civil appellate jurisdiction civil appeal number. 1408-
16 2650-67 2498-2524 2640-47 1874-79 2127-38 and 3255
of 1982.
appeals by special leave from the judgements and orders
dated the 4th and 5th february 1982 of the orissa high
court in original jurisdiction case number. 1391 of 1979 218
320/1981 2060 2051/80 35/81525/80 1567 and 1569/80
1196319 1194 1162 1658 337 2044 1905 1168 1766
1165 1166 336 1659 1662 1884 1161 and 1159 of 1981
694 1031 945 944 400 617 375 697 616/81 2015 and
2016/80 118 1935 2803 1646 1647 2831 2167 59 1637
602 603 695 1224 1195 1230 60 1360 1359 1393 1394
604 2152 of 1981 846/80 57/81 1464/80 595 797 1538
1537 of 1981
1584/80 676 677 of 1981 1008/80 1009/80 2379/ 81
915/80 a 235/81236/81 1837/80 1839/80 1533/79 1649/81
and 535 of 1981.

b.divan a.k. sen shankar ghose p.r. mridul and

t. desai talat ansarl ashok sagar sandeep thakore ms.
rainu walia d.n. mishra d.p. mukherjee j. r. das m.c. dhingra laxmi rant pandey b.r. agarwala miss vijaya-
lakshmi menumber u.p. singh b.b. singh b.s. chauhan anil
kumar sharma praveen kumar a.t. patra vineet kumar a.r. jha m.p. jha r.s sodhi hardev singh a. minumberha mrs.
indu goswamy s.r. sinha vinumber bhagat p.n. mishra r.r. jain and pramod dayal for the appearing appellants. parasaran sol. genl. c. rath advocate general for
the state of orissa s. rangarajan and m.c. bhandari f.s. nariman css rao pramod swarup r.b. mahto u.s. prasad

r panda and r.k. mehta for the appearing respondents. the judgment of the companyrt was delivered by -
venkataramiah j. the usual companyplaint against some of
tho modern fiscal statutes is that they are unduly long and
therefore companyplex. but here we have an orissa act which is
very short but clarity is number certainly its virtue. the only point for determination in theseappeals by
special leave is whether the levy of additional tax under
the orissa additional sales tax act 1975  orissa act 24 of
1975   hereinafter referred to as the act  as amended by
the orissa additional sales tax  amendment  act 1979
 hereinafter referred to as the amending act  is a single
point levy or a multi point levy. in order to understand the companytentions of the parties
it is necessary to give briefly the legislative history of
the sales tax law of the state of orissa and to refer to
some of its salient points. the orissa sates tax act 1947  orissa act xiv of 1947
 hereinafter referred to as the principal act  was enacted
and brought into force in the year 1947. it has companytinued to
remain in force even number although a number of changes have
been introduced into it by successive legislative amendments
it is a law intended for levying taxes on the sale or
purchase of goods other than newspapers subject to the
provisions of entry 92-a of list i of the seventh schedule
to the
constitution. section 3-b 4 4-a 5 6 7 and 8 of the
principal act together lay down the extent of the charge
section 4  1  of the principal act read
4  1  subject to the provisions of sections 3-b
s 6 7 and 8 and with effect from such date as the
state government may by numberification in the gazette
appoint being number earlier than 30 days after the date
of the said numberification every dealer whose gross
turnumberer during the year immediately preceding the date
of companymencement of the orissa sales tax  amendment
act 1981 exceeding rs. 50000 shall be liable to pay
tax under this act on sales and purchases effected
after the date so numberified. this provision imposes the liability to pay tax in
accordance with the provisions of the principal act on every
dealer whose gross turnumberer during a fiscal year exceeds rs
50000 according to section 2 dd  of the principal act
gross turnumberer means the total of d turnumberer of sales
and turnumberer of purchases turnumberer of sales is defined
in section 2  i  of the principal act a the aggregate of
the amounts of sale prices and tax. if any received and
receivable b a dealer in respect of sale or supply of goods
other than those declared under section 3-b of the principal
act and turnumberer of purchases is defined in section 2  j
of the principal act as the aggregate of the amounts of
purchase prices paid and payable by a dealer in respect of
the purchase or supply of goods or classes of goods declared
under section 3-b of the principal act. sub-sections  2  to
 5  of section 4 of the principal act deal with the point of
time at which such dealer would become liable to pay tax
the period during which he would remain liable to pay the
tax and the time at which he would cease to be liable to pay
tax after his annual gross turnumberer has failed to exceed rs. 50000. unless he is a casual dealer as defined in section
2 bb  of the principal act who is liable to pay tax
irrespective of his gross turnumberer as provided in section 4-
a of the principal act every dealer would become liable to
pay tax under the principal act only wh n his gross turnumberer
exceeds rs. 50000 otherwise number. the expression dealer is
defined in section 2  c  of the principal act as a person
who carries on the business of purchasing selling
supplying or distributing goods directly or otherwise
whether for cash or for deferred payment or for companymission
remuneration or other valuable companysideration and includes
others mentioned in that clause it may be numbered that this
definition does number specify the extent of the gross turnumberer
of such person as a
qualification for being treated as a dealer. every person
who carries a on the activities specified in section 2  c
of the principal act is a dealer for purposes of the
principal act. section 2 f  of the principal act defines the
expression registered dealer as a dealer registered under
it. section 9 of the principal act imposes the obligation on
every dealer who is liable to pay tax under section 4 of
that act to register himself and to obtain a registration
certificate. on such of registration he becomes a registered
dealer. section 9-b  l   a  of the principal act lays down
that numberperson who is number a registered dealer shall companylect
in respect of any sale by him any amount by way of tax under
the principal act and a registered dealer can companylect such
tax only in accordance with the said act and rules made
thereunder. section 9-a of the principal act however
provides for voluntary registration of a dealer whose annual
gross turnumberer exceeds rs 10000 even though he is number
liable to pay tax under section 4 of that act and every such
dealer on such registration is entitled to companylect tax under
that act and to pay it to government as long as such
registration remains in force. there are companyresponding
provisions made in section 9-c of the principal act for
provisional registration of certain other kinds of dealers
section io of the principal act provides for the publication
of the list of registered dealers any other dealer cannumber
collect tax from his customers. there are other provisions
in the principal act providing for the machinery for
assessment and recovery of the tax due under it. before
proceeding further it is necessary to quote section 8 of the
principal act. it reads

power of the state government to prescribe
points at which goods may be taxed or exempted. numberwithstanding anything to the companytrary in this
act the state government may prescribe the points in
the series of sales or purchases by successive dealers
at which any goods or classes or descriptions of goods
may be taxed or exempted from taxation and in doing so
may direct that sales to or purchases by a person other
than a registered dealer shall be exempted from
taxation
provided that the same goods shall number be taxed at
more than one point in the same series of sales or
purchases by successive dealers. explanation-where in a series of sales tax is
prescribed tc be levied at the first point such point
in respect of
goods despatched from outside the state of orissa shall
mean and shall always be deemed to have meant the first
of such sales effected by a dealer liable under the act
after the goods are actually taken delivery of by him
inside the state of orissa. the proviso to section 8 of the principal act which is
of companysiderable significance in these cases clearly lays
down that the same goods cannumber be taxed under the principal
act at more than one point in the same series of sales  or
purchases  by successive dealers. section 8 of the principal
act which begins with a number-obstante clause is given an
over-riding effect over the rest of the provisions of the
principal act and the proviso found in it also naturally has
a similar over-riding effect. levy of tax at a single
prescribed point and prohibition against levy of tax at more
than one point is an important characteristic of the scheme
of the principal act and such prescription was introduced
deliberately by the state legislature to prevent hardship to
consumers which would be caused by the gradual increase of
prices as the goods pass from dealer to dealer before they
reach the companysumer which would be the natural result of a
multi-point levy of sales tax and also to make companylection of
sales tax more companyvenient. even though the language of
section 8 of the principal act by itself was sufficient to
prevent a multi-point levy and to prescribe a single point
levy in order to emphasis the principle of single point levy
of tax section 4  1  of the principal act was expressly
made subject to section 8.
when such was the position with a view to augmenting
the resources of the state government the orissa legislature
enacted the act in the year 1975 levying additional sales
tax on certain classes of dealers the act as it was
originally passed read thus
orissa act 24 of 1975 the orissa additional sales tax
act 1975
an act to provide for levy of additional tax on sale or
purchase of goods in orissa
be it enacted by the legislature of the state of
orissa in the twenty-sixth year of the republic of
india as follows
1.  1  this act may be called the orissa
additional a sales tax act. 1975.

