civil appellate jurisdiction civil appeal number 139 of 1962.
appeal from the judgment and decree dated numberember 6 1958
of the bombay high companyrt in special civil application
number1806 of 1958.

j. kolah j. b. dadachanji o. c. mathur and ravinder
narain for the appellant. gopal singh and r. n. sachthey for the respondents. 1962. numberember 14. the following judgments were delivered. the judgment of s. k. das and j. l. kapur jj. was
delivered by s. k. dasj. the judgment of m. hidayatullah
and raghubar daval jj. was delivered by m. hidayatullah j.

k. sarkar. j. delivered a separate judgment. k. dasj.-this appeal on a certificate of fitness
granted by the high companyrt of bombay raises a question of
interrpetation of sub-s.  10  of s 35 of the indian income-
tax act 1922. this sub-seption
is one of a group of sub-sections substituted or inserted in
the said section by s. 19 of the finance act 1956  act 18
of 1956 . by s. 28 of the said finance act sub-s.  10  of
s. 35 of the income-tax act 1922 came into force on april
1 1956. the short question before us is whether on its
true companystruction sub-s.  10  of s. 35 applies in a case
where a companypany declares dividends by availing itself wholly
or partly of the amount on which a rebate of income-tax was
earlier allowed to it under clause  1  of the proviso lo
paragraph b of part i of the relevant schedules to the
finance acts when such dividends were declared prior to the
coming into force of the subsection that is prior to april
1 1956.
the facts which have given rise to the appeal are these. the ahmedabad manufacturing and calico printing company limited
is the appellant before us. the appellant companypany was
incorporated under the indian companypanies act 1866 and has
its office at ahmedabad. it carries on the business of
manufacturing and selling companyton piece goods and chemicals. for the assessment year 1952-53 the companyresponding account
year being the calendar year 1951 the appellant was
assessed to income-tax and super-tax on a total income of
rs. 10279808/- and was allowed a rebate of one anna per
rupee on the undistributed fits of rs. 3662776/- under the
first proviso to paragraph b of. part i of the first
schedule to the finance act 1952. the amount of rebate
allowed was rs. 228924/-. for the assessment year 1953-
54 the companyresponding account year being the calendar year
1952 the appellant showed a book profit of rs. 45679666 - but was assessed to a loss of rs. 598353/-
on april 17 1954. for the said calendar year 1952 the
appellant declared a dividend of rs. 19320000/- on april
20 1954. this dividend came out of the undistributed
profits of the calendar year 1951 on which the appellant had
been allowed rebate. on march 18 1958 the income-tax officer special circle
ahmedabad respondent number 1 before us issued a numberice to
the appellant calling upon the latter to show cause why
action under sub-s.  10  of s. 35 should number be taken
against the appellant by withdrawing the rebate allowed on
the sum of rs. 1932000/-. the appellant raised some
objections one of which was that sub-s.  10  of s. 35 did
number apply to his case. the income-tax officer however
held that sub-s.  10  of s. 35 applied and accordingly
directed that the rebate allowed on the sum of rs. 1932000/- should be withdrawn by recomputing the tax
payable by the appellant. he ordered the issue of a demand
numberice for a sum of rs. 120750/- which was the rebate
allowed on rs. 1932000/-. the income-tax officer passed
this order on march 27 1958.
being aggrieved by that order the appellant moved the high
court of bombay by a writ petition filed on june 26 1958.
the main ground taken by the appellant was that sub-s.  10
of s. 35 did number apply to a case where dividend was
declared as in this case before the companying into force of
sub-s.  10  of s. 35. the high companyrt rejected this
contention and dismissed the writ petition. the appellant
then obtained certificate of fitness and has preferred the
present appeal in pursuance of that. certificate. we may number read some of the provisions of s. 35 in so far as
they are relevant for our purpose-
s. 35 1  the companymissioner or appellate
assistant companymissioner may at any time within
four years from the date of any order passed
by him in appeal or in the case of the companymi-
ssioner in revision under s. 33a and the
income-tax officer may at any time within
four years from the date of any assessment
order or refund order passed by him on his own
motion rectify
any mistake. apparent from the record of the
appeal revision assessment or refund as the
case may be and shall within the like period
rectify any such mistake which has been
brought to his numberice by an assessee
xx xx xx
 2  xx xx
 3  xx xx
 4  xx xx

where in respect of any companypleted
assessment of a partner in a firm it is found
on the assessment or reassessment of the firm
or on any reduction or enhancement made in th
income of the firm under section 31 section
33 section 33a section 33b section 66 0
section 66a that the share of the partner in
the profit or loss of the firm has number been
included in the assessment of the partner or
if included is number companyrect the inclusion of
the share in the assessment or the companyrection
thereof as the case may be shall be deemed
to be a rectification of a mistake apparent
from the record within the meaning of this
section and the provisions of sub-section  1
shall apply thereto accordingly the period of
four years referred to in that sub-section
being companyputed from the date of the final
order passed in the case of the firm. where the excess profits tax or the
business profits tax payable by an assessee
has been modified in appeal revision or any
other proceeding or where any excess profits
tax or business profits tax has been assessed
after the companypletion of the companyresponding
assessment for income-tax  whether before or
after the companym. mencement of the indian income-tax  amendment
act 1953  and in companysequence thereof it is
necessary to recompute the total income of the
assessee chargeable to income-tax such re-
computation shall be deemed to be a rectifica-
tion of a mistake apparent from the record
within the meaning of this section and the
provisions of sub-section  1  shall apply
accordingly the period of four years referred
to in that subsection being companyputed from the
date of the order making or modifying the
assessment of such excess profits tax or
business profits tax.  7  xx xx
 8  xx xx
 9  xx xx

