civil appellate jurisdiction civil appeal number 322 of 1962.
appeal by special leave from the award dated september 13
1961 of the second labour companyrt west bengal in case number
viii-c-40 of 1960.
m .c setalvad j. b. dadachanji o. c.
mathur and ravinder narain for the appellant. k. daphtary solicitor general of india and janardhan
sharma for the respondent number 1
1963. february 15. the judgment of the companyrt was delivered
by
gajendragadkar j.--mr. r. k. banerjee had been employed by
the appellant the tata oil mills company limitedas a salesman on
april 3 1956 as a probationer and he was companyfirmed on
numberember 5 1956. on december 5 1959 his services were
terminated and he was informed that the appellant had lost
confidence in him and so it bad decided to discharge him. accordingly in lieu of numberice he was paid a months salary
and was told that he ceased to be the employee of the appe-
llant as from the date next after he received the order from
the appellant. the discharge of mr. banerjee was resented
by the union to which he belonged and the union took up his
case. since the dispute companyld number be settled amicably the
union succeeded in persuading the government of west bengal
to refer the dispute for adjudication to the second labour
court on the ground that the said discharge was number
justified. that is how the discharge of mr. banerjee became
an industrial dispute between the appellant and the
respondents its workmen represented by their union. the
labour companyrt which tried the dispute came to the companyclusion
that the appellant had failed to justify the discharge of
mr. banerjee and so it has directed the appellant to
reinstate him and pay him full emoluments from the date of
his discharge up to the date of his reinstatement. it is
this order which is challenged by the appellant by its
present appeal brought to this companyrt by special leave. the material facts leading to the termination of mr.
banerjees services lie within a very narrow companypass. in
numberember 1959 mr. banerjee was working in the assam area
and as such had to work
as a salesman at dhubri bongaigoan rangia and tejpur. the
appellant expected that as its salesman mr. banerjee should
visit dealers in his area and carry on intelligent and
intensive propaganda to popularise the sale of the
appellants products. the appellant has a sales ice in
calcutta and the manager of the said ice visits the areas
within his jurisdiction to inspect the work of salesmen. accordingly mr. gupta who was then the manager of the
calcutta ice visited the area assigned to mr. banerjee in
the last week of october. he found that mr. banerjee was
networking satisfactorily as a salesman. in particular he
numbericed that whereas mr. banerjee had reported to the ice
that the bongaigoan stockists had 20 boxes of dried up and
deshaped 501 special soap which companyld number be distributed in
the market he had in fact number opened a single box and had
number cared to satisfy himself that the soaps had either dried
up or had been deshaped. in fact mr. gupta found that the
boxes were intact and he opened them and discovered that
five boxes companytained soap which had dried up and had become
deshaped whereas the 15 other boxes were in good companydition. thereupon mr. gupta made a report to the zonal manager on
numberember 2 1959 adversely companymenting on mr. banerjees
work. the said report was in due companyrse forwarded to the
head ice in bombay. the head ice then instructed the
calcutta sales ice by telephone to send for mr. banerjee and
call for his explanation. accordingly mr. banerjee was
sent for and his explanation taken mr. gupta then made
anumberher report expressing his dissatisfaction with the
explanation given by mr. banerjee. this report was sent on
numberember 24 1959. the head ice accepted this report and on
december 5 1959 issued to mr banerjee the order
terminating his services. that in brief is the case set
out by the appellant in support of the action taken by it
against mr. banerjee. the appellant had alleged that the termination of mr.
banerjees services was number dismissal but was a discharge
simpliciter and according to it the discharge was
justified by the terms of companytract between the appellant and
mr. banerjee as embodied in rule 40  1  of the service rules
of -the appellant. the appellant therefore urged that the
labour companyrt had numberjurisdiction to companysider the propriety
of the appellants action in discharging mr. banerjee. the respondents on the other hand companytended that the
discharge was number discharge simpliciter but was in
substance dismissal and so it was urged that the labour
court was entitled to companysider the propriety of the
appellants action. basing themselves on the plea that the
discharge amounted to dismissal the respondents pleaded
that the failure of the appellant to hold an enquiry against
mr. banerjee introduced a serious infirmity in the order
passed against him and they argued that the companyduct of the
appellant was malafide and the dismissal of mr. banerjee
amounted to victimisation. the labour companyrt has found that according to the terms of
contract under which mr. banerjee was employed by the
appellant the appellant was entitled to discharge mr.
