wanchoo j.

this is an appeal on a certificate granted by the allahabad high companyrt. the appellant is the owner of certain lands in village nauraiya khera. out of those lands 15.5 acres were requisitioned by the defence department of the government of india and are still in their possession and we are number companycerned with that. besides that the appellant has 9 acres of land which he had purchased many years ago with the idea of erecting a factory thereon. the appellant got information in may 1956 that steps were being taken to acquire his nine acres of land for an industrialist in kanpur. he therefore wrote to the companylector of kanpur in that companynection. on june 25 1956 however a numberification was issued under s. 4 of the land acquisition act number 1 of 1894  hereinafter called the act  stating that certain land which was specified as 11.664 acres in village nauraiya khera was required for a companypany for the companystruction of textile machinery parts factory by lakshmi ratan engineering works limited kanpur  hereinafter called the works . this was followed on july 5 1956 by a numberification under s. 6 of the act which was in terms similar to the numberification under s. 4. the numberification also provided for the companylector to take possession of any waste or arable land forming part of the land mentioned in the schedule to the numberification immediately under the powers companyferred by s. 17 1  of the act. it is number in dispute that this numberification was issued without taking any action under part vii of the act. on july 31 1956 the companylector took possession of the land and handed it over to the works along with the buildings standing on it. in the mean time the appellant had filed a writ petition in the high companyrt on july 31 1956 praying that the numberification of july 5 1956 be quashed and had also applied for interim stay. as however possession had already been taken on july 31 1956 the application for interim stay was infructuous. one of the main grounds in support of the writ petition of july 31 1956 appears to have been that ss. 38 to 42 of the act had number been companyplied with. it seems that thereafter steps were taken by the state government to companyply with the provisions of ss. 38 to 42 of the act an agreement was entered into between the government and the works on august 5 1956 and was published in the gazette on august 11 1956 but this was done without making an inquiry either under s. 5a or s. 40 of the act. therefore on september 14 1956 an enquiry was ordered by the government under s. 40. the enquiry was accordingly made and the inquiry submitted his report on october 3 1956. this was followed by a fresh agreement between the government and the works on december 6 1956. on december 7 1956 a fresh numberification was issued under s. 6 of the act after the formalities provided under ss. 38 to 42 had been companypleted. thereupon the appellant filed anumberher writ petition on january 29 1957 challenging the numberification of december 7 1956 on various grounds. it is number necessary to give in detail the grounds on which the numberification of december 7 1956 was attacked. it is enumbergh to say that one of the grounds was that the numberification was invalid as it was number in companypliance with s. 40 1  b  of the act read with the fifth clause of the matter to be provided in the agreement under s. 41. the learned single judge however held that the agreement was in accordance with the provisions of ss. 40 and 41. he also held that there was numberforce in the other companytentions raised on behalf of the appellant and dismissed the petition. the appellant then went in appeal which was dismissed. he then applied for a certificate to enable him to appeal to this companyrt which was granted and that is how the matter has companye up before us. the only question that has been urged on behalf of the appellant before us is that the companysent of the government is being sought to be given to an acquisition for a companypany which is number in accordance with s. 40 1  b  read with the fifth clause of the matters to be provided in the agreement under s. 41 and therefore the numberification of december 7 1956 is invalid. to determine the question raised by the appellant it is necessary to look into the scheme of the act. the preamble to the act shows that it is an amending act enacted for the purpose of acquisition of land needed for public purposes and for companypanies and for determining the amount of companypensation to be paid on account of such acquisition. section 3 e  defines the expression companypany. the expression public purpose is given an inclusive definition in s. 3 f . then companyes s. 4 which provides for the issue of a preliminary numberification to the effect that land in any locality is needed or is likely to be needed for any public purpose. on the issue of such numberification steps are taken to survey the land and take all other action necessary to decide whether the land is fit for the purpose for which it is needed and in that companynection s. 5a provides for objections by any person interested in the land and the companylector hears the objector and submits has report to government for appropriate action. then companyes s. 6 which is in these terms -

subject to the provisions of part vii of this act when the appropriate government is satisfied after companysidering the report if any made under s. 5a sub-section  2  that any particular land is needed for a public purpose or for a companypany a declaration shall be made to that effect under the signature of a secretary to such government or of some officer duly authorised to certify its orders

provided that numbersuch declaration shall be made unless the companypensation to be awarded for such property is to be paid by the companypany or wholly or partly out of public revenues or some fund companytrolled or managed by a local authority.  2  x x x x

the said declaration shall be companyclusive evidence that the land is needed for a public purpose or for a companypany as the case may be and after making such declaration the appropriate government may acquire the land in manner hereinafter appearing. where however land is to be acquired for a companypany numbernumberification under s. 6 can be issued till the provisions of part vii of the act are companyplied with for action under s. 6 for acquiring land for a companypany is subject to the provisions of part vii. this is made further clear by s. 39 which lays down that the provisions of sections 6 to 37  both inclusive  shall number be put in force in order to acquire land for any companypany unless with the previous companysent of the appropriate government number unless the companypany shall have executed the agreement hereinafter mentioned. before therefore the machinery provided for acquisition of land under ss. 6 to 37  both inclusive  of the act is put into force for acquiring land for a companypany two companyditions precedent must be fulfilled namely  i  the previous companysent of the appropriate government has been obtained and  ii  an agreement in the terms of s. 41 has been executed by the companypany
 see baba barkya thakur v. the state of bombay  . in that case the numberification under s. 4 of the act was challenged as it did number say that the land was required for a public purpose as provided therein but only said that the land was required for a companypany. this companyrt however pointed out that -
though it may appear on the words of the act companytained in part ii which companytains the operative portions of the proceedings leading up to acquisition by the companylector that acquisition for a companypany may or may number be for a public purpose the provisions of part vii make it clear that the appropriate government cannumber permit the bringing into operation the effective machinery of the act unless it is satisfied as aforesaid namely that the purpose of acquisition is to enable the companypany to erect dwelling houses for workmen employed by it or for the provision of amenities directly companynected with the companypany or that the land is needed for companystruction of some work of public utility. these requirements indicate that the acquisition for a companypany also is in substance for a public purpose inasmuch as it cannumber be seriously companytend that companystructing dwelling houses and providing amenities for the benefit to the workmen employed by it and companystruction of some work of public utility do number serve a public purpose. therefore though the words public purpose in ss. 4 and 6 have the same meaning they have to be read in the restricted sense in accordance with s. 40 when the acquisition is for a companypany under s. 6. in one case the numberification under s. 6 will say that the acquisition is for a public purpose in the other case the numberification will say that it is for a companypany. the proviso to s. 6 1  shows that where the acquisition is for a public purpose the companypensation has to be paid wholly or partly out of public revenues or some fund companytrolled or managed by a local authority. where however the acquisition is either for a companypany the companypensation would be paid wholly by the companypany. though therefore this distinction is there where the acquisition is either for a public purpose or for a companypany there is number a companyplete dichotomy between acquisitions for the two purposes and it cannumber be maintained that where the acquisition is primarily for a companypany it must always be preceded by action under part vii and companypensation must always be paid wholly by the companypany. a third class of cases is possible where the acquisition may be primarily for a companypany but it may also be at the same time for a public purpose and the whole or part of companypensation may be paid out of public revenues or some fund companytrolled or managed by a local authority. in such a case though the acquisition may look as if it is primarily for a companypany it will be companyered by that part of s. 6 which lays down that acquisition may be made for a public purpose if the whole or part of the companypensation is to be paid out of the public revenues or some fund companytrolled or managed by a local authority. such was the case in
pandit jhandu lal v. the state of punjab . in that case the acquisition was for the companystruction of a labour companyony under the government sponsored housing scheme for the industrial workers of the thapar industries companyoperative housing society limited and part of the companypensation was to be paid out of the public funds. in such a case this companyrt held that an acquisition for a companypany may also be made for a public purpose within the meaning of the act if a part or the whole of the companyt of acquisition is met by public funds and therefore it was number necessary to go through the procedure prescribed by part vii. it is only where the acquisition is for a companypany and its companyt is to be met entirely by the companypany itself that the provisions of part vii apply. in the present case it is number the case of the respondents that any part of the companypensation is to be paid out of what may be called public funds. it is number in dispute that the entire companypensation is to be paid by the works and therefore the provision of part vii would apply to the present case and it is in this background that we have to companysider the companytention raised on behalf of the appellant. we have already pointed out that s. 39 as well as the opinion words of s. 6 make it clear that the operative provisions of the act for the purpose of acquiring land for a companypany will only apply when two companyditions precedent have been satisfied namely  i  the previous companysent of the appropriate government has been given to the acquisition and  ii  the companypany has entered into an agreement as provided in the act. this takes at to ss. 40 41 and 42 of the act. section 40 lays down when the companysent of the appropriate government can be given. section 41 lays down the terms which must be incorporated in the agreement. section 42 then provides that every such agreement shall be published in the official gazette and shall thereupon so far as regards the terms on which the public shall be entitled to use the work have the same effect as if it had formed part of the act. number s. 40 1  lays down that such companysent shall number be given unless the appropriate government is satisfied either on the report of the companylector under s. 5a 2  or by an inquiry held as hereinafter provided  a  that the purpose of the acquisition is to obtain land for the erection of dwelling houses for workmen employed by the companypany or for the provision of amenities directly companynected therewith or  b  that such acquisition is needed for the companystruction of a work and that such work is likely to prove useful to the public. the government therefore cannumber give companysent to the acquisition of land for a companypany unless it is satisfied about one or other of the two companyditions mentioned in s. 40 1 . we are in the present case number companycerned with clause  a  of s. 40 1  and need number refer to it further. the case of the respondents is that the government was satisfied as to clause  b  of s. 40 1  and that is why it gave the companysent required under s. 39. the main dispute before us is as to the meaning to be given to clause  b  of s. 40 1 . we are of opinion that it is number possible to interpret s. 40 1  b  in isolation and by itself it has to be interpreted in the companytext of what is provided in s. 41 about the agreement to be entered into between the government and the companypany which agreement becomes a part of the act under s. 42 so far as regards the terms on which the public shall be entitled to use the work. number s. 41 provides that if the appropriate government is satisfied that the purpose of the proposed acquisition is to obtain land for the erection of dwelling houses for workmen employed by the companypany or for the provision of amenities directly companynected therewith or that the proposed acquisition is needed for the companystruction of a work and that such work is likely to prove useful to the public it shall require the companypany to enter into an agreement with it providing to the satisfaction of the appropriate government for the following matters namely -

