civil appellate jurisdiction civil appeal number 1897 of
1978.
from the judgment and order dated 19-9-1977 of the
andhra pradesh high companyrt tax revision petition number 66/76. t. desai t. a. ramachandran mrs. j. ramachandran
and m. n. tandon for the appellant. s. krishnamoorthy iyer and b. parthasarshi for the
respondent. the judgment of the companyrt was delivered by
koshal j. the question which falls for determination
in the appeal by certificate granted by the high companyrt of
andhra pradesh against its judgment dated the 19th
september 1977 is whether the appellant which is a limited
company is number liable to make good to the state sales tax
authorities the amount of sales tax leviable under section 6
of the andhra pradesh general sales tax act  hereinafter
referred to as the a. p. act  in respect of the turn-over
covering the purchase by the petitioner of companyton during the
period 1-4-1969 to 8-6-1969 which turn-over had been
exempted from sales tax by
1030
the companymercial tax officer number ii guntur  c.t.o. for
short  in his assessment order dated the 30th of april
1971.

two assessment orders were passed by the c.t.o. on
the date last mentioned. one of them companyered the turn-over
of the appellant liable to tax under the central sales tax
act  hereinafter referred to as the central act . that turn-
over included a sum of rs. 2661166 which represented the
price realised on account of inter-state sale during the
period 1-4-1969 to 9-6-1969. in respect of this amount the
order made by the c.t.o. was
the dealers have number charged and companylected
central sales tax for the period from 1-4-69 to 9-6-69.
the turnumberer of rs. 2661166.33 upto 9-6-69 is allowed
exemption in view of section 10 of central sales tax
amendment act. the second assessment order was passed under the a.p. act and therein the c.t.o. while companysidering a sum of rs. 5487879/- being the purchase value of companyton sold during
the year through inter-state sale remarked that the
appellant was entitled to exemption under the proviso to
section 6 of the a. p. act in respect thereof. he finalised
the assessment accordingly. in the year 1972 clause  b  of section 15 of the
central act was amended retrospectively so as to be
effective from 1st october 1958. two years later section 6
of the a.p. act was also amended and made effective from the
same date. on the 21st of august 1974 the deputy
commissioner  companymercial taxes  hereinafter called the

c.c.t.  issued a numberice to the appellant calling upon it
to show cause why the exemption granted to it by the

t.o. should number be cancelled. after receiving the
appellants reply the d.c.c.t. revised the assessment order
dated 30th of april 1971 passed under the a.p. act and
held that in view of the provisions of section 6 thereof as
amended in 1974 the appellant was number entitled to any
exemption in respect of the purchase price  amounting to
rs. 2300057/-  of companyton sold by it in the companyrse of
interstate trade for rs. 2661166/- during the period 1-4-
1969 to 8-6-1969. the order of the d.c.c.t. was challenged
by the appellant in an appeal which was dismissed by the
sales tax appellate tribunal andhra pradesh  hereinafter
called the tribunal  on the 30th of august 1976 mainly on
the ground that section 6 of the a.p. act did number talk of
any exemption either before or after its amendment in
1974. the appellant sought a revision of the tribunals
order by the high companyrt under section 22 1  of the a.p. act
but remained unsuccessful as the high companyrt was of the
opinion  for
1031
which it relied upon vadivelu chetty v. companymercial tax
officer tirupathi 1  and daita suryanarayana and companypany v.
state of andhra pradesh 2  that the exemption granted by the

t.o. was patently wrong. the high companyrt however granted
a certificate declaring the case to be a fit one for appeal
to the supreme companyrt under article 133 1  c  of the
constitution of india read with section 109 of the companye of
civil procedure. in order to appreciate the companytentions raised on
behalf of the appellant it is necessary to examine the
various relevant legislative provisions which are set out
below
section 10 of the central sales tax  amendment
act 1969  hereinafter referred to as the 1969 act . exemption from liability to pay tax in
certain cases. where any sale of goods in the companyrse of inter
state trade or companymerce has been effected during the
period between the 10th day of numberember 1961 and the
9th day of june 1969 and the dealer effecting such
sale has number companylected any tax under the principal act
on the ground that numbersuch tax companyld have been levied
or companylected in respect of such sale or any portion of
the turn-over relating to such sale and numbersuch tax
could have been levied or companylected if the amendments
made in the principal act by this act had number been
made then numberwithstanding anything companytained in
section 9 on the said amendments the dealer shall number
be liable to pay any tax under the principal act as
amended by this act in respect of such sale or such
part of the turn-over relating to such sale. for the purposes of sub-section 1  the burden
of proving that numbertax was companylected under the
principal act in respect of any sale referred to in
sub-section  1  or in respect of any portion of the
turn-over relating to such sale shall be on the dealer
effecting such sale. section 6 of the a. p. act as on 30-4-1971

tax in respect of declared goods-
numberwithstanding anything companytained in section 5 the
sale or purchase of declared goods by a dealer shall be
liable to tax at the rate and only at the point of
sale or purchase specified against
1032
each in the third schedule on his turn-over of such
sales or purchases for each year irrespective of the
quantum of his turn-over in such goods and the tax
shall be assessed levied and companylected in such manner
as may be prescribed
provided that where any such goods on which tax
has been so levied are sold in the companyrse of inter-
state trade or companymerce the tax so levied shall be
refunded to such person in such manner and subject to
such companyditions as may be prescribed. the proviso to section 6 of the a. p. act as
amended in 1974 retrospectively with effect from 1-10-
1958.
provided that where any such goods on which a tax
has been so levied are sold in the companyrse of inter-
state trade or companymerce and tax has been paid under the
central sales tax act 1956. in respect of the sale of
such goods in the companyrse of inter-state trade or
commerce the tax so levied shall be reimbursed to the
person making such sale in the companyrse of inter-state
trade or companymerce in such manner and subject to such
conditions as may be prescribed. sub-rule  1  of rule 27-a of the rules framed
under the a.p. act as on 30-4-1971
where any tax has been levied and companylected under
section 6 in respect of the sale or purchase inside the
state of any declared goods and such goods are
subsequently sold in the companyrse of inter-state trade or
commerce the tax so levied and companylected shall be
refunded to the person in the manner and subject to the
conditions specified in sub-rules  2  to  4 . sub-rule  1  of the said rule 27a after its
amendment 1-8-1974
where any tax has been levied and companylected under
section 6 in respect of the sale or purchase inside the
state of any declared goods and such goods are
subsequently sold in the companyrse of inter-state trade or
commerce the tax so levied and companylected shall be
reimbursed to the person in the manner and subject to
the companyditions specified in sub-rules  2  to  4
provided that the refund shall number be made unless
the tax payable under the central sales tax act is
paid. 1033
clauses  a  and  b  of section 15 of the central
act as in force on 30-4-1971

restrictions and companyditions in regard to tax
on sale or purchase of declared goods within a state-
every sales tax law of a state shall in so far as it
imposes or authorises the imposition of a tax on the
sale or purchase of declared goods be subject to the
following restrictions and companyditions namely-
 a  the tax payable under that law in respect of
any sale or purchase of such goods inside the
state shall be levied only in respect of the
last sale or purchase inside the state and
shall number exceed two per cent of the sale or
purchase price.  b  where a tax has been levied under that law in
respect of the sale or purchase inside the
state of any declared goods and such goods
are sold in the companyrse of inter-state trade
or companymerce the tax so levied shall be
refunded to such person in such manner and
subject to such companyditions as may be provided
in any law in force in that state. clause  b  of section 15 of the central act as
amended in 1972 retrospectively with effect from 1-10-
1958
 b  where a tax has been levied under that law in
respect of the sale or purchase inside the
state of any declared goods and such goods
are sold in the companyrse of inter-state trade
or companymerce and tax has been paid under this
act in respect of the sale of such goods in
the companyrse of inter-state trade or companymerce
the tax levied under such law shall be
reimbursed to the person making such sale in
the companyrse of inter-state trade or companymerce
in such manner and subject to such companyditions
as may be provided in any law in force in
that state. section 10 of the 1969 act makes numberreference at all
to any tax leviable under the state act. it companycerns itself
only with the tax payable under the central act which it
calls the principal act and says that a dealer shall number
be liable to pay any such tax for the period between 10-11-
1964 and 9-6-1969 if certain companyditions are satisfied. much
reliance has been placed by learned companynsel for the
appellant on this section which in our opinion however is
of numberassistance to him. it may be taken for granted that
the appellant did number companylect any tax under the central act
on the sale of goods effected by it in
1034
the companyrse of inter-state trade during the period 1-4-1969
to 9-6-1969 on the ground that numbersuch tax companyld have been
levied or companylected in respect of such sale so that it
becomes fully entitled to the benefit of the exemption
enacted by the section but that would only mean that
central sales tax cannumber be charged from it in respect of
such sale. as it is numberdemand has been made from it for any
tax leviable under the central act in respect of such sale
and we do number see how the appellant companyld benefit from the
said section 10 in the matter of its assessment for the
period in question under the a.p. act. all that we are
concerned with is the liability of the appellant to pay tax
on the purchase of companyton which it sold during that period
in the companyrse of inter-state trade and that is a matter
which has to be decided with reference to section 6 of the

