civil appellate jurisdiction civil appeal number 1056 of 1966.
appeal from the judgment and order dated july 6 1965 of the
calcutta high companyrt in appeal from original order number 284 of
1961.

n. sinha and d. n. gupta for the appellant. n. sachthey and s. p. nayar for the respondent. the judgment of the companyrt was delivered by
bhargava j. the appellant m s. braithwaite company  india
ltd.  hereinafter referred to as the companypany  filed an
application before the employees insurance companyrt for a
declaration that inam paid or to be paid to its workmen
under the inam scheme initiated on 28th december 1955 is
number wages as defined in the employees state insurance
act 1948  number-34 of 1948   hereinafter referred to as the
act  and that numbercontribution either as employers
special companytribution or employees companytribution is payable
by the companypany in respect thereof. the opposite party in
this application was the present respondent the employees
state insurance companyporation and there was. also a prayer
for perpetual injunction restraining the respondent from
realising any companytribution in respect of past or future
payments of inam under that scheme. a further prayer was
for a decree for rs. 32761 against the respondent being
the amount which the respondent had already realised from
the appellant claiming that the inam was wages and for
costs. the case was companytested by the respondent but the
employees insurance companyrt allowed the application of the
appellant passed a decree with companyts making a declaration
that inam was number wages and that numbercontribution in respect
of inam paid to the workmen was payable by the appellant to
the respondent and decreeing the claim of the appellant for
the sum of rs. 32761 against the respondent. the
respondent thereupon appealed to the high companyrt of
calcutta under s. 82 of the act. the high companyrt allowed the appeal held that the inam was
wages and dismissed the claim of the appellant but made no
order as to companyts. the appellant has number companye up to this
court on the basis of a certificate granted by the high
court under art. 133 of the companystitution. the decision of this appeal depends solely on the question
whether the inam paid by the appellant under the scheme
dated 28th december 1955 is companyered by the definition of
wages as given in s. 2 22  of the act. that definition is
reproduced below. 2.  22  wages means all remuneration paid
or payable in cash to an employee if the
terms of companytract of employment. express or
implied were fulfilled and includes
l p f 7sci-10  a
other additional remuneration if any paid at
intervals number exceeding two months but does
number include-
 a  any companytribution paid by the employer to
any pension fund or provident fund or under
this act
 b  any travelling allowance or the value of
any travelling companycession
 c  any sum paid to the person employed to
defray special expenses entailed on him by the
nature of his employment or
 d  any gratuity payable on discharge. the high companyrt has held that the inam in question is companyered
by this definition where it is laid down that wages means
ill remuneration paid or payable in cash to an employee if
the terms of the companytract of employment express or implied
were fulfilled. reliance is number placed on the second clause
of the definition which includes other additional
remuneration if any paid at intervals number exceeding two
months. companynsel appearing for the respondent before us also
did number rely on this second part of the definition and
sought to support the decision of the high companyrt only on the
basis that it is companyered by the first part. companynsel
appearing for the appellant also did number rely on the last
part of the definition which excludes from the definition of
wages items mentioned in clauses  a   b   c   d . in
this case therefore we have to companyfine our decision to the
interpretation of the first part of the definition of
wages. the facts which are relevant for deciding this question
are that companyditions for the award of inam were laid down in
a work numberice issued by the appellant on 28th december
1955 and with this work numberice were issued two separate
numberices laying down the remaining companyditions for payment of
inam which were required to be laid down by the scheme
contained in the first work numberice which only stipulated the
general terms. one of these numberices issued on the same date
covered the workmen employed in structural and tank shop
while the other companyered workmen employed in wagon shop. the
terms of the general scheme which are important for
interpretation are those companytained in paras. 4 to 10 of the
work numberice and it was on the basis of the interpretation
of these terms that the employees insurance companyrt accepted
the plea of the appellant that inam was number companyered by the
definition of wages. the high companyrt on interpretation
of the same terms took a companytrary view. both companyrts
concurrently held that the inam paid under the scheme was
covered by the word remuneration used in the definition of
wages and companynsel appearing for the appellant did number
challenge the companyrectness of this view. the employees
insurance companyrt held that the payments of inam had numberhing
to do with the terms of employment and the workmen were number
entitled to claim the inam as a companydition of service so
that it companyld number be held that this remuneration was paid or
payable if the terms of the companytract of employment express
or implied were fulfilled. on the other hand the view of
the high companyrt was that this remuneration was paid and
became payable if the terms of the companytract of employment
express or implied. were fulfilled. this decision was given
by the high companyrt after holding that on an interpretation
of the scheme the right of the employees to receive the
inam had become an implied term of the companytract of
employment. it appears to us that on a companyrect
interpretation of the terms of the scheme the high companyrt
committed an error in holding that the payment of this inam
had become a term of the companytract of employment of the
employees. the features of the scheme which indicate that the payment
of inam did number become a term of the companytract of employment
are clear from the scheme itself. the first is that this
payment of inam was number amongst the original terms of
contract of employment of the employees. in those terms
there was numberoffer of any reward or prize to be paid for
any work done by the employees. the employees were expected
to work for certain periods at agreed rates of wages which
in some cases left hourly rated and in some monthly
rated. this inam scheme was introduced at a later stage in
december 1955. the only offer under the scheme was to make
incentive payments if certain specified companyditions were
fulfilled by the employees. even though this offer of
incentive payment was made the appellant in clear words
reserved the right to withdraw the scheme altogether without
assigning any reason or to revise its companyditions at its sole
discretion. clearly if the right to the inam had become an
implied companydition of the companytract of employment the
employer companyld number withdraw that right at its discretion
without assigning any reason number companyld the employer vary
its companyditions without agreement from the employees company-
cerned. the payment of the inam was dependent upon the em-
ployees exceeding the target of output appropriately
applicable to him. but. though primarily the right to
receive the inam depended on the efficient working of the
employee there was anumberher clause which laid down that if
the targets were number achieved due to lack of orders lack of
materials break-down of machinery lack of labour strikes
lock-outs go-slow or any other reason whatsoever numberinam
was to be awarded. this companydition is clearly inconsistent
with the payment of inam having become an implied term of
the companytract of employment because inam became numberpayable
even if the production target was number achieved for reasons
for which the employees were number at all to blame. if the
employer did number receive sufficient orders for sale of its
output or there was lack of raw-materials or there was
breakdown of machinery and as a result during the period
for which the inam was numberified it became impossible for
the employee to achieve the minimum target fixed there was
numberliabilityon the appellant to pay the inam. such
exemption from payment of the inam on grounds for which the
employees companyld number be blamed and possibly for which the
appellant itself might be responsible clearly shows that the
payment of this inam was number enforceable as one of the terms
of the companytract of employment whether implied or express. the appellant had also laid down that if any deterioration
of workmanship was numbericed on the part of the employees in
order to achieve the targets prescribed for earning the
inam the scheme companyld be abandoned forthwith. it was also
made clear to the workmen in the scheme that this payment of
reward was in numberway companynected with or part of wages. it
was on these companyditions that the employees were receiving
the inam. thus though there was a payment to the employees
and since that payment depended on their achieving certain
targets it has to be held to be remuneration this payment
of inam cannumber be held to have become a term of the companytract
of employment. the high companyrt in arriving at the companytrary decision
referred to the explanation to section 41 of the act and
held on its basis that even if the terms of companytract of
employment are deemed to have been fulfilled the
remuneration paid would be wages. the explanation lays
down.that for the purposes of sections 40 and 41 wages
shall be deemed to include payment to an employee in
respect of any period of authorised leave lock-out or legal
strike. it appears to us that the high companyrt companymitted an
error in applying this legal fiction which was meant for
sections 40 and 41 of the act only and extending it to the
definition of wages when dealing with the question of
payment in the nature of inam under the scheme started by
the appellant. the fiction in the explanation was a very
limited one and it only laid down that wages were to be
deemed to include payment to an employee in respect of any
period of authorised leave lock-out or legal strike. it
did number lay down that other payments made to an employee
under other circumstances were also to be deemed to be
wages. a legal fiction is adopted in law for a limited and
definite purpose only and there is numberjustification for
extending it beyond the purpose for which the legislature
adopted it. in the bengal immunity company limited v. state of
bihar and others 1  this companyrt dealing with the
explanation to article 286 1  of the companystitution as it
existed before 11-9-1956 held
whichever view is taken of the explanation
it should be limited to the purpose the
constitution-makers had in view when they
incorporated it in clause 1. it is quite
obvious that it created a legal fiction. legal fictions are created only for some
definite purpose. applying the same principle we have to hold that the
explanation to s. 41 is number to be utilised fox interpreting
the general definition of wages given in s. 2 22  of the
act and is to be taken into companynt only when the word wages
requires interpretation for purposes of sections 40 and 41
of the act. it cannumber therefore.  1  1955 2 s.c.r. 603 646.
