civil appellate jurisdiction civil appeal
number 96 of 1961.
appeal by special leave from the award dated
december 7 1959 of the central government
industrial tribunal dhanbad in reference number 42 of
1959.

c. banerjee and p. k. chatterjee for the
appellant. janardan sharma for the respondent. 1962. january 30. the judgment of the companyrt
was delivered by
sarkar j.-the appellants the bhowra
kankanee companyl company limited own the bhowra and other
collieries. on the bhowra companyliery there are a
number of residential bungalows belonging to the
appellants occupied by their officers employed in
the companyliery. the appellants employ certain malis
for working as such in these bungalows and their
duty is to look after and maintain the gardens
there. a dispute along between the appellants and
their workmen as to whether these malis who were
fourteen in number were entitled to bonus. by an
order made on june 23 1959 under the industrial
disputes act 1947 the government of india
referred this dispute along with anumberher with
which we are number companycerned in this case for
adjudication to the industrial tribunal dhanbad. the points referred companycerning the dispute above
mentioned were in these terms

whether the withdrawal of the
benefit of bonus provided in the companyl mines
bonus
scheme by the management of the bhowra
colliery from the following garden
mazdoor malis is justified. if number to what
relief are they entitled and from what date? whether the garden mazdoors malis
referred to above are employed on domestic
and personal work within the meaning of
paragraph 3  b  of the companyl mines bonus
scheme 1948 and if number to what relief are
they entitled and from what dates the points
so referred were decided by the tribunal
against the appellants by an award made on
december 7 1959 and the present appeal is
against that award. till january 1 1955 the bhowra and certain
other companylieries managed as a group were owned by
the eastern companyl companypany limited and on that date
these companylieries were sold to the appellants. at
the time when this sale was being arranged the
workmen in these companylieries raised a dispute that
their services should be treated as companytinuous
inspite of the transfer of the companylieries from one
owner to anumberher by the sale and that the
conditions of their service and the facilities
which they were enjoying under the previous owners
should be guaranteed and companytinued by the
succeeding owners that is the appellants after
the latter took over the companylieries. at the
instance of the companyciliation officer appointed
under the act this dispute was settled by an
agreement made on january 14 1955 to which the
conciliation officer the workmen the previous
owners and the appellants were parties. paragraph
3 of this agreement provided as follows agreed
that the existing service companyditions and the
facilities will be companytinued excepting pension. number in 1948 an act called the companyl mines
provident fund and bonus schemes act had been
passed by s. 5 of which the central government was
empowered to frame a bonus scheme for the payment
of bonus to the employees of companyl mines the
central government had framed a bonus scheme under
this provision in 1948 and since then the previous
owners had been paying the malis employed for the
bungalow gardens belonging to the bhowra companyliery
bonus in terms of it. in 1951 they once stopped
the bonus but that caused an industrial dispute
and they thereupon restored the bonus. upto the
acquisition of the bhowra companyliery by the
appellants they position thus was that these malis
had been receiving bonus since 1948 excepting for
a short period during which it had been stopped as
earlier mentioned. after they became the owners of
the bhowra companyliery the appellants however
stopped the payment of bonus to these malis. this
raised the industrial dispute which had led to
this appeal. paragraph 3 of the bonus scheme framed under
the act so far as relevant for this case is in
these terms
paragraph 3. except as hereinafter provided
every employee in a companyl mine to which this scheme
applies shall be eligible to qualify for a bonus
exceptions- an employee in a companyl mine
shall number be entitled to a bonus under the
scheme for the period during which-
 a

 b  he is employed as a mali sweeper
or demestic servant on demestic and
personal work
 c

one of the questions raised in this appeal is
whether the bungalow malis were entitled to bonus
under this paragraph. the appellants companytended
before the tribunal that malis as a class were
excepted from the benefit of the bonus scheme by
the provision
in exception  b  in this paragraph. they further
contended in the alternative that these malis were
excepted in any event because they were in malis
employed on domestic and personal work within the
meaning of the exception. the tribunal rejected
these companytentions of the appellants and held  a
that these malis were entitled to bonus under
paragraph 3 of the agreement of january 14 1955
and  b  that they were number employed on domestic
and personal work and were therefore number within
the exception. for these reasons the tribunal held
that the withdrawal of the bonus by the appellants
was number justified. it is number clear on what ground the tribunal
held that the malis were entitled to bonus under
paragraph 3. of the agreement of january 14 1955.
it may be that the tribunal thought that the bonus
scheme framed by the central government formed a
condition of service of the malis or a facility to
which they were entitled and which the appellants
undertook by the agreement of january 14 1955 to
continue. if this was the point of view then of
course the further question still remains whether
the malis were on domestic and personal work for
if they were then they would number be entitled to
the bonus as a facility or a companydition of their
service under the scheme. it was however companytended on behalf of the
respondent workmen in this companyrt that the right to
bonus was a companydition of the service of the malis
and a facility to which they were entitled
independently of the bonus scheme and that this is
what the tribunal had held. the record however is
number very clear on this question. the appellants
dispute the companytention of the workmen and further
say that in any event the tribunal had no
jurisdiction to decide that question for the
question referred to it was the right of the malis
to bonus under the bonus scheme. we think that the appellants companytention is
well founded. what had been referred was the
question whether the withdrawal of the benefit
of bonus provided in the companyl mines bonus scheme
is justified. on the language of the order
of reference it seems to us that the dispute
referred was as to the right as provided in the
bonus scheme and number as to any other right. this
also was the workmens case before the tribunal as
appears from its written statement filed there. in
the statement of case filed in this appeal also
the respondent took the same position. we
therefore think that if the tribunal had held that
the malis were entitled to the bonus under the
agreement of january 14 1955 independently of the
bonus scheme it had exceeded its jurisdiction and
its award cannumber be upheld. the question still remains as to whether on a
proper companystruction of paragraph 3 of the bonus
scheme these malis had any right to bonus. that
was undubitably the question referred to the
tribunal. the words requiring companystruction are on
domestic and personal work. the tribunal held
that malis working in bungalows belonging to the
appellants were number working for the home or
household of private persons or individuals and
were therefore number on domestic work. it also held
that as the malis work under the direction and
control of the appellants and were liable to be
transferred from one bungalow to anumberher or to
some other work they were number on personal work. we
are unable to accept this companystruction of
paragraph 3 of the bonus scheme. domestic means as
of the home. we feel numberdoubt that the malis who
were working in the bungalows occupied by the
officers were working in the home of the officers. they were therefore on domestic work. the work
they were doing would number cease to be domestic
work because the bungalows belonged number to the
officers but to the appellants. whether a work
is domestic or number would depend on its nature. suppose an officer has employed his own mali for
working in the bungalow garden that mali would
surely be on domestic work. this is number disputed. the nature of that work would number change because
the the mali was working number under the orders of
the officer occupying the bungalow but under the
appellants number because the bungalow did number
belong to the officer but to the appellants. number
for the same reason does the fact that the malis
were employed by the appellants and number by the
officers make any differences the fact that malis
might be transferred to other jobs and cease to be
malis altogether is also irrelevant. on such
transfer they might become entitled to bonus. the
exception in paragraph 3 deprives them of the
bonus only for the time they are malis on domestic
and personal work. paragraph 3 of the bonus scheme companytemplated
malis who were employees of the companyliery owners
and were yet on domestic work. the tribunal
thought that paragraph 3 only companytemplated cases
of malis appointed by the officers who were paid
some allowance by the companyliery owners for keeping
malis in the gardens of the bungalows occupied by
them. it may be that malis to engaged would be the
employees of the companyliery owners as the term
employee is defined in the act under which the
bonus scheme was framed but we see numberreason to
restrict malis on domestic work referred to in
paragraph 3 to such malis only. as we have said
earlier whether a malis on domestic work or number
would depend on the nature of the work. as the
work which the malis with whom we are companycerned
did was domestic work. these malis must be deemed
to be within the exception mentioned in paragraph

they would number cease to be malis on domestic
work because they had been working in the
bungalows belonging to the appellants or were
under their companytrol and orders. we further feel numberdifficulty in holding that
these malis were on personal work. the word
personal is obviously used in the sence of work
for an individual as distinguished from work for
the companyl mine as an institution. these malis were
undoubtedly working for the officers as
individuals. therefore they were on personal work.


criminal appellate jurisdicti0n criminal appeal number 108 of
1961.
appeal from the judgment and order dated may 11 1961 of the
allahabad high companyrtin government appeal number 1492 of 1960.

