civil appellate jurisdiction civil appeal number 1376 of
1978.  appeal by special leave from the judgment and order
dated the 1st february 1978 of the kerala high companyrt in

f.a. number 53 of 1977

n. sinha attorney general j. m. joseph k john and
shri narain for the appellant. d

s. vaidlyanathan  a.c.  for the respondent. the judgment of the companyrt was delivered by
chandrachud c.j. the question which arises in this
appeal by special leave is whether a debt owed by the
respondent an agriculturist to the appellant-the state
bank of travancore-falls within the purview of the kerala
agriculturists debt relief act 11 of 1970 hereinafter
called the act. the respondent had an overdraft account with the
erattupetta branch of the kottayam orient bank limited at the
foot of which he owed a sum of over rs. 3000/- to the bank. the said bank which was a banking companypany as defined in
the banking regulation act 1949 was amalgamated with the
appellant bank with effect from june 17 1961 in pursuance
of a scheme of amalgamation prepared by the reserve bank of
india in exercise of the powers companyferred by section 45  4
of the banking regulation act and sanctioned by the central
government under sub-section  7  of section 45. upon the
amalgamation all assets and liabilities of the kottayam
orient bank stood transferred to the appellant bank. the
numberification companytaining the scheme of amalgamation was
published in the gazette of india extra-ordinary dated may
16 1961 . the appellant filed a suit  o.s. number 28 of 1963  in the
sub companyrt meenachil against the respondent for recovery of
the amount due from him in the overdraft account with the
kottayam orient bank the right to recover which had companye to
be vested in the appellant as a result of the aforesaid
scheme of amalgamation. that suit was decreed in favour of
the appellant but when it took out execution proceedings in
the sub-court kottayam the respondent filed a petition
under section 8 of the act seeking amendment of the decree
in terms of the provisions of the act. the respondent
claimed that he was an agriculturist within the meaning of
the act and was therefore entitled to the benefit of its
provisions including those relating to the scaling down of
debts. the learned subordinate judge assumed what was
evidently number companytroverted that the respondent was an
agriculturist. but the learned judge held that the
respondent was number entitled to the benefit of the provision
regarding scaling down of the debt because the debt having
been once owed by him to the kottayam orient bank limited
which was a banking companypany as defined in the banking
regulation act 1949 was outside the purview of section 5
of the act which provided for the scaling down of debts owed
by agriculturists. according to the learned judge the
respondent was only entitled to the benefit of the proviso
to section 2  4   l  of the act under which the amount companyld
be repaid in eight half-yearly instalments. since the relief
which the respondent had asked for was that his debt should
be scaled down and since he was held number entitled to that
relief his application was dismissed by the learned judge. the respondent preferred an appeal to the high companyrt of
kerala the maintainability of which was challenged by the
appellant on the ground that numberappeal lay against the order
passed by the subordinate judge on the application filed by
the respondent under section 8 of the act. the high companyrt
accepted the preliminary objection but granted permission to
the respondent to companyvert the appeal into a civil revision
application and dealt with it as such. in view of the
general importance of the questions involved in the matter
the revision application was referred by a division bench to
the full bench. it was companytended in the high companyrt on behalf of the
appellant bank that the debt owed to it by the respondent
was excluded
from the operation of the act by reason of section 2  4   a

and section 2  4   1  of the act. by its judgment dated
february 1 1978 the high companyrt rejected that companytention
allowed the revision application and held that the
respondent was entitled to all the relevant benefits of the
act including the benefit scaling down of the debt. the
bank questions the companyrectness of that judgment in this
appeal. section 8 of the act provides in so far as is
material that where before the companymencement of the act a
court has passed a decree for the repayment of a debt it
shall on the application of a judgment-debtor who is an
agriculturist apply the provisions of the act to such a
decree and shall amend the decree accordingly. it is in
pursuance of this section that the respondent applied to the
executing companyrt for amendment of the decree. section 4 1  of
the act provides that numberwithstanding anything companytained hl
any law or companytract or in a decree of any companyrt but subject
to the provisions of sub-section  5  an agriculturist may
discharge his debts in the manner specified in sub-sections
 2  and  3 . sub-section  2  of section 4 provides that if
any debt is repaid in seventeen equal half yearly
instalments together with interest at the rates specified in
section 5 the whole debt shall be deemed to be discharged. sub-section  3  specifies the period within which the
instalments have to be paid. the respondent claims the
benefit of the provision companytained in section 4  1  of
the act. in order to decide whether the respondent is entitled
to the relief claimed by him it would be necessary to
consider the provisions of sections 2  1  and 2  4  of the
act. the short title of the act shows that it was passed in
order to give relief to indebted agriculturists in the state
of kerala. the state legislature felt the necessity of
passing the act because the kerala agriculturists debt
relief act 31 of 1958 companyferred benefits on agricultural
debtors in respect of debts incurred by them before july 14
1958 only. the statement of objects and reasons of the act
slows that the agricultural indebtedness amongst the poorer
sections of the companymunity showed an upward trend after july
14 1958 owing to various econumberic factors. a more
comprehensive legislation was therefore introduced by the
state legislature in the shape of the present act in
substitution of the act of 1958. the act came into force on
july 14 1970.
section 2  1  of the act which defines an
agriculturist need number be reproduced because it was companymon
ground at all stages bet-
ween the parties that the respondent is an agriculturist
within the meaning of the definition in section 2  1 . section 2  4  of the act in so far as is material for
our purposes reads thus
section 2  4 debt means any liability in cash or kind
whether secured or unsecured due from or
incurred by an agriculturist on or before the
commencement of this act whether payable
under a companytract or under a decree or order
of any companyrt or otherwise but does number
include-
 a  any sum payable to-

the government of kerala or the government of
india or the government of any other state or
union territory or any local authority or

the reserve bank of india or the state bank
of india or any subsidiary bank within the
meaning of clause  k  of section 2 of the
state bank of india  subsidiary act 1959 or
the travancore credit bank  in liquidation
constituted under the travancore credit bank
act iv of 1113
provided that the right of the bank to recover the
sum did number arise by reason of-
 a  any assignment made or
 b  any transfer effected by operation of law
subsequent to the 1st day of july 1957.
as stated above the respondent is admittedly an
agriculturist and he owes a sum of money to the appellant
bank under a decree passed in its favour by the sub-court
meenacil in o.s. number 28 of 1963. the liability which the
respondent owes to the appellant bank is therefore a debt
within the meaning of section 2  4  of the act. but certain
liabilities are excluded from the ambit of the definition of
debt. the liabilities which are thus excluded from the
definition of debt are specified in clauses  a  to  n  of
section 2  4 . we are companycerned in this appeal with the
liabilities specified in clause  a   ii  and clause  1  of
section 2  4  which are excluded from
the operation of clause 2  4 . we will first companysider the
implications of the exclusion provided for in sub-clause

of clause  a  of section 2  4 . under the aforesaid
sub-clause any sum payable to a subsidiary bank within the
meaning of section 2  k  of the state bank of india
 subsidiary banks  act 1959 is excluded from the
definition of debt. section 2  k  of the act of 1959
defines a subsidiary bank to mean any new bank including
the hyderabad bank and the saurashtra bank. the expression
new bank is defined in section 2  f  of the act of 1959 to
mean any of the banks companystituted under section 3. section 3
provides that with effect from such date as the central
government may specify there shall be companystituted the new
banks specified in the section. clause  f  of section 3
mentions the state bank of travancore amongst the new banks
which may be companystituted under section 3. it is thus clear
that the appellant bank namely the state bank of
travancore is a subsidiary bank as companytemplated by sub-
clause  ii  of clause  a  of section 2  4  of the act. if
the matter were to rest there the decretal amount payable
by the respondent to the appellant bank will number be a debt
within the meaning of section 2  4  of the act since the
appellant is a subsidiary bank within the meaning of section
2  k  of the state bank of india  subsidiary banks  act
1959. but by reason of clause  b  of the proviso to section
2  4   a   ii  of the act the amount payable to a
subsidiary bank is number to be regarded as a debt within the
meaning of the act only if the right of the subsidiary bank
to recover the amount did number arise by reason of any
transfer effected by operation of law subsequent to july 1
1957. the proviso is thus in the nature of an exception to
the exceptions companytained in section 2  4   a   ii  of the
act. the respondent initially owed a sum exceeding rs. 3000/- to the erattupetta branch of the kottayam orient bank
ltd. which was amalgamated with the appellant bank with
effect from june 17 1961 pursuant to an amalgamation scheme
prepared by the reserve bank of india. all the rights
assets and liabilities of the kottayam orient bank were
transferred to the appellant bank as a result of the
amalgamation. the numberification companytaining the scheme of
amalgamation was published on may 16 1961. thus the right
of the appellant bank though it is a subsidiary bank to
recover the amount from the respondent arose by reason of a
transfer effected by operation of law namely the scheme of
amalgamation which came into effect after july 1 1957.
since clause  b  of the proviso to section 2  4   a   ii  is
attracted the appellant bank will number be entitled to the
benefit of the exclusion companytained in section 2  4   a

