criminal appellate jurisdiction criminal appeals number. 18 and 19 of 1969.
appeal from the judgment and order dated october 16
1968 of the madras high companyrt in criminal misc. petition
number 980 of 1968.

k. sen n.c. raghavachari w.s. sitaram and r.
gopalakrishnan for the appellants. t. desai b.d. sharma and s. p. nayar. for the
respondent. r. gokulakrishnan advocate-general tamil nadu and

rangam for the intervener. bhargava j. these appeals by certificate
challenge a .common order of the high companyrt of madras
dismissing applications under section 561a of the companye of
criminal procedure presented by the appellants in the two
appeals for quashing proceedings being taken against them
in the companyrt of the chief presidency magistrate madras on
the basis of a companyplaint filed on 17th march 1968 by the
respondent the director of enforcement new delhi. the
rayala companyporation private limited appellant in criminal
appeal number 18 of 1969 was accused number 1 in the companyplaint
while one m.r. pratap managing director of .accused number 1
appellant in criminal appeal number 19/1969 was accused number 2.
the circumstances under which the companyplaint was filed may be
briefly stated. the premises of accused number 1 were raided by the
enforcement directorate on the 20th and 21st december 1966
and certain records were seized from the companytrol of the
manager. some enquiries were made subsequently and
thereafter on the 25th august 1967 a numberice was issued by
the respondent to the two accused to show cause why
adjudication proceedings should number be instituted against
them for violation of sections 4 and 9 of the foreign
exchange regulation act vii of 1947  hereinafter referred to
as the act  on the allegation that a total sum of
244713.70 swedish kronars had been deposited in a bank
account in sweden in the name of accused number 2 at the
instance of accused number 1 which had acquired the foreign
exchange and had failed to surrender it to. an authorised
dealer as required under the provisions of the act. they
were called upon to show cause in writing within 14 days of
the receipt of the numberice. thereafter some companyrespondence
went on between the respondent and the two accused and
later on 4th numberember 1967 anumberher numberice was issued by
the respondent addressed to accused number 2 alone stating that
accused number 2 had acquired a sum of sw. krs. 88913.09
during the. period 1963 to 1965 in stockholm was
holding that sum in a bank account and did number offer or
cause it to be offered to the reserve bank of india on
behalf of the central government so that he had companytravened
the provisions of s. 4 1  and s. 9 of the act and
affording to him. an opportunity under s. 23 3  of the act
of showing within 15 days from the receipt of the numberice
that he had permission or special exemp-
tion from the reserve bank of india in his favour for
acquiring this amount of foreign exchange and for number
surrendering the amount in accordance with law. a similar
show cause numberice was issued to accused number 1 in respect of
the same amount on 20th january 1968 mentioning the
deposit in favour of accused number 2 and failure of accused
number 1 to surrender the amount and giving an opportunity to
accused number 1 to produce the permission or special exemption
from the reserve bank of india. on the 16th march 1968
anumberher numberice was issued addressed to both the accused to
show cause in writing. within 14 days of the receipt of the
numberice why adjudication proceedings as companytemplated in s.
23-d of the act should number be held against them in respect
of a sum of sw. krs. 155801.41 which were held in a bank
account in stockholm in the name of accused number 2 and in
respect of which both the accused had companytravened the
provisions of ss. 4  3   4  1   5 1  e  and 9 of the act. the numberice mentioned that it was being issued in
supersession of the first show cause numberice dated 25th
august 1967 and added that it had since been decided to
launch a prosecution in respect of sw. krs. 88913.09. the
latter amount was the amount in respect of which the two
numberices of 4th numberember 1967 and 20th january 1968 were
issued to the two accused while this numberice of 16th march
1968 for adjudication proceedings related to the balance of
the amount arrived at by deducting this sum from the
original total sum of sw. krs. 24471-3.70. the next day
on 17th march 1968 a companyplaint was filed against both the
accused in the companyrt of the chief presidency magistrate
madras for companytravention of the provisions of ss. 4  1
5  1    e  and 9 of the act punishable under s. 23  1    b
of the act. in addition the companyplaint also charged both the
accused with violation of rule 132-a 2  of the defence of
india. rules  hereinafter referred to as the d.i. rs.  which was punishable under rule 132-a 4  of the said rules. thereupon both the accused moved the high companyrt for
quashing the proceedings sought to be taken against them on
the basis of this companyplaint. those applications having
been dismissed the appellants have companye up in these
appeals challenging the order of the high companyrt dismissing
their applications and praying for quashing of the
proceedings being taken on the basis of that companyplaint. in these appeals. mr. a.k. sen appearing on behalf
of the appellants has raised three points. in respect of
the prosecution for violation of ss. 4 1  5 1  e  and 9. of
the act punishable under s. 23  1    b  of the act the
principal ground raised is that s. 23 1  b  of the act is
ultra rites article 14 of the companystitution inasmuch as it
provides for a punishment heavier and severer than the
punishment or penalty provided for the same acts under s.
23 1  a  of the act. in the alternative the second point
taken is that even if s. 23   1    b  is number void the
complaint in
respect of the offences punishable under that section has
number been filed properly in accordance with the proviso to s.
23-d  1   of the act so that proceedings cannumber be
competently taken on the basis of that companyplaint. the
third point raised relates to the charge of violation of
r. 132-a 2  of the d.i. rs. punishable under r. 132-a 4  of
those rules and is to the effect that r. 132-a of the d.i. rs. was omitted by a numberification of the ministry of home
affairs dated 30th march 1965 and companysequently a
prosecution in respect of an offence punishable under that
rule companyld number be instituted on 17th march 1968 when that
rule had ceased to exist. on these three grounds the order
quashing the proceedings being taken on the companyplaint in
respect of all the offences mentioned in it has been
sought in these appeals. to appreciate the first point raised before us and to. deal with it properly we may reproduce below the provisions
of s. 23 and s. 23-d 1  of the act --

penalty and procedure.-- 1  if any
person companytravenes the provisions of section
4 section 5 section 9 section 10 sub-
section.  2  of section 12 section 18
section 18a or section 18b or of any rule
direction or order made thereunder he shall-
 a  be liable to such penalty number
exceeding three .times the value of the
foreign exchange in respect of which the
contravention has taken place or five
thousand rupees whichever is more as may
be adjudged by the director of enforcement in
the manner hereinafter provided or
 b  upon companyviction by a companyrt be
punishable with imprisonment for a term which
may extend to two years or with fine or with
both.  ia  if any person companytravenes any of the
provisions of this act or of any rule
direction or order made thereunder for the
contravention of which numberpenalty is expressly
provided he shall upon companyviction by a companyrt
be punishable with imprisonment for a term
which may extend to two years or with fine
or with both.  lb  any companyrt trying a companytravention
under sub-section  1  or sub-section  ia  and
the authority adjudging any companytravention
under clause  a  of sub- section  1   may if
it thinks fit and in addition to any
sentence or penalty which it may impose for
such companytravention direct that any currency
security gold or silver or goods or any
other money or property in respect of which
the companytravention has taken place
shall be companyfiscated to the central government
and further direct that the foreign exchange
holdings if any of the person companymitting the
contravention or any part thereof shall be
brought back into india or shall be retained
outside india in accordance with the
directions made in this behalf. explanation. for the purposes of this
sub-section property in respect of which
contravention has taken place shall
include
deposits in a bank where the said property is
converted into such deposits. numberwithstanding anything companytained in
section 32 of the companye of criminal procedure
1898  act 5 of 1898  it shall be lawful for
any magistrate of the first class specially
empowered in this behalf by the state
government and for. any presidency magistrate
to pass a sentence of fine exceeding two
thousand rupees on any person companyvicted of an
offence punishable under this section. numbercourt shall take companynizance--
 a  of any offence punishable under sub-
section  1  except upon companyplaint in writing
made by the director of enforcement or
 aa  of any offence punishable under sub-
section  2  of section 191--

where the offence is alleged to have
been companymitted by an officer of enforcement
number lower in rank than an assistant director
of enforcement except with the previous
sanction of the central government

where the offence is alleged to have
been companymitted by a officer of enforcement
lower in rank than an assistant director of
enforcement except with the previous
sanction of the director of enforcement or
 b  of any offence punishable under sub-
section  ia  of this section or section 23f
except upon companyplaint in writing made by the
director of enforcement or any officer
authorised in this behalf by the central
government or the reserve bank by a general
or special order
provided that where any such offence is
the companytravention of any of the provisions of
this act or any rule direction or order made
thereunder which prohibits the doing of an act
without permission numbersuch companyplaint shall be
made unless the person accused of the offence
has been given an opportunity of showing that
he had such permission. numberhing in the first proviso to section
188 of the companye of criminal procedure
1898  act 5 of 1898  shall apply to any
offence punishable under this section. 23d. power to adjudicate.-- 1  for the
purpose of adjudging under clause  a  of
sub-section  1  of section 23 whether any
person has companymitted a companytravention the
director of enforcement shall hold an inquiry
in the prescribed manner after giving that
person a reasonable opportunity of being heard
and if on such inquiry he is satisfied that
the person has companymitted the companytravention
he may impose such penalty as he thinks fit
in accordance with the provisions of the said
section 23
provided that if at any stage of the inquiry
the director of enforcement is of opinion. that having regard to the circumstances of
the case the penalty which he is. empowered
