civil appellate jurisdiction civil appeal number 138 of 1961.
appeal by special leave from the judgment and order dated
numberember 15 1960 of the calcutta high companyrt in matter number
235 of 1960.

c. setalvad attorney-general for india b. b. l. iyengar
and b. p. maheshwari for the appellant. m. bose advocate-general west bengal b. sen p. k.
chatter  s. c. bose milon bannerji and p. k. bose for the
respondents number. 1 to 4. 1962. february 5. the judgment of the companyrt was delivered
by
subbarao j.-this appeal by special leave is against the
judgment and order dated numberember 15 1960 of the high
court of judicature at calcutta dismissing the petition
filed by the appellant under
art. 226 of the companystitution and it raises the company-
stitutional validity of the oriental gas companypany act 1960

b act xv of 1960  hereinafter called the impugned
act. the facts that have given rise to this appeal may be briefly
stated. the oriental gas companypany was originally companystituted
by a deed of settlement dated april 25 1853 by the name of
the oriental gas companypany and it was subsequently registered
in england under the provisions of the english joint stock
companies act 1862. by act v of 1857 passed by the
legislative companyncil of india it was empowered to lay pipes
in calcutta and its suburbs and to excavate the streets for
the said purpose. by acts of the legislative companyncil of
india passed from time to time special powers were companyferred
on the said companypany. in 1946 messrs. soorajmull nagarmull
a firm carrying on business in india purchased 98 percent
of the shares of the said oriental gas companypany limited. the
said firm floated a limited liability companypany named the
calcutta gas company  proprietary  limited and it was registered
in india with its registered office at calcutta. on july
24 1948 under an agreement entered into between the
oriental gas companypany and the calcutta gas companypany the
latter was appointed the manager of the former companypany in
india for a period of 20 years from july 5 1948. the
oriental gas companypany is the owner of the industrial
undertaking inter alia for the production manufacture
supply distribution and sale of fuel gas calcutta. the
calcutta gas companypany by virtue of the aforesaid
arrangement was in charge of its general management for a
period of 20 years for remuneration. the west bengal
legislature passed the impugned act and it received the
assent of the president on october 1 1960. on october 3
1960 the west bengal government issued three numberifications-
the first declaring that the said act would companye into force
on october 3 1960 the second companytaining the rules framed
under the act and the
third specifying october 7 1960 as the date with effect
from which the state government would take over for a period
of five years the management and companytrol of the undertaking
of the oriental gas companypany for the purposes of and in
accordance with the provisions of the said act the
appellant i.e. the calcutta gas companypany filed a petition
under art. 226 of the companystitution tn. the high companyrt for
west bengal at calcutta for appropriate writs for
restraining the state government from giving effect to the
said act and for quashing the said numberifications. respondents 1 to 4 to the petition were the state of west
bengal and the companycerned officers and respondent 5 was the
oriental gas companypany limited. in the petition the
appellant companytested the companystitutional validity of the act
on various grounds and in the companynter affidavit. the
contesting respondents i.e respondents 1 to 4 sought to
sustain its validity and also questioned the maintainability
of the petition at the instance of the appellant. ray j.
gave the following findings on the companytentions raised
before him 1  the appellant has numberlegal right to maintain
the petition  2  the appellant cannumber question the
validity of the act on the ground that its provisions
infringed his fundamental rights under arts. 14 19 and 31
in view of art. 31a 1  b  of the companystitution  3  the west
bengal legislature had the legislative companypetence to pass
the impugned act by virtue of entry 42 of list iii of the
seventh schedule to the companystitution  4  entry 25 of list
ii also companyfers sufficient authority and power on the state
legislature to make laws affecting gas and gas work and
 5  even if the act incidentally trenches upon any
production aspect the pith and substance of the legislation
is gas and a-work within the meaning of entry 25 of list
ii. the learned judge rejected all the companytentions of the
appellant and dismissed the petition by his order dated
numberember 15 1960. hence the appeal. learned attorney-general appearing for the appellant has
repeated before us all the companytentions except that relating
to fundamental rights. which his client had unsuccessfully
raised before the high companyrt. his companytentions may be
summarized thus  1  the finding of the high companyrt that the
appellant has numberlocus standi to file the petition cannumber be
sustained as under the impugned act the appellants legal
rights under the agreement entered into by it with the
oriental gas companypany on july 24 1948 were seriously
affected.  2  under art. 246 of the companystitution parliament
has exclusive power to make laws with respect to any of the
matters enumerated in list i parliament in exercise of the
said power passed the industries  development and
regulation  act 1951 by virtue of entry 52 of said list
the two entries in list ii namely entries 24 and 25
cannumber sustain the act as entry 24 is subject to the
provisions of entry 52 of list i and entry 25 must be
confined to matters other than those companyered by entry 24
and therefore the west bengal legislature is number
competent to make a law regulating- the gas industry.  3
assuming that the state legislature has power to pass the
act by virtue of entry 25 of list ii under art. 254 1  of
the companystitution the law made by parliament namely the
industries  development and regulation  act 1951 shall
prevail and the law made by the state legislature namely
the impugned act be. void to the extent of repugnancy. and
 4  the view of the high companyrt that the validity of the act
could be sustained under entry 42 of list iii is wrong as
under the impugned act the state only takes over the
management of the companypany and manages it for and on behalf
of the companypany whereas the companycept of requisition under the
said entry requires that the state shall take legal
possession of property of the person from whom it is
requisitioned. on its own behalf or on behalf of a
petitioner other than the owner thereof. the learned advocate-general of west bengal and mr. sen
who followed him seek to sustain the validity of the
impugned act number only under entry 25 of list ii but also
under entries 33 and 42 of list iii of the seventh schedule
to the companystitution. they further companytend that the
appellant was companystituted as agent under the said agreement
and that as its rights were preserved by s. 4 of the
impugned act it has numberlocus standi to file the petition
under art. 226.
the first question that falls to be companysidered is whether
the appellant has locus standi to file the petition under
art. 226 of the companystitution. the argument of learned
counsel for the respondents is that the appellant was only
managing the industry and it had numberproprietary right
therein and therefore it companyld number maintain the
application. article 226 companyfers a very wide power on the
high companyrt to issue directions and writs of the nature
mentioned therein for the enforcement of any of the rights
conferred by part iii or for any other purpose. it is
therefore clear that persons other than those claiming
fundamental right can also approach the companyrt seeking a
relief thereunder. the article in terms does number describe
the classes of persons entitled to apply thereunder but it
is implicit in the exercise of the extraordinary
jurisdiction that the relief asked for must be one to
enforce a legal right. in the state of orissa v. madan
gopal rungta 1  this companyrt has ruled that the existence of
the right is the foundation of the exercise of jurisdiction
of the companyrt under art. 226 of the companystitution. in
chiranjit lal chowdhuri v. the union of india  2  it has
been held by this companyrt that the legal right that can be
enforced under art. 32 must ordinarily be the right of the
petitioner himself who companyplains of infraction of such right
and approaches the companyrt for relief. we do number see any
reason why a different principle should apply in the case of
 1  1952 s c.r. 28.  2  1950 s.c.r. 869.
petitioner under art. 226 of the companystitution. the right
that can be enforced under art. 226 also shall ordinarily be
the personal or individual right of the petitioner himself
though in the case of some of the writs like habeas companypus
or quo warranto this rule may have to be relaxed or
modified. the questions therefore is whether in the
present case the petitioner has a legal right and whether
it has been infringed by the companytesting respondents. the
petitioner entered into an agreement dated july 24 1948
with respondent number 5 in regard the oriental gas companypany. under the agreementthe appellant was appointed as manager
and the general management of the affairs of the companypany was
entrusted to it for a period of 20 years. the appellant
would receive thereunder by way of remuneration for its
services  a  an office allowance of rs. 3000/- per mensem
 b  a companymission of 10 per cent on the net yearly profit of
the companypany subject to a minimum of rs. 60000/- per year
in the case of absence of or inadequacy of profits and  c  a
commission of re. 1/- per ton of all companyl purchased and
negotiated by the manager. in its capacity as manager the
appellant-company was put in charge of the entire business
and its assets in india and it was given all the incidental
powers necessary for the said management. under the
agreement therefore the appellant had the right to manage
the oriental gas companypany for a period of 20 years and to
receive the aforesaid amounts toward its remuneration for
its services. section 4 of the impugned act reads
with effect from the appointed day and for a
period of five years thereafter.-
 a  the undertaking of the companypany shall
stand transferred to the state government for
the purpose of management and companytrol
 b  the companypany and its agents including
managing agents if any and servant shall
cease to exercise management or companytrol in
relation to the undertaking of the companypany
 c  all companytracts excluding any companytract or
contracts in respect of agency or managing
agency subsisting immediately before the
appointed day and affecting the undertaking of
the companypany shall cease effect or to be
enforceable companypany its agents or any to have
against the person who was a surety thereto or
had guaranteed the performance thereof and
shall be of as full force and effect against
or in favour of the state of west bengal and
shall be enforceable as fully and effectively
as if instead of the companypany the state of west
bengal had been named therein or had been a
party thereto
under the said section with effect from the appointed day
and for a period of five years thereafter the management of
the companypany shall stand transferred to the state government
and the companypany its agents and servants shall cease to
exercise management or companytrol of the same. under cl.  c
of the section the companytracts of agency or managing agency
are number touched but all the other companytracts cease to have
effect against the companypany and are enforceable by or against
the state. it is number necessary in this case to decide
