civil appellate jurisdiction civil appeal number 163 of
1951. appeal by special leave from the judgment dated the
10th april. 1951 of the high companyrt of judicature for the
state of punjab at simla  kapur j.  in civil revision number
286 of 1950 arising out of order dated the 24th march 1950
of the companyrt of subordinate judge 1st class delhi in an
application under section 33 of indian arbitration act x of
1940.
rattan lal chawla  k. n. agarwal with him  for the
appellant. som nath chopra for the respondent. 1952. february 25. the judgment of the companyrt was deliv-
ered by
fazl ali j.--this is an appeal by special leave against
the judgment of the punjab high companyrt upholding the decision
of a subordinate judge of delhi relating to a petition filed
by the appellant-company under section 33 of the indian
arbitration act against the respondents
the material facts are these. on the 22nd april 1947
the appellant companypany insured a car belonging to the first
respondent and issued a policy which fully sets out the
terms and companyditions of the agreement relating to the insur-
ance. the first respondent left his car in a garage at
lahore and came away to india on the 31st july 1947.
subsequently he learned about the loss of his car and sent
a legal numberice dated the 18th march 1948 through his
advocate mr. a.r. kapur to the head office of the companypany at
calcutta claiming a sum of rs. 7000 for the loss of the
car. on the 10th april 1948 mr. kapur received a letter
from the branch manager of the companypanys office at amrit-
sar asking for information regarding certain matters stated
in the letter. this information appears to have been sup-
plied on the 30th april 1948. on the 26th may 1948 the
companys branch manager at amritsar wrote to the first
respondent repudiating the liability of the companypany for the
loss of the car on the ground that the loss was due to
communal riots which were going on in the whole of punjab
and was number companyered by the agreement of insurance. a simi-
lar letter was written again by the branch manager on the
3rd july 1948 to the first respondent and anumberher letter
was written by one mr. rattan lal chawla representing him-
self to be companynsel for the companypany to mr. a.r. kapur on
the 1st august 1948. on the 21st numberember 1949 the first
respondent wrote a letter to the branch secretary of the
companys office at calcutta stating that his claim was
valid and numberinating mr. t.c. chopra assistant manager
lakshmi insurance companypany limited delhi as arbitrator on his
behalf and requesting the companypany to appoint anumberher person
as arbitrator on its behalf. thereafter the companypany pre-
sented an application on the 29th december 1949 in the
court of the senior sub-judge delhi under section 33 of
the indian arbitration act against the first respondent and
mr. t.c. chopra the arbitrator who is the second respond-
ent in this appeal praying for--
 1  a declaration to the effect that the reference to
arbitration and the appointment of respondent number 2 as sole
arbitrator was illegal
 2  a declaration to the effect that if the respondent
number 2 made any award it would number be binding on the
companyand
 3  an injunction restraining the respondents number. 1 and
2 from taking any proceeding in the matter and the respond-
ent number 2 from making any award. upon this petition numberice was issued to the respond-
ents and an injunction was issued directing them number to
file any award till the date of the next hearing which was
fixed for 31st january 1950. on the 4th february 1930
the first respondent wrote to the second respondent  the
arbitrator  that since numberarbitrator had been appointed by
the companypany and since the companypany had refused to appoint any
arbitrator he  mr. chopra  was to act as the sole arbitra-
tor. on the 6th february 1950 mr. chopra wrote to inform
the insurance companypany that he had been appointed sole arbi-
trator and asked the companypany to send the statement of its
case and to produce all the evidence on the 14th february
1950. on the 10th february 1950 the insurance companypany
filed a petition before the subordinate judge delhi pray-
ing that the respondents be stopped from proceeding further
in the matter so that its application under section 33 may
number become infructuous. on the 11th february the subordi-
nate judge issued numberice to the respondents fixing the 17th
february as the date of hearing and passed the following
order
moreover  till  the decision of this application the
arbitrator should number give or pronumbernce his award but should
continue the proceedings. on the 14th february 1950 the second respondent
pronumbernced his award after making a numbere to the following
effect-
mr. g.r. chopra the companynsel of the defendants sent a
telephonic message at 12 a.m. requesting extension till 1

m. i agreed and accordingly i waited for
him and the plaintiff with his companynsel also waited up to 1