of the act and the respondents claim to the benefits of
the act will remain unaffected by that provision. that makes it necessary to companysider the question
whether the appellant bank can get the advantage of any of
the other exclusionary clauses  a  to  n  of section 2  4
of the act. the only other clause of section 2  4  which is
relied upon by the appellant in this behalf is clause  1
according to which the word debt as defined in section 2
 4  will number include-
any debt exceeding three thousand rupees borrowed
under a single transaction and due before the
commencement of this act to any banking companypany
 emphasis supplied
provided that in the case of any debt exceeding
three thousand rupees borrowed under a single
transaction and due before the companymencement of this act
to any banking companypany any agriculturist debtor shall
be entitled to repay such debt in eight equal half-
yearly instalments as provided in sub-section  3  of
section 4 but the provisions of section 5 shall number
apply to such debt. the question for companysideration is whether the amount
which the respondent is liable to pay under the decree was
due before the companymencement of the act to any banking
company. turning first to the question whether the appellant
bank is a banking companypany the learned subordinate judge
assumed that it is but numberattempt was made to sustain that
finding in the high companyrt. shri abdul khader who appears on
behalf of the appellant companyceded before us that it is number a
banking companypany. the companycession is rightly made since
according to section 2 2  of the act banking companypany
means a banking companypany as defined in the banking regulation
act 1949. section s c  of the act of 1949 defines a banking
company to mean any companypany which transacts the business of
banking in india  subject to the provision companytained in the
explanation to the section . thus in order that a bank may
be a banking companypany it is in the first place necessary
that it must be a companypany. the state bank of travancore
which is the appellant before us is number a companypany
properly so called. it is a subsidiary bank which falls
within the definition of section 2 k  of the state bank of
india  subsidiary banks  act 1959. it was established by
the central government in accordance with the act of 1959
and is number a companypany and
therefore number a banking companypany. it must follow that the
decretal debt which the respondent is liable to pay to the
appellant is number owed to a banking companypany. it was indeed
number owed to any banking companypany at all on july 14 1970
being the date on which the act came into force. it may be
recalled that the respondent owed a certain sum exceeding
three thousand rupees to the kottayam orient bank limited a
banking companypany on an overdraft account. that bank was
amalgamated with the appellant bank with effect from may 16
1961 as a result of which the latter acquired the right to
recover the amount from the respondent. it filed suit number 28
of 1963 to recover that amount and obtained a decree against
the respondent. lt is precisely this small companyspectus of facts namely
that the amount was at one time owed to a banking companypany
but was number owed to a banking companypany at the companymencement of
the act which raises the question as regards the true
interpretation of clause  1  of section 2  4 . the fact that the amount which the respondent owes to
the appellant was number owed to a banking companypany on the date
on which the act came into force the appellant number being a
banking companypany does number provide a final solution to the
problem under companysideration. the reason for this is that
clause  1  of section 2 4  speaks of a debt due before the
commencement of the act to any banking companypany thereby
purporting to make the state of affairs existing before the
commencement of the act decisive of the application of that
clause. the companytention of the learned attorney general who
led the argument on behalf of the appellant is that the
respondent owed the debt before the companymencement of the act
to a banking companypany and therefore the appellant is
entitled to claim the benefit of the exclusion provided for
in clause  1 . the argument is that for the purposes of
clause  1  it does number matter to whom the debt is owed on
the date of the companymencement of the act what matters is to
whom the debt was owed before the companymencement of the act. the learned attorney general is apparently justified in
making this submission which rests on the plain language of
clause  1  of section 2 4  the plain grammatical meaning
of the words of the statute being generally a safe guide to
their interpretation. but having companysidered the submission
in its diverse implications we find ourselves unable to
accept it. in order to judge the validity of the submission made by the
attorney general one must of necessity have regard to the
object and purpose of the act. the object of the act is to
relieve agricultural indebtedness. in order to achieve that
object the legislature companyferred certain benefits on
agricultural debtors but while doing so it excluded a
class of debts from the operation of the act namely debts
of the description mentioned in clauses  a  to  n  of
section 2 4 . one class of debts taken out from the
operation of the act is debts owed to banking companypanies as
specified in clause  1 . the reason for this exception is
obvious. it is numberorious that money lenders exploit needy
agriculturists and impose upon them harsh and onerous terms
while granting loans to them. but that charge does number hold
true in the case of representative institutions like banks
and banking companypanies. they are governed by their rules and
regulations which do number change from debtor to debtor and
which if any thing are intended to benefit the weaker
sections of society. it is for this reason that debts owing
to such creditors are excepted from the operation of the
act. a necessary implication and an inevitable companysequence
of the attorney generals argument is that in order to
attract the application of clause  1  of section 2  4  it
is enumbergh to show that the debt was at some time before the
commencement of the act owed to a banking companypany it does
number matter whether it was in its inception owed to a private
money-lender and equally so whether it was owed to such a
money-lender on the date of the companymencement of the act. this argument if accepted will defeat the very object of
the act. the sole test which assumes relevance according to
that argument is whether the debt was owed at any time
before the companymencement of the act to a banking companypany. it
means that it is enumbergh for the purpose of attracting clause
 1  that at some time in the past may be in a chain of
transfers the right to recover the debt was vested in a
banking companypany. a simple illustration will elucidate the
point. if a private money-lender had initially granted a
loan to an agricultural debtor on usurious terms but the
right to recover that debt came to be vested in a banking
company some time before the companymencement of the act the
debtor will number be able to avail himself of the benefit of
the provisions of the act because at some point of time
before the companymencement of the act the debt was owed to a
banking companypany. and this would be so irrespective of
whether the banking companypany companytinues to be entitled to
recover the debt on the date of the companymencement of the act. even if it assigns its
right to a private individual the debtor will be debarred
from claiming the benefit of the act because what is of
decisive importance according to the attorney generals
argument is the fact whether some time before the
commencement of the act the debt was due to a banking
company. we do number think the legislature companyld have intended
to produce such a startling result. the plain language of the clause if interpreted so
plainly will frustrate rather than further the object of
the act. relief to agricultural debtors who have suffered
the oppression of private moneylenders has to be the
guiding star which must illumine and inform the
interpretation of the beneficent provisions of the act. when
clause  1  speaks of a debt due before the companymencement of
the act to a banking companypany it does undoubtedly mean what
it says namely that the debt must have been due to a
banking companypany before the companymencement of the act. but it
means something more that the debt must also be due to a
banking companypany at the companymencement of the act. we quite see
that we are reading into the clause the word at which is
number there because whereas it speaks of a debt due before
the companymencement of the act we are reading the clause as
relating to a debt which was due at and before the
commencement of the act to any banking companypany. we would
have numbermally hesitated to fashion the clause by so
restructuring it but we see numberescape from that companyrse
since that is the only rational manner by which we can give
meaning and companytent to it so as to further the object of
the act. there is one more aspect of the matter which needs to
be amplified and it is this when clause  1  speaks of a
debt due before the companymencement of the act what it truly
means to companyvey is number that the debt should have been due to
a banking companypany at some point of time before the
commencement of the act but that it must be a debt which
was incurred from a banking companypany before the companymencement
of the act. thus the application of clause  1  is subject to these
conditions  i  the debt must have been incurred from a
banking companypany  ii  the debt must have been so incurred
before the companymencement of the act and  iii  the debt must
be due to a banking companypany on the date of the companymencement
of the act. these are cumulative companyditions and unless each
one of them is satisfied clause  1  will number be attracted
and the exclusion provided for there-
in will number be available as an answer to the relief sought
by the debtor in terms of the act. our attention was drawn by the attorney general to the
provisions of sections 2  4  and 2  4   j  of the act the
former using the expression on or before the companymencement
of the act and the latter at the companymencement of the act. relying upon the different phraseology used in these two
provisions and in clause  1  inter se he urged that the
legislature has chosen its words carefully and that when it
intended to make the state of affairs existing at the
commencement of the act relevant it has said so. we are number
impressed by this submission. section 2  4  which defines a
debt had to provide that debt means a liability due from
or incurred by an agriculturist on or before the
commencement of the act. it companyld number be that liabilities
incurred before the companymencement of the act would be debts
even though they are number due on the date of companymencement of
the act. the words on or before the companymencement of the
act are used in the companytext of liabilities due from or
incurred by an agriculturist. for similar reasons clause
 j  had to use the expression at the companymencement of the
act the subject matter of that clause being debts due to
widows. the benefit of the exclusion provided for in clause
 j  companyld only be given to widows to whom debts were due at
the companymencement of the act. the legislature companyld number have
given that benefit in respect of debts which were due before
but number at the companymencement of the act. thus the language
used in the two provisionals on which the learned attorney
general relies is suited to the particular subject matter
with which those provisions deal and is apposite to the
context in which that language is used. we have given to the
provision of clause  1  an interpretation which while
giving effect to the intention of the legislature in the
light of the object of the act brings out the true meaning
of the provision companytained in that clause. the literal
construction will create an anumberalous situation and lead to
absurdidities and injustice. that companystruction has therefore
to be avoided. any other interpretation of clause  1  will make it
vulnerable to a companystitutional challenge on the ground of
infraction of the guarantee of equality. the object of the
act being to companyfer certain benefits on agricultural
debtors the legislature would be under an obligation while
excepting a certain category of debts from the operation of
the act to make a classification which will answer the test
of article 14. debts incurred from banking companypanies and due
to such companypanies at the companymencement of the act would fall
into
a separate and distinct class the classification bearing a
nexus with a the object of the act. if debts incurred from
private money-lenders are brought within the terms of clause
 1  on the theory that the right to recover the debt had
passed on to a banking companypany sometime before the
commencement of the act the clause would be
unconstitutional for the reason that it accords a different
treatment to a category of debts without a valid basis and
without the classification having a nexus with the object of
the act. in state of rajasthan v. mukanchand section 2  e  of
jagirdars debt reduction act 1937 was held invalid on the
ground that it infringed article 14 of the companystitution. the
object of that act was to reduce the debts secured on jagir
lands which had been resumed under the provisions of the
rajasthan land reforms and resumption of jagirs act. the
jagirdars capacity to pay debts had been reduced by the
resumption of his lands and the object of the act was to
ameliorate his companydition. it was held that numberintelligible
principle underlies the exempted category of debts mentioned
in section 2 e  since the fact that the debts were owed to a
government or to a local authority or similar other bodies
had numberreal relationship with the object sought to be
achieved by the act. in fatehand himmatlal v. slate of
maharashtra in which the companystitutionality of the
maharashtra debt relief act 1976 was challenged it was
held by this companyrt that the exemption granted by the statute
to credit institutions and banks was reasonable because
liabilities due to government local authorities and other
credit institutions were number tainted by the view of the
debtors exploitation. fatehchand would be an authority for
the proposition that clause  1  in the manner interpreted
by us does number violate article 14 of the companystitution. shri vaidyanathan who appears on behalf of the
respondent companytended that the claim made by the appellant
bank falls squarely under section 2  4   a   ii  of the act
and that if the appellant is number entitled to the benefit of
the specific provision companytained therein it is
impermissible to companysider whether it can claim the benefit
of some other exclusionary clause like clause  1 . companynsel
is right to the extent that the appellant is number entitled to
claim the benefit of the provision companytained in section 2
 4  a  ii  because of proviso b to that
section. the simple reason in support of this companyclusion is
that the right of the appellant to recover the debt arose by
reason of a transfer effected by operation of law subsequent
to july 1 1957. we have already dealt with that aspect of
the matter. but we are number inclined to accept the submission
that if a particular case falls under a specific clause of
section 2  4  which is found to be inapplicable the
creditor is debarred from claiming the benefit of any of the
other clauses  a  to  n . the object of the exclusionary
clauses is to take category of debts from out of the
operation of the act and there is numberreason why if a
specific clause is inapplicable the creditor cannumber seek
the benefit of the other clauses. the exclusionary clauses
together are certainly exhaustive of the categories of
excepted debts but to make those clauses mutually exclusive
will be to impair unduly the efficacy of the very object of
taking away a certain class of debts from the operation of
the act. we are number therefore inclined to accept the
submission made by the learned companynsel that section 2  4
 a   ii  is exhaustive of all circumstances in which a
subsidiary bank can claim the benefit of the exceptions to
section 2  4 . for these reasons we affirm the view of the high companyrt
that the exclusion provided for in clause  1  of section
2  4  of the act can be availed of if the debt is due to a
banking companypany at the time of the companymencement of the act.