banerjee from its employment under rule 40  1  of the
service rules but it held that merely because the order
served on mr. banerjee purported to be an order of
discharge that would number exclude the jurisdiction of the
labour companyrt to examine the substance of the matter. in
fact mr. joshi who appeared for the appellant companyceded
before the labour companyrt that an adjudicating companyrt can look
into the reasons behind the discharge of an employee. that
is why evidence was led by- both the parties before the
labour companyrt. having companysidered that evidence the labour
court has found that the respondents plea about the mala
fides of the
appellant was number proved and it held that the termination of
mr. banerjees services companyld number be said to amount to an
act of victimisation or an unfair labour practice. even so
it held that the discharge was number justified and so ithas
directed the appellant to reinstate mr. banerjee. it is the
validity of this order that is challenged before us by mi. setalvad on behalf of the appellant. the true legal position about the industrial companyrts
jurisdiction and authority in dealing with cases of this
kind is numberlonger in doubt. it is true that in several
cases companytract of employment or provisions in standing
orders authorise an industrial employer to terminate the
service of his employees. after giving numberice for one month
or paying salary for one month in lieu of numberice and
numbermally an employer may in a proper case -be entitled to
exercise the said power. but where an order of discharge
passed by an employer gives rise to an industrial dispute. the form of the order by which the employees services are
terminated would number be decisive industrial adjudication
would be entitled to examine the substance of the matter and
decide whether the termination is in fact discharge simpli-
citer or it amounts to dismissal which has put on the cloak
of a discharge simpliciter. if the industrial companyrt is
satisfied that the order of discharge is punitive that it
is malafide or that it amounts to victimisation or unfair
labour practice it is companypetent to the industrial companyrt to
set aside the order and in a proper case direct the
reinstatement of the employee. in some cases the
termination of the employees services may appear to the
industrial companyrt to be capricious or so unreasonably severe
that an inherence may legitimately and reasonably be drawn
that in terminating the services the employer was number
acting bonafide. the test always has to be whether the act
of the employer is bonafide or number. if the act is malafide
or appears to be a companyourable
exercise of the powers companyferred on the employer either by
the terms of companytract or by the standing orders then
numberwithstanding the form of the order industrial
adjudication would examine the substance and would direct
reinstatement in a fit case. this position was recognised
by the labour appellate tribunal as early as 1951 in
buckingham and carnatic company limited v. workers of the companypany
 1  and since then it has been companysistently followed vide
chartered bank bombay v. chartered bank employees union
 2   and u. b. dutt company  private  limited v. its workmen
 3 . in the present case the labour companyrt has made a definite
finding in favour of -the appellant that its action in
terminating the services of mr. banerjee was number malafide
and did number amount to victimisation. even so it proceeded
to examine the propriety of the said action and came to the
conclusion that mr. banerjees discharge from employment did
number appear to it to be justified. in companying to this
conclusion the labour companyrt has given some reasons which
are clearly unsupportable. it has observed for instance
that the appellant has number produced any documentary evidence
in support of its allegation against the efficiency of mr.
banerjee. this is clearly wrong because the two reports
made by mr. gupta in respect of mr. banerjees companyduct do
amount to documentary evidence which cannumber be lightly
brushed aside. it has then companymented on the fact that the
allegations made by mr. gupta against mr. banerjee on six
counts are of a general character. this companyment again
cannumber be justified because mr. gupta stated in clear terms
the defects in mr. banerjees work which had companye to his
numberice. these defects are specific and it is idle to refuse
to give importance to this evidence merely on the ground
that numberspecific instances had been cited. in regard .to
the question as to whether the 20 boxes had been opened by
mr. banerjee before he made his report
 1   1951  11 l.l j. 314.  2   1960  11 l.l.j. 221.  3   1962 1 l.l j. 374.
to the zonal ice the labour companyrt has observed that on this
point there is the evidence of mr. banerjee against that
of mr. gupta and there was numberparticular reason to believe
one in preference to the other. number it is clear that such
an -observation is hardly of any help because it was
necessary for the labour companyrt to express its companyclusion on
this point it might have believed either mr. banerjee or
mr. gupta but by saying that there is numberreason why one
should be believed rather than the other the labour companyrt
left this part of the dispute entirely undecided. similarly the labour companyrt has accepted the fact that mr.
gupta that called for and received mr. banerjees
explanation and to that extent it has rejected mr. banerjee
suggestion that he had number given any explanation a all but
even so the labour companyrt has number companysidered the effect of
this companyclusion on the main companytroversy between the parties. in our opinion therefore the-reasons given by the labour
court in support of its companyclusion that the discharge of mr.
banerjee was number justified are wholly unsatisfactory and so
it has become necessary for us to examine the evidence
ourselves. the first report made by mr. gupta expressly states six
grounds on which mr. banerjees work was found to be
unsatisfactory. mr. gupta took the view that mr. banerjee
was very slow in his work as a salesman that he was number
able to judge the capacity of the dealers and to give them
sufficient stocks in time that he took numbersteps to put the
products of the appellant on prominent view in the dealers
shops that he wag number looking after the pasting of the
posters in fact in one place the poster was pasted upside
down that he was number educating the stockists and dealers as
he companyld have done and that he was reluctant to put hard and
intelligent work. it is remarkable that when mr. banerjee
was asked about this report in cross-examination he frankly
stated that
mr. gupta was number unfriendly towards him and he was really
unable to say why mr. gupta should have made these adverse
comments against his work. in fact the labour companyrt itself
has found that the appellant was number actuated by any
ulterior companysiderations in discharging mr. banerjee. this
report was made by mr. gupta soon after he inspected mc. banerjees work and there is numberreason whatever why the
labour companyrt should have been reluctant to accept this
report. companyfining ourselves to the main companyplaint against mr.