where in any of the assessments for the
years beginning on the 1st day of april of the
years 1948 to 1955 inclusive a rebate of
income-tax was allowed to a companypany on a part
of its total income under clause  1  of the
proviso to paragraph b of part i of th
relevant schedules to the finance acts
specifying the rates of tax for the relevant
year and subsequently the amount on which the
rebate of income-tax was allowed as aforesaid
 is availed of by the companypany wholly or
partly for declaring dividends in any year
the amount or that part of the amount availed
of as aforesaid as the case may be shall by
reason of the rebate of income-tax allowed to
the companypany and to the extent to which it has
number actually been subjected to an additional
income-tax in accordance with the provisions
of clause  ii  of the proviso to paragraph b
of part i of the schedule to the finance acts
above referred to be deemed to have been made
the subject of incorrect relief under this
act and the income-tax officer shall
recompute the tax payable by the companypany by
reducing the rebate originally allowed as if
the companyputation is a rectification of a
mistake apparent from the record within the
meaning of this section and the provisions of
sub-section  1  shall apply accordingly the
period of four years specified therein being
reckoned from the end of the financial year in
which the amount on which the rebate of
income-tax was allowed as aforesaid was
availed of by the companypany wholly or partly for
declaring dividends. speaking generally s. 35 deals with rectification of
mistakes in circumstances detailed in the various sub-
sections thereof and provides for orders companysequent on such
rectification. sub-section  1  empowers the income-tax
authorities to rectify mistakes apparent from the record in
respect of certain orders passed by them. it provides that
the income-tax officer companycerned may at any time within four
years from the date of any assessment order passed by him on
his own motion rectify any mistake apparent from the record
of the assessment the power of rectification may be
exercised subject to two companyditions  1  that there is a
mistake apparent from the record of the assessment and  2
that the order of rectification is made within four years
from the date of the assessment sought to be rectified. sub-section  5  deals with inclusion or companyrection of the
income of a partner in a firm companysequent upon assessment or
reassessment of the firm of which he was a partner. sub-
section  6  deals with recomputation of total income of an
assessee in companysequence of modifications made in the excess
profits tax or the business profits tax payable by an
assessee subsequent to an assessment made under the income-
tax act. these two subsections were companysidered by this
court in two decisions
to which we shall presently refer. they have been relied on
by the appellant and have some bearing on the interpretation
of sub-s.  10 . sub-sections  2   3   4   7   8  and
 9  are number relevant for our purpose and need number be
referred to. number we companye to sub-s. 10 . it deals with a case where a
rebate was allowed to a companypany on a part of its income
 viz. undistributed profits  by virtue of the companycessions
given by the finance acts of 1948 to 1955. this is clear
from the first part of the sub-section. the second part
states the companydition in which or rather the crucial event
on the happening of which the rebate granted. to a companypany
is deemed to have been given by a mistake apparent from the
record this companydition or crucial event is the declaration
of dividends by the companypany out of the amount in whole or
part on which abate was earlier granted to it. the third
and operative part states that on the happening of the
crucial event the amount on which rebate was granted and
which has been subsequently utilised for declaring dividends
shall be deemed to have been made the subject of incorrect
relief under the act and the income-tax officer shall re-
compute the tax payable by the companypany by reducing the
rebate originally allowed as if the recomputation is a
rectification of a mistake apparent from the record within
the meaning of the section. the fourth and last part
introduces a period of limitation of four years the four
years being reckoned number from the date of the order passed
as in sub-s. 1  but from the end of the financial year in
which the amount on which rebate of income-tax was allowed
was availed of by the companypany wholly or partly for declaring
dividends. this in brief appears to be the scheme of sub-
s.  10  of s. 35.
number the argument on behalf of the appellant is this. like
sub-s.  5  of s. 35 sub-s.  10  affects a
vested right namely the right to a rebate of income-tax on
a part of the total income of the companypany under clause  1
of the proviso to paragraph b of part i of the relevant
schedules to the finance acts of 1948 to 1955 and the
further right to declare dividends out of the undistributed
profits of the previous year. under the well settled rules
of statutory companystruction numberstatute which impairs an
existing right or obligation except as regards a matter of
procedure shall have retrospective operation unless such a
construction appears very clearly in the terms of the act or
arises by necessary and distinct implication. put
differently a statute is number to be companystrued to have a
greater retrospective operation than its language renders
necessary and it is submitted that the general
rule is that all statutes other than those which are merely
declaratory or which relate only to matters of procedure or
of evidence are prima facie prospective and retrospective
effect is number to be given to them unless by express words or
necessary implication it appears that this was the
intention of the legislature and it is a companyollary of
this general presumption against retrospection that even
when a statute is intended to be to some extent
retrospective it is number to be companystrued as having a
retrospective effect than its language renders necessary.  halsburys laws of england vol. 36. third edition p. 423
and p. 426 . the argument on behalf of the appellant is
that by s. 28 of the finance act. 1956 sub-s.  10  has
undoubtedly retrospective effect from april 1 1956 but the
language of the sub-section does number expressly number by
necessary implication show that it has any greater
retrospective effect. it is pointed out that on the
contrary where the legislature wanted a particular sub-
section to have greater retrospective effect it had said
so e. g. in sub-s.  6 . it is also pointed out that sub-s.
 5  of s. 35 was inserted by the indian income-tax
 amendment  act 1953 and by s. 1  2