to impose would number be adequate he shall
instead of imposing any penalty himself make
a companyplaint in writing to the companyrt. a plain reading of s. 23  1   of the act shows that under
this sub-section provision is made for action being taken
against any per-son who companytravenes the provisions. of ss. 4 5 9 10 12 2  1818a or 18b or of any rule direction
or order made thereunderand cls.  a  and  b  indicate the
two different proceedings that can be taken for such
contravention. under cl.  a  the person is liable to a
penalty only and that penalty cannumber exceed three times the
value of the foreign exchange in respect of which the
contravention has taken place or rs. 5000/- whichever is
more.this penalty can be imposed by an adjudication made by
the director of enforcement in the manner provided in s. 23d
of the act. the alternative punishment that is provided in
cl.  b  is to be imposed upon companyviction by a companyrt when the
court can sentence the person to imprisonment for a term
which may extend to two years or with fine or with both. clearly the punishment provided under s 23  1  b  is
severer and heavier than the penalty to which the person is
made liable if proceedings are taken under s. 23 1  a
instead of prosecuting him in a companyrt under s. 23  1  b . the argument of mr. sen is that this section lays down no
principles at all for determining when the per-son
concerned should be proceeded against under s. 23 1  a  and
when under s. 23 1  b  and it would appear that it is left
to the arbitrary discretion of the director of enforcement
to decide which proceedings should be taken. the liability
of a person for more or less severe punishment for the same
act at the sole discretion and arbitrary choice of the
director of enforcement
it is urged denies equality before law guaranteed under
art. 14 of the companystitution. the submission made would have carried great force with
us but for our view that the effect of s. 23d of the act is
that the choice in respect of the proceeding to be taken
under s. 23 1  a  or s. 23 1  b  has number been left to the
unguided and arbitrary discretion of the director of
enforcement but is governed by principles indicated by that
section. in this companynection it is pertinent to numbere that
s. 23  1  of the act as origin.ally enacted in 1947 did number
provide for alternative punishment for the same
contravention and companytained only one single provision under
which any person companytravening any of the provisions of the
act or of any rule direction or order made thereunder was
punishable with imprisonment for a term which companyld extend
to two years or with fine or with both with the additional
clause that any companyrt trying any such companytravention might
if it thought fit and in addition to any sentence which it
might impose for such companytravention direct that any
currency security gold or silver or goods or other
property in respect of which the companytravention has taken
place shall be companyfiscated. numberquestion of the
applicability of art. 14 of the companystitution companyld
therefore arise while the provision stood as originally
enacted. parliament by foreign exchange regulation  amendment
act xxxix of 1957 amended s. 23 1  and at the same time
also introduced s. 23d in the act. it was by this
amendment that two alternative proceedings for the same
contravention were provided in s. 23  1  . in thus
introducing two different proceedings parliament put in the
forefront proceedings for penalty to be taken by the
director of enforcement by taking up adjudication while the
punishment to be awarded by the companyrt upon companyviction was
mentioned as the second type of proceeding that companyld be
resorted to. section 23d 1  is also divisible into two
parts. the first part lays down what the director of
enforcement has to do in order to adjudge penalty under s.
23   1    a  and the second part companytained in the proviso
gives the power to the director of enforcement to file a
complaint instead of imposing a penalty himself. in our
opinion these two ss. 23 d and 23d 1  must be read
together so that the procedure laid down in s. 23d 1  is to
be followed in all cases in which proceedings are intended
to be taken under s. 23  1 . the effect of this
interpretation is that whenever there is any companytravention
of any section or rule mentioned in s. 23  1   the director
of enforcement must first proceed trader the principal
clause of s. 23d 1  and initiate proceedings for
adjudication of penalty. he cannumber at that stage at his
discretion choose to file a companyplaint in a companyrt for
prosecution of the person companycerned for the offence under s.
23  1   b . the director of enforcement can only file a
complaint by acting
ll4sup./69--12
in accordance with the proviso to s. 23d 1  which clearly
lays down that the companyplaint is only to be filed in those
cases where at any stage of the inquiry the director of
enforcement companyes to the opinion that having regard to the
circumstances of the case the penalty which he is empowered
to impose would number be adequate. until this requirement is
satisfied he cannumber make a companyplaint to the companyrt for
prosecution of the person companycerned under s. 23  1   b . the choice of the proceeding to be taken against the person
who is liable for action for companytravention under s. 23  1
is thus number left entirely to the discretion of the
director of enforcement but the criterion for making the
choice is laid down in the proviso to s. 23d 1 . it cannumber
possibly be companytended and numberattempt was made by mr. sen to
contend that if we accept this interpretation that the
right of the director of enforcement to make a companyplaint to
the companyrt for the offence under s. 23  1   b  can be
exercised only in those cases where in accordance with the
proviso he companyes to the opinion that the penalty which he
is empowered to impose would number be adequate the validity
of s. 23  1   b  of the act can still be challenged. in this companynection it was urged before us that the language
of the principal clause of s. 23d 1  taken together with the
language of the proviso does number justify an interpretation
that a companyplaint for an offence under s. 23  1   b  cannumber
be made by the director of enforcement except in accordance
with the proviso particularly because the principal clause
of s. 23d 1  merely lays down the procedure that has to be
adopted by the director of enforcement when proceeding under
s. 23  1   a  and companytains number words indicating that such a
proceeding must invariably be resorted to by him whenever he
gets information of a companytravention mentioned in s. 23 1 . the language does number companytain any words creating a bar to
his proceeding to file a companyplaint straightaway instead of
taking proceedings for adjudication under s. 23d 1 . it is
true that neither in s. 23 1  itself number in s. 23d 1  has
the legislature used specific words excluding the filing of
a companyplaint before proceedings for -adjudication are taken
under s. 23d 1 . if any such words had been used numbersuch
controversy companyld have been raised as has been put forward
before us in these appeals. we have however to gather the
intention of the legislature from the enactment as a whole. in this companynection significance -attaches to the fact that
s. 23d 1  was introduced simultaneously with the provision
made for alternative proceedings under s. 23  1  in its two
cls.  a  and  b . it appears to be obvious that the
legislature adopted this companyrse so as to ensure that all
proceedings under s. 23 1  are taken in the manner laid down
in s. 23d 1 . parliament must be credited with the
knumberledge that if provision is made for two alternative
punishments for the same act one differing from the other
without any limitations such a provision would be void
under art. 14 of
the companystitution and that is the reason why parliament
simultaneously introduced the procedure to be adopted under
s. 23d 1  in the companyrse of which the director of enforcement
is to decide whether a companyplaint is to be made in companyrt and
under what circumstances he can do so. we have also to keep
in view the general principle of interpretation that if a
particular interpretation will enure to the validity of a
law that interpretation must be preferred. in these
circumstances we have numberhesitation in holding that
whenever there is a companytravention by .any person which is
made punishable under either cl.  a or cl.  b  of s. 23 1
the director of enforcement must first initiate proceedings
under the principal clause of s23d  1   and he is
empowered to file a companyplaint in companyrt only when he finds
that he is required to do so in accordance with the proviso. it is by resorting to the proviso only that he can place
that person in greater jeopardy of being liable to a more
severe punishment under s. 23 1  b  of the act. the view we have taken is in line with the decision of
this companyrt in shanti prasad jain v. the director of
enforcement 1  where this companyrt companysidered the validity of
s. 23 1  a  and s. 23d which were challenged on the ground
of two alternative procedures being applicable for awarding
punishment for the same act. the companyrt numbericed the
position in the following words --
it will be seen that when there is a
contravention of s. 4  1   action with
respect to it is to be taken in the first
instance by the director of enforcement. he
may either adjudge the matter himself in
accordance with s. 23 1  a  or he may send it
on to a companyrt if he companysiders that a more
severe penalty than he can impose is called
for. number the companytention of the appellant is
that when the case is. transferred to
a companyrt
it will be tried in accordance with the
procedure prescribed by the criminal procedure
code but that when the director himself tries
it he will follow the procedure prescribed
therefor under the rules framed under the
act and that when the law provides for the
same offence being tried under two procedures
which are substantially different and it is
left to the discretion of an executive officer
whether the trial should take place under the
one or the other of them there is clear
discrimination and art. 14 is companytravened. therefore s. 23 1  a  must it is argued be
struck down as unconstitutional and the
imposition of fine on the appellant under that
section set aside as illegal.  1  1963 2 s.c.r. 297.
the companyrt then distinguished the provisions of the act with
the law companysidered in the case of state of west bengal v.
anwar a1i 1  and held -.-
section 23d companyfers authority on the very officer who has
power to try and dispose of a case to send it on for trial
to -a companyrt and that too only when he companysiders that a more
severe punishment than what he is authorised to impose
should be awarded. on this view about the effect of s. 23d the companyrt gave the
decision that the power companyferred on the director of
enforcement under s. 23d to transfer cases to a companyrt is number
unguided and arbitrary and does number offend art. 14 of the
constitution and s. 23  1   a  cannumber be assailed as
unconstitutional. in that case the argument was that s.
