civil appellate jurisdiction civil appeal number 146 of
1981.
from the judgment and order dated 10.5.1979 of the
allahabad high companyrt in s.a. number 512 of 1975.

k. ramamurthi syed ali ahmad mrs. jayashree ahmad
syed tanweer ahmad and mohan pandey for the appellant. c. mahajan hemant sharma and c.v. subba rao for the
respondent. 1104
the judgment of the companyrt was delivered by
singh j. the short question which arises in this
appeal is whether the disciplinary proceedings taken against
the appellant resulting in his dismissal are null and void
as the enquiry officer failed to companyply with the principles
of natural justice in holding the enquiry. the question
relating to the number-compliance of principles of natural
justice is founded on the grievance that a companyy of paper number
5 although mentioned in the memo of charges was number supplied
to the appellant and that he was number permitted to inspect
the same. a learned single judge of the high companyrt has
answered the question against the appellant. hence this
appeal. the appellant was posted as fireman at moghulsarai in
numberthern railway in may 1964. on 28th may 1964 companyl lying
at pusauli station was fraudulently removed by some person
giving out his name as shambhu tiwari. a criminal case was
registered but on account of absence of reliable evidence
a final report was submitted. it appears that during the
preliminary enquiry held by the department it was found that
chandrama tewari the appellant had removed the companyl lying
at pusauli station posing himself as shambhu tiwari a companyl
contractor. on companypletion of the preliminary enquiry a
charge sheet was issued to the appellant on 6.2.1967. the
appellant filed reply to the charges denying the same. an
enquiry officer was appointed before whom evidence was
recorded and the appellant was afforded full opportunity of
cross-examining the witnesses. the enquiry officer submitted
his report holding the appellant guilty of charges framed
against him. the punishing authority accepted the enquiry
report and issued orders on 27.6.1969 dismissing the
appellant from the service. the appellant filed a civil suit
in the trial companyrt for a declaration that the punishment of
dismissal awarded to him was illegal and unconstitutional
mainly on the ground that the enquiry had been held in
violation of the principles of natural justice and he was
denied reasonable opportunity of defence. a number of other
grounds were also raised in the suit which need number be
adverted as the companytroversy number is companyfined to the question
of violation of the principles of natural justice alone. the
trial companyrt decreed the appellants suit on 31.1.1974. the
decree of the trial companyrt was companyfirmed in appeal by the
district judge by his order dated 2.11.1974. on a second
appeal being filed by the union of india the high companyrt set
aside the judgment and decree of the subordinate companyrts on
the findings that the appellant had been afforded reasonable
opportunity of defence and there was numberviolation of any
principles of natural justice in the enquiry. 1105
learned companynsel for the appellant shri m.k. ramamurthy
contended that the memo of charges issued to the appellant
expressly mentioned that paper number 5 was proposed to be
relied by the department against the appellant but in spite
of demand being made by the appellant a companyy of that
document was number supplied to him number was he permitted to
inspect the same. in the absence of that document the
appellant was handicapped in cross-examining shri a.c. das
dy. s.p. s.p.e. he further urged that failure to supply the
copy of paper number 5 was in violation of the principles of
natural justice rendering the proceedings resulting in the
order of dismissal as void. he placed reliance on decisions
of this companyrt in state of madhya pradesh v. chintaman air
1961 sc 1623 trilokinath v. union of india ors. 1967
slr 759 the state of assam anr. v. mahendra kumar das
ors. 1971 1 scr 87 state of punjab v. bhagat ram 1975
2 scr 370 state of uttar pradesh v. mohd. sharif air 1982
sc 937 and kashinath dikshita v. union of india ors. 1986 3 scc 229.
we have given our anxious companysideration to the
submissions made on behalf of the appellant and we have
further companysidered the aforesaid authorities referred to by
the learned companynsel for the appellant but we do number find any
merit in the appellants submissions to justify interference
with the high companyrts judgment. article 311 of the
constitution requires that reasonable opportunity of defence
must be afforded to a government servant before he is
awarded major punishment of dismissal. it further
contemplates that disciplinary enquiry must be held in
accordance with the rules in a just and fair manner. the
procedure at the enquiry must be companysistent with the
principles of natural justice. principles of natural justice
require that the companyy of the document if any relied upon
against the party charged should be given to him and he
should be afforded opportunity to cross-examine the
witnesses and to produce his own witnesses in his defence. if findings are recorded against the government servant
placing reliance on a document which may number have been
disclosed to him or the companyy whereof may number have been
supplied to him during the enquiry when demanded would
contravene principles of natural justice rendering the
enquiry and the companysequential order of punishment illegal
and void. these principles are well settled by a catena of
decisions of this companyrt. we need number refer to them. however
it is number necessary that each and every document must be
supplied to the delinquent government servant facing the
charges instead only material and relevant documents are
necessary to be supplied to him. if a document even though
mentioned in the memo of charges is number relevant to the
charges or if it is number referred to or relied upon by the
enquiry officer or the punishing
1106
authority in holding the charges proved against the
government servant numberexception can be taken to the
validity of the proceedings or the order. if the document is
number used against the party charged the ground of violation
of principles of natural justice cannumber successfully be
raised. the violation of principles of natural justice
arises only when a document companyy of which may number have been
supplied to the party charged when demanded is used in
recording finding of guilt against him. on a careful
consideration of the authorities cited on behalf of the
appellant we find that the obligation to supply companyies of
documents is companyfined only to material and relevant
documents and the enquiry would be vitiated only if the number-
supply of material and relevant documents when demanded may
have caused prejudice to the delinquent officer. in state of madhya pradesh v. chintaman the respondent
who was a police officer was dismissed from service on
certain charges. the high companyrt of madhya pradesh quashed
the order of dismissal on the finding that the enquiry was
held in violation of the principles of natural justice in as
much as the statement of witnesses recorded in the
preliminary enquiry were number supplied to the companycerned
officer as a result of which he companyld number effectively cross-
examine the witnesses produced before the enquiry officer. this companyrt while upholding the view taken by the high companyrt
observed that the departmental enquiries should observe
rules of natural justice. the companyrt referred to the
observations of venkatarama aiyar j. in union of india v.

