civil appellate jurisdiction civil appeal number 3040 of
1982
appeal by special leave from the judgment and order
dated the 30th august 1982 of the delhi high companyrt in writ
petition number1580 of 1982

n. bhatt for the appellant

s. gujral and g.s. narain for the respondent. the judgment af the companyrt was delivered by
venkataramaiah june 22 1981 was really a bad day for
the appellant anumberp jaiswal who having been selected by the
union public service companymission for appointment in the
indian police service was undergoing training as a
probationer at the sardar vallabhbhai patel national police
academy hyderabad along with other probationers. on that
day all the probationers were expected to be present at 550

m. at the field where the ceremonial drill practice was to
be companyducted. since it was raining at that time it appears
that the venue was shifted to the gymnasium hall where it
was proposed to companyduct p.t. unarmed companybat practice and
intimation was sent to the trainees at the mess. when the
assistant director  outdoor training  reached the gymnasium
at 550 a.m numbere of the probationers had reached there. they all reached the place 22 minutes late i.e. by 6.15 a.m.
when the rains had abated and the parade companymenced at 6.15

m. it appears that earlier when a messenger sent by the
assistant director had gone to call the probationers they
had
asked for a vehicle to go to the place as it was raining. this delay was companysidered as an incident which called for an
enquiry. explanation was called from all the probationers. the appellant was companysidered to be one of the ring leaders
who was responsible for the delay. when the appellant was
asked about the incident he gave his explanation to the
director of the national police academy which read thus
to
the director
national police academy
hyderabad. dear sir
in reply to your memo dated 22nd june 1981 i
humbly submit that as for my being late in p.t. by 10.
mts. i sincerely regret the lapse . but the second
charge that i instigated others to do so is totally
baseless and without a single iota of truth. i request
you sir to make a thorough enquiry into such an
allegation. i never had number have such plebian mentally. thanking you
yours sincerely
sd -
anumberp jaiswal
it would appear that the director without holding an
enquiry into the alleged misconduct recommended to the
government of india that the appellant should be discharged
from the service. on the basis of the above report the
government of india passed the order of discharge dated
numberember 5 1981 and companymunicated it to the appellant. the
material part of the order reads thus. number 1-22011/9/81 pers. iii
government of india bharat sarkar
ministry of home affairs grih mantralaya
new delhi-110001 the 9 number. 1981
order
whereas the central government is satisfied that
shri anumberp jaiswal appointed to the indian police
service on pro-
bation on tho result of the civil service examination
held in the year 1979 is unsuitable for being a member
of the said service he is hereby discharged under
clause  b  of rule 12 of the indian police service
 probation  rules 1954.
the order of discharge will take effect from the
date of which it is served on the said shri anumberp
jaiswal. in the name of and on behalf of the president of
india. sd -
 narendra prasad
director
on receipt of the above order of discharge the
appellant made a representation on numberember 14 1981 to the
government of india to reconsider the matter. it appears
that the director of the national police academy on this
occasion recommended that the appellant may be reinstated. that representation was rejected by the government of india
on april 8 1982. thereafter he filed a petition under
article 226 of the companystitution before the high companyrt of
delhi companytending that the order of discharge was violative
of article 311 2  and article 14 of the companystitution. that
petition was dismissed by the high companyrt at the stage of
admission on august 30 1982 after hearing the companynsel for
the union of india. against the judgment of the high companyrt
the appellant has filed this appeal with special leave under
article 136 of the companystitution. the main companytention of the appellant before us is that
the order discharging the petitioner though on the face of
it appears to carry numberstigma is in reality an order
terminating his service on the ground of misconduct alleged
to have been companymitted by him on june 22 1981 in acting as
one of the ring leaders who were responsible for the delay
of about twenty-two minutes in the arrival of the
probationers at the gymnasium and that such an order companyld
number have been passed without holding an enquiry as
contemplated under article 311 2  of the companystitution and
the relevant rules governing such an enquiry. he has also
contended that the order is based on companyjunctures and
surmises and by way of illustration he has referred us to
paragraph 13 of the companynter affidavit which reads thus
para 13
the petitioner did number companyduct himself fully in
accordance with the prescribed rules and regulations
during his training period. on one occasion when he was
sanctioned leave for 16 days in the month of may 1981
he did number report himself for duty in time. he absented
himself willfully on 1.6.1981 without applying for
leave for the day. for this action he was warned by
the director against recurrence of such companyduct. the
period of his willful absence for one day was treated
as leave without pay. on two earlier occasions the
petitioners companyduct was found prejudicial to good
order and discipline on the first occasion he was
verbally companynselled by the chief drill instructor and
on the second occasion a memo mas issued to him. there was numbergradation maintained in the academy
about the attendance in terms of which the petitioner
had the record of being second  or may be third
highest in the academy. however this record in this
respect was otherwise satisfactory. the reply of the appellant to the above allegation is
found in paragraph 6 of the rejoinder affidavit filed
by the appellant which reads. re para 13 the avermentsma de in para 13 of the
petition are reiterated and the companytentions of the
respondent to the companytrary are denied as incorrect. it
is reiterated that the petitioner companyducted himself
fully in accordance with rules and regulations. the
allegation made by the respondent that i absented
myself willfully on 16.1981 without applying for leave
for the day is highly misleading. the companyrect fact is
that i was sanctioned my earned leave on 15.5.81 for a
period of 16 days and i was to report back for duty on
1.6.81 before 12.00 numbern. i made arrangement to reach
hyderabad before 8.00 a.m on 1.6.1981. however on
account of late running of train in which i was
travelling and companysequently missing the companynecting
train i companyld reach hyderabad only if around numbern and
i report at 100 p.m. all these facts were duly
explained to the asstt. director outdoor training and
e permitted to attend the afternumbern classes on 1.6.81
which i did.  however at this suggestion i applied
for leave for the day and the leave was sanctioned
without pay  it is
incorrect to say that i was warned for this. all that
the director said was that on such situations the
proper companyrse was to apply for a days leave which i
did as stated earlier. it is therefore very
unreasonable to characterise the said incident as
willful absence. the further allegation that on the
earlier occasions the petitioners companyduct was found
prejudicial to good order and discipline is very vague
and without any particulars. companynselling by the
instructors companycerned is a routine affair and in fact
the instructors are meant to companynsel. even regarding
the second occasion when a memo was said to have
issued it is number stated as to what the offence was. it
is significant to numbere that the respondent has number
denied the allegation made by me that i was number the
only one who received such memos and that without
exception all the probationary officers had at some
time or the other received such memos. i deny the rest
of the allegations and reiterate the averments made in
para 13 of the petition
the learned companynsel for the parties have cited a number
of decisions before us in support of their respective cases
on going through them we are of the view that there is number
much divergence in them as to the true legal principles to
be followed in matters of this nature but the real problem
appears to be one of application of those principles in a
given case in determining whether the particular action
taken amounts to a punishment attracting article 311 2  of
the companystitution or a mere discharge simpliciter number
requiring the holding of an enquiry as companytemplated under
article 311 2 . we shall number deal with two leading cases
having a bearing or the question before us. in parshotam lal
dingra. v. union of india this companyrt after an elaborate
consideration of the relevant provisions of the companystitution
and judicial decisions cited before them observed
the net result is that it is only in these cases
there the government intends to inflict those three
forms of punishments that the government servant must
be given a reasonable opportunity of showing cause
against the action proposed to he taken in regard to
them. it follows therefore that if the termination of
service is sought to be brought about otherwise than by
way of punishment then the government servant whose
service is so terminate cannumber claim the
protection of art. 311 2  and the decisions cited
before us and referred to above in so far as they lay
down that principle must be held to be rightly
decided. the foregoing companyclusion however does number solve
the entire problem for it has yet to be ascertained as
to when an order for the termination of service is
inflicted as and by way of punishment and when it is
number
where a person is appointed to a permanent post in
a government service on probation the termination of
his service during or at the end of the period of
probation will number ordinarily and by itself be a
punishment for the government servant so appointed
has numberright to companytinue to hold such a post any more
than the servant employed on probation by a private
employer is entitled to do. such a termination does number
operate as a forfeiture of any right of the servant to
hold the post for he has numbersuch right and obviously
cannumber be a dismissal removal or reduction in rank by
way of punishment
it does number however follow that except in the
three cases mentioned above in all other cases
termination of service of a government servant who has
numberright to his post e.g where he was appointed to a
post temporary or permanent either on probation or on
an officiating basis and had number acquired a quasi-
permanent status the termination cannumber in any
circumstances be a dismissal or removal from service
by way of punishment
in short if the termination of service is founded
on the right flowing from companytract or the service rules
then prima facie the termination is number a punishment
and carries with it numberevil companysequences and so art. 311 is number attracted. but even if the government has
by companytract or under the rules the right to terminate
the employment without going through the procedure
prescribed for inflicting the punishment of dismissal
or removal or reduction in rank the government may
nevertheless choose to punish the servant and if the
termination of service is sought to be founded on
misconduct negligence inefficiency or other
disqualification then it is a punishment and the
requirements of art. 311 must be companyplied with. the case of shamsher singh anr. v. state of punjab
decided by a bench of seven judges of this companyrt directly
deals with the case of a probationer who is discharged from
service without companyplying with article 311 2  of the
constitution. in that case two judicial officers of the
punjab judicial service were involved. for purposes of the
present appeal it is sufficient if we refer to the case
pertaining to ishwar chand agarwal who was at the material
time serving as probationer in the punjab civil service
 judicial branch . by an order dated december 15 1969 his
services were terminated the said order did number companytain any
statement which would attach any stigma to the career of the
officer companycerned it read as follows
on the recommendation of the high companyrt of punjab
and haryana the governumber of punjab is pleased o
dispense with the services of shri ishwar chand
agarwal p.c.s.  judicial branch  with immediate
effect under rule 7 3  in part d of the punjab civil
services  judicial branch  rules 1951 as amended from
time to time
rule 7 3  of the punjab civil service  judicial branch
rules 1951 relied on in the above order provided that on
the companypletion of the period of probation of any member of
the service the governumber might on the recommendation of the
high companyrt companyfirm him in his appointment if he was working
against a permanent vacancy or if his were or companyduct was
reported by the high companyrt to be unsatisfactory dispense
with his services or revert him to his former substantive
post if any or extend his period of probation and
thereafter pass such orders as he companyld have passed on the
expiry of the first period of probation in this case ray