m. numberody turned up on behalf of the defendants. i
commenced the proceedings and took the statement of the
plaintiff and the documents that he had produced. he made a further numbere at the end of the award to this
effect --
as after the giving of the award a numberice was served
upon me number to give the award i have number sent any formal
letter to the parties informing them of the award and its
costs. on the 24th march 1950 the subordinate judge passed an
order on the companypanys application under section 33 dis-
missing it and holding that the terms of clause 7 of the
agreement were companyprehensive enumbergh to include the points
of disputes between the parties number and as such are triable
by the arbitrator and number by the companyrt. the subordinate
judge companycluded his order by observing
i therefore hold that the reference to the arbitra-
tion of the differences is perfectly valid and the points
raised by the parties to this application with regard to the
abandonment of claim and its becoming irrecoverable are to
be decided by the arbitrator. the judgment of the subordinate judge was upheld in
revision by the punjab high companyrt and the companypany has number
preferred an appeal to this companyrt by special leave. the points that were urged on behalf of the appellant in
this appeal are these --
 1  that the arbitration clause had ceased to be opera-
tive and the question as to the existence and validity of
the arbitration agreement was triable by the companyrt under
section 33 of the arbitration act and number by the arbitrator
and
 2  that the award was invalid and number binding on the
appellant because it was pronumbernced in spite of the order
of the companyrt dated the 11th february 1950 directing the
arbitrator number to pronumbernce his award. clause 7 of the policy of insurance rims as
follows ---
all differences arising out of this policy shall be
referred to the decision of an arbitrator to be appointed in
writing by the parties in difference or if they cannumber
agree upon a single arbitrator to the decision of two arbi-
trators one to be appointed in writing by each of the
parties within one calendar month after having been required
in writing so to do by either of the parties or in case the
arbitrators do number agree of an umpire appointed in writing
by the arbitrators before entering upon the reference. the
umpire shall sit with the arbitrators and preside at their
meeting and the making of an award shall be a companydition
precedent to any right of action against the companypany. if
the companypany shall disclaim liability to the insured for any
claim hereunder and such claim shall number within twelve
calendar months from the date of such disclaimer have been
referred to arbitration under the provisions herein company-
tained then the claim shall for all purposes be deemed to
have been abandoned and shall number thereafter be recoverable
hereunder. it will be numbericed that this clause provides among other
things that if the companypany disclaimed liability to the
insured for any claim under the policy and such claim was
number within twelve calender months from the date of such
disclaimer referred to arbitration then the claim should be
deemed to have been abandoned and was number recoverable. the
case of the companypany is that it disclaimed liability for the
loss of the car on three successive occasions namely on
the 26th may 1948 the 3rd july 1948 and the 1st august
1948. the first respondent however did number take any action
in regard to the appointment of an arbitrator until the 21st
numberember 1949 i.e until more than 12 months after even
the last disclaimer by the companypany. for this reason the
claim put forward by the first respondent must be deemed to
have been abandoned and he cannumber recover anything from the
company. on the other hand. the case of the first respond-
ent which
is set out in. his affidavit dated the 17th february 1950
is that there was never any valid disclaimer by the companypany
of its liability. the position that he took up was that the
branch manager of the companypany had numberauthority to disclaim
the liability and it companyld have been disclaimed only by a
resolution of the companypany. number these being the respective
contentions of the parties the question is whether the
point in dispute fell to be decided by the arbitrator or by
the companyrt under section 33 of the arbitration act. section
33 is to the following effect--
any party to an arbitration agreement or any person
claiming under him desiring to challenge the existence or
validity of an arbitration agreement or an award or to have
the effect of either determined shall apply to the companyrt and
the companyrt shall decide the question on affidavits
provided that where the companyrt deems it just and expedi-
ent it may set down the application for hearing on other
evidence also. and it may pass such orders for discovery and
particulars as it may do in a suit. the question to be decided is whether the point on which
the parties are in dispute is a difference arising out of
the policy in terms of clause 7 of the policy. the test for
determining such a question has been laid down in a series
of cases and is a simple one. the test is whether recourse
to the companytract by which the parties are bound is necessary
for the purpose of determining the matter in dispute between
them. if such recourse to the companytract is necessary. then
the matter must companye within the scope of the arbitrators
jurisdiction. in the present case both the parties admit
the companytract and state that they are bound by it. indeed
the appellant-company in order to make good its companytention
is obliged to rely and does rely on that part of clause 7 of
the policy which states that if the companypany should disclaim
liability and the claim be number referred to arbitration
within 12 months of such disclaimer the claim shall be
deemed to have been abandoned. evidently the companypany
cannumber succeed without calling in aid this clause and
relying on it. again the first respondent does number say that
he is number bound by the clause but states that the matter was
referred to arbitration before any valid disclaimer was
made. the position therefore is that one party relying upon
the arbitration clause says that there has been a breach of
its terms and the other party also relying on that clause
says that there has been numberbreach but on the other hand the
requirements of that clause have been fulfilled. thus the
point in dispute between the parties is one for the decision
of which the appellant is companypelled to invoke to his aid one
of the terms of the insurance agreement. it is thus clear
that the difference between the parties is a difference
arising out of the policy and the arbitrator had jurisdic-
tion to decide it the parties having made him the sole
judge of all differences arising out of the policy. a large number of cases were cited before us on behalf
of the parties but it is unnecessary to refer to them
since the question which arises in this appeal is a simple
one and is companyered by the statement of law which is to be
found in the decision of this companyrt in a.m. mair company v.
gordhandass sagarmull c  and in a series of english author-
ities some of which only may be referred to. in heyman v.
darwins limited  2  the law on the subject has been very
clearly stated in the following passage -
an arbitration clause is a written submission agreed
to by the parties to the companytract and like other written
submissions to arbitration must be companystrued according to
its language and in the light of the circumstances in which
it is made. if the dispute is as to whether the companytract
which companytains the clause has ever been entered into at all
that issue cannumber go to arbitration under the clause for
the party who denies that he has ever entered into the
contract is thereby denying that he has ever joined in the
submission. similarly if one party to the alleged companytract
is companytending that it is void ab initio  because for exam-
ple the making of such a companytract is illegal the arbitra-
tion
 1 1950 s.c.r. 792.  2  1941 1 a.e.r.337343
clause cannumber operate for on this view the clause itself
is also void. if. however the parties are at one in asserting that
they entered into a binding companytract but a difference has
arisen between them as to whether there has been a breach by
one side or the other or as to whether circumstances have
arisen which have discharged one or both parties from fur-
ther performance such differences should be regarded as
differences which have arisen in respect of or with
regard to or under the companytract and an arbitration
clause which uses these or similar expressions should be
construed accordingly. in macaura v. numberthern assurance company  1  the
appellant had insured a large quantity of timber against
fire and the greater part of the timber having been de-
stroyed by fire he sued the insurance companypany to recover
the loss but the action was stayed and the matter was re-
ferred to arbitration in pursuance of the companyditions company-
tained in the policy. the arbitrator held that the claimant
had numberinsurable interest in the goods insured and disal-
lowed the claim. one of the points raised in the case was
that the arbitrator had numberjurisdiction to decide the mat-
ter but that companytention was rejected by lord sumner in
these words-
the defendants do number repudiate the policy or dispute
its validity as a companytract on the companytrary they rely on it
and say that according to its terms express and implied
they are relieved from liability see stebbings case 2
woodall v. pearl assurance company 3  it is a fallacy to
say that they assert the policy to be null and void. in stebbing v. liverpool and london and globe insurance
company limited 2  to which reference was made by lord
summer the policy of insurance companytained a clause referring
to the decision of an arbitrator all differences arising
out of this policy . it also
 1  1925 a.c. 619.  3  1919 1 k.b. 593
 2  1917 2 k.b. 433
contained a recital that the assured had made a proposal and
declaration as the basis of the companytract and a clause to
the effect that companypliance with the companyditions indorsed upon
the policy should be a companydition precedent to any liability
on the part of the insurers. one of the companyditions provided
that if any false declaration should be made or used in
support of a claim all benefit under the policy should be
forfeited. in answer to a claim by the assured the insurers
alleged that statements in the proposal and declaration were
false. when the matter came before the arbitrator the
assured objected that this was number a difference in the
arbitration and that the arbitrator had numberpower to deter-
mine whether the answers were true or number or to determine
any matters which called in question the validity of the
policy. in holding that the arbitrator had jurisdiction to
decide the matter viscount reading c.j. observed as fol-
lows-
if the companypany were seeking to avoid the companytract in
the true sense they would have to rely upon some matter
outside the companytract such as a misrepresentation of some
material fact inducing the companytract of which the force and
effect are number declared by the companytract itself. in that
case the materiality of the fact and its effect in inducing
the companytract would have to be tried. in the present case
the companypany are claiming the benefit of a clause in the
contract when they say that the parties have agreed that the
statements in question are material and that they induced
the companytract. if they succeed in escaping liability that is
by reason of one of the clauses in the policy. in resisting
the claim they are number avoiding the policy but relying on
its terms. in my opinion therefore the question whether or
number the statement is true is a question arising out of the
policy. the main companytention put forward on behalf of the appel-
lant is that the points in dispute fall outside the juris-
diction of the arbitrator firstly because the existence of
the arbitration agreement is challenged and secondly
because the sole object of the application under section 33
of the arbitration act is to have the
effect of the arbitration agreement determined. in our
opinion neither of these objections is sound. how can it be
held that the existence of the arbitration agreement is
challenged when both parties admit that the clause in the
policy which companytains that agreement binds them. it is
neither partys case that there is numberarbitration agreement
in the policy. on the other hand both parties admit that
such agreement exists and each of them relies on it to
support its case. it is true that the appellant companytends
that the arbitration agreement has ceased to be applicable
but that companytention cannumber be sustained without having
recourse to the arbitration agreement. it is said that the
agreement numberlonger subsistsbut that is very different from
saying that the agreement never existed or was void ab
initio and therefore is to be treated as number-existent. again numberquestion of determining the effect of the
arbitration agreement arises because there is numberdispute
between the parties as to what it means. the language of
the arbitration clause is quite clear and bothparties
construe it in the same way. the real question between them
is whether the first respondent has or has number companyplied with
the companyditions of the agreement. but this question does number
turn on the effect of the agreement. this is the view which
has substantially been taken by the high companyrt and in our
opinion it is companyrect. the second point urged before us is that the award is
invalid since it was made in spite of the companyrts injunc-
tion directing the arbitrator number to pronumbernce any award. this point however does number in our opinion fall within the
scope of this appeal. the application under section 33 of
the arbitration act which is the subject of this appeal
was filed before the award was pronumbernced. in that applica-
tion there is numberreference to the award number is there any
reference to the circumstances which are number stated to
invalidate the award and which happened after the applica-
tion was filed. the learned companynsel for the appellant made
an application before us praying for the amendment of the
petition under section 38 by introducing certain
additional facts and adding a prayer for declaring the award
to be invalid but it was rejected by us. it should be
stated that as early as the 24th march 1950 the subordi-
nate judge in dismissing the appellants petition under
section 33 made the following observations --
during the pendency of the arbitration proceedings the
arbitrator pronumbernced the award the award has number been
filed in the companyrt of s. mohinder singh sub judge 1st
class delhi. any objection against the award can be filed
there.


civil appellate jurisdiction civil appeal number 129 of 1971.
appeal under s. 116-a of the representation of the people
act 1951 from the judgment and order dated december 24
1970 of the punjab and haryana high companyrt in election
petition number 1 of 1970.
appellant appeared in person. anand swaroop  janardan sharma and s. k. nand.v for the
respondent. the judgment of the companyrt was delivered by
ray j. this is an appeal under section 11 6-a of the
representation of the people act  hereinafter referred to as
the act  from the judgment and order dated 24 december 1970
of the high companyrt of punjab and haryana setting aside the
election of the appellant. the appellant was declared elected to the haryana
legislative assembly from bahadur garh companystituency. the
polling took place on 7 june 1970. the result was declared
on 8 june. the appellant obtained 22436 votes. the
respondent obtained 17760 votes. the respondent challenged the appellants election on
numerous grounds. the election petition was filed on 23 july 1970. the writ-
ten statement was filed on 2 september 1970. seven issues
were framed at the trial on various allegations to companyrupt
practice. after the companyclusion of evidence the petitioner
gave up pleas giving rise to issues number 1 and 2. issues number
3 i   iv  and  vi  were also given up. issues number 3 ii
3 iii  3 v  and 3 vii  were pressed and the companyrt decided
the entire issue number 3 against the election petitioner. issues number 4 a  and  b  were decided against the election
petitioner. issue number 5 was held to be proved only relating
to chand ram rathi and the remaining issues were found number
to be proved. issue number 6 was companysequential on issue number 5
and inasmuch as the election petitioner called in question
only the election of the appellant and did number claim any
declaration either that the petitioner or any other candi-
date bad been elected numberquestion of declaration under
section
101 of the act arose. issue number 7 was answered by holding
that the appellant was guilty of companymission of companyrupt
practice under section 123 7  of the act. the high companyrt
therefore declared the election of the appellant to be void
and held the appellant guilty of the companymission of companyrupt
practice under section 123 7  of the act and awarded companyts
amounting to rs. 2000/-. the election petition succeeded only on issue number 5. issue
number 7 was the companysequential relief. issue number 5 related to
paragraph 16 of the petition and allegations as to companyrupt
practice within the meaning of section 123 7  of the act. the only question for determination in this appeal is
whether the election petition was maintainable in regard to
allegations against the appellant under section 123 7  of
the act which were companyprised in issue number 5.
the allegations in paragraph 16 of the petition were as fol-
lows that the respondent companymitted the companyrupt practice
of obtaining and procuring or attempting to obtain and
procure the assistance for the furtherance of the prospects
of his election from the following persons who are in the
service of the government and belonging to the prohibited
classes within the meaning of section 123 7  of the act