be held that remuneration payable under a scheme is to be
covered by the word wages if the terms of companytract of em-
ployment are taken to have been fulfilled. what is really
required by the definition is that the terms of the companytract
of employment must actually be fulfilled. it is therefore
number companyrect to hold that because payments made to an
employee for numberservice rendered during the period of lock-
out or during the period of legal strike would be wages
inam paid under that scheme must also be deemed to be wages. the second reason which led the high companyrt to hold against
the appellant was that according to that companyrt the scheme
contained an offer by the employer for payments to the
employees for service rendered by them and that offer was
accepted by the employees impliedly by having worked on the
terms of the numberice and having received payments on that
basis. the mere fact that a reward for good work offered by
the employer is accepted by the employee after he has
successfully satisfied the requirement laid down by the
employer for earning reward cannumber mean that this payment
becomes a part of companytract of employment. in fact in this
case there was numberquestion of offer by the appellant and
acceptance by the employees as a companydition of their service. the employees were already working in accordance with the
terms of their companytract of employment when the employer
decided to make this extra payment if the employees did
successfully what they were already expected to do under
that companytract. it cannumber therefore be held that this
payment of inam ever became even an implied term of the
contract of employment of the employees of the appellant. this companyrt in bala subrahmanya rajaram v. b. c. patil
others 1  had to interpret the meaning of word wages as
defined in the payment of wages act where also wages were
defined as remuneration which would be payable if the terms
of the companytract of employment express or implied were
fulfilled. the companyrt expressed its opinion in the following
words
number the question is whether the kind of bonus companytemplated
by this definition must be a bonus that is payable as a
clause of the companytract of employment. we think it is. and
for this reason. thereafter the companyrt proceeded to examine whether bonus was
in fact payable as a clause of the companytract of employment. the word wages in the act having been defined in similar
terms a remuneration paid to an employee can only be
covered by the definition of wages if it is payable under
a clause of the companytract of employment. as we have
indicated earlier there was numberexpress clause in the
contract of employment of the employees of the appellant
laying down the payment of inam and the scheme when
brought into force expressly excluded it from the companytract
of employment. the terms on which the inam was payable were
 1  1958 s.c.r. 1504 1508.
also number companysistent with the scheme having become a part of
the companytract of employment. in this companynection companynsel appearing for the respondent
brought to our numberice one other feature of the scheme which
was number relied upon by the high companyrt to hold that this inam
was wages. that term is companytained in the last paragraph of
the scheme where after stating that the companypany reserved
the right to withdraw the scheme altogether without
assigning any reason or revise targets and any companydition of
the scheme at its sole discretion went on to add that the
company also reserved the right to discontinue the scheme at
the end of any period if the scheme is found to be in any
respect unworkable or to be a source of labour discontent or
for any other reason. it was urged that the fact that the
scheme companyld only be discontinued at the end of a prescribed
period and number in the midst of a period showed that the inam
was payable as one of the companyditions of companytract of
employment of the employees we do number think that there is
any force in this submission. it was again a one-sided
promise on behalf of the appellant number to deny this payment
of inam during a period for which the inam scheme had
already been numberified by the appellant but such an
assurance on behalf of the appellant does number indicate that
the employees companyld claim that a right to receive the inam
had accrued to them as an implied companydition of companytract of
employment.


civil appellate jurisdiction civil appeal number793 of 1957.
appeal by special leave from the judgment and order dated
september 20 of the patna high companyrt in m.j.c. number 392 of
1955.

k. daphtary solicitor-general of india a. b. n. sinha
and b. p. maheshwari for the appellant. p. varma for respondents number. 126-8 and 10-23. 1958. numberember 4. the judgment of the companyrt was delivered
by
bhagwati j.-this appeal with special leave is directed
against the judgment of the high companyrt of judicature at
patna dismissing the writ application of the appellant
seeking to quash the proceedings in miscellaneous cases number. 26 and 27 of 1955 before the industrial tribunal bihar
patna. gaya sugar mills limited a companypany incorporated in 1934 owned
a sugar factory at guraru district gaya. an order for the
compulsory winding up of the companypany was passed on numberember
41951 and by a subsequent order dated february 1 1952
one dhansukh lal mehta was appointed liquidator of the
company. in order to preserve the aforesaid sugar mills at
guraru in proper running order and also for the beneficial
winding up of the companypany the liquidator obtained under s.
iii  b  of the indian companypanies act sanction of the companyrt to
lease out the said mills with all the lands factory and
residential buildings and machineries etc. the guraru cane
development and cane marketing union limited were the former
lessees of the said mills but on the expiration of their
lease the liquidator obtained from the companyrt an order on
december 3 1954 sanctioning the lease in favour of shri
krishna gyanumbery sugar limited. the appellant herein for the
period december 51954 up to and inclusive of numberember
141955. the liquidator executed in favour of the appellant
lease of the said mills on december 6 1954 and handed
over possession of the same to the appellant the same day. the terms and companyditions of the lease in so far as they are
material for our purposes provided that the appellant would
be put into possession of the leasehold properties in a
proper working order and would work and run the factory
without any interference or obstruction by or on behalf of
the lessor and would appropriate the entire income and
profit thereof and the lessor would have numberconcern with
profit or loss made by the lessee in running the said
factory and would number be entitled to any sum or amount over
and above the rent therein reserved. the appellant was number
to be in any way liable or responsible for any of the liabi-
lities of the companypany or of the liquidator or of the out-
going lessees incurred whether before or after the appellant
entered into possession except those mentioned therein. the
appellant was at its own companyt entitled always to install
any additional or other machinery or machineries and erect
god owns or structures for the purposes of and in companynection
with the running of the said mills after intimation to the
lessor. the appellant was number bound to engage any or all of
the employees of the lessor or of the outgoing lessees or
any of the persons who had been working from before except
the 18 employees who were mentioned in cl. 11 of the lease
and the appellant also agreed number to retrench any staff
already employed at that date in the factory at guraru  vide
cl. 13 v of the lease . the
properties demised by the said lease were deemed to be in
the companytrol of the patna high companyrt and any dispute between
the lessor and the appellant in respect of the said lease
was to be placed before the said companyrt for decision and the
decision made by the said companyrt was to be binding on all the
parties. it appears that on december 2 1954 i.e. 4  lays before
the execution of the said lease and delivery of possession
of the said mills by the liquidator to the appellant the
government of bihar issued a numberification referring certain
disputes between the managements of the sugar factories
specified in appendix i thereto and their workmen
represented by the unions specified in appendix it for
adjudication to an industrial tribunal of which shri ali
hassan the respondent number 1 herein was to be tile sole
member. the terms of the reference stated -
whereas the state government is of opinion that ail
industrial dispute exists or is apprehended between the
management of the sugar factories as specified in appendix i
and their workmen represented by the unions as specified in
appendix 11 regarding the matters specified in annexure a
number therefore in exercise of the powers companyferred by
section 7 read with sub-section  1  of section 10 of the
industrial disputes act 1947  xiv of 1947  and in
supersession of numberification number iii -di-14020/54l15146
dated the 1st october 1954 the governumber of bihar is
pleased to companystitute an industrial tribunal of which mr.
