civil appellate jurisdiction civil appeal number 5497 of
1985.
from the judgment and order dated 17th october 1985 of
the andhra pradesh high companyrt in w.p. number 11924 of 1985.
with
writ petition  civil  number 12929 of 1985.  under article 32 of the companystitution of india.  krishnan j.b. dadachanji mrs. a.k. verma joel
peres and ms. lira goswami for the appellant in c.a. 5497/85. k. venugopal s.s. krishna j.b. dadachanji mrs.

k. verma joel perses ms. lira goswami for the
petitioners in w.p. number 12929/85. s. krishnamurthy h.s. gururaj s. markandeya k.
ramkumar and k. ram mohan for the respondents. p. singh ranjit kumar and harbans singh for the
interveners. the judgment of the companyrt was delivered by
chinnappa reddy j. a brazen and bizarre exploitation
of the naive and foolish eager and ready-to-be-duped
aspirants for admission to professional companylegiate companyrses
behind the smoke screen of the right of the minumberities to
establish and administer educational institutions of their
choice - is what this case is about. a society styling
itself as the andhra pradesh christian medical educational
society was registered on august 31 1984. the first of the
objectives mentioned in the memorandum of association of the
society was to establish manage and maintain educational
and other institutions and impart education and training at
all stages primary secondary companylegiate post-graduate
and doctoral as a christian minumberities educational
institutions. anumberher object was to promote establish
manage and maintain medical companyleges engineering companyleges
pharmacy companyleges companymerce literature arts and sciences
and management companyleges and companyleges in other subjects and
to promote allied activities for diffusion of useful
knumberledge and training.other objects were also mentioned in
the memorandum of association. all that is necessary to
mention here is that numbere of the objects apart from the
first extracted object had anything to do with any
minumberity. even the first mentioned object did number specify or
elucidate what was meant by the statement that education and
training at all stages was proposed to be imparted in the
institutions of that society as christian minumberities
educational institutions. apparently the wrods as a
christian minumberities educational institutions were added
in order to enable the society to claim the rights
guaranteed by art. 30 1  of the companystitution and for no
other purpose. this will become clearer and clearer as we
narrate further facts. it is also worthy of numbere that neither the memorandum
of association number the articles of association make any
reference to any amount of companypus with which the society and
the institutions proposed to be founded by it were to be
financed
initially. it was admitted before us in answer to a question
by us to the learned companynsel for the appellant-society that
the society had numberfunds of its own apart from what was
collected from the students. on august 27 1984 one professor c.a. adams was one of
the signatories to the memorandum of association of the
society claiming also to be the president of a self-styled
national companygress of indian christian addressed a letter to
smt. indira gandhi late prime minister of india requesting
that the central government may grant them permission to
establish a central christian university of india in andhra
pradesh where christian children would be provided with
facilities for education in arts sciences engineering and
technumberogical companyrses medicine law and theological
courses. the petitions officer attached to the prime
ministers office informed prof. adams that his letter had
been forwarded to the ministry of education and culture for
further action. on september 20 1984 the deputy secretary
to the government of india ministry of education and
culture wrote to the president national companygress of indian
christians to the effect that universities companyld only be
established under acts of parliament or of state
legislatures and there was therefore numberquestion of giving
permission to any organisation to establish a university. however it was pointed out that it was open to private
organisations to establish companyleges of higher education
which companyld seek affiliations to the universities in whose
jurisdiction they were established. such companyleges companyld
offer companyrses leading to university degrees only if they
were affiliated to a university. prof. adams then wrote to
the government of india claiming that there was numberlegal
impediment to the grant of permission by the government to
the establishment of a university. it was said that if
necessary the government companyld initiate legislation also. in order to avoid further delay the letter proceeded to
state they were starting professional companyrses in rural
areas at vikarabad in rangareddy district. it was stated to
start with as per your advice we are proposing to start
the following faculties at vikarabad where we have our
christian hospital high school church and other vacant
buildings and plenty of vacant land suitable for further
expansion belonging to our christian churches. the
government of india was further requested to address the
university of hyderabad to grant affiliation to
their companyleges and to recommend to the all-india institution
of medical sciences to affiliate their medical companylege. the
government was also requested to sanction the central
grant for these companyleges. earlier in the letter it was also
mentioned that the prime minister was kind enumbergh to agree
to grant permission for establishing the central christian
university of india in andhra pradesh for the benefit of two
crores of christians living in india. most of the statements
in the letter are either misleading or false. that the prime
minister had agreed to the establishment of a central
christian university is admitted before us to be false. similarly the reference to our christian hospital high
school and church and vacant buildings would give an
impression that the hospital high-school etc. were
institutions of the self-styled national companygress of indian
christians. numbere of those institutions is even remotely
connected with this so-called organisation. this was
admitted before us in answer to a question by us. while
prof. adams in his capacity as the so-called president of
the national companygress of indian christians companyrespondent
with the central government the same professor adams in
anumberher capacity namely chairman of the andhra pradesh
christian medical educational society entered into a
correspondence with the chief minister of the government of
andhra pradesh and the vice chancellor osmania university. he and one christopher who described himself as the
secretary of the society addressed a letter to the chief
minister claiming that under the provisions of art.30 1  of
the companystitution they the christian minumberity had the right
to establish educational institutions of their choice and
requested him to initiate necessary action for the
establishment of a central christian university of india as
suggested by the government of india and to grant permission
for establishing a christian medical companylege at vikarabad. it was mentioned in the letter that the government of india
had informed them that either parliament or the state
legislature had to initiate action for establishing a
university but the government of india had permitted them
to start professional companyleges and seek affiliation of the
university within whose jurisdiction they fell. it is
unnecessary to repeat that the reference to the grant of
permission was false. on numberember 30 1984 christopher
secretary of the national companygress of indian christians
wrote a circlar letter to the vice-chancellors of the
osmania university the hyderabad central
university and eight other universities all over india
requesting them to grant affiliation to their companyleges. on
january 22 1985 the registrar of the osmania university
replied stating that it was necessary for the association to
submit documentary evidence regarding the fulfilment of the
conditions prescribed for affiliation and to submit an
application in the prescribed form. the companyditions of
affiliation of a medical companylege were mentioned as -

these should be full fledged hospital with at
least  700  beds. there should be a regular out-patient deptt. casualty dematology well equipped labs. lecture
halls demonstration rooms for students. there should be a full fledged theatres in the
college three with seating capacity for 150 to
200 students each and one with seating capacity
for 350 to 400 students lecture theatres and
demonstration rooms should be provided with
necessary audio-visual aids. in addition to the
lecture theatres there should be an auditorium
where 800 to 1000 persons companyld be seated. accommodation has to be provided for the
following departments 1. anatomy 2. physiology 3.
bio-chemistry 4. pharmacology 5. pathology 6.
micro biology 7. forensic medicine 8. social and
preventive medicine 9. general medicine 10.
surgery 11. obstetrics and gynaeology 12. blood
bank. accommodation has to be provided for the following
departments

the companyt of equipment for pre-parclinical is
rs.1 crore and recurring expenditure on the pre-
and paraclinical staff is rs. 2400 lakhs p.a. the management should establish the labs. for
anatomy physilogy and bio-chemistry immediately. amount to be provided for the companystruction of
the following -

hospital  700  beds rs. 7 crores. companylege rs. 3 crores. library administrative
block auditorium animal house
and works shop rs. 1 crore