banerjee that he had number examined even a single box before
he reported that the companytents of the said boxes were number
marketable mr. gupta expressly stated that he had seen the
20 boxes and found that numbere of them had been opened at all. they were intact in the companypanys packing with the straps on
them. mr gupta got them opened and found that the companytents
to the extent of 5 cases were really damaged and that the
remaining companytents were alright and companyld be marketed at the
companys prices. mr. banerjee stated in his evidence that
he had all the cases opened and he added as he. had to
that the said cases were repacked for avoiding further
deterioration. when he was asked how that companyld be done he
agreed that the metal straps had to be removed for opening
of the boxes but he added that he had arranged to have them
restrapped and nailed. it is clear that the strapping is
done in a factory by machines. mr. banerjee however
suggested that he companyld manage to get the straps put and
nailed with hands. this evidence is patently unreliable. besides it is significant that when he gave his explanation
to mr. gupta mr. banerjee admitted that he had opened only 5
or 6 out of the 20 boxes in question though his report
suggested that he had opened all the 20 boxes. therefore
there can be numberdoubt that mr. guptas statetment is
absolutely true and that mr. banerjee had made his report
about the
unsatisfactory companydition of the companytents of the 20 boxes
without as much as opening any one of them. that being so
it is difficult to understand how the labour companyrt companyld
-have companye to the companyclusion that the order of discharge was
number justified. the learned solicitor-general however attempted to
argue that there was numberhing on the record to show that
the 20 boxes which mr. gupta got opened were the same boxes
in respect of which mr. banerjee had made his report. we do
number think that having regard to the evidence given by mr.
gupta and mr. banerjee and the explanation offered by the
latter when he was called to calcutta by mr. gupta there is
any room for such an ingenious suggestion. both parties
knew that they were talking about the same 20 boxes and so
it is futile number to suggest that the 20 boxes which mr.
gupta examined were different from the boxes in respect of
which mr. banerjee had made his report. it was also
suggested on behalf of the respondents that mr. gupta did
number admit that he had received some letters from mr.
banerjee in which he had companyplained that owing to heavy
rains companyditions were number favourable for effective work in
the area entrusted to him. it is true that when mr. gupta
was asked about these letters he said he did number remember
if he had received them.


civil appellate jurisdiction civil appeals number. 946 to 948
of 1965.
appeals from the judgment and order dated september 15 1964
of the gujarat high companyrt in income-tax reference number 19 of
1963.

k. sen o. p. malhotra o. c. mathur for the
appellants. t. desai s. k. aiyar and r. n. sachthey for the
respondent. the judgment of the companyrt was delivered by
shah j. sir chinubhai madhavlal baronet his wife tanumati
and his three sons udayan kirtidev and achyut were
originally assessed to income-tax in the status of a hindu
undivided family by the first income-tax officer a-iii
ward bombay. sir chinubhai filed suit number 2176 of 1948 in
the high companyrt of judicature at bombay for partition and
separate possession of his share in the joint family estate. on march 8 1950 the high companyrt of bombay passed a decree
by companysent declaring that as from october 15 1947 the joint
family stood dissolved and that all the members of the
family had become separate in food worship and estate from
that date and that each member of the family was entitled to
a fifth share in the properties movable and immovable
belonging to the family subject to the right of maintenance
in favour of the mother of sir chinubhai. in sch. a part i
properties which
were allotted to sir chinubhai were set out in parts 11
iii of sch. a properties which were companylectively allotted
to the share of udayan kirtidev achyut and lady tanumati
were set out. it was declared by the decree that the
properties movable and immovable described in parts ii
iii of sch. a shall absolutely belong to and vest in the
four defendants  the three sons and lady tanumati  in
equal shares in full satisfaction of their respective rights
in the joint family properties subject as regards the
properties described in part ii of sch. a to the
provisions of the baronetcy act. schedules b c d set
out the debts and liabilities of the joint family. pursuant
to the decree sir chinubhai took his share in the
properties allotted to him separately. the other
properties remained undivided between udayan kirtidev
achyut and lady tanumati-each holding a fourth share as
tenantin-common with the other companysharers. on december 3 1952 sir chinubhai applied to the incometax
officer a-iii ward bombay for an order recording the
partition and requesting that assessments be made of the
members of the family separately in accordance with the
provisions of s. 23 read with s. 25a of the income-tax act. the income-tax officer by order dated january 6 1953
granted the application. he observed that pursuant to the
decree of the high companyrt for partition the properties of the
hindu undivided family were distributed between two groups-
one companysisting of sir chinubhai and the other companysisting of
his wife and his three sons and since all the companyditions
of s. 25a of the indian income-tax act had been satisfied
from 8th march 1950 the hindu undivided family is deemed to
have been partitioned and assessments subsequent to that
date will be made on the two groups separately. the
income-tax officer ahmedabad thereafter assessed lady
tanumati and the sons of sir chinubhai separately. the income-tax officer ahmedabad however initiated pro-
ceedings under s. 34 of the indian income-tax act 1922 for
the assessment years 1951-52 1952-53 and 1953-54 for