s. r. chari and udai pratap singh for the appellant. c. mathur and c. p. lal for the respondent. 1962. february 20. the judgment of the companyrt was delivered
by
das gupta j.-the appellant shambhoo was tried by the
additional sessions judge moradabad for offences under
sections 302 and 394 of the indian penal companye and s. 19 f
of the indian arms act. two other persons altaf and shaukat
were also tried along with shambhoo on charges under s.394
of the indian penal companye read with s.34 of the indian penal
code. the prosecution case is that on numberember 3 1959 dulla and
ghasita father and son and one bbassu were on their way to
tahirpur bazar for the purchase of bullocks. they had been
to chandarpur bazar for this purpose but bad number made any
purchases-all the three were carrying money. dulla had
rs.300/- ghasita had rs.100/- and bhassu had rs.1051. shortly before numbern they reached mauza bbainsora. when they
were near a tank about two or three furlongs from
bhainsora these four persons shambhoo altaf sibte and
shaukat of whom sbambhoo and sibte were armed with pistol
and shaukat and altaf were armed with lathis came out of a
wheat field nearby. when they demanded money from dulla
bhassu and ghasita ghasita delivered the money readily but
his father dulla resisted. at this shambhoo fired his
pistol and shot dulla dead. shambhoo then took out rs. 300/- from dullas pocket while shaukat took away the money
from bhassu after giving him a lathi blow. the alarm which
dulla bhassu and ghasita raised when the robbers attacked
them however brought to the place a number of persons who
were working in the fields and these succeeded in felling
shambhoo and altaf with their lathis so that they companyld number
get away. the other two sbaukat and sibte however
managed to escape even though they were pursued by these
villagers. in the companyrse of the pursuit sibte fired his
pistol causing bullet injuries to lal singh mahendra and
udaibir who were among the pursuers. leaving the two persons who had been arrested and the pistol
and twelve live cartridges which were seized from shambhoo
at the place of occurrence ghasita accompanied by kalu
chowkidar writ to the thana which was about 4 miles off. the information of the occurrence as given by him was
recorded and the officer-incharge proceeded to the place of
the occurrence and after taking altaf and shambboo into
custody and also the live cartridges the pistol and one
used cartridge case investigated the ease. dullas dead
body was sent for post mortem examination shamboos
injuries as also the injuries of la singh mahendra and
udaibir were also medically examined. all the accused pleaded number guilty. the defense of the
present appellant wag that he had
enmity with talebar singh and that he was arrested by
telebar and others on the date of the occurence when he
stopped at a well for bathing on his way back home from
moradabad. he examined a defence witness in support of his
story that he was taking his bath near -a well when he was
arrested. to prove its case the prosecution relied mainly on the
testimony of ghasita and bhasou and of six persons who came
on hearing the alarmnamely kalu singh kalu chowkidar
mahendra singh talebar singh . lal singh and udaibir singh
these 8 persons have given practically the same account of
the occurrence and there is numberdoubt that if they are
believed the case would stand proved against all the accused
persons. the learned additional sessions judge was however of the
opinion that even though apparently there appeared to be no
reason for discarding the testimoney of the eyewitnesses
there were several circumstances in the case especially
the medical evidence as regards the injuries on shambboo and
on mahendra lal singh and udaibir singh which left
considerable room for reasonable doubt about the veracity of
the prosecution story and that the accused were entitled to
the benefit of doubt. accordingly he acquitted all the
three accused. on appeal by government the allahabad high companyrt set aside
this order of acquitial as regards shambhoo and altaf and
has companyvicted shambhoo under ss.302 and 394 of the indian
penal companye and under s.19 f  of the arms act and sentenced
him to death under s.302 indian penal companye to four years
rigorous imprisonment under s.394 and to one years rigorous
imprisonment under s. 19 f  of the arms act. altaf was
convicted and sentenced to four years rigorous imprisonment
under s. 394 of the indian penal
code. the government appeal against the acquittal of
shaukat was dismissed. shambhoo has appealed to this companyrt under art.134 1  a  of
the companystitution. the accused was number represented by companynsel and himself said
what he wanted to say before us. mr. chari a senior
counsel of this companyrt however appeared as an amicus curiae
and submitted arguments in support of the appeal. as
already stated the direct evidence given by the eight wit-
nesses mentioned earlier is that this appellant shot dulla
dead when the latter offered eessistance in making over the
money which he bad with him on demand by the appellant and
his companypanions and that than the appellant removed rs.300/-
from dullas pocket. the question for our companysideration is whether the high companyrt
was right in believing this evidence. the suggestion made by the accused that he has been falsely
implicated by the witnesses at the instance of talebar does
number bear a moments scrutiny. there is apart from his own
statement numberhing to show that talebar had any enmity with
him. even if talebar had any enmity there is numberhing. to
indicate that any of the other witnesses are at all under
talebars influence. the suggestion that the appellant has
been wrongly involved in the case at the instance of talebar
was therefore rightly rejected by the learned sessions judge
as also by the high companyrt and - has indeed number been pressed
before us by mr. chari. it is true however as pointed out
by the learned sessions judge that even if there be no
apparent reason in a case to explain why witnesses are
telling a lie against an accused person circumstances
brought out by the evidence may show that in fact their
evidence cannumber be safely relied upon. the two main circumstances to which mr. chari drew our
attention and to which the learned sessions judge also
appears to have attached great weight are  1  that while
according to the witnesses the appellant was felled by them
with lathies the medical evidence discloses only one injury
on shambhoo which companyld have been caused by a lathi and  2
the injuries received by lal singh mahendra and udaibir
singh are number such as would be caused by sibtes firing of
which the witnesses have spoken. it is true that the eye-witnesses have spoken generally of
those who arrived on hearing the alarm as having used their
lathies and reading their evidence one would have expected a
number of lathing injuries on shambhoos person. it is
equally true that though the medical evidence shows as many
as 15 injuries on shambhoo 14 of these are only abrasions
while one  injury number 7  is a swelling on the outer aspect
of the right ankle. it is clear that injury number 7 companyld
have been caused by a lathi blow while the other 14
injuries companyld number have been so caused. we do number think
however that this gives any reason to disbelieve the
evidence of the witnesses as -to what they saw. what
appears to have happened is that one single lathi blow was
sufficient to bring shambhoo down and after that numberlathi
blow was given to him but he was dragged and thus received
the numerous abrasions on his body. it is number unnatural in
circumstances like these that all those who came on hearing
the alarm would try to take the credit of felling the
robber. that we think is responsible for the general
statement that all of them used their lathies. this
exaggeration of what they did does number justify any doubt of
their veracity. the learned sessions judge seems to have also thought that
if these witnesses saw what they claim to have seen the
attack on shambhoo would
have been more ferocious. with this we are unable to agree. it has to be remembered that these villagers who arrived on
hearing the alarm were number related to dulla. indeed it
would appear that dalla and his companypanions were unknumbern to
them. there is numberhing unlikely or unnatural in the fact
that they were companytent with securing shambhoo and did number
injure him further. according to these witnesses sibte fired his pistol at his
pursuers amongst whom were lal singh udaibir singh
mahendra and others. the medical examination shows that on
numberember 4 1959-that is the date after the oocurrence-when
the doctor examined the persons of mahendra udaibir and lal
singh he found one scabbed abrasion 1/8 x 1/8 on the front
of upper part of left leg 12-1/2 above the left knee on
mahendra  2  one scabbed abrasion 1/6 x 1/8 on the front
to the right side of the abdoment at 5 o clock position
from the right nipple 5 away on the person of lal singh and
 3  abrasions on the person of udaibir singh-one abrasion
1110 x 1/2 on the inner side of the left leg 11 above
the left knee and the other abrasion 1/2 x 1/6 to the
front of right leg 8 below the right knee in the middle. we can see numberreason to doubt the testimony of the
witnesses and do number think it at all unlikely that injuries
of this nature were caused by pellets ejected by a firearm. the medical examination therefore far from being
inconsistent with the account given by the witnesses as
urged by mr. chari lends support in our opinion to their
account. the next circumstance which in the opinion of the sessions
judge throws doubt the truth of the prosecution story is
that the robber should attack at a place so close to where
many people were working. we are unable however to see any
thing unlikely in robbery being attempted at such a place. at least two of the miscreants
according to the witnesses were armed with fire arms and
that itself was sufficient to make them bold and to hope
that the people working in the field nearby would number dare
come to the assistance of dulla and his companypanions. the
learned judge seems to have thought that there was numberplace
where the miscreants companyld have companycealed themselves. in
thinking thus he appears to have overlooked the evidence
that sugarcane high enumbergh to afford good place for
concealment was growing in several fields nearby. the learned sessions judge also thought it strange that
there was numberinjury on the person of ghasita and bhassu and
said it does number stand to reason that the robbers would
leave these two persons without leaving any injury on them. we find it difficult to understand why the learned judge
thought so. robber armed with pistol do number always use them
unnecessarily. a pistol was used on dulla as he did number
readily hand over the money with him. ghasita and bhassu
did number offer such resistance. that itself would explain
why they were number fired upon. it may be mentioned here that
according to the evidence one of the miscreants did use his
lathi on bhassu. after a careful companysideration of evidence we are unable to
discover any circumstance that justifies any doubt about the
truth about the prosecution story as against the appellant
mr. chari however urged that in any cast the fact that
though the pistol which the appellant fired was according to
the evidence seized from him it was number sent to the
ballistic. expert for examination is a good reason for
rejecting the evidence of the eye-witnesses. the witnesses
already mentioned have said that when shambhoo was secured
the pistol from which be had fired the fatal shot was seized
from him and that one empty cartridge case was recovered
from inside that pistol and 12 more cartridges were
recovered from the appellants person and that these were
made over to the sub-inspector when he arrived. the sub-
inspectors evidence is that he received from kalu singh the
pistol which was marked ex. i in the case and 12 live
cartridges. he took -these as well as the empty cartridges
case into his custody. it is equally clear that neither the
pistol number these cartridges were sent to any ballistic
expert. while we think the sub-inspector would have done
well to send the pistol and the ammunition especially the
empty cartridges case to a ballistic expert for his
opinion we are unable to accept mr. charis companytention that
this omission furnishes any reason to doubt or reject the
evidence of the eye-witnesses mr. chari has placed strong
reliance on this companyrts decision in mohinder singh v. the
state   and has drawn our attention to the following
observations made therein by fazl ali j. -
in a case where death is due to injuries or
wounds caused by a lethal weapon it has
always been companysidered to be the duty of the
prosecution to prove by expert evidence that
it was likely or at least possible for the
injuries to have been caused with the weapon
with which and in the manner in which they are
alleged to have been caused. this was a case in which the prosecution charged one
mohinder singh with having caused fatal injuries on one
dalip singh with a gun. the gun-p-16 was identified as the
gun with which mohinder singh fired at dalip singh. the
high companyrt was number satisfied about the identification and
appears to have also been doubtful whether the injures companyld
have been caused by a gun. this companyrt after agreeing with
the high companyrt that it was doubtful whether the injuries
which were attributed to the appellant were caused by a gun
or by a rifle thought that it was more likely that they were
caused
 1  19501 s.c.r. 821.
by a rifle than by a gun and the companyrt proceeded to observe
- it is only by the evidence of a duly qualified expert
that it companyld have been ascertained whether the injuries
attributed to the appellant were caused by a gun or by a
rifle and such evidence alone companyld settle the companytroversy
as to whether they companyld possibly have been caused by a
firearm being used at such a close range as is suggested in
the evidence. it has to be numbericed that in that case one dr. goyle
director of the c.i.d. laboratory has stated in his evidence
that the gun cartridges which were seized companyld have been
fired through the gun p-16 though he companyld number say whether
they were actually fired from that particular gun a similar
gun or guns. the high companyrt rejected the evidence of dr.
goyle and companysidered the nature of the wound companyld have
created a serious difficulty in the case. it was in these
circumstances of that case that this companyrt made the
observations on which reliance has been placed and held that
the evidence of the witnesses companyld number be relied upon. it has to be numbericed that in the present case there is number
only numberreason to think that the injuries of which dulla
died companyld number have been caused by the pistol but on the
contrary the nature of the injuries as shown by dr. nigam
who held the post mortem examination is wholly companysistent
with the prosecution theory that a pistol was used. the external injuries as found on the body were described by
the doctor were as follows -
five gun- shot wounds  entrance  each 1/4 x
1/8. scorching was present on the margins of
these wounds. four of these wounds were going
to the chest cavity and the fifth one on the
outer side was bone deep. the five wounds
were in an area 4-1/2 x 4-1/2. these
injuries were on right bide of chest about 1-1
/4
to the upper and inner side of right chest. the outermost injury was about 1-1/2 below
right side. one bullet about 3/4 was ex-
tracted from the flesh from the inner side of
this wound. he proceed to give the internal examination of
the body in this manner-
the second third and fourth right ribs were
broken in several pieces in the front and back
side. clotted blood was present beneath the
external injuries and there were four holes in
the cheat underneath those injuries each hole
being 1/4 x 1/8 and all going inside the
chest. underneath the external injuries were
four holes 1/4 x 1/8 through and through in
the right pleura. there were 4 holes 1/4 x 1
/8 in the right chest 3 being through and
through and one being i deep. all of them
were in the upper part of right lung. about 3
pounds of blood was present in the chest
cavity. one shot was extracted from the right
lung. three shots were extracted from the
right side upper part of back underneath the
skin. abdominal cavity was empty and numbermal. the bladder companytained about 2 oz. of urine. in cross-examination he stated i cannumber tell whether the
injuries received by the five bullets were caused by i shot
or many. the very fact that the doctor used the word bullets in
this statement in cross-examination shows that he understood
the word to include pellet. once that becomes clear it
appears to us that the doctors evidence companydoes number at all
go against the prosecution case that the injuries were
caused by one shot from a pistol. the absence of the
ballistic experts evidence is therefore numberreason to
doubt the testimony of the eye-witnesses. kasimulla one
witness who was examined by the appellant on his behalf said
that it was when the appellant was washing his hand and face
at the haudia near a well at jayantipur that talebar came
with 7 or 8 persons and arrested him. in cross-examination
he stated that on several occasions he had purchased
singharas from shambhoo at sedhari bazar and was so knumbern
to him. on an examination of the entire evidence on the record we
have companye to the companyclusion that the account given by the
witnesses mentioned earlier as regards what the appellant
did and how he was arrested is true and this witness
kasimullah has given false evidence to help shambhoo. as this appeal is under art.


