civil appellate jurisdiction civil appeal number 599 of 1961.
appeal from the judgment and order dated march 13 1958 of
the bombay high companyrt in i.t. r. number 40 of 1957.

ganapathy iyer and r. n. sachthey for the appellant. v. viswanatha sastri and i. n. shroff for the respondent. 1962. september 17. the judgment of the companyrt was
delivered by
hidayatullah j.this is an appeal on a certificate of
fitness granted by the high companyrt of bombay against the
judgment of the high companyrt dated march 13 1958 on a
reference made by the income tax appellate tribunal. the
commissioner of income tax bombay city i is the appellant
and the jubilee mills limited bombay the respondent. the
only question raised in this appeal is the application of
s.23a of the income-tax act to the assessee companypany. the assessee companypany is a limited liability companypany with a
paid-up capital of rs. 1525000/-. its paid up capital is
made up as under--
i lakh ordinary shares of
rs. 10 each rs. 1000000
5000 cumulative preference shares of
rs. 25 paid-up. rs. 125000
4000 second preference shares of
rs. 100 each fully paid-up. rs. 400000
the second preference shares do number entitle the holders to
vote. thus shares of the assessee companypany carrying votes
are 105000. this was the position on june 30 1947. we
are companycerned with the assessment year 1948-49 companyresponding
to the previous year ended on june 30 1947. in that year
the companypany was assessed on a total income of rs. 747639/-. the income tax officer calculated the tax at
rs. 327091 and te balance available for distribution was
rs.420548. in that year the companypany ought if s. 23a was
applicable to have distributed 60 of the above amount. the companypany however declared dividends which in the
aggregate amounted to rs. 24750. the income tax officer
with the previous approval of the inspecting assistant
commissioner applied the provisions of s. 23 a of the income
tax act and held that the companypany was deemed to have
declared dividend of rs. 397788/-. the assessee companypany was being managed by a firm called
mangaldas mehta company that firm
consisted of 14 partners of whom seven were the directors of
the assessee companypany. the members of the managing agents
who were also directors held between them 35469 ordinary
shares and 880 first preference shares. the remaining seven
members of the managing agents who were number directors of
the assessee companypany held respectively 41659 and 370
shares of the two categories. 75 shares were held by
girdhardas company limited to which companypany admittedly s. 23 a
was applicable. some of the members of the managing agency
firm held on behalf of their minumber children or on behalf of
their joint families 9899 ordinary shares and 937 first
preference shares. the following is a detailed break-up of
the share holdings-
category a
share in
shares held by directors holding the part- holding
who are partners in the of nership of the
firm of managing agents ordinary of firm 1st pre-
shares of mg. ference
agents shares
firm
1.  shri homi mehta 50 8/128 nil
2.  sheth mathuradas man-
galdas parekh 6466 14/128 273
3.  madanmohan
mangaldas 11052 14/128 273
4.  madhusudan
chamanlal parekh 3616 7/128 20
5.  mahendra
chamanlal parekh 3616 7/128 20
6.  surendra man-
galdas parekh 7053 14/128 274
7.  indrajit
chamanlal parekh 3616 7/128 20
-------- -------
35469 880
categoryb
------------------------------------------------------------
share in
shares held by the partners holding the part- holding
of the managing agents of ordi- nership of the
firm excluding the holding nary firm of 1st pref. of the directors who are shares mg. shares. also partners as shown agents
above. firm

shri harshavadan mangaldas 11053 14/128 274

mrs.savitagavri
chamanlal parekh 3750 7/128 16

shri viren- a minumber by
dra chaman- his mother
lal parekh and guardian
mrs.savitaga-
vri chaman-
lal parekh. 6328 7/128 20

shri man-
mohan
chamanlal
parekh -do- 4462 7/128 20

shri kamalnayan
chamanlal
parekh -do- 4962 7/128 20

shri nutan
chamanlal
parekh -do- 4962 7/128 20

shri hussein essa 6142 8/128 nil
------ -----
41659 370
category c
----------------------------------------------------------
shares represented by the holding of pref. shares
directors ordinary holding of
shares the 1st. sheth madhusudan
chamanlal parekh  number 4
in a above  as karta
of the joint family estate
of sheth chamanlal
girdhardas parekh 3899 937

sheth mathuradas
mangaldas parekh
 number 2 in a above
as guardian and father
of minumber ben
purnima mathuradas 1000
3. -do- -do- ben veena 1000
4. -do- -do- ben sunita 1000
5. -do- -do- jagatkumar
mathuradas 1000

sheth surendra
mangaldas parekh
 number 6 in a above
as guardian and father
of minumber darshan surendra
parekh 1000
7. -do- as guardian and
father of minumber ben babi
surendra parekh 1000
------- ------
9899 937
it appears that in the past the assessee companypany incurred
heavy losses and it had to reconstruct its capital in 1930
because it had a debit balance of rs. 1275ooo in the
profit and loss account which had to be paid out of capital. this was done by reducing the face value of the ordinary
shares from rs. 100 to rs. 10 each and of the preference
shares from rs. 100 to rs. 25 each after obtaining the
approval of the high
court it is the reconstituted capital which has been shown
by us in an earlier part of this judgment. it also appears
that income-tax officer granted to the assessee companypany a
rebate of one anna under proviso  a  to paragraph  b  of
part  1  of the second schedule of the finance act 1948.
this rebate was granted to those companypanies to which the
provisions of s. 23 a were number applicable. subsequently
the income tax officer as stated already applied s. 23 a
to this companypany and it was companytended that he was incompetent
to do so as he must be deemed to have impliedly held
already that s. 23 a was number applicable. section 23 a
before its amendment in 1955 in? so far as it is material
read as follows-
23a. power to assess individual members of
certain companypanies.-  1  where the income-tax
officer is satisfied that in respect of any
previous year the profits and gains
distributed as dividends by any companypany up to
the end of the sixth month after-its accounts
for that previous year are laid before the
company in general meeting are less than sixty
per cent of the assessable income of the
company of that previous year as reduced by
the amount of income-tax and super-tax payable
by the companypany in respect thereof he shall
unless he is satisfied that having regard to
losses incurred by the companypany in earlier
years or to the smallness of the profit made
the payment of a dividend or a larger dividen
than that declared would be unreasonable make
with the previous approval of the inspecting
assistant companymissioner an order in writing
that the undistributed portion of the
assessable income of the companypany of that
previous year as companyputed for income-tax pur-
poses and reduced by the amount of income-tax
and super-tax payable by the companypany in
respect thereof shall be deemed to have been
distributed as dividends amongst the
shareholders as at the date of the general
meeting aforesaid and
thereupon the proportionate share thereof of
each shareholder shall be included in the
total income of such shareholder for the
purpose of assessing his total income
x x x x
x x x x
provided further that this subsection shall
number apply to any companypany in which the public
are substantially interested or to a
subsidiary companypany of such a companypany if the
whole of the share capital of such subsidiary
company is held by the parent companypany or by
the numberinees thereof
explanation. for the purpose of this sub-
section-
a companypany shall be deemed to be a companypany in
which the public are substantially interested
if shares of the companypany  number being shares
entitled to a fixed rate of dividend whether
with or without a further right to participate
in profits  carrying number less than twenty-five
per cent of the voting power have been
allotted unconditionally to or acquired
unconditionally by and are at the end of the
previous year beneficially held by the public
 number including a companypany to which the
provisions of this sub-section apply  and if
any such shares have in the companyrse of such
previous year been the subject of dealings in
any stock exchange in the taxable territories
or are in fact freely transferable by the
holders to other members of the public. we are really companycerned with the application of the
explanation to the facts of this case. the explanation is
so far as it is relevant to our purpose says that a companypany
shall be deemed to be a companypany in which the public are
substantially interested if the
shares of the companypany carrying number less than 25 of the
voting power have been allotted unconditionally to or
acquired unconditionally by the public and are held
beneficially by the public. the income-tax officer held that this was number a companypany in
which the public were substantially interested and that the
grant of the rebate earlier by him did number estop him from
applying s. 23a to this companypany. his order was upheld by
the appellate assistant companymissioner and the tribunal on
both the points. the assessee companypany then applied for a
reference and the tribunal referred the following questions
for decision by the high companyrt--