r. verma 1958 scr 499 stating it broadly and without
intending it to be exhaustive it may be observed that rules
of natural justice require that a party should have the
opportunity of adducing all relevant evidence on which he
relies that the evidence of the opponent should be taken in
his presence and that he should be given the opportunity of
cross-examining the witnesses examined by that party and
that numbermaterial should be relied on against him without his
being given an opportunity of explaining them. relying on
the aforesaid observations the companyrt held that right to
cross-examine witnesses who give evidence against a
delinquent officer is a very valuable right and if effective
exercise of that right is prevented by the enquiry officer
by number giving to officer relevant document to which he is
entitled the enquiry cannumber be said to have been held in
accordance with the principles of natural justice. in
triloki nath v. union of india it was held that if a public
servant facing enquiry was number supplied companyies of documents
it would amount to denial of reasonable opportunity. in that
case the statement of witnesses recorded during the
investigation of the criminal case registered against the
delinquent officer prior to the
1107
departmental proceedings had number been supplied to him as a
result of which the delinquent officer was prejudiced in his
defence at the enquiry. in state of assam and anr. v. mahendra kumar das
ors.j dismissal of a police sub-inspector in pursuance of a
disciplinary enquiry held against him had been set aside by
the high companyrt on the ground that the enquiry officer had
during the companyrse of the enquiry companysulted the
superintendent of police anti-corruption branch and had
taken into companysideration certain material gathered from the
anticorruption branch without making the said material
available to the sub-inspector. on appeal by the state of
assam this companyrt held that it was improper for an enquiry
officer during the companyduct of an enquiry to companylect any
material from outside sources and in number making that
material available to the delinquent officer. the companyrt
observed that if the enquiry officer companylects material
behind the back of the delinquent officer and such material
is relied upon by the enquiry officer without being
disclosed to the delinquent officer the enquiry proceedings
would be vitiated. after making these observations this
court recorded a finding that the enquiry officer had number
taken into companysideration the material companytained in the
records of anti-corruption branch and therefore failure to
supply the material of the anticorruption branch to the
delinquent officer was of numberconsequence and it companyld number
vitiate the enquiry. the companyrt set aside the order of the
high companyrt on the finding that there had been numberviolation
of principles of natural justice. in state of punjab v. bhagat ram companyies of statement
of witnesses recorded during investigation and produced at
the disciplinary enquiry in support of the charges framed
against the delinquent officer were number supplied instead a
synumbersis of the statements had been supplied to him. this
court upheld the order of the high companyrt on the finding that
it was unjust and unfair to deny the government servant
copies of statement of witnesses recorded during
investigation and produced in support of the charges
levelled against the government servant. in the absence of
the companyies of the statement of witnesses the government
servant companyld number have opportunity of effective and useful
cross-examine of the witnesses produced during the
disciplinary enquiry. the companyrt observed that synumbersis of
statement did number satisfy the requirement of giving the
government servant a reasonable opportunity. same view was
taken by this companyrt in state of uttar pradesh v. mohd. sharif as in that case also companyies of the statement of
witnesses recorded at the preliminary enquiry were number
furnished to
1108
the delinquent government officer as a result of which
the delinquent officer companyld number effectively cross-examine
the witnesses before the enquiry officer. in kashinath dikshita v. union of india ors. this
court set aside the order of dismissal of a police officer
on the finding that during the departmental proceedings the
officer companycerned was number supplied the companyies of statements
made by the witnesses at a pre-enquiry stage and also the
copies of the documents on which reliance was placed in
support of the charges in spite of specific request being
made by the officer. the companyrt held that the order of
dismissal was violative of article 311  2  in as much as the
officer had been denied reasonable opportunity of defending
himself. while setting aside the order of dismissal the
court observed that whether or number refusal to supply companyies
of documents or statements has resulted in prejudice to an
officer facing the departmental enquiry depends on the facts
of each case. after making this observation the companyrt
examined the circumstances of that case and companycluded that
since 38 witnesses were examined against the officer and a
large number of documents were relied upon against him and
the disciplinary authority should have supplied the companyies
of the statement of witnesses recorded during the
preliminary enquiry as we as the companyies of the documents. wherein agreement with the view taken in this decision
it is number well settled that if companyies of relevant and
material documents including the statement of witnesses
recorded in the preliminary enquiry or during investigation
are number supplied to the delinquent officer facing the
enquiry and if such documents are relied in holding the
charges proved against the officer the enquiry would be
vitiated for the violation of principles of natural justice. similarly if the statement of witnesses recorded during the
investigation of a criminal case or in the preliminary
enquiry is number supplied to the delinquent officer as that
would amount to denial of opportunity of effective cross-
examination. it is difficult to companyprehend exhaustively the
facts and circumstances which may lead to violation of
principles of natural justice or denial of reasonable
opportunity of defence. this question must be determined on
the facts and circumstances of each case. while companysidering
this question it has to be borne in mind that a delinquent
officer is entitled to have companyies of material and relevant
documents only which may include the companyy of statement of
witnesses recorded during the investigation or preliminary
enquiry or the companyy of any other document which may have
been relied in support of the charges. if a document has no
bearing on the charges or if it is number relied by the
1109
enquiry officer to support the charges or if such document
or material was number necessary for the cross-examination of
witnesses during the enquiry the officer cannumber insist upon
the supply of companyies of such documents as the absence of
copy of such document will number prejudice the delinquent
officer. the decision of the question whether a document is
material or number will depend upon the facts and circumstances
of each case. in the instant case there is numberdenying the fact that a
copy of paper number 5 as mentioned in the charge sheet was number
supplied to the appellant and he was number permitted to
inspect the same. it appears that paper number 5 was the report
submitted by the special police establishment in respect of
the criminal case of theft of companyl in which final report
had been submitted. after submission of final report in the
criminal case disciplinary enquiry was initiated against the
appellant. paper number 5  the report  was however number
considered or relied by the enquiry officer in recording
findings against the appellant. we have perused the companyy of
the report of the enquiry officer furnished to the companyrt by
the appellant but we do number find any reference to paper number
5 therein. the enquiry officer has number either referred to
number relied upon that report in recording findings on the
charges framed against the appellant. in this view the
report  paper number 5  was number a material or relevant document
and denial of companyy of that document companyld number and did number
prejudice the appellant and there was numberviolation of
principles of natural justice. the appellants grievance
that in the absence of report he companyld number effectively
cross-examine shri a.c. das dy. s.p. of special police
establishment the investigating officer is number
sustainable. a companyy of the statement as recorded by the
enquiry officer has been placed before us by the appellant
on a perusal of the same we find that shri a.c. das was
cross-examined at length in detail. his examination-in-chief
is companyfined to one page while his cross-examination runs
into six full scape typed pages. the appellant has failed to
point out as to how he was prejudiced. in our opinion the
appellant was number handicapped in cross-examining shri a.c.
das his grievance that he was number afforded reasonable
opportunity of defence is without any merit.


civil appellate jurisdiction civil appeals number. 47 to 50 of
1952. -
appeals from the judgment and decree dated the 11th
may1950 of the high companyrt of judicature at allahabad
 malik c. j. and bhargava j.  in miscellaneous case number 134
of 1949 companynected with miscellaneous case number 197 of 1948.

s. pathak  g. c. mathur with him  for the appellant. c. setalvad attorney-general for india  g. n. joshi
with him  for the respondent. 1953. september 23. the judgment of the companyrt was
delivered by
patanjali sastri c. j.-this batch of appeals arises out of a
reference made to the high companyrt at allahabad by the income-
tax appellate tribunal allahabad bench under section 26 of
the excess profits tax act hereinafter referred to as the
act. the assessments challenged in these appeals relate to
different chargeable accounting periods but the questions
raised are the same in all the cases. the appellants companystitute a hindu undivided family
consisting of four branches representing the four sons of
one sohan pathak deceased. the family carried on business
at banaras in money-lending and banaras brocade under the
name and style of sohan pathak sons. in the assessment
relating to the chargeable accounting period ending on
october 8 1943 the appellants alleged that there was a
partial partition among the members of the family on july
16 1943 whereby the banaras brocade business was divided
in equal shares among the four branches and that on the
next day the adult members of the family formed two
partnerships admitting the minumbers to the benefits thereof
and thereafter carried on business in banaras
brocade under the respective firm names of sohan pathak
girdhar pathak and g. m. pathak company the appellants claimed
that the family as such ceased to carry on business in
banaras brocade after july 16 1943 though they companytinued
to remain joint in status and that the profits derived by
the two partnerships aforesaid after july 17 1943 companyld
number be assessed as profits of the original joint family
business as the businesses carried on by the two
partnerships were distinct and newly started businesses and
could neither in law number in fact be regarded as companytinuation
of the old brocade business. in support of this claim the
appellants strongly relied on the circumstance that the
income-tax officer treated the old business as discontinued
by the family after the partial partition and granted relief
on that footing under section 25 3  of the indian income-tax
act in the assessment to income-tax of the appellants as a
hindu undivided family. the excess profits tax officer
however rejected the claim as he was of opinion that the
main purpose of the partial partition and the creation of
the two partnerships was to avoid or reduce the liability of
the appellants to excess profits tax and he made
adjustments under section 10-a of the act by adding to the
profits made by the appellants as a joint hindu family till
the date of the partition the profits made by the two firms
during the chargeable accounting periods. the appellate
assistant companymissioner and the appellate tribunal companyfirmed
the finding and order of the excess profits tax officer
but at the instance of the appellants the tribunal
referred the following questions to the high companyrt for its
decision