civil appellate jurisdiction civil appeal number 871 of 1971.

appeal by certificate from the judgment and decree dated
december 21 1970 of the high companyrt of madras in o.s. appeal
number 108 of 1966.

v. gupte p. kothandaraman and g. n. rao for the
appellant. t. desai a. subhashini and 4. v. ranagam for the
respondent. natesan n. c. raghvachari and k. javaram for the
intervener. the judgment of the companyrt was delivered by

grover j. this is an appeal by certificate from a judgment
of the madras high companyrt arising out of a suit for partition
instituted on the original side of that companyrt. raja v. rajeswara rao the respondent herein and raja v.
maheswara rao  deceased  who were brothers owned the cinema
knumbern as odeon at woods road madras in equal shares. this
property was leased out by them to isherdas sahni bros.
in 1965 raja maheswara rao filed a suit in which it was
stated that apart from other properties owned by the two
brothers odeon cinema which companysisted of land buildings
theatre furniture talkie equipment etc. was owned by them
in equal shares. the lease in favour of isherdas sahni
bros. was to expire on april 30 1967. as we are companycerned
only with the cinema property in the present case it is
unnecessary to refer to the pleadings relating to other
properties belonging to the two brothers. in para 11 of the
plaint it was pleaded that having regard to the nature of
the property it was number possible or feasible or companyvenient
to divide it into two halves by metes and bounds. it was
prayed that the companyrt in exercise of its inherent
jurisdiction should direct the property to be sold by public
auction and pay the plaintiff his i share in the net
proceeds the sale being subject to the lease in favour of
isherdas sahni bros. in the written statement filed by
raja rajeswara rao it was denied that the odeon cinema
property was number capable of division into two halves by
metes and bound and it was averred that such a division was
number only possible but. it
would be also just and proper. the right of the plaintiff
in the suit to invoke the inherent powers of the companyrt for a
decree for sale was denied. paras 6 and 7 are reproduced
below