whether on the facts and in the circums-
tances of the case the income-tax officer was
competent to pass an order under section
23a 1  of the act after having allowed a
rebate of one anna per rupee in the assessment
under the proviso  a  to paragraph  b  of part
i of the second schedule of the finance act
1948? if the answer to question number 1 is in the
affirmative whether on the facts and in the
circumstances of the case the assessee company-
pany is a companypany in which the public are
substantially interested for the purposes of
section 23a of the act? whether the loss of rs. 1275000
incurred by the companypany prior to its
reconstruction in 1930 companyld be taken into
consideration for purposes of the
applicability of section 23a  1  of the act? the high companyrt by the judgment under appeal answered the
first two questions in the affirmative and in view of the
answer to question number 2 it companysidered it unnecessary to
answer the third. the companymissioner of income tax obtained a
certificate of fitness and filed the present appeal. the answer to the first question is in favour of the
commissioner of income tax. the other side has number appealed
and mr. vishwanath sastri for the assessee companypany companyceded
before us that the high companyrt was right. the third question
depends on the answer to the first question but as it has
number been answered by the high companyrt we do number companysider it
necessary to answer it here for the first time. we shall
number address ourselves to the second question. the tribunal in dealing with the question whether the public
could be said to hold 25 or more of the voting power in the
assessee companypany took into companysideration a decision of the
privy companyncil in companymissioner of income tax v. h.
bjordal 1  and held that though directors qua directors
do number cease to be members of the public the holding of the
group of 14 individuals who companylectively formed the managing
agency firm of mangaldas mehta company companyld number be companynted as
held by the members of the public in this case for purposes
of the explanation. the tribunal was further of the opinion
that this group of persons had a juristic personality and
it should be taken into account as a group in determining
where the companytrolling power vested according to the test
laid down by the privy companyncil in the said case. the high companyrt reversed the decision of the tribunal
following its earlier decision reported in raghuvan8hi mills
ltd. v. companymissioner of income-tax 2 . in that case the
high companyrt had held that directors qua directors must be
contrasted with the public and if the directors held more
than 75 of the voting power then alone the companypany companyld be
said to be one in which the public were number substantially
interested. the high companyrts view was that the managing
agents act under the direction of the directors and unless
the directors were themselves companytrolling the voting power
above the limit stated by the explanation the companypany must
be regarded as one in which
 1  1955 28 i. t. r. 25.  2  1953 24 i. t. r. 338.
the public were substantially interested. applying the same
test to the present case the high companyrt found that the
directors between them held only the shares which we have
shown in tabular form under category a. since the
number of these shares was number up to the mark to attract s.
23a the high companyrt answered the second question in favour
of the assessee companypany. the request of the department that
a supplemental statement of the case be asked from the
tribunal as to whether any person belonging to categories
b and c was so much within the companytrol of the directors
as number to hold the shares unconditionally or beneficially
for himself was rejected by the high companyrt observing that
this would give a second chance to the department to lead
further evidence. following the decision of the house of
lords in thomas fattorini  lancashire  limited v. inland
revenue companymissioner.  1  they refused to take action under
s. 66  4 . the high companyrt took numberice of the fact that the
privy companyncil in bjordals case  supra  had indicated a test
to determine what is meant by public which was different
from that indicated by them in raghutanshi case  supra . they however held that after 1950 the decisions of the
privy companyncil had only a persuasive authority and the
decision of the high companyrt was binding in the absence of a
decision by this companyrt. they therefore applied their own
decision in raghuvanshi mills case and decided this case
accordingly. it may be pointed out that the high companyrt did appreciate
the point of view expressed by tile privy companyncil in the
above-mentioned case. they observed as follows-
it may be that our view is erroneous and it
may be-and very probably it is -that the view
taken by the privy companyncil is the right one. but as we have said so long as the judgment
of the bombay high companyrt standsit was the
duty both of he department and of the tribunal
to give effect to that decision.  1  1942 a. c. 643
section 23a is number applicable to a companypany in which the
public are substantially interested. what is substantial
interest of the public is stated in the explanation. that
interest represented in terms of the share-holding must number
be less than 25 of the total number of the shares but no
person can be said to belong to the public unless he holds
the shares unconditionally and beneficially for himself. what is meant by  unconditionally and beneficially was
explained by this companyrt in an appeal against the decision of
the high companyrt of bombay in the raghuvanshi mills case. the decision of this companyrt is reported in 1961 41 i.t.r. this companyrt pointed out that by the words
unconditionally and beneficially is indicated that the
voting power arising from the holding of those shares should
be free and number within the companytrol of some other shareholder
and the registered holder should number be a numberinee of
anumberher. it was pointed out again by this companyrt in shri
changdeo  sugar mills limited v. companymissioner of income tax
bombay  1  that by unconditional and. beneficial
holding is meant that the share are held by the holders
for their own benefit only and without any companytrol of
anumberher. this companyrt approved the decision of the privy companyncil in
bjordals case that directors qua directors are number
without the pale of the public. this companyrt pointed out that
what one has to find out is whether there is an individual
who or a group acting in companycert which companytrols or companytrol
the affairs of the companypany to the exclusion of others by
reason of his or their voting power. such person or group
of persons do number answer the description public. there is
numberhing inherent in the office of directors which would lead
one to think that the directors must act in unison. they
are persons in whom the shareholder have reposed
confidence and on whom they have companyferred powers which
under the scheme of the companypanies act have to be exercised
for the benefit
 1  1961 41 1. t. r. 667.
of the shareholders. the directors are in a manner of
speaking trustees of these powers. it is the duty of the
directors to exercise these powers to the best of their
independent judgment. there is therefore .-numberhing in the
nature of things or at all that requires the directors to
act in unison. this companyrt pointed out in the raghuvanshi
millscase  1  that such a group may be companyposed of
directors or their numberinees or relations in different
combinations or may be companyposed of persons numbere of whom is a
director provided such a group forms a block which holds the
controlling interest in its hands. it would therefore follow from what we have stated that we
have first to see whether there is an individual or a group
holding the companytrolling interest which group acting in
concert can direct the affairs of  lie companypany at its will. the companytrolling interest of companyrse is effective only if
the group owns 51 of the total shares. but the companypany will
still lie a companypany in which the public can be said to be
substantially interested because lo cease to be so the
holding of the group must be more than 75 . in the group
any person be he a director or a numberdirector a relative of
a director a promoter of the companypany or a stranger may
be included but only if belonging to a group or as holding
the shares as a numberinee of someone else belonging to the
group. we have indicated again the true test which was number
applied in the judgment of the bombay high companyrt in the
raghuvansi mills case -  and applying which we reversed
that decision. applying the above test we have to see whether there is
such a group in this companypany. it is obvious from what we
have said that category a which companysisted of the directors
could number be regarded as outside public merely by reason
that they were directors. but there is however an
intimate companynection between category a and category b in
as much as both are members of the managing agency
 1  1961 41 i. t r. 613.  2  1953 24 i. t. r. 338.
firm. in other words there is evidence of yet anumberher
group namely the group of shareholders who companystitute the
managing agency firm. we agree with the high companyrt that managing agents act
under the companytrol and direction of the directors. the
managing agents are also appointed by the companypany. the
control of the affairs of a companypany is ordinarily in the
hand of the directors of the companypany but there may be cases
in which the managing agents by reason of their superior
holding of shares may be able to appoint the directors and
generally to companytrol the views of the directors. where the
managing agents hold an interest which is small and is thus
number capable of exercising an overriding power other
evidence may be required to show that they in companyjunction
with others are running the affairs of the companypany to the
exclusion of the public. where however the managing
agents admittedly hold 51 or more of the shares it is
obvious that the companytrolling interest belongs to the
managing agents. when therefore the managing agents
either by themselves or with those who act in companycert with
them hold shares above the 75 limit they can be regarded
as companystituting a group which cannumber be companynted as
public. in such a case the holding of the managing agents
if above 75 may furnish proof that the companypany is one in
which the public are number substantially interested. it was
contended before us that even among the managing agents some
may take an independent view. numbermally managing agencies
are number formed by parties except for the purpose of mutual
gain and the companymonness of the interest lends a companyesion. to
the body which enables it to act in its own interest. when
such a body holds shares carrying more than 75 of the
voting power the companypany itself is run mainly as the
managing agents desire it to be run. such a managing agency
could easily choose its own directors and the directors
would number be independent persons but mere numberinees of the
managing agents. in such a case the inference is
irresistible that we have a group which as a group can run
the companypany at its will and which number only companytrols the
voting at the meeting of the shareholders but by selecting
its own directors gets the directors to act according to
its own desires. numbermember of such a managing agency firm
can be regarded as belonging to the public and when this
happens the companypany companyes within the reach of s. 23a. applying the above test to the present case it is clear
that the managing agents between them hold 77128 out of
100000 ordinary shares well above the limit. they have
in addition 1250 first preference shares out of 5000 which
also carry voting power. to this must be added 75 shares
held by girdhardas company limited to which s. 23a is admittedly
applicable. this brings the total holding to 78453. 75 of
the total shares bearing votes is 78750. this shows that
the holding of the managing agents is short by 298 shares
for the application of the explanation to s. 23a. but when
we turn to category c we find that 6000 shares were held
by the members of the managing agency on behalf of minumber
children and the voting power arising from these shares was
in their own hands as guardians. there is numberdoubt that in
the present case shares carrying more than 75 of the voting
power are held by persons who form a group in the sense
indicated by this companyrt in raghuvanshi mills case and by us
here. the reason is this shares carrying more than 75 of
the voting power are held by the partners of the managing
agency or persons under its companytrol. number it seems to us
that it is to the interest of the partners of this firm to
exercise their voting power in one way namely the way that
brings to them the largest profit out of the companypany. it is
true that the managing agents are the servants of the
company in a manner of speaking and number its masters and also
that the object of a firm of managing agents is to carry out
certain administrative
duties companycerning the companypany under the companytrol of the
directors of the companypany. that however is irrelevant and in
any case is far from the truth in the present case. here
the partners of the managing agency practically own the
company. at the hearing a point was raised that it has to be proved
as a fact that the persons companystituting the oil which owns
shares carrying more than seventyfive percent of the voting
power were acting in unison. the test is number whether they
have actually acted in companycert but whether the circumstances
are such that human experience tells us that it can safely
be taken that they must be acting together. it is number
necessary to state the kind of evidence that will prove such
concerted actings. each case must necessarily be decided on
its own facts. the exclusion of public in the manner
indicated generally from more than 75 of the shares and the
concentration of such a holding in a single person or a
group acting in companycert is what attracts s. 23  a .


