1995  3  suppl. scr 301

the judgment of the companyrt was delivered by

k. mukherjee j. pursuant to an order of detention dated july 111990
made by the secretary home and vigilance department government of kerala
under section 3 1  of the companyservation of foreign exchange and prevention
of smuggling activities act 1974  hereinafter referred to as the act

m. hari kumar the petitioner herein has been kept under detention since
july 31994 with a view to preventing him from smuggling goods. companysequent
upon a declaration subsequently made on august 1 1994 by an additional
secretary  ministry of finance department of revenue  government of india
under section 9 1  of the act the petitioners detention is to companytinue for
a period of two years. assailing the above order and declaration the
present petition has been moved on his behalf by his brother-in-law v.
rajan for a writ of habeas companypus. mr. sibal the learned companynsel appearing for the petitioner canvassed three
grounds in support of the petition. he first companytended that the
unreasonable and unexplained delay of about four years in executing the
order of detention clearly demonstrated that the detaining authority had
number properly applied his mind and arrived at a real and genuine
satisfaction about the necessity of detaining the petitioner. he next
contended that the grounds on which the order had been made were stale as
the alleged smuggling activity of the petitioner referred to therein took
place about four months earlier. he lastly submitted that the declaration
made under section 9 of the act was also bad as it does number indicate that
the declaring authority was aware of the unusual delay in serving the order
of detention and for that matter was satisfied that numberwithstanding such
lapse of time the petitioner was required to be kept in companytinued
detention solely for the smuggling activity alleged in the grounds of
detention. as in our opinion the first companytention of mr. sibal has got to be accepted
it will be redundant to deal with the other two. for a proper appreciation
of that companytention it will be necessary to refer to certain relevant and
undisputed facts. the petitioner was arrested by the customs authorities on march 2 1990 for
smuggling silver ingots in india through the port of companyhin-which forms the
sole basis for the impugned order of detention - and produced before the
additional chief judicial magistrate  econumberic offences  ernakulam. on
march 5 1990 an application for bail was moved on his behalf and on the
following day it was allowed by the learned magistrate with a direction
that he would appear before the assistant companylector  preventive
department  companyhin on any two days within a fortnight. aggrieved by such
grant of bail the customs authorities preferred and application before the
high companyrt for its cancellation. the high companyrt however did number feel
inclined to cancel the bail but directed by its order dated march 21 1990
that the petitioner shall number leave trivandrum and ernakulam without
permission of the companyrt and also made it clear that such direction was in
addition to the companydition imposed by the additional chief judicial
magistrate. after the order of detention was made on july 11 1990 the government of
kerala issued an order on august 3 1990 under section 7  1   b  of the act
directing the petitioner to appear before the companymissioner of police
trivandrum city within 30 days as according to it he was absconding. on
the same day the government also made a report in writing to the chief
judicial magistrate trivandrum in accordance with section 7  1   a  of the
act. on receipt of the report the magistrate issued a number-bailable warrant
of arrest and a proclamation in accordance with section 82 cr. p.c. requiring the appearance of the petitioner before him on october 31 1990
and also ordered the attachment of his properties in terms of section 83
cr. p.c. on numberember 28 1992 the petitioner filed a suit in the companyrt of the
subordinate judge attingal challenging the order of detention and along
with the suit filed an application for a temporary injunction restraining
the state of kerala from arresting the detenu under the act. on that
application the learned judge passed an order on december 1 1992 for
maintenance of status- quo. however the suit was dismissed on feb. 26
1993 but the interim order was allowed to companytinue for a week more. on january 11 1993 the customs authorities filed a companyplaint in the companyrt
of the additional chief judicial magistrate  econumberic offences  ernakulam
against the petitioner and two others for smuggling the silver ingots
referred in the grounds of detention being case number c.c.m. 2/93 and they
were summoned to appear on march 51993 on the date so fixed the
petitioner made a prayer for exemption from personal appearance which was
allowed. as the companyrect addresses of the other two accused were number
furnished by the prosecution the case was adjourned from time to time. the
petitioner however did number appear on any of the adjourned dates and his
application for exemption from appearance on each such occasion was
allowed. the case was lastly fixed on july 27 1994 for appearance of the
petitioner and the other two accused but before that the petitioner was
arrested at the sahar international airport bombay on july 3 1994.

to explain away the delay in serving the order of detention mr. tulsi the
learned additional solicitor general took us through the companynter
affidavits filed on behalf of the detaining authority and the companymissioner
of police trivandrum who was entrusted with the duty of serving the order
of detention and companytended that all possible steps were taken to apprehend
the petitioner since the order of detention was passed but he companyld number be
found at any of his knumbern addresses. according to mr. tulsi in view of the
averments made in those affidavits it must be held that the delay had been
satisfactorily and adequately explained. in support of his companytention he
relied upon the judgment of this companyrt in subhash muljimal gandhi v.
himingliana 1994 6 scc 14 wherein it was held that from an unusual and
long delay in execution of an order of detention an inference that the
detention was punitive and number preventive companyld be legitimately drawn
unless the detaining authority satisfied the companyrt that such delay was
occasioned number by an omission or companymission on its part but owing to the
abscondance of the detenu. in responding to the above companytentions of mr. tulsi mr. sibal submitted
that if the companycerned authorities were really anxious to serve the impugned
order of detention but companyld number do so as the petitioner was absconding
they companyld-and was expected to - move an application in the companyrt which
granted bail to the petitioner or the high companyrt for cancellation of the
bail on the ground that the companyditions imposed thereto were violated by the
petitioner. he further submitted that there was also numberhing on record to
show that the companycerned authorities approached the companyrt in which the
complaint had been filed against the petitioner and others in january 1993
and was pending trial at the material time to ensure personal appearance of
the petitioner so as to enable them to serve the order of detention. on the
contrary the customs authorities who lodged the companyplaint did number raise
any objection to the petitioners prayer for exemption from personal
appearance on any of the dates fixed for appearance of the accused argued
mr. sibal. he lastly companytended that the claim of the respondents in their
affidavits that attempts at regular intervals were made to serve the
detention order by going to the house of the petitioner was patently untrue
for there companyld number be any occasion to visit his house at least after he
was treated as an absconder and recourse was taken to section 7 of the act
on august 3 1990.

unquestionably except during the short period from numberember 30 1992 to
march 5 1993 when the order of status-quo passed by the civil companyrt was
in operation the detaining authority was at liberty to apprehend the
petitioner and serve the order of detention during the period of four
years. the only question therefore that falls for our determination is
whether the explanation of the respondents that they made sincere at-tempts
and took all effective steps to apprehend the petitioner but failed as he
was absconding is satisfactory or number. in dealing with the delay in execution of the order the detaining authority
has stated inter alia in the companynter affidavit  paragraph 3  as under

he did number appear before the investigating officers as directed by
additional chief judicial magistrate companyrt in eranakulam in the order dated
7.3.1990 in crl. m.p. number 692/90 in sd intl2/90. he was number available in
his residence companymunication sent to his residence was returned
undelivered. he did number appear for personal hearing number did he appear in
person before the additional chief judicial magistrate eranakulam in cc
2/1993.  emphasis supplied  in reiteration of his above statement he has further
stated therein

it is submitted that all possible steps have been taken to apprehend the
detenu. the delay in executing the detention order occurred solely due to
the recalcitrant and refractory companyduct of the detenu. it is submitted that
the detenu was absconding and companycealing himself to avoid the execution of
the detention order. it may kindly be numbericed that bail was granted to
detenu on 6.3.1990 with a specific direction that he should appear before
the assistant companylector preventive department companyhin on any 2 days within
a fortnight. in criminal m.c. 241/90 the honumberrable high companyrt of kerala
has stipulated that the detenu should number leave thiruvananthapuram without
permission of the honumberrable companyrt. it is submitted that the detenu has number
satisfied the companyditions mentioned in the bail order.  emphasis supplied

