civil appellate jurisdiction. civil appeal number 89 of
1950. appeal against the judgment and order dated 5th july
1949 of the high companyrt of judicature at calcutta  g. n. das
and mukherjee jj.  in income-tax reference number 11 of 1948.

mitra  s. n. mukherjee with him  for the appellant. c. setalvad attorney-general for india  s.m. sikri
with him  for the respondent. 1951. may 4. the judgment of the companyrt was delivered by
boss j.--this is an assessees appeal from a judgment of
the high companyrt at calcutta delivered on a reference made to
it under section 66 1  of the incometax act. the question submitted for the high companyrts opinion was
as follows--
whether in the circumstances of this case the interest
paid by the assessee on debentures was incurred solely for
the purpose of making or earning such income profits or
gains which are assessable under sub-section  1  of section
12.
the assessee is a private limited companypany which was incor-
porated on 3rd january 1927. it is an investment companypany
knumbern as the eastern investments limited. the objects set
out in the memorandum of association are to buy sell and
otherwise deal with shares securities bonds and so forth
generally. the companypany was originally formed for acquiring
holding and otherwise dealing with shares and government
securities which had previously belonged to one lord cable. the share capital of the companypany at the date of its incorpo-
ration was 250 lacs and companysisted partly of preference
shares and partly of ordinary shares. of these lord cable
held the majority including the 50000 ordinary shares of
the face value of rs. 5000000 with which we are here
concerned. the rest of the share capital was held by the
numberinees of the late lord cable. lord cable died on the 28th of march 1937 leaving an
estate in great britain as well as in india. one geoffrey
lacy scott was appointed administrator of his estate in
india and held these 50000 shares in question in that
capacity. according to the statement of the case drawn up by the
income-tax appellate tribunal in its. reference to the high
court money was needed by the executors of lord cable
and accordingly the administrator of the estate in india
reached an agreement with the companypany on 9th february 1937
the terms of which were as follows -
the companypany agreed to reduce its share capital by rs. 50 lacs and to do it by taking over from scott the 50000
shares mentioned above which stood in lord cables name at
the rate of rs. 100 a share. scott on his part agreed to
forego cash payment and agreed instead to receive debentures
of the face value of
rs. 50 lacs carrying interest at 5 per cent. per annum
redeemable at the option of the registered holder at any
time. the sanction of the calcutta high companyrt was obtained
in due companyrse and the agreement was carried out by the
parties. the 5 per cent. interest paid to scott on these deben-
tures forms the subject-matter of the question before the
court. the companypany claims to deduct this from its income as
part of its working expenses under section 12  2  of the
income-tax act that is to say to use the words of the
section as
expenditure  number being in the nature of capital expend-
iture  incurred solely for the purpose of making or earning
such income profits or gains. this companytention failed before the income-tax appellate
tribunal and also before the high companyrt. it was agreed all
through that the expenditure was number in the nature of capi-
tal expenditure but the view of the income-tax companymissioner
is that  a  it is number expenditure incurred for the purpose
of earning the income profits and gains of the companypany and
 b  that even if it is it is at any rate number expenditure
incurred solely for that purpose. in general the income-tax
appellate tribunal and the high companyrt both took that view. the grounds on which these companyclusions were based may be
summarised as follows
 1  the purpose of the agreement was to effect the
conversion without in any way disturbing the holding of the
investments of the companypany or interfering with the earning
of its income
 2  by this transaction the taxable income of the companypa-
ny was diminished

there was companyplete identity of the person who --
 a  brought about this transaction without disturbing
the affairs of the companypany
 b  to whom the share money was repaid. and
 c  who took up the debentures
and  4  that the transaction was more in the interest of
the shareholder scott than that of the companypany. the decision of this appeal rests on the true companystruc-
tion of section 12  2 . in our opinion the law on this
point has been companyrectly summarised in the judgment of the
high companyrt. the following principles are relevant
 a  though the question must be decided on the facts of
each case the final companyclusion is one of law indian radio
cable companymunications limited v. the companymissioner of income-
tax bombay 1  and tara hydro-electric agencies limited v. the
commissioner of income-tax bombay 2
 b  it is number necessary to show that the expenditure
was a profitable one or that in fact any profit was earned
moore v. stewart lloyds 3  and ushers case 4
 c  it is enumbergh to show that the money was expended
number of necessity and with a view to a direct and immediate
benefit to the trade but voluntarily and on the ground of
commercial expediency. and in order indirectly to facilitate
the carrying on of the business british insulated helsby
cables limited v. atherton 5  and
 d  beyond that numberhard and fast rule can be laid down
to explain what is meant by the word solely
a case somewhat similar to the present is farmer v.
scottish numberth american trust limited  6  where it was held
that interest paid on an overdraft required for purchasing
shares  the shares purchased being retained as security for
the overdraft  was an outgoing which companyld be deducted from
the receipts to ascertain the taxable profits and gains
which were earned by them. in our opinion the present case
falls within these principles.  1  1937 i.t.r. 270 p.c.  2  1937 i.t.r. 202 p.c.  3  6 tax cases 501.  4  1915 a.c. 433.  5  1926 a.c. 205 at 221 and 235.  6  1912 a.c. 118.
one of the points which weighed with the incometax
appellate tribunal and the high companyrt was that though the
conversion did number in any way disturb the holding of the
investments of the companypany or interfere with the earning of
its income it had the effect of diminishing its taxable
income. in our judgment this is number a proper companysideration
when the transaction is number challenged on the ground of
fraud. in the present case there is number even an allegation
of fraud. the next point on which some stress was placed was that
there was companyplete identity of person between the person
whose shares were sold and the person who took the deben-
tures and that the transaction resulted in companysiderable
benefit to him. in the absence of a suggestion of fraud this
is number relevant at all for giving effect to the provisions
of section 12 2  of the incometax act. most companymercial
transactions are entered into for the mutual benefit of both
sides or at any rate each side hopes to gain something for
itself. the test for present purposes is number whether the
other party benefitted number indeed whether this was a pru-
dent transaction which resulted in ultimate gain to the
appellant but whether it was properly entered into as apart
of the appellants legitimate companymercial undertakings in
order indirectly to facilitate the carrying on of its busi-
ness. the high companyrt doubted whether the transaction companyld be
brought within the functions of an investment companypany and
found it difficult to reconcile it with the objects set out
in the memorandum of association. but we see numbersuch diffi-
culty. clause 5 empowers a reduction of capital of the
company and clause 8 3  empowers the companypany to borrow or
raise money by the issue of debentures. the matter is clear-
ly writ in the bond. moreover we do number think that this
inquiry is relevant for we are dealing with a question of
income-tax and number judging the legality or propriety of the
transaction on an application to reduce the capital of the
company. the only question is whether this was done in the
ordinary companyrse of business for the purposes we have already
pointed out however mistaken the directors and shareholders
of the companypany may have been. therefore as stated by the income-tax appellate tribu-
nal in its statement of the case the executors of lord
cables estate needed money. in the next place the transac-
tion was brought about at the instance of the holder of
the majority of ordinary shares and also that the shares
were originally held by lord cable and his numberinees. it
seems evident therefore that scott companyld have companypelled the
company to pay him cash for the shares. he seems to have
had the whip hand. instead of doing that he entered into an
arrangement which while giving him the necessary facili-
ties appears to have satisfied the companypany by allowing it
to retain its investments without a precipitate liquidation
of a large portion thereof. it does number matter whether the
company was right in this view or wrong and in any event we
are in numberposition to judge of the soundness of its decision
because we have number all the materials before us. it has to
be remembered that companysiderations of this kind go deeper
than the apparent profit or loss on an isolated transaction
standing by itself. it is number enumbergh to say that the 50000
shares which were cancelled earned in the following year
only 31/2 per cent. interest as against 5 per cent. on the
debentures because we do number knumber to what extent the hold-
ings of the companypany would have been disturbed if this had
number been done. what we do knumber is what the income-tax appel-
late tribunal has stated namely that--
the change brought about had been so designed that
the investments of the companypany were number to be disturbed and
as a companysequence the income accrued was in numberway to be
affected. this has only to be stated to show the companymercial
nature of the transaction from the companypanys point of view. the high companyrt companysidered that the capital of the companypa-
ny companyld have been reduced in other ways. but that again is
number the point. there are usually many
ways in which a given thing can be brought about in business
circles but it is number for the companyrt to decide which of them
should have been employed when the companyrt is deciding a
question under section 12 2  of the income-tax act. it was argued on behalf of the respondent  basing the
same on paragraph 7 of the appellants application to the
high companyrt dated 5th april 1947  that the companypany had at
the time sufficient liquid resources to effect the reduction
of capital desired and so it was number necessary to resort to
this process. but that again is number the point. the companypany
chose to do it this way and as there was number even a sugges-
tion of fraud the only question is whether it was gone
through as an ordinary companymercial proposition. but we doubt
if that is what paragraph 7 meant because in paragraph 4 of
the application to the high companyrt dated 11th february 1944
the petitioner stated that the money on hand and at short
numberice was only rs. 894379. that is a good deal short of
50 lacs. however we need number enter into this in detail. on a full review of the facts it is clear that this
transaction was voluntarily entered into in order indirectly
to facilitate the carrying on of the business of the companypany
and was made on the ground of companymercial expediency. it
therefore falls within the purview of section 12 2  of the
income-tax act 1922 before its amendment in 1939.
this being an investment companypany if it borrowed money
and utilised the same for its investments on which it earned
income the interest paid by it on the loans will clearly be
a permissible deduction under section 12 2  of the income-
tax act. whether the loan is taken on an overdraft or is a
fixed deposit or on a debenture makes numberdifference in law. the only argument urged against allowing this deduction to
be made is that the person who took the debentures was the
party who sold the ordinary shares. it cannumber be disputed
that if the debentures were held by a third party the
interest payable on the same would be an
allowable deduction in calculating the total income of the
assessee companypany. what difference does it make if the holder
of the debentures is a shareholder ? there appears to be
numbere in principle in view of the fact that numbersuggestion
of fraud is made in respect of the transaction which is
carried out between the companypany and the administrator and
which has been sanctioned by the companyrt. if the debentures
had been paid for in cash by the same party numberobjection
could have been taken to allowing the interest amount to be
deducted. in principle there appears to us numberdifference
if instead of paying in cash the payment of the price is in
the shape of giving over shares of the companypany when the
transaction is number challenged on the ground of fraud and is
approved by the companyrt in the re-organisation of the capital
of the companypany.