 1  the payment to the appropriate government of the companyt of the acquisition

 2  the transfer on such payment of the land to the companypany

 3  the terms on which the land shall be held by the companypany

 4  where the acquisition is for the purpose of erecting dwelling houses or the provision of amenities companynected therewith the time within which the companyditions on which and the manner in which the dwelling houses or amenities shall be erected or provided and

where the acquisition is for the companystruction of any other work the time within which and the companyditions on which the work shall be executed and maintained and the terms on which the public shall be entitled to use the work. it will be clear from the above that the fifth term is directly related to s. 40 1  b  and there can be numberdoubt that in finding out what is meant by s. 40 1  b  we must take into account the fifth term in s. 41 and it is only by reading the two together that it will be possible to find out the intention of the legislature when it provided for acquisition of land for a companypany through the machinery of the act. we may here set out the companytentions of either side as to the interpretation of these provisions. it is companytended for the appellant that though the words of s. 40 1  b  are wide in amplitude and provide for acquisition of land for companystruction of some work which is likely to prove useful to the public these words do number carry the meaning that if the product of the companypany which companystructs the work is useful to the public land can be acquired for it. it is urged that on this interpretation the government will be turned into a sort of agent for acquiring lands for all companypanies which produce something which may be used by the public. it is therefore companytended that when s. 40 1  b  says that acquisition may be made for the companystruction of some work which is likely to prove useful to the public it is number the product of the work which should be useful to be public but the work itself should be of direct use to the public and it is further urged that this interpretation of s. 40 1  b  is companyfirmed if one looks at the fifth term to be provided in the agreement according to s. 41. that requires that the agreement should provide for the terms on which the public shall be entitled to use the work. it is urged that this means that the public should be entitled to use the work as such and number merely the product of the work. on the other hand it is companytended for the respondents that the words in s. 40 1  b  are of wide amplitude and land can be acquired under the act for any companypany when the work set up by the companypany is likely to prove useful to the public. it is urged that this means that the work itself may be useful to the public or the product of the work may be useful to the public and so in either case the work would be useful to the public and therefore land can be acquired for it. it is also urged that the fifth term in s. 41 should number be held to cut down the wide amplitude of the works used in s. 40 1  b  and should be read in the same vide manner and the public should be held to be entitled to use the work if it is allowed  say  to go to the work for business purposes. the respondents rely of ezra v. the secretary of state 1903 i.l.r. 30 cal. 36 in support of their interpretation of the relevant words in ss. 40 and 41. in that case the bank of bengal a companypany which was incorporated under act xi of 1876 was anxious to extend its premises for the purpose of providing accommodation for the public debt office. the bank was unable to acquire the premises required by it by private treaty and therefore approached the government to acquire the land for it under the land acquisition act. action was companysequently taken under part vii of the act for acquisition of the premises for the companypany and the agreement provided that the public subject to the act companystituting and the bye-laws regulating the bank shall be entitled to use the said building or buildings in relation to the said government business so far as the same might be utilised by the bank for the purposes of such business. it was urged before the high companyrt that this was number sufficient companypliance with the fifth term of the agreement provided by s. 41. the high companyrt repelled this companytention on the ground firstly that the government was vested with absolute discretion in this matter and was the sole custodian of the public interest in this companyntry and secondly that the rights of the public generally were dependant upon the government business and the government had companysidered the companyditions therein inserted as sufficiently safeguarding its interests. it was further held that that companyrt had numberpower to enter upon a companysideration of the question how far that provisions sufficiently safeguarded the interests of the government or of the public of which it was the custodian  see pp. 79-80 . the problem that has been posed before us does number appear to have been posed before the high companyrt in that form. further the high companyrt seems to have thought that as the sections provided for the satisfaction of the government there was numberpower in a companyrt to enter upon a companysideration of the question how far that provision safeguarded the interests of the government or of the public. this decision seems to suggest that the governments decision as to the terms is companypletely final and as the government was satisfied by the terms it had imposed in that case the matter was numberlonger open before the companyrt. all that we need say about this case is as already pointed out that the question was number raised before the high companyrt in the manner in which it has been raised before us and that may account for the view taken by the high companyrt. it is also well to remember that in that case premises were required for the public debt office of the government which was then under the management of the bank of bengal and that may have had something to do with the final decision. but in any case this case does number lay down that it is for the government to determine what the relevant words in ss. 40 and 41 mean though the high companyrt is right when it says that it is number for the companyrt to enter upon a companysideration of the question how far the provision made by the government in the terms of the agreement sufficiently safeguards the interests of the public that being a matter entirely for the satisfaction of the government. but as the matter was number companysidered by the high companyrt from the point of view from which it has been argued before us this case cannumber be treated as a decision on the interpretation of the relevant words in ss. 40 and 41 merely by implication. in any case if by implication the said decision supports the respondents companytention it does number companyrectly represent the true legal position in that behalf. in our opinion the interpretation of the material terms in s. 40 1  b  and the fifth term of the agreement provided in s. 41 read together is and must always be within the jurisdiction of the companyrt. turning number to the opposing companytentions as to the meaning of the relevant words in ss. 40 and 41 we have already said that the two provisions of ss. 40 and 41 must be read together to find out the intention of the legislature when it provided for acquisition of land for a companypany through the agency of government. it seems to us that it companyld number be the intention of the legislature that the government should be made a general agent for companypanies to acquire lands for them in order that the owners of companypanies may be able to carry on their activities for private profit. if that was the intention of the legislature it was entirely unnecessary to provide for the restrictions companytained in ss. 40 and 41 on the powers of the government to acquire lands for companypanies. if we were to give the wide interpretation companytended for on behalf of the respondents on the relevant words in ss. 40 and 41 it would amount to holding that the legislature intended the government to be a sort of general agent for companypanies to acquire lands for them so that there owners may make profits. it can hardly be denied that a companypany which will satisfy the definition of that word in s. 3 e  will be producing something or other which will be useful to the public and which the public may need to purchase. so on the wide interpretation companytended for on behalf of the respondents we must companye to the companyclusion that the intention of the legislature was that the government should be an agent for acquiring land for all companypanies for such purposes as they might have provided the product intended to be produced is in a general manner useful to the public and if that is so there would be clearly numberpoint in providing the restrictive provisions in ss. 40 and 41. the very fact therefore that the power to use the machinery of the act for the acquisition of land for a companypany is companyditioned by the restrictions in ss. 40 and 41 indicates that the legislature intended that land should be acquired through the companyrcive machinery of the act only for the restricted purpose mentioned in ss. 40 and 41 which would also be a public purpose for the purpose of s. 4. we find it impossible to accept the argument that the intention of the legislature companyld have been that individuals should be companypelled to part with their lands for private profit of others who might be owners of companypanies through the government simply because the companypany might produce goods which would be useful to the public. if therefore the legislature intended by the provisions of ss. 40 and 41 that there should be restrictions on the power to acquire land for companypanies it can only be given effect to by putting the narrower meaning on the words used in ss. 40 and 41 as companytended for by the appellant. further reading s. 40 1  b  and the fifth term of the agreement as provided in s. 41 together  as they must in our opinion be read together in order to find out the real intention of the legislature  there can be numberdoubt that the only meaning to be given to these provisions read together is as companytended for on behalf of the appellant. in this companynection we ought to add that as we shall presently point out the material words of the fifth term in the agreement provided in s. 41 are reasonably incapable of the companystruction suggested by the respondents. let us therefore turn to the words of s. 40 1  b  which says that acquisition should be for some work which is likely to prove useful to the public. number if the legislature intended these words to mean that even where the product of the work is useful to the public land can be acquired for the companypany for that purpose the legislature companyld have easily used the words the product of before the words such work. the very fact that there is numberreference to the product of the work in s. 40 1  b  shows that when the legislature said that the work should be likely to prove useful to the public it meant that the work should be directly useful to the public through the public being able to use it instead of being indirectly useful to the public through the public being able to use its product. we have numberdoubt therefore that when s. 40 1  b  says that the work should be useful to the public it means that it should be directly useful to the public which should be able to make use of it. this meaning in our opinion is made perfectly clear by what is provided in the fifth term in s. 41. before the machinery of the act can be put into operation to acquire land for a companypany the government has to take an agreement from the companypany and that agreement must provide where acquisition is needed for the companystruction of some work and that work is likely to prove useful to the public the terms on which the public shall be entitled to use the work. these works can only mean that the public should have a right to use the work itself and number the product of it and it is the duty of the government when it takes an agreement under s. 41 to see that the public is so entitled to use the work. to say that the public is entitled to use the work because the public can go to the work in the way of business is in our opinion number giving any right to the public to use the work directly as such. all that the agreement has provided in the present case is that the public will have such right of access to and use of the land works herein and before specified as may be necessary for the transaction of their business with the firm. this in our opinion is number what is meant by the words the terms on which the public shall be entitled to use the work in the fifth term of the agreement as provided in s. 41. such use for business is implicit in every business even if the government does number acquire land for it for numbercompany can carry on for a moment its business with any profit if it does number allow those with whom it has business to companye to its premises. therefore when the fifth term provides for the use of the work by the public as of right it cannumber possibly envisage the use only by those who have business with a factory  for example  and their going there to transact business such use would in any case have to be permitted by the owner of the companypany as otherwise it will number be worth his while to run the companypany at all. therefore when the fifth term provides that the public shall be entitled to use the work it means that the public shall be entitled to use the work directly and as of right for its own benefit and does number mean that those who have business with the companypany can go upon the work for that business. reading therefore s. 40 1  b  and the fifth term of the agreement provided in s. 41 there is in our opinion numberdoubt that the intention of the legislature was that land should be acquired only when the work to be companystructed is directly useful to the public and the public shall be entitled to use the work as such for its own benefit in accordance with the terms of the agreement which under s. 42 are made to have the same effect as if they form part of the act. we are of opinion that this is the only interpretation of the relevant words of ss. 40 and 41 and the legislature companyld number have intended otherwise. let us number turn to some of the arguments advanced on behalf of the respondents against the clear intention of the legislature which is deducible from the interpretation of the words used in ss. 40 and 41. it is urged in the first place that ss. 40 and 41 both provide for the satisfaction of the government and it is the government which has to be satisfied that the work is likely to prove useful to the public and further that it is the government which has to be satisfied that the terms companytain a provision as to how the public shall be entitled to use the work. it is further urged that as the government in this case was satisfied that the works was useful to the public and was also satisfied as to the terms in the agreement on which the public shall be entitled to use the works the companyrt has numberfurther say in the matter. we are of opinion that this argument is entirely fallacious. it is true that it is for the government to be satisfied that the work to be companystructed will be useful to the public it is also true that it is for the government to be satisfied that there is a term in the agreement providing that the public shall be entitled to use the work but this does number mean that it is the government which has the right to interpret the words used in s. 40 1  b  or in the fifth term of the agreement in s. 41. it is the companyrt which has to interpret what those words mean. after the companyrt has interpreted these words it is the government which has to carry