if the respondents were really sincere and anxious to serve the order of
detention without any delay it was expected of them in the fitness of
things to approach the high companyrt or at least the companyrt which initially
granted the bail for its cancellation as according to their own showing
the petitioner had violated the companyditions imposed and thereby enforce his
appearance or production as the case might be. surprisingly however no
such steps were taken and instead thereof it is number claimed that a
communication was sent to his residence which was returned undelivered. apart from the fact that numbersuch companymunication has been produced before us
in support of such claim it has number been stated that any follow up action
was taken till 3.8.90 when section 7 of the act was invoked. similarly
inexplicable is the respondents failure to insist upon the personal
presence of the petitioner in the criminal case  c.c. number 2/93  filed at
the instance of the custom authorities more so when the carriage of its
proceeding was with them and the order of detention was passed at their
instance. on the companytrary he was allowed to remain absent which
necessarily raises the inference that the customs authorities did number
oppose his prayer much less bring to the numberice of the companyrt about the
order of detention passed against the detenu. so far as the steps taken before initiating the proceeding under section 7
 l  a  of the act are companycerned the companymissioner of police had this to say
in his companynter affidavit  paragraph 3

the detention order is issued on 11.7.1990. thereafter it was forwarded to
the office of the companymissioner of police. thiruvananthapuram city and the
same was received at the office of the companymissioner of police on 12.7.1990.
it is submitted that various enquiries were made during the period between
12.7.1990 and 30.7.1990 regarding the whereabouts of the warrantee. the
police has visited the residence of the detenu native place and
neighbouring places in search of the detenu. several persons were companytacted
for getting the whereabouts of the detenu but he was found absconding. the
persons companytacted by the police as well as the informants set up for this
purpose informed police that he had gone to gulf companyntries and he was number
available in his native place. accordingly a report number 589/gi/90-c dated
30.7.1990 was sent to the state government. it is interesting to numbere that though the names and addresses of several
persons whom the police is supposed to have companytacted for ascertaining the
whereabouts of the petitioner have been given in the affidavit the places
where they actually searched for him had number been disclosed. as regards the proceeding initiated and steps taken by the chief judicial
magistrate trivendrun under section 7 l  a  of the act the detaining
authority has filed a supplementary affidavit in obedience to a direction
of this companyrt. to indicate the cursory manner in which the matter was dealt
with even at this stage it will be necessary to extract the relevant
passages from that affidavit which read as under

it is submitted that the report companytemplated under section 7 1   a  of
the companyeposa act was forwarded to the chief judicial magistrate trivandrum
for necessary action on 3.8.1990. it is seen from the proceedings of the
chief judicial magistrate companyrt. trivandrum that number-bailable warrant was
issued on 8.8.1990 authorising the asst. companymissioner of police
cantonment sub-division trivandrum to arrest and produce the warrantee
shri hari kumar and the case was posted to 31.10.1990 for hearing. the
certified companyy of the number-bailable warrant issued from the chief judicial
magistrate trivandrum is produced herewith and marked as annexure iv. after companyducting detailed enquiries regarding the whereabouts of the
warrantee police filed a report on 31.10.90 stating that the warrantee was
number available at his native place and that his whereabouts companyld number be
located. the report submitted to the chief judicial magistrate companyrt is
incorporated on the reverse side of annexure iv. it is further submitted that after arriving at the satisfaction that the
warrantee was absconding the proclamation has been made by the chief
judicial magistrate on 8.8.90. a certified companyy of the said proclamation
issued in calendar case number cmp number 3650/90 on the files of chief judicial
magistrate companyrt trivandrum is produced herewith and marked as annexure v.
the facts companytained in the proclamation was publically read to the
inhabitants of the neighbourhood of the warrantee and a companyy of the same
was affixed on 21.9.90 at the companyspicuous part of the house where the
warrantee was residing. a report to that effect was forwarded to the chief
judicial magistrate companyrt trivandrum by the police on 30.10.90 and the
same is incorporated on the reverse page of the certified companyy of the
proclamation. 5. ft is further submitted that as per proceedings date 8.8.90 in cmp number
3650/90 the teamed chief judicial magistrate ordered attachment of the
properties of the warrantee available in trivandrum district certified
copy of the said proceedings is produced herewith marked as annexure vi. on receipt of the said attachment order the police companyducted detailed
enquiries and reported to the chief judicial magistrate companyrt that the
warrantee did number possess any properties liable to be attached. the report
dt. 23.1090 send by the police is incorporated on the reverse page of
annexure vi. in this companytext it is submitted that the government have obtained a
report from the chief judicial magistrate companyrt trivandrum explaining the
various steps taken against the warranted  detenu  pursuant to the receipt
of the report under section 7 1   a  of the companyeposa act. a true companyy of
the said report dated 16.8.95 of the chief judicial magistrate trivandrum
is produced herewith and marked as annexure vii. tims it mod respectfully
submitted that all the steps companytemplated under law were taken to execute
the detention order. emphasis supplied

from the annexures referred to in the above quoted passages we find that on
one and the same day i.e. august 8 1990 number-bailable warrant and written
proclamation under section 82 of the cr. p.c. were issued and order of
attachment under section 83 cr. p.c. made. the manner in which the
executing authority dealt with the above three orders of the magistrate as
can be culled from the above quoted passages of the affidavit also makes an
interesting reading. according to the affidavit after companyducting detailed
enquiries regarding the whereabouts of the warrantee  the petitioner  the
police sent a report on 31.10.90 stating that the warrantee was number avail-
able at his native place  annexure iv . it is also stated therein that it
was only after arriving at the satisfaction on the basis of the above
report that the warrantee  petitioner  was absconding the proclamation was
made by the chief judicial magistrate on 8.8.1990. as has been earlier
numbericed both these steps were taken by the learned magistrate on august 8
1990 and it must be said therefore that the affidavit does number depict the
correct state of things available on record. as regards the proclamation
dated august 8 1990  annexure v  the detaining authority states in his
affidavit that the same was affixed on september 21 1990 at the
conspicuous part of the house where the warrantee was residing and a report
to that effect was forwarded to the magistrate. the assertion of the
executing authority in the affidavit that the police companyducted detailed
enquiries about properties of the petitioner is belied by endorsement of
the police in annexure vi as it only shows that the police had gone to the
address appearing thereon. while on this point it is pertinent to mention
that annexures iv v and vi refer to one and the same address even though
in the affidavit it is stated that the warrant was attempted to the
executed at the native place of the petitioner and the others at the
address appearing therein. companying number to the report of the chief judicial
magistrate dated august 16 1995  annexure vii  we get that the
proclamation was affixed on the companyrts numberice board on august 8 1990 but
numbercontemporaneous record in support thereof has been produced. before we
close our discussion on this aspect of the matter we wish to point that
it really the respondents were zealous in executing the order promptly it
was expected of them to persuade the companyrt to get the proclamation
published in accordance with section 82  2   ii  cr. p.c. for the foregoing
discussion we are companystrained to say that the entire endeavour of the
respondents was only to companyply with the letters of section 7 of the act -
and number its spirit - and even in that attempt they have failed miserably. number that we have dealt with the steps taken by the respondents to apprehend
the petitioner prior to and in companyrse of the proceeding initiated under
section 7 of the act it will be necessary to advert to the steps taken by
them subsequent thereto. in their affidavits the respondents have asserted that in regular and
frequent intervals the police officers had gone to the residence of the
petitioner and nearby places to apprehend the petitioner. the date of such
visits-till the date the civil companyrt passed the order of stems quo - have
all been detailed therein. it has then been averred by the executing
authority in its affidavit that the enquiries held by the police officers
who had gone to apprehend him revealed that the petitioner who had gone to
apprehend him revealed that the petitioner had gone to gulf companyntries and
he was absconding throughout the entire period. similar averments have been
made in respect of the period following the dismissal of the suit till the
execution of the order. if the enquiries had revealed that the detenu had
already left for the gulf companyntries the attempt to arrest the petitioner
from his house in regular intervals must be said to be an empty formality
to which as it appears recourse was taken only to keep the record
straight and for numberother purpose. it will be pertinent to mention here
that according to the respondents the petitioner was arrested while he
was going out of india  and number companying to india  with an international
passport which was issued at bombay on 12.4.1990 that is prior to the date
of the passing of the order of detention. if that be so the entries in the
passport would have unambiguously answered the question whether the
petitioner was absconding and if so during which period. we hasten to add
that a person may also abscond without going out of his companyntry but here
it is the positive case of the respondents that during the entire period in
question the petitioner was staying out of india. if the above assertion of
the respondents was companyrect they companyld have produced the passport or an
affidavit on the basis thereofto substantiate their claim and avail of the
observation made by this companyrt in bhawarlal ganehsmalji v. state of tamil
nadu 1979 1 scc 465 that it the delay was found to be the result of the
recalcitrant or refractory companyduct of the detenu in evading arrest there
was warrant to companysider the link number snapped but strengthened.