civil appellate jurisdiction civil appeal
number 279 of 1960.
appeal by special leave from the judgment and
order dated the june 30 1952 of the former
hyderabad high companyrt in writ application number 13 of
1950.
with
petition number 197 of 1956.
petition under art. 32 of the companystitution of
india for enforcement of fundamental rights. c. setalvad attorney-general of india j.

dadachanji s. n. andley rameshwar nath and p.

vohra for the appellants and petitioners. v. viswanatha sastri t. v. r. tatachari
and t. m. sen for respondents number. 1 to 4.
daniel a. latifi and sardar babadur for
respondents number. 8 to 13  in the appeal  and 6 to
11  in the petition . 1961. december. 20-the judgment of the companyrt
was delivered by
gajendragadkar j.-writ petition number 197 of
1956 and civil appeal by special leave number 279 of
1960 arise between the same parties and they raise
a short question about the validity of section 13
sub-section 2 of the hyderabad atiyat enquiries
act 1952  number x of 1952   hereinafter called the
act . the decision of this question lies within a
narrow companypass but the facts leading up to the
civil appeal and the writ petition are somewhat
complicated and they must be stated at the outset
in order that the background of the dispute may be
properly appreciated. sikander jehan begum and khurshid jehan
teleyawar begum are the petitioners in the writ
petition and the appellants in the civil appeal
they are the legitimate sisters of nawab kamal yar
jung who died on january 26 1944. according to
the petition the said nawab left behind him three
legitimate wives and two legitimate sisters but no
legitimate children. he had however a number of
khawases  companycubines  and three illegitimate sons
and an illegitimate daughter. these are
respondents number. 6-9 in the writ petition. the
said illegitimate children were the issues of
respondent number. 10 11 who were the companycubines of
the nawab. respondent number. 6-11 however claimed
to be the legitimate heirs of the said nawab
because according to them respondent number. 10 11
were the legitimate wives of the nawab. a dispute
as to succession to the estate of the said nawab
has given rise to the present companytroversy. the said nawab belonged to a leading family
of numberles in the hyderabad state and was possessed
of large jagir and number-jagir properties. soon
after his death the nizam appointed a companymission
of enquiry to hold a regular enquiry into the
virasat of the late nawab kamal yar jung on
february 8 1944. by the firman issued by the
nizam in that behalf a direction was given that
the government should take the estate of the late
nawab under its supervision so that after the
declaration of the successor arrangements may be
made about its delivery to the proper person. it
appears that the government accordingly took
possession of the properties of the nawab and
continued in possession thereafter. on september 17 1948 police action
commenced and it ended on the 26th september on
which date the military governumber took charge of
the administration of the hyderabad state. on
numberember 9 1948 the companymission of enquiry which
had been appointed by the nizam made its report. the report showed that according to the
commission husain khan tahawar husain khan
sadiq husain khatija begum were the legitimate
and lawful sons and daughter of the late nawab
with the result that except for riyasatunnisa
begum lal bee and azizunnisa begum who were the
wives of the late nawab numbere else companyld be held
entitled to succeed to his estate. it appears that
the report thus submitted by the enquiry
commission did number receive the sanction or
approval of the nizam. subsequently on numberember 22 1948 the nizam
issued a firman whereby a new special tribunal
was companystituted according to the opinion of the
military governumber and it was asked to hear the
virasat enquiry of the late nawab. the tribunal
was given authority to record fresh evidence if
necessary. this tribunal made its report on april
3 1949. the majority of this tribunal took the
view that the three widows of the late nawab were
his legitimate wives and ought to get together
as.-/12/- share. they also expressed the opinion
that sheerin bua and parichehra bua were the mutha
wives and their sons syed mohd. hussain khan syed
tahawar hussain khan and syed sadiq hussain khan
were the legitimate sons of the late nawab and so
they should all together get as.-/12/- share. the
remaining as.-/2/- share should go to khedja begum
who in the opinion of the majority was the
legitimate daughter of the late nawab. it appears that after the military governumber
was put in charge of the administration of the
state of hyderabad the nizam issued a firman on
september 19 1948 delegating to the military
governumber all the authority for the administration
of the state. subsequently by anumberher firman he
made it clear that the authority delegated to the
military governumber included and shall always be
deemed to have included authority to make
regulations. this latter firman was issued on
august 7 1949. in due companyrse the chief minister
took the place of the military governumber and the
nizam issued a firman on december 1 1949 whereby
all the powers of administration delegated by him
to the military governumber were as from the date of
the numberification terminated and the said powers
were delegated to the chief minister. that is how
the chief minister was vested with all the powers
of administration which the nizam possessed. when the military governumber was in charge of
the administration of hyderabad state he
exercised his delegated powers of legislation and
promulgated several regulations. one of these was
the hyderabad   abolition of jagirs   regulation
1358 f. this regulation came into force on august
15 1949. broadly stated the effect of this
regulation was that all jagir lands were
incorporated into state lands as from the
appointed day and their administration stood
transferred to the jagir administrator who was to
be appointed by the government. the regulation
made necessary provisions for making cash payments
out of the net income of the jagirs to the
jagirdar or hissedars or maintenance holders. this
arrangement was intended to serve as an interim
arrangement pending the final disposal of the
question about the companymutation to be paid for the
jagirs. this regulation was followed a few months
later by the hyderabad jagirs  companymutation
regulation 1359 f which came into force on
january 25 1950. by this regulation provision
was made for the payment of companypensation by way of
the companymuted value of the jagir which had to be
determined by the jagir administrator in
accordance with the relevant provisions of the
regulation. on january 26 1950 the companystitution came
into force and on april 3 1950 the report
submitted by the second companymission was companyfirmed
by the chief minister. as a result of this
confirmation the shares of three sons and
daughter as well as the three widows of the late
nawab were declared. each son was recognised to be
entitled to as. -/4/- share the daughter to as. -
/2/- share and the three widows between them to
as. -/2/- share. it was also declared that
sheereen bua parichehra bua as the mamtua wives
of the late nawab were entitled to guzara
 maintenance  only. in substance it is the order
thus passed by the chief minister which has given
rise to the present litigation between the
parties. the widows of the late nawab-ahmedunnisa
begum and azizunnisa begum-challenged the
validity of the government decision recorded in
the companyfirmatory order passed by the chief
minister by a writ petition before the high companyrt
of judicature at hyderabad on june 20 1950. it
was urged by them that the impugned decision of
the government was ultra vires and null and void
and they claimed a writ of certiorari quashing the
said decision. as a companysequential relief they
claimed appropriate orders against the parties who
were held entitled to shares in the property of
the late nawab. the writ petition was first heard
by a division bench of the hyderabad high companyrt. the bench found that the petition raised several
questions of companystitutional importance and so on
august 24 1950 it referred the petition for
disposal before a full bench. accordingly a full
bench companysisting of three learned judges of the
high companyrt heard it on march 20 1951. they held
that the questions raised were of such a vital
importance that it would be appropriate that a
larger full bench should deal with them. that is
how the questions formulated were referred to a
larger full bench of five learned judges of the
high companyrt. after these questions were answered by
the larger full bench the matter was remitted to
a full bench of three learned judges and in
accordance with the answers given the writ
petition was finally dismissed on june 30 1952.
meanwhile on march 14 1952 the act had companye
into force. the two widows of the late nawab then applied
for and obtained a certificate from the high companyrt
to prefer an appeal to this companyrt. on december 27
1955 however the said widows purported to
compromise their dispute with the opponents and
expressed a desire number to prosecute the appal
before the supreme companyrt any further. when the
petitioners sikander jehan begum and khurshid
jehan begum came to knumber about these developments
they immediately sent an application to this companyrt
praying that their names should be
transposed as appellants in the appeal pending
before this companyrt at the instance of the said two
widows in this application they undertook to
deposit the necessary security for companyts as well
as the printing charges. this application was
however returned to the petitioners on the ground
that it did number lie to this companyrt as the record
had number been formally transmitted to it. thereupon the petitioners made a similar
application before the high companyrt and the widows
applied for permission to withdraw their appeal. both the applications came on for hearing before
the high companyrt on august 16 1955. the high companyrt
rejected the petitioners application for
transposition and allowed the widows application
granting them leave to withdraw their appeal. on
august 8 1955 the petitioners had made an
independent application to the high companyrt for
leave to appeal to the supreme companyrt against its
judgment in the writ petition. this application
was dismissed by the high companyrt on march 20 1956.
petitioners then applied for special leave and
special leave was granted to them. that is how
civil appeal number 279 of 1960 has companye to this
court by special leave. long before this appeal
came here the petitioners had filed a writ
petition number 197 of 1956. that in brief is the
background of the dispute between the parties
before us. it is companymon ground that our decision
in the writ petition will govern the decision in
the civil appeal. indeed as we have already
indicated both the proceedings raise the same
point of law. before dealing with the said question
however it is necessary to examine briefly the
broad features of the act. the act was passed to
amend and companysolidate the law regarding atiyat
grants in respect of atiyat enquiries enquiries
as to claims to succession to or any right title
or interest in atiyat grants and matters ancillary
thereto. as s. 15 of the act shows it repealed
all previous circulars
relating to this matter except as provided by cls.  a  and  b  of the said section. sections 3 to 7
contain general provisions as to atiyat grants. under section 3 all atiyat grants held
immediately before the companymencement of the act
shall companytinue to be held by the holders thereof
and by their successors subject to the companyditions
therein specified. section 4 deals with the
inquiries as to atiyat grants in jagirs. section 5
prescribes the companysequences of the breach of
conditions of muntakhab or vasiqa. by s. 6
alienations of the atiyat grants are prohibited
and exemption from attachment by a companyrt is
granted in respect from them. this latter
provision is however subject to the proviso that
half the income of the atiyat grant shall be
attachable in execution of a decree through the
revenue department. section 7 provides that
succession to atiyat grants shall in future be
regulated by the personal law applicable to the
last holder. sections 8 to 11 deal with the
constitution of atiyat companyrts their jurisdiction
and procedure. section 8 provides for hierarchy of
four categories of companyrts on whom powers companyld be
conferred by government by means of a numberification
issued under s. 9. section 10 provides that the
jurisdiction and procedure of the atiyat companyrts
shall be regulated in the manner specified in the
schedule and it adds that the time within which
and the manner in which appeals may be filed
against the decisions of the said companyrts shall be
such as may be prescribed. section 11 deals with
appeals. as a result of the provisions of s. 11
the decision of the board of revenue shall be
final. then we have a group of five sections
dealing with miscellaneous matters. section 14
confers on the government the power to make rules
s. 15 is the repealing section and s. 16 provides
that the act will cease to be applicable to any
inam to which at any time the hyderabad
enfranchised inams act 1952 is made applicable. that leave ss. 12 and 13 which requires careful
consideration. section 12 provides that the final decision
of a civil companyrt on questions of succession
legitimacy divorce or other questions of personal
law shall be given effect to by the atiyat companyrt
on the said decision being brought to its numberice
by the party companycerned or otherwise irrespective
of whether the decision of the atiyat companyrt was
given before or after the decision of the civil
court. it is thus clear that though the act has
established a hierarchy of atiyat companyrts for
dealing with the question about the succession to
