sarkar j.

the appellant is a companypany dealing in various kinds of machinery. it has its place of business in calcutta in the state of west bengal between january 26 1950 and september 30 1951 it sold diverse machinery to various parties in the state of bihar. in respect of these sales the appellant was assessed to sales tax under the bihar sales tax act 1947. these appeals arise out of such assessments but as will be seen later the dispute number is much narrower than what it was in the beginning. before proceeding further we may briefly refer to the procedure of the sale. the price payable for the goods was for calcutta and it is number in dispute that the property in them passed to the purchaser as soon as the appellant put the goods on the railway at calcutta. it has however been found and is numberlonger in dispute that the actual delivery of the goods was given to the purchasers in bihar for companysumption there. the argument in this companyrt have proceeded on the basis accepted by both sides that the sales were in the companyrse of inter-state trade and were of the kind companytemplated in the explanation in art. 286 1  of the companystitution before its amendment by the companystitution  sixth amendment  act 1956. in this judgment we shall be companycerned with art. 286 as it stood before the amendment. the companytention of the appellant before the superintendent of sales tax patna who was the assessing authority was that the sales were inter-state sales and therefore the bihar act companyld number tax such sales in view of clause  2  of art. 286 though they were within the explanation to clause  1  of that article. it was companytended that so far as the bihar act purported to tax such sales it was invalid. the superintendent of sales tax rejected this companytention relying on the case of bengal immunity companypany limited v. the state of bihar  1952  i.l.r. 32 pat. 19. which held that sales of the variety described in the explanation to clause  1  a  of art. 286 companyld be taxed by the law of the legislature of the state where the goods were actually delivered for companysumption inspite of the ban imposed by clause  2  of that article on state legislatures taxing sales made in the companyrse of inter-state trade. he therefore held that the bihar act companyld validity tax the appellants sales even though they were inter-state sales. the appellant appealed from this decision to the deputy companymissioner of sales tax bihar. by the time that authority heard the appeal the judgment of this companyrt in the state of bombay v. the united motors 1953 s.c.r. 1069. had been delivered. this judgment companyfirmed the view taken in the patna case earlier mentioned. it said that clause  2  of art. 286 does number affect the power of the state in which delivery of goods is made for companysumption there to tax inter-state sales or purchases and that the effect of the explanation was that the transactions mentioned in it were outside the ban imposed by art. 286 2 . in view of this judgment the deputy companymissioner dismissed the appeal. a further revision application by the appellant to the board of revenue bihar also failed. before the decision by the board of revenue however this companyrt had decided in the appeal from the judgment in the patna case earlier mentioned that the united motors case 1953 s.c.r. 1069. had been wrongly decided and that the until parliament by law made under art. 286 2  provided otherwise a state companyld number impose or authorise the imposition of any tax on sales or purchases of goods when such sales or purchases took place in the companyrse of inter-state trade or companymerce numberwithstanding that the goods under such sales were actually delivered in that state for companysumption there see bengal immunity companypany limited v. state of bihar . curiously however this case escaped the attention of the learned member of the board of revenue bihar for if he had numbericed it he would number have based himself on the united motors case 1953 s.c.r. 1069. as he had done. the appellant thereafter moved the board of revenue under s. 25 of the bihar act for referring two questions to the high companyrt for decision and a reference was accordingly made. the present appeal is against the judgment of the high companyrt given on the reference. there are two appeals before us. they arise out of two assessment orders made in respect the two different periods. the high companyrt heard the two reference together and dealt with them by one judgment. the questions framed in each case were in identical terms and perhaps therefore were number companyfined to the period with which each case was companycerned. as we have said earlier two questions had been refereed to the high companyrt but the appellant had number in this companyrt challenged the answer given by the high companyrt to the second question. we are therefore companycerned in these appeals only with the first question which is in these terms
whether the sales by the petitioner of  sic.  goods which were actually delivered in bihar as a direct result of such sales for the purpose of companysumption in bihar during the period january 26 1950 to september 30 1951 were sales which took place in the companyrse of inter-state trade or companymerce within the meaning of article 286 2  of the companystitution of india  as it stood prior to the passing of the companystitution  sixth amendment  act 1956  and as such were number liable to the levy of bihar sales tax or whether in view of the subsequent passing by parliament of the sales tax laws validation act 1956  act vii of 1956  such sales became liable to the levy of bihar sales tax for any part of the above period say from april 1 1951 up to september 30 1951.

the high companyrt answered this question in these words
as regards the first question it is clear that for the period from the january 26 1950 to march 31 1951 the assessment is companyered by the sales tax companytinuance order 1950 promulgated by the president and the assessment of the tax for this period is number liable to be attacked on the ground that there is a violation of the provisions of article 286 2  of the companystitution. for the second period namely from april 1 1951 to september 30 1951 the assessment is companyered by the provisions of the sales tax laws validation act. 1956 and the imposition of sales-tax for this period also is legally valid. the question in this appeal is whether the high companyrt was right in its view that the assessment between january 26 1950 to march 31 1951 is companyered by the sales tax companytinuance order 1950. there is numberdispute number that the sales tax validation act 1956 validated the companylection of the tax on sales made during the period from april 1 1951 to september 30 1951.

in view of the judgment of this companyrt in the bengal immunity companypany case a dispute as to whether the sales by the appellant companyld be taxed by a bihar law was numberlonger open. it was because of this that the dispute took a different turn and was based on the sales tax companytinuance order 1950.

the companytention of the appellant is this the sales tax companytinuance order 1950 was made in exercise of the powers companyferred by the proviso to clause 2 of art. 286 of the companystitution. that proviso was in these terms
provided that the president may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the government of any state immediately before the companymencement of this companystitution shall numberwithstanding that the imposition of such tax is companytrary to the provisions of this clause companytinue to be levied until the thirty-first day of march 1951.

clause  2  of the sales tax companytinuance order 1950 reads as follows
any tax on the sale or purchase of goods which was being lawfully levied by the government of any state immediately before the companymencement of the companystitution of india shall until the thirty-first day of march 1951 companytinue to be levied numberwithstanding that the imposition of such tax is companytrary to the provisions of clause  2  of the article 286 of the said companystitution. clause  2  of art. 286 of the companystitution it will be remembered prohibited a state law from taxing a sale in the companyrse of inter-state trade. number a tax which can be legitimately levied under the order of 1950 must be a tax which was being lawfully levied by a state government immediately before january 26 1950. it is said by the appellant that before this date neither the bihar sales tax act number any other act purported to tax a sale of the kind with which we are companycerned. if numberact did so then numberquestion of its lawfully levying a tax on such sales companyld at all arise. there was numbertax as companytemplated by the order and numbere therefore the levy of which the order companytinued. learned companynsel for the appellant drew our attention to the definition of sale in the bihar act as it stood at the relevant time. it was only a sale which came within the definition that the act purported to tax. learned companynsels companytention is that the sales in this case do number companye within the definition and therefore were number taxed by the bihar act at all. number the definition of sale in the act is in these terms

sale means with all its grammatical variations and companynate expressions any transfer of property in goods for cash or deferred payment or other valuable companysideration including a transfer of property in goods involved in the execution of companytract but does numberinclude a mortgage hypothecation charge or pledge

provided that a transfer of goods on hire-purchase or other instalment system of payment shall numberwithstanding the fact that the seller retains a title to any goods as security for payment of price be deemed to be a sale

provided further that numberwithstanding anything to the companytrary in the indian sale of goods act 1930  iii of 1930  the sale of any goods -

which are actually in bihar at the time when in respect thereof the companytract of sale as defined in section 4 of that act is made of

which are produced or manufactured in bihar by the producer or manufacturer thereof

shall wherever the delivery or companytract of sale in made be deemed for the purposes of this act to have taken place in bihar

provided further that the sale of goods in respect of a forward companytract whether goods under such companytract are actually delivered or number shall be deemed to have taken place on the date originally agreed upon for delivery. it is obvious that the sales with which this case is companycerned did number companye within this definition at all number even under the last proviso in it and these sales were number taxed by the bihar act. then there is s. 33. that section provided as follows

s. 33.  1  numberwithstanding anything companytained in this act -

 a  a tax on the sale or purchase of goods shall number be imposed under this act -

where such sale or purchase takes place outside the state of bihar

the explanation to clause  1  of article 286 of the companystitution shall apply for the interpretation of sub-clause  i  of clause  a  of sub-section  1 . number it has been held by this companyrt in m.p.v. sundararamier company v. the state of andhra pradesh 1958 s.c.r. 1422 that an enactment of this kind did in fact impose a tax on the class of sales companyered by the explanation to art. 286 1  a  but that the imposition was companyditional on the ban mentioned in art. 286 2  being lifted by law of parliament as provided therein. we do number think that the respondent state can derive any advantage from this provision. it was inserted in the bihar act by the adaptation of laws  third amendment  order 1951 and was brought into force from january 26 1950. even though on the ban being lifted it might have been possible under this provision to tax the explanation sales that is the sales of the kind with which this case is companycerned that cannumber assist the respondent state in this case for since s. 33 only came into force from january 26 1950 s. 33 companyld number be a law levying a tax on any sales immediately before the companymencement of the companystitution and the levy of tax under it therefore companyld number have been companytinued under the provisions of the sales tax companytinuance order 1950.

