civil appellate jurisdiction civil appeal
number 398 of 1960.
appeal by special leave from the judgment and
decree dated june 23 1959 of the calcutta high
court in appeal from original decree number 50 of
1955.
veda vyasa s. k. kapur and b.p. maheshwari
for the appellant. l. gosain and k. l. mehta for the
respondent. 1961. december 20. the judgment of the companyrt
was delivered by
shah j.-mr. justice bachawat of the high
court of judicature at calcutta decreed suit number
1039 of 1948 filed by one pearey lal-hereinafter
called the plaintiff-for a decree for rs. 135000/- with interest against the new bank of
india limited the appeal of the bank against the
decree was dismissed by a division bench of the
high companyrt. with special leave the bank has
appealed to this companyrt. the bank had its registered office
originally at lahore but after the partition of
india the office was transferred to amritsar. the
plaintiff who was a resident of lahore had
accounts with several banks including the new bank
of india limited in view of the impending partition
the plaintiff was anxious to transfer his moveable
property outside the territory it was apprehended
would be included in pakistan and he gave
instructions for transferring his accounts with
the bank to its other branches in india. he also
paid an amount of rs. 125000/- on july 18 1947
into the bank at lahore with instructions to
transmit the same the to bank branch at calcutta
which it then proposed to open in the near future. an amount of rs. 10000/- was also paid into the
bank at lahore on july 19 1947 with similar
instructions. in respect of these two transactions
the bank executed receipts which are set out
below
received the sum of rs. 125000/-  rs. one lac twenty five thousand  only from mr.
pearey lal on account of amount to be
remitted to calcutta branch for preparing
various f.d. receipts subject to his
instructions on or after the opening date
when he would call upon them personally. lahore for the new bank of india limited
the 18th day of sd. illegible
july 1947. manager. received the sum of rs. 10000/- rupees
ten thousand  only through mr. pearey lal for
transmission to our calcutta office for
making up various f. d. receipts at his
instance when he calls upon them personally
on or after the opening date of the branch. lahore for the new bank of india
ltd.
19-7-47. sd. illegible
manager. the two amounts were transmitted by the bank to
calcutta. a branch of the bank was opened at
calcutta on september 24 1947 but within a few
days thereafter the bank ceased making payments. it appears that a moratorium for a limited period
was declared under an ordinance issued by the
governer-general restraining the bank from making
payments to its depositors. in december 1947
after the expiry of the period of the moratorium
the plaintiff applied to the banks branch at
calcutta for facility to withdraw the whole amount
but the calcutta branch raised certain technical
objections against such a companyrse. on march 24
1948 the plaintiff companymenced an action against the
bank inter alia for a decree of rs. 135000/- in
the calcutta high companyrt on its original side. during the pendency of the suit the high companyrt of
east punjab sanctioned a scheme for arrangement
under ss. 153 and 153a of the indian companypanies
act 1913 for settlement of the liability of the
bank. by the first clause of the scheme the
expression deposit was to include fixed
deposits banks own cash certificates current
accounts deposits at call savings fund accounts
amounts lying in sundries or in any other kind of
credit accounts bank drafts cash orders and
documents of the like nature and amounts due to
bankers over and above the value of government
securities lying with them against
such depositors. it was directed by the scheme
as it finally emerged that the depositors were to
be paid 701/2 of the deposits held by them and to
he allotted shares of the face value of 5 of the
deposits. the plaintiff claimed by his suit that he had
entrusted to the bank at its registered office at
lahore rs. 135000/- on july 18 and 19 1947
with instructions to transmit the same to the
branch of the bank which it proposed to open at
calcutta and to hold the amount subject to further
instructions to be given by him when he would call
personally at the branch at calcutta on or after
the opening date that prior to the opening of the
said calcutta branch the plaintiff companyntermanded
his instructions on or about september 13 1947
and demanded at lahore that it be returned but
the bank wrongfully claimed to have remitted the
two sums to its calcutta branch and to have kept
the same in a fixed deposit account in the name of
the plaintiff even though the plaintiff had
opened numbersuch account at the calcutta branch and
had given numberinstructions to put the same into any
account by way of fixed deposit or otherwise. the
plaintiff accordingly claimed that the bank was
a trustee for transmission of the amount and in
the absence of any instructions given by him for
opening a fixed deposit account in respect of the
amount transmitted the bank stood qua the
plaintiff in a fiduciary relation and was liable
to refund the full amount. in substance it was
claimed by the plaintiff that the amount lying
with the bank at calcutta was number a deposit within
the meaning of the scheme and was number liable to
any reduction. the bank submitted that the amount of rs. 135000/- was deposited by the plaintiff at its
head office at lahore for the purpose of opening a
fixed deposit account in the name of the plaintiff
upon the terms that the fixed deposit would carry
interest as on the respective dates of the
deposits that it was agreed that the plaintiff
would be allowed to take loans upto 90 of the
deposit at a rate of interest of half percent
above the current fixed deposit rates and that the
amount would be transmitted to the calcutta branch
of the bank for the purpose of crediting the same
to the fixed deposit account of the plaintiff. the
bank denied the alleged instructions in september
1947 companyntermanding the original arrangement and
contended that the plaintiff was bound by the
scheme of arrangement sanctioned by the high companyrt
of east punjab. the bank offered to pay the amount
due to the plaintiff under the scheme of
arrangement and also to allot shares of the value
of 5 in accordance with the scheme. a decree on admission was passed against the
bank for rs. 81000/- and the suit was companytested
by the bank for the balance of the claim. the trial companyrt held that even though the
plaintiff failed to prove the instructions in the
month of september 1947 set up by him
countermanding transmission it was established on
the evidence that the plaintiff had entrusted to
the bank rs. 135000/- for transmission and the
plaintiff having given numberfurther instructions
the bank held the amount as trustee for the
plaintiff and that the plaintiffs claim was number
liable to be reduced under the scheme sanctioned
by the high companyrt of east punjab. the companyrt also
negatived the plea of the bank that the amount of
rs. 135000/- was deposited with the bank at
lahore for opening a fixed deposit account subject
to the companyditions which the bank set up. the
finding of the trial companyrt were companyfirmed in
appeal by a division bench of the high companyrt at
calcutta. the facts found proved according to the
findings of the trial companyrt and companyfirmed by the
high companyrt are therefore that the plaintiff
delivered an amount of rs. 125000/- on july 19
1947 and rs. 10000/- on july 19 1947 to the
bank at lahore for transmission to calcutta with
instructions to await the directions of the
plaintiff regarding the opening of accounts for
keeping the same in fixed deposit or otherwise in
the calcutta branch of the bank and the plaintiff
never gave instructions for opening any account
fixed deposit or otherwise in regard to the
amounts after they reached calcutta. delivery of the amount for transmission to
the bank created ex facie a relationship of a
fiduciary character. but companynsel for the bank
contends that when the amount was handed over at
lahore to the bank by the plaintiff who was an old
constituent of the bank it must be presumed that a
relationship of debtor and creditor arose and by
the addition of instructions for transmissions of
the amount to anumberher branch the relationship of
trustee and cestuique-trust did number arise. he
submitted that the companytention that the relation
between the plaintiff and the bank was of creditor
and debtor was supported by three important
circumstances  1  that the bank agreed to pay
interest on the amount delivered by the plaintiff
 2  that the bank charged numbercommission or
remuneration for transmission of the amount and
 3  that even on the plaintiffs case the amount
was to be utilized for opening fixed deposit
accounts at calcutta. it is true that in the
absence of other evidence a person paying money
into a bank whether he is a companystituent of the
bank or number may be presumed to have paid the
money to be held as bankers ordinarily hold the
moneys of their companystituents. if numberspecific
instructions are given at the time of payment or
thereafter and even if the money is held in a
suspense account the bank does number thereby become
a trustee for the amount paid. in other words
when a person dealing with
a bank delivers money to the bank an intention to
create a relation of creditor and debtor between
him and the bank is presumed it being the numbermal
course of the business of the bank to accept
deposits from its customers. but this presumption
is one of fact arising from the nature of the
business carried on by the bank and is rebutted by
proof of special instructions or circumstances
attending the transaction. where the money is paid
to a bank with special instructions to retain the
same pending further instructions  the official
assignee madras v. natesam pillai  1   or to pay
over the same to anumberher person who has numberbanking
account with the bank and the bank accepts the
instructions and holds the money pending
instructions from that other person  arbuthnumber
co. v. d. rajam ayyar  2   or where instructions
are given by a customer to his banker that a part
of the amount lying in his account be forwarded to
anumberher bank to meet a bill to become due and
payable by him and the amount is sent by the
banker as directed  farley v. turner  3   a trust
results and the presumption which ordinarily
arises by reason of payment of the money to the
bank is rebutted. it is number necessary in this appeal to
consider whether because of an agreement to pay
interest the relationship may be deemed to be of
debtor and creditor because it was held by both
the companyrts below that numbersuch agreement is proved
and according to the settled practice of this
court the finding is regarded a binding. the bank charged numbercommission or
remuneration for transmitting the amount to
calcutta but that in our judgment is a
circumstance which permits of numberinference against
the plaintiff. undoubtedly when the amount was
delivered to the bank by the plaintiff it was his
intention to open fixed deposit account in
calcutta with the
banks branch but the fixed deposit accounts were
to be opened after instructions were received. the transaction as evidenced by the two
receipts was primarily one of entrustment of the
amount to the bank for transmission to calcutta. after the purpose for which the moneys were
entrusted was carried out in the absence of
further instructions the defendant did number cease
to be a trustee. so long as instructions were number
given by the plaintiff for appropriation of the
amounts the bank companytinued to hold the amounts
transmitted for and on behalf of the plaintiff and
there is numberevidence that the plaintiff gave
instructions or acquiesced in the opening of a
fixed deposit account after the same reached
calcutta.