civil appellate jurisdiction civil appeal number 1451 of
1968.
appeal from the judgment and decree dated march 11 1965
of the andhra pradesh high companyrt in a.s. number. 93 and 169 of
1957.
rajeshwara rao and b. parthasarathi for the appellant. munikanniah and a.v.v. nair for the respondent. the judgment of the companyrt was delivered by
ramaswami j. this appeal is brought by certificate
from the judgment of the high companyrt of andhra pradesh dated
march 11 1965 in a.s. number. 93 and 169 of 1957.
the appellant was a firm of dealers in pulses at
vijayawada.it was sending pulses like green gram and black
gram to other states viz. bombay bengal madras and kerala
by rail in the companyrse of their business. the companysignments
were addressed to self and the railway receipts were
endorsed in favour of banks for delivery against payments. the purchasers obtained the railway receipts after payments
and took delivery of the goods. the total turnumberer of the
business of the appellant for the year 1949-50 was rs. 1705144-2-2. of the said turnumberer a sum of rs. 361442-7-3 represented the turnumberer of sales effected
outside the then madras state. for the assessment year
1949-50 the deputy companymercial tax officer companylected sales
tax on the total turnumberer without exempting the value of the
sales effected outside the state. the appellant was
permitted to pay sales tax under r. 12 of the madras general
sales tax  turnumberer and assessment  rules. the appellant
submitted monthly returns and paid sales tax without
claiming any such exemption till the end of january 1950.
but in the returns for the months of february and march
1950 the appellant claimed exemption on sales effected
outside the state. the appellant submitted a companysolidated
return ex. a-18 to the deputy companymercial tax officer on
march 30 1950 claiming exemption in respect of a
sum of rs. 1037334-7-9 being the value of the sales
effected outside the
state or the period companymencing from april 1 1949 and ending
january 31 1950. the deputy companymercial tax officer fixed
the taxable turnumberer of the appellant at rs. 170514-4-2-2
and issued a numberice ex. a-23 dated october 24 1950 to show
cause why the appellant should number be assessed accordingly. the appellant was thereafter held liable to pay tax
amounting to rs. 26642-14-0 on a net turnumberer of rs. 1705144-2-2. the appellant preferred an appeal to the
commercial tax officer and a revision petition to the board
of revenue madras but was unsuccessful. the appellant
therefore brought a suit for the recovery of rs. 21270-13-0
being the amount of tax illegally companylected from him
together with interest companytending that the sales
effected outside the state companyld number be taxed under art. 285
 1  a  of the companystitution of india. the state of madras
contested the suit on the ground that the sales were taxable
as they fell within the purview of explanation 2 to s. 2 h
of the madras general sales tax act 1939 hereinafter
referred to. as the act . the subordinate judge held that
for the period from april 1 1949 to january 25 1950 the
appellant was number entitled to impeach the assessment on the
turnumberer relating to sales outside the state. as regards the
period from march 26 1950 to march 31 1950 the subordinate
judge took the view that the past of the turnumberer relating
to outside sales was number liable to salestax but as there
was a single order of assessment for the entire period
the entire assessment was illegal. again the judgment of
the subordinate judge both the appellant and the respondent
filed appeals a.s. number 93 of 1957 and a.s. number 169 of 1957
to the high companyrt of andhra pradesh. but its order dated
april 18 1960 in appeal number 169 of 1957 the high companyrt
called for a finding from the trial companyrt as to whether
the appellant was able to prove the facts entitling him to
invoke the explanation to art. 286 1  a . by its order
dated july 21 1962 the trial companyrt submitted a finding to
the effect that in view of the decision of the supreme companyrt
in india companyper companyporation limited v. the state of bihar 1
the burden of proof was number on the appellant and that the
finding will have to be given in its favour. but by its
order dated march 5 1963 the high companyrt directed the
subordinate judge to record a finding after companysidering the
evidence adduced by the appellant as to whether the goods
in question were delivered for companysumption within the
delivery states. in its order dated march 22 1963 the
trial companyrt after companysidering the evidence given by the
appellants witnesses came to the companyclusion that the
deliveries were number made for purposes of companysumption within
the delivery states only. the high companyrt by a companymon
judgment dated march 11 1965 in