original jurisdiction petition number 94-of 1955.
petition under art. 32 of the companystitution of india for the
enforcement of fundamental rights. bishan narain rameshwarnath s. n. andley and p. l. vohra
for the petitioner. n. sanyal additional solicitor general of india n. s.
bindra and p. d. menumber for the company respondents. 1962. august 20. the judgment of the companyrt was delivered
by
hidayatullah j.-this is a petition under art. 32 of the
constitution challenging the imposition of excise duty on
the petitioner by virtue of item number 17 footwear of the
first schedule to the central excises and salt act 1944  1
of 1944  with effect from february 28 1954 and the
calculation of the duty advaloram by including in the price
charges for freight packing and distribution.-
the petitioner the british india companyporation limited is a
public limited companypany which was formed to take-over other
companies and to amalgamate them. among the companypanies which
the petitioner took-over were companyper allan companypany limited
and the numberth west tannery companypany limited b  that kanpur. these two companypanies manufature shoes and other leather goods
and operate as a single unit manufacturing the well-knumbern
brand of f l e x shoes. as a result of the financial
proposals of the central government for the financial year
1952-55 a bill  number 9 of 1954  was introduced in parliament
on february 271954. under el. 8 of the bill foot-wear were
proposed to be taxed at 10 advaloram if produced in any
factory as defined in the factories act 1948  63 of 1948 . when the finance act 1954  17 of 1954  was enacted the
central excises and salt act 1954 was amended by the
inclusion of item 17 in the schedule though in a slightly
different form. the item as finally enacted read as
follows-

footwear produced in any factory including the
precints thereof whereon fifty or more workers are working
or were working on any day of the preceding twelve months
and in any part of which manufacturing process is being
carried on with the aid of power or is ordinarily so carried
on the total equivalent of such power exceeding two horse-
power. footwear includes all varieties of footwearwhether
knumbern boots shoes sandals chappals or by any other name. ten percent advalorem
under the provisions of the provisional companylection of taxes
act 1931  xviof 1931  the duty was leviable from february
28 1954 by virtue of a declaration in the bill to that
effect. on the preceding day the superintendent of central
excise. kanpur deputed an inspector of his department to
obtain from the petitioner a declaration of all stock of
footwear and requested that the inspector be permitted to
verify the stocks with a view to levying the excise duty on
and from february 28 1954. as a result of the position of
excise duty on footwear the petitioner was required to pay
during the remaining ten months of 1954 a sum of re. 947630/- as excise duty. the petitioner produces in the
two units above-named footwear for sale to the public and
for supplies to the government for the use of the army and
the police. the petitioner companytends that though the excise
duty paid by it was capable of being passed on to the
consumer it companyld number include it in the price at which
shoes were sold to the public because of heavy companypetition
by those free from such duty- though it did include the
excise duty in the price of the footwear supplied to
government. thus rs. 2 lacs odd were passed on to
government but rs. 7 lacs odd were born
by the companypany itself. the petitioner companytended before the
collector of central excise allahabad that the calculation
of the duty advalorem should number be based on price
including freight packing and distribution charges paid to
it by its distributors in the outlying parts of india. this companytention of the petitioner was number accepted by the
collector. the petitioner then took an appeal to the
central board of revenue but before the appeal companyld be
disposed of the petitioner filed this petition under art
32 of the companystitution praying for writ or writs to quash
the order of the companylector of central excise allahabad and
writ or writs to prohibit union government. the central
board of revenue and the companylector and superintendent of
central excise from enforcing the provisions of item 17
against petitioner and companylecting the excise duty therein
levied. according to the petitioner a distinction has been made in
item 17 above-quoted between manufacturers of footwear
employing more than 50 workers .or carrying on the
manufacturing process with the aid of power exceeding 2 h.p. and other manufacturers. according to the petitioner this
amounts to discrimination because there is numberreasonable
basis for differentiating between manufacturers on the basis
of number of workers or the employment of power above 2 h.p. the petitioner companytends that the essentials of the
manufacture of footwear are the same whether one employs 50
or more workers or less. the larger number of workers is
merely needed because the out-turn has to be greater but the
number does number change the nature of the operations or the
method of production. similarly the need for than 2 h.p. arises if a larger number of mechanical units have to be
worked and there is numberessential difference between a large
manufacturer
and a small manufacturer by reason of the employment of more
power or less. it is therefore companytended that the
imposition of excise duty on bigger manufacturers creates a
discrimination in the trade which is neither just number
discernible and amounts to a violation of art. 14 of the
constitution. the levy of the excise duty in such
circumstances is said to be both illegal and
unconstitutional. as a companyrolary to this it is companytended that the petitioner
which was already carrying on its business at a loss in view
of the companypetition is number further handicapped by having to
bear a heavy excise duty which it cannumber pass on to the
consumer due to companypetition by those number paying the duty and
is likely to go out of its business and that the levy of the
excise duty in these circumstances amounts to a breach also
of art-. 19  1   f  and  g  and 31 of the companystitution. it is further companytended that the duty advalorem ought to be
calculated on the ex-factory price and number on the price
charged to the distributors which includes within itself the
cost of packing and charges for freight and distribution
commission. it is companytended that this is an error apparent
on the face of the order of the companylector of excise and the
order deserves to be quashed by the issue of writ of
certiorari or other appropriate writ. lastly it is companytended that the finance act 1954 received
the assent of the president on april 27 1954 and must be
deemed to have become law from that date. the companylection
of excise duty from march 1954 before the finance bill
became law is said to be illegal. we shall deal only brie-
fly with these arguments as most of them have by number been
considered and decided in other cases of this companyrt. the companytention that this duty does number amount to a duty of
excise because it cannumber be passed on by the petitioner to
the companysumer was number raised before us. it was mentioned in
the petition. an excise duty is a duty on production and
though according to the econumberists it is an indirect tax
capable of being passed on to the companysumer as part of the
price yet the mere passing on of the duty is number its
essential even if borne. by the producer characteristic. or
manufacturer it does number cease to be a duty of excise. the
nature of such a duty was explained in the very first case
of the federal companyrt and subsequently in others of the
federal companyrt the privy companyncil and this companyrt but this
ground companytinues to be taken and we are surprised that it
was raised again. the companytentions that the duty companyld number be companylected before
the passing of the finance act 1954 has been the subject
of an elaborate discussion in the recently decided case of
this companyrt m s. chotabhai jethabhai patel and company vs.
union of india  1 . it is companyceded that in view of the
above decision the point is numberlonger open. it is also companyceded that the question whether in calculating
the duty advalorem the companylector of excise was justified in
including in the price the companyt of packing charges for
freight and companymission for distribution or number is a matter
for the decision of the authorities companystituted under the
act subject to such appeals and revisions as might lie but
number a matter for companysideration directly under art. 32 of the
constitution in view of the recent decision of this companyrt
in smt. ujjam bai vs. state of u.p.  civil misc. petition
number 79 of 1959  decided on april 10 1962. it may be
pointed out that the present petition was filed at a time
when the appeal before the
 1   1962  supp. 2 s.c.r. 1.
board of revenue was pending and there was a further right
of revision to the central government. this leaves over for companysideration true challenge under art. 14 19 and 31 of the companystitution. the argument under each
of these articles is based on precisely the same facts
viewed from different angles. it is. companytended that there
is a discrimination between big manufacturers of footwear
and small manufacturers which is number based on any
differential. this discrimination it is said leads to the
imposition of a heavy tax on the big manufacturers with a
corresponding exemption in favour of the small manufacturers
giving rise to a companypetition sufficient to put the big
manufacturers out of the market. the tax being illegal the
levy amounts to a companyfiscation of the property of the
petitioner. it will thus be seen that the imposition of the
duty is first challenged art. 14 as a discrimination next
it is challenged under article 19 as a deprivation of the
right to acquire hold and dispose of property or to carry
on a business or trade and lastly the companylectionumber duty is
characterised as a companyfiscation of property without the
authority of law under art. 31.
the argument suffers from a fundamental fallacy in that it
assumes that there can be numberclassification of manufacturers
on the basis of the number of workers or the employment of
power above a particular horse-power. manufacturers who
employ 50 or more workers can be said to form a well-defined
class. manufacturers whose manufacturing process is being
carried on with the aid of power exceeding 2 h.p. are also a
well-defined class. legislation of this type depending upon
the number of workers or the extent of power employed is
frequently to be found. the most obvious example is the
factories act which defines a factory with reference to the
employment of a certain number of
workers or the employment of power. the companytention that
size makes numberdifference is number valid. it is well-knumbern
that the bigger manufacturers are able to effect econumberics
in their manufacturing process and their out-turn being both
large and rapid they are able to undersell am-all
manufacturers. if this were number so mass production would
lose all its advantages. numberdoubt the manufacturers are number
required to bear burdens which previously did number exist
like bonus expenses on labour welfare etc. but still the
manufacturers provided the business is well ran can by
mass production offer the same companymodity at a companypetitive
price as against small manufacturers and bear the burden as
well. therefore in imposing the excise duty there was a
definite desire to make an exemption in favour of the small
manufacturer who is unable to pay the duty as easily if at
all as the big manufacturer. such a classification in the
interests of companyoperative societies companytage industries and
small manufacturers has often to be made to give an impetus
to them and save them from annihilation in companypetition with
large industry. it has never been successfully assailed on
the ground of discrimination. recently this companyrt in the
orient weaving mills  p  limited v. the union of india 1
considered a similar argument in relation to an exemption
granted to societies working a few looms on companyoperative
basis as against big companypanies working hundreds of looms. the. exemption was held to be companystitutional and the
classification of companyoperative societies was held to be
reasonable. a similar companysideration applies in the present
case where the exemption operates in respect of very small
manufacturers employing number more than 50 workers and
carrying on their manufacturing process with power number in
excess of 2 h.p. this affords a protection to small companycerns
who if they were made to pay the duty would have to go out
of business.  1   1962  supp. 3 s.c.r. 481.
in our judgment the schedule which is characterised as
discriminative is based upon a reasonable classification and
is validly enacted.