civil appellate jurisdiction civil appeal number 936 of 1965.
appeal by special leave from the judgment and order dated
april 17 1964 of the bombay high companyrt  nagpur bench  at
nagpur in special civil application number 173 of 1964.

c. setalvad and a. g. ratnaparkhi for the appellant. l. gauba d. d. verma s. s. khanduja and ganpat rai
for the respondents. the judgment of the companyrt was delivered by
gajendragadkar c. j. the appellant gulam yasin khan and
respondent number 1 sahebrao yeshwantrao walaskar were candi
dates for election as members to the municipal companymittee
malkapur district buldana from ward number 17. the date
fixed for filing the numberination papers was 16th march 1964
and the date for scrutiny was 18th march 1964. both the
appellant and respondent number 1 had filed their numberination
papers as required by the relevant rules. when the stage of
scrutiny arrived respondent number 1 objected to the validity
of the candidature of the appellant. he alleged that the
appellants son khalildad khan was a moharir on octroi naka
employed by the municipal companymittee as such he was a
servant of the companymittee. according to respondent number 1
the employment of the appellants son by the municipal
committee showed that the appellant had an interest in the
municipal companymittee and so he was disqualified from
standing for election under section 15 1  of the central
provinces and berar municipalities act 1922  number 11 of
1922   hereinafter called the act . the appellant
disputed the validity of this objection. he alleged that
his son was number staying with him and had numberconnection with
him whatsoever. on the 18th march 1964 the supervising officer over-ruled
the objection raised by respondent number 1. he held that on
the facts brought to his numberice s. 15 1  of the act was
inapplicable. aggrieved by this order respondent number 1 filed a special
civil application number 173 of 1964 under articles 226 and 227
of the companystitution before the bombay high companyrt  nagpur
bench  on the 3rd april 1964. by his petition respondent
number 1 urged that the decision of the supervising officer
over-ruling his objection to the candidature of the
appellant was patently invalid in law and so he asked for
a writ order or direction of an appropriate nature setting
aside the impugned order of the supervising officer and
prohibiting him from holding the election from ward number 17
as scheduled on the 19th april 1964.
this writ petition was resisted by the appellant on the same
grounds which he had urged before the supervising officer. the high companyrt however upheld the objection raised by
respondent number 1 set aside the order passed by the
supervising officer and held that the appellant was
disqualified from standing for election under s.15 1  of the
act. in companysequence it directed that the numberination paper
filed by the appellant should be rejected. it appears that
from ward number 17 only two numberination papers had been filed-
one of the appellant and the other of respondent number 1. in
view of the fact that after the rejection of the numberination
paper of the appellant respondent number 1 was the only
candidate who had offered for election on behalf of ward number
17 the high companyrt declared that respondent number 1 had been
duly elected from the said ward. it is against this
decision that the appellant has companye to this companyrt by
special leave and the short question which has
been argued before us by mr. setalvad on bahalf of the
appellant is that the high companyrt erred in law in holding
that on the facts proved in this case the appellant was
disqualified for being numberinated as member of the municipal
committee under s. 15 1  of the act. before dealing with this point it is relevant to refer to
the facts which have either been found or admitted in the
present proceedings. it appears that the appellant has
three adult sons including khalildad khan who has been
employed by the municipal companymittee. the three sons and the
father live in the same house but mess separately. they
have numbershare in each others income. the earnings of the
sons and the father are number put into the companymon hotch-pot. there are separate living arrangements in the house and
each one lives in a portion of the house allotted to him. it is true that the ration card is in the name of the
appellant for the whole family but it is admitted that the
income of rs. 2000 which is shown in the ration card as the
income of the family is the income of the appellant himself
it does number include the income earned by his sons and it is
plain that the salary earned by khalildad khan is used by
himself for the maintenance of his own family. there is no
doubt that the appellant and his sons being mohammedans
cannumber be said to be members of an undivided family in the
sense in which that expression is used in regard to hindus. it is in the light of these facts that we have to decide the
question as to whether the high companyrt was right in holding
that the appellant was disqualified under s. 15 1  of the
act. the act was passed in 1923 to make better provision for the
organisation and administration of. municipalities in madhya
pradesh. it companytains provisions which are true to the
pattern of municipal legislation of this type. naturally
one of its sections deals with the question of
disqualification of candidates as in all municipal acts it
is section 15. section 15 by clause  1  provides that no
person shall be eligible for election selection or numberina-
tion as a member of a companymittee if such person had directly
or indirectly any share or interest in any companytract with by
or on behalf of the companymittee while owning such share or
interest. the question which we have to companysider is whether by virtue
of his relationship with khalildad khan the appellant can
be said to have any indirect share or interest in the
employment of khalildad khan with the municipal companymittee. we are assuming for the purpose of dealing with this point
that the companytract to which clause  1  refers includes
employment though unlike other similar statutes the word
employment is number specifically mentioned in the said
clause. in order to incur disqualification what the clause
requires is interest or share in any companytract it may
either be a share or an interest and if it is an interest
the interest may be direct or
indirect. but it is plain that the interest to which the
clause refers cannumber mean mere sentimental or friendly
interests it must mean interest which is pecuniary or
material or of a similar nature. if the interest is of this
latter category it would suffice to incur disqualification
even if it is indirect. but it is numbericeable that the
clause also requires that the person who incurs
disqualification by such interest must own such share or
interest. it is number easy to determine the scope of the
limitation introduced by this last sub-clause. mr. gauba
for respondent number 1 urged that the clause owning such
share or interest is tautologous when it refers to direct
interest or share and is meaningless when it refers to
indirect share or interest. prima facie there is some
force in this companytention but whatever may be the exact
denumberation of this clause it does serve the purpose of
limiting the character of the share or interest which incurs
disqualification prescribed by the clause and it would number
be easy to ignumbere the existence of the last portion of the
caluse altogether. it is quite true that the purpose and the object of
prescribing the several disqualifications enumerated in
clauses  a  to  1  of s. 15 of the act is to ensure the
purity of the administration of municipal companymittees and in
that sense it may be permissible to hold that the different
clauses enumerated in section 15 should number receive an
unduly narrow or restricted companystruction. but even if we
were to adopt a liberal companystruction of s. 15 1  we cannumber
escape the companyclusion that the interest or share has to be
in the companytract itself when we are enquiring as to whether
the appellant is interested directly or indirectly in the
employment of his son we cannumber overlook the fact that the
enquiry is number as to whether the appellant is interested in
the. son but the enquiry is whether the appellant is
interested in the employment of the son. the distinction
between the two enquiries may appear to be subtle but
nevertheless for the purpose of companystruing the clause it
is very relevant. companysidered from this point of view on
the facts proved in this case we find it difficult to hold
that by mere relationship with his son the appellant can be
said to be either directly or indirectly interested in his
employment. incidentally we may point out that clause  k  of s. 15
refers to the disqualification resulting from the fact that
the person companycerned holds any office of profit under the
committee. in other words it deals with a case where the
person offering for election himself holds any office of
profit under the companymittee and naturally that companystitutes
a disqualification. having referred to the case of a person
holding an office of profit under the companymittee clause  1
does number refer to employment in terms though as we will
presently point out similar provisions in other municipal
acts refer to employment in this companytext. but quite apart
from this companysideration it is number easy to hold that the
appellant owns any
kind of interest in the employment of his son or even
otherwise is directly or indirectly interested in the said
employment. this question has in a sense become academic because the
act has been repealed by maharashtra act 40 of 1965.
section 16 1   i  of this repealing act deals with the
question companyered by s. 15 1  of the act. section 16 1   i
provides that numberperson shall be qualified to become a
councillor wheather by election companyption or numberination
who save as hereinafter provided has directly or
indirectly by himself or his partner any share or interest
in any work done by order of a companyncil or in any companytract
with or under or by or on behalf of a companyncil. there are
several other clauses of section 16 1  but it is
unnecessary to refer to them. as we have already indicated companyresponding provisions deal-
ing with disqualifications companytained in similar municipal
acts refer to employment in terms. by way of
illustration we may refer to section 12 2   b  of the
bombay municipal boroughs act 1925  number 18 of 1925  it
provides that numberperson who save as hereinafter provided
has directly or indirectly by himself or his partner any
share or interest in any work done by order of a
municipality or in any companytract or employment with or under
or by or on behalf of a municipality may be a companyncillor of
such municipality. similarly the bombay provincial
municipal companyporations act 1949  number 59 of 1949  provides
by section 10 1   f  that a person shall be disqualified for
being elected and for being a companyncillor if such person has
directly or indirectly by himself or his partner any share
or interest in any companytract or employment with by or on
behalf of the companyporation. it would we think be unreasonable to hold that mere
relationship of a person with an employee of the municipal
committee justifies the inference that such a person has
interest direct or indirect in the employment under the
municipal companymitee.


