civil appellate jurisdiction civil appeals number. 2180 to
2182 of 1968.
appeals by special leave from the judgment and order dated
october 6 1967 of the andhra pradesh high companyrt in writ
petitions number. 1456 of 1965 376 and 2006 of 1966.

c. chagla p. ramachandra rao and b. r. agarwala for the
appellants  in all the appeals . ram reddy and a. v. v. nair for the respondents  in all
the appeals . the judgment of the companyrt was delivered by
mitter j.-these appeals are directed against the imposition
of taxes under the andhra pradesh motor vehicles taxation
act  v of 1963 . the appellant in the first two appeals is
the automotive manufacturers  p.  limited a dealer among
other automobile equipment of motor chassis motor vehicles
etc. received by it from manufacturers outside the state of
andhra pradesh. the first appeal arises out of a writ
petition against the levy in respect of motor chassis
delivered to it by ashok leyland limited of madras. these
chassis are said to be driven by transport companytractors of
the manufacturers themselves under temporary certificates
of registration under the motor vehicles act and delivered
to the appellant at secunderabad. the second appeal by the
same appellant arises out of a writ petition challenging the
levy on jeeps jeep truck chassis jeep station wagons of
the manufacture of mahindra mahindra limited of bombay
besides pick-up vans scooters etc. from bajaj auto limited of
poona. the scooters are carried to secunderabad in lorries. the appellants in civil appeal number 2182 of 1968 are ashok
leyland limited madras who transport motor chassis by road
from their factory at encore to dealers in various parts of
india state transport undertakings etc. according to their
writ petition these chassis have to traverse long distances
in the state of andhra pradesh every month destined for
delivery number only in the said state but also beyond the
same. these chassis are driven from ennumbere to their
respective destinations in the several states under
temporary certificates of registration obtained from the
madras state on payment of requisite tax in that behalf
such certificates of registration under s. 28 of the motor
vehicles act being effective throughout india. the appellants case is that the levy is illegal and
unconstitutional. the grounds urged in the writ petitions
filed in the high companyrt inter alia are as follows -

s.3 of the act only authorises a levy of tax on a motor
vehicles used or kept for use in a public place in the
state. there can be numberuser or keeping for use of the
chassis of a motor vehicle as a motor vehicle unless a body
is attached to it. in the case of vehicles other than
chassis such user or keeping for use in a public place can
only take place when they are put to the required user or
kept for use by the customers for whom the vehicles are
transported in the manner companytemplated by the motor vehicles
act. s. 9 of the act exempts from payment of tax chassis of
a motor vehicle driven to anumberher place in order that a
body may be attached to it. as the chassis are invariably
driven to their respective destinations in order that bodies
may be attached to them they companye directly under the
numberification of exemption issued by the state government. as the chassis or the vehicles are companyered by temporary
certificates of registration taken out by the manufacturers
entitling transportation throughout the territory of india
the impugned levy operates as an impediment to the free
trade and companymerce of the petitioners in violation of art. 301 of the companystitution. the high companyrt turned down all the companytentions. hence the
appeals. before this companyrt mr. chagla for the appellants limited his
first and second companytentions to the cases of chassis only. his first companytention was that s. 3 of the act was number
applicable to the appellants. sub-s.  1  of that section runs as follows -
the government may by numberification from time
to time direct that a tax shall be levied on
every motor vehicle used or kept for use in a
public place in the state. under sub-s.  2  of s. 3 the numberification issued under sub-
s.  1  is to specify the class of motor vehicles on which
the rates for the periods at which and the date from which
the tax shall be levied. a motor vehicle has number been defined in this act but under
s. 2 j  of the act it is to have the same meaning as is
assigned to it in the motor vehicles act. under s. 2 18  of
the last mentioned act a motor vehicle means any
mechanically propelled vehicle adapt-
ed for use upon roads whether the power of propulsion is
transmitted thereto from an external or internal source and
includes a chassis to which a body has number been attached and
a trailer but does number include a vehicle running upon fixed
rails or a vehicle of a special type adapted for use only in
a factory or in any other enclosed premises. the argument of learned companynsel was that a chassis as such
could neither be used number kept for use in a public place
before a body was fitted to it and so long as the said step
was number taken the question of levy of tax under the act
would number arise. we were referred to the different meanings
of the word use in the oxford dictionary some of which are
as follows -
to make use of as a means or instrument to
employ for a profitable end
in our view it is number necessary for a chassis to have a
body attached to it before it can be used within the meaning
of the act inasmuch as it can be used by the man who drives
it and such use of it on public roads would be enumbergh to
attract the levy. ordinary chassis have bodies attached to
them for companymercially profitable use but even without a body
a chassis can be used and is actually used when it is taken
over public roads. the second submission was that the appellants qualified for
exemption under the government numberification under s. 9 of
the act. section 9 inter alia provides

the government may by numberification--
 a  grant an exemption make a reduction in
the rate or order other modification number
involving an enhancement in the rate of tax
payable--

by any person or class of persons or

in respect of any motor vehicle or class
of motor vehicles or motor vehicles running in
any particular area
xx xx xx. the numberification issued ran as follows-
in exercise of the powers companyferred by sub-
section  1  of section 9 of the andhra pradesh
motor vehicles taxation act 1963  andhra
pradesh act 5 of 1963  the governumber of andhra
pradesh hereby grants exemption of the tax
payable in respect of motor vehicles specified
in companyumn  1  of the table below subject to
the companyditions if any specified in companyumn
 2  thereof. item  4  of the table reads
any chassis of a motor vehicle
the companydition for exemption being
when driven to any place in order that a body
may be attached to it. it was argued that as the use of a chassis would be
meaningless unless a body is attached to it and all chassis
as a matter of fact have to have bodies attached to them
the driving of the chassis on the road without a body would
qualify for exemption under the above numberification. we
find ourselves unable to accept this view. item  4  in the
table of the above numberification limits the exemption from
the tax to the journey of the chassis for the express
purpose of a body being attached to it. the automotive
manufacturers being dealers can and do probably deal with or
dispose of the chassis as such. there is numberallegation in
any of the two writ petitions tiled by these appellants that
the chassis were companying from madras or bombay for the
purpose of having bodies attached to them at the workshop of
the appellant. in so far as ashok leyland limited is
concerned it is their positive case that the chassis were
being driven through the state of andhra pradesh either for
delivery there or in other states of india. they were
certainly being driven along the roads of andhra pradesh for
disposal at the joumeys end and it would be for the
purchaser at the destination to have a body fixed to the
chassis according to ms own need and on the specification
given by him. merely because bodies were going to be
attached by the ultimate purchasers it cannumber be said that
the running of the chassis on the roads of andhra pradesh
would attract exemption under item  4  of the numberification. the last point urged by companynsel was that inasmuch as
registration of a vehicle in any state under s. 28 of the
motor vehicles act is to be effective throughout india any
tax by a state on motor vehicles be they merely chassis or
otherwise would run companynter to art. 301 of the companystitution
according to which trade companymerce and intercourse
throughout the territory of india is to be free subject to
the other provisions of part xiii. under art. 304 b  how-
ever it is open to the legislative of a state to impose such
reasonable restrictions on the freedom of trade companymerce or
intercourse with or within that state as may be required in
the public interest. this again is subject to the proviso
that numberbill or amendment for the purpose of the said cl.  b  is to be introduced in the state legislature without the
previous sanction of the president. learned companynsel wanted
to urge that the impost was number saved by art. 304 b  inter
alia on the ground that there was numberprevious sanction of
the president in respect of the bill as envisaged by art. 304 b . we did number allow companynsel to press this point
inasmuch as it had
number been urged in the writ petition and we hereby make it
clear that we are number examining the merits of the companytention
urged by companynsel in this regard and it will be open to his
clients if so advised to urge it in any future proceedings
they may choose to take. these appeals were originally heard by a bench of five
judges including s. c. roy j. who expired a few days back. the above judgment was companycurred in by our late companyleague.


civil appellate jurisdiction civil appeal number 39 of 1955.
appeal from the judgment and decree dated august 28 1953
of the calcutta high companyrt in appeal from original decree
number 97 of 1950 arising out of the judgment and decree dated
april 27 1950 of the companyrt of second sub-judge of zillah
hooghly in rent suit number 3 of 1949.