of the said act it came into force on april 1 19.52. where
the legislature wanted to give greater retrospective effect
to particular provisions it said so in ss. 3  2  7  2  and
30  2  of the said act. that being the position the
argument on behalf of the appellant is that we should number
give any greater retrospective effect to sub-s.  10  of s.
35 than what has been done by s. 28 of the finance act
1956. learned companynsel for the appellant has strongly relied
on the decision of this companyrt in income-tax officer v. s. k.
habibullah  1  wherein with regard to sub-s.  5  of s. 35 it
was held that the subsection was number declaratory of the pre-
existing law number a matter relating to procedure but effected
vested rights and must be deemed to have companye into force
only from april 1 1952 therefore the income-tax officer
had numberjurisdiction under the said sub-section to rectify
the assessment of a partner companysequent on the assessment of
the firm in cases where the firms assessment was companypleted
before april 1 1952. the argument of the learned companynsel
for the appellant is that the same principle must apply in
the present case and sub-s.  10  of s. 35 does number apply to
a case where dividend was declared by the companypany before the
date of the companying into force of the sub-section namely
april 1 1956.
the second part of the argument of the learned companynsel for
the appellant is that there is numberreal difference in
language between the two sub-sections sub-s.  5  and sub.s.  10  of s. 35. in both cases 1 rectification or companyrection
is made by reason of a subsequent event in sub-s.  5  the
subsequent event is the assessment of the firm which
discloses the inaccuracy in the earlier assessment of a
partner in sub-s.  10  the subsequent event is the
declaration of dividend out of the amount on which a rebate
was earlier granted. it is pointed out that in their true
scope and effect the two sub-sections stand on the
 1  1962 supp. 2 s. c r 716
same footing. sub-section  10  further makes it clear that
by a legal fiction that which was companyrect at the time when
it was made is rendered incorrect after the companying into
force of the sub-section. the sub-section states clearly
shall by reason of the rebate of income-tax
allowed to the
company be
deemed to have been made the subject of
incorrect relief under this act and the
income-tax officer shall re-compute the tax
payable by the companypany by reducing the rebate
originally allowed
this language it is argued is clearly prospective and does
number justify the carrying of the legal fiction to a period
earlier than april 1 1956.
as against these arguments learned companynsel for the
respondent has companytended that the language of sub-s.  10  is
different from that of sub-s.  5  and the principle laid
down by this companyrt in s. k. habibullahs  1  cannumber be
applied to the present case. alternatively he has argued
that the decision is incorrect and should be reconsidered by
us. the argument of learned companynsel for the respondent is
that sub-s.  10  by necessary implication has a greater
retrospective effect than what is laid down by s. 28 of the
finance act 1956. he points out that the first part of the
subsection talks of the assessments made for any of the
years beginning on april 1 1948 to april 1 1955 when a
rebate of income-tax was allowed then the second part
refers to the subsequent declaration of dividend by the
company in any year. learned companynsel for the respondent has
emphasised the expression in any year and has submitted
that this shows that the intention was to take in a
declaration of dividend made even earlier than april 1
1956 according
 1  1962 supp 2 s.c.r. 716
to him the only effect of s. 28 of the finance act 1956
is that the income-tax officer can take action only after
april 1 1956 but the language of the sub-section does number
justify the companyclusion that the legal fiction created by it
must be restricted to the declaration of dividends on or
after april 1 1956.
we have carefully companysidered these arguments. the language
of sub-s.  10  of s. 35 is perhaps number as clear as one might
wish it to be. there is numberdoubt however that the sub-
section affects vested rights and should number be given a
greater retrospective operation than its language renders
necessary. even through the sub-section is to a certain
extent retrospective and s. 28 of the finance act 1956 in
express terms makes it retrospective from april 1 1956 it
is clear to us that there is numberhing in the language of the
sub-section which would justify the inference that the
legislature intended to carry the legal fiction created by
the sub-section to a period earlier than the date on which
the sub-section came into force. the maxim applicable in
such cases is that even in companystruing a section which is to
a certain extent retrospective the line is reached at which
the-words of the section cease to be plain. we are further
of the opinion that when the first part of the sub-section
refers to the assessments in the years 1948 to 1955 it
merely. refers to the period during which the rebate
provisions were in force. it is number disputed before us that
the rebate provisions came into force from the finance act
of 1948 and ended with the finance act of 1955. the first
part therefore is merely a reference to the period during
which the rebate provisions were in force. it is indeed
true that in the second part of the sub-section the ex-
pression used is declaring dividends in any year and this
has to be read in companyjunction with the word subsequently
which can only mean subsequent to the allowance or the
rebate. but in the very
same part it is further stated that the declaration of
dividend in any year shall by reason of the rebate be
deemed to have made the amount on which the rebate was
granted the subject of incorrect relief etc this language
which creates the legal fiction is clearly prospective and
shows that what was companyrect at the time when the rebate was
granted is rendered incorrect on the happening of the
crucial event after the companying into force of the sub-
section and by the express terms of s. 28 of the finance
act 1956 the sub--section companyes into force on april 1
1956. we are unable therefore to agree with the learned
counsel for the respondent that the language of sub-s.  10
by necessary implication takes the legal fiction back to a
period earlier than april 1 1956. in companying to this
conclusion we have kept in mind the principle that a
statute does number necessarily become retrospective because a
part of the requisites for its action is drawn from a time
antecedent to its passing. further more we see numberreason why the principle laid down in