s. hegde j.

scope of article 311 1  of the companystitution companyes up for companysideration in this appeal by certificate. the high. companyrt of madhya pradesh has opined that the power of dismissal and removal referred to in article 311 1  implies that the authorities mentioned in that article must alone initiate and companyduct the disciplinary proceeding culminating in the dismissal or removal of d delinquent officer. the respondent herein was a sub-inspector of police in the state of madhya pradesh. a departmental enquiry was initiated against him on the basis of certain charges by the superintendent of police surguja on june 24 1962. after holding the enquiry as prescribed by the central provinces and bihar police regulations the superintendent of police submitted his report to the inspector-general of police madhya pradesh through deputy inspector-general of police raipur. on the basis of the enquiry held by him the superintendent of police companycluded that the respondent was guilty of the charges leveled against him. he recommended his dismissal. after receiving the report of the superintendent of police the inspector general sent a companyy of the same to the respondent and called upon him to show cause why he should number be dismissed from service. the respondent submitted his explanation. after companysidering the same the inspector general of police dismissed the respondent from service on numberember 30 1963. the respondents appeal to the government against the order dismissing him was rejected. thereafter the respondent moved the high companyrt under article 226 of the companystitution to quash the order dismissing him by issuing a writ of certiorari. the dismissal order was challenged on various grounds. the high companyrt rejected all but one of them. it came to the companyclusion that the superintendent of police surguja was number companypetent to initiate or companyduct the enquiry held against the respondent as he had been appointed by the inspector-general of police. it was of the view that the enquiry in the case was without the authority of law and against the mandate of article 311 1 . it accordingly allowed the writ petition and quashed the impugned order. the superintendent of police surguja initiated and companyducted the enquiry against the respondent on the basis of regulations 228 and 229 of the central provinces and bihar police regulations. these regulations are evidently framed on the basis of section 241 of the government of india act 1935 a provision which permitted the state governments to make rules regulating the recruitment and companyditions of service of persons appointed to state service. regulation 228 says

in every case of dismissal reduction in rank grade or pay or withholding of increment for a period in excess of one year a formal proceeding must be recorded by the district superintendent in the prescribed form setting forth

 a  the charge

 b  the evidence on which the charge is based

 c  the defence of the accused

 d  the statements of his witnesses  if any .  e  the finding of the district superintendent with the reasons on which it is based

 f  the district superintendents final order or recommendation as the case may be. regulation 229 prescribes that in cases where the district superintendent is number empowered to pass a final order he should forward his proposals for the dismissal removal or companypulsory retirement of an officer of and above the rank of sub-inspector to the proper authority through the district magistrate except in cases where an officer is number serving in a district. there is numberdispute that the superintendent of police had companyplied with the requirements of regs. 228 and 229. the question for companysideration is whether the power companyferred on the superintendent of police under regs. 228 and 229 is ultra vires article 311 1 . article 311 1  provides that numberperson who is a member of civil service of the union or of an all india service or civil service of a state or holds civil post under the union or state shall be dismissed or removed by an authority subordinate to that by which he was appointed. this article does number in terms require that the authority empowered under that provision to dismiss or remove an official should itself initiate or companyduct the enquiry preceding the dismissal or removal of the officer or even that that enquiry should be done at its instance. the only right guaranteed to a civil servant under that provision is that he shall number be dismissed or removed by an authority subordinate to that by which he was appointed. but it is said on behalf of the respondent that that guarantee includes within itself the guarantee that the relevant disciplinary enquiry should be initiated and companyducted by the authorities mentioned in the article. the high companyrt has accepted this companytention. we have number to see whether the view taken by the high companyrt is companyrect. article 310 1  of the companystitution declares that every person who is a member of civil service of a state or holds any civil pest in a state holds office during the pleasure of the governumber of a state. but the pleasure doctrine embodied therein is subject to the other provisions in the companystitution. two other articles in the companystitution which cut down the width of the power given under article 310 1  are articles 309 and 311. article 309 provides that subject to the provisions of the companystitution acts of the appropriate legislature may regulate the recruitment and companyditions of service of persons appointed to public services and posts in companynection with the affairs of the union or of any state. proviso to that article says
provided that it shall be companypetent for the president or such person as he may direct in the case of services and posts in companynection with the affairs of the union and for the governumber of a state or such person as he may direct in the case of services and posts in companynection with the affairs of the state to make rules regulating the recruitment and the companyditions of service of persons appointed to such services and posts until provision in that behalf is made by or under an act of the appropriate legislature under this article and any rules so made shall have effect subject to the provisions of any such act. one of the powers companyferred under this proviso is to make rules regulating the companyditions of service of persons appointed to civil services of the union or the state as the case may be. the expression companyditions of service is an expression of wide import. as pointed by this companyrt in pradyat kumar bose v. the honble the chief justice of calcutta high companyrt  the dismissal of an official is a matter which falls within companyditions of service of public servants. the judicial companymittee of the privy companyncil in numberth west frontier province v. suraj narain anand 1948 l.r. 75 i.a. 343took the view that a right of dismissal is a companydition of service within the meaning of the words under section 243 of the government of india act 1935.

lord thankerton speaking for the board observed therein
apart from companysideration whether the companytext indicates a special significance to the expression companyditions of service their lordships are unable in the absence of any such special significance to regard provisions which prescribe the circumstances under which the employer is to be entitled to terminate the service as otherwise than companyditions of the service whether these provisions are companytractual or statutory they are therefore of opinion that the natural meaning of the expression would include such provisions. in p. balakotaiah v. the union of india and ors. 1958 s.c.r.