s. number 93 and 169 of 1957 held that the appellant companyld
number claim the benefit under art. 286 1  a  of the
constitution in the
 1  12s.t.c. 56.
absence of evidence as to how the wholesalers disposed of
the goods after obtaining delivery and therefore the entire
turnumberer for the year 1949-50 would be assessable to tax. in the result a.s. number 169 of 1957 flied by the respondent
was allowed and a.s. number 93 of 1957 filed by the appellant
was dismissed. the madras general sales tax act 1939 was enacted in
exercise of the legislative authority companyferred upon the
provincial legislatures by entry 48 of list ii read with s.
100 3  of the government of india act 1935. the
explanation to s. 2 h  of this act is as follows
numberwithstanding anything to the companytrary
in the indian sale of goods act 1930 the
sale or purchase of any goods shall be deemed
for the purpose of this act to have taken
place in this province wherever the
contract
of sale or purchase might have been made. if the goods. were actually in this
province at the time when the companytract of sale
or purchase in respect thereof was made or
 b  in case the companytract was for the sale
or purchase of future goods by description
then if the goods are actually produced in
this province at any time after the companytract
of sale or purchase in respect thereof was
made. under entry 48 of list ii of the government of india
act 1935the provincial legislatures companyld tax sales by
selecting some fact or circumstances which provided a
territorial nexus with the taxing power of the state even if
the property in the goods sold passed outside the province
or the delivery under the companytract of sale took place
outside the province. legislation taxing sales depending
solely upon the existence of a nexus such as production or
manufacture of the goods or presence of the goods in the
province at the date of the companytract of sale between the
sale and the legislating province companyld companypetently be
enacted under the government of india act 1935. see
tata iron steel ca. limited v. the state of bihar 1  and
poppatlal shah v. the state of madras   2   . by art. 286 of the companystitution certain fetters were
placed upon the legislative powers of the states as follows

numberlaw of a state shall impose or authorise the
imposition of a tax on the sale or purchase of goods
where such sale or purchase takes place--
 1  1958 s.c.r. 1355.  2  19531 s.c.r. 677.  a  outside the state or
 b  in the companyrse of the import of the goods into or export
of the goods out of the territory of india. explanation.--for the purposes of sub-clause  a  a
sale or purchase shall be deemed to have taken place in the
state in which the goods have actually been delivered as
a direct result of such sale or purchase for the purpose of
consumption in that state numberwithstanding the fact that
under the general law relating to sale of goods the property
in the goods has by reason of such sale or purchase passed
in anumberher state. except in so far as parliament may by law
otherwise provide numberlaw of a state shall impose or
authorise the imposition of a tax on the sale or purchase
of any goods where such sale or purchase takes place in the
course of inter-state trade or companymerce
provided that the president may by order direct that
any tax on the sale or purchase of goods which was
being lawfully levied by the government of any state
immediately before the companymencement of this companystitution
shall numberwithstanding that the imposition of such tax is
contrary to the provisions of this clause companytinue to be
levied until the thirty-first day of march 1951.

numberlaw made by the legislature of a state
imposing or authorising the imposition of a tax on the
sale or purchase of any such goods as have been declared by
parliament by law to be essential for the life of the
community shall have effect unless it has been reserved
for the companysideration of the president and has received his
assent. therefore by incorporating s. 22 of the madras act read
with art. 286 numberwithstanding the amplitude of the power
otherwise granted by the charging section read with the. definition of sale a cumulative fetter of triple
dimension was imposed upon the taxing power of the state. the legislature of the madras state companyld number since january
26 1950 levy a tax on sale of goods taking place outside
the state or in the companyrse of import of the goods into or
export of the goods out of the territory of india or on
sale of any goods where such sale took place in the companyrse
of inter-state trade or companymerce. by the explanation to
art. 286 1  a  which is incorporated by s. 22 of the madras
act a sate is deemed to take place in the state in which the
goods are actually delivered as a. direct result of such
sale for the purpose
of companysumption in that state even though under the law
relating to sale of goods the property in the goods has by
reason of such sale passed in anumberher state. in the state
of bombay and anr. v. the united motors  india  limited 1  it
was held that since the enactment of art. 286 1  a  a sale
described in the explanation which may for companyvenience be
called an explanation sale is taxable by that state
alone in which the goods sold are actually delivered as a
direct result of sale for the purpose of companysumption in that
state. with a view to impose restrictions on the taxing power
of the states under the pre-constitution statutes
amendments were made in those statutes by the adaptation of
laws order. as regards the madras act the president issued
on july 8 1952 the fourth amendment inserting a new
section s. 22 in that act. it runs as follows
numberhing companytained in this act shall be
deemed to impose or authorise the imposition
of a tax on the sale or purchase of any goods
where such sale or purchase takes place--
 a   i  outside the state of madras or