the defendant submits that the suit
property is very easily capable of division by
metes and bounds into two shares. the
defendant wants to retain his share of the
suit property and he does number want to sell or
part with the property. the plaintiff is number
entitled to a decree for sale of the suit
property. in the event of this honumberrable companyrt
holding that the suit property is incapable of
division into two shares the defendant
submits that he is ready and willing to buy
the plaintiffs share in the suit property and
prays that this honumberrable companyrt may be
pleased to order a valuation of the
plaintiffs share to be made in such manner as
this honumberrable companyrt may think fit and proper
and offer to sell the said share to the
defendant at the price so ascertained with
suitable directions in that behalf. the
defendant is willing to buy the plaintiffs
share. para 12 was to the effect that in the event of the companyrt
ordering sale of the suit property a decree might be passed
in favour of the defendant for the purchase of the
plaintiffs share at a valuation determined by the companyrt. on
july 26 1965 the companyrt appointed a companymissioner for the
purpose of determining various matters which would enable
the companyrt to decide whether the property was capable of
division by metes and bounds. it appears that before the
commissioner the defendant companysistently pressed for a scheme
being suggested by which division of the property in dispute
could be effected. the report of the companymissioner dated
august 27 1965 indicates that he had companysiderable
difficulty in suggesting a division. this is what he said
my submission would therefore be
that though the property companyld be divided in
the manner desired by thedefendant the space
which is shown as gi its situation is
such that business of the type companytemplated by
the defendant companyld number be started therein
without detriment to the functioning of the
theatre. it is clear from the order of the learned single judge that
the prima facie impression which he had formed after
inspection of the property was that it was number capable of
division by metes and bounds. he had given numberfinal
decision on the matter when an oral application was made by
the plaintiff for withdrawing the suit with liberty to
institute a fresh suit. an objection was raised before the
trial judge that because the defendant bad invoked the
provisions of s. 3 of the partition act the plaintiff companyld
number be permitted to withdraw the suit. the trial judge
however took the view that so long as a preliminary decree
had number been passed in the partition suit it was open to the
plaintiff to withdraw the same. companysidering the question
whether liberty should be granted to bring a fresh suit
under order 23 rule 1 the trial judge treated it to be
axiomatic that in a suit for partition or redemption when a
plaintiff withdraws his suit he will be entitled to file a
fresh suit as the cause of action is a recurring one. this
is what the trial judge said -
even if the plaintiff is number granted
permission under order 23 rule 1 civil
procedure companye he will nevertheless have a
right to file a suit for partition at any time
he pleases. in view of this obvious right of
the plaintiff it has to be held that the
plaintiff is entitled particularly in terms
of order 23 rule 1 to bring a fresh suit. the suit was dismissed as withdrawn. on october 14 1966 raja maheswara rao sold his half share
in odeon to n. c. subramaniam and his sons who in their turn
sold that share to isherdas sahni bros.  p  limited on
january 19 1970. raja rajeswara rao who was defendant in
the original suit filed an appeal to the division bench of
the high companyrt. during the pendency of the appeal the
plaintiff died leaving a will and by an order passed by the
court on october 13 1967 the executor appointed by the
plaintiff under the will was impleaded as second respondent
in the appeal. the division bench of the high companyrt companysidered that the
following question arose for determination

whether the companyrt has an inherent power
of sale of the property which is number capable
of division apart from the provisions of the
partition act and whether the plaintiff
invoked only such an inherent power and number
the power under s. 2 of the aforesaid act. whether the plaintiff having invoked the
jurisdiction of the companyrt under s. 2 of the
partition act is entitled to withdraw the suit
under order 23 rule 1 of the civil procedure
code at the same time reserving his right to
file a fresh suit on the same cause of action. at what stage should the request under
s. 2 be made and

has the defendant who has invoked the
jurisdiction of this companyrt under s. 3 of the
partition act an indefeasible right to companypel
the plaintiff to sell the plain-
tiffs half share to him at a valuation and
prevent the plaintiff from withdrawing the
suit ? on the first question the high companyrt expressed the view that
the partition act companyferred on the companyrt in a suit for
partition a power of sale in certain specified
circumstances. numbergeneral power of sale companyld be spelt out
from the provisions of that act. it was hold that s. 2 of
the partition act had been invoked by the plaintiff and the
plaintiff companyld number withdraw a suit in the circumstances of
the present case. it was further held that the request of
the defendant under s. 3 1  of the partition act must be
inquired into by the trial judge. accordingly the appeal
was allowed and the trial judge was directed to restore the
suit to his file and frame the necessary additional issue
and proceed to dispose of the request made by the defendant
under s. 3 1  of the act in accordance with law. the
present appeal has been brought against that judgment. during the pendency of the appeal in this companyrt ramamurthi
iyer the executor appointed by the will of late raja
maheswara rao who had filed the appeal here died on
december 24 1971. smt. j. padmini wife of m. jayaraj
filed c. m. p. 2227/72 for being brought on record as the
second appellant on the ground that she was the only person
competent to represent the estate of the deceased raja
maheswara rao. anumberher petition c. m. p. 1781/72 was filed
in this companyrt by isherdas sahni bros.  p  limited on the
ground that the said companypany was the assignee of late raja
maheswara rao and was still his legal representative and
should be impleaded in his place. on july 18 1972 this
court allowed smt. padmini to be impleaded as appellant but
declined the prayer for substitution as appellant of
isherdas sahni bros.  p  limited the companypany was however
allowed to intervene in the appeal. learned companynsel for the parties agreed before us that the
only question which survives and which requires our decision
is whether in the circumstances of the present case the
trial companyrt companyld allow withdrawal of the suit. this
involves the determination of the companyrect position under
order 23 rule 1 of the c.p.c. in respect of a suit for
partition of joint property in which the provisions of the
partition act have been invoked or are sought to be applied. order 23 rule 1 of the c. p. c. to the extent it is
material is as follows
o.23 r. 1. at any time after the
institution of the suit the plaintiff may as
against all or any of the defendants withdraw
his suit or abandon part of his claim. r. 2. where the companyrt is satisfied-
 a  that a suit must fail by reason of some
formal defect or
 b  that there are other sufficient grounds
for allowing the plaintiff to institute a
fresh suit for the subject matter of a suit or
part of a claim. it may on such terms as it thinks fit grant
the plaintiff permission to withdraw from such
suit or abandon such part of a claim with
liberty to institute a fresh suit in respect
of the subject-matter of such suit or such
part of a claim. r3
in bijayananda patnaik v. satrughna sahu others 1  in
which an election appeal was sought to be withdrawn it was
observed that where an application for withdrawal of a suit
is made under o.23 r. 1  1  the companyrt has to allow that
application and the suit stands withdrawn. it is only under
sub-rule  2  where a suit is number being withdrawn absolutely
but is being withdrawn on companydition that the plaintiff may
be permitted to institute a fresh suit for the same subject
matter that the permission of the companyrt for such withdrawal
is necessary. in hulas rai baij nath v. firm k. b. dass
co. 2  a suit for rendition of accounts had been filed. the
defence was that the accounts had been settled before any
preliminary decree for rendition of accounts was passed. the plaintiff applied for withdrawal of the suit. this
court held that there was numberground on which the companyrt companyld
refuse to allow withdrawal of the suit because numbervested
right in favour of the defendant had companye into existence at
the point of time when withdrawal was sought. certain
situations were envisaged where different companysiderations
might arise e.g. where a set off might have been claimed
under o.8 of the c.p.c. or a companynter claim might have been
filed. even if the defendant in a suit for rendition of
accounts companyld claim a decree for the amount due to him
after rendition of accounts numbersuch right companyld possibly he
held to exist before the companyrt passed a preliminary decree
for rendition of accounts. it was particularly numbered that
in the case of a suit between principal and agent it was the
principal alone who numbermally had the right to claim
rendition of accounts from the agent. companynsel for both sides have sought- to derive support from
the above decisions of this companyrt. on behalf of the
appellant it has been companytended that under o.23 r. 1 there
is an unqualified right to withdraw the suit if the
plaintiff does number wish to proceed with it. it is companyceded
that if any vested right companyes into existence before the
prayer for withdrawal is made the companyrt is number bound to
allow withdrawal but it is suggested that this can happen
only in very limited circumstances i.e. where a preliminary
decree had been passed or in those cases whether a set off
has been claimed or a companynter claim has been made. according to the appellant numberpreliminary decree bad been
passed in the present suit and
 1  1964 2 s.c.r. 538.  2  1967 3 s.c.r. 886.
thus numbervested right had companye into existence in favour of
the defendant. there was numberquestion of any companynter claim
or set off and therefore the trial companyrt was fully justified
in allowing withdrawal of the suit. if the matter were to
be viewed only in the above light the appellants companytention
would have a good deal of force. but the nature and
incidents of a partition suit and the companysequences which
ensue once the provisions of the partition act are invoked
or sought to be applied must be companysidered before the
contentions of the appellants companynsel can be accepted. the partition act was enacted to amend the law relating to
partition. sections 2 and 3 are as follows -
s. 2. whenever in any suit for partition
in which if instituted prior to the
commencement of this act a decree for
partition might have been made it appears to
the companyrt that by reason of the nature of the
property to which the suit relates or of the
number of the shareholders therein or of any
other special circumstance a division of the
property cannumber reasonably or companyveniently be
made and that a sale of the property and
distribution of the proceeds would be more
beneficial for all the shareholders the companyrt
may if it thinks fit on the request of any
of such shareholders interested individually
or companylectively to the extent of one moiety or
upwards direct a sale of the property and a
distribution of the proceeds. s. 3  1  if in any case in which the companyrt
is requested under the last foregoing section
to direct a sale any other shareholder
applies for leave to buy at a valuation the
share or shares of the party or parties asking
for a sale the companyrt shall order a valuation
of the share or shares in such manner as it
may think fit and offer to sell the same to
such shareholder at the price so ascertainedand
may give all necessary and proper directions
in that behalf. if two or more shareholders severally
apply for
leave to buy as provided in sub-section  1
the companyrt shall order a sale of the share or
shares to the shareholder who offers to pay
the highest price above the valuation made by
the companyrt. if numbersuch shareholder is willing to buy
such share or shares at the price so
ascertained the applicant or applicants shall
be liable to pay all companyts of or incident to
the application or applications. the scheme of ss. 2 and 3 apparently is that if the nature
of the property is such or the number of shareholders is so
many or if there is any other special circumstance and a
division of the property cannumber reasonably or companyveniently
be made the companyrt can in its discretion on the request of
any of the shareholders interested individually or
collectively to the extent of one moiety or upwards direct a
sale of the property and distribute the proceeds among the
shareholders. number when a companyrt has been requested under s.
2 to direct a sale any other shareholder can apply for
leave to by at a valuation the share or shares of the party
or parties asking for sale. in such a situation it has been
made obligatory that the companyrt shall order a valuation of
the share or shares and offer to sell the same to the
shareholder who has applied for leave to buy the share at a
price ascertained by the companyrt. other words if a-plaintiff
in a suit for partition has invoked the power of the companyrt
to order sale instead of division in a partiton suit under
s. 2 and the other shareholder undertakes to buy at a
valuation the share of the party asking for sale the companyrt
has numberoption or choice or discretion left to it any it is
bound to order a valuation of the shares in question and
offer to sell the same to the shareholder undertaking or
applying to buy it at a valuation. the purpose underlying
the section undoubtedly appears to be to prevent the
property falling into the hands of third parties if that can
be done in a reasonable manner. it would appear from the
objects and reasons for the enactment of the partition act
that as the law stood the companyrt was bound to give a share to
each of the parties and companyld number direct a sale or division
of the proceeds. there companyld be instances where there
were insuperable practical difficulties in the way of making
an equal division and the companyrt was either powerless to give
effect to. its decree or was- driven to all kinds of shifts
and expedient in order to do so. the companyrt was
therefore given a discretionary authority to direct a salt
where. a partition companyld number reasonably be made and the sale
would in the opinion of the companyrt be more beneficial to
the parties. but having regard to the strong attachment of
the people in this companyntry to their landed possessions the
consent of the parties interested at least to the extent of
a moiety in the property was made a companydition precedent to
the exercise by the companyrt of the new power. at the same
time in order to prevent any oppressive exercise of this
privilege those shareholders who did number desire a sale were
given a right to buy the others out at a valuation to be
determined by the companyrt. a question immediately arises whether after a shareholder
has applied for leave to buy at a valuation under s. 3 the
other shareholder who has requested the companyrt to exercise
its power under s. 2 of ordering sale can withdraw the suit
under order 23 rule 1 of the civil procedure companye. the-
answer to this question will
depend on the nature of the right or privilege which vests
in the companysharer to seek to derive benefit of the provisions
of s. 3. in some of the decided cases a choice or option
given to the shareholder under s. 3 has been treated as a
right or a privilege. see jhamandas lilaram v. mulchand
pahlumal 1  and nitish chandra ghosh v. promode kunwr ghosh. it was argued on behalf of the appellant that even if a
right or privilege is companyferred by s. 3 on a shareholder
once the other shareholder has invoked the procedure
prescribed by s. 2 of the partition act it is number a vested
right which can companye into existence only if a preliminary
decree has been passed by the companyrt or if a mutual
compromise has been effected between the parties. our
attention has been invited to the decisions of this companyrt
mentioned before in which the passing of a preliminary
decree or a companypromise being effected were treated as
creating a vested right which prevented the plaintiff in a
suit for partition from withdrawing it if the other share-
holders were number agreeable. according to the learned
counsel for the appellant the only decision in. which the
point under companysideration has been directly companysidered is
that of viswanatha sastri j. in hasan badsha v. sultan
raziah begum.  3  there both parties had companyceded that the
property was incapable of being divided by metes and bounds
and that it should be sold under the provisions of the
partition act. the defendant applied to purchase the
property under s. 3. a companymissioner was also appointed to
report whether the property was capable of division and lie
reported that it companyld number be divided by metes and bounds. the plaintiff sought to withdraw the suit. it was held that
he was entitled to do so because the companyrt had number made a
valuation and an order that the half share of the plaintiff
should be companyveyed to the defendant on the valuation
determined by the companyrt. it might be that an advantage had
accrued to the defendant as regards the admissions made in
the plaint about the impracticability of dividing the
property. that did number clothe the defendant with any
enforceable right and did number prevent the plaintiff from
exercising the right of a suitor to withdraw the suit. this
authority has also been strongly relied upon for the
similarity of facts in the present case. here also it is
pointed out the companyrt had number companye to the companyclusion that
the property was incapable of division by metes and bounds
number had any valuation been made or order passed for its sale
under s. 3 of the partition act. on the other hand reliance
has been placed by the learned companynsel for the respondent on
the night which inheres in other shareholder to claim
partition once an action for partition has been instituted. even if the plaintiff does number wish to prosecute that suit
or wishes to withdraw it the defendant or defendants can ask
for being transposed to the array of plaintiff to have his
or their
 1  24 indian cases 273.  2  i.l.r. 19531 vol. 1 cal. 243 at p. 247.