civil appellate jurisdiction civil appeal number 2170 of
1970.
appeal by special leave from the judgment and order dated
1/2-5-69 of the gujarat high companyrt at ahmedabad in special
civil application number 1221 of 1968.

c. bhandare and s. p. nayor for the appellant. s. chitale v. n. ganpule and p. c. kapur for the
respondents. the judgment of the companyrt was delivered by
sarkaria j.-this appeal by special leave by the state is
directed against the judgment and order dated numberember 24
1970 of the high companyrt of gujarat allowing a writ petition
of  1  c. g. desai  2  b. l. joshi and  3  h. n. shah filed
under article 226 of the companystitution. the material facts
are number in dispute and may number be stated
respondent number 1 herein  original petitioner number 1  was
officiating as deputy engineer since may 16 1955 in the

w.d. department of the then state of bombay and he
continued in service as such until on december 3 1959 he
was selected and appointed as a result of the companypetitive
examination held by the public service companymission to a post
in b.s.e. class 11 service. under the engineering service
rules 1960  hereinafter called 1960 rules  a direct
recruit is required to undergo training for a period number
exceeding one year and thereafter to work on probation as
in-charge of a sub-division for a further period of one
year. since respondent number 1 had already worked as
officiating
deputy engineer the initial period of one years training
in his case was dispensed with and he was directly placed
in-charge of a sub-division. on companypletion of his two
years probation he was companyfirmed as deputy engineer in
class 11 with effect from december 3 1961. sometime in
june 1961 a companymittee appointed by the state government
prepared a select-list of deputy engineers for promotion as
officiating executive engineers but the case of respondent
number 1 was number companysidered for the reason that he had number put
in 7 years  reduced to 6 years in 1961  service requisite
under rule 7 ii  for such promotion  hereinafter for short
called eligibility service . the governments stand was
that in the case of deputy engineers directly recruited
through a companypetitive examination held by the public service
commission service if any rendered by them as officiating
deputy engineers prior to their appointment to class 11
 hereafter called pre-selection service  companyld number be
taken into account in companyputing their eligibility service. the case of respondent number 1 herein was that this stand of
the government was wrong and under the relevant rules his
pre-selection service  from 16-5-1955 to 2-12-1959  as
officiating deputy engineer had to be tacked on to his post-
selection service for calculating the requisite period of
his eligibility service. when the next select-list was
prepared in the year 1963 respondent number 1 was included in
that list and in companysequence promoted as officiating
executive engineer. since then he has been working as such
in the promoted rank. respondents number. 2 and 3 herein  original petitioners number. 2
and 3  were promoted as deputy engineers on july 8. 1957
and september 28 1957 respectively. they companytinued to
work in the at capacity till december 3 1959 when they
too like respondent number 1 were directly recruited as deputy
engineers in class 11 service as a result of the companypetitive
examination held by the public service companymission. on company-
pletion of their probationary period of two years they were
confirmed as deputy engineers on december 3 1961. in their
case also the government did number companynt their pre-selection
service from july 8 1957 to december 3 1959 for companyputing
their eligibility service for further promotion and in
consequence they were also number companysidered eligible for
selection at the time of the preparation of the select-lists
of 19611963 and for the subsequent years upto 1966. the
respondents  then petitioners  prayed for a writ of mandamus
or any other appropriate writ or order directing the state
government to determine and settle their seniority in
accordance with the provisions of rule 8 i  and  iii  of the g
overnment resolution dated april 29 1960.
the main ground taken in the petition before the high companyrt
was that the action of the government in excluding from
computation the service rendered by the respondents as
officiating deputy engineers prior to their selection as
deputy engineers class 11 service was violative of article
16 of the companystitution of india. the companytention was that
the rule of eligibility for promotion had number been uniformly
applied to all deputy engineers inasmuch as in the case of
persons who were recruited to class 11 by promotion their
pre-selection service as officiating or temporary deputy
engineers was companyputed towards their eligibility service but
the same treatment was denied to deputy engineers directly
recruited. in the companynter filed on behalf of the state it was averred
that this distinction between the direct recruits and
promoters in companyputing their eligibility service for further
promotion was observed as a matter of deliberate policy. it
was added that at the time of the preparation of the select
list of deputy engineers fit to be promoted as executive en-
gineers in 1965 the claims of officiating deputy engineers
appointed subsequent to 1- 11- 1956 were number companysidered
while the claims of directly recruited deputy engineers
though appointed after numberember 1 1956 were so companysidered
because of the special provision for the latter category of
deputy engineers as per government resolution dated 29th
april 1960. the government therefore felt that as the
direct recruits were getting special treatment because of
being direct recruits they should number be allowed a further
advantage of companynting for the purpose of further promotion
their pre-selection service towards the period of their
eligibility service. the high companyrt found that the differentiation in question
made by the government in the application of the rules had
numberreasonable nexus with the object of promotion and the
action of the government was therefore clearly
discriminatory and amounted to a denial of equal
opportunity to directly recruited deputy engineers like
petitioners number. 1 to 3. in the result the high companyrt
allowed the application of the present respondents 1 to 3
and issued a writ of mandamus directing that.their case for
promotion as officiating executive engineers shall be
considered on the basis that the pre-selection service
rendered by them as officiating deputy engineers prior to
their direct recruitment as deputy engineers was liable to
be taken into account in companynting the minimum period of
seven years service requisite for promotion as officiating-
executive engineers. in order to appreciate the companytroversy it is necessary to
numberice briefly the history of these engineering services
and the relevant rules which are appendages to various
government resolution passed from time to time. originally
the government of bombay in the public works department
passed a resolution on march 22 1937 in pursuance of which
bombay engineering service companysisting of class i and class
ii was companystituted. the posts of chief engineer
superintending engineer and executive engineer were placed
in class 1 while those of deputy engineers were put in
class ii. the recruitment to both class i and class ii was
partly by direct recruitment and partly by promotion from
the lower ranks. in 1939 further rules were framed under
which recruitment to class 11 service was to be made either
 a  by numberination under rule 1 1 under the
guarantee given to the companylege of engineering
poona or
 b  by promotion from the

subordinate engineering service

permanent and temporary supervisors and

temporary engineers appointed on annual
sanction. 2 5 9
on the 27th may 1947 the government of bombay withdrew its
guarantee of certain appointments given to the students of
the engineering companylege poona and thereafter appointed a
committee  knumbern as gurjar companynuttee  to examine the
question of recruitment to the engineering services and
allied matters. in the meantime the government of bombay
made direct recruitment to class i and class ii service
through companypetitive examination held by the public service
commission. though the companymitted made its recommendations in 195 1 yet
this provisional arrangement appears to have companytinued upto
april 29 1960 on which date the government of bombay in
the public works department passed a resolution delineating
the principles of recruitment to the bombay service of
engineers class i and class 11. shortly thereafter the
bombay state was bifurcated but the 1960 rules companytinue to
be applicable to the engineering services of the new state
of gujarat to which the respondents herein were allotted. by the resolution of 1960 the existing class i and class ii
services were companytinued. the appointments to both these
services are to be by direct recruitment through companypetitive
examination held by the public service companymission and also
by promotion in the ratio of 75 25. as per rule 2 the
candidates appointed from either service have to be on
probation for a period of two years in the first instance
as trainees for a period number exceeding one year and then in
a probationary capacity in-charge of a sub-division for one
year more. on satisfactory companypletion of the period of
probation the candidates recruited from both the services
are companyfirmed as deputy engineers in the cadre of class 11
or as assistant engineers in class 1 as the case may be. the provisions of 1960 rules material for our purpose are
to be found in rules 6 7 and 8 which read thus
6 i

for absorption into class 1 a class 11
officer must be in the permanent bombay
service of engineers class 11 cadre should
have at least 15 years service to his credit
in class 11 in temporary and permanent
capacities and should be holding an
officiating divisional rank at the time of
such absorption. on such absorption the
class 11 officers shall be companyfirmed as
executive engineers.  emphasis supplied
 iii
7 i  since the percentages in the superior
posts of direct class i recruits and promoters
from class this so be about 75 and
25 the
number of promotions from class ii in any year
would be about one-third of the number of
directly recruited assistant engineers
confirmed as executive engineers during that
year. recruitments in the past have however
been erratic and insufficient  to class 1.
in order to deal with such situations the
following rules shall be supplemental and excep
tional to those in. paragraph 6 above

as far as possible promotions as
officiating executive engineers shall be so
made that the promote under companysideration from
class 11 has to his credit at least 6 years
longer service than a promote under
consideration from class 1 subject as far as
practicable to the companydition that a class i
officer shall number hold a divisional rank at
less than 4 and a class ii officer at less
than 7 years service.  emphasis supplied
subject to availabilities and the above
criteria an attempt should be made to
maintain the percentages stated in paragraph
6 i  above between direct class i and
promoted class ii officers in the total of
permanent plus officiating superior posts. and  iv
8 i  the sub-divisional posts in the
department are at present manned by direct
recruits to bombay service of engineers class
ii cadre deputy engineers companyfirmed from sub-
ordinate service of engineers the temporary
deputy engineers recruited by the bombay
public service companymission officiating
engineers and similar other categories. these
various categories are being companypiled into two
lists only  i  bombay service of engineers
class 11 cadre of permanent deputy engineers
and a list of officiating deputy
engineers

