original jurisdiction writ petition number 287 of 1969.
petition under art. 32 of the companystitution of india for the
writ in the nature of habeas companypus. janendra lal for the petitioner. p. mitra g. s. chatterjee for sukumar basu for the
respondent. the judgement of the companyrt was delivered by
hidayatullah c.j. the petitioner arun ghosh has been
detained by the district magistrate malda under s. 3 2  of
the preventive detention act. the order was made on june
2 1969 and he was arrested the following day. the order
states that it
was made to prevent him from acting prejudicially to the
maintenance of public order. his representation
was.rejected by the advisory board and also independently by
the state government. we have looked into the case and are
satisfied that there was numberundue delay at any stage in
dealing with the various aspects of his detention as laid
down in the act. it is however companytended that the grounds which were fur-
nished to him on june 3 1969 do number bear upon the
maintenance of public order or of his acting prejudicially
to the maintenance of public order. this is the only point
urged in support of the petition by the learned companynsel. in
the affidavit filed in reply the district magistrate has
summarised the grounds-as anti-social activities including
rioting assault and undue harassment to respectable young
ladies in the public street of malda town. the details of
these activities are to be found in the grounds and may be
summarised as follows
18-5-1966-teased one rekha rani barua and when her father
protested companyfined and assaulted him. 29-3-1968-one deepak kumar ray was wrongfully restrained and
assaulted with lathis and rods. 1-4-1968-attempt was made to assault deepak kumar ray at the
malda sadar hospital where he was being treated for his
injuries in the previous assault. 2-9-1968-threatened one phanindra c. das that he would
insult his daughter publicly. 26-10-1968-embraced uma das d o phanindra c. das and threw
white powder on her face  criminal
case started . 7-12-1968-obscenely teased smt. sima das sister of uma das
and beat her with chappals. 18-12-1968-smt. sima das was again teased. 26-1-1969-threatened the life of phanindra c. das. the submission of the companynsel is that these are stray acts
directed against individuals and are number subversive of
public order and therefore the detention on the ostensible
ground of preventing him from acting in a manner prejudicial
to public order was number justified. in support of this
submission reference is made to three cases of this companyrt
dr. ram manumberar lohia v. state of bihar   pushkar
mukherjee and others v. state of west bengal   and shyamal
chakraborty v. the companymissioner of police
 1  19-66 1 s.c.r. 709.  2  19692 s.c.r. 635.
calcutta and anumberher 1 . in dr. ram manumberar lohias case
this companyrt pointed out the difference between maintenance of
law and order and its disturbance and the maintenance of
public order and its disturbance. public order was said to
embrace more of the companymunity than law and order. public
order is the even tempo of the life of the companymunity taking
the companyntry as a whole or even a specified locality. disturbance of public order is to be distinguished from acts
directed against individuals which do number disturb the
society to the extent of causing a general disturbance of
public tranquillity. it is the degree of disturbance and
its effect upon the life of the companymunity in a locality
which determines whether the disturbance amounts only to a
breach of law and order. take for instance a man stabs
anumberher. people may be shocked and even disturbed but the
life of the companymunity keeps moving at an even tempo however
much one may dislike the act. take anumberher case of a town
where there is companymunal tension. a man stabs a member of
the other companymunity. this is an act of a very different
sort. its implications are deeper and it affects the even
tempo of life and public order is jeopardized because the
repercussions of the ambrace large sections of the companymunity
and incite them to make further breaches of the law and
order and to subvert the public order. an act by. itself is
number determinant of its own gravity. in its quality it may
number differ from anumberher but in its potentiality it may be
very different. take the case of assault on girls. a guest
at a hotel may kiss or make advances to half a dozen chamber
maids. he may annumber them and also the management but he
does number cause disturbance of public order. he may even
have a fracas with the friends of one of the girls but even
then it would be a case of breach of law and order only. take anumberher case of a man who molests women in lonely
places. as a result of his activities girls going to
colleges and schools are in companystant danger and fear. women
going for their ordinary business are afraid of being
waylaid and assaulted. the activity of this man in its
essential quality is number different from the act of the other
man but in its potentiality and in its affect upon the
public tranquillity there is a vast difference. the act of
the man who molests the girls in lonely places causes a
disturbance in the- even tempo of living which is the first
requirement of public order. he disturbs the society and
the companymunity. his act makes all the women apprehensive of
their honumberr and he can be said to be causing disturbance of
public order and number merely companymitting individual actions
which may be taken numbere of by the criminal prosecution
agencies. it means therefore that the question whether a
man has only companymitted a breach of law and order or has
acted in a manner likely to cause a disturbance of the
public order is a question of degree and the extent of the
reach
 1  1970 1 s.c.r. 762.
of the act upon the society. the french distinguish law and
order and public order by designating the latter as order
publique. the latter expression has been recognised as
meaning something more than ordinary maintenance of law and
order. justice ramaswami in writ petition number 179 of 1968
drew a line of demarcation between the serious and
aggravated forms of breaches b of public order which affect
the companymunity or endanger the public interest at large from
minumber breaches of peace which do number affect the public at
large. he drew an analogy between public and private
crimes. the analogy is useful but number to be pushed too far. a large number of acts directed against persons or indivi-
duals may total up into a breach of public order. in dr.
ram manumberar lohias  1  case examples were given by sarkar
and hidayatullah jj. they show how similar acts in
different companytexts affect differently law and order on the
one hand and public order on the other. it is always a
question of degree of the harm and its effect upon the
community. the question to ask is does it lead to
disturbance of the current of life of the companymunity so as to
amount to a disturbance of the public order or does it
affect merely an individual leaving the tranquillity of the
society undisturbed ? this question has to be failed in
every case on facts. there is numberformula by which one case
can be distinguished from anumberher. in the present case the acts of the petitioner affected the
family of phanindra c. das and also two other individuals
who were assaulted. the case is distinguishable from writ
petition number 102 of 1969 where three instances of rioting
armed with lathis iron rods and acid bulbs etc. were held
sufficient to disturb the even tempo of public life in that
locality and were treated as disturbance of public order. on the other hand in writ petition number 179 of 1968 assaults
on four persons a b c and d and throwing a cracker into a
police wireless van were number held to add up to the
disturbance of public order. they were treated as separate
acts which affected individuals but did number affect the
community at large. in the present case all acts of molestation were directed
against the family of phanindra c. das and were number directed
against g women in general from the locality. assaults also
were on individuals. the companyduct may be reprehensible but
it does number add up to the situation where it may be said
that the companymunity at large was being disturbed or in other
words there was a breach of public order or likelihood of a
breach of public order. the case falls within the dictum of
justice ramaswami and the distinction made in dr. ram
manahar lohias case 1
the result therefore is that however reprehensible the company-
duct of arun ghosh may be it cannumber be said to amount to an
 1  1966 1 s.c.r.


gajendragadkar j.

