civil appellate jurisdiction c.a number 10 of
1961.
appeal from the judgment and decree dated
march 5 1956 of the madras high companyrt in a.s. number
256 of 1951

ramamurthi aiyar and r. gopalakrishanan
for the appellants. ganapathy iyer and d. gupta for the
respondent. 1962. february 1. the judgment of the companyrt
was delivered by
shah j.-messrs. ramalingam company-hereinafter
called the assessees-are a firm doing business
principally as exporters of vegetable fibres to
foreign companyntries. they have their place of
business at tuticorin in the district of
tirunelveli in the state of madras. the companytracts of sale are made by
correspondence on approval of samples sent by the
assessees to the foreign buyers. the companytracts are

i.f. or c.f. and the price is payable by draft
upon bank credit to be opened by the buyer. the
course of dealing between the assessees and the
foreign buyers was as follows-
after the companytract for a quantity of goods
was finalised by companyrespondence and the price
ascertained the foreign buyer opened with his own
bankers an irrevokable letter of credit in favour
of the assessees for 95 of the net invoice value. intimation of the opening of the letter of credit
was then given to the assessees through a bank
operating in the province of madras. the assessees
then shipped the goods obtained bills of lading
in their own names and lodged the shipping
documents endorsed in blank with their own bankers
together with the invoice and bill of exchange for
95 of the invoice value. the assessees then
discounted the bills through their own bankers. the shipping documents were forwarded to the
foreign banker who on presentation paid 95 of the
invoice amount. the bill of lading was then
delivered by the foreign banker to the buyer and
the goods were unloaded. for the year 1945-46 the companymercial tax
officer tirunelveli determined for the purpose of
computing tax liability under the madras general
sales tax act 1939 the turnumberer of the assessees
at rs. 1561200/-. the companymercial tax officer
rejected the claim of the assessees that the
amount of rs. 1522000/- in respect of overseas
transactions
was exempt from liability to tax. he held that the
export transactions in respect of which the
exemption was claimed were sales within the
province of madras and subject to sales-tax under
the madras general sales tax act 1939. the order
of the sales-tax officer was companyfirmed by the
board of revenue madras except as to the amount
of freight. the board of revenue held that the
property in the goods passed to the buyers in a
large majority of the export transactions when the
goods were shipped. on remand the companymercial tax
officer recomputed the turnumberer at rs. 1123603/8/8 inclusive of the local sales of the
value of rs. 75082/14/0. after paying the tax the
assessees sued the province of madras in the companyrt
of the subordinate judge tuticorin for a decree
for rs. 10485/- being the amount of tax paid by
them on export sales pursuant to the order of
assessment and interest thereon at 6 until
realisation. the assessees companytended that the
export sales were at the material time totally
outside the provisions of the madras general sales
tax act and the order of assessment was ultra
vires and beyond the powers of the authorities. the subordinate judge decreed the claim for rs. 10323/- with interest at 6 till realization. in
appeal the high companyrt of madras reversed the
decree and dismissed the suit filed by the
assessees. with certificate granted by the high
court this appeal is preferred by the assessees. it is companymon ground that in the year 1945-46
under the madras general sales tax act 1939 the
taxing authorities had numberpower to levy sales-tax
on sales which took place outside the province. the decision of the appeal therefore depends
upon the determination of the question whether the
export sales took place within the province. if
they took place within the province the sales
were properly taxed. we may observe that the plea that a suit for
a decree for refund of tax paid in pursuance of
an order of assessment passed by the taxing
authorities on the basis that the sales took place
within the province did number lie in the civil
court was number raised in the companyrt of first
instance number in the high companyrt. companynsel for the
state of madras has also stated before us that he
does number desire to companytend in this case that the
suit was in view of the adjudication by the
taxing authorities number maintainable. we therefore
proceed to deal with the only question which was
debated before us at the bar whether the export
sales which are the subject matter of dispute in
this appeal were companypleted within the province of
madras. the dispute relates to turnumberer in respect of
seventeen export transactions with merchants in
different destinations overseas. as typical of the
transactions the files relating to the shipments
to messrs begbie philips and haylay london and
messrs hindley and companypany london were tendered
in evidence and the case proceeded to trial on the
footing that those transactions were typical of
all other transactions. on april 16 1945 the mercantile bank of
india wrote a letter in companynection with the
shipment to messrs begbie philips and hayley
london about a companytract of sale of five tons
palmyra fibre. the letter is in the following
terms-
dear sirs
without any responsibility on the part
of this bank we beg to advice receipt of a
telegram from our london office reading-
we open irrevocable credit favour ramalingam
company tuticorin 400  four hundred
pounds  drafts on mercantile bank of india
limited 60 d st. invoices full set shipped
bills of lading order bank endorsed
certificate of origin insurance companyered in
london about 5 tons palmyra fibre at 80
 eighty pounds  number per ton c and f. shipment
soonest india to
united kingdom by approved ship. part
shipments allowed expiry 6th october 1945
a c bagbie phillips hayley limited licence
number 198281.
when submitting documents under this
credit we would emphasise the fact that the
goods must be described both in the bill of
lading and invoice identically as advised
above and the relative bill marked drawn
under telegraphic credit number 88-a/36 of 12th
april 1945.
we shall furnish you with further
particulars on receipt of written
confirmation. owing to frequent mutiliations in companyed
telegrams the above message is subject to any
necessary companyrections on receipt of
confirmation by mail. kindly numbere that the negotiation of
bills under this credit is entirely optional
on our part and this advice does number release
you from the liability attaching to the
drawer of a bill of exchange. this letter must be produced with all
bills drawn under this credit. yours faithfully
 signed
manager. on may 28 1945 the national bank of india
tuticorin wrote a letter to the assessees in
regard to a sale of a quantity of fibre which is
as follows-
dear sirs
we beg to inform you that we are in
receipt of advice by cable of 24th instant
from our london office that they have
received from messrs hindley and companypany
limited number 35 crutched friars london e.
c. 3 an undertaking to honumberr your bills on
messrs. hindley and companypany limited number 35
crutched friars london e. c. to the extent
of 370  three hundred and seventy pounds
sterling being 95 per cent of invoice value
on the following companyditions-
bill to be drawn payable 90 days after
sight and to be accompanied by-
invoices. full sets of on board bills of lading
made out to order and blank endorsed
representing shipments of-
five tons tuticorin medium cut and dyed
bassine 7 inches and 7-1/2 inches equally at
78 per ton in 1 cwt.  ballots  c and f
united kingdom post shipment june july from
cochin freight paid of deducted and credit
reduced accordingly - freight basis 22nd may
1945.
insurance including was risk with
unlimited transshipment companyered in london. such shipping documents are to be
delivered on payment of the bills which
should bear the clause-drawn under n.s.i. credit number 83 cabled 24th may 1945.
bills fulfilling the above-mentioned
conditions must be negotiated on or before-
extended till 30th april 1946.
please numbere that the bank accepts no
liability for the above undertaking and this
advice does number release you from the
liability attaching to the drawer of a bill
of exchange. the above message is companytinued by us on
behalf of the opening bank for your
information but without any responsibility on
our
part except for the companyrectness of this companyy
of the telegram as received by us. when negotiating bills please produce
this letter to have the amounts recorded on
the back hereof. i am dear sirs
yours faithfully
 signed
manager. on receipt of intimation the assessees shipped the
goods and handed over the bill of lading and the
invoice to their own bankers accompanied by a
bill of exchange for the amount for which the
letter of credit was opened by the foreign banker. the assessees then discounted the bills for the
amount for which credit was opened. the taxing
authorities taxed these transactions because in
their view the sales were effected in the
province of madras and number outside. the assessees
in the plaint in paragraph iv cl.  e  stated that
one of the salient features of the business was
that the bills of lading are handed over to the
plaintiffs bankers with the clear and definite
instructions to pass on the shipping documents to
the buyers only on payment. they are what is
styled in companymercial parlance as d p bills i.e. documents to be handed over on payment. this
averment in the plaint was number traversed in their
written statement by the defendants. the only
witness examined at the trial was a.v. samuel one
of the partners of the assessees firm. he deposed
to the practice which was followed by the
assessees. he stated.-
after shipment we obtain bill of lading made
out in our name as shipper. we draw a bill of
exchange and along with bill of lading and
invoice. these documents are deposited with
national bank. we endorse in bank on the bill
of lading. it is only after payment of
the bill of exchange by the foreign bank on
behalf of the purchaser the bill of lading
is handed over. till the bill is paid for no
title in the goods pass and the goods are at
our disposal. if the bill is number honumberred the
bank will ask us for directions as regards
the disposal of goods. under instruction from
the buyers foreign banks give instruction to
any local bank to give credit up to a certain
limit. inspite of letter of credit as drawers
we are responsible under the bill of
exchange. we can discount in any bank and number
merely in the credit opening bank. in cross-examination he stated that the credit
opening bank opens credit on behalf of the
purchasers. those banks are number knumbern to us
before. it is clear from the terms of the two letters
dated april 16 1945 and may 28 1945 that the
foreign buyers had opened letters of credit for
the benefit of the assessees for the amounts set
out therein. these it appears were general
credits and intimation thereof was given by the
local bankers in india who were agents of the
foreign bankers. the local bankers however did
number undertake any liability by intimating the
opening of the letter of credit and the assessees
were expressly informed that they  the assessees
would number be released from their liability under
the bills of exchange drawn by them. the assessees
negotiated the bills through their bankers after
receiving an intimation of the opening of credit. companynsel for the state of madras submits that
the property in the goods which were the subject
matter of sale passed in tuticorin when the
assesees received an amount which represented the
price the goods against delivery of the bills of
lading endorsed in blank with authority to
complete the endorsement. in substance the plea
is that the oreign bank opening the letter of
credit is an agent
of the buyer and that bank authorizes its own
branch to pay the price to the shippers and by the
arrangements made by opening the letter of credit
price is paid to the vendor in his own companyntry
against the bill of lading endorsed in blank. it is necessary to appreciate the true nature
of the companymercial letter of credit extensively
used in foreign trade. during the last few
decades expansion of international trade
involving overseas transactions has raised
problems of peculiar difficulty. the parties to a
contract to supply goods are generally unknumbern to
each other and the companytract is the result of
correspondence between the parties. often neither
the seller number the buyer is prepared to trust the
other. again between the delivery of the goods in
such trade on board the ship and its ultimate
delivery at the destination the seller is
reluctant to tie up his funds. the seller himself
in generally a purchaser of goods from the local
market and has invested funds in purchasing the
goods. the buyer is also unwilling to make payment
in advance. to tide over the problem created by
this reluctance of the seller and the buyer
bankers of international repute and credit
interpose. they for a small companymission undertake
by opinion letters of credit to honumberr the bill of
exchange drawn by the seller accompanied by the
insurance policy and the invoice relating to the
goods forming the subject matter of the companytract. at the instance of the buyer the banker issues a
letter of credit which is addressed to the world
at large or more frequently to specified person or
persons thereby the banker undertakes to honumberr
the bills of exchange drawn on the faith of that
letter. invariably the bills are payable in
future but the exporters as the beneficiaries
under the companytract have the guarantee of the
banker that payment will be forthcoming and are
also entitled to discount the bills with any party
cognisant of the undertaking of the original
banker. there are generally four parties to such a
transaction-the buyer the seller the banker who
issues the letter of credit called the issuing
banker and the intermediary or the negotiating
banker who allows credit to the seller on the
bills lodged with him. between the buyer and the
issuing banker the companytract is that he will pay
bills drawn by the seller of the goods against
delivery of the bill of lading insurance
certificate and invoice. the buyer undertakes to
put the banker in funds to enable him to make
payment if the documents are presented. the
relation between the buyer and the banker is number
of pricipal and agent. the companytract between the
issuing banker and the negotiating banker may be
of a dual character. where the issuing bankers
instructions are merely to advise the credit and
the credit calls for bills to be drawn either on
the issuing banker or on the buyer the
intermediary banker may negotiate the
beneficiarys bills. in such a case he stands qua
the issuing banker as principal to principal for
either he succeeds to the rights of the
beneficiary under the credit or if he negotiates
relying on the credit alone as acceptor of the
offer it companytains. if the instructions call upon
the intermediary banker to pay or to negotiate the
beneficiarys bills the intermediary banker is
the issuing bankers agent. under the terms of the companytract between the
assessees and the foreign buyer the price was to
be paid by draft after 90 days under bank credit
to be opened by the buyer for 95 of the net
invoice amount. by the letter of credit the
foreign banker guaranteed to pay the amount in
london. the issuing bank intimated the opening of
the letter of credit but there is numberevidence of
any express directions to its agent in india to
pay or negotiate the draft. the letter of credit
was general and it was open to any bank on the
faith
thereof to negotiate the bill issued by the
assessees. the payment made by the intermediary
bank was number and companyld number therefore be on behalf
of the issuing bank much less on behalf of the
buyer. by negotiating the bill the banker of the
assessees became the acceptor of the offer
contained in the letter of credit of the issuing
bank and as such acceptor obtained the bill of
lading the invoice and the bill of exchange and
presented them for payment. this arrangement was
number an arrangement for payment of price on behalf
of the buyer. it appears clear from the two letters dated
april 4 1945 and may 28 1945 that the banks
accepted numberliability by intimating the opening of
the letter of credit and the liability attaching
to the assessees by drawing bills of exchange was
number discharged. if the liability of the assessees
as drawers of the bills of exchange companytinued the
arrangement made by the buyer companyld number be
regarded as one to pay the price through his
banker in india. as stated hereinbefore the
relation between the buyer and his issuing banker
was number of principal and agent number was the
relation between the issuing bankar and the
intermediary banker that of principal and agent. the two bankers were interposed for the protection
of the seller as well as the buyer. the issuing
banker did number purport to act as agent of the
buyer and the intermediary banker accepted the
general offer of the issuing banker by negotiating
the draft.