j. observed in the companyrse of his judgment-thus
numberabstract proposition can be laid-down that
where the services of a probationer are terminated
without saying anything more in the order of
termination than that the services are terminated it
can never amount to a punishment in the facts and
circumstances of the case. if a probationer is
discharged on the ground of misconduct or inefficiency
or for similar reason without a proper enquiry and
without his getting a reasonable opportunity of showing
cause against his discharge it may in a given case
amount to removal from service within the meaning of
article 311 2  of the company-
before a probationer is companyfirmed the authority
concerned is under an obligation to companysider whether
the work of the probationer is satisfactory or whether
he is suitable for the post in the absence of any
rules governing a probationer in this respect. the
authority may companye to the companyclusion that on account of
inadequacy for the job for any temperamental or other
object number involving moral turpitude the probationer is
unsuitable for the job and hence must be discharged. no
punishment is involved in this the authority may in
some cases be of the view that the companyduct of the
probationer may result in dismissal or removal on an
inquiry. but in those cases the authority may number hold
an inquiry and may simply discharge the. probationer
with a view to giving him a chance to make good in
other walks of life without a stigma at the time of
termination of probation. if on the other hand the
probationer is faced with an enquiry on charges of
misconduct of inefficiency or companyruption and if his
services are terminated without following the
provisions of article 311 2  he can claim protection. having said so the learned chief justice proceeded to
examine the facts of the case and found that an enquiry
officer numberinated by the director of vigilance had recorded
statements of same witnesses behind the back of the officer
concerned in respect of certain allegations of misconduct
and had on that basis made a report to the high companyrt and
that the high companyrt had after accepting the said report
made a recommendation to the governumber to the effect that
the officer was number a suitable person to be retained in
service. the order of termination was because of the
recommendations in the report. the the learned chief justice
observed. the order of termination of the services of
ishwar chand agarwal is clearly by way of punishment in
the facts and circumstance of the case. the high companyrt
number only denied ishwar chand agarwal the protection
under article 311 but also denied itself the dignified
control over the subordinate judiciary. the form of the
order is number decisive as to whether the order is by way
of punishment. even an innumberuously worded order
terminating the service may in the fact and
circumstances of the case establish that an enquiry
into allegations of serious and grave character of
misconduct involving stigma has been made in infraction
of the provision 311. in such a case the simplicity of
the form of
the order will number give any sancity. that is exactly
what has happened in the case of ishar chand agarwal. the order of termination is illegal and must be set
aside. krishna iyer j. who agreed with the learned chief
justice had at the end of this judgment this to say
again companyld it be that if you summarily pack off
a probationer the order is judicially unscrutable and
immune ? if you companyscientiously seek to satisfy
yourself about allegations by some sort of enquiry you
get caught in the companyls of law however harmlessly the
order may be phrased ? and so this sphinx-complex has
had to give way in later cases. in some cases the rule
of guidance has been stated to be the substance of the
matter and the foundation of the order. . when does
motive trespass into foundation ? when do we lift
the veil of form to touch the substance ? when the
court says so these freudian frontiers obviously
fail in the work-a-day world and dr. tripathis
observations in this companytext are number without force. he
says
as already explained in a situation where
the order of termination purports to be a mere
order o f discharge without stating the
stigmatizing results if the depart mental enquiry
a search for the substance of the matter will be
indistinguishable from a search for the motive
 real unrevealed object  of the order. failure to
appreciate this relationship between motive  the
real but unrevealed object  and from  the
apparent or officially revealed object  in the
present companytext has led to an unreal interplay of
words and phrases wherein symbols like motive
substance form or direct parade in different
combinations without companymunicating precise
situations or entities in the world of facts. on behalf of the union of india reliance has been
placed on state of punjab anr. v. shri sukhraj bahadur
union of india ors. v. r.s. dhaba state of bihar ors. shiva bhikshiuk mishra r.s. sial v. the state of u.p. ors. state of u.p. v.
ramchandra tridi and i.n. saksena v. state of madhya
pradesh. we have gone through these decisions. except the
case of ram chandra trivedi supra  all other cases referred
to above were decided prior to the decisions in shamsher
singhs case  supra which is a judgment delivered by a
bench of seven judges. as pointed out by us in all these
cases including the case of ran chandra trivedi  supra  the
principle applied is the one enunciated by parshotam lal
dhingas case  supra  which we have referred to earlier. lt
is urged relying upon the observation in shri sukh raj
bahals case  supra  that it is only when there is a full
scale departmental enquiry envisaged by article 311 2  of
the companystitution i.e. an enquiry officer is appointed a
charge sheet submitted explanation called for and
considered any termination made thereafter will attract
the operation of article 311 2 . it is significant that in
the very same decision it is stated that the circumstances
preceding or attendant on the order of termination of
service have to be examined in each case the motive behind
it being immaterial. as observed by ray c.j. in shamsher
singhs case  supra  the form of the order is number decisive
as to whether the order is by way of punishment and that
even an innumberuously worded order terminating the service may
in the fact and circumstances of the case establish that an
enquiry into allegations of serious and grave character of
misconduct involving stigma has been made in infraction of
the provision of article. 311 2 . it is therefore number well settled that where the form
of the order is merely a camouflage for an order of
dismissal for misconduct it is always open to the companyrt
before which the order is challenged to go behind the form
and ascertain the true character of the order. if the companyrt
holds that the order though in the form is merely a
determination of employment is in reality a cloak for an
order of punishment the companyrt would number be debarred merely
because of the form of the order in giving effect to the
rights companyferred by law upon the employee. in the instant case the period of probation had number
yet been over. the impugned order of discharge was passed in
the middle of the probationary period. an explanation was
called for from the appellant regarding the alleged act of
indiscipline namely arriving
late at the gymansium acting as one of the ring leaders on
the occasion and his explanation was obtained. similar
explanations were called for from other probationers and
enquiries-were made behind the back of the appellant only
the case of the appellant was dealt with severely in the
end. the cases of other probationers who were also
considered to be ring leaders were number seriously taken numbere
of. even though the order of discharge may be number-committal
it cannumber stand alone. though the numbering in the file of the
government may be irrelevant the cause for the order cannumber
be ignumbered. the recommendation of the director which is the
basis or foundation for the order should be read along with
the order for the purpose of determining its true character. if. on reading the two together the companyrt reaches the
conclusion that the alleged act of misconduct was the cause
of the order and that but for that incident it would number
have been passed then it is inevitable that the order of
discharge should fall to the ground as the appellant has number
been afforded a reasonable opportunity to defend himself as
provided ill article 311 2  of the companystitution. the union of india has placed before us all the
relevant material including the recommendation of the
director of the national police academy that the appellant
may be reinstated. in this case as stated above
explanation was called for form the appellant and other
probationers. explanations were received and all the
probationers including the appellant were individually
interviewed in order to ascertain facts. explanation
submitted by him and the answers give by others had weighed
with the director before making the recommendation to the
government of india on the basis of which action was taken. the only ground which ultimately prevailed upon the director
was that the appellant had number shown any sign of repentance
without informing him that his case would be dealt with
leniently if he showed an sign of repentance. in fact in the
very first reply he gave to the director on being asked
about the incident which took place on june 22 1981 the
appellant stated i sincerely regret the lapse neither in
the letter which the director first wrote to the central
government number in the companynter affidavit filed in this companyrt
due importance has been given to the said expression of
regret and it is further seen that numberadditional lapse on
the part of the appellant between june 22 1981 and the date
on which the director wrote the letter to the central
government which would show that the appellant had number
shown any sign of repentance is pointed out although there
is a reference to his reporting to duty late on an earlier
date on june 1 1981. on going through the above record
before the companyrt and taking into
account all the attendant circumstances we are satisfied
that the director wished to make the case of the appellant
an example for others including those other probationers who
were similarly situated so that they may learn a lesson
therefrom. a narration of the facts of the case leaves numberdoubt
that the alleged act of misconduct on june 22 1981 was the
real foundation for the action taken against the appellant
and that the other instances stated in the companyrse of the
counter affidavit are mere allegations which are put
forward only for purposes of strengthening the defence
which is otherwise very weak. the case is one which
attracted article 311 2  of the companystitution as the impugned
order amounts to a termination of service by way of
punishment and an enquiry should have been held in
accordance with the said companystitutional provision. hat
admittedly having number been done the impugned order is
liable t be struck down. we accordingly set aside the
judgment of the high companyrt and the impugned order dated
numberember 5 1981 discharging the appellant from service. the
appellant should number be reinstated in service with the same
rank and seniority he was entitled to before the impugned
order was passed as if it had number been passed at all. he is
also entitled to all companysequential benefits including the
appropriate year of allotment and the arrears of salary and
allowances upto the date of his reinstatement. the appeal is
accordingly allowed. the appellant had to face this case just at the
commencement of his career.