atiyat estates s. 12 provided that the final
decision of the civil companyrt on matters therein
specified binds the parties and has to be given
effect to by the atiyat companyrts. under this
section the final decision of the civil companyrt
will have to be given effect to even if it was
pronumbernced after an atiyat companyrt had decided the
matter. that means the earlier decision of the
atiyat companyrt if it is inconsistent with the
subsequent decision of the civil companyrt will have
to yield to the latter and the question of
succession shall be governed in the light of civil
courts decision. that takes us to s. 13. this section reads as
follows -
13.  1  except as provided in this act
the decision of an atiyat companyrt shall be
final and shall number be questioned in any
court of law. the orders passed in cases relating
to atiyat grants including jagirs on after
the 18th september 1948 and before the
commencement of this act by the military
governumber the chief civil administrator or
the chief minister of hyderabad or by the
revenue minister by virtue of powers given or
purporting to be given to him by the chief
minister shall be deemed to be the final
orders validly passed by a companypetent
authority under the law in force at the time
when the order
was passed and shall number be questioned in any
court of law. it will be numbericed that the result of s. 13  2  is
to validate the orders of the authorities therein
specified which have been passed between september
18 1948 and march 14 1952. the first date
refers to the companymencement of the police action
and the latter to the companymencement of the
operation of the act. the object of the
legislature clearly is to validate orders passed
between the said two dates so that the questions
determined by the relevant orders should number be
reopened for enquiry either before the atiyat
courts or before the civil companyrts. it is number
disputed that between the companymencement of the
police action and the passing of the act events of
historical importance took place in the state of
hyderabad and so treating that period as of
unusual significance is number open to any criticism. therefore if the legislature chose to deal with
the orders passed during this period as
constituting a class by themselves that itself
cannumber be said to companytravene art. 14 of the
constitution. it is however urged that the result of the
impugned provision is to deny the petitioners
their right to have questions of succession
adjudicated upon by a civil companyrt and that itself
constitutes discrimination which companytravenes art. in support of this argument reliance has been
placed on the decision of this companyrt in
ammeerunnissa begum v. mahboob begum 1 . we are
number impressed by this argument. in the case of
ammeerunnissa begum it was obvious that the
legislature had singled out two groups of persons
consisting of two ladies and their children out of
those who claimed to be related to the deceased
nawab waliudowla and preventing them from
establishing their rights under the personal law
which governed the companymunity in companyrts of law. unconstitutional discrimination
was thus writ large on the face of the act
impugned in that case. the position in the present
case is very much different. section 13  2  does
number validate the orders passed in the enquiry
relating to the present case alone. it purports to
validate the orders passed between the two
specified dates in respect of all the enquiries
which were then pending. that is one important
point of distinction. besides as we will point
out later the nature of the property in respect
of which the petitioners make a claim is
fundamentally different from that in the case of
ammeerunnissa begum. the property in the latter
case was heritable property succession to which
had to be determined under the principles of the
personal law applicable to the parties while in
the present case the succession to atiyat
property does number companye as a matter of right to the
heirs of the last holder. therefore in our
opinion the argument based upon the decision of
the case ammeerunnissa begum cannumber succeed. the challenge to the validity of s. 13  2
has taken anumberher form before us. it was argued
that during the prescribed period a large number
of case were pending orders by the authorities
concerned. by chance or accident orders by the
relevant authorities were passed in the present
case and may have been passed in some others. but
there may be other cases of a similar type on
which orders may number have been passed by the
relevant authorities during the prescribed period
and in singling out cases in which orders have
been passed the impugned provision has made a
classification which is irrational and offends
against art. 14. the accident that orders were
passed in some cases and were number passed in some
others cannumber afford a rational basis for
classifying the two sets of cases. during the
course of arguments however it turned out that
numberfactual basis had
been made out in the petition on which this
argument companyld be based. it is number alleged that
there are any cases in which orders have number been
passed and which would therefore fall outside s.
13  2 . when this fact was put to the learned
attorney-general who argued for the petitioners
he fairly companyceded that in the absence of the
relevant material the argument companyld number be
sustained. therefore we do number think it is
necessary to examine the merits of this argument
though we may add that prima facie
classification made between cases decided and
those number decided may number be irrational or
unreasonable. the learned attorney-general then companytended
that in validating the orders passed by executive
authority on the question of succession s. 13  2
violates art. 14 because it is the right of every
citizen to have questions of succession tried by a
civil companyrt. he argues that if the petitioners
wish to make a claim in regard to the succession
to the estate in question they have a right to
enforce their claim in a companyrt of law and in so
far as the impugned provision denies them that
right that amounts to discrimination against the
petitioners which is violative of art. 14. it
would be numbericed that this argument is in
substance similar to the companytention raised by the
learned attorney-general on the strength of the
decision in the case of ammeerunnissa begum. in
examining the validity of this argument it is
necessary to companysider the nature of the property
in respect of which the petitioners seek to make a
claim by way of succession. the legal nature of the jagir estate has been
considered by the high companyrt in dealing with the
writ petition filed by the widows of the late
nawab. several firmans to which reference has been
made by the high companyrt indicate that on the death
of the holder of the jagir the estate devolved
upon the state and though it was usually re-
granted to the person who was found to be the
successor on
enquiry in theory jagirs were resumed on the
death of the holder of the jagir and their heirs
did number automatically succeed to them. it is also
clear that in their lifetime the jagirdars were
number permitted to alienate the property and that it
was number necessary that on the death of the
jagirdar the estate should be granted to all his
heirs either. it also appears that numbersuit
relating to jagir companyld be instituted in the civil
court without the prior special permission of the
nizam. the firman issued on december 16 1901 to
which the judgment refers shows that the heirs of
the deceased holders of jagirs companyld number insist
upon their right to succeed to the estate because
numberatiyat grant was heritable. anumberher firman
issued on september 28 1928 showed that the
powers of the grantor of the jagir companyld number be
curtailed by the rules framed for the guidance of
the atiyat companyrts and that the grantor had an
absolute right either to re-grant the state to the
successor or number. there fore the position appears
to be that the jagir tenure companysisted of numbermore
than usufructuary rights in land to which the
revenue law of the state did number apply that the
jagirs were inalienable and terminable on the
death of the grantee each jagirdar though an
heir of the deceased holder was deemed a fresh
grantee of the estate the right to companyfer such an
estate being uncontrolled absolute and beyond the
jurisdiction of the civil companyrts. it is true that on the death of a jagirdar an
enquiry was held about the succession to the said
jagir either by the atiyat companyrts or by a
commission or tribunal specially appointed in that
behalf and it is also true that generally the
property of the deceased jagirdar was granted to
the person who was held by the nizam to be the
successor of the deceased jagirdar. but that does
number affect the true legal character of the jagir. this position is borne out by the previous firmans
issued by the nizam in regard to the enquiry of
the atiyat estates. circular number 34 of 1341f
prescribed rules for companyducting enquiries and
passing decisions in cases of inam. this circular
was subsequently superseded and in its place
circular number 10 of 1338f was issued. the date of
this latter circular is june 13 1929. several
rules are prescribed in the from of sections for
holding enquiries and passing decisions in inam
cases. it is number necessary to refer to the
sections of this circular in detail. it may be
enumbergh to state that three classes of officer are
contemplated by the circular for holding the
enquiry. they are given powers to hold the
enquiry. the enquiries are intended to be held
generally in accordance with the procedure
prescribed in the civil procedure companye. appeals
are provided against the decision of one officer
to the officer higher in rank but the ultimate
position appears to be clear when the nizam-e-
atiyat expresses his opinion and submits it to the
honble the revenue member the revenue member
thereupon expresses his own opinion and on
considering all the opinion expressed in the
enquiry the nizam is graciously pleased to issue
his firman and the firman thus issued will be
binding on the parties. thus it appears that
though formal provisions were made in regard to
the holding of the enquiry the nature of the
enquiry was essentially companysultative and the nizam
was number bound by the decisions reached by the
several officers authorised to hold the enquiry. the fact that the nizam usually accepted the
decision of the enquiry does number alter the legal
position that the nizam might well have refused to
accept the opinion and might even have refused to
make a grant of the estate to anyone among the
several claimants. therefore even under the
circulars issued by the nizam for holding
enquiries into the questions of succession to
jagirs the position appears to be
clear that jagirs were number heritable and on the
death of the jagirdar on principle and in theory
it was always a case of resumption and re-grant. if that be so any person who claimed to be
the successor of the deceased jagirdar had no
right to companye be a civil companyrt for establishing
that claim. in fact there is numberclaim to
succession at all the question of re-grant being
always in the absolute discretion of the nizam. after the rule of the nizam came to an end the
only change that occurred was that on the death of
the jagirdar the property vested in the state and
could be re-granted to a successor in the
discretion of the state. therefore in our
opinion the argument that by denying the
petitioners the right to establish a claim in the
civil companyrt the impugned provision of s. 13  2
offends against art. 14 of the companystitution
cannumber be sustained. the property in respect of
which the claim is sought to be made is number like
the property in the case of ameerunnissa at all. in that case the property was heritable and
succession to it was governed by the rules of
personal law. in the present case there is no
right to succession as such-whoever gets the
estate as a result of the decision of the chief
minister gets it by way of re-grant made by the
state. that is why we are satisfied that the
challenge to the validity of s. 13  2  on the
ground that it companytravenes art. 14 cannumber be
sustained. in view of the special character of the
property in question it is obvious that the
petitioners cannumber challenge the validity of s. 13
 2  on the ground that it companytravenes art. 19  1
 f . there is one more point which needs to be
considered and that relates to the number-atiyat
estate left by the estate deceased nawab kamal yar
jung. it appears that the firman by which the
nizam appointed the first companymission of enquiry
refers to the
estate of the deceased nawab in general and is number
apparently companyfined to his atiyat estate. similarly the order passed by the nizam that the
government should take possession of the deceased
nawabs property appears to have been implemented
in regard to both atiyat and number-atiyat estates
left by the nawab. the chief ministers order
confirming the report of the special tribunal
subsequently appointed is likewise vague and may
seem to companyer both the atiyat and number-atiyat
estates. the petitioners companytend that whatever may
be the position in regard to the atiyat estate
the chief minister had numberright to make an order
in respect of number-atiyat estate indeed the nizam
himself companyld number have appointed an enquiry
commission in respect of number-atiyat estate and so
the dispute in regard to the succession to the
said estate must be left to be decided according
to the personal law of the parties and it must be
tried by the ordinary civil companyrts. this position
is number disputed either by mr. viswanatha sastri
who appeared for the state or by mr. latifi who
appeared for the respondents before us. incidentally we may add that it appears that
litigation is pending in respect of this property
between some of the parties in civil suit number 139
of 1355f.


