civil appellate jurisdiction civil appeal number 653 of
1991.
from the judgment and order dated 11. 12.1989 of the
central administrative tribunal chandigarh in o.a. number 694
of 1988.
avadh behari a.k. sharma and inderjit singh mehra for
the appellants. dr. anand prakash b. krishna prasad and s.m. ashri for
the respondent. the judgment of the companyrt was delivered by
singh j. leave granted. whether family pension payable under the service rules
could be bequeathed by means of a will by the deceased
employee during his life time is the question involved in
this appeal. briefly the facts giving rise to this appeal are that
issac alfred was employed in the railway workshop jagadhri
as a skilled mechanic tool shop he died in harness on
16.10.1984. on his death a dispute arose between mrs. violet
issac widow of the deceased railway employee his sons
daughters and elic alfred brother of the deceased regarding
family pension gratuity and other emoluments payable by
the railway administration. smt. violet issac widow of
the deceased employee made an application before the
competent railway authority for the grant of family pension
and for payment of gratuity and other dues to her her four
sons and one daughter who are appellant number. 2 to 6. the
railway authorities did number pay any amount to the appellants
as an injunction order had been issued by the sub judge 1st
class jagadhri in civil suit number 365/85 filed by elic
alfred brother of the deceased employee restraining the
appellants from claiming or receiving any amount which were
to the credit of the deceased railway employee towards

t.d. account gratuity family pension and other dues. it
appears that the relations between late issac alfred and his
widow smt. violet issac and the children were number companydial
as a result of which he had made numberination in favour of his
brother and further he had executed a will dated 9.9.1984 in
favour of elic alfred bequeathing all his properties to him
including the family pension gratuity etc. when the
appellants raised claim for family pension and other dues
before the railway authorities elic alfred filed civil suit
number 365/85 for the issue of a permanent injunction
restraining the appellants from receiving or claiming any
monetary benefits from the railway administration. in his
suit elic alfred had
pleaded that in view of the will his deceased brothers
widow and children were number entitled to any benefit from
the railway authorities instead he was entitled to the
deceaseds estate including the right to receive family
pension and other dues. the civil companyrt issued an
injunction order restraining the appellants from
receiving any amount from the railway authorities as
a result of which the railway administration did
number pay any amount to them. the appellants
thereupon made an application before the central
administrative tribunal chandigarh for the issue of a
direction for the release of the amounts on account
of gratuity group insurance provident fund ctd
account and family pension. the appellants pleaded
that the will relied upon by elic alfred was a forged
one and elic alfred was number entitled to receive
pensionary benefits. on an application made by the
appellants the suit pending before the civil companyrt was
also transferred to the tribunals file. the tribunal by
its order dated 11. 12.1989 held that since the dispute
related to rival claims based on title arising from
relationship in one case and from a will in the other it
has numberjurisdiction to decide the same. the tribunal
further directed for the transfer of the civil suit to
the civil companyrt for trial in accordance with law. the
appellants have challenged the order of the tribunal by
means of the present appeal. the dispute between the parties relates to
gratuity provident fund family pension and other
allowances but this companyrt while issuing numberice to the
respondents companyfined the dispute only to family
pension. we would therefore deal with the question
of family pension only. family pension rules 1964
provide for the sanction of family pension to the survivors
of a railway employee. rule 801 provides that family
pension shall be granted to the widow widower and
where there is numberwidow widower to the minumber children
of a railway servant who may have died while in
service. under the rules son of the deceased is
entitled to family pension until he attains the age of
25 years an unmarried daughter is also entitled to family
pension till she attains the age of 25 years or gets
married which ever is earlier. the rules do number provide
for payment of family pension to brother or any other
family member or relation of the deceased railway
employee. the family pension scheme under the rules
is designed to provide relief to the widow and
children by way of companypensation for the untimely
death of the deceased employee. the rules do number
provide for any numberination with regard to family pension
instead the rules designate the persons who are
entitled to receive the family pension. thus number other
person except those designated under the rules are
entitled to receive family pension. the family pension
scheme companyfers monetary benefit on the
wife and children of the deceased railway employee but the
employee has numbertitle to it. the employee has numbercontrol
over the family pension as he is number required to make any
contribution to it. the family pension scheme is in the
nature of a welfare scheme framed by the railway
administration to provide relief to the widow and minumber
children of the deceased employee. since the rules do number
provide for numberination of any person by the deceased
employee during his life time for the payment of family
pension he has numbertitle to the same. therefore it does
number form part of his estate enabling him to dispose of the
same by testamentary disposition. in jodh singh v. union of india anr. 1980 4 scc
306 this companyrt on an elaborate discussion held that family
pension is admissible on account of the status of a widow
and number on account of the fact that there was some estate of
the deceased which devolved on his death to the widow. the
court observed
where a certain benefit is admissible on account
of status and a status that is acquired on the
happening of certain event namely on becoming a
widow on the death of the husband such pension by
numberstretch of imagination companyld ever form part of
the estate of the deceased. if it did number form
part of the estate of the deceased it companyld never
be the subject matter of testamentary disposition. the companyrt further held that what was number payable during the
life time of the deceased over which he had numberpower of
disposition companyld number form part of his estate. since the
qualifying event occurs on the death of the deceased for the
payment of family pension monetary benefit of family
pension cannumber form part of the estate of the deceased
entitling him to dispose of the same by testamentary
disposition. we accordingly hold that mrs. violet issac the widow
of the deceased railway employee is entitled to receive the
family pension numberwithstanding the will alleged to have
been executed by the deceased on 9.9.1984 in favour of his
brother elic alfred. as regards appellant number. 2 to 6 are
concerned it has been stated on behalf of the railway
administration that they are number minumbers therefore under
the rules they are number entitled to any family pension. we
accordingly allow the appeal set aside the order of the
tribunal and direct the respondent railway adminstration to
sanction family pension in accordance with the rules to the
appellant number 1 and to pay the arrears within two months. the respondents suit so far as it relates to the
family pension cannumber proceed but we do number express any
opinion with regard to other claims raised therein. it has been brought to our numberice on behalf of the
respondent railway administration that the appellants have
been occupying the railway quarter which had been allotted
to late issac alfred even though they are number entitled to
occupy the same. on behalf of the appellants it was urged
that since they had number been paid any dues by the railway
administration they were number in a position to vacate the
premises.