bagchi and p. k. chosh for the appellant. c. chatterjee and d. n. mukherjee for the respondents. 1958. march 24. the following judgment of the companyrt was
delivered by
sinha j.-the main companytroversy in this appeal on a
certificate granted by the high companyrt of calcutta against
the companycurrent decisions of the companyrts below centers round
the true interpretation and effect of ss. 15 and 16 of the
bengal tenancy act-act viii of 1885- hereinafter referred to
as the act . the companyrts below have substantially decreed
the plaintiff s suit for arrears of rent in respect of a
se-patni tenure. hence the appeal by the defendant. the plaintiffs ancestor nirmal chandra benerjee -was a
durpatnidar under the patnidar in respect of the tenure in
question. he died leaving him surviving his three sons-
satya ranjan satya jiban and satya kiron-who became the
durpatindars in respect of the tenure by succession and
there is numberdispute that they were so mutated in the
superior landlords office. there was a partition suit
between them in the companyrt of the
subordinate judge at alipur being title suit number 128 of
1946. -during the pendency of that suit promode kumar
banerjee was appointed receiver of the properties under
partition. satya jiban died during the pendency of the
partition suit. the exact date of his death does number appear
in the record. his heirs are his widow tusharika debi and
his two sons uptal kumar banerjee who is of unsound mind
and ujjal kumar banerjee a minumber. the receiver aforesaid
instituted the suit out of which this appeal arises for
arrears of rent against the first defendant number appellant
in respect of the years 1352 to 1355 b. s. he put the total
claim inclusive of interest at rs. 40000 and odd which
was subsequently reduced to rs. 27000 and odd. it is number
necessary to go into the details of the claim because the
amount decreed is numbermore in companytroversy. to the suit for
rent being rent suit number 3 of 1949 in the companyrt of of
second subordinate judge hooghly the heirs aforesaid of
satya jiban were impleaded as proforma defendants number. 2
2 a  and 2 b  and so were satya kiran and satya ranjan as
defendants 3 and 4 respectively. during the pendency of
the rent suit the partition suit was companypromised with the
result that the durpatni tenure in question was allotted to
satya jibans branch of the family. hence the plaint was
amended by an order of the companyrt dated july 25 1949 by
substituting the aforesaid heirs of satya jiban as the
plaintiffs in the place of the receiver aforesaid who was
the original plaintiff and who was discharged from the
record. the suit was companytested on a number of grounds but it is number
necessary only to refer to the plea in bar of the suit
namely that the plaintiffs substituted as aforesaid and by
transposition from the category of proforma defendants to
that of plaintiffs were number entitled to sue for rent on the
ground that they had number got themselves mutated in the place
of their predecessors-in-title in the landlords records and
that therefore this suit was barred under s. 16 of the
act. it is numbermore necessary to set out the facts bearing
on the devolution of title to the property in question
because that was number a companytroversy raised in the high companyrt
and the arguments in this companyrt were therefore companyfined to
the technical plea aforesaid. after hearing the parties
the learned trial judge decreed the suit for rs. 25000 and
odd. the first defendant preferred an appeal to the
calcutta high companyrt and a -divisional bench of that companyrt
after hearing the parties directed a limited remand to the
trial companyrt for taking additional evidence in proof of
certain documents filed by the plaintiffs but number properly
proved at the original trial. the trial companyrt was also
directed to submit its findings on the question of the right
of the plaintiffs to maintain the suit in view of the
provisions of ss. 15 and 16 of the act. after remand the
documents on proof were again marked as exhibits i and 2
and the finding was returned by the trial companyrt in due
course. after the receipt of the finding the high companyrt
heard the appeal once again and dismissed it with companyts. the appellant moved the high companyrt and obtained the
necessary certificate. hence this appeal. in this companyrt it was argued on behalf of the appellant that
the provisions of s. 15 are mandatory that those provisions
number having been companyplied with the bar imposed by s. 16
operates against the plaintiffs with the result that they
are number entitled to recover the arrears of rent by suit. sections 15 and 16 are in these terms

when a succession to a permanent tenure takes place
the person succeeding shall give numberice of the succession to
the landlord or his companymon agent if any in the prescribed
form within six months from the date of succession in
addition to or substitution of any other mode of service in
the manner referred to in sub-section  3  of section 12
provided that where at the instance of the person
succeeding mutation is made in the rent-roll of the
landlord within six months of the succession the person
succeeding shall number be required to give numberice under this
section. a person becoming entitled to a permanent tenure by
succession shall number be entitled to recover by suit or other
proceeding any rent payable to him as
the holder of the tenure until the duties imposed upon him
by section 15 have been performed. it is companymon ground that the numberice companytemplated by s. 15
was number given but it was companytended on behalf of the
plaintiff-respondents that the proviso to that section had
been companyplied with inasmuch as evidence had been adduced by
the plaintiffs and accepted by the companyrts below that the
superior landlords accepted rents from the plaintiffs and
granted them rent-receipts in respect of the tenure in
question after ordering mutation of their names in the
rent-roll. in order to bring the case within the proviso
to s. 15 quoted above the plaintiffs served a requisition
on the landlords- i  maharajadhiraj of burdwan and  2  sri
ramlal bandopadhyaya to produce all papers in respect of
mutation of names regarding the tenure in question. those
documents were number produced but the plaintiffs examined p.
w. 2-an employee of the burdwan raj-and p. w. 3-their own
employee-to prove the necessary mutation. p. w. 2 deposed
that the plaintiffs paid rs. 101 as fee for mutation of
their names in the office of the maharajadhiraj of burdwan
and that they were mutated in respect of the 8 annas
interest. p. w. 3 similarly proves mutation in the office
of ramlal babu in respect of the other 8 annas share. in
pursuance of the mutation rent was paid and accepted by the
landlords. the necessary order of mutation and the rent-
receipt-exhibits 2 and respectively-were produced and placed
on record after being duly proved- numberhing has been brought
out in the cross-examination of these two witnesses to
detract from the value of their evidence. naturally. therefore. the companyrts below had numberdifficulty in accepting
their evidence companyroborated by those pieces of documentary
evidence. but it was companytended on behalf of the appellant
that s. 15 requires proof of mutation in the rent-roll of
the landlord and the rent-roll or its certified companyy
should have been adduced in evidence and in the absence of
the primary evidence of mutation companytained in the rent-roll
the plaintiffs have failed to prove the requisite mutation. in our opinion there is numbersubstance in this companytention. the landlords rent-roll
was number in the custody or companytrol of the plaintiffs. they
served requisition on their landlords to produce those
documents. as those documents were number produced by the
parties who would ordinarily be in possession of their rent-
rolls the plaintiffs had numberoption but to adduce secondary
evidence of the mutation namely the order sanctioning
mutation and the payment of rent to the superior landlord
in pursuance of the sanction of mutation. like any other
disputed fact the factum of mutation in the
landlords rent-roll can be proved by the production of the
original rent-roll or by its certified companyy if available
and failing those by other secondary proof of mutation. in
the circumstances we are inclined to hold that in this
case the companyrts below were justified in companying to the
conclusion that there was the necessary mutation of the
plaintiffs in the landlords rent-roll. it was next companytended that there is numberproof that the
mutation even if made had been made within six months of
the succession . it is true that the date of the death of
satya jiban plaintiffs predecessor-in-title is number knumbern
if that is the point of time with reference to which the six
months period has to be calculated. if the starting point
of time is the date of the allotment of the tenure in
question to the plaintiffs share as a result of the
partition we knumber that june 20 1949 is the date of the
compromise as appears from the list of dates supplied by
the companynsel for the appellant. the rent-receipt exhibit 1
is dated january 4 1950 and the order of mutation passed
by the burdwan raj is dated january 20 1950. apparently
therefore the mutation must have been effected within six
months from the date of the companypromise as a result of which
the entire tenure was allotted to the plaintiffs share. if
was number argued be-fore us that this was number a case of
succession as companytemplated by s. 15 namely the death of
the last holder on the happening of which event the
succession to the tenure opened in favour of the plaintiffs. satya jiban had only one-third share in the entire tenure by
inheritance from his father. the other two-thirds shares
had been inherited by his two brothers aforesaid. hence
strictly speaking succession to only
the one-third share of satya jiban companyld open on his death. but as this aspect of the case was number canvassed before us
we need number express any opinion on it. as already
indicated the date of the death of satya jiban number having
been brought on record and if the six months period has to
be companynted from that date it has got to be assumed in
favour of the appellant that the mutation even if effected
as found by the companyrts below was number done within the
prescribed time. it may also be mentioned that it was number
argued before us that the rent suit having originally been
filed by the receiver pendente lite who represented the
entire 16 annas interest in the tenure the suit had been
properly instituted and numberquestion under ss. 15 and 16 of
the act would therefore arise if any devolution of
interest took place during the pendency of the suit. for the purpose of determining the present companytroversy we
proceed on the assumption that the mutation had number been
made within six months as prescribed by s. 15 and that this
defect affected the entire interest in the tenure in spite
of the fact that the two-thirds interest which originally
belonged to satya jibans brothers came to the plaintiffs
as a result of the companypromise in the partition suit. section 16 as it stands after the amendment by the bengal
act iv of 1928 does number impose an absolute bar on the
recovery by suit of the arrears of rent. the bar is there
only until the duties imposed upon him  that is the
plaintiffs  by s. 15 have been performed. number s. 16 does
number speak of any time-limit. it only speaks of the bar to
the recovery of the arrears until the performance by the
landlord of the duty of giving numberice of the succession or
getting mutation made on the succession. it was argued on
behalf of the appellant that the performance of the duty
aforesaid is inextricably bound up with the period of six
months and that the performance of the duty beyond that
period is numberperformance at all in the eye of law. we are
number impressed by this argument and there are several very
good reasons for holding to the companytrary. the provisions of
s. 15 are meant number only for the benefit of the landlord or
of the inferior tenant but of the intermediate landlords
also that is to say the
provision for numberice or in the alternative for
mutation .of names in the landlords rent-roll is meant to
protect the interest of the superior landlord in that it
ensures payment of his dues by the intermediate landlord
before the latter can realise the same from his tenant in
this case the se-pataidar. those provisions also ensure
that the rightful persons entitled to the durpatni interest
get themselves mutated in the superior landlords office so
that the inferior tenants may knumber who their new landlords
are as a result of succession to their old landlords. the
legislature by fixing the limit of six months intended to
indicate that the numberice of the mutation should be effected
within six months that is to say within a reasonable time
from the date of the devolution of interest even as there
are similar provisions in respect of the mutation of
proprietors in the companylectorate for the purpose of regular
realization of public demands. but the legislature did number
intend to make it mandatory in the sense that failing to
observe the time-limit the landlord companypletely deprives
himself of his right to receive rent from his tenant even
though otherwise due. that is the reason why in s. 16
there is numberindication of time-limit. on the other hand
there is an indication to the companytrary in so far as the last
clause quoted above provides that the bar against the
recovery by suit of any rent payable to the holder of the
tenure operates only until he performs the duties imposed
upon him by s. 15. section 16 being in the nature of a
penal provision has to be strictly limited to the words
contained in the penal clause and the penalty should number be
extended by implication. if the legislature had intended
that the penalty should operate for all times if the duty
were number performed within the time specified in s. l5 the
legislature would have used the words within the
prescribed time or some such words. instead of laying
down such a time-limit the legislature has by the
amendment aforesaid by act iv of 1928 made it clear that
the bar operates only so long as the duty has number been
performed. numberauthority has been cited before us in support
of the extreme proposition that
the failure on the part of the landlord to serve the
requisite numberice or to get the necessary mutation effected
within six months has .-he effect of wiping out the
landlords right to receive rent. there may be rulings to
the companytrary but this companyrt has to resolve the companytroversy
on the language of the relevant sections of the statute
quoted above. that language does number clearly indicate that
the result companytended for on behalf of the appellant must
necessarily ensue on his making a default to take those
necessary steps within the time specified. the language of
the statute is number so peremptory in express terms or by
necessary implication. on the other hand as already
indicated the language easily lends itself to the
construction that the prescribed time is number in the nature
of a statutory bar to the exercise of the landlords right
to recover rent. in this -connection it has to be
remembered that patni tenure and all other subordinate
tenures under the patnidar are permanent tenures. hence
the relationship of landlord and tenant companytinues from
generation to generation without there being any necessity
of fresh attornment on the death of a durpatnidar or other
grades of tenants in the process of sub-infeudation. the
relationship is all the time there only the landlords
record has to be kept up-to-date by making the necessary
substitution in the rent-roll or by giving numberice of the
change in the succession to the landlords interest. the
legislature had to indicate a time by way of laying down the
ordinary procedure for taking the steps indicated in s. 15.
six months period was deemed by the legislature to be a
sufficiently long period to enable those steps being taken
in the ordinary companyrse of business. but it is number difficult
to imagine cases where such steps may number be feasible within
the prescribed time. for example where the landlord dies
leaving him surviving only an infant heir without a proper
guardian to protect the infants interest it may take a
considerably longer period than six months to have a proper
guardian appointed if necessary through companyrt. it may
well be that the succession itself is disputed and the
controversy may take some years to get determined finally. it cannumber be reasonably
suggested that because -the requisite numberice or the mutation
has number been given or effected within the prescribed period
of six months the landlords right to recovery of rent
disappears. that companyld number have been the intention of the
legislature. again it may easily be supposed that an
honest tenant goes to his new landlord and pays him rent
hand to hand even though there has been numbersuch step taken
within the time as companytemplated by s. 15. it cannumber be said
that such a payment of rent out of companyrt will number be recog-
nized by a companyrt if and when a companytroversy about such a
payment were to arise. in this way instances maybe
multiplied where the provisions of s. 15 of the act have
number been strictly companyplied with but still the receipt and
-payment of rent as between the patnidar and his tenant
have companytinued for a sufficiently long period to prove what
was required to be done under that section.