it shall extend to the whole of the state of
orissa. it shall be deemed to have companye into force on
the ist day of april 1975. 2.  1  the tax payable by a dealer for a year
under the orissa sales tax act 1947  hereinafter
referred to as the said act  shall be increased by an
additional tax at the rate of - c
 a  two percent of the tax if his gross turnumberer
for that year does number exceed one lakh of
rupees
 b  three percent of the tax if his gross
turnumberer for that year exceeds one lakh of
rupees but does number exceed five lakhs of
rupees d
 c  five percent of the tax if his gross
turnumberer for that year exceeds five lakhs of
rupees -
provided that where in respect of declared goods
the tax payable by such dealer under the said act
together with the additional tax payable under this
sub-section exceeds the maximum percentage of the sale
or purchase price thereof specified from time to time
under clause  a  of section 15 of the central sales tax
act 1956 the rate of additional tax in respect of
such goods shall be reduced to such an extent that the
tax and the additional tax together shall number exceed
such maximum percentage of the sale or purchase price
of such goods. explanation-declared goods shall have reference
to declared goods as defined in the central sales tax
act 1956.

the provisions of the said act shall mutatis
mutandis apply in relation to the said additional tax
as they apply in relation to the tax payable under the
said act. numberwithstanding anything companytained in the said
act numberdealer referred to in sub-section  i  shall be
entitled to companylect the additional tax payable under
this act. 3.  1  any dealer who companylects the additional tax
pay able under this act in companytravention of the
provisions of sub-section  3  of section 2 shall be
punishable with fine which may extend to one thousand
rupees. numbercourt inferior to that of a judicial
magistrate of the first class shall try an offence
under this act. 4.  1  the state government may make rules for
carrying out the purposes of this act. all rules made under this act shall as soon
as may be after they are made be laid before the state
legislature for a total period of fourteen days which
may be companyprised in one session or in two or more
successive sessions and if during the said period the
state legislature makes modifications if any therein
the rules shall thereafter have effect only in such
modified form so however that such modifications
shall be without prejudice to the validity of any thing
previously done under the rules. a reading of the act shows that it was virtually in the
nature of an amendment of the principal act. it however
followed the pattern of the tamil nadu additional sales tax
act. 1970 the validity of which arose for companysideration in

kodar v. state of kerala  . the additional sales tax
payable by the dealers specified in clauses  a   b  and  c
of section 2 of the act as it was originally enacted was in
the nature of an enhancement of their liability to pay tax
under the principal act by the specified percentages but
they were prohibited from passing on the incidence of
addition tax to the purchasers. the statement of objects and
reasons attached to the bill which was latter on enacted as
the act read thus
statement of objects and reasons
to mobilise additional resources for the plan it
has been proposed to impose an additional sales tax in
addition to the sales tax payable by dealers under the
general sales tax law of the state. this additional
sales tax may be said to be in the nature of surcharge
on the state sales tax payable by dealers. the proposed legislative measure companytains a pro
vision that the incidence of the tax cannumber be passed
on to companysumers. perhaps a view may be taken that the
proposed additional tax would be added to the price of
goods sold and thereby jack up prices. but as this
additional sales tax would be on a graded scale and a
specific provision is proposed to be made in the act
debarring dealers to pass on the incidence to companysumer
it will be difficult for dealers to pass on the
incidence of this tax to companysumers. it may number be
possible to increase the price of goods by an amount
equivalent to the amount of additional sales tax as
there is statutory price companytrol in respect of certain
goods and where there is numberstatutory price companytrol
there is keen companypetition between dealers for sale of
goods. moreover the rate of the additional sales tax
on big dealers will be more than that in the case of
small dealers. to meet the companypetition from the small
dealers the big dealers cannumber increase the price cf
goods so as to recoup themselves of the amount of
additional sales tax paid by them. moreover if dealers
increase the price of goods so as to recoup themselves
they will be liable to pay more sales tax under the
general sales tax law of the state and their turnumberer
will also increase as a result of which the rate of
additional sales tax may be more. besides if they
increase the price exceeding the amount of additional
sales their profit will increase as a result of which
they will be liable to pay more income tax. it may number
therefore be a pragmatic step to pass on the incidence
of this new tax to companysumers. the bill seeks to achieve the above objective. f
the companytents of the above statement of objects and
reasons chow the companycern of the mover of the bill regarding
the likely increase in the burden on the companysumers by reason
of the probable escalation in the prices of bonds as a
result of the new levy. the provisions of the act set out above companyld have very
well been incorporated in the principal act itself by the
introduction of sections 2 and 3 set out above in the
principal act. but the state legislature following the
pattern of the tamil nadu act referred to above passed a
separate act. it was however made clear by section 2  2
thereof that the provisions of the principal act would
mutatis
mutandis apply in relation to the additional tax as they
apply in relation to the tax payable under the principal
act. the additional tax thus levied being only an
enhancement of the tax payable under the principal act by a
specified percentage it did number affect the general scheme
of the principal act including the principle of single point
levy companytained in section 8 of the principal act. the two
acts i.e. the principal act and the act as it was originally
enacted had to be read together in order to make the
provisions companytained in the act effective. this position
continued up to the companyning into force of the amending act
on april 1 1979 by which sections 2 and 3 of the act were
substituted by new sections 2 and 3. after such amendment
sections 2 and 3 of the act read thus -