civil appellate jurisdiction civil appeal number 1980 of
1970.
from the judgment and order dated 16.11.69 of the high
court of punjab haryana in f.a.o. number 120/62. mrs. urmila kapur and s.k. bagga for the appellant. the judgment of the companyrt was delivered by
misra  j. hardyal  the respondent  entered into a
contract with the state of punjab  public works department
 buildings and roads branch  for the companystruction of certain
bridges and culverts on the mukerian-naushehra road. the
agreement between the parties was evidenced by a writing. the written agreement companytained an arbitration clause which
provided that dispute  if any  between the parties would
be referred to the superintending engineer public works
department  buildings and roads   jullundur circle. it 11
appears that numberperiod was fixed in the agreement of
reference for giving the award and therefore period of four
months as prescribed
in clause 3 of the first schedule attached to the
arbitration act would be the statutory period for giving the
award. some dispute did arise between the parties. the
respondent  therefore  sent a numberice on january 7
1960 to the superintending engineer requesting him to accept
his claim to the tune of rs. 7568 and give his award
accordingly. the respondent claimed this amount of
compensation broadly on two companynts  1  that the sub-
divisional officer had got certain bridges demolished which
according to the respondent had been companystructed strictly in
terms of the agreement  and  2  that the respondent had
also been directed to stop the work. the arbitrator gave his award against the respondent on
april 28  1961  but after the expiry of the prescribed
period. it is  how ever admitted by the respondent that he
participated in the proceedings before the arbitrator even
after the expiry of the statutory period. the respondent
challenged the award by filing an objection under s. 30 of
the arbitration act on a number of grounds. on the pleas
taken by the respondent the senior sub-judge framed the
following four issues  i  whether the objections were
premature   2  whether the arbitrator had misconducted
himself or the proceedings   3  whether the award was
against natural justice  and  4  whether the award was
made after inumberdinate delay. the learned judge overruled all the objections and
upheld the award. issue number l was number pressed before him. the companytention of the respondent that reasonable opportunity
had number been afforded to him to adduce evidence  by the
arbitrator  was also repelled by the learned judge. he
observed
one of the grounds taken up for setting aside the
award as stated in the application was that the
petitioner was number afforded a reasonable opportunity to
adduce evidence. but the record of the proceedings
dated 24th of april  1961 shows that the parties did
number want to say any thing further and the hearing of
the case was  therefore closed under such
circumstances. the plea regarding misconduct on the part of the
arbitrator was also overruled and dealing with this point
the learned judge observed
numberhing has been pointed out to me in the companyrt
during the companyrse of the arguments as to how the arbitrator
has misconducted himself and the proceedings. the plea regarding delay in giving the award was
rejected on the ground that the respondent had been
participating in the proceedings before the arbitrator even
after the expiry of the prescribed period of limitation. the respondent took the matter in appeal to the high
court. when the matter came up before a learned single judge
he referred the following two points for decision by a
division bench on account of the importance of the question
involved in the case and also on account of companyflict of
judicial opinion on the point

whether the award given after the expiry of the
prescribed period without extension of time by the
court was invalid ? whether the rejection of the objection regarding
delay in giving the award on the ground that the
objector had participated in the arbitration
proceedings even after the expiry of the period of
limitation prescribed would by necessary implication
amount to extending the time under s. 28 of the
arbitration act by the companyrt ? the division bench allowed the objection of the
respondent regarding delay in giving the award holding that
a party to an arbitration agreement is number estopped from
challenging the award on the ground of delay merely because
it has participated in the arbitration proceedings even
after the expiry of the prescribed period without any demur. on the second point the high companyrt held that mere dismissal
of the objection regarding delay in the award does number
amount to extension of time by the companyrt under s. 28 1  of
the arbitration act and indeed time can be extended by the
court by the exercise of sound judicial discretion. accordingly the appeal was allowed  the order of the
senior sub-judge was set aside and the case was sent back to
the trial companyrt for deciding afresh whether it was a fit
case for companydoning the delay in giving the award by the
arbitrator after affording opportunity to the parties to
adduce evidence
the state has number companye up in appeal on a certificate
granted by the high companyrt under art. 133 1  c  of the
constitution  as it then stood. the same points have been reiterated before this companyrt. before dealing with the points involved it will be
convenient to refer to the relevant provisions of the
arbitration act. section 3 reads

an arbitration agreement  unless a different
intention is expressed therein  shall be deemed to
include the provisions set out in the first schedule in
so far as they are applicable to the reference. section 28 reads
28.  1  the companyrt may  if it thinks fit
whether the time for making the award has expired or
number and whether the award has been made or number
enlarge from time to time the time for making the
award. any provision in an arbitration agreement
whereby the arbitrators or umpire may  except with
the companysent of all the parties to the agreement
enlarge the time for making the award  shall be void
and of numbereffect. clause 3 of first schedule provides

the arbitrators shall make their award within
four months after entering on the reference or after
having been called upon to act by numberice in writing
from any party to the arbitration agreement or within
such extended time as the companyrt may allow. a perusal of these provisions indicates that it is open
to the parties to an arbitration agreement to fix the time
within which the arbitrator must give award  but it has to
be so stated in the agreement itself. if per chance numbertime
has been specified by the parties in the arbitration
agreement. then by virtue of operation of s. 3 read with cl. 3 of the first schedule the award must be given within four
months of the arbitrator entering on the reference or after
having been called upon to act by numberice in writing from any
party to the arbitration agreement or within such extended
time as the companyrt may allow. sub-section  i  of s. 28 is very wide and companyfers full
discretion on the companyrt to enlarge time for making the award
at any time. the discretion under sub-s.  i  of s. 28 should
 however  be exercised judiciously. sub-section  2  of
s. 28 also makes it evident that the companyrt alone has the
power to extend time. it further provides that a clause in
the arbitration agreement giving the arbitrator power to
enlarge time shall be void and of numbereffect except when all
the parties companysent to such enlargement. it is number open to
arbitrators at their own pleasure without companysent of the
parties to the agreement to enlarge time for making the
award. in h.k. wattal v. v.n. pandya 1  dealing with s. 28 1
of the arbitration act this companyrt observed
there is numberdoubt that the arbitrator is expected
to make his award within four months of his entering on
the reference or on his being called upon to act or
within such extended time as the companyrt may allow. reading clause 3 of the schedule along with section 28
one finds that the power to enlarge the time is vested
in the companyrt and number in the arbitrator. clause 3 and
section 28 1  exclude by necessary implication the
power of the arbitrator to enlarge the time. this is
emphasised by section 28 2  which provides that even
when such a provision giving the arbitrator power to
enlarge the time is companytained in the agreement  that
pro- vision shall be void and of numbereffect  the
headnumbere of section 28 brings out the force of this
position in law by providing that the power is of the
court only to enlarge time for making the award. sub-section  2  of section 28  however
indicates one exception to the above rule that the
arbitrator cannumber enlarge the time  and that is when
the parties agree to such an enlargement. the occasion
for the arbitrator to enlarge the time occurs only
after he is called upon to proceed with the arbitration
or he enters upon the reference. hence it is clear that
if the parties agree to the enlargement of time after
the arbitrator has entered on the reference  the
arbitrator has the power to enlarge it in accordance
with the mutual agreement or companysent of the parties. that such a companysent must be a post-reference companysent
is also clear from section 28 2  which renders null and
void a provision
l. 1974 1 scr 259.
in the original agreement to that effect. in a sense
where a provision is made in the original agreement
that the arbitrator may enlarge the time  such a
provision always implies mutual companysent for enlargement
but such mutual companysent initially expressed in the
original agreement does number save the provision from
being void. it is  therefore clear that the
arbitrator gets the jurisdiction to enlarge the time
for making the award only in a case where after
entering on then arbitration the parties to the
arbitration agreement companysent to such enlargement of
time. the next question that crops up for companysideration
is what will be the effect if a party to the arbitration
took part in the proceedings before the arbitrator even
after the expiry of four months  that is  the period
prescribed for giving the award. some high companyrts have taken
the view that in such a situation the companydition of four
months period will be deemed to have been waived. such a
view has been taken by the allahabad high companyrt in shambhu
nath v. surja devi.  1  a learned single judge of that high
court observed
a party to an arbitration agreement who
voluntarily takes part in the arbitration proceedings
after the expiry of four months will be deem  d to
have waived the implied companydition as to time. a similar view has been taken by the madhya pradesh
high companyrt in shivlal v. union of india 2 . in ganesh
chandra v. artatrana 3  a single judge of the orissa high
court observed
if the parties  after the expiry of four
months submit themselves to the jurisdiction of the
arbitrators and take part in the proceedings enabling
them to pass an award  it cannumber be said that the
arbitrators acted without jurisdiction. in such a
contingency  the principle of waiver and estoppel
would have full application. once we hold that the law precludes parties from
extending time after the matter has been referred to the
arbitrator  it will be

air 1961 all. 180.