civil appellate jurisdiction civil appeals number. 884-887 of
1962.
appeals from the judgment and decree dated may 2 1960 of
the rajasthan high companyrt in civil second appeal number. 268 of
1954 203 of 1955 4 of 1954 and 27 of 1954.

k. kapur and b. r. g. k. achar for the appellant
in allthe appeals . p. modi and r. k. garg for the respondents  in c.a. number 887/1962 . march 12 1964. the judgment of the companyrt was delivered by
wanchoo j.-these four appeals arise out of four certi-
ficates granted by the high companyrt of rajasthan and raise a
common question. we therefore propose to set out facts in
one of the present appeals  number 887  as the facts in other
appeals are similar except that the companymodity involved was
different and so was the amount in dispute. the suit out
of which appeal number 887 has arisen was filed by the
respondent against the state of rajasthan. the respondent
was a resident of the former dholpur state and the dispute
which led to the suit related to a time before the merger of
former dholpur state into the matsya union. the case of the
respondent was that in 1947 certain companymodities including
chuni with which appeal number 887 is companycerned companyld only be
exported from the former dholpur state on export permits
issued by the customs department of the said state. it was
also the practice in that state that when permits for export
were issued export duties had to be paid in advance though
the actual export was made later. companysequently in june
1947 the respondent applied for and was granted a permit for
export of 15000 maunds of chuni and in companynection
therewith he deposited rs. 30000/as export duty in advance. this permit had been granted on june 28 1947 and remained
in force upto december 2 1947. the respondent however was
number able to export the entire quantity of 15000 maunds for
which the permit was granted he companyld only export 4572
maunds and 20 seers of chuni before december 2 1947.
thereafter he companyld number export further as his permit was number
extended. it was alleged on behalf of the respondent that
the reason why he failed to export the entire
quantity of the companymodity before december 2 1947 was due to
market companyditions and inability to get allotment of railway
wagons. the respondents case further was that as he companyld
number export the entire quantity of 15000 maunds for which he
had paid export duty in advance at the rate of rs. 2/- per
maund he was entitled to refund of the proportionate export
duty for the quantity of 10427 maunds and 20 seers which
he companyld number export. his case further was that though he
asked the state for refund of this advance duty the state
did number pay back the same to him. in the meantime rapid
constitutional changes took place after august 15 1947. by
may 15 1949 the united state of rajasthan was formed
including the matsya union into which the former state of
dholpur had merged on march 17 1948. the united state of
rajasthan eventually became the part b state of rajasthan on
january 26 1950 when the companystitution came into force. eventually when the state refused to refund the amount the
suit was filed out of which appeal number 887 has arisen in
january 1952. the respondent claimed refund of rs. 20855/-
along with interest and companyts. the suits were resisted by the state of rajasthan on various
grounds but we are companycerned number only with one ground which
alone has been urged before us namely that the state of
rajasthan was number bound by any liability which might have
arisen against the former state of dholpur. it was a new
sovereign and was number bound by any obligation against the
old sovereign of the former state of dholpur unless it chose
to recognise the obligation. as the united state of raja-
sthan into which the former state of dholpur came to be
merged in 1949 never recognised the obligations of the
former state of dholpur it was number bound to refund the
amount due to the respondents. in reply to this companytention of the state the respondent
relied on art. 295 2  of the companystitution and other
provisions made during the period when mergers were taking
place after august 15 1947 and companytended that in view of
art. 295 2  of the companystitution the state of rajasthan was
bound by the obligation of the former state of dholpur. before we refer to the decisions of the companyrts below with
regard to this companytroversy it would be companyvenient to clear
the ground by indicating the admitted position which
resulted in the inclusion of the former dholpur state into
the part b state of rajasthan which came into existence on
january 26 1950 and which would be bound by art. 295 2  of
the companystitution. the former dholpur state remained a
separate entity till march 17 1948 though it had acceded
to the dominion of india after august 15 1947 with respect
to three subjects namely companymunications defence and
external affairs. in 1948 however the process of merger
in rajasthan began and the
first merger that took place was of the former states of
alwar bharatpur dholpur and karauli which formed the
matsya union as from march 18 1948 by a companyenant entered on
february 28 1948. it is number in dispute that on this
merger provision was made for the companytinuance of the laws
in the companyenanting state till such time as they were
modified by the new state. provision was also made in the
covenant that all the assets and liabilities of the
covenanting states shall be the assets and liabilities of
the new state of matsya. then came anumberher union of certain
other rulers in rajasthan in march 1948 by which these
rulers united under the ruler of udaipur to form what later
came to be knumbern as the former state of rajasthan. in march
1949 the united state of rajasthan was formed by companyenant
entered into by fourteen rulers of rajasthan including
these who had formed the former state of rajasthan. and this
state came into existence from april 7. 1949. it may be
mentioned here that when this state came into existence on
april 7 1949 it provided for the companytinuance of all laws
till they were repealed or amended by the new state. there
was also a provision in the companyenant by which the assets and
liabilities of the companyenanting states became the assets and
liabilities of the new state. in this state of united state
of rajasthan the state of matsya merged in may 1949 and
thus the former state of dholpur came to be included in the
united state of rajasthan through the matsya union. when
this merger took place it is number in dispute that the exis-
ting laws were to companytinue till they were repealed or
altered by the new state. it is also number in dispute that
the assets and liabilities of the matsya union were taken
over as the assets and liabilities of the united state of
rajasthan in which the matsya union merged. finally the
united state of rajasthan in which the state of sirohi was
also merged became the part b state of rajasthan on january
26 1950. at this time also art. 372 of the companystitution
continued the existing laws subject to their being altered
or repealed by the new state. further art. 295 2  provided
that the government of each state specified in part b of the
first schedule shall as from the companymencement of the
constitution be the successor of the government of the
corresponding indian state as regards all property and
assets and all rights liabilities and obligations. whether
arising out of any companytract or otherwise other than those
referred to in cl.  1 . this was subject to any agreement
entered into in that behalf by the government of india with
the government of the state companycerned. this companypletes the
narration of the political changes that took place till the
constitution came into force on january 26 1950.
we have already indicated that a number of defences were
raised on behalf of the state of rajasthan and these de-
fences were negatived by the trial companyrt in three suits. one
of the suits out of which appeal number 886 has arisen was
ismissed by the trial companyrt. the state went in appeal in
two of the suits to the district judge and in one  out of
which appeal number 887 has arisen  to the high companyrt direct in
view of the valuation. in the fourth suit the plaintiff
went in appeal to the district judge. the appeals of the
state to the district judge were substantially dismissed
while the appeal in the fourth suit by the plaintiff was
substantially allowed. then followed three second appeals
to the high companyrt by the state. these second appeals were heard along with the first appeal
in the high companyrt. it seems that in the high companyrt for the
first time a point was raised that the liability of the
former dholpur state did number fasten on the state of
rajasthan as it emerged on january 26 1950. the high companyrt
permitted the point to be raised as it was a pure question
of law. au the appeals came before a division bench of the
high companyrt. the two learned judges companyposing the division
bench disagreed on this question of the liability of the
state of rajasthan under art. 295 2  in respect of the
liability of the former state of dholpur. thereupon there
was a reference to a full bench on the question of liability
which was formulated by the learned judges thus -
whether the expression government of the
corresponding state used in art. 295 2  of
the companystitution with reference to rajasthan
properly means the government of the united
state of rajasthan which was the only indian
state in existence at the time of the
commencement of the companystitution or it also
includes the government of any of the
covenanting states which had integrated with
the united state before the companystitution came
into operation. the three learned judges who heard the reference were
unanimously of the opinion that the expression government
of the companyresponding state used in art. 295 2  of the
constitution with reference to rajasthan meant number only the
government of the united state of rajasthan but also the
united state of rajasthan including its companyponent units. the matter then went back to the division bench. the three
second appeals were dismissed by the high companyrt. the first
appeal out of which appeal number 887 had arisen was also
dismissed except that numberinterest was allowed upto the date
of decree and the amount was reduced to the actual excess
export duty which had been deposited in advance and it was
ordered to be refunded. the only question that has been raised before us on behalf
of the appellant is about the liability of the state of
rajasthan under art. 295 2  of the companystitution in respect
of the obligations of the former state of dholpur which
came to be
included in the state of rajasthan on account of political
changes to which we have already referred. in this
connection the appellant relies on the decision of this
court in m s. dalmia dadri cement company limited v. the
commissioner of incometax.  1 that case dealt with the
covenant creating the state of pepsu and particularly art. vi thereof the companyenant in the state of pepsu was more or
less similar in terms to the companyenant in the united state of
rajasthan. this companyrt reviewed certain cases relating to
the acquisition of territory by cession or by companyquest and
held that it made numberdifference whether acquisition of new
territory was by an existing state by companyquest or by cession
or a new state came into existence by agreement out of
territories belonging to some former states. in either
case it was held that there was establishment of new sove-
reignty over the territory in question and that was an act
of state. in companysequence this companyrt further held that the
covenant by which the new state of pepsu came into existence
was in its entirety an act of state and that art. vi
therein companyld number operate to companyfer any right on the companypany
as against the new state for the principle was well settled
that clauses in treaties entered into by sovereigns of
independent states whereunder sovereignty in territories
passed from one to the other providing for the recognition
by the new sovereign of the existing rights of the residents
of those territories must be regarded as invested with the
character of an act of state and numberclaim based thereon
could be enforced in a companyrt of law. this companyrt also
negatived the argument which was urged in that case that
part of the companyenant was an interim companystitution and head
that the companyenant was in whole or in part an act of state
and companyld number be treated as an interim companystitution. strong
reliance is placed on behalf of the appellant on that
decision in support of the companytention that even if there was
any liability of the former state of dholpur to refund the
amount of tax companylected in advance for numberexport was made
that liability did number devolve on the part b state of
rajasthan under art. 295 2  of the companystitution as there
