civil appellate jurisdiction civil appeal number 1 of 1959.
appeal by special leave from the award dated september 16
1957 of the industrial companyrt bombay in misc. application
 ic  number 20 of 1957.

c. setalvad attorney-general for india i. m. nanavati

n. andley j. b. dadachanji rameshwar nath and p. l.
vohra for the appellants. k. daphtary solicitor-general of india b. r. l.
iyengar and k. l. hathi for the respondent. k. daphtary solicitor-general of india h. j. umrigar
and r. h. dhebar for the intervener. 1960. march 17. the judgment of the companyrt was delivered by
gajendragadkar j.-this appeal by special leave is directed
against the award passed by the industrial companyrt bombay by
which a scheme for gratuity has been framed in favour of the
workmen represented by the respondent textile labour
association ahmedabad who are employed by the textile
mills in ahmedabad including the twenty appellant mills
before us. in order to appreciate the points of law raised
by the appellants in the present appeal we ought to state at
the outset the material facts leading to the present dispute
in which the impugned scheme for gratuity has been framed. on june 13 1950 the respondent gave numberice under s. 42 2
of the bombay industrial relations act 1946  bom. xi of
1947   hereinafter called the act  intimating to the mill
owners association at ahmedabad  hereinafter called the
association  that it desired a change as specified in the
annexure to the companymunication. the annexure showed that the
respondent wanted a change in that a scheme for gratuity
should be framed wherever services of an employee are
terminated by the mills on grounds of old-age invalidity
incapacity or natural death. it was further claimed that
the payment of gratuity in the said cases should be at the
rate of one months wages  including dearness allowance  per
every year of service. some incidental demands were also
specified in the annexure. the
demand thus made was number accepted by the association and so
it was referred to the industrial companyrt. pending the
reference the employees provident funds act 1952  19 of
1952  came into operation on march 4 1952 and it was
urged before the industrial companyrt on behalf of the
association that since the statutory scheme of provident
fund would soon become companypulsory it would number be advisable
to adjudicate upon the respondents claim for the specified
items of gratuity at that stage. this argument was accepted
by the industrial companyrt it held that when the scheme envi-
saged by the new act is introduced it would be possible to
see from what date it would be operative and that if after
the introduction of the said scheme it be found that a
sufficient margin is left it would then be open to the
respondent and the association to make a fresh application
for the institution of a gratuity fund either for all the
employees or for the benefit of such of them as will have to
retire within the next few years. it was on this ground
that the demand made by the respondent was rejected on april
18 1952.
it appears that the prescribed scheme under the provident
funds act came into operation on october 1 1952. in june
1955 a fresh numberice of change was given by the respondent
to all the mills in respect of the demand for gratuity and
the said demand became the subject-matter of certain
references to the industrial companyrt at bombay under s. 73a of
the act. at that time the association and the respondent
had entered into an agreement to refer all their disputes to
arbitration and in accordance with the spirit of the said
agreement the references pending before the industrial companyrt
in respect of gratuity were withdrawn and referred to the
board of arbitrators. before the board it was however
urged by the association that so long as the award passed
by the industrial companyrt on the earlier reference was
subsisting and in operation a claim for gratuity which was
the subject-matter of the said reference and award companyld number
be properly or validly companysidered by the board. this
objection was upheld by the board and so it made no
provision for gratuity. the decision of the board of
arbitrators in the said proceedings was published on july
25 1957.
after the said decision was made and before it was published
the respondent made the present application for modification
of the earlier award under s. 116a of the act on july 6
1957. in this application the respondent alleged that there
was sufficient justification for modifying the previous
award and for introducing a scheme of gratuity as claimed by
it. in this application a demand for gratuity was made on
the following lines-

in the case of one months basic wages and
death while in average dearness allow-
service or becom- ance per companypleted year of
ing physically or service. mentally unfit for
further service

on voluntary re- after 10 companytinuous years of
tirement or re- service in the companypany
signation of an same as in  1
employee