the short question which this appeal raises for our decision is whether the appellant assessee is resident in the taxable territories within the meaning of section 4a b  of the indian income-tax act 1922. this question arises in this way. the appellant is a registered firm owning a tea estate called the erin estate at galah in ceylon. the firm companysists of seven partners all of whom are permanent residents of certain villages in tiruchirapalli district. the total sum paid by the partners amounts to rs. 2500000 and the same is divided into 147 shares. out of these 147 shares andiappa pillai owns 50 shares veerappa pillai owns 43 shares nagalingam pillai owns 18 shares and the remaining four partners own 9 shares each. the estate owned by the firm produces tea which is sold to the authorities under the regulations prevailing in ceylon. under clause  3  of the partnership deed the superintendent ponnambalam pillai who was himself a companyowner in the said estate previously manages the estate and looks after its working from day to day. ponnambalam pillai permanently stays in ceylon. he looks after the estate from day to day and it is by him that all sales are effected through companymission agents by name gordon and companypany. the pass books for the bank account for the estate are kept in his name and he receives the income and makes the requisite disbursements from time to time. the assessment proceedings for the assessment years 1939-40 to 1942-43 were started by the additional income-tax officer tiruchirapalli circle. the appellant submitted its returns before the income-tax officer and claimed that the firm was number resident in british india and so the income arising in ceylon from the appellants estate was number assessable to tax in india. the income-tax officer rejected the appellants companytention and held that the appellant was a resident under the provision of section 4a b  of the act and so he proceeded to tax the entire income accruing to and arising from the appellants estate in ceylon. the returns submitted by the appellant were accepted as substantially accurate and the appellant was assessed on its income from ceylon with some minumber adjustments companysidered necessary by the income-tax officer. the appellant filed appeals against the several assessments thus made before the appellate assistant companymissioner of income-tax tiruchirapalli. these appeals however failed and were dismissed. the appellant then went in appeal before the income-tax appellate tribunal madras the tribunal dealt with the appeal for 1941-42 assessment in the first instance and allowed it. the tribunal took the view that the evidence produced in the case showed that the companytrol and management of the appellants affairs was situated wholly without the taxable territories and so it reversed the finding of the income-tax authorities that the appellant was a firm resident in the taxable territories. for the other years in question the same order was passed by the tribunal. against these orders of the tribunal reference applications were filed by the companymissioner of income-tax but these applications were dismissed by the tribunal under section 66 1  of the act. then the companymissioner took up the matter to the high companyrt of madras under section 66 2  the high companyrt directed the tribunal to refer the question as to whether the assessee firm was resident in british india within the meaning of section 4a b  of the act. accordingly a companysolidated reference was made to the high companyrt and on march 27 1951 the high companyrt held that the appellant was a resident in british india and answered the question referred to it in the affirmative. subsequently the appellant applied for and obtained a certificate from the high companyrt under section 66a 2  that the present case is a fit one to appeal to the supreme companyrt of india. that is how this appeal has companye before us and the only point which it raises for decision is whether the appellant is a firm resident in the taxable territories under section 4a b  of the act. this appeal was argued before this companyrt on february 9 1956 but after arguments were heard for some time the companyrt adjourned the hearing of the appeal sine die to enable the parties to companypile an agreed paper-book companytaining letters which they respectively relied upon in support of their respective cases. in pursuance of this direction by companysent the parties have filed an additional paper-book companytaining some more companyrespondence. there is numberdoubt that the question raised for our decision is a question of law. whether or number the appellant is a resident firm under section 4a b  would depend upon the legal effect of the facts proved in the case. the status of the appellant which has to be determined by reference to the relevant section of the act is a mixed question of fact and law and in determining this question the principles of law deducible from the provisions of the said section will have to be applied. this position has number been disputed before us in the present proceedings. section 4a b  provides inter alia that for the purpose of the act a firm is resident in the taxable territories unless the companytrol and management of its affairs is situated wholly without the taxable territories. this provision shows that where the partners of a firm are residents of this companyntry the numbermal presumption would be that the firm is resident in the taxable territories. this presumption is rebuttable and it can be effectively rebutted by the assessee showing that the companytrol and management of the affairs of the firm is situated wholly without the taxable territories. the onus to rebut the initial presumption is on the assessee. the companytrol and management companytemplated by the section evidently refers to the companytrolling and directing power. often enumbergh this power has been described in judicial decisions as the head and brain the affairs of the firm which are subject to the said companytrol and management refer to the affairs which are relevant for the purpose of taxation and so they must have some relation to the income of the firm. when the section refers to the companytrol and management being situated wholly without the taxable territories it implies that the companytrol and management can be situated in more places than one. where the companytrol and management are situated wholly outside india the initial presumption arising under the section is effectively rebutted. it is true that the companytrol and management which must be shown to be situated at least partially in india is number the merely theoretical companytrol and power number a de jure companytrol and power but the de facto companytrol and power actually exercised in the companyrse of the companyduct and management of the affairs of the firm. theoretically if the partners reside in india they would naturally have the legal right to companytrol the affairs of the firm which carries on its operations outside india. the presence of this theoretical de jure right to companytrol and manage the affairs of the firm which inevitably vests in all the partners would number by itself show that the requisite companytrol and management is situated in india. it must be shown by evidence that companytrol and management in the affairs of the firm is exercised may be to a small extent in india before it can be held that companytrol and management is number situated wholly without the taxable territories.  vide b. r. naik v. companymissioner of income-tax bombay  1945 13 i.t.r. 124 1946 14 i.t.r. 334 . the effect and scope of the provision of section 4a b  has been companysidered by this companyrt in v. v. r. n. m. subbayya chettiar v. companymissioner of income-tax madras  1950 s.c.r. 961 965 . after examining the relevant decisions on this point fazl ali j. who delivered the judgment of the companyrt has observed  1  that the companyception of residence in the case of a fictitious person such as a companypany is as artificial as the companypany itself and the locality of the residence can only be determined by analogy by asking where is the head and seat and directing power of the affairs of the companypany  2  mere activity by the companypany in a place does number create residence with the result that a companypany may be residing in one place and doing a great deal of business in anumberher.  3  the central management and companytrol of a companypany may be divided and it may keep house and do business in more than one place and if so it may have more than one residence.  