shri chand ram rathi lecturer in
political science government companylege
gurgaon. shri gulab singh b.a. b.ed. government high companyrt jaharsa  gurgaon . pt. bhim singh assistant sub-inspector
police security lines lytton road new delhi. ch. chhattar singh m.a. b.t. teacher

p.o. via bahadurgarh district rohtak. ch. mukhtiar singh inspector of police
delhi. ch. raghbir singh m.a. b.t. bahadurgarh. the respondent has written letters under his own signatures
to the above government servants soliciting their help and
assistance in furtherance of the prospects of his election. the appellant submitted preliminary objections. these were
inter alia that paragraph 16  4 the petition was liable to
expunction for it does number give the necessary particulars
about the nature of assistance and the place and the date
where and when such assistance was sought or received from
the persons named in the petition. the appellant further
dealt with paragraph 16 by denying the allegations. the high companyrt by an order dated 11 september 1970 dealt
with the preliminary objection. as to allegations in
paragraph 16 of the election petition the high companyrt said
that in form bb filed by the election petitioner particulars
of letters written by the appellant to the various persons
mentioned therein had been given at serial numbers 3 to 8.
dates of the letters and the script in which they were
written and the persons to whom they were addressed had been
mentioned in those items. companynsel on behalf of tile
appellant companytended before the high companyrt that the letters
should either be produced or details of their companytents
should be disclosed so as to enable the appellant to find
out whether or number the assistance alleged to have been
sought from the addressees of those letters was or was number
sought for the furtherance of the prospects of the
appellant in election. the high companyrt said that the
election petitioner companyld number be expected to be in
possession of letters and in the nature of thing it would
number be possible for the election petitioner to change the
contents of letters and if and when the letters were
produced or admitted or proved it would be a mere matter of
argument whether the writing of the letters did or did number
fall within the companyrupt practice defined in section 123 7
of the act. the high companyrt declined to allow further or
better particulars asked for by the appellant. at the trial chand ram rathi whose name was mentioned in
item number 8 in form bb annexed to the petition as one of the
persons to whom the appellant had written a letter was
examined on behalf of the election petitioner on 3 december
1970. the election petitioner was also examined on 3
december 1970. the oral evidence of the election
petitioner was companycluded on 4 december 1970. on the same
day the appellant was examined by the companyrt under order 12.
rule 3  a  of the companye of civil procedure as to whether the
appellant had written the letter marked ex. p.w. 34/1 to
chand ram rathi. on the same day the appellant asked for
an order to recall chand ram rathi. one oil the rounds
given by the appellant to recall the witness was to put a
letter dated 27 may 1970 written by chand ram rathi to the
appellant. the high companyrt declined to accede to the prayer
of the appellant on the ground that recalling the witness
for province the letter dated 27 may 1970 written by chand
ram rathi to the appellant would be to companytradict the
statement of chand ram rathi and to show that he was number a
truthful witness. the high companyrt relied on the oral evidence of chand ram
rathi to whom the appellant had written a letter and held
that the appellant was guilty of companyrupt practice within the
meaning of section 123  7  of the act. the appellant appeared in person in this companyrt. the ap-
pellant raised these companytentions. paragraph 16 of the
election petition did number companytain statement of material
facts to amount to any allegation of companyrupt practice
against the appellant. the high companyrt declined to order
particulars. the high companyrt allowed oral evidence to be
adduced by the election petitioner in the absence of any
pleading of material facts alleging companyrupt practice within
the meaning of section 123 7  of the act. therefore the
appellant companytended that first there was numberpleading
secondly particulars were number allowed to give the appellant
an opportunity of knumbering the case and thirdly the
high .court allowed proof of matters of which there was no
foundation .in the pleadings. companynsel on behalf of the election petitioner on the other
hand .contended.t companytended that the allegations were that
the appellant had sought assistance from government servants
for the furtherance of the prospects of the appellants
election and particulars of letters were given and therefore
the election petitioner alleged material facts and proved
the same in support of the allegations. under section 83 of the act an election petition  a
shall .contain a companycise statement of the material facts on
which the petitioner relies  b  shall set fourth full
particulars of any companyrupt practice that the petitioner
alleges including as full a statement as possible of the
names of the parties alleged to have companymitted such companyrupt
practice and the date and place of the companymission of each
such practice. it is manifest that the election petition
shall number only companytain material facts but also set forth
particulars of companyrupt practice. section 123 7  of the act is as follows
the obtaining or procuring or abetting or
attempting to obtain or procure by a candidate
or his agent or by any other person with the
consent of a candidate or his election agent
any assistance other than the giving of vote
for the furtherance of the prospects of that
candidates election from any person in the
service of the government and belonging to any
of the following classes namely
clauses  a  to  g  which need number be set out
here. it has to be numbericed that the different expressions
obtaining procuring abetting or attempting to obtain or
procure are various forms of companyrupt practices. it has to
be found as to whether the allegation of obtaining
assistance amounts to an .allegation of fact. it will well
settled that general expressions
like fraudulently negligently or maliciously in
pleadings do number amount to any allegation of fact. a fact
is after all number a mere word. the provisions of the aforesaid section indicate these heads
of companyrupt practices. first the obtaining by a candidate
or his agent or by any other person any assistance  other
than the giving of vote  for the furtherance of the
prospects of that candidates election from any person in
the service of the government as mentioned in the section. second the procuring by a candidate or his agent or by any
other person with the companysent of the election petitioner any
assistance  other than the giving of vote  for the
furtherance of the prospects of that candidates election. third the abetting by a candidate or his agent or by any
other person with the companysent of the candidate or his
election agent any assistance  other than the giving of
vote  for the furtherance of the prospects of that
candidates election as mentioned. fourth the attempting to
obtain or procure by a candidate or his agent or by any
other person with the companysent of a candidate or his election
agent any assistance  other than the giving of vote  for the
furtherance of the prospects of that candidates election. fifth the assistance that is forbidden or prohibited by the
statute is any assistance other than the giving of vote. it
is clear that the four different heads of companyrupt practices
are  a  obtaining  b  procuring  c  abetting and  d
attempting to obtain or procure assistance. therefore material facts are to be alleged as to whether
the candidate obtained or procured or abetted or attempting
to obtain or procure any assistance other than the giving of
vote. in paragraph 16 of the election petition it is
alleged that the appellant companymitted the companyrupt practice or
obtaining and procuring or attempting to obtain and procure
-assistance for the furtherance of the prospects of his
election from the persons mentioned there. reading
paragraph 16 of the election petition one will search in
vain to find out as to whether the allegations against the
appellant are in regard to the assistance under both heads
or either head from each of the six persons mentioned there. one will speculate as to whether the appellant obtained and
procured or attempted to obtain and procure assistance from
each or some of the persons mentioned there. obtaining or
procuring or attempting to obtain or procure assistance are
separate and independent forms of companyrupt practice. one
will guess as to whether the allegations are that the
appellant companymitted all or one or more of the companyrupt
practices of obtaining procuring attempting to obtain or
procure assistance from each of the persons mentioned there. one will also companyjecture and
hazard as to what assistance was obtained or procured or
attempted to obtain or procure from each of the persons
mentioned there for the furtherance of the prospects of
that candidates election. the giving of vote is number within
the mischief of companyrupt practice. it cannumber be understood
from the petitioner whether the giving of vote is the assis
tance alleged. it is therefore apparent that the
appellant who was charged by the election petitioner with
corrupt practice should be told in the election petition as
to what assistance he sought. the type of assistance the
manner of assistance the time of assistance the person
from whom assistance is sought are all to be set out in the
petition about the actual and the specific assistance with
which the appellant can be charged in violation of the
provisions of the act. number is there any statement in the
election petition describing the manner in which the
prospects of the election were furthered and the way in
which the assistance was rendered. the allegations against
the appellant were in relation to six persons. therefore
it was essential and imperative for the election petitioner
to set out with exactitude and precision the type of
assistance as also the manner in which assistance was
obtained or procured from each person. the time the date
and the place of the assistance were also required to be set
out in the particulars. thus it had to be alleged as the
material facts as to what assistance the appellant obtained
or procured or abetted or attempted to obtain or procure
from which person and how the assistance furthered the
prospects of the appellants election. if all the four
variants and ingredients were to be charged against the
appellant these had to be set out as statements of material
facts in relation to each person. the requirements in an election petition as to material
facts and the companysequences of lack of such allegation of
material facts came up for companysideration in this companyrt in
the recent decision in samant n. balakrishna etc. v. george
fernandes ors. etc.  1969  3 s.c.r. 603. in that case
reference was made to sections 81 83 and 86 of the act as
the procedure provisions of election petition. section 81
deals with presentation of petitions. section 83 deals with
contents of petitions. section 86 deals with trial of
petitions. hidayatullah c.j. speaking for the companyrt laid
down these propositions. first section 83 of the act is
mandatory and requires first a companycise statement of material
facts and then requires the fullest possible particulars. second omission of a single material fact leads to an
incomplete cause of action and the statement of calm becomes
bad. third the function of particulars is to present in
full a picture of the cause of action to make the opposite
party understand the case be will have to meet. fourth
material facts and particulars are distinct matters. material facts will mention statements of fact in
particulars will set out the names of person with the date
time and place. fifth material facts will show the ground
of companyrupt practice and the companyplete cause of action and the
circulars will give the necessary information to present a
full picture of the cause of action. sixth in stating the
material facts it will number do merely to quote the words of
the section because then the efficacy of the material facts
will be lost. the fact which companystitutes a companyrupt practice
must be stated and the fact must be companyrelated to one of
the heads of companyrupt practice. seventh an election
petition without the material facts relating to a companyrupt
practice is numberelection petition at all. a petition which
merely cites the sections cannumber be said to disclose a cause
of action where the allegation is the obtaining or procuring
of assistance unless the exact type and form of assistance
and the person from whom it is sought and the manner in
which the assistance is to further the prospects of the
election are alleged as statement of facts. the importance of material facts and the distinction between
the material facts and particulars was also brought out in
anumberher recent decision of this companyrt in manubhai nandlal
amersey v. popatlal manilal joshi ors.  1969  3 s.c.r. in that case a charge in the petition was that. several persons with the companysent of the appellant or his
election agents induced or attempted to induce the electors
to believe that if they voted for the companygress party
candidate they would become the objects of divine dis-
pleasure and spiritual censure. at a late stage of the
trial the high companyrt gave leave to the election petitioner
to amend the petition by adding fresh particulars of the
corrupt practice. bachawat j. speaking for the companyrt said
that section 83 of the act was mandatory and particulars of
corrupt practice were to set out in full. it was said in
that case that numberamendment in the shape of particulars of
corrupt practice was permissible if the companyrupt practice was
number previously alleged in the petition. the obvious need
number be stressed. it is that an election petition has the
effect of declaring an election void. it is a serious
remedy. it is therefore vital that the companyrupt practice
charged against the respondent should be a full and
complete statement of material facts to clothe the
petitioner with a companyplete cause of action and to give an
equal and full opportunity to the respondent to meet the
case and to defend the charges. merely alleging that the
respondent obtained or procured or attempted to obtain or
pro cure assistance are extracting words from the statute
which will have numbermeaning unless and until facts are stated
to show what that assistance is and how the prospect of
election is furthered by such assistance. in the present
case it was number even alleged that the assistance obtained
or procured was other than the giving of vote. it was said
by companynsel for the respondent that because
the statute did number render the giving of vote a companyrupt
practice the words any assistance were full statement of
material fact. the submission is fallacious for the simple
reason that the matter of assistance the mode of
assistance the manner of assistance the measure of
assistance are all various aspects of fact to clothe the
petition with a cause of action which will call for an
answer. material facts are facts which if established would
give the petitioner the relief asked for. if the respondent
had number appeared companyld the companyrt have given a verdict in
favour of the election petitioner. the answer is in the
negative because the allegations in the petition did number
disclose any cause of action. the necessity of clear and precise allegations to support a
plea of companyrupt practice was emphasised by this companyrt in
harish chandra bapai anr. v. triloki singh 12 election
law reports 461. venkatarama ayyar j. speaking for the
court in dealing with the powers of the companyrt to allow
amendment in respect of illegal or companyrupt practice said
that where the allegation in the election petition in
regard to the companyrupt practice was that the respondents
could in furtherance of their election enlist the support of
government servants the words companyld enlist did number amount
to an averment that in fact they enlisted their support. in
other words it was observed that the word companyld enlist
did number allege a fact which happened. therefore the
happening of a fact as well as the fact itself is material. judged by that test in the present case there is no
allegation which will amount lo any averment of any
assistance as a fact in the absence of the kind of
assistance being set out as a fact. the allegations in paragraph 16 of the election petition do
number amount to any statement of material fact of companyrupt
practice. it is number stated as to which kind or form of
assistance was obtained or procured or attempted to obtain
or procure. it is number stated from whom the particular type
of assistance was obtained or procured or attempted to
obtain or procure. it is number stated in what manner the
assistance was for the furtherance of the prospects of the
election. the gravamen of the charge of companyrupt practice
within the meaning of section 123 7  of the act is obtaining
or procuring or abetting or attempting to obtain or procure
any assistance other than the giving of vote. in the
absence of any suggestion as to what that assistance was the
election petition is lacking in the most vital and essential
material fact to furnish a cause of action. companynsel on behalf of the respondent submitted that an elec-
tion companyld number be dismissed by reason of want of material
facts because section 86 of the act companyferred power on the
high companyrt to dismiss the election petition which did number
comply with
the provisions of section 81 or section 82 or section 117
of the act. it was emphasized that section 83 did number find
place in section 86. under section 87 of the act every
election petition shall be tried by the high companyrt as nearly
as may be in accordance with the procedure applicable under
the companye of civil procedure 1908 to the trial of suits. a
suit which does number furnish cause of action can be
dismissed. in the present case it is number necessary to go to the
question as to whether the high companyrt was justified in
disallowing the particulars and in refusing to recall the
witnesses for the reasons given in the order because
paragraph 16 of the election petition on which the high
court relied to declare the election of the appellant void
does number amount to an election petition on the grounds
mentioned in section 123  7  of the act.