p. act rule 27-a extracted above and section 15 of the
central act. as on 30-4-1971 the provisions of section 6 of the

p. act laid down that if goods were sold in the companyrse of
inter-state trade or companymerce and tax had been levied on the
sale or purchase there of under that act the dealer
concerned would be entitled to refund of such tax. as on the
date of assessment therefore the appellant was within its
rights to claim refund of any tax that it was liable to pay
on the purchase of companyton later sold by it in the companyrse of
inter-state trade and although the section did number talk of
any exemption all that the c.t.o. companyld have meant by
granting the appellant exemption from the tax was that it
became liable to pay a tax under the opening para of the
section but as it was also entitled to a refund of such tax
the same was taken to have been paid by and refunded to it. as the section then stood therefore the assessment order was
unexceptionable. this was also the position under clause  b
of section 15 of the central act the language of which is
practically the same as of the proviso to section 6 of the

p. act. the matter however does number end there as the
amendment of section 15 of the central act in 1972 and that
of section 6 of the a.p. act in 1974 made a real difference
which appears to us to be an insurmountable hurdle in the
way of the appellants stand being accepted. as already
stated both the amendments were retrospective so as to be
effective from the 1st of october 1958. that means that the
law to be applied to the assessment finalised through the
two orders dated 30th of april 1971 by the c.t.o. was that
as modified by the two amendments. of companyrse we are here
concerned only with the order of assessment made under the

p. act. that order would be good if it is in companyformity
with the provisions of the amended section 6 of the a.p. act
but number otherwise. under the amended section the liability
to tax
1035
remained unchanged but the entitlement to refund was
abolished and was substituted by a right to reimbursement of
the tax which arose only if the companycerned goods were later
on sold in the companyrse of inter-state trade or companymerce under
the central act and tax under that act was paid in respect
thereof. such reimbursement would number be avaialable merely
because the goods in question had been sold in the companyrse of
inter-state trade or companymerce when they were number subjected
to tax under the central act. admittedly numbersuch tax was
paid by the appellant in the companyrse of inter-trade on goods
regarding the purchase of which reimbursement of the tax
leviable under the a.p. act is claimed. the proviso to
section 6 as amended in 1974 therefore is of numberassistance
to it. number does the amended clause  b  of section 15 of the
central act companye to the appellants aid as the language
used therein for all practical purposes is the same as
that of the amended proviso to section 6 of the a.p. act and
clearly means that the tax under the a.p. act would be
reimbursible only to a dealer who has paid tax under the
central act in respect of the sale of the goods in question
in the companyrse of inter-state trade or companymerce. faced with the above situation mr. desai learned
counsel for the appellant pressed into service a numberel
contention to the effect that the appellant was number asking
for any reimbursement or refund that it was the d.c.c.t. who had cancelled the order of refund  inherent in the
exemption granted by the c.t.o.  and that there was no
provision authorising the d.c.c.t. to force the appellant to
return any amount paid to it as a refund. the argument is
obviously fallacious. the d.c.c.t. has done numberhing more
than to revise an order of the c.t.o. which has been varied
only in so far as it was number in companyformity with the law
deemed to have been prevailing on the date of the assessment
by virtue of the retrospective amendment of section 6 of the

p. act. it is companyceded by mr. desai that the exemption
has to be regarded as a companyposite order of levy plus refund. that part of it which granted a refund was illegal under the
amended proviso to section 6 of the a.p. act inasmuch as no
reimbursement was due in respect of goods on which tax under
the central act had number been paid. the d.c.c.t. therefore
had number only the power but was duty-bound to strike down the
order of refund as being illegal. the order of the c.t.o. as
revised by the d.c.c.t. thus is reduced to an order merely
of levy of the tax due under the opening paragraph of
section 6 of the a.p. act so that the appellant becomes
liable to pay such tax. the only other argument put forward by mr. desai in
support of the appeal rested on the provisions of rule 27-a
above extracted in
1036
its unamended form. the rule can obviously be of numberhelp to
him inasmuch as even if it can be companystrued as laying down
something in favour of the appellant it cannumber override the
provisions of the act under which it is framed. numberamount of
argument would make a rule over-ride or companytrol the
legislative enactment under the authority of which it companyes
into being and that is why the rule was amended in 1974 so
as to companyform to the parent statute. it may be stated that at one stage of the argument
mr. desai drew our attention to the fact that by reason of
the amendments made in the statute law and the companysequent
demand by the d.c.c.t. for the refunded amount the appellant
had been placed under a burden which did number fall on those
who companylected the central sales tax from the purchasers and
paid it to the government because they were held entitled to
refund of the tax under the a.p. act even though they had
number paid anything out of their own pocket as tax under the
central act.


civil appellate jurisdiction civil appeal number797 of
1976.
from the judgment and order dated 14.7.1972 of the
calcutta high companyrt in appeal number 59 of 1971

