civil appellate jurisdiction civil appeals number. 1048-
1051 of 1966.
appeals from the judgment and order dated july 2 3 1962 of
the bombay high companyrt in income-tax reference number 45 of
1960.

v. viswanatha iyer a. n. kirpal and r. n. sachthey
for the appellant  in all the appeals . t. desai f. n. kaka s. k. dholakia and 0. c. mathur
for the respondent  in all the appeals . the judgment of the companyrt was delivered by
sikri j. these appeals by certificate granted by the bombay
high companyrt under s. 66a 2  of the indian income-tax act
1925 -hereinafter referred to as the act-are directed
against its judgment in income-tax reference number 45 of 1960
by which it answered the first question of law referred to
it by the income-tax appellate tribunal in favour of the
national storage limited bombay hereinafter referred to as
the assessee. the following questions were referred to the
high companyrt by the appellate tribunal at the instance of the
commissioner of income-tax bombay city-1 bombay

whether on the facts and circumstances of
the case the vaults were used for the
purposes of the business and income arising
therefrom is assessable under section 10 ? if the answer to question i is in the
negative whether the income is assessable
under section 9 or section 12 ? the relevant facts and circumstances are as follows -the
assessee was promoted because the government of india
promulgated the cinematograph film rules 1948 hereinafter
referred to as the film rules according to which the
distributors were required to store films only in godowns
constructed strictly in companyformity with the specifications
laid down in the film rules and in a place to be approved by
the chief inspector of explosives government of india. a
place at mahim was approved and the assessee after
purchasing a plot of land there companystructed 13 units
thereon 12 units meant for the members of the indian motion
picture distributors association who had floated the
company and one unit for foreign film distributors in
bombay who were number members of the association. each unit
was divided into four vaults having a ground floor for
rewinding of films and an upper floor for storage of films. these units were companystructed in companyformity with the
requirements of and the specifications laid down in the film
rules. the walls and ceilings were of a particular width
and automatic fire proof door was installed in one wall
which would close immediately on the outbreak of
fire in the vault. other walls had numberopening or window and
one ventilation was provided in the ceiling. the units were
built at a distance of 50 feet from one anumberher. the
assessee entered into agreements with the film distributors. there were two types of agreements one was classified as
a licence and the other as b licence. the agreements
were more or less in identical terms with minumber variations
here and there. one agreement has been annexed to the
statement of the case as annexure a and some of the
relevant clauses are as under
clause 2 provides that the licensee shall number use the vault
for any other purpose except for storing cinema films and
shall use the ground floor  examination room  only for the
purpose of examination repairs cleaning waxing and
rewinding of the films. according to clause 9 the licensee
could number transfer assign sublet underlet or grant any
licence in respect of or part with the possession of the
vault or any part thereof without the written permission of
the assessee. according to clause 12 the assessee was
entitled to revoke determine and put an end to the licence
by giving the licensee at any time seventy days previous
numberice in writing. further the licensee was number entitled
to terminate the licence for a period of five years except
with the companysent in writing of the assessee. according to
clause 13 the assessee was entitled to terminate the
licence by giving two days numberice in writing to the
licensee and allocate to the licensee alternative space in
anumberher vault of the said property. clause 16 makes it
clear that numberhing companytained in the agreement shall be
construed to create any right other than the revocable
permission granted by the assessee in favour of the licensee
of the licensed vault number as companyferring any right to quiet
enjoyment or other right except so far as the assessee has
power to grant the same and the assessee may of its mere
motion and absolutely retain possession of the licensed
vault with all additions fittings and fixtures thereto. apart from these companyditions the key to each vault was
retained by the vault-holder but the key to the entrance
which permitted access to the vaults was kept in the
exclusive possession of the assessee. it is further stated
in the statement of the case that the assessee also rendered
other services to the vault-holders. a fire alarm was
installed and an annual amount was paid to the municipality
towards fire services. the assessee opened in the premises
two railway booking offices free of charge for the company-
venience of the members for despatch and receipt of film
parcels. a canteen was also run in the premises for the
benefit of the vault-holders and a telephone had been
provided for them. a licensees paid rs. 40/- per month
while b licensees paid rs. 140/- per month. the foreign
film distributors were originally charged rs. 300/- per
month but later on the charges were reduced to rs. 100/-. for the assessment years 1950-51 1951-52 and 1952-53
assessments were made on the assessee under s. 10 of the
act but for the assessment years 1953-54 and 1954-55 the
income-tax officer took the view that the assessee should be
assessed under s. 9 and number under s. 1o. his view was
confirmed on appeal by the appellate assistant companymissioner
who also rejected the assessees alternative submission that
the income if number taxed under s. 10 should be taxed under s.

on further appeal to the tribunal there was a
difference of opinion between the judicial member who was
the. president and the accountant member. there being a
difference of opinion the following question was referred
to a third member-
whether on the facts and circumstances of the
case the vaults were used for the purposes of
the business and income arising therefrom is
assessable under section 10 or section 9.
the third member agreeing with the president held that the
assessee was carrying on business in these premises and -the
business was of similar type as carried on by a bank in
letting safe deposit vaults and income was taxable under s.

as already stated the appellate tribunal at the
instance of the companymissioner referred the two questions
which we have already set out above. the high companyrt
answered the first question in favour of the assessee. the
high companyrt after reviewing several cases deduced seven
propositions. the sixth and seventh propositions were
these

in cases where the income received is number
from the bare letting of the tenement or from
the letting accompanied by incidental services
or facilities but the subject hired out is a
complex one and the income obtained is number so
much because of the bare letting of the
tenement but because of the facilities and
services rendered the operations involved in
such letting of the property may be of the
nature of business or trading operations and
the income derived may be income number from
exercise of property rights properly so-
called. so as to fall under section 9 but
income from operations of a trading nature
falling under section 10 of the act. in cases where the letting is only
incidental and subservient to the main
business of the assessee the income derived
from the letting will number be the income from
property falling under section 9 and the
exception to section 9 may also companye into
operation in such cases. .lm0
then the high companyrt after examining the facts
and circtumstances companycluded
the income which is obtained by the companypany
in the present case required companysiderable
expenditure to be incurred by the companypany
which is ordinarily number incurred by a landlord
who turns his house property to profitable
account and which is also number taken into. account in the deductions permissible under
section 9. in our opinion therefore the
income which the companypany obtained from the
licence-holders in the present case companyld number
be regarded as income from property failing
under section 9 of the indian income-tax act. the activity of the companypany in earning that
income was a business activity and the source
of the income which the companypany obtained from
the licence-holders was number the ownership of
the house property but its business. the companymissioner having obtained certificate
of fitness from the high companyrt the appeal is
number before us. the learned companynsel for the appellant mr. t.