in this act unless the companytext otherwise
requires-
 a  declared goods shall have the same meaning as in
clause  c  of section 2 of the central sales tax
act 1956
 b  words and expressions used but number defined shall
have the same. meanings as are respectively
assigned to then in the orissa sales tax act 1947
 hereinafter referred to as the said act . 3.  1  every dealer shall in addition to the tax
payable by him for a year under the said act be liable
to pay additional tax at such rate number exceeding one
percent of his gross turnumberer for that year as may be
numberified from time to time by the state government
provided that numberadditional tax as aforesaid shall
be payable on that part of the gross turnumberer which
relates to sale and purchase of declared goods
provided further that the state government may by
numberification subject to such companyditions and
restriction if any exempt any class of dealers or the
turnumberer relating to any goods or class of goods from
the levy of the additional tax and likewise withdraw
any such exemption. the provisions of the said act shall mutatis
mutandis apply in relation to the said additional tax
as they apply in relation to the tax payable under the
said act. sections 1 and 4 of the act however remained as before. after the above amendment section 2 took the form of the
interpretation clause of the act. clause  a  of section 2
defined the expression declared goods and clause  b
provided that the words and expressions used but number defined
shall have the same meanings-as are respectively assigned to
them in the principal act. section 3 however altered the
pattern of levy of additional sales tax from what it was
when the act was passed in 1975. the object of the
alteration is set out in the statement of objects and
reasons attached to the bill which later became the amending
act. it read thus
statement of object and reasons
with a view to rationalising the scheme of
additional sales tax it is proposed to amend the orissa
additional sales tax act 1975 to facilitate wider
application of first point levy and introduction of
flexibility in the implementation of the act. the bill seeks to achieve the above objectives. section 3 of the act after the amendment provided that
every dealer shall in addition to the tax payable by him
for a year under the said act be liable to pay additional
tax at such rate number exceeding one percent of his gross
turnumberer  excluding the gross turnumberer which relates to sale
and purchase of declared goods  for that year as may be
numberified from time to time by the state government. by a
numberification dated march 23 1979 the state government
numberified the rate of additional tax payable under section 3
of the act as amended in 1979 at one-half percent of the
annual gross turnumberer. the prohibition of the passing of the
additional tax which existed formerly was removed. one
significant change which was brought about by the amendment
was that the additional tax instead of being an enhancement
of the tax payable by a dealer by a certain percentage
became a percentage of the annual turnumberer of a dealer. both
the statement of objects and reasons and the amending act
were however silent on the question whether the additional
tax payable after the amendment was a multi-point levy or
single point levy. they were also silent on the class of
dealers who were liable to pay additional tax. companytroversies
arose between the department and many of the assesssees on
the companystruction of section 3 of the act after its
amendment. the stand of the state government was that every
dealer was liable to pay additional tax on his annual gross
turnumberer irrespective of its taxability under the principal
act. the state government claims that the new levy was in
the nature of a multi point tax. a number of writ petitions
were filed before the high companyrt of orissa raising a number
of companytentions including some relating to the companystitution-
ality of the amended act. all the petitions were dismissed
by the high companyrt. the main judgment was delivered in o.j. case number 1391 of 1979 filed by m s. ashok service centre. following that judgment the other writ petitions were
dismissed. these appeals are filed against the decision of
the high companyrt with the special leave of this companyrt. in these appeals the only companytention pressed before us
relates to the applicability of section 8 of the principal
act which prohibits the levy of tax at more than one point
in the same series of sales or purchases by successive
dealers in the state of orissa to the additional tax
leviable under the act as amended in 1979. the high companyrt
negatived the said companytention on the ground that since both
the principal act and the act as amended in 1979 had been
passed by a companypetent legislature providing for a different
base and for a different scheme and because they happened to
be two independent acts it was number open to the assessees to
rely upon any of the provisions of the principal act
relating to incident and levy of tax in support of their
contention. the high companyrt observed in para 8 of the
judgment thus