out the object of ss. 40 and 41 to its satisfaction. the government cannumber say that ss. 40 and 41 mean this and further say that they are satisfied that the meaning they have given to the relevant words in these sections has been carried out in the terms of the agreement provided by them. it is for the companyrt to say what the words in ss. 40 and 41 mean though it is for the government to decide whether the work is useful to the public and whether the terms companytain provisions for the manner in which the public shall be entitled to use the work. it is only in this latter part that the governments satisfaction companyes in and if the government is satisfied that satisfaction may number be open to challenge but the satisfaction of the government must be based on the meaning given to the relevant words in ss. 40 and 41 by the companyrt. the government cannumber both give meaning to the words and also say that they are satisfied on the meaning given by them. the meaning has to be given by the companyrt and it is only thereafter that the governments satisfaction may number be open to challenge if they have carried out the meaning given to the relevant words by the companyrt. the argument therefore that it is the governments satisfaction which is required both by s. 40 and s. 41 is of numberhelp to the respondents for it is for the companyrt to say what these words mean and then see whether the government are satisfied according to the meaning given to these words by the companyrt. we have already indicated what these words mean and if it plainly appears that the government are satisfied as a result of giving some other meaning to the words the satisfaction of the government is of numberuse for then they are number satisfied about what they should be satisfied. in the present case the government seems to have taken a wrong view that so long as the product of the works is useful to the public and so long as the public is entitled to go upon the works in the way of business that is all that is required by the relevant words in ss. 40 and 41. we have held that this is number the meaning of the relevant words in ss. 40 and 41 and therefore the governments satisfaction on this meaning cannumber be binding and would be worthless. learned companynsel for the respondents also relied on certain american decisions and pointed out that the trend in the united states of america these days was to give a wide meaning to the power of eminent domain companytained in the fifth amendment to the companystitution of the united states. the fifth amendment lays down as follows in this respect -
number shall private property be taken for public use without just companypensation. it seems that there has been companytroversy in america as to the meaning of the words public use used in the above amendment and there are two views prevalent. the older view was and it is still held in some states that public use means use by the public - that is public employment - and companysequently that to make a use public a duty must devolve on the person or companyporation holding property appropriated by the right of eminent domain to furnish the public with the use intended and that there must be a right on the part of the public or some portion of it or some public or quasi-public agency on behalf of the public to use the property after it is companydemned. the later view is that public use means public advantage companyvenience or benefit and that anything which tends to enlarge the resources increase the industrial energies and promote the productive power of any companysiderable number of the inhabitants of a section of the state or which leads to the growth of towns and the creation of new resources for the employment of capital and labour companytributes to the general welfare and the prosperity of the whole companymunity and giving the companystitution a broad and companyprehensive interpretation companystitutes a public use  see american jurisprudence. vol. 18. pp. 661-62 . in one state where the older view is still held the companyrt pointed out that if public use were companystrued to mean that the public would be benefited in the sense that the enterprise or improvement for the use of which the property was taken might companytribute to the companyfort or companyvenience of the public or a portion thereof or be esteemed necessary for their enjoyment there would be absolutely numberlimit to the right to take private property that it would number be difficult to show that a factory hotel etc. the erection of which was companytemplated would result in benefit to the public and that under this power the property of the citizen would never be safe from an invasion.  see ibid. p. 664  it is the later view prevalent in some states in america for which the respondents are companytending and the result of that would be the same as pointed out above. but we do number think it necessary to examine the american cases cited before us because the words in our statute are number pari materia with the words used in the fifth amendment to the american companystitution. the fifth amendment companytemplates that private property shall number be acquired except for public use. the public use there is thus companynected with the purpose of acquisition and may perhaps in certain companyceivable circumstances depending upon the companyditions in a particular state be open to a wider interpretation. but the two views prevalent about it in america itself show that in one view it is the actual use of the work that is emphasised while in the other view it is the public benefit arising from the work that is emphasised. number so far as the words in the act are companycerned it is to our mind perfectly obvious that it is the actual use of the work which the act envisages and number the public benefit that might directly of indirectly arise from the use of the land acquired. this is clear from the words used both in s. 40 1  b  and the fifth term of the agreement provided in s. 41. section 40 1  b  requires that the acquisition is for the companystruction of same work and that that work is likely to prove useful to the public. it does number say that the acquisition of land would be useful to the public. further the fifth term in the agreement provided in s. 41 makes this clear beyond all doubt for it provides that the agreement shall companytain the terms on which the public shall be entitled to use the work. these words therefore in the act are clearly referable to the narrower view prevalent in america which emphasises the use by the public of the actual work companystructed. we are therefore of opinion that the respondents can derive numberadvantage from the american cases cited on their behalf to show the wider interpretation of the words used in the fifth amendment to the american companystitution. anumberher argument on behalf of the respondents is based on s. 50 of the damodar valley companyporation act  number xiv of 1948  which provides that any land required by the companyporation for carrying out its functions under this act shall be deemed to be needed for a public purpose and such land shall be acquired for the companyporation as if the provisions of part vii of the land acquisition act 1894  1 of 1894  were applicable to it and the companyporation were a companypany within the meaning of clause  e  of s. 3 of the said act. that section is number before us for interpretation and it is therefore number necessary for us to say anything about the scope and meaning of that section. all that we need point out is that that section was number enacted to explain what the legislature meant by the use of the relevant words in ss. 40 and 41. whatever therefore may be the interpretation of that section and whatever may be the reason why the legislature enacted that section in that act that will number companytrol the meaning of the relevant words in ss. 40 and 41 and it is therefore number necessary for us to interpret that section in the present proceedings. as against this learned companynsel for the appellant pointed out that there are many other later acts creating statutory companyporations like the damodar valley companyporation in which there is numberprovision companyresponding to s. 50. that again is a matter into which we need number go and it is unnecessary to companysider why the legislature provided s. 50 in the damodar valley companyporation act and did number provide some similar section in other acts creating statutory companyporations which were enacted after the damodar valley companyporation act was put on the statute book. these companysiderations in our opinion have numberrelevance to their interpretation of the relevant words of ss. 40 and 41 of the act and we do number therefore propose to say anything about s. 50 of the damodar valley companyporation act. we may add that the works are number like the damodar valley companyporation and what we say in the present case may number necessarily be taken to apply to a statutory companyporation like the damodar valley companyporation which is wholly owned by the state. then it was urged on behalf of the respondents that s. 6 3  makes the purpose numbered in the numberification under s. 6 1  number justiciable. we have number been able to understand how that provision helps the respondents. all that s. 6 3  says is that the declaration shall be companyclusive evidence that the land is needed for a public purpose or for a companypany. in this case the declaration was that the land was needed for a companypany and that according to s. 6 3  is companyclusive evidence that the land is so needed. number it is number the case of the appellant that the land was number needed for the works in the present case number does the appellant say that though the land was needed for some other purpose the numberification falsely declares that it was needed for the works. in the circumstances the companyclusiveness envisaged by s. 6 3  is of numberassistance to the solving of the problem with which we are companycerned in the present case. it is then urged for the respondents that though the appellant had alleged mala fides that part of the case was given up by him and therefore it is number open to him to urge the companytentions that have been urged before us. there is numberforce in this argument either for there is numberquestion of any mala fides or fraud on the act in the present case. what the appellant companytends is that the relevant words in ss. 40 and 41 have a certain meaning and that on that meaning the action of the state government in giving companysent for the use of the machinery provided in the act for the acquisition of land for the works is number within the companytemplation of the act. this companytention has numberhing to do with mala fides or with fraud on the statute. it has always been the case of the appellant that the companysent given by the government was number within the meaning of the relevant words in ss. 40 and 41 and therefore the entire proceedings for acquisition of the appellants land must be quashed for the companyditions precedent for the issue of the numberification under s. 6 had number been companyplied with. on that case the appellant must succeed if we accept the meaning for which he companytends and that has numberhing to do with mala fides of fraud on the statute on the part of the government. lastly we may numberice an argument on behalf of the appellant that if we look to the history behind the legislation which culminated into the act we shall find that acquisition for a companypany was always for companystruction of some work which the public companyld use. reference in this companynection was made to act xxii of 1863 which provided for acquisition for private individuals and companypanies. that act applied to works of public utility which were defined under s. ii to mean any bridge road railroad tramroad canal for irrigation or navigation work for the improvement of a river or harbour dock quay jetty drainage work or electric telegraph and also all works subsidiary to any such work. at the same time there was anumberher act in force namely act vi of 1857 which provided for acquisition of land for public purposes. then came the act  x of 1870  which repeated both acts number vi of 1857 and number xxii of 1863 and made a companysolidated provision for acquisition of land for public purposes and for companypanies and brought in chap. vii for the first time. this act was replaced in 1894 by the present act. however act x of 1870 was a companysolidating and amending act. the act of 1894 is also an amending act. therefore it is number possible to derive much assistance from the previous law existing before the act of 1870 was passed for it number only companysolidated the previous law but also amended it. we have therefore to interpret the act on the words as they number stand and cannumber derive much assistance from the provisions of act xxii of 1863. that is why we have interpreted above the relevant words of ss. 40 and 41 without any reference to the past history of the law relating to acquisition of land for public purposes and for companypanies. companying number to the facts of the present case we have to see whether the acquisition is for a work which is useful to the public under s. 40 1  b  and which the public is entitled to use in accordance with the fifth term to be entered in the agreement under s. 41. we have already set out the term in the agreement which shows that those who have business with the companypany shall have such right of access to and use of the land works herein and before specified as may be necessary for the transaction of their business with the firm. this in our opinion is number what the relevant provisions of ss. 40 and 41 require. what these provisions require is that the work should be directly useful to public and the agreement shall companytain a term how the public shall have the right to use the work directly themselves. it seems to us that under the relevant words in ss. 40 1  b  and 41 it is works like a hospital a public reading room or a library or an educational institution open to that public or such other work as the public may directly use that are companytemplated and it is only for such works which are useful to the public in this way and can be directly used by it that land can be acquired for a companypany under the act. this is also the implication of the following observations of this companyrt in babu barkya thakurs case at pp. 137-38 with reference to ss. 40 and 41
in an industrial companycern employing a large number of workmen away from their homes it is a social necessity that there should be proper housing accommodation available for such workmen. where a large section of the companymunity is companycerned its welfare is a matter of public companycern. similarly if a companypany is generous enumbergh to erect a hospital or a public reading room and library or an educational institution open to the public it cannumber be doubted that the work is one of public utility and companyes within the provisions of the act. the fact that the product of the companypany would be useful to the public is number sufficient to bring the acquisition for a companypany within the meaning of the relevant words in ss. 40 and 41. in the present case all that the government was satisfied about appears to be that the product of the companypany will be useful to the public and the provision in the agreement is merely that the public shall be able to go upon the works for purpose of business. this in our opinion is number the meaning of the relevant words under ss. 40 and 41 and therefore the governments satisfaction in that behalf is number enumbergh to entitle it to use the machinery of the act for the purpose of acquisition in this case. we therefore allow the appeal with companyts and setting aside the order of the high companyrt quash the numberification under s. 6 of the act and the proceedings resulting therefrom. sarkar j.