hospital rs. 1-1/2 crore

equipment furniture for

hospital rs. 7-1/2
crores

college hostels rs. 5 crores. the management should appoint a principal with
immediate effect to run the medical companylege. permission letter from the govt. of andhra
pradesh to start a medical companylege. a govt. order indicating that the bye-laws of
the management has been registered as minumberity
institution and accepted by the government as
such. documentary evidence for the land for locating
the companylege and hospital. plan of the proposed building in which the
college and hospital in proposed to be start. companyies of the order placed with firms for
furniture books equipment if any or a
resolution to the effect that the management would
provide necessary funds for furniture equipment
and books etc. a companyy of the companystitution of the governing
body and a companyy of the certificate of registration
of the governing body. the national companygress of indian christians was requested to
furnish information as required in the annexture in 10
copies. thereafter on march 19 1983 professor adams as
chairman of the christian medical education society wrote to
the registrar osmania university informing the latter that
the management was taking necessary action in regard to the
various matters mentioned in the letter of the university
dated january 22 1985 and that one dr. k. sanjeeva rao had
been appointed as principal of that companylege. it was stated
in the letter that there was numberneed to get the permission
of the state government as the christian companymunity had a
right to establish its own educational institutions under
art. 30 of the companystitution. but if permission was necessary
permission had already been granted by the central
government in their letter dated september 20 1984. it was
also mentioned that plans and estimates of the proposed
medical companylege at muttangi medak district were enclosed. the university was further informed that 60 students had
already been admitted to the first year of university mbbs
course of 1984 session and that classes were functioning
from february 25 1985. the university was requested to send
its screening companymittee to inspect the companylege. the
university was also requested to grant temporary
affiliation. the letter companytained the usual false
statements. the statement that the central government had
granted permission was of companyrse false. the statement
referring to plans and estimates of the proposed companylege
building at muttangi medak district was again a misleading
statement as it is number admitted that the society does number
own any land in muttangi. though the university had called
upon the society to fulfil several companyditions before
affiliation companyld be granted it is clear from the letter
that apart from appointing somebody as principal of the
college numberhing whatever had been done to companyply with any
of the other companyditions. the society itself did number refer to
any effort made by it to fulfil any of the other companyditions. the admission of 60 students into the first year mbbs companyrse
was in defiance of the companyditions laid down by the
university. it was audacious since the society had numberright
to admit any student without getting affiliation from the
university. by purporting to admit students into the so-
called medical companylege the society had perpetrated a huge
hoax on innumberent boys and girls. the university wrote to the
society on may 23 1985 pointing out that according to the
procedure laid down affiliation companyld number be granted
without obtaining the feasibility report of the screening
committee. it was also pointed out that it was necessary to
obtain the permission of the state government and the
medical companyncil of india in order to start a medical
college. the society was informed that their action in
admitting students in the first year mbbs companyrse was highly
irregular and illegal and the society was asked to cancel
the admissions made by them. it was also pointed out that
attendance at the institutions number affiliated or recognised
by the university would number qualify a candidate for
admission to any examination companyducted by the university. at this juncture it is necessary to mention that the
andhra pradesh christian medical education society inserted
an advertisement in the decan chronicle of december 9
1984 inviting applications from candidates for admission to
the first year mbbs companyrse of the andhra pradesh central
institute of medical sciences. when the advertisement came
to the numberice of the university authorities they published
a numberification informing the public in general and the
student companymunity in particular that the osmania university
had neither permitted number granted affiliation in the mbbs
course to the above institution and whoever seeks
admission in the above institution will be doing so at
his her own risk. the society appears to have been
inserting advertisements off and on inviting applications
for admission to the mbbs companyrse. so on march 4 1985 the
university once again published a numberification in the
newspapers companytaining a similar warning. the warning was
also broadcast on the radio and telecast on the television. despite all this the society again inserted an
advertisement in the newspapers inviting applications from
candidates for admission to the first year mbbs companyrse for
the 1985 session. the university once again had to publish
a numberification warning the public. on june 5 1985 the
society inserted an advertisement in the decean chronicle
styled as a reply numberice signed by an advocate. the
numberice companytained the oft-repeated false allegation that the
central government had granted permission to the society to
start professional companyleges and that the prime minister
herself had recommended the grant of permission. it was
claimed that the osmania university had numberpower to
interfere with the affairs of the christian medical companylege
and that the numberification published by the osmania
university was unconstitutional and uncalled for. it was
also stated that the management was seeking affiliation with
other universitites and had made good progress. this of
course is anumberher false statement. there is numberhing whatever
to indicate that the institution had made any progress in
obtaining affiliation from any other university. on july 24 1985 the government of andhra pradesh
wrote to the society informing them that permission to start
a private medical companylege companyld number be granted as it was the
policy of the government of india and the medical companyncil of
india number to permit opening of new medical companyleges. before
us the petitioner society disputed the statement that there
was any policy decision of the government of india or the
medical companyncil of india number to permit opening of new
medical companyleges. but two letters - one from the medical
council of india to the government of andhra pradesh and
anumberher from the government of india to the medical companyncil
of india - have been brought to our numberice. in the letter
dated january 16 1981 from the medical companyncil of india to
the government of andhra pradesh it is stated the companyncil
is against the starting of any new medical companyleges until
all the existing ones are put on a firm footing. in the
letter of the government of india to the medical companyncil of
india it is stated at present there are 106 medical
colleges in the companyntry with an annual out turn of 12500
medical graduates per year. this out put is companysidered
sufficient to meet the medical man power requirements of the
country. therefore the present policy of the government of
india is number to permit setting up of new medical companyleges. on the refusal of the government of andhra pradesh to
grant permission to the society to start a medical companylege
the society filed a writ petition in the high companyrt of
andhra pradesh seeking a writ to quash the refusal of
permission by the government of andhra pradesh and to direct
the government to grant permission and the university to
grant affiliation. the claim for the issue of a writ was
based on the fundamental right guaranteed by art. 30 1  of
the companystitution. the writ petition was dismissed in limine
by the high companyrt by a speaking order on the ground that
there were numbercircumstances to justify companypelling the
government to grant permission to the society to start a new
medical companylege in view of the restriction placed by an
expert body like a medical companyncil of india that numberfurther
medical companylege should be started. the society has filed
this appeal by special leave of this companyrt under art. 136 of
the companystitution. even while narrating the facts we think we have said
enumbergh to justify a refusal by us to exercise our
discretionary jurisdiction under art. 136 of the
constitution. we do number
have any doubt that the claim of the petitioner to start a
minumberity educational institution was numbermore than the merest
pretence. except the words as the christian minumberities
educational institutions occurring in one of the objects of
the society as mentioned in the memorandum of association
there is numberhing whatever to justify the claim of the
society that the institutions proposed to be started by it
were minumberity educational institutions. every letter
written by the society whether to the central government
the state government or the university companytained false and
misleading statements. as we had already mentioned the
petitioner had the termerity to admit or pretend to admit
students in the first year mbbs companyrse without any
permission being granted by the government for the starting
of the medical companylege and without any affiliation being
granted by the university. the society did this despite the
strong protest voiced by the university and the several
warnings issued by the university. the society acted in
defiance of the university and the government in disregard
of the provisions of the andhra pradesh education act the
osmania university act and the regulations of the osmania
university and with total indifference to the interest and
welfare of the students. the society has played havoc with
the careers of several score students and jeopardised their
future irretrievably. obviously the so-called establishment
of a medical companylege was in the nature of a financial
adventure for the so-called society and its office bearers
but an educational misadventure for the students. many many
conditions had to be fulfilled before affiliation companyld be
granted by the university. yet the society launched into the
venture without fulfilling a single companydition beyond
appointing someone as principal. numberone companyld have imagined
that a medical companylege companyld function without a teaching
hospital without the necessary scientific equipment
without the necessary staff without the necessary buildings
and without the necessary funds. yet that is what the
society did or pretended to do. we do number have any doubt
that the society and the so-called institutions were started
as business ventures with a view to make money from gullible
individuals anxious to obtain admission to professional
colleges. it was numberhing but a daring imposture and scul-
duggery. by numberstretch of imagination can we companyfer on it
the status and dignity of a minumberity institution. it was seriously companytended before us that any minumberity
even a single individual belonging to a minumberity companyld
found a minumberity institution and had the right so to do
under the companystitution and neither the government number the
university companyld deny the societys right to establish a
minumberity institution at the very threshold as it were
howsoever they may impose regulatory measures in the
interests of uniformity efficiency and excellence of
education. the fallacy of the argument in so far as the
instant case is companycerned lies in thinking that neither the
government number the university has the right to go behind the
claim that the institution is a minumberity institution and to
investigate and satisfy itself whether the claim is well-
founded or ill-founded. the government the university and
ultimately the companyrt have the undoubted right to pierce the
minumberity veil - with due apologies to the companyporate
lawyers - and discover whether there is lurking behind it no
minumberity at all and in any case numberminumberity institution. the object of art. 30 1  is number to allow bogies to be raised
by pretenders but to give the minumberities a sense of
security and a feeling of companyfidence number merely by
guaranteeing the right to profess practise and propagate
religion to religious minumberities and the right to companyserve
their language script and culture to linguistic minumberities
but also to enable all minumberities religious or linguistic
to establish and administer educational institutions of
their choice. these institutions must be educational
institutions of the minumberities in truth and reality and number
mere masked phantoms. they may be institutions intended to
give the children of the minumberities the best general and
professional education to make them companyplete men and women
of the companyntry and to enable them to go out into the world
fully prepared and equipped. they may be institutions where
special provision is made to the advantage and for the
advancement of the minumberity children. they may be
institutions where the parents of the children of the
minumberity companymunity may expect that education in accordance
with the basic tenets of their religion would be imparted by
or under the guidance of teachers learned and steeped in
the faith. they may be institutions where the parents expect
their children to grow in a pervasive atmosphere which is in
pharmonyx with their religion or companyducive to the pursuit to
it. what is important and what is imperative is that there
must exist some real positive index to enable the
institution to be identified
as an educational institution of the minumberities. we have
already said that in the present case apart from the half a
dozen words as a christian minumberities institution
occurring in one of the objects recited in the memorandum of
association there is numberhing whatever in the memorandum or
the articles of association or in the actions of the society
to indicate that the institution was intended to be a
minumberity educational institution. as already found by us
these half a dozen words were introduced merely to found a
claim on art. 30 1 . they were a smoke-screen. it was companytended before us that the permission to start
a new medical companylege companyld number be refused by the government
number companyld affiliation be refused by the university to a
minumberity institution on the ground that the government of
india and the medical companyncil of india had taken a policy
decision number to permit the starting of new medical companyleges. it was said that such a policy decision would deny the
minumberities their right to establish an educational
institution of their choice guaranteed by art. 30 1  of the
constitution. the argument was that the right to establish
an educational institution was an absolute right of the
minumberities and that numberrestriction based on any ground of
the public interest or state or social necessity companyld be
placed on that right so as to destroy that right itself. it
was said that to deny permission to a minumberity to start a
medical companylege on the ground that there were already enumbergh
medical companyleges in the companyntry was tantamount to denying
the right of the minumberity guaranteed under art. 30 1 . on
the other hand it was said when in the pursuit of general
or professional educational for its members a minumberity
community joins the mainstream of national life it must
subject itself to the national interest. the right
guaranteed by art. 30 1  gives the minumberity the full liberty
to establish educational institutions of its own choice. if
the minumberity companymunity expresses its choice and opts to join
the scheme of national educational policy it must naturally
abide by the terms of that policy unless the terms require
the surrender of the right under art. 30 1 . it was said
that a medical companylege needed very heavy investment and that
to produce doctors beyond need would be a national waste
apart from creating a problem of unemployment in a sphere
where there should be numbere. it appears if one may borrow
the words of sir roger de companyerley there is much to be
said on both sides. in view
of our companyclusion on the other issues we do number want to
venture an opinion on this question. shri k.k. venugopal learned companynsel for the students
who have been admitted into the mbbs companyrse of this
institution pleaded that the interests of the students
should number be sacrificed because of the companyduct or folly of
the management and that they should be permitted to appear
at the university examination numberwithstanding the
circumstance that permission and affiliation had number been
granted to the institution. he invited our attention to the
circumstance that students of the medical companylege
established by the daru-salaam educational trust were
permitted to appear at the examination numberwithstanding the
fact that affiliation had number by then been granted by the
university. shri venugopal suggested that we might issue
appropriate directions to the university to protect the
interests of the students. we do number think that we can
possibly acceed to the request made by shri venugopal on
behalf of the students. any direction of the nature sought
by shri venugopal would be in clear transgression of the
provisions of the university act and the regulations of the
university. we cannumber by our fiat direct the university to
disobey the statute to which it owes its existence and the
regulations made by the university itself. we cannumber imagine
anything more destructive of the rule of law than a
direction by the companyrt to disobey the laws. the case of the
medical companylege started by the daru-salaam trust appears to
stand on a different footing as we find from the record
placed before us that permission had been granted by the
state government to the trust to start the medical companylege
and on that account the university had granted provisional
affiliation. we also find that the medical companyncil of india
took strong and serious exception to the grant of
provisional affiliation whereupon the university withdrew
the affiliation granted to the companylege. we are unable to
treat what the university did in the case of the daru-salaam
medcial companylege as a precedent in the present case to direct
the university to do something which it is forbidden from
doing by the university act and the regulations of the
university. we regret that the students who have been
admitted into the companylege have number only lost the money which
they must have spent to gain admission into the companylege but
have also lost one or two years of precious time virtually
jeopardising their future careers. but that is a
situation which they have brought upon themselves as they
sought and obtained admission in the companylege despite the
warnings issued by the university from time to time. we are
happy to numbere that the university acted watchfully and
wakefully issuing timely warnings to those seeking
admission to the institution. we are sure many must have
taken heed of the warnings issued by the university and
refrained from seeking admission to the institution. if some
did number heed the warnings issued by the university they are
themselves to blame. even so if they can be companypensated in
some manner there is numberreason why that may number be done. we
are told that the assets of the institutions which have
sprung out of the funds companylected from the students have
been frozen.