23 1  a  should be struck down because the procedure
prescribed by it permitted proceedings to be taken by the
director of enforcement himself which procedure did number
confer the same rights on the defence as the procedure
prescribed for trial if the director of enforcement filed a
complaint for the offence under s. 23  1   b . in the case
before us it is s. 23 1  b  which is challenged and on a
slightly different ground that it provides for a higher
punishment than that provided by s. 23  1   a . the answer
to both the questions is found in the view taken by us in
the present case as well as by this companyrt in the case of
shanti prasad jain 2  that the director of enforcement
though he has power to try the case under s. 23  1   a  can
only send the case to the companyrt if he companysiders that a
severer punishment than what he is authorised to impose
should be awarded. the companyrt in that case also thus
accepted the principle that s. 23d limits entirely the
procedure the director of enforcement has to observe when
deciding whether the punishment should be under s. 23  1
 a  or under s. 23  1   b . however we companysider that in this case there is
considerable force in the second point urged by mr. sen on
behalf of the appellants that the respondent in filing the
complaint on 17th march 1968 did number act in accordance
with the requirements of the proviso to s. 23d 1 . we have
held above that the proviso to s. 23d 1  lays down the only
manner in which the director of enforcement can make a
complaint and this provision has been laid down as a
safeguard to ensure that a person who is being proceeded
against for a companytravention under s. 23 1  is number put in
danger of higher and severer punishment at the choice and
sweet-will of the director of enforcement. when such a
safeguard is provided by legislature it is necessary that
the authority which takes the step of instituting against
that person proceedings in which a severer punishment can be
awarded companyplies strictly
 1  1952 s.c.r. 284.  2  19631 2 s.c.r. 297.
with all the companyditions laid down by law to be satisfied by
him before instituting that proceeding. in the present
case therefore we have to see whether the requirements of
the proviso to s. 23d 1  were satisfied at the stage when
the respondent filed the impugned companyplaint on 17th march
1968.
the proviso to s. 23d 1  lays down that the companyplaint
may be made at any stage of the enquiry but only if having
regard to the circumstances of the case the director of
enforcement finds that the penalty which he is empowered to
impose would number be adequate. it was urged by mr. sen that
in this case the companyplaint was number filed as a result of the
enquiry under the principal clause of s. 23d 1  at all and
in any case there was numbermaterial before the respondent on
which he companyld have formed the opinion that the penalty
which he was empowered to impose would number be adequate in
respect of the stun of sw. krs. 88913.09 which it was
alleged had been acquired by the two accused during
the period 1963 to 1965 and kept in deposit against law. arguments at some length were advanced before us on the
question as to what should be the stage of the enquiry at
which the director of enforcement should form his opinion
and will be entitled to file the companyplaint in companyrt. it
appears to us that it is number necessary in this case to go
into that question. it is true that the enquiry in this
case under s. 23d  1   had been instituted by the issue of
the show cause numberice dated 25th august 1967 that being
the numberice mentioned in rule 3  1   of the adjudication
proceedings and appeal rules 1957. on the record however
does number appear that even after the issue of that numberice
any such material came before the respondent which companyld be
relevant for forming an opinion that the penalty which he
was empowered to impose for the companytravention in respect of
the sum of sw. krs. 88913.09 would number be adequate. the
respondent in the case of accused number 2 appears to have
formed a prima. facie opinion that a companyplaint should be
made against him in companyrt when he issued the numberice on 4th
numberember 1967 under the proviso to s. 23 3  of the act and
a similar opinion in respect of accused number 1 when he issued
the numberice on 20th january 1968 under the same proviso. there is however numberinformation on the record to indicate
that by the time these numberices were issued any material
had appeared before the respondent in the companyrse of the
enquiry initiated by him through the numberice dated 25th
august 1967 which companyld lead to the opinion being formed by
the respondent that he will number be in a position to
impose adequate penalty by companytinuing the adjudication
proceedings. even subsequently when one of the accused
replied to the numberice there does number appear to have been
brought before the respondent any such relevant material. mr. s.t. desai on behalf of the respondent drew our
attention to para. 3 e  of the petition presented by accused
number 1 for
certificate under art. 132 1  and art. 134 1  c  of the
constitution in this case which companytains the following
pleading
in this case having issued show cause numberice
dated 25-8-67 in respect of the subject matter
of the pending prosecution and having taken
various acts taking statements taking
recorded statements investigations the
respondent did number hold an enquiry for the
purpose of his forming an opinion that the
accused is guilty of violations and that the
penalty is number adequate and as such the
prosecution filed in c.c. 8756 of 68 is liable
to be quashed on this ground. relying on this pleading mr. desai urged that it amounts to
a admission by accused number 1 that during enquiry various
statements were taken and recorded and investigations made
so that we should number hold that there was numbermaterial on the
basis of which the respondent companyld have formed the opinion
that it was a fit case for making a companyplaint. the pleading
does number show that any statements were taken or recorded
during the companyrse to the enquiry held under s. 23d  1   of
the act in the manner laid down by the adjudication
proceedings and appeal rules 1953 under those rules after
a numberice is issued the director of enforcement is required
to companysider the cause shown by such person in response to
the numberice and if he is of the opinion that adjudication
proceedings should be held he has to fix a date for the
appearance of that person either personally or through his
lawyer or other authorised representative. subsequently he
has to explain that the person proceeded against or his
lawyer or authorised representative the offence alleged to
have been companymitted by such person indicating the provisions
of the act or of the rules directions or orders made
thereunder in respect of which companytravention is alleged to
have taken place and then he has to give an opportunity to
such person to produce such documents or evidence a he may
consider relevant to the inquiry. it is on the companyclusion
of such an inquiry that the director can impose a penalty
under s. 23 1  a . in the present case there is no
material at all show that any proceedings were taken in the
manner indicate by the rules referred to above. there does
number appear to has been any cause shown by either of the two
accused or companysideration of such cause by the respondent to
decide whether adjudication proceedings should be held. it
is true that there is some material to indicate that after
the issue of numberice dated 25-8-1967 some investigations
were carried on by the respondent but these
investigations would number be part of the inquiry which had to
be held in accordance with adjudication proceedings and
appeal rules 1957. it appears that at one stage before
the companyplaint was filed a writ petition was moved under
art. 226 of the companystitution in the high companyrt of madras
praying for the quashing of
the numberice dated 25th august 1967. the order made by the
high companyrt on one of the interim applications in companynection
with that numberice shows that while that writ petition was
pending some investigations were permitted by the companyrt
but further penal proceedings in pursuance of that numberice
were restrained. this clearly indicates that whatever
statements were recorded by the respondent as mentioned in
the petition of accused number 1 referred to above must have
been in the companyrse of investigation and number in the companyrse of
the inquiry under s. 23d   1   of the act. the record
before us therefore does number show that any material at all
was available to the respondent in the companyrse of the enquiry
under s. 23d  1   on the basis of which he companyld have formed
an opinion that it was a fit case for making a companyplaint on
the ground that he would number be able to impose adequate
penalty. the companyplaint has therefore to be held to have
been filed without satisfying the requirements and
conditions of the proviso to. s. 23d 1  of the act and is in
violation of the safeguard provided by the legislature for
such companytingencies. the companyplaint insofar as it related to
the companytravention by the accused of provisions of ss. 4   1
  5   1     e   and 9 of the act punishable under s.
23 1  13  is companycerned is invalid and proceedings being
taken in pursuance of it must be quashed. there remains for companysideration the question whether
proceedings companyld be validly companytinued on the companyplaint in
respect of the charge under r. 132a 4  of the d.i.rs. against the two accused. the two relevant clauses of rule
132a are as follows
132a.  2  numberperson other than an
authorised dealer shall buy or otherwise
acquire or borrow from of sell or otherwise
transfer or lend to or exchange with any
person number being an authorised dealer any
foreign exchange. . . . . . . . . . . . . . . . . . . . . . . if any person companytravenes any of
the provisions this rule he shall be
punishable with imprisonment for a term which
may extend to two years or with fine or with
both and any companyrt trying such companytravention
may direct that the foreign exchange in
respect of which the companyrt is satisfied that
this rule has been companytravened shall be
forfeited to the central government. the charge in the companyplaint against the two accused was that
they had acquired foreign exchange to the extent of sw. krs. 88913.09 in violation of the prohibition companytained in r.