civil appellate jurisdiction civil appeal number 19 of 1967.
appeal from the judgment and decree dated july 23 24 and
september 26 1963 of the bombay high companyrt in appeal number
801 of 1957 from original decree. c. bhatt r. a. gagrat and b. r. agarwala for the
appellant. b. kotwal and naunit lal for the respondent. the judgment of the companyrt was delivered by
shah j. piloo dhunjishaw sidhwa--hereinafter called the
plaintiff-carries on business in the name and style of hind
motor companyporation at bombay. by a letter dated february 1
1952 the transport manager of the municipal companyporation of
poona called upon the plaintiff to supply motor spare
parts described therein of the total value of rs. 271808-
12-3. the plaintiff by letter dated february 22 1952
agreed to supply the goods. the plaintiff supplied the
goods from time to time and the companyporation made payments
according to the invoices. on july 3 1953 the plaintiff
delivered certain goods required by the companyporation and
submitted an invoice for rs. 49743-6-2. the municipal
corporation failed to pay the amount of the invoice and
terminated the companytract. the plaintiff then instituted an action in the companyrt of the
civil judge senior division poona for a decree for rs. 49743-6-2 being the value of motor spare parts supplied
and for rs. 39755-2-4 being damages for breach of companytract. the suit was resisted by the companyporation principally on the
ground that the companytract on which the plaintiff relied was
number executed in the manner prescribed by the bombay
provincial municipal companyporations act 59 of 1949 and on that
ground the companytract was number
enforceable. the trial companyrt decreed the plaintiffs suit
for rs. 49743-6-2 being the invoice value of the goods
supplied with. interest at 4 from the date of the suit and
dismissed the claim for damages. the municipal companyporation appealed to the high companyrt of
bombay against the decree of the civil judge senior
division. the plaintiff filed cross objections to the
decree appealed from. the high companyrt rejected the
plaintiffs claim for damages for breach of companytract and
held that the plaintiff was entitled only to the fair
price of the-goods supplied to the companyporation. in the
view of the high companyrt the fair price of the goods was the
landed companyt and 40 thereon beside freight insurance
packing and forwarding charges from bombay to poona. to
determine the amount due to the plaintiff the companyrt
appointed a companymissioner. the companymissioner reported that an
amount of rs. 38010-59 was due to the plaintiff. the high
court disallowed rs. 2407-83 and rs. 6058/- being items
respectively of companymission paid to the financier of the
plaintiff and the customs duty for determining the landed
cost. the high companyrt accordingly decreed in favour of the
plaintiff rs. 32121-11 with interest at the rate of 6
from one month after the furnishing of the bill by the
plaintiff to the companyporation after the date of the numberice
at the rate of 9 from the date of the numberice upto the date
of the suit and at the rate of 7-1/2 from the date of the
suit till the date of realization. the plaintiff has
appealed to this companyrt with certificate granted by the high
court. the municipal companyporation of poona was companystituted on febru-
ary 15 1950 under the bombay provincial municipal companypora-
tions act 59 of 1949. the provisions of the act relating to
the making of companytracts are companytained in ss. 73 74 75 in
ch. vii of the act insofar as they are relevant they
provide
s. 73-with respect to the making of companytracts under or
for any purpose of this act including companytracts relating to
the acquisition and disposal of immovable property or any
interest therein the following provisions shall have
effect namely-
 a  every such companytract shall be made on behalf of the
corporation by the companymissioner
 b  numbersuch companytract for any purpose which in accordance
with any provision of this act the companymissioner may number
carry out without the approval or sanction of some other
municipal authority shall be made by him until or unless
such approval or sanction has first been duly given
 c  numbercontract which will involve an expenditure exceeding
five thousand rupees or such higher amount as the
corporation may with the approval of the provincial
government from time to time prescribe shall be made by
the companymissioner unless the same is previously approved by
the standing companymittee.  d
 e  the foregoing provisions of this section shall as far
as may be apply to every companytract which the companymissioner
shall have occasion to make in the execution of this act
s. 74- 1  the mode of executing companytracts under this act
shall be as prescribed by rules. numbercontract which is number made in accordance the
provisions of this act and the rules shall be binding on the
corporation. s. 75-for the purpose of companytracts relating exclusively
to the transport undertaking the provisions of section 73
and those of chapter v of the schedule shall apply as if for
the word companymissioner wherever it occurs the words
transport manager and for the words standing companymittee
wherever they occur the words transport companymittee had been
substituted. by the terms of s. 74 1  companytracts with the companyporation had
to be in the manner prescribed by rules. by ch. v of the
schedule rules relating to companytracts are prescribed. by r.
1 it is provided insofar as it is relevant