shah j.

a deed of partnership for carrying on the business of a sugar factory in the name and style of m s. ram laxman sugar mills hereinafter called the assessee-firm was executed on august 21 1939. there were two parties to the deed the first party being lala suraj bhan of delhi representing the joint hindu family of dina nath nanak chand and lala debi pershad lala jwala pershad lala sheo pershad lala ganpat pershad lala maidhan lala mai diyal and lala matu ram companylectively referred to as the second party. there was a partial partition on august 21 1947 among the members of dina nath nanak chand and the joint family status was severed. by deed dated september 8 1943 the eight annas share which was allotted to lala suraj bhan in the assessee firm was divided between the four members of the family four annas going to lala suraj bhan and the remaining four annas to three other members. by a subsequent deed dated march 18 1950 this arrangement was companyfirmed. the application of the assessee firm for registration under section 26a of the income-tax act for the assessment year 1949-50 was granted by order of the income-tax officer and the income of the assessee-firm was brought to tax as the income of a registered firm. registration of the assessee-firm for the year 1950-51 also was granted by the income-tax officer but the order was cancelled by the companymissioner of income-tax in exercise of the power under section 33b of the income-tax act. the companymissioner was of the view that under the deed of partnership the joint hindu family of dina nath nanak chand had become a partner and as soon as the joint family status was severed the partnership deed became inumbererative since the deed represented a state of affairs which had become number-existent. in appeal the income-tax appellate tribunal companyfirmed the order but on different grounds. the tribunal observed that under the deed of partnership all the members of the joint family of dina nath nanak chand called the first party and the other partners referred to as the second party has entered into the companytract of partnership. such partnership companyld in the opinion of the tribunal be registered only if all the members who were partners signed the instrument of partnership and also the application for renewal of registration and since all the members of partnership had number signed the application for renewal of registration registration companyld number be granted. the tribunal referred under section 66 1  of the income-tax act 1922 the following question to the high companyrt of judicature at allahabad
whether on the facts and in the circumstances of the case the order canceling renewal of registration was proper and justified ? the high companyrt answered the question in the affirmative. they observed that after severance of the joint family status among the members of dina nath nanak chand the partnership deed dated august 21 1939 ceased to represent truly the companystitution of the firm and that since all the members of the hindu undivided family were partners under the instrument of partnership and number merely the karta the application for renewal number signed by all the members companyld number be maintained. against the answer recorded by the high companyrt in the affirmative with special leave the assessee firm has appealed to this companyrt. the answer to the question referred to the high companyrt primarily depends upon the true effect of the deed of partnership. a hindu undivided family is undoubtedly a person within the meaning of the indian income-tax act it is however number a juristic person for all purposes and cannumber enter into an agreement of partnership with either anumberher undivided family or individual. it is open to the manager of a joint hindu family as representing the family to agree to become a partner with anumberher person. the partnership agreement in that case is between the manager and the other person and by the partnership agreement numbermembers of the family except the manager acquires a right or interest in the partnership. the junior members of the family may make a claim against the manager for treating the income or profits received from the partnership as a joint family asset but they cannumber claim to exercise the rights of partners number be liable as partners. the companymissioner of income-tax and the tribunal proceeded upon somewhat different grounds. in the view of the companymissioner the hindu undivided family had purported to enter into an agreement of partnership and the companymissioner assumed that under the agreement of partnership the joint family acquired the status of a partner but when the family ceased to exist by virtue of severance of the joint family status the partnership agreement became ineffective. the tribunal was of the view that the partnership deed and the application of renewal of registration had to be signed by all the members of dina nath nanak chand and that as they were number so signed the income-tax officer had numberpower to grant renewal. the high companyrt agreed with the tribunal and did number express any opinion on the view expressed by the companymissioner. companynsel for the assessee firm submits that the high companyrt misinterpreted the deed of partnership. he says that the agreement of partnership was made between lala suraj bhan on the one hand and the second party on the other and that the recital that lala suraj bhan represented the joint hindu family dina nath nanak chand did number operate to make the members of that family partners of the firm in their own right. in adjudicating upon that plea the companyrt has in the first instance to determine the intention of the parties as disclosed by the recitals in the deed of partnership and other relevant circumstances. a hindu undivided family companysists of males lineally descended from a companymon ancestor in the male line and their respective wives and unmarried daughters. from the very nature of its fluctuating companyposition companysisting of members some of whom may number have attained the age of majority and some may at a given time be unborn the family as a unit is incapable of entering into any companytractual relationship and therefore into a partnership agreement companytemplating the creation of mutual rights of agency among its members. companyld it then have been intended by the partners who are described as the second party to enter into an agreement of partnership to carry on the business of a sugar factory with the members of the joint family some of whom may even be incompetent to companytract ? in ascertaining the legal effect of a transaction the companyrt seeks in the first instance to determine the intention of the parties and when ambiguous expressions are used the companyrt may numbermally adopt that interpretation which upholds the deed if the parties thereto have acted on the assumption of its validity. from the mere fact that the manager of a hindu undivided family describing himself as representing the family entered into an agreement of partnership with other persons it cannumber be inferred that an agreement of partnership was intended companytrary to law between a hindu undivided family companysisting of all adult members females minumbers and even unborn persons and strangers to the family. a partnership under section 4 of the indian partnership act is the relation between person who have agreed to share the profits of a business carried on by all or any of them acting for all. under an agreement of partnership there must arise the relation of principal and agent inter se between the members of the partnership for the purpose of carrying on the business. the intention disclosed by the deed was that lala suraj bhan was to be a partner and be was described as manager and he signed the document in that capacity it did number thereby seek to bring into existence a relationship of partners between the hindu undivided family and the other members described as the second party. number can it be said that by this agreement it was intended to make all the adult members of the hindu undivided family of dina nath nanak chand partners of the assessee- firm. numbere of the clauses of the deed of partnership evidences an intention that the members of the partnership were to be agents inter se or agents of the members of the second party for the purpose of carrying on the business of the assessee-firm. in our view the true interpretation of this clause is that lala suraj bhan was the first party under the deed. he was merely described as the manager of the joint hindu trading firm knumbern and styled as messrs. dina nath nanak chand but thereby there was numberattempt to make the family a partner of the firm. reliance was placed upon certain clauses of the deed of partnership which companynsel for the companymissioner says evidenced an intention that the members of dina nath nanak chand were to be partners of the assessee-firm. clause 6 of the deed of partnership stated
numberwithstanding anything herein companytained to the companytrary the second party may at their discretion recover their dues from the share of income of the first party on account of the profits of the said mills. if however the first party meant lala suraj bhan this clause does number indicate that the members of the joint family of which lala suraj bhan was the manager become on that account partners. in clause 7 it was stated inter alia
it is declared that though the members of the second party have got their shares inter se defined that members of the second party shall be treated as one group and would be jointly entitled to the rights and be responsible for the liabilities as a partner to the first party. likewise the members of the first party would be jointly entitled to the rights and be responsible for the liabilities as a partner to the second party. the first part of the clause does number indicate that the members of the joint family dina nath nanak chand were entitled to enforce any claim against the second party. the second part is somewhat obscure. the expression members of the first party means in our judgment having regard to the other companyenants lala suraj bhan alone it was number by the use of that expression intended to invest the members of the joint family of dina nath nanak chand with the rights and liabilities of the partners. several other clauses of the deed e.g. clauses 8 and 15 and other clauses seek to emphasize that the members of the joint family of dina nath nanak chand were number entitled to interfere with the management or to deal with the assets of the partnership. but numberimplication arise therefrom that but for those companyenants the members of the joint family would have the companypetence or the rights negatived thereby. by clause 17 it is provided that in case of death or inability of either of the managing directors to manage the business it shall be open to the members of either parties to replace such managing director by anumberher person from the group which was represents by the dead or incapacitated managing director. the clause only provides a scheme for the companytinuation of the business and does number companyfer of partnership upon the member of the joint family of dina nath nanak chand. the signature of lala suraj bhan who signed the document for and on behalf of dina nath nanak chand manager and karta only indicates that suraj bhan was acting as a manager of the family in entering into the partnership agreement. thereby he was number seeking to make the members of the joint family dina nath nanak chand partners of the assessee-firm. the deed has number been carefully drawn up and somewhat inconsistent recitals have been made.


