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Appeals Nos. 181 to 184 of 1960. Appeals. from the judgment and order dated March 16, 1955, of the Madras High Court in Case Referred No. 43 of 1950. A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellants. Hardayal Hardy and D. Gupta, for the respondent. 1960, December 14. The Judgment of the Court was delivered by SHAH, J. These appeals relate to Excess Profits Tax liability of the appellants in respect of two chargeable accounting periods April 1. 1944, to March 31., 1945, and April 1, 1945, to March 31, 1946. The appellants were under an agreement dated July 11, 1945, appointed managing agents for 20 years of the Coimbatore Spinning and Weaving Co, 273 Ltd. hereinafter referred to as the company. Prior to October 1, 1944, the appellants were the Managing Agents of the Coimbatore Mills Agency Ltd hereinafter referred to as the Agency Company who were the Managing Agents of the company. The year of account of the appellants ended on March 31, of the company on June 30, and of the Agency Company on September 30. Under the agreement by which the appellants were appointed 'managing agents, the following remuneration was provided: 1. Office allowance at Rs. 1,500 per mensem; 2. Commission at 1% on all purchases of cotton and stores and 21/2 on all capital expenditure incurred from time to time; and 3. Commission at 10% on the net profits of the company due and payable yearly immediately after the accounts of the company were closed. For the assessment year 1945 46, the appellants submitted a return of their income inclusive of the following items: 1. Remuneration from the Agency Company Rs. 36,000. Commission at 10% on profits from the Agency Company upto 30 9 1944 Rs. 37,953. Remuneration from company from 1 10 1944 to 31 3 1945 Rs. 9,000. Commission at 1% on cotton and stores purchased during this period Rs. 21,704. This return was accepted by the Additional Income tax Officer, Coimbatore I & II Circles, and the appellants were assessed to income tax. Excess Profits Tax was also worked out on the same basis for the chargeable accounting period ending March 31, 1945. For the assessment year 1946 47, the appellants submitted a return of their income which included the following items: 1. Remuneration from the company for one year from 1 4 1945 Rs. 18,000. Commission at 10% on the profits of the company paid in December 1945 (1 10 1944 to 30 6 1945) Rs. 1,90,889. 35 274 3. Commission at 1% on purchases of cotton and stores from 1 4 1945 to 30 6 1945 Rs. 16,777. Commission at 2 12/ %on capital expenditure from 1 10 1944 to 30 6 1945 Rs. 1,690. The Tax Officer in charge of the assessment directed that the commission on purchases and capital expenditure be taken into account for the year April 1, 1945, to March 31, 1946, and that the receipts be computed accordingly. The amount of Rs. 1,127 attributable out of item 4 was accordingly taken into the account of the previous year after reopening the assessment under section 34 of the Income tax Act, and the commission on the profits of the company was apportioned between the period October 1, 1944, to March 31, 1945, and April 1, 1945, to June 30, 1945, by the application of r. 9 of Sch. 1 of the Excess Profits Tax Act. The Tax Officer also determined the proportionate commission payable under items 3 and 4, for the period ending March 31, 1946, and as a result of the apportionment, the liability of the appel lants, original and revised, for income tax and Excess Profits Tax for the assessment year 1945 46 and chargeable accounting period April 1, 1944, to March 31, 1945, stood as follows: Original assessment of income taxRs. 1,04,654. Excess Profits TaxRs. 45,292. Revised figures Income tax (loss) Rs. 36,182. Excess Profits TaxRs. 1,41,962 11 0. For the assessment year 1946 47 and chargeable accounting period April 1, 1945, to March 31, 1946, tax liability was computed at: Income tax Rs. 1,66,271. Excess Profits Tax Rs. 1,13,163 5 0. The orders of assessmentfor income tax and Excess Profits Tax were confirmed by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal. On the applications of the appellants 275 for reference under section 66(1) of the Income tax Act and section 21 of the Excess Profits Tax Act, the Tribunal drew up a statement of the case and submitted the following four questions to the High Court of Judicature at Madras: 1.Whether on the facts and in the circumstances of the case, the Income tax Officer/Excess Profits Tax Officer was right in taking action under section 34 and 15 of the Income tax and the Excess Profits Tax Act ? 2.Whether on the facts and in the circumstances of this case, the provisions of r. 9, section 1, were properly applied ? 3.Whether on the facts and in the circumstances of the case, the Income tax Officer/Excess Profits Tax Officer was correct in including the proportionate commission income of Rs. 1,127 for income tax assessment 1945 46 and Rs. 1,43,163 plus Rs. 1,127 for Excess Profits Tax assessment Tax for the chargeable accounting period ending 31st March 1945, and 4.Whether on the facts and in the circumstances of the case, the proportionate commission of Rs. 37,129 and Rs. 2,299 were rightly assessed for the assessment year 1946 47 ? The High Court answered all the questions against the appellants and in favour of the Department. Against the order passed by the High Court, these appeals have been preferred with certificate granted under section 66A(2) of the Income Tax Act read with section 21 of the Excess Profits Tax Act. Two questions were canvassed in these appeals: 1.Whether it was open to the Taxing Officer to re open the assessment for 1945 46; and 2.Whether the commission received by the appellants was liable to be apportioned under r. 9 of Sch. 1 of the Excess Profits Tax Act. The appellants maintained their books of account on cash basis and commission received from the company was credited after the accounts of the company were closed. The amounts received by the appellants from the company were included in their return and assessment for the year 1945 46 was completed 276 for the purposes of the Excess Profits Tax by the Tax Officer without apportionment appropriate to the chargeable accounting periods. In so doing, the Tax Officer committed an error. He overlooked the fact that the chargeable accounting period for the as assessment of Excess Profits Tax and the year of account of the company did not tally. Under section 15 of the Excess Profits Tax Act, if the Tax Officer discovers, in consequence of definite information which has come into his possession that profits of any chargeable accounting period chargeable to excess profits tax have escaped assessment, or have been under assessed, he may serve on the person liable to pay such tax a notice containing all or any of the requirements which may be included in a notice under section 13 and may proceed to assess or reassess the profits. The provision is substantially similar to section 34(1) of the Income tax Act before it was amended in the year 1948. It is manifest that by the assessment of income made on the assumption that the chargeable accounting period and the accounting period of the company tallied, there resulted under assessment in the computation of tax liability for Excess Profits Tax, and it was open to the Tax Officer to take action under section 15 of the Excess Profits Tax Act. Determination of the second question depends upon r. 9, Sob. 1, of the Excess Profits Tax Act. By section 2(19) of the Excess Profits Tax Act, the expression " profits " means profits as determined in accordance with Sch. 1. That schedule sets out rules for computation of profits for the purpose of the Excess Profits Tax Act; and by r. 9, it is provided in so far as it is material that: " Where the performance of a contract extends beyond the accounting period, there shall (unless the Excess Profits Tax Officer, owing to any special circumstances, otherwise directs) be attributed to the accounting period such proportion of the entire profits or loss which has resulted, or which it is estimated will result, from the complete performance of the contract as is properly attributable to the 277 accounting period, having regard to the extent to which the contract was performed therein. " The performance of the contract of managing agency extended beyond the period of account of the company which was July 1, 1945, to June 30, 1946: it covered parts of two accounting periods. The Tax Officer was therefore obliged to apportion to the, chargeable accounting periods the entire profits resulting from the complete performance of the contract in proportions properly attributable to the accounting periods and this, he proceeded to do. Counsel for the appellants contends that the contracts contemplated by r. 9 are those of the nature of engineering or works contracts and the like where execution of the contract involves a profit making operation de die in diem and not contracts where remuneration is payable at a certain time for services performed throughout the stipulated period. It is true that remuneration was paid to the appellants after the expiry of the year of account of the company ; but the contract was one the performance of which extended throughout the year of account of the company. The appellants were the managing agents of the company and they had to perform their duties as managing agents for the whole year. It is not disputed that the contract of agency for 20 years is to be regarded for assessment of excess profits tax as an annual contract. The performance of the contract unmistakably cut across the accounting period is also manifest. The remuneration for performance of the contract is not computed at a daily rate, but is computed on a percentage of the commission on the profits of the company for the whole year, but on that account, the contract is not one in which performance does not extend throughout the year of account. Normally in a managing agency contract, the managing agent may not suffer loss, but that does not rule out the application of r. 9 to managing agency contracts. The terms in which r. 9 is enacted are general: the rule is applicable to all contracts which are intended to be operative for a fixed period. If, for the performance of the entire contract, 278 remuneration is payable at rates stipulated, the profit earned out of that remuneration must be apportioned in the manner provided by r. 9 if the performance of the contract extends beyond the accounting period The judgment of this Court in E. D. Sassoon & Co., Ltd. vs The Commissioner of Income Tax, Bombay City(1) on which strong reliance was placed by the appellants has no application to this case. In that case, M/s. E. D. Sassoon & Co., Ltd. who were managing agents of three different companies transferred the managing agencies to three other companies on several dates during the accounting year. A question arose in the computation of income tax payable by M/s. E. D. Sassoon & Co., Ltd. whether the managing agency commission was liable to be apportioned between M/s. E. D. Sassoon & Co., Ltd. and their respective transferees in the proportion of the services rendered as managing agents for the respective periods of the accounting year. It was held by this court (Jagannadhadas, J., dissenting) that on a true interpretation of the managing agency agreements in each case, the contract of service between the companies and the managing agents was entire and indivisible and the remuneration or commission became due by the companies to the managing agents only on completion of definite periods of service and at stated intervals ; that complete perfor mance was a condition precedent to the recovery of wages or salary in respect thereof and the remuneration payable constituted a debt only at the end of each period of service completely performed, no remuneration or commission being payable to the managing agents for broken periods; that no income was earned by or accrued to M/s. E. D. Sassoon & Co., Ltd. and as the transfer of the agencies did not include any income which E. D. Sassoon & Co., Ltd. had earned, they were not liable to be taxed under the Income Tax Act. But that was a case dealing with liability of the assessees who did not receive any income and to whom no income had accrued to pay (1)[1955] 1 S.C. R. 313. 270 income tax on the amounts of remuneration paid to their transferees. The court was not called upon to apply to income received by the assessee the principle of apportionment under r. 9 of Sch. 1 of the Excess Profits Tax Act, or any provision similar thereto. It is r. 9 of Sch. I which attracts the principle of apportionment. The rule enunciated in M/s, E. D. Sassoon & Co. 's case (1) has therefore no application to this case, and the High Court was right in holding that the assessment made by the Excess Profits Tax Officer by apportionment of the commission income between the chargeable accounting periods was correct. The appeals therefore fail and are dismissed with costs. One hearing fee. Appeals dismissed.

Under an agreement dated July 11, 1945, the appellants were appointed managing agents of the Coimbatore Spinning and Weaving Co. Ltd., for 20 years, and certain remuneration was provided for them including 10% commission on the net profits of the company due and payable yearly immediately after the accounts of the company were closed and commissions on purchases and capital expenditure of the company. Prior to October 1, 1944, the appellants were the managing agents of the Coimbatore Mills Agency Ltd., who were the managing agents of the Coimbatore Spinning and Weaving Co. Ltd. The year of account of the appellants ended on March 31, of the company on June 30, and of the Agency Company on September 30. For the assessment year 1945 46 the appellants submitted a return of their income which included the stipulated remuneration and commissions. This return was accepted by the Income tax Officer, and Excess Profits Tax liability for the chargeable accounting period ending March 31, 1945, was also worked out on that basis. A return of income was submitted by the appellants for the assessment year 1946 47 which included commission for the period 1 4 45 to 30 6 45 on purchases of cotton and stores and on capital expenditure. The Tax Officer directed that the commission on purchases and capital expenditure be taken into account 272 for the year April 1, 1945, to March 31, 1946, and that the receipts be computed accordingly. The assessment for 1945 46 was then reopened under section 34 of the Income tax Act under section 15 of the Excess Profits Tax Act and as a result of apportionment made by the application of r. 9 of Sch. 1 of the Excess Profits Tax Act, the liability of the appellants for Income tax and Excess Profits 'fax was revised and fresh assessments were made. The orders of assessment were confirmed by the appellate authorities. Held, that as in the instant case the chargeable accounting period for the assessment of Excess Profits Tax and the year of account of the company did not tally, by the assessment of income made on the assumption that they did tally, there had resulted under assessment and it was open to the Tax Officer to take action under section 15 of the Excess Profits Tax Act. The Excess Profits Tax Officer acted properly in apportioning under r. 9 of Sch. 1 the commission received by the appellants. Rule 9 of Sch. 1 of the Excess Profits Tax Act is enacted in general terms and it is applicable to all contracts which are intended to be operative for fixed periods. If, for the performance of the entire contract, remuneration is payable at certain rates the profits earned out of that remuneration must be apportioned in the manner prescribed by 19 if the performance of the contact extends beyond the accounting period. E. D. Sassoon & Co., Ltd. vs The Commissioner of Income tax, Bombay City; , , distinguished.

Appeal No. 73 of 1950. Appeal from the Judgment and Decree dated the 26th January, 1944, of the High Court of Judicature at Patna (Fazl Ali C. J. and Chatterji J.) in Appeal from Original Decree No. 4 of 1941, arising out of Judgment and Decree dated the 20th September, 1940, of the Court of the Additional Subordinate Judge of Hazaribagh in Title Suit No. 45 of 1939. section N. Mukherjee for the appellant. Gangacharan Mukherjee and A. N. Sinha for the respondents. October 23. The judgment of the Court was delivered by BHAGWATI J, 110 BHAGWATI J. The judgment of the Court was delivered by BHAGWATI J. 110 BHAGWATI J. The question that arises for our consideration in this appeal is whether prior to the enactment of section 65 A of the Transfer of Property Act in 1929 a mortgagor in possession had the power to grant a permanent lease of the mortgaged property so as to bind the mortgagee. One Raja Nilkanth Narain Singh was the owner of Gadi Sirampur and he executed the 1st August, 1914, a simple mortgage of Gadi Sirampur in favour of the Chota Nagpur Banking Association Limited. In 1920 the Bank filed a suit against his son Wazir Narain Singh to enforce the mortgage security and obtained a mortgage decree the 29th November, 1921. The Bank purchased a third share of Gadi Sirampur in execution of that decree the 28th October, 1922. Proceedings were taken to set aside this sale. During the pendency of these proceedings it appears that the 5th November, 1925, Wazir Narain Singh granted a permanent lease of four villages Nawadih, Koldih, Pandna and Chihutia by a registered Patta to one Hiraman Ram who was the Manager and Karta of his joint Hindu family. The Permanent lease was taken by him in his own name and in the name of his son Chohan Ram. An agreement was subsequently arrived at between the Bank and Wazir Narain Singh that if Wazir Narain Singh paid to the Bank or before the 16th August, 1926, the sum of Rs. 1,10,631 4 0 the sale would be set aside. Wazir Narain Singh executed the 14th August, 1926, a mortgage of Gadi Sirampur in favour of the Manager of the Court of Wards in charge of the plaintiff 's estate during his minority to secure repayment of a sum of Rs. 1,47,000 and out of the same satisfied the dues of the Bank and the sale in favour of the Ban was accordingly set aside. The plaintiff through the Manager of the Court of Wards filed a suit the 4th February, 1929, to enforce this mortgage and he impleaded as co defendants in that suit Hiraman Ram as defendant 20 and his father Dilo Ram as defendant 19. A final decree for sale was passed the 18th September, 1931, and the 111 Plaintiff purchased Gadi Sirampur at the auction sale held in execution of this decree the 6th April, 1935. Delivery of possession was obtained by the plaintiff through the Court the 16th February, 1936. Dilo Ram died after the mortgage decree but Hiraman Ram and his son Chohan Ram continued in actual possession of the disputed villages and the plaintiff therefore filed the 16th November, 1939, the suit, out of which this appeal arises, in the Court of the Additional Subordinate Judge of Hazaribagh against Hiraman Ram and Chohan Ram, defendants 1 and 2, for khas possession of these villages. The plaintiff contended that he was subrogated to the position of the Bank, that the decree which had been passed in the mortgage suit was binding the defendants, that he was the auction purchaser in execution of that mortgage decree and that the Patta being subsequent to the plaintiff 's mortgage thus came to an end and he was entitled to recover khas possession from the defendants. Defendant 2 filed his written statement contesting the plaintiff 's claim. He denied that the plaintiff. was subrogated to the position of the Bank. He contended that the decree in the mortgage suit was not binding him as he was not :a party to that suit. lie further contended that the Patta could not be put an end to by the auction sale of the mortgaged property. The defendant I filed a separate written statement. He denied that he was the Manager and Karta of the joint Hindu family. He also contended that there was a partition amongst the members of the joint family within a year after their possession of the properties in suit and the properties had been allotted at that partition to the defendant 2. The trial Court hold that, the plaintiff was subrogated to the position of the Bank. It also held that the defendant 1 was the Manager and Karta of the joint family and that the defendant 2 was fully represented in the mortgage suit, that the decree in the mortgage suit was binding the defendants and that the plaintiff was entitled to recover possession 112 of the said properties and mesne profits from the defendants. The defendants appealed against this decree to the High Court of Judicature at Patna. The High Court negatived the contention in regard to constructive res judicata which was urged behalf of the plaintiff. It then considered the further contention that Wazir Narayan Singh had, after creating the mortgage in favour of the Bank no power to grant the permanent lease in question to the defendants. After considering all the authorities which were cited before it, it came to the conclusion that the question whether Wazir Narayan Singh had got such power or not had to be determined with reference to the provisions of section 66 of the Transfer of Property Act and the crucial test was whether the lease rendered the mortgagee 's security insufficient. In spite of the fact that there was no allegation in the plaint that the defendant 's lease had the effect of rendering the security of the Bank insufficient, the High Court went into this question and a calculation of some figures came to the conclusion that the lease of the disputed villages in favour of the defendants did not in any way render the security of the bank insufficient. It therefore held that the lease was valid and was not affected by the plaintiff 's mortgage, decree or by the execution sale under that decree and accordingly dismissed the plaintiff 's suit. The plaintiff obtained leave to appeal to the Privy Council from this decision of the High Court and the appeal was admitted the 9th January, 1946. Both the Courts below found that the plaintiff was subrogated to the position of the Bank. They also found that the defendant 2 was sufficiently represented in the mortgage suit. These findings were not challenged before us and the only question which survived for our consideration was whether Wazir Narayan Singh had the power to grant a permanent lease to the defendants so as to bind the plaintiff. The question whether Wazir Narayan Singh had such power has got to be determined under the law as it stood prior to the enactment of section 65 A of 113 the Transfer of Property Act by Act XX of 1929. The mortgagor 's power to lease the mortgaged property was the subject matter of conflicting judicial decisions. Relying upon the rule of English common law under which the mortgagor had no power to lease, it was held in some cases that a mortgagor could not ordinarily without the concurrence of the mortgagee execute a lease which could be binding the mortgagee. In other cases a distinction was drawn between English mortgages and other mortgages and it was considered that the mortgagor in India remained the owner and when in possession could prima facie exercise the rights of ownership inclusive of the power to grant leases of the mortgaged property. The Question was decided with reference to section 66 of the Transfer of Property Act and it was held that the mortgagor could grant leases which were not wasteful in their effect the mortgagee 's security. This was the principle deduced by Jenkins C.J. in Balmukund vs Motilal(1) from the old case of Banee Pershad vs Beet Bhunjun Singh(1). This line of reasoning was not adopted in other cases which laid down a different rule, viz., that a mortgagor in possession might grant a lease conformable to usage in the ordinary course of management but was not competent to grant a lease unusual terms or authorise the use of land in a manner, or for a purpose, different from the mode in which he himself had used it before he granted the mortgage. This was laid down by Sir Ashutosh Mukherjee J. in Madan Mohan Singh vs Raj Kishore Kumari(3)and was followed in a number of cases. There was thus a conflict of decisions which was sought to be resolved by the enactment of section 65 A of the Transfer of Property Act which dealt with the mortgagor 's power to lease while lawfully in possession of the mortgaged property. "It is an elementary rule that though a mortgagor may assign the mortgaged premises, the assignee can only take subject to the encumbrances, and if the (1) (2) (i868) (3) (i9i6) 114 property is sold or foreclosed by the mortgagee, any interest which the mortgagor may have created since the mortgage will be destroyed" '. (Ghosh Mortgage, Vol. I, p. 212.) As was observed by Lord Selborne in Corbett vs Plowden(1), "If a mortgagor left in possession, grants a lease without the concurrence of the mortgagee (and for this purpose, it makes no difference whether it is an equitable lease by an agreement under which possession is taken or a legal lease by actual demise), the lessee has a precarious title, inasmuch as although the lease is good as between himself and the mortgagor who granted it, the paramount title of the mortgagee may be asserted against both of them. " It does not however follow that a lessee from the. mortgagor acquires no interest whatever in the property demised to him. A person taking a lease from a mortgagor after the mortgage does acquire an interest in the equity of redemption and can claim to redeem that footing. But this right of redemption does not necessarily mean that a lease of this character is always operative against the mortgagee. Merely because a lessee acquires an interest in the mortgaged property which is sufficient to enable him to redeem the mortgage it does not follow that the interest which the lessee has thus acquired is operative against the mortgagee. The true position is somewhere in the middle of these two extremes. The mortgagee is not normally bound by the acts of the mortgagor with reference to the mortgaged property. " But if a mortgagee takes his security with knowledge of the purposes to which the land is applied and allows the mortgagor to remain in possession he *ill be bound by the acts done by the mortgagor in accordance with the usual course." (Ghosh Mortgage, Vol. I, p. 212.) As indicated in the observations of Sir James Parke in Pope vs Briggs (2) the mortgagor might be considered as acting in the nature of a bailiff or agent for the mortgagee. Con sequently, if the mortgagor, after he has granted the (1) at p. 681. (2) (1829) 9 Barn. & Cres. 245 at p. 258. 115 mortgage, deals with the property in the usual course of management, the interest created by him may be rightly deemed operative against the mortgagee. An illustration of this view is found in the ease of Moreland vs Richardson(1) where a person took a mortgage of a burial ground and it Was held that, as the object of the burial ground is to grant rights of burial, this ' being the mode in which such property is dealt with, the mortgagee was not entitled to disturb the graves of those who had been: buried the land, while the mortgagor continued to hold it. , The mortgagor could thus in the usual course of management create a ten ancy from year to year in the case of agricultural land or from month to month in the case of property consisting of houses and his dealings with the mortgaged property in the usual course of management would be operative against the mortgagee. [Per Mukherjee J. in Madan Mohan Singh vs Raj Kishore Kumari(2)] "Whether the mortgagor possesses any larger powers of leasing is however very questionable. The only reported case in which such a power was recognized is Banee Pershad vs BeetBhunjun Singh(1) but the report in Sutherland is very meagre. The judgment too does not give forth any certain sound (sic.). It is only said that a mortgagor is not restricted in the management of the property by making a mortgage and that so long as nothing takes place to impair the value of the mortgagee 's security the mortgagor does not exceed his powers in making a lease for a term. The learned judges add perhaps somewhat unnecessarily that their decision should not go beyond the particular facts of the case before them." (Ghosh Mortgage, Vol. I, p. 213.) This case of Banee Pershad vs Beet Bhunjun Singh(3 was considered by Jenkins C. J. in Balmukund vs Motilal(4) as an authority for the proposition that as long as nothing took place which impaired the value or impeded the operation of the mortgage, the mortgagor in creating a temporary lease acted within his powers and these observations of Jenkins C.J. were (1) ; (2) at pp. 91, 92. (3) (4) , 116 considered by the Courts as justifying the applicability of the provisions of section 66 of the Transfer of Property Act while determining the binding nature of the leases created by. the mortgagor in possession the mortgagee. ; Mukherjee J. had occasion, to consider this very case in Madan Mohan Singh vs Raj Kishore kumari(1) and he cited it in support of the proposition that the interest created by the mortgagor while dealing with the mortgaged property in the usual course of management could be rightly deemed operative against the mortgagee. The following observations of Mukberjee J. in this connection at page 91 are very apposite: "As the case is very imperfectly reported, we have examined the record and ascertained the questions in controversy. The proprietor of an estate mortgaged it the 12th March, 1861. the 7th July, t862, the mortgagor granted an ijara potta of the property for a term of ten years. The mortgagee subsequently sued the mortgagor alone and got a decree; at the execution sale which followed, the property was sold the 24th December, 1863. The purchaser sued the 12th March, 1867, to eject the lessee, the ground that as he had acquired the property in the condition in 'Which it was when mortgaged, the lease, which would otherwise run till the 7th July, 1872, did not bind him. 'The Court of first instance overruled this contention 'as too broadly formulated, and held that as the mortgagor had in good faith granted the lease for a limited term a fair and reasonable rent, the mortgagee or the purchaser in execution of his decree could not repudiate it, specially as the mortgage deed did not prohibit the grant of temporary leases to middlemen or cultivators. appeal, the District Judge affirmed this view and declined to accept the broad contention that leases of all descriptions granted by a mortgagor were void as against the mortgagee. second appeal to this Court, Jackson and Mitter JJ. took substantially the same view. " (1) 117 These observations of Mukherjee J. point out what was the ratio decidendi of that case. The question of the sufficiency or insufficiency of the security was not really gone into but the Court considered that the lease was granted in good faith, was for a limited term and stipulated a fair and reasonable rent and it was therefore operative against the mortgagee. The Court was really guided by the consideration that the mortgagor dealt with the property in the usual course of management and the interest which was thus created by the mortgagor in the usual course must rightly be deemed operative against the mortgagee. ,The case of Banee Pershxd vs Beet Bhunjan Singh(1) therefore is really no authority for the wide proposition that a mortgagor was not restricted in the management of the property by making a mortgage and that so long as nothing took place,to impair the value, or impede the operation of the mortgage the mortgagor would be well within his powers in making a lease for a term. In our opinion section 66 of the Transfer of Property Act has nothing to do with the mortgagor 's power to lease the mortgaged property. Section 66 is a statutory, enactment of the powers of the mortgagor in.possession in regard to waste of mortgaged property. The mortgagor in possession is not liable for what in terms of the English Law of Real Property is known as permissive waste, i.e., for omission to repair or to prevent natural deterioration. He is however liable for destructive waste is acts which are destructive or permanently injurious to the mortgaged property if the security was insufficient or would be rendered insufficient by such acts. This section therefore has no application to the grant of a lease by the mortgagor in possession. The only relevant consideration is whether, the mortgagor in possession having the authority to deal with the property in the usual course of management, the lease granted by him can be rightly deemed operative against the mortgagee. , The true position has been stated in the following terms by,, Mukherjee, in Madan Mohan Singh vs Baj Kishore Kumar(2) (i) 16 (2) at page 92. 118 "The true position thus is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management, for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But it is not competent to the mortgagor to grant a lease unusual terms, or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used it before he granted the mortgage. " The question whether the mortgagor in possession has power to lease the mortgaged property has got to be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management. It has to be determined general principles and not the distinction between an English mortgage and a simple mortgage or con siderations germane to section 66 of the Transfer of Property Act. Having regard therefore to the position that section 66 has no application to leases of the mortgaged property, the decision of Jenkins C.J. in Balmukund vs Motilal(1) and the cases following that line of reasoning do not govern the question before us. While we are this subject we would like to em phasise that it is for the lessee if be wants to resist the claim of the mortgagee to establish that the lease in his favour was granted the usual terms in the ordinary course of management. Such a plea if established and it must not be overlooked that the burden of proof in this matter is upon him would furnish a complete answer to the claim of the mortgagee. If the lessee failed to establish this position he would have certainly no defence to an action at the instance of the mortgagee. No allegation was made behalf if of the defendants that the grant of the permanent lease was a dealing with the mortgaged property in the usual course of management by the mortgagor, In the absence of (9) , 119 any such plea we are of the opinion that there was No. answer to the plaintiff 's claim and the permanent lease granted by Wazir Narayan to the defendants could not prevail against the plaintiff. We have therefore come to the conclusion that Wazir Narayan Singh had no power to grant the permanent lease in question to the defendants, that the same was not binding and operative against the plaintiff, that the defendants had ample opportunity to@ redeem the mortgage if they so desired but did not choose to exercise their right of redemption, that the execution sale of Gadi Sirampur including the four villages in question was binding them and that the plaintiff was entitled to khas possession of the four villages of which the defendants were in wrongful possession. The appeal is allowed. The decree passed by the High Court dismissing the plaintiff 's suit is set aside and the decree passed by the trial court in favour of the plaintiff is restored with costs throughout. Appeal allowed. Agent for respondent No. 1: B. B. Biswas.

Under the law as it stood prior to the enactment of section 65 A of the Transfer of Property Act, by Act XX of 1929, the question whether the mortgagor in possession had powar to lease the mortgaged property has got to be determined with reference to the 109 authority of the mortgagor as the bailiff or agent of the mortgagee to deal with the property in the usual course of management. It has to be determined general principles and not the distinction between an English mortgage and a simple mortgage or the considerations germane to s.66 of the Transfer of Property Act, and the true position is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management; for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But it is not competent to him to grant a lease unusual terms or to alter the character of the land or to authorise its use in a manner, or for a purpose, different from the mode in which he himself had used it before he granted the mortgage. And it is for the lessee, if he wants to resist the claim of the mortgagee, to establish that the lease in his favour was granted the usual terms in the ordinary course of management. Where a mortgagor granted a permanent lease of the mortgaged property in the year 1925 and the High Court upheld the lease as against a person who had purchased the properties in a sale held in execution of a decree obtained by the mortgagee the mortgage, the ground that the lease did not impair the security of the mortgagee: Held, that the lease was not binding the mortgagee or the auction purchaser as it was not a lease granted in the usual course of management, even though it did not impair the security. Madan Mohan Singh vs Raj Kishore Kumari , approved. Balmukund vs Motilal (1915) 20 C.W.N. 350, dissented from. Banee Prasad vs Beet Bhunjun Singh , explained.

Appeal No. 475 of 1960. Appeal by special leave from the Award dated March 31, 1960, of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 227 of 1959. M. C. Setalvad, Attorney General for India, G. B. Pal and J. B. Dadachanji, for the appellant. I. N. Shroff, for the respondents. December 15. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave arises from an industrial dispute between the appellant, the Alembic Chemical Works Co. Ltd., and the respondents, its workmen. The said dispute related to a single demand made by the respondents with regard to leave. This demand consisted of three parts, (a) one month 's privilege leave with full salary and dearness allowance on completion of eleven months service in a year with a right to accumulate upto six months, (b) one month 's sick leave with full salary and dearness allowance for each year of service with right to accumulate for the entire period of service, and (c) every workman should be entitled to take leave in proportion to the number of days he is in service of the company at the time of his application for the same. This dispute was referred by the Government of Bombay for adjudication before the Industrial Tribunal under section 10(1)(d) of the XIV of 1947. The Tribunal considered the contentions raised by the appellant against the respondents ' demands, took into account awards or agreements between employers and their employees in comparable concerns and made its award. In regard to privilege leave the Tribunal has ordered that leave should be granted to the staff members covered by the reference as follows: Privilege leave upto 3 . 16 days as at present completed years of service per year. Up to 9 completed years. 22 days per year. And thereafter . One month for every 11 months of service. 299 The award allows accumulation of privilege leave upto three years. As regards sick leave, the Tribunal has ordered that the appellant should give its staff covered by the present award 15 days sick leave in a year with full pay and dearness allowance with a right to accumulate upto 45 days. It has also directed that no medical certificate should be demanded if sick leave for three days or less is asked for. In regard to the third item of demand concerning leave in proportion the Tribunal has made appropriate direction which it is unnecessary to set out for the purpose of this appeal. Before the Tribunal the main contention raised by the appellant was in regard to the propriety and reasonableness of the demand and in regard to the practice prevailing in comparable concerns. Before this Court, however, the provision made by the award in regard to privilege leave has been attacked mainly on the ground that the Tribunal had no jurisdiction to make such an award having regard to the provisions of section 79 of the (63 of 1948) (hereafter called the Act). It is urged that section 79 of the Act has made exhaustive and self contained provisions with regard to the granting of annual leave with wages to the employees to whom the said Act applies, and the effect of section 79 is to introduce standardisation in the matter of leave; which means neither the employer voluntarily, nor an Industrial Tribunal by its award, can add to the leave prescribed by the, said section. In the matter of leave section 79 is a complete code, and no additions to the said leave can be made either by a contract or by an award. It is common ground that the respondents are governed by the pro visions of the Act. This point was not raised before the Tribunal, but since it is a point of law which arises on admitted facts we have permitted the learned Attorney General to argue it before us. The Act was first enacted in 1934 as Act 25 of 1934. Since then it has been amended from time to time. Its main object is to consolidate and amend the law regulating labour in factories. For the purpose of determining which concerns and which employees 300 would be governed by the Act section 2(m) and (1) define "factory" and "worker" respectively. Even a broad view of the scheme of the Act and a perusal of its provisions would clearly indicate that the Act is a beneficent measure and its policy is to make reasonable provisions for the preservation of health of the workmen, their safety and their welfare. With that object in view, the Act has made provisions for the regulation of working hours of adults, has regulated the employment of young persons, and has also provided for annual leave with wages to the workmen. The amendments made in the relevant provisions of the Act from time to time indicate that the Act has been pursuing its beneficent policy slowly but steadily and is attempting to provide for the workmen better and larger amenities in their employment. It is in the light of this obvious policy and object of the Act that we have to decide the question raised before us by the appellant. Section 79(1) occurs in Chapter VIII which deals with annual leave with wages. It provides thus: "79. Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated at the rate of (i). if an adult, one day for every twenty days of work performed by him during the previous calendar year; (ii). if a child, one day for every fifteen days of work performed by him during the previous calendar year. Explanation 1 For the purpose of this sub section (a) any days of lay off, by agreement or contract or as permissible under the standing orders; (b) in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and (c). the leave earned in the year prior to that in which the leave is enjoyed; shall be deemed to be days on which the worker 301 has worked in a factory for the computation of the period of 240 days or more, but he shall not earn, leave for these days. " This section has 11 other sub sections which deal with different aspects and make relevant provisions in regard to annual leave with wages. It is not disputed that the award purports to make provisions for privilege leave in excess of the annual leave sanctioned by section 79. Can the Industrial Tribunal direct the appellant to provide such additional privilege leave to its employees?; in other words, does section 79 purport to standardise annual leave with wages so that no departure from the said standard is permissible either way? The appellant 's contention is that except for pre existing awards, agreements, contracts or except for pre existing law no departure from the standardised provision is permissible after section 79 was enacted. This argument raises the question of construing section 79 in the light of the other relevant provisions of the Act. It may be conceded that the provisions made by section 79 are elaborate, and in that sense may be treated as self contained and exhaustive. It is also clear that section 79(1) does not use the expression "not more than or not less than" as it might have done if the intention of the Legislature was to make its provisions correspond either to the minimum or the maximum leave claimable by the employees; but even so, when section 79(1) provides that every worker shall be allowed leave as therein prescribed, the provision prima facie sound,% like a provision for the minimum rather than for the maximum leave which may be awarded to the worker. If the intention of the Legislature was to make the leave permissible under section 79(1) the maximum to which a workman would be entitled, it would have used definite and appropriate language in that behalf. We are, therefore, inclined to think that even on a plain construction of section 79(1) it would be difficult to accede to the argument that it prescribes standardised leave which inevitably would mean the maximum permissible until section 79(1) itself is 302 Even on the basis that section 79(1) is capable of the construction sought to be placed on it by the appellant, the question would still remain whether the Raid construction should be preferred to the alternative construction which, as we have just indicated, is reasonably possible. The answer to this question must be in the negative for two reasons; first, having regard,to the obvious policy and object of the Act, if section 79(1) is capable of two constructions that construction should be preferred which furthers the policy of the Act and is more beneficial to the employees in whose interest the Act has been passed. It is well settled that in construing the provisions of a welfare legislation courts should adopt what is sometimes described as a beneficent rule of construction; but, apart from this general consideration about the policy and object of the Act, sections 78 and 84 occurring in the same Chapter as section 79 clearly indicate that section 79(1) is not intended to standardise leave provisions as contended by the appellant, and that is the second reason why the appellant 's argument cannot be accepted. Let us then consider the provisions of Bs. 78 and 84. Section 78(1) provides that the provisions of Chapter VIII shall not operate to the prejudice of any right to which a worker may be entitled under any other law, or under the terms of any award, agreement or contract of service. There is a proviso to this sub section which lays down that when such award, agreement or contract of service provides for longer annual leave with wages than provided in this Chapter the worker shall be entitled only to such longer annual leave. Section 78(2) exempts specified workers from the operation of Chapter VIII. The first difficulty which this section raises against appellant 's argument is that it undoubtedly recognises exceptions to the leave prescribed by section 79(1). It is well known that standardisation of conditions of service in industrial adjudication generally does not recognise or permit exceptions; if the hours of work are standardised, for instance, or the wage structure is standardised, it is intended to make hours of work and wages uniform in the whose industry brought 303 under the working of standardisation Standardisation thus inevitably means levelling up of those whose terms and conditions of service were less favourable than the standardised ones, and levelling down those of such others whose terms and conditions were more favourable than the standardised ones. That being so, if section 79(1) intended to standardise annual leave with wages it would normally not have made provisions in regard to exceptions as section 78(1) obviously does. Besides, the scope and extent of the exceptions recognised by section 78(1) are decisively against the appellant 's construction of section 79(1). The learned Attorney General has strenuously contended that the saving provision of section 78(1) applies only to existing law and existing awards, agreements or contracts of service; in other words, his argument is that the Legislature has deliberately decided to except pre existing arrangements and in that sense it is a departure from the usual concept of standardisation. In our opinion, the assumption that section 78(1) is confined to existing arrangements is plainly inconsistent with a fair and reasonable construction of the said provision. When s.78(1) refers to any other law it could not have been intended that it is only to existing laws that the reference is made and that the idea underlying the provision was that no law can be passed in future which would grant more generous leave to the employees. Such a restriction on the legislative activities of the appropriate Legislatures cannot obviously have been intended. If the reference to law is not confined only to existing law there is no reason why reference to any award, agreement or contract of service should be similarly circumscribed or limited. We feel no difficulty in holding that what section 78(1) protects are laws, awards, agreements or contracts of service which were then existing or which would come into existence later; that is to say section 78(1) does not affect preexisting arrangements and does not also prohibit future arrangements which would be more generous than section 79(1). A law may be passed making more generous provisions, or agreements or contracts may 304 be entered into or awards made with the same result. If that be the true position section 78(1) clearly negatives the theory that section 79(1) provides for standardisation of annual leave with wages. The provisions of section 84 would also lead to the same result. Section 84 provides that where the State Government is satisfied that the leave rules applicable to workers in a factory provide benefits which in its opinion are not less favourable than those for which Chapter VIII makes provision it may by written order exempt the factory from all or any of the provisions of Chapter VIII subject to such conditions as may be specified in the order. Now, the power to exempt factories has to be exercised having regard to the effect of the totality of the benefits which may be afforded to the workers by their respective factories. This power to exempt also necessarily postulates the existence of better amenities than those guaranteed by Chapter VIII, and that means that if a factory provides better leave amenities to its employees, the State Government may in the interest of the employees exempt the factory from the operation of this Chapter. The scope of section 84, like the scope of section 78, cannot be limited only to the more favourable benefits which may be existing at the date when the Act was passed. What is true about the existing benefits would be equally true about the benefits which may be granted by an employer to the employees in future. Let us illustrate what the con sequence would be if the appellant 's argument is accepted. Take the case of an employer who has been exempted under section 84 on the ground that the benefits of leave conferred by him on his employees are more favourable to them. In such a case, the employer may make his benefits still more favourable after exemption is accorded to him; but an employer who has already not provided more favourable benefits would be effectively precluded from making any such provisions in future. It is difficult to imagine that such a consequence could have been intended by the provisions of this welfare legislation. 305 The history of the amendments made in the relevant provisions of the Act also indicates that the Act has been gradually making more liberal provisions in ' the interest of workmen to whom it applies. In the original Act as it was passed (25 of 1934) section 34 provided for weekly holiday but no provision was made for holidays with pay. When the said Act was amended by Act 3 of 1945, section 49A which is equivalent to present section 78(1) without the proviso was inserted; and section 49B provided, inter alia, that every worker who has completed a period of twelve months continuous service in a factory shall be allowed during the subsequent period of twelve months holidays for a period of ten days. That is how provision for holidays came to be made. By the ; 'amending Act 63 of 1948, section 78 with the present proviso was enacted; and section 79 made a provision for annual leave with wages. While making provision for annual leave with wages the section then prescribed a minimum of ten days; subsequently, by amending Act 25 of 1954, section 79 as it stands at present was enacted; and in section 78 the word "annual" has been added to qualify leave in the proviso. We have thus briefly referred to some changes made in the Act from time to time in order to show that subsequent amendments have sought to make the provisions more liberal. There is one more point which may incidentally be mentioned whilst we are considering the amendments made in the Act from time to time. Section 49A which broadly corresponds to section 78 of the present Act saved other laws and terms of any award, agreement or contract of service just as section 78(1) does. Now, if the said section is construed on the lines which the appellant wants us to construe section 78(1) it would only be arrangements existing at the date when the said amending Act came into force on January 1, 1946, that would be protected and saved, and nothing that happened either by way of legislation or by way of awards or contracts subsequent to the said date would attract the provisions of the said section 49A or section 78 which subsequently took its place. This obviously is not 39 306 intended by the Legislature which incidentally shows that section 78(1) cannot be confined to existing arrangements or laws, but takes within its sweep future laws, agreements, contracts or awards. Therefore, the challenge to the validity of the award based on the assumption that section 79(1) provides for standardised award of annual leave with wages fails. Then it is urged that the provision made by the award for privilege leave introduces discrimination between the clerical staff covered by the present reference and operatives covered by the earlier awards made by the same Tribunal. We were told that operatives had made a similar claim for privilege leave before the same Tribunal, and the said claim had been rejected. The argument is that the provision for privilege leave made by the present award would create discontent amongst the operatives to whom similar leave has been denied, and that would disturb industrial peace. We are not impressed by this argument. It is not seriously disputed that a distinction has generally been made between operatives who do manual work and clerical and other staff; in fact the appellant 's standing orders themselves make different relevant provisions for the two categories of its employees. It is also not disputed that in practice such distinction is made by comparable concerns, and awards based on the same distinction are generally made in respect of the two separate categories of employees. We are, therefore, unable to appreciate the argument that in granting privilege leave to the present staff the Tribunal has either overlooked its earlier award or has made a decision which suffers from the vice of discrimination. The practice prevailing in comparable concerns and the trend of awards both seem to show that a distinction is generally made between the two categories of employees, and since the said distinction is perfectly justifiable no question of discrimination can arise. It is then argued that making liberal provisions for privilege leave and sick leave are really opposed to the modern trend in industrial thought, and so such liberal awards should be discouraged and corrected. 307 There is no doubt that when industrial adjudication seeks to do social justice it cannot ignore the needs of national economy; and so in considering matters of leave, either in the form of privilege leave or sick leave, the Tribunals should not ignore the consideration that unduly generous or liberal leave provisions would affect production and obviously production of essential commodities is in the interest of not only the employers and the employees but also of the general community; but it is difficult for us to accept the argument that we should make suitable modifications in the provisions made by the award in regard to privilege leave or sick leave. These are matters primarily for the Industrial Tribunal to consider and decide. The Tribunal is more familiar with the trend prevailing in comparable concerns, and unless it appears that the impugned provisions cannot be sustained on any reasonable ground or that they mark a violent departure from the prevailing practice or trend, we would be reluctant to interfere with the decision of the Tribunal. After all, in deciding what ,would be a reasonable provision for privilege leave or sick leave, the Tribunal has to take into account all relevant factors and come to its own decision. As we have already indicated, in making the present award the Tribunal has considered previous decisions which were relevant and prevailing agreements in comparable concerns. We have carefully considered the criticism made by the learned Attorney General against the provisions contained in the award, but we are not satisfied that a case has been made out for interference in an appeal under article 136. The result is the appeal fails and is dismissed with costs. Appeal dismissed.

It is not correct to say that section 79 of the , standardises the grant of annual leave with wages to employees to whom the Act applies and that neither the employer by voluntary agreement nor the Industrial Tribunal by its award can vary that standard. It is well settled that in construing the provisions of a welfare legislation, such as the Act in question which has for its object the preservation of the health, safety and welfare of the workmen, courts should apply the rule of beneficent construction and moreover, sections 78 and 84 of the Act put it beyond doubt that section 79(1) is not intended to standardise annual leave with wages by providing the maximum. Rightly construed section 78(1) of the Act not only protects past laws, awards, agreements and contracts but also those that are to come into existence in the future and does not prohibit a more generous agreement than that prescribed by section 79(1). Likewise the scope of section 84 of the Act which, in empowering the State to exempt a factory from all or any provisions of Ch. VIII of the Act, contemplates better amenities than those guaranteed by the Chapter, cannot be limited to benefits existing at the date of the Act but must also apply to future benefits which an employer may grant to his employees. Consequently, in a case where the Industrial Tribunal, on a consideration of awards and agreements between employers and employees in comparable concerns, awarded annual leave in excess of what is prescribed by section 79(1), Held, that the award was not open to challenge. Held, further, that the distinction generally made between operatives doing manual work and clerical and other staff is perfectly justifiable and so the award of privilege leave to the clerical staff could not be said to be discriminatory. Although the Industrial Tribunals in awarding privilege leave or sick leave must not fail to consider their effect on production and so on the interest of the community in general, this Court would be reluctant under article 136 of the Constitution to interfere with an award unless its provisions are unsustainable on any reasonable grounds and make a violent departure from the practice and trend prevailing in comparable concerns. 38 298

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

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

Appeals Nos. 223 and 224 of 1960. Appeals from the order dated November 23, 1956, of the Andhra Pradesh High Court, Hyderabad, in Tax Revision Cases Nos. 17 and 18 of 1956. 268 C. K. Daphtary, Solicitor General of India and T. V. B. Tatachari, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. December 14. The Judgment of the Court was delivered by HIDAYATULLAH, J. These are two appeals on certificates granted by the High Court of Andhra Pradesh against a common judgment in a sales tax revision filed by the appellants in the High Court. The facts are as follows: In the year 1952 53, for which the assessment of sales tax was in question, the appellants dealt in gunnies, and purchased them from two Mills in Vishakapatnam District and in respect of which they issued delivery orders to third parties, with whom they had entered into separate transactions. The procedure followed by the appellants was this: They first entered into contracts with the Mills agreeing to purchase gunnies at a certain rate for future delivery. Exhibit A 1 is a specimen of such contracts. The appellants also entered into agreements with the Mills, by which the Mills agreed to deliver the goods to third parties if requested by the appellants. The Mills, however, did not accept the third parties as contracting parties but only as agents of the appellants. Exhibits A 2 and A 2(a) are specimen agreements of this kind. Before the date of delivery, the appellants entered into agreements with third parties, by which they charged something extra from the third parties and handed over to them the delivery orders, which were known as kutcha delivery orders. Exhibits A 3 and A 4 are specimens of the agreement and the delivery orders respectively. The Mills used to deliver the goods against the kutcha delivery orders along with an invoice and a bill, of which Exs. A 6 and A 7 are specimens respectively, and collected the sales tax from the third parties. The tax authorities, however, treated the transaction between the appellants and third parties as a fresh sale, and sought to levy sales tax on it 269 again, which, the appellants, contended, was not demandable, as there was no second sale. The appellants failed in their contentions before the Deputy Commercial Tax Officer, Guntur, and their appeals to the Deputy Commissioner of Commercial Taxes, Guntur and the Andhra Sales Tax Appellate Tribunal, Guntur, were unsuccessful. The appellants then went up in revision to the High Court under the Madras General Sales Tax Act, 1939 (as amended by Madras Act No. 6 of 1951), but were again unsuccessful. The High Court, however, granted certificates, on which these appeals have been filed. The contentions of the appellants are that the agreement and the delivery of the kutcha delivery order did not amount to a sale of goods, but was only an assignment of a right to obtain delivery of the gunnies, which were not in existence at the time of the transaction with third parties, and were not appropriated to the contract, or, in the alternative, that this was only an assignment of a forward contract. They seem to have relied in the High Court upon the deci sions of this Court reported in The Sales Tax Officer, Pilibhit vs Messrs. Budh Prakash Jai Prakash(1) and Poppatlal Shah vs The State of Madras (2) to show that these transactions were not sales. These cases were not relied upon by the appellants before us, presumably because the High Court has adequately shown their inapplicability to the facts here. The learned Solicitor General appearing for the appellants rested his case entirely upon the first contention, namely, that there was only an assignment of a right to obtain delivery of the gunnies and not a sale. He contended that there was only one transaction of sale between the Mills and the third parties, who, on the strength of the assignment of the right to take delivery, had received the goods from the Mills. in our opinion, this does not represent the true nature of the transactions, either in fact, or in law. To begin with, the Mills had made clear in their agreements that they were not recognising the third parties as contracting parties having privity with (1) ; (2) ; 270 them, and that delivery would be given against the kutcha delivery orders to the third parties as agents of the appellants. The Mills, therefore, recognised only the appellants as contracting parties, and there was thus a sale to the appellants from the Mills, on which ,;sales tax was correctly demanded and was paid. In so far as the third parties were concerned, they had purchased the goods by payment of an extra price, and the transaction must, in law and in fact, be considered a fresh transaction of sale between the appellants and the third parties. A delivery order is a document of title to goods (vide section 2(4) of the Sale of Goods Act), and the possessor of such a document has the right not only to receive the goods but also to transfer it to another by endorsement or delivery. At the moment of delivery by the Mills to the third parties, there were, in effect, two deliveries, one by the Mills to the Appellants, represented, in so far as the Mills were concerned, by the appellants ' agents, the third parties, and the other, by the appellants to the third parties as buyers from the appellants. These two deliveries might synchronise in point of time, but were separate, in point of fact and in the eye of law. If a dispute arose as to the goods delivered under the kutcha delivery order to the third parties against the Mills, action could lie at the instance of the appellants. The third parties could proceed on breach of contract only against the appellants and not against the Mills. In our opinion, there being two separate transactions of sale, tax was payable at both the points, as has been correctly pointed out by the tax authorities and the High Court. The appellants relied upon a decision of the Andhra Pradesh High Court in The State of Andhra vs Kolla Sreeramamurty (3), but there, the facts were different, and the Division Bench itself in dealing with the case, distinguished the judgment under appeal, observing that there was no scope for the application of the principles laid down in the judgment under appeal, because in the cited case, "the property in the goods did not pass from the mills to the assessee and (3) Second Appeals Nos. 194 & 195 of 1954 decided on June 27, 1957. 271 there was no agreement of sale of goods to be obtained in future between the assessee and the third party". In the result, the appeals tail, and are dismissed with costs. One hearing fee. Appeals dismissed.

The respondents dealt in gunnies. They first entered into contracts with two Mills agreeing to purchase gunnies at a certain rate for future delivery, and also entered into agreement with third parties, by which they charged something extra from those third parties and handed over the delivery order known as kutcha delivery order. The Mills however did not accept the third parties as contracting parties, but only as the agents of the appellants and delivered the goods against the kutcha delivery orders, and collected the Sales Tax from the third parties. The tax authorities treated these transactions between the appellant and the third parties as fresh sales and sought to levy sales tax again, which the appellants contended, was not demandable as there were no second sales; the delivery of a kutcha delivery order did not amount to a sale of goods, but was only an assignment of a right to obtain delivery of gunnies which were not in existence and not appropriated to the contract; this was only an assignment of a forward contract. Held, that the agreements between the parties showed that third parties were not recognised by the sellers. A delivery order being a document of title to goods, the possession of such a document not only gave the right to recover the goods but also to transfer them to another by endorsement or delivery. There being two separate transactions of sale, one between the Mills and the original purchasers and the other between the original purchasers and third parties, tax was payable at both the points. The Sales Tax officer, Pilibhit vs M/s. Budh Prakash jai Prakash; , , Poppatlal Shah vs The State of Madras, ; , and The State of Andhra vs Kolla Sreeramamurthy, decided on June 27, 1957, referred to.

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

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

Appeals Nos. 134 to 137 of 1959. Appeals by special leave from the judgment and order dated September 20,1957, of the Bombay High Court in Income Tax Reference No. 14 of 1957. R. J. Kolah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. January 3. The Judgment of the Court was delivered by HIDAYATULLAH, J. This judgment governs the disposal of Civil Appeals Nos. 134 to 137 of 1959. They have been filed by four assessees with special leave, and arise out of similar facts, and it is not necessary to refer to more than one case to consider the point in question. The assessment year under consideration is 1952 53, and the previous year, the Calendar year, 1951. In that year, Mr. Tulsidas Kilachand, one of the four appellants, made a declaration of trust in favour of his wife, a portion of which may be quoted here: ". . . 1, Tulsidas Kilachand hereby de clare that I hold 244 shares of Kesar Corporation Ltd. and 120 shares of Kilachand Devchand & Co., Ltd upon trust to pay the income thereof to my wife Vimla for a period of seven years from the date hereof or her death (whichever event may be earlier) and I hereby declare that this trust shall not be revocable." In the year of account, a sum of Rs. 30,404 was received as dividend income on those shares, and the assessee contended that this income, after being grossed up, was not liable to be included in his total income, in view of the third proviso to section 16(1)(c) of the Indian Income tax Act. The Income tax Officer did not accept this contention, and though the assessment order is not before us, we gather from the statement of the case that the reason he gave was that the income had accrued to or had arisen in the hands of 353 Mr. Tulsidas Kilachand and had been paid by him to his wife. The Income tax Officer held that the words of the proviso "income arising to any person by virtue of a settlement or disposition" did not apply to this income. On appeal, the Appellate Assistant Commissioner held that the case was governed by section 16(3)(b), and need not be considered under the third proviso. to section 16(1)(c) of the Act. It appears to have been conceded before him that if the former provision applied, the proviso would not save the income from being assessed in the hands of Mr. Tulsidas Kilachand. The appeal was dismissed. In the appeal before the Tribunal, Mr. Tulsidas Kilachand again relied upon the third proviso to section 16(1)(c), and contended that the case was riot governed by section 16(3)(b) and that the dividend income could not be included in his assessment. The Tribunal came to the conclusion that the case was covered either by section 16(3)(a)(iii) or by section 16(3)(b), and that the income from the shares was, therefore, liable to be included in the income of Mr. Tulsidas Kilachand. The Tribunal, however, raised and referred the following question under section 66(1) of the Act to the High Court of Bombay: "Whether on a true construction of the deed of declaration of trust dated 5th March , 1951, the net dividend income of Rs. 30,404 on 120 shares of Kilachand Devchand & Co., Ltd. and 244 shares of Kesar Corporation Ltd. held under trust by the assessee for the benefit of his wife was income liable to be included in the total income of the assessee? The High Court came to the conclusion that, though section 16(1)(c) was not satisfied in view of the third proviso, section 16(3)(b) was applicable to the case, and answered the question in the affirmative. In the appeal before us, the case for the Department was based both on section 16(3)(a)(iii) and section 16(3)(b), while the appellants contended that this disposition fell within the third proviso to section 16(1)(c). The relevant provisions are: 45 354 " 16. Exemptions and exclusions in determining the total income. (1) In computing the total income of an assessee. . . . . . . . . (c) all income arising to any person by virtue of a settlement or disposition whether revocable or not, and whether effected before or after the commencement of the Indian Income tax (Amendment) Act, 1939 (7 of 1939), from assets remaining the property of the settlor or disponer, shall be deemed to be income of the settlor or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor: Provided. . . . . . . . . Provided further. . . . . . . . Provided further that this clause shall not apply to any income arising to any person by virtue of a settlement or disposition which is not revocable for a period exceeding six years or during the lifetime of the person and from which income the settlor or disponer derives no direct or indirect benefit but that the settlor shall be liable to be assessed on the said income as and when the power to revoke arises to him. (2). . . . . . . . (omitted) (3). In computing the total income of any individual for the purpose of assessment, there shall be included (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly (i). . . . . . . . . (ii). . . . . . . . . . (iii) from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or (b). so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or 355 association by such individual for the benefit of his wife or a minor child or both. " The object of framing section 16 can almost be taken from the observations of Lord Macmillan in Chamberlain vs Inland Revenue Commissioners (1), where he stated as follows: "This legislation . (is) designed to overtake and circumvent a growing tendency on the part of taxpayers to endeavour to avoid or reduce tax liability by means of settlements. Stated quite generally, the method consisted in the disposal by the taxpayer of part of his property in such a way that the income should no longer be receivable by him, while at the same time he retained certain powers over, or interests in, the property or its income. The legislature 's counter was to declare that the income of which the taxpayer had thus sought to disembarrass himself should, notwithstanding, be treated as still his income and taxed in his hands accordingly. " These observations apply also to the section under consideration, and the Indian provision is enacted with the same intent and for the same purpose. Section 16 thus lays down certain exemptions and exclusions in determining the total income of an assessee. Some of the provisions lay down the conditions for inclusion of certain income, while others lay down the conditions for exclusion of other income. We are concerned with the income accruing in case of settlements and the conditions under which income of a wife is treated as the income of the settlor or disponer or as the income of the husband. We have to see if the pro visions for exclusion or inclusion apply to this case. Section 16(1)(c) provides that income from assets remaining the property of the settlor or disponer or arising to any person by virtue of a revocable transfer of assets shall be deemed to be the income of the transferor. What cl. (c) means was decided by this Court in Provat Kumar Mitter vs Commissioner of Income tax (2). There, Provat Kumar Mitter had assigned the dividends only, and had not transferred the relevant shares. It was held by this Court that this (1) , 329. (2) 356 was a case of application of one 's own income and not assignment of the source from which the income was derived, which alone saved the income from tax, subject, however, to provisions like section 16(1)(c) and section 16(3). The deed in favour of the wife in that case gave only a right to the dividends, and not being a transfer of an existing property of the assessee, section 16(1)(c) and the third proviso were not attracted. That case thus has no application to the facts of the present case, where the disposition is differently made. The disposition here is for a period of seven years or the life of the settle ' whichever is shorter. During that period or the life of the settlee, Mr. Tulsidas Kilachand has bound himself upon trust to pay the dividends to his wife and not to revoke the settlement. The intention is obviously to put this case within the third proviso to section 16(1)(c), because cl. (c) does not apply to any income arising to any other person provided the disponer derives no direct or indirect benefit, even though the assets remain his property. If it were only a question of the application of the proviso, this disposition would be exempt. But by the deed of trust, the settlor holds the shares in trust; the shares do not remain the property of the settlor. Section 16(1)(c) has, therefore, no application, and the proviso is not attracted. The section goes on to deal with other situations and to provide for them specially. Sub section (3) provides specially for assets transferred to the wife or minor child. Income from assets transferred to the wife is still to be included in the total income of the husband, (a) if the assets have been transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration [vide sub section (3)(a)(iii)], or (b) so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife [vide sub section (3)(b)]. The first question is whether there can be said to be transfer of assets to the wife or to 'any person ' for the benefit of the wife. The second question is whether there was adequate consideration for the transfer, if 357 there was one The contention of the assessee is that there was no transfer of any assets at all. It is contended that the ownership of shares involves a bundle of rights, and that they are, generally speaking, (a) right to vote, (b) right to participate in the distribution of assets on dissolution, and (c) right to participate in the profits, e. g., dividends which might be Hi, .declared. It is pointed out that none of these rights was transferred to the wife, because transfer of assets connotes a creation of a right in the assets in praesenti. It is urged that there was no transfer of assets either to the wife or to any person for the benefit of the wife but merely a creation of a trust in respect of the shares, the dividends from which were payable to the wife, and that thus section 16(3)(a)(iii) or section 16(3)(b) was not applicable. It is lastly contended that even if it be held that there was such a transfer, it was for adequate consideration, being for love and affection, which is a good consideration. The contention that there was no transfer at all in this case is not sound. The shares were previously held by Mr. Tulsidas Kilachand for himself. After the declaration of trust by him, they were held by him not in his personal capacity but as a trustee. No doubt, under sections 5 and 6 of the Indian Trusts Act if the declarer of the trust is himself the trustee also, there is no need that he must transfer the property to himself as trustee; but the law implies that such a transfer has been made by him, and no overt act except a declaration of trust is necessary. The capacity of the declarer of trust and his capacity as trustee are different, and after the declaration of trust, he holds the assets as a trustee. Under the Transfer of Property Act, there can be a transfer by a person to himself or to himself and another person or persons. In our opinion, there was, in this case, a transfer by Mr. Tulsidas Kilachand to himself as a trustee, though there was no formal transfer. The assessee also stresses the words "any person or association of persons" in section 16(3)(b), and contends that such a person must be other than the husband, who transfers. The word "any person" is wide 358 enough to include the husband, when he transfers property to himself in another capacity. The change of capacity makes him answer the description "any person". This deed must be regarded as involving a transfer by the husband to a trustee, and even though the husband is the same individual, in his capacity as a trustee he must be regarded as a person distinct from the transferor. In our opinion, section 16(3)(b) covers the case. It remains to consider whether there was adequate consideration for the transfer. Reliance has been placed only upon love and affection. The words "adequate consideration" denote Consideration other than mere love and affection, which, in the case of a wife, may be presumed. When the law insists that there should be "adequate consideration" and not good consideration", it excludes mere love and affection. They may be good consideration to support a contract; but adequate consideration to avoid tax is quite a different thing. To insist on the other meaning is really to say that consideration must only be looked for, when love and affection cease to exist. In our opinion, this case falls within the special rules concerning wife and minor child, laid down in section 16(3)(b) and not within the third proviso to section 16(1)(c). It must thus be held that there was a transfer of the assets to the husband trustee for the benefit of the wife, The answer given by the High Court was thus correct. The appeals fail, and are dismissed with costs. One hearing fee. Appeals dismissed.

By a deed dated March 5, 1951, the appellant made a declaration of trust in favour of hiswife as follows: "I hereby declare that I hold 244 sharesupon trust to pay the income thereof to my wifefor a period of seven years from the date hereof or her death (whichever event may be earlier) and I hereby declare that this trust shall not be revocable". In the year of account, 1951, a sum of Rs. 30,404 was received as dividend income on those shares and the appellant claimed before the income tax authorities that this sum was not liable to be included in his total income in view of the third proviso to section 16(1)(c) of the Indian Income tax Act, 1922, but this claim was rejected on the ground that the case was covered either by section 16(3)(a)(iii) or by section 16(3)(b) of the Act. The appellant 's contention was that under the deed of trust there was no transfer of assets either to the wife or to any person for the benefit of the wife but merely a creation of a trust in respect of the shares, the dividends from which were payable to the wife, that even if it be held that there was such a transfer, it was for adequate consideration being for love and affection which was a good consideration, and that thus section 16(3)(a)(iii) or section 16(3)(b) was not applicable. Held, that on a true construction of the deed dated March 15, 1951, there was a transfer of the shares by the husband to himself as a trustee for the benefit of the wife and that even though the husband was the same individual, in his capacity as a trustee he must be regarded as a person distinct from the transferor. Held, further, that the words "adequate consideration" in section 16(3) of the Indian Income tax Act, 1922, denoted considera tion other than mere love and affection, which, in the case of a wife, may be presumed. Accordingly, the present case fell within section 16(3)(b) of the Act and not within the third proviso to section 16(i)(c). Provat Kumar Mitter vs Commissioner of 'Income tax; , , distinguished.

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

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

Appeal No. 10 of 1960. Appeal from the judgment and decree dated February 24, 1959, of the Bombay High Court in First Appeal No. 540 of 1958. M. C. Setalvad, Attorney General for India, A. P. Bhatt, Rameshwar Nath, section N. Andley, P. L. Vohra and J. B. Dadachanji, for the appellants. The respondent did not appear. December 16. The Judgment of the Court was delivered by SARKAR, J. Dadoba Tukaram Thakoor carried on a business under the name and style of Oriental Metal Pressing Works. On May 26,1955, a private company was incorporated under the name of Oriental Metal Pressing Works Ltd., hereafter called the Company, 331 to take over the aforesaid business. On July 7, 1955, Dadoba transferred his business to the Company. On the same date, an agreement was made between him and the Company by which he was appointed the managing director of the Company for life and was given the power "by deed inter vivos or by will or codicil to appoint any person to be a managing director in his place and stead". Regulation 109 of the articles of the Company reproduced these provisions. The shareholders of the Company were Dadoba, his brother, the respondent Bhaskar, and his two sons, the appellant Govind and the respondent Harish, of whom the first three were the directors, Dadoba being the managing director. This constitution of the Company continued till Dadoba 's death on January 14, 1957. Dadoba had died leaving a will whereby he purported to appoint the appellant Govind the managing director of the Company in his place from the date of his death. Shortly after Dadoba 's death, disputes arose between the appellant Govind and the respondent Bhaskar. The appellant Govind was contending that the respondent Bhaskar had ceased to be a director on account of his failure to attend the directors ' meetings. He also purported to co opt the appellant Bhal chandra as a director. The respondent Bhaskar contended that be had not ceased to be a director and challenged the legality of the appointment of the appellant Bhalchandra as a director. He further contended that the appointment of the appellant Govind as the managing director of the Company by the will of Dadoba, was void. On November 22, 1957, the respondent Bhaskar filed a suit in the City Civil Court of Bombay against the Company, the appellants Govind and Bhalchandra and the respondent Harish for the following declarations and for reliefs incidental thereto: (a). the appointment of the appellant Govind as the managing director was void; (b). the appointment of the appellant Bhalchandra as director was illegal and inoperative; and (c). he (the respondent Bhaskar) was and continued to be a director. 332 The learned Judge of the City Civil Court accepted all the contentions of the respondent Bhaskar and made the declarations claimed. The Company and the appellants Govind and Bhalchandra appealed from this decision to the High Court at Bombay. The appeal came up for hearing before a bench of two learned Judges of that Court. These learned Judges having taken different views, the matter was referred to another learned Judge of the same High Court. In the eventual result according to the opinion of the majority of the learned Judges, the appeal was dismissed and the decree of the City Civil Court was confirmed. The High Court however granted a certificate under article 133(1)(c) of the Constitution and the present appeal has been filed by the Company, Govind and Balchandra pursuant thereto. The respondents to this appeal are Bhaskar and Harish. It appears that while the appeal was pending in this Court, the respondent Bhaskar sold his holding in the Company to the appellant Govind and has now no interest in the Company or the appeal. No one has consequently appeared to contest the appeal in this Court, the respondent Harish apparently not being interested in doing so. In these circumstances, the questions whether the respondent Bhaskar continues to be a director and whether the appellant Bhalchandra was legally co opted as a director are no longer live issues and have not been canvassed in this appeal. On those questions therefore we express no opinion. Another result, rather unfortunate, has been that we have not had the advantage of arguments against the appeal. The Courts below held that the appointment of the appellant Govind as managing director by the will of Dadoba was void in view of the provisions of section 312 of the . That section reads thus: section .312. "Any assignment of his office made after the commencement of this Act by any director of a company shall be void. " The Act came into force on April 1, 1956 and Dadoba had both made his will and died, after that date. The appointment of the appellant Govind as managing 333 director was, therefore, made after the commencement of the Act. Now, section 312 makes the assignment of his office by a director void. It does not on the face of it, say that an appointment by a director of another person as the director in his place, would be void. The High Court, however, took the view that the word "assignment" in the section included "appointment", and so, such an appointment would also be void under the section. What we have to decide is whether the High Court was right in this view. Before we proceed to examine this question, we have to point out one thing. It appears that the High Court thought that the appellants had conceded that an appointment by a director of another in his place by act inter vivous be an assignment of the office of a director within section 312, and had only contended that such an appointment by will, which is what had been done by Dadoba, would not be an assignment and would not therefore be rendered void by the section. The learned Attorney General, appearing for the appellants, said that in this the High Court was in error and no such concession had been made. He further expressly withdrew that concession. This he was clearly entitled to do. It, therefore, becomes unnecessary for us to deal with the seasonings of the High Court in support of the view accepted by it, which were based on the concession. We have given the views of the High Court a most respectful and anxious consideration but we do not find ourselves able to agree with them. We will presently state our reasons for this conclusion, but now we wish to point out that in the view that we have taken of the matter it will not be necessary for us to deal with the argument advanced in the High Court that the section only forbade a director from appointing his successor, assuming assignment included appointment, but it did not prevent a managing director from assigning his office, or appointing his successor which was what Dadoba had done. If the section did not prevent a director from appointing his successor, which we do not think it did, then, clearly, there is nothing 334 in it which can justify the view that a managing director cannot appoint his successor. The section says that a director shall not be able to assign his office. It may be, as the High Court pointed out, that apart from "transfer" another meaning of the word "assignment" is, "appointment". But on a plain reading of the language used in the section, it does not seem to us possible to hold that the word "assignment" in it, can mean "appointment". First, the section talks of "assignment of his office" by a director. The word "his" would indicate that the office contemplated was one held by the director at the time of assignment. An appointment to an office can be made only if the office is vacant. It is legitimate, therefore, to infer that by using the word "his" the Legislature indicated that an appointment by a director to the office which he previously held but did not hold at the date of the appointment, was not to be included within the word "assignment". Again, there can be no doubt that the section was intended to render void a transfer of his office by a director for, if the section had intended only to avoid an appointment by a director of his successor, it would have clearly said so and would not have used the word "assignment". Therefore, even if it is possible for the word "assignment" to have the meaning of "appointment", then it would have to be given both the meanings of "transfer" and "appointment" in the section. This is what the High Court did. That would produce a curious result. Transfer and appointment are clearly entirely different things. Even apart from considerations arising from the law of conveyance, which the High Court was unable to entertain in connection with the transfer of an office, a transfer from its very nature inevitably imports the passing of a thing from one to another; a transfer without the passing of the thing transferred, even when that thing is an office, cannot be conceived. An "appointment", on the other band, has nothing to do with anything passing from one to another; it connotes the putting in of someone in a vacancy. The acts constituting a transfer and an appointment are 335 therefore wholly dissimilar. It would be an unusual statute which by the use of a single word intended to prohibit at the same time, two wholly different acts. We do not think that a construction leading to such a result is permissible. Secondly, section 255 of the Act permits one third of the total number of directors of a public company and all the directors of a private company to be appointed otherwise than by the company at a general meeting, if the articles make provision in this regard. The Act therefore expressly permits directors to be appointed otherwise than by the company. It follows that within the limit as to the number prescribed by the section, a power of appointment of directors can be legitimately conferred by the articles on any person including one who holds the office of a director. The Act expressly permits such power being conferred. In order, however, that a director may exercise this power of appointment, there must be a vacant office of a director. He may himself bring about that vacancy by resignation of his office. The vacancy would again be caused by his death or by the expiry of the term of his office. It would follow that the Act contemplates an appointment by a director of another person as director to take his office, when made vacant by his resignation or death or the expiry of the term of his office. There will be nothing illegal, if the power is exercised in the case of the death of the director, by an appointment made by his will. It will not be right so to interpret section 312, when its language does not compel it, as to bring in conflict with the provisions of section 255. This would happen, if the word " assignment"in section 312 was interpreted as including "appointment" and thereby making it prevent a director from appointing his successor when section 255 permits him to do that. Therefore again we think that in section 312 the word "assignment" does not mean "appointment". The High Court was of the view that unless "assignment" included "appointment", the object of ,the Act would be defeated. It was said that the intention and the object of the section was to restrain and 336 prevent a director from putting some one in his place and stead by any act on his part. This point was further expressed more clearly in the following words: "It is now well understood that the new , aims at eradicating many serious mischief which the principle of perpetual management of companies had caused in the past". The High Court felt that it would be defeating that aim by reading section 312 as if the words "assignment of his office" only meant a "transfer of office" and did not include the appointment of his successor by a director. Apparently the High Court thought that by making it possible for a director to choose his successor, the management of the company would be permitted to remain all along in one hand and this the Act wanted to prevent. It does not seem to us that the Act wanted to prevent this. The act by enacting section 255 shows that it does not disapprove of a person having power to appoint a succession of directors and in the case of a private company, a succession even of all the directors. Such a person would have what has been described as "per petual management". It would follow that the Act did not consider this as an evil which required prevention. If perpetual ma nagement by an outsider is not an evil, nor would such management by one who is a director of the company be so. This aspect is very clearly illustrated by the case in hand. Dadoba had this "perpetual management". But the whole of the Company 's undertaking was really a largess from him. In fact he held nearly 43% of the shares of the Company. It is inconceivable that perpetual manage ment by him would have worked to the detriment of the Company. We are therefore unable to agree that it was the object of the Act or of section 312 to prevent a director from appointing his successor. In view of the clear provisions of section 255 we do not think that it can be said, as was done in the High Court, that sections 254 and 317 of the Act, impliedly indicate that there should be no perpetual management. Section 254 says that a corporation or an association of persons shall not be eligible as a director. But this is not because, otherwise, there would be perpetual 337 management. The persons comprising the corporation or the association must change from time to time and so, even if they were appointed directors, there would be no perpetual management. We rather think that the idea behind section 254 is that as the office of a director is to some extent an office of trust, there should be somebody readily available who can be held responsible for the failure to carry out the trust and it might be difficult to fix that responsibility if the director was a corporation or an association of persons. Turning to section 317, we find that it provides that a managing director cannot be appointed for a term exceeding five years at a time. Section 315 however makes section 317 inapplicable to a private company. Therefore, section 317 is not available to support an argument that the Act does not want a private company and we are concerned with that type of a company to be under perpetual management. But indeed section 317 does not support that argument in the case of a public company either. It forbids an appointment of a managing director for more than five years "at a time". It permits the managing director to be reappointed after a term is over. If he is so reappointed, then there would be "perpetual management" by him. The Act does not, therefore, intend by section 317, to prevent that. Lastly, section 317 is not concerned with the directors, which section 312 is. Another argument that has to be dealt with is that if section 312 does not prohibit an appointment by a director of his successor, that section can easily be rendered infructuous by a director adopting the simple device of appointing a person as his successor in office instead of transferring the office to him. It seems to us that the question does not really arise. A director can legally and effectively appoint his successor only to the extent the articles permit this subject, of course, to the limit prescribed in section 255 in the case of a public company. An appointment so legally made does not result in an evasion of section 312 for, as we have earlier said, the section could not have intended to prevent what another section in the same 43 338 Act made legal. An appointment made outside the powers legally conferred by the articles is wholly ineffective ' and therefore is not an appointment at all and hence again, does not result in an evasion of section 312. We have now to consider an argument based on the first proviso to section 86B of the of 1913. The main part of section 86B contained a provision analogous to that of section 312 of the new Act. It made an assignment of his office by a director to another person, under an agreement with the company, void, unless such assignment was approved by a special resolution of the company. Under the new Act the assignment has been made altogether void and would not become valid even if approved by a special resolution of the company. Now, the proviso laid down that the exercise by a director of a power to appoint an alternate director to act for him during an absence of not less than three months from the district in which meetings of the directors are ordinarily held, if done with the approval of the board of directors, would not be deemed to be an assignment of office within the meaning of this section. The High Court took the view that this proviso showed that in certain circumstances an appointment by a director of another in his place might be deemed to bean assignment of his office and that since the new Act is a consolidating Act, it must be deemed to have continued the policy of the earlier Act and, therefore, for the purpose of section 312, an "assignment" must include an "appointment". The learned Attorney General pointed out that in the new Act there is no proviso, and therefore the rule of construction applied by the High Court, which enables by raising a presumption, something to be included in the main part of a section by reason of a provision in a proviso to it, has no application to the new Act for, here the provision in the proviso has been enacted in the form of an independent section, namely, section 313. According to him, this departure from the old arrangement of the provisions, in the new Act shows that it was not intended to continue the policy 339 of the old Act. He also said that the proviso in substance stated that the appointment by a director of an alternate director might in certain circumstances be deemed to be an assignment. He pointed out that by using the word "deemed" the proviso made it clear that the appointment of an ' alternate director was not a real assignment of office but was only to be fictionally taken as one. His contention was that such fiction could arise in a case coming strictly within the proviso but could not by extension be made to arise in any other case. These seem to us to be arguments of weight. Further in section 313 of the new Act, which has taken the place of the first proviso to section 86B of the old Act, the power to appoint an alternate director hag been given to the board and not to the director who intends to absent himself No scope for any deeming provision as in the Act of 1913 remains. Therefore again an argument based on the proviso to section 86B would not be available for the purpose of the present Act. It further seems to us that the proviso to section 86B does not indicate that it was intended that the word "assignment" in the main part of the section would include "appointment". The rule of construction on which the High Court relied in arriving at the view that it did, was put in these words: "It is a well established principle of construction that when one finds a proviso to a section, the presumption is that but for the proviso the enacting part of the section would have included the subject matter of the proviso." This rule would enable the court to hold in regard to section 86B at the most that an appointment of an alternate director by a director intending to absent himself would have been an assignment of his office but for the proviso. It would be an unwarranted extension of this principle to hold that all appointments of their successors by directors would be assignments within the main part of the section. In any case, in our view, as in section 312 of the new Act, so under the main part of section 86B of the old Act, an appointment of a successor to his office by a director, was not an assignment of his office by him for, the old Act contained in section 83B, 340 provisions substantially similar to those contained in section 255 of the new Act. , and the reasons which have inclined us to the view that in section 312 the word "assignment" does not include "appointment" would equally lead to the same conclusion in regard to section 86B. If the enacting part did not prohibit the appointment of his successor by a director, such prohibition cannot be read into it, in reliance upon a proviso. We may read here the observations of Lord Watson in The Guardians of the Poor of the West Derby Union vs The Metropolitan Life Assurance Society (1) "I am perfectly clear that if the language of the enacting part of the statute does not contain the provisions which are said to occur in it, you cannot derive these provisions by implication from a proviso. " It may be that the proviso was enacted ex abundanti cautela or it may be again, to prevent a possible argument that by the appointment of alternate directors an evasion of the main part of section 86B was being attempted. In view of the fact that the power to appoint alternate directors was not given by the old Act, but had to be given by the articles, such an argument might not have been unlikely. Therefore, it seems to us that the proviso to section 86B of the old Act does not assist the argument that in section 312 of the new Act, the word "assignment" would include "appointment". We think we ought to say something about what strikes us to be the policy behind section 312 of the new Act. We have earlier said that under section 255 of that Act a certain Dumber of directors in a public company has to be appointed by the company in a general meeting. In the case of a private company likewise, the directors have to be appointed similarly except to the extent the articles otherwise provide. It would therefore appear to be the policy of the Act that to a certain extent the appointments of the directors have to be made by the shareholders. It is intended that a certain number of directors would be the chosen representatives of the shareholders. If a director appointed (1) , 652. 341 by the company was permitted to assign his office, then the new incumbent would not be the chosen representative of the shareholders, and the intention of the Act would be defeated. It seems to us that it is to prevent this result that the Act forbids a director by section 312 from assigning his office. Where however a director has been appointed otherwise than by the company in a general meeting, the shareholders have nothing to do with his appointment. Such a director is not the chosen representative of the shareholders and the shareholders cannot claim to have a say in the appointment of his successor. We can discern no policy in the Act which can. be said to be liable to be defeated by the appointment of the successor of such a director by him. Therefore section 312 was not concerned with such an appointment. In the present case Dadoba had power under the articles to appoint a person to be the managing. director in succession to him, and in exercise of that power he bad appointed the appellant Govind as the managing director to hold the office after his death. Such power was clearly recognised by, and legal under, section 255 of the new Act. For the reasons earlier stated, the exercise of such power does not offend section 312. It follows that the appellant Govind had been lawfully and validly appointed the managing director of the Company. We, therefore, declare that the appellant Govind had been validly appointed the managing director of the Company, and set aside the decisions of the Courts below that he had not been so appointed. We have not been asked to interfere with the rest of the judgment under appeal and we do not do so. We also make no order for costs as no costs have been asked. Appeal allowed.

By section 312 of the , "Any assignment of his office made after the commencement of this Act by any direc tor of a company shall be void. " 42 330 The managing director of a private company, empowered by the terms of the agreement between him and the company and the articles thereof to appoint, by deed or by will, any person to be the managing director in his place and stead, died leaving a will whereby he appointed one of the appellants the managing director in his place from the date of his death. The High Court took the view that the word 'assignment ' in the section included 'appointment ' and as such the appointment in question was void. Held, that section 312 of the , cannot be interpreted in such a way as to bring it into conflict with section 255 of the Act since its language does not compel such an interpretation. The word 'assignment ' in that section does not mean appointment and the section is intended to render a transfer of his office by a director void and not an appointment by him of his successor. Section 255 of the Act, which expressly permits directors to be appointed otherwise than by the company, shows that, sub ject to the limit as to numbers prescribed by it, a director, authorised by the articles of the company, can appoint another to take his office when rendered vacant by his resignation or death or on expiry of his term of office. The proviso to section 86B of the old Act cannot lend any support to the argument that the word 'assignment ' in section 312 of the new Act includes 'appointment '. The Guardians of the Poor of the West Derby Union vs The Metropolitan Life Assurance Society, , referred to.

Appeal No. 22 of 1956. Appeal by special leave from the judgment and order dated July 4, 1954, of the Custodian General, Evacuee Property, in Revenue Case No. 427/R/ Judl. A. V. Viswanatha Sastri and R. Ganapathy Iyer, for the appellant. H.N. Sanyal,Additional Solicitor General of India, N. S.Bindra and D. Gupta, for the respondent. January 12. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave is directed against the order passed by the respondent, the Custodian General of Evacuee Property, New Delhi, in a revision petition confirming the orders of the subordinate authorities whereby the application made by the appellant for confirmation of the sale transaction in question has been rejected under section 40 (4) (a) of the Administration of Evacuee Property Act, XXXI of 1950. The appellant, Rabia Bai, who is a citizen of India having her residence at Grange, Yercaud, in the Salem District, came to know in 1949 that premises No. 20, Godown Street, G.T., Madras, was for sale. Since the appellant desired to acquire some immoveable property she arranged for 57 450 the purchase of the said premises through her husband. The said premises belonged to one Mohamad Gani Jan Mohamad who had left for Pakistan in 1947 and had settled there. The said Mohamad Gani Jan Mohamad had executed a power of attorney in favour of his nephew, Ahmed Abdul Gani. The said Gani came to Madras in April, 1949, and arranged for the sale, and as a result of negotiations between him and the appellant 's husband the latter entered into a written agreement with the former on April 29, 1949, to purchase the said property for Rs. 2,40,000/ . A substantial part of the consideration to the extent of Rs. 1,50,000 / was paid immediately in the form of cash and bank drafts. Thereafter the sale deed was duly engrossed and sent to Karachi for execution by the vendor. After it was received back duly executed it was presented at the Collector 's Office, Madras, and was duly stamped on June 27, 1949. Income tax clearance certificate had, however, to be obtained before the said document could be registered, and soon after the said certificate was obtained the document was presented for registration and was duly registered on August 11, 1949. The balance of the consideration of Rs. 30,000/ was paid before the registering officer to Mr. M. H. Ganni who also held a power of attorney from the vendor. That is how the appellant obtained title to the property in suit. As we will point out the appellant applied for confirmation of this sale deed and her application has been rejected. Before we refer to the relevant facts in connection with the said proceedings it is material to set out very briefly the history of the application of the evacuee laws to the State of Madras. Within a fortnight after the registration of the sale deed in favour of the appellant Ordinance No. XII of 1949 which had been promulgated on June 13,1949, was extended to Madras on August 23, 1949. Section 25(1) of the Ordinance imposed restrictions on transfers by evacuees. In substance this sub section provided that transfers made by or on behalf of evacuees of any right or interest in their property after such date as may be specified in that behalf with reference to any 451 Province by the Central Government by notification in the official gazette shall not be effective unless they are confirmed by the Custodian. Section 25(2) provided that an application for confirmation of such transfer may be made by the transferor or the transferor or any person claiming under, or lawfully authorised by, either of them to the Custodian within two months from the date of registration of the deed of transfer or within two months from the commence ment of the Ordinance whichever is later. The proviso to the said sub section empowered the Custodian to admit an application even if it was made after the period of limitation prescribed therefor if he was satisfied that there were sufficient reasons for doing so, and it imposed on the Custodian an obligation to record such reasons. Sub section (3) required the Custodian to hold a summary enquiry into the application in the prescribed manner, and authorised him to reject the application for confirmation if he was of opinion that (a) the transaction had not been entered into in good faith or for valuable consideration, or (b) the transaction was prohibited under any law for the time being in force, or (c) the transaction ought not to be confirmed for any other reason. Sub section (4) provides that if the application is not rejected under sub section (3) the Custodian may confirm the transfer either unconditionally or subject to such terms and conditions as he thinks fit to impose. Ordinance No. XII of 1949 was, however, repealed by Ordinance No. XXVII of 1949 which came into force on October 18, 1949. Section 38 of this latter Ordinance corresponds to section 25 of the earlier Ordinance except in one material particular. It provides that no transfer of any right or interest in the property made in any manner whatsoever after the 14th day of August, 1947, by or on behalf of an evacuee as therein specified shall be effective unless it is con firmed by the Custodian., In other words, whereas section 25 of the earlier Ordinance left it to the Central Government to specify the relevant date in reference to any Province by notification in the official gazette, section 38(1) has prescribed the date for all the Provinces 452 where the Ordinance applied. The rest of the relevant provisions of section 38 are the same as those of section 25 of the earlier Ordinance. On April 17, 1950, this Ordinance was in turn ,repealed by Act XXXI of 1950 by section 58. Section 40(1) and (4) are similar to the relevant provisions of sections 25 and 38 of the earlier Ordinances. One of the changes made is in regard to the relevant dates prescribed by section 40(1). Under section 40(1) the transfers which are affected by its provisions are those which are made after the 14th day of August, 1947, but before the 7th day of May, 1954; and in respect of them the said section provides, inter alia, that they shall not confer any rights on the parties thereto, if at any time after the transfer the transferor becomes an evacuee within the meaning of section 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. Section 40(4) deals with an application made under sub section (1) for the confirmation of the transfer. This sub section and its three clauses (a), (b) and (c) correspond to sections 25(3) (a), (b) and (c) and 38(4)(a), (b) and (c) of the two earlier Ordinances. Thus it is clear that the relevant provisions, which conferred power on the Custodian to hold an enquiry on the application made for the confirmation of the transfer and to reject confirmation in certain cases, continued to be the same. The position, therefore, is that Ordinance No. XII of 1949 which was extended to Madras on August 23, 1949, was in operation only until October 18, 1949. Thereafter Ordinance No. XXVII of 1949 took its place, and in turn this Ordinance was repealed by Act XXXI of 1950 on April 17, 1950. The application made by the appellant for confirmation of her purchase has been dealt with under the relevant provisions of the Act, and we would therefore refer to the said provisions hereafter. On December 19, 1949, the appellant applied for confirmation of the sale transaction in her favour. This application was resisted by the tenants who urged several grounds in support of their plea that the 453 transfer should not be confirmed. It appears that on January 11, 1951, the Assistant Custodian of Evacuee Property, Madras City, had declared the property of the vendor to be evacuee property since he was of the opinion that the vendor 's case fell within the four corners of the definition of " an evacuee " under section 2(d)(ii) of the Act. The declaration that the vendor 's property was evacuee property was made under section 7(1) of the Act. The Assistant Custodian considered the appellant 's application for confirmation of the transfer in the light of the declaration already made by him that the vendor was an evacuee and that his property was evacuee property. He referred to the relevant features of the transaction and came to the conclusion that he would not be justified in confirming it. It appears that in reaching this conclusion he relied on the provisions of section 40(4)(c) of the Act. In his opinion the feverish hurry disclosed by the conduct of the vendor attracted the provisions of section 40(4)(c). The order refusing to confirm the transaction was passed on July 31, 1951. The appellant challenged the correctness of this conclusion by preferring an appeal before the Custodian. The Custodian found in favour of the appellant that the sale transaction in question was supported by valuable consideration; even so he proceeded to examine the question as to whether it could be said to have been entered into in good faith. In dealing with this question the appellate authority considered the fact that the vendor had left for Pakistan in June, 1947, evidently on account of civil disturbances or in fear of such disturbances and that it was obvious that he was permanently settled in Pakistan. According to the appellate authority the vendor was desirous of disposing of his properties in India in order to convert them into cash and take them away to Pakistan. In this connection reliance was placed on a letter written by the vendor to Mohideen on July 4, 1949. In this letter the vendor had stated that " if the matter is delayed there would be many sort of new difficulties as you know that the Government are passing new rules every day ". He took the view that this letter 454 clearly disclosed that the vendor 's intention was to dispose of his properties as quickly as possible so as to evade the restrictions of the evacuee laws which he apprehended would be extended to Madras any day. this finding the appellate authority came to the conclusion that the transaction had been entered into otherwise than in good faith, and so it could not be confirmed under section 40(4)(a). The appellate judgment shows that according to the appellate authority the request for confirmation could be rejected also under section 40(4)(c) of the Act. This order was pronounced on February 4,1953. The appellant then moved the respondent, the Custodian General in his revisional jurisdiction. The respondent considered the matter afresh, and agreed with the finding of 'the appellate authority that though the transaction was supported by valuable consideration it could not be said to have been entered into in good faith. In support of this conclusion he relied on the conduct of the vendor, the haste with which the transaction was attempted to be completed and the anxiety disclosed by him in his letter to Mohideen. In substance the respondent came to the conclusion that the vendor wanted to evade the restrictions of the evacuee law which he knew would soon be extended to Madras, and that showed that he was not acting in good faith. It is on this view that the revisional application preferred before him by the appellant was dismissed by him on July 4, 1954. In his opinion the appellant 's case fell under section 40(4)(a) of the Act. He did not, therefore, consider the question about the applicability of section 40(4)(c). It is clear that if a transaction is affected by absence of good faith either in the vendor or the vendee its confirmation may properly be rejected under section 40(4)(a); in other words, good faith is required both in the vendor and the vendee. In that sense the provisions of section 40(4)(a) are more rigorous and stringent than those of section 53(1) of the Transfer of Property Act. Under the latter section which deals with fraudulent transfers the rights of a transferee in good faith and for consideration are expressly protected; that, 455 however, is not the position under section 40(4)(a). Therefore the fact that the appellant paid valuable consideration for the transaction and is not shown to have acted otherwise than in good faith in entering into the transaction would not justify her claim for confirmation of the said transaction if it is shown that the vendor had not acted in good faith in entering into the said transaction. The fact that consideration was paid by the appellant and that she was acting in good faith may perhaps be relevant in determining the character of her conduct in regard to the transaction; but it would not be relevant or material in determining the character of the conduct of the vendor in relation to the transfer. This position is not seriously disputed before us. Mr. Sastri, however, contends that in considering the good faith of the vendor it would be necessary to bear in mind that at the relevant time when negotiations were going on between the parties in respect of the transaction in question evacuee law had not been applied to Madras, and so evacuees like the appellant 's vendor were absolutely free to deal with their properties as they liked. He also attempted to argue that even where the evacuee law applied, the policy adopted by the Government of India was to confirm transfers made by Mohammedan evacuees in favour of Indian nationals unless a certificate signed by the prescribed income tax authority certifying that the transferor had paid all taxes due from him to the income tax department in respect of his property, business or undertaking, or has made satisfactory arrangements for the payment thereof, had not been produced, and unless he had failed to pay any other dues outstanding against him in the Custodian 's register in respect of his own property and third party claims recognised exparte by the Custodian. This argument is based upon a copy of the press note alleged to have been issued by the Government of India in the Ministry of Rehabilitation on May 13, 1949. On the other hand, the learned Additional Solicitor General has relied on a copy of a circular issued by the Government of India on March 9, 1950, where it has been stated that the instructions 456 issued by the Government of India are subject to other requirements of section 38(4) of the Central Ordinance No. XXVII of 1949 ; in other words, whatever may be the nature of the circulars and directions issued by the Government of India, the appropriate authorities administering the provisions of the evacuee law had to deal with the matters brought before them under the relevant provisions of the said law. We do not think we can attach much importance to the argument that even where the evacuee law applied confirmation of sale transactions was intended to be automatic subject to the satisfaction of the two conditions specified in the press note. We are bound to assume that the question about confirming sale transactions was required to be, and was in fact, dealt with by the appropriate authorities under the relevant statutory provisions which were in force at the material time. It is, however, true that no evacuee law had been extended to Madras at the time when the impugned transaction was completed, and that naturally raises the question as to whether if a transaction had been entered into deliberately and consciously with the object of evading the application of evacuee law which it was apprehended would soon be extended to Madras, does that fact attract the provisions of section 40(4)(a) of the Act? As we have already indicated the respondent has answered this question in the affirmative, and Mr. Sastri contends that this conclusion is erroneous in law. Mr. Sastri 's argument is that the expression " good faith " in section 40(4)(a) should be construed in the sense attributed to the said expression by section 3, sub section (22) of the General Clauses Act, X of 1897. The said provision lays down that a thing shall be deemed to be done in good faith where it is in fact done honestly whether it is done negligently or not. The argument is that the vendor could not be said to have acted dishonestly when no evacuee law applied to Madras, and an intention to avoid a law which may be applied to Madras in future cannot be said to introduce an element of dishonesty in his conduct. In our opinion this argument cannot be accepted. In this connection it is necessary to bear in mind that section 3 of the General 457 Clauses Act itself provides that the definitions prescribed by the said section are applicable " unless there is anything repugnant in the subject or context ", and so it would not be unreasonable to hold that the content of the expression " good: faith " would depend,, substantially on the context of the statute which uses it. In determining the denotation of the said expression in section 40(4)(a) it would be essential to take into account the scope and effect of the main provisions of section 40(1). As we have already noticed, this section provides, inter alia, that no transfer made after the 14th day of August, 1947, shall be effective so as to confer any rights in respect of the said transfer on the parties thereto if, at any time after the transfer, the transferor becomes an evacuee within the meaning of section 2, or the property of the transferor is declared or notified to be An evacuee property within the meaning of the Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act. It would thus be clear that all transfers made after the 14th day of August, 1947, but before the 7th day of May, 1954, are hit by this section, and that obviously would bring within the mischief of the section a large number of transfers effected at a time when no evacuee law was in force in respect of them. Reading section 40(1) and (4) together it appears that the transfers hit by the former provision would be valid only if they are confirmed under the latter provision. It is possible that a transfer made during the prohibited period may have been entered into in good faith or was for valuable consideration and did not attract any of the provisions contained in cls. (a), (b) and (c) of a. 40(4). In such a case merely because it was affected within the prohibited period it would not become void and the Custodian may have to confirm it; but where such a transfer attracts the provisions of section 40(4)(a) for instance, it would not be affirmed and it would remain inoperative. This shows that the main object of the Act was to preserve the property of persons who had migrated to Pakistan till the Government of India could come to some understanding with the Pakistan Government in regard to adjustment of claims of Indian 58 458 evacuees in respect of the properties left by them in Pakistan. The idea then presumably was that the two Governments should agree on the valuation of the evacuee properties left by evacuees in the two respective countries and the difference in the said valuation should be amicably adjusted between them. After such adjustment was made it was intended to compensate the evacuees in regard to the loss incurred by them in respect of the properties left by them in the two respective countries. That this intention did not succeed is an other matter. There can, however, be no doubt about the policy and object of the Act, and in determining the content of the expression " good faith " in the context of the main provision of section 40(1) this object and policy of the Act must be borne in mind. Section 40(4) refers to three kinds of cases where the transfer may not be confirmed; cl. (a) deals with transactions which are not entered into in good faith or for valuable consideration; cl. (b) deals with transactions which are prohibited under any law for the time being in force; and cl. (c) deals with cases of transactions which are not confirmed for any other reason. It would thus be seen that the scope of the three clauses is very wide. It is not only transactions prohibited under any law that fall within the mischief of section 40(4); but transactions which are not entered into in good faith or for valuable consideration also fall within its mischief Now, if the test prescribed by section 3(22) of the General Clauses Act as interpreted by Mr. Sastri is held to be relevant a large number of transactions may have to be confirmed even though they are shown to have been deliberately entered into with the object of evading the provisions of section 40(1). In our opinion, the fact that the evacuee law had not been extended at the relevant time to Madras would not be decisive in the matter. It was well known that the said law was being extended from Province to Province as it was deemed necessary, and indeed the letter written by the vendor to Mohideen clearly shows that the vendor knew as much. The history of the evacuee laws passed in several States and by the 459 Central Government and Legislature from time to time shows that the Legislatures were attempting to meet with an unprecedented problem, and the laws passed by them in India and Pakistan at the material time made it perfectly clear to the evacuees from both the countries that the two countries were adopting appropriate legislative measures to protect the evacuee properties and prevent their transfers. Therefore, if a vendor sold his property not for any necessity or for any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, that clearly was intended to defeat the provisions of the Act which he knew would soon be extended to Madras, and so it would be difficult to hold that he was acting honestly within the meaning of section 40(4)(a) of the Act. An intention to defeat the provisions of the Act cannot be said to be honest in the context. If despite his intention to defeat the application of the Act a transaction is upheld as entered into in good faith many transactions may escape the application of section 40(1), and that clearly would defeat the purpose of the Act. It is significant that though the provisions of section 40(1) are drastic they have been deliberately made retrospective, and that emphatically brings out the aim and object of the Act; and it would be unreasonable to ignore this aim and object of the Act in construing the expression " good faith " in section 40(4)(a). We would, therefore, hold that having regard to the aim and object of the emergency legislation with which we are concerned in the present case the expression " good faith " used in section 40(4)(a) has been property construed by the respondent when he held that a deliberate intention to defeat the apprehended application of the evacuee law which was responsible for the transfer in question brings the transfer within the ' mischief of section 40(4)(a). The result is the appeal fails and is dismissed with costs. Appeal dismissed.

M who had gone to Pakistan in 1947, sold his property in the State of Madras to the appellant on August II, 1949. At that time there was no legislation with respect to evacuee property in Madras. On August 23, 1949, the Administration of Evacuee Property (Chief Commissioners Provinces) Ordinance, 1949 (XII of 1949), was extended to Madras. The appellant made an application for the confirmation of the sale. Subsequently, M was declared an evacuee and the property as evacuee property. It was found that M had entered into the transaction with the object of evading the evacuee law which it was apprehended, would be extended to Madras. Consequently, confirmation of the sale was refused under section 40(4)(a) of the Administration of Evacuaee 449 Property Act, 950, on the ground that the transaction had not been entered into in good faith. The appellant contended that there was no lack of good faith on the part of M as he could not be said to have acted dishonestly when at the time of the sale no evacuee law had been applied to Madras and that an intention to avoid a future law could not be said to be dishonest. Held, that the vendor had not entered into the transaction in " good faith " and the confirmation of the sale was rightly refused under section 40(4)(a) of the Act. Having regard to the aim and object of the emergency legislation a deliberate intention to defeat the apprehended evacuee law motivating a sale amounted to want of " good faith ". If the vendor sold his property not for any necessity or any other legitimate purpose but solely with the object of converting it into cash and removing it to Pakistan, he intended to defeat the provisions of the evacuee law which he knew was to be extended to Madras soon and he acted dishonestly within the meaning of section 40(4)(a).

Appeals Nos. 142 and 143 of 1960. Appeals from the judgment and order dated July 21, 1955, of the Madras High Court in C.R. No. 32 of 1952. G. section Pathak and Naunit Lal, for the appellants. K. N. Rajagopal Sastri and D. Gupta for the respondent. January 10. The Judgment of the Court was delivered by HIDAYATULLAH J. These are two appeals by the legal representatives of one A. R. Rangachari, who died during the pendency, in the High Court at Madras, of proceedings in a reference under section 66(1) of the Income tax Act made by the Income tax Appellate Tribunal, Madras Bench. The following question was referred to the High Court for its decision: 382 " Whether the inclusion in the assessee 's total income of the profits settled by him on his wife and two daughters is justified in law ? " The High Court answered the question in the affirmative. The appeals have been filed with a certificate granted by the High court. Rangachari was one of five partners of a firm, Messrs. Chari and Ram, and held a six anna share in the profits and loss of the partnership. On September 22, 1947, he executed three deeds of settlement, which are marked Exts. A, A 1 and A 2, in favour of his wife,, a married adult daughter and a minor daughter. To each of them, he assigned a fourth share of the profits of the firm payable to him (but not the losses), for a period of 8 years, vesting the right in them to receive the said share of profits absolutely and exclusively and declaring the settlements to be irrevocable during the above period. It is not necessary to refer to the three documents, because the terms are the same. A few clauses of the deed, exhibit A, may be quoted. After recitals which included the following: " Whereas the Settlor has settled upon his minor daughter, Srimathi Meera Bai, one fourth of his share of profits payable to him from the firm for a period of eight years; And whereas out of natural love and affection, the Settlor is desirous of conferring upon the Beneficiary a similar portion of his share of profits from the firm ", the deed goes on to say " Now this Indenture witnesseth as follows: 1. .The Settlor hereby assigns unto the Beneficiary all the rights of the Settlor in respect of one fourth of his share of profits in the firm (but not the losses) payable to him during a period of eight years commencing from the date hereof to be taken and enjoyed by the Beneficiary in absolute and exclusive right. 2. .The Settlor shall not have any manner of right or interest in the said one fourth share hereby settled and the right to receive from the firm one fourth of 383 the Settlor 's share during the said period of eight years shall exclusively vest in the Beneficiary. 3. .The Beneficiary shall be entitled directly to receive and collect from the firm the share of profits hereby transferred for the said period of eight years. . . . 8. This settlement shall be irrevocable. " For the assessment year 1947 48 corresponding to a previous year ending on April 13, 1947, the profits due to Rangachari amounted to Rs. 86,491 13 0. This amount was credited to the account of Rangachari, and Rs. 21,622 15 3, being one fourth thereof, were transferred to the accounts of each of the three disponees. In the same way, the profits of the previous year ending April 13, 1948, were disposed of. The assessee claimed that these amounts could not be included in his total income for purposes of assessment, being excluded by reason of the third proviso to section 16(1)(c) of the Income tax Act. He also contended that the amount payable to his wife and two daughters never became his income, being diverted by an overriding title, and that the case was governed by the rule laid down by the Privy Council in Bijoy Singh Dudhuria vs Commissioner of Income tax, Bengal (1). The assessee 's contentions were not accepted by the Income tax Officer, and his appeals to the Appellate Assistant Commissioner and the Tribunal also failed. In so far as the assessment year 1947 48 was concerned, the Income tax Officer held that the income had already accrued to the assessee, because the deeds were executed five months after the close of the account year. He also held that the transfer to the minor daughter fell within section 16(3), as there was no adequate consideration for the transfer. With regard to the wife and married daughter, he held that section 16(1)(c) was not applicable, because what had been transferred was income first accruing to the assessee, while section 16(1)(c) contemplated income which accrued to a person, to whom the transfer was made. The same reasons (except the first) were given for rejecting the, (1) 384 assessee 's contentions in respect of the other assessment year. It is not necessary to refer in detail to the decisions of the Appellate Assistant Commissioner, the Tribunal ,,,and the High Court. The High Court in an elaborate judgment pointed out that section 16(1)(c) did not apply to these proceedings, and that the third proviso was, therefore, not attracted. It also held that the income had accrued to the assessee in the first instance, and had then been applied for payments under the deeds. This Court has recently decided three cases which have a direct bearing in this connection. In Provat Kumar Mitter vs Commissioner of Income tax, West Bengal (1), the assessee had executed a deed of trust under which dividends from certain shares which continued to be his assets, were transferred to his wife. It was held that the case did not fall within section 16(1)(c), and that the rule in Bijoy Singh Dudhuria 's case (2) also did not apply. In Tulsidas Kilachand vs The Commissioner of Income tax, Bombay(1), the husband had created a trust of the shares, constituting himself as the trustee to pay to the wife dividends from those shares for a period of seven years. It was held that the case was not governed by section 16(1)(c) but by section 16(3)(b). In The Commissioner of Income tax, Bombay vs Sitaldas Tirathdas (4), the rule laid down by the Privy Council in Bijoy Singh Dudhuria 's case was considered along with the case of the Privy Council in P. C. Mullick vs Commissioner of Income tax, Bengal (5), and it was pointed out that the rule in Bijoy Singh Dudhuria 's case (2) applied only to those cases where it could be said that by an overriding title the income was diverted in such a way as never to become the income of the assessee. These three cases, in our opinion, afford a complete answer to the contentions of the appellants. An examination of the deeds of settlement shows that the disponer had stated that from the profits " payable to him " certain amounts in specified shares were to be paid to his wife and two daughters. No (1) ; (3) ; (2) (4) ; , (5) 385 doubt, the assessee in those deeds created a right in favour of the disponees to get the amounts direct from the firm, of which he was a partner. The tenor of the documents shows that the profits were first to accrue to him and were then applied for payments to the disponees. Learned counsel for the appellants contended that what had been assigned was an actionable claim, to wit, the right to profits, and therefore the profits were diverted, before they accrued to the disponer. This, in our opinion, is neither in accord ance with the law of partnership nor with the facts as we have found on the record. Under the law of partnership, it is the partner and the partner alone who is entitled to the profits. Astranger, even if he were an assignee, has not and cannot have a direct claim to the profits. By the deeds in question, the assessee merely allowed a payment to his wife and daughters to constitute a valid discharge in favour of the firm; but what was paid was, in law, a portion of his profits, or, in other words, his income. A glance at the account books of the firm, Messrs. Chari and Ram, clearly shows that the amounts were first credited in the Khata of Rangachari and then under his directions were transferred from his Khata to those of his wife and daughters. The dispositions, therefore, were, in law and in fact, portions of the income of Rangachari, after the income had accrued to him, and tax was payable by him at the point of accrual. In view of the decision of this Court in Sitaldas Pirathdas 's case (1), it cannot be said that the profits were diverted by an overriding title before they accrued to Rangachari; and the rule in Bijoy Singh Dudhuria 's case (2) cannot be called in aid. For the above reasons, we are in entire agreement with the High Court in the answer given and dismiss these appeals with costs. Appeals dismissed.

One Rangachari, a partner of a partnership firm, assigned by means of a deed of settlement a fourth share of the profits of the firm each to his wife, a married adult daughter and a minor daughter for 8 years with the right to receive the said share of profits absolutely and exclusively from the firm. The question which arose before the High Court on a reference under section 66(1) of the Income tax Act was " Whether the inclusion in the assessee 's total income of the profits settled by him on his wife and two daughters is justified in law ?" The assessee Rangachari relying on the rule laid down by the Privy Council in Bijoy Singh Dudhuria 's case claimed that the amounts payable to his wife and two daughters never became his income, being diverted by an overriding title and that those amounts could not be included in his total income for the purposes of assessment being excluded by reason of the third proviso to section 16(1)(c) of the Income tax Act. The High Court held that the third proviso was not attracted and that the income had accrued to the assessee in the first instance, and had then been applied for payments under the deeds. On appeal with a certificate of the High Court: Held, that the answer given by the High Court was correct. 381 An examination of the deeds of settlement showed that the disponer had stated that from the profits " payable to him " certain amounts in specified shares were to be paid to his wife and two daughters. No doubt, the assessee in those deeds created a right in favour of the disponees to get the amounts direct from the firm, of which he was a partner. The tenor of the document In, showed that the profits were first to accrue to him and were then applied for payments to the disponees. Under the law of partnership, it is the partner and the partner alone who is entitled to the profits. A stranger, even if he were an assignee, has not and cannot have a direct claim to the profits. By the deeds in question, the assessee merely allowed a payment to his wife and daughters to constitute a valid discharge in favour of the firm, but what was paid was, in law, a portion of his profits or, in other words, his income. The rule in Bijoy Singh 's case was not applicable to this case, and in view of the decision of this court in Sitaldas Tirathdas 's case it cannot be said that the profits were diverted by an overriding title before they accrued to the assessee. Provat Kumar Mitter vs Commissioner of Income tax, West Bengal ; Tulsidas Kilachand vs The Commissioner of Income tax ; The Commissioner of Income tax, Bombay vs Sitaldas Tirathdas ; , applied. Bijoy Singh Dudhuria vs Commissioner of Income tax, Bengal , held inapplicable.

Appeals Nos. 480 to 487 of 1960. Appeals by special leave from the judgment and order dated July 15, 1960, of the Allahabad High Court in Civil Misc. Writ Nos. 1554, 1561, 1553, 1560, 1556, 1558, 1559 and 1557 of 1960. N. C. Chatterjee, R. K. Garg, section C. Agarwal, D. P. Singh, K. K. Sinha, V. A. Seyid Muhamad and M. K. Ramamurthi, for the appellants (in C. As. Nos. 480 and 481 of 60). R. K. Garg, M. K. Ramamurthi, section C. Agarwal, D. P. Singh, V. A. Seyid Muhamad and K. K. Sinha, for the appellants (in C. As. 482 to 487 of 60). G. N. Kunzru and I. N. Shroff, for the respondents. January 10. The Judgment of the Court was delivered by HIDAYATULLAH, J. These are eight appeals against the judgment and " decree " of the High Court of Allahabad dated July 15, 1960, with special leave granted by this Court. By the writ petitions, which failed before the High Court, the appellants had asked that Resolutions Nos. 90, 94 to 96 and 99 to 102 passed by the Executive Council of the Banaras Hindu University on May 15, 1960, terminating their services from June 1, 1960, be quashed. The names of the appellants, the posts they held and the gist of the Resolutions passed against them have been set down below : Group I 1. Dr. Akshaibar Lal: Reader in College of (C. A. No. 480 of 1960) Agriculture. (Resolution No. 100 4months ' pay in lieu of notice) 2. Dr. Gopal Tripathi Professor of Chemi (C. A. No. 482 of 1960) cal Engineering and Principal, College of Technology. (Resolution No. 101 4months ' pay in lieu of notice) 389 3. Pandit Ram Vyas Pandey : Reader and Head of (C. A. No. 486 of 1960) Department of Jyotish Sanskrit Maha vidyalaya. (Resolution No. 99 under cls. 4 and 7 of the agreement dated March 26, 1931, and Ordinance No. 6 of the Ordinances of the University 6 months ' pay in lieu of notice) 4. Dr. Gauri Shankar Tiwari : Lecturer in Chemis (C. A. No. 487 of 1960) (Resolution No. 102 4 months ' pay in lieu of notice) Group II 5. Dr. Rain Deo Misra: Professor and Head (C. A. No. 481 of 1960) of Department of Botany, College of Science. (Resolution No. 94 under cls. 4 and 7 of the agreement dated February 3, 1959, and Ordinance No. 6 of the Ordinances of the University 4 months ' pay in lieu of notice) 6. Mr. Ganesh Prasad Singh: Lecturer in Physical (C. A. No. 483 of 1960) (Resolution No. 95 under cls. 4 and 7 of the agreement dated January 18, 1946, and Ordinance No. 6 of the Ordinances of the University 6 months ' pay in lieu of notice) 7. Mr. Radhey Shyam Sharma: Lecturer, College of (C. A. No. 484 of 1960) Technology. (Resolution No. 90 under cls. 4 and 9 of the agreement dated January 21, 1957, and Ordinance No. 6 of the Ordinances of the University 4 months ' pay in lieu of notice) 8. Dr. Ram Yash Roy: Lecturer in Botany, (C. A. No. 485 of 1960) College of Science. (Resolution No. 96 under cls. 4 and 7 of the agreement dated August 12, 1932, and Ordinance No. 6 of the Ordinances of the University 6 months ' pay in lieu of notice). 390 The cases of the appellants are very similar; but fall into two groups as indicated above. The differences are not many, and some of them are indicated in the gist of the resolutions noted against their names. Other differences will appear from the facts, which are given below. The affairs of the Banaras Hindu University, for reasons with which we are not concerned, had been deteriorating, and a situation had arisen which required intervention immediately. The President of India, in his capacity as Visitor and in exercise of the powers conferred by section 5(2) of the , appointed a Committee of Enquiry (known as the Mudaliar Committee) consisting of: 1. Dr. A. L. Mudaliar (President) 2. Mr. M. C. Mahajan 3. Dr. P. Subbarayan 4. Sucheta Kripalani 5. Dr. Nairoji Wadia (Members) to enquire into and report, inter alia, on the general state of discipline in the University, keeping in view the disturbances in some of the Institutions of the University, and to suggest remedies and measures of reform for the betterment of academic life and efficient functioning of the University. The Committee made a report suggesting that a " Screening Committee " should be appointed to review the appointments made to the teaching staff and the work of the teaching staff, and that action should be taken in the light of the findings of the Screening Committee. On June 14, 1958, the President of India promulgated an Ordinance (IV of 1958) to amend the . By section 8 of the Ordinance, the Statutes of the University were amended, and in place of Statute No. 30, another Statute was substituted, which set up a " Screening Committee ", consisting of (a) a person who is or has been a Judge of a High Court (Chairman), (b) the Vice Chancellor (Ex officio) and (c) a person having administrative or other experience in educational matters, to examine the cases of all persons holding teaching, administrative or other 391 posts in the University at the commencement of the Ordinance, in respect of whom there was reason to believe that their continuance in office would be detrimental to the interests of the University, and to forward its recommendations to the Executive Council to take such action as it may deem fit. The Ordinance of the President was repealed by the Banaras Hindu University (Amendment) Act, 1958 (XXXIV of 1958), which re enacted Statute No. 30 as follows: " 30. (1) If the Executive Council has reason to believe that the continuance in office of any person who on the 14th day of June, 1958, was holding any teaching, administrative or other post in the University would be detrimental to the interests of the University, it may, after recording briefly the grounds for such belief, refer the case of any such person, together with the connected papers, if any, in its possession, to the Solicitor General to the Government of India: Provided that, where an allegation of the nature referred to in this subsection relates to a member of the Executive Council who was holding any teaching, administrative or other post in the University on the said date, the Executive Council shall, without considering the allegation, refer the case of such person, together with a copy of the allegation, to the Solicitor General to the Government of India. (2) If on any such reference the Solicitor General to the Government of India is of opinion that there is a prima facie case for inquiry, he shall refer the case of the person concerned to a Committee to be constituted for the purpose by the Central Government and known as the Reviewing Committee, which shall consist of the following persons, namely : (a) a person who is or has been a Judge of a High Court nominated by the Central Government who shall be the Chairman of the Committee; and (b) two persons nominated by the Central Government from among persons who have had administrative or other experience in educational matters, 392 (3) It shall be the duty of the Reviewing Committee to examine the case of every person referred to it by the Solicitor General; and the Reviewing Committee shall, after holding such inquiry into the case as it may think fit, and after giving to the person concerned an opportunity of being heard, if he so desires, forward its recommendations to the Executive Council. (4) The meetings of the Reviewing Committee shall be convened by such person as may be appointed for this purpose by the Chairman. (5) On receipt of the recommendations of the Reviewing Committee, the Executive Council shall take such action thereon as it may think fit: Provided that when the recommendations relate to any such person as is referred to in the proviso to sub section (1), such person shall not take part in any meeting of the Executive Council in which the recommendations are considered. (6) Before taking any action against any person on the recommendations of the Reviewing Committee, the Executive Council shall give him a reason. able opportunity of being heard. " Under the powers granted by this Statute and after sundry procedure, the Solicitor General sent up the cases of the appellants (and some others, who are not before us) to the Reviewing Committee. The appellants appeared before the Reviewing Committee and represented their cases. Except in the case of Mr. Radhey Shyam Sharma (Civil Appeal No. 484 of 1960), whose case was kept pending because certain matters were sub judice, the Reviewing Committee sent its findings to the University. These findings were considered in respect of the four appellants in Group I (above), and on February 13, 1960, the Executive Council passed Resolutions Nos. 436 to 439 calling upon them to show cause why their services be not terminated, in view of the findings of the Reviewing Committee that the continuance in office of those appellants was detrimental to the interests of the University, which the Executive Council had accepted. These four appellants showed cause on March 5, 1960, No notices 393 were, however, sent to the four appellants in Group II above, and this is one distinguishing feature in the cases. The four appellants (Group I) filed petitions under article 226 of the Constitution (W. Ps. Nos. 712 to 715 of 1960) on March 9,1960, in the High Court of Allahabad for relief against the proposed action. On the same day D. section Mathur, J. passed an ad interim order as follows: " The respondents Nos. 1 to 3 are directed until further orders, not to take any further proceedings against the petitioners. " The Registrar of the University then applied to the High Court, and on April 25, 1960, Jagdish Sahai, J., made the following order: " In supersession of the interim order dated 9 3 1960, I order that the proceedings before respondent No. 2, Executive Council of Banaras Hindu University, arising out of the recommendations of the Reviewing Committee shall remain stayed. " On May 15, 1960, the Executive Council of the University passed a number of Resolutions. Resolution No. 89 took into consideration the explanations sent by the four appellants (Group 1) on March 5, 1960, and the order of the High Court, and it was resolved: ". . that the consideration of the above cases be postponed till after the writ petitions above mentioned are disposed of by the High Court. " On the same day, however, Resolutions Nos. 99 to 102 were passed terminating the services of the four appellants (Group 1) from June 1, 1960, giving to them four or six months ' salary, in lieu of notice. In the Resolution concerning Pandit Ram Vyas Pandey, there was a mention that the action was taken under cls. 4 and 7 of the agreement executed by him and Ordinance No. 6 of the Ordinances of the University. In the remaining three cases, it was not stated under what exercise of power the action was taken. Even earlier than the notice to show cause issued on February 13, 1960, explanations were called from Pandit Ram Vyas Pandey and Dr. Gopal Tripathi by Resolutions Nos. 278 and 281 dated September 9, 1959, and these explanations were ordered to be filed by Resolution No. 103 50 394 passed on the same day. Four Resolutions were also passed terminating the services of the other appellants belonging to Group II. It was after these Resolutions were communicated that the eight petitions were filed by the appellants in the High Court of Allahabad. The High Court by a common judgment, which is under appeal, dismissed all the petitions with costs. The case of the appellants, broadly stated, is that the Executive Council could not take recourse to the provisions of Ordinance No. 6 of the Ordinances of the University, having started action under Statute No. 30, that Ordinance No. 6 was subordinate to, Statute No. 30 and could not prevail where Statute No. 30 applied, that action against the four appellants in Group I was stayed by the High Court and Resolution No. 89, and that any action thereafter under the agreement or Ordinance No. 6 was incompetent. The action of the Executive Council was characterised as mala fide and a fraud upon the University Act and Statute No. 30. The High Court did not accept any of these contentions. Before us, the same points have been urged again, and in reply, the University contends that the Executive Council could take action Under the terms of the agreements, where such agreements existed, or under Ordinance No. 6 or Statute No. 30 at its Option, and that where alternative remedies were provided by law, all or any. of the remedies could be invoked. Before we deal with these arguments, it is necessary to examine closely the powers of the Executive Council of the University, as they can be gathered from the , the Statutes and Ordinanaces framed under it. The Act was passed in 1915 (XVI of 1915), but it was amended in 1930, 1951 and 1958. Originally, the Act provided for the framing of Statutes and Regulations by the University ; but in 1951, the existing Regulations were deemed to be the first Ordinances under section 18(2) of the amended Act. A further power to make Regulations was conferred by section 19. Thereafter, there were Regulations in addition ,to the University Act, Statutes and Qrdinances, We 395 are not concerned with the Regulations, and no reference need be made to them except to say that they ranked below the Ordinances and had to be consistent, with the Act, the Statutes and the Ordinances. In the Act, the word "Statute" was defined to ' mean " the Statutes for the time being in force ", and ' there was an analogous definition of the word " Ordinances ". Section 17(2) of the Act enacted that " the first Statutes shall be those set out in Schedule I ". The power to frame Statutes was conferred on the Executive Council by section 17(3), but was subject to the previous approval of the Visitor. This sub section, as it was amended by section 4 of the Banaras Hindu University (Amendment) Act, 1958, read as follows: " The Executive Council may, from time to time, make new or additional Statutes or may amend or repeal the Statutes; but every new Statute or addition to the Statutes or any amendment or repeal of a Statute shall require the previous approval of the Visitor who may sanction, disallow or remit it for further consideration. Section 4A of the Act invested the University with powers, and sub sections (7) and (13) may be quoted here: " (7) to institute professorships, readerships, lectureships and other teaching posts required by the university and to appoint persons to such professorships, readerships, lectureships and other posts; (13) to create administrative, ministerial and other necessary posts and to make appointments thereto. " Section 7 of the Act named the officers and authorities of the University, but power was reserved to the University to declare, by statutes, other officers and authorities of the University. In addition to being an authority of the University, the Executive Council was appointed the executive body of the University. Sub section (2) of section 10 of the Act laid down: " The Executive Council shall exercise such powers and perform such duties as may be vested in it by the Statutes. " Section 17 of the Act provided how the statutes were to be framed and what they were to contain. We 396 have already referred to the first Statutes of the Uni versity which were placed in Schedule of the Act and the power of the Executive Council to make new or additional Statutes or to amend or repeal existing Statutes subject to the prior approval of the Visitor. Section 17 provided: " 17(1). Subject to the provisions of this Act, the Statutes may provide for all or any of the following matters, namely: (c) the appointment, powers and duties of the officers of the University. " From the above analysis, it is clear that the Act created the Executive Council as an authority and the executive body of the University; but its powers were conferred and its duties were created by the Statutes. The source of power and duties in respect of the Executive Council was thus the Statutes under the authority of the Act. Section 18 of the Act (as amended in 1951) provided: " 18(1). Subject to the provisions of this Act and the Statutes, the Ordinances may provide for all or any of the following matters, namely: Ordinances: emoluments and terms and conditions of service of teachers of the University. " The Ordinances were thus made subordinate to the Act and the Statutes, and could not go beyond them or derogate from them. One more provision of the Act as amended in 1951 may be read here. It is s.19A,which provided: " 19A. (1) Every salaried officer and teacher of the University shall be appointed under a written con. tract, which shall be lodged with the University and a copy of which shall be furnished to the officer or teacher concerned. (2) Any dispute arising out of a contract between the University and any of its officers or teachers shall, at the request of the officer or teacher concerned or at the instance of the University, be referred to a Tribunal of Arbitration consisting of one member appointed 397 by the Executive Council, one member nominated by the officer or teacher concerned and an umpire, appointed by the Visitor, and the decision of the Tribunal shall be final. " The powers granted to the Executive Council by the Statutes may now be seen. Statute No. 18 was amended in 1958, and is referred to as amended. It laid down: " 18(1). The Executive Council shall, subject to the control of the Visitor, have the management and administration of the whole revenue and property of the University and the conduct of all administrative affairs of the University. (2) Subject to the provisions of the Act, the Statutes and the Ordinances, the Executive Council shall, in addition to all other powers vested in it, have the following powers, namely: (i) To appoint, from time to time,. Principals of Colleges and institutions established by the University, and such Professors, Readers, Lecturers and other members of the teaching staff, as may be necessary, on the recommendation of Selection Committees constituted for the purpose (Proviso omitted) (ii) to appoint members of the administrative staff or to delegate the power of appointment to such authority or authorities, or officers as the Executive Council may, from time to time, by resolution, either generally or specially direct;. " The power of appointment was thus conferred by the Statutes on the Executive Council. We now turn to the Ordinances, where the disciplinary rules are to be found. On October 13, 1958, the Executive Council by Resolution No. 181 reconstituted the material Ordinance. Chapter III in part I of the Banaras Hindu University Calendar (1958) contains the terms of appointment, grades, salary and conditions of service of teachers, officers and other employees of the University. That Chapter is divided into many sections and sub sections. Section 5 deals with teaching and administrative posts, and section 6, with the conditions 398 of service and terms of appointment. Ordinance No. 2 in this section lays down: " The conditions of service of the staff shall be embodied in the Agreement Form of service. Every employee shall on confirmation sign the agreement Form. " Ordinance No. 6, before its amendment, read: " The Executive Council shall be entitled to terminate the engagement of an employee (i) on grounds of misconduct and (ii) physical unfitness for good cause and after calling for and considering his explanation and after giving four months ' notice in writing or payment of four months ' salary in lieu of notice. The Ordinance was unhappily worded. The expression "physical unfitness for good cause" hardly makes sense. More difficulty arises by the use of the conjunction "and". That word used for the first time in the Ordinance is obviously used disjunctively; but on the second and third time it is used conjunctively, introducing two conditions precedent. So far, there is no dispute, though much bad drafting. Dispute arises over the last use of the conjunction 'and" in the Ordinance. The appellants contend that it must be read conjunctively as introducing a third condition precedent, while the University urges that it is a separate power of termination unconnected with the others. The High Court was persuaded to read the clause as interpreted by the University and, in our opinion, rightly. In 1958, the Executive Council re framed this Ordinance but surprisingly enough, without any better success. The re enacted Ordinance, as printed in the amendment slip, read: " 6. The Executive Council shall be entitled to terminate the engagement of an employee for (i) misconduct, or (ii) physical unfitness, or (iii) inefficiency, or (iv) breach on his part of one or more of the terms of his agreement with the University, after 399 calling for and considering his explanation in each of the cases mentioned above; or (v) after giving four months ' notice or payment ' of four months ' salary in lieu thereof. The dispute this time arises from the careless use of the word "or". The Ordinance mentions four reasons for termination of services, which are numbered (i) to (iv). In each of those cases, there is the condition precedent that explanation must be called for and considered. So far, the meaning is clear, even though the drafting is far from commendable. Then follow a semi colon and "or" and number (v). The word "or" does not seek to create an option between calling for and considering an explanation and a four months ' notice, etc. The number (v) and the semi colon between " mentioned above " and " or " do not permit this reading. The difficulty, however, does not end there. If we read the fifth clause as connected independently with the opening words, we get this: " The Executive Council shall be entitled to terminate the engagement of an employee for . . . . . . . . . (v) after giving four months ' notice. . . which makes the word "for " superfluous in the sentence. In our opinion, the sense of the Ordinance can be obtained by rearranging the matter thus: " 6. The Executive Council shall be entitled to terminate the engagement of an employee for (i) misconduct, or (ii) physical unfitness, or (iii) inefficiency, or (iv) breach on his part of one or more of the terms of his agreement with the University, after calling for and considering his explanation in each of the cases mentioned above; or (v) after giving four months ' notice or payment of four months ' salary in lieu thereof " This means that, if action is taken under cls. (i) to (iv), an opportunity of showing cause against the termination of the service must be given; but action can also be taken to terminate the service, without assigning a 400 cause, on four months ' notice or four months ' salary ,in lieu of notice. The case of the University is that all these orders of termination of service were passed under the power granted by cl. (v) of this Ordinance, modified by the terms of the agreements as they existed. The result of this analysis shows that the power of the University to terminate the services of the incumbents was derived from (a) agreements, (b) Ordinances, and (c) Statute No. 30. The agreements merely represented the general right of a master to terminate the services of incumbents, where they were subject to agreements, after reasonable notice, without giving any reason. The Ordinances, in addition to preserving that right, gave power to terminate service for proved misconduct, inefficiency or physical unfitness. These powers, unless used according to the stated conditions, were unexercisable, and in the case of a service which was protected against arbitrary action, being perma nent, could only be invoked in an appropriate instance. In those cases which would fall within the categories of proved misconduct, inefficiency and physical unfitness, the University was required to take action in accordance with the Ordinance and the Rules. This was the position before the new Statute No. 30 was added by Parliament. This legislative measure was undertaken as the result of the sorry state of affairs of the University, and a special ground was required to be proved. It was that the continuance of an incumbent was detrimental to the interests of the University. The power to terminate the services of an incumbent on this ground was hedged in with appropriate safeguards, due to the struggle for power which it is said, had arisen in the University in the past; and though the Mudaliar Committee had suggested a Screening Committee to go into the cases of all teachers, Parliament thought it necessary that before any case reached the Screening Committee (renamed the Reviewing Committee) it should be scrutinised by the Solicitor General. The procedure which the new Statute enacted, ensured fair play and proper scrutiny. First, the Executive Council had to resolve that the continuance in office of any particular person 401 was detrimental to the interests of the University. The reasons for such belief had to be recorded briefly, and the Resolution together with the connected papers had to be sent to the Solicitor General. In the case of a teacher who was a member of the Executive Council, the Executive Council was not to consider the allegations but to send the papers to the Solicitor General. The Solicitor General had to decide if there was a prima facie case for enquiry, and then he was to refer suitable cases to the Reviewing Committee. The Reviewing Committee was then to enquire into the matter, and forward its recommendations to the Executive Council. The Executive Council was thereafter required to proceed under cl. (6), which was as follows: " Before taking any action against any person on the recommendations of the Reviewing Committee, the Executive Council shall give him a reasonable opportunity of being heard. " The power of the Executive Council was conferred by cl. 5, which provided: " On receipt of the recommendations of the Reviewing Committee, the Executive Council shall take such action thereon as it may think fit. " The procedure laid down in Statute No. 30 was followed by the University. The cases of the appellants went before the Solicitor General and then before the Reviewing Committee. In seven cases out of eight, ' the Reviewing Committee gave its opinion. In four out of seven cases, a show cause notice was issued under cl. 6 but not in others; and the four appellants (Group 1) also showed cause. They also obtained a stay from the High Court of Allahabad against action under Statute No. 30, and the Executive Council decided to postpone consideration of their cases. But the Executive Council abandoned action under Statute No. 30, and proceeded to act under powers which, it thought, flowed from the agreements and the Ordinances, and terminated the services of the eight appellants, giving four or six months ' salary in lieu of notice. 51 402 In so far as the power of terminating services with. out notice was concerned, the general power could not be invoked, when allegations of conduct detrimental to the interests of the University had already been made and scrutinised by the Solicitor General and the Reviewing Committee and the matter was pending before the Executive Council. The powers granted by the Ordinances are expressly subject to the Statutes, and the Ordinances cannot prevail over the Statutes. Statute No. 30 provided for special action in special circumstances. The existence of the special circumstances is expressly admitted, inasmuch as the cases were referred to the Reviewing Committee. The existence of the special circumstances and the special remedy excluded the right of the University to invoke its general powers, not to start with, but after the special procedure had been deliberately adopted and had commenced. If the cases of these appellants had not been sent to the Solicitor General and the Reviewing Committee at all, other considerations might have arisen. The question is whether after the special procedure was once invoked, it could be dropped in the middle and other powers exercised. The University relies on three arguments in this connection. It is first contended that the powers of the University were cumulative, and that the University could resort to any of the remedies open to it. Reliance is placed in support of this argument on Shankar Sahai vs Din Dial (1) (observations of Mahmood, J., at p. 418), Om Prakash Gupta vs State of U. P. (2), The State of Madhya Pradesh vs Veereshwar Rao Agnihotry 3 ), Brockwell vs Bullock (1), Seward vs " Vera Cruz" (5) and Barker vs Edger (6). It is not necessary to refer to these cases in detail. It has been laid down recently by this Court that, where the law allows alternative remedies, one or the other or both can be invoked unless one remedy is expressly or by necessary implication excluded by the other (See State (1) All. 409. (2) ; (3) ; , (4) (5) (6) [1898] A.C. 748 (P.C.), 403 of Kerala vs G. M. Francis and Co. (1)). The question thus is whether there is anything expressly stated by law or clearly implied which would exclude powers under the agreements and the Ordinances, when action has been taken under the Statutes. The University Act expressly makes the Ordinances subject to the Statutes, and in case of any clash between them, the Ordinances must be made to stand down. Further, Statute No. 30 was enacted by Parliament to meet a special situation, and contained a code for dealing with certain special kinds of cases. To that extent, the implication is not only one way, but is also clear. The University could not, having started enquiries under Statute No. 30, abandon the enquiries in midcourse and pass on to something else. This is illustrated by the contradictory Resolutions passed on the same day. In the case of the four appellants belonging to Group I, action under Statute No. 30 was deferred till after the decision of the High Court. But one is tempted to ask what possible further action was con templated when their services were terminated the same day. It may be pointed out here that dropping of action under Statute No. 30 deprived the appellants of the right to show cause against what had been alleged against them or found by the Reviewing Committee. The appellants characterised the whole action as lacking in bonafides. The action can only be questioned if it is ultra vires ' and proof of alien or irrelevant motive is only an example of the ultra vires character of the action, as observed by Warrington, L.J., in the following passage: " My view then is that only case in which the Court can interfere with an act of a public body which is, on the face of it, regular and within its powers, is when it is proved to be in fact ultra vires, and that the references in the judgments in the several cases cited in argument to Lad faith, corruption, alien and irrelevant motives, collateral and indirect objects, and so forth, are merely intended when properly understood as examples of matters (1) ; 404 which if proved to exist might establish the ultra vires character of the action in question " (Short vs Poole Corporation (1). We are not concerned so much with the motives, nor even with the justice of the action as with its legality, and, in our opinion, having invoked Statute No. 30 in the special circumstances and having gone on with that procedure, it was not possible to undo everything and rely upon other powers, which were not only subordinate but were clearly not available in those special circumstances which led, to action under Statute No. 30. The next argument is that Statute No. 30 itself left liberty of action, inasmuch as el. 5 gave power to the Executive Council to act as it thought fit. To begin with, it is wrong to think that the words conferring discretion are to be read in the abstract. Those words have to be read within the four corners of Statute No. 30. Tile words are permissive, no doubt, as to the choice of action, but are imperative in so far as they require some act completing the intent and purpose of the enquiry itself. The words " shall take such action thereon as it may think fit " give liberty of action on the recommendations of the Reviewing Committee, but lay a duty to form an opinion. The words do not give a discretion to take action outside the Statute. Lastly, it is argued that the Executive Council as the appointing authority had the power also to dismiss, and reference is made to sections 4(7) and 4(13) of the Act and section 16 of the General Clauses Act. None can deny that the University did possess such a power. The question is whether it exercised it correctly under the Statutes and Ordinances. We are quite clear that the Executive Council did not. We may say here that we have not accepted the contention that the action of the Executive Council was based upon malice or any indirect or oblique motive. The error was in thinking that there were cumulative or alternative powers, even after the adoption of the special procedure under Statute No. 30. We are, therefore, of opinion that (1) , 91. 405 the impugned Resolutions were ultra vires and should be quashed. In the result, the appeals are allowed. Resolutions Nos. 90, 94 to 96 and 99 to 102 dated May 15, 1960, of the Executive Council of the Banaras Hindu University are quashed, and an appropriate writ or writs shall issue to the respondents to that effect. The respondents shall pay the costs of these appeals, as also of the High Court. Only one set of hearing fee here and in the High Court shall be allowed. Appeals allowed.

On June 14, 1958, the President of India promulgated an Ordinance to amend the . By section 8 of the Ordinance, the Statutes of the University were amended, and in place of Statute NO. 30, another statute was substituted, which set up a " Screening Committee " to examine the cases of all persons holding teaching, administrative or other posts in the University at the commencement of the Ordinance, in respect of whom there was reason to believe that their continuance in office would be detrimental to the interests of the University, and to forward its recommendations to the Executive Council to take such action as it may deem fit. The Ordinance was repealed by the Banaras Hindu University (Amendment) Act, 1958, which re enacted Statute No. 30. Under the re enacted Statute before any action could be taken by the Executive Council as referred to above, the matter had first to be referred to the Solicitor General of the Government of India, who, if he was of the opinion that there was prima facie case for inquiry, shall refer the case of the person concerned to a committee, known as the Reviewing Committee. On receipt of the recommendations of the Reviewing Committee, the Executive Council was to take such action thereon as it thought fit, after giving the person concerned a reasonable opportunity for being heard. Apart from Statute No. 30, added by Parliament, the Executive Council could terminate the engagement of an employee by taking action under the terms of the agreement, where such agreement existed, or under Ordinance No. 6, framed under the Act, without assigning a cause, on four months ' notice or four months ' salary in lieu of notice. The cases of the appellants who held posts under the Univer sity were considered in accordance with the procedure laid down in Statute No. 30 by the Solicitor General who then sent up their cases to the Reviewing Committee. The appellants appeared before the Committee and made their representations. The Committee sent its findings in respect of the appellants except one to the Executive Council who then called upon four of them to show cause why their services should not be terminated, in view of the 387 findings of the Committee that the continuance in office of those appellants was detrimental to the interests of the University. No notices, however, were sent to appellants 2, 4, 5 and 6. Appellants 1, 3, 7 and 8 having filed petitions in the High Court of Allahabad under article 226 of the Constitution of India for relief against the proposed action and proceedings having been stayed, the Executive Council passed a resolution, No. 89, on May 15, 1960, that the consideration of their cases was postponed till after the writ petitions were disposed of by the High Court. On the same day, however, the Executive Council passed resolutions, Nos. 90, 94 to 96 and 99 to 102, terminating the services of all the appellants giving them four or six months ' salary in lieu of notice. The appellants challenged the validity of the resolutions on the grounds, inter alia, (1) that the Executive Council could not take recourse to the provisions of Ordinance No. 6 having started action under Statute NO. 30, (2) that Ordinance No. 6 was subordinate to Statute NO. 30 and could not prevail where Statute NO. 30 applied, (3) that action against respondents 1, 3, 7 and 8 was stayed by the High Court and resolution No. 89 and that any action thereafter under the agreement or Ordinance No. 6 was incompetent, and (4) that, in any case, the action of the Executive Council was mala fide and a fraud upon the Univer sity Act and Statute NO. 30. The case for the University authorities was that the Executive Council could take action under the terms of the agreements, where such agreements existed or under Ordinance No. 6 or Statute NO. 30 at its option, and that where alternative remedies were provided by law, all or any of the remedies could be invoked: Held, that the impugned resolutions were ultra vires and should be quashed. The power of terminating services without notice could not be invoked in the present case, where allegations of conduct detrimental to the interests of the University had already been made and scrutinised by the Solicitor General and the Reviewing Committee and the matter was pending before the Executive Council. The powers granted by the Ordinances were expressly subject to the Statutes, and the Ordinances could not prevail over the Statutes. State of Keyala vs C. M. Francis and Co. [1961] 3 S.C.R. 181, distinguished. The words " shall take such action thereon as it may think fit " in Statute No. 30, gave liberty of action on the recommendations of the Reviewing Committee but lay a duty to form an opinion. The words did not give a discretion to take action outside the Statute. The action taken by the University authorities could only be questioned if it was ultra vires and proof of alien or irrelevant motive was only an example of the ultra vires character of the action. The court was not concerned so much with the motives, 388 nor even with the justice of the action taken by a public body, like the University, as with its legality. Short vs Poole Corporation , relied on.

72 of 1950. Petition under article 32 of the Constitution of India for a writ of mandamus. V.K.T. Chari, J.S. Dawdo, Alladi Kuppuswami, and C.R. Pattabhi Raman, for the petitioner. M.C. Setalvad, Attorney General for India (G. N. Joshi with him) for opposite party Nos. 1 and 2. G.N. Joshi, for opposite party Nos. 3 to 5 and 7 to 10. 1950. December 4. The Court delivered Judgment as follows. KANIA C.J. This is an application by the holder of one ordinary share of the Sholapur Spinning and Weaving Company Ltd. for a writ of mandamus and certain other reliefs under article 32 of the Constitution of India. The authorized capital of the company is Rs. 48 lakhs and the paid up capital is Rs. 32 lakhs, half of which is made up of fully paid ordinary shares of Rs. 1,000 each. 875 I have read the judgment prepared by Mr. Justice Mukher jea. In respect of the arguments advanced to challenge the validity of the impugned Act under articles 31 and 19 of the Constitution of India, I agree with his line of reasoning and conclusion and have nothing more to add. On the question whether the impugned Act infringes article 14, two points have to be considered. The first is whether one individual shareholder can, under the circum stances of the case and particularly when one of the re spondents is the company which opposes the petition, chal lenge the validity of the Act on the ground that it is a piece of discriminatory legislation, creates inequality before the law and violates the principle of equal protec tion of the laws under article 14 of the Constitution of India. The second is whether in fact the petitioner has shown that the Act runs contrary to article 14 of the Con stitution. In this case having regard to my conclusion on the second point, I do not think it is necessary to pro nounce a definite opinion on the first point. I agree with the line of reasoning and the conclusion of Mr. Justice Mukherjea as regards the second point relating to the inva lidity of the Act on the ground that it infringes article 14 of the Constitution and have nothing more to add. In my opinion therefore this petition fails and is dismissed with costs. FAZL ALI J. I am strongly of the opinion that this peti tion should be dismissed with costs. The facts urged in the petition and the points raised on behalf of the petitioner before us are fully set forth in the judgments of my brethren, Sastri, Mukherjea and Das JJ., and I do not wish to repeat them here. It is sufficient to say that the main grounds on which the Sholapur Spinning and Weaving Company (Emergency Provisions) Act, 1950 (Act No. XXVIII of 1950), which will hereinafter be referred to as "the Act", has been assailed, is that it infringes three fundamental rights, these being: 876 (1) the right to property secured by article 31 of the Constitution; (2) the right to acquire, hold and dispose of property, guaranteed to every citizen by article 19 (1) (f); and (3) the right to equal protection of the laws, guaran teed by article 14. It has been held in a number of cases in the United States of America that no one except those whose rights are directly affected by a law can raise the question of the constitutionality of that law. This principle has been very clearly stated by Hughes J. in McCabe vs Atchison(1), in these words : "It is an elementary principle that in order to justify the granting of this extraordinary relief, the complainant 's need of it and the absence of an adequate remedy at law must clearly appear. The complainant cannot succeed because someone else may be hurt. Nor does it make any difference that other persons who may be injured are persons of the same race or occupation. It is the fact, clearly established, of injury to the complainant not to others which justifies judicial interference. " On this statement of the law, with which I entirely agree, the scope of the discussion on this petition is greatly restricted at least in regard to the first two fundamental rights. The company and the shareholders are in law separate entities, and if the allegation is made that any property belonging to the company has been taken possession of without compensa tion or the right enjoyed by the company under article 19 (1) (f) has been infringed, it would be for the company to come forward to assert or vindicate its own rights and not for any individual shareholder to do so. In this view, the only question which has to be answered is whether the peti tioner has succeeded in showing that there has been an infringement of his rights as a shareholder under articles 31 and 19 (1) (f) of the Constitution. This question has been so elaborately dealt with by Mukherjea J., that I do not wish to add anything to what he has said in his judg ment, and all that is necessary for me to say is that I adopt his conclusions, (1) 235 u.s. 151. 877 without committing myself to the acceptance of all his reasonings. The only serious point, which in my opinion, arises in the case is whether article 14 of the Constitution is in any way infringed by the impugned Act. This article corresponds to the equal protection clause of the Fourteenth Amendment of the Constitution of the United States of America, which declares that "no State shall deny to any person within its jurisdiction the equal protection of the laws". Professor Willis dealing with this clause sums up the law as prevail ing in the United States in regard to it in these words: "Meaning and effect of the guaranty The guaranty of the equal protection of the laws means the protection of equal laws. It forbids 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 subjected to such legislation shall be treated alike under like circumstances and condi tions both in the privileges conferred and in the liabili ties 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."( ') Having summed up the law in this way, the same learned author adds : "Many different classifications (1) Constitutional Law by Prof. Willis, (1st Edition). p.579. 878 of persons have been upheld as constitutional. A law apply ing to one person or one class of persons is constitutional if there is sufficient basis or reason for it. " There can be no doubt that article 14 provides one of the most valuable and important guarantees in the Constitution which should not be allowed to be whittled down, and, while ac cepting the statement of Professor Willis as a correct exposition of the principles underlying this guarantee, 1 wish to lay particular emphasis on the principle enunciated by him that any classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must bear a reasonable and just relation to the things in respect of which it is proposed. The petitioner 's case is that the shareholders of the Sholapur company have been subjected to discrimination visa vis the shareholders of other companies, inasmuch as section 13 of the Act subjects them to the following disabilities which the shareholders of other companies governed by the Indian Companies Act are not subject to: : "(a) It shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company. (b) No resolution passed at any meeting of the share holders of the company shall be given effect to unless approved by the Central Government. (c) No proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any court unless by or with the sanction of the Central Government. " Primafacie, the argument appears to be a plausible one, but it requires a careful examination, and, while examining it, two principles have to be borne in mind : (1) that a law may be constitutional even though it relates to a single individual, in those cases where on account of some special circumstances or reasons applicable to him and not applica ble to others, 879 that single individual may be treated as a class by himself; (2) that it is the accepted doctrine of the American courts, which I consider to be well founded on principle, 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 a clear transgression of the constitutional principles. A clear enunciation of this latter doctrine is to be found in Middleton vs Texas Power and Light Company(1), in which the relevant passage runs as follows : "It must be presumed that a legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds. " The onus is therefore on the petitioner to show that the legislation which is impugned is arbitrary and unreasonable and there are other companies in the country which should have been subjected to the same disabilities, because the reasons which led the Legislature to impose State control upon the Sholapur company are equally applicable to them. So far as article 14 is concerned, the case of the share holders is dependent upon the case of the company and if it could be held that the company has been legitimately sub jected to such control as the Act provides without violation of the article, that would be a complete answer to the petitioner 's complaint. Now, the petitioner has made no attempt to discharge the burden of proof to which I have referred, and we are merely asked to presume that there must necessarily be other compa nies also which would be open to the charge of mismanagement and negligence. The question cannot in my opinion be treated so lightly. On the other hand, how important the doctrine of burden of proof is and how much harm can be caused by ignor ing it or tinkering with it, will be fully illustrated, by referring to the proceedings in the Parliament in connec tion with the enactment of the (1) ,157. 880 Act, where the circumstances which necessitated it are clearly set out. I am aware that legislative proceedings cannot be referred to for the purpose of construing an Act or any of its provisions, but I believe that they are relevant for the proper understanding of the circumstances under which it was passed and the reasons which necessitat ed it. A reference to the Parliamentary proceedings shows that some time ago, a representation was made on behalf of a section of the shareholders of the Sholapur company to the Registrar of Joint Stock Companies in Bombay, against the conduct of the managing agents, and the Government of Bombay was moved to order a special inquiry into the affairs of the company. For the purpose of this inquiry, two special inspectors were appointed by the Bombay Government and their report revealed "certain astounding facts" and showed that the mill had been grossly mismanaged by the Board of Direc tors and the managing agents. It also revealed that the persons who were responsible for the mismanagement were guilty of certain acts and omissions which brought them under the purview of the law. The Bombay Government accept ed the report of the inspectors and instructed the Advocate General of Bombay to take legal proceedings against certain persons connected with the management of the company. Thereafter, the Government of India was approached by the Provincial Government and requiested to take special action in order to secure the early opening of the mill. The Government of India found that they had no power to take over the management of a particular mill, unless its working could be ensured through the existing management acting under the direction of a Controller appointed under the Essential Supplies Act, but they also found that a peculiar situation had been created in this case by the managing agents themselves being unable or unwilling to conduct the affairs of the company in a satisfactory and efficient manner. The Government of India, as a matter of precaution and lest it should be said that they were going to interfere unnecessarily in the affairs 881 of the company and were not allowing the existing provisions of the law to take their own course, consulted other inter ests and placed the matter before the Standing Committee of the Industrial Advisory Council where a large number of leading industrialists of the country were present, and ultimately it was realized that this was a case where the Government could rightly and properly intervene and there would be no occasion for any criticism coming from any quarter. It appears from the discussion on the floor of the House that the total number of weaving and spinning mills which were closed down for one reason or other was about 35 in number. Some of them are said to have closed for want of cotton, some due to overstocks, some for want o[ capital and some on account of mismanagement. The Minister for Indus try, who sponsored the Bill, in explaining what distin guished the case of the Sholapur mill from the other mills against whom there might be charges of mismanagement, made it clear in the course of the debate that "certain condi tions had to be fulfilled before the Government can and should intervene", and he set out these conditions as fol lows : "(1) The undertaking must relate to an industry which is of national importance. Not each and every undertaking which may have to close down can be taken charge of tempo rarily by Government. (2) The undertaking must be an economic unit. If it appears that it is completely uneconomic and cannot be managed at all, there is no sense in Government taking charge of it. If anything, it will mean the Government will have to waste money which belongs to the taxpayer on an uneconomic unit. (3) There must be a technical report as regards the condition of the plants, machinery, etc. which either as they stand, or after necessary repairs and reconditioning can be properly utilised. (4) Lastly, and this is of considerable importance there must be a proper enquiry held before Government take any action. The enquiry should show that 113 882 managing agents have so misbehaved that they are no longer fit and proper persons to remain in charge of such an impor tant undertaking. "(1) It appears from the same proceedings that the Sholapur mill is one of the largest mills in Asia and employs 13,000 workers. Per shift, it is capable of producing 25 to 30 thousand pounds of yarn, and also one lakh yards of cloth. It was working two shifts when it was closed down on the 29th August, 1949. The closure of the mill meant a loss of 25 lakhs yards of cloth and one and a half lakhs pounds of yarn per month. Prior to 1947, the highest dividend paid by the company was Rs. 525 per share and the lowest Rs. 100, and, in 1948, when the management was taken over by the managing agents who have been removed by the impugned Act, the accounts showed a loss of Rs. 30 lakhs, while other textile companies had been able to show very substantial profits during the same period. Another fact which is brought out in the proceedings is that the. managing agents had acquired control over the majority of the shares of the company and a large number of shareholders who were dissatisfied with the management had been rendered powerless and they could not make their voice heard. By reason of the preponderance of their strength, the managing agents made it impossible for a controller under the Essential Supplies Act to function and they also made it difficult for the company to run smoothly under the normal law. It was against this background that the Act was passed, and it is evident that the facts which were placed before the Legislature with regard to the Sholaput mill were of an extraordinary character. and fully justified the company being treated as a class by itself. There were undoubtedly other mills which were open to the charge of mismanagement, but the criteria adopted by the Government which, in my opinion, cannot be said to be arbitrary or unreasonable, is not applicable (1) parliamentary Debates, Volume III, No. 14; 31st March 1950, pp.2394 5 883 to any of them. As we have seen, one of the criteria was that a mere allegation of mismanagement should not be enough and no drastic step such as is envisaged in the Act should be taken without there being a complete enquiry. In the case of the Sholapur mill, a complete enquiry had been made and the revelations which were made as a result of such enquiry were startling. We are familiar with the expression "police power" which is in vogue in the United States of America. This expression simply denotes that in special cases the State can step in where its intervention seems necessary and impose special burdens for general benefit. As one of the judges has pointed out, "the regulations may press with more or less weight upon one than upon another, but they are designed not to impose unequal or unnecessary restrictions upon anyone, but to promote, with as little individual inconvenience as possible, the general good. "(1) It need not be emphasized that the principles underlying what is known as police power in the United States of America are not peculiar to that country, but are recognized in every modern civilized State. Professor Willis dealing with the question of classification in exercise of police power makes the following observa tions: "There is no rule for determining when classification for the police power is reasonable. It is a matter for judicial determination, but in determining the question of reasonableness the Courts must find some economic, political or other social interest to be secured, and some relation of the classification to the objects sought to be accomplished. In doing this the Courts may consider matters of common knowledge, matters o[ common report, tile history of the times, and to sustain it they will assume every state of facts which can be conceived of as existing at the time Of legislation. The fact that only one person or one object or one business or one locality is affected is not proof of denial of the equal protection of the laws. For such (1) Per Field J. in Barbier vs Connally. ; 884 proof it must be shown that there is no reasonable basis for the classification. " In this particular case, the Government initially took control of the Sholapur Company by means of an Ordinance (Ordinance No. II of 1950), of which the preamble runs as follows : "Whereas on account of mismanagement and neglect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudicially af fected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community; And whereas an emergency has arisen which renders it necessary to make special provision for the proper manage ment and administration of the aforesaid Company; Now, therefore,. . . . " In the course of the Parliamentary debate, reference was made to the fact that the country was facing an acute cloth shortage, and one of the reasons which apparently influenced the promulgation of the Ordinance and the passing of the Act was that the mismanagement of the company had gravely affected the production of an essential commodity. The facts relating to the mismanagement of this mill were care fully collected and the mischief caused by the sudden clos ing of the mill to the shareholders as well as to the gener al public were fully taken into consideration. Therefore, it seems to me that to say that one particular mill has been arbitrarily and unreasonably selected and subjected to discriminatory treatment, would be an entirely wrong propo sition. Article 14 of the Constitution, as already stated, lays down an important fundamental right, which should be closely and vigilantly guarded, but, in construing it, we should not adopt a doctrinaire approach which might choke all benefi cial legislation. The facts to which I have referred are to be found in a public document, and, though some of them may (1) Constitutional Law by Prof. Willis (1st Edition) p. 580. 885 require further investigation forming as they do part of a one sided version, yet they furnish good prima, facie grounds for the exercise of the utmost caution in deciding this case and for not departing from the ordinary rule as to the burden of proof. In the last resort, this petition can be disposed of on the simple ground that the petitioner has not discharged the onus which lies upon him, and I am quite prepared to rest my judgment on this ground alone. I think that the petitioner has failed to make out any case for granting the writs or directions asked for, and the petition should therefore be dismissed with costs. PATANJALI SASTRI J. This is an application under article 32 of the Constitution seeking relief against alleged infringe ment of certain fundamental rights of the petitioner. The petitioner is a shareholder of the Sholapur Spinning and Weaving Company, Limited, Sholapur, in tim State of Bombay, (hereinafter referred to as "the Company "). The authorised share capital of the Company consisted of 1590 fully paid up ordinary shares of Rs. 1,000 each, 20 fully paid up ordinary shares of Rs. 500 each and :32,000 partly paid up redeemable cumulative preference shares of Rs. 100 each, of which Rs. 50 only was paid up. Of these, the petitioner held one ordinary share in his own name and 80 preference shares which, however, having been pledged with the Bank of Baroda Ltd., now stand registered in the Bank 's name. The company was doing flourishing business till disputes arose recently between the management and the employees, and in or about August, 1949, the mills were temporarily closed and the company, which was one of the largest producers of cotton textiles, ceased production. Thereupon, the Gover nor General intervened by promulgating on the 9th January, 1950, an Ordinance called the Sholapur Spinning and Weaving Company (Emergency Provisions) Ordinance (No. II ' of 1950), which empowered tim Government of India to 886 take over the control and management of the company and its properties and effects by appointing their own Directors and to delegate all or any of their powers to the Provincial Government. In exercise of the powers thus delegated, the Government of Bombay appointed respondents 3 to 9 as Direc tors to take charge of the management and administration of the properties and affairs of the company. Subsequently, on 10th April, '1950, the Ordinance was repealed and was re placed by an Act of Parliament containing similar provisons, namely the Sholapur Spinning and Weaving Company (Emergency Provisions) Act (No. XXVIII of 1950) (hereinafter referred to as the "impugned Act"). The petitioner complains that the impugned Act and the action of the Government of Bombay pursuant thereto have infringed the fundamental rights conferred on him by arti cles 11, 19 and 31 of the Constitution with the result that the enactment is unconstitutional and void, and the inter ference by the Government in the affairs of the company is unauthorised and illegal. He accordingly seeks relief by way of injunction and mandamus against the Union of India and the State of Bombay impfended as respondents 1 and 2 respec tively in these proceedings and against respondents a to 9 who are now in management as already stated. The company is irapleaded proforma as the 10th respondent. Before discussing the issues involved, it is necessary to examine the relevant provisions of the impugned Act in order to see in what manner and to what extent the petition er 's rights have been affected thereby. The preamble to the repealed Ordinance stated that "on account of mis management and neglect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudicially affected the production of an essen tial commodity and has caused serious unemployment amongst a certain section of the community and that an emergency has arisen which renders it necessary to make special provi sion for the proper management and administration of the aforesaid 887 Company." This preamble was not reproduced in the impugned Act. Section a empowers the Central Government to appoint as many persons as it thinks fit to be directors of the company "for the purpose of taking over its management and administration. " Section 4 states the effect of the order appointing directors to be that (1) the old directors shall be deemed to have vacated their office, (2) the contract with the managing agents shall be deemed to have been termi nated, (3) that the properties and effects of the company shall be deemed to be in the custody of the new directors who are to be "for all purposes" the directors of the compa ny and "shall alone be entitled to exercise all the powers of the directors of the company whether such powers are derived from the Companies Act or from the memorandum or articles of association or otherwise. " Section 5 defines the powers of the new directors. They are to manage the busi ness of the company "subject to the control of the Central Government" and shall have the power to raise funds offering such security as they think fit, to carry out necessary repairs to the machinery or other property in their custody and to employ the necessary persons and define the necessary conditions of their service. Section 12 provides for the restoration of the management to directors nominated by the shareholders when the purpose of the Government 's interven tion has been fulfilled. Section 13 is important and reads thus: "13. Application of the Companies Act. (1) Notwith standing anything contained in the Companies Act or in the memorandum or articles of association of the company (a) it shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company; (b) no resolution passed at any meeting of the shareholders of the company shall 'be given effect to unless approved by the Central Government; (c) no proceeding for the winding up of the company or for the appointment of a receiver in respect, thereof shall lie in any Court unless by or with the sanction of the Central Government. (2) Subject. 888 to the provisions contained in sub section (1) and to the other provisions of this Act. and subject to such excep tions, restrictions and limitations as the Central Govern ment may, by notified order, specify, the Companies Act shall continue to apply to the company in the same manner as it applied thereto before the issue of the notified order under section 3. " By section 14 the provisions of the Act are to have effect "notwithstanding anything inconsistent therewith contained in any other law or in any instrument having effect by virtue of any law other than this Act. " Section 16 provides for delegation of powers to the Govern ment of Bombay to be exercised subject to the directions of the Central Government, and section 17 bars suits or other proceedings against the Central Government or the Government of Bombay or any director "for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act. " As a result of these provisions all the properties and effects of the company passed into the absolute power and control of the Central Government or its delegate the Gov ernment of Bombay, and the normal functioning of the company as a corporate body came to an end. The shareholders have been reduced to the position of interested, if helpless, onlookers while the business is carried on against their will and, may be, to their disadvantage by the Government 's nominees. The declared purpose of this arrangement was, according to the Preamble of the repeated Ordinance to keep up the production of an essential commodity and to avert serious unemployment amongst a certain section of the commu nity. The question accordingly arises whether the impugned Act. which thus affects the petitioner and his co sharehold ers, while leaving untouched the shareholders of all other companies, including those engaged in the production of essential commodities, denies to the petitioner the equal protection of the laws under article 14 of the Constitution. The correct approach to 889 this question is first to see what rights have been con ferred or protection extended to persons similarly situated. The relevant protection is to be found in the provisions of the Indian Companies Act which regulates the rights and obligations of the shareholders of incorporated companies in India. Section 21 of the Act assures to the shareholders the protection of the stipulations contained in the memoran dum and articles of association by constituting. them a binding contract, so that neither the company nor the share holders have the power of doing anything inconsistent there with. The basic right of the shareholders to have their undertaking managed and conducted by the directors of their own choice is ensured by section 83B. Their right to exer cise control and supervision over the management by the directors by passing resolutions at their general meeting is regulated by various provisions of the Act. The important safeguard of winding up the company in certain unfavourable circumstances either through court or by the shareholders thems elves voluntarily is provided for in sections 162 and 203. All these rights and safeguards, on the faith of which the shareholders embark their money in their undertaking, are abrogated by the impugned Act in the case of the share holders of this company alone. In fact, the Central Govern ment is empowered to exclude, restrict or limit the opera tion of any of the provisions of the Companies Act in rela tion to this company. It is thus plain that the impugned Act denies to the shareholders of this particular company the protection of the law relating to incorporated joint stock companies in this country is embodied in the Companies Act and is primafacie within the inhibition of article 14. It is argued, however, that article 14 does not make it incumbent on the Legislature always to make laws applicable to all persons generally, and that it is open to the Legis lature 'to classify persons and things and subject them to the operation of a particular law according to the aims and objects which that law is designed to secure. In the present case, Parliament, 114 890 it was said, came to the conclusion, on the materials placed before them, that the affairs of the company were being grossly mismanaged so as to result in the cessation of production of an essential commodity and serious unemploy ment amongst a section of the community. In view if the detriment thus caused to public economy, it was competent for Parliament to enact a measure applicable to this company and its shareholders alone, and Parliament must be the judge as to whether the evil which the impugned Act was designed to remedy prevailed to such an extent in this company as to call for special legislation. Reliance was placed in support of this argument on certain American decisions dealing with the equal protection clause of the Fourteenth Amendment of the Federal Constitution. It is, however, unnecessary to discuss those decisions here, for it is undeniable that equal protection of the laws cannot mean that all laws must be quite general in their character and application. ' A legislature empowered to make laws on a wide range of sub jects must of necessity have the power of making special laws to attain particular objects and must, for that pur pose, possess large powers of distinguishing and classifying the persons or things to be brought under the operation of such laws, provided the basis of such classification has a just and reasonable relation to the object which the legis lature has in view. While, for instance, a classification in a law regulating labour in mines or factories may be based on age or sex, it may not b`e based on the colour of one 's skin. It is also true that the class of persons to whom a law is made applicable may be large or small, and the degree of harm which has prompted the enactment of a particular law is a matter within the discretion of the law makers. It is not the province of the court to canvass the legislative judgment in such matters. But the issue here is not whether the impugned Act was ill advised or not justified by the facts on which it was based, but whether it transgresses the explicit constitutional restriction on legislative power imposed by article 14. 891 It is obvious that the legislation is directed solely against a particular company and shareholders and not against any class or category of companies and no question, therefore, of reasonable legislative classification arises. If a law is made applicable to a class of persons or things and the classification is based upon differentia having a rational relation to the object sought to be attained, it can be no objection to its constitutional validity that its application is found to affect only one person or thing. For instance, a law may be passed imposing certain restric tions and burdens on joint stock companies with a share capital of, say, Rs. 10 crores and upwards, and it may be found that there is only one such company for the time being to which the law could be applied. If other such companies are brought into existence in future the law would apply to them also, and no discrimination would thus be involved. But the impugned Act, which selects this particular company and imposes upon it and its shareholders burdens and disa bilities on the ground of mismanagement and neglect of duty on the part of those charged with the conduct of its under taking, is plainly discriminatory in character and is, in my judgment, within the constitutional inhibition of article 14. Legislation based upon mismanagement or other miscon duct as the differentia and made applicable to a specified individual or corporate body is not far removed from the notorious parliamentary procedure formerly employed in Britain of punishing individual delinquents by passing bills of attainder, and should not, I think, receive judi cial encouragement. It was next urged that the burden of proving that the impugned Act is unconstitutional lay on the petitioner, and that, inasmuch as he has failed to adduce any evidence to show that the selection of this company and its shareholders for special treatment under the impugned Act was arbitrary, the application must fail. Whilst all reasonable pre sumption must undoubtedly be made in support of the consti tutional validity of a law made by a competent legislature, the circumstances of the present case would seem, to my 892 mind to exclude such presumption. Hostile discrimination is writ large over the face of the impugned Act and it dis closes no grounds for such legislative intcrvcntion. For all that appears no compelling public intercsts were involved. Even the preamble to the original Ordinance was omitted. Nor did respondents 1 and 2 file any counter statement in this proceeding explaining the circumstances which led to the enactment of such an extraordinary measure. There is thus nothing in the record even by way of allegation which the petitioner need take steps to rebut. Supposing, howev er, that the impugned Act was passed on the same grounds as were mentioned in the preamble to the repealed Ordinance, namely, mismanagement and neglect prejudicially affecting the production of an essential commodity and causing seri ous unemployment amongst a section of the community, the petitioner could hardly be expected to assume the burden of showing, not that the company 's affairs were properly man aged, for that is not his case, but that there were also other companies similarly mismanaged, for that is what, according to the respondents, he should prove in order to rebut the presumption of constitutionality. In other words, he should be called upon to establish that this company and its shareholders were arbitrarily singled out for the impo sition of the statutory disabilities. How could the peti tioner discharge such a burden ? Was he to ask for an inves tigation by the Court of the affairs of other industrial concerns in India where also there were strikes and lock outs resulting in unemployment and cessation of production of essential commodities? Would these companies be willing to submit to such an investigation ? And even so, how is it possible to prove that the mismanagement and neglect which is said to have prompted the legislation in regard to this company was prevalent in the same degree in other companies ? In such circumstances, to cast upon the petitioner a burden of proof which it is as needless for him to assume as it is impracticable to discharge is to lose sight of the realities of the case. 893 Lastly, it was argued that the constitutionality of a statute could not be impugned under article 32 except by a person whose rights were infringed by the enactment. and that, inasmuch as there was no infringement of the individ ual right of a shareholder, even assuming that there was an injury to the company as a corporate body, the petitioner was not entitled to apply for relief under that article. Whatever validity the argument may have in relation to the petitioner 's claim based on the alleged invasion of his right of property under article 31, there can be little doubt that, so far as his claim based on the contravention of article 14 is concerned, the petitioner is entitled to relief in his own right As has been pointed out already, the impugned Act deprives the shareholders of the company of important rights and safeguards which are enjoyed by the shareholders of other joint stock companies in Indian under the Indian Companies Act. The petitioner is thus denied the equal protection of the laws in his capacity as a sharehold er, and none the less so because the other shareholders of the company are also similarly affected. The petitioner is thereled to seek relief under article 32 of the Constitu tion. In this view it becomes unnecessary to consider the questions raised under articles 19 and 31 of the Constitu tion. In the result]t, I would allow the application. MUKHERJEA J. This is an application presented by one Chiranjitlal Chowdhuri, a shareholder of the Sholapur Spinning and Weaving Company Limited (hereinafter referred to as the company), praying for a writ of mandamus and certain other reliefs under article 32 of the Constitution. The company, which has its registered office within the State of Bombay and is governed by the provisions of the Indian Companies Act, was incorporated with an authorised capital of Rs. 48 lakhs divided into 1590, fully paid up ordinary shares of Rs. 100 each, 20 fully paid up ordinary shares of Rs. 500 each and 32,000 partly paid up cumulative preference shares of Rs. 100 each. The 894 present paid up capital of the company is Rs. 32 lakhs half of which is represented by the fully paid up ordinary shares and the other half by the partly paid up cumulative prefer ence shares. The petitioner states in his petition that he holds in his own right three ordinary shares and eighty prefercnce shares in the company, though according to his own admission the ,preference shares do not stand in his name but have been registered in the name of the Baroda Bank Limited with which the shares are pledged. According to the respondents, the petitioner is the registered holder of one single ordinary share in the company. It appears that on July 27, 1949, the directors of the company gave a notice to the workers that the mills would be closed, and pursuant to that notice, the mills were in fact closed on the 27th of August following. On January 9, 1950, the Governor General of India promulgated an Ordinance which purported to make special provisions for the proper man agement and administration of the company. It was stated in the preamble to the Ordinance that "on account of mis management and neglect, a situation has arisen in the af fairs of the Sholapur Spinning and Weaving Company Limited which has prejudicially affected the production of an essen tial commodity and has caused serious unemployment amongst a certain section of the community ", and it was on account of the emergency arising from this situation that the promulga tion of the Ordinance was necessary. The provisions of the Ordinance, so far as they are material for our present purpose, may be summarised as follows: Under section 3 of the Ordinance, the Central Government may, at any time, by notified order, appoint as many persons as it thinks fit, to be directors of the company for the purpose of taking over its management and administration and may appoint one of such directors to be the Chairman. Section 4 provides that on the issue of a notified order under section 3 all the directors of the company holding office as such immediately before the issue of the order shall be deemed to have vacated their offices. and any existing 895 contract of management between the company and any managing agent thereof shall be deemed to have terminated. The directors thus appointed shall be for all purposes the directors of the company duly constituted under the Compa nies Act and shall alone be entitled to exercise all the powers of the directors of the company. The powers and the duties of the directors are specified in section 5 and this section inter alia empowers the directors to vary or cancel, with the previous sanction of the Central Government, any contract or agreement entered into between the company and any other person if they are satisfied that such contract or agreement is detrimental to the interests of the company. Section 10 lays down that no compensation for premature termination of any contract could be claimed by the managing agent or any other contracting party. It is provided by section 12 that so long as the management by the statutory directors continues, the shareholders would be precluded from nominating or appointing any person to be a director of the company and any resolution passed by them will not be effective unless it is approved by the Central Government. This section lays down further that during this period no proceeding for winding up of the company, or for appointment of a receiver in respect thereof could be instituted in any court, unless it is sanctioned by the Central Government, and the Central Government would be competent to impose any restrictions or limitations as regards application of the provisions of the Indian Companies Act to, be affairs of the company. The only other material provision is that contained in section 15, under which the Central Government may, by notified order, direct that all or any of the powers exercisable by it under this Ordinance may be exercised by the Government of Bombay. In accordance with the provisions of section 15 men tioned above, the Central Government, by notification issued on the same day that the Ordinance was promulgated, delegat ed all its powers exercisable under the Ordinance to the Government of Bombay, 896 On the next day, the Government of Bombay appointed respond ents 3 to 7 as directors of the company in terms of section 3 of the Ordinance. On the 2nd of March, 1950, the re spondent No. 9 was appointed a director and respondent No. 5 having resigned his office in the meantime, the re spondent No. 8 was appointed in his place. On the 7th of April, 1950, the Ordinance was repealed and an Act was passed by the Parliament of India, known as the Sholapur Spinning and Weaving Company (Emergency Provisions)Act which re enacted almost in identical terms all the provisions of the Ordinance and provided further that all actions taken and orders made under the Ordinance shall be deemed to have been taken or made under the corresponding provisions of the Act. The preamble to the Ordinance was not however repro duced in the Act. The petitioner in his petition has challenged the con stitutional validity of both the Ordinance and the Act. As the Ordinance is no longer in force and all its provisions have been incorporated in the Act, it will not be necessary to deal with or refer to the enactments separately. Both the Ordinance and the Act have been attacked on identical grounds and it is only necessary to enumerate briefly what these grounds are. The main ground put forward by the petitioner is that the pith and substance of the enactments is to take posses sion of and control over the mills of the company which are its valuable assets and such taking of possession of proper ty is entirely beyond the powers of the Legislature. 'The provisions of the Act, it is said, amount to deprivation of property of the shareholders as well as of the company within the meaning of article 31 of the Constitution and the restrictions imposed on the rights of the shareholders in respect to the shares held by them constitute an unjustifia ble interference with their rights to hold property and as such are void under article 19 (1) (f). It is urged that there was no public purpose for which the Legislature could authorise the taking possession or acquisition of 897 property and such acquisition or taking of possession with out payment of compensation is in violation of the funda mental rights guaranteed by article 31 (2) of the Constitu tion. It is said further that the enactment denies to the company and its shareholders equality before the law. and equal protection of laws and thus offends against the provi sions of article 14 of the Constitution. The only other material point raised is that the legislation is beyond the legislative competency of the Parliament and is not covered by any of the items in the legislative lists. On these allegations, the petitioner prays, in the first instance. that it may be declared that both the Act and the Ordinance are ultra vires and void and an injunction may be issued restraining the respondents from exercising any of the powers conferred upon them by the enactments. The third and the material prayer is for issuing a writ of mandamus, "restraining the respondents 1 to 9 from exercising or purporting to exercise any powers under the said Ordinance or Act and from in any manner interfering with the manage ment or affairs of the company under colour of or any pur ported exercise of any powers under the Ordinance or the Act," The other prayers are not material for our purpose. Before I address myself to the merits of this applica tion it will be necessary to clear up two preliminary matters in respect to which arguments were advanced at some length from the Bar. The first point relates to the scope of our enquiry in the present case and raises the question as to what precisely are the matters that have to be inves tigated and determined on this application of the petition er. The second point relates to the form of relief that can be prayed for and granted in a case of this description. Article 32 (1) of the Constitution guarantees to every body the right to move this court, by appropriate proceed ing, for enforcement of the fundamental rights which are enumerated in Part 1II of the Constitution. Clause (2) of the article lays down that the 115 898 Supreme Court shall have the power to issue directions or orders or writs including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari whichever may be appropriate for the enforcement of any of the rights conferred by this part. Thus anybody who complains of infraction of any of the fundamental rights guaranteed by the Constitution is at liberty to move the Supreme Court for the enforcement of such rights and this court has been given the power to make orders and issuue directions or writs similar in nature to the prerogative writs of English law as might be considered appropriate in particular cases. The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right compels the inference that they are applicable only to natural persons. An incorporated company, there fore, can come up to this court for enforcement of its fundamental rights and so may the individual shareholders to enforce their own; but it would not be open to an individual shareholder to complain of an Act which affects the funda mental rights of the company except to the extent that it constitutes an infraction of his own rights as well. This follows logically from the rule of law that a corporation has a distinct legal personality of its own with rights and capacities, duties and obligations separate from those of its individual members. As the rights are different and inhere in different legal entities, it is not competent to one person to seek to enforce the rights of another except where the law permits him to do so. A well known illustra tion of such exception is furnished by the procedure that is sanctioned in an application for a writ of habeas corpus. Not only the man who is imprisoned or detained in confine ment but any person, provided he is not an absolute stranger, can institute proceedings to obtain a writ of habeas corpus for the purpose of liberating another from an illegal imprisonment. 899 The application before us under article 32 of the Con stitution is on behalf of an individual shareholder of the company. Article 32, as its provisions show,. is not di rectly concerned with the determination of constitutional validity of particular legislative enactments. What it aims at is the enforcing of fundamental rights guaranteed by the Constitution, no matter whether the necessity for such enforcement arises out of an action of the executive or of the legislature. To make out a case under this article, it is incumbent upon the petitioner to establish not merely that the law complained of is beyond the competence of the particular legislature as not being covered by any of the items in the legislative lists, but that it affects or invades his fundamental rights guaranteed by the Constitu tion, of which he could seek enforcement by an appropriate writ or order. The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains I of infraction of such rights and approaches the court for relief. This being the position, the proper subject of our investigation would be what rights, if any, of the petitioner as a shareholder of the company have been violated by the impugned legislation. A discussion of the fundamental rights of the company as such would be outside the purview of our enquiry. It is settled law that in order to redress a wrong done to the company, the action should prima facie be brought by the company itself. It cannot be said that this course is not possible in the circumstances of the present case. As the law is alleged to be unconstitutional, it is open to the old directors of the company who have been ousted from their position by reason of the enactment to maintain that they are directors still in the eye of law, and on that footing the majority of shareholders can also assert 'the rights of the company as such. None of them, however, have come forward to institute any proceeding on behalf of the compa ny. Neither in form nor in substance does the present application purport to be one made by the company itself. Indeed, the company 900 is one of the respondents, and opposes the petition. As regards the other point, it would appear from the language of article 32 of the Constitution that. the sole object of the article is the enforcement of fundamental rights guaranteed by the Constitution. A proceeding under this article cannot really have any affinity to what is known as a declaratory suit. The first prayer made in the petition, n seeks relief in the shape of a declaration that the Act is invalid and is apparently inappropriate to an application under article 32; while the second purports to be framed for a relief by way of injunc tion consequent upon the first. As regards the third pray er, it has been contended by Mr. Joshi, who appears for one of the respondents, that having regard to the nature of the case and the allegations made by the petitioner himself, the prayer for a writ of mandamus, in the form in which it has been made, is not tenable. What is argued is that a writ of mandamus can be prayed for, for enforcement of statutory duties or to compel a person holding a public office to do or forbear from doing something which is incumbent upon him to do or forbear from doing under the provisions of any law. Assuming that the respondents in the present case are public servants, it is said that the statutory duties which it is incumbent upon them to discharge are precisely the duties which are laid down in the impugned Act itself. There is no legal obligation on their part to abstain from exercising the powers conferred upon them by the impeached enact ment which the court can be called upon to enforce. These is really not much substance in this argument, for according to the petitioner the impugned Act is not valid at all and consequently the respondents cannot take their stand on this very Act to defeat the application for a writ in the nature of a mandamus. Any way, article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases, and the application of the petitioner cannot be thrown out simply on the 901 ground that 'the proper writ or direction has not been prayed for. Proceeding now to the merits of the case, the first contention that has been pressed before us by the learned Counsel for the petitioner is that the effect of the Shola pur Spinning and Weaving Company Limited (Emergency Provi sions) Act, has been to take away from the company and its shareholders, possession of property and other interests in commercial undertaking and vest the same in certain persons who are appointed by the State, and the exercise of whose powers cannot be directed or controlled in any way by the shareholders. As the taking of possession is not for any public purpose and no provision for compensation has been made by the law which authorises it, such law, it is said, violates the fundamental rights guaranteed under article 31 of the Constitution. To appreciate the contention, it would be convenient first of all to advert to the provisions of the first two clauses of article 31 of the Constitution. The first clause of article 31 lays down that "no person shall be deprived of his property save by authority of law" The second clause provides: "No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken posse sion of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given. " It is a right inherent in every sovereign to take and appropriate private property belonging to individual citi zens for public use. 'this right, which is described as eminent domain in American law, is like the power of taxation, an offspring of political necessity, and it is supposed to be based upon an implied reservation by Govern ment that private property acquired by its 902 citizens under its protection may be taken or its use con trolled for public benefit irrespective of the wishes of the owner. Article 31 (2) of the Constitution prescribes a two fold limit within which such superior right of the State should be exercised. One limitation imposed upon acquisition or taking possession of private property which is implied in the clause is that such taking must be for public purpose. The other condition is that no property can be taken, unless the law which authorises such appropriation contains a provision for payment of compensation in the manner laid down in the clause. So far as article S1 (2) is concerned, the substantial question for our consideration is whether the impugned legislation authorises any act amounting to acquisition or taking possession of private property within the meaning of the clause. It cannot be disputed that acquisition means and implies the acquiring of the entire title of the expropriated owner, whatever the nature or extent of that title might be. The entire bundle of rights which were vested in the original holder would pass on acquisition to the acquirer leaving nothing in the former. In taking possession on the other hand, the title to the property admittedly remains in the original holder, though he is excluded from possession or enjoyment of the property. Article 31 (,?) of the Constitu tion itself makes a clear distinction between acquisition of property and taking possession of it for a public purpose, though it places both of them on the same footing in the sense that a legislation authorising either of these acts must make provision for payment of compensation to the displaced or expropriated holder of the property. In the context in which the word "acquisition" appears in article 31 (2), it can only mean and refer to acquisition of the entire interest of the previous holder by transfer of title and I have no hesitation in holding that there is no such acquisition either as regards the property of the company or of the shareholders in the present case. The question, therefore, narrows down to this as to whether the legisla tion in 903 question has authorised the taking of possession of any property or interest belonging to the petitioner. It is argued by the learned Attorney General that the taking of possession as contemplated by article 31 (2) means the taking of possession of the entire bundle of rights which the previous holder had, by excluding him from every part or item thereof. If the original holder is still left to exercise his possession with regard to some of the rights which were within the folds of his title, it would not amount to taking possession of the property for purposes of article 31 (2) of the Constitution. Having laid down this proposition of law, the learned Attorney General has taken us through the various provisions of the impugned Act and the contention advanced by him substantially is that nei ther the company nor the shareholders have been dispossessed from their property by reason of the enactment. As regards the properties of the company, the directors, who have been given the custody of the property, effects and actionable claims of the company, are, it is said, to exercise their powers not in their own right but as agents of the company, whose beneficial interest in all its assets has not been touched or taken away at all. No doubt the affairs of the company are to be managed by a body of directors appointed by the State and not by the company, but this, it is argued, would not amount to taking possession of any property or interest within the meaning of article 31 (2). Mr. Chari on the other hand, has contended on behalf of the petitioner that after the management is taken over by the statutory directors, it cannot be said that the company still retains possession or control over its property and assets. Assuming that this State management was imposed in the interests of the shareholders themselves and that the statutory directors are acting as the agents of the company, the possession of the statutory directors could not, it is argued, be regarded in law as possession of the company so long as they are bound to act in obedience to the dictates of the Central Government and not of the company itself in the administra tion of its affairs. Possession of an 904 agent, it is said, cannot juridically be the possession of the principal, if the agent is to act not according to the commands or dictates of the principal, but under the direc tion of an exterior authority. There can be no doubt that there is force in this con tention, but as I have indicated at the outset, we are not concerned in this case with the larger question as to how far the inter position of this statutory management and control amounts to taking possession of the property and assets belonging to the company. The point for our consider ation is a short one and that is whether by virtue of the impugned legislation any property or interest of the peti tioner himself, as a shareholder of the company, has been taken possession of by the State or an authority appointed under it, as contemplated by article 31 (2) of the Constitu tion. The petitioner as a shareholder has undoubtedly an interest in the company. His interest is represented by the share he holds and the share is movable property according to the Indian Companies Act with all the incidence of such property attached to it. Ordinarily, he is entitled to enjoy the income arising from the shares in the shape of divi dends; the share like any 'other marketable commodity can be sold or transferred by way of mortgage or pledge. The hold ing of the share in his name gives him the right to vote at the election of directors and thereby take a part, though indirectly, in the management of the company 's affairs. If the majority of shareholders sides with him, he can have a resolution passed which would be binding on the company, and lastly, he can institute proceedings for winding up of the company which may result in a distribution of the net assets among the shareholders. It cannot be disputed that the petitioner has not been dispossessed in any sense of the term of the shares he holds. Nobody has taken the shares away from him. His legal and beneficial interest in respect to the shares he holds is left intact. If the company declares dividend, he would be entitled to the same. He can sell or otherwise dispose of the shares at any 905 time at his option. The impugned Act has affected him in this way that his right of voting at the election of direc tors has been kept in abeyance so long as the management by the statutory director continues; and as a result of that, his right to participate in the management of the company has been abridged to that extent. His rights to pass resolutions or to institute winding up proceedings have also been restricted though they are not wholly gone; these rights can be exercised only with the consent or sanction of the Central Government. In my opinion, from the facts stated above, it cannot be held that the petitioner has been dispossessed from the property owned by him. I may apply the test which Mr. Chari himself formulated. If somebody had taken possession of the petitioner 's shares and was clothed with the authority to exercise all the powers which could be exercised by the holder of the shares under law, then even if he purported to act as the petitioner 's agent and exer cise these powers for his benefit, the possession of such person would not have been the petitioner 's possession if he was bound to act not under the directions of the petitioner or in obedience to his commands but under the directions of some other person or authority. There is no doubt whatsoever that is not the position in the present case. The State has not usurped the shareholders ' right to vote or vested it in any other authority. The State appoints directors of its own choice but that it does, not in exercise of the share holders ' right to vote but in exercise of the powers vested in it by the impugned Act. Thus there has been no dispos session of the shareholders from their right of voting at all. The same reasoning applies to the other rights of the shareholders spoken of above, namely, their right of passing resolutions and of presenting winding up petition. These rights have been restricted undoubtedly and may not be capable of being exercised to the fullest extent as long as the management by the State continues. Whether the restric tions are such as would bring the case within 116 906 the mischief of article 19 (1) (f) of the Constitution, 1 will examine presently; but 1 have no hesitation in holding that they do not amount to dispossession of the shareholders from these rights in the sense that the rights have been usurped by other people who are exercising them in place of the displaced shareholders. In the view that I have taken it is not necessary to discuss whether we can accept as sound the contention put forward by the learned Attorney General that the word "property" as used in article 31 of the Constitution con notes the entire property, that is to say the totality of the rights which the ownership of the object connotes. According to Mr. Setalvad, if a shareholder is not deprived of the entirety of his rights which he is entitled to exer cise by reason of his being the owner or holder of the share and some rights, however insignificant they might be, still remain in him, there cannot be any dispossession as contem plated by article 31(2). It is difficult, in my opinion, to accept the contention formulated in such broad terms. The test would certainly be as to whether the owner has been dispossessed substantially from the rights held by him or the loss is only with regard to some minor ingredients of the proprietory right. It is relevant to refer in this connection to an observation made by Rich J. in a Full Bench decision of the High Court of Australia,(1) where the ques tion arose as to whether the taking of exclusive possession of a property for an indefinite period of time by the Com monwealth of Australia under Reg. 54 of the National Securi ty Regulation amounted to acquisition of property within the meaning of placitum 31, section 51, of the Commonwealth Constitution. The majority of the Full Bench answered the question in the affirmative and the main reason upon which the majority decision was based is thus expressed in the language of Rich J. "Property, in relation to land, is a bundle of rights exercisable with respect to the land. The tenant of an unencumbered estate in fee simple in possession has the largest possible bundle. But there is nothing in (1) See Minister of Stain for the Army vs Dalziel, 68 C L.R. p. 261, 907 the placitum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it was expropriat ing. " It is not, however, necessary for my purpose to pursue the matter any further, as in my opinion there has been no dispossession of the rights of a shareholder in the present case. Mr. Chari in course of his opening relied exclusively on clause (2) of article 31 of the Constitution. During his reply, however, he laid some stress on clause (1) of the article as well, and his contention seems to be that there was deprivation of property in the present case in contra vention of the terms of this clause. It is difficult to see what exactly is the contention of the learned Counsel and in which way it assists him for purposes of the present case. It has been argued by the learned Attorney General that clause (1) of article 31 relates to a power different from that dealt with under clause (2). According to him, what clause (1) contemplates is confiscation or destruction of property in exercise of what are known as 'police powers ' in American law, for which no payment of compensation is neces sary. I do not think it proper for purposes of the present case to enter into a discussion on this somewhat debatable point which has been raised by the learned Attorney General. In interpreting the provisions of our Constitution, we should go by the plain words used by the Constitution makers and the importing of expressions like 'police power ; which is a term of variable and indefinite connotation in American law can only make the task of interpretation more difficult. It is also not necessary to express any opinion as to wheth er clauses (1) and (2) of article 31 relate to exercise of different kinds of powers or they are to be taken as cumula tive provisions in relation to the same subjectmatter, namely, compulsory acquisition of property. If the word "deprived" as used in clause (1) connotes the idea of de struction or confiscation of property, obviously no such thing has happened in the present 908 case. Again if clauses (1) and (2) of article 31 have to be read together and "deprivation" in clause (1) is given the same meaning as compulsory acquisition in clause (2), clause (1), which speaks neither of compensation nor of public purpose, would not by itself, and apart from clause (2), assist the petitioner in any way. If the two clauses are read disjunctively, the only question that may arise in connection with clause (1) is whether or not the depriva tion of property is authorised by law. Mr. Chari has raised a question relating to the validity of the legislation on the ground of its not being covered by any of the items in the legislative list and to this question I would advert later on; but apart from this, clause (1) of article 31 of the Constitution seems to me to be altogether irrelevant for purposes of the petitioner 's case. This leads me to the consideration of the next point raised by Mr. Chari, namely, whether these restrictions offend against the provision of article 19(1)(f) of the Constitution. Article 19(1) of the Constitution enumerates the dif ferent forms of individual liberty, the protection of which is guaranteed by the Constitution. The remaining clauses of the article prescribe the limits that may be placed upon these liberties by law, so that they may not conflict with public welfare or general morality. Article 19(1)(f) guarantees to all citizens ' the right to acquire, hold or dispose of property. ' Any infringement of this provision would amount to a violation of the fundamental rights, unless it comes within the exceptions provided for in clause (5) of the article. That clause permits the imposition of reasonable restrictions upon the exercise of such righ teither in the interests of the general public or for the protection of the interests of any Scheduled Tribe. Two questions, therefore, arise in this connection: first, whether the restrictions that have been imposed upon the rights of the petitioner as a shareholder in the company under the Sholapur Act amount to infringement of his.right to acquire, hold or dispose of property within the meaning of article 19(1)(f) of the Constitution and 909 secondly, if they do interefere with such rights, whether they are covered by the exceptions 1aid down in clause (5) of the article. So far as the first point is concerned, it is quite clear that there is no restriction whatsoever upon the petitioner 's right to acquire and dispose of any property. The shares which he holds do remain his property and his right to dispose of them is not lettered in any way. If to 'hold ' a property means to possess it, there is no infringe ment of this right either, for, as I have stated already, the acts complained of by the petitioner do not amount to dispossession of him from any property in the eye of law. It is argued that 'holding ' includes enjoyment of all benefits that are ordinarily attached to the ownership of a property. The enjoyment of the fruits of a property is undoubtedly an incident of ownership. The pecuniary benefit, which a share. holder derives from the shares he holds, is the dividend and there is no limitation on the petitioner 's right in this respect. The petitioner undoubtedly has been precluded from exercising his right of voting at the elec tion of directors so long as the statutory directors contin ue to manage the affairs of the company. He cannot pass an effective resolution in concurrence with the majority of shareholders without the consent or sanction of the Central Government and without such sanction, there is also a disa bility on him to institute any winding up proceedings in a court of law. In my opinion, these are rights or privileges which are appurtenant to or flow from the ownership of property, but by themselves and taken independently, they cannot be reck oned as property capable of being acquired, held or disposed of as is contemplated by article 19 (1) (f) of the Constitu tion. I do not think that there has been any restriction on the rights of a shareholder to hold, acquire or dispose of his share by reason of the impugned enactment and conse quently article 19 (1) (f) of the Constitution is of no assistance to the petitioner. In this view, the other point does not arise for consideration, but I may state here that even if it is conceded for argument 's sake that the 910 disabilities imposed by the impugned legislation amount to restrictions on proprietory right, they may very well be supported as reasonable restraints imposed in the interests of the general public, viz., to secure the supply of a commodity essential to the community and to prevent a seri ous unemployment amongst a section of the people. They are, therefore, protected completely by clause (5)of article 19. This disposes of the second point raised by Mr. Chari. The next point urged on behalf of the petitioner raises an important question of constitutional law which turns upon the construction of article 14 of the Constitution. It is urged by the learned Counsel for the petitioner that the Sholapur Act is a piece of discriminatory legislation which offends against the provision of article 14 of the Constitu tion. Article 14 guarantees to all persons in the territo ry of India equality before the law and equal protection of the laws and its entire object, it is said, is to prevent any person or class of persons from being singled out as a special subject of discriminatory legislation. It is pointed out that the law in this case has selected one particular company and its shareholders and has taken away from them the right to manage their own affairs, but the same treatment has not been meted out to all other companies or shareholders situated in an identical manner. Article 14 of the Constitution, it may be noted, corre sponds to the equal protection clause in the Fourteenth Amendment of the American Constitution which declares that "no State shall deny to any person within its jurisdiction the equal protection of the laws. " We have been referred in course of the arguments on this point by the learned Counsel on both sides to quite a number of cases decided by the American Supreme Court, where questions turning upon the construction of the 'equal protection ' clause in the Ameri can Constitution came up for consideration. A detailed examination of these reports is neither necessary nor prof itable for our present purpose but we think we can cull a few general principles from some of the pronouncements of 911 the American Judges which might appear to us to be consonant with reason and help us in determining the true meaning and scope of article 14 of our Constitution. I may state here that so far as the violation of the equality clause in the Constitution is concerned, the peti tioner, as a shareholder of the company, has as much right to complain as the company itself, for his complaint is that apart from the discrimination made against the company, the impugned legislation has discriminated against him and the other shareholders of the company as a group vis a vis the shareholders of all other companies governed by the Indian Companies Act who have not been treated in a similar way. As the discriminatory treat ment has been in respect to the shareholders of this company alone, any one of the shareholders, whose interests are thus vitally affected, has a right to complain and it is immate rial that there has been nodiscrimination inter se amongst the shareholders themselves. It must be admitted that the guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions. As has been said by the Supreme Court of America, "equal protection of laws is a pledge of the protection of equal laws( ')," and this means "subjection to equal laws applying alike to all in the same situation("). " In other words, there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is the same. I am unable to accept the argument of Mr. Chari that a legislation relating to one individual or one family or one body corporate would per se violate the guarantee of the equal protection rule. There can certainly be a law applying to one person or to one group of persons and it cannot be held to be (1) Yick Wo vs Hopkins, 118 U.S. at 369 (2) Southern Raliway Company vs Greene, ; ,412. 912 unconstitutional if it is not discriminatory in its charac ter (1). It would be bad law "if it arbitrarily selects one individual or a class of individuals, one corporation or a class of corporations and visits a penalty upon them, which is not imposed upon others guilty of like delinquency(2). " The legislature undoubtedly has a wide field of choice in determining and classifying the subject of its laws, and if the law deals alike with all of a cer tain class, it is normally not obnoxious to the charge of denial of equal protection; but the classification should never be arbitrary. It must always rest upon some real and substantial distinction bearing a reasonable and just rela tion to the things in respect to which the classification is made; and classification made without any ' substantial basis should be regarded as invalid(3). The question is whether judged by this test the im pugned Act can be said to have contravened the provision embodiedin article 14 of the Constitution. Obviously the Act purports to make provisions which are of a drastic character and against the general law of the land as laid down in the Indian Companies Act, in regard to the admin istration and management of the affairs of one company in indian territory. The Act itself gives no reason for the legislation but the Ordinance, which was a precursor of the Act expressly stated why the legislation was necessary. It said that owing to mismanagement and neglect, a situation had arisen in the affairs of the company which prejudicially affected the production of an essential commodity and caused serious unemployment amongst a certain section of the community. Mr. Chari 's contention in substance is that there are various textile companies in India situated in a simi lar manner as the Sholapur company, against which the same charges could be brought and for the control and regulation of which all the reasons that are mentioned in the preamble to the Ordinance (1) Willis Constitutional Law, p. 580. (2) Gulf C. & section F.R. Co. vs Ellis. , at 159. (3) Southern Railway Co. vs Greene, ; , at 412 913 could be applied. Yet, it is said, the legislation has been passed with regard to this one company alone. The argument seems plausible at first sight, but on a closer examination I do not think that I can accept it as sound. It must be conceded that the Legislature has a wide discretion in determining the subject matter of its laws. It is an accepted doctrine of the American Courts and which seems to me to be well founded on principle, that the presumption is favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a transgression of constitutional principles. As was said by the Supreme Court of America in Middleton vs Texas Power and Light Company(1), 'It must be presumed 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. " This being the position, it is for the petitioner to establish facts which would prove that the selection of this particular subject by the Legislature is unreasona ble and based upon arbitrary grounds. No allegations were made in the petition and no materials were placed before us to show as to whether there are other companies in India which come precisely under the same category as the Sholapur Spinning and Weaving Company and the reasons for imposing control upon the latter as mentioned in the preamble to the Ordinance are applicable to them as well. Mr. Chari argues that these are matters of common knowledge of which we should take judicial notice. I do not think that this is the correct line of approach. It is quite true that the Legislature has, in this instance, proceeded against one company only and its shareholders; but even one corporation or a group of persons can be taken as a class by itself for the purpose of legislation, provided it exhibits some excep tional features which are not possessed by others. The courts should prima facie (1) 219 u.s. 152 at p. 157. 117 914 lean in favour of constitutionality and should support the legislation if it is possible to do so on any reasonable ground, and it is for the party who attacks the validity of the legislation to place all materials before the court which would go to show that the selection is arbitrary and unsupportable. Throwing out of vague hints that there may be other instances of similar nature is not enough for this purpose. We have not even before us any statement on oath by the petitioner that what has been alleged against this particular company may be said against other companies as well. If there was any such statement, the respondents could have placed before us the whole string of events that led up to the passing of this legislation. If we are to take judi cial notice of the existence of similar other badly managed companies, we must take notice also of the facts which appear in the parliamentary proceedings in connection with this legislation which leave been referred to by my learned brother, Fazl Ali J. in his judgment and which would go to establish that the facts connected with this corporation are indeed exceptional and the discrimination that has been made can be supported on just and reasonable grounds. I purpose ly refrain from alluding to these facts or basing my deci sion thereon as we had no opportunity of investigating them properly during the course of the hearing. As matters stand, no proper materials have been placed before us by either side and as I am unable to say that the legislature cannot be supported on any reasonable ground, I think it to be extremely risky to overthrow it on mere suspicion or vague conjectures. If it is possible to imagine or think of cases of other companies where similar or identical condi tions might prevail, it is also not impossible to conceive of something" peculiar" or "unusual" to this corporation which led the legislature to intervene in its affairs. As has been laid down by the Supreme Court of America, "The Legislature is free to recognise degrees of harm and it may confine its restrictions to those cases where the need is deemed to be the clearest"(1). We should (1) Radics, vs New York, 264 U.S. 915 bear in mind that a corporation, which is engaged in produc tion of a commodity vitally essential to the community, has a social character of its own, and it must not be regarded as the concern primarily or only of those who invest their money in it. If its possibilities are large and it had a prosperous and useful career for a long period of time and is about to collapse not for any economic reason but through sheer perversity of the controlling authority, one cannot say that the legislature has no authority to treat it as a class by itself and make special legislation applicable to it alone in the interests of the community at large. The combination of circumstances which are present here may be of such unique character as could not be existing in any other institution. But all these, I must say, are matters which require investigation on proper materials which we have not got before us in the present case. In these circum stances I am constrained to hold that the present applica tion must fail on the simple ground that the petitioner made no attempt to discharge the primafacie burden that lay upon him and did not place before us the materials upon which a proper decision on the point could be arrived at. In my opinion , therefore, the attack on the legislation on the ground of the denial of equal protection of law cannot succeed. The only other thing that requires to be considered is the argument of Mr. Chari that the law in question is in valid as it is not covered by any of the items in the legis lative list. In my opinion, this argument has no substance. What the law has attempted to do is to regulate the affairs of this company by laying down certain special rules for its management and administration. It is fully covered by item No. 43 of the Union List which speaks inter alia of "incor poration, regulation and winding up of trading corporations. " The result is that the application fails and is dis missed with costs. DAS J. As I have arrived at a conclusion different from that reached by the majority of this Court, I 916 consider it proper, out of my respect for the opinion of my learned colleagues, to state the reasons for my conclusions in some detail. On January 9, 1950, the Governor General of India, acting under section 42 of the Government of India Act, 1935, promulgated an Ordinance, being Ordinance No. II of 1950, concenrning the Sholapur Spinning and Weaving Company, Limited, (hereafter referred to as the said company). The preambles and the provisions of the Ordinance have been referred to in the judgment just delivered by Mukherjea J. and need not be recapitulated by me in detail. Suffice it to say that the net result of the Ordinance was that the managing agents of the said company were dismissed, the directors holding office at the time automatically vacated their office, the Government was authorised to nominate directors, the rights of the shareholders of this company were curtailed in that it was made unlawful for them to nominate or appoint any director, no resolution passed by them could be given effect to without the sanction of the Government and no proceeding for winding up could be taken by them without such sanction, and power was given to the Government to further modify the provisions of the Indian Companies Act in its application to the said company. On the very day that the Ordinance was promulgated the Central Government acting under section 15 delegated all its powers to the Government of Bombay. On January 10, 1950, the Government of Bombay appointed Respondents Nos. 3 to 7 as the new directors. On March 2, 1950, Respondent No. 5 having resigned, Respondent No. 8 was appointed a director in his place and on the same day Respondent No. 9 was also appointed as a director. In the meantime the new Constitu tion had come into force on January 26, 1950. On February 7, 1950, the new directors passed a resolution sanctioning a call for Rs. 50 on the preference shares. Thereupon a suit being Suit No. 438 of 1950 was filed in the High Court of 917 Bombay by one Dwarkadas Shrinivas against the new directors challenging the validity of the Ordinance and the right of the new directors to make the call. Bhagwati J. who tried the suit held that the Ordinance was valid and dismissed the suit. An appeal (Appeal No. 48 of 1950) was taken from that decision which was dismissed by a Division Bench (Chagla C.J. and Gajendragadkar J.) on August 29, 1950. In the meantime, on April 7, 1950, the Ordinance was replaced by Act No. XXVIII of 1950. The Act substantially reproduced the provisions of the Ordinance except that the preambles to the Ordinance were omitted. On May 29, 1950, the present petition was filed by one Chiranjitlal Chowdhuri. The petitioner claims to be a shareholder of the said company holding 80 preference shares and 3 ordinary shares. The preference shares, according to him, stand in the name of the Bank of Baroda to whom they are said to have been pledged. As those preference shares are not registered in the name of the petitioner he cannot assert any right as holder of those shares. According to the respondents, the petitioner appears on the register as holder of only one fully paid up ordinary share. For the purposes of this application, then, the petitioner 's interest in the said company must be taken as limited to only one fully paid up ordinary share. The respondents are the Union of India, the State of Bombay and the new directors besides the company itself. The respondent No. 5 having resigned, he is no longer a director and has been wrongly impleaded as respond ent. The reliefs prayed for are that the Ordinance and the Act are ultra vires and void, that the Central Government and the State Government and the directors be restrained from exercising any powers under the Ordinance or the Act, that a writ of mandamus be issued restraining the new direc tors from exercising any powers under the Ordinance or the Act or from in any manner interfering with the management of the affairs of the company under colour of or in purported exercise of any powers under the said Ordinance or Act. 918 The validity of the Ordinance and the Act has been challenged before us on the following grounds: (i) that it was not within the legislative competence (a) of the Gover nor General to promulgate the Ordinance, or (b) of the Parliament to enact the Act, and (ii) that the Ordinance and the Act infringe the fundamental rights of the shareholders as well as those of the said company and are, therefore, void and inoperative under article 13. Re (i) . The present application has been made by the petitioner under article 52 of the Constitution. Sub section (1) of that article guarantees the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part [1] of the Constitution. Sub section (2) empowers this Court to issue directions or orders or writs, including certain specified writs, whichever may be appro priate, for the enforcement of any of the rights conferred by that Part. It is clear, therefore, that article 32 can only be invoked for the purpose of the enforcement of the fundamental rights. Article 32 does not permit an applica tion merely for the purpose of agitating the competence of the appropriate legislature in passing any particular enact ment unless the enactment also infringes any of the funda mental rights. In this case the claim is that the fundamen tal rights have been infringed and, therefore, the question of legislative competence may also be incidentally raised on this application. It does not appear to me, however, that there is any substance in this point for, in my opinion, entry 33 of List I of the Seventh Schedule to the Government of India Act, 1935, and the corresponding entry 43 of the Union List set out in the Seventh Schedule to the Constitu tion clearly support these pieces of legislation as far as the question of legislative competency is concerned. Sec tions 83A and 83 B of the Indian Companies Act can only be supported as valid on the ground that they regulate the management of companies and are, therefore, within the said entry. Likewise, the provisions of the Ordinance and the Act relating to the appointment of directors by the 919 Government and the curtailment of the shareholders ' rights as regards the election of directors, passing of resolutions giving directions with respect to the management of the company and to present a winding up petition are matters touching the management of the company and, as such, within the legislative competence of the appropriate legislative authority. In my judgment, the Ordinance and the Act cannot be held to be invalid on the ground of legislative incompe tency of the authority promulgating or passing the same. Re (ii) The fundamental rights said to have been in fringed are the right to acquire, hold and dispose of property guaranteed to every citizen by Article 19(1)(f) and the right to property secured by article 31, In Gapalan 's case (1) 1 pointed out that the rights conferred by article 19 (1) (a) to (e) and (g) would be available to the citizen until he was, under article 21, deprived of his life or personal liberty according to procedure established by law and that the right to property guaranteed by article 19 (1)(f) would likewise continue until the owner was, under article 31, deprived of such property by authority of law. Therefore, it will be necessary to consider first whether the shareholder or the company has been deprived of his or its property by authority of law under Article 31 for, if he or it has been so deprived, then the question of his or its fundamental right under article 19 (1) (f) will not arise. The relevant clauses of article 31 run as follows "31. (1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorisingthe taking of such possession or such acquisition, unless the law provides for compensation for the property taken posses sion of or acquired (1) ; 920 and either fixes the amount of the compensation, or speci fies the principles on which, and the manner in which, the compensation is to be determined and given. " Article 31 protects every person, whether such ' person is a citizen or not. and it is wide enough to cover a natu ral person as well as an artificial person. Whether or not, having regard to the language used in article 5, a corpora tion can be called a citizen and as such entitled to the rights guaranteed under article 19, it is quite clear that the corporation is protected by article 31, for that article protects every "person" which expression certainly includes an artificial person. The contention of the peitioner is that the Ordinance and the Act have infringed his fundamental right to property as a shareholder in the said company. Article 31, like article 19(1) (f), is concerned with "property ". Both the articles are in the same chapter and deal with fundamental rights. Therefore, it is reasonable to say that the word "property" must be given the same meaning in construing those two articles. What, then, is the meaning of the word "property"? It may mean either the bundle of rights which the owner has over or in respect of a thing, tangible or intangible, or it may mean the thing itself over or in respect of which the owner may exercise these rights. It is quite clear that the Ordinance or the Act has not deprived the shareholder of his share itself. The share still be longs to the shareholder. He is still entitled to the dividend that may be declared. He can deal with or dispose of the share as he pleases. The learned Attorney General contends that even if the other meaning of the word "proper ty" is adopted, the shareholder has not been deprived of his" property" understood in that sense, that is to say he has not been deprived of the entire bundle of rights which put together constitute his "property ". According to him the" property" of the shareholder, besides and apart from his right to elect directors, to pass resolutions giving directions to the directors and to present a winding up petition, consists in his right to participate 921 in the dividends declared on the profits made by the working of the company and, in case of winding up, to participate in the surplus that may be left after meeting the winding up expenses and paying the creditors. Those last mentioned rights, he points out, have not been touched at all and the shareholder can yet deal with or dispose of his shares as he pleases and is still entitled to dividends if and when declared. Therefore, concludes the learned Attorney General, the shareholder cannot complain that he has been deprived of his "property", for the totality of his rights have not been taken away. The argument thus formulated appears to me to be somewhat too wide, for it will then permit the legisla ture to authorise the State to acquire or take possession, without any compensation, of almost the entire rights of the owner leaving to him only a few subsidiary rights. This result could not, in my opinion, have been intended by our Constitution. As said by Rich J. in the Minister for State for the Army vs Datziel (i) while dealing with section 31 (XXXI) of the Australian Constitution "Property, in relation to land, is a bundle of rights exercisable with respect to the land. The tenant of an unencurnbered estate in fee simple in possession has the largest possible bundle. But there is nothing in the placi tum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it is expropriating. " The learned Judge then concluded as follows at p. 286 : "It would in my opinion, be wholly inconsistent with the language of the placitum to hold that whilst preventing the legislature from authorising the acquisition of a citi zen 's full title except upon just terms, it leaves it open to the legislature to seize possession and enjoy the full fruits of possession indefinitely, on any terms it chooses or upon no terms at all." (1) ; 118 922 In my judgment the question whether the Ordinance or the Act has deprived the shareholder of his "property" must depend, for its answer, on whether it has taken away the substantial bulk of the rights constituting his "property". In other words, if the rights taken away by the Ordinance or the Act are such as would render the rights left un touched illusory and practically valueless, then there can be no question that in effect and substance the "property" of the shareholder has been taken away by the Ordinance or the Act. Judged by this test can it be said that the right to dispose of the share and the right to receive dividend, if any, or to participate in the surplus in the case of winding up that have been left to the shareholder are illu sory or practically valueless, because the right to control the management by directors elected by him, the right to pass resolutions giving directions to the directors and the right to present a winding up petition have, for the time being, been suspended ? I think not. The right still pos sessed by the shareholder are the most important of the rights constituting his "property", although certain privi leges incidental to the ownership have been put in abeyance for the time being. It is, in my opinion, impossible to say that the Ordinance or the Act has deprived the shareholder of his "property" in the sense in which that word is used in article 19 (1) (f) and article 31. The curtailment of the incidental privileges, namely, the right to elect directors, to pass resolutions and to apply for winding up may well be supported as a reasonable restraint on the exercise and enjoyment of the shareholder 's right of property imposed in the interests of the general public under article 19 (5), namely, to secure the supply of an essential commodity and to prevent unemployment. Learned counsel for the petitioner, however, urges that the Ordinance and the Act have infringed the sharehold er 's right to property in that he has been deprived of his valuable right to elect directors, to give directions by passing resolutions and, in case of apprehension of loss, to present a petition for the winding 923 up of the company. These rights, it is urged, are by them selves "property" and it is of this "property" that the shareholder is said to have been deprived bythe State under a law which does not provide for payment of compensation and which is, as such, an infraction of the shareholder 's funda mental right to property under article 31 (2). Two ques tions arise on this argument. Are these rights "property" within the meaning of the two articles I have mentioned ? These rights, as already stated, are, no doubt, privileges incidental to the ownership of the share which itself is property, but it cannot, in my opinion, be said that these rights, by themselves, and apart from the share are "proper ty" within the meaning of those articles, for those articles only regard that as "property" which can by itself be ac quired, disposed of or taken possession of. The right to vote for the election of directors, the right to pass reso lutions and the right to present a petition for winding up are personal rights flowing from the ownership of the share and cannot by themselves and apart from the share be ac quired or disposed of or taken possession of as contemplated by those articles. The second question is assuming that these rights are by themselves "property ", what is the effect of the Ordinance and the Act on such "property". It is nobody 's case that the Ordinance or the Act has autho rised any acquisition by the State of this "property" of the shareholder or that there has in fact been any such acquisi tion. The only question then is whether this "property" of the shareholder, meaning thereby only the rights mentioned above, has been taken possession of by the State. It will be noticed that by the Ordinance or the Act these particular rights of the shareholder have not been entirely taken away, for he can still exercise these rights subject 0 course, to the sanction of the Government. Assuming, however, that the fetters placed on these rights are tantamount to the taking away of the rights altogether, there is nothing to indicate that the Ordinance or the Act has, after taking away the rights from the shareholder, 924 vested them in the State or in any other person named by it so as to enable the State or any other person to exercise those rights of the shareholder. The Government undoubtedly appoints directors under the Act, but such appointment is made in exercise of the the powers vested in the Government by the Ordinance or the Act and not in exercise of the shareholder 's right. As already indicated, entry 43 in the Union List authorises Parliament to make laws with respect, amongst other things, to the regulation of trading corpora tions. There was, therefore, nothing to prevent Parliament from amending the Companies Act or from passing a new law regulating the management of the company by providing that the directors, instead of being elected by the shareholders, should be appointed by the Government. The new law has undoubtedly cut down the existing rights of the shareholder and thereby deprived the shareholder of his unfettered right to appoint directors or to pass resolutions giving direc tions or to present a winding up petition. Such depriva tion, however, has not vested the rights in the Government or its nominee. What has happened to the rights of the shareholder is that such rights have been temporarily de stroyed or kept in abeyance. The result, therefore, has been that although the shareholder has been for the time being deprived of his "property", assuming these rights to be "property", such "property" has not been acquired or taken possession of by the Government. If this be the result brought about by the Ordinance and the Act, do they offend against the fundamental rights guaranteed by article 31 ? Article 31 (1) formulates the fundamental right in a nega tive form prohibiting the deprivation of property except by authority of law. It implies that a person may be deprived of his property by authority of law. Article 31 (2) prohib its the acquisition or taking possession of property for a public purpose under any law, unless such law provides for payment of compensation. It is suggested that clauses (1) and (2)o[ article 31 deal with the same topic, namely, compulsory acquisition or taking possession 925 of property, clause (2) being only an elaboration of clause (1). There appear to me to be two objections to this sug gestion. If that were the correct view, then clause (1).must be held to be wholly redundant and clause (2), by itself, would have been sufficient. In the next place, such a view would exclude deprivation of property otherwise than by acquisition or taking of possession. One can conceive of circumstances where the State may have to deprive a person of his property without acquiring or taking possession of the same. For example, in any emergency, in order to prevent a fire spreading, the authorities may have to demolish an intervening building. This deprivation of property is sup ported in the United States of America as an exercise of "police power ".This deprivation of property is different from acquisition or taking of possession of property which goes by the name of "eminent domain" in the American Law. The construction suggested implies that our Constitution has dealt with only the law of "eminent domain ", but has not provided for deprivation of property in exercise of police powers ' '. I am not prepared to adopt such construction, for I do not feel pressed to do so by the language used in article 31. On the contrary, the language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may well be brought about otherwise than by acquiring or taking possession of it. I think clause (1) enunciates the general principle that no person shall be deprived of his property except by authority of law, which, put in a positive form, implies that a person may be de prived of his property, provided he is so deprived by au thority of law. No question of compensation arises under clause (1). The effect of clause (2) is that only certain kinds of deprivation of property, namely those brought about by acquisition or taking possession of it, will not be permissible under any law, unless such law provides for payment of compensation. If the deprivation of property is brought about by means other than acquisition or taking possession of it, no compensation is required, provided that such deprivation is by 926 authority of law. In this case, as already stated, although the shareholder has been deprived of certain rights, such deprivation has been by authority of law passed by a compe tent legislative authority. This deprivation having been brought about otherwise than by acquisition or taking pos session of such rights, no question of compensation can arise and, therefore, there can be no question of the infraction of fundamental rights under article 31 (2). It is clear, therefore, that so far as the shareholder is concerned there has been no infringement of his fundamental rights under article 19 (1) (f) or article 31, and the shareholder cannot question the constitutionality of the Ordinance or the Act on this ground. As regards the company it is contended that the Ordi nance and the Act by empowering the State to dismiss the managing agent, to discharge the directors elected by the shareholders and to appoint new directors have in effect authorised the State to take possession of the undertaking and assets of the company through the new directors appoint ed by it without paying any compensation and, therefore, such law is repugnant to article 31 (2) of our Constitution. It is, however, urged by the learned Attorney General that the mills and all other assets now in the possession and custody of the new directors who are only servants or agents of the said company are, in the eye of the law, in the possession and custody of the company and have not really been taken possession of by the State. This argument, however, overlooks the fact that in order that the posses sion of the servant or agent may be juridically regarded as the possession of the master or principal, the servant or agent must be obedient to, and amenable to the directions of, the master or principal. If the master or principal has no hand in the appointment of the servant or agent or has no control over him or has no power to dismiss or discharge him, as in this case, the possession of such servant or agent can hardly, in law, be regarded as the possession of the company(1). In this view of the (1) See Elements of Law by Markby. 6th Edition. Para 371. p. 192. 927 matter there is great force in the argument that the proper ty of the company has been taken possession of by the State through directors who have been appointed by the State in exercise of the powers conferred by the Ordinance and the Act and who are under the direction and control of the State and this has been done without payment of any compen sation. The appropriate legislative authority was no doubt induced to enact this law, because, as the preamble to the Ordinance stated, on account of mismanagement and neglect, a situation had arisen in the affairs of the company which had prejudicially affected the production of an essential com modity and had caused serious unemployment amongst a certain section of the community, but, as stated by Holmes J. in Pennsylvania Coal Company vs Mahon(1), "A strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional. way of paying for the change. " Here, there fore, it may well be argued that the property of the company having been taken possession of by the State in exercise of powers conferred by a law which does not provide for payment of any compensation, the fundamental right of the company has, in the eye of the law, been infringed. If the fundamental right of the company has been in fringed, at all, who can complain about such infringement ? Primafacie the company would be the proper person to come forward in vindication of its own rights. It is said that the directors having been dismissed, the company cannot act. This, however, is a misapprehension, for if the Act be void on account of its being unconstitutional, the directors appointed by the shareholders have never in law been dis charged and are still in the eye of the law the directors of the company, and there was nothing to prevent them from taking proceedings in the name of the company at their own risk as to costs. Seeing that the directors have not come forward to make the application on behalf of the company and in its name the question arises whether (1) ; 928 an individual shareholder can complain. It is well settled in the United States that no one but those whose rights are directly affected by a law can raise the question of the constitutionality of that law. Thus in McCabe vs Atchison(1) which arose out of a suit filed by five Negros against five Railway Companies to restrain them from making any distinction in service on account of race pursuant to an Oklahoma Act known as ' 'The Separate Coach Law," in uphold ing the dismissal of the suit Hughes J. observed : "It is an elementary principle that in order to justify the granting of this extraordinary relief, the complainants ' need of it and the absence of an adequate remedy at law must clearly appear. The complaint cannot succeed because some one else may be hurt. Nor does it make any difference that other persons who may be injured are persons of the same race or occupation. It is the fact, clearly established, of injury to the complainant not to others which justi fies judicial interference. " In that case there was no allegation that anyone of the plaintiffs had ever travelled on anyone of the rail roans or had requested any accommodation in any of the sleeping cars or that such request was refused. The same principle was laid down in Jeffrey Manufacturing Company vs Blagg(2), Hendrick vs MaCyland(3) and Newark Natural Gas and Fuel Company vs The City of Newark(1). In each of these cases the Court declined to permit the person raising the question of constitutionality to do so on the ground that his rights were not directly affected by the law or Ordinance in ques tion. On the other hand, in Truax vs Raich(5) and in Bu chanan vs Warley(5) the Court allowed the plea because in both the cases the person raising it was directly affected. In the first of the two last mentioned cases an Arizona Act of 1914 requiring employers employing more than five workers to employ not less than eighty per cent. native born citi zens was (1) 235 u.s. 151. (4) 242 u.s. 403. (2) 235 u.s. 571. (5) 239 u.s. 33. (3) ; (6) 245 u.s. 60. 929 challenged by an alien who had been employed as a cook in a restaurant. That statute made a violation of the Act by an employer punishable. The fact that the employment was at will or that the employer and not the employee was subject to prosecution did not prevent the employee from raising the question of constitutionality because the statute, if en forced, would compel the employer to discharge the employee and, therefore, the employee was directly affected by the statute. In the second of the two last mentioned cases a city Ordinance prevented the occupation of a plot by a colored person in a block where a majority of the residences were occupied by white persons. A white man sold his property in such a block to a Negro under a contract which provided that the purchaser should not be required to accept a deed unless he would have a right, under the laws of the city, to occupy the same as a residence. The vendor sued for specific performance and contended that the Ordinance was unconstitutional. Although the alleged denial of con stitutional rights involved only the rights of coloured persons and the vendor was a white person yet it was held that the vendor was directly affected, because the Courts below, in view of the Ordinance, declined to enforce his contract and thereby directly affected his right to sell his property. It is, therefore, clear that the constitutional validity of a law can be challenged only by a person whose interest is directly affected by the law. The question then arises whether the infringement of the company 's rights so directly affects its shareholders as to entitle any of its shareholders to question the constitutional validity of the law infringing the company 's rights. The question has been answered in the negative by the Supreme Court of the United States in Darnell vs The State of Indi ana(1). In that case the owner of a share in a Tennessee corporation was not allowed to complain that an Indiana law discriminated against Tennessee corporations in that it did not make any allowance, as it did in the case of Indiana corporations, where the corporation (1) 119 930 had property taxed within the State. This is in accord with the well established legal principle that a corporation is a legal 'entity capable of holding pro perty and of suing or being sued and the corporators are not, in con templation of law, the owners of the assets of the corpora tion. In all the cases referred to above the question of constitutionality was raised in connection with the equal protection clause in the Fourteenth Amendment of the American Federal Constitution. If such be the require ments of law in connection with the equal protection clause which corresponds to our article 14, it appears to me to follow that only a person who is the owner of the property can raise the question of constitutionality under article 31 of a law by which he is so deprived of his property. If direct interest is necessary to permit a person to raise the question of constitutionality under article 14, a direct interest in the property will, I apprehend, be necessary to entitle a person to challenge a law which is said to infringe the right to that property under article 31. In my opinion, although a shareholder may, in a sense be interested to see that the company of which he is a shareholder is not deprived of its property he cannot, as held in Darnell vs Indiana(1), be heard to complain, in his own name and on his own behalf, of the infringement of the fundamental right to property of the company, for, in law, his own right to property has not been infringed as he is not the owner of the company 's properties. An interest in the company owning an undertak ing is not an interest in the undertaking itself. The interest in the company which owns an undertaking is the "property" of the shareholder under article 31 (2), but the undertaking is the property of the company and not that of the shareholder and the latter cannot be said to have a direct interest in the property of the company. This is the inevitable result of attributing a legal personality to a corporation. The proceedings for a writ in the nature of a writ of habeas corpus appear to be somewhat different for the (1) 226 u. section 338 931 rules governing those proceedings permit, besides the person imprisoned, any person, provided he is not an utter strang er, but is at least a friend or relation of the imprisoned person, to apply for that particular writ. But that special rule does not appear to be applicable to the other writs which require a direct and tangible interest in the appli cant to support his application. This must also be the case where the applicant seeks to raise the question of the constitutionality of a under articles 14, 19 and 31. For the reasons set out above the present petitioner cannot raise the question of constitutionality of the impugned law under article 31. He cannot complain of any infringement of his own rights as a shareholder, because his "property" has not been acquired or taken possession of by the State although he has been deprived of his right to vote and to present a winding up petition by authority of law. Nor can he complain of an infringement of the compa ny 's right to property because he is not, in the eye of law, the owner of the property in question and accordingly not directly interested in it. In certain exceptional cases where the company 's property is injured by outsiders, a shareholder may, under the English law, alter making all endeavours to induce the persons in charge of the affairs of the company to take steps, file a suit on behalf of himself and other shareholders for redressing the wrong done to the company, but that principle does not apply here for this is not a suit, nor has it been shown that any attempt was made by the petitioner to induce the old directors to take steps nor do these proceedings purport to have been taken by the petitioner on behalf of himself and the other shareholders of the.company. The only other ground on which the Ordinance and the Act have been challenged is that they infringe the the fundamen tal rights guaranteed by article 14 of the Constitution. "Equal protection of the laws", as observed by Day 3. in Southern Railway Company vs Greene (1), "means subjection to equal laws, applying (1) ; 932 alike to all in the same situation". The inhibition of the article that the State shall not deny to any person equality before the law or the equal protection of the laws was designed to protect all persons against legislative discrim ination amongst equals and to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation. It does not, howev er, mean that every law must have universal application, for all persons are not, by nature, attainment or circumstances, in the same position. The varying needs of different class es of persons often require separate treatment and it is, therefore, established by judicial decisions that the equal protection clause of the Fourteenth Amendment of the Ameri can Constitution does not take away from the State the power to classify persons for legislative purposes. This classi fication may be on different bases. It may be geographical or according to objects or occupations or the like. If law deals equally with all of a certain well defined class it is not obnoxious and it is not open to the charge of a denial of equal protection on the ground that it has no applica tion to other persons, for the class for whom the law has been made is different from other persons and, there fore, there is no discrimination amongst equals. It is plain that every classification is in some degree likely ' to produce some inequality, but mere production of inequality is not by itself enough. The inequality produced, in order to encounter the challenge of the Constitution, must be "actually and palpably unreasonable and arbitrary. " Said Day J. in Southern Railway Company vs Greene(1) : " While reasonable classification is permitted, without doing vio lence to the equal protection of the laws, such classifica tion must be based upon some real and substantial distinc tion, bearing a reasonable and just relation to the things in respect to which such classification is imposed; and the classification cannot be arbitrarily made without any substantial basis. Arbitrary selection, it has been said, cannot be justified by calling it classification". Quite conceivably there may be a law 933 relating to a single individual if it is made apparent that, on account of some special reasons applicable only to him and inapplicable to anyone else, that single individual is a class by himself. In Middieton vs Texas Power and Light Company(1) it was pointed out that there was a strong presumption that a legislature understood and correctly appreciated the needs of its own people, that its laws were directed to problems made manifest by experience and that the discriminations were based upon adequate grounds. It was also pointed out in that case that the burden was upon him who attacked a law for unconstitutionality. In Lindsley vs Natural Carbonic Gas Company(2) It was also said that one who assailed the classification made in a law must carry the burden of showing that it did not rest upon any reasonable basis but was essentially arbitrary. If there is a classi fication, the Court will not hold it invalid merely because the law might have been extended to other persons who in some respects might resemble the class for which the law was made, for the legislature is the best judge of the needs of the particular classes and to estimate the degree of evil so as to adjust its legislation according to the exigency found to exist. If, however, there is, on the face of the stat ute, no classification at all or none on the basis of any apparent difference specially peculiar to any particular individual or class and not applicable to any other person or class of persons and yet the law hits only the particular individual or class it is nothing but an attempt to arbi trarily single out an individual or class for discriminating and hostile legislation. The presumption in favour of the legislature cannot in such a case be legitimately stretched so as to throw the impossible onus on the complainant to prove affirmatively that there are other individuals or class of individuals who also possess the precise amount of the identical qualities which are attributed to him so as to form a class with him. As pointed out by Brewer J. in the Gulf, Colorado and Santa Fe 'Railway vs W.H. Ellis (3), while good faith (1} ; (2) ; (3) 165 U.S. 150. 934 and a knowledge of existing conditions on the part of a legislature was to be presumed, yet to carry that presump tion to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain indi viduals or corporations to hostile and discriminating legis lation was to make the protecting clause a mere rope of sand, in no manner restraining State action. The complaint of the petitioner on this head is formu lated in paragraph 8 (iii) of the petition as follows : "The Ordinance denied to the company and its sharehold ers equality before the law and equal protection of the laws and was thus a violation of article 14 of the Constitution. The power to make regulations relating to trading corpo rations or the control or production of industries was a power which consistently with article 14 could be exercised only generally or with reference to a class and not with reference to a single company or to shareholders of a single company. " The Act is also challenged on the same ground in paragraph 9 of the petition. The learned Attorney General contends that the petitioner as an individual shareholder cannot complain of discrimination against the company. It will be noticed that it is not a case of a shareholder complaining only about discrimination against the company or fighting the battle of the company but it is a case of a shareholder complaining of discrimination against himself and other shareholders of this company. It is true that there is no complaint of discrimination inter se the share holders of this company but the complaint is that the share holders of this company, taken as a unit, have been discrim inated vis a vis the shareholders of other companies. Therefore, the question as to the right of the shareholder to question the validity of a law infringing the right of the company does not arise. Here the shareholder is com plaining of the infringement of his own rights and if such infringement can be established I see no reason why the shareholder cannot come within article 32 to vindicate his own rights. The fact that these proceedings have been taken by 935 one single shareholder holding only one single fully paid up share does not appear to me to make any the least difference in principle. If this petitioner has, by the Ordinance or the Act, been discriminated against and denied equal protec tion of the law, his fundamental right has been infringed and his right to approach this Court for redress cannot be made dependent on the readiness or willingness of other shareholders whose rights have also been infringed to join him in these proceedings or of the company to take substan tive proceedings. To take an example, if any law discrimi nates against a class, say the Punjabis, any Punjabi may question the constitutionality of the law, without joining the whole Punjabi community or without acting on behalf of all the Punjabis. To insist on his doing so will be to put a fetter on his fundamental right under article 32 which the Constitution has not imposed on him. Similarly, if any law deprives a particular shareholder or the shareholders of a particular company of the ordinary rights of sharehold ers under the general law for reasons not particularly and specially applicable to him or them but also applicable to other shareholders of other companies, such law surely offends against article 14 and any one so denied the equal protection of law may legitimately complain of the infringe ment of his fundamental right and is entitled as of right to approach this Court under article 32 to enforce his own fundamental right under article 14, irrespective of whether any other person joins him or not. To the charge of denial of equal protection of the laws the respondents in the affidavit of Sri Vithal N. Chandavar kar filed in opposition to the petition make the following reply: "With reference to paragraph 6 of the petition, I deny the soundness of the submissions that on or from the 26th January, 1950, when the Constitution of India came into force the said Ordinance became void under article 13(1) of the Constitution or that the provisions thereof were inconsistent with the provisions of Part III of the said Constitution or for any of the other grounds mentioned in paragraph 8 936 of the said petition. " In the whole of the affidavit in opposition there is no suggestion as to why the promulgation of the Ordinance or the passing of the Act was considered necessary at all or on what principle or basis either of them was founded. No attempt has been made in the affidavit to show that the Ordinance or the Act was based upon any principle of classification at all or even that the particu lar company and its shareholders possess any special quali ties which are not to be found in other companies and their shareholders and which, therefore, render this particular company and its shareholders a class by themselves. Neither the affidavit in opposition nor the learned Attorney General in course of his arguments referred to the statement of the objects and reasons for introducing the bill which was eventually enacted or the Parliamentary debates as showing the reason why and under what circumstances this law was made and, therefore, apart from the question of their admis sibility in evidence, the petitioner has had no opportunity to deal with or rebut them and the same cannot be used against him. The learned Attorney General takes his stand on the presumption that the law was founded on a valid basis of classification, that its discriminations were based upon adequate grounds and that the law was passed for safeguard ing the needs of the people and that, therefore, the onus was upon the petitioner to allege and prove that the classi fication which he challenged did not rest upon any reasona ble basis but was essentially arbitrary. I have already said that if on the face of the law there is no classification at all or, at any rate, none on the basis of any apparent difference specially peculiar to the individual or class affected by the law, it is only an instance of an arbitrary selection of an individual or class for discriminating and hostile legislation and, therefore, no presumption can, in such circumstances, arise at all. Assuming, however, that even in such a case the onus is thrown on the complainant, there can be nothing to prevent him from proving, if he can, from the text of. the law itself, that 937 it is "actually and palpably unreasonable and arbitrary" and thereby discharging the initial onus. The Act is intituled an Act to make special provision for the proper management and administration of the Sholapur Spinning and Weaving Company, Limited. " There is not even a single preamble alleging that the company was being misman aged at all or that any special reason existed which made it expedient to enact this law. The Act, on its face, does not purport to make any classification at all or to specify any special ' vice to which this particular company and its shareholders are subject and which is not to be found in other companies and their shareholders so as to justify any special treatment. Therefore., this Act, ex facie, is nothing but an arbitrary selection of this particular compa ny and its shareholders for discriminating and hostile treatment and read by itself.is palpably an infringement of Article 14 of the Constitution. The learned Attorney General promptly takes us to the preambles to the Ordinance which has been replaced by the Act and suggests that the Act is based on the same consider ations on which the Ordinance was promulgated. Assuming that it is right and permissible to refer to and utilise the preambles, do they alter the situation ? The preambles were as follows : "Whereas on account of mismanagement and ne glect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudi cially affected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community;And whereas an emergency has arisen which renders it necessary to make special provision for the proper management and administration of the aforesaid compa ny; " The above preambles quite clearly indicate that the justification of the Ordinance rested on mismanagement and neglect producing certain results therein specified. It will be noticed that apart from these preambles there is no material whatever before us establishing or even suggesting that this company and its shareholders have in fact been guilty of any 938 mismanagement or neglect. Be that as it may, the only reason put forward for the promulgation of the Ordinance was mismanagement resulting in falling off of production and in producing unemployment. I do not find it necessary to say that mismanagement and neglect in conducting the affairs of companies can never be a criterion or basis of classifica tion for legislative purposes. I shall assume that it is permissible to make a law whereby all delinquent companies and 'their shareholders may be brought to book and all companies mismanaging their affairs and the shareholders of such companies may, in the interest of the general public, be deprived of their right to manage the affairs of their companies. Such a classification made by a law would bear a reasonable relation to the conduct of all delinquent compa nies and shareholders and may, therefore, create no inequal ity, for the delinquent companies and their shareholders from a separate class and cannot claim equality of treatment with good companies and their shareholders who are their betters. But a distinction cannot be made between the delinquent companies inter se or between shareholders of equally delinquent companies and one set cannot be punished for its delinquency while another set is permitted to continue, or become, in like manner, delinquent without any punishment unless there be some other apparent difference in their respective obligations and unless there be some cogent reason why prevention of mismanagement is more imperative in one instance than in the other. To do so will be nothing but an arbitrary selection which can never be justified as a permissible classiffication. I am not saying that this particular company and its shareholders may not be guilty of mismanagement and negligence which has brought about seri ous fall in production of an essential commodity and also considerable unemployment. But if mismanagement affect ing production and resulting in unemployment is to be the basis of a classification for making a law for preventing mismanagement and securing production and employment, the law must embrace within its 939 ambit all companies which now are or may hereafter become subject to the vice. This basis of classification, by its very nature, cannot be exclusively applicable to any partic ular company and its shareholders but is capable of wider application and, therefore, the law founded on that basis must also be wide enough so as to be capable of being ap plicable to whoever may happen at any time to fall within that classification. Mismanagement affecting production can never be reserved as a special attribute peculiar to a particular company or the shareholders of a particular company. It it were permissible for the legislature to single out an individual or class and to punish him or it for some delinquency which may equally be found in other individuals or classes and to leave out the other individu als or classes from the ambit of the law the prohibition of the denial of equal protection of the laws would only be a meaningless and barren form of words. The argument that the presumption being in favour of the legislature, the onus is on the petitioner to show there are other individuals or companies equally guilty of mismanagement prejudicially affecting the production of an essential commodity and causing serious unemployment amongst a certain section of the community does not, in such. circumstances, arise, for the simple reason that here there has been no classification at all and, in any case, the basis of classification by its very nature is much wider and cannot, in it application, be limited only to this company and its shareholders and, that being so, there is no reason to throw on the petitioner the almost impossible burden of proving that there are other companies which are in fact precisely and in all particu lars similarly situated In any event, the petitioner, in my opinion, may well claim to have discharged the onus of showing that this company and its shareholders have been singled out for discriminating treatment by showing that the Act, on the face of it, has adopted a basis of classifica tion which, by its very nature, cannot be exclusively ap plicable to this company and its shareholders but Which may be equally appplicable to other companies 940 and their shareholders and has penalised this particular company and its shareholders, leaving out other companms and their shareholders who may be equally guilty of the alleged vice of mismanagement and neglect of the type referred to in the preambles. In my opinion the legislation in question infringes the fundamental rights of the petitioner and offends against article 14 of our Constitution. The result, therefore, is that this petition ought to succeed and the petitioner should have an order in terms of prayer (3) of the petition with costs. Petition dismissed. Agent for the petitioner: M.S.K. Aiyengar. Agent for opposite party Nos. 1 & 2:P.A. Mehta. Agent for opposite party Nos. 3 to 5 and 7 to 10: Rajinder Narain.