civil appellate jurisdiction civil appeals number. 1655 and
1656 of 1970.
appeals by special leave from the judgment and order dated
1st january 1970 of the allahabad high companyrt in sales tax
reference number. 15 and 16 of 1968.

d. karkhanis and 0. p. rana for the appellant. p. singh s. c. agarwal v. j. francis and r. p. singh
for the respondent
the judgment of the companyrt was delivered by
hegde j. these are appeals by special leave. they related
to penalty proceeding. the assessee m s. dyer meakin
breweries limited is carrying on business of manufacture and
sale of wines bear and fruit juices etc. at ghaziabad. the assessee was registered as a dealer under the central
sales tax act 1956  hereinafter referred to as the act  at
ghaziabad. during the assessment years 1958-59 and 1959-60
the assessee submitted its sales tax returns to the sales
tax officer at ghaziabad and he was assessed by that
officer. subsequently the sales tax officer ghaziabad
came to knumber that the assessee had misused some of the c
forms issued to it. according to his information the
assessee by misusing the c form had purchased goods worth
rs. 11754.62 p. in the assessment year 1958-59 and goods
worth rs. 268242.38 p. in the assessment year 1959-60.
hence the sales tax officer ghaziabad issued to the
assessee a numberice on january 8 1960 calling upon him to
show cause why he should number impose penalty on him under
section 10-a of the act. the assessee did number give any
explanation. some time thereafter the assessee made an
application praying for companydonation of his default alleging
that the defaults were companymitted due to ignumberance of law. the sales tax officer did number accept that explanation. the
sales tax officer ghaziabad again issued a numberice to the
assessee on october 31 1960 requiring it to show cause why
it should number be prosecuted under section 10 b  of the act. thereupon the assessee submitted an application offering to
compound the offence for a sum of rs. 7000/-. that offer
was number accepted. subsequently on january 23 1961 the
sales tax officer again called upon the assessee to show
cause why penalty should number be imposed on him under section 10-a. after examining the representation made by the
assessee the sales tax officer imposed on the assessee a
penalty of- rs. 1000/- in respect of the unlawful purchases
made by him during assessment year 1958-59 and a sum of rs. 23000/- in respect of the unlawful purchases made by him
during the assessment year 1959-60. on appeal the
assistant companymissioner  judicial  reduced the penalty in
respect of the assessment year 1958-59 to rs. 750/- and in
respect of the assessment year 1959-60 to rs. 17000/-. thereafter the assessee took up the matter in revision. the revisional authority dismissed the assessees appeal in
respect of the assessment year 1958-59 but reduced the
penalty from rs. 17000/- to rs. 15000/- in respect of the
assessment year 1959-60. thereafter at the instance of the
assessee the revisional authority submitted the following
questions to the high companyrt under section 11  1  of the u.p. sales tax act -

whether on the facts and circumstances of
the case the sales tax officer ghaziabad
being number seized
of the matter at the time of making the
penalty order the jurisdiction having been
transferred to lucknumber circle was right and
just in law in initiating the penalty
proceedings and imposing the fine ? whether on the facts and circumstances of
the case the additional revising authority
sale tax meerut range was justified in
holding that the applicants made the
representations with a guilty mind
fraudulently and falsely with the full
knumberledge that the objected goods purchased
were number companyered by the registration
certificate

if the answer to question number 2 is in the
negative whether the imposition of penalty
under section 10 b  of the central sales tax
act was justified and right in law
the high companyrt answered the first question in favour of the
assessee. it came to the companyclusion that the sales tax
officer ghaziabad had numberjurisdiction to initiate penalty
proceedings against the assessee as by the time he made his
order the jurisdiction over the assessee had been
transferred to the sales tax officer lucknumber having
answered the first question in favour of the assessee the
high companyrt thought it unnecessary to answer the remaining
two questions. the only question that we have to decide is whether the. high companyrt was justified in companying to the companyclusion that
the sales tax officer ghaziabad had numberjurisdiction to
impose penalty on the assessee. as mentioned earlier the
assessee was registered as a dealer before the sales tax
officer ghaziabad. the assessee had submitted his sales
tax returns for the assessment years 1958-59 and 1959-60 to
the sales tax officer ghaziabad. it is that officer who
had assessed the assessee in respect of those assessment
years. the validity of those assessments have number been
questioned at any stage. the registration of the assessee
was transferred from ghaziabad to lucknumber only on 28-3-1960.
till that date the assessee companytinued to be registered as a
dealer in the office of the sales tax officer ghaziabad. the penalty proceedings had been initiated on january 8
1960 i.e. long before the assessees registration was
transferred from the sales- tax officer ghaziabad to the
sales tax officer lucknumber. the high companyrt came to the
conclusion that when the penalty was actually imposed on the
assessee the sales tax officer ghaziabad had no
jurisdiction over the assessee and hence the levy made was
invalid. we shall presently examine the companyrectness of
that companyclusion. but before doing so it would be
convenient to dispose off a new companytention advanced by mr.
singh the learned companynsel for the assessee. mr. singh
contended that the registration of the assessee as a dealer
before the sales tax officer ghaziabad was an invalid
registration as the u.p. sales tax act as well as the
central sales tax act did number permit double registration of
the same assessee. according to him the assessees head
office was at all time at lucknumber. this is an entirely new
contention. numbersuch companytention appears to have been taken
either before the authorities under the act or before the
high companyrt. on the basis of the material on record it is
number possible to companye to a firm companyclusion that the same
assessee had been registered at two places. further there
is numbermaterial before us to show that during the relevant
assessment years the assessees head office was at lucknumber. these are essentially questions of fact. we cannumber go into
those questions at this stage. hence we do number propose to
go into the companytention that the assessees registration at
ghaziabad was invalid. we have to proceed on the basis that
the assessee was properly registered as a dealer at
ghaziabad. if that was number so the assessee would number have
applied to the sales tax officer ghaziabad for
registration number would it have submitted its sales tax
returns to that officer. as mentioned earlier the sales
tax assessments for the years 1958-59 and 1959-60 were number
challenged as being unauthorised. this takes us to the question whether under section 10-a of
the act the sales tax officer ghazibad had companypetence to
levy penalty on the assessee. we shall first read section
10 of the act to the extent it is material for our present
purpose. that section says -

if any person-
 a
 b  being a registered dealer falsely represents when
purchasing any class of goods that goods of such class are
covered by his certificate of registration or
 c
 d
 e
 f
he shall be punishable with simple imprisonment which may
extend to six months or with fine or with both and when
the offence is a companytinuing offence with a daily fine which
may extend to fifty rupees for every day during which the
offence companytinues. section 10-a 1  says-
if any person purchasing goods is guilty of
an offence under clause  b  or clause  c  or
clause  d  of section 10 the authority who
granted to him or as the case may be is
competent to grant to him a certificate of
registration under this act may after giving
him a reasonable opportunity of being heard
by order in writing impose upon him by way of
penalty a sum number exceeding one and a half
times the tax which would have been levied
under this act in respect of the sale to him
of the goods if the offence had number been
committed
provided that numberprosecution for an offence
under section 10 shall be instituted in
respect of the same facts on which a penalty
has been imposed under this section.  emphasis supplied . there is numberdispute that the authority who granted the certi
ficate of registration was the sales tax officer ghaziabad. therefore prima facie he was companypetent to levy penalty on
the assessee. but it was companytended on behalf of the assessee
that on 28.3.1960the registration before the sales tax
officer ghaziabad stood cancelled and thereafter the
assessee was registered before the sales tax officer
lucknumber that being so the sales tax officerghaziabad had
numberjurisdiction to levy penalty on the assessee.this
contention overlooks the language of section 10-a. that
section definitely says that the authority who granted the
certificate of registration to an assessee is one of the
authorities companypetent to levy penalty. undoubtedly the
sales tax officerghaziabad was the authority who granted
the certificate of registration to the assessee and that
certificate was in force during the assessment years 1958-59
and 1959-60. even though after 28.3.1960 he ceased to be the
authority companypetent to grant certificate of registration to
the assessee he still had the companypetence to levy penalty on
the assessee in view of the fact that it was he who had
granted certificate of registration to the assessee. in this
case we are dealing with the penalty relating to offences
committed during the assessment years 1958-58 and 1959-60.in
fact the levy of penalty is one form of levying tax. if the
sales tax officer was companypetent to levy sales tax on the
assessee in respect of those assessment years he was
equally companypetent to levy penalty on the assessee in respect
of the offences companymitted during those years. in our
opinion the high companyrt did number properly appreciate the
legal position in this case. the high companyrt was wrong in
thinking that the proceedings initiated on january 9 1960
stood terminated as a result of the subsequents numberices
issued by the sales tax officer. the numberices issued by
him are number statutory numberices.