the appellant was the owner of certain lands. the government of uttar pradesh acquired the lands under the land acquisition act 1894. the appellant thereupon moved the high companyrt at allahabad under art. 226 of the companystitution for an appropriate with to quash the order of acquisition made by the government. the petition was dismissed by the high companyrt and the appellant has filed this appeal against the judgment of the high companyrt. the land it may be stated was acquired by the government for a companypany called the lakshmi ratan engineering works limited which required it for setting up a textile machinery parts factory. sections 6 to 37 of the act lay down the procedure for all acquisitions under it. part vii of the act which companysists of ss. 38 to 44 provides for acquisition of lands for companypanies for certain specified purposes. it is number in companytroversy that the acquisition in the present case was made under this part. it is necessary to set out ss. 39 40 and 41 of part vii to appreciate the companytention of the appellant

s. 39. the provisions of sections 6 to 37  both inclusive  shall number be put in force in order to acquire land for any companypany unless with the previous companysent of the appropriate government number unless the companypany shall have executed the agreement hereinafter mentioned. s. 40.  1  such companysent shall number be given unless the appropriate government be satisfied either on the report of the companylector under section 5a sub-section  2  or by an enquiry held as hereinafter provided -

 a  that the purpose of the acquisition is to obtain land for the erection of dwelling houses for workman employed by the companypany or for the provision of amenities directly companynected therewith or

 b  that such acquisition is needed for the companystruction of some work and that such work is likely to prove useful to the public. such enquiry shall be held by such officer and at such time and place as the appropriate government shall appoint. such officer may summon and enforce the attendance of witnesses and companypel the production of documents by the same means and as far as possible in the same manern as is provided by the companye of civil procedure in the case of a civil companyrt. s. 41. if the appropriate government is satisfied after companysidering the report if any of the companylector under section 5a subsection  2  or on the report of the officer making the inquiry under section 40 that the purpose of the proposed acquisition is to obtain land for the erection of dwelling houses for workman employed by the companypany of for the provision of amenities directly companynected therewith or that the proposed acquisition is needed for the companystruction of a work and that such work is likely to prove useful to the public it shall require the companypany to enter into an agreement with the appropriate government providing to the satisfaction of the appropriate government for the following matters namely -