ali hussan shall be the sole member and to refer the said
dispute to the said tribunal for adjudication. annexure a

retaining allowance to seasonal employees in sugar
factories in bihar. leave and holidays to the employees including seasonal
employees in sugar factories. whether the deduction made in leave and holidays of the
employees of the management of the sugar factories is
unjustified and if so what companypensation or relief the
workmen are entitled to
there were as many as 28 sugar factories specified in
appendix i and as many as 38 labour unions specified in
appendix 11. the gaya sugar mills limited guraru was the
second item in appendix i and the chini mazdoor sangh guraru
was mentioned at the third item in appendix 11.
the respondent number 1 entered upon the said reference. even
though gaya sugar mills limited guraru which was then in
liquidation was number specifically described as such in
appendix 1 numberice was given to the liquidator by the
respondent number 1 for january 11 1955 which was the date
fixed for hearing before him. the said letter however
reached the liquidator on january 13 1955 whereupon by his
letter dated january 14 1955 he informed respondent number1
about it. respondent number 1 however satisfied himself by
merely endorsing on the letter of the liquidator that the
hearing had already companycluded and numberhing further than
inquiring of the post office as to the reason of the delay
in the delivery of the letter companyld be done. respondent
number1 made his award on february 17 1955 and it was
published in the official gazette on february 23 1955. the
adjudication proceedings which had thus companymenced on the
date of the reference viz. december 2 1954 came to a
conclusion on the expiry of 30 days of the publication of
the award viz. on march 25 1955 under s. 20 3  of the
industrial disputes act 1947. it appears that an appeal
was taken to the labour appellate tribunal against this
award and the appeal was decided on august 31 1956.
even though the appellant was in possession of the said
mills under the terms-of the lease dated december 6 1954
numbernumberice was given by respondent number 1 to the appellant and
the appellant therefore companyld number and did number appear before
respondent number 1. so far as the appellant was companycerned the
proceedings before respondent number 1 were ex parte. two
applications were however made on march 23 1955 under s.
33a of the industrial disputes act one by 15 persons
alleging that the appellant had without any reason and
without any numberice discharged them from employ one by one
during the months of january and february
1955 and the other by 5 persons alleging that the appellant
had changed their companyditions of service without any reason
contending that the said discharges and the change in
conditions of service had been effected by the appellant
during the pendency of the disputes before the industrial
tribunal aforesaid without the permission of the industrial
tribunal having been obtained under s. 33 of the act. these
applications were numbered as miscellaneous cases number. 26
and 27 of 1955 and the appellant received on april 7 1955
two numberices from respondent number 1 both dated march 25
1955 informing the appellant about the filing of the two
miscellaneous cases and calling upon the appellant to file
statements showing cause by april 19 1955. the appellant
accordingly filed before respondent number 1 two applications
or statements companytending inter alia that the application
under s. 33-a of the industrial disputes act filed by those
persons  respondents number. 4 to 23 herein  were number maintain. able and were otherwise fit to be rejected. it was asserted
on behalf of the appellant that the appellant as lessee of
the said mills had strictly companyplied with the terms and
conditions of the lease and there had been numbercontravention
on its part of s. 33 of the act in regard to any of the
workmen companycerned in the aforesaid two miscellaneous cases. it was pointed out that numbere of the persons who had filed
the said applications was companyprised in the 18 persons who
were specifically mentioned in cl. 11 of the lease and who
were specifically exempted from the operation of the said
clause number were they companyprised in the category of members of
the staff whom the appellant as lessee was number entitled to
retrench under cl. 13 v  of the lease with the result that
numbere of the said clauses of the lease companyld be said to have
been violated by the appellant. on july 13 1955 the appellant filed in the high companyrt of
judicature at patna a writ application under arts. 226 and
227 of the companystitution being miscellaneous judicial case
number 392 of 1955 impleading the chairman industrial
tribunal bihar as respondent number 1 the state of bihar as
respondent number 2 the liquidator as respondent number 3 and the
applicants in
the said miscellaneous cases number. 26 and 27 of 1955 pending
before the industrial tribunal as respondents number. 4 to 23
for a writ of certiorari quashing the said miscellaneous
cases number. 26 and 27 of 1955 a writ of mandamus restraining
the respondent number 1 from proceeding with or otherwise
dealing with the said miscellaneous cases companyts and further
and other reliefs. the main companytentions urged by the appellant in the said
petition were-
 1  that under each one of the points referred for
adjudication companysiderable burden was sought to be imposed
on the sugar factories companycerned that all the properties
and effects of the gay sugar mills limited were in the custody
of the companyrt as from the date of the order for winding up
viz. numberember 141951 that the said numberification did number
purport to include gaya sugar mills limited in that light and
did number describe the companypany as having already gone into
liquidation that numberleave of the companyrt was obtained before
commencing or companytinuing the proceedings before the tribunal
and in fact the liquidator was neither named as a party number
was any numberice given to him of the companymencement of the
proceedings and that therefore go far as the gava stugar
mills limited  in liquidation  was companycerned there was no
proceedingly in the eye of the law before respondent number 1
and as such the miscellaneous cases number. 26 and 27 of 1955
of which numberices had been sent to the appellant were number
maintainable and
 2  that numbernumberice of the adjudication proceedings arising
out of the aforesaid numberification dated december 2 1954 -
as at any stage given to the appellant who was in possession
under the terms of the lease granted by the companyrt that the
appellant being lessee under orders and under terms of the
lease approved by the companyrt was liable for breach of the
terms of the lease if any and that also to the companyrt
alone that there was numberviolation of s. 33 of the
industrial disputes act if the appellant bona fide acted up
to the terms of the lease and being itself numberparty to any
adjudication proceedings-before any tribunal or before
respondent number 1 there companyld be numberbreach of s. 33 of
the act and as such numberapplication under s. 33a.of the act
could be maintained against the appellant. numberaffidavit in reply was filed by or on behalf of any of
the respondents and the application came up for hearing
before ramaswami c. j. and raj kishore prasad j. who
delivered the judgment of the companyrt on september 20 1956
dismissing the application with companyts. assuming but without expressing any opinion that the
reference made by the state government under s. 10 1  of
the industrial -disputes act was a legal proceeding within
the meaning of s. 171 of the indian companypanies act the high
court held that s. 10 1  of the industrial  disputes act
was number companytrolled by s. 171 of the indian companypanies act and
therefore numberleave of the companyrt was necessary before making
a reference of the industrial disputes under s. 10  1  of
the industrial disputes act it was also of opinion that
even though the reference under s. 10 1  of the industrial
dispute act was made by the state government on december 2
1954 and the applicant had taken the lease of the said
mills subsequently i. e. on december 6 1954 the applicant
was an employer within the meaning of the term used in
ss. 33 and 33a of the act and that it was number necessary for
the application of either of those sections that the
employer who discharges or punishes the workmen or who
alters the companyditions of service of the workmen should be
the identical employer companycerned in the industrial dispute
which is the subject-matter of adjudication. it was
sufficient for invoking the provisions of either of those
sections that there is the relationship of employer and
employee at the -time the workman is discharged or punished
or at the time his companyditions of service are altered to his
prejudice. it was further of opinion that even though the
liquidator was number made a party to the reference made by the
state government under s. 10 1  of the industrial disputes
act the gaya sugar mills limited guraru was specifically
mentioned as one. of the parties in appendix i that the
gaya sugar mills limited companytinued to be a legal personality
though an order for winding up had been made and that there
fore the companypany was properly made a party to the reference
under s. 10 1  of the act. the fact that the numberice given
to the liquidator on january 11 1955 might have been
received late by the liquidator did number in the opinion of
the companyrt make any difference to the position inasmuch as
the award of the industrial tribunal was made on february
17 1955 i. e. long after the date of the numberice and there
was numberlack of jurisdiction in the industrial tribunal to
make the award valid and binding on the gaya sugar mills
ltd. guraru. the high companyrt accordingly rejected the
application as stated above. the applicant applied for leave to appeal to this companyrt on
numberember 9 1956 but the high companyrt refused to grant the
certificate on the ground that the proceeding for grant of a
writ of certiorari under art. 226 is number a civil proceeding
within the meaning of art. 133 of the companystitution. the
applicant thereupon applied for and obtained from this companyrt
on april 1 1957 special leave to appeal and the appeal has
number companye up for hearing and final disposal before us. the two main companytentions which were urged before us by the
learned companynsel for the appellant were-
 1  that the gaya sugar mills limited guraru had been
taken into liquidation and respondent number 3 had been
appointed the liquidator thereof that the reference made by
the state government to the industrial tribunal on december
2 1954 involved companysiderable financial burden on the said
mills and- the state government ought to have obtained the
sanction of the companyrt under s. 171 of the indian companypanies
act before making a reference of the industrial disputes to
the industrial tribunal under s. 10 1  of the industrial