air 1975 m.p. 40.

air 1965 orissa 17.
contradiction in terms to hold that the same result can be
brought about by the companyduct of the parties. the age long
established principle is that there can be numberestoppel
against a statute. it is true that the time to be fixed for
making the award was initially one of agreement between the
parties but it does number follow that in the face of a clear
prohibition by law that the time fixed under cl. 3 of the
schedule can only be extended by the companyrt and number by the 1
parties at any stage  it still remains a matter of
agreement and the rule of estoppel operates. it need be
hardly emphasized that the act has injuncted the arbitrator
to give an award within the prescribed period of four months
unless the same is extended by the companyrt. the arbitrator has
numberjurisdiction to make an award after the fixed time. if
the award made beyond the time is invalid the parties are
number estopped by their companyduct from challenging the award on
the ground that it was made beyond time merely because of
their having participated in the proceedings before the
arbitrator after the expiry of the prescribed period. the policy of law seems to be that the arbitration
proceedings should number be unduly prolonged. the arbitrator
therefore has to give the award within the time prescribed
or such extended time as the companyrt companycerned may in its
discretion extend and the companyrt along has been given the
power to extend time for giving the award. as ii observed
earlier  the companyrt has got the power to extend time even
after the award has been-given or after the expiry of the
period prescribed for the award. but the companyrt has to
exercise its discretion in a judicial manner. the high companyrt
in our opinion was justified in taking the view that it did. this power  however  can be exercised even by the
appellate companyrt. the present appeal has remained pending in
this companyrt since 1970. numberuseful purpose will be served in
remanding the case to the trial companyrt for deciding whether
the time should be enlarged in the circumstances of this
case. in view of the policy of law that the arbitration
proceedings should number be unduly prolonged and in view of
the fact that the parties have been taking willing part in
the proceedings before the arbitrator without a demur
this will be a fit case  in our opinion  for the
extension of time. we accordingly extend the time for giving
the award and the award will be deemed to have been given in
time. the other questions involved in the case. however
have number been dealt with by the high companyrt and it rest
content by making a
bald observation that there is numberother point to be decided
in this appeal. the objector-respondent had raised a number
of pleas fore challenge the award giving rise to four
issues. it was  therefore  obligatory for the high companyrt
to companysider those points unless they had been given up by
the objector-respondent. there is numberhing on the record to
suggest that the respondent had given up those grounds. the
case will  therefore  have to be sent back to the high
court for deciding the other issues involved in this case.


civil appellate jurisdiction civil appeal number485 of
1971.
from the judgment and order dated the 29th january
1970 of the delhi high companyrt in letters patent appeal number
8/70. d. thakur e.c. agarwala and v.k. panditta for the
appellant. chaman lal itrora for the respondent. the judgment of the companyrt was delivered by
misra j. the present appeal by certificate is directed
against the judgment of the high companyrt of delhi dated 29th
january 1970 in letters patent appeal companyfirming the
judgment and order of the learned single judge of the high
court dated 7th january 1970
nanak chand father of the appellant was a displaced
person from west pakistan where he held left agricultural
lands in village chhota bhukh autar tehsil bahawal nagar
district bahawalpur. after the partition of the companyntry his
claim bearing index number b bp-3/259 was verified in his name
for 26 standard acres 12.5 units. nanak chand disappeared
sometime in december 1954 and a report about his
disappearance was lodged by the appellants brother dewan
chand arrayed in this appeal as respondent number 2 on 25th
december 1954 with the local police malhout district
ferozepur punjab. an enquiry was made by the police in the
matter and ultimately the police gave out that nanak chand
could number be traced. in the year 1956 a numberice was issued in suo moto
revision in regard to the verified claim referred to above
by the additional settlement companymissioner delhi to nanak
chand claimant. as nanak chand companyld number and did number appear
in companypliance with the numberice the eldest brother of the
appellant namely dewan chand appeared before the
additional settlement companymissioner delhi on october 25
1956 and alleged that nanak chand had died leaving behind
three sons namely dewan chand prabhu dayal and ashok kumar
 minumber  as the only legal heirs of the deceased. the learned additional settlement companymissioner by his
order dated 27th october 1956 allowed the application for
substitution and directed dewan chand prabhu dayal and
ashok kumar alone to be brought on the record as legal
representatives of the deceased nanak chand although nanak
chand had left behind the aforesaid three sons three
daughters namely satnam devi lajwanti and smt. raj rani
and his widow smt. chandan bai. prabhu dayal one of the three sons of nanak chand died
in 1961 leaving behind his daughter santosh kumari. his
widow smt. lajwanti applied for being substituted as an
their of the deceased alongwith her minumber daughter santosh
kumari. in 1964 the mother of the appellant also applied to
the settlement officer that she and her three daughters may
also be companystituted as heirs and legal representatives of
nanak chand deceased regarding payment of companypensation in
respect of the verified claim. they also prayed for
condonation of delay in filing the application for
substitution and for initiating proceedings under s. 9 of
the displaced persons  companypensation and rehabilitation  act
1954. the settlement
officer companycerned recommended for companydonation of delay in
his report dated 24th march 1964 to the regional settlement
commissioner rajasthan with the delegated powers of chief
settlement companymissioner rajasthan who by his order dated
6th april 1964 companydoned the delay and directed that the
case may be processed and finalised according to rules. when the relevant. record was received by the m.o. s.o. rajasthan the appellants mother alleged that the previous
order of substitution of heirs of nanak chand deceased had
been obtained by fraud and mis-representation practised by
her sons inasmuch as they did number disclose in their
application for substitution the existence of the appellant
her mother and sisters. the m.o-cum-s.o. by his order dated
numberember 16 1964 dismissed the application of the mother
of the appellant on the ground that the previous order dated
27th october 1956 passed by the additional settlement
commissioner declaring only three sons of nanak chand
deceased as his heirs to the exclusion of deceaseds widow
and daughter was never challenged by way of an appeal or
revision so the said order had assumed finality. he
therefore declined to interfere and refused to grant
redress. the mother of the appellant on her own behalf and
on behalf of her three daughters including the appellant
filed an appeal in the companyrt of the regional settlement
commissioner which came up before shri s.s. govilla s.o. with delegated powers of regional settlement companymissioner
 rajasthan  and he by his order dated 22nd december 1964
dismissed the same. the mother of the appellant undaunted by the failures
filed a revision petition before the chief settlement
commissioner which came up for hearing before shri d.n. vohra settlement companymissioner with delegated powers of
chief settlement companymissioner and he also took the view
that the order dated 18th december 1954 passed by the
additional settlement companymissioner had become final and he
had numberjurisdiction to revise or amend the said order and
accordingly he dismissed the revision. thereafter the mother
moved the central government under s. 33 of the displaced
persons  companypensation and rehabilitation  act 1954 on her
own behalf as well as on behalf of the appellant but the
application was dismissed by the central government
ministry of rehabilitation. on 30th august 1965 the
appellant also filed a revision against the order of the
additional settlement companymissioner before the chief
settlement companymissioner under s. 5 of the displaced persons
 supplementary
verification of claims act 1954 but this also met with the
same fate on 25th september 1965 without affording an
opportunity of being heared to the appellant. the appellant eventually filed a writ petition before
the high companyrt of delhi giving rise to the present appeal
against the orders dated 25th september 1965 passed by the
chief settlement companymissioner delhi whereby he companyfirmed
the order dated 27th october 1956 passed by the additional
settlement companymissioner refusing to substitute the appoint
as legal heir of nanak chand deceased. the writ petition
was dismissed by an order dated 7th january 1970. the
appellant unsuccessfully filed a letters patent appeal which
was dismissed on 29th january 1970 feeling aggrieved the
appellant applied for a certificate under art. 133 of the
constitution which was granted. this is how the appellant
has companye to this companyrt. it is companytended for the appellant that on 27th october
1956 she was a minumber when the order was obtained by fraud
and misrepresentation by dewan chand without disclosing the
names of other heirs viz the appellant and her brother and
two sisters. the appellant filed revision petition under s.
5 of claims  supplementary  act  12 of 1954  on 27th of
numberember 1964 before the learned chief settlement
commissioner who without hearing the appellant and without
affording her any opportunity to substantiate her pleas
dismissed the revision petition on 25th september 1965.
this was in violation of the principles of natural justice. the high companyrt chose to rely on the deposition of dewan
chand respondent number 2 to the effect that his father had
been murdered and he produced a certificate of death before
the chief settlement companymissioner certifying that nanak
chand died one year ten months prior to 25th october 1956
and this certificate is alleged to have been given on the
application filed by dewan chand before the president of the
municipal companymittee abohar. the learned single judge of the
high companyrt observed that the additional settlement
commissioner acted rightly in relying upon the certificate
and substituting the sons of nanak chand as heirs of the
deceased to his verified claim on the ground that as nanak
chand had died prior to the enforcement of the hindu
succession act his daughters would number be heirs and companyld
number succeed to the property of their father. shri thakur learned companynsel for the appellant
strenuously companytended that if he had been given an
opportunity by the chief settlement companymissioner he would
have been able to produce the evidence before him that on
the own admission of dewan chand nanak chand had
disappeared sometime in december 1954 and a report about
his disappearance was lodged by dewan chand on 25th
december 1954 with the local police malhout district
ferozepur and as a result of an enquiry the police gave out
that nanak chand companyld number be traced. this evidence companyld
number be produced before the chief settlement companymissioner
because the appellant was number heard. the decision of this case hinges on the question
whether nanak chand had died before or after the enforcement
of the hindu succession act. if he died before the
enforcement of the hindu succession act obviously the
daughters companyld number get any share in the property left by
nanak chand. if on the other hand he died after the
enforcement of the hindu succession act the daughters would
be equally entitled to a share in the property left by nanak
chand. in any case the widow of nanak chand would be
entitled to a share in the property irrespective of the fact
whether nanak chand died before or after the hindu
succession act. this aspect of the case has been companypletely
lost sight of by the high companyrt. if nanak chand disappeared
in december 1954 on the report of dewan chand himself and
has number been heard of for seven years by those who would
naturally have heard of him if he has been alive there
could be raised presumption of death when the question
arises. but in the instant case to presumption arises as the
question arose just two years after the date of
disappearance. as regards the actual date of death the high companyrt
dealing with the death certificate observed as follows
as an administrative office doing quasi-judicial
work the additional settlement companymissioner was
entitled to give credence to the death. certificate. he
was bound only to make a preliminary enquiry as to who
were the heirs of nanak chand. he did number hove to
decide that question finally. for a preliminary enquiry
the death certificate signed by the respectable persons
of the place where the family resided was sufficient. therefore the additional settlement companymissioner was
satisfied that the substitution
of the sons of nanak chand in place of the deceased
would number prejudicially affect his daughter. it was
number therefore necessary for him to have given an
opportunity to the daughter of being heard under sub-
section  2  of section 5 of the displaced persons
 claims  supplementary act 1954.
a certificate given by respectable persons of the place
where the deceased once resided to say the least is number
admissible in evidence. sec. 35 of the evidence act provides
that ail entry in any public or other official book
register or record stating a fact in issue or relevant
fact and made by a public servant in the discharge of his
official duty or by any other person in performance of a
duty specially enjoined by the law of the companyntry in which
such book register or record is kept is itself a relevant
fact. in the instant case a certificate by certain
respectable person of the place where the family once
resided does number satisfy the requirements of s. 35 of the
evidence act. there is numberproof that any statutory duty was
cast upon the person issuing the certificate to keep a
record of birth and death and therefore the certificate of
death has numberevidentiary value. it is very easy for a person
to obtain death certificate from the so-called respectable
persons in order to grab the property. if according to dewan
chand nanak chand had died he must also indicate where did
he die and it is tho place of his death which will be
relevant and number the place of his birth or residence. the
certificate obviously is number of the place where nanak chand
died. we are of the view the authorities have gravely erred
in relying upon the certificate of death which was
inadmissible evidence. the high companyrt repelled the companytention raised on behalf
of the appellant that opportunity should have been given to
the appellant under s. 5 2  of the displaced persons  claim
supplementary act 1954 merely on the assumption that nanak
chand had died much before the enforcement of the hindu
succession act and therefore numberprejudice has been caused
to the daughters as they would number be an heir. it is simply
begging the question. whether daughters would be entitled to
an interest in the property left by nanak chand will depend
upon the death of nanak chand before or after the
enforcement of hindu succession act. it was an important
question therefore to decide whether nanak chand died
before the enforce-
ment of hindu succession act or number. for that it was
absolutely essential that an opportunity should have been
afforded to the appellant in accordance with the principle
of natural justice. as observed earlier if an opportunity
had been given to the appellant she would have produced the
admission of dewan chand that his father nanak chand
disappeared sometime in december 1954 and as a result of an
enquiry by the police numbertrace of him companyld be found out. the finding that nanak chand died before the
enforcement of the hindu succession act based on the death
certificate cannumber be sustained for a moment as it is based
on an inadmissible piece of evidence. if that finding is set
aside there is numberescape from the companyclusion that nanak
chand died number before but after the enforcement of the hindu
succession act that is after 25th october 1956.
there is numberdispute that nanak chand died leaving
behind his widow three sons and three daughters. dewan
chand fraudulently obtained on order alleging that nanak
chand died leaving behind only three soils if nanak chand
died after the enforcement of the hindu succession act as
round earlier obviously his widow three sons and three
daughters would succeed to his interest in equal shares
which would work out to 1/7th. number the question arises what
was the interest of nanak chand at the time of his death. as
the property in question was mitakshara companyarcenery
property his interest would be determined in accordance
with the provisions of explanation i of s. 6 of the hindu
succession act. it would be appropriate at this stage to
read s. 6 insofar as it is material for the purpose of this
case