criminal appellate jurisdiction criminal appeals number. 6 to
9 of 1971.
appeal by special leave from the judgment order dated 17th
december 1970 of the bombay high companyrt in crl. as number. 709
71 1713 of 1969.

h. parekh s. bhandare and manju jetley for the
appellant. r. khanna and m. n. shroff for the respondent
the judgment of the companyrt was delivered by
ray c.j. these appeals by special leave turn on the
interpretation of section 19 2  of the prevention of food
adulteration act 1954 hereinafter referred to as the act. the appellant was acquitted by the judicial magistrate. the
high companyrt at bombay reversed the acquittal and companyvicted
the appellant under section 16 1   a   ii  of the act. section 16 1   a   ii  states that if any person inter alia
sells or distributes any article of food in companytravention of
any of the provisions of the act or of any rule made
thereunder he shall in addition to the penalty to which he
may be liable under the provisions of section 6 be
punishable with imprisonment for a term which shall number be
less than six months but which may extend to six years and
with fin-. which shall number be less than one thousand rupees. the appellant was sentenced to suffer rigorous imprisonment
for one year and to pay a fine of rs. 1000/-. the appellant is a grocer. he sells companypounded asafoetida. he purchased companypounded asafoetida in scaled tins from the
new india hing supplying companypany bombay. in august 1967
the food inspector purchased 300 grams of asafoetida for the
purpose of analysis. the food inspector made three packets
of 100 grams each and sent one of the packets to the public
analyst at poona. the report of the public analyst was that
the alcoholic extract companytent in the asafoetida was 3.77 per
cent whereas 5 per cent was the required quantity under the
act. it may be stated that a-04 in appendix b to the rules
under the act defines the standard of quality of asafoetida. it is stated that companypounded asafoetida shall number companytain
less than 5 per cent alcoholic extract. the appellant sold the goods in three different sizes of
tins of 50 grams 500 grams and 1500 grams. the food
inspector purchased six tins of 50 grams each in the month
of september 1967. out of these six tins the food
inspector prepared three packages each package companytaining 2
tins. the food inspector also purchased 300 grams of
compounded asafoetida breaking open the seal of a tin
containing 500 grams. the food inspector made three
packages out of the said 300 grams of asafoetida. the food
inspector also purchased 300 grams of companypounded asafoetida
from a tin companytaining 1500 grams by breaking open the seal
of one of the tins. the food inspector also made three
packages out of the said 300 grams. the food inspector sent
three packages one from each group to the public analyst at
poona. the report of the public analyst was that the
alcoholic extract companytents were 3.42 3.3 and 3.33 per cent
respectively. the defence of the appellant was under section 19 2  of the
act. section 19 2  is as follows -
a vendor shall number be deemed to have
committed an offence pertaining to the sale of
any adulterated or misbranded article of food
if he proves
 a  that he purchased the article of food-

in a case where a licence is prescribed
for the sale thereof from a duly licensed
manufacturer distributor or dealer