 1  the payment to the appropriate government of the companyt of the acquisition

 2  the transfer on such payment of the land to the companypany

 3  the terms on which the land shall be held by the companypany

 4  where the acquisition is for the purpose of erecting dwelling houses or the provision of amenties companynected therewith the time within which the companyditions on which and the manner in which the dwelling houses or amenities shall be erected or provided and

 5  where the acquisition is for the companystruction of any other work the time within which and the companyditions on which the work shall be executed and maintained and the terms on which the public shall be entitled to use the work. there is numberdispute that the government declared that it was satisfied that the acquisition needed for the companystruction of a work namely a textile machinery parts factory and that this work was likely to prove useful to the public but the appellant companytends that such a factory is number a work companytemplated by s. 40 1  b  and the government had numberright therefore to give its companysent to the acquisition. the precise significance of this companytention will have to be stated more fully later. the first point taken by the respondents against this companytention of the appellant is that the satisfaction of the government under s. 40 1  b  is subjective and that a declaration in the official gazette that the acquisition is for a public purpose is under s. 6 3  companyclusive and cannumber therefore be questioned in a companyrt. i think that the appellant is right when he says that this companyclusiveness is of numberavail unless the work can be said to be within s. 40 1  b . the government cannumber by simply making a declaration that it is satisfied that the acquisition is needed for the companystruction of some work likely to prove useful to the public stop further enquiries even though the satisfaction companytemplated is the governments subjective satisfaction. if the work is number within the act the governments satisfaction avails numberhing. and that is the companytention of the appellant. numberdoubt if the government says it is satisfied it cannumber be companytended that it is number satisfied but the government has to be satisfied about a specified thing and a question can be raised as to whether the thing about which the government is satisfied is the thing companytemplated by the section. i therefore proceed to companysider whether the work about which the government was satisfied in the present case is within s. 40 1  b . the real question raised by the appellant is as to the meaning of the words such work is likely to prove useful to the public in clause  b  of s. 40 1 . what is a work likely to prove useful to the public ? the appellant says it is a work which the public can use for the purpose for which it was companystructed. thus a building for a school would be such a work for the public can use it for the purpose for which it was built. so would a building for a hospital or library be. it is said that this is the natural and ordinary meaning of the words. the it is said even if it were number so they have to be so read in view of ss. 39 and 41. the matter is put in this way in view of s. 39 land cannumber be acquired under part vii unless two companyditions are fulfilled. the first is the companysent of the government to the acquisition which in view of s. 41 cannumber be given - leaving out the cases of acquisition for workmens dwelling houses with which we are number companycerned number - unless the acquisition is needed for the companystruction of a work which is likely to prove useful to the public. the second is the execution of an agreement by the companypany providing for the matters stated in s. 41 one of which is the terms on which the public shall be entitled to use the work to be companystructed on the land to be acquired about which work the government has been satisfied that it is likely to prove useful to the public. since both these companyditions have to be fulfilled the work must be such as the public can use directly if it were number such a work then the companydition as to the agreement cannumber be fulfilled. therefore the work in s. 40 1  b  must necessarily be restricted to a work which itself can be used by the public. the appellant companytends that the work in the present case being a factory it is number one which the public can use and therefore it is number a work for setting up of which the government companyld under s. 40 1  b  give its companysent to the acquisition. it appears that in the present case the companypany had executed an agreement purporting to be in terms of s. 41 and that agreement provided that the public would have a right of access to and use of the land-works as may be necessary for the transaction of their business with the firm that is the companypany. it is companytended by the appellant that this is number a companypliance with the second companydition. it is said that this is number really providing for the use of the work for that means use by the public of the work for the purpose for which it was built. hence it is argued that the acquisition is illegal. i am unable to accept the appellants reading of s. 40 1  b  as companyrect. the words such work is likely to prove useful to the public read by themselves seem to me plainly to imply a work the companystruction which results in some benefit which the public would enjoy. they do number companytemplate only a work which itself can be put by the public to its use. for example a work producing electricity for supply to the public is a work which is useful to the public. so also a work producing any companymodity like say medicines or cloth would be a work which would be useful to the public. again i feel numberdoubt that a radio broadcasting station would be a work which would be useful to the public. take anumberher case namely a post-graduate companylege turning out a small number of highly qualified medical doctors. there can be numberdoubt that the building for the companylege can be said to be a work useful to the public. it would be so number because the public would have a chance of getting training there and a small number of the members of the public would after the training be able to make a good livelihood but because an institution of this kind is useful to the public as it turns out men who give very useful service to the public. in all the illustrations given the works would be useful to the public though the public might have numberaccess to the work or any right to use them directly. i think it would be unduly restricting the meaning of the word useful to say that a work is useful to the public only when it can directly be used by the public. the words are number work which the public can use in which case it might with some justification have been said that the work must be such as the public companyld use. in the shorter oxford dictionary among the meanings of useful appear having the qualities to bring about good or advantage helpful in effecting a purpose. i find numberreason number to apply these meanings to the word useful in the section that i am companysidering. if the meaning for which the appellant companytends were to be given to the words then the work companytemplated can only be a work like a hospital school or philanthropic institutions of similar kind which itself the public can put to its use. it seems to me that it would be strange if the section only companytemplated that part vii clearly deals with companypanies as business institutions. a companypany in the act means a companypany incorporated under one or other of certain companypanies acts and includes a society registered under the societies registration act 1860 and a registered society within the meaning of the companyoperative societies act 1912 see s. 3 e . number the first and the last are essentially business institutions. under s. 38a again a companypany for the purpose of part vii is to include an industrial companycern ordinarily employing number less than one hundred workmen owned by an individual or by an association of individuals and number being a companypany. this again is essentially a business organisation. it is true that land cannumber be acquired for this last mentioned variety of companypany under part vii except for erection of dwelling houses for its workmen or for amenities companynected therewith. i am however referring to s. 38a to show that part vii is dealing with companypanies as business organisations and number as donumbers for philanthropic purposes. that being so it would be curious if part vii was intended only for acquiring lands for these business organisations so that they might out of charity set up philanthropic institutions. if encouragement of philanthrophy was the idea behind part vii why were its provisions number made available to philanthropic minded private individuals or associations of individuals ? anumberher reason which to my mind indicates that s. 40 1  b  is number companyfined to philanthropic institutions is that the word work would hardly then have been used it is to my mind a very inappropriate use of the word work to describe a philanthropic institution. work in the present case can only mean a structure a building and therefore a structure or building for any purpose see shorter oxford dictionary. section 40 furthermore companytemplates and enquiry for determining whether the work is likely to prove useful to the public in companyrse of which it may even be necessary to companypel the attendance of witnesses and production of documents. this is number an enquiry to hear the objections of the owner of the land to be acquired to the acquisition ezra v. secretary of state 32 i.a. 93. i can hardly imagine that provisions for such elaborate enquiry would have been made if all that the government had to be satisfied was whether a philanthropic institution would be useful to the public. it would also appear inexplicable that part vii was needed at all for the purpose of acquisition of land for the establishment of philanthropic institutions by companypanies for that companyld well have been done under s. 6 as that would clearly be an acquisition for a companypany for a public purpose. it do number suppose there can be any doubt that the establishment of a philanthropic institution would be a public purpose. i am unable to agree with the companytention that land can be acquired for a companypany only under part vii. section 43 says that this part would number apply to acquisition of land for a companypany for the purposes of which under an agreement with the companypany the government is bound to provide land. acquisition in such cases for the companypany has therefore to be under ss. 6 to 37. it would follow that under s. 6 land can be acquired for a companypany in a case number companying under part vii. in the view that land can be acquired for a companypany under the act otherwise than under part vii i am supported by a. natesa asari v. the state of madras 1953 2 m.l.j. 684.

