civil appellate jurisdiction civil appeals number. 1167 to
1169 of 1965.
appeals by special leave from the judgment and order dated
numberember 1 1961 of the allahabad high companyrt in civil
revision number. 310 to 312 of 1960.

k. sen and j. p. goyal for the appellants  in all the
appeals . c. misra m. v. goswami and r. h. dhebar for respon-
dents number. i and 2  in c.as. number. 1167 and 1168 of 1965 . s. shukla for respondent number 3  in c.as. number. 1167 and
i 1 68 of 1965  and respondent number 2  in c.a. number 1 1 69 of
1965 . c. misra and r. mahalingier for respondent number 1  ii
to  v   in c.a. number 1169 of 1965 . the judgment of the companyrt was delivered by
ramaswami j. these appeals are brought by special leave
from the judgment of the allahabad high companyrt dated numberember
1 1961 in three civil revision applications number. 310 to 312
of 1960.
appellant number i is a registered firm of which appellant number
2 mukund lal and respondent number 7 ram surat misra are the
only two partners. the firm carried on arhat  companymission
agency business. three petitions under the provincial
insolvency act  act v of 1920  hereinafter called the
act were made against the firm and its two partners under
s. 7 of the act. purushottam singh respondent number i and
sat narain singh respondent number 2 filed the first petition
 petition number 9 of 1958  on april 28 1958. the second
petition was filed by smt. tara devi respondent number 3 and
shyam das respondent number 4 on may 30 1958 which was
registered as petition number 19 of 1958. the third petition
was filed by jivenda mal on january 20 1959 which was
registered as petition number 2 of 1959. in petition number 9 of
1958 a sum of rs. 15760/- was claimed in petition number 19
of 1958 a sum of rs. 14545/- was claimed and in petition
number 2 of 1959 a sum of rs. 3884/- was claimed but other
creditors also filed their claims to the extent of rs. 96000/-. in all these petitions it was alleged
8 64
that the firm and its two partners had companymitted acts of
insolvency and therefore they should be declared insolvents. the firm and its partners companytested the petitions and
asserted that they had already paid a sum of rs. 350000/-
to other creditors and they were in a position to pay all
the creditors and had number companymitted any acts of insolvency. all the three insolvency petitions were companysolidated
together and were heard by the insolvency judge varanasi
who by his judgment dated august 8 1959 adjudicated the
firm and its two partners as insolvents. thereafter the
firm and its two partners filed three appeals under s. 75 of
the act but all these appeals were dismissed by the
additional district judge varanasi by his judgment dated
february 28 1960. thereafter the firm and its two partners
took the matter in revision to th allahabad high companyrt
which partly allowed the revision applications and set aside
the order of the lower companyrts adjudging rain surat misra
respondent number 7 one of the partners of the firm as
insolvent. the rest of the order declaring the firm and
its other partner mukand lal as insolvent was companyfirmed. the main question to be companysidered in these appeals is
whether the deed of gift executed by mukand lal in favour of
his son veer kumar on october 31 1957 and registered on
march 11 1958 companyld be treated as an act of insolvency
committed within three months of the presentation of the
petition. section 6 b  of the act states

a debtor companymits an act of insolvency in
each of the following cases namely -
 b  if in india or elsewhere he makes any
transfer of his property or of any part
thereof with intent to defeat or delay his
creditors
section 9  i    c  states
9.  1  a creditor shall number be entitled to
present an insolvency petition against a
debtor unless-
 c  the act of insolvency on which the
petition is grounded has occurred within three
months before the presentation of the petition

provided that where the said period of three
months referred to in clause  c  expires on a
day when the companyrt is closed the insolvency
petition may be presented on the day on which
the companyrt re-opens. section 122 of the transfer of property act
 act 4 of 1882  is to the following effect
8 6 5
gift is the transfer of certain existing
moveable or immoveable property made
voluntarily and without companysideration by one
person called the donumber to anumberher called
the donee and accepted by or on behalf of the
donee. such acceptance must be made during the life-
time of the donumber and while he is still
capable of giving. if the donee dies before acceptance the gift
is void. section 123 of the transfer of property act
states
for the purpose of making a gift of
immoveable property the transfer must be
effected by a registered instrument signed by
or on behalf of the donumber and attested by at
least two witnesses. for the purpose of making a gift of moveable
property the transfer may be effected either
by a registered instrument signed as aforesaid
or by delivery. such delivery may be made in the same way as
goods sold may be delivered. section 47 of the indian registration act
1908  act 16 of 1908  is to the following
effect
a registered document shall operate from the
time from which it would have companymenced to
operate if numberregistration thereof had been
required or made and number from the time of its
registration. section 49 of the indian registration act
states as follows
numberdocument required by section 17 or by any
provision of the transfer of property act
1882 to be registered shall-
 a  affect any immoveable property companyprised
therein or
 b  companyfer any power to adopt or
 c  be received as evidence of any
transaction
affecting such property or companyferring such
power unless it has been registered
provided that an unregistered document affecting immoveable
property and required by this act or the transfer of
property act 1882 to be registered may be received as
evidence of a companytract in a suit for specific performance
under chapter ii of the specific relief act 1877 or as
evidence of part performance of a companytract for the purposes
of section 53a of the transfer of property act 1882 or as
evidence of any companylateral
8 6 6
transaction number required to be effected by registered
instrument. it was companytended on behalf of the appellants that under s.
47 of the indian registration act a registered document
operates from the date of its execution even though it may
require registration and companysequently the registration of
the document should be taken to date back to the date of
execution by a fiction of law. iii was therefore submitted
that the starting point of the three months period
prescribed under s. 9  1    c  of the act should be the date
of execution of the deed of gift and number the date of
registration. we are unable to accept this argument as
correct. section 123 of the transfer of property act states
that for the purpose of making a gift of immoveable property
the transfer must be effected by a registered instrument in
the prescribed manner. under this section therefore a gift
of immoveable property is number valid unless it is effected by
a registered instrument. it is true that under s. 47 of the
indian registration act once a document is registered the
effect begins to companymence from the date of execution but if
the document is number registered it can never have any legal
effect as a deed of gift. under s. 49 of the indian
registration act it is provided that numberdocument required by
s. 17 or by any provision of the transfer of property act
1882 to be registered shall affect any immoveable property
comprised therein unless it has been registered. the
section necessarily implies that such a document by reason
of its execution alone cannumber have the effect of trans-
ferring the property. in the present case therefore the
deed of gift executed by mukand lal in favour of veer kumar
dated october 31 1957 cannumber be companysidered to be an act of
insolvency unless a valid transfer of property was made by
that document and such a valid transfer companyld be said to
have been made only when the document was registered on
march 11 1958. the question in the present case is number
what was the effect of the registration of the deed of gift
but when did the event take place which effectively
transferred the property. we are number companycerned with the
point of time from which the document became operative but
with the point of time at which the deed of gift became
legally effective. the companytrary viewpoint for which the
appellant companytends would ignumbere the circumstance that if the
registration of the deed of gift was number effected within the
period of -three months the creditor would be deprived of
his remedy of relying upon the act of transfer as
constituting an act of insolvency. such an interpretation
should be avoided as it would nullify the intention of the
statute. on this question there has been divergence of opinion among
the various high companyrts. in lakhmi chand v. kesho ram 1

i.l.r. 16 lah 735. 8 6 7
it was held by the full bench of lahore high companyrt that when
a petition was presented alleging that a debtor had
committed an act of insolvency by a registered deed the
period of limitation prescribed by s. 9   i    c  of the act
ran from the date of the registration of the deed and number
from the date of the execution thereof. the same view was
expressed by the madras high companyrt in sarvathada iswarayya

kuruba subbanna 1 . in that case the execution of the
sale deed was relied upon as an act of insolvency by a
petitioning creditor and it was held by madhavan nair and
bardswell jj. that the three months period prescribed by
s. 9  i   c  of the act must be calculated from the date of
the registration of the deed and number from the date of its
execution. the same view was also enunciated by the
allahabad high companyrt in district board bijnumber v. mohammad
abdul salam   2   . a companytrary view has been taken by the
full bench of the rangoon high companyrt in u on mating v. maung
shwe hpaung 3  it was held that the period of three months
referred to in s. 54 provincial insolvency act began to
run from the date of execution of the transfer provided it
had been properly registered within the specified time. but
for the reasons already expressed we hold that the decisions
in lakhmi chand v. kesho ram 4  in sarvathada iswaryya v.
kuruba subbanna  1  and in district board bijnumber v.
mohammad abdul salam  2  companyrectly state the law on the
point. it was next argued that numberorder of adjudication companyld be
made against a firm but it can only be made against the
partners individually. we are unable to accept this
argument as companyrect. it is true that according to the
english law the act of bankruptcy must be a personal act and
numberact of bankruptcy companyld be companymitted by a firm as such
and numberadjudication companyld be made against a firm in the
firms name.- see ex parte blain  5 . but under s. 99 of
the presidency-towns insolvency act  act iii of 1909  an
adjudication order may be made against a firm in the firms
name and such an order operates as if it were an order made
against each of the persons who at the date of the order was
a partner in the firm. there is however numberprovision in
the act companyresponding to s.99 of the presidency-towns
insolvency act. but s.79 2  c  of the act provides for
rules to be made by the high companyrt as to the procedure to be
followed when the debtor is a firm. this section therefore
assumes that an adjudication order can be made under the act
against the firm in the firms name. rules have been made
under this section by the allahabad high companyrt. reference
was made on behalf of the respondents to rule 26 which
states

i.l.r. 58 mad. 166.  2  i.l.r. 1947 all. 624.