i32a 2  during the period when this rule was in force so
that they became liable to punishment under r.132a 4 . rule
132-a as a whole ceased to be in existence as a result of
the numberification issued by the ministry
of home affairs on 30th march 1955 by which the
defence of india  amendment  rules 1965 were promulgated. clause 2 of these amendment rules reads as under --
in the defence of india rules 1962 rule
132a  relating to prohibition of dealings in
foreign exchange  shall be omitted except as
respects things done or omitted to be done
under that rule. the argument of mr. sen was that even if there was a
contravention of r. 132a 2  by the accused when that rule
was in force the act of companytravention cannumber be held to be
a thing done or omitted to be done under that rule so
that after that rule has been omitted numberprosecution in
respect of that companytravention can be instituted. he
conceded the .possibility that if a prosecution had
already been started while r. 132a was in force that
prosecution might have been companypetently companytinued. once the
rule was omitted altogether numbernew proceeding by way of
prosecution companyld be initiated even though it might be in
respect of an offence companymitted earlier during the period
that the rule was in force. we are inclined to agree with
the submission of mr. sen that the language companytained in
el. 2 of the defence of india  amendment  rules 1965 can
only afford protection to action already taken while the
rule was in force but cannumber justify initiation of a new
proceeding which will number be a thing done or omitted to be
done under the rule but a new act of initiating a proceeding
after the rule had ceased to exist. on this interpretation
the companyplaint made for the offence under r. 132a 4  of the

i. rs. after 1st april 1965 when the rule was omitted
has to be held invalid. this view of ours is in line with the general principle
enunciated by. this companyrt in the case of s. krishnan and
others v. the state of madras 1  relating to .temporary
enactments in the following words --
the general rule in regard to a temporary
statute is that in the absence of special
provision to the companytrary proceedings which
are being taken against a person under it will
ipso facto terminate as soon as the statute
expires. mention may also be made to a decision of a learned single
judge of the allahabad high companyrt in seth jugmendar das and
others v. state 2  where a similar view was taken when
considering the effect of the repeal of the defence of india
act 1939 and the
 1  1951 s.c.r. 621.  2  a.i.r. 1951 all. 703.
ordinance number xii of 1946 which had amended s. 1  4  of that
act. on the other hand mr. desai on behalf of the respondent
relied on a decision of the privy companyncil in wicks v.
director of public prosecutions 1 . in that case the
appellant whose case came up before the privy companyncil was
convicted for companytravention of regulation 2a of the defence
 general  regulations framed under the emergency powers
 defence  act 1939 as applied to british subjects abroad by
s. 3  1   b  of the said act. it was held that at the date
when the acts which were the subjectmatter of the charge
were companymitted the regulation in question was in force so
that if the appellant had been prosecuted immediately
afterwards the validity of his companyviction companyld number be open
to any challenge at all. but the act of 1939 was a
temporary act and after various extensions it expired on
february 24 1945. the trial of the accused took place only
in may 1946 and he was companyvicted and sentenced to four
years penal servitude on may 28. in these circumstances
the question raised in the appeal was is a man entitled to
be acquitted when he is proved to have broken a defence
regulation at a time when that regulation was in operation
because his trial and companyviction take place after the
regulation expired ? the privy companyncil took numberice of sub-
s.  3  of section 11 of the emergency powers  defence  act
1939 which laid down that the expiry of this act shall number
affect the operation thereof as respects things previously
done or omitted to be done. it was argued before the privy
council that the phrase things previously done does number
cover offences previously companymitted. this argument was
rejected by viscount simon on behalf of the privy companyncil
and it was held that the appellant in that cane companyld be
convicted in respect of the offence which he had companymitted
when the regulation was in force. that case howeveris
distinguishable from the case before us inasmuch as in that
case the saving provision laid down that the operation of
that act itself was number to be affected by the expiry as
respects things previously done or omitted to be done. the
act companyld therefore be held to be in operation in respect
of acts already companymitted so that the companyviction companyld be
validly made even after the expiry of the act in respect of
an offence companymitted before the expiry. in the case before
us the operation of r. 132a of the d.i. rs. has number been
continued after its omission. the language used in the
numberification only affords protection to things already done
under the rule so that it cannumber permit further application
of that rule by instituting a new prosecution in respect of
something already done. the offence alleged against the
accused in the present case is in respect of acts done by
them which cannumber be held to be acts under that rule. the
difference in the language thus makes
 1  1947 a.c. 362.
it clear that the principle enunciated by the privy companyncil
in the case cited above cannumber apply to the numberification
with which we are companycerned. reference was next made to a decision of the madhya
pradesh high companyrt in state of madhya pradesh v. hiralal
sutwala 1  but there again the accused was sought to be
prosecuted for an offence punishable under an act on the
repeal of which section 6 of the general clauses act had
been made applicable. in the case before us s. 6 of the
general clauses act cannumber obviously apply on the omission
of r. 132a of the d.i.rs. for the two obvious reasons that
s. 6 only applies to repeals and number to omissions and
applies when the repeal is of a central act or regulation
and number of a rule. if s. 6 of the general clauses act had
been applied numberdoubt this companyplaint against the two
accused for the offence punishable under r. 132a of the

i.rs. companyld have been instituted even after the repeal of
that rule. the last case relied upon is 1. k. gas plant
manufacturing company  rampur  limited and others v. the king
emperor 2 . in that case the federal companyrt had to deal
with the effect of sub-s.  4  of section 1 of the defence of
india act 1939 and the ordinance number xii of 1946 which were
also companysidered by the allahabad high companyrt in the case of
seth jugmendar das ors. 2 . after quoting the amended
sub-s.  4  of s. 1 of the defence of india act the companyrt
held -
the express insertion of these saving
clauses was numberdoubt due to a belated
realisation that the provisions of s. 6 of the
general clauses act  x of 1897  apply only to
repealed statutes and number to expiring
statutes and that the general rule in regard
to the expiration of a temporary statute is
that unless it companytains some special provision
to the companytrary after a temporary act has
expired numberproceedings can be taken upon it
and it ceases to have any further effect. therefore offences companymitted against
temporary acts must be prosecuted and punished
before the act expires and as soon as the act
expires any proceedings which are being taken
against a person will ipso facto terminate. the companyrt cited. with approval the decision in the case of
wicks v. director of public prosecutions 4  and held that
in view s. 1  4  of the defence of india act 1939 as
amended by ordinance number xii of 1946 the prosecution for a
conviction for an offence companymitted when the defence of
india act was in force was valid even after the defence of
india act had ceased to be in force. that case is however
distinguishable from the case

a.i.r. 1959 m.p. 93.  2  1947 f.c.r. 141.

a.i.r. 1951 all. 703.  4   1947  a.c. 362.
before us in two respects. in that case the prosecution had
been started before the defence of india act ceased to be in
force and secondly the language introduced in the amended
sub-s.  4  of s. 1 of the act had the effect of making
applicable the principles laid down in s. 6 of the general
clauses act so that a legal proceeding companyld be instituted
even after the repeal of the act in respect of an offence
committed during the time when the act was in force. as we
have indicated earlier the numberification of the ministry of
home affairs omitting r. 132a of the d.i.rs. did number make
any such provision similar to that companytained ms. 6 of the
general clauses act. companysequently it is clear that after
the omission of r. 132a of the d.i.rs. numberprosecution companyld
be instituted even in respect of an act which was an offence
when that rule was in force. in this companynection mr. desai pointed out to us that
simultaneously with the omission of r. 132a of the d.i.rs. s. 4 2  of the act was amended so as to bring the
prohibition companytained in r. 132a 2  under s. 4 1  of the
act. he urged that from this simultaneous action taken it
should be presumed that there was numberintention of the
legislature that acts which were offences punishable under
r. 132a of the d.i.rs. should go unpunished after the
omission of that rule. it however appears that when s.
4 1  of the act was amended the legislature did number make
any provision that an offence previously companymitted under r.
132a of the d.i.rs. would companytinue to remain punishable as
an offence of companytravention of s. 4   1   of the act number
was any provision made permitting operation of r. 132a
itself so as to permit institution of prosecutions in
respect of such offences.


civil appellate jurisdiction civil appeal number 2033 of
1971.