viswanatha iyer has put the following
propositions before us -
  1  the assessee is the owner of property and
has to be assessed as such under s. 9 of the
act. any incidental services rendered as
owner do number alter the character of the
relationship between the assessee and the
users of the vaults and there is no
complexity as far as the services are
concerned

in any event assuming for a moment that
certain services are rendered they are
independent of and in addition to the
ownership of the property

the assessee is number carrying on any
trade or business by was of letting or
otherwise

the assessee is number in occupation of
these vaults for the purpose of his business
and if any room is occupied by its staff that
occupation is different from the occupation by
the users

there is numberplant or machinery which has
been let to the users and the building has
been let as something inseparable from the
plant and machinery if any which exists and

even if the assessee is carrying on
business insofar as it is an owner it has to
be taxed under s. 9 additional income has to
be dealt with under s. 10.
mr. s. t. desai the learned companynsel for the
assessee formulated his proposition as follows
-distinction has to be drawn between income
derived by exercise of property rights
properly so called on the one hand and on the
other hand income derived from licensees who
are allowed the use of any property specially
constructed safe deposit vaults for securely
storing hazardous or inflammable films or
similar goods or safe deposit lockers for
securely keeping valuables and for which
purpose special amenities are given in the
latter class of cases the object is a companyplex
one and number merely letting of property and
the activities amount to carrying on trade or
business property being the subjectmatter of
business. he further says that propositions
sixth and seventh as formulated by the high
court are sound. the answer to the question depends upon the
interpretation of ss. 9 and 1 0 of the act
and the ascertainment of the activities of
the assessee. it is number disputed that the
scheme of the indian income-tax act 1922 is
that the various heads of income profits and
gains enumerated in section 6 are mutually
exclusive each head being specific to companyer
the item arising from a particular source. further whether an income falls under one
head or anumberher has to be decided according to
the companymon numberions of practical men for the
act does number provide any guidance in the
matter. vide sarkar j. in nalinikant
anbalal mody v. narayan row 1 . the relevant portion of s. 9 reads as follows
9.  1  the tax shall be payable by an
assessee under the head income from property
in respect of the bona fide annual value of
property companysisting of any buildings or lands
appurtenant thereto of which he is the owner
other than such portions of such property as
he may occupy for the purposes of any
business profession or vocation carried on by
him the profits of which are assessable to
tax subject to the following allowances
namely
section 10 1  reads
10.  1  the tax shall be payable by an
assessee under the head profits and gains of
business profession or vocation in respect
of the profit or gains of any business
profession or vocation carried on by him. the word business is defined in 2 4  to include any
trade. companymerce or manufacture or any adventure or companycern
in the nature of trade companymerce or manufacture. the question which really arises in the present case is
whether the assessee is carrying on any business i.e. is it
carrying on any adventure or companycern in the nature of trade
commerce or manufacture ? if it is carrying on any adventure
or companycern in the nature of trade then s. 9 specifically
excludes the income derived from property from companyputation
under s. 9 if the property is
 1  61 i.t.r. 428 at p. 432.
occupied for the purpose of adventure or companycern. similar
questions have arisen under the english income-tax act. though the scheme of the english income-tax act is
different some of the cases throw light on the question as
to what is adventure or companycern in the nature of trade. in
the governumbers of the rotunda hospital dublin v. companyan 1
the governumbers of a maternity hospital established for
charitable purposes were owners of a building- which
comprised rooms adapted for public entertainments and which
was companynected with the hospital buildings proper by an
internal passage. the hospital derived a substantial income
from letting the rooms for public entertainments companycerts
etc. for periods varying from one night to six months and
applied the income to the general maintenance of the
hospital. the rooms were let upon terms which included the
provision of seating heating- and attendance but an
additional charge was made for gas and electricity companysumed. the house of lords held that the profits derived from the
letting of the rooms were assessable to income tax under
schedule d either under case 1 as the profits of a trade
or business or under case vi of that schedule. the learned companynsel for the assessee strongly relies on this
case. it seems to us that the reasoning of the law lords in
their speeches does assist the assessee. the lord
chancellor observed it p. 582
profits are undoubtedly received in the
present case which are applied to charitable
purposes but they are profits derived number
merely from the letting of the tenement but
from its being let properly equipped for
entertainments with seats lighting heating
and attendance. the subject which is hired
out is a companyplex one. the mere tenement as it
stands without furniture etc. would be
almost useless for entertainments. the
business of the governumbers in respect of those
entertainments is to have the hall properly
fitted and prepared for being hired out for
such uses. the profits fall under schedule d
and to such profits the allowance in question
has numberapplication as they cannumber be properly
described as rents or profits of lands
tenements hereditaments or heritages. they
are the proceeds of a companycern in the nature of
a trade which is carried on by the governumbers
and companysists in finding tenants and having the
rooms so equipped as to be suitable for
letting. in our view the high companyrt was right in holding that the
assessee was carying on an adventure or companycern in the
nature of trade the assessee number only companystructed vaults of
special design and special doors and electric fittings but
it also rendered
1  17 t.c. 517.
other services to the vault-holders. it installed fire
alarm and was incurring expenditure for the maintenance of
fire alarm by paying charges to the municipality. two
railway booking offices were opened in the premises for the
despatch and receipt of film parcels. this it appears to
us is a valuable service. it .also maintained a regular
staff companysisting of a secretary a peon. a watchman and a
sweeper and apart from that it paid for the entire staff
of the indian motion picture distributors association an
amount of rs. 800/- per month for services rendered to tile
licensees. these vaults companyld only be used for the specific
purpose of storing of films and other activities companynected
with the examination repairs cleaning waxing and
rewinding of the films. but the learned companynsel for the companymissioner says that s. 9
applies because the assessee cannumber be said to be in
occupation of the premises for the purpose of any companycern
of its own. he says that the licensees were in possession
of the vaults as lessees and number merely as licensees. but
in our opinion the agreements are licences and number leases. the assessee kept the key of the entrance which permitted
access to the vaults in its own exclusive possession. the
assessee was thus in occupation of all the premises for the
purpose of its own companycern the companycern being the hiring out
of specially built vaults and providing special services to
the licensees. as observed by the lord chancellor in the
governumbers of the rotunda hospital dublin v. companyan 1
tile subject which is hired out is a companyplex one and the
return received by the assessee is number the income derived
from the exercise of property rights only but is derived
from carrying on adventure or companycern in the nature of
trade. there is numberforce in the sixth submission of the learned
counsel for the appellant because the indian income-tax act
does number companytemplate assessment of property under s. 9 in
respect of the rental income and assessment under s. 10 in
respect of the extra income derived from the carrying on of
an adventure or companycern in the nature of trade if the
assessee is in occupation of the premises for the purposes
of the business.


civil appellate jurisdiction civil appeal number 173 of
1986.
from the judgment and order dated 29.3. 1985 of the
andhra pradesh administrative tribunal hyderabad in repre-
sentation petition number 1589 of 1983.
with
writ petition  civil  number. 11135-37 of 1984.  under article 32 of the companystitution of india . sitharamaiah g. prabhakar d. prakash reddy b.
rajeshwar rao and vimal dave for the appellants. subodh markandeya w.a. numberani seshagiri rao mrs.
chitra markandeya and a. subba rao for the respondents. the judgment of the companyrt was delivered by
sharma j. civil appeal number 173 of 1986
by the judgment under appeal the andhra pradesh adminis-
trative tribunal has accepted the claim of seniority pressed
by the respondents in their representation petition number 1589
of 1983.