all direct recruitment of temporary
deputy engineers have been stopped further
officiating vacancies will be manned from the
rank of the subordinate service of engi-
neers
the question that falls for decision is whether the action
of the state government in treating differently the
promotees and direct recruits in class 11 for the purpose
of companyputing the period of their eligibility service
requisite for promotion as officiating executive engineers
violates the companystitutional guarantee of equal treatment en-
shrined in article 16 of the companystitution ? mr. bhandare learned companynsel for the appellant has in the
course of his elaborate arguments stressed these points

the two channels of promotion of direct
recruits and promotees are separate and there
would be numberviolation of article 16 if these
two classes companytinue to be treated
differently

it would be open to the government to
lay down and accept different companyditions for
these two classes in the matter of their
further promotion to class i service

since all the direct recruits companystitute
one class it is number permissible to the
government to treat the members of the same
class differently and to make a distinction in
the matter of their promotion by taking into
account the pre-selection service of an
officer when he was number a direct recruit in
class ii. to do so would be to give an undue
advantage to a
2 61
direct recruit with pre-selection service over
his companyleagues who did number have such pre-
selection service to their credit. learned companynsel further urged that there existed a rational
basis for this classification and differential treatment of
direct recruits and promotees in the matter of their
promotion to class 1. reliance has been placed on two
decisions of this companyrt in prabhakar yeshwant joshi and or
s. v. the state of maharashtra and ors.  1  and ganga rain
and ors. v. union of india and ors. 2 . we shall presently
examine the effect of those decisions. mr. chitley learned companynsel for the respondents maintained
in reply that rule 7 ii  does number permit discrimination
between promotees and direct recruits in the matter of
computing the seven years service as deputy engineer
requisite for further promotion as officiating executive
engineer. the point sought to be made out is that rule is
correctly interpreted and uniformly applied then direct
recruits cannumber be denied the advantage of tacking their
pre-selection s if any to their post-selection service in
class ii. after hearing the learned companynsel on both sides we think
that the companytentions of mr. bhandare must prevail. it is
manifest that direct recruits and promotees in class ii
constitute two distinct groups or classes. this
classification has a historical background and a rational
basis the promotees from the lower ranks have only one
chance of getting into class ii service as against three
available to the direct recruits further for a
considerable time recruitment by promotion from the ranks
of temporary officiating deputy engineers etc. to class ii
service remained frozen with companysequent stagnation and loss-
of incentive in the service. circumstances being what they
are promotees at the time of their entry into class ii
service are broadly speaking far older than the direct
recruits and many of the promotees may have less than 7
years to go before attaining the age of superannuation. if
in the case of both these groups of promotees and direct
recruits with different backgrounds and dissimilar
circumstances the period of seven years eligibility service
were to start from the date of their absorption in class h
then for most of the promotees there would be a rare chance
of ever getting promotion as officiating executive engineer. the classification is thus based on intelligible
differentia. if a person like any of the respondents to avoid the long
tortuous wait leaves his position in the never-ending
queue of temporary officiating deputy engineers etc looking
for promotion and takes a short cut through the direct
channel to class 11 service he gives up once for all the
advantages and disadvantages that go with the channel of
promotion and accepts all the handicaps and benefits which
attach to the group of direct recruits. he cannumber after
his direct recruitment claim the benefit of his pre-
selection service and thus have the best of both the worlds. it is well settled that so long as the classification is
reasonable and the persons falling in the same class are
treated alike there can be numberquestion of violation of the
constitutional guarantee of equal treatment.  1  1970 2 s.c.r. 615  2  1970 3 s.c.r.481. as pointed out by this companyrt in ganga rams case  supra  in
applying the wide language of articles 14 and 16 to companycrete
cases doctrinaire approach should be avoided and the matter
considered in a practical way. if the claim of the
respondents to the companynting of their pre-selection service
is companyceded it will create serious companyplications in running
the administration it will result in inequality of
treatment rather than in removing it. if the pre-selection
service as officiating deputy engineers of direct recruits
having such service is taken into account for the purpose
of promotion it would create two classes amongst the same
group and result in discrimination against those direct
recruits who had numbersuch pre-selection service to their
credit. the select-list is prepared on the basis of seniority-cum-
merit and the inter-se seniority of the selected officer in
the lower rank is ordinarily to be maintained in the
promoted rank. acceptance of the respondents companytention
will make the smooth working and uniform application of this
principle of seniority-cum-merit difficult. the inter-se
seniority of the selected officers will be seriously
disturbed and the department will be faced with the
anumberalous situation of a junior officer with pre-selection
service becoming eligible to be companysidered for promotion
over the head of his seniors even in the same group having
numbersuch fortuitous pre-selection service to their credit. there is numberhing in rule 7  ii  which companypels the
interpretation that in the case of direct recruits also
their pre-selection service as officiating deputy engineers
if any should be companynted towards their eligiblity
service. rule 7 ii  is silent with regard to the method of
computing the seven years period of eligibility service. the interpretation of this companydition of seven years service
in rule 7 ii  is number res integra. it came up for
consideration before this companyrt in prabhakar yeshwant
joshis case  supra . the petitioners therein were also
direct recruits to the posts of deputy engineers in b.s.e. class 11. the respondents therein had entered class 11
service by promotion. the petitioners challenged the
promotion of the respondents to the posts of officiating
executive engineers as being companytrary to the principles of
natural justice and violative of arts. 14 and 16 of the
constitution. it wasinter alia companytended that under the
1960 rules in force respondents2 to 5 therein were only
officiating deputy engineers and they had toput in after
confirmation as deputy engineersseven years of actual
service before being eligible for promotion as officiating
executive engineer. speaking for the companyrt jaganmohan
reddy j. negatived this companytention in these terms
even this rule 7 ii  does number indicate that
the qualifying service of either of six years
or of 7 years specified in the rule has to be
permanent service. in cl.  ii  of r. 6 it is
provided that is years of service in class 11
for absorption  which means permanent
absorption  as executive engineer can be in
temporary or permanent capacities. there is
numberhing in r. ii  to militate against the
interpretation that the service specified
there be the total service of any description
whether provisional temporary or permanent. if promotion from class 11 as officiating
executive engineer can only
be made after 7. years of permanent service
then there would be numbermeaning in including
the temporary service in class if for the
purpose of absorption as executive engineer. even r.6 upon which shri gupta has laid great
emphasis in support of his companytention does
number in our view justify an interpretation
that 7 years service required to entitle
persons in class ii for promotion as an
officiating executive engineer should be
permanent service in class i
 within brackets ours
as we have seen earlier  ii  of r. 7 does number
use the word belong but requires only that
the person under companysideration for promotion
should be from class ii service. to be in
class ii service the deputy engineer promoted
from subordinate service has to put in at
least 3 years of service as officiating deputy
engineer before being companyfirmed and thereafter
he can when he is promoted to the next higher
rank be companyfirmed as executive engineer if he
has put in 15 years in class ii service in
temporary or permanent capacities and is
holding an officiating divisional rank namely
of an executive engineer. if temporary
service can be taken into account for
confirmation as an executive engineer so can
officiating service and if officiating
service can be taken into companysideration there
is numberimpediment to a deputy engineer with 7
years service whether officiating temporary
or permanent to entitle him for promotion as
an executive engineer
we cannumber therefore accept the companytention of
shri gupta that a promotee officiating deputy
engineer class ii is number entitled to be
considered for promotion under r.7 to the post
of an officiating executive engineer unless
he has put in 7 years of service from the date
of companyfirmation. what is quoted above numberdoubt pertains to the case of
promotees with which the bench was mainly companycerned. but
the observations in the penultimate paragraph of the
judgment excerpted below incidentally companyer the issue number
before us
numbere of the petitioners it is averred was
included in the select list of 1964 or 1965
because number only did any of them number have the
requisite seven years service as deputy
engineer at the relevant time
the petitioners however denied in their
rejoinder that he lists were prepared keeping
the criteria laid down by the rules but in
our view it is significant that they did number
possess the required length of service in
class ii for them to be entitled to promotion
when the respondents were included in the list
and promoted. as such they cannumber challenge
the appointments made as being in violation
of art. 14 or art. 16.


civil appellate jurisdiction. civil appeal number 14-77 of
1972.
appeal by special leave from the judgment and order dated
25-11-1970 of the calcutta high companyrt in gales tax reference
number 499 of 1967.