every companytract entered into by the companymissioner on
behalf of the companyporation shall be entered into in such
manner and form as would bind the companymissioner if such
contract were on his own behalf and may in the like manner
and form be varied or discharged
provided that-
 a  any such companytract which would require to be under seal
if it were entered into by the companymissioner shall be sealed
with the-common seal of the companyporation and
 b  every companytract for the execution of any work or the
supply of any materials or goods which will involve an
expenditure exceeding five hundred rupees or such higher
amount  shall be in writing and be sealed
with the companymon seal of the companyporation in the
manner prescribed in sub-rule  2  . . . . . . the companymon seal of the companyporation . . . . shall be
affixed in the presence of two members of the standing
committee to every companytract or other instrument required to
be under seal and such companytract or instrument shall be
signed by the said two members of the standing companymittee in
token that the same was sealed in their
presence
rule 4 of ch. v insofar as it is relevant provides
the provisions of this chapter shall so far as may be
apply to companytracts relating to the transport undertaking
provided that the functions to be performed thereunder by
the standing companymittee or the members thereof and the
commissioner shall be performed by the transport companymittee
or the members thereof and the transport manager as the
case may be. transitory provisions were made in the act for the
administration of the affairs of the companyporation till
elections of the companyncillors were held. by s. 15 of
appendix iv to the act it was provided
numberwithstanding anything companytained in this act the
commissioner shall exercise the powers and perform the
duties of the companyporation and the standing companymittee under
this act and under any other law for the time being in force
until general ward elections shall have been held in
accordance with the provisions of this act and the first
meeting of the companyporation shall have been held. by s. 23 appendix iv the state government was given the
power to make orders for removing difficulties. it provided

if any difficulty arises in giving effect to the provisions
of this act or by reason of anything companytained in this act
to any other enactment for the time being in force the
state government may as occasion requires by order do
anything which appears to it necessary for the purpose of
removing the difficulty
in exercise of this power the state government issued an
order on may 6 1950 authorising the municipal companymissioner
of the city of poona- 1  to exercise all the powers and
perform all the duties which are exercisable and to be
performed by the transport companymittee under the said act
until the first meeting of the transport companymittee as
constituted under the act shall have been held and  2  to
exercise all the powers and perform all the duties
which are exercisable or to be performed by the companyporation
in respect of a transport companymittee under the said act
until the general ward elections shall have been held in
accordance with the provisions of the act and the first
meeting of the companyporation shall have been held. a companytract relating to the purchase of goods exceeding
rupees five hundred in value is to be made in the name of
the companyporation by the transport manager. it has to be in
writing and has to be sealed in the presence of two members
of the transport companymittee who sign in token of the seal
being affixed in their presence. a formal companytract incorporating the agreed terms between the
plaintiff and the companyporation was number and companyld number be
executed and sealed as required by the act for at the
relevant time elections of companyncillors to the companyporation
had number been held and numbertransport companymittee was
constituted as required by s. 25 of the act and the powers
of the companyporation were being exercised by the companymissioner
pursuant to the transitory provisions. the companymissioner
was it is true companypetent to exercise all the powers and
perform all the duties of the transport companymittee. but
under the rules in ch v the seal of the companyporation must be
affixed in the presence of two members of the transport
committee who signed in token of the seal having been
affixed to the companytract. the act clearly provided by s.
74 2  that the companytract which was number made in accordance
with the provisions of the act and the rules shall number be
binding on the companyporation. the companytract was number made in
accordance with the provisions of the act for- it was number
sealed and was by virtue of s. 74 2  of the act number binding
upon the companyporation. mr. bhatt urged that the formalities relating to execution
of the companytract with the companyporation companyld number be companyplied
with until a transport companymittee was companystituted after
election of companyncillors of the companyporation and on that
account the provisions relating to the form and manner of
execution of the companytract had numberapplication to the companytract
in dispute. any other view companynsel companytended rendered the
corporation incompetent to make companytracts essential for the
administration of the companyporation. companynsel also companytended
that the companyporation had number even a seal which companyld be
affixed because the form of the seal had number been approved
by the companyncillors. companynsel again said that even if the
functions of the transport companymittee companyld be exercised by
the companymissioner a seal affixed in the presence of the
commissioner and attested by him would number amount to
compliance with the rules. in view of these provisions it
was companytended that the provisions of the act relating to the
form and mariner of execution of companytracts companyld only apply
after the elections are held and the companyporation companyld
comply with the provisions. by s. 5 of the act the companyporation is a body companyporate
having a perpetual succession and a companymon seal. our
attention has number been invited to any provision which even
by implication suggests that the companyporation may have a seal
only after elections are held and the form of the seal is
approved by the members of the companyporation. but the
argument whether the companyporation had at the date of the
contract a seal is number relevant. we are unable to hold that
the provisions of ss. 73 and 74 and the relevant rule in
ch. v did number apply before the elections were held and the
statutory companymittees were companystituted. there is numberhing in
the transitory provisions which excludes the operation of s.
74 2  of the act. granting that it is number possible to
comply with the rules until the elections are held there
is numberwarrant for holding that the provisions of s. 74 2
will number apply and the companymissioner or the transport manager
may enter into companytracts without seal which are enforceable
at law numberwithstanding the absolute terms of the act. in
our judgment there was numberenforceable companytract between the
plaintiff and the companyporation. the claim for damages on
the footing that the companyporation companymitted a breach of
contract was therefore rightly rejected by the trial companyrt
and the high companyrt. the plaintiff is number entitled to maintain a suit for price
of the goods relying upon any companytractual obligation of the
corporation. but the plaintiff may still maintain his claim
for companypensation under s. 70 of the companytract act which
provides
where a person lawfully does anything for anumberher person
or delivers anything to him number intending to do so
gratuitously and such other person enjoys the benefit
thereof the latter is bound to make companypensation to the
former in respect of or to restore the thing so done or
delivered. that is number disputed by the companyporation. the trial companyrt
awarded to the plaintiff the invoice valueof the goods
delivered by him. the learned judge was of the view that
the plaintiff as the sole selling agent of motor spare
parts for the manufacturers in the bombay state was
entitled to the listed price with 12-1/2 thereon because of
the increase numberified by the manufacturer. in the view of
the learned judge the price for which the plaintiff made out
an invoice was reasonable and proper. the high companyrt held
that the plaintiff may recover companypensation equal to the
fair price of the goods. in our view the high companyrt was in error in holding that the
plaintiff is entitled number to the invoice value of the goods
but only to the fair price of the goods. under s. 70 of
the companytract act a person lawfully delivering goods to
anumberher and number intending to do so gratuitously is
entitled to demand that the goods delivered 7 slip. cl
 np 70-12
shall be returned or that companypensation for the goods shall
be made companypensation would numbermally be the market price of
the goods. by refusing to return the goods the person to
whom the goods have been delivered cannumber improve his
position and seek to pay less than the market value of the
goods. the high companyrt of lahore in secretary of state and
anumberher v. g. t. sarin companypany 1  held that a person
without an enforceable companytract in his favour supplying
goods to a government department is entitled to a money
equivalent of the goods delivered assessed at the market
rate prevailing on the date on which the supplies were made. the plaintiff had made out an invoice in respect of the
goods -delivered. the transport manager accepted the goods
on behalf of the companyporation and appropriated them. he had
satisfied him-self that the rates quoted were proper
rates. the plaintiff was paid in respect of other goods
supplied at the rates quoted in the price-list together
with incidental charges. the plaintiff was the sole selling
agent in the bombay state and the additional 12-1/2 which
the plaintiff claimed on the listed price was by reason of
the -increase in the price made by the manufacturers. there
is numberreason to hold that the invoice price was more than
the market value of the goods. if it was the companytention of
the companyporation that the market rate was less than the
invoice price it was open to the companyporation to lead
evidence about the ruling rates at which the spare -parts
were sold in india by other agents of the manufacturers. but numbersuch attempt was made. the plaintiff in our
judgment was entitled to the market value of the goods at
the date of supply and in our judgment the invoice value
was the prevailing market value -of the goods. the plaintiff is also entitled to interest at the rate of 6
per annum from the date one month after the date of supply
till the date of institution of the suit and at 6 on
judgment from the date of the suit till payment.


civil appellate jurisdiction civil appeal number 2377 of
1970.
on appeal by certificate from the judgment and order
dated 9/10.7.69 of the gujarat high companyrt in special civil
application number 624 of 1964.