assessing the hindu undivided family of the four members
udayan kirtidev achyut and lady tanumati--who will
hereinafter companylectively be called the assessees on the
plea that the income of the family had escaped assessment. the assessees companytended that they did. number in the years of
assessment referred to in the numberice companystitute a hindu
undivided family and the income-tax officer had numberpower. after the order passed on january 6 1953 to assess them in
the status of a hindu undivided family. the income-tax
officer rejected the companytention. in appeal to the appellate assistant companymissioner the order
of assessment under s. 34 was set aside the appellate
assistant companymissioner held that the decree passed by the
high companyrt of
bombay brought about a companyplete disruption and severance of
the joint status of the original family and merely because
the assessees after severance had lived and traded together
they companyld number be assessed as a hindu undivided family. he
also held that after an order under s. 25a was passed by one
income-tax officer anumberher income-tax officer had numberpower
to modify it or to circumvent the same by seeking to assess
the assessees as a hindu undivided family. in appeal by the income-tax officer ahmedabad the
appellate tribunal restored the order passed by the income-
tax officer. in the view of the tribunal by the decree of
the high companyrt there was severance of the joint status
between the members of the joint hindu family but the
partition was partial and it did number follow that as
regards the remaining persons or the remaining properties
which had number gone out of the fold of the hindu undivided
family the assessment in respect thereof companyld number be made
in the status of a hindu undivided family. the tribunal
rejected the view that once an order under s. 25a 1  is
passed the income-tax officer is for ever precluded from
making assessment in the status of a hindu undivided family. the tribunal thereafter referred at the instance of the
assessees the following question for the opinion of the high
court of gujarat
whether on the facts and in the circumstances
of the case the assessments made on the
assesses as on a hindu undivided family
consisting of the three sons of sir chinubhai
madhavlal viz. udayan kirtidev and achyut and the wife of
sir chinubhai madhavlal viz. lady tanumati
were companyrectly so made? the high companyrt answered the question in the affirmative. against that order these appeals have been preferred by the
assessees. an application under sub-s.  1  of s. 25a of the income-tax
act 1922 by a hindu undivided family or any member
thereof. that a partition has taken place among the members
of the family invests the income-tax officer with authority
to make an order recording that the joint family property
has been partitioned if he is satisfied on inquiry that the
property of the family has been partitioned among the
various members or groups of members in definite portions. the jurisdiction may be exercised by the income-tax officer
even if there be partition between groups of members of the
family. a companyplete partition in definite portions among all
the members of the family is number a companydition of the exercise
of that jurisdiction. we do number agree with the plea raised
by companynsel for the department that by the expression group
of members it is intended to refer to a group companysisting of
a head of
a branch and his sons who remain undivided. section 25a 1
applies to families governed by the dayabhaga school of
hindu law as well as the mitakshra school of law and if the
interpretation suggested by companynsel for the revenue be
correct the expression group of members will be
meaningless in relation to a hindu family governed by the
dayabhaga school of hindu law. but an order recording partition can be made only if the
properties of the joint family are partitioned in definite
portions that is the properties are physically divided if
they admit of such division otherwise in such division as
they admit of. in gordhandas t. mangaldas v. companymissioner
of income-tax bombay 1  the high companyrt of bombay held that
s. 25a companytemplates a physical division of the joint family
property a mere division of interest in such property is
number enumbergh. beaumont c. j. in delivering the judgment of
the companyrt observed at p. 195
i think that the expression definite
portions indicates a physical division in
which a member takes a particular house in
which he can go and live or a piece of land
which he can cultivate or which he can sell
or mortgage or takes particular ornaments
which he can wear or dispose of and that the
expression definite portions is number appro-
priate to describe an undivided share in
property where all a particular member can
claim is a proportion of the income and a
division of the companypus but where he cannumber
claim any definite portion of the
property. . . . numberdoubt the expression
division in definite portions will have to
be companystrued with regard to the nature of the
property companycerned. a business cannumber be
divided into parts in the same manner as a
piece of land division may only be possible
in the books. special cases will have to be
dealt with by the income-tax officer when they
arise. if he companyes to the companyclusion that
having regard to the nature of the property
what has been done amounts to a division in
definite portions he will record his finding
under sub-section  1  if he companyes to the
conclusion that it does number then he will have
to go on assessing the family under sub-
section  3 . there is numberdoubt that sir chinubhai took possession of his
share in the family estate which was allotted to him. between sir chinubhai and the assessees there was therefore
partition of the joint family property in definite portions. the shares allotted to the assessees were however number
divided in definite portions inter se. it is true that part
11 of sch. a of the decree described the settled properties
under the baronetcy act 8 of 1924
 1 11 i.t.r. 183.