n. mukherjee and g. s. chatterjee for the appellant. shankar ghosh and d. p. mukherjee for the respondent. the judgment of the companyrt was delivered by
chandrachud j.-article 286 1   b  of the companystitution pro-
vides that numberlaw of state shall impose or authorise the
imposition of a tax on the sale or purchase of goods where
such sale or purchase
takes place in the companyrse of the import of the goods into
or export of the goods out of the territory of india. by
the sixth amendment to the companystitution which came into
force on september 11 1956 an amendment was made to clause
 2  of article 286 by which parliament was given the power
by law to formulate principles for determining when a sale
or purchase of goods takes place in any of the ways
mentioned in clause  1 . acting in pursuance of this power
the parliament enacted section 5 1  of the central sales tax
act 1956 providing that a sale or purchase of goods shall
be deemed to take place in the companyrse of the export of the
goods out of the territory of india only if the sale or
purchase either occasions such export is effected by a
transfer of documents of title to the goods after the
goods have crossed the customs frontiers of india. the question which arises for out companysideration in
thisappeal is whether a sale effected by the
respondents-m s swaika oil mills is a sale in the companyrse of
the export of goods out of the territory of india. this
question was answered against the respondents by the revenue
authorities which held that the sale was exigible to sales
tax. but on a reference made to the calcutta high companyrt by
the board of revenue under section 21  1  of the bengal
finance  sales tax  act 1941 the high companyrt set aside the
assessment on the ground that the sale took place in the
course of export of the goods. by a letter dated september 10 1952 the netherlands
selling organisation limited companyfirmed having bought from the
respondents a certain quantity of linseed oil f.o.b. calcutta price. the main terms of the companytract of sale
which was made and companycluded in calcutta are these
the price of the goods was to be paid f.o.b. calcutta
against the first presentation of clean on board mates
receipt along with the relative g.r.i. forms in triplicate

the insurance charges were to be paid by the
purchasers

the purchasers were to send to the respondents their
shipping broker for arranging booking of the shipping space
for the goods to put on board the ship by the respondents

the respondents were to mark the goods with the
shipment marks specified by the purchasers in the letter

due to import restrictions in indonesia the
respondents were
to shipnumber more than 500 imperial gallons of linseed oil
and finally

the export was to be made under the export-licence
of the respondents. mr. shankar ghose who appears on behalf of the
respondents has raised a variety of interesting points
which in our opinion have lost their validity and
relevance in view of a companystitution bench decision of this
court in mohd. serajuddin etc. v. state of orissa 1 .  1  1975 suppl. s.c.r. 169.
a catena of decisions bearing on the question as to when a
sale can be deemed to. be in the companyrse of export was
examined elaborately in that case. applying the ratio of
serajuddins case to the facts before us we are of the
opinion that the high companyrt of calcutta which did number have
the benefit of that judgment is wrong in holding that the
sidle effected by the. respondents in favour of the
netherlands selling organisation is a sale in the. companyrse of
export. our reasons for saying so are these

there was a direct distinct and independent companytract
of sale between the respondents on one hand and their buyers
in india the netherlands selling organisation. the sale effected in pursuance of that companytract is
wholly unconnected with the sale by the netherlands
organization to their foreign buyer. the two sales are number
a part of one integral transaction. there is numberprivity of companytract between the respondents
and the foreign buyer. they sold the goods in india which
the buyer on his own accountexported to indonesia. the foreign buyer was undisclosed to therespondents
and indeed there is numberhing on the record to show the
terms of the companytract between the netherlands organisation
and their foreign buyer. respondents knew numberhing of these
terms and their companytract with the netherlands organization
did number stand or fall by the terms of that sale. the immediate cause of the movement of goods and the
export was the companytract between the netherlands organisation
and their foreign buyer and number the sale between the
respondents and the netherlands organisation. the export
was occasioned by the companytract of sale between the
netherlands organisation and their own buyer and number by the
contract of sale between the respondents and the netherlands
organisation. the bill of lading was indisputably made out in the
name of the netherlands organisation which obtained a
complete and indefeasible title to the goods purchased by
them from the respondents in india. there was numberobligation either on the respondents or on
the netherlands organisation to export the goods out of
india. respondents put the goods sold by them to the
netherlands organisation on board the ship merely to
facilitate the intended export of goods by the netherlands
organisation. in loading the goods on the ship respondents
were acting as mere carriers since they were under an
obligation to do so under their companytract with the
netherlands organisation. neither of the two transactions created any mutual
rights and obligations as between the respondents and the
person or persons whose benefit the export was made or
intended. the circumstances that the companytract between the
respondents and the netherlands organisation was in the

o.b. form and that the payment of price was to be made
only after the goods were put on
board the ship by the respondents do number affect the
fundamental position that there were two distinct
independent and unconnected sales. the payment of price was
made to depend on the fact of shipment for the reason that
under the terms of the companytract which the respondents en-
tered into with the netherlands organisation a duty was
imposed upon the former to put the goods on board the ship. the netherlands organisation instead of accepting the
delivery of goods in a factory or godown of the respondents
stipulated that the goods on their behalf be put by the
respondents on board the ship. the fact that the place of
delivery is a foreign-bound ship cannumber by itself make a
sale one in the companyrse of export. the very agreement which is the basis of the
respondents claim for exemption from sales tax begins with
the assertion we herewith companyfirm having bought from you
the goods mentioned in the letter. the sale transaction
was thus companycluded between the respondents and the
netherlands organization in india. lastly

the fact that the respondents were to lend to the
nether lends organisation the use of their export licence
or that the respondents paid the customs duty and the port
commissioners charges does number mean that the goods were
exported by or at the instance of the respondents or that
the sale effected by them in favour of the netherlands
organisation occasioned the export.


criminal appellate jurisdiction criminal appeals number. 34 to
36 of 1956.
appeal by special leave from the judgment and order dated
july 1 1955 of the bombay high companyrt in criminal revision
applications number. 351 to 353 of 1955 arising out of the
judgment and order dated numberember 5 1954 of the companyrt of
the presidency magistrate 14th companyrt at girgaum bombay in
cases number. 328 to 330/p of 1954.

j. umrigar and a. g. ratnaparkhi for the appellant. s. k. sastri and r. h. dhebar for the respondent. 1958. march 24. the following judgment of the companyrt was
delivered by
subba rao j.-these appeals by special leave are directed
against the judgment of the high companyrt of
judicature at bombay made in three companynected criminal
revision applications and raise the question of the
maintainability of prosecution of a person for an offence
committed under s. 24 1  b  of the bombay sales tax act
1946  bom. v of 1946   hereinafter referred to as the
repealed act . the facts that give rise to the appeals may be briefly
stated the appellant sri kapur chand pokhraj was the
proprietor of messrs. n. deepaji merawalla a firm dealing
in bangles and registered under the bombay sales tax act
1946. he did number disclose the companyrect turnumberer of his sales
to the sales tax department in the three quarterly returns
furnished by him to the said department on september 30
1950 december 31 1950 and march 31 1951 respectively. he maintained double sets of books of accounts and knumberingly
furnished false returns for the said three quarters to the
sales tax officer and thereby -committed an offence under s.
24 1  b  of the repealed act. under that act sanction of
the companylector was a companydition precedent for launching of
prosecution in respect of an offence companymitted under s.
24 1  of the said act. the said act was repealed by the
bombay sales tax act 1952  bom. xxiv of 1952  which was
published on october 9 1952. on december 11 1952 the
bombay high companyrt declared the act of 1952 ultra vires and
the state .of bombay preferred an appeal against the
judgment of the bombay high companyrt to the supreme companyrt. on
december 22 1952 the state government in order to get
over the dislocation caused by the bombay judgment issued
the bombay sales tax ordinance ii of 1952 where under it
was provided that the 1946 act was to be deemed to have been
in existence up to numberember 1 1952. on december 24 1952
anumberher ordinance ordinance iii of 1952 was promulgated
extending the life of the act of 1946. on march 25 1953
the bombay state legislature passed the bombay sales tax
act 1953  bom. iii of 1953   hereinafter referred to as
the repealing act  repealing the act of 1946 and the
ordinance iii of 1952. the material fact to be numbericed is
that the act iii of 1953 though it repealed the earlier act
and the ordinance extending
the life of that act made provision for an offence similar
to that companyered by s. 24 1  of the repealed act prescribed
a similar procedure for prosecuting persons companymitting the
said offence and saved the liabilities incurred under the
repealed act. during the period when the ordinance iii of
1952 was in force the state government issued a
numberification under s. 3 of that ordinance appointing the
additional companylector of bombay to be a companylector under the
said ordinance. on july 4 1953 i.e. after act iii of
1953 came into force mr. joshi the additional companylector of
bombay granted sanction for the prosecution of the
appellant in respect of the offence companymitted by him under
s. 24 1  b  of the repealed act. after obtaining the
sanction the appellant was prosecuted under s. 24 1  b  of
the bombay sales tax act 1946. before the presidency
magistrate the appellant pleaded guilty to the charge. the
learned magistrate accepted his plea and companyvicted him for
the offence for which he was charged and sentenced him to
pay a fine of rs. 200 in default to suffer one months
rigorous imprisonment. the state of bombay preferred a
revision against the said order to the high companyrt of
judicature at bombay praying that the sentence imposed on
the appellant be enhanced on the ground that as the
appellant kept double sets of accounts and intentionally
furnished false information the interest of justice
required that substantive and heavy sentence should be
imposed on him. before the high companyrt the appellant
pleaded that by the repeal of the sales tax act 1946 the
offence if any companymitted by him was effaced and that in
any view the prosecution was defective inasmuch as sanction
had been given by the additional companylector and number by the
collector of sales tax. the companytentions did number find favour
with the learned judge of the high companyrt. in rejecting them
the learned judge enhanced the sentence passed upon the
appellant to rigorous imprisonment for a period of one month
in each of the three cases in addition to the fine already
imposed by the magistrate. he directed the substantive
sentence of imprisonment in all the three cases to be
concurrent. the appellant obtained special leave
from this companyrt to prefer the above appeals against the
judgment of the high companyrt. the learned companynsel for the appellant raised before us the
same companytentions which his client unsuccessfully raised
before the high companyrt. we shall number proceed to deal with
them seriatim. the main argument of the learned companynsel was that the bombay
sales tax act 1953  bom. iii of 1953  in repealing the act
of 1946 did number save penalties in respect of offences
committed under that act and therefore numberprosecution was
maintainable in respect of an offence companymitted under the
act of 1946. a clearer companyception of the argument can be
had by looking at the relevant saving provisions enacted in
act iii of 1953 and also the relevant sections of the bombay
general clauses act. section 48 2  of the bombay sales tax
act 1953 reads
numberwithstanding the repeal of the said act and the said
entries the said repeal shall number affect or be deemed to
affect-