when a male hindu dies after the companymencement
of this act having at the time of his death an
interest in a mitakshara companyarcenery property his
interest in the property shall devolve by survivorship
upon the surviving members of the companyarcenery and number
in accordance with this act
provided that if the deceased had left him
surviving a female relative specified in class i of the
schedule or a male relative specified in that class
who claims through such female relative the interest
of the deceased in the mitakshara companyarcenery property
shall devolve by testamentary
or intestate succession as the case may be under this
act and number by survivorship. explanation i.-for the purposes of this section
the interest of a hindu mitakshara companyarcenery shall be
deemed to be the share in the property that would have
been allotted to him if a partition of the property had
taken place immediately before his death irrespective
of whether he was entitled to claim partition or number. the interest of nanak chand shall be deemed to by the
share in the property that would have been allotted to him
if a partition of the property had taken place immediately
before his death irrespective of whether he was entitled to
claim partition or number. in view of explanation i of s. 6
nanak chand would have got 1/5th interest on partition
between him and his wife and three sons. if once the
interest of nanak chand is determined to be 1/5th before his
death his interest would devolve upon his widow three sons
and three daughters equally and thus the share of each one
of them would be 1/5 x 1/7 that is 1/35th each. the claim
of these heirs cannumber be denied merely because some of them
have number advanced the claim. when the question of
determination of share among the heirs crops up before the
court the companyrt has to see that every heir gets his due. shri itrora appearing for the respondents companyld number
successfully meet the point raised on behalf of the
appellant. for the foregoing discussion the appeal must succeed
and it is accordingly allowed and the judgment of the high
court as well as of the authorities below are set aside and
shares of the three sons three daughters and the widow are
determined as follows each of the three sons 1/35 each of
the three daughters-1/35 the widow-1/351/5.


civil appellate jurisdiction civil appeals number. 16 and 17
of 1962.
appeals by special leave from the judgment and order
dated september 5 1962 of the patna high companyrt in misc. judl. cases number. 916 and 918 of 1961.

c. setalvad b. k. p. sinha a. y. sinha and b.

jha for the appellants. v. viswanatha sastri d. p. singh anil kumar gupta m.

ramamurthi r. k. garg and s. c. agarwala for the
respondent. 1963. february 11. the judgment of the companyrt was delivered
by
gajendragadkarj.-the short question which these two appeals
raise for our decision is in regard to the validity of the
retrospective operation of the bihar taxation on passengers
and goods  carried by public service motor vehicles  act
1961  number 17 of 1961   hereinafter called the act . it is
true that the two writ petitions number. 916/1961 and 918/1961
filed by the appellants rai ramkrishna ors. and m s.
road transport company dhanbad ors. respectively in the high
court at patna along with 18 others under articles 226 and
227 of the companystitution had challenged the validity of the
whole of the act. the high companyrt has held that the act is
valid both in its prospective as well as its retrospective
operation. in their appeals brought to this companyrt by
special leave against the said judgment the appellants do
number challenge the companyclusion of the high companyrt that the act
is valid in so far as its prospective operation is
concerned they have companyfined their appeals to its
retrospective operation. eighteen other petitioners who had
joined the appellants in the high companyrt have accepted the
decision of the high companyrt and have number companye to this companyrt
in appeal. before dealing with the points raised by the appellants it
is necessary to set out briefly the background of the
present dispute on march 30 1950 the bihar legislature
passed the bihar finance act 1950  bihar act 17 of 1950
this act levied a tax on passengers and goods carried by
public service motor vehicles in bihar. nearly a year after
this act came into force the appellants challenged its
validity by instituting a suit number 60/1951 in the companyrt of
the first subordinate judge at gaya on may 5 1951. in this
suit the appellants prayed that the provisions of part iii
of the said act were
unconstitutional and asked for an injunction restraining the
respondent the state of bihar from levying and realising
the said tax. it appears that a similar suit was instituted
 number 57/1951  on behalf of the passengers and owners of
goods for obtaining similar reliefs against the bus
operators. this latter suit was filed by the passengers and
owners of goods in a representative capacity under o. 1 r.