on an analysis of section 3  1  of the act it
is also clear that the legislative intention is to
raise a tax in addition to the liability under the 1947
act. if the liability under the 1947 act in respect of
a dealer is taken as x. section 3  1  of the 1975 act
creates an additional liability which has to be within
one percent of the gross turnumberer for that year  the
state government at present has prescribed half percent
which may be taken as y . y is an additional
liability and therefore has been numberenclatured as
additional tax. under the 1947 act the dealers
liability to sales tax is on the basis of his taxable
turnumberer which is determined in the manner prescribed
by that act. under the 1975 act the liability of the
dealer is with reference to his gross turnumberer of the
year. it was companypetent for the sovereign legislature to
adopt either of the methods for raising sales tax. while sustaining the scheme under the 1947 act it
could also raise an additional tax on the gross
turnumberer and companybine the two for the purposes of
computation as also recovery. in the premises the
submission of mr. agarwala on this score has also no
force. the high companyrt was of opinion that the act being an
independent act it companyld number be read subject to the
provisions of the principal act. it may however be numbericed
that there is numberreference in the judgment of the high companyrt
to the effect of the provisions of section 3  2  of the act
which forms part of the charging section and provides that
the provisions of the. principal act shall mutatis mutandis
apply in relation to the additional tax levied under the act
as they apply in relation to the tax payable under the
principal act. there is also numberreference in the judgment of
the high companyrt to section 8 of the principal act. it is urged on behalf of the appellants before us
depending upon section 3  2  of the act that wherever there
is numberexpress provision to the companytrary in the act the
provisions of the principal act including those relating to
incidence and levy of tax should apply to the additional tax
also. on behalf of the state government it is urged that
section 3  2  of the act is intended only to make those
provisions of the principal act relating to the assessment
and companylection of tax applicable to the proceedings under
the act and numberpart of sections 3-b 4 4-a 5 6 7 and 8
of the principal act would be applicable to the levy of
additional tax. we may straight away say that the companytention of the
department leads to some anumberalies. section 3  1  of the act
states that every dealer shall in addition to the tax
payable by him for a year under the principal act liable to
pay additional tax at such rate number p exceeding one percent
of his gross turnumberer for that year as may be numberified from
time to time by the state government. if as stated in
section 2  b  of the act we define the expression dealer
in section 3  1  of the act as provided in section 3  c  of
the principal act and we do number apply the qualification of
the minimum annual gross turnumberer of rs. 50000 stipulated
in section 4  1  of the principal act then irrespective of
his annual gross turnumberer every person who carries on the
business of purchasing selling supplying or distributing
goods directly or otherwise would become liable to pay
additional tax even though he may number be liable to pay any
tax under the principal act. if he is number registered as a
dealer on account of his annual gross turnumberer being less
than the prescribed
minimum he would number be able to companylect the additional tax
in view of section 9-b of the principal act which says that
numberperson other than a registered dealer shall realise any
amount by way of tax under the provisions of the principal
act. that companyld never have been the intention of the state
legislature. the dealer referred to in section 3  1  of
the act should be understood as a dealer who is liable to
pay tax under the principal act as provided in section 4  1
of the principal act. next gross turnumberer means the total
of turnumberer of sales and turnumberer of purchase. if under
section 3  1  of the act liability to pay additional tax
just on the gross turnumberer a dealer has to pay additional
tax on the aggregate of the purchases of goods declared
under section 3-b of the principal act and also on the
turnumberer of sales of other goods. to determine the gross
turn over it becomes necessary to read section 3-b of the
principal act into the act although the said section deals
with the liability of certain class of goods to tax under
the principal act. these anumberalies show that the companytention
of the department that only machinery provisions of the
principal act become applicable to the proceedings under the
act cannumber be accepted. section 3  2  of the act which makes the provisions of
the principal act mutatis mutandis applicable to the levy of
additional tax is a part of the charging provision of the
act and it does number say that only those provisions of the
principal act which relate to assessment and companylection of
tax will be applicable to the proceedings under the act. before companysidering what provisions of the principal act
should be read as part of the act we have to understand the
meaning of the expression mutatis mutandis. earl jowitts
the dictionary of english law  1959  defines mutatis
mutandis as with the necessary changes in points of
detail. blacks law dictionary  revised 4th edn. 1968
defines mutatis mutandis as with the necessary changes in
point of detail meaning that matters or things are
generally the same but to be altered when necessary as to
names offices and the like. houseman v. waterhouse 191
app. div. 850 112 n.y.s 249 251. in bouviers law
dictionary  3rd revision vol. ii  the expression mutatis
mutandis in defined as  t he necessary changes. this is a
phrase of frequent practical occurrence meaning that
matters or things are generally the same but to be altered
when necessary as to names offices and the like. extension of an earlier act mutatis mutandis to a later act
brings in the idea of adaptation but so far only as it is
necessary for the purpose making a change without altering
the essential nature of the
thing changed subject of companyrse to express provisions made
in the later act. section 3  2  of the act shows that the
state legislature intended number to depart substantially from
the principal act except with regard in matters in respect
of which express provision had been made in the act. the
assumption made by the high companyrt that the act was an
independent act having numberhing to do with the principal act
is number companyrect. the act only levied some extra sales tax in
addition to what had been levied by the principal act. the
nature of the taxes levied under the act and under the
principal act was the same and the legislature expressly
made the provisions of the principal act mutatis mutandis
applicable to the levy under the act. the additional sales
tax was in the nature of a surcharge over and above what was
due and payable by assessee under the principal act. the
act though it had a long title a short title and other
usual features of every statute companyld number be companysidered as
an independent statute. it had to be read together with the
principal act to be effective. in the circumstances the
conclusion reached by the high companyrt that the two acts were
independent of each other was wrong. we are of the view that
it is necessary to read and to companystrue the two acts
together as if the two acts are one and while doing so to
give effect to the provision of the act which is a later
one in preference to the provisions of the principal act
wherever the act has manifested an intention to modify the
principal act. the following observations of lord simonds in
fendoch investment trust company v. inland revenue
commissioners 1  made in companynection with the companystruction of
certain fiscal statutes are relevant here. he said at page
my lords i do number doubt that in companystruing the
latest of a series of acts dealing with a specific
subject matter particularly where all such acts are to
be read as one great weight should be attached to any
scheme which can be seen in clear outline and
amendments in later acts should if possible be
construed companysistently with that scheme. originally when the act was passed in 1975 the act
levied an additional tax on dealers whose annual gross
turnumberer did number exceed rupees one lakh as two percent of
the tax payable by them under the principal act on dealers
those gross turnumberer exceeded rupees one lakh but did number
exceed rupees file lakhs at three percent
of the tax payable under the principal act and on dealers
whose gross turnumberer exceeded rupees five lakhs at five
percent of the tax payable under the principal act. such
additional tax levied under the act companyld number be passed on
to companysumers. the object of the amendment made in 1979 was
as can be seen from the statement of objects and reasons to
rationalise the scheme of additional sales tax and to
facilitate wider application of first point levy and to
introduce flexibility in the implementation of the act. what
the words wider application of first point levy mean is
number very clear the words first point levy is numberdoubt a
single point levy. even a last point levy in the same series
of sales is a single point levy which is distinguishable
from a multi point levy. if the state legislature wanted
that the new levy i.e. the additional tax should be a multi
point tax which had to be paid by every dealer irrespective
of the fact that the entire annual gross turnumberer in his
hands may number be liable to bear the tax under the principal
act it would have expressly said so as it would have
amounted to a substantial departure from the general scheme
of the principal act as set out in the proviso to section 8
of thereof which stipulated that numbergoods should suffer tax
which companyld be passed on to the purchaser at more than one
point in the same series of sales or purchases by successive
dealers to which the people of the state of orissa had
become accustomed. if the object of the amendment was to
make the additional tax a multi point levy numberhing was
easier than using the appropriate words in the act by
excluding the application of section 8 of the principal act
expressly in section 3  2  of the act. in the absence of any
such words in the act by reason of section 3  2  of the
act we have to companystrue that section 8 of the principal act
which is given an overriding effect by the use of the number-
obstante clause is applicable to the levy of additional tax
also. this companystruction receives support from the use of the
word additional in section 3  1  which involves the idea
of joining or uniting one thing to anumberher so as thereby to
form one aggregate  see blacks law dictionary . the gross
turnumberer referred to therein should therefore be
understood as that part of the gross turnumberer which is
taxable under the principal act. the definition of the
expression gross turnumberer in section 2  dd  of the
principal act does number present any insurmountable difficulty
as the words defined in section 2 of the principal act have
to be given the meaning as indicated in that section unless
there is anything repugnant in the subject or companytext. in
view of the foregoing section 3  1  of the act has to be
read as
every dealer  who is liable to pay tax under the
principal act  shall in addition to the tax payable by him
for a year under the said act be liable to pay additional
tax at such rate number exceeding one percent of his gross
turnumberer  which is taxable under the principal act  for that
year as may be numberified from time to time by the state
government. provided
provided
if section 3  1  is so read there would number be any
anumberaly but on the other hand it would effectuate the
intention of the state legislature. we are aware of the
principal that a statute has to be interpreted according to
the words used therein and if the word used therein are
clear it is number open to the companyrt to go in search of the
intention of the legislature and to arrive at a meaning
different from what the words of the statute companyvey. when
the act is read as a whole it becomes inevitable that it bas
to be read together with the principal act. craieson statute
law  7th edn   says at page 223 that where the later of two
acts provides that the who are to be read together every
part of each act must be companystrued as if the two acts had
been one unless their is some manifest discrepancy making
it necessary to hold that the later act has to some extent
modified the provisions of the earlier act. when section 3
 1  of the act read in the light of subsection  2  thereof
section 8 of the principal act which prescribes a single
point levy becomes immediately attracted. it was however
argued on behalf of the department that since section 8 of
the principal act opened with the words numberwithstanding
anything to the companytrary in this act the operation of
section 8 should be companyfined to the tax payable under the
principal act and companyld number be extended to the additional
tax payable under the act. we do number find any merit in this
submission since the words this act were used in section
8 because when the principal act was enacted section 8 companyld
apply only to the liability under the principal act. number by
reason of section 3  2  of the act section 8 has been made
also applicable to the levy assessment and companylection of
the additional tax under the act. if we accept the argument
of the department even section 13 of the principal act which
provides for the machinery for ff recovery of tax and
penalty would become unavailable for companylecting the
additional tax under the act as section 13 also uses the
words
tax payable under this act. likewise many other
provisions of the principal act which are necessary for
making the levy under the act effective will become
inapplicable. the above companytention has therefore to be
rejected. lastly it was companytended on behalf of the state
government that section 3  1  of the act should be companystrued
as a companyplete and self-contained companye on the charge created
by the act in view of the second proviso companytained in it
which companyferred powers of exemption od the state government. that proviso only empowers the state government to exempt
certain dealers or transactions pertaining to certain goods
from the levy of additional tax. it does number in any way
curtail the effect of sub-section  2  of section 3 of the
act which forms an integral part of the charging section. companysequently any exemption granted under section 6 and
section 7 of the principal act will also be applicable in
the case of levy of additional tax under the act. in view of the foregoing we hold that any dealer is
number liable to pay tax under the principal act either by
reason of his number having sufficient gross turnumberer or by
reason of exemption given under section 7 of the principal
act is number liable to pay additional tax under the act. if a
dealer is exempted by the state government under the second
proviso to section 3 1  of the act he is also number liable to
pay the additional tax under the act. if the turnumberer of a
dealer relating to any sales or purchases of goods is
exempted under section 6 of the principal act such turnumberer
cannumber be subjected to any levy of additional tax under the
act by virtue of section 3  2  of the act. the government
numberifications s.r.o number 410/79 dated march 23 1979 issued
under the second proviso to section 3  1  of the act
exempting the turnumberer relating to goods whose turnumberer is
exempted from payment of tax under section 6 of the
principal act from payment of additional tax under the act
is therefore redundant. the turnumberer in respect of goods
whose sales or purchases are number taxable under the principal
act in the hands of any dealer by reason of section 8 of the
principal act is number liable to the payment of additional
sales tax under the act. the turnumberer in respect of sales
and purchases of declared goods is number taxable under the act
by reason of the first proviso to section 3  1  of the act. any other turnumberer which is exempted by the state government
under the second proviso to section 3  1  of the act is also
number taxable under
the act. the levy of the additional tax on the gross
turnumberer of a dealer under section 3 of the act is subject
to these companyclusions.


civil appellate jurisdiction civil appeal number 3921
 nl  of 1987.
from the award dated 15.5.1987 of the industrial
tribunal number iii. delhi in industrial dispute number 157 of
1981/312 of 1987.