on termination for less than 10 but more
of service by the than 7 years at 3/4 rate of
company  1  for less than 7 years
but 5 years or more than 5
years at the 1/2 rate of  1
for more than 10 years
continuous service as in
 1  above. it appears that in the application thus made a typing
mistake had crept in which failed to type properly the third
category of cases. the respondent applied on august 21
1657 for amendment of the said typing mistake and the said
amendment was naturally allowed. it is the demand made by
this application that is the subject-matter of the present
proceedings under s. 116a of the act. in the present proceedings the association did number file a
written statement and in fact withdrew leaving it open to
each mill to file a separate written statement of its own. it appears that there was a difference of opinion amongst
the companystituents of the association. accordingly written
statements were filed on
behalf of the 65 companystituent mills and the large majority of
the said written statements raised some preliminary
objections against the companypetence of the present proceedings
and disputed the respondents claim for gratuity also on the
merits. the industrial companyrt has overruled all the
preliminary objections and on the merits it has framed a
scheme for gratuity on industry-cum-region basis. the
award framing the said scheme was pronumbernced on september
16 1957. it is against this award that 21 out of the 65
mills have companye to this companyrt by special leave. one of the
appellant mills has subsequently withdrawn from the appeal
with the result that out of 65 mills 45 mills do number feel
aggrieved by the award but 20 mills do and the companytentions
raised by them fall to be companysidered in the present appeal. before dealing with the merits of the points raised by the
appellants it would be relevant to refer very briefly to the
relevant provisions of the act. the act has been passed by
the bombay legislature because it thought that it was
expedient to provide for. the regulation of the relations of
employers and employees in certain matters to companysolidate
and amend the law relating to the settlement of industrial
disputes and to provide for certain other purposes . with
this object the act has made elaborate provisions for the
regulation of industrial relationships and for the speedy
disposal of industrial disputes. an industrial dispute
under s. 3 sub-s.  17  means any dispute or difference
between an employer and employer or between employers and
employees or between employees and employees and which is
connected with any industrial matter . the expression
industrial matter has been inclusively defined in a very
wide sense. approved union in s. 3 2  means a union
on the approved list primary union under s. 3 28
means a union for the time being registered as a primary
union under the act registered union under s. 3 30  means
a union registered under the act  while representative
union under s. 3 33  means a union for the time being
registered as a representative union under the act
section 3 39  defines wages as meaning remuneration of
all
kinds capable of being expressed in terms of money and
payable to an employee in respect of his employment or work
done in such employment and includes inter alia any
gratuity payable on discharge . section 42 sub-s.  2
provides that an employee desiring a change in respect of an
industrial matter number specified in schedule i or ii shall
give numberice in the prescribed form to the employer through
the representative of employees but shall forward a companyy of
the same to the chief companyciliator the companyciliator of the
industry companycerned for the local area the registrar the
labour officer and such other person as may be prescribed. section 66 1  provides inter alia that if an employer and
a representative union or any other registered union which
is the representative of the employees by a written
agreement agree to submit any present or future industrial
dispute or class of such disputes to the arbitration of any
person whether such arbitrator is named in such agreement
or number such agreement shall be called submission. we have
already numbericed that the association and the respondent had
entered into a submission in respect of several disputes
which were referred to the board of arbitrators. section
73a is important for our purpose it deals with reference to
arbitration by unions and provides that numberwithstanding
anything companytained in this act a registered union which is
a representative of employees and which is also an approved
union may refer any industrial dispute for arbitration to
the industrial companyrt subject to the proviso prescribed under
it. it is under s. 73a that the reference was made on the
earlier occasion to adjudicate upon the respondents claim
for a gratuity as specified in its numberice of change. that takes us to ss. 116 and 116a. section 116 provides
inter alia for the period during which an award would be
binding section 116 1  lays down in regard to an award that
it shall cease to have effect on the date specified therein
and if numbersuch date is specified on the expiry of the
period of two months from the date on which numberice in
writing to terminate such an award is given in the
prescribed manner by any of the parties thereto to the other
party provided
that numbersuch numberice shall be given till the expiry of three
months after the award companyes into operation in other words
the award cannumber be terminated at least for three months
after it has companye into operation thereafter it may be
terminated as prescribed by s. 116 1 . with the rest of the
provisions of s. 116 we are number companycerned in the present
appeal. section 116a 1  prescribes inter alia that any
party who under the provisions of s. 116 is entitled to give
numberice of termination of an award may instead of giving
such numberice apply after the expiry of the period specified
in sub-s.  2  to the industrial companyrt making the award for
its modification. it is unnecessary to set out the other
provisions of s. 116a. the award under appeal has been made
by the industrial companyrt on the application made by the
respondent under s. 11 6a. the first companytention raised before us by the learned
attorney-general on behalf of the appellant is that the
application for modification made by the respondent under s.
116a is incompetent because what the respondent seeks is
number any modification of the earlier award which is
permissible under s. 116a but a reversal and a revision of
the said award which is number permissible under the said
section. the expression modification of the award may
include alteration in the details of the award or any other
subsidiary incidental matters. in this companynection it must
be borne in mind that there is a radical difference between
the meaning of the word change as distinguished from the
meaning of the word modification . section 116 2  allows
for a change or modification of the registered agreement
settlement or award in terms of the agreement and that
clearly brings out the difference between the two companycepts
of change and modification . in cases falling under
s. 116 2  the agreements or settlements can be wholly
revoked and fresh ones substituted in their place by
consent or by companysent they may be modified in subsidiary or
incidental details. where the legislature wanted to provide
for change it has expressly done so in s. 116 2  by using
both the words changed or modified
section 116a however is companyfined only to modification of
the award and number its change. the same argument is placed in anumberher form. it is
contended that it was number the intention of the legislature
to permit the proceedings under s. 116a for change of policy
underlying the award or its essential framework. such a
result can be achieved only by terminating the award under
s. 116 1  and raising an industrial dispute as provided by
the act. in support of this companytention reliance has been
placed on the observations made by mukherjea j. as he then
was in the case of be delhi laws act 1912 1  where the
learned judge stated that the word modification
occurring in s. 7 of the delhi laws act did number mean or
involve any change of policy but was companyfined to alteration
of such a character which keeps the policy of the act intact
and introduces such changes as are appropriate to local
conditions of which the executive government is made the
judge . in the same case bose j. observed that the power
to restrict and modify does number import the power to make
essential changes . on the other hand the learned solicitor-general has
contended that the companytext in which the word modification
has been used in s. 116a does number justify tne adoption of
the limited meaning of the word modify for which the
appellants companytend. the policy of the act and the reason
why s. 116a has been enacted show that the word
modification has been used in a sense larger than its
ordinary meaning. the legislature realised that the
procedure prescribed by s. 116 sub-s.  1  for terminating
the award which necessitates the other subsequent steps was
apt to be dilatory and involved and so it has purported to
provide for an effective alternative speedy remedy for the
change of the award under s. 116a. in support of this
argument reliance has been placed on the meaning assigned to
the word modified in words and phrases where it is
stated that though one of the primary meanings of the word
modify is numberdoubt to limit or restrict it also
means to vary and there is authority that it may even
mean to extend or enlarge  2 .  1  1955 2 s.c.r. 747 1006.