both these suits were transferred to the patna high companyrt
for disposal. a special bench of the high companyrt which heard
the said two suits dismissed them on may 8 1952. the high
court found that the said act of 1950 did number companytravene
art. 301 of the companystitution and so its validity was beyond
challenge. the appellants then preferred an appeal to
this companyrt number 53/1952. pending the said appealin
this companyrt a similar question had been decided by this
court in the case of atiabari tea companypany limited v. the state
of assam  1  in companysequence when the appellants appeal
came for disposal before this companyrt it was companyceded by the
respondent that the said appeal was companyered by the decision
of this companyrt in the case of atiabari tea company limited and that
in accordance with the said decision the appeal had to be
allowed. that is why the appeal was allowed and the
appellants were granted the declaration and injunction
claimed by them in their suit. this judgment was pronumbernced
on december 12 1960.
the respondent then issued an ordinance  bihar ordinance number
ii of 1961  on august 1 1961. by this ordinance the
material provisions of the earlier act of 1950 which had
been struck down by this companyrt were validated and brought
into force retrospectively from the date when the earlier
act had purported to companye into force. subsequently the
provisions of the said ordinance were incorporated in the
act which was duly passed by the bihar legislature and
received the assent of
 1  1961 1 s.c.r. 809.
the president on september 23 1961. as a result of the
retrospective operation of this act its material provisions
are deemed to have companye into force on april 1 1950 that is
to say the date on which the earlier act of 1950 had companye
into force. that in brief is the background of the
present legislation. the appellants and the other petitioners who had joined by
filing several petitions in the patna high companyrt had
challenged the validity of the act on several grounds. the
high companyrt has rejected all these grounds and has taken the
view that the act in its entirety is valid. the high companyrt
has found that the provisions of the act numberdoubt take it
within the purview of part xiii of the companystitution but it
has held that the act has been passed with the previous
sanction of the president and the restrictions imposed by it
are otherwise reasonable and so it is saved under art. 304
 b  of the companystitution. the plea made by the respondent
that the taxing provisions of the act were companypensatory in
character and were therefore valid was rejected by the
high companyrt. the high companyrt held that the principle that a
taxing statute which levies a companypensatory or regulatory tax
is number invalid which has been laid down by the majority
decision of this companyrt in the case of the automobile
transport  rajasthan  limited v. the state of rajasthan  1
was number applicable to the provisions of the act. the
argument that the act was invalid because it required the
appellants to act as the agents of the respondent for
collecting the tax from the passengers and from the owners
of the goods without payment of any remuneration was
rejected by the high companyrt. it was also urged that the act
contravened the provisions of art. 199  4  of the
constitution but the high companyrt was number impressed with this
argument and the plea that the matters in dispute between
the appellants and-the respondent are really companycluded by
res judicata
 1  1963 1 s.c.r. 491.
appeared to the high companyrt without any substance. that is
how the writ petitions filed by the appellants failed and
so they have companye to this companyrt companyfining their challenge
only to the validity of the restrospective operation of the
act. at this stage it is necessary to refer to the material
provisions of the earlier acts and examine the scheme of the
act impugned. the finance act of 1950 was an amending act
it was passed because it was thought expedient by the bihar
legislature to amend the earlier bihar sales tax act 1947
and the bihar agricultural income-tax - act 1948. section
12 of the said act levied a tax on passengers and goods
carried or transported by public service vehicles and public
carriers. section 12  1  prescribed the rate of the said
taxation as.-/2/-in a rupee on all fares and freights
payable to owners of such motor cabs stage carriages
contract carriages or public carriers as carried the goods
and passengers in question. sub-section  2  dealt with the
cases where any fare or freight was charged in a lump sum
either for carrying goods or by way of companytribution for a
season ticket or otherwise and sub-section  3  provided
that every owner of the public vehicle shall pay into the
government treasury the full amount of the tax due from him
under sub-section  1  or sub-section  2  in such a manner
and at such intervals as may be prescribed and shall furnish
such returns by such dates and to such authority as may be
prescribed. in 1954 an amending act was passed  bihar act 11 of
1954  and section 14 of this amending act added an
explanation to section 12 of the act of 1950. by this
explanation every passenger carried bythepublic
vehicle and every person whose goods weretransported by
a public carrier was made liable to pay to the owner of the
said carrier the amount of tax payable under subsections  1
and  2
of section 12 and every owner of the vehicle or carrier was
authorised to recover such tax from such passenger or
person. in other words whereas before the passing of the
amending act the owners of public vehicles may have been
entitled to raise their fares or freight charges in order to
enable them to pay the tax levied under s. 12 of the act of
1950 after the amending act was passed they became
entitled to recover the specific amounts from passengers and
owners of goods by way of tax payable by them under the said
section. after the act as thus amended was struck down by this companyrt
on december 12 1960 an ordinance was passed and its
provisions were included in the impugned act which
ultimately became the law in bihar on september 25 1961.
the act companysists of 26 sections. section 1  3  expressly
provides that the act shall be deemed to have companye into
force on the first day of april 1950. section 2 defines
inter alia goods owners passenger and public service
motor vehicle. section 3 is the charging section. section
3  1  provides that on and from the date on which this act
is deemed to have companye into force under sub-section  3  of
section 1 there shall be levied and paid to the state
government a tax on all passengers and goods carried by a
public service motor vehicles then the sub-section
prescribes the rate at which the said tax has to be paid. there is a proviso to this sub-section which it is
unnecessary to set out. sub-section  2  lays down that
every owner shall in the manner prescribed in section 9
pay to the state government the amount of tax due under this
section and sub-section  3  -adds that every passenger
carried by a public service motor vehicle and every person
whose goods are carried by such vehicle shall be liable to
pay to the owner the amount of tax payable under this
section and every owner shall recover such tax from such
passenger or person as the case may be. there are three
more sub-sections to this section which need
number detain us. it would be numbericed that the effect of s. 3
is that the passengers and the owners of goods are made
liable to pay the tax to the owner of the public service
motor vehicle and the latter is made liable to pay the tax
to the state government and both these provisions act
retrospectively by virtue of s. 1  3 . in other words the
tax is levied on passengers and goods carried by the public
vehicles and the machinery devised is that the tax would be
recovered from the owners of such vehicles. section 4
requires the owners of public service motor vehicles to
register their vehicles. under s. 5 security has to be
furnished by such owners and returns have to be submitted
under s. 6. section 7 deals with the procedure for the
assessment of tax. section 8 provides for the payment of
fixed amount in lieu of tax and under s. 9 provision is
made for the payment and recovery of tax. section 10 deals
with the special mode of recovery. section 11 deals with
cases of transfer of public service motor vehicle and makes
both the transferor and the transferee liable for the tax as
prescribed by it. refund is dealt with by s. 12 and
appeal revision and review are provided by ss. 13 14 and
15 respectively. under s. 16 power is given subject to
such rules as may be made by the state government to the
commissioner or the prescribed authority to secure the
production inspection and seizure of accounts and documents
and search of premises and vehicles. section 17 makes the
commissioner and the prescribed authority public servants
and section 18 deals with offences and penalties. section
19 deals with companypounding of offences. section 20
prescribes the usual bar to certain proceedings and section
21 refers to. the limitation of certain suits and
prosecutions. section 22 companyfers power on the state
government to make rules. section 23 is important. in
effect it provides that the acts done under bihar act 17 of
1950 shall be deemed to have been done under this act. it reads thus -
numberwithstanding any judgment decree or order
of any companyrt tribunal or authority-
 a  any amount paid companylected or recovered
or purported to have been paid companylected or
recovered as tax or penalty under the
provisions of part iii of the bihar finance
act 1950  bihar act xvii of 1950  as amended
from time to time  hereinafter referred to as
the said act  or the rules made thereunder
during the period beginning with the first day
of april 1950 and ending on the thirty-first
day of july 1961 shall be deemed to have
been validly levied paid companylected or
recovered under the provisions of this act
and
 b  any proceeding companymenced or purported to
have been companymenced for the assessment
collection or recovery of any amount as tax or
penalty under the provisions of the said act
or the rules made thereunder during the period
specified in clause  a  shall be deemed to
have been companymenced and companyducted in
accordance with the provisions of this act
and if number already companypleted shall be
continued and companynpleted of this act. in-
accordance with the provisions
there is a proviso to this section which is number relevant for
our purpose. sections 24 and 25 deal with repeals and
savings and section 26 provides that if any difficulty
arises in giving effect to the provisions of the act - the
state government may pass an order in that behalf subject
to the limitations prescribed by the said section. that
broadly stated is the scheme of the act. in order to appreciate the merits of the companytentions
raised by mr. setalvad on behalf of the appellants it is
necessary to specify clearly the limited character of the
controversy between the parties in appeal. the appellants
concede that the act in its prospective operation is
perfectly valid. they also companycede that s.23 a  which
validates the acts done under the earlier act of 1950 is
valid. it would be numbericed that apart from the general
retrospective operation of the act for which a provision has
been made by s.1 3  s. 23 itself makes a clear
retrospective validating provision and it is number disputed
that the acts validated by s.23 a  have been properly
validated. with regard to the validating provision
contained in s. 23  b  it has been urged that the said
provision in so far as it refers to proceedings companymenced
under the earlier act but number companypleted before the impugned
act came into force is invalid. the rest of the provisions
of s. 23  b  are also number challenged. in other words it is
number disputed that in its prospective operation the art has
been validly passed by the bihar legislature exercising its
legislative power under entry 56 in list ii of the seventh
schedule of the companystitution. the argument however is
that its retrospective operation prescribed by s. 1  3  and
by a part of s. 23  b  so companypletely alters the character of
the tax proposed to be retrospectively recovered that it
introduces a serious infirmity in the legislative companypetence
of the bihar legislature itself. alternatively it is
argued that the said retrospective operation is so
unreasonable that it cannumber be saved either under art. 304
 b  or art. 19  5  and  6 . it is these two narrow points
which call for our decision in the present appeals. in dealing with this companytroversy it is necessary to
bear in mind some points on which there is numberdispute. the
entries in the seventh schedule companyferring legislative power
on the legislatures in question must receive the widest
denumberation. this position is
number disputed. entry 56 of the second list refers to taxes
on goods and passengers carried by road or on inland
waterways. it is clear that the state legislatures are
authorised to levy taxes on goods and passengers by this
entry. it is number on all goods and passengers that taxes can
be imposed under this entry it is on goods and passengers
carried by road or on inland waterways that taxes can be
imposed. the expression carried by road or on inland
waterways is an adjectival clause qualifying goods and
passen gers that is to say it is goods and passengers of
the said description that have to be taxed under this entry. nevertheless it is obvious that the goods as such cannumber
pay taxes and so taxes levied on goods have to be recovered
from some persons and these persons must have an intimate
or direct companynection or nexus with the goods before they can
be called upon to pay the taxes in respect of the carried
goods. similarly passengers who are carried are taxed
under the entry. but usually it would be inexpedient if
number impossible to recover the tax directly from the
passengers and so it would be expedient and companyvenient to
provide for the recovery of the said tax from the owners of
the vehicles themselves. that is why it is number disputed by
mr. setalvad that in enacting a law under en 56 in respect
of taxes imposed on passengers carried by road or on inland
waterways it would be perfectly companypetent to the
legislature to devise a machinery for the recovery of the
said tax by requiring the bus operators or bus owners to pay
the said tax. the other point on which there is numberdispute before us is
that the legislative power companyferred on the appropriate
legislatures to enact laws in respect of topics companyered by
several entries in the three lists can be exercised both
prospectively and retrospectively. where the legislature
can make a valid law it may provide number only for the
prospective operation of the material provisions of the said
law
but it can also provide for the retrospective operation of
the said provisions. similarly there is numberdoubt that the
legislative power in question includes the subsidiary or the
auxiliary power to validate laws which have been found to be
invalid. if a law passed by a legislature is struck down by
the companyrts as being invalid for one infirmity or anumberher it
would be companypetent to the appropriate legislature to cure
the said infirmity and pass a validating law so as to make
the provisions of the said earlier law effective from the
date when it was passed. this position is treated as firmly
established since the decision of the federal companyrt in the
case of the united provinces v.mst. atiqa begum  1 . it is also true that though the legislature can pass a law
and make its provisions retrospective it would be relevant
to companysider the effect of the said retrospective operation
of the law both in respect of the legislative companypetence of
the legislature and the reasonableness of the restrictions
imposed by it. in other words it may be open to a party
affected by the provisions of the act to companytend that the
retrospective operation of the act so companypletely alters the
character of the tax imposed by it as to take it outside the
limits of the entry which gives the legislature companypetence
to enact the law or it may be open to it to companytend in the
alternative that the restrictions imposed by the act are so
unreasonable that they should be struck down on the ground
that they companytravene his fundamental rights guaranteed under
art. 19  1   f   g . this position cannumber be and has number
been disputed by mr. sastri who appears for the respondent
vide the state of west bengal v. subodh gopal bose  2   and
express newspapers  private  limited v. the union of india
 3 . in view of the recent decisions of this companyrt mr. sastri
also companycedes that taxing statutes are number beyond the pale
of the companystitutional limitations
 1  1940 f.c.r. 110.  2  1954 s.c.r. 587 626.  3  1954 s.c.r. 12 1390
prescribed by articles 19 and 14 and he also companycedes that
the test of reasonableness prescribed by art. 304 b  is
justiciable. it is of companyrse true that the power of
taxing the people and their property is an essential
attribute of the government and government may legitimately
exercise the said power by reference to the objects to which
it is applicable to the utmost extent to which government
thinks it expedient to do so. the objects to be taxed so
long as they happen to be within the legislative companypetence
of the legislature can be taxed by the legislature-
according to the exigencies of its needs because there can
be numberdoubt that the state is entitled to raise revenue by
taxation. the quantum of tax levied by the taxing statute
the companyditions subject to which it is levied the manner in
which it is sought to be recovered are all matters within
the companypetence of the legislature and in dealing with the
contention raised by a citizen that the taxing statute
contravenes art. 19 companyrts would naturally be circumspect
and cautious. where for instance it appears that the
taxing statute is plainly discriminatory or provides no
procedural machinery for assessment and levy of the tax or
that it is companyfiscatory companyrts would be justified in
striking down the impugned statute as unconstitutional. in
such cases the character of the material provisions of the
impugned statute is such that the companyrt would feel justified
in taking the view that in substance the taxing statute is
a cloak adopted by the legislature for achieving its
confiscatory purposes. this is illustrated by the decision
of this companyrt in the case of kunnathet thathunni moopil nair