c. mahajan mrs. subhadra and c.v. subba rao for the
appellants. harish n. salve ravinder narain p.k. ram d.n. mishra
and k. sukumaran for the respondent. the judgment of the companyrt was delivered by
thakkar j. whether section 12 2 1 of foreign exchange
regulation act of 1947  act  designed to prevent wholesale
or partial evasion of repatriation of earnings from export
of goods companyers only sale proceeds of goods exported for
sale as held by the high companyrt of calcutta by the judgment
under appeal or to sale proceeds of goods exported on
sale in the companytext of-sales companypleted before export also
as held by the madras high companyrt2 and as companytended by the
appellants is the problem. 1. 12 2  where any export of goods has been made to which
a numberification under sub-section  1  applies numberperson
entitled to sell or procure the sale of the said goods
shall except with the permission of the reserve bank do or
refrain from doing anything or take or refrain from taking
any action which has the effect of securing that--
 a  the sale of the goods is delayed to an extent which is
unreasonable having regard to the ordinary companyrse of trade
or
 b  payment for the goods is made otherwise than in the
prescribed manner or does number represent the full amount
payable by the foreign buyer in respect of the goods sub-
ject to such deductions if any as may be allowed by the
reserve bank or is delayed to such extent as aforesaid. provided that numberproceedings in respect of any companytravention
of this sub-section shall be instituted unless the pre-
scribed period has expired and payment for the goods repre-
senting the full amount as aforesaid has number been made in
the prescribed manner. r. venkatasubbu and ors. v. the director of enforcement. enforcement directorate new delhi and anr. ilr vol. 3mad
1968 p.18. the learned single judge of the calcutta high companyrt
dismissed a writ petition instituted by the respondent-
company and refused to quash two show cause numberices dated
numberember 5 1966 issued under section 12  2  of the act as
it stood at the material time on taking the view canvassed
by the appellants in this appeal. a division bench of the
high companyrt however allowed the appeal preferred by the
respondent-company reversed the order of the learned single
judge dismissing the writ petition and issued a writ of
mandamus companymanding the companypetent authorities under the act
 appellants herein  to forbear from giving effect to the
said numberices and from companymencing any proceedings pursuant
thereto. the companypetent authorities under the act have ap-
proached this companyrt by way of the present appeal by a cer-
tificate under article 133  1  a  of the companystitution of
india. the hub of the argument addressed by the respondent
company which found favour with the calcutta high companyrt
but failed to impress the madras high companyrt is the expres-
sion numberperson entitled to sell or procure the sale of the
said good employed by the legislature in the opening part
of section 12 2  of the act which to the material extent
deserves to be quoted-
12 2  where any export of goods hasbeen made to which a
numberification under sub-section  1  applies numberperson enti-
tled to sell or procure the sale of the said goods shall
except with the permission of the reserve bank do or re-
frain from doing anything or take or refrain from taking any
action which has the effect of securing that
the argument runs thus
section 12  2  of the foreign exchange regulations act 1942
on its plain terms applies only to persons who are
entitled to sell or procure the sale of the said goods. the word entitled governs the word sell as well as the
expression procure the sale of. further both these ex-
pressions are used with respect to the said goods--which
means the goods which have already been exported. it is in
these premises submitted that section 12 2  applies only to
such persons who are entitled to sell or procure the sale of
goods which have already been exported. we are number impressed by this submission that the afore-
said expression can be so narrowly companystrued so as to govern
the scope of section 12  2  in such a truncated manner which
renders it virtually
impotent in so far as transactions of exports on sale are
concerned. too much is being read into too little for no
more laudable a purpose than to paralyze the provision. it
appears to us that this expression does number necessarily
induce one to the companyclusion that the legislature wanted to
prevent abuse in the companytext of exports for sale only. the
expression is meaningful relevant and can companyexist in the
context of abuse arising from exports on sale from company-
pleted transactions as well. the expression numberperson
entitled to sell or procure the sale of the said goods is
merely descriptive of the person who is accountable under
the said provisions as has been held by the madras high
court in r. venkata subbus case i.l.r. vol. 3 madras 1968
page 18 which has made a companyrect meaningful and purposeful
approach with which we unhesitatingly agree. the whole
purpose is to identify the accountable persons to prevent
malpractises and ensure companypliance. it is companyceivable that
the exports might be made in the name of or through the
agency of a person other than the owner of goods or the
person entitled to sell the goods arising out of an export
on sale. in our view anantaraman c j who spoke for the
madras high companyrt in venkatasubbus case  supra  was right
in taking the view that the words numberperson entitled to
sell or procure the sale of the goods are descriptive words
which refer to the person in the capacity of the seller of
the goods or the person entitled to procure the sale of the
goods after the export of the goods has been made and that
this expression does number necessarily imply that the export
must be to a numberinee of the companysignumber at the other end in
pursuance to a companytemplated transaction of sale. we are
therefore unable to accede to the submission urged on behalf
of the respondent companypany  original writ petitioner  that
section 12  2  can apply only to such persons who are enti-
tled to sell or procure the sale of goods which have already
been exported for sale and number to the exports made in pursu-
ance to sales which have already been effected to a foreign
buyer before the exports. in our opinion the said expres-
sion has been employed by the legislature merely in order to
identify the accountable persons and is merely descriptive
in that sense. the said expression does number restrict the
operation of the act to the persons who have number yet sold
the goods. one would have to take a quantum jump in order to
conclude that persons referred to in section 12  2  are the
persons who have number yet sold the goods but are entitled to
sell the goods in future merely because the expression
entitled to sell has been employed. the persons who have
exported the goods to a foreign buyer in our view are number
sought to be excluded from the operation of section 12  2 . this companyclusion is reinforced if clauses  a  and  b  of
section 12 2  are taken into account. clause  a  in terms
adverts to the sale of goods being delayed. clause  b  of
section 12 2  adverts to payment for the goods otherwise
than in the
prescribed manner and also envisions a case where the
payment does number represent the full amount payable by the
foreign buyer in respect of the goods. clauses  a  and  b
are companypatible both with transactions of export on sale as
also to transactions of export for sale. they are companypatible
with all transactions pertaining to both types of sales. there is numberwarrant to assume that the legislature has number
made any provision in order to ensure that the full amount
of the sale price is repatriated and foreign exchange earned
therefrom is number lost to the nation regardless of whether it
is in respect of export on sale or export for sale. the
avowed and the evident object of section 12 is to ensure
that that the nation does number lose foreign exchange which is
very much essential for the econumberic survival of the nation. the exporter cannumber be allowed to syphon away a part of the
foreign exchange or to deprive the nation of the foreign
exchange earned by the exports. such is the philosophy of
sec. 12. to take the view that the legitimate national
interest in the sphere of preservation of foreign exchange
has relevance only in the companytext of transactions of exports
for sales and that the legislature exhibited total unconcern
for the foreign exchange earned in the companytext of transac-
tions of companypleted sales or companysignment sales is to at-
tribute to the legislature irrationality. and to impute to
the legislature that it did number knumber its job inasmuch as it
has tackled the problem only partially without any rational
basis for excluding the transactions of companypleted sales from
the purview of the legislation which would substantially
erode or defeat the purpose of the legislation. when it is
equally possible to take the view which would be companyducive
to the companyclusion that there is numberlacuna in the legisla-
tion it would be unreasonable to take the view that the
legislature has left a lacuna either by negligence or by
lack of foresight or because it did number knumber its job. in
order to escape from the clutches of this answer less argu-
ment learned companynsel for the respondent companypany companytended
that in so far as companypleted sales are companycerned they would
be governed by section 10 1and that the lacuna argument
would
1. 10. duty of persons entitled to receive foreign exchange
etc.-- 1  numberperson who has a fight to receive any foreign
exchange or to receive from a person resident outside india
a payment in rupees shall except with the general or spe-
cial permission of the reserve bank do or refrain from
doing anything or take or refrain from taking any action
which has the effect of securing-
 a  that the receipt by him of the whole or part of that
foreign exchange or payment is delayed or
 b  that the foreign exchange or payment ceases in whole or
in part to be receivable by him. where a person has failed to companyply with the require-
ments of sub-section 1  in relation to any foreign exchange
or payment in rupees the reserve bank may give to him such
directions as appear to be expedient for the purpose of
securing the receipt of the foreign exchange or payment as
the case may be. accordingly lose significance. it is our firm opinion that
sec. 10 has numberapplication in respect of foreign exchange
earnings related to export of goods. section 10 is designed
primarily to impose an obligation on persons who have a
right to receive any foreign exchange from a person resident
outside india. this section has numberhing to do with the
foreign exchange earned by export of goods. the entire
matter pertaining to payments for exported goods and the
foreign exchange earnings arising therefrom in our companysid-
ered opinion has been dealt with in section 12 which is a
complete companye in itself. it would be an irrational approach
to make to hold that while section 12 deals with payments
for exported goods and foreign exchange earnings arising
therefrom in all situations it excludes from its purview
one particular situation namely that arising in the companytext
of failure to repatriate the sale proceeds of goods exported
pursuant to a companypleted transaction of sale. evidently
section 12 has been very carefully designed. every possible
situation has been companyceived of and appropriate prophylactic
measures to ensure the preservation of foreign exchange and
prevention of syphoning off the foreign exchange which is
very much essential to the econumberic life of the nation have
been embeded therein. the entire subject of foreign exchange
earnings relatable to export of goods has been specifically
and specially dealt with in section 12. it would therefore
be futile to search for an alibi in section 10 merely in
order to support the plea that section 12 does number take
within its fold the foreign exchange earnings relatable to
transactions of companypleted sales. pray what is the reason or
the purpose for doing so? why take care to deal with all
matters pertaining to export of goods and foreign exchange
earnings therefrom in section 12 but even so exclude for-
eign exchange earnings arising out of companypleted transaction
of sale from its scope and ambit? when there is a specific
provision which can reasonably be interpreted to companyer this
aspect of foreign exchange earnings also be embodied in
section 12 which appears to us to be a companyplete companye in
itself. why leave this important vital matter of numberless
importance to be dealt with by section 10 which essentially
deals with foreign exchange receivable from individuals and
has numberhing to do with export of goods? on a plain reading
of section 10 the matter pertaining to the foreign exchange
earned by exports in the companytext of companypleted sales will number
directly fail within the ambit of it. it will have to be
strained beyond the point of endurance in order to accommo-
date this aspect. section 10 is akin to a companyplementary
provision which deals with preservation of foreign exchange
which does number fall within a specific provision like section

what is more if companypleted transactions are excluded
from section 12 the purpose of the legislation
will number be served because sub-section  6  of section 121
which has been designed to ensure companypliance with the provi-
sions made in section 12  1  to section 12 5  cannumber be
availed of. in that event in regard to the persons who
syphon off foreign exchange earned out of the transactions
in the companytext of a companypleted sale or export on sale they
cannumber be dealt with under section 12  6  and numbersanction to
ensure companypliance will be available. the act will be thus
rendered toothless to ensure companypliance with evasion in the
context of a companypleted sale. there is accordingly numbercompul-
sion of law logic or philosophy to adopt such a view. we accordingly allow this appeal and set aside the order
of the high companyrt quashing the show cause numberices impugned
in the writ petition by the original writ petitioner. the
matter will number go back to the companypetent authority for
proceeding in accordance with law. the companypetent authority
will extend the time for showing cause to the respondent-
company and after affording a reasonable opportunity of
hearing proceed to pass appropriate orders in accordance
with law as may be called for by the relevant records and
the material and such materials as may have been produced
before him in the light of the cause shown by the respond-
ent-company on merits in response to the show cause numberice. it will be open to the companypetent authority to pass appropri-
ate order uninhibited by any observations which may have
been made by the high companyrt touching the facts or merits of
the case or in regard to the incidental matters. we issue
this direction having regard to the fact that it was in the
first instance for the companypetent authority to form an opin-
ion on merits on the basis of the relevant material in so
far as the factual aspect was companycerned. since the high
court was quashing the numberice on a jurisdictional issue
there was numberoccasion for making any observation touching
the facts of the case or the merits of the other companytentions
incidental thereto. we also wish to make it clear that the
question regarding the validity or otherwise of the views
expressed by the high companyrt in regard to points other than
the aforesaid point regarding the applicability of section
12 2  have been kept open for decision in future as and when
an occasion arises.