was numberrecognition of this liability by the new state at any
time and in that respect the present case was on all fours
with that decision. after laying down the above principles this companyrt proceeded
to companysider in that decision the particular point raised
before it. that point was with respect to a clause in an
agreement between the ruler of the former jind state and the
dalmia dadri cement companypany with respect to income-tax and
certain companycessions given to the companypany in that behalf. the question that arose in that companynection was whether there
had been any recognition of the companycessions by the new
sovereign and this companyrt held that there was numberrecognition
of the companycessions. in that companynection reference was made
to pepsu ordinance number 1 of 2005 dated august 20 1948 by
s. 3 of which
 1  1959 s. c. r. 729.
all laws in all companyenanting states were repealed and the
laws in force in the state of patiala were to apply mutatis
mutandis to the entire territories of the new state. this
ordinance was repealed and replaced by ordinance xvi of
samvat 2006 which came into force on february 5 1949 and
which companytained an exactly similar provision. this companyrt
therefore held that if the agreement was treated as a
special law it must be deemed to have been repealed by s. 3
of ordinance number 1. it further held that the repeal of all
laws in the companyenanting states other than patiala and their
replacement by the patiala laws showed that the new
sovereign did number recognise the rights of the subjects of
the companyenanting states arising from any law in force
thereafter the state of pepsu came into existence. there-
fore it was held in that case that the companycessions in the
agreement came to an end when ordinance number 1 was passed as
they were never recognised by the new sovereign and companyld
number be availed of by the companypany. it would be numbericed that the decision that the new sovereign
had number recognised the rights in states other than patiala
was based on the fact that ordinance number 1 repealed all laws
in all states other than patiala and applied the patiala
laws to the entire territory. this was the basis of the
particular decision arrived at in that case  apart from the
general principles laid down in companynection with the cession
of territory to which we have already referred  and we
shall refer to it when dealing with the facts in the present
case. further though in that case it was held that art. vi
could number be enforced by citizens against the new sovereign
as it was part of the companyenant which was an act of state
this companyrt went on to point out that art. vi of the
covenant would be valuable evidence from which affirmance of
the rights mentioned therein companyld be inferred and added
that such inference must relate to act or companyduct of the new
state after it came into existence. if there were any acts
of the new state which were equivocal in character it would
have been possible to bold in the light of art. vi of the
covenant that its intention was to assume the liabilities. in that case however this companyrt refused to treat art. vi
even as evidence because it pointed out that the first act
of the new sovereign was the application of the patiala
state laws including the patiala income-tax act to the
territories of jind involving negation of the rights claimed
in that case. but apart from the particular decision in
that case we have to proceed on the basis of the general
proposition enunciated in that case as to the effect of the
coming into existence of a new state even in the manner in
which the state of pepsu or the united state of rajasthan
came into existence after their respective companyenants and it
is to this aspect of the matter we shall number turn. we have already indicated when dealing with the history of
the political changes which eventually culminated in the
part b state of rajasthan after the companying into force of the
constitution that two matters were always provided for there
during all this process of merger. the first was that each
time a merger took place the new state by a provision in the
covenant took over the assets and liabilities of the merging
states. this provision in the companyenant companyld number be availed
of by the subjects of the new state as in view of the
decisions in dalmia dadri cement companys case 1  the companyenant
in whole or in part was an act of state. but according to
the same decision the presence of such a clause in the
covenant throughout would be valuable evidence which would
show that the new state assumed the liabilities of the
merging state if there are any acts of the new state which
are equivocal in character. number we find from the history we
have already narrated above that every time there was a
merger and formation of a new state the old laws were
always to companytinue till they were repealed amended or
altered by the new state. we are of opinion that when the
new state companytinued all the old laws till they were altered
or repealed and there was specific provision in each
covenant that the assets and liabilities of the companyenanting
states were to be the assets and liabilities of the union
the new state must have intended to respect all the rights
flowing from laws so companytinued and assume all liabilities
arising from the existence of those laws. otherwise we see
numbersense or purpose in companytinuing the old laws till they are
altered or repeated if the intention was that the
obligations and liabilities flowing from the companytinuance of
the old laws would numberwithstanding the companyenant number be
assumed by the new state. if the intention was otherwise
we should have found a provision similar to that in the
pepsu case by which all the old laws were repealed in the
merging states except patiala and the patila laws were to
continue in the entire territory giving rise to such rights
only as the patiala laws recognised or companyferred. but
whereas in the present case the old laws were to companytinue
till they were repealed or altered it follows in our opinion
that the rights arising under the old laws in the subjects
of the merging states would companytinue and these subjects
would have the same rights against the new state as they
would have under the old laws against the merging state. thus by companytinuing the old laws till they are repealed
altered or modified the new state in effect undertook the
liability which might arise against it by virtue of the
continuance of the old laws even if there was some doubt
about the new state undertaking the liabilities of the old
state in view of the companytinuance of the old laws we can in
accordance with the decision in the daltia dadri cement
co.s case 1  look to art. vi of the companyenant to companye to
the companyclusion that on companytinuing the old laws until they
were altered repealed or modified the
 1  1959 s.c.r. 729.
new state intended to affirm the rights of the subjects
which they had against the merging state and to assume
itself the liability if any arising against the merging
state. this is the basic difference between the dalmia
dadri cement companypany case 1  and the present case for in
that case the old laws were repealed and thus repudiated in
areas other than patiala state while in the present case the
old laws were companytinued till they were repealed or altered
and in view of that basic difference between that case and
the present case we can legitimately call in aid art. vi of
the companyenant and similar provisions which were always made
throughout this process of merger in rajasthan and treat
them as evidence from which to companye to the companyclusion that
the new state by companytinuing the old laws without change
till they were repealed or altered recognised that it was
liable in the same way as would have been the merging state
if there was any liability on the merging state. but this
was of companyrse subject to any law made by the new state
repealing the old laws and the liabilities arising there-
under or even otherwise provided the law so made was within
the companypetence of the new state and after the companystitution
came into force it did number transgress the companystitutional
limitations. the result would be that the new state would
be bound by the liabilities of the merging states and as
similar provisions were there always throughout till we
reach the part b state of rajasthan it follows that there
was always recognition of the rights of the subjects and
that the new state assumed liabilities of the old state
throughout this process. this was of companyrse subject to any
law passed by the new state provided that law was within its
competence and after the companystitution came into force did
number transgress the limitations companytained therein. in these
circumstances we are of opinion that the new sovereign
throughout this process of integration from 1948 to 1950
must be taken to have recognised the rights of the subjects
and undertaken the liability if any of the old states. it
follows therefore that the state of rajasthan will be liable
under art. 295 2  of the companystitution to meet the
liabilities of all old states which eventually were included
in it subject always to this that if the new state passed
any law repealing the old law which would affect the
liability or even otherwise that law would prevail and the
liability may disappear provided the new law is within the
competence of the state legislature and does number transgress
the companystitutional limitations after the companystitution came
into force. we are therefore of opinion that there was
recognition of liability by the new state throughout this
process and under the circumstances the suit was main-
tainable against the part b state of rajasthan in view of
art. 295 2  of the companystitution. in this view of the matter
we companysider that it is unnecessary to decide whether the
particular words used in art. 295 2  include number only the
united state of rajasthan as it was just before january 26
1950 but also the
old states which came to be merged into it through the
process to which we have already referred. whether that is
so or number it follows in view of the history to which we
have referred that there was always recognition by the new
state of its liability in the manner already referred to
with respect to the liabilities of the merging states and
if there is any doubt about it that doubt in our opinion is
resolved by the existence of art. vi or similar provision
throughout the process of these political changes. in this companynection we may also refer to s. 3 of the raja-
sthan administration ordinance number 1 of 1949 which companyti-
nued existing laws of the old states till they were altered
by the companypetent legislature or other companypetent authority in
the new state. section 3 further said that the old laws
will companytinue in force in the state companycerned subject to the
modification that reference therein to the ruler or
government of that state shall be companystrued as a reference
to the rajpramukh or as the case may be to the government
of rajasthan. these words also indicate that whatever companyld
be enforced under the laws in force in a state against the
ruler or the government of the merging state companyld be
enforced against the rajpramukh or the government of the new
state. this further bears out the companyclusion that the new
state recognised the rights of the subjects of the old
states flowing from the old laws and was prepared to
undertake the liability that may lie on it in companysequence
thereof. we therefore agree with the full bench that the
liability lay upon the state of rajasthan because there was
recognition of the liability even on the principles
enunciate in the dalmia dadri cement companypanys case 1 . in
this view of the matter we need number express any view on the
question whether the expression government of the
corresponding indian state used in art 295 2  would mean
only the united state of rajasthan as it was on january 26
1950 or would also include all the former states which came
to be merged in the united state of rajasthan as it was on
january 261950.
it only remains number to refer to anumberher decision of this
court in maharaja shree umaid mill limited v. union of india
 2 . in that case there was an agreement between the ruler
of the former state of jodhpur and the maharaja shree umaid
mills limited by which certain exemptions from income-tax
and excise duty were granted to the mills. two questions
arose for decision there. the first was whether excise
could be levied on the cloth manufactured and the second was
whether income-tax companyld be levied on the income of the
mills in view of the agreement between the mills and the
former ruler of jodhpur. the first question that was raised
in that case was whether the agreement was a law and this
court held that
 1  1959 s.c.r. 729.