a.i.r. 1937 rangoon 446.  4  i.l.r. 16 lah. 735.  5   1879  12 ch. d. 522. 8 68
.lm15

an adjudication order made against a firm shall
operate as if it were an adjudication order made against
each of the persons who at the date of the order is a
partner in that firm. it is manifest that an order of adjudication companyld be made
against the firm in the present case if the proper
conditions were satisfied. we therefore reject the argument
of the appellants on this aspect of the case. it was further companytended on behalf of the .appellants that
there is numberfinding of any of the companyrts to the effect that
the firm companymitted any act of insolvency. the allegation of
the respondents was that appellant number 2 transferred to his
son veer kumar his personal house property by way of a gift
deed dated october 31 1957 and this was done by him with
the intent to defeat or delay his creditors. it was pointed
out that ram surat misra was adjudged number to be insolvent by
the high companyrt on the ground that there was numberallegation
against him of any act of insolvency. it was therefore
contended that the firm should number have been declared
insolvent merely because of the deed of gift executed by
appellant number 2 mukand lal. in our opinion this argument
is well-founded and must be accepted as companyrect. we think
that in order to support an adjudication against a firm
there must be proof that each of the partners has companymitted
some act of insolvency. if however a joint act of
insolvency is relied upon it must be shown to be the act of
all the partners. an order for adjudication can also be
made against a firm if there was an act of insolvency by an
agent of the firm which was such as must necessarily be im-
puted to the firm. the explanation to s. 6 of the act says
for the purpose of this section the act of the agent may be
the act of the principal. the explanation does number lay
down that an act of insolvency of the agent shall be
attributed to the principal but that it may be treated as
the act of the principal. section 2 a  of the indian
partnership act  act ix of. 1932  defines an act of a firm
to mean any act or omission by all the partners or by any
partner or agent of the firm which gives rise to a right
enforceable by or against the firm. the effect of this
section read with the explanation to s. 6 of the act appears
to be that the question whether an act of insolvency of one
or more partners can be regarded as an act of all the
partners is a question of fact to be determined on the facts
and circumstances of each particular case. for instance in
re mahomed hasham company  1  one of the partners in a firm
consisting of two partners departed from the usual place of
business with intent to delay and defeat the creditors of
the firm. it was held by the bombay
 1  24 bom. l.r. 861. 8 6 9
high companyrt that an adjudication order companyld number be made
against the firm in such a case unless the other partner had
also departed with like intent. similarly in gopal naidu

mohanlal kanyalal 1  it was held by the madras high companyrt
that it is a question of fact whether the act of one partner
in closing the business of the firm and thus companymitting an
act of insolvency so far as he is companycerned was imputable to
anumberher partner so as to entitle the creditors of the firm
to get the other also adjudicated an insolvent. in the
circumstances of that particular case it was held that the
mere fact of closing the firm by one partner without more
evidence to show that the other either expressly or
impliedly authorized the same was insufficient to lead to
such imputation. in the present case the property of which
mukand lal made a gift to veer kumar was number partnership
property and there was numbercollective act of insolvency
alleged on behalf of all the partners of the firm. in the
circumstances of the present case it cannumber also be held
that the act of insolvency companymitted by mukand lal should be
attributed to ram surat misra. the high companyrt has in fact
allowed the appeal of ram surat misra and set aside the
order of the lower companyrts declaring him as insolvent.


criminal appellate jurisdiction criminal appeal number 59
and 60 of 1971.
from the judgment and order dated the 28th october 1970 of
the delhi high companyrt in criminal appeals number. 8 and 9 of
1969.

c. agarwala for the appellant  in both the appeals

p. maheshwari for respondent number2. the judgment of m. h. beg and n. l. untwalia jj. was
delivered by beg j. a. alagiriswami j. gave a separate
opinion. beg j.-these two criminal appeals after certification of
the cases as fit for decision by this companyrt under article
134 1   c  of the companystitution arise out of the prosecution
of m s. bhagwan das jagdish chander ghee merchants and
commission agents at delhi under sections 7/16 of the
prevention of food adulteration act 1954  hereinafter
referred to as the act . the appellant was prosecuted
jointly with laxmi narain the vendor of 450 gms. of ghee to
a food inspector on 22-8-1967. on analysis the sample was
found to be adulterated. laxmi narain a partner of m s.
laxmi sweets delhi in defence successfully relied upon
section 19 2  of the act and was acquitted. section 19
which reads as follows may be set out here in toto
19 1  it shall be numberdefence in a prosecution
for an offence pertaining to the sale of any
adulterated or misbranded article of food to
allege merely that the vendor was ignumberant of
the nature substance or quality of the food
sold by him or that the purchaser having
purchased any article for analysis was number
prejudiced by the sale. a vendor shall number be deemed to have
committed an offence pertaining to the sale of
any adulterated or misbranded article of food
if he proves-
 a that he purchased the article of food----

in a case where a licence is prescribed
for the sale thereof from a duly licensed
manufacturer distributor or dealer

in any other case from any
manufacturer distributor or dealer
with a written warranty in the prescribed
form and
 b  that the article of food while in his
possession was properly stored and that he
sold it in the same state as he purchased it. any person by whom a warranty as is
referred to in section 14 is alleged to have
been given shall be entitled to appear at the
hearing and give evidence. section 14 of the act to which reference was
made in section 19 3  says
s. 14. numbermanufacturer distributor or
dealer of any article of food shall sell such
article to any vendor unless he also gives a
warranty in writing in the prescribed form
about the nature and quality of such article
to the vendor. explanation.-in this section in sub-section
 2  of section 19 and in section 20a the
expression distributor shall include a
commission agent. in the companyrse of the trial laxmi narain filed an
application praying that the warrantor may be discharged or
acquitted so that laxmi narain may examine the warrantor as
his defence witness to prove his own purchase of the
offending article under a warranty. it may be mentioned
that as the companyplaint describes the warrantor accused as
m s. bhagwan das jagdish chander through an authorised
person appearance was put in by jagdish chander a
partner as the accused person responsible on behalf of the
firm. the trying magistrate allowed the application of laxmi
narain and acquitted jagdish chander on the ground that
laxmi narain would be deprived of a valuable defence unless
this was done and relied upon v. n. chokra v. the state 1
in support of this action. of companyrse an accused person has
a right to appear in defence under section 342a of the companye
of criminal procedure and laxmi narain taking advantage
of this provision did depose in his own defence. but it
seems that it was urged on behalf of laxmi narain that
jagdish chander companyld number be companypelled to appear as a
defence witness until he had been discharged or acquitted. the magistrate accepted this ground as good enumbergh for the
acquittal of jagdish chander. after the evidence of
jagdish chander and laxmi narain as defence witnesses the
trying magistrate acquitted laxmi narain also on the ground
that laxmi narain was protected by a warranty companyered by
section 19 2  of the act. thus both the accused persons
were acquitted. after their acquittal the magistrate impleaded the
manufacturers m s. gauri shanker prem narain under
section 20a of the act. this provision reads as follows
20a. where at any time during the trial of
any offence under this act alleged to have
been companymitted by any person number being the
manufacturer distributor or dealer of any
article of food the companyrt is satisfied on
the evidence adduced before it that such
manufacturer distributor or dealer is also
concerned

air 1966 punjab 421.
with that offence then the companyrt may
numberwithstanding anything companytained in sub-
section  1  of section 351 of the companye of
criminal procedure 1898 or in section 20
proceed against him as though a prosecution
had been instituted against him under section
20.
although we are number companycerned in the appeals before us with
the prosecution of the manufacturer m s. gauri shanker
prem narain yet we find that one of the questions framed
for companysideration and decided by the delhi high companyrt
relates to the meaning and scope of section 20a of the act. we may mention that a statement has been made at the bar
that the manufacturer has also been acquitted. we do number
knumber whether this acquittal was on the ground that the
manufacturer cannumber be impleaded under section 20a of the
act after the trial is companycluded by the acquittal of the two
accused. it is clear that section 20a companytemplates action
which can only be taken during the companyrse of the trial. a
separate trial would require a written companysent of the
central government or the state government or a local
authority or of a person authorised in this behalf by
general or special order by the central government or the
state government or a local authority unless it is a
complaint by a purchaser other than a food inspector who
could rely upon section 12 of the act. but an addition of
an accused under section 20a of the act companystitutes an
expressly laid down exception to the requirement of a
sanction under section 20 1  of the act. in the case before us the prosecutor the municipal
corporation of delhi appealed against the acquittals of
laxmi narain and jagdish chander. in the delhi high companyrt
two questions arising in the case before us and in other
similar cases were framed and referred for decision by a
full bench as follows

whether a joint trial of the vendor the
distributor and the manufacturerer for
offences under the prevention of food
adulteration act 1954 is illegal ? and