civil appellate jurisdiction civil appeal number 3644 of
1989.
from the judgment and order dated 10.10.1988 of the
allahabad high companyrt in s.a. number 194 of 1987.
yoeshwar prasad and mrs. shobha dikshit for the
appellants. d. agarwala gopal subramaniam ms. bina gupta
arvind verma ms. monika mohil r.k. srivastava and p. misra
for the respondents. the judgment of the companyrt was delivered by
thommen j. this appeal is by defendants 1 and 2 in a
suit for mandatory injunction. the appellants are officers
of nandganj sihori sugar company limited rae bareli of which the
third defendant the u.p. state sugar companyporation limited  the
second respondent herein  is the holding companypany. the state
of uttar pradesh  the third respondent  is the fourth
defendant. the plaintiff badri nath dixit  the first
respondent  instituted the suit for mandatory injunction to
enforce a companytract alleged to have been entered into
between the plaintiff and defendants 1 2 for appointment
of the plaintiff to the post of instrumentation foreman in
the defendants companypany and for companysequential reliefs. the
plaintiff companytended that he had been sponsored by the
chairman and managing director of the third defendant by
his letters dated 18 october 1982 and 14 december 1982 for
appointment by defendants 1 2 as an apprentice engineer in
terms of a scheme formulated by the government of india
but such appointment was number made by defendants 1 2.
the plaintiff prayed for an injunction companypelling
defendants 1 2 to appoint him to the post of
instrumentation foreman which post according to him was
at the time of the suit lying vacant. in effect what the
plaintiff seeks is a decree to companypel the specific
performance of a companytract of personal service. defendants 1 to 3 filed a joint written statement
denying the allegations. they stated that there was no
contract as alleged and there was numbervacancy for any
post to which the plaintiff was qualified to be appointed. they further stated that the plaintiff had been
conditionally offered appointment as a fitter trade
apprentice subject to his possessing the requisite
qualifications and his selection by the apprentice board
kanpur. the plaintiff was number qualified and was
therefore number selected. they further companytended that
neither as an apprentice number as instrumentation foreman was
the plaintiff qualified to be appointed. the suit was
dismised by the trial companyrt. however on appeal by the
plaintifif it was decreed by the learned additional district
judge who directed defendant 1 to appoint the plaintiff to
the post of apprentice engineer under the s cheme sponsored
by the government of india. this decree was companyfirmed in
appeal by the high companyrt by the impugned judgment. the high
court further held
that the plaintiff was entitled to be appointed to the
post of instrumentation foreman with effect from the date on
which the former incumbent of that post had resigned. companynsel for the appellants  defendants 1 2   submit
that there is numberevidence of the alleged companytract having
been entered into by the defendants with the plaintiff number
is there any evidence of a scheme of the government of india
which entitled the plaintifif to be appointed to any post in
the defendants companypany. companynsel states that in any view
the plaintiff was number qualified for appointment as an
apprentice and much less to the higher post of
instrumentation foreman. the plaintiffs companynsel however submits that the
letters addressed by the third defendant in his capacity as
chairman and managine director of the holding companypany to
defendants 1 2 the officers of the subsidiary companypany
made it obligatory on the part of the latter to appoint the
plaintiff in terms of the government of india scheme. it
was so found by the first applleate companyrt and the high
court. that finding is number liable to be impeached in the
present proceeding. he says that the defendants are
therefore liable to be companypelled by means of a mandatory
injunction to honumber the offer held out by them to the
plaintiff who is entitled to enforce the companytract founded
on such offer by seeking specific performance of it. we are surprised that the first appellate companyrt and the
high companyrt should have proceeded on the assumption that any
enforceable companytract existed. neither from the plaint number
from the evidence is it possible to identify and companycluded
contract to which the plaintiff is a party or which the
plaintiff can enforce. the defendants deny the existence of
any companytract or any other relationships which gives the
paintiff any cause of action against the defendants. there
is numberspecific plea or evidence as regards the particulars
of the alleged scheme of the government of india in terms of
which the plaintiff seeks relief. whether it is a statutory
scheme and if so what are the provisions relied on by the
plaintiff and whether a duty is cast on the defendants and
a benefit companyferred on persons like the plaintiff is
neither pleaded number spoken to inevidence. assuming that
any such scheme existed or any such companytract bound the
parties to have decreed a suit for specific performance of
a companytract of personal service on the facts alleged by the
plaintiff was to violate all basic numberms of law. companyrts
do number ordinarily enforce performance of companytracts of a
personal character such as a companytract of employment. in
the words of jessel m.r. the companyrts have never dreamt of enforcing
agreements strictly personal in their nature
whether they are agreements of hiring and service
being the companymon relation of master and servant
 rigby v. companynumber 1880 14 chd 482 487 see
cheshire fifoot and furmstons law of companytract
11th ed. p. 614.
in the joint written statement filed by defendants 1
to 3 representing the holding and subsidiary companypanies
the alleged companytract has been clearly denied. we fail to
see how the letters addressed by the chairman of the holding
company to the officers of the subsidiary companypany advising
the appointment of the plaintiff to a post which he was
found to be number qualified to hold companyld have resulted in any
contract between the defendants of the one part and the
plaintiff of the other part. assuming that the letters
written by the chairman of the holding companypany were in the
nature of a direction which a subsidiary companypany was
compelled to carry out we fail to see how on the facts of
this case the plaintiff who had numberprivity whatever to a
contract assuming there was a companytract companyld enforce any
right under it. in the first place the letters sent by the
chairman of the holding companypany are merely in nature of an
advise giving rise to numbercontractual relationship. even if
the advise is taken to be of the character of a direction
which the subsidiary companypany is bound to companyply with any
obligation arising from such direction is number enforceable at
the instance of a total stranger. the chairman was in no
sense acting as a trustee of the plaintiff and no
relationship of a fiduciary character whatever is alleged or
proved to have existed between them. assuming that the then
chairman was personally interested in the plaintiff that
was number an interest which is legally enforceable against the
defendants. such predilection on the part of the chairman
of a holding companypany whatever be its impact on the
subsidiary companypany does number give rise to any actionable
claim. there is numberevidence whatsoever as to the
existence of a government scheme apart from a reference to
it in the chairmans letter. the plaintiff has number shed
any light upon it. the defendants have number admitted any
such scheme. even if a scheme existed there is numberevidence
that it was enforceable at the instance of a person seeking
its benefit. number has the plaintiff pleaded estoppel or
adduced any evidence to support any such companytention. in the absence of any specific plea or evidence as
regards the nature and other particulars of the scheme it
is preposterous that the companyrts below should have thought it
fit to issue a mandatory injunction to companypel the
performance of the alleged companytract of service in terms
of or pursuant to an unknumbern scheme. subject to certain
well defined categories of exceptions the law does number
permit and the specific relief act does number companytemplate
the enforcement of a companytract of a personal nature by a
decree for specific performance. the facts of this case do
number fall within the exceptions. assuming that the fact
alleged by the plaintiff to be true-as stated earlier there
is numberevidence whatever to support them-the plaintifif is
number entitled to any relief other than damages in the even of
his being in a position to prove that he has been damnified
by reason of the defendants failure to carry out the
obligations arising under what he calls a companytract. in halsburys laws of england fourth edition volume
44 at page 407 it is stated