The Governor General of India, finding that on account of mismanagement and neglect a situation had arisen in the affairs of the Sholapur Spinning and Weaving Company Ltd. which had prejudicially affected the production of an essen tial commodity and had caused serious unemployment amongst a certain section of the community, and that an emergency had thereby arisen which rendered it necessary to make special provision for the proper management and administration of the said company, promulgated an Ordinance, which was subse quently reenacted in the form of an Act of the Legislature called the sholpur Spinning and Weaving Company (Emergency Provisions)Act, 1950, the net result of which was that the Managing Agents of the said company were dismissed, the directors holding office at the time automatically vacated their office, the Government was authorised to appoint new directors, the rights of the shareholders of the company were curtailed in the matters of voting, appointment of directors, passing of resolutions and applying for winding up, and power was also given to the Government to further modify the Indian Companies Act in its application to the company; and in accordance with the provisions of the Ordi nance new directors were appointed by the Government. A shareholder of the company made an application under article 32 of the Constitution for a declaration that the Act was void and for enforcement of his fundamental rights by a writ of mandamus against the Central Government, the Government of Bombay and the directors, restraining them from exercising any powers under the Act and from interfering with the management of the company, on the ground that the Act was not within the Legislative competence 870 of the Parliament and infringed his fundamental rights guaranteed by articles 19 (1) (f), 31 and 14 of the Constitu tion and was consequently void under article 13. The company was made a respondent and opposed the petition. Held per KANIA C.J., FAZL ALI, MUKHERJEA and DAS JJ. (i) that the impugned Act did not infringe any fundamental right of the petitioner under article 31 (1), as if did not deprive the company or the petitioner of any property save under authority of law; (ii) that the impugned Act did not infringe any fundamen tal right guaranteed by article 31 (2.) inasmuch as it did not authorise the "acquisition" of any property of the company or of the shareholders or "the taking possession" of the property of the petitioner, namely, the shares which he held in the company, though he was disabled from exercising some of the rights which an ordinary shareholder in a company could exercise in respect of his shares, such as the right to vote, to appoint directors, and to apply for winding up; and, if the Act had authorised the "taking possession" of the property of the company, the petitioner was not entitled to any relief on that score under article 32; (iii) that, as the Act did not impose any restrictions on the petitioner 's right "to acquire, hold and dispose of" his shares, there was no infringement of article 19 (1) (f); and assuming that the restrictions imposed on the right of voting etc. were restrictions on the right to acquire, hold or dispose of property within article 19 (1) (f), such restric tions were reasonable restrictions imposed in the interests of the public, namely, to secure the supply of a commodity essential to the community and to prevent serious unemploy ment amongst a section of the people, and were therefore completely protected by cl. (5) of article 19. Held also per KANIA C.J., FAZL ALI, and MUKHERJEA JJ. (PATANJALI SASTRI AND DAS JJ. dissenting). that though the Legislature had proceeded against one company only and its shareholders, inasmuch as even one corporation or a group of persons can be taken to be class by itself for the purposes of legislation, provided there is sufficient basis or reason for it and there is a strong presumption in favour of the constitutionality/of an enactment, the burden was on the petitioner to prove that there were also other companies similarly situated and this company alone had been discrimi nated against, and as he had failed to discharge this burden the impugned Act cannot be held to have denied to the peti tioner the right to equal protection of the laws referred to in article He and the petitioner was not therefore entitled to any relief under article 32. Per PATANJALI SASTRI J. As the impugned Act plainly denied to the shareholders of this particular company the protections of the law relating to incorporated Joint Stock Companies as embodied in the Indian Companies Act. it was Prima facie within 871 the inhibition of article 14; and, even though when a law is made applicable to a class of persons or things and the classification is based on differentia having a rational relation to the object sought to be attained, it can be no objection to its constitutional validity that its applica tion is found to affect only one person or thing. since the impugned Act selected a particular company and imposed upon it and its shareholders burdens and disabilities on the ground of mismanagement and neglect of duty on the part of those charged with the conduct of its undertaking no ques tion of reasonable classification arose and the Act was plainly discriminatory in character and within the constitu tional inhibition of article 14. Whilst all reasonable pre sumptions must undoubtedly be made in favour of the consti tutional validity of a law made competent legislature, no such presumption could be raised in this case as on the face of it the Act was discriminatory and the petitioner could not be called upon to prove that similar mismanagement existed in other companies. The issue was not whether the impugned Act was ill advised or not justified by the facts on which it was based but whether it transgressed the ex plicit constitutional restriction on legislative power imposed by article 14. Per DAs J. The impugned Act, ex facie, is nothing but an arbitrary selection of a particular company and its shareholders for discriminating and hostile treatment, and, read by itself, is palpably an infringement of article 14 of the Constitution. Assuming that mismanagement and neglect in conducting the affairs of a company can be a basis of classification and that such a classification would bear a reasonable relation to the conduct of all delinquent compa nies and shareholders and may therefore create no inequali ty, a distinction cannot be made between the delinquent companies inter se or between shareholders of equally delin quent companies, and one set cannot he punished for its delinquency while another set is permitted to. continue, or become, in like manner, delinquent without any punishment unless there be some other apparent difference in their respective obligations and unless there be some cogent reason why prevention of mismanagement is more imperative in one instance than in the other. The argument that the pre sumption being in favour of the Legislature, the onus is on the petitioner to show that there are other individuals or companies equally guilty of mismanagement prejudicially affecting the production of an essential commodity and causing serious unemployment amongst, certain section of the community does not, in such circumstances, arise, for the simple reason that here there has been no classification at all and, in any case, the basis of classification by its very nature is much wider and cannot, in its application, be limited only to this company and its shareholders; and that being so, there is no reason to throw on the petitioner the almost impossible burden of proving that there are other companies which are in fact precisely and in all particulars similarly situated. In any event the petitioner, 872 may well claim to have discharged the onus of showing that this company and its shareholders have been singled out for discriminating treatment by showing that the Act, on the face of it, has adopted a basis of classification which, by its very nature, cannot be exclusively applicable to this company and its shareholders but which may be equally ap plicable to other companies and their shareholders and has penalised this particular company and its shareholders, leaving out other companies and their shareholders who may be equally guilty of the alleged vice of mismanagement and neglect of the type referred to in the preamble in the Ordinance. Per PATANJALI SASTRI, MUKHERJEA and DAS JJ. (KANIA, C.J,, dubitante). In so far as the petitioner 's rights as a shareholder were curtailed he was entitled to apply for relief under article 30, in his own right on the ground that the Act denied to him the equal protection of the laws and therefore contravened article 14 even though the other share holders did not join him in the application. Per MUKHERJEA J. The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right, com pels the inference that they are applicable only to natural persons. An incorporated company, therefore, can come up to the Supreme Court for enforcement of its fundamental rights and so may the individual shareholders to enforce their own; but as the company and its shareholders are in law separate entities, it would not be open to an individual shareholder to complain of a law which affects the fundamental right of the company except to the extent that it constitutes an infraction of his own rights as well. In order to redress a wrong to the company the action should prima facie be brought by the company itself. Article 32 of the Constitution is not directly concerned with the determination of the constitutional validity of particular enactments, what it aims at is the enforcement of fundamental rights guaranteed by the Constitution and to make out a case under the Article it is incumbent on the petitioner to establish not merely that the law complained of is beyond the competence of the Legislature but that it affects or invades his fundamental rights guaranteed by the Constitution, of which he could seek enforcement by an appropriate writ or order. Under article 32 the Supreme Court has a very wide discre tion in the matter of framing writs to suit the exigencies of particular cases and an application under the article cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for. In the context in which the word "acquisition" is used in article 31 i2) it means and implies the acquiring of the entire title of the expropriated owner whatever the nature or extent of that right might be, 873 The guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions. It means only that there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is the same. Quaere : Whether the word "property" in article 31 means the totality of the rights which the ownership of the property connotes, and whether clause (1) of article 31 contem plates only confiscation or destruction of property in exercise of what are known as police powers in American law for which no compensation is necessary. DAS J. The question whether an Act has deprived a person of his "property" must depend on whether it has taken away the substantial bulk of the rights constituting his property. Where the most important rights possessed by the shareholders of a company are still preserved by an Act even though certain privileges incidental to the ownership of the shares have been put in abeyance, the shareholders cannot be said to have been deprived of their "property" in the sense in which that word is used in article 19(1) (f) and article 31. If on the face of the law there is no classification at all, or at any rate none on the basis of any apparent dif ference specially peculiar to the individual or class af fected by the law, it is only an instance of an arbitrary selection of an individual or class for discriminating and hostile legislation and, therefore, no presumption can, in such circumstances, arise at all Assuming, however, that even in such a case the onus is thrown on the complainant, there can be nothing to prevent him from proving, if he can, from the text of the law itself, that it is actually and palpably unreasonable and arbitrary and thereby discharging the initial onus. The right to vote, to elect directors, to pass resolu tions and to present an application for winding up, are privileges incidental to the ownership of a share, but they are not by themselves apart from the share, "property" within the meaning of article 19 (1) (f) and article 31; and even assuming that they are "property" such rights cannot be said to have been acquired or taken possession of by the Govern ment in this case within article 31 (2). The language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may well be brought about otherwise than by acquiring or taking possession of it and in such a case no question payment of compensation arises. FAZAL ALI MUKHERJEA and DAS JJ. Except in the matter writs in the nature of habsas corpus no one but those whose rights are directly affected by a law can raise the question of the constitutionality of a law and claim relief under article 39. A corporation being a different entity from the shareholders, a 112 874 share holder cannot complain on the ground that the rights of the company under articles 19 (1) (f) or 31 are infringed. FAZL ALl J. A classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must hear a reasonable and lust relation to the things in respect of which it is proposed. But 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 a clear transgression of constitutional principles. Though article 14 lays down an important fundamental 'right, which should be closely and vigilantly guarded, a doctri naire approach which might choke all beneficial legislation should not be adopted, in construing it. i A.K. Gapalan vs The State ([1950] S.C.R. 87), Minister of State for the Army vs Dalziel ; , Yick Wo vs Hopkins , Southern Railway Co. vs Greene ; , Gulf C. & S.F. Co. Ellis ; , Middle ton vs Texas Power and Light & Co. ; , Badice vs New York (264 U.S. Pennsylvania Coal Co. vs Mahon (960 U.S. 3931, McCabe vs Archison ; , Jeffrey Manufactur ing Co. vs Blang , Newark Natural Gas and Fuel Co. vs City of Nework U.S 403), Truax vs Raich (939 U.S. 33), Buchanan vs W 'arley ; Darnell vs The State of Indiana , Lindely vs Natural Carbonic Gas Co. , and Barbier vs Connolly ; referred to.

Appeal No. 166 of 1951. Appeal from the Judgment and Decree dated September 15, 1948, of the High Court of Judicature for the State of Punjab at Simla (Mahajan and Teja Singh JJ.) in Regular Second Appeal No. 1844 of 1945 from the Judgment and Decree dated June 5, 1945, of the Court of the District Judge, Gurgaon, in Civil Appeal No. 171 of 1943, arising out of the Judgment and Decree dated August 27, 1943, of the Court of the Subordinate Judge, Gurgaon, in Civil Suit No. 11 of 1943. Tarachand Brijmohanlal for the appellant. Gurubachan Singh (Radha Krishan Aggarwal, with him) for the respondent. 1952, November 7. The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J. The plaintiffs, Joti Prasad and Sat Narain, sued for partition and possession of their two fifths share in the suit properties alleging that the first defendant wag alone in possesSion of the same, having redeemed a mortgage executed by the joint family of which the plaintiffs and defendants were members, in favour of one Raghumal in the year 1896 on paying Rs. 5,800. Defendants 2 to 5 were impleaded as co sharers. Out of them, defendants 2 and 3 admitted the claims of the plaintiffs. Defendant 4 died pending suit, and her name was struck off. Defendant 5 supported the first defendant. On the date of the trial court 's decree, the two plaintiffs were held entitled to one sixth share each. The first defendant resisted the plaintiffs ' claim. He contended that the redemption by him in 1920 was not on behalf of the joint family as alleged by the plaintiffs but on his own account as there had been a disruption of the joint family status much earlier, and that before the plaintiffs could get arty relief, they were bound to pay him not merely a proportionate share in the sum of Rs. 5,800 which he paid to the mortgagee for redemption but their share in the original mortgage debt of Rs. 11,200. He also denied that the original mortgage was executed on behalf of the joint family. The Subordinate Judge, and on appeal, the High Court found that the original mortgage was a mortgage transaction of the joint family, and that the first defendant, Ganeshi Lal, redeemed the mortgage on his own account and for his own benefit at a time when there was no longer any joint family in existence. It was further held by the trial court that the plaintiffs and other co sharers were bound to pay their proportionate share of the amount paid by the first defendant to redeem the mortgage, namely, Rs. 5,800. But from this a sum of Rs. 1,200 which he had already received by way of redemption of certain mortgage rights had to be deducted. The District Judge enhanced this sum of RS. 4,600 to 245 Rs. 5,000, as the first defendant had paid taxes due on the property up to 1940, but he confirmed the main findings of the Subordinate Judge. A second appeal preferred by the first defendant was dismissed by the High Court at Simla (Mehr Chand Mahajan and Teja Singh JJ.). They repelled the contention of the first defendant that a suit for partition and possession was not maintainable without bringing a suit for redemption. They also negatived his right to get a proportionate share in the amount of Rs. 11,200 due on the mortgage. Two other learned Judges gave leave to appeal under section 109 (c) of the Civil Procedure Code, as a substantial question of law was involved. Three points were argued before us by learned counsel for the appellant; firstly, there was an assignment of the mortgage in favour of the appellant with the result that the entire rights of the mortgagee vested in him; secondly, even viewing the question as one of legal subrogation, he was entitled, under the principles of justice, equity and good conscience which governed the State of Punjab, as the has not been applied to the State, to recover from the co mortgagors not merely their shares in the sum of Rs. 5,800 which he had paid for redemption but their shares in the full amount of Rs. 11,200 due under the mortgage; and thirdly, that the suit for partition without asking for redemption was not maintainable. Points Nos. 1 and. 3 have no force whatever. The registered deed of redemption does not contain any words of assignment. To say that Ganeshi Lal shall be the owner of the entire amount due from the mortgaged property is something different from stating that the security has been assigned in his favour. On the other hand, the endorsement of receipt of payment on the back of the mortgage deed itself and the statement of the mortgagee that he has released the mortgaged property from his mortgage go to show that there was no assignment. 246 The non maintainability of the suit does not seem to have been in issue either before the trial court or before the District Judge, and it appears to have been raised for the first time before the High Court. It was pointed out by the learned Judges, and quite rightly, that so long as no question of limitation was involved, there was no objection to a claim for redemption and one for possession and partition being joined together in the same suit. Only the second point remains for consideration, and this raises an interesting question of law. It is not denied that Ganeshi Lal who redeemed the prior mortgage is subrogated to the mortgagee 's rights, but the controversy is about the extent of his rights as subrogee. By virtue of the redemption, does he get all the rights of the mortgagee and hold the mortgage as a shield against the co mortgagors for the full amount due on the mortgage on the date of redemption whatever he may have himself paid to get it discharged, or does he stand in the mortgagee 's shoes only to the extent of getting reimbursed from the comortgagors for their shares in the amount actually paid by him? The lower courts have held that the latter is the correct position in law, but the appellant has challenged it as unsound. The first two clauses of the present section 92 of the run in these terms: " Any of the persons referred to in section 91 (other than the, mortgagor) and any co mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee. The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. " It is a new section and was inserted by the amending Act XX of 1929. The original sections 74 and 247 75 conferred the right to redeem in express terms only on second or other subsequent mortgagees, though the co mortgagor 's right to subrogation on redemption was recognised even before the Act. As the has not been extended to the State of East Punjab, it is unnecessary to decide whether section 92 is retrospective in its operation, on which point there has been a conflict of opinion between the several High Courts. Section 95 of the Act which removed the confusion caused by the old section which, conferring on the co mortgagor what was called a charge, and thus seeming to negative the application of the doctrine of subrogation, is also inapplicable to the present case. We therefore steer clear of sections 74 and 75 of the old Act and sections 92 and 95 of the present Act, and we are free to decide the question on principles of justice, equity and good conscience. If we remember that the doctrine of subrogation which means substitution of one person in place of another and giving him the rights of the latter is essentially an equitable doctrine in its origin and application, and if we examine the reason behind it, the answer to the question which we have to decide in this appeal is not difficult. Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it, and it is well recognised that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors. Such being the legal position as among the co mortgagors, if one of them redeems a mortgage over the property which belongs jointly to himself and the rest, equity confers on him a right to reimburse himself for the amount spent in excess by him in the matter of redemption; he can call upon the co mortgagors to contribute towards the excess which he has paid over his own share. This proposition is postulated in several authorities. In the early case of Hodgson vs Shaw (1) Lord Brougham said: (1) ; ; 248 "The rule is undoubted, and it is one founded on the plainest principles of natural reason and justice, that the surety paying off a debt shall stand in the place of the creditor, and have all the rights which he has, for the purpose of obtaining his reimbursement. " I have italicised the word " reimbursement Sheldon in his well known treatise on Subrogation has got the following passage in section 13 of the Second Edition: " There is another class of cases in which he who has paid money due upon a mortgage of land to which he had some title which might be affected or defeated by the mortgage, and who was thus entitled to redeem, has the right to consider the mortgage as subsisting in himself, and to hold the land as if it subsisted, until others interested in the redemption, or who held also the right to redeem, have paid a contribution. " Be it noted that what is spoken of here is a contribution. Dealing with the subject of subrogation of a, surety by payment of a promissory note and citing the observations of the Alabama Court, Harris says in his work on Subrogation (1889 Edition) at page 125: " The rule is, that a surety paying a debt, shall stand in the place of the creditor; and is entitled to the benefit of all the securities which the creditor had for the payment of the debt, from the principal debtors; in a word, he is subrogated to all the rights of the creditor; the surety, however, cannot avail himself of the instrument on which he is surety, by its payment. By payment it is discharged and ceases to exist, and the payment will not, even in equity, be considered an assignment; the surety merely becomes the creditor of the principal to the amount paid for him. " To compel the co debtors or co mortgagors to pay more than their share of what was paid to the creditor or mortgagee would be to perpetrate an inequity or 249 injustice, as it would mean that the debtor who is in a position to pay and pays up can obtain an advantage for himself over the other joint debtors. Such a result will not be countenanced by equity; the favouritism shown by law to a surety, high as it is, does not extend so far. The surety can ask to be indemnified for his loss: he can invoke the doctrine of subrogation as an aid to his right of contribution. Sheldon says in section 105 of his book : " The subrogation of a surety will not be carried further than is necessary for his indemnity; if he buys up the security at a discount, or makes his payment in a depreciated currency, he can enforce it only for what it cost him. He cannot speculate at the expense of his principal ; his only right is to be repaid. " In section 178, Harris is still stronger. " Since subrogation is founded on principles of equity, the surety who would avail himself of the doctrine and invoke equity must do equity ; and while ' he is entitled to a reimbursement in all that he pays out properly for his principal, debt, interest and cost, he is not entitled, in any way to recover more than he has paid. For instance, if he pays the debt of his principal, in depreciated currency, the rule would seem to be that he could demand from the principal only the value of that currency at the time he made the payment. Nor would he upon principles of equity be permitted to purchase the debt at a discount and then be subrogated to collect the whole face value of the debt, and especially if he held securities, or if the creditor held securities which would fall into his hands, out of which to pay the debt; because the securities are trust funds for the purpose, and set aside for the payment of that debt and an assignee of trustee cannot speculate in the purchase of claims against the fund in his hands. It would not be equality; it would not be equity. " While it can be readily conceded that the joint debtor who pays up and discharges the mortgage 250 stands in the shoes of the mortgagee, and secures to himself the benefit of the security by such payment, the extent to which he can enforce his right as against the other joint debtors is a different matter altogether. In his monumental work on Equity Jurisprudence, Pomeroy points out that he will be subrogated to the rights of the mortgagee only to the extent necessary for his own equitable protection. (See page 632 of Volume IV of the Fifth Edition by Symons). Clearer still is the passage found at page 640 of the same book: " The mortgagor himself who has conveyed the premises to a grantee in such manner that the latter has assumed payment of the mortgage debt becomes an equitable assignee on payment, and is subrogated to the mortgagee, so far as is necessary to enforce his equity of reimbursement or exoneration from such grantee. " It is as regards the excess of the payment over his own share that the right can be said to exist. Pomeroy says this at pages 660 and 661: "In general, whenever redemption by one of the above mentioned persons operates as an equitable assignment of the mortgage to himself, he can keep the lien of it alive as security against others who are also interested in the premises, and who are bound to contribute their proportionate shares of the sum advanced by him, or are bound, it may be, to wholly exonerate him from and reimburse him for the entire payment. . The doctrine of contribution among all those who are interested in having the mortgage redeemed, in order to refund the redemptor the excess of his payment over and above his own proportionate share, and the doctrine of equitable assignment in order to secure such contribution, are the efficient means by which equity completely and most beautifully works out perfect justice and equality of burden, under these circumstances. . . . " Whatever the difference might be between the English law and the Indian law as regards the right 251 to enforce decrees and securities for the due payment of a debt in the case of a surety who discharges a simple money debt and a surety who pays up a mortgage, it is still noteworthy that Section V of the Mercantile Law Amendment Act of 1856 (England) provided for indemnification by the principal debtor( for the advances made and loss sustained by the surety. There is a distinction in this respect between a third party who claims subrogation and a co mortgagor who claims the right, and this is brought out by Sir Rashbehary Ghose in his Law of Mortgage in India, Volume I, 5th Edition. He says at page 354, pointing out that co mortgagors stand in a fiduciary relation : " I should add that an assignee of a mortgage is entitled, as a rule, to recover whatever may be due on the security. But if he stands in a fiduciary relation, he can only claim the price which he has actually paid together with incidental expenses. " The right of the co mortgagor who redeems the mortgage is spoken of as the right of reimbursement at page 372 in the following passage : "Strictly speaking, therefore, when one of several mortgagors redeems a mortgage, he is entitled to be treated as an assignee of the security which be may enforce in the usual way for the purpose of re imbursing himself. " The redeeming co mortgagor being only a surety for the other co mortgagors, his right is, strictly speaking, a right of reimbursement or contribution, and in law, when we have regard to the principles of equity and justice, there should be no difference( between a case where he discharges an unsecured debt and a case where he discharges a secured debt. It is unnecessary for us to decide in this appeal whether section 92 of the was intended to strike a departure from this position when it states that the co mortgagor shall have the same 252 rights as the mortgagee whose mortgage he redeems, and whether it was intended to abrogate the rule of equity as between co debtors, and provide for the enforcement of the liability on the basis of the amount due under the mortgage ; and this is because, as has been already stated, we are governed not by the statute but by general principles of equity and justice. If it is equitable that the redeeming co mortgagor should be substituted in the mortgagee 's place, it is equally equitable that the other co mortgagors should not be called upon to pay more than he paid in discharge of the encumbrance. In this connection, reference may be made with advantage to the decision of Sir Asutosh Mookerjoe and Teunon JJ. in DigambarDas vs Harendra Narayan Panday (1) where the question arose as regards the the rate of interest and the period for which the redeeming co mortgagor would be entitled. There is an elaborate examination of the nature of the right of subrogation obtained by one of several joint comortgagors who redeems the mortgaged property, and in the course of the discussion the following observations occur: " In so far as the amount of money which he is entitled to recover from his co mortgagors is concerned, he can claim contribution only with reference to the amount actually and properly paid to effect redemption to which sum he can add his legitimate expenses . . The substitution, therefore, of the new creditor in place of the original one, does not place the former precisely in the position of the latter for all purposes. . If therefore one of several mortgagors satisfies the entire mortgage debt, though upon redemption he is subrogated to the right and remedies of the creditor, the principle has to be so administered as to attain the ends of substantial justice regardless of form ; in other words, the fictitious cession in favour of the person who effects the redemption, operates only to the extent to which it is necessary to apply it for his indemnity and protection." (1) 258 There is a definite expression of opinion by the Madras High Court on the point in the decision reported in Suryanarayana vs Sriramulu(1). In that case, a purchaser of a half share of the equity of redemption claimed to recover half of the amount of the mortgage on the security of the other share in the hands of the defendant, and it was held that as his purchase of the decree on the mortgage was prior to his purchase of the equity of redemption, he was entitled to the full amount claimed by him. The learned Judges distinguish the case from one where one of two mortgagors discharges an encumbrance binding on both, and say that in such a case the mortgagor doing so could not recover from his comortgagors more than a proportionate share of the amount actually paid by him. After this rather lengthy discussion of the subject, we consider it unnecessary to notice and comment on the several decisions cited for the appellant. It may be said generally that they only lay down that in cases where the , as it stood originally or as amended in 1929, is not applicable, we are governed by the principles of equity, justice and good conscience, and that sections 92 and 95 embody such principles. None of the cases deals with the extent or degree of subrogation, and there is nothing in them which runs counter to the view that the doctrine must be applied along with other rules of equity, so that the person who discharges the mortgage is amply protected, and at the same time there is no injustice done to the other joint debtors. He who seeks equity must do equity, and we shall be violating this rule if we give effect to the appellant 's contention. The High Court, in our opinion, reached the correct conclusion. The parties are not agreed on the shares to which the plaintiffs are entitled, and this is because after the date of the final decree some of the branches have become extinct by the deaths of their representatives. Whether under customary law in the Punjab, uncles (1) 254 exclude nephews or they take jointly, and whether succession is per stirpes or per capita, was the subject of disagreement at the Bar before us. This question must therefore be left over for determination by the trial court, and the case will have to go back to that court for effecting partition and delivery of possession according to the shares to which the plaintiffs may be found entitled. Subject to what is contained in the foregoing paragraph, the appeal will stand dismissed with costs. Appeal dismissed.

On principles of equity, justice and good conscience, which apply to the Punjab (where the , is not in force) if one of several joint mortgagors redeems the entire Mortgage by paying a s less than the full amount due under the mortgage, he is entitled to receive from his co mortgagors, only their proportionate shares on the amount actually paid by him. He is not entitled to claim their proportionate shares on the amount which was due to the mortgagee under the terms of the mortgage on the date of redemption. Hodgson vs Shaw ; , Digambar Das vs Harendra Narayan Panday [(1910) and Suryanarayana vs Sriramulu [(1913) referred to. Judgment of the High Court of Punjab at Simla affirmed.

Appeal No.449 of 1958. Appeal by special leave from the judgment and decree dated August 7, 1956, of the Patna High Court in Misc. Judicial Case No. 604 of 1953. 406 D. P. Singh, for the appellant. section P. Varma, for the respondent. January 11. The Judgment of the Court was delivered by SHAH, J. The High Court of Judicature at Patna answered in the affirmative the following question which was submitted by the Board of Agricultural Income tax, Bihar, under section 28(3) of the Bihar Agricultural Income tax Act, XXXII of 1948 hereinafter referred to as the Act: " Whether, in the facts and circumstances of the case, the petitioner could be legally assessed for the income of the Estate in 1355 Fasli when the Estate was in the hand of the Receiver ? " With special leave under article 136 of the Constitution, this appeal is preferred against the order of the High Court. The appellant is the Mahant of the Asthal Estate, Salauna, in the District of Bhagalpur in Bihar. In a suit concerning that estate, a Court Receiver was appointed by the First Class Subordinate Judge, Monghyr, to manage the estate. The Receiver functioned till sometime in December, 1949, and under the order of the Subordinate Judge he handed over charge of the estate to the appellant on January 8, 1950. On January 15, 1950, the appellant submitted a return of income of the estate to the Agricultural Income tax Officer, Monghyr, for the Fasli year 1355 corresponding to September 16, 1948, to September 15, 1949. The Agricultural Income tax Officer assessed on August 7, 1950, the agricultural income of the estate at Rs. 90,507 2 6 and ordered the appellant to pay Rs. 20,290 13 0 as agricultural income tax. Appeals against the order of assessment preferred to the Commissioner of Agricultural Income tax and the Board of Agricultural Income tax, Bihar, were unsuccessful. The Board however referred the question set out hereinbefore to the High Court under section 28(3) of the Act as arising out of its order. The only question which falls to be determined in this appeal is whether the appellant was liable to be assessed to pay agricultural income tax for the year 407 in which the estate was in the management of the Court Receiver. Section 3 of the Act which is the charging section provides: " Agricultural income tax shall be charged for each financial year in accordance with and subject to the provisions of this Act on the total agricultural income of the previous year of every person. " By section 4,it is provided: Save as hereinafter provided, this Act shall apply to all agricultural income derived from land situated in the State of Bihar. " The income of the estate of the appellant was not exempt from payment of tax and by virtue of section 3, agricultural income tax was charged upon the income for the assessment year in question, and the appellant was prima facie liable as owner of the estate to pay tax on that income. The appellant however relied upon section 13 of the Act which provides: " Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force, or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and received by him shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income tax so payable by each such person and shall be liable to pay the same. " The appellant urged that if the land from which agricultural income is derived is held by a Receiver and the income is received by the Receiver, the Receiver alone can, by virtue of section 13, be deemed to be the assessee and the Receiver alone is liable to pay the tax in respect of that income. In support of his contention, the appellant relies upon the definition of the word. , " person " in s, 2, cl. (m) which estates; 408 Person ' mean,% any individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for another, either as owner, trustee, receiver, common manager, administrator or executor or in any capacity recognised by law, and includes an undivided Hindu family, firm or company. " In our view, there is no substance in the contention raised by the appellant. The liability to pay tax is charged on the agricultural income of every person. The income though collected by the Receiver was the income of the appellant. By section 13, in addition to the owner, the Receiver is to be deemed to be an assessee. But the fact that the Receiver may, because he held the property from which income was derived in the year of account, be deemed to be an assessee and liable to pay tax, does not absolve the appellant on whose behalf the income was received from the obligation to pay agricultural income tax. Section 13 merely provides a machinery for recovery of tax, and is not a charging section. When property is in the possession of the Receiver, common manager or administrator, the taxing authorities may, but are not bound to, treat such persons as assessees and recover tax. The taxing authorities may always proceed against the owner of the income and assess the tax against him. The definition in the connotation of" person " undoubtedly included a receiver, trustee, common manager, administrator or executor, and by such inclusion, it is open to the taxing authorities to assess tax against any such persons; but on that account, the income in the hand of the owner is not exempt from liability to assessment of tax. Counsel for the appellant urged that the income received by the appellant from the Receiver did not retain its character of agricultural income and therefore also the appellant was not liable to pay agricultural income tax. But this contention was never raised before the taxing authorities and no such question has been referred to this court. The character of the income was accepted to be agricultural 409 income in the hands of the appellant and the only question which was sought to be referred and raised before the Board of Agricultural Income tax was one as to the liability of the appellant to be assessed to agricultural income tax for the year in question. In that view of the case, the appeal fails and is dismissed with costs. Appeal dismissed.

The appellant was the Mahant of the Asthal Estate in Bihar which was in the management of a Receiver appointed by the Civil Court in a suit relating to the estate. On appeal the question that arose for decision in this Court was whether the appellant Mahant was liable to be assessed under the Bihar Agricultural Income tax Act, 1948, to pay agricultural income tax for the year in which the estate was in the management of the Court Receiver. Held, that the income though collected by the Receiver was the income of the appellant. By virtue of the provisions of sections 2, cl. (m) and 13 of the Bihar Agricultural Income tax Act it was open to the taxing authorities to treat the Receiver as the assessee because he held the property from which income was derived, but on that account the income in the hand of the owner was not exempt from liability to assessment of tax. Section 3 of the Act provides for charging agricultural income of every person " as defined in section 2, cl. (m) which includes a receiver and section E3 merely provides a machinery for recovery of tax from "Persons" including receivers and is not by itself a charging section.

Appeals Nos. 158 to 164 of 1960. Appeals from the judgment and order dated October 8, 1958, of the Bombay High Court in I.T.A. Nos. 7505, 7506, 5046 to 5048, 5149 and 5150 of 1956 57. A. V. Viswanatha Sastri, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the. appellants. R. Ganapathy Iyer and D. Gupta, for the respondent. January 12. The Judgment of the Court was delivered by HIDAYATULLAH, J. These seven appeals have been filed on a certificate granted by the High Court of Bombay against the judgment and order of the High Court dated October 8, 1958, in a case referred by the Income tax Appellate Tribunal, Bombay. The first appellant is the Bhor Industries, Ltd., a Company incorporated in 1944 in the former Bhor State with its registered office also situated in the town of Bhor. It did the business of dyeing, printing and bleaching cloth, cloth proofing, etc., in Bhor State. The remaining five appellants are the shareholders of this Company, which, admittedly, was a private Company limited by shares, at all material times. We are concerned in these appeals with the account years of the Company, 1946 and 1947. During these years, the income of the Company was as follows: Assessment Total Income accruing Total World year Income or arising in the Income (Sum Indian State of of 2 & 3) Bhor. 1 2 3 4 1947 48 Rs. 4,32,542 Rs. 2,24,542 Rs. 6,57,084 1948 49 Rs. 4,32$709 Rs. 3,47,416 Rs. 7,80,125 412 The Company held its general meetings to declare dividends at Bhor on August 17,1947, and August 19, 1948, respectively. For the account years 1946 and 1947 respectively it declared a dividend of Rs. 2,580/and Rs. 1,140/ . Bhor State merged with the Province of Bombay by virtue of the States Merger (Governors ' Provinces) Order, 1949, which came into force on August 1, 1949. By the Taxation Laws (Extension to Merged States and Amendment) Act, 1949, which received the assent of the Governor General on December 31, 1949, the Indian Income tax Act was extended to the merged States with effect from April 1, 1949. That Act also introduced section 60A in the Income tax Act, by which power was given to the Central Government, if it considered necessary or expedient so to do, to avoid any hardship or anomaly or to remove any difficulty in the application of the Income tax Act to merged States, to make a general or special order granting exemption, reduction in rate or other modification. Under the power thus conferred, the Central Government notified the Merged States (Taxation Concessions) Order, 1949. For the assessment years 1947 48 and 1948 49 corresponding to the account years of the Company, 1946 and 1947, the Income tax Officers assessed the Company as non resident, and held that the Company was not a public Company within the meaning of section 23A of the Indian Income tax Act. The Income tax Officer who passed the order for the assessment year 1947 48 under section 23A, held that the assessable income in British India of the Company in 1946 minus the taxes, must be deemed to be distributed among the shareholders in the proportion of their shareholdings. The Incometax Officer calculated the amount deemed to be distributed as follows: 413 1946 (assessment year 1947 48). Total Income . Rs. 4,32,542 Taxes . Rs. 1,89,237 Amount available for distribution . Rs. 2,43,305 as dividend Dividend declared . Rs. 2,580 Balance of the amount available and deemed to be distributed . Rs. 2,40,725 For the account year 1947, the Income tax Officer took the total world income less the taxes as the amount available for distribution as dividend. According to him, that amount was as follows: 1947 (assessment year 1948 49). Total income . Rs. 4,32,709 Income in Bhor State . Rs. 3,47,416 Total world income . Rs. 7,80,125 Taxes . Rs. 2,43,399 Amount available for distribution as dividend . Rs. 5,36,726 Dividend declared . Rs.1,140 Balance of the amount available for distribution . Rs.5,35,586 The Income tax Officer then apportioned it among the shareholders as on August 19, 1948. This worked out at Rs. 539.9 per share. The Income tax Officer then divided this amount of Rs. 539.9 in the proportion the total income bore to the income in Bhor State and taxed the former in the hands of the shareholders, but the balance was included and considered for purposes of rate only. The Tribunal in the statement of the case illustrated this by citing the case of one of the shareholders (Pushpakumar M. D. Thackersey) as follows: 414 "The portion of Rs. 5,35,586 apportionable to his 90 shares at the rate of Rs. 539.9 per share worked out at Rs. 50,211/ . This amount of Rs. 50,21/was divided into two smaller amounts in the ratio already mentioned and the amount of Rs. 27,851/was actually brought to tax whereas the amount of Rs. 22,360/ attributable to Bhor State income of Rs. 3,47,416/ was merely included in the total income for rate purposes." In computing these " deemed dividends ", the two Income tax Officers did not deduct the interest charged to the Company under section 18A(8), from the assessable income along with income tax and super tax under section 23A(1). The Company as well as the shareholders appealed to the Appellate Assistant Commissioner, but their appeals were unsuccessful. Their further appeals to the Tribunal were also dismissed. They raised the contentions that section 23A was not applicable to the Company, that the deemed income arising from a fictional distribution of the dividends could not be taxed in the hands of the shareholders because section 23A did not apply to them, and that they were protected by the Concessions Order in the same way in which the Company was. They also raised the contention that in. determining the balance of the amount available for distribution, interest charged under section 18A(8) ought to have been deducted. All these contentions were not accepted by the Department and the Tribunal. At the instance of the Company and the shareholders, the Tribunal drew up a statement of the case, and referred three questions to the High Court for its decision. These questions were as follows: " 1. Whether paragraph 12 of the Merged States (Taxation Concessions) Order, 1949, precluded the Income tax Officer from making an order under Section 23A in the case of the assessee company in respect of its profits and gains of the previous year ended 31st December, 1946 ?/ 31st December, 1947 ? 415 2. Whether in making an order under Section 23A in respect of the profits and gains of the year 1946/1947 the assessable income of that previous year is to be reduced not only by the amount of incometax and super tax payable by the company in respect thereof but also by the amount of interest charged to it in accordance with the provisions of Section 18A ? 3. Having regard to the order passed by the Income tax Officer under Section 23A in respect of the Company 's profits of the year 1947 and having apportioned the sum of Rs. 17,641/ to the shareholder, Pushpakumar, as his proportionate share in the distribution made by the Income tax Officer under Section 23A and having regard to the provisions of Section 14(2) (c), whether the said sum of Rs. 17,641/has been properly included in his total income for the purpose of charging it to tax ? " The third question was a typical question, as similar questions also arose in the case of other shareholders with variation in the amount. The amount of Rs. 17,641/ , the Tribunal stated, replaced Rs. 50,211/in view of certain directions given by the Tribunal. The High Court framed one more question as the second part of question No. 1 in disposing of the reference, which read as follows. : " Whether paragraph 12 of the Merged States (Taxation Concessions) Order, 1949, precluded the Income tax Officer from making any order under Section 23A so as to affect the assessee shareholders in respect of their profits and gains for the assessment year 1949 50 ? The High Court answered the first and second questions and the question framed by it in the negative, and the third question, in the affirmative. The High Court, however, granted a certificate under section 66A of the Income tax Act, and the present appeals have been filed. The contentions raised before the High Court have been raised before us. The Company questions the application of section 23A to the two assessment years, 1947 48 and 1948 49, while the shareholders 416 question the application of section 23A to the Company and also to them in the assessment year, 1949 50. Both the Company and the shareholders contend that interest under section 18A(8) ought to have been deducted along with the income tax to find out the available surplus. The shareholders claim the benefit of section 14(2) (c) in respect of the entire amount of the balance deemed to be distributed. To begin with, one must remember that the Indian Income tax Act was applied to Bhor State from April 1, 1949, and that there was no income tax law in force in Bhor State prior to its merger. This position also obtained in many other Indian States, which merged with the Provinces in British India. The fact that income tax is charged in an assessment year on the income, profits or gains of the previous year would have made persons resident in merged States to pay tax on income which, but for the extension of the Indian Income tax Act, was either not liable to income tax at all or was liable at a lesser rate. In view of the apprehended difficulties and anomalies, the Extension Act itself gave power to remove such anomalies and hardships. Section 60A was added to the Income tax Act, and it read as follows: " If the Central Government considers it necessary or expedient so to do for avoiding any hardship or anomaly, or removing any difficulty, that may arise as a result of the extension of this Act to the merged States, the Central Government may, by general or special order, make an exemption, reduction in rate or other modification in respect of income tax in favour of any class of income, or in regard to the whole or any part of the income of any person or class o f persons. . " The Concessions Order, 1949, was passed in furtherance of this power. We are concerned only with paragraph 12 of the Concessions Order, 1949, which has been relied upon by the Company and the share. holders, who are appellants before US. It is not necessary to refer to paragraphs 4, 5 and 6 to which passing reference Was made in the arguments, because 417 they deal with income in an Indian State, which has not been taxed in these cases at all. Paragraph 12 provided for the application of section 23A to a previous year ending on or after August 1, 1949, but not to a previous year ending before August 1, 1949. It may be quoted here: "The provisions of section 23A of the Indian Income tax Act shall not be applied in respect of the profits and gains of any previous year ending before 1st day of August, 1949, unless the State law contains a provision corresponding thereto." Reading the Extension Act, section 60A and the Concessions Order, 1949, together, the following position emerges. The Indian Income tax Act applied to and from the assessment year 1949 50 (April 1, 1949 to March 31, 1950) in the merged States. Corresponding previous years were comprehended. The difficulty which was likely to be felt was with respect to the fact that the merger with the Province of Bombay operated from August 1, 1949, and not from April 1, 1949. In respect of the exemption under section 14 (2) (c), the position was preserved by applying paragraphs 5 and 6 to the exempted income. These two paragraphs made the State rate applicable to that exempted income. Similarly, previous years ending after March 31, 1948, were to be assessed to Indian income tax, but the excess of the tax computed at Indian rates over the tax computed at State rates was to be given away as rebate, and profits and gains of companies of any previous year ending before August 1, 1948, earned in an Indian State were saved from section 23A, unless there was, in the State, a provision corresponding to section 23A. It must be remembered that the Income tax Officer in the present case did not seek by his order under section 23A to distribute the Bhor State income of the shareholders of the Company as dividend; he restricted his order to the British Indian income. There was, in fact, in the State of Bhor no law of Income tax, and no order taxing income which arose in Bhor could be passed by the Income tax Officer. 418 By the definition in section 2(5A) of the Indian Incometax Act. a company formed in pursuance of an Act of an Indian State was a company for the purposes of the Act, and it was open to the Income tax Officer exercising powers under section 23A to declare the income of such a company accruing or arising within the taxable territory as distributed among the shareholders. The right of the Department to pass an order under section 23A(1) of the Indian Income tax Act was not chal lenged before the Tribunal, and it was not the subject of a decision in the High Court. The argument still has been, on behalf of the Company as well as the shareholders, that paragraph 12 of the Concessions Order saved the profits and gains, whether made in Bhor State or in British India, from the application of section 23A, and that indirectly the shareholders were entitled to the same benefit. Paragraph 12 of the Concessions Order depends on whether a company was being assessed under the Indian Income tax Act in respect of its profits and gains in an Indian State for any previous year ending before the first day of August, 1949. By the application of the Indian Act to an Indian State, the income of a company in an Indian State was likely to be taxed to Indian income tax from the assessment year, 1949 50. For the earlier assessment years a company 's income in the Indian State was exempt without the assistance of the Concessions Order. The exemption granted by the Concessions Order was to operate in respect of those profits and gains which, but for the exemption, would have been included in the assessment year, 1949 50 and subsequent years. In so far as paragraph 12 of the Concessions Order was concerned, it gave exemption in respect of action under section 23A to income of " any previous year " ending before the first day of August, 1949. The date, August 1, 1949, was chosen because the merger with the Provinces took place on that date. The word " any " does not refer to all the previous years prior to and ending before August 1, 1949, but to a previous year in relation to the assessment year, 1949 50 and ending before the first day of August, 1949. The words 419 any previous year mean, therefore, only one previous year, which would be a previous year for the purposes of the assessment year, 1949 50 but which, to get the exemption, must end before the first day of August, 1949. The exemption, therefore, did not apply to previous years other than the one described, and in respect of the earlier previous years, paragraph 12 of the Concessions Order was hardly needed. Otherwise, there would be no need to mention in the paragraph the date on which the previous year must end. It is thus quite clear that paragraph 12 provided for income, profits and gains of those previous years which were specially mentioned and in respect of which anomalies were likely to arise by reason of the fact that the merger took place on August 1, 1949, while the Income tax Act was applied from April 1, 1949. In view of the fact that specific terminii of previous years are expressly mentioned in the Concessions Order, it is not possible to accept the argument on behalf of the appellants that " all " previous years before the date mentioned were comprehended in paragraph 12. The application of that paragraph must be limited to one previous year only which ended prior to August 1, 1949. The previous years, with which we are concerned, ended on December 31, 1946, and December 31, 1947, respectively. In the case of this Company, the previous year which would answer the description in paragraph 12 would be the previous year ending December 31, 1947. To that previous year, the provisions of section 23A were not applicable, and the profits and gains made in Bhor State would be protected. The position which obtained in the assessment year 194748 would thus obtain also in the assessment year 1948 49 in so far as the Company was concerned, and its profits and gains in Bhor State could not be considered for purposes of application of section 23A. The position was, however, different in regard to the income in British India which formed the total income of the Company in the taxable territory. It was not contended that the assessable income of the Company in the taxable territories would not attract 420 s.23A, if the distribution of dividends from that income was below the mark set in section 23A. There is thus no difference between the assessment years 194748 and 1948 49, and the method of calculation adopted in the first year is also applicable to the second. To this extent, the answer to the first question (first part) must be deemed to be modified in respect of the previous year ending December 31, 1947. It is next contended that interest that was charged to the Company under section 18A(8) ought to have been deducted along with the income tax before the fictional dividends were computed. Section 18A(8) reads as follows: " Where, on making a regular assessment, the Income tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of the section, interest calculated in the manner laid down in sub section (6) shall be added to the tax as determined on the basis of regular assessment. " The words of the sub section are clear to show that interest as interest is added to the tax as determined. There is nothing to show that it is to be treated as tax, and it thus retains its character of interest but is recoverable along with the tax. Indeed, section 29 of the Income tax Act makes a distinction between tax, penalty and interest. Since section 23A speaks of deduction only of income tax and super tax, no deduction could be made in respect of this interest. Question No. 2 was thus correctly answered by the High Court. In so far as the shareholders who were all resident in the taxable territories were concerned, paragraph 12 of the Concessions Order did not, in terms, protect them. Section 23A enjoins that dividends to the extent of 60 per cent. of the assessable income of the Company after deduction of income tax and super tax must be paid. When the assessable income of the Company has been determined and after the necessary deductions have been made, if dividends are not distributed in accordance with section 23A, the fiction applies to that portion of the profits and gains which were taxable as assessable income of the Company in the 421 taxable territories and which ought to have been so dis tributed. Section 23A, as it was before the amendment in 1955, mentioned 60 per cent. of the assessable income of a company as reduced by the amount of income tax and super tax payable by a company, and provided further that the undistributed portion of the assessable income of a company as computed and reduced shall, subject to certain conditions, be deemed to have been distributed as dividends amongst the shareholders. We have already shown that the benefit of paragraph 12 is not available in respect of these fictional dividends, in so far as the assessable income of the Company was concerned. It is, however, contended that these dividends would be deemed to be declared in Bhor State and to have been received there, and that unless another fiction is engrafted upon the fiction created by section 23A, these deemed dividends cannot be taxed in the hands of the shareholders. No doubt, the section implies a fiction; but if the fiction is given effect to, such income must be deemed to be distributed to the shareholders, and the fiction thus transcends all questions of accrual or receipt in the taxable territories. What is deemed to be distributed must be deemed to have accrued and also received by the person to whom it is deemed to be distributed [See sections 4(1)(a) and 4(1)(b)(i) and (ii)]. Paragraph 12 of the Concessions Order saved the Company in respect of income in Bhor State for the assessment year 194849 for the corresponding previous year ending before August 1, 1949, but it did not save the operation of a. 23A in respect of the assessable income of the Company in the taxable territories and the distribution of dividends to the shareholders from that income. In our opinion, the High Court was right in holding that the dividends deemed to have been distributed out of the Assessable income of the Company in the taxable territories were ' rightly assessable in the total income of the shareholders resident in the taxable territories. No question has been referred on the method of calculation of the dividends deemed to 422 have been distributed, and we need, therefore, express no opinion on that part of the case. The shareholders (appellants 2 to 6) claim the benefit of a 14(2)(o) of the Act, which provides: " 14(2). 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 British India in the previous year by or on behalf of the assessee, or are assessable under Section 12 B or Section 42. " We have already shown that the force of the fiction makes the dividends which ought to have been distributed, to be so distributed. We have also said that this fiction transcends all questions of accrual and receipt. The effect of section 23A is to make dividends payable out of the British Indian income to the shareholders. Paragraph 4 of the Concessions Order and section 14(2)(c) saved for the shareholders the income of the Company outside the taxable territories only, that is to say, the income earned in Bhor State. They do not affect the operation of section 23A on the assessable income of the Company which, by reason of the application of the Indian Income tax Act even prior to the Extension Act, was assessable under the Indian Income tax Act. Dividends payable out of that portion of the income will attract section 23A, and section 14(2)(c) does not apply. Section 14(2)(c) saves only that portion of the income which was not assessable in the taxable territories by reason of its accrual in the State. The Income tax Officer in assessing the income of the shareholders for the assessment year, 1949 50, ought to have deducted the income which accrued in Bhor State, while applying section 23A to them. This he, in effect, did, but he adopted a method on which no question has been raised, and the correctness of the method cannot be examined. The answer to question No. 1 is thus in the negative, with the modification that section 23A applied only to that 423 portion of the income which was earned in British India and not in Bhor State. The answer to the second question is in the negative. The answer to the third question is in the affirmative. The question posed and answered by the High Court hardly arises, in view of the answer to the first questions That question and the answer to it are set aside as being not necessary. The appeals thus fail except for a slight modification in the answer to the first question, and subject to that modification, are dismissed. The appellants must bear the costs of these appeals. There shall be one hearing fee. Appeals dismissed.

The appellant had been incorporated in 1944 as a private company limited by shares in the former State of Bhor with its registered office in Bhor. The shareholders of the company were at all material times resident in British India. By virtue of the States Merger (Governors ' Provinces) Order, 1949, the State was merged with the Province of Bombay with effect from August 1, 1949. The provisions of the Indian Income tax Act, 1922, were extended to the merged State with effect from April 1, 1949. Under the power given by section 60A of the Act which enabled the Central Government to remove any difficulty in the application of the Act to merged States by making a general or special order granting exemption or other modification, the Central Government notified the Merged States (Taxation Concessions) Order, 1949. Paragraph 12 of that Order stated that " the provisions of section 23A of tile Indian Income tax Act shall not be applied in respect of the profits and gains of any previous year ending before 1st day of August, 1949, unless the State law contains a provision corresponding thereto. " The total world income of the company for 1946 and 1947 was Rs. 6,57,084 and 7,8o, 125 respectively and for those years the company declared dividends of Rs. 2,580 and Rs. 1140. For the assessment years 1947 48 and 52 410 1948 49, corresponding to the account years 1946 and 1947, the Income tax Officers assessed the company as nonresident ; for the assessment year 1947 48, the Officer held that ' the assessable income of the company in British India for 1946 less the taxes must be deemed to be distributed among the shareholders in the proportion of their shareholdings, under section 23A of the Act, while for the account year 1947, the total world income less the taxes was deemed to be is tributed, the part proportionate to the income in Bhor State being excluded, except for purposes of rate. In computing the " deemed dividends " the Income tax Officer did not deduct the interest charged to the company under section 18A (8) from the assessable income along with the income tax and super tax under section 23A(1). The company and the shareholders claimed (1) that para. 12 of the Merged States (Taxation Concessions) Order, 1949, precluded the Income tax Officer from making an order under section 23A of the Act in respect of the profits and gains of the account years ending December 31, 1946, and December 31, 1947, which were previous years ending before August 1, 1949, and (2) that, in any case, interest under section 18A(8) ought to have been deducted along with the income tax before the fictional dividends were computed. A further contention was raised that since the dividends in question would be deemed to have been declared in Bhor State and received there, unless another fiction was engrafted upon the fiction created in section 23A that the dividends must be deemed to have been received in the taxable territories, they could not be taxed in the hands of the shareholders. The shareholders also claimed the benefit of s 14(2)(C) in respect of the entire amount of the balance deemed to be distributed. Held: (1) that the expression "any previous year" in para. 12 of the Merged States (Taxation Concessions) Order, 1949, did not refer to all the previous years prior to and ending before August 1, 1949, but meant only one previous year, which would be a previous year for the purposes of the assessment year 194950, but which, to get the exemption, must end before the first day of August, 1949; (2) that the force of the fiction under section 23A of the Indian Income tax Act, 1922, which makes the dividends which ought to have been distributed to be so distributed, transcends all questions of accrual and receipt, and what is deemed to be distributed must also be deemed to have accrued and received by the person to whom it is deemed to be distributed; (3) that section 14(2)(c) of the Act saves only that portion of the income which is not assessable in the taxable territories by reason of its accrual in the State and does not affect the operation of section 23A on the assessable income of the company which, by reason of the application of the Indian Income tax Act even prior to the extension of the Act to the State after merger, was assessable under the Act 411 (4) that the wording of section 18A(8) of the Act under which interest is recoverable along with the tax, does not show that it is to be treated as tax but retains its character as interest, and since section 23A speaks of deduction only of income tax and supertax, no deduction could be made in respect of the interest under that section.

90 of 1956. Petition under article 32 of the Constitution of India for enforcement of Fundamental rights. R. V. section Mani, for the petitioner. N.S. Bindra, K. L. Hathi and R. H. Dhebar, for the respondents. January 12. The Judgment of the Court was delivered by MUDHOLKAR, J. This is a petition under article 32 of the Constitution for issuing an appropriate writ to the respondents not to enforce the provisions of s.1144 of the Criminal Procedure Code or an appropriate writ forbidding respondent No. 4 from proceeding further with the prosecution of the petitioner for offences under sections 143 and 188 of the Indian Penal Code read with section 1 17 thereof, for quashing the proceedings against the petitioner before respondent No. 4 and for the issue of a writ of habeas corpus to respondents 1 to 3 directing them to produce or to cause to be produced the petitioner to be dealt with according to law and to set him at liberty. The facts which have led up to the petition are briefly as follows: There are two unions of textile workers in Nagpur, one known as the Rashtriya Mill Majdoor Sangh and the other as Nagpur Mill Majdoor Sangh. The former is a branch of the Indian National Trade Union Congress. The Rashtriya Mill Majdoor Sangh entered into an agreement with the management of the Empress Mills regarding the closure of Empress Mill No. 1 for rebuilding it and regarding the employment of workers who were employed therein in a third shift. This agreement was opposed by the Nagpur Mill Majdoor Sangh. On January 25, 1956, a group of workers belonging to the Nagpur Mill Majdoor Sangh went in a procession to Gujar 's Wada, Mahal, Nagpur, where the office of the Rashtriya Mill Majdoor Sangh is located. 54 426 It is said that a scuffle took place there between some members of the procession and some workers belonging to Rashtriya Mill Majdoor Sangh. Thereupon an offence under section 452 read with section 147 of the Indian Penal Code was registered by the police on January 27, 1956. A large procession consisting of the workers of the Nagpur Mill Majdoor Sangh was taken out. This procession marched through the city of Nagpur shouting slogans which, according to the District Magistrate, were provocative. On the same night a meeting was held at the Kasturchand Park in which it was alleged that the workers belonging to the Nagpur Mill Majdoor Sangh were instigated by the speakers who addressed the meeting to offer satyagraha in front of the Empress Mill No. 1 and also to take out a procession to the office of the Rashtriya Mill Majdoor Sangh. On January 28,1956, the workers belonging to the Nagpur Mill Majdoor Sangh assembled in large numbers in Mahal Chowk and on Mahal road blocking the traffic on the road. It is said that these persons were squatting on the road and as they refused to budge the District Magistrate passed an order at 4 00 a.m. on January 29, 1956, which came into force immediately and was to remain in force for a period of fifteen days prohibiting, among other things, the assembly of five or more persons in certain areas specified in the order. The petitioner entertained the view that the order promulgated by the District Magistrate under section 144 of the Code of Criminal Procedure was an encroachment on the fundamental rights of the citizens to freedom of speech and expression and to assemble peaceably and without arms, guaranteed under article 19(1)(a) and (b) of the Constitution and, therefore, he held a public meeting outside the area covered by the aforesaid order. It is alleged that at that meeting he criticised the District Magistrate and exhorted the workers to contravene his order and take out processions in the area covered by the order. Thereupon he was arrested by the Nagpur police for having committed the offences already referred to and produced before a magistrate, The magistrate remanded him to 427 jail custody till February 15, 1956. The petitioner 's application for bail was rejected on the ground that the accusation against him related to a Don bailable offence. Thereupon the petitioner moved the High Court at Nagpur for his release on bail but his application was rejected on February 22, 1956. The petitioner then presented a petition before the High Court under section 491 of the Code of Criminal Procedure for a writ of habeas corpus. That petition was dismissed by the High Court on May 9, 1956. The petitioner then moved the High Court for granting a certificate under article 132 of the Constitution. The High Court refused to grant the certificate non the ground that in its opinion the case did not involve any substantial question of law regarding the interpretation of the Constitution and was also not otherwise fit for grant of a certificate. On April 23, 1956, the petitioner presented the present petition before this Court. The petitioner also sought an exparte order for the stay of the proceedings before the respondent No. 4 till the decision on the petition to this Court. This Court admitted the petition but rejected the application for stay. On May 6, 1956, the petitioner took out a notice of motion for securing stay of the proceedings before respondent No. 4. On May 28,1956, this Court ordered that the entire prosecution evidence be recorded but the delivery of the judgment be stayed pending the decision of this petition. After the proceedings were stayed by this Court, the petitioner was released on bail by the trying magistrate. On behalf of the petitioner Mr. Mani has raised the following contentions: (1) That section 144 of the Code of Criminal Procedure in so far as it relates to placing of restrictions on freedom of speech and freedom of assembly confers very wide powers on the District Magistrate and certain other magistrates and thus places unreasonable restrictions on the rights guaranteed under article 19(1)(a) and (b) of the Constitution. (2) The District Magistrate constitutes the whole legal machinery and the only check for control on 428 his powers is by way of a petition to him to modify or rescind the order, that thus the District Magistrate becomes " a judge in his own cause" presumably, what learned counsel means is a judge with regard to his own decision and so the remedy afforded by the section is illusory. Further the remedy by way of a revision application before the High Court against the order of the District Magis trate is also illusory and thus in effect there can be no judicial review of his order in the proper sense of that expression. (3 Section 144 adopts "likelihood" or "tendency" as tests for judging criminality ; the test of determining the criminality in advance is unreasonable. (4) Section 144 substitutes suppression of lawful activity or right for the duty of public authorities to maintain order. (5) Even assuming that section 144 of the Code of Criminal Procedure is not ultra vires the Constitution, the order passed by the District Magistrate in this case places restrictions which go far beyond the scope of clauses (2) and (3) of article 19 and thus that order is unconstitutional. Learned counsel also challenged the validity of the order on grounds other than constitutional, but we need not consider them here since it will be open to the petitioner to raise them at the trial. This being a petition under article 32 of the Constitution, the petitioner must restrict himself to those grounds which fall within cl. (1) thereof. We think it desirable to reproduce the whole of section 144. (1)In cases where, in the opinion of a District Magistrate, a Chief Presidency Magistrate, Sub Divisional Magistrate, or of any other Magistrate (not being a Magistrate of the third class) specially empowered by the 'State Government ' or the Chief Presidency Magistrate or the District Magistrate to act under this section there is sufficient ground for proceeding under this section and im mediate prevention or speedy remedy is desirable, such Magistrate may, by a written order stating 429 the material facts of the case and served in manner provided by section 134, direct any person to abstain from a certain act or to take certain order with certain property in his possession or under his management, if such Magistrate considers that such direction is likely to prevent or tends to prevent, obstruction, annoyance or injury, or risk of obstruction, annoyance or injury to any person lawfully employed, or danger to human life, health or safety, or a disturbance of the public tranquility or a riot, or an affray. (2) An order under this section may, in cases of emergency or in cases where the circumstances do not admit of the serving in due time of a notice upon the person against whom the order is directed, be passed ex parte. (3) An order under this section may be directed to a particular individual, or to the public generally when frequenting or visiting a particular place. (4) Any Magistrate may, either on his own motion or on the application of any person aggrieved, rescind or alter any order made under this section by himself or any Magistrate subordinate to him, or by his predecessor in office. (5) Where such an application is received, the Magistrate shall afford to the applicant an early opportunity of appearing before him either in person or by pleader and showing cause against the order; and if the Magistrate rejects the application wholly or in part, he shall record in writing his reasons for doing. (6) No order under this section shall remain in force for more than two months from the making thereof; unless, in cases of danger to human life, health or safety, or a likelihood of a riot or an affray, the 'State Government ' by notification in the Official Gazette, otherwise directs. " Sub section (1) confers powers not on the executive but on certain Magistrates. This provision has been amended in some States, as for instance, the former Bombay State where power has been conferred on the Commissioner of Police to pass an order thereunder. But we are not concerned with that matter here 430 because that provision is not contained in the law as applicable to the former State of Madhya Pradesh with which alone we are concerned in the matter before us. Under sub section (1) the Magistrate himself has to form an opinion that there is sufficient ground for proceeding under this section and immediate prevention or speedy remedy is desirable. Again the subsection requires the Magistrate to make an order in writing and state therein the material facts by reason of which he is making the order thereunder. The sub section further enumerates the particular activities with regard to which the Magistrate is entitled to place restraints. Sub section (2) requires the Magistrate ordinarily to serve a notice on the person against whom the order is directed and empowers him to proceed exparte only where the circumstances do not admit of serving such a notice in due time. Sub section (3) does not require any comment. Sub section (4) enables a Magistrate to rescind or alter an order made under this section and thus enables the person affected, if the order is addressed to a specified individual, or any member of the public, if the order is addressed to the public in general, to seek, by making an application, exemption from compliance with the order or to seek a modification of the order and thus gives him an opportunity to satisfy the Magistrate about his grievances. The Magistrate has to deal with applications of this kind judicially because he is required by sub section (5) to state his reasons for rejecting, wholly or in part, the application made to him. Finally the normal maximum duration of the order is two months from the date of its making. The restraints imposed by the order are thus intended to be of a temporary nature. Looking at the section as a whole it would be clear that, broadly speaking, it is intended to be availed of for preventing disorders, obstructions and annoyances and is intended to secure the public weal. The powers are exercisable by responsible magistrates and these magistrates have to act judicially. Moreover, the 431 restraints permissible under the provision are of a temporary nature and can only be imposed in an emergency. Even so, according to the learned counsel these provisions place unreasonable restrictions on certain fundamental rights of citizens. Firstly, according to learned counsel restrictions on the rights guaranteed by cls. (2) and (3) of article 19 of the Constitution can be placed in the interest of id public order " and not in the interest of the " general public ", which expression, according to him is wider in its ambit than public order and that since section 144 enables a magistrate to pass an order in the interest of the general public the restrictions it authorises are beyond those permissible under cls. (2) and (3) of article 19. It is significant to note that section 144 nowhere uses the expression " general public ". Some of the objects for securing which an order thereunder can be passed are, " to prevent obstruction, annoyance, injury. . . etc. No doubt, the prevention of such activities would be in the ,public interest" but it would be no less in the interest of maintenance of " public order. " Secondly, according to learned counsel, section 144 is an amalgam of a number of things to many of which there is no reference even in el. (2) of article 19. In order to enable the State to avail of the provisions of cls. (2) and (3), he contends, a special law has to be passed and a provision like section 144 can serve no purpose. This contention has only to be mentioned to be rejected. Clauses (2) to (6) of article 19 do not require the making of a law solely for the purpose of placing the restrictions mentioned in them. Thirdly, according to learned counsel sub section (1) of a. 144 does not require the magistrate to make an enquiry as to the circumstances which necessitate the making of an order thereunder. It is true that there is no express mention anywhere in section 144 that the order of the magistrate should be preceded by an enquiry. But we must construe the section as a whole. The latter part of sub section (1) of section 144 specifically mentions that the order of the magistrate should sot out the 432 material facts of the case. It would not be possible for the magistrate to set out the facts unless he makes an enquiry or unless he is satisfied about the facts from personal knowledge or on a report made to him which he prima facie accepts as correct. Clearly, therefore, the section does not confer an arbitrary power on the magistrate in the matter of making an order. It is contended that section 144 of the Code of Criminal Procedure confers very wide powers upon certain magistrates and that in exercise of those powers the magistrates can place very severe restrictions upon the rights of citizens to freedom of speech and expression and to assemble peaceably and without arms. It seems to us, however, that wide though the power appears to be, it can be exercised only in an emergency and for the purpose of preventing obstruction, annoyance or injury to any person lawfully employed, or danger to human life, health or safety, or a disturbance of the public tranquillity or a riot, or " an affray ". These factors condition the exercise of the power and it would consequently be wrong to regard that power as being unlimited or untrammelled. Further, it should be borne in mind that no one has a right to cause " obstruction, annoyance or injury etc., " to anyone. Since the judgment has to be of a magistrate as to whether in the particular circumstances of a case an order, in exercise of these powers, should be made or not, we are entitled to assume that the powers will be exercised legitimately and honestly. The section cannot be struck down on the ground that the magistrate may possibly abuse his powers. It is also true that initially it is the magistrate con cerned who has to form an opinion as to the necessity of making an order. The question ', therefore, is whether the conferral of such a wide power amounts to an infringement of the rights guaranteed under article 19(1)(a) and (b) of the Constitution. The rights guaranteed by sub cl. (a) are not absolute rights but are subject to limitations specified in cl. (2) of article 19 which runs thus: " Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law,, or prevent the 433 State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. " Similarly the rights to which sub cl. (b) relates are subject to the limitations to be found in cl. (3) of article 19, which runs thus: " Nothing in sub clause (b) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of public order, reasonable restrictions on the exercise of the right conferred by the said sub clause. " The Code of Criminal Procedure was an existing law at the commencement of the Constitution and so, in the context of the grounds on which its validity is challenged before us, what we have to ascertain is whether the conferral thereunder of a power on a magistrate to place restrictions on the rights to which sub section (a) and (b) of article 19 relate is reasonable. It must be borne in mind that the provisions of section 144 are attracted only in an emergency. Thereunder, the initial judge of the emergency is, no doubt, the District Magistrate or the Chief Presidency Magistrate or the sub divisional magistrate or any other magistrate specially empowered by the State Government. But then, the maintenance of law and order being the duty and function of the executive department of the State it is inevitable that the q question of formation of the opinion as to whether there is an emergency or not must necessarily rest, in the first instance, with those persons through whom the executive exercises its functions and discharges its duties. It would be impracticable and even impossible to expect the State Government itself to exercise those duties and func tions in each and every case. The provisions of the section therefore which commit the power in this regard to a magistrate belonging to any of the classes referred to therein cannot be regarded as unreasonable. We 55 434 may also point out that the satisfaction of the magistrate as to the necessity of promulgating an order under section 144 of the Code of Criminal Procedure is not made entirely subjective by the section. We may also mention that though in an appropriate case a magistrate is empowered to make an order under this section ex parte the law requires that he should, where possible serve a notice on the person or persons against whom the order is directed before passing that order. Then sub section (4) provides that any magistrate may either on his own motion or on the application of any person aggrieved, rescind or alter any order made under this section. This clearly shows that even where an ex parte order is made the person or persons affected thereby have a right to challenge the order of the magistrate. Sub section (5) provides that where such a challenge is made, the magistrate shall give an early opportunity to the person concerned of appearing before him and showing cause against the order. The decision of the magistrate in such a proceeding would undoubtedly be a judicial one inasmuch as it will have been arrived at after hearing the party affected by the order. Since the proceeding before the magistrate would be a judicial one, he will have to set aside the order unless he comes to the conclusion that the grounds on which it rests are in law sufficient to warrant it. Further, since the propriety of the order is open to challenge it cannot be said that by reason of the wide amplitude of the power which section 144 confers on certain magistrates it places unreasonable restrictions on certain fundamental rights. Learned counsel, however, says that the right conferred on the aggrieved person to challenge the order of the magistrate is illusory as he would be a judge with regard to his own decision. This argument would equally apply to an application for review made in a civil proceeding and we do not think that it is at all a good one. Again, though no appeal has been provided in the Code against the Magistrate 's order under section 144, the High Court has power under section 435 read with section 439 of the Code to entertain an application for the revision of such an order, The powers of the High Court in 435 dealing with a revision application are wide enough to enable it to quash an order which cannot be supported by the materials upon which it is supposed to be based. We may point out that sub section (1) of section 144 requires a magistrate who makes an order thereunder to state therein the material facts upon which it is based and thus the High Court will have before it relevant material and would be in a position to consider for itself whether that material is adequate or not. As an instance of a case where the High Court interfered with an order of this kind, we may refer to a decision in P. T. Chandra, Editor, Tribune vs Emperor(1). There, the learned judges quite correctly pointed out that the propriety of the order as well as its legality can be considered by the High Court in revision, though in examining the propriety of the order the High Court will give due weight to the opinion of the District Magistrate who is the man on the spot and responsible for the maintenance of public peace in the district. In that case the learned judges set aside an order of the District Magistrate upon the ground that there was no connection between the act prohibited and the danger apprehended to prevent which the order was passed. We would also like to point out that the penalty for infringing an order under section 144 is that provided in section 188, Indian Penal Code. When, therefore, a prosecution is launched thereunder, the validity of the order under section 144, Criminal Procedure Code, could be challenged. We are, therefore, unable to accept Mr. Mani 's contention that the remedy of judicial review is illusory. The argument that the test of determining criminality in advance is unreasonable, is apparently founded upon the doctrine adumbrated in Scheneck 's case(2) that previous restraints on the exercise of fundamental rights are permissible only if there be a clear and present danger. It seems to us, however, that the American doctrine cannot be imported under our Constitution because the fundamental rights guaranteed under article 19 (1) of the Constitution are not absolute rights but, as pointed out in State of Madras (1) A.I.R. 1942 Lah. 171. (2) Scheneck vs U. section, ; 436 vs V. G. Row (1) are subject to the restrictions placed in the subsequent clauses of article 19. There is nothing in the American Constitution corresponding to cls. (2) to (6) of article 19 of our Constitution. The Fourteenth Amendment to the U. section Constitution provides, among other things, that " no State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; that of the Constitution of the United States. Then again, the Supreme Court of the United States has held that the privileges and immunities conferred by the Constitution are subject to social control by resort to the doctrine of police power. It is in the light of this background that the test laid down in Scheneck 's case (2) has to be understood. The language of section 144 is somewhat different. The test laid down in the section is not merely " likelihood " or " tendency ". The section says that the magistrate must be satisfied that immediate prevention of particular acts is necessary to counteract danger to public safety etc. The power conferred by the section is exercisable not only where present danger exists but is exercisable also when there is an apprehension of danger. Apart from this it is worthy of note that in Scheneck 's case (2) the Supreme Court was concerned with the right of freedom of speech and it observed: "It well may be that the prohibition of law abridging the freedom of speech is not confined to previous restraints, although to prevent them may have been the main purpose We admit that in many places and in ordinary times the defendants, in saying all that was said in the circular, would have been within their constitutional rights. But the character of every act depends upon the circumstances in which it is done The most stringent protection of free speech would not protect a man in falsely shouting fire in a theatre, and causing a (1) ; (2) ; 437 panic. It does not even protect a man from an injunction against uttering words that may have all the effect of force. . The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress has a right to prevent. It is a question of proximity and degree. " Whatever may be the position in the United States it seems to us clear that anticipatory action of the kind permissible under section 144 is not impermissible under cls. (2) and (3) of article 19. Both in el. (2) (as amended in 1951) and in cl. (3) power is given to the legislature to make laws placing reasonable restrictions on the exercise of the rights conferred by these clauses in the interest, among other things, of public order. Public order has to be maintained in advance in order to ensure it and, therefore, it is competent to a legislature to pass a law permitting an appropriate authority to take anticipatory action or place anticipatory restrictions upon particular kinds of acts in an emergency for the purpose of maintaining public order. We must, therefore, reject the contention. It is no doubt true that since the duty to maintain law and order is cast upon the Magistrate, he must perform that duty and not shirk it by prohibiting or restricting the normal activities of the citizen. But it is difficult to say that an anticipatory action taken by such an authority in an emergency where danger to public order is genuinely apprehended is anything other than an action done in the discharge of the duty to maintain order. In such circumstances that could be the only mode of discharging the duty. We, therefore, reject the contention that section 144 substitutes suppression of lawful activity or right for the duty of public authorities to maintain order. Coming to the order itself we must consider certain objections of Mr. Mani which are, in effect, that there are three features in the order which make it unconstitutional. In the first place, according to him the order is directed against the entire public though the magistrate has stated clearly that it was promulgated 438 because of the serious turn which an industrial dispute had taken. Mr. Mani contends that it is unreasonable to place restrictions on the movements of the public in general when there is nothing to suggest that members of the public were likely to indulge in activities prejudicial to public order. It is true that there is no suggestion that the general public was involved in the industrial dispute. It is also true that by operation of the order the movements of the members of the public would be restricted in particular areas. But it seems to us that it would be extremely difficult for those who are in charge of law and order to differentiate between members of the public and members of the two textile unions and, therefore, the only practical way in which the particular activities referred to in the order could be restrained or restricted would be by making those restrictions applicable to the public generally. The right of citizens to take out processions or to hold public meetings flows from the right in article 19(1)(b) to assemble peaceably and without arms and the right to move anywhere in the territory of India. If, therefore, any members of the public unconnected with the two textile unions wanted to exercise these rights it was open to them to move the District Magistrate and apply for a modification of the order by granting them an exemption from the restrictions placed by the order. Mr. Mani 's contention, and that is his second ground of attack on the Magistrate 's order, is that the only exception made in the order is with respect to funeral processions and religious processions and, therefore, it would not have been possible to secure the District Magistrate 's permission for going out in procession for some other purpose or for assembling for some other purpose in the area to which the order applied. So far as the customary religious or funeral processions are concerned, the exemption has been granted in the order itself that if anyone wanted to take out a pro cession for some other purpose which was lawful it was open to them under section 144, sub section (4), to apply for an alteration of the order and obtain a special exemption. 439 More omission of the District Magistrate to make the exemption clause of the order more comprehensive would not, in our opinion, vitiate the order on the ground that it places unreasonable restrictions on certain fundamental rights of citizens. The third and last ground on which Mr. Mani challenged the constitutionality of the order was that while the order prohibits the shouting of provocative slogans in public places etc., it does not give any definition of what was meant by the expression "provocative slogans ". Therefore, according to Mr. Mani, this order is vague and must be deemed to be placing unreasonable restrictions on the rights of free speech of citizens. It seems to us that the expression " provocative slogans " has necessarily to be understood in the context in which it has been used in the order and, therefore, it cannot be regarded as vague. We have, therefore, reached the conclusion that the order of the District Magistrate is not unconstitutional either because section 144 is itself violative of fundamental rights recognised in article 19 or on the ground that it is vague and places unreasonable restrictions on those fundamental rights. We, therefore, dismiss this petition. Shortly after this petition was made to this Court, the petitioner presented a special leave petition in which he seeks to challenge the judgment of the Nagpur High Court dated April 9, 1956, dismissing his writ petition to that High Court. The points raised in the Special Leave Petition are similar to those raised in this petition. Since we are dismissing this petition, there can be no question of granting the special leave to the petitioner to appeal against the judgment of the Nagpur High Court. Petition dismissed.

The District Magistrate, apprehending a breach of peace as a result of demonstrations and counter demonstrations held by two rival labour unions promulgated an order under section 144 of the Code of Criminal Procedure, which was to remain in force for a period of fifteen days, prohibiting, inter alia, the assembly of five or more persons in certain specified areas. The petitioner took it as an invasion on the fundamental rights of the citizens under article 19(1)(a) and (b) of the Constitution and held a meeting outside the specified areas and exhorted the workers to take out processions in the notified areas in defiance of the said order. He was thereupon prosecuted under sections 143 and 188 read with section 117 of the Indian Penal Code. He moved the High Court under section 491 of the Code of Criminal Procedure, and having failed to get relief there, moved this Court under article 32 of the Constitution challenging the constitutional validity of section 144 of the Code on the ground that it conferred wide and unguided powers on the District Magistrate and thus contravened article 19(i)(a) and (b) of the Constitution. Held, that the attack on the constitutional validity of section 144 of the Code of Criminal Procedure must fail, 424 Read as a whole, the section clearly showed that it was intended to secure the public weal by preventing disorders, obstructions and annoyances. The powers conferred by it were exercisable by responsible Magistrates who were to act judicially and the restraints permitted by it were of a temporary nature and could be imposed only in an emergency. The restrictions which the section authorises are not beyond the limits prescribed by cls. (2) and (3) of article 19 of the Constitution. The prevention of such activities as are contemplated by the section is undoubtedly in public interest and therefore no less in the interest of public order. Clauses (2) to (6) of article 19 of the Constitution do not require a special enactment for the enforcement of the restrictions mentioned in them. The impugned section must be construed as a whole and although the first part of cl. (1) does not expressly mention that the order of the Magistrate must be preceded by an enquiry, the second part clearly indicates that the Magistrate has to satisfy himself either by his own enquiry or from a report made to him as to what the facts are. The section does not, therefore, confer an arbitrary power on the Magistrate in the matter of making the order. The wide power under the section can be exercised only in an emergency and for the purpose of preventing obstruction, annoyance or injury etc. as specified therein and those are the factors that must necessarily condition the exercise of the power and, therefore, it was not correct to say that the power is unlimited or untrammelled. Since the judgment has to be of a Magistrate, it can be assumed that the power will be exercised legitimately and honestly. The section cannot be struck down simply on the ground that the Magistrate might possibly abuse his power. Although the section makes the Magistrate the initial Judge of an emergency that cannot make the restrictions placed by it unreasonable. Since maintenance of law and order rests with the Executive, it is only appropriate that the initial decision must be with the Magistrate. But such decision is not entirely based on his subjective satisfaction. Sub sections (2), (4) and (5) clearly indicate that the Magistrate must act judicially. Moreover, the propriety of his order can be challenged in revision. It was not, therefore, correct to say that the remedy of a person aggrieved by an order under the section was illusory. P. T. Chandra, Editor, Tribune vs Emperor, A.I.R. 1942 Lah. 17r, referred to. The American doctrine that previous restraints on the exer cise of fundamental rights are permissible only if there is a clear and present danger, can have no application in India, since the rights guaranteed by article 19(1) of the Constitution are not absolute but subject to restrictions under cls. (2) to (6) of that 425 Article. Anticipatory action permitted by section 144 is not, therefore, hit by cls. (2) and (3) of article 19. Scheneck vs U. section ; , considered. State of Madras vs V. G. Row ; , relied on.

iminal Appeal No. 78 of 1959. Appeal by special leave from the judgment and order dated November 25, 1958, of the former Bombay High Court in Criminal Revision Application No. 1393 of 1958 arising out of the judgment and order dated September 18, 1958, of the Presidency Magistrate 11 Class, Mazagaon at Bombay in Case No. 1101/P of 1958. R. H. Dhebar, for the appellant. The respondent did not appear. October 18. The Judgment of the Court was delivered by 28 HIDAYATULLAH J. This is an appeal by the State of Bombay, with the special leave of this Court, against the order of acquittal by the High Court of Bombay of the respondent, Vishnu Ramchandra, who was prosecuted under section 142 of the Bombay Police Act and sentenced to six months ' rigorous im prisonment by the Presidency Magistrate, 2nd Court, Mazagaon, Bombay. On November 16, 1949, Vishnu Ramehandra was convicted under section 380 and 114 of the Indian Penal Code, and sentenced to one month 's rigorous imprisonment. On October 15, 1957, the Deputy 'Commissioner of Police, Bombay, acting under section 57(a) of the Bombay Police Act (22 of 1951), passed an order against Vishnu Ramchandra which was to operate for one year, externing him from the limits of Greater Bombay. At that time, a prosecution under section 411 of the Indian Penal Code was pending against Vishnu Ramchandra, and he was not immediately externed, to enable him to attend the case. This prosecution came to an end on July 10, 1958, and resulted in his acquittal. Immediately afterwards, a constable took him outside the limits of Greater Bombay, and left him there. The prosecution case was that he returned to Greater Bombay, and was arrested at Pydhonie on August 24, 1958. He was prosecuted under section 142 of the Bombay Police Act. His plea that he was forcibly brought back to Pydhonie and arrested was not accepted by the Presidency Magistrate, and he was convicted. He filed a revision application, which was heard by a learned single Judge of the High Court of Bombay. Three contentions were raised before the High Court. The first was that the Deputy Commissioner of Police had not applied his mind to the facts of the case before making the order of externment. The second was that section 57 of the Bombay Police Act was prospective, and could not be made applicable, unless the conviction on which the action of externment was based, took place after the coming into force of that Act. The third was that the belief entertained by the Deputy Commissioner that Vishnu Ramchandra was 29 likely to engage himself in the commission of an offence similar to that for which he was prosecuted was based on the prosecution which was then pending, and that that ground disappeared after his acquittal. The High Court did not consider the first and the third grounds, because it held that the second ground was good. Section 57 of the Bombay Police Act reads as follows: " Removal of persons convicted of certain offences If a person has been convicted (a) of an offence under Chapter XII, XVI or XVII of the Indian Penal Code (XLV of 1860), or (b) twice of an offence under section 9 or 23 of the Bombay Beggars Act, 1945 (Bom. XXIII of 1945,) or under the Bombay Prevention of Prostitution Act, 1923 (Bom. XI of 1923), or (c) thrice of an offence within a period of three years under section 4 or 12A of the Bombay Prevention of Gambling Act, 1887 (Bom. IV of 1887), or under the Bombay Prohibition Act, 1949 (Bom. XXV of 1949) the Commissioner, the District Magistrate or the Sub Divisional Magistrate specially empowered by the State Government in this behalf, if he has reason too believe that such person is likely again to engage himself in the commission of an offence similar to that for which he was convicted, may direct such person to remove himself outside the area within the local limits of his jurisdiction, by such route and within such time as the said officer may prescribe and not to enter or return to the area from which he was directed to remove himself ". In reaching his conclusion the learned single Judge observed that the legislature had used the present participle " has been " and not the past participle in the opening portion of the section, and that this indicated that the section was intended to be used only where a person was convicted subsequent to the coming into force of the Act. He further observed that being a penal section, it had to be interpreted prospectively. He repelled an argument of the Assistant 30 Government Pleader that section 57 merely re enacted the provisions of section 27 of the City of Bombay Police Act, 1902, and that a liability incurred under the older Act was preserved by section 167 of the Bombay Police Act of 1951. Observing further that the Deputy Commissioner of Police at the time of the passing of the order could not be said to have entertained a belief about the activities of Vishnu Ramchandra based upon his conviction in the year 1949, he held that the order of externment must be regarded as invalid for that reason and also on the ground that the conviction was not after the coming into force of the Act. At the hearing before us, the respondent was not represented. We have heard Mr. Dhebar in support of the appeal, and, in our opinion, the High Court was not right in the view it had taken of section 57 of the Act. The question whether an enactment is meant to operate prospectively or retrospectively has to be decided in accordance with well settled principles. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective, but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events. The reason why penal statutes are so construed was stated by Erle, C. J., in Midland Rly. Co. vs Pye (1) in the following words: "Those whose duty it is to administer the law very properly guard against giving to an Act of Parliament a retrospective operation, unless the intention of the legislature that it should be so construed is expressed in clear, plain and unambiguous language; because it manifestly shocks one 's sense of justice that an act, legal at the time of doing it, should be made unlawful by some new enactment ". This principle has now been recognised by our Constitution and established as a Constitutional restriction on legislative power. (1) ; , 191. 31 There are, however, statutes which create Do new punishment, but authorise some action based on past conduct. To such statutes, if expressed in language showing retrospective operation, the principle is not applied. As Lord Coleridge, C. J., observed during the course of arguments in Rex vs Birthwhistle (1): " Scores of Acts are retrospective, and may without express words be taken to be retrospective, since they are passed to supply a cure to an existing evil." Indeed, in that case which arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act was held retrospective without express words. It was said: " It was intended to cure an existing evil and to afford to married women a remedy for desertion, whether such desertion took place before the passing of the Act or not." Another principle which also applies is that an Act designed to protect the public against acts of a harmful character may be construed retrospectively, if the language admits such an interpretation, even though it may equally have a prospective meaning. In Queen vs Vine (2), which dealt with the disqualification of persons selling spirits by retail if convicted of felony, the Act was applied retrospectively to persons who were convicted before the Act came into operation. Cock burn, C. J., observed: "If one could see some reason for thinking that the intention of this enactment was merely to aggravate the punishment for felony by imposing this disqualification in addition, I should feel the force of Mr. Poland 's argument, founded on the rule which has obtained in putting a construction upon statutes that when they are penal in their nature they are not to be construed retrospectively, if the language is capable of having a prospective effect given to it and ' is not necessarily retrospective. But here the object of the enactment is not to punish offenders, but to protect the public against public houses in which spirits are retailed being kept by persons of doubtful character . On looking at the Act, the words used seem (1) (1889) 58 L.J. (N.S.) M.C. 158. (2) 32 to import the intention to protect the public against persons convicted in the past as well as in future; the words are in effect equivalent to 'every convicted felon '. " In the same case, Archibald, J., expressed himself forcefully when he observed: " I quite agree, if it were simply a penal enactment, that we ought not to give it a retrospective operation ; but it is an enactment with regard to public and social order, and infliction of penalties is merely collateral. " Similarly, in Ex Parte Pratt (1), which dealt with the words " a debtor commits an act of bankruptcy " to enable the Court to make a receiving order, Cotton, L. J., gave the words a retrospective operation, observing: " I think that no reliance can be placed on the words I commits ' as showing that only acts of bankruptcy committed after the Act came into operation are intended. " In the same case, the observations of Bowen, L. J., were: " I think that the more the Act is studied the more it will be found that it is framed in a very peculiar way. I do not mean to say that it is inartistically framed. I think it is framed on the idea that a bankruptcy code is being constructed, and when the present tense is used, it is used, not in relation to time, but as the present tense of logic. " Fry, L. J., added : " I entirely agree with Bowen, L. J., as to the meaning of the present tense in the section ; it is used, I think, to express a hypothesis, without regard to time." In Bourke vs Nutt (2), Lord Esher, M. R., speaking of these observations of Bowen and Fry, LL. J., observed : " . the case seems to show that when the present tense is used in this statute (section 32 of the Bankruptcy Act, 1883) the time to be considered is the time at (1) (2) [1894] I Q.B. 725. 33 which the Court has to act, and not the time at which the condition of things on which it has to act came into existence. " Applying the above principles, Lord Esher, M. R., held that the section was not retrospective but prospective, because the important time was that at which it had to be considered whether the person was disqualified and it related to a time after the passing of the Act. He, however, added that " even if it could be said that it is retrospective its enactments are solely for the public benefit, and the rule that restricts the operation of a penal retrospective statute does not apply, because this statute is not penal." These principles, though not unanimously expressed, have been accepted in later cases both in England and in India. In Ganesan vs A. K. Joscelyne (1), Chakravarti, C. J., observed, Sarkar, J. (as he then was), concurring: " I may state, however, that in spite of the ordinary and I might almost say cardinal rule of construction that statutes, particularly statutes creating liabilities, ought not to be so construed as to given them a retrospective operation unless there is a clear provision to that effect or a necessary intendment implied in the provisions, there is another principle on which Courts have sometimes acted. It has been held that where the object of an Act is not to inflict punishment on anyone but to protect the public from undesirable persons, bearing the stigma of a conviction or misconduct on their character, the ordinary rule of construction need not be strictly applied. " In Taher Saifuddin vs Tyebbhai Moosaji (2), the same principles were applied by Chagla, C. J. and Bhagwati, J. (as he then was), and reference was made also to The Queen vs Inhabitants of St. Mary Whitechapel (3) where Lord Denman, C. J., in his judgment observed: " . it was said that the operation of the statute was confined to persons who had become widows after (1) A.1 R. ,38. (2) A.I.R. 1953 Bom. 183, z86, 187. (3) [1848) ; 12 Q.B. 120 (B): 34 the Act passed, and that the presumption against a retrospective statute being intended supported this construction; but we have before shown that the statute is in its direct operation prospective, as it relates to future removals only, and that it is not properly called a retrospective statute because a part of the requisites for its action is drawn from time antecedent to its passing." Now section 57 of the Bombay Police Act, 1951, does not create a new offence nor makes punishable that which was not an offence. It is designed to protect the public from the activities of undesirable persons who have been convicted of offences of a particular kind. The section only enables the authorities to take note of their convictions and to put them outside the area of their activities, so that the public may be protected against a repetition of such activities. As observed by Phillimore, J., in Rex vs Austin (1), "No man has such a vested right in his past crimes and their consequences as would entitle him to insist that in no future legislation shall any regard whatever be had to his previous history. " An offender who has been punished may be restrained in his acts and conduct by some legislation, which takes note of his antecedents; but so long as the action taken against him is after the Act comes into force, the statute cannot be said to be applied retrospectively. The Act in question was thus not applied retrospectively but prospectively. It remains only to consider if the language of the section bars an action based on past actions before the Act was passed. The verb "has been" is in the present perfect tense, and may mean either " shall have been " or " shall be ". Looking, however, to the scheme of the enactment as a whole and particularly the other portions of it, it is manifest that the former meaning is intended. The verb " has been " describes past actions, and, to borrow the language of Fry, L.J., in Ex Parte Pratt (2), " is used to express a hypothesis, without regard to time ". An externment order, however, to satisfy the (1) , 556. (2) [1884] 12 Q.B 334 35 requirements of section 57 of the Bombay Police Act, must be made bona fide, taking into account a conviction which is sufficiently proximate in time. Since no absolute rule can be laid down, each case must depend on its own facts. In the result, we set aside the acquittal, and remit the case to the High Court for disposal on the other points urged before it and in the light of observations made here by us. Appeal allowed.

On November 16, 1949, the respondent was convicted under sections 38o and II4 of the Indian Penal Code. On October 5, 1957, the Deputy Commissioner of Police, Bombay, acting under section 57(1) of the Bombay Police Act passed an order externing him from the limits of Greater Bombay. Later he was prosecuted and convicted under section 142 of the Bombay Police Act by the Presidency Magistrate for returning to the area from which he was externed. On an application for revision the High Court acquitted the respondent upholding his contention that section 57 of the Bombay Police Act was not retrospective and was not applicable unless the conviction on which the externment was based took place after the Act came into force. On appeal by the appellant with the special leave of this Court it was 27 Held, that though statutes must ordinarily be interpreted prospectively unless the language makes them retrospective, either expressly or by necessary implication, and penal statutes creating new offences are always prospective, penal statutes creating disabilities though ordinarily interpreted prospectively are sometimes interpreted retrospectively when the intention is not to punish but to protect the public from undesirable persons whose past conduct is made the basis of future action. Midland Ry. Co. vs Pye, IO C.B. (N.S.) 179, Rex vs Birth whistle, (1889) 58 L.J. (N.S.) M.C. 158, Queen vs Vine, [1875] IO Q.B. 195, Ex Parte Pratt, , Bourke vs Nutt, [1898] I Q.B. 725, Ganesan vs A.K. Joscelyne, A.I.R. 1957 Cal. 33, Taher Saifuddin vs Tyebbhai Moosaji, A.I.R. 1953 Bom. 183, The Queen vs Inhabitants of St. Mary Whitechapel, ; : ; and Rex vs Austin, , considered and applied. Section 57 of the Bombay Police Act did not create a new offence but was designed to protect the public from the activities of undesirable persons convicted of particular offences and enabled the authorities to take note of their activities in order to put them outside the areas of their activities for preventing any repetition of such activities in the future. The verb " has been " as used in section 57 meant " shall have been Legislation which takes note of a convicted offender 's antecedents for restraining him from his acts cannot be said to be applied retrospectively as long as the action taken against him is after the Act comes into force. The Act in question was thus not applied retrospectively but prospectively. An externment order must be bona fide and must relate to a conviction which is sufficiently proximate in time.

Appeal No. 252 of 1956. Appeal from the judgment and decree dated September 29, 1953, of the Rajasthan High Court (Jaipur Bench) in Civil Writ Application No. 28 of 1951. Gopal Singh and T. M. Sen, for the appellants. section N. Andley, J. B. Dadachanji and P. L. Vohra,for the respondent. January 19. The Judgment of the Court was delivered by SINHA, C. J. This appeal on a certificate granted by the Jaipur Bench of the High Court of Judicature for Rajasthan that " the case involves a substantial question of law as to the interpretation of articles 277, 278, 294 and 295 of the Constitution of India and the case is a fit one for appeal to the Supreme Court under article 132(1) and also under article 133(1)(c) of the Constitution of India" is directed against the judgment dated September 29, 1953, of the High Court of Judicature for Rajasthan at Jaipur to the effect that the appellant, the Union of India, was not entitled to levy and recover arrears of excise duty on cotton cloth for the period April 1, 1949, to March 31, 1950, from the respondent, the Maharaja Krishnagarh Mills Ltd. The facts of this case, which have not been in dispute at any stage of the proceedings, may shortly be stated as follows. The respondent is a cloth mill located in Krishnagarh in District Jaipur in the State of Rajasthan. It had a stock of manufactured cloth on April 1, 1949, and also manufactured cloth during the period, April 1, 1949, and March 31,1950. In respect of such cloth an excise duty became payable under the Rajasthan Excise Duties Ordinance, 1949 (XXV of 1949), at rates set forth in the schedule to the Ordinance. The sum of Rs. 1,56,291 odd became payable on that account out of which only a sum of Rs. 19,739 odd was paid to the Government of Rajasthan, thus leaving the sum of Rs. 1,36,551 odd outstanding against the respondent. After the Indian Constitution came into effect the Central Excise and 526 Salt Act, 1944, and the rules framed thereunder were extended to the State of Rajasthan by section 11 of the Finance Act of 1950. Hence, the duty became payable in respect of the cloth manufactured on and from April 1, 1950, under the provisions of that Act. The appellant claimed that as a result of the agreement between the Government of India and the State of Rajasthan, to be noticed hereinafter in detail, and of the Constitution, the Union of India became entitled to realise the arrears of the excise duty in respect of the cloth manufactured by the respondent before April 1, 1950. In enforcement of that claim the Superintendent of Central Excise, Jaipur, served a notice dated February 16, 1951, on the respondent demanding payment of the outstanding amount of Rs. 1,36,551 odd. The respondent thereupon filed a writ petition in the High Court of Rajasthan, Jaipur, under article 226 of the Constitution against (1) the Union of India, (2) the Central Board of Revenue, Delhi, (3) the Collector of Central Excise for Rajasthan, Delhi, and (4) the Superintendent of Central Excise, Jaipur, who are the appellants before us, praying for a writ of prohibition against them prohibiting them from imposing, levying or collecting any tax or duty by way of excise as also for any appropriate direction, order or writ. The writ petition was founded on the contentions that the notice of demand served upon the respondent as aforesaid was illegal and unauthorised on the ground (1) that the Central Government had no jurisdiction to levy any tax before January 26, 1950, (2) that the Central Excise and 'Salt Act was not in force in Rajasthan before April 1, 1950, and (3) that without the application of the rules framed by the Central Government under section 37 of the Central Excise and Salt Act, 1944, to Rajasthan no duty could be imposed, levied or collected and those rules were made applicable to Rajasthan only on December 16, 1950. On behalf of the appellants, who were the respondents in the High Court, it was contended that it was got correct to say that the rules framed under s, 37 527 of the Central Excise and Salt Act, 1944, were made applicable to the State of Rajasthan by virtue of the notification dated December 16, 1950, and it was asserted that those rules became applicable to the State of Rajasthan with effect from April 1, 1950, as a result of section 11 of the Finance Act, 1950. It was also contended that by virtue of section 3 of Rajasthan Excise Duties Ordinance (XXV of 1949) promulgated by His Highness the Rajpramukh of Rajasthan on September 5, 1949, excise duty was levied on cloth and other articles produced and manufactured in Rajasthan on and after April 1, 1949, at the rates set forth in the first schedule of the said Ordinance. It was also contended that in pursuance of articles 278 and 295 of the Constitution the President of India had entered into an agreement with the Rajpramukh of Rajasthan on February 25, 1950, whereby the parties agreed to accept the recommendations of the Indian States Finance Enquiry Committee, 1948 49, contained in part I of its report, read with chapters 1, 11 and III of part II of its report, in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter VIII of part 11 of the said report. By virtue of the said agreement the Union of India became entitled to claim and recover all excise duties, whether assessed or un assessed, which the State of Rajasthan was entitled to recover from the respondent as from April 1, 1949, before the Central Excise and Salt Act, 1944, was extended to the State of Rajasthan, as aforesaid. The matter was first heard by a Bench consisting of Ranawat and Sharma, JJ., which, in view of the importance of the points involved in the case, referred the following two points for decision by a larger Bench by its judgment dated November 5, 1951: " 1. Whether by virtue of Articles 278, 279 and 295 of the Constitution of India and the agreement entered into between the President of India and the Rajpramukh of Rajasthan on the 25th of February, 1950, the Union of India is entitled to levy and recover arrears of excise duty on cloth held in stock or manufactured before the 1st of April, 1950, 68 528 in case excise duty thereon was payable to the State of Rajasthan under the provisions of the Rajasthan Excise Duties Ordinance No. 25 of 1949 ? 2. Whether the publication of the Government notification by which the Jaipur Excise Rules were adopted under the provisions of the Rajasthan Excise Ordinance was sufficient publication within the meaning of section 28 of the Rajasthan Excise Duties Ordinance No. 25 of 1949, and whether the publication of the aforesaid notification should be deemed to have been properly authenticated by authentication of the publication of the Ordinance. If not, whether want of authentication would have the effect of invalidating the said Excise Rules ? " The case was then heard by a Full Bench consisting of Wanchoo, C.J., Ranawat and Dave, JJ. The judgment of the Court was delivered by the learned Chief Justice on November 24, 1952, in substance upholding the contentions raised on behalf of the petitioner before the High Court, now respondent. The High Court came to the conclusion that article 277 of the Constitution was a complete answer to the claim of the Government of India to collect the dues in question for any period anterior to April 1, 1950. This conclusion was based on the reasoning that the agreement aforesaid between the Government of India and the Government of Rajasthan was in effect overridden by article 277 and that the agreement contemplated by article 278 was in respect of a duty which was leviable by the Government of India. By virtue of article 277 of the Constitution cotton excise duty was actually leviable by the State of Rajasthan up to March 31, 1950, because Parliament made the contrary provision only from April 1, 1950. Therefore, it was further observed by the High Court that the effect of article 277 on Art 278 of the Constitution was that cotton excise duty could not be said to be leviable by the Government of India so far as the State of Rajasthan was concerned up to March 31, 1950. In view of that conclusion it was further held that the right to collect the arrears of excise duty in question could not be held to have been transferred to the Union of India 529 by virtue of the agreement aforesaid of February 25, 1950. The first question referred to the Full Bench was thus answered in favour of the petitioner in the High Court. The second question relating to the publication and authentication of the Excise Rules was also answered in favour of the petitioner, now respondent. The High Court held that the Hindi Gazette relied upon on behalf of the Government did not contain any authentication of the Rules and did not show by whose authority they had been published. This conclusion was based on the ground that the contention raised on behalf of the Government that the publication in the Gazette and the authentication therein did not only apply to the Ordinance but covered the Rules also, was not correct. The answers given by the Full Bench to the questions referred to it by the Division Bench were returned to the Bench concerned and the Bench, in pursuance of the opinion of the Full Bench, ordered by its judgment dated September 29, 1953, that "a direction be issued against the opposite party not to recover from the petitioner the amount of Rs. 1,36,551 12 as per their notice of demand of the 16th of February, 1950. The petitioner shall get costs of this petition from the respondents. " The Union of India applied for and obtained the necessary certificate, as quoted above, from the High Court of Rajasthan. That is how the matter is before this Court. It is manifest that if the opinion of the Full Bench on the second question referred to as to the publication and authentication of the Rules is correct, then no other question will arise for determination by this Court. It ' the Rules under the Rajasthan Excise Duties Ordinance, XXV of 1949, had not been properly promulgated and authenticated, then the Ordinance by itself could not be sufficient for the levy and collection of the tax sought to be imposed. It is, therefore, necessary for us first to determine that controversy. At the outset, it may be mentioned that the writ petition filed by the respondent in the High Court under article 226 of the Constitution did not allege any facts bearing on this part of the controversy. 530 Thus, there was no foundation laid in the pleadings for a contention that the Rules aforesaid had not been promulgated on a proper authentication. As already indicated, the petition was founded only on the lack of power in the Union Government to levy and collect the excise duty with reference to the provisions of the Central Excise and Salt Act of 1944 and the Rules framed thereunder. There is no reference to the provisions of Ordinance XXV of 1949 promulgated by the Rajasthan Government. It was only in the reply to the writ petition made by the respondent in the High Court that reliance was placed upon the said Ordinance and the Rules framed thereunder. We do not find any pleadings, or any petition by way of amendment of the pleadings, in the record of this case raising the contention that the Rules framed under the Ordinance aforesaid had not been promulgated on a proper authentication. The High Court, therefore, on the face of the pleadings, was not justified in permitting the petitioner before it to raise this contention, but our decision need not be rested on the lack of pleadings only. We have examined the Rajasthan Gazette, the Hindi version of which is entitled Rajasthan Raj Patra published by authority of the Rajasthan Government dated Margashirsa Krishna 7, Saturday, Samvat 2006, containing the notification dated Jaipur, September 15, 1949, the preamble of which states that Shriman Rajpramukh had made and promulgated the following Ordinance which was being published for the information of the public and it purports to have been authenticated by the Law Secretary, Sanyukta Rajasthan Sarkar. Under that authentication follows the Ordinance, XXV of 1949, dated September 5, 1949. The Ordinance goes to the end of page 169 and from the next page 170 ending with page 172 appear the Rules. They begin with the declaration which may be translated as follows: " In exercise of the powers conferred under sections 5 and 26 of the Rajasthan Excise Duties Ordinance of 1949 the Rajasthan Government orders that till new Rules are framed under the said Ordinance, the Rules framed under the Jaipur Excise Duties Act 531 of 1945 known as the Jaipur Excise Duty Rules of 1945 will be in force throughout the whole of Rajasthan with necessary modifications and for this purpose will be treated as made under the Rajasthan Ordinance. " It would thus appear that the authentication by the Law Secretary appearing on the first page of the Gazette as aforesaid was intended to govern not only the Ordinance in question but also the Rules which had been promulgated thereunder. Apparently, section 28 of the Ordinance which ran " All rules made and notifications issued under this Ordinance shall be made and issued by publication in the Rajasthan Gazette. All such rules and notifications shall thereupon have effect as if enacted in this Ordinance " was understood to authorise such a mode of promulgation and authentication. The authority that promulgated the rule having intended the signature of the Law Secretary appearing at the beginning of the publication as an authentication of the rules, we are of opinion that the formal requirements of section 8 (2) of the Ordinance V of 1949 were satisfied. Whether the authentication appears in the beginning of the notification or at the end of it is not material so long as it is clear on a reference to the publication in the Gazette that the matter is substantially covered by the authentication, whether appearing at the beginning or the end of the notification. The High Court, therefore, was in error in coming to the conclusion that the authentication covered the Ordinance proper without the Rules framed thereunder. The correct conclusion from the record as it stands is that the authentication covers the entire notification including both the Ordinance proper and the Rules framed thereunder which became parts of the Statute. In view of this conclusion it becomes necessary now to examine the ratio of the decision of the High Court on the first question referred to it, namely, the authority of the Union of India to realise the arrears of the duty in question. It is clear in view of our conclusion 532 that the Ordinance and the Rules framed thereunder have been properly promulgated in the Official Gazette, that the Government of Rajasthan was entitled to levy and collect the duty of excise in respect of. cotton cloth from the respondent. As a matter of fact, the respondent appears to have paid about Rs. 19,739 odd out of the duty payable by it to that Government. The remaining amount for which the notice of demand had been issued by the official of the Government of India was certainly payable to the Government of Rajasthan. We have, therefore, to consider whether the Government of India by any process of law stepped into the shoes of the Rajasthan Government in respect of the arrears aforesaid. In this connection reliance was placed on the agreement between the President of India and the Rajpramukh of Rajasthan dated February 25, 1950. The relevant provisions of the agreement are these: " Whereas provision is made by Articles 278, 291, 295 and 306 of the Constitution of India for certain matters to be governed by agreements between the Government of India and the Government of a State specified in Part B of the First Schedule to the Constitution. . Now, therefore, the President of India and the Rajpramukh of Rajasthan have entered into the following agreement, namely: The recommendations of the Indian States Finance Enquiry Committee, 1948 49 (hereafter referred to as the Committee) contained in Part I of its Report read with Chapters 1, 11 and III of Part 11 of its Report in so far as they apply to the State of Rajasthan (hereafter referred to as the State) together with the recommendations contained in Chapter VIII of Part 11 of the Report, are accepted by the Parties hereto, subject to the following modifications, namely. . The modifications are not material to this case. The agreement thus incorporates as terms of the agreement the report of the Committee, the relevant portion of which is in these terms: 533 " With effect from the prescribed date, the Centre will take over all 'federal ' sources of Revenue and all 'federal ' items of expenditure in State together with the administration of the Departments concerned. The Centre must also take over all current out standings (including pending assessments, refunds, and arrears), liabilities, claims, etc., and all productive and unproductive capital assets connected with these Departments. " It is common ground that "federal sources of revenue" include the duty of excise in question. It is also clear that all outstanding dues from assessees including pending assessments and arrears have been by the terms of the agreement made over to the Centre. This agreement, as the preamble itself indicates, has been made in accordance with the provisions of articles 278 and 295 of the Constitution. The relevant portions of article 278 are as under: " 278. (1) Notwithstanding anything in this Constitution, the Government of India may, subject to the provisions of clause (2), enter into an agreement with the Government of a State specified in Part B of the First Schedule with respect to (a) the levy and collection of any tax or duty leviable by the Government of India in such State and for the distribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter;. and, when an agreement is so entered into, the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement. " It is noteworthy that the provisions of article 278 override pro tanto other provisions of the Constitution including article 277 and the terms of the agreement override the provisions of the Chapter, namely, Chapter I of Part XII. In this Chapter are contained articles 264 to 291. Thus, on a construction of the pro. visions of articles 277 and 278, it is clear that in the absence of any agreement between the Government of India and the Government of a State specified in Part B, duties of customs which immediately before 534 the commencement of the Constitution were being lawfully levied by the Government of such a State continue to be levied by that State until provision to the contrary is made by Parliament by law, notwithstanding that such a duty is mentioned in the Union List. Article 277, therefore, is in the nature of a saving provision permitting the States to levy a tax or a duty which, after the Constitution, could be levied only by the Centre. But article 277 must yield to any agreement made between the Government of India and the Government of a State in Part B in respect of such taxes or duties, etc. The pro. vision to the contrary contemplated by article 277 was made by the Finance Act, XXV of 1950, section 11, which extended the Central Excise and Salt Act, 1944, along with other Acts to the whole of India except the State of Jammu and Kashmir. But that section has effect only from April 1, 1950, and therefore does not apply to the arrears of duty of excise now in controversy. The agreement envisaged by article 278 was entered into as aforesaid on February 25, 1950. That agreement conceded to the Centre the right to levy and collect the arrears of the duty in question. The reasons given by the High Court for the conclusion that in spite of article 278 read with the agreement aforesaid, the Union Government was not entitled to realise the arrears are (1) that the agreement does not contain any specific provision about levy and collection of cotton excise duty in Rajasthan, (2) that the mere approval in the agreement of the principles set out in the report is not enough in view of article 277 which made a distinctly different provision from that contemplated in the report and (3) that the agreement could be only with respect to a duty which was leviable by the Government of India. In our opinion, none of these reasons aforesaid can stand in the way of the Union of India. Though the agreement does not in terms refer to levy and collection of cotton excise duty in Rajasthan, it is clear that the agreement has to be read with the relevant portions of the report quoted above. So read, there cannot be the least doubt that cotton excise duty in Rajasthan, as a " federal 535 source of revenue," is also covered by the agreement. Nor is it correct to say that the agreement read with the report is not enough to override the provisions of article 277. The agreement read with article 278, as already indicated, in terms, overrides the provisions of article 277. The only other reason which weighed with the High Court in getting over the terms of article 278 cannot also hold good. That a duty of the kind now in controversy on the date of the agreement after coming into force of the Constitution is leviable only by the Government of India even in respect of the State of Rajasthan is clear beyond all doubt. The Union List only, namely, entry 84 in the Seventh Schedule, authorises the levy and collection of the duty in question. Neither the State List, List II, nor the Concurrent List, List III, contains any such authorisation. It is true that article 277 has saved, for the time being, until Parliament made a provision to the contrary, the power of the State of Rajasthan to levy such a duty, but that is only a saving provision, in terms subject to the provisions of article 278. Thus, the combined operation of articles 277 and 278 read with the agreement vests the power of levy and collection of the duty in the Union of India. It is only in the absence of an agreement like the one we have in this case that the Rajasthan Government could continue to levy and collect the duty in question. The agreement between the two Governments completely displaced the operation of article 277 in regard inter alia to the levy of this duty so far as the State of Rajasthan is concerned. It is clear, therefore, that the High Court was in error in holding that Art,. 277 was any answer to the claim of the Government of India and should override the provisions of article 278 read with the agreement. On a proper construction of these provisions, in our opinion, the result is just to the contrary. In this view of the matter, it is not necessary to consider the other arguments advanced on behalf of the appellants, whether article 295 should prevail over article 277. For the reasons aforesaid, this appeal is allowed and the decision of the High Court set aside. The result 69 536 is that the writ petition filed by the respondent in the High Court stands dismissed with costs here and in the High Court. Appeal allowed.

The question for determination in the appeal was whether the Union of India was entitled to levy and recover arrears of excise duty on cotton cloth for the period April 1, 1949, to March 31, 1950, payable by the respondent, a cloth mill in the State of Rajasthan, under the Rajasthan Excise Duties Ordinance, 1949. After the coming into force of the Indian Constitution and the extension of the Central Excise and Salt Act, 1944, and the rules framed thereunder to the State of Rajasthan by section II of the Finance Act of 1950, the duty in respect of cloth manufactured on and from April 1, 1950, became payable under that Act. The appellant Union, however, claimed that as a result of the agreement entered into on February 25, 1950, by the President of India with the Rajpramukh of Rajasthan under article 278 and article 295 of the Constitution, the Union of India became entitled as from April 1, 1950, to claim and recover all arrears of excise duties which the State of Rajasthan was entitled to recover from the respondent before the Central Excise and Salt Act, 1944, was extended to Rajasthan. Notice having been accordingly served on the respondent demanding payment of the outstanding amount of Rs. 1,36,551 12 as payable by it, it moved the High Court under article 226 of the Constitution. On a reference by the Division Bench which heard the matter in the first instance, the Full Bench finding in favour of the respondent held that article 277 was a complete refutation of the said claim by the Union and article 278 and the said agreement were overridden by it. Held, that the provisions of articles 277 and 278 of the Con stitution, properly construed, leave no manner of doubt that article 277 was in the nature of a saving provision, subject in terms to the provisions of article 278, permitting the States to levy a tax or duty which, after the Constitution could be levied only by the centre. But article 277 had to yield place to any agreement in respect of such taxes and duties made between the Union Government and the Government of a Part B State under article 278. Since there could not be the least doubt in the instant case that the agreement between the President and the Rajpramukh of Rajasthan conceded to the Union the right to levy and collect the arrears of the cotton excise duty in Rajasthan, the High Court was wrong in taking a contrary view of the matter.

iminal Appeal No. 65 of 1958. Appeal by special leave from the judgment and order dated April 11, 1956, of the Calcutta High Court in Criminal Revision No. 1584 of 1955. N. C. Chatterjee, Arun Kumar Dutta and D. N. Mukherjee, for the appellant. K.B. Bagchi and S.N. Mukherjee, for the respondents. January 16. The Judgment of the Court was delivered by SINHA, C.J. This appeal by special leave is directed against the judgment and order of the High Court of Judicature at Calcutta, dated April 11, 1956, whereby the appellant 's claim of absolute privilege as a member of the Bengal Legislative Assembly was rejected and the prosecution launched against him under section 500, Indian Penal Code, was allowed to proceed. The facts of this case are not in doubt or dispute and may shortly be stated as follows. The appellant is a citizen of India and an elected member of the West Bengal Legislative Assembly. He is also a medical practitioner at Ghatal in the Midnapore District of West Bengal. In January, 1954, the appellant gave notice of his intention to ask certain questions in the Assembly. Those questions were disallowed in accordance with the rules of procedure for the conduct of business of the Assembly. In February, 1954, the appellant was informed that the questions proposed by him had been disallowed. The appellant published 488 the questions that had been disallowed in a local journal called Janamat, in its issue of February 28, 1955. In July, 1955, the first respondent, whose conduct formed the subject matter of the questions and who was then functioning as a Sub divisional Magistrate, filed a complaint against the appellant and two others, the editor, and the printer and publisher respectively of the journal aforesaid. The petition of complaint alleged that the appellant had made and published scandalous imputations against him intending them to be read by members of the public, that those imputations were false and unfounded and had been made with the definite intention of harming or with the knowledge or having reason to believe that they would harm the reputation of the complainant and that the complainant felt greatly aggrieved and harmed in mind and reputation. He also alleged that being a Government servant, the, complainant had to obtain the necessary permission from the Government for instituting legal proceedings for the vindication of his character as a public servant and that accounted for the delay in filing the petition of complaint. The petition of complaint charged the appellant with an offence under section 500 of the Indian Penal Code and the second and third accused, who have been cited as respondents 2 and 3 in this Court, under section 501 of the Indian Penal Code. After several adjournments, the petitioner raised, by way of preliminary objection to the .criminal prosecution, the question of his absolute privilege and immunity from prosecution under the provision of the Constitution. The learned Magistrate by his order dated October II,, 1955, overruled the objection and held that the privilege claimed by the accused was not an unqualified one. He relied on a judgment of the Calcutta High Court in the case of Dr. Suresh Chandra Banerjee vs Punit Goala (1) in support of his conclusion that the first accused before him, now appellant, was not entitled to the privilege and immunity claimed by him. Thereafter, the appellant moved the High Court under article 228 of the Constitution for having the case withdrawn to the (1) High Court for determination of the constitutional question raised by him by way of defence, but that, application was dismissed by a Bench of the High ' Court on November 9, 1955, presumably on the ground that the. case did not involve any substantial question of law as; to the interpretation of the Constitution. Not daunted by the adverse order aforesaid of the Bench of the High Court, the petitioner again moved the High Court and obtained a rule on several grounds including the question of the proceedings being barred by the provisions of article 194 of the Constitution. The learned Single Judge, who dealt with the case on this occasion, noticed the position that strictly speaking the constitutional question could not be allowed to be reagitated in view of the Bench decision aforesaid. But the learned Judge all the same dealt with the points raised by the appellant including the question arising under article 194 of the Cotistitution. The learned Judge dismissed the application holding that a member of the Legislative Assembly had no absolute privilege in respect of the questions sought to be asked by him, which had been disallowed but he had published them all the same. It was also pointed out that the questions had never been asked in the House and that, therefore, could not be said to form part of the proceedings of the House. He further held that the publication in the journal at the instance of the appellant could by no means be said to have been under the authority of the House. The appellant moved the learned Judge for a certificate under article 132(1) of the Constitution, but that application was also refused on the ground that the case did not involve any substantial question of law as respects the interpretation of the Constitution. The appellant then moved this Court and obtained special leave to appeal from the judgment of the High Court refusing the claim of privilege. He also obtained stay of fur. ther proceedings in the Court of the Magistrate. The hearing of the appeal was ordered to be expedited That order was passed on October 1, 1956, but notwithstanding the order of expedition, the case came to be heard only four years later, 490 In this Court, it has been contended on behalf of the appellant that the learned Judge below had erred in his interpretation of the provisions of article 194 of the Constitution and that on a proper construction ' of; those provisions it should have been held (1) that questions sought to be asked by a member of a Legislative Assembly, even though disallowed by the Speaker, formed part of the proceedings of the House, and, as such, their publication would not attract the provisions of the Indian Penal Code; (2) the provisions of article 194 should be liberally construed in favour of persons like elected members of the Assembly who are rendering public service not only by making speeches and asking questions in the Assembly, but also by publishing them in the public press with a view to apprising the country and, particularly the constituency of what had been happening in the House. In other words, it Was claimed that there was an absolute privilege in favour of a member and that, therefore, he could not be prosecuted for having published the questions he sought to put, but had been disallowed by the Speaker. Do the provisions of article 194 of the Constitution lend any support to the contentions aforesaid raised on behalf of the appellant? The first clause of article 194 does not call for any comment in, this case because no question as regards freedom of speech in the Legislature of a State has been raised. Clause (2) of the Article has, firstly, laid down a bar against any proceedings, civil or criminal against any" member of a Legislature of a State in respect of anything said or any vote given by him in the Legislature or any Com mittee thereof; and secondly, that no person shall be liable in a civil or criminal proceeding in respect of the publication of any report, paper, votes or proceedings under the authority of a House of such a Legislature. It is not contended that the publication complained against in this case was under the authority of the Legislative Assembly of West Bengal. So the second part of the second clause of; article 194 cannot be pressed in aid of the appellants contention. As regards the first part of the second clause, can it be said that the publication, which forms the subject matter of the 491 prosecution in,, this case, can come within the purview of ', anything said or any vote given " by a member of. the Legislative Assembly? The answer must be in the ' negative. It is, therefore, manifest that el. (2) of article 194 is equally of no assistance to the appellant. Naturally, therefore, reliance was placed in the course of arguments in this Court on the provisions of cl. (3) of article 194. Does the publication of a disallowed question by a member of an Assembly come within the powers, privileges and immunities of the members of the House ? The answer to this question depends upon finding out what are the powers, privileges. and immunities of the members of the House of Commons of the Parliament of the United Kingdom at the commencement of the Constitution. This Court in the case of M. section M. Sharma vs Shri Sri Krishna Sinha (1) has considered in great detail those immunities with respect to the publication of a portion of a speech which was directed by the Speaker to be expunged from the proceedings of the House. This Court has held that the publication of such a portion of the proceedings is not within the privilege attaching to the publication of a faithful report of the proceedings of a House of the State Legislature. That case was not concerned with the penal law of the country. In that case the Court was concerned with ascertaining the powers of the Assembly to punish for contempt of the House with reference to the privileges and immunities of a House of the Legislature of a State. Hence, that decision does not assist us in determining the present controversy. If we turn to the legal position in England with reference to the House of Commons, it is clear that the immunity of a member of the House of Commons is in respect of the speeches made by him in Parliament, but it does not extend to the publication of the debate outside Parliament. If a member of a House of Commons ' _publishes his speech made in the House separately from the rest of the proceedings in the House, he will be liable for defamation if his speech contains matters defamatory of any person. In the celebrated case of R. vs Lord Abingdon (2),,Lord Kenyon had decided that a speech which had been made in (1) [1959] Suppl. 1 S.C.R. 806, (2) ; 170 E.R.337, 492 the House of Lords was not privileged if published separately from the rest of the debate. In May Parliamentary Practice, 16th Edition, by Lord Campion, occur the following statements in respect of the two well known cases of Abingdon (1) and Creevey, Journal of the House of Commons (1912 13) 704: "Abingdon 's case, (1). An information was filed against Lord Abingdon for a libel. He had accused his attorney of improper professional conduct,, in a: speech delivered in the House of Lords, which he afterwards published in several newspapers at his own expense. Lord Abingdon pleaded his own case in the Court of King 's Bench, and contended that he had a right to print what he had, by the Law of Parliament, a right to speak; but Lord Kenyon said that a member of Parliament had certainly a, right to publish his speech, but that speech should not be made a vehicle of slander against any individual; if it was, it was a libel. The Court gave judgment that his lordship should be imprisoned for three months, pay a fine of pound 100, and find, security for his good behaviour. Creevey 's case (2), 1813. Creevey, a member of the House of Commons, had made a charge against an individual in the House, and incorrect reports of his speech having appeared in several newspapers, Mr. Creevey sent a correct report to the editor of a newspaper, with a request that he would publish it. Upon an information filed against him, the jury found the defendant guilty of libel, and the King 's Bench refused an application for a new, trial (See Lord Ellenborough 's judgment in Rex vs Creevey (2)). Mr. Creevey, who had been fined pound 100, complained to the House of the proceedings of the King 's Bench; but the House refused to admit that they were a breach of privilege. " It is clear on a reference to the law in England in respect of the privileges and immunities of the House of Commons that there is no absolute privilege attaching to the publication of extracts from proceedings in the House of Commons. So far as a member of the House of Commons is concerned, he has an absolute privilege (1) (1794) Esp. 226; M, &section 2 73; 493 in respect of what he has spoken within the four walls of the House, but there is only a qualified privilege in his favour even in respect of what he has himself said, in the House, if he causes the same to be published in the public press. The case of publication of proceedings of Parliament, not under the authority of the House, stands on the same footing as the publication of proceedings in courts of justice. That was made clear by Cockburn, C.J. in the case of Wason vs Walter (1). Explaining why the publication of a single speech in the proceedings in the House would not be absolutely privileged, the learned Chief Justice observed: " It is to be observed that the analogy between the case of reports of proceedings of courts of justice and those of proceedings in Parliament being complete, all the limitations placed on the one to prevent injustice to individuals will necessarily attach on the other; a garbled or partial report, or of detached parts of proceedings, published with intent to injure individuals, will equally be disentitled to protection. So long as Parliament does not crystallise the legal position by its own legislation, the privileges, powers and immunities of a House of a State Legislature or Parliament or of its members are the same as those of the House of Commons, as stated above. In the present case the appellant sought to put certain questions bearing upon the conduct of the complainant, the first respondent, in this case. According to r. 27 of the Assembly Procedural Rules, certain conditions have to be fulfilled in order that a question may be admissible. Amongst other requirements of the rule, one of the conditions is that it must not contain any imputation or imply a charge of a personal character. Rule 29 of those rules authorises the Speaker to decide on the admissibility of a question with reference to the provisions of the rules and lays down that the Speaker " shall disallow any question when, in his opinion, it is an abuse of the right of questioning, or is in contravention of those provisions. " In view of the conclusion we have already reached, namely, that there is no absolute privilege, even in favour of a member of the Legislature, in respect of a publication not of the entire 63 (1) , 94. proceedings, but of extracts from them, it is not necessary for us to decide the question whether disallowed questions can be said to form part of the proceedings of a House of Legislature. In this connection, it is also relevant to note that we are concerned in this case with a criminal prosecution for defamation. The law of defamation has been dealt with in sections 499 and 500 of the Indian Penal Code. Section 499 contains a number of exceptions. Those specified exceptions lay down what is not defamation. The fourth exception says that it is not defamation to publish a substantially true report of the proceedings of a court of justice, but does not make any such concession in respect of proceedings of a House of Legislature or Parliament. The question naturally arises how far the rule in Wason 's case (1) can be applied to criminal prosecutions in India, but as this aspect of the controversy was not canvassed at the Bar, we need not say anything about it, as it is not necessary for the decision of this case. The legal position is undisputed that unless the appellant can make out an absolute privilege, in his own favour, in respect of the publication which is the subject matter of the charge in this case, the prosecution against him cannot be quashed. As we have held, that he has no such absolute privilege, in agreement with the High Court, he must take his trial and enter upon his defence, such as he may have. As the evidence pro and con has not been recorded in full, the arguments at the Bar had naturally to be confined to the purely legal question of the absolute privilege claimed. It need hardly be added that we do not express any opinion on the merits of the controversy which will now be gone into by the learned Magistrate before whom the case has been pending all these years. For the reasons given above, it must be held that there is no merit in this appeal. It is accordingly dismissed. The pending prosecution, which has been held up for so long, it is expected,, will now be proceeded with without any avoidable delay. Appeal dismissed.

The appellant, who was an elected member of the West Bengal Legislative Assembly, gave notice of his intention to put certain questions in the Assembly and on those questions being disallowed by the Speaker published them in a journal called Janamat of Ghatal, his own constituency. The first respondent who was then the Sub Divisional Magistrate of Ghatal and whose conduct was the subject matter of some of those questions, filed a complaint against the appellant and two others, the editor and the printer and publisher of the janamat, under sections 500 and 501 of the Indian Penal Code. The appellant pleaded privilege and immunity under article 194 of the Constitution as a bar to criminal prosecution. The trial Magistrate as also the High Court found against him. On appeal by special leave it was claimed on his behalf that he had an absolute privilege under article 194 of the Constitution to publish the disallowed questions and could not be prosecuted therefor. Held, that the claim of immunity under article 194 of the Constitution must be negatived. Clause (1) of article 194 had no application since the matter was clearly outside the scope of that clause. Clause (2) of that Article was also inapplicable since it was not the case of the appellant that the publication was under the authority of the Legislative Assembly and it could not also be said that it came within the expression " anything said or any vote given " in that clause. The publication of a disallowed question by a member of the Assembly does not come within the powers, privileges and immunities enjoyed by a member of the House of Commons and, consequently, cl. (3) of article 194 also cannot be of any help to the appellant. The immunity enjoyed by a member of the House of Commons is clearly confined to speeches made in Parliament and does not extend to the publication of the debate outside. If he publishes his speech, made in the House, separately from the rest of the proceedings of the House, he is liable for defamation, in case.it is defamatory. Abingdon 's case, Espinasse 's Reports, Nisi Prius 1793 1810, 228 and Creevey 's case, I Maule and Selwyn 's Reports, King 's Bench, 1813 1817, 273, referred to. 487 There is no absolute privilege attaching to the publication of extracts from the proceedings in the House of Commons and a member, who has absolute privilege in respect of his speech in) the House itself, can claim only a qualified privilege in respect of it if he causes the same to be published in the public press. Quaere: Whether publication of parliamentary proceedings, not authorised by the House, stands on the same footing as the publication of proceedings in a court of law. Wason vs Walter, (1868 69) L.R. 4 Q.B. 73, referred to. M. section M. Sharma vs Sri Krishna Sinha, [1959] SUPP. 1 S.C.R. 806, distinguished. Dr. Suresh Chandra Banerjee vs Punit Goala, , referred to.

Appeal No. 443 of 1957. Appeal by special leave from the judgment and order dated April 25, 1955, of the Allahabad High Court in Civil Misc. Case No. 26/1951. C. B. Aggarwala, C. P. Lal for G. Ar. Dikshit, for the appellant. section K. Kapur and Mohan Behari Lal, for the respondent. October 31. The Judgment of Hidayatullah, Das Gupta and Shah, JJ., was delivered by Shah, J., and the judgment of Das and Ayyangar, JJ., was delivered by Ayyangar, J. SHAH J. Judge (Revisions) exercising authority under section 11 of the United Provinces Sales Tax Act XV of 1948 drew up a statement of case and referred to 191 the High Court of Judicature at Allahabad the follow question : " Whether the assessee, who is a manufacturer and a dealer of non edible oils and who elected the previous year as the basis of his assessment in the assessment year 1948 49, is liable to be assessed at the flat rate of 3 pies per rupee on the whole of the turnover of the previous year, or whether he is liable to be assessed at the rates of 3 pies per rupee and 6 pies per rupee on the turnover of the previous year in proportion to the two periods from 1st April to 8th June, 1948, and from 9th June, 1948 to the 31st March, 1949 ?" The High Court answered the question as follows: " The applicant company is liable to pay tax for the assessment year 1948 49 on the turnover of the previous year in respect of sales of non edible oils at the flat rate of 3 pies per rupee. " Against the order of the High Court recording its answer, this appeal with special leave is preferred. The facts which give rise to the appeal are briefly these : The Modi Food Products Co., Ltd. hereinafter referred to as " the assessee ", manufactures oils edible and non edible in its factory at Modinagar, District Meerut, State of Uttar Pradesh. The assessee is registered as a "dealer" under the United Provinces Sales Tax Act XV of 1948. The assessee 's year of account commences on June 1, and ends on May 31, next year. For the year of account 1946 47, the assessee 's sales of edible and non edible oils amounted to Rs. 63,02,849 7 7. The U. P. Legislature enacted with effect from April 1, 1948, the United Provinces Sales Tax Act XV of 1948 providing for the levy of a tax on sales of certain commodities. This act was amended by Act XXV of 1948 with retrospective operation from April 1, 1948. By the Act, " assessment year " was defined as meaning the twelve months ending on March 31 and " previous year " was defined as meaning the twelve months ending on the 31st March next preceding the assessment year, or, if the accounts of the dealer had been 192 made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st March then, at the option of the dealer, the year ending on the day to which his accounts had so been made up. ,Turnover " was defined as meaning the aggregate of the proceeds of sale by a dealer. By section 3, a tax at the rate of 3 pies per rupee of turnover was, subject to certain exceptions, made payable by every dealer in each assessment year whose turn. over in the previous year exceeded Rs. 12,000 or such larger amount as may be prescribed; the Provincial Government was however authorised to reduce the rate of tax on any dealer or class of dealers on the turnover in respect of any goods or class of goods. By section 3 A, the Government of U. P. was authorised to introduce instead of the multiple point scheme of taxation provided by section 3 a single point system of taxation and by notification to declare that the proceeds of sale of any goods or class of goods shall not be included in the turnover of any dealer except to such single point in the series of sales by successive dealers as may be prescribed; and if the Government made such a declaration, the turnover of the dealer in whose turnover the sale of such goods was included was in respect of such sale to be taxed at such rate as may be specified not exceeding one anna per rupee. By section 7, every dealer whose turnover in the previous year was Rs. 12,000 or more was directed to submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed. By the proviso, the Government was authorised to prescribe that any dealer or class of dealers may submit in lieu of the return or returns specified in that section, a return or returns of his turnover of the assessment year at such intervals as may be prescribed. Provision was made by the Act for appeals against the order of assessment and revision against the order of the appellate authority. By section 11, the High Court of Judicature at Allahabad was authorised to decide questions of law raised in any case in the course of assessment and 193 referred to it on a statement of the case drawn up by the Revising Authority. By section 24. the Provincial, Government was invested with power to make rules to carry out the purposes of the Act and in particular in respect of certain specified matters. In exercise of the powers conferred by section 24 of the Act, the Government of U. P. framed rules. Rule 39 of the U. P. Sales Tax Rules gave to every dealer an option to submit his return of the turnover of the assessment year in lieu of the return of the turnover of the previous year. A dealer who did not carry on business during the whole of the previous year had no option, but was bound to submit his return of the turnover of the assessment year. By r. 40, it was provided that every dealer who elected to submit a return of the turnover of his previous year shall within sixty days of the commencement of the assessment year, submit to the Sales Tax Officer a return showing his turnover of the previous year. By r. 41, it was provided that every dealer whose estimated turnover during the assessment year was not less than Rs. 15,000 and who elected to submit his return of such year shall before the last day of July, October, January and April submit to the Sales Tax Officer, a return of his gross turnover for the quarters ending June 30, September 30, December 31 and March 31. In exercise of the authority conferred by section 3 A which was incorporated in the Act by Act XXV of 1948, the Government of U. P. issed the following notification : " In exercise of the powers conferred by section 3 A of the United Provinces Sales Tax Act, 1941, as amended by the United Provinces Sales Tax (Amendment) Act, 1948, the Governor is hereby pleased to declare that with effect from June 9, 1948, the proceeds of sale of goods entered in column 2 of the schedule hereto shall not be included in the turnover of any dealer except at the point in the series of sales by successive dealers mentioned in column 4 thereof under the circumstances shown in column 3 thereof. (2) The Governor is further pleased to order that 25 194 as from June 9, 1948, the rate of tax in respect of the column 5 of the schedule hereto. (3) Every dealer by or on whose behalf goods mentioned in the schedule aforesaid are held at the close of the 8th day of June, 1948, shall submit a statement showing the quantity and price of such stock and of the stock of such goods held on the 24th day of May, 1948, to the appropriate assessing authority by the 30th day of June, 1948. " To this notification was appended a schedule which set out the descriptions of diverse commodities, the "circumstances under Which the turnover was to be calculated " the point of tax and the rate of tax. Item 14 of the schedule was " oils of all kinds excluding edible oils but including Vanaspati " and sales thereof by manufacturers in the U. P. were liable to tax at the rate of 6 pies per rupee. By virtue of this notification, non edible oils became liable to a single point tax as from June 9, 1948, at the time of sale by an importer or manufacturer in the United Provinces. The assessee submitted its return for the assessment year 1948 49 on its taxable turnover of the previous year ending on May 31, 1947, to the Sales Tax Officer, Meerut Range. On the assessee 's return, the Sales Tax Officer assessed the tax at Rs. 1,16,238 12 0, holding that sales of non edible oils for the first 69 days out of the year of the turnover were to be taxed at the rate of 3 pies, and sales for the remaining 296 days were to be taxed at the rate of 6 pies per rupee. Against the order passed by the Sales Tax Officer, Meerut Range, an appeal was preferred to the Judge (Appeals), Sales Tax, under section 9 of the Act. The appellate authority modified the order and directed the assessee to pay tax on non edible oils on the turnover of the previous year at the flat rate of 3 pies per rupee and reduced the tax liability to Rs. 1,08,477 0 3. This order of the Judge (Appeals) was set aside by the revising authority and the order of the Sales Tax Officer was restored. On, a direction made by the High Court, the revising authority drew up a statement of the case and submitted for opinion a question 195 which in his opinion arose out of the assessment. The High Court re framed the question as set out hereinbefore, and answered it in favour of the assessee. By section 3 and section 3 A, which are the charging sections, the liability to pay sales tax in each assessment year is charged on the total turnover of a dealer. By section 7, read with r. 39, the assessee has the option to adopt the turnover of the previous year as the taxable turnover for the year of assessment: and if he does so, he has to submit within sixty days of the commencement of the assessment year returns showing his turnover for that previous year. If, however, the assessee adopts the turnover in the year of assessment as his taxable turnover, he has to submit returns before the last day of July, October, January and April his gross turnover for each of the four quarters ending 30th June, 30th September, 31st December and 31st March. The tax is evidently levied in respect of the year of assessment : it is not levied in respect of the business carried on in the previous year. Again, the rate applicable in assessing the tax is the rate in force in the year of assessment. That is clear from the terms of sections 3 and 3 A. But the taxable turnover for the year of assessment may, except in certain cases not material for the purpose of this appeal, at the option of the tax payer be either the turnover of the previous year or of the year of assessment. If the assessee adopts the turnover of the previous year, by the provisions contained in section 3 and section 7 and rr. 39 and 40, the liability to pay tax arises on the 1st of April and the rate applicable is the rate in force on that date. The liability of the assessee adopting the turnover of the year of assessment arises by virtue of sections 3 and 7 and r. 41 at the end of each quarter. When the taxable turnover is based on the turnover of the previous year, the tax is assessed on an artificial turnover not related to the actual sales of the year of assessment: whereas the levy of tax on a return made on the turnover of the year of assessment is made on actual sales of that year. The tax paid on the turnover of the previous year is not related to the actual sales 196 provision for making adjustments in the liability to tax on ascertainment of the actual turnover at the end of the year of assessment. The Government of the United Provinces had by notification dated June 8,1948, altered the rate of tax in the matter of various commodities including nonedible oils with effect from June 9, 1948. The Sales Tax Officer was right in his view that the levy of tax at the altered rate was not to operate on sales effected before June 9, 1948. Initially, when the liability of the assessee to pay tax on edible oils for the assessment year arose, the rate was undoubtedly 3 pies per rupee on the turnover, and the question which falls to be determined is whether by reason of the alteration of the rate and its incidence in the course of the year, the assessee became liable to pay tax at the higher rate on a part of the turnover of the previous year and if so, on what basis. A tax payer who adopted the previous year 's turnover bad under section 7 and r. 40 to submit his return within sixty days of the commencement of the assessment year, and no provision for submission of any supplementary returns in the case of alteration of rates in the course of the year was made in the Act or the Rules: nor was any method provided for retrospective modification of an assessment once made. There were under the Act and the Rules two distinct and clear cut schemes to assess sales tax, (1) where the tax payer elected to submit his return based on the turnover of the previous year and (2) where he elected to or was bound by law to submit his return on the turnover of the year of assessment. Under these two schemes the points of time at which liability arose and the turnover on which liability was to be assessed were in their nature not identical. The tax payers paying tax under the first scheme paid it on the turnover of the previous year and at the rate in force after the end of the period and applicable to it. The tax payer paying tax under the second scheme paid tax in quarterly installments based on the previous quarter 's actual turnover and at the rate or rates prevalent in the quarter or applicable to it. Was it intended, when alteration was made in the rate of tax 197 or its incidence during the course of the year, to assimilate these two schemes of taxation so as to, permit of a departure from the one to the other ? There is no express provision in the Act or in the Rules in that behalf. Nor does the notification suggest that it was so intended. In the case of a dealer who adopts the turnover of the year of assessment for purposes of taxation, the application of the notification altering the rate of tax and the incidence of tax does not present any difficulty. The notification enjoins levy of the tax at the altered rate only in respect of sales taking place after the fixed date, and all sales which preceded that date are to be taxed at the original rate. In the face of the language employed sales anterior to the date specified could not be affected. The question next arises: Is any machinery provided in the Act or the Rules for projecting this division of the year of assessment, into the previous year, and for apportioning the turnover of that year ? Express provision in that behalf there is none : and it is difficult to imply such a provision in the Act. The dates of commencement and closure of the previous year of a tax payer may vary according to the system of accounting adopted by the assessee. The year may commence from any day of any recognised calendar year, and the year may not consist of 365 days. The method of antedating by one year the date on which the alteration is made in the rate or incidence will be manifestly inappropriate. The method of division of the turnover proportionate to the period of the assessment year before the alteration of the rate and after such alteration though prospective, must be deemed to have been made retrospectively in the previous year, and on a day which is removed from the commencement of the year of account by the number of days by which the date of alteration of rate is removed from the commencement of the year of assessment. But the adoption of the turnover of the previous year as the taxable turnover for the year of assessment is itself based on a fiction and, in the absence of any express provision either in the Act or the Rules or even in the notification setting out machinery for such 198 a division of the year, we are unable to hold that this scheme of a fictional division may be projected into the previous year to make an artificial division of the turnover for imprinting thereon the altered rate of assessment as from the date of the division. Counsel for the State of Uttar Pradesh submitted several hypothetical cases suggesting that by refusing to adopt this method of division of the previous year of assessment for the application of the altered rate, several anomalies may arise in working out the liability to tax. He submitted that a person who was not a manufacturer or an importer of goods included in the schedule to the notification under section 3 A may, if he has adopted the turnover of the previous year as his taxable turnover be liable even though it was the intention of the Government to absolve him from liability to pay tax. But a tax payer adopting the turnover of the previous year for payment of tax makes his choice 'voluntarily and subject to the advantages and disadvantages which that step involves. The fact that he may have to pay tax from which persons choosing the alternative method of submitting of return may partially be exempted, because of an exemption granted in the course of the year, may not, in our judgment, be a ground for not giving full effect to the provisions of the Act as they stand. In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions '. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed it Cannot imply anything which is not expressed it cannot import provisions in the statutes so as to supply any assumed deficiency. Section 18 el. (c) of the Act which provides for proportionate reduction of tax when in the case of a change or discontinuance taking place in the course of the assessment year of a firm which has been assessed for such year on the turnover of the previous year does not support the contention that an artificial divisions of the turnover of the previous year is intended 199 in cases of alteration of circumstances during the course of the assessment year. It may be noticed that, the provision is limited to changes in or discontinuance of the business of a firm, in terms it does not apply to individuals. It is not for us to consider why the Legislature has not chosen to make a similar provision in respect of individuals. But the fact that the Legislature has made an express provision dealing with changes or discontinuance of business of firms in the course of the assessment year enabling a reduction proportionately to the tax already paid would be a ground indicating that in cases not governed by that provision, no alteration in the liability was permissible when the taxable turnover was based on the previous year 's turnover. It is not provided that in giving effect to the alteration of the rate during the course of the year of assessment an artificial division of the turnover of the previous year should, in applying the altered rate be made. The Legislature having failed to provide machinery for working out the liability, the attempted projection becomes unworkable. A legal fiction must be limited to the purposes for which it has been created and cannot be extended beyond its legitimate field. The turnover of the previous year is fictionally made the turnover of the year of assessment: it is not the actual or the real turnover of the year of assessment. By the imposition of a different tariff in the course of the year, the incidence of tax liability may competently be altered by the Legislature, but for effectuating that alteration, the Legislature must devise machinery for enforcing it against the tax payer and if the Legislature has failed to do so, the court cannot resort to a fiction which is not prescribed by the Legislature and seek to effectuate that alteration by devising machinery not found in the statute. We are therefore of the view that the conclusion of the High Court is correct. The appeal therefore fails and is dismissed with costs. AYYANGAR J. We regret we are unable to agree with the judgment just now pronounced. The facts giving rise to this appeal are briefly 200 these:A company called The Modi Food Products Ltd. ' (amalgamated with the respondent) which will be referred to hereinafter as the assessee, was during the years 1946 & 1947 a manufacturer of and dealer in vegetable oils both edible and non edible. During that year there was no legislation imposing any tax on sales. The U. P. legislature enacted the U. P. Sales Tax Act in 1948 and the statute received the assent of the Governor and was published in the official Gazette on June 5, 1948. Section 1 (2) of the Act enacted that it shall be deemed to have come into force on April 1, 1948. The appeal is concerned with the liability to sales tax under the Act of the assessee company in respect of the sale of oil effected by the assessee during the period June 1, 1946 to May 31, 1947, which was the account year of the assessee previous to the first assessment year under the Act1948 49. Section 3 of the Act, to quote only the relevant words, as it stood at the material time, enacted : " Section 3. Liability to tax under the Act. Subject to the provisions of this Act, every dealer shall pay on turnover in each assessment year a tax at the rate of 3 pies a rupee Provided that (i) the Provincial Government may, by notification in the official Gazette, reduce the rate of tax on the turnover of any dealer or class of dealers or on the turnover in respect of any goods or class of goods; (ii) a dealer whose turnover in the previous year is less than Rs. 12,000 or such larger amount as may be prescribed shall not be liable to pay the tax under this Act for the assessment year. " By the U. P. Sales Tax Amendment Act, 1948 (Act XXV of 1948) this proviso was slightly modified and section 3(A) was inserted in the Act reading as follows: " Section 3 A. Single point taxation. (1) Notwithstanding anything contained in Section 3, the Provincial Government may, by notification in the official Gazette, declare that the proceeds of sale of any goods or class of goods shall not be included in the turnover of any dealer except at such single point 201 in the series of sales by successive dealers as may be prescribed. (2)If the Provincial Government makes a declaration under sub section (1) of this Section, it may further declare that the turnover of the dealer, in whose turnover the sale of such goods is included, shall, in respect of such sale, be taxed at such rate as ' may be specified not exceeding one anna per rupee if the sale relates to goods specified below. (A list of goods was then set out) and nine pies per rupee if it relates to any other goods. " Non edible oil which is the commodity with the sale of which the assessment in the present appeal is concerned is not in the list of goods set out in section 3(A) and would therefore be covered by the residuary clause of the section. The U. P. Government issued the following notification dated June 8, 1948, under section 3(A) of the Act: " In exercise of the powers conferred by Section 3 A of the United Provinces Sales Tax Act, 1948, as amended by the United Provinces Sales Tax (Amendment) Act, 1948, the Governor is hereby pleased to declare that with effect from June 9, 1948, the proceeds of sale of goods entered in column 2 of the Schedule hereto shall not be included in the turnover of any dealer except at the point in the series of sales by successive dealers mentioned in column 4 thereof under the circumstances shown in column 3 thereof. 2. The Governor is further pleased to order that as from June 9, 1948, the rate of tax in respect of the turnover of the aforesaid goods shall be as entered in column 3 of the Schedule hereto. Every dealer, by or on whose behalf goods mentioned in the schedule aforesaid are held at the close of the 8th day of June, 1948, shall submit a statement showing the quantity and price of such stock and of the stock of such goods held on the 24th day of May, 1948, to the appropriate assessing authority by the 30th day of June, 1948 ". In the Schedule annexed to this notification, nonedible oil of the type dealt with by the assessee was 202 subject to a tax @ 6 pies per rupee if the same was manufactured in U. P. Section 7 of the Act, as it stood at the date relevant to this appeal, enacted : " Section 7. Determination of turnover and assessment of tax. (1) Subject to the provisions of Section 18, every dealer whose turnover in the previous year is Rs. 12,000 or more in a year shall submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed: Provided that the Provincial Government may prescribe that any dealer or class of dealers may submit, in lieu of the return or returns specified in this section, a return or returns of his turnover of the assessment year at such intervals, in such form and verified in such manner as may be prescribed, and thereupon all the provisions of this Act shall apply as if such return or returns had been duly submitted under this section. Provided further that the assessing authority may in his discretion extend the date for the submission of the return by any person or class of persons ". Rules were framed by Government inter alia under the power conferred by the 1st proviso just now set out and by rule 39 of the said rules an option was given to dealers to submit returns of their turnover of the assessment year in lieu of the turnover of the previous year. The assessee exercised the option of being assessed on the basis of the turnover of the previous year under section 7(1) of the Act and in respect of first assessment year after the Act came to force assessment year 1948 49, it filed a return in respect of the turnover of its previous year June 1, 1946 to May 31, 1947. The total turnover of the assessee during this period was Rs. 63,02,849 7 7. The Sales Tax Officer by his order dated March 12, 1949, assessed the turnover in respect of edible oil at 3 pies per rupee. As regards the sale of non edible oil, the sales tax officer hold that since the notification set out above under 203 section 3(A) had come into force as and from June 9 of the assessment year, the assessee was liable to be assessed @ 3 pies per rupee on the turnover during the first 69 days of the year and @ 6 pies per rupee in respect of the remaining days of the year and he computed the ' tax accordingly. The assessee preferred an appeal to the Judge (Appeals), Meerut Range, Meerut, against the order of the Sales Tax Officer. This officer allowed the appeal of the assessee and held that the entire turnover was liable to be taxed only at a flat rate of 3 pies per rupee under section 3(1) of the Act on all oil sold by the assessee edible or non edible. The reason assigned for the order was that on the terms of the notification the new rate of tax could not be applied to sales effected in the previous year which had been opted for the purposes of assessment by the assessee and that so to apply it would be tantamount to giving retrospective effect to the notification which was contraindicated by the terms of the notification itself. The department thereupon moved the Judge (Revision) who accepted its contention and restored the order of the Sales tax Officer applying the provisions of the notification to the turnover of the assessee. There. after the assessee made an application to the Judge (Revision) to state a case for the opinion of the High Court under section 11 of the Act as to whether the rate of tax fixed by the notification could be applied to the sales of the commodity which factually took place on or before June 8, 1948. This petition having been dismissed, an application was filed before the High Court for directing the reference and on this being ordered the following question (as reframed by the High Court) was referred to it for determination : " Whether the assessee who is a manufacturer and a dealer of non edible oils and who elected the previous year as the basis of his assessment in the assessment year 1948 49 is liable to be assessed at the flat rate of 3 pies per rupee on the whole of the turnover of the previous year or whether he is liable to be assessed at the rates of 3 pies per rupee and 6 pies per rupee on the turnover of the previous year in proportion to the two periods from April 1 to June 8, 1948 and from to March 31 1949. " 204 The learned Judges answered the question in favour of the assessee and held that the notification under section 3(A) could not apply to determine the rate of tax payable by the assessee on his turnover of the previous year. The present appeal is against this answer by the High Court. As the arguments before us proceeded on practically the same lines as before the High Court, it will be convenient if we set out the reasoning by which the learned Judges upheld the asssessee 's contention that the notification under section 3(A) was inapplicable to determine the rate of tax payable by it. The grounds were mainly five: (1) The assessee could not be charged at the rates prescribed by the notification unless the new rates operated retrospectively; (2) that section 3(A) which was introduced into the parent Act (Act XV of 1948) by the Amending Act XXV of 1948 was not enacted with retrospective effect. Though the charge imposed by section 3(1) of the Act read with section 7(1) imposed tax retrospectively as and from April 1, 1948, section 3(A) did not on its terms so operate as and from that date. Hence the liability of the assessee which had become fixed under Act XV of 1948, as it originally stood, could not be and 'Was not varied by section 3(A) and would not therefore be affected by any notification issued under the last mentioned provision ; (3) that a notification under section 3(A) could not have retrospective effect since section 3(A) itself did not operate of its own force and merely empowered the Government, 'by a notification, to effect changes in the law and hence such changes when notified could not operate as from any date prior to the date of the notification ; (4) Section 3(A) which used the words " in respect of such sales " contemplated particular sales taking place after the notification issued under it and hence the notification issued under that section could not alter the rate of levy in respect of sales anterior to the date of the notification ; (5) that the terms of the notification carried out the general scheme of the Act and negatived retrospective operation and that as on its langu age it applied only to sales which took place on or 205 admittedly effected long prior thereto in the previous year the same could not be affected by the enhanced rate of duty. Before proceeding further it must be pointed out that the learned Judges of the High Court were not right in thinking that section 3(A) was not enacted to operate retrospectively from the commencement of the ' parent Act. Section 1(2) of the Sales tax Amending Act XXV of 1948 which introduced section 3(A) enacted: " It (this Act) shall be deemed to have come into force on the 1st April, 1948." and as section 3(A) was one of the sections of this enactment, it would have effect from the earlier date. This inadvertent error, however, would not affect the central point of the reasoning of the learned Judges. Besides elaborating the other points in the judgment of the High Court, learned Counsel for the respondent further pressed upon us that there was no specific provision in the Act for refund or reassessment which would have been present if the levy of a rate with retrospective effect were contemplated by the Act as applicable to the assessees who bad opted for the " previous year turnover " basis of assessment. He pointed out that in the case of those assessees who opted for their being assessed in respect of their turn. over during the assessment year, quarterly returns were submitted along with the payment provisionally of the tax due on the basis of that return, the final assessment being completed only after the close of the year when the amount due for the year was ascertained and a demand made for the balance due after adjustment of the amounts already paid during the course of the year (Rule 41). Obviously in their case no difficulty could arise by reason of any change in the law either in the rate or basis of taxation effected during the year, as these would automatically be given effect to in the final assessment. If, however, changes made in the rate of tax payable during the year were held applicable to those assessees who had opted for the previous year turnover basis, necessary adjustments could not be made in their assessment for lack of specific machinery to achieve the same. From this 206 he argued that the scheme of the Act was that in the case of the previous year turnover assessees, to use a convenient phrase, the tax liability had to be determined on the state of the law as it prevailed on the 1st day of the assessment year and that it got fixed and crystallised on that date and remained unaffected by any changes in the law effected during the course of the assessment year. In view of these additional submissions, we consider that it would be convenient to examine the entire argument of learned Counsel for the respondent under three heads into which they naturally fall: (1) Does the Act, read in conjunction with the Rules framed to give effect to its provisions, contemplate any difference being drawn between the basis of the tax liability (as distinct from the quantum of the turnover) of those assessees who have opted for the previous year turnover and " the assessment year turnover " assessees. (2) Is there any sound basis for the contention that the tax liability of the "previous year turnover" assessees gets crystallised on the 1st of April of the assessment year, with the result that such assessees are unaffected by any changes of the law which operate from beyond that date. (3) If the above two questions are answered in the affirmative the construction of the notification dated June 8, 1948, would not fall for consideration, for even if on its language it can apply to the turnover of a period anterior to its issue, the notification cannot be given such effect since the same would be against the basic scheme of the Act. If, however, the answer to the above two questions were in the negative, a further point would arise as to whether on the terms of the notification now under consideration the same could on its language apply so as to affect the tax liability of the " previous year turnover assessees. We shall now proceed to examine these submissions. On the scheme of U. P. Sales tax Act, as of every other sales tax legislation in the other Indian States, the total tax liability of an assessee is the resultant 207 product of two factors: (1) the total of the proceeds of sales effected during a given period, universally a year, from which are deducted the turnover of the sales of commodities which are exempt from tax; for instance under section 4 of the Act whose provisions will be referred to later; (2) multiplied by the rate of tax applicable either to the entire turnover or where ' different rates are prescribed on sales of different articles, such rates in respect of such turnover. The best way to appreciate the scheme underlying the Act would be to ascertain the position at the time the Act was enacted. It received the assent of the Governor and was published in the Gazette on June 5, 1948. Section 1(2) of the Act further enacted that " It shall be deemed to have come into force on April 1, 1948 ". Except to that limited extent, the Act is prospective. The tax is on the " turnover ", i.e., on the total of the sales proceeds of taxable sales and therefore unless there were a taxable sale, its proceeds would not enter the pool which goes by the name of " turnover ". As the Act is not retrospective, the taxable turnover would normally be the total of the sales effected after the enactment became operative, i. e., from and after April 1, 1948, but for the sake of convenience of assessment, it enacts by section 7(1), we have extracted earlier, a provision providing an option to dealers who have been in business in the year previous to the taxing enactment, to be assessed either on the turnover of the previous year, when owing to the absence of the Act their sales were not subject to tax or on the turnover of the current year. But whichever be the turnover adopted, the rate of tax or the determination of the particular sale proceeds whose total constitutes the taxable turnover, i.e., after the exclusion of the sale proceeds of the commodities listed in section 4, does not vary. In other words, though the figure of turnover might vary between those who have opted for the one or the other mode of assessment due to the volume of the sales, no difference is maintained in the Act as regards the incidence of the tax, i.e., either in the principle underlying the computation of the total turnover or in 208 the rate or rates applicable to the sales of particular goods or on the total turnover. This can only be on the premise or implicit assumption that the sales of the previous year are treated by the Act for the purpose of computing tax liability as the sales of the current year a projection forward in point of time. In other words, the entire basis underlying the charging provision section 3(1) read with the option provided by section 7(1) is that the sales of the previous year are fictionally treated as the sales of the current year for the purpose of the computation of the tax liability. It has to be remembered that in cases like the present, during the time when the sales were effected, the Act was not in operation and hence the sales were not taxable. But for the purpose of the imposition of the tax liability, it is assumed that the sales are taxable and the goods whose sales become taxable are determined on the basis of the provisions of the Act. Thus, if in the current year commodities A, B and C are exempt from tax, they are not to be included in the turnover of the dealer in respect of the previous year in the case of those who have opted for the " previous year turnover " under section 7(1), and the turnover thus computed is charged at the same rate of tax applicable to transactions of the current year. So far, therefore, as the express provisions of the Act go, no difference is made between the basis of the tax liability of the " previous year turnover " and the " assessment year turnover " assessees; and though by reason of the terms of section 7(1) the quantum of the turnover varies no other variation in the law applicable to the two types of assessees is contemplated. We must therefore start from the premise that the Act does not contemplate any difference in the incidence of the tax and the quantum of tax liability flowing from the choice of either the " previous year " or the " assessment year " as the basis of the determination of the turnover. We should add that learned Counsel for the respondent has not been able to point out any provision in the Act or in the Rules pointing to any such differentiation. It was, however, submitted that though the statute 209 might not say so in express terms, still by reason of the provisions of the Act and the Rules under, which the " previous year turnover " assessee had to ' or could submit his return within sixty days from the commencement of the assessment year and have his assessment completed immediately thereafter as compared to the " assessment year assessee " whose assessment was completed after the end of the year, coupled with the absence of any machinery for re assessment or refunds in the event of any change in the law effected after the commencement of the financial year, it had necessarily to be held that the liability of the " previous year turnover " assessee got crystallised as on the 1st of April of the assessment year and that the Act did not contemplate this being disturbed by any subsequent changes in the substantive law relating to assessment during the assessment year. It was said that the tax liability of the dealer who had opted for the " previous year " basis had to be determined on foot of two factors and only two: (1) the turnover of the sales of the previous year which is a definite and known figure by the 31st of March of the previous year and (2) the rate of tax on the turnover as it prevailed on the 1st of April of the assessment year when it was said that there was a "crystallisation" of the liability to tax. It was pointed out that it was possible for an assessee to submit his return on the basis of the " previous year turnover " even on the 1st of April of the assessment year and there being no legal impediment in the way of the figures returned by the dealer being accepted the assessment might conceivably be completed and the tax due demanded and even paid on the 1st of April, it sell If this were done, it was urged, there being no machinery for reassessment or refunds such completed assessment would become final for the year and could not be disturbed thereafter. If this were possible or were actually done in the case of one dealer who had so opted, it was urged that it would obviously be anomalous if another dealer who happened to submit his return later and whose assessment was in 27 210 consequence delayed, should be subjected to a different law or a different rate of levy. In our opinion, this argument breaks on critical examination. Learned Counsel for the respondent, to start with, asserted that the crystallisation of the tax liability as on the 1st of April of the assessment year was with reference to the law as it factually was on that date and that changes made subsequently even if with retrospective effect to date from the commencement of the year, would not affect that liability. This was obviously an untenable contention because if the later enactment or rule was retrospective it must be deemed in the eye of the law to have been in existence and in operation on the earlier date. Though learned Counsel withdrew this extreme argument, still the concession that changes effected with retrospective effect to date from the commencement of the assessment year would apply to determine the tax liability even of the " previous year turnover " assessee serves to emphasize that little importance could be attached to the two bases on which " the crystallisation " argument was rested, viz. : (1) the obligation or freedom of the previous year turnover assessee to submit his return and have his assessment completed within sixty days of the commencement of the assessment year and (2) the absence of a specific provision for reassessment and refund. Under the proviso (1) to section 3 which reads: " the Provincial Government may, by notification in the official Gazette, reduce the rate of tax on the turnover of any dealer or class of dealers or on the turnover in respect of any goods or class of goods." the State Government could reduce the rate of tax on the turnover of dealers from the standard rate of 3 pies in the rupee under the main part of section 3. It is also not denied that there is nothing in the terms of the proviso to confine the power to effect reductions only prospectively as distinguished from reductions having retrospective effect. If a reduction were effected say in January or February of the year, having effect as and from the 1st April preceding, on the very argument advanced, Counsel for the respondent would 211 have to concede, that the reduced rate would govern the liability of even those dealers who were assessed on the basis of their turnover of the previous year. Let us first take a case where such a reduction in the rate is notified to be effective before an assessee submits his return. In such a case, the benefit in the reduction of the rate could not be withheld from the previous year turnover dealers even on the theory of " crystallisation " just now referred to. Let us next take the case of a dealer who has submitted his return of the turnover of the previous year on a date anterior to the notification regarding the alteration of the rate. It might be mentioned that in the return submitted by dealers which has to be in Form IV of Appendix F to the rules, only the total of the sale proceeds of the sales of the classified items of goods have to beset out, but the return does not concern itself with the rate of the tax levied. This latter is a matter with which the assessing authority is concerned when determining the amount of tax payable. If the rates are altered subsequent to the submission of the return but before the assessment is completed, on the terms of the charging section which draws no distinction in the incidence of the tax as between the " previous year turnover " group and the " assessment year turnover " dealers, the Sales Tax Officer would have to afford every assessee, whatever be the basis of this turnover the benefit of the tax reduction. The position reached therefore is that if the change in the rate (we have assumed it to be by way of reduction, but the argument would equally apply to variation in any kind), were effected before the actual assessment, it should be given effect to in the case of every assessee for not merely is there no procedural complication in the shape of a need for refund but it would be in accordance with the, law and in fact one might go further and say that any other mode of proceeding would not be countenanced by the Act, because the statute homologises the basis of the tax whether the turnover is computed on the previous year 's or the current year 's sales. Next in regard to cases where the change in the law 212 is effected after the completion of the assessment we consider that the submission regarding the absence of machinery for reassessment and refund is not well founded. It is true that there are no provisions specially so designated to meet this contingency here referred to, but that is not the same thing as saying that there is a complete absence of machinery. In the first place, section 22 of the Act empowers authorities including the assessing officer to rectify any mistake apparent on the face of the record and by such rectification even to enhance the tax liability. If on the premises assumed, the variation in the rate of tax would on a proper construction of the Act be applicable to the turnover of the dealer who has opted for the " previous year rule " but the assessment order does not give effect to it, it would certainly be a case of an error apparent on the face of the record, which would bring the case within the power of rectification. On the analogy of the cases under section 35 of the Income Tax Act, 1922, the assessment officer could order rectification in such cases. Even apart from this, under a. 10(2) of the Act the dealer or the department as the case may be may apply to the Revising authority for revision of the assessment on the ground that the same is not legal, proper or regular. This section enacts: " The Revising Authority may in its discretion at any time suo motu or on being moved by the Commissioner of Sales Tax or on the application of any person aggrieved, call for and examine the record of any order or proceedings recorded by any appellate or assessing authority under this Act for the purpose of satisfying itself as to the legality or propriety, of such order or as to the regularity of such proceedings and may pass such order as he thinks fit." The orders which the Revising Authority could pass might either be by way of enhancement or reduction, and the subsequent sub sections provide: . "10 (4). The Revising Authority shall not pass any order under sub section (3) adversely affecting any person unless an opportunity has been given to such person to be heard. 213 (5) If the amount of assessment is reduced by the Revising Authority under sub section (3) it shall order the excess amount of tax if already realised to be refunded. " It is, therefore, not correct to say that there is no machinery for rectifying errors and for making consequential orders for payment of further tax, or for directing refunds, and this argument cannot therefore justify the construction contended for by the respondent. In the entire discussion up to now we have proceeded on the assumption that the turnover of " the previous year " of the dealer was a fixed quantity which was finally determined once and for ever on the 31st March of that year and that the problem was merely to find the rate of tax to be applied to this predetermined factor. It will be seen from an examination of the Act that even the factor of the turnover is subject to variation. For instance, the first part of section 4 enacts: " The provisions of section 3 of this Act shall not apply to (1) the sale of water, salt, foodgrains, milk, gur, electrical energy for industrial purposes, books, magazines, newspapers and motor spirit as defined in the United Provinces Sales of Motor Spirit Act, 1939, and any other goods which the Provincial Government may, by a notification in the official Gazette exempt from time to time. " Under this power besides the specified goods, the State Government might from time to time exempt other goods from among those whose sale proceeds have to be included in the turnover. If an exemption of that type were granted say in 1948 49, it cannot be contended that the turnover of the dealer who had opted for the " previous year " has to include these sales in the return which he submits in Form IV, If by the date of the submission of the return, the exemption has been notified, and has effect for the entire year of course he need not include these sale proceeds in his return. The computation, therefore, of the quantum of turnover of the previous year on which tax has to be levied is one which is subject to the law 214 in relation to it in the assessment year, and any change in that law presents the same problems, as the variation in the rate of tax. Up to now the discussion has proceeded on the basis that a change in the law made in the assessment year whether as regards the computation of the turnover or as to the rate of levy, is effective throughout that year, i.e., from the 1st April to the 31st March, and it is found that the fact that the returns of the previous year turnover dealers are required to or are submitted within the early part of the year, or the contention based on the absence of specific machinery for reassessment or refund are an insufficient basis for holding that a change in the law affecting the basis of tax liability would not affect the previous year turnover assessees and that the machinery provided by sections 10 and 22 are adequate to meet the contingencies arising out of the changes being retrospectively effected after the assessments were completed. We shall next proceed to consider whether the change in the law either as regards the computation of the taxable turnover or as regards the rate of tax becoming operative sometime after the year has commenced makes any difference. In the case of the "assessment year turnover " dealers, there is no problem because the sales effected during the course of the year would be governed by the law applicable from time to time. The entire basis or theory of the tax being levied on foot of the previous year 's turnover is that notwithstanding that factually the sales took place in the previous year they are to be deemed by fiction to have taken place in the year of assessment. If that theory be discarded there could be no legal foundation for the tax being levied by the Act even as originally enacted on a sale which factually took place before it was operative. The only question therefore is the precise scope of that fiction and its logical implication. If the sale in the previous year is treated by the Act as a sale in the present year, then no principle is contravened, if it were held that sales during a portion of the previous year are held to be sales during a corresponding portion of the current 215 year. If we reject the argument that it is only the law as prevailed on the 1st April of a year that forms,, the basis for the computation of the turnover and for the ascertainment of the tax liability as not flowing from the provisions of the Act, and indeed as contrary to the very scheme underlying the enactment, the changes in the law effected during the course of the assessment year must operate even in respect of the turnover of the previous year, which are deemed to be the turnover of the assessment year. It now remains to deal with the question as to whether the language employed in the notification by which only sales effected after a date specified in the assessment year are to be governed by the new levy, precludes the application of the notified change to those dealers whose sales were actually effected in the previous year, but who had opted for the " previous year turnover " basis of assessment. The argument of learned Counsel, which found favour with the learned Judges of the High Court was briefly this. The notification expressly states that only sales effected from and after June 9, 1948, were to be charged with the new rates. In terms therefore, the change in the law is wholly prospective. If so, one cannot by any line of reasoning reach the conclusion that the new rates of levy applied to sales, as by the present respondent, more than a year earlier. So stated the reasoning appears impressive and it is true that a taxing enactment cannot be construed as levying a charge unless the words clearly do so. But the words have always to be understood and more than that applied with reference to the underlying basis of the scheme of taxation. So applied, it does not appear to us to support the contention of the respondent. The change in the rate of tax, was no doubt prospective. The phraseology employed merely means that in the case of the " assessment year turnover " dealers only the sale proceeds of sales effected after the specified date would be governed by the new rates. In the case of the " previous year turnover " dealers, the change operates to determine the amount of tax during their assessment year just in the same manner as 216 the original charge under the Act, of a flat rate of three pies determined the tax payable notwithstanding that none of the sales whose proceeds were included in their turnover were effected during the assessment year. We have already pointed out that the basic idea underlying the provision contained in section 7(1) of the Act 'is that it projects the turnover of the previous year into the assessment year. Admittedly the Act itself is not retrospective, or designed to levy the charge under section 3(1), on sales effected before April 1, 1948. If sales of the previous year are brought within the taxing provision, it is not because the sales when they took place were subject to tax, but because either (a) the previous year 's sales are deemed in law when the assessee so opts as the sales of the current year or (b) the previous year 's turnover being opted, the provisions of the charging sections operate on that turnover. Whichever of these be the more accurate method of expressing the result, the fact is that there is no element of retrospectivity at all involved in the application of the tax law which prevails in the year of assessment to the turnover of the previous year when due to the choice of the assessee of being assessed under section 7(1), the previous years ' turnover basis is rendered applicable. Possibly the matter may be tested in this manner. Section 3(1) of the Act the charging section imposes in effect a tax of three pies per rupee on all sales effected after the commencement of the Act, i.e., after April 1, 1948. pose that section itself, had by a proviso imposed a tax @ six pies per rupee on all sales of edible oil effected on and after June 9, 1948. Could it then be open to argument, that in respect of the previous year 's sales, only a three pies tax was payable and that the result of the charging provision could be ignored. If, therefore, we are right so far, the respondent derives no advantage from the notification specifying the dates of sales effected from and after which they would be subject to the varied rate. The notification had necessarily to be worded as it was, in order to fulfil its primary purpose of effecting a change in the rate during the assessment year. The date 217 mentioned in the notification as the date from and after which sales would be charged at the new rates would therefore not militate against the new rates being applied to the turnover of the previous year, since the turnover of the previous year has to be assessed on the rates prevailing in the assessment year. The next question is how on the terms of the notification which came into operation after the commencement of the assessment year and during the course of it, the proportion of the turnover on the basis of which the tax liability of a previous year 's turnover dealer could be computed. Learned Counsel for the respondent urged that no intelligible basis could be suggested for distinguishing the two periods in the previous year when the original rates and the altered notified rates would operate. Learned Counsel urged that it would be impossible to distinguish these two periods either on any theory of retrospectivity of the notification or on any theory regarding the sales of the previous year being attributed to the corresponding dates of the current year. There is no doubt that this mode of computing the proportion, viz., to treat the sales which were effected on various dates of the previous year, as if they were sales on the corresponding dates of the current year and thus to compute the two totals of turnover which would be subject to different rates of duty would not be proper. The impropriety would arise from the fact that the fiction enacted by section 7(1) is not that each day 's sale in the previous year is deemed to be a sale on the corresponding date in the current year, but only that the total taxable turnover of the previous year is deemed to be that of the current year. The method to which objection is taken is however not the manner in which the Sales tax Officer computed the proportion which was affirmed by the Judge (Revision). If the total of the sale proceeds of the previous year is deemed to be the total of the current year, there is no illogicality or impropriety in dividing that total in accordance with the number of days in the year in which the different rates prevailed and that is precisely what the Sales tax Officer did. 28 218 If as we hold both the computation of the turnover of the previous year, as well as the incidence of the tax leviable on it, are to be determined not merely by the law as it stood on the first day of the assessment year, but by the law applicable to assessments during the entire assessment year, the method by which the tax liability of the respondent was computed by the Sales tax Officer is not open to any objection. In connection with the interpretation of the notification a minor point was suggested to which brief reference might be made. It was submitted that as the notification in effect levied a tax, if it was ambiguous, it should be resolved in favour of the subject the tax payer. We see no ambiguity in the notification to justify an appeal to this rule. Besides the notification in effect frees dealers other than importers and manufacturers of all tax liability in respect of the sale turnover of oil, though in the case of two specified classes of dealers. a single point tax at an enhanced rate is levied. In such a situation, the rule of construction invoked could hardly be applied, even if the condition as to ambiguity were present. We, therefore, hold that the assessment to sales tax of the respondent company by applying to its turnover of the year 1947 48, the rate of tax specified in the notification of June 8, 1948, as determined by the Sales tax Officer was in accordance with the law. We would accordingly allow the appeal, set aside the decree of the High Court and restore the assessment order of the Sales tax Officer with costs here and in the High Court. BY COURT. In accordance with the opinion of the majority, the appeal is dismissed with costs.

The respondent company was a manufacturer of edible and non edible oils and was registered as a " dealer " under the United Provinces Sales Tax Act, 1948. Its year of account commenced on June 1, and ended on May 31 of the next year. Under section 7(1) of the Act read. with rule 39 of the rules framed thereunder the respondent exercised the option of being assessed on the turnover of the previous year and submitted its return for the assessment year 1948 49 on its taxable turnover of the previous year ending May 31, 1947. The Sales Tax Officer assessed the turnover in respect of edible oil at 3 pies per rupee under section 3, but in respect of non edible oil he held that since a notification dated June 8, 1948, issued under section 3(A) had come into force from June 9, of the assessment year providing for the levy of tax at 6 pies per rupee, the assessee was liable to be assessed at 3 pies per rupee on the turnover during the first 69 days of the year and at 6 pies per rupee for the remaining days of the year. On appeal by the assessee the appellate authority modified the order and directed that the tax be levied at a flat rate of 3 Pies on both edible and non edible oils. This order was set aside by the revising authority and the order of the Sales Tax Officer was restored. On a direction made by the High Court the revising authority submitted a question for opinion. The High Court held that the assessee was liable to pay the tax at a flat rate of 3 pies per rupee. On appeal by the Commissioner of Sales Tax by special leave, Held (per Hidayatullah, Das Gupta and Sliah, jj.), affirming the view of the High Court, that the assessee who elected to submit his return on the turnover of the previous year, is liable to be assessed to sales tax at the rate in force on the first day of the year of assessment because the liability arises on that date, and any subsequent enhancement of the rate by virtue of a notification under section 3(A) does not alter that liability. A taxing statute must be interpreted in the light of what 190 is clearly expressed therein and nothing can be implied nor can provisions be imported into them so as to supply an assumed deficiency. Per section K. Das and Ayyangar, JJ. The rate of tax as applied by the sales tax officer was in accordance with law. Having regard to the scheme underlying the option to elect for a previous year turnover conferred by section 7(1) of the Act the change in the law and in the rate of tax effected during the assessment year must apply to the turnover of the previous year which is deemed to be the turnover of the assessment year and sales effected during that period have to be assessed at the rate prevailing in that year. Although the notification was prospective and was made with the object of changing the rate of taxation during the assessment year, the date mentioned therein did not prevent the application of the assessment year rate to the opted previous year turnover. It is not correct to say that there is absence of machinery for reassessment and refund of tax to justify the conclusion that the basis of the tax liablity for an assessment year is that which prevailed on the first day of that year since there are provisions in the Act such as for instance sections 10 and 22 which provide for reductions, refunds and rectification of errors regarding taxation and even for enhancement of the tax already levied. There was no ambiguity in the notification and the principle of resolving ambiguities in favour of the assessee could not be applied in this case.

Appeal No. 716 of 1957. Appeal from the judgment and decree dated July 29, 1955, of the former Bombay High Court in Appeal No. 50 of 1953 under the Letters Patent against the judgment and decree dated September 3, 1953, of the said High Court in First Appeal No. 547 of 1952. H. N. Sanyal, Additional Solicitor General of India, T. V. R. Tatachari and M. section K. Sastri, for the appellants. Purshottam Trikamdas, H. R. Gokhale and R. Gopalakrishnan, for the respondent. October 28. The Judgment of Jafer Imam and Raghubar Dayal, JJ., was delivered by Jafer Imam, J. A. K. Sarkar, J., delivered a separate judgment. IMAM J. This is an appeal against the judgment of a Division Bench of the Bombay High Court in Letters Patent Appeal No. 50 of 1953, reversing the decision of Shah, J. and restoring the order passed by the executing court which had been set aside by him. Two Questions arise for decision in this appeal (1) whether the Wada (house) ordered to be attached by the executing court is Watan property, and if so, can 165 it be attached in execution of a decree ? (2) If the Wada is not Watan property, is it exempted from attachment by virtue of the provisions of section 60 of the Code of Civil Procedure ? It is necessary now to state a few facts. One Rao Ba. Vithalrao Laxmanrao Thube, hereinafter referred to as Laxmanrao, brought Civil Suit No. 313 of 1943 against Tuljaramarao Narainrao Desai, hereinafter referred to as Tuljaramarao, to recover Rs. 80,000 which had been borrowed by him from the plaintiff. Laxmanrao 's suit was decreed on December 20, 1943. Tuljaramarao having died his legal representatives, the present appellants, were brought on the record on September 21, 1944. In April, 1949, Laxmanrao filed an application for the execution of the decree. He sought the attachment, with a view to their subsequent sale, of certain properties including the Wada which is the subject matter of this appeal. The appellants objected to the proposed attachment on various grounds. The executing court on December 17, 1951, issued a warrant of attachment only against the Wada in question. The appellants appealed to the Bombay High Court. Their appeal was heard by Shah, J., who by his order dated September 23, 1953, set aside the order of attachment relying on the decision of Chagla, J., in second Appeal No. 760 of 1942. He, however, gave no decision on the question whether section 60 of the Code of Civil Procedure gave protection to the Wada from attachment. Against the decision of Shah, J., there was an appeal under the Letters Patent of the High Court which was heard by a Division Bench. The Division Bench, as already stated, reversed the decision of Shah, J. and restored the order made by the executing court. Subsequently, the High Court gave a certificate that the case was a fit one for appeal to this Court. It is undisputed that the whole of village Nandi had been granted as inam to the ancestor of Tuljaramarao and his descendants as per Sanad, Ext. 54, and the Inam Patrak, Ext. In that Sanad there is no mention of any Wada existing on the Inam land. According to the executing court the Wada 166 appears to have been built after the grant. It appears that the opinion of the Division Bench of the High Court was also to the same effect. There is no finding of Shah, J., to the contrary. We must, therefore, proceed on the basis that the Wada in question was not the subject of the original grant. This Wada came to be constructed on the land in the inam village of Nandi sometime subsequent to the grant. "What has to be decided is, do the attributes of Watan Property " accrue to the Wada which was constructed after the grant on land which was admittedly " Watan Property " as defined by the Bombay Hereditary Offices Act, 1874 (Bombay Act No. III of 1874), hereinafter referred to as the Act. In appeal No. 760 of 1942, Chagla, J., took the view that the house in that case was an accession to the site on which it stood. Accordingly, it must partake of the character of the land on which it stood. The learned Judge stated that the question which he had to determine was whether the house was immovable property held for the performance of the duty appertaining to an hereditary office within the meaning of section 4 of the Act. Having regard to the definition of " immoveable property " in the Bombay General Clauses Act he was of the opinion that the house certainly formed part of the immoveable property which was held for the performance of the duty appertaining to the hereditary office of the Watan and that the only answer to the question " what is the immoveable property which is held for the performance of the duty under section 4?" can be both the land and the house. If the house forms part of the immoveable property it is not possible to sever the two and to say that it is only the land which is Watan property and not the house which is permanently fastened to it. Shah, J., relied upon the decision of Chagla, J., and held that the land on which the Wada in the present case stood, being Watan property, the Wada must also be deemed to have acquired that character. The Division Bench which heard the appeal against the decision of Shah, J., was of the opinion that although a house 167 built on land must be regarded as immoveable property it did not follow that like the land on which it was built the house became Watan property. The fact that a house subsequently built became immoveable property would have no material bearing on the question whether it was Watan property or not. In order that the house may be regarded as Watan property it must satisfy the test laid down by the definition of the word " Watan Property " in section 4 of the Act and that if the word " held " was construed in the way in which the learned Judges of the Division Bench thought it should be, it would be difficult to accept the view that a house subsequently built by a watandar on a part of the Watan land could be said to be held by him for the performance of his duties of a hereditary office. The learned Judges of the Division Bench accordingly were of the opinion that Shah, J., erred in so holding. " Watan Property " has been defined in the Act to mean: " The moveable or immoveable property held, acquired, or assigned for providing remuneration for the performance of the duty appertaining to an hereditary office. It includes a right to levy customary fees or perquisites, in money or in kind, whether at fixed times or otherwise. It includes cash payments in addition to the original watan property made voluntarily by the State Government and subject periodically to modification or withdrawal. " The inam lands of Nandi were undoubtedly held as remuneration for the performance of the duty appertaining to an hereditary office and therefore were Watan properties. On the findings of the courts below the Wada in question was not the subject of the grant. In our opinion, therefore, at no time was it held for providing remuneration for the performance of the duty appertaining to a hereditary office. Nor could it be said to have been acquired for performance of any such duty. It had been constructed some time subsequent to the grant either by the grantee or his descendants and there is no indication on the record 168 that it was constructed for the purpose of providing remuneration for the performance of the duty appertaining to a hereditary office. To that extent at least it appears to be clear that the Wada in question does not come within the definition of Watan property as defined in the Act. The only question is whether having been constructed on land which is Watan property and being immovable property within the meaning of the Bombay General Clauses Act, does it partake of the character of the land on which it stood ? On behalf of the appellants it was argued that the Wada is an accession to the Watan property, namely, the land of village Nandi. It seems to us, however, that construction of a Wada on land which is Watan property is not an accession to it, as accession to the land would suggest that over a course of years imperceptible accretion to the land has taken place and it was impossible to distinguish the original land from the accreted land. In such a case the accreted land may possibly partake of the character of the original land. Adjacent lands to the original land which have been acquired and can be distinguished cannot partake of the character of the original land. On behalf of the appellants it was argued that the right, title and interest of the grantor had to be looked at first in construing a grant and if it appeared from the terms thereof that it did not contain any reservation or exception then all the rights, title and interest of the grantor which he was capable of granting would pass to the grantee. The grantor in this case was the Government which could have built a construction on the land granted or dug tube wells on it. The grantee, therefore, could also build a house or any other structure on the land. On the other hand, it was contended on behalf of the respondent that the position of a watandar was not that of an absolute owner of the land. He held the land on certain conditions. The land was liable to forfeiture if he was guilty of certain acts mentioned in section 60 and Schedule 11 of the Act. We will assume, there being nothing to the contrary in the Sanad, that the grantee was not restricted from constructing a building on the land. From that, 169 however, it does not necessarily follow that the building so constructed became Watan property within the meaning of the Act. If the Government could have built a construction on the land it could also have dismantled it and removed the material with which it was made. Similarly, the grantee could do so, there being no restriction in that regard in the terms of the Sanad. It seems to us that on a proper construction of the Sanad there was no impediment in the way of the grantee from dismantling the house which he had built and removing the materials with which it had been constructed and selling the same. Indeed, unless it is held that a house constructed on the land partakes of the character of the land, it is difficult to see how the grantee is prevented from selling or mortgaging it but not the land on which it stood. It seems to us, therefore, that the Wada in the present case although immovable property did not partake of the character of the land on which it was constructed because it was severable from the land and was capable of being dismantled and the materials of which could be removed and sold without violating any of the provisions of the Act. In our opinion, the decision of the Division Bench of the High Court that the Wada was not Watan property appears to be correct. The next question for consideration is whether the Wada is one belonging to an agriculturist and occupied by him within the meaning of cl. (c) of the proviso to section 60(1) of the Code of Civil Procedure. If it is, then it is exempted from attachment by the provisions of the proviso. It was urged that as the word " agriculturist " has not been defined in the Code, the word must be construed according to its ordinary meaning. According to Shorter Oxford English Dictionary this word can also mean a farmer. Neither the extent of the land farmed by him nor the amount of income derived by him from cultivating the land was a relevant consideration in construing the word ".agriculturist "Nor would it be right to restrict the meaning of the word " agriculturist " to mean that an agriculturist must be a person who himself or by the aid 170 of the members of his family tills the land and not with the aid of employed labour. On behalf of the respondent, however, it was contended that the word "agriculturist " in el. (c) of the proviso must bear the same meaning as the word " agriculturist " in cl. (b) of the proviso. It was necessary, therefore, to construe the provisions of cl. (b) as well in order to under. stand what the Code intended the word " agriculturist " to mean in cl. On a proper construction of el. (b) not only an agriculturist must be the tiller of the land but he must also be a small agriculturist. Clause (b) was not intended to refer to a person who cultivated a large area of land and derived from it a large income. It was pointed out that in the present case the appellant Appasaheb was cultivating a very large area of land with the aid of employed labour and derived an income somewhere between Rs. 30,000 to 35,000 a year. Section 60(1) of the Code states in detail what property of a judgment debtor is liable to attachment and sale in the execution of a decree. It was urged that but for the proviso all the properties of Tuljaramarao other than Watan property were liable to attachment and sale in execution of Laxmanrao 's decree. The proviso no doubt exempted from attachment and sale certain properties mentioned therein but cl. (b) of the proviso clearly indicated that the object of the Code was to save in the case of a judgment debtor his tools as an artisan and, where he was an agriculturist, his implements of husbandry and such cattle and seed grains as may, in the opinion of the court, be necessary to earn his livelihood. It did not even exempt his agricultural produce unless there was a notification under section 61 of the Code specifying by a general or special order how much of the agricultural produce was, in the opinion of the State Government, necessary for the purpose of providing, until the next harvest, for due cultivation and the support of the judgment debtor and his family. It was suggested, therefore, that the Code intended to exempt from attachment and sale, in the case of an agriculturist, only that much which was necessary to enable him to earn his livelihood as such. 171 interpreted by various High Courts in India. Reference to only some of these cases need be made. In the case of Hanmantrao Annarao vs Dhruvaraj Pandurangrao (1) it was held by the Bombay High Court that the word " agriculturist " in cls. (b) and (c) of the proviso to section 60(1) of the Code of Civil Procedure denotes persons who are personally engaged in tilling and cultivating the land and whose livelihood depends upon the proceeds of such tillage and cultivation of the soil. It does not include large landed proprietors even though they may be tilling the land and cultivating it through their servants. In the case of Parvataneni Lakshmayya vs The Official Receiver of Kistna (2) a Full Bench of the Madras High Court arrived at the following conclusion after considering various decisions of some of the High Courts in India: " We think that, having regard to the scheme of the section exempting from attachment, as it does, tools of artisans, and, where the judgment debtor is an " agriculturist " his implements of husbandry and such cattle and seed grain as may in the opinion of the Court be necessary to enable him to earn his livelihood, and his houses and other buildings occupied by him, protection is intended to be given to those who are real tillers of the land, and that an " agricul turist " in the section is a person who is really dependent for his living on tilling the soil and unable to maintain himself otherwise. Main, chief, or principal sources of income are not, in our view, the proper tests. A man 's main source of income may be from tilling the soil but his other source or sources of income may be more than sufficient to maintain him. The fact that a man 's income from tilling the soil may be larger than his income from his ownership of land or other sources does not seem to us to make him an " agriculturist" within the meaning of the section. At the same time we see no reason for depriving an " agriculturist " of the exemption under the section because he may have invested money in a business or businesses as alleged in the present case and may (1) (1946) 49 B.L.R.867. (2) I.L.R. 172 derive some income therefrom or do coolie work and add to his earnings in bad times. The test of sole source of income if applied would deprive him of the benefit of the section and we prefer the tests which we have already laid down, viz., that he must be a tiller of the Boil really dependent for his living on tilling the soil and unable to maintain himself otherwise. " in the case of Tirloki Prasad vs Kunj Behari Lal (1) the Allahabad High Court held that the test to be applied in deciding whether a person is an agriculturist is whether his main source of income is derived from cultivation or not. In the case of Dwarka Prasad vs Municipal Board, Meerut (2) the same High Court held that there was no reason for holding that cl. (b) of the proviso to section 60(1) applied only to the case of very small farmers and not to the case of large farmers. Clause (b) aimed at protecting the implements of every farmer so as to enable him to continue to earn his livelihood in the same way as he had been doing previously. There was nothing to indicate that the clause was limited to small farmers. In the case of Gowardhandas vs Mohanlal (3) the conclusions of the Nagpur High Court were: "(i) Whether a person is an agriculturist or not is not a question turning on source of income but on nature of occupation. (ii) A person may have many occupations. If one of them is agriculture and for that purpose a house or building is occupied, protection can be claimed. (iii) A person who owns land and lets it reserving either money or produce is not an agriculturist but a landlord. (iv) A person who cultivates the land as a labourer, though neither a landowner nor a tenant, is an agriculturist. (v) If a man cultivates the land with his own hands or by means of labourers whose activities he directs he is an agriculturist whether he operates on a large or a small scale. If he has no connection with (1) A.I.R. 1935 All. 448. (2) A.I.R. 1958 All. (3) I.L.R. 173 the land except that he owns it and people work for him, he may or may not be an agriculturist according to circumstances. " In the case of Nihal Singh vs Siri Ram (1) the Lahore High Court held that the word "agriculturist " means a person who personally engages in the occupation of tilling the soil and derives his livelihood from that occupation and cannot (or does not) maintain himself from other sources. On the facts of the case that Court held that a man who merely received rent from tenants or the income of the produce derived by the employment of servants or partners could not be said to depend for his livelihood upon the proceeds derived from so engaging himself in the tillage of the soil. In the case of Anantalal vs Bibhuti (2) the Patna High Court held that an agriculturist was one who tilled the soil and thereby earned his livelihood and was expected to have implements of husbandry, cattle and seed grain. This, however, did not mean that he must till the land with his own hands or that he must necessarily have his own implements of husbandry. In any event, cultivation must be his main source of income though this would not be the sole test. The question whether a person was an agriculturist or not would have to be decided with reference to the facts of each particular case. In the present case the evidence of the appellant 's own witness, Balaji, shows that Tuljaramarao had reserved some lands for a home farm about 8 years before his death. The area reserved was about 35 acres and that he maintained about 12 bullocks and 8 servants. He was getting an income of Rs. 20,000 to Rs. 25,000 a year from these lands. He used to keep his cattle in the Wada where his servants also stayed and his agricultural implements were kept. The pro duce of the lands was also stored in the Wada. Tuljaramarao used to supervise the agricultural operations and his servants. After his death his son appellant Appasaheb became the owner. Appasaheb increased the acreage of the cultivation of the home farm to about 60 acres. He has 14 bullocks and 10 (1) Lah.23. (2) Pat. 348. 174 or 12 servants and the income is Rs. 30,000 to Rs. 35,000 a year. The cattle and the produce are kept in the Wada where he also resides. This witness also stated that the appellant Appasaheb had inams in 4 villages. Furthermore, in 10 or 12 villages he owns lands and he gets about Rs. 35,000 to Rs. 40,000 from his lands. The said Appasabeb and his brother sometimes worked personally in the fields. It is clear, from this evidence, that Appasaheb is by no means entirely dependent for his livelihood upon the income from the home farm. Apart from the income of the home farm he has a substantial income from other lands and there is nothing to show that this income derived from his other lands is the result of cultivation by him. It was contended on behalf of the appellants that the Bombay High Court had taken an extreme view in the case of Hanmantrao Annarao vs Dhruvaraj Pandurangrao (1). Reliance was placed on the decision of the Allahabad High Court in Dwarka Prasad vs Meerut Municipality (2) where it was held that a tractor was an implement of husbandry and it was not subject to attachment although it was used for cultivating an area of about 1,200 bighas of a farm. The decisions of the Madras High Court in the case of Parvataneni Lakshmayya vs The Official Receiver of Kistna (3), of the Lahore High Court in the case of Nihar Singh vs Siri Ram and Others (4) and of the Nagpur High Court in the case of Gowardhandas vs Mohanlal (5) were also relied upon on behalf of the appellants in order to show that to be an agriculturist a person did not have to personally cultivate the land and that it was immaterial whether the area cultivated or the income derived therefrom was large or small. The real test was, was the cultivation his main source of livelihood ? It was submitted, on the facts of the present case, that the appellant Appasaheb depended for his livelihood on the income derived from the land cultivated by him and that the Wada (1) (2) A.I.R. 1958 All. 561 (3) I.L.R. (4) Lah. (5) I.L.R. 175 on the land was occupied by him as an agriculturist for the purpose of his cultivation. Such being the position the Wada was occupied by him as an agriculturist and was therefore exempted from attachment under cl. (c) of the proviso to section 60(1) of the Code of Civil Procedure. Sub section (1) of section 60 of the Code of Civil Procedure makes all saleable property, movable and immovable, belonging to the judgment debtor and over which he has a disposing power liable to attachment and sale in execution of a decree against him. In this subjection unless the terms of the proviso came to the rescue of the judgment debtor, all lands and houses or other buildings, goods and money, amongst other things, belonging to him would be liable to be attached. The Legislature, however, recognized that it would not be expedient to leave the matter at that. Hence the proviso. The relevant clauses in order to determine what the word " agriculturist " means are clauses (b) and (c) of the proviso. Under cl. (b) the tools of an artisan are exempted from attachment. According to the Shorter Oxford English Dictionary the word " artisan " means a mechanic, handicraftsman or an artificer. The object of the Legislature in exempting from attachment tools of an artisan was obviously to leave him his tools in order to enable him to make a living. Without his tools the artisan would be destitute, a situation which the Legislature intended to avoid. In the case of a judgment debtor who was an agriculturist, the Legislature intended that his implements of husbandry and such cattle and seed grain as, in the opinion of the court, were necessary to enable him to earn his livelihood as an agriculturist should be exempted from attachment. Here again, the intention of the Legislature was to leave in the hands of an agriculturist sufficient means whereby he could earn his livelihood as an agriculturist. According to Shorter Oxford Dictionary one of the meanings of the word " husbandry " is the business of husbandry, that is to say, a person who tills and cultivates the soil or a farmer. The same dictionary states that one of the meanings of the word 176 " livelihood " is means of living maintenance. It can also mean income, revenue, stipend. In the case of an agriculturist his implements of husbandry must therefore mean implements with which he tills the soil. These are saved from attachment. So far as his cattle and seed grain are concerned, only that much is exempted which, in the opinion of the court, would be necessary to enable him to earn his livelihood and by which he could earn his maintenance. It is to be noticed that under cl. (b) the land which an agriculturist tills is not exempted from attachment. The agricultural produce of the land is exempted to the extent as notified in the Official Gazette issued under section 61 of the Code. On a fair reading of the provisions of cl. (b), that which is saved to an agriculturist are his implements with which he tills the soil and such cattle and seed grain which, in the opinion of the court, are necessary for him to use in order to enable him to maintain himself. The provisions of cl. (b) in the case of an agriculturist, therefore, suggest a person who tills the soil in order to maintain himself. Under cl. (c) houses and other buildings (with the materials and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment) belonging to an agriculturist and occupied by him are exempted from attachment. The word " agriculturist " in this clause must carry the same meaning as the word " agriculturist " in cl. (b) and the house must be occupied by him as such. The object of the exemption in el. (c) apparently is that an agriculturist should not be left without a roof over his head. In other words, the Legislature intended by cls. (b) and (c) to prevent an agriculturist becoming destitute and homeless. It was, however, argued on behalf of the appellants that there are no restrictive words in cl. So long as it was a house belonging to an agriculturist and occupied by him, it was exempted from attachment no matter what other income than agriculture was earned by him. The Wada in question was clearly occupied by the appellants for the purpose of tilling the land of the home farm and for storing the produce thereof, the implements of 177 husbandry and tethering of cattle employed in cultivating the land. It seems to us, on the evidence of the appellants ' own witness, that they do not themselves till the land of the home farm which is done by a large number of labourers employed by them. ' Tuljaramarao did not himself cultivate the land. He merely supervised the work of cultivation by the labourers. The witness, however, did state that sometimes Appasaheb and his brother worked personally in the fields. This is a vague statement which does not necessarily mean that they did any act of cultiva tion themselves. The Wada in question is a big structure where the appellants reside but if they are not agriculturists within the meaning of that word in section 60, the Wada cannot be exempted from attachment. It seems to us that even if it is not necessary that a person must till the land with his own hands to come within the meaning of the word " agriculturist " he must at least show that he was really dependent for his living on tilling the soil and was unable to maintain himself otherwise. In the present case it is quite obvious that even if the appellants can be described as agriculturists in the widest sense of that term, they are not agriculturists who are really dependent for their maintenance on tilling the soil and that they are unable to maintain themselves otherwise. The evidence shows that Tuljaramarao was getting an income of nearly 20,000 to 25,000 rupees from lands cultivated in the home farm and that the appellant Appasaheb by extending the acreage of that farm was receiving an income of Rs. 30,000 to Rs. 35,000. In addition he had lands in 10 or 12 other villages and his income from the lands was Rs. 35,000 to Rs. 40,000. Assuming that these figures include the income from the lands of the home farm, they would show that in addition to that income he had an additional income of at least Rs. 5,000 from lands in villages other than Nandi. Furthermore, the appellant Appasaheb is receiving a cash allowance of Rs. 700 to Rs. 800 per annum and Rs. 4,000 to Rs. 5,000 from the village, officers of the four inam villages. In these circumstances, it can hardly be said that the appellant 23 178 Appasaheb is really dependent for his maintenance by tilling the soil and unable to maintain himself other. From this point of view it seems to us that he cannot be regarded as an agriculturist within the meaning of that word in section 60 of the Code. In our opinion, the decision of the High Court that the Wada in question was not Watan property and that it was not exempted from attachment by virtue of the provisions of section 60(1) of the Code is correct. The appeal is accordingly dismissed with costs. SARKAP. The appellants are the legal representatives of one Tuljaram Desai. Tuljaram was the owner of certain watan properties. On his death, his son the appellant Appasaheb became entitled to them. The other appellants are the widow and younger son of Tuljaram. Sometime in 1943 one Vithalrao Thube obtained a decree for Rs. 80,000 against Tuljaram. By 1949 both Tuljaram and Vithalrao had died. The respondent is the successor in interest of Vithalrao. The present appeal arises out of the proceedings for the execution of the decree started by the respondent against the appellants. In this appeal we are concerned only with a wada (building) belonging to the appellant Appasaheb, standing on watan land which the respondent seeks to have attached and sold in execution. It is not now in dispute that watan properties are not saleable properties and cannot therefore be attached and sold in execution. The wada stands on watan land and the respondent seeks to proceed against the structure apart from the land. The appellant Appasaheb contends that he is an agriculturist and that wada belonging to and occupied by him is protected from attachment and sale by cl. (c) of the proviso to sub section (1) of section 60 of the Code of Civil Procedure. He also contends that the wada itself is watan property and is not in view of sub section (1) of section 60 liable to attachment and sale as it is not a saleable property. Now sub section (1) of section 60 makes all saleable property ,liable to attachment and sale in execution. The proviso to it so far as material runs thus : "Provided that the following particulars shall not be liable to such attachment or sale, namely: (b) tools of artisans and where the judgmentdebtor is an agriculturist, his implements of husbandry and such cattle and seed grain as may, in the opinion of the court be necessary to enable him to earn his livelihood as such. (c) houses and other buildings (with materials and the sites thereof and land immediately appurtenant thereto and necessary for their enjoyment) belonging to an agriculturist and occupied by him. " I propose now to consider the question whether the wada is saved from execution under el. (c) of the proviso to sub section (1) of section 60. In order that the clause may apply two conditions have to be fulfilled. First, the person claiming benefit under it must be an agriculturist and secondly the wada must belong to and be occupied by him. First, then, was the appellant Appasaheb an agriculturist within the meaning of the clause ? Now the plain meaning of the word " agriculturist " in the present context, is a person who occupies himself with agriculture, that is, cultivation of land for raising crops. Anybody who is engaged in cultivating land for raising crops would be an agriculturist. So far there is no difficulty. It appears however from the reported decisions that the High Courts have expressed sharply divergent opinions on the question as to who is an agriculturist within the meaning of the clause. The difference however is not on the point that an agriculturist must be one who cultivates but as to whether the agriculturist contemplated in cls. (b) and (c) is one who cultivates with his own hands and whether all persons who carry on agricultural operations are agriculturists within the clauses. These differences have arisen not because any difficulty was felt as to the meaning of the word " agriculturist ", but from the intention of the legislature to be gathered from the other words used in the clauses. In this appeal these authorities have been relied on by the 180 parties as it suited the contention of each. It is necessary therefore to consider the views expressed in these cases and decide whether the word " agriculturist " is to be given its plain meaning or has to be qualified in some way. It is of some significance to state that by and large, the view of one High Court has been discarded by another. One view is that an agriculturist is a person whose main source of livelihood is agriculture: see Tirloki Prasad vs Kunj Behari Lal (1). It is said that this is the right view for an agriculturist must be one who is so by profession. Now the main source of livelihood of a person may vary from time to time: therefore at one period of time a person might be ail agriculturist but not at another. It is not reasonable to hold that such a result was intended. Again it would often be difficult to decide which is the main source of livelihood of a person. Indeed it is not quite clear as to what is meant by main source of livelihood unless it means the livelihood producing the largest income. I find nothing in the clauses to warrant this view: they do not say anything about agriculture being a person 's main source of livelihood in any sense of the word " main ". Furthermore if this view is accepted, a rich farmer who has income from other sources, which income is smaller than his income from agriculture, would be protected by these clauses while a poor peasant who makes a slightly bigger income, say as a day labourer, than he does from agriculture, would be deprived of the protection. I am unable to accept a view which produces such a result. I find no reason why a person who has a profession besides agriculture, should be protected if agriculture is his main profession and not otherwise, particularly when what is protected is agricultural implements, cattle, seed grain and house used for agricultural purposes. Another view taken is that the agriculturist must be one whose sole means of livelihood is cultivation of land but excluding persons carrying on farming in a large way: Muthuvenkatarama Reddiar vs The Official 181 Receiver of South Arcot (1). This view has been discarded in a later full bench decision of the same High Court in Parvataneni Lakshmayya vs The Official Receiver of Kistna (2) to which reference will be made later. For myself, I find nothing in the clauses to justify this view. Take the case of a small cultivator who, in order to maintain himself, takes up the other work and so supplements his income. There is nothing in the clauses to indicate that such a cultivator should be deprived of the protection. It is well known that agricultural operations do not occupy a person for the whole year and as the income from agriculture is for quite a large number not enough to meet their needs, many small cultivators have to supplement their in. come by other work when they are not engaged in the fields. There is nothing in the clauses to lead to the view that these persons were not intended to get the protection. It seems to me manifest that there is no reason to deprive these persons of the benefit of the protection. Neither do I find any words in the clauses to support the view that big farmers are not intended to get the protection. This aspect of the matter will be discussed further later. The view taken in Muthuvenkatarama Reddiar 's case (1) does not therefore appear to me to be well founded. In Nihal Singh vs Siri Ram (3 ) a full bench of the Lahore High Court held that an agriculturist must be one who personally tills and not through servants and does not maintain himself from other sources of income. The reason given to support this view appears to be as follows: The word agriculturist must mean the same thing in cls. (b) and (c). In cl. (b) it is in juxtaposition with the word artisan. An artisan is one who himself practices a handicraft and furthermore he must practice the handicraft not as a hobby but as a living. So in cl. (b) an agriculturist must be one who personally tills and not through servants and maintains himself by agriculture alone. I am not convinced by this reasoning. If the word agriculturist means one who must till with his own (1) Mad. (2) I.L.R. (3) Lah. 182 hands, then it is wholly unnecessary to rely on the juxtaposition of the words artisan and agriculturist in cl. (b) for reaching the conclusion that the Lahore High Court did. It is only if the word " agriculturist " as ordinarily understood includes one who carries on agricultural operations through persons employed by him that it becomes necessary to rely on the reasoning based on the juxtaposition of the two words in the clause. But I am wholly unable to appreciate the logic of this reasoning. Assume that an artisan must be one who works with his own hands. It does not follow that an agriculturist if it does not mean exclusively one who tills with his own hands, must be one who tills only with his own hands when that word is used in juxtaposition with the word artisan. Such juxtaposition would afford no reason for departing from the normal meaning of the word agriculturist. In Hanmantrao vs Dhruvraj (1) also it was said that an agriculturist within the meaning of the clauses is one who tills with his own hands. The reason there put is that since in el. (b) reference is made to implements of husbandry, cattle and seed grain necessary for earning a livelihood as a cultivator, therefore primafacie, only an agriculturist who cultivates with his own hands is meant. Again I am unable to follow the reasoning for a person who lives on cultivation carried on by hired labour would also require implements of husbandry, cattle and seed grain. An agriculturist, as I have said, is one who carries on cultivation. Now one may carry on cultivation himself or through hired labour. In the latter case also he would be an agriculturist within the plain meaning of that word. Then it seems to me that if we exclude from the clause an agriculturist who does not till with his own hands, a most unreasonable situation would ensue. Old and incapacitated small farmers and most women would have to be denied the protection of the clauses. Again, it may so happen that a person carrying on agricultural operations himself becomes unable to do so through ill health for two or three years when he gets the cultivation done (1) I.L.R. 183 by employing labour and resumes cultivation when he regains his health. If the view now under discussion is correct, then such a person would cease to be an agriculturist during the period of ill health though before and after that period he would be an agriculturist. It does not seem to me that such results could have been intended. I come now to the view taken in Parvataneni Lakshmayya vs The Official Receiver of Kistna (1) earlier referred to. It was there said, "We think that, having regard to the scheme of the section exempting from attachment, as it does, tools of artisans, and, where the judgment debtor is an " agriculturist ", his implements of husbandry and such cattle and seedgrain as may in the opinion of the court be neces sary to enable him to earn his livelihood and his houses and other buildings occupied by him, protection is intended to be given to those who are real tillers of the land, and that an " agriculturist " in the section is a person who is really dependent for his living on tilling the soil and unable to maintain him otherwise. " I am unable to agree with this view. It leads to obvious anomalies. Take the case of a person whose sole means of living is agriculture. Suppose he carries on agriculture on a large scale and makes a big income out of it. He would still be dependent on agriculture for his living and unable to maintain himself otherwise. He would be an agriculturist for the purpose of the clauses within the meaning of Parvataneni 's case (1), for that case does not say that a large scale farmer is not an agriculturist. Such a person would be entitled to protection under the clauses even though his income from agriculture is, say Rs. 25,000 a year. Now take the case of a small farmer whose income from agriculture is Rs. 1,000 a year but who also makes Rs. 1,500 from other sources and is able to maintain himself from the latter income. According to Parvataneni 's case (1) such a person would not be an agriculturist for the purpose of the clauses and would not be entitled to any protection under them. I find (1) I.L.R. 184 it impossible that the legislature could have intended such a result. Then again I find nothing in the language of the clauses clearly leading to the view accepted in Parvataneni 's 'case (1) however. The only reference to a living is in cl. (b) and it is to be found in the words " such cattle and seed grain as may. be necessary to enable him to earn his living as such ", that is, as an agriculturist. I do not think that these words lead to the conclusion that the agriculturist contemplated must depend for his living on agriculture. They are intended to define the limit of the protection which an agriculturist is entitled to for his cattle and seed grain. These words must therefore mean such cattle and seed grain as are necessary for the agriculturist to earn his livelihood from agriculture if that was his sole means of livelihood. If that were not so we would have to hold that this part of the clause contemplated an agriculturist whose livelihood depended on agriculture alone and who had no other source of income. Obviously where a person earned his livelihood from agriculture and another source, it could not be decided what cattle and seed grain he would require to earn his living as an agriculturist for the simple reason that he did not earn his living as an agriculturist only. Parvataneni 's case (1) however accepts the view that a person may be an agriculturist within the meaning of the clauses though he may have besides agriculture another source of income. And with that view, for the reasons earlier stated, I entirely agree. There seems to me to be other reasons also why the view taken in Parvataneni 's case (1) is not the correct one. So far as the tools of an artisan are concerned, cl. (b) does not limit the protection to such of them as are necessary to enable him to earn his living as an artisan. Therefore, there is no reason to think that an artisan is one who must be dependent for his living on the handicraft practised by him. Likewise all implements of husbandry of an agriculturist are exempt from attachment and sale. The word " such " occurring before the words I cattle and seed grain in cl. (b) (1) I.L.R. 185 shows that these are protected only to the extent indicated and that there is no limit to the protection afforded to the implements of husbandry of an agriculturist. If this is the correct reading of the clause, as I think it is, then it seems to me impossible to say that an agriculturist whose implements of husbandry are intended to be protected must be one who could not maintain himself apart from agriculture. Likewise, there is nothing in cl. (c) to indicate that the agriculturist there mentioned must be one who depends for his living on agriculture: There remains one other view to consider. It has been said that the agriculturist must be a very small farmer; Muthuvenkatarama Reddiar vs The Official Receiver of South Arcot (1). For this qualification for an agriculturist again, I find no warrant in the clauses or indeed anywhere else in section 60. The various clauses in the proviso to section 60, sub sec. (1) exempting diverse things from attachment and sale are no doubt based on public policy, but the consideration of public policy in each case appears to me to be different. I find it impossible to say that the central idea was to protect the poor or to prevent a person being left destitute. Thus el. (a) protects the necessary wearing apparel, cooking vessels beds and bedding of the judgment. debtor. Even a very rich judgment debtor is entitled to protection under this clause. Clause (d) protects books of account. Here again it is not a poor man alone that is contemplated nor would deprivation of books of account leave one destitute in all cases. Clause (g) protects political pensions which may be and often are of substantial amounts. Clause (h) protects wages of labourers and domestic servants. This clause of course deals with a poor man and is intended to relieve against poverty. Since however, there is no one specific central idea running through all the clauses, each clause has to be construed by itself. Coming then to cls. (b) and (c), I find no justification for the view that they deal only with poor people or are intended to protect against destitution. Thus there (1) Mad. 227. 24 186 is nothing in el. (b) to indicate that the tools of only poor artisans are to be protected. The same thing can be said of an agriculturist. The fact that his cattle and seed grain are protected to the extent necessary to enable him to earn his livelihood does not lead to the view that he must be a poor agriculturist. On the contrary, the clause contemplates an agriculturist who has more cattle and seed grain than he needs for his livelihood. It clearly contemplates a rich and large scale agriculturist. Therefore it seems to me that there is no warrant for imposing any qualification on the plain meaning of the word I agriculturist ' in cls. (b) and (c). In my view, an agriculturist contemplated by the clauses is any person who occupies himself with agriculture. This is the view taken in Gowardhandas vs Mohan Lal (1) and with it I agree. A person occupying himself with agriculture would be an agriculturist though he does not cultivate with his own hands and carries on agriculture in a very large scale. He would still be an agriculturist though he has other means of livelihood besides agriculture. I come now to the facts of this case. The question is, is Appasaheb such an agriculturist as I have indicated ? The evidence clearly shows that he is. It can be said to have been established beyond doubt and not questioned in the Courts below, that Appasaheb was carrying on agricultural operations under his supervision through labour employed by him and with his own cattle and agricultural implements on fifty to sixty acres of land. The evidence also establishes that Appasaheb 's income from agriculture came to Rs. 30,000 to Rs. 35,000 per year. It appears that he was in receipt of cash allowances of Rs. 700 to Rs. 800 per year in respect of the watan and Rs. 4,000 to Rs. 5,000 per year from village officers of the watan villages, neither of which was income from agriculture. These facts in my view make Appasaheb an agriculturist for the purpose of cls. (b) and (c) though it may be that he was not dependent for his living upon agriculture and was a large scale farmer who did not 187 till with his own hands. I wish however to state that there is uncontradicted testimony that Appasaheb personally took part in the agricultural operations. Now cl. (c) protects from attachment and sale houses and other buildings with the sites thereof and land immediately appurtenant thereto and necessary for their enjoyment, belonging to an agriculturist and occupied by him. I think it is a fair reading of this clause to say that the houses, buildings and lands must be occupied by the agriculturist for the purpose of agriculture for the object of these clauses is to protect an agriculturist only so far as is necessary for his agricultural operations. If an agriculturist occupied a house, say as a holiday resort, there would be no reason to protect that house from attachment and sale. The question then arises whether Appasaheb occupied the wada for the purposes of his agricultural operations. I think the evidence makes it perfectly clear that he did so. It shows that the larger part of the wada was used for storing crops, keeping agricultural implements, residence of the farm servants and tethering cattle used for agriculture. Appasaheb and his family lived in a part of the wada but that also was clearly occupation for purposes of agriculture, for it is from there that he supervised the agricultural operations. I have therefore come to the conclusion that the wada is saved from attachment and sale in execution by cl. (c) of the proviso to sub section (1) of section 60 of the Code of Civil Procedure. The other contention of the appellants does not seem to me to be sustainable. It is said that the maxim accession credit principali applies and the wada standing on watan land has acquired the character of watan as an accession to it. It is not in dispute now that the wada was not in existence when the watan was first created but had been built subsequently by one of the watandars. It is also said that the grant of the watan carried full right of ownership in the subject of the grant ; that the grantee had the right to make such use of the land granted as any owner of it could have 188 done. So it was said that the wada had been put up rightfully by the watandar and became part of the watan as an accession to it. There is no doubt that the wada was rightfully constructed. It may be that it became on such construction a part of the land on which it stands and assumed the character of immovable property. But I am unable to agree that it thereupon assumed the inalienable character of watan property and was therefore hot liable to attachment and sale in execution. I do not think that the maxim accessio cedit principali applies in giving the wada put up on watan the character of a watan. Watan is a creation by government grant. It is inalienable under a special Act. The inalienable character attaches under the Act only to the property granted by the government. This peculiar character cannot be extended to other property by the application of the maxim. Therefore it seems to me that the wada is not inalienable though it stands on land which is inalienable as a government grant under a special Act. I would for this reason reject this contention of the appellant. As however in my view, the wada is protected from attachment and sale in execution under cl. (c) to the proviso to sub section (1) of section 60 of the Code of Civil Procedure, I would allow the appeal. BY COURT: In view of the majority Judgment, the appeal is dismissed with costs. Appeal dismissed.