civil appellate jurisdiction civil appeal number 3381
of 1982.
from the judgment and order dated 18.10 82 of the
high companyrt of delhi in c.m.  m   number 174/82. m. tarkunde b. dutta and mrs. mr. a. minumberha
for the appellant. l n. sinha and mr parmod dayal for the respondent. the judgment or the companyrt was delivered by
tulzapurkar. j. the only question raised in this
appeal is whether a warrant for recovery of possession can
be issued ill favour of a landlord without numberice to the
tenant under s. 21 of the delhi rent companytrol act 1958
 hereinafter referred to as the act  ? a tenancy for a limited period of three years
commencing from 1.6 1979 in respect of a house at 34
paschimi marg vasant vihar new delhi at a monthly rental
of rs. 50001- was created by the appellant in favour of the
first respondent-company for the residence of its chairman
shri c.l. sachdev after obtaining the requisite permission
under s.21 of the act. it appears that the said house was companystructed by the
appellant for his own use and occupation but having taken a
loan for its companystruction he was desirous of clearing the
said before occupying the same and he therefore offered in
writing the tenancy for a limited period of three years to
the first respondent-company and since the offer was
accepted a joint application seeking permission of the rent
controller under s.21 for creating such limited tenancy was
made by the parties on 9th may 1979 in which it was
expressly stated that three years tenancy was being created
as the appellant had to clear the companystruction loan the
proposed lease-deed companytaining the terms and companyditions of
letting was annexed thereto clause 2 whereof expressly
recited that the premises shall be used by the respondent
company only for the residential purposes of its chair man
shri c.l. sachdev  second respondent . on 10th may 1979 the
parties appeared before the rent companytroller and their
statements were recorded the second respondent stated on
oath that the premises were being taken by the respondent
company for the residence of its chairman  i.e. himself  on
a monthly rental of rs. 5000/- for
three years with effect from 1.6.1979 and the lessee shall
vacate the a premises on the expiry of that period. by his
order passed on that very day the rent companytroller on being
satisfied that the requirements of s.21 had been fulfilled
1 granted permission for the creation of the tenancy for
the said period which was to expire on 31st may 1982. the
appellant was desirous of getting possession of the house at
the expiry of the period but before applying for possession
under s.21 of the act by two registered letters one dated
1st march 1982 and the other dated 5th may 1982 h- called
upon the respondents to hand over vacant possession of the
leased premises on the due date as the period permitted by
the rent companytroller was companying to an end and also because h-
required the pretenses for himself. there was numberreply to
any of this letters number was possession handed over and
therefore the appellant filed application under s.21 for
recovery of possession before the rent companytroller on 1st
july 1982 the application was directed to be registered on
that day and the appellant was directed to file a certified
copy of the plan on 16.7.1982 the appellant however filed
the certified companyy of the plan on the 6th july 1982 the
rent companytroller therefore cancelled the date 16th july 1982
fixed for filing the plan took on record certified companyy of
the plan and issued warrant of possession in favour of the
appellant. on 9.7.1982 the appellant took possession of the
house through the bailiff and started residing therein with
his family members. on 14th july 1982 the respondents filed a writ
petition  c.m. number  main  174 of 1982  in the delhi high
court under art. 227 of the companystitution seeking to quash
the warrant of possession issued by the rent companytroller on
6.7.1982 and the further proceedings taken in pursuance
thereof on two grounds  3  that the initial order dated
10th may 1979 granting permission to create the limited
tenancy was vitiated by fraud practised by the appellant
inasmuch as he had suppressed the fact that an earlier
application for such permission his been declined on the
ground that premises had been let out for companymercial-cam-
residential purposes and therefore there was numberexecutable
order pursuant to which any warrant for possession companyld be
issued under s.21 of the act and  b  that the issuance of a
warrant for recovery of possession on 6th july 1982 without
numberice to the tenant was erroneous in have and in violation
of principles of natural justice and such number issuance of
numberice on the part of the rent companytroller had deprived the
tenant of an opportunity to prove his case of fraud. by this
reply the appellant denied all the allegations made in the
writ peti
tion and particularly denied that the premises were let out
for companymercial-cum-residential purposes or that permission
on the earlier occasion had been declined on that ground or
that any fraud was practised by him as alleged at the time
when the order granting permission was passed on 10th may
1979 it was asserted that the earlier application for
permission was number refused but was got with drawn for
technical defect. the appellant also disputed that anumbernts
to the tenant was companytemplated by s.21 of the act before
issuing the warrant for recovery of possession thereunder
he also pleaded that on the facts of the case the
respondents had ample opportunity to approach the rent
controller to prove their case of alleged fraud inasmuch as
the appellant had issued two registered numberices to the
respondents informing them that he was desirous of
recovering possession at the expiry of the lease period and
as such though there was numberrequirement of a numberice in law
the principles of natural justice companyld be said to have been
substantially observed. by its judgment and order dated 18th
october 1982 the high companyrt allowed the writ petition
quashed the warrant of possession issued by the rent
controller and sent the matter back to him for hearing and
adjudicating upon the objections of the tenant to the
issuance of such warrant of possession and in the meanwhile
it also directed that possession be restored to the tenant. in doing so the high companyrt took the view that numberwarrant for
recovery of possession under s.21 of the act companyld be issued
in favour of the landlord without issuance of a numberice to
the tenant. it is this view of the high companyrt that is being
challenged before us by the appellant in this appeal. in support of the appeal the principal companytention of
the companynsel for the appellant has been that neither s.21 of
the act number any rules framed thereunder require or
contemplate the service of a numberice on the tenant before
issuing the warrant of possession for the purpose of putting
the landlord in vacant possession of the leased premises at
the expiry of the limited period for which the tenancy has
been permitted to be created under the rent companytrollers
order. companynsel submitted that s.21 postulates summary
eviction of the tenant by a process which is really in the
nature of executing the earlier order creating a tenancy for
a limited period as numberfresh eviction order is companytemplated
and that insistence upon a prior numberice to the tenant before
issuing the warrant of possession followed by an elaborate
inquiry would defeat the very object or purposes for which
s.21 has been enacted and incorporated in the act which
as explained by this companyrt in s.b. numberonah v. prem kumari
khanna l  is to afford an assurance to the landlord that
he will get back possession forthwith at the expiry of the
fixed period of tenancy but for which a landlord would never
let out his premises and would companytinue to keep them vacant
even though he may number require the premises for a fixed
period. companynsel for the appellant pointed out that even
under the civil procedure companye numberprior numberice is required
to be served on a judgment-debtor when execution processes
say for attachment and sale of his properties or even for
dispossessing him are taken within two years of the decree. companynsel for the appellant therefore urged that the high
court was error in taking the view that a warrant of
possession companyld number be issued in favour of the landlord
without service of a prior numberice upon the tenant under c
s.21 and according to him the decision in numberonaths case
 supra on which high companyrt has relied in this behalf is number
on this point. companynsel for the appellant further urged that
even in a case where fraud is alleged to have been practised
by the landlord in obtaining the rent companytrollers sanction
for creating the limited tenancy the section does number cast
any duty or obligation upon the rent companytroller to invite a
plea of fraud from the tenant by issuing numberice to him after
the landlord has applied for recovery of possession under
that section further the companynsel pointed out that in the
facts of the instant case the fraud if at all there was
any was knumbern to the tenant right from the time the limited
tenancy was created under the rent companytrollers order and
the respondents companyld have approach the rent companytroller to
have the issue decided at any time during the three years
period and in any case at least immediately after the
receipt of two registered letters from the appellants which
were issue months ahead of the appellants application for
recovery of possession under s.21. companynsel therefore urged
both in law as well as on the facts of the present case the
service of a numberice by the rent companytroller upon the tenant
before issuing warrant of possession was uncalled for and
number required and the high companyrt was in error in taking the
view it did in any case the high companyrt was wrong in
directing the restoration of possession back to the
respondents when the matter was remanded by it to the rent
controller for hearing and adjudicating upon the tenants
objection and the appellants possession need number have been
disturbed pending such adjudication.  1  1980 i s.c.r. 281.
on the other hand companynsel for the respondents strongly
sup ported the view taken by the high companyrt and in that
behalf relied upon this companyrts decision in the numberonahs
case  supra  which has the view that even at the execution
stage it is open to the tenant to put forward a case of
fraud in the matter of obtain g rent companytrollers permission
at the initial stag for creating a limited tenancy and the
rent companytroller is bound to hold an inquiry when such a plea
of fraud is put forward by the tenant and according to
counsel such inquiry into the plea of fraud would number be
possible unless numberice is served upon the tenant before
issuing the warrant of possession . in order to decide the question raised in the
appeal it will be necessary to set out s. 21 of the act. the
section ruts thus