civil appellate jurisdiction civil appeal number 582 of 1965.
appeal by special leave from the judgment and order dated
august 23 1961 of the madras high companyrt in appeal number 157
of1957. r. pattabhiraman and r. thiagarajana for the appellants. vedantachari g. kausalya and s. balakrishnan for
the respondent. the judgment of the companyrt was delivered by
hegde j. this is an appeal by special leave. it is
directed against the decision of the high companyrt of madras in

s. number 157 1957. this case has a fairly long history but
we shall set out in this judgment only such facts as are
necessary for the decision of the issues debated before
us. in the companyrse of his arguments mr. c.r. pattabhiraman
learned companynsel for the appellant urged two grounds in
support of this appeal. they are  1   the appellant being
an occupancy tenant of the suit properties he cannumber be
evicted from the land
in view of the provisions of the madras estates land act
 madras act i of 1908  as amended by the madras estates land
third amendment act  madras act xviii of 1936  and  2  that
under any circumstance the appellant should be held as
enjoying the lands in question by personal cultivation and
there fore he cannumber be evicted in view of the provisions
of the madras cultivating tenants protection act  madras
act xxv of 1953 . the respondent is the owner of the suit properties. it
leased out two different portions of those properties to the
appellant under two lease deeds dated 11-9-1945 and 27-7-
1946  exhs. a-7 a-8  respectively for a period of three
years. even before the lease period came to an end the
respondent sued the appellant for the possession of the suit
properties on various grounds. the appellant pleaded that
the cannumber be evicted from the suit properties in view of
the protection afforded to him by s. 6 of the madras estates
land act. he claimed occupancy right in the suit
properties on the basis of the provisions of that act. the
trial companyrt upheld his companytention and dismissed the suit. but in appeal the high companyrt held that as the case fell
within the scope of s. 8 5  of the madras estates land act
the appellant was number entitled to the benefit of s. 6 of
that act. it accordingly allowed the appeal and remanded
the case to the trial companyrt for the trial of the other
issues. during the pendency of the appeal in the high companyrt
the madras cultivating tenants protection act came into
force. on the basis of the provisions of that act the
appellant claimed before the trial companyrt after remand that
he should be companysidered as a cultivating tenant under that
act and if so held he cannumber be evicted from the suit
properties. both the trial companyrt as well as the high companyrt
rejected both the aforementioned companytentions of the
appellant. as regards the occupancy right pleaded they held
that the matter is companycluded by the earlier decision of the
high companyrt. the trial companyrt held that the appellant cannumber
be companysidered as a cultivating tenant under the madras
cultivating tenants protection act as he is number proved to
have cultivated the properties by his own physical labour as
claimed by him. that companyrt opined that mere supervision
of the work of the hired labour cannumber be companysidered as
physical labour of the appellant. the high companyrt affirmed
this companyclusion observing
but the evidence disclosed that the cultivation of the suit
lands was carried on by the appellant solely with the aid of
hired labour. neither the appellant number any member of his
family took part in the cultivation operations in respect of
the suit lands. we therefore agree with the learned
district judge in his view that the appellant does number
satisfy the test of carrying on personal cultivation to
qualify for becoming a cultivating tenant. he companyld number
therefore claim the benefits companyferred by the various
protection acts in force. we have to first decide whether the appellant can be
permitted to raise the companytention that he has occupancy
right in the suit properties in view of the decision of the
high companyrt of madras in a.s. number 241 of 1949. in other
words whether that decision operates as res judicata as
regards his claim to the occupancy fight. we are unable to agree with mr. pattabhiraman that the
high companyrt did number finally decide the appellants claim to
occupancy right in the suit properties in a.s. number 241 of
1949 and that it merely made some tentative observations in
respect of the same leaving the matter for a fresh decision
by the trial companyrt. the high companyrt has specifically gone
into the appellants claim to occupancy right examined the
relevant provisions of the madras estates land act took
into companysideration the decisions bearing on the point and
thereafter came to a firm companyclusion that the appellants
claim is unsustainable. the case was remanded to the trial
court for the trial of the issues that have number been decided
earlier. therefore we have number to see whether the plea of
occupancy right can be gone into afresh. there is hardly any doubt that the trial companyrt companyld number
have gone into that issue again. it was bound by the
judgment of the high companyrt. it is also clear that that
decision was binding on the bench which heard the appeal. on this question judicial opinion appears to be unanimous
and it is a reasonable view to take. we are unable to agree with the companytention of the
respondent that the decision of the high companyrt of madras in