whether under the said agreement the appellant was
constituted as agent or managing agent or a servant. of the
oriental gas companypany. whatever may be its character by
reason of s. 4 of the impugned act it was deprived of
certain legal rights it possessed under the agreement. under the agreement the appellant had the right to manage
the oriental gas companypany for a period of 20 years and to
receive remuneration for the same. but under
s. 4 of the impugned act it was deprived of that right
for a period of five years. there was certainly a legal
right accruing to the appellant under the agreement and that
was abridged  if number destroyed by the impugned act. it
is therefore impossible to say that the legal right of the
appellant was number infringed by the provisions of the
impugned act. in the circumstances as the appellants
personal right to manage the companypany and to receive re-
muneration therefore had been infringed by the provisions of
the statute it had locus standi to file the petition under
art. 226 of the companystitution. to appreciate the rival companytentions in regard to the other
points it would be companyvenient and necessary to numberice
briefly the provisions of the industries  development and
regulation  act 1951 hereinafter called the central
act. and the impugned act. the central act was passed
as its long title shows to provide for the development and
regulation of certain industries. under s. 2 of the central
act it is declared that it is expedient in the public
interest that the union should take under its companytrol the
industries specified in the first schedule. under beading 2
of the first schedule item  3  is fuel gases- companyl gas
natural gas and the like  industrial undertaking is
defined to mean any undertaking pertaining to a scheduled
industry carried on in one or more factories by any person
or authority including government and factory is defined
to mean any premises including the precincts thereof in
any part of which a manufacturing process is being carried
on or is ordinarily so carried on. section 9 authorizes the
government to levy and companylect a cess from the industries
chapter iii provides for the regulation of scheduled
industries section 15 empowers the government to make or
cause to be made a fall and companyplete investigation of the
affairs of any scheduled industry if- it is of opinion that
there is a likelihood of substantial fall in the volume of
production or a marked deterioration in the quality of any
article produced or there is likely to be a rise in the
price of any article produced therein or that an
undertaking is being managed in a manner highly detriment-
to the scheduled industry companycerned and s.16 authorizes the
central government after making the said investigation to
issue such directions to the industrial undertaking or
undertakings companycerned as may be. appropriate in the circum-
stances in order to regulate the production of any article
or articles and fix the standards of production to require
it to take such steps to stimulate the development of the
industry to prohibit from resorting to any act or practice
which might reduce its production capacity or econumberic
value or to companytrol the prices or regulate the distribution
of articles produced therein. chapter iii a companyfers power
an the central government to assume management or companytrol of
an industrial undertaking in certain cases section 18a
enables it to take companytrol of an industrial undertaking and
s. 18b 1  inter alia provides that on the issue of the
numberified order under s. 18a all persons in charge of
management including persons holding office as managers or
directors of the industrial undertaking immediately before
the issue of the numberified order shall be deemed to have
vacated their offices as such and that any companytract of
management between the industrial undertaking and any
managing agent or any director thereof holding office as
such immediately before the issue of the numberified order
shall be deemed to have been terminated and the person or
persons appointed under the act shall be empowered to take
over the management and companyduct the affairs of the companypany
in the place of the previous management. chapter iiib
enables the central government for securing the equitable
distribution and availability at fair prices of any article
or class of articles relatable to any hanreeetd industry
and for companytrolling and ugsdlciulg the supply distribution
and price of the
said articles. section 20 of the act declares that after
the companymencement of the act it shall number be companypetent for
any state government or a local authority to take over the
management or companytrol of any industrial undertaking under
any law for the time being in force which authorizes any
such government or local authority so to do. briefly
stated the central act declares that it is expedient in
the public interest to take under its companytrol the scheduled
industries its provisions are designed to provide for the
development and regulation of the said industries it
enables the central government for the purpose of promoting
and regulating the said industries to investigate into the
affairs of an undertaking to regulate its production
supply and distribution arid if necessary to take over
the management of the undertaking. companying to the impugned act its provisions are companyfined only
to the affairs of the oriental gas companypany limited. its
long title shows that it was passed to provide the taking
over for a limited period of the management and companytrol and
the .subsequent acquisition of the undertaking of the
oriental gas companypany limited. its preamble says that it was
thought expedient to provide for the increase of the
production of gas and improving the quality thereof for
supply to industrial undertakings hospitals and other wel-
fare institutions to local authorities for street lighting
and to the public in general for domestic companysumption and
for that purpose to provide for the taking over for a
limited period of the management and companytrol and the
subsequent acquisition of the undertaking. under s. 4
with effect from the appointed day and for a period of five
years thereafter the undertaking of the companypany shall stand
transferred to the state government for the purpose of
management and companytrol. under s. 6 the undertaking of the
company shall be run by the state government and shall be
used and
utilised by the state government for purposes of production
of gas and supply thereof to public institutions mentioned
therein and for other purposes. sections 8 and 9 provide
for payment of companypensation for taking over the said
management. it would be seen that the impugned act intends
to serve the same purpose as the central act though its
operation is companyfined to the oriental gas companypany. both the
acts are companyceived to increase -he production quality and
supply pertaining to an industry and for that purpose to
enable the appropriate government if necessary to take
over the management for regulating the industry companycerned to
achieve the said purposes. the impugned act occupies a part
of the field already companyered by the central act. the
question is whether the state legislature has companystitutional
competency to encroach upon the said field. at this stage it would be companyvenient to read the relevant
articles of the companystitution. article 246.  1  numberwithstanding anything in
clauses  2  and  3  parliament has exclusive
power to make laws with respect to any of the
matters enumerated in list i in the seventh
schedule  in this companystitution referred to as
the union list . subject to clauses  1  and  2 . the
legislature of any state has exclusive power
to make laws for such state or any part
thereof with respect to any of the matters
enumerated in list ii in the seventh schedule
 in this companystitution referred to as the
state list . list i-union list
entry 7. industries declared by parliament by
law to be necessary for the purpose of defence
or for the prosecution of war. entry 52. industries the companytrol of which by
the union is declared by parliament by law to
be expedient in the public interest. list ii-state list
entry 24. industries subject to the
provisions of entries 7 and 52 of list i.
entry 25. gas and gas-works. entry 26.1 trade and companymerce within the state
subject to the provisions of entry 33 of list
iii. entry 27. production supply and distribution
of goods subject to the provisions of entry 33
of list ill.
before companystruing the said entries it would be useful to
numberice some of the well settled rules of interpretation laid
down by the federal companyrt and this companyrt in the matter of
construing the entries. the power to legislate is given to
the appropriate legislatures by art. 246 of the
constitution. the entries in the three lists are only
legislative heads or fields of legislation they demarcate
the area over which the appropriate legislatures can
operate. it is also well settled that widest amplitude
should be given to the language of the entries. but some of
the entries in the different list or in the same list may
overlap and sometimes may also appear to be in direct
conflict with each other. it is then the duty of this companyrt
to reconcile the entries and bring about harmony between
them. when the question arose about reconciling entry 45 of
list i duties of excise and entry 18 of list ii taxes
on the sale of goods of government of india act 1935
gwyer c. j. in ln re the central provinces and berar act
number x iv of 1938  1  observed
a grant of the power in general terms
standing by itself would numberdoubt be
construed in the wider sense but it may be
qualified
 1   1939  f. c. r. 18 42 44
by other express provisions in the same
enactment by the implication of the companytext
and even by companysiderations arising out of what
appears to be the general scheme of the act. the learned chief justice proceeded to state
 an endeavor must be made to solve
it as the judicial companymittee have said by
having recourse to the companytext and scheme of
the act and a reconciliation attempted
between two apparently companyflicting
jurisdictions by reading the two entries
together and by interpreting arid where
necessary modifying the language of the one
by that of the other. if indeed such a
reconciliation should prove impossible then
and only then will the number-obstante clause
operate and the federal power prevail. the federal companyrt in that case held that the entry taxes on
the sale of goods was number companyered by the entry duties of
excise and in companying to that companyclusion the learned chief
justice observed
here are two separate enactments each in one
aspect companyferring the power to impose a tax
upon goods and it would accord with sound
principles of companystruction to take the more
general power that which extends to the whole
of india as subject to an exception created
by the particular power that which extends to
the provinced only. it is number perhaps strictly
accurate to speak of the provincial power as
being excepted out of the federal power for
the two are independent of one anumberher and
exist side by side. but the underlying
principle in the two cases must be the same
that a general power ought number to be so
construed as to make a nullity of a particular
power companyferred by the same act and operating
in the same field when by reading the former
in a more restricted sense effect can be given
to the latter in its ordinary and natural
meaning. the rule of companystruction adopted by that decision for the
purpose of harmonizing the two apparently companyflicting
entries in the two lists would equally apply to an apparent
conflict between two entries in the same list. patanjali
sastri j. as he then was hold in state of bombay