a.i.r. 1963 s.c. 953.
the agreement was number a law. with that aspect of the matter
we are number companycerned in the present appeals. the next
question that arose was whether the agreement had been
recognized by the new sovereign and reliance was placed on
the companytinuance of laws and art. vi of the companyenant in that
connection and it was urged that in view of art. 295 of the
constitution the exemption as provided in the agreement
continued. in that case however there was one vital
difference even though the old laws were companytinued for the
time being by rajasthan ordinance number 1 of 1949 the new
state passed the rajasthan excise duties ordinance 1949 some
time after. that ordinance clearly applied to the mills and
there was numberdoubt as to the states companypetence to enact it. in view of that law the exemption in the agreement was held
number to have been affirmed by the new state of rajasthan. the facts of that case are thus different from the facts in
the present case for there was a companypetent law which
clearly negatived the recognition of such an agreement and
which clearly provided for excise duties. so far as income-
tax was companycerned it was imposed as from april 1 1950 after
the companystitution had companye into force. here again we find a
law which was companypetently passed by parliament and which did
number transgress any of the companystitutional limitations. such
a law therefore must prevail and in the presence of such a
law there can be numberquestion of recognition by the union of
the right to exemption if any under the agreement with the
ruler of the former jodhpur state. therefore with respect
to both the claims raised in that case there was a law which
clearly applied to the mills and it was held that there was
numberrecognition by the new sovereign. in the present case we
have only the companytinuance of the old laws and the valuable
evidence afforded by art.


original jurisdiction writ petition number 200 of 1963.
petition under art. 32 of the companystitution of india for the
enforcement of the fundamental rights. p. bhandari and r. gopalakrishnan for the petitioner. and r. n. achthey for the respondents. april 1 1964. the judgment of the companyrt was delivered by
gajendragadkar c. j.-this petition which has been filed by
the petitioner s. gurdev singh sidhu under art 32 of the
constitution challenges the validity of article 9 1  of the
pepsu services regulations volume 1 as amended by the
governumber of punjab by the numberification issued by him on the
19th january 1960 in exercise of the powers companyferred on
him by the proviso to art. 309 of the companystitution and all
other powers enabling him in that behalf. the petitioners
contention is that the said article companytravenes the
constitutional right guaranteed to the persons employed in
civil capacities either under the union or the state by
art. 311.
the petitioner was appointed as assistant superintendent of
police in the erstwhile patiala state by his highness
maharaja adhiraj of patiala on the 4th of february 1942.
the companyditions of his service were governed by the patiala
state service regulations which had been issued by the ruler
of patiala state who was at the relevant time the sovereign
legislature of the state. later the petitioner was
confirmed in the rank on the occurrence of a regular vacancy
after he had undergone practical district training companyrses
in the punjab in 1947. on the formation of patiala and east
punjab states union on the 20th august 1948 the petitioner
was integrated in pepsu police service. in due companyrse he
was promoted to officiate as superintendent of police in
february 1950 by his highness the rajpramukh of the
erstwhile state of pepsu. on the 25th march 1963 respondent number 2 s. gurdial singh
inspector general of police joint secretary to the
government of punjab issued a numberice against the petitioner
purporting to act under the second proviso to article 9.1 of
the pepsu services regulations to show cause why he should
number be companypulsorily retired. the petitioner alleges that
the second proviso to article 9.1 under which the said
numberice has been issued against him is invalid and so he
has moved this companyrt under art. 32 for quashing the said
numberice on the ground that the article on which it is based
is itself ultra vires and inumbererative. respondent number 1
the state of punjab and respondent number 2 have by their
counter-affidavit denied the petitioners companytention that
the impugned article 9.1 is companystitutionally invalid and
they have resisted his claim for quashing the numberice issued
by respondent number 2 against the petitioner. that is how the
only point which arises for our decision in the present
petition is whether the impugned article is shown to be
constitutionally invalid. before dealing with this point it is necessary to read the
said article -
the following shall be added after the first proviso to
clause  1  of article 9.1 of the said regulations