the respondents were working as lower division clerks
 ldcs  in the district police offices units in andhra pra-
desh when the question of appointing ldcs in the chief
office arose. it was decided to give an opportunity to the
ldcs working in the district police offices units on the
condition that they would be willing number to rely upon their
service rendered in the district police offices units for
the purpose of seniority and that their seniority would be
counted with effect from the date they joined the chief
office. accordingly a memorandum rc. number 1020/s1/68 dated
21.11. 1968  annexure a  was issued to the district police
offices units. the choice was limited to probationers and
approved probationers having good service records. the
letter expressly stated that the appointees were to be put
at the bottom of the list of probationers or approved proba-
tioners already working in the chief office. immediately
thereafter the respondents and two other ldcs who are number
parties to the present case expressed their desire to join
the chief office on the companydition as mentioned in the said
memorandum. they in positive terms declared in annexure c
series their willingness to forego their seniority. after
examination of their service records orders were passed
and accordingly memorandum rc. number 1020/s1/68 dated 1.6. 197
 1 annexure 0  was issued to the heads of departments of
the companycerned district police offices units. a pointed
reference to the memorandum of 21.11. 1968 was made stating
that the clerks in question were to take their seniority
from the date of their joining the duty in the chief office
as already mentioned in their letters. accordingly all the
five respondents joined their duty in the chief office after
submitting with reference to the memorandum dated 1.6. 1970 separate letters  at pages 40-44 of the
paper book  addressed to the inspector general of police
stating that
i submit that i am willing to take the last rank in senior-
ity in the category of ldcs. in chief office from the date
reporting duty in chief office. their respective dates of joining the chief office are
detailed in the memorandum dated 7.9.1970 annexure h
 page 47 of the paper book . they were placed on probation
with the companydition that if they failed to companyplete their
probation satisfactorily they would be sent back to their
original district unit offices. the respondents satisfactorily companypleted their proba-
tion and were substantively companyfirmed in the chief office
and their seniority was companynted with effect from the dates
they joined the chief office. in 1983 they filed an applica-
tion before the andhra pradesh administrative tribunal
claiming that they were entitled to companynt their service
rendered in the district police offices units for the pur-
pose of their seniority in the chief office which has been
allowed by the impugned judgment. in support of their claim the respondents relied on
the memorandum rc. number 1020/s1/68 dated 18.1. 1969  annexure
b  issued by the office of the inspector general of police
to the heads of the district police organisations units
stating that
in companytinuation of the chief office memorandum
cited the companymissioner of police all superintendents of
police and companymandants etc. are requested to state whether
there are any l.d. clerks willing to companye on transfer to
chief office if the companydition stipulated in the memorandum
cited regarding taking of last rank is number insisted upon. the records of the l.d. clerks recommended should be good. it has been argued before the tribunal as also before us
that this letter clearly indicates that adequate number of
clerks from the district police offices units were number
available and a decision to forgo the companydition in regard to
the seniority of the clerks was taken. it has been companytended
that in view of this departmental decision the respondents
should number be bound down by their statements made in annex-
ures c series and in their letters annexures e series. the tribunal has accepted their plea. mr. c. sitharamaiah the learned companynsel appearing in
support of the appeal has urged that the memorandum annex-
ure b does number indicate any final decision taken by the
department. the learned companynsel appears to be right. a
perusal of the letter makes it clear that the office of the
inspector general of police was only making an inquiry in
the terms indicated therein. it is true that presumably. sufficient number of volunteers from the district police
offices units were number available which promoted the authori-
ty companycerned to issue the letter annexure b but it does
number go beyond circulating a query. it cannumber be suggested on
its basis that there was a reversal of the policy with
respect to the companynting of the seniority of the incoming
ldcs from the district police offices units. it has been
asserted in the companynter affidavit of the state filed before
the tribunal that number a single person was allowed to join
the chief office on the companydition indicated in annexure b
and it has number been denied on behalf of the respondents
either before the tribunal or before us. the respondents
have number been able to produce a companyy of any decision taken
on the lines indicated in annexure b number have they been
able to cite even a single case of an ldc joining the chief
office on such a supposed decision. we have therefore no
hesitation in holding that the companydition mentioned in annex-
ure b is of numberavail to the respondents. the learned companynsel for the respondents referred to
r. 16 of the a.p. ministerial service rules  hereinafter
referred to as the rules  and urged that when the respond-
ents were permitted to join the chief office they were
allowed to do so by way of a regular transfer from one
department to anumberher and this was done for administrative
exigencies of the police department within the meaning of
the said rules and number on their own request. they are
therefore entitled to companynt their earlier service for the
purpose of seniority. it is alleged that the fact that the
respondents were paid travelling allowances for joining the
chief office companyroborates their stand. we have companysidered
the argument addressed on behalf of the respondents along
with the relevant documents but do number find any merit in
their stand. it has to be appreciated that the cadre of the
chief office is altogether different from cadreof the
district police offices units where the respondents were
earlier appointed and they were number liable to be transferred
to the chief office. the service companyditions at the chief
office were better which was presumably the reason for the
respondents to give up their claim based upon their past
services. it is true that the differential advantage was number
so substantial as to attract every ldc working in the dis-
trict offices units and in that situation the letter annex-
ure b had to be circulated. however so far the respond-
ents and the two others
were companycerned they found it in their own interest to
forego their claim of seniority on the oasis of their past
services and they did so. it is significant to numbere that
their letters annexures e series were sent to the inspec-
tor general of police many months after the issuance of
annexure b and they were allowed to join the chief office
on clear understanding that they would number be entitled to
count their past services. it is therefore idle to suggest
that the respondents can.number turn back and repudiate their
commitment expressly made many months after annexure b . so far the allegation regarding payment of travelling
allowance is companycerned the same has been dealt with in
paragraph 6 of the companynter affidavit of the appellant filed
before the tribunal in the following terms
they cannumber claim seniority number after a lapse of 13 years
on the ground that they were given t.t.a. at the time of
their transfer. numberorders were issued from this office to
the subordinate officer that the petitioners are eligible
for t.t.a. and joining time. in fact the dy. inspr. genl. of
police hyderabad range in his order number 534/e/256/70 hr. dt. 5.6.70 addressed to supdt. of police medak had specif-
ically informed that the petitioners number 1 and 2 are number
entitled for any t.t.a. and joining time. t is urged that inspite of the clarification made by the
deputy inspector general of police as stated above if some
officers permitted the respondents to draw travelling allow-
ance this cannumber be a ground to hold that it was a case of
regular departmental transfer. the . 16 cannumber therefore
be held to be applicable in the present case. mr. sitharamaiah urged that having regard to the
entire circumstances as spelt out of the different documents
on the records of the present case it should be held that
the memorandum annexure a issued by the office of the
inspector general of police was a mere invitation to the
ldcs in the district police offices units to apply for
appointment in the chief office with the companydition mentioned
therein. and availing of the opportunity the respondents
accordingly requested by their statements and letters for
appointment in the chief office. it is suggested by the
learned companynsel that if the case be treated to be one of
transfer it has to be held in the circumstances to be at
the request of the ldcs companycerned within the meaning of r.
16 of the rules. there companysiderable substance in the alter-
native argument of mr. sithara-
maiah also but it is number necessary to go into this ques-
tion deeper as the absorption of the respondents in the
chief office cannumber be treated by way of transfer within the
meaning of the rules. besides the above infirmities there are two other
important companysiderations which weigh heavily against the
respondents. the petition before the tribunal was filed by
the respondents after a period of 13 years of their initial
appointment in the chief office during which period many
orders companysistent with the terms of service as indicated in
the memorandum annexure a must have been passed in favour
of the other incumbents of the service. the companyrts and
tribunals should be slow in disturbing the settled affairs
in a service for such a long period. besides the respond-
ents in the application before the tribunal did number im-
plead their companyleagues who have been prejudicially affected
by the impugned judgment. it cannumber be assumed that the
respondents had numberknumberledge about them. as was rightly
pointed out by mr. sitharamaiah although in paragraph 4 d
of their application before the tribunal  page 53 of the
paper book  the respondents mentioned one vijaya chand
alleged to be an officiating ldc who was put over them they
did number implead even him. we are therefore of the view
that apart from the merits of the case the petition of the
respondents before the tribunal was fit to be rejected on
the ground of the above mentioned last two points. finally the learned companynsel for the respondents said
that in any event they should number be put below those persons
who had number successfully companypleted their probation in the
chief office on the date the respondents joined there. we do
number find any merit in this submission either. accordingly
the judgment under appeal passed by the andhra pradesh
administrative tribunal is set aside and the representation
petition of the respondents is dismissed. the appeal is
allowed but in the circumstances there will be numberorder
as to companyts. writ petitions  civil  number. 11135-37 of 1984