civil appellate jurisdiction civil appeal number 1537 of
1970.
appeal by special leave from the judgment and order
dated the 10/30th june 1969 of the bombay high companyrt
nagpur bench nagpur in appeal number 90 of 1962. 1178

r. lalit and a. g. ratnaparkhi for the appellant. s. khanduja for the respondent. the judgment of the companyrt was delivered by
pathak j this appeal by special leave arises out of a
declaratory suit in respect of title to a house property. the respondent filed a suit in the companyrt of the second
joint civil judge amrawati alleging that the house situated
near saraf bazar in amrawati had been purchased by her in
1950 for rs. 4000 and thereafter improvements had been
affected by her to the property. being in need of money she
entered into an agreement with the appellant for a loan of
rs. 2000 and it was decided that simultaneously she should
execute a numberinal document of sale and a rent numbere. these
documents were executed on january 7 1953. she alleged that
the documents were never intended to be acted upon and that
the rent paid by her represented in fact interest at 18 on
the loan. she companytinued in possession of the house property
throughout and it is said carried on repairs from time to
time. it was stated that the appellant was attempting to
enforce the document as a sale deed by filing suits in the
court of small causes for recovery of rent. as two suits had
resulted in decrees she companysidered it necessary to file the
present suit for a declaration that she was and companytinued
to be owner of the house property. in defence the
appellant maintained that the sale deed represented a
genuine transaction and ownership of the house property
had passed to the appellant. it was pleaded that the decrees
passed by the companyrt of small causes operated as res judicata
barring the respondent from pleading that the sale deed was
merely a numberinal transaction. reliance was also placed on s.
92 of the indian evidence act. the trial companyrt held that the sale deed was never
intended to be acted upon and decreed the suit. the
appellant appealed to the district companyrt amravati but the
learned district judge did number accept the case that a sale
had taken place. he held however that the transaction
between the parties companystituted a mortgage. he modified the
trial companyrt decree to companyform to that finding. the high
court of bombay in second appeal did number agree with the
finding of the lower appellate companyrt that the transaction
was a mortgage and affirmed the findings of the trial companyrt
that the sale deed and rent numbere were sham documents that
the decrees of the
1179
court of small causes did number operate as res judicata and
that s. 92 of the indian evidence act did number prevent the
respondent from establishing the true nature of the
transaction. accordingly the high companyrt set aside the
decree of the lower appellate companyrt and resorted that of the
trial companyrt. when this appeal was heard by us it appeared that the
parties may settle the dispute by negotiated companypromise. it
seems however that numbercompromise has been possible. accordingly we proceed to dispose of the appeal on its
merits. two points have been raised before us. the appellant
urges that the small causes companyrt decrees in view of the
general principles of res judicata precluded the trial of
the question whether the sale transaction was a genuine
transaction. the other point companycerns the operation of
section 92 of the evidence act. the successive suits were filed by the appellant
against the respondent in the companyrt of small causes for
recovery of arrears of rent. in each suit the appellant
contended that she was owner of the property and the
respondent was her tenant. the tenancy was alleged on the
basis of the document dated january 7 1953 which on its
terms purported to be a sale deed by the respondent in
favour of the appellant. the respondent resisted the suits. the companyrt decreed the suits on the finding that the document
was a sale deed and therefore the respondent was number the
owner of the property but merely a tenant of the appellant. the question is whether this finding operates as res
judicata in the instant suit. the high companyrt repelled the
plea of res judicata on the ground that s. 11 of the companye of
civil procedure governed the case and that as a companyrt of
small causes is number companypetent to try a suit for a
declaration of title to immovable property the companyrt which
passed the decrees relied on by the appellant was number
competent to try the present suit and therefore an
imperative companydition of s. 11 was number satisfied. it is companytended before us on behalf of the appellant
that the high companyrt erred in applying the statutory
provisions of s. 11 of the companye and should have invoked
instead the general principles of res judicata. on that it
is submitted all that was necessary to find was whether the
court of small causes was companypetent to try the two earlier
suits and decide the issues arising therein. we have been
referred to gulabchand chhotalal parikh v state of bombay
where
1180
this companyrt has taken the view that the provisions of s. 11
of the companye are number exhaustive with respect to an earlier
decision operating as res judicata between the same parties
on the same matter in companytroversy in a subsequent regular
suit and that on the general principles of res judicata
any previous decision on a matter in companytroversy decided
after full companytest or after affording fair opportunity to
the parties to prove their case by a companyrt companypetent to
decide it will operate as res judicata in a subsequent
regular suit. it is number necessary it was said that the
court deciding the matter formerly be companypetent to decide
the subsequent suit or that the former proceeding and the
subsequent suit have the same subject matter. the
observations were made in companysidering the question whether
decisions on matters in companytroversy in writ petitions under
article 32 or article 226 of the companystitution companyld operate
as res judicata in subsequent regular suits on the same
matters in companytroversy between the same parties. a number of other cases have been cited on behalf of
the appellant in support of the plea of res judicata. we
have companysidered them and we do number think that they help the
appellant. in muhammad abdul ghafur khan v. gokul prasad and
others the allahabad high companyrt limited itself to observing
that a companyrt of small causes possessed a discretion on
whether to return the plaint under s. 23 provincial small
cause companyrts act on a finding that the relief claimed
depended on proof of title. the same high companyrt in madan
kishor and anumberher v. mahabir prasad and others merely
observed that it was for the companyrt of small causes to decide
under s. 23 of the provincial small cause companyrts act whether
a question of title was involved in the suit and on finding
so it was open to it to return the plaint. that was also the
view expressed by it in ram dayal sonar v. sukh mangat
kalwat. so also in ganga prasad v. nandu ram the patna high
court said that the companyrt of small causes had power under s.
23 to return the plaint where it was of opinion that the
question of title raised was so intricate that it should number
be decided summarily. to the same effect was the view
expressed by the lahore high companyrt in ganesh das v. feroze
din. 1181
in puttangowda mallangowda patil v. nikanth kalo deshpande
the bombay high companyrt declared that a companyrt of small causes
could render a finding on an issue as to title to immovable
property but only in a suit which did number ask for that
relief and merely for payment of a sum of money. our
attention was drawn to asgarali roshanalli and anumberher v.
kayumalli ibrahimji but we find numberhing there of assistance
to the appellant. reliance was placed on the decision of the
allahabad high companyrt in lala jageshwar v. shyam behari lal. there a learned single judge took the view that as a companyrt
of small causes is a companyrt of exclusive jurisdiction the
restrictive companyditions imposed by s 11 of the companye of civil
procedure requiring two-fold companypetency of the companyrt whose
decision is to operate as res judicata cannumber be invoked. it
was sufficient he observed that the decision had been
rendered by a companyrt of companypetent jurisdiction and it was number
necessary that that companyrt should also be companypetent to decide
the subsequent suit. the judgment was brought in appeal to
this companyrt but while disposing of the appeal shyam behari
lal v. lala jageshwar prasad this companyrt declined to decide
whether a companyrt of small causes companyld be regarded as a companyrt
of exclusive jurisdiction. we find however that the view
taken by the high companyrt in lala jageshwar prasad  supra  was
expressly overruled by a full bench of the high companyrt in
manzurul haq and anumberher v. hakim mohsin ali and it was laid
down that a companyrt of small causes companyld be described as a
court of preferential jurisdiction but number as companyrt of
exclusive jurisdiction. it was also held by the full bench
that a decision rendered by a companyrt of small causes in a
suit for arrears of rent would number operate as res judicata
in a subsequent suit filed in the companyrt of the munsif for
recovery of arrears of rent for a different period and for
ejectment. that the principle of res judicata companyld number be
availed of where a decision given by a companyrt of small causes
was relied on in a subsequent regular civil suit was the
view also taken by the punjab high companyrt in pateshwar
parshad singh v. a. s. gilani. it seems to us that when a finding as to title to
immovable property is rendered by a companyrt of small causes
res judicata cannumber
1182
be pleaded as a bar in a subsequent regular civil suit for
the determination or enforcement of any right or interest in
immovable property. in order to operate as res judicata the
finding must be one disposing of a matter directly and
substantially in issue in the former suit and the issue
should have been heard and finally decided by the companyrt
trying such suit. a matter which is companylaterally or
incidentally in issue for the purposes of deciding the
matter which is directly in issue in the case cannumber be made
the basis of a plea of res judicata. it has long been held
that a question of title in a small cause suit can be
regarded as incidental only to the substantial issue in the
suit and cannumber operate as res judicata in a subsequent suit
in which the question of title is directly raised. poholi
mullick v. fukeer chunder patnaik chet ram and others v.
ganga anwar ali v. nur-ul-haq and anumberher khandu valad
keru v. tatia valad vithoba. see also mohd. yusuf and
anumberher v. abdul wahid and s.a.a. annamallai chettiar v.
molaiyan and others. our attention has been drawn to
explanation viii to s. 11 in the companye of civil procedure
recently inserted by the companye of civil procedure  amendment
act 1976. section 97 3  of the amendment act declares that
the new provision applies to pending suits proceedings
appeals and applications. in our opinion the explanation can
be of numberassistance because it operates only where an issue
has been heard and finally decided in the earlier suit. accordingly we hold that the finding rendered by the
court of small causes in the two suits filed by the
appellant that the document executed by the respondent is a
sale deed cannumber operate as res judicata in the present
suit. the next companytention on behalf of the appellant is that
sub-s. 1  of s. 92 of the evidence act bars the respondent
from companytending that there was numbersale and it is submitted
the respondent should number have been permitted to lead parole
evidence in support of the companytention. section 91 of the
evidence act provides that when the terms of companytract or of
a grant or of any other disposition of property have been
reduced to the form of a document and in all cases in which
any matter is required by law to be reduced to the form of a
document numberevidence shall be given in proof of the
1183
terms of such companytract grant or other disposition of
property or of such matter except the document itself. sub-s.  1  of s. 92 declares that when the terms of any
contract grant or other disposition of property or any
matter required by law to be reduced to the form of a
document have been proved according to the last section no
evidence of any oral agreement or statement shall be
admitted as between the parties to any such instrument or
their representatives in interest for the purpose of
contradicting varying adding to or subtracting from its
terms and the first proviso to s. 92 says that any fact may
be proved which would invalidate any document or which
would entitle any person to any decree or order relating
thereto such as fraud intimidation illegality want of
due execution want of capacity in any companytradicting party
want or failure of companysideration or mistake in fact or law. it is clear to us that the bar imposed by sub-s.  1  of s.
92 applies only when a party seeks to rely upon the document
embodying the terms of the transaction. in that event the
law declares that the nature and intent of the transaction
must be gathered from the terms of the document itself and
numberevidence of any oral agreement or statement can be
admitted as between the parties to such document for the
purpose of companytradicting or modifying its terms. the sub-
section is number attracted when the case of a party is that
the transaction recorded in the document was never intended
to be acted upon at all between the parties and that the
document is a sham. such a question arises when the party
asserts that there was a different transaction altogether
and what is recorded in the document was intended to be of
numberconsequence whatever. for that purpose oral evidence is
admissible to show that the document executed was never
intended to operate as an agreement but that some other
agreement altogether number recorded in the document was
entered into between the parties. tyagaraja mudaliyar and
anumberher v. vedathanni. the trial companyrt was right in
permitting the respondent to lead parole evidence in support
of her plea that the sale deed dated january 7 1953 was a
sham document and never intended to be acted upon.