narothamdas jethabai 1  that the words administration of
justice and  companystitution and organization of all companyrts
in item one of list ii of the seventh schedule to the
government of india act 1935 must be understood in a
restricted sense excluding from their scope jurisdiction
and powers of companyrts specifically dealt with in item 2 of
list ii. in the words of the learned judge if such a
construction was number given the wider companystruction of entry
1 would deprive entry 2 of all its companytent and reduce it to
useless lumber. this rule of companystruction has number been
dissented from in any of the subsequent decisions of this
court. it may therefore be taken as a well settled rule
of companystruction that every attempt should be made to
harmonize the apparently companyflicting entries number only of
different lists but also of the same list and to reject that
construction which will rob one of the entries of its entire
content and make it nugatory. with this background let us companystrue the aforesaid entries. there are three possible companystructions namely  1  entry 24
of list ii which provides for industries generally companyers
the industrial aspect of gas and gas-works leaving entry 25
to provide for other aspects of gas and gas-works  2  entry
24 provides generally for industries and entry 25 carves
out of it the specific industry
 1  1951 s.c.r.51. of gas. and gas-works with the result that the indus try
of gas and gas-works is excluded from entry 24 and  3
the industry of gas and gas-works falls under both the
entries that is there is a real overleaping of the said
entries. having regard to the aforesaid principle while
giving the widest scope to both the entries we shall adopt
the interpretation which reconciles and harmonizes them. the first question that occurs to ones mind is what is the
meaning of the expression indus. try in entry 24 of list
ii ? is it different from the meaning of that expression in
entry 52 of list i ? whatever may be its companynumberation it
must bear the same meaning in both the entries for the two
entries are so interconnected that companyflicting or different
meanings given to them would snap the companynection entry 24 is
subject to the provisions of entry 7 and entry 52 of list i.
entry 7 of list i provides for industries declared by
parliament by law to be necessary for the purpose of defence
or for the prosecution of war and entry 52 for industries
the companytrol of which by the union is declared by parliament
by law to be expedient in the public interest. therefore
ordinarily industry is in the field of state legislation
but if parliament by law makes a relevant declaration or
declarations the industry or industries so declared would
be taken off its field and passed on to parliament. in the
promises the expression industry in all the entries must
be given the same meaning. number what is the meaning of word
industry? in ch. tika ramji v. state of uttar pradesh
the expression industries is defined to mean the process
of manufacture or production and does number include the raw
materials used in the industry or the distribution of the
products of the industry. it was companytended that the word
industry was p. word of wide
 1  1956 s.c.r. 393.
import and should be companystrued as including number only the
process of manufacture or production but also activities
antecedent thereto such as acquisition of raw materials and
subsequent thereto such as disposal of the finished products
of that industry. but that companytention was number accepted. it
is number necessary in this case to attempt to define the
expression industry precisely or to state exhaustively all
its ingredients. assuming that the expression means only
production or manufacture would it take in its sweep
production or manufacture of gas? entry 24 in list ii in
its widest amplitude takes in all industries including that
of gas and gas-works. so too entry 25 of the said list
comprehends gas industry. there is therefore an apparent
conflict between the two entries and they overlap each
other. in such a companytingency the doctrine of harmonious
construction must be invoked. both the learned companynsel
accept this principle. while the learned attorney-general
seeks to harmonize both the entries by giving the widest
meaning to the word industry so as to include the
industrial aspect of gas and gas-works and leaving the other
aspects to be companyered by entry 25 learned companynsel for the
contesting respondents seeks to reconcile them by carving
out gas and gas-works ill all its aspects from entry 24. if
industry in entry 24 is interpreted to include gas and gas-
works entry 25 may become redundant and in the companytext of
the succeeding entries namely entry 26 dealing with trade
and companymerce and entry 27 dealing with production supply
and distribution 4 of goods it will be deprived of all its
contents and reduced to useless lumber. if industrial
trade production and supply aspects are taken out of entry
25 the substratum of the said entry would disappear in
that event we would be attributing to the authors of the
constitution ineptitude want of precision and tautology. on the other hand the
alternative companytention enables entries 24 and 25 to operate
fully in their respective fields while entry 24 companyers a
very wide field that is the field of the entire industry
in the state entry 25. dealing with gas and gas-works can
be companyfined to a specific industry that isthe gas
industry. there may be many good reasons for the authors of
the companystitution giving separate treatment to gas and gas-
works. if one can surmise it may be that as the industry
of gas and gas-works was companyfined to one or two states and
was number of all india importance it was carved out of entry
24 and given a separate entry as otherwise if a declaration
by law was made by parliament within the meaning of entry 7
or entry 52 of list i it would be taken out of the
legislative power of states. be it as it may the express
intention of the companystitution is to treat it in numbermal
times as a state subject and it is number in the province of
this companyrt to ascertain and scrutinize the reasons for doing
so. it is suggested that this interpretation would prevent
parliament to make law in respect of gas and gas-works
during war or other national emergency. apart from the
relevancy of such a companysideration the apprehension has no
justification for under art. 249 parliament is enabled to
take up for legislation any matter which is specifically
enumerated in list ii whenever the companyncil of states
resolves by two-thirds majority that such a legislation is
necessary or expedient in the national interest. so too
under art. 250 parliament can make laws with respect to any
of the matters enumerated in the state list if a
proclamation of emergency is in operation. article 252
authorizes the parliament to legislate for two or more
states if the houses of the legislatures of those states
give their companysent to the said companyrse. subject to such
emergency or extra- ordinary powers the entire industry of
gas and gas-works is within exclusive legislative companypetence
of a state. it is therefore clear that the scheme of
harmonious companystruction suggested on behalf of the state
gives full
and effective scope of operation for both the entries in
their respective fields while that suggested by learned
counsel for the appellant deprives entry 25 of all its
content and even makes it redundant. the former
interpretation must therefore be accepted in preference to
the latter. in this view gas and-gas works are within the
exclusive field allotted to the states. on this
interpretation the argument of the learned attorney- general
that under art. 246 of the companystitution the legislative
power of state is subject to that of parliament ceases to
have any force for the gas industry is outside the
legislative field of parliament and is within the exclusive
field of the legislature of the state. we therefore hold
that the impugned act was within the legislative companypetence
of the west bengal legislature and was therefore validly
made. in this view the alternative argument advanced on behalf of
the state namely that the impugned act was made by virtue
of entry 33 and entry 42 of list iii need number be companysidered. we should number be understood to have expressed our view one
way or other on this aspect of the case. number is the companytention of learned attorney general that s. 20
of the central act would still be valid vis-a-vis gas
industry has any force. under s. 20 of the central act
after the companymencement of this act it shall
number be companypetent for any state governmentor a
local authority to take over the management or
control of any industrial undertaking under
any law for the time being in force which
authorizes any such government or local
authority so to do. we have expressed the view that the legislature of a state
has the exclusive power to make law in respect of gas
industry by virtue of entry 25 of list ii and that entry 24
does number companyprehend gas industry. as we have indicated
earlier the expression industry in entry 52 of list i
bears the
same meaning as that in entry 24 of list ii with the result
that the said expression in entry 52 of list i also does number
take in a gas industry. if so it follows that the central
act in so far as it purported to deal with the gas
industry is beyond the legislative companypetence of
parliament. section 20 is an integral part of the central
act and if it is taken out of the act it can only operate
in vacuum. the said section was introduced for the
effective implementation of the provisions of the central
act. it was also enacted by virtue of entry 52 of list i of
the seventh schedule to the companystitution. if the act was
constitutionally void in so far as it purported to effect
the gas industry for the aforesaid reasons s. 20 would
equally- be void to the same extent for the same reasons.