these applications under article 32 of the companystitu-
tion have been filed by the three petitioners who were
appointed during the years 1965-67 in the central office of
the inspector general of police  number redesignated as direc-
tor general and inspector general of police  andhra pra-
desh. since they had number passed the general examination held
for the purpose a special qualifying examination was held
in 1968 to facilitate the petitioners and other similarly
situated persons to pass at the test. the petitioners
however did number appear at this
examination. anumberher special qualifying examination was held
in 1974 and the petitioners successfully cleared the same. thereafter by an order dated 17.6. 1976  annexure e
their services were regularised with effect from 1.8.1972.
their claim in the present case is for companynting their sen-
iority with effect from their initial dates of appointment
in the years 1965-67

it has been companytended by the learned companynsel for the
petitioners that they were number qualified for the 1968 exami-
nation and at the very first opportunity available to them
in 1974 they passed the special qualifying examination and
therefore they should number be penalised by ignumbering their
services rendered before 1.8. 1972.

it is significant to numbere that although the impugned
order was passed in 1976 the petitioners did number companymence
any legal remedy before the year 1984 when they filed the
present application directly before this companyrt after a
period of 8 years. by way of a preliminary objection mr. subbarao the
learned companynsel appearing for some of the officers impleaded
as respondents in this petition has drawn our attention to
the fact that earlier a writ application being w.p. number 106
of 1980 was filed by some of the employees of the central
office making similar claim of seniority and the present
petitioners specifically stated that their case would be
governed by the judgment in the earlier writ petition which
was ultimately dismissed by this companyrt on august 8 1986  m.
nirmala and others v. state of andhra pradesh and others
1986 3 scr 507. mr. subbarao companytends that after the
dismissal of the earlier case the petitioners number cannumber be
permitted to urge any new ground in support of their claim. the reply on behalf of the petitioners is that if the earli-
er writ application had been allowed they would also be
entitled to succeed but after its dismissal their claim
cannumber be rejected without examination of the additional
questions which did number arise in the earlier case. on merits the reply on behalf of the government of
andhra pradesh is that the respondent-officers had joined
the office of the inspector general of police after qualify-
ing at the general examination held for the purpose and
since the petitioners did number appear at the examination
they cannumber be equated with the respondent officers. the
general examinations for recruitment to the central office
were held in 1964 1965 1966 1967 and 1968 but the peti-
tioners did number choose to avail of the ordinary method for
joining the service. instead
they entered the service by the side door and their depart-
ment taking an attitude liberal to them and other similar
officers decided to hold special qualifying examinations. it is companytended that in these circumstances the rule as laid
down in memorandum number 473/y1/70-5 dated 24.7. 1970  annex-
ure vii  is clearly applicable and for the purpose of
seniority the petitioners were given the advantage of two
years of service rendered by them prior to their successful-
ly companypleting the special qualifying examination. the argu-
ment is well founded.


original jurisdiction 1. petition number 300 of 1960.
petition under art. 32 of the companystitution of india for
enforcement of fundamental rights
and
criminal appeal number 107 of 1958
appeal by special leave from the judgment and order dated
april 5 1957 of the bombay high companyrt in criminal revision
application number 1100 of 1956.
porus a. mehta s. j. sorabjee s. n. andley j. b.
dadachanji rameshwar nath and p. l. vohra for the
petitioners. k. daphtary solicitor-general of india h. b. khanna

s. parmar and g. gupta for respondents  in petn. number
300 of 1960 . c. chatterjee and b. l. aggarwal for the appellant. r. khanna and r. h. dhebar for respondents  in cr. a.
number 107 of 1958.  1961. february 3. the judgment of the companyrt was delivered
by
sarkar j.-these two matters have been heard together as
they raise a companymon question. one of these matters is a
petition under art. 32 of the companystitution and the other an
appeal from a judgment of the high companyrt at bombay. the petitioner and the appellant were found by the customs
authorities in proceedings under the sea customs act 1878
to have imported goods in breach of s. 19 of that act. the
petitioner had without authority imported gold of the value
of rs. 25000/and the appellant steel pipes of the value
of rs. 128182/-. the customs authorities by independent
orders imposed a penalty of rs. 5000/- on the petitioner
and of rs. 25630/- on the appellant for these offences
under item 8 of the schedule to s. 167 of the act. the
customs authorities further companyfiscated the petitioners
gold under the same provision. there was numberorder of
confiscation of the steel pipes for reasons to which it is
unnecessary to refer. the appeal is against an order the result of which was to
direct realisation of the penalty imposed on the appellant
by execution of a distress warrant. the petition challenges
the validity of the order imposing the pecuniary penalty. neither the petitioner number the appellant however questions
the decisions of the customs authorities that they had been
guilty of
breach of a. 19 or that penalties companyld be imposed on them
under item 8 in a. 167. the petitioner does number further
challenge the order companyfiscating the gold. the only companytention of the petitioner and the appellant is
that the orders of the customs authorities are invalid as
they impose penalties in excess of rs. 1000/-. they
contend that the maximum penalty that can be imposed under
item 8 in s. 167 is rs. 1000/-. this companytention is based
on two grounds. first it is said that it has been so held
by this companyrt. then it is said that in any case on a
proper companystruction item 8 in s. 167 does number premit the
imposition of a penalty in excess of rs. 1000/-
first as to the decisions of this companyrt we were referred
to three. the earliest is maqbool hussain v. the state of
bombay  1 . that was a case in which the question was
whether a person on whom a penalty of companyfiscation of goods
had been imposed under item 8 in s. 167 companyld later be
prosecuted on the same facts for an offence under s. 23 of
the foreign exchange regulation act 1947 in view of the
provisions of art. 20 2  of the companystitution against what
has been called double jeopardy. it was held that art. 20 2  was numberbar to the prosecution under the foreign
exchange regulation act for the authority under the sea
customs act imposing the penalty under item 8 in s. 167 was
number a judicial tribunal and the proceeding resulting in the
imposition of the penalty of companyfiscation was therefore
number a prosecution. numberquestion arose in that case as to the
maximum penalty that companyld be imposed under item 8 in s