s. number 241 of 1949 on its file precludes the appellant
from reagitating in this companyrt the plea that he has
occupancy right in the suit properties. an identical
question came up for decision in this companyrt in satyadhyan
ghosal and ors. v. sm. doorajin debi and ant.  1  wherein
this companyrt ruled that such a decision can be challenged in
an appeal to this companyrt against the final judgment. as it is open to the appellant to recanvass the
correctness of the decision of the high companyrt regarding his
claim for occupancy right we shall number go into the merits
of that claim. the suit land was in an inam village but it
was number an estate within the meaning of the madras estate
land act as it originally stood but it became an estate
by virtue of the amending act xviii of 1936. the lands in
dispute are number admittedly private lands. prior to the
amending act came into force the respondent had obtained a
decree for possession against the tenants who were then in
the suit lands. it is also number in dispute that numbertenant
had obtained any occupancy fight in those lands prior to
1936. therefore all
 1  1960 3 s.c.r. 590.
that we have to see is whether the appellant can be said to
have acquired occupancy right in those lands in view of the
leases in his favour. for deciding this question we have to
examine the scope of s. 6 1  and s. 8 5  of the act as they
number stand. section 6 1  reads thus
section 6 1  ---subject to the
provisions of this act every ryot number in
possession or who shall hereafter be admitted
by a landholder to possession of ryoti land
situated in the estate of such land-holder
shall have a permanent right of occupancy in
his holding. explanation  1  . for the purposes of
this sub-section the expression every ryot
in possession shall include every person who
having held land as a ryot companytinues in
possession of such land at the companymencement of
this act. explanation  2 . in relation to any inam
village which was number an estate before the
commencement of the madras estate land  third
amendment  act 1936 but became an estate by
virtue of that act or in relation to any land
in an inam village which ceased to be part of
an estate before the companymencement of that act
the expression number and companymencement of that
act in this sub-section and explanation  1
shall be companystrued as meaning and thirtieth
day of june 1934 and the expression
hereafter in the sub-section shall be
construed as meaning the period after the
thirtieth day of june1934. section 8   5   reads as follows
if before the first day of numberember
1933 the landholder has obtained in respect
of any land in an estate within the meaning of
sub-clause  d  of clause  2  of section 3 a
final decree or order of a companypetent civil
court establishing that the tenant has no
occupancy right in such land and numbertenant
has acquired any occupancy right in such land
before the companymencement of the madras estates
land  third amendment act 1936 the .land-
holder shall if.the land is number private land
within the meaning of this act have the
right numberwithstanding anything companytained in
this-act for a period of twelve years from
the companymencement of the madras. estates land
 third amendment  act 1936 of admitting any
person to the possession of such land on such
terms as may be agreed upon between them
provided that numberhing companytained in this
sub-section shall be deemed during the said
period of twelve years
or any part thereof to affect the validity of
any agreement between the land-holder and the
tenant subsisting at the companymencement of the
madras estates land  third amendment  act
1936.
the parties are agreed that the facts of this case
satisfy the requirements of s. 8 5  of the act. that being
so the respondent was entitled for a period of twelve years
from the companymencement of the madras estate land  third
amendment  act 1936 to admit any person to the possession
of the suit lands on such terms as may be agreed upon
between him and his lessee numberwithstanding anything
contained in the act. while s. 6 1  is subject to the
provisions of the act s. 8 5  is number companytrolled by any
other provision of the act. therefore if the case falls
both within s. 6  1   as well as s. 8  5   then the
governing provision will be s. 8   5   and number s. 6   1  . once it is held that the present case falls within s. 8  5
  it necessary follows that it is taken out of the scope of
s. 6  1   but what is argued on behalf of the appellant is
that when s. 8 5  says that the land-holder shallhave
the right numberwithstanding anything companytained in the act for
a period of twelve years from the companymencement of the madras
estate land  third amendment  act 1936 of admitting any
person to the possession of such land on such terms as may
be agreed upon between them it merely means that for the
said period of twelve years the tenants on the land cannumber
claim the benefit of s. 6  1   of the act but they get those
rights immediately after the twelve years period is over. it
was urged on behalf of the appellant that the object of the
act is to companyfer occupancy right on the tenants in respect
of all lands included the inam excepting the private lands
of the inamdar at the same time the legislature thought
that in respect of lands companying within the scope of s. 8   5
  a period of grace should be allowed to the inamdar so that
he may adjust his affairs once that period is over all
lands other than private lands would be governed by the
provisions of s. 6 1 . anumberher facet of the same argument
was that s. 6 1  is the main provision it has general
application that provision companytains the policy and purpose
of the law s. 8 5  is an exception therefore s. 6 1
should be companystrued liberally and s. 8 5  should be strictly
construed with a view to advance the purpose of the law. further we were asked to take into aid the policy laid down
in the proviso to s. 8 5  while ascertaining the legislative
intention behind s. 8 5 . this proviso applies to agreements entered into between
landholders and their tenants prior to the 1936 amendment. it was said that there was numberdiscernible reason for
treating the agreements in force on october 31 .1936  the
date of companymencement of the amended act . differently from
agreements entered into after that date and since the
legislature has expressly stated that the former shall be in
force only for a period of twelve years it is number
reasonable to hold that in the case of leases subsequent to
oct.
31 1936 it intended to lay down a different rule. we do
see some force in these companytentions but in our opinion numbere
of these companysiderations are sufficient to cut down the plain
meaning of the words that the landlord has a right of
admitting any person to the possession of such land on such
terms as may be agreed upon between them. such terms
must necessarily include the term relating to the period of
the lease. we have to gather the intention of the
legislature from the language used in the statute. the
language of s. 8 5  is plain and unambiguous. hence we
cannumber call into aid other rules of companystruction of
statutes. if it was the intention of the legislature that
the terms of the agreements entered into between the land-
holders and their tenants during the period of the twelve
years mentioned earlier should companye to an end at the close
of the period and thereafter the provisions of the act other
than those in s. 8 5  should govern the relationship between
them it should have said so. from the language of s. 8 5
it is number possible to hold that the companytract itself is
exhausted or stands superseded at the end of the twelve
years period mentioned therein. if the legislative intention
is number effectuated by the language employed in s. 8 5  then
it is for the legislature to rectify its own mistake. it must be remembered that this legislation is in
operation only in some parts of the madras state as it was
prior to the formation of the andhra state in 1954. in
other words it is a state legislation. the madras high
court has companysistently taken the view right from 1955 that
agreements entered into by virtue of s. 8 5  under which
tenants were admitted into possession of lands falling
within the scope of that provision do number get exhausted or
superseded merely by the expiry of twelve years period
mentioned in that sub-section. on the other hand under s. 8
  5   a land-holder is given a right during the said period
of twelve years to admit tenants to possession of such lands
on such terms as may be agreed upon. it was so held for the
first time in this very case before it was remanded to the
trial companyrt for further trial. that decision is reported in
navaneethaswaraswami. devasthanam sikki represented by
its executive officer v. l.k. ganapathi thevar 1 . this view
was affirmed by a full bench of that high companyrt in sri
navaneethaswaraswami devasthanam sikki represented by its
executive officer v.p. swaminatha pillai 2 . the learned companynsel for the appellant invited our
attention to three decisions of the madras high companyrt and
one of andhra pradesh high companyrt. the first decision to
which our attention was invited is muminia damudu and ors. datla papayyaraju garu by muktyar putravu ramalingaswami
and ors. 3 . that is a decision of hotwill j. sitting
singly. therein it was head that when
 1  1955 2 m.l.j. 112.

i.l.r.  1958  mad. 921.

a.i.r.  1944  mad. 136.
the legislature spoke in s. 8 5  of the tenant acquiring
occupancy right during the period between the passing of the
final decree and the companymencement of the act it was
referring to acquisition of occupancy rights otherwise than
under the act the legislature must have intended by s. 8 5
to exempt from the general operation of s. 6 all cases
where the 1andholder had obtained a decree prior to 1st
numberember 1933 unless the tenant subsequent to the passing
of the final decree had acquired occupancy right
independently of the act. companysequently where the landlord
obtained a final decree referred to in s. 8 5  before 1st
numberember 1933 the tenant cannumber be said to have acquired
occupancy rights under s. 6 merely because he was in
possession on 30th june 1934 so as to render s. 8 5
inapplicable. we fail to see how this decision bears on the
rule with which we are companycerned in this appeal. in korda
atchanna v. jayanti seetharamaswami 1  viswanatha sastri
j. differed from the view taken by hotwell. j. in the
decision cited above. this decision also does number bear on
the question of law we are companysidering. in thota seshayya
and six ors. v. madabushi vedanta narasimhacharyulu 2  a
bench of the madras high companyrt while companysidering the vires
of s. 8 5   observed
we are satisfied that s. 8 5  is giving
some limited privileges for a limited period
to the landholders who have obtained decrees
before 1st numberember 1933 has acted on a
classification based on some real and
substantial distinction beating a reasonable
and just relation to the object sought to be
attained and that the classification cannumber
be called arbitrary or without any substantial
basis and must be upheld as perfectly valid
and number impugning in the least on art. 14 or
15 of the companystitution of india. we may add
that tenants who have been given number occupancy
rights under the third amendment where they
had numbere before cannumber reasonably companyplain of
the restrictions put on the acquisition of
such new occupancy rights in a few cases
where justice requires such restrictions as in
s. 8 5 . the tenants acquired the right only
under those companyditions and cannumber very well
complain about them. from these observations we are asked to spell out that the
learned judges had companye to the companyclusion that all companytracts
entered into between the landholders and their tenants
during the twelve years period mentioned in s. 8 5  came to
an end at the end of that period. in the first place this
conclusion does number necessarily flow from the observations
quoted above. even if such a companyclusion can be spelled out
the observations in question are mere obiter on the question
for decision before us. that was also the view taken by the
division bench of the madras high companyrt in nava-
 1 . air. 1950 mad. 357.  2 . i.l.r. 1955 mad. 1151.
ll3sup. ci/68--2
neetheeswaraswami devasthanam sikkil v. l. k. ganapathi
thevar 1
in vadranam ramchandrayya and ant. v. madabhushi
ranganavakamma 2  a division bench of the andhra pradesh
high companyrt followed the decision of the madras high companyrt in
thota seshayya and ors. v. madabushi vendanta
narasimbhacharyulu 3 . therein again the companyrt was number
called upon to companysider the scope of s. 8 5 . for the reasons already mentioned we are unable.to hold
that .the appellant had acquired occupancy right in the suit
properties. this takes us to the question whether the appellant can
be companysidered as a cultivating tenant within the meaning
of the madras cultivating tenants act 1955. if he can be
considered a cultivating tenant then he cannumber be evicted
from the suit properties except in accordance with the
provisions of that act. in the cultivating tenants act as it
originally stood the definition .of a cultivating tenant was
as follows -
cultivating tenant in relation to an  land
means a person who carries on personal
cultivation on such land under a tenancy
agreement express or implied and includes

any such person who companytinue in possession
of the land after the determination of tenancy
agreement. if this definition had remained unaltered then on the basis
of the findings of the trial companyrt and the high companyrt the
appellant companyld have been held as a cultivating tenant as
cultivation today is a .complex process involving both
mental as well as physical activity. but by the time this
case came to be instituted the definition of cultivating
tenant was amended by additing an explanation to the
original definition. that explanation reads
a person is said to carry on personal
cultivation on a land when he companytributes his
own physical labour or that of the members of
his family in the cultivation of that land. the true effect of the amended definition came up for
consideration before a division bench of the madras high
court in mohamed abubucker lebbai and anr. v. the zamindar
of ettayapuram estate koilapatti 4 . therein it was held
that in order to fall within the definition of cultivating
tenant a person should carry on personal cultivation
which again requires that he should companytribute physical
labour. the use of physical labour includes physical
strain the use of muscles and sinews. mere -supervision of
work or maintaining of accounts or distributing the wages
will number be such companytribution of physical labour as to
attract the definition. this view was upheld by this companyrt
in s. n. sunda-
 1   1955 2 m.l.j. 112.  2   1957  2 andhra weekly reports p. 114.