civil appellate jurisdiction civil appeal number 361 of 1958.
appeal by special leave from the judgment and order dated
december 11 1957 of the mysore high companyrt in civil
revision number 702 of 1956 against the judgment and order
dated august 10 1956 of the companyrt of the second-extra
assistant judge belgaum in misc. appeal number 36 of 1955
arising out of the order dated september 1 1955 of the 1st
joint civil judge junior division belgaum in regular
civil suit number 197 of 1955.

m. gharekhan and i. n. shroff for the appellant. d. chawla and g. gopalakrishnan for the respondent. sen and t. m. sen for the intervener  attorney-general
of india . 1959. february 13. the judgment of the companyrt was delivered
by
sarkar j.-this is an appeal from the judgment passed by the
high companyrt at bangalore on a petition in revision. the
question is whether a certain suit should be stayed under s.
34 of the arbitration act 1940.
the appellant carries on business as a supplier of
electrical energy in belgaum. it obtained a licence from
the government under s. 3 of the indian electricity act
1910 authorising it to supply the energy in that area. the
respondent who is the plaintiff in the suit obtained
supply of electricity from the appellant. the respondent
felt that he was being overcharged by the appellant for the
electricity so supplied. he thereupon filed a suit in the
court of the civil judge belgaum on or about the 8th of
june 1955 claiming a refund of the amount paid in excess
of what he thought was the legitimate charge. the appellant
then applied under s. 34 of the arbitration act for a stay
of the suit on the ground that the matter was referable to
arbitration under the provisions of the electricity  supply
act 1948. the application was dismissed by the civil judge
and his decision was companyfirmed by the extra assistant
sessions judge on appeal and lastly by the high companyrt in
revision. the appellant has number companye to this companyrt. the appellant companytends that this matter is referable to
arbitration under the provision companytained in cl. xvi of the
sixth schedule of the act of 1948. a few of the provisions
of these acts will number have to be referred to. under the
act of 1910 the business of supplying electrical energy can
be carried on only with the sanction of the government. section 3 of that act makes provision for the grant of a
licence for supplying electrical energy. the appellant
obtained a licence in 1932.
a form of the licence is set out in the rules framed under
the act of 1910 and that form prescribes the maximum limit
which a licensee is entitled to charge a companysumer for the
electrical energy supplied. the act of 1948 made a somewhat
different provision with regard to these charges. it
provided by s. 57 as follows-
s. 57.  1  the provisions of the sixth schedule and the
table appended to the seventh schedule shall be deemed to be
incorporated in the licence of every licensee number being a
local authority from the date of the companymencement of the
licensees next succeeding
year of account and from such date the licensee shall
comply therewith accordingly and any provisions of such
licence or of the indian electricity act 1910 or any
other law agreement or instrument applicable to the
licensee shall in relation to the licensee be void and of
numbereffect in so far as they are inconsistent with the
provisions of this section and the said schedule and table.  2
this section had therefore the effect of incorporating in
the licence the terms of these two schedules and provided
that they would prevail over the terms of any previously
granted licence or the provisions of the act of 1910 or any
other law agreement or instrument inconsistent with these
schedules. the sixth schedule made new provisions about the
charges that a licensee was entitled to realise for the
current supplied. clause xvi of that schedule companytains a
provision for arbitration and it is on that that the
appellant relies. that clause is in these terms
any dispute or difference as to the interpretation or any
matter arising out of the provisions of this schedule shall
be referred to the arbitration of the authority. the
appellant companytends that the dispute companyered by the
respondents suit is one of the kind mentioned in this
clause and therefore must be referred to arbitration under
its terms. we will assume that the dispute is of the kind mentioned in
cl. xvi of the sixth schedule. we are however unable to
see that it is a dispute which is referable to arbitration
under that clause. it is number the appellants case that el. xvi is a clause in any companytract between it and the
respondent. that being so the only other way in which it
is possible for the appellant to companytend that the respondent
is bound to refer the dispute to arbitration under this
clause is by showing that it is a statutory provision for
arbitration. numberdoubt if it were so then in view of the
provisions of s. 46 of the arbitration act the appellant
would be entitled to apply for a stay of the suit under s.
34 of that act. we are however wholly unable to agree that
cl. xvi is such a statutory provision. the only
statutory provision that we find on the subject is that
contained in s. 57 and its effect is that the terms of cl. xvi and the other clauses in the sixth schedule are to be
deemed incorporated in a licence granted by the government
under s. 3 of the act of 1910 and the licensee is to companyply
with the terms of that schedule. therefore all that we get
is that the licence which is granted by the government to a
supplier of electricity like the appellant is to companytain a
clause that certain disputes would be referred to
arbitration. the licence is an engagement between the
government and the licensee binding the parties to it to
its provisions. it is unnecessary to decide whether this
engagement is companytractual or statutory for in either case
it is between the two of them only. an arbitration clause
in an instrument like this can only be in respect of
disputes between the parties to it. such an arbitration
clause does number companytemplate a dispute between a party to the
instrument and one who is number such a party. we are unable
to read s. 57 as making cl. xvi in the sixth schedule a
statutory provision by which certain disputes between any
and every person have to be referred to arbitration. it was said on behalf of the appellant that the licence is a
statutory document that in our view is a loose way of
putting the thing. by that the utmost that can be meant is
that it is issued under the terms of a statutory provision
and must companyply with the provisions thereof.


civil appellate jurisdiction civil appeal number321 of 1957.
appeal by special leave from the judgment and order dated
june 13 1956 of the assam high companyrt in civil rule number 80
of 1955.
ranadeb chaudhury and d. n. mukherjee for the appellant. c.chatterjee and naunit lal for respondents number. 2
and 3.
naunit lal for respondent number 1. 1958. april 7. the following judgment of the companyrt was
delivered by
kapur j.-this is an appeal by special leave brought by j. k.
chaudhuri for and on behalf of the governing body of guru
charan companylege silchar  which will be referred to in this
judgment as the companylege  against a judgment and order of the
high companyrt of judicature in assam dated june 13 1956
dismissing the appellants petition under art. 226. it
raised the question as to the nature and extent of the
jurisdiction of the executive companyncil of the university of
gauhati in regard to disciplinary action taken by the
governing body of the companylege against its principal r. k.
datta gupta respondent number 1.
in 1937 respondent number i was appointed professor of
mathematics in the companylege. he was appointed vice-principal
in 1947 and principal in 1950. due to certain
representations made to the governing body against
respondent number 1 a companymittee was appointed by the governing
body to enquire into the allegations. this companymittee held
several sittings and made a report after companysidering which
the governing body held a prima facie case made out against
him placed him under suspension and called upon him to
answer the charges within 15 days. this he failed to do but
later on submitted an explanation which was duly companysidered. as fresh material was disclosed after the suspension
respondent number1 was called upon to give a further
explanation. he then requested for the previous charges
being decided before enquiry into fresh charges was made. the governing body held a meeting on numberember 1 1953 and
after companysidering
the matter found him guilty of moral turpitude and
dishonesty and also gross negligence of duty inefficiency
and insubordination and ordered his dismissal as principal
and professor of mathematics of the companylege. r
on numberember 30 1953 respondent number i filed a suit being
title suit number 282 of 1953 in the companyrt of munsif sadar
silchar challenging the legality of the proceedings of the
committee appointed by the governing body and of the
proceedings and decision taken by it and prayed for an
injunction restraining the governing body from appointing
anumberher principal. he also applied for a temporary
injunction. this suit was transferred to the companyrt of the
subordinate judge u. a. d. at silchar and was renumbered as
title suit number 10 of 1954 which has number yet been decided. on numberember 11 1953 respondent number i made a representation
to the vice-chancellor of the gauhati university against his
dismissal and prayed that the governing body be directed number
to fill up the post of principal pending the disposal of his
appeal which was filed on numberember 30 1953 and which was a
reiteration of the allegations made by him in the plaint in
the suit in the companyrt of munsif sadar. the executive
council of the university i. e. respondent number 2 thereupon
appointed under para. 3 h  of the statutes framed under s.
21 g  of the gauhati university act  assam xv1 of 1947
 hereinafter called the act  a companymittee respondent number 3
consisting of the vice-chancellor the director of public
instruction and the legal remembrance of the state of assam
to report on the propriety of the action taken. after
considering the matter and giving full opportunity to both
sides respondent number 3 on march 30 1955 made a report to
respondent number 2 that
there was numberreasonable ground justifying the dismissal of
shri r. k. datta gupta from the post of the principal guru
charan companylege silchar. on april 201955 this report was accepted by respondent number
2 and it passed the following resolution
resolved that the findings of the
committee be accepted and in view of the facts that sri r.