In respect of a decree passed against T, who was the owner of certain watan properties, a building standing on watan land comprised in the said properties, was sought to be attached and sold in execution of the decree. The appellant, who was the legal representative of T, claimed that the building:was not liable for attachment and sale because (1) the building, being part of watan property within the meaning of section 4 of the Bombay Hereditary Offices Act, 1874, was not saleable property under sub section (1) of section 60 of the Code of Civil Procedure, 1908, and (2) in any case, he was an agriculturist and the building belonging to and occupied by him was protected from attachment and sale by cl. (c) of the proviso to sub section (i) of section 60 of the Code. The facts showed that the building was not in existence when the watan was first created but had been built subsequently by one of the watandars and there was no indication on the record that the building was constructed for the purpose of providing remuneration for the performance of the duty appertaining to a hereditary office. The evidence also showed that the appellant was not entirely dependent for his livelihood upon the income from the home farm, that he had substantial income from other lands and that there was nothing to show that this income derived from his other lands was the result of cultivation by him. Held, that the building in question was not an accession to the land so as to partake of the character of the land on which it was constructed and did not come within the definition of watan property in section 4 of ' the Bombay Hereditary Offices Act, 1874. Held, further (per jafer Imam and Raghubar Dayal, jj. Sarkar, J., dissenting), that the word " agriculturist " in cl. (c) of the proviso to sub section (1) of section 60 of the Code of Civil Procedure, 1908, must carry the same meaning as the word in cl. (b) and that in order that a person might come within the meaning of the word in those clauses it must be shown that, he was really dependent for his living on tilling the soil and was unable to 164 maintain himself otherwise, though it was not necessary that he must till the land with his own hands. That on the facts the appellant was not an agriculturist within the meaning of the word in section 60 of the Code. Case law reviewed. Per Sarkar, J. (1) On the plain meaning of the word agriculturist " in cls. (b) and (c) of the proviso to sub section (1) of section 60 of the Code an agriculturist is any person who occupies himself with agriculture. There is nothing in cl. (c) to indicate that the agriculturist there mentioned must be one who depends for his living on agriculture. A person occupying himself with agriculture would be an agriculturist though he did not cultivate with his own hands and carried on, agriculture in a very large scale. He would still be an agriculturist even if he had other means of livelihood besides agriculture. (2) Under cl. (c) in order that houses and buildings belonging to an agriculturist might be protected from attachment and sale they must be occupied by him for the purpose of agriculture.

Appeals Nos. 303 to 307 of 1960. Appeals by special leave from the judgment and order dated May 14, 1957, of the Madras High Court, in Case Referred No. 1 1 1 of 1953. R. Ganapathy Iyer and G. Gopalakrishnan for the appellant. K. N. Rajagopal Sastri and D. Gupta, for the respondent. January 18. The Judgment of the Court was delivered by KAPUR, J. These appeals are brought by special leave against the judgment and order of the High Court of Madras in an Income tax reference under section 66(1) of the Indian Income tax Act, hereinafter termed the " Act". The question referred was : " Whether the income tax assessment of the business of I Spade Clover Beedies ' belonging to the estate of the deceased and carried on during the previous years 1943 to 1946 as an association of persons for the assessment years 1944 45 to 1947 48 is valid? " And this question was decided in the affirmative and therefore against the appellants. The facts leading to the appeals are that one Khan Sahib Mohamed Oomer Sahib, who was carrying on the business of manufacture and sale of Spade Clover brand Beedies, died on December 17, 1942, leaving a minor son Mohamed Noorullah (the appellant) by his pre deceased wife, a widow, Luthfunnissa Begum, and four children by her who were all minors at the date of the death of Oomer Sahib. Noorullah through his next friend applied to sue in forma pauperis and during the pendency of those proceedings two Advocates of the Madras High Court were appointed joint receivers of the properties of the deceased on March 17, 1943. This appointment was by consent of parties. On 517 May 10, 1943, the widow, Luthfunnissa, filed a suit for partition and also applied for the continuance of the joint receivers. Noorullah opposed this application but by an order dated May 25,1943, the receivers were ordered to be continued and they carried on the business as before. In due course a preliminary decree for partition was passed. The High Court has observed that none of the parties wanted to break the continuity of the business after the death of the father. In the beginning Luthfunnissa and Dawood carried on the business and from the date of their appointment, i.e., May 17, 1943, the joint receivers continued the business till November 25, 1946, when during the course of the proceedings the business was put tip for sale by auction between the co heirs and was purchased by Noorullah. The years of assessment are 1944 45 to 47 48, the relevant accounting years for which were the calendar years 1943 to 1946. The profits of the business were assessed to tax in the hands of the receivers as the income of an association of persons and the contention of the appellant that the share of the profits of each of the co heirs should have been separately taxed, was rejected by the Income tax authorities as well as by the Income tax Appellate Tribunal. The only question which was raised both before the department as well as before the Tribunal was the assessment to tax of the income of the business. There was no dispute in regard to the income of the properties which was taxed under section 9(3) of the Act. The business was inherited by the heirs of Oomer Sahib and was carried on without break during the accounting years first by the widow and Dawood and then jointly by the receivers. The nature of the business was such that it could not be divided up and had to be carried on as one whole with a unity of control and all the parties desired to preserve and did preserve this unity. The opposition by the appellant to the application for receivership filed on behalf of Luthfunnissa, the widow, was only on the ground that the appellant wanted different persons to be appointed and not to the continuance of the business or to the unity 518 of control. The Income tax Appellate Tribunal in its order stated : " In fact, there was no change in the continuity of the business and from the date of death of Md. Oomer Sahib up to 24th March, 1943, the business was carried on by mutual agreement and consent by Luthfunnissa Begum acting on her own behalf and on behalf of her minor children and her minor step son Md. Noorullah. There can, therefore, be no gain saying the fact that immediately after the death of Md. Oomer his estate was inherited and run by combination of individuals who had pooled their resources for the common purpose of earning income. " And the High Court has observed The opposition was apparently to the persons to be appointed receivers and not to the continuance of the business or to the unity of control that was necessary. Noorullah himself had realised that when he applied earlier for the appointment of receivers to conduct the business among other things. Despite Noorullah 's opposition when Luthfunnissa asked for the continuance of receivers in her application No. 1162 of 1943, the existence of the desire of all the co sharers including Noorullah for the continuance of the business with proper persons to take charge of the business under the orders of court was clear. That intention was material on which the departmental authorities and the Tribunal which agreed with them could find that the co sharers did constitute an 'association of persons '. " From the finding of the Tribunal it is obvious that the business was such that it was not capable of division, it being the manufacture and sale of " Beedies " of a particular brand and the finding of the Tribunal was that the business was carried on with the consent of the parties. On this finding it has to be decided whether the business was the business of an " association of persons. " and its profits are assessable as such ? The contention of counsel for the appellant was (1) that on the death of Md. Oomer his estate including the business devolved upon his heirs in specific 519 shares; and (2) there was no consensus of opinion between the heirs which is shown by the fact that the appellant filed an application to sue in forma pauperis and before that application could be decided the widow sued for partition and even though receivers were appointed objection was taken by the appellant to the ' appointment of receivers. But these facts do not assist the case of the appellant. As has been said above, the business was in the first instance carried on by the widow and Dawood on behalf of the heirs of Oomer and subsequently when the suits were brought none of the parties wanted to break the unity of control of the business nor its continuity and it was of such a nature that it could not be carried on without such consensus and therefore the receivers carried on the business. On these findings the High Court has rightly come to the conclusion that the business was a business of an association of persons. This Court in Commissioner of Income tax, Bombay vs Indira Balkrishna (1) considered the question as to what an association of persons means. The test laid down in three cases: In re B. N. Elias & Others (2); Commissioner of Income tax vs Laxmidas Devidas and Another (3) and In re Dwarkanath Harischandra Pitale (4) was accepted by this Court as correctly laying down the crucial test for determining what is an association of persons and that in each case the conclusion has to be drawn from the circumstances. In the first case the test was laid down as applying to combinations of individuals who were engaged together in some joint enterprise but not constituting a partnership. Such a combination of persons formed for the promotion of a joint enterprise banded together as if they were " coadventurers " it was held would constitute an asssociation of individuals. In the second case, that is, Commissioner of Income tax vs Laxmidas Devidas and Another (3) Beaumont, C. J., at p. 589 laid down the test as follows: " In my opinion, the only limit to be imposed on the words 'other association of individuals ' is (1) ; (2) 67 (3) (4) , 520 such as naturally follows from the fact that the words appear in an Act imposing a tax on income, profits and gains, so that the association must be one which produces income, profits or gains. It seems to me that an association of two or more persons for acquisition of property which is to be managed for the purpose of producing income, profits or gains falls within the words 'other association of individuals ' in section 3; and under section 9 of the Act, the Association of individuals is the owner of the property and as such is assessable." In that case it was also held that the fact that one of the assessees was a minor during the year of the assessment did not affect the question. In In re Dwarkanath Harischandra Pitale (1) the assessees were two brothers who became entitled to certain house properties as tenants in common and held and managed the properties as such and derived profit therefrom. It was held that though the assessees in the first instance did not constitute an association of individuals, they became so when they elected to retain the property and managae it as a joint venture producing income. The test there laid down was that as soon as there was election to retain the property and manage it as a joint venture the persons so electing became an association of individuals. The Rangoon High Court in The Commissioner of Income tax, Burma vs M. A. Baporia and Others (2) also laid down the same interpretation of the words " association of individuals ". That was a case,, of Mohammedan co heirs and it was held that by merely inheriting a share of property no person can become a member of an association of individuals unless there is some forbearance or act upon his part to show that his intention and will accompanied the new status, that is, an association of individuals. One of the co heirs in that case was appointed an agent to realise the income from the properties left to the co heirs by their father and mother under Mohammedan Law and that was held to be sufficient to constitute them an association of individuals. (1) (2) 521 It is unnecessary to refer to other cases. Taking the test as laid down by this Court in Indira Balkrishna 's case (1) it appears to us that the appellant and other co heirs were rightly assessed as an association of persons. No doubt a suit for partition had been filed which was preceded by an application made by the appellant to sue in forma pauperis, but the suit in reality was for ensuring the proper conduct of the business and not its discontinuance. During the period that the suit was pending and even before that, i.e., after the death of the father the business was carried on by the consent of all parties as one unit as indeed it had to be, because it had to be carried on as one unit with unity of control and therefore the co heirs did form an association of persons within the meaning of section 3 of the Act. Counsel for the appellant relied on section C. Mazumdar,Receiver, Trigunait Brothers ' Estate vs Commissioner of Income tax (2). That was a case of persons who formed a joint family being governed by the Mitakshara School of Hindu Law. A suit for partition was filed and the court appointed a receiver and a preliminary decree was passed but the receiver was continued in regard to certain portion of the property and the income was assessed by the taxing authorities as the income of an association of persons. It was held that the income from property could not be taxed as such because the shares of the parties were definite and ascertainable. The amount paid by the lessees could not be taxed in a lump sum as being the profits of a business carried on by an association of persons and the assessment was, therefore, made in accordance with the provisions of section 9(3). It was also held that the assessees were not carrying on a trade or business themselves and there was no association of persons as contemplated by the Act. But that case can be of no assistance in the decision of the matter now before us. The income to be assessed there was not income of any business carried on by or on behalf of the assessees and it was held that letting out property was not a trade or business. With regard to the income received by the receiver (1) ; (2) 522 who employed contractors to carry on the business of coal cutting and raising it on the pit bead, it was held that that was not the income of an association of persons on the ground (1) that the receiver was in possession and he employed contractors for coalcutting and raising of coal; (2) that the assessees had no hand in the business which produced royalty and (3) that the assessees had disassociated themselves from each other because of this partition suit. In our opinion the case so far as it relates to the carrying on of the business and in so far as it is contrary to the opinion expressed by this Court in Indira Balkrishna 's case (1), is not correctly decided. Another case relied upon by the counsel for the appellant was Buldana District Main Cloth Importers ' Group, Khamgaon vs Commissioner of Income tax, Nagpur (2). In that case a certain group of persons were directed to import cloth in the district and had to work a scheme for the distribution and sale of cloth which had been evolved by the District authorities. That was held not to be an association of persons. It appears that although they were appointed as a group of importers, all of them did not participate in that scheme during the entire period. There were changes in the personnel of the group from time to time and there was no compulsion to work the scheme. On these facts it was held that the group did not agree to carry on the business or share the profits. That case must be taken to have been decided on its own facts and does not in any way affect the meaning of the phrase " association of persons. " Counsel also relied on Khan Bahadur M. Habibur Rahman vs Commissioner of Income tax, Bihar & Orissa (3 ) in which a waqf deed was executed by which the assessee dedicated the income with ultimate benefit to the poor and constituted himself the sole mutwali of the trust. The deed provided that the beneficiaries should be benefited concurrently and in the same proportion. It was held that section 41(1) was inapplicable and the assessee should, therefore, be taxed on the basis of profits falling to the share of (1) ; (2) (3) 523 each beneficiary and not on the footing that all the beneficiaries constituted an association of persons. Fazl Ali C. J. (as he then was) there observed at p. 194: " It seems to me therefore that the finding of the Tribunal that there were only 24 persons who were entitled to share the profits in the accounting year and that they were entitled to equal shares therein must be accepted. As it does not seem to have been contended that the assessee had any other relations than those enumerated by the Tribunal who would be entitled to share the profits, it is academic to discuss whether the various categories of persons referred to by the Appellate Assistant Commissioner of Income tax were included in the term 'family ' or not." On this ground the income was not assessed as the income of an association of persons and that case " as also decided on its own facts. The question in the present case is as to what income was to be taxed. The income was the income of a business which was carried on as a single business by the consent of all the parties. The mere fact that a suit was pending at the time for the administration of the estate of the deceased or for the separation of the shares of the co heirs does not affect the incidence of taxation in this case, because the business was carried on, as said above, as one business with unitary control and by the consent of the parties. The High Court was right in holding that the income was assessable as an income of an association of persons. The appeals must, therefore, be dismissed with costs. One hearing fee. Appeals dismissed.

The business of manufacture and sale of a particular brand of beedies was carried on by 0, a Mohamedan, who died in 1942 leaving a minor son, the appellant, by his pre deceased wife, his widow L, and four children by her. Proceedings were taken first by the appellant and later on by L in connection with the partition of the properties left by 0, including the business, and during the pendency of the proceedings the business was carried on by receivers who had been appointed by the court by consent of parties on May 17, 1943. The receivers continued the business till November 25, 1946, when during the course of the proceedings the business was put up for sale by auction between the co heirs and was purchased by the appellant. For the years of assessment, 1944 45 to 1947 48, for which the accounting years were 1943 to 1946, the profits of the business were assessed to income tax in the hands of the receivers as the income of an association of persons, and the claim of the appellant that the shares of the profits of each of the co heirs should have been separately taxed was rejected by the income tax authorities. The facts showed that the business was inherited by the heirs of 0 and was carried on without break during the accounting years first by L and another and then by the receivers, that the nature of the business was such that it could not be divided up and that all the parties desired that the business should be carried on as one whole with a unity of control. Held, that on the finding that the business was carried on by the consent of all parties as one unit with unity of control, the co heirs did form an association of persons within the meaning of section 3 of the Indian Income tax Act, 1922, and that the income of the business was assessable as the income of an association of persons ; and the mere fact that a suit was pending at the time for the administration of the estate of the deceased or for the separation of the shares of the co heirs did not affect the incidence of taxation in the case. Commissioner of Income tax, Bombay vs Indira Balkrishna, ; , followed. 516 section C. Mazumdar, Receiver, Trigunait Brothers ' Estate vs Commissioner of Income tax, , disapproved in so far as it was contrary to the above decision of the Supreme Court.

iminal Appeal No. 16 of 1959. Appeal from the judgment and order dated November 18, 1958, of the Allahabad High Court in Criminal Reference No. 452 of 1956. B. V. section Mani, for the appellants. G. C. Mathur and C. P. Lal, for the respondent. January 20. The Judgment of the Court was delivered by AYYANGAR, J. Having heard the learned Counsel for the appellants in full we did not consider it necessary to call on the respondent since, we were clearly 565 of the opinion that the contentions raised in the appeal possessed no merit. The legality of a prosecution for contravention of the notification fixing the maximum prices at which certain categories of iron & steel could be sold is the subject matter of this appeal. The appellants are two in number, related to each other as husband and wife. The second appellant Sushila Devi is " a Registered Stockholder " and is stated to be the proprietor of the firm " Balwanta Devi Sushila Devi " situated in Sultanpur in Uttar Pradesh and the first appellant Bhagwati Saran, her husband, the manager of the said firm. There has been some previous history before the present prosecution was initiated but it is sufficient for the purposes of this appeal to start with the report to the Judicial Magistrate, Amathi, by the officer incharge of the Police station, Sultanpur, dated August 20,1955. It was headed " Offence Section II B Iron &Steel Control Order, 1941" and set out the following facts: " Bhagwati Saran used to work as a Karinda in the firm of Balwanta Devi Sushila Devi and had all along been doing sales and purchases at the shop, and also issued receipts under his signatures. Shrimati Sushila Devi is the wife of accused Bhagwati Saran and she was the proprietor. Balwanta Devi has died. Hence she alone is the proprietor. In the course of investigation it was also revealed that Bhagwati Saran had from time to time sold some iron bark; on behalf of this firm after receiving price more than the control rate, which he had all along been getting printed, and ' had been getting some other receipts checked fictitiously under the Control Act from the office of the Supply Officer. An information relating to it was given to Shri P. N. Kapoor, the then D. M., Sultanpur by his munim Kalapnath and on it a case was registered at this police station and the investigation was made. . . . On the report of the P.P. the S.P. ordered another charge sheet to be submitted under section 8 of Essential Commodities Ordinance of 1955. Hence this charge sheet under section 11 B 566 (III) Iron and Steel Control of Production and Distribution Order, 1941, read with s ' 8 of Essential Commodities Ordinance of 1955 is sent against both the accused. The accused persons after being arrested were released on bail. It is, therefore, prayed. that the accused persons after being summoned may be punished. " The report further stated that 4 volumes of cash memos, and 5 volumes of register of Permits were deposited in the Malkhana and would be produced in evidence and followed it with a list of 13 prosecution witnesses. The Judicial Magistrate registered the case and issued summons to the accused on September 16, 1955, the case being directed to be called on September 30, 1955. The accused were thereafter examined before the Magistrate under section 364 of the Criminal Procedure Code on March 23, 1956, and on the next day the Magistrate framed a charge against them which read as follows: " That you between 10th January 1952 and 27th February 1952 in Sultanpur sold 11 Cwt. 12 lb. iron bars on 11th January 1952 %ad 3 Cwt. iron bars on 18 2 52 and Cwt. iron bars on 26th February 1952 at the rate of Rs. 21 13 9 per Cwt. though the controlled rate as notified in Government of India Gazette dated 1st July 1952 for the commodity was Rs. 21 2 4 per Cwt. and thus you charged Rs. 1 15 0, Rs. 2 2 3 and Rs. 4 4 6 respectively excess and more than the controlled price and thereby committed an offence punishable under section 7 E. section Temp. P. Act 1946 read with section 1 1 B (iii) of Iron and Steel Control of Production and Distribution Order of 1941 and I hereby direct that you be tried by the said Court on the said charge. " The two appellants thereupon moved the. Court of the Sessions Judge, Sultanpur, to revise the order of the Magistrate dated March 24, 1956, framing charges against them under section 7 of the Essential Supplies (Temporary Powers) Act, 1946 Act XXIV of 1946 (referred to hereafter as the Act). The points urged at that stage were mainly two: (1) That the notification by the Controller under 567 cl. 11 B(1) fixing the maximum prices which were stated to have been contravened not having been filed before the Court, the Magistrate erred in framing a charge, and (2) that the report of the police was not in conformity with the provisions of section 11 of the Act. The learned Sessions Judge upheld the second of the above contentions which was, that the report made by the police officer did not set out " the facts constituting the offence" as required by section II of the Act. He rejected the other point put forward by the appel lants but in view of his conclusion that there was a defect in the report which went to the root of the jurisdiction of the Magistrate to take cognizance of the case, he made a reference to the High Court with a recommendation that the charge framed against the appellants be quashed. This reference was heard by a Single Judge of the High Court, who disagreed with the learned Sessions Judge in his view that the report did not satisfy the requirements of section 11 of the Act. Before the learned Judge, however, a further point was urged, that section 11 B of the Iron & Steel Control of Production and Distribution Order, 1941 (which will be referred to hereafter as the Control Order) was itself ultra vires. This further objection was referred to a Division Bench for decision. The point urged before the learned Judges of the Division Bench was that the power to fix prices vested in the Steel Controller by cl. 11 B of the Control Order was unconstitutional, as violative of the right to carry on business guaranteed by article 19(1) (g) of the Constitution. The learned Judges answered this point against the appellants and the case thereafter came back before the learned Single Judge for final disposal of the reference by the Sessions Judge. The learned Counsel for the appellants once again made a submission to the learned Judge regarding the report of the police officer dated August 20, 1955, not satisfying the requirements of section 11 of the Act and pressed before him the view which found favour with the learned Sessions Judge. In a more detailed judgment, the learned Judge again rejected this contention and dismissed the reference and directed the prosecution to continue. It is this 73 568 order of the High Court. of Allahabad that is the subject matter of appeal now before us. on a certificate granted by that Court. It would be seen that the only two points in controversy before the High Court were: (1) whether the report of the police officer dated August 20, 1955, contained " the facts constituting the offence " with which the appellants were charged, as to satisfy the requirements of section 11 of the Act, and (2) whether el. 11 B of the Control Order, violated the fundamental right to carry on business guaranteed by article 19(1)(g). In the grounds of appeal to this Court and in the statement of case, however, the appellants have raised various other grounds and have also filed a petition for leave to urge these additional grounds, We desire to make it clear that grounds additional to those urged before the High Court would not be permitted to be raised before this Court as a matter of course and that petitions for such purpose would not be granted save in exceptional cases. It has to be noticed that in hearing and dealing with such additional grounds the Court is handicapped in not having the advantage of the opinions of the High Court on the points urged. It is the correctness of the decisions of High Courts that are sought to be challenged in appeals and it is but proper that the correctness of these judgments should, save in exceptional cases like for instance subsequent legislation or questions of fundamental and general importance etc., be assailed only on grounds urged before such Courts. Besides, when among the grounds thus urged as in this case is includ ed a violation of article 14, the handicap is accentuated, since the material facts on which the classification might rest could not be properly, investigated or evaluated on the basis of the affidavits filed in this Court without a careful sifting of the facts which a consideration by the High Court would afford. If in the appeal now before us, we have departed from this rule, and permitted the appellants to urge the additional grounds it was because of the circumstance that the prosecution was pending and learned Counsel submitted that he would seek to sustain his contention 569 regarding the violation of fundamental rights on the materials already on record. The ground regarding the constitutionality of el. 11 B of the Control Order has been the subject of elaborate consideration by this Court in Union of India vs Messrs. Bhana Mal Oulzari Mal (1) and is, therefore, no longer open to argument. Learned Counsel for the appellant therefore did not challenge the correctness of the judgment of the High Court upon this point. Besides the ground based on a non compliance with section 11 of the Act which we shall consider later, learned Counsel urged before us two points with reference to the notification issued by the Steel Controller fixing the maximum prices at which the several categories of iron and steel could be sold by producers and stockholders. These were: (1) that the notification of the Controller dated July 1, 1952, for the contravention of which the appellants were being prosecuted, was ultra vires the rule making power conferred upon him by el. 11 B(1) of the Control Order, (2) if, however, the notification was held to be within his power, the same was unconstitutional in that it was discriminatory and violated article 14 of the Constitution. As we have indicated earlier, these grounds of challenge to the validity of the notification were not made in any of the Courts below including the High Court, but for the reasons indicated we permitted learned Counsel to argue them before us. In order to appreciate the contention presented in the two forms, it is necessary to set out the terms of el. 11 B(1) which conferred power upon the Controller to fix the maximum base prices at which the several varieties of iron and steel could be sold. Clause 11 B(1) runs: " 11 B. Power to fix prices. (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by stockholder including a Controlled Stockholder and (c) by any other person or class of persons. Such price or prices may differ for iron and steel obtainable from (1) ; 570 different sources and may include allowances for contribution to and payment from any equalization fund established by the Controller for equalising freight, the concession rates payable to each producer or class of producers under agreements entered into by the Controller with the producers from time to time, and any other disadvantages. " Clause (2) of the Control Order defines " producer as " a person carrying on the business of manufacturing iron or steel ", and " registered producer " as " a producer who is registered as such by the Controller ". The same clause defines " stockholder " as " a person holding stocks of iron or steel for sale who is registered as a stockholder by Controller " and " Controlled stockholder " as " a stockholder appointed by the Con. troller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time ". The notification of the Controller dated July 1, 1952, impugned in these proceedings runs in these terms, quoting only the material words: " Under Ministry of Commerce and Industry Notification. . the prices of all items of steel under columns 1, 11 and III in the schedule of Base Prices of the attached price circular No. 1 of 1951 have been increased by Rs. 50/ per ton with effect from 1st July, 1952, except item 19(b), i.e., Billets which has been increased by Rs. 45/ per ton. . The other General and Special Conditions of sale mentioned in the attached Price circular remain the 571 The price circular dated July 1, 1951, referred to here consisted of eight columns which ran thus: (Price in rupees per ton) Maximum Base Prices at Calcutta, Bombay and Madras Base Materials Column I Column II Column III Price Item For sales by For sales by For sales by Registered controlled all persons No. Producers. stockholders. other than Registered Producers and controlled stockholders. Untested Untested Untested Untested Untested Te sted Rs. Rs. Rs. Rs. Rs. Rs. A Bars, Structural and plates etc. Bars and Rods 303 333 328 363 348 383 (Rounds and squares below 3" and flats up to and including 5" wide) 2 to 42. . . . . . . This was followed by General Conditions and Special Conditions which inter alia made provision for the purpose of rounding off inequalities in freight caused by places being situated at varying distances from the place of production etc. It was the operation of some of these conditions that was urged as giving rise to the discrimination complained of, but it will, however, be convenient to deal with them later, after disposing of the argument regarding the notification not being within the powers of the Controller under cl. 11 B (1). The 'ground urged in support of the contention that the notification by the Controller was not in conformity 572 with cl. 1 1 B (1) was this: Whereas under cl. 1 1 B (1) the Controller was directed to fix the maximum prices which could be charged by three different classes, viz., (a) Producers, (b) Stockholders including Controlled stockholders, and (c) Other persons, the impugned ,notification departed from this scheme in two respects: (1) The clause contemplated that the notification should apply to all " producers " whereas " producers " other than " Registered producers " were wholly left out by the Controller with the result that no limitation was placed upon the price they could charge, (2) Whereas the clause directed the Controller to include both the types of stockholders" Registered " as well as " Controlled " within the same class and make the same limit of prices applicable to both, the notification had included only " Controlled stockholders " as the second category of dealers and " registered stockholders " had not been specified eo nomine by him. This meant either that "Registered stockholders " were wholly outside the class of dealers governed by the notification or that they were intended to be included in the residuary class in column III. On these premises learned Counsel urged that if " registered stockholders " like the second appellant were not within the notification, the prosecution must fail because the maximum prices chargeable by her had not been fixed. If on the other hand such dealers had been separated from " Controlled stockholders " and included in the residual category, such a classification was not countenanced by cl. 11 B(1) and was therefore ultra vires. We consider that these submissions are wholly without any substance. Before the argument that " producers " other than " registered producers " had not been included in the notification can be accepted, it has to be established that there is any such producer. There is a list of " registered producers " appended to the notification and learned Counsel admitted that he could not say that there were any besides these, who were "Producers" of iron and steel within the meaning of the Control Order. If therefore, every " producer " was registered, there is no scope for the argument that 573 any persons had been left out and permitted to sell at prices of their choice. The other part of learned Counsel 's argument that registered stockholders " were not governed by the notification because they were not included in column II thereof and that dealings by them were not subjected to the maxima of prices fixed by it, has only to be stated to be rejected. The heading of the last column shows that all categories of dealers other than "registered producers.," and " controlled stockholders " were included in the residuary category. The related contention that the Controller acted outside his powers in differentiating between " controlled stockholders " and " registered stockholders " and in fixing different maxima of prices that could be charged by the two categories of dealers, does not deserve serious consideration either. If we understand the classification aright, it is like one between wholesale dealers and retailers and it is on this basis that the maximum price that could be charged by the " Registered Stockholders " who fall under column III is fixed at Rs. 20/ per ton above that permissible to " Controlled Stockholders " in respect of the category of steel which we have extracted earlier. The classification which gives persons in the category of the appellants this advantage is certainly not one regarding which a complaint could be made. Even when this advantage conferred on registered stock holders by the classification by the Controller was pointed out to learned Counsel for the appellant he persisted in his argument that "registered stock. holders". should have been put in column II along with " controlled stockholders " and should have been permitted to sell only at the same maximum prices. This is sufficient to show that the argument regarding the classification was frivolous and could not have been urged with any seriousness. This apart, we consider that even on the terms of cl. 11 B (1), the Controller is not prevented from drawing a distinction within the three classes which are specified in it. The purpose and policy of the enactment is to ensure that an essential commodity like iron and steel is made available, to 574 the consumer at reasonable prices and in the achievement of this objective classification of producers or of other stockholders based upon rational grounds would obviously be within the power of the Controller. Taking for instance the last class (c) " any other person or class of persons," it cannot be that this group could not be sub classified, if there was any reason or necessity to do so. If head (c) is susceptible of this interpretation, as it obviously must, we see no reason why head (b) should not be similarly construed. We have therefore no hesitation in rejecting the contention of learned Counsel, that the notification of the Controller fixing maximum prices is beyond his power, as not warranted by the terms of el. 11 B (1) of the Control Order. The argument next advanced in challenge of the validity of the notification was, that some of the General Conditions appended to the notification were discriminatory of the class of "registered stockholders" as compared with the " controlled stockholders " invoking for this purpose article 14 of the Constitution. Learned Counsel did not challenge the legality of the creation of the equalisation fund by the allowances for what is termed as " place extra ". Learned Counsel, however, urged two matters wherein facilities had been afforded or price increases permitted, to " controlled stockholders" which were denied to " registered stockholders " and that these had been done without any rational basis. These were: (1) The 3rd of the special conditions for sale by " controlled stockholders " read: "The question of credit facilities will be a matter for negotiation between the customers and the controlled stockholders. " (2) Similarly, Condition 5 also relating to " controlled stockholders" read: ,The base prices are. for sizes and length available in Size. Customers requiring material cut to length or size not available in stock will be required to pay cutting and wastage charges agreed between the customers and the stockholders. " Coming now to the special conditions for sale " by persons other than producers and controlled stock holders, " i.e., the conditions which governed sales like those by the second appellant, special condition 1 575 read: " The base rates given in column III above are ex site and apply to sales by all persons other than Producers and Controlled Stockholders. . and are not subject to additional charges for cutting or for credit facilities. " Neither of these points cutting charges or credit facilities could be held to be discriminatory without a full investigation of the facts and circumstances which led to the imposition of these special conditions. Differentiation could never per se be discrimination, nor is there any presumption that the adoption of different rules for groups differently situated is unequal treatment violative of article 14. On the other hand, the presumption is the other way and the party that alleges unjustifiable discrimination should establish it to the satisfaction of the Court. We consider that there is no material on the basis of which an argument could be sustained that the special conditions to which learned Counsel adverted contained any element of unfair or irrational discrimination to attract article 14. There was a slight and subsidiary point raised in regard to the allowance of credit facilities and cutting charges. It was said that these charges were indeterminate and that the Controller having been directed by cl. 11 B (1) to fix definite maximum prices had departed therefrom by permitting increases of undefined amounts. This argument again has no substance. The base price for the commodity having been fixed, there are incidentals which by their very nature were incapable of definite quantification, since they were dependent on each individual case. This contention also we therefore reject. In passing, we might observe that the matter before this Court in Union of India vs Messrs. Bhana Mal Gulzari Mal (1) related to a prosecution for a contravention of a notification of an earlier date, but in terms identical with the present, except as to the prices, wherein the dealers in the commodity were classified in the same manner as has been done in the notification now before us and with the same general and special conditions. The respondent then before this Court was " a registered (1) ; 74 576 stockholder " who was being prosecuted for effecting sales in excess of the maximum prices fixed. The fact that on that occasion no contention was urged challenging the validity of the notification as beyond the powers of the Controller, on the grounds now put forward clearly indicates, that the matters now urged never appeared then, as a possible source of grievance to a party situated similarly as the second appellant. We hold that the notification fixing the prices together with the conditions appended thereto are valid and enforceable. The last point that remains to be dealt with, is the contention that the initiation of the prosecution against the appellants was invalid for non compliance with the requirements of section 11 of the Act. This Section runs : " 11. Cognizance of offences. No Court shall take cognizance of any offence punishable under this Act except on report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code (XLV of 1860). " Learned Counsel for the appellants urged that though two of the conditions specified by the statute, viz., (1) a report in writing, (2) by a public servant were satisfied, the third requisite, viz., that the report should set out the " facts constituting such offence " was lacking and that by reason of this defect the Magistrate could not lawfully take cognizance of the case against the appellants. In elaboration of this point learned Counsel pointed out that the report did not specify: (a) the date when the alleged sales took place, (b) the quantity sold, (c) the person in question who was the buyer and who paid the excess over the controlled price, (d) the class or category of iron and steel which was the subject of the sale by the appellants, (e) the precise maximum price which had been fixed for such variety, (f) the amount which the appellants were alleged to have received in excess. The learned Judge of the High Court rejected this contention and, in our opinion, correctly. In the report which we have already extracted the provision 577 of the law which the appellants were stated to have contravened was set out, and it was there stated that being " registered stockholders " they had sold the goods above the price notified and that they had further, in order to conceal their crime, fabricated evidence. It is to be noticed that the report is required to contain only " a statement of facts constituting the offence " and its function is not to serve as a chargesheet against the accused. The function or purpose of the second of the above three requirements of section 11 is to eliminate private individuals such as rival traders or the general public from initiating a prosecution and for this purpose before cognizance is taken the complaint is required to emanate from " a public servant ". The two further requirements, viz., that the report should be in writing and regarding the contents of the report, are to ensure that there shall be a record that the public servant is satisfied that a contravention of the law has taken place. If the contravention in question is sufficiently designated in the report, and in the present case that cannot be disputed, since besides a reference to the notification stated to have been contravened, the report states that the accused had effected sales above the maximum prices specified in the notification, the requirements of the section are satisfied. The details which would be necessary to be proved to bring home the guilt to the accused and which comprised the several matters enumerated by learned Counsel which we have set out, will be details which would emerge at a later stage, when after notice to the accused a charge is framed against them, and of course at the stage of the trial. They would all be matters of evidence and section 11 does not require the report to be or to contain either the charge sheet or the evidence in support of the charge, its function being merely to afford a basis for enabling the magistrate to take cognizance of the case. In support of his submission regarding the construction of section 11 reliance was placed on two decisions: Dr. N. G. Chatterji vs Emperor (1) and Rachpal Singh vs (1) 578 Rex (1). Both these were cited before the learned Judge and we agree with the manner in which he has dealt with and distinguished them. No doubt, in both these cases it was held that the requirement of r. 130 (1) of the Defence of India Rules (whose language was similar to is. 11 of the Act) as to the Statement of " facts constituting the contravention " was not complied with, but the " reports " dealt with in them, bear no resemblance to the report in the case before us. In the first of these decisions, the recital in the report was that the accused was guilty of a " prejudicial act to the interest of the public " and " had prejudiced the success of financial measures with a view to the efficient prosecution of the war ". These words were held to be absolutely vague, even the particular rule or provision of law which was said to have been contravened, not even being mentioned in the report. The other decision in 50 Criminal Law Journal does not bear any analogy to the present case either. The report there in question ran: "On the statement of the informant an offence under section 81(2), Defence of India Rules, has been committed for which the charge sheet is being submitted." On this it was held that the facts alleged to constitute the contravention were not set out in the report and that the Magistrate had therefore no jurisdiction to take cognizance of the case. Obviously this case could not assist the learned Counsel to sustain a contention that the report in the present case was defective. We consider that the report on which the prosecution was launched satisfied the requirements of section 11 of the Act. In the result the appeal fails and is dismissed. Appeal dismissed.

A police officer made a report under section 11 of the Essential Supplies (Temporary Powers) Act, 1946, regarding a contravention of cl. 11 B(III), Iron and Steel (Control of Production and Distribution) Order, 1941, read with section 8 of the Essential Commodities Ordinance, 1955, to the Magistrate against the appellants who were registered stockholders that they had sold iron bars at prices higher than the controlled rate. After enquiry the Magistrate framed a charge against the appellant under section 7, Essential Supplies (Temporary Powers) Act, 1946, read with cl. 11 B(III) of the Control Order. The appellants contended that the charge ought to be quashed on the grounds, (i) that the notification of the Controller fixing the maximum sale price of the several categories of iron and steel was ultra vires the rule making power in cl. 11 B(i) of the Control Order, (ii) that the notification was discriminatory and violated article 14, and (iii) that the complaint could not be taken cognisance of by the Magistrate because the report of the police officer did not set out the facts constituting the offence as required by section II of the Act. The first two grounds were raised for the first time before the Supreme Court. Held, that the notification fixing the rates was intra vires cl. 11 B(i) of the Control Order. The notification did not omit any class mentioned in cl. 11 B(1) from its purview; it included 564 "registered producers" and it was not shown that there were any "producers " other than " registered producers " enumerated in the notification. The notification governed " registered stockholders " also as they were included in the residuary category of persons other than " registered producers " and " controlled stockholders ". The notification was not discriminatory and did not offend article 14 of the Constitution. The notification no doubt permitted the grant of credit facilities and the right to charge for cutting and wastage in sales to " controlled stockholders " but not to " registered stockholders " in regard to sales by them. Differentiation was not per se discrimination. There was no material to show that there was any unfair or irrational discrimination which could attract article 14. Held, further, that the police report on which the prosecu tion was launched satisfied the requirements of section II of the Act. The purpose of section II was to eliminate private persons from initiating prosecutions and to confine it to public servants. The requirement of the section that the report should be in writing and should set out the facts constituting the offence was to ensure that there was a record that the public servant was satisfied that a contravention of the law had taken place. If the contravention was sufficiently designated in the report the requirements of the section were satisfied. Section II did not require the mention in the report of details which would be necessary to be proved to bring home the guilt to the accused. Dr. N. G. Chatterji vs Emperor and Rachpal Singh vs Rex , not applicable. Additional grounds, other than those urged before the High Court, would not be permitted to be raised before the Supreme Court as a matter of course, but only, in exceptional circumstances like cases of subsequent legislation or where questions of fundamental and general importance were raised.

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

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

Appeal No. 84 of 1958. Appeal by special leave from the judgment and order dated December 22/23, 1955, of the Calcutta High Court in I.T.R. No. 24 of 1953. N. C. Chatterjee, D. P. Pal and D. N. Mukherjee for the appellant. Hardayal Hardy and D. Gupta, for the respondent. January 17. The Judgment of the Court was delivered by SHAH, J. Messrs. National Cement Mines Industries Ltd. hereinafter referred to as the appellants are a public limited company incorporated to " carry on the 65 504 business of cement and lime manufacture and also of limestone supply and for the purposes of such businesses to acquire rights and concessions pertaining to limestone, coal and surface lands from the Dewar khand Karanpura Mines and Industries Ltd." and also to " work mines or quarries and to find, win, get, work, etc. or otherwise deal with clay and bauxite." Dewarkhand Karanpura Mines and Industries Ltd. hereinafter called the " Karanpura Company " had obtained three leases on November 29, 1930, first for mining limestone from Maharaja Pratap Narain Udai Nath Shah Deo from limestone beds in certain villages in Dewarkhand, second from Maharaj Kumar Nand Kishore Nath Shah Deo of the surface rights neces. sary to exercise the powers and privileges in respect of the first lease and the third from Maharaj Kumar Raj Kishore Nath Shah Deo of surface rights in respect of Hoyer village. The period in each of the three leases was thirty years. On March 17, 1932, the Karanpura Company conveyed the rights and options under the three leases to the appellants. On September 30, 1934, the appellants acquired the limestone and surface rights in respect of limestone beds in village Umedanda for 95 years from Maharaja Pratap Narain Uday Nath Shah Deo and Maharaj Kumar Raj Kishore Nath Shah Deo. On the same date, the appellants entered into two agreements, one with Maharaja Pratap Narain Uday Nath Shah Deo which is called the ,bauxite option agreement " thereby acquiring the first option to take a lease or leases of any area or areas of bauxite deposits in certain villages, and another from the said Maharaja for the first option to take a lease or leases of limestone beds in the Tori District. By a fourth agreement also dated September 30,1934, between the Karanpura Company, Maharaja Pratap Narain Udai Nath Shah Deo acting with the consent of Maharaj Kumars Raj Kishore Nath Shah Deo and Nand Kishore Nath Shah Deo, the royalties reserved under the original deeds dated November 29, 1930, were reduced and the periods of the leases were extended to 99 years from the date of the original leases, 505 By deed dated May 7,1935, the appellants conveyed to Dewarkhand Cement Company Ltd. (which later came to be known as Associated Cement Ltd. and will be referred to hereinafter by that name) the benefits of the four leases and the two agreements for the unexpired periods. By this deed, for a present consideration of Rs. 25,000 " for trouble and expenses in obtaining the leases and agreements " and for further payment under several covenants which will be presently set out, the appellants conveyed the rights vested in them subject to certain reservations. In the year of account June 1, 1944, to May 31, 1945, the appellants received from the Associated Cement Ltd. under the first covenant of the deed, Rs. 77,820 being the amount computed at the rate of 0 13 As. per ton of cement manufactured from limestone won from the lands and sold by the company. The Income tax Officer, Companies District 1, Calcutta, included this amount in the total assessable income of the appellants in the assessment year 1946 47. This order was confirmed in appeal by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal. At the instance of the appellants, the Tribunal referred the following question with another not material for this appeal to the High Court of Judicature at Calcutta: " Whether on a proper construction of the Deed of Assignment dated 7th of May, 1935, and on the facts and in the circumstances of this case, the Tribunal was right in holding that, the sum of Rs. 77,820 represented a receipt of a revenue nature in the hands of the Applicant and assessable as such The following facts were held proved by the Tribunal. The principal objects of incorporation of the appellants were to carry on the business of manufacturing cement and lime and sale of limestone and the appellants were formed with the object of acquiring the rights and concessions of the Karanpura Company. By their Memorandum of Association, the appellants were authorised to sell or dispose of the undertakings or any part thereof as they thought fit, 506 and to sell, lease, mortgage, dispose of, turn to account or otherwise deal with all or any part of their property and rights and in pursuance of these objects the rights and concessions of the Karanpura Company were acquired and extension of leases and concessions were obtained and were transferred to the Associated Cement Ltd. The appellants were therefore carrying on in the year of account 1944 45 the business for which they were incorporated. After reciting the prefatory clauses, it was stated in the deed: "WHEREAS it was agreed inter alia that the Purchaser should pay to the Vendor the sum of Rupees twenty five thousand for trouble and expenses in obtaining the leases and agreements dated the thirtieth day of September one thousand nine hundred and thirty four hereinbefore recited and hereinafter expressed to be hereby transferred and Whereas the Purchaser hath paid to the Vendor the said sum of rupees twenty five thousand as the Vendor doth hereby acknowledge NOW THIS INDENTURE WITNESSETH that in con. sideration of the covenants on the part of the Purchaser hereinafter contained the Vendor hereby grants assigns and transfers unto the Purchaser and the Karanpura Company at the request and by the direction of the Vendor hereby grants assigns transfers and confirms unto the Purchaser:". The deed then proceeds to set out the description of the various leases and concessions and agreements and the covenants which the Associated Cement Ltd. undertook in favour of the appellants. These covenants are: (1) That it will pay to the Vendor a sum equal to thirteen annas in respect of every ton of cement sold by it which shall have been manufactured from the limestone won by it from the lands hereby transferred and comprised in the hereinbefore recited leases and agreements. (2) That it will not sell any Fluxstone won by it from the said lands to the Tata Iron and Steel Company Ltd., at a price less than Rupees one and annas 507 fourteen per ton F. O. R. the siding nearest to the quarry or place from which it shall be won without the consent of the Vendor. (3) That it shall pay to the Vendor one half the profit( if any) which it shall make by selling Fluxstone to the Tata Iron & Steel Company Ltd.,or to any other person such profits to be ascertained after deduction from the price received all costs, charges and expenses including the royalty payable to the Maharaja in respect thereof but before educting overhead charges. Such accounts to be closed and adjusted on the thirtieth day of June and the thirty first day of December in each and every year. (4) That it will not grant to the Tata Iron & Steel Company Ltd., the right to quarry and remove Fluxstone from the lands hereby transferred at a royalty of less than ten annas per ton, and will pay to the Vendor one half of any royalty so charged and received. (5) That in the event of the payments made under clauses one, three and four above in any one year not amounting to the minimum hereinafter set out the Purchaser shall pay in lieu and in full discharge there for the following minimum: (a) During the first year to be computed from the first day of January one thousand nine hundred and thirty five, rupees ten thousand. (b) During the second year rupees thirty thousand. (c) During every subsequent year rupees fifty thousand. Out of the above minimum payment of rupees fifty thousand per year for the purposes of account, the sum of rupees twenty thousand shall be deemed to have been paid in respect of payment under clause three above. (6) That the Purchaser or the persons deriving title under the Purchaser will at all times from the date hereof duly pay all rents, royalties and payments becoming due under the (four) hereinbefore recited Indenture of Lease (,subject as regards the Limestone lease to the modifications effected by the agreement for 508 reduction of royalty dated the thirtieth day of September one thousand nine hundred and thirty four hereinabove recited) in respect of the premises agreements options rights or benefits hereby assigned and transferred and observe and perform the covenants agreements stipulations and conditions therein contained and henceforth on the part of the Lessee or grantee to be observed and performed in respect of the aforesaid premises or under the said Bauxite agreement or under the said Tori Option agreement or under the said agreement for reduction of royalty And also will at all times from the date hereof save harmless and keep indemnified the Vendor its successors and assigns from and against all proceedings costs claims and expenses on account of any omission to pay the said rent, royalty or payments or any breach of any of the said covenants agreements stipulations and conditions. (7) That the Purchaser will not work raise remove or use stone or clay in the properties comprised in the leases and agreements hereby transferred to it for making lime. (8) That the Purchaser shall not by any of its actions or omissions cause leases and agreements, mentioned above and in respect of properties hereby transferred, to be determined, or the rights thereunder, including the right of renewal, to be prejudiced. (9) That in areas comprised in the leases and agree. ments hereinabove expressed to be hereby assigned and not containing limestone the Vendor 's rights under leases and agreements from the Maharaja of Chotanagpur or Maharaj Kumar Nand Kishore Nath Shah ' Deo other than the leases and agreements above referred to shall not be jeopardised or affected by this Indenture. (10) That the clay and shales lying within areas, which do not contain Limestone, can be removed and utilised by the Vendor for all purposes except that of cement manufacture. The deed then proceeded after setting out certain other covenants: 509 " AND IT IS HEREBY EXPRESSLY AGREED AND DECLARED that if the Limestone within the areas comprised in the Leases hereby transferred available for manufacturing cement is exhausted the Purchaser will be entitled to determine this Indenture on giving to the Vendor six months ' notice in writing in which case the Purchaser, if so required, will retransfer the leases and agreements aforesaid. " By clauses (1), (3) and (4), the Associated Cement Ltd. undertook to make certain payments to the appellants. By cl. (1) they agreed to pay 0 13 As. for every ton of cement manufactured from the limestone won from the lands and sold; by el. (3), the Associated Cement Ltd. agreed to pay half the profits which they made by selling Fluxstone to the Tata Iron & Steel Co., or to any other person; and by el. (4), they agreed to pay half the royalty received from the Tata Iron & Steel Company for the right to quarry and remove fluxstone from the lands. By clause (5), provision was made for minimum payment in the event of the aggregate under cis. (1), (3) and (4) not reaching the sums specified therein. Clauses (2), (4), (7), (8) and (9) were in the nature of restrictive covenants. By cl. (2), the Associated Cement Ltd. were prohibited from selling any fluxstone won from the lands to the Tata Iron & Steel Company for less than Re. 1 14 As. per ton F. O. R. By cl. (4), an obligation not to convey the right to quarry and remove fluxstone for royalty less than 0 10 As. per ton was imposed. By el. (7) the Associated Cement Ltd. undertook not to remove or use or allow any one to raise work, remove or use stone or clay in the lands. By cl. (8), the Associated Cement Ltd. undertook not to do any acts or omissions causing the leases and agreements to be determined or the rights thereunder to be prejudiced. By cl. (9), rights of other persons under leases and agreements in lands not containing limestone were not to be affected. By el. (10), the right of the appellants to utilise clay and shale lying within the areas not containing limestone except for the purpose of manufacturing cement was retained, There were certain exceptions 510 to this and the ninth clause whereby the Associated Cement Ltd. were entitled to excavate, use or remove all kinds of clays in and from the areas within the boundary lines marked in the plan and they were also authorised to make permanent structures and use certain strips of lands. By el. (6) the Associated Cement Ltd. agreed to pay rent stipulated under the original leases and agreements and also undertook to keep indemnified the appellants from and against all proceedings, costs, claims and expenses on account of any omission to pay the rent royalty or payments or any breach of any of the covenants agreements and the leases. There was also the covenant authorising the Associated Cement Ltd. to terminate the deed in the event of limestone in the land comprised in the leases being exhausted. The appellants undoubtedly did not part with all their rights in favour of the Associated Cement Ltd. by this deed dated May 7, 1935. The consideration under the deed consisted of a fixed component and annual payments fluctuating with the business activity of the Associated Cement Ltd. A fixed amount of Rs. 25,000 was paid " for trouble and expenses in obtaining the leases and agreements " and additional payments were to be made under cls. (1), (3) and (4) subject to the minimum prescribed by el. It is difficult to categorise a transaction of this character. It is not a conveyance of all the rights of the appellants nor can it be regarded as a sale even of the rights which were conveyed. Numerous restrictions were imposed by the deed upon the rights of the transferee which were inconsistent in their very nature with the character of a sale, and the covenant authorising termination of the deed in the event of the limestone being exhausted removes all doubt in that behalf. Nor is it a lease : it is not a transfer of a right to enjoy property for a certain time in consideration of periodical payments. It also does not evidence a transaction in the nature of a joint venture between the appellants and the Associated Cement Ltd. Cement was to be manufactured by the Associated Cement Ltd, out of limestone to be won from the lands 511 and in consideration of the rights conveyed, payments at specified rates were agreed to be made out of the price to be obtained by sale of cement, fluxstone and limestone. The appellants had no control over the production of limestone and manufacture of cement, or on the sale of fluxstone and limestone. But in assessing the true character of the receipt for the purpose of the Income tax Act, inability to ascribe to the transaction a definite category is of little consequence. It is not the nature of the receipt under the general law but in commerce that is material. It is often difficult to distinguish whether an agreement is for payment of a debt by instalments or for making annual payments in the nature of income. The court has, on an appraisal of all the facts, to assess whether a transaction is commercial in character yielding income or is one in consideration of parting with property for repayment of capital in instalments. No single test of universal application can be discovered for solution of the problem. The name which the parties may give to the transaction which is the source of the receipt and the characterization of the receipt by them are of little moment, and the true nature and character of the transaction have to be ascertained from the covenants of the contract in the light of the surrounding circumstances. The decision of the question is however not left to the application of any arbitrary standards. There are certain broad principles which guide the determination of the character of the receipt. The distinction between a capital receipt and revenue receipt though fine is real. The dividing line may be thin, and often at first sight imperceptible. Where capital is repaid in instalments, it is not liable to income tax; for instance when a person sells his property and agrees to receive the price stipulated in instalments, by whatever name such instalments are called, they are not liable to income tax see Foley vs Fletcher (1), Secretary of State in Council of India vs Andrew Scoble (2), Oswald vs Kirkcaldy Magistrates and Commissioners of Inland Revenue vs Ramsay (4). (1) ; (2) ; (3) (4) 66 512 But where property is conveyed in consideration of what in truth is annuity payable for a definite or a definable period, the annuity is not payment on capital account and is taxable see State of Bihar vs Sir Kameshwar Singh (1), Captain Maharajkumar Gopal Saran vs Commissioner of Income tax, Bihar and Orissa (2), Chadwick vs Pearl Life Assurance Co. (3). Again, if property is conveyed in consideration of periodical payments, the payment being a share of profits of a business or profession (William John) Jones vs Commissioners of Inland Revenue(4), or a mineral royalty depending upon the quantity of minerals raised Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of Income tax, Bihar and Orissa (5), or computed on sales of manufactured articles Commissioners of Inland Revenue vs 36149 Holdings, Ltd. (6), or a percentage of gross profits made in the exploitation of a secret process Delage vs Nugget Polish Co., Ltd. (7), is income and taxable. Counsel for the appellants submitted that the receipt under clause (1) of the terms of the deed dated May 7, 1935, was in the nature of capital payment and relied upon certain decisions in support of that submission. In Minister of National Revenue vs Catherine Spooner(8), decided by the Judicial Committee of the Privy Council in an appeal from the Supreme Court of Canada, the respondent Catherine Spooner had sold her rights, title and interest in land owned by her in freehold to a company in consideration of a certain sum in cash, besides shares of the company, and an agreement to deliver 10% of oil produced from the land on which the company covenanted to carry out drilling and, if oil was found, pumping operations. These were described as royalties. Oil was struck in the lands and the respondent was paid 10 of the gross proceeds of the oil produced in lieu of oil. The (1) (5) (1943) L.R. 70 I.A. 180. (2) (6) (3) (7) (1906) 2r Times Law Reports 454. (4) 10 (8) , 513 Supreme Court of Canada held that the sum so received was not an annual profit or gain within the meaning of section 3 of the Income War Tax Act, but a receipt of a capital nature and therefore not chargeable to tax. According to the Judicial Committee, there was between the respondent and the company no relation of lessor or lessee: the transaction was one of sale and purchase, and the transaction had taken the form which it did because of the uncertainty whether oil would be found by the purchaser. As the value of the land depended on this contingency, the price, not unnaturally was made to depend in part on the event of oil being struck. The judgment lays down no new principle; it proceeded merely upon interpretation of the document in the light of the circumstances. In Trustees of Earl Haig vs Commissioners of Inland Revenue (1), the question which fell to be determined was whether a share of the royalties received in consideration of allowing the use of the diaries of the late Earl Haig for writing his biography were, in the hands of the trustees under the will of Earl Haig, capital receipts. That was undoubtedly a case in which payments received by the trustees were dependent upon the professional activities of the author and the proceeds derived from the sales of the biography he wrote. By the agreement, the author was authorised to extract and publish from the diaries what he thought fit. The diaries were undoubtedly an asset, and after they were used by the author for publication of the biography, their value as an asset was, if not wholly, largely exhausted and their future value was negligible. The agreement was therefore regarded as conveying an asset in its entirety to the author in consideration of a share in the royalties and the receipt of this share was regarded as receipt of capital. That decision proceeded upon the special character of the agreement and the nature of the asset transferred and did not seek to lay down any general principle. In Nethersole vs Withers (2), N who had acquired under an agreement the exclusive right to dramatise (1) (2) 514 a novel of Rudyard Kipling received under an agreement with the widow of the author, a third share of a lump sum for which the sound and film rights were granted exclusively to a film company for a period of ten years. The film right of a comprehensive character having been granted by the legal representative of the author against payment of the sum stipulated, the question arose whether the payment received by N was taxable under the Income Tax Act under Case II of Schedule D or under case VI of Schedule D. It was held that N having ceased to be the owner of the portion of the copyright she had assigned, the proceeds were not annual profits or gains within the meaning of Schedule D, Case VI. That was a case in which N had wholly sold and disposed of a part of the property and the amount received by her was the price paid in lump and was not in the nature of income. That case also proceeded upon the special character of the transaction. The case of The Commissioners of Inland Revenue vs The Marine Steam Turbine Co., Ltd. (1) on which reliance was sought to be placed by counsel for the appellants needs no detailed consideration. In that case, a company which was on the facts found not carrying on a trade or business was held not assessable to Excess Profits Duty, because the condition of liability was the carrying on of trade or business. The appellants had however not sold the entirety of the rights acquired by them from the Karanpura Company. The conveyance was subject to several restrictions and the appellants retained in part rights in the land conveyed. The transaction was substantially a commercial transaction for sharing the profits of the commercial activities of the Associated Cement Ltd. The High Court was therefore right in holding that the transaction dated May 7, 1935, was a commercial transaction and the payment under cl. (1) thereof at the rate of 0 13 as. 'per ton of cement sold was of the nature of income and not capital. In that view of the case, the appeal fails and is dismissed with costs. Appeal dismissed. (1) ; [1920] I K.B. 193.

The appellants were carrying on the business of cement and lime manufacture and supply thereof. By a deed dated May 7 ' 1935, the appellants conveyed to the Associated Cement Ltd. the rights which had vested in them under an earlier conveyance made in their favour by a company known as Karanpura Cod Under the deed the appellants reserved to themselves the right to receive from the Associated Cement Company a sum equal to thirteen annas in respect of every ton of cement sold by it which shall have been manufactured from the limestone won by it from the lands transferred and comprised in the leases and agreements. Pursuant to this stipulation in the year of account, the appellants I received from the Associated Cement Ltd. Rs. 77,820. The Income tax Officer included this amount in the total assessable income of the appellants in the assesment year and his order was confirmed by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal. The contention of the appellants before the High Court in a reference under section 66 of the Indian Income tax Act that on a proper construction of the deed and on the facts and circumstances of the case the sum of Rs ' 77,820 did not represent receipt of a revenue nature in the hands of the appellants and was not assessable as such, was negatived. Held, that the deed did not incorporate a transaction of either sale or lease. The conveyance was subject to several restrictions and the appellants retained in part, rights in the land conveyed. The transaction was substantially a transaction for sharing the profits of the commercial activities of the Associated Cement Ltd. and the receipt under cl. 1 of the deed was of the nature of income and not capital and as such assessable to tax. 503 Foley vs Fletcher, ; , Secretary of State in Council of India vs Andrew Scoble, ; , Oswald vs Kirkcaldy Magistrates, , Commissioners of Inland Revenue vs N Ramsay, (1935) 20 T.C. 79, State of Bihar vs Sir Kameshwar Singh, [1952] 21 I.T.R. 382, Captain Maharajkumar Gopal Saran vs Commissioner of Income tax, Bihar & Orissa, and Chadwick vs Pearl Life Assurance CO., , considered and applied. In assessing the true character of the receipt for the purpose of the Income tax Act, inability to ascribe to the transaction a definite category is of little consequence. It is not the nature of the receipt under the general law but in commerce that is material. It is often difficult to distinguish whether an agreement is for payment of a debt by instalments or for making annual payments in the nature of income. The court has, on an appraisal of all the facts, to assess whether a transaction is commercial in character yielding income or is one in consideration of parting with property for repayment of capital in instalments. No single test of universal application can be discovered for solution of the problem. The name which the parties may give to the transaction which is the source of the receipt and the characterization of the receipt by them are of little moment, and the true nature and character of the transaction have to be ascertained from the covenants of the contract in the light of the surrounding circumstances. The decision of the question is however not left to the application of any arbitrary standards. There are certain broad principles which guide the determination of the character of the receipt. The distinction between a capital receipt and revenue receipt though fine is real. The dividing line may be thin, and often at first sight imperceptible.

Appeal No. 204/1956. Appeal from the judgment and decree dated February 23, 1951, of the Madras High Court in O. section Appeal No. 13/1948. R. Keshva Aiyangar and M. section K. Aiyangar, for the appellant. A. V. Viswanatha Sastri and Naunit Lal, for .respondent No. 1. B. K. B. Naidu, for respondent No. 6. 1961. January 27. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal arises out of a suit filed by the respondent M. Raghava Mudaliar who claims to be the reversioner of Madhava Ramanuja Mudaliar. In his suit the respondent alleges that after the death of Madhava Ramanuja Mudaliar which took place on March 22, 1893, his property came into the possession of his widow Manickammal. Sub sequently the said Manickammal and Rengammal, the widowed mother of the deceased Madhava Ramanuja Mudaliar alienated the properties without any legal necessity. According to the respondent the said alienation was not binding on him and so he was entitled to recover possession of the said property free of any encumbrance or charge. Manickammal died on October 18, 1941, whereas Rengammal died in June, 1921. On the death of the widow Manickammal reversion fell open and that has given a cause of action to the respondent for his present suit. Madhava Ramanuja Mudaliar died issueless and was survived by his widow, his widowed mother, his sister Andalammal and the respondent and his sister Apurupammal who are the children of Ammakannu Ammal the second sister of Madhava Ramanuja Mudaliar, and Ethirajammal the daughter of the third sister of Madhava Ramanuja Mudaliar. To his suit the respondent impleaded the appellant Andalammal, Krishnasami Mudaliar, son of the said Apurupammal (defendant 1) and Susila Bai Ammal daughter of 626 Ethirajammal as defendants 2 to 4. The Udayavar Temple by the sole trustee Bysani Krishnaiah Chetty was joined as defendant 5. After her husband 's death Manickammal obtained letters of administration to his estate from the High Court at Madras. It appears that the relations of the widow with her mother in law were embittered, and that led to disputes between them. These disputes were settled by the two widows in pursuance of the advice of certain arbitrators who mediated between them. The settlement thus reached was recorded in writing on May 27, 1893 (exhibit D 2). It would be relevent to refer to the main terms of the settlement at this stage. This settlement set out the properties covered by it as Serial Nos. 1 to 5. Item No. 1 which was a house in three blocks was divided between the respondent and his sister Apurupammal who were to take one share; Ethirajammal who was to take another share; and Andalammal who was to take the third share. House No. 62, which, was Serial No. 2, and houses and shops Nos. 126 and 127 which were shown as Serial No. 3 were agreed to be sold, and it was settled that out of the sale proceeds the debts of the deceased Madhava Ramanuja Mudaliar and his father should be discharged; expenses incurred in obtaining the letters of administration should then be deducted along with the expenses of sale, and the balance should be divided equally between the two widows subject to a payment of Rs. 1,000/ to the mother in law in lieu of her jewels. The two cawnies of lands which were Serial No. 4 were agreed to be given to the maternal uncle of the deceases Madhava Ramanuja Mudaliar, whereas the moveables which were shown as Serial No. 5 had to be divided half and half between the two widows. This document con tained a clause which provided that " in case any one of us contravenes the terms the other party shall not only cancel this agreement but his title to the estate of Madhava Ramanuja Mudaliar prior to the agreement shall in no way be affected subject to. which this agreement has been entered into. " The document thus executed was attested by four attesting witnesses. 627 It appears that soon after this agreement was finalised, Krishnasamy Mudaliar, defendant 3, objected to its validity and disputed the right of the widows to deal with the property in the manner specified in it. He was, however, persuaded to abandon his objections. ' and a sale deed was executed by him conveying his reversionary rights to the two widows for consideration ' on September 10, 1894. By this document defendant 3 purported to recognise and grant an absolute title to the two widows in regard to the estate of the deceased (exhibit D 3). Subsequent to this document the two widows began to enjoy the properties as agreed between them. On February 4, 1895 the two widows sold item No. 1 in Schedule 11 attached to the plaint, i.e., Nos. 126 and 127, Anna Pillai Street and Audiappa Naick Street respectively to Thatha Venkata Raghava Subbu Chetty. The appellant is the successor in title of the said division in respect of the said item No. 1 in Schedule II. In the present appeal we are concerned only with this item. On May 27, 1895, a composite deed of partition and administration of property of the deceased was executed by and between the two widows (exhibit D 5). By this document the three blocks in the house shown as Serial No. 1 in exhibit D 2 were delivered into the possession of the respective donees. The maternal uncle of the deceased was given two cawnies of lands as therein stipulated and the debts of the deceased were discharged and expenses incurred in respect of the letters of administration were met. It is under these circumstances that the respondent filed his present Suit No. 56 of 1946 on the Original Side of the Madras High Court;. and he claimed that the alienations made by the two widows were not binding on him and he was entitled to the possession of the property left by the deceased Madhava Ramanuja. The schedule attached to the plaint referred to four items of property, and as we have already pointed out it is only with item No. 1 out of these four items with which we are concerned in the present appeal. 628 In regard to the said item the appellant urged that the agreement between the two widows (exhibit D 2) and the subsequent composite deed executed in pursuance of it (exhibit D 5) were in the nature of a family arrangement, and as such they were binding on the respondent. In was also alleged by the appellant that the respondent had received benefit under the said arrangement and by his conduct had ratified it. The appellant further pleaded that the transfer in favour of his predecessor was supported by legal necessity. Incidentally a plea of surrender was also raised by the appellant. Mr. Justice Kunhiraman, who tried the suit, held that there was a family arrangement which bound the respondent. He also observed that the respondent had received benefit under the said arrangement and was therefore precluded from challenging its validity. The learned Judge incidentally made some observations which showed that he was inclined to uphold the plea of surrender raised by the appellant. In the result the respondent 's suit was dismissed. The respondent then took the matter in appeal and succeeded. The appeal court held that the impugned arrangement cannot be said to be a bona fide family settlement which would bind the respondent. Before the appeal court it was conceded that the plea of surrender raised by the appellant could not be sustained, and that the contention that the respondent was bound by the family arrangement could not also be sustained. It was, however, urged on behalf of the appellant that the respondent 's conduct precluded him from disputing the validity of the arrangement but this argument was rejected by the appeal court; likewise, the contentions that the transfer in favour of the appellant 's predecessor was justified by legal necessity also failed. As a result of these findings the respondent 's appeal was allowed, the decree passed by the trial court was set aside, and the claim for possession made by the respondent was decreed. The respondent 's suit was accordingly directed to go before the Official Referee for ascertainment of mesne profits 629 claimed by him. It is against this decree that the appellant has come to this Court in appeal. The principal point which has been urged before us by Mt% R. Keshav Aiyangar on behalf of the appellant is that in substance the respondent has ratified the impugned transaction, has received benefit under it, and by his conduct has affirmed it, and so it is not open to him to challenge its validity and binding character. In support of this argument he has canvassed for our acceptance the proposition that if a person with full knowledge of his rights assents to a transaction which may otherwise be voidable at his instance and takes benefit under it, he is subsequently precluded from disputing its validity. In support of this argument he has relied on a decision of this Court in Sahu Madho Das vs Pandit Mukand Ram (1). In that case this Court has held that it is settled law that an alienation by a widow in exercise of her powers is not altogether void but only voidable by the reversioners who may either singly or as a body be precluded from exercising their right to avoid it either by express ratification or by acts which treat it as valid or binding. This Court also observed that it is a principle of general application underlying many branches of the law that a person who with full knowledge of his rights has once elected to assent to a transaction voidable at his instance and has thus elected not to exercise his right to avoid it, cannot go back on that election and avoid it at a later stage ; having made his election he is bound by it. The argument is that though the respondent may not be a party to the impugned transaction, if by his conduct it can be said that he has elected to uphold it and has received benefit under it he cannot be allowed to go back upon the election. There is of course no doubt about the correctness of the principle thus enunciated, but the difficulty in the way of the appellant arises when the applicability of the said principle is tested in the light of the relevant material findings in that case. That is why it is necessary to refer very briefly to the findings of fact on which the decision in Sahu (1) ; , 630 Madho Das 's case (1) rests. In that case this Court considered the question as to whether the plaintiff Mukand Ram had assented to the impugned family arrangement, and observed that as he was not a party to the arrangement his assent to the arrangement itself and not to something else must be clearly established, and also his knowledge of the facts. Then, having thus posed the question the material evidence was examined, and it. was held that the cumulative effect of the said evidence led to the reasonable inference that the plaintiff 's assent was to the very arrangement itself, and his conduct as well as the conduct of his brother Kanhaiya Lal was consistent only with that hypothesis; in other words, the examination of the material evidence justified the inference that Mukand Ram had in fact elected to assent to the transaction and had received benefit under it, and so the doctrine of election or ratification precluded him from disputing the validity of the said transaction. It is, however, significant that dealing with the case of the minor sons, who were not parties either personally or through their guardians, and who did not claim title either through Pato or her daughters, this Court expressly observed that so far as they were concerned what they received were gifts pure and simple and the only assent that could be inferred from the mere acceptance of the gifts and nothing more would be assent to that particular gift and not assent to the gifts similarly made to others. This observation brings out in bold relief by contrast the relevant findings in the light of which the plaintiff was held precluded from disputing the validity of the impugned transaction. The appellant has also relied on another decision of this Court in Dhiyan Singh vs Jugal Kishore (2). In that case it was held that even if the impugned award was invalid the plaintiff who disputed its validity was barred from making that claim by reason of estoppel. Brijlal against whom the plea of estoppel was effectively raised appeared to have made a claim to the estate in question in 1884 when the impugned (1) [1955] a S.C.R. 22. (2) [1952] S.C.R. 478. 631 transaction took place,, and it was as a result of this claim that settlement was reached and the impugned transaction effected. This Court held that even if the award which was challenged was invalid Brijlal by his conduct had precluded himself from raising the contention against the validity of the award. In , coming to this conclusion this Court observed that, the case before it was very similar to the one which the Privy Council had decided in Kanhai Lal vs Brij Lal (1). When we turn to the Privy Council decision itself we find that Kanhai Lal, who was held by the Privy Council to be precluded from challenging the arrangement to which he was a party, had set up a title in himself on the strength of an alleged adoption, and when, having regard to the said title, a settlement was reached and a compromise arrangement was made, it was held by the Privy Council that the doctrine of estoppel came into play. Kanhai Lal, who subsequently became a reversioner according to the Privy Council, was bound by the previous arrangement and " cannot now claim as a reversioner. " These two decisions also emphasise, the fact that if a person having full knowledge of his rights as a possible reversioner enters into a transaction which settlers his claim as well as the claim of his opponents at the relevant time, he cannot be permitted to go back on that arrangement when reversion actually falls open. There are two other decisions of the Privy Council to which reference may be made. In Rangaswami Gounden vs Nachiappa Gounden (2) the Privy Council had to deal mainly with the question of surrender, its theory and its essential features. Incidentally it had also to deal with the case of reversioner who had taken from an alienee from a Hindu widow a mortgage of a property which included a part of the property alienated, and the question raised was whether by reason of the fact that the reversioner had a mortgage of the said property he was precluded from challenging the validity of the said alienation; and the Privy Council held that he was not so precluded. In dealing with this aspect of the question the Privy Council (1) (1919) L.R. 45 I.A. 118. (2) (1918) L.R. 40 I.A. 72. 632 observed that it is well settled that though he who may be termed a presumptive reversionary heir has a title to challenge an alienation at its inception, he need not do so, but is entitled to wait till the death of the widow has affirmed his character, a character which up to that date might be defeated by birth or by adoption The Privy Council then examined the nature of the mortgage, the properties included in it, and observed that the said mortgage consisted of 2/14ths of the mitta which had come to the mortgagors in right of their own succession, and the remaining share had come to them through the impugned deed of gift. Then it was observed that at the time of the mortgage the mortgagee did not know whether he would ever be such a reversioner in fact as would give him a practical interest to quarrel with the deed of gift; and the Privy Council asked "why should he not take all that the mortgagers could give or propose to give. " " To hold that by doing so ", observed the Privy Council, " he barred himself from asserting his own title to a part of what was mortgaged seems to their Lordships a quite unwarrantable proposition." This decision shows that the principle of election or estoppel or ratification must be applied with due circumspection and the mere fact that the reversioner has received some benefit under the transaction or has not challenged the validity of the transaction when it took place cannot bar his rights as a reversioner when reversion in his favour falls open. The last case on which reliance has been placed by the appellant is the decision of the Privy Council in Ramgouda Annagouda vs Bhausaheb (1). In this case the widow of the last male holder had alienated nearly the whole of the property of her husband by three deeds executed and registered on the same day. One of the deeds was in favour of a presumptive reversioner. The Privy Council held that the three deeds had to be regarded as forming one transaction entered into by all the persons interested in the properties, and that after the reversion fell open, the reversioners who were parties to the said transactions (1) (1927) L.R. 54 I.A. 396. 633 were precluded from disputing the two alienations by reason of their conduct. According to the Privy Council the three deeds in question were inseparably connected together and in that view Annagouda, the reversioner, who challenged two of the three transactions, not only consented to the sale to Shivgouda and the gift to Basappa which were the two transactions impeached but these dispositions formed part of the same transaction by which he himself acquired a part of the estate. Thus it may be taken to be well settled that if a presumptive reversioner is a party to an arrangement which may properly be called a family arrangement and takes benefit under it, he would be precluded from disputing the validity of the said arrangement when reversion falls open and he becomes the actual reversioner. The doctrine of ratification may also be invoked against a presumptive reversioner who, though not a party to the transaction, subsequently ratifies it with full knowledge of his rights by assenting to it and taking benefit under it. It is, however, clear that mere receipt of benefit under an arrangement by which a Hindu widow alienates the property of her deceased husband would not preclude a presumptive reversioner from disputing the validity of the said alienation when he becomes the actual reversioner. It must always be a question of fact as to whether the conduct of the said reversioner on which the plea of ratification is based does in law amount to ratification properly so called. It is in the light of these principles that we must now consider the relevant facts in the present appeal. There can be no doubt that the transaction which took place on May 27, 1893, as a result of the dispute between the two widows and with the intervention of the well wishers of the family is not a family arrangement as understood under Hindu Law. This position was conceded before the High Court and is not disputed before us (exhibit D 2). Similarly, the sale deed which was executed by defendant 3 in favour of the two widows is of no assistance because it was obviously a sale by defendant 3 of his reversionary rights which were then no better than spes suwessionis and as 634 such this transaction (exhibit D 3) cannot help to validate the earlier arrangement between the two widows. The composite document (exhibit D 5) of May 27, 1895, is in substance no more than an alienation no doubt executed for the purpose of carrying out the original arrangement between the two widows. Thus in dealing with the question as to whether the respondent is precluded from challenging the validity of the impugned transaction it is necessary to bear in mind that the original transaction is not a transaction in the nature of a family arrangement. Besides, he was then a minor and admittedly he was not a party to any of the said transactions. It is, however, urged that the respondent obtained a certificate or a patta from the Collector in regard to the property conveyed to him under exhibit D 5, and the argument is that he has deliberately withheld the said patta because he apprehended that if produced the patta would go against him. The explanation given by the respondent for not producing the patta is attacked as unsatisfactory, and it is urged that the said explanation cannot possibly conceal his intention to keep back the document from the Court. In his cross examination the respondent stated that the Collector 's certificate which had been given to him by his grandmother had been filed by him in Suit No. 495 of 1916 in the City Civil Court, and he added that his advocate in the said suit had not returned the document to him. We may assume that the respondent has not produced the document though it was in his possession; but we have on the record two documents which were issued to the other donees, and all that the appellant is entitled to assume is that a similar document had been issued in favour of the respondent. In our opinion, the two documents on the record do not assist the appellant 's argument that any representation had been made by the respondent to the Collector before he obtained a patta in his favour. In fact the issue of the patta is a routine matter which would necessarily follow on the execution of the registered sale deed (exhibit D 5). On the registration of the said document persons who got certain immoveable properties 635 under it were given the certificates by the Collector in ordinary course, and so no argument can be built up against the respondent that the acceptance of the patta amounts to the ratification of the original transaction of sale. It is then urged that in Civil Suit No. 495 of 1916 filed in the City Civil Court at Madras by Apurupammal against tile respondent and another, the respondent filed the written statement in which he admitted the validity of the impugned transaction. It appears that the plaintiff in that suit had based her claim on the said impugned transaction, and in respect of the said claim the respondent had alleged in paragraph 2 of his written statement that he admitted that in consequence of certain disputes which arose between the mother and the widow of the deceased Govinda Mudaliar a compromise settlement was arrived at in pursuance of which some transfers were effected. This, it is said, amounts to an admission of the validity of the said transaction (exhibit D 15). This argument, however, fails to take notice of the fact that while referring to the said compromise settlement the respondent had expressly added that the said compromise settlement was obviously to take effect only during the life tenancy of the widow of the deceased Govinda Mudaliar (exhibit P 3). In other words, taking the statement as a whole, as we must, the respondent looked upon the said compromise settlement as an alienation made by the widow and as intended to take effect during her lifetime and no more. In other words, far from supporting a plea of ratification against the respondent this statement strengthens his case that he took the benefit with the knowledge and under the belief that the arrangement under which the said benefit flowed was intended to be operative during the ,Lifetime of the widow, and as such he had no occasion to challenge its, validity whilst the widow was alive. A somewhat similar argument is based on the conduct of the respondent in relation to Civil Suit No. 1117 of 1921 filed by Masilamani Mudaly, the sister 's son, and the deceased Govinda Mudaliar in the Madras High Court (exhibit P.16). To this suit the 636 respondent was impleaded as defendant 7. In this suit the said plaintiff had challenged the validity of the arrangement, and asked for appropriate injunctions against defendant 6 to the suit, Thuggi Kondiah Chetty, Trustee of Udayavar Koil, and other defendants from dealing with the property to the prejudice of the reversionary right of the plaintiff. It is unnecessary to refer to the pleadings in the said suit or to specify in detail the reliefs claimed. The only point which is relevant to consider is that the reversioner had challenged the arrangement in question. The respondent by his written statement had purported to support the plea made by the plaintiff, and had added that he was not personally aware of any attempt on the part of defendants 2 to 4 to alienate the properties in respect of their possession and enjoyment. This suit, however, did not proceed to a trial as it was dismissed for want of prosecution, and the argument is that since the respondent had supported the plaintiff in the said suit it was necessary that he should have got himself transposed as a plaintiff, when he found that the original plaintiff was allowing the suit to be dismissed for non prosecution. In our opinion, this argument is far fetched and cannot possibly sustain the plea of ratification against the respondent. If the respondent took possession of the property under the arrangement with the distinct understanding that the arrangement was to last only during the lifetime of the widow, we see no justification for the assumption that he should have carried on Civil Suit No. 11 17 of 1921 or should in fact have challenged the said arrangement at all. The last argument urged in support of the plea of ratification is based on the oral evidence given by the respondent in the present case. The respondent was asked about the quarrels between the mother and the widow of the deceased Mudaliar, and he said that they were living together and that there were quarrels between them. Then he was asked as to whether he got the property under the impugned arrangement, and he said that his grandmother gave him the house with the Collector 's certificate and told him that she 637 was going to die soon and so he may take the house. The respondent also admitted that since the house was thus delivered to him and to his sister they were in possession of it and in enjoyment of its income. The respondent then stated that he was not aware of the document of 1895 until 1916, and that he came to know about the division between the two widows( only in 1910. It is urged that this statement should not be believed, and that the reluctance of the respondent to disclose the truth should lead to the inference that he knew all about the impugned transaction and its effect, and that when he took possession of the property allotted to him under the said transaction he knew fully well about his rights and he accepted the benefits with the object of reifying the whole transaction. In our opinion there is no ,substance in this argument. In this connection it is relevant to remember that until Act II of 1929 was passed a sister 's son, like the respondent, would have had very few chances of becoming an actual reversioner; he would have come in the list of bandhus; and so it would be difficult to assume that at the time when the respondent accepted the gift of the house he knew about his rights as a possible reversioner. Besides, the benefit which he obtained under the impugned transaction could also in substance have been claimed by him under an earlier arrangement entered into between Govinda Mudaliar and Madhava Ramanuja Mudaliar on February 7, 1887 (exhibit D 1). Having regard to the arrangement disclosed by the said document the benefit given to the respondent and the other children of the sisters of the deceased Mudaliar may as well have been based on the said arrangement, and all that the transactions of 1893 and 1895 did was to give effect to it (Exs. D 2 and D 5). Besides, as we have already pointed out, in 1893 the respondent was a minor, and when subsequent to 1895 he took possession of the property it does not appear on evidence that he knew that the intention of the widows was to treat the property as absolute owners and to convey absolute titles to the respective donees and transferee under 638 the said transaction. He also could not have known about his rights as a possible reversioner. Therefore, in our opinion, the High Court was right in holding that the appellant had failed to establish his plea of ,ratification against the respondent. Indeed, to hold otherwise would be in the words of the Privy Council a quite unwarrantable proposition " (1) (p. 87). That leaves the question of legal necessity to be considered. The High Court has held that the impugned transfer cannot be said to have been justified by legal necessity; and, in our opinion, the finding of the High Court on this point is obviously right. In dealing with this question it may be relevant to recall that the widow of the deceased Mudaliar had obtained letters of administration to the estate of the deceased on April 26, 1893, and, as usual, in issuing the letters limitation had been imposed upon the widow that she could not deal with or transfer the property in question without the requisite sanction. There is some force in the argument urged before us by Mr. Sastri on behalf of the respondent that it was with a view to avoid the necessity to obtain the requisite sanction that the widow of the deceased Mudaliar was persuaded by her mother in law to enter into the impugned transaction under the guise of a family arrangement. The document itself (exhibit D 5) does not purport to be justified by legal necessity. In terms it purports to give effect to the original arrangement of 1893 (exhibit D 2); and if the said arrangement is not valid as a family arrangement the subsequent transfer would also be invalid. Besides, out of a total consideration of about Rs. 10,000/ the amount of Rs. 776/ can be taken to represent the debts due by the deceased Mudaliar; the rest of the items of consideration cannot be treated as constituting a legal necessity at all. The amount of Rs. 558/ was the expense incurred for executing the document; similarly the amount of Rs. 409/representing the funeral expense of the deceased Mudaliar, had apparently been spent by the widow who wanted to reimburse herself and that cannot be a legal necessity. The other items of consideration do (1) (1918) L.R. 46 I.A. 72. 639 not even purport to be for legal necessity. Therefore, in our opinion, the conclusion is inescapable that the impugned transfer is not justified by legal necessity. The result is the appeal fails and is dismissed with costs. Appeal dismissed.

M, a Hindu, died leaving his mother, widow, sisters and sisters ' son and daughters. There were disputes between the mother and the widow which were settled at the instance of certain arbitrators. Under this settlement a portion of one of the houses was given to a sister of M, another portion to R son of another sister and his sister and a third portion to the daughter of the third sister. Certain properties , which had been agreed to be sold under the settlement were sold to the appellant by the mother and the widow. After the death of the mother and the widow R filed a suit as the next reversioner of M for recovery of the properties sold on the ground that the alienation was without necessity and was not binding on him. The appellant contended (i) that R was precluded from disputing the settlement between the mother and the widow as he had received a benefit under it and had ratified it by his conduct and (ii) that the transfer was for legal necessity. Held, that the transfer was not binding on R and he was entitled to avoid it. The settlement between the mother and the widow was also not binding on R. If a person having full knowledge of his rights as a possible reversioner enters into a transaction which settles his claim as well as the claim of the opponents at the relevant time, he cannot be permitted to go back on that arrangement when reversion actually falls open. But the mere fact that the reversioner has received some benefit under the transaction or has not challenged its validity when it took place cannot bar his rights as a reversioner. It will always be a question of fact as to whether the conduct of the reversioner on which the plea of ratification is based does in law amount to ratification properly so called. In the present case the settlement was not in the nature of a family arrangement; at that time R was a minor and was not a party to any of the said transactions. There was no conduct of R which could amount to ratification of the settlement or of the alienation. At the time when he accepted the gift he could not know about his rights as a possible reversioner. Further, there was no legal necessity for the transfer. Sahu Madho Das vs Pandit Mukand Ram ; , Dhiyan Singh vs Jugal Kishore, [1952] S.C.R. 478, Kanhai Lal vs Brij Lal (1918) L.R. 45 I.A. 118. Rangasami Gounden vs Nachiappa Gounden (1918) L.R. 46 I.A. 72 and Ramgouda Annagouda vs Bhausakeb (1927) L.R. 54 I.A. 396, referred to 625

: Criminal Appeal No. 100 of 1958. Appeal from the judgment and order dated April 24, 1958, of the Calcutta High Court in Criminal Misc Case No. 38 of 1958. G. section Pathak and D. N. Mukherjee, for the appellants. L. K. Jha and R. C. Datta, for respondent No. 1. K. B. Bagchi and P. K. Bose, for respondent No. 2. 1961. January 13. The Judgment of Imam and Raghubar Dayal, JJ. was delivered by Imam, J., Subba Rao, J. delivered a separate judgment. IMAM, J. The appellants were convicted for contempt of court and each of them was sentenced to pay a find of Rs., 500 by, the Calcutta High Court. They applied to the High Court for a certificate that 463 the case was a fit one for appeal to this Court which was granted. Hence the present appeal. On March 19, 1955, one Bimala Kanta Roy Choudhury filed a complaint before the Sub Divisional Magistrate, Alipore, against the respondent B. K. Sen under section 497 of the Indian Penal Code. The Magistrate after examining numerous witnesses declined to frame a charge and discharged the accused under section 253(1) of the Code of Criminal Procedure by his order dated July 13, 1957. Against the order of discharge Bimala Kanta Roy Choudhury filed a revisional application before the Sessions Judge of 24 Parganas, who by his order dated November 22, 1957, directed further enquiry. On January 3, 1958, the Magistrate while holding further enquiry, as directed, allowed the prosecution to tender further evidence. On February 3, 1958, the accused B. K. Sen filed a revision petition in the Calcutta High Court against the order of the Sessions Judge directing further enquiry as well as the order of the Magistrate permitting the prosecution to lead further evidence. The High Court thereupon issued a Rule and stayed further proceedings. The respondent B. K. Sen held the office of Commissioner of the Calcutta Corporation at the time he filed his petition in the Calcutta High Court for proceedings against the appellants for contempt of court. According to that petition, at a special meeting of the Calcutta Corporation held on January 16, 1958, the Mayor suggested the formation of a committee for discussion of necessary and appropriate steps to be taken with 'a view to eradicate alleged malpractices prevailing in different departments of the Corporation. At this meeting Satyananda Bhattacharjee made certain wild allegations against B. K. Sen. Two resolutions were passed at the meeting, one of which, authorised the Mayor to constitute a Special. Committee to give effect to the suggestions and objectives indicated by the Mayor in his statement dated January 10, 1958. On February 14, 1958, at an ordinary meeting of the Calcutta Corporation. the aforesaid Bhattacharjee repeated his allegations made at the previous meeting of January 16. At the meeting 464 it was resolved that a Special Committee be set up and the appellants were elected as members of the committee. The Special Committee was to enquire into certain allegations made against certain officials of the Corporation who are said to have taken advantage of their office in carrying on business in their own names. The resolution was in the following terms: "That a Special Committee consisting of Councillors Shri section K. Gupta, Shri R. N. Majumdar and Shri section K. Roy be set up to enquire into the allegations levelled against certain officials of the Corporation who are alleged to have been taking advantage of their high offices in carrying on business in their own names. The Committee will take up only those matters that relate to the Corporation. " The record of the contempt proceedings in the High Court shows that at a meeting of the Calcutta, Corporation, on March 26, 1958, Bhattacharjee informed the Mayor that on February 14, 1958, he had mentioned on the floor of the House certain charges against some high officials of the Corporation and that the Mayor had asked him to submit his papers to the Special Committee. Bhattacharjee further informed the Mayor that the day before, at a sitting of the Special Committee, he wanted to hand over to the Special Committee some papers that were with him, but the Special Committee would not take them and had stated that they would enquire into "open case only ". Bhattacharjee then asked the Mayor to request the Special Committee to enquire into all the allegations made by him. On this, the Mayor asked Bhattacharjee to hand over the papers to him. Then the Mayor stated that if that was not written in the proceedings he would take it that day that all the papers would he sent to the Special Committee. According to B. K. Sen, on April 11, 1958, Bimala Kanta Roy was examined by the Committee and he admitted Chat his case against B. K. Sen under section 497 of the Indian Penal Code was at that time pending consideration before the High Court. Bimala Kanta Roy Choudhury then alleged that either the witnesses 465 themselves or their near relations got appointments in the Corporation of Calcutta. Bimala Kanta Roy Choudhury had specifically mentioned one Tarak Nath Dey. The entire purpose of the statement of Bimala Kanta Roy Choudhury was to prove the truth of his allegations that B. K. Sen had abused his official position and had created a situation which made it impossible for him to produce relevant witnesses to prove his case. The Special Committee then caused the production of Tarak Nath Dey and confronted him with Bimala Kanta Roy Choudhury. Tarak Nath Dey was then examined but denied that he was the agent of the wife of Bimala Kanta Roy Choudhury or the Tadbirkar of B. K. Sen. The Special Committee went out of their way to traverse the grounds and take evidence on matters which were directly and substantially in issue and were pending in the Calcutta High Court. B. K. Sen further alleged in his petition, that the appellants had set up a parallel court of enquiry for ascertaining the truth or otherwise of the allegations made by Bimala Kanta Roy Choudhury. That the action of the Special Committee was calculated to create an atmosphere of prejudice against him and amounted to unwarranted inter ference with the free flow of justice. The action of the Special Committee had a tendency to prejudice the trial and/or to influence the decision of the case by the trial Court or by the High Court. The Special Committee thereafter issued to him a questionnaire. The relevant portions of the questionnaire are in the following terms : " III (a). It is alleged that between 4th January, 1956, and 20th September, 1957; i.e., at or about the time when the case under section 497, I.P.C., was being tried, you gave appointments to the following persons: (1) Anil Koyal (2) Jogendra Nath Mondal (3) Ahi Kanta Choudhury (4) Govinda Banerjee (5) Narendra Nath Naskar, who are related respectively to Palan Koyal, Haradhan (alias Haridhan) Mondal, Tripti Choudhury, Thakur Raj Smriti Tirtha and Upendra Naskar who were cited as witnesses in the case. 59 466 (b)It is alleged that about the same time you gave appointments to Tarak Nath Dey, Hardhan Dey, Pradip Bhaduri, Ardhangsu Mondal etc. and condoned the punishment previously inflicted on Dhiren Mondal as they were helping you in conducting your defence in the case. (c) It is alleged that you were instrumental in securing the appointment of another probable prosecution witness Kamakshya Chatterjee through one M. L. Ghosh against whom a demolition case was pending. " The case of B. K. Sen before the High Court was that the action of the appellants as members of the Special Committee amounted to gross contempt of the High Court as well as of the Court of trial. Accordingly, B. K. Sen filed on April 16, 1958, his petition in the High Court for proceedings against the appellants for contempt of court. Notice was issued to the appellants by the High Court returnable the same day to show cause why they should not be proceeded against for contempt of court. On April 17, 1958, the appellants showed cause. The ' High Court, however, issued a Rule returnable by April 23. After hearing the parties the High Court on April 24, convicted the appellants as already stated. The only question for determination is whether the conduct of the appellants as members of the Special Committee amounted to contempt of court. On behalf of the appellants it was urged that the enquiry held by the Special Committee was not to determine the guilt or the innocence of B. K. Sen in the case under section 497 pending against him. It was impossible to characterise the enquiry by the Committee as a parallel enquiry. The Special Committee had been constituted specially for the purpose of determining whether the employees of the Calcutta Corporation had abused their position in the discharge of the powers vested in them. The Special Committee was not constituted to enquire into the conduct of B. K. Sen only. Even the questionnaire sent to him referred to three incidents which have nothing to do with the case under a. 497 against him pending in the 467 Magistrate 's court. The first incident was concerned with an agreement with some lady to build a house for Rs. 40,000, and to sell it to her for Rs. 50,000 and that thereby he had engaged in a business for profit which was contrary to his conditions of service. The second incident related to the reduction of the valuation of certain premises, belonging to some persons described as the Guptas who were either his relations or friends, long after their appeal had been disposed of and without recording any adequate reasons for such reduction. The third incident related to I the assessment of his own house when he had reduced its letting value to Rs. 90 per month and on that basis had been paying the Corporation tax whereas he actually received as house rent for the same at Rs. 250 per month. The opinion expressed by the Land Acquisition Collector was that the proper letting value of the premises would be Rs. 281 per month. The entire purpose of the enquiry was to ascertain whether B. K. Sen, as Commissioner of the Corporation, had been abusing his position as such. Even the questionnaire under III(a), (b) and (c) does not state that B. K. Sen had so acted with a view to suborning prosecution witnesses in the case against him under section 497 or that he had acted in a manner so as to suppress the evidence which might be led against him. It was pointed out that the questionnaire throughout stated " it is alleged " and there was no assertion therein that B. K. Sen had actually acted in an improper manner. The letter which accompanied the questionnaire expressly requested B. K. Sen to give the Committee some time between 10 a.m. and 1 1 a. m. on April 16 so that they could get the facts from him. In other words, the Special Committee had not accepted the allega tions against B. K. Sen but had merely pointed out to him the nature of the allegations and desired to get from him the actual facts. This conduct of the appellants as members of the Special Committee could not in any way amount to their converting themselves into a tribunal holding a parallel enquiry to the real matter in issue in ' the case under section 497 against B. K. Sen. 468 It was further urged that if the question at all arose in the enquiry that B. K. Sen had acted with the ulterior motives in the matters stated in questionnaire 111(a), (b) and (c) that would be merely incidental to the main purpose of the enquiry whether he, as Commissioner of the Calcutta Corporation, had abused his position. Before the conduct of the appellants could be characterised as contempt of court it had to be established that their conduct tended to prejudice mankind against B. K. Sen or it tended or was calculated to interfere with the due course of justice. It was further argued that before a person can be convicted for contempt of court it must be found that his act amounted to real contempt and was of a kind that necessitated action being taken by the court against him. In the present case, the incidental question whether B. K. Sen had acted in, an improper way ,in making the appointments under questionnaire 111(a), (b) and (c) with a view to suit his own end,% was something too remote for a court to hold that it tended to or was calculated to interfere with the course of justice and that it amounted to such contempt which required the taking of proceedings for contempt against the appellants. Reliance was also placed on section 99(1) of the Calcutta Municipal Act, 1951, which states that "Every Special Committee shall conform to any instructions that may from time to time be given to it by the Corporation. " The appellants as members of the Special Committee had merely performed their public duty in obeying the instructions of the Corporation when at the meeting of the Corporation on March 26, 1958, the papers presented by Bhattacharjee were sent to the Special Committee. If the action of the appellants at &II amounted in law to contempt of court it was so slight that it did not call for proceedings for contempt being instituted against them. The respondents in this appeal are B. K. Sen and the State of West Bengal. On behalf of the State of West Bengal no submissions were made. On behalf of B. K. Sen, however, it wait contended that the facts asserted in his petition for contempt filed in the High 460 Court had not been controverted by the appellants. All that the appellants had stated in their affidavit was that they did not admit the assertions of fact in the petition for contempt other than those stated in their affidavit. It was strongly urged on behalf of B. K. Sen that he protested at the meeting of the Corporation on February 14, 1958, that Bhattacharjee 's allegations ought not to be entertained as the subject matter of his allegations was at the time sub judice in the Calcutta High Court. Several members of the Corporation had also raised a similar objection. Apparently, from Bhattacharjee 's statement at the meeting of the Corporation on March 26, 1958, the Committee had refused to take the papers submitted by him and the Committee had stated that they would enquire into " open case only ". In spite of the knowledge which the appellants had about the matter being sub judice in the Calcutta, High Court they bad none the less at the meeting of the Special Committee on the 11th of April, 1958, examined Bimala Kanta Roy Choudhury, the complainant in the case under a. 497, Indian Penal Code, against B. K. Sen. Furthermore, they had also examined Tarak Nath Dey with reference to the allegations made by Bhattacharjee. The appellants had thus entered into a parallel enquiry into a matter which was at that time in issue in the proceedings in the Calcutta High Court. That Court had before it a petition of B. K. Sen questioning the validity of the order of the Sessions Judge directing further enquiry in the case under section 497, Indian Penal Code. An important question to be decided in that proceeding was whether it was correct that B. K. Sen had suborned the prosecution witnesses in the case under section 497, Indian Penal Code, against him or had prevented witnesses for the prosecution from appearing against him. It was clear from paragraphs 7 and 15 of Annex. C, the charges made by Bhattacharjee against B. K. Sen, that his case was that B. K. Sen had been tampering with prosecution witnesses of Garia with the aid of Dhiren Mondal. Some of the sets of alleged adultery are said to have been committed at Garia. B. K. Sen had also won over a 470 prosecution witness Kamakshya Chatterjee by procuring an appointment for him in the Central Bank of India Ltd., Calcutta. The action of the appellants in thus holding a parallel enquiry tended to interfere with the course of justice as well as to prejudice mankind against B. K. Sen. The action of the appellants could not be regarded as slight because it had been a deliberate action. It was not enough to say that the appellants had merely sent a questionnaire to B. K. Sen and had not made any comment on the allegations made before them by Bhattacharjee and Bimala Kanta Roy Choudhury. It was the act of holding an enquiry into a matter which was directly in issue and which was pending for determination in the Calcutta High Court which amounted to contempt of court, Mr. Jha, on behalf of B. K. Sen, further contended that the provisions of section 99(1) of the Calcutta Municipal Act could not be pleaded in defence to a charge of contempt if the action of the appellants amounted to contempt of court. Furthermore, as the direction given to the appellants was by the Mayor and not the Calcutta Corporation section 99(1) did not apply. We would now consider whether the action of the appellants amounts in law to real contempt of the Calcutta High Court and the Magistrate before whom the proceedings under section 497 were pending at the time the High Court passed its order convicting the appellants for contempt. There is a controversy between the appellants and B. K. Sen whether Bimala Kanta Roy Choudhury and Tarak Nath Dey were examined by the appellants. There is no clear statement on behalf of the appellants in denial. Their mere assertion that " save and except what was stated in their affidavit nothing else was admitted " would not be enough to controvert this assertion of B. K. Sen. Even if it be assumed that these two persons were examined by the appellants what is stated in paragraph 10 of B. K. Sen 's affidavit in the High Court is that Bimala Kanta Roy Choudhury had mentioned names of the prosecution witnesses and had alleged that either the witnesses themselves or their near 471 relations had received appointments in the Corporation of Calcutta. He had also alleged that Tarak Nath Dey was the agent of the wife of Bimala Kanta Roy Choudhury and Tadbirkar of B. K. Sen. Tarak Nath Dey when examined denied this. He was certainly an employee of the Corporation. Paragraph 10 further stated that the only purpose for which Bimala Kanta Roy Choudhury was examined was to prove the truth of the allegations made by him that B. K. Sen had abused his official position and had created a situation which had made it impossible for Bimala Kanta Roy Choudhury to produce relevant witnesses in proof of his case. Concerning the examination of Tarak Nath Dey, in paragraph 11,B. K. Sen stated that the idea behind the examination of this individual was to prove B. K. Sen 's connection and association with the wife of B. K. Roy Choudhury, and to show that he had appointed Tarak Nath Dey due to services rendered in connection with the case under section 497, Indian Penal Code, against him. It is clear, however, from the questionnaire III (a), (b) and (c) that the appellants in framing the same did not assert that B. K. Sen 's conduct in making the appointments mentioned therein was with a view to suborning prosecution evidence in the case under section 497, Indian Penal Code, against him or to make it impossible for Bimala Kanta Roy Choudhury to produce relevant witnesses in proof of his case. The combined effect of the letter written by the appellants to B. K. Sen in sending the questionnaire and the manner in which the questionnaire III (a), (b) and (c) were framed would indicate that the appellants did not accept all the allegations made by Bimala Kanta Roy Choudhury or Bhattacharjee. The record does not establish that at any time the appellants had made comments on the case under section 497, Indian Penal Code, pending against B. K. Son or in respect of any matter pending in connection with that case in the Calcutta High Court. It was, however, said that in taking the papers filed by Bhattacharjee and thereupon examining Bimala Kanta Roy Choudhury and Tarak Nath Dey the 472 appellants had embarked upon a parallel enquiry on matters which were pending investigation in a court of law. The Special Committee consisting of the appellants was constituted by the Corporation to conduct an enquiry into the conduct of the servants of the Corporation in matters relating to affairs of the Corporation. The Special Committee was enquiring into not only the conduct of the Commissioner of the Corporation (B. K. Sen) but also into the conduct of other servants of the Corporation. The questionnaire sent to B. K. Sen refers to his conduct in relation to matters in questionnaires 1 and 11. These were matters which had no connection whatsoever with the case under section 497, Indian Penal Code, against B. K Sen. Regarding questionnaire III (a), (b), and (c) the principal matter which the Special Committee were to enquire into was whether (1) B. K. Sen had made the appointments in question and (2) those appointments were of persons who were either related to the prosecution witnesses in the section 497 case or were helping B. K. Sen in conducting his defence in that case. The questionnaire nowhere suggested that B. K. Sen had made these appointments in order to suborn prosecution witnesses in that case or that he had made the appointments with a view to preventing Bimala Kanta Roy Choudhury from producing witnesses to prove his case against B. K. Sen. Appointment of persons who were relations of witnesses for the prosecution in the section 497 case or of those who were helping B. K. Sen in his defence in that case would certainly be a relevant matter in ultimately deciding whether B. K. Sen had taken advantage of his position as Commissioner of the Calcutta Corporation in making undeserving appointments. On the other hand, even if it were established that the appointments were made of relations of prosecution witnesses and of those who were helping him in his defence, the Special Committee may have, at the conclusion of their enquiry, found that the appointments in question were, in fact, of suitable and qualified persons and that B. K. Sen had not in making the appointments abused his position as a servant of the, Corporation, 473 The circumstances do not establish that the Special Committee had constituted itself as a court of parallel enquiry to look into matters in issue in the section 497 case against B. K. Sen or which were in issue in the pending proceedings in the High Court. What exactly is meant by a court of parallel enquiry is not clear. No doubt it would be mischievous for a newspaper to systematically conduct an independent investigation into a crime for which a man has been arrested and to publish the results of that investigation. This is because trial by newspapers, when a trial by one of the regular tribunals of the country is going on, must be prevented. The basis for this view is that such action on the part of a newspaper tends to interfere with the course of justice whether the investigation tends to prejudice the accused or the prosecution. There is no comparison between a trial by a newspaper and what has happened in this case. The Special Committee had embarked upon an enquiry on the directions of the Corporation in order to discover malpractice on the part of the Corporation 's servants. Malpractices on the part of a servant of the Corporation would presumably include making unworthy appointments. The ascertainment of the motive for the appointments would be merely incidental to the main purpose of the enquiry. It would be difficult to conclude therefrom that the Special Committee were holding a parallel enquiry on matters pending decision by a court of law and that thereby their action tended to interfere with the course of justice. It was not asserted in the affidavit of B. K. Sen that the Special Committee had knowledge that one of the questions to be decided in the proceedings before the High Court was whether B. K. Son had suborned the prosecution witnesses in the case under section 497 against him. There is no finding of the High Court in this respect either. If the conduct of a particular party amounts to contempt of court usually lack of knowledge of pending proceedings may not be available to him by way of defence. We have looked into the record of this case and have no hesitation in saying that the appellants at no 60 474 time intended to interfere with the course of justice ' and their conduct did not tend to interfere with the course of justice. The appellants had been careful in making no comments on any proceedings pending in a court of law or the issues arising out of them. In these circumstances,, we are of the opinion that the offence of contempt of court by the appellants has not been established. The appeal is accordingly allowed and the conviction of the appellants for contempt of court is set aside. The fines, if paid, must be refunded. SUBBA RAO, J. I have had the advantage of perusing the judgment prepared by my learned brother, Imam, J. I regret my inability to agree with him. In my view, this is one of the typical cases wherein a group of enlightened men constituting a committee did a purposive act which had a clear tendency to obstruct or interfere with the due process of justice. On the facts, the following questions fall to be considered: (1) What was the nature of the criminal proceedings pending in the Court of the Sub Divisional Magistrate, Alipore, and in the High Court at Calcutta and what were the questions that were to be decided therein? (2) What was the nature of the inquiry initiated by the appellants and what was the subjectmatter of the said inquiry? (3) Whether the acts attributed to the appellants constituted contempt of court. (4) If the appellants were guilty of contempt of court, was this an appropriate case for taking contempt proceedings against them ? (5) Whether the punishment imposed on the appellants was excessive. The learned Judges of the High Court were in a position to ascertain the scope of the criminal proceedings taken against the appellants,. for they had before them the entire record pertaining to the criminal revision case. The judgment of the High Court discloses that the learned Judges had freely drawn from the said record the facts necessary to elucidate the question raised before them; but, unfortunately,, none of the parties thought fit to get the relevant portions of the criminal proceedings printed and placed before, us, 475 I would, therefore, proceed on the basis of the allegations made by the respondents in their petition filed before the High Court in so far as they were not specifically controverted by the appellants and on the facts given by the learned Judges in their judgment. On March 19, 1955, one Bimala Kanta Roy Choudhury filed a complaint before the Sub Divisional Magistrate, Alipore, alleging that the first respondent, B. K. Sen, the then Commissioner of the Corporation of Calcutta, committed acts of adultery with his wife, Tripti Roy Choudhury and thereby committed an offence under section 497 of the Indian Penal Code. After protracted trial and on an examination of many witnesses, the Sub Divisional Magistrate, by his order dated July 13, 1957, discharged the first respondent under section 253 (1) of the Code of Criminal Procedure. Before the Sub Divisional Magistrate, it was contended that the case of the complainant was true but he was prevented from proving it by reason of the respondent 's interference with the prosecution witnesses. The Sub Divisional Magistrate in discharging the respondent also found that some prosecution witnesses were won over by the said respondent. Against the said order of discharge, Bimala Kanta Roy Choudhury filed a revision petition in the Court of the Sessions Judge, 24 Parganas, under section 436 of the Code of Criminal Procedure. The learned Sessions Judge accepted the contention of Bimala Kanta Roy Choudhury that by the influence of respondent No. 1 many prosecution witnesses were withheld from the court, and by an order dated November 22, 1957, he set aside the order of the Sub Divisional Magistrate and directed further enquiry by Sri C. L. Choudhury, a Magistrate with 1st Class powers at Alipore. On January 3, 1958, the said Magistrate passed an order enlarging the scope of the further enquiry and directed examination of new witnesses; in the result the prosecution was allowed to tender further evidence and the entire case was reopened and it was, awaiting the decision of that court. On February 3,1958, respondent No. 1 filed a criminal revision, being Criminal Revision Case No. 149 of 1959, 476 in the High Court at Calcutta against the order of the Magistrate dated January 3,1958, directing the examination of new witnesses. A division bench of the High Court issued a rule and stayed further proceedings in the Magistrate 's court. It would be seen that one of the questions that fell to be decided by the High Court was whether there was any truth in the allegation that the respondent suborned the prosecution witnesses, with the result that some important witnesses did not attend the court and others perjured themselves to support the respondent. If the criminal revision was dismissed and the trial before the Magistrate proceeded, a similar question would arise before the Magistrate, namely, whether the prosecution witnesses were kept back from the witness box because they were tampered with by respondent No. 1 and whether the prosecution witnesses examined, or some of them, had been influenced by the respondent. This question would have an important bearing not only on the disposal of the criminal revision petition but also on the appreciation of the evidence before the Magistrate. It may be recalled that on February 3, 1958, a division bench of the High Court issued a rule and stayed further proceedings in the Magistrate 's court. On January 16, 1958, at a special meeting of the Corporation of Calcutta the Mayor suggested the formation of a committee for discussion of necessary and appropriate steps to be taken with a view to eradicate alleged malpractices prevailing in different departments of the Corporation. The Mayor suggested that the Commissioner of the Corporation should place his suggestions on the subject before the Committee. Satyananda Bhattacharjee, one of the councillors, made certain allegations against the Commissioner. The meeting passed two resolutions, one of which authorized the Mayor to constitute a Special Committee. On February 14, 1958, another meeting of the Corporation was held. In that meeting Satyananda Bhattacharjee reiterated his allegations against the Commissioner and particularly referred to the criminal case pending in. the High Court. The respondent protested against 477 reference to matters which constituted the subjectmatter of a pending case in court. After some debate the Corporation passed the following resolution appointing a Special Committee consisting of appellants 1, 2 and 3: Resolved:That a Special Committee consisting of Councillors Sri section K. Gupta, Sri. R. N. Majumdar and Sri S.K. Roy be set up to enquire into the allegations levelled against certain officials of the Corporation who are alleged to have been taking advantage of their high offices in carrying on business in their own names. The Committee will take up only those matters that relate to the Corporation. " It will be seen from the resolution that the said Committee was only authorized to enquire against officials of the Corporation who were carrying on business in their own names. It was further elucidated that the Committee would take up only those matters that related to the Corporation. Neither expressly nor by necessary implication this resolution authorized the Committee to make an inquiry against the Commissioner of the Corporation in regard to any appointments made by him in the Corporation with a view to.suborn witnesses in the aforesaid criminal case. Indeed, the last sentence of the resolution expressly prohibited the Committee from embarking upon any such inquiry in regard to matters that did not relate to the Corporation. On March 29, 1958, a motion was tabled in the meeting of the Corporation for the removal of the Commissioner from his office under section 19(3) of the Calcutta Municipal Act, 1951. Out of the 86 councillors only 38 supported the motion and, as the requisite number of votes was not obtained, the motion was dropped. It appears that Satyananda Bhattacharjee intended to hand over to the Special Committee certain papers relevant to the allegations made against the Commissioner, but in view of the limited terms of the reference they could not be received by the Committee. There. after, on March 26, 1958, Satyananda Bhattacharjee made a complaint of the same in his speech in the meeting of the Corporation and the Mayor took over the 478 papers from him and promised to send them to the Special Committee and he accordingly handed them over to the Special Committee. Two of the documents handed over by the Mayor to the Special Committee were annexed to the affidavit filed by each of the appellants and marked "C". The first document contained various charges made by the said Satyananda Bhattacharjee against the respondent, and the second document purported to be a copy of the petition filed by Bimala Kanta Roy Choudhury in the Court of the Sub Divisional Magistrate, Alipore, on May 31, 1955. In the first document Satyananda Bhattacharjee gave, inter alia, the names of various prosecution witnesses and the names of persons related to them to whom the Commissioner had given appointments. He had also given the name of another prosecution witness and alleged that the Commissioner procured an appointment for him in the Central Bank Ltd., Calcutta, through the good offices of another officer of the Bank by promising the latter to drop a case in respect of his premises. This document, therefore, contained in unambiguous terms specific allegations against the first respondent in the matter of suborning the prosecution witnesses in the criminal proceeding pending in the Magistrate 's court and in the High Court. In the second document also specific allegations were made that the respondent was attempting to influence the Witnesses through the Corporation employees. On the basis of the allegations made by Satyananda Bhattacharjee and Bimala Kanta Roy Choudhury, an inquiry was started by the Committee against the first respondent in respect of charges, among others, pertaining to criminal proceedings pending against him in the court. It was disclosed in the affidavit filed in rejoinder by the respondent that the Special Committee held its deliberations in the lady councillors ' room and that from March 25, 1958, on a black board bung up outside that room it was written in chalk "Allegations Special Committee"; that the first sitting of the Special Committee was held _on March 251, 1958; that a Secretary and a steno grapher attended the meeting; that the notes of the 479 proceedings taken by the stenographer were typed and that Satyananda Bhattacharjee, Bimala Kanta Roy Choudhury and other Councillors attended the meetings: (see the affidavit in rejoinder filed by the first respondent in the High Court). On April 11, 1958, Bimala Kanta Roy Choudhury was examined. It was stated in the affidavit filed by the first respondent in the High Court that the said person admitted before the Committee that he had filed a complaint against the first respondent under section 497 of the Indian Penal Code and that was pending in the High Court and that he also gave the names of the witnesses whom he had cited in proof of his case and that either the witnesses themselves or their near relations got appointments in the Corporation of Calcutta. He also mentioned that one Tarak Nath Dey was the agent of the wife of Bimala Kanta Roy Choudhury and Tadbirkar of the respondent. The Committee thereafter examined Tarak Nath Dey and Bimala Kanta Roy Choudhury identified him as the person referred to by him in his statement. Tarak Nath Dey in his examination denied the said allegations made against him. Presumably on the basis of the allegations made by Satyananda Bhattacharjee and the evidence given before the Com. mittee by Bimala Kanta, Roy Choudhury, the Committee issued the following notice dated April 15,1958, to the first respondent: " As you probably know, we have been appointed to make an enquiry into certain allegations relating to the administration of the Corporation of Calcutta and specially into certain steps taken by you in the matter of assessment and appointments and a few; other matters, we are giving you a synopsis of the cases in which the enquiry is being held and we shall be glad if you kindly give us some time between 10 a.m. and 11 a m. tomorrow (the 16th instant) so that we can get the facts from you. " The synopsis of the cases served upon the first respondent consisted of three questions. We are concerned only with the third question in this case and it reads: " III (a). It is alleged that between 4th January, 1956, and 20th September, 1957, i.e., at or about the, 480 time when the case under section 497, I. P. C., was being tried, you gave appointments to the following persons: 1. Anil Koyal. Jogendra Nath Mondal. Ahi Kanta Choudhury. Govinda Banerjee. Narendra Nath Naskar. (b) It is alleged that about the time you gave appointments to Tarak Nath Dey, Haradhan Dey, Pradip Bhaduri, Ardhangsu Mondal etc., and condoned the punishment previously inflicted on Dhiren Mondal as they were helping you in conducting your defence in the case. (c) It is alleged that you were instrumental in securing the appointment of another probable prosecution witness Kamakshya Chatterjee through one M. L. Ghosh against whom a demolition case was pending. " Thereafter, on April 16, 1958, the respondent filed a petition in the High Court at Calcutta for contempt of court and the High Court by an order of the same date issued notice to show cause why the rule prayed for should not be issued. The following crucial facts emerge from the fore. going narration that led to the filing of the contempt petition: The resolution appointing the Special Committee did not authorize it either expressly or by necessary implication to make an inquiry in respect of the activities of the Commissioner in connection with the criminal case pending in the Magistrate 's Court as well as in the High Court. The members of the Committee were the councillors of the Corporation, and one of them, namely, Saibal Kumar Gupta, belonged to the Indian Civil Service, another, it was represented, was a practising barrister and the third was also an educated person. Being members of the Corporation, they must have known what all happened at the meeting of the Corporation and particularly the objections raised by the respondent and others that no inquiry should be made in respect of matters that were sub judice in courts, They must 481 have also known that in view of the said objections the resolution was precisely drawn to avoid any encroachment on the matters that were sub judice. No further resolution was passed by the Corporation enlarging the scope of the enquiry. Section 91 of the Calcutta Municipal Act, 1951, does not authorize the Mayor to enlarge its scope. The members of the Committee who must be deemed to have had knowledge of the scope of its powers obviously initiated the inquiry which was beyond the scope of the resolution. With the knowledge that criminal proceedings were pending, they examined witnesses, served questionnaire on the respondent, invited or at any rate permitted, apart from the staff which was assisting the committee in the discharge of its duties, councillors and others to attend the meeting. The inquiry could not in any sense of the term be called confidential and was conducted in a manner that it would be known to everybody who was interested in it. The inquiry against the Commissioner of the Corporation in the Corporation building in respect of a, criminal case for the offence of adultery alleged to have been committed by him must have been a sensational news item; at any rate, it must have attracted the attention of the vast staff of the Corporation and its innumerable visitors. With this background I shall briefly consider the law of contempt relevant to the facts of this case. The Contempt of Courts Act, 1926, has not defined the phrase " contempt of court ". The judgment of Lord Hardwicke, L. C., in Re Read & Huggonson (1), which has always been regarded as the locus classics on the subject, declared " Nothing is more incumbent upon courts of justice, than to preserve their proceedings from being misrepresented : nor is there anything of more pernicious consequence, than to prejudice the minds of the public against persons concerned as parties in causes before the cause is finally heard." The learned Lord Chancellor characterized contempt as of three kinds, namely, scandalizing the court, abusing par ties in, court, prejudicing mankind against (1) ; 61 482 parties and the court before the cause is heard. Adverting to the third category, which is germane to the present case, the Lord Chancellor proceeded to state at p. 471 thus: " There may also be a contempt of this court, in prejudicing mankind against persons before the cause is heard. There cannot be anything of greater consequence, than to keep the streams of justice clear and pure, that parties may proceed with safety both to themselves and their characters. " But to constitute contempt of court, in the words of Lord Russel, C. J., " the applicant must show that something has been published which either is clearly intended, or at least is calculated, to prejudice a trial which is pending " (See The Queen vs Payne (1)). In The Queen vs Gray (2), the phrase " contempt of court " is defined as, inter alia, " something done calculated to obstruct or interfere with the due course of justice or the lawful process of the courts. " Lord Goddard, C.J., in R. vs Odham 's Press Ltd. (3), after considering the relevant authority on the subject, laid down the following test to ascertain whether there is contempt of court in a given case, at p. 497: " The test is whether the matter complained of is calculated to interfere with the course of justice Words much to the same effect were used by Parker, C.J., in a recent decision in R. vs Duffy & Others (4) when he stated at p. 894 that: ". . . the question in every case is whether. the article was intended or calculated to prejudice the fair hearing of the proceedings. " In Halsbury 's Laws of England, 3rd edition, Vol. 8, it is stated at p. 8, " It is sufficient if it is clear that the comment tends to prejudice the trial of the action. " Adverting to the third category of contempt described by Lord Hardwicke, L. C., the learned author says at p. 8 thus: " The effect of such misrepresentations may be not only to deter persons from coming forward to (1) , 580. (2) (3) (4) 483 give evidence on one side, but to induce witnesses to give evidence on the other side alone, to prejudice the minds of jurors, or to cause the parties to discontinue or compromise, or to deter other persons with good causes of action from coming to the court. " The said view has been accepted and followed also in India: see State vs Biswanath Mohapatra (1) and Ganesh Shankar Vidyarthi 's case (2). Learned counsel contends that every such act is not contempt of court, but it is a condition of the exercise of the jurisdiction to commit a person for contempt that it must seriously prejudice the course of justice. It is not necessary to go into the question whether, even though an act constitutes a contempt of court, the seriousness of the offence is a condition of the exercise of the jurisdiction or is only an element that a judge has to take into consideration in exercising his discretion whether to take action for contempt of court or not, for in this case, on the facts, I am satisfied that the act of the appellants had a clear tendency to prejudice the fair hearing of the criminal proceedings pending against the first respondent. In a criminal case, it is more strictly the duty of a court to prevent any interference with the course of justice than in civil cases. On the said authorities it is settled law that a person will be guilty of contempt of court if the act done by him is intended or calculated or likely to interfere with the course of justice. How can it be said that the inquiry initiated by the Committee to ascertain whether the witnesses cited or examined for the prosecution in the pending criminal case were suborned by the Commissioner by devious methods alleged to have been adopted by him could not have any serious repercussions on the proceedings pending in the Magistrate 's court as well as in the High Court? Assume for a moment that the High Court dismissed the revision and, as a result, the Magistrate took over the criminal case before him for trial, and the prosecution examined its witnesses with the knowledge that (1) I.L.R. [1955] Cuttack 305. (2) A.I.R. 1929 All. 484 an inquiry would be held by a responsible committee in respect of conduct or credibility of witnesses to be examined in the criminal case. Would it be possible to predicate that the witnesses could be in a position to depose truthfully in the witness box? A truthful witness, who would otherwise speak in favour of the accused, might be tempted to lie in the witness box either to avoid an ignominy that he perjured in the witness box as a relative of his was appointed in the Corporation or to protect the interests of his relation, though as a matter of fact the said relation had been appointed on his own merit& So too, an untruthful witness may perjure himself in the witness box with a view to harm the Commissioner in the inquiry before the Committee. Some honest witnesses might be afraid to come into the witness box, for in the inquiry made by the Committee they might be attributed motives. Though a strong willed Magistrate might exclude from his mind the fact that a high power committee is making an inquiry in respect of the witnesses that are being examined before him, the factum of the inquiry might unconsciously operate on a weaker mind. The inquiry would, therefore, have an obvious tendency to obstruct the even course of justice. Assume again that the High Court had not stayed the proceedings before the Committee and the Committee completed the proceedings and exonerated the Commissioner by holding that the witnesses were not suborned by him, even that finding would have an effect on witnesses and the Magistrate, for with the background of such a finding untruthful witnesses would depose to a false case with greater confidence than otherwise they would. This finding might also affect the result of the case. Assume once again that the Committee completed its inquiry but held that the witnesses were suborned; the effect of such finding would certainly have a far reaching impact on the credibility of witnesses and also would deflect the witnesses from ,speaking the truth. From whatever angle it is looked at, the tendency to prejudice the course of justice is apparent. Now taking the High Court, it may be said that, a Judge of a High Court can be relied upon not 485 to be influenced by what the Committee might or might not say. But that would not prevent the public and the affected parties from reasonably apprehending that the inquiry initiated by a high power committee or the findings given therein would affect the fair hearing of the revision petition. From the aforesaid facts it is manifest that the contempt in the instant case is not merely a technical but a serious one which is calculated to interfere with or obstruct the due course of justice. In my view, therefore, this was preeminently a fit case for the court to take action. The last question is whether the learned Judges were right in imposing a fine on the appellants. The judgment of the High Court shows that the learned Judges were very considerate to the appellants. They bad given them every opportunity to apologize for their conduct. 'The following passage appears in the judgment : "It may be observed at this stage that during, arguments each of the respondents was asked if be wished to apologize for any contempt that might be found against him. Each of the respondents expressed his inability to apologize. At the conclusion of the arguments we made known to the respondents that in our view they were guilty of contempt and asked if they or any of them desired to tender any apology to Court. Respondent No. 4, Bimala Kanta Roy Choudhury, tendered an apology to the Court, but the other respondents refused to do so. " In the circumstances the learned Judges, in my view, rightly convicted each of the appellants for contempt of court and sentenced each of them to pay a fine of Rs. 500/ . In the result, the appeal fails and is dismissed. BY THE COURT: In accordance with the opinion of the majority the appeal is allowed and the conviction of the appellants for contempt of Court is set aside. The fine, if paid, must be refunded. Appeal allowed.

The first respondent, the then Commissioner of the Corpora tion of Calcutta, was after a protracted trial for an alleged offence under section 497 of the Indian Penal Code discharged by the Magistrate under section 253(1) of the Code of Criminal Procedure. The Sessions judge, on a petition in revision filed by the complainant, holding that the said respondent had suborned the complainants witnesses, set aside the order of discharge and directed further enquiry by another Magistrate who permitted the complainant to tender further evidence. The respondent moved the High Court in revision and a Division Bench issued a Rule and stayed further proceedings. While the matter was thus pending before the High Court, the Corporation of Calcutta by a resolution appointed the three appellants members of a Special Committee which ran as follows : " That a Special Committee consisting of Councillors Shri section K. Gupta, Shri R. N. Majumdar and Shri section K. Roy be set up to enquire into the allegations levelled against certain officials of the, Corporation who are alleged to have been taking advantage of, their high offices in carrying on business in their own names, The Committee will take up only those matters that relate to the Corporation. " Subsequent to the passing of the said resolution, the Mayor handed over to the Committee certain papers from a Councillor containing certain allegations against the Commissioner. It was the case of the said respondent that the Special Committee there, upon examined the complainant and another and issued to him a notice along with a questionnaire, the relevant portions of which were as follows: "As you probably know, we have been appointed to make an enquiry into certain allegations relating to the administration of the Corporation of Calcutta and specially into certain steps taken by you in the matter of assessment and appointments and few order matters, we are giving you a synopsis of the cases in which the enquiry is being held and we shall Se glad if you kindly give us some time between 10 a. m. and 11 a. m. tomorrow (the 16th instant) so that we can get the facts from you." * * * 461 " III (a). It is alleged that between 4th January, 1956, and 20th September, 1957, i.e., at or about the time when the case under section 497, I.P.C., was being tried, you gave appointments to the following persons: (1) Anil Koyal (2) jogendra Nath Mondal (3) Ahi Kanta Choudhury (4) Govinda Banerjee (5) Narendra Nath Naskar, who are related respectively to Palan Koyal, Haradhan (alias Haridhan) Mondal, Tripti Choudhury, Thakur Raj Smriti Tirtha and Upendra Naskar, who were cited as witnesses in the case. (b)It is alleged that about the same time you gave appoint ments to Tarak Nath Day, Hardhan Day, Pradip Bhaduri, Ardharigsu Mondal etc. and condoned the punishment previously inflicted on Dhiren Mondal as they were helping you in conducting your defence in the case. (c) It is alleged that you were instrumental in securing the appointment of another probable prosecution witness Kamakshya Chatterjee through one M. L. Ghose against whom a demolition case was pending. " Thereupon the first respondent filed a complaint in the High Court charging the appellants with contempt of the High Court as well as the trial court. The High Court found the appellants guilty and convicted them for contempt of Court. Hence this appeal. Held (per Imam and Raghubar Dayal, JJ., Subba Rao, J. dissenting), that the appellants were not guilty of contempt of Court and the appeal must succeed. It could not be said that the Special Committee had consti tuted itself a court of parallel enquiry with regard to matters in issue either before the trial Magistrate or the High Court. There can be no comparison between the present case and a trial conducted by a newspaper. The Special Committee was directed by the Corporation to enquire into malpractices on the part of its employees, necessarily including unworthy appointments, and the ascertainment of the motive could only be incidental to the main purpose of the enquiry and could not lead to the conclusion that the Special Committee was holding a parallel enquiry on matters pending before the Court and thereby intended to interfere with the course of justice. The record clearly showed that the appellants had at no time intended to interfere with the course of justice, nor had their conduct tended to do so. They had taken care not to comment on any proceedings pending in I court or the issues arising out of them. Per Subba Rao, J. The appellants obviously initiated an enquiry which went beyond the scope of the resolution passed by the Corporation. With the knowledge that criminal proceedings were pending, they examined witnesses and served the 462 questionnaire. They permitted councillors and others to attend the enquiry which was in no sense confidential. It is settled law that a person is guilty of contempt of court if the act done by him is intended or calculated or likely to interfere with the course of justice. Re Read & Huggonson, ; , The Queen V. Payne, , The Queen vs Gray, , R. V. Odham 's Press Ltd., , R. vs Duffy Mohapatra, I.L.R. [1955] Cuttack 305 and Ganesh Shankay Vidyarthi 's case, A.I.R. 1929 All.81, referred to. It could not be said in the instant case that the enquiry, initiated by the committee to ascertain whether the first respondent had suborned witnesses cited or examined against him, could not have serious repercussions on the proceedings pending in the Magistrate 's court or in the High Court. Although a strong willed ' Magistrate might not be influenced by the enquiry, it might unconsciously affect a weaker mind and thug obstruct the even course of justice. Even though a judge of the High Court might withstand the effect of such an enquiry, that would not prevent the public and the parties, especially in a criminal case, from reasonably apprehending that the enquiry or the findings made by the committee might affect a fair hearing of the matter. The contempt, in the instant case, was not merely of a technical nature but of a serious character calculated to interfere with and obstruct the due course of justice and as such was preeminently one against which the court must take action.

Appeal No. 205 of 1956. Appeal from the judgment and decree dated May 26, 1954, of the Calcutta High Court in Appeal from Original Decree No. 127 of 1950. 580 D. N. Mukherjee, for the appellants. N. C. Chatterjee and R. B. Biswas, for respondents Nos. 1(a) and 2. 1961. January 25. The Judgment of the Court was delivered by KAPUR, J. This is an appeal against the judgment and decree of the High Court of Judicature at Calcutta. The appellant was the defendant in the suit out of which this appeal has arisen and respondent No. 1 was the plaintiff, and the second respondent was a proforma defendant. The facts of this case are these: On February 4, 1941, the respondent sold the property in dispute to the appellant for a sum of Rs. 10,000. On February 10, 1941, there was an agreement for reconveyance within a period up to February 10, 1943, for a sum of Rs. 10,001. The relevant clause of this agreement was the third clause which was as follows : " Clause 3. The purchase shall be completed by the purchasers within two years, i.e., to say on or before the 10th day of February, 1943, time being the essence of the contract. If the purchasers shall on or before the 10th day of February, 1943, pay to the vendor a sum of Rs. 10,001 the vendor shall at the cost of the purchasers execute such conveyance as may be necessary for conveying and transferring its right, title and interest in the said property free from encumbrances, if any, created by it. " On November 26, 1942, the solicitor for respondent No. 1 wrote a letter to the appellant stating that that respondent was ready and willing to have the purchase completed as early as possible on payment of Rs. 10,001. Along with that letter a draft conveyance was sent for approval but all this was subject to the result of a search as to the encumbrances, if any, created by the appellant. On November 30, 1942, the solicitors for the appellant company wrote back saying that immediate arrangements should be made for giving inspection of the agreement of sale on which the respondents were relying as the appellant was unable to trace the copy of the said agreement from its record. 581 Again on December 11, 1942, the respondent 's solicitor sent a letter stating : " My client is very eager to complete the purchase and the full consideration money therefore is lying idle in his hands awaiting, the return of the relative draft conveyance as approved by you on your clients ' behalf. " To this the reply of the appellant 's solicitors dated December 18, 1942, was: " Our clients deny that there was any concluded or valid agreement for sale with your client or with any other person in respect of the above premises." On June 10, 1943, respondent No. 1 filed a suit for specific performance and in the alternative for redemption on the footing that the transaction was in reality a mortgage. The trial court dismissed the suit oil May 16, 1950, holding that the transaction on the basis of which the suit was brought was not a mortgage but was out and out sale with an agreement for repurchase and as the vendor had not paid the money " punctually according to the terms of the contract, the right to repurchase was lost and could not be specifically enforced ", and the court had no power 'to afford any relief against forfeiture of this breach. The plaintiff respondent took an appeal to the High Court and it was there held that the failure on the part of the respondents to actually tender the amount of the consideration does riot bar a suit for specific performance because after the repudiation of the contract by the appellant, the tender would have been a useless formality. The appeal was therefore allowed and the suit for specific performance decreed. It is against this judgment and decree that the appellant has come in appeal to this Court. The correspondence which has been proved in this case shows that when the respondent 's solicitor called upon the appellant to reconvey the property in dispute to the respondent and also sent a draft conveyance, the appellant denied that there was any concluded or valid agreement for sale in respect of the property in dispute. This was a complete repudiation of the contract to reconvey which the 582 appellant had agreed to by cl. 3 of the agreement which has been set out above. As the appellant had repudiated the contract and had thus failed to carry out his part of the contract it was open to the respondent to sue for its enforcement. But it was argued on behalf of the appellant that the respondent did not tender the price, i.e., Rs. 10,001 nor was he in a position to do so and in that view of the matter the respondent is not entitled to get a decree for specific performance. In cases of this kind no question of formal tender of the amount to be paid arises and the question to be decided is not whether any money was within the power of the respondent but whether the appellant definitely and unequivocally, refused to carry out his part of the contract and intimated that money will be refused if tendered. The principle laid down in Hunter vs Daniel (1) is applicable to cases of this kind. In that case Wigram, V. C., stated the position as follows: " The practice of the Courts is not to require a party to make a formal tender where from the facts stated in the Bill or from the evidence it appears the tender would have been a mere form and that the party to whom it was made would have refused to accept the money. " Lord Buckmaster in Chalikani Venkatarayanim vs Zamindar of Tuni (2) accepted this statement of the law and observed: " Their Lordships think that that is a true and accurate expression of the law, and the question therefore is whether the answer that was sent on behalf of the mortgagee amounted to a clear refusal to accept the money. " This principle applies to the facts of the present case also and the question is whether the answer sent on behalf of the appellant amounted to an unequivocal refusal to carry out its part of the contract which in our opinion it was. It was next contended that the offer made by a solicitor is not a proper offer in law and therefore when (1) ; ; (2) (1922) 50 I.A. 41, 47. 583 the solicitor for the respondent called upon the appellant to execute the documents they were not bound to do so. We are unable to accord our assent to this proposition. The case upon which the Counsel for the appellant relied, i.e., Ismail Bhai Rahim vs Adam Osman (1), in our opinion has no application to the facts and circumstances of this case. It was held in that case that the offer made by a promiser through a solicitor to pay a debt with interest thereon at the date of the offer does not of itself afford a reasonable opportunity to the promisee of ascertaining that the promisor is able and willing to perform his promise. Unless there is something peculiar in the circumstances of that case that case does not lay down good law. It is difficult to see why a tender made through a solicitor who is for that purpose an agent, is not a proper tender. In our opinion the High Court rightly held that the respondents were entitled to a decree for specific per formance and we therefore dismiss this appeal with costs. Appeal dismissed.

The appellant purchased the property in dispute from the respondent but soon thereafter there was an agreement for reconveyance of the property to the respondent within a period of two years for almost the same value for which it was 'sold. The relevant clause of this agreement was as follows: " Clause 3 The purchase shall be completed by the purchasers within two years, i.e., to say on or before the 10th day of February, 1943, time being the essence of the contract. If the purchasers shall on or before the 10th day of February, 1943, pay to the vendor a sum of Rs. 10,001 the vendor shall at the cost of the purchasers execute such conveyance as may be necessary for conveying and transferring its right, title and interest in the said property free from encumbrances, if any, created by it. " Before the expiry of the stipulated period the respondent entered into correspondence with the appellant asking for the completion of the agreed reconveyance and intimating that the purchase money was ready to be paid, but after some correspondence the appellant 's solicitors totally repudiated the agreement for reconveyance. The respondent did not then tender the price agreed to be paid and filed a suit for specific performance which was dismissed by the trial court on the ground that the respondent had not paid the money. The High Court decreed the suit. Held, that as the appellant had totally repudiated the con tract for reconveyance and had failed to perform his part of the contract it was open to the respondent to sue for its enforcement and the High Court was right in holding that the respondent was entitled to a decree for specific performance. In a case of total repudiation of the agreement for sale it was useless to make a formal tender of the purchase money. Hunter vs Daniel ; , and Chalikani vs Zamindar of Tuni and Others (1922) L.R. 50 I.A. 41. followed. Ismail Bhai Rahim vs Adam Osman I.L.R. , distinguished.

Appeal No. 234/60. Appeal from the judgment and order dated November 18, 1958, of the Bombay High Court at Nagpur in Special Civil Application No. 201 of 1958. N. C. Chatterjee, M. N. Phadke, section A. Sonhi and Ganpat Rai, for the appellants. A. V. Viswanatha Sastri, B. R. Mandekar and A. G. Ratnaparkhi, for respondent No. 1. G. C. Mathur and R. H. Dhebar, for respondent No. 2. 1961. January 27. , J. This is an appeal against the jugdment and order of the High Court of Judicature of Bombay at Nagpur dismissing a petition under articles 226 & 227 of the Constitution challenging the legality of the imposition of the octroi tax under section 66(1)(e) of the C. P. & Berar Municipal Act (Act II of 1922) hereinafter termed the Act. The appellants who were the petitioners in the High Court are some of the rate payers of the town of Akola in the erstwhile State of Bombay and respondent No. 1 is the Municipal Committee, Akola. On November 11, 1957, respondent No. 1 passed a resolution to impose an octroi tax on animals and goods brought within the limits of the Akola Municipality. This resolution and the draft Rules of Assessment and Collection were later on forwarded by the Akola Municipality to the State Government for publication. A notification dated January 3, 1958, was published in the Bombay Government Gazette on January 16, 1958. This Gazette Notification contained the draft rules, the schedule of goods liable to octroi duty and the rates to be charged. This was in accordance with the requirements of section 67(2) of the Act. Respondent 620 No. 1, the Municipal Committee, affixed on the Notice Board of the Committee and published in the local newspapers the proposed rules for the imposition of the tax, but the objection of the appellants is that they did not publish along with them the draft of the " System of Assessment ". It is true that a pamphlet in Marathi language was distributed in the town of Akola and the proposals were also published in the local newspaper Jan Sewak. Objections to the proposals were filed by some of the rate payers of the town of Akola and all of them were considered and a resolution was passed by the Municipal Committee on March 3, 1958, and that is the resolution which was challenged in the petition filed in the High Court by a petition dated April 14, 1958, p raying for the quashing of the resolution and for the issuing of a prohibitory order against the State Government against sanctioning the proposal sent by the Municipal Committee. On April 18, 1958, a rule was issued by the High Court to the opposite parties calling upon them to show cause why the, order as prayed should not be made. This notice was served on the Special Government Pleader on May 9, 1958, and the Special Government Pleader put in his appearance on June 17, 1958. On June 23, 1958, an interim injunction was issued, but previous to that on June 19, 1958, a final notification was issued by the Government approving of the proposal to impose the octroi tax. As a consequence of this the petition was allowed to be amended, but ultimately the High Court dismissed the petition and this appeal has been brought on a certificate of the High Court. The sole question which has been debated before us is the legality of the imposition. The ground on which the legality is challenged is that there was no full compliance with the mandatory requirements of section 67(2) of the Act. It is, therefore, necessary to deal with the relevant provisions of the Act. Chapter IX of the Act deals with Imposition, Assessment and Collection of taxes. Section 66 provides for the taxes which can be imposed and section 67 deals with the mode of the imposition of the tax. By section 71, the State 621 Government is empowered to make rules regulating the assessment of taxes and for preventing evasion of assessment. Section 76 empowers the State Government to make rules regulating the collection of taxes and preventing evasion of payment. Section 85 em Con powers the State Government to make rules regulating the refund of taxes. But it was argued on behalf of the appellants that as the mandatory provisions of section 67 as to publication of the " System of Assessment " in accordance with the rules was not complied with, the imposition of the tax was illegal. Reliance was placed on certain judgments, but it is not necessary to discuss those cases because in the circumstances of this case they are of little assistance. The respondents, on the other hand, submitted that what was published was all that the section required and that the word assessment there did not mean anything more. As section 67(2) has been mainly relied upon, it may be quoted. It provides: " 67(2) When such a resolution has been passed, the committee shall publish in accordance with rules made under this Act, a 'notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be adopted. " The scheme of section 67 appears to be this: that when a Municipal Committee wishes to impose a tax it has to pass a resolution at a special meeting and then it has to publish its resolution for imposition of that tax so that the rate payers may be able to place their objections against the imposition. This publication must appear in the Government Gazette and also locally as required by the rules. The Municipal Committee has then to consider the objections, if any, of the rate payers and if the Committee does not consider it necessary to alter its original proposals, it has to send its proposals with the objections received and its decision thereon and any modifications of the original proposals to the State Government which, after considering the matter, may sanction them or refuse to sanction or sanction them with modifications, 622 The real objection of the appellants was that the system of assessment had not seen published as required. The Rule relating to publication under section 67 is as follows : " 1. A notice under section 67(2) of the intention of the municipal committee to impose a tax, or under section 68(3) of the proposal of the committee to increase the amount of rate of any tax, shall be forwarded to the State Government through the Deputy Commissioner for publication in the " Madhya Pradesh Gazette. " The notice under section 67(2)shall be accompanied by draft rules for the assessment and collection of the tax. After its publication in the Gazette the, notice shall be published by affixing copies thereof to a notice board at the municipal office and at conspicuous places in the town, and shall also be published in the local papers, if any. As an alternative to its publication in local papers, the committee may circulate the notice in print in vernacular within the municipal limits. Proclamation shall also be made by beat of drum throughout the municipality notifying the intention of the committee and calling the attention of the inhabitants to the notice in question and to the term of thirty days laid down in the law as that within which objections to the proposed imposition or increase must be submitted to the committee. " According to this rule the notice under section 67(2) has to be accompanied by draft rules for the assessment and collection of the tax and after its publication in the Gazette the notice has to be published by affixing copies thereof to a notice board at the Municipal Office and at conspicuous places in the town and has to be published in the local papers, if any, or it may circulate the notice in print within the municipal limits. It is admitted that in the Gazette dated January 16, 1958, the draft rules were published which contained the articles to be taxed, the rate or rates at which they were to be taxed and what articles were not to be taxed. It also contained a brief statement of objects. and reasons for the imposition of the tax. This was 623 followed by draft rules as to how taxation was to be done. In short what was published in the Gazette was admitted to conform to all the requirements of section 67(2). But the contention raised is that in the Jan Sewak, a local Marathi newspaper, the rules which were published contained the articles to be taxed, the rate or rates at which they were to be taxed, but the draft rules in regard to " System of Assessment " were not published along with it. The High Court has pointed out that what was done was a sufficient compliance with the provisions of section 67(2) and that the words " System of Assessment " meant only the stage of the imposition of the tax and not other stages as a whole. Sections 71, 76 and 85, as has been said above, deal with rules for assessment and for preventing evasion of taxes, rules for collection of taxes and rules for refund respectively. Read together these provisions of the Act support the decision of the High Court that the words " System of Assessment " do not necessarily mean the whole procedure of taxation, i.e., imposition, collection and procedure in regard to collection and refunds. The rule also shows that what is to be affixed on the notice board and at conspicuous places of the town is the notice and not the draft rules relating to assessment and collection. In our opinion there has been a compliance with the provision of section 67(2) and that the publication of the rules relating to the rates at which the tax had been imposed was sufficient to comply with the provisions of the Act and the rules made thereunder. It is unnecessary to deal with the efficacy of sub sections (7) and (8) of section 67. In our opinion the judgment of the High Court was right and the appeal is therefore dismissed with costs. Appeal dismissed.

The Municipal Committee, Akola, passed a resolution to impose an octroi tax and forwarded it along with the draft rules of assessment and collection to the State Government. The State Government published a notification in the Gazette which contained the articles to be taxed, the rate or rates at which they were to be taxed and a brief statement of objects and reasons for the imposition of the tax. This was followed by draft rules as to how taxation was to be done. Thereafter the Municipal Committee affixed on its notice board and also published in the local newspapers the said proposed rules but the draft rules in regard to the " system of assessment " were not published along with other particulars. It was alleged by the appellants that the Municipality by not publishing the draft rules of the " system of assessment ", failed to comply in full with the mandatory requirements of section 67(2) of the Act rendering the imposition of tax illegal. Held, that the words " system of assessment " did not neces sarily mean the whole procedure of taxation, i.e. imposition, collection and procedure in regard to collection and refund. The notice and not the draft rules relating to assessment and collection were required under the Rules to be affixed on the notice 619 board of the Municipality and at other conspicuous places of the town. In the instant case the publication of the Rules relating to the rates at which the tax had been imposed was sufficient compliance with the provisions of Section 67(2) of the C. P. S Berar Municipal Act, 1922, and the rules made thereunder.

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

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

Appeal No. 221 of 1956. Appeal from the judgment and decree dated August 5,1955, of the Bombay High Court in Appeal No. 128/X of 1954. section N. Andley, J. B. Dadachanji, Rameshwar Nath and ,P. L. Vohra, for the appellants, 654 A V. Viswanatha Sastri and Tarachand Brij mohan Lal. for the respondents. January 31. , J. This appeal which has come to this Court with a certificate issued by the Bombay High Court raises for our decision a short and interesting question about the scope and effect of the provisions contained in section 89 of the Indian Companies Act, 1913, in relation to the law of banking. This question arises in this way. The appellant, the Oriol Industries, Ltd. (hereafter called the company) was incorporated on May 15, 1945, and it appointed as its managing agents M/s. Poddar Chack & Co. Soon after its incorporation the company passed a resolution on May 21, 1945, whereby it decided to open an account with the respondent, the Bombay Mercantile Bank, Ltd. (hereafter called the bank) and in accordance with the said resolution an account was opened with it on May 28, 1945. Twenty eight cheques were drawn on this account aggregating the total amount of Rs. 28,882 13 0 during the period between May 28, 1945 and July, 31, 1945. These cheques were drawn by K. Poddar and M. J. Chacko in pursuance of the authority conferred on them by the company. On September 28, 1948, by its liquidator the company brought the present suit claiming to recover from the bank the said amount of Rs. 28,882 13 0. The case for the company as set out in the plaint was that the payment of the said amount had been made by the bank wrongfully and negligently and the amount drawn under the said cheques had been wrongfully debited to the company in its account kept by the bank. It appears that the resolution for winding up of the company was held by the court to be null and void, and Bo the plaint was subsequently amended whereby the name of the liquidator was struck out and the suit then purported to be one which was instituted by the company itself The plea raised by the company that the cheques in question had been negligently 'and wrongfully honoured by the bank was 655 seriously disputed by the bank in its statement. Mr. Justice Tendolkar, who tried the suit on the Original Side of the Bombay High Court, however, upheld the plea raised by the company and came to the conclusion that the cheques had been wrongfully B, honoured. Even so, Mr. Justice Tendolkar held that out of the total amount in dispute an amount of Rs. 8,882 13 0 had been actually received by the company and so on equitable grounds he rejected the company 's claim in regard to the said amount. The company 's claim was, however, decreed in respect of the balance of Rs. 20,000. The decree thus passed by Tendolkar, J. was challenged by the bank in its appeal, whereas the rejection of the company 's claim in respect of Rs. 8,882 13 0 by the trial judge gave rise to cross objections by the company. The Court of Appeal has reversed the finding of Tendolkar, J., and has held that the bank was not liable to repay any amount to the company since it had accepted and honoured the cheques issued on it in good faith. It may be stated at this stage that the plea of negligence which had been originally urged by the company in its plaint was expressly given up at the trial. Since the Appeal Court accepted the bank 's case on the principal question of law it did not think it necessary to consider the question of limitation or the question about the applicability of the equitable doctrine on which the trial judge had relied. In the result the appeal filed by the bank was allowed, the cross objections preferred by the company were rejected, and the suit filed by the company was dismissed with costs. The company then moved the High Court for a certificate, and on a certificate being granted it has come to this Court; and on its behalf Mr. Andley has urged that in coming to the conclusion that the company 's claim was unsustainable the Appeal Court has misjudged;the effect of the provisions of section 89 of the Indian Companies Act in relation to the conduct of the bank in the present case. That is how the principal question which falls for our decision is about, the scope and effect of the provisions of s, 89 of the Indian Companies Act. 84 656 Before dealing with the said question of law it is necessary to dispose of a minor point raised by Mr. Andley. He contends that the cheques issued by K. Poddar and M. J. Chacko and honoured by the bank had not been issued in the form required by the resolution which gave them authority to operate on the company 's account with the bank. The relevant resolution passed by the company provided that "the banking accounts of the company be opened with the bank and another bank and that the said banks be and hereby authorised to honour cheques, bills of exchange and promissory notes, drawn, accepted or made on behalf of the company by the Managing Agents M/s. Poddar Chacko & Co., by both the Directors of the Managing Agents firm, namely, Mr. Keshavdeo Poddar and Mr. M. J. Chacko and to act on any instructions so given relating to the account whether the same be overdrawn or not or relating to the transactions of the company. " The argument is that two conditions had to be satisfied before the bank could accept a cheque issued under this resolution; the cheque had to be signed by both the Directors of the Managing Agents firm, and it had to be drawn on behalf of the company. In point of fact, all the cheques have been signed by the two individuals without describing themselves as Directors of the Manging Agents firm and without showing that they had drawn them on behalf of the company. These defects, it is urged, made the cheques irregular and inconsistent with the mandatory requirements of the resolution, and the bank was there fore not justified in honouring the said cheques. In our opinion, this argument is unsound. On a fair and reasonable construction of the resolution it is difficult to uphold the contention that the resolution required the drawers of the cheques to specify on each cheque that they were made or drawn on behalf of the company. The object of the resolution as well as its effect merely was to conform to the requirements of a. 89 of the Indian Companies Act to which we will presently refer. It cannot be said that the resolution required that the drawers of the cheques had to comply with the said condition apart from the requirements of section 89 ; and so it would be unreasonable 657 to treat the said requirement as a condition prescribed by the resolution independently of section 89. In this connection the subsequent resolution passed by the company is significant. It appears that on October 22, 1945, a resolution was passed by the, company authorising M. J. Chacko to sign cheques for the company, and when this resolution was communicated to the bank it was told that the cheques on behalf of the company would thereafter be signed as: it For and on behalf of the Oriol Industries Limited, For Poddar Chacko & Co."; in other words, by this communication the bank was told that it is only cheques signed by M. J. Chacko in the manner specified in the communication that the bank should honour. This communication affords an eloquent contrast to the communication made by the company to the bank in regard to the earlier resolution by which M/s. Poddar and Chacko were authorised to issue cheques on its behalf Therefore, in our opinion, the argument that the impugned cheques accepted by the bank were inconsistent with the specific mandatory requirements authorised by the resolution cannot be accepted. That takes us to the principal question of law. In dealing with the said question it is first necessary to refer to section 26 of the (26 of 1881). This section provides that " every person capable of contracting according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsements, delivery and negotiation of a promissory note, bill of exchange or cheque." This section further provides, inter alia, that " nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cages in which, under the law for the time being in force, they are so empowered. " This section does not purport to make any provision of substantive or procedural law. The latter part of the section merely brings out that a company cannot claim authority to issue a cheque under its first part. The law in regard to the company 's power to issue negotiable instruments has to be found in the relevant provisions of the Companies Act 658 itself We must, therefore, turn to section 89 of the said Act. Section 89 provides that " a bill of exchange, hundi or promissory note shall be deemed to have been made, drawn or accepted or endorsed on behalf of a company if made, drawn, accepted or endorsed in the name of, or by or on behalf of, or on account of, the company by any person acting under its authority express or implied. " It is clear that in order that a company may be bound by a negotiable instrument purporting to have been issued on its behalf two conditions must be satisfied; the instrument must be drawn, made, accepted or endorsed in the name of or by or on behalf of or on account of the company, and the person who makes, draws, endorses or accepts the instrument must have the authority given to him by the company on that behalf. This authority may be either express or implied. There is thus no doubt that before a company can be bound by a negotiable instru ment one of the essential conditions is that the instrument on its face must show that it has been drawn, made, accepted or endorsed by the company. This may be done either by showing the name of the company itself on the instrument, or by the statement of the person making the instrument that he is doing so on behalf of the company. In other words, unless the plain tenor of the negotiable instrument on its face satisfies the relevant requirement the instrument cannot be validly treated as an instrument drawn by the company. This position is not disputed. The importance and significance of the said requirement can be illustrated by reference to a decision of the Privy Council which had occasion to consider a similar requirement under section 27 of the . The said section provides that "every person capable of binding himself or of being bound, as mentioned in Section 26, may so bind himself or be bound by a duly authorised agent acting in his name." In Sadasuk Janki Das vs Sir Kishan Pershad (1) the Privy Council held that the name of the person or the firm to be charged upon a negotiable document should be stated clearly on the face or on (1) Cal. 659 the back of the document so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand. It is not sufficient that the name of the principal should be in some way disclosed; it must be disclosed in such a way that, on any fair interpretation of the instrument his name is the real name of the person liable on the bill. " According to the Privy Council " sections 26, 27 and 28 of the contained nothing inconsistent with the principles just set out, and there was nothing to support the contention urged before it that in an action on a bill of exchange or promissory note against a person whose name properly appears as a party to the instrument it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal. " This decision was no doubt given under section 27 of the , but the principles enunciated in it apply with equal force to a negotiable instrument issued under section 89 of the Indian Companies Act. The inevitable consequence of this requirement is that wherever a negotiable instrument is issued without complying with the said requirement it would not bind the company and cannot be enforced against it. In The Bank of Bombay vs H. R. Cormack (1) it was held by the Bombay High Court that in order to make a company liable on a bill or note it must appear on the face of such bill or note that it was intended to be drawn, accepted or made on behalf of the company, and no evidence dehors the bill or note is admissible under section 47 of the Indian Companies Act, X of 1866, equal to section 89 of the present Act. In support of this decision Sargent, C.J., has cited the observations of Lord Justice James in Miles ' Claim (2) " that it is the law of this country, and always has been the law of this country, that nobody is liable upon a bill of exchange, unless his name, or the name of some partnership, or body of persons of which he is one, appears either on the face or the back of the bill. " Thus there can be no doubt that the failure to comply with the essential requirements of section 89 must necessarily mean that the.negotiable instrument in question (1) Bom. (2) 643. 660 defectively issued cannot be enforced against the company. But the question which arises for our decision is whether this principle can be invoked in the present case where the action is not based on a negotiable instrument. The present dispute is between the bank and its constituent the company, and the claim made 'by the latter proceeds on the assumption that in honouring the cheques irregularly drawn the bank has acted improperly and exposed itself to the charge that it has honoured the cheques wrongfully and improperly. In considering this question it may be relevant to recall that both the courts below have found that the bank has acted bona fide and that the charge of negligence levelled against it by the company had been expressly given up. It is also necessary to bear in mind that when the company opened its account with the bank it was furnished with a book of cheques and it is from the said book that the impugned cheques have been issued. Evidence also shows that K. Poddar and M. J. Chacko had no other joint account with the bank so that it is clear that when the impugned cheques were issued the bank was justified in thinking that the said cheques must have been issued by the two drawers on behalf of the only account on which they could operate, and that the bank thought was done in pursuance of the authority conferred on them by the company by its resolution. In such a case, if the bank honours the cheques can it be said that the company on whose behalf the cheques were purported ,to have been issued can contend that the cheques should not have been honoured and that the amount debited to the company by the bank in its accounts has been improperly and wrongfully debited? It would be noticed that the principle underlying section 89 which is a very healthy and salutary principle affords to the companies protection against claims made on negotiable instruments defectively or irregularly drawn; but, when we deal with a dispute between a company and the bank of which it is a constituent it is difficult to extend the said principle. The said principle in terms is applicable only when a claim is made against a company on a negotiable instrument; in other words, 661 it is only in the matter of enforcement of negotiable instrument against a company that the principle comes into play. It is, therefore, difficult to see how the principle enunciated in section 89 can be extended to a claim made by the company against the bank. In our., opinion, therefore, the High Court was right in coming to the conclusion that section 89 cannot be invoked by the company against the bank in making the present claim. The decisions on which the company relied are all decisions in cases where a negotiable instru ment was sought to be enforced against the company and had thus given rise to a cause of action. No case has been cited before us in which section 89 has been extended to a claim like the present. On the other hand, there is authority of the House of Lords in support of the view which the High Court has taken in the present case. In Mahony vs East Holyford Mining Co. (1), a similar point arose for the decision of the House of Lords. One of the two points in that case had reference to eight cheques which had been defectively or irregularly drawn on behalf of the company and honoured by the bank. In reject ing the company 's claim against the bank in respect of the amount covered by the said cbeques Lord Chelmsford observed as follows: " With respect to the objection that the name of the company is not on eight of the cheques paid by the Bank, and therefore by the Companies Act, 1862, they are invalid, and the official liquidator is entitled, at all events, to the amount of these cheques the short answer is, that although the bankers might have perhaps required that these cheques should be made formally correct before they were paid; yet having paid them upon the demand of the only persons whom they knew as representing the company in the operations upon the account, there is not the slightes t pretence for insisting upon the liability of the Bank to repay the amount of these cheques on the ground of an unauthorised payment of them. " The Lord Chancellor Lord Cairns disposed of the point in these words: " The question being merely as (1) (1875) 7 Eng. & Irish Reports, 869, 662 to the authority given to the bankers to make the payment, it appears to me that when those who drew and those who honoured the cheque knew the account on which it was intended to operate, the result was ,the same as if the account had been mentioned on the face of the cheque, and that no distinction is to be made as to the money paid upon these cheques." Lord Penzance agreed with this opinion and observed that " looking at the way in which the cheques were drawn, and understood by those who drew them, and by those who paid them, they stand in no different way from the rest of the cheques in the case. " It would thus be clear that the authority of this decision of the House of Lords is in favour of the view taken by the High Court that the principle enunciated by section 89 of the Indian Companies Act cannot be extended to a claim made by a company against its bank on the ground that the cheque which the bank accepted and honoured was defective in that it did not comply with the requirements of section 89 and could not have been enforced against it. We ought to add that section 47 of the corresponding English Act of 1862 is exactly in the same terms as section 89 of the Indian Act. It also appears that Chalmers has expressed the same opinion for he says, ,So, too, bankers may be justified in paying cheques out of the funds of a company, where clearly, by the form of the cheques the company would not be liable as drawers if they should not be paid " (1). Similarly, Halsbury approves of the same principle in these words: " although documents omitting the name of the company therefore cannot be relied on as against the company, monies paid under them to persons known to represent the company are not on that account payable over again " (2). The result is the appeal fails and is dismissed with costs. Appeal dismissed. (1) Chalmers on " Bills of Exchange ", P. 63. (2) Halsbury 's Laws of England, 3rd Edn., Vol. , paragraph 830.

The Managing Agents of the appellant company withdrew certain sums of money from its a count with the respondent (1) Mad. 871. (2) Lah. (3) (4) I.L.R. (5) (6) Pat. 106 (7) (1953) I.L.R. K. All. 64. (8) Pat. 653 Bank, which the company had by a resolution authorised the Managing Agents to operate on. The Managing Agents had no other account with the said Bank. The company brought the suit, out of which the present appeal arises, against the Bank for recovery of the said amounts on the ground that the cheques issued by the Managing Agents had been wrongfully honoured by the Bank in that they were signed by them without describing themselves as Directors of the Managing Agents firm and on behalf of the company, as required by the resolution. The trial judge decreed the suit except with regard to a part of the claim which he found to have actually been received by the company. The appeal court dismissed the suit holding that the Bank had paid in good faith and that the company was not entitled to rely on section 89 of the Indian Companies Act. Held, that the court of appeal was right in holding that section 89 of the Indian Companies Act could not be invoked by the appellant in the present case. There can be no doubt that before a negotiable instrument can be enforced against a company under section 89 of the Indian Companies Act, it must on the face of it show that it was drawn, made, accepted or endorsed by the company, and this may be done either by showing the name of the company itself on the instrument, or by statement of the person making the instrument that he was doing so on behalf of the company. Sadasuk janki Das vs Sir Kishan Pershad, Cal. 663, applied. The Bank of Bombay vs H. R. Cormack, Born, 275 and Miles ' claim, , referred to. But the said principle is applicable only to the claim made against a company on a negotiable instrument and cannot be extended to a dispute between a bank and its constituent where the claim is not so based and proceeds on the basis that in honouring the cheques wrongfully drawn the bank acted improperly. Mahony vs East Holiford Mining Co., (1875) 7 Eng. & Irish Reports 869, referred to. Held, further, that the object of the resolution as well as its effect was merely to conform to the requirements of section 89 of the Indian Companies Act, 1913, and not to prescribe any condition precedent independently of that section.

l Appeal No. 313/1956. Appeal from the judgment and decree dated July 25,1952, of the Allahabad High Court in Second Appeal No. 2547 of 1946. B. Ganapathy Iyer and T. M. Sen for the appellant K. P. Gupta, for the respondent. January 31. The Judgment of the Court was delivered by SHAH, J. On January 30, 1943, Bhola Nath Sambhu Ram as agent of the respondent L. Musaddilal delivered a bale of cloth to the railway administration E. 1. at Agra railway station for carriage by railway to the Chola Station in the E. I. Rly. The consignment was accepted by the railway administration and a railway receipt was issued in the name of the consignor Bhola Nath Sambhu Ram. Bhola Nath Sambhu Ram endorsed the railway receipt in favour of the respondent and sent it by post to the respondent. The bale of cloth did not reach Chola, and the railway administration was unable despite efforts to trace it. There was correspondence between the railway administration and the respondent about the consignment. Failing to obtain satisfaction 649 for the loss suffered by him, the respondent served a composite notice under section 77 of the Indian Railways Act and section 80 of the Civil Procedure Code on December 7, 1943, and thereafter on May 18, 1944, filed suit No. 283 of 1944 in the court of the 11 Munsif, Bulandshahr, for a decree for Rs. 782 3 6 being the " price of the bale " and Rs. 200 " for loss on account of nondelivery." The railway administration resisted the claim on the pleas among others that the suit was not maintainable without an effective notice under a. 77 of the Railways Act and that the suit was barred because at the date of the institution of the suit, the period of limitation prescribed by article 31 of the Limitation Act had expired. The trial court decreed the suit. In appeal, the Additional Civil Judge, Bulandshahr, reversed, the decree passed by the trial court and dismissed the suit. A Full Bench of the High Court of Allahabad reversed the decree passed by the first appellate court and restored the decree of the trial court. With certificate of fitness under article 133(1)(c) of the Constitution, this appeal has been preferred by the Union of India. Section 77 of the Railways Act in so far as it is material provides: "A person shall not be entitled to compensation for the loss, destruction or deterioration of goods delivered to be carried, unless his claim to compensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery of the goods for carriage by railway. " Section 77 manifestly prescribes a condition precedent to the maintainability of a claim for compensation for goods lost, destroyed or deteriorated while in the custody of the railway administration. The notice prescribed was not served by the respondent upon the railway administration within six months from the date on which the goods were delivered for carriage, and prima facie the suit would be barred for non compliance of a statutory condition precedent. But the respondent pleaded and the plea has found favour with the High Court that the suit filed by him 650 was for compensation not for loss, destruction or it deterioration of the goods, but " for non delivery of the goods. " In the view of the High Court, a claim for compensation for non delivery of goods is a claim distinct from a claim for compensation for loss, destruction or deterioration of goods and to the enforcement of a claim of the former variety by action in a court of law section 77 is not a condition precedent. The railway administration in India is not an insurer of goods: it is merely a bailee of goods entrusted to it for carriage. Section 72 of the Railways Act, prescribes the measure of the general responsibility of a railway administration as a carrier of goods. By that section, the responsibility of a railway administration for loss, destruction or deterioration of goods delivered to be carried by railway is subject to other provisions of the Act to be that of a bailee under section 152 and section 161 of the . Sections 151 and 152 of the deal with the duties of a bailee. If a bailee takes as much care of the goods bailed to him as a person of ordinary prudence would under similar circumstances of his own goods of the same bulk, quality and value as the goods bailed to him, in the absence of a special contract, he is not responsible for loss, destruction or deterioration of the goods bailed. By sections 160 and 161 of the , the bailee is under an obligation to return or deliver according to the bailor 's direction the goods bailed as soon as the time for which the good were bailed has expired or the purpose for which the goods were bailed has been accomplished and if on account of default of the bailee the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods, The railway administration being a bailee of the goods delivered for carriage to it is therefore a bailee during the period when the goods remain in its custody for the purpose and in the course of carriage and for the purpose of delivery after the goods are carried to the destination. 651 But the quantum of care which the railway administration is required to take is that care which it would take having regard to the bulk, quality and value of its own similar goods. Section 77 of the Railways Act is enacted with a view to enable the railway administration to make enquiries and if possible to recover the goods and to deliver them to the consignee and to prevent stale claims. It imposes a restriction on the enforcement of liability declared by section 72. The liability declared by a. 72 is for loss, destruction or deterioration. Failure to deliver is the consequence of loss or destruction of goods; it does not furnish a cause of action on which a suit may, lie against the railway administration, distinct from a cause of action for loss or destruction. By the use of the expression, "loss, destruction or deterioration," what is contemplated is loss or destruction or deterioration of the goods and the consequent loss to the owner tbereof. If because of negligence or inadvertence or even wrongful act on the part of the employees of the railway administration, goods entrusted for carriage are lost, destroyed or deteriorated, the railway administration is guilty of failing to take the degree of care which is prescribed by section 72 of the Railways Act. There are undoubtedly two distinct articles, articles 30 and 31 in the first schedule of the Indian Limitation Act dealing with limitation for suits for compensation against carriers. Article 30 prescribes the period of limitation for suits against a carrier for compensation against loss or injury to goods and article 31 prescribes the period of limitation for suits for compensation against a carrier for non delivery or delay in delivering the goods. The period of limitation under each of these articles is one year but the points of time from which that period is to be reckoned are different. But because the Indian Limitation Act provides different points of time from which the period of limitation is to run, it is not possible to infer that the claim covered by either article is not for compensation for loss, destruction or deterioration of the goods. We are unable to project the provisions of Art, 30 and 31 652 of the Limitation Act upon sections 72 and 77 of the Railways Act and to hold that a suit for compensation for loss because of non delivery of goods does not fall within section 77. The view we have expressed is supported by a large volume of authority in the courts in India for instance The Madras and Southern Mahratta Railway Co., Ltd. vs Haridoss Banmalidoss (1), Hill Sawyers and Co. vs Secretary of State (2), Martab Ali vs Union of India (s), Union of India vs Mitayagiri Pullappa (4), Assam Bengal Railway Co., Ltd. vs Radhika Mohan Nath (5) and Bengal Nagpur Railway Co. Ltd. vs Hamir Mull Chhagan Mull (6). The view expressed to the contrary in the Allahabad High Court in Governor General in Council vs Mahabir Ram (7) and ;by the Patna High Court in Jais Ram Ramrekha Das vs G. 1. P. Railway (8), is in our judgment erroneous. This appeal will therefore be allowed and the respondent 's suit will stand dismissed. As the Union of India was permitted to appeal for obtaining the decision of this Court which may settle the conflict of views even though the amount involved is small, we think that it is just and proper that there should be no order as to costs throughout. Appeal allowed.

The respondent served on the Railway Administration a composite notice under s 77 of the Indian Railways Act and under section So of the Code of Civil Procedure and sued for price of goods and for loss on account of nondelivery. The claim was resisted by the Railway Administration on pleas amongst others that the suit was not maintainable without an effective notice under section 77 of the Railway Act and that the suit was barred because at the date of the suit the period of limitation prescribed by article 31 of the Indian Limitation Act had expired. A full bench of the Allahabad High Court upheld the decree of the trial court in favour of the respondent holding that a claim for compensation for non delivery of goods was a claim distinct from the claim for compensation for loss, destruction or deterioration of the goods, and to the enforcement of a claim of the former variety by action in a court of law under section 77 was not a condition precedent. Held, that section 77 of the Indian Railways Act imposes a restriction on the enforcement of liability declared by section 72 of the Act and prescribes a condition precedent to the maintainability of a claim for compensation for goods lost, destroyed or deteriorated while in the custody of the railway Administration who are bailers and not insurer of goods. The section is enacted with a view to enable the railway administration to make enquiries and if possible to recover the goods and deliver them to the consignee and to prevent stale claims. Failure to deliver goods is the con sequence of loss or destruction and the cause of action for it is not distinct from the cause of action for loss or destruction, 83 648 Held, further, that merely because articles 30 and 3r of the Indian Limitation Act prescribe different points of time from which the limitation is to run for suits against carriers it cannot be inferred that the claim covered by either article is not for compensation for loss, destruction or deterioration of the goods; and the said articles 30 and 31 cannot be projected upon sections 72 and 77 of the Indian Railways Act for holding that suit for compensation for non delivery of goods does not fall within section 77. The Madras and Southern Mahratta Railway Co. Ltd. vs Haridoss Banmalidoss, Mad. 871, Hill Sawyers and Co. vs Secretary of State,, Lah. 133, Martab Ali vs Union of India, , Union of India vs Mitayagiri Pullappa, I.L.R. [1958] A.P. 323, Assam Bengal Railway Co. Ltd. vs Radhika Mohan Nath and Others, and Bengal Nagpur Railway Co. Ltd. vs Hamir Mull Chhagan Mull and Another Pat. 106, approved. Governor General in Council and Others vs Mahabir Ram and Another, (1953) I.L.R. I All. 64 and Jais Ram Ramrekha Das V. G.I.P. Railway and Another (1929) I.L.R. 8 Pat. 545, overruled.

Appeals Nos. 416 of 1958 and 19 of 1959. Appeals by special leave from the Award dated January 13, 1958, of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 218 of 1957. M. C. Setalvad, Attorney General for India, N. A. Pal khivala, G. B. Pai and G. Gopalakrishnan, for the appellant (In C.A. No. 416 of 58) and respondent No. 1 (In C.A. No. 19 of 1959). H. R. Gokhale, section B. Naik and K. R. Choudhury, for the respondent No. 1 (In C.A. No. 416 of 1958) and appellant (In C.A. No. 19 of 1959). January 20. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. These two cross appeals Go arise from an industrial dispute between the Standard Vacuum Refining Co. of India Ltd. (hereafter called 538 the appellant) and its workmen (hereafter called the respondents). This dispute related to a claim for bonus made by the respondents against the appellant for the year commencing on January 1, 1956, and ending with December 31, 1956. The respondents claimed that for the relevant year they were entitled to receive by way of bonus their nine months ' total earnings inclusive of all allowances and overtime and extra time earnings. After this demand was made the conciliation officer attempted conciliation between the parties but his efforts failed, and so he submitted a failure report under section 12(4) of the (XIV of 1947). The Government of Bombay then considered the said report and was satisfied that there was a case for reference of the said dispute to the Tribunal. That is how the present reference came to be made under section 12(5) of the Act,. The respondents who have made the present claim include 648 employees; amongst them 524 are operatives and 124 belong to the clerical cadre. Before the Tribunal the respondents ' case was that during the conciliation proceedings the appellant had admitted its capacity to pay and to meet the entire claim of bonus made by them; and so it was urged that it was unnecessary to screen the respondents ' claim through the Full Bench formula. They further alleged that the appellant was not paying a living wage to the respondents and there still remained a large gap between the wage actually received by them and the living wage to which they would be ultimately entitled. According to the respondents their claim for bonus should be examined solely by reference to the gap which had to be filled up between the two wages; and in determining the amount of bonus all the legitimate requirements of the respondents should be carefully considered. This claim was denied by the appellant. It denied the respondents ' allegation that during conciliation proceedings it had admitted its capacity to pay the entire amount of bonus claimed by the respondents. It then specifically averred that in law the respondents were not entitled to any bonus because the 539 appellant was paying them a living wage and so one of the essential conditions for the payment of bonus, namely, the need to fill the gap between the actual wage and the living wage was absent in the present case. The appellant then set out its calculations in regard to the average wages paid to the different categories of respondents and supported its plea that they were not entitled to any bonus at all. It may be added that the appellant had already voluntarily paid three months ' basic wages to the respondents by way of bonus, but since the respondents were making a much larger claim the appellant thought it necessary to raise this general issue of law and to contend that the respondents were not entitled to any bonus at all. On these pleadings the Tribunal had to consider the said question of law, but it appears that the material produced before it was so limited and meagre that it thought it would not be possible to arrive at any definite opinion on the question of what is the living wage in Bombay; apparently the Tribunal also thought that it was unnecessary to do so, because it has observed that the present dispute did not relate to wage scales and that the living wage was an illusive concept. Even so, having broadly considered the contentions raised by the appellant it held that " the wages are fair but there is still in a large number of cases a gap between the actual wage and the living wage. " On this finding the Tribunal proceeded to examine the other contentions raised by the parties in regard to the quantum of bonus which should be awarded and it reached the conclusion that the respondents were entitled to receive five months ' basic earnings " excluding dearness and other allowances and overtime " as bonus for the relevant year. Accordingly it has made an award to that effect and has issued appropriate directions in that behalf. This award is challenged by the appellant in its Civil Appeal No. 416 of 1958, and it is urged by the learned Attorney General on its behalf that the tribunal should have held that the appellant was paying a living wage to the respondents and that there was no case for 540 awarding any bonus to the respondents at all during the relevant year. On the other hand the respondents challenge the award by their Civil Appeal No. 19 of 1959, and it is urged by Mr. Gokhale on their behalf that the tribunal was in error in not awarding the respondents a higher bonus than five months ' basic wages. That is how the two cross appeals arise from the award under appeal. The learned Attorney General has criticised the approach adopted by the tribunal in dealing with the question of living wage. He contends that it was necessary that the tribunal should have carefully examined the material produced before it and should have made a definite finding one way or the other. He commented on the fact that the finding is vague and indefinite, and he has contended that the tribunal should have made it clear as to what it exactly meant when it observed that in a large number of cases a gap between the actual wage and the living wage subsisted. This criticism is partly justified. We think it would have been better if the tribunal had addressed itself to the question raised before it by the appellant and made a more definite and precise finding. In this connection, it must, however, be added that the oil companies have been raising this plea for some years past and the plea has been consistently rejected by tribunals during all these years. The present tribunal itself has had occasion to deal with this plea raised by the oil distributing companies, and since the plea had never succeeded in the past and no material change had been proved in regard to the relevant year the tribunal was probably disinclined to treat the plea very seriously and that may explain the approach adopted by it in dealing, with the said plea in the present proceedings. Besides, the tribunal took the view, and we think rightly, that the material produced by the appellant in support of its plea is wholly insufficient and meagre. The point raised is one of general importance and any positive finding on the content of the concept of a living wage in the context of today would naturally affect industrial adjudication in regard to claims of 541 bonus in all industries. That is why, if the appellant was serious about its contention that the living wage standard had been reached in its wage structure it should have produced more satisfactory evidence which would have enabled the tribunal to attempt the task of concretely defining what the concept of living wage means in the context of today. Absence of sufficient and satisfactory material may also explain the approach adopted by the tribunal in dealing with this issue. At the hearing before us the learned Attorney General suggested that we should remand the case to enable his client to lead further and more satisfactory evidence. We have rejected this request. The appellant knew fully well the implications of the plea raised by it and the very large issue which the tribunal would have to consider in dealing with the merits of the said plea. If the appellant was content to support its plea on certain material and did not attempt to lead more satisfactory evidence it cannot blame the tribunal for dealing with the matter on the material such as it was. In such a case it would be futile for the appellant to ask for indulgence from this Court at this late stage. It is admitted that the appellant has paid three months ' basic wages as bonus to the respondents voluntarily for the relevant year, and we were told that an agreement has been reached between the parties in respect of bonus for subsequent years until 1963. They have agreed that for the two succeeding years the decision of this Court will apply and for five years thereafter a specific agreement has been reached for raising the wage structure and providing for the payment of bonus at the agreed rate. The learned Attorney General faintly suggested that the appellant has agreed to pay bonus voluntarily in this manner but the payment is gratuitous and should not affect the main plea raised by it in the present proceedings. Even so, the question raised by the appellant sounds academic and unrealistic, and that is another reason why it is not entitled to the indulgence for which the learned Attorney General has pressed before us. We would, therefore, deal with the point 542 seriously urged before us on behalf of the appellant on the material produced before the tribunal and such additional material as was brought to our notice. At the outset it is necessary to state that the plea raised by the appellant assumes that as soon as a living wage standard has been reached by any employor it would be unnecessary for him to pay any bonus to his employees. The learned Attorney General has naturally relied on the decisions of this Court as well as the decisions of industrial tribunals in support of his argument that the Full Bench formula which governs the decision of bonus disputes postulates that a claim for bonus can be entertained if two conditions are satisfied; the employer must have made profit in the relevant year, which after the deduction of prior charges leaves sufficient available surplus; and there must be a gap between the wages actually paid to the employees and the living wage standard which they hope to reach in due course. In dealing with bonus claims industrial adjudication has so far proceeded on the assumption that in the making of profits labour makes its contribution, and that since it is not receiving a living wage it is entitled to claim that the gap between the actual and the living wages should be filled by the payment of bonus for each relevant year; that no doubt appears to be the result of the relevant decisions on the point (Vide: Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur (1); The Sree Meenakshi Mills Ltd. vs Their Workmen (2). We will revert to this point later. Meanwhile let us proceed to examine the merits of the contention that the appellant is paying the respondents a living wage. It is well known that the problem of wage structure with which industrial adjudication is concerned in a modern democratic State involves on the ultimate analysis to some extent ethical and social considerations. The advent of the doctrine of a welfare State is based on notions of progressive social philosophy which have rendered the old doctrine of laissez J faire obsolete. In the nineteenth centurv the relation between employers and employees were usually governed (1) ; (2) ; , 884.543 by the economic principle of supply and demand, and the employers thought that they were entitled to hire labour on their terms and to dismiss the same at their choice subject to the specific terms of contract between them, if any. The theory of " hire and fire " as well as the theory of " supply and demand " which were allowed free scope under the doctrine of laissez faire no longer hold the field. In constructing a wage structure in a given case industrial adjudication does take into account to some extent considerations of right and wrong, propriety and impropriety, fairness and unfairness. As the social conscience of the general community becomes more alive and active, as the welfare policy of the State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the growing strength of the trade union movement collective bargaining enters the field, wage structure ceases to be a purely arithmetical problem. Considerations of the financial position of the employer and the state of national economy have their say, and the requirements of a workman living in a civilised and progressive society also come to be recognised. It is in that sense, and no doubt to a limited extent, that the social philosophy of the age supplies the background for the decision of industrial disputes as to wage structure. As Mrs. Barbara Wootton has pointed out, the social and ethical implications of the arithmetic and the economics of wages cannot be ignored in the present age (1). It is because of this socioeconomic aspect of the wage structure that industrial adjudication postulates that no employer can engage industrial labour unless he pays it what may be regarded as the minimum basic wage. If he cannot pay such a wage he has no right to engage labour, and no justification for carrying on his industry; in other words, the employment of sweated labour which would be easily available to the employer in all undeveloped and even under developed countries is ruled out on the ground that the principle of supply and demand has lost its validity in the (i) " The Social Foundations of Wage Policy " by Barbara Wootton Allen & Unwin. 70 544 matter of employment of human labour, and that it is the duty of the society and the welfare State to assure to every workman engaged in industrial operations the payment of what in the context of the times appears to be the basic minimum wage. This position is now universally recognised. In dealing with wage structure it is usual to divide wages into three broad categories: the basic minimum wage is the bare subsistence wage; above it is the fair wage, and beyond the fair wage is the living wage. It would be obvious that the concepts of these three wages cannot be described in definite words because their contents are elastic and they are bound to vary from time to time and from country to country. It would be difficult and also inexpedient to attempt the task of giving an adequate precision to these concepts. What is a subsistence wage in one country may appear to be much below the subsistence level in another; the same is true about a fair wage and a living wage; what is a fair wage in one country may be treated as a living wage in another, whereas what may be regarded as a living wage in one country may be no more than a fair wage in another. Several attempts have nevertheless been made to describe generally the contents of these respective concepts from time to time. The most celebrated of these attempts was made by Mr. Justice Higgins in his judgment in 1907 in a proceeding usually referred to as the Harvester Case. Sitting as President of the Commonwealth Court of Conciliation and Arbitration, the learned Judge posed the question as to what is the model or criterion by which fairness or reasonableness is to be determined, and he answered it by saying that " a fair and reasonable wage in the case of an unskilled labourer must be ail amount adequate to cover the normal needs of the average employee regarded as a human being living in a civilised community." (1) (1) Cited by Foender in "Better Employment Relations", , 178, 545 In their work " Industrial Democracy " published in 1920 Sidney and Beatrice Webb observed that "there is a growing feeling not confined to trade unionists that the best interests in the community can only be attained by deliberately securing to each section of the workers those conditions which are necessary for the continuous and efficient fulfilment of its particular function in the social machine " (p. 590). In 1919 the Commissioner of the Bureau of Labour Statistics conducted a tentative budget enquiry in the United States of America, and analysed the objects with reference to three concepts, namely, the pauper and poverty level, the minimum of subsistence level and the minimum of health and comfort level; the last was taken for determining the standard of a living wage. This classification was approved by the Royal Commission on the Basic Wage for the Commonwealth of Australia, and it proceeded through norms and budget enquiries to ascertain what the minimum of comfort level should be. The Commission quoted with approval the description of minimum health and comfort level in the following terms : " This represents a slightly higher level than that of subsistence, providing not only for the material needs of food, shelter and body covering, but also for certain comforts such as clothing sufficient for bodily comfort, and to maintain the wearer 's instinct of self respect and decency, some insurance against the more important misfortunes death, disability and fire good education for the children, some amusement, and some expenditure for self development " (1). According to the United Provinces Labour Enquiry Committee wages were classified into four categories, poverty level, minimum subsistence level, the subsistence plus level, and the comfort level (2). The third category would approximate to the fair wage, and the fourth to the living wage. According to the South Australian Act of 1912 the living wage means " a sum (1) Cited in the Report of the Committee on Fair Wages published by the Government of India, Ministry of Labour pp.5 and 6.(2) Ibid. 546 sufficient for the normal and reasonable needs of the average employee living in a locality where work under consideration is done or is to be done ". On the other hand, the Queensland Industrial Conciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall not be less than is " sufficient to maintain a well conducted employee of average health, strength and competence, and his wife and ' a family of three children in a fair and average standard of comfort, having regard to the conditions of living prevailing among employees in the calling in respect of which such basic wage is fixed. and provided that in fixing such basic wage the earnings of the children or wife of such employee shall not be taken into account " (1). The Fair Wages Committee which made its Report in 1949 broadly accepted the view expressed by the Royal Commission on the basic wage for the Commonwealth of Australia which we have already cited. According to the Committee, " the living wage should enable the male earner to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age (2). " The Committee emphasised that " the minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker. For this purpose the minimum wage must also provide for some measure of education, medical requirements and amenities " (3). In this connection it would be useful to refer to the observations made by Philip Snowden in regard to the concept of living wage. These observations are generally cited with approval by industrial tribunals. Said Snowden, " it may be possible to give (1) Cited in the Report of the Committee on Fair Wages published by the Government of India, Ministry of Labour p. 5. (2) Ibid. (3) Cited in the Report of the Committee on Fair Wages published by the Government of India, Ministry of Labour p. 8. 547 a precise or satisfactory definition of a living wage, but it expresses an idea, a belief, a conviction, a demand. The idea of a living wage seems to come from the fountain of justice which no man has ever seen, which no man has ever explained, but which we all know is an instinct divinely implanted in the human heart. A living wage is something far greater than the figures of a wage schedule. It is at the ' same time a condemnation of unmerited and unnecessary poverty and a demand for some measure of justice (1). " On the problem of converting the concept of living wage into monetary terms this is what Snowden had said: " The amount of the living wage in money terms will vary as between trade and trade, between locality and locality. But the idea is that every workman shall have a wage which will maintain him in the highest state of industrial efficiency, which will enable him to provide his family with all the material things which are needed for their health and physical well being, enough to enable him to qualify to discharge his duties as a citizen"(2). It is in this broad and idealistic sense that article 43 of the Constitution has referred to the living wage when it enunciates the Directive Principle that the State shall endeavour, inter alia, to secure by suitable legislation, or economic organisation, or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. This Court has recognised this idealistic position of the concept of living wage in the case of Express Newspapers (Private) Ltd. vs The Union of India (3). It would thus be obvious that the concept of a living wage is not a static concept; it is expanding and the number of its constituents and their respective contents are bound to expand and widen with the development and growth of national economy. That is why it would be impossible to attempt the (1) Philip Snowden " The Living Wage ", p. 1. (2) Ibid. (3) , 79 82. 548 task of determining the extent of the requirement of the said concept in the context of today in terms of rupees, annas and pies on the scanty material placed before us in the present proceedings. We apprehend that it would be inexpedient and unwise, to make an effort to concretise the said concept in monetary terms with any degree of definiteness or precision even if a 'fuller enquiry is held. Indeed, it may be true to say that in an under developed country it would be idle to describe any wage structure as containing the ideal of the living wage, though in some cases wages paid by certain employers may appear to be higher than those paid by others. As observed in its Report by the Commission of Enquiry on " Emoluments and Conditions of Service of Central Government Employees, 1957 59 ", " taking a standard family as consisting of four members of whom only one is an earner, the average income of a family at the highest figure during the nine years ending in 1957 58 would work out at Rs. 1,166/ per annum or about Rs. 97/ per mensem. The minimum wage cannot be of the order of Rs. 125/when on the basis of the national income the average for a family works out only to Rs. 97/ per mensem. " Therefore, looking at the problem of industrial wages as a whole it would not be possible to predicate that our wage structure has reached even the level of a fair wage. It is possible that even so some employers may be paying a very high wage to their ' workmen, and in such a case it would be necessary to examine whether the wages paid approximate to the standard of the living wage; but in deciding this question the proper approach to adopt would be to consider whether the wage structure in question even approximately meets the legitimate requirements of the components consti tuting the concept of a living wage. For that purpose it may not be essential, and on the material produced before us it is not even possible, first to determine what in terms of money those constituents would denote in the context of today. The learned Attorney General 's argument that we should first determine independently what amount in terms of rupees, annas and pies would be treated as a living wage today 549 obviously ignores the complexity of the problem and the poverty of the material adduced by the appellant in the present proceedings. There is another aspect of this question to which we must incidentally refer. We are dealing with the contents of the living wage in the present appeal not for the purpose of fixing a wage structure; the contention raised by the appellant is that since the wages paid to the respondents have reached the stage of a living wage there is no gap between the actual wage and the living wage, and so there is no occasion to make a claim for bonus. While dealing with this contention there would be no justification for ignoring the idealistic character of the living wage is specified in article 43 of the Constitution ; and so, it would be necessary to enquire whether the wage in question satisfies the tests laid down by the Royal Commission on the basic wage for the Commonwealth of Australia which has been endorsed by the Fair Wages Committee 's Report and broadly approved by this Court in the Express Newspapers ' case (1). The question which we must now consider is whether the appellant has succeeded in showing that its wage structure has reached the standard of the living wage which has been specified as one of the ultimate objectives by article 43 and which is the ideal that the working population of the country hopefully looks forward to achieve. Before the tribunal the Union filed statements to show that the wage structure prevailing amongst the respondents is no more than the need based minimum wage. In support of this plea they referred to the resolution which has been unanimously passed at the 15th Session of the Indian Labour Conference held in New Delhi on July 11 and 12, 1957. This resolution makes a declaration about the wage policy which should be followed during the Second Five Year Plan. The Tripartite Committee which passed the resolution considered the relevant notes placed before it, and held that they would be useful as background material for (1) 550 wage fixation. It then took note of the difficulties in assessing quantitatively the individual importance of various factors affecting wage fixation such as product ivity, cost of living, the relation of wages to national income and so on, and proceeded to discuss the wage policy with specific reference to minimum wages and fair wages. With regard to the minimum wage fixation it was agreed that the minimum wage was need based to ensure the minimum human needs of the industrial worker irrespective of any other considerations. To calculate the minimum wage the Committee accepted the following norms and recommended that they should guide all wage fixing authorities including Minimum Wage Committees, Wage Boards, adjudicators, etc. (ii) Minimum food requirement should be calculated on the basis of a net intake of calories, as recommended by Dr. Aykroyd for an average Indian adult of moderate activity. (iii) Clothing requirements should be estimated at a per capita consumption of 18 yards per annum which would give for the average workers family of four, a total of 72 yards. (iv) In respect of housing, the rent corresponding to the minimum area provided for under Government 's Industrial Housing Scheme should be taken into consideration in fixing the minimum wage. (v) Fuel, lighting and other I miscellaneous ' items of expenditure should constitute 20% of the total minimum wage. " Having set forth these norms the Committee recognised the existence of instances where difficulties may be experienced in implementing its recommendations, and so it added that wherever the minimum wage fixed went below its recommendations it would be incumbent on the authorities concerned to justify the 551 circumstances which prevented them from adherence to the norms prescribed by the Committee. Having thus unanimously agreed on the content of the need based minimum wage the Committee proceeded to observe that as regards fair wages it was agreed that the Wage Board should go into the details in respect of each industry on the basis of the recommendations contained in the Report of the Committee on Fair Wages. The respondents treated this unanimous resolution as the basis for their claim that the wages paid to them by the appellant were no better than the need based minimum contemplated by the said resolution. Accordingly they set out the diet requirements extracted from Health Bulletin No. 23, and converted the said requirements into monetary terms at Rs. 123 75 nP. Having thus arrived at the calculation of the value of the diet requirements of workmen (Exs.U 4 and U 5) they proceeded to make calculations about the money content of the need based minimum wage at Rs. 209 70 (exhibit U 6). This conclusion has been reached on the basis that the minimum diet requirements would be Rs. 123 75 nP., clothing requirements would be Rs. 9/ , rent would be Rs. 42/ and miscellaneous expenditure at 20% of the total of the three preceding items would be Rs. 34 95 nP. Their case was that in view of the fact that Rs. 209 70 nP. approximates to the standard of the need based minimum wage the claim that the wage structure of the appellant has reached the living wage standard cannot be sustained. On the other hand the appellant sought to justify its claim principally on the calculations made by the Textile Labour Committee which had made its report in 1940. It may be pointed out that in its statement (exhibit C 6) the appellant has used the expressions " fair wage " and " living wage " somewhat indiscriminately, and seems to have assumed that the norms prescribed by the Tripartite resolution had relation to a fair wage and not the need based minimum wage. That, however, does not appear to be accurate, According to 71 552 the Textile Committee 's report the money content of the living wage in 1940 was Rs. 50/ to Rs. 55/ per month. This total is taken as the basis by the appellant in making its relevant calculations. The appellant has then referred to the norms prescribed by the Tripartite resolution and has assumed that the total of the need based minimum wage would be Rs. 40 14 0, and since there had been a rise in the cost of living after 1940 the appellant has multiplied Rs. 41/ by 3.5 which gave the amount of Rs. 143.50 nP. Thus, according to the appellant the need based minimum would not be the said amount of Rs. 209/ as calculated by the respondents. Then the appellant added that even if Rs. 55/was taken as the equivalent of the living wage in 1940 and the same is multiplied by 3 5 one gets Rs. 192.50 nP. and that should represent the living wage in the relevant year. Having thus reached the figure of Rs. 192.50 nP. as the monetary value of the living wage in the relevant year, the appellant purported to support its plea that its wage structure had reached the status of a living wage by relying on the average wages paid by it to the respective categories of its employees. Taking the class of operatives which comprises 524 workmen the average wage packet consisting of the basic salary, the dearness allowance and the value of the amenities supplied by the appellant to them equals Rs. 273.65 nP. The average wages in regard to the 124 clerks reach the figure of Rs. 370.11 nP., and the average wages for the total employees taken together reach the figure of Rs. 301.16 nP. According to the appellant whichever figure is taken it is much above Rs. 192.50 nP., and that must lead to the inference that the living wage standard has been reached by the appellant. That is how both the parties presented their respective contentions before the tribunal and before us. We have already indicated that the appellant 's calculations are made on the assumption that the figure of Rs. 50/ to Rs. 55/ per month can be taken 553 to be the monetary content of the living wage in 1940. In support of this assumption the appellant strongly relies on the Textile Committee 's report. This Committee was appointed in 1940 and was charged with the duty of conducting an investigation into the question of adequacy of wages in cotton textile industry of the Province of Bombay and to kindred matters relating to the industry. It was asked to enquire, inter alia, into the adequacy or inadequacy of wages earned in relation to a living wage standard, and if it found that in any occupation, centre or unit of the industry wages were inadequate it was asked to enquire into and report upon the reasons therefor. The Committee realised that the data supplied before it was insufficient but nevertheless it thought that it would be possible to consider the broad constituents of the concept of the living wage and use the said measure " not for the determination of a dispute or the grant of an award but only for ascertaining in a general manner whether the present level of earnings is or is not adequate in relation to it." The Committee then examined the material which was available to it; it took the view that the living wage standard should be determined in respect of the family unit, and for its calculation it converted the total number of members in the family into standard consumption units according to the formula evolved by Dr. Aykroyd in his Health Bulletin No. 23. According to this formula each family was assumed to consist of a workman, his wife and two dependents or children and their consumption units were treated respectively as 1.8 and 0.6 each respectively, the total consumption units thus being 3.0. Then the Committee considered the problem of housing and the expenditure on rent and other items of expenditure such as clothing, fuel and lighting and miscellaneous. In regard to the housing the Committee thought that for a family of four 180 sq.ft. may be held as the minimum in Bombay though according to it the floor area may be put a 554 little higher in less overcrowded places. It is on these calculations that the amount of Rs. 55 was held by the Committee to be the monetary value of the living wage standard. Naturally enough the appellant treats this conclusion as the foundation for its claim that it is paying a living wage to the respondents. In our opinion it would be unreasonable and unsafe to treat the conclusions of this Committee as to the monetary value of the living wage in 1940 as sound and to make it the basis of our calculations today. Incidentally the method of multiplying the figure deduced by the Committee by 3.5 is materially defective. The proper approach to adopt would be to evaluate each constituent of the concept of the living wage in the light of the prices prevailing today and thus reach a proper conclusion ; but apart from it, the main objection against adopting the figure reached by the Committee is that even in 1940 the said figure could not be properly regarded as representing anything like a living wage standard. The object with which the Committee proceeded to hold its enquiry was in a sense negative; it was to determine the question as to how far the prevailing wages were deficient having regard to some reasonable concept of a living wage standard. The material before it was insufficient to determine satisfactorily the money content of the said concept and the Committee itself was conscious that its calculations were bound to be broad and general and conditioned by the data available to it, and what is more important conditioned by the notions of social justice then prevailing. Since 1940 the concept of social justice has made very great progress and the Constitution of the country has now put a seal of approval on the ideal of a welfare State. Besides, it may seem entirely unrealistic to talk of a living wage in the light of our national economy in 1940 and to evaluate its content at Rs. 50 to Rs. 55 per month. It is obvious that the Committee was really thinking of what is today described 555 as the minimum need based wage, and it found that judged by the said standard the current wages were deficient. In its report the Committee has used the word " minimum " in regard to some of the constituents of the concept of living wage, and its calculations show that it did not proceed beyond the minimum level in respect of any of the said constituents. Therefore, though the expression ',living wage standard" has been used by the Committee in its report we are satisfied that Rs. 50 to Rs. 55 cannot be regarded as anything higher than the need based minimum wage at that time. If that be the true position the whole basis adopted by the appellant in making its calculations turns out to be illusory. All that the calculations made by the appellant would show is that the wages paid to the respondents are somewhat higher than what would be required by the concept of the need based wage. It is obvious that between the need based wage and the living wage there is a very long distance. This conclusion is strengthened by some of the observations made by the Commission of Enquiry on " the Emoluments and Conditions of Service of Central Government Employees ". In its report the Commission has referred to the Tripartite resolution on the need based minimum wage, and in the light of the exhaustive material produced before it, and after consulting experts and specialists whose advice was available to it, it has reached the conclusion that (a) the minimum remuneration worked out according to the recommended formula may be of the order of Rs. 125 / as compared to Rs. 52.50 which with some exceptions is the upper limit of minimum wages fixed under the law, (b) that it would be about 70 to 80% higher than the rates generally prevailing in the organised sectors of industry where wages are fixed either by collective bargaining or through conciliation and adjudication proceedings, and (c) that it would be well above the highest wages, i.e., Rs. 112/ (in cotton textiles industry in Bombay average for 1958) which any considerable number of unskilled workers are at present getting in the country (p. 65). We may incidentally add that having regard to its terms of reference the Commission did not feel it advisable to recommend the increase of the Central employees ' wages to the level of the need based minimum for reasons set out by it in its report. That is why it thought it reasonable to recommend that " the minimum remuneration payable to a Central employee which at present is Rs. 75 per mensem should be increased to Rs. 80 per mensem (p. 74). Reverting to the components of the concept of the living wage once again it may be relevant to observe that the principal component of the dietary requirements of a workmarn 's family is generally examined in the light of Dr. Aykroyd 's formula According to Dr. Aykroyd "in dealing with diet it is well to remember the distinction between an optimum and an adequate diet. An optimum diet is one which ensures for the functioning of the various life processes at their very best, whereas an adequate diet maintains these processes but not at their peak levels. Dr. Aykroyd, however, took the view that having regard to our national economy even an adequate or balanced diet may not be within the reach of every one, and so he observed that " it would be wise to effect a compro. mise by temporarily sacrificing the ideal to the necessity of making the improvement economically possible. " With this object he has tabulated the requirements of the improved diet which contains the (1) Health Bulletin No.23 The Nutritive Value of Indian Foods and the Planning of satisfactory Diets By Dr. Aykroyd and revised by Dr. V. N. Patwardhan Published by the Nutrition Research Laboratories, Indian Council of Medical Research, Coonoor. 557 essential nutrients but which would not be as costly as the balanced diet. Now there can be no doubt that in dealing with the monetary value of the content of the concept of the living wage it would not be enough to evaluate the diet requirement with reference to the improved or even the balanced diet. The improved vegetarian diet which has generally been taken into account in making the relevant calculations would be wholly inappropriate in making calculations with regard to a living wage. Under the living wage a workman would be entitled to claim an optimum diet as prescribed by Dr. Aykroyd. Similarly, the requirements as to clothing and residence which have been recognised in the Tripartite resolution, though appropriate in reference to a need based minimum wage, would have to be widened in relation to a living wage. Besides, in determining the money value of the living wage it would be necessary to take into account the requirements of "good education for children, some amusement, and some expenditure for self development ", and it is hardly necessary to emphasise that the content of these requirements cannot be easily converted into terms of money and they would obviously vary from time to time and would show an expansive tendency with the growth of national economy and with the advent of increasing prosperity for the nation as a whole and for any given industry in particular. In this connection it may be pertinent to observe that in deciding the question as to whether the living wage has been introduced by any employer normally it would be necessary to examine the wage structure paid to the relevant working class as a whole. It is well established that the claim for bonus is recognised on the basis of the contribution made by the working class as a whole to the profits of the employer, and we think it would be invidious, and on principle unreasonable, to isolate 558 a few cases where higher wages may be paid and to claim immunity from the payment of bonus in respect of such cases. In the absence of special circumstances prima facie the most expedient method to adopt would be to take the average of the wages paid to the relevant working class as a whole. It is, however, unnecessary to pursue this matter further and to pronounce a definite decision on it because, as we have just indicated, even taking the clerical category where the average works highest at Rs. 370.11 nP. we feel no hesitation in holding that the said average is much below the standard living wage. The said average is much above the need based minimum and may fall in the medium level of a fair wage; but that itself would show that it is much below the standard of the living wage. Similarly, Rs. 273.65 nP. which is the average of the operatives as well as Rs. 301.16 nP. which is the average of the operatives and the clerical staff taken together may be regarded as constituting wage structure which is above the need based minimum structure and may be treated as approximating to the lower level of the fair wage. One has merely to take into account the various constituent elements of the living wage to realise that these averages fall far short of the standard of the living wage. In reaching such a conclusion it is hardly necessary first to arrive at a concrete determination as to the money value of the living wage. In our opinion, taking the broad aspect of the concept of the living wage into consideration, and bearing in mind its idealistic and expanding character, it would be possible, and not very difficult either, to say about a given wage such as the one with which we are concerned in the present appeal that it does not reach the standard of a living wage. We must accordingly hold that the claim made by the appellant that it is paying a living wage to its employees cannot be sustained. It still remains to consider some of the decisions to which our attention was invited. In Standard Vacuum Oil Company. In that connection the tribunal referred to the Textile Committee 's report and assumed that Rs. 50/ to Rs. 55/ , that is to say, on an average Rs. 52 8 0 represented the money value of a living wage in 1940. On that assumption the tribunal made certain calculations and held that its" award may be regarded as the first approximation towards attaining the living wage standard. The learned Attorney General has relied on this decision in support of his argument that the basis supplied by the Textile Committee 's report was treated as valid for the pur pose of determining the money value of the living wage. For the reasons which we have already indicated we must hold that the tribunal was in error in treating Rs. 52 8 0 as the money value of the living wage even in 1940. The same comment falls to be made about the calculations made by the Labour Appellate Tribunal in Burmah Shell, etc., Oil Companies in Madras vs Their Employees (1). In that case the Appellate Tribunal thought that if 50% be added to the minimum wage of the employees that may assist them to attain the goal of the living wage, and this conclusion was based on the Textile Committee 's report. Similarly, the calculations made by the Industrial Tribunal, Madras, in Workers of section V. O. C. Ltd. (Standard Vacuum Employees ' Union) vs Standard Vacuum Oil Co. Ltd. (2), suffers from the same infirmity. Therefore, the three industrial decisions on which the appellant relied cannot assist it in establishing its contention that a living wage is paid to the respondents. In Burmah Shell Oil Storage and Distributing Co. of India, Ltd., Bombay vs Their Workmen (3) the Labour Appellate Tribunal had occasion to consider the content of the living wage. In that connection it referred to the Report of the Fair Wages Committee, and observed that the level of national income in India is so low that the country is unable to afford to prescribe by law a minimum wage which would correspond to the concept of a living wage. " The rudder is set in (1) (2) (3) , 72 560 the direction of a living wage", observed the Appellate Tribunal, " but the destination is not yet within sight; the gradual emergence of a welfare State will naturally help but even here progress is necessarily slow ". In our opinion, this statement shows the correct approach to the problem of determining the content of the concept of the living wage. In Standard Vacuum Oil Company vs Their Employees (1) the Labour Appellate Tribunal was called upon to consider the plea that the companies were paying a living wage to their employees. In dealing with the said contention the Appellate Tribunal observed that "the measurement of the living wage standard in terms of money has not been prescribed by law of the country, nor, as far as we are aware, has been determined anywhere in any scientific basis ". In its opinion, it was not possible nor necessary to fix the amount with exactitude which should form the minimum living wage after an exhaustive enquiry for considering the question of bonus, because, according to the principle laid down the whole gap between the existing wages and the living wage need not be filled up. That is why it thought that it would be sufficient for the purpose if an approximate idea can be formed by taking into account the approximate expenditure on the necessary items of requirements of the living wage standard. On these considerations the plea raised by the companies was rejected. It would thus be seen that the oil companies have been persistently making the claim before the industrial tribunals that they need not be called upon to pay bonus to their employees on the ground that they are paying them a living wage, and this plea has so far been consistently rejected. As we have already pointed out it may partly be because of this trend of industrial decisions that in the present proceedings the tribunal did not think it necessary to deal with the point elaborately or to make a definite finding. Before we part with this appeal we ought to add that if we had upheld the appellant 's claim it would have been necessary for us to consider the relevance (1) 561 and validity of the respondents ' alternative claim that in case living wage is paid by the appellant to them they should be allowed a share in the profits made by the appellant during the relevant year on the basis of profit sharing. It is true that industrial adjudication so far has consistently emphasised the fact that the payment of bonus is intended to fill the gap between actual wages and the living wage. Obviously no occasion has so far arisen to consider whether a claim for bonus can be made even after the standard of living wage has been attained because no employer has so far succeeded in showing that a living wage standard has been reached. We are making these observations because we wish to make it clear that our decision in the present appeal should not be taken to mean that as soon as a living wage standard is reached no claim for bonus can be made by the workmen; that is a question which may have to be considered on its merits if and when it arises. Until the stage is reached where a plea that living wage is paid can be reasonably made and proved it is desirable that industrial adjudication in regard to the payment of bonus should not be unnecessarily complicated by raising such a plea from year to year. That takes us to the appeal preferred by the respondents. The tribunal did not think it necessary to work out calculations because, according to the bonus formula, it was conceded that the available surplus in the hands of the appellant was very large. It, however, took into account the wage scales and salaries in the appellant 's concerns and other relevant factors and concluded that awarding five months ' bonus " strikes a fair balance between the conflicting standards of the workmen and the company ". Mr. Gokhale contends that five months ' bonus is too meagre and that the respondents were entitled to a much higher rate of bonus. On the other hand the learned Attorney General contends that we should put a ceiling in the matter of awarding bonus so that excessive claims for bonus would be discouraged. In our opinion it would be inadvisable and inexpedient to put such a ceiling in the matter of awarding bonus. 562 It is now well established that in awarding bonus industrial adjudication has to take into account the legitimate claims of the industry, its shareholders who are entitled to claim a return on the investment made by them and the workmen. This Court has consistently refused to lay down any rigid rule or formula which would govern the distribution of the available surplus between the three claimants. The decision of this question must inevitably depend on a proper assessment of all the relevant facts. If wages are small and the profits are high then the workmen would be entitled to have a high rate of bonus. Indeed, if an employer makes consistently high profits and the wages continue to be low it may justify the increase in the wage structure itself ; in other words, the award of bonus would have some relation to the wages paid to the employees. It is also true that unreasonably high or extravagant claims for bonus cannot be entertained just because the available surplus would justify such a claim. As has been observed by the Labour Appellate Tribunal in Burmah Shell Oil Storage and Distributing Co. of India Ltd., Bombay vs Their Workmen (1) care must be taken to see that the bonus which is given is not so excessive as to create fresh problems in the vicinity that upset emoluments all round or that it creates industrial discontent or the possible emergence of a privileged class. The impact of the award of bonus in an industrial dispute on comparable employments or on other employments in the region cannot be altogether ignored, though its effect should not be over estimated either. Having regard to the fact that the distribution of available surplus must inevitably depend in each case on its own facts this Court has generally refused to interfere with the decision of the tribunal on the ground that any decision on the question of distribution should be left to its discretion. In the present case the (1) 563 tribunal has considered all the relevant factors and has come to the conclusion that five months ' bonus would meet the ends of justice. We do not see any reason to interfere with this award. In the result both the appeals fail and are dismissed. There will be no order as to costs in both the appeals. Appeals dismissed.