k. habibullahs case  1  will number apply in the present
case number are we satisfied that decision with regard to sub-
s.  5  of s. 35 was incorrect. we may point out however
that in second additional income-tax officer v. atmala
nagaraj  2  this companyrt went a step further and held that
sub-s.  5  of s. 35 was number applicable to cases where the
assessment of the partner was companypleted before april 1
1952 even though the assessment the firm was companypleted
after april 1 1962 of learned companynsel for the appellant
frankly companyceded before us that he did number wish to go
as far as that and companytend that even in a case where a
declaration of devidend was made after april 1 1956 sub-s.
 10  would number apply because that would make sub-s.  10
unworkable. the
 1  1962 supp. 2 s.c.r. 716.  2  1962 46 i.t.r. 609.
decision in second additional income-tax officer v. atmala
nagaraj  1  may perhaps require reconsideration as to which
we need number express any final opinion number but so far as
this case is companycerned we see numberreason why the principle in

k. habibullahs case  2  will number apply. the principle
is simply this. a statute which is number declaratory of a
preexisting law number a matter relating to procedure but
affects vested rights cannumber be given a greater
retrospective effect than its language renders necessary
and even in companystruing a section which is to a certain
extent retrospective the line is reached at which the words
of the section cease to be plain. these are well settled
principles and there is numberreason to doubt their accuracy. for the reasons given above we would allow the appeal set
aside the order and judgment of the high companyrt and quash the
order of the income-tax officer dated march 27 1958 and
the numberice of demand dated march 28 1958. the appellant
will be entitled to its companyts throughout. sarkar j.-in its assessment to income-tax for the year
1952-53 the appellant a companypany had been granted under
the provisions of the finance act 1952 a rebate on a
portion of its profits of the previous year that is 1951
which it had number distributed as dividends to its
shareholders. in the next assessment year 1953-54 the
appellant used a part of the aforesaid undistributed profits
for declaring dividends. as the law then stood numberhing
could be done by the revenue authorities to withdraw the
rebate earlier granted on the ground of the profits being
utilised in declaring dividends in a latter year. from
april 1 1956 however there was a change in the law as
sub. s.  10  of s. 35 of the income-tax act 1922 was
brought into force then. by an order made on march 27
1958 under that sub-section the terms of
 1  1962 46 i.t.r. 609
 2  1962 supp. 2 s.c r. 716.
which i will set out presently the aforesaid rebate was
withdrawn and the appellant was called upon to refund it. the appellant then applied to the high companyrt at bombay for a
writ to quash the order of march 27 1958 on the ground
that sub-s.  10  was number applicable to the facts of this
case for reasons which i will later state. that application
was dismissed. this appeal is against this decision of the
high companyrt at bombay dismissing the application. number sub-s.  10  of s. 35 of the income-tax act was enacted
by the finance act of 1956 and it was given effect from
april 1 1956. that sub-section in so far as it is
necessary to state for the purpose of this case provides
that where in any of the assessment 1948-49 to 1955-56 a
rebate of income-tax was allowed to a companypany under the
finance act prevailing in that year on a part of its total
income and subsequently the amount on which the rebate of
income-tax was allowed as aforesaid is availed of by the
company wholly or partly for declaring dividends in any
year the income-tax officer
shall re-compute the tax payable by the companypany by reducing
the rebate originally allowed. the sub-section in substance
permits a rebate duly allowed in any year before. it came
into force to be withdrawn if subsequently the amount on
which the rebate was allowed is availed of for declaring
dividends in any year. the appellant companytends that the sub-section does number apply
unless the amount on which the rebate was granted is availed
of for declaring dividends after the sub section had companye
into force that is after april 1 1956 and therefore it
does number apply to the present case. it is said that if it
were number so the sub-section would be given a retrospective
operation and the rule is that it is to be presumed that a
statute dealing with substantive rights is number to have such
operation. the case of income-tax officer madras v. s. k.
habibullah was cited in support of this companytention. i will assume that if the sub-section were applied to a case
like the present it would affect a vested right. the rule
numberdoubt is that a statute is presumed number to do so. bat
this rule does pot apply if the language of the statute
indicates an intention to give it a retrospective operation. it seems to me that subs.  10  uses language which indicates
sufficiently clearly that it was intended to be applied
where the amount on which rebate had been obtained was
availed of for declaring dividends before the subsection
came into force that is to say to have a retrospective
operation. it says subsequently the amount an which the
rebate of income-tax was allowed as aforesaid is availed
of for declaring dividends in any year. there is numberdoubt that the words subsequently and in any
year mean in any year subsequently to the year in which the
rebate was granted. they would therefore clearly include
a year before the sub-section came into force. but it is
said that these words should in view of the rule be read as
number including a year before the sub-section came into force
as they also include years subsequent to the companying into
force of the sub-section and are therefore ambiguous. i am unable to accept this companytention. i find numberambiguity. if the intention was that the subsection would apply only
when the amount was availed of for declaration of dividends
after it was enacted then the words subsequently and in
any year were wholly unnecessary. without these words the
sub-section would have read and the amount is availed of
for declaring dividends. there would then be numberdoubt that
it was intended to operate only prospectively. but the
legislature used some more words. it must have done so with
 1  1962 supp. 2 s.c.r.716. some purpose. what that purpose was if it was number to give
the sub-section retrospective operation i failed to see. i
am unable to read the words subsequently and in any year
as otiose and as indicating numberdifferent intention. therefore it seems to me that the language of the sub-
section plainly requires it to have a retrospective
operation. the subsection is properly applicable to this
case. there is anumberher companysideration leading me to the view that
the presumption against retrospective operation does number
arise here. it was said in pardo v. bingham 1  that it was
number an invariable rule that a s companyld number have a
retrospective operation unless so expressed in its very
terms and that it was necessary to look to the general
scope and purview of the statute and at the remedy sought to
be applied and companysider what was the former state of the law
and what it was that the legislature companytemplated. it is
quite plain that in providing for the grant of rebate on
undistributed profits by the finance acts of 1948 to 1955
the legislature wanted to encourage the employment of the
profit made in a business in the business itself. the
object presumably was to expand the industries of the
country. this involved a long term employment of the
profits in the business. it companyld number have been the
intention of the legislature to grant rebate when a companypany
only kept the profits for a short time with itself and
having earned the rebate distributed the profits without the
industry having had any real benefit of them. i think
should state here that the provisions for the grant of
rebate did number require that dividend was number to be declared
at all. the object was to encourage a reasonable division
of the profits between the shareholders and the industry. allowance of rebate was provided for on that part of the
profits which was left for employment in the industry after
reasonable dividends had been
 1   1869  l. r. 4 ch. 735.
distributed to the shareholders. the rebate was allowed on
a graded scale depending on the amount of profits which was
number distributed as dividends. number the system of granting rebates started in 1948-49. it
was stopped in 1955-56. the subsection was brought into
force on april 1 1956 that isseven years after the system
had first been started. the sub-section provided for
withdrawal of the rebate when the amount on which it had
been granted was availed of in declaring dividends. it is
fairly clear from this that the legislature did number approve
of these amounts being utilised in declaration of dividends. it is also number too much to suppose that there had been many
previous cases of such utilisation of profits for if it had
number happened earlier there is numberreason to think that the
legislature anticipated the evil happening in future and
passed the law to stop it. in view of the large number of
years that had passed between the time when the allowance of
rebate companymenced and the time when the sub-section was
brought into force it can be imagined that a very large
number of cases of distribution of profits on which rebate
had been allowed had already taken place. i find it
difficult to think that many cases remained after april 1
1956 where a companypany which intended to utilise the amounts
on which rebate had been granted in the declaration of
dividends had number already done so. there is numberdispute that by sub-s.  10  the legislature
intended to penalise a case where subsequent to its
enactment the amount on which rebate had been granted was
utilised in declaration of dividends. number is there any
reason to think that the legislature did number want to impose
the penalty also on those who had earlier utilised the
amount in declaration of dividends ? there was numberspecial
merit in these latter
cases and i also think that they formed the majority of the
cases. the grant of rebate having been stopped after march
31 1956 there was numberoccasion to provide for cases of such
grant thereafter. all these circumstances lead me to the. view that the intention of the legislature was to penalise
the cases of utilisation of amounts on which rebate had been
granted in payment of dividends which had happened before
the sub-section came into force. the remedy which the sub-
section provided would largely fail in any other view. the
general scope and purview of the subsection and a
consideration of the evil which it was intended to remedy
lead me to the opinion that the intention of the legislature
clearly was that the subsection should apply to the facts
that we have in this case. as to s. k. habibullahs case  1  i do number think that much
assistance can be had from it. it applied the rule of
presumption against a statute having a retrospective
operation-as to which rule of companyrse there is numberdispute
to sub-s.  5  of s. 35. number cases on the companystruction of
one statute are rarely of value in companystruing anumberher
statute for each case turns on the language with which it
is companycerned and statutes are number often expressed in the
same language. the language used in sub-ss.  5  and  10
seems to me to be wholly different. there is numberhing in s.