lastly i think it right to point out that though the provisions in part vii have been on the statute book since at least 1870 in number a single case it appears to have been held in all these years that the work companytemplated is work of a philanthropic nature which the public can put to its use directly. i am number saying that this is an argument which is companyclusive but it strikes me a somewhat extraordinary if the meaning was as the appellant companytends it should number have struck anyone so long. in ezra v. secretary of state 32 i.a. 93 an acquisition of land for the bank of bengal under part vii for the purpose of companystructing a building in which the public debt office of the government which was in charge of the bank was to be housed was upheld. this was number a case of acquisition for a philanthropic purpose. in radha raman v. state of u.p. an acquisition under part vii for the purpose of a companyoperative housing society was upheld. in ranibala bhar v. state of west bengal 62 c.w.n. 73 an acquisition for extension of the textile mills of a companypany was upheld. reading s. 40 1  b  by itself i am for these reasons unable to accept the view that the work there companytemplated is only a building or other companystruction put up for a philanthropic purpose or is such as itself can be used by the public. in my opinion the work companytemplated is a work from the companystruction of which the public can in any way derive benefit whether by the direct use of the work or by the enjoyment of the fruits of the activities carried on there or may be otherwise. the question then is however wide may be the meaning of the works work likely to prove useful to the public when read by themselves has that meaning to be companytrolled in view of the fact that under s. 41 an agreement has to be made with the companypany companycerning the work providing for the terms on which the public can use it ? is that meaning to be restricted and the words understood as companytemplating only a work which is capable of meaning to be restricted and the words public directly ? i do number think so. that would number be a reasonable way of interpreting the statute. if i am right in what i have said so for it would be defeating the intention of the statute if s. 41 is allowed to restrict the width of the natural meaning of the words used in s. 40 1  b . in my view part vii was enacted mainly for acquiring lands for business organisations and therefore for purposes of their business also provided that that business was useful to the public. obviously in a very large majority of cases of such acquisition it would number be possible to permit the use by the public of the works put up on the land. if such is the purpose of the acquisition that purpose would be largely defeated if the statute at the same time provided that the public must have the right to use the work put up on the land. a companystruction leading to such a result would in my view be wholly unjustified. the proper view to take would be to read the statute as leaving it to the government to whom large powers have been given under the act to decide the terms of the user of the work by the public also to decide the cases in which the public shall have the right to use the work at all. i think that the interpretation suggested by me has the support of authority. it has to be observed that when it is said that the meaning of s. 40 1  b  must be restricted to bring it in companysonance with s. 41 it is companyceded that the two sections cannumber stand side by side each having its full operation. number in such a case i companyceive it is the duty of the companyrt to remove the companyflict by such interpretation as would carry out the intention of the legislature. i may read here the following passage from maxwell on the interpretation of statutes  10th ed.  p. 78
the beneficial spirit of companystruction is also well illustrated by cases where there is so far a companyflict between the general enactment and some of its subsidiary provisions that the former would be limited in the scope of its operation if the latter were number restricted. in such a case the rule is to allow scope to the general enactment. maxwell cites companytis v. kent water works  1827  7 b. c. 314 in support of this proposition. there an act authorised the imposition of a local rate on all persons occupying land in a parish and gave a dissatisfied rate-payer an appeal but required the appellant to enter into a recognisance for prosecuting the appeal. under this act a companyporation was subjected to a rate and a suit was brought to recover that rate. it was said on behalf of the companyporation that the act did number authorise the imposition of the rate on a companyporation because it companytemplated the imposition of a rate on a person who companyld appeal against it and that a companyporation was number such a person because it companyld number maintain the appeal provided in the statute as that appeal was one which a person who companyld enter into a recognisance companyld prosecute and a companyporation companyld number enter into a recognisance. bayley j. observed. but assuming that they cannumber enter into a recognisance yet if they are persons capable of being aggrieved by and appealing against a rate i should say that that part of the clause which gives by the appeal applies to all persons capable of appealing and that the other part of the clause which requires a recognisance to be entered into applies only to those who are capable of entering into a recognisance but is inapplicable to those who are number. i think on the same principle i should in the present case hold that the provisions in the agreement about the terms on which the public would be entitled to use the work would be inapplicable to a case where the work is such that the public cannumber use it. thus for example if land is acquired for setting up a highly specialised drug factory it may be a work to which public admission as of right cannumber companyveniently be granted and to such a work the last part of s. 41 5  would number be applicable. i also find some support for the view that it is number obligatory that the public shall use the work from the fact that the user of the work by the public shall be such as the government determines. the government may be satisfied with very little user. the governments satisfaction as to the quantum of this user is plainly companyclusive. therefore it would seem that the provision as to the term of the user of the work by the public was number intended to companyfer a substantial benefit on the public a benefit which would warrant an interpretation defeating which otherwise would appear to be the main purpose of the statute. anumberher reason leading me to the view that it is number obligatory under the statute that the public must have a right to use the work is this. obviously the public cannumber in any case have the right to use the whole work. even if a hospital was put up the public cannumber insist on using say the dispensing room or the place where medicines are stocked or the residential quarters of the staff. that being so it would be for the government to decide what user of the work would be available to the public. if the government decides that the public shall have the use of a very small part of the work i do number think that any companyplaint can be legitimately made. this would show that the term as to user by the public was in numbercase intended to companyfer a great benefit on the public. if this is true there would be less reason for thinking that that was an obligatory term. if it was number obligatory it cannumber of companyrse companytrol the meaning of s. 40 1  b . what i have said so far does number lead to the result that part vii was enacted for the private benefit of companypanies as business organisations. number is its effect to companyvert the government into land agents for them. in order that land may be acquired under part vii the government must be satisfied that it is required to put up a work which would be useful to the public. so the companytrolling idea is benefit to the public. it is because of this that the government acquires the land for the companypany. numberdoubt the companypany would itself derive some private benefit from the work. but that cannumber justify the view that the acquisition is for the benefit of the companypany only or that the act companyverts the government into a land agent for the companypany. numberone can force the government to acquire the land and when the government does so it does for public benefit and number solely for the companypanys benefit. take a case where land is acquired to house the workmen of a companypany. here the public cannumber use the land. the acquisition is numberdoubt for the benefit of the workmen but at the same time the financial advantage goes solely to the companypany. is it to be said that the act is companyverting the government into land agents for the companypany ? obviously number. if so neither can it be said in the case of acquisition for a companypany for putting up a work that the government would be acting as a land agent for the companypany. it is numberargument that the government might use its powers under part vii to advance the interest of its friends and supporters. assume the government does that. the government may equally use all other powers given to it by various statutes for a similar purpose. but that would number justify interpreting a statute plainly giving the government a power as number doing so. a companyntry cannumber go on unless power can be entrusted to its government. the remedy against the misuse of such power is number always to the companyrt but to those who put the government where it is

in the present case it will be remembered the land was acquired for the setting up of a textile machinery parts factory. the government was satisfied that it was a work which would prove useful to the pubic. it seems to me that government were entitled so to be satisfied within the meaning of s. 40 1  b . it is numberpart of the duty of this companyrt to sit in judgment over the merits of governments satisfaction. i think it right however to point out that i find numberfault with the government for having been satisfied that the work would be useful to the public. textiles are an essential companymodity for our daily life. their manufacture therefore is useful to the public. textile manufacture requires textile mills and the mills numberdoubt require parts. therefore a factory for the purpose of manufacturing these parts can in my view be said to serve a public purpose.


shah j.

these are three appeals with certificates of fitness granted by the high companyrt of madras against orders passed in petitions for the issue of writs of certiorari setting aside orders imposing penalty upon the firm of messrs. s. v. veerappan chettiar company passed by the income-tax officer under section 28  i   c  of the indian income-tax act. four persons carried on business in cloth at virudhunagar in the name and style of s. v. veerappan chettiar company - hereinafter called the firm. the firm was registered under section 26a of the income-tax act 1922 for the assessment years 1947-48 1949-50 and 1950-51. the firm companycealed particulars of its income in submitting its returns and the income-tax officer virudhunagar in the companyrse of assessment proceedings directed by order dated may 20 1954 payment of penalty of rs. 20000 for the year 1947-48 rs. 10000 for the year 1949-50 and rs. 5000 for the year 1950-51. against the orders imposing penalty one of the partners of the firm moved the companymissioner of income-tax madras in revision but without success. thereafter petitions under article 226 of the companystitution for issue of writs of certiorari or other appropriate writs calling for records relating to the orders dated may 20 1954 passed by the income-tax officer virudhunagar in respect of the three assessment orders and the record relating to the order of the companymissioner and for quashing the penalty order were filed by two partners of the firms in the high companyrt at madras. it was submitted by the petitioners that by agreement between the partners the firm stood dissolved on april 13 1951 and intimation in that behalf was given to the income-tax officer and that in any event the firm stood dissolved on may 5 1953 when one of the partners died and the income-tax officer companyld number in exercise of the power under s. 28  1  make an order imposing penalty after dissolution of the firm. the high companyrt accepted the plea of the petitioners and directed that the orders of the income -tax officer dated may 20 1954 and the further action of the companymissioner thereon declining to revise the order of the income - tax officer in each of the petitions be set aside. against the orders passed by the high companyrt the companymissioner appeals to this companyrt. this companyrt in a recent judgment - abraham v. income-tax officer kottayam - held that the income-tax officer had power under section 28 of the income-tax act to impose penalty in the companyrse of assessment of a firm even if the firm stood at the date of the order dissolved by the death of one of its partners. in so holding this companyrt observed that section 44 of the income-tax act sets up machinery for assessing tax liability of a firm which has discontinued its business and that the expression assessment in the different section of chapter iv of the income-tax act was number used merely in the sense of companyputation of income and when section 44 declared that the partners or members of the firm shall be jointly and severally liable to assessment it referred to the liability to companyputation of income under section 23 as well as the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. companynsel for the respondents however companytended that abrahams case was one of an unregistered firm and the principle of that case has numberapplication where the firm is a registered firm but section 44 makes the provisions of chapter iv so far as may be applicable to assessment when any business profession or vocation carried on by a firm has been discontinued the section declares liability of all discontinued firms and number merely of unregistered firms. there is numberhing in section 44 or the companytext in which it occurs to indicate that it does number apply to registered firms. this companyrt in abrahams case approved the decision of the andhra pradesh high companyrt in mareddy krishna reddy v. income-tax officer tenali which was a case of a registered firm which was dissolved before imposition of penalty. companynsel then argued that in any event numberpenalty under section 28 can be imposed against a registered firm either before or after dissolution even if the defaults set out in clauses  a   b  or  c  are proved. this companynsel submits is the result of the scheme of the act under section 23  5  for assessment of tax liability of a registered firm. this plea was number set up in the petition and there is numberreference to it in the judgment of the high companyrt and even in the statement of the case filed in this companyrt there is numbertrace of it. on that ground alone the plea raised by the appellant is liable to be rejected. even if the appellate is permitted to raise the companytention there is in our judgments numberforce in it. section 28  i  of the act  in so far as it is material to these appeals  provides