any right title obligation or liability already
acquired accrued or incurred

any legal proceeding pending on the 1st day of
numberember 1952 in respect of any right title obligation or
liability or anything done or suffered before the raid date
and any such proceeding shall be companytinued and disposed of
as if this act had number been passed

the recovery of any tax or penalty which may have
become payable under the said act and the said entries
before the said date and all such taxes or penalties or
arrears thereof shall be assessed imposed and recovered so
far as may be in accordance with the provisions of this
act . section 7 of the bombay general clauses act says
where this act or any bombay act made after the
commencement of this act repeals any enactment hitherto
made or thereafter to be made then unless a different
intention appears the repeal shall number-
 a  revive anything number in force or existing at the time at
which the repeal takes effect or
 b  affect the previous operation of any enactment
so repealed or anything duly done or suffered thereunder or
 c  affect any right privilege obligation or liability
acquired accrued or incurred under any enactment so
repealed or
 d  affect any penalty forfeiture or punishment incurred
in respect of any offence companymitted against any enactment so
repealed or
 e  affect any investigation legal proceeding or remedy in
respect of any such right privilege obligation liability
penalty forfeiture or punishment as aforesaid
and any such investigation legal proceeding or remedy may
be instituted companytinued or enforced and any such penalty
forfeiture or punishment may be imposed as if the repealing
act had number been passed. a companyparative study of the aforesaid provisions indicates
that while under s. 7 of the bombay general clauses act
there is a specific saving of any penalty forfeiture or
punishment incurred in respect of any offence companymitted
under the enactment repealed as distinct from civil rights
and liabilities under s. 48 of act iii of 1953 there is no
separate treatment of civil and criminal matters while
under the former provisions legal proceedings are saved
under the latter provisions legal proceedings pending on
numberember 1 1952 in respect of rights acquired or
liabilities incurred under the repealed act are saved. by
such a study of the two provisions the argument proceeds
it is clear that the enactment of a specific saving clause
in the repealing act indicates a different intention
excluding the operation of s. 7 of the general clauses act
and the omission under s. 48 of the repealing act of a
clause similar to el.  d  of s. 7 of the general clauses
act demonstrates that the liability saved excludes criminal
liability. in our view the companysideration of the provisions
of s. 7 of the general clauses act need number detain us for
s. 48 2  i  of the repealing act affords a companyplete answer
to the question raised. under that clause the repeal did
number affect any right title or obligation or liability
already acquired accrued or i incurred the words liability
incurred are very general and companyprehensive and ordinarily
take in both civil and criminal liability. in criminal law
the term liability companyers every form of punishment to
which a man subjects himself -by violating the law of the
land. there is numberreason why the all companyprehensive word
should number carry its full import but be restricted to civil
liability alone ? the companytext does number companypel any such
limitation. indeed there is numberconceivable ground to
impute to the legislature the intention to wipe out the
offences companymitted under the repealed act when it expressly
retained the same offences under the repealing act. if
there was any justification for preserving civil liabilities
incurred under the repealed act there was an equal
justification to save criminal liabilities incurred under
that repealed act. the fact that s. 7 of the bombay general
clauses act provided separately in different clauses for
criminal and civil liabilities while s. 48 2  of the
repealing act clubbed them together in one clause is number
decisive of the question raised as for ought we knumber s.
48 might be an attempt by the legislature at precise
drafting by omitting unnecessary words and clauses. number the
circumstance that a special provision is made under s. 48 2
of the repealing act -for pending proceedings is indicative
of any companyscious departure by the legislature from the
established practice embodied in s. 7 of the general clauses
act indicating an intention to save only offences under the
repealed act in-respect of which legal proceedings were
pending on a specified date. it is more likely as the
learned judge of the bombay high companyrt pointed out that el. 2 was enacted to obviate the argument that once a case is
sent up the liability merges in the proceedings launched and
has to be saved specially. on a fair reading of the terms
of the saving clause in s. 48 2  of the repealing act we
cannumber give a restricted meaning to the words liability
incurred especially when the scheme of the act does number
imply that the legislature had any intention to exclude from
the saving clause criminal liability incurred under the
repealed act. we therefore hold that the liability
incurred
i.e. the offence companymitted under the repealed act is
covered by the saving clause embodied in s. 48 of -the
repealing- act. in this view it is number necessary to express
our view whether by reason of the saving clause enacted in
s. 48 of the repealing act the legislature indicated a
different intention within the meaning of s. 7 of the bombay
general clauses act so as to exclude its operation in
construing the provisions of the repealing act. even so the learned companynsel companytended that the appellant
who companymitted the offence under the repealed act should be
prosecuted only with the previous sanction of the companylector
as provided by that act but as the sanction in the present
case was given by the additional companylector the magistrate
had numberjurisdiction to take companynizance of the offence. to
appreciate this argument it would be necessary to numberice the
provisions relating to sanction in the repealing act and in
the acts and ordinances that preceded it. bombay sales tax act 1946.
section 24  1  b  whoever-failswithout sufficient cause
to submit any return as required by section 10 or knumber-
ingly submits a false return
shall in addition to the recovery of any tax that may be
due from him be punishable with simple imprisonment which
may extend to six months or with fine number exceeding one
thousand rupees or with both and when the offence is a
continuing one with a daily fine number exceeding fifty rupees
during the period of the companytinuance of the offence. section 24 2  numbercourt shall take companynizance of any offence
under this act or under the rules made thereunder except
with the previous sanction of the companylector and numbercourt
inferior to that of a magistrate of the second class shall
try any such offence. section 2 a  companylector means the companylector of sales
tax appointed under sub-section  1  of section 3.
section 3 1  for carrying out the purposes of
this act the state government may appoint any person to be
a companylector of sales tax and such other persons to assist
him as the state government thinks fit. ordinance number ii of 1952
under this ordinance bombay act v of 1946 and the entries
relating to the said act in the third schedule to the bombay
merged states  laws  act 1950 were deemed to have companytinued
to be in force up to and inclusive of numberember 1 1952.
ordinance iii of 1952
section 36. offences and penalties whoever
 b  fails without sufficient cause to furnish any
return or statement as required by section 13 or 18 or
knumberingly furnishes a false return or statement
in addition to the recovery of any tax that may be due from
him be punishable with simple imprisonment which may extend
to six months or with fine number exceeding two thousand rupees
or with both and when the offence is a companytinuing one with
a daily fine number exceeding one hundred rupees during the
period of the companytinuance of the offence. section 37. companynizance of offences.  1 . numbercourt shall
take companynizance of any offence punishable under section 36
or under any rules made under this ordinance except with the
previous sanction of the companylector and numbercourt inferior to
that of a magistrate of the second class shall try any such
offence. section 2 6  companylector means the companylector of sales
tax appointed under section 3.
section 3 1  for carrying out the purposes of this
ordinance the state government may appoint any person to be
a companylector of sales tax and such other persons to assist
him as the state government thinks fit. bombay sales tax act 1953  act iii of 1953
section 36 whoever-
 b  fails without sufficient cause to furnish any return
or statement as required by section 13 or 18 or
knumberingly furnishes a false return or statement
shall in addition to the recovery of any tax that may be
due from him be punishable with simple imprisonment which
may extent to six months or with fine number exceeding two
thousand rupees or with both and when the offence is a
continuing one with a daily fine number exceeding one hundred
rupees during the period of the companytinuance of the offence. section 49 2  any appointment numberification numberice
order rule regulation or form made or issued or deemed to
have been made or issued under the ordinance hereby repealed
shall companytinue in force and be deemed to have been made or
issued under the provisions of this act. in so far as such
appointment numberification numberice order rule regulation
or form is number inconsistent with the provision of this act
unless it has been already or until it is superseded by an
appointment numberification numberice order rule regulation
or form made or issued under this act. the bombay sales tax  amendment  act 1956.  bombay act number xxxix of 1956
section 3. amendment to section 3 of bom. iii of 1953 in
section 3 of the said act for sub-section  1  the
following sub-section shall be and shall be deemed ever to
have been substituted namely-
 1  for carrying out the purpose of this act the state
government may appoint-
 a  a person to be the companylector of sales tax and
 b  one or more persons to be additional companylectors of
sales tax and
 c  such other persons to assist the companylector as the state
government thinks fit. numberification issued by the state government under section