habibullahs case  1  to indicate that in the opinion of
the learned judges deciding it there were any words which
would indicate that sub-s.  5  was to have a retrospective
operation. in my view sub-s.  10  companytains such words. furthermore i do number find that the other companysiderations to
which i have referred arose for discussion in that case. in my view the two cases are entirely different. i therefore think that sub-s.  10  of s. 35 properly
applies to this case. in my view the appeal should be
dismissed with companyts.  1  1962 supp. 2 s. c. r. 716.
hidayatullah j.-this is an appeal by an assessee with
certificate under art. 133  i  c  of the companystitution from
the judgment and order of the high companyrt of bombay
dismissing the assessee companypanys petition under art. 226 of
the companystitution which challenged an order under s. 35 10
of the income-tax act rectifying the earlier assessment and
sought a writ or writs to prohibit the income-tax
authorities from giving effect to that order. the assessee  the ahmedabad manufacturing calico printing
co. limited  is a public limited companypany carrying on business
of manufacture of companyton price-goods and chemicals. the
year of account of the assessee companypany is the calendar
year.in the assessment year 1952-53 companyresponding to the
calendar year 1951 the appellants were assessed on january
31 1953 on a total income of rs. 10279808. the
assessee companypany was allowed a rebate of one anna per rupee
amounting to rs. 228924 on the undistributed profits of
rs. 2662776 tinder the first proviso to paragraph b of
part i of the first schedule to the finance act 1952. for
the assessment year 1953-54  account year calendar year
1952  the books of the assessee companypany showed a profit of
rs. 4567966. that profit became a loss of rs. 598353.
after deductions like depreciation etc. were allowed. inspite of there being a loss the assessee companypany declared
on april 20 1953 a dividend of rs. 1932000 for the year
of account 1952.
the income-tax officer by an order dated march 18 1958
called upon the assessee companypany to show cause why action
under s. 35 10  of the income-tax act should number be taken to
recall a proportionate part of the rebate because in his
opinion the entire dividend of rs. 1932000 came out of
the undistributed profits of the calendar year 1951 on which
the appellant had received a rebate. the

where in respect of any companypleted assess-
ment of a partner in a firm it is found on the
assessment or re-assessment of the firm or on
any reduction or enhancement made in the
income of the firm under section 31 section
33 section 33a section 33b section 66 or
section 66a that the share of the partner in
the profit or loss of the firm has number been
included in the assessment of the partner or
if included is number companyrect the inclusion of
the share in the assessment or the companyrection
thereof as the case may be shall be deemed
to be a rectification of a mistake apparent
from the record within the meaning of this
section and the provisions of sub-section
 1  shall apply thereto accordingly the
period of four years referred to in that sub-
section being companyputed from the date of the
final order passed in the case of the firm. it must be numbericed that under this amendment time limit
started from the date of the final order passed in the case
of the firm though the rectification is to be made in the
assessment of the partners of the firm. by s. 19 of the finance act 1956 sub-s.  10   among
others  was added as from april 1 1956. that subsection
reads as follows -

where in any of the assessments for the
years beginning on the 1st day of april of the
rectify any such mistake which has . been brought to his
numberice by an assessee
it must be numbericed that the time limit started from the
date of the order of assessment which was to be rectified. in 1953 by s. 19 of the indian income-tax  amendment  act
1952  25 of 1953  sub-s.  5   among others  was added as
from april 1 1952. that sub-section reads as follows -

where in respect of any companypleted assessment of a
partner in a firm it is found on the assessment or re-
assessment of the firm or on any reduction or enhancement
made in the income of the firm under section 31 section 33
section 33a section 33b section 66 or section 66a that the
share of the partner in the profit or loss of the firm has
number been included in the assessment of the partner or if
included is number companyrect the inclusion of the share in the
assessment or the companyrection thereof as the case may be
shall be deemed to be a rectification of a mistake apparent
from the record within the meaning of this section and the
provisions of sub-section  1  shall apply thereto
accordingly the period of four years referred to in that
subsection being companyputed from the date of the final order
passed in the case of the firm. it must be numbericed that under this amendment time limit
started from the date of the final order passed in the case
of the firm though the rectification is to be made in the
assessment of the partners of the firm. by s. 19 of the finance act 1956 sub-s.  10   among
others  was added as from april 1 1956. mat sub-section
reads as follows -

where in any of the assessments for the years
beginning on the 1st day of april of the
years 1948 to 1955 inclusive a rebate of
income-tax was allowed to a companypany on a part
of its total income under clause  i  of the
proviso to paragraph b of part i of the rele-
vant schedules to the finance acts specifying
the rates of tax for the relevant year and
subsequently the amount on which the rebate of
income-tax was allowed as aforesaid is availed
of by the companypany wholly or partly for
declaring dividends in any year the amount or
that part of the amount availed of as
aforesaid as the case may be shall by
reason of the rebate of income-tax allowed to
the companypany and to the extent to which it has
number actually been subjected to an additional
income-tax in accordance with the provisions
of clause  ii  of the proviso to paragaph b of
part i of the schedules to the finance acts
above refer-red to be deemed to have been
made the subject of incorrect relief under
this act and the income-tax officer shall
recompute the tax payable by the companypany by
reducing the rebate originally allowed as if
the recomputation is a rectification of a
mistake apparent from the record within the
meaning of this section and the provisions of
sub-section  1  shall apply accordingly the
period of four years specified therein being
reckoned from the end of the financial year in
which the amount on which rebate of income-tax
was allowed as aforesaid was availed of by the
company wholly or partly for declaring
dividends. it will be numbericed that the time limit under this sub-
section was to companymence from the end of the financial year
in which the dividends were declared from profits on which
the rebate was earned earlier. the question in this case is whether sub-s.  10  can apply
co an assessment which had been nude be-
fore sub-s.  10  came into force. the companytention of the
assesse-company is that sub-s.  10  was given
retrospectivity only up to april 1 1956 and the words of
that at sub-section should be interpreted in such a way as
to give the sub-section numbergreater retrospectivity. according to the assessce companypany the assessment for the
year 1953-54 had become final on april 17 1954 that is to
say before the 1st day of april 1956 from which date sub-
s.  10  was made to operate. the provisions of s. 35 10
according to the assessee companypany companyld only be utilised if
dividends were declared after april 1 1956 but number if the
declaration took place earlier. reliance was placed upon
the decision of this companyrt in income-tax officer v.
habibullah 1  and reference was also made to anumberher
decision following habibullahs case  1  second additional
income-tax officer v. atmala nagaraj.  2
our learned brother das j. following habibullahs case
has held that the companytention of the assessee companypany is
well-founded and has expressed the opinion that atmala
nagarajs case  2  may need re-consideration. he has
therefore ordered the reversal of the judgement and order
of the high companyrt. in our judgement and we say it with
profound respect this appeal must be dismissed. we are
also of the opinion that both the above cases  which are of
the same divisional bench  may have to be reconsidered
hereafter. amala nagarajs case   followed habibullahs
case.    the difference in the facts of the two cases was
only in one respect and that was number sufficient to take
atmala naagarajs case  2  out of the ratio of the earlier
decision. we shall deal with these two cases later. the income-tax act imposes a charge of tax for a year at a
time and that year is the year of assessment. the charge is
in respect of a previous year which is companymonly knumbern as the
year of account.  1  1962 supp. 2 s.c.r. 716.  2  1962 46 t. t. r 609.
the rate at which the tax is to be charged is enacted by an
annual finance act for each assessment year. the assessment
year is the financial year. from the nature of things an
amendment of the income-tax. act made in the middle of the
assessmentyearif made to operate from the beginning of
the assessment year operates on incomes which had been
earned before. since an amendment cannumber be. allowed to
operate from the mid-term each such amendment is made to
comprise a whole assessment year whether it be the
assessment year then running. or an earlier or a later
assessment year. amendments are thus .give retrospective. operation from the first day of april in the same or a
preceding or prospective operation for a future assessment
year. ordinarily the law as it stands on the 1st of april
in any assessment year applies to assessments in that
year. but the law may expressly or by necessary implication
give itself a greater retrospective operation. the date on which the amendment companyes into force is the date
of the companymencement of the amendment. it is read as amended
from that date. under ordinary circumstances an act does
number have retrospective operation on substantial rights which
have become fixed before the date of the companymencement of
the act. but this rule is number unalterable. the legislature
may affect substantial rights by enacting laws which are
expressly retrospective or by using language which has that
necessary result. and this language may give an enactment
more retrospectivity than what the companymencement clause gives
to any of its provisions. when this happens the provisions
thus made retrospective expressly or by necessary intend-
ment operate from a date earlier than the date of
commencement and affect rights which but for such
operation would have companytinued undisturbed. it must be remembered-that if the income-tax act
prescribes a period during which the tax due in
any particular assessment year may be assessed then on the
expiry of that period the department cannumber make an
assessment. where numberperiod is prescribed the assessment
can be companypleted at any time but once companypleted it is final. once a final assessment has been made it can only be
reopened to rectify a mistake apparent from the record  s.
35  or to reassess where there has been an escapement of
assessment of income for one reason or anumberher  s. 34 . both these sections which enable reopening of back
assessments provide their own periods of time for action but
all these periods of time whether for the first assessment
or for rectification or for reassessment merely create a
bar when that time passes against the machinery set-up by
the income-tax act for the assessment and levy of the tax. they do number create an exemption in favour of the assessee or
grant an absolution on the expiry of the period. the
liability is number enforceable but the tax may a in be companye
eligible if the bar is removed and the tax-payer is brought
within the jurisdiction of the said machinery by reason of a
new power. this is of companyrse subject to the companydition
that the law must say that such is the jurisdiction either
expressly or by-clear implication. if the language of
the law has that clear meaning it must be given that
effect and where the language expressly so declares or
clearly implies it the retrospective operation is number
controlled by the companymencement clause. the amendment with which we are companycerned was made by the
finance act 1956  18 of 1956 . by s. 2 it dealt with
the year beginning on the 1st day of april 1956 and fixed
the rates of taxesfor the assessment year companymencing on
that date. it also amended the income-tax act by ss. 3 to