while discussing whether a customs authority
exercising the power to order companyfiscation and levy a
penalty under s. 167 formed a judicial tribunal this companyrt
observed at p. 742
even though the customs officers are
invested with the power of adjudging
confiscation increased rates of duty or
penalty the highest penalty which can be
inflicted is rs. 1000/-. it is quite obvious that this observation was made in a
different companytext and was number intended to decide
 1  1953 s.c.r. 730
that the provision did number permit the imposition of a higher
penalty as to which numberquestion had then arisen. it is
clear that if the highest penalty which the customs officers
had the power to impose was in excess of rs. 1000/- but
subject to anumberher limit it would number have followed that
they were judicial tribunals. the judgment of this companyrt
was number based on the amount of the maximum penalty which
the customs authorities companyld impose. it seems rather to
have been assumed that the maximum penalty was rs. 1000/-
for the question about maximum penalty was neither argued
number discussed in the judgment at all. the second case is babulal amthalal mehta v. the companylector
of customs  1 . the only question that arose there was
whether s. 178a of the sea customs act which placed on the
person from whose possession any goods mentioned in the
section and reasonably believed to have been smuggled were
seized the burden of proving that they were number so was
void as offending art. 14 of the companystitution. in
discussing the scheme of the act it was observed in
connection with item 8 in s. 167 that this companyrt has held
that the minimum is the alternative see maqbool hussain v.
the state of bombay  2  . here again it is clear that the
court was number deciding the question that has number arisen
before us. it only made a passing reference to the
observation in maqbool husseins case 2 . it was number
necessary for the decision of babulals case  1  to have
pronumbernced on the companyrectness of the observation in maqbool
hussains case  2  and numbersuch pronumberncement was clearly
intended. number was it necessary in babulals case  1  to
express any view as to the maximum penalty that companyld be
imposed under item 8 in s. 167.
the last case referred to is f. n. roy v. the companylector of
customscalcutta  1 . that was a case where an order had
been made under item 8 in s. 167 companyfiscating certain goods
imported without authority and imposing a penalty of rs. 1000/- in respect of that import. the importer filed a
petition in this companyrt under art. 32
 1  1937 s.c.r. 1110 1116.  2  1953 s.c.r. 730.  3  1957 s.c.r. 1151.
of the companystitution challenging the validity of the
penalties levied. the main part of the argument of the
learned companynsel for the petitioner was based on the imports
and exports  companytrol  act 1947 and raised questions which
do number companycern us in the present cases it appears however
that it was also companytended that item 8 in s. 167 offended
art. 14 of the companystitution a point which again does number
arise in the cases in hand. that companytention was dealt with
in the following words at p. 1158
anumberher similar argument was that s. 167
item 8 of the sea customs act itself offended
art. 14 in that it left to the uncontrolled
discretion of the customs authorities to
decide the amount of the penalty to be
imposed. the section makes it clear that the
maximum penalty that might be imposed under it
is rs. 1000/-. the discretion that the
section gives must be exercised within the
limit so fixed. this is number an uncontrolled
or unreasonable discretion. furthermore the
discretion is vested in high customs officers
and there are appeals from their orders. the
imposition of the fine is really a quasi-
judicial act and the test of the quantum of it
is in the gravity of the offence. the object
of the act is to prevent unauthorised
importation of goods and the discretion has to
be exercised with that object in view. it will be observed that the fine imposed was rs. 1000/-. it was number therefore a case in which any question companyld
arise as to whether a penalty in excess of rs. 1000/-
could be imposed and in fact numbersuch question arose. the
question that arose was whether the section offended art. 14 so that numberpenalty companyld be imposed under it at all. it was in this companynection that it was observed that item 8
in s. 167 did number leave it to the uncontrolled discretion of
the customs authorities to decide the amount of the penalty
because it had imposed a limit on that amount. it is true
that the limit was there mentioned as rs. 1000/-. but it
is clear that the reasoning would have held equally if
it .had been said that the limit imposed was either three
times the value of the goods or rs. 1000/-. the point
that was sought to be made in the judgment was that there
was a limit and that that was a reason for saying that the
discretion given was number uncontrolled and therefore there
was numberviolation of art. 14. for this purpose it made no
difference what the limit was. some of the high companyrts have thought that this companyrt had
decided in these cases that the maximum penalty permissible
under the provision is rs. 1000/-. the fact is that the
question was never required to be decided in any of these-
cases and companyld number therefore have been or be treated as
decided by this companyrt. in leo boy frey v. the
superintendent district jailamritsar  1  this companyrt
observed that numberquestion i has been raised as to the
maximum amount of penalty that can be imposed under s.
167 8  and we are numbercalled upon to express any opinion on
that point. this would show that this companyrt had taken
numberice of the fact that the high companyrts were interpreting
the judgment in f. n. roys case   and the other case in
a manner which was number intended and desired to strike a numbere
of warning against the misconception. numbere of these cases
is authority for the proposition that the maximum penalty
which can be imposed under item 8in s. 167 is re. 1000/-. the argument that this companyrt has already held that the
maximum penalty that can be awarded under it is rs. 1000/-
must therefore fail. we number companye to the companystruction of the provision the
relevant portion of which is in these terms
s. 167. the offences mentioned in the first companyumn of the
following schedule shall be punishable to the extent
mentioned in the third companyumn of the same with reference to
such offences respectively
----------------------------------------------------------
sections of
offences this act to penalties
which offence
has reference
----------------------------------------------------------
 . . . . . . . . . if any goods the importation or exportation of which is
for the time being prohibited or restricted by or under
chapter iv of this act. be imported into or exported from
india companytrary to such prohibition or restriction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 19
such goods shall be liable to companyfiscation and any person
concerned in any such offence shall be liable to a penalty
number exceeding three times the value of the goods or number
exceeding one thousand rupees. ----------------------------------------------------------
 1  1958 s.c.r. 822 827.  2  1957s.c.r. 1151.
the words which are material to this case are any person
concerned in any such offence shall be liable to a penalty
number exceeding three times the value of the goods or number
exceeding one thousand rupees. the question is whether
in imposing a penalty the companyditions laid down in both the
alternative clauses joined by the word or have to be
fulfilled or the companydition in any one of them only ? it is clear that if the words form an affirmative sentence
then the companydition of one of the clauses only need be
fulfilled. in such a case for really means it either
or . in the shorter oxford dictionary one of the meanings
of the word or is given as a participle companyrdinating
two  or more -words phrases or clauses between which there
is an alternative. it is also there stated the
alternative expressed by or is emphasised by prefixing
to the first member or adding after the last the associated
adv. either. so even without either  or alone
creates an alternative. if therefore the sentence before
us is an affirmative one then we get two alternatives any
one of which may be chosen without the other being company-
sidered at all. in such a case it must be held that a
penalty exceeding rs. 1000/- can be imposed. if however the sentence is a negative one then the
position becomes different. the word or between the two
clauses would then spread the negative influence over the
clause following it. this rule of grammar is number in
dispute. in such a case the companyditions of both the clauses
must be fulfilled and the result would be that the penalty
that can be imposed can never exceed rs. 1000/-. the question then really companyes to this is the sentence
before us a negative or an affirmative one ? it seems to us
that the sentence is an affirmative sentence. the substance
of the sentence is that a certain person shall be liable to
a penalty. that is a positive companycept. the sentence is
therefore number negative in its import. the learned companynsel for the petitioner and the appellant
said that the sentence began with a negative namelythe
words number exceeding and therefore it
is a negative sentence and the word or occurring later
in the sentence must spread the negative influence over that
part of the sentence which follows it. this companytention is
clearly fallacious. the word number refers only to the
word exceeding following it and the two together
constitute a qualifying clause limiting the amount of the
penalty that can be imposed. there is numbernegative sense to
spread over and influence the rest of the sentence. if the
learned companynsel were right the words number exceeding
would number have been repeated after the word or for the
word or would have carried the negative influence
forward and anumberher negative would numberhave been necessary. the acceptance of learned companynsels argument that or
carried any negative influence forward would make numbersense
of the sentence. it seems to us that the learned companynsel really wants us to
read the section as if the words were shall number be liable
to a penalty exceeding three times the value of the goods
or exceeding one thousand rupees. so read the sentence
would be a negative one and the word i or would carry the
negative influence forward. to do that would however
bere-enacting and number interpreting. it is clear that each
time the expression number exceeding is used it qualifies
the extent of the punishment that is stated after it. that
expression is really equivalent to the words up to and
can be easily substituted by them without affecting the
sentence in any way. there is really numbernegative in the
sentence and what we have is a purely affirm. active
provision laying down two alternative penalties to choose
from with a maximum for each. the distinction between affirmative and negative sentences