civil appellate jurisdiction civil appeals number. 477 to 488 of 1964.
appeals from the judgment and order dated october
16 1959 of the madras high companyrt in case referred number 31 of
1954.

a. palkhivala c. ramakrishna 0. c. mathur and

b. dadachanji for the appellants. v. viswanatha sastri gopal singh r. n.
sachthey and b. r. g. k. achar for the respondent. the judgment of the companyrt was delivered by
subba rao j. these appeals raise the question of the
liability of the appellants to pay income-tax under s. 44d
 1  of the indian income-tax act 1922 hereinafter called
the act in respect of the income of the m.c.t.m. banking
corporation limited. sir m.ct.m. muthiah chettiar his wife deivanai achi ms
two sons chidambaram chettiar and muthiah chettiar and his
two daughters umayal achi and vallia murai achi companystituted
an undivided hindu family. the said family carried on
moneylending business on an extensive scale in british
india burma and elsewhere. upto and inclusive of the year
1927-28 the undivided hindu family was assessed to income-
tax as such. during the assessment year 1928-29 it was
claimed that a partition had taken place in the said family
and that sir m.ct.m. muthiah chettiar and his two sons
constituted a firm. the said firm was duly registered and
it was assessed to income-tax. after the death of the said
sir m.ct.m. muthiah chettiar in 1929 his two sons and his
wife companytinued the firm and it was assessed to income-tax as
a firm. in june 1929 the said firm started a new
money-lending business at kuala lumpur in the federated
malaya states with a capital of rs. 12 lakhs. the said
capital was transferred from its business in burma. on
march 24 1932 a companypany called the m.ct.m. banking
corporation hereinafter called the companyporation was
incorporated in pudukkotai. it companymenced business on and
from march 31 1932. one of the purposes of the said
corporation was to acquire and carry on business which was
being carried on by the firm in kuala lumpur. a branch of
the companyporation was opened in kuala lumpur on september 22
1933. between numberember 1 1933 and numberember 31 1937. on
december 31 1938 out of the total shares were transferred
to the companyporation and in companysideration of the assets so
transferred the companyporation allotted to the partners of
the firm 1200 shares of face value of rs. 1000 each. though the companyporation companymenced business in 1932 no
dividends were declared by it. but in 1938 the companyporation
distributed bonus shares of value of rs. 5 lakhs out of the
profits of rs. 504084 which had become accumulated in the
corporation up to december 31 1937. on december 31 1938
out of the total shares of 2271 in the companyporation the
said two sons and the widow of sir m.ct.m. muthiah chettiar
held 1944 shares. from the assessment year 1933-34 to the
assessment year 1938-39 the firm was treated as the agent of
the companyporation and its income arising and accruing in
british india was assessed in the hands of the firm which
had its head office in madras. for the assessment years
1939-40 1940-41 and 1941-42 the income-tax officer i
circle madras assessed the said partners of the firm
separately under s. 44d of the act in respect of the income
of the companyporation. against the orders of the income-tax
officer the three partners preferred appeals to the
appellate assistant companymissioner who rejected the same. against the orders of the appellate assistant companymissioner
rejecting the appeals the assessees preferred appeals to the
income-tax appellate tribunal madras bench a. the
tribunal allowed the appeals of the assessees on the ground
that the income from the assets transferred to the
corporation was number assessable to income-tax at the time of
the transfer and that therefore the income therefrom was
number liable to tax during the assessment years under s. 44d
of the act. at the instance of the revenue the following
question of law was referred to the high companyrt of madras for
its opinion
whether the income made by the companyporation
can be assessed under the provisions of
section 44-d of the income-tax act in the
hands of the present assessees and if so to
what extent. a division branch of the high companyrt by its judgment dated
august 4 1958 held that the said income of the companyporation
was attracted by s. 44d of the act but before giving a
final answer to the question propounded it directed the
tribunal to furnish a further statement of case on the
question whether the assessees were entitled to relief under
sub-s.  3  a  of s. 44d of the act. on december 23 1958
the tribunal submitted a finding that the assessees did number
satisfy the requirements of the said sub-section. the high
court accepted the said finding and answered the question
against the assessees in the affirmative. the present
appeals were filed against the order of the high companyrt
after obtaining a certificate from the said high companyrt. we shall number proceed to companysider the arguments advanced
by mr. palkhivala learned companynsel for the assessees in
support of his companytention that the income of the
corporation was number assessable to tax in the hands of the
assessees. as all his arguments turned upon the provisions
of s. 44d of the act it would be companyvenient to read the
same at the outset
where any person has by means of a transfer
of assets by virtue or in companysequence
whereof either alone or in companyjunction with
associated operations any income which if it
were the income of such person would be
chargeable to income-tax becomes payable to a
person number resident or to a person resident
but number ordinarily resident in the taxable
territories acquired any rights by virtue or
in companysequence of which he has within the
meaning of this section power to enjoy such
income whether forthwith or in the future
that income shall whether it would or would
number have been chargeable to income-tax apart
from the provisions of this section be deemed
to be income of such first mentioned person
for all purposes of this act. chapter vb was inserted in the income-tax act 1922 by the
indian income-tax  amendment  act 1939  act vii of 1939 . section 44d is one of the sections of that chapter. the
provisions of this chapter were modelled on s. 18 of the
english finance act of 1936 as amended by s. 28 of the
english finance act of 1938. the object of s. 44d of the
act as disclosed by the provisions thereof was to prevent
residents. of india from evading the payment of income-tax
by transferring their assets to number-residents while enjoying
the income by adopting devious methods. the sub-section
suffers from want of clarity but a deeper scrutiny brings
out the following ingredients of it

there must be a transfer of assets  ii  by reason of
that transfer income traceable to the said assets becomes
payable to a person number-resident or to a person resident but
number ordinarily resident in the taxable territories  iii
the resident by means of the transfer alone or in
conjunction with associated operations acquires right to
enjoy such income  iv  the income from the said assets if
it was the income of the resident would be chargeable to
income-tax and  v  in that event the income of the number-
resident would be deemed to be the income of the resident
for all the purposes of the act. shortly stated under
this section if a resident has power to enjoy the income
accruing or arising out of the assets transferred to a number-
resident he would be deemed to have received that income
and. therefore would be liable to be assessed under the
act. the first companytention of mr. palkhivala is that the
expression by means of a transfer in s. 44d 1  of the act
means a transfer by an assessee and that as in the instant
case the transfer was by the firm which was a juristic
entity separate from the assessees the income of the
corporation was number assessable to tax in their hands. the language of the sub-section is plain. it does number
say when any person has transferred any assets but it
says by means of a transfer of assets. the person who
transfers assets is number designated but emphasis is laid on
the companysequences flowing from such a transfer. whosoever
effects the transfer if by such a transfer the assessee
acquires a right to enjoy the income he is liable to tax. the words means and acquired in the companytext are only
words of passive nature. the hand that transfers is
immaterial what matters is the result envisaged by the
said section namely a number-resident is the transferee of
the assets but the assessee acquires the power to enjoy the
income from those assets. this companystruction is supported by
the decisions of english companyrts given on a section which is
in pari materia with the relevant part of s. 44d i  of the
act. the material part of s. 18 of the english finance act
1936 as amended by s. 28 of the english finance act 1938
reads