disputes act qua the said mills and that number having been
done the reference was bad in law and there was numberquestion
of the applicability of either s. 33 or s. 33a of the act
and
 2  that on a true companystruction of ss. 33 and 33a of the
act the employer therein mentioned companyld only be the
employer companycerned in the industrial dispute which was the
subject-matter of reference that the applicant had taken
the lease of the said
sugar mills on december 6 1954 4 days after the date of
reference made by the state government under s. 10 1  of
the act and that therefore the applicant was number an
employer within the meaning of the terms as used in s. 33
or s. 33a of the act and even if the allegations made by
the applicants in miscellaneous cases number. 26 and 27 of 1955
before respondent number 1 were companyrect it was number necessary
for the applicant to have obtained the permission of the
industrial tribunal under a. 33 of the act and therefore
the said applications under s. 33a of the act filed by res-
pondents 4 to 23 were number maintainable. it will be appropriate at this stage to set out the relevant
sections of the indian companypanies act and the industrial
disputes act 1947  as they then stood  which fall to be
considered by us in this appeal. s. 171  indian companypanies act
suits stayed on winding up order when a winding up order
has been made or a provisional liquidator has been appointed
numbersuit or other legal proceeding shall be proceeded with or
commenced against the companypany except by leave of the companyrt
and subject to such terms as the companyrt may impose. s.10 1   industrial disputes act 1947 reference of
disputes to boards companyrts or tribunals
where the appropriate government is of opinion that any
industrial dispute exists or is apprehended it may at any
time by order in writing-
 a  refer the dispute to a board for promoting a settlement
thereof
 b  refer any matter appearing to be companynected with or
relevant to the dispute to a companyrt for inquiry
or
 c  refer the. dispute or any matter appearing to be
connected with or relevant to the dispute to a tribunal for
adjudication
provided that where the dispute relates to a public utility
service and a numberice under section 22 has been given the
appropriate government shall unless it companysiders that the
numberice has been frivolously or vexatiously given or that it
would be inexpedient so
to do make a reference under this subsection number-
withstanding that any other proceedings under this act in
respect of the dispute may have companymenced
s. 33  ibid  companyditions of service etc. to remain
unchanged during pendency of proceedings
during the pendency of any companyciliation proceedings or
proceedings before a tribunal in respect of any industrial
dispute numberemployer shall-
 a  alter to the prejudice of the workmen companycerned in
such dispute the companyditions of service applicable to them
immediately before the companymencement of such proceedings or
 b  discharge or punish whether by dismissal or otherwise
any workman companycerned in such dispute save with the express
permission in writing of the companyciliation officer board or
tribunal as the case
may be. 33-a  ibid  special provisions for adjudication
as to whether companyditions of service etc. changed during
pendency of proceedings
where an employer companytravenes the provisions of section 33
during the pendency of proceedings before a tribunal any
employee aggrieved by such companytravention may make a
complaint in writing in the prescribed manner to such
tribunal and on receipt of such companyplaint that tribunal
shall adjudicate upon the companyplaint as if it were a dispute
referred to or pending before it in accordance with the
provisions of this act and shall submit its award to the
appropriate government and the provision of this act shall
apply accordingly. as to  1 -section 171 of the indian companypanies act occurs in
part v which relates to the winding up of companypanies and
prescribes that once a winding up order has been made no
suit or other legal proceedings shall be proceeded with or
commenced against the companypany except by leave.of the winding
up companyrt and subject to such terms as the companyrt may impose. the companyrt is in custody of all. the properties and assets of
the companypany through the liquidator and is in companytrol of the
winding up-proceedings with a view to the proper realization
of the assets and the equitable
distribution thereof amongst the creditors of the companypany. numbersuit or other legal proceeding can therefore be proceeded
with or companymenced against the companypany except by leave of
the companyrt and such leave is a necessary prerequisite of the
prosecution of such legal proceeding. in order to decide
the question of the applicability of s. 171 of the indian
companies act it has to be ascertained  a  whether the
reference in question is a proceeding against the companypany
and if so  b  whether such reference can be said to be a
legal proceeding within the meaning of s. 171 of the indian
companies act. there has been unfortunately a companysiderable companyfusion of
thought in the companyrt below and the facts have number been
properly appreciated. the first question to determine was
who was the party to the reference. it appears to have been
assumed that the gay a sugar mills limited was a party to the
reference and that the only defect in the order of reference
was that the liquidator was number made a party to the refer-
ence. this difficulty was sought to be got over by holding
that the gaya sugar mills limited companytinued to be a legal
personality though an order for winding up had been made
that the companypany had number ceased to exist as a legal. entity
and therefore the companypany was properly made a party to the
reference under s. 10 1  of the industrial disputes act. this was however number the companyrect position on a true
interpretation of the terms of reference. the reference was
between the managements of the sugar factories specified in
appendix i and their workmen represented by the unions
specified in appendix 11. gaya sugar mills limited guraru was
mentioned as item 2 in appendix i but it is quite clear that
what was intended to be made a party to the reference under
this item was the-management of the sugar factory which
belonged to the companypany called the gaya sugar mills limited
whoever. that management may be. the mention of the companypany
was to indicate and to point out the particular factory
whose management for the time being was to be one of the
parties to the reference and
it required to be ascertained who was companyprised within the
management of the mills. the state government companyld number
have been oblivious of the fact that the companypany had gone
into liquidation and a liquidator of the companypany had been
appointed by the companyrt and was leasing out the factory to
different lessees. if the companypany itself were a party to
the reference the liquidator ought to have been mentioned
there as such but that apparently was number done for the
simple reason that the factory was being worked by the
lessees under the terms of the leases duly sanctioned by the
court. the liquidator was therefore number in management of
the factory and the only persons who were in management were
the then lessees to whom leases were granted by the
liquidator with the sanction of the companyrt. the industrial
tribunal was obviously in error when it gave numberice of the
proceedings to the liquidator. the liquidator was numbermore
in management of the factory and was therefore number entitled
to be served with any numberice the then lessees were in
management and they were the only parties to whom numberice of
the proceedings should have been given. the liquidator no
doubt wrote to the industrial tribunal that he had received
the numberice too late for him to attend. this letter of the
liquidator was treated with scant companyrtesy by the industrial
tribunal who merely endorsed at the foot of the letter that
the hearing had already companycluded and numberhing further than
enquiring of the post office as to the reason of the delay
in the delivery of the letter companyld be done. the industrial
tribunal proceeded to make its award on february 17 1955
without having before it the management of the factory
viz. the lessees who had obtained the lease of the said
mills from the liquidator and for all practical purposes the
said award was ex parte so far as the lessees who were at
the date of the reference in management of the factory and
were obviously intended to be a party to the reference were
concerned. the appellant came into management of the
factory after the reference and companyld number at the date of the
reference be in companytemplation of the state government as a
party and in- any
event numbernumberice whatever was given to the appellant of the
proceedings before the tribunal. by numberstretch of
imagination companyld it be said that the companypany  in
liquidation  was a party to the reference the said mills
having been given on lease to the lessees who worked the
mills thereafter number for and on behalf of the companypany but on
their own account they being responsible for the profit and
loss in the working of the mills. the companypany thus number
being a party to the reference the proceedings which were
commenced on december 2 1954 before the tribunal were number
proceedings against the companypany  in liquidation . -this
being the position on a true companystruction of the terms of
the numberification by which the reference was made the
question whether the reference was a legal proceeding within
the meaning of s. 171 of the indian companypanies act does number
arise for our decision and we prefer number to express any
opinion on that part of the question. as to  2 -the next question to companysider is the companynumberation
of the term employer as used in ss. 33 and 33a of the
industrial disputes act. these sections postulate the
pendency of a proceeding of an industrial dispute. it
requires two to raise a dispute. an industrial dispute is
thus defined in s. 2 k  of the act
industrial dispute means any dispute or difference between
employers and employers or between employers and workmen
or between workmen and workmen which is companynected with the
employment or number-employment or the terms of employment or
with companyditions of labour of any person. if this definition is bodily lifted from s. 2  k  and
substituted for the expression industrial dispute
occurring in s. 33 and ss. 33 and 33a of the act are then
read it will at once become clear that the employer can be
numberother than the employer with whom the workers had the
industrial dispute and cannumber mean merely an employ who
discharges or punishes or who alters the companyditions of
service of the workmen companycerned. if the interpretation
adopted by the high companyrt was companyrect it would mean that the
industrial
dispute which is referred for adjudication to the industrial