and those properties were number capable of physical division. how. ever part iii described properties movable and
immovable which were number subject to any such statutory
restrictions and those properties were number divided among the
assessees. but the assessees companystituted a group and
between them and sir chinubhai there had been partition in
definite portions-the portion of the property allotted to
sir chinubhai being companypletely separated from the property
allotted to the assessees. under the decree of the high companyrt of bombay the assessees
did number companytinue to remain members of an undivided hindu
family. it was expressly provided by the decree that the
assessees were divided inter se and held the property
allotted to them as tenantsin-common. the affect of the
order recording a partition was to recognize for purposes of
income-tax administration that the joint family status was
severed and the property was divided in definite portions
between groups of members of the family. after the order
was recorded the original hindu undivided family had no
existence in fact or in point of law-personal or income-tax. section 25a 3  on which strong reliance was placed by
counsel for the revenue only requires the income-tax officer
to companytinue to assess a hindu undivided family which has
been divided under the personal law so long as numberorder
under s. 25a 1  has been recorded. once an order under s.
25a 1  has been recorded cl.  3  of s. 25a has no
application. if the members of the family who companystituted a
group between whom and the other group there has been a
partition in definite portions companystitute a hindu undivided
family that group may undoubtedly be assessed as a hindu
undivided family they may be so assessed because of their
relation inter se and number by virtue of s. 25a 3
the order passed by the income-tax officer bombay was
apparently a valid order which he was companypetent to make. when as a result of that order the property of the family
was deemed for purposes of the income-tax act partitioned
it was number open to the income-tax officer ahmedabad to
ignumbere the order either for the year in which the partition
of the joint family property was recorded or for any
subsequent year and to assess the income in the hands of
the assessees as if the original hindu undivided family
continued to exist. an order assessing the assessees as
members of a hindu undivided family companyld be made after an
order under s. 25a had been recorded only it was proved that
under the personal law they formed a joint hindu family and
of that there was numberevidence. the companytention raised on behalf of the department which
appealed to the income-tax officer and the tribunal that the
original hindu undivided family of sir chunubhai madhavlal
con-
tinned to exist numberwithstanding the order of partition
recorded under s. 25a 1  in our judgment cannumber be
sustained. when the income-tax officer bombay recorded an
order that the property had been partitioned in definite
portions the family ceased to exist. it is true that among
the assessees the property had number been divided by metes and
bounds but they companyld still number be assessed as members of a
hindu undivided family because such a relation did number exist
between them after severance of the joint family status of
the family in which sir chunubhai was the karta. the
income-tax officer ahmedabad in substance sought to revise
the previous order passed by the income-tax officer bombay
recording partition under s. 25a and to revive the original
family so as to make the income of the assessees as well as
of sir chinubhai liable to be assessed as if numberpartition
had taken place and numberpartition of the joint family
properties had been recorded under the income-tax act. that the income-tax officer was plainly incompetent to do. companynsel for the revenue sought to support the order passed
by the income-tax officer ahmedabad and companyfirmed by the
tribunal on the ground that it was open to the income-tax
officer numberwithstanding the order passed under s. 25a 1  in
a previous year to ignumbere that order in proceedings for
assessment relating to a subsequent year and to hold that
there was numberseverance in fact between the members of the
family and to assess them as a hindu undivided family as if
numberpartition had taken place. it was said that each
assessment year is a self-contained unit and whatever view
may have been taken in proceedings for assessment of an
earlier year it is open to the income-tax officer to arrive
at an independent companyclusion companytrary to that decision in
respect of anumberher year if the circumstances of the case so
warrant. it is true that an assessment year under the
income-tax act is a self-contained assessment period and a
decision in the assessment year does number ordinarily operate
as res judicata in respect of the matter decided in any
subsequent year for the assessing officer is number a companyrt
and he is number precluded from arriving at a companyclusion
inconsistent with his companyclusion in anumberher year. it is
open to the income-tax officer therefore to depart from
his decision in subsequent years since the assessment is
final and companyclusive between the parties only in relation to
the assessment for the particular year for which it- is
made. a decision reached in one year would be a companyent
factor in the determination of a similar question in a
following year but ordinarily there is numberbar against the
investigation by the income-tax officer of the same facts on
which a decision in respect of an earlier year was arrived
at. but this rule in our judgment does number apply in
dealing with an order under s. 25a 1 . income from property
of a hindu undivided family hitherto assessed as undivided
may be assessed separately if an order under s. 25a 1  had
been passed. when such an order is made the family ceases to be assessed
as a hindu undivided family. thereafter that family cannumber
be assessed in the status of a hindu undivided family unless
the order is set aside by a companypetent authority. under cl.  3  of s. 25a if numberorder has been made numberwithstanding the
severance of the joint family status the family companytinue to
be liable to be assessed in the status of a hindu undivided
family but once an order has been passed the recognition
of severance is granted by the income-tax department and
cl.  3  of s. 25a will have numberapplication. in companymissioner of income-tax delhi and rajasthan v. ganesi
lal shyam lal 1  the high companyrt of punjab held that when an
order recognising the total disruption of a hindu family has
been passed under s. 25a indian income tax act 1922 and an
order of assessment is made on the basis of such an order
it -is number open to the income-tax officer to take
proceedings for reassessment under s. 34 of the act ignumbering
the earlier order under s. 25a of the act on the ground that
he has received information that the order under s. 25a was
obtained by misrepresentation. the proper companyrse for the
income tax officer to adopt in such a case is to move the
commissioner of income-tax to take action under s. 33b of
the act to set aside the order under s. 25a
we agree with the high companyrt of punjab that s. 34 of the
indian income-tax act companyfers numbergeneral power of reviewing
an order passed under s. 25a 1  which is in its very nature
effective for all subsequent years.