words and phrases by roland burrows vol. 3. p. 399.
it is companymon ground that the modification permissible under
s. 116a does number mean that the provisions of the award must
always be reduced it may mean even increasing the
provisions and so it is urged by the respondent that the
word modification should receive a wider denumberation in the
context of s. 116a. this companystruction numberdoubt receives
some support from the provision of s. 116a that a party may
apply for the modification of the award instead of giving
numberice for its termination and the latter clause tends to
show that the procedure prescribed by s. 116a is an alter-
native to the procedure prescribed by s. 116. the
industrial companyrt was apparently inclined to put a wider
denumberation on the word modification used in s. 116a. we do number think it is necessary to decide this larger
question of the companystruction of s. 116a because in our
opinion in the present case even if the limited and narrow
construction suggested by the appellant is put on the word
modification  the respondents application cannumber be said
to be outside the purview of the said section. there is no
doubt that the claim for gratuity made by the respondent in
the earlier proceedings has been rejected by the industrial. companyrt and that is an award but whether or number the present
application seeks for a modification of the said award
within the meaning of s. 116a would depend on what the
industrial companyrt had decided on the earlier occasion. it is
clear that the industrial companyrt did number then companysider the
merits of the claim at all. it upheld the associations
contention that the matter should number be decided then but
may be companysidered later in view of the fact that the
employees provident funds act had already been passed and
the statutory scheme for provident funds was about to companye
into force. it was on this ground alone that the industrial
court rejected the claim as it was then made but it took the
precaution of expressly adding that after the introduction
of the provident funds scheme it would be open to the res-
pondent or the association to make a fresh application for
the institution of a gratuity fund as it may deem expedient
to claim. it would number be unreasonable we think to
assume that when liberty was thus reserved
to the parties to make a fresh application the industrial
court had presumably s. 116a in mind. in substance the
effect of the order then passed was that the application was
regarded as premature and liberty was reserved to the
parties to renew the application if the statutory scheme was
thought to be insufficient or unsatisfactory by either of
them. in such a case if the respondent applies to the
industrial companyrt for modification of its award it is
difficult to accept the argument that the respondent seeks
to alter the framework of the award or to change any
principle decided in the award. the true position is that
by the present application the respondent is asking the
court to companysider the demand number that the scheme has companye
into force and is according to the respondent insufficient
to meet the workmens grievance. what the industrial companyrt
then promised to companysider after the scheme came into force
is brought before it for its decision again. that being the
true nature of the award and the true scope of the prayer
made by the respondent in its present application it is
difficult to hold that the application is incompetent under
s. 116a. the next argument which is pressed before us by the learned
attorney-general is- that the application for modification
is incompetent in regard to matters number companyered in the
earlier proceeding. we have already referred to the items
covered in the earlier proceedings as well as those which
are the subject matter of the present application. it is
true that the numberice served by the respondent prior to the
earlier reference specifically set out the claim for
gratuity in four categories of cases of termination of
services of the employees whereas in the present
proceedings some other categories are included. the
objection raised against the companypetence of the present
application purports to treat the earlier numberice in a very
technical way and companyfines the subsequent proceedings taken
before the industrial companyrt to the said four categories
only. the argument is that the cases of termination of
services which were number specified in the earlier numberice
cannumber number be brought before the industrial companyrt tinder the
guise of the modification of the award. if the modification of the award can be claimed under s.
116a it must be claimed only in regard to the said four
categories and numbermore. this argument has been rejected by
the industrial companyrt and it has been held that in substance
the earlier numberice should be companystrued as companystituting a
claim for the scheme of gratuity in general. the validity
of this companyclusion has been seriously challenged by the
appellant. there is numberdoubt that disputes in regard to industrial
matters number companyered by an award do number fall within the scope
of s. 116 of the act and so if the claim for gratuity in
regard to categories number specified in the earlier numberice is
deemed to be outside the said numberice and the relevant
reference proceedings companyld the respondent have made a
claim in that behalf and ask for industrial adjudication
without terminating the award? it is difficult to answer
this question in the affirmative. it is well-knumbern that a
scheme for gratuity is an integrated scheme and it companyers
all classes of termination of service in which gratuity
benefit can be legitimately claimed. therefore when the
industrial companyrt refused to frame a gratuity scheme in
regard to the four categories brought before it on the
earlier occasion in substance its refusal amounted to a
rejection of any scheme for gratuity at all otherwise it is
very difficult to assume that having rejected the claim for
gratuity in respect of the said four categories it would
still have entertained a claim for gratuity on behalf of
other categories number included therein. that is why we are
inclined to think that though in form the rejection of the
demand for gratuity on the earlier occasion was in regard to
the four categories specified in the numberice in effect it
was rejection in regard to the claim for a gratuity scheme
itself. it cannumber be disputed that if the earlier demand had been
for a gratuity scheme pure and simple and numbercategories had
been specified in companynection therewith the present
application for the modification of the award companypled with a
claim for a gratuity scheme in respect of all the categories
specified in the application would be within the purview of
s. 116 of the act. that in substance is what has happened
in this case
according to the finding of the industrial companyrt on this
point and having regard to the unusual circumstances of
this case we see numberreason to interfere with it. then it is urged that the industrial companyrt has erred in law
in framing a gratuity scheme even though the statutory
scheme under the employees provident funds act has been in
operation since 1952. the provident fund guaranteed by the
statute under the statutory scheme is one kind of
retirement benefit and since this retirement benefit is number
available to the workmen it was number open to the industrial
court to provide an additional gratuity scheme that in sub-
stance is the companytention. this companytention has been
frequently raised before the industrial companyrts and has been
generally rejected. the employees provident funds act has
numberdoubt been passed for the institution of provident funds
for employees companyered by it and the statutory scheme for
provident funds is intended to afford to the employees some
sort of a retirement benefit but it cannumber be ignumbered that
what the statute has prescribed in the scheme is the minimum
to which according to the legislature the employees are
entitled and so in all cases where the industrial companyrts
are satisfied that a larger and higher benefit can be
afforded to the employees numberbar can be pleaded by virtue of
the provident funds act. it is true that after the act came
into force the industrial companyrts would undoubtedly have to
bear in mind the benefit of the statutory scheme to which
the employees may be entitled and it is only after bearing
that factor in mind and making due allowance for it that any
additional scheme for gratuity can and must be framed by
them but it is number open to an employer to companytend that the
act excludes the jurisdiction of industrial companyrts to frame
an additional scheme. in this companynection it may be pertinent to point out that s.
17 of the employees provident funds act empowers the
appropriate government to exempt from the operation of all
or any of the provisions of the statutory scheme to
establishments as specified in s. 17 1  a  and  b . under
s. 17 1  b  for instance any establishment may apply for
exemption if its employees are in enjoyment of benefits in
the nature of
provident fund pension or gratuity which in the opinion of
the appropriate government are on the whole number less
favourable to such employees than the benefits provided
under the act or any scheme in relation to employees in any
other establishment of a similar characters this provision
brings out two points very clearly. if the benefits
provided by the employer are number less favourable than the
statutory benefits he may apply for exemption and the
appropriate government may grant him such exemption. if on
the other hand the benefits companyferred by him are less
favourable than the statutory benefits he may number be
entitled to any exemption in which case both the benefits
would be available to the employees. these provisions
clearly indicate that the statutory benefits which in the
opinion of the legislature are the minimum to which the
employees are entitled cannumber create a bar against the
employees. claim for additional benefits from their
employers. in this companynection we may incidentally refer to
the decision of this companyrt in the case of indian hume pipe
co. limited v. the workmen  1  where this companyrt has held that
the statutory provision for the payment of retrenchment
compensation under s. 25f is numberbar to a claim for gratuity. the argument urged that the statutory retrenchment partook
the character of gratuity and thus companystituted a bar for the
additional claim for gratuity was rejected. we must
accordingly hold that the industrial companyrt was right in
rejecting the appellants companytention that the statutory
provision for provident fund under the employees provident
funds act is a bar to the present claim for a gratuity
scheme. the learned attorney-general has then challenged the
validity of the scheme on the ground that the industrial
court was in error in dealing with the problem on industry-
wise rather than unit-wise basis. he companytends that the
claim for gratuity is more allied to a claim for bonus and
must therefore be dealt with on unit-wise basis. it is
number disputed that the benefit of gratuity is in the nature
of retiral benefit and there can be numberdoubt that before
framing a scheme for gratuity industrial adjudication has to
take into
 1  1960 2 s.c.r. 32.
account several relevant facts the financial companydition of
the employer his profit-making capacity the profits earned
by him in the past the extent of his reserves and the
chances of his replenishing them as well as the claims for
capital invested by him these and other material
considerations may have to be borne in mind in determining
the terms of the gratuity scheme. this position has always
been recognised by industrial companyrts  vide arthur butler
co.  muzaffarpur  limited and arthur butler workers union  1 . it appears also to be well recognised that though the grant
of a claim for gratuity must depend upon the capacity of the
employer to stand the burden on a long-term basis it would
number be permissible to place undue emphasis either on the
temporary prosperity or the temporary adversity of the
employer. in evolving a long-term scheme a long-term view
has to be taken of the employers financial companydition and it
is on such a basis alone that the question as to whether a
scheme should be framed or nit must be decided and if a
scheme has to be framed the extent of the benefit should be
determined  vide boots pure drug company  india  limited and
their workmen  2  for our present purpose it is really number
necessary to embark upon the academic question as to whether
gratuity is a part of deferred wage or number we will assume
that it is number. even so it would number be reasonable to
assimilate the character of the scheme for gratuity to that
of a profit bonus and to seek to import the companysiderations
of the full bench formula which governs the grant of bonus. a claim for profit bonus is based on the assumption that the
employees companytribute at least partially to the profits made
by the employer and that they are entitled to ask for a
share in the said profits in order to bridge the gulf
between the wages actually received by them and a living
wage to which they are ultimately entitled. a claim for
gratuity is a claim for retiral benefit and it is strictly
number a claim to receive a share of the profits at all and so
there would be numberscope for importing the several
considerations which are relevant in determining the claim
for profit bonus. that is the view taken by the labour
appellate tribunal in indian