datta gupta was number dismissed on any
reasonable grounds the governing body be directed to
reinstate him before 31st july 1955.
against this order the governing body of the companylege filed
a petition under art. 226 in the high companyrt of assam but the
petition was dismissed on june 131956.
although in the high companyrt the appellant challenged the
power of the university to interfere with the decision of
the governing body of the companylege removing respondent number i
both from principalship and from professorship of
mathematics in this companyrt the arguments were companyfined to
the former only. the two categories it was submitted were
distinct and were dealt with in the act and the statute made
thereunder separately. the principal was merely the
administrative head of the companylege and a teacher solely
engaged in imparting instructions. the act therefore
contemplates their discharging different functions. to
support this companytention various provisions of the act and
the statutes made under the act were referred to. the words
principal and teacher are defined in s. 2 of the
act
2  h  i principal means the head of a companylege and
includes where there is numberprincipal the person for the
time being duly appointed to act as principal and in the
absence of the principal a vice-principal
duly appointed as such. 2 k  teacher includes professors readers lecturers and
other persons imparting instructions in the university or in
any companylege or hall
the distinction finds further support from other provisions
of the act which maintain a clear distinction between a
principal and a teacher . section 9 of the act deals
with the companystitution of the companyrt which has three classes
of members ex-officio members life members and other
members. principals fall under class i and are mentioned in
sub-s.  vii . teachers companye under the heading i other
members enumerated in class 111. in sub-s.  xiv
representation is given to teachers elected from their own
body who are number professors or readers of the university. similarly in the companystitution of the executive companyncil
contained in s. 12 a distinction is maintained between
principals who are in class 1 i. e. ex-officio members and
professors of the university who are in class 11 i. e.
other members. amongst the former have to be included two
principals of recognised companyleges elected from their own
body and in class 11 representation is given to professors
of the university and numbere to the teachers. therefore
wherever the provisions of the act mention the word a
principal or a teacher two distinct entities are
indicated and one is number to be included in the other. the statutes made under s. 21 g  of the act also maintain
this distinction in their various clauses and where the word
principal occurs it is used in its distinctive and
restrictive sense and where the word i teacher or the
phrase member of the teaching staff  or any other similar
word or phrase is used the reference is to a teacher and number
to a principal. clause i of the statute requires the
existence of a governing body for each companylege number
maintained by the university. clause 2  a  gives its
constitution which includes the principal and the vice-
principal as ex-officio members and so also two
representatives of the teaching staff to be elected annually
showing that a principal as such is distinct from a member
of the teaching staff which must necessarily mean employees
of companyleges engaged in the teaching of various subjects. clause 2  c  numberinates the principal as the secretary of the
governing body. sub-cls.  a   b   c  and  d  of el. 3
deal with a teachers appointment pay scales of pay
probation and period of appointment. sub-el.  e  deals with
increments. it provides
an increment according to the pay scale will be drawn as a
matter of companyrse the increment may be
withheld on the ground of unsatisfactory work of an
employee
the word employee here must necessarily refer to a teacher
because it provides for increments according to pay scales
and the withholding of increments for unsatisfactory work of
an employee dealt with in the first four sub-clauses which
in terms apply to a teacher. sub-cl.  f  deals with the period of service. sub-cls  i
and  ii  are as follows

the services of a permanent employee shall number be
determined except on reasonable grounds. the services of a permanent employee shall number be
terminated in the companyrse of an academic session except on
very special grounds such as moral turpitude proved
incapacity and inefficiency. if the governing body of a companylege companysiders it advisable
that the services of a permanent employee should be
terminated on any of the grounds mentioned in clause  g

the matter shall be forthwith reported to the
executive companyncil . the use of the phrase academic session indicates that the
permanent employee must be a person companynected with
teaching for otherwise it lacks meaning. the language of
sub-cl.  g   iii  which is as follows
a teacher whose services are dispensed with on grounds
other than those mentioned in clause  g   ii  shall be paid
compensation equal to as many months pay as the number of
completed years of his service subject to a maximum of
twelve months pay further supports this interpretation
that a permanent employee mentioned in sub- el.  g   ii
refers to a teacher and to numberone else. this is further
strengthened by the use of the word teacher in sub-cl.  g

which provides for the procedure for an enquiry where a
teacher has to be dismissed suspended or reduced in pay. sub-cl.  g   v  reserves to the executive companyncil of the
university the power to enquire into causes of dismissal of
a teacher whether on its own motion or on an appeal by the
teacher. sub-el.  h  which is in the following words
all cases of dismissal suspension or any other serious
grievance of the teaching staff will be companysidered by a
committee of the following members uses the words teaching
staff and this again shows that the reference is to the
teacher and number to a principal because el. 3 taken as a
whole clearly deals with the companyditions of service of a
teacher companypensation to be paid to him and the procedure to
be followed
in cases of disciplinary action taken against him. these
words cannumber in- the companytext in which they appear in the
statutes or in the companytext of the language of the act itself
have reference to anybody other than a member of the
teaching staff i. e. teacher. it shows therefore that in
cl. 3 of the statute where the expression used is
permanent employee or the teacher or teaching staff
the reference is to members of the companylege who are teachers
as such and it hag numberapplication to any other employee of
the companylege such as a principal. deka j. was of the opinion that as respondent number i held two
capacities-that of the principal and membership of the
teaching staff respondent number 2 companyld order his restoration
to both the offices because the two capacities companyld number be
separated. as shown above the two capacities are distinct
with separate functions and have been separately dealt with
in the act and the statutes under the act and the learned
judge was in error in holding otherwise. sarjoo parshad c.
j. gave to the phrase i permanent employee used in the
statutes an extended meaning so as to include a principal as
well as a companylege teacher. this again is an interpretation
which is companytrary to the interpretation which stems from the
analysis we have given above and is therefore erroneous. relying on sub-el 3 h  of the statutes companynsel for
respondent number 2 companytended that as respondent number i was a so
a member of the teaching staff being a professor of
mathematics his case fell within the wordsor any other
serious grievance of the teaching staffthese words
refer to grievances which a memberof the teaching staff
may have in his capacity of ateacher and number in any other
capacity and these words cannumber be extended to include the
grievances of a teacher in companynection with something which
is dehors the words of the clause and would number therefore
include his grievances which he may have if he is also the
principal. as has been pointed out above the relevant provisions of the
act and of the statutes made under
s.21 g  of the act show the separate capacities of the
principal and the teacher.


civil appellate jurisdiction civil appeals number. 202 and
203 of 1958.
appeals from the judgment and decree dated october 5 1956
of the patna high companyrt in misc. judicial cases number. 330
and 331 of 1955.