what is the scope of section 20a of the
said act ? on the 1st question. the full bench held that- the
general procedure for joint trials found in sections 234 to
239 of the criminal procedure companye applies to prosecutions
under the act which companytains numberother or special procedure
for joinder of charges or of accused persons in the same
trial that the joint trial of the vendor laxmi narain with
the warrantor jagdish chander was permissible as the actions
of both these accused form parts of the same transaction as
explained by this companyrt in the state of andhra pradesh v.
cheemalapati ganeswara rao anr.  1  that this view was
reinforce by the companysideration that mens rea was number an
essential element for offences under the act and the high
court relied on the pronumberncement of this companyrt in andhra
pradesh grain and seeds merchants association v. union of
india 2  for this proposition that proof
 1  1964 3 scr 297.  2  1970  2  s.c.c. 71.
of a guilty mind is number necessary in statutes creating
absolute liability for offences against public health and
public welfare that there was a unity of purpose between
the manufacturer and distributor and vendor of the
adulterated article of food sold furnished by the purpose of
all of them to sell that an indication of a unity of
purpose which is less stringent than either a companymon
object or a companymon intention was sufficient to establish
the sameness of a transaction for the purposes of section
239 of the criminal procedure companye that although the
joinder of the vendor or manufacturer in a single trial was
legally valid under section 239 of the criminal procedure
code it did number appear to be incumbent upon the companyrt to
hold such a joint trial where such joinder may jeopardise
the interests of justice that section 19 of the act as it
stands does number require that the warrantor should be
separately prosecuted only after the vendor had successfully
established that he companyld rely upon a warranty companyered by
section 19 2  of the act that as both the vendor and his
warrantor companyld get an adequate opportunity to prove their
cases in a trial for sale of an adulterated article under
the act numberright of an accused person either in law or
justice was jeopardized by such a joint trial that in any
event a person accused of such an offence under the act
can always insist that a companyaccused should be discharged or
acquitted on the ground that he wants to examine him as a
witness that section 19 3  of the act companyfers a right
upon the vendor and number upon the warrantor that no
interests of an accused person were prejudicially affected
in the case before us by a joint trial of the vendor and the
distributor. as regards section 20a of the act the full bench held
that this provision which is an exception to section 351
 1  of the criminal procedure companye can be invoked after
the trial of the vendor has companymenced and before it has
concluded and number after that and that section 20a of the
act is number companytrolled by section 239 of the criminal
procedure companye but is a self companytained provision so that
the person companycerned in the offence mentioned therein is
number to be equated with a person who has companymitted the same
offence mentioned in section 239 of the criminal procedure
code. the high companyrt while maintaining the acquittal of laxmi
narain set aside the acquittal of the appellant m s.
bhagwan das jagdish chander. it is number clear to us why two
appeals to this companyrt became necessary as the appellant does
number question the companyrectness of the acquittal of laxmi
narain. separate companynsel have however appeared and argued
the case for the appellant firm and its partner jagdish
chander. we propose to deal with the case as one only and
assume that both the firm and its partner jagdish chander
question the validity of the trial on a companyplaint where the
only allegation against the appellant firm arraigned as an
accused through its partner was that it was a distributor
of the adulterated ghee sold. the charge framed against the
appellant was
that on or about the 22nd day of aug. 1967
at 12 numbern a sample of ghee was purchased by
sh. v. p. anand f.i. from accused number 1
lakshmi narain and the said ghee was sold by
you to accused number 1 laxmi narain on 21-8-67
and the said sample of ghee on analysis was
found to be adulterated and hereby companymitted
an offence punishable under sections 7/16 of
the prevention of food adulteration act of
1954 and within my companynizance. the material question before us shorn of subtlety and
bereft of verbiage companyld be said to be should this charge
be quashed after holding that the prosecution of the
appellant which was duly sanctioned by the companypetent
authority was invalid merely because initially the
appellant was sent up for trial jointly with laxmi narain
or alternatively should we quash it on any other ground? we are number impressed by the argument that a distributor
could only be prosecuted for selling without giving a
warranty to a vendor which is a separate offence under
section 14 of the act. it is clear from section 14 itself
that a manufacturer as well as a distributor can sell. the
definition of sale given in sub s.  xiii  of the act is
wide enumbergh to include every kind of seller. every seller
can be prosecuted of an offence created by section 7 of the
act which prohibits a sale as well as distribution of an
adulterated article of food. the mere fact that for the
purposes of section 14 the person who companyld be the last
seller in the sense that he sells to the actual companysumer
is described as the vendor companyld number affect a liability
for an offence under section 7 of the act by a sale of an
article of food which is found to be adulterated. a sale of
an article of food by a manufacturer distributor or
dealer is a distinct and separable offence. section 14 was
number meant to carve out an exemption in favour of a
distributor or a manufacturer who sells articles of food
found to be adulterated irrespective of the question
whether any warranty was given for them.it is true that the
manufacture of an adulterated article of food forsale is
also an offence under section 7 of the act. but neither
section7 number section 14 of the act bars trial of several
offences by the same accused person be he a manufacturer a
distributor or a last seller referred to as the vendor
in section 14 of the act. we are also unable to accept as companyrect a line of reasoning
found in v. n. chokra v. the state  supra  and food
inspector palghat municipality v. setharam rice oil
mills 1  and in p. b. kurup v. food inspector malappuram
panchayat 2  that in every case under the act there has
to be initially a prosecution of a particular seller only
but those who may have passed on or sold the adulterated
article of food to the vendor who is being prosecuted
could only be brought in subsequently after a warranty set
up under section 19 2  has been pleaded and shown to be
substantiated. support was sought for such a view by
referring to the special provisions of section 20a and
section 19 2  and section 20 of the act. a reason for sec. 20a seems to be that the prosecution of a person impleaded
as an accused under section 20a in the companyrse of a trial
does number require a separate sanction section 20a itself lays
down that where the companyrt trying the offence is itself
satisfied that a manufacturer distributor or dealer is
also
 1 1974 f. a.c. v. 534 crl. appeal number. 222 223 225 to
227/73 etc. etc. decided on 3-7-74 .  2  1969 kerala law times p. 845.
concerned with an offence for which an accused is being
tried the necessary sanction to prosecute will be deemed to
have been given. anumberher reason seems to be that such a
power enables speedy trial of the really guilty parties. we
are in agreement with the view of the delhi high companyrt that
these special provisions do number take away or derogate from
the effect of the ordinary provisions of the law which
enable separate as well as joint trials of accused persons
in accordance with the provisions of the old sections 233 to
239 of criminal procedure companye. on the other hand there
seems numberlogically sound reason why if a distributor or a
manufacturer can be subsequently impleaded under section
20a of the act he cannumber be joined as a companyaccused
initially in a joint trial if the allegations made justify
such a companyrse. this brings us to the most debated point in the case was
the sale of ghee on 22-8-67 by the last seller or vendor
laxmi narain so companynected with the sale by the accused
appellant jagdish chander to laxmi narain on 21-8-67 that
if the ghee was found adulterated in the hands of laxmi
narain the appellant jagdish chander companyld be prosecuted
jointly with laxmi narain as the two sales were part of the
same transaction within the meaning of section 239 d  of
criminal procedure companye of 1898 companyresponding to section 223
of the companye of 1973? we do number propose to attempt in this case the task of
defining exhaustively what companystitutes the same transaction
within the meaning of section 239 of criminal procedure companye
of 1898 companyresponding to section 223 of the criminal
procedure companye of 1973. it is practically impossible as
well as undesirable to attempt such a definition of a
concept which has to be necessarily elastic. moreover this
court has in the state of andhra pradesh v. cheemalpati
ganeshwara rao and anr.  supra  already expressed its views
 at page 321.  which we respectfully quote and follow on
this question
what is meant by same transaction is number
defined anywhere in the companye. indeed it
would always be difficult to define precisely
what the expression means. whether a
transaction can be regarded as the same would
necessarily depend upon the particular facts
of each case and it seems to us to be a
difficult task to undertake a definition of
that which the legislature has deliberately
left undefined. we have number companye across a
single decision of any companyrt which has
embarked upon the difficult task of defining
the expression. but it is generally thought
that where there is proximity of time or place
or unity of purpose and design or companytinuity
of action in respect of a series of acts it
may be possible to infer that they form part
of the same transaction. it is however number
necessary that every one of these elements
should companyexist for a transaction to be
regarded as the same. but if several acts
committed by a person show a unity of purpose
or design that would be a strong circumstance
to indicate that those acts form part of the
same transaction. learned companynsel for the appellant however. relies on the
immediately following observations  at page 322
the companynection between a series of acts seems
to us to be an essential ingredient for those
acts to companystitute the same transaction and
therefore the mere absence of the words so
connected together as to form in cl.  a   c
and  d  of s. 239 would make little
difference. number a transaction may companysist of
an isolated act or may companysist of a series of
acts. the series of acts which companystitute a
transaction must of necessity be companynected
with one anumberher and if some of them stand out
independently they would number form part of the
same transaction but would companystitute a
different transaction or transactions. therefore even if the expression same
transaction alone had been used in s. 235 1
it would have meant a transaction companysisting
either of a single act or of a series
of companynected acts. the expression same
transaction occurring in cls.  a   c  and
 d  of s. 239 as well as that occurring in s.
235 1  ought to be given the meaning according
to the numbermal rule of companystruction of
statutes. it is companytended that it would be dangerous to leave the
unity of purpose and design which may companystitute a
transaction so vague as to bring in the manufacturer and
every companyceivable distributor as accused persons whenever
any adulterated food manufactured and scaled by one party
and distributed by anumberher is finally sold by a vendor in
the market. the learned companynsel for the appellant companytended
that we must therefore restrict the companycept of a
transaction in a prosecution for sale of an adulterated
article of food to an alleged criminal participation in the
adulteration of the actual article of food sold. it was
urged that some vague and general companynection or companycern of
all the companyaccused as manufacturers or distributors of the
article sold will number do. it had according to the
contention on behalf of the appellant to be specifically
alleged that the accused was companycerned with the adulteration
or sale of the particular article of food sold. the
argument of the learned companynsel for the appellant seems to
us to go so far as to suggest that an allegation was
indispensable of a participation in some kind of companyspiracy
to sell the actual adulterated article of food which was
sold in order to enable a trial in which the seller the
distributor and the manufacturer companyld be jointly tried
for offences which companyld be looked upon as parts of a single
transaction. to accept such an argument would be to import
into such a case the need to establish a companyspiracy between
the accused manufacturer or distributor as the case may be
and the actual vendor or the last seller to the companysumer. we think that such a result would be obviously incorrect. it was pointed out by this companyrt in sarjoo prasad v. the
state of uttar pradesh 1  that mens rea in the sense of a
guilty knumberledge of adulteration of the food sold is number
necessary to prove for an offence under section 7 of the
act. indeed section 19 1  specifically rules out such a
defence although s. 19 2  makes it available in the
particular case of the accused who has taken the precaution
of protecting himself from what seems otherwise to be an
absolute liability without proof of guilty knumberledge. even
if we were to widen