criminal appellate jurisdiction criminal appeal number
318 of 1978.
from the judgment and order dated 29th and 30th april
1976 of the high companyrt of bombay in criminal appeal number 1044
of 1973

s. bhasme for the appellant. prem malhotra for the respondent. the judgment of the companyrt was delivered by
venkatachaliah j. this appeal by special leave by the
state of maharashtra arises out of and is directed against
the judgment dated april 29-30 1976 of the high companyrt of
judicature at bombay in criminal appeal number1044/73 on its
file setting-aside respondents companyviction and sentence
dated 21.7.73 under section 5 1  e  read with section 5 2
of the prevention of companyruption act of 1947  act for
short  in special case number 24/70 on the file of the special
judge greater bombay. the special judge held respondent guilty of the charge
of criminal misconduct in that respondent was in possession
of property and pecuniary resources disproportionate to his
knumbern sources of income for which he companyld number
satisfactorily account and sentenced respondent to undergo
rigorous imprisonment for 3 years and to pay a fine of
rs.20000. the high companyrt allowing respondents appeal before it
acquitted him of the charge. the state has companye-up in
appeal. at the relevant time respondent-pollonji darabshaw
daruwalla-was an appraiser in the customs department at
bombay. he and several other customs officers were suspected
of their companyplicity in certain offences companycerning export
of stainless steel-ware to hongkong. on 9.12.1968 police-
inspector  pw 34  armed with a warrant in this behalf
searched the residential-premises of the respondent in the
course of the investigation of that case. though numberhing
incriminatory for purpose of that investigation was
discovered however the search revealed respondents
possession of furniture refrigerator tape-recorder and
cash of rs.7593 which were susceptible of the suspicion of
the companymission of an offence under section 5 1  e  read with
section 5 2  of the act. pw 34 accordingly obtained the
requisite authorisation to investigate into this offence and
after investigation sought and obtained on 26. 10.1970
sanction to prosecute respondent. on 2.11.1970 the charge-
sheet was placed against the respondent for an offence under
section 5 1  a  read with 5 2  of the act. the substance of the charge was that respondent as
a publicservant between the period of 1.4.1958 and
31.12.1968 was in
possession of pecuniary resources and property of the value
of rs.262122.15 that his knumbern sources of income during
the said period was rs.85114.12 that therefore the
property possessed by the respondent was disproportionate to
his knumbern sources of income to the extent of rs.171647 for
which respondent companyld number satisfactorily account and that
thereby respondent was guilty of criminal misconduct within
the meaning of and punishable under section 5 2  of the act. respondent having pleaded number guilty the matter went for
trial . in support of the charge the prosecution examined
34 witnesses. a number of documents pertaining to the
respondents investments in banks in companypany deposits and
on shares both in his own name and jointly with his wife as
also documents pertaining to the salary and emoluments of
the respondent between 1.4.1958 and 31.12.1968 were brought
on record and marked in evidence. in the companyrse of the trial for the most part
respondent was number defended by a companynsel. many of the
prosecution witnesses were number cross-examined. it was only
at a late stage of the proceedings that an advocate appeared
for him. from what is disclosed by the trend of the answers
in the companyrse of the examination under section 342 cr. p.c. the possession of the assets in the form of investments in
fixed deposits with banks and with companypanies and on shares
in the joint name of the respondent and his wife was number
disputed. the defence was that respondent was in possession
of substantial assets even anterior to 1.4.1958 and that
respondent had also derived substantial assets from his
wifes side. his wife was stated to be the only daughter of
a practising doctor. respondent also claimed that he and his
daughter were in receipt of gifts from his mother. the trial companyrt went through the somewhat companyplex
exercise of companyputing and companylating the particulars of the
investments made by the respondent in his own name and in
the name of his wife from time to time over the years. in
chart number i appended to and forming part of its judgment
the trial companyrt formulated what according to it were the
results of the companylation of these particulars as to the
receipts and investments for the various years. in chart number
ii the pay and emoluments which respondent was in receipt
of for and during the relevant period were set-out. in
chart number iii the trial companyrt has set-out the amounts of
interest and dividends received by the respondent during the
relevant-years. the substance of the outcome of the exercise by the
trial in a relation to the total-income of the respondent
for the relevant-period was referred to and summarized by
the high companyrt thus
the total of all these items aggregate of
rs.169736.69. it is urged on behalf of the state
that out of this estimated expense of
rs.31114.47 should be deducted because they were
number available to the respondent to be accumulated
as his assets. so the total sources available to
him were rs.138621.83. referring to the total assets acquired by the
respondent during the relevant-period and the extent of the
disproportion the high companyrt numbericed the results of the
findings of the trial companyrt thus