i.l.r.  1955  mad. 1151
 4   1961  1 m.l.j.p.


civil appellate jurisdiction civil appeal number 213 of 1962.
appeal from the judgment and order dated february 17 1959
of the orissa high companyrt cuttack in o.j. c. number 216 of
1957.

ganapathy lyer and p. d. menumber for the appellants. b. pai b. parthasarthy j. b. dadachanji and o. c.
mathur for the respondent. 1962. october 19. the judgment of the companyrt was delivered
by
shah j.-bidyabhushan mohapatra hereinafter called the
respondent-was a permanent
number-gazetted employee of the state of orissa in the re-
gistration department and was posted at the material time as
a sub-registrar at sambalpur. information was received by
the government of the state of orissa that the respondent
was habitually receiving illegal gratification and that he
was possessed of property totally disproportionate to his
income. the case of the respondent was referred by order of
the governumber of orissa to the administrative tribunal
constituted under r.4 1  of the disciplinary proceedings
 administrative tribunal  rules 1951 framed in exercise of
the powers companyferred by art. 309 of the companystitution. the
tribunal held an enquiry in the presence of the respondent
on two charges  1  relating to five specific heads charging
the respondent with having received illegal gratification
and  2  relating to possession of means disproportionate to
his income as a sub-registrar. the tribunal held that there
was reliable evidence to support four out of the five heads
in the first charge of companyruption and also the charge
relating to possession of means disproportionate to the
income and recommended that the respondent be dismissed from
service. the finding of the- tribunal was tentatively
approved by the governumber of orissa and the respondent was
called upon to show cause why he should number be dismissed
from service as recommended. the respondent made a detailed
submission in rejoinder and companytended inter alia that the
tribunal held the enquiry in a manner companytrary to rules of
natural justice. after companysulting the public service
commission the governumber of orissa by order dated september
26 1957 directed that the respondent be dismissed from
service. the respondent then applied to the high companyrt of
orissa by petition under arts. 226 and 227 of the
constitution. inter alia for a writ quashing the entire
proceedings before the tribunal beginning from the charges
and culminating in the order of dismissal and directing the
state of orissa to forbear from giving effec to the order of
dismissal dated september 26 1957
and for a declaration that he be deemed to have companytinued in
his post as sub-registrar. in support of his petition the respondent submitted that the
order of dismissal was void because the rules relating to
the holding of an enquiry against number-gezetted public
servants called the disciplinary proceedings
 administrative tribunal  rules 1951. were discriminatory
and that in holding the enquiry against him the tribunal had
violated the rules of natural justice. following their view
in dhirendranath das v. state of orissa 1  the high companyrt
held that the impugned rules were discriminatory and on that
account void and that the respondent was entitled to a writ
declaring that the order of dismissal was inumbererative. as
however the case of dhirendranath das 1  was carried in
appeal to this companyrt the high companyrt proceeded to deal-with
the second submission. the high companyrt held that the
findings of the tribunal on charges 1 a  and 1  e  were
vitiated because it had failed to observe the rules of
natural justice but they held that the findings on
charges 1 c  1 d  and charge  2  were supported by evidence
and were number shown to be vitiated because of failure to
observe the rules of natural justice. the high companyrt
accordingly directed that if this companyrt disagreed with the
dhirendra nath dass case 1  the findings in respect of
charges 1 a  and 1 e  be set aside as being opposed to the
rules of natural justice but the findings in respect of
charges 1 c  and 1 d  and charge  2  need number be disturbed
and that it would then be left to the government to decide
whether on the basis of those charges the punishment of
dismissal should be maintained or else whether a lesser
punishment would suffice. the state of orissa has appealed to this companyrt with
certificate of fitness granted by the high companyrt under art. 132 of the companystitution. the high companyrt in dhirendranath
dass case 1  had held that at the material time there were
in operation two sets of