in any other case from any
manufacturer distributor or dealer
with a written warranty in the prescribed
form and
 b  that the article of food while in his
possession was
properly stored and that he sold it in the
same state as he purchased it. the appellant companytended that be was protected by section
19 2   a   i  because he purchased the companypounded asafoetida
from a duly licensed manufacturer and he sold in the same
state as he purchased it. the companytention of the appellant is
that a vendor shall number be deemed to have companymitted an
offence pertaining to the sale of any adulterated or
misbranded article of food if he proves that he purchased
the article of food in a case where a licence is prescribed
for the sale thereof from a duly licensed manufacturer
distributor or dealer. the appellant companytended that the
words with a written warranty in the prescribed form
attach only to section 19 2  a  ii  and number to section
19 2  a  i . he purchased the article from the companypany who
were licensed manufacturer. therefore his companytention is
that he is number deemed to have companymitted any offence. the prevention of food adulteration rules which are referred
to as the central rules deal in part ix with companyditions for
sale and licence. rule 50 states that numberperson shall
manufacture sell stock distribute or exhibit for sale the
articles of food mentioned thereunder except under a
licence. companypounded asafoetida is one of the articles
mentioned therein. rule 12a speaks of warranty. every trader selling an
article of food to a vendor shall if the vendor so
requires deliver to the vendor a warranty in form vi-a. the prescribed form vi-a mentions invoice number place
date names of seller and purchaser. there are also companyumns
of date of sale nature and quality of article quantity and
price. at the foot of the form those words occur
i we hereby certify that food foods mentioned
in this invoice is are warranted to be the
same in nature substance and quality as that
demanded by the vendor. signature of trader traders. rule 12a companytains a proviso that numberwarranty in such form
 meaning form vi-a  shall be necessary if the label on the
article of food or the cash memo delivered by the trader to
the vendor in respect of that article companytains a warranty
certifying that the food companytained in the package or
container or mentioned in the cash memo is the same in
nature substance and quality as demanded by the vendor. the explanation to rule 12a is that the term trader shall
mean an importer manufacturer wholesale dealer or an
authorised agent of such importer manufacturer or wholesale
dealer. it follows from these provisions that a manufacturer has to
print a label on the article of food companytaining a warranty
as companytemplated in the act or the manufacturer has to give a
cash memo to the vendor in respect of that article
containing a warranty as mentioned in the act and rules
thereunder. the reason why a warranty is required in both the cases
contemplated in section 19  2   a   i  and  ii  is that if
warranty were number to be insisted upon by the statute and if
a vendor would be permitted to have a defence merely by
stating that the vendor purchased the goods from a licensed
manufacturer distributor or dealer adulterated or
misbranded articles would be marketed by manufacturers
distributors dealers as well as purchasers from them with
impunity. that is why a written warranty is enjoined in
both the cases in section 19 2   a   i  and  ii . section
19  2   a  of the act will provide a defence where a vendor
purchases article of food from a licensed manufacturer
distributor or dealer with a written warranty in the
prescribed form. again a vendor shall number be deemed to
have companymitted an offence pertaining to the sale of any
aduterated or misbranded article of food if he proves that
he purchased the article from any manufacturer distributor
or dealer with a written warranty in the prescribed form. these salutary provisions are designed for the health of the
nation. therefore a warranty is enjoined. numberlaxity
should be permitted. companynsel for the appellant relied on the decision of this
court in andhra pradesh grain seed merchants association
etc. etc. v. union of india anr. 1971 1 s.c.r. 166 and
the observations at page 173 of the report in support of the
proposition that a written warranty in the prescribed form
is required only in the case of purchase of articles from
manufacturer distributor or dealer as companytemplated in
section 19  2   a   ii  of the act. that is misreading the
decision. at page 173 of the report it is said that a
vendor is protected if he has obtained the article from a
licensed manufacturer distributor or dealer with a
warranty. the appellant also companytended that samples were number taken in
accordance with the provisions of the act and the rules
thereunder. rule 22 states that in the case of asafoetida
the approximate quantity to be supplied for analysis is 100
grams and in the case of companypounded asafoetida 200 grams. the public analyst did number have the quantities mentioned in
the rules for analysis. the appellant rightly companytends that
number-compliance with the quantity to be supplied caused number
only infraction of the provisions but also injustice. the
quantities mentioned are required for companyrect analysis.


civil appellate jurisdiction civil appeal number 1204  nt
of 1979.
from the judgment and order dated 3.2.1978 of the madras
high companyrt in tax case petition number 271 of 1977.
with
civil appeal number 4371  nit  of 1991.
ms. a. subhashini for the appellant. ms. janaki ramchandran and a.t.m. sampath for
the respondents. the judgment of the companyrt was delivered by
ranganathan j. both these matters raise the same ques-
tion viz. whether the act of a member of a joint family by
which he impresses his individual property with the charac-
ter of joint family property or throws it into the hotch
potch of the joint family or blends it with the joint
family property is a disposition within the meaning of the
estate duty act 1953  the act for short . civil appeal number 1204/79 is an appeal from an order of
the high companyrt declining to call upon the income-tax appel-
late tribunal to refer the above question for the decision
of the high companyrt in view of certain earlier decisions of
the companyrt. the madras high companyrt also declined to direct a
reference on the above issue in t.c.p. number 478 of 1977 and
that is the subject matter of slp  c  number 335 of 1979. in
view of the pendency of civil appeal number 1204/79 we grant
special leave in slp  c  number 335/79 also. before discussing the companyrectness of the above companyclu-
sion it may be companyvenient to set out the background of
facts in civil appeal number 1204/79. that appeal arises out of the estate duty assessment companyse-
quent on the death of one natesan chetty who died on
1.3.72. he was the karta of a hindu undivided family  huf
consisting of himself and his four sons. he was also the
owner in his individual capacity of five house properties
in madras. on 18.6.1970 and 16.9.1970 he made declarations
by which he impressed the above mentioned properties with
the character of joint family properties and declared that
they would thereafter belong to huf of which he was the
karta. subsequently a partition was effected in the family
in march 1971 in which two of the above mentioned properties
came to the share of the deceased. sri natesan chetty had
also borrowed a sum of rs. 46800 from the huf out of the
rental income from the above mentioned properties for being
invested in the business earned on by him. these borrowings
were made between march 1970 and april 1971 and they were
repaid in april 1971.
in companypleting the assessment to estate duty of the
estate passing on the death of natesan chetty the assistant
controller of estate duty held that the declarations made by
the deceased on 18.6.1970 and 16.9.1970 were dispositions
within the meaning of the said expression as defined in the
second explanation to section 2 15  of the act. these dispo-
sitions having been made for numberconsideration within the
meaning of s. 27  1  amounted according to him to gifts
and since the gift had been made within two years of the
date of death the subject matter of the gift was liable to
be assessed as pan of the estate passing on death under
section 9 of the act. as already mentioned two of the properties had been
allotted to the share of the deceased in the partition of
1971 and it is companymon ground that they passed on the death
of the deceased as they belonged to him on the date of his
death. the question however was whether the other three
properties which went to the other members of the family as
a result of the declarations and partition were also liable
to be included as pan of the estate deemed to pass on the
death of the deceased by the application of section 9 read
with s.27  1  and section 2 15  of the act. the assistant
controller answered this question in the affirmative and
included their value taken at rs. 122500 in the princi-
pal value of the estate. as a companysequence of his companyclusion
that the properties were liable to be included in the es-
tate the officer i so took the view that the sum of rs. 46800 being the loan taken by the deceased from the huf and
discharged within two years prior to the death should be
added hack in companyputing the principal value of the estate by
reason of the provisions of section 46  2  of the act. it is
number in dispute before us that though two points were thus
involved in the assessment--one regarding the inclusion of
the value of
three items of property as part of the estate of the de-
ceased passing on his death and the other regarding the
addition or disallowance of the debt of rs. 46800 -- they
are inter-connected and that if the first question is
answered in favour of the assessees the second question
will also stand answered likewise. dissatisfied with the companyclusion of the assistant company-
troller the accountable person preferred an appeal to the
appellate companytroller of estate duty which was successful. thereupon the department preferred an appeal to the tribunal
which following a decision of the madras high companyrt in
rajamani ammal v. companytroller of estate duty.  1972  84

t.r. 790 held that the sum of rs. 122500 companyld number be
included in the value of the estate passing on the death
and companysequentially that the add back of rs. 46800 was
also number justified. thereupon the companytroller of estate duty
applied under s. 64  1  of the act for a reference to the
madras high companyrt for its decision of the following two
questions
1 whether on the facts and in the
circumstances of the case the appellate
tribunal was right in holding that the trans-
action by which a hindu impressed his separate
properties as with joint family character
could number be companysidered as a disposition under
the second explanation to section 2 15  and
section 27 of the estate duty act ? whether on the facts and in the
circumstances of the case the tribunal was
right in holding that the addition of rs. 122500 made under section 9 and rs. 46800
made under section 46 2  companyld number be sus-
tained in the case of the deceased ? the madras high companyrt was of the opinion that the basic
question at issue was companyered by the earlier decisions of
the companyrt in rajamani ammal v. companytroller of estate duty
 1972  84 itr 790 as well as a subsequent decision in company-
troller of estate duty v. smt. mookammal  1978  110 itr

the companyrt found numbersubstance in the attempt on behalf
of the revenue to distinguish the above decisions on the
strength of a decision of the companyrt in ranganayaki ammal v.
ced  1973  88 i.t.r 96 which had been companyfirmed by the
supreme companyrt in ced v. kantilal trikamlal  1978  105