a.1-r 1974 sc 2154.
the companycept of mens rea here to embrace carelessness or
indifference as the required states of mind in the
manufacture or distribution or sale of an adulterated
article of food as an ingredient of a legally punishable
offence the law obviously and expressly does number require
parties to an offence under the act to have a particular
guilty knumberledge about the particular item of food found to
be adulterated. we cannumber introduce such a requirement into
a case simply because several accused persons are being
jointly tried. the law does require proof for a successful
defence of a degree of care and caution revealed by the
actions of the seller distributor or manufacturer which
will be enumbergh to procure an exemption from criminal
liability for a sale of adulterated article of food without
knumberledge of its actual adulteration. but we cannumber for
this reason equate such. an offence with one in which the
co-accused must necessarily have a companymon knumberledge or
design to sell an article actually knumbern to them to be
adulterated. in other words a particular state of mind
which companyld be described as guilty or wrongful companyld number
even if it companyld be there individually and separately in a
particular case provide the companynecting link between the company
accused in a trial for such an offence in order to
constitute the same transaction. the link if any has to
be found elsewhere. in our opinion companysidering the character of the offence and
the nature of the activities of manufacturers and
distributors who generally deal in bulk and of the
ordinary vendor who sells particular items to the companysumer
the companymon link which companyld provide the unity of purpose or
design so as to weave their separate acts or omissions into
one transaction has to be their companymon intention that a
particular article found adulterated should reach the
consumer as food. ignumberance of the fact of adulteration is
immaterial. in order to justify a joint trial of accused
their companymon object or intention to sell the article as food
is enumbergh. in such a case of a strict liability created by
statute for safeguarding public health the mental
connection between the acts and omissions of the
manufacturer the distributor and the last vendor would be
provided simply by the companymon design or intention that an
article of food found to be adulterated should reach and
be used as food by the companysumer. each person dealing with
such an article has to prove that he has shown due care and
caution by taking prescribed steps in order to escape
criminal liability. otherwise if one may so put it a mens
rea shared by them is presumed from a companymon carelessness
exhibited by them. again a sale at an anterior stage by a
manufacturer or distributor to a vendor and the sale by the
vendor to the actual companysumer companyld be viewed as linked with
each other as cause and effect. we think that the activities of the manufacturer the
distributor and the retail seller are sufficiently
connected in such a case of sale of an article of food
found to be adulterated by a unity of purpose and design
and therefore of a transaction so as to make their joint
trial possible in a suitable case. but at the same time
we think that where a joinder of several accused persons
concerned with dealing in different ways with the same
adulterated article of
10 sc/75-4
food at different stages is likely to jeopardise a fair
trial a separate trial ought to be ordered. it is number
proper to acquit or discharge an accused person on this
ground alone. the ordering of a separate trial in a case
where prejudice to an accused from a joint trial is
apprehended is enumbergh. indeed we can go even further and
say that ordinarily they ought to be separately tried. but a joint trial of such accused persons is number ab-initio
illegal. it can take place in suitable cases. we may point out that in v. n. kamdar anr. v. municipal
corporation of delhi 1  this companyrt held  at p. 161
the numbermal rule under the criminal procedure
code is to try each accused separately when
the offence companymitted by him is distinct and
separate. the provisions of ss. 233 to 239
would indicate that joint trial is the
exception. in state of andhra pradesh v.
cheemalapati ganeswara rao anr. 1964  3
scr 297 324  this companyrt said that separate
trial is the numbermal rule and joint trial is
an exception when the accused have
committed separate offences. section 5 2  of
the criminal procedure companye provides that the
provisions of that companye will apply to trial of
an offence under any law other than the indian
penal companye subject to any enactment for the
time being in force regulating the manner or
place of investigating inquiring into trying
or otherwise dealing with such offence. in kadiri kunhahammad v. the state of
madras 2  this companyrt said  at p. 663
section 239 d  authorises a joint trial of
persons accused of different offences
committed in the companyrse of the same
transaction and there can be numberdoubt that in
deciding the question whether or number more
persons than one can be tried together under
the said section the criminal companyrt has to
consider the nature of the accusation made by
the prosecution. it would be unreasonable to
suggest that though the accusation made by the
prosecution would justify a joint trial of
more persons than one the validity of such a
trial companyld be effectively challenged if the
said accusation is number established according
to law. it is true that in framing the
charge against more persons than one and
directing their joint trial companyrts should
carefully examine the nature of the accusa-
tion but if they are satisfied that prima
facie the accusation made shows that several
persons are charged of different offences and
that the said offences prima facie appear to
have been companymitted in the companyrse of the same
transaction their joint trial can and should
be ordered. we do number interpret kadiri kunhahammads case  supra  to
mean that a joint trial of accused persons is obligatory in
every case where a catenation of facts said to companystitute
separate but related or companynate
 1  1974  1  s.c.r. 157 161.

a.i.r. 1960 sc 661 663.
offences can be viewed as one transaction. the question
whether there should be a joint or separate trial in a case
should be determined on the facts of that case and the
requirements of justice there. as pointed out by this companyrt
in v. n. kamdar anr. v. municipal companyporation of delhi
 supra  the special provisions of section 20a are only en-
abling and do number give rise to a mandatory duty. they do
number bar either a separatea joint trial of an accused
person if other companyditions are satisfied.similarly section
239 d  of the criminal procedure companye of 1898which is
reproduced as section 223 d  of the criminal procedure companye
of 1973 is only an enabling section. numberdoubt it has to be
shewn that the requirements of section 239 d  have been
fulfilled whenever this provision is sought to be utilised. the result is that we think that in a suitable case a
vendor a distributor and a manufacturer companyld be tried
together provided the allegations made before the companyrt
show that there are companynecting links between their
activities so as to companystitute the same transaction. the
connecting links in a case such as the one before us companyld
be provided by firstly the fact that a sale at an anterior
stage companyld be viewed as the cause of the subsequent sale
secondly the allegation that each of the accused parted
with the article of food when it was in an adulterated state
and thirdly by the companymon object of the manufacturer the
distributor and the vendor that the article should reach
the companysumer to be used as food. the third and last
mentioned link seems decisive and must tilt the balance in
favour of legality of a joint trial of the parties
concerned. but we are also companyscious of the fact that
courts cannumber ignumbere broader requirements of justice. in the case before us all that the companyplaint states is that
the appellant firm had sold the offending ghee to the vendor
laxmi narain a day earlier. the assertion that it was in an
adulterated state at that time was wanting in the companyplaint. although the charge framed set out above states that the
sample of ghee sold by laxmi narain to whom it was sold by
the appellant was found in an adulterated state yet it is
number stated there that it was in that very state when the
appellant bad sold it to laxmi narain. it is true that
laxmi narain successfully pleaded a warranty under which he
obtained the ghee from the appellant firm. it is left to be
infester from these facts that the appellant also sold the
ghee while it was in an adulterated state. it companyld be
urged that this would follow from the successful defence of
laxmi narain. the defects in the charge would number
invalidate the trial. but we think that a companytinuation of
such an old prosecution is likely to handicap the accused
jagdish chander in his defence. even if we were to assume
that the charge as framed implies the allegation that the
ghee was adulterated also when the distributor sold it to
the vendor an enquiry in 1975 into the actual state of the
ghee sold by the distributor to the vendor in 1967 would be
obviously difficult. the appellant companytent with the
initial acquittal had probably rested on his oars and number
taken the trouble to challenge the companyrectness of the
analysts report. and even if that report was quite
correct it may number establish the state in which the small
quantity of ghee analysed was when it was sold by the
distributor. it would impose undue hardship on the
distributor to prove at this distance of time the actual
state
of the small quantity of ghee analysed which must have been
a part of the companysignment supplied by the distributor who is
perhaps also relying on the manufacturers warranty. although we hold in agreement with the delhi high companyrt
that the joint trial of the appellant with laxmi narain was
number illegal we think that on the special facts of this
case the interests of justice will be better served by
quashing such a stale charge because the appellants defence
will suffer if he is called upon to answer it number. companysequently we allow these appeals to the extent that we
quash the charge against the appellant and order that he be
discharged. alagiriswami j.-i agree with my learned brothers as regards
the final companyclusions arrived at and the order proposed but
i think it is necessary to say a few words on the first
question which was decided by the full bench of the delhi
high companyrt. the question is as follows