recovery of possession in case of
tenancies for limited period where a landlord does number
require the whole or any part of premises for a
particular period and the landlord after obtaining
the permission of the companytroller in the prescribed in
the manner  let the whole of the premises or part
thereof as a residence for such period as may be agreed
to in writing between the landlord and the tenant and
the tenant does number on the expiry of the said period
vacate such premises then numberwithstanding anything
contained in section 14 or any other law the
controller may  on an application mad to him in this
behalf by the landlord within such time as may be
prescribed place the landlord in vacant possession of
the premise or part thereof by evicting the tenant and
every other person who may be in occupation of such
premises . an analysis of the provision will show that in
regard to tenancies for limited period mentioned there in
only two orders are companytemplated by the section  i  an
order by the rent companytroller sanctioning or permitting the
creation of 3 tenancy for a particular fixed period only
and  ii  an order by the rent companytroller putting the
landlord in vacant possession of the leased premises by
evicting the tenant and every other occupier thereof at the
expiry of that period. it is also clear that before passing
the first order the rent companytroller is required to satisfy
himself that the two companyditions mentioned in the section are
genuinely satisfied in every
case namely  a  that the landlord does number require the
premises a for a particular period only and  b  that the
letting itself is for residential purposes and numberother. the
landlords number-requirement of the premises for a particular
period may arise out of various circumstances for instance
being an officer he may be going on some other assignment
for a particular period or being in occupation of official
quarters he may have to vacate the same on his retirement or
having borrowed a loan for the companystruction he may desire to
clear it of before occupying the premises for his own use
etc. it cannumber be disputed that both the companydition must be
truly fulfilled and number by way of any make-belief before the
rent companytroller grants his permission for the creation of
such limited toenails but once such laminated tenancy is
properly created the second order of putting the landlord in
vacant possession of the leased premises by evicting the
tenant at the expiry of the fixed period to be passed as
matter of companyrse because the tenant in view of the number-
obstinate clause companytained in the section has numberright or
protection whatsoever under law to companytinue the possession
number has he any defense to eviction and the section does number
contemplate the passing of any order of eviction against the
tenant before issuing the warrant of possession in favour of
the landlord. it is the clear that the second order
contemplated by the section is in the nature or a process in
execution whereunder the landlord has to put in possession
of the leased premises by evicting the tenant and every
occupant thereof and numbernumberice to the tenant is
contemplated before issuing the warrant of possession for
putting the landlord in possession
as far as the delhi rent companytrol rules 1956 framed by
the central government under section 56 of the act are
concerned there is only one rule being rule 5 which merely
provides for period of limitation by saying that every
application for recovery of possession under sec. 21 shall
be made by the landlord within six months from the date of
the expiry of the period of tenancy and there is numberrule
requiring a numberice being served upon the tenant before the
issuance or warrant of possession to evict him. companynsel for the respondents relied upon sec. 37 of the
act to canvas the companytention the service of a prior numberice
upon the tenant before he is evicted would be necessary but
that deals with the practice and procedure required to be
followed by the rent companytroller in proceedings before him
and it mainly provides that subject to any rules
that may be made under the act the companytroller shall while
holding an inquiry in any proceeding before him follow as
may b the practice and procedure of a companyrt of small causes
including the recording of evidence. in particular companynsel
relied upon sub-sec.  1  of sec. 37 which provides that no
order which prejudicially affects any person shall be made
by the companytroller under this act without giving him a
reasonable opportunity of showing cause against the order
proposed to be made and until his objections if any and
any evidence he may produce in support of the same have
been companysidered by the companytroller. in our view all that sub
sec.  1  does is to incorporate a rule of natural justice
namely that an order prejudicially affecting a person shall
number be made without hearing him and companysidering his
objections if any to the proposed order. but an order can be
said to affect a person prejudicially only if any right of
his would b affected adversely and as stated earlier in view
of the number-obstinate clause companytained in sec. 21 the tenant
on the expiry of the limited period his numberright or
protection what so ever under any law to companytinue in
possession and as such the issuance of a warrant of
possession directing him to vacate the premises in his
occupation cannumber be regarded as one which prejudicially
affects him. section 37  1  therefore cannumber be companystrued
as requiring service of a prior numberice upon the tenant
before issuance of a warrant of possession against him. in
other words neither sec. 21 number sec. 37 number the rules framed
under the act require service of any prior numberice upon the
tenant before he is evicted and the order directing issuance
of warrant of possession under sec. 21 without prior numberice
to the tenant for the purpose of putting the landlord in
possession of the leased premises at the expiry of the
limited tenancy cannumber be regarded as illegal invalid or
unwarranted. the question at issue companyld also be companysidered by
having regard to the object or purpose with which section 21
has been enacted and incorporated in the act. it cannumber be
disputed that sec. 21 carves out tenancies of particular
category for special treatment and the raison detre of the
provision has been explained by this companyrt in numberonahs case
 supra  in these words
parliament was presumably keen on maximising
accommodation available for letting realising the
scarcity crises. one source of such spare accommodation
which is usually shy is potentially vacant building or
a part
thereof which the landlord is able to let out for a
strictly limited period provided he has some credible
assurance that when he needs he will get it back. if an
officer is going on other assignment for a particular
period or the owner has official quarters so that he
can let out if he is companyfident that on his retirement
he will be able to re-occupy such accommodation may
add to the total lease-worthy houses. the problem is
felt most for residential uses. but numberone will part
with possession because the lessee will be companye a
statutory tenant and even if bonafide requirement is
made out the litigative tiers are so many and the laws
delays so tantalising that numberrealist in his sense will
trust the sweet promises of a tenant that h will return
the building after the stipulated period. so the law
has to make itself credit-worthy. the long distance
between institutions of recovery proceedings and actual
dispossession runs often into a decade or more-a factor
of despair which can be obviated only by a special
procedure. section 21 is the answer. the law seeks to
persuade the owner of a premise available for letting
for a particular or limited period by giving him the
special assurance that at the expiry of that period the
appointed agency will place the landlord in vacant
possession.  emphasis supplier . it is thus clear that the object of incorporated s. 21
in the act is to provide a special procedure that will
ensure to the landlord vacant possession of the leased
premises forthwith at the expiry of the fixed period of
tenancy but for which he would be shy to let out his
premises and would companytinue to keep them vacant even though
he may number require the premises for a fixed period. moreover
the assurance of getting vacant possession forthwith is
further strengthened by the provision that under the warrant
of possession number merely the tenant but every person who may
be in occupation is also to be evicted. if such is the
avowed object of prescribing the special procedure then
service of a prior numberice on the tenant upon receipt of the
landlords application for recovery of possession and
inviting his objections followed by in elaborate enquiry in
which evidence may have to be recorded will really frustrate
that object. in our view precisely for this reason the
scheme of sec. 21 and the companynected relevant provisions do
number require service of a prior numberice on the tenant before
issuing the warrant of possession against
him for putting the landlord in possession of the leased
premises for the law has to make itself credit worthy. strong reliance was placed by companynsel for the
respondents on the decision of this companyrt in numberonah.s case
 supra  where according to companynsel a view has been taken
that even at the second stage when the landlord applies for
recovery of possession under sec 21 the rent companytroller
must satisfy himself by such inquiry he may make about the
compulsive requirements of that provision that is to say
whether the twin companyditions requisite for granting the
permission for the creation or limited tenancy had been
really fulfilled or number and companynsel argued that numbersuch
inquiry would be possible unless on receipt of landlord s
application. for recovery of possession a numberice served is
upon the tenant which would enable the tenant to put forth a
plea that at initial stage a mindless order granting
permission ion for the creation of limited tenancy had been
made with it the will companydition being really satisfied or
that the said initial order granting permission was the
result of either fraud on the part of the landlord or
collusion between the parties companynsel urged that a more
ritulistic enforcement the companydition of the permission
udders sec. 21 or a mechanical grant of permission
thereunder would amount to subverting the whole effect-of
sec. 21 and it is well settled fraud and companylusion
 especially companylusion between two to unequal the strong and
the weak  will vitiate companypletely the permission so granted
and render it number-est. therefore it would be the duty of
the rent companytroller to hear and adjudicate upon such pleas
of the tenant before issuing warrant of possession in favour
of the landlord. at the outset we would like to observe that
in numberonahs case the question whether a prior numberice is
required to be served upon the tenant before issuance of
warrant of possession in favour of the landlord under sec. 21 did number arise for companysideration. it was a case where
upon receipt of landlords application for reconvey of
possession under the section the tenant raised pleas that
the premises had been let out for number-residential purposes
and that the sanction or permission granted for the
creation of the limited tenancy was vitiated by fraud and
collusion and the question that arose for companysideration was
whether at that stage the rent companytroller should companysider
those peas even when reside at the stage. in other words all
that the said case decided in that if such please by the
tenant event at the exception
stage  i.e. at the stage of passing the second order  the
rent companytroller should companysider and adjudicate upon such
pleas but the decision is numberauthority for the proposition
that upon receipt of landlords application for recovery of
possession the rent companytroller must issue a numberice to the
tenant inviting from him the pleas of fraud companylusion etc. and hold an inquiry into such pleas before issuing the
warrant of possession in favour of the landlord for there
cannumber be a presumption that in very case there was a m re
ritualistic observance of the procedure companytemplated while
passing the initial order granting pertain or that the
controls had passed a mindless order or that the order
granting permission was the result of either fraud on the
part of the landlord or companylusion between the strong and the
weak. in fact clean in numberonah case this companyrt has observed
that there will be a presumption in favour of the sanction
or permission being regular and if that be so we fail to
appreciate as to why the rent companytroller should invite such
pleas of fraud companylusion etc. at the instance of the tenant
by being required to serve a numberice upon him before issuing
the warrant of possession in favour of the landlord
especially when the scheme of sec. 21 and the companynected
relevant provisions do number require it. what then is the remedy available to the tenant in a
case where there was in fact a mere ritualistic observance
of the procedure while granting permission for the creation
of a l limited tenancy or where such permission has procured
by fraud practised by the landlord or was a result of
collusion between n the strong and the weak ? must the
tenant in scull cases be unceremoniously evicted without
his plea being inquired into ? the answer is obviously in
the negative. at the same time must he be permitted to
protract the delivery of possess on of the leased premises
to the i landlord on a false plea of fraud or companylusion or
that there was a mechanical grant of permission and thus
defeat the very subject of the special procedure provided
for the benefit of the landlord in sec. 21 ? the answer must
again be in the negative. in our view these two companypeting
claims must be harmonized and the- solution lies number in
insisting upon service of a prior numberice on the tenant b
fore the issuance of the warrant of possession to evict him
but by insisting upon his approach the leant companytroller
during the currency of the limited tenancy for adjudication
of his pleas numbersooner he discovers facts and circumstances
that tend to vitiate ab initio the initial grant of
permission. either it is a mechanical grantor permission or
it is procured by fraud practised by the landlord or it is
the result
of companylusion between two unequals but in each case there is
numberreason for the tenant to wait till the landlord makes his
application for recovery of possession after the expiry of
the fixed period under sec. 21 but there is every reason why
the tenant should make an i mediate approach to the rent
controller to have his pleas adjudicated by him as soon as
facts and circumstances giving rise to such pleas companye to
his knumberledge or are discovered by him with due diligence. the special procedure provided for the benefit of the
landlord in sec. 21 warrants such immediate approach on the
part of the tenant. of companyrse if the tenant aliunde companyes to
knumber about landlords application for recovery of possession
and puts forth his plea of fraud or companylusion etc. at that
stave the rent companytroller would inquire into such plea but
he may run the risk of getting it rejected as an
afterthought. there is however numberneed to imply any
obligation on the part of the rent companytroller r to serve a
numberice on the tenant inviting him to file his objections
before issuing the warrant of possession in favour of the
landlord. having regard to the above discussion we are clearly
of the view that the high companyrt was in error in taking the
view that numberwarrant for recovery of possession under sec. 21 companyld be issued without serving a numberice on the- tenant. we hold that the rent companytrollers order directing the
issuance of warrant of possession in favour of the
appellant-landlord herein and the further proceedings of
putting him in position of the suit premises in pursuance
thereof were valid and proper and ought number to have been
quashed by the high companyrt. however since the high companyrt has
remanded the matter back to the rent companytroller for
adjudication upon pleas of the respondent tenant we number
propose to interfere with that e the order and the
adjudication of the objections raised by the respondent-
talent may be proceeded with and decided in accordance with
the law but on the facts of the instant case there was no
justification for the direction issued by the high companyrt
that pending such adjudication possession of the premises be
restored to the respondent-tenant. admittedly in the instant
case long before he applied for recovery of possession under
sec. 21 of the act the appellant had sent two registered
numberices to the registered numberices calling upon it to
vacate the premises as the period of the limited tenancy
was about to expire and also because he wanted the premises
for his own use and occupation and numberhing was done by the
respondents and it was only after the warrant of possession
had been executed and the landlord got possession of the
premises
in question that the respondent-company approached the high
a companyrt by means of a writ petition challenging the issuance
of warrant of possession on the ground that numberprior numberice-
had been served upon him and that the first order granting
permission for limited tenancy was the result of fraud
practised by the landlord.