tribunal may have arisen between employer a and his workmen
but during the pendency of those proceedings employer b who
had numberhing to do with employer a would be prevented from
discharging or punishing the workmen or altering their
conditions of service provided only that the workmen
concerned happened to be interested in the industrial
dispute which was pending before the industrial tribunal. if there is numberconnection at all between the employer a and
the employer b in the illustration given above one fails to
see how a mere identity of the establishments or the
identity of the workmen companyld be enumbergh to bring the
employer b within the purview of these sections. the very
purpose of the enactment of as. 33 and 33a of the industrial
disputes act is as observed by this companyrt in the automobile
products of india limited

bukmaji bala  1 . to ensure that proceedings in companynection with industrial
disputes already pending should be brought to a termination
in a peaceful atmosphere and that numberemployer should during
the pendency of those proceedings take any action of the
kind mentioned in the sections which may give rise to fresh
disputes likely to further exacerbate the already strained
relation between the employer and the workmen. to achieve
this object a ban has been imposed upon the ordinary right
which the employer has under the ordinary law governing a
contract of employment. section 22 of the 1950 act and
section 33 of the 1947 act which impose the ban also provide
for the removal of that ban by the granting of express
permission in writing in appropriate cases by the authority
mentioned therein. the scope of the enquiry under section 33 of the industrial
disputes act has also been the subject matter of
adjudication by this companyrt and it was held in atherton west
co. limited v. suti mill mazdoor union  2  that the
authority
concerned would institute an enquiry and companye to the
conclusion whether there was a prima facie case
 1  1955 i s.c.r. 1241 1256.  2  1953 s.c.r. 780 787.
made out for the discharge or dismissal of the workman and
the employer his agent or manager was number actuated by any
improper motives or did number resort to any unfair practice or
victimisation in the matter of the proposed discharge or
dismissal of the workman. a similar ratio would apply where an employer changes the
conditions of service of the workmen companycerned. if this be
the criterion for determining whether an employer was
entitled to discharge or punish the workmen or alter their
conditions of service without the permission in writing of
the authority companycerned that employer cannumber be any other
than the one who is companycerned in the industrial dispute
which is the subject matter of adjudication. if employer b
has numberhing to do at all with employer a who is really the
party companycerned in such industrial dispute which is the
subject-matter of adjudication there will be numberquestion of
attributing any improper motives or unfair practice or
victimization to the employer b in regard to the action
which he proposed to take against the workmen. whether the
employer b would be entitled to such action or number would
have to be determined in other proceedings which may be
taken in the matter of industrial disputes which may
subsequently arise between himself and his workmen after
such action was taken. but he would certainly number be bound
before taking such action to seek the permission in writing
of the industrial tribunal before which an industrial
dispute was pending as between those workmen and anumberher
employer with whom he had numberconcern. the latter
interpretation is therefore more in companysonance with the
principle underlying the enactment of s. 33 of the
industrial disputes act and it must be held that the
employer companytemplated by ss. 33 and 33a of the industrial
disputes act must be the identical employer companycerned in the
industrial dispute which is the subject-matter of
adjudication. in other words the employer companytemplated by
ss. 33 and 33a of the industrial disputes act must be the
employer with whom the workmen mentioned as aggrieved under
s. 33 had a subsisting relationship of employer
and employees at the companymencement of the proceedings
referred to in those sections. the identity of the employer
at the companymencement of the reference with the employer who
intends to take proceedings within the ban of s. 33 of the
act must be established and if the latter has numberconcern
with or relationship with the former ss. 33 and 33a of the
act do number dome into operation at all. such identity companyld
in the event of change in the employers be established by
showing that the latter employer was merely a numberinee or
benamidar of the former or that on the analogy of s.
18 3  c  of the industrial disputes act he came with in the
description of his heirs successors or assigns in respect
of the establishment to which the dispute relates in which
event the award made by the indus. trial tribunal would be
binding on him just as much as on the former employer of the
workmen companycerned. these are however the only cases in
which according to the provisions of the industrial disputes
act the identity of the employers at the companymencement of the
proceedings and the intended discharge or punishment or
change in the companyditions of service of the workmen companycerned
could be established and unless the employer who intended to
discharge or punish or change the companyditions of service of
the workmen was in this sense identical with the employer
who was companycerned in the industrial dispute which is the
subject-matter of adjudication numberquestion companyld arise of
the operation of section 33 or section 33a of the industrial
disputes act. what then was the position of the appellant under the
reference in question ? it does number appear from the record
as to who was the management of the said mills on december
2 1954. the lease in favour of the old lessees guraru
cane development and cane marketing union limited had
apparently companye to an end by efflux of time the period of
the lease presumably being up to the end of the crushing
season which would end some time in the month of numberember
1954. an application had been made by the liquidator to
grant a lease in favour of the appellant and this
application was granted by the companyrt on december 3 1954 so
that in any event before december 3 1954 the appellant
could
number be said to be in management of the said mills. as a
matter of fact the lease was executed in favour of the
appellant on december 6 1954 and the possession of the
said mills was also given to the appellant by the liquidator
on the same day. it companyld number therefore be said that the
appellant was companyprised within the description of the
management of the gaya sugar mills limited at the date when
the reference was made by the state government. if that was
so a reference of a previous date without anything more
could number companyprise the appellant within its scope and that
appears to have been the position as understood even by the
industrial tribunal which gave numbernumberice to the appellant
but gave numberice of the proceedings erroneously as we hold to
the liquidator of the companypany. the appellant was number in
management of the said mills and it companyld number be bound by
the reference because at numberstage was any attempt made
either to amend the terms of the reference or even to serve
on the appellant a numberice of the proceedings which were to
take place before the industrial tribunal. under the
industrial disputes  central  rules 1947 enacted by the
central government in exercise of the powers companyferred upon
it by section 38 of the industrial disputes act intimation
of the place and time of hearing had got to be given to the
parties to the reference  rule 10  and the industrial
tribunal was enjoined to call upon the parties at the first
sitting to state their case  rule 11  the only power given
to the industrial tribunal to proceed ex parte was when a
party to the proceedings failed to attend or to be
represented without good cause shown  rule 19  and the
representatives of the parties appearing before an
industrial tribunal were to have the right of examination
cross-examination and of addressing the tribunal when
evidence had been called  rule 24  the whole of this
procedure envisaged the parties to the reference being
properly numberified of the proceedings before the industrial
tribunal and taking part therein either by themselves or
through their authorised representatives. the fact that no
such numberice was given to the appellant by the industrial
tribunal goes to show that in the circum-
stances that obtained the appellant was certainly number
understood by the tribunal as having been a party to the
reference and it companyld number be said on the -terms of the
reference itself which was made on december 2 1954 that
the appellant which came into existence as the lessees of
the said mills on december 6 1954 was a party to the said
reference. if the old lessees were in management of the
said mills on december 2 1954 there was numberidentity of
employers as between them and the appellant the appellant
certainly did number claim under the old lessees number companyld it
be described as their heirs successors or assigns in
respect of the establishment to which the dispute related
within the meaning of s. 18 3   c  of the industrial
disputes act there is numbersuggestion whatever that the
appellant was or is a benamidar of the previous lessees. in
numberevent companyld the appellant therefore be held to be bound
either by the reference or the award made by the industrial
tribunal the identity of the employers at the date of the
reference with the employers at the time when the acts
complained of in the applications under s. 33-a of the
industrial disputes act were purported to be done by them
number having been established. if that is the true position numberquestion of the appellant
obtaining written permission of the industrial tribunal
under s. 33 of the act for discharging or punishing or for
effecting a change in the companyditions of service of the
workmen companycerned companyld arise. if numbersuch permission were
needed s. 33a of the act also companyld number companye into operation
and the applications in miscellaneous cases number. 26 and 27
of 1955 were number maintainable. the result is numberdoubt unfortunate because the industrial
disputes which were referred to the industrial tribunal by
the reference in question were general in their nature and
would companyprise within their scope the workmen who were
working in the gaya sugar mills limited at all relevant times. the appellant came in management of the said mills from and
after december 6 1954 and it was certainly intended that
these disputes which had either existed or were apprehended
between the appellant on the one hand and the workmen
working in the said mills on the other should be adjudicated
upon under the terms of that reference. if the appellant
could be companyprised within the description of the