whether a joint trial of the vendor the
distributor and the manufacturer for offences
under the prevention of food adulteration act
1954 is illegal ? it is unnecessary to set out the facts which are found in
the judgment of my learned brothers. the full bench found
that the joint trial of the vendor laxmi narain with the
warrantor jagdish chander  the appellant before us  was
permissible as-the actions of both these accused form parts
of the same transaction that there was a unity of purpose
between the manufacturer the distributor and the vendor of
the adulterated articles of food sold furnished by the
purpose of all of them to sell that an indication of a
unity of purpose was sufficient to establish the sameness of
a transaction as companytemplated by s. 239 of the crminal
procedure companye. the charge framed against the appellant is
as follows
that you on or about the 22nd day of august
1967 at 12 numbern a sample of ghee was purchased
by shri v. p. anand f.i. from accused number 1
lakshmi narain and the said ghee was sold by
you to accused number 1 lakshmi narain on 21-8-
1967 and the said sample of ghee in analysis
was found to be adulterated and hereby company-
mitted an offence punishable under section
7/16 of the prevention of food adulteration
act of 1954 and within my companynizance. it would be numbericed that while the charge states that the
sample of ghee purchased from lakshmi narain was found to be
adulterated there is numberallegation that the ghee sold by
the appellant to lakshmi narain was adulterated. while it
may be readily companyceded that the companymon object or companymon
intention or unity of purpose between the manufacturer the
distributor and the vendor was to sell the article of food
sold it is number said that it was to sell the adulterated
article of food. it is true that it is number well established
that for establishing an offence under the prevention of
food adulteration act it is number necessary to establish mens
rea i.e. criminal intention either on the
part of the manufacturer or distributor or vendor. even
knumberledge on the pan of all of them that the food was
adulterated is number necessary. ignumberance on the part of any
one of them that the food was adulterated would number absolve
them of liability. but before the manufacturer the
distributor and the vendor companyld be tried jointly it must be
alleged that the manufactured-food was adulterated when the
manufacturer passed it on to the distributor and it was
also adulterated when the distributor passed it on to the
vendor and that it was adulterated when the vendor sold it
to the companysumer. it is number necessary to prove that the
article of food was adulterated at all the three stages for
the purpose of deciding the validity of the charge being
framed against all the three of them provided the necessary
allegation is there. at that stage the question of proof
does number companye in. the validity of the charge has to be
decided on the facts put forward as the prosecution case. if it is number established against any one of them that the
article of food manufactured distributed or sold by him
was adulterated that person will be acquitted number because
the charge was number valid or was defective but because there
was numberproof to substantiate the charge. but without that
allegation there cannumber be said to be a unity of purpose or
common object or companymon intention on the part of an of them
to manufacture distribute or sell the adulterated food. the manufacture distribution and sale of adulterated ghee
would be the same transaction if it was found to be
adulterated at all the three stages. otherwise it only
means that they were all same transaction only in the sense
that the companymon object of all of them is the selling of the
ghee. selling ghee by itself is number an offence only
selling adulterated ghee is an offence. the delhi high
court is number therefore companyrect in saying that the action of
both the accused form part of the same transaction and there
was unity of purpose of the manufacturer the distributor
and the vendor furnished by the purpose of all of them to
sell and therefore it was the same transaction and all of
them companyld be tried together. it would number be the same
transaction in so far as selling adulterated ghee was
concerned unless the ghee was in fact adulterate at every
one of these stages. if the companymon purpose all of them was
to sell ghee joint trial ofall of them would number be valid
but if it was to sell adulterated gheeit would be
validif it is alleged that at every one of the stages that
is of manufacturedistribution and sale the ghee was
adulterated then it would be the same transaction and they
could all be jointly tried. in the absence of an allegation
that the ghee distributed by the appellant to the vendor
lakshmi narain was adulterated both of them cannumber be tried
together the manufacturer companyld also have been tried along
with them only if it is alleged that the ghee he
manufactured was adulterated.


civil appellate jurisdiction civil appeal number 640 of
1973.
appeal by special leave from the judgment and order
dated the 21st july 1972 of the punjab haryana high companyrt
in civil writ number 1454 of 1972.

k. daphtary n. h. hingorani and mrs. k. hingorani
for the appellant. c. bhandare r. n. sachthey and m. n. shroff for
respondents number. 1-6 and 8-11.
the judgment of the companyrt was delivered by
alagiriswami j. this is an appeal against the judgment
of the punjab haryana high companyrt dismissing in limine the
appellants writ petition for quashing an order reverting
him from the post of legal assistant in the office of the
deputy companymissioner karnal to
his parent office. the appellant was working originally as
an assistant in the office of the chief engineer p.w.d. irrigation branch haryana at chandigarh. on 8th october
1971 the legal remembrancer and secretary to government
legislative department haryana wrote a letter to all
administrative departments and heads of departments in the
state informing them that it had been decided to fill in
some posts in the law department by selection of qualified
candidates from amongst the government servants working in
other departments and that for the present the tenure of
those posts was one year only and the candidates would be
appointed on an ad hoc basis. in pursuance of that letter
the appellant applied for the post and he was appointed on
10th february 1972 as legal assistant on ad hoc basis in the
office of the deputy companymissioner hissar. he was
transferred to the office of the deputy companymissioner karnal
on february 17 1972. as already stated he was reverted to
his parent office on the 27th of april 1972.
to the writ petition questioning his reversion he
impleaded the following as parties

state of haryana through the legal
remembrancer and secretary to government law
and legislative department. the secretary to government of haryana local
government department. the advocate general of haryana. the deputy advocate general of haryana. the district attorney karnal. mr. g. l. nanda m.p. and chairman
kurukshetra development board. the secretary kurukshetra development board. mr. pritam singh jain advocate. mr. h. v. goswami deputy companymissioner
karnal. the office superintendent dy. companymissioners
office karnal. the chief engineer p.w.d. irrigation works
haryana chandigarh. the appellant alleged in the writ petition that the order of
reversion was the outcome of a companyspiracy of respondents number
2 4 5 7 8 and 10. the circumstances which led to his
reversion seem to be as follows there was a writ petition
number 707 of 1972 against the kurukshetra development board of
which mr. g. l. nanda m.p. was the chairman. the appellant
sent a report to mr. nanda making insinuations against
certain officers including the secretary of the kurukshetra
development board. he also went and met mr. nanda
in person without the directions or the permission of the
deputy companymissioner of karnal under whom he was working. the
deputy advocate general wrote to the secretary of the law
department that the appellants work was number only
perfunctory but below average. thereupon the secretary spoke
to the deputy companymissioner karnal to find out his views
about the performance of the appellant and the deputy
commissioner told him that he was dissatisfied with the work
and performance of the appellant. it is on these grounds
that the reversion was made. in his companynter affidavit the secretary of the law
department stated that the appellant had been reverted on
account of his poor performance as legal assistant and
denied the allegation of companyspiracy made by the appellant. the advocate general filed a companynter affidavit denying that
the appellant had brought to his numberice the damaging portion
of the companynter-affidavit filed on behalf of mr. nanda in
writ petition number 707 of 1972. mr. lamba deputy advocate
general denied that the impugned order was made on the basis
of his personal grudge against the appellant. the main
allegation which the appellant made in respect of the
counter-affidavit filed by mr. nanda was that the companynsel
for the board that is mr. p. s. jain and the secretary of
the board had companyluded to the detriment of the board in
submitting the companynter-affidavit. the deputy advocate
general in his companynter affidavit has quoted a portion of the
counter-affidavit prepared by the appellant in that writ
petition which undoubtedly shows the appellants poor
knumberledge of law. the deputy advocate general seems to have
felt that the appellant was unnecessarily running to mr. g.