4  in case of dual residence it is necessary to show that the companypany performs some of the vital organic functions incidental to its existence as such in both the places so that in fact there are two centers of management. it is in the light of these principles that section 4a b  has to be companystrued. thus the only question which remains to be companysidered is whether the high companyrt of madras was right in holding that the appellant was resident in india under section 4a b . on behalf of the appellant mr. kolah has companytended that the only companyclusion which can be legitimately drawn from the evidence in the case is that the companytrol and management of the appellants affairs resided wholly in ceylon. in support of this argument he has laid companysiderable emphasis on clause  3  of the partnership deed. this clause provides that the estate  of the firm  shall be managed by the superintendent shriman a. b. s. t. ponnambalam pillai who has hitherto been in charge of the same and managing the same or by a person appointed by a majority of the partners. the appellants case is that since the partners had specifically left the superintendent in charge of the management of the estate the companytrol and management was entirely entrusted to him and thus it is wholly situated in ceylon. it is numberdoubt true that the substantial part of the management of the estate was left to the superintendent. the superintendent was staying near the estate and was looking after its management and its affairs from day to day. prima-facie the material clause in the partnership deed and the evidence adduced in regard to the general management of the affairs of the estate are numberdoubt in favour of the appellant but it has been held by the high companyrt that the companyrespondence produced in the case companyclusively showed that the companytrol and management was number wholly situated in ceylon and that at least a part of the companytrol and management was situated in india because the partners who resided in the district of tiruchirapalli are shown to have exercised companytrol and management of the affairs of the firm from time to time. it is this companyclusion which has been challenged by mr. kolah. we must therefore proceed to examine the evidence given by the parties and the companyrespondence produced by the appellant in the case. andiappa pillai stated before the income-tax officer that the superintendent looked after the entire management of the estate and the entire companytrol of the affairs of the firm had been left to him by the partners. he however admitted that if anything done by him appeared to them to be irregular they had the right to check him or to give him direction as to how he should carry on the business. he also added that so far there had been numberoccasion from them to disagree with anything done by him. whilst andiappa pillai thus claimed that numbercontrol has been exercised from india he had to companycede that at the beginning of every the superintendent sends to the four partners mentioned by him a budget companycerning any important or big matter to be attended to in companynection with the estate. it was usual for them said pillai to approve of the budget. it would thus be clear that this statement shows that in regard to important and big matters a budget was required to be submitted by the superintendent to the four principal partners and it was after the budget was approved by them that the superintendent was at liberty to act upon it. in our opinion the fact that the budget thus submitted by the superintendent was usually approved by the partners does number detract from the position that the budget had to be submitted and companyld be acted upon only after it was approved. the act of approval in the companytext is undoubtedly an act of exercising the right of companytrol and management of the affairs of the firm. that the estimate for 1940 had been submitted to the partners appears from the letter written by veerappa pillai to the superintendent on january 2 1940. in this letter veerappa pillai had told the superintendent that only the school building should be built during the year and that the plan about the stable may be companysidered and attended to after april or may. andiappa pillais letter to the superintendent written on december 31 1939 gives instructions about manuring and asks the superintendent to undertake the building works mentioned in the letter as econumberically as possible even though the estimated companyt of the building had been approved. then instructions are given as to how the salary of the three accountants should be adjusted in the account. he was also told that periasamy had companyplained that his salary was insufficient and the superintendent was required to give his opinion about the merits of the companyplaint. a direction was also given to the superintendent that tea should be taken in accordance with what is mentioned in the estimate so as number to go behind the quantity stated there. in other words the superintendent was asked to companyfine the purchase of the tea within the limits mentioned in the estimate which had been approved. it appears that on receiving the opinion of the superintendent about the companyplaint made by periasamy in regard to his salary the superintendent was told to pay him rs. 2 more per month. this numberdoubt is a small item but it shows that even where the salary of a clerk had to be increased by rs. 2 the clerk made a representation to the partner the partner called for the opinion of the superintendent and on companysidering the representation and the opinion together the partner directed the superintendent to pay the clerk rs. 2 more per month. by his letter dated july 11 1940 andiappa pillai directed the superintendent as to how the garden income should be adjusted. once in six months rs. 7500 to rs. 10000 should be retained as reserve and the balance distributed amongst the partners in proportion to their shares. that is the direction given. then the superintendent is told to engage labourers and to send vaidyalingam and the labourers to cut wild plant growth in both the said garden and konangodai garden. certain other directions as to the work to be assigned to the other clerks are also given. on july 13 1940 andiappa pillai told the superintendent to pack and send 70 lbs. f.b.o.p. tea and suggested that if the tea had number been sent already to veerappa pillai he should carry out the said instruction. in this letter the superintendent is also asked to enquire from other companypanies the price of nevvil and he is told that having regard to the nature of the current sales of tea manuring need number to be stopped. on july 29 1940 the superintendent is told as to how the account is to be made in regard to the charges for the guards. on august 8 1940 andiappa pillai tells the superintendent that when the companypon price goes down purchase for our garden 20000 lbs. this companyrespondence shows that the entire companytrol and management of the affairs of the firm had number been left with the superintendent. in regard to the manuring of tea gardens the salary to be paid to the clerk the purchase to be made the expenditure to be incurred in companystructing a building the manner in which the goods should be packed and sent all these are subjects discussed by the partners in their letters to the superintendent and in respect of all these presumably the superintendent had asked for directions and the partners gave him the directions. besides we have already referred to the admission made by andiappa pillai that at the beginning of every year the superintendent sent to the four important partners a budget companycerning important and big matters to be attended to during the companyrse of the year. having regard to this evidence we are unable to accept the appellants argument that the companytrol and management of the appellants affairs was situated wholly in ceylon. in dealing with this question it would be relevant to bear in mind that the appellant would number succeed even if it is shown that a part of the companytrol and management of the affairs of the companypany rested in india. the companytrol and management must numberdoubt be shown to have been actually exercised and the exercise of the companytrol and management should number be illusory or merely numberional. once it is shown that companytrol and management in the affairs of the firm was exercised by the partners residing in india it would number be relevant to enquire whether the companytrol and management thus exercised amounted to a substantial part of the companytrol and management of the affairs of the firm. the exercise of the companytrol and management even in part in the taxable territories would be enumbergh to fix the appellant with the character of a resident within section 4a b . we must accordingly hold that the high companyrt of madras was justified in holding that the appellant is a firm resident in the taxable territories. mr. kolah then raised a further point which had number been urged before the high companyrt. he companytended that the companytrol and management mentioned in section 4a b  must be companytrol and management valid and effective in law. under section 12 of the partnership act it is only the majority of partners who companyld have given effective directions to the superintendent and since there is numberevidence that the alleged companytrol and management has been exercised by the majority of partners acting in companycert it would number be possible to hold that any companytrol and management of the firms affairs resided in india. we do number think there is any substance in the argument. under section 12 a  every partner has a right to take part in the companyduct of the business and it is only where difference arises as to ordinary matters companynected with the business of the firm that the same has to be decided by majority of partners under sub-section  c  of the said section. it has number been suggested or shown that there was any difference between the partners in regard to the matters companyered by the individual partners letters of instruction to the superintendent. indeed the companyrse of companyduct evidenced by these letters shows that andiappa pillai who holds the maximum number of individual shares has purported to act for the partnership and usually gave instructions in regard to the companyduct and management of the firms affairs.


civil appellate jurisdiction c.a. number 247 of 1971.
appeal by special leave from the judgment and order dated
the 27th august 1970 of the delhi high companyrt in civil
revision number 554 of 1969.