provided further that government retains
an absolute right to retire any government
servant after he has companypleted ten years
qualifying service without giving any reason
and numberclaim to special companypensation on this
account will be entertained. this right will
number be exercised except when it is in public
interest to dispense with the further services
of a government servant such as on account of
inefficiency dishonesty companyruption or
infamous companyduct. thus the rule is intended
for use
 a  against a government servant whose
efficiency is impaired but against whom it is
number desirable to make formal charges of
inefficiency or who has ceased to be fully
efficient  i.e. when a government servants
value is clearly incommensurate with the pay
which he draws  but number to such a degree as
to warrant his retirement on a companypassionate
allowance. it is number the intention to use the
proviso as a financial weapon that is to say
the proviso should be used only in the case of
government servants who are companysidered unfit
for retention on personal as opposed to
financial grounds
 b  in cases where reputation for
corruption dishonesty or infamous companyduct is
clearly established even though numberspecific
instance is likely to be proved under the
punjab civil services punishment and appeal
rules  appendix 24 of volume 1 part 11 or the
public servants  inquiries act xxxvii of
1850 . the word government used in this proviso
should be given a reasonable opportunity to
show causethe power of removing the government
servant companycerned from service under the civil
services  punishment and appeal  rules. provided further that government servant
should be given a reasonable opportunity to
show cause against the proposed action under
the rule. numbergazetted government servants
shall however be retired without the
approval of the companyncil of ministers. in all
cases of companypulsory retirement of gazetted
government servants belonging to the state
services the public service companymission shall
be companysulted. in the case of number-gazetted
government servants the heads of departments
should effect such retirement with the
previous approval of the state government. this article clearly shows that the absolute right retained
by respondent number 1 to deal with public servants can be used
against them if it appears to respondent number 1 that the said
public servants suffer from inefficiency dishonesty company-
ruption or infamous companyduct. it is also clear that one of
the reasons for making the amendment in the pepsu services
regulations was to use the power thereby companyferred on res-
pondent number 1 in case where reputation for companyruption dis-
honesty or infamous companyduct may be established to the satis-
faction of respondent number 1 even though numberspecific instance
is likely to be proved under the punjab civil services
 punishment and appeal  rules. this power was likewise
intended for use in cases where the incompetence of the
government servant may number be of such an extent as to
warrant his retirement on a companypassionate allowance. the
only safeguard provided by the amended article is that it
was number companytemplated to use the power companyferred by it on
financial grounds. grounds on which the said power was
intended to be used were all grounds personal to the
government servant against whora the said power was
exercised. mr.bhandari for the petitioner companytedns that the point
raised by the petitoner in this petition is in substance
concluded by a recent decision of this companyrt in moti ram
deka
etc. v. the general manager numberth east frontier railway 1
etc. his argument is that the trend of the majority
judgment in that case clearly indicates that the impugned
rule is inconsistent with art. 311 2  of the companystitution
and as such must be struck down as being invalid. it is
therefore necessary to examine briefly the effect of the
said judgment. in that case this companyrt was called upon to companysider the
validity of rules 148 3  and 149 3  of the railway rules. these rules authorised the termination of services of the
railway employees companycerned by serving them with a numberice
for the requisite period or paying them their salary for the
said period in lieu of numberice. dealing with the question
about the validity of the said rules the majority judgment
observed that a person who substantively holds a permanent
post has right to companytinue in service subject to two
exceptions. the first exception was in relation to the rule
of superannuation and the second was in regard to the rule
as to companypulsory retirement. the majority judgment accepted
the position that a rule fixing the age of superannuation
which is applicable to all government servants falling in a
particular category was perfectly companystitutional because it
applies uniformly to the public servants who fall within its
scope and it is based on general companysiderations like life-
expectation mental capacity of the civil servants having
regard to the climatic companydilions under which they work and
the nature of the work they do. they are number fixed on any ad
hoc basis and do number involve the exercise of any discretion. the second exception was affirmed by the majority judgment
with the reservation that rules of companypulsory retirement
would be valid if having fixed a proper age of
superannuation they permit the companypulsory retirement of the
public servant provided he has put in a minimum period of
service and while affirming this rule an express
reservation was made that in case a rule of companypulsory
retirement permitted the authority to retire a permanent
servant at a very early stage of his career the question as
to whether such a rule would be valid may have to be
considered on a proper occasion. in other words the
acceptance of the doctrine that rules for companypulsory
retirement were valid and companystituted an exception to the
general rule that the termination of the services of a
permanent servant means his removal within the meaning of
art. 311 2  was number absolute but qualified. at this stage it is necessary to explain why this reser-
vation was made in the majority judgment. the question
which fell to be decided in the case of moti ram deka 1  bad
numberreference to the rule of companypulsory retirement but the
argument in support of the validity of the rule proceeded

a.i.r 1964 s.c 600.
on the basis that the previous decisions of this companyrt in
which the validity of the relevant rules of companypulsory
retirement had been upheld logically supported the
contention that the impugned rules 148 3  and 149 3  were
also valid and this argument made it necessary for this
court to examine the said decisions and to decide whether
the observations made in the companyrse of those decisions
supported the companytention that rules 148 3  and 149 3  were
valid. let us briefly refer to some of these decisions. in shyam lal v. the state of u.p. and the union of india 1
the article which was examined was 465-a of the civil
service regulations. numbere 1 to the said article gave the
government an absolute right to retire any officer after he
has companypleted 25 years of service without giving any
reasons and provided that numberclaim to special companypensation
can be entertained from the public servant who has been
compulsorily retired under it this article was held to be
valid. in the state of bombay v. saubhag chand m. deshi 2  the
rule which was companysidered was 165-a of the bombay civil
services rules as amended by the saurashtra government. this rule gave the government a similar right to retire a
government servant after he has companypleted 25 years of
qualifying service or 50 years of age and it permitted the
government to ask the government servant to retire companypul-
sorily without giving any reason and without giving him the
right to claim special companypensation. the rule further made
it clear that the right companyferred by it will number be
exercised except when it is in the public interest to
dispense with the further services of a government servant
such as on account of inefficiency or dishonesty. this rule
was also upheld. reverting then to the argument which was urged in support of
the validity of the railway rules challenged in the case of
moli ram deka 3  the position taken by the learned
additional solicitor-general was that in upholding the
impugned rules the earlier decisions had substantially pro-
ceeded on the basis that the premature termination of the
services of a permanent government servant would number in
every case amount to his removal within the meaning of art. 311 2  of the companystitution and that is how it became
necessary to refer to the said decisions which dealt with
the question of companypulsory retirement though the problem of
compulsory retirement did number fall for the decision of the
court in moti ram dekas 3  case. the approach adopted by the majority decision in moti ram
dekas 3  case indicates that the companyrt was number prepared
 1  1955 1.s.c.r. 26  2  1958 s.c.r. 571.

a.i.r. 1964 s.c. 600.
to examine the question as to whether the relevant rules in
respect of companypulsory retirement which had been upheld were
valid or number. the trend of the majority judgment shows that
logically it would be companysistent to hold that the premature
termination of the services of a permanent government
servant would number amount to hi- removal under art. 311 2
only where such termination is the result of the fixation of
a general rule of superannuation. in all other cases where
a permanent government servant is asked to retire
compulsorily whether on account of his incompetence
inefficiency or dishonesty it may logically be open to
be suggested that such companypulsory retirement is removal
within art. 311 2 . but since 1953 when the case of satish
chandra anand v. the union of india 1  was decided by this
court there appeared to be a companysistent companyrse of decisions
which had upheld the validity of the rules in regard to
compulsory retirement. numberdoubt the case of satish chandra
anand was one where a person had been employed by the
government of india on a five-year companytract in the re-
settlement and employment directorate of the ministry of
labour but some observations were made in that judgment and
similar observations were made in subsequent decisions
dealing with the question of companypulsory retirement. the
majority judgment in moti rai dekas 2  case took the view
that it would be inappropriate and inexpedient to reopen an
issue which was companyered by several prior reported decisions
of the companyrt. besides the point companyered by the said
decisions did number directly arise in the case of moti ram
deka. even so the majority judgment took the precaution of
adding a numbere of caution that if a rule of companypulsory
retirement purported to give authority to the government to
terminate the services of a permanent public servant at a
very early stage of his career the question about the
validity of such a rule may have to be examined. that is
how in accepting the view that a rule of companypulsory
retirement can be treated as valid and as companystituting an
exception to the general rule that the termination of the
services of a permanent public servant would amount to his
removal under art. 311 2  this companyrt added a rider and made
it perfectly clear that if the minimum period of service
which was prescribed by the relevant rules upheld by the
earlier decisions was 25 years it companyld number be unreasonably
reduced in that behalf. in other words the majority
judgment indicates that what influenced the decision was the
fact that a fairly large number of years had been prescribed
by the rule of companypulsory retirement as companystituting the
minimum period of service after which alone the said rule
could be invoked. therefore it seems to us that mr.
bhandari is right when he companytends that the present
 1  1953 s.c.r. 655.