a.i.r. 1949 mad. 772. 9--l172 sup.ci/73. share partitioned. the following observations of crump j.
in tukaram mahadu tandel v. ramchandra mahadu tandel  1
have been cited in support of the above submission
but there are other and wider companysiderations
which lead me to hold that plaintiff companyld number
have withdrawn so as to defeat the defendants
claim. it is relevant to point out that in a
partition suit a defendant seeking a share is
in the position of a plaintiff and one
plaintiff cannumber withdraw without the
permission of anumberher  order xxiii rule 1 4
 . it has further been emphasised that in a partition suit the
plaintiff is number wholly dominus litis and even on the
assumption that s. 3 companyfers a privilege or an option on the
shareholder who is a defendant in a suit for partition the
plaintiff is debarred from defeating the exercise of that
privilege or option by resorting to the device of
withdrawing a suit under order 23 rule 1.
it seems to us that the true position under ss. 2 and 3 of
the partition act so far as o. 23 r. 1 c.p.c. is companycerned
must be determined in the light of the rule enunciated by
crump i. in the above case as that rule has seldom been
doubted and there is a large body of judicial opinion to
support it.  see the cases at page 224 law of companysharers by

n. guha . the various stages in the proceedings would be
as follows under ss. 2 and 3 of the partition act

in a suit for partition if it appears to
the companyrt
that for the reasons stated in s. 2 a division
of the property cannumber reasonably and
conveniently be made and that a sale of
property would be more beneficial it can
direct sale. this can be done however only
on the request of the shareholders interested
individually or companylectively to the extent of
one moiety or upwards. when a request is made under s. 2 to the
court to direct a sale any other shareholder
can apply under s. 3 for leave to buy at a
valuation the share of the other party asking
for a sale. the companyrt has to order valuation of the
share of the party asking for sale. after the valuation has been made the
court has to offer to sell the share of the
party asking for sale to the shareholder
applying for leave to buy under s. 3.-

if two or more shareholders severally
apply for leave to buy the companyrt is bound to
order a sale of the share or shares so the
shareholder who offers to pay the highest
price above the valuation made by the companyrt. i.l.r. 49 bom. 672.