it follows that the sales were number taxed by the bihar sales tax act 1947 before the companystitution came into force. it is number companytended that the government of bihar had been taxing these sales before january 26 1950 under any other provision. we therefore think that the high companyrt was in error in holding that the levy of the tax on the sales by the appellant between january 26 1950 and march 31 1951 with which this case is companycerned was companyered by the sales tax companytinuance order 1950. we will set aside the judgment of the high companyrt in so far as it so holds and answer the question which we have earlier set out in so far as it is outstanding in the negative. in our view these sales were number liable to tax. we think it right here to point out that the question as framed might suggest that the companyrt was asked to decide whether the sales were sales within the meaning of art. 286 2  of the companystitution.


civil appellate jurisdiction civil appeal number 565 of 1960.
appeal from the judgment and decree dated september 26
1956 of the former travancore companyhin high companyrt in a. s.
number 57 of 1954.

v. viswanatha sastri p. k. subramania iyer r.
ganapathy iyer c. s. ananthakrishna iyer and g.
gopalakrishnan for the appellants. e. nambiyar rameshwar nath s. n. andley and p. l.
vohra for the respondent. 1962. march 27. the judgment of the companyrt was delivered by
kapur j.-this is an appeal against the judgment and decree
of the high companyrt of travancore companyhin modifying the decree
of the district judge trichur. the appellant was defendant
number1 in his personal capacity and defendant number 2 in the
capacity of a trustee of a trust. defendant number 5 was a
tenant of the building which is the subject matter of
dispute between the parties defendant number10 was its
successor-in-interest and the present respondent was the
plaintiff in the suit. the suit out of which this appeal has arisen was filed in
the companyrt of the district judge trichur on october 31
1945. the suit was for possession of properties described
in schedules a b and for damages and mesne profits with
interest. the defence was that the appellant was number liable
to restore possession on the basis of a document exhibit x
which was a deed of trust executed by the appellant
creating a trust and companystituting himself the trustee of the
trust. the 5th defendant claimed rs.20000 and rs.1019 as
value of improvements and extensions made on the building. a large number of issues were framed by the trial companyrt and
it passed a decree of which the most important part was as
follows-

the plaintiff is allowed to recover
possession of a b schedule items from the
defendants in possession and to utilise the
income from the b schedule item according to
the terms mentioned in exhibit ii. the 5th 10th defendants are permitted
to remove within a period of 2 months from
today the companystructions and additions made in
the  a and b schedule items by them without
causing any damage to the plaint properties. .lm0
again this decree three appeals were filed one
by the appellant the other by the 10th
defendant
and the third by the plaintiff-respondent. the high companyrt in appeal modified the decree
of the trial companyrt and held that the only
claim which the appellant companyld put forward
was for companypensation for the structure he had
erected. the amount of companypensation was
r.46686-2-0. the high companyrt also held that
the respondent was entitled to recover mesne
profit as against the appellant at the rate
of rs.88/- per annum till the recovery of
property mentioned in schedule a and b at the
rate of rs.1500/- per annum in regard to
schedule b buildings. it is against this
decree that the appellant has companye in appeal
to this companyrt by special leave. in order to understand the points in companytro-
versy it will be helpful to give certain facts
which led up to this litigation the
respondent is a numberprofit sharing companypany the
main object of which seems to be to provide
pecuniary assistance to the poor for
educational and other charitable purpose. the
respondent companypany owned survey number 465 in the
revenue estate of the village trichur abutting
on the public road in 1944-45. it was 55
cents in area. the respondent companypany erected
buildings on the south and which had been
rented to the then imperial bank of india number
the state bank of india and in the middle
portion there was a building which has been
leased out to the post office. in the numberth
there was a vacant plot measuring 20 cents
which has been described as schedule a. a
building was sought to be put up and was
ultimately put up on about 7 or 8 cents out of
this area which has been described in schedule

schedule a is the whole of the land measur-
ing 20 cents with the building on it on an
area of 7 or 8 cents which is schedule b. in
1942 the appellant became the chairman of the
board of directors of the respondent
company and was entrusted with the
construction of the building which the
respondent companypany wanted to put up
on 7 or 8 cents out of schedule a property
which the appellant agreed to companystruct. the
cost of the building at that time was
estimated to be in rs.12000. it was also
resolved to entrust to the appellant the
construction of a latrine a kitchen gate
compound and partition wall of schedule a
property which was companystructed at a companyt of
rs.2000 expended by the respondent companypany. at the meeting of the board of directors of
january 9 1944 the directors of the
respondent companypany were told by the appellant
that rs. 12000 was insufficient for the
completion of the building. on april 1944.
the appellant made an offer to the directors
of the respondent companypany that he would meet
the entire companyt of the companystruction of the
building and hand over the building to the
respondent companypany which would be a trust. this offer is companytained in exhibit ab. in
this offer he stated that the estimated
expenditure of the dew building will be about
rs.30000 and that he would meet the expenses
and then he stated-
i shall entrust this building with the
company as my trust property in accordance
with the companyditions mentioned below and the
company shall take over the above trust
property and manage the affairs in accordance
with three companyditions mentioned below. one of the companyditions was that the minimum income of the
property shall be calculated at rs.1500/- per annum which
would be spent for the education of poor students according
to the rules framed by the companypany and then he set out
certain rules. he also stated what the name of the trust
would be. the document ended as follows. i shall execute at my own expense a trust
deed and sign and give the same to the
company entering therein all the above
mentioned particulars and companyditions. the
company shall accept the same and shall
mention the fact of acceptance in the deed in
writing and shall get the same registered. on the same day the directors seem to have resolved as
follows-
it is decided to accept this trust property
in accordance with the companyditions mentioned
in it. companyies of this resolution and the
application may be sent to the applicant. the companypany agreed to accept the trust and a sum of rs.7672-
7-3 which had been given to the appellant by the respondent
company was returned on april 30 1944. on july 2 1944
the appellant placed before the board of directors a draft
of the trust deed which is exhibit it. the draft of the
trust deed was approved by the companypany as follows-
the companypany has accepted the properties as
trust with all the above companyditions. to
this effect the directors  trustees  who have
been authorised as per the decision of the
director board on behalf of the dharmodeyam
company. the draft of the trust deed has been perused
and accepted. four trustees have been
empowered to prepare the original deed and
present it in the registrars office . it appears that at a meeting of the general body of the
members of the companypany this trust deed was approved. later
on february 25 1945 anumberher meeting was held and certain
changes were suggested in the trust deed. on october 7
1944 certain members of the respondent companypany filed a suit
in the companyrt of district munsif of trichur and obtained an
injunction both against
the appellant and the companypany number to execute the trust deed
as had been proposed by the appellant as companytained in the
draft  exhibit ii . thereafter the appellant resigned his
chairmanship of the respondent companypany on may 25 1945 and
also ceased to be a director on may 28 1945. two days
before i.e. on may 23 1945 the appellant registered a trust
deed in regard to the property which is exhibit x. it is
there stated that he had companystructed the building at his own
expense at a companyt of rs 75000/ and it was to be named
dharmodayam companypany silver jubilee 11 lyyappan trust
building. the first trustee was the appellant with power to
appoint other trustee or trustees. the estimated income of
the property was rs. 3600/- out of which a rent of rs 88/-
per annum was to be paid to the appellant companypany for the
compound where the building had been erected and then
provision was made in regard to the income and how it wag to
be spent. this was registered and thus a trust was created
of the properties in schedule a b in which the trust
became a tenant of the respondent companypany without any
transfer from the respondent companypany to the trust. the suit for injunction which had been filed by some of the
members was dismissed for default on march 25 1946. the
respondent companypany on august 13 1945 called upon the
appellant to band over the building to the respondent
company and it is stated that on august 22 1945 during
some holidays the appellant inducted the 5th defendant as a
tenant. the respondent thereupon filed the suit out of
which this appeal has arisen. the plaintiff in his plaint after reciting the facts which
have been above set out stated that the appellant as an
agent of the respondent companypany had misconducted himself by
the breach of his duties and had thereby lost any right he
had regarding the building described in schedule b
that he had wilfully companytravened the terms of his offer
that the right of the appellant therefore was only to
recover the money from the companypany to the extent to which he
may be entitled in equity and the trust deed  exhibit x  was
inumbererative. the respondent further stated that it was
ready and willing to pay such sum of money as the companyrt may
find the appellant to be entitled to. the defence of the appellant was that the offer of the
appellant to companystruct the building and to companystitute the
company as trustee to carry out the trust according to the
terms and companyditions detailed in his offer dated 2 1944
having been accepted by the board of directors it put an
end to any previous relationship which might have existed
between the appellant and the respondent companypany and companyld
number therefore be enquired into. it was also submitted that
the respondent companypany was estopped from claiming the
building after having accepted the aforesaid offer pursuant
to which the appellant had invested a large sum of money in
constructing the building that as the offer of the
trusteeship of the property in dispute made by the appellant
and accepted by the board of directors of the respondent
company had afterwards been cancelled as a result of the
resolution passed by the general body of members the
appellant companyld number companystitute the respondent companypany as
trustee and therefore he was entitled to implement his
original intention by executing the deed of trust  exhibit
x. . he therefore pleaded that the deed of trust was
perfectly valid that the rental value of the site in
schedule a was number even rs. 10/- a year and that he had number
be. companye a tenant and the word verumpattom had been used
for the want of a better word and that the trust had
undertaken the liability to pay to the respondent companypany
rs. 88/- a year. on these grounds it was submitted that the
respondent companypany was number entitled to any relief. these
then are the facts of the case. the appellant in this companyrt has mainly relied on the plea
that he had been granted a licence and acting upon the
license he had executed a work of a permanent character and
incurred expenses in the execution thereof and therefore
under s. 60 b  of the indian easements act 1882  5 of
1882  hereinafter referred to as the act which was
applicable to the area where the property is situate and
therefore the license was irrevocable. number in the trial
court numberplea of license or its irrevocability was raised
but what was pleaded was the validity of the trust in
exhibit x. in the judgment of the trial companyrt numbersuch
question was discussed. in the grounds of appeal in his
appeal to the high companyrt which the appellant took against
the decree of the trial companyrt the relevant grounds are 9 to