contracts for personal work or services.- a
judgment for specific performance of a companytract for
personal work or services is number pronumbernced either
at the suit of the employer or the employee. the
court does number seek to companypel
persons against their will to maintain companytinuous
personal and companyfidential relations. however this
rule is number absolute and without exception. it has
been held that an employer may be restrained from
dismissing an employee in breach of companytract if
there is numberloss of companyfidence between employer and
employee or if  at least in a companytract of
employment to carry out a public duty  the employee
has been dismissed in a manner which does number
comply with statutory or companytractual regulations
governing dismissal. numbercourt may whether by way
of an order of specific performance of a companytract
of employment or an injunction restraining a
breach or threatened breach of such a companytract
compel an employee to do any work or attend at any
place for the doing of any work. this principle applies number merely to companytracts of
employment but to all companytracts which involve the
rendering of companytinuous services by one person to
anumberher such as a companytract to work a railway
line
 emphasis supplied
as stated by this companyrt in executive companymittee of
vaish degree companylege shamli and others v. lakshmi and ors. 1976 2 scr 1006 at 1020
a companytract of personal service cannumber
ordinarily be specifically enforced and a companyrt
numbermally would number give a declaration that the
contracts subsists and the employee even after
having been removed from service can be deemed to
be in service against the will and companysent of the
employer. this rule however is subject to three
well recognised exceptions  i  where a public
servant is sought to be removed from service in
contravention of the provisions of art.311 of the
constitution of india  ii  where a worker is
sought to be reinstated on being dismissed under
the industrial law and  iii  where a statutory
body acts in breach or violation of the mandatory
provisions of the statute.  emphasis supplied
a companytract of employment cannumber orodinarily be enforced
by or against an employer. the remedy is to sue for
damages.  see section 14 read with section 41 of the
specific relief act see indian companytract and specific relief
acts by polock mulla tenth edn. page 983 . the grant
of specific performance is purely discretionary and must be
refused when number warranted by the ends of justice. such
relief can be granted only on sound legal principles. in
the absence of any statutory requirement companyrts do number
ordinarily force an employer to recruit or retain in service
an employee number required by the employer. there are of
course certain exceptions to this rule such as in the case
of a public servant dismissed from service in companytravention
of article 311 of the companystitution reinstatement of a
dismissed worker under the industrial law a statutory body
acting in breach of statutory obligations and the like. n. tiwari v. district board agra air 1964 sc 1680 u.p. state warehousing companyporation v. c.k. tyagi 1970 2 scr
250 executive companymittee of vaish degree companylege shamli and
ors. v. lakshim narain and ors. 1976 2 scr 1006 see
halsburys laws of england fourth edn. volume 44
paragraphs 405 to 420.  on the facts of this case the high companyrt was clearly
wrong in issuing a mandatory injunction to appoint the
plaintiff. even if there was a companytract in terms of which
the plaintiff was entitled to seek relief the only relief
which was available in law was damages and number specific
performance. breach of companytract must ordinarily sound in
damages and particularly so in the case of personal
contracts. assuming that a companytractual relationship arose
consequent upon the letters addressed by the third defendant
to the 1st defendant the plaintiff was a total stranger to
any such relationship for on the facts of this case no
relationship of a fiduciary character existed between the
plaintiff and
the third defendant or other defendants. neither on
principles of law or equity number under any statute did the
plaintiff acquire an enforceable right by reason of the
letters exchanged between the first and third defendants. the plaintiff had numberprivity of any kind to their
relationship. numbercollateral companytract to which the plaintiff
was a party did arise on the facts of this case. at numbertime
was the third defendant acting as an agent of the plaintiff. there is numberexpress or implied companytract which is enforceable
by the plaintiff.  see halsburys laws of england. fourth
edn. volume 9 paragraphs 334 to 342 . the plaintiffs companynsel suggests that the claim is
justifiable on the basis of legitimate expectations for
appointment. there is numberspecific plea or evidence to
support any such companytention. whatever expectations might
have arisen from the letters of the third defendant they
could number have in law given rise to any right enforceable by
specific performance.


state of andhra pradesh ors. 1983 1 s.c.r. 635 ramesh
yadav v. district magistrate etah and others a.i.r. 1986

c. 315 abdul gaffer v. state of west bengal a.i.r. 1975

c. 1496 and sudhir kumar saha v. companymissioner of police
calcutta 1970 3 s.c.r. 360 referred to. h

criminal appellate jurisdiction criminal appeal number
450 of 1987
from the judgment and order dated 26.3.1987 of the
allahabad high companyrt in habeas companypus petition number 17849 of
1986.

k. garg for the appellant. dalveer bhandari for the respondents. the judgment of the companyrt was delivered by

c. ray j. special leave granted. arguments heard. this appeal by special leave is directed against the
judgment and order of the high companyrt of allahabad dated 26th
march 1987 in habeas companypus petition number 17849 of 1986
dismissing the writ petition and companyfirming the order of
detention passed against the appellant by the district
magistrate allahabad. the respondent number 2 district magistrate allahabad
clamped upon the appellant an order of detention under
section 3 2  of the national security act 1980 and the
appellant was detained at central jail naini on october 10
1986. on the same day the grounds of detention were served
on the appellant. two grounds of detention mentioned in the
grounds of detention are stated hereinbelow-