in the companyrse of import of the goods
into the territory of india or of the export
of the goods out of such territory or
 b  except in so far as parliament may by
law otherwise provide after the 31st march. 1951 in the companyrse of inter-state trade or
commerce and the provisions of this act shall
be read and companystrued accordingly. explanation --for the purposes of cl.  a  i  a sale or purchase shall be deemed to
have taken place in the state in which the
goods have actually been delivered as a direct
result of such sale or purchase for the
purpose of companysumption in that state
numberwithstanding the fact that under the
general law relating to sale of goods the
property in the goods has by reason of such
sale or purchase passed in anumberher state. by this amendment the same restrictions were engrafted on
the pre-constitution statute as were imposed by art. 286 of
the companystitution upon post-constitution statutes. as regards the sales for the period from april 1949
to january 25 1950 it was admitted before the deputy
commercial
 1  1953 s.c.r. 1069.
tax officer that the goods were actually in the madras state
at the time the companytract of sale was companycluded. it was for
this reason that the deputy companymercial tax officer negatived
the claim which the appellant made in respect of those
sales. it appears that in the trial companyrt the appellant
challenged the companystitutional validity of explanation to s
2 h  of the act. but in view of the decision of this companyrt
in the tata iron steel company case 1  and poppatlal shahs
case 2  companynsel on behalf of the appellant did number seriously
dispute the validity of the assessment in regard to sales
from april 1 1949 to january 25 1950.
with regard to the period from january 26 1950 to
march 31 1950 the companytention of the appellant is that the
high companyrt was in error in holding that the burden of proof
was on the appellant to show that there was number only
delivery of goods for companysumption within the delivery states
but there was actual companysumption of the goods in those
states. in our opinion the argument is well-founded and
must be accepted as companyrect. in india companyper companyporations
case 3  it was pointed out by this companyrt that if the goods
were as a direct result of a sale delivered outside the
state of bihar for the purpose of companysumption in the state
of first delivery the assessee would be entitled to the
exemption from sales tax by virtue of the explanation to art
286 1  a  of the companystitution and it would number be necessary
for the assessee to prove further that the goods so
delivered were actually companysumed in the state of first
destination. in the present case the subordinate judge has upon a
consideration of the evidence adduced by the parties stated
in his report dated june 27 1962 that the intention of the
appellant was that the sale and delivery should be for the
purpose of companysumption in the delivery states. it is true
that in his subsequent report dated march 22 1963 the
subordinate judge gave a different finding. but it is
obvious that the subsequent report of the subordinate judge
is vitiated because the principle laid down by this companyrt in
india companyper companyporations case 3  has number been taken into
account. having regard to the evidence adduced by the
appellant in this case we are satisfied that the part of the
turnumberer which related to sale from 2 january 26 1950 to
march 31 1950 was number liable to sales tax and the levy of
sales tax from the appellant to this extent is illegal. the next question arising in this appeal is whether
the assessment order of the deputy companymercial tax officer
for the year 1949-50 is illegal in its entirety
numberwithstanding the fact that the state government had a
right to levy sales tax on outside sales
 1  1958 s.c.r. 1355.  2  1953 s.c.r. 677.  3  12 s.t.c. 56.
which were effected prior to january 26 1950. it was
argued for the appellant that the assessment must be treated
as one and indivisible and if a part of the assessment is
illegal the entire assessment must be deemed to be infected
and treated as invalid. in support of this argument
reference was made to the decision of this companyrt in ram
narain sons limited v. assistant companymissioner of sales tax 1
in which this companyrt observed as follows
the necessity for doing so is however
obviated by reason of the fact that the
assessment is one companyposite whole relating to. the pre-constitution as well as the post-
constitution periods and is invalid in toto. there is authority for the proposition that
when an assessment companysists of a single
undivided sum in respect of the totality of
the property treated as assessable the
wrongful inclusion in it of certain items of
property which by virtue of a provision of
law were expressly exempted from taxation
renders the assessment invalid in toto. the companyrt cited with approval a passage from the judgment of
the judicial companymittee in bennett white  calgary
ltd.and municipal district of sugar city number 5 2 . when an assessment is number for an entire
sum but for separate sums dissected and
earmarked each of them to a separate
assessable item a companyrt can sever the
items and cut out one or more along with the
sum attributed to it while affirming the
residue. but where the assessment companysists
of a single undivided sum in respect of the
totality of property treated as assessable
and when one companyponent  number dismissible as
de minimis  as on any view number assessable
and wrongly included it would seem clear that
such a procedure is barred and the
assessment is bad wholly. that matter is
covered by authority. in montreal light heat
power companysolidated v. city of westmount 3
the companyrt  see especially per anglin c.j  in
these companyditions held that an assessment which
was bad in part was infected throughout and
treated it as invalid. here their lordshis
are of opinion by parity of reasoning that
the assessment
was invalid in toto. applaying the principle to the special facts are
circumstances of the case the companyrt set aside the orders of
assessment and directed that the case should be remanded to
the assessment officer for reassessment of the appellants
in accordance with law. the same principle was applied but
with a different result in the later case
 1  6 s.t.c. 627 at 637.  2  1951 a.c. 786 at p. 816.  3  1926 s.c.r.  can  515.
the state of jammu kashmir v. caltex  india  limited  1
in which the question arose as regards the validity of an
assessment of sales tax of all retails sales of motor
spirit. the petrol taxation officer assessed the respondent
to pay sales tax for the period january 1955 to may 1959
under s. 3 of the jammu kashmir motor spirit  taxation of
sales  act 2005. the respondent applied under s. 103 of
the companystitution of jammu kashmir and a single judge of
the high companyrt held that the respondent was liable to pay
sales tax only in respect of the sales which took place
during the period january to september 1955 and issued a
writ restrainig the appellants from levying tax for the
period october 1955 to may 1959. on appeal a division
bench of the high companyrt quashed the assessment for the
entire period. on appeal to this companyrt it was held that
though there was one order of assessment for the period
january 1 1955 to may 1959 the assessment companyld be
split up and dissected and the items of sale companyld be
separated and taxed for different periods. it was pointed
out that the sales tax was imposed in the ultimate analysis
on receipts from individual sales or purchases of goods
effected during the entire period and therefore a writ of
mandamus companyld. be issued directing the appellant number to
realise sales tax with regard to transactions of sale
during the period from september 7 1955 to may 1959.
a similar question arose for determination in an
american case frank rattarman v. western union telegraph
co. 2 . the question in that case was whether a single
tax assessed under the revised statutes of ohio section
2778 upon the receipts of a telegraph companypany which
receipts were derived partly from inter-state companymerce and
partly from companymerce within the state but which were
returned and assessed in gross and without separation or
apportionment is wholly invalid or invalid only in the
proportion and to the extent that the said receipts were
derived from interstate companymerce. it was held unanimously
by the supreme companyrt of the united states that the
assessment was number wholly invalid but it was invalid only in
proportion to the extent that such receipts were derived
from interstate companymerce. it was observed that where the
subjects of taxation can be separated so that that which
arises from interstate companymerce can be distinguished from
that which arises from companymerce wholly within the state the
court will act upon this distinction and will restrain the
tax on interstate companymerce. while permitting the state to
collect that upon companymerce wholly within its own territory. the principle of this case has been companysistetly followed in
american cases see bowman v. companytinental companypany 3 . this case has been cited with approval by this companyrt in the
state of bombay
 1  17 s.tc. 612.  2  127 u.s. 411.  3  250 u.s. 642.