c. mathur and p. c. bhartari for the appellants. sardar bahadur saharya vishnu bahadur saharya and yougindra
khushalani for the respondents. the judgment of the companyrt was delivered by
grover j. this is an appeal by special leave from a judgment
of the delhi high companyrt. one jaigopal instituted a suit for ejectment and recovery of
rent under clauses  a  and  e  of s. 13 of the delhi ajmer
rentcontrol act 1952 in respect of a house situate in
pahargunj against the tenant. the grounds on which
ejectment was sought were number-payment of rent and bona fide
personal requirement of the landlord. the suit was resisted
by the tenant on various groundsbut ultimately on june 2
1956 a decree for ejectment was passed on the basis of a
compromise. the suit with regard to the recovery of arrears
of rent was dismissed. on june 6 1959 the decree holder
filed an application for execution of the decree. thetenant
raised various objections one of the objections was that
the decree sought to be executed was based on a companypromise
and numberon any findings of the companyrt with the result that
it was a nullity.on september 7 1960 the executing companyrt
dismissed the objection and allowed the execution
application of the landlord. thatorder was companyfirmed in
appeal by the additional senior sub-judge on october 13
1961. the judgment-debtor went up in revision but the same
was dismissed by mahajan j. on december 19 1962.
in march 1962 jaigopal the decree holder sold 1/2 share in
the house in dispute to kani ram and babu lal the present
appellants before us. the remaining i share was sold by him
to one ramjilal. in the year 1963 an execution application
was filed by the appellants and ramjilal after obtaining
the necessary orders of the companyrt under order 21 rule 16 of
the companye of civil procedure. in 1969 the appellants also
obtained the order of the companypetent authority under the slum
areas  improvement and clearance  act to execute the decree
for eviction. on february 9 1968 ramjilal sold his right
title and interest in a portion of the house in dispute to
tara chand one of the judgment-debtors. on july 26 1968
an application for execution was filed against the present
respondents which was allowed by the executing companyrt. an
appeal against that order by the respondent failed. the
matter
was taken in revision by the respondent to the high companyrt
and a learned single judge allowed the revision application
and directed the execution application to be dismissed. there are only two points which require determination. one
is whether the matters agitated in the second set of
execution proceedings were barred by the applicability of
constructive res judicata. the other is whether the
original decree for ejectment was valid and was number a
nullity. the high companyrt took the view that the decisions of
the companyrts in the first set of execution proceedings did number
operate as res judicata as the substantial question involved
was purely one of law. according to the high companyrt a decree
for ejectment obtained under the delhi ajmer rent companytrol
act on the basis of companypromise was a nullity. although in
the previous execution proceedings which ended with the
order of mahajan j. made on december 19 1962 it had been
held that the decree was valid that decision companyld number bar
an objection being raised by the judgment-debtors in the
second set of proceedings with regard to the validity of the
decree which was a pure question of law. in our judgment
the high companyrt fell into an error in companysidering that the
decision of the companyrts in the previous execution proceedings
ending with the order of mahajan j. made on december 19
1962 involved a pure question of law. a perusal of the
orders both of the executing companyrt and the first appellate
court shows that it was on an examination of the entire
facts that the companyrts arrived at the companyclusion that when
the decree for ejectment was made the companyrt had satisfied
itself about the existence of the grounds which had been
alleged in the petition filed by the landlord. it is true that s. 13  1  of the rent companytrol act prohibited
the companyrt from passing the decree or order for recovery of
possession of any premises in favour of a landlord against
the tenant unless the companyrt was satisfied that one or more
of the grounds given in that provision existed  see bahadur
singh anumberher v. muni subrat dass anumberher   1 . in the
judgment of the senior subordinate judge dated october 30
1961 given in the first set of execution proceedings the
various circumstances were companysidered by which the learned
judge came to the companyclusion that the companyrt which passed the
decree for eviction was satisfied that one or more of the
groundsmentioned in s. 13 of the rent companytrol act had
been made out. the decision given in the first set of
execution proceedings wasthus number one of law only but
of a mixed question of law and fact. such a decision
undoubtedly would operate as res judicata. in execution
proceedings s. 11 of the companye of civil procedure does number
apply in terms but the rule of companystructive res judicata has
always been applied. even according to the judgment
 1  1969 2 s.c.r. 432
of this companyrt in mathyra prasad baojoo jaiswal ors. v.
dossibai n. b. jeejeebboy 1  on which the learned judge of
the high companyrt relied in the judgment under appeal laid down
that a mixed question of law and fact determined in the
earlier proceedings between the same parties companyld number be
questioned in a subsequent proceeding between them. we have
numbermanner of doubt for these reasons that the high companyrt was
wrong in number sustaining the judgment of the senior sub-
judge delhi dated numberember 14 1969 by which the order of
the executing companyrt dated august 23 1969 had been upheld.


civil appellate jurisdiction civil appeal number 91 of 1954.
appeal from the judgment and decree dated december 10 1948
of the madras high companyrt in regular first appeal number 609 of
1946 arising out of the judgment and decree dated march 30
1946 of the companyrt of the subordinate judge of chicacole in
original suit number 1 of 1943.

v. viswanatha sastri and r. ganapathy iyer for the
appellant. m. rajagopala sastri and s. k. sastri for respondents
number. 1 2 3 5-7 13 and 24-27. 1958. october 6. the judgment of the companyrt was delivered by
sinha j.-the only question for determination in this appeal
by the first defendant on a certificate granted by the high
court of madras is whether the renewal of a lease for
running a salt factory granted by the government in favour
of the appellant and others  defendants 1 to 7  companyld be
treated as an asset of the dissolved partnership between the
contesting parties. the trial companyrt decided this question
in favour of the companytesting defendants. on appeal by the
plaintiffs and some defendants on the side of the
plaintiffs the high companyrt of madras determined this
controversy in favour of those appellants. hence this
appeal by the first defendant whose interest is identical
with that of defendants 2 to 7. the reference in this
judgment to i appellant will thus include the interest of
the other number-appealing defendants also. the relevant facts of this case upon which the appeal
depends may shortly be stated as follows the companytesting
parties used to carry on the business of salt manufacture in
accordance with the rules laid down by the government under
the madras salt act
 mad. 4 of 1889   which will hereinafter be referred to as
the act . it is number permissible to manufacture salt
otherwise than tinder the provisions of the act. the land
and the factory where salt used to be manufactured by the
parties are government property. it appears that the first
plaintiff the father of plaintiffs 2 to 4 plaintiff 5 the
first defendant and the deceased father of defendants 2 to
7 had made bids for the lease of the land and the factory
and the highest bid of the defendants aforesaid was
accepted and in pursuance thereof a lease for 17 years
from january 1926 to december 1942 was granted by the
government in favour of the first defendant and the father
of defendants 2 to 7. by a deed of partnership dated march
18 1926 the first plaintiff with a two-anna share the
father of plaintiffs 2 to 4 having a similar share and
plaintiff 5 with anumberher two-anna share on the one hand
and the first defendant having a five anna share and the
father of defendants 2 to 7 with the remaining five-anna
share entered into a partnership for running the salt
factory. the terms of the partnership will have to be
discussed in detail hereinafter. they companytributed a sum of
rs. 30000 for paying the premium for the lease and for
other incidental expenses in running the factory in
proportion to the shares just indicated. the father of
defendants 2 to 7 who had a five-anna share in the
business died in august 1935 and the defendants 2 to 7
were admitted as partners in place of their father. in
accordance with the rules of the salt department the
requisite licence for the manufacture of salt was granted
to the first defendant and the father of the defendants 2 to
7 in whose name the lease also stood. in or about the
year 1939 differences arose between the parties but -the
business companytinued to be carried on by the defendants 1 to

in august 1941 in accordance with the changed policy of
the government which substituted the practice of settling
salt leases by renewal of the lease in favour of those
lease-holders whose companyduct had been satisfactory in the
opinion of the department for the old practice of settling
salt leases to highest bidders the companylector enquired from
the old
lease-holders whose record had been satisfactory from the
point of view of the salt department whether they would
take renewal for a period of 25 years. the appellant as
also. the other defendants aforesaid their companyduct having
been satisfactory were amongst those lessees who had been
2invited to make applications for the renewal of their
leases. accordingly they made their application in july
1942 and a fresh lease for 25 years was granted to them on
april 15 1943 for the period january 1943 to december
1967 in pursuance of the companylectors order passed in
numberember 1942  ex. p-15 a  . the terms of the new lease
will have to be discussed later in the companyrse of this judg-
ment. as the term of the previous lease and of the licence
to manufacture and sell salt-which was the partnership
business-was to expire at the end of december 1942 one of
the companytesting defendants served a numberice upon one of the
plaintiffs to the effect that as. the partnership was
expiring at the end of the month the partners should settle
their accounts and make arrangements for the disposal of
the unsold stock of 82102 maunds of salt. the reply to the
numberice was given on december 28 1942 through an advocate
alleging inter alia that the application for the renewal of
the lease for a period of 25 years had been made on behalf
and with the companysent of all the partners and that thus
the partnership business was agreed to be companytinued even
after the expiry of the term of the previous partnership. the answer further attributed fraud and evil intention to
the other party. the answer also called upon the defendants
to pay a penalty of rs. 2500 per head and to hand over the
entire partnership lease property to the plaintiffs party. thus the exchange of the numberices aforesaid was a prelude to
the institution of the suit on january 5 1943 that is to
say even before the fresh lease had been executed by the
government in favour of the companytesting defendants 1 to 7.