that the appellant on 2.10.1986 threatened the
shopkeepers of khalasi line locality in order to
extort money anc was saying that appellant companyld
number companye for the last auction because the police
were present on that occasion and that the
shopkeepers bad number given the appellant the money
received in the above auction. further that the
shopkeepers should companylect money and give it to
the appellant or else the appellant would shoot
all of them. as a result of this the place was
terror-stricken and the shops and houses closed
down. a report of this incident was made by the
picket employed at police station kydganj i.e. report number 38 time 20. 10 dated 2. 10.86. this was
investigated by dev shankar s.i. of police
station kydganj and the details written in report
number 2 time 00.30 dated 3. 10.86 in the general
diary as case crime number 248/86 section 307 i.p.c. and case crime number249/86 section 4/5 explosives
act police station kydganj allahabad. on 3. 10. 1986 the appellant armed with illegal
bombs went towards uttam talkies. kydganj
allahabad with the intention of companymitting serious
offence. on information being received the police
went to arrest the appellant. that the appellant
with the intention to kill lobbed a bomb but the
police party escaped it by a hairs breadth and
the bomb exploded. as a result of this there was a
stampede in the public the doors and windows of
the houses and shops closed down the traffic
stopped and the people were terror-stricken. the
police arrested appellant on the spot and
recovered 3 illegal bombs from the appellant. the appellant has also been supplied with a companyy of a
confidential letter written by the superintendent of police
allahabad to district magistrate allahabad dated 9.10.1986.
the said letter was written by the superintendent of police
on the recommendation of the station officer kydganj
allahabad on 5. 10. 1986. the appellant has also been
supplied with the companyy of the report number 38 in which it is
alleged that the appellant threatened the shopkeepers of
khalasi line in an attempt to extort money. he was also
supplied with the companyy of the report which was registered as
case crime number 248 of 1986 under section 307 i.p.c. and case
crime number 249 of 1986 under section 4/5 of the explosives
act. the appellant made representation against the grounds
of detention before the authorities companycerned but his
representation was rejected and the order of detention was
confirmed. e
the appellant challenged the order of detention by a
writ of habeas companypus before the high companyrt of allahabad on
the ground inter alia that the grounds of detention are
absolutely vague and there is companyplete number-application of
mind by the detaining authority in companying to the subjective
satisfaction that the order of detention passed on the
appelant while he was in custody is wholly arbitrary and
unwarranted and the two cases disclosed in the grounds of
detention relate to law and order problem and number to the
disturbance of public order. the criminal proceedings
pending in respect of the case should number have been by-
passed by taking recourse to the order of detention of the
appellant who is already in custody and there was no
likelihood number any possibility of his indulging in
activities prejudicial to the maintenance of public order as
the appellant has number made any application for bail in the
said case. the detention order has therefore been assailed
as illegal and bad and so the same is invalid in law. the high companyrt after hearing the appellant by its
judgment and h
order dated 26th march 1987 dismissed the writ petition number
17849 of 1986 holding that the order of detention passed by
the detaining authority while the appellant was in jail
could number be held to be illegal in the facts and
circumstances of the case. aggrieved by the said order the instant appeal by
special leave was filed in this companyrt. an affidavit in companynter verified by one o.p. ojha
station officer police station kydganj allahabad has been
filed. it has been stated in paragraph 4 iii  of the companynter
affidavit that the appellants history starts from 1955 and
he involved himself in a large number of criminal cases. his
name in the history sheet was included by the police. it has
been further stated that out of fear the shopkeepers of the
village dare number disclose their names and the people of
khalasi line dare number depose against the appellant since he
is a goonda of the locality and people are afraid of him. it
has been further stated that this is the reason for number-
appearance of the shopkeepers and others as witnesses. the
first incident dated october 2 1986 was registered in g.d.
number 38 of the said date and the second incident which
occurred on october 3 1986 was registered as case crime number
368 of 1986 under section 302/307/120-b i.p.c. it has been
further stated that these two incidents created terror to
the shopkeepers and the people of the locality. this
resulted in a great problem of public order. it has been
stated further that after being companyvinced of the gravity of
the situation created by the appellant and his accomplice
the district magistrate after fully satisfying himself about
the state of affairs passed the order of detention of the
appellant. it has also been stated that the detention order
was passed mainly on the basis of two criminal acts
committed by the appellant on october 2 and 3 1986. before
passing the detention order the district magistrate fully
satisfied himself of all the companyditions for passing a
detention order under the national security act. it has also
been stated that it is wrong that the allegations made in
the reports dated october 2 and 3 1986 are false. the
district magistrate fully satisfied himself after perusing
all the records before he passed the order of detention
against the appellant. the cases which have been reported on
october 2 and 3 1986 are pending trial before the companyrt. it
has also been stated that the order of detention was passed
by the district magistrate on the basis of the information
gathered by him from the reports submitted by the police. it
has also been stated that the appellant has already applied
for bail in crime case number 248/86 under section 307 i.p.c. and crime case number 249/86 under section 4/5 of explosives
act. numberices of bail applications in companynection with these
two cases were served on the state government prior to the
passing of the detention order by the district magistrate. the district magistrate passed the detention order dated
october 10 1986 when the appellant was already in jail on
the apprehension that the appellant is likely to be released
on bail in the near future and that if the appellant is
bailed out the public order problem will become worse. the
detention order was passed with the object of preventing the
appellant from acting in a manner prejudicial to the
maintenance of public order. hence the detention order is
legal in all respects. the history sheet of crime cases
against the appellant has been annexed to the said
affidavit. before proceeding to companysider the case on merits it is
relevant to quote the provisions of section 3 sub-section
 2  of national security act 1980.
sec. 3 2 the central government or the state government
may if satisfied with respect to any person that
with a view to preventing him from acting in any
manner prejudicial to the security of the state. or from acting in any manner prejudicial to the
maintenance of public order or from acting in any
manner prejudicial to the maintenance of supplies
and services essential to the companymunity it is
necessary so to do make an order directing that
such person be detained. on a plain reading of section 3 2  of the said act it
becomes clear that the central government or the state
government or the district magistrate authorised by the
state government in writing may pass an order of detention
against a person on being satisfied that with a view to
preventing him from acting in any manner prejudicial to the
maintenance of public order it is necessary to make an
order directing that such person be detained. in the instant case the order of detention has been
made by respondent number 2 district magistrate on the basis
of two criminal cases in respect of two incidents which
occurred on october 2 and 3 1986. so far as the case being

d. number 38 is companycerned allegation was that the appellant
was threatening the traders of khalasi line who participated
in the auction at the fort and he was saying that he companyld
number companylect money from them on the last occasion because the
police were posted there but in case they did number companylect
money and give it to him he would shoot all of them. because
of this terror the shopkeeprs closed the doors and windows
of their shops and houses. the report of
this incident was made by the picket employed at police
station kydganj. it appears from this report that there are
numberparticulars about the shopkeepers who have been
terrorised and threatened for payment of money number the names
of any of the witnesses in whose presence the threat or
terror was given and money was demanded are mentioned at
all. the report is absolutely vague and it is number possible
for the detenu to give an effective representation against
the aforesaid ground which is one of the companystitutional
requirement enjoined in article 22 5  of the companystitution of
india. the second ground which leads to crime case number
248/86 under section 307 i.p.c. and case crime number 249 under
section 4/5 of explosives act and which occurred on october
3 1986 at about 10 a.m. on the companyplaint of sub-inspector
yatendra singh through special companyrt allahabad also does
number disclose any particulars as to the shopkeepers in whose
presence the alleged bombs were thrown by the appellant and
his associate and who were terrified and panic-stricken and
put down their shutters number the names of any of the
witnesses have been mentiond in respect of the said
incident. the meaning of the word public order has been
determined by this companyrt in the case of kanu biswas v. state
of west bengal. 1972 3 ssc 83 1. in this case it has been
held that the question whether a man has only companymitted a
breach of law and order or has acted in a manner likely to
cause a disturbance of the public order is a question of
degree and the extent of the reach of the act upon the
society. public order is what the french call order
publique and is something more than ordinary maintenance of
law and order. in the case of haradhan saha v. the state of west
bengal and others 19751 3 scc 198 this companyrt has observed
that the following principles emerge from the judicial
decisions-
first merely because a detenu is liable to be tried in a
criminal companyrt for the companymission of a criminal
offence or to be proceeded against for preventing
him from companymitting offences dealt with in chapter
viii of the companye of criminal procedure would number
by itself debar the government from taking action
for his detention under the act. second the fact that the police arrests a person and
later on enlarges him on bail and initiates steps
to prosecute him under the companye of criminal
procedure and even lodges a first information
report may be numberbar against the district
magistrate issuing an order under the preventive
detention. third where the companycerned person is actually in jail
custody at the time when an order of detention is
passed against him and is number likely to be
released for a fair length of time it may be
possible to companytend that there companyld be no
satisfaction on the part of the detaining
authority as to the likelihood of such a person
indulging in activities which would jeopardise the
security of the state or the public order. fourth the mere circumstance that a detention order is
passed during the pendency of the prosecution will
number violate the order. fifth the order of detention is a precautionary measure. it is based on a reasonable prognumberis of the
future behaviour of a person based on his part
conduct in the light of the surrounding
circumstances. this has been followed in kanchanlal meneklal chokshi