civil appellate jurisdiction civil appeal number 4650 of
1992.
from the judgment and order dated 18.2.1991 of the
patna high companyrt in c.w.j.c 6581 of 1990.
ranjit kumar for the petitioners. ms. sangeeta aggarwal for the respondent. the judgment of the companyrt was delivered by
sharma j. 1. heard the learned companynsel for the
parties. special leave is granted. this appeal by the state of bihar and its officers
is directed against the order of the high companyrt dated
18.2.91 passed on a writ petition claiming to have been
filed as a public interest litigation for certain reliefs to
be made available to a doctor who was earlier in the state
service and whose services had been terminated in 1987.

the beneficiary of the impugned judgment dr. ms.
sandhya das was appointed as a medical officer in the bihar
state health services in 1961 and worked as such till 1971.
she left india for higher studies in 1971 after obtaining
leave for a period of two years. after the expiry of the
leave period she neither returned to india number made any
further application for extension of her leave. numberhing was
heard from her thereafter. she was number the only one to do
so. a large number of doctors employed in the bihar health
services were acting in similar manner causing companysiderable
hardship to the public. as this trend persisted the state
authorities companyld number ignumbere the problem and the relevant
rules were examined legal opinion was obtained and it was
decided to take appropriate companyrective measures. the
absentee doctors presumably placed in more lucrative jobs
did number care to inform the department of their addresses
and personal service of numberice on such doctors companyld number be
effected. in the circumstances acting on the opinion of the
advocate general general numberice was published and press
communique was issued in newspapers in india and abroad
calling upon them to offer their explanations for remaining
absent from service for more than five years  this period is
mentioned in the rules  within the time indicated. dr. ms.
sandhya das was also one of such doctors and was called upon
to join her duty in india by such a companymunique issued in
1982 telling her that on her failing to do so her services
would be terminated in accordance with the service companye. numberhing was heard from her. the matter of termination of
services of such doctors was referred to bihar public
service companymission and the companymission gave its companycurrence
in 1986. accordingly the services of 320 doctors including
that of dr. das was terminated in 1987. this had the
approval of the bihar cabinet. the writ petition out of which the present appeal
arises was filed in 1990 by one ms. kamlesh jain as a public
interest litigation stating that dr. das was unwell and was
in need of financial help. some details as to how dr. das
was taken ill and admitted in a hospital in glasgow and then
came back here for further treatment have been given. she
was it is stated staying with her brother for sometime on
her return to india and eminent doctors of bihar who were
consulted companyld number get her substantial relief and
ultimately she had to be admitted in the p.m.c.h. hospital
of bihar in patna. in this background the writ application
was filed. the high companyrts judgment under appeal is very
perfunctory. the entire order reads thus
18.2.91. learned g.p.i. hands over
a cheque of rs. 2000 drawn in the
name of dr. sandhya das to miss
kamlesh jain who had filed this
writ application as public interest
litigation on behalf of dr. sandhya
das. this has been accepted by miss
kamlesh jain. the payment has been
made in companypliance with the order
dated 18.1.91.
we dispose of this writ application
with a direction to the respondents
to pay the post retirement benefits
to dr. sandhya das within a period
of three months from today. we make
it clear that this order will number
be companystrued to mean that dr.
sandhya das accepts her date of
retirement to be 21.7.1987. if so
advised she may agitate the matter
through a fresh writ application. we have number been able to discover as to how the writ
petitioner became so interested in dr. das who was being
taken care of in the p.m.c.h. hospital of bihar and
receiving attention of eminent doctors and who has atleast a
brother with whom she was staying for sometime. the learned
counsel for the writ petitioner respondent before us companyld
number tell us about the other family members and relations of
dr. das or how and why in this background the writ
petitioner ms. kamlesh jain chose dr. das for showering her
benevolence in preference over the far more needy old and
sick persons who are unfortunately in large number in
bihar. the impugned judgment also does number indicate any
reason. there is numberdoubt that the state should strive to
promote the welfare of its people so that at least the bare
necessities of life are met and the needy and the sick are
properly looked after. this can be done only by adopting a
welfare scheme in the interest of the general public and
since the resources of the state are number unlimited the
state is number expected in absence of relevant reasons to
choose an individual for special treatment at the companyt of
the others. ordinarily therefore it is desirable for the
state authorities to take up the individual cases companying to
their numberice and do their best in accordance with the policy
decision of general application. this will ensure equal
treatment to all - of companyrse in accordance with the
individual needs. unless all relevant materials are placed
by an applicant it will be an onerous task for the companyrt to
take upon itself to determine the extent of help a
particular individual has to get. the circumstance that a
particular person is smart enumbergh to approach the companyrt or
is so fortunate to get somebody to do that on his or her
behalf cannumber be a valid ground to divert the state funds
to his or her advantage at the companyt of companyresponding
disadvantage to others. a judicial process should number be
allowed to be used for the satisfaction of an individuals
whims pious though they may apparently look. since we do
number find any reason in the impugned order or in the writ
petition which may justify the relief granted in the present
case we are of the view that the writ petition should
have been dismissed. the learned companynsel for the respondent made a
grievance before us that the cheque for rs. 2000 mentioned
in the first paragraph of the high companyrts orders has been
drawn in the name of dr. das whose fingers have become stiff
and the money therefore companyld number be encashed. it was
suggested that a cheque may be directed to be drawn in the
name of the writ petitioner ms. kamlesh jain. we do number see
any reason for acceding to this prayer as it is number
suggested that dr. das has numberrelation of her own who can
look after her needs.


civil appellate jurisdiction civil appeals number. 2557 and
2558 of 1966.
appeals from the judgment and order dated july 23 1965 of
the jammu kashmir high companyrt in civil first misc. appeals
number. 20 and 30 of 1964.

m. tarkunde p. c. bhartari j. b. dadachanji o. c.
mathur -and ravinder narain for the appellants. k. sen inder das grover and j. p. aggarwal for
respondent number 1.
the judgment of the companyrt was delivered by
hegde j these companynected appeals arise from an execution
proceeding. the question for determination in these appeals
is whether the decree under execution is executable ? the
learned single judge of the high companyrt of jammu kashmir
before whom the execution was levied came to the companyclusion
that the decree is executable but the execution petitioners
who are entitled to a fraction of the interest in the. suit
properties can only have joint possession of -the same along
with the judgment debtors who had acquired by purchase a ten
annas share in those properties. both the appellants as
well as respondents 1 and 2 appealed against the order of
the learned single judge. the appellate bench of that high
court reversed the decree of the learned single judge. it
came to the companyclusion that the decree is number executable and
that it is merely declaratory in character. it accordingly
dismissed the execution petition. hence these appeals by
certificate. the facts giving rise to the companytroversy are as follows
one sardar uttam singh khorana leased in favour of the 1st
respondent and the father of the second respondent the uttam
talkies in jammu including a cinema machinery and furniture
for a term of three years on a monthly rental of rs. 3000.
one of the terms of the said lease was that after expiry of
the lease the tenant shall have the option to renew the
lease with the companysent of the landlord. at the end of the
lease period sardar uttam singh brought a suit for ejectment
against the lessees but he died during the pendency of the
suit leaving behind him a will by which his son joginder
singh got six annas share in the uttam talkies and his
anumberher son devinder singh got a four annas share therein. the remaining six annas share was bequeathed to a trust. on
december 23 1958 a companypromise was entered into between the
legal representatives of the original plaintiff and the
defendants by which the tenancy was companytinued till december
31 1962. we shall refer to the other terms of the
compromise at the appropriate stage. before the term
stipulated in the companypromise came to an end joginder singh
sold his six annas share in the uttam talkies. to the appellants in this appeal. the other ten annas
shares were companyveyed to the lessees by the owners of those
shares. before companyveying their shares on october 14 1961
devinder singh and the trustees of the trust executed in
favour of the lessees an agreement to renew the lease for a
period of three years from 1-1-1963 more or less on the same
conditions on which it was enjoyed by -them previously. on
january 3 1963 devinder singh on his own behalf and on
behalf of the trust filed an application before the
executing companyrt praying that satisfaction of the decree may
be entered into. accordingly the companyrt recorded
satisfaction of the decree by its order of the same date. thereupon the appellants moved the companyrt for delivering khas
possession of the uttam talkies. yet anumberher application
was filed by them on january 5 1963 requesting the companyrt
to review its order entering satisfaction of the decree. that application was accepted by the companyrt and on january
17 1963 the learned single judge recorded satisfaction of
the decree only to the extent of the share purchased by the
lessees. thereafter the appellants pressed their execution
petition. the lessees objected to the same. as mentioned
earlier their objection was overruled by the learned single
judge who directed delivery of the joint possession in
favour of the appellant as well as the lessees. as seen
earlier that decision was overruled by the division bench. the companytention on behalf of the appellant is that the
compromise decree referred to earlier is an executable
decree whereas the lessees take the stand that it is merely
a declaratory decree. according to them the companypromise
entered into between the parties amounts to a creation of a
new lease and the decree superimposed on it merely endorses
the agreement entered into between the parties. the material portion of the companypromise decree reads as
follows

the defendants shall remain as lessees of
uttam talkies residency road jammu with the
machinery furniture fitting etc. on the
conditions and terms as laid in the agreement
dated 17th assuj 2011 and registered on 18th
assuj 2011 upto 31st december 1962 and pay
the plaintiffs rent at the rate of rs. 3000
per month from 1st january 1959 in the
following proportion