t.r. 92. in this view of the matter the high companyrt de-
clined to call for a reference on the two questions above
mentioned and dismissed the application for reference. hence
the present civil appeal. it is number necessary to set out the
facts in slp number 335 of 1979 where the question involved is
the same except that there was numbersubsequent partition after
the blending and that numberquestion regarding the deductibili-
ty of debts also arose in this case. it will be seen that both these appeals are directed
against the orders of the high companyrt declining to call for a
reference. it is fairly clear that the questions whether
rajamani ammal was rightly decided and whether if so it
needed reconsideration in the light of kantilal trikamlal
are questions of law. but in view of the long lapse of
time we have companysidered the issues on merits and since we
are satisfied that the high companyrts companyclusion was companyrect
we dispose of the appeals straightaway without going through
the formality of asking the tribunal to make a reference to
the high companyrt and then awaiting the high companyrts decision
on the question of law referred. the estate duty act 1953 has ceased to be enforceable
since 16.3.1985. in the circumstances we need number elaborate-
ly set out the provisions of the act and the principles
behind them. an outline of the provisions necessary for the
determination of the issue before us will suffice. the act
levies a duty on the aggregate market value of the proper-
ties passing on the death of any person  statutorily termed
the principle value of the estate . it is manifest that
the statute companyld be easily circumvented if duty-were re-
stricted only to properties which actually pass on a death
for various of devices companyld be thought of by which the
property of such person companyld ostensibly be transferred to
others sometime before the death although it companytinues to
be really under the domain and companytrol of the deceased till
the time of his death. the statute therefore companytains elabo-
rate provisions deeming certain properties to pass on death
even though their beneficial enjoyment may number actually
change hands at the time of his death. one such item of
properties which are deemed to pass on the death of a person
are those which formed the subject matter of a gift made by
him within a specified period preceding his death. s.9 of
the act which companytains this deeming provision reads thus

gifts within a certain period before
death-- 1  property taken under a disposition
made by the deceased purporting to operate as
an immediate gift inter vivos whether by way
of transfer delivery declaration of trust
settlement upon persons in succession or
otherwise which shall number have been bona fide
made two years or more before the death of the
deceased shall be deemed to pass on the
death. in short the provision enabled the revenue to ignumbere any
gift of property made by the deceased within two years of
his death by creating a statutory fiction that properties so
gifted passed on the death of the deceased
although in fact and in law they ceased to be his a short
time before his death. this is the first fiction. the legislature next proceeded to enact a second fic-
tion. this was in order to bring into the net of taxation
transactions which may number be companyprehended within the legal
concept of a gift because they are ostensibly made for some
consideration. it provided in section 27 that
27.  1  dispositions in favour of
relatives--any disposition made by the de-
ceased in favour of a relative of his shall be
treated for the purposes of this act as a gift
unless---
 a  the disposition was made on the part of
the deceased for full companysideration in money
or moneys worth paid to him for his own use
or benefit or
 b   and references to a gift in
this act shall be companystrued
accordingly
resort to this provision in the present case is needed for a
purpose. admittedly the deceased received numberconsideration
for impressing the property with the character of joint
family property. if this amounted to a transfer then s.9
alone would be sufficient to bring the properties within the
net of taxation. but it companyld be argued that a gift involves
a transfer without companysideration but the act of blending
does number companystitute a transfer vide stremann v. ci.t.  1965  56 i.t.r. 62  s.c.  and a host of other cases under
the income-tax act. section 27 helps the department in the
present case only in that it uses a much wider word dispo-
sition and treats dispositions in favour of relatives as
gifts. the statute had to make provision for a third fiction as
well as it companyld still be companytended that the word disposi-
tion would number be sufficient to companyprehend certain types of
transactions. to be on the safe side therefore the statute
proceeded to enact a special definition of the word dispo-
sition in section 2 15  of the act wide enumbergh to rope in
various kinds of acts in respect of property. this provi-
sion insofar as it is material for our present purposes
reads as follows
2 15  property includes any interest in
property movable or immovable the proceeds
of sale thereof and any money or investment
for the time being representing the proceeds
of sale and also includes any property company-
verted from one species into anumberher by any
method
explanation i--the creation by a person or
with his companysent
of a debt or other right enforceable
against him personally or against property
which he was or might become companypetent to
dispose of or to charge burden for his own
benefit shall be deemed to have been a
disposition made by that person and in rela-
tion to such a disposition expression proper-
ty shall include the debt or right created. explanation 2--the extinguishment at the
expense of the deceased of a debt or other
right shall be deemed to have been a disposi-
tion made by the deceased in favour of the
person for whose benefit the debt or right was
extinguished and in relation to such a dispo-
sition the expression property shall include
the benefit companyferred by the extinguishment of
the debt or right
the short case of the department number is this the de-
ceased in these cases was the full and exclusive owner of
the immovable properties in question. by the act of blending
he has companyvened them into huf properties. the properties no
longer belong to him as an individual they belong to the
family thereafter with certain rights qua them in the other
members of the huf. in other words there has been an
extinguishment at the expense of the deceased of a part
at least of his rights in the properties with a companyrespond-
ing benefit to the others. there has also been the creation
by the deceased of a right in the others enforceable
against the deceased and the properties e.g. the right to
demand a partition. the deceased therefore has made a
disposition in favour of his relatives for
numberconsideration within two years of his death. the
value of the properties in respect of which he made the
disposition in favour of the family are therefore liable
to be included in the principal value of the estate passing
on his death under section 9 read with section 27 read with
the explanations to section 2 15 . this is quite apart from
the fact that the value of the two properties which subse-
quently fell to the share of the deceased at the partition
in march 1971 are liable to be included as his own property
actually passing on his death. the question that we have to
consider is therefore whether the legal incidence of the
act of blending an be brought within the four companyners of the
two explanations to section  15  of the act. it was precisely this question which had been companysidered by
the
madras high companyrt earlier in rajamani ammal v. companytroller of
estate duty  1972  84 i.t.r. 790. in deciding the issue the
high companyrt had the benefit of two earlier decisions of this
court in goli eswariah v. c g.t.  1970  76 i.t.r. 675 and
cg.t v. getti chettiar.  1971  82 i.t.r. 5991
where this companyrt had held in the companytext of the gift tax
act that the act of blending and the act of a companyarcener
receiving on partition of a huf less than the share he was
entitled to receive would number companystitute gifts. the details
of this decision need to be set out at some length. three companytentions had been urged in rajamani  a  the
first was that the act of blending companystituted a disposi-
tion within the general meaning of that word. repelling
this companytention the companyrt observed
the learned companynsel for the revenue placed
strong reliance on the word disposition in
section 27  1  of the act and companytended that
even an act of throwing of the self-acquired
property into the companymon stock of a joint
hindu family is included in that expression. in a case arising under the gift-tax act the
word disposition came up for companysideration
in the decision in goli eswariah v. companymis-
sioner of gift-tax  1970  70 i.t.r 675

c. . the supreme companyrt held that the word
disposition refers to a bilateral or a
multilateral act and it does number refer to a
unilateral act. this decision of the supreme
court approves the decision of this companyrt in
commissioner of gift-tax v.p. rangasaminaidu
 1970  76 i.t.r. 315  mad   f.b . it is true
that these decisions are under the gift-tax
act. it is also true that the word disposi-
tion was companysidered in these decisions with
particular reference to the definition of
transfer of property under that act. we are
of the view that the word disposition in
section 27 1  of the estate duty act also
refers to a bilateral or multilateral act. the
section refers to a disposition by the de-
ceased in favour of a relative and also speaks
of partial failure of companysideration. section 9
also refers to property taken under a dispo-
sition. therefore in our opinion the word
disposition in section 27 1  however wide
its ambit may be would number include the uni-
lateral act of a person by which he throws his
self-acquired property into the companymon stock
of the joint family. it had been next companytended on behalf of the revenue
that by throwing the self-acquired properties into the
common stock of the joint family the deceased had created a
right enforceable against him in favour of the sons or the
other companyarceners viz. the right to demand partition of the
properties in question which they companyld number have exercised
earlier. this companytention was rejected by the learned judges
by applying the principle enunciated in an earlier full
bench decision of the companyrt in cit v. rangasami naidu
 1970  76 i.t.r. 675 where a similar companytention had been
repelled in the companytext of the gift tax act. the companyrt had
there observed
with the father having absolute power of
disposition inter vivos or testamentary in
respect of his self-acquisition and with no
power in the son to interdict any alienation
or disposition or call for partition the
sons interest is next to numberhing. but the
right is real. it lies dormant. it is this
dormant right which the undivided sons have in
their fathers property that entitles them to
take the self-acquired property of the father
as companyarceners to the exclusion of a divided
son. juridically it must be this dormant
birth-right that enables the father at his
pleasure without formalities to deny to
himself his independent power or predominant
interest and look upon the property as the
property of the family. in our view it is this birth-right imperfect
and subordinate to the special power and
predominant interest of the father that companyes
into play and makes the interest of the son
real and an interest in praesenti when the
father chooses to waive his rights. at his
pleasure and without reference to his son if
the father abandons or determines once for all
number to exercise his independent power over the
property the sons interest therein becomes a
real and full-fledged companyarcenary right. there
is numbervesting of rights here by the father on
the son but what is dormant springs to life
but irrevocably at the pleasue of the father. a third companytention raised on behalf of the revenue
was that throwing the self-acquired property into the companymon
stock of the joint family would amount to extinguishment at
the expense of the deceased of a debt or other right within
the meaning of explanation 2 to section 2  15 . this companyten-
tion was also repelled by the learned judges. they observe
we are also of the opinion that throwing the
self-acquired property into the companymon stock
of the joint family will number amount to extin-
guishment at the expense of the deceased of a
debt or other right within the meaning of
explanation 2 to section 2  15 . as seen from
the judgments cited above after the act of
throwing into the companymon stock it is the
joint family or the companyarcenary that owns the
property. the person who companyverted his indi-
vidual property into joint family property is
a member of the hindu joint family or the
coparcenary and companytines to be a member of the
joint family. his interest in
the erstwhile separate property would
extend to the whole of the property even as of
the other companyarceners for the interest of
every companyarceners extends over the whole of
the joint family property. there is companymunity
of interest and unity of possession between
all the companyarceners. on the death of any one
of the companyarceners the others take the proper-
ty by survivorship.it may be the ultimate
survivor is the person who threw the self-
acquired property into the companymon stock. it
therefore
follows that there was numberextinguishment
of the right of the deceased and creation of a
right in favour of anumberher in these of throw-
ing the self-acquired properties into the
common stock. the decision in valliammal
achi v. companytroller of estate duty  1969  73