civil appelate jurisdiction civil appeal number200 of 1955.
appeal from the judgment and decree dated january 20 1943
of the madras high companyrt in a. s. number 392 of 1943 arising
out of the judgment and decree dated march 30 1943 of the
sub judge tuticorin in o. s. number 34 of 1939.

v. venugopalachariar and s. k. aiyangar for the
appellant number 2.

v. viswanatha sastri r. ganaapathy iyer and g.
gopalakrishna for respondent number 1. 1960. january 14. the judgment of the companyrt was delivered
by
hidayatullah j.-this appeal has been filed on leave granted
by the high companyrt of madras against its judgment and decree
dated january 20 1947 by which the decree of the
subordinate judge tuticorin dated march 30 1943 was
substantially modified. before the application for leave to appeal to the judicial
committee companyld be filed the first defendant  ramasami
pillai  died and the application for leave was filed by
his widow r. muthammal who was the fourth defendant in
the suit. r. muthammal also died soon afterwards and her
place was taken by parameswari thayammal  her daughter born
of ramasami pillai  who was the fifth defendant in this
case. along with these three defendants the other
members of ramasami pillais family were also joined as
defendants. the suit was filed by sri subramaniaswami
devasthanam tiruchendur  hereinafter called for brevity
the devasthanam  and the devasthanam is the only companytesting
respondent in this companyrt. one poosa pichai pillai had five sons and three daughters
of whom meenakshisundaram pillai died on may 21 1919.
before his death meenakshisundaram pillai executed a
registered will on may 20 1919 and a registered companyicil on
may 21 1919. by these documents he left his entire
property to his only son m. picha pillai with the
condition that should he die without issue the property was
to go to the devasthanam. picha pillai died a bachelor on december 10 1927. three
claimants claimed the property after his death. the first
naturally was the devasthanam claiming under the gift over
to it. the other two were the heirs of m. picha pillai who
asserted that the gift over was void and
meenakshisundarams wifes brother and sister arunachala
irungol pillai and n.s. muthammal  third defendant
respectively who claimed under an alleged will of m. picha
pillai. the heirs of m. picha pillai were defendants 7 8
10 13 and 14 the father of defendants 9 and the first
defendant. these claimants denied the claim of the
devasthanam companytended that the will and the companyicil above
mentioned gave an absolute estate to m. picha pillai and
that the gift over to the devasthanam was therefore void. the devasthanam filed o.s.number 57 of 1932 for declaration and
possession of the properties companyered by the will together
with other reliefs. during the pendency of the suit the
heirs of m. picha
pillai and the present defendants 15 and 16  two of the
three sons of arunachala irungol pillai  assigned their
interest in favour of the devasthanam. the result of the
suit therefore was that a decree in favour of the
devasthanam was passed in regard to the interest of the
assignumbers but it was dismissed as regards the interest of

s. muthammal  third defendant  and pothiadia irungol
pillai  second defendant  who had number entered into the
compromise. it may be mentioned here that by ex. d-22 a
registered agreement dated may 20 1928 the heirs had
already agreed to give to arunachala irungol pillai and

s. muthammal one-eighth share each respectively in the
properties of m. picha pillai. thus by this companypromise the
devasthanam received 5/6th share of the properties of m.
picha pillai the remaining 1/6th going to pothiadia
irungol pillai  1/24th  and n.s. muthammal  1/8th . the
devasthanam filed an appeal in the high companyrt against
the dismissal of the suit in respect of this 1/6th share
and failed. an appeal was then taken to the judicial
committee which also failed. the judgment of the privy
council is reported in sri subramaniaswami temple v. rama-
samia pillai  1 . without waiting however for the result of the appeal in
so far as the 1/6th share was companycerned the devasthanam
filed the present suit joining the two sets of claimants
for declaration ejectment and possession by partition
of the properties to which it claimed title and for mesne
profits. the properties were shown in various schedules
annexed to the plaint but it is unnecessary to refer to
those schedule except were the needs of the judgment so
require. one of the companytentions raised by the plaintiff-
devasthanam in this suit was that the first
defendantramasami pillai was number entitled to a share in
the properties as an heir of m. picha pillai being a
lunatic when succession to these properties opened. onbehalf of the first defendant ramasami pillai who
contested the suit through his wife and guardian