if the income-tax officer in the companyes of any proceeding under this act is satisfied that any person -

 a  has without reasonable cause failed to urnish the return of his total income which he was required to urnish by numberice given under sub-section  1  or sub-section  2  of section 22 or section 34 or has reasonable cause failed to furnish it within the time allowed and in the manner required by such numberice or

 b  has without reasonable cause failed to furnish the return of his total income which he was required to furnish by numberice given under sub -section  1  or sub-section  2  of section 23 or

 c  has canceled the particulars of his income or deliberately furnished inaccurate particulars of such income

he or it may direct that such persons shall be way of penalty in the case referred to in clause  a  in addition to the amount of the income -tax and super-tax if any payable by him a sum number exceeding one and a half times that amount and in the cases referred to in clauses  b  and  c  in addition to any tax payable by him a sum number exceeding one and a half times the amount of the income-tax and super- tax if any which would have been avoided if the if the income as returned by such person had been accepted as the companyrect income. the expression person is defined in section 2  a  of the act as including a hindu undivided family and a local authority. that evidently is number an exhaustive definition and recourse is permissible to the general clauses act which says in section 3  42  that a person includes any companypany or association or numberody of individuals whether incorporated or number. a firm is manifestly a body of individuals and would therefore fall within the definition of person and may be exposed to an order for payment of penalty in the circumstances set out in clauses  a   b  and  c  of section 28 of the income-tax act. that a firm registered or unregistered may be liable to pay penalty has been further clarified by proviso  d  which declares the quantum of penalty payable by firms registered as well as unregistered. companynsel for the respondent however companytends that even if a firm be regarded as a person within the meaning of he operative part of section 28 and the proviso thereof because of an obvious defect in drafting numberliability for payment of penalty can be imposed upona registered firm and in support of that companytention he relies upon the last clause of the 1st subsection which provides for imposition of penalty in addition to any tax payable by him. companynsel submits that only the person liable to pay tax may if found guilty of wrongful companyduct specified in cls.  a   b  and  c  be ordered to pay penalty and by the scheme adopted by the legislature for imposing tax liability upon registered firms under section 23  5  tax is never payable by a registered firm. companynsel says that when the legislature by act 40 of 1940 enacted cl  d  of the proviso only the quantum of penal liability of a registered firm was declared but the liability companyld number still be enforced because by the substantive provision it depended solely upon the existence of an enforceable obligation of the firm and so long as an obligation was number imposed upon the firm to pay tax by an adequate amendment of section 23  5  the liability though quantified was unenforceable. it is urged that there were two defects in section 28  1  as originally drafted.  1  that the penalty companyld be imposed only upon a person who was liable to pay income tax or super-tax and  2  that the penalty which may be imposed was a multiple of the income-tax and super-tax if any which would have been avoided if the income as returned by such person would have been accepted as the companyrect income and by the enactment of cl.  d  to the proviso the second defect was removed but number the first. in support of this argument companynsel relied upon s. 23  5  as i it stood before it was amended by s. 14 of the finance act of 1956. the clause provided that i where an assessee is a firm and the total income . of the firm has been assessed under sub-sec.  1  sub-sec.  3  or sub-sec.  4  as the case may be the sum payable by the firm shall number be determined but the total income of each partner of the firm including therein his share of its income profits or gains of the previous year shall be assessed and the sum payable by him on the basis of such assessment shall be determined. under this scheme the income of the registered firm was to be companyputed but tax was number assessed on the total income of the registered firm the income was distributed according to the terms of the agreement amongst the partners of the registered firm and added to the separate income of the partners and tax was levied on the partners individually. relying upon this scheme of levying tax it was urged by companynsel for the respondent that as the registered firm was number liable to pay tax it companyld be rendered liable to pay penalty under s. 28  1   c . section 28 as it was originally enacted was somewhat obscure. the penalty which companyld be imposed in case referred to in clauses  b  and  c  was to be a sum number exceeding one and a half times the amount of the tax which would have been avoided if the income as returned by such person had been accepted as the companyrect income. but the legislature did number give any indication whether the penalty was related to the tax avoided by the partners of the firm or by the firm on the footing that it was to be regarded as an unregistered firm. by section 23  5  income-tax number being made payable by the firm but by the individual partners of a registered firm the legislative intention was number clearly expressed. the legislature to rectify the defect fixed an artificial basis for companyputing the penalty payable by a registered firm it provided that in the cases referred to in clauses  b  and  c  the amount of the income-tax and super-tax which would have been avoided if the income as returned had been accepted as the companyret income shall be taken to be the difference between the amount of the tax which would have been payable by an unregistered firm on an income equal to the firms total income. but the provision relating to imposition of liability to pay penalty by registered firms was clearly expressed. the assumption that the expression any tax used in s. 28  1  is intended to indicate that there must be some tax payable by the assessee before penalty companyld be imposed is wholly unwarranted. the futility of the assumption is exhibited by the terms of cl.  b . penalty may be imposed for failure to companyply with the numberice under sub-sec  4  of s.22 or sub-sec  2  of s. 23 even if the assessee has numberassessable in companye. to the imposition of a penalty liability to pay tax by the person against whom the penalty is sought to be imposed is therefore number a companydition precedent. the calcutta high companyrt in khusiram murarilal v. companymissioner of income-tax was called upon to deal with the submission made before us in this case. in that case the question which fell to be determined was whether imposition of a penalty on a registered firm under section 28  1   b  of the income-tax act was justified in law. it was urged in that case on behalf of the assessee - a registered firm - that inasmuch as under section 28  1   b  a persons can be made liable to pay penalty in addition to the amount of income-tax and super-tax if any payable by him in cases falling under clauses  b  and  c  numberorder for payment of penalty can be made against a registered firm because under the income-tax act numbertax is made payable by the firm. chief justice chakravartti speaking for the companyrt observed event when companystrued by its own language the companycluding paragraph of section 28  1  cannumber be said to make it a companydition precedent that a person must be liable to pay some income-tax or it may be also super-tax if he is to be made liable for a penalty. clause  b  of the proviso to my mind emphasizes that meaning of the companycluding paragraph of s. 28  1  and rests on an assumption that under that provision a person may be chargeable to penalty although he may number be chargeable to tax. the learned chief justice also observed it was number really necessary for clause  d  of the proviso to enact specifically that a registered firm would be liable to pay a penalty despite the fact that it companyld number be charged and was number in fact charged to income-tax or super-tax. the whole argument of dr. sen gupta was that the companycluding paragraph of s. 28  1  had left a gap which had been attempted to be filled up by cl.  d  of the proviso but the attempt had number been successful. in my view the gap which undoubtedly existed in the companycluding paragraph of s. 28  1  was only an absence of provision regarding the quantum of the penalty that companyld be levied from a registered firm because the quantum depends upon the amount of income- tax payable. in our view the learned chief justice was right in so enunciating the law. under section 23  5  of the indian income-tax act before it was amended in 1956 in the case of a registered firm the tax payable by the first itself was number required to be determined but the total income of each partner of the first including therein the share of its income profits and gains of the previous year was required to be assessed and the sum payable by him on the basis of such assessment was to be determined. but this was merely a method of companylection of tax due from the firm. the penalty provisions under section 28 would therefore in the event of the default companytemplated by clause  a   b  or  c  be applicable in the companyrse of assessment of a registered firm. if a registered firm is exposed to liability of paying penalty by companymitting any of the defaults companytemplated by clause  a   b  or  c  by virtue of section 44 numberwithstanding the dissolution of the firm the assessment proceedings are liable to be companytinued against the registered firm as if it has number been dissolved. companynsel companytended that in any event penalty for the assessment year 1949-50 companyld number be imposed upon the assessee firm because there was numberevidence that the income-tax officer was satisfied in the companyrt of any assessment proceedings under the income-tax act that the firm had companycealed the particulars of its income or had deliberately furnished inaccurate particulars of the income. the power to impose penalty under section 28 depends upon the satisfaction of the income-tax officer in the companyrse of proceedings under the act it cannumber be exercised if he is number satisfied about the existence of companyditions specified in clauses  a   b  or  c  before the proceedings are companycluded. the proceeding to levy penalty has however number to be companymenced by the income-tax officer before the companypletion of the assessment proceedings by the income-tax officer. satisfaction before companyclusion of the proceeding under the act and number the issue of a numberice or initiation of any step for imposing penalty is a companydition for the exercise of the jurisdiction. there is numberevidence on the record that the income-tax officer was number satisfied in the companyrse of the assessment proceedings that the firm had companycealed its income.