The workmen claimed bonus for the year 1956 equivalent to nine months ' total earnings on the ground that the employers had admitted their capacity to pay and that there was a big gap between the wage actually received and the living wage. The employers contended that they were paying the workmen a living wage and they were not entitled to any bonus. The employers relying mainly on the Report of the Textile Labour Committee, 1940, contended that if the living wage in 1940, i.e., Rs. 55/ was multiplied by 35 (due to rise in prices) it gave Rs. 192.50 as the living wage in 1956 and they were paying their workmen at a higher rate. The workmen relied on the recommendations of the Indian Labour Conference, 1957, to show that Rs. 209.70 approximated to the standard of the need based minimum wage and that the average wage paid by the employers was nothing more than this. The Tribunal held that the wages paid were fair but that there was still a gap between the actual wage and the living wage and awarded bonus equivalent to five months ' basic wages. Held, that the employers had failed to establish that they were paying a living wage to the workmen. In construing wage structure the considerations of right and wrong, propriety and impropriety, fairness and unfairness are also taken into account to some extent. As the social conscience of the general community becomes more alive and active, as the welfare policy of the State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the. growing strength of the trade union movement collective bargaining enters the field, wage structure ceases to be a purely arithmetical problem. Wages are usually divided into three broad categories: the basic minimum wage, the fair wage and the living wage. The concept of these three wages cannot be described in definite words ,is their contents are elastic and vary from time to time and from place to place. The concept of a living wage is not a static concept; it is expanding and the number of its constituents and their 537 respective contents are bound to expand and widen with the development and growth of national economy. In an under developed country no wage structure could be described as reaching the ideal of a living wage. It is unreasonable and unsafe to treat the Report of the Textile Labour Committee, 1940, as to the monetary value of the living wage in 1940 as sound. The figure reached by the committee in 1940 did not represent anything like a living wage; it really represented the minimum need based wage. Besides, the method of multiplying the figure by 35 was materially defective ; the proper approach was to evaluate each constituent of the concept of the living wage in the light of the present day prices. Even the highest average wage paid by the employers was much below the standard of the living wage though it was above the need based minimum. Express Newspapers (P.) Ltd. vs Union of India, , Standard Vacuum Oil Company vs Their Workmen, , Burmah Shell, etc., Oil Companies in Madras vs Their Employees, , Woykers of S.V.O.C., Ltd. (Standayd Vacuum Employees ' Union) vs Standard Vacuum Oil Co. Ltd., and Standard Vacuum Oil Company vs Their Employees, , referred to. Burmah Shell Oil Storage and Distributing Co. of India, Ltd., Bombay vs Their Workmen, , approved. Quaeye: Whether the workmen would be entitled to bonus even if a living wage is paid to them by the employers. Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, and Syee Meenakshi Mills Ltd. vs Their Workmen, ; , referred to.

Appeals Nos. 54 and 55 of 1957. Appeals from the judgment and decree dated March 11, 1953, of the Judicial Commissioner 's Court, Rewa, in First Appeals Nos. 104 and 116 of 1952. B. C. Misra, for the appellant. Tarachand Brijmohan Lal, for the respondent. January 31. The Judgment of the Court was delivered by HIDAYATULLAH, J. Mahabir Prashad Rungta, appellant in these two appeals, was plaintiff in his own suit and defendant in a counter suit filed by Durga Datt, the respondent. The two appeals have been filed on certificates granted by the Judicial Commissioner, Vindhya Pradesh against a common judgment and decree of the Judicial Commissioner 's Court in four appeals filed by the rival parties, two in each civil suit. Certificate was also granted to the respondent; but he did not take steps in that behalf, and we are, therefore, concerned only with the appeals of Mahabir Prashad Rungta. The two suits were filed in the following circumstances: Rungta owns a colliery at Budhar in Madhya Pradesh. On October 30, 1950, an agreement was executed between Rungta and the respondent, Durga Datt. Durga Datt agreed to transport coal from the colliery to the railway station at the rate of Rs. 2 8 0 per ton for a period of two years commencing from November 11, 1950, to November 10, 1952. That agreement is exhibit P 1. The case of Rungta was that Durga Datt broke the contract from July 29, 1951, by stopping the work of transport. Durga Datt in his suit on the other hand, averred that Rungta had 641 broken the agreement and work of carriage as a result was stopped from July 30, 1951. The difference of a day between them is of no consequence. Rungta 's case was that as a result of the breach of the contract on the part of Durga Datt, he was required to employ other carriers and to pay them at Rs. 3 per ton, and he incurred demurrage and damages to his constituents for delay in supplies. He, therefore, claimed a sum of Rs. 60,000 as damages, including Rs. 20,000 as general damages for loss of business, credit and repu tation. He admitted that a sum of Rs. 15,087 5 0 was owed by him to Durga Datt on account of coal carried by the latter, and he thus claimed Rs. 44,912 11 0, after allowing credit for that sum. Durga Datt, in his suit, asked for a decree for Rs. 49,544 12 0. This included Rs. 26,139 11 0 on account of arrears of bills and Rs. 905 1 0 as interest on the amount. The balance (Rs. 22,500) was claimed as damages for loss of business and profits of the unexpired period of the contract at Rs. 1,500 per month. In giving the particulars for Rs. 26,139 11 0, Durga Datt stated that he had transported 15,844 tons 2 Cwts. of coal to the end of July, 1951, which were loaded in the wagons and despatched. He also claimed Rs. 7,500 in respect of 3,000 tons of coal which he had transported to the railway yard, but which had not beed loaded in the wagons. After adjusting sundry amounts and allowing credit for Rs. 21,861 7 6, he claimed Rs. 26,139 11 0, as stated above. Durga Datt alleged that Rungta was guilty of breach of the contract, particularly of cls. (4), (5) and (8) thereof, which compelled him to rescind the contract. These clauses may be quoted here: "(4) Petrol : It will be arranged by party No. 1 himself but party No. 2 will help in time of need to get the petrol; the expenses incurred by party No. 2 for securing such petrol will be borne by party No. 1. If party No. 2 in spite of his best efforts cannot arrange for petrol then in such case party No. 1 will not be responsible for any loss in regard to transportation of coal. 642 (5) Payment of Bills: Party No. 2 will make payment of Bills of party No. 1 for actual despatch of coal on the 10th of the following months; (8) The road will be kept in repair by party No. 2. " The two suits were consolidated by the trial Judge, and evidence was partly recorded separately and partly for the two suits together. The trial Judge held that the breach of the contract proceeded from Durga Datt, and the suit of Rungta was decreed in the sum of Rs. 12,900 as damages due to him. In the other suit, the trial Judge held that Durga Datt was entitled to a payment of Rs. 26,695 6 6 and a decree for Rs. 13,795 6 6 was passed in his favour after setting off the two amounts against each other. The rest of the claims in the two suits were dismissed. The parties were dissatisfied with the decrees, and four appeals were filed. The learned Judicial Commissioner reversed the decision of the trial Judge. He held that Rungta was guilty of the breach of the contract, because he had not made payments to Durga Datt as laid down by el. (5) of the agreement and had not kept the road in repair. He ordered the dismissal of Rungta 's suit in its entirety, and reducing the amount decreed in Durga Datt 's favour by Rs. 918 6 0 for which there was a double charge, he passed a decree for Rs. 25,113 4 0 awarding interest at 6 per cent. per annum on the amount from August 1, 1951, till date of realisation. In these two appeals, Rungta challenges (a) the dismissal of his suit for damages based on the finding that the breach proceeded from him; (b) the inclusion of Rs. 7,500 in respect of 3,000 tons of coal said to have been transported to the railway yard but not loaded in the wagons; and (c) the award of, and in the alternative the rate of, interest. The main question in these appeals is, who was responsible for the breach of the contract ? The admitted position is that work stopped about the end of July, 1951. Previous to the closure of work, each party had written letters of protest to the other, Rungta complaining that Durga Datt had slowed his work and he was suffering loss, and Durga Datt 643 complaining that lack of arrangements for petrol, failure to repair the road and the withholding of the money due to him were making it impossible for him to fulfil the contract. The trial Judge did not accept the case set up by Durga Datt, and held that he had wilfully stopped work. The learned Judicial Commissioner, on the other hand, held that Rungta had unreasonably and in breach of the agreement, withheld large payments and had left the road in a poor state of repair and thus caused the breach of the contract. He did not attach much importance to the controversy over the supply of petrol, which controversy was not mooted before us again. of the two reasons on which Rungta was held responsible for the breach of the contract, the important one was the withholding of payment. Learned counsel for Rungta contended that time was not of the essence of the contract, and that, in any case, the payment of bills to Durga Datt depended upon the presentation of the bills in time. From the evidence, it appears that when the trucks were loaded, coal was not weighed. It was weighed at the bridge where the wagons were loaded, details of which were either with the railway company, or with the representative of Rungta at the station. Durga Datt was required to obtain the information from one source or the other, before he could make his bills. How much coal was transported by Durga Datt was a fact also within the knowledge of Rungta, and the clause quoted above merely provided for payment of the bills by the 10th of the following month, without stating expressly that the presentation of bill was a condition precedent to the payment. The learned Judicial Commissioner held, on both the points, against Rungta, and in our opinion, rightly. Even if the presentation of the bills be regarded as a condition precedent to payment, it is clear enough that Rungta paid not the whole of the amounts due under the bills but, only small sums from time to time. Learned counsel for Rungta contended that Durga Datt, by receiving such payments and by not insisting on his rights, must be deemed to have waived payment in a lump sum under cl. But no case of waiver 644 was pleaded by him,, and the evidence, if any, cannot be looked into. In any event, an examination of the accounts between the parties discloses that payments were, in fact, withheld. Under the agreement, 10 per cent. of the bills was to be withheld to build up a security deposit of Rs. 2,000, and an amount in excess of this was withheld by the end of May. No doubt, the bills were not presented by Durga Datt at the end of each month; bills for April and May were submitted on July 16, 1951 and bills for June and July, on August 6 and 12 respectively. Even so, the indebtedness of Rungta to Durga Dutt stood as follows: 16th July, 1951 about Rs. 7,835 27th July, 1951 " Rs. 6,790 6th August, 1951 " Rs. 11,170 12th August, 1951 " Rs. 15,590 These sums were in addition to a security deposit of Rs. 2,038. Whatever might be the intent and purpose of the clause in question, it is clear enough that Rungta was withholding substantial amounts over a very long period without any reasonable cause. To Durga Datt, the receipt of money in time was a vital consideration if he was to fulfil his contract at all. It was not to be expected that he would go on carrying thousands of tons of coal from the colliery without receiving payments. In our opinion, these facts speak for themselves, and amply support the finding of the learned Judicial Commissioner that Rungta was really responsible for hamstringing the work of Durga Datt. Why Rungta did so is not very clear from the record of the case, though an 'attempt was made to show that the quantity of coal transported from month to month was falling. An abstract of the quantities transported does not support this allegation. This abstract is of the quantity loaded in wagons. The figures are almost constant, except in one month (April). There were, of course, variations in the quantity of coal loaded in the wagons from month to month; but the evidence shows that some coal remained at the siding in heaps and was not loaded immediately. The variation in the quantity also might have been due as much to Durga Datt as to the colliery and its output. In our judgment, no 645 inference can be drawn from the abstract, showing the quantities of coal loaded into the wagons, that Durga Datt had slackened work after May. Learned counsel for Rungta cited some cases in which time was not considered as of the essence of the contract. Most of these cases deal with immovable property, where a different rule applies. In commercial transactions, time is ordinarily of the essence, and in the agreement, with which we are concerned, the payment of bills by a particular date was expressly mentioned. The intention, obviously, was that Durga Datt would receive payments for work executed as soon as the amounts became due. Rungta did not pay these amounts, which were also within his own knowledge either by the 10th of the following month or even within a reasonable time after the presentation of the bills. In these circumstances, we are of opinion that cl. (5) was breached by Rungta. In addition to this, there were difficulties of the road being in a bad state during the rainy season. The evidence shows that the wheels of the trucks used to sink in the mud frequently and the trucks had to be dragged out. For this state of affairs, Rungta was mainly responsible under cl. The inclusion of the clause in the agreement itself shows that the parties realised that there might be hindrance to, the trucks, if the road was not repaired. The finding of the Judicial Commissioner on this part of the case is, therefore ' sound, though that reason by itself might not have been sufficient for stopping the work altogether and rescinding the contract. The case is thus covered by section 55 of the Indian Contract Act, and Durga Datt was entitled to rescind the contract, when the very important condition of the agreement was broken by Rungta. We confirm the finding of the Judicial Commissioner on this part of the case. This brings us to the inclusion of Rs. 7,500 on account of 3,000 tons of coal alleged to have been transported. The evidence on. this part of the case is somewhat unsatisfactory. Fortunately for Durga Datt, some of the witnesses of Rungta admitted that besides coal 646 which was loaded in the wagons, there were three large heaps of coal lying in the yard and that this coal was transported by Durga Datt. The estimate of Durga Datt was 3,000 tons. That is no more than a mere guess. A railway official was examined in the case, and he stated that loose coal was sufficient to fill " 100 or 50 wagons ". From the schedule filed, it appears that a wagon carries on an average 20 tons. Taking the number of wagons as 75, the quantity could not exceed 1,500 tons. A sum of Rs. 3,750 as payment for 1,500 tons at Rs. 2 8 0 per ton ought to have been included, instead of Rs. 7,500. To that extent, the decree in favour of Durga Datt would be modified. There remains the question of interest. Interest for a period prior to the commencement of suit is claim. able either under an agreement, or usage of trade or under a statutory provision or under the Interest Act, for a sum certain where notice is given. Interest is also awarded in some cases by Courts of equity. (Bengal Nagpur Railway Co. Ltd. vs Ruttanji Ramji (1)). In the present case no agreement about interest was made, nor was it implied: The notice which was given did not specify the sum which was demanded, and, therefore, the Interest Act does not apply. The present case also does not fall within those cases in which Courts of equity grant interest. Learned counsel for Durga Datt claimed interest as damages; but it is well settled that interest as damages cannot be awarded. Interest up to date of suit, therefore, was not claimable, and a deduction shall be made of such interest from the amount decreed. As regards interest pendente lite until the date of realisation, such interest was within the discretion of the Court. The rate fixed is 6 per cent. which, in the circumstances and according to the practice of Courts, appears high. Interest ,shall be calculated at 4 percent. per annum instead of at 6 per cent., and the decree shall be modified accordingly. Except for reduction in the amount decreed by Rs. 3,750 and of interest up to the date of the filing of the suit which has been disallowed arid of the rate of (1) (1937) L.R. 65 1.A. 66. 647 interest pendente lite until realisation, the appeals shall stand dismissed. In view of the substantial failure of the appeals, the appellant shall pay the costs in this Court. One hearing fee.

The respondent had agreed to transport coal from the appel lant 's colliery to the railway station. The appellant had to keep the road in repair and arrange for petrol and had to make the payment for the actual coal despatched by the 10th of the following month. The appellant complained that he was suffering loss as the respondent had slowed down the work and the respondent complained that by not arranging for the petrol, not keeping the road in repairs and not making payments of amounts due the appellant had made it impossible to fulfil the contract. The quantity of coal transported was a fact within the knowledge of the appellant and the agreement merely provided for payment of the bills by 10th of the following month, without stating expressly that the presentation of bill was a condition precedent to the payment. The appellants contended that time was not of the essence of the contract and in any case the payment of the bills depended upon the presentation of bills in time and also challenged the award of the interest. Held, that in commercial transactions time is ordinarily of the essence of the contract and was made so in the contract and when this important condition of the agreement was broken, section 55 of the Indian Contract Act could be invoked by the aggrieved party and he was entitled to rescind the contract. In the present case by withholding the payment of the bills cl. (5) of the contract was breached by the appellant. Held, further, that interest for a period prior to the com mencement of suit is claimable either under an agreement or usage of trade or under a statutory provision or under the Interest Act for,% sum certain where notice is given These 640 conditions not being satisfied and this being not a case in which Court of Equity grants interest, interest was not awardable as damages. Held, further, that interest pendente lite being in the discretion of Court, should be fixed in accordance with the circumstances and practice of the Court and should not be too high. Bengal Nagpur Railway Co. Ltd. vs Ruttanji Ramji, (1937) L.R. 65 I.A. 66, referred to.

Appeal No. 105 of 1950. Appeal from the Judgment and Order dated March 22, 1945, of the Court of the Judicial Commissioner, Ajmer Merwara, Ajmer (Davies J. C.) in Civil First Appeal No. 16 of 1944, arising out of the Judgment and Decree dated March 13, 1944, of the Court of the Judge, Small Causes, Ajmer, and Additional District Judge, Ajmer, in Civil Suit No. 28 of 1942. section section Deedwania for the appellant. M. C. Setalvad, Attorney General for India, (J. N, Sharma, with him) for the respondents, 199 1952. November 10. The Judgment of the Court was delivered by MAHAJAN 'J. This is an appeal by special leave granted by the Privy Council and limited to the question of court fee, viz., whether the memorandum of appeal presented to the High Court court fee was payable under section 7 (iv) (e) or article 17 of Schedule II of the Court Fees Act. The question whether the memorandum of appeal was properly stamped arose in the following circumstances: Edward Mills Co. Ltd. is a joint stock company situate in Beawar, Ajmer Merwara. In accordance with the provisions of the articles of the company one Seth Gadh Mal Lodha and Rai Sahib Moti Lal (respondent No. 2) were its chairman and managing director respectively since 1916. Seth Gadh Mal Lodha represented his family 'firm of Kanwal Nain Hamir Singh, while Rai Sahib Moti Lal represented the joint family firm of Champa Lal Ram Swaroop, 1st July, 1938, Rai Sahib Moti Lal and his firm were adjudged insolvents by the Bombay High Court. The result was that respondent No. 2 had to vacate the office of managing director and the members of his firm also became ineligibleforit. By a resolution of the board of direetors passed 18th July, 1938, Gadh Mal Lodha was appointed to take the place of Rai Sahib Moti Lal as managing director. Gadh Mal Lodha died llth January, 1942, and the board of directors then appointed Seth Sobhagmal Lodha to act as chairman as well as managing director till the, appointment was made by the company. An extraordinary meeting of the company was called for the 8th February, 1945, for the election of the chairman. At this meeting conflict &rose between the two groups represented by Sobhagmal Lodha and Moti Lal. The chairman therefore dissolved the meeting but the supporters of Moti Lal continued to hold it and passed a resolution appointing him as the sole agent and chairman for a period of twenty years a remuneration equal to ten per cent of the profits of the company It is this 200 resolution of the 8th February, 1942, which has led to the present dispute. Seth Sobhagmal in the situation that arose approached the District Judge of Ajmer with the prayer that a general meeting of the company may be held under the supervision of the court. This request was allowed 11th February, 1942, and the court ordered that the meeting be held 12th February, 1942, under the chairmanship of Seth Sobhagmal. Respondent No. 2 being aggrieved by this order, filed an ap plication in revision in the Court of the 'judicial Commissioner impugning the order. The learned Judicial Commissioner allowed the revision and directed that the resolution of the 8th February, 1942, should be acted upon. Having failed to get redress in the summary proceedings, the appellant then filed the suit out of which this appeal arises for quashing the resolution of the 8th February, 1942. In the plaint he asked for the following relies: 1. That it be declared that the appointment of defendant No. 2 is illegal, invalid and ultra vires and that he has no right to act as chairman, managing director etc. of defendant No. 1; 2. That a receiver be appointed to take charge of the management of the company, until a properly qualified chairman managing director etc. are duly appointed as required by the memorandum and articles of the company. The plaint bore a court fee stamp of Rs. 10 only, but the objection of the respondents that court fee was payable relief No. 2 the appellants paid ad valorem fee Rs. 51,000 which was the valuation of the suit for purposes of jurisdiction. The Additional District Judge dismissed the suit the preliminary ground that it was not maintainable as it related to the internal management of the company and that the, appellants had no right to bring it without impleading the directors who were necessary parties to it. 201 Aggrieved by this decision of the trials Judge, the appellants preferred an appeal to the Court of the Judicial Commissioner, Ajmer Merwara, at Ajmer. The memorandum of appeal was Stamped with a courtfee stamp of Rs. 1 0 and it was expressly stated therein that relief No. 2 of the plaint was given up. An objection was raised regarding the amount of courtfee paid the memorandum of appeal. The Judicial Commissioner ordered that proper court fees be paid thereon in a month. In this order no reasons were given for this decision. The additional fee demanded was not paid, and the Judicial Commissioner dismissed the appeal with costs 22nd March, 1945. An application was made for leave to appeal to the Privy Council against this order but, it was refused. In the order refusing leave it was said as follows: " appeal to this court, the memorandum was again stamped with a ten rupee stamp only and the respondents therefore objected. It having been conceded by plaintiffs earlier that the relief for the receivership was consequential to the relief for the declaration, the appellants were directed to pay the same stamp as had been paid in the trial Court. They objected stating that they had expunged from their memorandum of appeal the request that the court should appoint a receiver and that they were not, therefore, liable to pay the same amount this a notice was issued and counsel were beard. It being clearly set out in section 42 of the Specific Relief Act that no court shall grarant a declaration only where the plaintiff being able to seek further relief than a mere declaration of title omits to do so, the appellants were directed to pay as earlier ordered the same amount as bad ultimately been paid the plaint. They had earlier sought a consequential relief and the court 'was, therefore, entirelv unable to hold that the plaintiffs were unable to seek a further relief, they having sought the relief in the lower court and it having been refused to them. The amount of the stamp was not paid and the appeal was therefore dis missed with costs. " 202 The reasons for demanding additional court fee, though not mentioned in the original order, are stated in this order. The question for determination in this appeal is whether the order of the Judicial Commissioner demanding additional court fee can be sustained in law. A memorandum of appeal, as provided in article 1 of Schedule I of the Court Fees Act, has to be stamped according to the value of the subject matter in dispute in appeal; in other words, the relief claimed in the memorandum of appeal determines the value of the appeal for purposes of court fee. The only relief claimed in the memorandum of appeal was the first one mentioned in the plaint. This relief being purely of a declaratory character, the memorandum of appeal was properly stamped under article 17 of Schedule II It is always open to the appellant in appeal to give up a portion of his claim and to restrict it. It is further open to him; unless the relief is of such a nature that it cannot be split up, to relinquish a part of the claim and to bring it within the amount of court fee already paid: Brahnmnandam vs Secretary of State for India(1); Ram Prasad vs Bhiman(2); Karam Chand vs Jullundur Bank Ltd(1); Neelachalam vs Nara singha Das(4); Sah Bamehand vs Pannalal(5); Chuni Lal vs Sheo Charanlat Lalman(1). The plaintiffs in express terms relinquished the second relief,they had claimed in the plaint, in their memorandum of appeal. For the purpose of deciding whether the memorandum of appeal was properly stamped according to the subjectmatter of the appeal, it was not open to the Judicial Commissioner to canvass the question whether the suit with the second prayer eliminated from it fell within the mischief of the proviso to section 42 of the Specific Relief Act. That was a question which related to the merits of the appeal and did not concern its proper institution this ground, therefore, the Judicial Commissioner had no jurisdiction to demand (I) Mad. 48 (2) All. 151. (3) A.I.R. 1927 Leh. 543. (4) A.R. (5) A.I.R. 1929 All. (6) All. 203 additional fee from the plaintiffs and the appeal could not be dismissed for failure to meet it. We are thus of the opinion that the order demanding additional court fee the memorandum of appeal as it stood, ' that is, minus the second prayer, was erroneous and we hold that the memorandum of appeal was properly stamped, as the subject matter of the appeal was purely of a declaratory character. Mr. Setalvad for the respondents contended that the first relief claimed in the plaint, and which was the subject matter of the appeal included within it consequential relief and was not purely declaratory in nature and therefore the Judicial Commissioner was right in demanding additional court fee the value of the consequential relief. It was said that the words that respondent No. 2 "had no right to act as chairman and managing director" amounted to a claim for consequential relief. We are unable to agree. The claim contained in the first relief of the plaint is to the effect that it be declared that defendant No. 2 has no right to act as chairman an managing director because of his appointment being illegal, invalid, and ultra vires. The declaration claimed is in negative form that defendant No. 2 has no right to act as chairman and managing director. No claim for a consequential relief can be read within this prayer. The words "that defendant 2 has no right to act as chairman. . ' ' are mere repetition and reiteration of what is contained in the opening sentence of the paragraph. This contention of Mr. Setalvad, therefore, cannot be sustained. It was next contended that in view of the provisions of section 12 of the Court Fees Act it should be held that the decision of the Judicial Commissioner ' was final, and could not be challenged in appeal. Section 12 of the Court Fees Act enacts as follows: "Every question relating to Situation for the purpose of determining the amount of any fee chargeable under this chapter a plaint or memorandumu 204 of appeal shall be decided by the court in which such plaint or memorandum, as the case may be, is filed, and such decision shall be final as between the parties 'to the suit. " The provisions of this section have to be read and construed keeping in view the provisions of the Code of Civil Procedure. Order VII, Rule 11, Civil Procedure Code, provides as follows: "The plaint shall be rejected (b) where the relief claimed is undervalued and the plaintiff, being required by the court to correct the valuation within a time to be fixed by the court, fails to do so;. (d) where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and the plaintiff, being required by the court to supply the requisite stamp paper within a time to be fixed by the court, fails to do so. " An order rejecting a plaint is a decree as defined in section 2; sub section (ii), and is appealable as such. There is an apparent conflict between the provisions of the Code of Civil Procedure and the provisions of section 12 which make the order relating to valuation final and efforts to reconcile the provisions of the Court Fees Act and the Code have resulted in some divergence of judicial opinion the construction of the section. In a number of decisions the Calcutta High Court took the view that the finality declared by section 12 of the Court Fees Act had been taken away by the relevant provisions of the Code, as the order rejecting a plaint was appealable as a decree, no matter whether the dispute related to the category under which the same falls for purposes of court fee or only to valuation pure and simple under a particular category: Vide In re Omrao Mirza vs Mary Jones(,) and Tara Prasanna Chongdar vs Nrisingha Moorari Pal(1). This extreme view has not been maintained in later decisions and it has been held that the finality declared by section 12 is limited only to the question (2) Cal. 205 of valuation pure and simple and does not relate to the category under which a certain suit falls: Tariman Khatun vs Secretary o State for India in Council(1). The Allahabad High Court in its earlier decisions took the extreme view: Vide Muhammad Sadik vs Muhammad Jan(2). Later that court veered round to the view that the finality declared by section 12 only related to matters of, appraisement. The High Court of Lahore has placed a similar construction the meaning of the expression "valuation" in section 12 and has held that the finality attaches only to a decision which concerns valuation simpliciter and no finality attaches when a court decides a question whether a case falls within one or other category of the cases mentioned in the different sections and schedule of the Court Fees Act: Vide Mahna Singh vs Bahadur Singh(1); Mst. Parmeshri vs PannaLal(1). Thisviewhasconsistentlybeenheldin thatcourt. The Madras High Court took the same view in Lakshmi Amma vs Janamajayam Nambiar(5); Annamalai Chetty V. Cloete(6); and Narasimhalu Chetty vs Bamayya Naidu(7). Mr. Setalvad drew our attention to the recent Full Bench decision of that court in Madana Mohana Naiko vs Krupasindhu Naiko(1). That case, however, concerned the second part of section 12 and was not concerned directly with the construction to be placed the first part of the section. It, however, contains certain observations indicating that in the opinion of the judges there was no ground for this restricted construction of the word " valuation " in section 12 and that the finality declared bysection 12 attached not only to valuation pure and simple but also attached to decisions relating to category under which a suit or appeal falls for purposes of court fee. These obiter observations, however, cannot be said to ,,overrule the earlier Full Beach decision of that court in Lakshmi Amma vs Janamajayam Nambiar(5). In a (1) I.I.R.(1940) (2) (1889) I.L.R. II All. 91, F.B. (3) (4) A I.R. 27 (5) , F.B. (6) Mad. 204. (7) A.I.R. 1942 Mad. (8) A.I.R. 1937 Mad. 81. 206 later decision in Narasimhalu Chetty vs Bamayya Naidu(1), the decision of the Full Bench was explained as not in any way overruling the decision in Lakshmi Amma vs Janamajayam Nambiar(2). All recent decisions of the Bombay High Court have taken the same view: Vide Dada vs Nagesh(3); Krishnaji Bari Dhandhere vs Gopal Narain Dhandhere(4). Mr. Setalvad drew our attention to an earlier decision of the Bombay High Court in Vithal Krishna vs Balakrishna Janardan(5). In that case the court undoubtedly held that no appeal lay and the finality declared by section 12 was comprehensive enough to include all questions whether relating to category or valuation pure and simple. It was, however, held that the High Court could correct an erroneous decision in the exercise of its revisional powers. Thus the finality declared by section 12 was destroyed by the exercise of powers of appeal under the guise of exercising revisional jurisdiction. In Patna and Oudh the game view has been taken as in Lahore. Vide Chandramoni Koer vs Basdeo Narain Singh (6); Gumani vs Banwari(7). It thus appears that the consensus of judicial opinion is against the construction suggested by Mr. Setalvad. We think that the construction given to the language in section 12 in these decisions is right, and our reasons for saying so are these: The difference in the phraseology employed in sections 5 and 12 of the Court Fees Act indicates that the scope of section 12 is narrower than that of section 5. Section 5 which declares decisions questions of court fee whenever they arise in the chartered High Courts as final makes a decision as to the necessity of paying a fee or the amount thereof final. Whereas section 12 makes a decision every question relating to valuation for the purpose of determining the amount of any fee payable under chapter 3 a plaint or memorandum of appeal final. Had section 12 been drafted somewhat as follows (i) A.I.R. 1942 Mad. 502.(5) (1886) I.L.R. lo Bom. 610, F.B, (2) F.B.(6) (3) Bom. 486.(7) (4) A.I.R. 1936 Bom. 207 "If any dispute arises as to the amount of any fee chargeable under this chapter a plaint or memorandum of appeal, it shall be decided by the court in which such plaint or memorandum is filed and such decision shall be final as between the parties$), then the construction contended for by Mr. Setalvad might have been upheld. When the two sections in the same Act relating to the same subject matter have been drafted in different language, it is not unreasonable to infer that they were enacted with a different intention and that in one case the intention was to give finality to all decisions of the taxing officer or the taxing judge, as the case may be, while in the other case it was only intended to give finality to questions of fact that are decided by a court but not to questions of law. Whether a case falls under one particular section of the Act or another is a pure question of law and does not directly determine the valuation of the suit for 'purposes of court fee. The question of determination of valuation or appraisement only arises after it is settled in what class or category it falls. It has been argued in some decisions that it is absolutely necessary to decide the category in which a case falls before assessing its value and therefore the determination of the question of category is necessarily involved in the determination of the valuation of the suit for purposes of courtfee. This argument, though plausible, does not seem sound. The actual assessment of the value depends either arithmetical calculations or upon a valuation by an expert and the evidence led in the case, while the decision of the question of category is one of law and may well be said to be an independent question antecedent but not relating to valuation. The expression " valuation" interpreted in its ordinary meaning Of "appraisement", cannot be said to necessarily include within its ambit the question of category which is a matter of law. The construction placed this section by a long course of decisions is one which 208 reconciles the provisions of the Court Fees Act with that of the Code of Civil Procedure and does not make those provisions nugatory and is therefore more acceptable than the other constructions which would make the provisions of either one or the other of these statutes nugatory. Perhaps it may be possible to reconcile the provisions of the two statutes by holding that the finality declared by section 12 of the Court Fees Act means that the parties cannot impugn such a decision by preferring an appeal but that it does not confer such decisions a complete immunity from examination in a higher court. In other words section 12 when it says that such a decision shall be final between the parties only makes the decision of the court a question of court fee nonap pealable and places it the same footing as other interlocutory nod appealable orders under the Code and it does no more than that. If a decision under section 12 is reached by assuming jurisdiction which the court does not possess or without observing the formalities which are prescribed for reaching such a) decision, the order obviously would be revisable by the High Court in the exercise of revisional powers. Similarly, when a party thinking that a decision under section 12 is palpably wrong takes the risk of his plaint being rejected or suit dismissed and then appeals from the order rejecting the plaint or from the decree dismissing the suit but not from the decision the question of court fee, then it is open to him to challenge the interlocutory order even the question of court fee made in the suit or apppal. The word "finality" construed in the limited sense in which it is often used in statutes means that no appeal lies from an order of this character as such and it means no more than that. Conceding for the sake of argument but not admitting that Mr. Setalvad is right in his contention that section 12 is comprehensive enough to include within its ambit all questions relating to court fee whether they involve a decision as to question of category or as to valuation simpliciter, in the present 209 case the Judicial Commissioner decided none of these questions and: his decision cannot be said to be one falling within the ambit of section 12. All that the Judicial Commissioner decided was that as the suit could not be maintained without asking for relief No. 2, the same fee was payable the memorandum of appeal as the plaint. In substance the court decided an issue regarding the maintainability of the appeal without first deciding whether the appeal had been properly instituted in that court. No finality can attach to such a decision by the provisions of section 12, as in reality it decides no question within, the ambit of section 12 of the Court Fees Act. For the reasons given above the second objection raised by Mr. Setalvad that no appeal lies from the order of the Judicial Commissioner by special leave is without force and is overruled. The result, is, that the appeal is allowed, the decision of the Judicial 'Commissioner dismissing the appeal is set aside and the case remanded to him for decision in accordance with law the basis that the memorandum of appeal presented to him was properly stamped. The appellants ' costs of this appeal will be costs in the appeal in the Court of the Judicial Commissioner. Appeal allowed.

In a plaint the following reliefs were asked for, viz., (i) that it be declared that the appointment of 'defendant No. 2 as chairman of the board of directors of a company is illegal, invalid and ultra vires and that he has no, right to act as chairman, managing director etc., and (ii) that a receiver be appointed to take charge of the management of the company. The 'plaint bore a court fee stamp of Rs. 10 only but, the objection of the defendants, ad valorem fee was paid Rs. 51,000 which was the valuation of the suit. The suit was dismissed and the plaintiff preferred an appeal giving up the second relief and paying a court fee of Rs. 10 only. The appellate Court ordered payment of ad valorem court fee and non compliance rejected the memorandum of appeal, 0n further appeal: ' 198 Held, (i) that it was o pen to the appellant to give up the second relief in appeal and, as the subject matter of the appeal was of & purely declaratory nature, the memorandum of appeal was properly stamped; (ii)that the first relief was of a purely declaratory nature and did not involve any consequential relief ; (iii)that section 12 of the Court Fees Act did not preclude the Court from considering the correctness of the order of the low er appellate court rejecting the appeal the ground that the memorandum of appeal was not properly stamped. The finality imposed by section 12 of the Court Fees Act deci sions relating to court fee attaches only to decisions concerning valuation simpliciter; it does not attach to decisions relating to the category under which a suit or appeal falls for purposed of court fees. Section 12 of the Court Fees Act when it says that such a decision shall be final between the parties only makes the decision of the court a question of court fee non appealable and places it the same footing as other interlocutory non appealable orders under the Code and does no more than that. If a decision under section 12 is reached by assuming jurisdiction which the court does not possess or without observing the formalities which are prescribed for reaching such a decision, the order obviously would be revisable by the High Court in the exercise of revisional powers. Similarly, when a party thinking that a decision under section 12 is palpably wrong takes the risk of his plaint being rejected or suit dismissed and then appeals from the order rejecting the plaint or from the decree dismissing the suit but not from the decision the question of court fee, then it is open to him to challenge the interlocutory order even the question of court fee in the suit or appeal. The word " finality " construed in the limited sense in which it is often used in statutes means that no appeal lies from an order of this character as such and it means no more than that.

87 of 1959. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. M. P. Amin, Dara P. Mehta, P. M. Amin; section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra for the petitioners. A. V. Viswanatha Sastri, R. Ganapathy Iyer, P. Kesava Pillai and T. M. Sen, for the respondents. H. N. Sanyal, Additional Solicitor General of India, B. Sen and R. H. Dhebar, for the Intervener. 541 1960. November, 21. The, Judgment of P. B. Gajendragadkar, A. K. Sarkar, K. Subba Rao and J. R. Mudholkar, JJ., was delivered by P. B. Gajendragadkar J., K. N. Wanchoo, J., delivered a separate judgment. GAJENDRAGADKAR, J. This is a petition filed under article 32 of the Constitution in which the validity of the Orissa Mining Areas Development Fund Act,( , 1952 (XXVII of 1952), is challenged. The first petitioner is a public limited company which has its registered office at Bombay. A large majority of its shareholders are citizens of India; some of them are themselves companies incorporated under the Indian Companies Act. Petitioners Nos. 2 to 7 are the Directors of Petitioner No. 1, the second petitioner being the Chairman of its Board of Directors. These petitioners are all citizens of India. At all material times the first petitioner carried on and still carries on the business of producing and selling coal excavated from its collieries at Rampur in the State 'of Orissa. Two leases have been executed in its favour; the first was executed on October 17, 1941, by the Governor of Orissa whereby all that piece or parcel of land in the registration district of Sambalpur admeasuring about 3341.79 acres has been demised for a period of 30 years commencing from September 1, 1939, in consideration of the rent reserved thereby and subject to the covenants and conditions prescribed thereunder; and the second is a surface lease executed in its favour by Mr. Mohan Brijraj Singh Dee on April 19, 1951, in relation to a land admeasuring approximately 211.94 acres for a like period of 30 years commencing from February 4, 1939, in consideration of the rent and subject to the terms and conditions prescribed by it. Pursuant to section 5 of the Orissa Estates Abolition Act, 1951, all the right, title and interest of the Zamindar of Rampur in the lands demised to the first petitioner under the second lease vested in respondents, the State of Orissa. Since then the first petitioner has duly paid the rent reserved by the said lease to the appropriate authorities appointed by respondent 1, 69 542 and has observed and performed all the conditions and covenants of the said lease. In exercise of its rights under the said two leases the first petitioner entered upon the lands demised and has been carrying on the business of excavating and producing coal at its collieries at Rampur. In December, 1952, the Legislature of the State of Orissa passed the impugned Act; and it received the assent of the Governor of Orissa on December 10, 1952. It was, however, not reserved for the consideration of the President of India nor has it received his assent. In pursuance of the rule making power conferred on it by the impugned Act respondent 1 has purported to make rules called the Orissa Mining Areas Development Act Rules, 1955; these rules have been duly notified in the State Gazette on January 25, 1955. Subsequently, the Administrator, respondent 2, appointed under the impugned Act issued a notification on June 24, 1958, whereby the first petitioner 's Rampur colliery has been notified for the purpose of liability for the payment of cess under the impugned Act. The area of this colliery has been determined at 3341.79 acres. In its appeal filed under rule 3 before the Director of Mines the first petitioner objected to the issue of the said notification, inter alia, on the ground that the impugned Act and the rules framed under it were ultra vires and invalid; no action has, however, been taken on the said appeal presumably because the authority concerned could not enter tain or deal with the objections about the vires of the Act and the rules. Thereafter on March 26, 1959, the Assistant Administrative Officer, respondent 3, called upon the first petitioner to submit monthly returns for the assessment of the cess. The first petitioner then represented that it had filed an appeal setting forth its objections against the notification, and added that until the said appeal was disposed of no returns would be filed by it. In spite of this representation respondent 3, by his letter of May 6, 1959, called upon the 543 first petitioner to submit monthly returns in the prescribed form and issued the warning that failing compliance the first petitioner would be prosecuted under section 9 of the impugned Act. A similiar demand was made and a similar warning issued by respondent 3 by his letter dated June 6, 1959. It is under these circumstances that the present petition has been filed. The petitioners contend that the impugned Act and ' the rules made thereunder are ultra vires the powers of the Legislature of the State of Orissa, or in any event they are repugnant to the provisions of an existing law. According to the petition the cess levied under the impugned Act is not a fee but is in reality and in substance a levy in the nature of a duty of excise on the coal produced at the first petitioner 's Rampur colliery, and as such is beyond the legislative competence of the Orissa Legislature. Alternatively it is urged that even if the levy imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II of the Seventh Schedule, it would nevertheless be ultra vires having regard to the provisions of Entry 54 in List I read with Central Act LIII of 1948. The petitioners further allege that even if the said levy is held to be a fee it would be similarly ultra vires having regard to Entry 52 in List I read with Central Act LXV of 1951. According to the petitioners the impugned Act is really relatable to Entry 24 in List III, and since it is repugnant with Central Act XXXII of 1947 relatable to the same Entry and covering the same field the impugned Act is invalid to the extent of the said repugnancy under article 254. On these allegations the petitioners have applied for a writ of mandamus or a writ in the nature of the said writ or any other writ, order or direction prohibiting the respondents from enforcing any of the provisions of the impugned Act against the first petitioner; a similar writ or order is claimed against respondent 3 in respect of the letters addressed by him to the 1st petitioner on March 3, 1959 and June 6, 1959. This petition is resisted by respondent 1 on several grounds. It is urged on its behalf that the levy 544 imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II and its validity is not affected either by Entry 54 read with Act LIII of 1948 or by 'Entry 52 read with Act LXV of 1951. In the alternative it is contended that if the said levy is held to be a tax and not a fee, it would be a tax relatable to Entry 50 in List II, and as such the legislative competence of the State Legislature to impose the same cannot be successfully challenged. Respondent 1 disputes the petitioner 's contention that the impugned Act is relatable to Entry 24 in List III; and so, according to it, no question of repugnancy with the Central Act XXXII of 1947 arises. After this appeal was fully argued before us Mr. Amin suggested and Mr. Sastri did not object that we should hear the learned Attorney General on the question as to whether even if the levy imposed by the impugned Act is a fee relatable to Entries 23 and 66 in List II of the Seventh Schedule, it would nevertheless be ultra vires having regard to the provisions of Entry 54 in List I read with Central Act LIII of 1948. Accordingly we directed that a notice on this point should be served on the learned Attorney General and the case should be set down for hearing on that point again. For the learned Attorney General the learned Additional Solicitor General appeared before us in response to this notice and we have had the benefit of hearing his arguments on the point in question. The first question which falls for consideration is whether the levy imposed by the impugned Act amounts to a fee relatable to Entry 23 read with Entry 66 in List II. Before we deal with this question it is necessary to consider the difference between the concept of tax and that of a fee. The neat and terse definition of tax which has been given by Latham, C. J., in Matthews vs Chicory Marketing Board (1) is often cited as a classic on this subject. "A tax", said Latham, C. J., "is a compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered". In bringing out the essential features of a tax this defini (1) ; , 276. 545 tion also assists in distinguishing a tax from a fee. It is true that between a tax and a fee there is no generic difference. Both are compulsory exactions of money. by public authorities; but whereas a tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the consolidated fund which ultimately is utilised for all public purposes, whereas a cess levied by way of fee is not intended to be, and does not become, a part of the consolidated fund. It is earmarked and set apart for the purpose of services for which it is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax payer and the public authority there is no option to the tax payer in the matter of receiving the service determined by public authority. In regard to fees there is, and must always be, co relation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax; and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co relation between the service and the levy, or whether the levy is either not co related with service or is levied to such an 546 excessive extent as to be a presence of a fee and not a fee in reality. In other words, whether or not a particular cess levied by a statute amounts to a fee or tax would always be a question of fact to be determined in the circumstances of each case. The distinction between a tax and a fee is, however, important, and it is recognised by the Constitution. Several Entries in the Three Lists empower the appropriate Legislatures to levy taxes; but apart from the power to levy taxes thus conferred each List specifically refers to the power to levy fees in respect of any of the matters covered in the said List excluding of course the fees taken in any Court. The question about the distinction between a tax and a fee has been considered by this Court in three decisions in 1954. In The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1) the vires of the Madras Hindu Religious and Charitable Endowments Act, 1951 (Madras Act XIX of 195 1), came to be examined. Amongst the sections challenged was section 76(1). Under this section every religious institution had to pay to the Government annual contribution not exceeding 5% of its income for the services rendered to it by the said Government; and the argument was that the contribution thus exacted was not a fee but a tax and as such outside the competence of the State Legislature. In dealing with this argument Mukherjee, J., as he then was, cited the definition of tax given by Latham, C.J., in the case of Matthews (2), and has elaborately considered the distinction between a tax and a fee. The learned judge examined the scheme of the Act and observed that "the material fact which negatives the theory of fees in the present case is that the money raised by the levy of the contribution is not earmarked or specified for defraying the expense that the Government has to incur in performing the services. All the collections go to the consolidated fund of the State and all the expenses have to be met not out of those collections but out of the general revenues by a proper method of appropriation as is done in the (1) ; (2) ; 547 case of other Government expenses". The learned judge no doubt added that the said circumstance was not conclusive and pointed out that in fact there was a total absence of any co relation between the expenses incurred by the Government and the amount raised by contribution. That is why section 76(1) was struck down as ultra vires. The same point arose before this Court in respect of the Orissa Hindu Religious Endowments Act, 1939, as amended by amending Act 11 of 1952 in Mahant Sri Jagannath Ramanuj Das vs The, State of Orissa (1). Mukherjea, J., who again spoke for the Court, upheld the validity of section 49 which imposed the liability to pay the specified contribution on every Mutt or temple having an annual income exceeding Rs. 250 for services rendered by the State Government. The scheme of the impugned Act was examined and it was noticed that the collections made under it are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They go to constitute a fund which is contemplated by section 50 of the Act, and this fund to which the Provincial Government contributes both by way of loan and grant is specifically set apart for the rendering of services involved in carrying out the provisions of the Act. The same view was taken by this Court in regard to section 58 of the Bombay Public Trust Act, 1950 (Act XXIX of 1950) which imposed a similar contribution for a similar purpose in Ratilal Panachand Gandhi vs The State of Bombay (2). It would thus be seen that the tests which have to be applied in determining the character of any impugned levy have been laid down by this Court in these three decisions; and it is in the light of these tests that we have to consider the merits of the rival contentions raised before us in the present petition. On behalf of the petitioners Mr. Amin has relied on three other decisions which may be briefly considered. In P. P. Kutti Keya vs The State of Madras (3), the Madras High Court was called upon to consider, inter (1) ; (2) [1954] S.C.R. 1055. (3) A.I.R. 1954 Mad. 621. 548 alia, the validity of section 11 of the Madras Commercial Crops Markets Act 20 of 1933 and Rules 28(1) and 28(3) framed thereunder. Section 11(1) levied a fee on the sales of commercial crops within the notified area and section 12 provided that the amounts collected by the Market Committee shall be constituted into a Market Fund which would be utilised for acquiring a site for the market, constructing a building, maintaining the market and meeting the expenses of the Market Committee. The argument that these provisions amounted to services rendered to the notified area and thus made the levy a fee and not a tax was not accepted by the Court. Venkatarama Aiyar, J., took the view that the funds raised from the merchants for a construction of a market in substance amounted to an exaction of a tax. Whether or not the construction of a market amounted to a service to the notified area it is unnecessary for us to consider. Besides, as we have already pointed out we have now three decisions of this Court which have authoritatively dealt with this matter, and it is in the light of the said decisions that the present question has to be considered. In Attorney General for British Columbia vs Esquimalt and Nanaimo Railway Co. (1), the Privy Council had to deal with the validity of forest protection impost levied by the relevant section of the Forest Act R. section B. C. 1936. The lands in question were statutorily exempted from taxation, and it was urged against the validity of the impost that the levy of the said impost was not a service charge but a tax; and since it contravened the exemption from taxation granted to the land it was invalid. This plea was upheld by the Privy Council. The Privy Council did consider two circumstances which were relevant; the first that the levy was on a defined class of interested individuals, and the second that the fund raised did not fall into the general mass of the proceeds of taxation but was applicable for a special and limited purpose. It was conceded that these considerations were relevant but the Privy Council thought that the weight to be attached to them should not be exagge (1) 540 rated. In appreciating the weight of the said relevant circumstances the Privy Council was impressed by the fact that the lands in question formed an important part of the national wealth of the Province and their proper administration, including in particular protection against fire, is a matter of high public concern ' as well as one of particular interest to individuals. In other words, the effect of the impugned provision was, that the expenses of what was the public service of the greatest importance for the Province as a whole had been divided between the general body of tax. payers and those individuals who had a special interest in having their property protected. It would thus appear that this decision proceeded on the basis that what was claimed to be a special service to the lands in question was in reality an item in public service itself, and so the element of quid pro quo was absent. It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from pub lic service, and in essence is directly a part of it, diffe rent considerations may arise. In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy. In Parton. vs Milk Board (Victoria)(1), the validity of the levy imposed on dairymen and owners of milk depots by section 30 of the Milk Board Act of 1933 as amended by subsequent Acts of 1936 1939 was (1) ; 70 550 challenged, and it was held by Dixon, J., that the levy of the said contribution amounted to the imposition of a duty of excise. This decision was substantially based on the ground that the statutory board "performs no particular service for the dairyman or the owner of a milk depot for which his contribution may be considered as a fee or recompense" that is to say the element of quid pro quo was absent qua the persons on whom the levy had been imposed. Therefore none of the decisions on which Mr. Amin has relied can assist his case. Let us now examine the scheme of the impugned Act. As the preamble shows it has been passed because it was thought expedient to constitute mining areas and a Mining Areas Development Fund in the State of Orissa. It consists of 11 sections. Section 3 of the Act provides for the constitution of a mining area whenever it appears to the State Government that it is necessary and expedient to provide amenities like communications, water supply and electricity for the better development of any area in the State of Orissa wherein any mine is situated, or to provide for the welfare of the residents or to workers in any such areas within which persons employed in a mine or a group of mines reside or work. Under this section the State Government has to define the limits of the area. and is given the power to include within such area any local area contiguous to the same or to exclude from such area any local area comprised therein; that is the effect of section 3(1). Section 3(2) empowers the owner or a lessee of a mine or his duly constituted representative in the said area to file objections in respect of any notification issued under section 3(1) within the period specified, and the State Government is required to take the said objection into consideration. After considering objections received the State Government is authorised to issue a notification constituting a mining area under section 3(3). Section 4 deals with the imposition and collection of cess. The rate of the levy authorised shall not exceed 5 per centum of the valuation of the minerals at the pit 's mouth. Section 5 provides for the constitution of the Orissa Mining Areas Development 551 Fund. This fund vests in the State Government and has to be administered by such officer or officers as may be appointed by the State Government in that, behalf Section 5(2) requires that there shall be paid to the credit of the said fund the proceeds of the cess recovered under section 4 for each mining area during the quarter after deducting expenses, if any, for collection and recovery. Section 5(3) contemplates that to the credit of the said fund shall be placed all collections of cess under section 5(2) as well as amounts from State Government and the local authorities and public subscriptions specifically given for any of the purposes of the fund. Section 5(4) deals with the topic of the appli cation of the said fund. The fund has to be utilised to meet expenditure incurred in connection with such measures which in the opinion of the State Government are necessary or expedient for providing amenities like communications, water supply and electricity, for the better development of the mining areas, and to meet the welfare of the labour and other persons residing or working in the mining areas. Section 5(5) lays down that without prejudice to the generality of the foregoing provisions the fund may be utilised to defray any of the purposes specified in cls. (a) to (e). Under section 5(6) the State Government is given the power to decide whether any particular expenditure is or is not debitable to the fund and their decision is made final; and section 5(7) imposes on the State Government an obligation to publish annually in the gazette a report of the activities financed from the fund together with an estimate of receipts and expenditure of the fund and a statement of account. Section 6 prescribes the mode of constituting an advisory committee. It has to consist of such number of members and chosen in such manner as may be prescribed, provided however that each committee shall include representatives of mine owners and workmen employed in mining industry. The names of the members of the committee are required to be published in the gazette. Section 7 deals with the appointment and functions of the statutory authorities to carry out the purpose of the Act, while section 8 confers on the State Government power to 552 make rules. Section 9 prescribes penalties and provides for prosecutions; and section 10 gives protection to the specified authorities or officers in respect of anything done or intended to be done by them in good faith in pursuance of the Act or any rules or order made thereunder. Section 11, which is the last section confers on the State Government the power to do anything which may appear to them to be necessary for 'the purpose of removing difficulties in giving effect to the provisions of the Act. The scheme of the Act thus clearly shows that it has been passed for the purpose of the development of mining areas in the State. The basis for the operation of the Act is the constitution of a mining area, and it is in regard to mining areas thus constituted that the provisions of the Act come into play. It is not difficult to appreciate the intention of the State Legislature evidenced by this Act. Orissa is an underdeveloped State in the Union of India though it has a lot of mineral wealth of great potential value. Un fortunately its mineral wealth is located generally in areas sparsely populated with bad communications. Inevitably the exploitation of the minerals is handicapped by lack of communications, and the difficulty experienced in keeping the labour force sufficiently healthy and in congenial surroundings. The mineral development of the State, therefore, requires that provision should be made for improving the communications by constructing good roads and by providing means of transport such as tramways; supply of water and electricity would also help. It would also be necessary to provide for amenities of sanitation and education to the labour force in order to attract workmen to the area. Before the Act was passed it appears that the mine owners tried to put up small length roads and tramways for their own individual purpose, but that obviously could not be as effective as roads constructed by the State and tramway service provided by it. It is on a consideration of these factors that the State Legislature decided to take an active part in unsystematic development of its mineral areas which would help the mine owners in moving their 553 minerals quickly through the shortest route and would attract labour to assist the excavation of the minerals. Thus there can be no doubt that the primary and the principal object of the Act is to develop ' the mineral areas in the State and to assist more efficient and extended exploitation of its mineral wealth. The constitution of the advisory committee as prescribed by section 4 emphasises the fact that the policy of the Act would be to carry out with the assistance of the mine owners and their workmen. Thus after a mining area is notified an advisory committee is constituted in respect of it, and the task of carrying out the objects of the Act is left to the care of the said advisory committee subject to the provisions of the Act. Even before an area is notified the mine owners are allowed an opportunity to put forward their objections. These features of the Act are also relevant in determining the question as to whether the Act is intended to render service to the specified area and to the class of persons who are subjected to the levy of the cess. Section 5 shows that the cess levied does not become a part of the consolidated fund and is not subject to an appropriation in that behalf; it goes into the special fund earmarked for carrying out the purpose of the Act, and thus its existence establishes a correlation between the cess and the purpose for which it is levied. It was probably felt that some additions should be made to the special fund, and so section 5(3) contemplates that grants from the State Government and local authorities and public subscriptions may be collected for enriching the said fund. Every year a report of the activities financed by the fund has to be published together with an estimate of receipt and expenditure and a statement of accounts. It would thus be clear that the administration of the fund would be subject to public scrutiny and persons who are called upon to pay the levy would have an opportunity to see whether the cess collected from them has been properly utilised for the purposes for which it is intended to be used. It is not alleged by the petitioners 554 that the levy imposed is unduly or unreasonably excessive so as to make the imposition a colourable exercise of legislative power. Indeed the fact that the accounts have to be published from year to year affords an indication to the contrary. Thus the scheme of the Act shows that the cess is levied against the class of persons owning mines in the notified area and it is levied to enable the State Government to render specific services to the said class by developing the notified mineral area. There is an element of quid pro quo in the scheme, the cess collected is constituted into a specific fund and it has not become a part of the consolidated fund, its application is regulated by a statute and is confined to its purposes, and there is a definite co relation between the impost and the purpose of the Act which is to render service to the notified area. These features of the Act impress upon the levy the character of a fee as distinct from a tax. It is, however, urged that the cess levied by section 4(2) is in substance and reality a duty of excise. As we have already noticed section 4(2) provides that the rate of such levy shall not exceed 5 per centum of the valuation of the minerals at the pit 's mouth; in other words it is the value of the minerals produced which is the basis for calculating the cess payable by mine owners, and that precisely is the nature in which duty of excise is levied under Entry 84 in List I. The said Entry empowers Parliament to impose duties of excise, inter alia, on goods manufactured or produced in India. When minerals are produced from mines and a duty of excise is intended to be imposed on them it would be normally imposed at the pit 's mouth, and that is precisely what the impugned Act purports to do. It is also contended that the rate prescribed by section 4(2) indicates that it operates not as a mere fee but as a duty of excise. This argument must be carefully examined before the character of the cess is finally determined. It is not disputed that under Entry 23 in List II read with Entry 66 in the said List the State Legislature can levy a fee in respect of mines and mineral development. Entry 23 reads thus: "Regu lation of Mines and mineral development subject to 555 the provisions of List I with respect to regulation and development under the control of the Union". We will deal with the condition imposed by the latter part of this Entry later. For the present it is enough to state that regulation of mines and mineral development is within the competence of the State Legislature. Entry 66 provides that fees in respect of any of the matters in the said List can be imposed by the State Legislature subject of course to the exception of fees taken in any Court. The argument is that though the State Legislature is competent to levy a fee in respect of mines and mineral development, if the statute passed by a State Legislature in substance and in effect imposes a duty of excise it is travelling outside its jurisdiction and is trespassing on the legislative powers of Parliament. This argument is based on two considerations. The first relates to the form in which the levy is imposed, and the second relates to the extent of the levy authorised. The extent of the levy authorised would always depend upon the nature of the services intended to be rendered and the financial obligations incurred thereby. If the services intended to be rendered to the notified mineral areas require that a fairly large cess should be collected and co relation can be definitely established between the proposed services and the impost levied, then it would be unreasonable to suggest that because the rate of the levy is high it is not a fee but a duty of excise. In the present case, if the development of the mining areas involves con siderable expenditure which necessitates the levy of the prescribed rate it only means that the services being rendered to the mining areas are very valuable and the rate payer in substance is compensating the State for the services rendered by it to him. It is significant that the petitioners do not seriously suggest that the services intended to be rendered are a cloak and not genuine, or that the taxes levied have no relation to the said services, or that they are unreasonable and excessive. Therefore, in our opinion, the extent of the rate allowed to be imposed by section 4(2) cannot by itself alter the character of the levy from a 556 fee into that of a duty of excise. If the co relation between the levy and the services was not genuine or real, or if the levy was disproportionately higher than the requirements of the services intended to be rendered it would have been another matter. Then as to the form in which the impost is levied, it is difficult to appreciate how the method adopted by the Legislature in recovering the impost can alter its character. The character of the levy must be determined in the light of the tests to which we have already referred. The method in which the fee is recovered is a matter of convenience, and by itself it cannot fix upon the levy the character of the duty of excise. This question has often been considered in the past, and it has always been held that though the method in which an impost is levied may be relevant in determining its character its significance and effect cannot be exaggerated. In Balla Ram vs The Province of East Punjab (1) the Federal Court had to consider the character of the tax levied by section 3 of the Punjab Urban Immoveable Property 'tax Act XVII of 1940. Section 3 provided as follows: "There shall be charged, levied and paid an annual to tax on buildings and lands situated in the rating areas shown in the schedule to this Act at such rate not exceeding twenty per centum of the annual value of such buildings and lands as the Provincial Government may by notification in official gazette direct in respect of each such rating area". The argument urged before the Federal Court was that the tax imposed by the said section was in reality a tax on income within the meaning of Item 54 in List I of the Seventh Schedule to the Constitution Act of 1935, and as such it was not covered by Item 42 in List II of the said Schedule. This argument was rejected on the ground that the tax levied by the Act was in pith and substance a tax on lands and buildings covered by Item 42. It would be noticed that the basis of the tax was the annual value of the building which is the basis used in the Indian Income tax Act for determining income from property; and so, the attack against the section was based on (1) 557 the ground that it had adopted the same basis for leaving the impost as the Income tax Act and the said basis determined its character whatever may be the appearance in which the impost was purported to be levied. In repelling this argument Fazl Ali, J. observed that the crucial question to be answered was whether merely because the Income tax Act has adopted the annual value as the standard for determining the income it must necessarily follow that if the same standard is employed as a measure for any other tax that tax becomes a tax on income. The learned judge then proceeded to add that if the answer to this question is to be given in the affirmative then certain taxes which cannot possibly be described as income tax must be held to be so. In other words, the effect of this decision is that the adoption of the standard used in Income tax Act for getting at the income by any other act for levying the tax authorised by it would not be enough to convert the said. tax into an income tax. During the course of this judgment Fazl Ali, J. also noticed with approval a similar view taken by the Bombay High Court in Sir Byramjee Jeejeebhoy vs The Province of Bombay (1). This decision has been expressly approved by the Privy Council in Governor General in Council vs Province of Madras (2). Consistently with the decision of the Federal Court their Lordships expressed the opinion that "a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods and not on sales or the proceeds of the sale of goods. The two taxes, the one levied on the manufacturer in respect of his goods and the other on the vendor in respect of his sales may in one sense overlap, but in law there is no overlapping; the taxes are separate and distinct imposts. If in, fact they overlap that may be because the taxing authority imposing a duty of excise finds it convenient to impose that duty at the moment when the excisable article (1) I.L.R. (2) (1945) L.R. 72 I.A. 91. 71 558 leaves the factory or workshop for the first time on the occasion of its sale". In that case the question was whether the tax authorised by the Madras General Sales Tax Act, 1939, was a tax on the sale of goods or was a duty of excise, and the Privy Council held it was the former and not the latter. Therefore, in our opinion, the mere fact that the levy imposed by the impugned Act has adopted the method of determining the rate of the levy by reference to the minerals produced by the mines would not by itself make the levy a duty of excise. The method thus adopted may be relevant in considering the character of the impost but its effect must be weighed along with and in the light of the other relevant circumstances. In this connection it is always necessary to bear in mind that where an impugned statute passed by a State Legislature is relatable to an Entry in List II it is not permissible to challenge its vires only on the ground that the method adopted by it for the recovery of the impost can be and is generally adopted in levying a duty of excise. Thus considered the conclusion is inevitable that the cess levied by the impugned Act is neither a tax nor a duty of excise but is a fee. The next question which arises is, even if the cess is a fee and as such may be relatable to Entries 23 and 66 in List II its validity is still open to challenge because the legislative competence of the State Legislature under Entry 23 is subject to the provisions of List I with respect to regulation and development under the control of the Union; and that takes us to Entry 54 in List I. This Entry reads thus: "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". The effect of reading the two Entries together is clear. The jurisdiction of the State Legislature under Entry 23 is subject to the limitation imposed by the latter part of the said Entry. If Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union, to 559 the extent of such declaration the jurisdiction of the State Legislature is excluded. In other words, if a Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law. The limitation imposed by the latter part of Entry 23 is a limitation on the legislative competence of (,he State Legislature itself. This position is not in dispute. It is urged by Mr. Amin that the field covered by the impugned Act has already been covered by the Mines and Minerals (Regulation and Development) Act, 1948, (LIII of 1948) and he contends that in view of the declaration made by section 2 of this Act the impugned Act is ultra vires. This Central Act was passed to provide for the regulation of mines and oil fields and for the development of minerals. It may be stated at this stage that by Act LXVII of 1957 which has been subsequently passed by Parliament, Act LIII of 1948 has now been limited only to oil fields. We are, however, concerned with the operation of the said Act in 1952, and at that time it applied to mines as well as oil fields. Section 2 of the Act contains a declaration as to the expediency and control by the Central Government. It reads thus: "It is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of mines and oil fields and the development of minerals to the extent hereinafter provided". It is common ground that at the relevant time this Act applied to coal mines. Section 4 of the Act provides that no mining lease shall be granted after the commencement of this Act otherwise than in accordance with the rules made under this Act. Section 5 empowers the Central Government to make rules by notification for regulating the grant of mining leases or for prohibiting the grant of such leases in respect of any mineral or in any area. Sections 4 and 5 thus 560 purport to prescribe necessary conditions in accordance with which mining leases have to be executed. This part of the Act has no relevance to our present purpose. Section 6 of the Act, however, empowers the Central Government to make rules by notification in the official gazette for the conservation and development of minerals. Section 6(2) lays down several matters in respect of which rules can be framed by the Central Government. This power is, however, without prejudice to the generality of powers conferred on the Central Government by section 6(1). Amongst the matters covered by section 6(2) is the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected. It is true that no rules have in fact been framed by the Central Government in regard to the levy and collection of any fees; but, in our opinion, that would not make any difference. If it is held that this Act contains the declaration referred to in Entry 23 there would be no difficulty in holding that the declaration covers the field of conservation and development of minerals, and the said field is indistinguishable from the field covered by the impugned Act. What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List I with respect to regulation and development under the control of the Union, and Entry 54 in List I requires a declaration by Parliament by law that regulation and development of mines should be under the control of the Union in public interest. Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if it contains the requisite declaration, then it would not be competent to the State Legislature to pass an Act in respect of the subject matter covered by the said declaration. In order that the declaration should be effective it is not necessary that rules should be made or enforced; all that this required is a declaration by Parliament that it is expedient in the public interest to take the regulation and development of mines under the control of the Union. In such a case the test must be whether the legislative declaration covers the field 561 or not. Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act LIII of 1948. It still remains to consider whether section 2 of the said Act amounts in law to a declaration by Parliament as required by article 54. When the said Act was passed in 1948 the legislative powers of the Central and the Provincial Legislatures were governed by the relevant Entries in the Seventh Schedule to the Constitution Act of 1935. Entry 36 in List I corresponds to the present Entry 54 in List I. It reads thus: "Regulation of Mines and Oil Fields and mineral development to the extent to which such regulation and development under Dominion control is declared by Dominion law to be expedient in public interest". It would be notic ed that the declaration required by Entry 36 is a declaration by Dominion law. Reverting then to section 2 of the said Act it is clear that the declaration contained in the said section is put in the passive voice; but in the context there would be no difficulty in holding that the said declaration by necessary implication has been made by Dominion law. It is a declaration contained in a section passed by the Dominion Legislature ' and so it is obvious that it is a declaration by a Dominion law; but the question is: Can this declaration by a Dominion law be regarded constitutionally as declaration by Parliament which is required by Entry 54 in List I. It has been urged before us by the learned Additional Solicitor General and Mr. Amin that in dealing with this question we should bear in mind two general considerations. The Central Act has been continued under article 372(1) of the Constitution as an existing law, and the effect of the said constitutional provision must be that the continuance of the existing law would be as effective and to the same extent after the Constitution came into force as before. It is urged that after the said Act was passed and before the Con stitution came into force no Provincial Legislature could have validly made a law in respect of the field covered by the said Act, and it would be commonsense to assume that the effect of the continuance of the 562 said law under article 372(1) cannot be any different. In other words, if no Provincial Legislature could have trespassed on the field covered by the said Act before the Constitution, the position would and must be the same even after the Constitution came into force. It is also contended that for the purpose of bringing the provision of existing laws into accord with the provisions of the Constitution the President was given power to make by order appropriate adaptations and modifications of such laws, and the object of making such adaptations obviously was to make the continuance of the existing laws fully effective. It is in the light of these two general considerations, so the. argument runs, must the point in question be considered. The relevant clause in the Adaptation of Laws Order, 1950, on which reliance has been placed in support of this argument is el. 16 in the Supplementary Part of the said Order. This clause provides that subject to the provisions of this Order any reference by whatever form of words in any existing law to any authority competent at the date of the passing of that law to exercise any powers or authorities, or to discharge any functions, in any part of India shall, where a corresponding new authority has been constituted by or under the Constitution, have effect until duly repealed or amended as if it were a reference to that new authority. The petitioners contend that as a result of this clause the declaration made by the Dominion Legislature in section 2 of the Central Act must now be held to be the declaration made by Parliament. Is this contention justified on a fair and reasonable construction of the clause? That is the crux of the problem. In considering this question it would be relevant to recall the scheme of the Adaptation of Laws Order, 1950. It consists of Three Parts. Part 1 deals with the adaptation of Central Laws and indicates the adaptation made therein; Part 11 deals with the adaptation of Provincial Laws and follows the same pattern; and Part III is a Supplementary Part which contains provisions in the nature of supplementary provisions. A perusal of the clauses contained in Part 563 I would show that though some adaptation was made in Act LIII of 1948 it was not thought necessary to make an adaptation in section 2 of the said Act whereby the declaration implied in the said section has been expressly adapted into a declaration by Parliament. Now, the effect of el. 16 in substance is to equate an authority competent at the date of the passing of the existing law to exercise any powers or authorities, or to discharge any functions with a corresponding new authority which has been constituted by or under the Constitution. Reference to the authority in the con. text would suggest cases like reference to the Governor General eo nomine, or Central Government which respectively would be equated with the President or the Union Government. Prima facie the reference to authority would not include reference to a Legislature; in this connection it may be relevant to point out that article 372(1) refers to a competent Legislature as distinguished from other competent authorities. That is the first difficulty in holding that el. 16 refers to the Dominion Legislature and purports to equate it with the Parliament. It is clear that for the application of this clause it is necessary that a reference should have been made to the authority by some words whatever may be their form. In other words it is only where the existing law refers expressly to some authority that this clause can be invoked. It is difficult to construe the first part of this clause to include authorities to which no reference is made by any words in terms, but to which such reference may be implied; and quite clearly the Dominion Legislature is not expressly referred to in section 2. In construing the present clause we think it would be straining the language of the clause to hold that an authority to which no reference is made by words in any part of the existing law could claim the benefit of this clause. Besides, there is no doubt that when the clause refers to any authority competent to exercise any powers or authorities, or to discharge any functions, it refers to the powers, authorities or functions attributable to the existing law itself; that is to say, authorities 564 which are competent to exercise powers or to discharge functions under the existing laws are intended to be equated with corresponding new authorities. It is impossible to hold that the Dominion Legislature is an authority which was competent to exercise any power or to discharge any function under the existing law. Competence to exercise power to discharge functions to which the clause refers must inevitably be related to the existing law and not to the Constitution Act of 1935 which would be necessary if Dominion Legislature was to be included as an authority under this clause. The Constitution Act of 1935 had been repealed by the Constitution and it was not, and could not obviously be, the object of the Adaptation of Laws Order to make any adaptation in regard to the said Act. Therefore, the competence of the Dominion Legislature which flowed from the relevant provisions of the Constitution Act of 1935 is wholly outside this clause. We have carefully considered the arguments urged before us by the learned Additional Solicitor General and Mr. Amin but we are unable to hold that cl. 16 can be pressed into service for the purpose of supporting the conclusion that the declaration by the Dominion Legislature implied in section 2 of Act LIII of 1948 can, by virtue of cl. 16, be held to be a declaration by Parliament within the meaning of the relevant Entries in the Constitution. If that be the true position then the alternative challenge to the vires of the Act based on el. 16 of the Adaptation of Laws Order must fail. There is another possible argument which may prima facie lead to the same conclusion. Let us assume that the result of reading article 372 and cl. 16 of the Adaptation of Laws Order is that under section 2 of Act LIII of 1948 there is a declaration by Parliament as suggested by the petitioners and the learned Additional Solicitor General. Would that meet the requirements of Entry 54 in List I of the Seventh Schedule? It is difficult to answer this question in the affirmative because the relevant provisions of the Constitution are prospective and the declaration by Parliament specified by Entry 54 must be declaration made by 565 Parliament subsequent to the date when the Constitution came into force. Unless a declaration is made by Parliament after the Constitution came into force it will not satisfy the requirements of Entry 54, and that inevitably would mean that the impugned Act is validly enacted under Entry 23 in List II of the Seventh Schedule. If that be the true position then it would follow that even on the assumption that el. 16 of the Adaptation of Laws Order and article 372 can be construed as suggested by the petitioners the impugned Act would be valid. Faced with this difficulty, both the learned Additional Solicitor General and Mr. Amin argued that cl. 21 of the said Order may be of some assistance. Clause 21 reads thus: "Any Court, Tribunal, or authority required or empowered to enforce any law in force in the territory of India immediately before the appointed day shall, notwithstanding that this Order makes no provision or insufficient provision for the adaptation of the law for the purpose of bringing it into accord with the provisions of the Constitution, construe the law with all such adaptations as are necessary for the said purpose". Assuming that this clause is valid we do not see how it is relevant in the present case. All that this clause purports to do is to empower the Court to construe the law with such adaptations as may be necessary for the purpose of bringing it in accord with the provisions of the Constitution. There is no occasion to make any adaptation in construing Act LIII of 1948 for bringing it into accord with the provisions of the Constitution at all. The said Act has been continued under article 372(1) and there is no constitutional defect in the said Act for the avoidance of which any adaptation is necessary. In fact what the petitioners seek to do is to read in section 2 of the said Act the declaration by Parliament required by Entry 54 so as to make the impugned Act ultra vires. Quite clearly cl. 21 cannot be pressed into service for such a purpose. Therefore, we reach this position that the field covered by Act LIII of 1948 is substantially the same as the field covered by the 72 566 impugned Act but the declaration made by section 2 of the said Act does not constitutionally amount to the requisite declaration by Parliament, and so the limitation imposed by Entry 54 does not come into operation in the present case. Act LIII of 1948 continues in operation under article 372; with this modification that so far as the State of Orissa is concerned it is the impugned Act that governs and not the Central Act. Article 372(1) in fact provides for the continuance of the existing law until it is altered, repealed or amended by a competent Legislature or other competent authority. In the absence of the requisite parliamentary declaration the legislative competence of the Orissa Legislature under Entry 23 read with Entry 66 is not impaired, and so the said Legislature is competent either to repeal, alter or amend the existing law which is the Central Act LIII of 1948; in effect, after the impugned Act was passed, so far as Orissa is concerned the Central Act must be deemed to be repealed. This position is fully consistent with the provisions of article 372. The result is that the material words used in cls. 16 and 21 being unambiguous and explicit, it is difficult to give effect to the two general considerations on which reliance has been placed by the petitioners. Incidentally the present case discloses that in regard to the requisite parliamentary declaration prescribed by Entry 54 in List I in its application to the pre Constitution Acts under corresponding Entry 36 in List I of the Constitution Act of 1935, there is a lacuna which has not been covered by any clauses of the Adaptation of Laws Order; that, however, is a matter for Parliament to consider. There is one more point which is yet to be considered. Mr. Amin contends that Entry 23 in List II is subject to the provisions in List I with respect to regulation and development under the control of the Union, and according to him Entry 52 in List I is one of such provisions. In this connection he relies on the said Entry which deals with industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest, and Industries (Development and Regulation) Act, 1951 (LXV 567 of 1951). This Act has been passed to provide for the development and regulation of certain industries one of which undoubtedly is coal mining industry. Section 2 of this Act declares that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. This declaration is a declaration made by Parliament, and if the provisions of the Act read with the said declaration covered the same field as is covered by the impugned Act, it would undoubtedly affect the vires of the impugned Act; but in dealing with this question it is important to bear in mind the doctrine of pith and substance. We have already noticed that in pith and substance the impugned Act is concerned with the development of the mining areas notified under it. The Central Act, on the other hand, deals more directly with the control of all industries including of course the industry of coal. Chapter II of this Act provides for the constitution of the Central Advisory Council and Development Councils, chapter III deals with the regulation of scheduled industries, chapter IIIA provides for the direct management or control of industrial undertakings by Central Government in certain cases, and chapter IIIB is concerned with the topic of control of supply, distribution, price, etc, of certain articles. The last chapter deals with miscellaneous incidental matters. The functions of the Development Councils constituted under this Act prescribed by section 6(4) bring out the real purpose and object of the Act. It is to increase the efficiency or productivity in the scheduled industry or group of scheduled industries, to improve or develop the service that such industry or group of industries renders or could render to the community, or to enable such industry or group of industries to render such service more economically. Section 9 authorises the imposition of cess on scheduled industries in certain cases. Section 9(4) provides that the Central Government may hand over the proceeds of the cess to the Development Council there specified and that the Development Council shall utilise the said proceeds to achieve the objects mentioned in cls. (a) to (d). These 568 objects include the promotion of scientific and industrial research, of improvements in design and quality, and the provision for the training of technicians and labour in such industry or group of industries. It would thus be seen that the object of the Act is to regulate the scheduled industries with a view to improvement and development of the service that they may render to the society, and thus assist the solution of the larger problem of national economy. It is difficult to hold that the field covered by the declaration made by section 2 of this Act, considered in the light of its several provisions, is the same as the field covered by the impugned Act. That being so, it cannot be said that as a result of Entry 52 read with Act LXV of 1951 the vires of the impugned Act can be successfully challenged. Our conclusion, therefore, is that the impugned Act is relatable to Entries 23 and 66 in List II of the Seventh Schedule, and its validity is not impaired or affected by Entries 52 and 54 in List I read with Act LXV of 1951 and Act LIII of 1948 respectively. In view of this conclusion it is unnecessary to consider whether the impugned Act can be justified under Entry 50 in List II, or whether it is relatable to Entry 24 in List III and as such suffexs from the vice of repugnancy with the Central Act XXXII of 1947. The result is the petition fails and is dismissed with costs. WANCHOO, J. I have read the judgment just delivered by my learned brother Gajendragadkar J. and regret that I have not been able to persuade myself that the cess levied in this case on all extracted minerals from any mine in any mining area at a rate not exceeding five per centum of the value of the minerals at the pit 's mouth by the Orissa State Legislature under section 4 of the Orissa Mining Areas Development Fund Act, No. XXVII of 1952, (hereinafter called the Act) is a fee properly so called and not a duty of ex cise. The facts are all set out in the judgment just delivered and I need not repeat them. The scheme of the Act, as appears from section 3 thereof is to give power to the State Government, whenever it 569 thinks it necessary and expedient to provide amenities, like communications, water supply and electricity for the better development of any area in the State where , in any mine is situated or to provide for the welfare of residents or workers in any such area within. which persons employed in a mine or a group of mines reside or work, to constitute such an area to be a mining area for the purposes of the Act, to define the limits of the area, to include within such area any local area contiguous to the same and defined in the notification and to exclude from such area any local area comprised therein and defined in the notification. A notification under section 3 is made, after hearing objections from owners or lessees of mines. After such an area is con stituted under section 3, a cess is imposed under section 4 on all extracted minerals from any mine in any such area at the rate not exceeding five per centum of the value of the minerals at the pit 's mouth. The cess so collected is credited to a fund called the Orissa Mining Area Development Fund created under section 5 of the Act, besides other amounts with which we are not concerned in this case. The Fund is to be applied to meet expenditure incurred in connection with such measures, which in the opinion of the State Government, are necessary or expedient for providing amenities like communications, water supply and electricity, for the better development of mining areas and to meet the welfare of labour and other persons residing or working in the mining areas. Then come other provisions for working out the above provisions including section 8, which gives power to the State Government to frame rules to carry. into effect the purposes of the Act. The Rules were framed under the Act in January, 1955. The constitutional competence of the Orissa State Legislature to levy the cess under the Act is attacked on two main grounds. In the first place, it is urged that the cess is in pith and substance a duty of excise under item 84 of List I of the Seventh Schedule and therefore the levy of such a cess is beyond the competence of the Orissa State Legislature. In the second place, it is urged that even if the cess is a fee, in view 570 of the two Acts of the Central Legislature and Parliament, namely, The Mines and Minerals (Regulation and Development) Act, No. LIII of 1948 and The Industries (Development and Regulation) Act, No. LXV of 1951, the Orissa Legislature was not competent to pass the Act. The petition has been opposed on behalf of the State of Orissa and the main contentions urged on its behalf are that the cess is a fee properly so called and not a duty of excise and therefore the Orissa State Legislature was competent to levy it and the two Central Acts do not affect that competence. In the alternative it has been urged that even if the cess is a tax the State Legislature was competent to levy it under item 50 of List If of the Seventh Schedule. The first question therefore that falls for consideration is whether the cess in this ' ease is a tax or a fee. Difference between a tax properly so called and a fee properly so called came up for consideration before this Court in three cases in 1954 and was considered at length. In the first of them, namely, The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt it was pointed out that "though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself". It was also pointed that "the essence of a tax is compulsion, that is to say, it is imposed under statutory power without the taxpayer 's consent and the payment is enforced by law. The second characteristic of a tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when (1) ; 571 collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the tax payer and the public authority. Another feature of taxation is that as it is a part of the common burden, quantum of imposition upon the tax payer depends generally upon his capacity to pay. " As to fees, it was pointed out that "a 'fee ' is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. " Finally, it was pointed out that "the distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege. . . Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives. " The consequence of these principles was that "if, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision be co related to the expenses incurred by Government in rendering the services. . . If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax." Having laid down these principles, that case then considered the vires of section 76 of the Madras Hindu Religious and Charitable Endowments Act, No. XIX of 1951, and it was pointed out that the material fact which negatived the theory of fees in that case was that the money raised by levy of the contribution was not ear marked or specified for defraying the expenses 572 that the Government had to incur in performing the services. All the collections went to the consolidated fund of the State and all the expenses had to be met not out of those collections but out of the general revenues by a proper method of appropriation as was done in the case of other government expenses. That in itself might not be conclusive, but in, that case there was total absence of any co relation between the expenses incurred by the Government and the amount raised by contribution under the provision of section 76 and in those circumstances the theory of return or counter payment or quid pro quo could not have any possible application to that case. Consequently, the contribution levied under section 76 was held to be a tax and not a fee. In the second case of Mahant Sri Jagannath Ramanuj Das vs The State of Orissa (1), a similar imposition by the Orissa Legislature came up for consideration. After referring to the earlier case, it was pointed out that "two elements are thus. essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make the imposition a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State to be spent for general public purposes." The Orissa imposition was held to be a fee because the collections made were not merged in the general public revenue and were meant for the purpose of meeting the expenses of the Commissioner and his office which was the machinery set up for due administration of the affairs of the religious institution. They went to constitute a fund which was contemplated by section 50 of the Orissa Act and this fund was specifically set apart for rendering services involved in carrying out the provisions of the Act. The third case, namely, Ratilal Panachand Gandhi (1) ; 573 vs The State of Bombay (1) came from Bombay. 58 of the Bombay Act, No. XXIX of 1950, provided for an imposition in proportion to the gross annual income of the trust. This imposition was levied for the purpose of due administration of the trust property and for defraying the expenses incurred in connection with the same. After referring to the two earlier cases, the Court went on to say that "taxis a common burden and the only return which the taxpayer gets is participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded. Thus in fees there is always an element of quid pro quo which is absent in a tax. . But in order that the collections made by the Government can rank as fees, there must be co relation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. " It was then pointed out that the contributions, which were collected under section 58, were to be credited in the Public Trusts Administration Fund as constituted under section 57. This fund was to be applied exclusively for the payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. The imposition therefore was in that case held to be a fee. These decisions clearly bring out the difference between a tax and a fee and generally speaking there is always an element of quid pro quo in a fee and the amount raised through a fee is co related to the expenses necessary for rendering the services which are the basis of quid pro quo. Further, the amount collected as a fee does not go to augment the general revenues of the State and many a time a special fund is created in which fees are credited though this is not absolutely necessary. But as I read these deci sions, they cannot be held to lay down that 'What is in pith and substance a tax can become a fee merely (1) [1954] S.C.R. 1055. 574 because a fund is created in which collections are credited and some services may be rendered to the persons from whom collections are made. If that were so, it will be possible to convert many taxes not otherwise leviable into fees by the device of creating a special fund and attaching some service to be rendered through that fund to the persons from whom collections are made. I am therefore of opinion that one must first look at the pith and substance of the levy, and if in its pith and substance it is not essentially different from a tax it cannot be converted into a fee by creating a special fund in which the collections are credited and attaching some services to be rendered through that fund. Let me then look at the pith and substance of the cess, which has been imposed in this case. The cess consists of a levy not exceeding five per centum of the value of the minerals at the pit 's mouth on all extracted minerals. Prima facie such a levy is nothing more nor less than a duty of excise. Item 84 of List I gives power to levy duties of excise exclusively to the Union and is in these terms : "Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry. " This item gives power to Parliament to impose duties of excise on all goods manufactured. or produced in India with certain exceptions mentioned therein. Taking this particular case, coal is produced from the mine and would clearly be covered by the words " other goods produced in India" and a duty of excise can be levied on it. What then exactly is meant by a duty of excise? Reference in this connection may be made to Governor General in Council vs Province of Madras (1). In that case the point arose whether the sales tax imposed by the Madras Legislature was a duty of excise. The Privy Council pointed out that (1) (1945) L.R. 72 I.A. 91. 575 "in a Federal constitution in which there is a division of legislative powers between Central and Provincial legislatures, it appears to be inevitable that controversy should arise whether one or other legislature is not exceeding its own, and encroaching on the other 's, constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its 'pith and substance ' as it has sometimes been said which must determine into what category it falls. " The Privy Council went on to consider what a duty of excise was and said that "it is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods not on sales or the proceeds of sale of goods. Though sometimes a duty of excise may be imposed on first sales, a duty of excise and a tax on the sale of goods were separate and distinct imposts and in law do not overlap." The Privy Council approved of the decisions of the Federal Court in re The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (1) and The Province of Madras vs Messrs. Boddu Paidanna and Sons (2). It seems to have been urged that because in some cases a duty of excise may be levied on the occasion of the first sale and a sales tax may also be levied on the same occasion, there is really no difference between the two. It is however clear that a duty of excise is primarily a tax on goods manufactured or produced; it is not a tax on the sale of goods, though the taxing authority may as a matter of concession to the producer not charge the tax immediately the goods are produced and may postpone it, to make it easy for the producer to pay the tax, till the first sale is made by him; nevertheless the charge is still on the goods and is therefore a duty of excise. On the other hand, a sales tax can only be levied when a sale is made and there is nothing to prevent its levy on the first sale. The two concepts (1) (2) (1948) F.C.R. go. 576 are however different and, as the Privy Council pointed out, a sales tax and a duty of excise are separate and distinct imposts and in law do not overlap. The pith and substance of a duty of excise is that it is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. Let me therefore see what the Orissa Legislature has done in the present case. It has levied a cess at a rate not exceeding five per centum on the value of minerals at the pit 's mouth on all extracted minerals. All the extracted minerals are nothing other than goods produced and the cess is levied on the goods produced at a rate not exceeding five per centum of the value at the pit 's mouth. The cess therefore in the present case cannot be anything other than a duty of excise. The pith and substance of the cess in this case falls fairly and squarely within entry 84 of List I and is therefore a duty of excise, which cannot be levied by the Orissa State Legislature. I may in this connection refer to the cesses levied by the Central Legislature and Parliament by Act XXXII of 1947 and by the Act No. LXV of of Act XXXII of 1947 lays down that there shall be levied and collected as a cess for the purposes of that Act a duty of excise on all coal and coke dispatched from collieries at such rate not less than four annas and not more than eight annas per ton as may from time to time be fixed by the Central Government by notification in the Official Gazette. This is obviously a tax on the goods produced, the basis of the tax being so much per ton. Again sec. 9 of Act LXV of 1951 lays down that there may be levied and collected as a cess for the purposes of that Act on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by the Central Government by notified order a duty of excise at a rate not exceeding two annas per centum of the value of the goods. This again is clearly a tax on goods produced or manufactured and is in the nature of a duty of excise, the basis of the tax being so much of the value of the goods. If these two taxes are duties of excise, 577 I fail to see any difference in pith and substance between these two taxes and the cess levied under the Act. It is however urged that the method employed in the Act for realising the cess is only a method of quantification of the fee and merely because of this quantification, the pith and substance of the impost does not change from a fee to a duty of excise. Reference in this connection was made to three cases of quantification. In Sir Byramjee Jeejeebhoy vs The Province of Bombay (1), a question arose with respect to a tax imposed on urban immovable property, whether it was a tax on lands and buildings. The challenge to the tax was on the ground that it was tax on income or capital value within items 54 and 55 of List I of the Seventh Schedule of the Government of India Act and could not therefore be imposed by the Bombay Legislature. It was held that the tax was a tax on lands and buildings within the meaning of item 42 of List II of the same Schedule and that the basis of the tax, which was the annual value, would not convert it into a tax on income or capital value. The High Court considered the pith and substance of the said Act and came to the conclusion that every tax on annual value was not necessarily a tax on income and it was held that the mode of assessment of a tax did not determine its character and one has to look to the essential character of the tax to decide whether it was a tax on income or on lands and buildings. Looking to the pith and substance of the tax it was held in that case that it was a tax on lands and buildings. That decision was in the circumstances of that case right because the intention of the legislature was not to tax the income of any one; the essential character of the tax in that case was to tax the lands and buildings and the annual value of the lands and buildings was only taken as a mode of levying the tax. In the present case, however, the very mode of the levy of the cess is nothing other than the levy of a duty of excise and therefore the principle of quantification for purposes of a fee cannot be extended to (1) I.L.R. 578 such an extent as to convert what is in pith and substance a tax into a fee on that basis. The next case to which reference was made is Municipal Corporation, Ahmedabad vs Patel Gordhandas Hargovandas (1). In that case the Ahmedabad Bo. rough Municipality had levied a rate on open lands and the basis of the levy was one per centum of the capital value of the land. It was urged that this amounted to a capital levy within entry 54 of List I; but the court repelled that contention and held that the levy was in pith and substance a tax on lands, which came within entry 42 of List II of the Seventh Schedule to the Government of India Act. A distinction was made between a tax on land which is levied on the basis of its capital value and a tax which is on capital treating it as an asset itself. This decision also, if I may say so with respect, is correct, for the basic idea was to tax lands and some method had to be found for doing so and the method evolved, though it might look like a capital levy, was in pith and substance not so. But the theory of quantification which is the basis of these two cases cannot be stretched so far as to turn levies which are in pith and substance taxes into fees, by the process of attaching certain services and creating a fund. The third case is Ralla Ram vs The Province of East Punjab (2). That was a case of a tax on lands and buildings and annual value was the basis on which the tax was levied. The Federal Court rightly pointed out that the pith and substance of the levy had to be seen and on that view it was not income tax but a tax on lands and buildings and the method adopted was merely a method of quantification. The Federal Court also pointed out that "where there is an apparent conflict between an Act of the Federal Legislature and an Act of the Provincial Legislature, we must try to ascertain the pith and substance or the true nature and character of the conflicting provisions and that before an Act is declared ultra vires, there should be an attempt to reconcile the two conflicting jurisdictions, and, only if such a reconciliation should prove (1) I.L.R. (2) 579 impossible, the impugned Act should be declared invalid. " It may also be pointed out that in all these three cases, one source of income of an individual or one item out of the total capital of an individual was the basis of calculation while income tax or capital levy is generally on the total income or the total capital of a person. That aspect must have gone into the decision that the method employed was merely a mode for imposing a tax on lands and buildings. In the present case, however, I see no difference between the method of imposing a duty of excise and the method employed in the Act for imposing a cess a matter which will be clear from the cesses imposed under the two Central Acts already referred to (No. XXXII of 1947 and No. LXV of 1951). It is not as if there could be no method of imposing a fee properly so called in this case except the one employed. Two methods readily suggest themselves. A lump sum annual fee could be levied on each mine even on a graded scale depending on the size of the mine as evidenced by its share capital. Or a similar graded fee could be levied on each mine depending on its size determined by the number of men employed therein. Where therefore the result of quantification is to bring a particular impost entirely within the ambit of a tax it would not be right to say that such an impost is still a fee, because certain services have to be rendered and a fund has been created in which collections of the impost are credited. If this were permissible many taxes not otherwise leviable would be converted into fees by the simple device of creating a special fund and attaching certain services to be rendered from the amount in that fund. That would in my opinion be a colourable exercise of the power of legislation, as explained in K. C. Gajapati Narayan Deo vs The State of Orissa (1). Let me illustrate how taxes can be turned into fees on the so called basis of quantification with the help of the device of creating a fund and attaching certain services to be rendered out of monies in the fund. Take the case of income tax under item 82 of List I of the Seventh Schedule, which is exclusively reserved (1) ; 580 for the Union. Suppose that some State Legislature wants to impose a tax on income other than agricultural income in the garb of fees. All that it has to do is then to create a special fund out of the amounts collected and to attach rendering of certain services to the fund. All that would be necessary would be to define the services to be rendered so widely that the amount required for the purpose would be practically limitless. In that case there would be no difficulty in levying any amount of tax on income, for the amount collected would always be insufficient for the large number of services to be rendered. What has to be done is to find out a number of items in Lists II and III of the Seventh Schedule in respect of which fees can be levied by the State Legislature. These fees can be levied on a total basis for a large number of services under various entries of Lists II and III. A fund can be created, say, for rendering services of various kinds to residents of one district. In order to meet the expenses of tendering such services, suppose, the legislature imposes a tax on every one in the district at 10 per centum of the net total income (other than agricultural income); the amount so collected is put in a separate fund and ear marked for such special services to be rendered to the residents of that district. Can it be said that such a levy is a fee justified under various entries of Lists II and III, and not a tax on income, on the ground that this is merely a mode of quantification? As an instance, take, item 6 of List II, "Public health and sanitation, hospitals and dispensaries"; item 9, "Relief of the disabled and unemployable"; item II, Education; item 12, Libraries, museums and similar institutions"; item 13, communications, that is to say, roads, bridges and other means of communications; item 17, "Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power"; and item ', 25, "Gas and gas works"; item 23 of List III, "Social security and social insurance, employment and unemployment"; item 24, "Welfare of labour including conditions of work, provident funds, employers ' liability workmen 's compensation, invalidity and old age 581 pensions and maternity benefits"; item 25, "Vocational and technical training of labour"; and item 38, "Electricity". Assume that a fund is created for rendering, these services to the residents of a district. The State Legislature is entitled to impose fees for rendering these services to the residents of the district; the costs of these services would obviously be limitless and in order to meet these costs, the State legislature levies a consolidated fee for all these purposes at 10 per centum of the total net income on the residents of the district (excluding his agricultural income) as a measure of quantification of the fee. Can it be said in the circumstances that such a levy would not be Income tax, simply because a fund is created to be used in the district where collections are made and these services have to be rendered out of the fund so created to the residents of that district and to no others? The answer can only be one, viz., that the nature of the impost is to be seen in its pith and substance; and if in pith and substance it is income tax within item 82 of List I of the Seventh Schedule it will still remain income tax in spite of the creation of a fund and the attaching of certain services to the monies in that fund to be rendered in a particular area. Such an impost can never be justified as a consolidated fee on the ground that it is merely a method of quantification. Compare what has been done in this case. Sec. 3 of the Act which refers to the services to be rendered mentions communications, that is,, roads, bridges and other means of communication (barring those given in List I), water supply and electricity, for the better development of the area. These three items themselves would mean expenditure of such large amounts that anything could be charged as a fee to meet the costs, particularly in an undeveloped State like Orissa. Further, the section goes on to mention provision for the welfare of residents or workers in any such area, which would include such things as social security and social insurance, provident funds, employer 's liability, workmen 's compensation, invalidity and old age pensions and maternity benefits and may be even employment and unemployment. Again large funds would 74 582 be required for these purposes. Therefore, the services enumerated in section 3 being so large and requiring such large sums, any amount can be levied as a fee and in the name of quantification any tax, even though it may be in List I, can be imposed; and that is exactly what has been done, namely, what is really a duty of excise has been imposed as a fee for these purposes which fall under items 13 and 17 of List II and 23, 24 and 38 of List III. There can be no doubt in the circumstances that the levy of a cess as a fee in this case is a colourable piece of legislation. I do not say that the Orissa State Legislature did this deliberately. The motive of the legislature in such cases is irrelevant and it is the effect of the legislation that has to be seen. Looking at that, the cess in this case is in pith and substance nothing other than a duty of excise under item 84 of List I and therefore the State legislature was incompetent to levy it as a fee. The next contention on behalf of the State of Orissa is that if the cess is not justified as a fee, it is a tax under item 50 of List II of the Seventh Schedule. Item 50 provides for taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development. This raises a question as to what are taxes on mineral rights. Obviously, taxes on mineral rights must be different from taxes on goods produced in the nature of duties of excise. If taxes on mineral rights also include taxes on minerals produced, there would be no difference between taxes on mineral rights and duties of excise under item 84 of List I. A comparison of Lists I and II of the Seventh Schedule shows that the same tax is not put in both the Lists. Therefore, taxes on mineral rights must be different from duties of excise which are taxes on minerals produced. The difference can be understood if one sees that before minerals are extracted and become liable to duties of excise somebody has got to work the mines. The usual method of working them is for the owner of the mine to grant mining leases to those who have got the capital to work the mines. There should 583 therefore be no difficulty in holding that taxes on mineral rights are taxes on the right to extract minerals and not taxes on the minerals actually extracted. Thus tax on mineral rights would be confined, for example, to taxes on leases of mineral rights and on premium or royalty for that. Taxes on such premium and royalty would be taxes on mineral rights while taxes on the minerals actually extracted would be duties of excise. It is said that, there may be cases where the owner himself extracts minerals and does not give any right of extraction to somebody else and that in such cases in the absence of mining leases or sub leases there would be no way of levying tax on mineral right, ,. It is enough to say that these cases also, rare though they are, present no difficulty. Take the case of taxes on annual value of buildings. Where there is a lease of the building, the annual value is determined by the lease money; but there are many cases where owners themselves live in buildings. In such cases also taxes on buildings are levied on the annual value worked out according to certain rules. There would be no difficulty where an owner himself works the mine to value the mineral rights on the same principles on which leases of mineral rights are made and then to tax the royalty which, for example, the owner might have got if instead of working the mine himself he had leased it out to somebody else. There can be no doubt therefore that taxes on mineral rights are taxes of this nature and not taxes on minerals actually produced. Therefore the present case is not a tax on mineral rights; it is a tax on the minerals actually produced and can be no different in pith and substance from a tax on goods produced which comes under Item 84 of List I, as duty of excise. The present levy therefore under section 4 of the Act cannot be justified as a tax on mineral rights. In the view I have taken, it is not necessary to consider the other point, raised on behalf of the petitioners, namely, that even if it is a fee, in view of the two Central Acts (mentioned earlier) the, Orissa Legislature was not competent to pass the Act. I would 584 therefore allow the petition, and declare that the Orissa Mining Areas Development Fund Act, 1952, is beyond the constitutional competence of the Orissa Legislature to pass it. The whole Act must be struck down because there will be very little left in the Act if section 4 falls as it must. The legislature would never have passed the Act without section 4. By COURT. In accordance with the majority Judgment of the Court, the Writ Petition is dismissed with costs.

The petitioners challenged the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952, which by section 3 empowered the State Government to constitute mining areas for the purpose of providing them with certain amenities after hearing objections from the lessees, by section 4 to impose and collect a cess not exceeding 5% of the valuation of the minerals at the pit 's mouth and by section 5 created a fund to which the cess was to be credited. The petitioners ' case, inter alia, was that the impugned Act and the rules made thereunder were ultra vires the powers of the State Legislature, the cess levied thereunder was not a fee but a duty of excise on coal within Entry 84 of List I of the Seventh Schedule to the Constitution and repugnant to Coal Mines Labour Welfare Fund Act, 1947 (Act XXXII of 1947), and, alternatively, even supposing it was a fee relatable to Entries 23 and 66 of List II, it was hit by Entry 54 of List I read with the Mines and Minerals (Regulation and Development) Act 1948 (Act LIII of 1948), or by Entry 52 of List I read with the Industries (Development and Regulation) Act, 1951 (Act LXV of 1951). It was urged on behalf of the State, inter alia, that the cess was a fee and not a duty of excise and the competence of the State Legislature to levy it was not affected by the Central Acts. Held (per Gajendragadkar, Sarkar, Subba Rao and Mudholkar, JJ.), that the cess imposed by the Act was a fee relatable to Entries 23 and 66 of List II of the Seventh Schedule to the Constitution and the Constitutional validity of the impugned Act was beyond question. Although there can be no generic difference between a tax and a fee since both are compulsory exactions of money by public authorities, there is this distinction between them that whereas a tax is imposed for public purposes and requires no consideration to support it, a fee is levied essentially for services rendered and there must be an element of quid pro quo between the person 538 who pays it and the public authority that imposes it. While a tax invariably goes into the consolidated fund, a fee is earmarked for the specified services in a fund created for the purpose. Whether a cess is one or the other would naturally depend on the facts of each case. If in the guise of a fee, the Legislature imposes a tax, it is for the Court on a scrutiny of the scheme of the levy, to determine its real character. The distinction is recognised by the Constitution which while empowering the appropriate Legislatures to levy taxes under the Entries in the three lists refers to their power to levy fees in respect of any such matters, except the fees taken in court, and tests have been laid down by this Court for determining the character of an impugned levy. Matthews vs Chicory Marketing Board, ; , The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; , Mahant Sri Jagannath Ramanuj Das & Any. vs The State of Orissa, ; , and Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, referred to. P. P. Kutti Keva & Ors. vs The State of Madras, A.I.R. , Attorney General for British Columbia vs Esquimalt and Nanaimo Railway Co., and Parton & Any. vs Mils Board (Victoria), (1949) 80 C.L.R. 229, considered and held inapplicable. In determining whether a levy is a fee the true test must be whether its primary and essential purpose is to render specific services to a specified area or class, it being of no consequence that the State may ultimately and indirectly be benefited by it. So judged, the scheme of the impugned Act leaves no manner of doubt that the levy authorised by it is a fee and not a tax. The amount of the levy must depend on the extent of the services sought to be rendered and if they are proportionate, it would be unreasonable to say that since the impost is high it must be a duty of excise. The rate specified by section 4(2) of the Act, therefore, cannot by itself alter the character of the levy and constitute a trespass by the State Legislature on the legislative powers of the Parliament under Entry 84 of the List I. Nor can the method prescribed by the Legislature for re covering the levy by itself alter its character. The method is a matter of convenience and, though relevant, has to be tested in the light of other relevant circumstances. It is not permissible to challenge the vires of a statute relatable to an Entry in List II solely on the ground that the method adopted for the recovery of the impost can and generally is adopted in levying a duty of excise. Ralla Ram vs The Province of East Punjab, , Byramjee Jeejeebhoy vs The Province of Bombay & Anr. I.L.R. 539 and Governor General in Council vs Province of Madras, (1945) 'L.R. 72 I.A. 91, considered. The limitation imposed by the latter part of Entry 23 of List II is a limitation on the legislative competence of the State ' Legislature itself and the test whether a statute passed by the State Legislature thereunder was ultra vires would be whether the requisite declaration under Entry 54, List I, has been made by Parliament by law covering the same field or not; it is not necessary in order to make the declaration effective that rules should also be made and enforced. Although by operation of article 372 of the Constitution Act LIII of 1948 was an existing Act substantially covering the same field as covered by the impugned Act, there was no adaptation of section 2 of that Act whereby a declaration implied by it could be said to have been adapted to a declaration by Parliament. Clause 16 of the Adaptation of Laws Order, 1950, properly construed, cannot be held to refer to the Dominion Legislature and equate it with the Parliament. It can be resorted to only where the existing law expressly refers to some authority that can be equated with the corresponding new authorities. Since the Dominion Legislature was not so referred to, its competence under the Constitution Act of 1935, repealed by the Constitution of India, was clearly outside the clause. Nor can Cl. 21 of the order be of any help to the petitioners. Consequently, in the absence of the requisite Parliamentary declaration, the competence of the Orissa State Legislature under Entry 23 read with Entry 66 of the List II was not impaired and the impugned Act must be deemed to have repeal ed the Central Act, so far as that State was concerned. This case incidentally discloses that in regard to the requisite Parliamentary declaration prescribed by Entry 54 in List I in its application to the pre constitution Acts under corresponding Entry 36 in List I of the Constitution Act of 1935, there is a lacuna which has not been covered by any clauses of the Adaptation of Laws Order, 1950. Nor was the impugned Act ultra vires the State Legislature by operation of Entry 52 of List I read with section 2 of the Industries (Development and Regulation) Act, 1951 (LXV of 1951). That Act, in pith and substance, deals more directly with the control of certain specified industries including the coal industry, while the impugned Act is concerned with the development of the mining areas notified under it. The field covered by the two Acts was not, therefore, the same. per Wanchoo, J. In order to determine whether a levy is a tax or a fee, what has to be considered is the pith and sub stance of the levy. Where the levy in pith and substance is not essentially different from a tax, it cannot be converted into a fee by crediting it to a special fund and attaching certain services to it. 540 The Commissioner, Hindu Religious Endowments, Madras, vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, ; , Mahant Sri Jaannath Ramanuj Das vs The State of Orissa, ; and Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, discussed. A duty of excise in pith and substance is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is different and distinct from a sales tax and in law they do not overlap. Governor General in Council vs Province of Madras, 72 I.A. 91, referred to. What the impugned Act did was to provide for the levying of the cess on the goods produced at a rate not exceeding five per centum of the value at the pit 's mouth. The cess was, therefore, in pith and substance a duty of excise falling within Entry 84 of List I, which the State legislature could not levy. It was not correct to say that the method employed by the impugned Act for realising the cess was a mere method of quantification and did not affect its character which was that of a fee. In the present case the very mode of the levy of the cess is nothing other than the levy of a duty of excise, and, therefore, the principle of quantification for purposes of a fee could not be so extended as to convert what was in pith and substance a tax into a fee. Sri Byramjee Jeejeebhoy vs The Province of Bombay, I.L.R. , Municipal Corporation, Ahmedabad vs Patel Gor dhandas Hargovandas, I.L.R. and Ralla Ram vs The Province of East Punjab, , considered. K. C. Gajapati Narayan Deo vs The State of Orissa, ; , referred to. The cess levied under section 4 of the Act could not be justified as a tax on mineral rights under Entry 50 of List II of the Seventh Schedule and the impugned Act was in effect a colourable piece of legislation.

15 of 1959, 14 of 1960 and 21 of 1959. Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights. Frank Anthony and J. B. Dadachanji, for the petitioners (In Petns. Nos. 15 and 21 of 1959). 612 H. J. Umrigar, O. P. Rana and A. G. Ratnaparkhi, for the petitioners (In Petn. No. 14 of 1960). L. K. Jha and section P. Varma, for the respondent (In Petn. No. 15 of 1959). C. K. Daphtary, Solicitor General of India, M. Adhikari, Advocate General for the State of Madhya Pradesh and I. N. Shroff, for the respondent (In Petn. No. 14 of 1960). H. N. Sanyal, Additional Solicitor General of India and C. P. Lal, for the respondent (In Petn. No. 21 of 1959). November 23. The Judgment of the Court was delivered by section K. DAS, J. These three writ petitions have been heard together, as they raise common questions of law and fact. They relate, however, to three different enactments made by the Legislatures of three different States Bihar in writ petition No. 15, Uttar Pradesh in writ petition No. 21, and Madhya Pradesh in writ petition No. 14. The petitioners in the several petitions have challenged the 'validity of a number of provisions of the enactments in question and, in some cases, also of the rules made thereunder. The impugned provisions are similar in nature, but are not exactly the same. Therefore, we shall first state in general terms the case of the petitioners and then consider in detail and separately the impugned provisions in each case. But before we do so, it is necessary to refer to some background history of the legislation under consideration in these cases. In the year 1958 this Court had to consider the validity of certain provisions of three Acts: (1) The Bihar Preservation and Improvement of Animals Act, (Bihar Act II of 1956); (2) the Uttar Pradesh Prevention of Cow Slaughter Act, 1955 (U. P. Act 1 of 1956); and (3) the Central Provinces and Berar Animal Preservation Act, 1949 (C. P. and Berar Act LII of 1949). The Bihar Act put a total ban on the slaughter of all 613 categories of animals of the species of bovine cattle. The U. P. Act put a total ban on the slaughter of cows and her progeny which included bulls, bullocks, heifers and calves. The C. P. and Berar Act placed a total ban on the slaughter of cows, male or female calves of cows, bulls, bullocks, and heifers, and the slaughter of buffaloes (male or female, adults or calves) was permitted only under a certificate granted by the proper authorities. These three Acts were enacted in pursuance of the directive principle of State policy contained in article 48 of the Constitution. The petitioners who challenged the various provisions of the aforesaid Acts in 1958 were engaged in the butcher 's trade and its subsidiary undertakings; they challenged the constitutional validity of the Acts on the ground that they infringed their fundamental rights under articles 14, 19(1)(f) and (g) of the Constitution. In the decision which this Court gave in Mohd. Hanif Quareshi vs The State, of Bihar (1), it held (i) that a total ban on the slaughter of cows of all ages and calves of cows and of she buffaloes, male or female, was quite reasonable and valid; (ii) that a total ban on the slaughter of she buffaloes or breeding bulls, or working bullocks (cattle as well as buffaloes) so long as they were capable of being used as milch or draught cattle was also reasonable and valid; and (iii) that a total ban on slaughter of she buffaloes, bulls and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals was not in the interests of the general public and was invalid. In the result this Court directed the respondent States not to enforce their respective Acts in so far as they were declared void by it. This led to some amending or new legislation, and we are concerned in these three cases with the provisions of these amending or new Acts and the rules made thereunder. In Bihar (Writ Petition No. 15 of 1959) the impugned Act is called the Bihar Preservation and Improvement of Animals (1) ; 78 614 (Amendment) Act, 1959 which received the assent of the Governor on January 13, 1959. in Uttar Pradesh (Writ Petition No. 21 of 1959) the impugned Act is called the Uttar Pradesh Prevention of Cow Slaughter (Amendment) Act, 1958 and in Madhya Pradesh (Writ Petition No ' 14 of 1960) a new Act was passed called the Madhya Pradesh Agricultural Cattle Preservation Act, 1959 (Act 18 of 1959) which received the assent of the President on July 24, 1959 and came into force on January 15, 1960. The rules made there under are called the Madhya Pradesh Agricultural Cattle Preservation Rules, 1959. The general case of the petitioners, who are several in number in each of the three cases, is that they are citizens of India and carry on their profession and trade of butchers; they allege that the various provisions of the impugned legislation infringe their fundamental rights in that they, for all practical purposes, have put a total ban on the slaughter of she buffaloes, bulls or bullocks, even after such animals have ceased to be useful, and have virtually put an end to their profession and trade. It is pointed out that the age up to which the animals referred to above cannot be slaughtered (20 or 25 years) has been put so high that the practical effect is that no animals can be slaughtered, and the amending or new legislation has put in other restrictions so arbitrary and unreasonable in nature that in effect they amount to a prohibition or destruction of the petitioner 's right to carry on their trade and profession. The following allegations quoted from one of the petitions (Writ Petition No. 15 of 1959) give a general idea of the nature of the case which the petitioners have put forward: "That there is good professional authority for the view that even in countries where animal husbandry is organised on a highly progressive and scientific basis, cattle seldom live beyond 15 or 16 years. That there is also good authority to the effect that even pedigree breeding bulls are usually discarded at the age of 12 or 14 years. , That in India bulls and bullocks and she buffaloes rarely live even up to the age of 15 years; draught bullocks begin to age after eight years, 615 That the raising of the age limit from 15 to 20 years is arbitrary, unreasonable and against the general public interests and is repugnant to and infringes the, fundamental rights of the, petitioners under Article 19 (1)(f) and (g) of the Constitution. That section 3 of the amending Act is a mala fide, colourable exercise of power, repugnant to the fundamental rights of the petitioners under Article 19 (1)(f) and (g). That this arbitrary raising of the age limit will be against the public interests For the following among ' other reasons: (i) That there will, in fact, be no bulls or bullocks or she buffaloes available for slaughter as few, if any, of such animals survive in India up to the age of 15 years; (ii) that the profession, trade and occupation of millions of Muslims will be permanently and irreparably injured; (iii) that millions of members of the minority communities such as Christians, Scheduled Castes, Scheduled Tribes and Muslims, for whom cattle beef is a staple item of their diet, will be deprived of this diet; (iv) that the menace of the rapidly increasing uneconomic cattle population in such matters as the destruction of crops, being a public nuisance, will be accentuated by this arbitrary age limit, and in effect will ensure that bulls and bullocks cannot be slaughtered; (v) that the menace of the rapidly increasing population of uneconomic cattle to the fodder and other animal food resources of the country will be accentuated. (vi) that the competition between the rapidly increasing cattle population, a large percentage I of which is uneconomic and useless, add the human population for available land will be accentuated; (vii) that this piece of legislation will ensure the steady increase of useless bulls and bullocks and must react disastrously against any attempt to improve milk production, bullock power or animal husbandry generally." 616 Similar allegations have been made in the other two petitions also. The correctness of these allegations has been con. tested on behalf of the respondent States, which through some of their officers have filed affidavits in reply. We shall presently examine at greater length the averments made in these affidavits, but we may indicate here in broad outline what their general effect is. In Bihar the age below which the slaughter of she buffaloes, bulls and bullocks is prohibited is 25 years. The respondent State has taken the plea that the usefulness or longevity of live stock for breeding and other purposes depends to a very great extent on (a) better animal husbandry facilities like feeding and management and (b) control of animal diseases, and as these facilities are now available in a greater measure, the legislature came to the conclusion that a bull or bullock or a she buffalo below 25 years of age continues to remain useful; if a bull, bullock or shebuffalo is permanently incapacitated below that age the impugned provision permits its slaughter and therefore the legislation which is challenged conforms to the decision of this Court and does not violate any fundamental right. In Uttar Pradesh the age is 20 years as respects bulls or bullocks, with a further restriction to be referred to later. The reply of the res pondent State is that bulls or bullocks do not become unfit at the age of 12 or 14 years as alleged by the petitioners; on the contrary, they continue to be useful and at no time they become entirely useless. It is then stated in the affidavit: "As a matter of fact, the age up to which the animals can live and are serviceable depends upon the care and attention they receive and the quality of the grass on which they are grazed. . . . . .According to a high authority the average age of an ox under favourable conditions would be between 15 to 20 years. Even under conditions prevailing in Uttar Pradesh, bulls can live upto 20 years or more as would appear from an analysis of a survey report of the animal husbandry department. " 617 On these averments the respondent State contends that the legislation is valid. In Madhya Pradesh also the age is 20 years. The Under Secretary to the( State Government in the Agricultural Department ' has made the reply affidavit in which it has been stated inter alia that conditions in Madhya Pradesh are different from conditions in other States. The affidavit then states: "The State of Madhya Pradesh has a total area of 107,589,000 acres, out of which total cropped area is 43,572,000 acres. Forest area is 33,443,000 acres, area not available for cultivation is 11,555,000 acres, uncultivated land is 18,405,000 acres and fallow land is 5,834,000 acres. It will thus be seen that this State has a large forest area and plenty of grass land for pasturage. As the forests supply the greater part of the fuel needs of the human population, the dung of animals is largely available as manure. The legislature considered that bulls, bullocks and buffaloes are useful in this State till they are well past twenty years of age and that they should not be slaughtered till they are past that age and are also unfit for work or breeding. The problem of animals dying of slow starvation or of worthless animals depriving useful animals of fodder needs no consideration in this State. The agricultural community in the State benefits by the existence of animals as long as they are useful. " There are also further averments as to the shortage of breeding bulls, working bullocks and she buffaloes in Madhya Pradesh. On these averments the contention of the respondent State is that the cattle in that State are useful up to the age of 20 years. We have indicated above in general terms the case of the petitioners and the reply which the respondent States have given. We proceed now to a detailed consideration of the impugned legislation in each case. (1) We take up first the Bihar Preservation and Improvement of Animals (Amendment) Act, 1959 and the rules made under the main Act of 1955. Section 3 of the Act as amended reads: "section 3.

In Mohd. Hanif Quareshi vs The State of Bihar the Supreme Court held that a total ban on the slaughter of bulls, bullocks and she buffaloes after they had ceased to be useful was not in the interests of the general public and was invalid. Thereafter, the Bihar Legislature passed the Bihar Preservation and Improvement of Animals (Amendment) Act, 1958, the Uttar Pradesh Legislature passed the U. P. Prevention of Cow Slaughter (Amendment) Act, 1958 and the Madhya Pradesh Legislature passed a new Act, the M. P. Agricultural Cattle Preservation Act, 1959. Section 3 of the Bihar Act prohibited the slaughter of a bull, bullock or she buffalo except when it was over 25 years of age and had become useless. Rule 3 of the Bihar Preservation and Improvement of Animals Rules, 1960 prescribed that the certificate for slaughtering an animal could be granted only with the concurrence of the Veterinary Officer and the Chairman or Chief Officer of a District Board, Municipality etc., and if the two differed, then according to the decision of the Sub Divisional Animal Husbandary Officer. Section 3 of the U. P. Act permitted the slaughter of a bull or bullock only if it was over 20 years of age and was permanently unfit. It further provided that the animal could not be slaughtered within 20 days of the grant of 'a certificate that it was fit to be slaughtered and gave a right of appeal to any person aggrieved by the order granting the certificate. Section 4(1)(b) of the Madhya Pradesh Act provided that no bull, bullock or buffallo could be slaughtered except upon a certificate issued by the competent authority and section 4(2)(a) provided that no certificate could be issued unless the animal was over 20 years of age and was unfit for work or breeding. Section 4(3) gave a right of appeal to any person aggrieved by the order of the competent authority. Section 5 provided that no animal 611 shall be slaughtered within 10 days of the date of the issue of the certificate and where an appeal was preferred against the grant of the certificate, till the time such appeal was disposed of. The petitioners, who carried on the profession and trade of butchers, contended that the various provisions of the three Acts set out above infringed their fundamental rights by practically putting a total ban on the slaughter of bulls, bullocks and she buffaloes even after the animal had ceased to be useful and thus virtually put an end to their profession and trade. Held, (i) that the ban on the slaughter of bulls, bullocks and she buffaloes below the age of 20 or 25 years was not a reasonable restriction in the interests of the general public and was void. A bull, bullock or buffalo did not remain useful after 15 years, and whatever little use it may have then was greatly offset by the economic disadvantages of feeding and maintaining unserviceable cattle. The additional condition that the animal must, apart from being above 20 or 25 years of age, also be unfit was a further unreasonable restriction. Section 3 of the Bihar Act, section 3 of the U. P. Act and section 4(2)(a) of the M. P. Act were invalid. (ii) Rule 3 of the Bihar Rules was bad as it imposed dis proportionate restrictions on the rights of the petitioners. The procedure involved such expenditure of money and time as made the obtaining of the certificate not worthwhile. (iii) The provisions in the Uttar Pradesh and Madhya Pradesh Acts providing that the animal shall not be slaughtered within 20 and10 days respectively of the issue of the certificate and that any person aggrieved by the order of the competent authority, may appeal against it, were likely to hold up the slaughter of the animal for a long time and practically put a total ban on slaughter of bulls, bullocks and buffaloes even after they had ceased to be useful. These provisions imposed unreasonable restrictions on the fundamental rights of the petitioners and were void. Mohd. Hanif Quareshi vs The State of Bihar, [1959] S.C.R. 629, State of Madras vs V. G. Row, ; and The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga, , referred to.

Appeal No. 364 of 1957. Appeal from the judgment and order dated February 22, 1956, of the former Bombay High Court in I.T.R. No. 31/1955. N. A. Palkhivala and I. N. Shroff, for the Appellants. A. N. Kripal and D. Gupta, for the Respondent. 1960. November 22. The Judgment of the Court was delivered by SHAH, J. This is an appeal by seven appellants with leave granted by the High Court of Judicature at Bombay certifying that it involves a question of importance. The appellants held 570 out of a total issue of 800 shares of the Navjivan Mills Ltd., Kalol, a public limited company hereinafter referred to as the Mills. Between the years 1943 47, the Mills purchased 5,000 shares of the Bank of India Ltd. At an extraordinary general meeting of the shareholders of the Bank of India held on May 6, 1948, a resolution was passed increasing the share capital of the Bank and for that purpose offering new shares to the existing shareholders in the proportion of one new share for every three shares held by the shareholders. The face value of the new shares was to be Rs. 50, but the shares were issued at a premium of Rs. 50. The shareholders had to pay Rs. 100 for each new share. The Mills as the holder of 5,000 shares became entitled to receive 1,6662 shares of the Bank of India at the rate of Rs. 100 per share. The Bank of India communicated its resolution by letter dated May 25, 1948 and enclosed therewith three forms, form A for acceptance, form 586 B for renunciation and 'form C which may compendiously be called a form for allotment to nominees. On receiving the circular letter, the Directors of the Mills passed the following resolution: "Resolved that the company having a holding of 5,000 ordinary shares in the capital of the Bank of India Ltd. having now received an intimation from the said Bank that this company is entitled to get 1,6662 more ordinary shares on payment of Rs. 50 as capital and Rs. 50 as premium per each share and it is considered proper to invest in the said issue of the said Bank the funds of this company to the extent of 66 shares only and to distribute the right of this company to the remaining 1,600 shares of the said issue amongst the shareholders of this company in the proportion of the shares held by them in this company. IT IS HEREBY RESOLVED that the funds of this company may be invested in the 66 shares out of 1,666 shares offered by 'the Bank of India Ltd., and the right to the remaining 1,600 shares is hereby distributed among 800 shares of this company in the proportion of right to two shares of the Bank per one ordinary share held in this company. The Managing Agents may take steps to intimate the shareholders to exercise the right if they like to do so. " Accordingly, the Mills exercised the right to take over only 66 shares out of the shares offered and resolved that the right to the remaining 1,600 shares be distributed amongst its 800 share holders. The seven appellants as holders of 570 shares of the Mills became entitled to 1,140 shares of the Bank of India. The appellants agreed to the allotment of these shares and ultimately transferred them to a private company Jesinghbai Investment Co. ' Ltd. The assessment of the seven appellants and of other shareholders of the Mills was reopened under section 34(1)(a) of the Indian Income Tax Act by the Income Tax Officer on the footing that, the release by the Mills of the shares of the Bank of India amounted to a distribution of "dividend" and the value of the right released in favour of the shareholders though taxable 587 under section 12 of the Act, had escaped tax. The order of the Income Tax Officer reassessing the income of the seven appellants was confirmed in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal. At the instance of the appellants, the i following question was submitted by the Tribunal to the High Court at Bombay under section 66(1) of the Income Tax Act: "Whether on the facts and circumstances of the case the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend" within the meaning of section 2(6A) of the Indian Income Tax Act. " The High Court reframed the question as follows: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd., in favour of the assessees amounted to a distribution of "dividend"?" and answered it in the affirmative. The High Court observed that the definition of "dividend" in section 2(6A) was an inclusive and not an exhaustive definition, and even if the distribution of the right to the shares of the Bank of India could not be regarded as dividend within the extended meaning of that expression in section 2(6A), it was still dividend within the ordinary meaning of that expression and was taxable as income in the hands of the appellants. Counsel for the appellants contended that the High Court was not justified, having regard to the form of the question which expressly related to the distribution of the right to the Bank of India shares being dividend within the meaning of the definition in section 2(6A) of the Income Tax Act, in enlarging the scope of the question and in answering it in the light of its ordinary meaning. There is no substance in this contention. "Dividend" is defined in section 2(6A) as inclusive of various items and exclusive of certain others which it is not necessary to set out for the purpose of this appeal. "Dividend" in its ordinary meaning is a 588 distributive share of the profits or income of a company given to its shareholders. When the Legislature by section 2(6A) sought to define the expression "dividend" it added to the normal meaning of the expression several other categories of receipts which may not otherwise be included therein. By the definition in section 2(6A), "dividend" means dividend as normally understood and includes in its connotation several other receipts set out in the definition. The Tribunal had referred the question whether the distribution of the right to apply for the Bank of India shares amounted to distribution of dividend within the meaning of section 2(6A) and in answering that question, the High Court had to take into account both the normal and the extended meaning of that expression. In the question framed by the Tribunal, there is nothing to indicate that the High Court was called upon to advise on the question whether the receipts by the appellants amounted to dividend only within the extended definition of that expression in section 2(6A). It was also urged that in nominating its shareholders to exercise the option to purchase the new issue of the Bank of India, the Mills did not distribute any dividend. The Mills were, it is true, not obliged to accept the offer made by the Bank of India, however advantageous it might have been to the Mills to accept the offer: it was open to the Mills to renounce the offer. The Mills had three options, (1) to accept the shares, (2) to decline to accept the shares, or (3) to surrender them in favour of its nominee. It is undisputed that when the shares were offered by the Bank of India to its shareholders, the right to apply for the shares had a market value of Rs. 100 per share. The face value of the new share was Rs. 50 but the shareholders had to pay a premium of Rs. 50, thus making a total payment of Rs. 100 for acquiring the new share. The new shares were quoted in the market at more than Rs. 200: and the difference between the amount payable for acquiring the shares under the right offered by the Bank of India and the market quotation of the shares was indisputably the value of the right. The Mills could not be compelled to obtain 589 this benefit if it did not desire to do so: it could accept the shares or decline to accept those shares or exercise the option of surrendering them in favour of its nominees. This last option could be exercised by nominating the persons who were to take over the shares and that is what the Mills did. The Mills requested the Bank of India to allot the shares to its nominees, and the request for allotment to its nominees amounted to transfer of the right. By its resolution, the Mills in truth transferred a right of the value of Rs. 200 for each share held by its shareholders. This was manifestly not distribution of the capital of the Mills. It was open to the Mills to sell the right to the shares of the Bank of India in the market, and to distribute the proceeds among the shareholders. Such a distribution would undoubtedly have been distribution of dividend. If instead of selling the right in the market and then distributing the proceeds, the Mills directly transferred the right, the benefit in the hands of the shareholders was still dividend. Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value. The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend. It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value. But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered. We are therefore of the view that the High Court was right in holding that the distribution of the right to apply for and obtain two shares of the Bank of India (at half their market value) for each share held by the shareholders of the Mills amounted to distribution of dividend. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellants were shareholders of a company known as Navjivan Mills Ltd. which held a large number of shares of the Bank of India. The Bank with the object of increasing their share capital offered some more shares to the Mills for a price including premium which was about half the market value. The Mills purchased a small number of the shares so offered with their own funds and distributed their right to acquire the remaining shares to their shareholders in the proportion of two shares of the Bank for one share held by them. The assessment of the appellant was reopened by the Income Tax Officer under section 34(1)(a) of the Income tax Act on the footing that the release of the right to the shares of the Bank of India amounted to distribution of dividend. Appeals against the order of the Income Tax Officer having failed, the High Court at the instance of the appellants framed the following question: "Whether on the facts and circumstances of the case, the distribution of the right to apply for the shares of the Bank of India by Navjivan Mills Ltd. in favour of the assessees amounted to a distribution of "dividend"? 585 The High Court answered the question in the affirmative. On appeal with a certificate of the High Court, Held, that the view taken by the High Court was correct. The distribution to the shareholders of the Mills of the right to obtain two shares of the Bank of India for each share held by them at half the market value amounted to distribution of "dividend" which was liable to be taxed.

Appeals Nos. 321 and 322 of 1956. Appeals by special leave from the judgment and decree dated September 21. 1951, of the Mysore High Court in Regular Appeals Nos. 3,24,13 and 25 of 1948. 49, arising gut of the judgment and decree dated 85 664 January 9, 1948, of the Principal DistriCt Judge, Bangalore, in Original Suits Nos. 55 of 1946 47 and 117 of 1945 46 respectively. section K. Venkataranga Aiyangar and section K. Aiyangar, for the appellant. B. K. B. Naidu, for the respondents. February 1. The Judgment of the Court was delivered by SHAH, J. V. R. Subramanyam, the appellant herein is the owner of plot No. 29, Subedar Chattram Road in the town of Bangalore. B. Thayappa respondent is a building contractor. The appellant entrusted the respondent with the work of constructing a house and shops on the plot, on terms and conditions set out in a written agreement dated October 1, 1942, which was slightly modified on October 6, 1942. By the agreement the respondent was to construct for the appellant on the plot six shops abutting a public road, the main building at the rear of the shops, an out house and a garage according to a site plan. The respondent was to be remunerated at rates specified in the agreement: for constructions with R. C. C. roofing, the rate stipulated was Rs. 4 2 0 per square foot and for " tiled construction " it was Rs. 3 2 0 per square foot. The Municipality of Bangalore did not sanction the plan as proposed by the appellant. The plan was altered and it was sanctioned, subject to those alterations. By the alterations the shops were deleted from the plan, the area of the out house was increased, and a puja room on the ground floor and an extra room on the first floor were added to the plan. A compound wall was also to be constructed. The respondent carried out a substantial part of the construction work according to plan and the appellant paid to him diverse sums of money and delivered building materials. The aggregate amount accordingly received by the respondent was Rs. 20,200. But before the work could be completed disputes arose between the appellant and the respondent about the work done by the latter. The appellant claimed that the work done was defective and that he was entitled to compensation for effecting 665 repairs necessary to rectify the defects. The respondent claimed compensation at certain rates set up by him for work done for the appellant for which no express provision was made in the written agreement. Each party set up an oral agreement about the remuneration to be paid to the respondent for the extra work which was not included in the original agreement. The appellant filed a suit in the court of the Subordinate Judge, Bangalore, against the respondent which was later transferred to the court of the Principal District Judge, Bangalore, and numbered O. section 54 of 1946 47, for a decree for Rs. 8,515 4 0 being the amount of compensation which the appellant claimed he was entitled to receive from the respondent for defective work and for delay in completion of the construction. The respondent filed a suit against the appellant which was later transferred to the Court of the Principal District Judge, Bangalore, and numbered 55 of 1946 47. By this suit, the respondent claimed a decree for Rs. 5,988 12 0 being the remuneration due to him for the work done in constructing the house less Rs. 20,200 received from the appellant. The respondent filed another suit No. 117 of 1945 46 for a decree for Rs. 15,001 10 9 with interest and notice charges being the amount due to him for the construction of the out house, godown, first floor room and flight of steps and the value of some building materials which the respondent claimed he had left in the premises of the appellant and which the latter had wrongfully removed. The trial court granted to the appellant a decree for Rs. 3,000 in suit No. 54 of 1946 47. To the respondent, he granted a decree for Rs. 2,989 6 0 in suit No. 55 of 1946 47 and in suit No. 117 of 1945 46, he granted a decree for Rs. 13,329 10 9. Both the parties felt themselves aggrieved by the decrees passed in the three suits and six appeals were preferred to the High Court of Judicature of Mysore at Bangalore against those decrees. The High Court reversed the decree passed in suit No. 54 of 1946 47 and dismissed the appellant 's claim in its entirety. The decrees 666 passed in suit Nos. 55 of 1946 47 and 117 of 1945 46 were also set aside and proceedings were remanded to the District Court with a direction that a qualified engineer be appointed as Commissioner to determine the amounts payable to the respondent for work done in addition to the work agreed to be done under the written contract. The High Court ordered that the same be determined " in accordance with the directions " given in the judgment. The appellant has appealed to this court against the decrees in suits Nos. 55 of 1946 47 and 117 of 1945 46 with special leave under article 136 of the Constitution and he challenges the directions given in the order of remand. The dispute between the parties related to the construction of the out house, garage, puja room, the room on the first floor, the stair case 'leading to the upper floor room and the compound wall. In respect of these constructions (except for the compound wall) the District Judge awarded compensation to the respondents at the rate of Rs. 4 2 0 per square foot and in respect of the compound wall he awarded compensation at the rate of Rs. 5 per running foot, and certain additional charges. The High Court held that the respondent was entitled to receive compensation at the prevailing market rate for constructions which were not covered by the agreements dated October 1, 1942 and October 6, 1942. The High Court negatived the plea of the respondent that the appellant had agreed to pay him at " extra rates for deviations and additions not specifically contained in the original agreement. " The High Court then held that for the construction of the out house,puja room and the upper floor room, the respondent was entitled to receive compensation at the rate of Rs. 4 2 0 and for the out house he was entitled to receive " some extra amount for the additional constructions. " In these items, according to the High Court, there was no material deviation from the original plan. The High Court further directed that for the flight of stairs compensation be paid either "by way of a lump sum or on cubical content whichever was more practicable or common according to the rates which they proposed to indicate for such 667 additional work. " The High Court however held that there was substantial variation from the original contract in the construction of the garage, and therefore the garage could " not be covered by the contracted rate" and must be paid for at the rates current at the end of the year 1943. The High Court also directed that " if the extra items not covered by Exs. VII and VII(a) have been constructed or supplied by the defendants as claimed in his bills Exs. XXI, XXII and XXIII are to be paid for in addition to the flat rate, the basis on which they should be paid for may. . be fixed in accordance with the rates contained in exhibit II. " Counsel for the appellant submitted that as in the view of the High Court the respondent failed to prove the oral agreement pleaded by him, the suit should have been dismissed, and they should not have awarded compensation quantum meruit which was not claimed. it was urged that the respondent must succeed or fail ' on the case pleaded by him, and not on a cause of action not pleaded. In our view, there is no substance in this contention. As we have already observed, in respect of the additional work done by the respondent, both the parties set up conflicting oral agreements. These were not accepted by the High Court. If a party to a contract has rendered service to the other not intending to do so gratuitously and the other person has obtained some benefit, the former is entitled :to compensation for the value of the services rendered by him ' Evidently, the respondent made additional constructions to the building and they were not done gratuitously. He was therefore entitled to receive compensation for the work done which was not covered by the agreement. The respondent claimed under an oral agreement compensation at prevailing market rates for work done by him: even if he failed to prove an express agreement in that behalf, the court may still award him compensation under section 70 of the Contract Act. By awarding a decree for compensation under the Statute and not under the oral contract pleaded, there was in the circumstances of this case no 668 substantial departure from the claim made by the respondent. It was then urged that the High Court was in error in directing assessment of compensation for the additional work " in accordance with the rates mentioned in exhibit II. " The plaintiff 's witness T. section Narayana Rao had admitted that the rates in exhibit II were the current market rates for building construction work similar to the appellant 's building. In the view of the High Court, the rates set out in that bill were not excessive. If with a view to restrict the scope of the enquiry, the learned judges of the High Court gave a direction to the Commissioner for assessing compensation on the basis of rates which were approved by the plaintiff 's witness, it cannot be said that any serious error was committed in incorporating that direction which would justify our interference. Finally it was urged that the appellant was entitled to claim the loss suffered by him on account of defective work by way of an equitable set off in the claim made by the respondent in suits Nos. 55 of 1946 47 and 117 of 1945 46. But the appellant made a claim in a substantive suit for compensation for loss suffered by him because of the alleged defective work done by the respondent. That suit was dismissed by the High Court and it is not open to the appellant thereafter to seek to reagitate the same question in the companion suits when no appeal has been preferred against the decree in suit No. 54 of 1946 47. and no plea of equitable set off has been raised in the written statements in the companion suits. In our view, there is no substance in any of the contentions raised. The appeals therefore fail and are dismissed with costs. One hearing fee. Appeals dismissed.

The appellant entered into an agreement with the respondent who was a building contractor entrusting him with the work of constructing a house and shops. The respondent undertook the work but before it could be completed disputes arose between them and the appellant claimed compensation for effecting repairs to rectify defective work done by the respondent, and the respondent claimed compensation at certain rates set up by him for work for which there was no express provision in the written agreement. Suits based on their respective claims were filed by the appellant and the respondent which were partly decreed by the trial court. The High Court dismissed the appellant 's suit in its. entirety and remanded the respondent 's suit directing the appointment of a qualified engineer for determining, according to the directions given in the judgment, the amount payable to the respondent for work done in addition to the agreed work under the contract. The appellant contended that the respondent having failed to prove the oral agreement pleaded the respondents ' suit should have been dismissed and compensation quantum meruit which was not claimed should not have been awarded. Held, that if a party to a contract rendered service to the other not intending to do so gratuitously and the other party had obtained some benefit, the former was entitled to compensation for the value of the services rendered by him. The respondent not intending to do gratuitous work was entitled to compensation for additional work not covered by the written agreement. Even if the respondent failed to prove his claim for compensation at the prevailing market rate under an oral agreement the court had jurisdiction to award compensation for work done under section 70 of the Contract Act. The appellant 's suit having been dismissed by the High Court and no appeal having been preferred against it, it was not open to him to reagitate the same question of compensation in the companion suits in which no equitable set off was claimed.

Appeals Nos. 396 to 398 and 419 to 421 of 1959, and 152 of 1960. Appeals by special leave from the judgment and order dated November 5, 1958, of the Punjab High Court in First Appeals from Orders Nos. 42 to 44, 60 to 62 and 55 of 1955 respectively. M. C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants (in C. As. 396 to 398 of 59) and Respondent No. 2 (in C. As. 419 to 421 of 59 and 152 of 60). A. V. Viswanatha Sastri and G. C. Mathur, for the appellant (In C. As. 419 to 421 of 59), Respondent No. 1 (In C. As. 396 to 398 of 59) and Respondent No. 3 (In C. A. No. 152 of 60). G. C. Mathur, for the appellant (In C. A. No. 1.52 of 60). Gopal Singh and D. Gupta, for Respondent No. 2 (In C. As. 396 to 398 of 59) and Respondent No. 1 (In C. As. 419 of 59 and 152 of 60). February 2. The Judgment of the Court was delivered by 679 GAJEMDRAGADKAR, J. This is a group of seven appeals all of which arise from the same land acquisition proceedings in respect of which the Punjab Government originally issued a notification under section 4 of the Land Acquisition Act, 1894, on March 23, 1948. By this notification the State Government declared its intention to acquire land in the Ambala District for the construction of the new Capital for East Pun ab. No action was, however, taken in pursuance of this notification. Meanwhile the Punjab Legislature passed the East Punjab Requisition of Immovable Property (Temporary Powers) Act, 48 of 1948. Under the provisions of this Act the Government requisitioned the land in question for the purpose of resettling the persons who were likely to be evicted from their fands as a result of the construction of the new Capital. The said land was actually acquired on May 20,1951. This land forms part of a Jagir known as "Singh Purian " and comprises the areas of villages Mataur, Dhirpur, Saneta and Giddarpur in the District of Ambala. It appears that these villages originally formed part of the area covered by the Cls Sutlej States. section Amrao Singh was entered as owner of the land thus acquired. His wife is Sardarani Gurdial Kaur and his son is Satinder Singh. The estate of Amrao Singh was at the relevant time being managed by the Court of Wards. Pursuant to the provisions of the Act compensation was assessed by the estate officer and was accordingly offered by the State Government to the Court of Wards. The Court of Wards agreed to the amount of compensation thus offered and Amrao Singh himself did not object to it. Satinder Singh, however, was not willing to accept the said compensation and he raised several objections contending that it was wholly inadequate. He also objected to the compensation being paid either to the Court of Wards or to his father Amrao Singh, and in support of this contention he urged that since the estate once formed part of Cis Sutlej States, Amrao Singh was entitled only to its usufruct for his life and had no right to alienate or otherwise deal with its corpus. Satinder Singh 's plea was that after the 87 680 amount of compensation was finally determined it should be deposited in Government Securities or alternatively a part of it should be paid to him as compensation for the land of his reversionary rights. This plea applied to the three villages of Mataur, Saneta and Giddarpur. In regard to the village of Dhirpur, Amrao Singh 's wife Sardarani Gurdial Kaur claimed that she was in possession of the said village as it was charged for the payment of her maintenance by a compromise decree passed in her favour and against her husband Amrao Singh. She therefore claimed for herself the entire amount of compensation. Thus the contest about the apportionment of the compensation amount took a triangular form. At this stage it would be convenient to refer to the relevant provisions of the statute under which the present proceedings have been taken. In 1948 the relevant Punjab statute was East Punjab Act, 48 of 1948. Section 2 of the said Act deals with the requisitioning of property, and section 3 empowers the State Government to acquire requisitioned properties. Section 5 prescribes the principles according to which compensation had to be paid in regard to acquired properties. Section 5(e) provides that the arbitrator, in making his award, shall have regard to the provisions of sub section (1) of section 23 of the Land Acquisition Act, 1894 (1 of 1894) so far as the same can be made applicable. This Act was followed by the Punjab Requisitioning of Immovable Property (Amendment and Validation) Act, 1951 (President 's Act No. 2 of 1951). By section 5 of this Act section 5 of the earlier Act was amended, inter alia, by adding one provision. This provision provides that where any property is acquired in connection with the new Capital of the State of Punjab compensation may be paid whether by agreement or by award of the arbitrator, either in money or in kind or partly in money and partly in kind, and where there is no person competent to alienate the property, or there is a person with limited interest in such property, or there is any dispute as to the persons entitled to receive the compensation or as to the apportionment thereof, the arbitrator shall make an award in such a manner or 681 make an arrangement in such a way as may be equitable having regard to. the interests of the persons concerned; in other words, the principle of equitable apportionment which had been recognised by section 32 of the Land Acquisition Act of 1894 has in effect been added by this amending Act. In 1953 the Punjab Requisitioning and Acquisition of Immovable Property Act, 1953 (XI of 1953), came into force. Section 24 of this Act repeals the two earlier Acts of 1948 and 1951, and after this Act came into force it was the provisions of this Act that governed the proceedings relating to the requisitioning, and acquisition of immovable properties in Punjab. The equitable principle which was inserted in the Act of 1948 by the amending Act of 1951 has been retained in the present Act under section 8 (3). Section 23 (1) of this Act validates requisitions and acquisitions of properties there specified, while sub section (2) of the said section provides, inter alia, that acquisition of immovable property purporting to have been made before the commencement of this Act shall be deemed for all purposes to have been validly made as if the provisions of the said enactment or order had been included and enacted in this section, and this section had beenin force on and from the date of the acquisition. It has been held by a Full Bench of the Punjab High Court in Colonel His Highness Raja Sir Harindar Singh Brar Bans Bahadur, Ruler, Faridkot State vs The State of Punjab (1) that compensation for property acquired under the Land Acquisition Act, 1894 or under the Punjab Act of 1948 must be paid in accordance with the principles set out in those Acts and not in accordance with the principles set out in the later Act of 1953. This position is not disputed by either party in the present proceedings. Thus it is common ground that for determining the amount of compensation and its apportionment amongst the rival claimants the provisions of the relevant Act of 1948 are applicable though the proceedings were held under the relevant provisions of the later Act of 1953. In fact, the appointment of the arbitrator who conducted the proceedings (1) 682 in the present case was made by the State Government under section 8(1)(b) of the Act of 1953. We have already noticed that the provisions of section 8 (3) of this Act were included by an amendment in the earlier Act of 1948 by the amending Act of 1951. Before the arbitrator the acquisition proceedings were dealt with in four different cases, each one being related to the lands in one of the four villages in question. On the contentions raised by the parties the arbitrator first considered two preliminary issues. They were: (1) Is Satinder Singh competent to object to the amount of compensation awarded in the case, and (2) Is the appointment of the arbitrator invalid on account of the agreement between the State and the Court of Wards about the amount of compensation payable by the State to the Court of Wards. It appears that Amrao Singh contended that his son Satinder Singh had no locus standi in the matter, and that since he and the Court of Wards had agreed to the amount of compensation offered by the State the arbitrator had no jurisdiction to hold any enquiry on the claim put forward by Satinder Singh. The arbitrator, however, rejected Amrao Singh 's pleas, and held that he was entitled and bound to hold the proceedings and to consider the merits of the pleas raised by Satinder Singh. The arbitrator then proceeded to examine the merits of the rival contentions. He found that the property in suit was a part of Cis Sutlej States and so Amrao Singh had only a limited interest in it and had no right to alienate it. As a result of this conclusion the arbitrator held that Satinder Singh, who was the next heir, was entitled to contest the amount of compensation and was also entitled to claim a share in the distribution of the amount. In regard to Dhirpur land he held that Sardarani Gurdial Kaur was entitled to retain the possession of the village for her maintenance under a compromise decree and that both Amrao Singh and Satinder Singh were bound by the said decree. In the result the arbitrator determined the amount of compensation and directed that the entire amount of compensation in regard to Dhirpur 683 should be invested in Government Securities in the name of the holder of Manauli Estate with a charge in favour of Gurdial Kaur which would entitle her to its annual profits in lieu of maintenance. He also directed that on the death of Gurdial Kaur the amount should be divided half and half between the then holder of the Estate and the next heir or heirs taken together. In regard to the lands in the three other villages the arbitrator directed that the amount of compensation determined by him should be paid in cash, 3/4ths to Amrao Singh and 1/4th to the next sole heir Satinder Singh. The amount originally offered by the Government and ultimately awarded by the arbitrator were as follows: Village Govt. Offer Award Mataur (Plus Rs. 93,309.00 Rs. 1,82,813.00 15% acquisi tion charges) Saneta Rs. 42,179.00 Rs. 55,377.00 Giddarpur Rs. 15,726.00 Rs. 27,640.00 Dhirpur Rs. 1,17,912.00Rs. 2,27,860.00 It would thus be seen that the contest made by Satinder Singh in respect of the amount of compensation originally offered by the Government substantially succeeded inasmuch as the total amount offered was increased by the arbitrator by Rs. 2,24,564/ . The order thus passed by the arbitrator was recorded by him in the four cases tried before him in respect of the four villages. These orders became the subject matter of several appeals in the Punjab High Court. The State of Punjab preferred four appeals 67 to 70 of 1955; Satinder Singh preferred three appeals 42 to 44 of 1955; Amrao Singh preferred four appeals 59 to 62 of 1955; and Sardarani Gurdial Kaur preferred Appeal No. 55 of 1955. In its appeal the State urged before the High Court that Satinder Singh was not competent to object to the compensation offered by the State and so the proceedings held before the arbitrator were invalid. It was also urged alternatively that Amrao Singh and Sardarani Gurdial Kaur were not entitled to compensation at the higher rates directed by the arbitrator, and that the benefit 684 of the award should be available only to Satinder Singh, and it was contended that the amount of compensation fixed by the arbitrator was excessive. All these contentions have been rejected by the High Court and the appeals preferred by the State have been dismissed. The State has not challenged the correctness of the decision of the High Court, and so we are not concerned in the present appeals with the merits of the pleas raised by the State before the High Court. In the appeals preferred by Satinder Singh the High Court rejected his plea that the valuation fixed by the arbitrator in respect of certain properties was inadequate. It also rejected his plea that the amount of compensation ordered to be divided between him and his father Amrao Singh should be deposited in Government Securities. The High Court held that though equitable considerations would be relevant in deciding the question of apportionment, it would be inexpedient to direct that the amount should be deposited in Government Securities because in that case no one will ever be absolutely entitled to it. The High Court also thought that since the State in whose favour the estate may finally lapse owing to escheat did not object to the apportionment made by the arbitrator there was no reason to interfere with the actual order. as to apportionment between father and son which the arbitrator thought was reasonable. In dealing with this question the High Court took the view that the alleged reckless extravagance of the father on which the son relied was not relevant. In the result the three appeals filed by Satinder Singh were dismissed. The High Court then dealt with the appeal preferred by Amrao Singh, and it confirmed the finding of the arbitrator that the property acquired originally formed part of Cis Sutlej States and that in regard to the said States the rule is now well settled that the Jagirs large or small in Cis Sutlej States are non transferable and are even exempt from attachment as political pensions, the holder for the time being having only life interest in the estate, the corpus of which is to be 685 kept intact so that it may pass from heir to heir and lapse in favour of the Government in the absence of any legal heir. The High Court also held that even if the character of the property was considered from the angle of the general custom of Punjab the same conclusion followed because the property in question was undoubtedly ancestral immovable property in the hands of the father qua his son and as such the father had no right to alienate it to the prejudice of his son without legal necessity or any other compelling reason. That is how the principal point urged by the father against the claim set up by his son was rejected and his appeals were dismissed. The appeal preferred by Sardarani Gurdial Kaur also met the same fate and was dismissed. It appears that all the three claimants urged before the High Court that they were entitled to interest at a reasonable rate on the amount of compensation from the time that the property was acquired and they lost possession of it. This contention was likewise rejected by the High Court, and it was held that under the relevant Act of 1948, it was not permissible to award interest on the amount of compensation, The result was that the decision of the arbitrator was fully confirmed and all the appeals preferred before the High Court were dismissed. This decision of the High Court is challenged by special leave by the three claimants Amrao Singh, Satinder Singh and Sardarani Gurdial Kaur respectively. The appeals preferred by Satinder Singh are Civil Appeals Nos. 396 to 398 of 1959; Amrao Singh 's appeals are Civil Appeals Nos. 419 to 421 of 1959, whereas Sardarani Gurdial Kaur 's appeal is Civil Appeal No. 152 of 1960. That is how this group of seven appeals arises from the same land acquisition proceedings taken by the State of Punjab in respect of the lands situated in the four villages already mentioned. We would hereafter refer to Satinder Singh as the appellant, Amrao Singh as respondent 1, the State of Punjab as respondents, and Sardarani Gurdial Kaur as Sardarani. Logically then the first point which we must consider is the nature of the property and the title of 686 respondent 1 in relation to it. That is the principal point which Mr. Viswanatha Sastri sought to raise before us in the appeal filed by respondent 1. This question has been considered both by the arbitrator and the High Court elaborately and they have concurred in making a finding against respondent 1. As the judgment of the High Court points out the fact that the lands in question originally formed part of the domain of section Budh Singh or of the Cis Sutlej States was not seriously disputed before the High Court. This implied concession naturally makes Mr. Sastri 's task very difficult. Besides, we are not satisfied that there is any substance in the plea which Mr. Sastri has raised before us on this point. The history of the property has been considered by the arbitrator, and the arbitrator as well as the High Court have placed considerable reliance on the relevant statements made in the Punjab Land Administration Manual compiled by Sir James Mac. Douie and revised in 1931. Reliance has also been placed on the relevant statements in the compilation known as the " Chiefs and Families of Note in the Punjab " published by the Punjab Government in 1940. The pedigree table of the Singh Purian family given in this publication shows that the family was founded by section Kapur Singh who held the title of Nawab. section Budh Singh was his grandson and he was the head of the family in 1809. Amrao Singh is a descendant of Gopal Singh who was one of the seven sons of Budh Singh. The large Jagirs owned by the families are situated in Kharar and Rupar Tehsils of Ambala District and they formed part of the area formerly known as Cis Sutlej States. Paragraphs 100, 101 and 102 of Douie 's Land Administration Manual give a detailed account of the families and the in properties. The same is also briefly mentioned in the Punjab Gazetteer dealing with Ambala, District. It appears from this material that the Sardars in the Cis Sutlej States were independent Rulers whose ancestors ultimately came under the protection of the British Government in about 1809. Between 1809 to 1847 the British Government tried to enforce good 687 government amongst the semi independent States; in order to achieve this object the British Government gradually strengthened its hold and tightened the reins with a view to enforce good government. It appears that the Government exercised the right of escheat very freely and whenever there was lapse of heirs it G. took up the management and government of the area in its own hands. After 1846 Government began to introduce sweeping measures of reform and with that object Government reduced the privileges and rights of the petty chieftains. In 1849 the chieftains lost their sovereign powers and were deprived of their criminal, civil and fiscal jurisdiction so that they became no more than Jagirdars. Their rights in the lands held by them were, however, left untouched. Rules regarding succession to these Jagirs were framed by the Central Government from time to time and family custom was respected within reasonable limits. One of these rules is to be found in paragraph III of Douie 's Manual. Clause (c) of this paragraph laid down " that alienations by a Jagirdar or pattidar of portions of his holding, whether to his relations or strangers, shall neither be officially recognised nor officially recorded. " Similarly paragraph 164 emphasised the inalienable character of the Jagirs and referred to the opinion expressed by the Court of Directors whereby the said character was clearly and unambiguously notified. " We should have supposed ", said the Court of Directors, " that there could be no necessity for notifying this as a rule, since it follows from the very nature of a Jagir, which cannot be alienated and can only be attached for the life of the holder. " There is thus no doubt that the statements in the authorised publications to which we have just referred and on which the High Court and the arbitrator have relied conclusively show that the holder of property which was a part of Cis Sutlej States did not own the property absolutely but held it as a limited owner. The Kaiflat Taluka of Singh Purian family which has been produced in these proceedings supports the same conclusion. 688 Mr. Sastri, however, wanted to contend that the evidence on the record was insufficient to justify the conclusion that the lands under acquisition formed part of the original estate of section Budh Singh; but he fairly conceded that respondent 1 had not gone into the witness box and had not purported to justify his plea that any of the lands in dispute have been acquired either by him or by his ancestors in such manner that they could be treated as the absolute properties of the holder. The circular issued by the Office of the Commissioner and Superintendent of Cis Sutlej States on February 26, 1857, unambiguously shows that " all proprietary right to any part of the lands forming a part of the Jagir which may be held by the Jagirdar will be considered as pertaining to the Jagir and will go to the holder of the Jagir for the time being." This principle was applicable even to houses and other buildings standing on the Jagir which are in the nature of forts and may be considered to appertain to the estate. The only exception made was in regard to the shops built or acquired by the Jagirdar in a town apart from his place of residence. Therefore, on the material as it stands it is difficult to sustain the plea that the concurrent findings made by the arbitrator and the High Court on the question about the character of the property and the nature of the title held by the holder of the said property are wrong. Incidentally it may be added that the same conclusion has been reached by the High Court on the ground of the customary law prevailing in the Punjab. We must accordingly proceed to deal with the rest of the dispute between the parties on the basis that the respondent 1 is not the absolute owner of the property and that the appellant is entitled to represent the reversionary interest in the present proceedings. That takes us to the pleas raised by the appellant in his appeals. On his behalf it has been urged by the learned Attorney General that the whole amount of compensation in respect of the three villages Matsur, Sunets and Giddarpur should be appropriately invested Pond both he and respondent 1 should 689 be allowed to enjoy the income coming from the said investment in the share which may ultimately be fixed between them. In support of this contention he relies on the provisions of section 32 (1) (b) of the Land Acquisition Act 1 of 1894. This provision empowers the Court to direct that the compensation amount payable to the owners should be invested either in Government or approved securities and the payment of interest or other proceedings arising from such interest should be directed to the person or persons who would for the time being have been entitled to the possession of the lands under acquisition. The argument is that since respondent 1 was not entitled to alienate the property and was under an obligation to keep the corpus in tact for the benefit of the reversioners the compensation amount payable in respect of the acquisition of the said property should be similarly treated and saved for the benefit of the reversioners; in other words, it is urged that the compensation amount should be treated as a conversion of the corpus of lands and the same should not be distributed as directed by the High Court. Section 32 deals with cases where the land acquired belonged to any person who had no power to alienate the same; and since respondent 1 was not entitled to alienate the property the principle enunciated by section 32(1) (b) is pressed into service as an equitable principle which should be applied to the present case. In support of this argument the learned Attorney General has relied on decisions of different High Courts where this principle has been extended to watan property (Shri Somashekhar Swami vs Bapusaheb Narayanrao Patil (1) ), to the property belonging to an idol (K. C. Bannerjee, Official Receiver, In re (2) ), to the property held by a widow (Mt. Gangi vs Santu & Others (3)), or to land belonging to an impartible estate (Special Deputy Collector, Ramnad vs Rajah of Ramnad (4) ). This contention, however, ignores that the provisions of section 32 (1) (b) are intended to be applied only provisionally and for a short period. The scheme of (1) A.I.R. 1948 Bom. (2) A.I.R. 1928 Cal 402. (3) A.I.R. 1929 Lah. (4) A.I.R. 1935 Mad. 690 section 32 is that in cases to which the said section applies the Court shall order the compensation amount to be invested in the purchase of other lands which would be held under the right, title and conditions of ownership as the land in respect of which the compensation amount has been deposited. That is the plain effect of section 32(1)(a). Section 32 (1) (b) comes into operation if such purchase cannot be effected forthwith; and it has to remain in operation until such purchase is made. In other words, if the compensation amount cannot be immediately invested in the purchase of other lands, as an interim measure the said amount may be invested in the prescribed securities and income thereof distributed to those who were entitled to it. Therefore, even if the principle underlying section 32 is extended to the present case on equitable considerations it would not justify the appellant 's claim that the compensation amount should itself be treated as corresponding to the corpus of lands acquired and should be permanently invested in suitable securities leaving to the parties concerned the right to enjoy only its income. Such a course is plainly inconsistent with the principle recognised by section 32(1)(a). Therefore, we are not prepared to accede to the argument that the compensation amount should not be divided between the parties and should be permanently deposited in the fund set apart in proper investments. If the said amount must, therefore, be divided between the appellant and respondent 1 how should it be divided? That is the next question which calls for our decision. The appellant contends that the fairest way to distribute this amount would be to divide it half and half between him and respondent 1. We are inclined to hold that this contention is well founded. As the High Court has observed, it is not at all easy to estimate the relative value of the two interests represented by the appellant and respondent 1. The High Court thought that the ratio may be 2/3 and 1/3 or 3/4 and 1/4 there being little to choose between the two; and so it confirmed the apportionment made by the arbitrator. This decision, however, suffers from one serious infirmity. The High Court thought that 691 the conduct of respondent 1 which was characterized by the appellant as the conduct of a reckless spend. thrift and squanderer was wholly irrelevant in determining the shares to which the appellant and, respondent 1 were respectively entitled. In our opinion, in deciding the question of apportionment on equitable grounds it is relevant and material to take, into account the grievance made by the appellant that the money which would be left with respondent 1 would be frittered away by him and no part of it would reach the reversioner. In support of this contention, the appellant relied on the past conduct of respondent 1. Several alienations made by him are cited and attention is invited to the fact that after respondent 1 became a major his estate has been taken over by the Court of Wards for management under section 5(2) (b) of the Court of Wards Act, 1903, from 1928 to 1938, 1939 to 1947, 1948 to 1954. It has also been urged that since 1954 respondent 1 has made several unauthorised alienations. We do not propose to consider the validity of each one of these allegations but we have no hesitation in holding that on the material available on the record it would be difficult to reject as unfounded the apprehensions which the appellant entertains in regard to the fate of the amount which may be given to respondent 1. Besides, we are also inclined to take into account the fact that the appellant himself has a son and in apportioning the amount we have to bear in mind the fact that the amount is being paid in respect of the lands which respondent 1 holds as a limited owner and the reversionary interest in respect of which has to be safeguarded. We would, therefore, direct that the amount of compensation in respect of the three villages should be divided between the appellant and respondent 1 half and half. It is significant that the amount of compensation in respect of the fourth village which is at present charged for the maintenance of Sardarani has been ordered to be divided half and half. Therefore, we would uphold the contention raised by the learned Attorney General on behalf of the appellant and direct that the said amount should be divided not as 692 2/3 and 1/3 but half and half between the father and son. The next point which the learned Attorney General wanted to urge was that the increase in the amount of compensation directed by the arbitrator should be paid to him exclusively. His case was that the Court of Wards and respondent 1 had accepted the amount offered by the State Government, and it was because he raised contentions that the proceedings were referred to the arbitrator whose award ultimately enhanced the compensation amount to a very large extent. This contention was not raised either before the arbitrator or before the High Court, and we have therefore not allowed the appellant to raise it before us. That takes us to the question of interest which has been urged before us by all the three claimants alike. The argument is that the amount of compensation awarded should carry a reasonable rate of interest from the date of acquisition when the claimants lost possession of their properties. This argument has been rejected by the High Court principally on the ground that the relevant Act of 1948 makes no provision for payment of interest and omission to make such a provision amounts in law to an intention not to award interest in regard to compensation amount determined under it. In support of this conclusion the High Court has referred to the fact that section 5(e) of the Act specifically makes applicable the provisions of section 23(1) of the Land Acquisition Act of 1894, and that, it is said, inevitably leads to the inference that sections 28 and 34 of the Act which deal with the payment of interest are not intended to apply to the proceedings under it. In our opinion, this conclusion is not wellfounded. It would be legitimate to hold that by the application of section 23(1) in terms the provisions of section 23(2) are by necessary implication excluded. If the Legislature has provided that only one part of section 23 should be applied it would be reasonable to hold that the other part of section 23 was not intended to be applied; but we do not see how it would be reasonable to hold 693 that by the application of section 23(1) the principles under lying the provisions of sections 28 and 34 are also excluded. Therefore, it is necessary to examine this question on general grounds and principles without assuming that the application of these general considerations is excluded by any of the provisions of the Act. What then is the contention raised by the claimants? They contend that their immovable property has been acquired by the State and the State has taken possession of it. Thus they have been deprived of the right to receive the income from the property and there is a time lag between the taking of the possession by the State and the payment ' of compensation by it to the claimants. During this period they have been deprived of the income of the property and they have not been able to receive interest from the amount of compensation. Stated broadly the act of taking possession of immovable property generally implies an agreement to pay interest on the value of the property and it is on this principle that a claim for interest is made against the State. This question has been considered on several occasions and the general principle on which the contention is raised by the claimants has been upheld. In Swift & Co. vs Board of Trade (1) it has been held by the House of Lords that " on a contract for the sale and purchase of land it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took, or might safely have taken, possession of the land. " This principle has been recognised ever since the decision in Birch vs Joy (2). In his speech, Viscount Cave, L.C., added that " this practice rests upon the view that the act of taking possession is an implied agreement to pay interest ", and he points out that the said rule has been extended to cases of compulsory purchase under the Lands Clauses Consolidation Act, 1845. In this connection distinction is drawn between acquisition or sales of land and requisition of goods by the State. In regard to cases falling under the latter category this rule would not apply. (1) 532. (2) ; , 694 In Inglewood Pulp and Paper Co. Ltd. vs New Brunswick Electric Power Commission (1), it was held by the Privy Council that " upon the expropriation of land under statutory power, whether for the purpose of private gain or of good to the public at large, the owner is entitled to interest upon the principal sum awarded from the date when possession was taken, unless the statute clearly shows a contrary intention. " Dealing with the argument that the expropriation with which the Privy Council was concerned was not effected for private gain, but for the good of the public at large, it observed " but for all that, the owner is deprived of his property in this case as much as in the other, and the rule has long been accepted in the inter pretation of statutes that they are not to be held to deprive individuals of property without compensation unless the intention to do so is made quite clear. The right to receive the interest takes the place of the right to retain possession and is within the rule. " It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact that section 5(3) of the Act makes section 23(1) of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the payment of interest. That is the view which the Punjab High Court has taken in Surjan Singh vs The East Punjab Government (2), and we think rightly. It is, however, urged by Mr. Gopal Singh for respondent 2 that what the claimants are entitled to receive is compensation, and since the word " compensation " is used by section 5(1) both in respect of requisition as well as acquisition it would not be fair to import the general rule about the payment of interest where property is acquired. Compensation, it is urged, should represent the price of the property and there is no (1) , (2) A.I.R. 1957 Punj. 265, 695 justification for adding to the said price any amount by way of damages. We are not impressed by this argument. When a claim for payment of interest is made by a person whose immovable property has been acquired compulsorily he is not making claim for damages properly or technically so called; he is basing his claim on the general rule that if he is deprived of his land he should be put in possession of compensation immediately; if not, in lieu of possession taken by compulsory acquisition interest should be paid to him on the said amount of compensation. In our opinion, therefore, the fact that section 5(1) deals with compensation both for requisition and acquisition cannot serve to exclude the application of the general rule to which we have just referred. Mr. Gopal Singh then relied on some observations made by this Court in Seth Thawardas Pherumal vs The Union of India (1). Bose, J., who spoke for the Court has set out four conditions which must be fulfilled before interest can be awarded under Interest Act of 1839, and observed that not one of those was present in the case with which the Court was concerned. That is why it was held that the arbitrator had erred in law in thinking that he had the power to allow interest simply because he thought the demand was reason able. Having come to this conclusion the learned Judge proceeded to make certain observations in respect of the applicability of section 34 of the Code of Civil Procedure. He added that section 34 does not apply because the arbitrator is not a Court within the meaning of the Code, nor does the Code apply to arbitrators, and but for section 34 even a Court would not have the power to give interest after the suit. These observations were considered by this Court in Nachiappa Chettiar vs Subramaniam Chettiar (2), and it was pointed out that they were obviously not intended to lay down any broad and unqualified proposition like the one which is urged before us by Mr. Gopal Singh in the present appeal. In this connection we may incidentally refer to Interest Act, 1839 (XXXII of 1839). Section 2 of this (1) (2) ; 696 Act confers power on the Court to allow interest in cases specified therein, but the proviso to the said section makes it clear that interest shall be payable in all cases in which it is now payable by law. In other words, the operative provisions of section 1 of the said Act do not mean that where interest was otherwise payable by law Court 's power to award such interest is taken away. The power to award interest on equitable grounds or under any other provisions of the law is expressly saved by the proviso to section 1. This question was considered by the Privy Council in Bengal Nagpur Railway Co. Ltd. vs Buttanji Ramji (1). Referring to the proviso to section 1 of the Act the Privy Council,observed " this proviso applies to cases in which the Court of equity exercises its jurisdiction to allow interest. " We have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by judicial decisions as an equitable right; and so, the proviso to section 1 of the Interest Act saves the said right. We must accordingly hold that the High Court was in error in rejecting the claimants ' case for the payment of interest compensation amount, and so we direct that the said amount should carry interest at 4% per annum from the date when respondent 2 took possession of the claimants ' lands to the date on which it deposited or paid the amount of compensation to them. In the appeal preferred by the Sardarani, Mr. Mathur attempted to challenge the propriety of the order passed by the High Court directing that the amount of compensation in respect of Dhirpur lands should be .invested and that the Sardarani should receive her maintenance from the interest accruing from such investment. Apart from the fact that the order made in that behalf is fair and just, it is clear that the learned counsel for the Sardarani himself had suggested that such an order should be passed. Therefore, we cannot allow Mr. Mathur to raise any contention against the said order in the present appeal. (1) (1938) L.R. 65 I.A. 66, 697 Mr. Mathur further contended that if we were to award interest on the amount of compensation his client would be entitled to receive the whole of the interest on the compensation amount ordered to be paid in respect of the lands in Dhirpur village. That no doubt is true, and indeed Mr. Mathur 's claim in that behalf is not disputed either by the appellant or by respondent 1. We would accordingly modify the decree passed by the High Court by directing that the amount of compensation payable in respect of the lands in Mathur, Saneta and Giddarpur may be divided half and half between the appellant and respondent 1, and that interest should be paid on all the items of compensation determined by the High Court at 4% per annum. The interest in regard to the compensation payable for Dhirpur lands should be paid to the Sardarani, whereas the interest in regard to the lands in the three other villages should be paid half and half to the appellant and respondent 1. In making the payments of compensation amounts to the respective parties whatever amounts may have been withdrawn by or on their behalf should be taken into account and their claims should be properly adjusted in that behalf. In the circumstances of this case we direct that the appellant should get half his costs from respondent 1 and the other half from respondent 2 in his three appeals. There will be only one set of hearing costs. The costs in the remaining four appeals should be borne by the parties. C. A. Nos. 396 to 398 of 1959 and C. A. No. 152 of 1960 allowed in part. C.A. Nos. 419 to 421 of 1959, dismissed.

Lands in four villages forming part of the Cis Sutlej jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of"Immovable Property (Temporary Powers) Act, 1948. At the time of the acquisition A was the holder of the jagir. Possession over one of the villages had been given to 677 A 's wife G in lieu of maintenance under a consent decree. The matter of payment of compensation was referred to an arbitrator. A claimed that he was entitled to the entire compensation amount as he was the present holder of the jagir. A 's son S claimed that the lands, acquired were inalienable, that A merely had a life interest therein and that the compensation money should be deposited out of which A should get only the interest for his life. G claimed that she was entitled to the entire compensation in respect of the lands over which she was in possession. All the claimants claimed interest on the compensation amount from the date of taking of possession to the date of payment of compensation. The arbitrator held: (i) the acquired lands were inalienable and A merely had a life interest thereiq, (ii) S was entitled to a share in the compensation awarded, (iii) the amount of compensation for the first three villages should not be deposited but should be divided between A and S in the proportion of 3/4th to 1/4th, (iv) the compensation for the fourth village should be deposited and the interest thereof be paid to G and after the death of G the amount be divided between A and S half and half, and (v) the claimants were not entitled to any interest on the amount of compensation. On appeal the High Court confirmed the awards in toto. The claimants appealed to the Supreme Court by special leave. Held, that the acquired lands formed part of a Cis Sutlej Jagir which was inalienable, that A was merely a limited owner thereof and was not entitled to the entire amount of compensation and that the reversioners were also entitled to a share therein. The compensation amount could not be permanently deposited leaving the parties the right to enjoy only its income. Even if the equitable principle of section 32, Land Acquisition Act, 1894, was applied it would not justify the permanent investment of the compensation amount. Section 32(1)(b) was intended to be applied provisionally for short periods, where other lands had to be purchased out of the compensation money but were not immediately available and the money had to be invested as an interim measure till such lands were available. It was fair to divide the compensation money in respect of the first three villages half and half between A and section In deciding the question of apportionment on equitable grounds it was relevant and material to take into account the facts that no part of the amount paid to A would reach the reversioners, that S himself had a son and that the reversionary interest had to be safeguarded. Shri Somashekhar Swami vs Bapusaheb Narayanrao Patil A.I.R. , K. C., Banerjee, Official Receive?, In re: A.I.R. 1928 Cal. 402, Mt. Gangi vs Santu A.I.R. 1929 Lah. 736 and Special Deputy Collector, Ramnad vs Rajah of Ramnad A.I.R. 1935 Mad. 215, referred to. Held, further, that the claimants were entitled to interest at 4% per annum on the compensation amount from the date when possession was taken by the State to the (late on which it deposited 678 or paid the amount of compensation to the claimants ' The provision in section 5(e) of the 1048 Act which made section 23(1) of the Land Acquisition Act, 1894, applicable did not exclude the application of SS. 28 and 34 of the latter Act which dealt with the payment of interest. On general principles, the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property ; the right to receive interest took the place of the right to retain possession. The application of this rule was not excluded by section 5 of the 1948 Act. Even under the Interest Act, 1839, the power to award interest on equitable grounds was expressly saved by the proviso to section 1. Swift & Co. vs Board of Trade , Birch vs joy ; and Inglewood Pulp and Paper Co. Ltd. vs New Brunswick Electric Power Commission , applied. Surjan Singh vs The East Punjab Government A.I.R. 1957 Punj. 265, approved. Seth Thawardas Pherumal vs The Union of India and Nachiappa Chettiar vs Subramaniain Chettiar ; , referred to.

Appeal No. 240 of 1955. 732 Appeal by special leave from the judgment and order dated September 3, 1953, of the Bombay High Court in Income tax Reference No. 15 of 1953. Hardayal Hardy and D. Gupta, for the appellant. G. section Pathak, section P. Mehta, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent. February 3. The Judgment of Gajendragadkar and Wanohoo, JJ. was delivered by WANCHOO, J. In this matter by our order made on April 24, 1958, we had referred the case back to the Tribunal to submit a further statement of case on certain questions. That statement of case has now been drawn up by the Tribunal and sent to this Court. The matter is now ready for decision. This is an appeal by the Commissioner of Incometax, Bombay, against the judgment of the High Court at Bombay given on a reference under section 60(2) of the Income tax Act answering the question referred, in the negative. That question was, " Whether, in any event, on the facts found by the Tribunal, there was any remittance by the petitioner to Bombay within the meaning of and assessable under section 4(1) (b) (iii) of the Income tax Act,. " The assessment year concerned was 1948 49, the accounting year being 2003 Sambat. The facts found may now be stated. At the relevant time, Bhavnagar was a ruling State and therefore outside British India. There was a mill there which we shall, for brevity, call the Bhavnagar Mills. The assessee and his brother Gordhandas had large sums in deposit with the Bhavnagar Mills. These sums were profits earlier earned by the assessee and his brother in Bhavnagar. The amounts deposited belonged to the assessee and his brother in equal shares, The Bhavnagar Mills kept an account of these deposits. This account showed that on April 7, 1947, a sum of Rs. 50,000/ had been paid out to Harkisondas Ratilal and another sum of the same amount to Dilipkumar Trikamlal. There is another mill in Bombay which we shall call the Bombay Mills. The account of the Bombay Mills showed that on April 3, 733 1947, Rs. 50,000/ had been received from each of Harkisondas Ratilal and Dilipkumar Trikamlal. Harkisondas Ratilal and Dilipkumar Trikamlal were the benamidars for the assessee and his brother and the entries indicated that the moneys had been withdrawn from the Bhavnagar Mills by the assessee and his brother and advanced to the Bombay Mills. The assessee and his brother were in full control of both the Bhavnagar Mills and the Bombay Mills. On these facts the Tribunal had come to the conclusion that there had been a remittance of the assessee 's profits from Bhavnagar to Bombay, namely, Rs. 50,000/ being half of the amounts mentioned above, on account of his share and such remittance was taxable tinder section 4(1) (b) (iii). The assessee raised the question with which we are concerned in view of this decision. The High Court held that under the section income is taxable only when it is brought into or received in the taxable territory by the assessee himself and not when it is so brought into or received on behalf of the assessee and that all that the facts found by the Tribunal showed was that the assessee disposed of his accumulated income in Bhavnagar by directing his debtor, the Bhavnagar Mills, to pay an amount not to himself but to a third party, namely, the Bombay Mills. According to the High Court, , " The result was that only one debtor was substituted for another. This did not amount to a receipt of the money by the assessee himself in Bombay or to a bringing of it into Bombay by him. " In this view of the matter, the High Court answered the question referred in the negative. When the appeal was heard by us on the earlier occasion, the learned Advocate for the appellant contended that even on the basis on which the High Court had proceeded, namely, that there was only a substitution of one debtor for another, it has to be said that the money was received by the assessee himself in Bombay. The contention was that the respondent could not become a creditor of the Bombay Mills unless he advanced the moneys to them. 734 His point was that even assuming that the receipt of the cheque by the Bombay Mills drawn in its favour by the Bhavnagar Mills did not amount to receipt of moneys by the respondent, as soon as the Bombay Mills credited the amount of it to the respondent, there was nationally a receipt of the money by the assessee and an advance of it by him to the Bombay Mills to create the debt. The learned advocate for the assessee said in answer to this contention that there was nothing to show that the agreement for the advance of the money by the assessee to the Bombay Mills had not been made at Bhavnagar. He also said that there was nothing to show as to how the money or the cheque came from Bhavnagar to Bombay and that it might have been that it was agreed between the assessee and the Bombay Mills at Bhavnagar that the money would be deposited in the Bombay Mills to the credit of the assessee and the cheque or the money might have been delivered to the Bombay Mills or its agent at Bhavnagar. His contention was that if such was the case and on the evidence it could not be said that it was not then the notional receipt of the money by the assessee and its advance by him to the Bombay Mills, if any, would have taken place in Bhavnagar and when the money was thereafter brought to Bombay, it was the Bombay Mills ' own money. In this view of the matter, according to the learned advocate for the assessee, the moneys could not be subject to tax under the section. In this position of the arguments then advanced, we observed as follows : " It seems to us that this contention of the learned advocate for the respondent has to be dealt with before this appeal can be finally disposed of. We therefore think it fit to refer the case back to thaT Tribunal to submit a further statement of case, after taking such evidence as may be necessary, as to show how the cheque was brought from Bhavnagar to Bombay and what agreement had been made between the parties concerned as a result of which the amount of the cheque was credited in the names 735 of Harkison Ratilal and Dilipkumar Trikamlal in the accounts of the Bombay Mills. The Tribunal will submit its report within four months. In view of this order we refrain from expressing any opinion on any of the points argued at the bar. " It is pursuant to this order that the further statement of case has been submitted by the Tribunal. In its statement of case now submitted the Tribunal found the following facts: The Bhavnagar Mills had an account in the Bank of India Limited at one of its Bombay Branches. A cheque book in respect of this account was with the assessee who had power to operate it on behalf of the Bhavnagar Mills. The assessee acting on behalf of the Bhavnagar Mills drew a cheque on the Bhavnagar Mills aforesaid account in the Bank of India Limited on April 3, 1947, in favour of self. This was done in Bombay. This cheque was handed over by the assessee to the Bombay Mills in Bombay for being credited in the account of the Bombay Mills in the names of Harkison Ratilal and Dilipkumar Trikamlal which were really the benami names of the assessee and his brother. The Bombay Mills on the same date presented this cheque to another branch of the Bank of India Ltd. in Bombay where they had an account, for deposit in that account. The actual entries in the books of the different branches of the Bank were made on April 5, 1947. The Bombay Mills also made entries in their own books crediting the moneys received on the cheque, to Harkison Ratilal and Dilipkumar Trikamlal. The assessee in his turn instructed the Bhavnagar Mills to debit the joint account of himself and his brother with it in the sum of Rs. 1 lac as having been paid to Harkison Ratilal and Dilipkumar Trikamlal. This entry was actually made a little later, namely on April 7, 1947. The facts now found would show that nothing had been done at Bhavnagar. It was also found that as the Bombay Mills needed moneys and the assessee had money with the Bhavnagar Mills, he utilised these latter moneys for an advance being made by him out of it to the Bombay Mills, 94 736 As will appear from our earlier order hereinbefore set out, none of the points arising in the appeal had been decided by us on that occasion. The question that we have to decide is whether on these facts it can be said that income had been brought into or received in Bombay by the assessee. The relevant portion of the section is in these terms : " 4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which (a). are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or (b). if such person is resident in the taxable territories during such year, (i). accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year, or (ii) accrue or arise to him without the taxable territories during such year, or (iii).having accrued or arisen to him without the taxable.territories before the beginning of such year and after the 1st day of April, 1933, are brought into or received in the taxable territories by him during such year, or (c). if such person is not resident in the taxable, territories during such year, accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year. " In the present case we are concerned with cl. In order however to understand what the words " brought into or received in the taxable territories by him " mean we have to consider the whole scheme of this subjection. The subjection mainly deals with the total income of any previous year which is chargeable to income tax under section 3 of the Act. It is divided into three parts. The first part, which is el. (a) provides that all income, profits and gains received or deemed to be received in the taxable territories in such year by or on behalf of such person will be included in the taxable income. So far as el. (a) is 737 concerned, it is immaterial whether the person is resident in the taxable territories or is not resident therein; as long as income etc. is received in the taxable territories by or on behalf of such person in the previous year, it is liable to be included in the computation of total income. Under this clause therefore it is the receipt in the previous year that is material and the residence of the person to be taxed is immaterial. It has been held under this clause that receipt must be the first receipt in the taxable territories and if income etc. has been received elsewhere in the same year and is then brought into the taxable territories it should not be considered to be income etc. received in such year in the taxable territories: (see Keshav Mills Ltd. vs Commissioner of Income tax The basis of this decision obviously is that cl. (a) is dealing with the receipt of income etc. in the taxable territories in the year in which it has accrued or arisen and in those circumstances it is the first receipt of such income in the taxable territories that gives rise to liability of the charge of income tax. If such income etc. accruing or arising in the previous year has already been received outside the taxable territories it cannot be said to be received again as such in the taxable territories, if it is brought from the place where it was received as such into the taxable territories. The second part which is cl. (b) deals with the case of a person Who is resident in the taxable territories during such year. In his case all income which accrues or arises or is deemed to accrue or arise to him in the taxable territories during such year is chargeable to income tax; besides, all income etc. which accrues or arises to him without the taxable territories during such year is also chargeable to income tax. Then comes the part with which we are directly concerned and which provides that all income etc. which having accrued or arisen to such person without the taxable territories before the beginning of such year and after the first day of April 1933 is brought (1) ; 738 into or received in the taxable territories by him during such year will be chargeable to income tax. This is a special provision relating to income etc. which has accrued or arisen not in the previous 'year but in years previous to that though after April 1, 1933. This special provision relating to a person resident in the taxable territories must be distinguished from the provision in el. (a) in connection with which it has been held that the receipt there meant must be the first receipt, for cl. (a) applies irrespective of whether the person is resident in the territories or not to income etc. of the previous year received in the taxable territories in the same year. Clause (b)(iii) on the other hand refers to income etc. which accrued before the previous year and is brought into or received in the taxable territories in such year by a person resident therein, and obviously the considerations which led this Court to hold in Keshav Mills case(1) that the receipt in el. (a) means the first receipt would not apply to this special provision in cl. (b)(iii). Mr. Pathak for the respondent however argues that the words in cl. (b)(iii) are the same as in cl. (a), namely, " are received " and therefore the receipt in cl. (b)(iii) must also be the first receipt. These words however are not terms of art and in our opinion their meaning must receive colour from the context in which they are used. In the context of cl. (a) these words could only refer to the first receipt; but it does not follow from this that in the context of el. (b)(iii) also they refer only to the first receipt. Let us see what el. (b)(iii) is meant to provide for. It will be noticed that el. (a), cl. (b)(i) and (ii) and cl. (c) deal only with income etc. which has arisen in the previous year while el. (b)(iii) deals with a special class of cases where a person resident within the taxable territories had income etc. accruing or arising to him without the taxable territories and which he did not bring in the taxable territories as and when it arose but does so many years later. In such a case it stands to reason that the income etc. having arisen to such person, may be years before the previous year, must (1) ; 739 have been received by him outside the taxable territories ; but it is urged that cl. (b)(iii) does not speak of receipt outside the taxable territories but only speaks of income etc. having accrued or arisen to him without the taxable territories and that it is possible that though the income etc. might have accrued long ago it might not have been received even outside the taxable territories. This is theoretically possible; but in our opinion it is clear that when el. (b)(iii) speaks of income etc. having accrued or arisen, without the taxable territories it is implicit in it further that such income etc. having accrued or arisen without the taxable territories had already been received there. Considering that el. (b)(iii) applies to all income having accrued or arisen after the first day of April 1933 (that is more than 27 years ago now) it does not seem reasonable to hold that the words " having accrued or arisen " used in that clause have no reference to its receipt also outside the taxable territories. It seems to us therefore that what cl. (b)(iii) provides is that if any income etc. had arisen or accrued outside the taxable territories and had been received there sometime before the previous year and if such income etc. is brought into or received in the taxable territories by such person in the previous year it will be liable to be charged under section 3. In the circumstances, looking to the special pro. vision of el. (b)(iii) it would be reasonable to infer that what it contemplates is bringing into or receipt in the taxable territories in the previous year of income etc. which had already accrued or arisen without the tax. able territories earlier than the previous year and may have also been received there. Any other interpretation would really make that part of cl. (b)(iii) which refers to," received in the taxable territories " more or less useless, for it is not likely that income having accrued or arisen outside the taxable territories before the previous year should not have been received also outside the taxable territories. Therefore, the reason. able interpretation of el. (b)(iii) is that if a person resident in the taxable territories has already received without the taxable territories any income etc. accruing or arising to him without the taxable territories 740 before the previous year brings that income into or receives that income in the taxable territories he would be chargeable to income tax under section 3. Therefore, for the purpose of cl. (b)(iii) the receiving in the taxable territories need not be the first receipt. We shall later consider what will be the effect of this interpretation on the facts of this case. Then there is cl. (c), which deals with the case of a person resident outside the taxable territories to whom income etc. has accrued or arisen or is deemed to have accrued or arisen in the taxable territories during the previous year. It will thus be seen that cl. (a) deals with a person who may or may not be a resident in the taxable territories and makes the income etc. accruing or arising to him in the previous year liable to income tax if it is received or deemed to be received by him in the taxable territories also within the same year ; cl. (b) deals with the case of a person who is resident in the taxable territories and gives a wider definition of the total income and cl. (c) deals with a person not resident in the taxable territories and makes only such of his income as accrues or arises or is deemed to accrue or arise in the previous year in the taxable territories liable to income tax in addition to what is provided in el. Let us now see on the facts of this case whether the respondent can be said to have received this sum of Rs. 50,000/ in the taxable territories during the previous year. The statement of the case shows that this sum was income etc. of the respondent which accrued to him outside the taxable territories and had been received by him there and deposited in the Bhavnagar Mills in his account. It is also clear from the facts which we have set out already that this money which was lying to the credit of the respondent in the Bhavnagar Mills was received by him by means of a cheque on the Bank of India Ltd., Bombay, in which the Bhavnagar Mills had an account and on which the respondent had the authority to draw. Having thus drawn the money by a cheque on the said bank, the respondent advanced it to the Bombay Mills and the cheque was cashed by the Bombay Mills and the 741 money was credited into the account of the respondent 's benamidars in the Bombay Mills. There was thus clearly receipt in the previous year of income etc. which had accrued to the respondent outside the taxable territories before the previous year and he would therefore be chargeable under section 3 of the Act with respect to this amount. The High Court has held that the income would be taxable only when it is brought into or received in the taxable territories by the assessee himself and not when it was so brought or received on behalf of the assessee. The relevant words of el. (b)(iii) with which we are concerned are these: "are brought into or received in the taxable territories by him during such year. " We have held that this is a case of receipt by the respondent in the taxable territories; it is therefore unnecessary to consider in the present case whether the words " brought into the taxable territories by him " mean that the income must be brought in by the person himself as held by the High Court. This being a case of receipt, there can be no doubt that income etc. was received by the respondent and the indirect, method employed in this case for receiving the money would none the less make it a receipt by the respondent himself Reference in this connection may be made to Bipin Lal Kuthiala vs Commissioner of Income tax, Punjab (1), where it was held that the money was received by the assessee even though in fact what bad happened there was that the assessee directed his debtor in Jubbal which was outside the taxable territories to pay money to his creditor in British India. It was held that in the circumstances there was receipt of income in British India, though the method employed was indirect. We are therefore of opinion that the respondent is liable to pay incometax on the sum of Rs. 50,000/ under section 4(1)(b)(iii) of the Act and the question framed therefore must be answered in the affirmative. The result is that the appeal is allowed and the order of the High Court set aside. The appellant will get the costs of this appeal and in the court below. (1) A.I.R. 1956 S.C. 634. 742 SARKAR, J. The facts necessary for this appeal are few and simple. The assessee, who is the respondent in this appeal, was a resident of Bombay. He had certain in come in Bhavnagar, a place without the taxable territories, which he had kept in deposit with a concern there. This concern had an account in a bank in Bombay. The assessee, presumably as one of the officers of the concern, could operate this account. He drew, in Bombay, a cheque on this account which cheque eventually found its way into the account of a. concern in Bombay in a bank there and was credited in that account. The Bombay concern thereafter made entries in its own books of account in respect of the amount of the cheque in favour of two persons of the names of Harkison Ratilal and Dilipkumar Trikamlal. The Bhavnagar concern, in its turn, a few days later debited the account that the assessee had with it in respect of the deposits, with the amount of the cheque as moneys paid to these two persons. These two persons however were only benamidars for the assessee. The transactions, therefore, showed that the assessee had withdrawn the money from the concern at Bhavnagar out of its accumulated income and advanced it to the concern in Bombay. The Tribunal found it as a fact that the assessee had utilised in Bombay his income lying at Bhavnagar for making an advance in Bombay. These transactions took place in April 1947. I have simplified the facts a little for clarity. Actually the account in the concern at Bhavnagar was in the joint names of the assessee and his brother and the advance to the concern in Bombay was really in their joint names. The assessee 's share was half of the amount of the cheque and with that share alone we are concerned in this case. On these facts half the amount of the cheque as representing the assessee 's share of the accumulated income, was included in his total income, for assessment to income tax for the year 1948 49 under section 4(1)(b)(iii) of the Income tax Act, 1922. That section so fair as is material is in these terms 743 section .4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which (a). are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or (b). if such person is resident in the taxable territories during such year, (iii).having accrued or arisen to him without the taxable territories before the beginning of such year and after the 1st day of April, 1933, are brought into or received in the taxable territories by him during such year, or The only question is whether the assessee can be said to have " brought into " or " received " this income in Bombay within the meaning of sub cl. (iii) of section 4(1)(b). No other objection to the assessment was raised. The respondent first contends that he cannot be said to have " received " the income in Bombay. He contends that on the facts found it must be held that he had already " received " the income in Bhavnagar and he could not " receive " it again in Bombay or anywhere else. It seems to me that this contention is well founded. This Court has held that " Once an amount is received as income, any remittance or transmission of the amount to another place does not result in I receipt ', within the meaning of this clause, at the other place ": Keshav Mills Ltd. vs Commissioner of Income tax, Bombay (1). No doubt, the observation was made with regard to el. (a) of section 4(1). But I am unable to find any reason why the word should have a different meaning in sub cl. (iii) of a. 4(1)(b). On the contrary, the words " brought into " in subel. (iii) would furnish a reason, if one was necessary, for the view that the word " ' received " there means received for the first time. I venture to think that this Court did not in Keshav Mills case (1), hold that that word in section 4(1)(a) meant, (1) , 962, 95 744 " the first receipt after the accrual of the income ", because of anything in the context in which the word occurred but because, in the nature of things, income can be " received " only once and not more than once, and a subsequent dealing with income after it has been received, can never be a " receipt " of income. It seems to me that what was said in connection with the Act as it then stood, in Board of Revenue vs Ripon Press(1), namely, "that you cannot receive the same sum of money qua income twice over, once outside British India and once inside it " expresses the inherent nature of receipt of income and still holds good and unless the context compels a different meaning, which I do not find the present context to do, income can be received only once. As, in the present case, it seems fairly clear that the assessee had received the income in Bhavnagar, I do not think he can be taxed on it on the basis that he " received " it in Bombay over again. If, however, the assessee did not " receive " the income in Bombay, it seems clear to me that he "brought into" Bombay that income. He got in Bombay an amount which he had earlier received in Bhavnagar as income, for he advanced it to a concern in Bombay and this he could not do if he had not got it. The getting of the income in Bombay may not have been the receipt of it but how could he got it if he did not bring it in ? After the assessee received the income in Bhavnagar, it remained all the time under his control and that is why he could not receive it again: see Sundar Das vs Collector of Gujrat (2). An assessee might however, change the shape of the income received. Section 4(1) (b)(iii) does not require that in order that income may be brought into the taxable territories it is necessary, that the shape of the income should not have been changed since it was first received. Indeed, it has not been contended to the contrary. Sub clause (iii) of section 4(1)(b) would have completely defeated itself if it required that the income had to be kept in the same ,shape in which it had been received. Whatever shape (1) Mad. 706 711. (2) Lah. 745 the income had assumed, the assessee had it with him all the time as income and for the purpose of sub cl. (iii) it could be brought into the taxable territories in that shape. Now what the assessee had done with the income in this case was to put it with a party in Bhavnagar. The income then took the shape of a debt due to him. It became a right to receive money or moneys worth. When he had that debt discharged in Bombay, he must have had it brought into Bombay. Therefore he had brought the income into Bombay. Suppose he had received the income in the shape of coins and had kept it in his safe at Bhavnagar and brought the coins into Bombay. There would have been no doubt that he had brought the income into Bombay. Suppose again, he had put the income originally received by him at Bhavnagar in a bank there and then he obtained a draft from the bank payable in Bombay and brought the draft from Bhavnagar to Bombay and cashed it there. Again, there would be little doubt that he had, by this process, brought the income into Bombay. It is well known that though income in income tax law is generally contemplated in terms of money, it may be conceived in other forms. In fact anything which represents and produces money and is treated as such by businessmen, would be income: see per Lord Lindley in Gresham Life Assurance Society Ltd. vs Bishop (1) and per Lord Halsbury L.C. in Tennant vs Smith (2). If the bringing of the bank draft would be bringing of income, I am unable to see why the bringing of a right to receive the money would not be bringing of income when that right has been exercised and turned into moneys worth. Such a right would be based on a promise by the debtor to pay and though verbal, would be considered by businessmen to represent money. The assessee in Bombay used that right and obtained moneys worth. He accepted the Bhavnagar concern 's cheque in Bombay, gave it a pro tanto discharge for the debt owing by it to him. He used the cheque in acquiring a new asset, namely, a promise by the (1) ; 296, (2) ; , 156. 746 Bombay concern to pay money. Therefore, in my view, the respondent assessee was liable under section 4(1)(a), (b)(iii) to be taxed ON the amount of the cheque as income which he had brought into the taxable territories. I would hence allow the appeal and answer the question referred, in the affirmative. Appeal allowed.

The assessee, resident in British India, had some money in deposit with a concern in Bhavnagar, outside British India. On April 7, 1947, he transferred part of it to a concern in Bombay. He was assessed to tax on this amount under section 4(i)(b)(iii) of the Income tax Act. The assessee contended that to attract the application of section 4(i)(b)(iii) the receipt in the taxable territory must be the first receipt of income. Held, that the assessee was liable to tax on this amount. Per Gajendragadkar and Wanchoo, JJ. Where a person, resident in the taxable territories, has already received, outside the taxable territories, any income etc. accruing or arising to him outside the taxable territories before the previous year brings that income into or receives that income in the taxable territories he would be chargeable to income tax thereon. Though for the purposes of cl. (a) of section 4 the receipt must be the first receipt of income in the taxable territories, for the purposes of cl. (b)(iii) the receiving in the taxable territories need not be the first receipt. Keshav Mills Ltd. vs Commissioner of Income tax ; , referred to. Per Sarkar, J. The income could not be said to have been "received" in the taxable territory within the meaning of cl. (b)(iii) as income could be received only once. But it is clear that the assessee " brought into " Bombay that income. It was immaterial in what shape he received the income in Bhavnagar and in what shape he brought it in Bombay. Keshav Mills Ltd. vs Commissioner of Income tax ; , Board of Revenue vs Ripon Press Mad. 706 and Sundar Das vs Collector of Gujrat (1922) I.L.R. , applied. Gresham Life Assurance Society Ltd. vs Bishop [1902] A.C. 287 and Tennant vs Smith ; , referred to.

Appeal No. 237 of 1956. Appeal by special leave from the judgment and order dated December 13, 1954, of the Calcutta High Court in Appeal from Original Order No. 117 of 1954. B. Sen, P. K. Chatterjee and section N. Mukherjee, for the appellant. B. C. Mitter and D. Mukherjee, for respondent No. 1. 1961. February 6. The Judgment of the Court was delivered by HIDAYATULLAH, J. This appeal is as much without substance, as it was unnecessary. Hazrat Syed Mastershid Ali Al Quadari (the appellant) is the eldest son of one Hazrat Sahib Syed Shah Mastershid Ali Al Quadari (shortly, Hazrat Sahib), the first Mutawalli of a wakf created on August 9, 1931, for the maintenance of the shrine of a Muslim Pir in the town of Midnapur. After the death of Hazrat Sahib, the appellant, claiming to succeed to his father as Sajjadanashin, being his eldest son, made an application To the Commissioner under the Bengal Wakf Act. His younger brother, Syed Shah Rushaid Ali Al Quadari, opposed his claim, the ground being that he was nominated as the succes sor by Hazrat Sahib. While this controversy was afoot, the Commissioner, acting under section 40 of the Bengal Wakf Act, appointed Syed Shah Rasheed Ali Al Quadari (the third son of Hazrat Sahib) as a temporary Mutawalli. The appellant then moved a petition in the Calcutta High Court under article 226 of the Constitution against the appointment, which was allowed by Sinha, J. and the order of the Commissioner was set aside. On appeal to the Divisional Bench, consisting of Chakravarti, C. J. and Lahiri, J. (as he then 761 was), the order of Sinha, J. was reversed, and the petition was dismissed. This appeal has been filed with special leave. It is contended in this appeal that the order of the Commissioner appointing a temporary Mutawalli was illegal, because under the Rules framed by the Government, only the Board constituted under the Bengal Wakf Act could make the appointment. This argument, in our opinion, is wholly unsound. The learned Chief Justice of the High Court examined the matter at great length in reaching his conclusion; but, in our opinion, the reasons can be stated within a narrow compass. We are concerned with sections 40 and 29 of the Bengal Wakf Act. Section 40 reads as follows: " In the case of any Wakf of which there is no Mutwalli or where there appears to the Board to be an impediment to the appointment of amutwalli the Board, subject to any order of a competent Court, may appoint for such period as it thinks fit a person to act as Mutwalli. " Section 29 provides: "The Board may, from time to time, authorize the Commissioner to exercise and perform, subject to the control of the Board, any of the powers and duties conferred or imposed on the Board by or under this Act." On April 24, 1936, the Board adopted the following resolution : " (2). In exercise of the powers vested in them under Section 29 of the Act this Board resolve that the Commissioner of Wakfs be authorised to exercise and perform, subject to the control and approval of this Board, the following powers and duties conferred or imposed on this Board by the sections of the Act mentioned against each case: (c). The powers of this Board under section 40 to appoint a temporary mutwalli. " These two provisions of the Act show only too plainly that a temporary Mutawalli can be appointed either by the Board, or, if the powers and duties be 762 delegated to the Commissioner, by the Commissioner. The appellant contends that the Commissioner can only make a report to the Board, and the Board alone can make the appointment, and refers to two Rules framed by Government. These Rules are: "1. If it appears to the Commissioner that there is no mutwalli, in the case of any wakf, or that a a vacancy in the office of the mutwalli has been caused by death, resignation, retirement or removal of th e former mutwalli, and a dispute has arisen between two or more rival claimants to the vacancy, and such dispute is likely to affect the interests of the Wakf, he may institute an enquiry and report the result thereof to the Board with his recommendation. 2. .On receipt of the report and the recommendation from the Commissioner, or on its own motion, the Board may appoint a mutwalli under section 40 of the Act. " It is argued that under the second Rule the Commissioner was bound to make his report and recommendation, but the Board alone was empowered to appoint a temporary Mutawalli under section 40. The last words of the second Rule, it is said, are clear. This is, no doubt, true of those cases where the Board has not delegated its functions under section 40 to the Commissioner. Once that delegation has been made, the Commissioner acts for and on behalf of the Board, and the Rules cease to apply. The Rules cannot affect the power of the Board to delegate its functions under section 29, and harmonious construction requires that the Rules should give way, when there is a delegation of the powers of the Board. The Commissioner was thus competent to make the appointment. Mr. Sen, however, contends that the appointment of a temporary Mutawalli could only be made if there was an " impediment " to the appointment of a permanent Mutawalli, and that there was no impediment to such an appointment but " a challenge to the appellant as a candidate. " The word " impediment " means hindrance or obstruction, and there was certainly an obstruction to the appointment of a permanent 763 Mutawalli, while the dispute remained undecided. This point has no force whatever. The question which seemed to have largely engaged ' attention in the High Court, namely, whether the delegation was only of powers or also of duties of the Board, was not argued before us, though it formed the subject of considerable discussion in the statements of the case. It is without substance. Where powers and duties are interconnected and it is not possible to separate one from the other in such wise that powers may be delegated while duties are retained and vice versa, the delegation of powers takes with it the duties. The proposition hardly needs authority; but if one were necessary, reference may be made to Mungoni vs Attomey General of Northern Rhodesia (1). In our opinion, the appeal has no force whatever. The appellant chose the extraordinary course of dragging the respondents twice to the High Court and again to this Court merely to challenge an order of temporary duration, while the main controversy remained outstanding for years and could have been decided by now. The appeal fails, and is dismissed. The appellant shall pay the costs of the respondents, who have entered appearance. Appeal dismissed.

During controversy between two brothers each of whom claimed to be appointed Mutawalli, the Commissioner of Wakfs appointed a third brother as a temporary Mutawalli under section 40 of the Bengal Wakf Act, which appointment was challenged on the ground that the order of the Commissioner appointing a temporary Mutawalli was illegal because under the rules framed by the Government of West Bengal the Board constituted under Bengal Wakf Act could alone make the appointment and the Commissioner could only make a report and recommendation to the Board. Held, that under the provisions of section 40 read with section 29 of the Bengal Wakf Act, a temporary Mutawalli can be appointed by the Commissioner to whom the powers and duties have been 760 delegated by the Board. The Rules cannot affect the powers of the Board to delegate its functions under section 29 of the Act to the Commissioner, and once the delegation is made the rules cease to apply. Held, further, that where power and duty are interconnected and it is not possible to separate one from the other in such wise that power can be delegated while duty is retained and vice versa, the delegation of powers takes with it the duties.

iminal Appeal No. 32 of 1956. Appeal from the judgment and order dated October 7 and 10, 1955, of the Bombay High Court in Criminal Appeal No. 817 of 1955. Porus A. Mehta, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant. N. section Bindra, R. H. Dhebar and T. M. Sen, for the respondent. January 27. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. This is an appeal by special Rag leave by Ardeshir H. Bhiwandiwala against the order of the High Court of Bombay allowing an appeal 594 by the State against the acquittal of the appellant of an offence under section 92 of the (Act LXIII of 1948), hereinafter called the Act, for his working the Wadia Mahal Salt Works situate at Wadala, Bombay, without obtaining a licence under section 6 of the said Act read with r. 4 of the rules framed under the Act. The main question for determination in this appeal is whether these Salt Works come within the definition of the word " factory " under cl. (m) of section 2 of the Act. The answer to this question depends on the meaning of the word " premises " in the definition of the word "factory " and on the determination whether what is done at this Salt Works in connection with the conversion of sea water into crystals of salt comes within the definition of the expression " manufacturing process " in cl. (k) of section 2 of the Act. The Salt Works extend over an area of about two hundred and fifty acres. Some of the other salt works, however, have even larger areas. The only buildings on this land consist of temporary shelters constructed for the resident labour and for an office. At a few places, pucca platforms exist for fixing the water pump when required to pump water from the sea. When not required, this pump is kept in the office. With the exception of the constructions already mentioned, the entire area of the Salt Works is open. On the sea side, it has bunds in order to prevent sea water flooding the salt pans. Clause (m) of section 2 of the Act reads: factory ' means any premises including the precincts thereof (i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, 595 but does not include a mine subject to the operation of the , or a railway running shed. " The relevant portion of the definition of " manufacturing process " in cl. (k) of section 2, reads : " manufacturing process ' means any process for(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting, any article or substance with a view to its use, sale, transport, delivery or disposal; or (ii) pumping oil, water or sewage; or. . . It is contended for the appellant that the expres. sion "premises" in the definition of the word "factory" means " buildings " and that "mere open land " is not covered by the word " premises " and as there are no buildings except temporary sheds on the Salt Works, the Salt Works cannot be said to be a " factory ". We do not agree with this contention. The word "premises " has now come to refer to either land or buildings or to both, depending on the context. The meanings of the word " premises " in various lexicons and dictionaries are given below: a) Wharton 's Law Lexicon: " Premises " is often used as meaning " land or houses ". (b) Cochran 's Law Lexicon, IV Edition: " Premises " means " houses or lands (c) Black, H.C., Law Dictionary, IV Edition: " Premises " as used in the estates means (i) lands and tenements; an estate; land and buildings thereon; the subject matter of the conveyance; (ii) a distinct and definite locality and may mean a room, especially building or other definite area; (d) Earl Jowitt, Dictionary of English Law:" Premises. . from this use of the word, " premises " has gradually acquired the popular sense of land or buildings. Originally, it was only used in this sense by laymen, and it was never so used in well drawn instruments, but it is now 596 frequently found in instruments and in Acts of Parliament as meaning land or houses, e.g., the Public Health Act, 1875, section 4, where "premises" includes messuages, buildings, lands, easements, tenements and hereditaments of any tenure. (e) Ballentine, J.A., Law Dictionary with Pronunciation, II Edition: " Premises " as applied to land, Webster 's New International Dictionary defines the word as follows: The property conveyed in a deed; hence, in general, a piece of land or, real estate ; sometimes, especially in fire insurance papers, a building or buildings on land; the premises insured. It is therefore clear that the word " premises " is a; generic term meaning open land or land with buildings or buildings alone. The expression" premises including precincts" it has been urged, clearly indicates that in the context of the definition of the word " factory ", premises meant only buildings as buildings alone can have precints and there can be no precincts of any open land. This expression " premises including precincts" does not necessarily mean that the premises must always have precincts. Even buildings need not have any precincts. The word " including " is not a term restricting the meaning of the word " premises " but is a term which enlarges the scope of the word " premises ". We are therefore of opinion that even this contention is not sound and does not lead to the only conclusion that the word " premises " must be restricted to mean buildings and be not taken to cover open land as well. Sub cl. (bb) of el. (1) of section 7 of the Act requires the occupier of a factory to mention in the written notice to be sent to the Chief Inspector before his occupying or using any premises as a factory, the name and address of the owner of the premises or building including the precincts thereof referred to in section 93. This sufficiently indicates that the word " premises " is not restricted in scope to buildings alone. of course, the building referred to in this clause is the 597 building which is referred to in section 93 of the Act. Sub section (1) of section 93 reads: " Where in any premises separate buildings are leased to different occupier,% for use as separate factories, the owner of the premises shall be responsible for the provision and maintenance of common facilities and services, such as approach roads, drainage, water supply, lighting and sanitation. " This again makes it clear that " premises " refer to an entire area which may have within it several separate buildings. Further, section 85 empowers the State Government to declare that all or any of the provisions of the Act shall apply to any place wherein a manufacturing 'process is carried on with or without the aid of power or is so ordinarily carried on notwithstanding certain matters mentioned in the section. The word " place" is again a general word which is applicable to both open land and to buildings and its use in this section indicates that the Act can be applied to works carrying on a manufacturing process on open land. There is thus internal evidence in the Act itself to show that the word " premises " is not to be confined in its meaning to buildings alone. The High Court has rightly pointed out that the Act is for the welfare of the workers and deals with matters connected with the health, safety, welfare, working hours of the workers, employment of young persons and leave to be granted to workers and that, therefore, the legislature could not have intended to discriminate between the workers who are engaged in a manufacturing process in a building and those who 'are engaged in such a process on open land. It is contended for the appellant that the various provisions of the Act cannot be applicable to salt works where the process of converting sea water into salt is carried on in the open. This is true as regards some of the provisions, but then there is nothing in the Act which makes it uniformly compulsory for every occupier of a factory to comply with every requirement of the Act, An occupier is to comply 598 with such provisions of the Act which apply to the factory he is working. It is admitted that the workers have at times to work at night; that some women workers are employed; that workers have to take rest; that they have to take food at about mid day; that they do require drinking water and that first aid 'things are kept in the office room. It may be that the occupier has made adequate arrangements for such purposes but this does not mean that the provisions of the Act concerning such amenities shall not be applicable to salt works. Further, the Act has sufficient provisions empowering the State to exempt the occupiers from complying with certain I provisions as a special case. Section 6 of the Act empowers the State Government to make rules requiring the previous permission in writing of the State Government or the Chief Inspector to be obtained for the site on which the factory is to be situated and for the construction or extension of any factory or class or description of factories. This provision of the Act together with the relevant rules framed in that connection, does not mean that every factory must have a building and that necessary permission for its construction or extension is to be obtained. Of course, every factory must have a site and previous permission of the State Government or the Chief Inspector may be necessary before the site is to be used for the purposes of a factory. Further, there is nothing in the definition of manufacturing process " which would make it necessary that this process be carried on in a building. This definition really deals with the nature of the work done and not with where that work is to be done. The work can be done both in the building or in the open. Lastly, learned counsel for the appellant relied on certain cases which are detailed below: In Kent vs Astley (1) it was held that a slate quarry, a large open space extending over an area of 400 acres, the works of which were carried on in the open (1) 599 air, the only buildings being sheds, was not a "factory" within the meaning of 30 & 31 Viet. c. 103 (Factory Acts Extension Act, 1867), section 3, sub section Cockburn, C.J., said at page 23: " Therefore, if this work had been carried on within a building, I think that it would have fallen within the scope of the statute, and that the justices ' ought to have convicted. . and I do not think that in using the word I premises ' the legislature intended to include sheds erected in the quarry merely as a protection against the weather; they are only accessories to the quarry and the quarrying processes; and the legislature has not yet declared that open air works shall be within the scope of the Factory Acts. But, except in cases which have been specially provided for, it has not as yet included works carried on in the open air, because they are less exposed to the evils incident to manufactures carried on in buildings. " Mellor, J., said at page 24: " The legislature has from time to time extended the Factory Acts to different trades and businesses. Numerous slate quarries exist, and a large number of persons are employed in them: if the legislature intended to apply the Factory Acts to them, it would have been done by special enactment. " Hannen, J., said: " I agree with my Brother Mellor, that if the legislature had intended to apply the Factory Acts to quarries, they would have been expressly mentioned, and this omission leads strongly to the conclusion that it was not intended to interfere with persons employed in quarries. " It is not clear from these observations alone why the slate quarries where work was carried on in the open air and not in building, was not held to be "a factory" on that account. This is, however, apparent when one considers that the Factory Act of 1833 was enacted to regulate the labour of children and young persons in the mills and factories of the United Kingdom and applied only to cotton, woollen, worsted, hemp, flax, tow, linen or silk mill or factory wherein 77 600 steam or water or any other mechanical power was used to propel or work the machinery in such mill or factory. The other subsequent Acts simply extended the scope of the Factory Act of 1833. The Act of 1844 was to amend the law relating to labour in ,,factories and provided by section LXXIII that "the Factory Act as amended by this Act and this Act " would be construed together as one Act. The relevant portion of the definition of the word " factory " in this Act reads: "The word I factory ' notwithstanding any Provision or Exemption in the Factory Act shall be taken to mean all Buildings and Premises situated within any part of the United Kingdom of Great Britain and Ireland wherein or within the, Close or Curtilage of which Steam, Water, or any other mechanical Power shall be used to move or work any Machinery employed in preparing, manufacturing, or finishing, or in any Process incident to the Manufacture of Cotton. , Wool, Hair, Silk, Flax, Hemp, Jute, or Tow, either separately or mixed together, or mixed with any other Material or any Fabric made thereof. " This indicates that is premises " need not consist of buildings and that they mean something different from buildings The Act of 1850 was for the regulation of the employment of children in factories and provided that that Act would be construed together with the previous Acts as one Act. There is nothing particular in the Factory Act of 1856 to refer to. The Act of 1860 dealt with the employment of women, young persons and children in bleaching works and dyeing works under the regulations of the ; section VII, which defines the words " Bleaching Works " and " Dyeing Works " reads, with regard to its relevant portion, thus: " In the Construction of this Act the words Bleaching Works ' and Dyeing Works ' shall be understood respectively to mean any Building. Buildings, or Premises in which Females, Young 601 Persons and Children, or any of them, are employed, and in One or more of which Buildings or Premises any Process previous to packing is carried on. " Section IX gives the exemptions and its relevant portion is: " Nothing in this Act contained shall extend or apply to . or to any Premises, either open, inclosed, ' or covered, used or to be used bona fide exclusively for the purposes of carrying on. . This makes it clear that " Premises " can consist of open areas. The 1867 Act is described as " Factory Acts Extension Act, 1867 ", and according to section 3, " factory means: . . . . . . . 7. Any premises, whether adjoining or separate, in the same occupation, situate in the same City, Town, Parish, or Place, and constituting One Trade Establishment, in, on or within the Precincts of which Fifty or more Persons are employed in any manufacturing Process; . . . . . . . ." It is clear from the series of legislation up to the decision in Kent 's case that the Parliament specifically enacted with respect to the places which were to be controlled by the respective Factory Acts and that it was therefore that it was said that if the legislature had intended to apply the Factory Act to the slate quarries, it would have extended the Act to them. As the various Factories and Mills which were covered by the Factory Act of 1833 were such which could function only in buildings, the conception grew that nothing would come within the expression " factory " unless it had a building and unless the Factory Act definitely provided for the application of the Act to it. The next case relied on is Redgrave vs Lee (2 ). The earlier decision was just followed in this. The next case cited for the appellant is Nash vs Hollin shead (3). This case too is distinguishable as the farm on which the workman was employed to drive a movable steam engine for the purpose of working a (1) (2) (3) 602 mill for grinding meal intended to be used for food for stock on the farm and not for sale, was held to be not a factory in view of the fact that the meal which was ground was not intended for the purpose of sale but was meant only for feeding the stock from the farm. It was also observed that the consequences of holding a farm to be a factory " would really produce a ludicrous result ". It is on the basis of this observation that the trial Court, in the present case, held that the application of the provisions of the Act to the Salt Works would lead to " ludicrous results ". We have already stated that such is not the result of the application of the relevant provisions of the to the Salt Works. There is nothing useful for the present case, for our purpose, in Weston vs London County Council (1) and in Wood vs London County Council (2). It may now be mentioned that the Factories Act, 1937 (I Edw. 8 & 1 Geo. 6, c. 67) specifically provides in sub section (7) of section 151 that " premises shall not be excluded from the definition of a factory by reason only that they are open air premises ". Various clauses of sub section (1) of section 151 define " factory " to mean " any premises in which certain type of work is carried on by way of trade or for purposes of gain. " These provisions support the interpretation we are putting on the word " premises " in cl. (m) of section 2 of the Act. We therefore hold that the Salt Works would come within the meaning of the expression " premises " in the definition of the word " factory " and would be a factory if the work carried on there comes within the definition of " manufacturing process ". The second contention for the appellant is that the process of converting sea water into salt does not amount to " 'manufacturing process " as no process for making, altering, packing, cleaning or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal is carried on. It is also urged that no other process mentioned in cl. (k) of section 2 is carried on in the Salt Works, that it is just the force of gravity and the solar energy which (1) (2) 603 do the necessary work for the occupiers of the Salt Works to convert sea water into salt and that no human agency is employed in such conversion. This contention found favour with the trial Court. The High Court, however, did not agree with it and stated: "In our opinion it is a travesty of language to say that although 47 workmen are working on these works, salt is made without the assistance of human agency. . Now, in this case there is no doubt that the workmen employed on these salt works are dealing with the sea water in a particular manner and but for the dealing with it in that manner, salt as made on these works would not be made. We agree with the High Court that the conversion of sea water into salt is not due merely to natural forces, but is due to human efforts aided by natural forces. The sea water in the sea never becomes salt merely on account of the play of sun 's rays on it. The natural force of gravity is utilised for carrying sea water from the sea to the reservoirs, thence to the tapavanis and from there to the crystallizing pans which are specially prepared by thumping the mud and making the layer of tile ground hard and water tight. The solar energy is utilised in evaporating the water in the brine. The human agency is employed for other processes carried on in the Salt Works. The process of making salt is described in the letter dated July 12, 1949, included in Exhibit 1, from the President, Salt Merchants and Shilotires Association, Bombay, to the Secretary, Department of Industry and Supply, Government of India, New Delhi, thus: "A salt work mainly consists of an open marshy area, surrounded by mud embankment, the height of which is above the highest tide water mark in that locality to prevent inundation. In this embankment, sluice gates are provided with suitable places to take in and discharge the sea water and the waste water respectively. The inner enclosed area is divided into compartments for the storage of sea brine of different densities. When the salt is formed, it is stored on the platform by the laborers engaged in the manufacture. It is then weighed, bagged and 604 carried to Railway Station or to a port of shipment. For said production the sea water is taken into the Reservoirs at high water tide twice during a month. The high tides take place on about nine or ten days in a month, five days during day time and four times at night. Some of the labourers are detained for this work but they are also not required to be present the whole time, when the evaporation is going on. Once the brine is let into the crystallising beds, its surface is not to be disturbed for four or five days. After this, the labourer has to be careful to see that the density does not exceed a certain limit and that the other kinds of salt contained in the brine are not deposited, thus contaminating the sodium chloride (common salt) already formed. This they learn by experience. Sifting and storing then begins. The labourer has also to refill the crystallizing beds with fresh, brine. Thus the labourers work is intermittent and not continuous for any fixed hours. " It is clear therefore that labourers are employed for (i) admitting sea water to the reservoirs by working sluice gates, sometimes at night also, or the pump; (ii) filling crystallizing beds; (iii) watching the density of brine in the crystallizing beds; (iv) seeing that the density does not exceed certain limits and that salts other than sodium chloride (common salt) are not formed; (v) scraping and collecting salt crystals (vi) grading the salt crystals by " sieving " and (vii) putting salt into gunny bags. It follows that it is due to human agency, aided by natural forces, that salt is extracted from sea water. The, processes carried out in the Salt Works and described above, come within the definition of " manufacturing process " inasmuch as salt can be said to have been manufactured from sea water by the process of treatment and adaptation of sea water into salt. The sea water, a non commercial article, has been adapted to salt, a commercial article. The observations in Sedgwick vs Watney Combe, Reid & Company, Limited(1) at page 463, support the (1) , 605 view that the process undergone at the Salt Works is the process of treatment 'of sea water for the purpose of converting it into salt. The hereditament, the subject of controversy in the case, was used in connection with the manufacture of " bottled beer " by the respondent. Brewed beer, which was not in a drinkable condition, and therefore not saleable as draught ' beer, was brought to the premises in tank wagons and pumped into large tanks. Carbonic acid gas was put into it. It was then filtered and put into bottles which were corked and labelled. The bottles were then packed and removed for delivery. The question for decision was whether the hereditament was occupied and used for the purpose of distributive wholesale business. In that connection it was said: " But the point is whether the treatment that the beer undergoes in these premises is a mere prelude to distribution. I am clearly of opinion that it is not. The finished article that is being prepared for distribution is bottled beer. It undergoes treatment, a treatment which changes its quality and makes it from an unpotable and unmarketable article into a potable and marketable one. " In the present case, in the Salt Works, the finished article is " salt ". It does not enter the Salt Works as " salt ". It enters as brine which, under the process carried out, changes its quality, and becomes salt, a marketable article. The observations in Grove vs Lloyds British Testing Co. Ltd.(1) at page 467 support the view that the conversion of sea water into salt amounts to adapting it for sale. It is stated there : "I think ' adapting for sale ' points clearly to something being done to the article in question which, in some way, makes it in itself a little different from what it was before." In Kaye vs Burrows & Others and Hines vs Eastern Counties Farmers ' Co operative Association Ltd. (2) it was said at page 484: " The test is just as it was in the bottled beer case. You must look at what is the finished article ' (1) , (2) 606 to be turned out. If that finished article is only put into the condition of a finished article by the processes to which it has been subjected in the hereditament, then the processes will fall within the expression altering or adaptation for sale '. In both the cases of the rags and the seeds the finished article is different from the article in bulk which enters the hereditament, and that is, in our opinion, an adaptation for sale." In The State of Kerala vs V. M. Patel (1) this Court held the treatment of pepper and ginger to be a " manufacturing process " where the work which was carried on in the premises of the firm was described thus :" It consisted of winnowing, cleaning, washing and drying pepper on concrete floor. A similar process was also being applied to ginger, which was dipped in lime and laid out to dry in a warehouse on the premises. " The case reported as In re: Chinniah, Manager, Sangu Soap Works (2) is of no help to the appellant as there nothing definite was held about the process carried out to be a manufacturing process or not and what was stated was in connection with the word I( manufacture" in general and not with reference to " manufacturing process. " Similarly the case reported as Paterson vs Hunt is not of much help. It simply held that mere sorting of rags will not amount to adapting for sale. In this case reference was made to it being held in Law vs Graham (4) that washing the bottles before the beer was put into them was not adapting the beer, or adapting the bottles or adapting the bottled beer for the purpose of sale and in Hoare vs Truman, Hanbury, Buxton & Co. (5) that it was a case of adapting for sale when gas was used to force carbonic acid at high pressure into the beer for charging it with the acid and mixing it and so aerating the beer. The case is (1) Crl. 42 of 1959. decided on October 12, 1960. (2) A.I.R. 1957 Mad. 755. (3) (4) (5) 607 distinguishable as sorting of rags brought about no change in particular rags sorted out. They were just separated from other things with which they were mixed and therefore the rags were in no way adapted to some different article. This cannot be said in connection with the conversion of sea water into salt. The decisions in McNicol vs Pinch (1), State vs Chrestien Mica Industries Ltd. (2) and G. R. Kulkarni vs The State (3) are of no help in determining the point under consideration as there the word " manufacture " was interpreted according to the dictionary meaning and the context. In the present case, we are considering the definition of the expression " manufacturing process " and no dictionary meaning of the word " manufacture " and no interpretation of what constitutes " manufacture " for the purposes of other Acts can be of any guide. It may, however, be noted that even according to the meaning given to the word " manufacture ", the conversion of brine into salt would amount to manufacture of salt as " the essence of making or of manufacturing is that what is made shall be a different thing from that out of which it is made " vide McNicol vs Pinch(4) page 361. We are therefore of opinion that the process of converting sea water into salt carried on on the appellant 's Salt Works comes within the definition of manufacturing process " in el. (k) of section 2 of the Act. Reference was made to the expression of opinion by the Chief Inspector of Factories in his letter to the Deputy Salt Commissioner, Bombay, in support of the appellant 's contention that salt works as such do not come within the definition of the word " factory ". It was stated in this letter that originally salt pans were considered to be amenable to the Factories Act and as such salt pan occupiers were informed to get the pans registered and licensed. However, as some doubt was felt, the question was re examined and it had been found that salt pans would not be factories except where they were equipped with a building used (1) (2) [1956] Pat. 660, (3) I.L.R. [1937] M. P. 13. 608 in connection with the manufacture of salt. The Deputy Commissioner for Salt was not satisfied with this view and in his reply dated September 13, 1952, stated, after referring to the provisions of cl. (m) of section 2 of the Act, that " by premises is meant building and its adjuncts ". No further correspondence between these authorities has been brought on the record and we do not know what had been the final view taken by the authorities in this connection. Further, such a view expressed by any authority is of no help in deciding the questions before us. It may also be mentioned that the representation made by the President of the Salt Merchants and Shilotires Association on July 12, 1949, to the Secretary to Government of India, Department of Industries & Supply, did not raise the contention that the salt works did not come within the definition of the word " factory " and merely represented that the provisions of the Act be not applied to the salt works in view of the matters mentioned in that representation. Even the reply by the appellant 's firm to the Inspector of Factories dated April 9, 1952, did not state that the salt works did not come within the definition of the word " factory " and simply stated that the provisions of the Indian Factories Act were considered redundant for which their Bombay Salt Association had already made a suitable representation to the Government of India. It was for the first time, in the written statement filed by the appellant in the trial Court, that it was contended that the Salt Works would not come within the word " factory " in the Act. Omission of the accused or the Association of salt merchants to contend, at an earlier stage, that the salt works do not come within the definition of the word " factory " is also not of any relevance for our considering the questions before us. We have made reference to it only in view of the reference made by the appellants to an opinion expressed by the Chief Inspector of Factories in his letter to the Deputy Salt Commissioner dated September 13, 1952. In view of the above,, we are of opinion that the appellant 's Salt Works do come within the definition 609 of the word ',factory" and that the appellant has been rightly convicted of the offence of working the factory without obtaining a licence. We therefore dismiss the appeal. Appeal dismissed.