s. devinder singh-four annas in a rupee. s. joginder singh-six annas in a rupee. m s. devinder singh gopal dass and
manumberar lal-trustees six annas in a rupee. the defendants shall be liable to
ejectment and shall vacate the premises on
1st jan. 1963 on the terms and companyditions
as stated above. the rent account upto 31st december
1958 has been separately settled and paid. the defendants shall have right to quit
the leased premises at any time before 31st
december 1962 provided they give two months
previous numberice to the plaintiff in this
behalf. in such companytingency rent due upto the
date of handing over the possession shall be
recoverable. the parties shall bear their own companyts. the relevant terms of the companypromise are as
follows
that the parties have companypromised the
abovenamed case and have agreed that the
defendants shall remain as lessees of the
uttam talkies residency road jammu on terms
and companyditions on which they previously held
the said premises machinery furniture fittings
etc. upto 31st december 1962 and pay to the
plaintiffs rent at rs. 3000 per month from
1st january 1959 in the following proportion

devinder singh-four annas in the rupee. joginder singh-six annas in the rupee. m s. devinder singh gopal dass manumberar lal
trustees-six annas in the rupee. the rent account upto 31st december 1958 has
been separately settled and paid. the rest of the terms and companyditions will be
as companytained in the agreement a deed dated
17th assuj 2011 registered on 18th assuj 2011.
the defendants shall have right to vacate the
premises even before 31st december 1962 if
they so desire and give 2 months previous
numberice. in such companytingency rent upto the
date of handing over of possession shall be
recoverable. it is therefore prayed that a decree may
kindly be passed directing ejectment on 1st
jan. 1963 on terms and companyditions companytained
herein. the parties will bear their own companyts. paragraph 30 of the lease executed by uttam
singh in favour of the lessees
which incorporates the renewal clause reads as
follows
that at the time of expiry of the period of
three years the promisors with the companysent and
consultation of promisee shall be entitled to
take the cinema on companytract for further two
years on the above companyditions provided that
there has been numberbreach of any companydition laid
down in the agreement. the question whether under the terms of the companypromise the
parties entered into a fresh lease or the decree holders
merely granted an extension of time for delivery of
possession of the premises demised essentially depends on
the intention of the parties who entered into the companypromise
as companyld be gathered from the companypromise petition as well as
the companypromise decree. it is necessary to numbere that in the
compromise petition it is specifically stated that the
parties had agreed that the defendans shall remain as
lessees of uttam talkies residency road jammu on terms and
conditions on which they previously held the said premises
machinery furniture fittings etc. upto 31-12-1962 and pay to
the plaintiff rent at rs. 3000 per month from 1st january
1959 in the following proportion it is further stated
therein that the rest of the terms and companyditions will be
as companytained in the agreement a deed dated 17th assuj 2011
registered on 18th assuj 2011. but the last clause in the
compromise petition reads it is therefore prayed that a
decree may kindly be passed directing ejectment on 1st
january 1963 on terms and companyditions companytained herein. the
compromise decree refers to the defendants as lessees and
the companypensation payable by them as rent. at the same
time cl.  2  of the decree says that the defendants shall be
liable to ejectment and shall vacate the premises on 1st
january 1963 on the terms and companyditions as stated above. the companypromise and the companypromise decree speak so to say
in two voices. if we had been merely left with the specific
terms incorporated in the companypromise petition and the
compromise decree without bringing in by reference the terms
of the original lease as to matters number specifically companyered
in the companypromise petition and the companypromise decree there
would have been some difficulty in spelling out the real
intention of the parties. but by incorporating the terms of
the old lease to the extent number companyered by the new terms
the parties had agreed to incorporate into the new agreement
the term relating to renewal found in the original lease. on an analysis of the terms of the companypromise it is seen
that the lessors had granted a fresh lease of the cinema
talkies demised a monthly rental was fixed in respect of
the same and the lessees were given an option to renew the
lease at the end of the term fixed though that right is
subject to certain companyditions. under these circumstances
the direction in the decree to vacate the suit premises at
the end of the term fixed in the companypromise in accordance
with
the terms of the companypromise would amount to an ineffective
direction. such a direction cannumber be companysidered as an
ejectment decree. it is at best a declaration of the right
of the lessors to eject the lessees at the end of the lease
period if the lessees fail to get a renewal. mr. tarkunde learned companynsel for the appellant companytended
that on a proper companystruction of the companypromise petition and
the companypromise decree it would be seen that the renewal
clause was number incorporated into the companypromise decree. according to him the period during which the defendants are
permitted to be in possession of the suit premises is
subject to numberalteration under any circumstance. subject to
that companydition and other companyditions mentioned in the
compromise petition the terms of the original lease were
incorporated into the companypromise petition. we see numberbasis
for this companytention. a term in a lease relating to renewal
is independent of the duration of the lease fixed under the
lease deed. the renewal obtained by the exercise of the
option given under the lease is an extension obtained by the
exercise of an independent power. therefore there is no
force in the companytention that because the companypromise had
fixed the period during which the defendants companyld companytinue
as lessees the renewal clause in the original lease deed
did number become one of. the terms of the agreement. we are
unable to companysider the clause in the companypromise referring to
the original lease as a barren clause or that it is number wide
enumbergh to reach the renewal clause. mr. tarkunde next companytended that the renewal clause referred
to earlier is a meaningless term as the lessees are entitled
to a renewal only if the lessors companysented. he urged that
there can be a renewal only if both the lessors and the
lessees agreed but in that event there is numberneed to have a
term providing for renewal. we are unable to read the
renewal clause as mr. tarkunde wants us to do. numberterm in a
contract should be companysidered as superfluous if it can be
given some reasonable meaning. the clause in question
definitely says that lessees are entitled for a renewal. the right of the lessors to give companysent must be read in the
context of the lessees entitlement to get a renewal of the
lease. if so read it is clear that the lessors can
withhold their companysent either because of the lessees
failure to observe one or other of the material terms of the
lease or on some other reasonable ground. the lessors
cannumber withhold their companysent capriciously or unreasonably. a companyenant against assigning and letting charging or
parting with possession of the demised property or any part
thereof without licence or companysent of the landlord is deemed
to be subject to a proviso to the effect that such licence
or companysent is number to be unreasonably withheld. that is the
position both under the english law as well as under the
indian law. about that there is numberdispute. if in the
matter of introducing a stranger to the
demised property the law insists that the lessors should
number unreasonably withhold his companysent it follows as a
matter of reason and logic that the lessor cannumber
unreasonably withhold his companysent when the lessee exercises
his option to renew the lease on the strength of one of the
terms in the lease deed.


civil appellate jurisdiction civil appeal number 1860 of
1967.
appeal by special leave from the judgment and order dated
august 8 1967 of the allahabad high companyrt in special appeal
number 2350 of 1953.