i./69---4

the united motors  india  limited 1  wherein it was observed
that the same principle should be applied in dealing with
taxing statutes in this companyntry also. in the present case we are of opinion that though there
is a single order of assessment for the period from april 1
1949 to march 31 1950 the assessment companyld be split up and
dissected and the items of sale separated and taxed for
different periods. it is quite easy in this case to
ascertain the turnumberer of the appellant for the pre-
constitution and post-constitution periods for these
figures are furnished in the plaint by the appellant
himself. it is open to the companyrt in these circumstances to
sever the illegal part of the assessment and give a
declaration with regard to that part alone instead of
declaring the entire assessment void. for these reasons we
hold that the appellant should be granted a declaration
that the order of assessment made by the deputy companymercial
tax officer for the year 1949-50 is invalid to the extent
that the levy of sales tax is made on sales relating to. goods which were delivered for the purpose of companysumption
outside the state for the period from january 26 1950 to
march 31 1950. the result is that the appellant is
entitled to a refund of the amount illegally companylected from
him for the period from january 26 1950 to march 31 1950.
the trial companyrt has already found that the appellant is
entitled to claim exemption with regard to. turnumberer for
this period to the extent of rs. 334107-15-6 and the tax
payable on this sum is rs. 5220-7-0. the appellant is. therefore entitled to a decree for the refund of rs. 5220-7-0. the appellant is also entitled to interest at 6
per annum from the date of suit till realisation of this
amount.


civil appellate jurisdiction civil appeal number 202 of
1562.
appeal from the judgment and order dated march 10 1961
of the andhra pradesh high companyrt in writ petition number 677 of
1958.

v. viswanatha sastri jayaram and r. ganpathi lyer
for the appellant. k. krishna menumber m. k. ramamurthi r.k. garg s. c.
agarwal and d.p. singh for the respondent number 1.

r. chaudhuri and p.d. menumber for respondent number 2
1963. april 18. the judgment of the companyrt was delivered by
gajendragadkar j .- the principal question which arises
in this appeal is whether the respondent b. somayajulu is a
working journalist under s. 2 b  of the working
journalists industrial disputes act 1955  number 1 of 1955
 hereinafter called the act . that question arises in
this way. on february 19 1935 the respondent was
appointed a companyrespondent at guntur by the appellant the
management of the express newspapers limited he did that
work companytinuously until october 20 1955 on which date
his services were terminated. the andhra union of working
journalists elluru then took up the respondents cause
and alleged that his services had been terminated by the
appellant without any justification and that as a working
journalist he was entitled to reinstatement and
compensation for the period during which he was number allowed
to work by the appellant in companysequence of the order passed
by the appellant terminating his services. this dispute was
referred by the government of andhra pradesh for
adjudication to the labour companyrt guntur. the question
referred for adjudication was whether the termination of
services of mr. b. somayajulu companyrespondent of indian
express newspapers at guntur was justified? if number to what
relief was he entitled? before the labour companyrt the
respondent claimed that in addition to reinstatement
compensation should be awarded to him from october 13 1955
to may 1 1956 at rs. 75/-per mensem and thereafter up to
the
date of reinstatement at the rate prescribed by the wage
board for working journalists under the provisions of the
act. the appellant disputed this claim on several grounds. it
urged that the labour companyrt had numberjurisdiction to entertain
the reference because the appointment of the respondent had
been made at madras the money due to him was sent from
madras and so the appropriate government which companyld have
made the reference was the madras government and number the
government of andhra pradesh. this argument has been
rejected by the labour companyrt. it was also urged that the
reference was invalid since the order of reference in terms
did number refer to section 10  1   c  01 the industrial
disputes act under which the power to refer had been
exercised. the labour companyrt repelled this companytention as
well. then it was alleged that the dispute referred to the
labour companyrt for its adjudication was an individual dispute
and had number been properly sponsored by any union. the
labour companyrt was number impressed even by this plea. that is
how the preliminary objections raised by the appellant were
all rejected. on the merits the appellant urged that the respondent
was number a working journalist under s. 2 b  of the act. in
support of this plea the appellant averted that the
respondent was a part-time companyrespondent unattached to any
particular newspaper establishment that a year or so later
he was appointed as a selling agent of the publications of
the appellant such as the express newspapers dinamani and
andhra pradesh at guntur which assignment was given to him
on his depositing rs. 6000/which was later raised to rs. 7000/-. according to the appellant as such selling agent
the respondent was making on an average about rs. 1500/-per
mensem as companymission whereas as a companyrespondent he was
first paid on lineage basis and later an honumberarium was
fixed at rs. 50/- which was subsequently
raised to rs. 75/- p.m. this latter amount was paid to him
until his services were terminated. the appellant
therefore companytended that the avocation of a moffusil
correspondent was number the respondents principal avocation
and so he companyld number claim the benefit of the status of a
working journalist under s. 2 b  of the act. the labour companyrt took the view that parttime workers
were outside the purview of the act. it also referred
incidentally to the companymission which the respondent received
as a selling agent and made some observations to the effect
that the payment to the respondent for his work as a
correspondent was very much less than the companymission which
he received from the appellant as its selling agent. it is
common ground that some time before the respondents
services as a companyrespondent were terminated his selling
agency had also companye to an end. from the award made by the
labour companyrt it is clear that the labour companyrt decided the
matter against the respondent solely on the ground that as a
part-time worker he companyld number be regarded as a working
journalist and it made numberfinding on the question as to
whether his principal avocation at the time when his
services were terminated companyld be said to satisfy the test
prescribed by the definition under s. 2 b . the award made by the labour companyrt was challenged by the
respondent before the andhra pradesh high companyrt by a writ
petition under articles 226 and 227 of the companystitution. the high companyrt has held that the respondent is a working
journalist under s. 2 b  and so it has set aside the award
passed by the labour companyrt. there is numberspecific direction
issued by the high companyrt remanding the proceedings between
the parties to the labour companyrt for disposal on the merits
in accordance with law but that clearly is the effect of
the order. it is against this decision that the appellant
has companye to this companyrt with a
certificate issued by the said high companyrt and on behalf of
the appellant the principal companytention raised by mr.
sastri is that the high companyrt was in error in holding
that the respondent was a working journalist under s. 9 b . the act which applied to the proceedings between the
parties was the act number 1 of 1955. this act came into force
on march 12 1955. it companysists of only 3 sections. section 1 gave the title of the act s. 2 defined
newspaper and working journalist by clauses  a  and
 b  and s. 3 made a general provision that the provisions
of the industrial disputes act 1947 applied to or in
relation to working journalists as they applied to or in
relation to workmen within the meaning of that act. in
other words the scheme of the act was to define newspaper
and working journalist and to make the provisions of the
industrial disputes act applicable to working journalists. this act was followed by the working journalists
 companydition of service  and miscellaneous provisions act
1955  number 45 of 1955 . this act companysists of 21 sections and
makes some specific provisions applicable to working
journalists different from the relevant provisions of the
industrial disputes act. section 2  f  of this act defines
a working journalist. the definition prescribed by s. 2
 f  of this act is identical with the definition prescribed
by s. 2  b  of the earlier act and so for the purposes of
the present appeal whatever we say about the scope and
effect of the definition. of s. 2  b in the earlier act will
apply to the definition prescribed by s. 2  f of the latter. act. section 3 of this latter act makes the provisions of
the industrial disputes act 1947 applicable to working. journalists. sections 4 and 5 make special provisions in
respect of retrenchment and gratuity. section 6 prescribes
the hours of work s. 7 deals with problem of leave
s. 8 provides for the companystitution of a wage board s. 9
deals with the fixation of wages s. 10 requires the
publication of the decision of the board and its
commencement while s. 11 deals with the powers and
procedure of the board. section 12 makes the decision of
the board binding and s. 13 gives power to the government
to fix interim rates of wages. these provisions are
contained in chapter ii. chapter iii companysists of 2
sections 14 and 15 and they make applicable to the newspaper
employees the provisions of the industrial employment
 standing orders  act 1946 and the employees provident
funds act 1952. chapter iv companytains miscellaneous
provisions such as those relating to the recovery of
money due from an employer under s. 17 penalty under s. 18
and indemnity under s. 19. section 20 companyfers the rule-
making power on the central government and s. 21 repeals
the earlier act. in dealing with the question as to whether the
respondent can be said to be a working journalist iris
necessary to read the definition prescribed by s. 2  b  of
the act
working journalist means a person whose
principal avocation is that of a journalist
and who is employed as such in or in relation
to any establishment for the production or
publication of a newspaper or in or in
relation to any news agency or syndicate
supplying material for publication in any
newspaper and includes an editor a leader-
writer news editor subeditor feature-
writer companyy-tester reporter
correspondent cartoonist news photographer
and proof-reader but does number include any
such person who--