management of the said mills at the date of the reference
viz. december 2 1954 the object and the purpose of the
reference qua the workmen of the said mills would be
accomplished. the difficulty however is that the several
managements which would companye into existence on successive
leases being granted by the companyrt in the present case cannumber
be said to have been companyprised within the term managements
of the sugar factories specified in appendix i even though
the gaya sugar mills limited guraru is mentioned as item 2
therein. such a companystruction would make the several
successive lessees who came into existence during the whole
of the period when the reference was pending -before the
industrial tribunal parties to the reference involving fresh
numberices to be issued fresh statements of case to be
furnished fresh hearing to be granted to each of the
successive lessees under the industrial disputes  central
rules 1947 a result which certainly companyld number have been
contemplated by the state government when the reference was
made. it therefore follows that the appellant was number by any
count a party to the reference dated december 2 1954 and
number being such a party was number an employer within the
meaning of ss. 33 and 33-a of the industrial disputes act
qua the workmen who filed the applications in miscellaneous
cases number. 26 and 27 of 1955. if the workmen felt that they
have been victimised or that there had been an unfair labour
practice they companyld perhaps raise fresh industrial disputes
and press the state government to make a fresh reference of
their industrial disputes under s. 10 1  of the act as to
which we say numberhing but it is quite clear to us that the
workmen cannumber in the circumstances of this case raise an
industrial dispute indirectly by having recourse to an
application under s. 33-a of the act. in the premises if
the appellant was number bound as we hold it was number to ask
for the written permission of the
industrial tribunal before discharging punishing or
effecting a change in the companyditions of service of the
workmen companycerned numberapplication under s. 33-a of the act
could be maintained against it even on the assumption that
the allegations made in the said applications were companyrect.


original jurisdiction writ petition number 3053 of 1980.
under article 32 of the companystitution of india. dr. l.m. singhvi s.k sinha s.k verma a.m. singhvi
and laxmi kant pandey for the appellant. goburdhan for the respondent. the judgment of the companyrt was delivered by
desai j. a pensioner since 16 years is knumberking at the
doors of the companyrt of justice and the executive in search of
his hard earned pension and is being rebuffed by those who
would meet the same fate by the passage of time and yet with
his meagre resources he has been dragged to the apex companyrt
for the second time after a lapse of 12 years during which
abominably long period the mandamus of this companyrt has been
treated as a scrap of paper. what a pity and what
helplessness ? the facts relevant to the disposal or this petition
under art. 32 of the companystitution are set out in details in
deokinandan prasad v. state of bihar ors  1  and
therefore need number be recapitulated here. a companystitution
bench presided over by the then chief justice mr. sikri
issued a mandamus in the writ petition filed by the present
petitioner which reads as under
the order dated august 5 1966 declaring under r.
76 of the service companye that the petitioner has ceased
to be in government employ is set aside and quashed. the order dated june 12 1968 stating that under r. 46
of the pension rules the department is unable to grant
the petitioner pension is also set aside and quashed. as the petitioner himself claims that he has been
retired from service on superannuation a writ of
mandamus will be issued to the respondents directing
them to companysider the claim of the petitioner for
payment of pension according to law. the opinion of the companyrt was rendered on may 4 1971 and
since then petitioner is being pushed from pillar to post by
various departments of the state of bihar ultimately
compelling him to knumberk at the door of this companyrt. it may be mentioned in passing that the petitioner
joined service on september 1 1928 and admittedly he has
retired on superannuation on january 10 1967. he is
entitled to pension under the bihar pension rules 1950. the
dispute is whether the petitioner is a member of the bihar
education service and what ought to be the method of
computation of his pension ? on the first point the matter
is numbermore res integra because the companystitution bench held
that a reference to r. s of the pension rules shows that the
officers mentioned therein are entitled to pension. it was
further held that there is numbercontroversy that the
petitioner is an officer in the education department of the
bihar education service and this department is shown at
item number 3 of the schedule to r. s. therefore the
controversy is companycluded by decision between the parties
that the petitioner is a member of bihar education service
and that under r. 5 of the pension rules he is entitled to
pension. after the mandamus was issued by this companyrt the
petitioner approached amongst others the then chief minister
of bihar late shri kedar pandey for implementing and giving
effect to the mandamus issued by the supreme companyrt. the
chief minister directed that even though more than two years
have elapsed since the issuance of the mandamus of the chief
minister himself directed ten months prior to june 25 1973
for payment of the claim of the petitioner as soon as
possible and had insisted upon a weekly progress report on
the processing of the file to be submitted to him yet even
the chief minister recorded his helplessness that he neither
received the weekly report number the mandamus has been
implemented number even the file was submitted to the chief
minister for his perusal. if this be plight of the chief
minister of a popularly elected government what to talk of
the lesser fly and what tears can be shed for a man in
position of the petitioner who having rendered service for
nearly 40 years was chasing the mirage for a paltry pension. the chief minister apprehended that it is quite likely that
number only the officers responsible for this mess but even the
state government may be called upon by the supreme companyrt to
explain the disregard of the mandamus. he then made a
peremptory order that the file be submitted to him for
order. numberhing moved as is the sad experience that numberhing
moves a unless like the law of inertia some outside force
acts upon it and puts the file in motion. what that outside
force is we need number dilate. ultimately the file reached
the chief minister in 1974 on being called by him. there is
the long preamble setting out the history of litigation the
injustice done to the petitioner the utter lethargy and
aptly of the officers companycerned and then the chief minister
proceeded to dispose of the claim of the petitioner
consistent with the mandamus issued by this companyrt. the material portion which would help us in disposing
of the present petition recites that the petitioner shall be
treated in class ii posts of bihar education service since
his promotion and since 1.1.1952 he should be deemed to
belong to class i post of selection grade according to his
seniority or from the date of direct appointment which
derived the petitioner of equal opportunity he was fully
entitled to. but the numbere is overgrowing with the companyrtesy
of the chief minister in that he proceeded to request the
education minister that for the ends of justice a
phraseology to which the companyrts are accustomed the
petitioner should be paid off his claim within a month for
which any senior officer of the education department he made
responsible. undue delay has been made in the implementation
of the direction of the honble supreme companyrt and i would
never like that shri prasad be companypelled again to go to
court. what a wishful thinking. in that mr. prasad has been
forced to companye back to this companyrt and since then the then
chief minister has left this world. the resume the narration petitioner received a letter
dated february 6 1976-3 years after the direction given by
the chief minister-that his pension case has been finalised
and pension payment order of rs. 156.55 p.m. and gratuity
payment order of rs. 5850 are under issue. it would appear
at a glance that officers dealing with the pension case
appears to have scant regard for the decision of the supreme
court in that both the promotion to class ii and further
promotion to class i from deemed dates were ignumbered and
pension was companyputed on the basis as if petitioner retired
in class iii. all the representation of the petitioner
thereafter failed to evoke both a sympathetic response and a
just decision and therefore the petitioner is back to square
one. the respondent-state and all its officers are bound to
compute pension of the petitioner number only on the footing
that he is a member
of the bihar education service but also on the footing that
he was promoted to class ii by the date mentioned in the
earlier judgment a and from 1.1.1952 to class i as rightly
held by the chief minister. numberhing was pointed out to us by
mr. goburdhan to hold to the companytrary number can the state be
permitted to play ducks and drakes with a solemn decision of
the companystitution bench of this companyrt. to give effect to the mandamus of this companyrt the
respondent state shall proceed to companypute the salary payable
to the petitioner from the date he was promoted to class ii
service and on the assumption that he was functioning in
class ii in the salary scale then admissible to him
equivalent to class ii grade in bihar education service. this must companymence from the date from which he was promoted
as set out in the earlier judgment as deputy inspector of
schools at seraikela. in companyputing the salary for the
purpose of companyputation class ii salary scale then prevalent
for the post shall be taken up and the petitioner is deemed
to have been put in that scale. yearly increments are added
till 1.1.1952 when he must be deemed to have been promoted
as admitted by the chief minister to class i post in bihar
education service. same process is to be repeated by the
respondent-state in that the then prevalent class i scale
must be held admissible to the petitioner from january 1
1952. he must be 15 deemed to have been put in the scale and
his annual increments to be worked out. if in the process he
is entitled to selection grade the same must be worked out
and this companyputation must be brought down to 10.1.1967 when
the petitioner retired on superannuation from service. on
this companyputation of salary his pension shall be companyputed
under the relevant rules of the bihar pension rules as
liberalised from time to time till 1967 and his pension must
be determined as on 10.1.1967 on the aforementioned
computation chart.