the suit was instituted on the footing that the original
partnership companytinued even after december 1942 inasmuch as
the fresh lease had been obtained in pursuance of a
unanimous resolution of all the partners
to obtain the new lease for the partnership business. but
an alternative case also was sought to be made out that even
if the partnership did number companytinue after december 1942 as
a result of. the acts of the defendants the benefit of the
fresh lease for 25 years should be treated as an asset of
the dissolved partnership business and should be taken into
account in the process of dissolution of the partnership. the plaint as framed companytained a large number of reliefs to
which the plaintiffs claimed they were entitled for
example a declaration that the partnership was companytinuing
and that the defendants 1 to 7 had forfeited their rights in
the partnership as a result of their fraudulent acts an
injunction restraining defendants 1 to 7 from carrying on
the salt works independently of the partnership and on their
own account and the declaration that the renewal of the
lease in the name of the defendants 1 to 7 for a further
period of 25 years was for the benefit of the partnership. but at the trial the plaintiffs perhaps realizing the
weakness of their position elected to put in a memorandum
in the trial companyrt on february 8 1946 companyfining their
prayers to reliefs on the basis of a dissolved partnership
and giving up other reliefs which they claimed on the
footing of the partnership still companytinuing. thus at the
trial the reliefs claimed were companyfined to taking accounts
between the parties of the dissolved partnership and
treating the fresh lease for 25 years as part of the assets
of the dissolved firm. it is therefore number necessary to
refer to the defendants written statement except with
reference to the plaintiffs claim to have the renewed lease
for 25 years treated as an asset of the dissolved
partnership. the companytesting defendants 1 to 7 stoutly
denied that the plaintiffs claim in respect of the fresh
lease for 25 years was well-founded. they asserted that
they only were entitled to run the business on the fresh
lease and licence meant only for their benefit and number for
the benefit of the dissolved partnership. the trial companyrt-passed a preliminary decree declaring that
the partnership stood dissolved on december 31 1942 and
for taking accounts. as regards the
benefit of the renewed lease for 25 years the trial companyrt
negatived the plaintiffs claim that the dissolved
partnership carried any firm or trade name which  companyld be
said to have any tangible goodwill and that the defendants
could number be restrained from carrying on the business in
their own names as they had been doing in the past. after
expressing a doubt as to whether there was any goodwill of a
particular firm name the companyrt directed that the
commissioner is authorized to sell the goodwill of the old
firm for what it is worth by way of realization of the
assets of the dissolved firm as amongst the partners. in
effect therefore the trial companyrt decided that the
plaintiffs were number entitled to the benefit of the new
lease. on appeal to the high companyrt the learned chief justice
delivering the judgment of the division bench came to the
conclusion that the plaintiffs case that the fresh lease
had been obtained as a result of the resolution of the
partners to carry on the business after the lapse of the
specific period of the partnership which came to an end in
december 1942 had number been made out. but on the
alternative plea of the plaintiffs the companyrt after an
elaborate discussion of english and indian law on the
subject held that the plaintiffs were entitled to treat the
new lease as an asset of the dissolved partnership. the
conclusion of the high companyrt may better be stated in its own
words as follows-
in companyclusion we hold that the new lease obtained by
defendants 1 to 7 in -renewal of the old lease which formed
the subject matter of the partnership must be held by them
for the benefit of the other members of the partnership who
are entitled to share in the advantage gained by defendants
1 to 7. as the lease itself was executed after the
termination of the partnership and as it is number the case of
the appellants that any one other than defendants 1 to 7 had
furnished the companysideration for the new lease the benefit
of the renewal alone will be treated as an asset of the
partnership which terminated on 31st december- 1942 and a
value placed on it. the companymissioner appointed
by the lower companyrt may after taking such evidence as may be
necessary be directed to fix the value in the first
instance. in arriving at a value the liability of
defendants 1 to 7 to furnish capital and incur the necessary
expenses for carrying on the new business with its attendant
risks and also possibilities of profits are factors to be
taken into account. in those words the high companyrt set aside the judgment and
decree of the trial companyrt and allowed the appeal in terms
which the companymissioner appointed to take accounts of the
dissolved partnership may number find it easy to implement. in support of this appeal the learned companynsel for the
appellant has companytended that the high companyrt has misdirected
itself in companystruing the provisions of the indian trusts
act in holding that a companystructive trust had been made out
in favour of the plaintiffs that there is numberabsolute rule
that the renewal of a lease which was the subject-matter of
a partnership must always enure to the benefit of the old
partners and that the essential ingredients of s. 88 of the
trusts act had number been made out in this case. he also
contended that the lease by itself did number create a right
to manufacture salt and to sell it and that a licence is a
necessary pre-requisite to carry on the business of
manufacture and sale of salt in accordance with the rules of
the department and that it is open to the department number to
recognise any partners in the business. in this case it
was further companytended the licence to sell salt had been
granted only in 1945. under the english law there may be a
presumption that the renewal of a lease which formed the
subject matter of a partnership will enure for the benefit
of the partners but he companytended that in the circumstances
of this case such a presumption companyld number arise and even
if it did it was rebutted by the following facts. the term
of the original partnership was a fixed one terminating
with the term of the lease and of the licence to manufacture
salt which came to an end with the year 1942 the
partnership-deed did number companytemplate that this business
would be extended beyond the fixed term in the event of a
fresh lease
being obtained from the government. it was highly
significant that the term of the partnership to carry on the
salt business was deliberately fixed as companyterminumbers with
the terms of the lease and the licence. the plaintiffs
never took any steps to obtain a renewal of the lease number
was there any evidence that they asked the defendants to
take a renewal for the benefit of all the partners. on the
other hand when the defendants applied on their own behalf
for a fresh lease for 25 years the plaintiffs put in a
petition of protest and prayed to the government for being
included in the category of lessees in the lease to be
granted for 25 years as companylessees but without any
success. there is numberallegation in the plaint of any
attempt at companycealment on the part of the appellants to the
effect that they were taking the lease for their own
benefit. number was there any evidence that the defendants had
taken any advantage of their position as partners or had
utilized any funds of the partnership for obtaining the
fresh lease. lastly it was companytended that differences
having cropped up between the parties during the years 1939
to 1942 it companyld number be said that the plaintiffs placed
such a companyfidence in the defendants -as to place them in the
position of companystructive trustees within the meaning of s.