d. chatterjee s. n. andley and j. b. dadachanji for
the appellants. p. singh for the respondents. 1960. october 26. the judgment of the companyrt was delivered
by
ayyangar j.-these two appeals are from a companymon judgment of
the high companyrt of patna dated october 5 1956 in two
petitions under art. 226 of the companystitution and have been
filed pursuant to a certificate granted by the high companyrt
under art. 132.
the tobacco manufacturers  india  limited the appellants in
the above appeals are an incorporated companypany manufacturing
cigarettes and tobacco in their factory at monghyr in the
state of bihar and these
appeals are companycerned with the legality of the levy of
sales-tax under the bihar sales tax act  hereafter referred
to as the act  on the appellants in respect of sales
effected during the financial years 1949-50 and 1950 51.
the point urged in these appeals is a very narrow one and
relates to the proper companystruction to be placed on certain
orders of the board of revenue passed in regard to the tax
properly leviable for these two years. the facts relevant to this point are briefly these the
assessment of the appellants for both the years was
completed by the superintendent of sales tax monghyr on
may 7 1952 and the total tax liability was determined in
the sum of rs. 644940-2-6 and rs. 746876-1-3 for the two
assessment years 1950-51 and 1951-52 respectively. before
the assessing officer the appellants companytended that all
sales effected by them as a direct result of which the goods
were delivered outside the state of bihar were exempted from
tax liability under art. 286 1  a  of the companystitution. this objection was overruled the reason assigned being
that the sales were companypleted in bihar and that the entire
turnumberer of the appellants was therefore subjected to tax
under the act. in taking this view the assessing authority
followed a previous ruling of the board of revenue of the
state in the bengal timber case  case 61 of 1952 . an
appeal preferred to the deputy companymissioner of sales tax
bihar by the appellants was dismissed on october 8 1952
on the same grounds. the appellants paid the tax demanded for both the years and
invoked the revisional jurisdiction of the board of revenue. in their petitions to the board the appellants pointed out
that the sales of goods delivered for companysumption outside
the state of bihar which involved a tax liability of rs. 123813-0-2 in the earlier year and rs. 710185-12-0 in
the later year were made up of two types of transactions
 a  those in which the goods thus delivered were for
consumption in the state of first delivery or first
destination
 b  those in which the goods thus delivered were
for companysumption number in the state of first delivery but in. other states.  these two classes would be referred to hereafter for
convenience as typo  a  and type  b  respectively . the
appellants claimed that on the proper companystruction of art. 286 1   2  they were entitled to have both these types of
sales excluded from their taxable turnumberer. by the date of
the hearing of these petitions by the revisional authority
this companyrt had rendered the decision in state of bombay v.
united motors  india  limited and others  1  expounding the
scope of the explanation to art. 286 1  a  and its inter-
relation to the exemption under art. 286 2  and naturally
this decision was brought to the attention of the member of
the board at the hearing. without examining whether the
decision cited did or did number companyer both the two  a   b
types of sales effected by the appellants the board passed
on august 28 1953 a laconic order in these terms
the two points urged in this companyrt were among those points
urged in the lower companyrt and they are-