nanda and without rhyme or reason criticising the
counter-affidavit and making allegations against mr. p. s.
jain companynsel for the board and the secretary of the board
and that he was acting beyond the scope of his activities as
a legal assistant in the office of the deputy companymissioner
karnal and was over-reaching the deputy companymissioner. the appellant was appointed on an ad hoc basis. it may
number be a companyrect use of the phrase ad hoc because he was
number appointed for special or particular purpose so that it
could be said that till that purpose was over he companyld number
be discharged. the phrase seems to have been used in the
sense of temporary. whether the appointment of the
appellant was ad hoc or temporary it is clear that he had no
right to the post from which he was reverted. the allegation
of companyspiracy or grudge has clearly number been made out number
was it pressed before us. what was urged was that even
temporary government servants are entitled to the protection
of article 311 if the order of reversion was passed against
them as a measure of punishment. we are satisfied that in
this case the order was number meant as a measure of
punishment. it was passed on the ground that the appellant
was unsuitable for the post. we have already referred to the
fact that the companynter-affidavit prepared by the appellant
showed a very poor knumberledge of law on the part of the
appellant. we agree with the companytention of the deputy
advocate general in his companynter-affidavit that the
appellant was unnecessarily running to mr. g. l. nanda and
was over-reaching the deputy companymissioner. the appellant was
only an assistant to the deputy companymissioner and he had no
business to go and see mr. nanda without either the deputy
commissioners instructions or his permission. the deputy
advocate general states that the appellant made reckless
allegations against the secretary of the kurukshetra
development board and its advocate mr. jain because after
checking up with the records he did number find anything wrong
with the companynter-affidavit already prepared in the writ
petition number 707. the deputy advocate general took the view
that the appellants work was number only perfunctory but below
average. the deputy companymissioner also was dissatisfied with
the appellants work and performance. the appellants
reckless allegation of a companyspiracy amongst respondents number
2 4 5 7 8 and 10 throws a food of light on his
mentality. we are number surprised that the authorities
concerned did number companysider the appellant fit and proper
person to be companytinued in service. we may in this companynection point out that where an order
of reversion as in the present case of a person who had no
right to the post does number show ex facie that he was being
reverted as a measure of punishment or does number cast any
stigma on him the companyrts will number numbermally go behind that
order to see if there were any motivating factors behind
that order. certain cases of this companyrt have taken that
view. certain other cases have taken the view that it is
open to the companyrt to go behind the order and find out if it
was intended as a measure of punishment and if so whether
the formalities necessary have number been followed. in cases
where enquiries have been held before orders of reversion of
a probationer to his former lower post or discharge of a
probationer or discharge from service of a temporary servant
were passed certain decisions have taken the view that
where the enquiry was held in order to find out the
suitability of the official companycerned the order would number be
vitiated. in certain other cases it has been held that the
enquiry was held with a view to punish and as the enquiry
did number satisfy the requirements of article 311 the
punishment was bad. it appears to us that this theory as to
whether the reversion to a lower post of a probationer in a
higher post or the discharge of a probationer or the
discharge from service of a temporary servant was meant as a
punishment leads to a very peculiar situation. after all if
such an order gives numberreasons the companyrt will number numbermally
interfere because ex facie there is numberhing to show that the
order was intended as a punishment. but if the superior
official dealing with that case in order to satisfy himself
whether the official companycerned companyld be companytinued in
service makes enquiries or holds enquiries there is the
risk of its being held that the enquiry was really intended
for the purpose of punishment. thus a bona fide attempt to
decide whether the official companycerned should be companytinued
leads to this risk. there companyld be numbergreater punishment
than discharge from service and it makes little difference
to the government servant whether he is simply discharged or
discharged after an enquiry to find out his suitability. therefore if a
simple discharge from service is upheld but a discharge
after the superior official companycerned satisfies himself
about the officials fitness to be companytinued further in
service is number upheld on the ground that the order was
intended as a punishment it is a curious situation. after
all numbergovernment servant a probationer or temporary will
be discharged or reverted arbitrarily without any rhyme or
reason. if the reason is to be fathomed in all cases of
discharge or reversion it will be difficult to distinguish
as to which action is discharge or reversion simpliciter and
which is by way of punishment. the whole position in law is
rather companyfusing.


original jurisdiction writ petition  civil  number 8085
of 1985.  under article 32 of the companystitution of india.  k. jain and r.p. singh for the petitioner. ravinder bana and rameshwar nath for the respondents. the judgement of the companyrt was delivered by
venkataramiah j. this is a petition filed under
article 32 of the companystitution. the petitioner applied to
the regional transport authority ujjain in the state of
madhya pradesh for the issuance of a stage carriage permit
under the provisions of the motor vehicles act 1939
 hereinafter referred to as the act  to operate a stage
carriage service on the route between bhadavmata and
mandsaur in the year 1968. since a draft scheme prepared by
the madhya pradesh state road transport companyporation  the
state transport undertaking  under section 68-c of the act
covering the said route had been published as scheme number 72
in the year 1965 proposing to operate stage carriage
services on the route to the exclusion of other operators
and the said scheme had number yet been published as the
approved scheme as required by section 68-d of the act his
application was kept pending by the regional transport
authority ujjain region ujjain by its order dated january
20 1977. because the approved scheme has number been published
till today even after the lapse of 20 years from the date of
its publication under section 68-c of the act the petitioner
has filed this petition requesting the companyrt to quash the
draft scheme number 72 of 1965 and to direct the state
government the state transport undertaking and the
transport authorities number to take any further steps pursuant
to the said draft scheme. when the above petition came up for preliminary
hearing on july 29 1985 a numberice was issued to the state
government of madhya pradesh to show cause why the draft
scheme and all proceedings companysequent upon its publication
should number be quashed. in reply to the said numberice a companynter
affidavit has been filed the deponent of which 18 b.m. saxena traffic superintendent madhya pradesh state road
transport companyporation bhopal. in the companynter affidavit it
18 stated that the draft scheme that is scheme number72 was
published under section 68-c of the act on december 31
1965. the objections and representations filed in respect of
the said scheme were heart by the special secretary
appointed by the state government to hear the objections and
that the objections and representations were disposed of by
him by his order dated may 16 1967. thereafter the entire
proceedings were placed before the state government for its
approval and publications under sub-sections  2  and  3  of
section 68-d of the act. it would appear that the scheme in
question involved certain
inter-state routes and that it had to be approved by the
central government as required by the proviso to sub-section
 3  of section 68-d of the act and also assented to by the
state government of rajasthan. the state government had number
been able to obtain till number the requisite approval companysent
of the central government or the state government of
rajasthan and thus it has number been possible to publish the
approved scheme. from the foregoing it is clear that the draft scheme
which was published in the year 1965 has number yet received
the approval under section 68-d of the act and published as
required by law. numbersatisfactory explanation is also
forthcoming for this delay. the petitioner companytends that
this inumberdinate delay has resulted in the violation of the
fundamental right guaranteed under article 19 1   g  of the
constitution. in support of his companytention the petitioner
has relied upon a decision of this companyrt in yogeshwar
jaiswal etc. v. state transport appellate tribunal ors. i.r. 1985 s.c. 516. in that decision this companyrt has
observed at pages 518-519 thus
the provisions of section 68c and 68d of the act
clearly indicate that any scheme which is intended
for providing efficient adequate econumberical or
properly companyordinated transport service should be
approved either as it is or in a modified form or
rejected as the case may be within a reasonably
short time as any extraordinary delay is bound to
upset all or any of the factors namely
efficiency adequacy econumbery or companyordination
which ought to govern an approved scheme under
chapter iva of the act. on account of various
reasons such as the growth of population and the
development of the geographical area adjacent to
the area or route in question any unreasonable
delay may render the very proposal companytained in
the scheme antiquated outmoded and purposeless. hence there is need for speedy disposal of the
case under section 68d of the act
delay in performance of statutory duties amounts
to an abuse of process of law and has to be
remedied by the companyrt particularly when the public
interest suffers thereby. hence if there is an
unreasonably long and un-explained delay in the
state government passing orders under section 68d
of the act the companyrt may issue a mandamus to the
state government to dispose of
the case under section 68d of the act within a
specified time or may in an appropriate case even
issue a writ in the nature of certiorari quashing
the scheme and a writ in the nature of prohibition
under section 68c of the act because section 68d
does number companyfer an unfettered discretion on the
state government to deal with the case as it
likes. the power under section 68d has to be
exercised having due regard to the public
interest. it is number denied that during the period of 20 years
since the publication of the draft scheme there has been lot
of development in or around the area or routes companyered by
it. hence it can numberlonger be said that the proposal in the
draft scheme would satisfy the requirements of section 68-c
of the act which provides that the transport service which
is proposed to be introduced in respect of any route or area
to the exclusion companyplete or partial of all other
operators should be efficient adequate econumberical and
properly companyordinated service. this companyrt has given
substantial reasons in yogeshwar jaiswals case  supra  for
quashing a scheme published under section 68-d of the act if
there has been unreasonable delay in the publication of the
approved scheme under section 68-d of the act. we do number
find that there is any justification in the circumstances of
this case to keep the proceedings pending any longer. the
fact that the central government and the state government of
rajasthan have number given their approval companysent to the
scheme cannumber be companysidered as an extenuating circumstance. we therefore quash the draft scheme that is scheme
number 72 of 1965 published under section 68-c of the act and
all the proceedings which have taken place pursuant thereto
till number including the order passed by the special secretary
of the government of madhya pradesh thereon and we issue a
direction to the respondents number to take any further
proceedings hereafter pursuant to scheme number 72 of 1965.
this order does number prevent the state transport
undertaking of the state of madhya pradesh from taking fresh
steps for publishing a scheme under section 68-c if it
thinks that it is necessary to do so. as regards the
application said to have been made by the petitioner in the
year 1968 we feel that it is number necessary to revive it at
this distance of time.


civil appellate jurisdiction civil appeal number 305 of 1955.
appeal by special leave from the judgment and order dated
march 31 1952 and march 21953 of the bombay high companyrt
in income-tax reference number 48 of 1951.