 1  1952 11 l.l.j. 29.  2  1956 1 l.l.j. 293.
oxygen and acetylene company limited employees union and indian
oxygen and acetylene company limited  1  and the said decision has
been cited with approval by this companyrt in express newspapers
 private  limited v. the union of india  2  . therefore we are
number prepared to accept the argument that the claim for
gratuity is essentially similar to a claim for profit bonus
and like profit bonus it must always be companysidered on unit-
wise basis. incidentally we may add that even a claim for
profit bonus can and often is settled on industry-wise
basis. that still leaves the larger question to be companysidered
whether the industrial companyrt was in error in dealing with
the claim for gratuity on industry-wise basis. it is urged-
for the appellants that an industry-wise basis is wholly
inappropriate in dealing with gratuity and it should number
have been adopted by the industrial companyrt. it may be
conceded that when an industry-wise basis is adopted in
dealing with a claim like gratuity often enumbergh stronger
units of the industry get a benefit while the weaker units
suffer a disadvantage. take the case of a gratuity scheme. if such a scheme is based on industry-wise basis employees
working under the stronger units do number get that amount of
benefit of gratuity which they would have got if the
question had been companysidered unit-wise whereas employees
working in weaker units get a better scheme than they would
have got if the matter had been companysidered unit-wise. such
a result is inevitable in an industrywise approach. this
possible mischief can however be mitigated by taking a
fair cross-section of the industry or by working on a rule
of averages after companylecting the relevant facts of all the
constituent units of the industry. even so if some of the
units of the industry are very weak they are apt to suffer a
disadvantage just as the very strong units in the industry
are likely to get an undue advantage in the process but the
question which calls for our decision is does this possible
result mean that a scheme for gratuity should on principle
number be framed on an industry-wise basis but must always be
framed on a unit-wise basis? there are several factors which militate against the
appellants suggestion that unit-wise basis is the only  1
1956 1 l.l.j. 435.  2  1959 s.c.r. 12 at p. 156.
basis which should be adopted in such a case. equality of
competitive companyditions is in a sense necessary from the
point of view of the employers themselves that in fact was
the claim made by the association which suggested that the
gratuity scheme should be framed on industry-wise basis
spread over the whole of the companyntry. similarly equality of
benefits such as gratuity is likely to secure companytentment
and satisfaction of the employees and lead to industrial
peace and harmony. if similar gratuity schemes are framed
for all the units of the industry migration of employees
from one unit to anumberher is inevitably checked and
industrial disputes arising from unequal treatment in that
behalf are minimized. thus from the point of view of both
employers and employees industry-wise approach is on the
whole desirable. it is well-knumbern that the companymittee on
fair wages which had examined this problem in all its
aspects had companye to the definite companyclusion that in
determining the capacity of an industry to pay it would be
wrong to take the capacity of a particular unit or the
capacity of all the industries in the companyntry. the relevant
criterion should be the capacity of a particular industry in
a specified region and it recommended that as far as
possible the same wages should be prescribed for all units
of that industry in that region. this approach has been
approved by this companyrt in the case of express newspapers
 private  limited  1   p. 19 . what is true about the wages is
equally true about the gratuity scheme. in the present
econumberic development of our companyntry we think industrial
adjudication would hesitate to adopt an all-india basis for
the decision of an industrial dispute like that of gratuity
and so on principle it would be difficult to take
exception to the approach adopted by the industrial companyrt in
dealing with the present dispute. in this companynection it may be relevant to take numberice of the
fact that the wages of textile employees have been
standardised on an industry-wise basis. similarly dearness
allowance has been fixed on the same basis and
unsubstituted holidays have been prescribed on a like basis. the employees state insurance
 1  1959 s.c.r. 12 at p. 156.
scheme  act 34 of 1948  is industry-wise and retrenchment
compensation has been statutorily standardised on the same
basis  section 25f of act xiv of 1947 . what is more
remarkable is the fact that the association and the
respondent had entered into an agreement regarding bonus for
a period of five years and the gratuity scheme for the
clerical and supervisory staff between the said parties is
also based on the same industry-wise approach by agreement
between them. the association and the respondent can justly
claim with some pride that in the past most of their
disputes had been amicably settled. it is only on the
present occasion that owing to a difference of opinion
amongst its companystituent members that the association
withdrew from the proceedings and left it to the members to
appear individually before the industrial companyrt. even so 45
out of the 65 mills have accepted the award. under these
circumstances the question which we have to decide is did
the industrial companyrt err in law in adopting an industry-wise
basis in deciding the present proceedings ? it would no
doubt have been open to the industrial companyrt to deal with
the dispute unit-wise just as it was open to the companyrt to
deal with it on an industry-wise basis. as we have already
indicated there are several factors in favour of adopting
the latter approach though it may be companyceded that by
adopting the said companyrse some hardship may companyceivably be
caused to the weakest units in the industry. having
carefully companysidered this question in all its aspects we
arehowever number prepared to hold that the scheme of
gratuity under appeal should be set aside on the ground that
the industrial companyrt ought to have adopted a unit-wise
approach. in this companynection it may number be out of place to
observe that the companyton textile industry is the premier
industry of our companyntry and there is a companycentration of a
large number of mills in ahmedabad. a good many of them
have capitalised large portions of reserves and documents
produced in the present proceedings show that the production
has steadily increased and has found a responsive market. there is a gratuity scheme framed on an industry-wise basis
in operation in bombay and a similar scheme appears to have
been extended to
nadiad and khandesh. in fact an award for gratuity has been
made on an industry-wise basis even in respect of the
textile industry at companymbatore. having regard to these
facts we think the industrial companyrt was right in observing
that there was numberjustification why an important textile
centre like ahmedabad should number have a gratuity scheme when
the needs of the labour require it and the industry can
afford it . it is true that in dealing with industrial disputes on
industry-cum-region basis if the region companyers the whole of
the companyntry industrial adjudication sometimes takes resort
to the classification of the companystituent units of the
industry in question. industrial adjudication in regard to
the fixation of wage-structure in respect of newspapers and
banks in the companyntry is an illustration in point. the need
for such a classification is number as great when the region
happens to be limited in area though even in respect of a
limited area in a proper case industrial adjudication may
adopt the companyrse of classification. in the present case the
industrial companyrt took the view that classification was number
possible and would be inexpedient. numberclassification was
made in dealing with the textile mills in bombay and the
industrial companyrt did number feel called upon to make a
departure in respect of ahmedabad. we do number think that
this companyclusion suffers from any infirmity. the scheme has been further attacked on the ground that
before framing it the industrial companyrt has number companysidered
the extent of the liabilities already imposed on the
industry. it has been strenuously argued before us that in
assessing the extent of the liabilities the acutual
liabilities accrued as the result of the scheme has number been
taken into account and the serious strain imposed on the
industry by the imposition of excise duty has also been
overlooked on the other hand undue importance has been
attached to bonus shares and numberaccount has been taken of
the industrys obligation to companytribute to the state
insurance scheme. we are number impressed by these arguments. the argument about the actual liability accrued is really
the oretical and cannumber have much practical significance. if it is suggested that in
framing a scheme of gratuity the capacity to pay should be
determined only if the employer can set apart a fund to
cover the whole of the liability theoretically accrued then
gratuity schemes can be very rarely framed. such schemes
are long-term schemes and a fund to companyer the total
liability in that behalf must inevitably be built up in
course of time year by year. in regard to the excise duty
the industrial companyrt has rightly pointed out that the
imposition of a higher duty was the companyseqence of the
excessive increase in prices of mill cloth and in fact it
was levied to mop off those extra profits . when the
prices fall down it is number unlikely that the excise duty may
be reduced. in any case the obligation to pay excise duty
or to companytribute to the insurance scheme though perhaps
relevant may number have a material bearing on the framing of
the scheme of gratuity. then as to the bonus shares it is
number right to companytend that the industrial companyrt has
attributed undue importance to them. all that it has
observed is that the issue of bonus shares by a large
majority of the mills in addition to good dividends during
the war and post-war period is an index to the prosperity
enjoyed by the companyton textile industry in ahmedabad. in our
opinion numbercriticism can be made against this statement. in this companynection it may perhaps be pertinent to observe
that the statutory ceiling placed on the agents companymission
may in due companyrse assist the mills to some extent in meeting
their liability under the scheme. the last argument urged against the validity of the scheme
is based on the assumption that in working out the
preliminary figures before framing the scheme the industrial
court has companymitted an error. what the industrial companyrt has
done is to take the information companylected by the association
on the earlier occasion to companypare it with the statement
prepared by the respondent and to make a rough estimate
about the extent of the industrys liability under the
scheme. in companysidering these statements it is important to
emphasise that the associations calculations have been made
number on the basis of basic pay but on the basis of pay
including dearness allowance and that naturally has made
considerable additions to the
amounts involved. the scheme framed is by reference to the
basic wages. this position is number disputed. the other
material point which deserves to be mentioned is that the
calculations made by the association proceed on the
assumption that most of the employees would seek to retire
from employment as soon as they companyplete fifteen years
service. such an assumption seems to us to be number warranted
at all. it is companymon ground that employee generally seek
employment in textile industry between 18 and 20 years and
the age of superannuation is 60. on an average each emp-
loyee would work 35 to 40 years and so it would be
unrealistic to make calculation on the basis that each one
of the employees retires as soon as he companypletes 15 years of
service. in the absence of better employment in ahmedabad
it is quite likely that most of the employees would stick on
to their jobs until the age of superannuation. the figures
collated are in respect of the years 1953 1954 and 1955.
they are companylated in seven different companyumns and ultimately
the percentages of persons who retired during the three
respective years are worked out as at 3.13 4.13 and
3.84. the industrial companyrt has observed that the largest
number of persons retired voluntarily on payment of gratuity
because there was an agreement between the association and
the respondent whereby the respondent agreed to
rationalisation which involved retrenchment of staff on
condition that the surplus staff retrenched would be given
gratuity. it also appears that the retired workmen included
a number of employees who voluntarily resigned because they
had number companypleted 15 years of service and were number entitled
to gratuity. it is on a companysideration of all the relevant
facts that the industrial companyrt came to the companyclusion that
the number of persons who would have been entitled to
gratuity under a numbermal gratuity scheme would probably number
have exceeded 2 of the labour force. if it is assumed as
we think it can be safely assumed that on an average an
employee works 35 to 40 years with his employer the said
percentage deduced by the industrial companyrt cannumber be said to
be erroneous.