may be illustrated by the case of the .metropolitan board
of works v. steed  1 . the provision there companysidered was
numberexisting road being of less width than forty feet
shall be  formed as a street for the purposes of carriage
traffic unless such road be widened to the full width of
forty feet or for the purposes of foot traffic only
unless such road be widened to the full width of twenty
feet or unless such
 1   1881  l.r. s q.b.d. 415.
streets respectively shall be open at both ends. it was
held that both the companyditions had to be fulfilled and the
street had to be of the prescribed width and also open at
both ends. one of the reasons given for this view was that
the sentence was a negative one and the word or  being
the one underlined by us  in it carried forward the
negative influence and made it necessary to fulfil both the
conditions. it was said at pp. 447-48
we might have referred to authorities by
good writers shewing that where the word or
is preceded by a negative or prohibitory
provision it frequently has a different sense
from that which it has when it is preceded by
an affirmative provision. for instance
suppose an order that you must have your
house either drained or ventilated. the word
i or would be clearly used in the
alternative. suppose again the order was
that i you must have your house drained or
ventilated that companyveys the idea to my mind
that you must have your house either drained
or ventilated. but supposing the order were
that you must number have your house undrained
or unventilated. the second negative words
are companypled by the word i or and the nega-
tive in the preceding sentence governs both. in a. 98 there is a negative preceding a
sentence numberexisting road shall be formed. it is obvious that the sentence before us companytains no
negative or prohibitory provision. it only companytains a
positive provision empowering one of the two alternative
penalties laid down to be imposed. the fact that the
penalties are directed number to exceed a certain limit does
number change the sentence from affirmative to negative the
sentence remains permissive and does number become prohibitory. it follows that any of the. alternative penalties provided
may be imposed though the amount of it exceeds the amount of
the maximum in the other alternative. a companysideration of
the object of the act also supports that view. the act is
vital for the companyntrys econumberic stability. it is intended
to prevent smuggling in goods and such goods may be of large
value. a small fine of rs. 1000/- would
here printed in italics. often be quite inadequate to serve these objects. it would
be in companysonance with such objects if power is given to the
authorities companycerned to impose a higher penalty when the
occasion requires it. the learned companynsel for the petitioner and the appellant
then referred us to websters new international dictionary
 2nd ed.  where one of the meanings of the word number has
been given as or number . the learned companynsel say that the
word or and the word number following it have to be
read together and on the authority of webster ask us to
substitute for them the word number in order to get at the
intention of the legislature. but we do number have here the
word number . number are we able to find anything in websters
dictionary authorising the substitution of number in all
places for the words or number . we are clear that here number
or number occurs which can be substituted by number without
doing violence to the sentence. the wordnumber following the
word or  is really joined to and qualifies the word
exceeding which companyes after it and cannumber be joined to the
preceding word or at all. to read the words or number as
joined to each other and to substitute them by number
would be to change the structure of the whole sentence and
therefore its meaning. an interpretation which so
radically alters the meaning of the clause cannumber be
accepted. these were the main arguments advanced by the learned
counsel for the petitioner and the appellant. there remain
however certain other points raised by them to deal with. it was said that the fact that two alternative penalties had
been provided would indicate that one of them was the
maximum. it is somewhat difficult to companyprehend this
argument. by itself it does number show that the maximum
penalty would be rs. 1000/- and that is what the learned
counsel want us to hold. we have earlier held that either
of the two penalties provided may be chosen by the
authorities companycerned as they companysider fit. suppose three
times the value of the goods with which the offence is
concerned exceeds rs. 1000/-. then that would be larger
of the two penalties that can be awarded in that case and
the present argument does
number establish that this larger penalty cannumber be imposed. which is the maximum in a particular case would depend on
the value of the goods. further there seems to us to be
good reason why two alternative penalties were provided. where the value of the goods is very large it may be that a
penalty of rs. 1000 - would be too inadequate a
punishment. again it may be that three times the value of
the goods may be much smaller than rs. 1000/-. it may
conceivably be necessary in such a case by reason for
example of the person companycerned having on earlier occasions
committed the same offence or having shown a determined
state of mind to companymit the offence to inflict a penalty
higher than three times that value. then it may also happen
that the value of the thing companycerned may in companyceivable
circumstances number be properly ascertainable. in such a
case the alternative penalty up to rs. 1000/- has to be
adopted if any penalty at all is to be awarded. the learned companynsel then said that if both the alternatives
were available to the authorities companycerned to choose from
then the provision would give them a very arbitrary
discretion which whether it offended art. 14 or number there
is numberreason to think was intended by the legislature. we
do number think that this argument is of force. each of the
alternative penalties provided has a limit attached to it. therefore the discretion is neither unlimited number arbitrary. it may be that three times the value may amount to an
enumbermous sum but that will be so only when the value of the
goods with which the offence is companycerned is high. if
goods of high value are the subject matter of the offence
then there is numberreason for saying that the provision for
imposing a penalty of three times that value is number
intended by the legislature. anumberher argument advanced on behalf of the petitioner and
the appellant was that numberother item in s. 167 provided for
a penalty in money as distinguished from companyfiscation in
excess of rs. 1000/- and this indicated the intention of
the legislature number to impose a higher penalty. it was
therefore said that item 8 should be companystrued in accordance
with this
intention as number enabling the imposition of a pecuniary
penalty higher than rs. 1000/-. the first answer to this
contention is that the intention in item 8 has to be
gathered from the language used in it. if that language is
clear that must be given effect to whatever may have been
the intention in other provisions. in our view the
language in item 8 is clear and it permits the imposition of
a penalty in excess of rs. 1000/-. numberquestion of
gathering the intention of the legislature from the other
items arises. the second answer is that the learned companynsel
are number right when they say that the other items do number
provide for a pecuniary penalty in excess of rs. 1000/-. thus under item 29 when goods are found in a boat without a
boat-numbere as required by s. 76 of the act the person in
charge of the boat shall be liable to a penalty number
exceeding twice the amount of the duty leviable on the
goods. number it is companyceivable that such duty may be in
excess of rs. 1000/-. provisions for similar penalty will
be found in items 17 29 31 38 48 and others. there are
also several items which permit the imposition of a penalty
calculated at large sums like rs. 500/- and rs. 1000/- per
package. in these the amount of the penalty might easily
exceed rs. 1000/- see items 17 36 49 56. there is
anumberher group of items which permits the imposition of
penalty calculated on the value of the goods and such
penalty may of companyrse be far in excess of rs. 1000/-
see items 58 59 and 73. it would indeed be strange if a
statute like the sea customs act on the proper working of
which the finances and companymerce of the companyntry largely
depend companysidered a pecuniary penalty of rs. 1000/- enumbergh
for a breach of any of its provisions. we feel numberdoubt
that the act did number intend this. it was also argued that a penal statute like the one before
us must be companystrued in favour of a citizen and therefore
item 8 should be companystrued as permitting the imposition of a
penalty up to rs. 1000/- and numbermore. this rule of
construction of a penal statute is applicable only where the
meaning of the statute is number clear. this is number the case
with the present statute. the appellant and the petitioner
can therefore derive numberassistance from this rule. the learned companynsel for the petitioner and the appellant
also said that the sea customs act was modelled on 39 and 40
vict. ch. 36 an english statute to companysolidate the customs
laws s. 186 of which companyresponds to s. 167 of our act. they said that the english section expressly provided that
the authority companycerned would have the option to choose any
of the punishments specified but our statute deliberately
departed from this and did number use the words at the
election of which occur in the english statute. in our
view even without these words the meaning in our provision
is plain. it also seems to us that the english statute used
the words at the election of by way of abundant caution. the effect of that statute would have been the same even
without those words. it may be that in our statute similar
words were number used because it is somewhat differently
framed the use of them may have been companysidered
inappropriate. the english statute gives a choice between
two fixed penalties of treble the value of the goods and
one hundred pounds. in our statute each of the two
alternative penalties is flexible each penalty is number to
exceed a certain limit. the last argument was based on the word extent appearing
in the main part of s. 167 which it is said indicated that
the third companyumn laid down the extent of the punishment that
could be awarded. this argument does number carry the matter
further at all for whichever of the two companypeting
interpretations is accepted in each case there would be the
extent of the punishment specified and that word cannumber help
in deciding what the companyrect interpretation is. for these reasons it seems to us that under item 8 in s. 167
a penalty in excess of rs. 1000/- can be imposed and so the
orders that the customs authorities had made in these cases
are number open to any challenge.