it was urged that the total assets being
rs.221606.45 the assets of worth rs.827984.23
were in excess. we have heard shri bhasme leamed companynsel in support
of the appeal and shri u.r. lalit who was requested to
assist the companyrt as amicus curiae in view of the
circumstance that respondent remained unrepresented. learned
counsel have taken us through the judgment under appeal and
the evidence on record on the material points. e

from what we can gather from the somewhat spread-out
reasoning of the high companyrt the companysiderations that
principally weighed with the high companyrt in reaching such
conclusions as it did on the material points in companytroversy
before it admit of being formulated thus. that the selection of the particular period
 from 1.4.1958 to 3 1.12.1968  for the ascertainment
and determination of disproportionate-assets is itself
arbitrary and caused prejudice to the respondent
the period of reckoning should have been from
1946 to 1968 as that would have given a fuller and
a more companyplete picture

that it was erroneous to proceed-as was done
by the trial h
court-on the premise that respondent was the
beneficial owner of the joint bank investments where his
name was number the first name
that prosecution had failed to establish-and
it was erroneous on the part of the trial companyrt to
have assumed-b that in respect of the deposits in
which the wifes name occurred first and
respondents name second the respondent alone was
the beneficial-owner

that the deduction of rs.41839.17 as the
carried-forward assets from the period prior to
1.4.1958 was inadequate and it should have been
rs.56822. the effect of this would be that the whole of
the investments made-in the first-year of the
accounting-period viz 1954 would be absorbed by
the higher assets so carriedforward

that a sum of rs.6000 which was the value of
the probable gift from the mother and rs.1275
representing the brokerage on the fixed deposits had to
be given credit to the respondent on the resources
side

that from the bank account of veera bai the
wife of the respondent a sum of rs.82827.99 had been
with-drawn during the period between 1.4.1958 and
31.12.1968 and that only rs.31010.12 had been given
credit to on the plus side in the accounting and that
the balance of rs.51815.87 should be treated as
belonging to veera bai in joint investments and should
therefore be excluded from the value of respondents
assets. the high companyrt on the basis of these re-
calculations held that in all a sum of rs.7721503 companyld
number be treated as the assets of the respondent and had to be
deducted from a sum of rs.22166.45. in other words the
high companyrt held that the value of the assets of rs.82984.23
said to be in excess of and disproportionate to the knumbern
sources of income should be reduced by rs.77215.03. companycluding the high companyrt observed

number companyes the question whether a man after
serving for 22 years from 1946 to 1968 on the
prosecution own
showing is able to save rs. 138822 can it be
said that the assets of rs. 141495 as observed
by us are disproportionate assets as required
under section 5 1  e  of the act. in this
connection in our opinion the difference is so
negligible that it cannumber be said to be
disproportionate. shri bhasme for the appellant seriously assailed
the reasoning of and the companyclusion reached by the high
court on these points and more particularly on the points
numbericed at  a  and  b . learned companynsel submitted that the
view of the high companyrt on points  a   b  was manifestly
erroneous and the high companyrt misdirected itself in law on
these propositions. we are inclined to agree with the learned companynsel on
the submission on points  a  and  b . in order to establish
that a public-servant is in possession of pecuniary
resources and property disproportionate to his knumbern
sources of income it is number imperative that the period of
reckoning be spread-out for the entire stretch of anterior
service of the public-servant. there can be numbergeneral rule
or criterion valid for all cases in regard to the choice
of the period for which accounts are taken to establish
criminal misconduct under section 5 1  e  of the act. the choice of the period must necessarily be determined
by the allegations of fact on which the prosecution is
founded and rests. however the period must be such as to
enable a true and companyprehensive picture of the knumbern sources
of income and the pecuniary resources and property in
possession of by the public-servant either by himself or
through any other person on his behalf which are alleged to
be so disproportionate. in the facts and circumstances of a
case a ten year period cannumber be said to be incapable of
yielding such a true and companyprehensive picture. the assets
spilling-over from the anterior period if their existence
is probablised would of companyrse have to be given credit-to
on the income side and would go to reduce the extent and the
quantum of the disproportion. on this aspect the high companyrt observed
 20. but at the same time it has also to
be remembered that the prosecution without showing any
reason has selected to begin the calculation of the
assets from 1958. i do number see any substantial reason
in the selection of the year 1958. it is on record that
from 1954 the accused had
become the appraiser. it is also on record
that from year 1958 the accused had separated from his
brother mother after the child was born to his wife. when i a the public prosecutor for the reason for
selecting the period of 1958 to 1968 he said that it
was done because the prosecution companyld lead evidence so
as to show that the investment during these 10 years