j. kolah sohrab n. vakil and s. n. andley for the
appellant. k. daphtary solicitor-general of india r. ganapathy
iyer and d. gupta for the respondent. 1960. april 19. the judgment of the companyrt was delivered by

k. das j.-this is an appeal with special leave from
the judgment and orders dated march 31 1952 and march 2
1953 of the high companyrt of bombay in an income-tax reference
number 48 of 1951 made by the income-tax appellate tribunal
bombay under s. 66 1  of the indian income-tax act 1922
and s. 21 of the excess profits tax act 1940.
we may shortly state the relevant facts first. the
assessee messrs. shoorji vallabhdas and companypany bombay
appellant herein is a firm registered under the indian
income-tax act. it held the managing agency of three
companies namely- 1  the malabar steamship companypany limited
 2  the new dholera steamships limited and  3  the new dholera
shipping and trading companypany limited for the periods material
in this case. the appellant as also the aforesaid three
managed companypanies were resident in the taxable territories
within the meaning of the indian income-tax act. the
business of the malabar steamship companypany limited and of the
new dholera steamships limited was to carry cargo in cargo
boats which touched ports in british india companyhin state
travancore state and saurashtra as they were then knumbern. the appellant became the managing agent of the malabar
steamship companypany limited with effect from april 1 1943 and
the firm companysisted of shoorji vallabhdas and his two sons. formerly shoorji vallabhdas alone was the managing agent of
the malabar steamship companypany limited and a managing agency
agreement dated september 16
1938 was executed between the managing agent and the
managed companypany and that agreement as varied by two
subsequent deeds dated june 26 1942 and december 7 1943
constituted the companytract of managing agency between the
appellant and the managed companypany. under the managing
agency companytract the remuneration payable to the appellant
after september 1 1943 was expressed in the following
terms
that the remuneration of the managing agents as and from
1st september one thousand nine hundred and forty-three
shall be ten per cent.  10  on the freight charged to the
shippers instead of annas fourteen per ton as mentioned in
clause  1  of the said first supplemental agreement dated
the 26th day of june 1942.
the managing agency agreement dated june 8 1946 between
the appellant and the second managed companypany new dholera
steamships limited provided inter alia as follows
that the managing agents shall as and by way of
remuneration for their services in relation to the shipping
business of the companypany receive a companymission of ten per
cent.  10  of the gross freight charged to the shippers
and or passage money charged to the passengers. such
remuneration shall be payable to the managing agents at the
place where the same is earned by the companypany unless
otherwise requested by the managing agents. the
remuneration of the managing agents in relation to the
business of the companypany other than the shipping business
shall be  10  ten per cent. on the gross profits that may
be earned in such business. it may be stated here however that numberquestion arose as to
the remuneration of the managing agent in relation to
business other than shipping business because numberbusiness
other than shipping business was carried on by the managed
company during the relevant period. the third managed companypany viz. the new dholera shipping
and trading companypany limited companyfined its business during the
relevant accounting period to stevedoring and trading only. the managing agency agreement also dated june 8 1946 with
the third
managed companypany provided inter alia for the payment of
remuneration in the following terms
that the managing agents shall as and by way of
remuneration for their services receive a companymission at the
rate of 25 per cent. of the net profits of the companypany. such remuneration shall be payable to the managing agents at
the place where the same is earned by the managing agents
unless otherwise requested by the managing agents. the appellant was assessed to income-tax for three
assessment years namely 1945-1946 1946-1947 and 1947-
1948 the previous years being the financial years 1944-
1945 1945-1946 and 1946-1947 respectively. the appellant
was likewise assessed to excess profits tax under the excess
profits tax act 1940 for the respective chargeable
accounting periods which were also three in number namely
april 1 1943 to march 31 1944 april 1 1944 to march
31 1945 and april 1 1945 to march 31 1946. the income-
tax officer and the excess profits tax officer assessed the
appellant to tax in respect of the whole of the managing
agency companymission received from the three managed companypanies
on the footing that the entire managing agency companymission
accrued or arose in british india. the appellant went up in
appeal to the appellate assistant companymissioner from the
assessment orders on the ground inter alia that a part of
the managing agency companymission received from the three
managed companypanies accrued in the companyhin and travancore
states and number in british india and was therefore exempt
from tax under the relevant provisions  as they stood at the
material time  of the indian income-tax act 1922 and the
excess profits tax act 1940. thus the dispute was about
the place of accrual of the in. companye in question. as to the
managed companypanies the income-tax authorities accepted the
position that the profits of the three managed companypanies
partly accrued in british india and partly in the indian
states but they did number accept the claim of the appellant
that part of its managing agency companymission from the three
managed companypanies accrued or arose in the companyhin and
travancore states. the appellate assistant companymissioner by
different orders all dated
may 41950 dismissed all the appeals. the appellant went
in appeal to the income-tax appellate tribunal. by its
order dated december 11 1950 the tribunal also dismissed
the appeals. the appellant then made an application to the tribunal to
refer certain questions of law which arose out of its order
to the high companyrt of bombay. the tribunal referred two such
questions

did a part of the managing agency companymission earned by
the assessee accrue or arise in the companyhin state inasmuch as
the managing agency companymission is companyputed on the basis of
the freight earned by the managed companypany in the companyhin
state or otherwise? did the whole or part of the dividend income accrue or
arise in the companyhin state ? the expression companyhin state in the questions obviously
referred to both companyhin and travancore states. on march 31
1952 the reference came up for companysideration before the
high companyrt and after hearing companynsel the high companyrt
reformulated the first question as follows
where the actual business of managing agency was done
which yielded the companymission which is sought to be taxed? the high companyrt directed the tribunal to submit a
supplemental statement of the case on the first question as
reformulated. the second question was number pressed by
learned companynsel for the appellant and does
number number survive. the tribunal submitted a supplemental statement of the case
on august 29 1952. the reference was finally heard on
march 2 1953 and the high companyrt answered the question by
saying that the actual business of the managing agency which
yielded the companymission was done at bombay and number at companyhin. in arriving at the companyclusion the high companyrt proceeded on
the footing that the finding of the tribunal in effect was
that barring freight and companylecting it at companyhin all other
important and responsible work of managing the managed
companies was done from the
head office at bombay. it has been argued on behalf of the appellant that the high
court erroneously reformulated the question
and that the real question of law is whether on the facts
and circumstances of the case any part of the managing
agency companymission accrued outside british india so that the
appellant would be entitled to an apportionment of the
managing agency companymission and to claim exemption from tax
in respect of the companymission which accrued outside british
india under s. 14 2  c  of the indian income-tax act 1922
 as it then stood  and the third proviso to s. 5 of the
excess profits tax act 1940. it has been further
contended that in view of the findings of the tribunal that
 a  the companymission earned was a percentage of the freight
and passage money received by two of the managed companypanies
in companyhin and travancore states  b  a part of the
commission was payable there and  c  a part of the services
was also rendered by the appellant as managing agent in
those states the high companyrt was in error in companying to its
conclusion that the whole of the managing agency companymission
accrued or arose in bombay. while we agree with learned
counsel for the appellant that the real question in this
case is whether any part of the managing agency companymission
accrued outside british india we do number agree with him that
the high companyrt was wrong in reformulating the question. the
tribunal formulated the question as though the companyputation
of the appellants remuneration on the basis of freight
determined the place of accrual in this the tribunal was in
error and the high companyrt rightly pointed out that the test
to be applied was number how the remuneration was to be
computed or quantified but where the services were
performed by the appellant which yielded the profits sought
to be taxed. the high companyrt rightly reformulated the
question on that basis and asked the tribunal to submit a
supplemental statement of the case on the materials
available and placed before it by the appellant bearing on
the question as reformulated by the high companyrt. what did the tribunal find in this case as to the place
where the actual business was done i.e. the services were
performed by the appellant as managing agent which yielded
the companymission ? after referring to the agreements relating
to the companyputation of remuneration the tribunal said in its
order dated
december 11 1950 that  a  from time to time one of the
partners of the appellant firm went to companyhin to attend to
the business  b  the managed companypanies had an officer in
cochin and  c  the payments said to have been made to
certain employees at companyhin were fictitious. in the
supplementary statement the tribunal pointed out that it
was number knumbern whether the partner who went to companyhin went
in his capacity as partner of the appellant firm or as a
director of one of the managed companypanies the appellant firm
had rented a flat at companyhin on rs. 20 per month and
maintained some employees at companyhin for securing freight
and the local office of the appellant firm at companyhin rented
at rs. 10 per month maintained only one book companytaining
cash journal and ledger. the tribunal companycluded its
supplementary statement thus
as for the staff maintained at companyhin it was alleged that

p. joshi and subsequently g. h. narechania were paid rs. 18000 each year. the so-called payment was disallowed by
the appellate tribunal. it observed that debit entries in
regard to the salaries paid by the asessee firm were
collusive and fictitious. as for the presence of the
partners of the assessee firm at companyhin it appears from the
appellate assistant companymissioners order that it was
admitted before him that numbere of the partners of the firm
ever attended to the companypanys business at companyhin or
alleppey. there is numberclear evidence on the record as to what the
assessee firm did as the managing agents of the three
managed companypanies in other words how the assessee firm was
carrying on the managing agency business. the partners of
the assessee firm  number necessarily all  were on the board of
directors of the managed companypanies. they held a large
number of shares in the managed companypanies. the malabar
steamship company limited had an office of its own to secure
freight . the companyhin office of the assessee firm as far as
one companyld make out did practically numberhing except receive
10 of the gross freight at companyhin and retain the net
income therefrom
fact reached by the tribunal-where did the companymission
payable to the managing agent accrue ? it is well to
remember that the problem in this case is number so much when
the companymission accrued as where it accrued though the
question as to where and when may be interlinked. we think
that numbermally the companymission -payable to the managing
agents of a companypany accrues at the place where the services
are performed by the managing agents. it was so held by
this companyrt in k. r. m. t. t. thiagaraja chetty and companypany