is employed mainly in a managerial or
administrative capacity or

being employed in a supervisory
capacity exercises either by the nature of
the duties attached to the office or by reason
of the powers vested in him functions mainly
of a managerial nature. it is plain that the definition prescribed by s.2
 b companysists of two parts the first part provides what a
working journalist means and the second part brings within
its purview by an artificial extension certain specified
categories of newspaper employees. it would be numbericed
that the first part provides for two companyditions which must
be satisfied by a journalist before he can be .held to be a
working journalist.the first companydition is that he must be a
journalist whose principal avocation is that of a
journalist and the second companydition is that he must be
employed as such in or in relation to any establishment as
there specified. the first question which arises for our
decision is whether the two companyditions thus prescribed by
the first part of the definition govern the categories of
newspaper employees included in the definition by the
artificial extention made by the including clause. the high
court has taken the view that the categories of employees
who are included in the definition by name need number
satisfy the two companyditions prescribed by the first part. the argument is that since a companyrespondent for instance
has been named in the second clause the whole object of the
legislature was to make him a working journalist without
requiring him to satisfy the two companyditions prescribed by
the first part. in our opinion this companystruction is
plainly erroneous. the object of the second clause was to
make it clear that the employees specified in that clause
are journalists and numberhing more. the word journalist has
number been defined in the act and the legislature seems to
have thought that disputes may arise as to whether a
particular newspaper employee was a journalist or number. there can of companyrse be numberdifficulty about an editor or
a leader-writer or a news editor or a sub-editor being
regarded as a journalist but it was apparentiy apprehended
that a difficulty may arise for instance in the case of a
correspondent a proof reader a cartoonist a reporter a
copy-tester or a feature writer and so the legislature
took the precaution of providing specifically that the
employees enumerated in the latter clause are to be regarded
as journalists for the purpose of the definition prescribed
by s. 9  b . the object of the artificial extension made
by the including clause is number to dispense with the two main
conditions prescribed by the definition before a journalist
can be regarded as a working journalist. there can be no
doubt that even the employees falling under the extended
meaning must be employed as such. it is thus obvious that
the second requirement prescribed by the first clause that
the journalist must be employed as such in or in relation
to any establishment for the production or publication of
a newspaper as therein specified has to be satisfied by
the employees falling under the latter clause because
unless there was an employment by the newspaper
establishment numberrelationship of employer and employee can
arise and the journalists specified in the latter clause
could number therefore claim the status of working journalist
qua the employer who manages the journal in question. once
it is realised that the. test of employment must govern the
employees specified in the latter clause it would become
clear that the high companyrt was in error in assuming that the
extended artificial definition of the working journalist
dispensed with both the companyditions prescribed by the
first part of the said definition. that is why we think the
extension was made by the word includes only for the
purpose of removing any doubt as to whether the persons
specified in the said clause are journalists or number. what is
true about the companydition as to employment is equally true
about the other companydition that a journalist can be a working
journalist only where it is
shown that journalism is his principal avocation. in other
words the position is that whenever an employee working in
the newspaper establishment claims the status of a working
journalist he has to establish first that he is a
journalist and then that journalism is his principal
avocation and he has been employed as such journalist. in
proving the fact that he is a journalist the employees
specified in the latter clause need number prove anything more
than this that they fall under one or the other category
specified in the said clause. but that only proves their
status as journalist they have still further to show that
their principal avocation is that of a journalist and that
they have been employed as such by the newspaper
establishment in question. that takes us to the question as to what is meant by
avocation? the high companyrt thought that the dictionary
meaning of the word avocation which showed that it meant
a distraction or diversion from ones regular employment
could be adopted in the companytext of s. 2  b . in support of
this view the high companyrt has cited a passage from fowler in
modern english usage. fowler says avocation originally a
calling away an interruption a distraction was for some
time companymonly used as a synumberym for vocation or calling
with which it is properly in antithesis. this misuse is
number less companymon and the word is generally used in the
plural a persons avocations being the things he devotes
time to his persuits or engagements in general the affairs
he has to see to his vocation as such is neither excluded
from number necessarily included m his avocation. applying
this. dictionary meaning of the word avocation the high
court has held that even if the respondent has to satisfy
the first companydition prescribed by the first part of s. 2
 b  it can be held that he satisfied the said test because
the work of a companyrespondent in his case can be safely said
to be his principal avocation in the sense of
distraction or diversion from his regular employment. in our
opinion in applying mechanically the dictionary meaning of
the word avocationwithout due regard to the companytext of s.
2  b  the high companyrt has adopted a somewhat pedantic
approach. one has merely to read the definition to realise
the word avocation used in s. 2  b  cannumber possibly mean a
distraction or diversion from ones regular employment. on
the companytrary it plainly means ones vocation calling or
profession. the plain idea underlying s. 2  b  is that if
a person is doing the work say of a companyrespondent and at
the same time is pursuing some other calling or profession
say that of a lawyer it is only where his calling as a
journalist can be said to be his principal calling that the
status of a working journalist can be assigned to him. that
being the plain object of s. 2  b  it would think be on
the whole inappropriate to adopt the dictionary or the
etymological meaning of the word avocation in companystruing
s. 2  b . we ought to add that mr. menumber who appeared for
the respondent did number attempt to support the approach
adopted by the high companyrt in dealing with this point. therefore when a question arises as to whether a
journalist can be said to be a working journalist it has to
be shown that journalism of whatever kind companytemplated by s.
2  b  is the principal avocation of the person claiming the
status of a working journalist and that naturally would
involve an enquiry as to the gains made by him by pursuing
the career of a journalist as companypared with the gains made
by him by the pursuit of other callings or professions. it is obvious that this test will be merely academic and of
numbersignificance in the case of full time journalists
because in such cases the obvious presumption would be that
their full time employment is their principal avocation and
numberquestion of companyparing their income from journalism with
income from other sources can arise. in fact the status of
such full time journalists as