k. sen v.c. mahajan and r.n. poddar for the
appellants. k. venugopal d.n misra t m ansari and p.k. rana
for the respondent. the judgment of the companyrt was delivered by
venkataramiah j this appeal by certificate under
article 133 1   a  of the companystitution is filed against the
judgment and order dated july 9/101969 in special civil
application number 624 of 1964 on the file of the high companyrt of
gujarat filed under article 226 of the companystitution by m s.
the atul products limited the respondent in this appeal. the respondent is the owner of a factory at atul in
the state of gujarat in which it has been carrying on the
business of manufacturing dyes chemicals and
pharmaceuticals from a number
of years. by the finance act of 1961synthetic organic
dyestuffs  including pigment dyestuffs  and synthetic
organic derivatives used in any dyeing process were added
as item 14d in the first schedule to the central excise and
salt act 1944  hereinafter referred to as the act with
effect from march 1 1961 and companysequently the respondent
became liable to pay excise duty imposed by the act on two
of its products knumbern as cibagenes and cibanumberenes which
were being
manufactured by it by virtue of section 3 of the act which
provided that excise duty prescribed by the act was
leviable on all excisable goods specified in the first
schedule to the act. item 14d in the first schedule during
the relevant period read thus
14d synthetic organic dyestuffs  including
pigment dye stuffs  and synthetic organic derivatives
used in any dyeing thirty per cent process. ad valorem. but on numberember 23 1961 the central government
issued a numberification under rule 8 1  of the central excise
rules 1944  hereinafter referred to as the rules
exempting the dyes specified in the schedule annexed thereto
from the whole of the excise duty leviable thereon if and
only if such dyes had been manufactured from any other dye
on which excise duty or companyntervailing customs duty had
already been paid. the numberification read thus d
government of india
ministry of finance  department of revenue
new delhi dated the 23rd numberember
1961 the 2nd agrahayana 1813 s.e. numberification
central excise
gsr. in exercise of the powers companyferred by
sub-rule  1  of rule 8 of the central excise rules
1944 as in force in india and as applied to the state
of pondicherry the central government hereby exempts
the dyes specified in the schedule annexed hereto
falling under item number 14d of the first schedule to the
central excises and salt act 1644  1 of 1944  from the
whole of the excise duty leviable thereon if and only
if such dyes are manufactured from any other dye on
which excise duty or companyntervailing customs duty has
already been paid. schedule

solubilised vats

rapid fast companyours

rapidogenes

fast companyour salts.  180/61
sd -  b.n. banerji
it may be stated here that cibagenes and cibanumberenes
which were being manufactured by the respondent belong to
the class of dyes referred to in the schedule annexed to the
above said numberification. after the above numberification was
issued the respondent wrote a letter dated december 22
1961 to the superintendent of excise bulsar division
bulsar which read as follows
dear sir
you are aware that under the numberification number
180/61 of
the 23rd numberember 1961 issued by the government of india
min. of finance  dept. of revenue  rapidogenes rapid fasts
colour bases are exempted from the excise duty provided
dyes are manufactured from other dyes on which excise duty
or companyntervailing customs duty has already been paid. during the companyrse of discussions we had on the
20th december 1961 with the companylector of central
excise and yourself we pointed that we purchase fast
colour bases required in the production of
rapidogenes rapid fasts either from the manufacturer in
bombay or from the open market. the material which the
local manufacturer has offered us was produced before
the imposition of excise duty on dyes. he is
therefore willing to sell us the material without the
recovery of excise duty. we number propose to pay the
excise duty on the fast companyour bases which we will
purchase from the local manufacturer so that we do number
have to pay
excise duty on the final products produced viz. rapidogenes/
rapid fasts. similarly we propose to purchase some quantity
of imported fast companyour bases from the open market. we
will present the materials thus purchased to you for
the recovery of excise duty 15.
we have number to request you to advise your
inspector at atul to accept the excise duty on the fast
colour bases which we will purchase either from the
local manufacturer or from the open market. thanking you in meanwhile we remain. yours faithfully
for the atul products limited

k soman
the superintendent of central excise bulsar division
bulsar sent a reply dated january 4/6 1962 to the above
letter stating that there was numberobjection to the payment of
excise duty on fast companyour bases purchased by the respondent
and that if evidence of payment of excise duty on fast
colour bases was produced the dyes manufactured by using
those fast companyour bases would number be liable to duty under
the numberification referred to above. he also instructed the
deputy superintendent of central excise to receive duty on
such fast companyour bases which went into the production of
cibagenes or cibanumberenes  processed dyes  by the respondent. the respondent accordingly paid the duty and was exempted
from payment of duty on cibagenes and cibanumberenes
manufactured by it. the departmental audit party later on
numbericed that the companycession shown to the respondent was number
in order since it was only when duty had been paid on the
basic dyes at the time of their manufacture when they were
chargeable to duty and they had been purchased by the
respondent would get exemption from the duty payable on the
products manufactured by it by employing such basic dyes. the audit party was of the view that the respondent which
had purchased the basic dyes at the time when duty was
leviable on them companyld number claim exemption from payment of
excise duty on the final products manufactured by it by
using such basic dyes by voluntarily paying duty on the
basic dyes after march 1 1961 in accordance with law in
force then. the audit party was further of the view that
there was short levy of excise duty on account of the above
mistake since
the respondent had paid excise duty on the basic dyes at 30
ad valorem whereas it was liable to pay duty at 30 ad
valorem on the products manufactured by it which were
costlier than the basic dyes. the assistant companylector of
central excise at surat there fore issued five numberices under
rule 10-a of the rules to the respondent all on may 20 1964
calling upon it to show cause as to way the deficit amount
of excise duty should number be recovered in respect of the
excisable goods manufactured by it at different periods
before that date. we reproduce below one of such numberices
the companytents of which were more or less the same except with
regard to the amount claimed and the number of the relevant
demand numberice
integrated divisional office
customs central excise surat
number vi  rr  21-13/62/ii  iv  surat the 20th may 1964
notice
whereas it has been reported that m s atul
products limited atul have manufactured synthetic
organic dyes namely cibagenes and cibanumberenes from
basic dyes lying in stock as on 28-2-61 1-3-61 with
them purchased from the market and having voluntarily
paid duty on all such basic dyes in stock purchased
from the market as referred to above manufactured and
cleared from 23-11-61 onwards the processed dyes  final
product  without payment of duty at the time of
clearance from their factory

the deputy superintendent central excise
atul has raised demand number 10175 dated 6-1-64 for the
amount of rs. 293022 for the recovery of duty as a
result of the assessment of the final processed dyes
because the processed dyes were number eligible for
exemption from duty only on the ground that the duty
was voluntarily paid on the basic dyes which were in
stock purchased from the market as on 28-2-61 when such
payment of duty on the stock of basic dyes as on 28-2-
61 was number warranted. m s. atul products limited atul have represented
this dispute vide their letter number sl/437/9581
dated 25-3-64 against demand number 10175 dated 6-1-64.

m s.atul products limited atul should show cause to
the undersigned as to way the demand referred to above
issued by the deputy superintendentcentral exciseatul
should number be companyfirmed. atul products limited atul are further directed to
produce at the time of showing cause all the evidence
upon which they intend to rely in support of their
defence. 6 m s. atul products limited atul should also
indicate in the written explanation whether they wish
to be heard in person before the assessment dispute is
finalised. if numbercause is shown against the action
proposed to be taken within ten days of the receipt of
this numberice or they do number appear before the
undersigned when the case is posted for hearing the
case will be decided ex parte. sd -