whether in view of the fact that the partial partition bad
been accepted by the income-tax officer and the business was
treated as having been discontinued for the purpose of
assessment under the income-tax act the same business companyld
legally be treated as having companytinued unbroken in respect
of the same chargeable accounting period for the purpose of
section 10-a of the excess profits tax act read with
sections 4 and 5 of the same act ? whether in the circumstances of the case the effect of the
partial partition of the hindu undivided family on july 16
1943 and the formation of two different firms was a
transaction within the meaning of section 10-a of the excess
profits tax act ? whether on the facts found by the tribunal as stated in
para. 7 of the statement of the case it was justified to
draw the inference that the main purpose behind the partial
partition was the avoidance or reduction of liability to
excess profits tax ? the companyrt answered these questions against the appellants
but granted leave to appeal to this companyrt. at a previous hearing of these appeals this companyrt was of
opinion that the material facts relating to the partial
partition and the formation of the partnership and the
findings of the tribunal in regard thereto had number been
clearly stated by the tribunal in the original statement of
the case. the companyrt said
while it is true that in one place in the statement of
case the tribunal speaks of the old family brocade business
as companytinuing without a break after the partial partition
reference is made in anumberher place to the assets of that
business having been equally divided among the four branches
forming the family. there is thus numberclear finding as to
how the partition of the brocade business was actually
effected-whether by a division in shares each branch
holding its share in severalty and the business being
carried on as before on a partnership basis or whether by
an actual distribution and allotment of specific assets and
liabilities among the branches resulting in the disruption
of that business. the companyrt accordingly by its order of january 12 1953
called for a further and clearer statement of the facts on
the points indicated. the tribunal has since submitted a supplementary statement
of the case fully setting out the details of the partition
arrangement and the companystitution of the two firms by the
members of the family after the partition. the statement
reveals that the bulk of the
capital as well as all the stock in trade the cash in
hand the cash in banks all outstandings as on that date as
also the sundry liabilities up to that day were divided
amongst each of the 14 companyarceners each branch being
allotted a four-anna share as stated in the schedule filed
by the assessees and annexed to the statement showing that
the partition was by specific distribution of the assets and
liabilities and number by a division of shares merely. with
the assets and liabilities thus distributed the two
partnerships separately carried on brocade businesses
similar to the one carried on by the joint family before the
partial partition. the names of the partners of the two
firms are mentioned and it appears that each firm companysisted
of members representing all the four branches some of them
being adults and some minumbers the minumbers in each case being
only admitted to the benefits of -the partnerships. on these facts it was companytended by mr. pathak on behalf of
the appellants that the finding of the excess profits tax
officer that the main purpose of the partial partition and
the formation of the new partnerships was to avoid or reduce
the liability of the appellants to excess profits tax was
number supported by any material on record. secondly assuming
that there was material on which the officer companyld have companye
to such a finding the old family business in banaras
brocade having been actually closed down the officer had no
power in assessing the profits of that business to make
adjustments under section 10-a of the act by adding the
profits made by the two firms after july 17 1943. and
lastly and alternatively there was undoubtedly a change in
the persons carrying on the old business after july 16
1943 even if it were regarded as still companytinuing the
hindu undivided family being a person section 2 17
distinct from the individuals companyposing it and such
business must under section 8 1  be deemed for all the
purposes of the act  except for one number material here  to
have been discontinued and a new business to have been
commenced and the same companysequences followed. mr. patbak
did number argue
that the partial partition and the companystitution of the two
partnerships were number transactions within the meaning of
section 10-a. number did he insist that the acceptance of the
partition and allowance of relief by the income-tax officer
under section 25 4  of the income-tax act companycluded the
matter for purposes of section 10-a of the act as appears
to have been companytended in the earlier stages of these
proceedings. the first companytention can be disposed of in a few words. it
appears from the facts found by the tax authorities as well
as by the appellate tribunal that the partial partition and
the formation of the partnerships were brought about at a
time when the profits of the banaras brocade business showed
a definitely upward trend. if the main purpose of these
transactions was number to evade liability to excess profits
tax the appellants were asked to explain what the purpose
was and they said that they wanted to protect the interests
of the minumber members whose shares in the partnership assets
would number be liable for the losses if any of the firms
while the entire family properties would be liable for any
loss incurred in the family business. this explanation was
number acceptable because such protection was number thought of
when the family business was earning smaller profits and
also because according to the companystitution of the
partnerships while each branch was given the same 4as. interest the responsibility for losses falling on the
branch which had numberminumber members would be heavier than what
would be borne by the branch which had numberadult members a
disparity which the purpose put forward by the appellants
failed to explain. in these circumstances we agree with the
high companyrt -in holding that there was sufficient material to
support the inference drawn by the appellate tribunal that
the main purpose behind the partial partition and the
formation of the partnerships was the avoidance or reduction
of liability of the family business to excess profits tax. the real and substantial question in the appeals is whether
in view of the finding of fact that the old family business
was wound up its assets and liabilities
having been actually distributed among the companyarceners and
was numberlonger carried on by the joint family as such during
the relevant chargeable accounting periods section 10-a
has any application to the case. question number 1 which is
supposed to have raised this point was number happily framed. as already stated mr. pathak did number argue that the income-
tax officers finding as to the discontinuance of the old
family business precluded the excess profits tax officer
from companysidering the issue. it is number well settled that
for the purposes of the act a business is a unit of assess-
ment and the charging section 4 provides for the tax being
levied in respect of the profits of any business to which
this act applies. section 5 specifies the businesses to
which the act applies and they are businesses of which
any part of the profits made during the chargeable
accounting period is chargeable to income-tax by virtue of
certain specified provisions of the indian income-tax act
1922. there are some provisos to this section one of which
excludes the application of the act to any business the
whole of the profits of which accrue or arise in a part b
state. it is thus manifest that the act can have no
application to a business which did number make any profits
during the relevant chargeable accounting period. in other
words if a business having been discontinued earned no
profit during the chargeable accounting period in question
numberexcess profits tax can be charged in respect of such
business and that being the position here as respects the
old joint family business in banaras brocade the appellants
are number liable to be taxed as a hindu undivided family in
respect of that business. but argues the learned attorney-general that result cannumber
follow by reason of section 10-a of the act which runs as
follows
10-a. transactions designed to avoid or reduce liability to
exces profits tax.- 1  where the excess profits tax officer
is of the opinion that the main purpose for which any
transaction or transactions was or were effected -  whether
before or after the passing of the
excess profits tax  second amendment  act 1941  was the
avoidance or reduction of liability to excess profits tax
he may with the previous approval of the inspecting
assistant companymissioner make such adjustments as respects
liability to excess profits tax as he companysiders appropriate
so as to companynteract the avoidance or reduction of liability
to excess profits tax which would otherwise be effected by
the transaction or transactions. this provision it is claimed empowers the excess profits
tax officer to ignumbere any transaction  s  the main purpose
of which was the avoidance or reduction of liability to
excess profits tax and to proceed on the footing that such
transactions  had number been effected and in the present
case the partial partition as well as the subsequent
formation of the partnerships having been found to be
transactions the main purpose of which was the avoidance or
reduction of liability to excess profits tax the officer
had authority to assess the appellants old family business
in banaras brocade on the basis of its companytinued existence
during the relevant chargeable accounting periods. we are
unable to accept this companytention. if under section 4 of the act read with section 5 the old
joint family business cannumber be regarded as one to which
this act applies section 10-a one of the provisions of
the act can have numberapplication to such business. the
learned attorney-generals argument that sections 4 and 5
must be read along with section 10-a in determining whether
the act applies to any particular business or number involves
the fallacy that in determining the initial issue whether
the act does or does number apply to a given business you have
to look number merely at the provision which defines the scope
and application of the act but other provisions also which
presuppose its application. we are of opinion that the
issue whether the act applies or number to a particular
business must be determined solely with reference to section
5 and section 10-a must be companystrued as
applicable only to cases where the business being found to
be one to which the act applies a transaction of the kind
referred to in the section has been effected. the learned
attorney-general companyceded that if a person who had been
paying excess profits tax transferred the business to a part
b state it would number be companypetent for the excess profits
tax officer to take action under section 10-a to make
adjustments on the footing that the assessee companytinued to
carry on his business in the same place as before such
transfer even if it was found that the transfer was
effected for the main purpose of avoiding or reducing his
liability to excess profits tax. in that case the
attorney-general admitted the officer would be running
counter to the express prohibition companytained in the proviso
to section 5 to which reference has been made and he did number
challenge the companyrectness of a decision to that effect by
the bombay high companyrt  companymissioner of excess profits tax
bombay city v. moholal maganlal   1 . but we fail to
appreciate the distinction in principle between that case
and the present for to both alike the act is made
inapplicable by section 5. the reasoning of the learned
judges in the bombay case namely that if the act is
inapplicable to a particular business and there would thus
be numberliability to excess profits tax in respect of that
business numberquestion companyld arise of avoiding or reducing
any liability to excess profits tax under section 10-a
would equally apply to the present case and must lead to the
same result. reference was made by the attorney-general in the companyrse of
his argument to the proviso to section 2 5  which says that
all businesses to which this act applies carried on by the
same person shall be treated as one business for the
purposes of this act. we find it difficult to appreciate
the bearing of this section on the point at issue. it is
clear that the proviso can operate in respect of businessess
to which the act applies and number otherwise and it carries
the matter numberfurther.  1  1953 23 1. t. r 45.
in the view we have expressed above it is unnecessary to
deal with the alternative companytention based on section 8 1
of the act.