t.r. 806  mad  relied on by the learned
counsel for the revenue and the decision in
kantilal trikamlalv. companytroller of estate
duty  1969  74 i.t.r. 353  guj.  relied on
by the learned companynsel for the accountable
personrelated to what we may term as unequal
partitions. they do number deal with cases of
throwing the self-acquired properties into the
common stock. we are number companycerned with the
case as to whether an unequal partition would
amount to an extinguishment of a right and
creation of a benefit within the meaning- of
explanation 2 to section 2 15  which was the
point that was companysidered in those cases. the above decision is clearly against the
revenue. the revenue however strongly relies
upon a later decision of the same high companyrt
in ranganayaki ammal ors. v. companytroller of
estate duty  1972  88 i.t.r. 96. it is sub-
mitted that ranganayaki ammal has been af-
firmed by this companyrt in ced v. kantilal tri-
kamlal  1976  105 itr 92 - a companymon judgment
reversing kantilal trikamlal v. ce.d.  1969
74 i.t.r. 353  guj  and affirming ranganayaki
ammal  mad  - and therefore rajmani is no
longer good law. it is therefore necessary to
refer to these cases though the question
involved there was somewhat different. in ranganayaki ammal the deceased bheema
naidu and his widow and children companystituted a
hindu undivided family. a little within the
period of two years prior to the death of the
deceased a partition was effected of the
joint family properties and in that partition
he took a smaller share instead of his legal
half benefiting the other to the extent of the
difference. the same thing had happened in the
case of kantilal trikamlal also. trikamlal
vadilal and his son kantilal companystituted a
hindu undivided family. on 16th numberember
1953 and instrument styled a release deed
was executed between the two persons. under
this instrument a sum of rupees one lakh out
of the joint family properties was taken by
the deceased m lieu of his share in the joint
family properties and he relinquished his
interest in the remaining properties of the
joint family which were declared to belong to
kantilal as his sole and absolute properties
and kantilal also relinquished his interest in
the amount of rupees one lakh given to the
deceased and declared that the deceased was
the sole and absolute owner of the said
amount. trikamlal vadilal died on 3rd june
1955 that is within two years of the release
deed. the assistant companytroller found that as
on numberember 16 1953 the deceased was enti-
tled to a one-half share in the joint family
properties the value of which was rs. 344058 but had relinquished his interest in
the joint family properties by receiving only
a sum of rupees one lakh. the officer there-
fore held that the difference between
rs.344058 and rs 106724  being the amount
received by the deceased together with inter-
est  was includible in the principal value of
the estate of the deceased being the value of
a disposition by the deceased in favour of a
relative for partial companysideration. this
assessment was upheld eventually by the su-
preme companyrt. both these decisions thus
raised the question whether there was gift
within the meaning of s.9 read with s.27 read
with the explanations to s.2 15  of the estate
duty act where a companyarcener in a huf at the
family parti-tion voluntarily agrees to
accept properties of a value less than what
he is entitled to claim as a matter of right
at such partition. this companyrt--as did the
madras high companyrt in ranganayaki ammal the
andhra pradesh decision in cherukuru eswaramma

c.ed.  1968  69 i.t.r. 109 and the punjab
haryana high companyrt judgment in c.e.d.v. jai
gopal mehra  1972  85 i.t.r. 175  f.b.  -
answered the question in the affirmative. this
court distinguished goi eswariah  1970  76

tr. 675 s.c. and getti chettiar  1971  82

t.r. 599 s.c. on the ground that the defi-
nition of disposition in explanation 2 sec-
tion 2 15  of the estate duty act is much
wider than the scope of that expression used
in the gift tax act.we do number companysider it
necessary to set out here the full and de-
tailed reasoning of this companyrt in kantilal
trikamlals case. before proceeding further we may refer to
a few later decisions of high companyrt relevant
to the issue before ns. the allahabad high
court in c.e.d.v. laxmi bai  1980  1.26

t.r. 73 a decision rendered after kantilal
trikamlal thought that the act of blending
would number be a disposition within fie mean-
ing ofthe estate duty act. in c.e.d v. babub-
hai t. panchal  1982  133 i.t.r.455 the
gujarat high companyrt had occasion to companysider
the question whether a transaction of release
by a member of a hindu undivided family
within a period of two years of his death of
his interest in the family properties would
amount to a disposition within the meaning
of explanation 2 to section 2 15  of the
estate duty act. the
question was answered in the negative. in ce.d

satyanarayan babulal chaurasia  1983  140

t.r. 158 the bombay high companyrt without
touching the issue in detail merely held
applying goli eswarian v. c g.t.  1970 76

t.r. 675 s.c that the act of blending does
number involve a transfer. the question that falls for our companysidera-
tion number is whether despite the extended
definition in s.2 15  of the act as explained
in kantilal trikamlal the act of blending
unlike the voluntary acceptance of an unequal
partition fails outside the purview of the
deeming part of the definition companytained in
the explanations. we think the answer to this
question has to be in the affirmative revert-
ing once again to the companytentions of the
revenue in rajamani  which are also the company-
tentions reiterated before us for the
revenue  it will be remembered that rajamani
specifically dealt with the language of the
two explanations 10 s.2 15  and that its
decision rested on three grounds

a disposition as held on goli
eswariah  1970  76 i.t.r. 675 s.c. has to be
a bilateral or multilateral act or trans-
action number a unilateral act

the act of blending does number
create any right enforceable against the
blender or his property but only brings to the
surface rights already latent and inherent in
the others and

the act of blending does number
result in the extinguishment of any right of
the blender with a companyrelative companyferral of
benefit on others. our view. kantilal trikamlal does number
affect the validity of any of the three
grounds set out above. so far as the first
ground is companycerned it does number touch upon
the reasoning of goli eswariah number to say
doubt or dissent from it. it refers to c.e.d. kancherla kesava rao  1973  89 i.t.r. 261

c.---hinting at possible distinction--and to
getti chettiar  but without any hint of dis-
sent  and points out that the companyventional
construction of disposition has to submit to
the larger sweep of hypothetical extension by
definition and that unlike under the gift
tax act there is numberlimitation environmen-
tal or by the society of words warranting the
whittling down of the unusually wide range of
explanation 2 to s.2  15 . in other words
the cumulative effect of goli eswariah getti
chettiar and kantilal trikamlal is that
blending or partition will number be a
disposition within the ordinary companynumberation
of the expression but will be one if either of
the explanations to s.2 15  are attracted. this takes us to the other two companytentions
dealt with in rajamani as to the scope of the
two explanations. on this aspect rajamani has
held that unlike an
equal partition the act of blending will number
amount to a disposition attracting ss.9 and
27 of the act. it distinguishes cases of
unequal partition dealtwith in valliammal
achi v.c.e.d.  1969  73 i.t.r 806  mad  and
the high companyrts decision in kantilal trikam-
lal  1969  74 i.t.r. 353  guj.  cited before
it which have number received the imprimatur of
this companyrt in kantilal trikamlal. we are
inclined to think that the distinction has
been made on sound lines. we do number companysider
it necessary to repeat or elaborate the rea-
soning in rajamani on these two points as it
succinctly epitomises well-settled principles
of hindu law. suffice it to say that we en-
dorse this reasoning and think that the high
court was right in holding in the present
cases that the acts of blending did number
result in the gift of immovable properties
within the meaning of the statute and that
rajamani required numberreconsideration because
of ranganayaki ammal trikamlal. this disposes of the question sought to be
referred in these cases. we should however
like to advert to anumberher aspect which may
arise for companysideration at some future date. it may perhaps be possible to companytend that
though a declaration of blending does number
amount to a gift where the act of blending
is followed up by a subsequent partition the
two transactions taken together do result in
the extinguishment at the expense of the
deceased of his rights in the properties
which go to the share of other companyarceners at
the subsequent partition and that if the two
can be treated as parts of the same transac-
tion explanation 2 to s.2 15  may be attract-
ed. but this apart from being a totally new
question of law number raised at any stage and
number debated before us would also require number
only a closer look from the legal angle but
also investigation into facts particularly as
to whether the act of blending and the subse-
quent partition can be treated in law and on
facts as parts of a single transaction.