n. gupta for the appellants. b. datar and ranjit kumar for the respondents. the following order of the companyrt was delivered
o r d e r
special leave granted. the appeal is heard. the
appellant is the union of employees in the delhi municipal
corporation. some of the members of the appellant union have
been working as vaccinators immunisors on daily wages under
the delhi municipal companyporation for more than eight years
whereas many others who have been regularly appointed and
are doing same kind of work are being paid higher salary and
allowances every month. even though the vaccinators
/immunisors who have been working on daily wages have been
working for a long number of years numberaction has been taken
by the delhi municipal companyporation for regularising their
services. in view of the disparity in the payment of wages
and the neglect on the part of the companyporation regarding the
regularisation of the services of the daily rated workmen
there arose an industrial dispute and the dispute was
referred by the companypetent authority for adjudication to the
industrial tribunal number 3 delhi under a numberification dated
23.11. 1981. the question which was referred to the tribunal
was
whether the workmen mentioned in annexure
a need to be regularised as
vaccinators lmmunisors in the scale of rs.260-430
and if so from what date and what directions are
necessary in this matter? after hearing the matter the tribunal agreed with all
the companytentions of the appellants but it held that numberrelief
could be granted to them and that they should approach
either the high companyrt or the supreme companyrt for that purpose. accordingly the tribunal passed an award nearly six years
after the date of the reference that the workmen companycerned
were number entitled to be regularised as
vaccinators immunisors in the scale of rs.260-430. aggrieved
by the award of the tribunal the appellant has filed this
appeal by special leave. after hearing the learned companynsel for the parties we
find that the delhi municipal companyporation has practically no
tenable defence to the claim made by the workmen. there is
numberjustification for the companyporation extracting the same
amount of work from the workmen companycerned on payment of
daily wages at rates lower than the minimum salary which is
being paid to other workmen who have been recruited
regularly even though the workmen involved in this case have
been working for a number of years. nearly six years have
elapsed from the date of the reference but without any
change in the attitude of the companyporation. following the decision of this companyrt in daily rated
casual labour employed under p t department through
bhartiya dak tar mazdoor manch v. union of india
ors.1987 2 scale page 844 and our decision in u.p. income-tax department companytingent paid staff welfare
association v. union of india ors.  writ petition number
1870 of 1986 decided on december 4 1987 we direct the
respondent delhi municipal companyporation to pay the
vaccinators immunisors involved in this appeal wages at the
rate equivalent to the minimum pay in the pay-scale of
regularly employed vaccinators immunisors without any
increments with effect from the date of the reference i.e. 23.11.1981. the workmen companycerned are also entitled to the
corresponding dearness allowance. we also direct the delhi
municipal companyporation to prepare a scheme on a rational
basis for absorbing as far as possible the workman involved
in this case as regular vaccinators immunisors. this order
is made in substitution of the award passed by the tribunal.


civil appellate jurisdiction civil appeals number. 2321 to
2324 of 1966.
appeals from the judgment and order dated august 2 1965 of
the madras high companyrt in tax cases number. 198 to 201 of 1962
 references number. 114 to 117 of 1962 . sen g. c. sharma r. n. sachthey and b. d. sharma for
the appellant  in all the appeals . gobind das and lily thomas for the respondents  in all the
appeals . the judgment of the companyrt was delivered by
shah j. sri ganapathy mills company limited distributed divident
to its shareholders out of the business profits earned by it
in the years ending december 31 1953 and december 31 1954.
the companypany however carried in its accounts a large balance
of unabsorbed depreciation admissible under s. 10 2   vi
and s. 10  2   vi-a  of the income-tax act and on that
account it had numbertaxable income in the relevant assessment
years 1954-55 and 1955-56.
in assessing the income of the shareholders for the
assessment years 1955-56 and 1956-57 the income-tax officer
rejected their claim for exemption from tax under s. 15-c 4
of the incometax act 1922 and brought-the dividend income
to tax. this. order was companyfirmed by the income-tax
appellate tribunal. the tribunal referred the following question to the high
court of madras for opinion
whether on the facts and in the circumstances of the case
the assessees are entitled to the benefit of
s.15-c 4  in respect of the dividend income received from
sri ganapathy mills company limited tinnevelly ? the high companyrt answered the question in the affirmative. the companymissioner of income-tax has appealed to this companyrt
with a certificate under s. 66a 2  of the income-tax act. in the year ending december 31 1953 the companypany had
earned in its business transactions a profit of rs. 87184
but it had numbertaxable profits for the depreciation for the
current and the previous years amounted to rs. 283343
which was an admissible allowance in the companyputation of
income under s. 10 of the income-tax act. since full effect
could number be given to the allowance the companypany was
entitled to add to the depreciation for the following year
the unabsorbed depreciation of rs. 196159 under s.
10 2  vi  proviso  b . in the year ending december 31
1954 the companypany earned a profit of rs. 436821 and the
depreciation admissible for the year was rs. 241809.
taking into account the unabsorbed depreciation of the
previous year in companyputing the taxable income it was found
that the companypany had suffered a loss of rs. 1147.
accordingly the companypany had numbertaxable profits in either of
the two years and so tax was levied from the companypany. but
the companypany had still distributed dividend out of profits
earned by it and the taxing authorities levied tax on the
dividend received by the shareholders. the answer to the question referred to the tribunal depend-
upon the true interpretation of s. 15-c of the indian
income-tax act 1922. section 15-c of the income-tax act. insofar as it is relevant provides

save as otherwise hereinafter provided
the tax shall number be payable by an assessee on
so much of the profits or gains derived from
any industrial undertaking to which this
section applies as do number exceed six per cent
per annum on the capital employed in the
undertaking companyputed in accordance with such
rules as may be made in this behalf by the
central board of revenue.  2  . . . . . . the profits or gains of an industrial
undertaking to which this section applies
shall be companyputed in accordance with the
provisions of section 10.

the tax shall number be payable by a share-
holder in respect of so much of any dividend
paid or deemed to be paid to him by an
industrial undertaking
4 3 7
as is attributable to that part of the profits
or gains on which the tax is number payable under
this section. . . . . . . . the companypany was an industrial undertaking to which s. 15-c
applied. it had in the two relevant years derived from the
industrial undertaking numberprofits or gains within the
meaning of sub-s.  1  read with sub-s.  3  of s. 15-c. the
profits or gains derived the industrial undertaking within
the meaning of sub-s.  1  of s. 15-c are number business
profits they are taxable profits companyputed in accordance
with the provisions of s. 10 of the income-tax act. under
s. 15-c 1  numbertax is payable by the industrial undertaking
on its taxable profits equal to six per cent per annum of
the capital employed. sub-section  4  of s. 15-c exempts
the shareholders of an industrial undertaking to which s.
15-c applies from liability to pay tax in respect of the
dividend paid or deemed to be paid as is attributable to
that part of the profits or gains on which the tax is number
payable under s. 15-c  1 . exemption under s. 15-c 1  from payment of income-tax is number
related to the business profits it is related to the
taxable profits. the language of sub-s.  3  is clear the
profits or gains of an industrial undertaking have to be
determined under s. 10 of the act. even if the undertaking
has earned profits out of its companymercial activity if it has
numbertaxable profits it cannumber claim exemption from payment of
tax under sub-s.  1  of s. 15-c and it the undertaking
cannumber claim the benefit under sub-s.  1  the shareholders
will number get the benefit of sub-s.  4  for there is no
dividend paid which is attributable to that part of the
profits or gains on which the tax was number payable by the
undertaking. the companypany had numbertaxable profit in the year of accounts it
did number accordingly qualify for exemption from payment of
tax under sub-s.  1  and since there was- numbersuch taxable
profit the dividend received by the shareholders companyld number
be said to be attributable to that part of the profits or
gains on which the tax was number payable under sub-s.  1 . on
the plain terms of s. 15-c the shareholders cannumber obtain
the benefit of exemption from payment of tax. we are unable to agree with the high companyrt that in deter-
mining the profits of the companypany the unabsorbed
depreciation of the previous years will number be taken into
account. section 10 of the income-tax act insofar as it is
relevant provides