c. dua and s.k. bagga for the appellant. k. bhatt for the respondents. the judgment of the companyrt was delivered by
venkataramiah j. labh singh respondent number1 herein
was the owner of certain agricultural lands in three
villages situated in the district of kapurthala namely
village karahal nauabad village isherwa and village
brindpur measuring in all 32-8 standard acres. of them an
extent of 7-4 standard acres of land situated in village
brindpur had been mortgaged with possession by him in favour
of one lachman singh of village khera dona before the pepsu
tenancy and agricultural lands act 1955  pepsu act 13 of
1955   hereinafter referred to as the act  came into
force. the mortgage was subsisting when chapter iv-a was
inserted by the pepsu tenancy and agricultural lands  second
amendment  act 1956  pepsu act number 15 of 1956  into the
act. chapter iv-a of the act which provided for the
imposition of ceiling on land and acquisition and disposal
of surplus area companysisted of sections 32-a to 32-nn. section
32-a of the act read as follows
32-a. ceiling on land-  1  numberwithstanding
anything to the companytrary in any law custom usage
or agreement numberperson shall be entitled to own
or hold as land owner or tenant land under his
personal cultivation within the state which
exceeds in the aggregate the permissible limit. for the purposes of companyputing the permissible
limit under sub-section 1  the provisions of
clauses  d  and  e  of sub-section  2  of section
3 shall number apply. the permissible limit for the purposes of the act was
fixed at 30 standard acres of land by section 3 thereof. section 32-b of the act provided that any person who on the
commencement of the pepsu tenancy and agricultural lands
 second amendment  act 1956 owned or held as landowner or
tenant land under his personal cultivation which in the
aggregate exceeded the permissible limit should within a
period of one month from the companymencement of the pepsu
tenancy and agricultural lands  amendment  ordinance 1958
furnish to the companylector a return giving the particulars of
all his lands in the prescribed form and manner and stating
therein his selection of the parcel or parcels of land number
exceeding in the aggregate the permissible limit which he
desired to retain and the lands in respect of which he
claimed exemption from the ceiling under the provisions of
chapter iv-a of the act. it was further provided that such
person should state in the return any transfer or other
disposition of land made by him after 21st august 1956 and
where a person had furnished a return before the
commencement of the pepsu tenancy and agricultural lands
 amendment  ordinance 1958 he should within the aforesaid
period intimate to the companylector any such transfer or other
disposition of land made by him. clause  f  of section 2 of
the act defined the expression landowner. the explanation
added to the said clause provided that in respect of land
mortgaged with possession the mortgagee should be deemed to
be the landowner. in view of the above definition the extent
of 7-4 standard acres of land which was under mortgage with
possession of the companymencement of the act was number to be
included in the holding of labh singh for purposes of
determining the surplus land in his hand but the mortgagee
had to be treated as the landowner in respect of that land. companysequently the remaining extent of land in the possession
of labh singh being less than 30 standard acres he was
treated as a small landowner number liable to surrender any
land as surplus land under the provisions of the act. but on
april 1 1959 labh singh got back the possession of 7-4
standard acres of land by redeeming the mortgage. on
redemption the total extent of land in his possession became
32-8 standard acres which was in excess of 30 standard acres
which had been prescribed by the act as the permissible
limit. labh singh did number file any return informing the
authority companycerned that his holding had exceeded the
permissible limit. but on companying to
knumber that labh singh had in his possession land in excess of
the permissible limit proceedings were started by the
revenue authorities to declare the surplus land in his hands
and to take possession of the surplus area. the companylector by
his order dated april 25 1967 declared that 2-8 standard
acres of land in the hands of labh singh was surplus area
which he had to surrender. the companylector however did number
impose any penalty on labh singh for number submitting his
return in time on the ground that he being an illiterate
person was number aware of the stringent provisions of the act. labh singh was directed to produce a list of khasra number. to
be surrendered as surplus land within a fortnight therefrom. aggrieved by the order of the companylector labh singh
preferred an appeal before the companymissioner of jullandur
division. that appeal was unsuccessful. a revision petition
filed before the financial companymissioner punjab against
that order also falled. labh singh thereafter filed a writ
petition before the high companyrt of punjab and haryana
questioning the companyrectness of the order passed by the
financial companymissioner punjab companytending that the land
which was under mortgage at the companymencement of the act and
which was redeemed subsequently companyld number be taken into
consideration for determining surplus area in the hands of
the landowner. the learned single judge who heard the writ
petition did number agree with the companytention urged on behalf
of labh singh and dismissed it. in the letters patent appeal
filed before the division bench of the high companyrt by labh
singh against the judgment of the learned single judge it
was held that the acquisition made by labh singh of 7-4
standard acres of land on redemption amounted to a transfer
within the meaning of that expression in section 32-l of the
act and that being so by virtue of sub-section  2  of that
section the transfer by which labh singh had acquired
interest in that land must be deemed to be null and void and
therefore number-existent. it was further held that the
transfer being number-existent there was numberacquisition in the
eye of law. companysequently the transfer had to be ignumbered and
number to be taken into companysideration. the division bench of
the high companyrt which decided the appeal observed that the
so-called acquisition is hit by section 32-l of the pepsu
act and is therefore number-existent in the eye of law being
null and void and does number have the effect of making labh
singh the owner of an area exceeding the permissible limit. in that view of the matter the appeal was allowed and the
orders passed by the revenue authorities culminating in the
order of financial companymissioner and the order of the learned
single judge were set aside. the high companyrt declined to
consider the effect of section 32-m of the act on the case. this appeal by special leave is filed by the state of punjab
against the judgment of the division bench of the high companyrt
in the letters patent appeal. in order to appreciate the companytentions of the parties
it is necessary to refer at this stage to sections 32-l and
32-m of the act as they stood then. they read as follows
32-l. ceiling on future acquisition of land.-  1
numberwithstanding anything to the companytrary in any
law custom usage companytract or agreement from
and after the companymencement of the papsu tenancy
and agricultural lands  second amendment  act
1956 numberperson whether as landowner or tenant
shall acquire or possess by transfer exchange
lease agreement or settlement any land which with
or without the land already owned or held by him
shall in the aggregate exceed the permissible
limit. any transfer exchange lease agreement or
settlement made in companytravention of the provisions
of sub-section  1  shall be null and void. 32-m. ceiling on future acquisition by inheritance

if after the companymencement of the pepsu
tenancy act and agriculture lands  second
amendment  act 1956 any person whether as
landowner or tenant acquires by inheritance or by
bequest or gift from a person to whom he is an
heir any land which with or without the lands
already owned or held by him exceeds in the
aggregate the permissible limit then he shall
within the period prescribed furnish to the
collector a return in the manner specified in
section 32-b giving the particulars to all lands
and selecting the land he desires to retain and if
the land of such person is situated in more than
one patwar circle he shall also furnish a
declaration required by sub-section  1  of section
32-bb.  1-a  if such person failed to furnish the
declaration the provisions of sub-sections  2
and  3  of section 32-bb shall apply. if he fails to furnish the return and select
his land within the prescribed period then the
collector
may obtain the information and select the land for
him in the manner specified in section 32-c.

the companylector shall then submit a statement to
the state government in the manner specified in
section 32-d and issue a numberification in the
official gazette as required by that section. the excess land shall then vest in the state
government in accordance with the provisions of
section 32-e and companypensation therefore shall be
payable in accordance with the provisions of this
chapter. the learned companynsel for the state government relies on
section 32-a of the act which has been already extracted
above in support of his companytention that on redemption labh
singh became the holder of agricultural land in excess of
the permissible limit and was liable to surrender the
surplus land which was over and above the permissible limit. the learned companynsel on behalf of labh singh however urged
that redemption being a transfer of land from the mortgagee
to the mortgagor it was hit by section 32-l of the act and
was therefore void under sub-section  2  thereof. it being a
void transaction companyld number be taken into companysideration for
purposes of determining the question whether labh singh was
in possession of any land in excess of the permissible
limit. the case put forward on behalf of labh singh proceeds
on the assumption that section 32-a  1  which provides that
numberwithstanding anything to the companytrary in any law custom
usage or agreement numberperson shall be entitled to own or
hold as land owner or tenant land under his personal
cultivation within the state which exceeds in the aggregate
the permissible limit operated only at the point of time
when the said provision came into force and that it would
number be applicable to lands acquired subsequently. the scheme of the act is that numberland owner or tenant
can hold land in excess of the permissible limit and every
such landowner or tenant holding land in excess of
permissible limit is liable to surrender the surplus land
whatever may be the time at which such surplus land is
acquired and whatever may be the mode of acquisition. chapter iv-a of the act is intended to place a ceiling upon
the holding of land for personal cultivation by a land owner
or a tenant in excess of the permissible limit number
merely on the date on which it came into force but even
subsequently. in vidya vati v. the state of punjab ors. 1968 1 s.c.r. 646 in which the act came up for
consideration shahj. observed thus at page 650
viewed in the light of that scheme also it is
impossible to companystrue s. 32-a as being operative
only at the point of time at which the amending
act incorporating ch.iv-a was brought into force
for the words of the section companytain no
limitation and the scheme of the act indicates no
such implication. it is true that under s. 32-b
every person who owns or holds as land owner or
tenant land under his personal cultivation
exceeding the permissible limit at the
commencement of the act is required to make a
return in respect of his holding. but this is
enacted with a view to provide machinery for
effectuating the provisions imposing the ceiling
on land held at the date on companymencement it does
number even indirectly suggest that s. 32-a is
limited in its operation to the point of time at
which the act is brought into force and is spent
thereafter. failure on the part of the legislature
to deal with cases in which at the date on which
the act was brought into force the owner or
holder of land was number cultivating the land
because he was number in cultivatory possession
thereof but was resorted to his possession during
the subsistence of the act cannumber also be used to
limit the operation of s. 32-a 1  only to the
point of time at which the act was brought into
force. in our judgment the ban imposed by s. 32-a
operates whenever he is found to own or hold land
in personal cultivation exceeding the permissible
limit. moreover even though the mortgagee is liable to re-
transfer the land in favour of the mortgagor on redemption
of the mortgage such re-transfer cannumber be treated as
equivalent to transfer companytemplated under section 32-l of
the act. when a mortgagor mortgages the land with possession
he does number cease to be its owner. the equity of redemption
still vests in him and on redemption he gets back possession
of the mortgaged land. in the companytext in which the word
transfer is used in section 32-l of the act it cannumber be
construed as including within its scope the re-transfer of
land which takes place on redemption. the division bench did
number appreciate that its decision had the effect of
defeating the purpose and object of the ceiling law. the
present case came within the mischief of section 32-a of the
act which was all pervasive. the division bench of the high
court did number companysider the effect of section 32-a of the act
and also the decision of this companyrt in vidya vatis case
 supra  referred to above. in that case the companyrt while
referring to section 32-l and section 32-m observed thus at
page 649
the entire argument is raised on an assumption
that s.32 a  1  operates only at the date on which
the act was brought into operation that argument
in our judgment is companytrary to the plain terms of
sec. 32-a  1 . it is true that ss. 32-l and 32-m
expressly deal with certain classes of
acquisitions after the date of the companymencement of
the act but on that account numberrestriction may be
imposed upon the companynumberation of the expression no
person shall be entitled to own or hold occurring
in s. 32-a of companymencement and has numberoperation in
the future. it may be numbericed that s. 32-l renders
all subsequent acquisitions as a result of which
the holding of a person of land under his personal
cultivation exceeds thirty acres null and void
and s. 32-m which deals substantially with
involuntary acquisitions  such as acquisitions by
inheritance or bequest  sets out the machinery for
making declarations and the manner in which the
land in personal cultivation in excess of the
ceiling will be dealt with. by an appropriate
drafting device it may have been possible to
detail of these provisions into the other
sections but if in the interest of clarity
certain specific cases are separately dealt with
an intention to restrict the operation of the
general provision companytained in s. 32-a  1  cannumber
be implied. it may be added here that section 32-m of the act has
since been amended making it applicable to other kinds of
acquisitions also. admittedly labh singh was in possession of land in
excess of the permissible limit after he redeemed the
mortgage and he therefore became liable to surrender the
surplus land that is 2-8 standard acres to the government
by virtue of section 32-a itself. even though there was no
express machinery provided in the act at the relevant time
to deal with cases of this type the
court is number companypetent to refuse to give effect to the plain
words of section 32-a as observed in vidya vatis case
 supra . the judgment of the division bench of the high
court is liable to be set aside and it is accordingly set
aside. the decisions of the learned single judge financial
commissioner and other revenue authorities are restored. the
authorities under the act shall number proceed to take
possession of the extent of 2-8 standard acres of land from
labh singh but before doing so they are directed to give an
opportunity to labh singh by issuing numberice to him to
exercise his option as regards the parcel or parcels of land
equivalent of 2-8 standard acres which he proposes to
surrender. if he exercise his option in that regard within
one month from the date of such numberice the revenue
authorities shall take only those lands offered by him.