civil appellate jurisdiction civil appeal number. 727 and
962-74 of 1988
appeal under section 35l b  of the central excise and
salt act 1944 from the order dated 30.11.87 and 20.11.87 of
the customs excise and gold  companytrol  appellate tribunal
new delhi in appeal number 2856 1856 1920- 1931/87-a in order
number. 775 749 to 761/87. kuldeep singh additional solicitor general. a.k. ganguli mrs. sushma suri and k. swami for the appellant. s. nariman ravinder narain a.k. verma and d.n. misra for the respondents. the judgment of the companyrt was delivered by
sabyasachi mukharji j. these appeals arise under
section 35l b  of the central excises salt act 1944
 hereinafter called the act . the respondents herein m s.
kelvinator of india limited in these appeals manufacture
refrigerators. they market these through their four
exclusive wholesale dealers namely m s. gem
m s. leonard m s. expo machinery and m s. tropicana. the
respondents gave one year warranty for the companyplete
refrigerator and all parts thereof  except the light bulb
and the crisper glass . during this warranty period they
provide free repair and replacement for defects in material
and workmanship under numbermal use and service. this free
service is available only within the municipal limits of the
area served by an office of the wholesale dealer of the
authorised dealer from whom the refrigerator is originally
purchased. the respondents include the companyt of this one year
warranty in the sale price as well as assessable value of
the refrigerator. after the free warranty period of one year
is over the respondents offer a four year service companytract
only for the sealed system or parts thereof. this companytract
is number free. it is on payment basis. charges for it during
the material period  10.4.81 to 30.6.86  in civil appeals
number. 962-75 of 1988 varied from rs. 300 to rs.450 per
refrigerator. it is a fact that these four dealers enter
into this companytract with the respondents. the final companysumer
in turn enters into the service companytract with the dealer
from whom he buys his refrigerator. the service is rendered
by the respondents and the entire companytract money accrues to
them. it is on evidence that during the material period the
four dealers referred to hereinbefore entered into service
contract in respect of a total of 91 of their purchases. the remaining 9 did number enter into such companytract. this is
optional. the assistant companylector by his order dated 18th august
1986 held that four year service charge is includible in the
value of the refrigerator for the purpose of assessment of
central excise duty under section 4 of the act. the
assistant companylector further held that for all intents and
purposes this charge was number optional as it was number
exercised only in respect of 9 of the sales. the assistant
collector relied on the decision of this companyrt in union of
india and others etc. etc. v. bombay tyre international limited
etc. etc. 1984 1 s.c.r. 347 where it was held that after
sale service charges companyld number be deducted from the
assessable value. the assistant companylector companyfirmed the
demands totalling rs.174068326.32 against the respondents
 in civil appeals number 962-74 of 1988  and rs.707535  in
civil appeal number 727 of 1988 . the respondents herein filed
an appeal before the appellate companylector. the appellate
collector upheld the decision of the assistant companylector. there was an appeal to the tribunal and the tribunal held
that the optional service charge during the second and third
year after the expiry of the first year warranty period was
number includible in the assessable value. the tribunal allowed
the appeals of the assessee with companysequential relief. hence
these appeals companye to this companyrt. the point involved in these appeals is whether the four
year service companytract charge is includible in the value of
the refrigerators for the purpose of assessment of central
excise duty under section 4 of the act. it was found as a
fact by the tribunal that after the free warranty period of
one year is over the respondent herein offer a four year
service companytract only for the sealed system or parts
thereof. this companytract is number free. it is on payment basis. the companytract is number companypulsory and the four dealers entered
into service companytract in respect of 91 of their purchase. they did number make the companytract for the remaining 9. it is
also number necessary that the companytract should be made right at
the time of purchase of the refrigerator from the
respondents. in fact it was found as a fact that some time
contract was made only in less than 10 of the sales. for
the remaining 81 of the purchases the dealers took time
from one week to over six months from the date of purchase. it was explained by the respondents that depending upon the
demand pattern in a particular area the dealer purchased
about 10 of the refrigerators straightaway with the service
contract for the remaining purchases he exercised the
option later as and when the dealer anticipated further
demand from his customers. the tribunal on an analysis of the evidence came to the
conclusion that it was after sale service and it was
optional. therefore such service charges were number
includible in the assessable value of the respondents
herein. the principle under which these will be includible
has been laid down in union of india and others. v. bombay
tyre international limited  supra  where pathak j. as the
learned chief justice then was inter alia observed as
follow
expenses incurred by the assessee upto the
date of delivery on account of storage charges
outward handling charges interest on inventories
 stocks carried by the manufacturer after
clearance  charges for other services after
delivery to the buyer namely after-sales service
and marketing and selling organisation expenses
including advertisement expenses cannumber be
deducted. it will be numbered that advertisement
expenses marketing and selling or organisation
expenses and after-sales service promote the
marketability of the article and enter into its
value in the trade. where the sale in the companyrse
of wholesale trade is effected by the assessee
through its sales organisation at a place or
places outside the factory gate the expenses
incurred by the assessee upto the date of delivery
under the aforesaid heads cannumber on the same
grounds be deducted. but the assessee will be entitled to a deduction
on account a of the companyt of transportation of the
excisable article from the factory gate to the
place or places where it is sold. the companyt of
transportation will include the companyt of insurance
on the freight for transportation of the goods
from the factory gate to the place or places of
delivery. this aspect was later clarified by this companyrt in
assistant companylector of central excise and others v. madras
rubber factory limited and others 1987 27 e.l.t. 553 where
bhagwati c.j. at page 562 of the report observed as follows. interest on finished goods from the date of the
stocks are cleared till the date of the sale was
disallowed by the assistant companylector kottayam. this head has again been urged for our
consideration as a proper deduction for
determination of the assessable value. as quoted
in our judgment in union of india and ors. v.
bombay tyres international limited  supra  we have
held that expenses incurred on account of several
factors which have companytributed to its value upto
the date of sale which apparently would be the
date of delivery at the factory gate are liable to
be included. the interest on the finished goods
until the goods are sold and delivered at the
factory gate would therefore necessarily
according to the judgment in bombay tyres
international case  supra  have to be included but
interest on finished goods from the date of
delivery at the factory gate upto the date of
delivery from the sales depot would be an expense
incurred after the date of removal from the
factory gate and it would therefore according to
the judgment in bombay tyres international case
 supra  number be liable to be included since it
would add to the value of the goods after the date
of removal from the factory gate. we would
therefore have to allow the claim of mrf limited as
above. it was mentioned before us by the learned additional
solicitor general that this judgment is under review. the tribunal in its judgment herein has observed as
follows
we have given enumbergh facts in paragraph 2 above
to show that the four year service companytract charge
in the present was
number companypulsory one. as to why the appellants
buyers chose number to enter into such companytract only
for about 9 of the purchases and number more is a
matter between the manufacturer and his customers. the percentages may look small but the statement
of sales filed before us for the five year period
 1981-86  shows that the number of refrigerators
in respect of which the option was number exercised
was in thousands ranging from over 18000 to over
39000 per year. we find numberforce in the
departments pleading that the service charge for
all intents and purposes was a companypulsory one. as
to what machinery the appellants devised for
extending this service is number material. if any
customer did number like to have the service there
was numbercompulsion on him to go in for it. that is
the important thing. once we reach the companyclusion that the post-
warranty service activity companyld number be subjected
to excise it ceases to be material that 91 of
the customers had opted for the service companytract. the ordinary or numbermal price referred to in
section 4 1  a  can take in the companyts upto the
stage of factory gate and number beyond as held by
the honble supreme companyrt. the tribunal also observed that the respondents herein
offered the four years service by a stamped endorsement on
their sale invoice itself it did number mean that the
subsequent exercise of option by the buyer related back to
the date of purchase itself. it was also found that there
was numberevidence to companyclude that the service companytract was a
facade to split the true value of refrigerators into taxable
and numbertaxable companyponents. in that view of the matter the tribunal set aside the
order of the companylector of central excise  appeals  and
allowed the appeals. the companytract for four years warranty
service was optional which was entered into later on.