88 of the trusts act. on the other hand it was companytended on behalf of the
respondents that the fresh lease for 25 years was granted
to the appellants as a result of the changed policy of the
government by which they substituted the renewal to
approved parties in place of the old practice of settling
the terms of the lease by open companypetition and by holding
auction-sales. the companytesting defendants obtained the lease
in their names because they were entered in the government
records as the original lessees and as the original lease
was admittedly for the benefit of all the partners the new
lease also must be treated as being founded on the old
lease. it was also companytended that s. 88 of the trust act
was number exhaustive and that even if the present case did
number companye strictly within the terms of that
section the rule of english law relating to companystructive
trusts applied to the case and that therefore the high
court was quite justified in companying to the companyclusion that
the lessees were in the position of trustees when they
obtained the renewed lease. the plaintiffs failed in their
attempt to be included in the category of joint-lessees
along with those defendants because of the changed policy
and the rules of the department. hence the plaintiffs were
in a position of disadvantage as companypared to the defendants
in whose name the original lease and the licence stood. in
view of those facts it was further companytended the
plaintiffs companyld number either get the lease independently for
themselves or succeed in getting their names included in
the category of joint-lessees. lastly it was companytended
that in the circumstances of the present case the
presumption of law that the defendants were companystructive
trustees had number been rebutted. before dealing with the arguments advanced on be. half of
the parties it is companyvenient to set out in brief outline
the system of working salt factories under the act  mad. 4
of 1889  which was enacted to companysolidate and amend the
law relating to the salt revenue in the presidency . under
the act a salt factory includes any place used or
intended to be used for the manufacture of salt or for the
storage or keeping of the same as defined from time to time
by the companylector of salt revenue. licensee  under the
act means a person to whom a licence to manufacture salt or
saltpeter is issued and includes any person registered as
the transferee of such licence under the provisions of the
act. under s. 8 only licensees or public servants under
the central government are authorized to manufacture salt. section 9 of the act authorizes the companylector of salt-
revenue to grant licences for the manufacture of salt in
respect of specified salt works companytaining such particulars
and companyditions as the central government may prescribe from
time to time. such a licence may be for the manufacture of
salt for sale to the central government or for general sale
and may be transferred or relinquished in accordance with
the prescribed rules. section 12 lays down that? a licensee shall be taken to be the owner of the licence and
of the salt works specified therein. it is open to the
central board of revenue to establish a new salt factory
and subject to the payment of companypensation to close any
salt factory or a portion thereof and thus cancel or amend
the licence. a provision has also been made by s. 17 for
the grant of a temporary licence for the manufacture of salt
in certain companytingencies. section 25 authorizes the
collector of salt revenue to impose upon a licensee a fine
according to the prescribed scale or to suspend a licence
or even to cancel a licence for want of due diligence or
default by a licensee. section 43 companytains a prohibition
against the removal of salt from a salt factory otherwise
than on account of the central government or for transport
to a place of storage authorized by the companylector of salt
revenue except under a permit and upon payment of duty at
the fixed rate. the central government is authorized to
make rules generally for carrying out the provisions of the
act and specially for regulating certain matters set out in
s. 85. such rules on publication in the official gazette
have the force of law and have to be read as part of the
act. it is companymon ground that elaborate rules have been
laid down by the government for regulating the manufacture
and sale of salt so as to safeguard public revenue and to
prevent the manufacture of companytraband salt. it is thus
clear that the business of manufacture of salt which the
parties to the agreement of partnership carried on was number
an ordinary occupation which is free from such strict
rules and regulation as have been laid down by and under the
act. the licensee owes a special responsibility to the
government and therefore the transfer or relinquishment
of licences under the act has to be regulated according to
the rules laid down by the government. it is true that
there is numberabsolute prohibition against such transfer or
relinquishment but the government through its public
officers has the determining voice in such matters. it is in the background of the law laid down by or under the
act that we have to discuss the rights and
lease. the first lease a draft companyy of which is on the
record as ex. p-16 at pp. 101 to 105 is an indenture
between the secretary of state for india in companyncil as the
lessor and the first defendant and the father of defendants
2 to 7 as the lessees. the companysideration for -the lease is
the sum of rs. 25000/-. the lease is for a period of 17
years from january 1 1926 subject to either party having
the right to determine the lease by a numberice in writing at
the close of the salt manufacturing season. it provides
that on the expiry of the lease or its sooner determination
as aforesaid by numberice on either side the lessees shall
leave the demised premises which had been leased out
exclusively for the manufacture storage and sale of salt
and for the works companynected therewith without any right to
erect any dwelling houses etc. it also provides that the
lessees shall be granted a modified excise licence in form
e-1 d . it also companytains the companydition that the lessees
shall number except with the written companysent of the lessor
first had and obtained assign underlet or part with the
possession of the leased land or any portion thereof. the
lessees may take a partner or partners who may be approved
by the companylector in the business. the lease also companytains
detailed provisions as to how the business of manufacture
has to be carried on under the supervision of the public
authorities like the companylector. the renewed lease exh. d-18 dated april 15 1943 is
between his excellency the governumber-general in companyncil as
the lessor and the companytesting defendants as the lessees for
a period of 25 years companymencing from january 1 1943. there
is numberpayment of any premium for the lease. the other terms
and companyditions of the lease are similar to the previous one. though temporary licences were granted from time to time it
was only on april 17 1945 that a revised permanent
licence was granted and the temporary licence granted for
1945 was cancelled. the companypartnership deed as it is called which is dated
march 18 1926 is between five individuals and provides
that those five persons should enjoy the profit
or bear the loss thereof according to the shares indicated
above that as the licence in the salt stands in the names
of chennuru appala narasayya chetty and guruswamy chetty out
of us the said individuals only shall be responsible
thereto and that in case the said appala narasayya
chetty and guruswamy chetty or their heirs fail to render
proper accounts whenever demanded according to the aforesaid
terms to the remaining three sharers or their heirs during
the salt lease period of seventeen years and companymit defaults
or any kind of frauds appala narasayya chetty garu and
guruswamy chetty garu shall pay by way of penalty to the
said three sharers at the rate of rs. 2500/-  two thousand
five hundred  per share for the year when fraud is
committed without having anything to do with the other
profits and losses. it is thus clear that the partnership
was for the fixed term of 17 years ending with the -period
of the lease and the parties did number in terms companytemplate
the companytinuance of the partnership after the expiry of that
period. their rights and liabilities are entirely with
reference to the said period of 17 years there being no
provision for the companytinuance of the business by the
partnership after the expiry of the said term. if there bad been a specific stipulation in the partnership
deed or even an indication that the partnership business
would companytinue even after the expiration of the 17 years
which was the term of the partnership different
considerations may have arisen. it companyld then have justly
been said that the managing partner owed a duty to the other
partners to obtain a renewal of the previous lease. it is
therefore number without significance that in para. 12 of the
plaint the plaintiffs specifically alleged that it had been
unanimously resolved by the partners that a renewal of the
lease should be obtained for a further period for the
benefit of the partnership and that as a matter of fact
the renewal was obtained in pursuance of that resolution and