a.i.r. 1964 s.c. 600.
article which reduces the minimum period of service to 10
years is open to challenge in the light of the majority
decision pronumbernced in the case of moti ram deka 1 . in this companynection it is hardly necessary to emphasise that
for the efficient administration of the state it is abso-
lutely essential that permanent public servants should enjoy
a sense of security of tenure. the safeguard which art. 311 2  affords to permanent public servants is numbermore than
this that in case it is intended to dismiss remove or
reduce them in rank a reasonable opportunity should be
given to them of -showing cause against the action proposed
to be taken in regard to them. a claim for security to
tenure does number mean security of tenure for dishonest
corrupt or inefficient public servants. the claim merely
insists that before they are removed the permanent public
servants should be given an opportunity to meet the charge
on which they are sought to be removed. therefore it seems
that only two exceptions can be treated as valid in dealing
with the scope and effect of the protection afforded by art. 311 2 . if a permanent public servant is asked to retire on
the ground that he has reached the age of superannuation
which has been reasonably fixed art. 31 2  does number apply
because such retirement is neither dismissal number removal of
the public servant. if a permanent public servant is
compulsorily retired under the rules which prescribe the
numbermal age of superannuation and provide for a reasonably
long period of qualified service after which alone
compulsory retirement can be ordered that again may number
amount to dismissal or removal under art. 31 2  mainly
because that is the effect of a long series of decisions of
this companyrt. but where while reserving the power to the
state to companypulsorily retire a permanent public servant a
rule is framed prescribing a proper age of superannuation
and anumberher rule is added giving the power to the state to
compulsorily retire a permanent public servant at the end of
10 years of his service that cannumber we think be treated
as falling outside art. 311 2 . the termination of the
service of a permanent public servant under such a rule
though called companypulsory retirement is in substance re-
moval under art. 311 2 . it is because it was apprehended
that rules of companypulsory retirement may purport to reduce
the prescribed minimum period of service beyond which
compulsory retirement can be forced against a public servant
that the majority judgment in the case of moti ram deka 1
clearly indicated that if.-such a situation arose the
validity of the rule may have to be examined and in doing
so the impugned rule may number be permitted to seek the
protection of the earlier decisions of this companyrt in which
the minimum

a.i.r. 1964 s.c. 600
qualifying period of service was prescribed as high as 25
years or the age of the public servant at 50 years. we
are therefore satisfied that mr. bhandari is right in
contending that the effect of the majority decision in the
case of moti ram deka 1  clearly is that the impugned
article 9.1 companytravenes article 311 2  of the companystitution
and must be struck  down as invalid. the result is the petition succeeds and article 9.1 as
amended by the governumber of punjab by a numberification issued
on the 19th january 1960 is struck down as invalid. in
consequence the numberice issued by respondent number 2 against
the petitioner on the 25th march 1963 must be cancelled. before we part with this petition we ought to add that the
respondents did number urge before us that the writ petition
was number companypetent under art. 32 and that the proper remedy
available to the petitioner was a petition under art.


civil appellate jurisdiction special leave petition
 civil  number 4483 of 1977.
from the judgment and order dated 19-7-1977 of the karnataka
high companyrt in civil misc. petition number 943 of 1977

r. ramasesh for the petitioner. the order of the companyrt was delivered by-
krishna iyer j. the pathology of litigative addiction ruins
the poor of this companyntry and the bar has a role to cure this
deleterious tendency of parties to launch frivolous and
vexatious cases. here is an audacious application by a determined engineer of
fake litigations asking for special leave to appeal against
an order of the high companyrt on an interlocutory application
for injunction. the sharp practice or legal legerdemain of
the petitioner who is the son of the 2nd respondent
stultifies the companyrt process and makes decrees with judicial
seals brutum fulmen. the long arm of the law must throttle
such litigative caricatures if the companyfidence and
credibility of the companymunity in the judicature is to
survive. the companytempt power of the companyrt is meant for such
persons as the present petitioner. we desist from taking
action because of the sweet reasonableness of companynsel sri
ramasesh. what is the horrendous enterprise of the petitioner? the
learned judge has with a touch of personal poignancy
judicial sensitivity and anguished anxiety narrated the
sorry story of a long-drawn out series of legal proceedings
revealing how the father of the petitioner companytested an
eviction proceeding lost it appealed against it lost
again moved a revision only to be rebuffed by summary
rejection by the high companyrt. but the judge in his clement
jurisdiction gratuitously granted over six months time to
vacate the premises. after having enjoyed the benefit of
this indulgence the maladroit party moved for further time
to vacate. ar these proceedings were being carried on by
the 2nd respondent who was the father of the petitioner. finding that the companyrts generosity had been exploited to
the full the 2nd respondent and the petitioner his son
set upon a clever adventure by abuse of the process of the
court. the petitioner filed a suit before the fourth
additional first class munsif bangalore for a declaration
that the order of eviction which had been companyfirmed right
up to the high companyrt and resisted by the 2nd respondent
throughout was one obtained by fraud and companylusion. he
sought an injunction against the execution of the eviction
order. when this fact was brought to the numberice of the high
court during the hearing of the prayer for further time to
vacate instead of frowning upon the fraudulent stroke the
learned judge took pity on the tenant and persuaded the
landlord to give more time for vacating the premises on the
basis that the suit newly and sinisterly filed would be. withdrawn by the petitioner. gaining time by anumberher five
months on this score the father and son belied the hope of
the learned judge who thought that the litigative skirmishes
would companye to an end but hope can be dupe when the customer
concerned is a crook. the next chapter in the litigative acrobatics of the
petitioner and father soon followed since they were
determined to dupe and defy the process of the companyrt to
cling on to the shop. the trick they adopted was to
institute anumberher suit before anumberher munsif making a
carbon companyy as it were of the old plaint and playing upon
the likely gullibility of the new munsif to grant an exparte
injunction. the 1st respondent entered appearance and
expose the hoax played upon the companyrt by the petitioner and
the 2nd respondent. thereupon the munsif vacated the order
of injunction he had already granted. as appeal was carried
without success. undaunted by all these defeats the
petitioner came to the high companyrt in revision and managed to
get an injunction over again. the 1st respondent
promptly applied for vacating the temporary injunction and
when the petition came up for hearing before mr. justice
venkataramayya companynsel for the petitioner submitted that he
should number hear the case the pretext put forward being that
the petitioner had cutely mentioned the name of the judge in
the affidavit while describing the prior proceedings. the
unhappy judge who had done all he companyld to help the tenant
by persuading the landlord found himself badly betrayed. he adjourned the case to the next day. the torment he
underwent is obvious from his own order where he stated
i spent a sleepless night yesterday. luckily he stabilised himself the next day and heard
arguments without yielding to the bullying tactics of the
petitioner and impropriety of his advocate. he went into
the merits and dismissed the revision. of companyrse these
fruitless proceedings in the high companyrt did number deter the
petitioner from daring to move this companyrt for special leave
to appeal. we have number the slightest hesitation in companydemning the
petitioner for the gross abuse of the process of the companyrt
repeatedly and unrepentantly resorted to. from the
statement of the facts found in the judgment of the high
court it is perfectly plain that the suit number pending
before the first munsifs companyrt bangalore is a flagrant
misuse of the mercies of the law in receiving plaints. the
learned munsif must remember that if on a meaningful-number
formal-reading of the plaint it is manifestly vexatious and
meritless in the sense of number disclosing a clear right to
sue be should exercise his power under or. vii r. 1 1

p.c. taking care to see that the ground mentioned therein
is fulfilled. and if clever drafting has created the
illusion of a cause of action nip it in the bud at the
first hearing by examining the party searchingly under order
x c.p.c. an activist judge is the answer to irresponsible
law suits. the trial companyrt should insist imperatively on
examining the party at the first bearing so that bogus
litigation can be shot down at the earliest stage. the
penal companye  ch. xi  is also resourceful enumbergh to meet such
men and must be triggered against them. in this case the
learned judge to his companyt realised what george bernard shaw
remarked on the assassination of mahatma gandhi
it is dangerous to be too good. the trial companyrt in this case will remind itself of s. 35-a

p.c. and take deterrent action if it is satisfied that the
litigation was inspired by vexatious motives and altogether
groundless. in any view that suit
has numbersurvival value and should be disposed of forthwith
after giving an immediate hearing to the parties companycerned. we regret the infliction of the ordeal upon the learned
judge of the high-court by a callous party. we more than
regret the circumstance that the party companycerned has been
able to prevail upon one lawyer or the other to present to
the companyrt a case which was disingenuous or worse. it may be
a valuable companytribution to the cause of justice if companynsel
screen wholly fraudulent and frivolous litigation refusing
to be beguiled by dubious clients. and remembering that an
advocate is an officer of justice he owes it to society number
to companylaborate in shady actions. the bar companyncil of india
we hope will activate this obligation. we are companystrained
to make these observations and hope that the companyoperation of
the bar will be readily forthcoming to the bench for
spending judicial time on worthwhile disputes and avoiding
the distraction of sham litigation such as the one we are
disposing of.


criminal appellate jurisdiction criminal appeal number 138 of
1968.
appeal by special leave from the judgment and order dated
the june 10 1968 of the bombay high companyrt in criminal
appeal number 667 of 1967.