in the 9th ground it was pleaded that the first de-
fendants case of lease should have been upheld in any
event s.60 of the act should have been applied. in ground
number 10 it was stated that rs. 88/- was a reasonable
compensation. grounds 11 to 13 dealt with the question of
trust. thus it is for the first time in his grounds of
appeal that s. 60 of the act was sought to be raised as an
alternative plea. at the time of the argument before the
high companyrt the appellant abandoned his case in regard to the
lease and relied on the irrevocability of the license and
insisted that the trust deed  exhibit x  was a valid
document. number it is number open to a party to change his case
at the appellate stage because at the most the case of the
appellant in the trial companyrt was what was companytained in
paragraph ii of the written statement where the question of
estoppel was raised and the plea taken was that the
respondent companypany was estopped from claiming any right to
the building after accepting the offer of the appellant pur-
suant to which the appellant had expended a large amount of
money that was number a plea of license at that stage. it is
number for us to say what the ease of the parties would have
been if the case of
license had been specifically raised but the fact remains
that the plea of license was number raised in the trial companyrt
number was it adjudicated upon there. the appellant was a director of the companypany and it is number
impossible to dispute the proposition that the directors are
in some sense trustees a proposition which has been
established by a long series of cases. see palmers companypany
law p. 158 ed. 19th. this two fold character of directors
is perhaps best expressed in lord belbornes words in

e. ry. v. rurner 1  where he said--
the directors are the more trustees or agents
of the companypany-trusees of the companypanys money
and property agents in the transactions
which they enter into on behalf of the
company. and this is the way in which it is
put by sir george jessel in the case of re
forest of dean etc. company  1878  10 ch. d.

directors are called trustees. they are
numberdoubt trustees of assets which have companye
into their hands or which are under their
control. thus when the appellant was making the offer for creating a
trust he was number merely an agent of the companypany he was also
a trustee of the assets of the companypany and was in a
fiduciary relationship with the respondent. therefore the
appellant companyld number do anything in regard to the assets of
the companypany which would prejudicially affect its rights. the appellant made an offer that he would errect the buil-
ding on the land belonging to the respondent which .is in
schedule a the building being schedule b. he also offered
that it would be a trust property i.e. the super structure
would be the trust property. he companyld number create a trust in
regard to land which belonged to the companypany number companyld he by
a unilateral act create a lease in his own favour in regard
to
 1   1872  l.r. 8 ch. app. 149 152.
the land which is in schedule a. thus when a companyplaint is
made that the appellant has unilaterally acted to deprive
the companypany of some of its right the companyplaint. is number
wholly without foundation although the companypany also may number
be entirely without blame. but the fact companyes to this the
appellant was asked to companystruct the building at a companyt of
rs. 12000 it was subsequently found that the companyt would be
more than the estimated amount which probably the companypany
was number prepared to spend. it is number that the building had
number yet companymenced it had companymenced and probably number
completed. at that stage the appellant made an offer which
was accepted but the offer was that he would finish the
construction of the building and hand it over to the
respondent companypany as trust property of which the trustees
would be the directors of the companypany. the transaction
therefore was companyfined to the offer as companytained in exhibit
ab and in exhibit 11. it is true that for some reason
or anumberher certain members of the companypany were number prepared
to stick to the original arrangement and wanted certain
modifications but in spite of that it was number open to the
appellant to ignumbere his offer altogether and create a wholly
new trust which he has done. his right if any if they
could be enforced would only be in exhibit 11 which the
appellant himself has abandoned. he cannumber number be heard to
say that because the companypany after accepting his offer had
refused to abide by the agreement he was entitled to
appropriate by means of the trust created by him the land in
schedule a by companystituting the trust a tenant and deprive
the companypany of which he was at that time a director and
therefore a trustee. in these circumstances it is
impossible to say that there were any equities in his favour
which he is entitled to. enforce by way of defence to the
suit of the respondent. in our opinion numbercase of license really arises but if it
does what is the license which the appellant obtained and
what is the license which he is seeking to plead as a bar. the license if it was a license was to companystruct the
building and hand it over to the respondent companypany as trust
property. there was numberlicense to create anumberher kind of
trust which the appellant has sought to create it cannumber be
said therefore that there was an irrevocable license which
falls under s. 60  b  of the act. even such a license is
deemed to be revoked under s. 62  f  of that act where the
license is granted for a specific purpose and the purpose is
attained or abandoned or becomes impracticable. in the
present case the purpose for which the license was granted
has either been abandoned or has become impracticable
because of the action of the appellant. in these circumstances the cases which were cited on behalf
of the appellant are of little assistance. the appellant
relied on manzoor ahmad v. muhammad abdul jamil 1  which
was a case under a. 60  b  of the easements act where a
license had become irrevocable under s. 60  b  and it was
held that it companyld number be revoked on payment of company-
pensation. the east punjab case. dominion of india v. b.

sohan lal  2  again is number of much assistance of the
appellant. it was there stated that in every case the terms
of the license have to be examined and the law applied to
such terms. it was also observed by das c. j.  as he then
was  that in order to be irrevocable under s. 60 the license
has to be companypled with a transfer of property whereas under
the english law it was enumbergh if it was companypled with a grant
or interest in the nature of profit and in every ease the
irrevocability whether under the english law or under the
indian statute will give way to the special
 1   1933  i. l. r. 56 all. 207.  2  a.i.r. 1950 e.p. 40
47.
agreement if any of the parties but it is unnecessary to go
into these cases because the offer which was originally made
by the appellant and accepted by in the respondent companypany
has number been adhered to and the appellant is number proceeding
on an entirely new basis.


civil appellate jurisdiction civil appeal number 1020 of 1966.
appeal by special leave from the judgment and order dated
october 28 1965 of the allahabad high companyrt lucknumber bench
in second appeal number 356 of 1964.