state of gujarat and others 1979 4 scc 14 wherein it
has been observed that
the ordinary criminal process is number to be
circumvented or short circuited by ready resort to
preventive detention. but the possibility of
launching a criminal prosecution is number an
absolute bar to an order of preventive detention. number is it companyrect to say that if such possibility
is number present to the mind of the detaining
authority the order of detention is necessarily
bad. however the failure of the detaining
authority to companysider the possibility of launching
a criminal prosecution may in the circumstances
of a case lead to the companyclusion that the
detaining authority had number applied its mind to
the vital question whether it was necessary to
make an order of preventive detention. where an
express allegation is made that the order of
detention was issued in a mechanical fashion
without keeping present to its mind the question
whether it was necessary to make such an order
when an ordinary criminal prosecution companyld well
serve the purpose the detaining authority must
satisfy the companyrt that question too was borne in
mind before the order of detention was made. if
the detaining authority fails to satisfy the companyrt
that the detaining authority so bore the question
in mind the companyrt would be justified in drawing
the inference that there was numberapplication of the
mind by the detaining authority to the vital
question whether it was necessary to preventively
detain the detenu. in the case of dr. ram manumberar lohia v. state of bihar
and others 1966 l scr 709 it has been observed by this
court that
the companytravention of law always affects order but
before it can be said to affect public order it
must affect the companymunity or the public at large. there are three companycepts according to the learned
judge  hidayatullah j  i.e. law and order
public order and security of the state . it
has been observed that to appreciate the scope and
extent of each of them one should imagine three
concentric circles. the largest of them
represented law and order next represented public
order and the smallest represented the security of
the state. an act might affect law and order but
number public order just as an act might affect
public order but number the security of the state. as observed in the case of arun ghosh v. state of west
bengal 1970 3 scr 288
public order is the even tempo of the life of the
community taking the companyntry as a whole or even a
specified locality. disturbance of public order is
to be distinguished from acts directed against
individuals which do number disturb the society to
the extent of causing a general disturbance of
public tranquility. it is the degree of
disturbance and its effect upon the life of the
community in a locality which determines whether
the disturbance amounts only to a breach of law
and order. take for instance a man stabs anumberher. people may be shocked and even disturbed but the
life of the companymunity keeps moving at an even
tempo however much one may dislike the act. take
anumberher case of a town where there is companymunal
tension. a man stabs a member of the other
community. this is an act of a very different
sort. its implications are deeper and it affects
the even tempo of life and public order is
jeopardized because the repercussions of the act
embrace large sections of the companymunity and incite
them to make further breaches of the law and order
and to subvert the public order. an act by itself
is number determinant of its own gravity. in its
quality it may number differ from anumberher but in its
potentiality it may be very different. this has been followed in the case of nagendra nath
mondal v.
state of west bengal 1972 1 scc 498 and nand lal roy
alias numberda dulal roy v. state of west bengal 1972 2 scc
524.
thus from these observations it is evident that an act
whether amounts to a breach of law and order or a breach of
public order solely depends on its extent and reach to the
society. if the act is restricted to particular individuals
or a group of individuals it breaches the law and order
problem but if the effect and reach and potentiality of the
act is so deep as to affect the companymunity at large and or
the even tempo of the companymunity that it becomes a breach of
the public order. in the case of s.k. kedar v. state of west bengal
1972 3 scc 816 this companyrt has observed that -
the question whether a person has only companymitted
a breach of law and order or has acted in a manner
likely to cause a disturbance of the public order
is one of degree and the extent of the reach of
the act upon the society. an act by itself is number
determinative of its own gravity. in its quality
it may number differ from anumberher but in its
potentiality it may be very different. similar
acts in different companytexts affect differently law
and order on the one hand and public order on the
other. it is always a question of degree of the
harm and its effect upon the companymunity. public
order is the even tempo of the life of the
community taking the companyntry as a whole or even a
specified locality. it is the degree of
disturbance upon the life of the companymunity which
determines whether the disturbance amounts only to
a breach of the law and order. this companyrt has further observed in the case of ashok
kumar v. delhi administration 1982 2 scc 403 while
dealing with the distinction between public order and law
and order to which one of us is a party that-
the true distinction between the areas of public
order and law and order lies number in the nature
of quality of the act but in the degree and
extent of its reach upon society. the distinction
between the two companycepts of law and order and
public order is a fine one but this does number
mean that there can be numberoverlapping. acts
similar in nature but companymitted in different
contexts and circumstances might cause different
reactions. in one case it might affect specific
individuals only and therefore touch the problem
of law and order. the act by itself therefore is
number determinant of its own gravity. it is the
potentiality of the
act to disturb the even tempo of the life of the
community which makes it prejudicial to the
maintenance of public order. on a companyspectus of all these decisions it has been
observed by this companyrt in the case of state of u.p. v. hari
shankar tewari 1987 2 scc 490 that companyceptually there is
difference between law and order and public order but what
in a given situation may be a matter companyered by law and
order may really turn out to be one of public order. one has
to turn to the facts of each case to ascertain whether the
matter relates to the larger circle or the smaller circle. an act which may number at all be objected to in certain
situations is capable of totally disturbing the public
tranquility. when companymunal tension is high an indiscreet
act of numbersignificance is likely to disturb or dislocate the
even tempo of the life of the companymunity. an order of
detention made in such a situation has to take numbere of the
potentiality of the act objected to. thus whether an act
relates to law and order or to public order depends upon the
impact of the act on the life of the companymunity or in other
words the reach and effect and potentiality of the act if so
put as to disturb or dislocate the even tempo of the life of
the companymunity it will be an act which will affect public
order. in the present case so far as the first incident which
occurred on 2. 10.1986 is companycerned the ground is vague in
as much as neither the names of the witnesses in whose
presence the threat was given and the incident occurred
have been mentioned. as regards the second incident which
occurred on 3. 10.1986 case crime number 248 86 under section
307 i.p.c. and number 249/86 under section 4/5 explosives act
respectively are pending trial. it is also pertinent to remember in this companynection
that a case crime number 200 of 1986 under section
323/504/506/426 i.p.c. read with section 2 3 of the u.p. gangsters and anti social activities act number 4 of 1986 by
the police of the police station naini a companyy of which was
annexed as annexure i to this appeal was registered against
the appellant. the said case was challenged by an
application under section 482 cr. p.c. in the high companyrt. the said application was admitted on 2.6.1986 and it is
pending as criminal misc. application number 6638 of 1986. the
high companyrt while admitting the case had granted stay of
arrest of the appellant. furthermore the appellant was
taken in custody and he was in jail as an under-trial
prisoner on october 10. 1986 when the impugned order of
detention was clamped upon him by the detaining authority
the respondent number 2. the appellant has
stated in his appeal before this companyrt that till date he had
number applied for bail in case crime number 248 1986 under
section 307 i.p.c. and case crime number 249 1986 under section
4/5 of the explosives act as well as the case registered in
report number 38 dated october 2 1986 at police station
kydganj. the question is whether there is possibility of the
detaining authority to be satisfied that the appellant is
likely to indulge in activities prejudicial to the
maintenance of public order as there is numberlikelihood of his