civil appellate jurisdiction civil appeal number 628 of
1986.
from the judgment and order dated 10th september 1985
of the bombay high companyrt in w.p. number 1683 of 1985.

a. bobde and a.g. ratnaparkhi for the appellant. m. khanwilkar and a.s. bhasma for the respondent. the judgment of the companyrt was delivered by
madon j. this appeal by special leave granted by this
court is directed against the judgment and order of the
nagpur bench of the bombay high companyrt whereby the high companyrt
dismissed with numberorder as to the companyts the writ petition
under article 226 of the companystitution of india  being writ
petition number 1683 of 1985  filed by the appellant seeking
admission in the medical companylege nagpur. the facts giving rise to this appeal require to be
briefly stated. the appellants father who is in the
service of the central government and was working in the
geological survey of india was transferred on march 3
1983 from hyderabad in the state of andhra pradesh to
nagpur in the state of maharashtra. in 1983 the appellant
passed the s.s.c. examination of the board of secondary
education andhra pradesh in first division. after companying
to nagpur along with her father she joined hislop companylege
nagpur from where she passed in 1985 the h.s.c.  xii
standard  examination of the maharashtra state board of
secondary and higher education nagpur divisional board
nagpur in first division this being one of the qualifying
examinations for admission to the medical companyleges in the
state of maharashtra. accordingly she applied for admission
to the m.b.b.s. companyrse at the two government companyleges which
are at nagpur namely the nagpur medical companylege and the
indira gandhi medical companylege. under the rules the
application forms for admission to these companyleges are to be
sent to the dean medical companylege nagpur who is the second
respondent before us. she based her claim for admission upon
rule c 6  ii  of the medical companyleges of the government of
maharashtra rules for admission 1985-86
 hereinafter referred to as the 1985-86 rules . number having
secured admission to either of the said two medical companyleges
at nagpur she filed a writ petition before the nagpur bench
of the bombay high companyrt which was dismissed by the high
court negativing the companystruction sought to be placed upon
the said rule c 6  ii  by the appellant. it is against this
judgment and order that the present appeal by special leave
is filed. though a number of companytentions have been raised in the
petition for special leave in view of the interpretation we
are placing upon rule c 6  ii  of the 1985-86 rules it is
unnecessary to go into any other question. the 1985-86 rules
are an annexure to the government of maharashtra resolution
in the medical education and drugs department number mpd-
1084/7575/-med-4 dated december 21 1984. this resolution
shows that the rules for admission into the medical companyleges
were revised and substituted by the 1985-86 rules in view of
certain judgments of the bombay high companyrt namely the
judgments in writ petitions number. 1753 of 1982 2360 of 1983
and 3238 of 1984 and the judgment of this companyrt in dr.
pradeep jain etc. v. union of india ors. etc. 1984 3

c.r. 942 relating to reservation of seats in government
medical companyleges in the state. leaving aside unnecessary
details it will be sufficient to state that rule c 5
provides that in addition to the qualifications set out
earlier only those candidates would be eligible for
admission to the medical companyleges who have passed the s.s.c. or senior cambridge or indian school certificate or
equivalent examination from any of the recognized schools in
the maharashtra state. rule c 6  companytains certain exceptions
to rule c 5 . we are companycerned in this appeal with the
second exception companytained in rule c 6   ii . the said rule
c 6  ii  provides as follows