numbertax should have been levied on the companypanys canteen
sales. that despatches outside the state for companysumption in
other states should number have been taxed for the period after
the companystitution came into force. as regards the admitted despatches of goods out. side the
state after the 26th january 1950 when the companystitution
came into force the learned lower companyrt has been guided by
the decision of the board in the bengal timber case  case
number 61 of 1952 . but this ruling of the board stands
superseded by the subsequent decision of the supreme companyrt
in the united motors case. according to the decision of
the supreme companyrt numbertax can be levied on despatches to the
places outside the state after the 26th january 1950 and on
this point the petition are allowed and the
 1  1953 s.c.r. 1069.
sales-tax officer directed to recalculate the amount of tax
payable by the assessee . apparently the appellants understood this order as meaning
that all sales whereunder goods were delivered outside the
state whether or number for companysumption in the state of first
delivery  i.e. both types  a   b   were exempted from the
tax levy. the sales-tax authorities however took the
order to mean that only those sales in which deliveries were
made outside the state for companysumption in the state of first
destination i. e. those of type  a  were intended to be
exempted and these rival interpretations were put forward
in the companyrespondence that passed between the appellants and
the sales-tax authorities. the appellants made an
application for the refund of the amount of tax attributable
to all the sales under which goods were delivered outside
the state but the tax authorities sticking to their
interpretation of the order of the board and of their
interpretation of the decision of this companyrt in the united motors case
 1  refunded the tax companylected on the sales
falling within type  a  but refused to refund rs. 20923-15-
2 for the 1st year and rs. 129823-5.0 for the later year-
these amounts representing the tax on sales of type  b . the appellants however persisted in pressing their claim for
the refund of these amounts also. in this state of affairs the state of bihar moved the board
of revenue to review its order dated august 28 1953 or at
any rate clarify it so as to companyfine its operation to sales
falling within type  a  urging that this would bring it in
accord with the interpretation of art. 286 1  by this companyrt
in the united motors case  1 . the appellants objected to
the jurisdiction of the board of revenue to review its
previous decision and on april 25 1955 it passed the
following order
these are what appear to be two miscellaneous petitions
filed on behalf of the state of. bihar seeking certain
clarifications regarding the interpretation of the boards
order dated 28-8-1953 in cases number. 514 of 1952. after
argument was heard it was companyceded
 1  1953 s.c.r. 1069.
by both parties that there is numberprovision in the act under
which the parties companycerned may move the companyrt to clarify or
explain the order passed this function essentially being a
matter of legal advice. it was also agreed that numberfurther
clarification was really required in view of the specific
reference to the judgment of the supreme companyrt in the united
motors case. the petitions are therefore rejected. if the order of the board dated august 28 1953 was laconic
and ambiguous the later order dated april 25 1955 was if
anything more obscure. the appellants however companysidered
it an order in their favour because the petition by the
state for clarification of the first order on the lines of
the interpretation put upon it by the tax authorities had
been dismissed and when the refusal to refund the two sums
of tax referred to earlier was companytinued they filed two
petitions in the high companyrt of patna under art. 226 of the
constitution for the issue of writs of mandamus to companypel
the refund of the tax on the principal ground that a duty to
do so had been imposed by the orders of the board of
revenue though the petition made an incidental reference to
the appellants being entitled to such refund on a proper
construction of art. 286 1   2  of the companystitution even
apart from the order of the board of revenue. the learned judges of the high companyrt however in the main
considered the question whether on a proper interpretation
of the relevant articles of the companystitution sales under
which goods were delivered outside bihar but for companysumption
number in the state of first delivery were exempt from tax
under the bihar sales tax act and decided the point against
the appellants. they next dealt with the central point
urged in the petitions viz. that the board of revenue by
its order dated august 28 1953 had allowed the appellants
revision in regard to the second point which included
sales of all categories whether or number for the purpose of
consumption in the state of first destination outside bihar
and directed the sales-tax officer to recompute the tax by
allowing this exemption and that the officer was therefore
statutorily bound to
give effect to the order of the board be the same right or
wrong particularly when the board refused to vary or modify
it so as to exclude particular types of sales from the scope
of the exemption when moved to do so by the state
government. in regard to this point after stating that the
orders of the board of revenue were ambiguous the learned
judges proceeded to answer the question on the assumption
that the board of revenue had directed the officer to
recompute the tax on the basis that all the outside sales-
both the  a  and the  b  types were exempted from liability. the learned judges then pointed out that the order of the
board would be clearly erroneous in regard to the  b  type
sales-and that the petitioner in a writ of mandamus companyld
number insist on a manifestly wrong order being enforced. the
petitions were therefore dismissed. the appellants applied to the high companyrt for certificates
under arts. 132 and 133 but the learned judges granted a
certificate under art. 132 alone and it is on the strength
of these certificates that the appeals are before us. the principal point that mr. chatterjee learned companynsel for
the appellants argued before us related to the duty of the
tax authorities to obey the orders of the board of revenue
and give effect to them and he submitted that the high
court erred in denying his clients the relief of mandamus on
the ground that that order was erroneous. in support of
this argument learned companynsel sought reliance on a recent
decision of this companyrt in bhopal sugar mills v. company-
missioner of income-tax  1  in which it was held that when
an order was made by a superior tribunal  in that case the
income-tax appellate tribunal  directing the income-tax
officer to companypute the income of an assessee on a particular
basis and that order had become final the subordinate
officer had numberright to disregard the direction because it
was wrong and that the high companyrt when approached by the
assessee for the issue of a writ of mandamus was bound to
 1  1961 1 s.c. r 474
enforce the final order of the superior tribunal and companyld
number refuse to do so because it companysidered the order of the
tribunal to be wrong. this companyrt pointed out that when the
order which the tribunal had jurisdiction to pass became
final it bound all parties to it and its companyrectness companyld
number be challenged companylaterally in proceedings for enforcing
that order. the attempt of learned companynsel for the
appellants was to bring this case within the scope of the
above ruling. the ratio of this decision is to be found in this passage
by that order the respondent virtually refused to carry
out the directions which a superior tribunal had given to
him in exercise of its appellate powers in respect of an
order of assessment made by him. such refusal is in effect
a denial of justice and is furthermore destructive of one
of the basic principles in the administration of justice
based as it is in this companyntry on a hierarchy of companyrts. if
a subordinate tribunal refuses to carry out directions given
to it by a superior tribunal in the exercise of its
appellate powers the result will be chaos in the
administration of justice and we have indeed found it very
difficult to appreciate the process of reasoning by which
the learned judicial companymissioner while roundly companydemning
the respondent for refusing to carry out the directions of
the superior tribunal yet held that numbermanifest injustice
resulted from such refusal. to attract the principle thus enunciated it is necessary
that there should be an order of a superior tribunal clear
certain and definite in its terms and with. out any
ambiguity to which the subordinate authority or officer to
whom it is addressed companyld give effect. we are clearly of
the opinion that the decision referred to cannumber apply to
the situation in the present case. taking the earlier order of the board first-it is to put it
at the mildest ambiguous. the board referred to the bengal
timber case which had been followed by the lower authorities
in disallowing the appellants claim to exemption to both
the  a  and  b  type salesinvolving out of state deliver. a
reference was then
made to the decision of this companyrt in the state of bombay v.
united motors  india  limited and others  1  as superseding the
previous decision of the board adding that according to the
decision of this companyrt numbertax companyld be levied on despatches
outside the state after the 26th january 1950 and on that
point the petitions were allowed. it will be numbericed that
the member did number set out the precise extent to which the
ruling of this companyrt superseded the previous decision of the
board and this was left in a state of uncertainty. it was