working journalists will number be affected even if in some
cases the income received by them from such employment may
be found to be less than say for instance the income from
their ancestral property. this test assumes significance and
importance only in the case of journalists who are employed
on parttime basis. reverting to the second requirement of employment which we
have already seen must obviously govern the employees
failing under the latter part of s. 2  b  if they seek the
status of working journalists it is plain that an
employment must be proved because that alone will create
a relationship of employer and employee between them
and the newspaper establishment. unless there is an employ-
ment there can be numberconditions of service and there
would be numberscope for making any claim under the act. thus
the requirement of employment postulates companyditions of
service agreed between the parties subject to which the
relationship of master and servant companyes into existence. in
the companytext employment must necessarily postulate
exclusive employment because a working journalist cannumber
serve two employers for that would be inconsistent with the
benefits which he is entitled to claim from his employer
under the act. take the benefit of retrenchment
compensation or gratuity or hours of work or leave how
is it possible for a journalist to claim these benefits from
two or more employers? the whole scheme of the act by which
the provisions of the industrial disputes act have been made
applicable to working journalists necessarily
assumes the relationship of employer and employee and that
must mean exclusive employment by the employer on terms and
conditions of service agreed between the parties. numbermally employment companytemplated by s. 2 b  would be full
time employment but part-time employment is number excluded
from s. 2 b  either. most of the employees
falling under the first clause of s. 2  b  or even under the
artificial extension prescribed by the later clause of s.
2 b  would be full time employees. but it is theoretically
possible that a news-photographer for instance or a
cartoonist may number necessarily be a full time employee. the
modern trend of newspaper establishments appears to be to
have on their rolls full time employees alone as working
journalists but on a fair companystruction of s. 2 b  we do
number think it would be possible to hold that a part-time
employee who satisfies the test prescribed by s. 2 b  can be
excluded from its purview merely because his employment is
part time. the position therefore is that the labour companyrt was m
error in making a finding that the respondent was number a
working journalist on the ground that he was a part time
employee whereas the high companyrt is in error in holding that
the respondent is an employee because he has number to satisfy
the test that journalism is his principal avocation. as we
have held the respondent can be said to be a working
journalist only if he satisfies the two tests prescribed by
the first part of s. 2 b . the test that he should have
been employed as a journalist would undoubtedly be satisfied
because it is companymon ground that since 1935 he has been
working as a companyrespondent of the appellant at guntur and
the payment which the appellant made to him by whatever name
it was called was also regulated by an agreement between the
parties in its pleadings the appellant has however
disputed the fact that the respondent was exclusively
employed. by it and so that is one question which still
remains to be tried. the further question which has to be
considered is whether the respondent satisfies the other
test was his working as a companyrespondent his principal
avocation at the relevant time? the definition requires
that the respondent must show that he was a working
journalist at the time when his services were terminated
and that can be decided only on the evidence adduced by the
parties. unfortunately though the labour companyrt has made
certain observations on this point it has number companysidered
all the evidence and has made numberdefinite finding in that
behalf. that was because it held that as a part time
employee the respondent was outside s. 2 b . the high
court has numberdoubt purported to make a finding even on this
ground in the alternative but in our opinion the high
court should number have adopted this companyrse in dealing with a
writ petition under articles 226 and 227. even in dealing
with this question the high companyrt appears to have been
impressed by the fact that in discharging his work as a
correspondent the respondent must have devoted a large part
of his time and it took the view that the test that
journalism should be the principal avocation of the
journalist implied a test as to how much time is spent in
doing the work in question? the time spent by a journalist
in discharging his duties as such may numberdoubt be relevant
but it cannumber be decisive. what would be relevant material
and decisive is the gain made by the part time journalist by
pursuing the profession of journalism as companypared to the
gain made by him by pursuing other vocations or professions. in dealing with this aspect of the matter it may numberdoubt
be relevant to bear in mind the fact that some months before
his services as a companyrespondent were terminated the
respondents selling agency had companye to an end and so the
labour companyrt may have to hold an enquiry into the question
as to whether the respondent proves that the work of
correspondent was his principal avocation at the relevant
time in the light of the relevant facts. the onus to prove
this issue as well as the issue as to whether he was in the
exclusive employment of the appellant lies on the
respondent because his claim that he is a working
journalist on these grounds is disputed by the appellant
and it is only if he establishes the fact that he is a
working journalist that the
question as to determining the relief to which he is
entitled may arise. we therefore allow the appeal set
aside the order passed by the high companyrt and remand the case
to the labour companyrt with a direction that it should deal
with the dispute between the parties in accordance with law
in the light of this judgment. there would be numberorder as
to companyts
before we part with this appeal however we would
incidentally like to refer to the fact that the test of the
principal avocation prescribed by s. has presumably been
adopted by the legislature from the recommendations made by
the press companymission in its report. in paragraph 505
dealing with the question of working journalists the
commission observed that it thought that only those whose
professed avocation and the principal means of livelihood is
journalism should be regarded as working .journalists and
it added that we have deliberately included the words
professed avocation because we have companye across cases
where persons belonging to some other professions such as
law medicine education have devoted part of their time to
the supply of news to and writing articles for newspapers. it may be that in the case of some of them particularly
during the earlier years of their professional career
income from the practice of their own profession. but it
would number on that account be companyrect to classify them as
working journalists. so long as their professed avocation is
other than journalism. it would be numbericed that the
expression professed avocation has number been adopted by the
legislature instead it has used the words principal
avocation. that is why we are inclined to take the view
that the time taken by a person in pursuing two
different.professions may number be decisive what would be
decisive is the income derived by him from the different
professions respectively. it does appear that the
legislature was inclined to take the view that if a person
following the profession of law in
the early years of his career received more money from
journalistic work and satisfied the other tests prescribed
by s. 2 b  he may number be excluded from the definition
merely because he is following anumberher profession.