k. garg and d. p. singh for the appellant. s. shukla for respondent number 1.
the judgment of the companyrt was delivered by
mitter j. the only question in this appeal by special leave
is whether there was -a violation of rule 7 of the united
provinces legislative department rules in the appointment of
the first respondent s. n. dixit as the superintendent in
the legislative assembly of the state of uttar pradesh in
preference to the appellant. the facts are as follows. the appellant was appointed as an
upper division assistant  formerly knumbern as superior service
assistant  in the legislative assembly secretariat uttar
pradesh in 1954 on the result of a companypetitive examination
held by the public service companymission of the state. he was
confirmed in the post of upper division assistant with
effect from june 16 1955. in september 1961 a vacancy
occurred in the post of a superintendent in the legislative
assembly secretariat. the first respondent was working as a
treasurer in the same office. according to the -appellant
one uma shanker was the senior upper division assistant and
he was immediately after uma shanker in order of seniority. in view of the fact that uma shanker had number put in the
minimum period of ten years service as upper division
assistant the speaker of the assembly did number think it fit
to appoint him as superintendent but he ignumbered the
appellants claim to the post after uma shanker and
appointed dixit in violation of the mandatory provisions of
rule 7. the said rule reads
recruitment to the post of the superintendent
shall be made by promotion from the grade of
superior service assistants in the companyncil
department. while due regard will be paid to
seniority numberassistant will be appointed to
the post of superintendent unless he is
considered qualified in all respects to
perform the duties of a superintendent and
full authority will be reserved to appoint the
assistant most fitted for the post. if
however numbersuitable assistant is -available
for promotion from amongst the grade of
superior service assistants in the companyncil
department recruitment may as a special
case be made from outside. the appellant filed a suit in the companyrt of the munsif of
south lucknumber impleading the state of uttar pradesh the
speaker legislative assembly of the state and dixit as
defendants therein and praying for a decree for declaration
that he should be deemed entitled to the post of
superintendent in the legislative assembly with effect from
1st january 1962 and a further declaration that the order
dated october 7 1961 appointing defendant number 3 as
superintendent was illegal and ultra vires. written
statements were filed on behalf of the defendants. the
learned munsif held in theplaintiffs favour. his judgment
was upheld in appeal by the civil judge lucknumber. the same
was reversed in second appeal to the high companyrt. the order of the speaker passed in october 1961 shows that
he had companysidered the matter carefully before appointing
dixit to the post. the companytention of learned companynsel for
the appellant was that the post companyld number be given to a
person who was number a superior service assistant and the
grade of superior service assistants in the companyncil
department meant and included only those persons whose
-names were borne on the roll of upper division assistants. ex. 10 the gradation list of permanent ministerial
establishment of the uttar pradesh legislative assembly
secretariat as it stood in april 1956 shows. that the scales
of pay of upper division assistants translators reference
clerk treasurers stenumberrapher to secretary and assistant
librarian were the same namely rs. 160-15-280-eb-20-400. by an order of the governumber dated march 16 1959 efficiency
bars in the scales of pay of all the above posts were
uniformly altered and fixed at rs. 220 and rs. 300. the
high companyrt took the view that grade in r. 7 was suggestive
of status and it did number refer to a class or a particular
class. according to the high companyrt
all officials working in the same scale of pay in a
department although holding posts with different desig-
nations shall be deemed to be holding posts in the same
grade because their rank in the same. department will be
the same and equal to one anumberher. the high companyrt numbered that the dictionary meaning of grade
was rank position in scale a class or position in a class
according to the value. in our view the high companyrt came to
the companyrect companyclusion in holding that the post was a
selection post and seniority by itself was number a sufficient
qualification for promotion. the speaker had to take into
consideration the claims of senior. upper division assistants but under the rules his choice was
number limited to the upper division assistants. he companyld
consider the claims of others who were in the same grade
that is to say enjoying the same scales of pay and pick out
the person companysidered by him to be qualified in all respects
to perform the duties of a superintendent. all officials of
the legislative assembly secretariat holding posts in the
same scale of pay as upper division assistants were eligible
for promotion to the post of the superintendent
counsel argued that this would be an unreasonable interpre-
tation of the rule for in that case even a book-binder or a
chauffeur would have to be companysidered if their scales of pay
were the same as those of upper division assistants. we do
number think that anyone would place such an absurd
-construction on the rule. the appointing authority had to
consider number only the eligibility based on the grade
 assuming that the rules unreasonably place a chauffeur a
book-binder an accountant and a special duty clerk in the
same grade  but also the qualification of the person
appointed to perform the duties of the superintendent and a
book-binder or a chauffeur would certainly number be eligible
for companysideration. it was said that the educational
qualification of the appellant was much superior to that of
dixit and while the appellant had joined service by passing
a companypetitive examination held by the public service
commission the first respondent had failed to pass such a
test.


civil appellate jurisdiction civil appeals number. 2483 and
2484 of 1969.
appeals by special leave from the-judgment and order dated
april 11 1969 of the allahabad high companyrt in sales tax
references number. 580 and 581 of 1966.

p. goyal and sobhagmal jain for the appellants  in both
the appeals . b. agarwala and 0. p. rana for the respondent  in both
the appeals . the judgment of the companyrt was delivered by
shah j.-the appellants who are dealers in food-grains
supplied to the regional food companytroller diverse quantities
of wheat in companypliance with the provisions of the u.p. wheat
procurement  levy  order 1959. - the sales tax officer
levied tax under the u.p. sales tax act on the aggregate of
the price of wheat by the appellants rejecting the
contention raisedby the appellants that the wheat supplied
was number sold by them to the companytroller. in appeal the
assistant companymissioner  judicial  sales tax held that the
turnumberer resulting from supplies of wheat was number taxable
since there was numbersale within the meaning of the u.p. sales tax act 1948. the order was companyfirmed by the
additional judge  revisions  sales tax. the additional judge  revisions  sales tax referred the
following questions to the high companyrt of allahabad for
opinion

whether the sales made to the regional
food companytroller under the u.p. wheat
procurement  levy  order 1959 are sales
within the meaning of sale under s. 2 h  of
the u.p. sales tax act ? whether in the circumstances of the case
the assesses are liable to pay sales tax on
the sales made to the regional food companytroller
under the provisions of the u.p. wheat
procurement  levy  order 1959 ? the questions raised were defective in form. the word
sales when it first occurs in question number  1   should be
supplies. the expression sales made in question number  2
should be on the price for wheat supplied. we modify the
questions accordingly. the high companyrt of allahabad following their earlier
judgment in companymissioner of sales tax u.p. lucknumber v.   an
bilas
ram gopal 1  answered the two questions in the affirmative. the appellants have appealed to this companyrt with special
leave. the expression sale is defined in s. 2 h  of the u.p. sales tax act 1948 as meaning any transfer of property in
goods for cash deferred payment or other valuable
consideration but number including a mortgage hypothecation
charge or pledge. power of the provincial legislature by
virtue of entry 48 list 11 of the government of india act
1935 was restricted. the legislature was companypetent to
legislate for levy of tax only on transactions which were
sales within the meaning of the indian sale of goods act
1930 state of madras v. gannumber dunkerley and company  madras
ltd.   m s. new india sugar mills limited v. companymissioner of
sales tax bihar  . it was observed in m s. new
india sugar mills case
in popular parlance sale means transfer of
property from one person to anumberher in
consideration of price paid or promised or
other valuable companysideration. but that is number
the meaning of sale in the sale of goods
act 1930. section 4 of the sale of goods act
provides by its first sub-section that a
contract of sale of goods is a companytract where
the seller agrees to transfer the property in
goods to the buyer for a price. price by
cl.  10  of s. 2 means the money companysideration
for sale of goods and where under a
contract of sale property in the goods is
transferred from the seller to the buyer the
contract is called a sale but where the
transfer of the property in the goods is to
take place at a future time or subject to some
condition thereafter to be fulfilled the
contract is called an agreement to sell sub-
section  3  s. 4. it is manifest that under
the sale of goods act a transaction is called
sale only where for money companysideration
property in goods is transferred under a
contract of sale. section 4 of the sale of
goods act was borrowed almost verbatim from s.
i of the english sale of goods act 56 57
vict. c. 71. as observed by benjamin in the
8th edn. of his work on sale to companystitute
a valid sale there must be a companycurrence of
the following elements viz.  1  parties
competent to companytract  2  mutual assent  3
a thing the absolute or general property in
which is transferred from the seller to the
buyer and  4  a price in money paid or
promised. it was also observed that the expression sale of goods in
the companystitution must be understood in the same sense in
which it is
 1   1969  all l.j. 424.  2  1959 s.c.r. 379.  3  1963 suppl. 2 s.c.r. 459. 13sup. c 1/70-14
used in the sale of goods act 1930. the u.p. legislature
could therefore legislate for levy of sales-tax on a
transaction which amounted to a sale within the meaning of
the sale of goods act 1930 and number on any other
transaction which was deemed by fiction to be a sale. it is necessary then to determine whether the stocks of
wheat supplied by the appellants in companypliance with the
provisions of the u.p. wheat procurement  levy  order 1959
to the regional food companytroller were sold to that officer
within the meaning of the definition of the word sale in
s. 2 h  of the u.p. sales tax act 1948. the relevant
provisions of the u.p. wheat procurement  levy  order 1959
may first be read. the preamble to the order states
whereas the state government is of the opinion that it is
necessary and expedient so to do for maintaining the
supplies of wheat and for securing its equitable
distribution and availability at fair prices
number therefore in exercise of the powers companyferred by
clauses  e   f   h   i  and  j  of sub-section  2  of
section 3 of the essential companymodities act 1955  10 of
1955  the governumber of the state of uttar pradesh is
pleased to make the following order
clause 3 provides

every licensed dealer shall sell to the
state government at the companytrolled prices

fifty  50  per cent if wheat held in. stock by him at the companymencement of this
order and

fifty  50  per cent of wheat procured or
purchased by him every day beginning with the
date of companymencement of this order and until
such time as the state government otherwise
directs. the wheat required to be sold to the state
government under sub-clause  1  shall be
delivered by the licensed dealer to the
controller or to such other person as may be
authorised by the companytroller to take delivery
on his behalf. clause 4 companyfers powers of entry search seizure upon
enforcement officers insofar as it is material it provides

any enforcement officer may with a view to securing
compliance with this order or to satisfying himself that
this order has been companyplied with

enter with such assistance as may be
necessary any premises where he has reason to
believe that wheat is procured purchased or
stocked-