The appellant was convicted of an offence under section 92 of the , for working a salt works without obtaining a licence. The salt works extended over an area of about 250 acres ' The only buildings on this land were temporary shelters for the resident labour and for an office ; at some places ,there where pucca platforms for fixing the water pump where 593 required to pump water from the sea. The appellant contend ed (i) that the salt works was not a factory as defined in section 2(m) of the Act, (ii) that the word " premises " in the definition of factory did not include open land, and (iii) that in converting sea water into salt the appellant was not carrying on any manufacturing process as defined in section 2(k). Held, that the salt works was a factory within the definition given in the Act and that the appellant was rightly convicted for working it without a licence. The word " premises " is a generic term meaning open land or land with buildings or buildings alone; the salt works came within the expression "premises" in the definition of the word " factory ". The extraction of salt from sea water was not due merely to natural forces but was due to human efforts aided by natural forces. The process of conversion of sea water into salt was a " manufacturing process " as defined in cl. (k) of section 2, inasmuch as salt was manufactured from sea water by a process of treatment and adaptation. By this process sea water, a non commercial article, was converted into a different thing salt, a commercial article. Kent vs Astley, , Redgrave vs Lee, and Nash vs Hollinshead, [1901] 1 K.B. 700, distinguished. Sedgwick vs Watney, Combe, Reid & Co. Ltd. , Grove vs Lloyds British Testing Co. Ltd. , Kaye vs Burrows & Ors. and Hines vs Eastern Counties Farmers ' Co operative Association Ltd. , The State of Kerala vs V. M. Patel, Cr. 42 of 1959, decided on 12 10 1960, In re: Chinniah, Manager, Sangu Soap Works, A.I.R. 1957 Mad. 755. Paterson vs Hunt , Law vs Graham, , Hoare vs Truman, Hanbury, Buxton & CO. , and McNicol vs Pinch, , referred to.

Appeals Nos. 448 and 449 of 1957. Appeals from the judgment and order dated September 27, 1956, of the Mysore High Court in Writ Petitions Nos. 44 and 45 of 1955. N. C. Chatterjee, D. N. Mukherjee and B. N. Ghose, for the appellant in C. A. No. 448 of 1957. V. L. Narasimhamoorthy, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant in C. A. No. 449 of 1957. G. R. Ethiraiulu Naidu, Advocate General, Mysore,, B. R. G. K. Achar and K. R. Choudhuri, for the respondent. February 3. The Judgment of the Court was delivered by KAPUR, J. These are two appeals brought against two judgments and orders of the High Court of Mysore which arise out of two petitions filed by the appellants under article 226 challenging the legality of the imposition of octroi on wool and cotton under section 98 of the City of Bangalore Municipal Corporation Act (Act LXIX of 1949), which for the sake of convenience, will be termed the " Act ". On March 31, 1954, a resolution was passed purporting to be under section 98(1) of the Act by which it was 700 resolved to levy an octroi on cotton and wool as follows : Name of the Articles Rate of duty 1. Raw cotton and wool (this includes both loose Rs. 1/9/ per and compressed, made in cent. ad valorem India or foreign) 2. . This was notified in the Mysore Gazette on April 3, 1954, and was also published as required by section 98(1) of the Act. Objections were invited and it is admitted that both the appellants filed their objections. Final resolution under section 98(2) was passed on December 21, 1954, and the resolution in regard to octroi came into force as from January 1, 1955. It may be mentioned that the final resolution passed under section 98 (2) of the Act was not published in the Official Gazette but was published in the local newspapers and a notice dated December 23,1954, was also sent to the appellants to the effect that after considering their objections the Municipality had decided to levy an octroi on the goods at the rate already notified. The appellant in C.A. 448/57, filed a petition in the High Court on March 15, 1955, under article 226 challenging the validity of the imposition of the octroi on the grounds: (1) that the tax was in contravention of section 98(2) of the Act in so far as a notice was not published in the Official Gazette; (2) that the tax was in contravention of section 130 of the Act and (3) that there was excessive delegation. The appellant in C. A. 449/57, filed its petition on March 17, 1955, in which besides challenging the validity of the imposition of the tax on grounds above set out, it also challenged the vires of the imposition on the grounds : , 1. that the levy of the octroi was in contravention of article 276(2) of the Constitution by which a tax on trade exceeding Rs. 250/ per annum could not be imposed 701 2. that it was a contravention of article 301 which guaranteed freedom of inter State trade and commerce, and 3. that it was in contravention of article 19(1)(g) of the Constitution. The High Court rejected all these objections and the appellant has come to this court on a certificate of the High Court under article 133(1) of the Constitution. In order to decide the question of the legality of the tax it is necessary to refer to the relevant provisions of the Act. Section 97 enumerates the taxes and duties which the Corporation is empowered to levy under the Act. Section 97(e) provides: " 97. The Corporation may levy (e)an octroi on animals or goods or both brought within the octroi limits for consumption or use therein. " Section 98 which deals with the powers. of control of Government and the procedure for the levying of the Municipal taxes provides: Section 98 (1). " Before the Corporation passes any resolution imposing a tax or duty for the first time it shall direct the Commissioner to publish a notice in the Official Gazette and in the local news. papers of its intention and fix a reasonable period not being less than one month from the date of publication of such notice in the Official Gazette for submission of objections. The Corporation, may, after considering the objections, if any, received within the period specified, determine by resolution to levy the tax or duty. Such resolution shall specify the rate at which, the date from which and the period of levy, if any, for which such tax or duty shall be levied. (2) When the Corporation shall have determined to levy any tax or duty for the first time or at a new rate, the Commissioner shall forthwith publish a notice in the manner laid down in sub section (1) specifying the date from which, the rate at which and the period of levy, if any, for which such tax or duty shall be levied. " 702 It was argued that instead of passing a resolution Imposing the octroi duty, the Corporation should have 'first published its " resolution " to impose the tax and that the Corporation could not at once pass " a resolution " by which it imposed the tax. It published that resolution in the Official Gazette and also in accordance with other provisions of section 98(1) and invited objections which were filed. The only defect, if defect it can be called at all, was that instead of saying that it " intended " to impose a tax, the notice which was published said the tax "had been resolved to be levied. " This is a technicality and is of no substance. The next objection raised was that after the Corporation adopted the resolution imposing the tax which was after considering all the objections the publication was only in local newspapers and there was no publication in the Government Gazette and this, it was submitted, was such a serious defect as to make the imposition illegal and ultra vires. In support counsel for the appellants relied on certain judgments where publication in the Official Gazette was held to be a condition precedent to the legality of the imposition of the tax. These cases are Krishna Jute & Cotton Mills vs The Municipal Council, Vizianagram (1); Municipal Council, Rajamundry vs Nidamarti Jaladurga Prasadarayudu (2). Reference was made also to The Municipal Council, Anantapur vs Sangali Vasudeva Rao (3) ; Manak Chand vs Municipal Council(4) and State of Kerala vs P. J. Joseph (5 ). This question we are not considering as we are referring this case to a larger Bench on certain constitutional points and shall refer this question also in the sequel. The second objection raised was that there was no compliance with section 130 of the Act. That section is as follows : Section 130. " If the corporation by a resolution determines that an octroi should be levied on animals or goods brought within the octroi limits of (1) A.I.R. 1926 Mad. (2) A.I.R. 1926 Mad. (3) Mad. (4) A.I.R. 1951 Raj. (5) A.I.R. 1958 S.C. 296, 299. 703 the city, such octroi shall be levied on such articles or goods specified in Part V Schedule III at such rates not exceeding those laid down in the said ' Part in such manner as may be determined by the corporation. " That is not a charging section but it imposes a limitation on the power of the Municipality as to the rate at which a tax can be imposed. It was further argued that before a resolution under section 98(1) could be passed the goods sought to be taxed had to be specified under section 130 read with Schedule 111, Part V of the Act. Clause 18 of that Schedule provides that octroi on animals and goods shall be levied at the rates not exceeding the following. Classes I to VII specify articles on which octroi can be levied at the maximum rate. Class VIII was as follows: Octroi Maximum rate "Other articles which are not speci fied above and which may be Rs.2 0 0 per cent. approved by the Corporation ad valorem" by an order in this behalf That class empowers the Municipal Council to impose octroi duty on other articles which are not specified but which may be approved by the Corporation. In other words the Corporation can choose other articles upon which tax can be imposed and the respondent Corporation in the present case did resolve to impose tax on raw cotton and wool and also fixed the rate at Rs. 1 9 0 per cent. ad valorem. The submission that as a result of the operation of section 130 first a resolution had to be passed specifying raw cotton and wool as goods on which octroi duty would be levied and then the procedure under section 98(1) and (2) had to be gone through is without substance. What the Corporation did was that it passed a resolution choosing these goods to be goods on which octroi duty was to be levied and by the same resolution it resolved that the goods therein specified be taxed at the rate therein specified. There is no contravention of section 130 even if the contention of the appellants was to be taken most strictly, The goods were specified; the 704 rate of tax to be levied on the goods was also specified; the resolution was passed to that effect and the other procedure laid down in section 98(1) was then followed. In our opinion it is not necessary that first a resolution should be passed specifying the goods and then another resolution should be passed showing the intention of the Municipality to tax those goods. What has been done substantially complies with the provisions of the Act. It was next argued that the words of Class VIII in Part V of Schedule III where the ' words used are " other articles which are not specified above " and which may be approved by the Corporation by order in this behalf meant that the goods must be precisely defined and included by name in the Schedule and that the use of the word in this behalf " meant adding to the list of articles in Schedule III. Reliance was placed on the interpretation of the word " in this behalf " as given by this Court in Bijay Cotton Mills Ltd. vs Their Workmen (1). But that case has no application to the facts of the present case because the resolution was, as a matter of fact, passed for the purpose of imposing an octroi duty on the goods in dispute. The words used in Bijay Cotton Mills Ltd. vs Their Workmen(2) were in another context and ' even there all that was said was that a notification had to issue making the Central Government the appropriate Government. As we have said above in the present case there was a resolution which sought to include these goods in the Schedule for the purpose of imposing the tax. The excessive nature of delegation under Class VIII in Part V of Schedule III was also urged but this was not a question which was raised in the High Court nor is there any substance in the matter. The argument raised was that the power of the Municipal Corporation to specify goods under Class VIII was excessive delegation which was both uncanalised and uncontrolled and reliance was placed on a judgment of this Court in Hamdard Dawakhana vs Union of India("); but that case has no application to the facts (1) ; (2) ; , 705 of the present case. In the present case the Legislature has laid down the powers of the Municipality to tax various goods. It has enumerated certain articles and animals and Class VIII read with section 97(e) of the Act has authorised the Municipality to impose tax on other articles and goods. This power is more in the nature of conditional delegation as was held in Baxter vs Ah Way(1) where it was hold that under a. 52 (g) of the (Australian) Customs Act, 1901, a power given to prohibit by proclamation the importation of certain articles was not a delegation of legislative power but conditional legislation because the prohibition of importation was a legislative abet of Parliament itself and the effect of sub section (g) of section 52 was only to confer upon the Governor General in Council the discretion to determine to which class of goods other than those specified in the section and under what conditions the prohibition shall apply. All that the Legislature has done in the present case is that it has specified certain articles on which octroi duty can be imposed and it has also given to the Municipal Corporation the discretion to determine on what other goods and under what conditions the tax should be levied. That, in our opinion, is not a case which falls under the rule laid down by this Court in Hamdard Dawakhana vs Union of India (2). It was contended in C. A. 449/57 that the imposition of duty on raw cotton could not cover processed cotton that is cotton which had been ginned, combed and pressed. The High Court held that the cotton by being ginned or pressed in bales does not cease to be raw cotton and was to be regarded as raw for the purpose of the Act. The same would apply to wool. The notification levying the tax specifically stated that raw cotton and wool included both loose and compressed, i.e., compressed cotton and wool whether it was Indian cotton or foreign cotton. It will not, in our opinion, be a correct meaning to give to the notification if it were " interpreted to apply only to cotton which had been gathered from the fields and had neither been ginned nor pressed. " We agree with (1) ; (2) ; 706 the High Court that this resolution covers the articles which the appellants in the two cases were importing into the limits of the Corporation of Bangalore. I The learned Advocate General appearing for the respondent also relied on section 38 of the Act which provides : Section 38 (1). " No act done, or proceeding taken under this Act shall be questioned merely on the ground (a) . . . . . . . . (b) of any defect or irregularity in such act or proceeding, not affecting the merit of the case. " This section validates all defects and irregularities in in any act or proceedings which do not affect the merit; of the case. It was submitted that this section is in another chapter, i.e., chapter 2 dealing with provisions common to the Corporation and the Standing Committees. It may be that it is in another chapter but the language of the section is wide and applies to all defects or irregularities in any act or proceeding done not affecting the merits of the case. In our opinion the following points should be heard by the Constitution Bench*: (1) Whether the imposition in the present case offends article 276 or 301 of the Constitution ? (2) Whether the failure to notify the final resolution of the imposition of the tax in the Government Gazette is fatal to the tax ? If the answer to these questions or any of them is in the affirmative the appeal will have to be allowed. But if the two questions are answered against the appellants the appeals will fail as all other points have been decided by us against the appellants. The costs will follow the event unless the Bench hearing the reference makes other order. Referred to Constitution Bench final disposal. *The decision of the Constitution Bench is reported infra.

The City of Bangalore Municipal Corporation resolved to levy octroi on cotton and wool and the resolution was notified in the Official Gazette as required by section 98(1) of the City of Bangalore Municipal Corporation Act. Objections were invited and the appellants filed their objections to the tax. Final resolution in regard to the tax was passed under section 98(2) of the Act which was published in local newspapers but not in the Official Gazette. Notices were also sent to the appellants to the effect that after considering their objections the Municipality had decided to levy octroi on the goods at the rate already notified. The appellants then filed applications in the High Court under article 226 of the Constitution challenging the legality of the levy of octroi but the High Court dismissed the applications. On appeal with a certificate of the High Court: Held, that publication of the resolution in the Official Gazette and invitation of objections under section 98(1) which were filed, were sufficient compliance with the provisions of the Act. The notice stating that the tax had been resolved to be levied instead of stating that it was intended to be levied was at the most only technically defective but all such defects were validated by section 38 of the Act. It was not necessary first to pass a resolution specifying the goods and then another resolution showing the intention of the Municipality to tax those goods. The goods and the rate of tax were specified and the resolution, was passed after following the procedure laid down in section 98(1). This amounted to substantial compliance with the provisions of the Act. The legislature has laid down the powers of the Municipality to tax various goods and enumerated certain goods; Class VIII in Part V of Schedule III read with section 97(e) of the Act authorised the Municipality to impose tax on other articles and goods. In 699 the present case there was a resolution which sought to include the goods in dispute in the Schedule for the purpose of imposing the tax. Bijay Colton Mills Ltd. vs Their Workmen [1960] 2 S.C.R. 982, distinguished. The conferment of power upon the Municipality to specify goods under Class VIII is in the nature of conditional delegation and does not amount to excessive delegation. Baxter vs Ah Way ; , followed. Hamdard Dawakhana vs Union of India ; , held not applicable. The High Court was right in holding that Cotton and Wool do not cease to be raw materials for the purposes of the Act, merely because they are ginned and pressed in bales. The resolution in the present case covered the articles imported by the appellants into the limits of the Corporation of Bangalore.

Appeal No. 216 of 1956. Appeal by special leave from the judgment and decree dated August 28, 1950, of the Punjab High Court in Civil Regular First Appeal No. 343 of 1944. L.K. Jha, K. P. Bhandari and Harbans Singh, for the appellants. Darya Datt Chawla for respondent Nos. 1(i) to (iii). February 9. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave arises from a partition suit filed by Baij Nath against his other coparceners. Baij Nath is the son of Behari Lal and he had four brothers Kidar Nath, Raghunath Sahai, Jagan Nath and Badri Nath. Kidar Nath was dead at the time of the suit, and his branch was represented by his five sons Ghansham Lal, Shri Ram, Hari Ram, Tirath Ram and Murari Lal, who were impleaded as defendants 1 to 5 respectively. On the death of Ghansham Lal pending the Suit his two minor sons Jai Pal and Chandar Mohan were brought on the record as his legal representatives and their mother Mst. Kaushalya was appointed guardian ad item. The two minors are the appellants before us. Chuni Lal, the son of Raghunath Sahai was defendant 6, Bal Kishan and Hari Kishan the two sons of Jagan Nath were defendants 7 and 8, and Badri Nath was defend. ant 9. Baij Nath 's case was that the family was undivided and he wanted a partition of his share in the family properties, and so in his plaint he claimed appropriate reliefs in that behalf. The several defendants made out pleas in respect of the claims made by Baij Nath, but for the purpose of this appeal it is unnecessary to refer to the said pleas. The suit wail instituted on Juno 11, 1941, 771 It appears that by consent of parties a preliminary decree was drawn by the trial court on October 30, 1941, but the validity of this decree was successfully challenged by an appeal to the Lahore High Court. It was held by the High Court that all parties had not joined in the compromise and so the preliminary decree could not be sustained. In the result the said decree was set aside and the case was remanded for trial. It further appears that after remand parties again came together and by consent requested the court to pass a preliminary decree once again. This was done on October 15, 1943. This preliminary decree specified the shares of the respective parties and left three outstanding issues to be determined by Chuni Lal, defendant 6, who it was agreed should be appointed Commissioner in that behalf. Pursuant to this preliminary decree the Commissioner submitted his interim report on November 19,1943, and his final report on November 29, 1943. On receipt of the reports the trial court gave time to the parties to consider the said report which had been explained to them. Parties wanted time and so the case was adjourned. Since the property in dispute was valuable and the parties were unable to make up their minds about the said reports further time was granted to them by the court to consider the matter. Ultimately, when parties did not appear to come to any settlement about the reports the case was adjourned to December 17, 1943, for objections to be filed by the parties. Tirath Ram, defend ant 4 alone filed objections; nobody else did. The said objections were considered by the court in the light of the evidence which had been led and a final decree was drawn on June 21, 1944. Against this decree an appeal was preferred by the appellants before the High Court of Punjab, and it was urged on their behalf that the preliminary decree was invalid in that at the time of passing the said decree the court had failed to comply with the mandatory provisions of 0. 32, r. 7 of the Code of Civil Procedure. The High Court did not allow the appellants to raise, this point because it held that their 99 772 failure to make an appeal against the preliminary decree precluded them from challenging its correctness or validity under section 97 of the Code. Certain other minor objections were raised by the appellants on the merits but they were also rejected. In the result the appeal failed and was dismissed, but in view of the circumstances of the case the parties were directed to bear their own costs. It is this decree that is challenged by the appellants in their present appeal by special leave; and the only point which has been urged by Mr. Jha on their behalf is that the High Court was in error in disallowing the appellants to challenge the validity of the preliminary decree in their appeal before it. Mr. Jha contends that in dealing with the question about the competence of the plea raised by the appellants the High Court has misjudged the effect of the provisions of 0. 32, r. 7. It is common ground that at the time when the preliminary decree was passed by consent and the appellants ' guardian Kaushalya Devi agreed to the passing of such a preliminary decree and to the appointment of Chuni Lal as Commissioner the appellants were minors and that leave had not been obtained as required by 0. 32, r. 7. Order 32, r. 7(1) provides that no next friend or guardian for the suit shall without the leave of the court expressly recorded in the proceedings enter into any agreement or compromise on behalf of the minor with reference to the suit in which he acts as next friend or guardian. It is also not disputed that the agreement which resulted in the drawing up of the preliminary decree and the appointment of Chuni Lal as Commissioner fell within the scope of this rule and that sanction required by the rule had not been recorded in the proceedings. The argument is that the failure to comply with this mandatory provision of the rule makes the agreement and the preliminary decree void, and if that is so section 97 of the Code of Civil Procedure would be no bar in the way of the appellants challenging the validity of the decree at the appellate stage. The effect of the failure to comply with 0. 32, r. 7(1) is specifically provided by 0, 32, r. 7(2) which says 773 that any such agreement or compromise entered into without the leave of the court so recorded shall be voidable against all parties other than the minor. Mr. Jha reads this provision as meaning that the impugned agreement is voidable against the parties to it who are major and is void in respect of the minor; in other words, he contends that the effect of this provision is that the major parties to it can avoid it and the minor need not avoid it at all because it is a nullity so far as he is concerned. In our opinion this contention is clearly inconsistent with the plain meaning of the rule. What the rule really means is that the impugned agreement can be avoided by the minor against the parties who are major, and that it cannot be avoided by the parties who are major against the minor. It is voidable and not void. It is voidable at the instance of the minor and not at the instance of any other party. It is voidable against the parties that are major but not against a minor. This provision has been made for the protection of minors, and it means nothing more than this that the failure to comply with the requirements of 0. 32, r. 7(1) will entitle a minor to avoid the agreement and its consequences. If he avoids the said agreement it would be set aside but in no case can the infirmity in the agreement be used by other parties for the purpose of avoiding it in their own interest. The protection of the minors ' interest requires that he should be given liberty to avoid it. No such consideration arises in respect of the other parties to the agreement and they can make no grievance or complaint against the agreement on the ground that it has not complied with 0. 32, r. 7(1). The non observance of the condition laid down by r. 1 does not make the agreement or decree void for it does not affect the jurisdiction of the court at all. The non observance of the said condition makes the agreement or decree only voidable at the instance of the minor. That, in our opinion, is the effect of the provision of 0. 32, r. 7(1) and (2). The question as to the procedure which the minor should adopt in avoiding such an agreement or decree has been the subject matter of several decisions, and 774 it has been held that a compromise decree may be avoided by the minor either by a regular suit or by an application for review by the court which passed the said decree. The decision in Manohar Lal vs Jadu Nath Singh (1), is an illustration of a suit filed by the minor for declaration that the impugned decree did not bind him. It is, however, not necessary for us to deal with this aspect of the matter in the present appeal any further. In support of his argument that the failure to comply with the requirements of 0. 32, r. 7(1) makes the decree a nullity Mr. Jha has very strongly relied on the decision of the Privy Council in Chhabba Lal vs Kallu Lal (2). In that case an objection to the validity of a reference to arbitration was taken by a party in an appeal against the decree passed on an award; and one of the points raised for the decision before the Privy Council was whether an appeal lay against the decree in question. Under Schedule 2, paragraph 16(2) of the Code which was then in force it was provided that upon the judgment pronounced according to the award a decree shall follow and no appeal shall lie from such decree except in so far as it is in excess of or not in accordance with the award. The argument urged against the competence of the appeal was that the objection against the validity of the reference and the award could and should have been raised under paragraph 15(1)(c) of the said Sche dule, and since such an objection had not been so raised and a decree was drawn in accordance with the award under paragraph 16, r. 1 no contention could be raised against the validity of the decree outside the terms of paragraph 16(2). This argument was repelled by the Privy Council. It was held that the objection against the validity of the reference based on the ground that the requirements of 0. 32, r. 7(1) had not been complied with did not fall within the purview of paragraph 15(1)(c). The said paragraph specified the grounds on which an award could be challenged. It provided that the award could be set aside if it was made after the issue of an order by the (1) (1906) L.R. 33 I A. 128. (2) (1946) L.R. 73 I.A. 52. 775 court superseding arbitration and proceeding with the suit or if it was made after the expiration of the period allowed by the court, or if it was otherwise invalid. It is on the last clause in paragraph 15(1)(c) that reliance was placed in support of the contention that the challenge to the validity of the reference should have been made under the said clause. The Privy Council did not uphold this argument. " In their opinion," observed Sir John Beaumont, who spoke for the Board, " all the powers conferred on the court in relation to an award on a reference made in a suit presuppose a valid reference on which an award has been made which may be open to question. If there is no valid reference the purported award is a nullity, and can be challenged in any appropriate proceeding. " It is on this last observation that Mr. Jha has naturally relied; but, in our opinion, the observation in question does not purport to be a decision on the interpretation of 0. 32, r. 7(2). The context shows that the said observation was made in support of the decision that the challenge to the validity of the arbitration and the award could not have been made under paragraph 15(1)(c) and nothing more. We are not prepared to extend this observation to cases like the present where the point in dispute is in regard to the interpretation of 0. 32, r. 7. It is significant that while describing the award as a nullity the Privy Council has also added that it can be challenged in any appropriate proceeding which postulates the adoption of necessary proceedings to avoid the award. The point for consideration by the Privy Council was whether a proceeding under paragraph 15(1)(c) was indicated or whether an appeal could be regarded as an appropriate proceeding; but it was assumed that a proceeding had to be adopted to challenge the award. The decision of the Privy Council was that the validity of the award could be challenged by an appeal because it could not have been challenged under paragraph 15(1)(c). Since it could not be challenged under paragraph 15(1)(c), according to the Privy Council paragraph 16(2) could not be invoked against the competence of the appeal. It is unnecessary 776 for us to examine the merits of the said decision in the present appeal. All that we are concerned to point out is that the observation in the judgment on which Mr. Jha relies cannot be treated as a decision on the interpretation of 0. 32, r. 7(2). That question did not directly arise before the Privy Council and should not be treated as concluded by the observation in question. As we have already pointed out, the words used in 0. 32, r. 7(2) are plain and unambiguous and they do not lend any support to the argument that non compliance with 0. 32, r. 7(1) would make the impugned decree a nullity. Mr. Jha has also relied upon another decision of the Privy Council in Jamna Bai vs Vasanta Rao (1). In that case two defendants of whom one was a minor compromised a suit pending against them, and in doing so entered into a bond by which they jointly agreed to pay a certain sum to the plaintiff at a future date. The leave of the court was Dot obtained on behalf of the minor as required by section 462 of the Code of Civil Procedure, 1882, which was then in force. When a claim was made on the said bond it was held that the bond was not enforceable against the minor but it was enforceable for the full amount against the joint contractor. We do not see how this case assists the appellants. It appears that Jamna Bai who was the joint contractor on the bond advanced the plea that one of the two promisers can plead the minority and consequent immunity of the other as a bar to the promise 's claim against him. This plea was rejected by the Privy Council, and that would show that the bond which was executed in pursuance of a compro mise agreement was not treated as null and void but as being unenforceable against the minor ' alone. In ,that connection the Privy Council observed that the minor 's liability could not be enforced in view of the fact that the requirements of section 462 of the Code had not been complied with. Indeed, in the judgment an observation has been made that the Privy Council was not expressing any opinion as to whether the bond could be enforceable against a minor even if section 462 had (1) (1916) L.R.43 I.A.99. 777 been complied with. Thus this decision is of no assistance to the appellants. Similarly, the decision of the Privy Council in Khiarajmal vs Daim (1), can also be of no help to the appellants, because in that case all that the Privy Council decided was that a court has no jurisdiction to sell an equity of redemption unless the mortgagors are parties to the decree or the proceedings which lead to it, or are properly represented on the record. In other words, if a minor is not properly represented on the record no order passed in the proceedings can bind him. We are unable to see how this proposition has any relevance to the point which we are called upon to decide in the present appeal. If the preliminary decree passed in the present proceedings without Complying with the provisions of 0.32, r. 7(1) is not a nullity but is only voidable at the instance of the appellants, the question is: can they seek to avoid it by preferring an appeal against the final decree ? It is in dealing with this point that the bar of section 97 of the Code is urged against the appellants. Section 97, which has been added in the Code of Civil Procedure, 1908, for the first time provides that where any party aggrieved by a preliminary decree passed after the commencement of the Code does not appeal from such decree he shall be precluded from disputing its correctness in any appeal which may be preferred from the final decree. It is urged for the appellants that an appeal is a continuation of the suit and so the appellants would be entitled to challenge the impugned preliminary decree as much by an application made in the suit itself as by an appeal preferred against the final decree passed in the said suit. It is true that the proceedings in appeal can be regarded as a continuation of the proceedings in suit; but the decision of the question as to whether the appellants can challenge the said preliminary decree in their appeal against the final decree must in the present case be governed by the provisions of section 97 of the Code. The whole object of enacting section 97 was to make it clear that any party (1) (1904) L.R. 32 I.A. 23. 778 feeling aggrieved by a preliminary decree must appeal against that decree; if he fails to appeal against such a decree the correctness of such a decree cannot be challenged by way of an appeal against the final decree, which means that the preliminary decree would be taken to have been correctly passed. When section 97 provides that the correctness of the preliminary decree cannot be challenged if no appeal is preferred against it, it clearly provides that if it is not challenged in appeal it would be treated as correct and binding on the parties. In such a case an appeal against the final decree would inevitably be limited to the points arising from proceedings taken subsequent to the preliminary decree and the same would be dealt with on the basis that the preliminary decree was correct and is beyond challenge. It would be idle to contend that what is prohibited is a challenge to the factual correctness of the decree on the merits, because if the said decree is voidable, as in the present case, the very point as to its voidable character is a part of the merits of the dispute between the parties. Whether or not 0. 32, r. 7(1) applies to the case would certainly be a matter of dispute in such a case and the object of section 97 is precisely to disallow any such dispute being raised if the preliminary decree is not challenged by appeal. The whole object which section 97 intends to achieve would be frustrated if it is held that only the factual correctness of the decree cannot be challenged but its legal validity can be even though an appeal against the preliminary decree has not been filed. Therefore, in our opinion, the High Court was right in coming to the conclusion that it was not open to the appellants to challenge the validity of the preliminary decree in the appeal which they had preferred against the final decree before the said High Court.

Order 32, r. 7(2) of the Code of Civil Procedure, which is intended to protect the interest of the minor, really means that an agreement or compromise entered into on behalf of the minor in contravention of 0. 32, r. 7(1) is voidable only at the instance of the minor and not at the instance of any other party to it. Such contravention does not render the agreement or decree a nullity and the same has to be avoided in an appropriate proceeding. Manohar Lal vs jadu Nath Singh (1906) L.R. 33 I.A. 128, referred to. Chhabba Lal vs Kallu Lal (1946) L.R. 73 I.A. 52, jamna Bai vs Vasanta Rao (1916) L.R. 43 I.A. 99 and Khiarajmal vs Daim (1904) L.R. 32 I.A. 23, held inapplicable. Where a preliminary decree is passed in non compliance with the provision of 0. 32, r. 7(1), the remedy of the minor is by way of an appeal against that decree and not against the final decree since section 97 of the Code is a bar to the challenging of the preliminary decree in an appeal against the final decree. Consequently, in a suit for the partition where preliminary decree by consent was passed against the minor in contravention of 0. 32, r. 7(i) and that decree having been sought to be set aside in an appeal from the final decree the High Court held that section 97 of the Code precluded the appellant from doing so. Held, that the decision of the High Court was correct and must be ashamed, 770 Held, further, that the object section 97 of the Code was intended to achieve would be wholly frustrated if it were to be held that the section merely prohibited a challenge to the factual correctness of the decree and not its legal validity.

Appeals Nos. 110 and 111 of 1951. Appeals from the Judgment and Decree dated May 6, 1946, of the High Court of Judicature at Calcutta (Biswas and Chakravartti JJ.) in Original Decree No. 43 of 1942 with Civil Rule 399 of 1945, arising out of Judgment and Decree dated June 30, 1941,, of the Second Court of Additional Subordinate Judge, 24 Parganas, in Title Suit No. 63 of 1938. N. C. Chatterjee (Saroj Kumar Chatterjee and A. N. Sinha, with him) for the appellants in Civil Appeal No. 110. Panchanan Ghose (section N. Mukherjee and Benoyendra Prasad Bagehi, with him) for Respondents Nos. I (a) and 1 (b) in Civil Appeal No. 110 and the appellants in Civil Appeal No. I I I. Ram Krishna Pal (guardian ad litem) for responded No. 5 (3) in Civil Appeal No. 110 and No.4 (3) in Civil Appeal No. 111, 156 1952. October27. The Judgment of the court wag delivered by MAHAJAN J. These two connected apeals from the judgment and decree of the High Court of Judicature at Calcutta in appeal from Original Decree No. 43 of 1942 dated the 6th May, 1946, arise out of Title Suit No. 63 of 1938, instituted the 21st September, 1938, in the Court of the Second Additional Subordinate Judge of Alipore, by Rajlakshmi against the Sens and the Dasses for possession of the properties which represent a four anna share of the estate once held by one Raj Ballav Seal. the 8th June, 1870, two days before his death, Raj Ballav Seal, a Hindu inhabitant of the town of Calcutta governed by the Bengal School of Hindu law, executed a will giving authority to his widow Mati Dassi to adopt a son and appointed her and three other persons as executors and trustees of the estate and gave them elaborate directions for the administration and distribution of his extensive properties. Raj Ballav was one of those persons who believe 0in leaving detailed instructions about their property and the manner in which it is to be managed and taken after their death and expect their wishes to be dutifully carried out by those who survive them. How his wishes have been respected by his descendants is now a matter of history. Since the year 1890 this is the eighth or ninth litigation concerning the construction of the testament he made that fateful &ay, and if by any means Raj Ballav could be informed of the result of these litigations and was told that it had been held that he had died intestate, he would surely rise out of the ashes and lodge an emphatic protest against what has happened. Raj Ballav died the 10th June, 1870, leaving him surviving his widow Mati Dassi and three grandsons, who were sons of a predeceased daughter by another wife and one of whom died in 1880 unmarried. The grandsons ' line will be referred to in this judgment as the Sens. On Raj Ballav 's death, Mati Dassi entered 157 into possession of the estate and adopted one Jogendra Nath Seal in 1873 under ' the authority conferred her. Jogendra married Katyayani, and Rajlakshmi, the plaintiff in the suit out of which these appeals arise, is their only child. She was less than one year old when Jogendra died in 1886. Shortly after the death of Jogendra, Mati Dassi adopted Amulya Charan, a brother of Katyayani in further exercise of the authority conferred her. Mati Dassi died in 1899 and the Sens then appeared to have taken possesion of the estate. During the lifetime of Mati Dassi, the two grandsons commenced a suit 22nd July, 1890, against Mati Dassi and the other executors then living, Amulya and Katyayani, for a declaration of the rights of the parties under the will, administration of the estate, accounts and a declaration ' as regardit their quarter share of the net income. Trevelyan J. declared that the grandsons were entitled to an onefourth share of the estate absolutely and directed accounts to be taken. This declaration was granted against Mati Dassi alone, the suit having been dismissed against the other defendants. The two grandsons having taken possession of the whole estate after the death of Mati Dassi, Amulya brought a suit the 9th October, 1901, against them and Katyayani for construction of the will and a declaration that he was the duly adopted son and heir of Raj Ballav and that as such, he was entitled to a three fourth share of the estate and the Sens were entitled only to the remaining one fourth share. By a judgment dated 5th January, 1903, the trial court dismissed the suit the view that under the will the first adopted son had acquired an absolute right, Pitle and interest.in the share of the estate left by the will of his adoptive father and he having left a widow and a daughter, Mati Dassi had no authority to make a second adoption. This decision was affirmed appeal. [Amitlya Charan Seal vs Kalidas Sen(1)]. 13th January, 1903, eight days after the decision of the trial, court dismissing Amulya 's suit, (I) Cal. 361 158 Katyayani commenced suit No. 11 of 1903 against the Sens, Amulya and the receiver appointed in Amulya 's suit, for construction of the will, declaration of title, partition and accounts. In, the plaint as originally filed, Katyayani admitted the title of the Sens to an one fourth share of the estate and claimed only a three fourth share for herself as the widow of Jogendra. The Sens claimed the whole estate for themselves as the heirs of Raj Ballav. They pleaded that the will was not genuine and that even if it was genuine, the bequests in favour of the adopted son and for the worship of the deity were invalid and that even if they were valid, Jogendra having died before attaining the age of 20 years had taken nothing under the will. During the pendency of this suit, the 25th September, 1903, the Sens mortgaged the whole sixteen annas of the estate to one Shib Krishna Das in order to secure a loan of Rs. 7,000. The mortgagee and his representatives in interest will be described in this judgment as the Dasses. Amulya 's appeal against the judgment of the trial court dated 5th January, 1903, was decided in 1905, during the pendency of Katyayani 's suit No. 1 1 of 1903 instituted the 13th January, 1903, and after the Dasses as mortgagees had entered into possession. the 26th September, 1905, after the decision of the High Court in Amulya 's suit, Katyayani applied for an amendment of the plaint so as to include a claim for the whole estate in accordance with that decision. This application was allowed. To this amended plaint no further written statement was filed by the Sens. By a judgment dated 21st December, 1905, the trial Judge decreed the claim of Katyayani for,the whole of Raj Ballav 's estate and a decree for recovery of possession of the whole estate was passed in her favour. It was held that the whole of the corpus of the estate had vested in Jogendra and the provisions of the will whereby a fourth share had been bequeathed to the grandsons were void and ineffectual. The plea of adverse possession and limitation taken by the Sens was abandoned at the trial, 159 Against this decision an appeal was taken to the District Judge. The mortgagee Shib Krishna Das was also added as a party in the appeal. The appeal was compromised and under the compromise Katyayani was to get a six anna share in absolute right in the estate, Kanai, her father, was to get another six anna share for his supposed troubles and expenses in connection with the litigation and each of the Sons a two anna share, their shares to be subject to the mortgage. charge. The compromise decree was passed 9th January, 1907, and the suit was remanded to the trial court in order that a partition might be effected and a final decree passed. A partition was made in due course and final decree was passed 10th September, 1907. On the 18th April, 1907, after the consent decree had been made by the appellate court in Katyayani 's suit, Rajlakshmi, daughter of Katyayani and the next reversioner to the estate of Jogendra, commenced suit No. 59 of 1907 'against the parties to the compromise for a declaration that the compromise and the consent decree were void and inoperative and that they were not binding her. The trial court held that the compromise was binding Rajalakshmi but that she was entitled to a declaration that Katyayani had taken only a widow 's estate 'in the six annas share given to her. appeal by Rajlakshmi, the High Court 8th August, 1910, reversed the trial court 's decree and declared that the consent decree was void and inoperative as against Rajlakshmi and that she was in no way bound by the partition proceedings which had taken place in execution thereof. The appeal was not contested by the Sons but was contested by the representatives of their mortgagees (the Dasses) who asserted the title of their mortgagors to an one fourth share of the estate both under the compromise decree and the will. (Bajlakshmi Dassee vs Katyayani Dassee(1). In the year 1919, two cross suits were commenced by the grandsons and by Katyayani and Rajlakshmi (I) Cal. 160 for recovery of the twelve annas share and the four annas share respectively in the possession of the respective parties. Katyayani brought suit No. 115 of 1919 for recovery of the four anna share against the Sens and the Dasses, while the Sens brought suit No. 112 of 1919 for recovery of the twelve annas share of the estate against Katyayani and Rajlakshmi. Both these suits were dismissed by the trial judge and his decision was affirmed appeal 21st July, 1925. Before the commencement of this suit, the Dasses had brought a suit the foot of their mortgage and had obtained a mortgage decree which was made final 23rd November, 1918. The property described as 2, Deb Lane, Calcutta, forming part of Raj Ballav 's estate and which had ' been allotted under the compromise to the share of the Sens was notified by a declaration under the Land Acquisition Act for acquisition the 16th January, 1921. the 27th April, 1928, Ajit Nath Das, mortgagee, made an application ' claiming the entire amount of compensation money and contended that the mortgagee decree holders were entitled to the whole of it. Rajlakshmi claimed the entire amount as owner of the sixteen anna share of Raj Ballav 's estate. the 7th July, 1928, a joint award was made in favour of 'all the claimants. Rajalakshmi asked for a reference to the court the point of apportionment of compensation by a petition made by her the 18th July, 1928. She asserted that the Sens and the Dasses were not entitled to any portion of the compensation money. Ajit Nath Das, mortgagee, also made an application for reference the 18th August, 1928. A similar petition was made by Jogender Mohan Das. Bholanath Sen filed a statement of the claim 8th June, 1929. A special judge was appointed under the Land Acquisition Act to try the matter. He disallowed Rajlakshmi 's claim and held that the Sens were entitled to the entire compensation money. Both the Sens and the Dasses were represented by their respective counsel and made common cause against Rajlaksbmi. 161 Rajlakshmi appealed to the High Court against the decision of the special judge but without any success. Her appeal was dismissed 8th March, 1935. She preferred an appeal to the Privy Council. This was allowed and Rajlakshmi was declared entitled to the entire compensation money. (Rajlakshmi vs Bholanath Sen) (1). Within two months of the decision of the Privy Council, the suit out of which these appeals &rise was commenced, as already stated, by Rajlakshmi 21st September, 1938, against the Sens and the Dsses for possession of the properties which represented the four anna share of the estate allotted to the Sens, and possession of which was delivered to them in pursuance of the terms of the final decree in suit No. 11 of 1903. A portion of these had since then been purchased by the Dasses in execution of the mortgage decree. This suit was dismissed by the trial judge. Rajlakshmi appealed to the High Court against the dismissal of her suit. The High Court allowed the appeal in part, the judgment and, decree of the trial court in so far as they dismissed the plaintiff 's suit as against the Sens were set aside and the suit was decreed against them and the plaintiff 's title to the properties in suit was declared as against them. It was ordered that she should recover possession from them, as also from defendant 14 as receiver but that her title and possession were subject to the rights of the defendants respondents 3 to 13 (Dasses) to proceed against the properties in execution of their mortgage decree the basis that these properties were in the possession of and dealt with by defendantsrespondents 1 and 2 as representing the four anna share of the estate to which they had title. An enquiry was also ordered as to the amount of the mesne profits. The appeal was dismissed as against respondents 3 to 13, the Dasses. The correctness of this decision has been impugned before us in these appeals by the respective parties to the extent that it goes against them. (I) (1938) 65 I.A. 365. 162 In order to appreciate the contentions raised in the two appeals it is necessary to determine the true scope and effect of the decision of the Privy Council in the land acquisition case of 1928 (Rajlakshmi vs Bholanath Sen) (1). The premises acquired in those proceedings admittedly formed Part of the estate of Raj Ballav Seal, which under the compromise decree of 1907 had by partition fallen to the four anna share allotted to the Sens. There was a triangular contest about the award of the compensation and a joint award was made in their favour after notice to all the parties interested in the property acquired including the mortgagees. That the mortgagees were within the definition of the phrase " person interested" is plain from the language of section 10 of the Act and perhaps it would have been unnecessary to mention this elementary fact by reference to the provisions of the Act had not the High Court thought otherwise. As already stated, the Sens, the Dasses and Rajlakshmi required the question of apportionment of compensation to be referred to the determination of the court and they stated the grounds which their claims were based. The dispute that arose between the parties is apparent the face of those proceedings and in the words of Lord Thankerton who delivered the decision of the Board, the matter in controversy was whether Rajlakshmi was entitled to the compensation money awarded in respect of the acquisition of part of the premises, 2 Deb Lane, in the town of Calcutta as successor to the estate of Raj Ballav Seal of which the said premises formed part. The claim to compensation made by the respective parties was founded the assertion of their respective titles in that part of Raj Ballav 's estate which under the partition decree of 1607 had been allotted to the Sens subject to the charge of the Dasses, and the decision the question of apportionment depended the determination of that title. The land acquisition court had thus jurisdiction to decide the question of title of the parties in the property (I) (1938) 65 I.A. 365. 163 acquired and that title could not be decided except by deciding the controversy between the parties about the ownership of the four anna share claimed by the Sens and Rajlakshmi. The Land Acquisition Court and the High Court appeal held the title of the four annas share proved in the Sens. But their Lordships of the Privy Council held otherwise and found that the Sens had no such title, and that Rajlakshmi alone was entitled to the whole of the estate of Raj Ballav Seat including the four anna share that was in possession of the Sens and which their mortgagees had a charge. This is how their Lordships settled the matter in controversy: "It is important to get a clear view of the position of the estate after the decision of the High Court of 8th August, 1910, the effect of which (inter alia) was to annul the consent decree of the District Court in No. 11 of 1903, and to leave the decree of the Subordinate Judge, dated December 21, 1905, which has been already quoted, as final and binding. This decree declaring Katyayani 's title to the whole estate, was clearly a decree in Katyayani 's favour as representing the whole interests in the estate, and it has rightly been so regarded by both the courts below in the present case; and it formed res judicata in any I question with the Sens. As regards possession of the estate, while the decree made an order for recovery of possession, the possession given under the partition of 1907 continued, the Sens being in possession of the four annas. It seems clear that possession under an agreement which was not binding the reversionary heirs could not avail the Sens in a question with a reversionary heir, whose right to possess could not arise until the succession opened to such heir. " The above is a clear determination of the question of title between the Sens and Rajlakshmi in regard to the four anna share. It was argued behalf of the Sens before the Privy Council that in any case 164 the decision in suit No. 115 of 1919instituted by Katyayani against the Sens and their mortgagees for recovery of the four anna share operated as res judicata the claim of Rajlakshmi. This plea was Inegatived and it was held that the decree in suit No. 115 of 1919 could not and did not affect Rajlakshmi 's right to possession. There can thus be no doubt that the determination of the question of title to this part of Raj Ballav 's estate was within the scope of the land acquisition proceedings and the title was finally determined in those proceedings. In order successfully to establish a plea of res judicaia or estoppel by record it is necessary to show that in a previous case a court, having jurisdiction to try the question, came to a decision necessarily and substantially involving the determination of the matter in issue in the later case. It was at one time a matter of doubt whether the determination of a court to which a matter had been referred by the collector was such a decision and that doubt was resolved by the judgment of the Privy Council in Bamachandra Bao vs Ramachandra Rao(1), which decided that where a dispute as to the title to receive the compensation had been referred to the court, a decree thereon not Appealed from renders the question of title resjudicata in a suit between the parties to the dispute. In that case it was observed as follows: "The High Court appear only to have regarded the matter as concluded to the extent of the co 'mpensation money, but that is not the true view of what occurred, for, as pointed in Badar Bee vs Habib Merican Noordin(2) it is not competent for the court, in the case of the same question arising between the same parties, to review a previous decision no longer open to appeal, given by another court having jurisdiction to try the second case. If the decision was wrong, it ought to have been appealed from in due time. Nor in such circumstances can the interested parties be heard to say that the value of the subject matter (1) (1922) 49 I.A. 129. (2) 165 which the former decision was pronounced was comparatively so trifling that it was not worth their while to appeal from it. If such a plea were admissible, there would be no finality in litigation. The importance of a judicial decision is not to be measured by the pecuniary value of the particular item in dispute. It has been suggested that the decision was not in a former suit, but whether this were so or not makes no difference, for it has been recently pointed out by this Board in Hook vs Administrator General of Bengal(1) that the principle which prevents the same matter being twice litigated is of general application, and is not limited by the specific words of the Code in this respect." In Bhagwati vs Bam Kali(1) an issue was decided in favour of B in a land acquisition proceeding that she was entitled to the whole of the compensation money. In a subsequent suit by another widow, who was also a claimant in the land acquisit ion proceedings, for a declaration that she was entitled to a half share in the estate inherited by her husband and his brothers, it was held that her suit was barred by the rule of res judicata, the District Judge having in the previous proceeding decided that she had no title to the land. In that case part of the property in dispute was, acquired under the Land Acquisition Act and the Collector by his award apportioned the compensation between the widows in equal shares. Both the widows raised the question of title to the compensation. The objections were referred under the Act to the District Judge and the District Judge the issue as to whether Bhagwati was entitled to the entire compensation or whether Ram Kali was entitled to a half, found in favour of Bhagwati. Ram Kali then brought a suit ' against Bhagwati for a declaration of her right to a half share of the whole of the property inherited by the brothers and their mother. The Subordinate Judge held that the suit was barred by res judicala by the decision of the District Judge in the reference under the Land Acquisition Act. The High Court (1) (1921) 48 I.A. 187. (2) (1939) 66 I.A. 145. 166 reversed this decision holding that Ram Kali 's title ,was not the subject matter of the reforence to the ;District Judge and he was not therefore competent to try it. The Privy Council reversed this decision and held that the District Judge did determine the question of the ownership and his decision was binding upon the parties and the matter was res judicata. These two decisions, in our opinion, are conclusive the point of resjudicata raised in the present case and in these circumstances it has to be hold that the question of title to the four anna share was necessarily and substantially involved in the land acquisition proceedings and was finally decided by a court having jurisdiction to try it and that decision(thus operates as res judicata and estops the Sens @ and the mortgagees from re agitating that matter in this suit. We are not now concerned with the question whether the Privy Council was right or wrong. The High Court held that there can be no question that this decision is binding the Sens and concludes them the question of their title as against Rajlakshmi and that there could be no question also that it is binding the mortagees who were parties to the proceeding. In the concluding part of the judgment they observed as follows "Our conclusion, therefore, is that there is nothing in the decision of the Privy Council which can operate as res judicata against the Dasses, either directly or constructively, the question of the title of the Sens to the mortgaged properties. They are bound by the decision so far as it goes: just as the Sens can no longer say that the decision in suit No. 11 ,is not res judicata against them in a question with the plaintiff, both as regards title and the right to possession,so cannot the Dasses say that the decision is not res judicata against the Sens. But their own right to prove the title of the Sens against the plaint iff is in no way affected. This may look anomalous, 'but such anomaly is inherent in the doctrine of res judicata which does not create or destroy title but is only a rule of estoppel," 167 With great respect it seems to us that the, conclusion reached as regards the mortgagees is neither illuminating nor sound. The anomalous result arrived at is account of a wrong approach to the solution of the problem and is not the result of any anomaly inherent in the doctrine of res judicata. The learned Judges posed certain questions and then attempted to answer them in view of the limited provisions of section 11, Civil Procedure Code, which in terms apply only to suits, forgetting for the moment, if we may say so with respect, that the doctrine of res judicata is based general principles of jurisprudence. The questions were: (1) Did the judgment of the Privy Council in the 1928 land acquisition proceedings decide any question as to the right of the mortgagees to hold from the Sens a mortgage of the four anna share, or their right to prove the title of their mortgagors in a question between themselves and the reversioners to Jogendra 's estate ? (2) Could the mortgagees have raised these questions in the land acquisi tion proceedings and even if they could have, are the questions such that they ought to have been raised? It is difficult to appreciate how both these questions were germane to the issue to be decided in the case. Here it is worthwhile repeating what was said by Sir Lawrence Jenkins in delivering the judgment of the Board in Sheoparsan Singh vs Ramnandan Singh(1):" `` In view of the arguments addressed to them, their Lordships desire to emphasize that the rule of res judicata while founded ancient precedent, is dictated by a wisdom which is for all time. 'It hath been well said ' declared Lord Coke, 'interest reipublicaeut sit finis litium otherwise, great oppression might be done under colour and pretence of law ' ; Though the rule of the Code May be traced to an English source, it embodies a doctrine in no way opposed to the spirit of the law as expounded by the Hindu commentators. Vijnaneswara and Nilakantha include the plea of a former judgment among those allowed by law, each citing for this purpose the text of (i) (1916) 43 I.A. 91 at p. 98 168 Katyayana who describes the plea thus: If a person, though defeated at law, sue again, he should be answered, "you were defeated formerly". This is called the ple a of former judgment. And so the application of the rule by the courts in India should , ',be influenced by no technical considerations of form, but by matter of substance within the limits allowed by law. " The binding force of a judgment delivered under the Land Acquisition Act depends general principles of law and not upon section 11 of the Act. If it were not binding, there would be no end to litigation, The mortgagees had been fighting about the title of the mortgagors from the year 1910. When Rajakshmi lost her suit instituted 18th April, 1917, to contest the compromise decree in suit No. 59 of 1907 and preferred an appeal to the High Court, that appeal was not contested by the Sens at all, but was contested by the representatives of their mortgagee who asserted the title of the mortgagors to one fourth share of the estate both under the compromise decree and under the will. In the year 1919 when the two cross suits above mentioned wore commenced, the mortgagees were impleaded as parties and took an active interest in the cases. When the proceedings under the Land Acquisition Act were commenced in the year 1928 a joint award was made in their favour along with the Sens and Rajlaksmi. As parties interested in the property acquired they asked for a reference and gotit. They were represented by counsel before the land acquisition court and got a decision the question of title as to the four anna share of the estate of the late Raj Ballav in favourofthemortgagorsandthemselves. They were impleaded as parties in the appeal preferred by Rajlakshmi to the High Court and before that court also they were represented by counsel and were successful in defending that appeal. They were again impleaded as parties by Rajlakshmi in the appeal preferred by her to the Privy Council. They took active part in the proceedings for leave to appeal and in 169 having the papers prepared for the use of the Privy Council. As a matter of fact, they paid part of the printing cost. Their non appearance before the Privy Council at the time of hearing cannot thus relieve them of the consequence of an adverse decision given against them by, the Privy Council. They had every, right in those proceedings to defend the title of their, mortgagors to the four anna share and they fully exercised their right except that at the last stage, possibly having won in the two courts below, they assumed that the decision in the final court would also be favourable to them and did not appear before the Privy Council. It had been held in a number of cases prior to the amendment made in section 73 of the Transfer of Property Act by Act XX of 1929 that where the property acquired forms part of an estate which is mortgaged for an amount larger than the amount awarded as compensation, the mortgagee is entitled to the whole of the compensation in liqcuidation of the mortgage debt. This view was accepted by the legislature when it added sub sections (2) and (3) to section 73. Sub section (2) is in these terms "Where the mortgaged property or any part thereof or any interest therein is acquired under the Land ' Acquisition Act, 1894, or any other enactment for the time being in force providing for the compulsory acquisition of immoveable property, the mortgagee shall be entitled to claim payment of the mortgagemoney, in whole or in part, out of the amount due to the mortgagor as compensation. " In view of the provisions of sections 9, 10, 18 and 30 of the Land Acquisition Act, it is evident that if the mortgagee actually intervenes in the land acquisition proceedings and makes a claim for the compensation, and any question of title arises about the right of the mortgagor in respect to the land acquired which affects the claim for compensation, he has every right to protect that title. In the proceedings commenced in 1928 for the acquisition of 2, Deb Lane, Calcutta, as already stated, the mortgagees actually 170 intervened and defended the title of their martgagors but without success. In those circumstances the view taken by the High Court that they had no locus standi to make the claim, as it was not based their own title cannot be sustained because a mortgagee has no other title than the title of his mortgagor. The judgment of the High Court when it says that the Dasses claimed it the footing that they being; creditors of the Sens, with a lien the property, were entitled to receive the money towards the satisfaction of their debt and their claim therefore was not a claim of title, but only a claim to receive the compensation money, is clearly erroneous as the claim could be established only by proving the title of their mortgagors as against Rajlakshmi. We have further not been able to follow the judgment of the High Court when it says that the and acquisition court must be presumed to have dismissed the mortgagees ' claim the proper and legal ground that the mortgagees being mere mortgagees had no locus standi to lay claim for the compensation money. It would have been more accurate if it was said that the land acquisition court having held the title of the Sens proved to the premises acquired, presumed that the compensation money to which the Sons were entitled would be paid in due course to their mortgagees as both of them were sailing together and had a common cause against Rajlakshmi. The High Court further observed that the mortgagees were bound by the decision of the Privy Council so far as it goes against them. We are not able to see to which part of the decision this remark relates. The only decision that the Privy Council gave was the question of the title of the Sens. The award of compensation to Rajlakshmi was a mere consequence of it, and if the Sens had no title in the four anna share of Raj Ballav 's estate, the mortgagees obviously can have no lien any part of the property included in that share. The strangest part of the judgment of the High Court is when it says that the right of the Dasses to prove the title of the Sens against the plaintiff was in no way affected by the Privy Council decision. 171 ,It seems to have lost sight of the fact that that right was advanced by the Dasses more than once. It was exercised by them in the litigation of the year 1907 which ended in the decision of the High Court in 1910. It was exercised by them in the 1919 litigation and was again exercised by them in the land acquisition proceedings of 1928. In these circumstances it appears to us that they had no further right left to establish the title of their mortgagors in the four anna share of Raj Ballav 's estate claimed by them. It may be pointed out that the mortgagees having got a decision in their favour from the High Court, absented themselves before us. One of the representatives of the original mortgagees, Ram Krishen Das, is a minor and was represented by a guardian ad litem appointed for the suit in the court below. He appeared and contested the appeal and urged that the mortgagees had no interest whatever in the property acquired and that they were interested only in realising their debt. This contention is directly opposed to the provisions of section 58 of the Transfer of Property Act and the clear provisions of section 73 which only states the law that prevailed even before then. The result is that we are of the opinion that the High Court was in error in holding that the decision of the Privy Council in the land acquisition case of 1928. was not binding the mortgagees the question of the title of the Sens to the four anna share of Raj Ballav 'section estate as against Rajlakshmi. Mr. Panchanan Ghose for the. Sens made a valiant effort to escape from the effect of the Privy Council judgment in Rajalakshmi vs Bholanath Sen(1) a number of grounds. None of his arguments, however, was convincing and might well have been summarily ,rejected but we think that it is due to Mr. Ghose and ,his long standing at the Bar that the arguments are noticed and met. The first contention raised by :him was that the judgment of the Privy Council could not operate as (i) [1938] 65 I.A. 365. 172 res judicata against the present contention of the Sens and the mortgagees,about the title to the four anna share of Raj Ballav 's estate, because the subject matter of those proceedings was the compensation money, a sum of Rs. 900, and not the property that is the subject matter of the present suit. He argued that when the plea of res judicata is founded general principles of law, that plea can only prevail provided the subject matter in the two cases is identical. It was conceded that such contention could not be sustained under the provisions of section 11 of the Code. In our opinion this argument is untenable and was negatived by their Lordships of the Privy Council in Bhagwati vs Bam Kali(1), cited above, in clear and emphatic terms. In that case, in a regular suit which concerned the rest of the property the plea of res judicata was upheld by reason of the decision in the land acquisition case which concerned another part of the property which had been acquired and for which compensation was payable. The quotation already cited earlier from this decision brings out that point clearly. The test of res judicata is the identity of title in the two litigations and not the identity of the actual property involved in the two cases. It was then argued by Mr. Ghose that the judge who decided the apportionment issue in the land acquisition proceedings of 1928 was a special judge appointed under the Land Acquisition Act and not being a District Judge, the two decisions of the Privy Council. , i.e., Bamachandra Bao vs Bamachandra Rao(2) and Bhagwati vs Bam Kali(1), had no application, as the special judge had no jurisdiction to hear the present suit, while the District Judge in those cases would have jurisdiction to hear the regular suits. It was urged that to substantiate the plea of resjudicata even general principles of law it was necessary that the court that heard and decided the former case should be a court competent to hear the subsequent case. This contention was based the language of (I) [1939] 66 I. A. 145. (2) [1922] 49 I.A. 129. 173 section 11. The condition regarding the competency of the former court to try the subsequent suit is one of the limitations engrafted the general rule of res judicata by section 11 of the Code and has application to suits alone. When a plea of res judicata is founded general principles of law, all that is necessary to establish is that the court that heard and decided the former case was a court of competent jurisdiction. It does not seem necessary in such cases to further prove that it has jurisdiction to hear the later suit. A plea of res judicata general principles can be successfully taken in respect of judgments of courts of exclusive jurisdiction, like revenue courts, land acquisition courts, administration courts, etc. It is obvious that these courts are not entitled to try a regular suit and they only exercise special jurisdiction conferred them by the statute. We have not been able to appreciate the distinction sought to be made out by Mr. Ghose that had this matter been decided by a District Judge, then the decision of the Privy Council would have been res judicata but as it was decided by a special judge the effect was different. The District Judge when exercising powers of a court under the Land Acquisition Act, in that capacity is not entitled to try a regular suit and his jurisdiction under the Land Acquisition Act is quite different from the jurisdiction he exercises the regular civil side. Next it was urged that the decision given by the Privy Council was ex parte, and it had not the force of res judicata unless the subject matter of the two proceedings was identical. Reliance for this proposition was placed certain observations contained in the decision of the House of Lords in NeW Brunswick Rly. Co. vs British,* French Trust Corporation(1). in that case a view was expressed that in the case of a judgment in default of appearance, a defendant is only estopped from setting up in a subsequent action a defence which was necessarily, and with complete precision, decided by the previous judgment, and it (I) (1939] A.C. I. 23 174 was said that if a Writ is issued for a small claim, the defendant may well think it is better to let judgment ,go by default rather than incur the trouble and expense of contesting it and that in such cases the default judgment one bond cannot be used as governing the construction of 992 other bonds even if identical in tenor as it would involve a great hardship were the defendat precluded from contesting the later case. These observations have no apposite. application to the circumstances of the present case where the judgments of the first two courts were given after full contest and then a party defaulted in appearing before the Privy Council after having obtained judgment in his favour in the courts below. A now point was taken for the first time before us which had not been taken in express terms in the written statement and which had not been argued either before the Subordinate Judge or before the High Court. The point was that the present suit of Rajlakshmi was barred by section 47, Civil Procedure Code, inasmuch as she obtained a decree for possession of the whole estate including the four anna share now in dispute in her suit No. II of 1903 and having obtained a decree for possession, her remedy to recover possession of that share along with the twelve anna share was by executing that decree and not by a separate suit. , The plea has no substance in it. The decree given in suit No. 11 of 1903 became unexecutable by reason of the compromise arrived at in appeal in that case in 1907, which compromise was given full effect by actual partition of the property. When that, decree was declared null and void at the instance of Rajlakshmi, it still remained binding inter partes during the lifetime of Katyayani and that was the reason why Katyayani 's suit brought in 1919 for recovery of possession of the four anna share was dismissed. That suit, however, was held to have been instituted by Katyayani for protection of her personal rights and not as a representative of Jogendra 's estate. It was for this reason that the Privy Council in, the 1928 land acquisition case held that it 175 had not the effect of res judicata Rajlakshmis suit claiming title in the four anna share of Raj Ballav 's estate which under the partition decree had gone to the Sens. Katyayani in view of the compromise decree had no right to execute the decree as a different situation had arisen after the decree had been passed. She had a fresh cause of action ' to bring a new suit for possession by setting aside the compromise. This she did but failed. As against Raj lakshmi the plea of section 47 in these circumstances can have no validity. Even as against Katyayani it was untenable and it seems it was for this reason that this plea was never taken either in the earlier suit of 1919 or in the present suit. For the reasons given above this contention of Mr. Ghose also fails. Mr. Ghose raised a question of limitation and urged that Rajlakshmi 's suit was barred by time inasmuch as the cause of action to sue for possession of the four anna share accrued to Jogendra and he having failed to file a suit, both Katyayani and Rajlakshmi must be taken to have lost the title to the part of the property in the possession of the Sens. The premises which this contention is based is erroneous. Jogendra died long before the Sens took possession of the property and therefore Jogendra before his death had no cause of action against the Sens to eject them as they were not in possession. the other hand, the trustees were holding the property his behalf. The pleas of limitation and adverse possession were abandoned by the Sens a former occasion, as already stated in the earlier part of this judgment, and they were negatived by the Privy Council in the land acquisition proceedings. It is evident that the possession of the Sens during the lifetime of Katyayani could not confer any title them as against Rajlakshmi, the next reversioner, whose title to the estate could only arise the death of Katyayani. For the reasons given above we hold that the appeal (No. 111 of 1951) preferred behalf of the 176 Sens has no merits and must fail. It is accordingly dismissed with costs. The appeal preferred by Rajlakshmi against the mortgagees '(No. 110 of 1951) is allowed with costs in all the courts and her title to the property in suit and for possession of the f same is decreed and it is directed that the defendants do deliver Possession of the suit properties to the plaintiff. It is further declared that the plaintiff is entitled to mesne profits from the defendants. An enquiry will be made as to the amount of mesne profits due prior and subsequent to the institution of the suit and there will be a decree for the amount so determined. In conclusion we do express the hope that this judgment will finally conclude the ruinous litigations which have been going in courts since the last 62 years in respect of Raj Ballav 's estate and ingenuity of counsel will no longer be pressed into service to again reopen questions which must now be taken as finally settled. Appeal No. 110 allowed. Appeal No. 111 dismissed. Agent for the appellants in C. A. No. 110 and respondent No. 1 in C.A. No. Ill section C. Bannerjee. Agent for respondents Nos. 1 (a) and (b) in C.A. No. 110 and appellants in C. A. No. Ill: Sukumar Ghose.

Where the right to receive compensation for property acquired in land acquisition proceedings as between rival claimants depends the title to the property acquired and the dispute as to title is raised by the parties and is decided by the Land Acquisition Judge after contest, this decision as to title operates as res judicata in a subsequent suit between the same parties the question of title. The binding force of a judgment delivered under the Land Acquisition Act depends general principles of law and not section 11 of the Civil Procedure Code, and the decision of a Land Acquisition Judge would operate as res judicata even though he was not competent to try the subsequent suit. If a mortgagee intervenes in land acquisition proceedings and makes a claim for compensation, and any question of title arises about the title of the mortgagor in respect to the land acquired which affects the claim for compensation, he has every right to protect that title and if he defends that title and the issue is decided against his mortgagor, the decision would operate as res judicata even as against the mortgagee. Certain premises which formed part of the estate of a de ceased person were acquired in land acquisition proceedings. There was a triangular contest about the right to the compensation money between A and B, two rival claimants to a four annas 155 share in the estate of the deceased, and C, a mortgagee from one of the claimants. The three parties required the question of apportionment to be referred to the Court and a Special Judge who was appointed decided the question of title to the four annas share upon which the right to receive the compensation depended and made an award. The Land Acquisition Judge and High Court found the title in favour of B after due contest between the parties but the Privy Council reversed the decision and decided the question of title in favour of A. In a subsequent suit between the same parties the question of title was again raised:, Held (i) that the decision of the Privy Council the ques tion of title in the land acquisition proceedings operated as res judicata as against B &a well as C, even though the Land Acquisition Judge was a Special Judge who would have had no juris diction to try the subsequent suit; (ii)that the rule of res judicata was applicable even though the subject matter of dispute in the land acquisition proceedings was the compensation money and not the property which was in dispute in the subsequent suit ; (iii)the fact that the mortgagee did not appear at the hearing before the Privy Council was immaterial as the judgments in the first two courts were given after full contest. Ramachandra Rao vs Ramachandra Rao [1922] 49 I.A. 129, and Bhagwati vs Ram Kali [1939] 66 I.A. 14 applied.

Appeal No. 263 of 1956. Appeal from the judgment and decree dated January 6, 1953, of the Madras High Court in A. section Appeal No. 7 of 1949. M. C. Setalvad, Attorney General of India and Naunit Lal, for the appellants. 100 780 A. V. Vimanatha Sastri and B. K. B.Naidu, for respondent No. 1. M. B. K. Pillai, for respondent No. 2. 1961. February 9. The Judgment of the Court was delivered by GAJENDRAGADKAR,J. This appeal has been brought to this Court with a certificate granted by the Madras High Court and it arises from a suit filed by the appellants Mallesappa and Chenna Basappa against their uncle Mallappa, respondent 1 and granduncle Honnappa, respondent 2, for partition. According to the plaint, the family of the appellants and respondent 1 was an undivided Hindu family until the date of the suit, and respondent 1 was its manager. The ancestor of the family was Desai Mallappa. He had three sons, Kari Ramappa who died in 1933, Virupakshappa who died long ago and Honnappa, respondent 2. Kari Ramappa had four sons Guru shantappa (died 1913), Bandappa (died 1931), Mallappa (respondent 1) and Veerabhadrappa (died 1927). Gurushantappa married Parvathamma; the two appellants are the sons of Bandappa, their mother being Neelamma. They were born in 1926 and 1929 respectively. Their case was that respondent 1 who has been the manager of the family for many years has been trying to deprive them of their legitimate share in the property and refused their request for partition, and so they had to file the present suit. According to them, in the property of the family they and respondent 1 were entitled to half share each. To the plaint were attached the schedules describing the several items of property. Schedule A consisted of items 1 to 163 which included houses and lands at Jonnagiri. Schedule B described the movables while Schedule C included items 1 to 35 all of which had been acquired by the family under a document exhibit B 32. It is in respect of all these properties that the appellants claimed their half share and asked for a partition in that behalf. This claim was resisted by respondent 1 principally on the ground that in 1929 Ramappa, the father of 781 respondent 1 and the grandfather of the appellants had effected a partition of the joint family properties between respondent 1 and his elder brother Bandappa who is the appellants ' father. That is how, according to respondent 1, the appellants ' claim for partition was untenable. In this way he pleaded separate title to all the properties in suit. On these pleadings the learned District Judge, who tried the suit, framed eight issues; two of these related to the question regarding the status of the family. He found that the plea of partition made by respondent 1 was not proved, and accordingly he declared that the appellants were entitled to half share in the properties of the family and passed a preliminary decree for partition. According to the learned judge, the appellants were entitled to their half share in the items of property described in Schedule A excluding items 63, 64, 65, 86 and 151 and items in paragraph 14(d) of the written statement of respondent 1 as well as items of property described in Schedules B and C. This decree was passed on November 22, 1948. The said decree was challenged by respondent 1 by his appeal before the Madras High Court. He urged that the trial court 's finding as to the status of the family was erroneous, and he pleaded that in any case the appellants were not entitled to any share in the properties at Jonnagiri, items 4 to 61, as well as the properties acquired under exhibit B 32. The first argument was rejected by the High Court, but the second was upheld. In the result the decree passed by the trial court was confirmed except in regard to the said two categories of properties. It is this appellate decree which is challenged before us by the learned Attorney General on behalf of the appellants. In order to appreciate the contentions raised before us it would be necessary to recapitulate briefly the findings concurrently recorded by the courts below in respect of the plea of partition set up by respondent 1. These findings afford a background in the light of which the pleas raised before us would have to be considered. It appears that respondent 1 relied on several documents in support of his plea that there 782 was a partition effected by Ramappa in 1929. The trial court repelled this argument and observed that from 1937 respondent began to do mischief. The transfer of patta in 1937 on which respondent 1 relied was entirely his work and the appellants ' mother Neelamma had not been consulted and had given no consent to it. In the opinion of the trial court respondent 1 through his agents whom he examined as witnesses in the suit (D. Ws. 2 and 14) managed the family lands, arranged to pay cist for them and manipulated entries in the revenue record purporting to show that Neelamma had paid the said cist as pattadar. Neelamma was an illiterate and Gosha woman and it appeared that a certain amount of coercion had been practised on her as well as deception in persuading her to execute the original of exhibit B 10 which contained the recital that the house there described had fallen to the share of Neelamma 's husband at a prior partition. The trial court was satisfied that the said recital had been fraudulently made and the 'document had not been read to Neelamma at all. The demeanour of respondent 1 in the witness box was also criticised by the trial judge when he observed that he did not impress the trial judge as a truthful witness, and in his opinion he was a powerful and influential man in the village who was able to do a number of things as he wished and so it was not surprising that he was able to get a number of witnesses to speak to separate enjoyment of a few items of land by the appellants ' mother. When the question of status of the family was reagitated before the High Court it felt no hesitation in confirming the conclusions of the trial court in regard to the general conduct of respondent 1, the documents brought into existence by him, and the unfair manner in which he had dealt with the appellants ' mother. For the reasons set out by the High Court in its judgment " and also for the various reasons put forward by the learned District Judge in his exhaustive judgment " the High Court agreed with the learned judge that the alleged partition of 1929 had not been proved. Thus the dispute between the parties has to be considered 783 on the basis that until the date of the institution of the suit the family was an undivided Hindu family with respondent I as its manager. The first point which has been raised before us by the learned Attorney General relates to items 4 to 61 at Jonnagiri. These properties originally belonged to Karnam Channappa. He died in 1904, and in due ' course the said property devolved upon his widow Bassamma who died in 1920. Bassamma left behind her three daughters Channamma, Nagamma and Veeramma. Channamma married Ramappa, and as we have already indicated the couple had four sons including the appellants father Bandappa and the first respondent Mallappa. It is common ground that the properties at Jonnagiri had been obtained by Channamma by succession from her father and were held by her as a limited owner. The appellants ' case was that after Channamma obtained these properties by ,succession she allowed the said properties to be thrown into the common stock of other properties belonging to her husband 's family, and so by virtue of blending her properties acquired the character of the properties belonging to her husband 's family; in other words, the appellants ' claim in respect of this property is based on the principle of blending or throwing into the com mon stock which is recognised by Hindu law. The trial court relied on some transactions adduced by the appellants and upheld the plea that Channamma 's properties had become joint family properties in which the appellants had a half share. The High Court has reversed this finding, and it has held that the transactions on which the appellants relied do not prove blending as known to Hindu law. That is why the appellants ' claim to these properties has been rejected by the High Court. Before considering the appellants ' case in regard to ,/these properties it is necessary to enquire whether the doctrine of blending can be invoked in such a case. Is this doctrine based on any Sanskrit Text of Hindu Law? According to the decision of the Privy Council in Shiba Prasad Singh vs Rani Prayag Kumari Debi (1). (1) (1932) L.R. 59 I.A. 331. 784 this doctrine is based on the text of Yagnavalkya and the commentary of Mitakshara; the text of Yagnavalkya reads thus: " In cases where the common stock undergoes an increase, an equal division is obtained " (1). In his commentary on this text Vijnyaneshwara has observed as follows: " Among unseparated brothers, if the common stock be improved or augmented by any one of them through agriculture, commerce or similar means, an equal distribution nevertheless takes place; and a double share is not allotted to the acquirer " (2). Sir Dinshah Mulla, who delivered the judgment of the Privy Council in the case of Shiba Prasad Singh (3) has observed that the words of Yagnavalkya mean that " if a member of a joint family augments joint property, whatever may be the mode of augmentation, the property which goes to augment the joint family property becomes part of the joint family property, and he is entitled on a partition to an equal share with the other members of the family, and not to a double share, as in some other cases dealt with in the preceding verses. This is the placitum on which the whole doctrine of merger of estates by the blending of income is founded " (p. 349). It would thus be seen that according to this decision the doctrine of blending or throwing into the common stock is based on the text just quoted. With very great respect, however, the text of Yagnavalkya and the comments made by Vijnyaneshwara on it do not appear to have any relation to the doctrine of blending as it has been judicially evolved. The context of the discussion both in the text of Yagnavalkya and in the commentary clearly shows that what is being discussed is the acquisition of property by a coparcener with the use of the family stock; in other words, taking the benefit of the family stock and making its use if a coparcener through trade, agriculture or any other means augments the initial or original family stock, the augmentation thus made is treated as forming part of the original stock and an accretion to it, and in this augmentation the acquirer is not given any extra share for his special exertions. (1) Ch. 1, sect. 4, 30. (2) Mitakshara, ch. 1. sect. (3) (1932) L.R. 59 I.A. 331. 785 This position is clarified by the comments made by Sulapani. Says Sulapani: " that an equal division is here specifically ordained; for in a partnership with a common stock, the difference in the gains of each individual member is not to be taken into account at the time of partition. " Vijnyaneshwara observes that this text is intended to be an exception to the text of Vasishtha which allows two shares to the acquirer and which is cited in the Mayukha (1). It would thus be clear that the relevant text and the commentary are not dealing with a case where the separate property of a coparcener independently acquired by him is thrown into the common stock with the deliberate intention of extinguishing its separate character and impressing upon it the character of the joint family property. The subject matter of the discussion is addition to the common stock made by the efforts of a coparcener with the assistance of the common stock itself. Therefore, in our opinion, the said text cannot be treated as the basis for the doctrine of blending as it has been judicially evolved. It is, we think, unnecessary to investigate whether any other text can be treated as the foundation of the said doctrine since the said doctrine has been recognised in several decisions and has now become a part of Hindu law. In Rajani Kanta Pal vs Jaga Mohan Pal (2) the Privy Council held that " Where a member of a joint Hindu family blends his self acquired property with property of the joint family, either by bringing his self acquired property into a joint family account, or by bringing joint family property into his separate account, the effect is that all the property so blended becomes a joint family property." The question which falls for our decision is: Does this principle apply in regard to a property held by a Hindu female as a limited owner? In our opinion, it, is difficult to answer this question in favour of the; appellants. The rule of blending postulates that a;, coparcener who is interested in the coparcenary property and who owns separate property of his own may, (1) The Vyavahara Mayukha, Pt. 1, by Vishvanath Narayan Mandlik, 215. (2)(1923) L.R. 50 I.A. 173. 786 by deliberate and intentional conduct treat his separate property as forming part of the coparcenary property. If it appears that property which is separately acquired has been deliberately and voluntarily thrown by the owner into the joint stock with the clear intention of abandoning his claim on the said property and with the object of assimilating it to the joint family property, then the said property becomes a part of the joint family estate ; in other words, the separate property of a coparcener loses its separate character by reason of the owner 's conduct and get thrown into the common stock of which it becomes a part. This doctrine therefore inevitably postulates that the owner of the separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. There can be no doubt that the conduct on which a plea of blending is based must clearly and unequivocally show the intention of the owner of the separate property to convert his property into an item of joint family property. A mere intention to benefit the members of the family by allowing them the use of the income coming from the said property may not necessarily be enough to justify an inference of blending; but the basis of the doctrine is the existence of coparcenary and coparcenary property as well as the existence of the separate property of a coparcener. How this doctrine can be applied to the case of a Hindu female who has acquired immovable property from her father as a limited owner it is difficult to understand. Such a Hindu female is not a coparcener and as such has no interest in coparcenary property. She holds the property as a limited owner, and on her death the property has to devolve on the next reversioner. Under Hindu law it is open to a limited owner like a Hindu female succeeding to her mother 's estate as in Madras, or a Hindu widow succeeding to her husband 's estate, to efface herself and accelerate the reversion by surrender; but, as is well known, surrender has to be effected according to the rules recognised in that behalf. A Hindu female owning a limited estate cannot circumvent the rules of surrender 787 and allow the members of her husband 's family to treat her limited estate as part of the joint property belonging to the said family. On first principles such a result would be inconsistent with the basic notion of blending and the basic character of a limited owners ' title to the property held, by her. This aspect of the matter has apparently not been argued before the courts below and has not been considered by them. Thus, if the doctrine of blending cannot be invoked in regard to the property held by Channamma, the appellants ' claim in respect of the said property can and must be rejected on this preliminary ground alone. However, we will briefly indicate the nature of the evidence on which the plea of blending was sought to be supported. It appears that in 1921 a deed of maintenance was executed in favour of Gurushantappa 's widow Parvathamma by the three surviving brothers of Gurushantappa. This deed was attested by their father Kari Ramappa. It is clear that this deed includes some of the lands which Channamma had acquired by succession to her father (exhibit A 10). Subsequently, on July 5, 1923, some additional properties belonging to Channamma were charged to the said maintenance (exhibit A 11). It also appears that pattas in respect of the same lands belonging to Channamma were obtained in the names of the members of the family; and consequently, the said pattas were shown in the relevant revenue papers. Broadly stated, that is the nature of the evidence on which the plea of blending rests. It is obvious that even if the doctrine of blending were applicable it would be impossible to hold that the transactions on which it is sought to be supported can lead to the inference that Channamma did any act from which her deliberate intention to give up her title over the properties in favour of the members of her husband 's family can be inferred. It is not difficult to imagine Channamma 's position in the family. If her husband and her sons dealt with her property as they thought fit to do Channamma may not know about it, and even if she knew about it, may not think it necessary to object 788 because she would not be averse to giving some income from her property to her sons or to her widowed daughter in law. As we have already pointed out, the conduct of the owner on which the plea of merger can be invoked must be clear and unequivocal, and the evidence about it must be of such a strong character as to justify an inference that the owner wanted to extinguish his title over the property and impress upon it the character of the joint family property. Besides, as we will later point out, Channamma executed a deed of surrender in 1938 and the said document is wholly inconsistent with the plea that she intended to give up her title to the property in favour of her husband 's joint family. However, this discussion is purely academic since we have already held that the principle of blending cannot be invoked in respect of the limited estate held by Channamma. Therefore, we must hold that the High Court was right in rejecting the appellants ' claim in respect of the properties in Jonnagiri. That takes us to the properties in Schedule C in respect of which the trial court had decreed the appellants ' claim and the High Court has rejected it. This property has been obtained by respondent 1 as a result of the decree passed in O. section No. 5 of 1940. The property originally belonged to Virupakshappa, and in O. section No. 5 of 1940 respondents 2 and 1 claimed a declaration against the two widows of Virupakshappa, their daughter and certain alienees. The declaration claimed was that the wills of Virupakshappa therein specified were invalid and inoperative and that the respondents had reversionery right to Virupakshappa 's estate after the lifetime of his widows and daughter. A further declaration was also claimed that alienations and gifts specified in the plaint were invalid beyond the lifetime of the widows and the daughter of Virupakshapna. This suit ended in a compromise decree, and it is common ground that the properties in Schedule C came to the share of respondent 1 by this compromise decree. The question which has been argued before us in respect of these properties is whether or not the appellants 789 are entitled to a share in these properties. The appellants contend that respondent 1 had joined respondent 2 in the said suit as representing their undivided family and the properties acquired by him under the compromise decree passed in the said suit has been allotted to him as representing the whole of the family. On the other hand, respondent 1 contends that he joined respondent 2 in his individual character and the decree must inure for his individual benefit. It is clear that at the time when the said suit was filed respondent 2 was a presumptive reversioner and not respondent 1 ; but it appears that respondent 2 wanted the help of respondent 1 to fight the litigation, and both of them joined in bringing the said suit. It is common ground that respondent 2 asked Neelamma whether she would like to join the litigation. Respondent 2 has stated in his evidence that Neelamma was not willing to join the said litigation and respondent 1 has supported this version. The High Court thought that the evidence of Neelamma was also consistent with the story set up by respondent 1. That is one of the main reasons why the High Court held that the decree passed in the said suit did not enure for the benefit of the family. In assuming that Neelamma supported the version of respondent 1 the High Court has obviously misread her evidence. This is what Neelamma has stated in her evidence: " Defendants 1 and 2 came to me at the time of filing their suit and said that the expenses are likely to be heavy and that minors ' properties would not be wasted. 1 said 1 had no objection and gave my consent." The High Court has read her evidence to mean that she was not prepared to waste the properties of her minor sons and so she refused to join the adventure, and in doing so it thought that the statement of respondent 2 was that the minors ' properties should not be wasted, whereas according to the witness the said statement was that the minors ' properties "would" not be wasted. It would be noticed that it makes substantial difference whether the words used were " would not " or " should not. " 790 We have no doubt that on the evidence as it stands the inference is wholly unjustified that Neelamma refused to join respondents 1 and 2. Besides, as we have already pointed out, the evidence of respondents 1 and 2 have been disbelieved by both the courts, and in fact the conduct of respondent 1 whereby he wanted to defeat the claims of his nephews has been very strongly criticized by both the courts. Therefore, we feel no hesitation in holding that the trial court was right in coming to the conclusion that respondents 1 and 2 consulted Neelamma and with her consent the suit was filed and was intended to be fought by the two respondents not for themselves individually but with the knowledge that respondent 1 represented the undivided family of which he was the manager. If that be so, then it must follow that the decree which was passed in favour of respondent 1 was not for his personal benefit but for the benefit of the whole family. In this connection it is necessary to bear in mind that respondent 1 has not shown by any reliable evidence that the expenses for the said litigation were borne by him out of his pocket. It is true that both the courts have found that respondent 1 purchased certain properties for Rs. 600/ in 1925 (exhibit B 4). We do not know what the income of the said properties was; obviously it could not be of any significant order; but, in our opinion, there is no doubt that where a manager claims that any immovable property has been acquired by him with his own separate funds and not with the help of the joint family funds of which he was in possession and charge, it is for him to prove by clear and satisfactory evidence his plea that the purchase money proceeded from his separate fund. The onus of proof must in such a case be placed on the manager and not on his coparceners. But,, apart from the question of onus, the evidence given by respondent 1 in this case has been disbelieved, and in the absence of any satisfactory material to show that respondent 1 had any means of his own it would be idle to contend that the expenses incurred for the litigation in question were not borne by the joint 791 family income. Therefore, apart from the fact that Neelamma was consulted and agreed to join the adventure on behalf of her sons, it is clear that the expenses for the litigation were borne by the whole family from its own joint funds. This fact also shows that the property acquired by respondent 1 under the compromise decree was acquired by him as representing the family of which be was the manager. The result is that the view taken by the High Court in respect of the properties in Schedule C must be reversed and that of the trial court restored. That leaves a minor point about three items of property, Serial Nos. 63, 64 and 65, in Schedule A. These items of property form part of Jonnagiri property, and we have already held that the appellants cannot make any claim to the whole of this property. It appears that though the trial judge passed a decree in favour of the appellants in respect of Serial Nos. 4 to 61 in Schedule A, he did not recognise the appellants ' share in the three serial numbers in question because he held that they were not part of the joint family property but belonged exclusively to respondent 1. It also appears that these properties originally belonged to the joint family of the parties but they were sold by Kari Ramappa and his two brothers to Channappa as long ago as 1898. That is how they formed part of Channappa 's estate. Both the courts have found that the sale deed in question was a real and genuine transaction, and they have rejected the appellants ' case to the contrary. Respondent 1 claims these items under a deed of surrender executed in his favour by Channamma (exhibit B. 3) on December 5, 1938. This document is accepted as genuine by both the courts and it is not disputed that the surrender effected by it is valid under Hindu law. Indeed this document is wholly inconsistent with the appellants ' case that Channamma wanted to convert her separate properties into properties of the joint family of her husband. Therefore, there is no substance in the appellants ' argument that they should be given a share in these three items of property. 792 The result is the appeal is partly allowed and the decree passed by the High Court is modified by giving the appellants their half share in the properties described in Schedule C. The rest of the decree passed by the High Court is confirmed. In the circumstances of this case the parties should bear their own costs. ' Appeal allowed in part.

The rule of blending in Hindu Law as evolved by judicial decisions can have no application to a property held by a Hindu female as a limited owner. That rule postulates a coparcener deliberately and intentionally throwing his independently acquired property into the joint family stock so as to form a part of it. Although it is unnecessary now to investigate whether there is any other text on which that rule could be founded, it is quite clear that the text of Yagnavalkya in a different context and the commentary thereupon by Vijnyaneshwara, relied on by the Privy Council in this connection, can have no relation to the said rule. Shiba Prasad Singh vs Rani Prayag Kumari Debi (1932) L.R. 59 I.A. 331, disapproved. Rajanikanta Pal vs Jaga Mohan Pal (1923) L.R. 50 I.A. 173, relied on. Consequently, where in a partition suit certain immovable properties acquired by a Hindu female from her father as a limited owner were claimed to form part of the joint family property of her husband by virtue of the said rule: Held, that the claim must fail. Held, further, that a Hindu female owning a limited estate cannot circumvent the rules of surrender and allow the members of her husband 's family to treat her limited estate as part of the joint family property of her husband. Before the said rule can be invoked, it must be shown that the owner wanted to extinguish his title to the property in question and impress upon it the character of joint family property.

minal Appeal No. 131 of 1959. Appeal by special leave from the judgment and order dated November 21, 1958, of the Patna High Court in M. J. C. No. 805 of 1958. G. section Pathak, section C. Banerjee and P. K. Chatterjee, for the appellant. R. Ganapathy Iyer and B. H. Dhebar, for the respondents. February 10. The Judgment of the Court was delivered by DAs GUPTA, J. On February 20, 1958, there occurred in the Central Bhowra Colliery, in Dhanbad in Bihar an accident as a result of which 23 persons lost their lives. After an inquiry under. a. 24 of the , into the causes of and the circumstances attending the accident, and the publication of the report of the inquiry, a complains was prepared by the Regional Inspector of Mines, (Dhanbad, under the direction of the Chief Inspector of Mines, Dhanbad, before the Sub Divisional Officer, Dhanbad, against the appellant for an offence under section 74 of the , for contravention of regulations 107 and 127 of the Coal Mines Regulations, 1957. The Central 35 Bhowra Colliery belongs, and belonged at the relevant date to a private company, viz., M/s. Central Bhowra Colliery Co., Private Limited. The appellant is and was a shareholder and a director of this company. After the Sub Divisional Officer took cognizance of the complaint and issued processes against him, the appellant made an application to the Patna High Court under article 226 of the Constitution, for the issue of an appropriate writ for quashing the criminal proceedings. This application was summarily dismissed. It if; against that order of dismissal that this appeal has been filed by special leave obtained from this Court. The two main grounds on which the prayer for quashing the proceedings was based were: (1) that section 76 of the , in pursuance of which the appellant, who was not himself the owner of the colliery company, but only one of the directors and shareholders has been prosecuted, is void as it violates article 14 of the Constitution; (2) the Coal Mines Regulations, 1957, are invalid having been framed in contravention of a. 59(3) of the . These two contentions were also urged before us in appeal. The first contention is based on an assumption that the word "any one" in section 76 means only "one of the directors, and only one of the shareholders". This question as regards the interpretation of the word "any one" in section 76 was raised in Criminal Appeals Nos. 98 to 106 of 1959 (Chief Inspector of Mines etc.) (1) and it has been decided there that the word "any one" should be interpreted there as "every one". Thus under section 76 every one of the shareholders of a private company owning the mine, and every one of the directors of a public company owning the mine is liable to prosecution. No question of violation of article 14 therefore arises. As regards the other contention that the regulations are invalid the appellant 's argument is that the provisions of section 12 and section 59 of the , are mandatory. Section 12 provides: "(1) The Central Government may constitute for any part of the territories to which this. Act extends, (1) ; 36 or for any group or class of mines, a Mining Board consisting of (a) a person in the service of the Government, not being the Chief Inspector or an Inspector, appointed by the Central Government to act as Chairman; (b) the Chief Inspector or an Inspector appointed by the Central Government; (c) a person, not being the Chief Inspector or an Inspector, appointed by the Central Government; (d) two persons nominated by owners of mines or their representatives in such manner as may be prescribed; (e) two persons to represent the interest of miners, who shall be nominated in accordance with provisions laid down in the section. " Section 59 empowers the Central Government to 'make regulations consistent with the Act for all or any of the purposes mentioned therein, while section 58 empowers the Central Government to make rules consistent with the Act for all or any of the purposes mentioned therein. Section 59 after providing in its first sub section that the power to make regulations and rules conferred by sections 57 and 58 is subject to the condition of the regulations and rules being made after previous publication provides in its third sub. section further conditions as regards the making of regulations. This sub section runs thus: "Before the draft of any regulation if; published under this section it shall be referred to every Mining Board which is, in the opinion of the Central Government concerned with the subject dealt with by the regulation, and the regulation shall not be so published until each such Board has had a reasonable opportunity, of reporting as to the expediency of making the same and as to the suitability of its provisions. " A similar provision was made in the fourth sub section as regards the making of rules. By an amendment made in 1959 these two subsections have been combined into one. It was not disputed before us that when the Regulations were framed, no Board as required under section 12 37 had been constituted, and so, necessarily there had been no reference to any Board as required under section 59. The question raised is whether the omission to make such a reference make the rules invalid. As has been recognised again and again by the courts, no general rule can be laid down for deciding whether any particular provision in a statute is mandatory, meaning thereby that non observance thereof involves the consequence of invalidity or only directory, i.e., a direction the non observance of which does not entail the consequence of invalidity, whatever other consequences may occur. But in each case the court has to decide the legislative intent. Did the legislature intend in making the statutory provisions that nonobservance of this would entail invalidity or did it not? To decide this we have to consider not only the actual words used but the scheme of the statute, the intended benefit to public of what is enjoined by the visions and the material danger to the public by pro the contravention of the same. In the present case we have to determine therefore on a consideration of all these matters whether the legislature intended that the provisions as regards the reference to the Mines Board could be contravened only on pain of invalidity of the regulation. Looking at the language of the section, we find, the legislature, after saying in the first part of sub section (3), that before any regulation is published, it "shall be" referred to every Mining Board which is, in the opinion of the Central Government concerned with the subject, and goes on to say in the latter part, that the regulation "shall not" be published until each Board has had a reasonable opportunity of reporting as to the expediency and suitability of the provisions. While it is true that language is only one of the many considerations which have to be taken into account in deciding whether a requirement is directory or mandatory, it is legitimate to note that the language used in this case is emphatic and appears to be designed to express an anxiety of the legislature that the publication of the regulation, which is condition precedent to the making of the regulations, should 38 itself be subject to two conditions precedent first, a reference to the Mining Boards concerned, and secondly, that sufficient opportunity to the Board to make a report as regards the expediency and suitability of the proposed regulations. The cause of this anxiety becomes patent, when one examines the matters on which regulations can be made, Even a cursory examination of the purposes set out in the 27 clauses of section 57 shows that most Of them impinge heavily on the actual working of the mines. To mention only a few of these, viz., cl. (c) under which regulations may be made for prescribing the duties of owners, agents and managers of mines and of persons acting under them; (g) for determining the circumstances 'in which and the conditions subject to which it shall be lawful for more mines than one to be under a single manager; (j) for prohibiting, restricting or regulating the employment of adolescents and women in mines; (k) for providing for the safety of the persons employed in a mine; (m) for providing for the safety of the roads and working places in mines; (n) for the inspection of workings and sealed off fire areas in a mine; (o) far providing for the ventilation of mines; (r) for providing for proper lighting of mines and regulating the use of safety amps therein; are sufficient to show that the very purpose of the Act may well be defeated unless suitable and practical regulations are framed to help the achievement of this purpose, Arbitrary and haphazard regulations without full consideration of their practicability and ultimate effect on the efficient working of the mines, would, apart from, often defeating the purpose of the Act, affect injuriously the general economy of the country. That we are entitled to presume, is the reason behind the legislature 's anxiety that Mining Boards should have an opportunity of examining regulations, and expressing their opinion before they are finalised. As has been already mentioned section 12 which deals with the formation of boards provides for representation thereupon of two persons nominated by owners of mines or their representatives and two persons to re. present the interests of persons employed in mines, in 39 addition to three persons representing the Government. The constitution is calculated to ensure that all aspects including on the one hand the need for securing the safety and welfare of labour and on the other hand the practicability of the provisions proposed from the point of, view of the likely expense and other considerations can be thoroughly examined. It is certainly to the public benefit that Boards thus constituted should have an opportunity of examining regulations proposed in the first place, by an administrative department of the government and of express ing their opinion. It is true that the law does not require concurrence of the Board with the regulations proposed. It is reasonable to expect however that when a Board has expressed an opinion in favour of the rejection or modification of a proposed regulation, the department would not treat it lightly. But, even where the opinion expressed by the Board is not accepted the very fact that there has been such an examination by the Board, and a consequent re. examination by the department is likely to minimise the risks to public welfare. There can be little doubt therefore that generally speaking strict obedience of the command in sub section 3 of section 59 regarding consultation with the Mining Board is likely to promote public welfare. Let us now examine the matter from another aspect and ask ourselves the question: what risk there is to the public welfare of an insistence in all cases that the omission of consultation as enjoined in section 59 would invalidate a regulation. Emergencies may arise, when in order that the public may not suffer. regulations must be framed with the least possible de lay; and much valuable time may be lost if a reference must be made to all the Mining Boards concerned and opportunity given to them to express their opinion before regulations are made. In such cases, public interest may well be endangered if regulations, in order to be valid have to conform,to the requirements of previous consultation with, the Mining Boards. We find however that such cases of emergency have been specially dealt with in a. 60 of the Act, the operative portion of which runs thus: 40 "Notwithstanding anything contained in subsec tions (1), (2) and (3) of section 59, regulations under clause (1) and clauses (k) to (a) excluding clause (1) of section 57 may be made without previous publication and without previous reference to Mining Boards, if the Central Government is satisfied that for the prevention of apprehended danger or the speedy remedy of conditions likely to cause danger it is necessary in making such regulations to dispense with the delay that would result from such publication and reference". Thus, the apprehended danger to public interest from requiring as a condition of the validity of regulations previous consultation with the Mining Board is averted. An examination of all the relevant circumstances, viz., the language used, the scheme of the legislation, the benefit to the public on insisting on strict compliance as well as the risks to public interest on insistence on such compliance leads us to the conclusion that the legislative intent was to insist on these provisions for consultation with the Mining Board as a prerequisite for the validity of the regulations. This conclusion is strengthened by the fact that in section 60 when providing for the framing of regulations in certain cases without following the procedure enjoined in section 59, the legislature took care to add by a proviso that any regulation so made "shall not remain in force for more than two years from the making thereof". By an amendment made in 1959 the period has been changed to one year. It is not unreasonable to read this proviso as ex. pressing by implication the legislature 's intention that when the special circumstances mentioned in section 60 do not exist and there is no scope for the application of that section no regulation made in contravention of s.59 will be valid for a single day. Strew was laid on behalf of the respondent on the fact that section 59 does not require that regulations must have the concurrence of the Mining Boards; and it was pointed out that this Court in State of U. P. vs Manbodhan Lal Srivastava (2) in holding that article 320(3) (2) ; 41 of the Constitution was not mandatory, relied, inter alia, on the fact that "the requirement of the consultation with the Commission does not extend to making the advice of the Commission, on these matters, binding on the government". While it is true that this Court did attach weight to this circumstance, we have to remember that this was the only one of the several circumstances, on the total consideration of which, the court decided that the provision for consultation in article 320(3) was not mandatory. One of these circumstances was that article 320(3) contained a proviso, which gave a clear indication "of the intention of the Constitution makers that they did envisage certain cases or class of cases in Which the Commission need not be consulted". "If the provisions of article 320(3) were of a mandatory character", observed Sinha, J., (as he then was), while delivering the judgment of the Court, "the Constitution would not have left it to the discretion of the head of the executive government to undo these provisions by making regulations to the contrary". It has to be noticed, as pointed out above, that section 60 of the , also lays down clear provisions where the consultation as required in section 59 need not take place. Here, however, the legislature has not left it to the discretion of the executive government "to undo these provisions by making regulations to the contrary". The legislature itself has given clear guidance as to the cases where such consultation need not be made by the Government. What is more, the legislature has laid down that regulations made without such consultation would have a limited life. In Srivastava 's Case (1) this Court quoted with approval the following observations of the Privy Council in Montreal Sirgeet Railway Company vs Nor. mandin ("): "When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, (1) ; (2) ; , 175. 42 or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done." and applied the principle thus laid down to the case before it. There is however no scope in the present case of applying this principle in support of the directory nature of section 59(3). As we have pointed out above, the inconvenience that might be caused by holding regulations made in contravention of section 59(3) invalid is removed by the provisions of section 60; and on the other hand to hold that regulations may be validly made without following the procedure laid down in section 59even in cases not falling within section 60 is likely to be harmful to public interest, and to cause general incon venience. It is really a converse case of what the Privy Council had to consider in Montreal Street Railway Company 's Case (1) and this Court considered in Srivastava 's Case (2). For all the reasons given above, we are of opinion that the provisions in section 59(3) of the , are mandatory. There remains for consideration the question whether these provisions were complied with before the Coal Mines Regulations, 1957, were I framed. As has been pointed out above, it was not disputed before us that at the time when the regulations were framed no new Mining Board had been constituted under the , and consequently no consultation with any Mining Board constituted under the 1952 Act took place. It has been stated before us however on behalf of the respondents that the Mining Boards constituted under section 10 of the Mines Act, 1923, were continuing to operate at the time these regulations were framed and that there was full consultation with these Mining Boards before these regulations were framed. (1) ; , 175. (2) ; 43 If in fact there was such consultation the further question would arise whether consultation with the Mining Boards constituted under the provisions of the Mining Act, 1923, would be sufficient compliance with the provisions of section 59(3) of the present Act. Before these questions are decided it is not possible to come to a definite conclusion whether the Coal Mines Regulations, 1957, are valid or not. As there is not sufficient material before us to decide the question, whether in fact the Mining Boards constituted under section 10 of the 1923 Act were functioning at the date when these regulations were made and whether these Boards were consulted before the regulations were framed, we have not thought fit to consider here the further question whether if such consultation had taken place that would be sufficient compliance with section 59(3) of the 1952 Act. In the circumstances, the proper course, in our opinion, is to direct that the criminal proceedings pending in the court of the sub divisional magistrate be disposed of by him or any other magistrate to whom the case may be transferred in accordance with law, after deciding the question whether there was consultation with Mining Boards constituted under section 10 of the Mines Act, 1923, before the regulations were framed and, if so, whether such consultation amounted to sufficient compliance with section 59. If his conclusion is that there has not been compliance with the provisions of section 59 the regulations must be held to be invalid and the accused would be entitled to an acquittal; if, on the other hand, he holds that there has been sufficient compliance with the provisions of section 59 he should dispose of the case after coming to a conclusion on the evidence as regards the allegations made against the appellant in the petition of complaint. The appeal is disposed of accordingly. Appeal allowed. Case remanded.

Section 76 of the , provides that where the owner of a mine is a private company any one of the shareholders thereof may be prosecuted and punished under this Act for any offence for which the owner of the mine is punishable. The appellant who was a shareholder and a director of a private company owning a colliery, was prosecuted for an offence under section 74 Of the Act for contravention of Regulations 107 and 127 Of the Coal Mines Regulations, 1957. He challenged the validity of the prosecution on the grounds (1) that section 76 of the Act in pur suance of which he who was not himself the owner of the colliery but only one of the directors and shareholders had been prosecuted, was void as it violated article 14 of 'the Constitution of India, and (2) that the Coal Mines Regulations, 1957, were invalid as they had been framed in contravention of section 59 (3) of the Act, inasmuch as there was no consultation with a Mining Board before they were published as required by that sub section. It was not disputed that when the Regulations were framed, no Mining Board as required under section 12 Of the Act had been con stituted. and so there had been no reference to any such Board, 34 but it was alleged that there was consultation with the Mining Board constituted under section 10 of the Mines Act, 1923. Held: (1) that the words "any one" in section 76 of the , should be interpreted as "every one" and that under that section every one of the shareholders of a private company owning the mine was liable to prosecution. Accordingly, section 76 did not contravene article 14 Of the Con stitution. Chief Inspector of Mines vs Lala Karam Chand Thapar, , followed. (2) that compliance with the provisions in section 59 (3) Of the Act was mandatory. State of U. P. vs Manbodhan Lai Srivastava, [1958] section C. R. 533, distinguished. Quaere, whether consultation with the Mining Boards con stituted under the provisions of the Mines Act, 1923, would be sufficient compliance with section 59 (3) Of the .

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

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

Appeal No. 512 of 1957. Appeal by special leave from the judgment and decree dated August 29 ' 1952, of the Madras High Court in Second Appeal No. 2349 of 1946. Azizuddin and K. R. Choudhury , for the appellant. Shaukat Hussain and P.C. Agarwala, for respondents Nos. 1 and 2. 1961. February 14. The Judgment of the Court was delivered by SHAH J. There is in the village of Cavelong, District Chiugleput in the State of Madras an ancient Durgah to which is appurtenant a Masjid. The Nawab of Carnatic had granted two villages in inam for the maintenance of the Durgah and the Masjid. Offerings from the devotees who visited the Durgah and the Maajid were also received. The income of the institution after disbursing the expenses of "Sandal", and "Urs" and of feeding the poor has since long been shared by descendants in four families in equal shares. By 'Custom females and persons claiming through females were excluded from receiving a share of the income and the income was distributed amongst the males descended 'in the male fine. In original suit No. 27 of 1940 of the file of the Subordi nate Judge, Chingleput, a scheme was framed for administration of the Durgah and the Masjid and a Board of trustees was appointed for that purpose. By the scheme, provision was. made for distribution of the surplus income amongst the members of the four families. 69 Fakruddin, in the following genealogy, belonged to one of the four families which received the income. Sheik Mohammad Fakir Mohammad Sheik Miran Giasuddin Nismat Ulla Khamruddin Nayeem Uddir Fakir Mohammad Fakruddin=Sulai Niama Ulla Abdul Safi man Bi Wahid Ulla (2nd plaintiff) (1st deft.) Nayeemuddin (died unmarried) Ramat Syed Un Unnissa (2nd nissa (Ist defendant) plaintiff) As a descendant of Sheik Mohammad, Fakruddin received a 1/8th share of. the income. He was also by arrangement with others entitled to perform the "Urs" ceremony once in eight years. Fakruddin died in 1921 leaving him surviving his wife Sulaiman Bi and two daughters Rahmat Unnissa and Syed Unnissa. Sulaiman Bi is plaintiff No. 2 and Rahmat Unnissa and Syed Unnissa are respectively defendant No. 2 and plaintiff No. 1 in suit No. 156 of 1937 out of which this appeal arises. In the year 1926, it was the turn of Fakruddin to perform the "Urs" and it is claimed by the plaintiffs that it was performed on behalf of the widow and daughters of Fakruddin by their deputies. The next turn was in the year 1934, but in the performance of the "Urs", the plaintiffs and defendant No. 2 were obstructed by Abdul Wahid son of Nayeem Uddin belonging to the other branch in Sheik Mohammad 's family. Plaintiffs 1 and 2 then filed suit No. 156 of 70 1937 in the court of the District Munsif at Chingleput .For a declaration that they were entitled to enjoy the properties described in the schedule annexed to the plaint and to manage the Durgah, perform the "Urs" festival and receive all "incomes, endowments and perquisites thereof once in every eight years" since 1934 according to their turn. They also claimed an injunction restraining Abdul Wahib from interfering with their rights in that behalf. Rahmat Unnissa the eldest daughter of Fakruddin was impleaded as defendant No. 2. Abdul Wahid defendant No. 1 died during the pendency of the suit and defendants 4 to 10 who were brought on record on their own application as heirs and legal representatives to the exclusion of the daughter of Abdul Wahid defended the suit. They denied the right of the plaintiffs to a share in the income contending that lay custom in the family, females were excluded from inheritance, that the office of "Peshimam", "Khatib" and "Mujavar" could only be held by males and that females were excluded from those offices, that the plaintiffs ' claim was barred by the law of limitation and that in any event the suit for a mere declaration was not maintainable. The Trial Judge held and the appellate court agreed with him that there was an immemorial custom governing the institutions precluding the plaintiffs from performing services or sharing the income, emoluments and perquisites and therefore the plaintiffs were not entitled to perform those services and enjoy the surplus income, and accordingly they were not entitled to the declaration of an injunction prayed for. In second appeal, the High Court at Madras held that by virtue of the Shariat Act, 1937, the income received from the institution had to be shared according to the per sonal law of the parties and that the plaintiffs ' claim was not barred by the law of limitation nor was the suit open to the objection that it was as framed not maintainable. Against the decree passed by the High Court, this appeal with special leave under article 136 of the Constitution is preferred. In our view, the suit as framed was maintainable. The management of the institution is vested in the 71 trustees. The four families, it is true, are by tradition entitled to perform and officiate at certain ceremonies and also to share in the income. A suit for declaration with a consequential relief for injunction, is not a suit for declaration simpliciter; it is a suit for declaration with further relief. Whether the further relief claimed in a particular case as consequential upon a,declaration is adequate must always depend upon the facts and circumstances of each case. In Kunj Behari Prasadji Purshottam Prasadji vs Keshavlal Hiralal (1), it was held that section 42 of the Specific Relief Act does not empower the court to dismiss a suit for a declaration and injunction and that an injunction is a further relief within the meaning of section 42 of the Specific Relief Act. In that case, the plaintiff had claimed that a certain will was null and void and that being a close relative of the last holder of a gadi, he was entitled to be the Acharya in the place of that last holder and for an injunction restraining the defendants from offering any obstruction to his occupation of the gadi. It was held that such a suit was maintainable. The surplus income .of the institution is distributed by the trustees and the plaintiffs are seeking a declaration of the right to receive the income and also an injunction restraining the defendants from interfering with the exercise of their right. The High Court hold that plaintiff No. 1 was at the date of the suit 19 years of age and was entitled to file a suit for enforcement of her right even if the period of limitation had expired during her minority within three years from the date on which she attained majority by virtue of sections 6 and 8 of the Indian Limitation Act. Apart from this ground which saves the claim of the first plaintiff alone, a suit for a declaration of a right and an injunction restraining the defendants from interfering with the exercise of that right is governed by article 120. of the Limitation Act and in such a suit the right to sue arises when the cause of action accrues. The plaintiffs claiming under Fakruddin sued to obtain a declaration of their rights in the institution which (1) I.L.R. (1904) XXVIII Bom. 72 was and is in the management of the trustees. The trial judge hold that the plaintiffs were not "in enjoyment of the share" of Fakruddin since 1921 and the suit filed by the plaintiffs more than 12 years from the date of Fakruddin 's death must be held barred, but he did not refer to any specific article in the first schedule of the Limitation Act which barred the suit. It is not shown that the trustees have ever denied or are interested to deny the right of the plaintiffs and defendant No. 2; and if the trustees do not deny their rights, in our view, the suit for declaration of the rights of the heirs of Fakruddin will not be barred under article 120 of the Limitation Act merely because the contesting defendant did not recognize that right. The period of six years prescribed by article 120 has to be computed from the date when the right to sue accrues and there could be no right to sue until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right. If the trustees were willing to give a share and on the record of the case it must be assumed that they being trustees appointed under a scheme would be willing to allow the plaintiffs their legitimate rights including a share in the income if under the law they were entitled thereto, mere denial by the defendants of the rights of the plaintiffs and defendant No '. 2 will not set the period of limitation running against them. The trial court as well as the first appellate court held on an exhaustive review of the evidence that there was an immemorial custom governing the institutions whereby the plaintiffs were not entitled to perform service or share the income, emoluments and perquisites. But since the enactment of the Shariat lot 26 of 1937, this custom must be deemed inapplicable to the members of the family. By section 2 of the Act, it was enacted as follows: "Notwitlwtanding any customs or usage to the contrary in all questions (save questions relating to agricultural lands) regarding intestate succession, ,special property of females, including personal property inherited or obtained under contract or gift or 73 any other provision of Personal Law, marriage, dissolution of marriage, including talaq, ila, zihar, lian, khula and mubarrat, maintenance, dower, guardian. ship, gifts, trusts and trust properties, and wakfs (other than charities and charitable institutions and charitable and religious endowments) the rule of decision in cases where the parties are Muslims shall be the Muslim Personal Law (Shariat). " Under the Shariat Act,, 1937, as framed, in questions relating to charities and charitable institutions and charitable and religious endowments, the custom or usage would prevail. But the Act enacted by the Central Legislature was amended by Madras Act 18 of 1949 and a. 2 as amended provides: "Notwithstanding any custom or usage to the contrary, in all questions regarding intestate succession, special property of females including personal property inherited or obtained under contract, or gift or arty other provision of personal law, marriage, dissolution of marriage, including Tallaq, ila, zihar, lian, Khula and Mubarrat, maintenance, dower, guardianship, gifts, trusts and trust proper. ties and wakfs the rule of decision in cases where the parties are Muslims shall be the Muslim Personal Law (Shariat). " Manifestly by this act ' "the rule of decision" in all questions relating to intestate succession and other specified matters including wakfs where the parties to the dispute are Muslims is the Muslim Personal Law. The, terms of the Act as amended are explicit. Normally statute which takes away or impairs vested rights under existing laws is presumed not to have retrospective operation. Where vested rights are affected and the question is not one of procedure, there is a presumption that it was not the intention of the legislature to alter vested rights. But the question is always one of intention of the legislature to be gathered from the language used in the statute. In construing an enactment, the court starts with a presumption against retrospectivity if the enactment seeks to affect vested rights: but such a presumption 74 may be deemed rebutted by the amplitude of the language used by the Legislature. It is expressly enacted in the Shariat Act as amended that in all questions relating to the matters specified, "the rule of decision" in cases where the parties are Muslims shall be the Muslim Personal Law. The injunction is one directed against the court: it is enjoined to apply the Muslim Personal Law in all cases relating to the matters specified notwithstanding any custom or usage to the contrary. The intention of the legislature appears to be clear; the Act applies to all suits and proceedings which were pending on the date when the Act came into operation as well as to suits and proceedings filed after that date. It is true that suits and proceedings which have been finally decided would not be affected by the enactment of the Shariat Act, but if a suit or proceeding be pending even in appeal on the date when the Act was brought into operation, the law applicable for decision would be the Muslim Personal Law if the other conditions prescribed by the Act are fulfilled. In our view, the High Court was right in holding that it was bound to apply the provisions of the Shariat Act as amended by Madras Act 18 of 1949 to the suit filed by the plaintiffs. We are unable to agree with the view of the Lahore High Court in Syed Roshan Ali vs Mt. Behmat Bibi (1) that a right acquired before 1937 (the date on which the Shariat Act was brought into operation) to bring a suit for a declaration that the alienation by the widow of the last holder who had by custom succeeded to the limited estate left by her husband was not binding upon the reversioner, was not taken away by the enactment of the . It may be observed that the court proceeded merely upon the general presumption against retrospectivity and their attention, it appears, was not directed to the phraseology used by the legislature to give section 2 a retrospective operation. The plea raised by counsel for. the contesting defendants that even under the Muslim Personal Law, females are excluded from performing the duties of (1) A.I.R. 1943 Lah. 219. 75 the offices of "Peshimam", "Khatib" and "Mujavar" and that they cannot carry out the duties of those offices even through deputies is one which was not raised before the High Court. The trial court has found that the duties of those offices could be performed through deputies. The first appellate court did not express any opinion on that question and before the High Court, this question was not mooted. We do not think that we would be justified in allowing the contesting defendants to argue this question in this appeal. In any event, if the income was being distributed amongst the four families, the plaintiffs and defendant No. 2 claiming under Fakruddin would, by virtue of the provisions of the Shariat Act, be entitled to receive that income. There is nothing on the record to suggest that the right to receive the income is conditional upon the performance of the duties of the offices of "Peshimam", "Khatib" and "Mujavar". In that view of the case, this appeal fails and is dismissed with costs. Appeal dismissed.

Under a scheme a Board of Trustees was appointed for administration of the Durga and a Masjid for the maintenance of which the Nawab of Carnatic had granted two villages in Inam. The income of the institution after disbursing the expenses had since long been shared by the descendants in four families in equal shares. The scheme also provided that the surplus income was to be distributed amongst the members of the said four families. One of the descendants died leaving him surviving his wife and two daughters who were obstructed in the performance of the "Urs" by the appellant 's father. The said Muslim female members filed a suit for declaration that they were entitled to enjoy the properties and to manage the Durga, perform the "Urs" festival and receive all incomes, endowments and perquisites thereof once in every eight years according to their turn. The right to a share in the income was denied by the appellant contending that by custom in the family, females were excluded from inheritance and that the claim was barred by the law of limitation and that, in any event, the suit for mere declaration was not maintainable. Held, that a suit for declaration of rights with a consequential relief for injunction was not a suit for declaration simpliciter; it was a suit for declaration with further relief and was not barred under article 120 Of the Indian Limitation Act merely because the contesting defendant did not recognise the right. The period of six years prescribed by article 120 is to be computed from the date when the right to sue accrued and there could be no right to sue until there was an accrual of the right asserted in the suit and its infringement or at least a clear and unequi vocal threat to infringe that right. If under the law a person was entitled to any legitimate right, the mere denial of the right will not set the period of limitation running against the person entitled to such right. 68 Held, further, that on the enactment of the Shariat Act 26 Of 1937, as amended by the ' Madras Act r8 Of 1949, the Muslim Personal Law applies in all cases relating to the matters specified notwithstanding any customer usage to the contrary even at the stage of appeals, if other conditions prescribed under the Act are fulfilled. Kunj Behari Prasadji Purshottam Prasadji vs Keshavld Hiralal. 567, discussed. Syed Roshan Ali vs Mt. Rehmat Bibi and Others, A.I.R. 1943 Lah. 219, disapproved.

Appeal No.371 of 1956. Appeal from the Judgment and decree dated August 28, 1953, of the Madras High Court in A.S. No. 262 of 1949. A. V. Viswanatha Sastri, R. Sundaralingam and B. K. B. Naidu, for the appellant. Ganapathy Iyer, V. A. Seyid Muhamad and T. M. Sen, for the respondent No. 1. 1961. February 15. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal has been brought with a certificate issued by the Madras High Court and it arises out of a suit filed by the Managing Trustee of the appellant Sri Vedaraneeswararswamy Devasthanam against respondents 1 and 2 the Dominion of India and the Province of Madras respectively. In this suit the appellant claimed a declaration that the properties in suit belong to the appellant and asked for a direction against respondent 1 to put the appellant in possession of the same. A further direction was claimed against the said respondent calling upon it to account for and pay to the appellant mesne profits past and future and an alternative plea was also made by which the court was requested to determine the proper rent payable by the said respondent to the appellant. This claim has been rejected by the learned Subordinate Judge of Mayuram who tried the case and an appeal preferred by the appellant against the 89 trial court 's decision has likewise failed. That is why the appellant has come to this Court. According to the appellant the suit properties which admeasure about 2,400 acres are situated in the village of Agastiyampalli and the said village was granted in inam absolutely to the appellant by the Tanjore Rajas several centuries ago. From the time of the said grant the appellant was in exclusive possession and enjoyment of the said properties, and its trustees and managers used to look after them and collect their profits for the use and benefit of the appellant. In 1806 an agreement was reached between the East India Company and the appellant, under which the Company took possession of the appellant 's properties in suit and in return promised to pay a sum of 1848 Pagodas annually. Out of this amount 1200 Pagodas represented the rent of the property. Pursuant to this agreement the Company took possession of the said property and was paying the agreed rent until 1858. In that year respondent 2 which succeeded the Company entered into possession of the property on the same terms and was making the annual payment of the said sum until 1937. Thereafter respondent 1 took over the salt revenue administration and as such the properties came into its possession. Respondent 1 has been paying the appellant the agreed amount from year to year. The appellant 's case was that the true legal relationship between the parties was that of a lessor and lessee and that the lease itself was not of a permanent character but was one in the nature of annual or yearly lease which was continued from year to year. It is on this basis that the appellant made the two alternative claims specified above. Respondent 1 disputed this claim. , It denied that it held the properties under an annual or yearly lease. Its case was that when the suit lands, were taken over by the Company compensation was fixed once for all, the average income of the appellant from the manufacture of salt carried on by the appellant during the previous ten years having been taken as the basis for the purpose of calculating the said compensation. 90 The properties came under the possession and control of the Company as a result of the proceedings taken under Regulation 1 of 1805 and the amount of Rs. 4,200/ corresponding to 1848 Pagodas represents the compensation annually payable to the appellant. Respondent 1 made certain other pleas on the merits Of and urged a bar of limitation. On these pleadings the trial court framed ten issues. On the principal point of dispute between the parties it held that a reading of the relevant documents clearly showed that "at the time when the Company took possession whatever the idea may then have been it must have been only to take over the properties permanently from the plaintiff Devasthanam and not to place themselves at the mercy of the trustees who might evict them at any time". According to the trial court the arrangement evidenced by the said documents was a permanent arrangement and that being so, the appellant was not entitled to claim possession. The trial court also held that even if the relationship between the parties could be said to be that of a lessor and lessee the lease in question was a permanent lease subject only to the payment of a fixed rent of Rs. 4,200/ per annum. On these findings the trial court dismissed the appellant 's suit. The appellant then took its case before the Madras High Court. The High Court in substance agreed with the conclusions of the trial court. It considered the whole of the documentary evidence and came to the conclusion that the trial judge was right in holding that the documentary evidence showed that the arrangement by which the Company took possession of the appellant 's properties was a permanent arrangement and that if it was held to be a lease it must be regarded as a permanent lease. According to the High Court the appellant 's claim was also barred by limitation under article 134(B) of the Limitation Act. The High Court therefore confirmed the trial court 's decree and dismissed the appeal preferred by the appellant. In the present appeal the principal question which has been raised before us by Mr. Viswanatha Sastri 91 for the appellant is about the true nature of the relationship between the parties in respect of the properties in suit. He contends that the principal document exhibit A. 1 on which reliance is placed by respondent 1 should be construed not as a permanent but as an annual lease; and according to him the contrary view taken by the High Court is not supported by the tenor of the document, and he also argues that in construing the said document the High Court has( not borne in mind relevant principles of law governing the powers of the manager of a Hindu religious institution. Let us then briefly consider the relevant documents bearing on the point. The principal document is exhibit A. 1. It purports to be a copy of the order passed by Mr. Wallace on December 31, 1806. It is addressed to the manager of the temple and it reads thus: "As the Government have taken charge of the pagoda salt pans and Sea Customs of Thopputhurai, belonging to the above temple, the sum of 1848 Pagodas shall be given to the temple annually in cash from the treasury being calculated on the average amount of 10 years ' revenue besides which every possible assistance will be given to the temple. " It would be noticed that there is no duration specified in the document, and prima facie it reads as if the Government had taken charge of the salt pans and Sea Customs permanently promising in return to pay to the temple the amount specified annually from year to year. In construing this document reference may be made to the previous correspondence that passed between the Collector and the Members of the Board of Revenue. It is not disputed that this correspondence can be considered for the purpose of construing the effect of the terms of exhibit A. 1. On July 17, 1806, a letter was addressed to the President and Members of the Board of Revenue in which the idea of acquiring this property was fully explained. In this letter in was stated that "it would be better to grant to the temple commutation in land because that would be more certain and permanent than ready money payment". In computing the compensation which may be paid to 92 the temple the accounts of the pagoda were examined. ,It was found that the pagoda enjoyed revenue from the duties levied at ports at Thopputhurai and Kodikarai. Ten years ' account showed that the average annual income in that behalf was. 283 Pagodas. To this amount was added the amount of magama or charitable and litigious fees and the total worked out at an average of 532 Pagodas. From this was deducted 46 Pagodas which was the average of charges and expenses incurred in collecting the port duties. Thus the net annual average revenue was 486 Pagodas. Then an account was made of the income received by the temple from salt manufacture in the salt pans and it was ascertained that an average income in that behalf would be Star Pagodas 1362. That is how the whole annual income was found to be 1848 Pagodas. It would thus be seen that elaborate calculations were made to determine the amount of compensation which should be legitimately paid to the temple for depriving the temple of the possession of its properties in question. It was then considered whether the commutation for the amount :.should be in land or in money, and, as we have already pointed out, a recommendation was made that payment of commutation in the form of land would be more certain and permanent. Thus the perusal of this document leaves no doubt that the property was intended to be acquired permanently for the purpose of manufacturing salt. It is on that basis that calculations were made and the amount of compensation determined. It appears that this proposal made by the Collector was not approved by the Government at Fort St. George. In the letter written by the Secretary to the Government on October 28, 1806, it was recommended that a payment should be made from the public treasury of a compensation for the loss which the pagoda had sustained by the introduction of salt monopoly in the Province of Tanjore not exceeding Star Pagodas 1848 per annum. The proposal thus made by the Government was accepted by the Board and its decision was communicated by the letter of November 17, 1806. It is in the background of this correspondence 93 that we have to decide the effect of the terms contained in exhibit A. 1. Thus considered there can be little doubt that though 'the property was not purchased outright it was taken charge of on a permanent basis for the purpose of manufacturing salt and compensation was determined on the same basis but made payable annually at the rate of 1848 Pagodas. There are, however, some other documents on which Mr. Sastri relies. An extract from the inam register prepared on November 27, 1862 (exhibit A. 18) has been pressed into service by the appellant. The main argument is that the relevant columns 16 to 20 which give particulars regarding the owners do not refer to the Company 's right under this permanent arrangement. If the transaction was a permanent lease, it is urged, the lessee 's rights would have been specified in the relevant columns. We are satisfied that this argument is not well founded. The main column deals with particulars regarding the owners. It also provides that if the inam was sub divided the name etc. of each sharer shall be entered in its columns. We are, therefore, not satisfied that the name of the permanent lessee was expected to be shown in this column. It is true that in determining the additional assessment on excess area payable by the temple the whole of the property is assumed to belong to the temple; but that is not inconsistent with the temple continuing to be the lessor of the suit property at all. There is no doubt that if the Company had become the lessee of the said suit property by a document duly executed in that behalf entries made in the inam register cannot change or affect the character of the said right. Therefore, in our opinion, there is nothing in exhibit A. 18 which militates against the case set up by respondent 1. Then Mr. Sastri has relied on exhibit A. 2 which is a title deed issued by the Inam Commissioner is favour of the temple. In this document the temple 's title to the Devadayam or pagoda inam village of Agastiyampalli is recognised and specific mention has been made of the porambokes in the said village. It is stated that the whole of the property is held for the support 94 of the pagoda in the village of Vedaranyam. What we have said about the extract from the Inam Register applies with equal force to this document. It appears that from 1806 when the Company took possession of the property until 1941 the appellant has allowed the Company and its successors to be in quiet enjoyment of the property on receipt of an annual compensation paid from year to year. In 1941 the factory officer wrote to the trustee of the appellant to let him know the name or the names of the revenue villages to which the area covered by the. salt factory was originally attached prior to the acquisition, and he enquired whether any compensation amount had been paid to the temple for the said acquisition. It is this letter which presumably started the appellant 's present claim. Soon after receiving this letter the appellant wrote to the factory officer on April 8, 1941 alleging that the property had been leased out to Government for the manufacture of salt for a monthly lease of Rs ' 350 or annually Rs. 4,200. The appellant thus set up a relationship of lessor and lessee between itself and respondent 1. Then the appellant moved the relevant authorities for appropriate relief on one ground or another. All its efforts to obtain possession of the property or even to have the amount of compensation enhanced failed and that led to the present dispute. The main argument which has been urged before us by Mr. Sastri is that in construing exhibit A. 1 we ought to bear in mind the limitations on the powers of the manager of the temple at the relevant time. Mr. Sastri has relied on the fact that the manager of a temple could not have entered into a transaction of permanent lease unless there was a compelling necessity so to do. A permanent lease amounts to an alienation of the property and would have to be justified as such. An annual lease, on the order hand, can be executed by the manager in his capacity as the manager and the same is treated as an act of prudent management. That, however, is not true about a permanent lease, and so in construing the document we should attribute to the manager the desire and intention to act within 95 his powers and not without them. In support of this argument Mr. Sastri has referred us to the decisions of the Privy Council in Maharanee Shibessouree Debia vs Mothooranath Acharjo (1), Nainapillai Marakayar vs Ramanathan Chettiar (2), and Palaniappa Chetty vs Deivasikamony Pandara (3). The argument is that a fair and reasonable rule of construction would be to treat the document as executed in pursuance of the legitimate authority available to the manager of the temple and not as one which is executed in breach of the said authority. This position cannot be and is not disputed. In the application of this rule to the present case, however, two relevant facts cannot be ignored. The first important fact is that after the execution of the document more than a century has elapsed; and so, as observed by the Privy Council in Bawa Magniram Sitaram vs Kasturbai Manibhai (4), "where the validity of a permanent lease granted by a shebait comes in question a long time (in the present case nearly 100 years) after the grant, so that it is not possible to ascertain what were the circumstances in which it was made, the Court should assume that the grant was made for necessity so as to be valid beyond the life of the grantor". In the present case more than a century has elapsed after the grant A as made, and so the principle laid down by the Privy Council in that case can well be invoked by respondent 1. Besides, it is common ground that under the relevant provisions of Regulation 1 of 1805 the manufacture and sale of salt was made subject to the immediate direction and control of the general agent appointed by the Government, and the said manufacture and sale as well as transit, export and import of salt, whether by Bear or by land, in the territory subject to the Presidency of Fort 'St. George was prohibited except on account of Government or with their express sanction. It was also provided that all salt manufactured, sold, conveyed, exported or imported, directly (1) (1869) 13 Moo. I.A. 270, 273, 275 (2) (1923) L. R. 51 I.A. 83, 97, 98. (3) (1917) L.R. 44 I.A. 147,155, 156. (4) (1921) L.R. 49 I.A. 54. 96 or indirectly, otherwise than is provided for in the said Regulation, shall be liable to seizure and confiscation. In other words, part of this property belonging to the temple on which salt was being manufactured became absolutely useless for that purpose as the temple could no longer manufacture, or permit the manufacture of, salt. Faced with this situation it is not at all unlikely that the manager of the temple was compelled to enter into an arrangement with the Company and secure for the benefit of the temple a sub stantial permanent income accruing from year to year. It is common ground that the whole of the property was marshy and the only use to which it could be profitably put was for the manufacture of salt, and that could no longer be done after Regulation 1 of 1805 was passed. That is why we think that even the test of the rule of construction on which Mr. Sastri relies can be said to be satisfied in the present case. Circumstanced as he was the then manager or trustee had no option but to enter into an agreement like the one which was evidenced by exhibit A. 1; thereby the manager provided for a recurring income to the temple and thus arranged for the upkeep of the temple, the worship of the idol and discharge his duties as trustee. We have already seen how the previous correspondence which preceded the execution of the document unambiguously shows that the intention of the Company was to take possession of the property on a permanent footing, and realising the limitations imposed by the Regulation the manager of the temple would also have wanted to give the property to the Company permanently and thereby create a permanent source of income for the temple. The subsequent conduct of the temple for over a century is consistent with the view that the temple knew that the property has been permanently given to the Company and is inconsistent with the present case that the lease is an annual lease. The payment and acceptance of the same uniform rent for over a century when so many political and other changes took place also support the same conclusion. The pleas set up by the appellant from stage 97 to stage in respect of its relationship with respondent in regard to the possession of this land have changed from time to time and that shows that the appellant was at paying to put forward a basis on which it could claim either possession or enhanced rent. The fact that respondent 1 is making large profits out of this property may explain the appellant 's desire to get some more share in the said income but that cannot assist the appellant if it has parted with the property permanently as early as 1805 oil the terms and conditions specified in exhibit A. 1. In our opinion, the High Court was right in coming to the conclusion that the transaction evidenced by exhibit A. 1 is a permanent lease and that respondent 1 is entitled to retain possession of the whole of the property on the terms and conditions specified in the said document. We must accordingly hold that the appellant 's claim either for possession or for enhancement of rent has been properly rejected by the courts below. In the result the appeal fails but there will be no order as to costs. Appeal dismissed.

The appellant Devasthanam had certain properties, granted to it in inam by the Rajas of Tanjore centuries ago, which com prised salt pans. After the passing of Regulation 1 of 1805 which prohibited manufacture of salt except on account of the Government or with their express sanction, the East India Company in 1806 took over possession of those properties and the agreement between the parties as recorded in the order passed on behalf of the Board of Revenue, was as follows, "As the Government have taken charge of the pagoda salt pans and Sea Customs of Thopputhurai, belonging to the above temple, the sum of 1848 Pagodas shall be given to the temple annually in cash from the treasury being calculated on the average amount of 10 years ' revenue besides which every possible assistance will be given to the temple." The previous correspondence between the Collector and the Board of Revenue showed that the properties were intended to be acquired permanently for the purpose of manufacturing salt and compensation was determined on that basis. From 1886 till 1941 the appellant allowed the company and its successors, the respondents 1 and 2, to be in quiet possession of the properties in dispute on receipt of the said annual compensation. Its case, negatived both by the trial Court as well as the High Court in appeal, was that the agreement represented a lease from year to year and it was contended on its behalf in this Court that in construing the document regard must be had to the limited powers of a manager of a Hindu Temple to alienate trust property and he must be held to have intended to act within his powers and not beyond them. Held, that the transaction in question was a permanent lease and the appeal must fail. Although it is indisputable that in construing a document executed by the manager of a Hindu temple the fair and reasonable rule would be to treat it as executed in pursuance of his legitimate authority and not in breach of it, that rule could have no application in the instant case, for the facts that more than a century had admittedly elapsed since the document in question had been executed and, further, that the then manager, 88 faced by the prohibition of the manufacture of salt by Regulation 1 of 1805, had no option, in the interest of the Devasthanam itself, but to enter into the agreement in order that he could provide for a recurring income to the temple, could not be ignored. Bawa Magniram Sitaram vs Kasturbai Manibhai, (1921) L.R.49 I.A. 54, applied. Maharanee Shibessouree Debta vs Mothoranath Acharjo, (1809) L.R. 13 Moo. I.A. 270, Nainapillai Marakayar vs Ramanathan Chettiar, (1923) L.R. 51. I.A. 83 and Palaniappa Chetty vs Deivasikamony Pandara, (1917) L.R. 44 I.A. 147, referred to.

il Appeals Nos. 469, 470,506, 507 and 529 to 534 of 1962. Appeals by special leave from the judgment and order dated December 18, 1961, of the Madhya Pradesh High Court in Misc. Petition Nos. 24, 29, 42, to 45, 58, 70, 95 and 213 of 1960. WITH Petitions Nos. 70 and 71 of 1962. Petition under article 32 of the Constitution of India for enforcement of Fundamental rights. Sachin Chaudhri, B. Sen, J. B. Dada chanji, O. C. Mathur and Ravinder Narain, for the appellants (in C. As. 469 and 470/62) and the Petitioners (in Petitions. Nos. 70 and 71 of 62). A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the respondent (in C. As. 469 470, 506 and 507 of 62), Respondents Nos. 1 and 3 (in C. As. 529 to 534/62) and Respondent No. 1 (in Petn. Nos. 70 and 71/62). B. Sen and I. N. Shroff, for the appellants (in C. As. 506 and 507/62). 175 N. C. Chatterjee, Y. section Dharmadhikaree and M. section Gupta, for the appellants (in C. As. 529 to 534 of 62). I. N. Shroff, for the respondents Nos. 2 and 4 (in C. As. 529 to 534 of 62). September 24. The judgment of the Court was delivered by GAJENDRAGADKAR, J. These ten appeals and two writ petitions have been placed for hearing together in a group, because they raise common questions of law. The appellants in these matters are all colliers holding mining leases under the Government of Madhya Pradesh for the extraction of coal from collieries situated in the Chhindwara District. The respondent, Janapada Sabha, Chhindwara, has issued notices against them calling upon them to pay coal tax " 'for coal manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the jurisdiction of the original Independent Mining Board for the said area It appears that the mining area in question was within the territorial limits of the Independent Mining Local Board which had the status and powers of a District Council under the Central Provinces Local Self Government Act, 1920 (hereinafter called the Act). The respondent Sabha is the successor of the said Mining Board and, therefore, claims to be entitled to continue the levy and recover the tax in question. On March 12, 1935, the Mining Board exercising its powers under section 51 of the Act, resolved to levy coal tax, and accordingly, the first imposition made by it received the sanction of the local Government on December 16, 1935, as per Notification No. 8700 2253 D VIII. This notification came 'into force from January 1, 1936. On December 16, 1935, the local Government notified the rules for the assessment and 176 collection of the tax which it had framed in exercise of the powers conferred on it by section 79 (1), clauses (xv), (xix) and (xxx). Rule 2 of these Rules provided that the tax shall be payable by every person, firm or company holding a mining lease for coal within the limits of the Independent Mining Local Board 's jurisdiction. Rule 3 provided that the tax shall be levied @ three pies per ton on coal, coal dust or coke manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of the Independent Mining Local Board. In 1943, the words " 'coke manufactured at the mines" were deleted from Rule 3 and the tax was confined to coal and coal dust. The rate thus prescribed was increased from time to time. On December 22, 1943, the rate was made 4 pies per ton; on July 29, 1946, it was made 7 Pies, per ton; and on July 1. 9, 1947, it was made 9 pies. The Mining Board continued to recover the tax at the said rates until the Act was repealed in 1948 and in its place was enacted the Central Provinces and Berar Local Self Government Act, 1948 (No. 38 of 1948). The respondent Sabha has now taken the place of the said Mining Board and has issued the notices against the several appellants, calling upon them to pay the coal tax for the different periods mentioned in the said notices. The appellants in Civil Appeals Nos. 469 and 470 of 1962 are : The Amalgamated Coalfields Ltd. and The Pench Valley Coal Co. Ltd. They are companies in operated under the Indian Companies Act, 1913, andor both have Shaw Wallace & Co., Ltd., as their Managing Agents. On August 23, 1958, notices were served on the two appellants calling upon them to pay Rs. 21,898/ 64 np and Rs. 11,838/9 np respectively as tax assessed @ 9 pies per ton from ,,January 1, 1958, to June 30, 1958: This tax was claimed in respect of coal which included coal despatched by the appellants outside the State of 177 Madhya Pradesh. The validity of these notices was challenged by the appellants in this Court by their Writ Petition 'No. 31 of 1959. On February 10, 1961, the said writ petition was dismissed by this Court and it was held that the notices served on them were valid (Vide The Amalgamated Coalfields Ltd. vs The Janapada Sabha, Chhindwara(1). On September 13, 1960 and March 2, 1961, two notices of demand were served on the appellants calling upon them to pay Rs. 1,16,776/25 nP. and Rs. 65,261/19 nP. respectively in regard to the tax assessed @ nine pies per ton on all coal despatched by the appellants from their collieries for the half years ending June 30, 1958. December 31, 1958, June 30), 1959, December 31 1959, June 30, 1960 and December 31, 1960. The appellants challenged the validity of these notices by a Writ Petition filed by them in the High Court of Madhya Pradesh on April 1.2, 1961 (No. 95 of 1961). Whilst the said writ petition was pending before the High Court, the appellants filed another writ Petition in the same High Court (No. 213 of 1961). By this writ petition, the appellants challenged the validity of notices issued against them on June 9, 1959, by which coal tax was demanded from them for a period between April 1, 1951 to December 31, 1957. This tax was levied in respect of coal despatched by the appellants outside the State of Madhya Pradesh. The amounts demanded were Rs. 1,92,144/66 nP. and Rs. 68,319/36 nP. respectively. These two petitions along with eight others were heard together by the High Court. So far as the appellants ' petitions were concerned, the High Court has held that the appellants ' claims were barred by res judicata by reason of the earlier decision of this Court in the case of the Amalgamated Coalfields Ltd. (1). The appellants then applied for and obtained special leave from (1) ; 178 this Court on April 23, 1962 and it is by special leave thus granted to them that they have come to this Court in Civil Appeals 469 & 470 of 1962. The appellants have also filed two Writ Petitions Nos. 70 & 71/1962 under article 32 of the Constitution. By these writ petitions, the two appellants challenged the validity of the notices served on them on Julie 9, 1959 as well as on September 13, 1960. The appellants ' case is that these notices are illegal and without jurisdiction and so, they want them to be quashed by an appropriate writ or order issued against the respondent in that behalf. Thus, the two appellants, the Amalgamated Coalfields Ltd., and the Pench Valley Coal Co. Ltd.,, arc concerned with the two appeals Nos 469 & 470/1962) and Writ Petitions 70 & 71/1962. The other appeals arise from the writ petitions filed in the High Court of Madhya Pradesh by the respective appellants which were tried along with the writ petitions filed by the Amalgamated Coalfields Ltd. & Anr. In dealing with these writ petitions, High Court has held that the decision of this Court is the case of Amalgamated Coalfields Ltd.(1) concludes the points raised by them in challenging the validity of the notices, and so, following the said decision, the High Court has dismissed all the said petitions. The appellants applied for and obtained special leave to come to this Court against the said decisions and it is with the special leave thus granted to them that these appellants have come before us. Civil Appeal No. 506 arises from the decision of the High Court of 'Madhya Pradesh dismissing the writ petition filed before it by the appellant, the Central Provinces Syndicate (P) Ltd. By its writ petition the appellant had challenged the validity of the notice served by the respondent calling upon it to pay arrears of the tax amounting to Rs. 20,776/88 nP. being arrears from April 1, 1951 to June 30, 1959. (1) ; 179 It appears that for the said period, the appellant had been taxed by the respondent, but the said tax was not imposed on coal which had been transported by the appellant outside the limits of the State of Madhya Pradesh. The respondent now sought to reopen the assessment levied against the appellant for that period by including a claim for tax in respect of coal sold by the appellant outside the limits of the State. The High Court has rejected the Writ Petition and that decision 'has given rise to Civil Appeal No. 506 of 1962. Civil Appeal No. 507 of 1962 arises from a writ petition filed by the appellants M/s. Kanhan Valley Coal Co. (Private) Ltd., in the High Court of Madhya Pradesh in which the validity of the notice issued by the respondent calling upon the appellants to pay the coal tax amounting to Rs. 10,970/ as arrears from April 1, 1951 to June 30, 1959 has been challenged. The High Court has dismissed the writ petition, and so, the appellants have come to this Court by their Appeal No. 507/1962. Civil Appeals Nos. 529 to 534 of 1962 similarly arise out of six writ petitions filed by the appellants M/s. Newton Chickli Collieries (P) Ltd. & five others in the High Court of Madhya Pradesh challenging the validity of the notices of demand served on them to recover by way of arrears coal tax for the periods mentioned in the notices in regard to coal sent by them outside the State of Madhya Pradesh for export. These writ petitions were dismissed by the High Court, and the appellants have, therefore, come to this Court by appeals Nos. 529 534/1962. That, in brief, is the genesis of the ten appeals and two writ petitions which have been grouped together for hearing in this Court. It will thus be seen that Civil Appeals Nos. 469 & 470/1962 and Writ Petitions Nos. 70 & 71/1962 raise a preliminary question about the applicability 180 of the doctrine of res judicata to writ petitions filed under article 226 or to petitions under article 32, whereas the said appeals and writ petitions as well as the other appeals raise an additional question about the validity of the notices issued against the respective appellants. We would, therefore, deal with civil appeals Nos. 469 and 4 70/1962 and Writ Petitions Nos. 70 and 71/1962. Our decision in these matters will govern the other appeals in this group. The first point which falls for our decision, in these appeals is one of res judicata. The High Court has held that the challenge made by the appellants against the validity of the demand notices issued against them by the respondent is barred by res judicata by virtue of the decision of this Court in the earlier case brought by the appellants themselves before this Court. The Amalgamated Coalfields Ltd.(1) Before dealing with this point it is necessary to refer to the said decision. In that case, the validity of the impugned notices was challenged on two grounds ; it was urged that the levy of the tax by the Independent Mining Board was invalid at the date of its initial imposition in 1935 and so, the respondent Sabha which was the successor of the said Mining Board could claim no authority to continue the said tax. This contention was based on the assumption that before the power conferred by section 51 of the Act could be exercised,, the previous sanction of the Governor General had to be obtained, or that there should be fresh legislation in that behalf. This Court held that the Act having received the assent of the Governor General, its validity cannot be challenged in view of the saving clauses in the proviso to section 80A (3) and section 84(2) of the Government of India Act, 1915. That being so, it was not open to any party to suggest that any subsequent amendments of the Government of India Act could affect the continued validity and operation of the Act. The second contention raised was one of construction. It was urged (1) ; 181 that on a fair construction of section 51, the coal tax was excluded from the purview of the local authority. The This argument was based on the opening clause of section 51 which provided that its provisions would operate subject to the provision of any law or enactment for the time being in force. It was suggested that this clause took in the provisions of section 80A(3) of the Government of India Act read with the Scheduled Taxes Rules framed under that section, but this argument was also rejected. It appears that at the hearing of the petition, the appellants also attempted to take an additional point against the validity of the. impugned notices on the ground that the rate of tax which had been increased from 3 pies to 9 pies per ton was invalid. The appellants ' case was that this increase was effected after the commencement of the Government of India Act, and so, it was invalid. This argument was not considered by the Court, because it was not even hinted in the petition filed by the appellants and the Court thought that it would not be proper to permit the appellants to raise that point at that stage. That is how the appellants ' challenge to the validity of the impugned notices served on them on August 23, 1958 was repelled and the writ petition filed by them in that behalf was dismissed. It appears that the authority of the Janapada Sabha to levy the impost under s.51 of the Act was challenged on another ground in the case of Ram Krishna Ram Nath v, Janapad Sabha (1). This time the attack against the competence of the janapad Sabha proceeded on the ground that in repealing the Act of 1920, the subsequent Act of 1948 had not provided for the continuance of the said power in the janapad Sabhas which were the successors of the Independent Mining Boards. Section 192(c) purported to provide that all rates, taxes and cesses due to the District Council, Local Board or Independent Local Board shall be deemed to be due to the Sabha to (1) [1962] Supp. 3 S.C.R. 70. 182 whose area they pertain. But it was obvious that this clause could apply to, and save, only rates, taxes and cesses already due; it did not authorise the imposition of fresh cesses, taxes or rates in future. Having realised that the relevant provision did not save future imposts, an amending Act was passed in 1949 by which the said saving was extended to include the right of the janapad Sabhas to continue the levy of the impugned tax and this amendment was made retrospective f from June 11, 1948, when the parent Act had come into force. In the case of Ram Krishna (1) the validity and effectiveness of this amendment of 1949 was challenged. It was thus a basic challenge to the power of the janapad Sabhas to levy any impost on the ground that the subsequent amendment was invalid. This Court repelled the said challenge and held that the retrospective operation of the amendment was valid. According to this decision, the Provincial Legislature was competent to legislate for the continuance of the tax, provided the relevant conditions of s.143(2) of the Government of India Act 1935 were satisfied. These conditions required that the tax should be one which was lawfully levied by a local authority for the purposes of a local area at the commencement of Part III of the Government of India Act; that the identity of the body that collects the tax, the area for whose benefit the tax is to be utilised and the purposes for which it is to be utilised continue to be the same, and that the rate of the tax is not enhanced nor is its incidence materially altered, so that, in substance, it continues to be the same tax. Since these tests were satisfied by the impost levied by the janapad Sabha, it was held that the impost was valid and that the retrospective amendment of s.192 was effective. The present proceedings constitute a third challenge to the validity of the notices issued by the janapad Sabha, and as we have already seen, the (1) [1962] Supp. 3 S.C.R. 70. 183 challenge made by the appellants by their writ petitions before the High Court has been repelled on the preliminary ground that it is barred by res judicata. In that connection, the first question to consider is whether the general principle of res judicata applies to writ petitions filed under article 32 of the Constitution. This question has been considered by a special Bench of this Court in the case of Pandit M. section M. Sharms vs Dr. Shree Krishna Sinha (1). Chief justice Sinha, who delivered the unanimous opinion of the Court, has answered this question in the affirmative. In that connection, the learned Chief justice has referred to an earlier decision of this court in Raj Lakshmi Dasi vs Banamali Sen, (2) where it has been laid down that the principle underlying res judicata is applicable in respect of a question which has been raised and decided after full ' contest, even though the first Tribunal which decided the matter may have no jurisdiction to try the subsequent suit and even though the subject matter of the dispute was not exactly the same in the two proceedings. It ought to be added that the Tribunal which had tried the first dispute in that case was a Tribunal of exclusive jurisdiction. Then the points raised on behalf of the petitioner Sharma were considered and it was noticed that, in substance, they were the same points which had been agitated before this Court on an earlier occasion and had been rejected. "In our opinion", said the judgment, "the questions determined by the previous decision of this Court cannot be reopened in the present case and must govern the rights and obligations of the parties which as indicated above, are substantially the same. " Thus, this decision shows that even petitions filed under article 32 are subject to the general principle of res judicata. The question about the applicability of the doctrine of res judicata to the petitions filed under (1) (2) ; 184 article 32 came before this Court in another form in Daryao vs The State of U. P. (1), and in that case it has been held that where the petition under article 226 is considered on the merits as a contested matter and dismissed by the High Court, the decision pronounced is binding on the parties, unless modified or reversed by appeal or other appropriate proceedings under the Constitution, and so, if the said decision was not challenged by an appropriate remedy provided by the Constitution, a writ petition filed in respect of the same matter would be deemed to be barred by res judicata. Therefore, there can be no doubt that the general principle of res judicata applies to writ petitions filed under article 32 or article 226. It is necessary to emphasise that the application of the doctrine of res judicata to the petitions filed under article 32 does not in any way impair or affect the content of the fundamental rights guaranteed to the citizens of India. It only seeks to regulate the manner in which the said rights could be successfully asserted and vindicated in courts of law. The question in the present appeals, however, is somewhat different. The notices which are challenged by the appellants in the present proceedings are in respect of the tax levied for a period different from the period covered by the notices issued on August 23, 1958 which were the subject matter of the earlier writ proceedings (The Amalgamated Coalfields Ltd. ( 2 ) ) . Where the liability of a tax for a particular year is considered and decided, does the decision for that particular year operate as res judicata in respect of the liability for a subsequent year ? In a sense, the liability to pay tax from year to year is a separate and distinct liability; it is based on a different cause of action from year to year, and if any points of fact or law are considered in determining the liability for a given year, they can generally be deemed to have been considered and decided in a collateral and incidental way. The (1) ; (21 ; 185 trend 'of the recent English decisions on the whole appears to be, in the words of Lord Radcliffe, ',,that if is more in the public interest that tax and rate assessments should not be artificially encumbered with estoppels (I am not speaking, of course, of the effect of legal decisions establishing the law, which is quite a different matter), even though in the result, ' some expectations may be frustrated and some time wasted." (vide Society of Medical Officers of Health vs Hope Valuation Officer (1)). The basis for this view is that generally, questions of liability to pay tax are determined by Tribunals with limited jurisdiction and so, it would not be inappropriate to assume that if they decide any other questions incidental to the determination of the liability for the specific period, the decisions of those incidental questions need not create a bar of res judicata while similar questions of liability for subsequent years are being examined. In that connection, it would be interesting to refer to four English decisions. In the case of Broken Hill Proprietary Co. Ltd. and Municipal Council of Broken Hill, (2) the question which fell for decision was how the average annual value of a mine for rating purposes had to be determined, and it was held by the Privy Council that the said value was to be ascertained by dividing the value of the output during the three years by three, not by multiplying it by 205 and dividing it by 365. One of the points which the Privy Council had to consider was whether a contrary decision reached by the High Court of Australia between the parties as to the valuation for a previous year, operated as res judicata. In rejecting the plea that the principle of res judicata applied, Lord Carson. observed that ""the decision of the High Court related to a valuation and a liability to a tax in a previous year, and no doubt as regards that year, the decision could not be disputed. The present case relates to a new question, viz., the valuation for a different year and the liability for that year. It is not (1) , 563, (2) 186 eadem questio, and therefore, the principle of res judicata cannot apply." (p. 100). It, however, appears that in the same year, the Privy Council came to a somewhat contrary decision in the case of Hoystead vs Commissioner of Taxation.(1) In that case, the question which arose for decision was about the deduction claimable under ther elevant provision of the Land Tax Assessment Act, 1916 (Aust.) Upon the assessment for 1919 20, the Commissioner allowed only one deduction of 5,000 lbs. contending that the beneficiaries were not joint owners within the meaning of the Act. The case was then stated to the full Bench which upheld the Commissioner 's view and rejected the argument that the Commissioner was estopped from coming to that conclusion in view of his decision in a previous year. When the matter went before the Privy Council, it reversed the decision of the Full Court, because it held that the Commissioner was estopped, even though in the previous litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, and the Privy Council thought that the matter so admitted was fundamental to the decision then given. It would thus be seen that this decision applied the principle of res judicata even where there was no express decision on the point, but the point had been conceded in the earlier proceedings. In 1960, the House of Lords had occasion to consider this question in the case of Society of Medical Officer of Health (2). We have already quoted one statement of 'the law from the speech of Lord Radcliffe in that case. In that case, the main reason given for repelling the application of the principle of res judicata in rating cases, was that the jurisdiction of the Tribunal which deals with those cases is limited, in that its function begins with and ends with deciding the assessment or liability of a person for a terminable period. Besides, it was (1) (2) , 563. 187 held that the position of a valuation officer is that of a neutral official charged with the recurring duty of bringing into existence a valuation list, and he cannot properly be described as a party so as to make the proceedings a lis inter partes. In coming to the conclusion that the doctrine of res judicata would not apply in such cases, Lord Radcliffe was influenced by the consideration that if decisions in rating cases are to be treated as conclusive for all time that Would be to impose a needlessly heavy burden upon the administration of rating (p.566). This decision purported to approve of the view taken in the case of the Broken Hill Proprietary Co. Ltd.(1) and to distinguish the view taken in the Hoystead case. (2) Lord Radcliffe had occasion to return to the same subject again in Gaffoor vs Income tax Commissioner. (3) Speaking for the Privy Council, Lord Radcliffe considered the problem of the application of res judicata to taxation cases, examined it in detail and came to the conclusion that the said doctrine did not apply to tax cases in the sense that the decision for the levy of a tax for one year does not operate as res judicata in dealing with the question of a tax for the subsequent year. On this occasion, emphasis was not placed so much on the limited nature of the jurisdiction of the Tribunal that deals with tax cases, but it was held that even if the matter goes to a High Court on a statement of the case, the decision of the High Court would also not create a bar of res judicata in dealing with the tax claim for a subsequent year. " 'The critical thing," said Lord Radcliffe, " 'is that the dispute which alone can be determined by any decision given in the course of these proceedings is limited to one subject only, the amount of the assessable income for the year in which the assessment is challenged. " He, no doubt, recognised that in the process of arriving at the necessary decision, it was likely that the consideration of questions of law turning upon the construction of the ordinance or of other statutes or (1) (2) , (3) [1961] 2 W.L.R.794. 188 upon the general law, may be involved, but he thought that the decision of those questions should be treated as collateral or incidental to what is the only issue that is truly submitted to determination (pp. 800 801). This decision would, therefore, support the appellants ' contention that the High Court was in error in dismissing their writ petitions on the preliminary ground that they were barred by res judicata. In considering this question, it may be necessary to distinguish between decision on questions of law which directly and substantially arise in any dispute about the liability for a particular year, and questions of law which arise incidentally or in a collateral manner, as Lord Radcliffe himself has observed in the case of the Society of Medical Officers of Health, (1) that the effect of legal decisions establishing the law would be a different matter. If, for instance, the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High Court or brought before this Court and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as res judicata against the assessee for a subsequent year. That, however, is a matter on which it is unnecessary for us to pronounce a definite opinion in the present case. In this connection, it would be relevant to add that even if a direct decision of this Court on a point of law does not operate as res judicata in a dispute for a subsequent year, such a decision would, under article 141, have a binding effect not only on the parties to it, but also on all courts in India as a precedent in which the law is declared by this Court. The question about the applicability of res judicata to such a decision would thus be a matter of merely academic significance. In the present appeals, the question which arises directly for our decision is : does the principle (1) , 563. 189 of constructive res judicata apply to petitions under article 32 or article 226 where the dispute raised is in respect of a year different from the year involved in a prior dispute decided by this Court ? We have already noticed the points actually decided by this Court against the appellants on the earlier occasion (vide The Amalgamated Coalfields Ltd.(1)). One of the points sought to be raised was in regard to the validity of the increase in the rate of tax from 3 pies to 9 pies per ton; and since this point had not been taken in the petition and relevant material was not available on record, this Court refrained from expressing any opinion on it. The appellants contend that the order passed by this Court refusing permission to the appellants to raise this point on the earlier occasion does not mean that this Court has decided the point on the merits against the appellants; it may mean that the appellants were given liberty to raise this point later: but even otherwise, the point has not been considered and should not be held to be barred by constructive res judicata . It is significant that the attack against the validity of the notices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion. It is not as if the same ground which was urged on the earlier occasion is placed before the Court in another form. The grounds now urged are entirely distinct, and so, the decision of the High Court can be upheld only if the principle of constructive res judicata can be said to apply to writ petitions filed under article 32 or article 226. In our opinion, constructive res judicata which is a special and artificial form of res judicata enacted by section 11 of the Civil Procedure Code should not generally be applied to writ petitions filed under article 32 or article 226. We would be reluctant to apply this principle to the present appeals all the more because we are dealing with cases where the impugned tax liability is for different years. In dismissing the appellants ' petitions on the ground of res judicata, the High Court has no doubt referred to (1) ; 190 article 141 under which the law declared by this Court is binding on all Courts within the territory of India. But when we are considering the question as to whether any law has been declared by this Court by implication, such implied declaration, though binding must be held to be subject to revision by this Court on a proper occasion where the point in question is directly and expressly raised by any party before this Court. Therefore, we are inclined to hold that the appellants cannot be precluded from raising the new contentions on which their challenge against the validity of the notices is based. The first. ground urged by the appellants on the merits is that the levy authorised to be imposed by the Act and the Rules framed thereunder violates the fundamental rights guaranteed to the citizens under article 19 (1) (f) of the Constitution, and in support of this Arguments reliance is placed on the decision of this Court in Kunnathat Thathunni Moopil Nair vs The State of Kerala (1). In that case, the impugned Act was struck down because it suffered from several serious infirmities; it was confiscatory in character and its provisions in regard to the levy of the impost were so arbitrary and unreasonable that the Court took the view that the Legislature had completely ignored the legal position that the assessment of a tax on person or property was at least of a quasi judicial character. This conclusion was based on the examination of the relevant statutory provisions. in the present case, we are not satisfied that this decision can assist the appellants at all, because the nature of the statutory provisions and the Rules framed under the Act in the present appeals is entirely different. At this stage, it is necessary to refer to the relevant statutory provisions and the Rules. Section 51 of the Act (which, in substance, corresponds to section 90 of the Act of 1948) reads thus (1) ; 191 "51. (1) Subject to the provisions of any law or enactment for the time being in force, a District Council may, by a resolution passed by a majority of not less than two thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50. (2) The first imposition of any tax, toll or rate under sub section (1) shall be subject to the previous sanction of the Provincial Government. x x x X" Sub section (3) and the proviso are not relevant for our purpose. Then we go to section 79 which confers power on the Provincial Government to make Rules. Section 79 (1)(xv) is relevant for our purpose. It provides that : "The Provincial Government may make rules consistant with this Act and with reference, if necessary, to the varying circumstances of different local areas, as to the assessment and collection of the cases and rates specified in sections 48, 49 & 50 and of any tax, toll or rate imposed under section 51, as to the maximum amounts or rates at which any of them may be imposed, as to the prevention of evasion of assessment or payment thereof, as to the agency by which they shall be assessed and collected, and as to the manner in which account thereof shall be rendered by District Councils. " In pursuance of the powers conferred on the local Government by section 79, rules have been framed on December 16, 1935. Rules 3 to 10 deal with the question of the impost of tax and provide how decisions made in that behalf by appropriate authorities 192 become final. Rule 3 prescribed the rate at 3 pies per ton, Rule 4 provides that the figures reported by the concessionaires and the Railway companies half yearly to the Dy. Commissioner, shall be the basis for the assessment of the tax. Under Rule 5, every mining lessee has to submit a statement half yearly. On receipt of the statement, the assessment has to be made by the Chairman of the Independent Mining Local Board under Rule 6. A notice of demand follows under rule 7. Fifteen days ' period is given for filing objections under Rule 8. Rule 9 provides for the Consideration and disposal of the objections, and Rule 10 lays down that if no objection is filed, the Chairman 's assessment shall be final, if any objection is received, the Independent Mining Local Board 's decision shall be final and shall be communicated to the assessee as soon as possible. It would thus be seen that the scheme of these Rules provides ample opportunity to the assessees to object to the notice of demand served on them and in fact, the demand notices are substantially based on the figures supplied by the railway companies and the concessionaires and the statements submitted by the assessees themselves. Therefore, it would be idle to suggest that the impost of the tax authorised by the relevant statutory provisions and the Rules is a capricious administrative or executive affair and so, should be held to violate article 19(1)(f) of the Constitution. Then it is urged that the demand of the tax @ 9 'es per ton is invalid, because it is inconsistent with Rule 3 which has prescribed the maximum rate permissible to be levied against the assessees. We have already noticed that section 79(1)(XV) authorised the making of a rule as to the maximum amounts or rates at which any of the articles can be taxed. This was introduced by an amendment made in 1933 by C.P. Act VII of 1933, and so, the argument is that Rule 3 which provides that the tax shall be levied @ 3 pies per ton must be deemed to pro 193 vide for the maximum rate which can be levied and that is 3 pies per ton and no more. This argument is no doubt well founded., because Rule 3 will have to be read in the light of the power conferred on the local Government by section 79(XV) and that would mean that the rate of 3 pies per ton has been prescribed by the Rule of the maximum rate permissible. But this argument ignores the fact that this Rule has been subsequently deleted by a notification on September 6, 1943 published in the Government Gazette on September 10, 1943. When this notification was cited before us, the appellants conceded that the argument based on the construction of Rule 3 was not available to them. Therefore, the contention that Rule 3 prohibits the levy at a rate higher than 3 pies cannot succeed since the Rule itself has been subsequently deleted and was not a part of the Rules at the relevant time when the impugned notices were issued. It is then argued that the impost of the tax at the rate of 9 pies per ton is not valid, because it does not comply with the requirements of section 51(2) of the Act, and that raises the question of the construction of the said section. Section 51(1) authorises the imposition of the tax, provided, of course, the procedure prescribed by it and the requirements laid down by it are satisfied. Sub Section (2) then lays down that the first imposition of any tax shall be subject to the previous sanction of the Provincial Government. The appellants contend that in the context, the "first im position" means not only the first imposition in the sense of an initial imposition, but it includes every fresh imposition levied at an increased rate. On the other hand, the respondent Sabha contends that the first imposition means only the initial levy or impost and cannot take in subsequent imposts or levies. 'In this connection, it is relevant to remember that sub section (2) was added by the same Amending Act by which section 79(XV) was amended, and 194 so, it would not be unreasonable to assume that when the legislature gave power to the local Government to prescribe by rules the maximum rates permissible to be levied, it introduced sub section (2) in section 51 because it was thought necessary that whenever the rates were changed, the imposition of the tax at the increased rates should receive the previous sanction of the Government. If the respondent 's construction is accepted, it would mean that the respondent should obtain the previous sanction of the Government at the initial levy and thereafter may go on increasing the rate of the levy to any extent without securing the sanction of the Government in that behalf. Now that Rule 3 has been deleted and no maximum has been or can be prescribed by the Rules, it would be unreasonable to hold that the respondent is given an unfettered and unguided authority to levy the impost in question at any rate it likes. Since no ceiling has been placed by the Rules in that behalf, it would, we think be fair to hold that if the rates are increased and levy is sought to be imposed on the altered rates, the imposition of the levy at these altered rates should be deemed to be included in the express on "first imposition" under section 51(2). We are, therefore, inclined to accept the appellants ' construction of section 51(2). That being so, it is necessary to enquire whether the imposition of the tax @ 9 pies has received the previous sanction of the local Government. During the course of his arguments, Mr. Sastri for the respondent attempted to suggest that sanction had been obtained for the increase in the rates from time to time and a typed summary of the notifications issued in that behalf was supplied to us at the time of arguments. This summary refers to the three increments made in 1943, 1946 and 1947 respectively to which we have already referred. The summary read as if the increments had been sanctioned by the State Government. But Mr. Sachin Choudhury for the appellants contended that the 195 summary supplied by the respondent was incomplete and inaccurate and that the examination of the Gazette in which the notifications were published, would show that the amendments in the rates had been made not with the previous sanction of the Government, but by the Mining Local Board itself. Two of these notifications were then produced before us by the respondent, and they supported the conten tion made by Mr. Choudhury. Therefore, the argument that the imposition @ 9 pies per ton has received the sanction of the Government must fail, and so, the impugned notices which seek to recover the tax from the appellants @ 9 pies per ton must be held to be invalid The respondent is entitled to levy tax only @ 3 pies per ton because that levy has received the sanction of the Government, but if the respondent intends to increase the rate of the said tax, it must follow the procedure prescribed by s.51(2), provided of course, it is open to the respondent to increase the said tax. There is yet another point on which the appellants are entitled to succeed, and that has reference to the fact that the respondent is seeking to reopen some of the assessments made by it against the appellants. The argument is that once an assessment is made for a specific period, it becomes final and it is not open to the respondent to demand additional amount by way of tax in respect of the said period. The genesis of the tax is somewhat interesting. It appears that roads were constructed by the Independent Mining Local Board at enormous cost at the request of the Mining interests and even debt had to be incurred by the Board for completing the work of the construction of roads. Since the mining companies received substantial benefit from these roads, the Legislature thought of levying a tax on coal, and that is the origin of the tax. When the first notification was issued on December 16, 1935 it authorised and sanctioned the imposition by the Independent 196 Mining Local Board at Chhindwara in the Chhindwara District "of a tax at 3 pies per ton on coal, coal dust or coke, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail, within the jurisdiction of the Independent Mining Local Board. " This tax was recovered by the Board and thereafter by the respondent in respect of coal whether sold inside the district of Chhindwara or sold outside the district of Chhindwara or even outside the State of Madhya Pradesh. In other words, the total coal produced by each mining lease holder substantially came to be taxed. But after the Constitution came into force, doubts arose as to whether article 286 of the Constitution did not preclude the respondent from recovering tax in respect of coal exported out of the State of Madhya Pradesh, and in view of the advice given to the respondent by the Government of Madhya Pradesh, the respondent did not collect the tax in respect of coal which was exported by rail outside the State of Madhya Pradesh from about 1952. The respondent wanted to consult legal opinion on this point, but the State Government refused permission to the respondent to incur expenditure in that behalf. Subsequently however, this question came to be decided by the High Court of Madhya Pradesh in a writ petition filed by M/s. Newton Chickli Collieries (Pvt. ) Ltd. (No. 265 of 1957). The High Court held that the tax levied by the janapada Sabhas under s.51 of the Act did not amount to a sales tax nor to an excise duty and so, the respondent thought that it could levy tax even on coal exported by rail outside the State of Madhya Pradesh. In fact after this judgment was pronounced by the High Court on August 6, 1958, the Provincial Government withdrew its instructions to the respondent not to levy tax on exported coal. That is how the respondent has issued notices against the appellants in respect of coal exported by rail out of the State of Madhya Pradesh in regard to the years for which assessment has already been levied against the 197 appellants for the coal not so exported, and the contention of the appellants is that this reopening of the assessment is not permissible under the Rules. This contention appears to be well founded. We have already seen the scheme of the Rules and we have noticed that Rule 10 provides that if no objection is filed, the Chairman 's assessment shall be final and if an objection is received, the decision of the Mining Board would be final. In other words, the scheme clearly provides that at the end of each six monthly period, the tax has to be assessed, notices to be issued to the assessee, his objections to be considered and the tax to be ultimately determined in the light of the decision on the said objections; and under Rule 10, the two decisions specified therein become final. It may be that the Rules do not prescribe any limitation within which these steps have to be taken by the respondent for each period, but that is another matter. In view of the provisions of Rule 10, it is difficult to hold that the respondent is entitled to reopen assessments already made and rendered final under the said Rule. There is no other provision for reopening assessment as we have under sections 34 & 35 of the Indian Income Tax Act, and so,. the respondent is not justified in issuing notices for the years which arc covered by assessment orders already passed. The finality provided for by Rule 10 will work as much against the respondent as against the assessees. In support of the appeals, another argument was sought to be raised against the increase of the rates. It was urged that the tax is in the nature of an excise duty or a sales tax and, therefore, any increase in the said tax beyond the limit of 3 pies the continuance of which has been saved by the provisions of article 143 of the Government of India Act, 1935 and article 277 of the Constitution will be invalid. This argument is based on the terms used 198 in the notification of December 16, 1935. Since coal is described as manufactured at the mines, the argument is that it is in the nature of an excise duty and since the notification also refers to coal sold for export by rail or sold otherwise than for export by rail, it is ' argued that it is a sales tax. On the other hand, the respondent contends that it is neither a sales tax nor an excise duty and as such, the rate can be increased subject, of course, to the requirements of section 51 (2) of the Act. It appears that by notification issued on September 6, 1943, the preamble of the Rules was modified by substituting for the words " 'coal, coal dust or coke" by "coal and dust coal" and by deleting the words " 'manufactured at the mines". Curiously enough, these amendments have not been made in the original notification itself. We have already noticed that this latter notification deleted Rule 3. Some arguments were urged before us by learned counsel on both sides as to the effect of this notification which modified the preamble to the Rules. We do not, however, think it necessary to consider these arguments in the present appeals because of our conclusion that the impugned notices levying the tax @ 9 pies per ton are invalid for two reasons: the increase in the rates has not been sanctioned by the State Government under section 51 (2) and an attempt to recover at the increased rate the tax for the years already covered by assessment orders passed in that behalf, is barred by Rule 10. The result is, the appeals and the writ petitions are allowed and an appropriate direction or order is issued restraining the respondent from recovering the tax at a rate higher than 3 pies per ton and also restraining the respondent from recovering any additional tax in respect of the years for which tax has already been assessed against the appellants. The same will be the order in the other companion appeals. The 199 appellants will be entitled to their costs, but one set of bearing fees will be taxed. Appeals and writ petitions allowed.

The 1st appellant in the first batch of appeals had filed a writ petition in this Court challenging the notices calling upon him to pay the tax of 9 pies per ton on coal including coal despatched outside the State of Madhya Pradesh on two grounds, namely, that the levy of the tax by the Independent Mining Board was invalid at the date of its initial imposition and, 173 therefore, the respondent Sabha which was the successor of the Mining Board could not continue the levy and also that on a proper construction of section 51 of the Act, the levy could not be made. Another point namely, the increase in the rate of tax from the original 3 pies to the 9 pies per ton at which the tax was demanded was illegal was sought to be canvassed but was not allowed to be argued by the Court as it had not been raised in the petition. The writ petition was rejected. The appellant challenged the levy of the tax for the further periods byway of a writ petition before the High Court of Madhya Pradesh on grounds distinct and separate from those which had been rejected by this Court. The High Court dis missed the writ petition on the ground that it was barred by res judicata by reason of the earlier judgment by this Court. In the case of the other appellants the High Court held that the matter was also concluded on the authority of the decision of this Court. The appellants in the first batch of appeals came by special leave and also filed writ petitions challenging the validity of the levy. Held, that while the general principle of res judicata applies to writ petitions under article 32 and article 226 of the Constitution, in its application to article 32 of the Constitution, the doctrine only regulates the manner in which the fundamental rights could be successfully asserted and does not in any way impair or affect the content of the fundamental rights. Pandit M.S.M. Sharma vs Dr. Shree Krishna Sinha, [1961] 1 section 0. R. 96, Raj Lakshmi Dasi vs Banamali Sen, [1953] section C. R. 154 and Daryao vs State of U.P., ; , referred to. Constructive res judicata was a creature of statute and its application could not be extended to other proceedings particularly those questioning tax liability for different years. Held, further, that the law declared by the Supreme Court which is binding under article 141 of the Constitution of India is that which has been expressly declared and any implied declaration though binding was subject to revision by this Court when the point was subsequently directly and expressly raised before this Court. Held, further, that the procedure of assessment of tax authorised by the relevant statutory provisions and the Rules could not be said to be a capricious administrative or executive affair so as to violate article 19(1) (f) of the Constitution. 174 Kunnathat Thathunni Moopil Nair vs State of Kerala, ; , distinguished. As the Rule which prescribed the maximum rate had itself been deleted it could not be said that there had been a levy in excess of the maximum prescribed. As neither the Act nor the Rules prescribed a ceiling on the levy, the expression "first impositions occurring in section 51(2) would include every increase of the levy after its initial imposition and the increased levy would require the previous sanction of the Local Government and such sanction not being there, the levy at the rate of 9 pies per ton was illegal. Considering the nature of the tax and the periods for which it was assessed and in the absence of any provision, the assessment once made by r. 10 was final and there could be no re assessment.

Appeal No. 82 of 1957. Appeal from the judgment and decree dated April 4, 1955, of the Calcutta High Court in Appeal from Appellate Decree No. 1224 of 1953. G. section Pathak and D. N. Mukherjee, for the appellant. H. N. Sanyal, Additional Solicitor General of India and P. K. Chatterjee, for the respondents. February 10. The Judgment of the Court was delivered by SHAH, J. Of the premises relating to which this dispute arises No. 5, Raja Rajkissen Street, Calcutta the respondents are the owners and the appellant was a contractual tenant from June 15, 1917, till June 15, 1947, under three successive tenancies for 10 years each. Under the first tenancy, the appellant paid rent at the rate of Rs. 84,15,0,per month, under the second tenancy at the rate of Rs. 180 per month 815 and under the third tenancy at the rate of Rs. 225 per month. The tenancy was in respect of buildings used for manufacturing " tin canisters " and open land. On September 30, 1946, the Governor of Bengal issued the Calcutta Rent Ordinance, V of 1946, making certain provisions for control of rent of premises in the town of Calcutta. By section 12 of the Ordinance, it was provided in so far as it is material that notwithstanding, anything contained in the Transfer of Property Act, the Presidency Small Cause Courts Act or the Indian Contract Act, no order or decree for the recovery of possession of any premises shall be made as long as the tenant pays rent to the full extent allowable by the Ordinance and performs the conditions of the tenancy. By the proviso, the landlord was, notwithstanding the protection granted entitled, if the conditions specified therein were fulfilled, to obtain possession of the premises. This Ordinance was replaced by Act I of 1947 which contained substantially the same provisions. By the West Bengal Act V of 1948, the provisions of Ordinance V of 1946 and Act I of 1948, were continued. Thereafter on December 1, 1948 the West Bengal Premises Rent Control (Temporary Provisions) Act XXXVIII of 1948 was brought into operation and by this Act, the West Bengal Act V of 1948 was repealed, but the protection granted to the tenants was con tinued. This Act was repealed by the West Bengal Premises Rent Control Act, 1950, and by section 12 of the latter Act protection to tenants, including tenants whose tenancies had expired, against eviction was granted by prohibiting courts from passing decrees or orders for recovery of possession of any premises in favour of landlords. It was provided by that Act that the landlord shall be entitled to obtain a decree in ejectment, inter alia, where the premises are reasonably required by, him either 1 for the purpose of building or rebuilding or for his own occupation. By letter dated May 15, 1957, the respondents called upon the appellant. to vacate and deliver possession on the expiry of the period of tenancy. Possession was however not delivered by the appellant 816 and he continued to pay the stipulated amount and the same was accepted by the respondents. In an application under section 9 of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1948, the Controller fixed the standard rent of the premises at Rs. 455 per month. After the enactment of the West Bengal Premises Rent Control Act, 1950, another application was submitted by the appellant and the standard rent was reduced to Rs. 247,8,0. On October 10, 1950, the respondents served a notice upon the appellant requiring him " to quit, vacate and deliver possession of the premises occupied ", which the appellant was described as holding as " monthly tenant ", on the expiry of the 31st of Chaitra, 1357 B. section, i.e., April 14, 1951. The ground for eviction, it was claimed, was that the premises were reasonably required by the landlords for putting up now buildings thereon. The appellant having failed to vacate the premises, the respondents sued in the Court of Small Causes, Calcutta, for a decree in ejectment. The Court of Small Causes decreed the suit filed by the respondents. In appeal to the Special Bench, Court of Small Causes, the decree passed by the court of first instance was reversed. The appellate court held that by acceptance of rent after determination of the tenancy in June, 1947, the appellant continued to be " a tenant holding over " and as the purpose of the tenancy was manufacturing, it could be determined only by a notice of six months, expiring with the year of tenancy and as no such notice was served, the tenancy was not determined and the suit was liable to fail. In appeal to the High Court of Judicature at Calcutta, the decree passed by the Special Bench was reversed and the decree passed by the court of first instance was restored. With certificate of fitness under article 133(1)(c) of the Constitution this appeal is preferred by the appellant against the order of the High Court. The contractual tenancy in favour of the appellant was determined by efflux of time on June 15, 1947, and since that date there has been between the parties no fresh contractual tenancy. The respondents were, 817 it appears, anxious to obtain possession of the premises let out to the appellant, but they were unable to obtain assistance of the court in view of the protection afforded to the appellant by the successive rent control Acts. In the meanwhile, the appellant continued to pay every month amounts equal to the contractual rent, and later the rent declared to be the statutory rent. Does the acceptance of the amounts paid by the appellant confer upon him the right of a tenant holding over within the meaning of section 116 of the Transfer of Property Act? Section 116 of the Transfer of Property Act in so far as it is material provides that if a lessee of property remains in possession thereof after the determination of the lease granted to him and the lessor accepts rent from the lessee or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year or from month to month according to the purpose for which the property is leased as specified in section 106. It is, however, well settled that where a con tractual tenancy to which the rent control legislation applies has expired by efflux of time or by determination by notice to quit and the tenant continues in possession of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord has assented to a new contractual tenancy. It was observed by B. K. Mukherjee, J. (as he then was), in Kai Khushroo vs Bai Jerbai (1): " On the determination of a lease, it is the duty of the lessee to deliver up possession of the demised premises to the lessor. If the lessee or a sub lessee under him continues in possession even after the determination of the lease, the landlord undoubtedly has the right to eject him forthwith; but if he does not, and there is neither assent or dissent on his part to the continuance of occupation of such person, the latter becomes in the language of English law a tenant on sufferance who has no lawful title to (1) , 270,273. 818 the land but holds it merely through the laches of the landlord. If now the landlord accepts rent from such person or otherwise expresses assent to the continuance of his possession, a new tenancy comes into existence as is contemplated by section 116, Transfer of Property Act, and unless there is an agreement to the contrary, such tenancy would be regarded as one from year to year or from month to month in accordance with the provisions of section 106 of the Act. " It was further observed ". . . in cases of tenancies relating to dwelling houses to which the Rent Restriction Acts apply, the tenant may enjoy a statutory immunity from eviction even after the lease has expired. The landlord cannot eject him except on specified grounds mentioned in the Acts themselves. In such circumstances, acceptance of rent by the landlord from a statutory tenant whose lease has already expired could not be regarded as evidence of a new agreement of tenancy, and it would not be open to such a tenant to urge, by way of defence, in a suit for ejectment brought against him, under the provisions of Rent Restriction Act that by acceptance of rent a fresh tenancy was created which had to be determined by a fresh notice to quit. " Under the Calcutta Rent Ordinance, 1946, and the subsequent legislation which culminated in the West Bengal Premises Rent Control Act, 1950, in the expression "tenant" was included any person who continued in possession after termination of his tenancy. Section 12 of the West Bengal Premises Rent Control Act, 1950, expressly protects a tenant whose lease has expired. By the Rent Restriction Statutes ' at the material time, statutory immunity was granted to the appellant against eviction, and acceptance of the amounts from him which were equivalent to rent after the contractual tenancy had expired or which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 116, Transfer of Property Act. Failure to take action which was consequent upon a statutory prohibition 819 imposed upon the courts and not the result of any voluntary conduct on the part of the appellant did not also amount to " otherwise assenting to the lessee continuing in possession. " Of course, there is no prohibition against a landlord entering into a fresh contract of tenancy with a tenant whose right of occupation is determined and who remains in occupation by virtue of the statutory immunity. Apart from art express contract, conduct of the parties may undoubtedly justify an inference that after determination of the contractual tenancy, the landlord had entered into a fresh contract with the tenant, but whether the conduct justifies such an inference must always depend upon the facts of each case. Occupation of premises by a tenant whose tenancy is determined is by virtue of the protection granted by the statute and not because of any right arising from the contract which is determined. The statute protects his possession so long as the conditions which justify a lessor in obtaining an order of eviction against him do not exist. Once the prohibition against the exercise of jurisdiction by the court is removed, the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of. the lessor 's right to evict the tenant will not unless the statute provides otherwise, be conditioned. The High Court was in our judgment right in holding that by merely accepting rent from the appellant and by failing to take action against him, the appellant did not acquire the rights of a tenant holding over. It is true that in the notice dated October 10, 1950, the appellant is described as a " monthly tenant ", but that is not indicative of conduct justifying an inference that a fresh contractual tenancy had come into existence. Within the meaning of the West Bengal Premises Rent Control Act, 1950, the appellant was a " tenant " and by calling the appellant a tenant the respondents did not evince an intention to treat him as a contractual tenant. The use of the adjective monthly " also was not indicative of a contractual relation. The tenancy of the appellant was determined by efflux of time an subsequent occupation by him 820 was not in pursuance of any contract express or implied, but was by virtue of the protection given by the successive statutes. This occupation did not confer any rights upon the appellant and was not required to be determined by a notice prescribed by is. 106 of the Transfer of Property Act. In that view of the case, this appeal fails and is dismissed with costs. Appeal dismissed.

The appellant was a contractual tenant of certain premises in the town of Calcutta of which the respondents were the owners. The respondents called upon the appellant to vacate and deliver possession of the premises on the expiration of the period of tenancy but possession was not delivered and the respondents were unable to obtain possession in view of the protection afforded to the tenants by the successive rent control Acts passed by the State. In the meantime the 814 appellant continued to pay every month amounts equal to the contractual rent, and later the rent declared to be the statutory rent and the respondent accepted the same. The question arising for decision was whether the acceptance of the amounts by the respondents conferred upon the appellant the right of a tenant holding over within the meaning of section 116 of the Transfer of Property Act. Held, that where a contractual tenancy to which the rent control legislation applied, had expired by efflux of time or by determination by notice to quit and the tenant continued in possession of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord had assented to a new contractual tenancy. Kai Khushroo vs Bai Jerbai , followed. Acceptance by the landlord from the tenant of amounts equivalent to rent after the contractual tenancy had expired or amounts which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 116 of the Transfer of Property Act. Occupation of the appellant after the determination of tenancy was not in pursuance of any contract express or implied but was by virtue of protection granted by the successive statutes and such occupation was not required to be determined in the manner prescribed by section 106 of the Transfer of Property Act.

iminal Appeals No,%. 79 and 89 of 1959. Appeals by special leave from the judgment and order dated May 6,1959, of the Allhabad High Court in Criminal Appeal No. 1224 of 1957. A. section R. Chari, B. K. Gary, D.P. Singh, section C. Agarvial and M. K. Ramamurthi, for the appellants. G. C. Mathur and C. P. Lal for the respondent. 77 1961. February 15. The judgment of the Court was delivered by SUBBA RAO, J. These two appeals are directed against the judgment of the High Court of Judicature at Allahabad dismissing the appeal preferred by the appellants and maintaining the convictions and sentences imposed on them by the learned Sessions Judge Meerut, under a. 147, section 424, section 452, section 325, read with section 149, and is. 323, read with section 149, of the Indian Penal Code. Briefly stated the case of the prosecution is as follows: One Har Narain had obtained a decree from the court of the Additional Munsif, Ghaziabad, against one Sunehri Jogi for a sum of money. In execution of that decree the Munsif issued a warrant for the attachment of the judgment debtor 's property. The amin to whom the said warrant was entrusted attached, inter alia, three buffaloes and two cows, which were in the house of the judgment debtor, as his property. The amin kept the cattle in the custody of one Chhajju, the sapurdar. As the said sapurdar had no accommodation in his house for keeping the animals, he kept them for the night in the enclosure of the decree holder with his permission. The next day at about 7 a. m., the nine appellants, armed with lathies, went to the enclosure of the decree bolder and began to untie two of the attached buffaloes. The decree holder, his son and his nephew protested against the acts of the appellants whereupon the appellants struck the three inmates of the house with lathies, and when P.W. 4 intervened, they struck him also with lathies. Thereafter, appellants 1. 2 and 3 took away the two buffaloes followed by the other appellants. The defence version is that on June 1, 1955, at about 7 a. m. the first appellant, Tika, was taking his two buffaloes for grazing when Har Narain and 1 1 others came with the amin and forcibly snatched the said buffaloes, that when Tika objected to it, those 12 persons assaulted him with lathies, that when appellant 2, Raja Ram, came there, he was also assaulted, and that Tika and Raja Ram used their lathies in self defence. 78 The learned Sessions Judge, on a consideration of the evidence, held that the cattle were attached on the evening of May 31, 1955, and that, after their seizure, they were kept in the house of Har Narain. The Sessions Judge disbelieved the defence version that the accused gave the beating to Har Narain and others at 11 a. m. on June 1, 1955 in self defence. On that finding, he convicted the accused as aforesaid. On appeal, the learned Judges of the High Court accepted the finding arrived at by the learned Sessions Judge and confirmed the convictions and the sentences passed by him on the accused, but directed the various sentences to run concurrently. Hence the appellants have preferred these two appeals against the Judgment of the High Court. Learned counsel for the appellants raised before us the following contentions: (1) The attachment of the buffaloes was illegal and, therefore, the appellants in taking away their own buffaloes from the possession of the decree holder did not commit any offence under section 424 of the Indian Penal Code. (2) Even if the attachment was valid, neither the amin had any authority to keep the attached buffaloes in the custody of the sapurdar, nor the sapurdar had any power to keep them in the custody of the decree holder, and therefore the decree holder 's possession was illegal and the appellants in taking away the buffaloes did not commit any offence within the meaning of section 424 of the Indian Penal Code. (3) The appellants also did not commit any offence under section 441 of the Indian Penal Code, as they had no intention to commit an offence or cause annoyance to the decree holder, but they entered the house of the decree holder only to recover their buffaloes from illegal custody. (4) The appellants did not commit an offence under section 325, read with as. 147 and 149, of the Indian Penal Code, as their common object was not to cause grievous hurt to the decree holder and others, but was only to recover their buffaloes illegally detained by the decree holder. The first two contentions may be considered together. The material facts relevant to the said contentions may be stated. Har Narain in execution of his 79 decree against Sunehri Jogi attached the buffaloes that were in the house of the judgment debtor. Tika, appellant 1, filed a claim petition it is common case that subsequent to the incident his claim petition was allowed. in the claim petition, the High Court pointed out that Tika did not question the validity of the attachment but only set up his title to the buffaloes. Indeed, his defence in the criminal case also was not that the incident happened when the attached buffaloes were in the house of the decree holder but that the incident took place before the attachment was effected. Before the Sessions Judge no point was taken on the basis of the illegality of the attachment. For the first time in the High Court a point was sought to be made on the ground of the illegality of the attachment, but the learned Judges rejected the contention not only on the ground that official acts could be presumed to have been done correctly but also for the reason that the appellants did not question the legality of the attachment in the claim petition. That apart, P.W. 1, the amin, was examined before the Sessions Judge. He deposed that he had attached the heads of cattle from the house of the judgment debtor, Sunehri Jogi, and that he had prepared the attachment list. He further deposed that the warrant of attachment received by him was with him. A perusal of the cross examination of this witness discloses that no question was put to him in regard to any defects either in the warrant of attachment or in the manner of effecting the attachment. In these circumstances, we must proceed on the assumption that the attachment had been validly made in strict compliance with all the requirements of law. If so, the next question is, what is the effect of a valid attachment of moveables? Order XXI, rule 43, of the Code of Civil Procedure describes the mode of attachment of movable properties other than agricultural produce in the possession of the judgment debtor. It says that the attachment of such properties shall be made by the actual seizure, and the attaching officer shall keep the attached property in his own custody or in the custody of one of his subordinates 80 and shall be responsible for the due custody thereof The relevant rule framed by the Allahabad High Court is r. 116, which reads, "Live stock which has been attached in execution of a decree shall ordinarily be left at the place where the attachment is made either in custody of the judgment debtor on his furnishing security, or in that Of some land holder or other respectable person willing to undertake the responsibility of its custody and to produce it when required by the court. " The aforesaid rule also empowers the attaching officer to keep the animals attached in the custody of a sapurdar or any other respectable person. Attachment by actual seizure involves a change of possession from the judgment debtor to the court; and the rule deals only with the liability of the attaching officer to the court. Whether the amin keeps the buffaloes in his custody or entrusts them to a sapurdar, the possession of the amin or the sapurdar is in law the possession of the court and, so long as the attachment is not raised, the possession of the court continues to subsist. Would it make any difference in the legal position if the sapurdar, for convenience or out of necessity, keeps the said animals with a responsible third party? In law the said third party would be a bailee of the sapurdar. Would it make any difference in law when the bailee happens to be the decree holder? Obviously it cannot, for the decree holder 's custody is not in his capacity as decree holder but only as the bailee of the sapurdar. We, therefore, hold that the decree holder 's possession of the buffaloes; in the present case was only as a bailee of the sapurdar. But it is said that even on that assumption, appellant 1, being the owner of the buffaloes, was not guilty of an offence under section 424 of the Indian Penal Code, as he could not have acted dishonestly in trying to retrieve his buffaloes as their owner from the custody, of the court 's officer or his bailee. This argument turns upon the provisions of section 424 of the Indian Penal Code. The material part of a. 424 of the said Code reads: 81 "Whoever dishonestly or fraudulently removes any property of himself or any other person, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both". The necessary condition for the application of this section is that the removal should have been made dishonestly or fraudulently. Under section 24 of the Indian Penal Code, "Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing ,dishonestly '. " Section 23 defines "wrongful gain" and "wrongful loss". "Wrongful gain" is defined as gain by unlawful means of property to which the person gaining is not legally entitled; and "wrongful loss" is the loss by unlawful means of property to which the person losing is legally entitled. Would the owner of a thing in court 's custody have the intention of causing wrongful gain or wrongful loss within the meaning of a. 23 of the Indian Penal Code? When an attachment is made, the legal possession of a thing attached vests in the court. So long as the attachment lasts or the claim of a person for the thing attached is not allowed, that person is not legally entitled to get possession of the thing attached. If he unlawfully takes possession of that property to which he is not entitled he would be making a wrongful gain within the meaning of that section. So too, till the attachment lasts the court or it officers are legally entitled to be in possession of the thing attached. If the owner removes it by unlawful means, he is certainly causing wrongful loss to the court or its officers, as the case may be, within the meaning of the words "wrongful loss", In the present case when the owner of the buffaloes removed them unlawfully from the possession of the decree holder, the bailee of the sapurdar, he definitely caused wrongful gain to him. self and wrongful loss to the court. In this view, we must hold that appellant 1 dishonestly removed the buffaloes within the meaning of section 424 of the Indian Penal Code and, therefore, he was guilty under that ,section. 82 Now we shall proceed to consider some of the decisions cited at the Bar in support of the contention that under no circumstances the owner of a thing would be guilty of an offence under section 424 of the Indian Penal Code, if he removed it from an officer of a court, even if he was in possession of it under a legal attachment. Reliance is placed upon the decision of the Court of Criminal Appeal in Rex. vs Thomas Knight (1) where a prisoner, the owner of the fowls, ' took them away from the possession of the Sheriff 's officer, the court held that the prisoner was not guilty of larceny. "Larceny if; the willful and wrongful taking away of the goods of another against his consent and with intent to deprive him permanently of his property". There are essential differences between the concept of larceny and that of theft; one of them being that under larceny the stolen property must be the property of someone whereas under theft it must be in the possession of someone. It would be inappropriate to apply the decision relating to larceny to an offence constituting theft or dishonest or fraudulent removal of property under the Indian Penal Code, for the ingredients of the offenses are different. In Sarsar Singh vs Emperor (2), Bajpai, J., held that "the mere fact that the judgment debtor, who is entitled to remove his crops which are not validly attached, has removed them does not prove that he has done so dishonestly". There the attachment was made in derogation of the provisions of Order XXI, rule 44, Civil Procedure Code; and the Court held that the attachment was illegal and, therefore, the property would not pass from the judgment debtor to the court. It further held that under such circumstances the court could not presume that the act of removal was done dishonestly within the meaning of section 24, I.P.C. This decision does not help the appellants, as in the present case the attachment was legal. Sen, J., in Emperor vs Ghasi (3) went to the extent of holding that the owner cutting and removing a portion of the (1) (2) (3) All 214. 83 crops under attachment in execution of a decree and in the custody of a shehna did not constitute an offence under section 424, I.P.C. The learned Judge observed at p. 216, "If they were the owners of the crop and removed the same, their conduct was neither dishonest nor fraudulent". The learned Judge ignored the circumstance that the attachment of the crops had the legal effect of putting them in the possession of the court. For the reason given by us earlier, we must hold that the case was wrongly decided. In Emperor vs Gurdial (1) Pullan, J., held that the owner by removing the attached property from the possession of the custodian and taking it into his own use, did not commit an offence under section 424, I.P.C. But in that case also the attachment was illegal. But there is a current of judicial opinion holding that where there was a legal attachment, a third party claiming to be the owner of the moveables attached would be guilty of an offence under section 424 or section 379, I.P.C., as the case may be, if lie removed them from the possession of the court or its agent. Where a revenue court had attached certain plots and certain persons were appointed as custodians of the crop standing on the plots and accused out and removed the crop in spite of knowledge of the promulgation of the order of attachment, the Allahabad High Court held in Dalganjan vs State (2) that the removal of the crop by the accused was dishonest and that the conviction of the accused under section 379, I.P.C. was proper. The learned Judges said, "Since the possession passed from the accused to the custodians, the cutting of the crop by the accused in March 1951 was dishonest." In State vs Rama (3) the Rajasthan High Court held that where a person takes away the attached property from the possession of the sapurdar, to whom it is entrusted, without his consent, and with the knowledge that the property has been attached by the order of a court, he will be guilty of (1) All. 119., (2) A.I.R. 1956 All. (3) Raj. 84 committing theft, even though he happens to be the owner of the property. Though this was a case under s.379, I.P.C., the learned Judges considered the scope of the word "dishonestly" in section 378, which is also one of the ingredients of the offence under section 424, I.P.C. Wanchoo, C. J. observed at p. 775 thus: "There is no doubt that loss of property was caused to Daulatram inasmuch as he was made to lose the animals. There is also no doubt that Daulatram was legally entitled to keep the animals in his possession as they were entrusted to him. The only question is whether this loss was caused to Daulatram by unlawful means. It is to our mind obvious that the loss in this case was caused by un lawful means because it can never be lawful for a person, even if he is the owner of an animal, to take it away after attachment from the person to whom it is entrusted without recourse to the court under whose order the attachment has been made." These observations apply with equal force to the present case. A division bench of the Allahabad High Court in Emperor vs Kamla Pat (1) considered the meaning of the word "dishonestly" in the context of a theft of property from the possession of a receiver. Sulaiman, J., observed at p. 372 thus: "Therefore when a property has been attached under an order of a civil court in execution of a decree, possession has legally passed to the court. Any person who takes possession o f that property subsequent to that attachment would obviously be guilty tinder section 379 of the Indian Penal Code, if he knew that the property had been attached and was therefore necessarily acting dishonestly. " We need not multiply decisions, as the legal position is clear, and it may be stated as follows: Where a property has been legally attached by a court, the possession of the same passes from the owner to the court or its agent. In that situation, the owner of the said property cannot take the law into his own hands, but can file a claim petition to enforce his right. If he resorts to force to get back his property, (1) All. 368. 85 he acts unlawfully and by taking the property from the legal possession of the court or its agent, he is causing wrongful loss to the court. As long as the attachment is subsisting, he is not entitled to the possession of the property, and by taking that property by unlawful means he is causing wrongful gain to himself. We are, therefore, of the view that the appellants in unlawfully taking away the cattle from the possession of the decree holder, who is only a bailee of the sapurdar, have caused wrongful loss to him and therefore they are guilty of an offence under section 424,I.P.C. The next contention turns upon the provisions of section 441 of the Indian Penal Code. The argument is that the appellants did not commit trespass with intention to commit an offence or intimidate, insult or annoy any person in possession of such property. A distinction is made between intention and knowledge. It is said that the appellants did not trespass into the house of the decree holder with any such intention as mentioned in that section. But in this case we have no doubt, on the evidence, that the appellants entered the house of the decree holder with intent to remove the attached cattle constituting an offence under section 424 of the Indian Penal Code. The appellants are, therefore, guilty of the offence and have been rightly convicted under section 441 of the Indian Penal Code. The last contention is that the principal object of the accused was to get back their cattle which had been illegally attached and that their subsidiary object was to use force, if obstructed, and that in the absence of a specific charge in respect of the use of force the accused should not have been convicted of what took place in furtherance of the subsidiary object. The relevant charge reads thus: "That you, on or about the same day at about the same time and place voluntarily caused such injuries on the persons of Om Prskash, Har Narain, Jhandu and Qabul, that if the injuries would have caused the death of Har Narain, you would have been guilty of murder and thereby committed an offence under section 307 read with section 149 86 I.P.C. and within the cognizance of the court of Sessions. " Though section 149 of the Indian Penal Code is mentioned in the charge, it is not expressly stated therein that. the members of the assembly know that an offence under section 325 of the Indian Penal Code was likely to be committed in prosecution of the common object of that assembly. Under section 537 of the Code of Criminal Procedure, no sentence passed by a court of competent jurisdiction shall be reversed or altered on appeal or revision on account of any error, omission or irregularity in the charge, unless such error, omission or irregularity has in fact occasioned a failure of justice. The question, therefore, is whether the aforesaid defect 'in the charge has in fact occasioned a failure of justice. The accused knew from the beginning the case they had to meet. The prosecution adduced evidence to prove that the accused armed themselves with lathies and entered the premises of the decree holder to recover their cattle and gave lathi blows to the inmates of the house causing thereby serious injuries to them. Accused had ample opportunity to meet that case. Both the courts below accepted the evidence and convicted the accused under section 325, read with section 149, I.P.C. The evidence leaves no room to doubt that the accused had knowledge that grievous hurt was likely to be caused to the inmates of the decree holder 's house in prosecution of their common object, namely, to recover their cattle. We are of the opinion that there is no failure of justice in this case and that no case has been made out for interference. No other point was raised before us. In the result, the appeals fail and are dismissed. Appeals dismissed.

In execution of a decree the Amin attached, inter alia, two buffaloes from the house of the judgment debtor and entrusted them to the custody of a sapurdar. As the sapurdar had no accommodation in his house for keeping the buffaloes he kept them for the night in the enclosure of the decree holder with his permission. Early next morning the appellants armed with 76 lathies, went to the enclosure of the decree holder and began to untie the two. buffaloes; the decree holder, his son and nephew protested whereupon they and another person, who tried to intervene, were beaten by the appellant with lathies and the two buffaloes were taken away. Afterwards appellant No. 1 made a claim petition before the executing court and that court held that the two buffaloes belonged to him. The appellants were convicted of offenses under sections 147, 452, 424, 325/149 and 323/149 Indian Penal Code. They challenged their convictions on the grounds: (i) that the custody of the decree bolder over the buffaloes was illegal as neither the a minor had any authority to give them in the custody of the sapurdar nor had the sapurdar any power to keep them in the custody of the decree holder, (ii) that the appellants bad entered the enclosure of the decree holder only to recover their buffaloes and had not acted dishonestly. Held, that the appellants were rightly convicted. The decree holder 's possession of the buffaloes was as a bailee of the sapurdar. Order 21, Rule 43 read with R. 116 (framed by the Allahabad High Court) empowered the amin to keep the attached buffaloes in the custody of a sapurdar. The sapurdar could, for convenience or necessity, keep them with a third person as bailee and such third person could be the decree holder also. Attachment involved a change of possession from the judgment debtor to the Court; and whoever was entrusted with the possession held it on behalf of the Court until the attachment was raised. So long as the attachment lasted or the claim of a person for the thing attached was not allowed, that person was not legally entitled to get possession of the thing attached. If he unlawfully took possession of that thing he caused "wrongful gain" to himself and "wrongful loss to the Court. Rex vs Thomas Knight, , Sarsay Singh vs Emperor, and Emperor vs Gurdial, All. 119 distinguished. Emperor vs Ghasi, All. 214, disapproved. Dalganjan vs State, A.I.R. 1956 All. 630, State vs Rama, Raj 772 and Emperor vs Kamla Pat, All. 368, applied.

minal Appeal No. 154 of 1959. Appeal by special leave from the judgment and order dated March 27, 1959, of the Mysore High Court in Criminal Appeal No. 168 of 1956. section N. Andley, J. B. Dadachanji, RameShwar Nath and Bavinder Narain, for the appellant. B. Gopalakrishnan and T. M. Sen, for the respondent. February 16. The Judgment of the Court was delivered by 130 RAGHUBAR DAYAL, J. This is an appeal by special leave against the judgment of the High Court of Mysore at Bangalore confirming the appellant 's conviction for an offence under section 5(2) of the Prevention of Corruption Act, 1947 (Act 11 of 1947), by the Special Judge, Dharwar. The appellant is alleged to have committed the offence while he was a Municipal Councillor and Chairman of the Managing Committee of the Navalgund Municipality. The only question for determination in this appeal is whether the appellant was a 'Public servant ' contemplated by section 2 of the Preven tion of Corruption Act. The contention for the appellant is that he was not such a 'public servant '. Section 2 of the Prevention of Corruption Act reads: "For the purposes of this Act, 'public servant ' means a public servant as defined in section 21 of the Indian Penal Code". Section 21 of the Indian Penal Code defines the persons coming within the expression 'public servant ' and its Tenth Clause reads: "Every officer whose duty it is, as such officer, to take, receive, keep or expend any property, to make any survey or assessment or to levy any rate or tax for any secular common purpose of any village, town or district, or to make, authenticate or keep any document for the ascertaining of the rights of the people of any village, town or district". The Rule 68 framed under the Bombay District Municipal Act, 1901 (Bombay Act III of 1901) and admittedly applicable to the appellant reads: "The Chairman of an Executive Committee shall sign payment orders on behalf of the Committee after the Committee have passed the bills and may also order payment of bills for fixed recurring charges such as pay bills in anticipation of the Committee passing them". The High Court held that the appellant, as Chairman of the Managing Committee, could expend the money of the Municipality as he could order payment of bills for fixed recurring charges and that therefore he 131 came within the purview of the expression 'public servant ' defined in the Tenth Clause of section 21 of the Indian Penal Code. The only criticism which the learned counsel for the appellant has urged against this view is that the High Court did not keep the distinction between the words ,duty ' and 'power ' in mind and that rule 68 empowers the Chairman to order payment and does not impose a duty on him to order payment. We are of opinion that the power to make payment of fixed recurring charges such as pay bills imposes a duty on the Chair. man to do so when necessary as the power it; vested in the Chairman for the benefit of the persons entitled to receive those recurring charges. Reference may usefully be made here to what was said in this connection in Julius vs The Lord, Bishop of Oxford (1). Earl Cairns, the Lord Chancellor, said in connection with the interpretation to be put on the expression 'it shall be lawful ' in a certain statute: "The words 'it shall be lawful ' are not equivocal. They are plain and 'unambiguous. They are words merely making that legal and possible which there would otherwise be no right 'or authority to do. They confer a faculty or er, and they do not of themselves do more than confer a faculty or power, But there may be something in the nature of the thing empowered to be done, something in the ob. ject for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so". The aforesaid power is conferred on the Chairman for the benefit of the persons who have served the Municipality and have got the right to receive their pay or money for articles provided. There may arise ciroumstances when any delay in payment may affect those persons adversely. The pay is due on the first day of (1). (1880) 5 App. 214, 222. 132 the month and it may not be convenient to fix a meet. ing of the Committee at a date for early payment of the pay due. A meeting already fixed may have to be adjourned for want of quorum. The passing of the pay bills, in the circumstances, is more or less a formal matter and therefore the rules empower the Chairman of the Managing Committee to order payment of the pay bills in anticipation of sanction by the Committee. The Chairman can exercise this power for the benefit of the employees voluntarily or when requested by those persons to exercise it. The mere fact that this power of the Chairman was to be exercised only with respect to fixed recurring charges and in anticipation of the Committee passing the bills for those charges therefore does not affect the question in any way. Clause ten of section 21 of the Indian Penal Code merely requires that the person should have the duty to expend property for certain purposes. It is not restricted to such cases only where there is no limitation on the exercise of that power of expending pro perty. The Chairman has the duty to order payment and to spend the money of the Municipality in certain circumstances. We therefore hold that the appellant was a (public servant ' when the alleged offence was committed. In view of our opipion, we do not discuss the effect of section 45 of the Bombay District Municipal Act which lays down that every municipal councillor shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code, or the question whether the appellant, as a mere Municipal Councillor, comes within the definition of 'public servant ' in section 21 of the Indian Penal Code. These questions were not considered by the High Court. We therefore dismiss the appeal. Appeal dismissed.

The question arising for determination was whether the Chairman of the Managing Committee of a Municipality who could order payment of bills for fixed recurring charges was a "public servant" within the meaning of section 21 of the Indian Penal Code. Held, that the power to make payment of fixed recurring charges, such as pay bills, imposed a "duty" on the Chairman to do so when necessary as the power was vested in the Chairman for the benefit of the persons entitled to receive those recurring charges. Julius vs Lord Bishop of Oxford, , referred to. Section 21, Cl. 1O of the Indian Penal Code merely requires that the person should have the "duty" to expend property for certain purposes and is not restricted to such cases only where there is no limitation on the exercise of that power of expending property. The Chairman had the duty to order payment and spend money of the Municipality in certain circumstances and as such was a "public servant".