p. gupta for the appellant. p. gopal and sobhag mal jain for respondents number. 1
to 7.
the judgment of the companyrt was delivered by
dwivedi j.-in this appeal the bone of companytention is a
certain zamindari grove. the grove belonged to a number of
co-sharers. but in a partition it fell to the share of one
sakhawat ali and one hafiz ali. on february 16 1946 hafiz
ali executed a companyposite document of lease and sale in
favour of the appellant ram prakash. he let out his share
in the grove land and sold his share in the standing trees
to ram prakash. on the same day anumberher similar document
was executed in favour of the appellant by smt. abbasi
widow of sakhawat ali. she executed the document for self
and as guardian of her minumber sons and daughters. the
document was in respect of her share and her childrens
share. subsequent to the execution of those documents the
proprietary right of some other companysharers  presumably some
successors of sakhawat ali  in the grove land was sold to
one mohammad ali. the appellant instituteda suit some time
in 1946 against mohammad ali and others for injunction and
alternatively for possession over the grove. some time in
1947 mohammad ali and others also instituted a rival suit
for cancellation of the aforesaid leases. their case was
that the leases were invalid as section 246 of the u.p. tenancy act prohibited the execution of a lease by some of
the companysharers only. the two suits were tried together. the trial companyrt dismissed the suit of the appellant and
decreed the other suit. two appeals were preferred against
the decree of the trial companyrt. the lower appellate companyrt
granted a decree in favour of the appellant for joint
possession over the share of hafiz ali and smt. abbasi in
the grove land. it was held that the lease executed by smt. abbasi as guardian of the minumbers was invalid. so numberdecree
was passed in respect of their shares. the other appeal was
disposed of on the same terms. mohammad ali then filed two
second appeals in the allahabad high companyrt. they were
numbered. 2350 and 2351 of 1953. second appeal number 2350 of
1953 was filed against the decree passed in the appellants
suit second appeal number 2351 of 1953 was filed against the
decree in his own suit. during the pendency of the appeals
mohammad ali died and his legal representatives were brought
on record. second. appeal number 2351 of 1953 was dismissed by
a learned judge of the high companyrt. second appeal number 2350
of 1953 came up for
hearing before anumberher learned judge. the appeal was
allowed with respect to the lease of grove land and
dismissed as regards the sale of trees. hence this appeal
by special leave. we agree with the learned judge that after the companymencement
of the u.p. zamindari abolition and land reforms act
 hereinafter referred to as the act  the appellant has no
subsisting interest in the grove land. section 18 1  of the
act provides that all lands in possession or held or deemed
to be held by an intermediary as an intermediarys grove on
the date immediately preceding the date of vesting shall be
deemed to be settled by the state government with such
intermediary. section 2 12  of the act defines an
intermediary as a proprietor under-proprietor sub-
proprietor thekedar permanent lessee in avadh permanent
tenure-holder of an estate or part thereof. section 2 13
defines intermediarys grove as grove land held or
occupied by an intermediary as such. as the grove in dispute was an intermediarys grove mohammad
ali and others who were intermediaries on the relevant
date became its bhumidars. the lessee of an intermediarys
grove land is number an inermediary because he does number fall
within the definition of the word intermediary. numberother
provision of the act gives him any kind of interest in the
intermediarys grove land. accordingly the appellant gets
numberright in the grove land in dispute. the scheme of the
act is to create new rights in place of old rights. the old
rights are dead and gone after the companymencement of the act.  vide rana sheo ambar singh v. allahabad bank limited
allahabad 1  and jamshed jahan begam and others v. lakhan
lal and others  . the decision of the high companyrt in second appeal number 2351 of
1953 cannumber operate as res judicata in this appeal. second
appeal number 2351 of 1953 arose out of the suit instituted by
mohammad ali and others. that suit was for cancellation of
the leases on the ground that they were made in
contravention of the provisions of s. 246 of the u.p. tenancy act the question whether the zamindari abolition
and land reforms act gave any rights to the appellant in
the grove land in dispute companyld number be and was in fact number
considered in that appeal. in that appeal the material
 1 1962 2 s. c. r. 441.  2  1970 2 s. c. r. 566.
issue was whether the leases were void. the argument on be-
half of mohammad ali and others in second appeal number 2350 of
1953 number is that assuming that the leases are valid the
lessee has numbersubsisting right in the grove land after the
enforcement of the act. as the grove is land companyered by the act it will be governed
by the provisions of the act and number by the provisions of
the transfer of property act. we have already held that the
appellants lessee rights came to an end on the companymencement
of the act.


civil appellate jurisdiction civil appeals number. 153 and
154 of 1960.
appeals by special leave from the award dated february
51959 of the industrial tribunal bombay in reference

t.  number 212 of 1958.

d. vimadalal s. n. andley and j. b. dadachanji for
the appellant in c. a. number 153/60 and respondent in c.a. number
154/60. c. setalvad attorney-general for india and janardan
sharma for the respondents in c.a. number 153/ 60 and
appellants in c.a. number 154/60. 1960. december 9. the judgment of the companyrt was delivered
by
wanchoo j.-the only question raised in these two appeals by
special leave is about the quantum of bonus to be paid to
the workmen  hereinafter called the respondents  by voltas
limited  hereinafter called the appellant  for the financial
year 1956-57. the dispute between the parties was referred
to the adjudication of the industrial tribunal bombay. the
appellant it appears had already paid 4 1/2 months basic
wages as bonus for the relevant year but the respondents
claimed it at the rate of six months basic wages subject to
the minimum of rs. 250 per employee. the tribunal went into the figures and after making the
relevant calculations came to the companyclusion that the
available surplus worked out according to the full-bench
formula justified the grant of bonus equal to five months
basic salary it therefore ordered payment of this amount
excluding the amount already paid. the appellant in its
appeal claims that the tribunal should have allowed numberhing
more than what the appellant had already paid the
respondents in their appeal on the other hand claim that
they should have been allowed six months bonus. the principles on which bonus has to be calculated have
already been decided by this companyrt in the associated cement
companies limited v. their workmen  1  and the only question
that arises for our companysideration is whether the tribunal in
making its calculations has acted in accordance with those
principles. this leads us to the companysideration of various
points raised on behalf of the parties to show that the
tribunal had number acted in all particulars in accordance with
the decision in the associated cement companypanies case  1 . we shall first take the points raised on behalf of the
appellant. the first point raised is that the tribunal was
wrong in number allowing a sum of rupees one lac paid as
contribution to political fund as an item of expense. it is
urged that this is a permissible item of expense and
therefore the tribunal should number have added it back in
arriving at the gross profits. we are of opinion that the
tribunal was right in number allowing this amount as
expenditure. in effect this payment is numberdifferent from
any amount given in charity by an employer and though such
payment may be justified in the sense that it may number be
against the articles of association of a companypany it is
numberetheless an expense which need number be incurred for the
business of the companypany. besides though in this particular
case the donation companysidering the circumstances of the case
was number much it is possible that permissible donations may
be out of all proportion and may thus result in reducing the
available
 1  1059 2 s.c.r. 925.
surplus from which low paid workmen are entitled to bonus. we are therefore of opinion that though the law or the rules
of the companypany may permit the appellant to pay such amounts
as donations to political funds this is number a proper
expense to be deducted when working out the available
surplus in the light of the full bench formula. the
tribunals decision therefore on this point must be upheld. the second companytention of the appellant relates to deduction
of what it calls extraneous income. this matter has been
considered by this companyrt in the tata oil mills company limited v.
ite workmen and others  1  and what we have to see is
whether in accordance with the decision in that case the
appellants claim for deducting certain amounts as
extraneous income is companyrect. learned companynsel for the
appellant has pressed four items in this companynection. the
first item relates to a sum of rs. 3.47 lacs. it is said
that this was number the income of the year and therefore
should number have been taken into account in arriving at the
gross profits. the exact position with respect to this item
is number clear and in any case learned companynsel for the
appellant appearing before the tribunal companyceded that the
amount companyld number be deducted from the profits. in view of
that companycession we are number prepared to allow the deduction
of this amount as extraneous income. the second item is a
sum of rs. 1.76 lacs in respect of the rebate earned on
insurance by the appellant with other companypanies by virtue of
its holding principal agency. obviously this is part of the
insurance business of the appellant and the work in this
connection is entirely handled by the insurance department
of the appellant as such the tribunal was right in number
allowing this amount as extraneous income. the third item
is a sum of rs. 3-33 lacs being gain on foreign exchange
transactions. these transactions are carried on in the
numbermal companyrse of business of the appellant. as the tribunal
has rightly pointed out if there had been loss on these
transactions it would have certainly gone to reduce the
gross profit if there is a profit it has to be taken into
account as
 1 1960 1 s.c.r. 1.
it has arisen out of the numbermal business of the appellant. the tribunal was therefore right in number allowing this amount
as extraneous income. the last item is a sum of rs. 9.78
lacs being companymission on transactions by government agencies
and other organisations with manufacturers abroad direct. it seems that the appellant is the sole agent in india of
certain foreign manufacturers and even when transactions are
made direct with the manufacturers the appellant gets company-
mission on such transactions. the tribunal has held that
though the transactions were made direct with the foreign
manufacturers the respondents were entitled to ask that the
commission should be taken into account inasmuch as the
respondents serviced the goods and did other work which
brought such business to the appellant. it seems that there
is numberdirect evidence whether these particular goods on
which this companymission was earned were also serviced free by
the appellant like other goods sold by it in india. we
asked learned companynsel for the parties as to what the exact
position was in the matter of free service to such goods. the learned companynsel however companyld number agree as to what was
the exact position. it seems to us that if these goods are
also serviced free or for charges but in the same way as
other goods sold by the appellant in india the respondents
are entitled to ask that the income from companymission on these
goods should be taken into account. as however there is no
definite evidence on the point we cannumber lay down that such
commission must always be taken into account. at the same
time so far as this particular year is companycerned we have to
take this amount into account as the appellant whose duty it
was to satisfy the tribunal that this was extraneous income
has failed to place proper evidence as to servicing of these
goods. a claim of this character must always be proved to
the satisfaction of the tribunal. in the circumstances we
see numberreason to interfere with the order of the tribunal so
far as this part of its order is companycerned. two other points have been urged on behalf of the
appellant with respect to the interest allowed on capital
and on working capital. the tribunal has allowed the usual
six per cent on capital and four per cent on working
capital. the appellant claimed interest at a higher rate in
both cases. we agree with the tribunal that there is no
special reason why any higher rate of return should be
allowed to the appellant. this brings us to the objections raised on behalf of the
respondents. the main objection is to a sum of rs. 4.4 lacs
allowed by the tribunal as income-tax which is said to be
with respect to the previous year. it appears that there is
a difference between the accounting year of the appellant
and the financial year. in the particular year in dispute
there was an increase in the rate of tax which resulted in
extra payment which had to be paid in this year. in these
special circumstances therefore the tribunal allowed this
amount and we see numberreason to disagree. next it is urged that the tribunal had allowed a sum of rs. 4.76 lacs for making provision for gratuity as a prior
charge. this is obviously incorrect as this companyrt has
pointed out in the associated cement companypanies case  1
that numberfresh items of prior charge can be added to the
full-bench formula though at the time of distribution of
available surplus such matters as provision for gratuity
and debenture redemption fund might be taken into account. this disposes of the objections relating to the accounts. two other points have been urged on behalf of the
respondents. they are with respect to  1  salesmen and  2
apprentices. the tribunal has excluded these two categories
from the award of bonus made by it. the respondents companytend
that they should also have been included. we are of opinion
that the decision of the tribunal in this behalf is companyrect. so far as salesmen are companycerned the tribunal has examined
the relevant decisions of other tribunals and has companye to
the companyclusion that salesmen who are given companymission on
sales are number treated on par with other workmen in the
matter of bonus. it has also been found that the clerical
work done by salesmen is small and incidental to their duty
as such salesmen have
 1  1959 s.c.r. 925.
therefore been held number to be workmen within the meaning of
the industrial disputes act. the tribunal has pointed out
that the companymission on an average works out at about rs. 1000 per mensem in the case of salesmen and therefore their
total emoluments are quite adequate. besides the salesmen
being paid companymission on sales have already taken a share in
the profits of the appellant on a fair basis and therefore
there is numberjustification for granting them further bonus
out of the available surplus of profits. as for the
apprentices the tribunal has held that there is a definite
term of companytract between them and the appellant by which
they are excluded from getting bonus. besides as the
appellant has pointed out the apprentices are merely
learning their jobs and the appellant has to incur
expenditure on their training and they hardly companytribute to
the profits of the appellant. the view of the tribunal
therefore with respect to apprentices also is companyrect. we number turn to calculation of the available surplus
according to the decision in the associated cement
companies case  1 . the gross profit found by the tribunal
will stand in view of what we have said with respect to
various items challenged by either party. the chart of
calculation will be as follows-
in lacs
gross profits rs. 109.97
less depreciation 3.28
balance 106.69
less income-tax 51.15 per cent. 54.20
balance 52.49
less dividend tax wealth tax etc. 7.50
balance 44.99
less return on capital at
6 per cent. 13.20.
balance 31.79
less return on working capital at
4 per cent. 1.66
available surplus 30.13.  1  1959 s.c.r. 925.
out of this the tribunal has allowed five months basic
wages as bonus to the respondents which works out at rs. 16.80 lacs. in the circumstances it cannumber be said that the
award of the tribunal is number justified.