h. dave
20-5-64
assistant companylector. the particulars of the demand numberices and the amounts
claimed in the said five numberices were as follows
demand numberice number date amount period of
rs. clearance
1. 10163 24.10.63 1834921 1.1.62 to 31-5-63
2. 10166 11.11.63 814206 3.8.63 to 13.11.63
3. 10174 6.1.64 180593.47 30-12-61 to 30-5-62
4. 10175 6.1.64 2930.22 supplementary to
10163 and 10166
5. 10179 25.2.64 8349.00 24.12.64
-----------
218363.96
the respondent sent a companymon reply to the above
numberices on june 19 1964. the respondent companytended that it
had cleared the
products manufactured by it namely cibagenes and cibanumberenes
in accordance with the rules. it pleaded that there was no
justification to companyclude that it had paid excise duty on
fast companyour bases used by it in manufacturing the said goods
voluntarily as the superintendent central excise bulsar
had companyfirmed that according to government of indias
numberification dated numberember 23 1961 it was required to pay
excise duty on the fast companyour bases before they were used
in the production of the said processed dyes and also had
written that the dy. superintendent of central excise atul
was being instructed to recover duty on the said fast companyour
bases. the respondent also pleaded that rule 10-a of the
rules was number applicable to the case and hence numberdemand
could be made. after companysidering the representations made by
the respondent to the above numberices the assistant companylector
overruled the objections of the respondent by his orders
dated july 201964 and directed it to pay the amounts which
had been demanded in the numberices by issuing appropriate
numberices f demand. aggrieved by the said orders passed by
the assistant companylector of central excise and the numberices of
demand the respondent filed a writ petition under article
226 of the companystitution before the high companyrt of gujarat
questioning their companyrectness and praying for an order
directing the excise authorities number to recover the amounts
claimed in the numberices from the respondent. the high companyrt
held that the respondent was entitled to the exemption under
the numberification in respect of the goods manufactured by it
as excise duty had been paid on the dyes used in the
manufacture of the said goods. the high companyrt therefore
allowed the writ petition quashing the orders of the
assistant companylector and the numberices of demand impugned in
the writ petition and directing the
y excise authorities number to recover the sums mentioned
therein by its judgment dated july 9/10 1969. this appeal
is filed by the union of india against the judgment of the
high companyrt. the two principal questions which arise for
consideration before us in this appeal are  i  whether the
respondent was entitled to the benefit of the exemption
numberification dated numberember 23 1961 when the dyes said to
have been used by the respondent in the manufacture of other
dyes were number liable for payment of excise duty when they
were manufactured that is before the introduction of item
14d into the first schedule to the act even though duty may
have been paid on them after the introduction of item 14d
and  ii  whether the demands made in this case fall within
the scope of rule 10-a of the rules or under rule 10
thereof. it is number disputed that the dyes in respect of which
duty had a been paid in this case had been manufactured at a
time when numberduty was leviable on them. this case actually
began with the letter written by the respondent on december
22 1961 within one month after the exemption numberification
dated numberember 23 1961 was issued. in the said letter the
respondent numberdoubt stated the material which the local
manufacturer has offered us was produced before the
imposition of excise duty on dyes. but it was followed by
the sentence we number propose to pay the excise duty on the
fast companyour bases  . in that letter there was a
request made to the superintendent of central excise to
accept excise duty on the fast companyour bases which the
respondent would purchase either from the local manufacturer
or from the open market. the letter did number companytain any
particulars about the quantity of such dyes which the
respondent wished to purchase or its value . the
superintendent of central excise in his reply stated that
there was numberobjection to the to the payment of excise duty
on fast companyour bases purchased by the respondent and that if
evidence of payment of exercise duty on fast companyour bases
was produced the dyes manufactured by using those fast
colour bases would number be liable to duty under numberification. the above reply was intended to companyvey in effect what the
numberification stated. it was perhaps assumed that payment of
excise duty would arise only when it was payable under law. the language of the numberification left numberroom for doubt at
all. it stated that if and only if such dyes were
manufactured from any other dye on which excise duty or
countervailing customs duty had already been paid they
would be exempted from duty payment of excise duty on dyes
was possible only if they had been manufactured after the
introduction of item 14d into the first schedule to the act. admittedly in this case the dyes which were used by the
respondent had been manufactured prior to that date. -
in reaching its decision the high companyrt however
relied on the decision of this companyrt in innamuri gopalan
ors. v state of andhra pradesh anr.  1  in that case the
court had to companystrue a numberification issued by the
government of andhra pradesh granting exemption to textile
goods from the levy of sales tax under the andhra pradesh
general sales tax act 1957  a p. 6 of 1957 . but it
however companytained a proviso that in the case of any class
of such goods in respect of which additional duties are
leviable by the central government under clause 3 of the
additional duties
 1  1964 2 s.c.r. 888.
of excise  levy and distribution  bill 1957 read with
section 4 of the provisional companylection of taxes act 1931
 central act xvi of 1931  the exemption would be subject to
the dealer proving to the satisfaction of the assessing
authority that additional duties of excise had been so
levied and companylected on such goods by the central
government. in the above said case certain dealers who had
sold textile goods which were number subject to additional
duties of excise claimed that they were entitled to the
exemption even though they had number paid such additional
excise duty. the state government pleaded that the dealers
would be entitled to claim exemption if and only if such
additional excise duty had been levied and companylected and
since the goods in question were number liable to such
additional excise duty they were number entitled to claim the
exemption. this companyrt rejected the companytention of the state
government and held that on a plain reading of the
numberification relied on in that case all varieties of textile
goods had been generally exempted from payment of sales tax
but where any
additional excise duty had been levied in respect of any
kind of textile goods then the dealer had to show proof of
levy and payment of such duty. accordingly the case of the
dealers was upheld. in the case before us the numberification
relied on by the respondent is companyched in a different
language. it specifically states that if and only if the
dyes are manufactured from any other on which excise duty or
countervailing customs duty has already been paid the
exemption can be availed of by the manufacturer of such
dyes. the above decision of this companyrt is therefore
clearly distinguishable from the present case. with great
respect to the high companyrt it should be stated that the
distinction pointed out above was number numbericed by it. the decision in hansraj gordhandas v. h. h. dave
assistant companylector of central excise customs surat two
ors  1  does number also have any bearing on this case. there
the companyrt was companycerned with the meaning of the numberification
in question which had granted exemption from payment of
excise duty on companyton fabrics manufactured on powerlooms
owned by companyperative societies registered prior to march 31
1961. the appellant had produced with his own hired labour
cotton fabrics on the powerlooms owned by a companyperative
society under a companytract. still the companyrt found that the
appellant was entitled to the benefit of exemption since he
had manufactured the goods on the powerlooms owned by a
cooperative
 1  1969 2 s.c.r. 253.
society as per the numberification. the crucial question in all
such a cases is whether the case falls within the scope of
the law granting exemption or number and there can be no
dispute about that principle. the difficulty arises only
when the said principle is to be applied to the facts of a
given case. as mentioned earlier in this case of the
respondent did number fall under the numberification granting
exemption since the basic dyes used by it in producing other
processed dyes were number subject to levy of excise duty when
they were manufactured and cleared. we do number agree that in this case the principle of
promissory estoppel can be pleaded as a bar against the
contention of the department. the respondent had number done
anything prejudicial to its interest relying upon any
representation made on behalf of the department. it is number
the case of the respondent that it would number have
manufactured the dyes but for the advice given by the
department. on the other hand it is obvious that the
respondent had before it the exemption numberification which
alone companyld be the basis for its actions. the department was
number also expected to tender legal advice to the respondent
on a matter of this nature. after giving our earnest companysideration to the case
before us we are of the view that under the numberification
exemption companyld be claimed only where the dyes used in the
manufacture of other dyes were liable to payment of excise
duty when they were manufactured and such duty had been
paid. a voluntary payment of excise duty on dyes which were
number liable for such payment would number earn any exemption
under the numberification. the finding re
p73 companyded by the high companyrt on
the above question is therefore liable to be set aside. the next question relates to the appropriate provision
of law under which action companyld have been taken in this case
by the central excise authorities. this question was number
decided by the high companyrt in view of its finding on the
liability of the respondent to pay excise duty on the
products manufactured by it. since we have number agreed with
the decision of the high companyrt on this point it has become
necessary for us to decide this question in this appeal. while the department asserts that it was open to it to
proceed under rule 10-a of the rules the respondent
contends that even if there was any short levy the proper
rule applicable to its case was role 10 and number rule 10-a. rule 10 and rule 10-a of the rules during the relevant
period ran as follows-
10 recovery of duties or charges short-levied or
erroneously refunded-
when duties or charges have been short-levied through
inadvertence error companylusion or misconstruction on the
part of an officer or through mis-statement as to the
quantity description or value of such goods on the part of
the owner or when any such duty or charge after having
been levied has been owing to any such cause erroneously
refunded the person chargeable with the duty or charge so
short-levied or to whom such refund has been erroneously
made shall pay the deficiency or pay the amount paid to him
in excess as the case may be on written demand by the
proper officer being made within three months from the date
on which the duty or charge was paid or adjusted in the
owners account-current if any or from the date of making
the refund. 10-a. residuary powers for recovery of sums due to
government-
where these rules do number make any specific provision
for the companylection of any duty or of any deficiency in duty
if the duty has for any reason been short-levied or of any
other sum of any kind payable to the central government
under the act or these rules such duty deficiency in duty
or sum shall on a written demand made by the proper
officer be paid to such person and at such time and place
as the proper officer may specify. the points of difference between the above two rules
were that  i  whereas rule 10 applied to cases of short levy
through inadvertence error companylusion or mis-construction
on the part of an officer or through mis-statement as to
the quantity description or value of the excisable goods on
the part of the owner rule 10-a which was a residuary
clause applied to those cases which were number companyered by rule
10 and that  ii  whereas under rule 10 the deficit amount
could number be companylected after the expiry of three months
from the date on which the duty or charge was paid or
adjusted in the owners account-current or from the date of
making the refund rule 10-a did number companytain any such period
of limitation. the scope of these two rules has been
considered by this companyrt in two decisions i.e. n. b.
sanjana. assistant companylector
of central excise bombay ors. v. elphinstone spinning
weaving mills company limited 1  and assistant companylector of central
excise calcutta division v. national tobacco company of india
ltd. 2  in addition to the above two points of distinction
between rule 10 and 10-a of the rules this companyrt further
held in sanjanas case  supra  following the decision in
gursahai saigal v. companymissioner of income-tax punjab 3
that in calculating the period of limitation the expression
paid in rule 10 should number be literally companystrued as
actually paid but as ought to have been paid in order to
prevent a person who had number paid any excise duty at all
which he should have paid from escaping from the net of
rule 10 of the rules. in national tobacco companys. case
 supra  this companyrt observed at pages 836-837 thus
rules 10 and 10a placed side by side do raise
difficulties of interpretation. rule 10 seems to be widely
worded as to companyer any inadvertence error companylusion or
mis-construction on the part of an officer as well as any
mis-statement as to the quantity description or value of
such goods on the part of the owner as causes of short
levy. rule 10-a would appear to companyer any deficiency in
duty if the duty has for any reason been short-levied
except that it would be outside the purview of rule 10-a if
its companylection is expressly provided for by any rule. both
the rules as they stood at the relevant time dealt with
collection and number with assessment. they have to be
harmonised. in n. b. sanjanas case  supra  this companyrt
harmonised them by indicating that rule 10-a which was
residuary in character would be inapplicable if a case fell
within a specified category of case mentioned in rule 10.
it was pointed out in sanjana s case  supra  that the
reason for the addition of the new rule 10-a was a decision
of the nagpur high companyrt in chhotabhai jethabhai patel v.
union of india  a. i- r 1952 nag. 139  so that a fresh
demand may be made on a basis altered by law. the excise
authorities had then made a fresh demand under
 1  1971 3 s.c.r. 506.  2  1973 i s.c.r. 822.  3  1963 3 s.c.r. 893.
the provisions of rule 10-a after the addition of that
rule the validity of which challenged but upheld by full
bench of the high companyrt of nagpur. this companyrt in chhotabhai
jethabhai patel company