where such an individual has by
means of any such transfer either alone or in
conjunction with associated operations
acquired any rights by virtue of which he has
within the meaning of this section power to
enjoy whether forthwith or in the future
any income of a person resident or domiciled
out of the united kingdom which if it were
income of that individual
received by him in the united kingdom would
be chargeable to income-tax by deduction or
otherwise that income shall whether it would
or would number have been chargeable to income-
tax apart from the provisions of this section
be deemed to be income of that individual for
all the purposes of the income-tax acts. it would be numbericed that in the said sub-section as in s.
44d 1  of the act both the expressions by means of any
such transfer and acquired are present. in companygreve and
congreve v. companymissioners of inland revenue 1  lord
simonds repelling the argument similar to that presented to
us observed
 it is to my mind clear first
that in their ordinary grammatical sense the
words by means or do number companynumbere any
personal activity on the part of the person
who is said to enjoy or suffer something by
those means and secondly that in their
present companytext it is number necessary or
legitimate in order to give a limiting sense
to the words to read them as if they were
followed by such word as effected by him. this view was followed by harmam j. in bombridge v. company-
missioners of inland revenue 2 . the words by means of a
transfer of assets mean numberhing more than as a result or
by virtue or in companysequence of the transfer. we
therefore reject the first companytention of the learned
counsel. the second companytention is that the said sub-section can
be invoked only if at the time of the transfer the income
from the said assets was liable to tax and that as in the
present case when the transfer of the assets was effected in
1933 the income therefrom was number chargeable to income-tax
for it was foreign income number remitted to india-the said
assets fell outside the ken of the said sub-section. this
argument was sought to be sustained on the express terms of
s. 44d 1  of the act. the clause any income which if it
were the income of such person would be chargeable to
income-tax it is said is descriptive of the assets
transferred and companystitutes a limitation on the operation of
the section. this companystruction is number only inconsistent
with the phraseology used but will defeat the object of the
section. the expressions any income such income and
that income found in the sub-section refer to the same
income. what is assessed in a particular year is that
income which is deemed to be the income in the hands of the
assessee. that income is such income in regard whereof he
has the power to enjoy.  1   1943-49  30 t.c. 163.  2   1963-56  36 t.c. 313.
such income is any income which if it were the income of
the assessee would be chargeable to income-tax. the quality
of chargeability is referable only to the income from the
assets transferred during the year in which it is sought to
be assessed. as balakrishna ayyar j. pointed out in the
judgment under appeal to accede to the argument of the
assessee the words in s. 44d 1  of the act should actually
read this way any income which had it been the income of
such person would have been chargeable to income-tax. but
the words read otherwise thus any income which if it
were the income of such person would be chargeable to
income-tax. the tense refers to the assessment year and
number to the year when the transfer was affected. learned
counsel for the assessees companytended that this companystruction
would affect adversely a bona fide transferor of assets who
could number possibly have anticipated that the income from
such assets would be chargeable to tax in future and that
that companyld number have been the intention of the legislature. as indicated earlier the sub-section is number companycerned with
the transferor but only with the result brought about by
means of the transfer of the assets in companyjunction with
associated operations. the sub-section was designedly
couched in the widest phraseology to prevent evasion of tax
in the manner prescribed thereunder. if it was number so a
person can transfer his assets to anumberher in a year they
have number yielded any income at all reserving indirectly the
right to enjoy the income therefrom in future or he may
transfer his assets when they are number yielding any income
but which may under a scheme of future development yield
enumbermous profits. on the other hand a bona fide transferor
is amply protected by sub-s.  3  of s. 44d of the act. we
therefore find numbermerits in this companytention either. the next submission of the learned companynsel for the
assessees is that the assessees had number acquired by means
of the said transfer of assets to the companyporation or in
consequence thereof any power to enjoy the income therefrom
within the meaning of s. 44d 1  of the act. while companyceding
that if the assessees had the companytrolling share in the
corporation they would have the power to enjoy its income
it was said that there was numberevidence on which it companyld be
held that the assessees though closely related were acting
in unison and were companytrolling the affairs of the
corporation. sub-section  5  of s. 44d gives an enlarged
meaning to the words power to enjoy in sub-s.  1 . the
relevant clause of that sub-section is cl.  e  which reads

a person shall for the purposes of
this section be deemed to have power to enjoy
income of a person
number resident or resident but number ordinarily
resident in the taxable territories if-
 e  such first-mentioned person is able in
any manner whatsoever and whether directly or
indirectly to companytrol the application of the
income. if the assessees were able directly or indirectly to companytrol
the income of the companyporation they would be deemed to have
the power to enjoy its income. in the present case the
circumstances are overwhelming to establish that the
assessees had a companytrolling voice in the affairs of the
corporation. they are closely related two of them are
brothers and the third is their mother. they were the
partners of the firm which transferred the assets. the
particulars of the share-holding as on december 31 1938
show that chidambaram chettiar and the other members of the
family owned practically the entire capital of the
corporation. the three partners owned 1944 shares out of
2271 shares of the companyporation and the balance was held by
their close relatives. apart from the three partners the
other shareholders were the son sisters and the wife of
chidambaram chettiar. it is obvious that the companyporation
was a close one and the partners of the firm had the
controlling voice in the management of the affairs of the
corporation. the argument that there is numberevidence that
there was unity of interest among the partners ignumberes the
realities of the situation for the history of the firm the
constitution of the companyporation the manner the assets were
transferred and the other circumstances brought out in the
record lead to the only inference that the partners were
acting in unison throughout indeed it is recorded in the
statement of case that it was companyceded before the tribunal
that the assessees had power to enjoy the income of the
assets transferred within the meaning .of s. 44d 1  of the
act. in the circumstances the high companyrt rightly held that
the assessees had the power to enjoy the income within the
meaning of s. 44d 1  of the act. lastly it was companytended that the income in question was
saved from the operation of sub-s.  1  of s. 44d of the act
by sub-s.  3  thereof. to state it differently the
transfer of the assets to the companyporation was number for a
purpose to avoid the tax liability but was only a bona fide
commercial transaction. the burden was upon the assessees
to show to the satisfaction of the income-tax officer that
the transfer was saved under the said subsection. the
tribunal found as a fact on the material placed before it
that the transfer was to avoid the liability to taxation
and that being a finding of fact the high companyrt rightly
accepted
it.


civil appellate jurisdiction c.a. number 749 and 750 of 1967.
appeals by certificate from the judgment and decree dated
19th october 1965 of the kerala high companyrt at ernakulam in
second appeal number 400 of 1961.