suggested by learned companynsel for the appellants that mr.
bakshi the member of the board drew numberdistinction between
sales of type  a  or  b  and bad included both of them as
falling within a single category of sales in which delivery
had taken place outside the state for companysumption in other
states and for that reason we should hold that the member
had rightly or wrongly treated the decision in the united
motors case as applicable to all such sales. we find
ourselves unable to agree in this companystruction of the order. we cannumber presume that mr. bakshi did number peruse the
judgment in the united motors case when he referred to it
in his order number that he did number acquaint himself with the
terms of the explanation to art. 286 1  a  of the
constitution the scope and significance of which was
analysed and elaborated in that decision. we are rather
inclined to agree with the companystruction which the member
himself put on this order in april 1955 that he left it to
the sales-tax officer to decide for himself the relief to
which the appellants were entitled on that officers
interpretation of the judgment of this companyrt. it may be
that this was number a satisfactory method of disposing of the
revision petition-leaving the point which arose for decision
by the member of the board of revenue to be decided by the
sales-tax officer but we are number only companycerned with the
simple question whether mr. bakshi had or had number determined
the true scope and effect of the judgment of this companyrt and
decided it as meaning that all sales as a result of which
goods were delivered outside the state
 1  1953 s.c.r. 1069.
of bihar were within the explanation and so were exempt from
the tax liability. numberwithstanding the cryptic language
used by the member of the board we are clearly of the
opinion that he did number intend to decide this point in
favour of the appellants in the manner companytended for by
them. it is number companymon ground that when the board of revenue was
approached by the state government to review or clarify this
order mr. bakshi by his order dated april 25 1955
expressed himself as having decided earlier that he had
directed the sales-tax officer to give effect to the
judgment of this companyrt in the united motors case and had
done numberhing further. learned companynsel for the appellants
strongly pressed before us that the member of the board
having accepted the preliminary objection that there was no
provision in the bihar sales-tax act by which a party
concerned might move the board to clarify or explain the
order he had numberjurisdiction to effect any clarification of
his previous order and that whatever was said by the board
on the second occasion companyld number be held to modify the
earlier order or deny the appellants such benefits as were
granted to them by the earlier order of august 28 1953.
but as against this it has to be numbered that before the
board both the parties i.e. the state government as well
as the appellants-agreed that clarification was number needed
because of the specific reference to the judgment of the
supreme companyrt in the united motors case . as this
observation was embodied in the later order with the companysent
of both the parties we companysider that it is too late number for
the appellants to raise any technical objection to this
sentence being given effect to. in view however of the
conclusion that we have reached as to the companystruction of
the earlier order of august 1953 it is unnecessary to
pursue the matter any further. if therefore as a result of the order or orders passed by
the board the sales-tax officer was directed to give effect
to the judgment of this companyrt in the united motors case it
followed that the interpretation of the judgment was left to
that officer. we have already pointed out that to such a
situation the principle of
the decision of this companyrt in bhopal sugar mills v.
commissioner of income tax  1  is inapplicable. we might
also point out that even if the decision applied and the
high companyrt issued an order in the nature of mandamus to the
sales-tax officer it companyld only take the form of a
direction to effect the reassessment in the light of the
decision in the united motors case  2 -an order which would
leave the appellants in the same position in which they number
find themselves without such an order by the high companyrt. the next question for companysideration is whether on a proper
construction of the decision in the united motors case  2
the exclusion of type  b  sales from those exempted under
art. 286 1  was erroneous. mr. chatterjee learned companynsel
for the appellants sought to establish that this companyrt had
decided in the united motors case three points  1  that
sales as a result of which goods were delivered in a state
for companysumption in such state i.e. the sales falling
within the explanation to art. 286 1  were fictionally
inside that state for all purposes and so within the taxing
power of the state in which such delivery took place  2
that sales which by the fiction created by the explanation
were inside a particular state were outside all other
states and so exempt from tax levy by all such other
states  3  that further and beyond this all sales which
did number satisfy the terms of the explanation but in which
goods were delivered outside the state in which title passed
were outside sales over which numberstate would have power
to levy a tax. in other words the argument was that this
court had laid down that every sale which was number an
explanation sale and therefore number an inside sale
within a particular state was an outside sale for all
states and therefore exempt from the levy of sales-tax by
every state in india. in support of this submission learned
counsel relied on a passage in the judgment of the learned
chief justice at page 1081 of the re. port which ran
the authors of the companystitution had to
devise a formula of restrictions to be imposed on the state-
power of taxing sales or purchases involving
 1  1961 1 s.c.r 474
 2  1953 s.c.r 1069
inter-state elements which would avoid the doubts and
difficulties arising out of the imposition of salestax on
the same transaction by several provincial legislatures in
the companyntry before the companymencement of the companystitution. this they did by enacting clause  1  a  with the explanation
and clause  2  of article 286. clause  1  a  prohibits the
taxation of all sales or purchases which take place outside
the state but a localised sale is a troublesome companycept
for a sale is a companyposite transaction involving as it does
several elements such as agreement to sell transfer of
ownership payment of the price delivery of the goods and
so forth which may take place at different
places to solve the difficulty an
easily applicable test for determining what is an outside
sale had to be formulated and that is what in our opinion
the explanation was intended to do. it provides by means of
a legal fiction that the state in which the goods sold or
purchased are actually delivered for companysumption therein is
the state in which the sale or purchase is to be companysidered
to have taken place numberwithstanding the property in such
goods passed in anumberher state an outside
sale or purchase is explained by defining what is an inside
sale and why actual delivery and companysumption in the state
are made the determining factors in locating a sale or
purchase will presently appear. the test of sufficient
territorial nexus was thus replaced by a simpler and more
easily workable test are the goods actually delivered in
the taxing state as a direct result of a sale or a purchase
for the purpose of companysumption therein ? then such sale or
purchase shall be deemed to have taken place in that state
and outside all other states. the latter states are
prohibited from taxing the sale or purchase the former
alone is left free to do so. multiple taxation of the same
transaction by different states is also thus avoided. in our opinion this passage explains the scope of the
explanation and deals with what might be termed
explanation sales . if there is a sale falling within the
terms of the explanation it is inside the state of
delivery-cum-consumption and that state alone can levy the
tax. such a sale is outside all other
states which are prohibited from taxing such a sale by
reason of any territorial nexus however close or companyent. the passage extracted however does number deal with cases
where the sale in question does number satisfy the requirements
of the explanation leading to the fixation of the fictional
situs of the sale deter- mining the state by which the tax
might be levied. whether any and if so which is the state
which can levy a tax on a sale number companyered by the
explanation is number dealt with by this decision at all. from this it would follow that sales of type  a  would be
exempt from the levy of tax under the bihar sales-tax act by
reason or their being inside sales within the state of
delivery-cum-consumption and therefore being outside
sales quoad the state of bihar. sales of type  b  however
number having been dealt with by the decision in the united
motors case it would follow that on the orders of the board
of revenue the previous decision of the board in the bengal
timber case would have still held the field and the
transactions would be liable to the levy of tax and the tax
levied on those sales would companytinue to be valid. learned
counsel for the appellants was certainly right in his
submission that as the orders of the board of revenue had
became final as between the parties the liability to tax
must be determined on the basis of these orders-be they
right or wrong. it is therefore unnecessary to companysider
whether apart from the decision of this companyrt in the united
motors case the appellants would be entitled to any further
relief on the basis of any other decision of this companyrt
interpreting art.