31 of 1959. Petition under article 32 of the Constitution of India, for enforcement of Fundamental Rights. M. C. Setalvad, Attorney General of India, section N. Andley, J. B. Dadachanji, Pameshwar Nath and P. L. Vohra, for the petitioners. B. Sen and I. N. Shroff, for the respondent. February 10. The Judgment of the Court was delivered by AYYANGAR, J. This petition under article 32 has been filed impugning the validity of two notices of demand served on the petitioners requiring them to pay what has been compendiously described as "coal tax" by the respondent, which is a Local Board constituted under the Central Provinces & Berar Local Government Act, 1948 (C. P. & Berar Act XXXVIII of 1948). The ground of challenge is that there was no legislative power for the levy of the tax and that consequently the fundamental rights of the petitioners under article 19(1)(f) and (g) are being violated. It may be stated at the outset that the tax now impugned has been imposed by the local authority, 3 from March 12, 1935 and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might not itself be a ground for denying them relief Before however we set out the points urged by the learned Attorney General in support of the petition, it would be convenient if we narrate briefly the history of the levy of this tax. Section 51 of the Central Provinces Local Self Government Act, 1920 (C. P. Act IV of 1920), which will be referred to hereafter as the Act, ran: "51(1). Subject to the provision of any law or enactment for the time being in force, a district council may, by a, resolution passed by a majority of not less than two thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50. The first imposition of any tax, toll or rate under sub section (1) shall be subject to the previous sanction of the local Government. " The petitioners are working certain mines situated in the district of Chhindwara and for the area covered by the mines an Independent Mining Local Board was constituted in or about 1926 and such Boards are included in the definition of a Local Board under the Act and they have vested in them all the powers of a District Council. This Mining Board, after obtaining the previous approval of the local Government, passed on March 12, 1935, by the majority requisite under E;. 51(1) of the Act a resolution to impose a tax on coal, coal dust and coke in the following terms: "The tax shall be levied at the rate of three pies per ton on coal, coal dust or coke, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of the Independent Mining Local Board. " The tax has been levied and collected ever since. The Local Self Government Act of 1920 was repealed and re enacted by the Central Provinces & Berar Local Government Act, 1948, but nothing turns on 4 this, because the later enactment and certain amendments made subsequently contain provisions for the continuance of the Local Boards constituted under. the repealed enactment and for the continued exigibility of the taxes and ceases in force at the date of the commencement of the Act of 1948. The respondent was, as stated earlier, constituted under the Act of 1948 and is admittedly the successor of the Inde pendent Mining Board which imposed the tax by its resolution dated March 12, 1935, and is legally entitled to continue the levy if the original imposition was valid. There is only one other matter to be mentioned at this stage, viz., that the rate of duty which, as seen from the resolution extracted earlier, was 3 pies per ton when imposed in 1935 was raised by the local body to 9 pies per ton in 1949, this being the rate which now prevails. On August 23, 1958, the Chief Executive Officer of the respondent Sabha served two notices of demand on the first and second petitioners requiring them to pay sums of Rs. 21,898.64 and Rs. 11,838 09 respectively as the tax due by each, for despatches of coal from their respective mines for the period January 1, 1958, to June 30, 1958. It is the validity of these notices that is impugned in this petition. The submissions of the learned Attorney General were three: (1) The levy of the tax by the Independent Mining Board was invalid at the date of its original imposition in 1935, and consequently the respondent Sabha its successor obtained no authority to continue the same. (2) Assuming the levy was valid when originally imposed, it ceased to be legal after the coming into force, first of the Government of India Act, 1935 and later of the Constitution of India in 1950 under which the tax in question or some portions of it became exclusively leviable by the Central or Union Government and would not be covered by the saving as to previously existing taxes in section 143 of the Government of India Act, 1935, and subsequently of article 277 of the Constitution. 5 (3) Assuming further that the provision contained in section 143 of the Government of India Act covered the tax, the protection afforded by it or the continuance for which it provided, is only for a tax at the rate of 3 pies per ton prevailing before the commencement of the Government of India Act (April 1, 1937), and the increase in the rate to 9 pies per ton in 1949 rendered the levy and the demand illegal either in whole or at least in part. We shall now proceed to deal with these points in that order: (1) That the imposition of the tax by the Independent Mining Board by resolution dated March 12, 1935, was invalid. This was sought to be rested on three distinct grounds: (a) that the levy of the tax was in contravention of section 80A(3) of the Government of India Act, 1915. Section 80A(3) enacted, to quote only the part material: "The local legislature of any province may not, without the previous sanction of the Governor General, make or take into consideration any law(a) imposing or authorising the imposition of any new tax unless the tax is a tax scheduled as exempted from this provision by rules made under this Act; or " The taxes now impugned are not within those enumerated in the schedules to the Scheduled Taxes Rules and hence the previous sanction of the Governor General was required before a bill authorising the levy of the tax could be taken into consideration. And the Act which by a. 51 authorised the imposition of the tax, had been passed by the local legislature without the previous sanction of the Government having been obtained. The petition as filed setting out this contention proceeds on the basis that the Act was passed after the Government of India Act, 1919, by which section 80A was introduced into the Act of 1915 came into force. If ,that had been the correct position, the proviso to ,section 80A(3) reading: 6 "Provided that an Act or a provision of an Act made by a local legislature, and subsequently assented to by the Governor General in pursuance of this Act, shall not be deemed invalid by reason only of its requiring the previous sanction of the Governor General under this Act." would be a complete answer to the above objection, since under the Government of India Act, 1915, before and after its amendment in 1919, every bill passed by a local legislative council had, after receiving the assent of the Governor, to be transmitted to the Governor General and could become law only after the latter had signified his assent (Vide section 81(1) & (3) of the Act). That the Governor General had assented to the Act under this provision was never in dispute. The saving contained in the proviso is, it should be noticed, in addition to the general saving contained section 84(2) of the Government of India Act (to read only the material words): ". the validity of any Act of. any local legislature shall not be open to question in any legal proceedings on the ground that the Act affects . a central subject" which is of wider import and designed to remove all questions of legislative competence of the type now put forward from the purview of Courts. At the stage of the arguments, however, it was found. that the Act had become law even prior to the coming into force of the Government of India Act, 1919, with the result that the contention raised in the petition based on section 80A(3) could not be urged. From the recitals at the beginning of the Act it was found that the previous sanction of the Governor General had been obtained to the introduction of the measure in the Local Legislature under section 79(2) of the Government of India Act, 1915 i.e., before section 80A(3) intro duced into the Government of India Act, 1919, was brought into force. The learned Attorney General, therefore, modified his argument and presented it in this form: No doubt when section 51 of the Act was enacted, it was within the competence of the Local Legislature. But the power conferred by that section to levy the tax was exercised 7 only in 1935 and by that date section 80A had been introduced into the Government of India Act and thereafter there could be no local imposition of a tax, not included in the Scheduled Taxes Rules without the previous sanction of the Governor General being obtained. We consider this argument wholly without force. The validity of section 51 of the Act, when enacted, not being open to any objection under the Government of India Act, 1915, the amendments effected to the Government of India Act, 1915, by the Act of 1919 did not in any manner, or to any extent, expressly or even by implication affect or trench upon the continued validity and operation of that section. Obviously, section 80A(3) was only concerned to lay down the preliminaries for enacting a law after that provision came into force and after a law has once been enacted and is in operation, there is no question of the procedure laid down for bills being attracted. This apart, all controversy is set at rest and any argument of the type now urged is precluded by r. 5 of the Scheduled Taxes Rules which runs: "Nothing in these rules shall affect the right of a local authority to impose a tax without previous sanction or with the previous sanction of the local Government when such right is conferred upon it by any law for the time being in force. " The submission therefore that before the power conferred by section 51 of the Act, the previous sanction of the Governor General had to be obtained or that there must be fresh legislation, must be rejected. (b) The second matter urged under this head was based on the meaning to be given to the opening words of section 51 of the Act: "Subject to the provision of any law or enactment for the time being in force". it was suggested that the provision contained in a. 80A(3) of the Government of India Act read with the Scheduled Taxes Rules framed under that section constituted "a law for the time being in force" to ,which the power to levy the tax was subject. In the first place, it is clear that a law like that which is found in section 80A(3) prescribing a procedure for enacting future Acts of the Local Legislature could not be 8 comprehended within those words. But even if it did, in the face of r. 5 of the Scheduled Taxes Rules, the construction suggested could have no basis. (c) The last reason assigned for disputing the validity of the original imposition of the tax, was that section 51 of the Act on its language and in the context of the other provisions referred to in that section, did not authorise the levy of a tax or cess of the nature of the "coal tax". We are wholly unable to accept this argument. The relevant words of section 51 are: "impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50". It is not suggested that "the coal tax" is one specified in any of the sections set out, and hence there was power to levy any other tax including that which is now impugned. The learned Attorney General however suggested that the tax authorised by section 51 should still be somewhat like the taxes referred to in the other sections, though not identical with them. Obviously, in the face of the words "other than those. " the rule Of ejusdem generis is contra indicated and if so on no rule of construction could "the coal tax" be excluded from the purview of the local authority. We, therefore, hold that the original imposition of the tax in 1935 was valid. (2) The next question is: has the tax ceased to be legally leviable by reason of the coming into force of the Government of India Act, 1935 and of the Constitution? Both these constitutional enactments contain express provisions whereby taxes, cesses, etc., which were previously lawfully levied by local authorities for the purposes of their local areas, might continue to be collected and applied for the same purposes notwithstanding that those taxes could thereafter be imposed only by the Central or the Union Government, as the case may be (Vide section 143 of the Government of India Act, 1935, and article 277 of the Constitution). The objection therefore that "coal tax" or some of the components of it, could have been imposed only by the Central Government or the Union Government is no ground for impugning the continued validity and exigibility of the tax. It is needless to add that if the 9 tax fell within the Provincial or the State List, the levy would be valid under section 292 of the Government of India Act and article 372 of the Constitution even without the aid of the special provision in section 143 or article 277. In view of those considerations the learned Attorney General did not address us seriously on this point. (3) The last point urged was as regards the validity of the increase in the rate of tax to 9 pies per ton effected in 1949, i.e., after the commencement of Government of India Act, 1935. This objection was not even hinted in the petition now before us, and we did not consider it proper to permit petitioners to raise the point. The result is that the petition falls and is dismissed with costs. Petition dismissed.

Section 51 of the Central Provinces Local Self Government Act, 1920 empowered a district council, subject to the previous sanction of the local Government, to impose "any tax, toll or rate, other than those specified in SS. 24, 48,49, and 50. " On March 12, 1935, an Independent. Mining Local Board functioning in the area in which the petitioners were working certain mines situated therein, and having vested in it all the powers of a district council, resolved to impose a tax on coal, coal dust and coke manufactured at the mines or sold within the territorial jurisdiction of the Board. The petitioners who were served with notices of demand requiring them to pay certain sums of money as the tax due by them for despatches of coal from their mines, challenged the legality of the levy of the tax on the grounds, inter alia (1) that the Act which by section 51 authorised the imposition of the tax, had been passed by the local legislature without the previous sanction of the Governor General, thereby contravening section 80A(3) of the Government of India Act, 1915, and that even if it was found that the Act was validly passed before the coming into force of the Government of India Act, 1919, which introduced section 80A into the Act of r 1915, the power conferred by section 51 to levy tax was exercised only in 1935 and by that date S.80 A had been introduced into the Government of India Act,1915, and that thereafter there could be no legal imposition of a tax without the previous sanction of the Governor General being obtained, (2) that section 51 Of the Central Provinces Local Self Government Act, 1920, on its language and in the context of other provisions referred to in that section, did not authorise .the levy of a tax of the nature of the coal tax, and (3) that, in any case, the tax ceased to be legally leviable after the coming 2 into force of the Government of India Act, 1935, and of the Constitution of India, since a tax like that in question could be in posed only by the Central Government. Held: (1) that the Central Provinces Local Self Government Act, 1920, having received the assent of the Governor General, its validity cannot be challenged in view of the saving clauses in the proviso to section 80A(3) and section 84(2) of the Government of India Act, 1915. (2) that the validity of Central Provinces Local Self Government Act, 1920, when enacted, not being open to any objection under the Government of India Act, 1915, any subsequent amendments to the latter Act could not in any manner affect its continued validity and operation. (3) that on the proper construction Of section 51 of the Act of 1920, the levy of a coal tax is not excluded from the purview of the local authority. (4) that the continued levy of the tax in question even after the coming into force of the Government of India Act, 1935, and the Constitution of India, is valid in view of section 143 Of the Act of 1935 and article 227 of the Constitution.

Appeal No. 65 of 1952. Appeal from an award dated 17th November, 1951, made by the Labour Appellate Tribunal of India, Calcutta, in Appeal No. 280 of 1951. K. P. Khaitan (Harnam Das, with him) for the appellant. H. B. Asthana for the respondents. Gopalji Mehrotra for the Intervener. December 2. The Judgment of the Court was delivered by BHAGWATI J. This is an appeal by special leave against the decision of the Labour Appellate Tribunal, Calcutta, upholding the award made by the State Industrial Tribunal, Uttar Pradesh, with certain modifications. An industrial dispute arose between the appellant, the Vishwamitra Press Karyalaya, Kanpur, and the respondents, the workers of the Vishwamitra Press as represented by the Kanpur Samachar Patra Karamchari Union, Kanpur, in regard to the alleged victimisation of certain workmen under the guise of 'retrenchment. That industrial dispute was referred to the Industrial Tribunal, by a notification dated the 24th April, 1951. The time for making the award expired on the 9th June, 1951, and on the 9th June. 1951, a further notification was issued extending the time for making the award up to the 30th June, 1951. The 30th June, 1951, was a public holiday and the 1st July was a Sunday. The Industrial Tribunal made its award on the 2nd July, 1951, and pronounced it in open court on that day. It was however thought by the Uttar Pradesh Government that the award was beyond time and invalid and on the 18th July, 1951, a notification was issued extending the period up to the 3rd July, 1951. This award was challenged by the appellant before the Labour Appellate Tribunal. The Labour Appellate. Tribunal negatived the Contentions of the appellant. The appellat applied 274 for special leave which was granted by this Court on the 21st December, 1951, limited to the following grounds: " (1) The Government had no power to extend the time of the making of award after the expiry of the time originally fixed, and the award made by the Adjudicator after such time is illegal, ultra vires, inoperative and void. (2)In any case the State Government I had extended the time for making the award till 30th June, 1951, and the Adjudicator 's award made after that date is void. (3)That the extension of time by the Government on. 21st July, 1951, after even the time extended previously had expired, was ultra vires, and it could not make a void award a valid award. " The industrial dispute which arose between the appellant and the respondents was referred by the Uttar Pradesh Government to the Industrial Tribunal in exercise of the powers conferred by sections 3 and 4 of the Uttar Pradesh . The Uttar Pradesh Government had in exercise of the powers conferred by section 3 (d) of the Act promulgated an order inter alia providing for the adjudication of the industrial disputes referred by it to the Industrial Tribunals. Paragraph 16 of that order ran as under : " The Tribunal or the Adjudicator shall hear the dispute and pronounce its decision within 40 days (excluding holidays observed by courts subordinate to the High Court) from the date of reference made to it by the State Government, and shall thereafter as soon as possible supply a copy of the same to the parties to the dispute, and to such other persons or bodies as the State Government may in writing direct. Provided that the State Government may extend the said period from time to time." Paragraph 9 which prescribed the powers and functions of Tribunals inter alia provided: 275 "(9). The decision shall be in writing, and shall be pronounced in open court and dated and signed by the member or members of the Tribunal, as the case may be, at the time of pronouncing it. " It was not disputed before us that the original period calculated in accordance with paragraph 16 above expired on the 9th June, 1951, and the Uttar Pradesh Government validly extended the period up to the 30th June, 1951. It was however contended that the Industrial Tribunal should have made its award on the 30th June, 1951, and not on the 2nd July, 1951, as it purported to do. It was urged that the provision as to excluding holidays observed by courts subordinate to the High Court which obtained in paragraph 16 above did not apply when the period was extended up to a particular date. It would apply only if the period was extended by a particular number of days when for the purpose of the computation of those days the holidays would have to be excluded in the manner therein mentioned. The Uttar Pradesh Government having extended the period up to the, 30th June, 1951, it was submitted that the award, should have been made by the 30th June, 1951, and, not later and having been made on the 2nd July, 1951, was therefore beyond time and invalid. This argument might well have prevailed but for the provisions of section 10 of the U. P. General Clauses Act, 1904. That section provides: " Where, by any United Provinces Act, any act or proceeding is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the court or office is closed; on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court or office is open. " The Industrial Court was closed on the 30th June, 1951, which was declared a public holiday. The 1st July, 1951, was a Sunday and it was competent to the 'Industrial Court to pronounce its decision on the next 276 afterwards on which the Industrial Court was n, i.e., the 2nd July, 1951. Prima facie therefore award which was pronounced on the 2nd July, 1, was well within time. The only thing which Shri Khaitan counsel for the appellant urged before us therefore was that the Industrial Court was not a court within the meaning of section 10 of the U. P. General Clauses Act, "The court" according to his submission could only be construed mean a court in the hierarchy of the civil courts the State and an Industrial Court did not fall hin that category. We are unable to accept this intention of Shri Khaitan. The Uttar Pradesh industrial Disputes Act, 1947, was an Uttar Pradesh t. The General Order dated the 15th March, 1951, which provided inter alia for the reference of the industrial dispute for adjudication and the manner in which it was to be adjudicated, was promulgated by e U. P. Government in exercise of the powers conferred upon it by section 3 (d) of the Act. Paragraph (9) of the General Order provided for the decision ing pronounced by the Industrial Tribunal in open urt and we fail to understand how it could ever be ged that the Industrial Tribunal was not a court ithin the meaning of section 10 of the U. P. General lauses Act. If the Industrial Tribunal was thus a ourt within the meaning of section 10 of the U. P. General Clauses Act the court was closed on the 30th ane, 1951, as also on the 1st July, 1951, and the decion could be pronounced by the Industrial Court on i.e next day afterwards on which it was open, i.e., on ne 2nd July, 1951. In our opinion therefore the ecision which was pronounced on the 2na July, 951, 'was well within time and was valid and binding ' in the parties. The above decision is determinative of this appeal, and the appeal will therefore stand dismissed with costs. Appeal dismissed. Agent for the respondents and the intervener: C. P. Lal.

The time prescribed for making an award under the U. P. , expired on the 9th June, 1951. The Government extended the period up to 30th June, 1951. The 30th June was a public holiday and 1st July was a Sunday and the Industrial Tribunal pronounced its award on the 2nd July: Held, that an Industrial Tribunal to which a dispute is referred under the U. P. , is a " Court " within the meaning of section 10 of the U.P. General Clauses Act, 1904, and, as the 30th June and 1st July were holidays, the award pronounced on the 2nd July was not invalid on the ground that it was not pronounced within the period fixed. 273

Appeals Nos. 218 to 223 of 1959. Appeals from the Judgment and Decree dated August 9, 1953, of the Bombay High Court in Appeals Nos. 605 and 606 of 1952 from Original Decrees. B. B. Kotwal, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant (In C. As. Nos. 218 and 219 of 59), Respondent No. 1 (In C. As. Nos. 220 and 222 of 59), Respondent No. 2 (In C. A. No. 221 of 59) and Respondent No. 5 (In C. A. No. 223 of 59). W. section Barlingay and A. G. Ratnaparkhi, for the appellants (In C. As. Nos. 220 and 221 of 59), Respondents Nos. 1 to 4 (In C. As. Nos. 218 and 223 of 59) and Respondents Nos. 3 to 6 (In C. As. Nos. 219 and 222 of 59). Naunit Lal, for the appellants (In C. As. 222 and 223 of 59), Respondent No. 6 (In C. A. No. 218 of 59), Respondent No. 1 (In C. As. Nos. 219 and 221 of 59) and Respondent No. 3 (In C. A. No. 220 of 59). R. Gopalakrishnan, for Respondents Nos. 5(a) to 5(c) (In C. A. No. 218 of 59), Respondents Nos. 2(a) to 2(c) (In C. As. Nos. 219, 220 and 222 of 59) and Respondents Nos. 3(a) to 3(c) (In C. A. No. 221 of 59) and Respondents Nos. 6(a) to 6(c) (In C. A. No. 223 of 59), 794 1961. February 10. The Judgment of the Court was delivered by SHAH, J. These six appeals are filed with certificates under article 133 of the Constitution granted by the High Court of Judicature at Bombay. The appeals arise out of the judgments and decrees in suits Nos. 47 of 1948 and 36 of 1949 in the court of the Civil Judge, Senior Division, Dharwar. The following geneology set out in the plaint in Suit No. 47 of 1948 explains the relationship between the parties: Dongarsa | | | Yamosa Ramakrishnasa | | | | | | | Hanmantsa Kashinathsa Bhaskarsa Murarsa | (D 1) | (D 2) Bhimasa | (D 3) | | | | | Narsingsa Pandurangsa Benakosa Hanmantsa (P 1) (P 2) (P 3) (P 4) The principal contesting party in the suits was Kashinathsa, eldest son of Yamosa, and he was the first defendant in both the suits. For facility of reference, we propose to refer to the parties as they were arrayed in Suit No. 47 of 1948. Bhimasa the plaintiff in Suit No. 36 of 1949 will, therefore, be referred in this judgment as defendant No. 3. At a partition in 1893 between Dongarsa 's branch and the other branches, the former branch received property of the aggregate value of Rs. 13,000/ . Members of that branch thereafter carried on business of weaving silk garments and also of sale and purchase of silk garments. In 1912, defendant No. 1 started a cloth shop in the name of Kashinathsa Kabadi. In 1916, be started a commission agency business in the name of H. R. Kabadi Shop, and in 1920 he started, business in money lending and silk goods. Since 1912, defendant No. 1 was the principal earning member of of the family and was attending to the various lines of business and he was assisted by the other members of the family. The family prospered and in course of time acquired a large estate. Before 1946, Bhaskarsa father of the plaintiffs and Ramakrishnasa and 795 Hanmantsa grandfather and father respectively of defendant No. 3 had expired, and the first defendant was the senio rmost member of the family. In 1946, disputer, arose between the members of the family and defendant No. 3 declined to continue in jointness with the other members of the family and demanded that he be given his half share after dividing the properties by metes and bounds. Claiming that he alone was instrumental in amassing the vast estate which exceeded in value to Rs. 14,00,000/ , defendant I submitted that the estate be divided in four equal shares and that one share be given to him and the remaining shares to the heirs of Bhaskarsa, defendant No. 2 and defendant No. 3. On August 17,1946, the disputes were referred under a deed in writing to three persons Vithaldas Devidas Vajreshwari a merchant of Betegiri, Devindrasa Tuljansa a common relation of the parties and Parappa Nagappa Jagalur a clerk of the pleader acting for the family (whom we will collectively refer as the Panchas) with authority to determine what shares should be allotted to the different branches of the family and to determine the extra shares to be given to defendant No. 1 for " special exertions made by him in acquiring the property " and to divide the assets of the money lending and other properties of the family_ business as the " Panchas thought fit and proper." The Panchas accepted the reference and embarked initially upon an enquiry for ascertaining what shares in the family property should be allotted to the various contesting parties. On September 23, 1946, the Panchas decided that each of the four parties defendant No. 1, defendant No. 2, the plaintiffs collectively and defendant No. 3 should be given a fourth share in the properties of the family. This decision was reduced to writing: it was signed by the Panchas and was accepted by the parties and in token of acceptance, they subscribed their signatures thereto. On the same day, gold ornaments of the value of Rs. 67,000/ were divided by the Panchas in four equal shares. A record thereof was made in the proceedings of the Panchas. 102 796 The Panchas then proceeded to award to each of the parties gold ornaments weighing 167 tolas 15 as. and silver 481 tolas and 4 as. On September 24, 1946, it is the case of defendant No. 1 that the Panchas decided to give him an additional share of the value of Rs. 40,000/ out of the property for bringing the family " to the present prosperous conditions " and the Panchas directed that defendant No. 2 should for that purpose pay out of his share Rs. 30,000/ to defendant No. 1 and the plaintiffs should pay Rs. 10,000/ to him and the old house of the joint family be allotted to him as his exclusive property. This was denied by the other parties. On October 12, 1946, the Panchas divided the residential houses and a record of this division was entered in five separate books hereinafter referred to as "partition books. " In each of the " partition books the Panchas subscribed their signatures under the record of the division and allotment of the shares and the parties also signed underneath the same in token of acceptance of that division. On October 19, 1946, the Panchas divided an amount of Rs. 64,000/ entries regarding which had been posted in the family books of account. Each party was given Rs. 16,000/ and this division was entered in the account books of Yamosa Dongarsa Kabadi and the entry was duly signed in token of acknowledgment of the correctness by all the parties. It is the case of defendant No. 1 that on that day another amount of Rs. 3,20,000/. which was " the unaccounted cash lying in the safe of the family but which was not entered in the books of account and details whereof were set out in a Tippan Book," was also divided and each party was given Rs. 80,000/ . of the two major contentions in this group of appeals, one has centered round the truth of the story about the division of this amount. 1 On October 20, 1946, the " four empty safes " and the warehouses and lands at Betgiri were divided. On October 21, 1946, the stock in trade of the silk shop was divided in four equal shares and on November 10, 1946, miscellaneous gold and pearl ornaments and the houses at Gadag and plots of land in the Hubli Cotton Market were similarly divided, On February 7, 1947, 797 the agricultural lands, cattle and agricultural implements were divided. On February 22,1947, Rs. 24,000/as the accumulated cash on hand in the money lending business were divided into four equal shares. Divisions made on October 20, 1946, October 21, 1946, February 7 and February 22, 1947, were duly entered in the " partition books " and the entries were signed by the Panchas and were also by the parties in acknowledgment of the correctness of the divisions. On February 24, 1947, acknowledgments were obtained from the junior members of the family to the reference to the Panchas and to the decision of the Panchas dated September 23, 1946, whereby each branch was given a four annas share and also to the subsequent divisions made from time to time between September 23, 1946, and February 24, 1947. Between February 25, 1947, and April 10, 1947, cotton bales belonging to the family of the value of Rs. 3,20,000/were divided into four equal shares. The record of this division was not signed by the parties. After the furniture and utensils of the family were divided, there survived certain disputes about the outstandings of the family and other properties especially a dispute about Rs. 16,000/ lying in cash with the family which could not be decided. To resolve the disputes about these properties and the outstandings of the family, the Panchas, with the consent of the parties referred them for decision to one Bhim Rao Godkhindi, a senior pleader of the Gadag Bar. On November 3, 1947, the Panchas executed a writing in favour of Godkhindi authorising him to complete the work of partition of the estate. Godkhindi accepted the authority. On December 5, 1947, Godkhindi asked the parties to "state clearly " what according to them were the properties which remained to be partitioned, and the plaintiffs gave a list to Godkhindi of such properties. Between February 5 and February 9, 1948, outstandings of the value of Rs. 1,20,000/ were divided by Godkhindi and this was accepted by the parties. But Godkhindi was unable to proceed with the division of the remaining assets. On February 9, 1948, the first plaintiff served a notice canceling the authority of the Panchas to 798 divide the properties of the family and on August 19, 1948, he filed Suit No. 47 of 1948 in the court of the Civil Judge, Senior Division, Dharwar, for partition of the properties remaining to be divided and for accounts of the joint family properties. By his plaint, the plaintiffs admitted that the parties had agreed to divide the property into four equal shares. in para. 6 of their plaint, they set out the properties which they alleged had not been divided. The plaintiffs claimed that they be awarded a fourth share in the outstandings of the assets of " Kashinathsa Yamosa Kabadi " and " H. R. Kabadi " shops, and in " a considerable amount of money that has been there" since the time of the ancestors the Tippan in respect of which it was alleged was with defendants Nos. 1 and 2 and in certain gold and silver articles, and lands and houses and rents which were recovered. On August 19, 1948, the plaintiffs also filed a petition in the court of the Civil Judge for leave to revoke the authority of the Panchas. Notice of this petition was served upon the Panchas, and the Panchas having expressed unwillingness to function the court passed an order cancelling their authority. Thereafter defendant No. 3 filed Suit No. 36 of 1949 on August 16, 1949, for partition and separate possession of a half share in all the properties of the joint family. By his plaint, he claimed that he " had been told " that despite the decision of the Panchas dated September 23, 1946, he will be given a half share in the properties, that his consent to the divisions made by the Panchas was obtained by misrepresentation and that the Panchas were guilty of partiality and therefore their decisions were not binding on him. He averred that it was not possible for him to give the descriptions of the properties other than those described in the plaint and of all the movables belonging to the family and the money lending dealings, he claimed a declaration that the authority given to the Panchas had been revoked and for a decree for partition and separate possession of a half share in the property which may be proved to belong to the joint family. 799 In both the suits, defendant No. 1 contended that the Panchas had divided the properties in four equal shares after their decision to divide the same in that manner was accepted, that the Panchas from time to time had made actual division of the properties with the consent of the parties, that the division of the properties in each case was acted upon and properties allotted to the parties were reduced into possession by the parties to whom they were allotted, and that on that account the division could not be reopened. He also contended that the " unaccounted cash " had been divided on October 19, 1946, and each party was given his share therein, and that the Panchas had given to him an extra share of the value of Rs. 40,000/ in cash payable by the plaintiffs and defendant No. 2 and the residential family house at Betgiri. Defendant No. 2 supported the claim made by the plaintiffs. The Civil Judge held that by virtue of the order passed in the petition for revoking the reference to the Panchas their authority as well as the proceedings and all the decisions given by them ceased to bind the parties because " the decisions stood cancelled." He also held that the decisions were not binding upon the parties as they were not filed in court; that the Panchas were not proved to have awarded to defendant No. 1 any additional share in the property of the family; and that the ,unaccounted cash" of the family which amounted to Rs. 3,20,000/ was not divided. He accordingly passed decrees in the two suits ordering that a fresh partition be effected of all the joint family property moveable and immoveable. Against the decrees passed by the court of first instance defendant No. 1 preferred Appeal No. 605 of 1952, against the decree in Suit No. 47 of 1958 and Appeal No. 606 of 1952, against the decree in Suit No. 36 of 1949. In the two appeals, the High Court at Bombay by a common judgment modified the decrees passed by the court of first instance. In the view of the High Court, there were in law no valid awards made by the Panchas which could be set up in defence by defendant No. 1 to the claim made by the third defendant. They observed that the awards of the 800 Panchas were not binding because they were not properly stamped and those that affected immoveable properties were not registered. But the High Court held that the division of the moveables such as gold and silver ornaments made on September 23, 1946, could not be reopened. They further held that the " unaccounted cash " amounting to Rs. 3,20,000/ was divided on October 19, 1946, and that each branch had received Rs. 80,000/ . The High Court accordingly modified the decree passed by the trial court in so far as it related to the gold and silver ornaments divided by the Panchas on September 23, 1946, and also in respect of the amount of the unaccounted cash of Rs. 3,20,000/ . There were certain other modifications made in the decrees which are not material for the purposes of these appeals, as no arguments have been advanced at the bar relating thereto. In these appeals by defendant No. 1, the plaintiffs and defendant No. 3, two principal questions fall to be determined: (1) whether defendant No. 3 is entitled to a half share in all the properties of the joint family ignoring the division already made and (2) whether the unaccounted cash which was estimated by defendant No. 3 and the plaintiffs at Rs. 4,00,000/ and which was stated by defendant No. 1 to be Rs. 3,20,000/was divided on October 19, 1946. On these two questions, the parties are differently arrived. On the first question, defendant No. 1 is supported by the plaintiffs and defendant No. 2. On the second question, defendant No. 1 is opposed by the plaintiffs and defendants Nos. 2 and 3. After setting out the contentions of the parties, it is recited in the deed of reference that the parties had given authority to the Panchas to peruse the written and oral evidence and to decide what shares shall be allotted to the different branches and also to decide what may appear to be proper for providing an "extra share" to defendant No. 1. The agreement between the members of the joint Hindu family to appoint Panchas for dividing the family properties amounts to severance of the joint family status from the date of the agreement. Once reference is made, joint family 801 status is severed and it is not postponed until the division of the property by metes and bounds. To appreciate the contentions, it is necessary to follow the method adopted by the Panchas in dividing the properties. The decision of the Panchas to allot to each branch a fourth share was accepted by all the parties. Thereafter the Panchas proceeded to allot shares in the properties movable and immovable. The distribution of the properties was set out in writing and in acknowledgment of the fact that distribution was made as described the parties signed the writing: " We have appointed these as the Panchas. In accordance therewith all the Panchas heard all the information (placed below them) and all the Panchas unanimously decided on 23 9 1946 that Kashinathsa Yamosa Kabadi should be given a 1/4 share, that Narasingsa Bhaskarsa Kabadi should be given a 1/4 share, and that Bhimasa Hanumantasa Kabadi should be given a I share, and we all having consented to the said decision of the Panchas, we all and all the Panchas have put our respective signatures to the said decision of the Panchas. The details of the properties that have fallen to the shares of the different shares as per the decision effected in accordance with the said decision are as follows:" This acknowledgment was not merely an agreement not to challenge the decision of the Panchas, but was made as evidencing the division actually made and reduced to writing. The trial court found that the properties separately allotted to the various branches were reduced into possession by the parties and the High Court agreed with that view. If the consent of the parties was not procured by fraud, misrepresentation or any other ground which may vitiate a partition under the general law, the division made by the Panchas and accepted by the parties would be binding upon them. It is always open to the members of a joint Hindu family to divide some properties of the family and to keep the remaining undivided. By the reference to the Panchas, the parties ceased, to be members of the joint Hindu family. If thereafter the 802 assets of the family were divided and that division was accepted by the parties, the properties reduced by the parties to their possession must be deemed to be of the individual ownership of the parties to whom they were allotted, and the remaining properties as of their tenancy in common. Evidently in this case, the Panchas suggested what they regarded as a just and convenient method of partition and that method was accepted by the parties. Originally it was intended to make a general division or award in respect of all the properties and with that end in view a stamp paper of the value of Rs. 30/ was purchased. But in the course of the proceedings, effectuating a division of all the properties by a single award was apparently found inconvenient and a convenient method was adopted and the properties were divided by stages. In the first instance, the principle of division was discussed and decided upon and that principle was accepted by the parties. Thereafter the properties were divided in different sections. The plea raised in his plaint by defendant No. 3 that his consent to the reference was obtained by coercion and undue influence is somewhat vague and indefinite. He merely stated that he had recently attained the age of majority, that defendant No. I was the head of the family and that he was not in a position ',either to say anything against him (defendant No. 1) or to act against him." He also stated that defendant No. I had threatened him that he (defendant No. 3) would be given a share only if he acted according to the behest of defendant No. 1 otherwise he would be driven out of the house without anything and therefore he " became helpless " and agreed to sign the " letter of authority passed in favour of the Panchas." He pleaded in para. 5 of the plaint that he had not agreed to take a more fourth share and that he " had all along been insisting upon receiving a half share," and that it was his intention to take his legitimate half share " without dispute if that could be managed " and as he believed that he would be given that share he did not immediately raise any objections He also stated that hill had been promised 803 by defendant No. 1 that he would be given his share in the property. The learned trial judge rejected this plea holding that Defendant No. 3 failed to prove that he was " compelled by exercise of undue influence and coercion to agree to the reference to the Panchas, and that he had been promised by defendant No. I that he would be given a half share." In the High Court, the plea raised by defendant No. 3 about coercion and undue influence and the promise made by defendant No. I does not appear to have been seriously pressed. The plea of defendant No. 3 that he subscribed his signatures to the various decisions given by the Panchas from time to time because he believed that he was bound by the decision dated September 23, '1946, and that but for such belief he would not have subscribed his signatures to those decisions has in our judgment no force. Defendant No. 3, it appears on the evidence, voluntarily accepted the decision that each branch was to be given a fourth share and he accepted the division of the properties allotted to him on that footing. Again by virtue of the order passed by the Civil Judge cancelling the reference, the proceedings taken by the Panchas including the division of the property which had been accepted were not revoked. The plaintiffs filed Misc. Application No. 15 of 1948 for an order revoking the reference and as the Panch Devendrasa was found unwilling to proceed with the work of dividing the property, the arbitration was cancelled. Under section 12, sub section (2) of the Arbitration Act, where the authority of an arbitrator or arbitrators is revoked by leave of the court, the court may order that the arbitration agreement shall cease to have effect with respect to the difference referred. If the decisions of the Panchas had not been accepted by the parties with the revocation of the reference, all proceedings which they had adopted might have fallen through; but the parties did accept the decisions made from time to time and the cancellation of the reference had not the effect of vacating the divisions already made. We are unable to agree with the view of the trial judge that the cancellation had the effect of 804 nullifying all the interim divisions and that they must be deemed to have been impliedly set aside. It is unnecessary to consider whether these decisions may be regarded as " interim awards " within the meaning of section 27 of the Arbitration Act. The decisions given and divisions made were not merely tentative arrangements liable to be superseded at a later stage. The decisions were treated as final and were carried out. We agree with the High Court that whatever may be the original intention of the parties, the Panchas having with the consent of the parties proceeded to divide the properties in stages, each decision must be regarded as final with regard to the property divided thereby. We are of the view that it was open to defendant No. I to set up the division of the properties made from time to time as a defence to the action filed by defendant No. 3. Even assuming that the records of the divisions made by the Panchas are awards strictly so called, what is set up in defence is not the awards made by the Panchas, but the partition of the property by agreement after accepting the method of partition suggested by the Panchas. To such a plea, there is in our judgment no bar of section 32 of the Arbitration Act. By section 32 it is provided: " Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act. " Before the , was enacted, an award made by arbitrators appointed out of court even if it was not made a rule of the court was regarded as equivalent to a final judgment and any suit filed on the original cause of action referred to the arbitrators was held barred. In Muhammad Nawaz Khan vs Alam Khan it was held by the Judicial Committee of the Privy Council that an award is valid even if no party has sought to enforce it by the summary procedure, (1) (1891) L.R. 18 I.A. 73. 805 Since the enactment of the ,, there has &risen wide divergence of judicial opinion among the High Courts on the question whether an award made in a reference out of court can be set up as a defence to an action filed by a party thereof on, the original cause of action when the award is not filed in court. Section 31, sub section (2) of the provides: " Notwithstanding anything contained in any other law for the time being, in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed and by no other court " and section 33 sets out the procedure to be followed for challenging the existence, effect or validity of an arbitration agreement or an award or to have its effect determined. It is manifest that questions relating to the validity, effect or existence of an award can be decided by the court to which an application making it a rule of court lies. In Babui section K. Kuer vs B. N. Sinha (1), the Patna High Court held that by virtue of section 32 of the , an award made on a private reference to arbitration is not operative of its own force; it only becomes operative on being made a rule of the court. It was held in that case that an award cannot be set up as a defence to an action unless it is filed in court and a decree is obtained thereon. Similar view was taken in Sait Pamandass vs T. section Manikyam Pillai Bhimavarapu Venkatasubbauva vs Addanki Bapadu and Firm Gulzarimal Gheesdal vs Firm Rameshrhandra Radhyeshyam (4). On the other hand, in Pamudurthi Suryanarayana Reddy vs Pamudurthi Venkata Reddi (1), it was held that sections 32 and 33 of the Indian , did not preclude a defendant from (1) (1952) l. L.R. 31 Pat. (2) A.I.R. 1960 And. Pra. 59. (3) A.I.R. 1951 Mad. (4) I.L.R. (5) I.L.R. 806 setting forth an award which had been fully performed by him but which was not filed in Court under section 14 and on which a judgment was not pronounced or a decree given under section 17 of the Act, in answer to the plaintiff 's claim which was the subject matter of the reference and the award. That view was accepted in Rajamanickam Pillai vs Swaminatha Pillai (died) (,). It is not necessary in this appeal to express a considered opinion on this disputed question. It may be sufficient to observe that where an award made in arbitration out of court is accepted by the parties and it is acted upon voluntarily and a suit is thereafter sought to be filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit but that the parties have by mutual agreement settled the dispute, and that the agreement and the subsequent actings of the parties are binding. By setting up a defence in the present case that there has been a division of the property and the parties have entered into possession of the properties allotted, defendant No. I is not seeking to obtain a decision upon the existence, effect or validity of an award. He is merely seeking to setup a plea that the property was divided by consent of parties. Such a plea is in our judgment not precluded by anything contained in the . The records made by the Panchas about the division of the properties, it is true, were not stamped nor were they registered. It is however clear that if the record made by the Panchas in so far as it deals with immoveable properties is regarded as a non testamentary instrument purporting or operating to create, declare, assign, limit or extinguish any right, title or interest in immoveable property, it was compulsorily registrable under section 17 of the Registration Act, and would not in the absence of registration be admissible in evidence. But in our judgment, the true effect of what are called awards is not by their own force to create any. interest in immoveable property they recorded (1) A.I.R. 1952 Mad. 807 divisions already made and on the facts proved in this case, their validity depends upon the acceptance by the parties. The records made by the Panchas were documents which merely acknowledged partitions already made and were not by law required to be registered. On a perusal of exhibit 456A which is a translation of the tippan book in which are recorded the decisions which are signed by the parties, it is evident that the Panchas were merely recording what had been actually divided and they were not seeking to set out their decisions relating to division of property to be made. The question whether the various decisions recorded in exhibit 456A and in the, books of account were required by law to be stamped need not be decided. The documents were admitted in evidence by the trial court and no question of admissibility of those documents can be raised at a later stage of the suit or in appeal (see section 36, Stamp Act). We are unable to agree with the view of the High Court that the decisions dated October 12, 1946, October 20,1946, and November 10, 1946, were not intended to be final decisions. There is no reliable evidence to support the view of the High Court. Even if the divisions are not strictly in conformity with the shares declared in the decision dated September 23, 1946, the parties having accepted those divisions and having reduced the shares allotted to their possession, it is not open to them to seek to reopen the same on the ground that the division was unequal. Defendant No. 3 contended in the trial courts and the High Court that he had not taken possession, of the property allotted to his share. The trial court held that he had taken possession of all the properties which had fallen to his share and the plea that he has not obtained possession was untrue. The High Court has accepted that view. To sum up: on a consideration of the materials placed before the court, the reference to Panchas is proved to be made voluntarily by all the parties, that the Panchas had in the first instance decided that each branch was to get a fourth share in the properties and that decision was accepted by the parties, that division 808 of properties made from time to time was also accepted by the parties, and subsequently, when the Panchas were unable to proceed with the division, the matter was referred by consent of the parties to Godkhindi and Godkhindi divided with the consent of the parties the outstandings. but he was unable to divide the remaining properties. For reasons we have already stated, the division made by the Panchas and by Godkhindi is binding upon the parties. Such properties as are not partitioned must of course be ordered to be divided and the division will be made consistently with the rules of Hindu law. To the division of such properties which have not been divided, the decision of the Panchas dated September 23, 1946, will not apply. We may now turn to the second question whether on October 19, 1946, the amount of Rs. 3,20,000/ which was the " unaccounted cash with the family " was partitioned. It was the plea of defendant No. I that on that day after dividing the amount of Rs. 64,000/ the " unaccounted cash " which was found to be Rs. 3,20,000/ was actually divided and each branch was given Rs. 80,000/ . Defendant No. 1 relied upon his own testimony besides the testimony of Parappa (one of the Panchas) and of Huchappa clerk of the family shop. Defendant No. 3 examined the other Panch Devendrasa. The trial court held that the testimony of Huchappa and Parappa was unreliable. Defendant No. 1 did admit that the family possessed Rs. 3,20,000/ as " unaccounted cash "; and the burden of proving that division was in fact made lay on him. The trial court observed that there was no writing evidencing the division of Rs. 3,20,000/ , no receipt was taken from any person for payment of a share in that amount, and that it was highly improbable that a person like defendant No. 1 would part with substantial amounts without taking receipts. The High Court disagreed with this view. , They pointed out that there was no entry made in the books of account of this large amount of cash, and apprehending that a division of the property with a 809 formal record which may ultimately be produced in court was likely to involve the members of the family in proceedings for concealment of income, no record was maintained of the division thereof. The High Court also relied upon the testimony of Parappa, Huchappa and defendant No. 1 and upon the circumstance that neither in the plaintiffs ' plaint nor in the plaint of defendant No. 3 was any specific reference made to the refusal of defendant No. 1 to divide this amount. In our view, the High Court was right in the conclusion to which it arrived. It is true that it is difficult to rely upon the oral testimony of either side. Defendant No. I and defendant No. 3 are evidently interested persons and their testimony may not carry much weight. Parappa one of the Panchas deposed that the amount of Rs. 3,20,000/ was divided on August 19, 1947, and each branch received its share. He stated that the amount was not entered in the books of account. He further stated that after the safes were opened, the Tippan book was found together with the money and that the cash was counted but it was not compared with the Tippan book, that thereafter the amount was divided. According to this witness, there was no documentary evidence about that amount and he did not know whether the defendants had knowledge of the extent thereof He explained that no receipts were taken because defendant No. I did not demand the same, that he did not press for a writing as the parties said that it was a " secret arrangement ", and as the division was " with complete concord ", he did not think it necessary to take a writing or to record it in the books. The testimony of Huchappa 'was similar. The other Panch Devendrasa stated that plaintiff No. 1 and defendant No. 2 had pressed the Panchas to give them their share in the " unaccounted cash ", saying that defendant No. I was " indefinitely postponing " it, that the Panchas advised defendant No. 1 to divide this amount, but he stated that he would be " reduced to equality " with others when ' he had a large family and that he had made great efforts and that he should 810 be given more property, otherwise he would not allow division of the " unaccounted cash " and the other property. The Panchas then told him that they had decided upon the share each should be given and no further proposal would be entertained by plaintiff No. 1. The witness then said that he left for Gadag. In cross examination, he stated that he and the other Panchas had told defendant No.1 to give the shares of the unaccounted cash to the other sharers. The evidence of the witnesses clearly shows that the question relating to the division of the "unaccounted cash " was expressly discussed and the plaintiffs as well as defendant No. 3 were fully aware of the existence of this amount lying in the safe which was not entered in the books of account. It is the case of defendant No. I that the amount was divided on October 19, 1947. The first plaintiff and defendant No. 3 have denied this on oath; defendant No. 2 did not enter the witness box. The burden certainly did lie upon defendant No. 1 to establish the division of the amount but there are several important circumstances which go to prove that a partition must have been effected as alleged by defendant No. 1. From the sequence in which various properties were partitioned, it is clear that in the first instance the principle of division was decided and then the valuable properties like the immovable properties, the cash, stock in trade of the shops, were divided and then the division of properties of comparatively small value like the agricultural implements, pots and furniture was taken in hand. If there was a. large amount of Rs. 3,20,000/ in cash lying undivided before dividing pots, pans and furniture, the other parties would have insisted upon the division of that amount. : It is difficult to believe especially having regard to the plea that defendant No. 1 had adopted a refractory attitude with the other parties that defendant No. 3 accepted the division of properties of comparatively small value without insisting upon division of this large amount. There is also the circumstance that even though plaintiff No. I know about the existence of the " unacounted cash " in the safe, it was 811 expressly mentioned in the plaint. We would have expected the plaintiffs to state expressly that on or about October 19, 1947, " unaccounted cash " was found in the safe and that even though defendant No. I was asked to divide the same by the remaining parties as well as the Panchas, he declined to accede to that demand. The conduct of defendant No. 3 in not setting out this item in his plaint renders the story that defendant No. I refused to divide this amount somewhat improbable. There is again no reference in the plaint filed by defendant No. 3 that the amount that was divisible was not divided on account of the attitude adopted by defendant No. 1. Counsel for defendant No. 3 relied upon the averments in para. 9 of the plaint that it was not possible for defendant No. 3 to give a description of the remaining properties and the movable articles belonging to the family and the money lending dealings. But there is in the plaint no reference to any cash amount. Schedules appended to the plaint are very detailed and it is difficult to believe that defendant No. 3 did not mention that this amount of Rs. 3,20,000/ was not divided even after demands were made and ignored. The plea that he apprehended that he might be called upon to pay court fee ad valorem on the amount if he specified it in the plaint is futile. Consistently with the 'practice prevailing in the courts in the Bombay Province, defendant No. 3 had paid Rs. 18,12,0 as court fee under article 17, cl. VII, on the plea that he and the other parties were in constructive possession of the entire property, belonging to the family. Properties worth lakhs of rupees were described in the schedules annexed to the plaint and if court fee ad valorem was not payable according to defendant No. 3 in respect of, those properties, we fail to appreciate why he should have apprehended that court fee ad valorem would still be payable if he claimed a share in the cash amount of Rs. 3,20,000/ . There is also the other circumstances that with consent of the parties reference was made to Godkhindi by the three Panchas of all the matters which had 812 remained to be settled, and in the statement made before him which was recorded in writing, there was no reference to the claim that the amount of Rs. 3,20,000/ had remained to be divided. Plaintiff No. 1 gave a detailed statement of the properties which remained to be divided and that document is dated December 5, Item 5 is " cash balance in the Dalali shops and in the house should be divided ", and again in cl. (12) it was stated " an account of the amounts in suspense (parabhare) account should be taken and the total of the said amount should be divided. " Counsel for the plain. tiffs and the third defendant submitted that the original of this list was in Kannad which was translated into Marathi and the Marathi word which is translated into English as " suspense " was " parabhare ". That word according to the plaintiffs and the third defendant meant " unaccounted for ". It is difficult for us to express any opinion on this argument. It may be observed that the learned Judge of the High Court who delivered the judgment was himself conversant with the Marathi language and he was not prepared to accept that interpretation. But that by itself may not be sufficient to reject the plea of the plaintiffs. What is material is that in a detailed statement consisting of as many as 24 items the plaintiffs have not set out that this amount of Rs. 3,20,000/ which was found in the family safe and which the Panchas wanted to divide, was on account of the uncompromising attitude of the first defendant not divided. If the amount had not been divided, we have not the slightest doubt that in the statement this amount would have been expressly included. Godkhindi was examined as a witness in these suits. The trial court found him to be a person who was wholly disinterested. It appears from the evidence of Godkhindi that no question about the division of Rs. 3,20,000/ was mooted. If the amount had not been divided, we have no doubt that this question would have been prominently brought to his notice; but no such plea was even raised. We are of the view having regard to these circumstances that 813 the amount of Rs. 3,20,000/ must have been divided. In that view of the case, the decree passed by the High Court will be modified as follows: The properties of the joint family except the properties divided on September 23, 1946, October 12, 1946, October 19, 1946, including the amount of Rs. 3,20,000/ , October 20, 1946, October 21, 1946, including the stock in trade, silks and sarees and cupboards, and on November 10, 1946, February 7, 1947, February 22, 1947, February 24, 1947, February 25, 1947, and the furniture, utensils and other movables between May and June, 1947, and the property divided on July 13, 1947, and the outstandings divided be tween February 5, 1948, and February 9,1948, shall be partitioned between the parties. The partition will be made on the footing that defendant No. 3 is entitled to a half shar and defendant No. 1, the plaintiffs collectively and defendant No. 2 are each entitled to a 1/6 share. Defendant No. I will be entitled to his costs in Appeals Nos. 218 of 1959 and 219 of 1959. The other appeals filed by the plaintiffs and defendant No. 3 will be dismissed. One hearing fee. C. As. Nos. 218 and 219 of 1959 allowed. C. As. Nos. 220 to 223 of 1959 dismissed.

The parties were members of a joint Hindu family possessed of considerable property movable and immovable. They volun tarily appointed Panchas to determine the shares of the parties and to divide the property. The Panchas first determined the shares of the parties and reduced the determination to writing. It was accepted by the parties and was signed by all of them and the Panchas. Thereafter, on various dates the Panchas divided several items of movable and immovable properties and the parties entered into possession of their shares. These divisions were duly entered in the " partition books " and were signed by the parties and the Panchas. The Panchas were unable to divide the remaining properties and with the consent of the parties they appointed one G to divide them. G divided some of the properties but he too was unable to divide the remaining properties. One of the parties served a notice cancelling the authority of the Panchas and filed a suit for partition of the remaining properties. Upon an application made by the plaintiff for revoking the reference the Trial Court cancelled the arbitration as one of the Panchas was unwilling to proceed with the division. Another party filed a suit for partition of all the properties contending that the division made by the Panchas was not binding as the award had not been made a rule of the court and the reference had been revoked and as the award was not registered. Held, that the divisions already made by the Panchas were binding on the parties and only the remaining properties were liable to be partitioned. By the reference to the Panchas, the 793 parties ceased to be members of the joint Hindu family. Thereafter, by the division of the family assets which was accepted by the parties and by the taking into possession of their shares by the parties, the properties came under the individual ownerships of the parties to whom they were allotted; and in respect of the remaining properties they became tenants in common. The proceedings taken by the Panchas were not revoked by the order of the trial Court revoking the reference as they had been accepted and acted upon by the parties. Where an award made in arbitration out of court is voluntarily accepted and acted upon by the parties and a suit is thereafter filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit but that the parties have by mutual agreement settled the dispute, and that the agreement and the subsequent actings of the parties are binding. Such a plea is not barred by section 32 of the Arbitration Act. The records made by the Panchas were documents which merely acknowledged partitions already made and were not required to be registered.

Appeals Nos. 421 to 423 of 1957. Appeals from the judgment and order dated February 18, 1955, of the Allahabad High Court (Lucknow Bench), at Lucknow in F.A.F.O. Nos. 11 to 13 of 1953. J. B. Dadachanji, for the appellant. C. B. Agarwala and C. P. Lal, for the respondent. February 6. The Judgment of the Court was delivered by SHAH, J. These three appeals were filed by the appellants M/s. Jethanand & Sons with certificate of fitness granted under article 133(1) (c) of the Constitution by the High Court of Judicature at Allahabad. The appellants entered into three separate contracts with the Government of the United Provinces (now called the State of Uttar Pradesh) on March 20, 1947, May 27, 1947, and June 28, 1947, for the supply of stone ballast at Shankar Garh, District Allahabad. The contracts which were in identical terms contained the following arbitration clause 97 756 " All disputes between the parties hereto arising out of this contract whether during its continuance or after its rescission or in respect of the construction or meaning of any clause thereof or of the tender, specifications and conditions or any of them or any part thereof respectively or anything arising out of or incident thereto for the decision of which no express provision has hereinbefore been made, shall be referred to the Superintending Engineer of the Circle concerned and his decision shall in all cases and at all times be final, binding and con clusive between the parties." Pursuant to the contracts, the appellants supplied stone ballast. Thereafter, purporting to act under cl. (16) of the agreements, the Executive Engineer, Provincial Division, referred certain disputes between the appellants and the State of Uttar Pradesh, alleged to arise out of the performance of the contracts, to arbitration of the Superintending Engineer of the Circle concerned. The Superintending Engineer required the appellants to appear before him at the time fixed in the notices. The appellants by their letter dated May 31, 1951, declined to submit to the jurisdiction of the Superintending Engineer, and informed him that if he hears and determines the cases ex parte, the " decisions will not be binding " on them. On February 7, 1953, the Superintending Engineer made and published three awards in respect of the disputes arising under the three contracts and filed the same in the court of the Civil Judge, Lucknow. The appellants applied for setting aside the awards alleging that the contracts were fully performed and that the dispute alleged by the State of Uttar Pradesh to have arisen out of the contracts could not arise after the contracts were fully performed and that the State could not refer those alleged disputes to arbitration. They also contended that the awards were not valid in law because on the arbitration agreements action was not taken under section 20 of the Arbitration Act. The Civil Judge, Lucknow, held that the disputes between the parties were properly referred to the Superintending Engineer by the State of Uttar 757 Pradesh and that the awards were validly made. Against the orders passed by the Civil Judge, Lucknow, three appeals were preferred by the appellants to the High Court of Judicature at Allahabad. The High Court set aside the orders passed by the Civil Judge and remanded the cases to the Trial Judge with a direction that he do allow the appellants and if need be, the respondent to amend their pleadings, and frame all issues that arise out of the pleadings and allow the parties an opportunity to place such evidence as they desire and decide the case on such evidence. In the view of the High Court no proper notice of the filing of the awards was served upon the appellants and that they were " seriously handicapped in their reply by the course which had been adopted both by the court and the arbitrator in the conduct of the proceedings in court. " On the applications filed by the appellants, the High Court granted leave to appeal to this court under article 133(1)(c) of the Constitution, certifying that the cases were fit for appeal to this court. Counsel for the respondent has urged that the High Court was incompetent to grant certificate under article 133(1) (c) of the Constitution. The order passed by the High Court was manifestly passed in exercise of the inherent power to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court. Under article 133 of the Constitution, an appeal lies to this court from any judgment, decree original order in a civil proceeding of a High Court if the High Court certifies that : (a). . (b). . or (c)"the case is a fit one for appeal to the Supreme Court. " In our view, the order remanding the cases under section 151 of the Civil Procedure Code is not a judgment, decree or final order within the meaning of article 133 of the Constitution. By its order, the High Court did not decide any question relating to the rights of the parties to the dispute. The High Court merely 758 remanded the cases for retrial holding that there was no proper trial of the petitions filed by the appellants for setting aside the awards. Such an order remanding the cases for retrial is not a final order within the meaning of article 133(1)(c). An order is final if it amounts to a final decision relating to the rights of the parties in dispute in the civil proceeding. If after the order, the civil proceeding still remains to be tried and the rights in dispute between the parties have to be determined, the order is not a final order within the meaning of article 133. The High Court assumed that a certificate of fitness to appeal to this court may be issued under section 109(1)(c) of the Code of Civil Procedure, even if the order is not final, and in support of that view, they relied upon the judgment of the Judicial Committee of the Privy Council in V. M. Abdul Rahman vs D. K. Cassim & Sons (1). But section 109 of the Code is now made expressly subject to Ch. IV, Part V of the Constitution and article 133 (1) (c) which occurs in that chapter authorises the grant of a certificate by the High Court only if the order is a final order. The inconsistency between section 109 Civil Procedure Code and article 133 of the Constitution has now been removed by the Code of Civil Procedure (Amendment) Act 66 of 1955. But even before the amending Act, the power under section 109(1) (c) being expressly made subject to the Constitution, an appeal lay to this Court only against judgments, decrees and final orders. Again, the orders passed by the High Court did not raise any question of great public or private importance. In the view of the High Court, the applications forgetting aside the awards filed by the appellants were not properly tried and therefore the cases deserved to be remanded to the court of first instance for trial de novo. The High Court granted leave to the parties to amend their pleadings; they also directed the Civil Judge to frame " all the issues that arise and allow the parties an opportunity of adducing such evidence as they desired. " It was an order for trial de novo on fresh pleadings and on all issues that may (1)(1933) L.R. 60 I.A. 76. 759 arise on the pleadings. Evidently, any decision given by the High Court in the course of the order would not in that trial de novo be binding and the cases will have to be tried afresh by the Civil Judge. The High Court was of the view that the interpretation of para. 3 of the first schedule of the Indian Arbitration Act raised a substantial question of law. But by the direction of the High Court, this question was also left open to be tried before the Civil Judge. We fail to appreciate how an observation on a question which is directed to be retried can still be regarded as raising a question of law of great public or private importance justifying grant of a certificate under article 133 (1) (c) of the Constitution. We accordingly vacate the certificate granted by the High Court and dismiss these appeals with costs. One hearing fee. Appeals dismissed.

Pursuant to an agreement between the parties a dispute relating to the supply of stone ballast was referred for adjudication to an arbitrator who was appointed under the agreement. The arbitrator 's awards were contested by the appellants but the trial court held that the dispute was properly referred and the awards were validity made. The High Court set aside the orders 755 of the trial court and remanded the case for decision after framing all the issues and giving the parties an opportunity to produce evidence. The High Court then granted a certificate of fitness or appeal to this Court under article 133(1)(c) of the Constitution. Held, that an order remanding a case without deciding any question relating to the rights of the parties is not a judgment, decree or final order within the meaning of article 133 of the Constitution. An order is final if it amounts to a final decision relating to the rights of the parties in dispute in the Civil proceeding. The power under section 109 of the Code of Civil Procedure having been expressly made subject to Ch. IV, Part V of the Constitution an appeal lay under that section to this Court only against judgments, decrees and final orders. V. M. Abdul Rahman and Others vs V. D. K. Cassim and Sons and Another (1933) L.R. 60 I.A. 76, referred to. As the orders passed by the High Court did not raise any question of great public or private importance and even the question of interpretation of Para. 3 of the first schedule of the Indian Arbitration Act was left open to be tried by the Civil Judge, no certificate of fitness to appeal to this Court could be granted under article 133 of the Constitution.

Appeals Nos. 314 316 & 778 of 1957. Appeals from the Judgment and Decree dated September 8, 1954, of the Calcutta High Court in appeal from Original Decree No. 159 of 1951. section Chowdhury, B. Das and P. K. Ray Chaudhury, for the appellants in Civil Appeal No. 314 of 1957. M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for respondent No. 1. section N. Mukherjee, for respondent No. 2. section M. Bose, B. Sen and B. N. Ghosh, for respondents Nos. 3 18, 20 40, 42 and 44 47. B. N. Ghosh, for respondent No.48. N. C. Chatterjee and P. K. Chatterjee, for respondent No. 51. section M. Bose, section Chowdhury, B. Sen and B. N. Ghosh, for the appellants in Civil Appeal No. 315 of 1957. M. C. Setlvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for respondent No. 1. section N. Mukherjee, for respondent No. 2. 823 P. K. Ray Chaudhury, for respondent No. 6. B. Das and P. K. Ray Chaudhury, for respondents Nos. 8 28. P. K. Chatterjee, for respondent No. 30. section Chowdhury and P. K. R. Chaudhury, for the appellant in Civil Appeal No. 316 of 1957. M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for respondent No. 1. section N. Mukherjee, for respondent No. 2. B. Das and B. N. Ghosh, for respondents Nos. 3 18, 20 40, 42, 44, 47 and 49 69. N. C. Chatterjee and P. K. Chatterjee, for respondent No. 71. M. C. Stealvad, Attorney General for India, R. Ganapathy Iyer and D. Gupta, for the appellant in Civil Appeal No. 778 of 1957. section M. Bose, section Chowdhary, B. Sen and B. N. Ghosh, for respondents Nos. 2 17, 19 39, 41 and 43 46. Sukumar Ghose, for respondent No. 40. section Chowdhury and P. K. Ray Chaudhury, for respondent No. 47. section Chowdhury, B. Das and P. K. Ray Chaudhury, for respondents Nos. 49 69. N. C. Chatterjee and P. K. Chatterjee, for respondent No. 71. February 17. The Judgment of the Court was delivered by WANCHOO, J. These four appeals on certificates granted by the High Court at Calcutta arise out of one judgment and will be dealt with together. The brief facts necessary for present purposes are these: In September 1946 there was food shortage in the country. In order to relieve this shortage, the Government of India entered into an agreement with the President of Argentine Institute for Promotion of Trade by which it undertook to freeze, requisition and take over and sell to the Argentine Institute and ship to Argentine 30,000 tons of hessian and, in return the Institute guaranteed to obtain licences for shipment 824 from Argentine of maize and wheat offals already purchased by the Government of India in Argentine. This agreement was arrived at on September 27, 1946. In anticipation of this agreement, the Government of India on September 20, 1946, addressed letters to the managing agents of various jute mills in Bengal demanding from them information as to stocks of hessian of certain description held by the mills under their managing agencies and prohibiting them from selling, transferring, removing, consuming or otherwise disposing of any article enumerated in Sch. B to the communication. This demand was made under Sub rule (5) of r. 75 A of the Defence of India Rules (hereinafter called the Rules). After the information had been gathered, the Government of India issued an order on September 30, 1946, to the same managing agents requisitioning the hessian specified in the Schedule to the order and directing them and every other person in possession of the said property to deliver it to the Director of Supplies, Calcutta, and in the meantime not to dispose of the property in any manner without the permission of the Central Government. The Schedule to the order in each case indicated the mill from which the requisition was made, the quantity, the description of the hessian and the name of the registered stock holders. These requisition orders were served upon the managing agents of the mills under sub r. (1) of r. 75 A of the Rules on that very day. Thereafter on the same day, that is, September 30, 1946, the Government of India issued a notice under sub r. (2) of r. 75 A to the managing agents communicating that it had been decided to acquire the property under that sub rule. The managing agents were further informed that by virtue of sub r. (3) of r. 75 A the said property would vest in the Central Government at the beginning of the day on which the notice was, served upon them free from any mortgage, pledge, lien or other similar encumbrance. The notices of acquisition were accompanied by schedules similar to the schedules accompanying the requisition orders. This notice of acquisition was also served on the same day on all the 825 managing agents. Further on the same day the Deputy Director of Supplies, Government of India, wrote to the Secretary, Indian Jute Mills Association that shipping instructions would be issued in due course by the Director of Supplies, Calcutta, with respect to hessian requisitioned and acquired under the orders and notices already referred to. The Government then tried to take possession of the hessian requisitioned and acquired but the mills and the holders of delivery orders resisted the Government 's attempt on the ground that the orders of requisition and acquisition were invalid. The Government of India then filed the suit, out of which the present appeals have arisen, on December 11, 1946, for enforcing the orders of requisition and acquisition and also applied for a receiver to be appointed. This application was resisted and it became apparent that it would take some time before it could be disposed of. As ships which were to carry the hessian to Argentine were ready and shipment could not be delayed, the Government on January 7, 1947, promulgated an Ordinance, being Ordinance No. I of 1947, whereby notwithstanding the pendency of the suit the title and possession of the goods requisitioned and acquired were made to vest in the Government. The Government then took possession of the hessian and shipped the same to Argentine. The suit however did not become infructuous or unnecessary after this because section 3 of the Ordinance provided that the suit should be proceeded with in regard to one question involved in it and decision thereon obtained. Under section 3 it was provided that if in the suit it was finally decided that the said goods were not validly requisitioned or acquired by the Central Government on the 30th day of September, 1946, each of the several previous owners of the said goods would be entitled to receive as compensation from the Central Government the market price prevailing on the date of the institution of the aforesaid suit; but if no such decision was made in the suit, the said goods would be deemed to have been validly requisitioned and acquired by the Central Government on the 30th September, 1946, and the 826 amount of compensation to be paid by the Central Government to the several previous owners of the said goods would be determined in accordance with the provisions of law in force on September 30, 1946, relating, to the requisition and acquisition of movable property under the rules made under the Defence of India Act, 1939. It may be mentioned that the Defence of India Act, 1939, and the Rules made thereunder came to an end on September 30,1946. The main question therefore which remained to be decided in the suit was whether the orders of requisition and acquisition were valid and binding on the respective defendants; and the suit was confined to obtaining a declaration to that effect. If a declaration was granted to the Government of India as prayed, the compensation would be determined as on September 30, 1946, in accordance with the provisions of law in force on that day relating to the requisition and acquisition of movable property under the rules made under the Defence of India Act, 1939. On the other hand, if no such declaration was granted, compensation would have to be arrived at in accordance with the market price of hessian prevailing on the date on which the suit was filed, i.e., December 11, 1946. The main questions which arose for determination in the trial court were four, namely (1) Were the alleged orders of requisition dated September 30, 1946, mentioned in the plaint properly and/or validly and/or duly served? (2) Did such alleged orders effect any valid requisition of the goods mentioned in the Schedules to such orders? (3), Were the orders and notices of acquisition mentioned in the plaint properly made or given and/or duly served ? (4) Is there any custom of trade, practice or usage that upon delivery orders being made over to the buyers against payment the property in the goods represented by such delivery orders passed to such buyers ? Sarkar, J., who tried the suit on the original side of the High Court held that the orders of requisition were properly and validly made. He further held that there was no service of the orders on the mills which were in possession of the hessian and which 827 had to be served in order to effect a valid requisition. He therefore held that as there was no proper or due service of the orders there was no valid or binding requisition. Further on the question of acquisition he held that as the goods requisitioned and acquired were subject to pucca delivery orders and in view of the usage that pucca delivery orders were only issued against payment, were passed from hand to hand by endorsement and were sold and dealt with in the market as absolutely representing the goods to which they relate and as the mills were estopped from challenging that the property in the goods had passed (see Anglo India Jute Mills Co. vs Omademall (1)), the Government which was claiming ownership through the mills was also subject to estoppel and as the holders of the delivery orders being the owners of the property were not served on September 30,1946, under r. 75 A (2) of the Rules, the property in the goods therefore did not pass on September 30, 1946. On this view the suit was dismissed. The Union of India then went in appeal. The appeal court reversed the view of Sarkar J. on the question of requisition. It held that the requisition orders did affect and intended to affect individual mills and service on the managing agents of the mills was good service on the mills and therefore the orders of requisition were valid. On the question of acquisition the appeal court posed the question whether the notices of acquisition were served on the owners as required by r. 75 A (2). It did not agree with the view of Sarkar J. that the Government was claiming through the mills and were therefore estopped from challenging the title of the holders of delivery orders. It also held that property in the goods could not pass by estoppel in the face of the provisions of the , III of 1930. Accordingly it held that it was not necessary to serve the holders of the delivery orders with notices of acquisition ; but it further held that the mills which were the owners of the goods requisitioned were not served with the notices of (1) Cal. 127, 828 acquisition, as in its opinion strict compliance with, the provisions of the rules in 0. XXIX of the Code of Civil Procedure were necessary in order that transfer of ownership contemplated under r. 75 A of the Rules, may be effected. Further as there was failure to comply strictly with the provisions of 0. XXIX of the Code of Civil Procedure and as in the view of the appeal court r. 119 (I B) of the Rules did not apply,,, to the case, there was no service of notices of acquisition on the owners as required by r. 75 A (2) of the Rules therefore it held that the acquisition was not valid. In the result the appeal was partly allowed as to the effect of the requisition orders but the view of Sarkar J. was upheld as to the effect of notices of acquisition. This has been followed by four appeals on certificates granted by the High Court. Appeals Nos. 314 to 316 are by the defendants in the suit challenging the view of the appeal court that the orders of requisition were valid and binding. The appellants in these appeals will hereinafter be referred to as the defendants. Appeal No. 778 is by the Union of India challenging the view of the appeal court that the, notices acquisition were not properly served and, therefore there was no acquisition of property: on September 30, 1946, as provided by r. 75 A (3). We shall first deal with the three appeals by the defendants relating to the requisition orders. It is necessary to set out rr. 75.A and 119 of the Rules in this connection, for the validity of the requisition orders depends upon whether the, two rules have been complied ', with. The two rules are as follows: " 75A. (1) If in the opinion of the Central Government or the Provincial Government it is necessary or expedient so to do for securing the defence British India, public safety, the maintenance of public order or the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community, that Government may by order in writing requisition any property, movable or immovable, and may make such further orders as 829 appear to that Government to be necessary or expedient in connection with the requisitioning : Provided that no property used for the purpose of religious worship and no such property as is referred to in rule 66 or in rule 72 shall be requisitioned under this rule. (2) Where the Central Government or the Provincial Government has requisitioned any property under sub rule (1), that Government may use or deal with the property in such manner as may appear to it to be expedient, and may acquire it by serving on the owner thereof, or where the owner is not readily traceable or the ownership is in dispute, by publishing in the Official Gazette, a notice stating that the Central or Provincial Government, as the case may be, has decided to acquire it in pursuance of this rule. (3) Where a notice of acquisition is served on the owner of the property or published i n the official gazette under sub rule (2), then at the beginning of the day on which the notice is so served or published, the property shall vest in Government free from any mortgage, pledge, lien or other similar encum brance and the period of the requisition thereof shall end. (4). . . . . . . " "119. (1) Save as otherwise expressly provided in these Rules, every authority, officer or person who makes any order in writing in pursuance of any of these Rules shall, in the case of an order of a general nature or affecting a class of persons, publish notice of such order in such manner as may, in the opinion of such authority, officer or person, be best adapted for informing persons whom the order concerns, in the case of an order affecting an individual corporation or firm serve or cause the order to be served in the manner provided for the service of a summons in rule 2 of Order XXIX or rule 3 of Order XXX as the case may be in the First Schedule to the Code of Civil Procedure, 1908 (V of 1908), and in the case of an 830 order affecting an individual person (not being a corporation or firm) serve or cause the order to be served on that person (i) personally, by delivering or tendering to him the order, or (ii) by post, or (iii)where the person cannot be found, by leaving an authentic copy of the order with some adult male member of his family or by affixing such copy to some conspicuous, part of the premises in which he is known to have, last resided or carried on business or personally worked for gain. (1 A). Where any of these Rules empowers an authority, officer or person to take action by notified order, the provisions of sub rule (1) shall not apply in relation to such order. (1 B). If in the course of any judicial proceeding, a question arises whether a person was duly informed of an order made in pursuance of these Rules, compliance with sub rule (1), or, in a case to which sub rule (1 A) applies, the notification of the order, ' shall be conclusive proof that he was so informed; but a failure, to comply with sub rule (1) (i) shall not preclude proof by other means that he had information of the order; and (ii) shall not affect the validity of the order. " The scheme of r. 75 A(1) which provides for requisitioning is that the Government has to form an opinion whether it is necessary or expedient to make a requisition for securing the defence of British India, public safety, the maintenance of public order or the efficient prosecution of the war or for maintaining supplies and services essential to the life of the community. After such opinion has been formed, the Government may by order in writing requisition any property, movable or immovable, and make such further orders as appear to it to be necessary ;or expedient in that connection. It has been faintly urged on behalf of the defendants that the orders of requisition were invalid as they did not comply with 831 the first condition indicated above, namely, the necessity or expediency of passing the order. It is enough to say that there is nothing in this contention. The order of September 30, 1946, states in so many words that " in the opinion of the Central Government it is expedient for maintaining supplies and services essential to the life of the community " to make a requisition. It has never been the case of the defend. ants that the orders of requisition were passed mala fide In these circumstances, in the absence of mala fide, the opinion of the Government is final and the purpose indicated by it in the orders for making requisitions is one of the purposes for which an order of requisition can be made under r. 75 A. The main contention of the defendants in their appeals is that r. 75 A contemplates that the order of requisition must be brought to the knowledge of the person whose interests are being affected by it and that this was not done in this case, for neither the holders of delivery orders nor the mills were apprised of the orders of requisition on September 30, Therefore, it is urged that the orders of requisition were not valid and binding. Now sub rule (1) of r. 75 A does not specifically provide for the manner in which an order of requisition is to be served, nor does it provide specifically on whom such an order should be served. So far as the person on whom an order of requisition should be served is concerned, we agree with the appeal court that service of such an order is necessary on the. person who can place the goods in question at the disposal of the requisitioning authority and until that is done there cannot be any valid and effective requisition. This is also clear from the definition of the word " requisition " in r. 2(11) of the Rules, for " requisition " means in relation to any property, to take possession of the property or to require the property to be placed at the disposal of the requisitioning authority. Therefore a requisition of property can be effected either by taking possession of the property or by requiring the property to be placed at the disposal of the requisitioning authority. In the present case we are concerned with 832 the second mode of requisition. In such a case it is necessary that the party which is required to place the goods in question at the disposal of the requisitioning authority should be informed of the order of requisition, so that it may place the property at the disposal of the requisitioning authority as required by the order. Three questions therefore immediately &rise in this connection, namely, (i) who were the proper persons on whom orders of requisition should have been served, (ii) what is the manner in which the orders should have been served, and (iii) whether proper persons have been served in the proper manner in this case. So far as an order of requisition is concerned, we are of opinion that there is no question of any service of the order on the holders of delivery orders, for whatever may be their position as to the ownership of the goods (a matter with which we shall deal later when considering the matter of, acquisition), they were admittedly not in possession of the goods on September 30. Further the goods were admittedly in the possession of the mills and therefore the proper persons to be served with the orders of requisition in this case were the mills. The next question is as to the manner in which the mills which were in possession of the goods had to be served. To that the answer is in our opinion to be found in r. 119 of the Rules. Rule 119 (1) provides that save as otherwise expressly provided in these rules every order in writing in pursuance of any of these rules shall be served in the manner provided therein. Now there is no express provision as to the manner in which an order of requisition in writing issued under r. 75 A has to be served ; therefore it has to be served as provided in r. 119 (1). Further, as orders in this case concerned an individual corporation they had to be served in the manner provided for ' service of summons in r. 2 of 0. XXIX of the Code of Civil Procedure. Rule 2 of 0. XXIX provides that where 'the suit is against a corporation, the summons may be served on the secretary, or on any director, or other principal officer of the corporation, or by leaving 833. it or sending it by post addressed to the corporation as the, registered office or if there is no registered office then at the place where the corporation carries on business. We have therefore to see whether the mills were served with the orders of requisition in the manner provided by r. 2 of 0. XXIX of the Code of Civil Procedure. Further in case there is any irregularity in service it will have to be seen whether the matter comes under sub r. (1 B) of r. 119. Let us therefore first examine the question whether the mills were served as provided in 0. XXIX, r. 2. Now the orders of requisition were sent to the managing agents of the various jute mills. It is true that in the heading of the order, though the name of the managing agency corporation was mentioned, it was not specifically stated there that the order was being addressed to it as the managing agents for such and such mills. But when one reads the schedule attached to each order sent to the managing agents, it becomes immediately clear that the order was intended for the mills mentioned in the schedule and was being served on the managing agents of the mills. As an instance, we may refer to one requisition order addressed to Messrs. Thomas Duff and Co. Ltd. In the, schedule it was clearly stated that the order was with respect to jute bales held by the jute mills under the managing agency of the addressee and the names of the jute mills with respect to; which the order was passed and was being communicated to the managing agents were also mentioned, that is, Titaghur, Victoria, Samnaggur (South) and Samnaggur (North) Jute, Mills. Any one. receiving this order should be therefore able immediately to understand that the order was served on Messrs. Thomas Duff and Co. Ltd., as the managing agents of the four jute mills mentioned above. The defect therefore, in the form of address was in our opinion of no consequence. The order read as a whole along with the schedule leaves no doubt that the order was meant for the jute mills mentioned in the schedule and was addressed to Messrs. Thomas Duff and Co. Ltd. as the managing agents of, those jute mills, It is not in dispute, that 834 orders of requisition with respect to other mills addressed to other managing agents were in the same form and contained similar schedules. There can therefore in our opinion be no doubt that the orders of requisition were meant for the mills and were addressed to them through the managing agents. It is not in dispute that those orders were served on the managing agents on September 30, 1946, and the only question therefore that remains to be considered is whether the service on the managing agents on behalf of the mills is proper service as provided in r. 119 (1) of the Rules read with r. 2 of 0. XXIX of the Code of Civil Procedure. In the matter of service, we are concerned with cl. (a) of O. XXIX, r. 2, which provides that summons may be served on the secretary, or on any director or other principal officer of the corporation ; and what we have to see is whether service on the managing agents was service on "other principal officer" of the corporation. Section 2 (II) of the Indian Companies Act, No. VII of 1913, which was in force at the relevant time, defines an " officer " to include any director, managing agent, manager or secretary. So a managing agent of a corporation is an officer of the corporation. The question then is whether he is,& principal officer, and the answer to our mind is obvious, considering the nature of the duties of a managing agent of a corporation. It is not seriously disputed either that if a managing agent is an officer of the corporation, he would, considering the nature of his duties, be a principal officer. What is, however, contended is that the definition of an officer given in the Companies Act is an artificial definition and is only for the purposes of the Companies Act and not for the Code of Civil Procedure. The appeal court did not accept this contention and was of the opinion that, the definition of an officer given in the Companies Act can also be utilised for the purpose of the Code of Civil Procedure and we think,that that view is correct. Therefore, when the service in this case was effected on the managing agents of the mills it was effected on one of the principal officers of the corporation and 835 would be a good service under O. XXIX, r. 2 But it is contended that the intention behind O. XXIX, r. 2 is that the service must be on a human being and that O. XXIX, r. 2 does not contemplate service on one corporation for the purpose of securing service on another corporation. In this connection reliance is placed on rr. I and 3 of 0. XXIX where it is urged that the same words occur and it is clear that these rules contemplate that the other principal officer mentioned therein must be a human being. This contention was urged before the appeal court and was rejected by it and in our opinion, rightly. It is true that under rr. I and 3, the principal officer envisaged must be a human being, but that conclusion follows from the setting in which these words appear in these two rules. Rule I relates to the signature and verification of a pleading by the secretary, director or other principal officer of the corporation while r. 3 provides that a court may require the personal appearance of the secretary or of any director or other principal officer of the corporation. It is obvious therefore from the setting in which the words "other principal officer" appear in these two rules that he must be a human being, for signature and verification in one case and personal appearance in another can only be by a human being. But rr. I and 3 do not define who a principal officer is. Therefore, even though in these two rules a principal officer must be a human being, it does not follow that in r. 2 also he must be a human being. Rule 2 relates to service and cl. (b) thereof clearly shows that the service to be effected need not necessarily be on a human being connected with the corporation, for under el. (b) the service will be effective if the summons is left or sent by post addressed to the corporation at the registered office or if there is no registered office then at the place where the corporation carries on business. Therefore, for service to be effective it is not necessary that summons must be served on some human being connected with the corporation. Nor do we see anything in 0. XXIX which would militate against our holding that the service on one corporation may be made by serving 836 another corporation which may be the principal officer of the first corporation. Once it is clear in view of the definition of an " officer" ins. 2 (11) of the Companies Act that a managing agent is an officer and when it is obvious considering the nature of the duties of a managing agent of the corporation that it must be held to be a principal officer, service on the managing agent of a corporation would be effective service for the purpose of 0. XXIX, r. 2. We therefore agree with the appeal court that the orders of requisition in this case having been undoubtedly served on the managing agents of the mills as such there has been proper service of the said orders on the mills as required by r. 119 of the Rules. Therefore as the service on the mills through the managing agents was good service within the meaning of r. 119 read with 0. XXIX, r. 2, it is unnecessary to consider the further question whether it is good service within the meaning of r. 119 (1 B). We are therefore in agreement with the appeal court that the orders of requisition were properly and validly and duly served on the mills through the managing agents and therefore these orders effected a valid requisition of the goods mentioned in the schedules attached thereto. In this view Appeals Nos. 314 to 316 fail and are hereby dismissed. Now we turn to the appeal of the Union of India with respect to acquisition. It is not disputed that on the same day (namely, September 30, 1946) notice of the decision to acquire the requisitioned goods was served on the same managing agents. Here again in the heading of the notice only the name of the managing agent was mentioned without specifying in so many words that the communication was being addressed to the managing agents corporation concerned as managing agents of such and such mills. But it is not in dispute that as in the case of orders of requisition so in the case of notices of acquisition there was a schedule attached and that schedule mentioned that acquisition was of goods held by the jute mills under the managing agency of the corporation to which the notice was addressed and the names 837 of the mills whose managing agents the addressed corporation was, were also mentioned in the schedule. It is clear therefore that the notice of the decision to acquire was given to the various managing agents of the various mills in their capacity as managing agents of the mills specified in the schedule and the question is whether the notice was in accordance with r. 75 A (2). Rule 75 A(2) provides that after the property has been requisitioned the Government may acquire it by serving on the owner thereof a notice stating that the Government has decided to acquire it. Further sub r. (3) of r. 75 A lays down that where a notice of acquisition has been served on the owner, then at the beginning of the day on which the notice is so served the property shall vest in Government free from any mortgage, pledge, lien or other similar encumbrance and the period of the requisition thereof shall end. Sub rule (2) therefore requires that there should be a service of the notice of acquisition on the owner of the property requisitioned. Two questions therefore immediately arise in view of the provisions of r. 75 A (2), namely, (1) that there should be a service of the notice on the owner, and (2) that this service should be in accordance with r. 75 A (2). If both these conditions are satisfied, r. 75 A (3) comes into play and the property vests in the Government as provided therein. The first question therefore that arises is whether the notice in this case was served on the owner of the requisitioned goods. The argument on behalf of the defendants is that the requisitioned goods did not belong to the mills and that the real owners were the holders of the pucca delivery orders, and as there was no service of notice on them, there could be no acquisition under r. 75 A (3). Reliance in this connection is placed on Anglo India Jute Mills Co. 's case (1). In that case it was held that " by the usage of the jute trade in Calcutta, pucca delivery orders are issued only on cash payment, are passed from hand to hand by endorsement and are sold and dealt with in the market as absolutely representing the goods to which (1) Cal. 838 they relate." Therefore, it is urged that the owners of the goods were the holders of the pucca delivery orders and not the mills even though the goods were in the possession of the mills at the time when notices Of acquisition were issued. Now it is not in dispute so far as these pucca delivery orders with which we are concerned in these appeals are concerned that though holders thereof pay for the goods specified therein, at no time till actual delivery is given is there any appropriation of the goods either to the contract or the delivery orders. In spite however of the absence of such appropriation, the holders of pucca delivery orders are regarded by the trade as the owners of the goods specified therein and as held in The Anglo India Jute, Mills Co. 's case (1) these pucca delivery orders are passed from hand to hand by endorsement and are sold and dealt with in the market as absolutely representing the goods to which they relate. The question therefore that arises is whether the property in the goods represented by the pucca delivery orders can be said to have passed to the holders thereof, when they receive them. The contention on behalf of the Union of India is that property in the goods cannot pass in law to the holders of the pucca delivery orders till the goods are actually appropriated to the particular order; therefore, as in this case it is not in dispute that no goods were actually appropriated towards the pucca delivery orders concerned, the property in the goods did not pass to the holders thereof but was still in the mills. Reliance in this connection is placed on section 18 of the Indian , go. III of 1930. That section lays down that " where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. " In the present case, as we have already said it is not in dispute that the goods covered by the pucca delivery orders are not ascertained at the time such orders are issued and, ascertainment takes place in the shape of appropriation when the goods are actually delivered in compliance (1) Cal. 839 therewith. Therefore, till appropriation takes place and goods are actually delivered, they are not ascertained. The contract therefore represented by the pucca delivery orders is a contract for the sale of unascertained goods and no property in the goods is transferred to the buyer in view of section 18 of the Indian till the goods are ascertained by appropriation, which in this case takes place at the time only of actual delivery. The appeal court in our opinion was therefore right in holding that the property in the goods included in the pucca delivery orders did not pass to the holders thereof in view of section IS of the in spite of the decision in the case of the Anglo India Jute Mills Co. (1). What that case decided was that in a suit between a holder of a pucca delivery order be he the first holder or a subsequent holder who has purchased the pucca delivery order in the market and the mills, there will be an estoppel and the mill will be estopped from denying that cash had been paid for the goods to, which the delivery order related and that they held the goods for the holder of the pucca delivery order. That case therefore merely lays down the rule of estoppel as between the mill and the holder of the pucca delivery order and in a suit between them the mill will be estopped from denying the title of the holder of pucca delivery orders; but that does not mean that in law the title passed to the holder of the pucca delivery order as soon as it was issued even though it is not disputed that there was no ascertainment of goods at that time and that the ascertainment only takes place when the goods are appropriated to the pucca delivery orders at the time of actual delivery. The appeal court was in our opinion right in holding that the effect of the decision in the case of Anglo India Jute. Mills Co. (1) was not that the property in the goods passed by estoppel and that that case only decided that as between the seller and the holder of the pucca delivery order, the seller will not be heard to say that there was no title in the holder of the delivery order. That case was not dealing with the question of title (1) Cal. 840 at all as was made clear by Jenkins C.J. but was merely concerned with estoppel. In the present case the question whether the Government of India will be estopped is a matter which we shall consider later; but so far as the question of title is concerned there can be no doubt in view of section 18 of the that title in these cases had not passed to the holders of the pucca delivery orders on September 30, 1946, for the goods were not ascertained till then, whatever may be the position of the holders of the pucca delivery orders in a suit between them and the mills to enforce them. The next question then is whether the Government of India is also estopped from challenging that the title passed to the holders of the pucca delivery orders as soon as they got the delivery orders. Sarkar J. seems to have taken the view that as the Government of India was claiming under the mills and had stepped into the place of the mills by acquisition and was claiming ownership through the mills, it would also be estopped from denying the title of the holders of pucca delivery orders in the same way as the mills through whom it was claiming. The appeal court on the other hand held that the Government of India was not claiming through the mills and therefore would not be estopped like the mills from disputing the title of the holders of the pucca delivery orders. We are of opinion that the view of the appeal court is correct. The Government was not acquiring the property through the owners but under the power given to it by the statute, namely, the Defence of India Act and the Rules made thereunder. It did not acquire merely the rights of the owners of the property but the whole property. This is clear from r. 75 A (3) which lays down that "where a notice of acquisition is served on the owner of the property then at the beginning of the day on which the notice is so served, the property shall vest in Government free from any mortgage, pledge, lien or other similar encumbrance. " This shows clearly that what the Government is acquiring under the statute is a kind of paramount title and not any title derived from any owner, for 841 title derived from the owner would not be (for example) free from mortgage, etc. Therefore when Government takes action to acquire the requisitioned property under sub r. (2) of r. 75 A by serving a notice of its decision to do so, it is acquiring the whole property under the statute and is not making any claim to the property through the mills. Thus it is not merely the rights of the owners that the Government acquires; it acquires the whole property free from all kinds of encumbrances. What is thus acquired under the Defence of India Rules is no particular person 's right but the totality of the rights in the property. It cannot therefore be said that. the Government of India when it takes action under r. 75 A (2) is claiming through anybody: it acquires the totality of the rights in the property by virtue of the power vested in it by the statute, eliminating all subsisting private rights. There can in such a case be no estoppel against the Government of India qua the holders of the pucca delivery orders, for the Government of India is not stepping into the shoes of the mills but is acquiring title which is paramount in nature. Therefore even though there may be an estoppel against the mills in view of the decision of The Anglo India Jute Mills Co. (1), there can be no estoppel against the Government of India. Further as in law the property had not passed to the holders of the pucca delivery orders in the circumstances of this case, it was not necessary to serve them with notices under r. 75 A (2), for in law the owners were the mills and it was sufficient if notices were served on them. We may incidentally make it clear that the decision in the case of Anglo India Jute Mills Co. (1) would still be good law in an appropriate case where the question of estoppel can rightly arise. " In view of the foregoing discussion, the conclusion at which we arrive is that on September 30, 1946, the mills were in law the owners of the property which had been requisitioned and with respect to which notices of acquisition were given on the same day. Therefore the notice required under r. 75 A (2) had to be given only to the mills. (1) 842 The question then which arises is whether due notice was given to the mills under r. 75 A (2). The appeal court held that strict compliance with the provisions of the rule by which such transfer of ownership can be effected was necessary. It further held that as notices were not addressed in so many words to the managing agents as managing agents of the various mills, there was no due service as required by r. 75 A (2) and therefore there was no acquisition following on the service of the notices in this case. The first question that arises in this connection is the manner in which notice has to be served under r. 75 A (2). Now all that r. 75 A (2) says ' is that notice of the decision to acquire the property has to be served on the owner thereof (except in certain circumstances with which we are not concerned). The contention of the learned Attorney General on behalf of the Union of India is that. a notice under r. 75 A (2) has also to be served in the manner provided in r. 119 and that therefore the provisions of r. 119 (1 B) would also apply to service of such a notice. On the other hand it has been contended on behalf of the defendants that r. 119 refers to service of orders in writing and r. 75 A(2) does not speak of an order in writing as is the case in r. 75 A(1). We do not think it necessary for purposes of this case to decide whether a notice stating that the Government has decided to acquire the requisitioned property is an order in writing as contemplated under r. 119. Assuming that it is not so, it still remains to be seen how a notice of the kind envisaged in r. 75 A (2) has to be served on a corporation. The appeal court was of the view that as r. 75 A (2) did not provide for the manner of service and as in its opinion r. 119 did not apply, the service of a notice under r. 75 A (2) must be in a reasonable manner. Proceeding on the assumption that r. 119 does not apply, it seems to us that the view of the appeal court that a notice under r. 75 A (2) must be served in a reasonable manner is correct. What then is this reasonable manner of service of notice under r. 75 A(2)? In this connection reference may be made to two provisions in two other Acts. The first 843 is a provision in section 148 of the Indian Companies Act, 1913, which was then in force. That section provides that " a document 'may be served on a company by leaving it at, or sending it by post to, the registered office of the company. " The other provision is 0. XXIX, r. 2 of the Code of Civil Procedure, which we have already considered. We may however read the opening words of this rule for this purpose. They are as follows: " Subject to any statutory provision regulating service of process, where the suit is against a corporation the summons may be served. " It will be seen that r. 2 of 0. XXIX of the Code of Civil Procedure is subject to any statutory provision regulating service of process and where there is any specific statutory provision r. 2 would not be applicable. The only other statutory provision is in section 148 ibid. But that provision, as the words themselves show, is merely an enabling provision and it nowhere lays down that the method mentioned in section 148 is the only method of serving all documents on a company. The section lays down that a document may be served on a company by leaving it or sending it by post at the registered office of the company. But the language shows that that is not the only provision nor is it imperative that service can be effected in the way mentioned in that section, and in no other way. If that were the intention this section of the Companies Act would have been very differently worded. We therefore find that there is one enabling,.provision in section 148 of the Companies Act as to the manner in which documents may be served on a company or a corporation. Order XXIX, r. 2 lays down another method also in addition which courts may employ in effecting service on a corporation. To our mind either of the modes specified in section 148 of the, Indian Companies Act or 0. XXIX, r. 2 of the Code of Civil Procedure is a reasonable mode of effecting service on a company. It is said that 0. XXIX, r. 2 applies to a case of a suit by or against a corporation. That is undoubtedly so. But what is good service in suits would in our opinion 844 be reasonable service for the purpose of r. 75 A (2). Therefore, notices under r. 75 A (2) could be served on the mills either in the manner provided in a. 148 of the Companies Act or in the manner provided in 0. XXIX, r.2 of the Code of Civil Procedure. In this case the manner employed for the service of notices under r. 75 A (2) is that provided in 0. XXIX, r. 2 (a), namely, by effecting service on the principal officer of the mills, namely, the managing agents. We have already considered whether the orders of requisition on the various managing agents were duly served and have held that it was so. We fail to see why what was good service under 0. XXIX, r. 2 in the case of orders of requisition would not be good service or & reasonable way of service in the case of notices of acquisition, for it is not in dispute that the two were served on the same day one after the other and were substantially the same. There was the same defect in the two communications, namely, the heading where the name of the managing agent was mentioned did not contain in so many words that it was being addressed " the managing agent of such and such mill, but the schedule attached made it clear that was addressed as managing agent of those mills both for the purpose of requisition as well as for the purpose of acquisition. The appeal court seems to think that though this kind of service was good for the purpose of requisition it was not good for the purpose of acquisition, because where acquisition was concerned it was necessary that there must be strict compliance with the manner of service, that is, the heading should have also contained that the managing agents were being addressed &a managing agents of particular mills. We are of opinion that this view of the appeal court is not correct and that what was good service in the case of orders of requisition was also good service in the matter of notices of acquisition, for in substance the two services were effected exactly in the same manner on the principal officer of the mills, which 'in one case were in possession of the goods and in other were owners of the goods. We are therefore of opinion that service of the notices of acquisition in this case 845 on the managing agents of the mills was effective service on the mills as owners for the purpose of r. 75 A (2). In consequence r. 75 A (3) would apply and the property in the goods passed to the Government of india on September 30, 1946. The appeal of the Union of India therefore is allowed and a declaration is granted that the goods were validly requisitioned and acquired and that the orders of requisition and notices of acquisition were valid and binding on the respective defendants, and the goods specified therein vested in the Government of India on September 30, 1946. As to costs, it appears that this litigation was due entirely to the defect in the form of address of the requisition orders and the notices of acquisition. In the circumstances we order parties to bear their own costs throughout. Civil Appeals Nos. 314 to 316 of 1957 dismissed. Civil Appeal No. 778 of 1957 allowed.

The Government of India entered into an agreement with the President of Argentine Institute for Promotion of Trade to supply Hessian in return for licences for. shipment to India of food stuff purchased there and with a view to implement that agreement issued orders under r. 75A(i) of the Defence of India Rules, 1939, on the managing agents of certain jute mills on September 30, 1946, requisitioning hessian and directing them and any other person in possession of the said goods to deliver them to the Director of Supplies, Calcutta. Although in the heading of the notices after the names of the managing agents it was not stated that they were being addressed as managing agents of such and such mills, the schedules attached to them made it clear that they were addressed 'as managing agents of such and such mills. On the same day notices of acquisition under r. 75A(2) were served on the said managing agents and they were further informed that under r. 75A(3) the goods would vest in the Government at the beginning of the same day free from any mortgage, pledge, lien and other similar encumbrance. The notices of acquisition were also accompanied by schedules similar to those accompanying the requisition orders. The 821 Government of India tried to take possession of the hessian but was resisted by the mills and the holders of pucca delivery orders and brought the suit, out of which the present appeals arose, for enforcing the said orders of requisition and acquisition. The Defence of India Act, 1939, and the Rules made thereunder, had in the meantime come to an end and the question before the courts below was whether the orders of requisition and acquisition as served were effective in law. The trial judge held that as there were no valid orders of requisition as the mills had not been properly served and since the goods were subject to pucca delivery orders, the mills as well as the Government were estopped from challenging the ownership of the holders of the said delivery orders. The appeal court held that the orders of requisition were valid and binding, that the mills, and not the holders of the delivery orders, were the owners of the goods but that the notices of acquisition had not been served as required by r. 75A(2) Of the Rules and, therefore, there was no valid acquisition under r. 75A(3) Of the Rules. Held, that the requisition of the goods could be effected either by taking possession of them or by requiring them to be placed at the disposal of the requisitioning authority. Since in the present case, the mills and not the holders of the delivery orders were admittedly in possession of the goods on the date of the requisition, the proper persons to be served with the orders were the mills. Since the Rules did not expressly provide as to the manner in which orders of requisition in writing under r. 75A had to be served, r. 119(i) must apply and as the orders in the present case concerned an individual corporation, they had to be served in the, manner prescribed by 0. XXIX, r. 2 of the Code of Civil Procedure. The word "officer" as defined by section 2(ii) Of the Indian Companies Act, 1913, includes a managing agent and such definition can be utilised for the purpose of the Code and regard being ha to the nature of his duties there can be no doubt that a managing agent would be within the expression " other principal officer" in O. XXIX, r. 2(1) of the Code. There was no basis for the contention that service under r.2 must be on some human being or that there could be no effective service on a corporation by serving another corporation which might be its principal officer. The service of the orders of requisition on the managing agents obviously meant for the mills in the instant case, was, therefore, good service under 0. XXIX, r. 3 Of the Code. Since r. 75A(2) itself did not provide for any mode of service of notice under it, either the one or the other of the modes specified in section I48 of the Indian Companies Act, 1913, or 0. XXIX, r. 2 Of the Code would be a reasonable mode of effecting service thereunder. In the instant case the notices of 822 acquisition having been served under 0. XXIX, r. 2(a), as the orders of requisition had also been, such service was good service and the acquisition was effective in law. It was not correct to say that the property in the goods represented by the pucca delivery orders had passed to their holders. The contract involved in such delivery orders is a contract of sale of unascertained goods and in view of section 18 of the Indian , title cannot pass to the buyer till the goods are ascertained by appropriation. Anglo India jute Mills Co. vs Omademull Cal. 127, explained. It was not correct to say that the Government of India in acquiring the requisitioned goods was claiming title through the mills and would be, like them, estopped qua the holders of pucca delivery orders. The power to acquire the property flowed from the Defence of India Act and the Rules made thereunder and covered not merely the rights of the owners but the entire goods. Rule 75A(3) of the said Rules made it quite clear the acquisition thereunder was of a title paramount and of the whole of the property freed from all kinds of encumbrances. No question of serving any notice on the holders of pucca delivery orders, therefore, arose in the present case as the property in the goods had not in law passed to them.

Appeal No. 276 of 1956. Appeal from the judgment and decree dated October 15, 1954, of the Allahabad High Court in Execution First Appeal No. 224 of 1951. section P. Sinha and Tiryugi Narain for the appellants. G. C. Mathur, for respondent No. 1. 1961. February 20. The Judgment of the Court was delivered by DAS GUPTA, J. This appeal raises a question of limitation in execution proceedings. The decree sought to be executed was made by the Civil Judge, Kanpur, on September 2, 1938, in a suit for partition brought by two brothers Jumna Prasad and Devi Prasad and two minor sons of Jumna Prasad, against Gajju Lal, his son Jawala Prasad, the four minor sons of Jawala Prasad Sharda Prasad, Dharam Pal, Ram Pal and Krishna Pal, and one Smt. Sundari. By the decree one of the properties, a house formerly bearing No. 36/22 and now 36/58, Etawa Bazar, Kanpur, was awarded along with other properties to the defendants in the suit. The present application for execution was made by the four brothers, Sharda Prasad, Dharam Pal, Ram Pal and Krishna Pal on Novem ber 23, 1949. The prayer was that these applicants may be delivered possession over this Etawa Bazar house along with Gajju Lal, Jawala Prasad and Smt. Sundari on dispossession of Jumna Prasad and Devi Prasad. It is stated in the application that all these applicants had " up till now been minors and one of them is still a minor and so no question in respect of time arises. " This ' it is important to note, was the first application for execution of the ' partition decree. A number of objections were raised but the principal objection and the only one with which we are concerned in this appeal was that the application was barred by time. The decision of this question depended on the answer to the question raised on behalf of the opposite parties that Jawala Prasad one of the persons entitled jointly 'with these applicants to make an application for the execution of the decree could have 877 given a discharge of the liability under the decree without the concurrence of his minor sons and so time ran under section 7 of the Limitation Act against them also from the date of the decree. The Trial Court did not feel satisfied that Jawala Prasad could give a valid discharge and held accordingly that the application was within time. on appeal the High Court held that Jawala Prasad as the Karta of the Hindu joint family could act on behalf of the entire joint family in taking possession of the house allotted to the defendants and delivery of such possession could discharge the liability qua the entire joint family and held accordingly that the application was barred by limitation. The High Court however granted a certificate under article 133(1)(c) of the Constitution and on that certificate this appeal has been filed by the applicants for execution. Two contentions were raised on behalf of the appellants in support of the plea that the High Court erred in holding that the application for execution was barred by limitation. First, it is urged that section 7 of the Limitation Act does not apply at all to a partition decree. The second contention is that in any case Jawala Prasad could not give a valid discharge of the liability under the decree in view of the provisions of O. 32 of the Code of Civil Procedure. On the first contention the argument is that the word " discharge " is appropriate only in respect of a monetary claim and is wholly inappropriate in respect of any decree for possession whether on partition or otherwise. There is, in our opinion no substance in this argument. The mere fact that the two illustrations to section 7 are in respect of debts is no ground for thinking that the provisions of section 7 are limited to suits or decrees on monetary claims only. Nor can we see any reason to think that the word " discharge " can refer only to debts. Discharge means, to free from liability. The liability may be in respect of monetary claims, like the debts; it may be in respect of possession of property; it may be in respect of taking some order as regards property it may be in respect of many other matters. Except in the case of declaratory decrees or 878 decrees of a similar nature, the decree in favour of one person against another requires the person against whom the decree is made liable to do something or to refrain from doing something. This liability is in a sense a debt which the party is in law bound to discharge. The ordinary use of the word " judgment debtor " to denote a person against whom a decree has been made makes a clear recognition of this. It is worth mentioning in this connection that the Code of Civil Procedure itself defines " judgment debtor " to mean " any person against whom a decree is passed or an order capable of execution has been made. " It is helpful to notice in this connection the provisions of section 8 of the Limitation Act that " nothing in section 6 or section 7 applies to suits to enforce rights of preemption. " If section 7 had been applicable merely to litigation for monetary claims it would have been unnecessary and indeed meaningless to take the special step of exempting suits to enforce rights of pre emption from the operation of section 7. This is a further reason in support of the conclusion that the word " discharge" in section 7 is not limited to discharge of monetary claims only but also to discharge or satisfaction of all other liabilities as well. We therefore hold that the first argument raised on behalf of the appellants has no substance. Equally untenable is the second argument that the provisions of 0. 32 of the Code of Civil Procedure debar the manager of a Hindu joint family from giving discharge in respect of a liability to deliver properties. Under the Hindu Law the Karta of a Hindu joint family represents all the members of the family and has the power and duty to take action which binds the family in connection with all matters of management of the family property. Clearly, therefore, when in respect of a transaction of property possession has to be received by the several members of the family, it is the Karta 's duty and power to take possession on behalf of the entire family, including himself, the members of the family who are sui juris as well as those who are not. 879 When any minor member of a joint family is a party to a proceeding in a court he has however to be represented by a next friend appointed by the court and where somebody other than the managing member, of the family has been appointed a guardian ad litem there might be difficulty in the way of the managing member giving a discharge on behalf of the minor. Where however the managing member himself is the guardian ad litem the only difficulty in the way of action being taken by him on behalf of a minor is to the extent as mentioned in 0. 32, rr. 6 and 7. In Ganesha Row vs Tuljaram Row (1) the Judicial Committee pointed out that: " No doubt a father or managing member of a joint Hindu family may, under certain circum stances and subject to certain conditions, enter into agreements which may be binding on the minor members of the family. But where a minor is party to a suit and a next friend or guardian has been appointed to look after the rights and interests of the infant in and concerning the suit, the acts of such next friend or guardian are subject to the control of the Court. " In that case their Lordships held that in view of the provisions of section 462 of the then Code of Civil Procedure (which corresponds to 0. 32, r. 7 of the present Civil Procedure Code) the managing member who had been appointed a guardian in the suit had no authority to enter into any compromise or agreement purporting to bind the minor. This principle has been applied also to cases where the provisions of 0. 32, r. 6 would apply and so it has been held in numerous cases in India that the Karta of a Hindu joint family though guardian in the suit cannot give a valid discharge in respect of a claim or a decree for is money or other movable property." (Parmeshwari Singh vs Banjit Singh (2) and Letchmana Chetty vs Subbiah Chetty (3)) In the present case however there is no scope for the application of either the provisions of 0. 32, r. 6 or O.32, r. 7 of the Code of Civil Procedure. Neither is (1) (1913) L.R. 40 I.A. 132,138, (2) A.I.R. 1939 Pat. (3) Mad. 920. 880 this a case of a receipt of any money or movable properties nor is there any question of entering into an agreement or compromise on behalf of the minor. For, clearly acceptance of delivery of possession of property in terms of the decree in a partition suit can by no stretch of imagination be considered entering into any " agreement or compromise" We are therefore of the opinion that Jawala Prasad, the managing member of the family could have given a discharge of the liability under the partition decree by accepting delivery of possession on behalf of his minor sons without their consent and so time ran against them also under section 7 of the Limitation Act from the date of the decree. The High Court was therefore right in its conclusion that the application for execution was barred by limitation. The appeal is accordingly dismissed with costs. Appeal dismissed.

A decree dated September 2, 1938, in a suit for partition of joint Hindu family property awarded a house to the share of one J and his four minor sons. J failed to execute the decree. On November 23, 1949, an application was made by the appellants, the four sons of J, for execution of the decree stating that three of them had been minors till then and one of them was still a minor and so no question of limitation arose. The respondent objected that the application was barred under section 7 of the Indian Limitation Act. The appellants contended that section 7 did not apply to a partition decree and that section 7 was no bar as j could not have given a valid discharge of the liability under the decree in view of the provisions of 0. 32 of the Code of Civil Procedure. Held, that the application for execution was barred by limitation. J, the managing member of the family could have given a discharge of the liability under the partition decree by accepting possession on behalf of his minor sons without their consent and so time ran against them under section 7 from the date of the decree. Order 32, rr. 6 and 7 were no bar to j giving a discharge of the liability under the decree as it was neither a case of receipt of any money or movable property nor was there any question of entering into an agreement or compromise on behalf of the minors. Ganesha Row vs Tuljaram Row (1913) L.R. 40 1.A. 132, Parmeshwari Singh vs Ranjit Singh, A.I.R. 1939 Pat. 33 and Letchmatsa Chetty vs Subbiah Chotty, Mad. 920, referred to. 876

Appeal No. 112 of 1957. Appeal by special leave from the judgment and decree dated January 28, 1954, of the Bombay High Court in First Appeal No. 69 of 1950. Purshottam Trikamdas and Naunit Lal for the appellants. C. K. Daphtary,Solicitor General of India, section N. Andley, J. B. Dadachanji and P. L. Vohra for respond ents Nos. I and 2. B R. L. Iyengar for respondents Nos. 6 to 9. 1961. February 21. The Judgment of the Court was delivered by SHAH, J. The genealogy which sets out the relationship between some of the principal parties in this litigation is as follows: Mallappa | | | | | Balappa Shivappa Basavanappa Chanamalappa | | Basalingappa | Rachappa | (Parvatewa Balappa deft. 9 | respdt. 12) | | | | | | | Shrishailappa Shivappa | (Plaintiff 1) (plaintiff 2) | | | | | | | | | malappa Chanabasappa Balappa Basavanappa Shrishailppa (deft. 5) (deft.6) (adopted by (deft. 7) (deft. 8) Chanamalappa Mallappa had four sons Balappa, Shivappa, Basavanappa and Chanamalappa. These four sons, formed a joint Hindu family. Chanamalappa separated himself from the joint family sometime in the year 1909 and his other three brothers continued to remain joint. Shivappa was the Manager of the joint family 898 after the death of Mallappa. Shivappa died in 1928. and Rachappa became the Manager of, the family. The joint family possessed lands in seventeen, villages and many houses in Khanapur. The family had also an extensive money lending business. One Bashettappa Neeli hereinafter referred to as Bashettappawas married to the sister of Rachappa. On July 29, 1929, Bashettappa executed a deed of simple mortgage in favour of Rachappa in respect of certain parcels of lands and houses belonging to him to secure repayment of Rs. 1,73,000/ , Rs. 76,700/ out of which were received in cash and the balance represented amounts which Rachappa agreed to pay to Bashettappa 's creditors. To one Gurappa, Bashettappa owed Rs. 8,000/ as an unsecured debt and Rachappa agreed to pay that debt. In Insolvency Application No. 22 of 1929 of the file of the First Class Subordinate Judge, Dharwar, Bashettappa was adjudicated an insolvent and receivers were appointed by the Insolvency Court to administer his estate. The receivers applied for a declaration that the mortgage deed, in favour of Rachappa was in fraud of creditors and was 'accordingly void. The Assistant Judge, Dharwar, in Appeal No. 25 of 1934 from the order of the Insolvency Court held that Rachappa was entitled out of the mortgage amount to recover Rs. 45,700/ as a secured debt and Rs. 31,000/ as unsecured debt. Gurappacreditor of Bashettappa in the meanwhile filed Suit No. 84 of 1932 against Rachappa and other members of his family in the court of the First Class Subordinate Judge, Dharwar, for a decree for Rs. 8,000/claiming that Rachappa had, acting on behalf of the joint family of which he was the manager, undertaken under the deed of mortgage to pay that amount and. that he Gurappa had accepted that undertaking. ; A decree exparte was passed in that suit against Rachappa on February 28,1933, and the claim against the other members of the family was either withdrawn ' or rejected. On July 23, 1939, the three branches of the joint family by mutual agreement severed the joint status and properties movables and immovables beloning to the family were divided. Pursuant to 899 this division, lands and houses which fell to the shares of the three branches were mutated in the Revenue and Municipal records in the names of the managers of the respective branches. Movables were also divided. The mortgage amount recoverable from Bashettappa and a claim against one Desai were ' it is the case of the plaintiff in the suit out of which this appeal Arises, kept joint. Gurappa after making certain infructuous attempts to execute the decree filed dharkhast No. 176 of 1940 to recover Rs. 11,061 6 9 and prayed for an order of attachment and sale of the rights of Rachappa under the mortgage bond dated July 29,1929. One Ganpatrao N. Madiman hereinafter referred to as Madiman offered the highest bid at the court auction and the mortgage bond was sold to him for Rs. 20,000/ An application filed by Rachppa for setting aside the sale pleading that the sale was vitiated by material irregularities and fraud in publishing and conducting the sale was rejected. The mortgage bond was delivered by the executing court to Madiman and orders were issued against Bashettappa and the receivers of his estate prohibiting them from making payments of the dues under the mortgage or any interest thereon, to any person or personal except the purchaser Madiman. In Miscellaneous Application No. 57 of 1944, Madiman applied, to the Insolvency Court to be recognised as an unsecured creditor for Rs. 31,000/., and the application was granted on the footing that the entire interest under the mortgage bond was purchased by him. Receivers appointed by the Insolvency Court thereafter put up for sale. the equity of redemption in the mortgaged properties and the same was purchased for Rs. 15,500/. by Madiman. The sale deed in this behalf was executed by the receivers in favour of Madiman on January 28, 1947. Madiman accordingly became the owner of the equity of redemption and claimed to be entitled to the entire mortgagee right as a purchaser of the right, title and interest of Rachappa. Basalingappa who was the natural brother of Rachappa and was adopted by his uncle Basavanappa died in 1946 leaving him surviving his widow 900 Parvatewa, and two sons Shrishailappa and Shivappa. The sons of Basalingappa who will hereinafter be referred to as the plaintiffs filed Suit No. 253 of 1947 for a decree for Rs. 1,23,400/ by enforcing the mortgage deed executed by Bashettappa claiming that Madiman had at the court auction acquired in the mortgagee right only the right, title and interest of Rachappa which was a third and the plaintiffs and defendants 5 to 8 sons of Shivappa continued to remain owners of the remaining two third share. The plaintiffs prayed for a decree that the amount due under the mortgage be awarded to them and in default of payment the amount be realised by sale of the mortgaged property. To this suit were impleaded Bashettappa as defendant No. 1, receivers of his estate as defendants Nos. 2 and 3,Madiman as defendant No. 4, sons of Shivappa as defendants Nos. 5 to 8 and Rachappa and his son as defendants Nos. 9 and 10. Madiman died after the institution of this suit and his sons were impleaded as defendants Nos. 4A to 4C and his widow as defendant 4D. Madiman 's sons were the principal contesting defendants and the main contentions raised by them were: (1) that the mortgagee right was the separate property of Rachappa and it did not belong at any time to the joint family, of Rachappa defendants 5 to 8 and the plaintiffs, (2) that in any event, at the partition between the three branches the mortgagee right had failed to the share of Rachappa and that it was not kept undivided as alleged by the plaintiffs, and (3) that in Execution Petition No. 176 of 1940, the entire interest of the joint family was sold and it was purchased by Madiman and consequently, the plaintiffs could not enforce the mortgage. The trial court negatived the contentions raised by the sons of Madiman and held that only a third share in the mortgagee right was purchased at the court auction by Madiman. The court accordingly passed a decree against defendants Nos., 4A to 4D for payment of Rs. 60,933 5 4 and proportionate costs ',with future interest at 6% per annum 'on Rs. 30,466,10 8 901 from the date of the suit to the plaintiffs and defendants 5 to 8 within six months and in default of payment for sale of the mortgaged property. Against that decree, defendants 4A to 4C hereinafter referred to as the appellants appealed to the High Court at Bombay. The High Court held that the mortgagee right belonged to the joint family, that the agreement to pay Rs. 8,000/ to Gurappa was not binding upon that family and therefore in execution of the decree passed in favour of Gurappa only the right, title and interest of Rachappa was purchased by Madiman. The High Court further held that there was in 1939 severance of joint family status between the members of the family of Rachappa, plaintiffs and others, but as in the state of the record in the view of the court a finding on the question whether the mortgage debt was kept undivided could not be recorded, they remanded the case for recording a finding on the following issue: " Whether it is proved that the mortgage debt of 29th July, 1929, fell to the share of defendant No. 9 at the family partition of July, 1939, " and directed the trial court to allow both the parties to lead evidence upon this issue and to certify its findings thereon. The trial court recorded a negative finding on that issue. It held that the mortgage claim was kept undivided at the partition. The High Court confirmed this finding and dismissed the appeal filed by the appellants, subject to a slight modification as to the rate of interest awarded by the trial court. With special leave under article 136 of the Constitution, this appeal is preferred. No serious argument was advanced before us on the plea that the amount due under the mortgage from Bashettappa was not the property of the joint family. At the material time when the mortgage deed was executed by Bashettappa, Rachappa was the manager of the joint family. In Suit No. 84 of 1932 filed by Gurappa it was alleged that Rachappa was the manager of the joint family consisting of himself and the branches of Shivappa and Basavanappa and that the mortgage transaction was for the benefit of the joint family and that Raohappa had entered into that 902 transaction for and on behalf of the joint family and in that suit Rachappa alone was declared liable to pay Rs. 8,000/ . Partition of the year 1930 is supported by evidence which has remained unchallenged. Intimation was given to the village and Municipal authorities pursuant to the partition for mutating the names of the different branches to whom the shares were allotted. The evidence of Rachappa and Mallappa that the partition took place also has remained uncontradicted. The question which calls for consideration is whether at the partition, the mortgagee right under the deed executed by Bashettappa was kept undivided. Mallappa defendant No. 5 in his evidence when he was examined after remand stated that " an equal division was made of the lands according to the income and that Rachappa was not given a smaller share in the lands. " He also stated that the houses were divided in equal shares and the outstandings in the money lending business except two bonds the mortgage bond executed by Bashettappa and one Desai were kept undivided. He denied the suggestion that the mortgage debt due from Bashettappa was allotted exclusively to Rachappa. Rachappa in his evidence also stated that the mortgage bond was kept undivided between the three branches and that it was not true that it was allotted to his shares at the partition. Devidas defendant No. 4 A had evidently no personal knowledge about this partition or the terms thereof His statement that Rachappa had told him at the time when Madiman offered his bid at the court auction that the mortgage bond was allotted exclusively to Rachappa 's share could not in the circumstances of the case be true and was rightly "believed by the trial court and the High Court.

The manager of an undivided Hindu family consisting of himself, his brother and their step mother, instituted a suit for recovery of the amount due under a mortgage belonging to the family. The step mother who was interested in the mortgagee right was not made a party to the suit. Though the manager (the first plaintiff) did not describe himself as the manager in the plaint, the allegations in the plaint showed that the suit was filed on behalf of the joint family. No objection as to non joinder was raised in the trial court, but when the appeal was pending in the High Court the step mother was added as a party on her applica tion. The contesting defendants pleaded that as all persons having an interest in the mortgage security were not joined as parties within the period of limitation prescribed for a suit to enforce the mortgage, and the first plaintiff did not, in any case, purport to institute the suit in his capacity as the manager, the suit must fail. Held: (1) that the failure to join a person who is a proper but not a necessary party does not affect the maintainability of the suit nor does it invite the application of section 22 Of the Indian Limitation Act, 1908 ; (2) that the question whether a suit as instituted by the manager of an undivided Hindu family in his personal capacity or as representing the family depends upon the circumstances of each case and that the failure of the plaintiff to describe himself as the manager in the plaint is not decisive of the question. (1) (2) 897 In the resent case, the step mother was not a necessary party, and the facts showed that the suit was instituted by the first plaintiff in his capacity as manager. Accordingly, the suit was maintainable. Guruvayya Gowda and Others vs Dattatraya Anant and Others Bom. 11, referred to.

Appeal No. 759 of 1957. Appeal from the judgment and Order dated June 26, 1957, of the Bombay High Court in Appeal No, 92 of 1956. J. C. Bhatt, section N. Andley, J. B. Dadachanji, Rameshuar Nath and. P. L, Vohra, for the appellants. R. Ganapathy Iyer and D. Gupta, for respondent. February 16. The Judgment of Gajendragadkar, Subba Rao, Wanchoo and Mudholkar, JJ., was delivered by Wanchoo, J. Sarkar, J., delivered a separate Judgment. WANCHOO, J. This appeal by certificate granted by the High Court of Bombay raises the constitutionality, of section 114(2) of the Bombay Industrial Relations Act, No. XI of 1947, hereinafter called the Act). The brief facts necessary for present purposes are these. 108 The appellant is a cotton textile mill situate in Bombay. It is said that the appellant had been continuously making losses from 1950 to 1955. References were however made under section 73 A of the Act by the Rashtriya Mill ' Mazdoor Sangh, Bombay, in respect of disputes relating to bonus for the years 1952 and 1953, which are said to be pending before the Industrial Court, Bombay. The ease of the appellant before the Industrial Court was that as it had made losses there was no question of its paying any bonus for the years in dispute. It seems that at the same time there were cases relating to bonus of other mills pending before the Industrial Court and the appellant applied that its case should be dealt with separately, and this prayer was acceded to. It seems that while the references were pending, an agreement was. arrived at between the Mill owners ' Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay, with respect to payment of bonus for the years 1952 to 1957 and the agreement was to come into force with respect to each mill when it was signed by each member mill of the Mill owners ' Association. Clause (6) of that agree ment provided for payment of bonus even where the profit made by a mill was not adequate to provide for all prior charges as per the Full Bench formula evolved by the Labour Appellate Tribunal in The Mill owners ' Association, Bombay vs The Rashtriya Mill Mazdoor Sangh (1) or even where a mill made actual loss, the minimum bonus being in either of these two cases 4 8 per cent. of the basic wages. earned during the year, subject to such mill being entitled to adjust the amount thus paid by it as the minimum bonus against any available surplus in any subsequent year or years under the provisions of the agreement. This agreement was registered and was made enforceable as an award against those mills which were parties thereto. The appellant however did not sign the agreement and therefore it was not enforced as an award by the Industrial Court against the appellant. Thereafter the Rashtriya Mill Mazdoor Sangh wrote to the Government of Bombay requesting that the (1) 109 said award should be enforced against the appellant in exercise of the powers vested in the Government by section 114(2) of the Act. After necessary action under section 114(2), the Government of Bombay issued a notification dated July 31, 1956, directing that the award made by the Industrial Court on March 13, 1956, for payment of bonus for the years 1952 and 1953 and also for the years 1954 to 1957 be enforced against the appellant. This was followed by a writ petition by the appellant in the High Court challenging the constitutionality of section 114(2) and also challenging the power of the State Government to issue such a notification under that provision. The petition was however dismissed on October 9, 1956. There was then an appeal to a Division Bench of the High Court in which also the appellant failed. The appellant then applied for a certificate to enable it to file an appeal to this Court, which was granted and that is how the matter has come up before us. Two main points have been urged on behalf of the appellant before us. In the first place, it is urged that section 114(2) is unconstitutional as it violates the fundamental rights guaranteed under article 19(1)(f) and (g) of the Constitution. In the second place, it is urged that even if section 114(2) is constitutional, the notification has gone beyond the powers conferred on the State Government by that section and therefore the notification is bad. We do not think it necessary for purposes of the present appeal to consider the constitutionality of section 114(2), for we have come to the conclusion that the notification is bad because it goes beyond the powers conferred on the State Government by that section. This brings us immediately to the second point that has been urged before us and in that connection we have to consider the ambit of the power of the State Government under section 114(2). Section. 114(2) reads as follows. "In cases in which a Representative Union is a party to a, registered agreement, or a settlement, submission or award, the State Government may, 110 after giving the parties affected an opportunity of being heard, by notification in the Official Gazette, direct that such agreement, settlement, submission or. award shall be binding upon such other employers and employees in such industry or occupation in that local area as may be specified in the notification: Provided that before giving a direction under this section the State Government may, in such cases as it deems fit, make a reference to the Industrial Court for its opinion. " The words of section 114(2) are very general and may at first blush be open to the interpretation that any agreement, settlement, submission or award may be extended thereunder provided it fulfills its terms. But further consideration shows that there are two obvious limitations on the power of the State. Government in that behalf. The first limitation arises out of the subject matter of the agreement etc., to be extended. Suppose the agreement etc. deal with (lot us say) the wages of a certain type of workmen in a certain mill. Suppose that the agreement etc., are extended to ano ther mill where that type of workmen does not exist. Obviously the agreement cannot be extended in these circumstances and the power of the State Government is thus limited by the subject matter of the agreement etc. The second limitation which again, is obvious arises from the provisions of law. The proviso to section 114(2) shows that before exercising its power under the said section the Government can refer the matter to an Industrial Court and there can be no doubt that an Industrial Court cannot and will not, advise anything against the law. Section 95 A makes the determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court under the regulations made under section 92 binding in all proceedings under the Act. What is done under section 114(2) is also a proceeding under the Act after notice to the parties affected. The State Government is thus bound by any decision on a question of law while proceeding under a. 114(2). The 111 policy of the Act underlying section 95 A therefore lead,,; to the conclusion that the exercise of power conferred by section 114(2) has to be in conformity with the industrial law laid down by the Full Bench of the Industrial Court and also by any decision of this Court. The State Government therefore when it passes an order under section 114(2) must have full regard to the law as laid down by the legislature and by the decisions of this Court and cannot pass an order under section 114(2) which is against such law. Besides, section 114(2) places a registered agreement, a settlement, a submission and an award on the same footing and so if an award has to conform to section 95 A as it must so must the other three mentioned therein. Therefore, when the State Government acts under section 114(2) it can only do as between the parties before it what a labour court, an Industrial Court or a wage board can in law do under the Act. We do not think that section 114(2) authorises the State Government to act against the law as laid down by the legislature or by this Court. Section 114(2) therefore appears to be speedy remedy (dispensing with all appeals provided under the Act) by which the State Government may direct that the terms and conditions of employment in the matter of wages, hours of work and so on may be the same in a particular industry or occupation in a particular area as may have been settled between a representative union and other employers in that area and as could if necessary be enforced through an award in a case to which the representative union was a party. There can be no doubt however that the State Government cannot do under section 114(2) what an adjudicator has 'no power to award under the provisions of the Act. Therefore, as we read a, 114(2) we cannot escape the conclusion that the State Government 's power to make a direction under that section is co terminus with the power of an adjudicator (be it a labour court, an Industrial Court or a wage board under the Act) to make an award thereunder, and the State Government cannot under section 114(2) do what an adjudicator cannot do under the Act. This being the ambit of the State Government 's power in respect of giving a direction under a. 114(2), 112 let us now proceed to see whether the impugned notification is within the ambit of these powers. By this notification the State Government has directed that the award dated March 13, 1956, made by the Industrial Court shall be binding on the appellant and its employees in the matter of payment of bonus for the years 1952 to 1957 (both inclusive). It is not in dispute that the said award was based, on an agreement between the Mill owners ' Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay. The said agreement provided that it would have to be signed by each member mill of the Mill owners ' Association before it would be binding on it and again it is not in dispute that the appellant mill though it is a member of the Mill owners ' Association never signed it. Farther, cl. (6) of the agreement provided for payment of minimum bonus even in cases where there was no adequate profit to provide for all prior charges as per the Full Bench formula and also in cases where a mill had made actual loss on the year 's working, subject to a proviso as to adjustment. Thus by the direction given in the impugned notification the appellant is subjected to payment of bonus even where it has not made adequate profit to provide for all prior charges or has in fact made a loss. The contention on behalf of the appellant is that it would not be open to an Industrial Court to grant bonus when profit was not adequate to meet all prior charges or where there was an actual loss and therefore when the impugned notification made it possible for grant of bonus even in these cases (for prima facie the appellant had made losses upto 1955), it directed something which even an Industrial Court could not do. ' In consequence, it is urged that the notification inasmuch as it makes this possible is beyond the powers conferred on the State Government under section 114(2) because it allows something to be done which even an Industrial Court could not allow. Reliance in this connection is placed on the decision of this Court in The New Manekchowk Spinning. Co. Ltd. and Others vs The Textile Labour Association (1). In that case this Court was considering (1) [1961] 3 S.C.R. 113 a similar agreement relating to Ahmedabad. The Industrial Court had imposed that agreement after its expiry for one year on the mills inspite of their contention that they were not bound to pay any bonus for the years in dispute in view of the law laid down by this Court in The Associated Cement Companies, Limited vs The Workmen (1). After examining the terms of the agreement then in dispute this Court came to the conclusion that in view of the law laid down in The Associated Cement Companies ' case, the Industrial Court had no jurisdiction to impose that agreement on the mills. It further held that an agreement of that kind could only continue by consent of parties. and could not be enforced by industrial adjudication against the will of any of the parties. The agreement in the present case directed to be enforced by the impugned notification is similar in terms and as held New Manekchowk 's case (2) it could not be enforced by industrial adjudication against the will of any of the parties. The power of the State Government under section 114(2) being co terminus with the power of an adjudicator under the Act, such an agreement cannot therefore be directed to be enforced against the will of the appellant even under section 114(2) inasmuch as by doing so the State Government would be going beyond the powers conferred on it by that section. The impugned notification therefore must be held to be bad inasmuch as it goes beyond the powers conferred on the State Government under section 114(2) and must therefore be struggle down. We therefore allow the appeal with costs and setting aside the order of the High Court hold that the notification dated July 31, 1956, is beyond the powers of the State Government under section 114(2) and direct that it will not be enforced. We should however like to make it clear that this decision will not prejudice the trial of any references with respect to bonus which may be pending or which may hereafter be made between the appellant and its employees with respect to years 1952 to 1957 (both (1) (2) ; 114 inclusive). If such references are pending or are hereafter made they will be decided in accordance with the decision of this Court in The Associated Cement Companies ' Case SARKAR, J. This appeal arises but of an application made by the appellants to the High Court at Bombay under article 226 of the Constitution for a writ directing the respondent, the State ' of Bombay, to forbear from acting upon or enforcing a certain notification issued by it under a. 114(2) of the Bombay Industrial Relations Act, 1946. This order was; sought on two grounds. The first ground was that section ll4(2) was ultra vires, illegal and void. The second ground was that if it was not so, the notification had been issued in improper exercise of the powers conferred by that provision. The appellants are a cotton textile mill in Greater Bombay, a local area under the Act, and its directors and shareholders. Their application was dismissed by the High Court and hence the present appeal. It appears that certain references were pending since 1953 and 1954 under the Act in the Industrial Court between various cotton textile mills in Greater Bombay and their employees, in respect of disputes concerning bonus for the years 1952 and 1953. In these references the employees were represented by the Rashtriya Mill Mazdoor Sangh, a Representative Union of workmen in the cotton textile industry as defined in the Act and a union registered under it. The appellant mill was a party to these references. On March 1, 1956, while these references were pending, the Rashtriya Mill Mazdoor Singh entered into an agreement with the Mill Owners Association, Bombay, of which fortyseven cotton textile mills including the appellant mill, were members, regarding the bonus to be paid to the employees of these mills for the years 1952 to 1957. This agreement was subsequently accepted individually by about fortytwo of the mills who were members of the Association and parties to the references, and became binding on these mills. This agreement was later registered under the Act and filed in the pending references and an award was (1) 115 made by the Industrial Court on March 13, 1956, in terms of it, as between the mills who had individually accepted the agreement and their employees. The appellant mill did not accept the agreement and no award was made in the references concerning it and so far as it was concerned, the references remained pending. On July 31, 1956, the respondent made the order which is challenged in these proceedings. That order was in these terms: "Whereas the. Rashtriya Mill Mazdoor Sangh, Bombay. .is a party to an award dated the 13th March 1956 And whereas the Government of Bombay, con siders that the award should be made binding upon the employers specified in column 1 of the schedule hereto annexed and their employees And whereas the said employers and the Rash triya Mill Mazdoor Sangh, Bombay, representing the said employees being the parties affected were heard Now, therefore, in exercise of the powers conferred by sub section (2) of section 114 of the said Act, the Government of Bombay hereby directs that the said award shall be binding on the employers specified in column 1 of the schedule hereto annexed and their employees in the matter of payment of bonus for the years specified against the employers in column 2 of the said schedule. " The appellant mill was one of the employers men. tioned in the schedule to the notification and the schedule further provided that the award would be binding on the appellant mill and its employees for the years 1952 to 1957, both inclusive. As a result of this notification the appellant mill became liable to pay bonus to its employees for the. years mentioned, in terms of the award based on the agreement, to neither of which it was a party. The appellants contend that the appellant mill is not liable to pay bonus in law as laid down by this Courtin Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union (1) and by the Full Bench (1) ; 116 of the Labour Appellate Tribunal, in Mill Owners ' Association, Bombay vs Rashtreeya Mills Mazdoor Sangh (1) as it has not made any profit for the period commencing from June 30, 1950, and ending on June 30,1955. The agreement on which the award was based, adopted a formula for ascertaining the available surplus of the profits of an employer and provided for payment of certain bonus out of it. This bonus, I gather, would have been of a smaller amount than that payable under the formula laid down in the cases mentioned earlier. The appellants have no complaint against this Part of the agreement for, presumably, under it, they would not be liable to pay any bonus at all. What they object to is el. 6 of the ' agreement. This clause in substance provided that when no avai. lable surplus was found to exist according to the for mula or even when a mill had incurred loss in a particular year, it would have to pay its employees "a minimum bonus equivalent to 4.8 per cent of the basic wages earned by them during the year", with a right to recoup the bonus so paid, out of the bonus that would be payable under the agreement in subsequent years and out of the residue of the surplus profits then remaining, it would have to pay bonus in terms of the agreement. The substance of the appellants ' grie vance against the notification is that under it the appellant mill has to pay bonus in terms of cl. 6 of the agreement even though it has been working at a loss. The first question is whether section 114(2) is invalid and illegal. That section so far as is material is in these terms: "section 114 (1). A registered agreement or a settlement, submission or award shall be binding upon all per. sons who are parties thereto: (2) In cases in which a Representative Union is a party to a registered agreement, or a settlement, submission or award, the State Government may, after giving the parties affected an opportunity of (1) 117 being heard, by notification in the Official Gazette, direct that such agreement, settlement, submission or award shall be binding on such other employers or employees in such industry or occupation in that local area as may be specified in the notification. " The appellants first challenge the validity of the .section on the ground that it offends article 14 of the Constitution. It is said that it gives an unguided and arbitrary power to the State Government to discriminate between various sets of employers and employees and make an order on any one set at its pleasure leaving out others. It seems to me that this contention is not well founded. The power given by the provision is not, in my view, uncontrolled. The object of the Act clearly is the settlement of industrial disputes and attainment of industrial peace. Furthermore, under the section the order can be made on employerS and employees in a local area which again is a limitation of the power. Now, a local area is an area notified as such for the purposes of the Act: see section 2(23). The object of this pro vision as to local areas is to divide the State into several areas for better maintenance of industrial peace and to group together for that purpose, the industries in a region. If conditions of labour in any area where a large number of workmen is collected, are uniform, then there is less likely to be disaffection among them whereas if such conditions are not the same, the workmen are likely to become restive. It is well known that regional considerations are closely connected with industrial disputes and are of importance for their settlement. The local area contemplated by section 114(2) is obviously the area in respect of which the Representative Union mentioned in it has been registered. No reference can be found in the section to any other local area. Under section 2(33) a Representative Union means a union registered as such under the Act and under section 13(1) a Representative Union is a union which has a membership of not less than fifteen per cent. of the employees in any industry in any local area and registered for that industry in the area. 118 The agreement, settlement, submission or award mentioned in the section has to be one to which a Representative Union is a party. It follows from this that a substantial body of workmen in an area has come to a decision or become bound by an award as to a question or questions affecting them. Therefore, the power under the section can be exercised only for achieving industrial peace in that area. It is not unlikely when a substantial section of workmen congregated in an area have secured certain rights that the other employees in that area may claim similar rights and this may disturb industrial peace in that area. The power can be exercised only for meeting such disturbance and only in the local area where it occurs. There are therefore two guiding principles. First, the power can be exercised only to prevent breach of industrial peace. Secondly, it can be exercised only in a specified area if there is a threat to industrial peace there. An exercise of the power outside the area and for purposes other than maintenance of industrial peace, would be beyond the scope of the section. Again, once there is occasion for legitimate exercise of the power and it is exercised, it must be exercised in all units of the industry in that local area in which units the threat to the industrial peace exists if that would restore the peace. It would be open to the Courts to correct a discriminatory use of the power or its use outside the scope of the section. Therefore it does not seem to me that the section confers unguided and arbitrary power. is of some interest to state that in the present case there has been no such discriminatory use of the power or any use outside the section. The respondent has made the award binding on all the remaining mills who had not accepted the agreement and there is evidence that there was: threat of breach of industrial peace in these mills. Then also, I find that the section has conferred the power on the highest authority, namely, the Government itself. That would be some guarantee that it would be duly exercised. This is a further reason for 119 holding that the section does not confer absolute and arbitrary Power. The next objection to the section is that it offends article 19(1)(g) in that it puts an unreasonable restriction on a person 's right to carry on business. This contention also is unacceptable to me. There is no doubt that the section puts certain restrictions on a person 's right to carry (in an occupation or business. The real question is whether the restrictions have been put in the interest of the general public and are reasonable. That the restrictions have been put in the interest of the general public seems to me to be unquestionable. The reason why the restrictions have been put is that otherwise, industrial peace would be disturbed. The entire country is interested in industries and, therefore, in industrial peace. This point requires no elaboration. , Then, are the restrictions put, reasonable? It seems to me that they are. The restrictions are that an agreement; settlement, award or submission all of ,Which of course must be concerning industrial disputes to which a person is not a party is made binding on him. By an "agreement", the parties to an industrial dispute settle it themselves. A "settlement" means a settlement of an industrial dispute arrived at with the assistance of a conciliator in the course of conciliation proceedings under the provisions of the Act. A "submission" is a reference of an industrial dispute to arbitration. An "award" is an adjudication on an industrial dispute by the court constituted under the Act. An agreement, a settlement or a submission is the result of the free consent of the parties to the dispute. As earlier stated, the section only applies to an agreement, settlement or submission to which a Representative Union, which is a union representing a substantial number of workmen, is a party. Therefore, the section can apply to an agreement, settlement or submission which a substantial number of workmen and an employer has, of their free choice, accepted. It would follow that such an agreement, settlement or submission has been considered reasonable by parties 120 interested and in the case of a settlement by the con ciliator appointed under the Act also. The restrictions imposed by any of these must therefore be reasonable. An award, on the other hand, is a decision of a court and can, therefore, always be expected to be reasonable. If certain restrictions are reasonable for an employer and his employees, I suppose it would follow that those restrictions would be equally reasonable for other employers and employees and more so, when they are all in the same neighborhood where the conditions are likely to be more or less the same. Therefore, it seems to me that the restrictions imposed by section 114(2) cannot be said to be unreasonable. I have earlier summarised the offending part of the agreement. I do not think that there is anything unreasonable there. The employer pays only 4.8 per cent of the basic wage in the year when he makes no profit with a right to recoup it in a subsequent and more prosperous year. The maximum that he has to pay as bonus in the best year is, I gather, less than what he would have to pay under. the formula regarding bonus laid down by this Court. The agreement extends over 6 years and it would not be unreasonable to suppose that during_ these years profits might be made to wipe off the minimum bonus paid in a lean year. The restrictions put by the present agreement are, therefore,, in my view quite reasonable. It may be that in individual cases, which are not likely to be many, the restrictions may work hardship. But that would not justify a conclusion that section 114(2) itself imposes unreasonable restrictions on a man 's right to carry on his business or occupation. This view was taken by this Court in Bijay Cotton Mills vs The, State, of Ajmer (1), where it was said in respect of the ; "Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the Act but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for the striking down the law itself as unreasonable." (1). [1955] 1 S.C.R. 752, 755 6. 121 Another ground on which the validity of the section was challenged was that it prevented a party from having an industrial dispute decided by an Industrial Court under the Act. But I do not see that there is an inherent right in a party to an industrial dispute to have it decided by an Industrial, Court under the Act. The right to ask for an adjudication by an Industrial Court is itself created by the Act. What the Act has given, it can clearly restrict or take away in any manner it thinks fit. The provisions of the Act must be read together and in cases in which power under section 114(2) has. been exercised, the right to ask for an adjudication by an Industrial Court must be considered either as taken away or unavailing. I thus come to the conclusion that the section is not invalid for any of the reasons mentioned. I also feel no doubt that the section was quite within the legislative competence of the legislature which passed it. I did not understand the learned counsel for the appellants to contend to the contrary. I have mentioned the legislative competence only to dispose of another argument which also, I think, was aimed at the validity of the section. It was said that there is no power anywhere to provide for payment of bonus where in law such bonus is not payable. This argu ment is founded on the decision of this Court in the Muir Mills case (1) where it had been said that no bonus is payable where no profit has been made. Therefore it is said that the section authorises payment of bonus where none is payable in law. This argument seems to me to be misconceived. If the section is legislatively competent and otherwise valid, as I think it is, then it cannot be invalid for the simple reason that it directs payment of bonus where, as held by this Court, as a matter of adjudication, none would be payable in law. The law laid down by this Court is only for application when the question comes up for adjudication by a court bound by that law. It has no relevance, in deciding the validity of an otherwise competent law. The law laid down by any Court cannot take away legislative competence. The (1) ; 122 enactment in question has left the law laid down by this Court quite unaffected; it will still apply in all cases where it is applicable. Now I proceed to consider the validity of the notification. As I understood the learned counsel for the appellants, he put his case on two grounds. He first said that the notification was invalid as it was made while a reference was pending in an Industrial Court. The reasoning is that it is invalid as it takes away the jurisdiction of that Court to decide the pending reference. I think what I have earlier said is a sufficient answer to this contention. The right to have the pending reference proceeded with was given by the Act. There is nothing to prevent that Act or any other, from providing that the pending reference shall be discontinued or become infructuous. If a notification could be made under the section, as the present argument assumes it could be, then as to when it could be made, would certainly depend on the terms of the statute. I find nothing in the Act to show that a notification could not be made while a reference was pending and so as to render it 'abortive. Therefore I think that no exception can be taken to the notification in the present case for the reason that it was issued while the reference was pending. The other challenge to the notification does not appear to have been raised in the High Court. It was based on section 95A of the Act which is in these terms: section .95A. The determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court, constituted under the regulations made under section 92, shall be recognised as binding and shall be followed. in all proceedings under this Act. It is said that the Government in issuing a notification under section 114(2) was, in view of section 95A, bound by the decisions of the Full Bench but in issuing the present notification, it ignored a decision of the Full Bench which provided that no bonus would be payable by an employer where he had made no profits. Therefore it is contended that the notification is invalid. I am unable to accept this argument. I will assume 123 that there is Full Bench decision of the kind mentioned. It is also true that the effect of the notification is to make the appellant mill pay bonus for a year when it had made no profit. All this, however, to my mind makes no difference for, though in issuing a notification under section 114(2) the respondent has to give the parties sought to be affected by it a hearing, there is really no proceeding held within the meaning of section 95 A in connection with the issue of the notification. All that section 95A does is to make "the determination of any question of law" by the Full Bench binding in certain proceedings. In order that determination of a question of law may be binding in another proceeding, that proceeding must raise the same question for, a determination of one question of law cannot be binding on another question. Now what is the question when a notification is intended to be issued under is. 114(2)? The only question is whether it is necessary for preserving industrial peace in a locality that a certain agreement, settlement, submission or award should be made binding on persons who are not parties to it. Such a question would not be a question of law at all; it would not be a question which could ever have arisen before the Full Bench. It would follow that no occasion of being bound by a determination of a question of law by the Full Bench can ever arise when the Government is considering whether a notification under section 114(2) should be issued. It may be that the result of a notification made under section 114(2) is to create a liability, for example, to pay bonus. The question of law as to the liability to pay bonus may have been decided by the Full Bench. That however cannot make the question arising under section 114(2) a question whether in law bonus is payable. The questions remain essentially different. Therefore, it seems to me, that section 114(2) does not contemplate a proceeding of the nature conceived by section 95A. Then I find that section 95A occurs in Chapter XIII of the Act which is concerned with Industrial Courts. It appears from the provisions of this chapter that the Industrial Court is the highest Court contemplated by 124 the Act. Under section 92 it has power to provide by regulations made by it that it will sit in Benches consisting of more than one person. Obviously it is intended that when a question of importance and difficulty arises, the Court will sit in a larger Bench. Section 95A appears, therefore, to have been enacted for the purpose that other courts acting under the Act should follow the decisions of the Full Bench so that there might be uniformity of law. It was not intended to have any application to the issue of a notification under is. 114(2). It also seems to me that if in issuing a notification under section 114(2) the Government were to be bound by the decisions of the Full Bench, then that section would be rendered almost completely infructuous. The question whether in view of section 95A, in issuing a notification under section 114(2) the Government is bound to follow the decisions of the Full Bench can arise only if section 114(2) is valid. If section 114(2) is valid, an interpretation of a. 95A which renders it infructuous cannot be correct. The sections of a statute must be so interpreted as not to affect the operation of one another. Let me take the case of an agreement concerning bonus between employer A and his employees. Now there is nothing in law to prevent an employer and his employees from making any agreement they like as to bonus. They may agree that bonus would he paid at a certain rate even when the employer has not made any profit. That would be a perfectly valid agreement. The agreement that was made in this case was of that kind. It has not been suggested that the agreement was invalid. Indeed, the fact that it was filed in the pending references and an award was made in terms of it would put it beyond doubt that it was unexceptionable for, the award was made in terms of the agreement as required by section 115A and it could not have been so made unless the agreement was in all respects valid. The Act therefore contemplates an agreement of this kind. If the argument of the learned counsel for the appellants is right, this agreement cannot be made 125 binding between B and his employees. Now, first, section 114(2) does not say that the agreement contemplated by it must comply with all decisions of the Full Bench. I find no justification for adding to the word "agreement" in section 114(2) the words "provided it is in compliance with decisions of the Full Bench". Secondly, common experience would show that when; disputants settle their disputes themselves by an agreement, they rarely, if ever, make the agreement strictly in terms of their legal 'rights; they, as it is said, give and take and adjust matters in their own way. So cases would be rare where the parties make ' the agreement strictly in terms of the law laid down ' by the Full Bench. Thus if the contention of the appellants is right, there would practically be no agreement to which section 114(2) would apply. Now, what is the law that can be laid down by the Full Bench regarding right to bonus? It can Only be general principles as to when it is to be payable and if payable, how the amount of it is to be calculated. This is what this Court did in the Muir Mills Case (1) and the subsequent cases regarding bonus. The actual award of bonus by the Full Bench on the facts of the case before it, would of course not be a determination of a question of law. Suppose now that the agreement between A and his employees was in compliance with the Full Bench decision. That agreement must therefore only provide that bonus of a certain amount would be paid in certain years. I do not find it possible to conceive of an agreement concerning bonus made after the Full Bench decision, which does not provide for the amount of the bonus to be paid but ,only lays down the formula for calculating what is to be paid, for, the formula is in the Full Bench decision and does not require to be laid down afresh. That agreement would be an agreement in compliance with the Full Bench decision. Suppose such an agreement provides for payment of a month 's wage,% as bonus. Now this agreement is to be made binding on B and his employees. If the argument that it can be made so binding only if as a result, B is not made to pay (1). [1955] 1 S.C.R. 991. 126 anything more than what he would have to pay under he Full Bench decision itself, is right then, it seems to be that the only case in which the agreement can be made so binding will be that in which the figures for example, of income, expenses, rehabilitation and a host of other things on which according to the Full Bench decision the bonus is to be calculated, are in the case of B absolutely identical with those in the case of A. If the figures were not so identical, then in the case of B, a month 's wages may be too large a bonus according to the Full Bench decision, though it La just right in the case of A. I do not think that such identity would ever exist. I think it right to point out here that under section 114(2) only the agreement as made can be extended to become binding on others. There is no power under it to alter the agreement in any way and then make it binding. What I have said so far concerning agreements would apply equally to settlements. Therefore, again almost all agreements made in terms of the Full Bench decision would also be taken out of the operation of section 114(2). Then I take the case of an award. An award is a decision of a court adjudicating upon an industrial dispute under the Act. I do not consider now an award based on an agreement for such an award would in substance be an agreement and with agreements, I have already dealt. I will, therefore, take an award passed as a matter of adjudication. I should suppose that such an award would be in accordance with the law as decided by the Full Bench for the decision of the Full Bench would be binding on the court passing the award in view of a. 95A. As stated in connection with agreements such an award would only decide how much bonus, assuming the dispute to be concerning bonus, would have to be paid; it would not be laying down any general principle for calculating bonus for, ex hypothesis those principles have already been laid down by the Full Bench. Here again, as in the case of agreements and for the same reason, if the argument for the appellants is right, the award can be made binding on employers not parties to it only when the relevant figures in the case if both the employers, 127 namely, the one who is a party to the award and also the other on whom the award is sought to be made binding, are identical. I conceive, such identity would never exist. As regards submissions, I am unable to see how section 95A can have any application at all. Submissions are defined in section 66 of the Act which, so far as material, provides, that "Any employer and a Representative Union may, by a written agreement, agree to submit any present or future industrial dispute to . . arbitration Such agreement shall be called a submission. " It does not appear to me to be conceivable that the Full Bench could ever have decided whether such a submission shall be made or not. The making of a submission involves no question of law. It can be made only in respect of industrial disputes. Section 66 gives the parties concerned the right to make it. Clearly, when a submission by A and his employees is sought to be made binding on B and his employees, there can be no question of compliance with any Full Bench decision. It would, therefore, appear that section 114(2) would become almost wholly infructuous if a notification under it could be issued only where the effect of that would not be to produce a result which is not in compliance with Full Bench decisions. It also strikes me that if in issuing the notification, the Government had to follow the Full Bench decisions, then the issue of that notification would really become an adjudication, the Government taking the place of the Industrial Court. The very same questions would then arise as would have arisen if the matter had to be decided by an Industrial Court. I am unable to hold that the inten tion was to make the Government itself an Industrial Court. If an adjudication by a court was necessary then the Industrial Court was already there and there was no need to put the duty of adjudication on the Government. For all these reasons I do not think that in issuing a notification under section 114(2) any question of complying with any Full Bench decision arises. In my view, 128 the issue of the notification is not a proceeding as contemplated by section 95A. Lastly, it was contended that the notification under the section had been issued mala fide. The only reason for this contention was that the object of such issue was to get round the decision of this Court in Muir Mills case (1). It is true that one of the reasons why the Rashtriya Mill Mazdoor Sangh wanted the notification to be issued was that it wanted to find a "way out of the situation arising as a result of the decision of the Supreme Court in Muir Mills case (1)". But I am not able to agree that makes the notification mala fide. Apart from the fact that the Sangh felt that the decision had not helped the industry or the workmen, which feeling I have no reason to doubt was perfectly honest, I am unable to see bow, if it is legally permissible under the statute to do a thing the result of which would be to get round a decision of this Court, the doing of it can be said to be mala fide. The Act directly permits and contemplates a notification which would produce a result in variance with a decision of this Court. There has been no misuse of the Act at all. As I have earlier stated, in the case of bonus the effect of a notification under section 114(2) would almost always be to permit something which is not permitted under the rule laid down in the Muir Mills case (1). That being so, a notification duly issued under the section cannot be said to have been issued mala fide. For all these reasons, in my view, the Act is not invalid and the notification of July 31, 1956, is unobjectionable and cannot be set aside. I would, therefore, dismiss the appeal with costs. By COURT: In accordance with the majority judgment, the order of the High Court is set aside and the appeal is allowed with costs. Appeal allowed.

The disputes regarding bonus to be paid to the ' workmen of the appellant mill and other cotton textile mills in Greater Bombay for the year 1952 and 1953 were referred to the Industrial Court under the provisions of the Bombay Industrial Relations Act, 1946, and while the references were pending, an agreement was arrived at between the Mill owners ' Association, Bombay, and the Rashtriya Mills Mazdoor Sangh, a Representative Union of workmen in the cotton textile industry with respect, to payment of bonus for the years 1952 to 1957, providing inter alia for payment of bonus even where a mill made actual loss, the minimum bonus being 4.8 per cent. , of the basic wages earned during the year, subject to such mill being entitled to adjust the amount thus paid by it as the minimum bonus against any available surplus in any subsequent year or years. This agreement was registered and was made enforceable as an award (1) L.L.R. (2) A.I.R. 1937 Mad. 763. 106 against those mills which were parties thereto. The appellant; however, did not sign, the agreement, and its case before the Industrial Court was that it had been continuously making losses from 1950 to 1955. On July 31, 1956, the Government of Bombay issued a notification under section 114(2) Of the Act directing that the award made by the Industrial Court aforesaid, for payment of bonus for the years 1952 and 1953 and also for the years 1954 to 1957 be enforced against the appellant. The appellant challenged the validity of section 114 on the grounds (1) that it offended article 14 Of the Constitution inasmuch as it gave an unguided and arbitrary power to the State Government to discriminate between various sets of employers and employees and make an order on any one set at its pleasure leaving out others, (2) that it offended article 19(i)(g) in that it put an unrea sonable restriction on a person 's right to carry on business, and (3) that it prevented a party from having an industrial dispute decided by an Industrial Court under the Act. In any event, the appellant contended that the notification was bad, because (a) it was made while a reference was pending in an Industrial Court and, therefore, took away the jurisdiction of, that Court to decide the pending references and (b) the notification went beyond the powers conferred on the State Government by section 114 since under that section the Government was bound by the decisions of the Full Bench in view of section 95A, but in the present case it ignored a decision of the Full Bench which provided that no bonus would be payable by an employer where it had made no profits. Held (Sarkar, j., dissenting), that the notification dated July 31, 1956, was beyond the powers conferred on the State Government under section 114(2) Of the Bombay Industrial Relations Act, 1946, and must, therefore, be struck down, There are three limitations on. the power of the State Government when acting under section 114(2): (1) that it is limited by the subject matter of the agreements, or settlement, submission or award sought to be extended, (2) that it has to be in conformity with the industrial law laid down by the Full Bench of the Industrial Court and also by any decision of the Supreme Court, and (3) that the State Government 's power to make a direction under that section is co terminus with the power of an adjudicator and the State cannot do 'what an 'adjudicator cannot do under the Act. Action taken by the State Government under section 114(2) is a proceeding under the Act within the meaning Of section 95A of the Act. The New Maneckchowk Spining Co. Ltd. and others vs The Textile Labouy Association, [1961] 3 S.C.R. I, relied on. Per Sarkar, J. (1) Section 114 of the Bombay Industrial Relations Act, 1946, does not offend article 14 Of the Constitution. The object of the Act is the settlement of industrial disputes and 107 attainment of industrial peace and the section does not confer absolute and arbitrary power. (2) The restrictions imposed by section 114(2) are reasonable and have been put in the interest of the general public. Consequently, the section does not contravene article 19(i)(g). Bijay Cotton Mills Ltd. vs The State of Ajmer, ; , referred to. (3) The provisions of the Act must be read together and in cases in which power under section 114(2): has been exercised, the right to ask for an adjudication by an Industrial Court must be considered either as taken away or unavailing. (4) The issue of a notification under section 114(2) is not a proceeding as contemplated by section 95A and, therefore, any question of complying with any Full Bench decision does not arise. (5) Section 114 directly permits and contemplates a notification which would produce a result in variance with a decision of the Supreme Court and, therefore, a notification duly issued under that section cannot be said to have been issued, mala fide. Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; , referred to. (6) The Act is not invalid and the notification of July 31, 1956, is unobjectionable and cannot be set aside.

Appeals . 101 to 104 of 1957. Appeals from the judgment and order dated February 4, 1954, of the Mysore High Court in Regular, Second Appeals Nos. 5 and 6 of 1953 and Writ Petitions Nos. 67 and 68 of 1953 respectively. H. N. Sanyal, Additional Solicitor General of India, R.Ganapathy Iyer and D. Gupta for the appellant. A. V. Visv)anatha Sastri, M. section K. Sastri and ' T. R. V. Sastri for A. G. Ratnaparkhi, for the respondents. February 20. The Judgment of the Court was delivered by WANCHOO, J. These are four appeals on certificates granted by the Mysore High Court. They will be disposed of together as the. points raised in them are common. The facts of these cases are complicated and may be mentioned in some detail. On July 7, 1949, the then State 'of Mysore passed The Mysore Administration of Evacuee Property (Emergency) Act, No. XLVII of 1949 (hereinafter called the. first Mysore Act). It provided for the appointment of a Custodian of Evacuee Property for the State of Mysore and other officers subordinate to him for the purpose of administering evacuee property in that 858 State. Section 2(c) defined an " evacuee " and section 2(d) evacuee property ". Section 5 laid down that all evacuee property situate in Mysore would vest in the custodian. Section 6 provided for a notification by the Custodian in the Mysore Gazette of evacuee property vested in him. Section 8 provided that any person claiming any right to or interest in any property notified under section 6 as evacuee property or in respect of which a demand requiring a surrender of possession had been made by the Custodian might arefer a claim to the Custodian on the ground that he property was not evacuee property or his interest in the property had not been affected by the provisions of that Act. It was further provided that the Custodian was, to hold a summary inquiry in the prescribed manner into such claims and after taking such evidence as might be produced, pass an order stating the reasons there for) either rejecting the claim :or allowing it wholly or in part. Finally, section 30 provided for an appeal to the High Court where the original order under section 8 had been passed by the Custodian, an Additional Custodian or an Authorised Deputy Custodian. This Act remained in force till it was replaced by the Mysore Administration of Evacuee Property (Second) (Emergency) Act, No. LXXIV of 1949 (hereinafter called the second Mysore Act), which came into force on November 29, 1949. On September 21, 1949, the Custodian issued a notification by which he declared the properties. of the two respondents as evacuee properties which had vested in him, as the, respondents had become evacuees. Thereupon two claims were filed under section 8 of the first Mysore Act separately by the two respondents. These claims were investigated by the Deputy Custodian who dismissed the same on April 17, 1950, declaring that the, properties were evacuee properties. , It may be mentioned that in the meantime, the second Mysore Act had come into force by which the first Mysore Act was repealed. But section 53(2) of the second Mysore Act provided, that anything done or any action taken. in the exercise of any power conferred by the first Mysore Act shall be deemed to have been done 859 or taken in the exercise of the powers conferred by the second Mysore Act. It was also provided that any penalty incurred or proceeding commenced under the first Mysore Act shall be deemed to be a penalty incurred or proceeding commenced under the second Mysore Act as if the latter Act were in force on the day on which such thing was done, action taken, penalty incurred or proceeding commenced. There was how. ever one difference in the two Mysore Acts. The first Mysore Act had provided by section 5 for the vesting of all evacuee property situate in Mysore ipso facto in the Custodian; section 6 then provided for notification by the Custodian and section 8 for preferring claims. The second Mysore Act however made a departure from this and section 5 thereof provided that " a where the Custodian is of opinion that any property is evacuee property within the meaning of this Act he may, after causing notice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property. " Section 6 then provided for vesting of any property declared to be evacuee property in the Custodian. Thus while under the first Mysore Act the evacuee property vested in the Custodian and the person who claimed that it was not evacuee property had to make an application under section 8 and to get it declared that it was not evacuee property, under the second Mysore Act there was no vesting in the Custodian and the Custodian had to give a notice in the manner prescribed (if he thought any property to be evacuee property) and after hearing the persons interested to declare the property to be evacuee property; and it was only thereafter that the property vested in him as evacuee property. Further, the second Mysore Act also defined the " Custodian General " as the Custodian General of Evacuee Property in India appointed by the Government of India under section 5 of the Administration of Evacuee Property Ordinance (Central Ordinance No, XXVII of 1049), which had come 860 into force on October 18, 1949. Further there was a change in the forum of appeals and instead of the High Court the appeal lay to the Custodian General from an order passed under section 5 of the second Mysore Act where the original order had been passed by the 'Custodian, Additional Custodian or Authorised Deputy Custodian and in some cases to the District Judge designated in this behalf by the Government under sections 22 and 23 of the second Mysore Act. In addition, provision was made by section 25 of the second Mysore Act for revision by the Custodian General of orders passed by the District Judge or the Custodian on appeal. It may be mentioned that the , No. XXXI of 1950 (hereinafter called the Act), came into force on the day the Deputy Custodian passed the order dated April 17, 1950. It may also be mentioned that in the meantime the Constitution of India had come into force on January 26, 1950, and the former State of Mysore had become the new Part B State of Mysore under the Constitution. The Act was to apply to the whole of India except the States of Assam, West Bengal, Tripura, Manipur and Jammu and Kashmir. Thus the Act applied to the Part B State of Mysore on April 17, 1950, and though there was no specific provision then in the Act repealing the second Mysore Act it is not seriously disputed that the Act by necessary implication repealed the second Mysore Act, as the Act substantially enacted all that was contained in the second Mysore Act. However that may be, appeals were filed against the order of April 17, 1950, before the Custodian. These appeals were allowed on August 22, 1950. The Custodian held that there was not sufficient evidence to prove the respondents as evacuees and consequently the properties in question could not be treated as evacuee properties. On October 3,1950, the Custodian General gave notices to the respondents under section 27 of the Act in respect of the order of the: Custodian dated August 22, 1950, and asked them to show cause why '; the said order of the Custodian be not revised, On December 7, 1950, the Administration of Evacuee 861 Property (Amendment) Act, No. LXVI of 1950, was passed by which inter alia section 58 of the Act was amended and it was provided that if immediately before the. commencement of the Act there was in force in any State to which the Act extended any law which corresponded to the Act and which was not repealed by, sub section (1) it shall stand repealed. This was made retrospective from the date from which the Act came into force (namely, April 17, 1950) and so the repeal of evacuee property laws which were in force in those States to which the Act applied which was implicit in it was made explicit from December 7, 1950, so that frum April 17, 1950, only the Act held the field. On February 11, 1952, the Custodian General set aside the order of the Custodian dated August 22, 1950, and ordered that further proceedings in these cases should be taken before the Custodian as an original matter and be was directed to dispose of the cases afresh in the light of the evidence already recorded and such other evidence as might be produced before him by the two respondents. When the matter thus came back to the Custodian he ordered the Deputy Custodian on April 7, 1952, to record the evidence and then submit the record to him for final disposal. Eventually, the matter came before the Custodian for final disposal on December 2, 1952. He held that the two respondents were evacuees and their properties were evacuee properties. This was followed by two appeals to the High Court on January 2, 1953. As, however, the respondents felt some doubt whether any appeal lay to the High Court two writ petitions were also filed on September 7, 1953, against the order of the Custodian. The two appeals as well as the two writ petitions were disposed of by the High Court by a common judgment on February 4, 1954. The High Court held that the appeals before it were competent. It further seems to have 'held that the CustodianGeneral had no power under section 27 of the Act to revise the order passed by the Custodian on August 22,1950. Finally, as the High Court held that the appeals were competent it went into the matter as an appellate court and came to the conclusion that the order of the 862 Custodian dated December 2, 1952, was erroneous. It, therefore, allowed the appeals as well as the writ petitions and set aside the order of the Custodian dated December 2, 1952, and restored the earlier order of the Custodian dated August 22, 1950. Thereupon "followed applications by the Custodian of Evacuee Property, Mysore, for certificates to file appeals to this Court on which the High Court granted the certificates, and that is how the four appeals have come up before us. The main contention of the learned Additional Solicitor General on behalf of the appellant is two. He urges firstly that the High Court was in error when it held that the Custodian General had no power to set aside the order of August 22, 1950, under section 27 of the Act. In the second place, his contention is that the High Court was in error in holding that an appeal lay to it from the order of the Custodian dated December 2, 1952. Therefore, the High Court could not deal with the matter before it as if it were hearing an appeal; it could only consider the writ petitions before it and in doing so it would not be justified in issuing a writ of certiorari against the order of December 2, 1952, because that order was not passed without jurisdiction and there was no error of law apparent on the face of the record to call for interference with it. Mr. Sastri for the respondents In reply submits that as the proceedings in these oases began under a. 8 of the first Mysore Act and as there was nothing corresponding to that section either in the second Mysore Act or in the Act, which replaced successively the first Mysore Act, the High Court was entitled to hear an appeal from the order of Decem ber 2, 1952, as that order must be held to have be On passed in a proceeding under the first Mysore Act, even if it be that the Custodian General had the jurisdiction to set aside the order of August 22, 1960 under section 27 of the Act. Further, Mr. Sastri contends that the Custodian General had no jurisdiction to set aside the order of August 22, 1960, under section 27 of the Act. 863 The first point therefore which falls for consideration is whether the Custodian General had jurisdiction to set aside the order of August 22,1950, under section 27; for if he had no such jurisdiction the High Court may be entitled after holding that the Custodian General 's order of February 11, 1952, was without jurisdiction, to set aside all subsequent proceedings, leaving:the order of August 22, 1950, operative and in full force (assuming for this purpose that the High. Court had jurisdiction in writ proceedings to set aside the order of the Custodian General whose headquarters were in New Delhi). Now the first Mysore Act had no provision relating to the Custodian General. It was the second Mysore Act which for the first time brought in the CustodianGeneral and gave him powers of revision under section 25 with respect to orders passed by the Custodian or the District Judge in. appeal. Then came the Act on April 17, 1950, by which the Custodian General was given the power to call for the record of any procee in which any District Judge or Custodian had passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and to pass such order in relation thereto as he thought fit. This provision is wider than the provision in the second Mysore Act and is not confined to orders passed by a District Judge or a Custodian in appeal and would apply even to original orders passed by the Custodian, which term, according to the definition in section 2(c) includes any Additional, Deputy or Assistant Custodian of evacuee property. We have already pointed out that the Act provides substantially for all ,matters contained in the second Mysore Act and therefore must be held to have repealed the second Mysore Act by implication. but in any case the question whether the second Mysore Act was repealed by the Act when it came into force on April 17, 1950, I" been set at rest by the later Central Act, LXVI of 1950. That Act was passed on December 7, 1950, and 2 thereof began thus: "For section 58 of the, , the following section shall be 864 substituted. and shall be deemed always to have been substituted. " This clearly shows that Central Act LXVI was amending section 58 retrospectively from the date on which it came into force (namely, April 17, 1950). The new section 58 which was thus substituted in the Act from April 17, 1950, contained sub section (2) which is as follows: " If, immediately before the commencement of this Act, there is in force in any State to which this Act extends any law which corresponds to this Act and which is not repealed by sub section (1), that corresponding law shall stand repealed. " It is clear therefore that the second Mysore Act was expressly repealed as from April 17, 1950, by the Act in view of this substituted section 58 put into it retrospectively by Act LXVI, for the second Mysore Act was undoubtedly a law corresponding to the Act. The High Court seems to have overlooked the fact that Act LXVI gave retrospective operation to the new section 58(2) which was inserted in the Act. It seems to think that the second Mysore Act was repealed on December 7, 1950, when Act LXVI came into force. The High Court was further in error in holding that the amended sub section (3) of section 58 which was put into the Act also came into force from December 7, 1950, while as matter of fact it came into force from April 17, 1950, when the Act itself first came into force. The position when the Custodian General gave notice in October, 1950, under section 27 of the Act therefore was that the first Mysore Act had already been re. 'pealed by the second Mysore Act and the second Mysore Act had been repealed by the Act as from April 17, 1950, and therefore in October, 1960, only the Act held the field. The question then arises whether it was open to the Custodian General to revise the order dated August 22, 1950, under section 27 of the Act in February, 1952. Now section 27 is very wide in terms and gives power to the Custodian General at any. time either on his own motion or on application made to him in this behalf. , to call for the record of any proceeding in which any District Judge or Custodian 865 has passed an order for the purpose of satisfying himself as to the legality or propriety of any order and to pass such order in relation thereto as he thinks fit. Prima facie, therefore, these wide words give power to the Custodian General to revise any order passed by the Custodian. It is urged on behalf of then respondents that the Custodian General could; not revise the order dated August 22, 1950. We are not impressed by this argument. Now the Act was passed in 1950 to set up a central organisation for the custody, management and control, etc. , of property declared by law to be evacuee property with the Custodian General at the head. It is also clear that all similar laws existing in various States on the date the Act came into force (namely, April 17, 1950) were repealed by it. The intention of the Legislature obviously was to provide for the custody and management etc. of evacuee property in the manner provided in the Act with the Custodian General as the head of the organisation. Further, action taken with respect to evacuee property under the first Mysore Act was deemed under section 53 (2) of the second Mysore Act to have been taken thereunder and finally any action taken in the exercise of the power conferred by the second Mysore Act was deemed to have been taken in the exercise of the powers conferred by the Act. Therefore, any action taken with respect to evacuee property and any order passed by any Custodian in any proceeding with respect to such property would be subject to the revisory jurisdiction of the CustodianGeneral under section 27 in view of the wide language thereof and the fact that proceedings started under the first Mysore Act. would not, in our opinion, make any difference to the power of the Custodian General under section 27. Obviously the order of August 22, 1950 was passed when the Act was in force in a proceeding relating to evacuee property by the Custodian and the Custodian General would be competentunder section 27 to call for the record of that proceeding and satisfy himself as to the legality or propriety of any such order and thereafter pass, such order in relation thereto so he thought fit, We are, therefore, of opinion that ' 866 considering the purpose for which the Act was passed and the successive saving clauaes in the second Mysore Act and in the Act,,the Custodian General had the power under section 27 to call for the record of the proceed. ing in which the order of August ' 22, 1950, was passed &ad consider its legality or propriety and Pass such order in relation thereto as he thought fit. Even if the notice of October, 1950, may be open to question as it was issued before Act LXVI of 1950 was passed, there can be no doubt that the order of February,, 1952, under a. 27 was passed after hearing the parties and would be valid and within the jurisdiction of the Custodian General when it was passed. Therefore, the order of the Custodian General dated February II,, 1952, being within his jurisdiction would not be liable to be set aside on a writ of certiorari as if the Custodian General had acted without jurisdiction. The subsequent proceedings, therefore, which took place after the order of the Custodian General would also be with jurisdiction and would not be liable to be set aside on a writ of certiorari on the ground that they were without jurisdiction. The High Court, thereforewas in error in holding that the order of the Custodian, General dated February 11, 1952,was without juries diction and therefore all subsequent proceedings taken in pursuance thereof were also without jurisdiction, with the result that the order of August 22, 1950 stood fully operative. This brings us to the next question whether any appeal lay to the High Court against the order of December 2, 1952. There is no,doubt that the proceedings in the present case commenced under the first, Mysore Act with a notification under is. 6 and claim applications under section 8. If the original proceeding had finished when the first Mysore Act was in force and the order of December 2, 1952, had been passed during its operation there would undoubtedly have been as appeal to the High Court under section 30 thereof. But the, first Mysore Act, was repealed by the second Mysore Act in. November, 1949, and the second Mysore Act was in its turn repealed by the Act #,a from April 1950. The, questions therefore, that arises for consideration 867 is 'Whether after the repeal of the first Mysore Act an appeal would still lie to the High Court from the order of December 2, 1952. The main contention of Mr. Sastri in this behalf is that if the second Mysore Act or the Act contained provisions which were similar to the provisions contained in section 8 of the first Mysore Act, it may have been possible to say that the remedy provided by the first Mysore Act under section 30 had been superseded by the remedy provided in the Act, that remedy being an appeal to the Custodian General under section 24 of the Act. The argument further proceeds that neither the second Mysore Act nor the Act provides anything similar to what was provided by section 8 of the first Mysore Act. Therefore, even though the first Mysore Act was repealed by the second Mysore Act the proceedings in the present case must be deemed to be still under the first Mysore Act which must be deemed to be existing for this purpose and, therefore, the right of appeal being a vested one and &rising when the proceedings commenced, there would still be a right of appeal under section 30 of the first Mysore Act in spite of its being repealed. When the matter came before the Custodian in 19,52 it was contended before him that the proceedings should be taken to be under the first Mysore Act. He accepted this contention, though he added that it was immaterial for the purposes of the present cases as the definition of " evacuee " in section 2(c) of the first Mysore Act was practically the same as in section 2(d) of the Act. It is urged that in view of the manner in which the Custodian, dealt with the case when he passed the order. dated December 2, 1952, the proceedings before him must be taken to be under the first Mysore Act and if so an appeal would lie to the High Court under ,section 30.,of the first Mysore Act. This view has been accepted by the High Court also and that is why it hold; that the appeals before it were competent; and it is,, the correctness of this view which has been challenged before us. Now there is no doubt that the right of appeal is a substantive right and arises when A proceeding is commenced and cannot be taken away by subsequent 868 legislation, except by express provision or necessary intendment. There is no express provision in the present case taking away the right of appeal conferred by the first Mysore Act. We have therefore to see whether it can be said that the right of appeal conferred by the first Mysore Act has been taken away by necessary intendment by the subsequent legislation ; and if so whether it has been completely taken away or has been replaced by another right of appeal, though not to the High Court. Under the first Mysore Act, as we have already pointed out, evacuee property ipso facto vested in the Custodian under section 5. There. after the Custodian was expected to notify such property under section 6. On such notification or where the Custodian demanded surrender of possession a person claiming any right to the property was entitled to make an application preferring a claim before the Custodian. That application was dealt by the Custodian in a summary manner and he had 'the power either to reject the application or allow it in whole or in part. An order passed by the Deputy or the Assistant Custodian under section 8 was appealable to the Custodian and an order passed by the Custodian or Additional Custodian or an authorized Deputy Custodian was appealable to the High Court. The contention on behalf of the respondents is that when the first Mysore Act was replaced by the second Mysore Act, there was a vital change in the procedure and therefore cases in which proceedings had commenced under section 8 could only be dealt with under the first Mysore Act and for that purpose the first Mysore Act would be deemed to be alive under a. 6 (e) of the Mysore General Clauses Act, No. III of 1899, which corresponds to section 6 (e) of the General Clauses Act, No. X of 1897. Now there is no doubt that the proceedings in these cases commenced under the first Mysore Act though they terminated when that Act was no longer in force. What we have to see is whether there is anything in the repealing legislation which by necessary intendment took away the right of appeal provided by the first Mysore Act and substituted in its place another right of appeal provided by the repealing Act, 869 The argument of Mr. Sastri is that there is nothing in the second Mysore Act which repealed the first Mysore Act corresponding to section 8 of the first Mysore Act and therefore in spite of the repeal of the first Mysore Act proceedings commenced under a. 8 of that Act would continue to be governed thereby, including the right of appeal. In this connection he urges that the scheme of the second Mysore Act with respect to evacuee property is vitally different from the scheme which is to be found in the first Mysore Act. In the second Mysore Act there is no provision corresponding to section 5 of the first Mysore Act by which any property becomes ipso far to evacuee property and vests in the Custodian. Under the second Mysore Act the Custodian has first to form a tentative opinion whether the property is evacuee property and after he has formed such opinion he gives notice thereof to the persons interested; after such notice is given he holds inquiry into the matter and thereafter passes an order declaring the property to be evacuee property. Thus under the first Mysore Act the property became evacuee property ipso facto and the person claiming any interest in it had to proceed under section 8 and make a claim which had to be investigated and thereafter the Custodian finally declared whether the property, which he had notified under section 6 was evacuee property or not. Under the second Mysore Act there being no vesting ipso facto, the proceeding commences; with a notice by the Custodian to the person interested followed by an inquiry after which the Custodian decides to declare the property evacuee if he finds it to be so under the law. Further under the second Mysore Act when an order was passed declaring property to be evacuee property under a. 5 it was open to the person aggrieved by such order to file an appeal to the Custodian where the original order had been passed by the Deputy Custodian or Assistant Custodian and to the Custodian General where the original order had been passed by the Custodian, Additional Custodian or Authorised Deputy Custodian. There was also in certain cases appeal to the District Judge; but we are not concerned with that in the 870 present appeals. The position under the Act was also the same as under the second Mysore Act and the right of appeal was also similar. It is thus true that there has been a change in the procedure by which evacuee property is finally declared to be evacuee property. Under the first Mysore Act the property became evacuee property and the person had to go and file a claim and establish that it was not. That claim was investigated and after investigation the Custodian had to come to a final conclusion whether the property was evacuee or not. 'If he came to the conclusion that it was evacuee property, the vesting under section 5 was confirmed. If on the other hand he came to the conclusion that the pro perty was not evacuee property the legal effect was that there was no vesting under section 5 of the first Mysore Act. Under the second Mysore Act the property did not ipso facto vest in the Custodian as evacuee property but he formed a tentative opinion as to whether it was evacuee property and then gave notices to the persons interested. They appeared before him and the matter was investigated. He then had to come to a final conclusion whether the property was evacuee property or not. If he came to the conclusion that it was evacuee property he declared it to be such; if on the other hand he came to the conclusion that it was not evacuee property the proceedings came to an end. It will be seen therefore on a comparison of the two procedures that though there is difference between the two, the difference is not of a vital or substantial nature. In the one case the ' law started with the presumption that the property was evacuee property and the person interested had to go and make a claim and establish that it was not evacuee property and the matter had to be investigated and the Custodian finally had to come to the conclusion one way or the other. In the other case the law did not start with the presumption but only a tentative opinion was to be formed by, the Custodian who gave notice to the person interested and the matter was then investigated and thereafter the Custodian had to decide finally one way or the other 871 But in both cases the question whether the property was evacuee property or not was investigated and it was only after investigation that it could be finally said whether the property was evacuee property or, not. Therefore, though there may be an apparent difference between what is provided by a. 8 in the, first Mysore Act and by section 5 in the second Mysore Act as also by section 7 in the Act, the difference is, not material and it is only after investigation, whether under section 8 of the first Mysore Act, or under section 5 of the second Mysore Act or under section 7 of the Act that the Custodian comes to the final conclusion whether the property is evacuee property or not. Under the circumstances it would not in our opinion be unreasonable to say that the investigation provided under a. 8 of the first Mysore Act and the subsequent remedies following on an order under section 8 are in substance the same as the investigation provided under section 5 of the second Mysore. Act ores. 7 of the Act and the subsequent remedies following on an order thereon. We cannot, therefore, agree with the High Court that there is nothing in the second Mysore. Act to correspond to section 8 of the first Mysore Act and therefore these proceedings which began under the first Mysore Act must continue to be governed by that Act in spite of its repeal by the second Mysore Act. As we have pointed out above the proceedings under section 8 of the first Mysore Act are in substance equal to proceedings under section 5 of the second Mysore Act and therefore proceedings commenced under the first Mysore Act must in view of a. 53(2) of the second Mysore Act, be deemed to be proceedings under section 5 of the latter Act. Once that conclusion is reached and it seems to us that it is inevitable it follows that an order made in a proceeding commenced under section 8 of the first Mysore Act must be deemed to be an order made under section 5(1) of the second Mysore Act or under section 7(1) of; the Act. In this connection it is relevant to point out that; it could not have been the intention of the legislature to keep the first Mysore Act alive for certain purposes for all, time the whole object of passing the subsequent Acts is plainly against such an assumption. 872 The next question that arises is whether the second Mysore Act and the Act took away the right of appeal which lay to the High Court under the first Mysore Act and substituted for it another right of appeal by necessary intendment. As we have already Pointed out, there is no express provision either in the second Mysore Act or in the Act in this behalf. But once it is held that proceedings which commenced under section 8 of the first Mysore Act must, when the second Mysore Act came into force, be deemed under section 53(2) thereof to be proceeding under section 5(1) or when the Act came into be deemed under section 58(3) thereof to be proceeding under section 7(1) and must be continued under those provisions, it follows that the legislature necessarily intended that all subsequent action following an order under section 5(1) or section 7(1) must be taken under the second Mysore Act or under the Act as the case may be. It could not have been intended by the legislature when it was expressly providing for appeal from an order under section 5(1) of the second Mysore Act or under section 7(1) of the Act that a proceeding commenced under the first Mysore Act (which was equivalent to a proceeding under section 5(1) or section 7(1) should continue to be governed in the matter of appeal by the first Mysore Act. This is therefore in our view a case where by necessary intendment (though not by express provision) the legislature intended that the provision as to appeals provided by subsequent legislation should supersede the provision as to appeals under the first Mysore Act. We may point out that this is not a case where the right of appeal disappears altogether,, all that happens is that where the order is passed by the Custodian the appeal lies to the Custodian General instead of to the High Court. The legislature has provided another forum where the appeal will lie and in the circumstances it must be held that by necessary intendment the legislature intended that forum alone to be, the forum where the appeal will lie and not the forum under the first Mysore Act. Reference in this connection may be made to Garikapatti Veeraya vs 873 N. Subbiah Choudhury (1), where this Court held that the vested right of appeal was a substantive right and was governed by the law prevailing at the time of th commencement of the suit and comprised all successive rights of appeal from court to court which really constituted one proceeding but added that such right could be taken away expressly or by necessary intendment. In the present cases we are of opinion that once proceedings under section 8(1) of the first Mysore Act are held to be similar to proceedings under section 5(1) of the second Mysore Act or section 7(1) of the Act, it must necessarily follow that the legislature intended this all subsequent proceedings in the nature of appeal after the first Mysore Act came to an end, must being the forum provided by the subsequent legislation We are therefore of opinion that the High Court was in error in holding that appeals to it lay from the order of December 2, 1952. The result of the view we have taken is that the High Court was not justified in looking into the order of December 2, 1952, as an appellate court,, though I would be justified in scrutinizing that order as if it was brought before it under article 226 of the Constitutional for issue of a writ of certiorari. The limit of th jurisdiction of the High Court in issuing writs of certiorari was considered by this Court in Hari Vis Kamath vs Syed Ahmed Ishaque and others (2) and the following four propositions were laid down: (1) Certiorari will be issued for correcting errors of jurisdiction ; (2)Certiorari will also be, issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice; (3), The court issuing a writ of critorari acts in exercise of a supervisory land not appellate jurisdiction. One consequence of this is that, the court will not review findings of fact reached by. the inferior court or tribunal, even if they be erroneous; (4)An error in the decision or determination itself may also be amenable to a writ of certiorari if (1) ; (1) ; , 874 it is a manifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be corrected by certiorari but not a mere wrong decision. In the present case, the Custodian had jurisdiction to decide the matter once it is held that the, Castodian General had jurisdiction to set aside the order of August 22, 1950. The main question for decision in these cases was whether the respondents were evacuees within the meaning of a. 2(c) of the first Mysore Act. The questions that fall for decision under section 2(o) are questions of fact and as pointed out in Hari Vishnu Kamath 's case (2) it is not open on a writ praying for certiorari to review findings of fact reached by an inferior court or tribunal even though they may be erroneous. Further, unless there is a patent error of law there can be no interference by a writ of certiorari. While dealing with the writ petitions the main argument that appealed to the High Court was that the Custodian General, had no Jurisdiction in revision to reopen the earlier proceedings and in consequence all subsequent proceedings were null and void The High Court was further aware of the fact that, the ordinary remedy of the respondents in these cases against the order of December 2, 1952, was to appeal to the Custodian General tinder section 24 of the Act; but as it was of the view that the order of ;the Custodian General under a. 27 was without jurisdiction it held that it should interfere and set aside the order of December 2, 1952, which was also without jurisdiction and restore that, of August 22,1950. In the view we have taken, the order of the Custodian General was with jurisdiction and therefore there was in our opinion no reason for the High Court interfere in the exercise of its jurisdiction under article 226 of the Constitution with the order of December 2, 1952, as this is a case where only a writ of certiorari could issue and that is not justified in view of the decision in Hari Vishnu Kamath 's case(1) (1) ; 875 We therefore allow the appeals, set aside the order of the High Court and restore that of the Custodian dated December 2, 1952. This of course will not take away the right if any of the respondents to approach the Custodian General, for we have not considered the merits of the order, of December 2, 1952. In the circumstances of this case we pass no order as to costs. Appeals allowed.

On July 7, 1949, the then State of Mysore passed the Mysore Administration of Evacuee Property (Emergency) Act, 1949, providing, inter alia, for the appointment of a Custodian of Evacuee Property for the State of Mysore for the purpose of administering evacuee property in the State. By section 6 all evacuee property vested in the Custodian under section 5 had to be notified by him in the Mysore Gazette, while section 8 provided that any person claiming any right to any property notified under section 6 might prefer a claim to the Custodian on the ground that the property was not evacuee property. Section 30 provided for an appeal to the High Court where the original order under section 8 had been passed by the Custodian, an Additional Custodian or an Authorised Deputy Custodian. This Act was replaced by the Mysore Administration of Evacuee Property (Second) (Emergency) Act, 1949, which came into force on November 29, 1949. Section 53(2) of that Act provided that anything done or any action taken in the exercise of any power conferred by the earlier Act shall be deemed to have been done or taken in the exercise of the powers conferred by the later Act. Under the second Act, instead of the High Court an appeal from the order of the Custodian lay to the Custodian General, appointed by the Government of India under the provisions of the Administration of Evacuee property Ordinance, 1949, which had come into force on October 18, 1949 ; and in addition, section 25 Of that Act provided for revision by the Custodian General of orders passed by the Custodian. The , which was passed by Parliament and which came into force on April 17, 1950, provided substantially for all matters contained in the second 856 Mysore Act. Section 27 gave the Custodian General powers of revision against the orders of the Custodian, and section 58 as amended and given retrospective operation, provided that " if, immediately before the commencement of this Act, there was in force in any State to which this Act extended any law which corresponded to this Act and which was not repealed. . that corresponding law shall stand repealed. " On September 21, 1949, the Custodian issued a notification declaring the properties of the respondents as evacuee properties, and claims filed by them under section 8 of the earlier Mysore Act were investigated by the Deputy Custodian who dismissed the same on April 17, 1950. Appeals were filed against the said order before the Custodian and were allowed on August 22, 1950. on the ground that there was not sufficient evidence to prove the respondents as evacuees and consequently the properties in question could not be treated as evacuee properties. On October 3, 1950, the Custodian General gave notice to the respondents under section 27 of the , in respect of the order of the Custodian dated August 22, 1950, and asked them to show cause why the said order be not revised. On February II, 1952, the Custodian General set aside the order and directed the Custodian to dispose of the cases afresh. On December 2, 1952, the Custodian passed an order by which he held that the respondents were evacuees and that their properties were evacuee properties. Against this order the respondents filed two appeals to the High Court, and also two writ petitions under article 226 of the Constitution as they had doubts whether any appeal lay to the High Court. The High Court took the view that the Custodian General bad no power under section 27 of the Act to revise the order of the Custodian and that as the proceedings in these cases began under section 8 of the first Mysore Act and as there was nothing corresponding to that section either in the second Mysore Act or in the Act of 1950, the High Court was entitled to hear the appeal from the order of December 2, 1952, as that order must be held to have been passed in proceedings under the first Mysore Act. The High Court then went into the matter as an appellate court and came to the conclusion that the order of the Custodian dated December 2, 1952, 'Was erroneous. Held, that the High Court erred in holding that the order of the Custodian General dated February II, 1952, was without jurisdiction. Considering the purpose for which the Administra tion of Evacuee Property Act, 195o, was passed and the successive saving clauses in the second Mysore Act and in the Act, the Custodian General bad the power under S ' 27 to call for the record of the proceeding in which the order of August 22, 1950, was passed and consider its legality or propriety. Held, further, that the High Court was also in error in holding that appeals to it lay from the order of December 2, 1952. 857 An order made in a proceeding commenced under section 8 of the. first Mysore Act must be deemed to be an order made under section 5(1) of the second Mysore Act or under section 7(1) of the Act, in view of section 53(2) of the second Mysore Act and section 58(3) of the Act. Consequently, by necessary intendment, the legislature must have intended that the provision as to appeals provided by subsequent legislation should supersede the provision as to appeals under the first Mysore Act. Garikapatti Vecraya vs N. Subbiah Choudhury ; , referred to. Since the main question for decision in these cases was whe ther the respondents were evacuees, and as such a question was one of fact, the High Court was not justified in looking into the order of December 2, 1952, as an appellate court in dealing with applications for a writ of certiorari under article 226 of the, Constitution. Hari Vishnu Kamath vs Syed Ahmad Ishaque and Others, ; , applied.

Appeal No. 369 of 1957. Appeal from the judgment and decree dated the January 27, 1956, of the Allahabad High Court (Lucknow Bench) at Lucknow in Civil Misc. Application No. 17 of 1954 (0. J.). C. B. Agarwala and C. P. Lal, for the appellant. V. D. Misra, for the respondent. February 16. , J. This is an appeal against the judgment and order of the High Court of Allahabad on a certificate granted by that court. The respondent filed a 99 petition under article 226 of the Constitution praying that the imposition of stamp duty by the Collector of Sitapur, of Rs. 85,595/7/ and a penalty of Rs 5/ was against law and could not be realized against him and prayed that the order be quashed. ,, On September 12, 1948, the, respondent executed a wakf by oral recitation of Sigha and then it was written on a stamped paper which was signed by the respondent and attested by, Witness. On September 15, 1948, it was presented to the Collector for his opinion under section 31 as to the duty chargeable. As the Collector himself was in doubt, he referred the matter to the Board of Revenue which, after a fairly long time, held that the document was liable to duty in accordance with article 58 of the Stamp Act. On October 29, 1951, the Collector held that Rs. 85,598/7/ were payable as stamp duty and ordered that it be deposited within fifteen days. Notice to this effect was served on the respondent on November, 10, 1951. Thereupon the respondent filed a petition in the High Court under article 226 which was dismissed on November 3, 1952 on the ground that it was premature. On February 2, 1954, a further notice was served upon the respondent to deposit the amount of the stamp duty plus the penalty of Rs. 5/ within a month otherwise proceedings would be taken against him under section 48 of the Stamp Act. Thereafter on March 1 1944, the respondent filed a petition under article 226 of the Constitution in the Allahabad High Court challenging the legality of the, imposition of the stamp duty and the penalty and prayed for a writ of certiorari. A full bench of the High Court quashed the order of the Collector and the State of U.P. has come in appeal to this Court. The decision of this appeal depends upon the interpretation of ss, 31, 32 and 33 of the Stamp Act. The relevant portion of section 31 provides: , section 31(1) "When any instrument,, whether executed or not and whether previously stamped or not,, is brought to the Collector and. the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and 100 not less than eight annas) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable. " It is admitted that the document in dispute was submitted to the Collector for his opinion under a. 31 and the opinion of the Collector was sought as to what the duty should be. Under section 32 of the Act when such an instrument is brought to the Collector, under a. 31 and he determines that it was already fully stamped or he determines the duty which is payable on such a document and that duty is paid, the Collector shall certify by endorsement on the instrument presented that full duty with which it is chargeable has been paid and upon such endorsement being made, the instrument shall be deemed to be fully stamped or not chargeable to duty as the case may be ' Under the proviso to section 32, the Collector is not authorised to make the endorsement if an instrument is brought to him a month after the date of its execution. Then follows section 33 which is as follows: section 33 "Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom an instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order t o ascertain whether it is stamped with a stamp of the value and description required by the law in force in British India when such instrument was executed or first executed: Provided that (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding 101 under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898; (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in case of a doubt, (a) the collecting Government may determine what offices shall be deemed to be public offices; and (b) the collecting Government may determine who shall be deemed to be persons in charge of public offices. " The decision of this appeal depends upon the interpretation to be put upon the words "before whom any instrument chargeable. . . . is produced or comes in the performance of his functions". Dealing with these words the High Court held: " With all respect, therefore, we agree that the learned Judges deciding Chuni Lal Burman 's (1) case took a correct view of the words " is produced or comes in the performance of his functions" used in Section 33 of the Act to mean "that production of the instrument concerned in evidence or for the purpose of placing reliance upon it by one party or the other. " The High Court was also of the opinion that the object of paying the whole stamp duty was to get the instrument admitted into evidence or its being acted upon or registered or authenticated as provided in sections 32(3), 35, 38(1) and 48(1) of the Stamp Act. Counsel for the State referred to the various sections of the Act; first to the definition section; Section 2(11) which defines what is "duly stamped"; section 2(14) which defines "instrument" and section 9(12) which defines "executed". He then referred to section 3 which lays down what "chargeable" means and then to section 17 which provides that all instruments chargeable with duty and executed by any person in British India shall be stamped before or at the time of the execution. Certain other sections i.e. sections 35 and 38(1) were also (1) A.I.R. 1951 All. 851. 102 referred to and so also sections 40(1)(a), 41, 42 and 48 but in our opinion it is not necessary to refer to these sections. What has to be seen is what is the consequence of a person applying to a Collector for his determination as to the proper duty on an instrument. The submission on behalf of the State (appellant) was that if an instrument whether 'stamped or not is submitted for the opinion of the Collector before it is executed, i.e., it is signed, then the Collector is required to give his determination of the duty chargeable and return the document to the person seeking his opinion but if the document is scribed on a stamped paper or unstamped paper and is executed then different consequences follow. In the latter case it was submitted that under section 33 the Collector is required to impound the document if he finds that it is not duly stamped. On the other hand it was submitted on behalf of the respondent that on his giving his opinion the Collector becomes functus officio and can take no action under section 33. It is these two rival contentions of the parties that require to be decided in this case. After an inordinately long delay, the Collector determined the amount of duty payable and impounded the document. Power to impound is given in section 33 of the Act. Under that section any Person who is a Judge or is in charge of a public office before whom an instrument chargeable with duty is produced or comes in the performance of his functions is required to impound the instrument if it appears to him not to be duly stamped. The question is does this power of impounding arise in the present case?. The instrument in dispute was not produced as a piece of evidence nor for its being acted upon e.g. registration, nor for endorsement as under section 32 of the Stamp Act but was merely brought before the Collector for seeking his advise as to what the proper duty would be. The words "every person. . before whom any instrument. . is produced or comes in the performance of his functions" refer firstly to production before judicial or other officers performing judicial functions as evidence of any fact to be proved and secondly refer to other officers who have to perform any 103 function in regard to those instruments when they come before them e.g. registration. They do not extend to the determination of the question as to what the duty payable is. They do not cover the acts which fall within the scope of section 31, because that section is complete by itself and it ends by saying that the Collector shall determine the duty with which, in his judgment, the instrument is chargeable, if it is chargeable at all. Section 31 does not postulate anything further to be done by the Collector. It was conceded that if the instrument is unexecuted i.e. not signed, and the opinion of the Collector is sought, he has to give his opinion and return it with his opinion to the person seeking his opinion. The language in regard to exe cuted and unstamped documents is no different and the powers and duties of the Collector in regard to those instruments are the same, that is, when he is asked to give his opinion, he has to determine the duty with which, in his judgment, the instrument is chargeable and there his duties and powers in regard to that matter end. Then follows section 32. Under that section the Collector has to certify by endorsement on the instrument brought to him under section 31 that full duty has been paid, if the instrument is duly stamped, or it is unstamped and the duty is made up, or it is not chargeable to duty. Under that section the endorsement can be made only if the instrument is presented within a month of its execution. But what happens when the instrument has been executed more than a month before its being brought before the Collector? Section 31 places no limitation in regard to the time and there is no reason why any time limit should be imposed in regard to seeking of opinion as to the duty payable. Chapter IV of the Act which deals with instruments not duly stamped and which contains as. 33 to 48, provides for impounding of documents, how the impounded documents are to be dealt with, Collector 's powers to stamp instruments impounded and how the duties and penalties are to be recovered. It would be an extraordinary position if a person seeking the advice of the Collector and not wanting to rely upon 104 an instrument as evidence of any fact to be proved nor wanting to do any further act in regard to the instrument so as to effectuate its operation should also be liable to the penalties which unstamped instruments used as above might involve. The scheme of the Act shows that where a person is simply seeking the opinion of the Collector as to the proper duty in regard to an instrument, he approaches him under section 31. If it is properly stamped and the person executing the document wants to proceed with effectuating the document or using it for the purposes of evidence, he is to make up the duty and under section 32 the Collector will then make an endorsement and the instrument will be treated as if it was duly stamped from the very beginning. But if he does not want to proceed any further than seeking the determination of the duty payable then no consequence will follow and an executed document is in the same position as an instrument which is unexecuted and unstamped and after the determination of the duty the Collector becomes functus officio and the provisions of section 33 have no application. The provisions of that section are a subsequent stage when something more than mere asking of the opinion of the Collector is to be done. Our attention was drawn to the observations of Rankin C. J. in Be Cooke and Kelly (1) but those observations are obiter as the High Court held that the reference under section 57 of the Stamp Act was incompetent. The doctrine of functus officio was applied in several cases: Collector, Ahmednagar vs , Rambhau Tukaram Nirhali (2). In that case a certificate of sale had been signed but the certificate was not duly stamped which was pointed out when it was sent to the Sub Registrar for registration. The Sub Registrar informed the Judge about it and the Judge got back the certificate from the purchaser and thinking that he had power to impound the document and to impose a penalty asked for the opinion of the high Court and it was held that after he had signed it he was functus officio and could not act any further and could not impound it. The same principle was laid down in (1) Cal. 1171. (2) A.I.R. 1930 Bom. 105 Paiku vs Gaya (1) and in Chunduri Panakala Rao vs Penugonda Kumaraswami (2) and in our opinion as soon as the Collector determined the duty he became functus officio and he, could not impound the instrument under a. 33 and consequential proceedings could not ') therefore, be taken. The appeal is therefore dismissed with costs. Appeal dismissed.

The respondent executed an instrument and presented it to the Collector for his opinion under section 31 Stamp Act as to the duty chargeable. The Collector,, after a reference to the Board of Revenue, determined the duty payable. He then impounded the instrument and ordered that the ditty be deposited within 98 fifteen days. Later, a notice was served upon the respondent to deposit the amount of stamp duty and penalty within one month and threatening that in default proceedings would be taken to recover them as arrears of land revenue. The respondent challenged the legality of the impounding of the instrument and demand of stamp duty and penalty. Held, that after determination of the stamp duty the Collector became functus officio and could not impound the instrument or demand duty and penalty. Under section 31 the Col lector has merely to determine the proper amount of duty. If the person executing the instrument wants to effectuate the instrument or to use it for purposes of evidence he has to make up the duty and under section 32 the Collector makes the necessary endorsement. Section 33 empowers every person in charge of a public office before whom an instrument chargeable with duty is produced or comes in the performance of his functions to impound the instrument if it is not duly stamped. When an instrument is presented to the Collector under section 31 for determination of duty it cannot be said that it "is produced or comes in the performance of his functions" as contemplated by section 33. These words refer firstly to production before judicial or other officers performing judicial functions as evidence of any fact to be proved, and secondly refer to other officers who have to perform any function in regard to those instruments when they come before them, e.g., registration. In Re Cooke and Kelly, Cal. 1171, held obiter. Collector, Ahmednagar vs Rambhau Tukaram Nirhali, A.I.R. , Paiku vs Gaya, I.L.R. and Chunduri Panakala Rao vs Penugonda Kumaraswami, A.1,R. , referred to.

Appeal No. 31 of 1957. Appeal from the judgment and order date September 27, 1955, of the Jammu and Kashmir High Court in Misc. Application No. 23 of 1955. Jaswant Singh, Advocate General for the State of Jammu and Kashmir and R. H. Dhebar, for the appellant. section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for respondent. February 23. The Judgment of the Court was delivered by SARKAR, J. The respondent is a Civil Engineer who held various positions under the appellant, the Government of the State of Jammu and Kashmir. On September 8, 1954, while the respondent was holding the post of Development Commissioner, he was placed under suspension by an order made by the appellant on that date. Later, the appellant passed another order on February 12, 1955, demoting the petitioner to the post of a Divisional Engineer. On May 12, 1955, the respondent moved the High Court of Jammu and Kashmir under article 32(2A) of the Constitution of India as applied to the State of Jammu and Kashmir, for a writ directing the appellant not to give effect to the order dated February 12, 1955, and to recognise him as the Chief Engineer, the substantive post held by him when he was suspended, with effect from the date of suspension and with all the emoluments of that office. The High Court issued the writ as prayed. The State appeals from the judgment of the High Court, 971 In the view that, we think, must be taken of this case, it is unnecessary to go into the facts a great deal. At one stage of his career under the appellant, the respondent held a job of some responsibility in what was called the Sindh Valley Hydro Electric Scheme. This Scheme was for generating electric power by dams erected in the Sindyh water course and for using the water for irrigation purposes. The work on this Scheme seems to have commenced some time ago. The respondent was connected with the Scheme from 1949 till he was transferred from the work in 1953. It appears that the appellant was dissatisfied with the Progress of the work and the manner in which it had been carried out and decided to establish a Commission of Inquiry (a) to investigate into the reasons for (i) progressive rise in the estimates, (ii) the defective planning and the delay in the execution of the work and (iii) the other irregularities and (b) to fix responsibility upon the persons concerned and make appropriate recommendations. Pending the investigation various officers associated with the planning and execution of the Scheme including the respondent, were placed under suspension on September 8, 1954. Thereafter on October 20, 1954, a commission was set up by the appellant consisting of various persons. The Commission made certain enquiries and eventually submitted its report to the appellant. The appellant then made the order demoting the respondent purporting to act on the basis of the report. It is not necessary to set out the facts any more. The respondent, in his application for the writ, questioned the validity of the orders suspending and demoting him on these grounds. He alleged that the Commission did not conduct the enquiry according to the rules of natural justice. He said that he was not even informed of the charges against him nor given a proper hearing and that if he had been given proper opportunity, he would have proved that he had not been at fault at all. He also said that the appointment of the Commission could only have been made under section 2 of the Public Servants (Inquiries) Act, 1977 124 972 (Kashmir era), and must, therefore, be deemed to have been so made. He complained that the provisions of this Act were not observed by the Commission in making the enquiry. Lastly, he said that the respondent could be reduced in rank only in accordance with the procedure laid down in the Kashmir Civil Service Rules passed by the State Council Order No. 81 C of 1939 and this procedure had not been followed. In the High Court, the question as to whether these Rules had the status of law seems to have been debated at great length. The High Court took the view (that they had. We will proceed on the basis that the High Court was right and the allegations made by the respondent in his petition had been substantiated. Now, the High Court was moved to exercise its powers under article 32 (2A) of the Constitution. The order made by it cannot be upheld if it was not justified by that provision. This is not in dispute. That provision is in these terms: article 32(2A). " Without prejudice to the powers conferred by clauses (1) and (2), the High Court shall have power throughout the territories in relation to which it exercises jurisdiction to issue to any person or authority, including in appropriate cases any Government within those territories, directions or orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by this Part. " The High Court can then exercise its powers under article 32 (2A) only " for the enforcement of any of the rights conferred by this Part ". The Part referred to is Part III and the rights conferred by it are the fundamental rights. Therefore, the High Court can act under cl. (2A) of article 32 only to enforce a fundamental right. The only fundamental right, however, on the violation of which learned counsel for the respondent could rely in support of the order of the High Court was that conferred by article 14, namely, the right to the equal protection of the laws. He said that the 973 respondent was entitled to have the procedure prescribed by the Kashmir Civil Service Rules followed before the order demoting him could be made and as that procedure was not followed, his client had been denied the equal protection of the laws. It seems to us that even if the Rules are a law and the respondent has not been given the benefit of them, all that can be said to have happened is that the appellant has acted in breach of the law; But that does not amount to a violation of the right to the equal protection of the laws. Otherwise, every breach of law by a Government would amount to a denial of the equal protection of the laws. We are not aware of any authority in support of that proposition and none has been cited to us. Nor are we able to find any support for it in principle. It is not the respondent 's case that other servants of the appellant had been given the benefit of those Rules and such benefit has been designedly denied only to him. It seems to us that the appeal must be allowed on the simple ground that the respondent 's petition does not show a violation of any fundamental right. The High Court had no power to act under article 32 (2A) at all. We think it right to point out that articles 226 and 311(2) of the Constitution of India had not been applied to the State of Jammu and Kashmir at any material time. No question of the respondent 's application being maintainable in view of these articles, therefore, arises. The appeal is accordingly allowed. There will be no order as to costs. Appeal allowed.

The Government of Jammu and Kashmir on the basis of the report of the commission of enquiry set up by it demoted the respondent who had been suspended earlier. The respondent moved the Jammu and Kashmir High Court under article 32(2A) of the Constitution of India as applied to the State of Jammu and Kashmir for a writ, inter alia, questioning the validity of the order suspending and demoting him, alleging violation of rules of natural justice by the commission of enquiry and breach of statutes and rules of service. Articles 226 and 311(2) of the Constitution of India bad not been applied to the State of Jammu 970 and Kashmir. The High Court acting under article 32(2A) set aside the orders suspending and demoting the respondent. Held, that the High Court had no powers to act under article 32(2A) of the Constitution of India as the writ petition did not disclose a violation of any fundamental right. Held, further, that the breach of a law by the ' Government, if any, did not amount to a denial of the equal protection of the laws, as it had not ever been alleged by the respondent that the benefit of that law had been designedly denied only to him.

Appeals Nos. 105 and 106 of 1957. Appeals from the judgment and decree dated April 8, 1954, of the Assam High Court in Appeal from Appellate Decree Nos. 41 and 54 of 1951. L. K. Jha and D. N. Mukherjee, for the appellant. Naunit Lal, for respondents Nos. 1 to 12. February 23. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. These two appeals arise from a suit instituted by the appellant in the Court of the Special Subordinate Judge, Assam Valley Districts, in which he claimed a declaration that the sale deeds of lands described in detail in the various Schedules attached to the plaint were void and for possession of the lands covered by the said sale deeds. His case was that Madhab Temple at Hajo is a very ancient temple and the Assam Rajahs had granted lands to the Bardeuries (temple officials) to enable them to render service to the deities installed in the said temple. The lands thus granted to the temple officials were endowed lands and the same had been burdened with service to the temple; in other words, the grantees were entitled to enjoy the lands on condition that they rendered the requisite service to the temple. As a corollary of the 949 burden imposed on the grantees by the said grant the lands were inalienable to strangers though they could be transferred to any of the Bardeuries of the temple. According to the appellant the said lands had originally been granted to Hem Kanta Sarma and Uma Kanta Sarma who were then the worshippers at the temple. The respondents who were impleaded to the" suit represented the heirs of the original grantees and assignees from those heirs. The appellant has brought this suit on behalf of the Madhab Temple at Hajo, and his case is that the alienations made by the worshippers in favour of non worshippers were invalid and so the temple was entitled to claim a declaration as set out in the plaint and to ask for possession of the lands unauthorisedly transferred to the predecessors in title of the respondents. The lands in suit have been described in detail and specified in three Schedules called Ka, Kha and Ga. The respondents denied this claim. They urged that the original grants were not burdened with service and were alienable without any restriction whatever. They also pleaded that they had purchased the lands bona fide for valuable consideration and without notice of any such burden or obligation subsisting on the lands. Besides, they added a plea of limitation in respect of the lands specified in Schedules Kha and Ga. The trial court upheld the appellant 's contention and made a finding that the lands in suit were burdened with service with the result that the impugned alienations were void. It also found that the purchasers had not shown that they had made adequate enquiries and so their plea that they were purchasers without notice could not be sustained. On the question of limitation, however, it accepted the plea raised by the respondents in respect of the lands described in Schedules Kha and Ga. In regard to the lands described in Schedule Ka the trial Court directed that the appellant should obtain delivery of possession of the said lands through the transferor defendants or their heir if the latter were willing to render service to the temple; otherwise the appellant was held entitled to get independent possession and the said transferors 950 would be deemed to have relinquished their interest in the said lands. This decree gave rise to cross appeals before the District Court. The said appeals were heard together and the appellate court confirmed the decree passed by the trial court in respect of Kha and Ga lands. In regard to the lands in Schedule Ka the appellate court maintained the declaration in favour of the appellant but discharged the conditional decree for possession because it held that in regard to the said lands the appellant must be left to move the sovereign authority to sue for resumption of the said lands. This appellate decree became the subject matter of two appeals and cross objections before the High Court. The High Court has held that the finding concurrently recorded by the courts below in regard to the burden subsisting on the lands in question was based on evidence most of which was hearsay and the whole of which taken together was meager and insufficient in law to sustain the said finding. The High Court has also criticised the courts below for placing the onus of proof in regard to the character of the lands on the respondents. According to the High Court it was for the appellant to prove his case in respect of the nature of the original grant. The High Court has then taken into account the fact that the evidence shows that many of the lands were transferred to strangers and that was inconsistent with the case made out by the appellant. Besides, the High Court has referred to the fact that the lands in question are described as Brahmottar lands in revenue papers and that clearly shows that the said lands are heritable and transferable without restriction. On the question of limitation the High Court has accepted the plea of the respondents that Article 144 of the Limitation Act applied. As to the declaration granted to the appellant by the District Court the High Court has observed that the said declaration was absolutely futile. In the result the suit preferred by the appellant has been dismissed with costs throughout. It is this decision which is challenged before us by the appellant with a certificate granted to the appellant by the High Court in that behalf 951 The principal point which has been urged before us by Mr. Jha for the appellant is that the High Court was in error in coming to the conclusion that lands in suit which are admittedly described as Brahmottar lands in the revenue records are transferable without, any restriction. In support of its conclusion the High Court has referred to the history of the lands, the nature of the initial grant and the recognition of the title of the grantees by the British Government after it conquered Assam and of the several steps taken thereafter. This history has been set out in detail in the Assam Land Revenue Manual(1). From this introduction it appears that Nisf khiraj (half revenue paying) estates as distinguished from Khiraj (full. revenue paying) estates form a class of tenure found only in Assam Proper and they have a special history of their own. In 1834, shortly after Assam was annexed by the Government of India it ruled that " all rights to hold lands free of assessment founded on grants made by any former Government must be considered to have been cancelled by the British conquest. All claims therefore for restoration to such tenure can rest only on the indulgence of the Government without any right. " This ruling clearly and emphatically brought out the legal consequences of political conquest. Grants made by the previous Governments came to an end and their continuance after the conquest would depend upon the indulgence of the succeeding Government. It appears that prior to the conquest of Assam under the previous regime the predecessors in interest of the then owners of Nisf khiraj estates held their lands revenue frce and called themselves lakhirajdars. They continued to describe themselves as such even after their lands were resumed and assessed at half rates. Mr. Scott, the first British Commissioner of Assam, refused to recognise any claims to hold land revenue free. Research made by him in that behalf showed that even prior to the Burmese conquest of Assam lakhiraj land had occasionally been assessed at five annas a pura (four bighas) in timer, of trouble by (1) Vol. 1, 6th Ed., p. lxvii. 952 the Assam Rajahs themselves. Basing himself on this precedent Mr. Scott fixed the assessment of the said land at the said rates and subsequently increased it to seven or eight annas a pura. This imposition war, known as Police Barangani. Captain (afterwards General) Jenkins became the Commissioner of Assam in 1834. The lakhirajdars objected to pay the tax imposed on their lands by Mr. Scott on the ground that Mr. Scott intended to levy the said tax temporarily and had promised Lo remit it. This dispute was referred by General Jenkins to the Government of India who replied that they saw no reason to believe that the tax imposed by Mr. Scott was intended to be temporary, and they added that if it was Mr. Scott 's intention it would Dot be valid because Mr. Scott had not obtained the sanction of the Government in that behalf. Even so, the Government of India directed that a full enquiry should be made into all claims to rent free lands on the part of Rajahs or as debotter or dharmottar or on any other plea throughout the districts of Assam and Captain Bogle was appointed Special Commissioner to make the said enquiry under Regulation III of 1818. This enquiry had to be held subject to the control and orders of General Jenkins. The Government prescribed certain principles to guide Captain Bogle in his enquiry. One of these principles was that pending the lakhiraj enquiry Mr. Scott 's moderate rates were to be levied. The orders issued by the Government in that behalf clearly declared the right of the Government to assess all lands held revenue free in Assam Proper, but subject to this right Government were prepared to grant the indulgence of restoring to the lakhirajdars all lands held by them and to confirm them in possession. It appears that the instructions issued by the Government were not fully carried out by General Jenkins. Instead of treating all lakhiraj lands as being on the same footing and liable to assessment the General drew a broad distinction between debotter lands which were appropriated to temples and lands known as brahmottar or dharmottar, that is to say, 953 lands devoted to some religious purpose not being temple lands. In respect of the former he confirmed the grants revenue free. In respect of the latter be simply confirmed the grantees in possession subject to the payment of Mr. Scott 's favourable rates until, Captain Bogle 's enquiry was terminated and final orders passed in that behalf It is curious that though the enquiry of Captain Bogle went on for many years it was not formally completed till the year 1860. By that time the instructions issued by the Government of India at the commencement of the enquiry were lost sight of. No report was submitted to the Government by the enquiring officer and final orders of the Government of India were not obtained on the question whether the holders of brahmottar and dharmottar lands were to hold their lands at the rates fixed by General Jenkins. In consequence holders of these lands have ever since continued to hold at half rates without any formal decision by the Government of India having been reached in that behalf. Subsequently the holders ' rights to continue to hold the lands at the said rates have been recognised and their holdings have been declared to be heritable and transferable by the Government of India in 1879. This summary of the history of these lands which is to be found in the introduction to the Assam Land Revenue Manual shows that Nisf khirajdar of the present day " is ordinarily a person whose lands were claimed by his ancestors revenue free on the ground that they were granted by the Assam Rajas for some religious or charitable purpose". It appears that the word " Nisf khiraj " was invented for the first time in 1871 and it applied to all estates which paid half the ordinary revenue rates. This word was presumably invented to avoid confusion caused by the use of the word " lakhiraj which had been applied to them prior to 1871. The history of this tenure is similarly stated in the Government Gazette relating to Assam as well as by Baden Power (Vol. III, pp. 406 following). 954 At this stage it would be necessary to refer to the relevant provisions of Regulation 1 of 1886,. It in called the Assam Land and Revenue Regulation of the said year. Section 3(g) of this Regulation defines " land holder " as meaning any person deemed to have acquired the status of a land holder under section 8 ; while section 8 (1) provides, inter alia, that any person who has, before the commencement of this Regulation, held immediately under the Government for ten years continuously any land not included either in a permanently settled estate, or in a revenue free estate, and who has during that period paid to the Government the revenue due thereon or held the same under an express exemption from revenue, shall be deemed to have acquired the status of a land holder in respect of the land. That takes us to section 9 which provides that a land holder shall have a permanent heritable and transferable right of use and occupancy in his land subject to the provisions contained in cls. (a), (b) and (c) of the said section. It is unnecessary to refer to the said exceptions. It would thus be clear, and indeed it is not disputed, that the transferor Bardeuries who held the lands in suit fall under section 8 (1) (a) and became land holders under section 3 (g). The inevitable consequence of this position is that section 9 applies to them and their rights in the lands in their occupation are statutorily recognised to be permanent, heritable and transferable. This statutory position is consistent with the declaration made by the Government of India in 1879, and in view of this clear statutory position it would be difficult to sustain the plea that the lands in question are burdened with the special condition that they can be transferred only to Bardeuries and not to any strangers outside the group. As the High Court has found. and that is no longer in dispute, these lands are described as brahmottar lands in revenue records and to the said lands and their holders the statutory provisions of the Regulation to which we have just referred applied; therefore, it is impossible to escape the conclusion that by virtue of the relevant statutory provisions of the Regulation the lands must be deemed to be heritable and transferable without any restrictions 955 This aspect of the matter was completely ignored by the trial court and the appellate court, and so the High Court was right in correcting the error which had crept into the concurrent decisions of the courts below. Besides, the High Court was also right in holding that in a case of this kind where the appellant urged that the lands could be alienated only to a specified class of persons, the onus 'Was on the appellant and not on the respondents to prove the contrary. Failure to put the onus on the appellant introduced a serious infirmity in the approach adopted by the courts below in dealing with this question. That was another infirmity in their decision. It is also clear that the evidence adduced by the appellant in support of his case to which reference has been made by the first two courts is entirely unsatisfactory and, even if it is believed, in law it would be insufficient to sustain the plea that there was a limitation on the transferability of the lands in question. We are also satisfied that the declaration granted by the District Court was futile. Therefore, in our opinion, the view taken by the High Court is absolutely correct and the grievance made by the appellant against the validity of the said conclusion cannot be sustained. In the result the appeals fail and are dismissed with Costs. Appeals dismissed.