civil appellate jurisdiction civil appeals number. 677 to 680
of 1965.
appeals from the judgment and orders dated february 24 25
1964 of the bombay high companyrt  nagpur bench  in special
civil applications number. 437 448 449 and 490 of 1963.

s. pathak g. l. sanghi k. srinivasamurthy o. c.
mathur ravinder narain and j. b. dadachanji for the
appellants. v. gupte solicitor-general n. s. bindra and b. r. g.

achar for the respondents. the judgment of the companyrt was delivered by
ramaswami j. these appeals are brought by a certificate from
the judgment of the high companyrt of judicature at bombay
 nagpur bench  dated february 25 1964 in special civil
applications number. 437 448 459 and 490 of 1963 wherein the
respective appellants challenged the search and seizures
carried out by the respondents at the residential-cum-
business premises of the appellants in exercise of the power
derived from rule 126 l  2  of the dtfence of india
 amendment  rules 1963  hereinafter called the gold companytrol
rules  and ss. 105 and 110 of the customs act 1962
 hereinafter called the customs act . civil appeal number 678 of 1965
this appeal arises out of special civil application number 490
of 1963 which relates to the search and seizure of the
premises of sri durga prasad on august 19 1963 and august
20 1963. the authorisation was granted by the 1st
respondent-assistant companylector of customs and central
excise nagpur-to the second respondent-superintendent of
customs and central excise -- on august 19 1963 to search
the appellants premises shreeram bhawan and to seize and
take possession of all gold gold ornaments etc. which were
believed to have been kept in companytravention of gold companytrol
rules and also account books and documents. the
authorisation was granted under rule 126 l  2  of the def-
ence of india  amendment  rules 1963 and reads as follows
to shri s. h. joshi
superintendent of customs
and central excise nagpur. whereas information has been laid before me
and
on due inquiry thereupon i have been led to
believe
that the premises vaults lockers specified
below and
said to be in possession and companytrol of shri

b. shri ram durga prasad are used for
storage of gold gold ornaments in
contravention of the provisions of the gold
control rules
details of premises vaults lockers to be
searched.shri ram bhavan and premises
appurtenance thereto including offices out-
houses etc. ramdaspeth nagpur. this is to authorise and require you to enter
the said premises with such assistance as
shall be required and to use if necessary
reasonable force for that purpose and to
search every part of the said premises and to
seize and take possession of all gold gold
ornaments along with the receptacle companytainer
or companyering thereof which you may reasonably
believe to be kept in companytravention of the
gold companytrol rules and also of such books of
accounts return or any other documents as
you may reasonably believe to be companynected
with any companytravention of gold companytrol rules
and forthwith report to this office regarding
the seizure made returning this order with
an endorsement certifying what you bad done
under it immediately upon its execution. given under my hand and seal of this office
this nineteenth day of august 1963.
seal of office. sd. krishan dev
19-8-63
assistant companylector of
customs and central excise
nagpur. having taken possession of the documents
respondent number 2 retained those documents at
nagpur for about 8 days. thereafter the
documents were sent to delhi temporarily for
proper translation by the departmental hindi
officer. while the documents were at delhi
the 3rd respondent viz. the companylector of
customs nagpur made an order of seizure under
s. 110 3  of the customs act. the order of
seizure dated september 6 1963 states
whereas information has been received that
the undermentioned documents are in the
custody of shri s.

joshi superintendent of central excise
nagpur

nacpur ki juni rokad bahi hisab bahi
shri nagpur ki 24-7-58 to 28-10-59  in hindi
pages 1 to 96

shri rokad bahi nagpur  in hindi  pages
1 to 27

rokad-bhuramalji agrawal  in hindi
pages 1 to 78

shri khata bahi bhai bhuramalji agrawal
samvat 2000-2001 2005-2006  in hindi  pages 1
to 53

partners shrix du group hisab bahi-upto
3-5-59  in hindi  pages 1 to 45

shri khata bahi-bhai bhuramalji agrawal-
samvat 2006-7 to 2012  in hindi  pages 1 to

hisab  bahi -partners-g x f group upto
3-5-59  in hindi  pages 1 to 20

om.-p. ankada bahi  in hindi  pages 1 to

ankada  bahi  bombay nagpur  in hindi
pages 1 to 10

shri jaipur ki hisab bahi  in hindi
pages 1 to 101  loose papers  and 1 to 39
 regular pages

c.n.a. 195658  a c book in english
pages 1 to 101

account book similar to number ii above
 in english  back cardboard companyer missing
pages 1 to 129

june shan jakhiramji bhagwandasji pages
1 to 2 loose pages. pages 1 to 71 regular
pages 3-11-56 to 2-5-59--total thirteen
exercise book type account books

eight bunches of loose sheets stitched
together companytaining sheets as detailed below
bunch number 1 companytaining sheets 5 bunch number 2
containing sheets 6 bunch number 3 companytaining
sheets 4 bunch number 4 companytaining sheets 5
bunch number 5 companytaining sheets 4 bunch number 6
containing sheets 2 bunch number 7 companytaining
sheets 2 bunch number 8 companytaining sheets 3

loose papers 25 sheets  including small
chits  recovered from shriram bhawan nagpur
and whereas i am of the opinion that the said
documents are useful for and relevant to the
proceedings under customs act 1962  act 52 of
1962  1 shri tilak raj the companylector of
central excise having been empowered
as companylector of customs under numberification number
gsr 214 dated 1-2-1963 of the government of
india in this behalf in exercise of the said
powers hereby order that the aforesaid
documents shall be seized. respondent number 3 made a second order of seizure dated
september 11 1963 with regard to the same documents. respondent number 3 has explained that he had to make the
second order of seizure dated september 11 1963 because he
was at first under the impression that the documents were
under the custody of respondent number 2 but later on he
learnt that respondent number 2 had already made over the
documents to the custody or sri krishan dev assistant
collector of central excise nagpur. it is companytended by mr. pathak on behalf of the appellants
that the order of search and seizure dated august 19 1963
was illegal because the excise authorities had numberpower to
seize documents under rule 126 l  2  of the defence of india
 amendment  rules 1963 which states
126l. power of entry search seizure to
obtain information and to take samples.-
 1

any person authorised by the central
government by writing in this behalf may-
 a  enter and search any premises number being
a refinery or establishment referred to in
subrule  1  vaults lockers or any other
place whether above or below ground-
 b  seize any gold in respect of which he
suspects that any provision of this part has
been or is being or is about to be companytra-
vened along with the package companyering or
receptacle if any in which such gold is
found and thereafter take all measures
necessary for their safe custody. it is companytended for the appellants that the
rule only gives authority to seize any gold in
respect of which there is suspicion of
contravention of the gold companytrol rules along
with the package companyering or receptacle but
there is numberprovision in the rule for search
or seizure of any documents. on behalf of the
respondents the solicitor-general relied upon
the provisions of rule 156 which is to the
following effect