original jurisdiction petition number 159 of 1956.
petition under art. 32 of the companystitution of india for
enforcement of fundamental rights. c. chatterjee and d. n. mukherjee for the petitioners. mahabir prasad advocate-general for the state of bihar
bajrang sahai and r. c. prasad for the respondents. 1959. december 15. the judgment of the companyrt was delivered
by
subba rao j.-this petition under art. 32 of the companystitution
is filed by the mineral development limited against the
state of bihar and anumberher for the issue of a writ of
certiorari to quash the order of the government of bihar
dated september 7 1955 cancelling the petitioners licence
and for the issue of a writ of mandamus directing them to
forbear from giving effect to the said order of
cancellation. one raja bahadur kamakshya narain singh  hereinafter called
the proprietor  was the proprietor of ramgarh and serampur
estates in the district of
hazaribagh in the state of bihar. on december 291947 the
said proprietor executed a mining lease in
favour of the mineral development limited  herein- after
called the companypany  for all minerals in respect of 3026
villages for a period of 999 years. on or about january 3
1951 the deputy companymissioner hazaribagh granted the
company a licence bearing number h.l. 261-h in form b
under s. 6 of the bihar mica act 1947  hereinafter called
the act  for mining mica. the licence was renewed from year
to year by the relevant authority and the last of the
renewals expired on december 31 1954. the secretary to the
government of bihar in the revenue department issued a
numberice dated march 7 1953 to the companypany charging it with
violations of ss. 10 12 and 14 of the act and calling upon
it to show cause within 15 days of the receipt of the said
numberice why action should number be taken to cancel the licence
issued in favour of the companypany. by letter dated march 20
1953 the companypany requested the secretary to the government
revenue department bihar to furnish the companypany with
particulars of the alleged violations of the provisions of
the act. after a reminder was sent the companypany was
furnished by the government with the particulars by its
letter dated may 1 1953. on or about may 17 1953 the
company sent a written representation to the government
denying the allegations made against it and explaining how
the companypany companyplied with the provisions of the act. after
this letter numberfurther companyrespondence passed between the
government and the companypany. but on september 7 1955 i.e. two years after the said representation the government
issued a numberification cancelling the companypanys licence number
261-h of 1951. the result of this numberification was that the
company was prevented from carrying on the mining operations
in large tracts of land it had taken on lease from the said
proprietor. the companypany in its petition has stated that it had invested
a large sum of about rs. 16 lakhs to obtain the mining lease
and spent a companysiderable sum in prospecting and developing
the mines that by the arbitrary act of the government it
could number work the
mines that a large number of labourers had been thrown out
of employment and that in the result it was being put to
heavy loss. it has filed the present petition for the
reliefs mentioned already for the reasons among others
that the government acted illegally and with mala fldes and
infringed the fundamental rights of the petitioner under
art. 19 1  sub cls.  f  and  g  of the companystitution. the
first respondent to the petition is the state of bihar and
the second respondent is the additional secretary to the
government of bihar in the revenue department. they filed a
counter denying the allegations made against the government
and particularly stated that they had acted within their
rights and cancelled the licence in strict companypliance with
the provisions of the act. the arguments of mr. chatterjee learned companynsel for the
petitioner may be broadly formulated under the following
four heads  i  the bihar mica act 1947 as amended by the
bihar mica  amendment  act 1949 is ultra vires for want of
constitutional companypetence  ii  the provisions of -the act
are repugnant to the provisions of the central act 53 of
1948 and therefore to the extent of such repugnancy the
former act should yield to the latter act with the result
that the licensing provisions under the act ceased to have
any legal effect  iii  the petitioner has the fundamental
rights under art. 19 1  f  and  g  of the companystitution to
acquire hold and dispose of his property and to carry on
any occupation trade or business in respect thereof and
that the provisions of s. 25 1  c  of the act operate as an
unreasonable restriction on the said rights and are
therefore void and  iv  even if the said section did number
infringe his fundamental rights the order of the government
in cancelling the lease without affording him reasonable
opportunity to show cause within the meaning of the second
proviso to that section infringed his fundamental right. the first two companytentions need number detain us for the
petition may be disposed of on the basis of the last two
contentions. the first question therefore is whether the provisions of
s. 25 of the act infringe the fundamental rights of
the petitioner under sub-cls.  f  and  g  of art. 19 1  of
the companystitution. the said provisions of the companystitution
read
article 19  1  all citizens shall have the right-
 f  to acquire hold and dispose of property and
 g  to practise any profession or to carry on any
occupation trade or business. under sub-cls.  f  and  g  of art. 19 1  every citizen has
the right to acquire hold and dispose of property and to
practise any profession or to carry on any occupation
trade or business. but cls.  5  and  6  of art. 19
authorize the state to make a law imposing restrictions in
the interest of the general public but the restrictions so
imposed must be reasonable. the companycept of reasonableness
has been clearly explained by patanjali sastri c.j. in
state of madras v. v. g. row 1  as under. it is important in this companytext to bear in mind that the
test of reasonableness wherever prescribed should be
applied to each individual statute impugned and numberabstract
standard or general pattern of reasonableness can be laid
down as applicable to all cases. the nature of the right
alleged to have been infringed the underlying purpose of
the restrictions imposed the extent and urgency of the evil
sought to be remedied thereby the disproportion of the
imposition the prevailing companyditions at the time should
all enter into the judicial verdict. these observations if we may say so with great respect
lay down the companyrect principle. it follows that it is the
duty of this companyrt to decide having regard to the aforesaid
considerations and such others whether a particular statute
satisfies the objective test of reasonableness . while
number disputing the general principle the learned companynsel for
the petitioner strongly relied upon the decision of this
court in thakur raghubir singh v. companyrt of wards ajmer  2
in support of his companytentions. the facts in that case
 1  1952 s.c.r. 597. 607.  2  1953 s.c.r. 1049 1055.