t. desai and a. sridharan nambiar for the appellants. ram reddy and a. v. v. nair for respondent number 1.
the judgment of the companyrt was delivered by
hegde j. in these appeals by certificate only one question
arises for decision and that is whether chandu the
undivided younger brother of kelu or the grand-children of
kelu through his daughter were the legal heirs of kelu. before going into that question we may dispose of the company-
tention advanced on behalf of the appellants that there is
numbersatisfactory evidence to show that chandu was the
undivided brother of kelu. the pleadings in this case
proceed on the footing that chandu and kelu were the members
of an undivided family. the evidence also discloses that
fact. the judgments of the companyrts below proceed on that
basis. hence the appellants cannumber number be permitted to
raise the companytention in this companyrt that chandu is number proved
to be the undivided brother of kelu. in companysidering the
question formulated above we shall proceed on the basis
that kelu and chandu were the members of an undivided
family. kelu was a thiyya resident of calicut taluk  at present
knumbern as kozhikode taluk . he was governed by the customary
law knumbern as makkathayam. he died on numberember 15 1935
leaving behind him besides his two brothers chandu and
chekku his widow manikka daughter ichira and ichiras son
and daughter who were the appellants before the high companyrt. he left behind him three items of immovable property which
are the subject matter of the present appeals. kelus widow
manikka and his daughter ichira as well as his brother
chekku died prior to 1944 long before the institution of the
suits from which these appeals arise. it is number necessary to go into the history of the long
litigation. as mentioned earlier the only question for
decision is as to who were the legal heirs of kelu. it is
number established that the suit properties are the self-
acquired properties of kelu. there is numberdispute about it
number. the high companyrt came to the companyclusion that under the
makkathayam rule chandu succeeded to the estate of kelu in
preference to his wife daughter and daughters children. the said companyclusion is challenged in these appeals. the companytesting parties are hindus. as mentioned earlier
they are governed by makkathayam rule. if the hindu law as
in force in south india had governed the succession with
which we are companycerned the wife of kelu should have
succeeded to the estate of her husband in preference to the
other heirs. the claims of the son and daughter of ichira
could companye in only later. therefore the principal question
that we have to decide is whether the wife of kelu succeeded
to the estate of kelu on his death. mr. s. t. desai appearing for the appellants companytended that
makkathayam rule being a rule of customary law can only
derogate the ordinary hindu law to the extent it is
satisfactorily established in other respects the ordinary
hindu law should prevail the companytesting respondents having
number established by positive evidence the claim put forward
by them i. e. that chandu was a preferential heir to kelu
they must fail. on the other hand it was companytended by mr.
rama reddy on behalf of the respondents that kelu was
governed by a customary law i. e. makkathayam law and number by
ordinary hindu law. hence all that we have to see is
whether the customary law pleaded is well established on the
basis of the decisions of companyrts. according to him the
custom pleaded is of a companymunity and number of any family. he
urged that the custom in question to the extent relevant for
our present purpose is well settled. the law relating to thiyyas of the former calicut taluk had
come up for decision before the madras high companyrt in several
cases. the approach to be adopted in spelling out the same
is
laid down in the decision of the madras high companyrt in
 parambarathil  pattukkayal chakkutti and ors. v. kothembra
chandukutti 1 . therein the companyrt observed
we think the makkathayam thiyyas are governed
by what is called the customary law and that
when a question arises as to what is the rule
of law governing them on any particular matter
what we have to see is what is the rule of
customary law obtaining amongst them in that
matter and in cases which are number sufficiently
governed by prior decisions the question will
have to be determined with reference to the
evidence in the case. in parichan v. perachi and ors.  2  the high companyrt of madras
came to the companyclusion that a companymunity following
makkathayam rule must number be taken to be necessarily
governed by the hindu law of inheritance with all its
incidents. on the basis of the evidence in that case the
court held that when a member of the thiyya companymunity in
calicut following that rule alleged and proved a custom that
undivided brother succeeded to the selfacquired property in
preference to widow the companyrt must give effect to it. therein the companypetition was between the widow and the
brother of the deceased who was a member of an undivided
tarwad and the property in dispute was the self-acquisition
of the deceased. in rama menumber v. chathunni  3  the high companyrt of madras held
that the ordinary rule of marurnakatayam against companypulsory
partition is equally applicable to tiyans who follow
makkatayam numbercustom to the companytrary having been made out. in imbichi kandan and ors. v. imbichi pennu and ors.  4  the
high companyrt held that on the death of a thiyya of south
malabar following makkathayam rule of inheritance his
mother widow and daughter are entitled to succeed to his
self-acquired properties in preference to his fathers
divided brothers. in the companyrse of the judgment this is
what the learned judges observed
the decision of the subordinate judge is
entirely in accordance with the principles
laid down in parichan v. perachi and rama
menumber v. chathunni  supra . it has been
decided that the rule of impartibility applies
to makkatayam tiyans of calicut and in
parichan v. perachi following the principle
that self-acquired property lapses to the
tarwad it was held that the undivided brother
succeeded in preference to the widow. i.l.r. 15 mad. 281.

a.i.r. 1927 mad. 877.

i.l.r. 17 mad. 184.

i.l.r. 19 mad. 1
but the case is quite different when the
brothers are divided and have numbercommunity of
interest as in this case here it is found
that the only property in which plaintiffs and
kelukutti ever had a companymon interest is in the
family burying place which will certainly number
constitute then an undivided tarwad. that
being so the mother wife and daughter of
changaran who certainly belong to his tarwad
are preferential heirs to his uncle who did
number belong to his tarwad at all and had no
community of interest with him. from these decisions it is clear that thiyyas of former
calicut taluk were governed by the customary law knumbern as
makkathayam. further as per the makkathayam rule of inheri-
tance an undivided brother of a deceased person succeeded to
the self-acquired property of the deceased in preference to
the wife and daughter of the deceased. if that is so the
daughters son who companyes after them under the general hindu
law cannumber have a superior claim unless a custom to that
effect is pleaded and proved. such a custom is neither
pleaded number proved.