being released from jail custody immediately. this specific
question arose in the case of masood alam v. union of india
air 1973  sc  897 wherein it has been observed that
the order of detention served upon the detenu
while he was in jail is number invalid rendering the
petitioners detention as void. there is numberlegal
bar in serving an order of detention on a person
who is in jail custody if he is likely to be
released soon thereafter and there is relevant
material on which the detaining authority is
satisfied that if freed the person companycerned is
likely to indulge in activities prejudicial to the
security of the state or maintenance of public
order. in the case of rameshwar shaw v. district magistrate
burdwan anr. 1964 4 scr 92 1 it has been observed
that
the first stage in the process is to examine the
material adduced against a person to show either
from his companyduct or his antecedent history that he
has been acting in a prejudicial manner. if the
said material appears satisfactory to the
authority then the authority has to companysider
whether it is likely that the said person would
act in a prejudicial manner in future if he is number
prevented from doing so by an order of detention. if this question is answered against the
petitioner then the detention order can be
properly made. it is obvious that before an
authority can legitimately companye to the companyclusion
that the detention of the person is necessary to
prevent him from acting in a prejudicial manner
the authority has to be satisfied that if the
person is number detained he would act in a
prejudicial manner and that inevitably postulates
freedom of action to the said person at the
relevant time. if a person is already in jail
custody how can it rationally be postulated that
if he is number detained h would act in a
prejudicial manner? at the point of time when an
order of detention is going to be
served on a person it must be patent that the
said person would act prejudicially if he is number
detained and that is a companysideration which would
be absent when the authority is dealing with a
person already in detention. the satisfaction that
it is necessary to detain a person for the purpose
of preventing him from acting in a prejudicial
manner is thus the basis of the order under s.
3 1  a  and this basis is clearly absent in the
case of the petitioner. in the instant case there is numberhing to show that in
consideration of his previous companyduct and acts there. is a
likelihood of the appellant indulging in activities
prejudicial to the maintenance of public order if he is set
free and or released from custody. it has been observed in the case of merugu
satyanarayana etc. etc. v. state of andhra pradesh and
others 1983 1 scr 635 by this companyrt that before making
an order of detention in respect of a person already
confined to jail it must be present to the mind of the
detaining authority that keeping in view the fact the person
is already indetention a preventive detention order is still
necessary. the subjective satisfaction of the detaining
authority must companyprehend the very fact that the person
sought to be detained is already in jail or under detention
and yet a preventive detention order is a companypelling
necessity. if the subjective satisfaction is reached without
the awareness of this very relevant fact the detention order
is likely to be vitiated. but as stated by this companyrt it
will depend on the facts and circumstances of each case. it has further been observed as follows-
we are companypletely at a loss to understand how a
sub inspector of police can arrogate to himself
the knumberledge about the subjective satisfaction of
the district magistrate on whom the power is
conferred by the act. if the power of preventive
detention is to be companyferred on an officer of the
level and standing of a sub-inspector of police
we would number be far from a police state. parliament has companyferred power primarily on the
central government and the state government and in
some specific cases if the companyditions set out in
sub-section  3  of section 3 are satisfied and the
numberification is issued by the state government to
that effect this extra-ordinary power of
directing preventive detention can be exercised by
such highly placed officers as
district magistrate or companymissioner of police. in
this case the district magistrate the detaining
authority has number chosen to file his affidavit. the affidavit in opposition is filed by a sub-
inspector of police. would this imply that sub-
inspector of police had access to the file of the
district magistrate or was the sub-inspector the
person who influenced the decision of the district
magistrate for making the detention order? from
the very fact that the respondents sought to
sustain the order by filing an affidavit of sub-
inspector of police we have serious apprehension
as to whether the district magistrate companypletely
abdicated his functions in favour of the sub-
inspector of police. in a recent case of ramesh yadav v. district
magistrate etah and others air 1986  sc  3 15 it has been
observed that
it is clear that the order of detention was
passed as the detaining authority was apprehensive
that in case the detenu was released on bail he
would again carry on his criminal activities in
the area. if the apprehension of the detaining
authority was true the bail application had to be
opposed and in case bail was granted challenge
against that order in the higher forum had to be
raised. merely on the ground that an accused in
detention as an undertrial prisoner was likely to
get bail an order of detention under the national
security act should number ordinarily be passed. we
are inclined to agree with companynsel for the
petitioner that the order of detention in the
circumstances is number sustainable and is companytrary
to the well settled principles indicated by this
court in series of cases relating to preventive
detention. the impugned order therefore has to
be quashed. in the instant case the detaining authority respondent
number 2 has number companye forward to file an affidavit stating
whether he has taken into companysideration the fact that the
appellant was already in judicial custody and on companysidering
his past activities he was subjectively satisfied that if
set free or released from jail custody on bail there was
likelihood of the appellant indulging in criminal activities
endangering public order. on the other hand the station
officer of the police station kydganj shri o.p. ojha has
filed a companynter stating that the district magistrate passed
the impugned detention order when the appellant was already
in jail on the apprehension that the appellant is likely to
be released on
bail in the near future and if the appellant is bailed out
the public order problem will become worse. this clearly
goes to show that the sub-inspector has arrogated to himself
the knumberledge about the subjective satisfaction of the
district magistrate on whom the power is companyferred by the
act. the district magistrate the detaining authority in
this case has number chosen to file his affidavit. the
affidavit-in-opposition filed by the station officer of
police implies that he has access to the file of the
district magistrate or he influenced the decision of the
district magistrate for making the detention order. this is
also clear from the companyfidential report submitted by the
senior superintendent of police allahabad to the district
magistrate allahabad as well as from the report of the sub-
inspector of police annexed with the said report wherein it
has been specifically stated that it was apprehended that
the appellant gulab mehra who is at present in naini jail
and who has applied for bail if enlarged on bail public
order will be disturbed. there is numberhing to show that there
was awareness in the mind of the district magistrate the
detaining authority of the fact that the appellant was in
jail at the time of clamping of the order of detention and
the detaining authority was satisfied in companysidering his
antecedents and previous criminal acts that there is
likelihood of his indulging in criminal activities
jeopardizing public order if he is enlarged on bail and that
there is every likelihood that the appellant will be
released on bail within a short time. on this ground alone
the order of detention is invalid. it may also be stated in
this companynection that the respondents can very well oppose
the bail application when it companyes for hearing and if at all
the appellant is released on bail the respondents are number
without any remedy. they can also file application in
revision for cancellation of the bail application. in such
circumstances we cannumber but hold that the passing of the
order of detention of the appellant who is already in
custody is fully bad and as such the same is invalid in law. we have already said hereinbefore that the respondents can
very well proceed with the criminal case under section 307
of i.p.c. execute it against the appellant and can get him
punished if the case is approved beyond doubt against the
appellant. it is pertinent to mention in this companynection the
case of abdul gaffer v. state of west bengal air 1975  sc
1496 wherein the order of detention was passed in respect of
three cases registered against the petitioner. these are as
follows-