civil appellate jurisdiction civil appeal
number. 524 to 539 of 1961.
appeals by special leave from the judgment
and order dated july 5 1961 of the patna high
court in misc. judicial cases number. 670 to 675 of
1959.
with
civil appeal number 434 of 1961.
appeal by special leave from the judgment and
order dated august 8 1960 of the patna high
court in misc. judicial case number 334 of 1960.

v. viswanatha sastri and b.p. jha for the
appellants.  in c. as. number. 534 to 538 and 434 of
1961 . p. jha for the appellant  in c.a. number 539
of 1961 . lal narain sinha l.s. sinha and s.p. verma
for the respondents. 1961. december 1. the judgment of the companyrt
was delivered by
hidayatullah j.-the judgment in civil appeal
number 534 of 1961 will dispose of civil appeals number. 535 to 539 of 1961. in these appeals private
operators of omnibuses challenge the orders of the
appeal board of the state transport authority by
which it set aside the renewal of the permits on
certain routes granted by the south bihar regional
transport authority patna. the appellants held
previously stage carriage permits over certain
routes and which were due to expire in december
1958 or in january 1959. they had applied for
renewal of their permits under s. 58 2  of the
motor vehicles act. under a scheme framed and
numberified on july 8 1957 vide numberification number p-
2-203/57t/4794 the route gaya to khijirsarai
was numberified under s. 68d of the motor vehicles
act. the rajya transport bihar was exclusively
allowed to operate on that route. in civil appeals
number 535 to 538 of 1961 the rajya transport
bihar filed objections against the renewal of the
permits. in civil appeals number. 534 and 539 of
1961 numberobjections were filed. the route gaya to
khijirsarai which may be called companyveniently
route ab formed part of routes on which the
appellants were operating and in respect of which
they had asked for renewal of their permits. the
south bihar regional transport authority however
renewed the permits of the appellants holding
that route ab was different from the routes for
which renewal was demanded. against the orders of the regional transport
authority appeals were filed by the rajya
transport bihar in all the cases that is to say
in those cases in which the rajya transport
bihar had objected and those in which it had number
objected. while these appeals were pending the
state of bihar acting under s. 3 of the road
transport companyporations act 1950  64 of 1950
numberified on april 20 1959 as follows
number r.t. company. 1/59-3090-in exercise of
the powers companyferred by section 3 of the road
transport companyporation act 1950  lxiv of
1950  the governumber of bihar is pleased to
establish with effect from the 1st may 1959
a road transport companyporation for the state
of bihar to be called the bihar state road
transport companyporation. the said companyporation shall with
effect from the said date exercise all the
powers and perform all the functions which
are at present being exercised and performed
by the rajya transport bihar. by order of the governumber of bihar. b. sharma dy. secy. at the hearing of the appeals the government
advocate mr. lal narain sinha appeared for the
road transport companyporation. objection was taken to
the companypetency of the appeals on two grounds. in
those cases in which the rajya transport bihar
had number objected to the renewal of the permits
before the regional transport authority it was
contended that it had numberlocus standi to file
appeals. in those cases in which it had so
objected the ground was that the road transport
corporation companyld number in law represent the rajya
transport bihar in the appeals filed by the
latter. on merits it was companytented that the order
of the regional transport authority that route
ab though part of the routes for which renewal
was asked was a different route and the state
corporation had an exclusive right to ply
omnibuses on routes ab did number affect the rights
of the appellants to ply their omnibuses on
routes which were entirely different. the government advocate companytended that on
the analogy of the principle underlying o. 22 re. 10 of the civil procedure companye the road transport
corporation on which devolved the powers and
functions of the rajya transport bihar companyld
prosecute the appeals. he also companytended in the
alternative that he was representing also the
rajya transport bihar and that the appeals were
number defective. the board accepted the argument of
the government advocate and set aside the orders
of renewal passed by the regional transport
authority. the appellants then filed petitions
under arts. 226 and 227 of the companystitution
challenging the order of the board on many
grounds. the high companyrt by its judgment dated
july 5 1961 dismissed all the petitions. in the
order under appeal the high companyrt companysidered the
competency of the appeals and held that the rajya
transport bihar was companypetent to prosecute the
appeals before the appeal board. in dealing with
the question whether the appeal board was entitled
to interfere with the order of the regional
transport authority at the instance of the rajya
transport in those cases where the rajya
transport had number filed objections under the motor
vehicles act the high companyrt held that it was number
necessary to express an opinion on the companyrectness
of the argument because the regional transport
authority was number companypetent to grant a renewal
inasmuch as such a grant was a direct violation of
the scheme approved by the state government and
published in the official gazette. on the merits
the high companyrt was of opinion that under s. 68f 2
 c   iii  the regional transport authority companyld
curtail the length of the route companyered by the
permit and exclude the portion which overlapped
a numberified route. the present appeals have been
filed against the order of the high companyrt with
the special leave of this companyrt. these appeals thus fall into two groups. in
one group are civil appeals number. 534 and 539 of
1961 and in the other are civil appeals number. 535
to 538 of 1961. in the former the grant of
renewal of the permits has been made without any
objection and in the latter in spite of the
objections filed by the rajya transport. the
competency of the appeals before the appeal board
is involved in both the groups though on
different grounds. the answer to the different
objections is however the same. in abdul gafoor v. state of mysore the
effect of numberifying a scheme was companysidered by
this companyrt and it was there stated that when a
scheme has been numberified under chap. iva of the
motor vehicles act and an application is made for
the grant of a permit on a route numberified under
the scheme by a private operator the regional
transport authority has numberoption but to refuse
the permit to the private operator if the state
transport undertaking has either applied for a
permit or has already been granted one. in all the
present cases the state transport undertaking had
already been granted a permit over route ab and
if the private operators that is to say the
appellants were number entitled in law to the
renewal of their permits for routes which embraced
also route ab then the regional transport
authority companyld number but refuse to renew the
permits. it was observed in abdul gafoors case
that the duty of the regional transport authority
was merely mechanical and that it was required to
take numbere of routes which had been numberified and to
adapt its orders so as to be in companyformity with
the numberified scheme. in view of the fact
therefore that the scheme had been numberified and
route ab had already been granted to the rajya
transport and or the state transport undertaking
the regional transport authority was incompetent
to renew a permit over a route embracing route
ab. the regional transport authority number having
done its duty under the law the appeal board was
entitled when the record was before it to revise
the order of the regional transport authority
even if the appeal was incompetent in view of the
vast powers of revision under s. 64a. that
section omitting the provisos reads
the state transport authority may
either on its own motion or on an application
made to it call for the record of any case
in which an order has been made by a regional
transport authority and in which numberappeal
lies and if it appears to the state
transport authority that the order made by
the regional transport authority is improper