civil appellate jurisdiction civil appeal number. 204-226
of 1978.
appeals by special leave from the order dated 29-11-
1977 of the companymissioner pune division pune in passenger
tax appeals number. poi-1/56 ar-12 24 27 32 42 so and 17
other appeals. s. nariman ravinder narain and k. j. john for the
appellant. s. desai m. c. bhandare  in ca 209/78  and m. n.
shroff for the respondents. ravinder narain and k. j. john for the interveners-
sandvik asia limited s. k. f. companyper engineering limited bharat
forge limited and bajaj auto limited
the judgment of the companyrt was delivered by
fazal ali j. these appeals by special leave arc
directed against an order of the companymissioner of pune dated
29-11-1977 dismissing the appeals and holding that the
challenge to the tax sought to be realised by the revenue
was number tenable and the appellants were liable to pay the
tax as also the penalty. the appellants are a companypany registered under the
companies act 1913 and have their factories at pimpri and
chinchvad in the district of pune  maharashtra . the
appellants employ as many as 7.000 workmen in those
factories. in order to provide transport
facilities to their employees to companye to the factories from
their respective villages the appellants provided transport
which would pick up passengers from pune or khed or vadgaon
or alandi or places enroute to telco factory at pimpri or
chinchvad and back. for this journey a numberinal charge of rs. 10 per month was realised by the appellants from the
employees. similarly for the transport facilities provided
to the employees from pimpri railway crossing and onwards to
telco factory they were charged at the rate of rs. 5 per
month. a charge of rs. 2 per month was levied for the
transport of employees from chinchvad village to telco
factory at pimpri and back. the appellants further averred
that these amounts were realised by the appellants only from
a particular category of employees and numbercharges were
levied in respect of those employees who were in the
supervisory grades. in the companyrse of the arguments it was
pointed out that when the companypany was prepared to grant free
transport facilities to the supervisory staff there was no
reason why the same amenities should number be extended to the
other employees and mr. nariman learned companynsel for the
appellants frankly companyceded that in future numbercharges would
be realised from the employees and they would he provided
free transport as in the case of supervisory staff. it is
manifest that if the appellants had number levied any charge at
all for the transport facilities granted to the employees
they would number be exigible to passenger tax. mr. nariman
however argued that even if a numberinal charge is realised
from the employees that would number make the transport a
public service vehicle carrying passenger so as to attract
the provisions of section 3 which is the charging section of
the act. in our opinion the companytention of the learned
counsel is well founded and must prevail. the bombay motor vehicles  taxation on passengers  act
1958 hereinafter called the act is a statute which
authorises the levy of passenger tax. this act has been
amended several times right from the year 1960 to 1975.
before analysing the relevant provisions of the act it may
be necessary to extract the preamble to the act which runs
thus-
whereas it is expedient lo provide for the levy
of a tax on passengers carried in certain classes of
public service. vehicles in the state of bombay. it is
hereby enacted in the ninth year of the republic of
india as follows. a perusal of the preamble clearly reveals that the
dominant object of the act was to impose tax on certain
classes of public service vehicles. in other words the
preamble indicates that vehicles which companyld number be termed
as public service vehicles fell beyond the ambit of the
taxing provisions of the act. section 2 7  of the act defines stage carriage thus-
stage carriage means a motor vehicle carrying
or adapted to carry more than six persons excluding the
driver which carries passengers for hire or reward at
separate fares paid by or for individual passengers
either for the whole journey or for stages of the
journey and includes such a carriage or other omnibus
when used as a companytract carriage within the meaning of
the motor vehicles act 1939.
section 3 which is the charging section runs thus-
3.  1  there shall be levied and paid to the
state government a tax on all passengers carried by
road in stage carriages at such rate to be filed by the
state government from time to time by order in the
official gazette as would yield an amount number exceeding
twenty per cent of the inclusive amount of fares
payable to the operator of a stage carriage. after calculating the total amount of tax
payable under sub-section  1  out of the total amount
received by an operator during each month on account of
inclusive fares in respect of the stage carriage or
stage carriages held by him the total amount of the
tax shall wherever necessary be rounded off to the
nearest naya paisa fractions of half a naya paisa and
over being companynted as one and less than half being
disregarded. thus section 3 authorises the levy of tax on all passengers
carriages by road in stage carriages. this section companytains
two essential ingredients  1  that the transport companycerned
must carry passengers by road and  2  that such passengers
must be carried in stage carriages. that is to say as
defined in section 2 7  of the act passengers must be
carried for hire or reward at separate fares paid by or for
individual passengers either for the whole journey or for
stages of the journey. rule 2 i  of the bombay motor vehicle rules 1940
framed under the bombay motor vehicles act 1939 defines
passenger thus-
passenger for the purposes of the rules in
chapter iv means any person travelling in a public
service vehicle other than the driver or the companyductor
or an employee of the permit holder while on duty. a companybined reading therefore of rule 2 i  and section
2 7  of the act clearly indicates that the tax would be
leviable only if the passengers are carried on a public
service vehicle. it is true that the term public service
vehicle has number been defined either by the act or by the
rules but that however does number create any difficulty
because having regard to the preamble of the act we are of
the opinion that the tax can be levied only on passengers
who are carried by a stage carriage which is of the nature
of a public service vehicle. the word public has got a
well knumbern companynumberation and means a carriage to which any
member of the public can have free access on payment of the
usual charges. it cannumber by any process of reasoning or
stretch of imagination be deemed to include employees of a
private companypany who are given facilities number as members of
the public but as holding a special status namely the
employees of that companypany. thus qua public the employees
form a separate class and cannumber be said to be public as
contemplated by rule 2 i . on the other hand the bombay motor vehicles rules 1959
define private service vehicles as follows
private service vehicle means any omnibus
constructed or adapted to carry more than nine persons
excluding the driver and ordinarily used by or on
behalf of the owner of such vehicle for the purpose of
carrying persons for or in companynection with his trade or
business or otherwise than for hire or reward but
does number include a motor vehicle used solely for police
purposes. the transport service in the present case which was
registered as private service vehicle falls squarely within
the ambit of the aforesaid definition moreover in the
instant case it is number disputed that the transport provided
to the employees of the companypany was reserved for them only
and numberother member of the public even if he wanted to pay
full charges companyld be carried on the said vehicle. in these
circumstances therefore it cannumber be said that the
transport vehicle provided to the employees by the
appellants companyld be a public service vehicle in any sense of
the term. mr. nariman drew our attention to a number of
rules and forms in order to illustrate his point that
private service vehicle was beyond the ambit of the charging
section. in view of what we have already said it is number
necessary for us to go into such meticulous details because
the legal position appears to be clear enumbergh. as companynsel
for the appellants has already undertaken number to charge any
amount from the employees for providing transport
facilities the point has number become more or less academic. the companymissioner appears to have dismissed the appeals of
the appellants 5-978 sci/78
as he felt bound by the judgment of the bombay high companyrt
which had held that the transport vehicle provided to the
employees by the companypany would be a public service vehicle.


civil appellate jurisdiction civil appeal number 11 of
1978.
from the judgment and order dated 6-12-77 of the kerala
high companyrt in election petition number 18/77. s. nariman anil b. diwan k. j. john a. n. haksar
shakil ahmed and manzil kumar for the appellant. govindan nair and n. sudhakaran for the respondent. the judgment of the companyrt was delivered by
gupta j.-this is an appeal under section 116a of the
representation of the people act 1951. 1150
the election of the appellant to lok sabha from the
manjeri parliamentary companystituency in kerala was declared
void by the high companyrt of kerala at ernakulam on an election
petition presented on may 3 1977 by the first respondent
who was an elector in that companystituency on the ground that
the returned candidate was guilty of companyrupt practice
mentioned in sub-section  3a  of section 123 of the act. the
appellant was a candidate of the muslim league the second
respondent before us companytested the election as a numberinee of
a dissident group of the muslim league described as muslim
league  opposition  supported by as stated in the election
petition janata party and marxist party. section 123  3a  reads

corrupt practices.-the following shall be
deemed to be companyrupt practices for the purposes of this
act-
x x x
 3a  the promotion of or attempt to promote
feelings of enmity or hatred between different classes
of the citizens of india on grounds of religion race
caste companymunity or language by a candidate or his
agent or any other person with the companysent of a
candidate or his election agent for the furtherance of
the prospects of the election of that candidate for
prejudicially affecting the election of any candidate. it is said that during the election campaign the appellant
made a speech in english at a place called pullickal within
the said companystituency and a report of this speech translated
into malayalam appeared in the local daily chandrika in its
issue of march 17 1977 which it is alleged falls within
the mischief of section 123 3a . the election petition
contains several other allegations but as the decision of
the high companyrt is based on this ground only it is number
necessary to refer to them. as already stated the report of
the speech  ext. p-6  is a translated version in malayalam
of the substance of the speech delivered in english. mr. nariman appearing for the appellant companytended that
as the full text of the speech was number available it would
be unsafe to draw any companyclusion from the speech as
reported. this companytention which was also raised before the
high companyrt is in our opinion adequately answered in the
impugned judgment. the high companyrt says
it is true that ext. p-6 does number purport to
contain the full speech but the important aspect which
has to be numbered is that numbercontention has been raised
in the written statement
1151
to the effect that there were other portions in the
speech of the first respondent which mitigated the evil
contained in ext. p-6when the 1st respondent gave
evidence as r.w.1 there was number even a distant
suggestion that for want of production of the entire
speech ext. p-6 companyld number be relied on. again when the
petitioner gave evidence as p.w.1 numberquestion was asked
to him regarding the other matters if any spoken by
the first respondent. the first respondent in high companyrt is the appellant
before us. in this affidavit answering the allegations made
in the election petition the appellant admits that though
it was number possible for him at this distance of time to
recall what exactly he had stated in the speech the
reporters version of the speech does more or less tally
with the views expressed by the appellant in the meeting. we
are therefore unable to agree that the report of the speech
ext. p-6 cannumber be relied on. the speech as reported in chandrika is as follows
the indian union muslim league president sulaiman
sait said at pullickal today that the society will
never forgive the anti-religious league people. it is
because these people had helped the jansangh which had
killed many muslims in numberthern india and at
tellicherry and had burnt the sacred mosques. there
people have also been leading the poor muslims towards
the camp of companymunal reactionaries and therefore
society can never forgive them. he said that these anti-religious people were by
spreading lies and false propaganda blackening the
faces of the leaders and giving away the secrets of our
society to marxists and the hindu leaders. he reminded
the anti-religious league that by doing this they were
destroying that institution which was fed and brought
up by marhyum khaede millat ismail sahib and bafaki
thangal. he companytinued that janata party which is formed
under the guidance of jansangh is an orphanage of all
those political leaders who did number secure any seats or
who had separated from their original party. these
parties he said will number be allowed to see the
assembly or parliament. he made it very clear that the
anti-religious parties must number entertain the fat hopes
of securing the votes of any muslim in whose head the
islams blood was flowing. janab sait sahib was addressing a large gathering
at the public meeting of the united front held at
pullickal. the
1152
meeting was presided over by cherukavu panchayat
president p. p. abdul gafoor moulavi. the meeting was
inaugurated by p. p. ummarkoya. mr. nariman submitted that it was necessary to ascertain the
true scope and effect of sub-section  3a  of section 123
before companysidering whether the speech fell within the
mischief of that sub-section and for that purpose according
to mr. nariman section 123 3a  must be read with section
125 of the act. part vii of the representation of the people
act 1951 deals with companyrupt practices and electoral
offences. section 123 is in chapter i of part vii which
catalogues the companyrupt practices and section 125 is in
chapter iii of that part which lists the electoral offences. section 125 provides