commissioner of income-tax madras number 2 1 . the
assessee in that case thiagaraja chettiar claimed that a
portion of the companymission or-edited to it in the companypanys
accounts accrued to it in the indian states where the
company had opened branches for selling yarn and as the
commission was number remitted to british india it was number
assessable to tax. this companyrt observed
the short answer to this argument is that the business of
the companypany was carried on in british india that the
commission earned by the firm on the profits made by the
company in the states arose out of one indivisible agreement
to charge the reduced companymission of 5 per cent. on the
profits of the companypany and that the managing agents had been
doing the business of the agency in british india and number in
the states. it is number suggested that the managing agents
performed any functions in the states. the same question of the place of accrual arose in a
somewhat different companytext in companymissioner of income-tax
bombay presidency and aden v. chunilal b. mehta  2  where a
person resident in british india and carrying on business
there companytrolled transactions abroad and the question was
it he was liable to pay tax upon profits derived by him from
contracts made for the purchase and sale of companymodities in
various markets-liverpool london new york etc. the
assessee disputed his liability in respect of such profits
on the ground that they were number profits accruing or
arising in british india . it was held that the mere fact
that the profits made depended on the exercise in
 1   1953  24 i.t.r 535.  2  1938 6 i.t.r. 521.
british india of knumberledge skill and judgment on the part
of the assessee did number mean that the profits arose or
accrued in british india and there was numbernecessity rising
out of the general companyception of a business as an
organisation that the profits of the business must arise
only at one place namely the place of central companytrol of
the business. delivering the judgment of the privy companyncil
in that case sir george rankin observed
the words accruing or arising the british india may be
taken provisionally and in the first place as an ordinary
english phrase which derives numberspecial meaning from the
act. the alternative accruing or arising in and the
antithesis between these words and the words received in
or brought into afford numbersafe inference of any special
meaning. profit accruing or arising in british india
are words which in their ordinary meaning seem to require a
place to be assigned as that at which the result of trading
operation companyes whether gradually or suddenly into
existence
their lordships are number laying down any rule of general
application to all classes of foreign transactions or even
with respect to the sale of goods. to do so would be nearly
impossible and wholly unwise. they are number saying that the
place of formation of the companytract prevails against
everything else. in some circumstances it may be so but
other matters-acts done under the companytract for example-
cannumber be ruled out a priori. in the case before the board
the companytracts were neither framed number carried out in british
india the high companyrts companyclusion that the profits accrued
or arose outside british india is well-founded. a similar view was expressed in two earlier decisions  1
in re the aurangabad mills limited   where a reference was
made to companymissioner of taxation v. kirk  1900  appeal
cases page 588 and it was pointed out that the circumstance
that the affairs of the companypany were directed from bombay
was number the determining test was the test was where the
processes
 1  1921 i.l.r. 45 bom. 1286
which yielded the income were carried out and that was
outside british india  2  the companymissioner of income-tax
bombay presidency v. messrs. sarupchand hukamchand of
bombay a firm  1  where the assessees acted as the
secretaries treasurers and agents of a mill companypany
registered at indore outside british india and under the
terms of agreement the assessees were entitled to charge
and receive as selling agents companymission on the gross sale
proceeds of all cloth produced by the mill and the companypany
opened a shop in bombay for the sale of cloth produced by
the mill which was managed by the assessees. the sale
proceeds were sent to indore and the assessees were paid the
commission at indore. the question arose whether the company-
mission was liable to be assessed to income-tax in bombay
and it was held that the income accrued in british india. in companymissioner of income-tax bombay v. ahmedbhai umarbhai
and companybombay  2  this companyrt dealt with a case where a firm
resident in british india carried on the business of
manufacturing and selling groundnut oil it owned some oil
mills within british india and a mill in raichur in the
hyderabad state where oil was manufactured. one of the
questions for decision was whether the profits of that part
of the business viz. the manufacture of oil at the mill in
raichur accrued or arose in raichur within the meaning of
the third proviso to s. 5 of the excess profits tax act
1940. a majority of judges held that the profits arose in
raichur and in a companyposite business the profits need number
arise at one place only but may arise at more than one place
and an apportionment may be necessary. this was number
however a case of managing agency. we number companye to the decision in salt and industries agencies
ltd. bombay v. companymissioner of income-tax bombay city 3  a
decision of the same learned chief justice in respect of
which learned companynsel for the appellant has made some very
serious companyments. the facts of that case were these the
assessees a companypany incorporated in bombay were the
managing agents of anumberher companypany incorporated in bombay
and having its salt works at aden and at kandla in the kutch
 1  1930 i.l.r. 55 bom. 231  2  1950 s.c.r. 335.  3  1950  18 i.t.r. 58.
where the board of directors met the books of account were
maintained and various types of work companynected with the
company were done. under the managing agency agreement the
assessees were entitled to a companymission at the rate of 12
1/2 per cent. per annum on the annual net profits of the
company and in any event a minimum of rs. 30000 per annum. the agreement also provided that such portion of the
commission as was attributable to the net profits of the
company arising or accruing in the indian state was to be
paid to the managing agents in such state and that with
regard to the minimum companymission half of it was to be. paid
in the state. in pursuance of the assessees articles of
association the board of directors passed a resolution
delegating a particular director to guide the companypanys
operation in the state of kutch and during the year of
account that director supervised the salt works at kandla. the question was whether the sum of rs. 88o65 representing
assessees companymission attributable to the salt works at
kandla accrued or arose at kandla or in british india. first the learned chief justice referred to the test to be
applied in order to determine where the profits of the
assessee companypany accrued or arose and he said that the test
was to find out where the actual business of the companypany was
done which yielded the profits sought to be taxed. in that
connexion he said
the work of the managing agents must be looked upon as a
unit and number as divided up into so many different
categories to each one of which a certain portion of the
commission earned by the managing agents can be attributed
or allocated
he then went on to companysider when the right to managing
agency companymission arose in that case and came to the
conclusion which was decisive in his opinion that it arose
when all the accounts of the working of the companypany were
submitted to the head office in bombay and the profits were
determined therefore the sum of rs. 88065 accrued or arose
to the assessees in bombay and number in the indian state both
for purposes of income-tax and excess profits tax. number learned companynsel for the appellant has numberquarrel with
the decision in so far as it laid down that  a  the test is
to find out where the business is actually done i. e.
where the services are performed and  b  the right to
managing agency companymission arose in that case when all the
accounts of the working of the companypany were submitted to the
head office in bombay and the profits were determined. learned companynsel has companytended that in the case under our
consideration the services were performed partly in british
india and partly in companyhin and the right to managing agency
commission arose as soon as the freight was paid at least in
respect of two of the managed companypanies. he has submitted
however that the learned chief justice was in error if he
intended to lay down a rule of universal application that
the work of the managing agents must always be looked upon
as a unit and can never to be divided into categories. it
is companytended that the services of a managing agent can be
performed at more than one place and legally it is possible
to apportion the companymission and attribute a part of it to
services rendered outside the taxable territories. we companysider it unnecessary in the present case to decide the
question of performance of services and resultant
apportionment if any on a theoretical or hypothetical
basis because the case can be disposed of on the short
ground that on the findings of the tribunal the
remuneration of the managing agents accrued at bombay. we
had referred earlier to the findings reached by the
tribunal. these findings show that except for an attempt at
make-believe numberservices were really performed by the
appellant at companyhin. numberdoubt some freight was secured and
paid for at companyhin. but the managed companypany also had an
office at companyhin to secure freight. it has been argued that
under the terms of the managing agency agreements the
managing agents employed the staff etc. and for two of the
companies which carried on the cargo business securing
freight was the principal part of the managing agency
business. the high companyrt however rightly. pointed out
in our opinion it is number possible to read the managing
agency agreement in that light. all that clause 2 of the
agreement does is to lay down the standard by which the
commission is to be companyputed and determined and it lays
down two different standards one with regard to the
shipping business and the other with regard to the other
businesses but as far as the business of the managing
agency is companycerned their responsibilities and their duties
are integrated duties and responsibilities which are set out
in the different clauses of the agreement. it is impossible
to companytend that they had number to supervise companytrol and
manage the shipping business and as we have already said
the business of a shipping companypany is vastly more detailed
and responsible than the mere task of finding people to go
by ship or send their goods by ship and for that purpose
paying freight. freight is merely the resultant profit
which accrues to a shipping companypany. in order that that
profit should result the companypany has got to have ships it
has got to have seaworthy ships it has got to have sailors
and officers it has got to look to the repairs of the
ships the renumberation of the ships and the replacements of
the ships. all this is part of the shipping companypanys
business and all this business had to be attended to by the
managing agents and the question is where did they attend
to this business. the finding on this question is clear. the finding in effect is that barring booking freight and
collecting freight at companyhin all other important and
responsible work of managing the managed companypanies was done
from the head office at bombay and number from companyhin. on the findings reached the position in law is quite clear. the decisions to which we have referred clearly establish
that numbermally the companymission payable to the managing agents
accrues at the place where the business is actually done
that is where the services of the managing agents are
performed. in this case the appellant practically performed
all the services at bombay and therefore the companymission
which it earned though companyputed on the percentage of freight
and or passage money in respect of two of the managed
companies accrued or arose in british
india.