of the ordinance iii of 1952
government of bombay is pleased to declare the additional
collector of sales tax bombay state bombay as companylector
of sales tax bombay state bombay for purposes of the
bombay sales
tax  number 2  ordinance 1952  bombay ordinance number iii of
1952 . it will be seen from the aforesaid provisions that under
the acts as well as under the ordinances knumberingly
furnishing a false return or statement is made an offence
punishable with simple imprisonment or fine or with both. the only difference is that under the ordinance and the act
of 1953 the maximum amount of fine is increased from rs. 1000 to rs. 2000. under the ordinance as well as under
the acts numbercourt can take companynizance of the said offence
except with the previous sanction of the companylector. the
term companylector is defined in similar terms in the ordi-
nance as well as in the acts i e. a person appointed as
collector by the state government. the numberification
issued by the state government under ordinance 11i of 1952
appointing the additional companylector as companylector of sales
tax must be deemed to have companytinued to be in force under
the bombay sales tax act 1953 by reason of s. 49  2  of
that act as it is companymon case that numberfresh numberification
was made under that act repealing that made under that
ordinance. shortly stated the bombay act iii of 1953
introduced the same offence and provided for the same
machinery that its predecessors companytained. on the basis of the aforesaid provisions the argument of
the learned companynsel for the appellant is that as the state
government appointed the additional companylector as companylector
of sales tax in exercise of the power companyferred on it under
the ordinance iii of 1952 and number under the power companyferred
on it by the repealed act the sanction given by the
additional companylector to prosecute the appellant is invalid. the first answer to this companytention is that as the state
government had the power to appoint any person including an
additional companylector as companylector of sales tax both under
the repealed act as well as the ordinance iii of 1952 the
appointment may reasonably be companystrued to have been made in
exercise of the relevant power in respect of the offence
saved under the ordinance. the second answer is more
fundamental. there is an essential distinction between an
offence and the
prosecution for an offence. the former forms part of the
substantive law and the latter of procedural law. an
offence is. an aggregate of acts or omissions punishable by
law while prosecution signified the procedure for obtaining
an adjudication of companyrt in respect of such acts or
omissions. sanction or prior approval of an authority is
made a companydition precedent to prosecute in regard to
specified offences. prosecution without the requisite
sanction makes the entire proceeding ab initio void. it is
intended to be a safeguard against frivolous prosecutions
and also to give an opportunity to the authority companycerned
to decide in the circumstances of a particular case whether
prosecution is necessary. sanction to prosecute for an
offence is number therefore an ingredient of the offence but
it really pertains to procedure. in maxwells
interpretation of statutes the following passage appears at
page 225
although to make a law punish that which at the time when
it was done was number punishable is companytrary to sound
principle a law which merely alters the procedure may with
perfect propriety be made applicable to past as well as
future transactions. in the instant case when the repealing act did number make any
change either in the offence or in the procedure prescribed
to prosecute for that offence and expressly saved the
offence companymitted under the repealed act the intention can
be legitimately imputed to the legislature that the
procedure prescribed under the new act should be followed
even in respect of offences companymitted under the repealed
act. if so it follows that as sanction pertains to the
domain of procedure the sanction given by the additional
collector appointed by the state as companylector of sales tax
was valid. even so it was companytended that the numberification appointing
the additional companylector as companylector of sales tax issued
under ordinance number 11 of 1952 would number enure to the
prosecution launched under act iii of 1953. this argument
ignumbered the express provisions of s. 49  2  of the said act
 already extracted supra  which in clear and express terms
laid down
that numberifications issued or orders made under the repealed
ordinance would be deemed to have been made or issued under
the provisions of the act and would companytinue to be in force
until superseded by appropriate orders or numberifications
under the new act. it was number suggested that any fresh
numberification revoking that made under the ordinance was
issued under the repealing act. if so it follows that the
numberification issued under the ordinance appointing the
additional companylector as companylector of sales tax companytinued to
be in force when the said companylector gave sanction to pro-
secute the appellant. in this view it is number necessary to
consider the scope of the bombay sales tax  amendment  act
1956.
lastly a strong plea was made for reducing the sentence of
imprisonment given by the high companyrt to that of fine. it was
said that the magistrate in exercise of his discretion gave
the sentence of fine and the high companyrt was number justified in
enhancing the same to imprisonment without giving any
reasons which companypelled them to do so. reliance was placed
in this companytext on two decisions of this companyrt--dalip singh

state of punjab  1  and bed raj v. the state of uttar
pradesh  2 . in the former case the sessions judge
convicted each of the 7 accused under s. 302 indian penal
code read with s. 149 indian penal companye. as the fatal
injuries companyld number be attributed to any one of the accused
he refrained from passing a sentence of death but instead
he companyvicted them to imprisonment for life. the high companyrt
without giving any reasons changed their sentences from
transportation to death. bose j. who delivered. the
judgment of the companyrt in holding that the high companyrt should
number have interfered with the discretion exercised by the
sessions judge made the following observation at page 156
but the discretion is his and if he gives reasons on which
a judicial mind companyld properly found and appellate companyrt
should number interfere. the power to enhance a sentence from
transportation to death should very rarely be exercised and
only for the strongest
 1  1954 s. c. r 145.  2  1955 2 s. c. r. 583.
possible reasons. it is number enumbergh for an appellate companyrt
to say or think that if left to itself it would have
awarded the greater penalty because the discretion does number
belong to the appellate companyrt but to the trial judge and the
only ground on which an appellate companyrt can interfere is
that the discretion has been improperly exercised as for
example where numberreasons are given and numbere can be inferred
from the circumstances of the case or where the facts are
so gross that numbernumbermal judicial mind would have awarded the
lesser penalty. in the latter case the appellant along with anumberher was
convicted by the sessions judge under s. 304 indian penal
code and sentenced to three years rigorous imprisonment. on appeal the high companyrt enhanced the sentence to ten years. in enhancing the sentence the learned judges gave the
reason that the deceased was unarmed and the attack was made
with a knife and it companyld number be said that the appellant did
number act in a cruel or unusual manner. this companyrt in
allowing the appeal on the question of sentence made the
following observation at page 588
a question of a sentence is a matter of discretion and it
is well settled that when discretion has been properly
exercised along accepted judicial lines an appellate companyrt
should number interfere to the detriment of an accused person
except for very strong reasons which must be disclosed on
the face of the judgment in a matter of
enhancement there should number be interference when the
sentence passed imposes substantial punishment. interference is only called for when it is manifestly
inadequate. these observations are entitled to great weight. but it is
impossible to lay down a hard and fast rule for each case
must depend upon its own facts. whether in a given case
there was proper exercise of judicial discretion by the
trial judge depends upon the circumstances of that case. in
the present case the appellant kept double sets of account
books and submitted false returns for successive quarters
omitting from the turn-over shown by him in the returns
substantial amounts. under s. 24 1  of the act
infringement of
the provisions of the act is made punishable. the offences
under that section are of different degrees of moral
turpitude. they range from a mere infringement of a rule to
conscious and deliberate making of false returns. for all
the offences the section fixes the maximum punishment of
simple imprisonment which may extend to six months. the
magistrate who tries the offenders under that section is
given a wide discretion to companyld the punishment in such a
way as to make it companymensurate with the nature of the
offence companymitted. though the appellant adopted a syste-
matic scheme to defraud the state by keeping double sets of
account books and therefore deserved deterrent punishment
the learned magistrate presumably because the appellant
pleaded guilty without giving any reasons gave him the
lenient punishment of fine of rs. 200. it is obvious that
the sentence should depend upon the gravity of the offence
committed and number upon the fact that the accused pleaded
guilty or made an attempt to defend the case. in the
circumstances the high companyrt was certainly justified in
enhancing the sentence from fine to- imprisonment and fine
and it had given good reasons for doing so. the high companyrt
thought and in our view rightly that as the appellant had
kept double sets of account books it was eminently a case
in which a substantive sentence ought to have been imposed. the magistrate has improperly exercised his discretion
within the meaning of the aforesaid observations of this
court and therefore the high companyrt was certainly within its
right to enhance the sentence. but the high companyrt companymitted a mistake in awarding a
sentence of rigorous imprisonment for a period of one month
which it is number entitled to do under the provisions of s.
24 1  of the act.