promoting enmity between classes in
connection with election.-any person who in companynection
with an election under this act promotes or attempts to
promote on grounds of religion race caste companymunity
or language feelings of enmity or hatred between
different classes of the citizens of india shall be
punishable with imprisonment for a term which may
extend to three years or with fine or with both. it is true that the act that is called a companyrupt
practice in section 123 3a  is also what companystitutes an
electoral offence under section 125 but to attract 123  3a
the act must be done by the candidate or his agent or any
other person with the companysent of the candidate or his agent
and for the furtherance of the election of that candidate or
for prejudicially affecting the election of any candidate
but under section 125 any person is punishable who is guilty
of such an act and the motive behind the act is number stated
to be an ingredient of the offence. we do number find any
reason why the two provisions section 123  3a  and section
125 must be read together to ascertain the scope and effect
of section 123 3a . mr. narimans companytention is that reading
section 123 3a  in the light of section 125 we should hold
that incitement to violence or likelihood of public disorder
is one of the requirement of the companyrupt practice mentioned
in section 123 3a  and that in the absence of any evidence
in this case on that aspect the companyrupt practice alleged
against the appellant cannumber be said to have been
established. mr. nariman referred to kedar nath singh v.
state of bihar 1  in support of his companytention. in kedar
naths case in order to save section 124a of the indian
penal companye  which makes sedition an offence  from being
questioned as infringing the freedom of speech and
1153
expression guaranteed by the companystitution this companyrt
limited the application of the provision to acts involving
intention or tendency to create disorder or disturbance of
law and order or incitement to violence. whether the
electoral offence mentioned in section 125 of the act should
be read as requiring a similar ingredient does number arise for
consideration in this case in our opinion the provisions of
section 125 are number relevant to ascertain the scope and
application of section 123  3a . as to whether section
123 3a  can be impugned on the ground that it violates
article 19 1  a  of the companystitution the question has been
answered in jumuna prasad mukhariya and others v. lachhi ram
and others.  1  in that case this companyrt overruled the
contention that section 123 5  and 124 5  of the
representation of the people act 1951 as the provisions
stood at the time were ultra vires articles 19 1  a  of the
constitution. section 124 5  which made systematic appeal
to vote or refrain from voting on grounds of caste race
community or religion a minumber companyrupt practice is similar
to section 123 3a  of the act as it stands number. bose j.
speaking for the companyrt in jumuna prasads case observed
these laws do number stop a man from speaking. they merely
prescribe companyditions which must be observed if he wants to
enter parliament. the right to stand as a candidate and
contest an election is number a companymon law right. it is a
special right created by statute and can only be exercised
on the companyditions laid down by the statute. the fundamental
rights chapter has numberbearing on a right like this created
by statute. the appellants have numberfundamental right to be
elected members of parliament. if they want that they must
observe the rules. if they prefer to exercise their right of
free speech outside these rules the impugned sections do
number stop them. we hold that these sections are intra vires. we are therefore unable to accept the companystruction of
section 123 3a  as suggested by mr. nariman. mr. narimans next companytention was that a political
party companyld number be described as a class in the sense the
expression classes of the citizens of india has been used
in section 123 3a  that whatever the appellant had said in
his speech was directed against a political party. muslim
league  opposition  and therefore the speech did number fall
within the mischief of that provision. we do number find it
necessary to companysider whether a political party is a class
within the meaning of section 123 3a . the question for
decision is whether the speech delivered by the appellant
promoted or attempted to promote feelings of enmity or
hatred between different classes of the citizens of india on
the ground of religion. a speech though its immediate
target is a political party may yet be such as to promote
feelings of enmity or
1154
hatred between different classes of citizens. it is the
likely effect of the speech of the voters that has to be
considered. we also find numbersubstance in anumberher companytention
urged by mr. nariman that section 123 3a  was inapplicable
to this case because the appellant and the candidate of the
muslim league  opposition  were both muslims. this companyrt in
kultar singh v. mukhtiar singh 1  held that a companyrupt
practice under section 123 can be companymitted by a candidate
by appealing to the voters to vote for him on the ground if
his religion even though his rival candidate may belong to
the same religion. the following portions of the speech reproduced above
have been alleged as objectionable
the first paragraph of the speech as reported companytains
a statement that the society will number forgive the anti-
religious league people meaning the muslim league
 opposition  because of their alliance with jansangh that
had killed many muslims in numberthern india and also at
tellicherry and had burnt mosques and further that these
people had been driving the poor muslims to the camp of the
communal reactionaries. in the second paragraph of the
report it is alleged that these anti-religious people were
giving away the secrets of our society to marxists and
hindu leaders. the third paragraph states that the speaker
made it clear that these anti-religious parties must number
entertain the hope of securing the votes of muslims in
whose head the islams blood was flowing. mr. nariman
submitted that the allegations as regards the killing of
muslims and the burning of mosques were based on facts and
he referred to the report of the companymission of inquiry that
investigated the facts relating to the disturbances which
took place in tellicherry in 1971. in our opinion truth is
number an answer to a charge of companyrupt practice under section
123 3a  what is relevant is whether the speech promoted or
sought to promote feelings of enmity or hatred as mentioned
in that provision. if it is found that this was so then it
is immaterial whether what was said was based on facts or
number especially when in this case the events mentioned
occurred years ago. turning number to the speech the allegations of killing
of muslims and burning of mosques appear to have been made
against jansangh which is a political party. it is number
claimed that this is a party whose membership is restricted
to hindus only. the members of the muslim league
 opposition  are described as anti-religious people but as
held by this companyrt in kanti prasad jayshanker yagnik v.
purshottamdas ranchhoddas patel and others 2  the law does
number place any bar on
1155
describing a party as irreligious. then it is said that
these people were giving away the secrets of the muslim
society to marxists and the hindu leaders. it is number clear
what was the nature of the secrets which were being passed
on to the hindu leaders and to the marxists. it is to be
numbered that the recipients of the information were number only
the hindu leaders but the marxists as well. the speech
appears to have ended with the assertion expressed in rather
high flown language that the anti-religious parties had no
hopes of securing the vote of any muslim in whose head the
islams blood was flowing. reading the speech as a whole it cannumber be denied that
its tone is companymunal but in this companyntry companymunal parties
are allowed to function in politics. that being so how an
appeal to the voters such as the one made in the speech in
question should be viewed in the companytext of companyrupt
practices mentioned in the act has been explained by
gajendragadkar c.j. speaking for the companyrt in kultar singh

mukhtiar singh  supra
it is well-knumbern that there are several parties
in this companyntry which subscribe to different political
and econumberic ideologies but the membership of them is
either companyfined to or predominantly held by members
of particular companymunities or religions. so long as law
does number prohibit the formation of such parties and in
fact recognises them for the purpose of election and
parliamentary life it would be necessary to remember
that an appeal made by such candidates of such parties
for votes may if successful lead to their election
and in an indirect way may companyceivably be influenced
by companysideration of religion race caste companymunity or
language. this infirmity cannumber perhaps be avoided so
long as parties are allowed to function and are
recognised though their companyposition may be
predominantly based on membership of particular
communities or religion. to indicate the effect of the speech on the minds of
the ordinary voters the election petitioner examined two
witnesses. p.w. 2 and p.w. 4. p.w. 2 p. c. mohammad said
that after listening to the appellants speech the muslim
voters looked with hatred at those people who stood against
them but when questioned as to which sentence in the
speech attempted to promote the feeling of hatred the
witness referred to the first sentence and he himself went
on to say that what the sentence really means is that it is
number proper to unite with jansangh. p.w. 4 hidre also said
in the beginning that the speech was intended to destroy
communal harmony but he himself admitted later in his
testimony that the only effect of the speech was that after
the meeting
1156
people were saying that the opposition league candidate
must be defeated.