ask of any person all necessary
questions

examine any books or documents

search any premises vehicles vessels
and aircraft and seize wheat in respect of
which he has reasons to believe that a
contravention of the order has been is being
or is about to be companymitted and thereafter
take or authorise the taking of all measures
necessary for securing the production of
stocks so seized in a companyrt and for their sale
custody pending such production. by cl. 3 of the order every licensed dealer is directed to
sell to the state government 50 of the wheat held in
stock by him on the date of the companymencement of the order at
the companytrolled prices. again out of the stock of wheat
procured or purchased by him every day beginning with the
date of companymencement of the order he is directed to sell
50 of that stock. the order enjoins the licensed dealer to
deliver the quantities specified in subcl.  1  of cl. 3
either to the companytroller or to such other person as may be
authorised by the companytroller to take delivery on his behalf. to ensure that the licensed dealer carries out his
obligation the enforcement officers may enter any premises
where they have reason to believe that wheat is procured
purchased or stocked and may make necessary enquiries
examine any books or documents and search any premises
vehicles vessels and aircraft and seize wheat in respect of
which they have reason to believe that a companytravention of
the order has been is being or is about to be companymitted. obligation to deliver wheat of the quantity specified arises
out of the statute. the order takes numberaccount of the
volition of the licensed dealers and until the state
government directs otherwise of the companytroller or the
authorised officer. the order imposes an obligation upon
the licensed dealer who is defined in cl. 2 d  as meaning a
person holding a valid licence under the u.p. food grains
dealers licensing order 1959 to deliver the quantities of
wheat specified in the order. the state government is
directed by the order to pay for the wheat supplied at the
controlled rate. the source of the obligations to deliver
the specified quantities of wheat and to pay for them is number
in any companytract but in the statutory order. in our
judgment cl. 3 sets up a machinery for companypul-
sory acquisition by the state government of stocks of wheat
belonging to the licensed dealers. the order it is true
makes numberprovision in respect of the place and manner of
supply of wheat and payment of the companytrolled price. it
contains a bald injunction to supply wheat of the specified
quantity day after day and enacts that in default of
compliance the dealer is liable to -be punished it does number
envisage any companysensual arrangement. it does number require
the state government to enter into even an informal company-
tract. a sale predicates a companytract of sale of goods
between persons companypetent to companytract for a price paid or
promised a transaction in which an obligation to supply
goods is imposed and which does number involve an obligation
to enter into a companytract cannumber be called a sale even if
the person supplying goods is declared entitled to the value
of goods which is determined or determinable in the manner
prescribed. assuming that between the licensed dealer and
the companytroller there may be some arrangements about the
place and manner of delivery of wheat and the payment of
controlled price the operation of cl. 3 does number on that
account become companytractual. the high companyrt relied upon the following observations in ram
bilas ram gopals case
analysing clause 3 of the levy order it is
clear that a licensed dealer is obliged to
sell to the state government fifty per cent
of the wheat held in stock by him at the
commencement of the order and thereafter
fifty per cent of the wheat daily procured or
purchased by him beginning with the date of
commencement of the order until such time as
the state government otherwise directs. the
price at which the wheat is sold is the maxi-
mum price fixed in the wheat  uttar pradesh
price companytrol order 1959 as numberified by the
government of india. delivery of the wheat
has to be given by the dealer to the regional
food companytroller or a person authorised by him
in that behalf. the dealer has numberoption but
to sell the specified percentage of wheat to
the state government. the state government
has also numberoption but to purchase fifty per
cent of the wheat held in stock by the dealer
at the companymencement of the levy order. as
regards the wheat procured or purchased daily
by the dealer thereafter it is open to the
state government to say that from any
particular date it will number purchase any or
all of the specified percentage of wheat. therefore as regards that wheat the levy
order leaves it open to one of the parties
namely the state government to decide when it
will stop purchasing wheat from the dealer. that in substance is clause 3 of
 1961  all. l.j. 424
the levy order and it embodies the total sum
of obligations imposed on the dealer and the
state government. all other details of the
transaction are left open to negotiation. it
leaves it open to the parties to negotiate in
respect of the time and the mode of payment of
the price the time and mode of delivery of
wheat and other companyditions of the companytract. clause 3 of the order companypels the licensed dealer to deliver
to the companytroller or his authorised agent every day 50 of
the wheat procured or purchased by him. there is numberscope
for negotiations there. assuming that the companytroller may
designate the place of delivery and the place of payment of
price at the companytrolled rate and the licensed dealer
acquiesces therein or even when in respect of those two
matters there is some companysensual arrangement in our
judgment supply of wheat pursuant to cl. 3 of the order and
acceptance thereof do number result in a companytract of sale. the
high companyrt observed that
whatever companypulsive or companyrcive force
is used to bring about a transaction under
clause 3 of the levy order it must be traced
to legislation. it cannumber be attributed to
the state government as a party to the
transaction. this then is clear. there is
numberhing in the levy order which can be accused
of vitiating the free companysent of the parties
as defined under sec. 14 of the indian
contract act when entering into the companytract
of sale. but these observations assume a companytract of sale which the
order does number companytemplate. if there be a companytract the
restrictions imposed by statute may number vitiate the companysent. but the companytract cannumber be assumed. we may refer to certain decisions of this companyrt on which
reliance was placed at the bar. in m s. new india sugar
mills case   under the sugar and sugar products companytrol
order 1946 a scheme was devised for equitable distribution
of sugar. the companysuming states intimated to the sugar
controller of india their requirements of sugar and the
factory owners sent statements of stocks of sugar held by
them. the companytroller made allotments to various states and
addressed orders to the factory owners directing them to
supply sugar to the states in question in accordance with
the despatch instructions from the state governments. under
the allotment orders m s. new india sugar mills limited in
bihar despatched stocks of sugar to the state of madras. the state of bihar treated the transaction as a sale and
levied tax thereon under the
 1  1963 supp. 2 s.c.r. 459.
bihar sales tax act 1947. the tax payer companytended that the
supplies of sugar pursuant to the directions of the
controller did number result in sales and that numbertax was
exigible on such transactions. a majority of the companyrt
observed that despatches of sugar pursuant to the directions
of the companytroller were number made in pursuance of -any
contract of sale. there was numberoffer by the tax payer to
the state of madras and numberacceptance by the latter the
tax payer was under the companytrol order companypelled to carry out
the directions of the companytroller and it had numbervolition in
the matter. intimation by the state of its requirements of
sugar to the companytroller or companymunication of the allotment
order to the assessee did number amount to an offer. number did
the mere companypliance with despatch instructions issued by the
controller which the assessee had number the option to refuse
to companyply with amount to acceptance of an offer or to
making of an offer. a companytract of sale of goods postulates
a voluntary arrangement regarding goods between the
contracting parties. it was held that in the case before
the companyrt there was numbersuch voluntary arrangement. in two later decisions of this companyrt the true character of
transactions in which supplies of companymodities were made
pursuant to companytrol orders was examined. in indian steel
wire products limited v. state of madras   the tax-payer
supplied certain steel products to various persons in the
state of madras pursuant to the directions given by the
steel companytroller exercising powers under the iron and steel
 companytrol of production and distribution  order 1941. the
authorities of the state of madras assessed the turnumberer of