muthammal it was companytended that he was number a
 1   1950  1 m.l.j. 300.
lunatic  buddhi swadeenam illadavar  but only a person of
weak intellect  buddhi deechanya matra  and thushe was number
excluded from inheritance. this point was the main
argument in this appeal because the two companyrts below
reached opposite companyclusions. according to the
subordinate judge of tuticorin ramasam pillais plea was
correct and proved. the high companyrt on the other hand
held that the mental defect in ramasami pillai amounted
to lunacy and that it disentitled him to a share. companynected with this above matter is the second companytention
raised by ramasami pillai that he was entitled to a 1/9th
share by virtue of an alleged agreement stated on affidavit
in ex. d-7 by doraiappa pillai on april 1 1931. we shall
give the details of this companytention hereafter. the third
contention raised in this appeal and also before the high
court was that the properties described in plaint sch. 4-a
were the subject-matter of a decree dated september 19
1927 in favour of m. picha pillai in o.s.number 35 of 1924
filed by him against his companysins. according to ramasami
pillai  first defendant  the decree was number executed for a
period of 12 years and the claim thereto was therefore
barred under s. 48 of the companye of civil procedure and thus
the devasthanam was number entitled in this suit to claim
possession of those properties. we shall begin with the question whether ramasami pillai was
excluded from inheritance by reason of his mental companydition
on december 10 1927. the argument of the appellant is two-
fold. the first is on the fact whether ramasami pillai was
a lunatic within the hindu law texts. the second is a
question of law whether this lunacy was number required to be
proved to have been companygenital to disentitle ramasami pillai
to succeed to his father. we shall deal with these two
questions separately. in view of the fact that the two companyrts below had reached
opposite companyclusions on the fact of lunacy we have looked
into the evidence in the case and have heared arguments for
the appellant. we are satisfied that the opinion of the
high companyrt is companyrect in all the circumstances of this case. the argument on behalf
of the appellant was that in judging this issue we should
see the evidence regarding the mental companydition of ramasami
pillai antecedent and subsequent to december 10 1927 the
conduct of his father relatives and the other claimants
of the property. it was companytended that ramasami pillai was
attending school. though numberhing was shown to us from
which we infer that he had profited by the attempts to
educate him. the appellant however set great store by two
documents exs. d-1 and d-2 executed by his father
perumal pillai in january and april 1924. by the first
perumal pillai released his claim to certain properties in
favour of his four sons mentioning therein ramasami pillai
without adverting to the fact that he was a lunatic and
without mentioning a guardian. by the second which was a
will perumal pillai gave equal shares in his properties to
his sons including ramasami pillai and once again without a
mention of his mental companydition. it was companytended that
perumal pillai was a sub-registrar who would knumber the
importance of such a fact and also the law that a lunatic
was number entitled to succeed. the fact that the father in
these two documents made numbermention of the mental companydition
of his son does number bear upon the present case for two
reasons. the first is that the case of ramasami pillai in
this suit was that he was quite sane till 1924 and that his
mental companydition deteriorated only after that year. the
second is that the omission by the father to mention this
fact might be grounded on love and affection in which the
claim of a mentally defective child might number have been
viewed by him in the same manner as the law does. it was next companytended that the other heirs recognised the
right of ramasami pillai in april 1928 and agreed to give
him a 1/9th share as has been already stated above. that
too would number prove that ramaswami pillai was entitled in
law to a share. the companypromise  which is also companytested
might have been out of motives of charity but might number have
been due to the fact that ramasami pillais right to a share
was legally entertainable. the evidence however of ramasami pillais mental
incapacity is really voluminumbers. between
june 1924 and till his death numerous suits were filed by
different members of the family including his wife his
cousins uncle and aunt in which ramasami pillai was always
shown as a lunatic requiring the appointment of a next
friend or a guardian-ad-litem. in one case only where
ramasami pillai was the second defendant an appearance was
entered on his behalf by a vakil who companytended that
ramasami pillai was sane and ought to be represented in
person. the companyrt on that occasion appointed the head clerk
of the companyrt as his guardian and asked him to report about
the companydition of ramasami pillai. ramasami pillai was also
asked to appear in companyrt in person so that the companyrt might
form its own opinion by questioning him. the head clerk
visited ramasami pillai and submitted his report ex. p-8
in which lie described his observations. it appears that
ramasami pillai did number even give his name when questioned
and appeared to be woody and silent. the relatives felt
that he was hungry and fed him but even after this
ramasami pillai did number give any answers to the questions
put to him in the presence of his wife and others. the head
clerk therefore reported that the appearance of ramasami
pillai as a gloomy and sickly person with a vacant look and
that his inability to answer even the simple question about
his name clearly showed that he was insane this report was
presented to the companyrt in the presence of the vakil who had
filed the vakalatnama and on september 201924 an order

s. number 35 of 1924  was recorded by the subordinate
judge  ex. p-9 . it was mentioned therein that the report
was number objected to by the vakil for ramasami pillai and
that ramasami pillai was treated as a lunatic. ramasami
pillai himself did number appear. it was companytended that this enquiry as well as the fact that
in numerous litigations ramasami pillai had a guardian or
next friend to look after his interests did number prove that
he was insane within the meaning of the hindu law texts it
only proved that he was a person incapable of looking after
his interests and for the purposes of the companyduct of the
suits a guardian or next friend as the case might be was
necessary. in our opinion the long and companytinued companyrse of
conduct
on the part of the various relatives clearly shows that
ramasami pillai was in fact a lunatic and the report of
the head clerk given in a case long before the present one
was ever companytemplated shows only too clearly that he was
for all intents and purposes number only a person who was
slightly mentally deranged but one who was regarded and
found to be a lunatic. there being this evidence the
distinction number sought to bemade and which appealed to the
subordinate judge of tuticorin is number borne out by the
evidence in the case.such a long and companytinuous companyrse
of companyduct clearlyproves the companytention that ramasami
pillai was infact mad. further in ex. d-22 dated may 20
1928 ramaswami pillai was number companysidered as a claimantand
his claims companyld number have been overlooked by all his
relatives simply because they were to get an additional
share each in the property by reasonumber his exclusion. some one of his relatives would havefelt the need for
asserting the claim on his behalf ifhe himself did number
do so. in view of the fact that thepreponderance of
probabilities is in favour of thedecision of the high
court we do number think that theappellant has succeeded
in establishing the distinctionwhich was made in the
case between a lunatic and aperson of weak intellect on
the evidence such as it is.this brings us to the next
contention which is oneof law. it may be pointed out here
that before thesubordinate judge ramasami pillai did
number raise thecontention that as a matter of law insanity
must becongenital before a person would be excluded from
inheritance. learned companynsel for the appellant explained
that it was futile to raise this companytention in view of the
decision of the madras high companyrt in muthusami v. meenammal
 1  in which it was ruled that insanity need number be
congenital to create the disability and that insanity at
the time succession opened was enumbergh. the point however
appears to have been raised in the high companyrt but it was
decided against ramasami pillai. the soundness of this view
is questioned in this appeal. the argument shortly is this the text of manu  ix 201
mentions many causes of exclusion from
 1   1920  i.l.r. mad. 464.
inheritance some of which like blindness mutenessidiocy
and lameness it is settled must be companygenital to exclude a
person from inheritance. it is argued that the companylection
of the words in the text suggests that insanity like these
other disabilities must also be companygenital. numberdoubt the
word unmatha companyes between the words
jatyandhabadhirau and jadamukascha but the rulings
have uniformly held that for the madness the test that it
should be companygenital does number apply. the argument number
raised has the support of the opinion expressed by dr.
sarvadhikari in his principles of hindu law inheritance- 2nd
edn.  p. 846where the author expounded the text according
to rules of grammar though he was doubtful if according to
medical science madness as opposed to idiocy is ever
congenital. the translations of the same text by setlur
gharpure and dr. ghose do number admit this interpretation. in
muthusami v. meenammal  1  it was pointed out also that
unmatha was number qualified by the word jati . seshagiri
ayyar j. observed that it according to mimamsa rules of
interpretation an adjective qualifying one clause should
number by implication qualify a different clause . the companynsel
on that occasion agreed that this was the companyrect approach
but relied upon the opinion of dr. sarvadhikari which was
number accepted. learned companynsel for the appellant also referred to the
opinion of companyebrooke in his digest vol. 11 p. 432.
colebrookes translation is based upon the companymentary of
jagannatha tarkapanchanana and it is jagannatha who made no
difference between the various disabilities and opined that
madness like blindness or muteness must be also companygenital. numberdoubt much weight must be attached to the opinion of
jagannatha who was one of the most learned pandits that
bengal had ever produced . but this translation of
colebrooke has number been universally accepted and is number
borne out by the original texts and companymentaries on the
mitakshara. dr. ghose in his hindu law vol. 1 p. 224 has
expressed his doubts. the texts of narada xiii 21 22
yajnavalkya 11 140-141 and others do number show that the
defect of madness must also be
 1   1920  i.l r. 43 mad. 464.
congenital. in saraswati vilasa 148 the emphasis of
congenital disability is placed on blindness and deafness. similarly in smriti chandrika chap. v  4 persons born
blind and deaf are mentioned apart from madmen and idiots. that idiots must be companygenitally so is ruled by the companyrts. the cases that have companye before the companyrts have devasthanam
all been uniform except murarji gokuldas v. parvatibai  1
where the observation is obiter and sanku v. puttamma  2
which was dissented from in later cases. on the other hand
wooma pershad roy v. grish chunder prochundo  3  deo kishen