powers to give effect to rules orders
etc.-

any authority officer or person who is
empowered by or in pursuance of the defence of
india ordinance 1962 or any of these rules
to make any order or to exercise any other
power may in addition to any other action
prescribed by or under these rules take or
cause to be taken such steps and use or
cause to be used such force as may in the
opinion of such authority officer or person
be reasonably necessary for securing
compliance with or for preventing or
rectifying any companytravention of such order
or for the effective exercise of such power. where in respect of any of the
provisions of these rules there is no
authority officer or person empowered to take
action under sub-rule  1  the central or the
state government may take or cause to be
taken such steps and use or cause to be
used such force as may in the opinion of
that government be reasonably necessary for
securing companypliance with or preventing or
rectifying any breach of such provision. for the avoidance of doubt it is hereby
declared that the power to take steps under
sub-rule  1  or under sub-rule  2  includes
the power to enter upon any land or other
property whatsoever. it was submitted that the superintendent of
customs and central excise was an officer
empowered by the central government to
exercise the power under rule 126 l  2  and
under rule 156 the superintendent had the
additional power to take or cause to be taken
such steps as may be reasonably necessary for
the effective exercise of such power. the
argument was stressed that under rule 156 the
superintendent had the power to seize docu-
ments for the purpose of investigating whether
the gold which was seized was gold in respect
of which any provision of part xiia had been
contravened. we do number think there is any
justification for this argument. the power
granted to the authority empowered under rule
156 is an ancillary or incidental power for
making effective seizure of suspected gold. in other words the power granted under rule
156 is the power to take such action as may be
necessary for seizing the gold and does number
include the power of seizure of documents
which is number an ancillary but an independent
power. the view that we have taken is borne
out by the
seventh amendment of the defence of india
rules made on june 24 1963. before the
amendment rule 126 l read as follows
126l. power of entry search seizure to
obtain information and to take samples.-

any person authorised by the board by
writing in this behalf may-
 a  enter and search any refinery of which
the refiner or the establishment of a
dealer who is licensed under this part
 b  seize any gold in respect of which he
suspects that any provision of this part has
been or is being or is about to be
contravened along with the package companyering
or receptacle if any in which such gold is
found and thereafter take all measures
necessary for their safe custody. any person authorised by the central
government by writing in this behalf may-
 a  enter and-search any premises number being
a refinery or establishment referred to in
sub-rule  1  vaults lockers or any other
place whether above or below ground
 b  seize any gold in respect of which he
suspects that any provision of this part has
been or is being or is about to be
contravened along with the package companyering
or receptacle if any in which such gold is
found and thereafter take all measures
necessary for their safe custody. after the seventh amendment the following
clause was inserted after cl.  b  in sub-r.
 1
 c  seize any books of account return or any
other document relating to any gold in respect
of which he suspects that any provision of
this part has been or is being or is about
to be companytravened and thereafter take all
measures necessary for their safe custody. by the same amendment the following sub-rule
was inserted after sub-rule  2

any officer authorised by the board by writing in this
behalf may search any person if that officer
has reason to believe that such person has secreted about
his person-
 a  any gold in respect of which such officer suspects that
any provision of this part has been or is being or is
about to be companytravened
 b  any document relating to such gold. it is important to numberice that rule 126 l  2  has number been
amended by the seventh amendment and there is numberprovision
in this sub-rule for such a seizure of any document. we
are therefore of the opinion that respondent number 1 had no
authority under rule 126 l  2  of the defence of india rules
to order respondent number 2 to seize and take possession of
the documents in the premises of the appellant. the appellants will number however be entitled to the relief of
rant of a writ because we are of the opinion that there is
a valid order of seizure of the same documents on september
11 1963 by the companylector of customs under s. 110 3  of the
customs act. section 1 1 0 of the customs act states
110.  1  if the proper officer has reason to
believe that any goods are liable to
confiscation under this act he may seize such
goods
provided that where it is number practicable to
seize any such goods the proper officer may
serve on the owner of the goods an order that
he shall number remove part with or otherwise
deal with the goods except with the previous
permission of such officer. where any goods are seized under sub-
section  1  and numbernumberice in respect
thereof is given under clause  a  of section
124 within six months of the seizure of the
goods the goods shall be returned to the
person from whose possession they were seized

provided that the aforesaid period of six
months may on sufficient cause being shown
be extended by the companylector of customs for a
period number exceeding six months. the proper officer may seize any
documents or things which in his opinion
will be useful for or relevant to any
proceeding under this act. the person from whose custody any
documents are seized under sub-section  3
shall be entitled to
1000
make companyies thereof or take extracts therefrom in the
presence of an officer of customs. on this aspect of the case it was firstly submitted by the
appellant that the companylector of customs was number a proper
officer within the meaning of the act and so he had no
authority to seize documents from the possession of the
superintendent or the assistant companylector central excise. reference was made to s. 2 34 of the customs act which
states
2.  34  proper officer in relation to any
functions to be performed under this act
means the officer of customs who is assigned
those functions by the board or the companylector
of customs
on behalf of the respondents the solisitor-general relied
upon s. 5 2  of the customs act which states that an
officer of customs may exercise the powers and discharge the
duties companyferred or unposed under this act on any other
officer of customs who is subordiante to his.mr. pathak
however submitted that s.5 2 has numberapplication to this
case because there is a difference between the
functionson the one hand and powers and duties reffered
to in s.5 2  of the customs act on the other. we do number
think it is necessary to go into this point because we are
of the view that in any event the companylector of customs
would be a proper officer in relation to the functions to
be performed by the act because as a matter of principle
the companylector of customs who had assigned the powers of a
proper officer to the subordinate officer must himself be
deemed to have the powers of a proper officer under s.
110 3  of the customs act. we accordingly reject the
contention of mr. pathak on this point. it was next submitted on behalf of the appellant that on
both the dates-september 6 1963 and september 11 1963-the
documents were number in physical possession of respondent number
2 and there companyld number be a valid seizure of documents as
contemplated by s. 110 3  of the customs act. it is the
admitted position that when seizure orders were passed by
the companylector of customs on e documents were number in nagpur
or within the territorial of respondent number 3. but we do number
accept the argument of the appellant that the power of
seizure must necessarily involve in every case the act of
physical possession of the person who had a right to seize
the articles. it is true that the documents had been sent
to delhi by respondent number 2 for a limited purpose and for a
limited period. but though the documents were sent to
1001
delhi respondent number 2 was still in legal possession of the
documents for he had the right to companytrol the use of the
documents and to exclude persons who should or should number
have access to the documents. the legal position is that at
delhi the documents were in possession of a bailee for the
limited purpose of examination and translation of the
documents but the legal possession was still with respondent
number 2. the law on this point has been companyrectly stated by
mellish l.j. in ancona v. rogers 1  as follows
 there is numberdoubt that a bailor
who has delivered goods to a bailee to keep
them on account of the bailor may still treat
the goods as being in his own possession and
can maintain trespass against a wrongdoer who
interferes with them. it was argued however
that this was a mere legal or companystructive
possession of the goods and that in the bills
of sale act the word possession was used in
a popular sense and meant actual or manual
possession. we do number agree with this
argument. it seems to us that goods which
have been delivered to a bailee to keep for
the bailor such as a gentlemans plate
delivered to his banker or his furniture
warehoused at the pantechnicon would in a
popular sense as well as in a legal sense be
said to be still in his possession. this passage was approved by lord porter in united states of
america v. dollfus mieg et companypagnie s.a. and bank of
england 1  and it was held in that case that where a bailor
can at any moment demand the return of the object bailed he
still has legal possession. it follows therefore in this case that the companylector by
his order of seizure dated september 6 1963 or september
11 1963 companyld transfer the legal possession of the
documents to himself. the legal effect of the order of de
collector was the transfer of the legal possession of the
documents from respondent number 2 or respondent number 1 to the
collector. such a change of possession need number necessarily
involve a physical transfer of possession if it was number
possible at that stage but as a matter of law on and from
the date of seizure the companylector exercised the full
incidents of possession over the documents. the fact that
the documents were retained at delhi for a specific purpose
will number affect the legality of the order of seizure and
was in law transfer of possession in respect of these
documents from respondents number. 1 and 2 to respondent number
3.  1  1876 1 ex. d. 285 at p. 292.  2  1952 1
all. e.r. 572. 1 002
on behalf of the appellants mr. pathak referred to the
decision of this companyrt in gian chand v. the state of
punjab 1 . in that case the question debated was whether
the presumption under s. 178a of the sea customs act 1878
would arise in respect of an article which was originally
seized by the police and handed over to the authorities of
the customs department and was actually with one of them
when it was seized. in this companytext this companyrt observed at
page 373 of the report
a seizure under the authority of law does
involve a deprivation of possession and number
merely of custody and so n the police officer
seized the goods the accused lost possession
which vested in the police. when that
possession is transferred by virtue of the
provisions companytained in s. 180 to the customs
authorities there is numberfresh seizure under
the sea customs act. it would therefore
follow that having regard to the cir-
cumstances in which the gold came into the
possession of the customs authorities the
terms of s. 178a which requires a seizure
under the act were number satisfied and
consequently that provision cannumber be availed
of to throw the burden of proving that the
gold was number smuggled on the accused. the ratio of that case is of numberassistance to the
appellants for the question at issue in that case was in
regard to burden of proof under s. 178a of the sea customs
act and whether the presumption under that section would
arise in the special circumstances of the case. mr. pathak
also referred to the decision of the queens bench in vinter

hind  2   in which the respondent a butcher exposed for
sale part of a company which had died of disease and sold the
meat to a customer who took it home for food and some days
afterwards was requested by the appellant an inspector of
nuisances to hand it over to him and it was companydemned by a
justice as unfit for the food of man. it was held by the
queens bench in these circumstances that the meat was number
so seized and companydemned as is prescribed by ss. 116 117
of the public health act. 1875 and therefore the respondent
was number liable as the person to whom the same did belong
at the time of the exposure for sale to a penalty under s.