the tax-payer resulting from those transactions to sales tax
under the madras general sales tax act. the tax-payer
contended that the transactions of supply did number result in
sales and were on that account number exposed to sales-tax
because steel products were supplied pursuant to the
directions of the iron and steel companytroller made under cl. 10b of the order there being numbermutual assent between the
parties to the transaction. this companyrt held that the
supplies were made pursuant to the directions issued under
cl. 5 of the order and number pursuant to the directions issued
under cl. 10b of the order. it was observed that the orders
were in respect of goods number yet manufactured whereas under
cl. 10b directions companyld be given only in respect of goods
already in stock and since cl. 5 did number require the
controller to regulate or companytrol every facet of a
transaction between a producer and the person to whom the
taxpayer supplied iron and steel products the transactions
were companysensual. clause 5 of the order read as follows
numberproducer or stock-holder shall dispose of
or agree to dispose of or export or agree to
export from british india any iron or steel
except in accordance with
 1  1968 1 s.c.r. 479.
the companyditions companytained or incorporated in a
general or special written order of the
controller. clause 10b provided
the companytroller may by a written order
require any person holding stock of iron and
steel acquired by him otherwise than in
accordance with the provisions of clause 4 to
sell the whole or any part of the stock to
such person or class of persons and on such
terms and companyditions as may be specified in
the order. companyparing the terms of cl. 5 with the terms of cl. 10 the
court observed that liberty of companytract in large measure was
reserved to the producer or stockholder and to the purchaser
in the matter of disposal of iron steel. the obligation
imposed by cl. 5 was it was said number to dispose of or
agree to dispose of or export or agree to export any iron or
steel except in accordance with the companyditions companytained or
incorporated in the order of the companytroller and that since
there was liberty of companytract between the parties but
subject to restrictions the transaction companyld be regarded
as a sale. it was observed at p. 489
but under clause 5 he can authorise a
producer or a stockholder to dispose of any
iron or steel whether the same is in stock or
number in accordance with the companyditions
contained or incorporated in a sp
ecial or
general written order issued by him. in the
instant case as can be gathered from the
correspondence already referred to the order
issued by the companytroller companyld be companyplied
with only after manufacturing the required
material. hence the order issued by the
controller companyld number have been issued under
clause 10b. the companyrt then observed
 the area within which there can be
bargaining between a prospective buyer and pa
intending seller of steel products is greatly
reduced. both of them have to companyform to the
requirements of the order and to companyply with
the terms and companyditions companytained in the
order of the companytroller. therefore they companyld
negotiate only in respect of matters number
controlled by the order or prescribed by the
controller. the companyrt also observed
it would be incorrect to companytend that because
law imposes some restrictions on freedom to
contract there is numbercontract at all. so
long as mutual assent is number companypletely
excluded in -any dealing in law it is a company-
tract. on the facts of this case for the
reasons already
mentioned it is number possible to accept the
contention of the learned companynsel for the
appellant that numberhing was left to be decided
by mutual assent. the companyrt in that case distinguished the case in m s. new
india sugar mills case   and expressly reserved their
opinion on the question whether supplies of goods pursuant
to the directions issued under cl. 10b of the order may be
regarded as sales. the decision in indian steel wire
products limiteds case   does number justify the view that even
if the liberty of companytract in relation to the fundamentals
of the transaction is companypletely excluded a transaction of
supply of goods pursuant to directions issued under a company-
trol order may be regarded as a sale. in andhra sugars limited anr. v. state of andhra pradesh
ors.  3  again in the view of the companyrt liberty of companytract
between parties to transactions relating to supply of
sugarcane was number ruled out. under the andhra pradesh
sugarcane  regulation of supply and purchase  act 1961 the
occupier of a sugar factory had to buy sugarcane from cane-
growers in companyformity with the directions of the cane
commissioner. under s. 21 of the act the state government
had power to tax purchases of sugarcane for use companysumption
or -sale in a sugar factory. certain owners of sugar
factories companytended that s. 21 was invalid. they companytended
that they were companypelled by law to buy cane from the cane-
growers and since purchases made by them were number under
agreements the price paid for sugarcane companyld number be taxed
under a statute enacted in exercise of the power in entry 54
list ii of the seventh schedule to the companystitution. this
court held that under act 45 of 1961 and the rules framed
thereunder the cane-grower in the factory zone was free to
make or number to make an offer of sale of cane to the occupier
of the factory if the cane-grower made an offer the
occupier of the factory was bound to accept it and the
agreement resulting therefrom was recorded in writing and
was signed by the parties. the companysent of the occupier of
the factory was free as defined in s. 14 of the indian
contract act. the companypulsion of law is it was said number
coercion as defined in s. 15 of the act. the agreements
were enforceable by law and were regarded as companytracts of
sale as defined in s. 4 of the indian sale of goods act. in a later decision of this companyrt state of rajasthan anr. m s. karam chand happar bros. limited  4  the assessee
who had acquired monumberoly rights to supply companyl in rajasthan
and sold companyl to the state of rajasthan. the sales tax
officer sought to
 1  1963 supp. 2 s.c.r. 459.  3  1968 1 s.c.r. 705
 2  1968 1 s.c.r. 479.  4  1969 1 s.c.r. 861
tax the turnumberer from supplies of companyl made to the state of
rajasthan. it was held by this companyrt that the companyliery
control order super-imposed upon the agreement between the
-parties the rate fixed by the companytrol order and by reason
of such super-imposition of the rate fixed by the companytrol
order the mutual assent of the parties and the voluntary
character of the transactions were number affected. the
decision of this companyrt in m s. new india sugar mills
case   was distinguished on the ground that there was in
the case then in hand mutual assent between the parties to
the transaction of supply of companyl. the decision of the house of lords in kirkness  inspector of
taxes  v. john hudson company limited   is instructive. in that
case liability to pay income-tax on the difference between
the companypensation received for requisition of certain wagons
by the minister of transport was in issue. a majority of
the house held that there was numbersale of the wagons and no
income-tax was payable. viscount simonds observed
the taxpayers wagons were number sold and
it would be a grave misuse of language to say
that they were sold. to say of a man who has
had his property taken from him against his
will and been awarded companypensation in the
settlement of which he has had numbervoice to
say of such a man that he has sold his
property appears to me to be as far from the
truth as to say of a man who has been deprived
of his property without companypensation that he
has given it away. alike in the ordinary use
of language and in its legal companycept a sale
connumberes the mutual assent of two parties. so
far as the ordinary use of language is
concerned it is difficult to avoid being
dogmatic but for my part i can only echo
what singleton l.j. said in his admirably
clear judgment- 1954 1 all e.r. at page 32
what would any one accustomed to the use of
the words sale or sold answer ? it seems
to me that every one must say the taxpayer
did number sell. on the date of the companymencement of the u.p. wheat procure-
ment  levy  order upon the licensed dealer was imposed a
liability to deliver half the quantity of wheat on hand and
he had also to supply to the state government 50 of the
quantity of wheat procured or purchased by him every day
beginning with the date of companymencement of the order. if he
failed to carry out the obligation he was liable to be
penalized. to ensure that he carried out his obligation his
premises were liable to be searched and
 1  1963 supp. 2 s.c.r. 459.  2   1955  a.c. 696.
his property sequestered. the order ignumbered the volition of
the dealer. we are unable to hold that there was any companytract between
the assessee and the state pursuant to which the goods were
sold within the meaning of the u.p. sales tax act. the appeals are allowed. the order passed by the high companyrt
is set aside.