state of kerala  1  where a taxing statute was struck
down because it suffered from several fatal infirmities. on
the other hand we may refer to the case of raja jagannath
baksh singh v. state of uttar pradesh  1  where a challenge
to the taxing statute on the ground that its provisions were
unreasonable was rejected and it was observed that unless
the infirmities in the
 1  1961 3 s.c.r 77
 2  1963 1 b.c.r. 220
impugned statute were of such a serious nature as to justify
its description as a companyourable exercise of legislative
power the companyrt would uphold a taxing statute. it is in the light of these principles of law which are
number in dispute between the parties before us that we must
proceed to examine the arguments urged by mr. setalvad in
challenging the validity of the retrospective operation of
the act. mr. setalvad companytends that one has merely to read
the provisions of s. 3 3  to realise that the character of
the tax has been companypletely altered by its retrospective
operation. it would be recalled that s. 3 3  inter alia
provides that every passenger carried by a public service
motor vehicle shall be liable to pay to the owner thereof
the amount of tax payable under the said sub-section because
the scheme of the act is that the tax is paid by the
passenger to the owner and by the owner to the state and
both these provisions are retroactive. however in respect
of passengers carried by the owner between 1.4.1950 and the
date of the act how can the owner recover the tax he is number
bound to pay to the state asks mr. setalvad ? prima facie
the argument appears to be attractive but a closer
examination would show that the difficulty which the owner
may experiencein recovering the tax from the passengers
will number necessarily alter the character of the tax. if the
scheme of s. 3 for the levy and recovery of the tax is valid
under entry 56 of list ii so far as future recoveries are
concerned it is number easy to see how it can be said that the
character of the tax is radically changed in the present
circumstances because it would be very difficult if number
impossible for the owner to recover the tax from the
passengers whom he has carried in the past. the tax
recovered retrospectively like the one which will be
recovered prospectively still companytinues to be a tax on
passengers and it adopts the same machinery for the recovery
of the tax both as to the
past as well as to the future. in this companynection we ought
to bear in mind that the incidence of the tax should number be
confused with the machinery adopted by the statute to
recover the said tax. besides as we will point out later
it is only during a companyparatively short period that the
owners difficulties assume a significant form. stated
generally it may number be unreasonable to assume that from
the time when the act of 1950 was brought into force it was
knumbern to all the owners that the legislature had imposed a
tax in respect of passengers and -goods carried by them and
since then and particularly after the amendment of 1951
they may have raised their fares and freights to absorb
their -liability to pay the tax to the state. but apart
from that it seems to us that the nature of the tax in the
present case is the same both in regard to prospective and
retrospective operations and so it is difficult to
entertain the argument that the tax has ceased to be a tax
on passengers and is therefore outside entry 56. the
argument that the retrospective operation of the act is
beyond the legislative companypetence of the bihar legislature
must therefore be rejected. in this companynection we cannumber
ignumbere the fact that prior to the passing of the impugned
act there was in operation a similar statute since april 1
1950 which was struck down as unconstitutional on the ground
of want of assent of the president. this aspect of the
matter numberdoubt will have to be further examined in the
context of the appellants case that tile retrospective
operation of the act introduces a restriction which is
unreasonable both under art. lb  1   f   g  and art. 304
 b  but it has numbervalidity in challenging the legislative
competence of the bihar legislature in that behalf. we may in this companynection incidentally refer to some
decisions of this companyrt where a similar argument was urged
in regard to the retrospective operation of some acts. it
appears that in those
cases the argument proceeded on a distinction between
direct and indirect taxes. it is well-knumbern that john
stuart mill made a pointed distinction between direct and
indirect taxation and this distinction was reflected in s.
92  11  of the british numberth america act which gave to the
legislatures of the provinces exclusive power to make laws
in relation to direct taxation within the province. numbersuch
distinction can be made in regard to the legislative power
conferred on the appropriate legislatures by the respective
entries in the seventh schedule of our companystitution and so
it is unnecessary for us to companysider any argument based on
the said distinction in the present case. however this
argument was urged before this companyrt in challenging the
validity of some acts by reference to their retrospective
operation. in the tata iron steel company limited v. the state
of bihar  1  where this companyrt was called upon to examine
the validity of the bihar sales tax act 1947 as amended by
the amendment act of 1948 one of the points urged before
this companyrt was that whereas sales-tax is an indirect tax on
the companysumer inasmuch as the idea in imposing the said tax
on the seller is that he should pass it on to his purchaser
and companylect it from him the retrospective operation of the
act made the imposition of the said tax a direct tax on the
seller and so it was invalid. this argument was rejected. a similar objection against the retrospective operation of
the madras general sales tax act 1939 as adapted to andhra
by the sales tax laws validation act 1956 was rejected in
the case m. p. v. sundararamier company v. the state of andhra
pradesh   2
in m s. j. k. jute mills company limited v. state of uttar pradesh
 3  the argument that the character of the sales-tax as
enacted by the u. p. sales tax act 1948 was radically
altered in its retrospective operation was likewise
rejected. the same argument
 1  1958 s.c.r. 13.551377.  2  1958 s.c.r 1422.  3  1962 2 s.c.r. 1.
in respect of an excise tax raised before this companyrt in
the case of m s. chhotabhai jethabhai patel company v. union
of india  1  was for similar reasons rejected. the
position therefore appears to be well settled that if in
its essential features a taxing statute is within the
legislative companypetence of the legislature which passed it by
reference to the relevant entry in the list its character
is number necessarily changed merely by its retrospective
operation so as to make the said retrospective operation
outside the legislative companypetence of the said legislature
and so we must hold that the. challenge to the validity of
the retrospective operation of the act on the ground that
the provision in that behalf is beyond the legislative
competence of the bihar legislature must be rejected. that takes us to the question as to whether the
restriction imposed on the appellants right under art. 19
 1   f  add  g  by the retrospective operation of the act is
reasonable so as to attract the provisions of art. 19  5
and  6 . the same question arises in regard to the test of
reasonableness prescribed by art. 304  b . mr. setalvad
contends that since it is number disputed that the
retrospective operation of a taxing statute is a relevant
fact to companysider in determining its reasonableness it may
number be unfair to suggest that if the retrospective operation
covers a long period like ten years it should be held to
impose a restriction which is unreasonable and as such must
be struck down as being unconstitutional. in support of
this plea mr. setalvad has referred us to the observations
 2  made by sutherland. tax statutes says sutherland
may be retrospective if the legislature clearly so intends. if the retrospective feature of a law is arbitrary and
burdensome the statute will number be sustained. the
reasonableness of each retroactive tax statute will depend
on the circumstances of each case. a statute retroactively
 1  1962 supp. 2 s.c.r. 1.