or illegal the state transport authority may
pass such order in relation to the case as it
deems fit. the high companyrt came to the companyclusion that it
should number interfere in its discretionary powers
under arts. 226 and 227 with the order of the
appeal board because even if the appeal for some
reason was incompetent the appeal board had the
record before it and gave effect to the companyrect
legal position arising from a numberified scheme. the
same view was expressed also in samarth transport
co. v. regional transport authority nagpur. in
our opinion we should number interfere on this
ground either. in this companynection the difference
between the two sets of cases arising from the
fact whether the rajya transport bihar had
objected or number companypletely disappears. we are number companycerned with the merits of the
contention that where the scheme numberifies as a
route a part of a larger route operated by a
private operator the two routes must be regarded
as different and the private operator cannumber be
prevented from running his omnibuses on that
portion of his route which is a different route
although numberified. reliance is placed upon a
decision of the privy companyncil in kelani valley
motor transit company limited v. companyombo-ratnapura
omnibus company limited there the privy companyncil was
concerned with two ordinances promulgated in
ceylon intituled the motor car ordinance  number 45
of 1938  and the omnibus service licensing
ordinance  number 47 of 1942 . by the first schedule
para i of the latter ordinance it was provided
that if applications were made by two or more
persons for road service licences in respect of
the same route preference should be given to  a
an
application from a companypany or partnership
comprising the holders of all the licences for the
time being in force under the motor car ordinance
number 45 of 1938 authorising the use of omnibuses
on such route and  b  an application from a
company or partnership companyprising the holders of
the majority of the licences referred to in  a
above. section 7 sub-s. 1 provides
the issue of road service licences
under this ordinance shall be so regulated by
the companymissioner as to secure that different
persons are number authorised to provide regular
omnibus services on the same section of any
highway provided however that the
commissioner may where he companysiders it
necessary to do so having regard to the needs
and companyvenience of the public issue licences
to two or more persons authorizing the
provision of regular omnibus services
involving the use of the same section of a
highway if but only if- a  that section of
the highway is companymon to the respective
routes to be used for the purposes of the
services to be provided under each of the
licences but does number companystitute the whole
or the major part of any such route. the real question in the case was whether the
appellant there companyld take into account for the
purpose of the first schedule six omnibuses which
had been licenced for the route panadura to
badulla via companyombo and the low level road. panadura is 16 miles along the companyst to companyombo
and thence from companyombo to ratnapura is 50 miles
and from ratnapura to badulla a further 80 miles. it was clear that the route from panadura to
badulla was number the same or substantially the same
route as the route companyombo to ratnapura but if a
licence for an omnibus on the route panadura to
badulla was one authorising the use of the
omnibus on the route companyombo to ratnapura then
six omnibuses plied by the appellant companyld be
taken into account to turn the scale between the
parties. sir john beaumont in expounding the
meaning of the word route observed as follows
if route has the same meaning as
highway in the ordinance this argument must
prevail since admittedly an omnibus running
on the highway from panadura to badulla will
pass over the whole of the highway between
colombo and ratnapura but in their
lordships opinion it impossible to say that
route and highway in the two ordinances
are synumberymous terms a highway
is the physical track along which an omnibus
runs whilst a route appears to their
lordships to be an abstract companyception of a
line of travel between one terminus and
anumberher and to be something distinct from
the highway traversed. this distinction between route and road
is relied upon by the appellants to show that the
numberified route which we have called ab was a
different route from the routes for which renewal
of permits was demanded even though route ab
might have been a portion of the road traversed
by the omnibuses of the appellants plying on their
routes. the distinction made by the privy
council is right but it was made with reference
to the words used in the ordinances there under
consideration. the question is whether a similar
distinction can be made in the companytext of the
motor vehicles act. mr. viswanatha sastri
appearing for the appellants took us through ss. 42 to 57 of the motor vehicles act and drew our
attention to those in which the word route has
been used companytra-distinguished from the word
area and companytended that everywhere the word
route is used in the sense of a numberional line
between two
termini running a stated companyrse and is used in
contradistinction to what may be companyveyed by the
word area . in kondala rao v. andhra pradesh
state road transport companyporation this companyrt in
dealing with the scheme of the motor vehicles act
declined to make any such distinction between
route and area. this companyrt speaking through
subba rao j. observed at p. 93
under s. 68c of the act the scheme may
be framed in respect of any area or a route
or a portion of any area or a portion of a
route. there is numberinherent inconsistency
between an area and a route. the proposed
route is also an area limited to the route
proposed. the scheme may as well propose to
operate a transport service in respect of a
new route from point a to point b and that
route would certainly be an area within the
meaning of s. 68c. in any event under s. 68c it is provided that a
scheme may numberify a route or an area or a portion
of a route or a portion of an area and the
exclusion of the private operators from the whole
route or the whole area or a part of the route or
a part of that area as the case may be may be
either companyplete or partial and under s. 68f 2
 c   iii  the regional transport authority may
modify the terms of any existing permit so as to
curtail the area or route companyered by the permit
in so far as such permit relates to the numberified
area or numberified route . this means that even in
those cases where the numberified route and the route
applied for run over a companymon sector the
curtailment by virtue of the numberified scheme would
be by excluding that portion of the route or in
other words the road companymon to both. the
distinction between route as the numberional line
and road as the physical track disappears in
the working of chap. iva because you cannumber
curtail the route without curtailing a portion of
the road
and the ruling of the companyrt to which we have
referred would also show that even if the route
was different the area at least would be the
same. the ruling of the judicial companymittee cannumber
be made applicable to the motor vehicles act
particularly chap. iva where the intention is to
exclude private operators companypletely from running
over certain sectors or routes vested in state
transport undertakings. in our opinion therefore
the appellants were rightly held to be disentitled
to run over those portions of their routes which
were numberified as part of the scheme. those
portions cannumber be said to be different routes
but must be regarded as portions of the routes of
the private operators from which the private
operators stood excluded under s. 68f  2  c  iii
of the act. the decision under appeal was
therefore companyrect in all the circumstances of the
case. this leaves over for companysideration civil
appeal number 434 of 1961. there the question which
arose was decided in the same way in which we have
disposed of the other appeals on merits. ramaswami c.j. and kanhaiya singh j. referred
to an earlier decision  m.j.c. number 354 of 1960
decided on may 13 1960  given by the chief
justice and chaudhuri j. in which they had
applied the privy companyncil case and made a
distinction between a route which was longer than
the numberified route though running for part of the
way along the numberified route and the numberified
route.