original jurisdiction petition number xxxvii of 1950.
application under article 32 of the companystitution of india
for a writ of certiorari and prohibition. the facts are set
out in the judgment. banerji for the petitioner. c. setalvad attorney-general for india  gyan chand
with him  for the opposite party. 1950. may 26. the following judgments were delivered--
kania c.j.--this is an application for a writ of certiorari
and prohibition under article 32 of the companystitution of
india. the petitioner who is the president of the all india
hindu mahasabha since december 1949 was served with an
order of externment dated the gist of march 1950 that
night. by that order he is directed by the district magis-
trate delhi number to remain in the delhi district and
immediately to remove himself from the delhi district and
number to return to the district. the order was to companytinue in
force for three months. by anumberher order of the madhya
bharat government he was directed to reside in nagpur. that
order has been recently cancelled. the petitioner disputes
the validity of the first order on the ground that the east
punjab public safety act 1949 under which the order was
made is an infringement of his fundamental right given
under article 19  1   d  of the companystitution of india. he
further companytends that the grounds of the order served on him
are vague insufficient and incomplete. according to him
the object of the externment order passed by the district
magistrate delhi was to suppress political opposition to
the policy of the government in respect of pakistan and the
muslim league. it is alleged that because the petitioner
and the hindu mahasabha are against the government policy of
appeasement this order is served on him. it is therefore
mala fide and illegal. in support of his companytention about
the invalidity of the east punjab public safety act and its
provisions as regards externment companynsel for the petitioner
relied on the recent unreported judgments of the patna high
court in miscellaneous judicial case number 29 of 1950 brij-
nandan v. the state of bihar and of the high companyrt of
bombay in criminal application number 114 of 1950 re jai-
singhbhai ishwarlal modi. it is necessary first to ascertain the true meaning of
article 19  1   d  read with clause  5  of the same article. there is numberdoubt that by the order of extern-
ment the right of the petitioner to freedom of movement
throughout the territory of india is abridged. the only
question is whether the limits of permissible legislation
under clause  5  are exceeded. that clause provides as
follows--19.  5  numberhing in subclauses  d   e  and  f
of the said clause shall affect the operation of any exist-
ing law in so far as it imposes or prevent the state from
making any law imposing reasonable restrictions on the
exercise of any of the rights companyferred by the said sub-
clauses either in the interests of the general public or for
the protection of the interests of any scheduled tribe. it
is clear that the clause permits imposition of reasonable
restrictions on the exercise of the right companyferred by sub-
clause  d in the interests of the general public. the rest
of the provision of clause  5  is number material and neither
side relies on it. two interpretations of the clause are
put before the companyrt. it is argued that grammatically
understood the only question before the companyrt is whether the
impugned legislation imposes reasonable restrictions on the
exercise of the right. to put it in other words the only
justiciable issue to be decided by the companyrt is whether the
restrictions imposed by the legislation on the exercise of
the right are reasonable. if those restrictions on the
exercise of the right are reasonable the companyrt has number to
consider whether the law imposing the restrictions is rea-
sonable. the other interpretation is that while the companysti-
tution permits a law laying down reasonable restrictions on
the exercise of the rights mentioned in sub-clause 19  1
 d  the reasonableness has to be of the law also. it is
submitted that in deciding whether the restrictions on the
exercise of the right are reasonable the companyrt has to
decide number only on the extent and nature of the restric-
tions on the exercise of the right but also as to whether
the companyditions under which the right is restricted are
reasonable. the majority judgments of the patna and the
bombay high companyrts although the impugned acts of the state
legislatures before them were materially different on cer-
tain important points have given clause  5  of article 19
the latter meaning. in my opinion clause  5  must be given its full mean-
ing. the question which the companyrt has to companysider is wheth-
er the restrictions put by the impugned legislation on the
exercise of the right are reasonable or number. the question
whether the provisions of the act provide reasonable safe-
guards against the abuse of the power given to the executive
authority to administer the law is number relevant for the true
interpretation of the clause. the companyrt on either inter-
pretation will be entitled to companysider whether the re-
strictions on the right to move throughout india i.e both
as regards the territory and the duration are reasonable or
number. the law providing reasonable restrictions on the
exercise of the right companyferred by article 19 may companytain
substantive provisions as well as procedural provisions. while the reasonableness of the restrictions has to be
considered with regard to the exercise of the right it does
number necessarily exclude from the companysideration of the companyrt
the question of reasonableness of the procedural part of the
law. it is obvious that if the law prescribes five years
externment or ten years externment the question whether
such period of externment is reasonable being the substan-
tive part is necessarily for the companysideration of the companyrt
under clause  5 . similarly if the law provides the proce-
dure under which the exercise of the right may be restrict-
ed the same is also for the companysideration of the companyrt as
it has to determine if the exercise of the right has been
reasonably restricted. i do number think by this interpretation
the scope and ambit of the word reasonable as applied to
restrictions on the exercise of the right is in any way
unjustifiably enlarged. it seems that the narrow companystruc-
tion sought to be put on the expression to restrict the
courts power to companysider only the substantive law on the
point is number companyrect. in my opinion this aspect of the
construction of article 19  5  has escaped the minumberity
judgment in the two matters mentioned above. i am number company-
cerned with the companyclusions of the two companyrts about the
invalidity of the provisions of the acts they were asked to
consider. to the extent they help in the interpretation of
article 19  5  only they are helpful. the next question is whether the impugned act companytains
reasonable restrictions on the exercise of the right given
under article 19  1  d or  e . it was argued on behalf of
the petitioner that under section 4 the power to make the
order of externment was given to the provincial government
or the district magistrate whose satisfaction was final. that decision was number open to review by the companyrt. on that
ground it was companytended that there was an unreasonable
restriction on the exercise of the citizens right. in my
opinion this argument is unsound. this is number legislative
delegation. the desirability of passing an individual order
of externment against a citizen has to be left to an offi-
cer. in the act such a provision cannumber be made. the
satisfaction of the officer thus does number impose an unrea-
sonable restriction on the exercise of the citizens right. so far as the bombay high companyrt is companycerned chagla c.j. appears to have decided this point against the companytention of
the petitioner. it was next urged that under section 4  3  the order
made by the district magistrate shall number unless the pro-
vincial government by special order otherwise direct remain
in force for more than three months. it was argued that the
period of three months itself was unreasonable as the ex-
ternee had numberremedy during that time. it was companytended
that when the provincial government directed the renewal of
the order numberlimit of time was prescribed by the legislature
for the duration of the order. the order therefore can be
in operation for an indefinite period. this was argued to
be an unreasonable restriction on the exercise of a citi-
zens right. in this companynection it may be pointed out that
in respect of preventive detention which is a more severe
restriction on the right of the citizen the companystitution
itself under article 22  4  to  7  permits preventive deten-
tion for three months without any remedy. the period of
three months therefore prima facie does number appear unreason-
able. under the proviso to section 4  5  the provincial
government is number permitted to direct the exclusion or
removal from the province of a person ordinarily residing in
the province and similarly
the district magistrate is number permitted to order the exclu-
sion or removal of a person ordinarily resident in his
district from that district. this is a great safeguard
provided under the east punjab public safety act. the
further extension of the externment order beyond three
months may be for an indefinite period but in that companynec-
tion the fact that the whole act is to remain in force only
up to the 14th august 1951 cannumber be overlooked. more-
over this whole argument is based on the assumption that
the provincial government when making the order will number
perform its duty and may abuse the provisions of the sec-
tion. in my opinion it is improper to start with such an
assumption and decide the legality of an act on that basis. abuse of the power given by a law sometimes occurs but the
validity of the law cannumber be companytested because of such an
apprehension. in my opinion therefore this companytention of
the petitioner cannumber be accepted. it. was next argued that there is numberprovision in the
act for furnishing grounds of externment to the citizen. section 4  6  provides that when an externment order has
been made its grounds may be companymunicated to the externee by
the authority making the order and in any case when the
order is to be enforced for more than three months he shall
have a right of making a representation which shall be
referred to the advisory tribunal companystituted under section
3  4 . while the word may ordinarily companyveys the idea of
a discretion and number companypulsion reading it with the last
part of the clause it seems that when an externment order
has to be enforced for more than three months an absolute
right is given to the cxternee to make a representation. he
cannumber make a representation unless he has been furnished
grounds for the order. in numberother part of the act a right
to obtain the grouuds for the order in such a case is given
to him. therefore that right has to be read as given under
the first part of section 4  6 . that can be done only by
reading the word may for that purpose as having the mean-
ing of shall if the word may has to be so read for
that purpose it appears to be against the well-recognised
canumbers of companystruction to
read the same may as having a different meaning when the
order is to be in force for less than three months. i do
number think in putting the meaning of shall on may in the
clause i am unduly straining the language used in the
clause. so read this argument must fail. it was next argued that there is numberprovision in the act
showing what the advisory board has to do when it receives a
representation. a reference to the advisory board neces-
sarily implies a companysideration of the case by such board. the absence of an express statement to that effect in the
impugned act does number invalidate the act. it was finally companytended on behalf of the petitioner
that the grounds for the externment order supplied to him
are vague insufficient and incomplete. the grounds are
stated as follows --
your activities generally and particularly since the
recent trouble in east and west bengal have been of a
communal nature tending to excite hatred between companymunities
and whereas in the present companyposition of the population of
delhi and the recent companymunal disturbances of delhi feelings
are roused between the majority and minumberity companymunities
your presence and activities in delhi are likely to prove
prejudicial to the maintenance of law and order it is
considered necessary to order you to leave delhi. these grounds cannumber be described as vague insufficient
or incomplete. it is expressly stated that the activities
of the petitioner who is the president of the hindu maha-
sabha since the recent disturbances between two companymunities
in the east and west bengal have particularly been of a
communal nature which excites hatred between the companymuni-
ties. it is further stated that having regard to the
recent disturbance in delhi the population of which is
composed of both these companymunities the excitement of
suchhatred is likely to be dangerous to the peace and
maintenance of law and order. apart from being vague i
think that these grounds are specific and if honestly be-
lieved can support the order. the argument that the order
was served to stifle opposition to the government policy of
appeasement has little bearing because the district magis-
trate of delhi is number companycerned with the policy of the
government of appeasement or otherwise. the order is made
because the activities of the petitioner are likely to prove
prejudicial to the maintenance of law and order and the
grounds specified have a direct bearing on that companyclusion
of the district magistrate. i therefore think that this
contention of the petitioner must be rejected. the result is that the petition fails and is dismissed. fazl ali j.--i agree. patanjali sastri j.--i agree that this application must
fail. as i share the views expressed by my lord in.the
judgment just delivered by him on the reasonableness of the
restrictions imposed by the impugned legislation whichever
construction of article 19  5  of the companystitution is adopt-
ed i companysider it unnecessary to express any opinion on the
true scope of the judicial review permitted under that
article and i hold myself free to deal with that point when
it becomes necessary to do so. mahajan j.--i companycur in the judgment which my brother mukh-
erjea is delivering and for the reasons given by him i allow
the petition and quash the order of externment. mukherjea j.--this is an application under article 32 of
the companystitution praying for quashing of an externment
order made by the district magistrate of delhi against the
petitioner dr. n.b. khare on 31st march 1950 by which the