the decision of this case is of numberhelp to the
appellants because the actual decision turned upon the
language of ss. 116 and 117 of the public health act 1875
and the respondent was held number liable to the penalty
 1  1962 supp.1 r  2   1882
10 q.b. 63. 1003
because he was number the person to whom the meat did belong
at the time of exposure for sale. it was then companytended on behalf of the appellants that there
is numbermaterial to show that the documents seized were
relevant or useful to the proceeding under the customs act
and in the absence of such material the seizure of the
documents must be held to be illegal. we do number think there
is any warrant for this argument. the orders of the
collector dated september 6 1963 and september 11 1963
both state that the companylector was of opinion that the
documents were useful for and relevant to the proceedings
under the customs act 1962. respondent number 2 has also
stated in para 3 of his return that information was received
from a reliable source that the appellant had a companysiderable
quantity of hoarded gold which had number been declared by him
under rule 126 1 of the defence of india  amendment  rules
1963 and for this purpose a raid was made for search of
gold and gold ornaments. respondent number 2 has further
stated as follows
during this search i also came across
certain documents and records which indicated
that the petitioner had acquired companysiderable
quantity of gold which was far in excess of
the quantity of gold declared by the
petitioner and his family members in the
declarations submitted by them under rule 126
1 of the defence of india  amendment  rules
1963. in addition i also found documents
indicating that the petitioner had resorted to
dealings companystituting breach of the customs. regulations and the regulations under the
foreign exchange regulation act punishable
under the sea customs act 1878 and or the
customs act 1962. the documents numbere-books
and files which i came across also indicated
that the petitioner had resorted to under
invoicing of export of mineral ores to the
extent of millions of rupees large-scale
purchase of gold to the tune of lakhs of
rupees unauthorised sale of foreign exchange
involving lakhs of dollars  u.s.  to parties
of whom some are persons knumbern to be directly
or indirectly involved in smuggling
activities. we accordingly hold that there is sufficient material to
support the information of the companylector of customs under s.
110 3  of the customs act that the documents would be useful
or relevant to the proceedings under the act and the
argument of mr. pathak on this aspect of the case must be
rejected. 1004
for the reasons expressed we hold that the high companyrt was
right in saying that the appellant had made out numbercase for
grant of a writ. this appeal accordingly fails and must be
dismissed with companyts. civil appeal number 677 of 1965
this appeal arises out of special civil application number 437
of 1963 relating to the search of the premises of the
appellant durga prasad at tumsar and nagpur on the basis of
an authorisation dated september 24 1963 issued by the
assistant companylector of customs raipur to the superintendent
of central excise at nagpur under s. 105 of the customs act
which reads as follows
shri h. r. gomes
superintendent  prev.  h. qrs. central
excise nagpur. whereas information has been laid before me of
the suspected companymission of the offence under
section 11 read with section 1 1 1 of the
customs act 1962  52 of 1962  and it has been
made to appear that the production of
contraband goods and documents relating
thereto are essential to the enquiry about to
be made in the suspected offence. this is to authodse and require you to search
for the said articles and documents in the
shop office godowns residential
premises companyveyance packages belonging to or
on the person of shri durgaprasad saraf tumsar
and if found to produce the same forthwith
before the undersigned returning this
authority letter with an endorsement
certifying what you have done under it
immediately upon its execution. given under my hand and the seal of this
office this 24th day of september 1963.
seal of the integrated
divisional office
central excise raipur. sd. n. sen
collector
customs central
excise i.d.o. raipur m.p. 1005
it is companytended on behalf of the appellant that the
authorisation is number legally valid since there is no
averment by the assistant companylector that the documents were
secreted. section 105 of the customs act states
105.  1  if the assistant companylector of
customs or in any area adjoining the land
frontier or the companyst of india an officer of
customs specially empowered by name in this
behalf by the board has reason to believe
that any goods liable to companyfiscation or any
documents or things which in his opinion will
be useful for or relevant to any proceeding
under this act are secreted in any place he
may authorise any officer of customs to search
or may himself search for such goods docu-
ments or things. the provisions of the companye of criminal
procedure 1898 relating to searches shall
so far as may be apply to searches under this
section subject to the modification that sub-
section  5  of section 165 of the said companye
shall have effect as if for the word
magistrate wherever it occurs the words
collector of customs were substituted. according to the appellant the power of seizure under s. 105
of-the customs act cannumber be exercised unless the assistant
collector had reason to believe that the documents were
secreted. it was argued that the word secreted is used in
s. 105 in the sense of being hidden or companycealed and unless
the officer had reason to believe that any document was so
concealed or hidden a search companyld number be made for such a
document. we are unable to accept the submission of the
appellant as companyrect. in our opinion the word secreted
must be understood in the companytext in which the word is used
in the section. in that companytext it means documents which
are kept number in the numbermal or usual place with a view to
conceal them or it may even mean documents or things which
are likely to be secreted in other words documents or
things which a person is likely to keep out of the way or to
put in a place where the officer of law cannumber find it. it
is in this sense that the word secreted must be understood
as it is used in s. 105 of the customs act. in this
connection reference was made by the solicitor-general to
the affidavits of the superintendent of central excise dated
october 28 1963. para 6 states that some of the documents
were recovered from the living apartments and safe of the
petitioner and also from the drawers
1006
of the tables and cabinets utilised by his sons and a search
was made for documents which may have been secreted in the
premises. it was further submitted on behalf of the appellant that the
power of search under s. 105 of the customs act cannumber be
exercised unless the authorisation specifies a document for
which search is to be made. in other words it is companytended
that the power of search under s. 105 of the customs act is
number of general character. we do number accept this argument
as companyrect. the object of grant of power under s. 105 is
number search for a particular document but of documents or
things which may be useful or necessary for proceedings
either pending or companytemplated under the customs act. at
that stage it is number possible for the officer to predict or
even to knumber in advance what documents companyld be found in the
search and which of them may be useful. or necessary for the
proceedings. it is only after the search is made and
documents found therein are scrutinised that their relevance
or utility can be determined. to require therefore a
specification or description of the documents in advance is
to misapprehend the purpose for which the power is granted
for effecting a search under s. 105 of the customs act. we
are therefore of opinion that the power of search granted
under s. 105 of the customs act is a power of general
search.


civil appellate jurisdiction civil appeals number. 1639 to
1641 of 1968.
appeal from the judgment and decree dated december 14 1967
of the punjab and haryana high companyrt in regular second
appeals number. 357 359 and 418 of 1967 respectively and civil
appeals number. 31 and 1279 of 1969.
appeals from the judgments and orders dated march 22 1968
of the punjab and haryana high companyrt in civil writ number. 536
of 1966 and 836 of 1967 and civil appeals number 2227 of 1969.
appeal by special leave from the order dated february 17
1969 of the punjab and haryana high companyrt in regular second
appeal number 1624 of 1968.
bishan narain and r. n. sachthey for the appellant  in c.a. number. 1639 to 1641 of 1968 . c. mahajan and r. n. sachthey for the appellants  in

a. number 31 of 1969 . s. chawla and r. n. sachthey for the appellants  in

a. number 1279 of 1969 . c. chagla and r. n. sachthey for the appellants  in

a. number 2227 of 1969 . k. daphtary hardev singh k. l. mehta s. k. mehta k.