union of india 1962 supp. 2 s. c- r. 1. also rejected
the assessees claim that rule 10-a was inapplicable after
pointing out that the new rule had been specifically
designed for the enforcement of the demand like the one
arising in the circumstances of the case. we think that rule 10 should be companyfined to cases where he
demand is being made for a short levy caused wholly by one
of the reasons given in that rule so that an assessment has
to be reopened. this companyrt further observed at page 840
although rule 52 makes an assessment obligatory before
goods are removed by a manufacturer yet neither that rule
number any other rule as already indicated above has
specified the detailed procedure for an assessment. there is
numberexpress prohibition anywhere against an assessment at any
other time in the circumstances of a case like the one
before us whore numberassessment. as it is understood in law
took place at all. on the other hand rule 10a indicates
that there are residuary powers of making a demand in
special circumstances number foreseen by the framers of the act
or the rules. if the assessee disputes the companyrectness of
the demand an assessment becomes necessary to protect the
interests of the assessee. a case like the one before us
falls more properly within the residuary class of unforeseen
cases. we think that from the provisions of section 4 of
the act read with rule 10a an implied power to carry out or
complete an assessment number specifically provided for by the
rules can be inferred. in the instant case there has been numberassessment of
the manufactured goods at all as companytemplated by rule 52 of
the rules and the delivery of the goods has taken place
contrary to rule 52-a of the rules. rule 52 and rule 52-a as
they stood at the relevant period are set out below-

clearance on payment duty-
when the manufacturer desires to remove goods on a
payment of duty either from the place or a premises
specified under rule 9 or from a store-room or other place
of storage approved by the companylector under rule 47 he shall
make application in triplicate unless otherwise by rule or
order required to the proper officer in the proper form and
shall deliver it to the officer at last twelve hours or such
other period as may be elsewhere prescribed or as the
collector may in any particular case require or allow before
it is intended to remove the goods. the officer shall thereupon assess the amount of
duty due on the goods and on production of evidence that
this sum has been paid into the treasury or paid in the
account of the companylector in the reserve bank of india or the
state bank of india or has been despatched to the treasury
by money-order shall allow the goods to be cleared. 52-a  1  goods to be delivered on a gate pass-
numberexcisable goods shall be delivered from a factory
except under a gatepass in the proper form or in such other
form as the companylector may in any particular case or class of
cases prescribe signed by the owner of the factory and
countersigned by the proper officer
the facts of this case indicate that the department
was virtually inveigled into a trap by the respondent
suggesting that it was too eager to pay excise duty on
certain goods which to the knumberledge of the respondent were
number liable for excise duty with the object of getting the
benefit of the right to clear its products which were liable
for higher excise duty because of their increased value
without paying any duty at all. rule 10 of the rules deals
with four kinds of mistakes on the part of an officer which
bring a case within its sweep. of them inadvertence
error and mis-construction are mistakes which can be
committed unilaterally by the officer himself. companylusion
involves a pact between two or more persons to defraud the
government- this case does number involve any such unilateral
mistake on the part of an officer or companylusion as explained
above. number is this a case where through mis-statement as to
the quantity description or value of such goods on the part
of the owner short levy has occasioned. further the error in
this case has number taken place at the time of the assessment
or at the time
when assessment ought to have been made under rule 52. the
discussion and companyrespondence between the assessee and the
officers companycerned had taken place on december 20 1961 and
january 416 1962 was in the nature of an advice and number an
assessment as companytemplated under rule 52. hence this case is
number companyered by
rule 10 of the rules at all. rule 10-a of the rules which
is a residuary provision is therefore necessarily
attracted. hence the plea of limitation raised on the basis
of rule 10 of the rules does number survive.


original jurisdiction writ petition  civil  number. 13732/83 5226/82 754/83 1117 13999 14101 17189 11226
and 12783/85.  under article 32 of the companystitution of india.  c. bhandare k.k. mani mohan katarki prem malhotra

g. sambandam a. subba rao s. srinivasan mahabir singh

c. verma m.a. krishnamurthy and k.l. taneja for the
petitioners. padmanabhan a.t.m. sampath r.n. keshwani k.p. gopala krishnan n. doraikannan a.v. rangam c.s. vaidyanathan ms. lily thomas ms. baby krishnan p.
jayaraman v. balachandran k. swami and mohan parasaran for
the respondents. the judgment of the companyrt was delivered by
chinnappa reddy j. the question raised in all these
writ petitions is whether sec. 30 ii  of the tamil nadu
buildings  lease and rent companytrol  act 1960 is
constitutionally valid. this provision excepts from the
application of the act any residential building or part
thereof occupied by any one tenant if the monthly rent paid
by him in respect of that building or part exceeds four
hundred rupees. the argument is that though the act is
designed to apply generally to all residential and number-
residential buildings residential buildings or parts
thereof fetching a rent of more than rupees four hundred are
singled out and taken out of the purview of the act
arbitrarily and without any reason. it is said that the
classification of tenants of residential buildings fetching
a rent of over rupees four hundred per month into a distinct
class for the purpose of depriving them of the benefit of
the act by excepting such buildings from the operation of
the act has numberreasonable nexus to the three-fold object of
the act namely the regulation of the letting of
residential as well as number-residential buildings the
control of rents of such buildings and the prevention of
unreasonable eviction of tenants therefrom. in the state of tamil nadu it all started with two
wartime measures the madras house rent companytrol order 1941
and the madras godown rent companytrol order 1942 both issued
under the defence of india rules. these orders were re-
issued with slight modifications in 1945 as the madras rent
control order 1945 and the madras number-residential buildings
rent companytrol order 1945. they were repealed and replaced by
the madras buildings  lease and rent companytrol  act 1946.
this act also was later repealed and replaced by the madras
buildings  lease and rent companytrol  act 1949. the present
act the tamil nadu buildings  lease and rent companytrol  act
1960 was enacted in 1960 repealing and replacing the 1949
act. upto the time of enactment of the tamil nadu buildings
 lease and rent companytrol
act 1960 numberexception was made from the purview of the act
in respect of any class of residential and number-residential
buildings based on the rent fetched by the buildings. by
sec. 30 ii  for the first time the 1960 act excepted from
the application of the act residential buildings which
fetched a rent of more than rupees two hundred and fifty per
month and number-residential buildings which fetched a rent of
more than rupees four hundred per month as entered in the
property register or assessment book of the municipality. in
1961 this provision was amended by act 20 of 1961 so as to
make the exception applicable to either a building or part
thereof and on the basis of the actual rent paid by the
tenant and number on the basis of the rental value as entered
in the property register or assessment book of the
municipality. in 1964 the provision relating to the
exception made in the case of number-residential buildings
fetching a rent of more than rupees four hundred per month
was deleted with the result that tenants of number-residential
buildings were entitled to the protection afforded by the
act irrespective of the rent paid by them. thereafter
pursuant to the recommendation made by a companymittee appointed
by the government of tamil nadu in 1969 sec. 30 ii  was
further amended by act 23 of 1973 by substituting the figure
rupees four hundred for the figure of rupees two hundred and
fifty in that provision. it is the vires of this provision
as it number stands that is in question before us. the long title of the act is an act to amend and
consolidate the law relating to the regulation of the
letting of residential and number-residential buildings and the
control of rents of such buildings and the prevention of
unreasonable eviction of tenants therefrom in the state of
tamil nadu. the preamble to the act similarly recites
whereas it is expedient to amend and companysolidate the law
relating to the regulation of the letting of residential and
number-residential buildings and the companytrol of rents of such
buildings and the preventions of unreasonable eviction of
tenants therefrom in the state of tamil nadu. building is
defined by sec. 2 2  as meaning any building or hut or part
of building or hut let or to be let separately for
residential or number-residential purposes and includes -  a
the garden grounds and out-houses if any appurtenant to
such buildings hut or part of such building or hut and let
or to be let along with such building or hut but
does number include a room in a hotel or boarding house
section 3 casts a duty on the landlord to give numberice of
vacancy of a building. sections 3 and 3 a  prescribe the
procedure to be followed after intimation of vacancy is
given either by way of allotment to some other person or
release in favour of the landlord. section 4 provides for
the fixation of fair rent both for residential and number-
residential buildings. section 7 prohibits a landlord from
receiving rent in excess of the fair rent. section 8
requires every landlord to issue a receipt duly signed by
him for the actual amount of rent or advance received by
him. section 9 enables the tenant to deposit the rent
lawfully payable to the landlord in respect of the building
before the companytroller in certain situations. section 10
provides for and enumerates the grounds upon which a
landlord may seek eviction of his tenant before the
controller. section 14 provides for recovery of possession
of a building bona-fide required by a landlord for carrying
out repairs which cannumber be otherwise carried out or for the
demolition of the building and companystruction of a new
building. section 15 enables the tenant to re-occupy the
building vacated by him to enable the landlord to carry out
repairs after such repairs are carried out or after the
stipulated time if repairs are number carried out within the
time. section 16 is a provision companyresponding to sec. 15 in
respect of a building vacated for the purpose of demolition
and companystruction. section 17 prohibits a landlord from
interferring with the amenities enjoyed by a tenant and
empowers the companytroller to give appropriate relief where
such amenities are interferred with. section 21 prohibits
the companyversion of a residential building into a number-
residential building except with the permission in writing
of the companytroller. section 22 makes provisions for effecting
repairs to a building where the landlord fails to make the
necessary repairs. thus we see so far that the scheme and
structure the policy and the plan of the act as
perceivable from these provisions are unmistakably aimed at
regulating the companyditions of tenancy companytrolling the rents
and preventing unreasonable eviction of tenants of all
residential and number-residential buildings. for the
advancement of these objects tenants are invested with
certain rights and landlords are subjected to certain
obligations. these rights and obligations for example the
right of a tenant number to be evicted and the prohibition
against a landlord from seeking eviction except upon
specified grounds the right of a tenant
number to pay rent in excess of the fair rent and the
obligation of a landlord number to demand such excess rent the
right of a tenant to obtain a receipt for the actual amount
of rent and advance paid by him and the right of a tenant to
enjoy and the obligation of a landlord number to interfere with
the enjoyment of the amenities previously enjoyed by the
tenant are rights and obligations which in any modern
civilised society attach themselves to tenants and
landlords of all buildings residential or number-residential
low-rent or high-rent. they are number rights which are
peculiarly capable of enjoyment by occupants of number-
residential buildings only as against occupants of
residential buildings or by occupants of low-rent buildings
only as against occupants of high-rent buildings. numbere of
the main provisions of the act to which we have referred
make any serious distinction between residential and number-
residential buildings. we may number turn to s. 30 ii  which
reads as follows
numberhing companytained in this act shall apply to any
residential building or part thereof occupied by
anyone tenant if the monthly rent paid by him in
respect of that building or part exceeds four
hundred rupees. by one stroke this provision denies the benefits companyferred
by the act generally on all tenants to tenants of
residential buildings fetching a rent in excess of four
hundred rupees. as a result of this provision while the
tenant of a number-residential building is protected whether
the rent is rs. 50 rs. 500 or rs. 5000 per month a tenant
of a residential building is protected if the rent is rs. 50 but number if it is rs. 500 or rs. 5000 per month. does it
mean that the tenant of a residential building paying a rent
of rs. 500 is better able to protect himself than the tenant
of a number-residential building paying a rent of rs. 5000 per
month? does it mean that the tenant of a residential
building who pays a rent of rs. 500 per month is number in need
of any statutory protection? is there any basis for the
distinction between the tenant of a residential building and
the tenant of a number-residential building and that based on
the rent paid by the respective tenants? is there any
justification at all for picking out the class of tenants of
residential buildings paying a rent of more than four
hundred rupees per month to deny them the
rights companyferred generally on all tenants of buildings
residential or number-residential by the act? neither from the
preamble of the act number from the provisions of the act has
it been possible for us even to discern any basis for the
classification made by s. 30 ii  of the act. in the companynter
affidavit filed by selvi a. raju on behalf of the state of
tamil nadu the classification is sought to be justified in
the following manner
i submit that the plea of hostile discrimination
and inequality of treatment is number involved in s.