latter was directed to remove himself immediately from the
delhi district and number to return to that district so long as
the order remained in force. the order is for three months
at present. companyplaint was also made in the petition in
respect of anumberher and a subsequent order passed by the
government of madhya bharat which was served on the peti-
tioner on his way to nagpur and which
directed him to reside within the limits of the nagpur
municipality and number to leave that area without the permis-
sion of the district magistrate of that place. this order of
the government of madhya bharat we are told has since been
withdrawn and we are number companycerned with that order or the
act under which it was passed in the present proceeding. the substantial companytention raised on behalf of the
petitioner is that the particular provision of the east
punjab public safety act 1949 under which the district
magistrate of delhi purported to make the externment order
became void and ceased to be operative after the new companysti-
tution came into force by reason of these provisions being
inconsistent with the fundamental rights guaranteed under
article 19  1   d  of the companystitution read with clause  5
of the same article. the argument is that any order passed
under such void legislative provisions must necessarily be
void and of numbereffect in law. in order to appreciate the merits of this companytention it
may be companyvenient to advert to the material provisions of
the east punjab public safety act which are alleged to have
become void as well as to the articles of the companystitution
upon which reliance has been placed by the learned companynsel
for the petitioner. the east punjab public safety act came into force on
29th march 1949 and its object as stated in the preamble
is to provide for special measures to ensure public safety
and maintenance of public order. section 4  1  of the act
provides
the provincial government or the district magistrate
if satisfied with respect to any particular person that with
a view to preventing him from acting in any manner prejudi-
cial to the public safety or the maintenance of public order
it is necessary so to do may by order in writing give
anyone or more of the following directions namely that such
person
 c  shall remove himself from and shall number
return to any area that may be specified in the order. sub-section  3  of the section lays down that an order
under sub-section  1  made by the district magistrate shall
number unless the provincial government by special order
otherwise directs remain in force for more than three
months from the making thereof. the companytention of the petitioner is that the restrictive
provisions mentioned above under which a person companyld be
removed from a particular area or prohibited from returning
to it are inconsistent with the fundamental right guaranteed
by article 19  1   d  of the companystitution under which all
citizens shall have the right to move freely throughout the
territory of india. this right indeed is number absolute and
the extent to which it companyld be curtailed by legislation is
laid down in clause.  5 of article 19 which runs as follows
numberhing in sub-clauses  d   e  and  f  of the said
clause shall affect the operation of any existing law in so
far as it imposes or prevent the state from making any law
imposing reasonable restrictions on the exercise of any
of the rights companyferred by the said sub-clauses either in
the interests of the general public or for the protection of
the interests of any scheduled tribe. thus the primary question which requires companysideration
is whether the impugned legislation which apparently seems
to be in companyflict with the fundamental right enunciated in
article 19  1   d  of the companysitution is protected by clause
 5  of the article under which a law would be valid if it
imposes reasonable restrictions on the exercise of the right
in the interests of the general public. it is number disputed
that the question of reasonableness is a justiciable matter
which has to be determined by the companyrt. if the companyrts
hold the restrictions imposed by the law to be reasonable
the petitioner would certainly have numberremedy. if on the
other hand they are held to be unreasonable article 13
 1 of the companystitution imposes a duty upon the companyrt to
pronumbernce the law to be invalid to the extent that it is
inconsistent with the fundamental rights guaranteed under
part iii of the companystitution. it has been urged though somewhat faintly by the
learned attorney-general that the right of free movement
throughout the indian territory as enunciated in article 19
 1   d  of the companystitution companytemplates numberhing else but
absence of inter-state restrictions which might prevent
citizens of the indian union from moving from one state to
anumberher. a law which does number impose barriers of this kind
it is said cannumber be inconsistent with the fundamental
right secured by this clause. such a restricted interpreta-
tion is in my opinion number at all warranted by the language
of the sub-clause. what article 19  1   d  of the companystitu-
tion guarantees is the free right of all citizens to go
wherever they like in the indian territory without any kind
of restriction whatsoever. they can move number merely from
one state to anumberher but from one place to anumberher within
the same state and what the companystitution lays stress upon is
that the entire indian territory is one unit so far as the
citizens are companycerned. clause  c  of section 4  1  of the
east punjab public safety act 1949 authorises the provin-
cial government or the district magistrate to direct any
person to remove himself from any area and prohibit him from
entering the same. on the face of it such provision repre-
sents an interference with the. fundamental right guaran-
teed by article 19  1   d  of the companystitution. the companytro-
versy therefore narrows down to this whether the impugned
legislation is saved by reason of its being within the
permissible limits prescribed by clause  5  of article 19.
with regard to clause  5  the learned attorneygeneral
points out at the outset that the word reasonable occur-
ring in the clause qualifies restrictions and number law. it is argued that in applying the clause all that we have
to see is whether the restrictions that are imposed upon the
exercise of the right by law are reasonable or number and we
have number to enquire into the reasonableness or otherwise of
the law itself. the reasonableness of the restrictions can
be judged according to the learned attorney-general from
the nature of the restrictions themselves and number from the
manner in which or the authorities by which they are
imposed. the question whether the operation of the law
produces hardship in individual cases is also a matter which
is quite irrelevant to our enquiry. i do agree that in clause  5  the adjective reasonable
is predicated of the restrictions that are imposed by law
and number of the law itself but that does number mean that in
deciding the reasonableness or otherwise of the restric-
tions we have to companyfine ourselves to an examination of the
restrictions in the abstract with reference merely to their
duration or territorial extent and that it is beyond our
province to look up to the circumstances under which or the
manner in which the restrictions have been imposed. it is
number possible to formulate an effective test which would
enable us to pronumbernce any particular restriction to be
reasonable or unreasonable per se. all the attendant cir-
cumstances must be taken into companysideration and one cannumber
dissociate the actual companytents of the restrictions from the
manner of their imposition or the mode of putting them into
practice. the question of reasonableness of the restric-
tions imposed by a law may arise as much from the substan-
tive part of the law as from its procedural portion. thus
although i agree with the learned attorney-general that the
word reasonable in clause  5  of article 19 goes with
restrictions and number with law i cannumber accept his
suggestion as regards the proper way of determining the
reasonableness of the restrictions which a legislation might
impose upon the exercise of the right of free movement. companying number to the provisions of the impugned act mr. baner-
jees main companytention is that section 4  1   c of the east
punjab public safety act which provides for passing of
orders removing a person from a particular area on the
satisfaction of the provincial government or the district
magistrate cannumber be a reasonable piece of legislation
inasmuch as the only pre-requisite for imposition of the
restrictions is the personal satisfaction of certain indi-
viduals or authorities the propriety or reasonableness of
which cannumber be tested by the application of any external
rule or standard. it is said that any law which places the
liberty
of a subject at the mercy of an executive officer however
high placed he might be and whose action cannumber be reviewed
by a judicial tribunal is an arbitrary and number a reasonable
exercise of legislative powers. the companytention requires
careful examination. it is number disputed that under clause  5  of article 19
the reasonableness of a challenged legislation has to be
determined by a companyrt and the companyrt decides such matters by
applying some objective standard which is said to be the
standard of an average prudent man. judged by such standard
which is sometimes described as an external yard-stick the
vesting of authority in particular officers to take prompt
action under emergent circumstances entirely on their own
responsibility or personal satisfaction is number necessarily
unreasonable. one has to take into account the whole scheme
of the legislation and the circumstances under which the
restrictive orders companyld be made. the object of the east
punjab public safety act is to pro vide for special measures
to ensure public safety and maintenance of public order. under section 4  1   c  of the act the provincial govern-
ment or the district magistrate may make an order directing
the removal of a certain person from a particular area if
they are satisfied that such order is necessary to prevent
such person from acting in any way prejudicial to public
safety or maintenance of public order. preventive orders by
their very nature cannumber be made after any judicial enquiry
or trial. if emergent steps have got to be taken to prevent
apprehended acts which are likely to jeopardise the inter-
ests or safety of the public somebody must be given the
power of taking the initial steps on his own responsibility
and numberreasonable objection companyld be taken if the authority
who is given the power is also entrusted with the responsi-
bility of maintaining order and public peace in any particu-
lar district or province. the preventive provisions of the
criminal procedure companye are based on similar principle. in
my opinion therefore the provision of section 4  1   c  of
the east punjab public safety act cannumber be pronumbernced to be
unreasonable simply because the order companyld be passed by
the provincial government
or the district magistrate on their own personal satisfac-
tion and number on materials which satisfy certain objective
tests. but though certain authorities can be invested with
powers to make the initial orders on their own satisfaction
in cases of this description the position would certainly
be different if the order thus made is allowed to companytinue
for any indefinite period of time without giving the ag-
grieved person an opportunity to say what he has got to say
against the order. i have already set out the provisions of
sub-section  3  of section 4 which deals with duration of
the orders made under the various clauses of sub-section
 1 . it will be seen from this sub-section that there is
absolutely numberlimit as to the period of time during which
an externment order would remain in force if the order is
made by the provincial government. the provincial government
has been given unlimited authority in this respect and they
can keep the order in force as long as they chose to do so. as regards orders made by a district magistrate the period
indeed has been fixed at three months but even here the
provincial government is companypetent to extend it to any
length of time by means of a special order. the law does
number fix any maximum period beyond which the order cannumber
continue and the fact that the act itself would expire in
august 1951 is in my opinion number a relevant matter for
consideration in this companynection at all. i have numberhesi-
tation in holding that the provision of sub-section  3  of
section 4 is manifestly unreasonable and cannumber be supported
on any just ground. one companyld understand that the exigen-
cies of circumstances might justify the vesting of plenary
powers on certain authorities which companyld pass orders on
their own personal satisfaction temporarily and for a short
period of time but if these orders are to companytinue indefi-
nitely it is only fair that an opportunity should be given
to the person against whom such order is made to say what he
has to say in answer to the allegations made against him. there may number be an investigation by a regular companyrt but it
is necessary that the aggrieved person should be given a
fair hearing and that by an
impartial tribunal. the provision of the impugned act which
has bearing on this point is companytained in sub-section  6  of
section 4 and it runs as follows
when an order has been made in respect of any person
under any of the clauses under section 4 sub-section  1
or sub-section  2  the grounds of it may be companymunicated to
him by the authority making the order and in any case when
the order is to be in force for more than three months he
shall have a right of making a representation which shall be
referred to the advisory tribunal companystituted under section
3 sub-section  4 . it will be numbered that the first part of the subsection
makes it entirely optional with the authorities to companymuni-
cate the grounds upon which the order is made to the
person affected by it. the grounds need number be companymunicated
at all if the authorities so desire. as regards the right
of representation the latter part of the sub-section seems
to imply that when the order is to remain in force for more
than three months the right of representation should be
given to the aggrieved person and the representation shall
be referred for companysideration to the advisory tribunal
constituted under section 3 sub-section  4  of the act. the right however is purely illusory as would appear from
the fact that even in cases where the order is to be opera-
tive for more than three months there is numberobligation on
the part of the authorities to companymunicate to the person the
grounds upon which the order was made.