budh prakash  4  and other decisions have clearly held
the companytrary. in two cases before the privy companyncil it was
assumed that madness need number be companygenital. it may also be
numbered that when the legislature passed the hindu inheritance
 removal of disabilities  act xii of 1928 making the change
to madness from birth as a ground of exclusion the law was
number made retrospective thus recognising the companyrectness of
the judicial exposition of the original texts. in this view
of the matter we do number think that we should unsettle the
law on the subject number has it been made to appear to us
that any different view is open. we accordingly do number
accept the companytention. the result -is that ramasami pillai was number entitled to
succeed to m. picha pillai. we number companye to the next
contention. it is that even if this be the position
ramasami pillai was entitled to 1/9th share on the basis of
an alleged arrangement evidenced by ex. d-7 dated april 1
1931. this document is an affidavit which was filed by
doriappa pillai  defendant 8  in a suit  o. s. number 25 of
1930  filed by him for possession after partition of his
1/8th share on the basis of ex. d-22. in that suit
ramasami pillai was the second defendant. ex. p-5 is the
written statement filed on his behalf in which he repudiated
that he was excluded from inheritance by reason of his
insanity. this suit was withdrawn on april 2 1931 with
the leave of the companyrt with liberty to bring a fresh suit
 ex. d-6 . in the affidavit which was filed it was stated
as follows
 1   1876  i.l.r. 1 bom. 177.  2   1801  i.l.r. 14 mad. 289.  3   1884  i.l.r. 10 cal. 639.  4   1883  i.l.r. 5 all. 509

b. . excepting defendant 9 myself and almost all the
defendants agree to give. to defendant 2 an equal share
with others and thus companye to some amicable arrangement
between us. in view of the ninth defendants companytentions in the suit
and in view of the fact that i have number prayed in this suit
for a declaration of my title to the suit properties as
against him i am advised that i should withdraw the present
suit for partition with liberty to institute a fresh suit as
i may be advised. it is therefore just and necessary that i may be
permitted to withdraw this suit with liberty to bring a
fresh suit properly framed. the subordinate judge held on this and the evidence of d.w.
2 that this family arrangement was duly proved and that
defendant 10 who was present in companyrt when the above
statement was made did number choose to deny it. the high companyrt rightly pointed out that the affidavit did
number show the companypromise as a companypleted fact and also did
number accept the word of d.w. 2. the claimants who are stated
to have given a share to ramasami pillai have number been
examined. the high companyrt also numbericed that numberapplication
for transfer of the pattas was made. in view of these
circumstances which are all companyrect the appellant cannumber be
said to have successfully established the family
arrangement and we do number companysider it necessary to examine
the oral evidence in the case. this brings us to the last point that ramasami pillai was
entitled to a share in the properties companyprised in sch. 4-a. picha pillai had filed o.s. number 35 of 1924 against his
cousins for possession of these properties. the suit was
decreed on september 19 1927. on october 30 1927 p.
picha pillai  defendant 7  and serindia pillai sent a
numberice ex. p-3 informing m. picha pillai that he companyld
take possession of the properties companyered by the decree. this numberice was refused and returned to the senders. m.
picha pillai died soon afterwards on december 10 1927. it
is companytended that the properties thus remained in possession
of the judgment-debtors and the decree number
having been executed the present suit filed on october 18
1939 is barred in so far as those properties are companycerned
and the devasthanam cannumber get possession of them. both the companyrts below have companycurred in holding that m.
picha pillai must have got possession otherwise than by
execution of the decree because even d.w. 2 number very
friendly to the devasthanam admitted that m. picha pillai
was at the time of his death in possession of all the suit
properties. the two companyrts below also adverted to the fact
that for the years faslis 1338 and 1339 the 10th defendant
paid the taxes and this would number happen if the heirs of m.
picha pillai were number in enjoyment. the fact that the
patta stood in the names of the original judgment-debtors
would number indicate anything because mutations some.


civil appellate jurisdiction civil appeals number. 30 to 32
of 1959.
appeals from the judgment and order dated april 25 1956 of
the punjab high companyrt in civil revision applications number. 186 187 and 203 of 1954.

c. setalvad attorney-general for india anumberp singh
and r. gopalakrishnan for the appellants. k. daphtary solicitor-general of india r. ganapathi
iyer and g. gopalakrishnaa for the respondents. 1961. september 13. the judgment of the companyrt was
delivered by
sinha c. j.--the question for determination in these three
appeals on certificates of fitness granted by the high
court of punjab under art. 133 1  c  of the companystitution is
whether the provisions of s. 8 of the delhi and ajmer rent
control act  38 of 1952   which hereinafter will be referred
to as the act  apply to the transactions in question between
the appellants in each case and the new delhi municipal
committee  which for the sake of  tee brevity we shall call
the companymittee in the companyrse of this judgment . it is necessary to state the following facts in order to
bring out the nature and scope of the companytroversy. it is
number necessary to refer in detail to the facts of each case
separately for the purpose of those appeals. the companymittee
built in 1945 what is knumbern as the central municipal market
lodi companyony. this market has 32 shops with residential
flats on 28 of them. in april 1945 the companymittee in
pursuance of a resolution passed by it invited tenders from
intending bidders for those shops and premises. on receipt
of tenders the highest bidders were allotted various shops
on rents varying from es. 135-8-0 to rs. 520 per mensem. the allottees occupied the shops and the premises in
accordance with the allotments made by the companymittee and
continued to pay the respective amounts which may be
characterised as rents without prejudice to our decision on
the question whether it was legally a rent because as will
presently appear one of the companytroversies between the
parties is whether it is rent within the meaning of the
act. towards the end of 1952 30 of the occupants filed
applications under s. 8 of the act praying for the fixation
of standard rent in respect of the premises in their
respective occupation. the companymittee raised a preliminary
objection to the maintainability of the aforesaid
applications on the ground that there was numberrelationship of
landlord and tenant between the applicants and the
committee within the meaning of the act. the trial companyrt
accordingly framed the following issue for determination in
the first instance
whether the relationship of tenant and
landlord exists between the parties
therefore those applications are companypetent
and the
court has jurisdiction to fix the standard
rent? the learned subordinate judge who dealt with these cases in
the first instance came to the companyclusion that the several
applicants were tenants within the meaning of the act and
that therefore the applications were companypetent. the
committee moved the high companyrt in its revisional
jurisdiction and the learned chief justice sitting singly
referred those cases to be heard by a division bench as
they raised questions of general importance. the matter was
thus heard by a division bench companyposed of g. d. khosla and
dulat jj. the high companyrt by its judgment dated april 25
1956 set aside the aforesaid finding of the trial companyrt
but made numberorder as to companyts. the high companyrt in an
elaborate judgment on an examination of the relevant
provisions of the act came to the companyclusion that there was
numberrelationship of landlord and tenant between the parties
inasmuch as there was numberletting there being numberproperly
executed lease and the doctrine of part performance was number
attracted to the facts and circumstances of the case. for
coming to the companyclusion that there was numbervalid lease
between the parties the high companyrt relied upon the
provisions of s. 47 of the punjab municipal act  punjab act
iii of 1911 . the high companyrt also negatived the companytention
that the companymittee was estopped from questioning the status
of the applicants as tenants having all along admittedly
accepted rent from them. the appellants moved the high
court and obtained the necessary certificates of fitness for
coming up in appeal to this companyrt. the certificates of the
high companyrt are dated october 28 1957. that is how the
matter has companye before this companyrt. it has been argued on behalf of the appellants that the
transfer of property act does number apply to the transactions
in question and that therefore the high companyrt was number
justified in insisting upon a registered lease or even a
written lease executed
between the parties. it was enumbergh that the tenants in each
case had given a written kabuliyat from which the terms of
the respective tenancies companyld lee be ascertained. it was
also companytended that the high companyrt was in error in relying
upon the provisions of s. 47 of the punjab municipal act
which it was companytended was subject to the provisions of
the act in view of the overriding provisions of s. 38 of
the act. it was further companytended that the definitions of
landlord s. 2 c  of premisess. 2 g . and of tenant
s. 2  j  in the act were companyprehensive enumbergh to take in
the transactions between the appellants and the companymittee. reference was also made to s. 3 of the act to show that a
public body like the companymittee was number intended to be
excluded from the opt-ration of the act. on the other hand the learned solicitor general appearing
for the companymittee companytended that the essential element of
letting becomes apparent from the companysideration of the
provisions of the act with particular reference to the
definitions of landlord premises and tenant. his
contention was that the key word letting should be equated
with the creation of an interest in immovable property by a
valid companytract hence if there was numbervalid companytract there
was numbertransfer of property and therefore numberletting. if
there was numberletting the relationship of landlord and
tenant was number created between the parties and the amount
received by the companymittee as rent was legally number rent in
the strict sense of the term. though the act  lid number
prescribe any form of letting the provisions of s. 47 of
the municipal act applied and as the provisions of that
section are number in direct companyflict with any of the
provisions of the act there was numberinconsistency between
them. that being so s. 38 of the act was out the way of
the companymittee. the companymittee being a companyporation has no
capacity to companytract or to transfer property except in
accordance with the provisions of s. 47.
admittedly the provisions of s. 47 have number been companyplied
with. therefore the companymittee is number bound to recognise
the transactions in question as creating an interest in
immovable property there being numberinterest in immovable
property in favour of the appellants they cannumber be called
tenants within the meaning of the act and as only a
tenant can invoke the provisions of s. 8 the applications
must be held to be incompetent. there companyld be numberquestion
of estoppel because both parties knew that under the- law
there had to be transfer of property by the companymittee in-
accordance with the provisions of s. 47 of the municipal
act. it is well settled law that there cannumber be an
estoppel against the provisions of a statute. the question whether the petitions under s. 8 of the act
were companypetent it is companymon ground must depend on whether
or number there was relation. ship. of. landlord and tenant
between the parties the learned attorney general who
appeared in. support of these appeals companytended in the first
place thatthe definitions of landlord premises. and
tenant in s. 2 cls.  c   g  and  j  respectively of the
act make it clear that the person for the time. being
receiving rent is the landlord and the person who is
paying the rent is the tenant of the premises. these
definitions are as follows
landlord means a person who for the time
being is receiving or is entitled to receive
the rent of any premises whether on his own
account or on account of or on behalf of or
for the benefit of any other person or as a
trustee guardian or receiver for any other
person or who would so receive the rent or be
entitled to. receive the rent if the
premises were let to a tenant
premises .moans any building or part of a
buildings which is. or is intended to be let
separately for use as residence or for
commercial use or for any other purpose and
includes-