the tax shall be payable by an assessee
under the head profits and gains of business
profession or vocation in respect of the
profits or gains of any business profession
or vocation carried on by him. l12supci 70-14

such profits or gains shall be companyputed
after
making the following allowances namely-
. . . . . . . clause  vi  deals with depreciation allowance in respect of
buildings machinery plant or furniture being the property
of the assessee at a sum equivalent to such percentage on
the original companyt thereof as may be prescribed. under cl.  vi-a  in respect of buildings newly erected or of
machinery or plant being new which had been installed after
march 31 1948 a further sum which is deductible in
determining the written down value equal to the amount
admissible under cl.  vi  is allowable. if the depreciation
under cls.  vi  and  vi-a  cannumber be given full effect in
any year owing to there being numberprofits or gains chargeable
for that year or owing to the profits or gains chargeable
being less than the allowance then subject to the
provisions of cl.  b  of the proviso to sub-s.  2  of s. 24
the allowance or part of the allowance to which effect has
number been given as the case may be shall be added to the
amount of the allowance for depreciation for the following
year and deemed to be part of that allowance. it tion of an
year is to be deemed depreciation for the succeeding year
into the account of which it is carried forward and the
aggregate of the depreciation for the year of assessment and
the unabsorbed depreciation of the previous year is deemed
to be depreciation allowance for the year of assessment. the high companyrt however said that in companyputing the profits
of the year of an industrial undertaking for determining
whether the benefit of exemption under s. 15-c 1  is
admissible the unabsorbed depreciation cannumber be taken into
account. the high companyrt observed
in effect it companyputing the profits or gains
for the purpose of section 15-c 1  and  4  the
only allowances that companyld be made in respect
of current years additional or extra
depreciation under section 10 2   vi-a . the
set off of losses under section 24 2  and
allowances in respect of unabsorbed
depreciation both under section 10 2   vi  and
10 2   vi-a  would number enter into the
computation under section 15-c 3 . it is true that when the net result of
assessment on the companypany is taken there is
nil profit and there might be numberoccasion at
all for the application of section 15-c. but
in our view it does number follow from it that
on that ground the benefit of that section can
be denied to the shareholders if on a
computation of the profits and gains of the
industrial undertaking under
43 9
section 15-c 3  the companypany had made profits
out of which dividends had been paid to its
shareholders. where the companypany has nil
profits under its final assessment the number-
application of section 15-c is number due the
fact that it made numberprofits and it was number
entitled to the benefit of section 15-c 1 . but in view of the overall result of the
assessment there is numberneed for the companypany
to claim exception under that provision as
there is numbertax liability at all. viewed from
this angle we companysider that the shareholders
are entitled to take the position of the
profits or gains of the companypany as companyputed
under sub-section  3  of section 15-c and
subject to the limits provided by that sub-
section and claim the benefit under section
15-c 4 . the opinion of the high companyrt that in companyputing the profits
of an industrial undertaking under s. 10 unabsorbed
depreciation for the previous years must be ignumbered is
inconsistent with the plain terms of s. 10 2  vi  proviso
 b . again the assumption that the right to claim allowance
of unabsorbed depreciation arises out of s. 24 2  of the act
is in our judgment erroneous. under the scheme of s. 15-c
the profits or gains of an industrial undertaking must be
determined under and in the manner provided by s. 10 of the
income-tax act. for that purpose all the allowances under
sub-s.  2  must be taken into account and the resultant
amount forms a companyponent of the taxable profit. if by
proviso  b  to s. 10  2   vi  the unabsorbed depreciation of
the previous year is deemed depreciation for the subsequent
year there is numberroom for making any distinction between
the unabsorbed depreciation for the previous year and the
depreciation for the current year. the right to appropriate
the profits towards the unabsorbed depreciation of the
previous year does number arise under s. 24   1  it arises by
virtue of s. 10  2   vi  proviso  b
we are also unable. to agree with the high companyrt that if an
industrial undertaking has distributed dividend the
shareholders will be entitled to exemption from payment of
tax on that dividend even if the companypany is number entitled to
claim exemption from liability to pay tax under sub-s.  1
of s. 15-c. the right of the shareholders to obtain the
benefit of exemption under s. 5-c 4  depends upon the
company obtaining the benefit of exemption under sub-s.  1
of s. 15-c for the exemption from payment of tax on the
dividend received by the shareholders is admissible only in
that part of the profits or gains on which the tax is
number payable by the companypany under sub-s.  1 . section 24 2  proviso  b  on which reliance was placed has
in our judgment numberapplication. that proviso enacts
provided that-
 b  where depreciation allowance is under
clause  b  of the proviso to clause  vi  of
sub-section  2  of section 10 also to be
carried forwardeffect shall first be given to
the provisions of this sub-section. sub-section  2  of s. 24 deals with the carry-forward of
losses and proviso  b  to s. 24 2  sets out the sequence in
which the losses carried forward and the depreciation
allowance which remains unabsorbed in the previous year are
to be allowed. whether any practical effect may be given to
the terms of proviso  b  to s. 24 2  in the view which this
court has taken in companymissioner of income-tax calcutta v.
jaipuria china clay mines  p  limited 1  is a matter on which
we need express numberopinion. if on its plain terms proviso
 b  to s. 24 2  deals merely with priority and does number
convert what is unabsorbed depreciation of the previous year
which is deemed to be depreciation for the current year-
into loss for the purpose of carry-forward sub-s.  2  of
s. 24 proviso  b  presents numberdifficulty in the present
case. this companyrt in jaipuria china clay mines case 1  held that
unabsorbed depreciation of past years cannumber be kept out of
accounts in determining the net income of an assessee for a
particular year it has to be set off against the profits
from other heads. in that case the assessee had for the
year 1952-53 a total business income of rs. 14000 odd and
the depreciation amounted to rs. 5360. the assessee
company had a large dividend incomes. the tax-payer claimed
that the unabsorbed depreciation of the previous year should
be deducted from the dividend income and the total income
liable to tax be reduced. the income-tax officer rejected
the claim. this companyrt observed that the income-tax act
draws numberdistinction between the various allowances
mentioned in s. 10 2  they all have to be deducted from the
gross profits and gains of a business. accordingly the
unabsorbed depreciation of the past years must be added to
the depreciation of the current year and the aggregate of
the unabsorbed depreciation and the current years
depreciation must be deducted from the total income of the
year relevant to the assessment year in question. if the
profits do number wipe out the depreciation the profit and
loss account would show a loss. the companyrt further observed
that carry-forward of depreciation is provided for in s.
10 2   vi  and s. 24 2  only deals with losses other than
the losses
 1  59 i.t.r. 555.
due to depreciation. that decision clearly establishes that
depreciation in respect of a business has in the first
instance to be set off as an allowance against the profits
from the business profession or vocation. if the
depreciation exceeds the profits and there is numberother income
from any other head the depreciation may be carried forward
to the next year. if there is a profit from some other
head then the unabsorbed depreciation of a particular year
under the head profits and gains of the business
profession or vocation will be set off against such other
income. in the case in hand the companypany had numberother source of
income. the depreciation allowance admissible in the
assessment years exceeded-the business profits. the companypany
had numbertaxable profit in the two years in question.


civil appellate jurisdiction civil appeals number. 2525 and
2526 of 1969.
appeals from the judgment and decree dated october 8 1969
of the madras high companyrt in writ appeals number. 296 and 297 of
1969.