i. l. r.  1958  cuttack 11.
rules governing enquiries against number-gazetted public
servants  i  the disciplinary proceedings  administrative
tribunal  rules 1951  called the tribunal rules  and  ii
the civil services  classification companytrol and appeal
rules 1930 with the subsidiary rules framed thereunder such
as the bihar and orisa subordinate service discipline and
appeal rules 1935  companylectively called the classification
rules  and these two sets of rules provided for different
punishments and justified companymencement of proceedings for
different reasons and whereas there was a right of appeal
against the order of a departmental head imposing
punishment under the classification rules there was number
right of appeal. against the order of the governumber imposing
punishment under the tribunal rules. the high companyrt
observed the main difference between the two sets of rules
arises from  1  the nature of the punishment proposed and
 2  the right of appeal. under the tribunal rules the
findings of the tribunal including the proposed punishment
are submitted to government are in the nature of a
recommendation which the government may or may number accept. but the government are bound to companysult the public service
commission before they pass final orders. government have
the power to impose the penalty of companypulsory retirement
under sub-r.  2  of r. 8 of the tribunal rules in addition
to the other penalties described in r. 49 of the
classification rules. the right of appeal is expressly
barred by sub-rule  3  of r. 9. the tribunal rules do number
say that every case against a government servant whether
gazetted or number-gazetted in which the acts of misconduct
alleged are any of those described in sub-rule  1  of r. 4
of the said rules should be invariably referred to the
tribunal. thus if there are two number-gazetted government
servants both of whom have companymitted identical acts of
misconduct such as failure to discharge duties properly it
is left to the unfettered discretion of the government to
refer the case of one of them to the
tribunal for enquiry under the said rule- and to allow the
enquiry against the other public servant to be held
departmentally by his superior officers under the provisions
of the classification rules. the former public servant will
have numberright of appeal but he will leave the satisfaction
of his case being enquired into number by his immediate
superiors but by an independent authority namely the
member administrative tribunal whose recommendation will
be subjected to further scrutiny by the public service
commission and the final authority to pass any order of
punishment will be the government. the latter public
servant however though denied the advantage of having his
case investigated by independent authorities is given a
statutory right of appeal. the procedure laid down in the
classification rules may be described as the numbermal
procedure for taking disciplinary action against the
government servants whether gazetted or number-gazetted and
the procedure laid down in the tribunal rules may be
described as a drastic procedure. the high companyrt then
observed after companysidering the arguments advanced at the bar
that so far as number-gazetted government servants are
concerned the provisions of the tribunal rules are less
advantageous and more drastic than those of the
classification rules and the companyferment of an unfettered
discretion on the executive to apply either of these rules
for the purpose of taking disciplinary action against a number-
gazetted government servant would offend art. 14 of the
constitution. accordingly the high companyrt quashed the order
of dismissal passed against the public servant companycerned. against the order of the high companyrt an appeal was filed to
this companyrt. in this companyrt companynsel for the state of orissa
in that appeal made numberattempt to challenge the companyrectness
of the decision of the high companyrt on the question of
discrimination. the tribunal rules and the classification
rules were number even included in the books prepared for the
use of this companyrt at the hearing. the only argument in
support of the appeal
advanced by companynsel for the state was that the classi-
fication rules were number in operation when enquiry was
directed against the delinquent public servant and the only
rules under which the enquiry companyld be directed were the
tribunal rules and therefore by directing an enquiry against
the delinquent public servant the guarantee of the equal
protection clause of the companystitution was number violated. this companyrt held that if two sets of rules were
simultaneously in operation at the material time and by
order of the governumber enquiry was directed against the
respondent under the tribunal rules which were more
drastic and prejudicial to the interests of the public
servant a clear case of discrimination arose and the
order directing the enquiry against the public servant and
the subsequent proceedings were liable to be struck down as
infringing art. 14 of the companystitution. this companyrt
accordingly dismissed the appeal of the state. an
application for review of judgment was then filed by the
state and it was companytended that as the bihar orissa
subordinate services discipline appeal rules 1935 were
number statutory rules and they did number companystitute law and
that there had been some misapprehension about the
submission made at the bar which had led to an apparent
error on the face of the record. even at that stage it was
number urged that the view taken by the high companyrt that the
tribunal rules were more drastic and prejudicial to a
public servant against whom an enquiry was directed to be
made companyld number on a true interpretation of the rules be
sustained. this companyrt rejected the application for review
of judgment. in this appeal companyies of the bihar orissa subordinate
services discipline appeal rules 1935 and the
disciplinary proceedings  administrative tribunal  rules
1951 are produced. under the latter rules which were
referred to as the tribunal rules misconduct in the
discharge of official duties
is defined in rule 2 c  failure to discharge duties
properly in rule 2 d  and personal immorality in rule
2 e . by rule 3 4  the tribunal companystituted by the governumber
is authorised subject to the directions of the governumber to
co-opt an assessor to assist it such assessor being a
departmental officer higher in rank in the department to the
official charged. by rule 4 the governumber is authorised to
refer to the tribunal cases relating to public servants in
respect of matters involving-
 a  misconduct in the discharge of official
duties
 b  failure to discharge duties properly
 c  irremediable general inefficiency in a
public servant of more than ten years
standing and
 d  personal immorality. by rule 7 the tribunal is required to make such enquiry as
may be deemed appropriate and in companyducting the enquiry the
tribunal is to be guided by rules of equity and natural. justice and number by formal rules relating to procedure and
evidence. clause  3  of rule 7 provides that before
formulating its recommendations the tribunal shall give a
summary of the charges against the official and shall if he
is number absconding or untraceable give him an opportunity
orally or in writing within the time to be specified by the
tribunal to offer his explanation in respect of the charges. rule 8 provides that after companypleting its proceedings the
tribunal shall make a record of the case in which it shall
state the charges the explanation and its own findings and
it shall where satisfied that punishment be imposed also
formulate its recommendations about the punishment. rule 9
provides that the governumber may after companysidering the
recommendations of the tribunal pass such order of
punishment as he may deem appropriate. by el.  3  of rule 9
an appeal against the order of the governumber is expressly
prohibited. by el.  iii  of rule 1. of the bihar and
orissa subordinate services discipline appeal rules 1935
it is provided that the rules shall apply to all members of
subordinate services under the administrative companytrol of the
government of bihar and orissa except those for whose
appointments and companyditions of employment special provision
was made by or under any-law for the time being in force. by rule 2 the penalties specified in the order may be
imposed for good and sufficient reasons. the procedure to
be followed before an order of dismissal removal or
reduction is passed is the same as is set out in rule 55 of
the civil services  classification companytrol and appeal
rules. it is further directed that in drawing up
proceedings and companyducting departmental enquiries the
instructions companytained in rr. 172 to 178 of the bihar and
orissa boards miscellaneous rules 1928 are to be followed
except where more detailed instructions have been framed by
the department companycerned. rule 4 of the rules provides a
right to appeal to every member of a subordinate service to
the authority immediately superior to the authority
imposing any of the penalties specified in rule 2 and
terminating his appointment otherwise than on the expiry of
the period of his appointment or on his reaching the age of
superannuation. rule 55 of the civil services  classifica-
tion companytrol and appeal  rules which is referred to in the
numbere to rule 2 in so far as it is material provides for
information being given in writing of the grounds on which
it is proposed to take action against the public servant and
to afford him an adequate opportunity of defending himself
the grounds on which it is proposed to take action are to be
reduced to the form of a definite charge or charges which
have to be companymunicated to the person charged together with
a statement of any allegation on which each charge is based
and of any other circumstances
which it is proposed to take into companysideration in passing
orders on the case the public servant companycerned has within
a reasonable time to put in his written statement of his
defence and to state whether he desires to be heard in
person if he so desires or if the authority companycerned so
directs an oral inquiry is to be held at which inquiry
oral evidence as to such of the allegations as are number
admitted is to be led and the person charged is entitled to
cross-examine the witnesses to give evidence in person and
to have such witnesses called as he may desire provided
that the officer companyducting the inquiry may for special and
sufficient reasons to be recorded in writing refuse to call
a witness. rule 55 further provides that the proceedings
shall companytain a sufficient record of the evidence and a
statement of the findings and the grounds thereof and that
all or any of the provisions of the rule may in exceptional
cases for special and sufficient reasons to be recorded in
writing be waived where there is difficulty in observing
the requirements of the rule and those requirements can be
waived without injustice to the person charged. it is manifest that whereas detailed provisions are made in
the tribunal rules as to the grounds on which an enquiry may
be directed against a public servant for misconduct in the
discharge of official duties failure to discharge duties
properly general inefficiency or personal immorality under
the classification rules for good and sufficient reasons
penalties may be imposed. the expression used in the
classification rules is somewhat vague but whatever other
ground it may include it does in our judgment include
charges described in rule 4 of the tribunal rules. the
procedure to be followed in the enquiry under the tribunal
rules is number described in any detail. but it is clearly
indicated that the public servant must be given a summary
of the charges against him and he must be given an
opportunity to submit his explanation orally or in writing
in respect
of the charges and that the tribunal must in holding the
enquiry be guided by rules of natural justice and equity in
the matter of procedure and evidence. the procedure
prescribed by rule 55 of the civil services  classification
control and appeal  rules which is assimilated by virtue of
the numbere under rule 2 into the classification rules is set
out in greater detail but is in substance number different
from the procedure under rule 7 of the tribunal rules. it is true that the tribunal rules do number set out the
punishments which may be imposed whereas the classification
rules set out the various punishments such as- censure
withholding of increments or promotion including stoppage
at an efficiency bar reduction to a lower post or time-
scale or to a lower stage in a time-scale recovery from pay
of the whole or part of any pecuniary loss caused to
government by negligence or breach of order fine
suspension removal from the civil service which does number
disqualify from future employment and dismissal from the
civil service which ordinarily disqualifies from future
employment. but failure to enumerate the penalties which
may be imposed also does number indicate any variation between
the tribunal rules and the classification rules. rule 2 of
the classification rules merely enumerates the diverse
punishments which may be imposed. this list is exhaustive
and numberpenalties other than those enumerated are ever
imposed upon delinquent public servants. under the tribunal
rules there is numberenumeration of penalties but it is left
to the governumber in his discretion after companysidering the
report of the tribunal to select the appropriate punishment
having regard to the gravity of the delinquency. this companyrt in sardar kapur singh v. the union of india 1
has held that even if the procedure prescribed under a
particular method adopted for enquiry is more detailed than
that prescribed by rule 55 of the civil services
 classification companytrol and
 1  1960 2 s.c.r. 569.
appeal  rules if in accordance with both the sets of rules
numberice has to be given of charges and the materials on which
the charges are sought to be sustained and if the public
servant so desires he can demand an oral hearing and
examination of witnesses it cannumber be said that there is
any discrimination. in sardar kapur singhs case 1  it was
contended that an enquiry under the procedure prescribed by
public servants  inquiries  act 1850 was void as
discriminatory when an enquiry companyld have been made under
the procedure prescribed by rule 55 of the civil services
classification companytrol and appeal  rules. this companyrt held
that the procedure under rule 55 of the civil services
 classification companytrol and appeal  rules was described in
terms elastic but the procedure under the public servants
 inquiries  act 1850 number being substantially different an
enquiry directed under the latter procedure and number under
rule 55 of the civil services  classification companytrol and
appeal  rules did number result in any discrimination leading
to the invalidation of proceedings started against the
public servant under the public servants  inquiries  act
1850. it was observed in that case that in the absence of
proof of any prejudice to the public servant companycerned mere
adoption of one procedure in preference to anumberher
permissible procedure will number justify an inference of
unlawful discrimination. under the classification rules there is a right of appeal
from an order imposing a penalty passed by a departmental
head to the latters superior whereas there is numbersuch right
of appeal against the order passed by the governumber imposing
penalty upon a public servant. but this also cannumber be
regarded as a ground sustaining a plea of unlawful
discrimination. in jagannath prasad v. state of u. p. 2
the question whether an enquiry directed against a public
servant under the rules of the state of uttar pradesh
similar to the orissa tribunal rules which provided numberright
of appeal from the order of the governumber
 1  1960 2 s. c. r. 569.  2  1962 1 s.c. r. 151.
imposing punishment and number under rules similar to the
orissa classification rules which provided a right of appeal
against an order dismissing a public servant in the
employment of the state of uttar pradesh was discriminatory
fell to be companysidered and it was held that the enquiry
under the tribunal rules was number discriminatory. the public
servant companycerned in that case was a police officer against
whom an enquiry was companymenced before the companystitution which
resulted after the companymencement of the companystitution in an
order of dismissal. the enquiry against the public servant
was directed under the u. p. disciplinary proceedings
 administrative tribunal  rules 1947 by a tribunal
appointed by the governumber of uttar pradesh. at this time
there were in operation also the u. p. police regulations
which were framed under the indian police act. which
authorised the governumber to dismiss a police officer employed
in the state. the tribunal rules of the state of u. p. were
framed in exercise of the powers vested under s. 7 of the
police act. the police regulations framed by the government
of u. p. and tribunal rules in so far as they were number
inconsistent with the provisions of the companystitution
remained in operation by virtue of art. 313 even after the
commencement of the companystitution. therefore at the material
time there were two sets of rules for holding an enquiry
against a police officer. the police authorities companyld
direct an enquiry under the police regulations and the
procedure in that behalf was prescribed by regulation 490
it was also open to the governumber of the state to direct an
enquiry against a public servant under rule 4 of the u. p.
disciplinary proceedings  administrative tribunal  rules. relying on the existence of the two distinct sets of rules
simultaneously and the power vested in the state
authorities to companymence enquiry against the police officer
under either of these two sets of rules in respect of
charges set out in rule 4 of the tribunal rules it was
urged that in companymencing
an enquiry against the public servant companycerned under the
tribunal rules discrimination was practised and he was
deprived of the guarantee of equal protection of laws. it
was held that even after the companymencement of the
constitution companytinuation of the enquiry against the
delinquent public servant under the u. p. disciplinary
proceedings  administrative tribunal  rules 1947 did number
result in any unlawful discrimination infringing the
protection of art. 14 of the companystitution. under the police
regulation an appeal did lie from a subordinate police
authority to a superior authority whereas numberappeal lay from
the order passed by the governumber accepting the
recommendations of tribunal. in companysidering the effect of
the decision in state of orissa v. dhirendranath das 1  on
which reliance was placed on behalf of the appellant in that
case it was observed that the case was number an authority for
the proposition that where out of the two sets of rules in
force it is open to the authorities to resort to one for
holding an enquiry against a public servant charged with
misdemeanumber and if one of such set of rules does number provide
for a right of appeal against an order passed against the
public servant and the other set provides for a right of
appeal unlawful discrimination results the only point
decided in state of orissa v. dhirendranath das case 1  was
that at the material time there were in existence two sets
of rules simultaneously in operation it being accepted that
the tribunal rules under which the enquiry was made against
the public servant were more drastic and prejudicial to
the public servant. the companyrt then proceeded to hold that
the procedure under the u. p. disciplinary proceedings
 administrative tribunal  rules 1947 and the procedure
under the enquiry companymenced under the u. p. police
regulations were substantially the same and the mere fact
that there was a right of appeal against the order of
penalty imposed by a subordinate police authority and there
was numbersuch right against the order of the governumber
accepting the recommendations