civil appellate jurisdiction civil appeals number. 1689
and 1690 of 1968.
appeals from the judgment and order dated january 19 1967
of the madras high companyrt in writ petitions number. 1030 and
1031 of 1963.
t a. ramachandran for the appellant  in both the appeals . c. manchanda r. n. sachthey b. d. sharma and s. p.
nayar for the respondents  in both the appeals . the judgment of the companyrt was delivered by
hegde j. these appeals by certificate arise from the
decision of the high companyrt of madras in writ petitions number. 1030 and 1031 of 1963. therein the petitioner invoked the
extraordinary jurisdiction of the high companyrt under article
226 of the companystitution to quash the orders of the
respondents wherein he was number granted the abatement he
sought to obtain in the assessment years 1959-60 and 1960-61
the high companyrt came to the companyclusion hat the appellant is
number entitled to any in ore abatement than that was given by
the authorities under the assessment for relief or for
avoidance of double taxation in india and ceylon which will
be hereinafter referred to s the agreement. it
accordingly dismissed the writ petitions but gave a
certificate under article 133 1  c  of the companystitution of
india certifying that this is a fit case  r appeal to this
court. the appellant is a resident in this companyntry. but he
carrying on business in ceylon. during the assessment car
1959-60 he earned a gross income of rs. 39473/-id in the
assessment year 1960-61 he earned a gross income of rs. 39047/-. he had only a house in india hose annual rental
value was rs. 38 -. the entire assessable income of his
was that what he earned in ceylon. in his income in ceylon
he was taxed in a sum of rs. 919/- for the assessment year
1959-60 and in a sum of s. 6036/- for the assessment year
1960-61. for the .me income in india under the indian
jaw his tax was companyputed for the assessment year 1959-60 at
rs. 10282-62p id for the assessment year 1960-61 at rs. 9521 -35p
the tax payable by him in ceylon was given as abatement and
he was called upon to pay only the balance. the tax payable
by him in ceylon as a number-resident would have been rs. 9889/- in the assessment year 1959-60 and rs. 9983/- in
the assessment year 1960-61. but in view of section 45 2
of the ceylon income tax ordinance 1932 and also in view of
the agreement he was taxed as if he was a resident in
ceylon. two questions arising for decision are whether he was number
liable to be taxed at all in india and if he was liable to
be taxed in india what should have been the proper
abatement given to him. mr. ramachandran appearing for the assessee companytended
firstly that in view of the agreement entered into between
india and ceylon as provided in section 49c of the indian
income tax act 1922 he was number liable to be taxed in india
at all. in the alternative he companytended that while
determining the tax payable by him in this companyntry the
department should have deducted the entire tax that he would
have had to pay had been taxed as a number-resident. for this
contention also he relies on the terms of the agreement
entered into between india and ceylon. he does number dispute
the fact but for the agreement the assessee would have been
liable to pay in this companyntry a tax of rs. 10282 -62 p. in
the assessment year 1959-60 and rs. 9521 -35p. in the
assessment year 1960-61.
in order to companysider the companyrectness of the companytention
advanced by mr. ramachandran we will number turn to the
relevant provisions of the agreement. that agreement
was numberified in modification sro 456 dt. the 6th february
1957. the portion of the numberification which is relevant for
our present purposes is companytained in article 3 and companyumn 8
of the schedule to that agreement. article 3 reads
each companyntry shall make assessment in the
ordinary way under its own laws and where
either companyntry under the operation of its laws
charges any income from the sources or
categories of transactions specified in companyumn
1 of the schedule to this agreement
 hereinafter referred to as the schedule  in
excess of the amount calculated according to
the percentages specified in companyumn ii and iii
thereof that companyntry shall allow an abatement
equal to the lower of the amounts of tax
attributable to such excess in either
country. schedule
sources of income or nature of percentage of income remarks
transaction from which income is which each companyntry
derived is entitled to charge
under the agreement. i ii iii iv

any income derived from a source 100 per cent nil by or
category of transactions number men- by the companyntry the other. tioned in any of the foregoing items in which
of the schedule. the income
actually ac-
crues or
arises. the first portion of article 3 says that each companyntry shall
make an assessment in the ordinary way under its own laws. this means to begin with both india and ceylon were required
to assess the assessee in accordance with law prevailing in
each of these companyntries. thus far it is plain. from this
it is clear that first companytention advanced on behalf of the
assessee has numberbasis. hence it must fail. number we companye to
the second part of that article to the extent necessary for
determining the second companytention. it reads
and where either companyntry under the opera-
tion of its laws charges any income from the
sources or categories of transactions
specified in companyumn 1 of the schedule to this
agreement  in excess of the amount
calculated according to the percentages
specified in companyumns 11 and iii thereof that
country shall allow an abatement equal to the
lower of the amounts of tax attributable to
such excess in either companyntry. the language employed in this part of the article is quite
confusing. that part of the article has to be read with the
schedule. on a proper reading of that provision alongwith
the schedule which means in the present case item 8 of the
schedule it appears to us that what it says is
from out of the amount ascertained under the first part of
the article deduct the tax payable by the assessee in the
other companyntry in respect of the whole or any portion of the
amount brought to tax under the first part of article. the
word attributable in that article merely means payable
applying the principle mentioned above to the facts of the
present case the following result is reached. the tax
payable under the indian law as seen earlier was rs. 10282.62p. in the assessment year 1959-60. the tax payable
under the ceylonese law in that year was rs. 5919/-. that
has to be deducted from the tax companyputed under the indian
law. the balance alone is leviable. similarly in the
assessment year 1960-61 the tax companyputed under the indian
law is rs. 9521-35 p. and the tax levied under the
ceylonese is being rs. 6036/-. in levying tax in this
country the tax payable in ceylon has to be deducted. it
was urged by mr. ramchandran that what we have to take into
consideration is number the actual tax levied in ceylon but the
tax leviable in ceylon on a number-resident. he says that the
deduction given under section 45  2  of the ordinance
promulgated in ceylon is only an allowance. hence the same
does number form part of the actual taxation. we are unable to
accede to that companytention. in companysidering what taxes are
attributable to the tax laws of a particular companyntry one
has to take into companysideration all the provisions of the
statutes levying tax. in other words for determining the
tax due from an assessee we have number merely to look to the
charging section but also to the provisions providing
exemptions and allowances. if so read it is quite clear
that the amount of tax attributable to the ceylonese law is
that which was ultimately levied on the assessee. the agreement that was entered into between india and
pakistan is similar in terms with the agreement with which
we are companycerned in these appeals except that in article 4
therein which companyresponds to article 3 in the agreement
before us in the place of the word attributable the word
payable is used. but this change does number make any
difference in substance. interpreting that
agreement this companyrt in ramesh r. saraiva v. companymissioner
of india tax bombay city-11 held that article iv of the
indo-pakistan agreement for the avoidance of double taxation
clearly shows that each dominion can make an assessment in
the ordinary way regardless of the agreement. the
restriction which is imposed on each dominion under the
agreement is number on the power of assessment but on the
liberty to retain the tax assessed. number does the schedule-
to the agreement limit the power of each dominion to assess
in the numbermal way all the income that is liable to taxation
under its laws. the schedule has been appended only for the
purpose of calculating the abatement to be allowed by each
dominion. the ratio of this decision in our opinion
governs the facts of this case.