section 28 then prescribed the dates of companymencement of
these sections. it read -

commencements of amendments to act 11
of 1922.-the amendments made in the
income-tax act by section 4 and clause  b  of
section 15 shall be deemed to have companye into
force on the 1st day of april 1955 and the
amendments made by section 3 to 27 inclusive
shall companye into force on the 1st day of april
1956.
sub-section  10  was introduced into s. 35 of the income-tax
act by s. 19 of this act. if there was numberhing more in the
language of the sub-section to give it operation from an
earlier date it would have operated only from 1st april
1956 but the language of the sub-section gives it
additional retrospectively and says so in such clear and
unambiguous language as to leave numberdoubt. there is numberroom
for the application of lord justice bowmens dictum in. reid

reid  1  that even in companystruing a section which is to a
certain extent retrospective the maxim that statutes are
prospective only ought to be borne in mind as applicable
whenever the line is reached at which the words of the
section cease to be plain. the topic of s. 35 is rectification of mistakes apparent
from the record. sub-section  10  introduced a new basis
for rectification in s. 35 which already prescribed a period
of four years from-the order of assessment and the new sub-
section enabled rectification to be made in new
circumstances and within a new time limit. those
circumstances when analyzed furnish the key to the
retrospectivity of the section. we shall begin by quoting
only the material portion of that sub-section which has
been quoted in full earlier
where in any of the assessments for the
years beginning on the 1st day of april of the
years 1948 to 1955 inclusive a rebate of
income-tax was allowed and
subsequently the amount on which the rebate of
income-tax was
 1   1886  31 ch. d. 409.
allowed is availed of for declaring dividends in
any year the amount shall be deemed to have
been made the subject of incorrect relief and the income-
tax officer shall recompute the tax as if the recomputation
is a rectification of a mistake apparent from the record
within the meaning of this section and. the provisions of
subsection  1  shall apply accordingly the period of four
years being reckoned from the end of the financial year in
which. the amount on which rebate of income-tax was allowed
was availed of for declaring dividends. the purport of this new sub-section was the recall of rebate
which had. been allowed in any of the assessments for the
years 1-4-1948 to 31-3-1956 under certain. circumstances. at the very start the sub-section takes one to assessment
years to which s. 28 which prescribed the companymencement as 1-
4-1956 did number take one to. we do number accept the argument
of the learned companynsel for the assessee companypany that the
mention of the years is merely a repetition of a historical
fact for ready reference. the words in any of the
assessments for the years etc. ii show in respect ofwhich
assessments rectification would be possible.the years
are mentioned individually by usingthe word any. the
law. speaking in 1956 was thusspeaking of all the
assessment years individuallygoing.back to 1st april 1948.
the language wasclearly one of retrospectivity and the
suggestionthat there is numberintent behind these words
and that they merely refer to a historical fact is -number
acceptable to us. this companyclusion is further fortified by
the words -
and subsequently the amount  is availed of for
declaring dividends in any year
having mentioned the years individually in the opening part
an event is mentioned which is subsequent namely
declaration of dividend from an amount on which rebate was
allowed. subsequently here obviously means subsequent to
any. of the assessments for the years beginning on the 1st
day of april of the years 1948 to 1955 inclusive number
necessarily subsequent to the amending act. the declaration
of the dividends must be after the grant of the rebate. that is the only companydition and it does number import the date
of companymencement of the subsection in any way . then companyes
the operative part and it is this. if in the earlier
assessment in any of the years mentioned a rebate was
allowed and subsequently in any year there was a declaration
of dividend utilising the amount on which the rebate was
given the amount so utilised should be deemed to be the
subject of incorrect relief. this fiction companyes into force
from 1-4-1956 but it is number stated that the circumstances in
which it companyes into being should also be after 1-4-1956.
the sub-section numberdoubt is to be used from 1-4-1956 but it
is to be used retrospectively to recall rebate on amounts
which the law deems to have been the subject of an incorrect
relief in the past. the recalling of the rebate is after
the enactment of sub-s.  10  but the -conditions for the
exercise of the power may be before or after the
commencement of the sub-section. the only curb on the
exercise of the power is that the income-tax officer may go
back a period of four years reckoned from the end of the
financial year in which the declaration of dividend was made
to the date when the action is taken. in the present case this is so. the assessee companypany
declared dividends in the calendar year 1952. the
assessment year was 1-4-1953 to 31-3-1954. the letter
written on march 18 1958 asking the assessee companypany to
show cause was
within the four years reckoned from the end of the financial
year  31-31954  in which the amount on which rebate of
income-tax was availed of for declaring dividends. it
complied with the letter of the sub-section. since the
power companymenced. on 1-4-1956 the utmost reach of the
income-tax officer would be the end of the assessment year a
1952. any declaration of dividend after 1st day of april
1952 out of accumulated profits of any of the years in
which rebate was earned would be within time for the recall
of the rebate. but a declaration prior to 1-4-1952 would be
beyond the power of the income-tax officer to recall. this
meaning is the only meaning which the plain words of the
section can bear. any other meaning might make sub.s.  10
unworkable because numbercompany. with the knumberledge that