criminal appellate jurisdiction criminal
appeal number 130 of 1961.
appeal by special leave from the judgment and
order dated september 26 1956 of the madhya
pradesh high companyrt  indore bench  at indore in cr. number 8 of 1956.

k. banerjee and takur das taneja for the
appellant. n. shroff for the respondent. 1962. february 2. the judgment of the companyrt
was delivered by
kapur j.-this appeal is directed against the
judgment and order of the high companyrt of madhya
bharat upholding the companyviction of the appellant
under ss. 380 and 451 of the indian penal companye. the question for decision is whether the appellant
could be tried in 1955 under the indian penal companye
for offences companymitted by him in 1948 when the
state of jhabua in which the offences were
committed was number a part of dominion of india and
whether the state penal companye did companytain any
provision companyresponding to the sections of the
indian penal companye under which the appellant has
been companyvicted. in jhabua state there is thikana jhaknawda
which was a jagir. its thakur thakur narayan
singh died on numberember 11 1945 without leaving
a son. his two widows adopted gajendrapal singh
the second son of his highness the raja of jhabua
on july 15 1946. representations made by the
appellant claiming the succession to the thikana
were rejected by his highness. his further
representation to the then political agent was
also
rejected. it is alleged that the appellant entered
in a companyspiracy with about 150 persons and on
january 18 1948 forcibly entered the thikana and
took possession of it and remained in unlawful
possession for about 7 months when he gave up the
possession. the prosecution against him and 15
others under ss. 121 295 and 455 of the indian
penal companye started on october 7 1955. he was
convicted under ss. 451 and 380 of the indian
penal companye but all the other accused persons were
acquitted by the sessions judge. against his
conviction the appellant took an appeal to the
high companyrt but his appeal was dismissed and he has
come in appeal to this companyrt by special leave. when the appeal was heard on january 9 1962
the question whether the appellant companyld be tried
in 1955 under the indian penal companye for offences
committed in 1948 in the erstwhile state of jhabua
and whether there were similar provisions in the
penal laws of that state at the time of the
commission of the offences was raised. as this
question had number been raised in any of the companyrts
below we adjourned the hearing of the appeal to
enable the parties to place the necessary material
before us. the argument was companyfined to this
question only as we did number find any substance in
any of the other points in the appeal. according to the report of the companyncil of
administration on the administration of jhabua
state for 1935-41 p. 48 the then raja of jhabua
state by numberification applied amongst other laws
the penal companye of india to the state of jhabua. by
ordinance 1 of 1948 issued by the rajapramukh
after the state of jhabua became part of the state
of madhya bharat which was replaced by regulation
of government act  act 14 of 1948  the laws
already in force in jhabua were companytinued in that
part of the state of madhya bharat. on february
22 1951 the part b states  laws  act 1951  act
iii of 1951  was enacted.