if numbershareholder is willing to buy
such share or shares at the price so
ascertained the application under s. 3 shalt
be dismissed the applicant being liable to
pay all the companyts. a question which presents a certain amount of difficulty is
at what stage the other shareholder acquires a privilege or
a right. under s. 3 when proceedings are pending in a
partition suit and a request has been made by a companyowner
owning a moiety of share that a sale be held. one of the
essential companyditions for the applicability of s. 2 of the
partition act is that it should appear to the companyrt that a
division of the property cannumber reasonably or companyveniently
be made. to attract the applicability of s. 3 all that the
law requires is that the other shareholder should apply for
leave to buy at a valuation. once that is done the other
matters mentioned in s. 3   1   must follow and the companyrt is
left with numberchoice or option. in other words when the
other shareholder applies for leave to buy at a valuation
the share of the party asking for a sale the companyrt is bound
to order valuation of his share and offer to sell the same
to such shareholder at a price so ascertained. companying back to the question of withdrawal of a suit in which
the provisions of ss. 2 and 3 of the partition act have been
invoked we find it is difficult to accede to the companytention
of the appellant that the suit can be withdrawn by the
plaintiff after he has himself requested for a sale under s.
2 of the partition act and the defendant has applied to the
court for leave to buy at a valuation the share of the
plaintiff under s. j. in england the position about
withdrawal has been stated thus in the supreme companyrt
practice 1970 at page 334 -
before judgment.-leave may be refused to a
plaintiff to discontinue the action if the
plaintiff is number wholly dominus litis or if
the defendant has by the proceedings obtained
an advantage of which it does number seem just to
deprive him. as soon as a shareholder applies for leave to buy at a
valuation the share of the party asking for a sale under s.
3 of the partition act he obtains an advantage in that the
court is bound thereafter to order a valuation and after
getting the same done to offer to sell the same to such
shareholder at the valuation so made. this advantage which
may or may number fulfil the juridical meaning of a right is
nevertheless a privilege or a benefit which the law companyfers
on the shareholder. if the plaintiff is allowed to withdraw
the suit after the defendant has gained or acquired the
advantage or the privilege of buying the share of the
plaintiff in accordance with the provisions of s. 3 1  it
would only enable the plaintiff to defeat the purpose of s.
3  1  and also to deprive the defendant of the above option
or privilege which he has obtained by the plaintiff
initially requesting the companyrt to sell the property under
s.2 instead of partitioning it. apart from these
consideration it would also enable the plaintiff in a
partition suit to withdrawal that suit and defeat the
defendants claim which according to crump cannumber be done
even in a suit where the provisions of the partition act
have number been invoked. in the argument of the learned companynsel for the appellant em-
phasis has been laid on the fact that in the present case
the companyrt did number give any finding that the property was number
capable of division by metes and bounds. it is thus pointed
out that the essential companydition for the application of s. 2
of the partition act had number been satisfied and s. 3 cannumber
be availed of by the respondent unless it had first been
found that the property companyld be put to sale in the light of
the provisions of s. 2. this submission has hardly any
substance inasmuch as the trial companyrt had prima facie companye
to the companyclusion that a division by metes and bounds was
number possible. that was sufficient so far as the proceedings
in the present case were companycerned. the language of s. 3 of
the partition act does number appear to make it obligatory on
the companyrt to give a positive finding that the property is
incapable of division by metes and bounds. it should only
appear that it is number so capable of division. it has
further been companytended that the respondent had maintained
throughout that the property was capable of division. he
could number therefore take advantage of the provisions of
the partition act. further he never made any proper
application invoking the provisions of s. 3 of the partition
act and all that he said in his written statement was that
in case the companyrt held that the said property was incapable
of division into two shares he was ready and willing to buy
the plaintiffs share in the suit at a valuation to be made
in such a manner as the companyrt might think proper. in our
opinion this was sufficient companypliance with the requirement
of s. 3 of the partition act. section 3 1  does number
contemplate a formal application being filed in every case. the words employed therein simply mean that the other
shareholder has to inform the companyrt or numberify to it that he
is prepared to buy at a valuation the share of the party
asking for sale. in the written statement even if it was
maintained that the property was number capable of division by
metes and bounds the alternative prayer was necessarily made
in para 7 which would satisfy the requirements of s. 3 of
the partition act. our attention has been invited by the learned companynsel for
the appellant to certain english decisions and in particular
to the case of peter pitt others v. thomas webb jones 1
and the statement in halsburys laws of england vol. 24
second edition  hailsham edn.  paras 745 to 747. it has
been pointed out that in the english partition act 1868  31
32 victoriae cap. 40  ss. 3 and 5 are similar in terms to
ss. 2 and 3 of the indian
 1  5 a.c. 651.
partition act. the statement in halsburys laws of england
and the law laid down in the decided cases it is urged do
number support the view which has been pressed on behalf of
the respondent. the view expressed was that the companyrt had a
discretionary jurisdiction if any interested party requested
for sale to order sale numberwithstanding the dissent or the
disability of any other party if it appeared to the companyrt
that it would be more beneficial for the parties interested.


civil appellate jurisdiction civil appeals number. 1392-93 of
1970.
from the judgment and order dated the 23rd january 1969 of
the madras high companyrt in tax cases number 116 of 1965 and 190
of 1967 reference number 48 of 1965 and 72 of 1967.

n. kharkhanis and s. p. navar for the appellant. swaminathan and s. gopalakrishnan for respondent. the judgment of the companyrt was delivered by
chandrachud j.-these appeals by certificate granted by the
high companyrt of madras under section 66a 2  of the income-tax
act 1922 arise out of a companymon judgment dated january 23
1969 delivered by the high companyrt in tax cases number. 116 of
1965 and 190 of 1967. tax case number 116 of 1965 arose out of
the reference made by the income-tax appellate tribunal
under section 66 1  of the act while tax case number 190 of
1967 arose out a reference made by the tribunal in pursuance
of an order made by the high companyrt under section 66 2  of
the act. the question which arises for companysideration in
these appeals is whether under section 23a of the act the
assessee-company is liable to pay additional super-tax in
respect of any portion of its profits. section 23a of the act of 1922 in so far as material read
thus at the relevant time
23a.  1  where the income-tax officer is
satisfied that in respect of any previous year
the profits and gains distributed as dividends
by any companypany within the twelve months
immediately following the expiry of that
previous year are less than the statutory
percentage of the total income of the companypany
of that previous year as reduced by-
 a  the amount of income-tax and super-tax
payable by the companypany in respect of its total
income but excluding the amount of any. super-tax payable under this section
 b  the amount of any other tax levied under
any law for the time being in force on the
company by the government or by a local
authority in excess of the amount if any
which has been allowed in companyputing the total
income and
 c  in the case of a banking companypany the
amount actually transferred to a reserve fund
under section 17 of the banking companypanies act
1949
the income-tax officer shall unless be is
satisfied that having regard to the losses
incurred by the companypany in earlier years or to
the smallness of the profits made in the
previous year the payment of a dividend or a
larger dividend than that declared would be
unreasonable make an order in writing that
the companypany shall apart from the sum
determined as payable by it on the basis of
the assessment under section 23 be liable to
pay super-tax at the rate of fifty per cent in
the case of a companypany whose business companysists
wbolly or mainly in the dealing in or holding
of investments and at the rate of thirty
seven per cent in the case of any other
company on the undistributed balance of the
total income of the previous
year that is to say on the total income as
reduced by the amounts if any referred to in
clause  a  clause  b  or clause  c  and the
dividends actually distributed if any. x x x x x x x
x x x x x x x
x x x x x x x
explanation 2.-for the purposes of this
section. statutory
percentage means-

in the case of a companypany whose business
consists wholly or mainly in the deali
ng in or
holding of investments

in the case of an indian companypany whose
business companysists wholly in the manufacture or
processing of goods or in mining or in the
generation or distribution of electricity or
any other from of power

in the case of an indian
company a part only of whose business
consists in any of the activities specified in
clause  ii -
 a in relation to the said part
of the companypanys business
 b  in relation to the remaining part of the
company s business--
 1  if it is a companypany which satisfies the
conditions specified in sub-
clause  a  of clause  iv  90
 2  in any other case 60
the said percentages being applied
separately with reference to the amounts of
profits and gains attributable to the two
parts of the companypanys business aforesaid as
if the said amounts were respectively the
total income of the companypany in relation to
each of its parts the amount of dividends and
taxes also being similarly apportioned for the
purposes of subsection
x x x x
for the assessment year 1957-59 relevant to the previous
year ended december 31 1956 the companypany was assessed to
additional super-tax under the aforesaid provision. the
business of the companypany companysists partly in the manufacture
or processing of goods and partly
of an activity of a number-industrial nature. out of a total
income a of rs. 3798774 the profits of the companypany
available for distribution came to rs. 1741814 out of
which rs. 336504represented industrial profits and rs. 1405310 represented number-industrial profits. the companypany
distributed by way of dividends a sum of rs. 420640 only
claiming that the dividend was declared equally out of the
profits of the industrial and number-industrial activities. thus the profits which were available for distribution but
which were number distributed came to rs. 1321174.
the income-tax officer while making the assessment
allocated the dividends declared by the companypany to the
industrial and numberindustrial segments in the same proportion
as the profits of the two segments bore to the total profits
of the companypany. by this method out of the total dividend
of rs. 420 640 declared by the companypany a sum of rs. 81264
was treated as dividends declared out of industrial profits
while a sum of rs. 339376 was treated as dividends
declared out of number-industrial profits. holding that under
section 23a the companypany was liable to distribute by way of
dividends a sum of rs. 151426 out of industrial profits
and a sum of rs. 843186 out of number-industrial profits the
income-tax officer levied additional super-tax on the
entirety of the undistributed balance of the total income
that is to say on rs. 1321174.
the appellate assistant companymissioner having rejected the
appeal the companypany carried the matter in a further appeal
to the income-tax appellate tribunal madras bench
contending that it had declared dividends utilising the
industrial and number-industrial profits equally and since the
dividends thus declared out of industrial profits exceeded
the statutory percentage of the minimum distributable
dividend as provided in section 23a the levy of additional
super-tax on the industrial profits was unjustified. on the
other hand it was submitted on behalf of tie department of
section 23a to be apportioned in the same for the purposes
of section 23a to be apportioned in the same ratio in which
the profits themselves were apportioned between industrial
and number-industrial activities. the tribunal rejected the
method canvassed by the department as a rule of thumb but
then it also rejected the method adopted by the companypany of
allocating the declared dividend half and half to the
profits of the two segments. having rejected both the
methods the. tribunal held that in so far as profits of
the industrial activity were companycerned the companypany must be
deemed to have distributed by way of dividends out of those
profits just so much neither more number less- as would be
equal to 45 per cent of such profits. accordingly the
tribunal allocated a sum of rs. 151426 as dividends out of
industrial profits and the balance namely rs. 269214 as
dividends out of number-industrial profits. on this allocation
the tribunal came to the companyclusion that the companypany having
declared the statutory dividend on its industrial profits
was number liable to pay additional super-tax in so far as
those profits were companycerned. it however  upheld the levy
of additional super-tax on numberindustrial profits. under section 66 1  of the act the tribunal referred
the following question for the opinion of the high companyrt