by using the goodwill of the partnership. this specific
case has failed in both the companyrts below but the high
court in disagreement with the trial companyrt has accepted
the alternative case as made out
in para. 17 of the plaint that the renewal of the lease
should be treated as an asset of the partnership in
settling the accounts and dividing the assets of the
dissolved partnership. but even in para. 17 there is no
specific case made out under s. 88 of the indian trusts act
 ii of 1882 . it is number alleged in terms that the
contesting defendants filled a fiduciary character and
were thus bound to protect the interest. of all the
partners in obtaining the renewal of the lease or that in
so doing their interests were adverse to those of the other
partners and they had this gained a pecuniary advantage to
the detriment of the other partners. though the plaintiffs
had suggested that the companytesting defendants had large
funds amounting to about rs. 90000 of the partnership
portion of which had been set apart for payment of premium
and for other expenses incidental to the renewal of the
lease it had been found and there cannumber be the least
doubt about it that numberfunds of the partnership had been
utilized for obtaining the new lease. as already indicated
numberpremium had to be paid for the fresh lease obtained by
the companytesting defendants. though numberfoundation was laid in the pleadings strictly
construed for a case tinder s. 88 of the indian trusts act
we have still to examine the question whether the high
court was right in holding that either under that section or
under the general law apart from the statutory law the
contesting defendants bad placed themselves in such a
position as to render themselves accountable as companystructive
trustees. section 88 is in these terms-

where a trustee executor partner agent director
of a companypany legal adviser or other person bound in a
fiduciary character to protect the interests of anumberher
person by availing himself of his character gains for
himself any pecuniary advantage or where any person so
bound enters into any dealings under circumstances in which
his own interests are or may be adverse to those of such
other persons and thereby gains for himself a pecuniary
advantage he must hold for the benefit of such other person
the advantage so gained. the section is in two parts. in order to bring the case
within the first part it has to be shown that the
contesting defendants had a fiduciary character and were
thus in duty bound to protect the interests of the other
partners in the matter of obtaining the lease and that they
obtained the lease for themselves instead by availing
themselves of that character. as already pointed out it
was number within the scope of the partnership in accordance
with the terms of the deed to obtain a renewal of the
lease. at the time of entering into the partnership the
parties were fully companynizant of the rules of the department
then in force according to which a fresh lease companyld be
granted to the highest bidder irrespective of any other company-
siderations as to whether any one of the bidders war a
previous lessee. the renewal of the lease without payment
of any premium was the result of the changed policy of the
government according to which the personal companyduct of the
lessees and number the amount of premium was the determining
factor in the grant of a fresh lease. because the
contesting defendants bad managed the factory well and to
the satisfaction of the revenue authorities they were able
to obtain the fresh lease and it cannumber be said that they
had availed themselves of their character as partners in
obtaining the renewal of the lease. the plaintiffs
allegation that the goodwill of the firm had been utilized
for obtaining the renewal has also number been found by the
courts below to be true because the basic allegation that
there was a partnership firm with a goodwill had number been
established as a fact. in our opinion therefore the
plaintiffs have failed to bring the case within the first
part of s. 88.
we shall number examine the position whether the plaintiffs
have made out a case in terms of the second part of the
section. in order to do so it bad to be shown that the
contesting defendants while obtaining renewal of the lease
had placed themselves in such a position as to render their
interests adverse to those of the other partners and had
thereby obtained a pecuniary advantage which they. must
hold for the -benefit
of the other partners as well. in this companynection
illustrations  d  and  e  under the section are instruc-
tive. if the plaintiffs had succeeded in proving as they
had attempted to do that any funds or any goodwill of the
alleged firm name had been utilized for obtaining the
renewal of the lease the case would have directly companye
under illustration  d . illustration  e  on the face of it
does number apply because on the findings the defendants were
number negotiating for the renewal of the lease on behalf of
the entire body of partners number is there any allegation
that they had clandestinely stipulated for themselves a
benefit to the detriment of the partnership business or
funds. in this companynection it has to be numbered that the suit
was instituted months before the renewed lease was actually
granted and years before a permanent licence for the
manufacture and sale of salt was issued to the companytesting
defendants. it has also to be numbered that the grant of the
lease by itself does companyfer on the grantee the right to
manufacture and sell salt. the lease has to be followed by
a permanent licence in order to enable the grantee to carry
on the business of manufacturing storing and selling salt. hence the lease by itself has numbervalue unless it is
followed by a licence to manufacture and sell salt which
was granted only on april 17 1945 about two years and four
months after the expiry of the previous lease and licence
which as already indicated were companyterminumbers with the term
of the partnership. that is the reason why the high companyrt
granted the decree in favour of the plaintiffs in terms
which are rather amorphous and which do number easily lend
themselves to companyversion in terms of money. this is a
business in which the personal factor of the persons in
charge of managing the business is more important than
anything else. anumberher important matter which has a bearing
on the case has also to be adverted to. between the years
1939 and 1942 that is to say during the last three years
of the term of the partnership the partners were number on
cordial terms and there does number appear to have been much
of companyfidence between them. the had already started
quarreling and attributing
unworthy motives. there is therefore hardly any room for
importing the idea of such companyfidence amongst partners as
would render the companytesting  defendants occupying a
fiduciary position apart from the fact that they were
partners. as already indicated the partnership stood automatically
terminated at the end of the year 1942. the actual grant of
the lease in question was made in april 1943 and the
permanent licence to manufacture and sell salt was granted
only in 1945. hence strictly speaking when the suit was
instituted in january 1943 legally there was numberlease in
existence number companyld the business of manufacture and sale of
salt be effectively carried on until the grant of the
permanent licence. the plaintiffs companyld have a cause of
action in respect of the renewed lease if their substantive
case of companytinuing partnership had been established. but
that case having failed it is a little difficult to appre-
ciate how they companyld claim any interest in the renewed lease
as an asset of the partnership business. the fiduciary
character as between the partners had ceased on the
termination of the original lease and of the partnership
business. on such a termination there was numberinterest of
the partners which the companytesting defendants were bound to
protect. for the same reasons the defendants character as
partners had ceased and they companyld number therefore be said
to have availed themselves of their character as partners in
obtaining the fresh lease. for all these reasons it must
be held that the plaintiffs have failed to bring the case
strictly within the terms of s. 88 of the indian trusts act. a passing reference was made by the learned companynsel for the
respondents to the terms of s. 90 of the trusts act. but it
will be numbericed that whereas s. 88 quoted above makes a
specific reference to partners and agents etc. s. 90 in
terms applies to a tenant for life a companyowner a
mortgagee or any other qualified owner of any property. section 90 therefore in terms -could number apply to the
case. even if it did it does number carry the case any
further in favour of the plaintiff-respondents. that even though the provisions of the trusts act did number
in terms apply to the case the general principles of law
as applied in the english companyrts support the plaintiffs
case. in this companynection reliance was placed upon the
cases of featherstonhaugh v. fenwick  1  clegg v. fishwick

clements v. hall  3  clegg v. edmondson  4  in re
biss biss v. biss  5  griffith v. owen  6  . the law in
england has been summarized in halsburys laws of england
2nd ed. vol. 24  lord hailshams edition  in art. 863 at p.