The plaintiff appellant filed a suit alleging that the lands in suit were unauthorisedly transferred to the predecessors in title 121 948 of the respondents. His contention was that the lands were granted to the Bardeuries (officials) of a certain ancient temple in Assam in order to enable them to render service to the deities installed in the temple and as such the lands were inalienable to strangers other than the Bardeuries. Held, that in view of the history of land tenure in Assam and by virtue of the relevant statutory provisions of Assam Land and Revenue Regulation (Reg. 1 of 1886) the lands must. be deemed to be heritable and transferable without any restriction. The transferor Bardeuries, who held the lands described as brahmottar lands in revenue records, fell under section 8(1)(a) and became " land holders " under section 3(g) of the Regulation and consequently section 9 applied to them statutorily recognising their rights in the lands to be permanent, heritable and transferable. To prove the plaintiff appellant 's contention that the lands could be alienated only to a specified class of persons, the onus was on the appellant and not on the respondents to prove the contrary.

l Appeal No. 89 of 1952. Appeal by 'special leave from the Judgment dated June 27, 1951, of the Labour Appellate Tribunal of India at Calcutta in Appeals Nos. 94 and 142 of 1950 arising out of the Award of the Second Industrial Tribunal, Madras (published in the Fort St. George Gazette, Madras, dated October 3, (1950). N. C. Chatterjee (section N. Mukherjee, with him) for the appellant. section C. C. Anthoni Pillai (President, Madras Labour Union) for the respondents. December 2. The Judgment of the Court Was delivered by MAHAJAN J. 220 MAHAJAN J. This is an appeal by special leave from a decision dated 27th June, 1951, of the Labour Appellate Tribunal of India at Calcutta in appeals Nos. 94 and 142 of 1950, arising out of the award of the Second Industrial Tribunal, Madras. The relevant facts and circumstances giving rise to the appeal are as follows: On 1st November, 1948, 859 night shift operatives of the carding and spinning department of the Carnatic Mills stopped work, some at 4 p.m., some at 4 30 p.m. and some at 5 p.m. The stoppage ended at 8 p.m. in both the departments. By 10 p.m, the strike ended completely. The apparent cause for the strike was that the management of the Mills had expressed its inability to comply with the request of the workers to declare the forenoon of the 1st November, 1948, as a holiday for solar eclipse. On the 3rd November, 1948, the management put up a notice that the stoppage of work on the 1st November amounted to an illegal strike and a break in service within the meaning of the Factories Act (XXV of 1934) and that the management had decided that the workers who had participated in the said strike would not be entitled to holidays with pay as provided by the Act. This position was not accepted by the Madras Labour Union. The Madras Government by an order dated the 11th July, 1949, made under section 10(1) (c) of the (XIV of 1947), referred this dispute along with certain other disputes to the Industrial Tribunal, Madras. The adjudicator gave the award which was published in the Gazette on 12th October, 1950. By his award the adjudicator found that there could be little doubt that the stoppage of work by the night shift workers on the night of the last November,, 1948, was a strike, that it was an illegal strike, since the textile industry is notified as a public utility industry and there could be no legal strike without a proper issue of notice in the terms prescribed by the . No such notice had been given. In view of this finding he upheld the view of the management that the continuity of service of the workers was broken by the interruption 221 caused by the illegal strike and that as a consequence the workers who participated in such strike were not entitled to annual holidays with pay under section 49 B (1) of the Factories Act. He, however, considered that the total deprivation of leave with pay ordered by the management was a severe punishment and on the assumption that he had power to scrutinize the exercise of the discretion by the management in awarding punishment, reduced the punishment by 50 per cent and held that the workers would be deprived of only half their holidays with pay. The decision of the management was varied to this extent. The Mills as well as the Union appealed against this decision to the Labour Appellate Tribunal. That Tribunal upheld the contention of the Mills that the adjudicator had no power to interfere with and revise the, discretion of the management exercised by it under section 49 B (1). It also upheld the contention of the Union that what happened on the night of the 1st November did not amount to a strike and did not cause any interruption in the workers ' service. This is what the Tribunal said: "It would be absurd to hold that non permitted absence from work even for half an hour or less in the course of a working day would be regarded as interruption of service of a workman for the purpose of the said section. We are inclined to hold that the stoppage of Work for the period for about 2 to 4 hours in the circumstances of the case is not to be regarded as a strike so as to amount to a break in the continuity of service of the workman concerned. " In the result the appeal of the Union on this point was allowed and it was ordered that holidays at full rates as provided for in section 49 A of the Factories Act will have to be calculated in respect of the operatives concerned on the footing that there was no break in the continuity of their service by the stoppage of work on 1st November, 1948. In this appeal it was contended on behalf of the Mills that on a proper construction of section 49 B (1) 29 222 of the Factories Act: (XXV of 1934) the management was right in its decision that the continuity of service was broken by the interruption caused by the illegal strike and that the workers were not entitled to annual holidays with pay under the said section inasmuch as they would not have completed a period of twelve months ' continuous service in the factory, and that the non permitted absence as a result of concerted refusal to work even for 2 to 4 hours in the course of a working day amounts to an illegal strike and consequently an interruption of service of a workman for the purpose of section 49 B. In our judgment, this contention is well founded. Section 49 B provides "Every worker who has completed a period of twelve months continuous service in a factory shall be allowed, during the subsequent period of twelve months, holidays for a period of ten, or, if a child, fourteen 'Consecutive days, inclusive of the day or days, if any, on which he is entitled to a holiday under subsection (1) of section 35. " "Explanation. A worker shall be deemed to have completed a period of twelve months continuous service in a factory notwithstanding any interruption in service during those twelve months brought about by sickness ', accident or authorized leave not exceeding ninety days in the aggregate for all three or by a lookout, or by a strike which is not an illegal strike, or by intermittent periods of involuntary unemployment not exceeding thirty days. . . . It is clear that the benefit of this section is not avail able in cases where the interruption in service is brought about by an illegal strike. Section 2 q ) of the Industrial, Disputes Act (Act XIV of 1947) defines "strike" as meaning "a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have 223 been so employed to continue to work or to accept employment. The adjudicator found on the evidence and circumstances of the case that there was concert and combination of the workers in stopping and :refusing resume work on the night of the 1st November ' He observed that the fact that a very large number of leave applications was put in for various reasons pointed to the concerted action and that the appli cation given by the workers and their representatives also indicated that they were acting in combination both in striking and refusing to go back to work on the ground that they were entitled to leave for the night shift whenever a half a day 's leave was granted to the day shift workers. He further hold that the refusal of the workers to resume work in spite of the attempts made by the officers and their own Madras Labour Union representatives indicated that they were not as a body prepared to resume work unless their demand was conceded. In our opinion, the conclusion reached by the adjudicator was clearly right and the conclusion cannot be avoided that the workers 'were acting in concert. That being so, the action of the workers on the night of the 1st November clearly fell within the definition of the expression "strike" in section 2(q) of the . We have not been able to appreciate the view expressed by the Appellate Tribunal that stoppage of work for a period of two to four hours and such non permitted absence from work cannot be regarded as strike. Before the adjudicator the only point raised by the Union was that it was a spontaneous and lightning strike but it was not said by them that stoppage of work did not fall within the definition of " 'strike" as given in the Act. It cannot be disputed that there was a cessation of work by a body of persons employed in the Mills and that they were acting in combination and their refusal to go back to work was concerted. All the necessary ingredients,. therefore, of the definition exist in the present case and the stoppage of work on 1st November, 224 1948, amounted to a strike. It was not a case of an individual worker 's failure to turn up for work. It was a concerted action on the part of a large number of workers. The Appellate Tribunal was thus in error in not regarding it as a strike and it had no discretion not to regard what in law was a strike as not amounting to a strike. If it cannot be denied that the stoppage of work on 1st November, 1948, amounted to a strike, then it was certainly an illegal strike because no notice had been given to the management, the Mills being a public utility industry. It was contended by the President of the Union, who argued the case on behalf of the workers, that the Factories Act had no application to this case, because by a notification of the Government of Madras dated 23rd August, 1946, the Buckingham an Carnatic Mills had been exempted from the provisions of Chapter IV A of the Act and the provisions of sections 49 A and 49 'B were not therefore attracted to it and that no substantial question of law in respect to the construction of the section fell to be decided by this Court and that being so, this Court should not entertain this appeal under article 136 of the Constitution. This contention has no validity. The Mills were granted exemption from the provisions of Chapter IV A of the Factories Act because their leave rules were in accordance with the provisions of Chapter IV A of the Factories Act. These rules being in similar terms, the decision of the matter depends on the construction of the rules and this in volves a substantial question of law. Reliance was next placed on section 49 A of the Factories Act which provides that the provisions of the new Act would not operate to the prejudice of any rights which the workers were entitled to under the ' earlier rules and it was argued that under the leave rules of the Mills which prevailed prior to the coming into force of the Factories Act, the workers were entitled to privilege leave and there was no provision in those rules similar to the one that has been made in section 49 B or in the new rules and that the Mills 225 had no right to deprive them of leave by reason of the strike. This contention cannot be sustained because section 49 A (2) of the Factories Act has no application to the case of the Carnatic Mills in view of the notification ' dated 23rd August, 1946. Lastly, it was urged that the stoppage of work on 1st November, 1948, was not a concerted action on the part of the workers and that several workers in their own individual capacity wanted leave on that date. In our opinion, in view of the facts and circumstances detailed in the adjudicator 's award this contention cannot be seriously considered. We concur in the view of the facts taken by the adjudicator that the action of the 859 workers on the night of 1st November, 1948, fell within the definition of the word "strike" as given in section 2(q) of the and it was an illegal strike and the workers thus lost the benefit of holidays that they would have otherwise got under the rules. The learned counsel for the appellant undertook on behalf of the management ex gratia that it would condone the default of the workers on 1st November, 1948, and the cessation of work on that night would not be treated as depriving them of the holidays under the rules and we appreciate the spirit in which this undertaking was given and hope that the workers would also take it in that spirit. The result is that the appeal is allowed, and the decision of the Labour Appellate Tribunal on this point is set aside. In the circumstances of this case we make no order as to costs. Appeal allowed.

Where the night shift operatives of a department of a textile mills stopped work from about 4 p.m. up to about 8 p.m. on a certain day, the apparent cause of the strike being that the management of the mills had expressed its inability to comply with the request of the workers to declare the forenoon of that day as a holiday for solar eclipse, and it was found that the stoppage of work was the result of concerted action: Held (i) that the stoppage of work fell within the definition of a "strike" in section 2 (q) of the ; (ii) that the strike was an illegal strike as the textile mills was a public utility industry and no notice had been given to the management, even though the refusal to work continued only for a few hours; and (iii) that the continuity of service of the workers was interrupted by this illegal strike and they were not entitled to claim holidays with pay under section 49 B (1) of the Indian Factories Act, 1934.

Appeal No. 624 of 1960. Appeal by special leave from the judgment and order dated May 30, 1960 of the Mysore High Court in Civil Revision Petition No. 1098 of 1959. K. R. Karanth and R. Gopalakrishnan, for the appellant. A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the respondent. B. R. L. Iyengar and T. M. Sen, for the State of Mysore (On Notice issued by the Court). February 27. The Judgment, of the Court was delivered by SHAH, J. Smt. Vimla hereinafter referred to as the plaintiff filed suit No. 73 of 1956 in the court of the Subordinate Judge, South Kanara, for a decree for 1016 possession of lands, buildings, house sites described in sch. A and movable properties described in sch. B and for mesne profits in respect of properties described in sch. A and for a decree for possession and management and for account of the properties described in sch. C and institutions alleged to be the private family religious endowments in sch. D. The plaintiff claimed that on the death of her father Shri Dharmasthala Manjayya Heggade on August 31, 1955, she became entitled to the properties in suit but the defendant wrongfully possessed himself of those properties. The plaintiff valued the properties in schs. C and D under section 28 of the Madras Court fees and Suits Valuation Act, 1955 at Rs. 21,000/ and paid a court fee of Rs. 275/ . She valued the lands in schedule A for purposes of jurisdiction at 30 times the assessment and separately valued the buildings and paid court fee on that footing. On June 28, 1956, the Subordinate Judge ordered on an objection raised by his office that the amount of Rs. 34,577/ paid as court fee by the plaintiff was adequate. Then followed a course of proceedings for which not many precedents may be found. On September 9, 1950, the defendant filed his written statement raising an objection inter alia to the valuation of the properties in suit and the court fee exigible on the claim. The trial court then raised an issue about the adequacy of the court fee, paid by the plaintiff. On February 13, 1957, the defendant applied for the appointment of a Commissioner to value the properties. The court dismissed the application and declared that the court fee paid was adequate. In Revision Petition 272 of 1957 preferred by the defendant to the High Court of Judicature at Bangalore, the order passed by the Subordinate Judge was set aside and it was directed that the trial court do " ascertain the value of the properties for purposes of court fee in accordance with law after giving full opportunity to the parties and if need be by appointing a Commissioner to ascertain the present market value of the suit Schedule properties and decide the issue afresh on merits. " Pursuart to this direction, a Commissioner was appointed by 1017 the Subordinate Judge. The Commissioner submitted his report as to valuation of the properties. Objections were raised by the defendant to that report and a further report was submitted by the Commissioner. On the direction of the Subordinate Judge, a supplemental report was submitted by the Commissioner. After hearing the parties, the Subordinate Judge held that the properties described in sch. D were " extra commercial " and fixed court fee was exigible in respect of the claim for possession thereof, that pro perties described in sch. D were " trust properties " and section 28 of the Madras Court fees and Suits Valuation Act applied thereto as the dispute related to the right of management between persons claiming to be rival trustees, that the houses built on revenue paying lands had to be valued according to their market value and not at 30 times the land assessment and that the lands in sch. A were worth Rs. 7,74,665/ and the house sites were worth Rs. 27,625/ . The plaintiff paid the additional court fee as directed by the court,. Against the order passed by the Subordinate Judge, the plaintiff and the defendant applied by separate petitions in revision to the High Court of Mysore. The High Court heard the Advocate General of the State and substantially confirmed the order passed by the Subordinate Judge except as to an institution described as " Nelliyadi Beedu ", in respect of which the High Court directed the trial court to determine whether the institution was " extra commercial " after giving an opportunity to both parties to put forth their contentions and to lead evidence in that behalf. Against that order of the High Court, this appeal has been preferred by the defendant with special leave under article 136 of the Constitution. The Court fees Act was enacted to collect revenue for the benefit of the State and not to arm a contesting party with a weapon of defence to obstruct the trial of an action. By recognising that the defendant was entitled to contest the valuation of the properties in dispute as if it were a matter in issue between him and the plaintiff and by entertaining petitions preferred by the defendant to the High Court in exercise of 1018 its revisional jurisdiction against the order adjudging court fee payable on the plaint, all progress in the suit for the trial of the dispute on the merits has been effectively frustrated for nearly five years. We fail to appreciate what grievance the defendant can make by seeking to invoke the revisional jurisdiction of the High Court on the question whether the plaintiff has paid adequate court fee on his plaint. Whether proper court fee is paid on a plaint is primarily a question between the plaintiff and the State. How by an order relating to the adequacy of the court fee paid by the plaintiff, the defendant may feel aggrieved, it is difficult to appreciate. Again, the jurisdiction in revision exercised by the High Court under section 1 15 of the Code of Civil Procedure is strictly conditioned by cls. (a) to (c) thereof and may be invoked on the ground of refusal to exercise jurisdiction vested in the Subordinate Court or assumption of jurisdiction which the court does not possess or on the ground that the court has acted illegally or with material irregularity in the exercise of its jurisdiction. The defendant who may believe and even honestly that proper court fee has not been paid by the plaintiff has still no right to move the superior court by appeal or in revision against the order adjudging payment of court fee payable on the plaint. But counsel for the defendant says that by Act 14 of 1955 enacted by the Madras Legislature which applied to the suit in question, the defendant has been invested with a right not only to contest in the trial court the issue whether adequate court fee has been paid by the plaintiff, but also to move the High Court in revision if an order contrary to his submission is passed by the court. Reliance in support of that contention is placed upon sub section (2) of section 12. That sub section, in so far as it is material, provides: " Any defendant may, by his written statement filed before the first hearing of the suit or before evidence is recorded on the merits of the claim. plead that the subject matter of the suit has not been properly valued or that the fee paid is not sufficient. All questions arising on such pleas shall 1019 be heard and decided before evidence is recorded affecting such defendant, on the merits of the claim. If the court decides that the subject matter of the suit has not been properly valued or that the fee paid is not sufficient, the court shall fix a date before which the plaint shall be amended in accordance with the court 's decision and the deficit fee shall be paid. . " But this section only enables the defendant to raise a contention as to the proper court fee payable on a plaint and to assist the court in arriving at a just decision on that question. Our attention has not been invited to any provision of the Madras Court fees Act or any other statute which enables the defendant to move the High Court in revision against the decision of the court of first instance on the matter of court fee payable on a plaint. The Act, it is true by section 19, provides that for the purpose of deciding whether the subject matter of the suit or other proceeding has been properly valued or whether the fee paid is sufficient, the court may hold such enquiry as it considers proper and issue a commission to any other person directing him to make such local or other investigation as may be necessary and report thereon. The anxiety of the Legislature to collect court fee due from the litigant is manifest from the detailed provisions made in ch. III of the Act, but those provisions do not arm the defendant with a weapon of technicality to obstruct the progress of the suit by approaching the High Court in revision, against an order determining the court fee payable. In our view, the High Court grievously erred in entertaining revision applications on questions of court fee at the instance of the defend. ant, when no question of jurisdiction was involved. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

The question was whether the defendant was entitled to raise a grievance and contest the valuation of the properties in dispute as if it were a matter in issue between the plaintiff and himself and could seek to invoke the High Court in its revisional jurisdiction against the order adjudging 'court fees payable on the plaint. Held, that the Court Fees Act is enacted to collect revenue and not to be used as a technical weapon by the defendant for obstructing the progress of the suit by approaching the High Court in its revisional jurisdiction against the order determining and adjudging court fees payable on the plaint. That section 12(2) of the madras Court Fees Act, 1955, only enabled the defendant to assist the court in arriving at a just decision on the question of court fees payable on the plaint. That in the instant case the High Court grievously erred in entertaining revision application on the question of court fees at the instance of the defendant when no question of jurisdiction was involved.

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

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

Appeal No. 434 of 1960. Appeal by special leave from the judgment and order dated October 4, 1956, of the Hyderabad High Court in I.T.R. No. 116/5 of 1954 55. K. N. Rajagopal Sastri and D. Gupta, for the appellant. A, V. Viswanatha Sastri, S.N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents. February 22. The Judgment of the Court was delivered by SHAH, J. M/s. Bhikaji Dadabhai & Co. herein. after called the assessees owned an oil mill at Khammamath in the area of the former State of Hyderabad. For the year of assessment Fasli 1357 (October 1, 1946, to September 30, 1947), the assessees returned an income of Rs. 50,384/ . The Income tax Officer found that the books of account maintained by the assessees were unreliable and by his order dated February 10, 1950, he assessed their total income at Rs. 1,63,131/ . The Income tax Officer had, before finalising the assessment, issued on December 22, 1949, a notice to the assessees under section 40 of the Hyderabad Income tax Act requiring them to show cause why penalty should not be imposed upon them and by order dated October 31, 1951, directed the assessees to pay by way of penalty Rs. 42,000/ in addition to the tax. This order was confirmed in appeal by the Appellate Assistant Commissioner. In appeal, the Income tax Appellate Tribunal observed that by virtue of the provisions of section 13 (1) of the Indian Finance Act, 1950, the Hyderabad Income tax Act had ceased to have effect and as the power to impose penalty under section 40 of the Hyderabad Income tax Act was not saved, the order imposing penalty was without jurisdiction, The Tribunal observed; 925 " The Income tax Officer may have been in error in imposing the penalty, but there was no appeal against the order of the Income tax Officer to the Appellate Assistant Commissioner. Section 42(1) of the Hyderabad Income tax Act gives a right to an assessee to appeal if he objects to an order under section 40 made by an Income tax Officer. Section 40 ceased to have effect. There can therefore be neither an order under section 40 nor an appeal against the order if an order.has been wrongly made. The remedy of the assessee lies elsewhere, and not by way of an appeal to the Appellate Assistant Commissioner," and on that view dismissed the appeal. At the instance of the assessees, the following questions were referred by the Tribunal to the High Court of Judicature at Hyderabad 1. Whether on 31 10 1951, the Income tax Officer, Warrangal Circle, had the power to impose a penalty under section 40(1) of the Hyderabad Income tax Act in respect of the assessment for the year 1357 F. ? 2. Whether the assessee had a right to appeal against the order of the Income tax Officer imposing the penalty ? 3. If the Appellate Assistant Commissioner did not have jurisdiction to hear the appeal, whether the order of the Appellate Assistant Commissioner is a nullity and therefore the order of the Income tax Officer erroneous, though it may stand until it is set aside by a competent authority ? The High Court answered the first and the third questions in the negative and the second question in the affirmative. The High Court observed that the Appellate Assistant Commissioner had power to entertain the appeal in which the question of the power of the Income tax Officer to impose a penalty was challenged, and the decision of the Appellate Assistant Commissioner was not without jurisdiction. The High Court also proceeded in a petition separately filed by the assessees to direct the Income tax Appellate Tribunal to set aside the order of the Income tax Officer imposing a penalty as a logical 926 consequence of the view the Tribunal had taken regarding the absence of power in the Income tax Officer to levy a penalty. Against the order passed by the High Court, this appeal with special leave is preferred. We are in agreement with the High Court that the appeal to the Appellate Assistant Commissioner was competent. Even if the Income tax Officer committed an error in passing the order imposing penalty because the conditions necessary for invoking that jurisdiction were absent, an appeal against his order on the ground that he was not competent to pass the order did lie to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner is under the Act constituted an appellate authority against certain orders of the Income tax Officer, and exercise of that jurisdiction is not made conditional upon the competence of the Income tax Officer to pass the orders made appealable. The Appellate Assistant Commissioner had as a court of appeal jurisdiction to determine the soundness of the conclusions of the Income tax Officer both on questions of fact and law and even as to his jurisdiction to pass the order appealed from. We are, however, unable to agree with the High Court that because of the repeal of the Hyderabad Income tax Act by the Finance Act, 1950, the power to impose a penalty in respect of the years preceding the date of repeal was lost. The State of Hyderabad merged with the Indian Union during the pendency of the proceedings before the Income tax Officer. Thereafter the Indian Legislature enacted the Finance Act, 1950, which by sub section (1) of section 13 in so far as it is material provided: " If immediately before the 1st day of April, 1950, there is in force in any part B State. any law relating to income tax or super tax. that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922. " 927 Manifestly, by section 13, the Hyderabad Income tax Act ceased to have effect as from April 1, 1950. But the operation of that Act in respect of levy, assessment and collection of income tax and super tax in respect of periods prior thereto for which liability to Income tax could not be imposed under the Indian Income tax Act, 1922, was saved. The Judicial Committee of the Privy Council in Commissioner of Income tax, Bombay Presidency and Aden vs Messrs. Khemchand Ramdas observed: " One of the peculiarities of most Income tax Acts is that the word 'assessment ' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer." The Hyderabad Income tax Act also used the expression" assessment " in different senses. In certain sections, for instance sections 31 and 39 the expression is used as in the sense of mere computation of income; in other sections it is used in the sense of determination of liability and in certain other sections in the sense of machinery for imposing liability and procedure in that behalf. "By the Finance Act, 1950, the Hyderabad Income tax Act was expressly kept alive in respect of periods which include the assessment year in question for purposes of levy, assessment and collection of income tax. The High Court expressed the view that the word "assessment" in section 13 (1) included the whole procedure for imposing liability upon the taxpayer but not to the procedure for imposing a penalty. They thought that the Hyderabad Income tax Act dealt with liability to pay income tax and penalty in distinct provisions, both relating to imposition and recovery and that if the Legislature had intended to keep alive the Hyderabad Income tax Act for all purposes including the levy of penalty with respect to any particular year or years of assessment, it could have said so in terms clear and unambiguous instead of limiting the operation only to " levy, assessment and collection." In the view of the High Court, imposition of penalty (1) (1938) L.R. 65 I.A. 236; 928 was not a necessary concomitant or incident of the process of assessment, levy and collection of tax. The High Court proceeded upon the view that by saving the Hyderabad Income tax Act for the purposes. of levy, assessment and collection of income tax, the entire procedure for imposing liability to pay tax and. for collection of tax was saved, but penalty not being tax, provisions relating to imposition of and collection of penalty did not survive the repeal of the Hyderabad Income tax Act. This Court considered in C. A. Abraham vs The Income tax Officer, Kottayam(1) the question whether the expression " assessment " as used in section 44 of the Indian Income tax Act included the procedure for imposition of penalty in respect of a dissolved firm and it was observed: "The expression 'assessment ' used in these sections (provisions of Ch. IV of the Indian Income tax Act) is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest or contumacious conduct of the assessee." This court regarded penalty as an additional tax imposed upon a person in view of his dishonest or contumacious conduct. It is true that under the Hyderabad Income tax Act, distinct provisions are made for recovery of tax due and penalty, but that in our judgment does not alter the true character of penalty imposed under the two Acts. Nor are we able to agree that because in respect of the , the Indian Tariff Act, 1934, the , the Central Excise and Salt Act, 1944, and the Indian Post Offices Act, 1898, which were extended (1) ; 929 to the whole of India by section 11 of the Finance Act, 1950, and the provisions corresponding thereto were repealed by the proviso, and it was expressly provided that the previous operation of the corresponding law or any penalty, forfeiture or punishment ordered in respect of an offence committed against any such law or any investigation, legal proceeding or remedy in respect of such penalty, forfeiture or punishment or any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the Act had not been passed, that under sub section (1) of section 13 it was intended to prohibit the authorities otherwise competent in that behalf fro` commencing or continuing the proceeding for levying penalty even if the circumstances justify such a course. The scheme of the statutes specified in section 11 and which are repealed by sub section (2) of section 13 are somewhat different from the scheme of the Indian Income tax Act. Because by sub section (1) of section 13 of the Finance Act, 1950, the Hyderabad Income tax Act was to cease to operate as on April 1, 1950, except for the purposes of levy, assessment and collection of income tax and super tax, whereas in respect of other Acts specified in section 11 substantially provisions similar to those contained in section 6 of the General Clauses Act were enacted, an intention that proceedings for penalty may be commenced and continued under the Acts specified in section 11, whereas no such proceedings may be commenced or continued under the Hyderabad Income tax Act is not indicated. We are of the view that the High Court erred in holding that the proceedings for imposing the penalty could not be continued after the enactment of section 13 (1) of the Finance Act, 1950. The appeal will therefore be allowed and the answer to the first question will be recorded in the affirmative,. On the view taken by us, it is unnecessary to pass,any orders on the petition under article 226 of the Constitution which was presented to the High Court. The appellant will be entitled to his costs of the appeal in this Court and in the High Court. Appeal allowed.

The Income tax Officer found that the respondents ' books of accounts were unreliable and after assessing income for Fasli year 1357, corresponding to the year 1946 47, issued notice to the respondents on December 22, 1949, under section 40 of the Hyderabad Income tax Act to show cause why penalty should not be levied in addition to the tax and by an order dated October 31, 1951, directed payment of the said penalty. The State of Hyderabad merged with the Indian Union during the pendency of the proceedings before the Income tax Officer and by section 13 of the Finance Act, 1950, the Hyderabad Income tax Act ceased to have effect from April 1, 1950, but the operation of that Act in respect of levy, assessment and collection of income tax and super tax in respect of periods prior thereto for which liability to income tax could not be imposed under the Indian Income tax Act, was saved. The question was whether (a) the Income tax Officer had power on October 31, 1951, to impose a penalty under section 40(1) of the Hyderabad Income tax Act and (b) whether the assessee had a right to appeal against the order of the Income tax Officer imposing penalty and whether the Appellate Assistant Commissioner had jurisdiction to hear appeals or whether his order was a nullity. Held, that the power of the Income tax Officer to impose a penalty under section 40(1) of the Hyderabad Income tax Act in respect of the year preceding the date of the repeal of the Hyderabad Income tax Act was not lost because by section 13 of the Finance Act, 1950,,for the operation by the Hyderabad Income tax Act in respect of levy, assessment and collection of income tax and super tax in respect of periods prior to April, 1951, for which liability to income tax could not be imposed under the Indian Income tax Act, was saved and so the proceedings for imposing the penalty could be continued after the enactment of section 13(1) of the Indian Finance Act, 1950. Held, that the appeal against the order of the Income tax Officer on the ground that he was not competent to pass the order did lie to the Appellate Assistant Commissioner, whose jurisdiction was not made conditional upon the competence of the 924 Income tax Officer to pass the. orders made appealable; as a court of appeal he had jurisdiction to determine the soundness of the conclusions of the Income tax Officer both on the question of fact and law and even as to his jurisdiction to pass the order appealed from, and his order was not a nullity.

Appeal No. 77 of 1957. Appeal from the judgment and decree dated the August 6, 1954, of the Calcutta High Court in Appeal from Original Decree No. 73 of 1952. M. C. Setalvad, Attorney General for India, W. section Barlingay and A. 0. Ratnaparkhi, for the appellant. A.V. Viswanatha Sastri and P. K. Chatterjee, for respondent No. 1. 1961. March 1. , J. This appeal arises from a suit filed by respondent 1 Durga Prosad Chamaria against respondent 2 the heirs of John Carapiet Galstaun and others in which he sought to recover Rs. 4 p 64,213 5 3 on the mortgaes in suit. He had prayed for a preliminary mortgage decree according to 0. XXXIV, r. 4 of the Code of Civil Procedure and had asked for the appointment of a receiver in that behalf. 'The said mortgages were created by delivery of documents of title to immovable properties by the mortgagor John Carapiet Galstaun who died pending the suit. The properties mortgaged consisted of three items all of which are situated in Calcutta. These items are 24, Amratolla Lane, 96, Karaya Road 142 and premises 167/1 and 167/5 Dhurrumtolla Street (Chandni Bazar). In the present appeal we are concerned with premises 167/1. Respondent 1 's case was that he had advanced several amounts on seven different occasions to the mortgagor between August 2, 1926, and November 27, 1931. According to the terms of the transaction no specific time for payment of the mortgage dues had been fixed, and it was agreed that the monies advanced would become due and be repaid on demand being actually made by the mortgagee. With this plea we are not concerned in the present appeal. It was further pleaded by the mortgagee that the mortgagor had acknowledged his liability of the mortgagee 's claim by letters of March 5, 1932, and February 17, 1943, which were signed by him. It is on the strength of these acknowledgments that the mortgagee purported to bring his claim within time the suit having been filed on May 18, 1944. Pending the suit the appellant was added as a party defendant on August 23, 1944. By his application made by respondent 1 in that behalf it was alleged that the appellant had become the auction purchaser of premises 167/1 at a sale held by the Sheriff of Calcutta on May 3, 1944, in execution of a decree passed in Suit No. 2356 of 1931 by the Calcutta High Court with notice of mortgage in favour of respondent 1. Since the said sale had been confirmed on July 6, 1944, the appellant bad become a necessary party to the suit. That is how the appellant became a party to the proceedings and was interested like the mortgagor in disputing the validity of the claim made by respondent1. The principal issue which arose between the parties in the suit was one of limitation. It was not seriously disputed that the letter written by the mortgagor on February 17, 1943, amounted to an acknowledgment and it helped to bring within time respondent 1 's claim in respect of the last advance of Rs. 2,500 made on November 27, 1931. Respondent 1 's case that the earlier letter of March ' 5, 1932, amounted to an acknowledgment was, however, seriously disputed by the appellant. If this letter is held to amount to a 143 valid acknowledgment two items of consideration pleaded by respondent I would be within time; they are Rs. 20,000 and Rs. 35,000 advanced on the same day , September 10, 1926. Mr. Justice Banerjee, who tried the suit on the Original Side of the Calcutta High Court, held that the letter in question did not amount to an acknowledgment, and so he found that only the last item of Rs. 2,500 was in time. In the result he passed a decree for Rs. 5,000 only in favour of respondent 1. Then respondent 1 took the dispute before the Court of Appeal in the Calcutta High Court. The Court of Appeal has upheld the case made out by respondent I in regard to the acknowledgment based on the letter of March 5, 1932, and in consequence it has been held that the principal amounts due to respondent 1 are Rs. 55,000 and Rs. 2,500, and at the rate of interest payable thereon at 8% simple, the total amount payable being subject to the maximum allowable under the Money lenders ' Act. In accordance with these findings a preliminary decree has been drawn. It is this decree which is challenged before us by the appellant who has brought his appeal to this court with a certificate issued by the Calcutta High Court; and the only point which is raised for our decision is whether the letter in question amounts to a valid acknowledgment under section 19 of the Limitation Act. The decision of this question would naturally depend upon the construction of the letter on which respondent 1 relies; but before reading the said letter it would be relevant to consider the essential requirements of section 19 which provides for the effect of acknowledgment in writing. Section 19(1) says, inter alia, that where before the expiration of the period prescribed for a suit in respect of any right, an acknowledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. It would be noticed that some of the relevant essential requirements of a valid acknowledgment are that it must be made before the relevant period of limitation has 144 expired, it must be in regard to the liability in respect of the right in question and it must be made in writing and must be signed by the party against whom such right is claimed. Section 19(2) provides that where the writing containing the acknowledgment is undated oral evidence may be given about the time when it was signed but it prescribes that subject to the provisions of the , oral evidence of its contents shall not be received; in other words, though oral evidence may be given about the date oral evidence about the contents of the document is excluded. Explanation 1 is also relevant. It provides, inter alia, that for the purpose of section 19 an acknowledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has not yet come, or is accompanied by a refusal to pay, or is coupled with &.,claim to a set off, or is addressed to a person other than the person entitled to the right. It is thus clear that acknowledgment as prescribed by section 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledge judgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date 145 of the statement. In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly section excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly G. without intending to admit the existence of jural relationship such intention could ' be fastened on the maker of the statement by an involved or far fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in section 19, and there is really no substantial difference between the parties as to the true legal position in this matter. It is often said that in deciding the question as to whether any particular writing amounts to an acknowledgment as in construing wills, for instance, it is not very useful to refer to judicial decisions on the point. The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document, and so unless words used in a given document are identical with words used in a document judicially considered it would not ,serve any useful purpose to refer to judicial precedents in the matter. However, since decisions have been cited before us both by the learned Attorney General and Mr. Viswanatha Sastri we propose to refer to them very briefly before turning to the document in question. The question as to what is an acknowledgment has been answered by Fry, L., J., as early as 1884 A. D. in Green vs Humphreys (1). This answer is often quoted with approval. "What if; an acknowledgment", asked Fry, L.J., and he proceeded, "in my view an acknowledgment is an admission by the writer that there is a debt owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt (1) (1884) 26 Ch. D 474, 481 146 as being due from somebody. In order to take the case out of the statute there must upon the fair construction of the letter, read by the light of the surrounding circumstances, be an admission that the writer owes the debt". With respect, it may be added, that this statement succinctly and tersely gives the substance of the provisions contained in section 19 of the Limitation Act. Mr. Sastri has relied on the decision of the Privy Council in Beti Maharani vs Collector of Etawah (1) in which the Privy Council has recognised that it would be legitimate for the purpose of construing a document to look at the surrounding circumstances and that oral evidence about the intention of the maker of the statement cannot be admitted for the purpose of construing the said statement. "Their Lordships", observed Lord Hobhouse, who spoke for the Board, "cannot follow the learned judges of the High Court in admitting the Collector to give oral evidence of his intentions for the purpose of construing the notice. But they may for that purpose properly, look at the surrounding circumstances". In Sukhamoni Chowdhrani vs Ishan Chunder Roy (2) the statements on which reliance was placed by the creditor was contained in the directions given by the debtor to apply surplus income "to the payment of the ijmali debts of us three co owners of which a list is given below". It was held that by this statement the defendant acknowledged a joint debt and "from that follow the legal incidents of her position as a joint debtor with the plaintiff, one of which is that he may sue her for contribution". In other words, admission about a joint debt amounted to an acknowledgment though the liability to be sued for contribution is a matter of legal inference from the said admission and it had not been specifically included in the statement in question. Mr. Sastri has also relied on the decision of the Full Bench of the Allahabad High Court in Munshi Lal vs Hira Lal (3) where it has been held that a document said to constitute an acknowledgment has to be construed in the context in which it is given and that (1) (1894) 22 I.A. 31, 41 (2) (1897) 25 I A 95 (3) I.L.R. [1947] All. 11. 147 where its language is not clear in itself the context must be examined to see what it is to which the words referred. The Court, however, added that its decision She did not mean that any equivocation in an acknowledgment can be cured by ascertaining what the probable intention of the acknowledger was. Similarly in L Swaminatha Odayar vs Subbarama Ayyar (1) the Madras High Court has held that an acknowledgment for liability under section 19 need not be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannot be implied as a matter of law. On the other hand, the learned Attorney General has strongly relied on an earlier decision of the Bombay High Court in Dharma Vithal vs Govind Sadvalkar (2). In that case certain statements made in the receipt given for the delivery of the land to the officer of the Court were relied upon as amounting to an acknowledgment. The said receipt referred to the suit and decree and the decree to which reference was thus made had set forth in ordinary course the then plain. tiff 's claim as resting on a mortgage. The contention was that the reference to the decree made the decree a part of the receipt and since the decree referred to the plaintiff 's claim as resting on a mortgage the receipt itself served as an acknowledgment of a mortgage subsisting in 1827. This plea was rejected by the High Court. The High Court held that all that the receipt admits by implication is that the land had been awarded by the decree to the party who passed the receipt. "To extend it", observed West, J., "so as to make it an admission of the reasoning and legal grounds stated in the decree, would be to go beyond what probably was present at all to the consciousness of the recipient when he acknowledged having been put into possession". The learned judge then added that "the intention of the law manifestly is to make an admission in writing of an existing jural relation of the kind specified equivalent for the purposes of limitation to a new contract". As we will make it clear when we deal with the document before us it would be realised (1) Mad. (2) Bom. 99. 148 that this case cannot assist the appellant. The receipt itself did not contain any admission about the jural, relation between the parties. It merely referred to the decree which had set out the material allegations made in the plaint. Now 5 it would be plainly unreasonable to attribute to the party passing the receipt an intention to make the admissions which may be inferred from the averments made in the plaint which were incidentally recited, and so the Bombay High Court naturally rejected the plea that the receipt amounted to a valid acknowledgment. Incidentally we may add that when West, J. referred to a new contract file had perhaps in mind the definition of acknowledgment under section 4 of Act XIV of 1859 which required a promise to pay in addition to the subsistence of jural relationship. The element of promise was omitted in the subsequent Act XV of 1877, and it continues to be omitted ever since. As we have already indicated, under the present law acknowledgment merely renews the debt and does not create a fresh cause of action. It is now necessary to consider the document on which the plea of acknowledgment is based. This document was written on March 5, 1932. It, however, appears that on November 26, 1931, another letter had been written by respondent 2 to respondent 1; and it would be relevant to consider this letter before construing the principal document. In this letter respondent 2 had told respondent 1 that the Chandni Bazar property was being sold the next morning at the Rekistrar 's sale on behalf of the first mortgagee and that the matter was urgent. , otherwise the property would be sacrificed. It appears that the said property was subject to the first prior mortgage and respondent 2 appealed to respondent 1 to save the said threatened sale at the instance of the prior mortgagee. It is common ground that respondent 1 paid to respondent 2 Rs. 2,500 on November 27, 1931 and the threatened sale was avoided. This fact is relevant in construing the subsequent letter. The said property was again advertised for sale on March 11, 1932, and it was about this sale that the 149 letter in question came to be written by respondent 2 to respondent 1 on March 5, 1932. This is how the letter reads: "My dear Durgaprosad, Chandni Bazar is again advertised for sale on Friday the 11th instant. I am afraid it will go very cheap. I had a private offer of Rs. 2,75,000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew. As you are interested why do not you take up the whole. There is only about 70,000 due to the mortgagee a payment of 10,000 will stop the sale. Yours sincerely, Sd. J. C. Galstaun. " Does this letter amount to an acknowledgment of respondent 1 's right as a mortgagee? That is the question which calls for our decision. The argument in favour of respondent 1 's case is that when the document refers to respondent 1 as ' being interested it refers to his interest as a puisne mortgagee and when it asks respondent 1 to take up the whole it invites him to acquire the whole of the mortgage interest including the interest of the prior mortgagee at whose instance the property was put up for sale. On the other hand, the appellant 's contention is that the word "interest" is vague and indefinite and that respondent 1 may have been interested in the property in more ways than one. In that connection the appellant relies on the statements made by respondent 1 in his evidence. He stated that he was interested in the property in many ways and he clarified by adding that in the first instance he was a mortgagee having a charge on the property so that if the mortgagor was not able to pay him the money then he could have given him the property or the appellant could have got the property from him. He also stated that at one time he was thinking of buying or taking lease of the property in order to liquidate the debt but he added that negotiations in regard to the lease had taken place in 1926 and they bad ended in failure. According to him no such negotiations had taken place in 150 1932. It is urged that when the letter refers to the interest of respondent 1 in the property in question it may be interest as an intending purchaser or as an intending lessee. In construing this letter it would be necessary to bear in mind the general tenor of the letter considered as a whole. It is obvious that respondent 2 was requesting respondent 1 to avoid the sale as he did on an earlier occasion in November, 1931. The previous incident shows that when the property was put to sale by the first mortgagee the mortgagor rushed to the second mortgagee to stop the sale, and this obviously was with a view to persuade the second mortgagee to prevent the sale which would otherwise affect his own interest as such mortgagee. The theory that the letter refers to the interest of respondent 1 as an intending lessee or purchaser is far fetched, if not absolutely fantastic. Negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter nothing was heard about the said proposal. In the context it seems to us impossible to escape the conclusion that the interest mentioned in the letter is the interest of respondent 1 as a puisne mortgagee and when the said letter appeals to him to take, up the whole it can mean nothing other than the whole of the mortgagee 's interest including the interest of the prior mortgagee. An appeal to respondent 1 to stop the sale on payment of Rs. 10,000, as he in fact had stopped a similar sale in November, 1931, is an appeal to ensure his own interest in the security which should be kept intact and that can be achieved only if the threatened sale is averted. We have carefully considered the arguments urged before us by the learned Attorney General but we see no reason to differ from the conclusion reached by the Court of Appeal below that this letter amounts to an acknowledgment. The tenor of the letter shows that it is addressed by respondent 2 as mortgagor to respondent 1 as puisne mortgagee, it reminds him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee, and appeals to him to assist the avoidance of sale, and thus acquire the 151 whole of the mortgagee 's interest. It is common ground that no other relationship existed between the parties at the date of this letter, and the only subsisting relationship was that of mortgagee and mortgagor. This letter acknowledges the existence of the. said jural relationship and amounts to a clear acknowledgment under a. 19 of the Limitation Act. It is conceded that if this letter is held to be an acknowledgement there can be no other challenge against the decree under appeal. In the result the appeal fails and is dismissed with costs. Appeal dismissed.

In a mortgage suit brought by him, the respondent 1, the mortgagee, pleaded that limitation was saved by a letter written to him by the mortgagor, the respondent 2, which amounted to acknowledgment under section 19 of the Indian Limitation Act. There was a prior mortgage and before writing the letter in question the mortgagor had written another letter appealing to respondent 1 to save the property from being sold at the instance of the prior mortgagee. Thereupon the respondent No. 1 paid the required amount and the threatened sale was averted. The property was again advertised for sale and that was why the letter in question was written; it ran as follows, "Chandni Bazar is again advertised for sale on Friday the 11th instant. I am afraid it will go very cheap. I had a private offer of Rs. 2,75,000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew. As you are interested why do not you take up the whole. There is only about 70,000 due to the mortgagee a payment of Rs. 10,000 will stop the sale". The question was whether this letter amounted to an acknow ledgment of the respondent 1 's right as mortgagee under section 19 of the Indian Limitation Act. The trial judge held that it did not, but the Court of appeal took the contrary view. The auction purchaser appealed to this Court. Held, that it was obvious that the interest mentioned in the letter in the context of the previous one was none other than that of respondent 1 as a puisne mortgagee and the appeal to take up the whole meant the entirety of the mortgagee 's interest including that of the prior mortgagee. Since admittedly the only subsisting relation between the parties at the date of the letter was that of mortgagee and mortgagor and the letter acknowledged the existence of that jural relationship, it clearly amounted to an acknowledgment under section 19 of the Act. Held, further, that the essential requirement for sustaining a plea of acknowledgment under section 19 of the Act is that the statement on which it is sought to be founded must relate to a 141 subsisting liability, indicate the existence of the jural relationship between the parties and must be intended, either expressly or impliedly, to admit that jural relationship. The words used in a particular statement must be construed in the light of its own tenor and according to the context and unless the words used are identical and the interest is similar, previous decisions interpreting somewhat similar documents are not of much help. Green vs Humphreys,, , referred to. Beti Maharani vs Gollector of Etawah, (1894) L.R. 22 I.A. 3,, Sukkamoni Choudhrani vs Ishan Chunder Roy, (1897) L.R. 25 I.A. 95, Munshi Lal vs Hira Lal, I.L.R. 1947 All. II and Swaminatha Odayar vs Subbarama Ayyar, Mad. 548, considered. Dharma Vithal vs Govind Sadvalkar, Bom. 99, held inapplicable.

Appeal No. 272 of 1956. Appeal from the judgment and decree dated June 28, 1954, of the former Nagpur High Court, in First Appeal No. 107 of 1946. M. C. Setalvad, Attorney General for India, Purshottam Trikamdas, section T. Khirwadkar and I. N. Shroff for the appellant. Achhru Ram, A. R. Chaubey and Naunit Lal for the respondents. February 22. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal on a certificate granted by the Nagpur High Court. The brief facts necessary for present purposes are these. One Ramchandar Jat originally owned Annas 10/8 share in Mauza Tamalawadi while the rest belonged to others. Ramchandar executed a simple mortgage deed on July 27, 1920, in favour of Seth Ram Jiwan and two. minors Ram Narain and Radhey Sham. The plaintiffs. respondents are the representatives of the mortgagees. On August 27, 1926, the defendant appellant purchased Annas /5/4 share belonging to the other share holders in the village. Thereafter, the appellant brought a 915 suit against Ramchandar who was lambardar of the village for profits, in which 9, decree was passed against Ramchandar. In execution of that decree the appellant purchased the entire Annas /10/8 share of Ramchandar in the village about the year 1932. In consequence, the appellant became the owner of the entire village subject to the mortgage of the respondents on Annas /5/4 share therein. On July 27, 1932, the respondents sued Ramchandar on the basis of their mortgage deed and a preliminary decree for sale was passed in March, 1937. To this suit the appellant was also a party. The preliminary decree was followed by a final decree and thereafter the property was put to sale and was purchased by the respondents on March 1, 1940. This sale was confirmed on April 12, 1940, and a sale certificate was granted to the respondents. So by the year 1940 the respondents were the owners of Annas /5/4 share in the village while the appellant was the owner of Annas /10/8 share. The appellant was also a lambardar. Ramchandar Jat held sir land in certain khasras with a total area of 252 49 acres. On the sale of Ramchandar 's share to the appellant, Ramchandar became an ex proprietary tenant of his sir land. Thereafter Ramchandar was ejected from his exproprietary tenancy sometime in 1936 and the lands came into possession of the appellant. There were certain other lands which were nominally recorded as Muafi Khairati in the name of Ramchandar 's mother but were actually in the possession of Ramchandar. It appears that Ramchandar was ejected from these lands also and they came into, the possession of the appellant. Further the appellant as a lambardar came into possession of certain other lands by surrender or otherwise. The respondents filed a suit for partition before the Sub Divisional Officer, Hard&, in 1942. In that suit they claimed half share in the lands of Ramchandar and his mother which came into. the possession of the appellant. They also claimed a share in other lands which came into the possession of the appellant as lambardar. Their case was that these lands were 916 accession to the mortgage in their favour and they were therefore entitled to a proper share in them '. This claim was resisted by the appellant before the Sub Divisional Officer. On October 20, 1943, the Sub Divisional Officer passed an order which in effect rejected the contention of the respondents and accepted the plea of the appellant. Thereupon the respondents filed the present suit for a declaration in the civil court in 1944 claiming that they were entitled to a proportionate share in the lands specified in the plaint. The suit was resisted by the appellant and his contention was that the respondents had purchased specific khudkashat and chhotaghas plots and that they therefore could not be allowed anything more than what was mentioned in the decree and the sale certificate which were the basis of their title. As the specific lands with respect to which the respondents claimed a declaration in this suit were not mentioned in the sale certificate, they were not entitled to any share in them. A large number of issues were framed by the trial court, which decreed a part of the claim put forward by the respondents but dismissed the rest. Consequently, the respondents went up in appeal to the High Court. The appeal was allowed so far as the respondents ' claim to one half share in the sir plots held by Ramchandar was concerned. Further, they were allowed one third share in the lands held by the mother of Ramchandar and also in certain other lands which came into the possession of the appellant as lambardar subject to payment of certain amounts. This was followed by an application by the appellant for leave to appeal to this Court and a certificate was granted by the High Court. That is how the matter has come up before us. The main contention of the appellant before us is that the mortgage deed of 1920 which is the basis of the title of the respondents did not include the sir plots in the possession of, Ramchandar nor the plots of Ramchandar 's mother. Nor were these plots included in the suit which was brought by the respondents on the basis of the mortgage deed. Further, the sale certificate also did not include these plots, though 917 some other plots were mentioned therein. Therefore, the respondents were not entitled to these plots as accession to the mortgage. This brings us to a consideration of the mortgage in favour of the respondents. The mortgage was without possession and the property mortgaged was mentioned in these terms: " I do hereby mortgage without possession half share /5/4, five annas and four pies, area 678.31 acres, jama sarkar Rs. 326/10/8 together with khudkashat, chhotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or no fruits and prohibited and unprohibited wood with entire rights and prvileges appertaining to the village. " It will be seen that what was mortgaged was the entire half share of Ramchandar in /10/8 share which he owned in the village. It is true that the mortgage goes on to describe certain other things but that in our opinion is merely by way of precaution, for even if the part underlined* was not there in the mortgage, the respondents being the mortgagees of /5/4 share would be entitled to everything contained in that share. The underlined* part of the mortgage therefore does not cut down the amplitude of the mortgage with respect to the entire /5/4 share out of /10/8 share of Ramchandar. It is true that sir is not specifically mentioned in the mortgage but as the mortgage was of the entire /5/4 share out of /10/8 share it will include (unless there is a specific exclusion of sir) the area of sir also pertaining to the share mortgaged. In this connection our attention was drawn to as. 68 and 69 of the Central Provinces Land Revenue Act, No. 11 of 1917, which was in force at the relevant time. Section 68 deals with sir land and section 69 wit khudkashat. Sir is defined in section 2 (17) and khudkashat is defined in section 2 (5) as " that part of the home farm of a mahal which is cultivated by the proprietor as such and which is not sir land. " Thus though sir land may be a part of the home farm it is a different entity Here printed in italics. 918 from khudkashat land. Reference was also made to sections 49 and 50 of the Central Provinces Tenancy Act, No. 1 of 1920 (hereinafter called the Tenancy Act) which deal with transfer of sir land. Under section 49 (1) a proprietor who temporarily or permanently loses whether under a decree or order of a civil court or by transfer or otherwise his right to occupy any portion of his sir land as a proprietor shall at the date of such loss, become an occupancy. tenant except where he has obtained a sanction under section 50 of the Tenancy Act. Further under section 49 (2) there is a prohibition on the registration of documents which purport to transfer all the rights of a proprietor in big sir land without reservation of the right of tenancy specified in sub section It is urged for the appellant that the reason why sir land was not mentioned in the mortgage deed of 1920 was that otherwise sanction of the Revenue Officer would have been required under section 50 of the Tenancy Act. Now section 50 provides that if a proprietor desires to transfer the proprietary rights in any part of his sir without reservation of a right of occupancy specified in section 49(1) he may apply to the Revenue Officer and if such Revenue Officer is satisfied that the transferor is not wholly or mainly an agriculturist or that the property is self acquired or has been acquired within the twenty years last preceding, he shall sanction the transfer. Sections 49 and 50 in our opinion only come into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently and sanction has to be obtained under section 50 only where the transfer is to be made without reservation of the right of occupancy. But the mortgage in this case is a simple mortgage and there was no transfer of possession under it. Therefore the proprietor Ramchandar never lost his right to occupy his sir land by this mortgage and there was therefore no necessity for him to make any reservation in that respect or to apply for sanction under section 50, for he was not losing the right to occupy his sir at all. But that does not mean that when he mortgaged his entire share of /5/4 out of /10/8 share,, he was excluding from the mortgage the area of sir 919 corresponding to the share mortgaged. As the mortgage deed of 1920 stands, it is a mortgage of all the proprietary rights in /5/4 share including the proprietary right in the sir pertaining to that share ; but as the proprietor was not losing his right to occupy the sir land, the mortgage being without possession, it was not necessary for him to make any application under section 50 of the Tenancy Act. We are therefore of opinion that the appellant cannot take advantage in the circumstances of the fact that no application was made under section 50 of the Tenancy Act and therefore there was no effect of this mortgage on the sir rights. As we read the mortagage it clearly affected the sir Tight also pertaining to /5/4 share and it was not necessary to make an application under section 50 of the Tenancy Act, for the mortgagor was not losing possession of his sir and there would be no question of any ex proprietary tenancy arising in his favour, to relinquish which he would have to apply under section 50. Turning now to the plaint in the mortgage suit we find that the property subject to the mortgage is mentioned in para. 2 thereof inexactly the same terms as in the mortgage deed. In para. 13 it is again recited that the mortgagor mortgaged /5/4 share out of his /10/8 share. Paragraph 13 then goes on to say that on the date of the mortgage, the mortgagor had certain khudkashat and chhotaghas lands and both cultivating and proprietary rights in them pertaining to half share only were liable to be sold. No mention was made of sir in this paragraph. But that in our opinion was not necessary, for the mortgage included the mortgage of sir land also pertaining to /5/4 share though without possession. The prayer in the suit was for sale of the mortgaged property together with khudkashat, etc. ; but this again was a mere matter of precaution, for in any case the entire proprietary right in sir, khudkashat, etc., relating to /5/4 share would be sold on a decree following on the mortgage. Then coming to the sale certificate we find that it certifies that the respondents had purchased /5/4 share in the village with abadi, khudkashat, chhotaghas and all rights pertaining to the 'share. It is true that 920 khudkashat and chhotaghas are specifically mentioned in the sale certificate but the words " all rights pertaining to the share " appearing in the sale certificate would include such proprietary rights in the sir land as belonged to the share mentioned in the sale certificate. We are, therefore, of opinion. that so far as sir land is concerned, the proprietary right in it pertaining to /5/4 share was mortgaged and the respondents by their sale certificate got a right in the sir land also. Now what happened after the mortgage deed in favour of the respondents was that the appellant purchased the entire /10/8 share of Ramchandar subject to the mortgage of the respondents in 1932. At that time Ramchandar became an ex proprietary tenant of his entire sir relating to this share under section 49 of the Tenancy Act. In 1936 Ramchandar was ejected from the ex proprietary tenancy which came in the possession of the appellant as lambardar and has apparently since then remained in his possession. The case of the respondents is that in 1936 their mortgage was subsisting and the sir land which thus came into the possession of the appellant on the extinction of the ex proprietary tenancy became an accession to the mortgage and, therefore, they as mortgagees were entitled to half share in the lands which thus came into the possession of the appellant. We have already pointed out that the mortgage covered the sir plots also so for as the proprietary rights in them were concerned. Therefore, when Ramchandar 's ex proprietary rights came to an end and the land came into the possession of the appellant and became khudkashat, the mortgage would cover this khudkashat land to the extent of the mortgagees ' share therein. It is, true that if Ramchandar 's ex proprietary tenancy had continued, the mortgagee would have no right to ask for half share in it; but when the ex proprietary tenancy was extinguished and this land came in the possession of the lambardar mortgagor it, was an accession to the mortgage under section 70 of the Transfer,of Property Act and the mortgagees could claim a share in it. , It was however urged that accession to be available to 921 the mortgage must be a legal accession. We however see no illegality in the accession which took place. There is also no doubt that the accession took place when the mortgage was still subsisting. Therefore, we agree with the High Court that on the ex proprietary tenancy being extinguished, the sir land which Would otherwise have remained in the exclusive possession of Ramchandar as an ex proprietary tenant became an accession to the mortgaged property and the respondents would be entitled to half of it on their purchasing the /5/4 share in execution of the decree on the mortgage. The fact that the rent of an ex proprietary tenant is due to the person whose ex proprietary tenant he becomes by virtue of the sale or mortgage with possession would make no difference after ex proprietary tenancy is extinguished, for on such extinction the land would go to the entire proprietary body and would thus in this case be an accession to the mortgage to the extent of the share mortgaged. This brings us to the lands in the name of Ramchandar 's mother. It appears that these lands came into the possession of Ramchandar after the mortgage but before the institution of the mortgage suit. They were nominally recorded in the name of his mother and in 1932 after his entire share was purchased by the appellant lie was recorded as an occupancy tenant of these lands. Later the appellant came into possession of them apparently as a lambardar. It is not clear when and how the appellant got possession of them. There can be no doubt however that his possession was for the entire body of proprietors and the respondents would be entitled to a share in them. But it was urged that the claim of the respondents to these lands was barred by 0. 11, r. 2 of the Code of Civil Procedure, because they were not specified in the plaint based on the mortgage deed of 1920. Reliance in this connection is placed on Hazarilal vs Hazarimal (1) and Seth Manakchand vs Chaube Manoharlal (2). These cases in our opinion do not apply, because they are cases of foreclosure while in (1) A. I. R. , (2) A.I.R. 1944 P.C 46, 922 the present case the respondents ' suit was for sale of the share mortgaged with them. Further in the plaint, when specifying the khudkashat plots it wag made clear that they were khudkashat on the date of the mortgage; the respondents thus did not specify the khudkashat plots on the date of the plaint. Though they had specified some plots in the plaint which were mentioned in the sale certificate also, the suit " as for the sale of the entire /5/4 share and that would include khudkashat lands pertaining to the share existing at the time when the suit was filed. It is not necessary in a suit for sale to specify the lands in the possession of the mortgagor specifically and they would pass on sale along with the share sold. The claim, therefore, would not be barred under 0. 11, r. 2, on the ground that these plots entered in the name of the mother of Ramchandar were not specifically mentioned in the plaint. This leaves certain lands which came into the possession of the appellant as a lambardar in the ordinary course of management. The respondents would clearly be entitled to a share in these lands also on payment of proportionate expenses incurred by the appellant in the course of suits in which he came into possession. This is what the High Court has ordered and we see no reason to disagree with that view. The appeal, therefore, fails and is hereby dismissed with costs. Appeal dismissed.

One Ramchandar executed a simple mortgage deed without possession of his share in the property in dispute in favour of the respondents and others the relevant Portion of which ran thus :" I do hereby mortgage without possession half share, five annas and four pies, area 678 31 acres, jama sarkar Rs. 326/10/8 together with Khudkashat, chbotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or no fruits and prohibited and unprohibited wood with entire rights and privileges appertaining to the 'village." After the mortgage Ramchandar 's share was sold to the appellants and certain other lands recorded in Ramchandar 's mother 's name also came into the possession of the appellant. The main questions arising for decision were whether the mortgage included the sir land of Ramchandar and whether the other lands coming into the possession of the appellant were accession to the mortgage. Held, that as the mortgage deed stood it was a mortgage of all the proprietary rights in the mortgagor 's share in the property including the proprietary right in the sir pertaining to that share. As the mortgage was without possession the mortgagor was not losing possession of his sir and it was not necessary for him to make an application under section 50 of the Central Provinces Tenancy Act relating to the reservation of a right of occupancy. Sections 49 and 50 come into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently. Although in the plaint of the suit based on the mortgage no mention was made of sir, the entire proprietary right in sir, khudkashat etc. relating to the mortgagor 's share would be sold on a decree passed in the suit. The words " all rights pertaining to the share " appearing in the sale certificate following the execution of the decree in the mortgage suit passed in favour of the respondents would include the mortgagor 's proprietary rights in the sir land and the respondents by their sale certificate would get a right 'in the sir land also. 914 As the appellant had purchased the entire share of Ram chandar who was later ejected from his ex proprietary tenancy which came into the possession of the appellant as lambardar his sir land which thus came into the appellant 's possession while the mortgage was subsisting became an accession to the mortgage under section 70 Of the and the mortgagees were entitled to half share in the lands which came into the appellant 's possession. The lands recorded nominally in the name of Ramchandar 's mother but in the actual possession of the former having also came into the possession of the appellant as lambardar were held by him for the entire body of proprietors and the respondent would be entitled to a share in them. The respondent 's claim to those lands were not barred by 0. II, r. 2 of the Code of Civil Procedure merely because they were not mentioned in the plaint of the mortgage suit. Hazarilal vs Hazarimal, A.I.R. 1923 Nag. 130 and Seth Manakchand vs Chaube Manohar Lal, A. I.R. , held not applicable.

Appeals Nos. 173 to 175 of 1960. 134 Appeals from the judgment and orders dated March 11, 1958, of the Bombay High Court in I. T. R. No. 36 of 1957. of. A. V. ViSwanatha Sastri, section M. Dubash and G. Gopalakrishnan, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for respondents. March 1. The Judgment of the Court was delivered by KAPUR, J. These are three appeals pursuant to a certificate under a. 66A(2) of the Indian Income tax Act, 1922 (hereinafter called the 'Act), against the judgment and orders of the High Court of Bombay in Income tax Reference No. 36 of 1957. The appeals though directed against the same order are three in number because each partner of the firm has brought a separate appeal. The firm was carrying on the business of wine merchants at Bombay and came into existence prior to April 1, 1939. The firm had been assessed to income tax under the provisions of the Income tax Act of 1918. The firm which was registered under the provisions of the Income tax Act of 1922 (hereinafter termed the Act) was dissolved on March 24, 1945, and from the day following that i.e. March 25, 1945, a Private limited company i.e. section section Miranda and Co. Ltd. succeeded to the business of the firm. A claim made under section 25(4) of the Act to the effect that no tax was payable on the profits of the registered firm for the period between April 1, 1944, to March 24, 1945, was allowed. In respect of the chargeable accounting period April 1, 1944, to March 24, 1945, the registered firm was taxed to excess profits tax under the Excess Profits Tax Act, 1940. It also deposited as required certain sums of money tinder section 10 of the Finance Act, 1942, read with section 2 of the Excess Profits Tax Ordinance, 1943. In accordance with those provisions the firm became entitled to repayment of a portion of the excess profits tax amounting to a sum of Rs. 2,35,704. The shares of the three partners who are respective appellants in 135 the three appeals were James Miranda Rs. 58,926, Donald Miranda Rs. 58,926 and Mrs. N. Q. Miranda Rs. 1,17,854. It was submitted that the amount refunded, was business profit and therefore exempt con from tax under section 25(4) of the Act. The Income tax Officer rejected that submission and the share of each of the appellants was assessed to income tax and super tax and the balance after deducting the same he repaid to each of the partners but he computed the rate applicable to the tax by including the appellants ' total business income which was exempt under s;. 25(4) of the Act. On appeal this assessment was confirmed but on further appeal the Income tax, Appellate Tribunal held that the sum which was refunded was income from business and was therefore, exempt from income tax under section 25(4) of the Act. At the instance of the Commissioner of Income tax, the Tribunal referred the following question of law for the opinion of the High Court: "Whether the repayment of excess profits tax made by the Central Government in pursuance of Section 10 of the Indian Finance Act, 1942, or Section 2 of the Excess Profits Tax Ordinance, 1943, is profits from business for the purposes of Section 25(4) of the Indian Income tax Act?" The High Court held that the amount so refunded was income from other sources taxable under section 12 of the Act and the appellants were therefore not entitled to the benefit of section 25(4) of the Act. In dealing with the nature of the tax the learned Chief Justice said: .lm15 "Clearly the view of the Legislature was that this income should be treated as a statutory income with the consequences that must necessarily follow by reason of its being a statutory income. " It was argued on behalf of the appellants that the amount refunded was income, profits and gains from business and fell under section 10 of the Act and was therefore exempt under section 25(4) of the Act. For the determination of this question it is necessary to refer to the relevant provisions of the Excess Profits Tax Act, 1940, and the Finance Act, 1946. Section 12(1) of the Excess Profits Tax Act was as follows: 136 .lm15 section 12(1) "The amount of the excess profits tax payable in respect of a business for any chargeable accounting period diminished by any amount allowable by way of relief under the provisions of section 11 or section 11 A shall, in computing for the purposes of income tax or super tax the profits and gains of that business, be allowed to be deducted as an expense incurred in that period.", The relevant part of section 11(11) of the Indian Finance Act, 1946, provided: "Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provision; of section 10 of the Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, shall be deemed to be income for the purposes of the Indian Income tax Act 192 2, and shall, notwithstanding the provisions of section 34 of that Act, be treated as income of the previous year which constitutes or includes the chargeable accounting period in respect of which the said sum is repayable: Provided that any such sum repaid in respect of any profits which are. also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessment to income tax and super tax, as income of the previous year during. which the repayment is made. " It is not necessary to quote section 10(1) of the Finance Act, 1942, or the relevant provisions of the Excess Profits Tax Ordinance, 1943. Section 12(1) of the Excess Profits Tax Act shows that the amount of excess profits tax payable ,in respect of a business for any chargeable accounting period was an allowable expenditure. Under section ll(ll) of the Indian Finance Act, 1946, any excess profits refunded under the provisions of Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, were deemed to be income and were to be treated as income of the previous year which constituted or which included the chargeable accounting period in respect of 'which the said sum was repayable. Thus the sum repaid was 137 to be treated as income for the purposes of the Act for the previous year, notwithstanding section 34 of the Act. The preamble of the Excess Profits Tax Act shows that the object of that Act was to impose a tax on profits arising out of certain businesses. Therefore when any portion of the tax collected on excess profits tax was refunded under the provisions of the Finance Act, 1942 or the Excess Profits Tail, Ordinance, '1943, it necessarily had the same quality which it had before the amount which was charged with the payment of tax had under the provisions of those Acts. In a, judgment of this Court, Mc Gregor. and Balfour Ltd. vs Commissioner of Income Tax, West Bengal (1), the amount received as a refund by the assessee was held to be income for the purpose of the Act and for assessment it was treated as income of the previous year. After reference in that case to R. 4(1) of the Rules applicable to oases I and II of Schedule 'D '. of the English Income Tax Act, 1918 (8 and 9 Geo. V, c. 40), it was observed "The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verba, they are substantially in the same words and also in pari materia. There can be no doubt that the intention underlying the two provisions is the same and the language is substantially similar. " Thus this Court was of the opinion that the intention of the legislature ins. 11(14), of the Indian Finance Act, 1946, which was the section applicable in that case and of R. 4(1) of the English Income Tax Act was the same. The operative words of section 11(11) of the Finance Act, 1946, and of section 11(14) of that Act are almost identical. It would, thus appear that the amount of excess profits tax was an allowable deduction for the purpose of computation of the business profits of an, assessee under section 12(1) of the Excess Profits Tax Act and when it or a portion of it wag refunded it had to be treated as income of the assessee. When it was deposited with 138 the Central Government it was a portion of the profits of the business of the assessee and when it was returned to the assessee it must be restored to its character of being a part of the profits of a business. It cannot be said that its nature changes merely because it is refunded as 'a consequence of some provisions in the Finance Act or the Excess Profits Tax Ordinance. Its nature remains the same. The effect of the deposit under the Acts above mentioned, was as if a slice of the business profit was taken and deposited with the Central Government Treasury and then when it was found that a larger amount had been deposited than was exigible a portion of it was returned. By being put in a Government Treasury it does not cease to be what it was before i.e. profits of a business. As we have said it is significantly clear from the very preamble of the Excess Profits Tax Act i.e., it was a tax imposed on profits arising out of certain businesses. An argument was raised on behalf of the Commissioner that the tax was not paid out of the profits of the business, but in respect of the profits. That is immaterial; it was charged, levied and paid on the amount by which the profits during any chargeable accounting period exceeded the standard profits. It would be mere quibbling with words if one were to say that it was not a slice taken out of the profits of a business. In the cage Mc Gregor and Balfour Ltd. vs Commissioner,of Income Tax (1) this Court quoted with approval the observation, of the Master of the Rolls in A. & W. Nesbitt Ltd. vs Mitchell (1) where it was said: "But in respect of what is that payment made? It is not a legacy, it is not a sum which has fallen from the skies; it is a sum which is repaid because there was too large a sum paid by the company to the revenue authorities over the whole period 'during which Excess Profits Duty was paid, and that sum, means and is intend to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading. It comes back,, therefore, not having lost its character but being still the repayment of a sum too much, it is true but a sum taken (1) (2) , 217, 218 139 out of the profits which were made by the company in the course of its trading, profit,; which at the time they were made were subject to income tax and subject to excess profits duty, and that is the character of the repayment that has been made. " The amount deposited comes back without losing its character. No doubt the words in the English Rule are "shall be treated as profits for the year in which the payment is received", and in B 11(11) of the Indian Finance Act, 1946, such sum has to be treated as income of the previous year but as pointed out by this Court in Balfour and Mc Gregor case (1), the intention underlying the two provisions is the same and even the language used in the two provisions is substantially the same. Counsel for the Commissioner drew our attention to Kirke 's Trustees vs Commissioners of Inland Revenue (2), and it was submitted that the Lord Chancellor held at p. 329 that for the amount so received the assessment falls to be made under Case VI of Schedule 'D '. Lord Shaw of Dunfermline at p. 332 said that the repayment was to be treated as trading profits for the year of repayment and therefore assessable as such under Schedule 'D '. He was also of the opinion that the charge was to be one under Case VI. Lord Sumner said that it became a minor matter to decide whether the charge was to be made under Case I or Case VI but this is little consolation to the respondent (the Commissioner of Income tax) because Case VI was also dealing with taxes in respect of annual profits and gains which do not fall in one of the other cases. In our opinion the amount refunded did not lose its character which it had before the deposit and therefore it is an erroneous view to take that the income was assessable under section 12 of the Act and not under B. 10. If it was income falling under section 10, as in our opinion it was, then the appellants were entitled to get the benefit of section 25(4) of the Act and the amount was not liable to taxation. The appeals are therefore allowed with costs. One hearing fee. Appeals allowed.

The appellants were partners in a registered firm which was dissolved on March 24, 1945. A private limited company succeeded to the business of the firm from March 25, 1945. For the accounting period April 1, 1944, to March 24, 1945, the firm was assessed to excess profits tax under the Excess Profits Tax Act, 1940. It had deposited certain sums of money as required under section 10 of the Indian Finance Act, 1942, read with section 2 Of the Excess Profits Tax Ordinance, 1943, and in accordance with those provisions became entitled to repayment of a portion of the excess profits tax. The appellant 's claim before the Income. tax Officer under section 25(4) of the 'Indian Income tax Act, 1922, that no tax was payable on the profits of the firm for the period between April 1, 1944, to March 24, 1945, was allowed, but their plea that the amount of refund of the excess profits tax was business profit and therefore similarly exempt from tax, was rejected. The High Court, on a reference, took the view that the amount refunded was income from other sources taxable under section 12 Of the Indian Income tax Act, 1922, and that, therefore, the appellants were not entitled to the benefit of section 25(4) Of that Act. Held, that in view of section 12(1) of the Excess Profits Tax Act, 1940, and section II(II) of the Indian Finance Act, 1946, the amount refunded was income from business for the purposes of the Indian Income tax Act, 1922, and did not lose its character which it had before the deposit. It fell under section 10 of the Indian Income tax Act and was, therefore, exempt under section 25(4) of that Act. Mc Gregor and Baljbur Ltd. vs Commissioner of Income tax, Bengal, and A. & W. Nesbitt Ltd. vs Mitchell, [1926] II T.C. 2II, relied on.

Appeal No. 395 of 1959. Appeal by special leave from the Award dated November 25, 1957 of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 24 of 1956. N. C. Chatterjee, D. H. Buch and K. L. Hathi, for the appellants. M. C. Setalvad, Attorney General for India, J. B. Dadachanji and section N. Andley, for the respondent Nos. 1 and 2. M. C. Setalvad, Attorney General for India, Dewan Chaman Lal Pandhi and I. N. Shroff, for the respondent No. 3. 1960. November 30. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. It appears that the appellants were originally in the service of the Scindia Steam Navigation Co. Ltd. (hereinafter called the Scindias). Their services were transferred by way of loan to the Air Services of India Limited (hereinafter referred to as the ASI). The ASI was formed in 1937 and was 813 purchased by the Scindias in 1943 and by 1946 was a full subsidiary of the Scindias. Therefore from 1946 to about 1951, a large number of employees of the, Scindias were transferred to the ASI for indefinite periods. The Scindias had a number of subsidiaries and it was usual for the Scindias to transfer their employees to their subsidiary companies and take them back whenever they found necessary to do so. The ' appellants who were thus transferred to the ASI were to get the same scale of pay as the employees of the Scindias and the same terms and conditions of service (including bonus whenever the Scindias paid it) were to apply. The Scindias retained the right to recall these loaned employees and it is the case of the appellants that they were entitled to go back to the Scindias if they so desired. Thus the terms and conditions of service of these loaned employees of the ASI were different from those employees of the ASI who were recruited by the ASI itself. This state of affairs continued till 1952 when the Government of India contemplated nationalisation of the existing air lines operating in India with effect from June 1953 or thereabouts. When legislation for this purpose was on the anvil the appellants felt perturbed about their status in the ASI which was going to be taken over by the Indian Air Lines Corporation (hereinafter called the Corporation), which was expected to be established after the , No. XXVII of 1953, (hereinafter called the Act) came into force. They therefore addressed a letter to the Scindias on April 6, 1953, requesting that as the Government of India intended to nationalise all the air lines in India with effect from 1 June, 1953, or subsequent thereto, they wanted to be taken back by the Scindias. On April 24, the Scindias sent a reply to this letter in which they pointed out that all persons working in the ASI would be governed by cl. 20 of the Air Corporation Bill of 1953, when the Bill was enacted into law. It was also pointed out that this clause would apply to all those actually working with the ASI on 103 814 the appointed day irrespective of whether they were recruited by the ASI directly or transferred to the ASI from the Scindias or other associated concerns. It was further pointed out that if the loaned employees or others, employed under the 'ASI, did not want to join ,the proposed Corporation they would have the option not to do so under the proviso to cl. 20(1) of the 'Bill; but in case any employee of the ASI whether loaned or otherwise made the option not to join the proposed Corporation, the Scindias would treat them as having resigned from service, as the Scindias could not absorb them. In that case such employees would be entitled only to the usual retirement benefits and would not be entitled to retrenchment compensation. Finally, it was hoped that all those in the employ of the ASI, whether loaned or otherwise, having been guaranteed continuity of employment in the new set up would see that the Scindias would not be burdened with surplus staff, requiring consequential retrenchment of the same or more junior personnel by the Scindias. On April 29, 1953, a reply was sent by the union on behalf of the appellants to the Scindias. It was pointed out that the loaned staff should not be forced to go to the proposed Corporation without any consideration of their claim for re absorption into the Scindias. It was suggested that the matter might be taken up with the Government of India and the persons directly recruited by the ASI who were with other subsidiary companies might be taken by the proposed Corporation in place of the appellants. It seems that this suggestion was taken up with the Government of India but nothing came out of it, particularly because the persons directly recruited by the ASI. who were employed in other subsidiary companies did not want to go back to the ASI. In the meantime, the Scindias issued a circular on May 6,1953, to all the employees under the ASI including the loaned employees, in which they pointed out that all the persons working with the ASI would be governed by cl. 20(1) when the Bill became law and would be absorbed in the proposed Corporation, unless 815 they took advantage of the proviso to cl. 20(1). It was also pointed out that such employees as took advantage of the proviso to el. 20(1) would be treated as having resigned from service and would be entitled to usual retirement benefits as on voluntary retirement, and to nothing more. It was also said that their conditions of service would be the same until duly altered or amended by the proposed Corporation. The circular then dealt with certain matters relating to provident fund with which we are however not concerned. It appears that the Act was passed on May 28, 1953. 20(1) of the Act, with which we are concerned, is in these terms: "(1) Every officer or other employee of an existing air company (except a director, managing agent, manager or any other person entitled to manage the whole or a substantial part of the business and affairs of the company under a special agreement) employed by that company prior to the first day of July, 1952, and still in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in either of the Corporations by virtue of this Act, become as from the appointed date an officer or other employee, as the case may be, of the Corporation in which the undertaking has vested and shall hold his office or service 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 the same under the existing air company if its undertaking had not vested in the Corporation and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms or conditions are duly altered by the Corporation : Provided nothing contained in this section shall apply to any officer or other employee who has, by notice in writing given to the Corporation concerned prior to such date as may be fixed by the Central Government by notification in the official gazette 816 intimated his intention of not becoming an officer or other employee of the Corporation." After the Act was passed, notice was sent on June 17, 1953, to each employee of all the air companies which were being taken over by the proposed Corporation m and he was asked to inform the officer on special duty by July 10, 1953, if he desired to give the notice contemplated by the proviso to section 20(1). A form was sent in which the notice was to be given and it was ordered that it should reach the Chairman of the Corporation by registered post by July 10. The appellants admittedly did not give this notice as required by the proviso to section 20(1). In the meantime on June 8, 1953, a demand was made on behalf of the appellants in which the Scindias were asked to give an assurance to them that in the event of retrenchment of any loaned staff by the proposed Corporation within the first five years without any fault, the said staff would be taken back by the Scindias. Certain other demands were also made. The Scindias replied to this letter on July 3 and pointed out that they could not agree to give an assurance to take back the loaned staff in case it was retrenched by the proposed Corporation within the next five years. We are not concerned with the other demands and the replies thereto. On July 8, a letter was written on behalf of the appellants to the Scindias in which it was said that the appellants could not accept the contention contained in the circular of May 6, 1953. Though the appellants were carrying on this correspondence with the Scindias, they did not exercise the option which was given to them under the proviso to section 20(1) of the Act,. by July 10, 1953. First of August, 1953, was notified the appointed day under section 16 of the Act and from that date the undertakings of the "existing air companies" vested in the Corporation established under the Act (except the Air India International). So on August:1, 1953, the ASI vested in the Corporation and section 20(1) of the Act came into force. Hence as none of the appellants had exercised the option given to them under the proviso, they would also be governed by the said provision, 817 unless the contention. raised on their behalf that they could in no case be governed by section 20(1), is accepted. The tribunal came to the conclusion that, whatever the position of the appellants as loaned staff from the Scindias to the ASI, as they were informed on May 6, 1953, of the exact position by the Scindias and they did not ask for a reference of an industrial dispute immediately thereafter with the Scindias and as they" ' did not exercise the option given to them by the proviso to section 20(1) before July 10, 1953, they would be governed by section 20(1) of the Act. In consequence, they became the employees. of the Corporation as from August 1, 1953 and would thus have no right there after to claim that they were still the employees of the Scindias and had a right to revert to them. The consequence of all this was that they were held not to be entitled to any of the benefits which they claimed in the alternative according to the order of reference. It is this order of the tribunal rejecting the reference which has been impugned before us in the present appeal. The main contention of Mr. Chatterjee on behalf of the appellants is that they are not governed by section 20 (1) of the Act and in any case the contract of service between the appellants and the Scindias was not assignable and transferable even by law and finally that even if section 20(1) applied, the Scindias were bound to take back the appellants. We are of opinion that there is no force in any of these contentions. 20(1) lays down that every officer or employee of the "existing air companies" employed by them prior to the first day of July, 1952, and still in their employment immediately before the appointed day shall become as I from the appointed day an officer or employee, as the case may be, of the Corporation in which the undertakings are vested. The object of this provision was to ensure continuity of service to the employees of the "existing air companies" which were being taken over by the Corporation and was thus for the benefit of the officers and employees concerned. It is further provided in section 20(1) that the terms of service etc. would be the same until they are duly altered by the Corporation. One should have thought that the employees of the air 818 companies would welcome this provision as it ensured them continuity of service on the same terms till they were duly altered. Further there was no compulsion on the employees or the officers of the "existing air companies" to serve the Corporation if they did not want to do so. The proviso laid down that any officer or other employee who did not want to go into the service of the Corporation could get out of service by notice in writing given to the Corporation before the date fixed, which was in this case July 10, 1953. Therefore, even if the argument of Mr. Chatterjee that the contract of service between the appellants and their employers had been transferred or assigned by this section and that this could not be done,, be correct, it loses all its force, for the proviso made it clear that any one who did not want to join the Corporation, was free not to do so, after giving notice upto a certain date. Mr. Chatterjee in this connection relied on Nokes vs Doncaster Amalgamated Collieries Ltd. where it was observed at p. 1018 "It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result,, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract of service entered into by agreement between A and Y." This observation itself shows that a contract of service may be transferred by a statutory provision; but in the present case, as we have already said, there was no compulsory transfer of the contract of service between the "existing air companies", and their officers and employees to the Corporation for each of them was given the option not to join the Corporation, if he gave notice to that effect. The provision of section 20(1) read with the proviso is a perfectly reasonable provision and, as a matter of fact, in the interest of employees themselves. But, Mr. Chatterjee argues that section 20(1) will only apply to those who were in the employ of the "existing air companies"; it would not (1) , 819 apply to those who might be working for the "existing air companies" on being loaned from some other company. In other words, the argument is that the, appellants were in the employ not of the ASI but of the Scinaias and therefore section 20(1) would not apply to them and they would not become the employees of the Corporation by virtue of that provision when they failed to exercise the option given to them by the proviso. According to him, only those employees of the ASI who were directly recruited by it, would be covered by section 20(1). We are of opinion that this argument is fallacious. It is true that the appellants were not originally recruited by the ASI. They were recruited by the Scindias and were transferred on loan to the ASI on various dates from 1946 to 1951. But for the purposes of section 20(1) we have to see two things: namely, (i) whether the officer or employee was employed by the existing air company on July 1, 1952, and (ii) whether he was still in its employment on the appointed day, (namely, August 1,1953). Now it is not disputed that the appellants were working in fact for the ASI on July 1, 1952, and were also working for it on August 1, 1953. But it is contended that though they were working for the ASI they were still not in its employment in law and were in the employment of the Scindias because at one time they had been loaned by the Scindias to the ASI. Let us examine the exact position of the appellants in order to determine whether they were in the employ of the ASI or not. It is not disputed that they were working for the ASI and were being paid by it; their hours of work as well as control over their work was all by the ASI. From this it would naturally follow that they were the employees of the ASI, even though they might not have been directly recruited by it. It is true that there were certain special features of their employment with the ASI. These special features were that they were on the same terms and conditions of service as were enjoyed by the employees of the Scindias in the matter of remuneration, leave, bonus, etc. It may also be that they could not be, dismissed by the ASI and the Scindias may have had to take action in case it was 820 desired to dismiss them. Further it may be that they could be recalled by the Scindias and it may even be that they might have the option to go back to the Scindias. But these are only three special terms of their employment with the ASI. Subject to these special terms, they would for all purposes be the employees of the ASI and thus would in law be in the employment of the ASI both on July 1, 1952 and on August 1, 1953. The existence of these special terms in the case of these appellants would not in law make them any the less employees of the ASI, for whom they were working and who were paying them, who had power of control and direction over them; who would grant them leave, fix their hours of work and so on. There can in our opinion be no doubt that subject to these special terms the appellants were in the employ of the ASI in law. They would therefore be in the employ of the ASI prior to July 1, 1952 and would still be in its employ immediately before August 1, 1953. Consequently, they would clearly be governed by section 20(1). As they did not exercise the option given to them by the proviso to section 20(1), they became the employees of the Corporation from August 1, 1953, by the terms of the statute. The last point that has been urged is that even if section 20(1) applies, the Scindias are bound to take back the appellants. Suffice it to say that there is no force in this contention either. As soon as the appellants became by force of law the employees of the Corporation, as they did so become on August 1, 1953, in the circumstances of this case, they had no further right against the Scindias and could not; claim to be taken back in their employment on the ground that they were still their employees, in spite of the operation of section 20(1) of the Act. Nor could they claim any of the alternative benefits specified in the order of reference, as from August 1, 1953, they are by operation of law only the employees of the Corporation and can have no rights whatsoever against the Scindias. We are therefore of opinion that the tribunal 's decision is correct. The appeal fails and is thereby dismissed. There will be no order as to costs. Appeal dismissed.

Section 20(1) of the (XXVII of 1953), read with the proviso, is a perfectly reasonable provision and in the interest of the employees and it is not correct to say that it can apply only to the direct recruits of the existing air 812 companies and not at all to loaned employees working under them. The two conditions of its applications are (i) that the officer or employee was employed by the existing air company on July 1, 1952, and (ii) that he was still in its employment on August 1, 1953, the appointed day. In the instant case where the appellants who had been recruited by the Scindia Steam Navigation Co., Ltd., and on purchase by it of the Air Services of India Ltd., loaned to the latter, and were working under its direction and control on and between the said dates and being paid by it, Held, that in law they were the employees of the Air Ser vices of India from the appointed day, notwithstanding the existence of certain special features of their employment, and as such governed by section 20(1) of the Act and since they did not exercise the option given to them under the proviso, they became employees of the Corporation established under the Act and ceased to have any rights against the original employers. Nokes vs Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014, considered.

Appeal No. 264 of 1960. Appeal by special leave from the Award dated October 12, 1959, of the Industrial Tribunal, Bombay in Reference (IT) No. 81 of 1959. section T. Desai, Sukumar Ghose and B. N. Ghose, for the appellant. C. L. Dhudia and K. L. Hathi, for the respondents. April 3. The Judgment of the Court was, delivered by GAJENDRAGADKAR, J. This appeal by special leave is directed against the award passed by the industrial tribunal in a matter which was referred to it under section 36A(2) of the , for interpretation of certain terms of the award made by the said tribunal on April 28, 1951, in Reference No. 168 of 1950. It appears that a dispute had arisen between the appellant M/s. Jeewanlal (1929) Ltd. and its workmen in regard to certain demands made by the respondents against the appellant in 1950. The said dispute was referred for adjudication as a result of which an award was passed which, inter alia, provided for a gratuity scheme. Some provisions of this award have been referred for interpretation in the present reference. On August 31, 1957, resignation submitted by the appellant 's employee Bhanu Bala was accepted by the appellant. The said employee had joined the appellant 's service in 1929 but there was a break in the continuity of his service for nearly 81 months because he had remained absent from duty without permission or leave from. February 14, 1945 to the end of October, 1945. According to the appellant the said employee was not entitled to any gratuity under the scheme framed by the award. Even so the appellant offered him Rs. 1,165 and odd on compassionate grounds. The employee was not willing to accept that amount because he claimed that he was entitled to Rs. 2,282.50 nP. by way of gratuity. The demand thus made by the employee led to an industrial dis pute which was taken by the employee before the 720 First Labour Court at Bombay under section 33C of the Act. The Labour Court entertained the application, decided the point in dispute in favour of the employee and directed the appellant to pay him Rs. 1,781 80 nP. as gratuity. The appellant then moved the Bombay High Court for a writ under articles 226 and 227 on the ground that the Labour Court had no jurisdiction to entertain the application made before it by the employee. This writ petition was allowed and the order passed by the Labour Court was quashed. It was at this stage that the Government of Bombay referred the question of interpretation of the term "continuous service" contained in the award of 1951 to the Industrial Court under section 36A(1) of the Act. That is how the Industrial Court was possessed of the matter. It has held that the words "continuous service" I as used by the tribunal when it framed the award in question mean service not broken or interrupted by the termination of the contract of employment by either the employer or the employee or by operation of law. It is this interpretation the correctness of which is challenged by the appellant in its present appeal. The relevant part of the gratuity scheme which was framed by the tribunal in the earlier reference reads thus: (i) On the death of an employee while in the service of the company or on an employee becoming physically or mentally disabled to continue further in service half a months wages for each year of service subject to a maximum of ten months ' wages to be paid to him or to his heirs, executors, assigns or nominees as the case may be. (ii) On the termination of his service by the company after five years ' continuous service Gratuity at the same rate as above. (iii)On voluntary retirement or resignation of an employee after 15 years ' continuous service Gratuity at the same rate as above. As we have already seen the employee Bhanu Bala resigned and his resignation was accepted in August, 1957. He claimed the benefit of el. (iii) whereas the 721 appellant contended that the said employee had not been employed in continuous service for the requisite period because there was a break in his service between February 14, 1945, to the end of October, 1945, and that affected the continuity of his employment which made his claim incompetent under el. (iii). This contention has been rejected by the tribunal. Mr. section T. Desai contends that in interpreting the words "continuous service" in cl. (iii) we should compare the provisions of section 49B(l) along with the explanation in the Indian Factories Act, 1934 (XXV of 1934) as well as section 79(1) along with explanation (1) in the Indian (63 of 1948) prior to its amendment in 1954; and he argues that unauthorised absence from work should normally cause a break in service so that if an employee, after uNauthorised absence from work, is allowed to resume after such unauthorised absence he should not be entitled to claim continuous service in view of the break in his service. In support of this argument reliance has been placed on the decision of this Court in Buckingham and Carnatic Co. Ltd. vs Workers of the Buckingham and Carnatic Co. Ltd. (1). In that case this Court has held that the continuity of the service of the workers was interrupted by the illegal strike and so they were not entitled to claim holidays with pay under section 49B(1) of the Indian . It would, however, be noticed that the said decision turned upon the definition of the word "strike" in section 2(q) of the , read with the relevant provision of section 49 B of the Indian Factories Act, 1934; and there can be no doubt that in a different context the same words can and often have different meanings. As this Court has observed in Budge Budge Municipality vs P. It. Mukherjee (2), "the same words may mean one thing in one context and another in different context. This is the reason why decisions on the meaning of particular words or collection of words found in other statutes are scarcely of (1) ; (2) , 198. 91 722 much value when we have to deal with a specific statute of our OWn; they may be helpful but cannot be taken as guides or precedents". Therefore, the meaning attributed to the words "continuous service" in the context of the Factories Act may not have a material bearing in deciding the point in the present appeal. The same comment falls to be made in regard to the argument based on the definition of the expression "continuous service" contained in section 2(eee) of the . The said section provides that "continuous service" means uninterrupted service and includes service which may be interrupted merely on account ' of sickness or authorised leave or an accident or a strike which is not illegal, or a lockout or a cessation of work which is not due to any fault on the part of the workmen. This definition is undoubtedly relevant in dealing with the question of continuous service by reference to the provisions of Industrial Disputes ' Act but its operation cannot be automatically extended in dealing with an interpretation of the words "continuous service" in an award made in an industrial dispute unless the context in which the expression is used in the award justifies it. In other words, the expression "continuous service" may be statutorily defined in which case the definition will prevail. An award using the said expression may itself give a definition of that expression and that will bind parties in dealing with claims arising from the award. Where, however, the award does not explain the said expression and statutory definitions contained in other Acts are of no material assistance it would be necessary to examine the question on principle and decide what the expression should mean in any given award '; and that is precisely what the tribunal had to do in the present case. "Continuous service" in the context of the scheme of gratuity framed by the tribunal in the earlier reference postulates the continuance of the relationship of master and servant between the employer and his employees. If the servant resigns his employment service automatically comes to an end. If the employer terminates the service, of his employee that 723 again brings the continuity of service to an end. If the service of an employee is brought to an end by the operation of any law that again is another instance where the continuance is disrupted; but it is difficult to hold that merely because an employee is absent without obtaining leave that itself would bring to an end the continuity of his service. Similarly, participation in an illegal strike which may incur the punishment of dismissal may not by itself bring to an end the relationship of master and ser vant. It may be a good cause for the termination of service provided of course the relevant provisions in the standing orders in that behalf are complied with; but mere participation in an illegal strike cannot be said to cause breach in continuity for the purposes of gratuity. On the other hand, if an employee continues to be absent from duty without obtaining leave and in an unauthorised manner for such a long period of time that an inference may reasonably be drawn from such absence that by his absence he has aban doned service, then such long unauthorised absence may legitimately be held to cause a break in the continuity of service. It would thus always be a question of fact to be decided on the circumstances of each case whether or not a particular employee can claim continuity of service for the requisite period or not. In our opinion, therefore, the view taken by the tribunal is substantially right though we would like to make it clear that in addition to the cases where according to the tribunal continuity of service would come to an end there would be the class of cases where long unauthorised absence may reasonably give rise to an inference that such service is intended to be abandoned by the employee. With this modification we confirm the award and dismiss the appeal. There would be no order as to costs. Appeal dismissed.

One Bbanu Bala had joined the appellant 's service as a workman in 1929 and resigned in 1957. During this period of his service he had remained absent from duty without permis sion or leave for nearly 8 months between February, 1945, to 718 October, 1945. Under an Award made between the company and its workmen a scheme was framed wherein the concerned clause was that "on voluntary retirement or resignation of an employee after 15 years continuous service gratuity at the same rate as above. " Dispute arose with regard to the question of granting gratuity to Bhanu Bala who claimed the benefit of the said clause and the company denied the claim on the ground that the said employee had not been in continuous service for the requisite period because there was a break in his service and that affected the continuity of his employment which made his claim incompetent. The question was as to the interpretation of the term "continuous service" contained in the Award of 1951. Held, that in different context the same word can often have different meanings and the expression "continuous service" would always be a question of fact to be decided on the circumstances of each case whether or not a particular employee can claim continuity of service for the requisite period. Where the expression "continuous service" was statutorily defined then the definition would prevail; and where an award itself gave a definition of the expression that would bind the parties in dealing with claims arising from the award but where the award did not explain the expression "continuous service" and statutory definitions contained in other Acts were of no material assistance it would be necessary to examine the question on principle and decide what the expression should mean in any given award. "Continuous service", in the context of the scheme of gratuity, postulates the continuation of relationship of master and servant between the employer and employees which could come to an end either by act of parties, i.e., by resignation or termination of service, or by the operation of law; but the continuity of service would not come to an end merely because an employee was absent without obtaining leave; though. there would be cases where long unauthorised absence may reasonably give rise to an inference that such service was intended to be abandoned by the employee. For the purpose of gratuity mere participation in an illegal strike could not be said to cause breach in the continuity of service though it may he a good cause for its termination, provided the relevant provisions in the Standing Orders in that behalf were complied with. Buckingham and Carnatic Co. Ltd. vs Workers of the Bucking ham and Carnatic Co. Ltd.; , , distinguished. Budge Budge Municipality vs P. R. Mukherjee, [1953] 1 L.L.J. 195, referred to. 719

Appeals Nos. 41 44 of 1960. 182 Appeals 'by special leave from the judgment and order dated April 13, 1956, of the former Nagpur High Court in Misc. Civil Case No. 27 of 1954. K. N. Rajagopal Sastri and D. Gupta, for the appel. J. M. Thakar, section N. Andley, Rameshwar Nath, P. L. Vohra and J. B. Dadachanji, for the respondent. March 6. The Judgment of the Court was delivered by KAPUR, J. These are four appeals by the Commissioner of Income tax in Income tax Reference made under section 66 A(2) of the Income tax Act (hereinafter termed the 'Act '). The question for decision is whether the respondent is "an association of persons" within the meaning of section 3 of the Act. The appeals relate to two Income tax assessments and two Excess Profits Tax assessments the former for the year,% 1946 47 and 1947 48 respectively, corresponding to the accounting years February 1, 1945, to September 30,1945, and October 1, 1945, to August 21, 1946, the latter are in regard to chargeable account. ing periods February 1, 1945, to September 30, 1945, and October 22, 1945, to March 31, 1946. The decision of the Excess Profits Tax appeals is consequent upon the decision of the Income tax appeals. The facts may now be stated: In 1945 the Deputy Commissioner of Buldana evolved a scheme for the distribution of cloth in his district and with the sanction of the Government of C. P. appointed four persons, viz., Haji Ahmed Haji Ali & Co., Bhanji Kuwarji, Trimbaklal Tribhovan Das and Deolal Rangulal as sole agents for the import of cloth from mils in various places in India and for distribution of the same to retailers. Two of them Haji Ahmed Haji Ali & Co. and Bhanji Kuwarji carried on the business as from February 1, 1945, to the end of September 1945. The profits of the business in proportion of the capital contributed by these persons were distributed between these two persons. After September 1945 there was a change in the group of importers and some others also joined the group and the profits of 183 the subsequent period were similarly distributed between the members of the group as it was then constituted in proportion to the capital contributed by each of them. On March 12, 1947, the Income tax Officer issued a notice under section 22(2) of the Act to the respondent callinga upon it to submit a return of the income of the group for the assessment year 1946 47. This was served on Haji Ahmed Haji Ali & Co but that firm did not furnish any return contending that there was no privity of contract among members of ;the group. A notice was then issued under section 22(4) of the Act and on the production of the books, the Income tax Officer ascertained the income for the year ending September 1945 and assessed liability for payment of income tax under section 23(4) of the Act. He assessed the 'respondent as "an association of persons" both for purposes of Income tax and Excess Profits tax. An application under section 27 of the Income tax Act was dismissed by the Income tax Officer. Similarly for the year 1947 48 a notice was again issued and served on Haji Ahmed Haji Ali & Co. and similarly the group was assessed as an association of persons to Income tax and it was also assessed to Excess Profits tax for the period October 22, 1945, to March 31, 1946, and an application under section 27 of the Income tax Act was dismissed in regard to this period also. Appeals were taken against the orders of assessments of Income tax and Excess Profits tax but they were dismissed by the Appellate Assistant Commissioner. Appeals were then taken to the Income tax Appellate Tribunal but they also were dismissed by an order dated April 18, 1950. An application for making a reference to the High Court was dismissed by the Tribunal but an order was obtained from the High Court under section 66(2) of the Act and four questions were. ordered to be referred to the High Court. The question relevant for the appeals is the following. ",Whether under the facts and circumstances of the case, the Buldana District Main Cloth Importers ' Group constituted an 'Association of persons ' within the meaning of section 4 of the Income tax Act, 184 1922, and was liable to be assessed to income tax and excess profits tax in that status?" The order of the Tribunal dated April 18, 1950, shows that for different periods the group which imported the cloth was differently constituted but Haji Ahmed Haji Ali & Co. was a common member. The books relating to the business were maintained by Haji Ahmed Haji Ali & Co. and every time there was a change in the constituents of the group separate set of books was maintained by them and the profits from those enterprises were divided between the various persons who formed the group at the material times. It was contended before the Tribunal that there was no "Association of persons" and that the cloth imported was issued to the importers who sold the cloth on their own account. The Tribunal however found: "The accounts themselves show that the import and distribution of cloth was done on joint basis. The purchases were on,joint account, the sales were on joint account, the profit was first ascertained on the joint account and then distributed according to their agreed share of profits. In: our opinion the assessment has been rightly made on the status of an association of persons. " The High Court, when the matter went to it after the statement of the case by the Tribunal, held that before a group of persons could be called an "association of persons" it had to be established that they were in the nature of partners, i.e., the members of the group of their own volition or free will had joined in a venture with a view to earn profits. As the members of the group were appointed by the Deputy Commissioner a,% importers their participation could not be held to be of free will but it was under compulsion and therefore they were not an "association of persons" within the meaning of the Act. The High Court referred to and relied upon various cases to which it is not necessary to make any reference. As to what constitutes an association of persons was laid down by this Court in the Commissioner of Income tax, Bombay North vs Indira Balkrishna (1) and in 185 Mohammad,Noorulla vs Commissioner of Income tax decided on January 18, 1961, where the business was carried on as one unit and by the consent of all the parties who were heirs of deceased Mohammad Omer Sahib and during the period when an administration B suit between them was being fought in courts of law. In the present case the Tribunal has found that the It import and distribution of cloth which was the business carried on by the respondent, was dune on a joint basis. The purchases were joint; so were the sales and the profits were ascertained on a joint basis and then distributed according to the capital contributed by each member of the group. This finding which is one of fact makes the respondent an "association of persons" and it makes no difference that the business was carried on because the Deputy Commissioner of the district had appointed the members constituting the group to import and distribute the cloth in the district. The respondent, it. is not disputed, worked the scheme which was framed by the Deputy Commissioner and the working of the scheme produced profits and it made no difference that the scheme was at the instance of or under the control of the Deputy Commissioner. Dealing with the argument of similar control Sarkar, J., in Commissioner of Income tax, Madhya Pradesh & Bhopal vs Vyas and Dhotiwala (2) observed as follows: "The Tribunal thought that since the scheme was completely under the control of the Deputy Commissioner the assessees could not be said to have carried on business by working the scheme. We are unable to see that the fact of the control of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them. In our view, it only comes to this that the asaessees had agreed to do business in a certain manner. " We are in respectful agreement with this observation. In our view the respondent was an association of (1) [1961] 3 S.C.R.513. (2) [1959] Supp. 1 S.C.R. 39,43 196 persons and was rightly so assessed to Income tax and Excess Profits Tax. The appeals are therefore allowed with costs. One hearing fee. Appeals allowed.

A scheme for the distribution of cloth was evolved by the Deputy Commissioner of the District who appointed a group of persons as sole agents for the import of cloth from Mills and distribution of the same to retailers. Though for different periods the group was differently constituted, one of the members, firm 'H ' remained a common member. The profits of the business were distributed amongst the members of the group in proportion of the capital contributed by them. The Income tax Officer issued notice under section 22(4) Of the Indian Income tax Act, and on production of books of account assessed the respondent as an "Association of Persons". The High Court was of the opinion, inter alia that before a group of persons could be called an "Association of Persons" it had to be established that they were in the "nature of partners", which was not so in the instant case, as the members of the group were appointed by the Deputy Commissioner as importers; the participation of the group could not be held to be of free will but under compulsion and therefore they were not an "Association of Persons" within the meaning Of section 3 Of the Indian Income tax Act. Held, that where a business is carried on and the profits ascertained on a joint basis, and then distributed according to the capital contributed by each. member of the group, the group is an "Association of Persons" and it makes no difference that the scheme which produced profits was at the instance of or under the control of the Deputy Commissioner or that he had appointed the members constituting the group. Commissioner of Income tax, Bombay North vs Indira Bal krishna; , , referred to. Mohamed Noorullah vs Commissioner of Income tax, ; , relied on.

Appeal No. 20 of 1960. Appeal from the judgment and decree dated September 5, 1956, of the Judicial Commissioner 's Court at Ajmer in Civil First Appeal No. 3 of 1956. B. D. Sharma, for the appellant. M. C. Setalvad, Attorney General of India, C. L. Agarwala, M. K. Ramamurthy, R. K. Garg, D. P. Singh and section C. Agarwal, for the respondents I and 3. 1961. April 3. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal by the,, plaintiff against the judgment and decree of the Judicial Commissioner, Ajmer, confirming the decree of the trail Judge dismissing the suit. it comes before us on a certificate under articles 132(1) and 133(1)(c) of the Constitution granted by the High Court of Rajasthan after the Reorganisatiion of the States. The suit was filed by the appellant for recovery of Rs. 23,998 12 0 as price of goods supplied in the year 1947 to the Ruler of Jaipur State, (including interest) and damages suffered by the appellant due to the refusal of the defendants to take delivery of some other goods similarly ordered. In addition to the ex Ruler of Jaipur, his Military Secretary and one Mohabat Singh, an employee of the ex Ruler, were also joined as defendants, on the plea that they had placed the orders as agents of, the ex Ruler. The suit was filed on February 28, 1951. The ex Ruler raised the plea that the suit was incompetent, as the consent of the Central Government under section 87 B of the Code of Civil Procedure was not obtained and asked that the suit be dismissed. The other defendants denied the claim and also their lability on various grounds. It may be mentioned the Military Secretary (second 704 defendant) has since died, and this appeal is now directed against the ex Ruler and Mohabat Singh only. The Subordinate Judge held that though the suit was filed prior to the enactment of section 87 B by section 12 of the Code of Civil Procedure (Amendment) Act, 1951 (11 of 1951), it could not be continued against the ex Ruler. He adjourned the hearing for four months to enable the appellant to obtain the necessary consent. The appellant applied to the Central Government for its consent, but it was refused. He also applied in revision to the Judicial Commissioner, contending that section 87 B of the. Code of Civil Procedure offended the equality clause in article 14 of the Constitution and was thus void, but the Judicial Commissioner rejected the contention. He also refused a certificate on the ground that there was no final order as required by article 132(l)of the Constitution. The suit was subsequently dismissed against all the three defendants. In regard to the ex Ruler, it was held that no suit lay against him without the consent of the Central Government, and in regard to the remaining defendants, it was held that they were protected by section 230 of the Indian Contract Act. Sub section (3) of that section was held inapplicable, inasmuch as a suit could be filed against the ex Ruler with the consent of the Central Government. The appellant appealed to the Judicial Commissioner, Ajmer, but the appeal was dismissed. He obtained a certificate, as stated above, and this appeal has been filed. Two main questions have been raised in this appeal. The first is that the dismissal of the suit against the ex Ruler was erroneous. In support of this contention, it is urged that section 87 B of the Code of Civil Procedure is ultra vires the Constitution in view of article 14, and, in the alternative, that section 87 B, even if valid, cannot apply to this suit, which was pending when the section was enacted. The right to continue the suit being a substantive right, cannot, it is submitted, be taken away except by a law which is made applicable to pending actions, either expressly or by necessary intendment. Against the other respondent, it is contended that he was liable as an agent or at least, as a 705 sub agent, in view of the provisions of section 230(3) of the Indian Contract Act. We are not concerned with the merits of the claim, and they have not been mentioned at the bearing. We shall begin by considering whether section 87 B is ultra vires and void. It is said that it discriminates in favour of ex Rulers of Indian States by creating an immunity from civil actions. Prior to the present Constitution, Part IV of the Code of Civil Procedure contained provisions in respect of suits in particular cases. This was divided into three parts. Sections 79 to 82 dealt with suits by or against the Crown or Public Officers in their official capacity and section 88 provided for suit of interpleader. We are not concerned with them. Sections 83 to 87 dealt with suits by aliens and by or against Foreign Rulers and Rulers of Indian States. Sections 83 and 84 provided respectively when aliens and foreign States may sue. Section 85 provided for the appointment by Government of persons to prosecute or defend Princes or Chiefs. Section 86 provided for suits against Princes, Chiefs, Ambassadors and Envoys. It created partial ex territoriality by granting them exemption from civil jurisdiction except when an action was brought with the consent of the Central Government. The first sub section provided: "Any such Prince or Chief, and any ambassador or envoy of a foreign State, may in the case of the Ruling Chief of an Indian State with the consent of the Crown Representative, certified by the signature of the Political Secretary, and in any other case with the consent of the Central Government, certified by the signature of a secretary to that Government, but not without such consent, be sued in any competent Court. " The remaining four sub sections dealt with the kinds of suits and the conditions under which they could be brought and certain other aspects Of ex territoriality. Section 87 laid down the style of Princes or Chiefs as parties to suits. After the coming into force of the Constitution, 89 706 certain adaptations were made by the President by the Adaptations of Laws Order 1950, but we are not concerned with them. Suffice it to say that the protection continued in view of article 372 of the constitution (unless it was void under the Chapter on Fundamental Rights) till we come to the enactment of Act 11 of 1951. The impact of the Fundamental Rights provisions on section 86 as originally enacted and on the new section 87 B being the same, we need not consider the matter separately. When the Indian States integrated with British India, the Rulers of States and the Government of India entered 'Into covenants and agreements. In those covenants, it was agreed that the privileges, dignities and titles of the Indian Princes would be continued to be recognised. When the Constitution was enacted, the assurance in the covenants was respected, and article 362 was included in the Constitution. It reads: "In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause (i) of Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State." The reference to article 291 merely indicates that those covenants or agreements were meant which the Ruler of any Indian State had entered into with the Central Government before the commencement of the Constitution. This description is not repeated in article 362, but is incorporated by reference. The mention of article 291 in article 362 has no further significance, and the generality of the assurance in the latter Article is not lessened. The privilege of ex territoriality and exemption from civil jurisdiction except with the consent of the Central Government was one of long standing, and when the Amendment Act of 1951 was passed, sections 83 to 87 were reenacted. We are not concerned with all the changes that were made, and reference to some 707 of them is unnecessary. Section 86 was amended by deleting all references to Ruling Chiefs of Indian States and the first sub section was reenacted as follows: "86. (1) No Ruler of a foreign State may be sued in any court otherwise competent to try the suit except with the consent of the Central Government certified in writing by a Secretary to that Government:" (proviso omitted). Sub section (3) gave protection against arrest and, except with the consent of the Central Government, against execution of decrees against the property of any such Ruler. Section 87 laid down the style of foreign Rulers as parties to suits. Section 87 A was added to define "foreign State" and "Ruler" and to make the exemption only available to a State and its head, recognised as such by the Central Government. Section 87 B, with which we are concerned, was specially enacted in respect of suits against Rulers of former Indian States. It provided: "87 B. (1) The provisions of section 85 and of sub sections (1) and (3) of section 86 shall apply in relation to the Rulers of any former Indian State as they apply in relation to the Ruler of a foreign State. (2) In this section (a)former Indian State 'means any such Indian State as the Central Government may, by notification in the Official Gazette, specify for the purposes of this section; and (b) 'Ruler ' in relation to a former Indian State, means the person who, for the time being, is recognised by the President as the Ruler of that State for the purposes of the Constitution. " By this provision, which is very much the same as the former section 86, the privilege previously enjoyed by the Rulers of Indian States was continued. In this historical background, the question of dis crimination raised in the appeal must be examined. It is easy to see that the ex Rulers form a class and the special legislation is based upon historical considerations applicable to them as a class. The Princes 708 who were, before integration, sovereign Rulers of Indian States, handed over, after the foundation of the Republic, their States to the Nation in return for an annual Privy Purse and the assurance that their personal rights, privileges and dignities would be respected. The Constitution itself declared that these rights, etc., would receive recognition. A law made as a result of these considerations must be treated as based on a proper classification of such Rulers, who had signed the agreement of the character described above it is based upon a distinction which can be described as real and substantial, and it bears a just relation to the object sought to, be attained. It is further contended that the Article speaks of privileges but not of immunities, and we were referred to certain other Articles of the Constitution where "immunities" are specifically mentioned. It is not necessary to refer to those Articles. Immunity from civil action may be described also as a privilege, because the word "Privilege" is sufficiently wide to ' include an immunity. The Constitution was not limited to the choice of any particular words, so long as the intention was clearly expressed. In our opinion, the words "personal rights and privileges" are sufficiently comprehensive to embrace an immunity of this character. It is, therefore, clear that the section cannot be challenged as discriminatory, because it arises from a classification based on historical facts. It is next contended that section 87 B only applies the provisions of sub sections (1) and (3) of section 86, that tile words of the latter section are not retrospective, that the suit was filed before the enactment of section 87 B, and that the substantive right of the plaintiff to continue his suit could not be taken away in the absence of express language or clear intendment. The words of section 86(l) are "No Ruler of a foreign State may be sued in any court. This precludes, it is said, only the initiation of a suit and not the continuance of a suit already filed before the section was enacted. In our opinion, these arguments cannot be accepted. The word "sued" means not only the filing of a suit or a civil proceeding but also their pursuit through Courts. A person 709 is sued not only when the plaint is filed, but is sued also when the suit remains pending against him. The word "sued" covers the entire proceeding in an action, and the person proceeded against is sued throughout the duration of the action. It follows that consent is necessary not only for the filing of the suit against the ex Ruler but also for its continuation from the time consent is required. In view of the amplitude of the word "sued", it is not necessary to consider generally to what extent pending cases are affected by subsequent legislation or refer to the principles laid down in The United Provinces V.,, Atiqa Begum (1), Venugopala Reddiar vs Krishnaswamy Reddiar (2) or Garikapatti Veeraya vs N. Subbiah Choudhury (3). If the language of section 86 read with section 87 B were applicable only to the initiation of a civil suit, these cases might have been helpful; but since the words "may sue" include not only the initiation of a suit but its continuation also, it is manifest that neither the suit could be filed nor maintained except with the consent of the Central Government. In Atiqa Begum 's Case (1), Varadachariar, J. referred to the two principles applicable to cases where the question of retrospectivity of a law has to be considered. They are that vested rights should not be presumed to be affected, and that the rights of the parties to an action should ordinarily be determined in accordance with the law, as it stood at the date of the commencement of the action. But, the learned Judge pointed out that the language of the enactment might be sufficient to rebut the first, and cited the case of the Privy Council in K. C. Mukherjee vs Mst. Ram Ratan Kuer (4). Here, the matter can be resolved on the language of the enactment. The language employed is of sufficient width and certainty to include even pending actions, and the contrary rule applies, namely, that unless pending actions are saved from the operation of the new law,they must be taken to be affected. The word "sued ", as we have shown, denotes not only the start but also the continuation of a civil action, and the (1) [1940] F.C.R.110 (2) (3) [1957] S.C.R.4ss. (4) Pat. 710 Prohibition, therefore, affects not only a suit instituted after the enactment of section 87 B but one which, though instituted before its enactment, is pending. In our judgment, the present suit was incompetent against the first defendant, the ex Ruler of Jaipur. It is contended that defendants 2 and 3 acted as the agents of the ex Ruler and placed the order with the appellant. The position of the Military Secretary since dead) was on a different footing, but it is conceded that no cause of action against him survived, because the appeal has abated against him. Mohabat Singh, who is the third defendant, cannot be described as an agent of the ex Ruler, because his connection with the orders placed was merely to sign the letters purporting to emanate from the Military Secretary. Those letters he signed "for the Military Secretary". He was not acting as the agent of the ex Ruler but was performing the ministerial act of signing the letters on behalf of the Military Secretary. This cannot be said to have constituted him an agent. The suit against him was, therefore, misconceived, whatever might have been said of the Military Secretary. In our opinion, the dismissal of the suit was justified in the circumstances of the case. The appeal fails, and is dismissed with costs. The appellant will pay court fee on the memorandum of appeal, as he was allowed to file this appeal as a pauper. Appeal dismissed.

The appellant filed a suit for the recovery of money as price of goods supplied against the Ex Ruler of Jaipur. Subsequently section 87 B was introduced in the Code of Civil Procedure making the provisions of section 86 in respect of suits against rulers of foreign States applicable to the rulers of former Indian States. The Ex Ruler raised the plea that the suit was incompetent as the consent of the Central Government had not been obtained as required by section 87 B. The appellant contended: (i) that section 87 B violated article 14 Of the Constitution and was void, (ii) that section 87 B did not apply to the continuation of a suit pending at the time when section 87 B was enacted but only to the filing of a suit after the enactment of that section. Held, that section 87 B did not violate article 14 Of the Constitu tion and was not void. Section 87 B of the Code of Civil Procedure merely continued the privilege which was formerly enjoyed by the Rulers of Indian States and in regard to which the covenants entered into by the Ex Rulers and the Government of India provided for their continuance. This agreement about the privileges was further assured by article 362 Of the Constitution. The Ex Rulers thus formed a class and the special legislation was based upon historical considerations applicable to them as a class. The classification was based on a distinction which was real and substantial and it bore a just relation to the object sought to be attained. Held, further, that the suit was incompetent against the Ex Ruler of Jaipur. The protection of section 87 B read with section 86 applied both to the filing of a suit and to its, pursuit through the courts. Section 86 provides that "No Ruler. . may be sued in any court. . . A person is "sued" not only when the plaint is filed against him, but is "sued" also when the suit remained pending against him. The word "sued" covers the entire proceedings in an action. Consequently, the consent of the Central Government was necessary not only for the filing of the suit against the Ex Ruler but also for its continuation from the time consent was required. 703 Held, further, that section 87 B was on its terms applicable to pending suits and there was no saving in favour of pending actions. K. C. Mukherjee vs Mst. Rath Ratan Kuer, Pat. 268, applied.

Case No. 275 of 1951. Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated April 11, 1951, of the High Court of Judicature at Calcutta (Das Gupta and Mookerjee JJ.) in Criminal Revision Case No. 1028 of 1950 arising out of the Order dated November 23, 1950, of the Presidency Magistrate, 8th Court, Calcutta, in P. R. Case No. 2107 of 1950. N.C. Chakravarti for the appellant. B.Sen for the respondent. M.C. Setalvad, Attorney General for India (P. A. Mehta, with him), for the intervener. December 5. The Judgment of the Court was delivered by BOSE J. This is an appeal under article 132 (1) of the Constitution. Leave to appeal was granted by the High Court at Calcutta. 84 646 The appellant was convicted under section 7 (1) of essential Supplies (Temporary Powers) Act of 1946 for an offence said to have been committed on the 24th of October, 1950 The conviction was on At two counts: (1) for selling cloth above the controlled rate and (2) for not issuing a cash memo. The sentence was rigorous imprisonment for three months and a fine of Rs. 200 with another three months in default. The trial was before the 8th Presidency Magistrate at Calcutta who adopted a summary procedure. There was an application for revision before the High Court but it was dismissed. An application for leave to appeal to this Court was then filed. It was granted on a ground which was not taken either in the original court or in the revision before the High Court, namely that the Essential Supplies Act of 1946 under which the appellant was convicted was not in force on the 24th of October, 1950, and so there could be no conviction under it. The validity of this Act was challenged in Joylal Agarwala vs The State(1) but this Court he Id that the Act was valid up to the 31st of March, 1950, that being the life of the Act at the date relevant to that case. It is necessary to explain that the Act is a temporary Act and that its life has been extended from time to time after the date of its first expiry for a year at a time. The latest extension at the date of the previous case was up to the 31st of March, 1950. We therefore start with the position that the Act was a good Act up till that date. The Act was further extended up till the 31st of March, 1951, by a resolution dated the 20th of December, 1949. This is the extension with which we are concerned and which is now challenged, the argument being that there was no legislative body in existence on that date competent to extend the life of the Act for another year. The Gazette notification setting out the resolution is in the following terms (1) ; 647 `` New Delhi, the 22nd December, 1949. No. F. 7 WL (1) 47. The following resolution which wag passed by the Constituent Assembly (Legislative) at its meeting held on the 20th of December, 1949, is hereby published for general information : In pursuance of the proviso to section 4 of the India (Central Government and Legislature) Act, 1946, as adapted by the India (Provisional Constitution) Order, 1947, this Assembly hereby approves the extension of the period mentioned in sections 2 and 3 of the said Act for a further period of twelve months commencing on the first day of April, 1950. " It has to be seen whether the body which passed that resolution had the power to extend the Act. It can be accepted, because of the decision in Joylal Agarwala vs The State(1), that the Constituent Assembly had authority on 25th of February, 1948, and again on 23rd of March, 1949, to make two successive extensions of the Essential Supplies Act of a year each. The only question, therefore, is whether any body continued to have that power on the dates material here. The extensions jug t referred to were brought about as follows. The Constituent Assembly derived its authority to pass the above resolution from section 4 A of the India (Central Government and Legislature) Act of 1946. This was an Act of the British Parliament which originally conferred on the British Houses of Parliament the power of approving by resolution the extension of the period fixed by section 4. Later, the Indian Independence Act of 1947 was passed by the British Parliament and in exercise of the powers conferred by sections 9 and 19 of that Act the Governor General by an Adaptation Order substituted the words " Dominion Legislature " for the words " Houses of Parliament " and thus enabled the Dominion Legislature to exercise the powers of Parliament in this behalf. At the same time, the (1) ; 131. 648 Governor General introduced section4 A into the British Act of 1946, the India (Central Government and Legislature) Act, 1946, by way of adaptation and conferred on the Constituent Assembly the, powers of the Dominion Legislature. Thus the Constituent Assembly became empowered to extend the period fixed in section 4 by the passing of a resolution and that in its turn had the effect of extending the life of the Essential Supplies Act of 1946, because section 1 (3) of that Act says that it shall cease to have effect on the expiration of the period mentioned in section 4 of the India (Central Government and Legislature) Act of 1946. Now section 4 A provides that the Constituent Assembly shall have the powers of the Dominion Legislature under the British Act " until other provision is made by or in accordance with a law made by the Constituent Assembly under sub section (1) of section 8 of the Indian Independence Act, 1947. " Turning to sub section (1) of section 8 we find that the British Parliament invested the Constituent Assembly with all the powers of the Dominion Legislature " for the purpose of making provision as to the constitution of the Dominion. " That power it exercised and drew up the Indian Constitution, but in doing so it decided to bring the constitution into being in two instalments and it did that by enacting article 394 and enacting in it that that article and certain others, including article 379, should come into force " at once " at once being the 26th of November, 1949 while the remaining articles were to come into force on the 26th of January, 1950. Now article 379 (1) provides that `` Until both Houses of Parliament have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body functioning as the Constituent Assembly of the Dominion of India immediately before the commencement of this Constitution shall be the Provisional 649 Parliament and shall exercise all the powers and perform all the duties conferred by the provisions of this Constitution on Parliament. " It was argued on behalf the appellant that because of this article the Constituent Assembly disappeared as a law making body on and after the 26th of November, 1949, and that its place was taken by the Provisional Parliament referred to by that article, and as the resolution of the 20th December, 1949, purports to be a resolution of the Constituent Assembly (Legislative) and not of the Provisional Parliament, it is a resolution of a body which no longer had authority to enact laws or pass a resolution of this kind affecting the laws of the land. The learned Attorney General argues, on the other hand, that the Constituent Assembly continued to function as such and to retain its right to exercise its dual functions of constitution making and law making right up to the last stroke of midnight on the 25th of January, 1950. The very next second, when a new day ushered in a new era for this country, it ceased to exist as a Constituent Assembly and its place was taken by the Provisional Parliament of India. We need not decide this point, for even if the Provisional Parliament was intended to function on the 26th of November, 1949, and not from the 26th of January, 1950, it is clear that the Constituent Assembly was to continue in existence till " the commencement of the Constitution" which, by article 394, is the 26th of January, 1950. Consequently, the power conferred on it as a designated body, by the English statute, as adapted by the Governor General, could be validly exercised on the 20th of December, 1949, and was so exercised when it passed,the resolution of that date. The Provisional Parliament was not a body authorised to exercise the special power of approving the extension of the period mentioned in section 4 of the English statute as that was not one of "the powers conferred by this Constitution on Parliament," nor can bringing the Provisional Parliament into existence on the 26th of November, 1949 650 ( assuming that to be the case) be regarded as other provision" made by the Constituent Assembly within the meaning of section 4 A of the English Act. It follows the Constituent Assembly was not deprived of these specially designated powers on the date of the resolution. The next question is whether the Constituent Assembly had the power to extend the life of this particular piece of legislation beyond the 26th of January, 1950. The question was posed in this way. It was conceded that the Essential Supplies Act was validly extended up to the 31st of March, 1950. The resolution which extended its life for another year beyond this was passed on the 20th of December, 1949, but it was argued that it could not take effect till after the expiry of the previous extension, that is, not until the 1st of April, 1950. But by that time the Constitution had come into being and so neither the Constituent Assembly nor the Provisional Parliament could have extended the life of the temporary Act after its expiration on the 31st of March, 1950, because of Explanation III to article 372. It follows that the Constituent Assembly which purported to effect the extension ahead of time could not do, in anticipation, what the Constitution says cannot be done after its commencement. There is nothing in this contention. The resolution of the 20th December, 1949, took immediate effect and its effect was to alter the date fixed for the expiration of the period mentioned in section 4 of the English statute from the 31st of March, 1950, to the 31st of March, 1951. The Essential Supplies Act fixed the date for its own expiration as the date flied for the expiration of the period mentioned in section 4 above. Accordingly, it was an Act which was alive immediately before the 26th of January, 1950, and which was due, at that time, to expire of its own force, not on the 31st of March, 1950, but on the 31st of March, 1951, and as this was a law in force immediately before the commencement of the Constitution 651 it continued in force, because of article 372(1) and Explanation III, until it was due to expire. That exhausts the constitutional points. We bold that there was a body in existence. at all material times competent to extend the life of the Act up till the 31st of March, 1951, and that it did so extend its life on the 20th of December, 1949. The Act continued in force until after the Constitution and therefore was a living Act at the date of the offences, namely the 24th of October, 1950. Counsel then sought to attack the conviction on other grounds but a,,; the leave to appeal was confined to the constitutional points be cannot so far as that is concerned, be permitted to travel further. Of course, it would have been competent for him to file a separate petition for special leave to appeal on the other points but had be done so it would have followed the usual course and he would have been obliged to obtain special leave in the usual way. We therefore treated this part of the argument as one asking for special leave to appeal. We heard him fully and are of opinion that these remaining points are not ones on which special leave to appeal should be granted. We therefore reject this irregular petition for special leave to appeal on its merits. The appeal filed under article 132 (1) is also dismissed. Appeal dismissed. Agent for the intervener: G. H. Rajadhyaksha.

The Essential Supplies (Temporary Powers) Act, 1946, a temporary Act which was being extended from time to time after the date of its first expiry, for a year at a time, was extended up to the 31st March, 1951, from the 31st March, 1950, by a resolution passed by the Constituent Assembly (Legislative) at a meeting held on the 20th December, 1949. The appellant who was convicted for an offence committed under the Act on the 24th October, 1950, contended that the Constituent Assembly had no power to extend the Act in view of, the provisions of article 379 (1) of the Constitution, and that at any rate it had no power to extend the duration of the Act beyond the 26th January, 1950 645 Held, that, even assuming that under article 379 (1) the Provi sional Parliament was intended to function from the 26th November, 1949, and not from the 26th. January, 1950, as the Constituent Assembly was to continue in existence till the 26th January 1950, the power conferred on it as a designated body by the India (Central Government and Legislature) Act, 1946, of the British Parliament as adapted by the India (Provisional Constitution) Order, 1947, could be validly exercised on the 20th December, 1949, and was so exercised when it passed the resolution on that date. The Provisional Parliament was not a body authorised to exercise the special power of approving the extension of the period mentioned in section 4 of the India Act of 1946 as that was not one of the powers conferred by the Constitution on the Provisional Parliament, nor can bringing the Provisional Parliament into existence on the 26th November, 1949, assuming that to be the case, be regarded as " other provision " made by the Constituent Assembly within the meaning of section 4 of the India Act of 1946. Held further, that the resolution extending the life of the Act beyond the 26th of January, 1950, was not invalid, as it came into immediate effect and not on the 1st of April, 1950, when the previous extension expired. Accordingly the Act with its duration extended by virtue of the resolution was an Act immediately in force before the commencement of the Constitution anti so was saved by article 372 (1) and Explanation III.

Appeals Nos. 235 and 236 of 1960. Appeals from the judgment and decree dated January 23, 1959 of the Assam High Court at Gauhati in Civil Rules Nos. 138 and 139 of 1958. N. C. Chatterjee, Amjad Ali and K. R. Chaudhari, for the appellant (in C. A. No. 235 of 1960). D. N. Mukherjee, for the appellant (In C. A. No. 236 of 1960). section M. Lahiri, Advocate General, Assam and Naunit Lal, for the respondents. April 4. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. These two appeals arise out of two writ petitions Nos. 138 and 139 of 1958 filed respectively by the two appellants, Sonapur Tea Co. Ltd., of 15 D Sambhunath Pandi Street, Calcutta 9, and Musst. Mazirunnessa, wife of Abdul Gafur of Village Bhoknamari, District Kamrup, in which they challenged the validity of the Assam Fixation of Ceiling on Land Holdings Act I of 1957 (hereafter called the Act). The said writ petitions have been dismissed by the Assam High Court substantially on ground that since the impugned Act falls within the protection of article 31A the challenge made by the two appellants to the several provisions of the Act under articles 14, 19(1)(f) and 31(2) cannot be entertained Having dismissed the writ petitions principally on this ground the High Court granted certificates to both the appellants to come to this Court in appeal, 726 and so it is with the said certificates that the two appeals have been brought to this Court. It is not necessary to set out the material facts leading to the two writ petitions in any detail. It would be enough to say that under section 5 of the, impugned Act notices had been served on both the appellants by the respondent Deputy Commissioner and Collector of Kamrup calling upon them to submit a return giving the particulars of all their lands in the prescribed form and stating therein the selection of plot or plots of land (not exceeding in the aggregate the limits fixed under section 4) which they desired to retain under the provisions of the Act. The appellants contended before the High Court that the impugned Act under which this notice had been served on them was invalid and ultra vires and so they wanted the notice issued under section 5 to be quashed. That is the only relevant fact which needs to be stated for deciding the present appeals. The Act received the assent of the President on December 7, 1956, and was published in the official State Gazette on January 16, 1957. Subsequently it was amended by the amending Act XVII of 1957 and assent was obtained to the amendment thus made on November 8, 1957. By a notification issued by the State Government on February 7,1958, the amended Act came into force on February 15, 1958. It is relevant to consider briefly the broad features of the Act. It has been passed because the Legislature deemed it necessary to make provision for the imposition of limits on the amount of land that may be held by a person in order to bring about an equitable distribution of land. That being the object of the Act the principal provision of the Act imposes a ceiling on existing holding by s.4. The act extends to the seven Districts specified in section 1(2), and from its operation are excepted the lands specified in cls. (a) to (c) of s.2. These clauses refer to lands belonging to any religious or charitable institution of a public nature, lands held for special cultivation of tea or purposes ancillary thereto and lands exceeding 150 bighas utilised for large scale cultivation of citrus in a compact block by any person before January 1, 1955, lands 727 utilised by efficiently managed farms on which heavy investments or permanent structural improvements have been made and whose break up is likely to lead to a fall in production, and lands held by a sugar factory or a co operative farming society for cultivation of sugarcane for the purpose of such factory. It would thus be noticed that the measure of agrarian reform introduced by the Act has made exceptions in regard to lands which it thought should be left out of the operation of the Act in the interest of the economy of the State. Section 3 is the definition section. It defines land as meaning land which is or may be utilised for agricultural purposes or purposes subservient thereto and includes the sites of buildings appurtenant to such land. Under section 3(g) the word 'landholder ' has the meaning assigned to it in the Assam Land and Revenue Regulation, 1886 (Regulation I of 1886). 'Landlord ' under section 3(h) is a person immediately under whom a tenant holds but does not include the Government; and 'owner ' under section 3(i) includes proprietor, land holder or settlement holder as defined in section 3 of the Assam land and Revenue Regulation I of 1886 but it does not include Government. Section 3(o) defines 'tenant ' as meaning a person who holds land under another person and is, but for a special contract would be, liable to pay rent for that land to the other person, and includes a person who cultivates the land of another person on condition of delivering a share of the produce. These are the only definitions which are relevant for our purpose. Section 4 which is the key section of the Act prescribes ceiling on existing holding. The limit prescribed is 150 bighas in the aggregate subject to its provisos. Section 5 empowers the appropriate authorities to call for submission of returns by persons holding lands in excess of the ceiling. Section 8 empowers the State Government to acquire such excess lands by publishing in the official gazette a notification to the effect that such lands are required for public purpose, and such publication shall be conclusive evidence of the notice of acquisition to the person or persons holding such lands. Acquisition of excess lands prescribed by section 8 is followed by the vesting of the said 728 lands in the State under section 9. On publication of the notification under section 8 all such excess lands shall stand transferred to the State Government from the date of the publication of the said notification free from encumbrances by their original owner or owners. Under section 11 the Collector is authorised to take possession of the said lands. Section 12 prescribes the principles of compensation. and provides the manner in which the said compensation should be apportioned between the owner and the tenant; and s.13 provides for the manner of payment of such compensation. Under section 14 ad interim payment of compensation can be made as specified. These are the relevant provisions in Chapter 11 which deals with ceiling on existing holding and acquisition of excess land. Chapter III deals with the disposal of excess land. Under section 16(l) if there is any cultivating tenant in occupation of the land acquired from an owner then he shall have the option of taking settlement of such land within a prescribed period on the following conditions, namely, (a) that the area of land so settled together with any other lands held by him or any member of his family either as tenant or as owner shall not exceed in the aggregate the limit fixed under section 4, and (b) that he shall pay to the State Government in one or more equal annual installments not exceeding five an amount fixed by it but not exceeding the compensation payable by the State Government for acquisition thereof, provided that he shall have the right to adjust any amount which he is entitled to receive as compensation under the provisions of the Act against an equal amount which he is liable to pay under el. Section 16(2) provides that on payment of full amount under sub section (1) above the land shall be settled with a tenant with the status of a landholder. Under section 18 it is provided that if a tenant in occupation of any land acquired under section 8 does not take settlement of such land he shall acquire no right, title and interest in the land and shall be liable to be ejected. Chapter IV deals with excess land under annual lease and provides for its taking over. Chapter V puts a ceiling on future 729 acquisition, and chapter VI provides for ceiling for resumption of land from tenants for personal cultivation by the landlord. Chapter VII provides for the establishment of a Land Reform Board, and lays down its functions,while chapter VII contains miscellaneous provisions. That briefly is the scheme of the Act. The question which arises for our decision is whether this Act is protected under article 31A of the Constitution. This Article has been construed by this Court on several occasions in dealing with legislative measures of agrarian reforms. The object of such reforms generally is to abolish the intermediaries between the State and the cultivator and to help the actual cultivator by giving him the status of direct relationship between himself and the State. Article 31A(l)(a) provides that, notwithstanding anything contained in article 13, no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by article 14, article 19 or article 31, provided that, where such law is a law made by the Legislature of a State, the provisions of this Article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent. We have already seen that the assent of the President has been obtained both for the Act as it was originally passed and for the amending Act which subsequently modified some of the provisions of the original Act, and so the requirement prescribed by the proviso to article 31A(l)(a) is satisfied. That raises the question as to whether the rights of the appellants which are undoubtedly taken away or abridged constitute rights in relation to an "estate" as defined by article 31A(2)(b). We have already seen the definitions of land, landholder, landlord and tenant prescribed by section 3(f),(g),(h) and (o). It is common ground that the lands sought to be acquired fall within an "estate" as defined by article 31 A(2). Do the rights vesting in the appellants amount 92 730 to rights in relation to an "estate"? For deciding this question it would be necessary to consider the provisions of the existing law relating to tenure in force in Assam at the relevant time. The existing law relating to land tenure is to be found in the provisions of the a Assam Land and Revenue Regulation, 1886 (Regulation I of 1886). Section 3(g) of the said Regulation provides that a 'landholder ' means any person deemed to have acquired the status of a landholder under section 8. No hen we turn to section 8 we find that it provides the manner in which the status of a landholder can be acquired; and section 9 provides for the rights of such landholders. Under section 9 a landholder shall have a, permanent, heritable and transferable right of use and occupancy in is land subject to the payment of revenue, taxes, cesses and rates from time to time legally assessed or imposed in respect of the land. The remaining two clauses of this section need not be considered. It would be noticed that the expression "rights in relation to an estate" is of a very wide amplitude and as such the context requires that it must receive a very liberal interpretation. Thus considered there can be no doubt that the rights of the appellants which have been extinguished undoubtedly constitute "rights in relation to an estate" as defined by article 31A (2) (b). Indeed this position is not seriously disputed by Mr. Chatterjee who fairly conceded that having regard to the decisions of this Court in Thakur Raghubir Singh vs The State of Ajmer (Now Rajasthan) (1), Sri Ram Ram Narain Medhi vs The State of Bombay( ') and Atma Ram vs The State of Punjab (3 ) he would not be able to contend that the view taken by the High Court is erroneous. Faced with this difficulty Mr. Chatterjee attempted to argue that the Act is a colorable piece of legislation and should be struck down as such. His argument is that though ostensibly it purports to be a measure of agrarian reform its principal object and indeed its pith and substance is to acquire the property covered by its provisions and make profit by disposing of the (1) [1959] Supp. 1 S.C.R. 478. (2) [1959] Supp. 1 S.C.R. 489. (3) [1959] Supp. 1 S.C.R. 748. 731 same in the manner provided by Chapter III. Mr. Chatterjee seemed to suggest that the Legislature should not have made it necessary for the tenants to exercise an option for taking settlement under section 16 because the exercise of the said option involves the liability to pay the prescribed amount though in five installments, and that, according to Mr. Chatterjee indicates that the State wanted to make profit out of the bargain. Mr. Chatterjee 's grievance is against the provisions of section 18 also under which a tenant who does not opt for settlement is liable to be evicted. We are not impressed by this argument. The doctrine of colorable legislation really postulates that legislation attempts to do indirectly what it cannot do directly. In other words, though the letter of the law is within the limits of the powers of the Legislature, in substance the law has transgressed those powers and by doing so it has taken the precaution of concealing its real purpose under the cover of apparently legitimate and reasonable provisions (Vide: K. G. Gajapati Narayan Deo vs The State of Orissa) This position is not and can not be disputed. Is Mr. Chatterjee, however, right when he contends that the pith and substance of the Act and indeed its main object is to acquire property and dispose of it at a profit? That is the question which calls for our decision. In our opinion the answer to this question must obviously be against the appellants. The whole object of the Act which is writ large in all its provisions is to abolish the intermediaries and leave the lands either with the tiller or the cultivator. With that object ceiling has been prescribed by section 4, provisions have been made for the acquisition of excess. lands, and disposal of excess lands in favour of the tenants have been provided for. It is significant that in settling the lands upon the tenants it is expressly provided that the payment which the tenant may have to make and that too in one or more easy installments not exceeding five will never exceed the compensation payable by the State Government for acquisition (1) ; 732 thereof. This provision clearly negatives the assumption made by Mr. Chatterjee that any profit is intended to be made in the matter of disposal of excess lands. The State is paying compensation to the persons dispossessed under the principles prescribed by section 12; amongst the persons entitled to such compensation tenants are included, and when the State proceeds to settle lands on tenants it expects them to pay a fair amount of price for the land and puts a ceiling on this price that it shall never exceed the amount of compensation payable in respect of the Paid land. In our opinion this provision is very fair and reasonable and it would be idle to attack it as a piece of colorable legislation. We have already seen that the settlement of land on the tenants would make them landholders and that is the basic idea of the Act. If a tenant does not agree to take settlement it cannot be helped and so the land would then have to be taken from him and given over to somebody else who would be prepared to take settlement. It is thus clear that the object of putting ceiling on existing holding is to take over excess lands and settle them on actual cultivators Or tenants and that is the essential feature of agrarian reform undertaken by several States in the country. The Act conforms to the pattern usually followed in that behalf and the attack against its validity on the around that it is a colorable piece of legislation must therefore fail. In the result we hold that there is no substance in the two appeals. They are accordingly dismissed with costs one set of hearing. Appeals dismissed.

These appeals arose out of. two petitions filed in the High Court under article 226 of the Constitution challenging the constitutional validity of the Assam Fixation of Ceiling on Land Holding Act, 1957. The High Court in dismissing the petitions held that the impugned Act was protected by Art, 31A of the Constitution. The Act was a measure of agrarian reform and imposed limits on land to be held by persons in order to bring about its equitable distribution. The Act as originally passed as also its subsequent amendment received the assent of the President and this satisfied the requirement of the proviso to article 31A(1)(a) of the Constitution. The question, therefore, was whether the rights of the appellants which were taken away or abridged by the impugned Act were "rights" in relation to an estate within the meaning of article 31A(2)(b) of the Constitution. Held, that the expression " 'rights ', in relation to an estate" in article 31A(2)(b) of the Constitution is of a very wide amplitude and construed liberally, as it must be, and considered in the light of the provisions of sections 3(g) and 9 of the Assam Land and Revenue Regulation, 1886, the existing law relating to tenures, and the relevant definitions contained in the impugned Act, there could be no doubt that the rights of the petitioners, which the impugned Act extinguished, fell within the expression. Thakur Raghubir Singh vs The State of Ajmer, [1959] Supp. 1 S.C.R. 478, Sri Ram Reim Narain Medhi vs The State of Bombay, [1959] Supp. 1 S.C.R. 489 and Atma Ram vs The State of Punjab, [1959] Supp. 1 S.C.R. 748, referred to. A colourable legislation is one in which the Legislature transgresses the lawful limits of its legislative powers ,and "conceals its real purpose under the cover of apparently legitimate and reasonable provisions and thus seeks to do indirectly what it cannot do directly. K. G. Gajapathi Narayan Deo vs The State of [1954] S.C.R. 1, referred to. 725 It was not correct to say that the impugned Act was a colourable legislation whose concealed purpose was to make profit by disposing of land in the manner provided by Ch. III or that by pith and substance it was a profit making measure or that sections 16 and 18 of the Act were devices to that end. This is broadly contradicted by the whole object of the Act which is a measure of agrarian reform, writ large on all its provisions and clearly negatived by section 4 Of the Act which provides that in no case can the payment made by the tenant in getting the settlement exceed the amount of compensation payable by the Government in acquiring the land.

Appeal No. 86 of 1957. Appeal from the judgment and decree dated April 13, 1955, of the Madras High Court in A. section No. 673 of 1950. M. C. Setalvad, Attorney General for India, M. section K. Sastri, section Gopalaratnam and section Narasimhan, for T. K. Sundara Raman, for the appellant. A. V. Viswanatha Sastri and R. Gopalakrishnan, for the respondents. February 24. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal on a certificate granted by the Madras High Court. The facts lie in a narrow compass and may be briefly stated. One Viswanatha Iyer, who died in 1927 had a number of properties. He had no male issue but left two daughters surviving him who were minors at the time of his death. He had a brother Seetharama Iyer who died in 1934. The appellant is the third son of Seetharama. He was treated as a foster son (abhimanputra) by Viswanatha and was also minor at the time of his death. Viswanatha made a will on October 4, 1927. By this will he appointed his brother Seetharama a guardian of his minor daughters as well as of his foster son. He left the management of his properties to his brother and provided that as soon as his minor daughters attained majority Seetharama should give to them per head one veli of nanja land and one veli of punja land in vattam No. 149 in village Nagampadi 976 and further provided that the said Seetharama should deliver possession of the remaining properties to Balakrishnan, immediately after he attained majority. It was also provided in the will that Seetharama should pay to the minor daughters the income from the properties devised to them after the death of the testator. It appears that after the death of the testator, Seetharama remained in possession of the entire properties and thereafter on his death Balakrishnan came to be in possession of them. It appears that after the two daughters were married and became major, Balakrishnan paid them certain monies as due to them out of the income of the properties in May, 1942. Thereafter he used to pay 224 kalam of paddy and Rs. 175/in cash towards their properties after deducting the kist each year. In 1949 the two daughters claimed possession of their lands and their claim was that they were entitled in law having regard to the provisions of the will to select their respective one veli of anja land and one veli of punja land from out of the land in vattam 149. The appellant did not accept this right of selection and contended that the daughters were entitled to their lands taking into account lands of good and bad quality. Consequently, the daughters filed this suit in July, 1949, and claimed in Schedules and D of the plaint certain properties out of vattam 149 on the ground of selection made by them. The suit was resisted by the appellant who was prepared for a partition of land according to quality but was not prepared, to accept the right of selection claimed by the daughters. It was further contended on his behalf that in any case on the construction of the will it was for Seetharama to give such land as he chose to the daughters and not for the daughters to make the selection. The trial court upheld the contention of the daughters and decreed the suit. There was then an appeal to the High Court which was dismissed. The appellant then applied for leave to appeal and was granted 'a certificate; and that is how the matter has come tip before us. 977 Two questions arise. for decision in the present appeal. The first is whether the legatees have a right to make a selection in a case of this kind. The second is whether on a construction of the will the right of selection was in Seetharams or in the legatees. The High Court has held that the English rule of benevolent construction that a legatee has a, right to choose in such circumstances applies to India also and has further held that on the construction of the will in this case the right to choose was in the legatees and not in Seetharama. The learned Attorney General on behalf of the appellant contends that the English rule of construction which gives the right of selection to a devise was evolved to avoid uncertainty and make the subject of gift reducible to certainty. He also refers to a. 89 of the , No. XXXIX of 1925, which lays down that " a will or bequest not expressive of any definite intention is void for uncertainty " and urges that in view of this specific provision in the Succession Act it was not necessary to import the artificial rule of construction evolved in England to avoid uncertainty. Now the provision of section 89 applies only to those cases where a will is so indefinite that it is not possible to give any definite intention to it at all. The illustration to that section shows that it applies only where it is impossible to ascertain the intention of the testator from the words used in the will. For example, where the will uses the words " I bequeath money, wheat, oil or the like, without saying how much ", it is obviously impossible to ascertain the intention of the testator as to the quantity bequeathed and therefore such a will would be void for uncertainty. But there may be wills which use words which are not so uncertain that a definite intention cannot be ascribed to the testator under those words. It is to meet such cases that the English rule of selection by legatees was evolved. There are three possibilities which may &rise in cases where a will is not so uncertain as not to be capable of ascribing a definite intention to the testator. In the first case the testator himself may indicate what 978 he intends to bequeath and that indication is sufficient identify the property bequeathed. In such cases to there is no difficulty, for the testator has himself made the selection and the selection must be given effect to. The second case may be where the testator himself does not make a selection but nominates a, third person who may select the object of his bounty meant for the legatee. In such a case also there can be no difficulty and the person so nominated will make the selection. The third case is where the testator has not indicated the selection himself and has not nominated a, third person to make the selection; but still the gift is not so uncertain as to be void. It is in such cases that English Courts have evolved the benevolent rule that the testator intended to give the selection to the legatee and once the selection is made by the legatee the will takes effect. This case has been exemplified in Jarman on Wills, 8th edition, Vol. I, p. 477. The first example is where a, man devised two sores out of four sores that lay together and it was held that this was a good devise and the devise would elect. In another case a testator devised a message and ten acres of land surrounding it, part of a larger number of acres, the choice of such ten acres was held to be in the devise (see Hobson vs Blackburn(1). The principle in these oases was evolved in Peck vs Halsey (2). In that case the testatrix had bequeathed some of her best linen to her grandchildren. It was held that the legacy was void for uncertainty and the Master of the Rolls said that" if it were such or so much of my best linen as they should choose, or as my executors should choose for them, this would be good, and by the choice of the legatees or executors is reducible to a certainty. " In Tapley vs Eagleton (3), the testator devised " two houses in King Street " to the legatee. He however had three houses in King Street and the question &rose whether the devise was bad for uncertainty. Jessel, M. R. held that the words meant " two of my (1) ; ; , (2) (1726) 2 P. Wms. 387 ; (3) (1979) 12 Chz D 683. 979 houses in King Street " and that two of the houses oat of three passed to the legatee who was entitled to elect which two he would take. Reliance in this case was placed on an earlier case Duckmanton vs Duckmanton (1). There the testator had two closes of land in Ridgway Field. He devised one to one son and another to another son without indicating which was to go to which son. It was held that the devise was good and the case was one for election, the first devisee having the first choice. The same view was taken in Knapton vs Hindle(2), which was a more difficult case inasmuch as the devise was of one house each to the nephews and nieces of the testatrix without names being mentioned, The court however held following the analogy of Roman law that under the will there was a choice to the nephews and nieces and that in case of disagreement among them, the choice was to be determined by lots. It is urged that this is an artificial rule of construction and there is no reason to apply it to India. The rule was evolved by English Courts in order that where the testator 's intention to make a gift was clear and there was only some uncertainty (but not such complete uncertainty as could not be resolved at all) that may be avoided by giving a choice to the legatee. The rule seems to be a common sense rule to give effect to the intentions of a testator which clearly show that he intended to bequeath something which could be made definite by choice. We do not see why such a rule of common sense to give effect to wills which are not quite uncertain and which can be made certain should be called an artificial rule. We also do not see why in appropriate cases this rule of common sense should not be extended to India. We have already said that it is only when the uncertainty is so great that there is no way of resolving it and finding out the intention of the testator that section 89 comes into play. But where the uncertainty is of a less degree and the intention of the testator to gift certain property is clear, though there may be some difficulty because there is more property of that kind than actually bequeathed, that (1) (1860) 5 N. 219; ; , (2) [1941] ch. 125 980 the benevolent rule should be applied to carry out the intention of the testator which is otherwise clear. The matter has come up for consideration in two cases in the Madras High Court. In the first case, Narayanaswami Gramani vs Periathambi Granmni (1), the testator owned land measuring one kani and three quarters. He made a will by which he devised one kani thereof to the plaintiff in that suit. The plaintiff filed a suit to recover one kani selected by him out of the land in quest ion; and the point to be decided was whether the plaintiff was entitled to select and thus make the bequest which the testator wanted to give him certain. It was not urged in that case that the gift was altogether void for uncertainty, for the intention of the testator to give one kani out of one kani and three quarters of land was clear and certain and difficulty only was as to which part of one kani and three quarters should go to the legatee. The High Court held in that case as follows: "In a case like the present the devisee has clearly the right to choose. It has been lon g settled that if a man devises two acres out of four acres that lie together, this is a good devise and the devisee shall select. (Jarman on Wills, 5th Edition, page 331). " The matter came up again in Bharadwaja Mudaliar vs Kolandavelu Mudaliar (2). In that case the will gave to the legatee " six acres of good irrigated nanja lands in the village of Pudur ". The testator had 19.40 acres of land answering to the description. The legatee died without having made the selection. His heir brought a suit and wanted to select. It was held that the bequest was not void for uncertainty and that the heir would be entitled to six acres on partition but was not entitled to selection. Wallis C.J. remarked that "in England such a bequest would have been held void for uncertainty but for the benevolent rule of construction that the testator is intended to have left the choice to the legatee." He also pointed out that the accepted view in England was that the will could not be read as intending that (1) Mad. 460. (2) (1915) 29 M.L.J. 717. 981 heirs of a legatee should be allowed to make the election in the event of the legatee dying without having made it. He therefore distinguished the earlier case of Narayanasami Gramani (1) on that ground and then went on to remark about the English rules as follows: "These are, however, somewhat artificial rules to apply to the will of a Hindu agriculturist who was no doubt familiar with the ordinary process of partitioning lands by the Court in a partition suit and I think it much more likely that his intention was that in the absence of agreement the lands in question should be partitioned by the court than that the legatee should be left to make a selection for himself. " As pointed out by the High Court in the present case these observations of Wallis C.J. were Unnecessary in the case before him, as he was dealing with a case where the legatee had died without making the selection. We think that the further English rule that the legatee 's heir cannot make the selection is also based on common sense, for the testator never had the legatee 's heirs in his mind when he made the bequest his intention could only be in a case where selection was necessary that the legatee should make the selection. It seems to us therefore that where it is not possible to say on the construction of a will that the testator himself indicated the selection or appointed a third person to make the selection but still intended to make a gift which could be made certain by selection made by the legatee, the English rule of construction that in such cases the testator intended the legatee to select should be applied in India also and the decision in Narayanasami Gramani 's case (1) is correct. The fact that there are ways of partition available to agriculturists in India would make no difference to the application of the rule, for we take it that there are ways of partition available to parties in England also. The application of this rule would avoid unnecessary litigation also, for once it is known that in such cases the selection is with the legatee the difficulty arising out of such wills could be easily resolved without recourse to courts. For this reason (1) Mad. 460. 982 also we think that this rule of benevolent construction of wills of this description should be applied to India also. In this connection we may refer to two other cases to which the learned Attorney General drew our attention. The first is Asten vs Asten (1). That was a case where the gift failed for uncertainty. The testator had made bequests to his several sons of certain houses. In each case the house was described as "all that newly built house, being No. Sudeley Place, Cotsfield Road. " There were four newly built houses in Sudeley Place belonging to the testator and the description of all the houses was the same. In those circumstances it was held that the will was void for uncertainty, for there was no way by which the will could be made certain. The intention of the testator was clearly to select the house himself to be given to each son and therefore there could be no question of the legatees making the selection in the order in which they were named in the will. This case does not in any way detract from the benevolent rule of construction evolved in English law. Romer J. himself pointed out that he was prepared to hold that where a testator save one of similar properties to each of several legatees without saying anything more, he intended prima facie to give the right of selection to the legatees according to the priority of the bequests. But he pointed out that " it is, of course, essential that the will should not show that the testator was bequeathing any particular one of the properties to the legatee who desires to select, for the selection by the testator is incompatible with the view that he intended the legatee to select. " That was a case where on the construction of the will it was held that the testator himself intended to select but the selection failed, because of the uncertainty in the will. The second case is Bishop vs Holt (2). In that case the testatrix by her will gave her 140 shares in the Crown Brewery Company to the legatee for her life with remainder in trust for her children. She held 40 fully paid up shares and 240 partly paid up shares in (1) (1894] (2) 983. the Brewery. A question arose as to from where these 140 shares were to come. It was held that they were to come out of the 240 partly paid up shares on the ground that the testatrix 's intention was clear, for she only held 40 fully paid up shares and it could not have been intended that 140 shares should have come partly from the fully paid up shares and partly from partly paid up shares. The decision in that case was that the testatrix 's own selection could be spelt out of the will and once that was so no question of any selection by the legatee &rose. This case therefore does not in any way weaken the rule of benevolent construction by which the legatee is entitled in certain circumstances to make a selection. These two cases therefore have no application to the facts of the present case and do not detract from the rule of benevolent construction in cases where the testator has not made or intended to make the selection himself or has not nominated a third person to make the selection. This brings us to the second point, namely, whether the testator on the construction of this will intended his daughters to select. The main argument on behalf of the appellant in this connection is that on a fair and reasonable construction of the will the testator intended his brother Seetharama to select for the daughters and that as his brother had died without making the selection, the lands devised to the daughters must now be partitioned in the ordinary course. It is not disputed that if the intention of the testator was not to give the selection to his brother, the case would clearly be of the third kind indicated by us above and the daughters would have the right to select. We have already pointed out that by this will the testator appointed Seetharama as the guardian of his minor daughters as well as of his foster son, namely, the appellant. Then he said as follows: "He (Seetharama) shall as soon as the minors attain majority give to the female children per head immediately they attain majority one veli of nanja land and one veli of punja land in the said vattam No. 149 out of the aforesaid properties and he shall 984 deliver possession of the remaining properties to my son immediately after, he attains majority. " The argument is that these words show that it was Seetharama who was to make the selection and give the devised land to the two daughters and stress is laid on the words "he shall give to the female children." These words are contrasted with the words " he shall deliver possession of the remaining properties to my son." Now it is clear that there are no express words in the will which show that Seetharama shall select the land to be handed over to the two daughters. Can it be said merely because in one case the words used are " he shall give to the female children " and in the ' other case the words are "he shall deliver possession to my son" that by the use of the former words the testator was giving the right of selection to Seetharama ? As we read the will it seems to us that though the words are different in the case of daughters as compared to the words used in the case of the foster son, the meaning of the testator is the same, namely, that Seetharama who was the guardian of the three children will be in possession so long as the three children were minor and shall deliver possession of the properties to the children as and when they became major. We do not think that the testator meant something different in the case of the daughters because he used the words " he shall give to the female children " in contrast with the words " he shall deliver possession. . " used in the case, of the appellant. In the context the words in our opinion mean the same. Therefore the direction of the testator was that as soon as the children obtain majority the guardian will deliver possession to them of the respective lands bequeathed to them. We cannot therefore read this sentence in the will to mean that the testator was giving the right of selection to Seetharama in the case of the property which he was bequeathing to his daughters; nor is there anything in the words of the will which would lead to the inference that the testator intended that the daughters would get their lands after taking into account the good and bad quality of the land. If that were the intention of the testator he should have given them a share in the 985 vattam (No. 149) and not a, specific area of land of both nanja and Punja lands. Or be could have made this position clear, even if he wanted to indicate the extent of land, by using words which would indicate that good and bad quality land would be taken into account in computing the area to be given to the daughters. There are no words in the will from which it can be inferred that Seetharama was nominated by the testator to make the selection ; nor are there any words from which it can be inferred that the testator intended that the daughters should get the area of land devised to them taking into account the good and bad quality. The case, therefore, squarely comes in the third class of cases mentioned above by us, i.e., the testator had indicated with sufficient clarity what he wanted his daughters to get. The difficulty has arisen because vattam No. 149 has 21.38 acres of nanja land and 16.99 acres of punja land while each daughter is given 6.66 acres each of nanja and punja lands. The gift cannot be said to be void for uncertainty within the meaning of section 89, for it can be made certain by the selection of the daughters and is not so uncertain that it is impossible to make it certain. The vattam is indicated from which the land is to come, the area of nanja and punja lands to be taken by each daughter is fixed. But the area of two kinds of land in the vattam is more than that given to the daughters; it must in the circumstances be held that the testator intended that each daughter will select the land devised out of the vattam. In this view of the matter, there is no force in this appeal and it is hereby dismissed with costs. Appeal dismissed.

One Viswanatha Iyer who had two minor daughters but no male issue treated his brother Seetharama Iyer 's son, the appel lant, as a foster son and before his death made a will by which he left the management of his properties to his brother and provided that as soon as his minor daughters attained majority Seetharama should give them each one Veli of nanja land and one Veli of punja land in vattam No. 149 in village Nagampadi and should give possession of the remaining property to the appellant on his attaining majority. The daughters after attaining majority claimed possession of their land alleging that they were entitled under the will to select their respective one Veli of nanja land and one Veli of punja land out of the land in Vattam 149. A suit filed by the daughters on that allegation was decreed by the trial court and the decree was affirmed by the High Court holding that the English rule of benevolent construction that a legatee has a right to choose in such circumstances applied to India and that on the construction of the will in this case the right to choose was in the legatees and not in Seetharama. Held, that section 89 of the , which lays down that "a will or bequest not expressive of any definite intention is void for uncertainty", applies only to those cases where a will is so indefinite that it is not possible to give any definite intention to it at all; but there may be wills which use words which are not so uncertain that a definite intention cannot be ascribed to the testator under those words and it is to meet such cases that the English rule of selection by legatees was evolved. This rule of benevolent construction which is based on common sense and by which wills not quite uncertain can be made certain cannot be called an artificial rule and there is no reason why it should not be extended to India in appropriate cases. Narayanasami Gramani vs Periathambi Gramani, (1895) I.L.R. , approved. Bharadwaja Mudaliar vs Kolandavelu Mudaliar, (1915) 29 M.L.J. 717, discussed. Hobson vs Blackburn, ; ; , Peck vs Halsey, ; (1726) 2 P. Wms. 387; , Tapley vs Eagleton, , Duckmanton vs Duckmanton ; (1860) 5 H. & N. 220; and Knapton vs Hindle, , referred to. 975 Asten vs Asten, and Bishop vs Holt, , held inapplicable. The gift in the present case was not void for uncertainty within the meaning of section 89 of the Succession Act for it could be made certain by the selection of the daughters. The testator had clearly indicated what he intended his daughters to get but the difficulty arose because the area of the vattam was more than what was given to the daughters; it must be held in the circumstances of the case that the testator intended that each daughter would select the land devised out of the vattam. There were no words in the will from which it could be inferred that Seetharama was nominated by the testator to make the selection.

Appeal No. 375 of 1956. Appeal from the judgment and decree dated July 27, 1953, of the Madras High Court, in A. section No. 623 of 1949. A. V. Viswanatha Sastri and section Venkata Krishnan, for the appellants. M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer and G. Gopalakrishnan, for the respondent. February 27. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal on a certificate granted by the Madras High Court. The brief facts necessary for present purposes are these: The present suit was brought by Muthappa Chettiar (hereinafter referred to as the respondent) against K. Thiagarajan Chettiar (hereinafter called the appellant) and the Saroja Mills Ltd. In 1939 these two persons thought of doing business jointly by securing managing agencies of some mills. In that connection they carried on negotiations with two mills, namely, Rajendra Mills Limited, Salem and the Saroja Mills Limited, Coimbatore (hereinafter called the Mills). The managing agency of the Mills was with the Cotton Corporation Limited. On October 4, 1939, the said Corporation transferred and assigned its rights to the appellant and the respondent under the name of Muthappa and Co. On November 15, 1939, the Mills at an extraordinary general meeting of the shareholders accepted Muthappa and Co. as the managing agents and made the necessary changes in the Articles of Association. Later the appellant and the respondent obtained the managing agency of the Rajendra Mills Limited, Salem. The managing agents of this mill were Salem Balasubramaniam and Co. Ltd. Muthappa and Co. purchased all the shares of the Salem Balasubramaniam and Co. and thereafter carried on the business of the managing agency of this mill in the name of Salem Balasubramaniam and Co. Ltd. In November 1940 the appellant and the respondent entered into a written partnership agreement with respect to 1001 the managing agency business of the two mills. We shall consider the terms of this agreement later and all that we need say at this stage is that turns were fixed for the appellant and respondent to look after the actual management of the two mills and the appellant 's turn was the first and he therefore came into actual control of the two mills. Soon after however disputes arose between the appellant and the respondent with respect to the managing agency of the Rajendra Mills Limited, which resulted in various suits being filed between the partners, to which we shall refer later. Eventually on March 4, 1943, the appellant gave notice to the respondent terminating the partnership, considering it as a partnership at will. This was followed by the directors of the Mills terminating the managing agency of Muthappa, and Co. on the ground that company had ceased to exist and also on the ground that quarrels between the partners of the firm were not conducive to good management of the Mills. This was notified to the respondent on March 22, 1943. This action of the directors was approved in a meeting of the shareholders of the Mills on September 29, 1943, and necessary modifications were again made in the Articles of Association. In between on April 17, 1943, the respondent had filed a suit for a declaration that Muthappa and Co. continued to be the managing agents of the Mills and for obtaining possession of the office of managing agents for himself or along with the appellant and also for a permanent injunction restraining the Mills from appointing any other managing agents. This suit was dismissed by the trial court on the ground that it was not maintainable under section 69 of the Indian Partnership Act, No. IX of 1932 (hereinafter called the Act), though the trial court gave findings on other issues also. The respon dent went up in appeal to the Madras High Court against the decree in that suit. This appeal was dismissed on July 8, 1948, as the High Court held that the finding of the subordinate judge that the suit was not maintainable under section 69 of the Act was correct. The High Court however made it clear that it was 1002 expressing no opinion on the correctness 'or otherwise of the other findings recorded by the subordinate Judge. While this appeal was pending the respondent brought the present suit on February 28, 1946. In this suit he prayed for dissolving the firm Muthappa and Co., for accounts and for damages against the appellant and the Mills. The main contention of the respondent in the suit was that the alleged dissolution of partnership by the appellant and the removal of Muthappa; and Co. from the managing agency of the Mills 'were part of a scheme of fraud conceived by the Appellant which was actively connived at by the mills in order to defeat and defraud the respondent of 'his legitimate dues and his right to continue and act as the 'managing agent of the Mills. The damages claimed were estimated at the figure of five lacs of rupees to be recovered from both the appellant and the Mills or from either of them. In the alternative the respondent claimed that even if Muthappa and Co. had been removed validly from the managing agency on September 29, 1943, he was entitled to account from the appellant from November 15, 1939, to September 29, 1943. The suit was resisted by both the appellant and the Mills and their case was that the partnership was one at will and therefore ',Was validly terminated by the appellant by notice. It Was further contended that in any case the Mills were within their rights in terminating the managing :,agency of Muthappa and Co., as that firm had ceased to exist and there were interminable disputes between the partners. Fraud and collusion were denied and it 'was alleged that it was the respondent 's conduct which compelled the appellant to give notice of termination of partnership and the Mills to terminate the managing agency. The Mills took a further plea, namely, that so far as they were concerned, the suit was barred under section 69 of the Act. The trial court held that the firm of Muthappa and Co. *as a partnership at will and therefore was legally dissolved by the appellant by giving notice dated March 4, 1943. It further held that no case of fraud 1003 had proved and that the termination of the managing agency was legal. As to the Mills the trial court held that the suit against them was barred under section 69 of the Act. In consequence the suit against the Mills was dismissed in toto and the prayer for damages was also rejected. The trial court however directed the appellant to account for the profits earned from the inception of the partnership business till March 4, 1943, when the partnership was terminated by the appellant by notice. Thereupon the respondent went up in appeal to the High Court. The High Court held that the suit against the Mills was barred under section 69 of the Act, though it was made clear that if there were assets of the partnership firm in possession of the Mills the respondent would be entitled to recover them. The High Court however ordered the Mills to bear their own costs in both the courts on the ground that the Mills were guilty of fraud. As to the case against the appellant, the High Court held that the partnership was. not a partnership at will and therefore it could not be dissolved by notice by the appellant. It further held that the appellant fraudulently and in collusion with the Mills purported to dissolve the partnership by issuing an illegal notice and to have the managing agency terminated by the Mills, and in consequence the termination of the managing agency was illegal. On the view therefore that the partnership as well as the managing agency continued and on a review of the circumstances, the High Court held that this was a fit case for dissolving the partnership and fixed March 10, 1949, 'which was the date of the decree of the trial court as the date from which the partnership would be dissolved. Consequently it modified the decree of the trial court and passed a preliminary decree for accounts against the appellant in respect of the firm Muthappa and Co. from November 15, 1939, to March 10, 1949. and added that the respondent could also recover any amount found due to him on taking accounts against the partnership assets, if any, in the hands of the Mills. The appellant thou applied for a certificate to 1004 appeal to this Court which was granted; and that is how the matter has come up before us. The first question therefore that arises for our deter mination is whether the partnership in this case is a partnership at will and it is necessary to refer to the terms of the partnership agreement to determine this question. After reciting that the management of the. Mills was being carried on in the name and style of Muthappa and Company and of the Rajendra Mills Limited in the name and style of Salem Balasubramaniam and Co. Limited, the partnership agreement goes on to say that the partners shall get in equal shares the salary, commission, profit, etc. , that may be realised from the aforesaid managing agencies. It provides for carrying on the management in rotation once in four years, the appellant to manage for the first four years and thereafter the respondent to manage for the next four years and in the same way thereafter. It further provides that the partners and their heirs and those getting their 'rights shall carry on the management in rotation. The accounts were to be made once in every year after the closing of the yearly accounts of the two mills. There were then provisions as to borrowing with which we are not con cerned. The agreement further provides that in case either partner thinks of relinquishing his right of management under the agreement it shall be surrendered to the other partner only but shall not be transferred or sold to any other person whatever. Finally it is provided that the two partners shall carry on the affairs of the firm by rotation, once in four years and the income realised thereby shall be divided year after year and the partners and their heirs shall get the same in equal shares and thus carry on the partnership management. The contention on behalf of the appellant is that as this partnership does not fall under section 8 of the Act and is not within the two exceptions under section 7, it is a partnership at will. Section 7 provides that where no provision is made by contract between the partners for the duration of the partnership, or for the determination of the partnership, the partnership is partnership at will. Section 8 provides that a person may 1005 become a partner with another person in particular adventures or undertakings. Section 43 provides that where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. On the other hand if the partnership is not at will, a. 42 applies and is in these terms: "Subject to contract between the partners a firm is dissolved (a) if constituted for a fixed term, by the expiry of that term; (b) if constituted to carry out one or more adventures or undertakings, by the completion thereof; (c) by the death of a partner; and (d) by the adjudication of a partner as an insolvent. " Section 44 provides for dissolution by the court. The High Court was of the view that looking to the terms of the partnership it could not be held to be a partnership at will and that under section 7 it will be a case of a partnership the duration of which as well as the determination of which were fixed. The High Court was further of the view that section 8 of the Act would also apply to the partnership in question as the evidence showed that the partners had entered into partnership in order to carry on the business of managing agency of the two mills and such business was an under taking, As we read the terms of the agreement it seems to us clear that the intention could not be to create a partnership at will. The partners contemplated that the management would be carried on in rotation between them in four yearly periods. It was also contemplated that the heirs of the partners would also carry on the management in rotation. Considering this provision as well as the nature of the business of partnership it could not be contemplated that the partnership could be brought to an end by notice by either partner. The intention obviously was to have a partnership of some duration, though the duration was not expressly fixed in the agreement. Now section 7 contemplates two exceptions to a partnership at will. 1006 The first exception is where there is a provision in the contract for the duration of partnership; the second exception is where there is provision for the determination of the partnership. In either of these cases the partnership is not at will. The duration of a partnership may be expressly provided for in the contract; but even where there is no express provision, courts have held that the partnership will not be at will if the duration can be implied. See Halsbury 's Laws of England, Third Edition, Vol. 28, p. 502, para. 964, where it is said that where there is no express agreement to continue a partnership for a definite period there may be an implied agreement to do so. In Crawshay vs Maule (1) the same principle was laid down in these words at p. 483: " The general rules of partnership are well settled. Where no term is expressly limited for its duration, and there is nothing in the contract to fix it, the partnership may be terminated at a moment 's notice by either party. Without doubt, in the absence of express, there may be an implied, contract as to the duration of a partnership." The same principle in our opinion applies to a case of determination. The contract may expressly contain that the partnership will determine in certain circumstances; but even if there is no such express term, an implied term as to when the partnership will determine may be found in the contract. What we have therefore to see is whether in the present case it is possible to infer from the contract of partnership whether there was an implied term as to its duration or at any rate an implied term as to when it will determine. It is clear from the terms of the contract of partnership that it was entered into for the purpose of carrying on managing agency business. Further the term relating to turns of the two partners in the actual management and the further term that these turns will go on even in the case of their heirs in our opinion clearly suggest that the duration of the partnership would be the same as the duration of the managing agency. We cannot agree that this means that the partnership (1) ; 483. 1007 would become permanent. In any case even if there is some doubt as to whether the terms of this contract implied any duration of the partnership, there can in our opinion be no doubt that the terms do imply a determination of the partnership when the managing agency agreement comes to an end. It is clear that ' the partnership was for the sole business of carrying on the managing agency and therefore by necessary implication it must follow that the partnership would determine when the managing agency determines. Therefore on the terms of the contract in this case, even if there is some doubt whether any duration is implied, there can be no doubt that this contract implies that the partnership will determine when the managing agency terminates. In this view the partnership will not be a partnership at will as section 7 of the Act makes it clear that a partnership in which there is a term as to its determination is not a partnership at will. Our attention was drawn in this connection to a term in the contract which lays down that either partner may withdraw from the partner. ship by relinquishing his right of management to the other partner. That however does not make the partnership a partnership at will, for the essence of a partnership at will is that it is open to either partner to dissolve the partnership by giving notice. Relinquishment of one partner 's interest in favour of the other, which is provided in this contract, is a very different matter. It is true that in this particular case there were only two partners and the partnership will come to an end as soon as one partner relinquishes his right in favour of the other. That however is a fortuitous circumstance; for, if (for example) there had been four partners in this case and one of them relinquished his right in favour of the other partners, the partnership would not come to an end. That clearly shows that a term as to relinquishment of a partner 's interest in favour of another would not make the partnership one at will. We may in this connection refer to Abbott vs Abbott (1). That was a case where there were more than two partners and it was (1) 1008 provided that the retirement of a partner would not terminate the partnership and there was an option for the purchase of the retiring partner 's share by other partners. It was held that in the circumstances the partnership was not at will and it was pointed out that only when all the partners except one retired that the partnership would come to an end because there could not be a partnership with only one partner. We are, therefore, in agreement with the High Court that the contract in this case disclosed a partnership the determination of which is implied, namely, the termination of the managing agency and, therefore, under section 7 of the Act it is not a partnership at will. In the circumstances it is unnecessary to consider whether the case will also come under section 8 of the Act. The next question that arises is whether the managing agency has been terminated legally ; for if that is so the partnership would also be determined. This takes us to the history of the relations between the partners after the partnership came into existence. It seems that disputes arose between the partners some time in 1941 in connection with the Rajendra Mills Limited which was one of the mills included in the managing agency business. The respondent filed a suit on March 4, 1942, against the appellant and Salem Balasubramaniam and Co. Limited with respect to the 'allotment of shares in the managing agency company On March 11, 1942, the respondent filed another suit, this time on the basis of debentures which he hold against the Mills, praying for a decree against the Mills with respect to the debenture amount. , On June 17, 1942, the respondent filed a third suit with respect to the Rajendra Mills Limited for a declaration that the respondent was a partner owning half share in the managing agency of the Rajendra mills Limited ' On the same day the respondent filed a fourth suit against the appellant, his son and Salem Balasubramaniam and Co. Limited with respect to certain actions taken by the managing agency company. On July 15, 1942, the appellant filed a counter suit against the respondent and the managing agency company relating to the Rajendra Mills Limited for a 1009 declaration that the respondent had no interest in the managing agency company and for further reliefs. There is no doubt, therefore, that the relations between the partners were very strained in 1942. The respondent admitted in his statement that from the end of 1941 there was enmity between him and the appellant and there were vital differences between them and litigation was going on, though he said that in spite of the enmity he was willing to co operate with the appellant if the amount of which he had been defrauded were paid to him, on accounting. So far as the litigation with respect to the Rajendra Mills Limited was concerned the respondent lost and it was held that he had withdrawn from the partnership of the managing agency company with respect to that mill. As to the suit on debentures, the money was deposited in court and the dispute was only about costs. That matter also went up to the High Court and finally the High Court refused to allow costs to the respondent. It was in this strained atmosphere between the partners that the appellant gave notice dated March 4, 1943, terminating the partnership with respect to the Mills considering it as a partnership at will. We have however held that the partnership was not a partnership at will and the notice given by the appellant could not, therefore, terminate it legally. But the question still remains whether the managing agency of the Mills was terminated legally ; for if that was so the partnership would also come to an end on the date the managing agency was terminated in view of what we have held above. The High Court has examined the circumstances in this connection and has come to the conclusion that the appellant fraudulently and collusively with the Mills got the managing agency terminated and, therefore, the termination of the managing agency was illegal. We are unable to agree with this view of the High Court. It is, therefore, necessary to examine the circumstances in which the termination came about. The appellant sent a copy of his notice dated March 4, 1943, terminating the partnership to the Mills also. The respondent sent a reply to this notice in which he claimed that the partnership was 1010 not at will and the appellant was not entitled to terminate it, and a copy of this reply was also sent to, the Mills on March 16, 1943. On March 22, 1943, the directors of the Mills held a meeting. In that meeting the directors decided that as the partners of Muthappa and Company were unable to get on in harmony with each other and were involved in litigation and several suits were going on between them and on account of their differences the work of the Mills was suffering and was, likely to suffer and also because Muthappa and Company had ceased to exist and had lost its right of management and was no longer in a position to manage the Mills, it became necessary to appoint other managing agents. Thus by this resolution the managing agency of Muthappa and Company was terminated for two reasons: (1) that there were differences between the partners of the managing agency company and the work of the Mills was suffering and was likely to suffer, and (2) that Muthappa and Company had come to an end and, therefore, had lost its right of management. It appears that before this resolution was passed the appellant had been purchasing shares of the Mills in the market and had acquired a controlling interest therein. The High Court, therefore, thought that the hidden hand of the appellant was visible behind this resolution of the directors of the Mills, the more so as the appellant 's son was nominated by the same resolution to administer the whole affairs of the Mills subject to the control and direction of the board of directors till such time as suitable managing agents were appointed. This action of the board of directors was confirmed at a general meeting of the shareholders on September 29, 1943. The High Court thought that as the appellant had acquired a controlling interest in the Mills he was behind the resolution of the directors of March 22 1943, and the resolution of the general meeting of the shareholders of September 29, 1943. It may be that the appellant having acquired a controlling interest in the Mills had a good deal to do with the resolutions; but that in our opinion would not necessarily make his 1011 conduct fraudulent and the termination of the managing agency agreement illegal. It is not in dispute that there was no agreement between the partners that either of them would not purchase shares of the Mills in open market. We do not therefore see anything improper in the conduct of the appellant when he purchased the shares of the Mills in open market and managed to acquire the controlling interest therein. The appellant obviously had two capacities: in one capacity he was a partner of the respondent in the managing agency business, in the other capacity he was a large shareholder of the Mills and as such shareholder it was certainly his interest to see that the interest of the Mills did not suffer. The crucial question therefore is whether the action taken by the Mills by the two resolutions is such as would be taken by any prudent company when faced with the situation with which the Mills was faced in the present case. There can in our opinion be no doubt that any company when faced with a situation in which the Mills was in this case, and finding that the two partners of its managing agency firm were fighting tooth and nail and there was no love lost between them and also finding that the interest of the Mills was suffering and was likely to suffer because of the bad blood between the two partners of the managing agency, was bound to take steps to protect its own interests. The fact that the major shareholder in the Mills also happened to be a partner in the managing agency would not disentitle him from acting in the interest of the Mills as a major shareholder. We may in this connection refer to Morarji Goculdas and Co. vs Sholapur Spinning and Weaving Co. Ltd. and Others(1). In that case a question arose whether the termination of the managing agency agreement was illegal on the ground of misconduct. It was found in that case that there were quarrels between the partners of the managing agency firm of such a nature and duration as to impair seriously their capacity to discharge their duty to the company as managing agents and to affect prejudicially the interests of the company. It was held that : (1) 129 1012 " In each case the question must be whether the misconduct proved, or reasonably apprehended, has such a direct bearing on the employer 's business or on the discharge by the employee of that part of the employer 's business in which he is employed, as to seriously affect or to threaten to seriously affect the employer 's business or the employee 's efficient discharge of his duty to his employer. " If on the facts and circumstances of the case it was so, the termination of the managing agency would be justified. In the present case there can be no doubt that the quarrels between the two partners of the managing agency firm were so serious and of such duration as to impair their capacity to discharge their duty to the Mills as managing agents and to affect the interests of the Mills prejudicially. Therefore, if the directors of the Mills came to that conclusion it is in our opinion not correct to say that conclusion was arrived at fraudulently, simply because a major shareholder happened to be the appellant. We may in this connection refer to the observations of Younger L.J. in Commissioners of Inland Revenue vs Sansom (1) : " No doubt there are amongst such companies, as amongst any other kind of association, blacksheep; but in my judgment such terms of reproach as I have alluded to should be strictly reserved for those of them and of their directors who are shown to deserve condemnation, and I am quite satisfied that the indiscriminate use of such terms has, not infrequently, led to results which were unfortunate and unjust, and in my judgment this is no case for their use. " These remarks are in our opinion apposite in the present context. It is true that the appellant had a hand as a major shareholder in the two resolutions and this was never hidden; but it is equally true that in the circumstances then existing any prudent board of directors and any body of shareholders interested in a company would act in the manner in which the board of directors and the shareholders of the Mills (1) , 514. 1013 acted in the present case. We cannot therefore agree with the High Court that this is a case where the board of directors and the shareholders acted fraudulently in collusion with the appellant, for we cannot forget that the appellant as a major shareholder of the Mills could legitimately act to protect them and the action taken was such as any board of directors and any body of shareholders would bona fide take. In the circumstances we are of opinion that the resolution of the board of directors terminating the managing agency agreement, confirmed by the general meeting of the shareholders, did legally terminate the managing agency between the Mills and Muthappa and Company. It is true that in these resolutions a second reason was given for the termination, viz., that Muthappa and Co. had come to an end because of the notice of March 4. That legal position is in our view incorrect; but that apart there were otherwise sufficient reasons for the Mills to terminate the managing agency in the circumstances with which it was faced. The next question that arises is as to when the managing agency can be said to have been terminated, i.e., whether on March 22, 1943, or on September 29, 1943. Now under s.87 B(f)of the Indian Companies Act, No. VII of 1913, which was then in force, the appointment of a managing agent, the removal of a managing agent and any variation of a managing agent 's contract of management shall Dot be valid unless approved by the company by a resolution at a general meeting of the company. This provision clearly shows that a managing agent may be appointed and removed by the board of directors, though such appointment and removal is subject to the approval by the company by a resolution at a general meeting of the company. We agree with the High Court that when the company at its general meeting approves of an appointment or of a removal, the approval takes effect from the date of the appointment or removal by the board of directors. On this view therefore, when the general meeting in this case approved the action of the board of directors, the removal became valid and came into effect from March 22, 1943. 1014 Therefore, the managing agency agreement in this case was validly terminated on March 22, 1943. As we have already held that there was an implied term in the contract of partnership that it will determine when the managing agency agreement with the Mills terminates, the partnership in the present case must under the contract be deemed to have determined on March 22, 1943. Therefore, the respondent will be entitled to an account only from November 15, 1939, to March 22, 1943. The learned Attorney General however referred us to sections 9, 10 and 13(f) of the Act and his contention was that. the appellant must account for all the profits made by him out of the managing agency business, even after March 22, 1943. Unders.10 every partner has to indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm and under section 13(f) a partner has to indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm. In the first place, such a case was not made out in the plaint by the respondent; in the second place we are of opinion that sections 10 and 13(f) have no application to the facts of the present case. We therefore reject this contention. That leaves the question of costs. So far as Saroja Mills Limited are concerned, we are of opinion that they are entitled to their costs throughout from the respondent as their action in terminating the managing agency has been held by us to be legal and valid. As to Thiagarajan Chettiar we are of opinion that in the circumstances of this case, the order of the subordinate judge that Muthappa Chettiar (respondent) and Thiagarajan Chettiar (appellant) should bear their own costs is just and we order them to bear their own costs throughout. We therefore allow the appeal in part and order that accounts will be taken from November 15, 1939,. to March 22, 1943, as between Thiagarajan Chettiar and Muthappa Chettiar. The respondent will pay the costs of Saroja Mills Limited throughout; but Muthappa Chettiar and Thiagarajan Chettiar will bear their own costs throughout. Appeal allowed in part.

The appellant and the respondent entered into a written partnership with respect to the managing agency business of two mills, the terms of which were, inter alia, that the management shall be carried on in rotation once in four years, the appellant to manage for the first four years and thereafter the respondent to manage for the next four years and in the same way thereafter. 999 It further provided that the partners and their heirs and those getting their rights shall carry on the management in rotation. Soon after disputes arose between the partners and the appellant gave notice to the respondent terminating the partnership treating it as a partnership at will, and the directors of the mills in their turn terminated the managing agency on the ground that the quarrels between the partners were detrimental to the good management of the mills. Thereafter the respondent brought a suit against the appellant and the mills for dissolution of the partnership firm and damages alleging that dissolution of the partnership by the appellant by notice was fraudulent and connived at by the mills. The trial court held that the partnership was at will and the termination of the managing agency was, legal and disallowed damages. On appeal by the respondent the High Court held that the partnership was not a partnership at will and could not be dissolved by notice by the appellant. The termination of the managing agency was also held to be illegal. appeal by the appellant with a certificate of the High Court: Held, that considering the provision that the management would be carried on in rotation between the partners in four yearly periods and that the heirs of the partners would also carry on the business in rotation the intention was obviously to have a partnership of some duration, though the duration was not expressly fixed in the agreement. The duration of a, partnership may be expressly provided for in the contract but even when there is no express provision, courts have held that the partner. ship will not be at will if the duration can be implied. Grawshay vs Manle, Swans 495; ; , followed. The contract in this case disclosed a partnership the deter mination of which was implied, namely, the termination of the managing agency and, therefore, under section 7 of the Partnership Act it was not a partnership at will and was not legally terminable by the notice given by the appellant. In view of the strained atmosphere between the partners there was sufficient reason for the mill to terminate the managing agency and the resolution of the board of directors terminating the managing agency agreement confirmed by the general meeting of the shareholders, did terminate the managing agency. There was neither any fraud nor collusion by the mills with the appellant. Morarji Gokuldas and Co. vs Sholapur Spinning and Weaving Co. Ltd. and Others, and Commissioners of Inland Revenue vs Sansom, , referred to. The partnership in the present case must be deemed to have determined on the date of the passing of the resolution by the board of directors terminating the managing agency. Sections 10 and 13(f) of the Partnership Act have no application to the facts of the case.

87 of 1957. Petition under article 32 of the Constitution of India for enforcement of fundamental rights. B. D. Sharma, for the petitioner. N. section Bindra, R H. Dhebar and T. M. Sen, for the respondents. March 7. The Judgment of the Court was delivered by MUDHOLKAR, J. In this petition under article 32 of the Constitution the petitioner contends that the provisions of the (XXXI of 1950) and in particular those of section 2 (d) and sub section (4) of section 40 are unconstitutional. According to him the effect of the order passed against him by the Custodian of Evacuee Properties under sub section (4) of section 40 of the Act is to take away his 191 property without the authority of law. He further contends that the order of the Custodian amounts to discrimination in practice against the petitioner. These are the two main heads under which the arguments advanced before us could be classified. The relevant facts may now be stated. The petitioner purchased 195 51 acres of land in the former Bhopal State from one Babu Rehmatullah on June 23, 1950, for a consideration of Rs. 3,500. Rehmatullah was declared to be an intending evacuee by the Assistant Custodian of Evacuee Property. Eventually he left India for Pakistan on June 20, 1951. On June 12, 1951, the Assistant Custodian of Evacuee Property issued a notice to the petitioner to show cause why the land which he had purchased from Rehmatullah should not be declared to be "evacuee property". After hearing the petitioner the property was declared to be evacuee property on August 8, 1951. The petitioner challenged that order in appeal as well as in revision as provided in the Act but was unsuccessful. A writ petition preferred by him before the Judicial Commissioner, Bhopal, was dismissed in limine on July 14, 1954. He has, therefore, come up to this Court under article 32 of the Constitution. The first point pressed 'before us by Mr. B. D. Sharma, on behalf of the petitioner is that the provisions of the Evacuee Property Act and particularly those of sections 2 (d) and 40 (4) are unconstitutional, because they enable the State to take away property without paying any compensation therefore as required by article 31 (2) of the Constitution. The short answer to this contention is that the provisions of a law made in pursuance of any agreement entered into between the Government of India and the Government of any other country or otherwise With respect to property declared by law to be evacuee property will not be affected by the provisions of cl. 2 of article 31. This is clear from the provisions of article 31(5)(b)(iii) which rules is thus: "Nothing in clause (2) shall affect 192 (b) the provisions of any law which the State may hereafter make (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other country, or otherwise, with respect to property declared by law to be evacuee property. Mr. Sharma, however, contends that the protection afforded by the aforesaid clause must be limited to a law which itself declares any property to be evacuee property and not to a law which empowers an authority to declare any property as evacuee property. We cannot accept the contention. The words "property declared by law to be evacuee property" would necessarily include property which could be declared as evacuee property. A law relating to evacuee property would concern itself with laying down the criteria for determining what property is to be considered as evacuee property and could not be expected to specify the particular properties which are to be treated as evacuee properties. The protection afforded by the constitutional provision which we have quoted above is not restricted as suggested by Mr. Sharma but extends to a law which provides for the determination of the criteria for declaring property to be evacuee property. The next argument of learned counsel is that the property in question is not evacuee property and that the provisions of article 31(1) of the Constitution are a bar against taking it away. It is difficult to appreciate the argument. What article 31(1) prohibits is "deprivation of property save by authority of law". No doubt the petitioner can say that he is deprived of his property because of the declaration made by the Custodian that it is evacuee property. But then this declaration has been made in pursuance of a law enacted by Parliament. If, as contended by him, we had held that the law is unconstitutional the position would have been different. The next contention of learned counsel is that cls. (a) and (c) of section 40, sub section (4) are ultra vires because 193 they confer arbitrary power upon the Custodian. The reason for raising the contention is that an application made by the petitioner to the Custodian under section 40 for confirming the sale in his favour was rejected by him on the ground that the evacuee did not act , in good faith in effecting the sale. Sub section (4) of section 40 P.reads thus: "The Custodian shall hold an inquiry into the application in the prescribed manner and may reject the application, if the is of opinion that: (a) the transaction has not been entered into in good faith or for valuable consideration, or (b) the transaction is prohibited under any law for the time being in force, or (c) the transaction ought not to be confirmed for any other reason. " We are concerned here only with cl. (a) of section 40(4) to which the Custodian resorted and not with cl. We would, therefore, limit our remarks to el. Subsection (4) of section 40 enables the Custodian to hold an inquiry regarding the genuineness or validity of a transaction sought to be confirmed and cl. (a) empowers him to refuse to confirm it if he finds that it was not entered into in good faith. According to learned counsel the words "good faith" are vague and "slippery" and do not furnish any standard or a norm which has to be conformed to by the Custodian. Apart from the fact that the words "good faith" occur in a number of statutes and have acquired a definite meaning in courts of law, it may be pointed out that the power conferred by sub section (4) of section 40 is in the nature of a judicial power and, therefore, the absence of a standard for the determination of the question would not render the provision unconstitutional. Learned counsel wanted to contend that the absence of good faith on the part of the transferee was not sufficient and could not be regarded as a ground for refusing recognition to the transfer and that unless it is shown that the transferee was also lacking in good faith the transfer had to be confirmed under sub section (4) of section 40. He, however, did not press the contention 194 when it was pointed out to him that in Rabia Bai vs The Custodian General of Evacuee Property (1), this Court has upheld the order of the Custodian refusing to confirm the transfer on the ground that the evacuee had effected it in bad faith. The last contention of learned counsel is that he has been discriminated against by the Custodian in the matter of confirmation of the transaction. He said that prior to the sale of the land to him by Rehmatullah, the latter had sold a house to some nurses and that sale was found to be for inadequate consideration but in spite of that it was confirmed by the Custodian while the sale in his favour, though found to be for an adequate consideration was not confirmed. We would repeat that the order of the Custodian is a judicial order and merely because he may have gone wrong in dealing with one case we cannot hold that the petitioner has been discriminated against. The petition is wholly without basis and is accordingly dismissed without costs. Petition dismissed.

The petitioner purchased some land from R. R. was declared to be an intending evacuee and be left for Pakistan. The Assistant Custodian issued a 'notice to the petitioner to show cause why the land should not be declared to be evacuee property, and after hearing the petitioner he declared the land to be evacuee property. An appeal and a revision against the order were unsuccessful. The petitioner also applied to the Custodian under section 40 Of the , for confirmation of the sale but his application was rejected under section 40(4)(a) on the ground that the evacuee did not act in good faith in effecting the sale. The petitioner contended that section 2(d) of the Act defining evacuee property and section 40(4) empowering the custodian to reject an application for confirmation violated article 31(2) as they enabled the State to take away property without the authority of law. Held, that the provisions Of SS. 2(d) and 40(4) were not affected by article 31(2) in view of article 31(5)(b)(iii) of the Constitution. The protection of article 31 (5)(b)(iii) was not limited to a law which itself declared any property to be evacuee property but extended to a law which empowered an authority to declare any property as evacuee property and laid down the criteria for the declaration. Section 40(4)(a) of the Act which empowered the Custodian to reject an application for confirmation on the ground that the transaction had not been entered into in good faith could not be challenged as conferring arbitrary powers on the Custodian. The power was in the nature of a judicial power and the absence of a standard for the determination of the question could not render the provision unconstitutional.

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

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

Appeals Nos. 148 to 150 of 1960. Appeals by special leave from the judgment and order dated October 31, 1956, of the former Nagpur High Court in Misc. Civil Case No. 184 of 1953. K. N. Rajagopala Sastri and D. Gupta, for the appellants. J. M. Phakar, section N. Andley, J. B. Dadachanji and Bameshwar Nath, for the respondents. March 7. The Judgment of the Court was delivered by HIDAYATULLAH, J. These appeals, by special leave, have been filed by the Commissioner of Income tax, Madhya Pradesh, against the assessee, an individual, by name Seth Khushal Chand Daga. The assessee was a partner in a firm, Messrs. R. B. Bansilal Abirchand of Nagpur. In the year of account ending Diwali, 1941, he received his share of assets and property from this firm, and started business of his own. In the same year, his sources of income were speculation, allowance from Government as treasurer, house property and dividends. The assessee had received some profits from his share in an unregistered firm against which were set off his losses in his individual business, and the Income tax Officer, who made the assessment, determined the loss to be carried forward, at Rs. 53,840. The assessee appealed against the assessment, but did not question the loss which had been determined. For the year, 1942 43, the assessee claimed to reopen the question of the loss to be carried forward, stating that it was Rs. 2,11,760. This contention was not accepted by the Department, and on appeal, by the Tribunal. The contention was, however, raised again by him in the assessments for the years, 194849 and 1949 50. In these years, he had profits from 188 his share in the unregistered firm, Rs. 1,82,773 and Rs. 1,39,922 respectively, against which were set off his losses in his individual business, Rs. 1,18,913 and Rs. 60,589 respectively. The contention of the assessee was that the profits which he had derived. from the unregistered firm could not be set off against the loss in his individual business, as the profits of the unregistered firm had borne tax not in his hands but in those of the firm. This contention was rejected by the Department; but on appeal to the Tribunal, it was accepted. On the Tribunal being moved to make a reference, it referred four questions. Two of those questions dealt with matters also arising out of these assessments, but they have not been mentioned by us in this judgment. The two questions pertaining to these appeals were: "(1) Whether the assessee was competent in law to raise a question with regard to the determination of loss for the assessment year 1941 42 as finally determined in appeal, in the course of proceedings for the assessment year 1942 43 when the loss brought forward from 1941 42 was being set off ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss suffered by the assessee from his personal business (including his share of . loss from another firm) cannot be set off under Section 24(1) against his taxed share income from an unregistered firm?" These questions were answered by the High Court against the Commissioner, who has now appealed, with special leave. It was conceded by the learned counsel for the Commissioner that the second question has now been decided by this Court in Seth Jamnadas Daga vs The Commissioner of Income Tax (1), and that the answer must be against the Department. That portion of the case was thus not argued. As regards the first question, the only contention raised was that the loss which had been determined and ordered to be carried forward must be deemed to (1) ; 189 have become final, because no appeal was filed against that determination. But it appears that the procedure laid down by a. 24(3) under which the Income tax Officer has to notify to the assessee by order in writing the amount of the loss as computed by him for the purposes of that section was not followed. No doubt, under section 30 an appeal lies, if the assessee objects to the amount of loss computed and notified under section 24; but inasmuch as the Income tax Officer had not notified the loss computed by him by order in writing, an appeal could not be taken on that point. In our opinion, the assessee was, therefore, entitled to have the loss re determined in a subsequent year. Learned counsel for the Commissioner stated that the Department was not very anxious for the decision, because this particular assessee has had only losses in the years following, and no loss would be occasioned to the Revenue, if the losses brought forward be redetermined. But that is a matter, with which we are not concerned. In our opinion, the judgment of the High Court impugned before us was correct in the circumstances of the case. The appeals fail, and are dismissed with costs. One hearing fee. Appeals dismissed.

For the accounting year 1941 the assessee 's profits from his share in an unregistered firm were,. set off against his losses in the individual business and the Income Tax Officer determined the loss to be carried forward at RS. 53,840, but did not notify to the assessee by order in writing the amount of the loss as computed by him as required by section 24(3) of the Act. The assessee appealed against the assessment but did not question the amount of the loss which had been determined. In the year 1942 43 the assessee claimed to reopen the question of the loss to be carried forward stating that it was RS. 2,116760. This contention was rejected by the Tribunal. The contention was again raised by the assessee in the assessment years 1948 49 and 1949 50. The question was whether the loss which had been determined and ordered to be carried forward must be deemed to have become final because no appeal was filed against that determination. Held, that computation of the amount of loss under section 24 Of the Income tax Act does not become final unless the Income tax Officer notifies by order in writing, the amount of the loss as computed by him to the assessee. The assessee was entitled to have 187 the loss redetermined in a subsequent year though he had not filed an appeal against the determination of the loss but no appeal could be filed in the absence of an order in writing. Seth jamnadas Daga vs The Commissioner of Income tax, ; , applied.

minal Appeal No. 109 of 1960. Appeal by special leave from the judgment and order dated April 18, 1958, of the Andhra Pradesh High Court in Criminal, Misc. Petition No. 1421 of 1957. H. J. Umrigar and T. M. Sen, for the appellant. The respondent did not appear. March 8. The Judgment of the Court was delivered by MUDHOLKAR, J. The State of Andhra Pradesh has come up in appeal against the order passed in revision by the high Court of Andhra Pradesh quashing the charges framed against nine persons by Mr. Syed Firasath Hussain, Special Judge, Vijayawada. The revision petition was preferred by only two of those persons. The accused No. 1 Parthasarathi, who was a lower division clerk in the Central Excise Circle Office at Narasaraopet was in charge of the TP 1 permit books (transport permit) intended for issue to Central Excise Officers for granting permits to persons applying bona fide for licences to transport tobacco. According to the prosecution two of those books containing 25 permit forms each were found missing from the aforesaid office. The allegation is that Parthasarathi sold those books to the remaining accused for a consideration of Rs. 400. It was found during the investigation that seven permit forms from out of these books bad been used for transport of non duty paid tobacco after blanks in those forms had been filled and the signa tures of certain Central Excise Officers forged on them. Further, according to the prosecution, accused nos. 2 to 8 got authorisation letters prepared with the help of accused No. 9 'by forging the signatures of the supposed consignors of the tobacco. With the help of 197 these documents the accused nos. 2 to 8 are said to have transported tobacco to the licensed premises of certain persons and received payments for the tobacco delivered to them. The prosecution alleged that all this was done by all the accused by entering into a conspiracy, the object of which was to procure and utilise blank TP 1 forms, fill them in, forge the signatures of Central Excise Officers and use them as genuine for the purpose of transporting tobacco without paying duty upon it. The charge sheet states that the accused nos. 1 to 9 have committed the offence under section 120 B, Indian Penal Code read with a. 5(2) of Prevention of Corruption Act, 1947 (II of 1947). It further states that the accused No. 1 had committed offenses under section 5(1)(c) and 5(1)(d) of Prevention of Corruption Act, 1947 as also offenses under sections 420, 463 and 464, Indian Penal Code. The accused nos. 2 to 8 are said to have abetted all these offenses. Each of these accused is in addition said to have committed offenses under section 420, Indian Penal Code. The Subordinate Judge, Vijayawada was appointed as Special Judge under the provisions of section 6 of the Criminal Law Amendment Act, 1952 (II of 1952) to try offenses under the Prevention of Corruption Act, 1947. He framed the following charges: "CHARGE NO.1. That you, Accused 1 to 9 on or about 19 9 1953 to 5 11 53 agreed to do by illegal means to wit, A 1 being a public servant in the Central Excise Department dishonestly sold two blank T.P. 1 books for Rs. 350 to one late Jogayya and obtained pecuniary advantage for himself and A 2 to A 8 and that A 9 forged 7 T.P. 1 forms, out of the above two books, which forged T.P. 1s were used by A 2, A 3, A 5, A 7, A 8 with the assistance of A 4 and A 6 and cheated the merchants of Markapur and Cumbum by using the said forged T.P. 1s for the above purpose of cheating; and that the above acts were done by all of you in pursuance of a conspiracy and that thereby you A 1 have committed an offence punishable under Section 120B of the I.P.C. read with and (d) punishable under Sec. 5(2) of the Prevention of Corruption Act and also under Sec. 109 I.P.C. read with Sec. 490, 466 and 467 of the I.P.C. and that you,A 2 to A 9 under See. 120 B read with Sec. 5(1)(c) and (d) punishable under See. 5(2) of Act 11 of 1947 and See. 420, 466 and 467 and 471 I.P.C. and within my cognizance. CHARGE NO. That you A 1, being a public servant in the Central Excise Department, being a Lower Division Clerk in the office of the Superintendent of Central Excise, Narasaraopet Circle, since 1951 and in such capacity were entrusted since 1951 with blank T.P. 1 books dishonestly sold two of the above said T.P. 1 books under your control to one late Jogayya for Rs. 350, in or about the month of April, 1953 and dishonestly, fraudulently misappropriated the said amount and thereby committed the offence of misconduct punishable under Section 5(2) read with See. 5(1)(c) of the Prevention of Corruption Act, 11 of 1947 and within my cognizance. CHARGE NO. 111. That you A 1, in the above capacity, by corrupt and illegal means, and by abusing your position as a public servant, obtained for yourself an amount of Rs. 350 being the sale proceeds of the two Blank T.P. 1 books, from one late Jogayya and obtained for A 2 to A 8, a pecuniary advantage of Rs. 10,120 14 0, th e amount of revenue due to the Central Govern ment and thereby committed the offence of Criminal misconduct punishable under See. 5(2) read with Sec. 5(1)(d) of the Prevention of Corruption Act 11 of 1947 and within my cognizance. CHARGE TO. That you, A 9, on or about the days between September and November, 1953 forged 7 blank T.P. ls Nos. 610432, 610443, 610460,610448,61044, 610468, 610446 as if they are documents to have been made by the Central Excise Officials in their official capacity by filling up the same within false particulars and fixing the signatures of different 199 Central Excise Officials so as to show that they are genuine T.P. 1 permits 'hat you thereby committed an offence punishable under Section 466 I.P.C. and within my cognizance. CHARGE No. V. That you, A p, on or about the days between September and November, 1953 forged the 7 T.P. 1 permits mentioned in Charge No, IV purporting to be valuable securities with intent and that they may be used for transporting tobacco as duty paid tobacco and that you thereby committed an offence punishable under Section 467 of the I. P. C. and within my cognizance. CHARGE No. VI. That you, A 2 to A 8, on, or about the days between 12 9 53 and 5 11 53 at Chodavaram, Satulur, Velpur and Tenali dishonestly used the above seven forged T.P. Is mentioned in Charge No. IV as genuine, Which you know at the time you used them as forged documents and transported 26,989 lbs. non duty paid tobacco as duty paid tobacco by quoting the above fictitious documents as proof of payment of duty and that you ' thereby committed an offence punishable under Section 465 and 471 of the I.P.C. and within my cognizance. CHARGE No. VII. That you, A 2 to A 8, on or about the days between 19 9 53 and 6 11 53 at Cumbum and Mar kapur cheated (1) B. Ranga Subbayya of Cumbum (2) P. C, h. Venkata Subbaiah and (3) Shri B. Seshaiah of Markapur and thereby dishonestly inducing them to deliver you, Rs. 10,994 10.3, was the property of the above said persons; and that you thereby committed an offence punishable under Section 420 I.P.C. and within my cognizance. " While seven of the accused persons were content with the charges,, two preferred an application for revision before the High Court which, as already stated, accepted it and quashed the charges and directed the Special Judge to frame fresh charges on the lines indicated in the judgment. 200 Mr. Umrigar, who appears for the State of Andhra Pradesh, while conceding that Charge No. 1 as it stands, is involved and obscure and requires to be reframed takes exception to the observation of the High Court that the charge is bad for multiplicity. ,It not quite clear what the High Court me ant. If it meant that separate charges should be framed for different offenses there can be no objection; but if it meant that all these accused cannot be tried at the same trial then we have no doubt that it was in error. The High Court pointed out that this is an omnibus charge containing as many as 203 offenses and that it is 'in direct violation of sections 234, 235 and 239 of the Code of Criminal Procedure. No doubt, sub section (1) of section 234 provides that not more than three offenses of the same kind committed by an accused person within the space of 12 months can be tried at the same trial. But then section 235(1) provides that if in any one series of acts so connected together as to form the same transaction more offenses than one are committed by the same person, he may be charged with and tried at one trial for every such offence. Therefore, where the alleged offenses have been committed in the course of the same transaction the limitation placed by section 2314(1) cannot operate. No doubt, the offence mentioned, in charge No. 1 is alleged to have been committed not by just one person but by all the accused and the question is ' whether all these persons can be jointly tried in respect of all these offenses". To this kind of charge s.239 would apply. This section provides that the following persons may be charged and tried together, namely: (1) persons accused of the same offence committed in the course of the same transaction; (2) persons accused 'of an offence and persons accused of abetment or an attempt to commit such an offence; (3) persons accused of different, offenses committed in the course of the same transaction. Clearly, therefore, all the accused persons could be tried together in respect of all the offenses now comprised in charge No. 1. We, however, agree with 201 Mr. Umrigar that it would be desirable to split up charge No. 1 suitably go that the accused persons will not be prejudiced in answering the charges and in defending themselves. The learned Judge has hold, following a decision of a single Judge in In re Venkataramaiah (1) that no charge of conspiracy is permissible for committing which the conspiracy was entered into and which had actually been committed. In that case the learned Judge had observed as follows at p. 132: "Where the matter has gone beyond the stage of more conspiracy and offences are alleged to have been actually committed in pursuance thereof, these two sections are wholly irrelevant. Conspiracy, it should be borne in, mind, is one form of abetment (see section 107 I.P.C.) and where an offence is alleged to have been committed by more than two persons, such of them as actually took part in the commission should be charged with the substantive offence, while those who are alleged to have abetted it by conspiracy should be charged with the offence of abetment under section 109 I.P.C. The Explanation to section 109 makes this quite clear. An offence is said to be committed in consequence of abetment, when it is committed in pursuance of the conspiracy, and the abettor by conspiracy in made punishable (under section 109) with the punishment provided for the actual offence. " We are unable to accept this view. Conspiracy to commit an offence is itself an offence and a person can be separately charged with, respect to such a conspiracy. There is no analogy between section 120B and section 109 I.P.C. There may be an element of abetment in a conspiracy; but conspiracy is something more than an abetment. Offences created by section 109 and 120B, I.P.C. are quite distinct and there is no warrant for limiting the prosecution to only one element of con spiracy, that is, abetment when the allegation is that what a person did was something over and above that. Where,& number of offences are committed by (1) A.I.R. 1935 Mad. 130, 132. 202 several persons in pursuance of a conspiracy it is usual to charge them with those, offences as well as with the offence of conspiracy to commit those offences. As an instance of this we may refer to the case in section Swaminatham vs State of Madras (1). Though the point was not argued before this Court in the way it appears to have been argued before the Madras High Court and before the High Court of Andhra Pradesh, this Court did not see anything wrong in the trial of several persons accused of offences under section 120B and section 420 I.P.C. We cannot, therefore, accept the view taken by the High Court of Andhra Pradesh that the charge of conspiracy was bad. If the alleged offences are said to leave flown out of the conspiracy the appropriate form of charge would be a, specific charge in respect of each of those offences along with the charge of conspiracy. Before leaving this point we would like to refer to the decision in R. vs Dawson (2) which Mr. Umrigar very fairly brought to our notice, respondents being ex parte. In that case Finnemore J. who delivered the judgment of the Court observed: "Now with regard to the first count for con spiracy. . this court feels it is desirable 'Jo say something. This court has more than once warned of the dangers of conspiracy counts, especially these long Conspiracy counts, which one counsel referred to as a mammoth conspiracy. Several reasons have been given. First of all if there are substantive charges which can be proved, it is in general undesirable to complicate matters and to lengthen matters by adding a charge of conspiracy. Secondly, it can work injustice because it means that evidence, which otherwise would be inadmissible on the substantive charges against certain people, becomes inadmissible. Thirdly, it adds to the length and complexity of the case so that the trial may easily be well High unworkable and impose a quite intolerable strain both on the Court and on the jury. The learned Judges in fact quashed the conviction (1) A.I.R. 1957 S.C. 340, 343, 344. (2) [1960] 1 All. E.R. 558, 563. 203 for conspiracy in the case before them. We agree that it is not desirable to charge the accused persons with conspiracy with the ulterior object of letting in an evidence which would otherwise be inadmissible and that it is undesirable to complicate a trial by introducing a large number of charges spread over a long period. But then this is only a question of propriety and it should be left to the Judge or the magistrate trying the case to adopt, the course which he thinks to be appropriate in the facts and circumstances of the case. It cannot be said as a matter of law that such a trial is prohibited by the Code of Criminal Procedure. The High Court has further held that the learned Special Judge had no jurisdiction to try the offences under section 120B read with sections 466, 467 and 420 because he was appointed a Special Judge under the Criminal Law Amendment Act only for trying offences under the Prevention of Corruption Act. No doubt, he was appointed in the circumstances stated by the High Court, and therefore he will have that jurisdiction which he is competent to exercise under the Prevention of Corruption Act or the Criminal Law Amendment Act. Section 6 of the former provides that the State Government may appoint a Special Judge to try the following offences: (a) an offence punishable under section 161, section 165 or section 165A of the Indian Penal Code (Act XLV of 1860) or sub section (2) of section 5 of the Prevention of Corruption Act, 1947 (11 of 1947); (b) any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a). Sub section (1) of section 7 provides that notwithstanding any. thing contained in the Code of Criminal Procedure, 1898 or in any other law the offences specified in sub section (1) of section 6 shall be triable by special judges only. Sub section (3) of section 7 provides that when trying any case, a special judge may also try any offences other than an offence specified in section 6 with which the accused may under the Code of Criminal Procedure, 1898 be charged at the same trial. 204 Clearly, therefore, accused No. 1 could be tried by the Special Judge for offences under 'section ' 120 B read With sections 466, 467 and 420 I.P.C. Similarly the other accused who are, said to have abetted these offences could also be tried by the Special Judge. The view of the High Court is thus erroneous and its directions with respect to these offences are set aside. The High Court has further held that the provisions of a 196A(2) of the Code of Criminal Procedure have not been complied with and therefore the charges in respect of offences under as. 466 and 467 could not be enquired into by the Special Judge; section 196A(2) of the Code of Criminal Procedure reads thus: "No Court shall take cognizance of the offence of criminal conspiracy punishable under section 120B of the Indian Penal Code, (2) in a case where the object of the conspiracy is to commit any non cognizable offence, or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years, or upwards, unless the State Govern ment, or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government, has, by order in writing, consented to the initiation of the proceedings: Offences under sections 466 and 467 are admittedly non cognizable and, therefore, it would seem from the plain language of sub section (2) that for the offences under section 120 B read with sections 466 and 467, I.P.C. the sanction of the Government will be necessary. Mr. Umrigar referred us to the decision in Durgadas Tulsiram Sood vs State (1) and said that since the object of the conspiracy was to cheat the Government, that is, to commit an offence under section 420 I.P.C. and the offences under as. 466 and 467 were only means to that end, the trial was not vitiated simply because no sanction was obtained for prosecuting the accused for offences of criminal conspiracy to commit non cognizable offences; under as. 466 and 467 I.P.C. We do not think it necessary to say anything on the point because in (1) I.L.R. 205 any case the case has to go back to the Special Judge for re framing the charges and there is time enough for the Government to consider whether it should accord sanction to the prosecution of the various accused for the non cognizable offences alleged to have been committed by them in pursuance of conspiracy, assuming of course, that sanction is necessary. In the result we allow the appeal and set.aside the order of the High Court and direct the Special Judge to, frame fresh charges and proceed with the trial. The matter has been pending for a long time and we direct that the trial will proceed with. all expedition. Appeal allowed. Retrial ordered.

The High Court quashed the charges framed against the respondents. The charge sheet stated that accused 1 to 9 had committed offenses under section 12oB of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947, and that accused No. had committed offenses under SS. 5(1)(c) and 5, (i)(d) of the Prevention of Corruption Act and SS. 463, 464 Of the Indian Penal Code and accused 2 to 8 abetted all the offenses and each of the accused in addition had committed offenses under section 420 Of the Indian Penal Code. The High Court directed the Special judge to frame fresh charges inter alia on the ground that charge No. 1 was an omnibus charge containing as many as 203 offenses and that it was direct violation of SS. 234, 235 and 239 Of the Code of Criminal Procedure. Further that the Special judge had no jurisdiction to try the offenses under section 120B read with SS. 466, 467 and 420 Of the Indian Penal Code because he was appointed a Special judge under the Criminal Law Amendment Act, only for trying offenses under Prevention of Corruption Act. The question was whether all the accused, persons could be jointly tried in respect of all these offenses. Held, that when several persons had committed offenses, in the course of the same transaction, they could jointly be tried in respect of all those offenses under section 239 Of the Code of Criminal Procedure and the limitation placed by section 234 Of the Code could not come into operation, but the charges should be suitably split up so that the accused persons would not be prejudiced in answering the charges and defending themselves. Held, further, there is no analogy between section 120B and section Log of the Indian Penal Code. There may be an element of abetment in a conspiracy which is an offence by itself but conspiracy is something more than abetment for which a person could separately be charged. Offenses created under SS. 109 and 120B of the Indian Penal Code are quite distinct and there is no warrant for limiting the prosecution to only one element of conspiracy, that is, abetment when the allegation is that what a person did was something over and above that. If the alleged offenses flow out of the conspiracy the appropriate form of charge would be a specific charge in respect of each of those offenses along with the charge of conspiracy. Held, further, that the introduction of a large number of charges spread over a long period was a question of propriety and it should be left to the judge or the Magistrate trying the case to adopt the course which he thought to be appropriate in the facts and circumstances of the case. Held, also, that while a special judge appointed under section 6 of the Criminal Law Amendment Act has jurisdiction to try cases under section 5 of the Prevention of Corruption Act he can under section 7(3) Of the Criminal Law Amendment Act try other offenses under the Criminal Procedure Code for which the accused can be charged at the same trial. 196 In re Venkataramaiah, A.I.R. 1938 Mad. 130, disapproved. section Swaminatham vs State of Madras, A.I.R. 1957 S.C. 340, R. vs Dawson, [1960] 1 All E.R. 558 and Durgadas Tulsiram Sood vs State, I.L.R. , referred to.

Appeals Nos. 666 and 667 of 1957. N. C. Chatterjee and G. C. Mathur, for the appellant. A. V. Viswanatha Sastri, K. N. Rajagopala Sastri and T. M. Sen, for the respondents. March 8. The judgment of the Court was delivered by HIDAYATULLAH, J. These two appeals raise a common question of law, and it is convenient to deal with them together. They have been filed (with certificate) against a judgment of the High Court of Orissa, by Jagannath Agarwala, who sought to enforce a claim he had against the former State of Mayurbhanj and the ex Ruler of Mayurbhanj. They arise out of two petitions under article 226 of the Constitution, for writs of mandamus, etc., which the High Court of Orissa dismissed by its order under appeal. It appears that in the year 1943 the Maharaja, of 207 Mayurbhanj entered into an agreement or arrangement with Jagannath Agarwala for establishing a business for the manufacture of industrial alcohol and essential oils and for purchases of wheat and barley in the Punjab. Civil Appeal No. 666 of 1957 relates to the establishment of the manufacturing business, and Civil Appeal No. 667 of 1957, to the purchases of wheat and barley. With reference to the establishment of the business, the appellant urges that it was agreed that the capital required would be contributed by the parties in equal shares, and that the profit and loss would also be shared equally. As regards the purchases, the appellant was to advance such money as might be required, and the State of Mayurbhanj was to provide necessary permits and facilities for transport. In furtherance of this agreement, the appellant urges that he established a factory and started the business, but the Maharaja, instead of contributing his share of the capital, asked the appellant to do so on his behalf, promising to pay him the amount. The factory was constructed, and, it appears, it went into production, but later closed down, suffering a total loss of Rs. 2,80,875 9 3. In the first case, therefore, the claim of the appellant against the Maharaja and the State was Rs. 1,40,400 odd. In the second case, the appellant advanced a sum of Rs. 50,000 and also incurred a further expenditure of Rs. 3,741 7 9. The State of Mayurbhanj failed in its promise of procuring the necessary permits and facilities for transport, and the appellant was, therefore, required to sell the foodgrains in the Punjab, and thus incurred a loss of Rs. 14,844 0 3. The appellant alleges that the Maharaja promised to pay the 'amount. From January 1, 1949, the Mayurbhanj State merged with the Province of Orissa, and on the same day, the Government of Orissa promulgated the Administration of Mayurbhanj State Order, 1949 under section 4 of the Extra Provincial Jurisdiction Act, 1947 (47 of 1947). That Order allowed claims against the State of Mayurbhanj to be preferred to Government for its 208 consideration. Clause 9 of the Order, in so far as it is material, is as follows: "9. Claims against Ruler of the State. (a) The Administrator shall as soon as possible publish a notification in the Gazette in English and in vernacular calling upon all persons having pecuniary claims, whether immediately enforceable or not, against the State or the Ruler of the State in his capacity as Ruler of that State, to notify the same in writing to the officer authorised, by the Administrator in this behalf (hereinafter called the said officer) within three months from the date of the notification. (b) The notice shall also be published at such places and in such other manner as the Administrator may by special or general order direct. (c) Every such claimant shall, within the period specified in sub paragraph (a) notify to the said officer in writing his claim. with full particulars thereof and any claim presented after the expiration of such period shall be summarily rejected. (d) Every document including entries. in book.% of account in the possession of or under the control of the claimant on which he bases his claim shall be produced before the said officer along with the statement of the claim: (f) Nothing in the preceding sub paragraphs shall apply to any pecuniary claim of Government or any local authority. (g) The said officer shall after making such enquiry as he may deem fit, decide which claims notified under sub paragraph (c) are to be allowed in whole or in part and which are to be disallowed, and on his decision being confirmed by the Administrator, the said officer shall give written notice of the same to the claimants. The decision of the Administrator shall be final and shall not be liable. to be called into question in any Court whatsoever. ' (h) No court shall have jurisdiction to investigate 209 any pecuniary claim against the State or against the Ruler of the State in his capacity as Ruler of that State and such claim shall be determined only in accordance with the provisions of this paragraph. (i) The Administrator may delegate his powers under this paragraph to any officer subordinate to him not below the rank of an Additional District Magistrate. (j) The provisions of this paragraph shall not apply to any claim against the State based on a cause of action which arose on or after the 1st January 1949 and such claim shall be disposed of in accordance with the laws applied or continued in force under paragraph 5. " The appellant preferred his two claims for the consideration of the Claims Officer, who was dealing with such claims on behalf of the Administrator. The Claims Officer made a report to the Administrator on June 20, 1951 in respect of the first claim, and after examining the merits, gave his conclusions as follows: "Considering the evidence laid by the Claimant before me in support of his claim, I find that he is entitled to a sum of Rs. 1,37,785 13 7 1/2. It has been urged by the Claimant that interest @ Rs. 4 per cent. per annum should be allowed to him till the date of repayment of his dues. He has been allowed interest from 1 4 43 to 28 2 49 and,, I think, he should get interest thereafter @ Rs. 4 per cent. per annum till the date of repayment of his dues. As regards the Claimant 's demand for half share of further advances made by the Claimant after filing of this claim case, it cannot be entertained in this case. Submitted to the Revenue Commissioner, Orissa, Cuttack through the District Magistrate, Mayurbhanj as required under Clause 9(g) of the Administration of Mayurbhanj State Order, 1949. " In the other case, he made a report on November 5, 1951 that the appellant had substantiated his claim for Rs. 14,844 0 3, and was also liable to be paid interest amounting to Rs. 5,303 14 0. This report was 27 210 submitted to the Member (Third), Board of Revenue, Orissa, Cuttack, through the District Magistrate, Mayurbhanj. On June 28, 1952, the appellant received a Memo randum from the Deputy Secretary, Board of Revenue, Orissa, Cuttack, which read as ' follows: "Dear Sri Agarwalla, With reference to your petitions dated 1 10 51 and 7 9 50. I am directed to say that the claims have been rejected as Government have been advised that they are barred by limitation. Yours sincerely, Sd. Govind Tripathy". It appears that the appellant applied for review, and he was asked on November 8, 1952 to produce before the Board any document or documents in his possession to show that these were continuing businesses and also to point out the law that no claim of a continuing business could be barred by limitation. The documents on which the appellant presumably relied before the Board of Revenue have not been printed in the record of this Court, but on April 2, 1953, the solicitors of the appellant were informed that the Board of Revenue had declined to review the matter. It appears also that, in the first case, even before the merger the Revenue Minister, Mayurbhanj State, had rejected the claim put forward by the appellant by his order dated October 26, 1948, to the following effect: "The State need not recognise the claims put forward by Mr. J. Agarwalla, as there was really no formation of any Joint Stock Company nor any written agreement entered into and finally settled. B. Mohapatra (Revenue Minister, Mayurbhanj)". It was in these circumstances, that the two petitions under article 226 of the Constitution were filed. The High Court dismissed them. From the order of the High Court, it appears that two points alone were urged before it. The first was that the decision of the 211 Claims Officer should have gone to the Board of Revenue as a whole and not to a single Member and the second was that the appellant should have been served with a notice by the Board before the recommendations of the Claims Officer were rejected, and, as has now been argued before this Court, allowed a hearing. The first point was not argued before us, and it seems that the appellant has accepted the decision of the High Court that the Third Member was competent to hear and dispose of these cases. The second point alone has been argued, and. needs to be considered. The case was argued by Mr. N. C. Chatterjee on behalf of the appellant as illustrating a patent breach of the principles of natural justice. He contended that his client was entitled to a proper hearing before the report in his favour was rejected, and relied upon the following cases: Shivji Nathubai vs The Union of India (1), New Prakash Transport Co. Ltd. vs New Suwarna Transport Co. Ltd. (2), Nagendra Nath Bora vs The Commissioner of Hills Division and Appeals, Assam (3) and Gullapalli Nageswara Rao vs Andhra Pradesh State, Road Transport Corporation (4). In reply, Mr. A. V. Viswanatha Sastri contended that the rejection of the claim was an act of State, and that the new Sovereign State could not be compelled by a process of the municipal courts to accept a liability of the old Ruler, and though the new Sovereign State might make such enquiry as it chose, it was not compelled to give a hearing to the claimant. In his rejoinder, Mr.Chatterjee contended that the act of State was over, when the new Sovereign State invited claims under a law passed for the purpose, and proceeded to consider the evidence tendered in support of the claim He also contended that by the admission of the claim by the Claims Officer the act of State was over, and that any further consideration of the report had to comply with the rules of natural justice, laid down by this Court in the cases cited by him. What is an act of State and when it ceases to apply between a new Sovereign and the subjects of a State (1) ; (3) ; (2) (4) [1959] SUPP. 1 S.C.R. 319. 212 conquered, acquired or ceded to the new Sovereign, has been the subject of several decisions of this Court. In M/s. Dalmia Dadri Cement Co. Ltd. vs The Commissioner of Income tax (1) and The State of Saurashtra vs Memon Haji Ismail Haji (2), it has been held that unless the new Sovereign, either expressly or impliedly admits the claim. , the municipal courts have no jurisdiction in the matter. The question to consider is whether such a stage had been reached in the enquiry which had been commenced. No doubt, the plea that this was a part of an act of State was not specifically raised before the High Court; but, as pointed out by the Judicial Committee ' in Vale Singh Ji Joravar Singh vs Secretary of State for India (3), no plea is really needed. It is clear from the Order, which was made under the Extra Provincial Jurisdiction Act, that claims were being asked to be entertained only for investigation and not for acceptance. It is the acceptance of the claim which would have bound the new Sovereign State and the act of State would then have come to an end. But short of an acceptance, either express or implied, the time for the exercise of the sovereign right to reject a claim was still open. In Vaje Singh Ji 's case (3), enquiries were made by Captain Buckle and again in 1868, and the two enquiries lasted 16 years before the rejection of the claims, and the rejection was still upheld as an act of State. Vaje Singh Ji 's case (3) has been relied upon by this Court in the two cases referred to, in the argument of Mr. A. V. Viswanatha Sastri. It would, therefore, appear that the act of State could not be said to have come to an end, when the Government allowed claims to be preferred, or when their own Officer made his report. The Claims Officer was not a part of the municipal courts, and Government cannot be said to have submitted itself to the jurisdiction of the municipal courts, when it entrusted the enquiry to him. Nor can the investigation of claims be said to have conferred a civil right upon the claimants to enforce their claims against the State. In our opinion, enquiry was for the benefit of the State and not (1) [1959] S.C.R. 729. (2) ; (3) (1924) L.R. 51 I.A. 357. 213 for conferring rights upon likely claimants. It was always open to the Government to admit any claim, even though reported adversely by the Claims Officer, though such a contingency might have been very remote. Equally, therefore, the Government had the paramount right to reject a claim, which its Claims Officer considered good but on which the Government held a different opinion. In short, till there was an acceptance by the Government or some officer of the Government, who could be said to bind the Government, the act of State was still open, and, in our opinion, it was so exercised in this case. Mr. Chatterjee contended that at least within the four corners of the Order, the appellant had a right to be heard, and that he did not have a proper bearing. If the Member, Board of Revenue, entertained some doubt about the claim being within time, he might have heard the party. That this was an enquiry mainly to ascertain whether a claim should or should not be recognised is obvious enough. It was in no sense a trial of any issue between the appellant and the Government. To judge such an action with the same rigour with which a judicial enquiry or trial is judged is to convert the enquiry into a civil suit. The appellant was fully heard by the Claims Officer, and the only question was whether the claim was within time. Even there, the Member, Board of Revenue, asked the appellant to submit all documents and arguments in support of his contention that the claim was within limitation, and to that extent, the appellant had his say. Whether the Member, Board of Revenue should have gone further and given a viva voce hearing was a matter entirely for that Officer to choose, and there was nothing under the law to compel him. Though we think that such an opportunity might have been afforded to the appellant, we cannot say that this was a matter which entitled him to a writ. In this view of the matter, the appeals fail, and are dismissed. But, in the circumstances of the case, there shall be no order as to costs. Appeals dismissed.