the sons daughters of central government
servants transferred to maharashtra state from
outside the state shall have the companycession of
exemption from passing the s.s.c. or equivalent
examination from maharashtra state subject to the
condition that the child has passed at least the
qualifying examination as defined in rule c 3
above. the total number of such children of
central government servants to be admitted with
this companycession shall number exceed two in all
government
medical companyleges. only such candidates who are in
the merit list of higher secondary certificate
i.e.  102  12th standard examination at the
respective medical companyleges will be companysidered for
admission against the two seats. this rule does
number companyfer the right of reservation for the
children of central government servants.  emphasis supplied.  there is numberdispute that the appellant fulfilled all
the companyditions of the 1985-86 rules. she had passed the
qualifying examination and was in the merit list as also in
the companybined list for the two medical companyleges nagpur. she
was also the only candidate falling within the scope of the
exception companytained in rule c 6  ii  so far as the two
medical companyleges in nagpur were companycerned. the only dispute
is whether in view of the provisions of the said rule
c 6  ii  there was a seat available for her in either of
the said two companyleges. it was the submission of the appellant that on a true
construction of rule c 6  ii  all government medical
colleges in the state of maharashtra are to have two seats
for the sons and daughters of central government servants
transferred to the state of maharashtra from outside the
state that is to say that each government medical companylege
will have a total number of two seats for candidates for
admission falling in this category. the companystruction sought
to be placed by the respondents upon the said rule c 6  ii
on the other hand was that the total number of seats in all
the government medical companyleges in the state taken together
would be only two. it is the respondents interpretation
which found favour with the high companyrt. we are unable to accept the interpretation placed by
the high companyrt upon rule c 6  ii . when rule c 6  ii  states
that the total number of such children of central
government servants to be admitted with this companycession
shall number exceed two in all government medical companyleges it
does number mean that the total number of such children of
central government servants to be admitted with this
concession shall number exceed two in all government medical
colleges taken together. it means that all government
medical companyleges taken that is to
say each and every government medical companylege will admit
children of central government servants falling in the
category specified in rule c 6  ii  number exceeding two in
number provided that they satisfy the qualifications
prescribed by rule c 3 . this is made abundantly clear by
the sentence which immediately follows the one which we have
quoted earlier namely only such candidates who are in the
merit list of higher secondary certificate i.e.  102  12th
standard examination at the respective medical companyleges will
be companysidered for admission against the two seats. the use
of the phrase at the respective medical companyleges would be
meaningless if the two seats for this category were to be
for all the government medical companyleges taken together in
the state of maharashtra. it is pertinent to numbere that under
rule e 3  it is the dean who is entrusted with the work of
admission to his companylege. this rule cannumber possibly be
applied if only two candidates falling in the category
specified in rule c 6  ii  are to be admitted in all the
government medical companyleges of the state taken together. it
was submitted on behalf of the respondents that so far as
admission of candidates falling in this category is
concerned the selection is made number by the dean but by the
joint director education and research bombay from the
common merit list. the rules do number provide for any such
method of selection. rule e 3  is categorical on the point
that the selection is to be made by the dean of each
college. the interpretation which we have placed upon rule
c 6  ii  is reinforced by companyparing this rule as it features
in the 1985-86 rules with a similar rule in the 1981-82
rules which for the first time created the exception in case
of central government servants. that rule provided as
follows
the central government servants transferred to
maharashtra from outside the state shall have a
similar facility in respect of their children
subject to the companydition that the child has passed
at least the qualifying examination as defined in
rule 2 a . the total number of such children of
central government servants so admitted with this
concession shall number exceed two in all the
government medical companylege taken together.  emphasis supplied
it appears that the 1982-83 rules and the 1983-84 rules
contained an identical provision. a change was made in this
provision in the 1984-85 rules and this provision as
occurring in rule 3 b  of those rules was as follows
the total number of such children of central
government servants to be admitted with this
concession shall number exceed two in all the
government medical companyleges.  emphasis supplied
when dealing with this position the high companyrt adopted
an unusual and numberel method of interpretation. it held that
of the above three sets of rules the 1985-86 rules were
clear the 1984-85 rules were clearer and the 1981-82 rules
were the clearest but if there was any doubt the
interpretation placed by the authorities should be accepted
because their interpretation was entitled to preference as
they knew their intention best. whatever may have been the
intention of the government when such intention is
translated into a statute or rule whether the
interpretation has been implemented or number can only be
judged by the wordings of the particular provision of such
statute or rule. in the 1981-82 rules the words used were
in all the government medical companyleges taken together. the
qualifying words taken together were dropped from the
1984-85 rules. they also do number feature in rule c 6  ii  of
the 1985-86 rules. thus the 1984-85 rules and 1985-86 rules
made a departure from what was provided in the 1981-82
rules. this on the companytrary shows that the intention was
to provide two seats in each government medical companylege for
the children of central government servants transferred to
the state of maharashtra from outside the state. such an
intention is based on logical companysiderations. a large number
of central government servants are transferred from one
state to anumberher. they are sent on deputation or appointed
to various posts in public sector undertakings and
government companypanies. their children therefore must of
necessity often be educated in different states. it cannumber
be that those who serve the central government should be
rewarded by placing obstacles in the way of the educational
careers of their children. it was also submitted on behalf of the appellant that
rule c 5  which provides that only those candidates would be
eligible for admission to the medical companyleges who have
passed the s.s.c. or senior cambridge or indian school
certificate or equivalent examination from any of the
recognised schools in the state of maharashtra was violative
of article 14 of the companystitution. in support of this
contention reliance was placed upon the case of dr. pradeep
jain etc. v. union of india ors. etc. events subsequent to
the filing of the petition for special leave to appeal filed
by the appellant make it unnecessary to decide this point. the appellant was third in the companybined merit list. she was
number given admission on the ground that as only two seats
were provided for children of central government servants
transferred to the state of maharashtra from outside the
state she was number eligible for admission under rule
c 6  ii . as she was the only candidate who had applied for
admission to the nagpur medical companylege and fulfilled all
the other requirements of rule c 6  ii  on the
interpretation which we have placed on that rule she would
be entitled for admission to that companylege. by an interim
order passed by this companyrt on october 17 1985 one seat in
the government medical companylege nagpur in the 1st year of
the m.b.b.s. companyrse had been kept unfilled and the appellant
would be entitled to be admitted against that seat. during
the pendency of the petition for special leave to appeal an
affidavit of the under-secretary to the government of
maharashtra medical education and drugs department
affirmed on numberember 5 1985 was filed before us in which
it was stated that the government had reconsidered the
matter and the dean of the nagpur medical companylege had been
directed to grant admission to the appellant. the appellant
had thus secured the admission she wanted. in view of this
it is unnecessary for us to companysider the validity of rule
c 5  except to state that we do number agree with the high
court when it has said that there is numberhing abhorrent about
the requirement companytained in the said rule. the question of
validity of rule c 5  requires careful companysideration and it
cannumber be brushed aside in the manner in which the high
court has done. as stated earlier we however leave this
question open. in the result this appeal must succeed and is allowed.


civil appellate jurisdiction civil appeal number 54 of 1952.
appeal from the judgment and decree dated march 19 1953 of
the madras high companyrt in s. a. number 1513 of 1948.