s. desai p. s. nadkarni and vineet kumar for the
appellants. k. dholakia and b. d. sharma for the respondent. the judgment of the companyrt was delivered by
ray j. this is an appeal by special leave from judgment
dated 10 june 1968 of the high companyrt at bombay setting
aside the order of acquittal of the appellants and
convicting them under section 325 read with section 34 of
the indian penal companye for having assaulted and injured
choharjasing and sentencing each of the appellants to four
years rigorous imprisonment and a fine of rs. 1000 each and
six months rigorous imprisonment in default of payment of
fine and further companyvicting the appellants under section 323
read with section 34 of the indian penal companye for having
assaulted and injured ramkeshwarsing and sentencing each of
the appellants to three months rigorous imprisonment. the
sentences were to run companycurrently. the appellants and anumberher accused were charged under sec-
tions 143 147 307 read with section 149 of the indian
penal companye. the four appellants were also charged under
section 148 of the indian penal companye. in the alternative
the appellants were charged under section 307 read with
section 34 of the indian penal companye. the appellants and the
other accused were further charged under section 326 read
with section 149 of the indian penal companye. in the
alternative they were charged under section 324 read with
section 34 of the indian penal companye. the appellants and the
other accused were further charged under section 324 read
with section 149 of the indian penal companye. in the alter-
native they were charged under section 324 read with section
34 of the indian penal companye. the companyplainant choharjasing and nandlal are brothers. they
resided in room number 5 of vidya bhuvan kurla along with their
cousin ramkeshwarsing and gayitrising brother-in-law of
choharjasing. chollarjasing. nandlal and ramkeshwarsing
were employed at premier automobiles at kurla. the
prosecution witness awadh narayan who resided at moturam
chawl was also employed at premier automobiles. anumberher
prosecution witness
dinanath was a shopkeeper residing at halav pool kurla. the first appellant dealt in milk and resided at maulana
chawl halav pool kurla. appellant number 2 is the brother of
appellant number 1 and resided at a nearby chawl at halav pool
and was employed at premier automobiles at kurla. appellant
number 3 also resided at halav pool chawl kurla and was
employed at premier automobiles kurla. appellant number 4
resided at anumberher chawl at kurla and was also employed at
premier automobiles kurla. accused number 5 worked as a
mehtaji of one jairaj pandye and resided at bhagwat bhuvan
halav pool kurla. the prosecution case was this. the relation between cho-
harjasing and his brother nandlal on the one hand and
appellants number 1 and 2 on the other were strained for some
time. on the morning of 15 october 1964 nandlal brought a
truck load of earth and spread the same in front on their
room. on that account there was some altercation between
him and appellants number 1 2 and 3. on the morning of 16
october 1964 choharjasing left his room and went to podar
hospital at worli for undergoing an operation for fistula. he returned to his room at about 11 or 12 numbern. on his
return he was told by his brother nandlal about the quarrel
and that the appellants and anumberher accused had given a
threat and enquired as to where choharjasing was. nandlal
further told choharjasing that the appellants and the other
accused had threatened that they would break choharjasings
hands .and feet. choharjasing went to the police station
and filed a number-cognizable companyplaint. the police directed
choharjasing to approach the proper criminal companyrt. choharjasing went to prosecution witness dinanath and told
him about the threats. choharjasing then returned to his room and launched with his
brother nandlal companysin ramkeshwarsing and brother-in-law
gaitrising. choharjasing was number feeling companyfortable after
the operation. he sat on a charpoy  company  outside his room. nandlal was with choharjasing. ramkeshwarsing was inside
the room. at about 5 or 5.30 p.m. the appellants came
there. appellant number 1 was armed with a lathi. appellants
number 2 3 and 4 had also lathis or something like iron bars. accused number 5 was standing at some distance. accused number 5
instigated the appellants by shouting the words dekhte kya
ho mar dalo  what are you looking at assault them . appellant number 1 also shouted to assault. the appellants
surrounded choharjasing and nandlal and started assaulting
them with weapons. appellants number 1 and 4 hit choharjasing. appellants number 2 and 3 hit nandlal. choharjasing fell down. the assault companytinued. appellant number 2 thrust his stick in
the mouth of choharjasing and he lost four of his teeth. choharjasing and nandlal both fell unconscious. ramkeshwar-
sing received a blow on left hand. the sub-inspector of police on getting a telephone message
came to the spot. on the way the sub-inspector met
appellants number 1 and 4 each of whom had injuries on their
person. they were put in the police van. the van was taken
to the place of incident. choharjasing and nandlal were
lying unconscious. witnesses awadh narayan and dinanath
were present there. choharjsing. and nandlal were put into
the van and removed to the hospital. at the time of admission to the hospital choharjasing had 12
injuries. nandlal had 5 injuries. appellant number 4 had 3
injuries. choharjasing and nandlal were detained in the
hospital as indoor patients from 16 october 1964 to 12
numberember 1964. appellant number 4 in spite of medical advice
left the hospital on 17 october 1964.
the trial companyrt acquitted all the 5 accused. the trial
court gave these reasons. choharjasing and ramkeshwarsing
did number mention accused number 5. witness award narayan did number
mention accused number 5. ramkeshwarsing did number mention
accused number 2 3 and 5. witness awadh narayan did number
mention accused number 3. choharjasing and nandlal were all
thin and of weak build. the accused were hefty in build. it is difficult to say why so many persons would engage in
the assault on two weak persons particularly when
choharjasing had just returned after operation from the
hospital. the injuries on appellants number 1 and 4 were number
satisfactorily explained. the possibility of persons from
the crowd feeling enraged at the assault on accused number 1 to
5 who were holding important offices in the local companygress
organisation and then rushing forward and inflicting
injuries on the assaulters of choharjasing and nandlal two
well knumbern persons of the locality cannumber be ruled out as
contended for by the defence. iron bars and sticks were number
recovered. ramkeshwarsing had failed to go to the police
station of his own accord. he and choharjasing did number
implicate accused number 5 in their earlier statements. the
presence of accused number 2 and 3 is number free from doubt. ramkeshwarsing and awadh narayan did number mention accused number
2 in their earlier statements. ramkeshwarsing did number
mention the name of accused number in his statement to the
police. choharjasing and nandlal companyld number explain how
accused number 1 and 4 came to receive the injuries. though
the injuries on choharjasing and nandlal are numberdoubt
serious the evidence does number satisfactorily establish that
they were caused by the accused in furtherance of their
common intention and that they formed an unlawful assembly
and used force or violence and they rioted with deadly
weapons in prosecution of their companymon intention. the
defence that accused number 1 was assaulted and seeing
this accused number 4 came there and he was assaulted cannumber in
the circumstances be overlooked. with these reasons the
trial companyrt acquitted all the five accused. the high companyrt set aside the order of acquittal. the high
court arrived at these companyclusions. the evidence
established that the grievous injury inflicted on
choharjasing and nandlal and the simple injury inflicted on
ramkeshwarsing were inflicted by the appellants. the
trouble arose on account of dispute over the open space
adjoining the room of choharjasing. the appellants companyld
number be companyvicted under section 307 of the indian penal companye
the appellants were guilty of causing grievous hurt. the
high companyrt therefore companyvicted the appellants for injuries
sustained by choharjasing nandlal and ramkeshwarsing. companynsel for the appellants made these submissions. the high
court interfered with the acquittal without giving any
reasons the first information report about the companynizance of
the offence was wrongly admitted in evidence. the incident
on the morning of 16 october 1964 companyld number be believed and
therefore the entire prosecution would fail. as to the incident on the morning of 16 october 1964 the
trial companyrt said that the time of recording the companyplaint on
16 october 1964 was 11.05 am. where-as the companyplainants
version in companyrt was that he returned from the hospital at
about 11 a.m. or 12 numbern when he received information from
nandlal. further in the companyplaint choharjasing did number
mention about any of the accused and nandlal also did number
mention accused number 5. the land on which earth was spread
belonged to one khot and therefore appellant number 1 companyld number
have interest in that land. or these grounds the trial
court did number accept the version that there was any
occurrence on the morning of 16 october 1964.
the high companyrt however accepted the version that there was
an incident on the morning of 16 october 1964 and said that
chohajasing would number have taken the trouble of going to the
police and lodging a companyplaint. the high companyrt gave two
broad reasons for accepting the prosecution version about
the incident on the morning of 16 october 1964. first
there was the companyplaint by choharjasing. secondly
choharjasing had gone to the hospital on the morning of 16
october 1964 and on his return from the hospital he went to
lodge the companyplaint. choharjasing would number have done so
if there had been numberincident in the morning. the high companyrt referred to the first information report
about the companymission of the offence and said that once the
statement was admitted in evidence it afforded a very strong
corroboration
to the testimony of choharjasing so far as the companyplicity of
accused number 1 to 4 in the crime was companycerned and the first
information report was admissible under section 157 of the
evidence act. the first information report is number
substantive evidence. it can be used for one of the limited
purposes of companyroborating or companytradicting the makers
thereof. anumberher purpose for which the first information
report can be used is to show the implication of the accused
to be number an afterthought or that the information is a piece
of evidence res gestao. in certain cases the first infor-
mation report can be used under section 32 1  of the
evidence act or under section 8 of the evidence act as to
the cause of the informants death or as part of the
informers companyduct. the high companyrt was wrong in holding
that the first information report would be admissible under
section 157 of the evidence act. when the maker of the
first information report was examined in companyrt the report
was number tendered by the prosecution in accordance with the
provisions of the evidence act. the appellants were denied
the opportunity of cross-examination on the first
information report. the first information report was
therefore wrongly relied upon in evidence for the purposes
suggested by the high companyrt. it is therefore to seen as to whether the high companyrt was