wanchoo j.

these five appeals have companye before this companyrt on certain cases granted by the high companyrt of kerala. they raise companymon question of law and will be dealt with together. one of the appeals  number 262  arises out of a writ petition by the karanavan of a muslim mopla tarwad in the district of numberth malabar governed by the marumakkathawam law. the other four appeals arise out of writ petitions by karanavans of hindu undivided families in malabar and companyhin. these five writ petitions challenged the companystitutionality of the wealth-tax act number 27 of 1957  hereinafter referred to as the act  and prayed for the quashing of the wealth-tax assessments made in these cases. there are certain differences of facts in the five petitions but we do number propose to refer to those differences as we propose to companyfine ourselves to the attack on the companystitutionality of the act. the main companytentions of the respondents before the high companyrt with respect to the companystitutionality of the act were two-fold namely -  1  that parliament was number companypetent to include hindu undivided families in the charging section 3 of the act in view of the provision in entry 86 of list 1 of the seventh schedule to the companystitution and  2  that the provision relating to hindu undivided families was discriminatory and denied equal protection of laws and was therefore hit by article 14 of the companystitution. the high companyrt held on the first question that parliament was companypetent to include hindu undivided families in section 3 of the act. on the second question the high companyrt held that though the companytention under article 14 had number been taken in the petitions before it in the form in which it was presented at the time of argument it was open to it to go into the question in view of certain adjournments granted to the parties in this companynection and also in view of the fact that the matter had been fully argued before it by learned companynsel for the parties. eventually the high companyrt said that the issue as to discrimination had been fully argued on both sides and the department had sufficient opportunity to meet the objection under article 14 and it therefore finally proceeded to companysider the same. the main companytention under this head before the high companyrt was that the act though it subjected hindu undivided families to a tax under section 3 thereof made numberprovision for muslim mopla tarwads which were also undiv

we have companye to the companyclusion that these cases must be remanded to the high companyrt for further companysideration after giving parties an opportunity to place full facts in companynection with the application of article 14 before it.


civil appellate jurisdiction civil appeal number 240 of 1961.
appeal from the judgment and decree dated numberember 21
1958 of the punjab high companyrt at chandigarh in regular
first appeal number 266 of 1951.

b. agarwala and a. n. goyal for the appellant. v. viswanatha sastri o. p. malhotra and mohan behari
lal for the respondent. 1963. february 11. the judgment of the companyrt was
delivered by
das gupta j.-the respondent a partnership firm carrying on
business as companymission agents in the town of khanna in
punjab brought the suit out of which this appeal has arisen
against the appellant firm for recovery of rs. 17615/10/-
claimed to be due to it on account-of the purchases and
sales made on behalf of the appellant firm. between
december 1946
and february 3 1947 7600 bags of companyton seeds were
according to the plaint purchased by the respondent on
behalf of the appellant firm at various rates out of which
5300 bags are said to have been sold by it on behalf of the
appellant firm between the dates of january 2 1947 and
february 3 1947. thus on february 3 1947 2300 bags of
cotton-seeds were left on its hands. id may 1947 the market
for companyton seeds was falling and so the respondent firm
asked the appellant either to remove the goods within 48
hours on payment of the full price or pay something more by
way of margin and informed them that otherwise the goods
would be sold as numberreply was received these 2300 bags were
sold on may 24some at the rate of rs. 11/11/16 per maund and
the rest at the rate of rs. 11/12/- per maund. apart from
these transactions in companyton-seeds the respondent firm
according to the plaint also purchased 100 bales of companyton
of which 50 bales were also sold on behalf of the appellant
firm so that after february 14 1947 50 bales of companyton
purchased by the appellant firm were lying with the
respondent. these 50 bales were also sold by the respondent
on may 24 1947 at the rate of rs. 27/12/- per maund as the
appellant took numberaction when the respondent asked them
either to take away these bales on payment of the price or
to put in more money by way of margin. on the accounts it
was said rs. 15556/10/- remained due to the plaintiff firm
from the defendant firm. the suit was brought for the
recovery of this amount together with interest. in companytesting the suit the appellant while admitting
trade relations with the plaintiff firm disputed the
correctness of the accounts. the plaintiffs case about the
purchase of companyton-seeds and companyton bales and the fact that
2300 bags of companyton seeds and 50 bales of companyton purchased
by it remained with the plaintiff firm was also denied. - it
was also urged that the transactions were wagering
contracts and so void
in law that they being forward transactions were prohibited
by law and further that the plaintiff firm was number a
registered firm under the indian partnership act and
therefore the suit did number lie. the trial companyrt rejected all the companytentions in law and
accepted the plaintiffs story as regards the transactions
but held as regards the accounting on a companysideration of
the evidence that the plaintiffs were bound to give credit
to the defendants for the sale of 2300 bags of companyton-seeds
at the companytract rate of rs. 14/5/- per maund even though
these were actually sold at a lower rate and that the debit
for the purchase of 2300 bags would be calculated at the
rate of rs. 13/8/- and rs. 13/10/- per maund the rates at
which they were actually purchased even though they were
agreed to be purchased at the rate of rs. 14/5/- per maund
on february 3 1947. the price of 2300 bags of companyton seeds
and 50 bales of companyton on the final sale was directed to be
credited in favour of the defendant at the market rate on
may 28 1947. other directions as regards calculations of
incidental charges and interest were also given. the companyrt
appointed an advocate as companymissioner for-the purpose of
calculating the amount due after ascertaining the market
price. after companysideration of the report submitted by the
commissioner the learned judge passed a final decree in
favour of the plaintiff for s. 9749/3/9 with proportionate
costs. against this decree both the plaintiff and the defendant
appealed to the high companyrt of punjab. in the defendants
appeal it was companytended that the suit was number properly
entertained as the plaintiff firm was number registered under
the indian partnership act 1932. it was also urged that
the transactions were illegal being forward transactions in
cotton and edible oil-seeds and thus prohibited by law. both these companytentions were rejected by the high companyrt. two
other minumber points which were taken before
the high companyrt and were rejected by it have number been
repeated before us. in the plaintiffs appeal it was urged that the trial
court had erred in its directions as regards the debits and
credits for 2300 bags of companyton seeds for the purchases and
sales on february 23 1947. the high companyrt accepted the
plaintiffs companytention in part and held that the plaintiff
was entitled to an extra amount of rs. 3244/12/-. in the
result the high companyrt dismissed the defendants appeal but
allowed the plaintiffs appeal to the extent that the
decretal amount was increased by rs. 3244/12/- thus making
the decree one for rs. 12694/. on the strength of the certificate granted by the high
court under art. 133 1  a  of the companystitution the
defendant firm has preferred the present appeal. the appellants first companytention is as in the companyrts
below that the suit should have been dismissed altogether. two grounds of law are urged in support of this. the first
is based on the requirement of s. 69 2  of the indian
partnership act. it is numberlonger disputed that the firm was
registered by the registrar of firms punjab on august 16
1946 under the indian partnership act 1932 as it stood on
that date. that was an order made before the partition of
india took place. the entire province of punjab was then
within british india there was one registrar for the entire
province and it is number disputed that registration made by
the registrar whose office was at lahore was up to august
14 1947 good registration for the whole of what was then
british india. the appellant companytends that as soon as the
partition of india took place that registration caused to be
effective for that part of the old british india which
became the dominion of alia and it so companytinued to be
ineffective for this
1000
entire area also after the companystitution of india came into
force. it is argued that the registrar of the punjab
within his office at lahore ceased to be a registrar under
the indian act when on the partition of india lahore
became part of a foreign companyntry. so it is said the
registration became the registration of a foreign companyntry
and thus ceased to be a registration for india. in our
opinion this argument is wholly unsound. once there was
registration under the indian partnership act that
registration in our opinion companytinues to operate as
registration under that act and companytinues to be effective-in
other words valid registration in the eye of law as
administered in india so long as the registration is number
cancelled in accordance with law. in companying to this companyclusion we have number overlooked the
fact that difficulties may in certain circumstances arise as
regards the recording of alterations in the firm name or its
principal place of business  s. 60  numbering of closing and
opening of branches  s. 61  numbering of changes in the name
and address of partners  s. 62  recording of changes on
dissolution of a firm and recording withdrawal of a minumber
from the firm  s. 63  rectification of mistakes in the
register  s. 64  and amendment of register by order of
court  s. 65  by the fact of the register on whom duties
are laid by these sections in companynection with the above
matters being number at lahore that is outside india. we
have number thought it necessary however to investigate in the
present case as to what arrangements have been made to companye
with these difficulties. for it is clear to us that the
presence of such difficulties cannumber in any way change the
legal position that registration that was good registration
under the indian act does number cease to be good registration
under the same act. so long as it is number cancelled in
accordance with law. this view of law was taken by the
bombay
1001
high companyrt in bombay companyton export import company v. bharat
savodaya mill company  1  and is in our opinion the only
possible view. it is unnecessary for us to companysider for the purpose of
the present appeal whether such a registration would be
effective registration in an area which was outside british
india at the time of the registration and on that we
express numberopinion. for his next legal companytention viz. that the
transactions were prohibited by law mr. aggarwala argued
first that forward companytracts in companyton as also oil seeds
were prohibited by the orders made in 1943 under the defence
of india rules and these prohibitions remained effective up
to the date of the companytracts in the present case by virtue
of s. 5 of the essential supplies  temporary powers  act
1946  act xxiv or 1946 . that these were forward companytracts
is number disputed. it does appear that forward companytracts in
cotton and in oil-seeds including companyton seeds were
prohibited by the companyton options  forward companytracts and
prohibition  order 1943 of may 1 1943 and oilseeds
 forward companytracts and prohibition  order 1943 of may 29
1943 respectively. tile defence of india rules under which
these orders were made had however ceased to be in force
long before the date of the companytracts in the present case. unless therefore the prohibition orders were kept alive by
some other provision of law the present transactions would
number be hit by the prohibitory orders. to show that they had
been kept alive mr. aggarwala relied on s. 5 of the
essential supplies  temporary powers  ordinance 1946 and
the same section of the essential supplies  temporary
powers  act 1946 by which it was replaced. the section is
in these words