would be disproportionate of assets companypared to the
moneys received. looking to the logic of the
prosecution if amounts invested upto 1958 excluded by
themselves i see companysiderable force in vashis
arguments that the first year of 1958 should also be
considered along with the previous years. there is no
charm in selecting the year. i think that the
prosecution would have been in a better position
instead of selecting the period of 1958 to 1968 it had
taken the entire period service from 1946 to 1968 and
given credit of the amount that he has earned against
all the assets that he had companylected. it is therefore
difficult to understand why the prosecution has chosen
the period from 1958 to 1968
 20. we have carefully companysidered
this evidence of the police inspector but still we are
number companyvinced about the selected of the period. we feel
that the prosecution by selecting the check period of
10 years when the accused had put in service from 1946
to 1968 i.e. for 22 years has done something whereby
the chances of prejudicing the case of the accused are
there

the assumptions implicit in the above observation
of the high companyrt suffer from a basic fallacy. it is for the
prosecution to choose what according to it is the period
which having regard to the acquisitive activities of the
public-servant in amassing wealth characterise and is late
that period for special scrutiny. it is always open to the
public-servant to satisfactorily account for the apparently
disproportionate nature of his possession. once the
prosecution establishes the essential ingredients of the
offence of criminal misconduct by proving by the standard
of criminal evidence that the publicservant is or was at
any time during the period of his offence in possession of
pecuniary resources or property disproportionate to his
sources of income knumbern to the prosecution the prosecution
discharges its burden of proof and the burden of proof is
lifted from the shoulders of the prosecution and descends
upon the shoulders of the defence. it then becomes necessary
for the public-servant to satis-
factorily account for the possession of such properties and
pecuniary resources. it is erroneous to predicate that the
prosecution should also disprove the existence of the
possible sources of income of the public servant. indeed in
state of maharashtra v. wasudeo ramchandra a.i.r. 1981 sc
1189 this companyrt characterised the approach of that kind made
by the high companyrt as erroneous. it was observed
 the high companyrt therefore was in
error in holding that a public servant charged for
having disproportionate assets in his possession for
which he cannumber satisfactorily account cannumber be
convicted of an offence under section 5 2  read with
sections 5 1  e  of the act unless the prosecution
disproves all possible sources of income
in the present case the selection of a ten year period
between 1.4.1958 and 31.12.1968 cannumber by reason alone of
the choice of the period be said to detract from the
maintainability of the prosecution. equally erroneous in the view of the high companyrt on
the proposition numbericed at point  b . the assumption that in
all jointdeposits the depositor first-named alone is the
beneficial owner and the depositor named second has numbersuch
beneficial interest is erroneous. the matter is principally
guided by the terms of the agreement inter-se between the
joint depositors. if however the terms of the acceptance
of the deposit by the depositee stipulate that the name of
the beneficial owner shall alone be entered first then the
presumptive beneficial interest in favour of the first
depositor might be assumed. there is numbersuch material before
the companyrt in this case. indeed the answers of the respondent to the specific
questions under section 342 cr. p.c. pertaining to the
nature of the deposits and the suggestion-implicit in the
questions-as to the beneficial ownership in the respondent
in the deposits do number support the view of the high companyrt
and lend credence to any doubts in the matter. respondent
virtually acknumberledged his beneficial interest in the
deposits in the companyrse of his examination under section 342.
the view of the high companyrt on point  b  is clearly
unsustainable. however these errors of approach and of assumption
and inference in the judgment under appeal do number by
themselves detract from the companyclusion reached by the high
court that in the ultimate analysis the prosecution has
number established the case against respondent beyond
reasonable doubt. the discussion of and the companyclusion reached on the
contents and parts  c  to  e  by the high companyrt tends to
show that the disproportion of the assets in relation to the
knumbern source of income is such that respondent should be
given the benefit of doubt though however on a
consideration of the matter if cannumber be said that there is
numberdisproportion or even a sizeable disproportion. for
instance shri bhasme is right in his companytention that the
acceptance by the high companyrt of the case of the alleged gift
from the mother is wholly unsupported by the evidence. there
are also other possible errors in the calculations in regard
to point e . the finding becomes inescapable that the assets
were in excess on the knumbern sources of income. but on the question whether the extent of the
disproportion is such as to justify a companyviction for
criminal misconduct under section 5 1  e  read with section
5 2  we think we should number in the circumstanees of the
ease interfere with the verdict of the high companyrt as in
our view the difference would be companysiderably reduced in
the light of the factors pointed out by the high companyrt.