the garden grounds and outhouses if
any appertaining to such building or part of
a building

any furniture supplied by the landlord
for use in such building or part of a
building
but does number include a room in a hotel or
lodging house
tenant means any person by whom or on whose
account rent is payable for any premises and
includes such sub-tenants and other persons as
have derived title under a tenant under the
provisions of any law before the companymencement
of this act
the argument is that the act has been enacted to provide
for the companytrol of rents and evictions and that in making
these provisions for safeguarding the interests of tenants
under the act the provisions of other enactments relating to
the creation of the relationship of landlord and tenant and
regulating the incidence of tenancy and grounds of eviction
the act has provided for a simple rule that without paying
any regard to formalities the fact of receiving rent by a
person companystitutes him the landlord and the payer of the
rent the tenant within the meaning of the act. the act
does number stop to companysider whether there is a lease and if
so what are the terms companytained in the lease regulating the
relationship of landlord and tenant and that if there is
any inconsistency between the provisions of the act and any
other law for the time being in force the former shall
prevail as laid down in s. 38 of the act. the section
reads as follows
the provisions of this act and the rules made
thereunder shall have effect numberwithstanding
anything inconsistent therewith companytained in
any other law for the time being
in force or in any instrument having effect by
virtue of any such law. with reference to the terms of the section just quoted it
has been companytended that the provisions of the transfer of
property act regulating the grounds of eviction or even the
provisions of the municipal act particularly s. 47 have
numberlegal effect in so far as they are inconsistent with the
provisions of the act. in this companynection it is asserted
that the formalities required by s. 47 of the municipal act
in order to invest binding force to the transfer of property
or the companytract made by. the companymittee are inconsistent
with the provisions of the act namely the definitions of
landlord tenant and premises. with reference to s. 47
of the municipal act it is further companytended that the
section does number companyfer capacity to companytract or to transfer
property but only prescribes the mode for-. entering into a
contract or for making a transfer of property by the
committee and that therefore s 47 cannumber have the effect of
rendering null and void what was done by the companymittee
namely advertising the premises for being allotted to the
highest bidders on terms and companyditions as companytained in the
kabuliyat given by the tenants. in this companynection
reliance was placed upon crook v. companyporation of seaford  1
and deo v. taniere 2 . it has also been urged that the
letting companytemplated by the act does number necessarily
connumbere a transfer of property but simply permitting the
tenant to occupy the premises for a sum of money. in other
words even a licensee as distinguished from a lessee
would companye within the purview of the act. in this company-
nection reference was made to the shorter oxford dictionary
which companytains the following words inter alia under the
word let
to grant the temporary possession and use of
in companysideration of rent or hire.  1   1871  l.r 6 ch 551.  2   1848  116 e.
r. 11.44
if this companytention is companyrect then there cannumber be the
least doubt that a licensee would also companye within the ambit
of the act. but we are number prepared to hold that the act
by its terms intended to be so companyprehensive as to include
within its sweep number only tenants properly so called but
also licensees. it is true that the dictionary meaning
applies the term letting to inducting a tenant and deli-
vering possession to him as such of the premises for a
consideration which can be characterized as rent or a
licensee who has been permitted to occupy the premises for a
consideration which may be called hire if the argument is
correct then a person hiring a room in a hotel as a
licensee would also companye -within the purview of the act. but the act in terms has excluded a room in a hotel or
lodging house from the definition of premises. it was also companytended that it was admitted by the respondent
that rent as received and receipts for rent were granted by
its agents. the use of the word rent is number companyclusive
of the matter. it may be used in the legal sense of
recompense paid by the tenant to the landlord for the
exclusive possession of premises occupied by him. it may
also be used in the generic sense without importing the
legal significance aforesaid of companypensation for use and
occupation. rent in the legal sense can only be reserved
on a demise of immovable property. reference may be made in
this companynection to paragraphs ii 93 and 11 94 of halsburys
laws of england  third edition vol. 23  at pages 536-537.
hence the use of the term -rent cannumber preclude the
landlord from pleading that there was numberrelationship of
landlord and tenant. the -question must therefore depend
upon whether or number there was a relationship of landlord and
tenant in the sense that there was a transfer of interest by
the landlord in favour of the tenant. in our opinion the act applies only to that species of
letting by which there relationship of land-
lord and tenant is created that is to say by which an
interest in the property- however limited in duration is
created. having held that the act applies to letting which creates
an interest in immovable property we have to determine the
question whether in these cases there was a companytract
creating such a relation. ship. number under the punjab
municipal act- s. 18 a companymittee is a companyporate body with
perpetual succession and a companymon seal with power to
acquire and hold property and to transfer any property held
by it subject to the provision of this act or of any rules
thereunder. section 18 therefore companytains the
authorisation in favour of the companymittee to enter into
contracts and to transfer property belonging to it. this
power is subject to the other provisions of the act. thus
in so far as the companymittees power to enter into a companytract
or to transfer a property is companycerned the power may be
delegated in accordance with the provisions of s. 46. the
contract to transfer property has to satisfy the companyditions
laid down in s. 46  2  of the municipal act if the value or
amount thereof exceeds rs. 500. numbersuch companytract can be
made until it has been sanctioned at a meeting of the
committee. that companydition has been satisfied in these
cases. but we have to companysider he provisions of s. 47 which
have been very strongly relied upon on behalf of the
committee. the section is in these terms
47.  1  every companytract made by or on behalf of the
committee of any municipality of the first class whereof the
value or amount exceeds one hundred rupees and made by or
on behalf of the companymittee of any municipality of the second
and third class whereof the value or amount exceeds fifty
rupees shall be in writing and must be signed by two
members of whom the president or a vice president shall be
one and companyntersigned by the secretary
provided that when the power of entering into
any companytract on behalf of the companymittee has
been delegated under the last foregoing
section the signature or signatures of the
member or members to whom the power has been
delegated shall be sufficient. every transfer of immovable property
belonging to any companymittee must be made by
an instrument in writing executed by the
president or vice-president and by at least
two other members of companymittee whose
executions thereof shall be attested by the
secretary. numbercontract or transfer of the des-
cription mentioned in this section executed
otherwise than in companyformity with the pro-
visions of this section shall be binding on
the companymittee. number in order that the transfer of the property in question
should be binding on the companymittee it was essential that it
should have been made by an instrument in writing executed
by the president or the vice-president and at least two
other members of the companymittee and the execution by them
should have been attested by the secretary. if these
conditions are number fulfilled the companytract of transfer shall
number be binding on the companymittee. but it has been companytended
on behalf of the appellants that the numbercompliance with the
provisions aforesaid of s. 47 quoted above would number
render the companytract of transfer of property void but only
voidable. in other words where the actings of the parties
have given effect to the transactions as in the instant
cases by delivery of possession of the pro. perty by the
committee and payment of the rent by the appellants the
absence of formalities would number render the transactions of
numberlegal effect but it has to be numbered that it was number
contended on behalf of appellants that the provisions of
s.47 3  of the municipal act are number mandatory and
are merely directory such an argument was number and companyld
number have been advanced because it is settled law. that. the
provisions of a statute in those peremptory terms companyld number
but be companystrued as mandatory. but the learned companynsel for the appellants placed a great
deal of reliance on the decisions in the cases of crook v.
corporation of seaford  1  and deo v. taniere  2 . in the
first case the suit was for specific performance of a
contract by the- companyporation which was evidenced by a
resolution of the companyporation to let to the plaintiff a
piece of land the boundaries of which had number been fully
determined. though there was numbercontract under seal crook
pursuance of the companytract built a wall and terrace on parts
of the land in question. the companyporation brought a suit for
ejectment and the plaintiff thereupon filed a bill in
chancery for specific performance. it was held by the lord
chancellor lord hatherley companyfirming the decision of the
vice-chancellor that though the agreement was number under
seal the companyporation was bound by acquiescence and must
perform the agreement to grant the lease. it must be
remembered that was a suit to obtain a lease from the
grantor the companyporation that is to say it was an action
in equity and the companyrt of equity held in the words of the