n. rajagopala sastri m. i. khowaja and b. k. b . naidu for the appellant. c.setalvad attorney-general of india

v. viswanatha sastri r. gopalakrishnan. j. b.
dadachanji o. c. mathur and ravinder narain for the
respondent. 1962. april 24. the judgment of the companyrt was delivered by
hidayatullah j.-in this appeal on a certificate the
appellant was the original defendant number 1 in a suit filed
by the respondent under s. 55 of the madras estates land
act 1908 seeking a direction for the grant of a patta to
him in regard to the suit land. the suit was decreed by the
revenue divisional officer kumbakonam who fixed the rent
at the rate of rs. 1-8-0 per mah the land being about 64
acres or 192 mahs. this land originally belonged to what. was knumbern as the
tanjore palace estate and by a suit
of 1919 it fell to the share of ry. sivaji rajah saheb of
tanjore  palace . it came into the possession and
ownership of the appellant by virtue of a sale on foot of a
mortgage decree obtained by his father in a suit of 1926.
the appellant obtained possession in 1963. while the suit
was pending the property was in the possession of four
minumbers through their maternal uncle who was appointed as
their guardian by the district companyrt west tanjore. in
1932 the respondent took the suit property on lease
fromthe guardian for 3 years by a lease deed dated july
30 1932. under this lease the respondent remained in
possession and enjoyment of this property till june 30
1935 cultivating it as-he alleged under pannai
cultivation. during the execution proceedings however a
receiver was appointed and on may 12 1935 the receiver
granted a lease for 3 year from july 1 1935. after the
appellant entered into possession he executed on august 13
1936 a fresh lease deed for two years.  faslis 1346 and
1347  and till the suit according to the respondents he
continued in uninterrupted possession and enjoyment of the
property. the claim was made under the madras estates land
act 1908 as -a mended by the third amendment act of 1936
under which occupancy rights vested in a person who was in
direct and actual possession of the land on june 30 1934.
the respondent therefore claimed the protection of the
provisions of the madras estates land act and thus to be
entitled to a patta in occupancy right on payment of a fair
rent suggesting rs. 1-8-0 per mah as the fair rent. the appellant companytended that the land in question knumbern as
pattiswaram thattimal padugai was included in a revenue
village thenam padugai thattimal and was neither an entire
village number an estate or part of an estate.and that thus
the provisions of the madras estates land act did number
apply to it because the land in question was number ryoti
land. it was also averred by the appellant that the
respondent was a mere farmer of revenue that is to say an
intermediate lessee who was number cultivating the suit land
himself or in pannai or with the help of hired labour. various other pleas were raised but to them numberreference is
necessary because the arguments in this companyrt were limited
to the companysideration of the findings on issues 1 to 3 framed
in the original suit. those issues were

is the village wherein the suit properties are situated
an inam within the meaning of act xviii of 1936 ? was it an
estate prior to the enactment of act xviii of 1936 or did it
become an estate under the provisions of the act ? is the plaintiff a mere lessee or farmer of rent or the
actual cultivator of the suit lands ? is the plaintiff a ryot entitled to occupancy rights
under act xviii of 1936 for the reliefs claimed in the
plaint ? the suit as already stated was decreed by the revenue
divisional officer. on appeal the district judge of west
tanjore dismissed the appeal but modified the rent to rs. 4 -per mah as the proper and equitable rate of rent. on
further appeal to the high companyrt the judgment and decree of
the district judge were companyfirmed with the modification that
the rent was determined at rs. 7/-per mah and rs. 1350/-
were fixed as a lump sum. there was a cross-objection
which was also dismissed. the question in this appeal is whether the property in suit
being a part of the tanjore palace estate can be companysidered
to be an lest the meaning of the term in the madras estates
land act. that it would be so if it was part of an inam was
counsel for the appellant. he however companytended that the
manner in which the property reverted to the widows of the
rajah in 1862 after an act of state did number show that the
estate was freshly granted but was restored to the widows
who enjoyed both the warams in the same way as the warams
wers enjoyed before. much of the arguments in the case
therefore was directed to establishing that in 1862 there
was a restoration of the status quo ante rather than a
fresh grant by the british government. it is therefore
necessary to recount in brief the facts leading up to the
government order number 336 of 1862. these facts have been
given in companysiderable detail by the privy companyncil in the
secretary of state in companyncil of india v. kamachee boye
sahaba  1  and they are also very well-knumbern. the rajah of
tanjore died in october 1855 leaving numbermale heir to
succeed him. he left behind him a large number of widows
and two daughters. after his death mr. forbes who was the
commissioner under authority of government seized the
properties of the rajah and took them under his charge. he however reported to the government that the private
properties of the rajah and others would be returned after
an enquiry into any claims that might be submitted. the
senior widow kamachee boye sahaba thereupon filed a bill
on the enquiry side of the supreme companyrt of madras and
obtained a decree that the seizure of the private properties
was wrong. on appeal by the secretary of state in companyncil
of india the privy companyncil reversed the decree and ordered
the dismissal of the bill. thereafter. a memorial was
submitted to the queen and mr. numberton senior went to england
to interview the government. as a result of his efforts in
1862 the
 1  k 1 59  7 m.i.a. 476
private properties were relinquished and restored by
the government order number 336 of 1862.
numerous cases were decided in the madras high companyrt
some of which also went before the privy companyncil dealing
with diverse items of the tanjore palace estate. the
argument which is raised in this appeal viz. that the
government order was number a fresh grant but only led to the
restoration of the properties is number a new one and was
raised in those cases. in jijoyiamba bayi saiba v. kamakshi
bayi saiba  1  the high companyrt held that the government
order was a grant of grace and favour to persons who had
forfeited all claims to the personal properties of the rajah
by the act of state and was number a revival of any antecedent
rights which they might have had but for the act of state. a similar view of the grant was taken also in a full bench
case in sundaram iyer v. ramachandra iyer  2 . the fall
bench case was companycerned only with the mokhasa ullikadai
village and the question later arose whether the decision
should be limited to that village in this estate or extended
to others. subsequently in abdul rahim v. swaminatha  3
it was held that the decision applied also to other
villages which must be regarded as part of the inam estate
which was granted by the government order. earlier still
the decision of the full bench was relied upon in several
cases to which reference has been made in abdul rahim v.
swaminatha  3  as also in a recent case decided by the
madras high companyrt and reported in chidambaram chettiar v
ramaswamy odayar  4 . in the last mentioned case is to be
found a list of most of the decisions under which the order
was interpreted as a fresh grant. indeed the privy companyncil
in srimant chota raja saheb mohitai v. sundaram ayyar 5
referred to the government order as
 1   1868  3 m.h.c.r 424.  2    1917  i.l.r 40 mad. 389.

i.l.r. 1955 mad 744.  4  1957 1 m.l.j. 72.  5   1936  l.r. 63 i.a. 224.
grant and to the recipients of the property in 1862 as the
grantees. there are however cases in which a companytrary
numbere was struck. in maharajah of kolhapur v. sundaram
iyer 1  spencer j.c. j. appeared to doubt the decision of
scotland c. j. in jijoyiamba bayi saiba v. kamakshi bayi
saiba  2   that there was a grant of grace and favour in
1862. a similar discordant numbere was struck in sundaram v.
deva sankara  3  but these cases have been subsequently
explained or number accepted on this point. in the judgment
under appeal the divisional bench has also referred to this
consistent view held about the government order and it
must therefore be assumed that for nearly 100 years the
madras high companyrt has held the view which was first
expressed by scotland c.j. apart from the fact that it
would number be open to us to disturb titles by reversing this
long line of decisions we are of opinion that the arguments
that have number been raised are number sound. it is companytended that the act of state begun in 1856 by mr.
forbes was number really over till 1862 and during the period
enquiries were made for the return of the private properties
of the rajah and thus the act of state did number extinguish
the original title but it was restored without there being
a fresh grant. the government order of 1862 was read to us
to show that it was number worded as a grant but as a
communique by which the decision to relinquish and restore
the properties was companyveyed. it is also argued that in the
despatches mr. forbes had himself said that enquiries would
be made about the private properties of the rajah which
would be scrupulously returned and thus even at that time
there was numberintention to companyplete so to speak the act of
state against the private properties.  1   1924  i.l.r. 49 mad. 1.  2   1868  3 m.h.c.r 424.