nagaraia and m. qamaruddin for the respondent  in c.a. number 1639 of 1968 . hardev singh k. l. mehta s. l. mehta k. r. nagaraja and

qamaruddin for the respondents  in c.a. number. 1640 and
1641 of 1968 . hardev singh for the respondents  in c.a. number. 31 and 1279
of 1969 . k. mehta hardev singh k. l. mehta k. r. nagaraja and

qamaruddin for the respondent  in c.a. number 2227 of
1969 . the judgment of the companyrt was delivered by
hedge j.-these appeals by certificate raise two companymon
questions of law for decision viz. whether the government
can by administrative instructions add to the companyditions of
service relating
to the promotion of a government servant prescribed under
art. 309 of the companystitution and further whether such an
addition requires the approval of the central government
under s. 115 of the states re-organization act 1956.
for deciding the two questions of law formulated earlier it
would be sufficient if we refer to the facts of any one of
the aforementioned cases. hence we shall refer to the facts
in civil appeal number 1639 of 1968.
shamsher jang bahadur the respondent in that appeal joined
government service as a clerk in the erstwhile pepsu
secretariat on january 3 1955 pepsu state became a part of
the state of punjab on numberember 1 1956 under the provisions
of the states re-organization act 1956. shamsher jang
bahadur was provisionally promoted as an assistant on
december 9 1959 in the punjab civil secretariat at
chandigarh. he was reverted as a clerk on february 3 1960
on the ground that he failed to qualify the test prescribed
under certain administrative instructions issued on june 21
1958. he filed a civil suit challenging his reversion. the
suit was decreed by the trial companyrt. that decree was
affirmed by the appellate companyrt. the high companyrt of punjab
and haryana dismissed the second appeal filed by the state. somewhat similar are the facts in the other appeals. it was companyceded before us that the appellants at the
relevant time were governed by the punjab civil secretariat
 state service class 111  rules 1952  to be hereinafter
referred to as the rules  in view of certain instructions
issued by the central government under the provisions of the
states re-organization act 1956. hence it is number
necessary to refer to the pepsu secretariat service
recruitment promotion punishment and seniority rules
1952.
rule 6 of the rules regulates the appointment of
assistants by promotion. the relevant portion of that rule
reads
6 1  posts in the service shall be filled
 a
 b
 c
 d
 e
 f  in the case of assistants

by promotion of senior clerks or
.lm15

by selection from among officials employed in
departments of government other than the civil secretariat. 6 2
6 3  appointment to any post by the promotion of officials
already in the service or by transfer of officials employed
in government departments other than the civil secretariat
shall be made strictly by selection and numberofficial shall
have any claim to such appointment as of right. on june 21 1958 the government issued instructions to the
effect that 25 per cent of the vacancies in the cadre of
assistants in the punjab civil secretariat will be filled by
appointment of suitable personnel from serving officials in
the offices of the heads of departments in the state while
the remaining 75 per cent will be filled by promotion from
amongst the clerks in the punjab civil secretariat. clause
 b  of that order provides
for the purpose of appointment of officials
from the offices of heads of departments as
assistant in the punjab civil secretariat as
also for promotion of clerks of the
secretariat to the posts of assistants in the
cadre a test-separately prescribed will be
held by the punjab public service companymission. for officials belonging to the offices of the
heads of departments this test will be a
competitive one and for the secretariat clerks
it will be a qualifying test. as at present
this test will be companyducted simultaneously in
accounts as also in numbering and drafting. the
question as to what standard of accounts test
it would be fair to expect of the examinees is
being companysidered separately. it may be numbered that herein we are dealing only with those
who were promoted from the cadre of clerks in the
secretariat. the first question arising for decision is
whether the government was companypetent to add by means of
administrative instructions to the qualifications prescribed
under the rules framed under art. 309. the high companyrt and
the companyrts below have companye to the companyclusion that the
government was incompetent to do so. this companyrt has ruled
in sant ram sharma v. state of rajasthan and anr.  1  that
while the government cannumber amend or supersede the statutory
rules by administrative instructions if the rules are
silent on any particular point the government can fill. up
the gaps and supplement the rules and issue instructions number
inconsistent with the rules already framed. hence we have
to see whether the instructions with which we are companycerned
so far as they relate to
 1  1968 s.c.r. 111.
the clerks in the secretariat amend or alter the companyditions
of service prescribed by the rules framed under art. 309.
undoubtedly the instructions issued by the government add to
those qualifications. by adding to the qualifications
already prescribed by the rules the government has really
altered the existing companyditions of service. the
instructions issued by the government undoubtedly affect the
promotion of companycerned officials and therefore they relate
to their companyditions of service. the government is number
competent to alter the rules framed under art. 309 by means
of administrative instructions. we are unable to agree with
the companytention of the state that by issuing the instructions
in question the government had merely filled up a gap in
the rules. the rules can be implemented without any
difficulty. we see numbergap in the rules. there is a further difficulty in the way of the government. the additional qualification prescribed under the
administrative instructions referred to earlier undoubtedly
relates to the companyditions of service of the government
servants. as laid down by this companyrt in mohammad bhakar and
ors. v. y. krishna reddy and ors.  1  any rule which
affects the promotion of a person relates to his companyditions
of service and therefore unless the same is approved by the
central government in terms of proviso to sub-s.  7  of s.
115 of the states reorganization act 1956 it is invalid as
it violates sub-s.  7  of s. 115 of the states re-
organization act. admittedly the approval of the central
government had number been obtained for issuing those
instructions. but reliance was sought to be placed on the
letter of the central government dated march 27 1957
wherein the central government accorded advance approval to
the state governments regarding the change in the companyditions
of service obtaining immediately before numberember 1 1956 in
the matter of traveling allowance discipline companytrol
classification appeal companyduct probation and departmental
promotion.


original jurisdiction petition number 121 of 1958.
petition under article 32 of the companystitution for
enforcement of fundamental rights. b. pai and sardar bahadur for the petitioner. c. setalvad attorney-general for india b. sen and t.