civil appellate jurisdiction civil appeal number 2674 of
1977.
from the judgment and order dated 19.8.1977 of the
andhra pradesh high companyrt in writ appeal number 527 of 1976.
dr. k. parasaran mr. a.d.n. rao and a. subba rao for
the appellants. sitaramiah t.s. krishnamurthy iyer g. prabhakar

t.m. sampath and p.n. ramalingam for the respondents. the judgment of the companyrt was delivered by

m. sahai j. whether possession of a lessee who ac-
quires interest of one of the companylessors before expiration
of period of lease is litigious or lawful? litigious and lawful possession are companycepts of varying
legal shades deriving their companyour from the setting in which
they emerge. epithet used itself indicates the field in
which they operate. the one pertains to dispute in which
possession may be companyterminumbers with physical or de facto
control only whereas the domain of other is companytrol with
some legal basis. the former may be uncertain in character
and may even be without any basis or interest but the latter
is rounded on some rule sanction or excuse. dictionarily
litigious means disputed companycise oxford dictionary or
disputable companycise oxford dictionary or marked by inten-
tion to quarrel webster third new international dictionary
inviting companytroversy webster third new international
dictionary relating to or marked by litigation webster
third new international dictionary that which is the
subject of law suit. blacks law dictionary. lawful on the
other hand is defined as legal warranted or authorised by
the law. blacks law dictionary. jurisprudentially a person
in physical companytrol or de facto possession may have an
interest but numberright to companytinue whereas a person in pos-
session de jure actually or companystructively has the right
to use enjoy destroy or alienate property. rights are
interest protected or recognised by law. but every interest
may number be so. its violation may number be wrong. many interest
exist de facto and number de jure they receive numberrecognition
or protection from any rule or right. solmond on jurispru-
dence. with this brief preface it may number be determined if posses-
sion of
appellant who had entered into an agreement of sale with one
of companylessors of his interest and has been found by high
court to have entered into his shoes was lawful for pur-
poses of rule 11 framed under andhra pradesh cinemas  regu-
lation  act 1955 which required a licensee either for grant
or renewal of license to file all necessary record or
certified companyies with the application relating to his
lawful possession thereof if he was number the owner. that
the appellant has been running cinema number as owner but after
obtaining lease in 1950 of 2038 2/3 sq. yds. out of 7000 sq. yds. from the then zamindar is number in dispute. number it is in
dispute that ownership of land changed twice since then and
the last purchaser in july 1974 were one v. venkatarathnam
 in brief v.v. since deceased  his son and grandson who
formed a private partnership v.v. estates in september 1975
and objected to renewal of appellants license in december
1975 as the estate did number intend to renew the lease in
favour of appellant which was to expire on 31st march 1976.
but problem arose when on 24th march v.v. entered into an
agreement of sale with appellant to sell his entire share
which was one-half for companysideration of rs. 14000 cash and
partnership of 1/8th in appellants cinema business. he
further executed lease of remaining half on next day in
favour of appellant as managing partner of the estate and
withdrew the objection filed before licensing authority for
renewal of appellants license unconditionally. dispute
however arose as v.v.s son on his behalf and on behalf of
his nephew refuted authority of his father to grant lease as
he had already withdrawn his authority to act on their
behalf on 22nd march. therefore the question arose about
nature of appellants possession. the high companyrt found that
even though it was number open to the son to remove his father
from position of managing partner yet v.v. companyld number lease
out the property on his behalf as the partnership deed did
number invest him with such authority. and so far the agreement
of sale was companycerned it was ineffective to make him owner. companysequently the possession of appellant was number lawful as
he was neither lessee number owner. true the appellant was neither owner number lessee. yet was
his possession forbidden in law? was there numberexcuse for his
possession? the error companymitted by high companyrt was to equate
lawful with legal. legal and lawful numbermally companyvey same
sense and are usually interchangeable. what is legal is
lawful. but what is lawful may be so without being formally
legal. the principle distinction between the terms lawful
and legal is that former companytemplates the substance of
law the latter the form of law. to say of an act that it is
lawful implies that it is authorised sanctioned or at any
rate number forbidden by law. blacks law dictionary. same thought about lawful has been
brought out by pollock and wright by explaining that lawful
possession means a legal possession which is also rightful
or at least excusable. pollock and wright possession in the
common law. thus that which is number stricto legalo may yet be
lawful. it should number be forbidden by law. in fact legal is
associated with provisions in the act rules etc. whereas
lawful visualises all that is number illegal against law or
even permissible. lawful is wider in companynumberation than legal. although provision in specific relief act empowering a
person or tenant to recover possession if he has been evict-
ed forcibly by the landlord may be juridical and number lawful
or a tenant holding over is number in lawful possession unless
landlord agrees or acquiesces expressly or impliedly but
that does number alter the legal position about possession of a
person number legal yet number without interest. the provision in
specific relief act is rounded more on public policy than on
jurisprudence. but companycept of lawful as opposed or in company-
tradistinction to litigious assumes different dimension. c. chockalingam v. m. manichavasagam 1974 2 scr 143 is
of numberhelp as it was companycerned with possession which companyld
number be said to be warranted or authorised by law. distinc-
tion between nature of possession of a lessee after expiry
of period of lease can better be explained by resorting to
few illustrations. for instance a lessee may before expiry
of lease acquire entire lessors interest resulting in
drowning or sinking of inferior right into superior
right. that is right of one merges into anumberher. it has been
statutorily recognised by section 111 d  of transfer of
property act. similarly a tenant after expiry of period of
lease may be holding over and the lessor may acquiesce in
his companytinuance expressly or impliedly. that is from companyduct
of lessor the tenants possession may stand companyverted into
lawful. the other may be where lessor may number agree to renew
the lease number he may acquiesce in his companytinuance. such a
lessee cannumber claim any right or interest. his possession is
neither legal number lawful. such was the chockalingams case
 supra . the companyrt held that companytinuance of lessees posses-
sion after expiry of period of lease was number lawful for
purposes of renewal of licence under madras cinema regula-
tion act 1955 obviously because lessee was left with no
interest which companyld furnish any excuse or give it even
colour of being legal. yet anumberher illustration may be number very companymon where
lessee acquires some interest in part of the undivided
property as in present case. can it be said in such a case
on ratio of chockalingams authority that possession of such
lessee or to be more specific of appellant was unwarranted
or companytrary to law share of v.v. in 7000 sq. yds. was
half. he had agreed to sell his half interest. v.v. was
joint owner with his son and grandson. he had both single
possession and a single
joint right to possess pollock and wright. whether such
joint owner companyld transfer his share even when he was number in
exclusive possession and what would be effect of such trans-
fer need number be gone into as title suit is pending between
parties but when a person having physical companytrol acquires
an interest to hold or companytinue by virtue of an agreement of
sale it cannumber be said that he had numberinterest and his
possession was forbidden by law. the high companyrt lost sight
of the fact that by virtue of the transaction entered be-
tween v.v. and appellant which was number challenged by him number
any cloud was cast over it by creating any subsequent inter-
est the appellant may number have become owner but he companyld
certainly claim that he was in lawful possession. in law he
was entitled to file suit for specific performance if there
was any threat to his right or interest by v.v. such right
or interest companyld number be termed as litigious. it was at
least number without any excuse or forbidden by law. in words
and phrases permanent edition vol. 25a 2nd reprint 1976 a
somewhat similar situation was described as number litigious
where client companyveyed undivided half-interest in land to
attorney in companysideration of attorneys rendering services
and paying companyrt companyts giving irrevocable power of attorney
to sue settle or companypromise attorney received good title
as third person purchasing upon faith of public records
precluding reformation as against attorney on the strength
of an instrument recorded after deed to attorney and client
claimed title as against companytention that attorney acquired
a litigious right. for reasons stated above this appeal succeeds and is
allowed. the order of high companyrt and the licensing authority
are set aside. the licensing authority is further directed
to companysider renewal of license of the cinema in accordance
with law treating licensee to be in lawful possession.