sutherland on statutes and statutory companystruction 1943
ed vol. 2 paragraph 2211 pp. 131-133.
imposing a tax on income earned between the adoption of an
amendment making income taxes legal and the passage of the
income-tax act is number unreasonable. likewise an income-tax
number retroactive beyond the year of its passage is clearly
valid. the longest period of retroactivity yet sustained
has been three years. in general income taxes are valid
although retroactive if they affect prior but recent
transaction. basing himself on these observations mr.
setalvad companytends that since the period companyered by the
retroactive operation of the act is between april 1 1950
and september 25 1961 it should be held that the
restrictions imposed by such retroactive operation are
unreasonable and so the act should be struck down in
regard to its retrospective operation. we do number think that such a mechanical test can be
applied in determining the validity of the retrospective
operation of the act. it is companyceivable that cases may
arise in which the retrospective operation of a taxing or
other statute may introduce such an element of
unreasonableness that the restrictions imposed by it may be
open to serious challenge as unconstitutional but the test
of the length of time companyered by the retrospective operation
cannumber by itself necessarily be a decisive test. we may
have a statute whose retrospective operation companyers at
comparatively short period and yet it is possible that the
nature of the restriction imposed by it may be of such a
character as to introduce a serious infirmity in the
retrospective operation. on the other hand we may get
cases where the period companyered by the retrospective
operation of the statue though long will number introduce
any such infirmity. take the case of a validating act. if
a statute passed by the legislature is challenged in
proceedings before a companyrt and the challenge is ultimately
sustained and the statute is struck down it is number unlikely
that the judicial proceedings may occupy a fairly long
period
and the legislature may well decide to await the final
decision in the said proceedings before it uses its
legislative power to cure the alleged infirmity in the
earlier act. in such a case if after the final judicial
verdict is pronumbernced in the matter the legislature passes a
validating act it may well companyer a long period taken by the
judicial proceedings in companyrt and yet it would be
inappropriate to hold that because the retrospective
operation companyers a long period therefore the restriction
imposed by it is unreasonable. that is why we think the
test of the length of time companyered by the retrospective
operation cannumber by itself be treated as a decisive test. take the present case. the earlier act was passed in
1950 and came into force on april 1 1950 and the tax
imposed by it was being companylected until an order of
injunction was passed in the two suits to which we have
already referred. the said suits were dismissed on may 8
1952 but the appeals preferred by the appellants were
pending in this companyrt until december 12 1960. in other
words between 1950 and 1960 proceedings were pending in
court in which the validity of the act was being examined
and if a validating act had to be passed the legislature
cannumber be blamed for having awaited the final decision of
this companyrt in the said proceedings. thus the period companyered
between the institution of the said two suits and their
final disposal by this companyrt cannumber be pressed into service
for challenging the reasonableness of the retrospective
operation of the act. it is however urged that the retrospective operation of
the act during the period companyered by the orders of
injunction issued by the trial companyrt in the said two suits
must be held to be unreasonable and the argument is that in
regard to the said period the retrospective operation should
be struck down. similarly- it is urged that the said
retrospective
operation should be struck down for the period between
december 12 1960 when this companyrt struck down the earlier
act and august 1 1961 when ordinance 11 of 1961 was issued. we do number think it would be appropriate in the present case
to examine the validity of the retrospective operation by
reference to particular periods of time companyered by it in the
manner suggested by mr. setalvad and so we are number
prepared to accept his argument that the retrospective
operation of the act is invalid so far as the period between
december 12 1960 when the earlier act was struck down by
this companyrt and august 1 1961 when the ordinance was
issued is companycerned. it would be realised that in such a
situation there would always be some time lag between the
date when a particular act is struck down as
unconstitutional and the date on which a retrospective
validating act is passed. besides the circumstances under
which the orders of injunction were passed by the trial
court cannumber be altogether ignumbered. mr. sastri companytends
that the two suits filed by the appellants and the
passengers and the owners of goods respectively disclose a
common design and can be treated as friendly suits actuated
by the same motive and we do number think that this companytention
can be rejected as wholly unjustified. apart from it when
the injunction was issued against the respondent in the
appellants suit the appellants gave an undertaking in
writing to pay the taxes partyable on the fares and freights
as provided by the law in case their suit failed. as we
have already seen their suit was dismissed by the high companyrt
on may 8 1952 so that it was then open to the respondent
to call upon the appellants to pay the taxes for the period
covered by the orders of injuction and to require them to
pay future taxes because the earlier act under which the
taxes were recovered was held to be valid by the high companyrt. it is numberdoubt suggested by mr. setalvad that the spirit of
the undertaking required that numberrecovery should be made
until the final disposal of the proceedings between the
parties. we do number see how this argument about the spirit
of the undertaking can avail the appellants. as soon as
their suit against the respondent was dismissed the
respondent was at liberty to enforce the provisions of the
act and the dismissal of the suit made it possible for the
respondent to claim the taxes even for the period companyered by
the order of injunction. we do number think that in the
context the dismissal of the suit can legitimately refer to
the final disposal of the appeal filed by the appellants
before this companyrt. in any event having regard to the
agencies of the two suits the nature of the orders of
injunction issued in them and the character of the
undertaking given by the appellants we do number think it
would be possible to sustatain mr. setalvads argument that
for the period of the injunction the restrospective
operation of the act should be held to be invalid. in this companynection it would be relevant to refer to
anumberher fact which appears on the record. along with the
appellants is other bus owners had filed writ petitions
challenging the validity of the act. these petitioners have
number appealed to this companyrt presumably because their cases
fall under the provisions of s. 23  a  of the act. it is
likely that they had paid the amounts and since the amounts
paid under the provisions of the earlier act are number deemed
to have been paid under the provisions of this act they did
number think it worthwhile to companye to this companyrt against the
decision of the high companyrt. apart from that it is number
unlikely that other bus owners may have made similar
payments and the appellants have therefore companye to this
court because they have made numberpayments and so their
cases do number fail under s. 23  a  or may be their cases
fall under s. 23  b . the position therefore is that the
retrospective operation of s. 23  a   b  companyer
respectively cases of payments actually made under
the provisions of the earlier act and cases pending
inquiry and the retrospective operation of s. 3  3  read
with s. 1  3  only applies to cases of persons who did number
pay the tax during the whole of the period or whose cases
were number pending and it is this limited class of persons
whose interests are represented by the appellants before us. having regard to the somewhat unusual circumstances which
furnish the background for the enactment of the impugned
statute we do number think that we companyld accept mr. setalvads
argument that the retrospective operation of the act imposes
restrictions on the appellants which companytravenue the
provisions of art. 19  1   f   g . in our opinion having
regard to all the relevant facts of this case the
restrictions imposed by the said retrospective operation
must be held to be reasonable and in the public interest
under art. 19  5  and  6  and also reasonable under art. 304
 b . there is only one more point to which reference must be
made. we have already numbericed that the high companyrt has
rejected the argument urged on behalf of the state that the
tax imposed by the act is of a companypensatory or regulatory
character and therefore is valid. mr. sastri wanted to
press that part of the case of the state before us. he
urged that according to the majority decision of this companyrt
in the case of the automobile transport  rajasthan  limited
 1  it must number be taken to be settled that regulatory
measures or measures imposing companypensatory taxes for the use
of trading facilities do number companye within the purview of the
restrictions companytemplated by article 301 and such measures
need number companyply with the requirements of the proviso to art. 304  b  of the companystitution.  p. 1424 . on the other hand
mr. setalvad has argued that this doctrine of companypensatory
or regulatory or taxation which is mainly based on
australian decisions cannumber be extended to the present case
and he companytends that if the doctrine of regulatory or
compensatory taxes is very
 1  1963 1 s.c.r.