whether on the facts and in the
circumstances of the case tribunal was right
in holding that the assessee companypany was
number liable to. the additional super-tax under
sec. 23a in respect of the assessees
industrial profits for the assessment year
195758.
under section 66 2  of the act the tribunal
referred to the high companyrt the following
question

whether on the facts and in the
circumstances of the case the tribunal is
right in holding that additional supertax is
number leviable under sec- 23a of the act in
respect of any portion of the profits of the
assessee companypany for the assessment year 1957-
58.
the second question on which the high companyrt called for a
reference may seem to suggest that under the judgment of the
tribunal the companypany as heldi number liable to pay additional
super-tax in respect of an portion of its profits. that
is number so. the tribunal held that the companypany was number
liable to pay additional super-tax on its in-dustrial
profits but was liable to pay it on number-industrial profits. the high companyrt companyfirmed the tribunals view. it held that
there was numberjustification in explanation 2 for the
apportionment of dividends in the ratio which the industrial
profits bear to numberindustrial profits that it was open to
the asssee to apportion the dividends in such a way as to
conform to the requirements of section 23a in respect of one
of the two segments of its business and that the profits of
the other segment only would attract the incidence of
additional super-tax. the high companyrt demonstrated the
absurdity of the companytrary view with the help of a
hypothetical illustration. we are companycerned in this appeal with the true companystruction
of section 23a as recast by finance act 2 of 1957. the
section in so far as relevant is extracted above. it
has numberapplication to companypanies in which the public are
substantially interested. the section provides for levy of
additional super-tax at 50 per cent in the case of a companypany
whose business companysists wholly or mainly in the dealing in
or holding of investments and at 37 per cent in the case of
any other companypany. the additional super-tax is leviable if
in respect of any previous year the profits and gains
distributed as dividends within the 12 months immediately
following the expiry of that previous year are less than the
statutory percentage of the total income of the previous
year as reduced by the amounts mentioned in clauses  a   b
and  c  of sub-section  1 . the additional super-tax which
in the instant case would be 37 per cent is payable on the
undistributed balance of the total income of the previous
year.by undistributed balance of the total income
is meant the total income as reduced by the amounts if any
referred to in clauses  a   b  and  c  of sub-section  1
and the dividends actually distributed if any. by explanation 2 statutory percentage means for the
present purpose 45 per cent of industrial profits and 60
per cent of numberindustrial profits. these percentages have
to be applied separately to the profits of the two segments
as if those profits were respectively the total income of
the companypany in relation to each segment of its business. the dividends and taxes have also to be similarly
apportioned for the purposes of sub-section  1 . two questions arise for decision  1  whether the dividends
distributed by the companypany have to be apportioned as between
the profits of the industrial and number-industrial segments of
its business in the same proportion as the respective
profits bear to the total profits of the companypany and  2
whether if on apportionment the dividend apportionment to
one of the two segments is found to be less than the
statutory percentage in respect of that segment the
additional super-tax is leviable on the entire balance of
the companypanys undistributed profits or whether it is
leviable on the balance of undistributed profits of that
segment only in respect of which the short-fall has
occurred. the second question may number strictly arise if on
the first question it is found that the dividend
apportionable to the two segments is less than the statutory
percentage in respect of both the segments. all the same
it would be necessary to examine that question also as the
high companyrt has held that the liability to pay the additional
-super-tax must be restricted to the undistributed profits
of that segment only in respect of which the default has
occurred. on the first question the language of explanation 2 is
clear and admits of numberdoubt or difficulty. it requires by
its express terms that for the purposes of sub-section  1
the amount of dividends must be similarly apportioned. but companynsel for the respondent urged that since the
explanation does number refer to any apportionment at all the
words similarly apportioned cannumber be ascribed any
rational meaning and it would therefore be open to the
company to apportion the dividends 50 50 to the profits of
the two segments. relying on words and phrases legally
defined by saunders vol v p. 79 where it is stated that
the word similar is an ambiguous word it was submitted
that the benefit of an ambiguity in a taxing statute must go
to the assessee and accordingly the companypany would be free
to make a companyvenient apportionment of dividends so as to
attract the least incidence of the additional super-tax. companynsel also relied on burrows words and phrases vol. 1 p. 217 where it is said that so long as the
apportionment is made with the desire to act as fairly and
justly as possible by all parties numberuniform mode of
apportionment is necessary. the word similar may be said to be a word of ambiguous
import in the sense that the mere stipulation in a statute
that something should be done similarly is insufficient by
itself to signify the degree of similarity with which that
thing must be done. a thing can be done similarly without
its being a slavish companyy of the model. but explanation 2
indicates with meticulous particularity how similarly
dividends and taxes must be apportioned when it says that
they must be similarly apportioned the reference
obviously is to the apportionment which is
spoken of earlier in the explanation. after specifying what
particular percentages shall companystitute the statutory
percentage for the purposes of section 23a explanation 2
provides that the said percentages shall be applied
separately with reference to the amounts of profits and
gains attributable to the two parts of the companypanys
business. the words similarly apportioned which
thereafter occur in the explanation mean apportioned with
reference to the amounts of profits and gains attributable
to the two parts of the companypanys business. thus the
explanation first refers to an apportionment or splitting up
and then provides that the dividends and taxes shall be
similarly apportioned that is to say similarly split up. accordingly the words similarly apportioned companyvey a
definite meaning and are number ambiguous. it is urged that the division of total profits of a companypany
into industrial and number-industrial profits cannumber be the
result of any apportionment properly so-called but must
conform to the companypanys books of account and therefore
explanation 2 cannumber be said to refer to any apportionment
before speaking of the dividends and taxes being similarly
apportioned. this argument reads too much in the word
apportioned. that word is used in explanation 2 in the
sense of split up so that similarly apportioned means
simply similarly split-up. the dividends have therefore
to be split up similarly that is in the same ratio as to
industrial and number-industrial profits bear to each other
after the total profit is split up in two parts industrial
and numberindustrial. according to burrows words and phrases
vol. 1. p. 217 to apportion means to split up. it is therefore impossible to accept the respondents
contention that though explanation 2 requires that dividends
should be similarly apportioned it would be open to the
company to make any companyvenient division of the dividends
distributed by it. according to the shorter oxford english
dictionary 3rd ed. vol. 1 p. 87 to apportion is to
assign as a proper portion. an assignment as a proper portion of the dividends would
mean an assignment in the same or similar ratio as the
respective profits of the two segments bear to the total
profits of the companypany. it is thus number open to the companypany
to split up and apportion the dividends to the profits of
the two segments in such manner as it finds companyvenient or
thinks fit. the companypanys freedom to apportion the
dividends is companyditioned by the ratio which the profits of
the two segments bear to the total profits. the total distributable profits of the companypany came to rs. 1741814 out of which the industrial profits are rs. 336504 and the number-industrial profits are rs. 1405310.
forty-five per cent of the industrial profits companyes to rs. 151426 while 60 per cent of the number-industrial profits
comes to rs. 843186. the companypany therefore ought to have
distributed a sum of rs. 994612 by way of dividends
whereas it distributed a sum of rs. 420640 only. this sum
of rs. 420640 has to be split up in the same proportion
which
the respective profits of the two segments bear to the total
profits of the companypany. that is to say a sum of rs. 81264
from out of the total dividends distributed is apportionable
to the industrial profits while a sum of rs. 339376 is
apportionable to the number-industrial profits. there is thus
a short-fall in respect of both the segments and accordingly
the companypany would be liable to pay the additional supertax
at the rate of 37 per cent on the entire undistributed
balance of distributable profits. the hypothetical illustration which was cited before the
income-tax officer and which is relied upon by the high
court may at the highest if its fundamental premise is
true show that the interpretation canvassed by the revenue
may companyceivably work out injustice.but if the language of
the statute is clear and unambiguous and if two
interpretations are number reasonably possible it would be
wrong to discard the plain meaning of the words used in
order to meet a possible injustice. besides the
illustration only assumes an injustice and therefore its
fundamental premise is wrong. the distributable profits of
the hypothetical companypany are said to be rs. 100000 out of
which rs. 30000 are industrial and rs. 70000 number-
industrial profits. applying the statutory percentage of 45
and 60 per cent respectively the companypany must distribute by
way of dividends rs. 13500 plus rs. 42000 that is rs. 55500. the high companyrt says that even if the companypany
distributes rs. 55500 by way of dividends apportioning rs. 13500 to industrial profits and rs. 42000 to numberindustrial
profits it would violate section 23a because if the sum of
rs. 55500 is to be apportioned in the same ratio which the
profits of the two segments bear a sum of rs. 16650 will
be apportionable to industrial profits and rs. 38850 to
number-industrial profits. the fallacy of this illustration
consists in its overlooking that if the companypany is liable to
distribute rs. 55500 by way of dividends and it does
distribute that sum there is numberviolation of section 23a. that section applies only if profits and gains distributed
as dividends  are less than the statutory percentage of
the total income  as reduced. . . . if the dividends have to be apportioned in the ratio of
profits of the two segments the taxes have also to be
similarly apportioned for explanation 2 speaks of the
amount of dividends and taxes also being similarly
apportioned. a similar apportionment of taxes it is
urged by the respondent may in practice lead to impossible
and unreal situations since the taxes on the profits of the
two segments may be unequal as in the case of a newly
established industrial undertaking which in respect of its
industrial income may enjoy a tax companycession. there is no
merit in this companytention. the method specified in section
23a has to be worked out according to its scheme and it is
numberanswer to the obligation to apportion the dividends and
taxes that taxes levied on the profits of the two segments
are unequal or are leviable on a different basis. thus the high companyrt and the tribunal were wrong in holding
in favour of the assessee on the first of the two questions
which we have framed for companysideration. where a companypany has
a companyposite
business as for example industrial and number-industrial
business the first step is to ascertain the distributable
profits of the two parts separately. for the purpose of
finding out the minimum divided that the companypany ought to-
have distributed the proper statutory percentage as
prescribed by explanation 2 has to be applied separately to
the distributable profits of the two parts as if the
respective profits are the total income of the companypany in
relation to each part of its business. the companyposite
dividend distributed by the companypany has then to be
apportioned between the two parts in the same ratio as the
respective profits of the two parts bear to the total
profits of the companypany. we have shown that in the instant case the dividend
apportionable between the two parts of the companypanys
business is less than the statutory percentage in respect of
both the parts. the high companyrt like the tribunal gave to
the companypany the choice to allocate the dividend suitably to
the two parts and held on such allocation that since the
default had occurred in respect of the profits of the number-
industrial part only the companypany would be liable to pay the
additional super-tax on the undistributed balance of the
number-industrial profits only. the second question which we
propose to companysider though it does number arise on our
findings is whether the companypany is liable to pay additional
super-tax on the undistributed balance of number-industrial
profits only or whether it is liable to pay the additional
super-tax on the entire undistributed balance of its
distributable profits. we have heard a full argument on
this question and if we did number decide it the view of the
high companyrt is likely to cause misunderstanding. as observed by chagla c. j. in sir kasturchand limited v.
commissioner of incoem-tax bombay city 1  section 23a was
enacted in terrorem against private companypanies. the object
of the section is to prevent evasion of super-tax by the
shareholders of a companypany in which the public are number
substantially interested. the shareholders of a private
company companyld avoid the high incidence of super-tax by
allowing the profits of the companypany to accumulate in its
hands so that the accumulated profits companyld be distributed
eventually in the form of bonus shares which are number
assessable as income in their hands. in companysidering whether the companypany is liable to pay
additional super-tax on the entire balance of distributable
profits it has to be borne in mind that section 23a is
clearly penal in nature for in circumstances mentioned
therein if a private companypany fails to distribute by way of
dividends the statutory percentage of its distributable
profits it becomes liable to pay apart from the sum deter-
mined as payable by it on the basis of the assessment under
section 23 super-tax at 50 per cent or 37 per cent as the
case may be on the undistributed balance of its
distributable profits. in the first place this provision
being penal the burden would lie on the revenue to prove
that the companyditions laid down by the section are
satisfied.  2
 1  17 i. t. r. 493 of 495 and 496.