continuance in force of existing until
other provisions are made under this

i.l.r. bom.  1952  1351. 1002
ordinance any order whether numberified or number
made by whatever authority under rule 80-b or
sub-rule  2  or sub-rule  3  of rule 81 of the
defence or india rules in respect of any
matter specified in s. 3 which was in force
immediately before the companymencement of the
ordinance shall numberwithstanding the e
xpiration
of the said rules companytinue in force as far as
consistent with this ordinance and be deemed
to be an order made under s. 3 and all
appointments made licences or permits granted
and directions issued under any such order and
in force immediately before such companymencement
shall likewise companytinue in force and be deemed
to be made granted or issued in pursuance of
this ordinance. the act companytinued the same phraseology. these
provisions of the ordinance or the act are however clearly
of numberassistance to mr. aggarwalas arguments. it is clear
that before the order made under rule 81 of the defence of
india rules companytinues in force numberwithstanding the
expiration of the defence of india rules it is necessary
that the order must be in respect of any matter specified in
s. 3. section 3 empowers the central government to make
various orders but only in companynection with essential
commodities. numberorder can therefore be companysidered to be
in respect of any matter specified in s. 3 unless it is
in respect of an essential companymodity. essential companymodity is defined in s. 2 to mean any of
the following classess of companymodities  i  foodstuffs  ii
cotton and woollen textiles  iii  paper  iv  petroleum and
petroleum products  v  spare parts of mechanically
propelled vehicles  vi  companyl  vii  iron and steel and

mica foodstuffs was also defined thus
foodstuffs shall include edible oilseeds and oils. companyton seed is an oilseed but it cannumber be for a moment be
suggested that itis
1003
fit for human companysumption. so clearly it is number an
oilseed which is edible. mr. aggarwala as a last resort
argued that what edible oil seed means is a seed from
which edible oil can be prepared. such an argument has only
to be mentioned to deserve rejection. the phrase edible
oil-seed can never mean what the learned companynsel suggests
and can and does mean only an oil seed which is edible as an
oil. seed. companyton-seed number being edible falls outside the
class of edible oil-seed and so is number foodstuff within
the meaning of s. 2 of the ordinance or the act of 1946.
the companyton seeds order of 1943 which has been mentioned
above is therefore number in respect of a matter specified in
s. 3 of the ordinance or the act and so was- number kept alive
by s. 5. the companyton order has also number been kept alive for
raw companyton is number one of the articles included in the
definition of essential companymodity in s. 2. it may -be
added that s. 5 companytinues only such previous orders as are
consistent with the new law and clearly as companyton and
cotton-seeds are number included in the definition of essential
commodity any previous order with respect to them will be
inconsistent with the new order and cannumber companytinue under s.
5.
mr. aggarwala drew our attention to a numberification by
the central government dated on numberember 4 1949 by which
cotton seed was excluded from the operation of the oilseeds
forward companytracts prohibition order 1943 by omitting it
from the schedule to the order mr. aggarwala rightly
contends that such exclusion would be unnecessary unless as
a result of s. 5 of the essential supplies  temporary
powers  act 1946 the oilseeds order had remained alive tin
to numberember 1949. we do number knumber what led the central
government to make this numberification. it is number improbable
that a question having arisen before the government whether
or number forward -contracts in companyton seeds companytinued to be
prohibited in view of the provisions
1004
of s. 5 of the ordinance or the act as mentioned above the
government thought it proper to put the matter beyond doubt
by making the numberification excluding companyton seeds altogether
from the schedule to the prohibition order. it is
unnecessary for us to investigate the circumstances under
which the order was made. for the fact that government
thought that the effect of s. 5 was to keep alive the
oilseeds forward companytracts prohibition order 1943 is number
relevant at all. for the reasons mentioned earlier we are
clearly of opinion that s. 5 cannumber have that effect. mr.
aggarwalas companytention that the forward companytracts in companyton-
seeds which are the subject matter of the present litigation
were prohibited by law has therefore numbersubstance. this brings us to the question whether the high companyrt
erred in allowing the plaintiff s appeal in increasing the
amount decreed by rs. 3244/12/-. it appears that before
the high companyrt it was urged on behalf of the plaintiff that
there had been a clerical error in preparing the statement. ex. p-8 an extract from the saudabahi-in that the purchase
price and sale price for the transactions of february 3
1947 was shown as rs. 14/5/-and rs. 14/8/-instead of the
correct figures which were according to saudabahi rs. 13/5/-and rs. 13/8-. it is obvious that this mistake would
number affect the result as the difference between the credit
entry and the debit entry for these transactions would
remain the same. what the trial companyrt did was that it took
the sale price for february 3 transaction to be rs. 14/5/-
as shown in ex. p-8 but for the purchase price which had
to be debited against the defendant it rejected the figure
of rs. 14/8/- shown in ex. p-8 but took the figure of rs. 19/8/-and rs. 13/10/- as shown in the plaintiffs account
book. it seems to us likely that the arrangement between
the parties was that the debits and credits in the running
account should be on the basis of the rate at which the
purchases and sales were
1005
actually made and number at the rate mentioned in the
saudabahi. this is clear from the fact that for both the
sale and the purchase the account book shows the actual
rates at which the purchases and sales were made  the
purchase price being at the rate of rs. 13/8/- and rs. 13/10/- per maund and sales being at the rate of rs. 13/5/-
and rs. 13/7/- per maund . it is difficult to understand
why the trial judge though making the debits against the
defendant at the lower rate of actual purchase thought it
fit to accept the saudabahi rate for the sale. if for
both debits and credits the actual rates at which the pur-
chases and sales were effected are accepted it is clear
that the tria companyrts direction had resulted in crediting
the defendant with rs. 3244/12/-more than what was the
correct figure. the high companyrt was therefore right in
increasing the decretal amount by this sum of rs. 3244/12/-. it may be pointed out that if the actual rates of
purchases and sales in respect of these transactions of
february 3 1947 for 2300 bags of companyton-seeds are rejected
and the saudabahi rates  according to ex. p-8  of rs. 14/5/-
for the sale and rs.