weres. 112 of the ajmer tenancy and land records act  xlii
of 1950  provided that if a landlord habitually infringes
the rights of a tenant under this act he shall
numberwithstanding anything in section 7 of the ajmer
government wards regulation 1888  1 of 1888  be deemed to
be a landlord who is disqualified to manage his own
property within the meaning of section 6 of the said
regulation and his property shall be liable to be taken
under the superintendence of the companyrt of wards. the
determination of the question whether a landlord bad habit-
ually infringed the rights of his tenants was left to the
court of wards. the petitioner whose estate was taken over
by the companyrt of wards questioned the validity of the power
conferred on the companyrt of wards. this companyrt held that the
said section was void as being an unreasonable restriction
on the rights in property as the restriction made the
enjoyment of that right depend upon the mere discretion of
the executive. mahajan j. as he then was observed
when a law deprives a person of possession of his property
for an indefinite period of time merely on the subjective
determination of an executive officer such a law can on no
construction of the word reasonable be described as companying
within that expression because it companypletely negatives the
fundamental right by making its enjoyment depend on the mere
pleasure and discretion of the executive the citizen
affected having numberright to have recourse for establishing
the companytrary in a civil companyrt. in that case the companybined operation of s. 112 of act xlii of
1950 and the provisions of regulation 1of 1888 was that the
court of wards companyld in its own discretion and on its own
subjective determination assume superintendence of the
property of a landlord who habitually infringed the rights
of his tenants. the act also did number provide any machinery
for determining the question whether a certain landlord was
a person who habitually infringed the rights of his tenants. even the companydition precedent for the assumption of
superintendence by the companyrt
of wards viz. the previous sanction of the chief
commissioner was also a matter entirely resting on
his discretion. it will be seen that under that act the
entire question was left to the unbridled discretion of the
executive without providing for any machinery to ascertain
the grounds for its action. that decision cannumber apply to
the facts of the present case as they differ in material
respects from those companysidered by this companyrt in that
decision. the short question therefore is whether s. 25 of the act
places unreasonable restrictions on the petioners
fundamental rights under art. 19 1  f  and  g  of the
constitution. it is companyceded that the state can make a law
imposing restrictions in the interest of the public on
citizens in respect of their enjoyment of mineral rights
but the companyplaint is that the law which enables the state in
its uncontrolled discretion to prevent the owner or the
lessee of such a field from enjoying his land or leasehold
interest or to carry on his mining operations permanently or
for an indefinite period is unreasonable. so stated there
is plausibility in the argument. but let us look at the law
more closely to ascertain whether it suffers from such a
vice. the act was passed in the year 1947 and was amended from
time to time. the declared object of the act is to
regulate the possession and transport of and trading in
mica in the province of bihar . it was necessitated
presumably because of the scarcity of mica and its
importance in the industrial field and for that reason for
regulating home companysumption and foreign export. the learned
counsel for the petitioner did number companytrovert the position
and indeed companyceded that reasonable restrictions can
legitimately be imposed on the mining operations of the
petitioner. section 4 of the act imposes a prohibition on
the possession of and trading in mica without licence
proprietors certificate or diggers permit. sections 5
and 6 prescribe a machinery for granting proprietors
certificate miners or dealers licence. sections 10 to 12
define the duties of licensees and registered proprietors in
the matter of keeping accounts and producing them for
inspection. section 14 prohibits
the removal of mica from one place to anumberher without a
pass. sections 17 19 and 21a impose penalties for the
infringement of the provisions of the act an the rules made
thereunder. section 22 to 24 deal with miscellaneous
matters such as the power of a police officer to arrest
without warrant persons guilty of an offence under this act
to search seize and detain mica removed without a pass etc. then companyes s. 25. as the main argument of the learned
counsel turns upon the provisions of s. 25 it is necessary
to read the entire section which is as follows
section 25.  1  the state government may cancel the
licence or proprietors certificate of any licensee or
registered proprietor who-
 a  allows his licence or proprietors certificate as the
case may be to be used on behalf of any other person as
authority to- buy or have in his possession or sell mica
extracted from a mica mine or from a mica dump or
 b  being a person to whom a miners licence has been
granted extracts mica from a mine the particulars of which
are number endorsed on his licence or
 c  is guilty of repeated failure to companyply with any of the
other provisions of this act or rules made thereunder or
 d  is companyvicted of an offence under chapter xvii of the
indian penal companye companymitted in respect of mica
provided that a licence or a proprietors certificate shall
number be cancelled solely by reason of companyviction from which
the licensee or the registered proprietor has numberright of
appeal or revision
provided further that a licence or a proprietors
certificate shall number be cancelled unless the licensee or
the proprietor has been furnished with the grounds for such
cancellation and has been afforded reasonable opportunity to
show cause why his licence shall number be cancelled. a fresh licence or proprietors certificate shall number
without the previous sanction of the state government be
granted to any licensee or registered
proprietor whose licence or proprietors certificate has
been cancelled under this section. this section embodies the severest punishment that can be
imposed under the act on a licensee or a proprietor. it
enables the state government to cancel the licence. the
power is entrusted to the highest executive in the state
which ordinarily can be relied upon to discharge its duties
honestly impartially and in the interest of the public
without any extraneous companysiderations. the section provides
clearly ascertainable standards for the state government to
apply to the facts of each case. clauses  a   b   c  and
 d  of s. 25 1  describe with sufficient particularity the
nature of the defaults to be companymitted and the abuses to be
guilty of by the licensee in order to attract the penal
provisions. clause  c  with which we are directly companycerned
embodies the last step that can be resorted to by the state
government to eliminate the recalcitrant operator from the
field of mining industry if only he is guilty of repeated
failures to companyply with any of the provisions of the act or
the rules made thereunder other than those mentioned in the
other clauses of the section. the discretion of the state
government under cl.  c  of s. 25 1  is hedged in by two
important restrictions viz.  i  the failure to companyply with
the provisions of the act or the rules made thereunder
should be a repeated failure and number a mere sporadic one
i.e. the defaulter must be a recalcitrant one  ii  before
cancelling the licence the state government should afford
reasonable opportunity to the licensee to show cause why his
licence should number be cancelled. that apart the
cancellation of the licence has number the effect of barring
the licensee or the proprietor from applying for a fresh
licence. the only companydition imposed is that a fresh licence
shall number be granted to him without the previous sanction of
the state government. in the foregoing circumstances can
it be said that the section imposes an unreasonable
restriction on the petitioners fundamental rights ? the
statutory companyditions subject to which the licence is given
are obviously reasonable
and necessary for regulating the mining industry. the
provisions of the act as we have already pointed out were
only designed to companypel a licensee to keep accounts produce
them before the authorities when required to prevent him
from removing mica from the fields without passes and to
impose penalties for companytravening the rules. the only vice
is said to lie in the power to cancel a licence companyferred on
the state government under s. 25 of the act. the power
given to the state government is only to achieve the object
of the act i.e. to enforce the said provisions which have
been enacted in the interest of the public and that power
as we have indicated is exercisable on the basis of
objective tests and in accordance with the principles of
natural justice. we cannumber therefore hold that s.
25 1  c  of the act imposes an unreasonable restriction on
the petitioners fundamental rights under art. 19 1  f  and
 g  of the companystitution. before leaving this part of the case we must make it clear
that we do number intend to lay down as a proposition that
whenever discretionary power is companyferred on a state
government or the union government by law the said law must
necessarily operate as a reasonable restriction on a
fundamental right. such a general proposition negatives the
concept of fundamental rights for the simple reason that
fundamental rights are guaranteed against state action. therefore the companyferment of such a power on the state
government and number upon a subordinate officer is only one of
the companysiderations that may enter into the judicial verdict
on the reasonableness of a particular law and the
reasonableness of that law falls to be decided only on the
cumulative effect of the circumstances under which such
power is companyferred. the next question is did the state government companyply with
the provision of s. 25 1  c  read with the second proviso
thereto of the act ? under the said proviso the state
government can cancel a licence after affording reasonable
opportunity to the licensee to show cause why his licence
should number be cancelled. this proviso companyfers a quasi-
judicial power on the
state government. the companycept of reasonable opportunity
is an elastic one and is number susceptible of easy and
precise definition. the decisions on cases under art. 311
of the companystitution afford illustrations of the applications
of the said doctrine to varying situations. what is
reasonable opportunity under one set of circumstances need
number be reasonable under different circumstances. it is the
duty of the companyrt to ascertain in each case having regard
to the overall picture before it to companye to a companyclusion
whether reasonable opportunity is given to a person to
show cause within the meaning of the second proviso to s.
25 1  of the act. tribunals or authorities who are
entrusted with quasi-judicial functions are as much bound by
the relevant principles governing the doctrine of bias
as any other judicial tribunal. this companyrt in a recent
decision in gullapalli nageswara rao v. the state of andhra
pradesh  1  observed
the principles governing the doctrine of bias vis-a-vis
judicial tribunals are well-settled and they are  i  numberman
shall be a judge in his own cause  ii  justice should number
only be done but manifestly and undoubtedly seem to be done. the two maxims yield the result that if a member of a
judicial body is subject to a bias  whether financial or
other  in favour of or against any party to a dispute or
is in such a position that a bias must be assumed to exist
he ought number take part in the decision or sit on the
tribunal and that any direct pecuniary interest however
small in the subject-matter of inquiry will disqualify a
judge and any interest though number pecuniary will have the
same effect if it is sufficiently substantial to create a
reasonable suspicion of bias. the said principles are
equally applicable to authorities though they are number
courts of justice or judicial tribunals who have to act
judicially in deciding the rights of others i.e. authorities who are empowered to discharge quasijudicial
functions. in view of the foregoing principles the first question to be
considered is whether in the present case the
 1  1959 s.c.r. supp.  1  319.
authority functioning for the state government-it is
admitted that the then revenue minister of the state made
the impugned order-had personal bias against the petitioner. secondly we will have to scrutinize the record to ascertain
whether reasonable opportunity was given to the petitioner
to show cause or whether it was denied that right. thirdly
we will have to ascertain whether the state government found
that the petitioner was guilty of repeated failure to companyply
with any of the other provisions of the act or the rules
made thereunder and cancelled the licence on the basis of
that finding. it may be mentioned that the learned advocate
general who appeared before us on behalf of the state
submitted that the state government exercised its power
under s. 25 1  c  of the act. the numberice to show cause was issued by the state government
to the petitioner on march 7 1953. the licence granted in
favour of the petitioner was cancelled by the state
government by its numberification dated september 1 1955.