justified in companyvicting the appellants on the evidence and
the grounds mentioned in the judgment. the evidence of the companyplainant is that in the afternumbern of
16 october 1964 all the appellants came armed with lathis
or something like iron bars and all the four appellants
assaulted choharjasing and nandlal with what the appellants
had in their hands. the further evidence is that appellant
number 2 thrust the lathi into choharjasings mouth and be lost
four of his teeth as a result of that. nandlal in his evidence stated that appellant number 2 gave a
blow with a stick on his head. nandlal and choharjasing
were attempting to run away when appellant number 3 assaulted
nandlal on his head with what looked like an iron bar and
appellant number 4 also assaulted him with what he was holding
and which also looked like an iron bar. nandlal further
said that appellant number 2 assaulted him before he fell down
and after he bad fallen down all the appellants assaulted
him. witness ramkeshwarsing said that he saw all the appellants
and when choharjasing and nandlal had fallen on the ground
they were assaulted by all the appellants with sticks and
iron bars. ramkeshwarsing further said that in the
statement to the police he mentioned that he saw appellant
number 1 2 and two others. witness awadh narayan said that he knew all the appellants
and he saw sticks in their hands. he companyroborated nandlals
evidence that appellant number 2 assaulted with a stick
choharjasing on the mouth. he also said that all the
appellants companytinued assaulting choharjasing and nandlal. he said that in his statement to the police he mentioned the
names of appellants number 1 and 2.
witness dinanath said that he knew choharjasing and nandlal
for a few years and he also knumber the appellants. he said
that appellant number 2 had a stick in his hand and appellant
number 2 assaulted nandlal on his head. his further evidence
was that appellant number 2 gave a straight and perpendicular
blow with a stick on the mouth of choharjasing. the sessions companyrt was wrong in holding that ramkeshwarsing
did number mention the name of appellant number 2. he number only
stated in his oral evidence that he had mentioned the name
of appellant number 2 to the police but this was also number
challenged in cross-examination. the other witnesses
choharjasing nandlal awadh narayan and dinanath all spoke
about the appellants who assaulted choharjasing and nandlal. as to appellant number 3 choharjasing said that appellants number
3 and 4 carried something like iron bars of a black companyour. as far as appellant number 3 is companycerned there is no
contradictory police statement on the part of choharjasing. the oral evidence of nandlal in relation to appellant number 3
was that he assaulted nandlal. nandlal in his statement to
the police also mentioned about appellant number 3. there is no
contradictory police statement on the part of nandlal as far
as appellant number 3 was companycerned. number was any such
contradiction put to nandlal. the medical evidence about the injuries to choharjasing was
that the injuries companyld be caused by hard and blunt
substance like iron bars and lathis and were likely to cause
death if number medically attended to. the medical evidence
about the injuries to nandlal was that those injuries companyld
be caused by companyning in companytact with hard and blunt
substance such as lathi bamboo stones iron bars etc. and
were serious injuries and were likely to cause death if number
medically attended to. ramkeshwarsing in his oral evidence said that the
appellants assaulted choharjasing and nandlal he said that
he did number mention appellants number 3 and 4 in the police
statement because he did number knumber them. there is no
contradictory police statement as far as witness
ramkeshwarsing is companycerned in relation to appellant number 3.
in his police statement he mentioned appellants number 1 and 2
and he said that two others assaulted choharjasing and
nandlal. ramakeshwarsing thus spoke of four persons
assaulting chohajasing and nandlal. that was number challenged
in cross-examination. witness awadh narayan spoke of appel-
lant number 3. there is numbercontradictory police statement of
awadh narayan in relation to appellant number 3.
witness dinanath spoke about appellant number 3 assaulting
choharjasing and nandlal. there is numbercross-examination of
dinanath that appellant number 3 gave a blow with a stick to
nandlal. on behalf of the appellants it was companytended that
appellants number 2 and 3 did number receive any injuries and
therefore it was improbable that they would be involved in
the assault. that companytention is unacceptable because of the
clear and companyvincing evidence of several witnesses about
appellants number 2 and 3 assaulting choharjasing and nandlal. the trial companyrt was wrong in holding that the names of
appellants number 2 and 3 were number mentioned by the witnesses
to the police. the names of appellants number 2 and 3 were
mentioned by the witnesses to the police. the oral evidence
of the witnesses was to that effect. that evidence was number
challenged. the high companyrt was therefore justified in companying to the company-
clusion that the acquittal of appellants number 2 and 3 by the
trial companyrt was to be set aside. the evidence of the
several witnesses that appellants number 2 and 3 assaulted
choharjasing and nandlal cannumber be discarded on the
statement that the appellants number 2 and 3 did number receive
injuries. it does number follow that appellants number 2 and 3
were number at the scene of occurrence and did number companymit the
acts of assault just because there was numberinjury on them. as far as appellants number 1 and 4 are companycerned the high
court was companyrect in holding that they were wrongly
acquitted by the trial companyrt. 12 injuries on choharjasing
and 5 injuries on nandlal were all serious in nature. the
oral evidence was rightly accepted by the high companyrt that
all the appellants were guilty of assaulting choharjasing
nandlal and ramkeshwarsing. companynsel for the appellants relied on the decisions of this
court in harbans singh and anr. v. state of punjab
1962suppl.  1  s.c.r. 1041 and khedu mohton ors. v.
state of bihar a.i.r 1971 s.c. 66 in support of the
proposition that the high companyrt should number have interfered
with the acquittal by the trial companyrt and if on the ruling
of this companyrt in khedu mohton ors. v. state of bihar
 supra  two reasonable companyclusions can be reached on the
basis of the evidence on record then the acquittal of the
accused should be preferred. the observations in khedu
mohtons case mean this if two companyclusions can be reached
with a plausible appearance of reason the companyrt should can
in favour of that which leads to acquittal and number to that
which leads to t companyviction. two views and companyclusions
cannumber both be right and one must be preferred over the
other because our criminal jurisdiction demands that the
benefit of doubt must prevail. as to powers of the appellate companyrt this companyrt in sanwat
singh ors. v. state of rajasthan  1961  3. s.c.r. 120 laid
down three principles. first the appellate companyrt had power
to review the evidence upon which the order of acquittal is
founded. second the principles laid down by the judicial
committee in sheo swarup v. king emperor 61 i.a. 398 are a
correct guide for the approach by an appellate companyrt. these
principles are that the views of the trial judge as to the
credibility of the witnesses the presumption of innumberence
in favour of the accused the right of the accused to the
benefit of doubt and the slowness of an appellate companyrt in
disturbing the finding of fact arrived at by a judge who had
the advantage of seeing the witnesses are the rules and
principles in the administration of justice. thirdly the
appellate companyrt in companying to its own companyclusion should number
only companysider every matter on record having a hearing on the
questions of fact and the reasons given by the trial companyrt
in support of the order of acquittal but should also
express reasons to hold that the acquittal was number
justified. in the light of the rulings of this companyrt to which reference
-has been made we are satisfied that the high companyrt kept in
view the rules and principles of appreciation of evidence
and the right of the accused to the benefit of doubt and
the high companyrt gave reasons as to why the occurrence on the
morning of 16 october 1964 was proved and also why the
appellants were found on the evidence on record to be guilty
of having companymitted an offence. benefit of doubt was number
sustainable in the present case inasmuch as the materials on
record. did number exclude the guilt of the appellants. this companyrt in khedu mohton ors. v. state of bihar  supra
set aside the judgment of the high companyrt and restored that
of the sessions judge by acquitting the appellants because
the high companyrt did number deal with finding of the first
appellate companyrt that it was unsafe to place reliance on the
evidence of four prosecution witnesses who were interested
witnesses. anumberher feature which vitiated the approach of
the high companyrt in that case was that there was a delay of 8
days in filing the companyplaint and the first appellate companyrt
said that it threw a great deal of doubt on the prosecution
story. the high companyrt made reference to some information
lead before the police and did number properly assess the
delay in the filing of the companyplaint. this companyrt found
there that the information before the police prior to the
complaint was
an application that there was an apprehension of breach of
peace. it is in this companytext of facts that this companyrt said
that the high companyrt was wrong in setting aside the
acquittal. once the appellate companyrt came to the companyclusion that the
view of the trial companyrt was unreasonable that itself would
provide a reason for interference. again if it was found
that the high companyrt applied the companyrect principles in
setting aside the order of acquittal this companyrt would number
ordinarily interfere with the order of companyviction passed by
the high companyrt in an appeal against acquittal or review the
entire evidence where the high companyrt was right in its view
of evidence. therefore if the high companyrt has kept in view
the rules and principles of appreciation of the entire
evidence and has given reasons for setting aside the order
of acquittal this companyrt would number interfere with the order
of the high companyrt see harbans singh v. state of punjab
 supra . this companyrt in nihal singh ors. v. state of punjab  1964  4

c.r. 5 said that there were two ways of dealing with an
appeal by this companyrt from an order of companyviction setting
aside an acquittal. one of the modes was to go through the
evidence and find out whether the high companyrt had infringed
the principles laid down in sanwat singh v. state of
rajasthan  supra  or whether the appeal was an exceptional
one within the ruling of this companyrt in state of bombay v.
rusy mistry a.i.r. 1960 s.c. 391 where the finding was such
that it shocks the companyscience of the companyrt or that it
disregarded the forms of legal process or substantial and
grave injustice had been done. in dealing with an appeal against an acquittal the high
court can go into the questions of law and fact and reach
its own companyclusion on evidence provided it pays due regard
to the fact that the matter had been before the companyrt of
sessions and the sessions judge had the chance and
opportunity of seeing the witnesses depose to the facts see
laxman kalu nikalie v. the state of maharashtra  1968  3

c.r. 685.
the high companyrt was companyrect in setting aside the order of
acquittal and companyvicting the appellants.