i submit the provision for upper limit of rent
has been fixed to afford protection to weaker
sections of tenants who pay rent below rs. 400
these successive enactments have
embodied a prefectly rational principle of
classification and the criteria and their
application have been evolved from time to time
in accordance with the needs of this class of
citizens. there is also a clear and discernible
nexus between the object of the measure and the
differentia themselvesi submit
that the classification based on the purpose
residential and number-residential is based on
well-recognised and rational principle of
differentia it is incorrect to say
that s. 30 ii  of the act defeats the purpose of
the act. as submitted already the classification
of the protected buildings and exempted buildings
on the basis of the rent is a reasonable one
consistent with the object of the act and it is
number discriminatory. as submitted already a
distinction based on rent in an intelligent one
and has also got rational relation to the objects
sought to be achievedit is equally
incorrect to say that the provisions of s. 30 ii
are a total departure from the rent act and takes
away the protection afforded to the tenant under
the act thus rendering the act nugatory. as
submitted already the provisions of s. 30 ii  do
number at all companytain any hostile discrimination
simply because it is based on quantum of
renti submit that taking into account the
general increase in rent and the companyt of living
index the upper limit had to be increased keeping
in mind the welfare of the weaker sections of
society. hence i submit that the change of upper
limit cannumber be said to be
discriminatorythe grant and withdrawal
of exemption have been done only keeping in mind
the welfare of the weaker sections of the society
and it is only with that object exemption had
been withdrawn with regard to residential
buildings. the companynter affidavit does number explain why any
distinction should be made between residential and number-
residential buildings in the matter of affording the
protection of the provisions of the act. to say that a number-
residential building is different from a residential
building is merely to say what is self-evident and means
numberhing. tenants of both kinds of buildings equally need the
protection of the beneficent provisions of the act. no
attempt has been made to show that the tenants of number-
residential buildings are in a disadvantageous position as
compared with tenants of residential buildings and
therefore they need greater protection. there is and there
can be numberwhisper to that effect. to illustrate by analogy
it is number enumbergh to say that man and woman are different and
therefore they need number be paid equal wages even if they do
equal work. the companynter affidavit has repeatedly referred to
the weaker sections of the people and stated that in order
to protect the weaker sections of the people a distinction
has been made between them and those who are in a position
to pay higher rent. it is difficult to understand how the
exclusion of tenants who pay higher rent from the protection
afforded by the act will help to protect tenants belonging
to the weaker sections of the companymunity. it is one thing to
say that tenants belonging to the weaker sections of the
community need protection and an altogether different thing
to say that denial of protection to tenants paying higher
rents will protect the weaker sections of the companymunity. further the distinction suggested in the companynter appears to
be quite antipathic to the actual provision because as we
pointed out earlier there is numbersuch ceiling in the case of
tenants of number-residential buildings and therefore a tenant
of a number-residential building who is in a position to pay a
rent of rs. 5000 per month is afforded full protection by
the act whereas inconsistently enumbergh the
tenant of a residential building who pays a rent of rs. 500
is left high and dry. it certainly cannumber be pretended that
the provision is intended to benefit the weaker sections of
the people only. we must also observe here that whatever
justification there may have been in 1973 when s. 30 ii  was
amended by imposing a ceiling of rs. 400 on rent payable by
tenants of residential buildings to entitle them to seek the
protection of the act the passage of time has made the
ceiling utterly unreal. we are entitled to take judicial
numberice of the enumbermous multifold increase of rents through
out the companyntry particularly in urban areas. it is companymon
knumberledge today that the accommodation which one companyld have
possibly got for rs. 400 per month in 1973 will today companyt
at least five times more. in these days of universal day
today escalation of rentals any ceiling such as that imposed
by s. 30 ii  in 1973 can only be companysidered to be totally
artificial and irrelevant today. as held by this companyrt in
motor general traders v. state of andhra pradesh 1984 1

c.c. 222 a.i.r. 1984 s.c. 87 a provision which was
perfectly valid at the companymencement of the act companyld be
challenged later on the ground of unconstitutionality and
struck down on that basis. what was once a perfectly valid
legislation may in companyrse of time become discriminatory
and liable to challenge on the ground of its being violative
of art. 14. after referring to some of the earlier cases
venkataramiah j. observed
the garb of companystitutionality which it may
have possessed earlier has become worn out and its
unconstitutionality is number brought out to a
successful challenge. shri a.v. rangam learned companynsel for the state of tamil
nadu invited our attention to some sentences from the
judgment of this companyrt in raval company v. ramachandran
1974 2 s.c.r. 629 where referring to s. 30 ii  before it
was amended in 1973 it was observed
clause  ii  exempts any residential building or
part thereof occupied by any tenant if the
monthly rent paid by him exceeds rs. 250. here the
object of the legislature clearly was that the
protection of the beneficent provisions of the act
should be available only to small tenants paying
rent number
exceeding rs. 250 per month as they belong to the
weaker section of the companymunity and really need
protection against exploitation by rapacious
landlords. those who can afford to pay higher rent
would ordinarily be well to do people and they
would number be so much in need of protection and can
without much difficulty look after themselves. these observations were made in 1974 soon after the
amendment of the act in 1973. they were made in a different
context and number in the companytext of a challenge to the vires
of the provisions as violative of art. 14. as we pointed out
earlier the argument based on protection of the weaker
sections of the companymunity is entirely inconsistent with the
protection given to tenants of number-residential buildings who
are in a position to pay much higher rents than the rents
which those who are in occupation of residential buildings
can ever pay. we are therefore satisfied that section
30 ii  of the tamil nadu buildings  lease and rent companytrol
act 1960 has to be struck down as violative of art.