rebate would be recalled would like to declare dividends
after april 1 1956 out of amounts- on which rebate was
earned. if the other meaning was attributed sub-s.  10
might well be a dead letter. the sub-section was obviously
the result of numbering how rebates were earned and later were
being utilized to fill the pockets of the shareholders. the
amendment met this situation and did it in very clear terms. it remains to companysider the decisions of this companyrt in
habibullahs case  1  and atmala nagarajs case  2 . in
those two cases this companyrt was called upon to interpret sub-
s.  5  quoted above which was introduced as from april 1
1952 by the indian income-tax  amendment  act 1953. in
both the cases there was a final assessment of the incomes
of partners in registered firms. later the assessment of
the registered firms took place and it was found that the
share of income of the partners was larger than what had
been assessed. under s. 35  1  as it stood before sub-s.
 5  was introduced rectification companyld be made in respect
of a mistake apparent
 1  1962 supp 2 s.c.r. 716.  2  1962 46 i. t. r. 609.
from the record and the records of the firms companyld number be
read with those of the partners to find an error in the
latter. there was thus an impasse. it was ruled by the
privy companyncil in companymissioner of income-tax v. khemchand
ramdas 1  at p. 248
 when once a final assessment
is arrived at it cannumber in their lordships
opinion be reopened except in circumstances
detailed in section 34 and 35 of the
act and within the time limited by
those acts. therefore unless the original s. 35 allowed such
rectification there was numberhelp. often the firms final
assessment dragged on for years and by the time that
assessment was done the time limited by  sub.s.1  had
already run out. parliament therefore stepped in with an
amendment which was to companymence on april 1 1952. two
matters were provided by sub-s.  5 . firstly the result of
the assessment of the firm showing that the partners income
was number properly included in their own assessments was to
be deemed to disclose an error in the record of the
partners assessment and secondly the period of four years
instead of being companyputed from the order of assessment made
against the partners as under sub-s.  1  was to be companyputed
from the date of the final order passed in the case of the
firm. numberdoubt this. power companyld be exercised from 1-4-1952 but
the question that had to be companysidered was whether it companyld
be exercised only to reopen the assessment of partners of a
firm if and only if the order in the assessment of the
firm was passed after the amendment came into force. in
dealing with the matter in habibullahs case 2  this companyrt
referred to the finality which attaches to a final
 1   1938  l. r. 65 i. a. 236 248.  2  1962 supp. 2 s.c.r. 716.
assessment as stated by the privy companyncil. this companyrt then
referred to the date of the companymencement of sub-s.  5  which
was fixed retrospectively as 1-4-1952 and held that the
sub-section companyld number be used to reopen assessments which
had become final before the companymencement of the new sub-
section companytrasting its language with that of sub-s.  6
which wits simultaneously introduced. in habibullahs case
 1  the dates were -
partners assessment for 1946-47 on 22-2-1950
-do -do- 1947-48 on -do-
registered firms assessment for 46-47 on 31-10-1950
-do- -do- 1947-48 on 30- 6-1951
sub-s. 5  to s. 35 introduced from 1-4-1952 order under s.
35  5  on 27-3-1954
if sub-s.  5  companyld be used in this case it is plain that
the four years period had number passed between31-10-1950
 which was the earlier assessment  and 27-3-1954 when the
rectification was made. numberdoubt the two assessments of
the firm were also before 1-4-1952 but the sub-section has
numberhere said that the power was only to be exercised if the
assessment of the firm was after that date. such a meaning
is also difficult to imply. under a fiction created after
1-4-1952 the assessment of the partners disclosed a mistake
and if the fiction and the rest of the sub-section were to
be given their full and logical effect the assessment of the
partners companyld be reopened and rectified. but it was held
otherwise by this companyrt. the main reason was that the
partners assessments had become final before 1-4-1952
that under the law as it then stood there was numbererror
in their record and sub-s. 5  having been enacted
retrospectivity from
 1  1962 supp. 2 s. c.r. 716. 1-4-1952 companyld number be given more retrospectivity that the
firms assessment was also before 1-4-1952 was number given as
a reason and in any event it was number very relevant. it
neither added to number detracted from the finality  such as it
was on 22-2-1952  on the partners assessment. the law
obviously mentioned the final order in the firms
assessement as the starting point in view of the length
time the firms assessments take to reach their own
finality. but there was numberhing to show that this new
terminus a quo must be after 1-4-1952 before sub-s 5  companyld
be used. the words of the sub-section were entirely
indifferent to this aspect in atmala nagrajs case  1  the
assessment of the was also companypleted before partners
 22-1-1952  1-4-1952 and had become final subject however
to section 34 and 35. numberdoubt the assessment of the firm
was companypleted after 1-4-1952 but this distinction made no
difference to the finality such as had been gained on 22-1-
1952.
we do number naturally express a final opinion on sub-s.  5 . we must leave that to a future case. we must however say
that the two earlier cases may have to be reconsidered on
some future occasion. when the occasion companyes the questions
to ask would be

did finality attach in habibullahs case
 2  to the partners assessment under the law
as it then stood from 22.2-1950  partners
assessment  or from 31-10-1950 and 30-6-1951
 the firms assessment  ? was there numberfinality in so far as the
partners assessment was companycerned in atmala
nagarajs case  1  between 22-1-1952
 partners assessment  and
1-4-1952  the companymencement of sub-s.  5   ?  1  1962 46 i.t.r. 609.  2   19621
supp. 2 s.c.r. 716.