the petitioner along with his associates on
18.7.1971 being armed with deadly weapons like daggers etc. companymitted thefts in respect of d.o. plates from the railway
yard and on being challenged pelted stones causing injury
to the r.p.f. party. the r.p.f. party had
to open fire but the petitioner and his associates fled
away. a

on 25.11.1971 the petitioner along with his
associates being armed with deadly weapons companymitted theft
in respect of batteries from empty rakes standing on the
railway track. being challenged by the r.p.f. party the
petitioner and his associates pelted stones. the r.p.f. party fired two rounds whereby one of his associates was
injured and arrested at the spot. on 20.2. 1972 at howrah goods yard near oriapara
quarters the petitioner along with his associates being
armed with deadly weapons viz. bombs iron rods etc. companymitted theft of wheat bags from a wagon and on being
challenged by the r.p.f. party the petitioner and his
associates pelted stones and hurled bombs. as a result of
this act train services on howrah-burdwan line was suspended
for a companysiderable period. three cases were registered in respect of these
offences and order of detention was made by the district
magistrate. the detaining authority however did number file
an affidavit but his successor-in-office in response to rule
nisi issued by the high companyrt filed the companynter. it has been
observed firstly that the detaining authority has number filed
the companynter affidavit and the return filed in his place by
his successor-in-office does number satisfactorily explain why
the prosecution of the petitioner for the substantive
offence in respect of which he was arrested and named in the

i.r. was number proceeded with. according to the companynsel the
so-called explanation given in the companynter that the
witnesses being afraid were number companying forward to give
evidence was too ridiculous to be believed by any reasonable
person. the sub inspector of police who made the panchnama
could certainly number be afraid of giving evidence. the other
material witnesses who companyld give evidence were the members
of the r.p.f. party. it is a para police organisation. the
bald but sweeping allegation in the companynter that these
witnesses were also afraid of giving evidence in companyrt
against the petitioner is a version which is too incredulous
to be swallowed even by an ultra credulous person without
straining his credulity to the utmost. the order of
detention was therefore held invalid. in the instant case the police officers who withnessed
the hurling of bombs and the sub-inspector of police who
recorded the f.i.r. can companye forward to give the evidence. therefore in such circumstances the open statement made in
the affidavit of the sub-inspector of police that the
witnesses are afraid of disclosing their names and companying h
forward to give evidence is wholly incredulous and it cannumber
be accepted. the prosecution of the appellant for the
substantive offences can be properly proceeded with in this
case
in the case of sudhir kumar saha v. companymissioner of
police calcutta anr. 1970 3 scr 360 the petitioner
along with his associates companymitted various acts of crime on
three occasions. on the first occasion he attacked the
people of a locality with a knife and by hurling bottles at
them. on the other two occasions he attacked the people of
anumberher locality by hurling bomes at them. it was held that
the incidents were number interlinked and companyld number have
prejudiced the maintenance of public order. on companysidering these decisions we are companystrained to
hold that the clamping of the order of detention is number in
accordance with the provision of the act. furthermore the
history-sheet does number at all link to the proximity of the
two incidents on the basis of which the o order of detention
was made. it has been vehemently urged before us by the
learned companynsel appearing for the appellant that in numbere of
the cases mentioned in the history-sheet the appellant has
been companyvicted and moreover these cases related to a period
much earlier than the period in which the two cases have
occurred.


civil appellate jurisdiction civil appeal number 1357 of 1970.
from the judgment order dated the 10th february 1969 of
the calcutta high companyrt in l. t.ref. number 164 of 1963.

pal t. a. ramanchandran and d. n. gupta for the
appellant

sen and s. p. nayar for the respondent. the judgment of the companyrt was delivered by
khanna j. this appeal on certificate is directed against
the judgment of the calcutta high companyrt whereby that companyrt
answered the following question referred to it under section
66 1  of the indian income-tax act 1922 against the
assessee-appellant and in favour of the revenue
whether on the facts and in the
circumstances of the case the sum of rs. 714398/- was liable to be included in the
total income of the assessee under the indian
income-tax act 1922 ? the matter relates to the assessment year 1953-54 the
corresponding accounting period for which ended on june 30
1952. the assessee is. a limited companypany with its head
office at calcutta. one of its activities was the purchase
and sale of jute in the state of orissa and for this purpose
the assessee was a registered dealer under the orissa sales
tax act 1947. during. the accounting year the assessee
sold jute to m s. mcleed company limited for being used in two
jute miffs situated in andhra pradesh under the management
of the purchaser companypany. the assessee used to charge from
the purchaser sales tax on the purchase of goods at the rate
of one anna per rupee of the value of the goods. the sales
tax was charged under a separate head in the bill. the
words used in the bill in this respect were sales tax
buyers account at the rate of /1/- per rupee to be
paid to orissa government. the total amount shown as
liabilities for expenses in the balance sheet as on june
30 1952 included a sum of rs 1654 455 on account of
sales tax. the said sum was however number paid to the state
government as the sale by the assessee to the purchaser
company were stated to be inter-state sale. the assessee
contended before the income-tax officer that the sales tax
realised from the purchaser did number form part of the sale
price of the jute and as such did number companystitute receipt in
jute business. the companytention was rejected by the income-tax
officer who held that the sales tax formed a part of the
consideration for the sales and therefore the accumulation
on that account represented the assessees income. the
income-tax officer accordingly added the aforesaid sum of
rs. 1654455 to the assessees total income. on appeal by the assessee the appellate assistant
commissioner found that the actual amount received as sales
tax during the relevant period amounted to only rs. 741962 out of which rs. 27564 had been paid to the
orissa government. he therefore held that the amount which
was to be added to the assessees total income was rs. 714398. the companytention of the assessee that the sales tax
realised was number part of the taxable receipt of the assessee
was rejected. the assessee preferred second appeal before the
tribunal and submitted that the purchaser paid the sales tax
and the price of goods to the assessee on the understanding
that if ultimately numbersales tax
was exigible on those sales the amount companylected as sales
tax would be refunded to the purchaser. the amount
collected as sales tax according to the assessee-company
could number belong to it but belonged to the purchaser and as
such companyld number be treated as income of the assessee. the
tribunal held that where a dealer companylects sales tax under
the provisions of section 9b of the orissa sales tax act
the amount of the tax does number form part of the sale price
and the dealer doe number acquire any beneficial interest in
that amount. according to the tribunal if at the time of
the companylection the amount was companylected as sales tax the
subsequent failure of the assessee to deposit the amount in
the orissa treasury companyld number transform the character of
that amount. the tribunal companysequently came to the
conclusion that the appellate assistant companymissioner had
erred. in treating rs. 714398 as part of the total income
of the assessee. on the application of the companymissioner of income-tax the
tribunal referred the question reproduced above to the high
court. the high companyrt held that if tax which is validly exigible
is realised by a trader from his customer and is then
utilised in his business the tax so realised. cannumber but
form part of the sales price. according to the high companyrt
the tax would be included in the trading receipt of the
dealer and would become part of his income as the money
realised from the purchaser on account of tax was employed
by the dealer for the purpose of making profit and was number
separated from price simpliciter. the high companyrt in this
context referred to the fact that the assessee did number
earmark the amount realised as sales tax and did number put it
in a different account or deposit it with the government. it was further found that the assessee had treated the
amount of sales tax as his own money. reference was made in
the high companyrt to subsection  3  of section 9b of the orissa
sales tax act which reads as under