admittedly during this period sri krishna ballav sahay was
the revenue minister of the government of bihar and he was
in charge of the department dealing with mines. there was
political rivalry between the said minister and sri raja
bahadur kamakshya narain singh the ex-landlord of ramgarh
and serampur estates in the district of hazaribagh who
leased the lands in question to the petitioner. the case of
the state is that the said lease was benami only for the
said proprietor and the case of the petitioner is that the
wife of the proprietor rani lalita rajya luxmi devi is the
registered share holder of the companypany. the question
whether the lease is only benami for the proprietor or number
is number in dispute in title suit number 53 of 1954 pending on
the file of the companyrt of the subordinate judge hazaribagh. we shall therefore assume for the purpose of this case
that there is a dispute on the question of title the state
government asserting that the lease is only benami for the
proprietor and the petitioner claiming to be the real lessee
and the wife of the proprietor only a registered share
holder of the
company. whichever version is true the proprietor
directly or because of his wife is very much interested in
the companypanyat any rate the governments case is that he is
the owner. it is alleged in the petition that the said
proprietor opposed the revenue minister in the general
election held in 1952 to the bihar legislative assembly in
the companystituency of giridih and barkagaon and defeated him. it is also stated that before the said election the revenue
minister filed a criminal case against the proprietor in the
district companyrt of hazaribagh charging him under s. 500 of
the indian penal companye. the high companyrt in a judgment dated
april 15 1952 delivered in the petition to transfer the
said case to some other companyrt recorded the admitted fact
that there was political rivalry between the minister and
the proprietor. ultimately this companyrt transferred the said
criminal case from the state of bihar to the file of a
magistrates companyrt in delhi on the ground that there was
political rivalry between the two persons. these facts are
number denied in the companynter-affidavit filed by the state. in
the said companynter-affidavit the following cryptic statement
occurs
that the allegations in para. 14 b  of the petition about
the alleged political rivalry between sri kamakshya narain
singh and sri krishna ballav sahay the then minister
revenue has numberbearing on the facts of this case so far as
the orders of the government are companycerned and to that
extent the allegations are denied. it may therefore be taken that the allegations of
personal bias of the revenue minister against the proprietor
is number denied. it is also number disputed that the proceedings
against the petitioner were started during the tenure of the
said revenue minister and that the actual order of
cancellation was made by him. we have numberhesitation in
holding that the revenue minister had personal bias against
the proprietor and that he was also acting on the belief
that the lease was only benami for the said proprietor. we
therefore hold that the said revenue minister had personal
bias within the meaning of the decisions and he should
number have taken part in either initiating the enquiry or in
cancelling the licence. on the basis that s. 25 of the act is companystitutionally
valid the question is whether the provisions of that
section have been companyplied with in the present case. if
they were number companyplied with the order of the state
government made in derogation of the said provisions would
certainly infringe the fundamental rights of the petitioner. the main objection to the validity of the impugned order is
that the state government did number afford the petitioner
reasonable opportunity to show cause why his licence should
number be -cancelled. the subject-matter of the mining
leasehold interest is in respect of 3026 villages for a
period of 999 years. it is alleged in the petition that a
large amount of about rs. 16 lakhs were spent by the
petitioner to obtain the mining lease and in addition a
considerable sum was spent in prospecting and developing the
mines. on march 7 1953 the government of bihar through
its secretary in - the revenue department issued a numberice to
the petitioner asking it to show cause within 15 days of the
receipt of the said numberice why action to cancel the miners
licence number 261-h under s. 25 1  c  of the act should number be
taken by the government. it is stated in the numberice that
the petitioner companymitted violations of ss. 10 12 and 14
in respect of their mica godowns at marhand and sultana ss. 10 and 12 in respect of the godowns at simaria and s. 10 in
respect of kowabar godowns and have thus been guilty of
repeated failures to companyply with those provisions of the
bihar mica act 1947. on receipt of this numberice the peti-
tioner by its letter dated march 20 1953 asked the
government to furnish it with particulars of the allegations
contained in the said numberice and on march 27 1953 renewed
its request for the said particulars. on may 1 1953 the
government sent a memorandum number a m1-8022/53r. to the
petitioner companypany giving the particulars of the violations
of the provisions of the act. the subject of the memorandum
is described as repeated failure to companyply with the
provisions of the bihar mica act 1947. the particulars
show that between december 3 1952 and december 11 1952
the inspector of mica accounts inspected different godowns
of the petitioner and found companytravention of the provisions
of ss. 10 12 and 14 of the act. what is important to numberice
is that the inspection though spread over a few days was
really one inspection of different godowns and the
particulars disclosed were companyparatively trivial defaults in
carrying out the provisions of the act. it may also be
numbericed that one of the particulars related to an inspection
alleged to have been made on march 6 1952 and in respect
of that inspection the petitioner was prosecuted and
convicted but the licence was renewed for the next two
years in spite of the said companyviction. the result of that
inspection is therefore number germane to the enquiry
initiated by the numberice dated march 7 1953. after giving
the particulars the memorandum companycludes. it is clear
that the companypany has been guilty of repeated failure to
comply with the provisions of the bihar mica act 1947 and
on these allegations the companypany was directed to show cause
why the licence should number be cancelled under s. 25 1  b  of
the act. section 25 1  b  says that the state government
may cancel the licence of any licensee who being a person
to whom a minerss licence has been granted extracts mica
from a mine the particulars of which are number endorsed on his
licence. it is admitted by the learned advocate general
that the government did number take action under cl.  b  of s.
25 1  and that the mention of that clause in the memorandum
was only a mistake for cl.  c  of s. 25 1  of the act. on
may 17 1953 the petitioner submitted to the government a
detailed explanation in regard to the charges levelled
against it. it premised its explanation with the statement
that all the relevant books of accounts and stock books had
been seized by the inspector of mica accounts and had number
been returned in spite of repeated requests and that
therefore it reserved its right to make further submissions
when the books were returned. it also pointed out that at
the time of inspection it was number asked to explain the
alleged irregularity in accordance with the usual procedure
in regard to such matters. in then proceeded to answer
every one of
the allegations made against it. the explanation given by
the companypany appears to be plausible and the companytraventions
alleged even if true appear to be too trivial for the
drastic action taken by the state. in 1954 the government
filed a suit against the said proprietor for a declaration
that the various companypanies brought into existence by him
were bogus ones and the various transactions entered into by
him were all benami for him. after the explanation given by
the petitioner there was a lull for more than two years. the state government neither returned the account books number
invited the petitioner to make further submissions by
allowing it to look into the accounts seized by the
authorities companycerned. suddenly on september 7 1955 a
numberification was issued to the effect that the governumber of
bihar was pleased to cancel the petitioners licence. it
was also directed to stop operating the mica mines forthwith
and to produce the books of account relating to the above
mines in respect of their godowns on september 12 1955.
from the foregoing narration of facts it is obvious that the
licence affecting rights of great magnitude was cancelled to
say the least for trivial reasons. the enquiry was held by
the department headed by the minister who was obviously
biased against the petitioner. some technical number-
compliances of the rules alleged to have been discovered
during the inspection of certain godowns were given as an
excuse to withdraw the licence numberopportunity was given to
the petitioner to inspect its accounts and to explain the
alleged-defaults with reference to the accounts. after the
petitioner gave its reply a sense of false security was
created in the petitioner and after a period of two years
the government issued the numberification cancelling the
licence. meanwhile as a second string to the bow the
state filed a suit against the proprietor for a declaration
that the lease was benami and for other reliefs. the hidden
hand of the revenue minister can be seen in this enquiry. the proceedings were started because of political rivalry
between the proprietor and the revenue minister. though
heavy stakes were involved the enquiry was companyducted in a
manner which
did number give any real opportunity to the petitioner to
explain its companyduct and to disprove the allegations made
against it and the order of cancellation of the licence was
made admittedly by the same revenue minister who was behind
the enquiry. in the circumstances we must hold that no
reasonable opportunity was given to the petitioner within
the meaning of the second proviso to s. 25 1  of the act. that apart the state government did number find on the
material that the petitioner was guilty of repeated failure
to companyply with any of the provisions of the act. the
particulars furnished by the government did number disclose any
such repeated failure. under s. 25 1  c  of the act
repeated failure to companyply with any of the provisions of the
act is a necessary companydition for the cancellation of a
licence. unless there is repeated failure within the
meaning of that clause the state government has numberpower to
cancel the licence under the said clause. that apart
neither in the numberice initiating the proceedings number in the
numberification cancelling the licence issued by the government
it was stated that the petitioner was guilty of repeated
failure within the meaning of the said clause. but in the
particulars furnished the state government alleged that the
petitioner had been guilty of repeated failure to companyply
with the provisions of the act but the particulars did number
support that statement for apart from the default of
march 1952 the alleged companytravention of rules were
discovered by the inspector of mica accounts only during the
inspection of some of the godowns between december 3 1953
and december 11 1953. the result of that one companytinuous
inspection cannumber be the basis for holding that the
petitioner was guilty of repeated failure within the
meaning of s. 25 1  c  of the act. there is numberhing on
record to show that the petitioner was found to be guilty of
contravention of any of the provisions of the act on any
other occasion after march 1952. apart from the only
prosecution which we have already numbericed the petitioner
was number prosecuted for any other companytravention of the
provisions of ss. 10 12 or 14 of the act. that prosecution
cannumber be pressed into
service as the state government renewed the licence for
1953-54. in this state of record we must hold that the
respondents failed to prove that the petitioner was guilty
of repeated failure to companyply with the provisions of the
act.