civil appellate jurisdiction civil appeal number 969 of 1964.
appeal from the judgment and order dated march 21 1963 of the
rajasthan high companyrt in d. b. civil income-tax ref. number 41
of 1960.

v. viswanatha sastri s. k. aiyar b. r. g. k. achar
and r. n. sachthey for the appellant. t. desai z. s. meeratwal and naunit lal for respondent. the judgment of the companyrt was delivered by
sikri j. this appeal by certificate granted under s. 66a 2
of the indian income tax act 1922 hereinafter referred to
as the act read with s. 261 of the indian income tax act
1961 is directed against the judgment of the rajasthan high
court in a
consolidated reference made to it by the income tax
appellate tribunal delhi branch under s. 66 1  of the act. this appeal relates to the assessment year 1943-44 and the
relevant question with which we are companycerned is as follows
whether the profit on the amounts received by
the assessees bankers in british india as
price of goods sold by the assessee on railway
receipts in the names of the companysignees or as
price of goods delivered ex-godown bhilwara
was liable to tax under the indian income-tax
act ? this question was referred at the instance of the appellant
and the item in dispute number before us is the item amounting
to rs. 273488 which was held number liable to taxation by
the appellate tribunal. the question which arises in this
appeal is whether the tribunal was right. the first
submission however of mr. a. v. viswanatha sastri the
learned companynsel for the appellant is that the high companyrt
has number dealt with this question insofar as it relates to
this sum. mr. desai on the other hand companytends that the
appellant has number appealed as far as this item is companycerned
and therefore before we attempt to answer the question we
must first see whether the appellants appeal companyers this
item. mr. desai refers us to the petition for leave to appeal to
the supreme companyrt filed in the high companyrt and says that
there is numberexpress mention of the item of rs. 273488. he
is right as far as this is companycerned but the appellant
apparently felt it was number necessary to mention expressly
this item. mr. sastri points to paras 12 and 13 of the
petition which read as follows

that on account of applying the
principle of accrual basis and allowing
apportionment of profit between the
manufacturing and selling processes in the
ratio of 75 25 the revenue that would be
lost to the department would be approximately
rs. 36000.

that the point of law decided by this
honble companyrt while returning the answer to
question number 12. namely whether the liability
to pay tax can be fastened on the assessee on
receipt basis or accrual basis is a
substantial question of law and is of great
public and private importance and would form
important precedent governing the numerous
other cases. the tax effect is also of
considerable value. further mr.sastri points out that the first seven parts of
the petition which deal with the facts and the proceedings
before the income tax authorities are general and companyer the
said item of rs. 273488 also the grounds of appeal number. 1 and 2 are very general and companyer the item in dispute. it
is true as pointed out by mr. desai that the high companyrt in
granting leave to appeal to the supreme companyrt did number
expressly deal with this item at all but then the high
court was dealing with the question of law as such and was
number adverting to the facts in detail. be that as it may
the appellant has filed an appeal in respect of the
assessment year 1943-44 and the only possible question that
can arise in this appeal is regarding the disputed item of
rs. 273488 and we do number feel justified in accepting this
technical objection and debarring the appellant from urging
that this item is taxable. number companying to the merits of the submission of mr. sastri
we find that the rajasthan high companyrt has omitted to
consider the question of the taxability of this item. this
item was exempted by the appellate tribunal. in this
connection the appellate tribunal observed as follows
. . but the assessee would number be liable to
tax in respect of goods sold by the assesses
to the purchasers on railway receipts in the
names of companysignees. in respect of these
goods the delivery of the goods was in
bhilwara the goods were appropriated there
and number in british india and the title in the
goods had passed in the indian state and number
in british india. the assessee cannumber
therefore be assessed on the amounts received
by the assessee from companysignees on railway
receipts in the names of the companysignees. it
is true that the companysignees did pay the price
of the goods to the assessees bankers in
british india but thereby the bankers in
british india had become the agents of the
consignees and number the agents of the assessee. in this view of the matter the inclusion of
the receipts on railway receipts addressed to
the companysignees cannumber be justified. in the
assessment years 1944-45 and 1945-46 numbere of
the railway receipts was in the name of the
consignees. the sales were on railway
receipts in the name of self or were in cash. it was only in the assessment year 1943-44
that the railway receipts were in the name of
the companysignees and they were to the tune of
rs. 273488. the amount will therefore be
excluded from the total receipts of rs. 1262911.
the high companyrt numbericed exclusion of rs. 273488 in these words
the tribunal also found that it was only in
the assessment years 1944-45 and 1945-46 that
sales were effected by assessee on railway
receipts in the names of the companysignees and
that such sales amounted to rs. 273488. the
tribunal accordingly deleted from the
aggregate amount sales of rs. 1272911 and
rs. 273488 obviously treating the amounts
deleted as number liable to tax. apparently the mention of 1944-45 and 1945-46 is a clerical
mistake and we should read it as 1943-44. apart from the
above words we do number find any reference to the figure of
rs. 273488 in the rest of the judgment. further the main
reasoning of the high companyrt companycerns the items of rs. 114687 in the year 1945-46 and rs. 355289 during the
year 1946-47. these amounts had been received by the
assessee by discounting hundies with the bharat bank
bhilwara and the rajasthan high companyrt held that the
assessee was liable to tax in respect of these items number on
receipt basis but on accrual basis. the item of rs.273388
was number realised in bhilwara by discounting of hundies but
in other circumstances. two companyrses are open to us in this appeal either we should
on the material here on the record decide whether rs. 273488 is taxable or number or remand the case to the high
court for decision. we have decided to take the latter
course because the relevant facts in respect of this item of
rs. 273488 are number clear and the companynsel for the assessee
and for the revenue have number been able to agree upon the
facts on which we should decide this question. we regret
having to adopt the latter companyrse because this appeal
concerns the assessment year 1943-44 and it is number 1965 but
under the circumstances we have numberchoice except to send the
case back to the high companyrt. we may mention however that mr. desai companytends before us
that the facts are clear and he relies on six documents
which are printed in the paper book namely -

the companytract form--annexure ex.t

copy of the postcard from shiv nath
radha krishna somani beawar to m. s mewar
textile
mills bhilwara dated march 7 1942-annxure
ex. u

copy of the advice from umedmal abheymal
ajmer to mewar textile mills dated march 7
1942-annexure ex. v

copy of the despatch instructions from
shiv nath radha krishna beawar to m s mewar
textile mills limited bhilwara dated march 11
1942 annexure ex. w

copy of letter to m s shivnath radha
krishna beawar dated march 12 1942 annexure
ex. x and

copy of the journal entry in the books
of the mills of rs. 9000 annexure ex. y.
he invites us to treat these documents as a sample of the
manner in which the goods were sent from bhilwara to the
consignee in british india and the amount of rs. 273488
was received. but we numberice that these very documents were
filed as annexures to the assessees application under s.
66 1  of the act in respect of questions other than question
number 2 which was referred by the tribunal at the instance of
the appellant and therefore we feel a doubt whether these
documents companyld safely be treated as relating to the item of
rs. 273488.
before we companyclude we must mention a matter of procedure. the appellate tribunal at the instance of the assessee
attached a number of documents to the statement of the case
including the six documents mentioned above but we find no
mention of these documents either in the appellate order of
the appellate tribunal or in the body of the statement of
the case. we feel that it is number companysistent with the
advisory jurisdiction of a high companyrt under the act that the
appellate tribunal should attach to the statement of the
case documents other than the proceedings of the income tax
authorities which are number mentioned and discussed either in
its own appellate order or in the statements of the case. suppose a dispute arises as to the interpretation of a
document which is annexed in the manner above mentioned.