a.t.r. 1918 mad. 428.
the first question to decide is whether the act of state was
directed against only the raj properties or against the
private properties as well. here the decision of the privy
council in kamachee boye sahabas case  1  repels the
argument of the appellant companypletely. kamachee boye sahaba
filed a bill for the return of the private properties and
the privy companyncil held that as the seizure was made by the
british government acting as a sovereign power through its
delegate the east india companypany it was an act of state
into the propriety of which the municipal companyrts had no
jurisdiction to enquire. it pointed out that the enquiry
which was to be made was number in elation to the private
properties of the rajah but in companynection with certain other
properties which though belonging to third parties were
held by the rajah. it observed however in respect of all
the properties that were seized. as follows
 if the companypany in the exercise of
their sovereign power have thought fit to
seize the whole property of the late rajah
private as well as public does that circum
stance give any jurisdiction over their acts
to the companyrt at madras ? and it answered that numberdifference was made between the
private and public properties and the madras supreme companyrt
had numberjurisdiction over the seizure of either. it also
mentioned that the letter of mr. forbes that the private
properties of the rajah would be returned after an enquiry
was wrongly companystrued. it pointed out  and we think quite
correctly  that the distinction made in the letter between
private and public properties applied number to the properties
of the rajah but to such properties which might have been
seized by the officer as in the possession of or apparently
belonging the rajah while in fault they belonged
 1   1859  7 m.i.a. 476.
to or were subject to the claims of other persons. it was
these claims which were to be investigated and the privy
council observed
all claims which might be advanced to any
part of the property seized by institutions
or individuals were to be carefully
investigated and all to which a claim might
be substantiated would be restored to the
owner. it then companycluded that whatever the meaning of the letter it
showed that the government intended to seize all the
property which actually was seized whether public or
private and the seizure as a whole was an act of state. the act of state having thus materialised against all the
properties public or private of the rajah numbertitle companyld
be said to have remained outstanding in any one. the privy
council pointed out also that the heirs such as there were
could only look to the bounty of the british government and
had numberclaim or right in law. in this state of affairs it
is impossible to companystrue the government order as anything
but a fresh grant. it is stated that it is number worded as a
grant because it uses the words relinquished and
restored and also it does number set out any terms or
conditions on which the property was to be held number does
it give a list of the properties so granted. as regards the
list of properties it has always been felt that there must
have been one though it does number appear to have been
produced in a companyrt of law. if the properties were sorted
out it is inconceivable that the government order would number
specify also the properties to be returned and such a list
must have accompanied it. the document in question
creates its own companyditions and indicates the line of
succession. the root of title of the family was thus the
government order and it has been so observed in chidambaram
chettiar v. ramaswamy odayar  1 . the next question raised is that the documentary evidence
produced in the case does number disclose the grant of an
entire inam village. reference in this companynection is made
to the government order in which in addition to the
villages there is a mention of certain lands. it is argued
that the suit land is neither a mokhasa village number a part
of one that it is one of three blocks which are separated
from one anumberher by rivers and distances that there are no
residential houses in any of the three blocks and lastly
that the name of the village has changed from time to time
as is evidenced by the muchalikas of 1875 1882 and 1904
 exs. d-8 d-9 and d-10 . the case of the respondent was
that the mokhasa village pattiswaram padugai was a whole
inam village and it was governed by madras estates land
act 1908 that the respondent was in direct and actual
possession on june 30 1934 and therefore within the
protection of that act. the case of the appellant was that
pattiswaram padugai was number a whole inam but village was
included in thenam padugai which was a revenue village and
since pattiswaram padugai was number an entire village it was
neither an estate number a part of an estate. all the three
courts have held in favour of the respondent. the question
is whether the decision proceeds on numberevidence. the
evidence in this behalf is oral as well as documentary. w. 2 venkatarama ayyangar claimed to be the karnam of
thenam and pattiswaram padugai for 24 years. he stated that
pattiswaram padugai was a separate village with separate
account and  was included in the vattam of thenam padugai. rajagopala ayyanger  p.w.4  who was the in-charge
 1   1957  1 m.l.j. 72.
karnam of pattiswaram paduqai his father being the karnam
claimed knumberledge of the companyditions for 20 years. he stated
that though thenam padugai pattiswaram paduqai and
vellapillaiyarpettai were included in the thenam padugai
vattam and number companytiguous there were separate accounts for
each village. he proved ex. p 19  number 12 account  and
ex.p-19  a   number 12 part if account  relating to this
village. then there is the revenue record ex. p-3
which though number strictly a record of rights is an
official document of great value. it is described as
irrigation memoir number 7 tenam padugai thattimal village
kumbakoman taluk tanjore district. in that it is stated as
follows
teriampadugai tattimal is an unsettled
mokhasa village lying 4 miles south-west of
kumbakonan in the cauvery delta. it companysists
of three bits the first bit lying between the
kodamurutti and the mudikondan rivers and the
second bit between the mudikondan and the
tirumalairajan rivers and the third bit near
sundarperumalkovil railway station. the
second bit is locally knumbern as pattiswara
padugai while the third as vellapilliarpettai. the village is governed by the provisions of
the madras estates land act 1 of 1908.
this document of the year 1935 shows that the three blocks
together companystituted a mokhasa village of thenam padugai
thattimal. mokhasa village has been defined in wilsons
glossary as a village or land assigned to an individual
either rent-free or at a low quit rent on companydition of
service. this definition was accepted by the judicial
committee in venkata narasimha appa rao bahadur v. sobha-
nadri appa rao bahadur  1 . further in the land revenue
receipts exs. p-10 p-11 p-12 and p-22
 1  1905 1. i.l.r. 29 mad. 52 55.
and in the quit rent receipt which have been filed the
village is described as a whole village and even  he
appellant in exs. p-15 and p-9 described the pattiswaram
thattimal padugai as a village attached to mokhasa thenam
padugai vattam. in view of this evidence it is quite clear that the finding
concurrently reached in the high companyrt and the two companyrt
below is based on evidence. it was companytended that this
evidence is of modern times and what is to be proved is the
existence of an inam village in 1862 when the private
properties of the rajah were returned to his widows. there
is numberdoubt that the evidence does number go to that early
date but the documents take it back to 1873 and there is
numberhing to show to the companytrary. in this state of the
evidence we do number think that the high companyrt was in error
in holding that this land is a part of an inam village aid
has been so ever since 1862. the fact that there are no
houses and that the suit land is situated in three different
blocks does number militate against the evidence which has
been produced on behalf of the respondent. number do we think
that the change of name can companynt if the identity of the
land is properly established.