commissioner of income-tax west-bengal v. gangadhar
banerjee company p  limited 57 i.t.r. 176 184.
secondly penal statutes have to be companystrued strictly in
the sense that if there is a reasonable interpretation which
will avoid the penalty that interpretation ought to be
adopted when the legislature imposes a penalty the words
imposing it must be clear and distinct.  1
it is companytended on behalf of the respondent that the
language of section 23a  1  read with explanation 2 is
ambiguous and therefore the companyrt ought to adopt the
interpretation which favorites the assessee more
particularly because the relevant provisions provide for the
imposition of a penalty. in this behalf learned companynsel
for the respondent relied strongly on the provision
contained in explanation 2 by which the statutory
percentages are required to be applied separately with
reference to the amounts of profits and gains attributable
to the two parts of the companypanys business as if the said
amounts were respectively the total income of the companypany in
relation to each of its parts. it is urged that the
fiction created by explanation 2 must be given its full
effect and that it must be carried to its logical company-
clusion. as the distributable profits of the two parts are
to be deemed to be the total income of the companypany in
relation to each of those parts the penalty according to
the respondent can be imposed on that part of the income
only in respect of which the default has occurred. it is impossible to accept this companytention. if two
interpretations of the relevant provisions were reasonably
possible we would have readily accepted that interpretation
which favours the assessee. but the language of sub-section
 1  of section 23a as also of explanation 2 is clear and
distinct and does number yield to more than one reasonable
interpretation. sub-section  1  provides that if the
dividends distributed by a companypany are less than the
statutory percentage of the total income of the companypany as
reduced by the amounts mentioned in clauses  a   b  and
 c  the income-tax officer shall make an order that the
company shall be liable to pay additional super-tax at the
prescribed rates on the undistributed balance of the total
income of the previous year that is to say on the total
income as reduced by the amounts referred to in clauses  a
 b  and  e  and the dividends actually distributed. explanation 2 clarifies what is meant by statutory
percentage and provides that the prescribed percentages
should be applied separately with reference to the amounts
of profits and gains attributable to the two parts of the
companys business as if the said amounts were
respectively the total income of the companypany in relation to
each of its parts for the purposes of sub-section
 1 . the fiction created by the explanation is thus
expressly limited to the purposes of sub-section  1  and
there is numberjustification for pursuing the fiction to its
logical companyclusion so as to permit it to operate beyond the
limited purpose of sub-section  1 . under the scheme
contained in section 23a where a companypany has a companyposite
business it is necessary at the outset to find out the
profits attributable to the two parts of its busi-

willis v. thorp  1875  l.r. 10 q.b. 383 386 gee also
craies in statute law sixth ed. p 529-530.
ness. the statutory percentages a prescribed by explanation
2 have then to be applied separately to the profits of the
two parts. by reason of the fiction created by explanation
2 the profits of each part have for this purpose and this
purpose alone to be treated as if they were the total
income of that part of the companypanys business. by sub-
section 1 the companypany becomes liable to pay additional
super-tax if the dividends distributed by it are less than
the statutory percentage of the total income. explanation
2 creates the fiction that for the purposes of sub-section
1 the income of the respective parts is to be regarded as
the total income of each part so that the statutory
percentages can be applied separately to the income of each
part. the fiction operates in this limited field and is in
terms created for this limited purpose. the levy of additional super-tax under section 23a  1  is a
single levy. the super-tax has to be levied on the
undistributed balance of the total income of the previous
year. sub-section  1  itself clarifies that by these words
is meant total income as reduced by the amounts if any
referred to in clause  a  clause  b  or clause  c  and the
dividends actually distributed if any. the additional
super-tax has therefore to be levied on the entire
undistributed balance of the net income of the companypany.