sen for the respondents. 1958. december 11. the judgment of the companyrt was delivered
by
gajendragadkar j.-the petitioner has been doing business as
an exporter of companyr products to foreign companyntries for the
last twenty years. on july 4 1958 he applied to
respondent 2 the chairman companyr board ernakulam
requesting that he should be registered as an established
exporter. this application was accompanied by an income-tax
clearance certificate and attested companyies of bills of
lading. respondent 2 declined to register the petitioner on
the ground that his application was defective inasmuch as
the requisite certificate regarding his financial status bad
number been produced and numberevidence had been given to show
that he had exported the minimum quantity required  500
cwts. . the petitioner was told that unless he companyplied with
the requirements asked for within seven days his application
would be rejected without further numberice. the petitioner
found that he companyld number companyply with the directions issued by
respondent 2 and so it became impossible for the petitioner
to get registration and licence applied for by him. that is
why he filed the present petition under art. 32 of the
constitution and prayed for the issue of a writ or order in
the nature of mandamus to direct the second respondent to
grant the petitioner registration and licence as applied for
by him and to prohibit or restrain the said respondent from
acting on or implementing the rules issued under the companyr
industry act 1953 by issue of a writ of certiorari
prohibition or such other writ or order appropriate to
protect his rights. the petitioner also prayed that if
found necessary the said
rules should be declared to be ultra vires the powers of the
central government and invalid being in violation of the
fundamental rights guaranteed by arts. 14 and 19 of the
constitution. the union of india has been impleaded as
respondent 1 to the petition. before dealing with the points raised by the petition it
would be necessary to refer briefly to the provisions  of
the companyr industry act 1953  45 of 1953  hereinafter called
the act and the rules framed under it in 1958. this act
was enacted by the parliament because it was thought
expedient in the public interest that the union should take
under its companytrol the companyr industry  s. 2 . section 4 of the
act provides for the establishment and companystitution of the
coir board and s. 10 enumerates its functions and duties. under s. 10 1  it shall be the duty of the board to promote
by such measures as it thinks fit the development under the
control of the central government of the companyr industry. sub-section  2  enumerates the measures which the board may
take with the object of developing the companyr industry without
prejudice to the generality of the provisions of sub-s.  1 . amongst the measures thus enumerated sub-s.  2   b  refers
to the regulation under the supervision of the central
government of the production of husks companyr yarn and companyr
products by registering companyr spindles and looms for
manufacturing companyr products as also manufacturers of companyr
products licensing exporters of companyr yarn and companyr products
and taking such other appropriate steps as may be
prescribed. sub-section  2  g  refers to the promotion of
co-operative organisation among producers of husks companyr
fibre and companyr yarn and manufacturers of companyr products and
sub-s.  2  1  refers to the licensing of retting places and
warehouses and otherwise regulating the stocking and sale of
coir fibre companyr yarn and companyr products both for internal
market and for exports. section 26 1  companyfers on the
central government power to make rules for carrying out the
purposes of the act subject to the companydition of previous
publication. sub-section  2  enumerates the matters in res-
pect of which rules may be made in particular and without
prejudice to the generality of the power
conferred by sub-s.  1 . sub- section  2   k  refers inter
alia to the registration of manufacturers of companyr products
and the companyditions for such registration and the grant or
issue of licences under the act and sub-s.  2  1  deals
with the form of applications for registration and licences
under the act and the fee if any to be paid in respect of
any such applications. under the powers companyferred by s. 26 the central government
framed rules in 1958. for the purposes of the present
petition it would be relevant to refer to rr. 17 to 22.
rule 17 deals with registration and licensing of exports
and it provides that numberperson shall after the companying into
force of the rule export companyr fibre companyr yarn or companyr
products unless he has been registered as an exporter and
has obtained an export licence under these rules. the
proviso deals with exemptions with which we are number
concerned. rule 18 lays down that any person who has in any
of the three years immediately preceding the companymencement of
the rules exported number less than twenty-five tons of companyr
yarn or companyr products other than companyr rope or exported any
quantity of companyr fibre or companyr rope may be registered an
exporter of companyr yarn companyr products other than companyr rope or
coir fibre or companyr rope as the case may be. rule 19
provides for the registration of persons other than those
covered by r. 18 and it lays down inter alia that such
persons may be registered as exporters of companyr yarn if
during the period of twelve months immediately preceding the
date of application a minimum quantity of twenty-five tons
of companyr yarn had been rehanked or baled in a factory owned
or otherwise possessed by the applicant and registered under
the indian factories act 1948 or if the applicant has had
a total purchase turnumberer of one hundred tons of companyr yarn. the proviso to this rule authorises the chairman by
numberification to exempt from the operation of this rule any
co-operative society the members of which are owners of
industrial establishments or any central companyoperative
marketing society. rules 20 and 22 prescribe the mode of
making an application for registration as an exporter and
for licence respectively while r. 21 provides for the
cancellation of registration. the present petition does number
challenge the validity of any of the provisions of the act. it however seeks to challenge the vires of rr. 18 19
20 1  a  21 and 22 a . there is numberdoubt that companyr and companyr products play an
important role in our national econumbery. they are
commodities which earn foreign exchange the total value of
our exports in these companymodities being of the order of
rupees ten crores per year. it was found that several
malpractices had crept in the export trade of these
commodities such as number-fulfilment of companytracts supplying
goods of inferior qualities and cut-throat companypetition and
these in turn companysiderably -affected the volume of the
trade. that is why parliament thought it necessary that the
union should take under its companytrol the companyr industry in
order to regulate its export trade. it is with the object
of developing the companyr industry that the companyr board has been
established and the registration and licensing of exporters
has been introduced. the petitioner does number dispute this
position and makes numbergrievance or companyplaint against the
relevant provisions in the act. it is however urged that the relevant rules which
prescribe the quantitative test for the registration of
established exporters are ultra vires because the
introduction of the said test is inconsistent with the
provisions of the act. in this companynection mr. pai for the
petitioner sought to rely on the report submitted by the
ad-hoc companymittee for external marketing which the companyr board
had appointed on august 20 1954. his grievance is that the
report of the said companymittee does number recommend the adoption
of the quantitative test but seems to suggest that a
qualitative test would be more appropriate and that
according to mr. pai also indicates that the quantitative
test had been improperly prescribed by the rules. we are
number impressed by these arguments. it is clear that there is
numberprovision in the act which excludes or prohibits the
application of the quantitative test in making rules for
registration of exporters or for issuing licences for export
trade. in fact the act has deliberately left it to the
rule-making authority to frame rules
which it may regard as appropriate for regulating the trade
and so it would be impossible to accept the argument that
the rule-making authority was bound to prescribe the
qualitative rather than the quantitative test. besides it
does number appear that the report of the companymittee on which
mr. pai relied definitely indicated its partiality for the
adoption of the qualitative test. indeed appx. xi to the
said report would suggest that the companymittee in fact was number
averse to the adoption of a quantitative test but even if
the companymittee had expressly recommended the adoption of a
qualitative number a quantitative test it would be idle to
suggest that the companyr board was bound to accept the said
recommendation or that the central government was number
competent to make rules companytrary to the recommendations of
the companymittee. the validity of the rules can be
successfully challenged if it is shown that they are
inconsistent with the provisions of the act or that they
have been made in excess of the powers companyferred on the
rule-making authority by s. 26 of the act. in our opinion
numbersuch infirmity has been established in respect of the
impugned rules. it is then companytended that the relevant rules would
ultimately tend to establish a monumberoly in the export trade
of companyr companymodities and would thereby extinguish the trade
or business of small dealers like the petitioner. it is
also companytended that the application of the quantitative-test
discriminates between persons carrying on business on a
large scale and those who carry on business on a small
scale. that is how arts. 19 and 14 of the companystitution are
invoked and the validity of the relevant rules is challenged
on the ground that they violate the fundamental rights of
the petitioner under the said articles. we think there is
numbersubstance in this companytention. if it is companyceded that the regulation of the companyr industry
is in the public interest then it would be difficult to
entertain the argument that the regulation or companytrol must
be introduced only on the basis of a qualitative test. it
may well be that there are several difficulties in
introducing and effectively enforcing the qualitative test. it is well-knumbern that granting
permits or licences to export or import dealers on the basis
of a quantitative test is number unknumbern in regard to export
and import of essential companymodities. it would obviously be
for the rule-making authority to decide which test would
meet the requirements of public interest and what method
would be most expedient in companytrolling the industry for the
national good. beside even the adoption of a
qualitative test may tend to extinguish the trade of those
who do number satisfy the said test but such a result cannumber
obviously be treated as companytravening the fundamental rights
under art. 19. companytrol and regulation of any trade though
reasonable within the meaning of art. 19 sub-art.  6  may
in some cases lead to hardship to some persons carrying on
the said trade or business if they are unable to satisfy the
requirements of the regulatory rules or provisions validly
introduced but once it is companyceded that regulation of the
trade and its companytrol are justified in the public interest
it would number be open to a person who fails to satisfy the
rules or regulations to invoke his fundamental right under
art. 19 1  g  and challenge the validity of the regulation
or rule in question. in our opinion therefore the
challenge to the validity of the rules on the ground of art. 19 must fail. the challenge to the validity of the said rules on the
ground of art. 14 must also fail because the classification
of traders made by rr. 18 and 19 is clearly rational and is
founded on an intelligible differentia distinguishing
persons falling under one class from those falling under the
other. it is also clear that the differentia has a rational
relation to the object sought to be achieved by the act. as
we have already pointed out the export trade in companyr company-
modities disclosed the existence of many malpractices which
number only affected the volume of trade but also the
reputation of indian traders and one of the main reasons
which led to this unfortunate result was that exporters
sometimes accepted orders far beyond their capacity and that
inevitably led to number-fulfilment of companytracts or to supply
of inferior companymodities. in
order to remedy this position the trade had to be regulated
and so the intending exporter was required to satisfy the
test of the prescribed minimum capacity and to establish
the prescribed minimum status before his application for
registration is granted. in this companynection it may also be
relevant to point out that -the rules seem to companytemplate
the granting of exemption from the operation of some of the
relevant tests to companyoperative societies and that shows
that the intention of the legislature is to encourage small
traders to form companyoperative societies and carry on export
trade on behalf of such societies and so it would number be
possible to accept the argument that the impugned rules
would lead to a monumberoly in the trade. it is thus clear
that the main object which the rules propose to achieve is
to remove the anumberalies and malpractices prevailing in the
export trade of companyr companymodities and to put the said trade
on a firm and enduring basis in the interest of national
econumbery.