The appellant had two money claims against the Maharaja of Mayurbhanj State. From January 1, 1949, the State merged with the Province of Orissa. Clause 9 of the Administration of Mayurbhanj State Order, 1949, promulgated by the Government of Orissa, provided for the issuing of a notification for calling upon all persons having pecuniary claims against the Maharaja to notify the same to an officer authorised in that behalf. After issue of the notification the appellant preferred his two claims before the Claims Officer. The Claims Officer made a report substantially accepting the claims. This report was submitted to the Member (third), Board of Revenue. Without giving the appel lant any hearing the claims were rejected on the ground that they were barred by limitation. The appellant applied for a review and submitted the documents on which he relied but again without giving the appellant a hearing the Board of Revenue declined to review the matter. The appellant contended 206 that there was a breach of the principles of natural justice in the Board of Revenue deciding the matter without giving the appellant a proper hearing. The respondent contended that the rejection of the claims was an act of State, that the new Sovereign State could not be compelled by the courts to accept the liability of the old Ruler, that though the new Sovereign State might make such enquiry as it chose it was not compelled to give a hearing to the appellant. The appellant replied that the act of State was over when the claims were invited and accepted by the Claims Officer. Held, that the rejection of the claims was an act of State and could not be challenged. Unless the new Sovereign, either expressly or impliedly, admitted the claims, the municipal courts had no jurisdiction in the matter. The act of State did not come to an end when Government allowed the claims to be preferred or the Claims Officer made his report. The enquiry was for the benefit of the State and not for conferring rights on the claimants. Till there was an acceptance of the claims by the Government or some officer who could be said to bind the Government, the act of State was still open. Dalmia,Dadri Cement Co. Ltd. vs Commissioner of Income tax, [1959] S.C.R 729 State of Saurashtra vs Mmemon Haji Ismail Haji, ; and Vaje Singh ji joravar Singh vs Secretary of State for India, (1924) L.R. 51 I.A. 357, relied on.

Appeals Nos. 7 to 9 of 1959. Appeals by special leave from the judgment and order dated June 25,1955, in cases Nos. 0551 R CG/ 54, 0602 R/CG/54 and 0503 R/CG/54 of 1954. Achhru Ram and B. R. L. Ayengar, for the appellants. Gopal Singh and T. M. Sen, for the respondents. March 10. The Judgment of the Court was delivered MUDHOLKAR, J. These are appeals by special leave from three orders against an order passed on March 12, 1954 by the Custodian General, Evacuee Property, disposing of three revision petitions, two of which were preferred by one Bharoo Mal (since deceased) 247 and one by his wife, and now widow, Padma Devi. Even though a common order was passed by the Custodian General, three appeals have been preferred before this Court. The facts leading upto the appeals are briefly as follows: An agreement was entered into between Bharoomal and one Nanan Begum on April 11, 1948 for the exchange of Bharoomal 's properties,at Sukkar in Sind, Pakistan for Nanan Begum 's properties at Lucknow. Prior to that, on April 7, 1948 a similar agreement was entered into between Padma Devi and one Tahir Ali. It is common ground that in pursuance of the agreement Bharoomal and Padma Devi entered into possession of the properties obtained by them in exchange from Nanan Begum and Tahir Ali respectively and the latter entered into possession of the. properties belonging to the former situated in Sukkar. The deed of exchange was to be executed within two years of the date of agreement; but in fact it was never executed. Consequently in the year 1950 Bharoomlal and Padma Devi instituted three suits for specific performance. These suits were decreed and sale deeds conveying certain properties to Bharoomal and certain properties to Padma Devi were executed by the Court in February, 1952. In October, 1949 the U. P. Administration of Evacuee Property Ordinance, 1949 (1 of 1949) was promulgated and shortly thereafter the Administration of Evacuee Property (Chief Commissioners Provinces) Ordinance, 1949 (12 of 1949), promulgated by the Central Government, was extended to the United Provinces replacing U. P. Ordinance 1 of 1949. Nanan Begum and Tahir Ali having migrated to Pakistan, Bharoomal and Padma Devi made three applications under cl. 25(2) of the Central Ordinance for confirmation of the exchanges in their favour. These applications were granted by the Deputy Custodian of Evacuee Property in the year 1950. Sometime in the year 1951 the Custodian of Evacuee Property suo motu revised the orders of the Deputy Custodian passed in the year 1950 on the ground that the agreements on the basis 248 of which the applications for confirmation were made by Bharoomal and Padma Devi do not amount to transfers and that consequently they could not be, confirmed. He also held that the, deeds of transfer obtained by Bharoomal and Padma Devi from the court were not confirmed by the Custodian and that, therefore, the possession of Bharoonal and Padma Devi over the properties in question which wore admittedly evacuee properties was unauthorised. He, therefore, ordered that possession of the properties be taken back from Bharoomal and Padma Devi and that they should be required to account for the rent& and profits realised by them from these properties. These persons preferred applications for revision before the Custodian General of Evacuee Property. Their applications were, as already stated, rejected by him. In the appeal to this Court the only ground pressed is that the Custodian had no jurisdiction to pass an order requiring the appellants to render accounts of the rents and profits from the properties in their possession. Mr. Achhruram, who appears for them, accepts the position that the orders of the Deputy Custodian of Evacuee Property passed in the year 1950 confirming the transfers were rightly set aside by the Custodian in revision. Therefore, only a short question falls to be determined by us and that is whether the Custodian was right in further ordering the appellants to render accounts of rents and profits from the properties in their possession. We asked Mr. Gopal Singh, who appears for the Custodian General, to show us any provision in the Act or in the rules which authorises the Custodian of Evacuee Property to direct a person who is alleged to be in unauthorised possession of evacuee property to render accounts for rents and profits of those properties without resorting to the ordinary remedy provided by law, that is by way of suit. Mr. Gopal Singh contends that as soon as Nanan Begum and Tahir Ali migrated to Pakistan their property in India automatically vested in the Custodian of Evacuee Property under cl. 5(1) of the U. P. Ordinance 1 of 1949 and continued to vest under Central 249 Ordinance No. XII of 1949 which replaced the U. P. Ordinance. By virtue of sub section (2) of section 8 of the (XXXI of 1950) which came into force on April 18, 1950, the property which is vested in the Custodian under any law repealed by the Act shall be deed to be evacuee property within the meaning of the Act and shall be deemed to have vested in the Custodian appointed under that Act. The Central 1 Ordinance XII of 1949 was one of the laws repealed by the Act. He then referred to section 10 and contended that thereunder the Custodian has the power to recover from an unauthorised occupant of evacuee property the rents and profits realised by him during the period of his unauthorised occupation. Sub section (1) of section 10 reads thus: "Subject to the provisions of any rules that may be made in this behalf, the Custodian may take such measures as lie considers necessary or expedient for the purposes of securing, administering, preserving and managing any evacuee property and generally for the purpose of enabling him satisfactorily to discharge any of the duties imposed on him by or under this Act and may, for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto. " According to him the words "for the purposes of securing, administering,preserving and managing any evacuee property"effectively confer on the Custodian power to recoverrents and profits of the property from the person in possession. There is nothing in the words relied on from which a power of the kind contended for by learned counsel can be deduced. Sub section (2) of section 10 specifically enumerates some of the powers of the Custodian. Learned counsel was not able to point to anything in the sub section which confers power on the Custodian to recover rents and profits from a person in unlawful possession of the properties. Learned counsel then referred to r. 10 and said that this rule would entitle the Custodian to determine and recover rents and profits from unauthorised occupants of evacuee property. Sub rule 1 32 250 of r. 10 undoubtedly authorises the Custodian to recover possession of property from the evacuee or from a person whether holding on behalf of, or under the evacuee or otherwise and not having a lawful title to possession thereof as against the Custodian. There is nothing in this sub rule which further entitles the Custodian to determine and recover rents and profits from an unauthorised occupant of evacuee property. Sub rule 2 of r. 10 empowers the Custodian to issue a notice to a tenant or a licensee in possession of evacuee property whom the Custodian cannot eject or does not want to eject. For one thing this sub rule cannot apply to a person who :Is alleged to be in unauthorised occupation of evacuee property. Then again it does not confer any power on the Custodian to determine rents and profits or to recover rent in a summary manner. In the circumstances we must hold that this provision also does not help the respondent. Such being the legal position, we must quash and set aside that portion of the order of the Custodian, confirmed by the Custodian General, which requires the appellants to pay rents and profits in respect of properties of Nanan Begum and Tahir Ali in their possession. Both parties will, however, be at liberty to take such steps is may be open to them at law for establishing or enforcing their respective claims. Costs of the appeal will be borne by the respondents. As the appeals were argued together there will be only one hearing fees. Appeals allowed.

The appellants exchanged their property in Pakistan with the property of an evacuee in India. They applied for confir mation of the transaction which was granted by the Deputy Custodian. Later, the Custodian revised the order and set aside the confirmation and ordered the ejectment of the appellants from the properties which were the subject of exchange. He further ordered that they should render accounts of the rents and profits realised by them from this property. The appellants contended that the Custodian bad no jurisdiction to pass any order requiring them to render accounts of the rents and profits. Held, that the Custodian bad no power under the Adminis tration of Evacuee Property Act to direct a person in unauthorised possession of evacuee property to render accounts of rents and profits thereof without resorting to the ordinary remedy provided by law, that is, by way of suit.

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

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

riminal Ap. peal No. 82 of 1952. Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated June 10, 1952, of the High Court of Judicature for the State of Punjab at Simla (Bbandari and Khosla JJ.) in Criminal Writ No. 144 of 1951. M. C. Setalvad (Attorney General for India) and C. K. Daphtary (Solicitor Genera I for India) (B. Gana pathy, with them) for the appellant. J. B. Dadachanji (amicus curice) for respondent No. 1. 1952. November 10. The Judgment of the Court was delivered by DAS J. This appeal arises out of a habeas corpus petition Bled by one Ajaib Singh in the High Court of Punjab for the production and release of one Musammat Sardaran alias Mukhtiar Kaur, a girl of about 12 years of age. 256 The material facts leading up to the filing of that petition may be shortly stated as follows. On the report made by one Major Babu Singh, Officer Commanding No. 2 Field Company, section M. Faridkot, in his letter dated February 17, 1951, that the petitioner Ajaib Singh had three abducted persons in his possession, the recovery police of Ferozepore, on June 22, 1951, raided his house in village Shersingwalla and took the girl Musammat Sardaran into custody and delivered her to the custody of the Officer in charge of the Muslim Transit Camp at Ferozepore from whence she was later transferred to and lodged in the Recovered Muslim Women 's Camp in Jullundur City. A Sub Inspector of Police named Nibar Dutt Sharma was deputed by the Superintendent of Police, Recovery, Jullundur to make certain enquiries as to the facts of the case. The Sub Inspector as a result of his enquiry made a report on October 5, 1951 to the effect, inter, that the girl had been abducted by the petitioner during the riots of 1947. On November 5, 1951, the petitioner filed the habeas corpus petition and obtained an interim order that the girl should not be removed from Jullundur until the disposal of the petition. The case of the girl was then enquired into by two Deputy Superintendents of Police, one from India and one from Pakistan who, after taking into consideration the report of the Sub Inspector and the statements made before them by the girl, her mother who appeared before them while the enquiry was in progress, and Babu alias Ghulam Rasul the brother of Wazir deceased who was said to be the father of the girl and other materials, came to the conclusion, inter alia, that the girl was a Muslim abducted during the riots of 1947 and was, therefore, an abducted person as defined in section 2(a) (1) of the Abducted Persons (Recovery and Restoration) Act LXV of 1949. By their report made on November 17, 1951, they recommended that she should be sent to Pakistan for restoration to her next of kin but in view of the interim order of the High Court appended a note to the effect that she 257 should not be sent to Pakistan till the final decision of the High Court. The matter then came before a Tribunal said to have been constituted under section 6 of the Act. That Tribunal consisted of two Superintendents of Police, one from India and the other from Pakistan. The Tribunal on the same day, i.e., November 17, 1951, gave its decision agreeing with the findings and recommendation of the two Deputy Superintendents of Police and directed that the girl should be sent to Pakistan and restored to her next of kin there. The habeas corpus petition came up for hearing before Bhandari and Khosla JJ. on November 26, 1951, but in view of the several questions of farreaching importance raised in this and other similar applications, the learned Judges referred the following questions to a Full Bench : 1. Is Central Act No. LXV of 1949 ultra vires the Constitution because its provisions with regard to the detention in refugee camps of persons living in India violate the rights conferred upon Indian citizens under article 19 of the Constitution ? 2. Is this Act ultra vires the Constitution because in terms it violates the provisions of article 22 of the Constitution ? 3. Is the Tribunal constituted under section 6 of the Act a Tribunal subject to the general supervision of the High Court by virtue of article 227 of the Constitution ? At the same time the learned Judges made it clear that the Full Bench would not be obliged to confine itself within the narrow limits of the phraseology of the said questions. On the next day the learned Judges made an order that the girl be released on bail on furnishing security to the satisfaction of the Registrar in a sum of Rs. 5,000 with one surety. It is not clear from the record whether the security was actually furnished. The matter eventually came up before a Full Bench consisting of the same two learned Judges 258 and Harnam Singh J. In course of arguments before the Full Bench the following further questions were added: 4.Does this Act conflict with the provision of article 14 on the ground that the State has denied to abducted persons equality before the law or the equal protection of the laws within the territory of India? 5.Does this Act conflict with the provisions of article 15 on the ground that the State has discriminated against abducted persons who happen to be citizens of India on the ground of religion alone ? 6. Does this Act conflict with article 21 on the ground that abducted persons are deprived of their personal liberty in a manner which is contrary to principles of natural justice ? " There was also a contention that the Tribunal which decided this case was not properly constituted in that its members were not appointed or nominated by the Central Government and, therefore, the order passed by the Tribunal was without jurisdiction. By their judgments delivered on June 10, 1952, Khosla and Harnam Singh JJ. answered question 1 in the negative but Bhandari J. held that the Act was inconsistent with the provisions of article 19(1) (g) of the Constitution. The learned Judges were unanimous in the view that the Act was inconsistent with the provisions of article 2.2 and was void to the extent of such inconsistency. Question 3 was not fully argued but Bhandari and Khosla JJ. expressed the view that the Tribunal was subject to the general supervision of the High Court. The Full Bench unanimously answered questions 4, 5 and 6 in the negative. Bhandari and Khosla JJ. further held that the Tribunal was not properly constituted for reasons mentioned above, but in view of his finding that section 4(1) of the Act was in conflict with article 22(2) Harnam Singh J. did not consider it necessary to express any opinion on the validity of the constitution of the Tribunal. 259 The Full Bench with their aforesaid findings remitted the case back to the Division Bench which had referred the questions of law to the larger Beach. The case was accordingly placed before the Division Bench which thereafter ordered that Musammat Sardaran alias Mukhtiar Kaur be set at liberty. The girl has since been released. The State of Punjab has now come up on appeal before us. As the petitioner respondent Ajaib Singh represented to us that he could not afford to brief an advocate to argue his case, we requested Sri J. B. Dadachanji to take up the case as ambicus curiae which be readily agreed to do. He has put forward the petitioners case with commendable ability and we place on record our appreciation of the valuable assistance rendered by him to the Court. In his opening address the learned Solicitor General frankly admitted that he could not contend that the Tribunal was properly constituted under section 6 of the Act and conceded that in the premises the order of the ' High Court directing the girl to be released could not be questioned. He, however, pressed us to pronounce upon the constitutional questions raised in this case and decided by the High Court so that the Union Government would be in a position to decide whether it would, with or without modification, extend the life of the Act which is due to expire at the end of the current month. We accordingly heard arguments on the constitutional questions on the clear understanding that whatever view we might express oh those questions, so far as this particular case is concerned, the order of the High Court releasing the girl must stand. After hearing arguments we intimated, in view of the urgency of the matter due to the impending expiry of the Act, that our decision was that the Act did not offend against the provisions of the Constitution and that we would give our reasons later on. We now proceed to set forth our reasons for the decision already announced. 34 260 In order to appreciate the rival contentions canvassed before us it is necessary to bear in mind the circumstances which led to the promulgation of an Ordinance which was eventually replaced by Act LXV of 1949 which is impugned before us as unconstitutional. It is now a matter of history that serious riots of virulent intensity broke out in India and Pakistan in the wake of the partition of August, 1947, resulting in a colossal mass exodus of Muslims from India to Pakistan and of Hindus and Sikhs from Pakistan to India. There were heart rending tales of abduction of women and children on both sides of the border which the governments of the two Dominions could not possibly ignore or overlook. As it was not possible to deal with and control the situation by the ordinary laws the two governments had to devise ways and means to check the evil. Accordingly there was a conference of the representatives of the two Dominions at Lahore in December, 1947, and Special Recovery Police Escorts and Social Workers began functioning jointly in both the countries. Eventually on November 11, 1948, an Inter Dominion Agreement between India and Pakistan was arrived at for the recovery of abducted persons on both sides of the border. To implement that agreement was promulgated on January 31, 1949, an Ordinance called the Recovery of Abducted Persons Ordinance,. 1949. This Ordinance was replaced by Act LXV of 1949 which came into force on December 28, 1949. The Act was to remain in force up to October 31, 1951, but it was eventually extended by a year. That the Act is a piece of beneficial legislation and has served a useful purpose cannot be denied, for up to February 29, 1952, 7,981 abducted persons were recovered in Pakistan and 16,168 in India this circumstance, however, can have no bearing on the constitutionality of the Act which will have to be judged on purely legal considerations. The Act is a short one consisting of eleven sections. It will be observed that the purpose of the Act is to implement the agreement between the two countries 261 as recited in the first preamble. The second preamble will show that the respective governments of the States of Punjab, Uttar Pradesh, Patiala and East Punjab States Union, Rajasthan and Delhi gave their consent to the Act being passed by the Constituent Assembly a circumstance indicative of the fact that those governments also felt the necessity for this kind of legislation. By section 1 (2) the Act extends to the several States mentioned above and is to re main in force up to October 31, 1952. The expression "abducted person" is defined by section 2(1) (a) as meaning " a male child under the age of sixteen years or a female of whatever age who is, or immediately before the 1st day of March, 1947, was a Muslim and who, on or after that day and before the 1st day of January, 1949, has become separated from his or her family, and in the latter case includes a child born to any such female after the said date. " Section 4 of the Act, which is important, provides that if any police officer, not below the rank of an Assistant Sub Inspector or any other police officer specially authorised by the State government in that behalf, has reason to believe that an abducted person resides or is to be found in any place, he may, after recording the reasons for his belief, without warrant, enter and take into custody any person found therein who, in his opinion, is an abducted person, and deliver or cause such persons to be delivered to the custody of the officer in charge of the nearest camp with the least possible delay. Section 6 enacts that if any question arises whether a person detained in a camp is or is not an abducted person, or whether such person should be restored to his or her relatives or handed over to any other person or conveyed out of India or allowed to leave the camp, it shall be referred to, and decided by , 'a Tribunal constituted for the purpose by the Central Government. The section makes the decision of the Tribunal final, subject, however, to the power of the Central Government to review or revise any such decision. Section 7 provides for the implementation of the decision of the 262 Tribunal by declaring that any officer or authority to whom the custody of any abducted person 'has been delivered shall be entitled to receive and hold the person in custody and either restore such person to his or her relatives or convey such persons out of India. Section 8 makes the detention of any abducted person in a camp in accordance with the provisions of the Act lawful and saves it from being called in question in any court. Section 9 gives the usual statutory immunity from any suit or proceeding for anything done under the Act in good faith. Section ' 10 empowers the Central Government to make rules to carry out the purposes of the Act. The main contest before us has been on question 2 which was answered unanimously by the Full Bench against the State, namely, whether the Act violates the provisions of article 22. If the recovery of a person as an abducted person and the delivery of such person to the nearest camp can be said to be arrest and detention within the meaning of article 22(1) and (2) then it is quite clear that the pro visions of sections 4 and 7 and article 22(1) and (2) cannot stand together at the same time, for, to use the language of Bhandari J., " it is impossible to obey the directions contained in sections 4 and 7 of the Act of 1949 without disobeying the directions contained in clauses (1) and (2) of article 22." The Constitution commands that every person arrested and detained in custody shall be produced before the nearest Magistrate within 24 hours excluding the time requisite for the journey from the place of arrest to the Court of the Magistrate but section 4 of the Act requires the police officer who takes the abducted person into custody to deliver such person to the custody of the officer in charge of the nearest camp for the reception and detention of abducted persons. These provisions are certainly conflicting and inconsistent. The absence from the Act of the salutary provisions to be found in article 22(1) and (2) as to the right of the arrested person to be informed of the grounds of such arrest and to consult and to be 263 defended by a legal practitioner of his choice is also significant. The learned Solicitor General has not contended before us, as he did before the High Court, that the overriding provisions of article 22(1) and (2) should be read into the Act, for t e o vious reason that whatever may be the effect of the absence from the Act of provisions similar to those of article 22(1), the provisions of article 22(2) which is wholly inconsistent with section 4 cannot possibly, on account of such inconsistency, be read into the Act. The sole point for our consideration then is whether the taking into custody of an abducted person by a police officer under section 4 of the Act and the delivery of such person by him into the custody of the officerin charge of the nearest camp can be regarded as arrest and detention within the meaning of article 22(1) and (2). If they are not, then there can be no complaint that the Act infringes the fundamental right guaranteed by article 22(1) and (2). Sri Dadachanji contends that the Constitution and particularly Part III the ereof should be construed liber ally so that the fundamental rights conferred by it may be of the widest amplitude. He refers us to the various definitions of the word "arrest" given in several wellknown law dictionaries and urges, in the light of such definitions, that any physical restraint imposed upon a person must result in the loss of his personal liberty and must accordingly amount to his arrest. It is wholly immaterial why or with what purpose such arrest is made. The mere imposition of physical restraint, irrespective of its reason, is arrest and as such, attracts the application of the constitutional safeguards guaranteed by article 22 (1) and (2). That the result of placing such a wide definition on the the term "arrest" occurring in article 22 (1) will render many enactments unconstitutional is obvious. To take one example, the arrest of a defendant before judgment under the provisions of Order XXXVIII, rule 1, of the Code of Civil Procedure or the arrest of a judgment debtor in execution of a decree under section 55 of the Code will, on this 264 hypothesis, be unconstitutional inasmuch as the Code provides for the production of the arrested person, not before a Magistrate but before the civil court which made the order. Sri Dadachanji contends that such consideration should not weigh with the court in construing the Constitution. We are in agreement with learned counsel to this extent only that if the language of the article is plain and unambiguous and admits of only one meaning then the duty of the court is to adopt that meaning irrespective of the inconvenience that such a construction may produce. if, however, two constructions are possible, then the court must adopt that which will ensure smooth and harmonious working of the Constitution and eschew the other which will lead to absurdity or give rise to practical inconvenience or make well established provisions of existing law nugatory. We have, therefore, to examine the article in question with care and ascertain the meaning and import of it primarily from its language. Broadly speaking, arrests may be classified into two categories, namely, arrests under warrants issued by a court and arrests otherwise than under such warrants. As to the first category of arrest, sections 76 to 86 collected under sub heading B Warrant of Arrest " in Chapter VI of the Code of Criminal Procedure deal with arrests in execution of warrants issued by a court under that Code. Section 76 prescribes that such a warrant must be in writing signed by the presiding officer, or in the case of a Bench of Magistrates, by any member of such Bench and bear the Beal of the court. Form No. II of Schedule V to the Code is a form of warrant for the arrest of an accused person. The warrant quite clearly has to state that the person to be arrested stands charged with a certain offence. , Form No. VII of that Schedule is used to bring up a witness. The warrant itself recites that the court issuing it has good and sufficient reason to believe that the witness will not attend as a witness unless compelled to do so. The point to be noted is that in either case the 265 warrantex facie sets out the reason for the arrest, namely, that the person to be arrested has committed or is suspected to have committed or is likely to commit some offence. In short, the warrant contains a clear accusation against the person to be arrested. Section 80 requires that the Police Officer or other person executing a warrant must notify the substance thereof to the person to be arrested, and, if so required, shall show him the warrant. It is thus abundantly clear that the person to be arrested is informed of the grounds for his arrest before he is actually arrested. Then comes section 81 which runs thus: " The Police Officer or other person executing a warrant of arrest shall (subject to the provisions of section 76 as to security) without unnecessary delay bring the person arrested before the Court before which he is required by law to produce such person. " Apart from the Code of Criminal Procedure, there are other statutes which provide for arrest in execution of a warrant of arrest issued by a court. To take one example, Order XXXVIII, rule 1, of the Code of Civil Procedure authorises the court to issue a warrant for the arrest of a defendant before judgment in certain circumstances. Form No. 1 in Appendix F sets out the terms of such a warrant. It clearly recites that it has been proved to the satisfaction of the court that there is probable cause for belief that the defendant is about to do one or other of the things mentioned in rule 1. The court may under section 55 read with Order XXI, rule 38, issue,a warrant for the arrest of the judgment debtor in execution of the decree. Form No. 13 sets out the terms of such a warrant. The warrant recites the decree and, the failure of the judgment debtor to pay the decretal amount to the decree holder and directs the bailiff of the court to arrest the defaulting judgment debtor, unless he pays up the decretal amount with costs and to bring him before the court with all convenient speed. The point to be noted is that, as in the case of a warrant of arrest issued by a court under the Code of Criminal Procedure, a warrant of arrest 266 issued by a court under the Code of Civil Procedure quite plainly discloses the reason for the arrest in that it sets out an accusation of default, apprehended or actual, and that the person to be arrested is made acquainted with the reasons for his arrest before lie is actually arrested. The several sections collected under sub heading B Arrest without warrant " in Chapter V of the Code of Criminal Procedure deal with arrests otherwise than under warrants issued by a court under that Code. Section 54 sets out nine several circumstances in which a police officer may, without an order from a Magistrate and without a warrant, arrest a person. Sections 55, 57, 151 and 401 (3) confer similar powers on police officers. Column 3, Schedule II to the Code of Criminal Procedure also specifies; the cases where the police may arrest a person without warrant. Section 56 empowers an officer in charge of a police station or any police officer making an investigation under Chapter XIV to require any officer subordinate to him to arrest without a warrant any person who may lawfully be arrested without a warrant. In such a case, the officer deputing a subordinate officer to make the arrest has to deliver to the latter an order in writing specifying the person to be arrested and the offence or other cause for which the arrest is to be made and the subordinate officer is required, before making the arrest, to notify to the person to be arrested the substance of the order and, if so required by such person, to show him the order. Section 59 authorises even a private person to arrest any person who in his view commits a non bailable and cognisable offence or any proclaimed offender and requires the person making the arrest to make over the arrested person, without unnecessary delay, to a police officer or to take such person in custody to the nearest police station. A perusal of the sections referred to above will at once make it plain that the reason in each case of arrest without a warrant is that the person, arrested is accused of having committed or reasonably suspected to have committed or of 267 being about to commit or of being likely to commit some offence or misconduct. It is also to be noted that there is no provision, except in section 56, for acquainting the person to be arrested without warrant with the grounds for his arrest. Sections 60 and 61 prescribe the procedure to be followed after a person is arrested without warrant. They run thus: " 60. A police officer making an arrest without warrant shall without unnecessary delay and subject to the provisions herein contained as to bail, take or send the person arrested before a Magistrate having jurisdiction in the case, or before the officer in charge of a police station." "61.No police officer shall detain in custody a person arrested without warrant for a longer period than under all the circumstances of the case is reasonable, and such period shall, not, in the absence of a special order of a Magistrate under section 167, exceed twenty four hours, exclusive of the, time necessary for the journey from the place of arrest to the Magistrate 's Court. " Apart from the Code of Criminal Procedure, there are other statutes which authorise the arrest of a person without a warrant issued by any Court. Reference may, byway of example, be made to sections 173 and 174 of the Sea Customs Act (VIII of 1878) and section 64 of the Forest Act (XVI of 1927). In both cases, the reason for the arrest is that the arrested person is reasonably suspected to have been guilty of an offence under the Act and there is provision in both cases for the immediate production of the arrested person before a Magistrate. Two things are to be noted, namely, that, as in the cases of arrest without warrant under the Code of Criminal Procedure, an arrest without warrant under these Acts also proceeds upon an accusation that the person arrested is reasonably suspected of having committed an offence and there is no provision for communicating to the person arrested the grounds for his arrest. 35 268 Turning now to article 22(1) and (2), we have to ascertain whether its protection extends to both categories of arrests mentioned above, and, if not, then which one of them comes within its protection. There can be no manner of doubt that arrests without warrants issued by a court call for greater protection than do arrests under such warrants. The provision that the arrested person should within 24 hours be produced before the nearest Magistrate is particularly desirable in the case of arrest otherwise than under a warrant issued by the court, for it ensures the immediate application of a judicial mind to the legal authority of the person making the arrest and the regularity of the procedure adopted by him. In the case of, arrest under a warrant issued by a court, the judicial mind had already been applied to the case when the warrant was issued and, therefore, there is less reason for making such production in that case a matter of a substantive fundamental right. It is also perfectly plain that the language of article 22(2) has been practically copied from sections 60 and 61 of the Code of Criminal Procedure which admittedly prescribe the procedure to be followed after a person, has been arrested without warrant. The requirement of 'article 22(1) that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest indicates that the clause really contemplates an arrest without a warrant of court, for, as already noted, a person arrested under a, court 's warrant is made acquainted with the grounds of his arrest before the arrest is actually effected. There can be no doubt that the right to consult a legal practitioner of his choice is to enable the arrested person to be advised about the legality or sufficiency of the grounds for his arrest. The right of the arrested person to be defended by a legal practitioner of his choice postulates that there is an accusation against him against which he has to be defended. The language of article 22(1) and (2) indicates that the fundamental right conferred by it gives protection against such 269 arrests as are effected otherwise than under a warrant issued by a court on the allegation or accusation that the arrested person has, or is suspected to have, committed, or is about or likely to commit an act of a criminal or quasi criminal nature or some activity prejudicial to the public or the State interest. In other words, there is indication in the language of article 22(1) and (2) that it was designed to give protection against the act of the executive or other non judicial authority. The Blitz case (Petition No. 75 of 1952), on which Sri Dadachanji relies, proceeds on this very view, for there the arrest was made on a warrant issued, not by a court, but, by the Speaker of & State Legislature and the arrest was made on the distinct accusation of the arrested person being guilty of contempt of the Legislature. It is not, however, our purpose, nor do we consider it desirable, to attempt a precise and meticulous enunciation of the scope and ambit of this fundamental right or to enumerate exhaustively the cases that come within its protection. Whatever else may come within the purview of article 22(1) and (2), suffice it to say for the purposes of this case, that we are satisfied that the physical restraint put upon an abducted person in the process of recovering and taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under section 4 of the impugned Act cannot be regarded as arrest and detention within the meaning of article 22(1) and (2). In our view, the learned Judges of the High Court over simplified the matter while construing the article, possibly because the considerations hereinbefore adverted to were not pointedly brought to their attention. Our attention has been drawn to sections loo (search for persons wrongfully confined) and 552 (power to compel restoration of abducted females) of 270 the Code of Criminal Procedure, and it has been urged that neither of those sections contemplates an accusation against the victim and yet such victim, after recovery, has to be brought before a Magistrate. It is to be observed that neither of the two sections treats the victim as an arrested person for the victim is not produced before a Magistrate under sections 60 and 61 'which require the production of a person arrested without warrant, or under section 81 which directs the production of a person arrested under a warrant issued by a, court. The recovered victim is produced by reason of special provisions of two sections,, namely, sections 100 and 552. These two sections clearly indicate that the recovery and taking into custody of such a victim are, not regarded as arrest at all within the meaning of the Code of Criminal Procedure and, therefore, cannot also come within the protection of article. 22(1) and (2). This circumstance also lends support"to the conclusion we have reached, namely, 'that the taking into custody of an abducted person under the impugned Act is not an arrest within the meaning of article 22(1) and (2). Before the Constitution, came into force it was entirely for the Legislature to consider whether the recovered person should be produced before a Magistrate as is provided by sections 100 and 552 of the Criminal Procedure Code in the case of persons wrongfully confined or abducted. By this Act, the Legislature provided that the recovered Muslim abducted person should be taken straight to the officer in charge of the camp, and the Court could not question the wisdom of the policy of the Legislature. After the Constitution, article 22 being out of the way, the position in this behalf remains the same. Sri Dadachanji also argued that the Act is inconsistent with article 14. The meaning, scope and ambit of that article need not be explained again, for they have already been explained by this Court on more than one occasion. [See Chiranjit Lal Chowdhury vs The Union of India (1), The State of Bombay vs F. N. (1) ; 271 Balsara (1), The State of West Bengal vs Anwar Ali Sarkar (2), and Kathi Raning Rawat vs The State of Saurashtra (3)]. There can be no doubt that Muslim abducted persons constitute a well defined class for the purpose of legislation. The fact that the Act is extended only to the several States mentioned in section 1 (2) does not make any difference, for a classification may well be made on a geographical basis. Indeed, the consent of the several States to the passing of this Act quite clearly indicates, in the opinion of the governments of those States who are the best judges of the welfare of their people, that the Muslim abducted persons to be found in those States form one class having similar interests to protect. ' Therefore the inclusion of all of them ' in the definition of abducted persons cannot be called discriminatory. Finally, there is nothing discriminatory in sections 6 and 7. Section 7 only implements the decision of the Tribunal arrived at under section 6. There are several alternative things that the Tribunal has been authorised to do. Each and everyone of the abducted persons is liable to be treated in one way or another as the Tribunal may determine. It is like all offenders under a particular section being liable to a fine or imprisonment. There is no discrimination if one is fined and the other is imprisoned, for all offenders alike are open to the risk of being treated in one way or another. In our view, the High Court quite correctly decided this question against the petitioner. The learned counsel for the respondent Ajaib Singh contended that the Act was inconsistent with the provisions of article 19(1)(d) and (e) and article 21. This matter is concluded by the majority decision of this court in Gopalan 's case (4) and 'the High Court quite correctly negatived this contention. Sri Dadachanji has not sought to support the views of Bhandari J. regarding the Act being inconsistent with article 19 (1)(g). Nor has learned counsel (1) ; (3) ; (2) ; (4) ; 272 seriously pressed the objection of unconstitutionality based on article 15, which, in our view, was rightly rejected by the High Court. Although we hold that the High Court erred on the construction they Put upon article 22 and the appellant has succeeded on that point before us, this appeal will, nevertheless, have to be dismissed on the ground that the Tribunal was not properly constituted and its order was without jurisdiction, as conceded by the learned Solicitor General. We, therefore, dismiss this appeal on that ground. We make no order as to costs.

The Abducted Persons (Recovery and Restoration) Act (Act LXV of 1949) does Dot infringe article 14, article 16, article 19 (1) (d), (e) and (g), article 21 or article 22 of the Constitution and is not unconstitutional on the ground that it,contravenes any of these provisions. The physical restraint Put upon an abducted person in the process of recovering and, taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under section 4 of the Abducted Persons (Recovery and Restoration) Act (LXV of 1949) is not arrest and detention within the meaning of article 22 (1) and (2) of the Constitution. The said Act does not therefore infringe the fundamental right guaranteed by article 22 of the Constitution. 255 The fundamental right conferred by article 22 gives protection ,against such arrests as are effected otherwise than under a warrant issued by a Court on the allegation or accusation that the arrested person has, or is suspected to have,. committed, or is about or likely to commit, an act of a criminal or quasi criminal nature or some activity prejudicial to the public or the State interest. There is indication in the language of article 22 (1) and (2) that it was designed to give protection against the act of the exe cutive or other non judicial authority. The Blitz Case (Petition No. 75 of 1952) explained. Muslim abducted persons constitute a well defined class for the purpose of legislation and the fact that the Act is extended only to the several States mentioned in section 1 (2) of the Act does not make any difference, for a classification may well be made on a geographical basis. The Act does not therefore contravene article 14 of the Constitution. If the language of an article is plain and unambiguous and admits of only one meaning, then the duty of the Court is to adopt that meaning irrespective of the inconvenience that such a construction may produce. If, however, two constructions are possible then the Court must adopt that which will ensure smooth and harmonious working of the Constitution and, eschew, the other which will lead to absurdity or give rise to practical inconvenience or make well established provisions of existing law nugatory.

Appeal No. 66 of 1959. Appeal by special leave from the judgment and order dated the February 1, 1958, of the Deputy Custodian General, Evacuee Property, New Delhi, in No. 1017 R/ Judl/Punj. Achhru Ram and M. L. Kapur, for the appellants. N. section Bindra and T. M. Sen, for the, respondents. March 8. The Judgment of the Court was delivered by 216 SUBBA RAO, J. This is an appeal by special leave against the order of the Deputy Custodian General of Evacuee Property, India, dated February 1, 1958, setting aside the order dated June 6, 1949, passed by the Custodian of Evacuee Property, Patiala, and remanding the case for enquiry. The facts lie in a small compass and may be briefly stated. One Dafedar Niranjan Singh, the first appellant herein, owned houses Nos. 915 and 916 situate in the town of Patiala. During the latter part of 1948, the Custodian of Evacuee Property, Patiala, took possession of the said houses under the provisions of the Patiala Evacuees (Administration of Property) Ordinance of Samvat 2004 (No. IX of 2004) (hereinafter referred to as Ordinance IX of 2004), on the ground that they were evacuee properties. On January 27, 1949, Dafedar Niranjan Singh filed a claim petition before the said Custodian alleging that the said properties belonged to him by inheritance. The Custodian by order dated June 6, 1949, allowed the claim and released the said properties. This order was communicated to the Assistant Custodian on June 7, 1949, and pursuant to that order the said houses were released. On June 9, 1955, the first appellant sold a part of the said properties to Major Bhagwant Singh, the second appellant herein, for Rs. 6,000. On June 21, 1949, Ordinance IX of 2004 was repealed by the Patiala and East Punjab States Union Ordinance No. XIII of Samvat 2006 (hereinafter referred to as Ordinance No. XIII of 2006) which was in its turn repealed by the Patiala and East Punjab State Union Ordinance No. XVII of 2006 (hereinafter referred to as Ordinance No. XVII of 2006). On October 18, 1949, Ordinance No. XVII of 2006 was also repealed by Central Ordinance No. XXVII of 1949, under which for the first time the office of Custodian General was created. This Central Ordinance was replaced by the Administration of Evacuee Property Act (No. XXXI of 1950). The said Act was amended from time to time. Nothing turns upon the said amendments in the present appeal. On December 24, 1955, i.e., more than six years after the order of the Custodian, the Litigation 217 Inspector of Evacuee Properties filed an application before the Custodian of Evacuee Property, Patiala, for review of the order of the Custodian dated June 6, 1949. During the pendency of that application, the powers of the Custodian and the Additional Custodian of Evacuee Property of review and revision under section 26 of the Act were taken away by the Administration of Evacuee Property (Amendment) Act XCI of 1956. On April 2, 1957, the Additional Custodian submitted the case to the Custodian General of Evacuee Property to enable him to take action suo motu under section 27 of the Act. On May 24, 1957, the Deputy Custodian General, to whom the powers of the Custodian General in that behalf had been delegated, issued notice to the appellants to show cause why the order of the Custodian of Evacuee Property, Patiala, dated June 6, 1949, be not revised. On February 1, 1958, after hearing the parties, the Deputy Custodian General, set aside the order of the Custodian dated June 6, 1949, and remanded the case to the Custodian for further enquiry. The present appeal by special leave was directed against the said order. Learned counsel for the appellants raised before us the following three points: (1) The deeming provisions of the repealing. Ordinances and Acts culminating in section 58(3) of the Act apply only to things done or action taken by the Custodian in exercise of his administrative powers and not to orders made by him in exercise of his judicial powers. (2) The order passed by the Custodian under Ordinance IX of 2004 cannot be deemed to be an order passed under the Act, as the chain of 'fiction was broken when Ordinance No. XIII of 2006 was issued. (3) Section 58(3) of the Act expressly saves the previous operation of Ordinance XXVII of 1949 or any corresponding law, and, therefore, the orders that had become final under the said Ordinance could not be revised under section 27 of the. Learned counsel for the State in addition to countering the said arguments, further submitted that the Custodian under Ordinance IX of 2004 had no jurisdiction to allow the claim of the first appellant and, 28 218 therefore, the said order was non est; with the result, the Custodian General could vacate it at any time under section 27 of the Act. Before considering the arguments advanced by learned counsel, it would be convenient at the outset to give a short history of the legislation relevant to the present enquiry leading to the conferment of plenary powers of revision under the Act on the Custodian General. The earliest Ordinance was the Patiala Evacuee (Administration of Property) Ordinance No. IX of 2004. It extended to the whole of Patiala State. Section 3 thereof enabled the appointment of Custodian of Evacuee Property and also the appointment of one or more Deputy Custodians and Assistant Custodians for such local areas as might be specified. Section 5 enjoined on the Custodian within the area placed in his charge to take possession of evacuee property and to take all measures he considered necessary or expedient for preserving or safeguarding such property. Under the proviso to section 6, the said Custodian, if any owner objected to his taking possession, after the issue of notice for taking possession and before taking possession thereof, should stay proceedings forthwith and should send the record of the case to the claims officer for decision. Section 12 provided for preferring of claims of any kind against evacuees or their property before the claims officer appointed for that purpose. Sub section (2) thereof conferred a right of appeal within 60 days of the date of decision of the said officer to the Custodian, urban areas; and under sub section (4) the decision of the claims officer, and, where an appeal had been filed, the decision of the appellate authority, should be final and conclusive and should not be called in question in an court by way of appeal or revision or in any original suit, execution application or other petition. Section 14 enabled the Custodian, urban areas, either suo motu or on application of any claimant to transfer on sufficient grounds any claim from the claims officer to any other officer appointed in this behalf by the Prime Minister Under section 16, decisions of the claims 219 officer and the Custodian were deemed to be decrees of court. It may be noticed at this stage, as it may have some bearing on an argument for the first time ' advanced on behalf of the State, that none of the provisions of the said Ordinance expressly enabled the Custodian to decide himself at time first instance a claim set up by an evacuee in respect of his property proposed to be taken possession of by him. But it may be contended that such a power was implicit in the power conferred on the Custodian to take possession of an evacuee property. When he could take possession of an evacuee property, if he had reason to believe that it was an evacuee property, he could equally release it if he was satisfied that he made a mistake in that regard. It may also be that the Custodian could withdraw the case to himself under section 14, if he was appointed by the Prime Minister under section 14 of the Ordinance to make an enquiry. Ordinance IX of 2004 was repealed by Ordinance XIII of 2006 which came into force on June 21, 1949. Under section 10 of the said Ordinance, any person claiming any right to or interest in any property of which the Custodian had taken possession or assumed control under section 9 might prefer such claim before the Custodian by an application within 30 day. ,.; from the date on which the possession of the property was taken. The Custodian was empowered to make a summary inquiry and to make an order on the application. Sub section (5) of section 10 conferred a power of revision on the Custodian against the order of an Assistant or Deputy Custodian for the purpose of satisfying himself as to the legality or propriety of any order passed by the said officer. Under sub section (6) thereof, any person aggrieved by an order made under sub section (4) or sub section (5) could prefer an appeal to the District Judge within whose ' jurisdictional limits the property was situate within one month of the date of the said order. Under sub section (7) thereof, all orders passed by the Claims Officer appointed under Ordinance IX of 2004 should be deemed to have been passed under sub section (4) of the said section of this Ordinance for the purpose of appeal or revision, 220 and such appeal could be filed to the District Judge within whose jurisdictional limits the property was situate within one month after the commencement of this Ordinance or the period prescribed under sub section (6) whichever expired later. Sub section (8) conferred revisional jurisdiction on the High Court against orders made under sub section (4), (5) or (6). Under sub section (9), subject to the decision of the District Judge on appeal or the High Court in revision, the order of the Custodian would be final and 'conclusive. One thing that may be noticed in this Ordinance is that no order made by the Custodian under Ordinance IX of 2004 was deemed to continue under this Ordinance. Sub section (7) of section 10 applied only to orders made by a Claims Officer appointed under the earlier Ordinance. Ordinance No. XVII of 2006, which came into force on July 31, 1949, repealed the earlier Ordinance XIII of 2006. Section 40 of this Ordinance read as follows: (1) The Patiala and East Punjab States Union Evacuees ' (Administration of Property) Ordinance, 2006, is hereby repealed. (2) Notwithstanding such repeal, anything done or any action taken in the exercise of any power conferred by the Ordinance aforesaid shall be deemed to have been done or taken in the exercise of the powers conferred by this Ordinance, and any penalty incurred or proceeding commenced under the repealed Ordinance shall be deemed to be a penalty incurred, or proceeding commenced under this Ordinance as if this Ordinance were in force on the day when such thing was done, action taken, penalty incurred or proceeding commenced. (3) Notwithstanding anything contained in this Ordinance or in any other law relating to the administration of evacuee property in force in the Union before the commencement of this Ordinance, all claims pending in the court of the Claims Officer appointed under the provisions of the Patiala Evacuee (Administration of Property) Ordinance, 2004 , shall be heard and decided by him in accord ance with the provisions of the aforesaid Ordinance. 221 (4) Any order passed under sub section (3) shall be appealable to or revisable by the Custodian with. in such time and in such manner as is laid down it the Ordinance referred to in sub section (3). Under this Ordinance anything done or an action taken under Ordinance XIIII of 2006 should be deemed to have been done or taken in the exercise of the powers conferred by this Ordinance. If the order of the Custodian under Ordinance IX of 2004 could not be deemed to be an order made under Ordi nance XIII of 2006, sub section (2) of section 40 of this Ordinance could not obviously operate on the said order, for the condition necessary for invoking the deeming provision was that the order should have been made under Ordinance XIII of 2006. Then came the Administration of Evacuee Property Ordinance, 1949 (No. XXV 11 of 1949). This Ordinance came into force on October 18, 1949. This Ordinance for the first time created the office of Custodian General. Under section 5 of this Ordinance, "The Central Government may, by notification in the Official Gazette, appoint a person to be the Custodian General of Evacuee Property in India for the purpose of discharging the duties imposed on the Custodian General by or under this Ordinance. " Section 27 of this Ordinance which dealt with powers of revision of the Custodian General, read as follows: "(1) The Custodian General may at any time, either on his own motion or on application made to him in this behalf, call for the record of any proceeding in which any District Judge or Custodian has passed an order in appeal under the provisions of this Chapter for the purpose of satisfying himself as to the legality or propriety of any such order and may pass such order in relation thereto as he thinks fit." "(2) Notwithstanding anything contained in subsection (1), where in respect of any proceeding called for under sub section (1), the Custodian General is 222 of opinion that the District Judge is in error in holding any person not to be an evacuee or any property not to be evacuee property, he shall not pass any order in relation thereto but shall refer the matter, with his own opinion thereon, to the High Court to which the District Judge is otherwise subordinate." "(3) Any reference made under subsection (2) shall be heard by a Bench of the High Court consisting of not less than two Judges, and the Custodian General shall dispose of the proceeding in accordance with the decision of the High Court. " Section 28 read: "Save as otherwise expressly provided in this Chapter, every order made by the Custodian General, District Judge, Custodian, Additional Custodian, Authorized Deputy Custodian, Deputy Custodian, or Assistant Custodian shall be final and shall not be called in question in any original suit, application or execution proceeding." A combined reading of sections 27 and 28 indicates that the Custodian General 's revisional jurisdiction was confined only to appellate orders of the District Judge or the Custodian; and, subject to the provisions of the Ordinance, the orders of the respective authorities were made final. Section 55 repealed the Ordinances of the various Provinces and provided under sub section (3) there of as follows: "Notwithstanding the repeal by this Ordinance of the Administration of Evacuee Property Ordinance, 1949, or of any corresponding law, anything done or any action taken in the exercise of any power conferred by that Ordinance or law shall be deemed to have been done or taken in the exercise of the powers conferred by this Ordinance, and any penalty incurred or proceeding commenced under that Ordinance or law shall be deemed to be a penalty incurred or proceeding commenced under this Ordinance as if this Ordinance were in force on the day on which such thing was done; action taken, penalty incurred or proceeding commenced. " The effect of the provisions of this Ordinance may be 223 stated thus: An order made under Ordinance No. XVII of 2006 should be deemed to have been made in exercise of the powers conferred under this Ordinance; any order so made, if it had not become final under the earlier Ordinance would be subject to the appellate or revisional jurisdiction, as the case may be, in the manner prescribed by this Ordinance; but if the said order was not made in appeal by the Custodian or the District Judge, it would not be subject to the revisional jurisdiction of the Custodian General, with the result that, under this Ordinance, even if the said order had not become final under the earlier Ordinance, it would become final under this Ordinance, if no further proceedings as provided under this Ordinance were taken in respect of the said order. Ordinance No. XXVII of 1949 was repealed by the (No. XXXI of 1950) (hereinafter called the Act), which came into force on April 17, 1950. This Act enlarged the revisional jurisdiction of the Custodian General. Section 27 is in the following terms: "(1) The Custodian General may at any time either on his own motion or on application made to him in this behalf call for the record of any proceedings in which any Custodian has passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and may pass such order in relation thereto as he thinks fit: The main difference between section 27 of the Act and section 27 of the Ordinance repealed by the Act is that under the. Act the Custodian General may exercise his revisional powers in respect of any proceedings in which any Custodian had passed an order, while under the Ordinance his revisional jurisdiction was confined only to an appellate order made by the Custodian or the District Judge, as the case may be. Section 58 of the Act, which repealed the ordinance provided in sub section (3) as follows: "The repeal by this Act of the Administration of Evacuee Property Ordinance, 1949 (XXVII of 1949), or the, Hyderabad Administration of Evacuee 224 Property Regulation (Hyderabad No. XII of 1359 F.) or of any corresponding law shall not affect the previous operation of that Ordinance, Regulation or corresponding law, and subject thereto, anything done or any action taken in the exercise of any power conferred by or under that Ordinance, Re gulation or corresponding law shall be deemed to have been done or taken in the exercise of the powers conferred by or tinder this Act as if this Act were in force on the day on which such thing was done or action taken. " The second part of section 58(3) of the Act is similar to that of section 55(3) of the Ordinance. But there is an essential difference between the first part of the said sub section in the Act and that in the Ordinance. The difference lies in the fact that under the Act the repeal of the Ordinance or of any corresponding law was not to affect the previous operation of that Ordinance or the corresponding law. Only subject to this qualification, anything done or any action taken in exercise of any power conferred by the Ordinance shall be deemed to have been done or taken in exercise of the powers conferred by or under the Act. One of the questions raised in this appeal turns upon the interpretation of ' the words "previous operation of that Ordinance". This Act was amended from time to time and the latest of the amendments was by Act 91 of 1956. As nothing turns upon the provisions of the ' amending Acts, we need not consider all of them; it would be enough if section 7A which was added by section 4 of Act 52 of 1954 was noticed. Under that section, "Notwithstanding anything contained in this Act, no property shall be declared to be evacuee property on or after the 7th day of May. 1954". There is also a proviso to that section, but that does not concern us here. With this background we shall proceed to consider the arguments advanced by learned counsel. The first argument of learned counsel for the appellant, namely, that the operation of section 58(3) of the Act shall be confined only to administrative acts done by the Custodian under the earlier Ordinances, was specifically raised before this Court and negatived by 225 it in Indira Sohan Lal vs Custodian of Evacuee Property, Delhi(1). There, on February 23, 1948, and application was made to the Custodian of Evacuee s Property for confirmation of the transaction of exchange under section 5 A of the East Punjab Evacuees ' (Administration of Property) Act, 1947, as amended in 1948. That application was not disposed of until March 20, 1952, on which date the Additional Custodian passed an order confirming the exchange. Meanwhile Act XXXI of 1950 was passed which conferred by section 27 revisional powers on the Custodian General. The Custodian General, in exercise of his powers under that section, set aside the order of confirmation and directed the matter to be reconsidered by the Custodian. It was contended, inter alia,that the positive operation of the provision that "anything done or any action taken in the exercise of any power conferred by or under that Ordinance. . shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act as if this Act were in force on the day on which such thing was done or action taken" applied only to purely administrative matters. But this contention was rejected by this Court which held that the said provision applied to the order in question which was admittedly a judicial order. It was further held in that decision that the said application had to be dealt with and disposed of under the said Act and, therefore, the order of confirmation passed in 1952 was subject to the revisional power of the Custodian General under section 27 of the said Act. In view of this decision nothing further need be said on the first point and it is, therefore, rejected. There is force in the second contention. The Custodian General found an unbroken chain of fiction leading to the conclusion that the order dated June 6, 1949, made by the Custodian must be deemed to be an order made by the Custodian in exercise of the powers conferred on him under the Act and, therefore, was subject to the revisional jurisdiction of the Custodian General under section 27 of the Act. But the history (1) ; 29 226 of the legislation in the context of the facts of the present case shows that the said chain had broken even during the period when Ordinance No. XIII of 2006 was in force. In the narration of facts we have pointed out that the order under Ordinance No. IX of 2004 was made by the Custodian and not by the Claims Officer. Sub section (7) of section 10 only provided that orders passed by the Claims Officer under Ordinance No. IX of 2004 should be deemed to have been passed under sub section (4) of section 10 of Ordinance No. XIII of 2006 for the purpose of appeal or revision. This sub section, therefore, had introduced a fiction with two limitations one limitation was that the original order should have been made by the Claims Officer and the other was that it was only for the purpose of appeal or revision. The result was that the said order of the Custodian could not be deemed to be an order made under the said Ordinance, as he was not the Claims Officer and that, even if he was the Claims Officer, his order must be deemed to be an order made under the later Ordinance only for the limited purpose, namely, for the purpose of appeal or revision. If this be so, it follows that the said order could not be deemed to have been passed under the successive Ordinances and the Act. We, therefore, accept this contention. The third contention is based upon the assumption that the order of the Custodian dated June 6, 1949, by the process of fiction shall be deemed to be an order made by the Custodian in exercise of the powers conferred on him by Ordinance No. XXVII of 1949. As we have already indicated at an earlier stage of our judgment, the order of a Custodian under that Ordinance was subject to an appeal under section 25 thereof to the District Judge designated in that behalf by the Provincial Government. The order of the District Judge on appeal was subject to revision by the Custodian General under section 27. Subject to the said provision, the order of the Custodian was final under section 28. In the present case, no appeal was filed against the order of the Custodian to the District Judge and, therefore, the said order had become final under section 28. To put it in other words, by operation of the provisions of the said Ordinance the order of the Custodian 227 made under Ordinance No. IX of 2004 but deemed to have been made under Ordinance No. XXVII of 1949 had become final. What then was the effect of the Sin repeal of that Ordinance by the Act of 1950? We have already noticed the provisions of section 58 which repealed the said Ordinance and which also made certain savings in respect of acts done tinder the Ordinance. Sub section (3) of section 58 dealing with the said savings, as we have stated when considering the history of the legislation, is in two parts. The first part says that the repeal by the Act of the said Ordinance shall not affect the previous operation of the said Ordinance; and the second part says that anything done or any action taken in the exercise of any power conferred by or under that Ordinance shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act as if this Act were in force on the day on which such thing was done or action taken. The second part is expressly made subject to the first part. If a case falls under the first part, the, second part does not apply to it. In the present case under the previous operation of the Ordinance the order of the Custodian had become final. If so, the fiction introduced in the second part could only operate on that order subject to the finality it had acquired under that Ordinance. Looking at the section from a different perspective, the same result would flow therefrom. The section does not expressly affect a vested right of a person in whose favour there was a final determination under the Ordinance. Nor does the section imply such retroactivity by necessary intendment. An order which had become final under the Ordinance could be deemed to be an order under the Act without disgorging itself of the attribute of finality acquired by it under the repealed Ordinance. The first part of the section definitely precludes any implication of such intendment. In Delhi Cloth and General Mills vs Incometax Commissioner Delhi (1), a similar question arose for consideration. There, on references made to, the High Court under section 66 of the Indian Income tax Act, (1) Lah. 228 1922, the High Court made orders before April 1, 1926. On April 1, 1926, the Income tax (Amendment) Act, 1926, came into force and under that amendment a right of appeal was given to an aggrieved party against the order of a High Court, subject to certain conditions, to the Privy Council. The question was whether that Act could retrospectively confer a right of appeal against orders which became final before the amendment came into force. The Judicial Committee restated the principle laid down by them in Colonial Sugar Refining Co. Ltd. vs Irving (1) thus at p. 290: " While provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment." After stating the principle, the Judicial Committee made the following remarks in respect of the question that arose in that case: "Their Lordships can have no doubt that provi sions which, if applied retrospectively, would deprive of their existing finality Orders which, when the statute came into force, were final, are provisions which touch existing rights. Accordingly, if the section now in question is to apply to orders final at the date when it came into force, it must be clearly so provided. Their Lordships cannot find in the section even an indication to that effect. " We respectfully accept the said principle as laying down the correct law on the subject. If so, by the same parity of reasoning, we must hold in the present case that the order of the custodian which had become final under Ordinance No. XXVII of 1949, could not be affected retrospectively under section 58(3) of the Act so as to deprive the order of the Custodian of the finality it had acquired under the said Ordinance. Not only the said provision does not contain any positive indication giving it such (1) 229 retroactivity. but also in express terms it saves the previous operation of that Ordinance. It is said that. this construction of section 58(3) is no longer open in view of the authoritative interpretation placed upon the said sub section by this Court in Indira Sohan Lal 's case (1). We have carefully gone through that judgment and we are of the view that the said decision is not only not against the construction placed by us on the said sub section but also the observations therein support the, same construction. There, unlike here, an application made to the Additional Custodian of Evacuee Property on March 20, 1948, was not disposed of until March 20, 1952 that is, till after the Act of 1950 came into force. The Additional Custodian made the order in that application on March 20, 1952. The Custodian General, in exercise of his powers under section 27 of the Act of 1950, Bet aside the order of the Additional Custodian and directed the matter to be reconsidered by the Custodian. In the present case the order made by the Custodian, as we have earlier pointed out, had become final before the Act of 1950 came into force and no proceeding in respect thereof was pending at the com mencement of the Act. With this difference in mind if one reads the observations of Jagannadhadas, J., at p. 1132 of the above judgment, the legal position will be clear. After considering the decision of the Judicial Committee in Delhi Cloth and General Mills Co. Ltd. vs Income tax Commissioner, Delhi (2) the learned Judge proceeded to observe thus at p. 1132: "This is obviously so because finality attached to them, the moment orders were passed, prior to the new Act. In the present case, the position is different. The action was still pending when Central Act XXXI of 1950 came into force. No order was passed which could attract the attribute of finality and conclusiveness under section 5 B of the East Punjab Act XIV of 1947. Further the possibility of such finality was definitely affected by the repealing provision in Central Ordinance No. XII of 1949, and Central Ordinance No. XXVII of 1949, (1) ; (2) (927) I.L.R. 230 which specifically provided that a pending action was to be deemed to be an action commenced under the new Ordinance as if it were in force at the time and therefore required to be continued under the new Ordinances. " These observations are certainly in accord with our view. The same distinction can also be discerned in the observations made by the learned Judge at p. 1133: "Nor can this be brought under the ambit of the phrase 'previous operation of the repealed law '.What in effect, learned counsel for the appellant contends for is not the 'previous operation of the repealed law ' but the 'future operation of the previous law '. There is no justification for such a construction. Besides, if in respect of the pending application in the present case, the previous repealed law is to continue to be applicable by virtue of the first portion of section 58(3) the question arises as to who are the authorities that can deal with it. " In that case, therefore, the repealed law could not operate on the subsequent stages of a pending application, for the previous law was repealed; whereas in the present case by operation of the "previous law, the order had become final. We are, therefore, of the opinion that the decision of this Court does not touch the point that arises for consideration in the present case. Reliance is placed by learned counsel for the respondents on a judgment of a division bench of the Punjab High Court in Janki Prasad vs The Custodian, Evacuee Property, Jullundur (1). There, an order confirming the sale effected by an evacuee was made by the Assistant Custodian on February 25,1949, and the said order was confirmed by the Additional Custodian on February 28, 1949. 'the question was whether under the provisions of the East Punjab Act XIV of 1947, the order of the Assistant Custodian could be reviewed by the Additional Custodian in exercise of the powers conferred on him under section 26 of the Act of 1950. The learned Judges hold that by fiction the (1) Punjab 823. 231 earlier order must be deemed to have been made under the Act of 1950 and, therefore, the Custodian would have power to review it under section 26 of the Act of 1950. We think, with respect to the learned Judges, that they have not correctly appreciated the scope of the provisions of section 58(3) of the Act of 1950. In our view, for the reasons already mentioned, that view of the Punjab High Court in the above decision is not correct. We, therefore, accept the third contention of learned counsel. Then remains the point that was raised for the first time before us by learned counsel appearing for the State. The argument was that Ordinance No. XXVII of 1949 was repealed and reenacted by the Act of 1950 in substantially the same terms, and, therefore, a repeal by implication was effectuated only of those provisions which were omitted from reenactment. For this position reliance was placed upon a passage from Sutherland 's Statutory Construction 3rd edn., Vol. 1, at p. 514. Therefore, it was contended that, as there was no provision in the Act correspond. 9 to the proviso to section 6 of the Ordinance No. IX of 2004, that proviso must be deemed to have been repealed; and an order made illegally under that proviso was non est. It is said that under section 27 of the Act, the Custodian General, at any time can ignore that order and proceed with fresh inquiry in respect of the question whether the property was an evacuee property or not. This question was raised for the first time before us and it was not hinted even in the statement of case filed by the State. In the circumstances, we would not be justified in allowing the respondents to sustain the order of the Custodian General on the said basis. Even otherwise it.would be of no avail to the respondent in the present case. We are 'not concerned in this case with the question whether the said order was made by the Custodian illegally or without jurisdiction. We are only concerned with the question whether the Custodian General can, under section 27 of the Act set aside an. order made by the Custodian. We have pointed '. out, that he has no such power to revise 232 orders that had become final before the Act came into force. Nor do we find any force in the argument of learned counsel for the State that under section 27 of the Act, the Custodian General may at any time revise the order of any Custodian and, therefore, the Custodian General can revise without any limit of time any order made by any Custodian under any previous law. Section 27 of the Act can be given retrospective operation only to the extent permitted by section 58(3) of the Act. We have held that section 58(3) does not affect the previous operation of the law and therefore cannot affect the finality of the orders made under the Ordinance. So the words in the section "any time" or "any Custodian" must necessarily be confined only to orders of any one of the Custodians defined in the Act and to orders of Custodians deemed to have been made under the Act but had not become final before the Act came into force. No other point was raised. In the result, the order of the Custodian General is set aside and that of the Custodian dated June 6, 1949, is restored. The respondents will pay the costs to the appellants. Appeal allowed.

The Custodian of Evacuee Property, Patiala, took possession of two houses under the provisions of the Patiala Evacuees (Administration of Property) Ordinance of Samvat 2004 (No. IX of 2004) but on the appellant claiming the houses as belonging to him they were released in his favour by the Custodian by an order dated June 6, 1949. Thereafter several Ordinances relating to evacuee property were passed one after another, the later one repealing the previous one and creating a chain of fictions by which certain provisions of the repealed Ordinance were deemed to continue under the repealing Ordinance. The last Ordinance was replaced by the Administration of Evacuee Property Act No. XXXI of 1950) under the provisions of which the Deputy Custodian General set aside the order of Custodian dated Julie 6, 1949, after giving notice to the present appellants. On appeal by special leave the appellants contended that (1) the deeming provisions of the repealing Ordinances and Acts culminating in section 58(3) of the Act apply only to things or action taken by the Custodian in exercise of his administrative powers and not to orders made by him in exercise of his judicial powers, (2) the order dated June 6, 1949 passed by the Custodian under Ordinance IX of 2004 could not be deemed to be an order passed under the, Act as the chain of fictions was broken when Ordinance No. XIII of 2006, repealing the previous Ordinance IX of 2004 was issued, (3) section 58 (3) of the Act expressly saves the previous operation of Ordinance XXVII of 1949 or any corresponding law and, therefore, the orders that had become final under the said Ordinance could not be revised under section 27 of the Act. Held, that the operation of section 58(3) of the (No. XXXI of 195o) was not confined only to administrative acts done by the Custodian under the earlier Ordinances but the provisions of that section applied also to judicial orders passed by him. 215 Indira Sohan Lal vs Custodian of Evacuee Property, Delhi, , followed. The order dated June 6, 1949, releasing the property in dis pute was passed under Ordinance No. IX of 2004 by the Custodian and not the Claims Officer as provided in the successive Ordinance No. XIII of 2006 and therefore that order could not be deemed to have been passed under the successive Ordinances and the Act. The alleged chain of fiction was broken during the period when Ordinance No. XIII of 2006 was in force. Even if the Custodian was the Claims Officer, his order must be deemed to be an order made under the later Ordinance only for the limited purpose of appeal or revisions. Under section 25 of the last Ordinance namely Ordinance No. XXVII of 1949 the order of the Custodian was appealable but no appeal having been filed it had become final under section 28. The order of the Custodian which had become final under the said Ordinance, could not be affected retrospectively under section 58(3) of the Act so as to deprive the order of the Custodian of the finality it had acquired under the said Ordinance. Section 58(3) does not contain any positive indication giving it such retroactivity but in express terms it saves the previous operation of that Ordinance. Colonial Sugar Refining Co. Lid. vs Irving, , followed. Indira Sohan. Lal vs Custodian of Evacuee property, Delhi; , , considered. Delhi Cloth and General. Mills vs Income tax Commissioner, Delhi, (1027) I.L.R. , referred to. janki Prasad vs The Custodian Evacuee Properly, Jullundur, Punj. 823, disapproved. The words "any time" or "any Custodian" in section 27 of the Act must necessarily be confined only to orders of any one of the Custodians defined in the Act and to orders of Custodians deemed to have been made under the Act but had not become final before the Act came into force.

Appeal No. 490 of 1957. Appeal from the judgment and decree dated March 22,1954, of the Allahabad High Court in Civil Misc. Writ No. 7854 of 1951. G. section Pathak, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. C. B. Agarwala, G. C Mathur and C. P. Lal, for respondents Nos. 1 and 3. March 6. The Judgment of section K. Das, M. Hidayatullah, J. C. Shah and N. Rajagopala Ayyangar, JJ. was delivered by J. C. Shah, J. K. C. Das Gupta, J. delivered a separate, Judgment. SHAH, J. In 1981, the appellant was admitted to the police force of the United Provinces and was appointed a Sub Inspector of Police. He was later promoted to the rank of Inspector, and in 1946 was transferred to the Anti corruption department. In 1947, he was appointed, while retaining his substantive rank of Inspector, to the officiating rank of Deputy Superintendent of Police. Shortly thereafter, complaints were received by the Chief Minister and Inspector General of Police ' U. P. charging the appellant with immorality, corruption and gross dereliction of duty. In a preliminary confidential enquiry, the Inspector General of Police came to the conclusion that "a prima facie case" was made out against the 20 154 appellant. He then directed that a formal enquiry be held against the appellant and passed orders reverting the appellant to his substantive rank of Inspector and placing him under suspension. An enquiry was held into the conduct of the appellant by the Superintendent of Police, Anti corruption department. The report of the Superintendent of Police was forwarded to the Government of U. P., and the Governor acting under r. 4 of the Uttar Pradesh Disciplinary Proceedings (Administrative Tribunal) Rules, 1947 herein after called the Tribunal Rules referred the case for enquiry to a Tribunal appointed under r. 3 of the Tribunal Rules on charges of corruption, personal immorality and failure to discharge duties properly. The Tribunal framed three charges against the appellant, and after a detailed survey of the evidence recommended on February 4, 1950, that the appellant be dismissed from service. The Governor then served a notice requiring the appellant to show cause why he should not be dismissed from service and after considering the explanation submitted by the appellant, the Governor ordered that the appellant be dismissed with effect from December 5, 1950. The appellant challenged this order by a petition instituted in the High Court of Judicature at Allahabad under article 226 of the Constitution for a writ of certiorari quashing the proceedings of the Tribunal and for a writ of mandamus directing the State of Uttar Pradesh to hold an enquiry under section 55 of the Civil Services (Classification, Control and Appeal) Rules. In support the order dismissing the appellant from High Court dismissing his petition, the appellant has raised three contentions: 1. that the order dismissing the appellant from the police force was unauthorised, because the Governor had no power under section 7 of the Police Act and the regulations framed thereunder to pass that order; 2. that even if the Governor was invested with power to dismiss a police officer, out of two alternative modes of enquiry, a mode prejudicial to the appellant having been adopted the proceedings of the Tribunal which enquired into the charges against him 155 were void, as the equal protection clause of the Con stitution was violated; and 3. that the proceedings of the Tribunal were vitiated because of patent irregularities which resulted in an erroneous decision as to the guilt of the appellant. To appreciate the first two contentions, it is necessary briefly to set out the relevant provisions of the laws procedural and substantive in force, having a bearing on the tenure of service of members of the police force in the State of Uttar Pradesh. The appellant was admitted to the police force constituted under Act V of 1861. By section 3 of that Act, superintendence throughout a general police district vests in and is exercised by the State Government to which such district is subordinate and except as authorised by the Act, no person, officer or court may be empowered by the State Government to supersede or control any police functionary. By section 4, the administration of the police throughout a general police district is vested in the Inspector General of Police. By section 7, it is provided that subject to the provisions of article 311 of the Constitution and to such rules as the State Government may from time to time make under the Act, the Inspector General, Deputy Inspectors General, Assistant Inspectors General and District Superintendents of Police may at any time dismiss, suspend or reduce any police officer of the subordinate rank whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same, or may award any one or more of the punishments (set out therein) to any police officer of the subordinate rank who discharges his duty in a careless or negligent manner or who by any act of his own renders himself unfit for the discharge thereof. Section 46 sub section(2) authorises the State Government to make rules for giving effect to the provisions of the Act, and also to amend, add to or cancel the rules framed. The Government of Uttar Pradesh has framed rules called the Police Regulations under the Indian Police Act. Chapter 32 containing Regulations 477 to 507 deals with departmental punishment and 156 criminal prosecution of police officers and Ch.33 containing Regulations 508 to 516 deals with appeals, revisions, petitions etc. By Regulation 477, it is provided that no officer appointed under section 2 of the Police Act shall be punished by executive order otherwise than in the manner provided in the chapter. Regulation 478A provides that the punishment of dismissal or removal from the force or reduction as defined in Regulation 482 may be awarded only after departmental proceedings. By Regulation 479 cl.(a), "full power" is reserved to the Governor to punish all police officers, and by cl.(b), the Inspector General is authorised to punish Inspectors and ill police officers of "lower ranks". Regulation 489 provides for the departmental trials of police officers and Regulation 490 provides that the departmental trials of police officers must be conducted in accordance with the rules set out therein. Regulation 490 in its various clauses makes provisions about oral and documentary evidence, framing of charges, explanation of the delinquent police officer, recording of statement of defence witnesses, recording of findings by the Superintendent of Police and the making of a report by the enquiry officer if he is of the view that the delinquent Police officer should be dismissed or removed from the force. Clause (9) provides that the police officer may not be represented by counsel in any proceeding instituted against him under the rules. By Regulation 508, every police officer against whom an order of dismissal or removal is passed is entitled to prefer one appeal against an order of dismissal from the police force to the authorities prescribed in that behalf, but against the order of the Governor in exercise of authority reserved under Regulation 479 cl.(a), no appeal is provided. By section 96B of the Government of India Act,, 1915, the tenure of all civil officers including police officers was at the pleasure of the Sovereign. In exercise of the powers conferred by sub.s.(2) of section 96B, classification rules were framed by the local Governments. In the Government of India Act, 1935, ch. 2 of Part X dealt with civil services, their tenure, recruitment and 157 conditions of service. The section corresponding to section 96B of the Government of India Act, 1915, in the later Act was section 240(1) and thereunder all members of the civil service held office during the pleasure of the Sovereign. By the Government of India Act, 1935, to every civil servant a two fold protection was guaranteed by cls.(2) and (3) of section 240(1) that he shall not be dismissed from service by any authority sub.ordinate to that by which he was appointed and that he shall not be dismissed or reduced in rank until be has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. But these provisions did not apply to police officers for whom a special provision was enacted in section 243. That section provided: "Notwithstanding anything in the foregoing provisions of this chapter, the conditions of service of the subordinate ranks of the various police forces in India shall be such as may be determined by or under the Act relating to those forces respectively. " The conditions of service of the police force of the subordinate ranks were under the Government of India Act, 1935 therefore only such as were prescribed by rules framed under section 7 and section 46(2) of the Police Act. By the Constitution of India, the distinction between police officers and other civil servants in the matter of protection by constitutional guarantees is abolished and as from January 26, 1950, the recruitment and conditions of service of all persons serving the Union or the State are now governed by article 309 and their tenure by article 310 of the Constitution. By Article 311, the protection granted under section 240 cls.(2) and (3) of the Government of India Act is extended to members of the police force as well. By Article 309, the conditions of service of public servants are made subject to the provisions of the Constitution and the Acts of the appropriate Legislature. By Article 310, except as expressly provided by the Constitution, (i.e., except in cases where there is an express provision for dismissal of certain public servants e.g., Judges of the Supreme Court and of the High Courts, Comptroller and Auditor General of India, Chief Election Commissioner) 158 all civil servants who hold office under the Union of India hold office during the pleasure of the 'President and all civil servants who hold office under the State hold it during the pleasure of the Governor. By virtue of article 313 of the Constitution, until other provision is made, all laws in force immediately before the Constitution and applicable to any public service which continues to exist under the Union or a State shall continue in force so far as consistent with the Constitution: the power of the police functionaries to dismiss police officers is therefore preserved. On November 4, 1947, the Governor of U. P. in exercise of, the powers conferred inter alia by section 7 of the Police Act, published the Tribunal Rules. By r. 1 el.(3), these rules apply "to all Government servants under the rule making control of the Governor" and are applicable to any acts, omissions or conduct arising before the date of commencement of the rules as they are applicable to those arising after that date. Clause (e) of r. 2 defines "corruption", el.(d) defines "failure to discharge duties properly" and el.(e) defines " personal immorality". Rule 4 authorises the Governor to refer to a Tribunal constituted under r. 3, cases relating to an individual Government servant or class of Government servant or servants in a particular area only in respect of matters involving (a) corruption, (b) failure to discharge duties properly.(e) irremediable general inefficiency in a public servant of more than ten years ' standing, and (d) personal im. morality. By cl. 2, the Governor is also authorised in respect of a gazetted Government servant on his own request to refer his case to the Tribunal in respect of matters referred to in sub.r. By r. 7, the proceedings of the Tribunal are to be conducted in camera and neither the prosecution nor the defense has the right to be represented by counsel. Rule 8 prescribes the procedure to be followed by the Tribunal and r. 9 deals with the record to be maintained by the Tribunal. Rule 10 states that the Governor shall not be bound to consult the Public Service Commission on the Tribunal 's recommendations and shall paw an order of punishment in the terms recommended by the Tribunal, provided "the Governor may for 159 sufficient reasons, award a lesser punishment". Rule 1 2 provides that nothing in the rules shall be deemed to affect the conduct of disciplinary proceedings 'in ' oases other than those specifically covered by the provisions of the Tribunal Rules. Rule 13 authorises the Governor to delegate the power to refer cases to gazetted officers,in charge of districts and to pass an order of punishment under r. 10 to heads of departments. Enquiry against the appellant, though commenced before the Constitution was concluded after the Constitution, and the order dismissing him from the police force was passed in December, 1950. Under Police Regulation 479(a), the Governor had the power to dismiss a police officer. The Tribunal Rules were framed in exercise of various powers vested in the Governor including the power under section 7 of the Police Act, and by those rules, the Governor was authorised to pass appropriate orders concerning police officers. By virtue of Article 313, the Police Regulations as well as the Tribunal Rules in so far as they were not inconsistent with the provisions of the Constitution remained in operation after the Constitution. The authority vested in the Inspector General of Police and his subordinates by section 7 of the Police Act was not exclusive. It was controlled by the Government of India Act, 1935, and the Constitution which made the tenure of all civil servants of a Province during the pleasure of the Governor of that Province. The plea that the Governor had no power to dismiss the appellant from service and such power could only be exercised by the Inspector General of Police and the officers named in s.7 of the police Act is therefore without substance. But it is urged that the enquiry held by the Tribunal against the appellant and the order consequent upon that enquiry deprived the appellant of the equal protection of the laws and were therefore void as infringing article 14 of the Constitution. It is true that when proceedings were started against the appellant for an enquiry for his alleged misdemeanors, one of two distinct procedures for holding an enquiry, was open for selection by the authorities. The police 160 authorities could direct an enquiry under the Police Regulations under the procedure prescribed by Regulation 490; it was also open to the Governor to direct an enquiry against the appellant, and as the charges against him fell within r. 4 of the Tribunal Rules, the procedure for enquiry was the one prescribed by r. 8 of the Tribunal Rules. Relying upon the existence of these two sets of rules simultaneously governing enquiries against police officers either ' of which could be resorted to at the option of the authorities in respect of charges set out in r. 4 of the Tribunal Rules, it was urged that in directing an enquiry against the appellant under the Tribunal Rules, discrimination was practiced against him, and he was deprived of the guarantee of equal protection of the laws. That an enquiry against the appellant could have been made under the procedure prescribed by Regulation 490 of the Police Regulations appears to be supported by rr.1(3), 4 and 12 of the Tribunal Rules. Rule 1 subr.(3) provides that the Tribunal Rules shall apply to all Government servants under the rule making control of the Governor, and by r. 4, the Governor is authorised to refer cases to the Tribunal, but he if; not obliged to do so. By r. 12, nothing in the Tribunal Rules is to affect the conduct of disciplinary proceedings in oases other than those specifically dealt with under the rules. But the order of the Governor directing an enquiry against the appellant was passed before the Constitution, and article 14 has no retrospective operation: it does not vitiate transactions even if patently discriminatory which were completed before the commencement of the Constitution. In Syed Qasim Razvi vs The State of Hyderabad (1), this court was called upon to decide whether a trial of an offender commenced before the Constitution under the Special Tribunal Regulation promulgated by the Military Governor of the Hyderabad State was, since the Constitution, invalid in view of article 14. Mukherjea J. speaking for the majority of the court observed: (1) 161 is not to obliterate the entire operation of the inconsistent laws or to wipe them out altogether from the statute book; for to do so will be to give them retrospective effect which they do not possess. Such laws must be hold to be valid for all past transactions and for enforcing rights and liabilities accrued before the advent of the Constitution. On this principle, the order made by the Mlitary Governor referring this case to the Special Tribunal cannot be impeached and consequently the Special Tribunal must be deemed to have taken cognizance of the case quite properly, and its proceedings up to the date of the coming in of the Constitution would also have to be regarded as valid." Similarly, Das, J. in Lachhmandas Kewalram Ahuja vs The State of Bombay (1) in dealing with the validity of proceeding before a Special Judge holding a trial before the Constitution observed: "As the Act was valid in its entirety before the date of the Constitution, that part of the proceeding before the Special Judge, which, up to that date, had been regulated by this special procedure cannot be questioned, however discriminatory it may have been. . ". Selection by the authorities of one of two alternative procedures at a time when article 14 was not in operation, does not therefore enable the appellant to contest the validity of the enquiry on the plea of denial of equal protection of the laws. It was also observed in Syed Qasim Razvi 's case(2) by Mukherjea J. at p. 606: "In cases of the type (where the trial commenced before the Constitution) Which we have before us where part of the trial could not be challenged as bad and the validity of the other 'part depends on the question as to whether the accused has been deprived of equal protection in matters of procedure, it is incumbent upon the court to consider, firstly, whether the discriminatory or unequal provisions of law could be separated from the rest and even without them a fair measure of equality in the matter (2) ; (2) 162 of procedure could be secured to the accused. In the second place, it has got to consider whether the procedure actually followed did or did not proceed upon the basis of the discriminatory provisions. In our opinion, a mere threat or possibility of unequal treatment is not sufficient. If actually the accused has been discriminated against, then and then only he can complain, not otherwise. We may mention here that the impossibility of giving the accused the substance of a trial according to normal procedure at the subsequent stage may arise not only from the fact that the discriminatory provisions were not severable from the rest of the Act and the court consequently had no option to continue any other than the discriminatory procedure; or it may arise from something done at the previous stage which though not invalid at that time precludes the adoption of a different procedure subsequently." The proceedings of the Tribunal prior to the commencement of the Constitution are therefore not open to challenge except to the limited extent indicated by Mukherjea J. The question which falls to be considered is whether the procedure followed by the Tribunal after the Constitution was discriminatory and operated to the prejudice of the appellant. Regulation 490 of the Police Regulations sets out the procedure to be followed in an enquiry by the police functionaries, and rr. 8 and 9 of the Tribunal Rules set out the procedure to be followed by the Tribunal. There is no substantial difference between the procedure prescribed for the two forms of enquiry. The enquiry in its true nature is quasi judicial. It is manifest from the very nature of the enquiry that the approach to the materials placed before the enquiring body should be judicial. It is true that by Regulation 490, the oral evidence is to be direct, but even under r. 8 of the Tribunal Rules, the Tribunal is to be guided by rules of equity and natural justice and is not bound by formal rules of procedure relating to evidence. It was urged that whereas the Tribunal may admit on record evidence which is hearsay, the oral 163 evidence under the Police Regulations must be direct evidence and hearsay is excluded. We do not think that any such distinction was intended. Even though the Tribunal is not bound by formal rules relating to procedure and evidence, it cannot rely on evidence which is purely hearsay, because to do so in ' and enquiry of this nature would be contrary to rules of equity and natural justice. The provisions for maintaining the record and calling upon the delinquent public servant to submit his explanation are substantially the same under Regulation 490 of the Police Regulations and r. 8 of the Tribunal Rules. It is urged that under the Tribunal Rules, there is a departure in respect of important matters from the Police Regulations which render the Tribunal Rules prejudicial to the person against whom enquiry is held under those rules. Firstly it is submitted that there is no right of appeal under the Tribunal Rules as is given under the Police Regulations; secondly that the Governor is bound to act according to the recommendations of the Tribunal and thirdly, that under the Tribunal Rules, even if the complexity of a case under enquiry justifies engagement of counsel to assist the person charged, assistance by counsel may not be permitted at the enquiry. These three variations, it is urged, make the Tribunal Rules not only discriminatory but prejudicial as well to the person against whom enquiry is held under these Rules. In our vie," , this plea cannot be sustained. The Tribunal Rules and the Police Regulations in so far as they deal with enquiries against police officers are promulgated under section 7 of the Police Act, and neither the Tribunal Rules nor the Police Regulations provide an appeal against an order of dismissal or reduction in rank which the Governor may pass. The fact that an order made by a police authority is made appealable whereas the order passed by the Governor is not made appealable is not a ground on which the validity of the Tribunal Rules can be challenged. In either case, the final order rests with the Governor who has to decide the matter himself. Equal protection of the laws does not postulate equal treatment of all persons without 164 distinction:it merely guarantees the application of the same laws alike and without discrimination to all persons similarly situated. The power of the Legislature to make a distinction between persons or transactions based on a real differentia is not taken away by the equal protection clause. Therefore by providing a right of appeal against the order of police authorities acting under the Police Regulations imposing penalties upon a member of the police force, and by providing no such right of appeal when the order passed is by the Governor, no discrimination inviting the application of article 14 is practiced. under r. 10 of the Tribunal Rules, the Governor is enjoined to pass an order of punishment in terms recommended by the Tribunal, whereas no such obligation is cast upon the police authority who is competent to dismiss a police officer when an enquiry is held under Regulation 490 of the Police Regulations. To the extent that r. 10 requires the Governor to accept the recommendation of the Tribunal, the rule may be regarded as inconsistent with the Constitution, because every police officer holds office during the pleasure of the Governor, and is entitled under article 311(2) to a reasonable opportunity to show cause to the satisfaction of the Governor against the action proposed to be taken in regard to him. The partial invalidity of r. 10 however does not affect the remaining rules: that part of the rule which requires the Governor to accept the recommendation of the Tribunal as to the guilt of the public servant concerned is clearly severable. We may observe that in considering the case of the appellant, the Governor exercised his independent judgment and passed an order of dismissal and did not act merely on the recommendation of the Tribunal. The difference between the two sets of rules on the matter under consideration does not relate to the procedure of the enquiring bodies, but to the content of reasonable opportunity guaranteed by article 311 of the Constitution. The rules relating to appearance of lawyers at enquiries under the Police Regulations and under the Tribunal Rules are also not different. Under cl.(9) 165 of Regulation 490 of the Police Regulations, an accused police officer may not be represented by counsel in any proceeding instituted under those Regulations, ' and by r. 7 of the Tribunal Rules, neither the prosecution nor the defence have the right to be represented by counsel. Both the rules deny to the police officer the right to be represented by counsel. The procedure provided in the Police Regulations is substantially the same as the procedure prescribed by the Tribunal Rules, and by continuing the enquiry after the Constitution under the Tribunal Rules and not under the Police Regulations, a more onerous procedure prejudicial to the appellant was not adopted. The Governor appointed the Tribunal for enquiry against the appellant before the Constitution, but the order of dismissal was passed after the Constitution came into force. The appellant was entitled to the protection of article 311(2) of the Constitution. Since the Constitution was enacted, the distinction which was made between members of the police force and other civil servants under sections 240, 241 and 243 of the Government of India Act has disappeared and all civil servants including the police officers are entitled to the protection of article 311(2). The content of the guarantee was explained by this court in Khem Chand vs The Union of India (1). It was observed by "To summarise: the reasonable opportunity envisaged by the provisions under consideration includes (a)an opportunity to deny his guilt and establish his innocence which he can only do if he is told what the charges leveled against him are and the allegations on which such charges are based; (b)an opportunity to defend himself by cross examining the witnesses produced against him and by examining himself or any other witnesses in support of his defence; and finally (c)an opportunity to make his representation as to why the proposed punishment should not be inflicted on him, which he can only do if the competent authority, after the enquiry is over and after (1) ; , 1096.166 applying his mind to the gravity or otherwise of the charges proved against the government servant tentatively proposes to inflict one of the three punishments and communicates the same to the government servant". To a police officer charged with misdemeanor, opportunity in all the three branches set out in Khemchand 's case (1)is provided under the Tribunal Rules. There is opportunity to the police officer against whom an enquiry is made to deny his guilt and to establish his innocence; there is opportunity to defend himself by cross examination of witnesses produced against him and by examining himself and other witnesses in support of his defence, and there is also opportunity to make his representation as to why the proposed punishment should not be inflicted. The discrimination which is prohibited by article 4 is treatment in a manner prejudicial as compared with another person similarly circumstanced by the adoption of a law, sub stantive or procedural, different from the one applicable to that other person. In Sardar Kapur Singh vs The Union of India (1), this court held that by directing an enquiry against a member of the Indian Civil Service who was charged with misdemeanor under, the and not under r. 55 of the Civil Services (Classification, Control and Appeal) Rules when there was no substantial difference between the material provisions, discrimination was not practiced. It was observed (at p. 581): "Does the holding of an enquiry against a public servant under the , 18,50 violate the equal protection clause of the Constitution? The appellant submits that the Government is invested with authority to direct an enquiry in one of two alternative modes and by directing an enquiry under the which Act it is submitted contains more stringent provisions when against another public servant similarly circumstances an enquiry under r. 55 may be directed, article 14 of the Constitution is infringed. " After considering the ,,special protection given to (1) ; 1096 (2) ; 167 members of the Indian Civil Service and the essential characterised of the procedure for making enquiries under the public Servants (Inquiries) Act,1850, it was observed at p.584. "The primary constitutional guarantee, a member of the Indian Civil Service is entitled to is one of being afforded a reasonable opportunity of the content set out earlier, in an enquiry in exercise of powers conferred by either the or r. 55 of the Civil Services (Classifi. cation, Control and Appeal) Rules, and disorimination is not practised merely because resort is had to one of two alternative sources of authority, unless it is shown that the procedure adopted operated to the prejudice of the public servant concerned. In the case before us, the enquiry held against the appellant is not in manner different from the manner in which an enquiry may be held consistently with the procedure prescribed by r. 55, and therefore on a plea of inequality before the law, the enquiry held by the Enquiry Commissioner is not liable to be declared void because it was held in a manner though permissible in law, not in the manner, the appellant says, it might have been held. " In Syed Qasim Razvi 's case (1), it was held that if the substance of the special procedure followed after the Constitution in an enquiry or trial commenced before the Constitution is the same as in the case of a trial by the normal procedure, the plea of discrimination invalidating a trial must fail, Counsel for the appellant in support of his plea that the enquiry by the Tribunal was vitiated because it was held under a discriminatory procedure relied judgment of this Bench in the State of Orissa Dhirendranath Das (2). In that case, a lower Division Assistant in the Secretariat of the Orissa Government was found guilty of certain misdemeanor by a Tribunal appointed under rules framed by the Orissa Government after an enquiry held in that behalf and was ordered to be dismissed from service. In a petition by the public servant under article 226 of the Constitution praying for a writ declaring illegal the order (1) (2) A.LR.168 of dismissal it was held by the Orissa High Court that ad on the date on which enquiry was directed against the petitioner there were two sets of rules in operation, the Tribunal Rules and the Bihar and Orissa Subordinate Services Discipline and Appeal Rules and it was open to the Government of Orissa to select either set of rules for enquiry against any public servant against whom a charge of misdemeanor was made and that selection of one in, preference to the other set of rules was violative of the guarantee of article 14 of the Constitution. The High Court accordingly declared the order of dismissal inoperative and further declared that the disciplinary proceedings be restored to the stage which they had reached when the case was referred to the Tribunal. Against that order, the State of Orissa preferred an appeal to this court. The relevant rules were not in that case incorporated in the paper book prepared for the hearing nor did counsel for the@ State produce for our consideration those rules. Counsel also conceded that by the adoption of the procedure prescribed by the Tribunal Rules in preference to the procedure in an enquiry under the Service Rules, discrimination would be practiced because there were substantial differences in the protection to which the public servants were entitled under the Service Rules and the Tribunal Rules. The only ground pressed in support of the appeal was that the Service Rules were not in operation at the time when the enquiry in question was directed and by directing an enquiry under the Tribunal Rules, discrimination was not practiced. But this argument raised for the first time questions which were never investigated and this court declined to allow counsel to raise them. It was observed in that case: "If the two sets of rules were in operation at the material time when the enquiry was directed against the respondent and by order of the Governor, the enquiry was directed under the Tribunal Rules which are "more drastic" and prejudicial to the interest of the respondent, a clear case of discrimination arises and the order directing enquiry 169 against the respondent and the subsequent proceedings are liable to be struck down as infringing article 14 of the Constitution." Before us, counsel for the appellants has produced a printed copy of the Disciplinary Proceedings (Administrative Tribunal) Rules, 1951 published by the Government of Orissa. A perusal of these rules may apparently suggest that subject to certain minor differences, these rules are substantially the same as the Tribunal Rules framed by, the State of U. P. We have however not been supplied with a copy of the Bihar and Orissa Subordinate Services Discipline and Appeal Rules, 1935. The judgment of this court in The State of Orissa vs Dhirendranath Das can have no application to this case, because in that case, the order of the High Court was. assailed on the limited ground that the High Court erred in assuming that there were two sets of rules simultaneously in operation, and it was open to the Executive Government to select one or the other for holding an enquiry against a delinquent public servant. That contention was negatived and the judgment of the High Court was confirmed. We do not think that there is any substance in the plea that discrimination was practiced by continuing the enquiry under the Tribunal Rules after the Constitution was brought into force. This appeal is filed with a certificate under article 132 of the Constitution. By ' el.(3) of article 132 the appellant is entitled to appeal to this court only on the ground that the High Court has wrongly decided a substantial question as to the interpretation of the Constitution and unless this court grants leave to him, on no other. Counsel for the appellant has challenged the regularity of the proceedings of the Tribunal and we have heard him to assure ourselves that the proceeding of the Tribunal has not been vitiated by any serious irregularity, or that the appellant was net deprived of the protection under article 311 of the Constitution. We proceed to consider briefly the arguments advanced in support of that plea. It was urged 170 in the first instance that the appellant was not permitted to appear at the enquiry before the Tribunal by a lawyer whereas the State Government was represented by a lawyer. It was averred in paragraph 14 of the affidavit of the appellant that the case for the prosecution was conducted by Jwala Prasad, Deputy Superintendent of Police and Legal Advisor to the Anti corruption Department, and that the Tribunal was told that such a course would be contrary to the Tribunal Rules and in any case contrary to rules of equity and natural justice, because he the appellant was not permitted to appear by counsel. In reply, Hari Shankar Sharma, Deputy Superintendent of Police stated in his affidavit that it was not true that before the Tribunal prosecution was conducted by Jwala Prasad. Ho also, stated that the Tribunal had required the presence of Sri Krishna who had made enquiries, but as Sri Krishna could not remain present, Jwala Prasad attended the sitting of the .Tribunal only on one day as Deputy Superintendent of Police, C.I.D., but he did not take any part in the proceedings, and "examination of witnesses and the cross examination was all done by the members of the Tribunal" and the appellant. It does not appear that Jwala Prasad was a practicing lawyer: he was not in any case permitted to appear as a lawyer and on the affidavit of Hari Shankar Sharma, it is clear that he did not take any part in the examination of witnesses or cross examination. It was then urged that the explanation submitted by the appellant was not considered because the Governor felt bound by the recommendations of the Tribunal. But in para 25 of the affidavit, Hari Shankar Sharma stated that the explanation of the appellant was submitted to the Government by the Inspector General of Police and the Governor duly considered the explanation and was of opinion that the appellant was unable to clear his conduct and therefore under r. 10(1) of the Tribunal Rules the Governor ordered dismissal of the appellant from service after considering the merits of his defence. It was then urged that the application submitted by the appellant for summoning witnesses and 171 calling for certain records was not considered and the appellant had on that account been prejudiced. In para 15 of his affidavit, the appellant stated that the Tribunal refused to call for certain records and though he wanted to summon certain defence witnesses, his application in that behalf was also refused. In answer P to this averment, Hari Shankar Sharma stated that the appellant had given a long list of defence witnesses and the Tribunal asked him to select those witnesses whose evidence in the opinion of the appellant would be relevant and thereupon the appellant " reduced his list to a much smaller number" and all those witnesses were summoned. Then it was urged that the assessor who is required under the rules to assist the Tribunal not having remained present at the hearing, the enquiry was vitiated. In paragraph 16 of the affidavit, the appellant has stated that during the enquiry section N. Agha the assessor was absent on many days on which the case was heard and the evidence was recorded. In reply, Hari Shankar Sharma stated that the contents of paragraph 16 of the affidavit were not correct, that it was true that Agha could not attend on certain dates "due to unavoidable circumstances", but the appellant was specifically asked if he had any objection to the recording of evidence in Agha 's absence and the appellant having stated that he has no objection, the proceedings were continued with his written consent. He further stated that the assessor was explained of the proceedings held on the days on which he had remained absent. The averments made in the affidavit of Hari ShankarSharma were not controverted by the appellant. On the materials placed on record, there is no substance in any of the pleas raised by the appellant relating to the regularity of the proceedings of the Tribunal. It may be pertinent to note that even though the appellant challenged before the High Court the regularity of the proceedings of the Tribunal, no argument was, it appears, advanced before the High Court in support thereof. The judgment of the High Court which is fairly detailed does not refer to any 172 ground on which the contention was sought to be sustained. The appeal fails and is dismissed with costs. DAS GUPTA, J. I have had the advantage or reading the judgment prepared by Shah J.; but while I respectfully agree with the conclusions on all other points, I regret my inability to agree with the conclusion reached there on the main question in controversy, viz. whether the Uttar Pradesh Disciplinary Proceedings (Administrative Tribunal) Rules, 1947 are void as being in contravention of article 14 of the Constitution, in so far as they do not provide for any appeal against a decision by the Governor under Rule 10. The facts have been fully stated by my learned Brother and need not be repeated, especially as the facts in this particular case do not arise for consideration in the decision of the question of law, whether article 14 is contravened by the above provisions of the Tribunal Rules. Under these rules the Governor may refer to the Tribunal constituted in accordance with rule 3 "cases relating to an individual government servant or class of government servants or government servants in a particular area only in respect of matters involving (a) corruption; (b) failure to discharge duties properly; (c) irremediable general ineffi ciency in a public servant of more than ten year 's standing; and (d) personal immorality." Under cl. 3 of rule 1 these rules apply to all government servants under the rule making control of the Governor. It is not disputed that these rules apply to every member of the police service in Uttar Pradesh and that the Governor may refer to the Tribunal the cases relating to any individual government servant belonging to the police department in respect of any of the matters mentioned 'in cl. (1) of Rule 4. It is also not disputed that if the Governor "does not make any such refe rence, the case of any such member of the police service in respect of any of these matters may be inquired into under the Uttar Pradesh Police Regulations. The co existence of the provisions of Police Regulations on 173 the question of departmental punishment of police officers with the Tribunal Rules, thus results in the position that of two members of the police service holding the same post and rank, one may be proceeded against in respect of any of the matters mentioned in Rule 4(1) of the Tribunal Rules, under the Tribunal Rules and another may be proceeded against for the self same matter under the Police Regulations. Where the inquiry is held under the Tribunal Rules, the Tribunal has to make a record of the charges, the explanation, its own findings and the views of the assessor and where satisfied that punishment be imposed, also formulate its recommendations about punishment. Under Rule 10 the Governor will then decide the case and no appeal shall lie against the order so passed by the Governor. Where the action is taken under the Police Regulations procedure, a police officer against whom an order of dismissal, removal, suspension or reduction is passed has a right of appeal to the authority prescribed in Regulation 508. The question is whether the existence of the right of appeal under the Police Regulation Procedure and the absence of the right, appeal against the decision by the Governor in the Tribunal Rules ' procedure amounts to unequal treatment. On behalf of the respondent it has been urged that there is no unequal treatment as in one case it is the order of the Governor which is made not appealable and in the other case it is the order of a police functionary which is made appealable. The argument seems to be that only if in the Police Regulations an order made by the Governor had been made appealable while under the Tribunal Rules the order made by the Governor was not appealable there could be any scope for a complaint of unequal treatment. With great respect to my learned brethren who have taken the contrary view, I am of the opinion that this argument misses the realities of the position and is really an attempt to slur over the difficulty. The real Position that requires examination appears to me to be this: Suppose A and B are two police officers holding the same rank and post and A is proceeded against under the 174 Tribunal Rules on a charge of corruption while B is proceeded against on a similar charge of corruption under the Police Regulations procedure. In the first case if the Tribunal finds A guilty and recommends, say, dismissal; and the Governor makes an order of dismissal, against this order there is no appeal. Suppose in B 's case also the punishing authority makes an order of dismissal but against this B has a right of appeal. It is obvious that while in the latter case B has some chance of the appellate authority taking a different view either about his guilt or about the quantum of punishment and setting aside or modifying the order, A has no such chance at all. It will be little consolation to A that the order in his case has been passed by such an high authority as the Governor. He can, it seems to me, legitimately complain that there is a real difference between the way he is treated and B is treated because of this existence of B 's right of appeal against the punishing authority 's order while he has no such right. Unless one assumes that the right of appeal is only in name, I do not see how one can deny that there is a legitimate basis for this complaint. I cannot agree that the right of ap. peal is a right without substance. Whenever one authority sits in appeal over another authority there is always a chance that the appellate authority may take a different view of facts or of law and as regards the quantum of punishment requisite, from the authority whose decision is under appeal. It is this chance which is denied, if a right of appeal is taken away. I am therefore of opinion that the absence of the right of appeal under Rule 10 of the Tribunal Rules while a right of appeal is given to a police officer under the Police Regulations, results in unequal treatment in a substantial matter, as between a police officer proceeded against under the Tribunal Rules and an officer who is proceeded against under the Police Regulations procedure. Nor is it possible to discover any principle to guide the discretion of the Government to select some police officers to be proceeded against under the Tribunal Rules while leaving out other police officers to be proceeded against, in respect 175 of similar matters, under the Police Regulations procedure. I have therefore come to the conclusion that the Tribunal Rules in so far as they provide that no appeal shall lie against the decision of the Governor is ultra vires the Constitution, being in contravention of article 14 of the Constitution. As has been noticed by Shah J. a somewhat similar question fell to be considered by us in Civil Appeal No. 103 of 1959 (State of Orissa vs Dhirendranath Das). Comparing the Disciplinary Proceedings (Administrative Tribunal) Rules., 1951 of the Orissa Government under which Dhirendranath Das had been proceeded against and dismissed from service with the Bihar and Orissa Subordinate Service Discipline and Appeal Rules, 1935 this Court held that inasmuch as there was a right of appeal to the authority immediately superior to the punishing authority under the Service Rules. while there is no such appeal against the findings and recommendations of the Tribunal, the pre proeedings were substantially different. The court further pointed out that as inquiries could be directed according to procedures substantially different at the, discretion of the executive authority "exercise whereof is not governed by any principle,% having any rational relation to the purpose to be achieved by the inquiry, the order selecting a prejudicial procedure, out of the two open for selection, is hit by article 14 of the Constitution. " I cannot find anything here that would justify a revision of the view taken by us in that case. As in my judgment the U. P. Disciplinary Proceedings (Administrative Tribunal) Rules, 1947 are hit by article 14 of the Constitution I would allow the appeal and set aside the order of dismissal passed against the appellant By Court. In view of the majority Judgment of the Court, the appeal fails and is dismissed with costs. Appeal dismissed.

There were certain charges of immorality, corruption and gross dereliction of duty against the appellant who was a police officer. After an enquiry, the Governor of U. P. referred the case under section 4 Of the U. P. Disciplinary Proceedings (Administrative Tribunal) Rules, 1947, to a Tribunal. The Tribunal recommended on February 4, 1950, that the appellant be dismissed from service. The Governor then served a notice on the appellant to show cause why he should not be dismissed from service and after considering the explanation submitted by him dismissed him with effect from December 5, 1950. The appellant challenged the order of dismissal, inter alia, on the grounds: (i) that the Governor had no power under section 7 of the Police Act and the U. P. Police Regulations framed thereunder to dismiss a police officer and (ii) that the enquiry held by the Tribunal violated 152 article 14 Of the Constitution as of the two parallel procedures available under the Tribunal Rules and under the U. P. Police Regulations, the mode prejudicial to the appellant under the Tribunal Rules was adopted. Held (per Das, Hidayatullah, Shah and Ayyangar, JJ.) that the enquiry by the Tribunal and the order of dismissal passed by the Governor were legal and valid. Under para. 479(a) of the U. P. Police Regulations, framed under section 7 Of the Police Act, the Governor bad the power to dismiss a police officer. Under the Tribunal Rules also, which were framed in exercise of the various powers vested in the Governor including the power under section 7 Of the Police Act, the Governor was authorised to dismiss a police officer. By virtue of article 313 Of the Constitution these provisions remained in operation even after the coming into force of the Constitution. The authority vested in the Inspector General of Police and his subordinates by section 7 of the Police Act, was not exclusive; it was controlled by the Government of India Act, 1935, and the Constitution which made the tenure of all civil servants of a province or state during the pleasure of the Governor. The procedure adopted did not violate article 14 Of the Con stitution. Though at the time when proceedings were started against the appellant two distinct procedures for holding the enquiry were open for selection by the authorities, the order by the Governor referring the case under the Tribunal Rules having been passed before the Constitution, article 14 could have no application to it even if it was discriminatory. The procedure ire scribed in the Police Regulations is substantially the same as the procedure prescribed by the Tribunal Rules, and by continuing the enquiry after the Constitution under the Tribunal Rules and not under the Police Regulations, a more onerous procedure prejudicial to the appellant was not adopted. The fact that an order made by a police authority under the Police Regulations is made appealable whereas an order passed by the Governor under the Tribunal Rules is not made appealable does not amount to discrimination within the meaning of article 14. The Tribunal Rules provide for the giving of reasonable opportunity to a public servant in ill its aspects, viz., opportunity to deny his guilt, opportunity to defend himself and opportunity ,to make his representation against the proposed punishment. The mere existence of two sets of parallel procedures is not discriminatory unless it was shown that one set is more onerous than the other. Syed Qasim Rozvi vs The State of Hyderabad and Lackhmandas Kewalram. Abuja vs The State of Bombay, ; , applied. Khem Chand vs The Union of India and others, [1954] S.C. R. 1080 and Sardar Kapur Singh V: Union of India, (1960) 2 S.C. R. 569, referred to. 153 State Of Orissa vs Dhirendranath Das, A.I.R. 1961 S.C. 1715, distinguished. Per Das Gupta, J. The U.P., Disciplinary Proceedings (Administrative Tribunal) Rules, 1947, are hit by article 14 Of the Constitution. The absence of the right of appeal under the Tribunal Rules while a right of appeal is given to a police officer under the Police Regulations, results in unequal treatment in a substantial matter between police officers proceeded against under the two procedures. Further, there is no principle. to guide the Government in selecting which of the two procedures is to be applied in a particular case.

Appeal No. 535 of 1958. Appeal from the judgment and order dated March 29,1955, of the Assam High Court in I.T.R. No. 1 of 1954. A.V. Viswanatha Sastri and D. N. Mukherjee, for the appellants. Hardayal Hardy and D. Gupta for the respondent. March 13. The Judgment of the Court was delivered by HIDAYATULLAH, J. This appeal which has been filed with a certificate under section 66(A)(2) granted by the High Court of Assam against its judgment and order dated March 29, 1955, concerns the assessment of the appellants, a Hindu undivided family, for the assessment years, 1945 1946 and 1946 1947. The appellants owned a tea garden called the Sewpur Tea Estate in Assam. They had on the Estate, factories, labour quarters, staff quarters etc. On February 27, 1942, the Military authorities requisitioned all the factory buildings, etc., under R. 79 of the Defence of India Rules. Possession was taken sometime between March land March 8, 1942. The tea garden was, however, left in the possession of the appellants. The possession of the military continued till the year 1945, and though the appellants looked after their tea garden the manufacture of tea was completely stopped. Under the Defence of India Rules, the Military authorities paid compensation. For the year 1944, corresponding to the assessment year, 1945 1946, they paid a total sum of Rs. 2,22,080 as compensation including a sum of Rs. 10,000 for repairs to quarters for labourers and Rs. 144 which represented the assessor 's fee. For the year 1945, corresponding to the assessment year, 1946 1947, the Military authorities paid a sum of Rs. 2,46,794 which included a sum of Rs. 15,231 for other repairs. The sums paid for repairs appear to have been admitted as paid on capital account, and rightly so. The question was whether the two Sums paid in the two 259 years minus these admitted sums, or any portion thereof, were received on revenue or capital account. The assessments for the two years were made by different Income tax Officers. For the assessment year, 1945 1946, the Income tax Officer deducted from Rs. 2,22,080, a sum of Rs. 1,05,000 on account of admissible expenses. He then applied to the balance Rs. 1,17,080, R. 24 of the Indian Income tax Rules, 1922, and brought to tax 40 per cent of that sum amounting to Rs. 46,832. The assessment was made under section 23(4). For the assessment year, 1946 1947, the assessment was made under section 23(3) of the Incometax Act. The Income tax Officer excluded the sum paid on account of repairs and treated the whole of the amount as income taxable under the provisions of the Income tax Act, after deduction of admissible expenditure. The appeals filed by the appellants to the Appellate Assistant Commissioner against both the assessments were unsuccessful. On further appeal, the Income tax Appellate Tribunal (Calcutta Bench) was divided in its opinion. The Judicial Member held that the receipts represented revenue but on account of "use and occupation" of the premises requisitioned. He, therefore, computed the not compensation attributable to such use and occupation at 20 per cent of the total receipts in both the years. He however, observed that if the receipts included income from the tea estate he would have been inclined to apply R. 24 in the same way as the first Income tax Officer. The Accountant Member was of the opinion that the appellants were liable to pay tax on 40 per cent of their receipts in both the years after deduction of the sums paid for repairs of buildings and the admissible expenditure. He accepted the estimate of expenditure for the account year, 1944,. at RE;. 1,05,000, and directed that the admissible expenditure for the succeeding year be determined and deducted before the application of R. 24. It appears that through some inadvertence these two orders which were not unanimous, were sent to the appellants and the Department. The Commissioner of Income tax filed an application under section 66(1) for a 260 reference, while the appellants filed an application under section 35 for rectification of the orders, since many other matters in appeal were not considered at all. When these two applications came before the Tribunal, it was realised that the matter had to go to a third Member for settling the difference. The President then heard the appeal, and agreed with the Accountant Member. Though he expressed a doubt whether the appellants were entitled to the benefit of rr. 23 and 24, he did not give an opinion, because this point was not referred to him. The Tribunal then referred the case to the High Court of Assam on the following two questions: "(1). Whether the sums of Rs. 2,12,080 and RE;. 2 31,563 paid by the Government to the assessee in 1945 and 1946 respectively (exclusive of the sums paid specifically for building repairs) were revenue receipts in the hands of the assessee comprising any element of income? (2). If so, whether the whole of the said sums less the expenses incurred by the assessee in tending the tea bushes constituted agricultural income in his hands exempt from tax under the Indian Income tax Act, 1922?" The reference was heard by Sarjoo Prasad, C.J., and Ram Labhaya, J., along with two writ petitions, which had also been filed. They delivered separate judgments, but concurred in their answers. The High Court answered both the questions against the appellants. The writ petitions were also dismissed. Before we deal with this appeal, we consider it necessary to state at this stage the method of calculation of compensation adopted by the Military authorities. It is not necessary to refer to both the years, because what was done in the first year was also done in the following year except for the change in the amounts. This method of calculation is taken from the order of the Judicial Member, and is as follows: 261 Rs. A. P. Crop 211120 1bs. at 17.85d (half) and at 18.35d (half) 2,12,292 14 0 15480 1bs. at Rs. 0 11 10 11, 449 12 0 52600 1bs. at Rs. 0 15 6 50,956 4 0 2,74, 698 14 0 Less Saving of plucking and manufacturing: Rs. (a) Expenses at annas 3 per lb. 49,209 (b) Sale of export rights, 1,32,935 1bs. 4,924 (c) Purchase of export rights 78,185 lbs. at annas 4. 1,629 (d) Food and clothing concessions 7,000 62,762 0 0 2,11,9360 0 Add For fees of assessors, Rs. 144 Coolie lines repairs, Rs. 10,000 10,1440 0 Rs. 2,22,08000 From the admitted facts which have been summarised above, it is clear that the business of the appellants as tea growers and tea manufacturers had come to a stop. The word "business" is not defined exhaustively in the Income tax Act, but it has been held both by this Court and the Judicial Committee to denote an activity with the object of earning profit. To say that a business is being carried on, means no more than that profit is to be earned by a process of production. The business of a tea grower and manu facturer is not merely to grow tea plants but to collect tea leaves and render them fit for sale. During the years in question, the appellants were tending their tea garden to preserve the plants, but this activity cannot be described as a continuation of the business, 262 which had come to an end for the time being. It would have hardly made any difference to the carrying on of business, if, instead of the factories and buildings, the tea garden was requisitioned and occupied, because in that event also, the business Would have come to a standstill. The compensation which was paid in the two years was no doubt paid as an equivalent of the likely profits in those years; but, as pointed out by Lord Buckmaster in The Glenboig Union Fireclay Co. Ltd. vs The Commissioners of Inland Revenue (1) and affirmed by Lord Macmillan in Van Den Berghs Ltd. vs Clark (2), "there is no relation between the measure that is used for the purpose of calculating a particular result and the quality of the figure that is arrived at by means of the application of that test". This proposition is as sound as it is well expressed, and has been followed in numerous cases under the Indian Income tax Act and also by this Court. It is the quality of the payment that is decisive 1 of the character of the payment and not the method of the payment or its measure '. and makes it fall within capital or revenue. We are thus required to determine what was it that was paid for, or, in other words, what did the two payments replace, if they replaced anything. The arguments at the Bar followed the pattern which has by now become quite familiar to Courts. We were taken to the 12th Volume of the Tax Cases series, where are collected case,% dealing with Excess Profits Duty and Corporation Profits Tax in England follow ing the First World War, and to, other English case, , reported since. These cases have been considered and applied on more than one occasion by this Court, and we were referred to those cases as well. Now, it is necessary to point out that the English cases were decided under a different system of taxation and must be read with care. A case can only be decided on its own facts, and the desire to base one 's decision on another case in which the facts appear to be near enough sometimes leads to error. It is well to (1) (2) ; 263 remember the wholesome advice given by Lord Dunedin in Green vs Gliksten & Son Ltd. (1) that "in these Income Tax Act cases one has to try, as far as possible, to tread a narrow path, because there are quagmires on either side into which one can easily be led. . " The English cases to which we were referred, were used even in England by Lord Macmillan in Van Den Berghs ' case (2) as mere illustrations, and when cited before the Judicial Committee in Income Tax Commissioner vs Shaw Wallace & Co.(3) were put aside by Sir George Lowndes with this observation "their Lordships would discard altogether the case law which has been so painfully evolved in the construction of the English income tax statutes both the cases upon which the High Court relied and the flood of other decisions which has been let loose in this Board". Most of the cases cited before us deal with Excess Profits Duty and Corporation Profits Tax. In the former group, pre war profits had to be determined, so that they might be Compared with post war business for the purpose of arriving at the excess profits, if any. In dealing with the pre war profits, diverse receipts were considered from the angle whether they formed capital or revenue items. The observations which have been made are sometimes appropriate to the nature of the business to which the case related and the quality of the payment in relation to that business. Similarly, the Corporation Profits Tax was a tax intended to be imposed upon the profits of British Companies (which included some other corporate bodies ' carrying on trade or business including the ' business of investments. The profits which were taxed under section 52 of the English, Finance Act were required to be determind according to the principles laid down in that Act. It is thus obvious that though the English cases may be of some help in an indirect way by focussing one 's attention on what is to be regarded as relevant (1) 384 (2) ; (3) (1932) L.R 59 J.A. 206. 264 and what rejected, they cannot be regarded in any sense as precedents to follow. Since this Court on other occasions used these cases as an aid, we shall refer to them briefly; but we have found it necessary to sound a warning, because the citation of these authorities has occasionally outrun their immediate utility. We begin with the oft cited case of The Glenboig Union Fireclay Co. Ltd. (1). That was a case under the Excess Profits Duty. The facts are so well known that we need not linger over them. A seam of fireclay could not be worked, and compensation was paid for it. That the clay was capital asset was indisputable, and the portion lost was a slice of capital. The hole made in the capital was filled up by the compensation paid. It was said that a portion of the capital asset was sterilized and destroyed, and even though the business went on, the payment was treated as on capital account. The case cannot be used as precedent, because here, no doubt, the factories and buildings were apart of fixed capital, but the payment was not so much to replace them in the hands of the appellants as to compensate them for the stoppage of business. The Glenboig case (1) does not apply. The case of Short Bros. Ltd. vs The Commissioners of Inland Revenue (2), another case under the Excess Profits Duty, illustrates a contrary principle. The Company had agreed to build two ship;, 'but the contracts were cancelled and E. 100,000 were paid for cancellation of the contracts. This was held to be a receipt in the ordinary course of the Company 's trade. Rowlatt, J., said that it was "simply a receipt, in the course of a going business, from that going business nothing else". In the Court of Appeal, Lord Hanworth, M.R., affirmed the decision, observing: "Looked at from this (business) point of view it appears clear that the sum received was received in ordinary course of business, and that there was not in fact any burden cast upon the company not to carry on their trade. It was not truly compensation (1) (2) 265 for not carrying on their business; it was a sum paid in ordinary course in order to adjust the relation between the shipyard and their customers. " The payment was by a customer to the shipyard. Whether the amount was paid for ships built or because the contract was cancelled, it was a business receipt and in the course of the business. In the present case, the payment is not of this character, and Short Bros. case (1) does not apply. The next case also of Excess Profits Duty is The Commissioners of Inland Revenue vs Newcastle, Breweries, Ltd. (2). In that case, the admiralty took over one third stock of rum of the Brewery, and paid to the Company the cost plus 1 section per proof gallon. Later, the compensation was increased by an amount of E. 5,309 and was brought to tax in the earlier year, when the original compensation was paid. The observations of Rowlatt, J., though made to distinguish the case from one in which the compensation is paid for destruction of business, are instructive. We shall refer to them later. The learned Judge held that this was a case of compulsory sale of rum, and that a compulsory sale was also a sale. The receipt was held to be a profit. The decision was affirmed by the Court of Appeal. This case also, so far as its facts go, was very different, and the actual decision has no relevance. The Commissioners of Inland Revenue, vs The Northfleet Coal and Ballast Co. Ltd. (3) was a case like Short Bros. case (1). ;E. 3,000 in a lump sum were paid to be relieved from a contract, and as the business was a going business, it was held to be profit. In fact, Short Bros. case (1) was applied. Ensign Shipping Co. Ltd. V. The, Commissioners of Inland Revenue 4 a case of Excess Profits Duty, is interesting. During the Coal Strike of 1920, two ships of the Company were ready to sail with cargoes of coal. They were detained for 15 and 19 days respectively by orders of Government. In April 1924,pound 1,078/were paid as compensation, and were held to be (1) (3) 34 (2) (4) 266 trading receipts. Rowlatt, J., laid down that if there was an operation which produced income, it was none the less taxable, because it was a compulsory operation. The learned Judge then observed that he could not hold that this was a case of hire, like Sutherland vs The Commissioners of Inland Revenue (1), because the ships lay idle and their use was interrupted. The learned Judge then concluded: "Now it is quite dear that if a source of income is destroyed by the exercise of the paramount right. and compensation is paid for it, that that is not income, although the amount of the compensation is the same sum as the total of the income that has been lost. but in this case I have got to decide the case of a temporary interference. Here these ships remained as ships of the concern. they merely could not sail for a certain number of days, and in lieu of the value of the use which they would have been to their owners in their profit earning capacity during those days, in lieu of that receipt, this money was paid to the owners, although they were not requisitioned, as if requisitioned. I think I ought to regard this sum, as the Commissioners have obviously regarded it, as a sum paid which to the shipowners stands in lieu of the receipts of the ship during the time of the interruption. " This decision was approved by the Court of Appeal. Now, the case was one of loss of time during which the ships would have been usefully and profitably employed. It was argued in the Court of Appeal with the assistance of the Glenboig case (2), and it was suggested that the vessels, were `sterilised ' for the period of detention. Lord Hanworth said that that was rather a metaphorical word to use, and that the correct way was to look at the matter differently. The Master of the Rolls observed: "But in the present case it seems to me that, looked at from a business point of view, all that has happened is that the two vessels arrived much later at the ports to which they were consigned than they would have done, with the consequent result (1) (2) 267 that for the certain number of days which they were late they could not possibly make any earnings, and it is in respect of that direct loss by reason of the interference with the rights exercised on behalf of His Majesty that they made a claim and have been paid compensations This ruling was strongly relied upon by the Department as one which laid down a principle applicable here. We do not agree. The, payment there was made towards loss of profits of a going business, which business was not destroyed. As a source of income, the business was intact, and the business instead of being worked for the whole period, was worked for a period less by a few days and the profit of that period was made up. That may be true if one is going to determine standard profits of a particular period, because what is paid goes to profits in the period but is of no significance in a case like the present, where during the whole of the year no business at all was done nor profits made. This case also does not help to solve the problem. Charles Brown & Co. vs The Commissioners of Inland Revenue (1) is yet another case of Excess Profits Duty. In that case, the business of the taxpayer was carried on under the control of the Food Controller from 1917 to 1921, and he was compelled to bay and sell at prices fixed by the Controller . By agreement a 'mill standard ' was fixed, and the tax. payer was allowed to retain profits up to that standard, and if there was a shortfall, it was to be made up by the Controller. This amount which the taxpayer retained together. with the amount paid towards shortfall was regarded as profits. The principle applicable is easily discernible. There can be little doubt that the trade was being carried on, and what was received was rightly treated as profits. Howlatt, J., observed that this was a clearer case than the Ensign case (2). The matter was covered by section 38 of the Finance (No. 2) Act of 1915, Fourth Schedule, Part 1(1), where the words were "The profits shall be taken to be the actual profits arising in the accounting period". (1) (1) 268 In Barr Crombie & Co. Ltd. vs The Commissioners of Inland Revenue (1), the Company 's business consisted almost entirely of managing shipping for another Company. When the shipping Company went into liquidation, a sum was paid as compensation to the managing Company. It was held that this was a capital receipt. The reason for holding thus was that the structure (if the managing Company 's whole business was affected and destroyed, and this was not profit but compensation for loss 'of capital. Kelsall Parsons & Co. vs The Commissioners of Inland Revenue (2), to which we shall refer presently, was distinguished on the ground that, though in that case the agency was cancelled, the payment was for one year and that too, the final year. This case is important in one respect, and it is that if the entire business structure is affected and destroyed, the payment may be regarded as replacing capital, which is lost. These are cases of Excess Profits Duty where profits for a particular period had to be determined and also the character of the payments in relation to the kind of business, to determine whether to treat them as excess profits or not. In the Glenboig case (1), the payment was not regarded as profit, because it replaced lost capital and so also, in Barr Crombie case(1). These form the first group. Short Bros. case Northfleet case (5) and Ensign Shipping CO 's case were of a going business, and what was paid was towards lost profits in a going concern. These form the second group. Newcastle Breweries case (7) and Charles Brown and 60 's case (3) were of business actually done and profits therefrom. None of these rulings is directly in point. In the case with which we are concerned, the payment was not towards any capital asset to attract the first group, there was no going business so as to attract the second, and nothing was bought nor any business done with the taxpayer to make the third group applicable. (1) (2) ; (3) (4) (5) (6) (7) (8) 269 We shall next see some cases which involved Corporation Profits Tax. In The Gloucester Railway Carriage and Wagon Co. Ltd. vs The Commissioners of Inland Revenue(1), the Company was doing business of selling wagons and of hiring them out. The Company then sold all the wagons which it was using for purposes of hiring. The receipt was treated as profit of trade, there being but one business and the wagons being the stock in trade of that business. In Green vs Gliksten & Son Ltd.(2), stocks of timber were destroyed. Their written down value was pound 160,824 but the Insurance Company paid :E. 477,838. The Company credited E. 160,824 in its trading account but not the balance. The House of Lords held that the timber, though burnt, was realised, and that the excess of the sum over the written down book value must be brought into account. These two cases throw no light upon the problem with which we are faced, and any observations in them are so removed from the facts of this case as to be of no assistance. The cases under Sch. D of the Income tax Act like Burmah Steam Ship Co. Ltd. vs The Commissioners of Inland Revenue(3), a case of late delivery of ships sent for overhaul, Greyhound Racing Association (Liverpool) Ltd. vs Cooper(4), which was a case of surrender of an agreement in which the amounts were treated as trading receipts, are not cases of stoppage of a business and are not relevant. Kelsall Parsons case(5), where one of the agreements of a commission agency which was to run for 3 years was terminated at the end of the second year and compensation of pound 1500/ was paid for the last and final year, was held on its special facts to involve taxable profits of trading. Though the business came prematurely to an end, the struc ture of the business was not affected because the payment was in lieu of profits in the final year of the business as if business had been done. The payment was held to be within the structure of the business in the same way as in Shove vs Dura Manufacturing Co. Ltd. (6). The converse of these cases is the well known (1) (3) (5) ; 270 Van Den Berghs Ltd. vs Clark (1), where mutual trade agreements were rescinded between two Companies and pound 450,000 were paid to the assessee Company as ",damages". This was treated as capital receipt and not as income receipt to be included in computing the profits of trade under Sch. D Case 1 of the Income tax Act of 1918. Lord Macmillan observed: "On the contrary the cancelled agreements related to the whole structure of the appellants ' profitmaking apparatus. They regulated the appellant 's activities, defined what they might and what they might not do, and affected the whole conduct of their business. I have difficulty in seeing how money laid out to secure, or money received for the cancellation of, so fundamental an Organisation of a trader 's activities can be regarded as an income disbursement or an income receipt". We have referred to these cases to show that none of them quite covers the problem before us. The facts are very dissimilar, and the observations, though attractive, cannot always be used with profit and often not without some danger of error. We shall now turn to the cases of this Court, which were referred to at the hearing. The first case of this Court is The Commissioner Income Tax and Excess Profits Tax, Madras vs The, South India Pidures Ltd., Karaikudi (2). The South India Pictures, Ltd., held distribution rights for 5 years of three films towards the completion of which they had advanced money to a film producing Company, called the Jupiter Pictures. When the term had partially run out, the agreement for distribution was cancelled, and the South India Pictures, Ltd., received Rs. 26,000/ as commission. The question was whether this sum was on capital or revenue account. Das, C. J., and Venkatarama Aiyar, J., held that it was the latter, while Bhagwati, J., held that it was the former. The learned Chief Justice came to his conclusion on four grounds: (i) that the payment was towards commission which would have been earned; (ii) that it was not the price of any capital (1) ; (2) ; 271 asset sold, surrendered or destroyed; (iii) that the structure of the business, which was a going business, was not affected; and (iv) that the payment was merely an adjustment of the relation between the South India Pictures, Ltd. and the Jupiter Pictures. The learned Chief Justice thus rested his decision on, Short Bros '(1) and Kelsall Parsons '(2) cases and not upon Van den Berghs (3) or Barr Crombie 's case (4). Bhagwati, J., who dissented, judged the matter from the angle of business accountancy. He observed that money advanced to produce the cinema pictures, if returned, would have been credited on the capital side as a return of capital, just as expenditure for distribution work was revenue expenditure and the commission, a revenue receipt. On a parity of reasoning, the learned Judge held that money spent in acquiring distribution rights was a capital outlay, and that when distribution rights were surrendered, it was capital which was returned, since the agreement was a composite one, the films were a capital asset and the payment for their release was a return of capital. With due respect, it is difficult to see how the payment could be regarded as capital in that case. The fact which seems to have been overlooked in the minority view was that the entire capital outlay had, in fact, been previously recouped and even the security held by the South India Pictures had been extinguished. It was a portion of the running business which ceased to be productive of commission and by the payment, the commission which would have been earned and would have constituted a revenue receipt when so earned, was put in the pockets of the South India Pictures. The business of the South India Pictures. was still & going business, one portion of which instead of being fruitful by stages became fruitful all at once. What was received was still the fruit of business and thus revenue. The case, though interesting, is difficult to apply '. in the present context of facts, where no business at all was done and what was received was not the fruit of any business. (1) (3) ; (2) ; (4) 272 The next case of this Court, Commissioner of Income Tax vs Jairam Valji (1), may be seen. The assessee there was a contractor, and received Rs. 2,50,000 as compensation for premature termination of a contract. This was held to be a revenue receipt. The assessee had many businesses including many contracts, and the receipt was considered as one in the ordinary course of business. All the English decisions to which we have referred, were examined in search for principles, but the principle on which the decision 'was rested, was that the payment wag an adjustment of the rights under the contract and must be referred to the profits which could be made if the contract had instead been carried out. The payment not being on account of capital outlay and the assessee not being prevented from carrying on his business, the receipt was held to be revenue, that is to say, related to income from a contract terminated prematurely. In a sense, the case is analogous to The South India Pictures, Ltd. case which it follows. In The Commissioner of Income tax, Hyderabad Deccan vs Messrs. Vazir Sultan & Sons (3), the assessee held the sole selling agency and distribution rights of a particular brand of cigarette, in the Hyderabad State on foot of a 2 per cent discount on all business done. Subsequently, the area outside Hyderabad State was also included on the same terms. Later still, the area was again reduced to the Hyderabad State. Rs. 2,19,343 were paid by way of compensation "for loss of territory outside Hyderabad". Bhagwati, J., and Sinha, J., (as he then was), held that the compensation was on capital account, while Kapur, J., held otherwise. The reason given by the majority was that the agency agreement was a capital asset and the payment was in lieu of the loss of a portion of the capital asset. Kapur, J., on the other Wand, held that the loss which was replaced was the loss of agency commission and bore its character. The case furnishes a difficult test to apply. If what was adjusted was the relationship between the parties and if (1) [1959] Supp. 1 S.C.R. 110. (2) ; (3) [1959] SUPP. 2 S.C.R. 375. 273 there was a going business as, in fact, there was, the case comes within the dicta in The South India Pictures Ltd. case (1) and Jairam Valji 's case (2). The case can only be a decision on the narrow ground that a portion of the 'fixed capital was lost and paid for. In Godrej & Co. vs Commissioner of Income tax(3) the assessee firm, which held a managing agency, released the managed Company from an onerous agreement and inconsideration,, was paid Rs. 7,50,000. It was held that the payment was not made to make up the difference in the remuneration of the managing agency firm bat to compensate it for the deterioration or injury of an enduring kind to the managing agency itself. The injury being thus to a capital asset, the compensation paid was held to be on capital account. The last case of this Court to which reference may be made is Commissioner of Income tax vs Shamshere Printing Press (4). That 'was a very special case. There, the premises of the Press were requisitioned by Government, but the Press was allowed to set up its business elsewhere, the charges for shifting the machines, etc., being paid by Government. In addition, Government paid a sum claimed as loss of profits, which was expected to bring up the profits to the level of profits while the business was in its old place. The ' assessee claimed that this sum was paid as compensation for loss of goodwill arising from its old locality. There was however, nothing to show that the payment was goodwill and it was held that the compensation paid must be regarded as money arising as profits in the course of business. It was like putting money in the till to bring the profits actually made by the level of normal profits. All these cases were decided again on their special facts. Though they involved examination of other decisions in search for the true principles, it cannot be said that they resulted in the discovery of any principle of universal application. To summarise them: South India Pictures ' case (1) was so decided because (1) ; (2) [1959] SUPP. 1 S.C.R. 110. (3) [1960] 1 S.C.R. 527.(4) [1960] 39 I.T.R. go. 35 274 the money received was held to be in lieu of commission which would have been earned by the business which was still going, and the receipt was treated as the fruit of the business. The same reason was given in Jairam Valji 's case (1) and Shamshere Printing Press case (2). In Vazir Sultan 's case (3), the compensation was held to replace loss of capital, and in Godrej 's case (4), the compensation was said not to have any relation to the likely income or profits but to loss of capital. Each case was thus decided on its facts. We have so far shown the true ratio of each case cited before us, and have tried to demonstrate that these cases do no more than stimulate the mind, but none can serve as a precedent, without advertence to its facts. The nature of the business, or the nature of the outlay or the nature of the receipt in each case was the decisive factor, or there was a combination of these factors. Each is thus an authority in the setting of its own facts. Before we deal with the facts of this case and attempt to answer the question on which there is so much to guide but nothing to bind, we will refer to two cases of the Judicial Committee, one of which is Income Tax Commissioner vs Shaw Wallace & Co. (5), to which we have referred in another connection. In that case, all the authorities prior to 1935 to which we have referred (and some more) were used in aid of arguments; but the Judicial Committee, for reasons which are now illustrated by this judgment, declined to comment on them. Shaw Wallace and Co., did many businesses, and included in them was the managing agency of two oil producing Companies. This agency wag terminated, and compensation was paid for it. The usual question arose about capital or revenue. The Full Bench of the Calcutta High Court related the payment to goodwill, but the Judicial Committee rejected that ground because no goodwill seemed to have been transferred. The Judicial Committee also rejected the contention that it was compensation in lieu of notice under section 206, Indian (1) [1959] SUPP. 1 S.C.R. 110. (3) [1959] SUPP. 2 S.C.R. 375. (2) (4) [1960] 1 S.C.R. 527. (5) (1932) L.R. 59 I.A. 206. 275 Contract Act, as there was no basis for it either. The Judicial Committee held that income meant a periodical monetary return coming in with some sort of regularity or expected regularity from a definite source and in business was the produce of something "loosely spoken of as capital". In business, income is profit earned by a process of production, or, in other words, by the continuous exercise of an activity. In this sense, the sum sought to be charged could not be regarded as income. It was not the product of business but some kind of solatium for not carrying on business and thus, not revenue. The case is important, inasmuch as this analysis of 'income ' has been accepted by this Court and has been cited with the further remark made in Gopal Saran Narain Singh vs Income Tax Commissioner (1) that the words "profits and gains" used in the Indian Income tax Act do not restrict the meaning of the word "income" and the whole expression is 'income ', writ 'large. From this case, it follows that the first consideration before, holding a receipt to be profits or gains of business within section 10 of the Indian Income tax Act is to see if there was a business at all of which it could be said to be income. We shall now take up for consideration the facts of our case and see how far any principle out of the several which have governed earlier cases can be usefully applied. The assessee was a tea grower and tea. manufacturer. His work consisted in growing tea and in preparing leaves by a manufacturing process into a commercial commodity. The growing of tea plants only furnished the raw material for the business. Without the factory and the premises, the tea leaves could not be dried, smoked and cured to become tea, as is known commercially, and it could not be packed or sold. The direct and immediate result of the requisition of the factories was to stop the business. That the tea was grown or that the plants were tended did not mean that the business was being continued. It only meant that the source of the raw material was intact but the business was gone. (1) (1935) L.R. 62 I.A. 207. 276 Now, when the payment was made to compensate the assessee, no doubt the measure was the out turn of tea which would have been manufactured; but that has little relevance. The assesee was not compensated for loss or destruction of or injury to a capital asset. the buildings were taken for the time being, but the injury was not So much to the fixed capital as to the business as a whole. The entire structure of business was affected to such an extent that no business was left or was done in the two years. ' This was not a case where the interruption was caused by the act of a contracting party so that the payment could be regarded as an adjustment of a contract by payment. It was a case of compulsory requisition, but the requisition did not involve the buying of tea either as raw material or even as a finished product. If that had been the case, it might have been possible to say that since business was done, though compulsorily, profits had resulted. It ' was not even a case in which the business continued, and what was paid was to bring up the profits to normal level. The observations of Rowlatt, J., in Newcastle Breweries case (1) distinguish a case where business is carried on and one in which business comes to an end. The learned Judge observes: "Now I have no doubt that a Government re quisition, such as took place during the war, could destroy a trade, and anything which was paid would be compensation for such destruction. I can understand, for instance, if they had requisitioned in this case the people 's building and stopped them either brewing and selling or doing anything else, and paid a sum, that could not be taken as a profit; they would have destroyed the trade pro tempore and paid compensation for that destruction; and in fact I daresay if they take the whole of the raw materials of a man 's trade and prevent him carrying it on, and pay a sum of money, that is to be taken, not as profit on the sale of raw materials, which he never would have sold,, but as compensation for interfering with the trade altogether." These observations, though made under a different (1) 277 statute, are, in general, true of a business as such, and can be usefully employed under the Indian Income tax Act. Our Act divides the sources of income, profits and gains under various heads in section 6. Business is dealt with under section 10, and the primary condition of the application of the section is that tax is payable by an assessee under the head profits and gains of a business ' in respect of a business carried on by him. Where an assessee does not carry on business at all, the section cannot be made applicable, and the compensation that he receives cannot bear the character of profits of a business. It is for this reason that the Judicial Committee in Shaw Wallace 's case (1) observed that the compensation paid in that case was not the product of business, or, in other words, profit, but some kind of solatium for not carrying on business and thus, not revenue. It is to be noted that Das, C.J, in South India Pictures ' case (2), in distinguishing Shaw Wallace 's case (1), made the following observation: "In Shaw Wallace 's case the entire distributing agency work was completely closed, whereas the termination of the agreements in question, did not have that drastic effect on the assessee 's business at all. . In Shaw Wallace 's case, therefore, it could possibly be said that the amount paid there represented a capital receipt. " The observation is guarded, but it recognises the difference made in the Privy Council case and others between payment to compensate interference with a going business and compensation paid for stoppage of a business altogether. This distinction was emphasised in the dissenting opinion in Vazir Sutltan 's case (3). Though the payment in question was not made to fill a hole in the capital of the assessee, as in the Glenboig case (4), nor was it made to fill a hole in the profits of a going business as in Shamshere Printing Press case (5), it cannot be treated as partaking the character of profits because a business not having (1) (1932) L.R. 59 I. A. 206. (3) [1959] Supp. 2 S.C.R. 375. (2) ; (4) (5) 278 been done, no question of profits taxable under section 10 arose. The Privy Council described such a payment as a solatium. It is not necessary to give it a name; it is sufficient to say that it was not profit of a business. Once it is held that this was not profit at all, it is clear that Rules 23 and 24 of the Indian Income tax Rules could not apply, and there was no question of apportioning the amount, as laid down in R. 24. The whole of the amount received by the assessee was not assessable. It remains to consider whether the payment could be treated as income from property under section 9 of the Income tax Act. That this was never the case of the Department is clear from the fact that the income was not processed under that section, and even the Judicial Member of the Tribunal, who entertained this opinion, did not express it as his decision in the case. This aspect of the matter not having been considered in the case before, we cannot express any opinion upon it. In our opinion, the answers to the two questions ought to have been: Question (1) no Question (2) does not arise. In the result, the appeal is allowed with costs here and in the High Court. Appeal allowed.

The assessee, a Hindu undivided family, owned a tea estate in Assam comprising a tea garden, factories, labour, quarters, staff quarters etc. On February 27, 1942, the military authorities requisitioned all the factory buildings etc., under the Defence of India Rules but the tea garden, however, was left in the possession of the assessee. The possession of the military continued till the year 1945 and during that period, though the assessee looked after its tea garden, its business as tea growers and tea manufacturers could not be continued. Under the Defence of India Rules, the military authorities paid the assessee as compensation a sum of Rs. 2,22,080 for the year 1944, which included Rs. 10,000 for repairs to quarters for labourers, and a sum of Rs. 2,46,794 for the year 1945, which included Rs. 15,231 for repairs. For the assessment years 1945 1946 and 1946 47 the question arose as to whether the aforesaid sums or any portion thereof were capital receipts or were revenue receipts and liable to tax. The facts showed that the business, which the assessee had been carrying on, consisted in growing tea plants and in making tea out of the leaves by a manufacturing process into a commercial commodity, that without the factory and the premises the tea leaves could not be dried, smoked and cured to become tea, and that the result of the requisition of the factories was to stop the business. Held, that the amounts paid by the military authorities were received by the assessee not as compensation for the loss of profits of the business which it had been carrying on but for the injury to the business as a whole, because the entire structure of business was affected to such an extent that no business was carried on by the assessee during the two years in question. Accordingly, the compensation could not bear the character of profits of a business and was not liable to tax under section Io of the Indian Income tax Act, 1922. Income tax Commissioner vs Shaw Wiallace & CO., (1932) L.R. 59 I.A. 206, referred to and applied. Case law reviewed. 33 258

Appeal No. 424 of 1960. Appeal from the judgment and order dated March 25, 1958, of the Madras High Court in case Referred No. 62 of 1957. A.V. Viswanatha Sastri, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. 252 H. N. Sanyal, Additional Solicitor General of India, K. N. Rajagopala Sastri and D. Gupta, for the respondent. March 13. The Judgment of the Court was delivered by KAPUR, J. This is an appeal against the judgment and order of the High Court of Judicature at Madras. The assessee is the appellant and the Commissioner of Income tax is the respondent. A partnership consisting of four persons was formed by a deed of partnership dated March 31, 1949. On July 27, 1951 another partner was taken into partnership and a new deed was drawn up. The previous partnership deed was considered as the principal deed. The new partnership like the old one was to end on March 31, 1954. On March 29, 1954, a new partnership was entered into and a sixth partner was taken and a new deed was executed. The new partner contributed Rs. 40,000 as his share to the capital but in the partnership deed no express provision was made as to the manner in which profits and losses were to be divided between the partners. In order to rectify this, a deed of rectification was executed on September 17, 1955, which was after the close of the account year 1954 55. This deed recited that an error had crept in in typing the partnership deed dated March 29, 1954 by omitting to type el. 21 of the old partnership deed in the new deed. The parties had therefore agreed to rectify the error by adding cl. 20 A as follows: "We hereby agree that for purpose of clarification the following clause shall be added as clause 20 A in the Partnership Instrument, dated 29th March, 1954: "The parties shall be entitled to shares in the profits and losses of the firm in proportion to the contribution of the capital of each of the partners and whenever fresh capital is required for the business, each partner shall be liable to contribute the additional capital in the same proportion as the 253 paid up capital referred to in clause 4 of the deed, dated 29th March 1954". " This is signed by all the partners. Up to the end of assessment year 1954 55 the old firms i.e., the one constituted of four partners and the other constituted of five partners were registered under section 26A of the Income Tax Act (hereinafter termed the 'Act '). The appellant firm then applied for registration for the assessment year 1955 56. The Income Tax Officer pointed out to the appellant firm that there was no specification of shares of the partners in the deed of partnership. Thereupon the appellant submitted the deed of rectification dated September 17, 1955, above mentioned and submitted that the original deed did specify the shares of the partners and the deed of rectification only clarified the position. But the registration was refused by the Income tax Officer and an appeal taken against that order to the Assistant Commissioner was dismissed. Further appeal was taken to the Income tax Appellate Tribunal which also failed. At the request of the appellant the following question was referred to the High Court for its opinion: "Whether the assessee firm is entitled to registration section 26 A of the Income tax Act for the assessment year 1955 56." The High Court held that under section 26 A of the Act the factual existence in the year of account of an instrument of partnership was necessary, a requisite which, in the present case, was lacking and therefore the provisions of section 26 A were not satisfied and that the specification of shares only took place on September 17, 1955 when the deed of rectification was executed. The question was therefore answered in the negative. Against this judgment and order the appellant has come in appeal to this Court by certificate of the High Court. It was contended that cls. 9, 11, 34 and 41(a) sufficiently specified the shares of the partners and satisfied the requirements of the law. These clauses were as follows: 254 Cl. 9 "Such extra contribution made by the partners shall be credited to the respective partners under an account called "Extra Capital Subscription Account" and for the period of the utilisation of the whole or part thereof during the course of the year or years, it shall be treated as capital con. tribution only for the purpose of dividing profit but it shall otherwise in no circumstances be added to the paid up capital. " Cl. 11. "In addition to the shake of profits in proportion to the contribution to the extra, capital subscription account, the amount, so advanced shall carry an interest equal to the highest rate at which the company may have to pay in the event of borrowing the same from Multani money market and shall carry twice the said rate of interest in the year or years of loss. " Cl. 34. "The senior partner may at any time during the subsistence of the partnership bring in one or more of his other sons other than partners of the 5th and the 6th part herein to the partnership and in the event of their so becoming partners they will be liable for the same duties as the other partners herein and shall be entitled to remuneration and profits in proportion to their capital contribution. 41(a). "In the event of the dissolution of partnership the capital available for distribution as per the balance sheet, except for debts outstanding for collection and reserve fund, shall be paid off to the outgoing partner in proportion of the capital contribution of the outgoing partner to the total contribution of all the partners, including extra capital subscription paid, if any, under clause 9. " None of these clauses specify the shares of the partners. Clause 9 has reference to extra contribution made by the partners which was to be treated as capital contribution for the purpose of dividing profits but was not otherwise taken to be paid up capital. Clause 11 provides for interest on the extra capital subscribed . Clause 34 authorises the senior partner during the subsistence of the partnership to bring in 255 one or more of his sons as partners who on being so brought in were entitled to remuneration and profits in proportion to their capital contribution. Clause 41(a) provides that in the event of dissolution of partnership the capital available except for debts etc. was to be paid to the outgoing partners in proportion to the capital contribution of the outgoing partner. But in none of these clauses is it stated what the shares of the partners in the profits and losses of the firm were to be and that in our opinion was requisite for registration of the partnership under section 26 A of the Act and as that was wanting, registration was rightly refused. Registration under section 26 A of the Act confers a benefit on the partners which the partners would not be entitled to but for section 26 A. The right can be claimed only in accordance with the statute which confers it and a person seeking relief under that section must bring himself strictly within the term of that section. The right is strictly regulated by the terms of that statute: Ravula Subba Rao vs The Commissioner of Income tax, Madras Section 26 A provides: S.26A(1) "Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners for registration for the purpose of this Act and of any other enactment for the time being in force relating to income tax or super tax. " For the purpose of this case the relevant words of that section are "constituted under an instrument of partnership specifying the individual shares of the partners". Therefore unless the instrument of partnership specified the individual shares of the partners the instrument of partnership does not conform to the requirements of the section. In B. C. Mitter & Sons V. Commissioner of Income tax (2) it was held that the instrument of partnership to be registered should have been in existence in the accounting year in respect of which an assessment is being made. At page 202, Sinha J., (as he then was) said: (1) [1956] S.C.R. 577,588. (2) 256 "It is, therefore, essential, in the interest of proper administration and enforcement of the relevant provisions relating to the registration of firms, that the firms should strictly comply with the requirements of the law, and it is incumbent upon the Income tax authorities to insist upon full compliance with the requirements of the law." In the present case an instrument of partnership was in existence but it did not specify the shares which was one of the requirements for registration and that condition was fulfilled by the deed of rectification dated September 17, 1955. Therefore it cannot be said that there was the requisite instrument of partnership specifying the individual shares of the partners during the year of account. The High Court, in our opinion, was right in answering the question in the negative. We therefore dismiss this appeal with costs. Appeal dismissed.

A partnership consisting of four persons was formed on March 31, 1949, which was to come to an end on March 31, 1954. On July 27, 1951, a fifth partner was taken into the partnership. On March 29, 1954, a new partnership was entered into taking in a sixth partner will) contributed Rs. 40,000 as his share to the capital. In the partnership deed no express provision was made as to the manner in which profits and losses were to be divided. A deed of rectification was executed on September 17, 1955, after the close of the account year 1054 5 5, adding a clause to the partnership deed that the partners shall share in the profits and losses in proportion to their contributions to the capital. Upto the end of the assessment year 1954 55, the old firms were registered under section 26A of the Income tax Act. The new firm applied for registration for the assessment year 1955 56, but registration was refused on the ground that there was no specification of shares of the partners. Held, that registration was rightly refused. Section 26A requires that for registration in a particular year there must be an instrument of partnership specifying the shares of the partners in the profits and losses. Though in the present case there was an instrument of partnership in the year of assessment 1955 56, it did not specify the shares. The right of registration can be claimed only in accordance with section 26A and the assessee must bring himself strictly under the terms of that section. Ravula Subba Rao vs The Commissioner of Income tax, Madras, [1956] S.C.R. 577 and R. C. Mitter & Sons vs Commissioner of Income tax, E1959] , referred to.

12 of 1959. Petition under article 32 'of the Constitution of India for enforcement of fundamental rights. R.Gopalakrishnan, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioners. C.K. Daphtary, Solicitor General of India, B. Ganapathy Iyer and T. M. Sen, for the respondents. March 14. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J. The petitioner is a joint Hindu family firm carrying on business at Berhampur in the State of Orissa, and registered as a dealer under the provisions of the Orissa Sales Tax Act, 1947, hereinafter referred to as the Act. Its business consists in the purchase of castor seeds, turmeric, gingili and other commodities locally, and selling them to demlers outside the State. The Sales Tax Officer, Berhampur, included in the taxable turnover of the petitioner the purchase of goods made by it inside the State but sold, as aforesaid, to dealers outside the State and imposed a tax of Rs. 27,161 13 0 on account of such sales during the sixteen quarters commencing from April 1, 1952, and ending with March 31, 1956. In the present application filed under article 32, the petitioner challenges the validity of the tax on the ground that the purchases in question were made in the course of inter State trade, and that a tax thereon was in contravention of article 286(2) The impugned tax has be en levied under section 5 of the Act, which, omitting what is not relevant, runs as follows: 5. (1) The tax payable by a dealer under this 316 Act shall be levied at the rate of one quarter of an anna in the rupee on his taxable turnover: . . . . . . (2) In, this Act the expression "taxable turnover" means that part of a dealer 's gross turnover during any period which remains after deducting there from: (a) his turnover during that period on . . . . . . (ii) sales to a registered dealer of goods specified in the purchasing dealer 's certificate of registration as being intended for resale by him in Orissa or for use by him in the execution of any contract in Orissa, and on sales to a registered dealer of contai ners or other materials for the packing of such goods: Provided that when such goods are used by the registered dealer for purposes other than those specified in his certificate of registration the price of goods so utilised shall be included in his taxable turnover. It will be seen that under this section when a sale takes place, the seller has to include it in his taxable turnover; but when the sale is to a registered dealer who declares that his purchases are for resale in Orissa, then it is excluded from the seller 's turn. If the registered dealer purchaser sells the goods outside the State in breach of the condition, the purchases by him are liable to be included in his turnover, and assessed to sales tax. That precisely is what has happened in this case. The sales to the petitioner were not included in the taxable turnover of the sellers by reason of the registration certificate which the petitioner had obtained on a declaration that the goods were to be resold in 'Orissa. But in violation of this declaration he sold the goods to dealers outside the State, and so he became liable to be taxed under section 5(2)(a)(ii) of the Act. The contention of the petitioner is that these purchases were made in the course of inter State trade, and that the imposition of sales tax thereon is, in 317 consequence, ultra vires The provision applicable is article 286(2), as it stood prior to the sixth amendment, and it ran as follows: "Except in so far as, Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce. " The argument on behalf of the petitioner is that as the goods were purchased for the purpose of being sold to dealers outside the State, and they were in fact so sold, the purchases were in the course of inter State trade, and the levy of tax thereon was within the prohibition enacted by article 286(2). We do not agree with this contention. The transactions of sales which have been taxed were wholly inside the State of Orissa. They were sales by persons in the State of Orissa to persons within the State of Orissa, of goods which were in Orissa. The fact that the purchaser sold those very goods to dealers outside the State is not relevant, as those sales are distinct and separate from the sales on which the taxes in question have been imposed. The present levy is not on the sales by the petitioner to persons outside the State, but on the purchases by him inside the State. The former sales are in the course of inter State trade, and are not taxable under article 286(2), but the latter are purely intrastate sales, and a tax imposed thereon does not offend article 286(2). In support of his, contention that the purchases are hit by Art 286(2), the petitioner relies on the, decision of this Court in Messrs. Mohanlal Hargovind Das V. The State of Madhya Pradesh (1). In that case, the petitioners who were registered dealers under the Central Provinces and Berar Sales Tax Act, 1947, were carrying on business in the manufacture and sale of bidis in Madhya Pradesh. For the purpose of their business, they imported processed tobaco from the State of Bombay in large quantities, rolled them into bidis and sold them to dealers in other States. (1) ; 318 The sales tax authorities imposed a tax on the purchases made by them, on the ground that they had, in breach of the declaration in the registration certificate, sold them to merchants outside Madhya Pradesh. The contention of the petitioners was that the purchases by them were in the course of inter State trade, and that the imposition of tax thereon was therefore repugnant to article 286(2). It was this contention that was accepted by this Court. It will be noticed that the in this case the assessment of sales tax was on very purchases from dealers in Bombay, under which the goods were transported from the State of Bombay to Madhya Pradesh. In the present case, the purchases which are sought to be assessed involved no movement of the goods outside the State of Orissa. In order that a sale or purchase might be inter State, it is essential that there must be transport of goods from one State to another under the contract of sale or purchase. In the Bengal Immunity Company Limited vs The State of Bihar (1) occur the following observations which are apposite: "A sale could be said to be in the course of interState trade only if two conditions concur: (1) A sale of goods and (2) a transport of those goods from one State to another under the contract of sale. Unless both those conditions are satisfied, there can be no sale in the course of interstate trade. " With reference to the analogous provision under article 286(1)(b) prohibiting the imposition of tax on the sale or purchase of goods in the course of import or export, it has been field by this Court that it is only a sale or purchase which occasions the export or import of the goods out of or into the territory of India or a sale in the State by the exporter or importer by transfer of shipping documonts, while the, goods are beyond the customs barrier, that is within the exemption, and that a sale which precedes such export or import or follows it is not exempted, vide State of Travancore. Cochin vs Shannugha Vilas Cashew Nut Factory (2). On the same principles, a purchase, made inside a State, for sale outside the State cannot itself be held (1) 784 785. (2) ; 319 to be in the course of inter State trade, and the imposition of a tax thereon is not repugnant to article 286(2) of the Constitution. In the result this petition is dismissed with costs. Petition dismissed.

The petitioner who was a, registered dealer under the Orissa Sales Tax Act, 1947, was carrying on the business of purchasing and reselling castor seeds, etc., in the State of Orissa. Under a declaration given by him for the purpose of obtaining his registration certificate the goods purchased by him in Orissa were to be resold in that State. He purchased certain commodities inside the State but in contravention of his declaration sold, the goods to dealers outside the State. The Sales Tax Officer included in the taxable turnover of the petitioner the purchase made by him inside the State in accordance with section 5(2)(a)(II) of the Act. The contention of the petitioner was that the purchase was in course of inter State trade and was exempted under article 286(2) of the Constitution of India. Held, that the transaction of sale which has been taxed was wholly inside the State of Orissa and was distinct and sepa rate from the sale made by the purchaser to dealers outside the State. The former transaction was taxable under section 5(2)(a)(II) of the Act while the latter was exempted under article 286(2) of the Constitution. Messrs. Mohanlal Hargovind Das vs The State of Madhya Pradesh, ; , distinguished. In order that a sale or purchase might be inter State, it is essential that there must be transport of goods from one State 315 to another under the contract of sale or purchase. A purchase made inside a State, for sale outside the State cannot itself be held to be in the course of inter State trade and the imposition of tax thereon is not repugnant to article 286(2) of the Constitution. Bengal Immunity Company Limited vs The State of Bihar, and State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory; , , followed.

Appeal No. 754 of 1957. Appeal by special leave from the judgment, and order dated September 29, 1954, of the Deputy Custodian General, Evacuee Property, in Revision Petition No. 321 R/ADCG/53. Achhru Ram and K. L. Mehta, for the appellant. Bishan Narain, T.N. Sethia A. N. Arora and K. R. Choudhury, for respondent No. 1 1961. March 14. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by special leave is directed against the order of the Additional Deputy Custodian General of Evacuee Property, New Delhi, dated 'September 29, 1954, setting aside the order dated August 25, 1952 of the Additional Custodian, Rural, Jullundur, confirming that of the Deputy Commissioner, Ambala, dated May 12, 1951. The appellant belongs to a group of evacuees which may for convenience be described as Dhawan Group. Diwan Chaman Lal, respondent No. 1, was a displaced person from West Pakistan where he owned considerable properties. On September 1, 1949, in lieu of land left behind in Pakistan, he was allotted 152.9 acres of land in village Kharwan in Tehsil Jagadhri, District Ambala. The appellant and his 299 group also owned large extents of properties in West Pakistan. Each one of that group was allotted different extents of land in the same village. Before possession was taken by the allottees, two persons, namely, Hari Chand and Khilla Ram, filed applications dated November 14, 1949, and November 11, 1949, respectively for re allotment on the ground that the soil of the village was not of uniform quality and the allotment on the basis of blocks was not justified. The Additional Deputy Commissioner, Ambala, re commended the splitting of the land into four blocks and the said recommendation was accepted by the Director General, Rural Rehabilitation, by his order dated December 2, 1949. Thereupon the village was divided into four blocks and was re allotted. On account of the re allotment, the 1st respondent could not get his entire allotment in village Kharwan in one block and he was given instead land in different blocks and different villages. Aggrieved by this order, the first respondent filed a review application before the Deputy Commissioner, Ambala, on September 27, 1950, praying for the restoration of his original allotment made on September 1, 1949. The Deputy Commissioner, Ambala, rejected that application on May 12, 1951. Against that order the first respondent preferred a revision to the Additional Custodian, who dismissed the same on August 25, 1952. Against that order of dismissal, the first respondent filed a revision to the Custodian General on October 30, 1952. To that revision only the Custodian was made party; but the appellant and the members of his group were subsequently made parties by an order of the Deputy Custodian General dated August 25, 1953. Thereafter notices were issued to them. The appellant and others on their being made parties raised various contentions. The Deputy Custodian General cancelled the allotment made in favour of the Dhawan Group in respect of the excess area allotted to them and directed the land obtained by means of this cancellation to be utilised for the consolidation of the allotment of the first respondent in village Kharwan. He also gave further consequential directions. The present 300 appeal is preferred by Purshotam Lal Dhawan, a member of the Dhawan Group, against the said order. Learned counsel for the appellant raised before us the following two points: (1) The revision to the Deputy Custodian General was barred by time. (2) On the date when the allotment made to the appellant was cancelled, the Deputy Custodian General had no power to cancel the allotment. To appreciate the first contention some relevant dates may be given. The order of the Additional Custodian was passed on August 25, 1952. The said order was communicated to the first respondent on September 11, 1952. The revision was filed on October 10, 1952. On the date of the filing of the revision only the Deputy Custodian was made a party,, but later on the Dhawan Group was impleaded in the revision in October 1953. No application for excusing delay in preferring the revision against the said persons was made. It was contended before the Deputy Custodian General that the revision petition was barred by time against the Dhawan Group, but the Deputy Custodian General rejected that argument and disposed of the petition on merits. The first question for consideration is whether the revision was barred by limitation in so far as the Dhawan Group was concerned. Some of the relevant provisions regulating the power of revision of the Custodian General may be noticed. Section 27 of the Act says, "The Custodian General may at any time either on his own motion or on application made to him in this behalf call for the record of any proceedings in which any Custodian has passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and may pass such order in relation thereto as he thinks fit". Under the proviso to that section, "the Custodian General shall not pass an order under the sub section prejudicial to any person without "giving him a reasonable opportunity of being heard. In exercise of the powers conferred by section 56 of theAct, the Central Government made the following rules among others: 301 Rule 31. (5) Any petition for revision when made to the Custodian General shall ordinarily be made within sixty days of the date of the order sought to be revised. The petition shall be presented in person or through a legal practitioner or a recognized agent or may be sent by registered post. The petition shall be accompanied by a copy of the order sought to be revised and also by a copy of the original order unless the Revising Authority dispenses with the production of any such copy. In contrast to the said provisions, rule 31(1) dealing with appeals says, "All appeals under the Act shall when they lie to the Custodian, be filed within thirty days of the date of the order appealed against and when they lie to the Custodian General, within sixty days of such date". Section 27 of the Act confers a plenary power of revision on the Custodian General and it empowers him to exercise his revisional powers either suo motu or on application made in that behalf at any time. The phrase "at any time" indicates that the power of the Custodian General is uncontrolled by any time factor, but only by the scope of the Act within which he functions. The Central Government cannot obviously make a rule unless section 56 of the Act confers on it an express power to impose a time fetter on the CustodianGeneral 's power. We do not find any such power conferred on the Central Government under section 56 of the Act. So the rule can only be read consistent with the power conferred on the Custodian General under section 27 of the Act. That must have been the reason why rule 31(5) does not prescribe any limitation on the Custodian General to exercise suo motu his revisional power. Even in the case of an application for revision filed before him it is said that ordinarily it shall be filed within sixty days. The use of the word "ordinarily" indicates that the period of sixty days is not a period of limitation but only a rule of guidance for the petitioners as well as for the CustodianGeneral. It is within the discretion of the CustodianGeneral to entertain revision petitions after sixty days, 302 but the rule indicates to him that the reasonable period for entertaining a revision is sixty days. The difference in the phraseology of sub rules (1) and (5) of rule 31 of the Rules also leads to the same conclusion, for in the matter of appeals a period of limitation of thirty days when made to the custodian and sixty days when it lies to the Custodian General is prescribed whereas no such rigid period has been laid down in the case of a revision. If rule 31(5) is so read, its provisions will not conflict with those of section 27 of the Act; and in that event they would be valid. The construction suggested by learned counsel for the appel lant may lend scope to the argument that the rule is ultra vires the statute, for when a section says that there is no time limit for entertaining a revision, section rule cannot say that it shall be filed within a particular time. The argument that the principle underlying section 5 of the Limitation Act applies to a petition for revision under section 27 of the Act has no force. Section 5 of the Limitation Act applies to an appeal for which a period of limitation is prescribed and it empowers the court to admit the appeal after the period of limitation, if the applicant satisfied it that he has sufficient reason for not preferring the appeal within the prescribed time. The principle thereunder cannot be made applicable to a revision petition under section 27 of the Act in respect of which no period of limitation is prescribed. At the same time we must make it clear that the powers of the Custodian General under section 27, read with rule 31(5), are not intended to be exercised arbitrarily. Being a judicial power, he shall exercise his discretion reasonably and it is for him to consider whether in a particular case he should entertain a revision beyond the period of sixty days stated in rule 31(5). In this case we cannot say that the Custodian General had acted perversely or unreasonably in entertaining the revision. The revision was filed in time. The Dhawan Group was made party at the subsequent stage as the Custodian General rightly thought that any order he would make in favour of the appellant might prejudice the Dhawan Group. After giving them a reasonable opportunity 303 of being heard within the meaning of the proviso to section 27(1) of the Act, he made the order. The CustodianGeneral, therefore, acted reasonably within his powers. This objection is overruled. The second contention of learned counsel for the appellant is that the Custodian General had no power to cancel an allotment made on or before July 22, 1952. Let us recapitulate the relevant facts. The original order of allotment was made in favour of the appellant 's group and of the first respondent on September 1, 1949. There *as re allotment on December 2,1949. There allotment was cancelled by the Deputy Custodian General by his order dated September 29, 1954. The question is whether the Deputy Custodian General can set aside the allotment made on December 2, 1949. The question raised falls to be decided on the relevant provisions of the Act and the rules made thereunder. Section 11 of the Act confers on the Custodian the power to cancel any allotment made by him, whether such allotment was made or entered into before or after the commencement of the Act. Rule 14 of the Rules narrates the grounds on which an allotment can be cancelled and also the procedure to be followed for cancelling such an allotment. If a custodian makes an order either cancelling or refusing to cancel an allotment, the Custodian General can, under section 27 of the Act, set aside that order, if he is satisfied that it is not legal or proper, and he may pass such order in relation thereto as he thinks fit. But it is said that rule 14(6) limits the power of the Custodian General in respect of allotments made under the Act. As the argument turns upon that rule, it would be convenient to read the material parts of it. Rule 14. (6) "Notwithstanding anything contained in this rule, the Custodian of Evacuee Property in the State of Punjab shall not exercise the power of cancelling any allotment of rural evacuee property on a quasi permanent basis, or varying the terms of any such allotment, except in the following circumstances:. . . . . . ). After narrating the circumstances, with which we are 304 not now concerned, the sub.rule contains a proviso which reads, "Provided further nothing in this sub rule shall apply to any application for revision, made under section 26 or section 27 of the Act, within the prescribed time, against an order passed by the lower authority on or before 22nd July, 1952. " Under this sub rule there is a ban on the exercise of the power of the Custodian to cancel an allotment of a rural evacuee property on a quasi permanent basis except under certain circumstances. his sub rule was substituted for the old sub rule by S.R.O. 1290 of July 22, 1952. A Custodian under the Act cannot set aside an allotment except under the.circumstances mentioned in the sub rule. But the second proviso to that sub rule lifts the ban in the case of an application made for revision under section 26 or section 27 of the Act. It may be mentioned that the words "or section 27" after the words "section 26" were added in the sub. rule on August 26, 1953 i.e., before the order of the Custodian General in the present case. Section 26 of the Act, as it then stood, conferred revisional jurisdiction on the Custodian, Additional Custodian or Authorized Deputy Custodian against the orders of subordinate officers. Section 27, as we have already noticed, confers a similar power of revision on the CustodianGeneral. By reason of the proviso, the CustodianGeneral can, in exercise of his powers under section 27 of the Act, cancel an allotment made by a lower authority on or before July 22, 1952. The only limitation on that power is that he must do so in a revision filed within the prescribed time. What is the prescribed time for a revision under section 27 of the Act? "Prescribed" has been defined in the Act to mean " prescribed by rules made under this Act". Rule 31(5) prescribes that a revision to the Custodian General shall ordinarily be made within sixty days of the order sought to be revised. In considering the first point, we have explained the scope of the rule and we have held that the said rule is only a rule of guidance and that in law a revision can be entertained at any time even after sixty days if the Custodian General in his discretion thinks fit to entertain it. The prescribed time in 305 the context of a revision to the Custodian General can only mean sixty days or such other time within which the Custodian General in his discretion thinks fit to entertain the revision. As the allotment in the present case was made before July 22, 1952, the Custodian General was within his rights in cancelling the same. Before we close, it is necessary to notice another contention raised by learned counsel for the respondents. The argument was that there was no allotment made in favour of the appellant and, therefore, there was no scope for invoking the provisions of rule 14 of the Rules. The basis of the argument is the following observations of the Deputy Custodian General in his order dated September 29, 1954: "The petitioner has rightly contended that the Dhawan Group had no verified claim for the allotment of this excess area and in spite of an opportunity afforded by me to them to produce the copies of their Parcha Claim, they have failed to do so. The reports of the Land Claims Officer dated 7th August 1952, and 11th August 1952, on pages 147 and 151 of the record, show that although the allotment had been made to Dhawan Group but a search had been made for their claims which were not traceable. On page 129 of the record, a report by the Department dated 21st August, 1952, shows that no order of allotment to Dhawan Group was forthcoming." These observation do not record a clear finding that there was no allotment in favour of the appellant. Indeed the factum of allotment to the appellant was never questioned throughout the proceedings. In the circumstances, we must dispose of this appeal on the basis that there was an allotment in favour of the appellant. This contention, is, therefore, rejected. No other point was raised before us. In the result, he appeal fails and is dismissed with costs. Appeal dismissed.

The appellant and the respondent, who were displaced persons from West Pakistan, were allotted lands in the same village. At the instance of certain persons, the first allotment was cancelled and there was a re allotment. The respondent was aggrieved by this order and on September 27, 195o, he filed a review application before the Deputy Commissioner for restoration of the original allotment but it Was dismissed on May 12 , 1951 Against this order the respondent preferred a revision application to the Additional Custodian. who dismissed the same on August 25, 1952. Thereupon, the respondent filed a revision application before the Custodian General on October 30, 1952. To this revision on the Custodian was made a party; but the appellant was made a party by order of the Custodian General on August 25, 1953. After bearing the parties the Custodian General on September 29, 1954, cancelled part of the re allotment made in favour of the appellant. appellant contended: (i) that the revision application to the Custodian General was barred by time, and (ii)that the ' Custodian General had no power to cancel the allotment. Hold, that the revision application was not barred by time. Rule 31(5) provides that :a revision petition to the Custodian General "shall ordinarly be made within sixty days of the 38 298 order sought to be revised". This rule is only a rule of guidance and not one of limitation and in law a revision can be entertained even after sixty days if the Custodian General in his discretion thinks fit to entertain it. In the present case the revision was filed within the time but the appellant was impleaded after the period of sixty days had expired. But it could not be said that the Custodian General acted perversely or unreasonably in entertaining the revision. Held, further, that the Custodian General had the power to cancel the allotment made on December 2, 1949. Under r. 14(6) the Custodian could not, after July 22, 1952, cancel an allotment except under certain specified circumstances; but the second proviso to r. 14(6) permitted the Custodian General, in exercise of his powers of revision under section 27 , to cancel an allotment made by a lower authority on or before July 22, 1952.

Appeal No. 119 of 1957. Appeal by special leave from the judgment and decree dated March 3, 1955, of the Orissa High Court in Appeal No. 593 of 1950. B. Patnaik, for the appellants. D. N. Mukherjee, for the respondents. March 14. The Judgment of the Court was delivered by SUBBA RAO, J. This is an appeal by special leave against the judgment of the High Court of Judicature for Orissa dated March 3, 1955, setting aside the judgment of the Court of the District Judge, Mayurbhanj, and restoring that of the Subordinate Judge, Baladore. The facts leading up to this appeal may be briefly stated. The land in dispute originally belonged to one Bhagaban Parida. On July 16, 1924, he executed a registered kabala 'for a ' consideration of Rs. 2,000 in favour of one Priyanath Sasmal. On June 2, 1928, Priyanath Sasmal executed a usufructuary mortgage bond (exhibit B) for Rs. 1,500 in favour of 292 Lakshminarayan Pani, the father of the appellants herein. Under the terms of the said usufructuary mortgage, the mortgaged property was put in possession of the mortgagee. One of the terms of the mortgage deed was that the initial responsibility for the payment of rent was that of the mortgagor and that, if for any reason he did not pay the arrears of rent, the mortgagee was under an obligation to pay off the arrears to the landlord and to obtain a receipt acknowledging the payment. The mortgagee did not pay the arrears of rent, with the result that for arrears of rent the said property was brought to sale and ultimately purchased by the mortgagee for a sum of Rs. 300 on September 22, 1936. The sale was confirmed on November 4, 1936, and the mortgagee took possession through Court on December 21, 1938. The mortgagor filed a suit against the mortgagee in the Court of the Subordinate Judge, Balasore, for redemption of the mortgage and for possession. As the mortgagor died after the filing of the suit, his widow and son were brought on record as his legal representatives. The defence of the appellants to that suit was that possession was not delivered to their father, the mortgagee, under the terms of the mortgage deed, that the debt was discharged, that their father had purchased the equity of redemption in execution of the rent decree, and that the mortgagor had no longer any right to sue him for redemption. The learned Subordinate Judge and, on appeal, the District Judge concurrently found that in fact possession was delivered to the mortgagee on the basis of the mortgage deed and that the plea of discharge was not true; but, while the trial court held that after the purchase of the property by the mortgagee in execution of the decree for rent he was holding the, property only on behalf of the mortgagor, the appellate court came to the conclusion that after the said purchase the relationship of mortgagor and mortgagee came to an end; with the result the trial court decreed the suit and the appellate court, setting aside that decree, dismissed the suit. The legal representatives of the mortgagor preferred a second appeal to the High Court against the judgment and 293 decree of the District Judge. A division bench of the High Court agreed with the conclusion of the trial court, set aside the decree of the District Court and restored that of the trial court. Hence the present appeal. Learned counsel for the appellants i.e., the legal representatives of the mortgagee, contended that in execution of the rent decree the mortgagee became the purchaser of the equity of redemption, with the result that the relationship of mortagor and mortgagee ceased to exist and, therefore, the respondents could not sue for redemption and their remedy, if any, was to sue for setting aside the sale on the ground of fraud or otherwise. On the other hand, learned counsel for the respondents contended that, as the sale was the result of manifest dereliction of duty imposed upon the mortgagee by the terms of the transaction, the purchase by the mortgagee would only be in trust for the mortgagor and, therefore, the suit for redemption was maintainable. To appreciate the rival contentions it is necessary to notice briefly the law on the subject. The relevant section governing the facts of the case is section 90 of the (2 of 1882). The material portion of the section reads, "Where a mortgagee by availing him,self of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to the repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage. " Illustration (c) to that section says, "A mortgages land to B, who enters into possession. B allows the Government revenue to fall into arrears with a View to the land being put up for sale and his becoming himself the purchaser of it. The land is accordingly sold to B. Subject to the 294 repayment of the amount due on the mortgage and of his expenses properly incurred as mortgagee, B holds the land for the benefit of A." The following three conditions shall be satisfied before section 90 of the can be applied to a case: (1) the mortgagee shall avail himself of his position as mortgagee; (2) he shall gain an advantage; and (3) the gaining should be in derogation of the right of the other persons interested in the property. The section, read with illustration (c), clearly lays down that where an obligation is cast on the mortgagee and in breach of the said obligation he purchases the property for himself, he stands in a fiduciary relations ship in respect of the property so purchased for the benefit of the owner of the property. This is only another illustration of the well settled principle that a trustee ought not to be permitted to make a profit out of the trust. The same principle is comprised in the latin maxim commodum ex injuria sua nemo habere debet, that is,,convenience cannot accrue to a party from his own wrong. To put it in other words, no one can be allowed to benefit from his own wrongful act. This Court had occasion to deal with a similar problem in Sidhakamal Nayan vs Bira Naik (1). There, as here, a mortgagee in possession of a tenant 's interest purchased the said interest in execution of a decree for arrears of rent obtained by the landlord. It was contended there, as it is contended here, that the defendant, being a mortgagee in possession, was bound to pay the rent and so cannot take advantage of his own default and deprive the mortgagors of their interest. Bose, J., speaking for the Court, observed at p. 337 thus: "The position, in our opinion, is very clear and in the absence of any special statutory provision to the contrary is governed by section 90, Trusts Act. The defendant is a mortgagee and, apart from special statutes, the only way in which a mortgage can be terminated as between the parties to it is by the act of the parties themselves, by merger or by an order of the Court. The maxim "once a mortgage always (1) A.I.R. 1954 S.C. 336. 295 a mortgage" applies. Therefore, when the defendant entered upon possession he was there as a mortgagee and being a mortgagee the plaintiffs have a right to redeem unless there is either a contract between the parties or a merger or a special statute to debar them." These observations must have been made on the assumption that it was the duty of the mortgagee to pay the rent and that he made a default in doing so and brought about the auction sale of the holding which ended in the purchase by him. The reference to section 90 of the supports this assumption. Learned counsel for the appellants relied upon the decision of the Judicial Committee in Malkarjun Bin Shidramappa Padare vs Narhari Bin Shivappa (1) in support of his contention that a mortgagor cannot seek the relief of redemption without first getting the sale set aside. There, a mortgaged property was sold in execution of a decree against the mortgagor and the plaintiff neglected or refused to pray that it might be set aside. The Judicial Committee held that an execution sale could not be treated as a nullity if the court which sold it had jurisdiction to do so; and it could not be set aside as irregular without an issue raised for that purpose and investigation made with the judgment creditor as a party thereto. That was not a case where the mortgagee who had an obligation to discharge under the mortgage deed made a default with the result the. property was sold and purchased by the mortgagee himself. The proposition enunciated by the Judicial Committee would apply to a case where the equity of redemption was extingui shed by the court sale. This may apply to a case, where the mortgagee, after obtaining leave to bid., purchases at a sale in execution of his decree or a decree obtained by a third party. In such a case there may be scope for the argument that the equity of redemption is extinguished and, therefore, the mortgagor cannot get relief till the sale is set aside in the manner known to law. But when the sale is (1) (1900) L.R. 27 I.A. 216. 296 brought about by the default of the mortgagee, the mortgage is not extinguished and the relationship of mortgagor and mortgagee continues to exist and, therefore, there will not be any necessity for setting aside the sale. The legal position may be stated thus: (1) The governing principle is "once a mortgage always a mortgage" till the mortgage is terminated by the act of the parties themselves, by merger or by order of the court. (2) Where a mortgagee purchases the equity of redemption in execution of his mortgage decree with the leave of court or in execution of a mortgage or money decree obtained by a third party, the equity of redemption may be extinguished; and, in that event, the mortgagor cannot sue for redemption without getting the sale set aside. (3) Where a mortgagee purchases the mortgaged property by reason of a default committed by him the mortgage is not extinguished and the relationship of mortgagor and mortgagee continues to subsist even thereafter, for his purchase of the equity of redemption is only in trust for the mortgagor. Let us now apply the aforesaid principles to the concurrent findings arrived at by the courts below. All the courts concurrently found that in fact possession was delivered to the mortgagee on the basis of the mortgage deed, exhibit B. They have also found that the plea of discharge taken by the appellants was not true. The High Court found that under the mortgage deed the mortgagee had a duty to pay the arrears of rent to the landlord, but he made a default in paying the said arrears. The High Court farther held that the sale was the result of manifest dereliction of the duty imposed upon the mortgagee by the very terms of the transaction. The said findings clearly attract the provisions of section 90 of the . In view of the aforesaid principles, the right to redeem the mortgage is not extinguished and in the eye of law the purchase in the rent sale must be deemed to have been made in trust for the mortgagor. In the promises, the High Court was right in holding that the suit for redemption was maintainable. 297 No other point was raised before us. The appeal fails and is dismissed with costs. Appeal dismissed.

Usufructuary mortgage bond was executed in favour of the father of the appellant who was put in possession of the mortgaged property. One of the terms of the usufructuary mortgage was that in case of failure of payment of rent by the mortgagor, the mortgagee was to pay off the arrears of rent to the landlord, which obligation the mortgagee did not honour as a result of which the property was brought to sale and ultimately purchased by the mortgagee. The mortgagor filed a suit against the mortgagee, the appel lant 's father, for redemption of the mortgage and !or possession. , The defence inter alia was that the mortgagee had purchased equity of redemption in execution of the rent decree and that the mortgagor had no longer any right to sue him for redemption and their remedy, if any, was to sue for setting aside the sale on the ground of fraud or otherwise. Held, that section go of the Trusts Act read with the illustration (c) lays down the principle that no one can be allowed to benefit for his own wrongful act. Held, further, that the legal position with regard to mort gagor and mortgagee was that: (1) the governing principle is that "once mortgagee 291 always a mortgagee" till the mortgage is terminated by the act of the parties themselves, by merger or by order of the Court; (2)where a mortgagee purchases the equity of redemption in execution of his mortgage decree with the leave of court or in execution of a mortgage or money decree obtained by a third party, the equity of redemption may be extinguished; and, in that event, the mortgagor cannot sue for redemption without getting the sale set aside; and (3)where a mortgagee purchases the mortgaged property by reason of a default committed by him the mortgage is not extinguished and the relationship of Mortgagor and mortgagee continues to subsist even thereafter, for his purchase of the equity of redemption is only in trust for the mortgagor. In the instant case the right to redeem the mortgage was not extinguished and in the eyes of law, the purchase in the rent sale was deemed to have been made in trust for the mortgagor and the suit for redemption was maintainable. Sidhakamal Nayan vs Bira Naik, A.I.R. 1954 S.C. 336, relied on. Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa, (1900) L.R. 27 I.A. 216, distinguished.

77 of 1958. Petition Under article 32 of the Constitution of India for enforcement of Fandamental Rights. Bhavani Lal and P. C. Agarwala, for the petitioners. C.K. Daphtary, Solicitor General of India, B. Ganapathy Iyer and T. M. Sen, for the respondents. March 14. The Judgment of the Court was delivered by S.K. DAS, J. This is a writ petition under article 32 of the Constitution. The petitioners, Messrs. Nand Lal Raj Kishan, carry on a business of commission agents at Delhi and are liable to pay sales tax in respect of their business under the provisions of the Bengal Finance (Sales Tax) Act, 1941, as in force in Delhi. They filed returns for four quarters of 195455 and claimed exemption in respect of sales of certain goods to the registered dealers under the provi sions of section 5(2)(a)(ii) of the said Act. By his order dated April 11, 1956, the Sales Tax Officer disallowed the exemption claimed by the petitioners mainly on the ground that the alleged sales were made to "those 285 registered dealers whose activities had gone underground." The Sales. Tax Officer issued a demand notice for a sum of Rs. 1,11,890 11 0 on account of sales tax. The petitioners then carried an appeal to the Assistant Commissioner of Sales Tax, Delhi. The Assistant Commissioner set aside the order of the Sales Tax Officer and remanded the case for a fresh decision in the light of certain judgments given by the Chief Commissioner, Delhi, in a number of similar cases. In the meantime the Bengal Finance (Sales Tax) Act, 1941, was amended by the Bengal Finance (Sales Tax) (Delhi Amendment) Act, 1956, being Act No. 17 of 1956. This amending Act which came into force on October 27, 1956, inserted a new section, which is section 8A of the Act. This section reads as follows: "section 8A. Security from certain class of dealers. The Commissioner, if it appears to him to be necessary so to do for the proper realisation of the tax levied under this Act, may impose for reasons to be recorded in writing as a condition of the issue of a registration certificate to a dealer or of the continuance, in effect, of such a certificate issued to any dealer, a requirement that the dealer shall give security up to ail amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under this Act. " On May 17, 1957, the petitioners asked for a fresh registration certificate on the ground that their original certificate had been lost in transit. They further asked for the addition of some more items of goods in the registration certificate, such as cigarettes, bidis and glass of all kinds. Thereupon the Sales Tax Officer made certain enquiries and found that the petitioners had been frequently shifting their places of business and the sales alleged to have been made by them to some registered dealers were not genuine, because those persons could not be traced at the addresses given. On a report being submitted to the Commissioner of Sales Tax, Delhi, the Commissioner asked the Sales Tax Officer to issue a notice to the petitioners. On 286 July 13,1957, such a notice was issued to the petitioners to show cause why they should not be asked to furnish a security of Rs. 10,000 in accordance with the provisions of section 8A. The petitioners then appeared before the Sales Tax Officer and made a statement that they were not prepared to deposit any amount as security. They also filed a written explanation objecting to the demand of security. The matter was then referred to the Commissioner of Sales Tax who con sidered the explanation of the petitioners and the report of the Sales Tax Officer. The Commissioner expressed his finding in the following words: "In view of the reputation that the dealer enjoys in the market, namely, that he being a commission agent has been engaged in the business of selling goods to other commission agents, all sales being effected to unscrupulous registered dealers, frequent changes in the name and place of busines s without giving specific details, late submission of information regarding the changes: in the name and place of business, non submission of returns for the year 1956 57 within the prescribed time, it appears neces sary to demand security under section 8A of the Bengal Finance (Sales Tax) Act, 1941 as in force in Delhi. " Accordingly, on November 27, 1957, he made an order directing the petitioners to furnish security either in cash or by two personal sureties for a Bum of Rs. 5,000 by December 15, 1957. Against the aforesaid order of the Commissioner the petitioners went in revision to the Chief Commissioner of Delhi. The Chief Commissioner heard Counsel for the petitioners and by his order dated April 15, 1958, dismissed the application in revision. The petitioners then filed a writ petition in the Punjab High Court which was summarily dismissed. On the present writ petition the petitioners have impugned the order of the Commissioner dated November 27, 1957 on the ground that section 8A of the Act under which the order was passed is constitutionally invalid. They have challenged the validity of section 8A on three grounds: firstly, it is contended that section 8A 287 gives an undefined, unlimited and unrestricted power to the Commissioner of Sales Tax; secondly, it is contended that no limit is fixed with regard to the amount of security which may be demanded under the section; and thirdly, it is contended that the section imposes an unreasonable restriction on the right of the petitioners to carry on their business inasmuch as it does not provide for any enquiry before the demand for security is made, nor does it provide for an opportunity being given to the person against whom the order is proposed to be passed of being heard before such order is passed. We do not think that these grounds have any substance. Section 8A does not give unlimited or unrestricted power. to the Commissioner of Sales Tax. It states inter alia that the Commissioner may impose for reasons to be recorded in writing as a condition of the issue of registration Certificate to a dealer, or of the continuance of such a certificate, a requirement that the dealer shall give security up to an amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under the Act: this power of the Commissioner is, however, subject to the condition that it must "appear to him to be necessary so to do for the proper realisation of the tax levied under the Act". In other words, the Commissioner may exercise his power of demanding security only when he considers it necessary to do so for the proper realisation of the tax levied under the Act. By no stretch of argument can it be suggested that the power is an unlimited or an unrestricted power. Learned Counsel for the petitioners has referred us to the decision of this Court in Messrs. Duarka Prasad Laxmi Narain vs The State of Uttar Pradesh (1). That was a case in which under cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority was, given absolute power to grant or refuse to grant, renew or refuse to renew suspend, revoke, cancel or modify any licence under the Order. It was pointed out by this Court that there was nothing to regulate or guide the discretion (1)[1954] S.C.R. 803. 288 of the licensing officer and the provision impugned therein committed to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chose. That is not the position here. Section 8A itself gives the necessary guidance when it says that the Commissioner may exercise his power only when it is necessary to do so for the proper realisation of the tax levied under the Act. In a later decision of this Court in Virendra vs The State of Punjab (1) it was pointed out that in Dwarka Prasad 's case (1) the impugned provision prescribed no principles and gave no guidance in the matter of the exercise of the power, but in a case where the exercise of the power is conditioned by the statute itself, the ratio in Dwarka Prasad case (2) does not apply. The same view was reiterated in Kishan Chand Arora vs The Commissioner of Police, Calcutta (3). Section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941, gives the power to the Commissioner to demand reasonable security for the proper payment of tax payable under the Act. This section came in for consideration of the Calcutta High Court in Durga Prasad Khaitan vs Commercial Tax Officer (4) and it was held that the section did not confer unfettered or arbitrary power to the Commissioner. We approve of the view expressed therein that the power to levy a tax includes the power to impose reasonable safeguards in collecting it, and demanding security for the proper payment of the tax payable under the Act is neither an arbitrary nor an unreasonable restriction. As to the contention that there,is no limit to the amount which can be demanded as security, it is only necessary to point out that the amount that can be demanded as security must have relation to the payment of the tax for which the person concerned may be or become liable under the Act. The amount must depend on the nature of the business, its turnover and the amount of tax payable thereon by the person concerned. Furthermore, the order of the Commissioner under section 8A is subject to revision by the Chief (1) ; , 321 (3) ; (2)[1954] S.C.R. 803. (4)[1937] 8 S.T.C. 105. 289 Commissioner and if an arbitrary or unreasonable amount is demanded, the order of the Commissioner will be subject to scrutiny by the Chief Commissioner. We do not think that even in the matter of the amount of security, the power of the Commissioner is unlimited or unrestricted. As to the last contention that the section does not provide for any enquiry or any opportunity being given to the person against whom the order is proposed to be passed of being heard, this point was taken before the Chief Commissioner and the Chief Commissioner rightly pointed out that the principles of natural justice would apply and the person to whose prejudice the order is to be made must be given an opportunity to say whatever he has to say in his defence. In the present case such an opportunity was given to the petitioners. A notice was issued to the petitioners by the Sales Tax Officer. The petitioners appeared before the Sales Tax Officer, submitted a written explanation and also made oral submissions. The Commissioner had before him the report of the Sales Tax Officer, the explanation submitted by the petitioners in reply to the notice issued, and also the statements made by them. It has been contended on behalf of the petitioners that no oral hearing was given to the petitioners by the Commissioner of Sales Tax and learned Counsel for the petitioners has made a grievance that the order of the Commissioner was passed without hearing the petitioners. It may be pointed out here that when the petitioners were heard by the Chief Commissioner in support of their application in revision, they made no grievance on the score that the Commissioner of Sales Tax had not given them a second opportunity of a fresh oral hearing. We do not think that a second opportunity like the one suggested on behalf of the petitioners was either necessary or obligatory. The petitioners had an opportunity of saying what they had to say against the demand of security. They raised their objections which were considered by the Commissioner who, in spite of those objections, came to the conclusion that it was necessary to ask the petitioners 37 290 to furnish security for the proper realisation of the tax levied or leviable under the Act. We agree with the Chief Commissioner that there was no violation of the principles of natural justice in the present case. For the reasons given above we hold that there is no merit in the petition which is accordingly dismissed with costs. Petition dismissed.

The validity of section 8A of the Bengal Finance (Sales Tax (Delhi Amendment) Act, 956, enabling the Commissioner of Sales Tax to demand security from dealers for payment of tax was challenged by the petitioners on the grounds that (i) the section gave undefined, unlimited and unrestricted power to the commissioner, (ii) no limit was fixed for the amount of security, and (iii) the section did not provide for any enquiry before the demand of security, nor did it provide for an opportunity of being heard being given to the person against whom the order was proposed to be passed. Held, that section 8A did not give any unlimited or unrestricted power to the Commissioner of Sales Tax. The power of the Commissioner of Sales Tax was subject to the condition that it (1)[1958] 9 S.T.C. 194. 284 must appear lo him to be necessary to demand security for the proper realisation of the tax. The power to levy a tax includes the power to impose reasonable safeguards for collecting it and demanding security for the proper payment of tax is neither in arbitrary nor an unreasonable restriction. Durga prasad Khaita vs Commercial Tax Officer, [1957] 8 S.T.C. 105, approved. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh, ; , distinguished. Virendra vs The State of Punjab, ; and Kishan Chand Arora vs The Commissioner of police, Calcutta; , , referred to. The power of the Commissioner as regards the amount of security was not unlimited because the order of the Commis sioner was subject to revision and scrutiny by the Chief Commissioner. In the instant case an opportunity having been give to the petitioners for submitting their defence and an explanation having been actually submitted by the petitioners there was no violation of the principles of natural justice. A second opportunity for oral hearing was not obligatory.

iminal Appeals Nos. 57 and 58 of 1960. Appeals by special leave from the judgment and order dated November 5/6, 1958, of the Bombay High Court at Nagpur in Criminal Appeal No. 94 of 1958. Jai Gopal Sethi and G. C. Mathur, for the appellant (in Cr. A. No. 57 of 1960). G. C. Mathur, for the appellant (in Cr. A. No. 58 of 1960). Gopal Singh and D. Gupta, for the respondent. December 5. The Judgment of the Court was delivered by SUBBA RAO, J. These two appeals raise rather an important question on the interpretation of the provisions of section 207A of the Criminal Procedure Code (hereinafter referred to as the Code). ' The facts that have given rise to these appeals may be briefly stated. The appeals arise out of an incident that took place on November 29, 1957, when one Sadashiv was murdered in the courtyard of his house in village Nimgaon. The case of the prosecution was that the four appellants, armed with sticks, went to the house of the deceased, dragged him 'out of the house and beat him with sticks in the courtyard; and that as a result of the beating he died on the next day at about 5 p.m. at Bhandara Hospital. After investigation, the police submitted their report to the Magistrate under 'section 173 of the Code along with the relevant documents. After forwarding the report, the officer in charge of the; police station furnished 892 the appellants with a copy of the report forwarded under sub section (1) of section 173, the First Information Report recorded under section 154 and all other documents or relevant extracts thereof on which the prosecution proposed to rely, including the statements recorded under sub section (3) of section 161 and also intimated them of the persons the: prosecution proposed to. examine as its witnesses. The Magistrate posted the case for inquiry on February 10, 1958 and on that date the prosecution intimated that it did not intend to examine any witnesses in the Magistrate 's Court., , On behalf of the appellants no objection was raised, to,that course. But the Magistrate adjourned the inquiry to February 12, 1958, as he wanted to consider whether any evidence was necessary to be recorded before commitment. On February 12, 1958, reexpressed his opinion that no witness need. be examined at that stage; thereafter, he framed charges against accused appellants under section 302, read with section 34, of the Indian Penal Code, and also under section 448 thereof and committed the appellants to the Sessions Court. Before the learned Sessions Judge the prosecution led four types of evidence, i.e. (1) eye witnesses, namely, P.Ws. 6, 11, 20 and 25; (2) dying declaration, exhibit P 15, supported by P. Ws. 18,22 and 19; (3) the identification of the appellants in jail by P.Ws. 20 and 25; and (4) recovery of various articles at, the instance of the accused appellants. The defence examined four witnesses. On a consideration of the entire evidence, the learned Sessions Judge held that,the prosecution, case had been amply borne out and that the four appellants entered into the house of the deceased and beat him in the manner described by the prosecution wit nesses. no less than 12 confused wounds were inflicted on the deceased, which resulted in the fracture of his ribs and injury to the lung,. and as the, doctor opined that the death was due to shock and haemorrhage resulting from said fracture, the learned Sessions Judge hold that the accused appellants were guilty of murder and convicted them under s.302, read with a. 34, Indian Penal Code,and he further convicted them, under section 448 of the Indian 893 Penal Code for trespassing into the house of the deceased. On these findings the learned Sessions Judge sentenced the appellants to undergo imprisonment for life on the first count and for 3 months rigorous imprisonment on the second count. The appellants preferred an appeal against their convictions and sentences to the High Court of Bombay at Nagpur. The learned Judges of the High Court, on a resurvey of the entire evidence, agreeing with the learned Sessions Judge, accepted the prosecution case, but they held that the appellants were guilty only under section 304, Part 1, read with section 34, Indian Penal Code, and in the result they reduced the sentence from life imprisonment to 10 years ' rigorous imprisonment in regard to appellant 1 and to 7 years ' rigorous imprisonment in regard to appellants 2 to 4. Against the said convictions and sentences, the appellants have preferred, by special leave, appeals to this Court. Criminal Appeal No. 57 of 1960 has been preferred by the first appellant and Criminal Appeal No. 58 of 1960 by appel lants 2 to 4. Learned counsel for the appellants raised before us the following two points: (1) The Sessions Court and, on appeal, the High Court have not properly appreciated the evidence and the circumstances of the case in holding that the appellants had committed the offences. (2) The trial and conviction of the appellants by the Sessions Court were null and void, as the Magistrate had no jurisdiction to commit the appellants to Sessions without examining witnesses under sub section (4) of section 207A of the Code and that, as the order of 'committal was without jurisdiction, the defect was not cured either under section 532 or section 537 of the Code. The first question does not merit any consideration. Both the courts below have, carefully considered the evidence adduced by the prosecution as well as the accused appellants and have accepted the prosecution case. It is a well established practice of this Court not to interfere on questions of fact, particularly when they are concurrent findings, except under exceptional circumstances. We find, no such exceptional 894 circumstances in this case. We, therefore, reject the first contention. The second contention turns upon the interpretation of the relevant provisions of section 207A of the Code. Before attempting to construe the relevant provisions of the section it would be helpful to notice briefly the history of the said section. Under the Criminal Procedure Code, as it originally stood, in the matter of committal proceedings there was no distinction between the proceeding instituated on a police report and that instituted otherwise than on police report. The main object of the committal proceedings was to hold an inquiry to ascertain and record the case which was to be tried before the Court of Sessions. It was primarily to give an opportunity to an accused to know in advance the particulars of evidence that would be adduced against him in the Court of Sessions so that he could be in a position to prepare his defence. Another object, which was no less important, was to enable the Magistrate to discharge an accused if there was no prima facie case against him. This procedure prevented unnecessary harassment to such accused and at the same time saved the valuable time of the Sessions Court. In practice the committal proceeding, whether intended by the Legislature or not, served another purpose, namely, it gave an opportunity to the accused to test the credibility of witnesses by bringing out the discrepancies between their evidence in the committing court, the statements made by them to the police under section 161 of the Code and the evidence given by them in the Court of Sessions. Though very often accused persons took full advantage of this additional opportunity to test the veracity of the witnesses, as often as not, it had turned out to be duplication of trials with the resultants long delays in the disposal of criminal cases. The advantage of committal proceeding. was not solely for the accused, for the. prosecution by examining the witnesses before the committing Magistrate secured their testimony in the sense that though it was tampered subsequenty it is unfortunately a frequent phenomenon in criminal, cases it could use the said evidence as substantive 895 one under section 288 of the Code. The Legislature, in its wisdom, presumably thought that undue delay in the disposal of sessions cases was due to the elaborate and ' prolonged committal proceedings and stepped in to amend the Code in that respect. The whole of section 207A has been inserted by Act XXVI of 1955. While the section simplified the procedure in regard to commitment proceedings instituted on a police report, it confined the existing procedure to proceedings initiated otherwise than on a police report. This distinc tion between the two classes of cases had a reasonable factual basis. In the case of a police report, a thorough inquiry would have been made and the investigating officer would have sent a report to the Magistrate under section 173 of the Code. The amended section 173 of the Code also enjoins on the officer in charge of the police station a duty to furnish before trial, free of cost, to the accused copies of the report forwarded under that section to the Magistrate, the First Information Report recorded under section 154 and all other documents or relevant extracts thereof on which the prosecution proposes to rely, including the statements, if any, recorded under section 164 of the Code and those recorded under sub section (3) of section 161 and a list of witnesses whom the prosecution proposes to examine as its witnesses. The Magistrate in a proceeding instituted on police report would ordinarily be in a position, on the said material to understand the case of the prosecution and know the nature of the evidence that would be adduced on the basis of which the accused is sought to be proceeded against. The accused also would have an opportunity to know beforehand the case he would have to meet and the evidence that would be adduced against him. But in a proceeding instituted otherwise than on a police report, no such maternal would be available and therefore the old procedure continued to apply to such a case. With this background let us look at the provisions of section 207A of the Code. The relevant provisions of section 207A of the Code may now be read: Section 207A: (1) When, in any proceeding instituted on a police report, the Magistrate receives the 896 report forwarded under section 173, he shall, for the purpose of holding an inquiry under this section, fix a date which shall be a date not later than fourteen days from the date of the receipt of the report, unless the Magistrate, for reasons to be recorded, fixes any later date. If, at any time before such date, the officer conducting the prosecution applies to the Magistrate to issue a process to compel the attendance of any witness or the production of any document or thing, the Magistrate shall issue such process unless, for reasons to be recorded, he deems it unnecessary to do so. At the commencement of the inquiry, the Magistrate shall, when the accused appears or is brought before him, satisfy himself that the documents referred to in section 173 have been furnished to the accused and if he finds that the accused has not been furnished with such documents or any of them, he shall cause the same to be so furnished. The Magistrate shall then proceed to take the evidence of such persons, if any, as may be produced by the prosecution as witnesses to the actual commission of the offence alleged, and if the Magistrate is. of opinion that it is necessary in the interests of justice to take the evidence of any one or more of the other witnesses for the prosecution, he may take such evidence also. The accused shall be at liberty to cross examine the witnesses examined under sub section (4), and in such case, the prosecutor may re examine them. (6) When the evidence referred to in sub section (4) has been taken and the Magistrate has considered all the documents referred to in section 173 and has, if necessary, examined the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him and given the prosecution and the accused an opportunity of being heard, such Magistrate shall, if he is of opinion that such evidence and documents disclose no grounds for committing the accused person for trial, record his reasons ,and discharge him, unless it appears to the Magistrate 897 that such person should be tried before himself or some other Magistrate, in which case he shall proceed, accordingly. When, upon such evidence being taken, such documents being considered, such examination (if any) being made and the prosecution and the accused being given an opportunity of being heard, the Magistrate is of opinion that the accused should be committed for trial, he shall frame a charge under his hand, declaring with what offence the accused is charged. On the interpretation, of sub section (4), which is the main sub section under scrutiny in the present case, the High Courts in India have expressed conflicting views. It would not be necessary to consider the said decisions in detail, but it would be enough if we state the conflicting views, which areas follow: (1) Under sub section (4) the prosecution is bound to examine all the eye witnesses indicated in the police report, and the discretion of the Magistrate to examine witnesses under the second part of the said sub section is only in respect of witnesses other than the eye wit nesses: vide M. Pavalappa vs State of Mysore (1), State vs Andi Betankar (2), Ghisa vs State (3 ) and Chandu Satyanarayana vs The State (4). (2) The Magistrate 's power to examine eye witnesses under the first part of sub section (4) is confined only to such witnesses as are produced in court by the officer conducting the prosecution and if he has not produced any such witnesses, the Magistrate cannot examine any eye witnesses under the second part of the said sub section, for, according to this view, the second part deals with only witnesses other than eye ,witnesses. (3) If the prosecution has not produced any eye witnesses the court may not in its discretion examine any witness under the second part, but can, if satisfied, discharge or commit the accused to sessions on the basis of the documents referred to in section 178 of the Code: vide State vs Lakshmi Narain (5), State, of U. P. vs Satyavir (6). (4) The first part confers a power on a Magistrate only to examine the eyewitnesses produced, but (1) A.I.R. (3) A.I.R. 1919 Raj. (5) A.I.R. 1960 All. 237. (2) A.I.R. 1958 Orissa 241. (4) A.I.R. 1959 A.P.651. (6) A.I.R. 1959 All. 898 the second part empowers him to examine any witness other than those produced, whether eyewitnesses or not, and in a case where the prosecution failed to discharge its duty to produce any witnesses or any important eye witnesses, the court would not be exercising its judicial discretion if it commits the accused to sessions on the basis of documents referred to under section 173 of the Code without examining at least the important witnesses: vide State vs Yasin (1), In re Pedda Amma Muttigadu (2), A. Ishaque vs The State (3) and Manik Chand vs The State (4). We have gone through the judgments of the High Courts cited at the Bar and derived considerable assistance from them for deciding the question raised. But as the question is to be primarily decided on the interpretation of the relevant provisions, we think, without any disrespect to the learned Judges, that it is not necessary to consider the said decisions in detail. Now let us look at the relevant provisions of section 207A of the Code to ascertain its intendment. Sub section (4) is the most important section vis a vis the taking of evidence. It is in two parts, the first part provides for the examination of witnesses produced by the prosecution and the second part for the examination of other witnesses. One of the fundamental rules of interpretation is that if the words of a statute are in themselves precise and unambiguous "no more is necessary than, to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature". The first part of the sub section reads: "The. Magistrate shall then proceed to take the evidence of such persons, if any, as may be produced by the prosecution as witnesses to the actual commission of the offence alleged. " The word "shall" imposes a peremptory duty on the Magistrate to take the evidence; but the nature of the said evidence is clearly defined thereafter. The clause "as may be produced by the prosecution as witnesses to the actual commission of the offence alleged" governs the words "such persons"; (1) A.I.R. 1958 All. (3) A.I.R. 1958 Cal. (2) A.I.R. 1959 A.P. 469. (4) A.I.R. 1958 Cal. 324. 899 with the result that the duty of the Magistrate to take evidence is only confined to the witnesses produced by the prosecution. Learned counsel for the appellants contends that it could not have been the intention of the Legislature to permit the prosecution to keep back the eye witnesses in the committal court and therefore the word "produced" should be read as "cited". To accept this interpretation is to substitute the word "cited" in place of the word "produced": such a construction is not permissible, especially, when the plain meaning of the word used by the Legislature is clear and unambiguous, and the acceptance of that meaning does not make the section otiose. The phrase "if any" between the words "such persons" and the aforesaid clause emphasizes that the prosecution may not produce any such persons, in which case the obligation to examine such witnesses cannot arise. The wording of the second part of the sub section is also without any ambiguity and it reads: "and if the Magistrate is of opinion that it is necessary in the interests of justice to take the evidence of any one or more of the other witnesses for the prosecution, he may take such evidence also. " No doubt the word "may" in the clause "he may take evidence" imposes duty upon the Magistrate to take other evidence; but that duty can arise only if he is of opinion that it is necessary in the interests of justice to take the evidence. The fulfilment of the condition that gives rise to the duty is left to the discretion of the Magistrate. The duty to take evidence arises only if he is of the requisite opinion. Doubtless the discretion being a judicial one, it should be exercised reasonably by the Magistrate. If he exercises it perversely, it may be liable to be set aside by a superior court. If so, what do the words "other. witnesses" mean? Do they mean witnesses other than eyewitnesses or witnesses, eye witnesses or not, other than those produced before the Magistrate, by the prosecution? The witnesses who will depose to the prosecution case may be of different categories, namely, (i) witnesses who are eye witnesses to the actual commission of the offence alleged; (ii) witnesses who speak to the facts 900 which afford a motive for the commission of the offence; (iii) witnesses who speak to the investigation and to the facts unfurled by the investigation; and (iv) witnesses who speak to the circumstances and facts probablizing the commission of the offence, which is technically described as substantive evidence. Sub section (4) enjoins on the Magistrate a duty to examine the first category of witnesses produced by the prosecution. The word "actual" qualifying the word "commission" emphasises the fact that the said witnesses should be those who have seen the commission of the offence. We have held in interpreting the first part that the Magistrate should examine only such witnesses who are produced before him by the prosecution; but there may not be eyewitnesses in a case, or, if there are, the prosecution may not have produced all of them before the Magistrate. The second part of the sub section therefore confers a discretionary power on the Magistrate to examine any one or more of witnesses of all categories, including the eye witnesses who have not been produced by the prosecution within the meaning of the first part of the said sub section. But it is said that sub sections (6) and (7) indicate that taking of evidence by the Magistrate is a condition precedent for making an order of discharge or of committal and, therefore, the provisions of Sub section (4) must be so construed as to impose a duty on the Magistrate to examine some witnesses. Firstly, we cannot hold that the sub sections impose any such condition. The argument is that the clause in subs. (6), namely, "When the evidence referred to in subsection (4) has been taken" is a condition precedent for making an order of discharge. The adverb "when" in the clause in the context denotes a point of time and not a condition precedent. The clause means nothing more than that an order of discharge can be made under sub section (6) after the events mentioned therein have taken place. Secondly, the two clauses necessarily refer to the corresponding or appropriate situations under the earlier sub sections. The first clause will not come into play if the Magistrate has not taken any evidence. So too, in sub section (7) also the 901 adverb "when" denotes the time when the Magistrate can make the order of committal. If evidence has, not been taken, that sub section is not applicable a the Magistrate proceeds to make an order of committal on other material referred to in the sub section. On the other hand ', if the said two sub sections are construed as imposing a condition precedent for making an order of discharge or commitment, as the case may be, the said two sub sections will directly, come into conflict with the provisions of sub section When one. sub section clearly confers a discretion on the Magistrate to take or not to take evidence, the other subsections take it away. It is not permissible to create conflict by construction, when by an alternative construction all the three sub sections can be harmonized and reconciled. If the construction suggested by learned counsel for the appellants be adopted, it would also lead to an anomaly in that the Magistrate, though the documents referred to in section 173 clearly pronounce the innocence of the accused, has to go through the pretence of examining one or more witnesses to satisfy the provisions of the sub section. Reliance is placed upon section 251A of the Code relating to warrant cases whereunder the Magistrate is authorized, upon consideration of all the documents referred to in section 173 and upon making such examination of the accused as the Magistrate thinks necessary and after giving the prosecution and the accused an opportunity of being heard, to discharge the accused, if he considers the charge against the accused to be groundless; but if he is of opinion that there is ground that the accused has committed an offence alleged against him, he shall frame in writing a charge against the accused. By contrasting this provision with section 207A, it is contended that if the construction put forward by learned counsel is not accepted, the obvious difference between the two. procedures indicated by the Legislature would be obliterated. We cannot agree with this contention. The difference between the two procedures is that, in a case covered by section 207A, evidence will have to be taken under certain 902 contingencies, whereas under section 251A no evidence need be taken at all. That distinguishes the different procedures under the two sections and it is not the province of the court to add any further conditions or limitations to those provided by the Legislature. We are fortified in our view by a decision of this Court in Macherla Hanumantha Rao vs The State of Andhra Pradesh (1). There the point in controversy was whether sa. 207 and 207A, inserted in the Code by the Amending Act XXVI of 1955, violated the provisions of article 14 of the Constitution. In support of the contention that they violated article 14 of the Constitution, it was sought to be made out that the provisions of section 207A of the Code, in comparison and contrast with other provisions of Ch. XVIII of the Code, prescribed a less advantageous position for the accused persons in a proceeding started under a police report than the procedure prescribed in other cases in the succeeding provisions of that chapter. This Court held that there was a reasonable classification to support the difference in the procedures. Sinha J., as he then was, who spoke for the Court, in order to meet the argument based on discri mination, considered the scope of the new section. In doing so, the learned Judge observed thus at p. 403: "The magistrate then has to record the evidence of such witnesses as figure as eye witnesses to the occurrence, and are produced before him. He has also the power ' in the interest of justice, to record such other evidence of the prosecution as he may think necessary, but he is not obliged to record any evidence. Without recording any evidence but after considering all the documents referred to in section 1973 and after examining the accused person and after hearing the parties, it is open to the magistrate to discharge the accused person after recording his reasons that no ground for committing the accused 1 for trial has been made out, unless he decides to try the accused himself or to send him for trial by another magistrate. If, on the other hand, he finds that the accused should be committed for trial, he is required to frame a charge (1) ; 903 disclosing the offence with which the accused is charged. " Then the learned Judge proceeded to consider the scope of section 208 of the Code. After having found that there was obvious difference in the procedure, the learned Judge came to the conclusion that "the Legislature has provided for a clear classification between the two kinds of proceedings at the commitment stage based upon a very relevant consideration, namely, whether or not there has been a previous inquiry by a responsible public servant whose duty it is to discover crime and to bring criminals to speedy justice". It will thus be seen that the observations of the learned Judge at p. 403 cannot be said to be obiter, as learned counsel asks us to hold, for the construction of the provisions of section 207A was necessary to ascertain whether there was reasonable classification or not. Assuming that the said observations are obiter, even then, they record the considered opinion of five learned Judges of this Court. The view we have expressed also is consistent with the said observations. Our view could now be expressed in the following propositions: (1) In a proceeding instituted on a police report, the Magistrate is bound to take evidence of only such eye witnesses as are actually produced by the prosecution in court. (2) The Magistrate, if he is of opinion that it is in the interest of justice to take evidence, whether of eye witnesses or others, he has a duty to do so. (3) If the Magistrate is not of that opinion and if the prosecution has not examined any eye witnesses, he has jurisdiction to discharge or commit the accused to sessions on the basis of the documents referred to in s, 173 of the Code. (4) The discretion of the Magistrate under sub section (4) is a judicial discretion and, therefore, in appropriate cases the order of discharge or committal, as the case may be, is liable to be set aside by a superior court. Before closing we would like to make some observations. Rarely we come across cases where the prosecution does not examine important eye witnesses, for such a procedure would entail the danger of the said witnesses being tampered with by the accused, with 904 the result that there will not be any evidence taken by the committing Magistrate which could be used as substantive evidence under section 288 of the Code. Even if the prosecution takes that risk, the Magistrate shall exercise a sound judicial discretion under the second part of sub section (4) of section 207A in forming the opinion whether witnesses should be examined or not, and any perverse exercise of that discretion can always be rectified by a superior court. Rut there may be a case where the Magistrate can make up his mind definitely on the documents referred to in section 173 without the aid of any oral evidence and in that event he would be within his rights to discharge or commit the accused, as the case may be. In this view, it is not necessary to express our opinion whether even if the Magistrate acted illegally in committing an accused without taking any evidence, the said illegality is cured either by section 537 of the Code or any other section thereof. In the result, the appeals fail and are dismissed. Appeals dismissed.

On the date fixed for the inquiry the prosecution intimated to the Magistrate that it did not intend to examine any witness in the Magistrate 's Court. The Magistrate adjourned the inquiry to consider whether it was necessary to record any evidence before commitment. On the adjourned date he expressed his opinion that no witnesses need be examined, framed charges against the appellants and committed them to the Sessions Court. The appellants contended that the Magistrate had ' no jurisdiction to commit them to Sessions without examining witnesses under sub section (4) of section 207 A of the Code of Criminal Procedure. Held, that the order of commitment was valid and the Magistrate had jurisdiction to make it 'Without recording any evidence. The position under section 207 A of the Code is that: (i) the Magistrate is bound to take evidence of only such eye witnesses as are actually produced by the prosecution before the Committing Court; 891 (ii) the Magistrate if he is of opinion that it is in the interests of justice to take evidence whether of. eye witnesses, or of others, he has a duty to do so; (iii). .the Magistrate, if he is not of that opinion and if the prosecution has not examined any eye witnesses, he has jurisdiction to discharge or commit the accused on the basis of the documents referred to in section 173 of the Code; (iv).the discretion of the Magistrate is a judicial dis cretion which is liable to be corrected by a superior Court, Macherla Hanumantha Rao vs The State of Andhra Pradesh, ; , relied on.