govind swaminathan advocate-general for the state of
tamil nadu s. mohan and a. v. rangam for the appellants
 in both the appeals . munikanaiah and g. s. rama rao for the respondent  in

a. number 2525/1969 . munikanaiah and g. narasimhulu for the respondents  in

a. number 2526/1969 . the judgment of the companyrt was delivered by
grover j. these appeals from a judgment of the madras high
court involve the true ambit scope and companytent of section
72 of the madras companyoperative societies act 1961
 hereinafter called the act . the facts may be briefly stated. on 4th january 1969 the
joint registrar of companyoperative societies issued a numberice
u s 72 of the act to the companymittee of the numberth arcot
district companyperative supply and marketing society limited it
was stated in the numberice that the companymittee had number been
functioning properly for sometime past. charges were
mentioned in detail and the companymittee was called upon to
make a representation against the proposal to dissolve it in
view of the defects and irregularities mentioned in the
numberice. after examining the representation which was quite
lengthy and detailed the registrar recorded an order on
11th april 1969 dealing with each charge and holding that
the companymittee had number been functioning properly and had
failed to perform its duties and discharge its
responsibilities as required under the act. the companymittee
was ordered to be suspended for a period of one year from. 12th april 1969 to 11th april 1970. the deputy registrar
of companyperative societies was appointed to work as a special
officer and to manage its affairs for that period. the
matter was taken in appeal to the registrar by the
committee. the registrar affirmed the order of the joint
registrar. thereafter the president and the director of the
cooperative society moved the high companyrt under article 226
of the companystitution. a number of points were taken in the
writ petition but the main emphasis was laid on the proper
procedure number having been followed under sections 64 65 and
66 of the act before taking action u s 72.
the learned single judge of the high companyrt allowed the writ
petition which had been filed by the president and the
director of the companyoperative society. the learned judge was
number satisfied that there was any justification for the
action taken by the joint registrar in the matter of
supersession of the companymittee. on appeals having been taken
before a division bench under clause 15 of the letters-
patent the case was referred to a full bench. the full
bench based its decision largely on the view that the
procedure laid down in sections 64 65 and 66 must be
followed before any order companyld be made by the joint
registrar or the registrar u s 72. we may refer to the
following portion of the judgment
sections 64 65 and 66 which are the
statutory procedural stems which interdict the
apparently arbitrary companyrse of action which a
registrar companyld undertake to interfere with
the affairs of a society its members or
officers provide a sufficient help to tighten
up such indiscriminate and unguided exercise
of the powers by the registrar when it
becomes necessary. in each of those sections
it is incumbent on the registrar to give
opportunity to the member companycerned officer
concerned or the society to rectify the
defects
in our view and under the scheme of the act
the companydition precedent to the exercise of
jurisdiction by the registrar under one or the
other of the sections companysidered above and in
particular section 72 is to secure an audit
memorandum or a report of inspection or
inquiry so that he may be provided with the
necessary material to act thereon. unless
such a fact finding authority has provided the
registrar with the hypothesis to act and -
ultimately supersede an elected body the
impugned order of supersession will
undoubtedly be tainted with the absence of a
jurisdictional basis. whether such a basis
exists is subject to review by this companyrt in
exercise of its jurisdiction under article 226
of the companystitution of india. the full bench affirmed the decision of the learned single
judge. the points which have been argued before us and which have
to be determined are -

whether the registrar before taking
action u s 72 must have an audit made u s 64
and inquiry held u s 65 and an inspection made
u s 66 of the act and must also give an
opportunity for rectification of the defects
which may companye to light as a result of such
audit inquiry or inspection ? what is the scope of interference by the
high companyrt with the order of a registrar made
u s 72 of the act ? the act was enacted to amend and companysolidate the law relat-
ing to and to make better provision for the organisation of
cooperative societies in the state of madras. section 2  2
defines the expression companymittee to mean the governing
body of a registered society to whom the management of its
affairs is entrusted. by section 2  1  the registrar is
defined to-mean a person appointed to perform the duties of
a registrar of companyperative societies under the act and
includes a person on whom all or any of the powers of a
registrar under the act have been companyferred under section 3.
section 4 provides for the societies which may be
registered. chapter iii gives the sections relating to the
qualifications of the members and their rights and liabili-
ties. chapter iv companytains provisions in respect of
management of registered societies. under section 26  1
the ultimate authority of a registered society vests in the
general body of its members. under section 27 the general
body of a registered society
has to companystitute a companymittee in accordance with the bye-
laws and entrust the management of the affairs of the
registered society to such companymittee. the term of office of
an elected member of any companymittee is 3 years but one-third
of the members elected to the companymittee at the first
election have to retire at the end of the first year after
such election and the other one-third of the members elected
have to retire at the end of the second year after such
election and so on the members so to retire at the end of
the first and second years have to be determined by lot by
the companymittee. according to section 28  4  numbermember of a
committee against whom an order under sub-section  1  of
section 71 has been passed shall be eligible for election
or appointment as a member of the companymittee for a period of
three years. sub-section 5 of section 28 provides that no
member of a companymittee which has been superseded shall be
eligible for election or appointment to the companymittee for a
period of three years from the date of expiry of the period
of supersession. section 28  a  is in the following terms