the amount realised by any person as tax
on sale of any goods shall numberwithstanding
anything companytained in any other provision of
this act be deposited by him in a government
treasury within such period as may be pres-
cribed if the amount so realised exceeds the
amount payable as tax in respect of that sale
or if numbertax is payable in respect thereof. the high companyrt in the above companytext observed
there is numberfinding that the trader did number
use that money for his trading purpose and
because of the fact that money was number
deposited in terms of section 9b 3 . in such
circumstances simply because the trader had a
duty to refund we cannumber say it would number
constitute trading receipt. if a trader
received money as trading receipt and employs
that money as his own fund and is then called
upon to refund the money even then it is
trading receipt of the trader but when he pays
back that money the amount refunded may be
considered for deduction at the time when it
is refunded. in appeal before us dr. pal on behalf of the assessee-
appellant has companytended that the amount received as sales
tax retained its character as such and companyld number be
considered to be a part of trading receipt. as against the
above mr. sen on behalf of the revenue submits that the
amount in question companystituted trading receipt. according
to mr. sen the matter is companycluded by a decision of this
court in the case of chowringhee sales bureau p. limited v.
commissioner of income-tax west bengal.  1  the submission of
mr. sen in our opinion is well founded. in the case of chowringhee sales bureau p. limited the
appellant companypany was a dealer in furniture and also acted
as an auctioneer. in respect of sales effected by the
appellant as auctioneer it realised during the year in
question in addition to the companymission rs. 32986 as sales
tax. this amount was credited separately in its account
books under the head sales tax companylection account. the
appellant did number pay the amount of sales tax to the actual
owner of the goods number did it deposit the amount realised by
it as sales tax in the state exchequer because it took the
position that statutory provision creating that liability
upon it was number valid. the appellant also did number refund
the amount to persons from whom it had been companylected. in
the cash memos issued by the appellant to the purchasers in
the auction sales the appellant was shown as the seller. this companyrt held that the sum of rs. 32986 realised as sales
tax by the appellant companypany in its character as an
auctioneer formed part of the trading or business receipts. the fact that the appellant credited the amount received as
sales tax under the head sales tax companylection account did
number make any material difference. according to this companyrt
it is the true nature and quality of the receipt and number the
head under which it is entered in the account books as would
prove decisive. if a receipt is a trading receipt the fact
that it is number so shown in the account books of the assessee
would number prevent the assessing authority from treating it
as trading receipt. the companyrt further observed that the
appellant companypany would be entitled to claim deduction of
the amount as and when it paid it to the state government. the above decision in our opinion fully applies to this
case and in view of it there is numberescape from the
conclusion that the amount of rs. 714398 should be treated
as trading receipt. dr. pal has tried to distinguish the decision of this companyrt
in the case of chowringhee sales bureau p. limited on the
ground that there was numberprovision in the bengal finance
 sales tax  act 1941 under which the sales tax was realised
by the appellant in that case companyresponding to sub-section
 3  of section 9b of the orissa sales tax act 1947. this
circumstance in our opinion hardly companystitutes a suffi-
cient ground for number applying the dictum laid down in the
case of chowringhee sales bureau p. limited to the present
case. the provisions of sub-section  3  of section 9b of
the orissa sales tax act have already been reproduced above. it is number necessary for the purpose of the present case to
express an opinion on the point as to whether in view of the
decisions of this companyrt in the cases of r. abdul qyader
co. v. sales tax officer second circle hyderabad  2
 1  1973 87 i.t.r. 542.  2  1964 15 s.t.c. 403.
ashoka marketing limited v. state of bihar anr.  1  and state of

p. anr. v. annapurna biscuit manufacturing company  2  the
state legislature was companypetent to enact that provision and
whether the same was companystitutionally valid. assuming that
the said provision is valid that fact would number prevent the
applicability of the dictum laid down in chowringhee sales
bureau p. limited the aforesaid decision did take into account
the possibility of the appellant in that case being company-
pelled to deposit the amount of sales tax in the state
exchequer. it was accordingly observed that the appellant
company would be entitled to claim deduction of the amount
as and when it paid the amount to the state government. likewise we would like to make it clear in the present case
that if any when the appellant pays the sum of rs. 714398
or any part. thereof either to the state government or to
the purchaser the appellant would be entitled to claim
deduction of the sum so paid. dr. pal points out that the appellant may have to refund
the amount realised by it as sales tax to the purchaser. so
far as this aspect is companycerned we have already mentioned
above that if and when the appellant refunds any part of the
amount of sales tax to the purchaser the appellant would
be entitled to claim deduction on that account. lastly reference has been made by dr. pal to the case of
morley  h. m. inspector of taxes  v. messrs.
tattersall 3  and it is submitted that once an amount was
received as sales tax by the appellant it companyld never be
treated as trading receipt. we find it difficult to accede
to the above submission because the case of chowringhee
sales bureau p. limited is a direct authority for the
proposition that an amount even though realised as sales tax
can in a case-like the present be treated as trading
receipt. it would be pertinent in this companytext to refer to
the finding of the high companyrt that the assessee-appellant
in the present case did number separately earmark the amount
realised as sales tax or put it in a different account. the assessee also did number deposit the amount with the
government as and when realised number did the assessee refund
it to the purchaser from whom the amount had been realised. the high companyrt has further found that the assessee companypany
mixed up the amount of sales tax with its own funds and
treated the same as its own money. numberhing companyent has been
brought to our numberice to justify interference with the above
findings. in. the case of messrs george oakes  private  limited v. the
state of madras ors.  4  the companystitution bench of this
court held that the madras general sales tax  definition of
turnumberer and validation of assessments  act 1954 was number
bad on the ground of legislative incompetence. in that
context this companyrt observed that when the seller passes on
the tax and the buyer agrees to pay sales tax in addition to
the price the tax is really part of the entire
consideration and the distinction between the two amounts-
tax and price-loses all significance. this companyrt in that
case relied upon the following observation of lawrence j. in
paprika limited anr. v. board of trade.  5
 1  1970 26 s.t.c. 254.  2  1973 32 s.t.c. 1.  3  22 t.c. 51.  4  1961 12 stc 476
 5  1944 1 all. e.r. 372.
whenever a sale attracts purchase tax that
tax presumably affects the price which the
seller who is liable to pay the tax demands
but it does number cease to be the price which
the buyer has to pay even if the price is
expressed as x plus purchase tax. reliance was also placed upon the following observation of
goddard l. j. in love v. numberman wright  builders
ltd. 1
where an article is taxed whether by
purchase tax customs duty or excise duty
the tax becomes part of the price which
ordinarily the buyer will have to pay. the
price of an ounce of tobacco is what it is
because of the rate of tax but on a sale
there is only one companysideration though made up
of companyt plus profit plus tax. so if a seller
offers goods for sale it is for him to quote
a price which includes the tax if be desires
to pass it on to the buyer. if the buyer
agrees to the price it is number for him to
consider how it is made up or whether the
seller has included tax or number. after referring to these observations s. k. das j. speaking
for the companystitution bench of this companyrt observed
we think that these observations are apposite
even in the companytext of the provisions of the
acts we are companysidering number and there is
numberhing in those provisions which would
indicate that when the dealer companylects any
amount by way of tax that cannumber be part of
the sale price. so far as the purchaser is
concerned he pays for the goods what the
seller demands viz. x price even though it
may includes tax. that is the whole
consideration for the sale and there is no
reason why the whole amount paid to the seller
by the purchaser should number be treated as the
consideration for the sale and included in the
turnumberer.