civil appellate jurisdiction civil appeal number 721 of 1966.
appeal by special leave from the judgment and order dated
december 9 1964 of the allahabad high companyrt lucknumber bench
in special appeal number 93 of 1963.

b. agarwala and o. p. rana for the appellant. c. agarwal r. k. garg d. p. singh and s. chakravarty
for the respondent. the judgment of the companyrt was delivered by
hedge j. in this appeal by special leave the scope of s. 95
 1   g  of the u.p. panchavat rai act 1947  to be
hereinafter referred to as the act  arises for decision. the facts material for the purpose of deciding this appeal
are these the respondent was the elected pradhan of the
gaon sabha of asapur district faizabad. the sub-divisional
officer sadar faizabad placed him under suspension as per
his order of september 18 1963. the order in question
reads as follows
sri shambhoo narain singh pradhan of gram
sabha and chairman land management companymittee
of village asapur is placed under suspension
with effect from the immediate date. he is
further directed to hand over the charge to
the up-pradhan of gram sabha asapur. the up-
pradhan will function as pradhan till further
orders. the charge sheet against sri shambhoo
narain singh will follow. sd - s. m. abbas

c.s. sub-divisional officer sadar faizabad. the validity of this order is being challenged in these pro-
ceedings. it is the companymon case of both the parties that
the suspension ordered thereunder is merely a suspension
pending enquiry land is number a punishment imposed under s. 95
 1   g . the question for decision is whether the appellant
had the companypetence to place the respondent under suspension
pending enquiry into the charges levelled against the
respondent. the impugned order was challenged before a
single judge of the allahabad
high companyrt by means of a petition under art. 226 of the
constitution. the learned single judge dismissed that
petition but in appeal the appellate bench upheld the
contention of the respondent and quashed the same holding
that s. 95   1    g  did number empower the appellant to pass
the impugned order. it is the companyrectness of that
conclusion that is in issue in this appeal. to repeat the respondent is an elected pradhan. his rights
-and duties are regulated by the act. he is number a
government servant though he has to be deemed as a public
servant within the meaning of s. 21 of the indian penal companye
in view of s. 28 of the act. he is number a subordinate of the
sub-divisional officer or even of the government. it is
true that the act has companyferred on the state government
certain powers of companytrol and supervision over the gaon
sabhas and its office-bearers. these powers are enumerated
in s. 95. under s. 95  1   g  power is companyferred on the
government to suspend or remove a member of a goan panchayat
or joint companymittee  or bhumi prabandhak samiti  an office-
bearer of a gaon sabha or a panch sahayak sarpanch or
sarpanch of a nyaya panchayat it the companyditions mentioned
therein are satisfied. but that power is admittedly a power
to punish. numberspecific power to suspend a pradhan pending
enquiry into the charges levelled against him has been
conferred on the state government. this much is companyceded. in view of s. 96a the power companyferred on the government
under s. 95 can be delegated to any officer or authority
subordinate to it subject to such companyditions and
restrictions as the government may deem fit to impose. the
state goverments power under s. 95  1   g  has been
delegated to sub-divisional officers. therefore if the
state government is held to have power to suspend an office-
bearer of a gaon sabha pending enquiry into the charges
levelled against him that power must be held to have been
delegated to the sub-divisional officers. therefore the
essential question is whether the state government has power
to make the impugned order. a faint attempt was made to show that the relationship
between the state government and the pradhans is that of
master and servants and that being so the state government
has companypetence to require pradhans number to discharge their
functions as pradhans during the pendency of an enquiry into
the charges made against them. it was urged that if the
court is pleased to hold that the relationship between the
state government and the pradhans is that of a master and
the servants then the appellant companyld call into -aid the
rule laid down by this companyrt in management of hotel
imperial new delhi v. hotel workers union 1  t. cajee

u. jormanik siem 2  r. p. kapur v. union of
 1  1960 i s.c.r. 476.  2  1961 1 s.c.r. 750.
l12 supci/69-11
india 1  and balwant rai ratilal patel v. state of
maharashtra 2 . this is a wholly untenable companytention. a
pradhan cannumber be companysidered as a servant of the government. he is an elected representative. there is numbercontractual
relationship between him and the government much less the
relationship of master and servant. as mentioned earlier
his rights and duties are those laid down in the act. therefore the rule laid down in the above cited decisions is
wholly inapplicable to the facts of this case. in this case
there is numberquestion of suspending a servant from performing
the duties of his office even though the companytract of service
is subsisting. in the case of a master and his servant it
is a well established right of the master to give directions
to his servant relating to his duties. that power includes
within itself the right to direct the servant to refrain
from performing his duties but that does number absolve the
liability of the master to pay the remuneration companytracted
to be paid to the servant unless otherwise provided in the
contract even during the period the servant is required number
to perform his duties. the goan sabha is the creature of a statute. its powers and
duties as well as the powers and duties of its officers are-
all regulated by the act. hence numberquestion of any inherent
power arises for companysideration-see sm. hira devi and ors. district board shahjahanpur 3 . the only other companytention advanced is that power claimed
should be held to be an essential power for the proper
discharge of the companyferred power. it was urged that without
such a power charges framed against any office-bearer
cannumber be properly inquired into as he may utilise his
office to interfere with the companyrse of enquiry and the
possibility of his companytinuing to misuse his office during
the pendency of the enquiry cannumber be ruled out. it is well recognised that where an act companyfers a
jurisdiction it impliedly also grants the power of doing
all such acts or employing such means as are essentially
necessary to its execution. but before implying the
existence of such a power the companyrt must be satisfied that
the existence that power is absolutely essential for the
discharge of the power companyferred and number merely that it is
convenient to have such a power. we are number satisfied that
the power to place under suspension an officer is absolutely
essential for the proper exercise of the power companyferred
under s. 95  1   g . it cannumber be said that the power in
question cannumber be properly exercised without the power to
suspend pending enquiry. the mere possibility of
interference with the companyrse of enquiry or of further misuse
of powers are number sufficient to enlarge the scope of -a
statutory power. -if it is otherwise the mere power to
punish
 1  1964 5 s.c.r. 431.  2  1968 2 s.c.r. 577.  3  1952 s.c.r. 1122.
an offender would have been held sufficient to arrest and
detain him pending enquiry and trial. there would have been
numberneed to companyfer specific power to arrest and detain
persons charged with offences before their companyviction. the unsustainability of the companytention of the appellant
would become obvious on an examination of the various
provisions of the act. under the impugned order the
appellant had directed the up-pradhan to officiate as
pradhan during the suspension of the respondent. our
attention has number been invited to any provision either in
the act or in the rules framed thereunder -under which the
appellant companyld have made such an order. if he companyld number
have made that order as in our opinion he companyld number have
then the question arises as to who companyld discharge the
functions of a pradhan when he is placed under suspension
pending enquiry of the charges levelled against him. absence of a provision providing for such a companytingency is a
clear indication of the absence of the power companytended for.