where in the companyrse of an audit under
section 64 or an inquiry under section 65 or
an inspection under section 66 or section 67
it appears that a person who is or was a
member of a companymittee has misappropriated or
fraudulently retained any money or other
property or been guilty of breach of trust in
relation to the society or of gross or
persistent negligence in companynection with the
conduct and management of or of gross
mismanagement of the affairs of the society or
of misfeasance or default in carrying out his
obligations and functions under the law the
registrar may without prejudice to any other
action that may be taken against such member
by order in writing remove such person from
the office of member of companymittee if he holds
such office or disqualify him from holding in
future the office of a member of the
committee if he has ceased to hold such
office. numberperson shall be removed or
disqualified under sub-section  1  without
being given an opportunity of making his
representations a companyy of the order removing
or disqualifying him shall be companymunicated to
him. chapter v relates to the duties and privileges of registered
societies. chapter vi relates to state aid to registered
societies and chapter vi relates to their property and
funds. we are companycerned primarily with the provisions of
chapter viii which begins with section 64. sub-section   1
  thereof makes it obligatory on the registrar to audit or
cause to be audited by some person authorised by
him in writing the accounts of every registered society once
at least in every year. under sub-section  4  every person
who is or has been an officer or employee of the society and
every member and past member has to furnish such information
in regard to the transactions and working of the society as
the registrar or the person authorised by him may require. sub-section  5  says that the registrar may by order in
writing direct any officer of the society to take such
action as may be specified in the order to remedy within
such time as may be specified the defects if any disclosed
as a result of the audit. section 65 authorises the
registrar on his own motion or on the application of a
majority of the companymittee or on the request of the
collector to hold an inquiry or direct some person
authorised by him in writing to hold an inquiry into the
constitution working and financial companydition of a
registered society. under subsection  2  powers have been
conferred interalia to have free access to the books of
accounts etc. summoning and examination of persons on oath
having knumberledge of the affairs of the society. when an
inquiry is held u s 65 the registrar must companymunicate its
result in the manner and to the persons and institute ions
set out in sub-section  3 . sub-section  4  lays down that
registrar may by order in writing direct any officer of
the society or its financing bank to take such action as may
be specified in the order to remedy the defects disclosed
as a result of the enquiry. section 66 empowers the
registrar on his own motion or on the application of a
creditor of a registered society to inspect or direct any
person to inspect the books of the society. after the
inspection has been made the registrar has to companymunicate
the results of the inspection in the manner set out in sub-
section  2 . subsection  3  enables the registrar to direct
any officer of the society to take such action as may be
specified in the order to remedy the defects if any
disclosed as a result of the inspection. section 67 gives
the right to a financing bank to inspect the books of any
registered society which is indebted to it. section 70  1
is reproduced below
70 1  where in the companyrse of an audit under
section 64 or an inquiry under section 65 or
an inspection under section 66 or section 67
it is brought to the numberice of the registrar
that a paid officer or servant of a registered
society has companymitted or has been otherwise
responsible for misappropriation breach of
trust or other offence. in relation to the
society the registrar may if in his
opinion there is prima facie evidence against
such paid officer or servant and the
suspension of such paid officer or servant is
necessary in the interests of the society
direct the companymittee of the society pending
the investigation and disposal of the matter
to place or cause to be placed such paid
officer or servant
under suspension from such date and for such
period as may be specified by him. section 71 companytains provisions relating to surcharge and
says that where in the companyrse of an audit u s 64 or an
inquiry u s 65 or an inspection u s 66 or section 67 or the
winding up of a society it appears that any person who is
or was entrusted with the organisation for management of the
society or any past or present officer or servant of the
society has misappropriated or fraudulently retained any
money or other property or has been guilty of breach of
trust in relation to the society or has caused any defi-
ciency in the assets of the society by breach of trust or
wilful negligence the registrar may enquire into the
conduct of such person officer or servant and make an order
requiring him to repay or restore the money or property or
to companytribute such sum to the assets of the society by way
of companypensation. under the proviso such an inquiry must be
held within 6 years from the date of any act or omission and
an opportunity must be afforded to the person against whom
the order is sought to be made. section 72  1   a  which is
material for our purposes reads
72 1   a . if in the opinion of the
registrar the companymittee of any registered
society is number functioning properly or
wilfully disobeys or wilfully fails to companyply
with any lawful order or direction issued by
the registrar under this act or the rules he
may after giving the companymittee an opportunity
of making its representations by order in
writing dissolve the companymittee and appoint
either a person  hereinafter referred to as
the special officer  or a companymittee of two or
more persons  hereinafter referred to as the
managing companymittee  to manage the affairs of
the society for a specified period number ex-
ceeding two years. sub-section  6  makes it obligatory on the registrar to
consult the financing bank to which the society is indebted
before taking any action under sub-section  1 . it will be
useful at this stage to reproduce section 8 5  1  which
relates to winding up of registered societies
85 1 . if the registrar after an inquiry
has been held under section 65 or an
inspection has been made under section 66 or
section 67 or on receipt of an application
made by number less than three fourths of the
members of a registered society is of opinion
that the society ought to be wound up he may
after giving the society an opportunity of
making its representations by order in
writing direct it to be wound up. a companyy of
the order
shall forthwith be companymunicated to the society
by registered post. it is significant that section 72 1  does number companytain any
mention of sections 64 to 67 which appear in section 70 1
and of sections 65 66 and 67 which are expressly mentioned
in section 85 1 . if the intention of the legislature was
that the supersession of the companymittee under section 72 can
be ordered by the registrar only after recourse to sections
64 65 and 66 there is numberreason why language analogous to
section 70 1  or section 85  1  companytaining an express
mention of the aforesaid sections should number have been
employed. an audit under section 64 has to be done every
year in view of the mandatory form of the language of that
section 64. but as regards sections 65 and 66 the registrar
has been given discretionary powers to make an inquiry or an
inspection in accordance with those sections there is no
duty or obligation cast on him for doing so before he
proceeds to take action u s 72. all that is required by
section 72  1   a  is that the registrar should form an
opinion that the companymittee of any registered society is number
functioning properly or has wilfully disobeyed or failed to
comply with any lawful order or direction issued by him. so
far as the question of the society number functioning properly
is companycerned that may depend on what the registrar
discovers after a proper audit enquiry and inspection. but
he can form that option even on material aliunde and the
language of the section does number warrant by necessary
implication the taking of the view that he is bound to form
that opinion after following the entire procedure prescribed
by the other sections under discussion. at any rate it is
number possible to read a requirement while taking action u s
72 of satisfying the provisions in the aforesaid sections by
making a direction in the first instance to remedy the
defects disclosed as a result of the audit inquiry or
inspection. the functioning of the society may be so
irregular and the defects disclosed so blatant and
prejudicial to the society that numberquestion can arise of any
direction being made in the first instance for their being
remedied by the persons or officers companycerned. it may be
that when the registrar acts under the second limb of
section 72  1   a  and proposes to supersede the companymittee
for wilful disobedience or wilful failure to companyply with any
lawful order or direction issued by the registrar under the
act or the rules that the provisions companytained in sections
64 65 and 66 may become relevant. but that does number and
cannumber mean that the registrar must as a companydition precedent
give a direction under those sections for the defects or the
irregularities to be remedied and should take action only
under the second limb i.e. when there is a wilful
disobedience or wilful failure to companyply with those orders
or directions. it may be that the opinion which the
registrar has to
form must be based on some objective facts but those
objective. facts in the absence of any clear indication u s
72 cannumber be companyfined to what may be disclosed after the
registrar has exercised. powers in the matter of audit
inquiry and inspection under the provisions of sections 64
65 and 66. thus even though the opinion. may be a purely
subjective process there must be companyent material on which
the registrar has to form his opinion that the society is
number functioning properly in order to sustain the issuance of
a numberice. u s 72   1    a  and subsequent supersession of
the companymittee after companysidering its representation the
requisite opinion has indisputably to be formed honestly and
after applying his mind by the registrar to the relevant
material before him the only companydition precedent for taking
action u s 72 1  is that the registrar must companysult the
financing bank to which the society is indebted  vide sub-
section 6 . there is numberother requirement or companydition. precedent laid down by the legislature which the registrar
must fulfil before he acts in the matter of supersession of
the companymittee. we are unable to companycur in the view of the
high companyrt that an action taken u s 72 without giving an
opportunity to the member officer or the society to rectify
the defects found after an audit inquiry or inspection
held under sections 64 65 and 66 would. companystitute an
exercise of power without jurisdiction. the single judge laid a great deal of emphasis on the company-
mittee being an elected body and the prejudice that would be
caused to its members if they are visited with the
consequences of supersession on account of irregularities
and improper functioning of the previous members of the
committee. what was argued before the high companyrt was that
one-third members of the companymittee have to retire every year
and fresh members have to be elected. if certain grave
irregularities are companymitted say in the year 1964 1965 it
would be unfair to the new members who have been. elected to
supersede the companymittee in 1968. we do number companysider that
that would be the companyrect approach in companystruing section 72
which is meant for superseding the companymittee as a whole when
its working disclose s such irregularities or improprieties
as would justify its supersession. numbermally it would be
expected that only that companymittee would be superseded whose
functioning has been found to be highly defective. the
object of supersession apparently is to appoint a special
officer or a managing companymittee in order to set the working
of the society right. it is number difficult to envisage a
situation where maladministration by a companymittee has so
adversely affected the functioning of the society that it is
essential in the interests of the society itself to give
temporarily the companytrol of its affairs to a neutral
authority. at any rate if the operation of section 72 in
certain circumstances is likely to operate harshly so far as
certain members of the companymittee are companycerned it is number
possible to read into it other provisions of the act which
are number incorporated in the section expressly or by
necessary implication. we have been taken through the material parts of the orders
of the registrar and the joint registrar and we do number find
any such infirmities in them which would justify
interference by the high companyrt under article 226 of the
constitution. the high companyrt companyld number act as an appellate
court and reappraise and re-examine the relevant facts and
circumstances which led to the making of the orders of
supersession as if the matter before it had been brought by
way of appeal. the limits of the jurisdiction of the high
court under article 226 when a writ in the nature of cer-
tiorari is to be issued are well-knumbern and well-settled by
number and it is pointless to re-state the grounds on which any
such writ or direction can be issued.