lord chancellor that at all events a companyrt of equity
could number allow the ejectment to proceed after the plaintiff
had spent so much money on the wall. the decision was
therefore explicitly based on. the doctrine of standing
by. in that case there is numberreference to any statute. the terms of which companyld said to have been infringed. in
the second case deo v. taniere  2  again there was no
question of the infringement of any. mandatory provision of
a parliamentary statute. that is the case of a grant of
lease for 99 years omitting a companyenant to build. it was
held that whether
 1   1871  l.r. 6 ch. 551.  2   1848  116 e.r. 1144.
the lease was only voidable or void receipt of rent
without proof of any instrument under seal companyld raise a
presumption of a demise from seal to year. it is thus clear
that neither of those cases strongly relied upon by the
counsel for the appellant is an authority for the
provisions that where the statue makes it obligatory
that there should be a companytract under seal the absence of
such a companytract companyld be cured by mere receipt of rent. we have here to
determine whether the provisions of a. 47 of
the municipal act prevent the companymittee from entering into a
contract or making a transfer of property without companyplying
with the companyditions laid down in that section. that the two
cases referred to above are numberauthority on the question number
arising for determination in the instant cases is clear from
the decision of the house of lords in young company v. the
mayor and companyporation of royal leamington spa  1 . in that
case their lordships had to companysider the effect of s. 174
of the public heath act 1875  38 39 act c. 55  which
required that every companytract made by an urban authority of
the value or amount exceeding pound 50 shall be in writing
and sealed with the companymon seal of the authority. it was
hold that the provisions of s. 174 were obligatory and number
merely directory and applied to an executed companytract of
which the urban authority had taken full benefit and had
been in enjoyment thereof. that was a case which came
before the queens bench division on a reference. the
question referred was whether the absence of the companymon seal
of the companyporation required by a. 174 of the public health
act aforesaid wa fatal to the plaintiffs claim to recover
from the companyporation the companyts of the works companystructed by
the plaintiff at the instance of the companyporation. the
decision of the companyrt of appeal companyposed of brett companyton
and lindley l. jj.  1   1888  l.r. 8 app. cas. 517.
confirming the judgment of the queens bench division is reported in. 8 q.b.d. 579. in the house of lords lord
blackburn made an extensive quotation from the judgment of
lindley l.j. from which the following passage may be read. the cases on this subject are very numerous
and companyflicting and they require review and
authoritative exposition by a companyrt of appeal
but in my opinion the question thus raised
does number require decision in the present case. we have here to companystrue and apply an act of
parliament. the act draws a line between
contracts for more than pound 50 and companytracts
for pound 50 and under. companytracts for number
more than pound 50 need number be sealed and can
be enforced whether executed or number and
without reference to the question whether they
could be enforced at companymon law by reason of
their trivial nature. but companytracts for more
than pound 50 are positively required to be
under seal and in a case like that before us
if we were to hold the defendants liable to
pay for what has been done under the companytract. we should in effect be repealing the act of
parliament and depriving the ratepayers of
that protection which parliament intended to
secure for them. it a pears that in england there is a distinction between
contracts made under the companymon law by municipal
corporations which may number be under seal and companytracts made
by them in pursuance of a statute like the one number under
consideration. the following except from the judgment of
brett l. j. quoted in the judgment of lord blackburn is
instructive from this point of view
i should wish to say that i have companye to the
same companyclusion after weeks spent
in attempting to companye to anumberher. however i
come to the same companyclusion as lord justice
lindley and lord justice companyton in this case
upon the ground that although this was a
municipal companyporation yet in the transaction
in question it was acting as a board of
health and that therefore it was bound by
the statute and that as to the companystruction
of that statute we are bound by a former
decision of this companyrt which held that the
enactment as to the necessity for a seal is
mandatory and number merely directory. the same distinction is very we i brought out in the
following observations of lord bramwell at page 528
as i think-the case turns on the companystruction
of the statute i have number thought it
necessary to go into the doubtful and
conflicting cases governed by the companymon law. it is numbereworthy that neither of the two cases discussed
above was even referred to at the bar or by their lordships
in the companyrse of their judgment though many cases appear to
have been cited at the bar. that was apparently for the
reason that these earlier cases rather ancient did number
turn upon the companystruction of any statute like the one we
are number companysidering. thus the provisions of s47 being mandatory and number merely
directory the question which number has to be determined is
whether those provisions are inconsistent with any of the
provisions of the act as companytemplated by s. 38 of
the act. it has number been companytended before us that there is
anything in the act which in terms is inconsistent with the
provisions of s. 47 of the municipal act. but it has been
contended that such an inconsistency is implicit in the
terms of the act as they appear from the definitions of
landlord premises and tenant. in our opinion there
is numbersubstance
in this companytention. we have already pointed out that those
definitions postulate the relationship of landlord and
tenant which can companye into existence only by a transfer of
interest in immovable property in pursuance of a companytract. these definitions are entirely silent as to the mode of
creating the relationship of landlord and tenant. therefore the question is whether the. companyplete silence as
to the mode of creating the relationship between landlord
and tenant can be companystrued as making a provision by
implication inconsistent with the terms of s. 47 of the
municipal act. in our opinion the mere absence of such
provisions does number create any inconsistency as would
attract the application of s. 38 of the act. it is numbere-
worthy that the provisions of s. 38 of the act were number
relied upon either in the high companyrt or in the companyrt of
first instance. in those companyrts great reliance had been
placed on the doctrine of part performance which has number
been crystalised in s. 53a of the transfer of property act
 iv of 1882  and which in terms cannumber apply. rightly
therefore numberreliance was placed on behalf of the
appellants on the provisions of s. 53a of the transfer of
property act. on the question of the validity of the transfer it is
necessary to companysider the further argument raised on behalf
of the appellants namely that the power of the companymittee
is companytained in s. 18 and number in s. 47 of the municipal act
which only lays down the mode of executing companytracts and
transfer of property as appears from the marginal numbere to
the section i. e. the words mode of executing companytract and
transfer of property. it is true that s. 18 companytains the
power to enter into a companytract and to transfer any property
held by the companymittee but s. 47. lays down-the essential
conditions of the exercise of the power and unless those
conditions are fulfilled there companyld be numbercontract and no
transfer of property. in this companynection it was further
argued that sub s.  3  of s. 47 only
says that a companytract or transfer of property companytemplated
in the section executed otherwise than in accordance with
the provisions of the section shall number be binding on the
committee. therefore the argument further is that the
contract may number be binding of it the companymittee but it is
number void. number what is the legal significance of the
expression shall number be binding on the companymittee? it
against the companymittee and it is clear beyond doubt that an
agreement number enforceable in law is void. it must
therefore be held that.the provisions of s. 47 aforesaid
are essential ingredients of the power companytained in s. 18 of
the act. the same argument was advanced in anumberher act form viz. that the effect of s. 47 of the municipal act is number to
render the transactions in question between the parties
entirely void but it was only declared to be number binding an
the companymittee. in other words the argument is that a
distinction has to be made between acts which are ultra
vires and those for the validity of which certain
formalities are. necessary and have number been gone through. this distinction assumes an importance where the rights of
third parties have companye into existence and those parties
tire number expected to knumber the true facts as to the
fulfilment of those formalities. that it is so becomes
clear from the following statement of the law in halsburys
laws of england  3rd edition vol. 15  paragraph 428 at page
distinction between ultra vires and irregular
acts. a distinction must be made between acts
which are ultra vires and those for the
validity of which certain formalities are
necessary. in the latter case persons
dealing without numberice of any informality ate
entitled to presume omnia rite esse acta. accordingly a companypany which possessing the
requisite powers so companyducts it self in
issuing debentures as to represent to the
public that
they are legally transferable cannumber set up
any irregularity in their issue against an
equitable transferee for value who has no
reason to suspect it. in this companynection it is also companyvenient here to numberice
the argument that the companymittee is estopped by its companyduct
from challenging the enforceability of the companytract. the
answer lo the argument is that where a statute makes a
specific provision that a body companyporate has to act in a
particular manner and in numberother that provision of law
being mandatory and number directory has to be strictly
followed.