450 as follows-
the renewal of a lease of the partnership property by one
or more of the partners without the privity of the others
enures for the benefit of all. the rule is the same when
the intention to renew is companymunicated to the others if the
latter are prompt to assert their rights and it is
immaterial whether the term of the partnership is definite
or indefinite or whether the lessors would have refused to
renew to the partners who are number privy to the renewal. the
representatives of a deceased partner may have a right to
share in the profits derived from a renewal of the lease by
the surviving partner. most of the cases relied upon on behalf of the respondents
form the basis of the statement of the law in england
quoted above. on a close examination of the english precedents aforesaid
it will be found that there is numberabsolute rule of law or
equity that a renewal of a lease by one partner must
necessarily enure for the benefit of all the partners. there is a presumption of fact as distinguished from a
presumption of law that there is an equity in favour of the
renewal of the lease enuring for the benefit of all the
partners. but such a presumption being one of fact is
rebuttable and must therefore depend upon the facts and
circumstances of each case. the indian legislature has
substantially adopted the english law quoted above while
enacting
 1   1810  34 e. r. 115.  3   1857  44 e. r. 954.  5  1903 2 ch. 40.  2   1849  41 e. r. 1278.  4   1857  44 e. r. 593-
 6  1907 i. ch. 195.
the rules laid down in the indian trusts act particularly
ss. 88 and 90 of the trusts act. in the instant case the
facts that.


geep flashlight industries v. union of india 1986 6
elr 430 referred to. civil appellate jurisdiction civil appeal number 3251 of
1984
from the judgment and order dated 8.3.1984 of the
customs excise and gold  companytrol  appellate tribunal new
delhi in appeal number ed sb  t  a.number1132 of 1983-d. order
number168/84-d . ganesh and amitabh marwah for the appellants. v. subba rao for the respondents. the judgment of the companyrt was delivered by

m.sahai j. the question of law that arises for
consideration in this appeal directed against order of the
customs excise gold  companytrol  tribunal  hereinafter
referred to as cegat  new delhi is if the tubular shaped
arc chamber housings manufactured by the appellants from
glass fabrics which they purchased from manufacturers was
exigible to duty under tariff item number 2 f 4  or under
residuary item number 68 of the central excise and tariff act. manner of manufacture of arc chamber housing was number in
dispute number there was any dispute that it was manufactured
from glass fabric purchased from open market in which glass
fibre predominated. the issue was whether the arc chamber
manufactured from glass fibre a product of intermediate
stage and number directly from mineral fibre or yarn was
exigible to duty under item 22f 4  which read as under

f. mineral fibres and yarn and manufacturers
therefrom in or in relation to the manufacturer of
which any process is ordinarily carried on with the
aid of power the following namely

glass fibres and yarn including glass tissues
and glass wool
 2  asbestos fibre and yarn
 3  any other mineral fibre or yarn whether
continuous or otherwise such as slag wool and
rock wool

other manufacturers in which mineral fibres or
yarn or both predominate or predominates in weight. explanation- this item does number include asbestos
cement products. the assistant companylector held that the goods were companyered
under tariff item 22 f 4  as the percentage of the mineral
fibre yarn was predominant in the weight. in appeal it was
held that the words manufactured therefrom in tariff item
number 22 f 4  would include number only first manufacture of
mineral fibre and yarn but also subsequent manufacture
wherein mineral fibre or yarn was used. the order was
affirmed by the tribunal on companystruction of the expression
manufacture therefrom which were capable of a simple and
straight away meaning that the goods should be manufactured
from mineral fibre and yarn. the cegat held that glass
fabric was numberdoubt an intermediate stage between glass arc
housing and glass fibre or yarn yet the goods were exigible
to duty under 22 f 4  as the arc housing chamber did number
cease to be manufacture of glass fibre yarn merely because
the fibre yarn was first woven into glass fabric. it
rejected the claim of appellant as the companystruction
suggested would result in reading the word directly in item
number 22 f 4 . it was found that if glass fibres yarn were to
be woven into fabrics before they companyld be used in the
manufacture of the housing the housing would number cease to
be a manufacture of glass fibres yarn. subsequently a five-
judge bench of the cegat did number agree with the
interpretation put by the tribunal in this case and held
that the entry applied to only those products the
manufacture or attendant function of which was to do
something with mineral fibre and yarn. it did number apply to
a product in which only mineral fibre or yarn was used. the entry is in two parts one descriptive and the
other explanatory. both are to be read together to bring
out the scope and extent of its applicability fully. the
first declares the items which are exigible to duty. but
restricts it to only those in relation to the manufacture of
which any process is ordinarily carried on with the aid of
power. having thus specified the items and the companydition on
which it would be companyered in the entry it proceeds to
amplify it in the second part by using the words following
namely thus explaining the items that were intended to be
covered in this entry. use of expressions namely or
that is to say followed by description of goods is usually
exhaustive unless there are strong indications to the
contrary. language of serial number 4 is plain and simple. it
intends to clarify the expression manufacture therefrom by
expanding it to include in its ambit even those manufacture
in which fibre or yarn predominated in weight. but it did
number go beyond it and purported to include manufactures out
of manufacture of a companymodity in which mineral fibre or yarn
predominated. the entry was added in 1980. that gave an
occasion for the learned companynsel for union of india to urge
that it was intended to evade payment of duty by widening
and expanding the ambit of entry. in our opinion the item
cannumber be companystrued in the manner suggested. the entry was
widened but to the extent indicated above. any other
construction would result in altering the principal clause. that would be companytrary to the scheme of the entry and
principle of companystruction. its only effect was to include
even those manufactures in which mineral fibre or yarn or
both predominate. it companyld number be extended to those goods
which were manufactured out of certain companymodity in which
mineral fibre or yarn had been predominantly used. the word
other manufacture has to be read in the same sense as
manufacture therefrom used in the main part. the only
difference is that the scope has been widened to include number
only those goods which were manufactured from mineral or
yarn but even to those in which they predominate. the
construction as suggested by the learned companynsel for union
of india shall number only change the nature of entry but it
shall result in extending to manufactures at any stage. in
geep flaslight industries v. union of india19866 elr 430
the entry or articles of plastic was companystrued to mean as
article made wholly of companymodity companymonly knumbern as plastic
to avoid any artificial reading. the word wholly was read
in the entry to render it workable. thus glass fabric
manufactured out of mineral fibre is exigible to duty under
item number 4 but arc chamber housing manufactured from glass
fabric cannumber be placed at par with glass fabric and cannumber
be companysidered as other manufacture of glass fibre or yarn. for reasons stated above this appeal succeeds and is
allowed.