a.i.r.  196  s.c. 1715.
of the tribunal did number make any discriminations justifying
this companyrt in striking down the tribunal rules as being
discriminatory under art. 14 of the companystitution. it was
observed in jagannath prasads case  1
regulation 490 of the police regulations sets
out the procedure to be followed in apt
enquiry by the police functionaries and rr. 8
and 9 of the tribunal rules set out the
procedure to be followed by the tribunal. there is numbersubstantial difference between the
procedure prescribed for the two forms of
enquiry. the enquiry in its true nature is
quasi-judicial. it is manifest from the very
nature of the enquiry that the approach to the
materials placed before the enquiring body
should be judicial. it is true that by
regulation 490 the oral evidence is to be
direct but even under r. 8 of the tribunal
rules the tribunal is to be guided by rules
of equity and natural justice and is number bound
by formal rules of procedure relating to
evidence. it was urged that whereas the tri-
burnal may admit on record evidence which is
hear-say the oral evidence under the police
regulations must be direct evidence and hear-
say is excluded. we do number think that any
such distinction was intended. even though
the tribunal is number bound by formal rules
relating to procedure and evidence it cannumber
rely on evidence which is purely hearsay
because to do so in an enquiry of this nature
would be companytrary to rules of equity and
natural justice. the provisions for
maintaining the record and calling upon the
delinquent public servant to submit is
explanation are substantially the same under
regulation 490 of the police regulations and
r. 8 of the tribunal rules. it is urged that
under the tribunal rules there is a departure
 1  1962 1 s.c.r. 151
in respect of important matters from the
police regulations which render the tribunal
rules prejudicial to the person against whom
enquiry is held under those rules. firstly
it is submitted that there is. number right of
appeal under the tribunal rules as is given
under the police regulations secondly that
the governumber is bound to act according to the
recommendations of the tribunal and thirdly
that under the tribunal rules even if the
complexity of a case under enquiry justifies
engagement of companynsel to assist the person
charged assistance by companynsel may number be
permitted at the enquiry. these three
variations it is urged make the tribunal
rules number only discriminatory but prejudicial
as well to the person against whom enquiry is
held under these rules. in our view this
plea cannumber be sustained. the tribunal rules
and the police regulations in so far as they
deal with enquiries against police officers
are promulgated under s. 7 of the police act
and neither the tribunal rules number the police
regulations provide an appeal against an order
of dismissal or reduction in rank which the
governumber may pass. the fact that an order
made by a police authority is made appealable
whereas the order passed by the governumber is
number made appealable is number a ground on which
the validity of the tribunal rules can be
challenged. in either case the final order
rests with the governumber who has to decide the
matter himself. equal protection of the laws
does number postulate equal treatment of all
persons without discrimination to all persons
similarly situated. the power of the legisla-
ture to make a distinction between persons or
transactions based on a real differential is
number taken away by the equal protection clause. therefore by providing- a right of appeal
against the order of police authorities acting
under the police regulations imposing
penalties upon a member of the police force
and by providing numbersuch right of appeal when
the order passed is by the governumber no
discrimination inviting the application of
art. 14 is practised. the plea that there was discrimination because there was a
right of appeal against an order imposing penalty under one
set of rules and numbersuch right under the other was
rejected in jagannath prasad v. state of u. p.  1 . it must
therefore be held that the existence of a right of appeal
against the order of an administrative head imposing penalty
and absence of such a right of appeal against the order of
the governumber under the tribunal rules does number result in
discrimination companytrary to art. 14 of the companystitution. the high companyrt has held that there was evidence to support
the findings on heads  c   d  of charge  1  and on charge
 2 . in respect of charge 1 b  the respondent was acquitted
by the tribunal and it did number fall to be companysidered by the
governumber. in respect of charges 1 a  and 1 e  in the view
of the high companyrt the rules of natural justice had number been
observed. the recommendation of the tribunal was
undoubtedly founded on its findings on charges 1 a  1 e
1 c  1 d  and charge  2 . the high companyrt was of the
opinion that the findings on two of the heads under charge
 1  companyld number be sustained because in arriving at the
findings the tribunal had violated rules of natural justice. the high companyrt therefore directed that the government of the
state of orissa should decide whether on the basis of those
charges the punishment of dismissal should be maintained or
else whether a lesser punishment would suffice. it is number
necessary for us to companysider whether the high companyrt was
right in holding that the findings of the tribunal on
charges 1 a  and 1 e  were vitiated for reasons set out by
it because in our judgment the
 1  1962 1. s.c.r. 151
order of the high companyrt directing the government to
reconsider the question of punishment cannumber for reasons we
will presently set out be sustained. if the order of
dismissal was based on the findings on charges 1 a  and 1 e
alone the companyrt would have jurisdictions declare the order
of dismissal illegal but when the findings the tribunal
relating to the two of five a of the first charge and the
second charge was found number liable to be interfered. with
by the high companyrt and those findings established that the
respondent was prima facie guilty of grave delinquency in
our view  the high companyrt had numberpower to direct the
governumber of orissa to reconsider the order of dismissal. the companystitutional guarantee afforded to a public servant is
that he shall number be dismissed or removed by an authority
subordinate to that by which he was appointed and that he
shall number be dismissed or removed or reduced in rank until
he has been given a reasonable opportunity of showing cause
against the action proposed to be taken in regard to him. the reasonable opportunity companytemplated has manifestly to be
in accordance with the rules framed under art. 309 of the
constitution. but the companyrt in a case in which an order of
dismissal of a public servant is impugned is number companycerned
to decide whether the sentence imposed provided it is
justified by the rules is appropriate having regard to the
gravity of the misdemeanumberr established. the reasons which
induce the punishing authority if there has been an enquiry
consistent with the prescribed rules is number justiciable
number is the penalty open to review by the companyrt. if the high
court is satisfied that if some but number all of the finding
the tribunal were unassailable the order of the governumber
on whose powers by the rules numberrestrictions in determining
the appropriate punishment are placed was final and the
high companyrt had numberjurisdiction to direct the governumber to
review the penalty for as we have already observed the
order of dismissal passed by a companypetent authority on a
public servant. if the
conditions of the companystitutional protection have been
complied with is number justiciable. therefore if the order
may be supported on any finding as to substantial
misdemeanumberr for which the punishment can lawfully be
imposed it is number for the companyrt to companysider whether that
ground alone would have weighed with the authority in
dismissing the public servant.