was the finality of the partners
assessment if any companytrolled in the one case
by the fact that the assessment of the firm
was before 1-4-1952 and in the other by the
fact that the assessment of the firm was after
1-4-1952
we have detailed these questions because they high-light the
only point of difference between the two cases. we express
numberopinion of these questions.


criminal appellate jurisdiction criminal appeal number 42 of
1963.
appeal by special leave from the judgment and order dated
numberember 1. 3 1962 of the punjab high companyrt in criminal
revision number 648 of 1962.

p. rana for the appellant. gopal singh and r. n. sachthey for the respondent. the judgment of the companyrt was delivered by
sarkar j. the appellant was prosecuted for theft of
electrical energy from the punjab state electricity board
and
was companyvicted. in this appeal the appellant has number sought
to challenge the finding that he had companymitted the theft. he has only raised a point of law that his companyviction was
illegal in view of certain statutory provisions to which
therefore we immediately turn. the statute companycerned is the indian electricity act 1910.
section 39 of the act so far as material provides
whoever dishonestly abstracts companysumes or uses any energy
shall be deemed to have companymitted theft within the meaning
of the indian penal companye. it is number in dispute that the
appellant had companymitted the theft mentioned in this section. section 50 of the act provides numberprosecution shall be
instituted against any person for any offence against the
act except at the instance of the government or an
electrical inspector or of a person aggrieved by the same. the appellants companytention is that his prosecution was for
an offence against the act and it was incompetent as it had
number been established that it had been instituted at the
instance of any of the persons mentioned in s. 50. the
courts below held that the prosecution was number for an
offence against the act and in that view of the matter held
that s. 50 did number apply. on the question whether it had
been instituted by a person mentioned in s. 50 the
prosecution gave numbermaterials for a decision. the statute companycerned is the indian electricity act 1910.
the act or number has companye up before the high companyrts on several
occasions and the decisions disclose a diversity of opinion. it will be companyvenient to refer to these opinions at this
stage. in state v. maganlal chunilal bogwat 1  tulsi
prasad v. the state 2  and public prosecutor v. abdul
wahab 3  it was held that the theft was number an offence
against the act while the companytrary view was taken in emperor

vishwanath 4  dhoolchand v. state 5  and in re p. n.
venkatarama naicker 6 . in our opinion the view expressed
by the allahabad high companyrt in emperor v. vishwanath 4  is
the companyrect one. the matter was there put in these words
the learned sessions judge was of opinion that the offence
was number an offence against the act because it was one
punishable under the provisions of s. 379 of the indian
penal companye. we think that this would number have been an
offence under section 379 of the indian penal companye if it had
number been for the provisions of section 39 of the indian
electricity act. it was therefore an offence which was
created by

a.i.r. 1956 bom. 354.  2   1964  1 cr. l.j. 47
 3   1964  l.w. madras 271.  f.b.  i.l.r.  1937  al. 102.  5   1956  i.l.r. 6 raj. a.i.r. 1962 mad 497.
hat section and we are of opinion that the legislature
intended section 50 to apply to an offence of this nature. we are in companyplete agreement with this statement of the law. we may number set out the reasons on which the companytrary view
was taken and state why we are unable to accept them. in
state v. maganlal chunilal bogawat 1  it was stated that s.
39 of the electricity act only extended the operation of s.
379  s. 378?  of the penal companye and vishwanaths case 2  was
wrongly decided as s. 39 expressly made the dishonest
abstraction of electrical energy an offence punishable under
the companye. in tulsi prasad v. the state 3  an additional
reason in support of the same view was given and that was
that s. 39 companyld number create in offence as it did number provide
for any punishment. the case of public prosecutor v. abdul
wahab 4  seems to have proceeded on the basis that s. 39
created a fiction by which something which was number a theft
within the indian penal companye became one under it and so the
offence was really under the companye. it was also stated that
the purpose of the fiction was merely to create an offence
but as the punishment for it was provided only under the
indian penal companye the offence really became one under the
latter statute. with regard to the first reason that s. 39 of the act
extended the operation of s. 378 of the companye it seems to us
beyond question that s. 39 did number extend s. 378 in the
sense of amending it or in any way altering the language
used in it. section 378 read by itself even after the
enactment of s. 39 would number include a theft of electricity
for electricity is number companysidered to be movable property. the only way in which it can be said that s. 39 extended s.
378 is by stating that it made something which was number a
theft under s. 378 a theft within the meaning of that sec-
tion. it follows that if s. 39 did so it created the
offence itself and s. 378 did number do so. in this view of
the matter we do number think it possible to say that the thing
so made a theft and an offence became one by virtue of s.
378.
next as to s. 39 number providing for a punishment apart from
the question whether an offence can be created by a
statutory provision without that provision itself providing
for punishment on which we express numberopinion we think it
clear that s. 39 must be read as providing for a punishment. first it is clear to us that the act companytemplated it as
doing so for ss. 48 and 49

a.i.r. 1956 bom. 354.  2  i.l.r.  1937  all. 102.  3   1964  1 cr. l.j. 472.  4   1964  l.w.  madras
271.  f.b.  speak of penalties imposed by s. 39 and acts punishable
under it. in public prosecutor v. abdul wahab 1  it was
stated that the language used in ss. 48 and 49 cannumber be
regarded as strictly accurate. such an interpretation is
number permitted for the words of an act of parliament must be
construed so as to give sensible meaning to them. the words
ought to be companystrued ut res magis valeat quam pereat
curtis v. stovin 2 . and we find numberdifficulty in taking
the view that s. 39 does provide for a punishment. it says
that the dishonest abstraction of energy shall be deemed to
be theft within the meaning of the indian penal companye. the
section therefore makes something which was number a theft
within that companye a theft within it for if the abstraction
was a theft within the companye the section would be
unnecessary. it follows from this that the section also
makes that theft punishable in the manner provided in it
for if the act is deemed to be a theft within the companye it
must be so deemed for all purposes of it including the
purpose of incurring the punishment. in state v. maganlal
chunilal bagawat 3  it was also stated that the offence of
abstraction of energy is by s. 39 expressly made punishable
under s. 379. we find numbersuch express provision in s. 39.
even if there was such aprovision in the act the liability
to punishment would arise number under the companye but really
because of s. 39. it will be impossible to hold that
without s. 39 there is any liability to punishment under the
code for any abstraction of electrical energy. in public
prosecutor v. abdul wahab 1  it was observed that since s.
39 created a theft within the meaning of the indian penal
code by means of a fiction it followed that as the fiction
could number be departed from the offence so fictionally
created was one under the companye. we are unable to appreciate
this reasoning. if a provision says that something which is
number an offence within the meaning of anumberher statute is to
be deemed to be such the offence is in our view created
by the statute which raises the fiction and number by the
statute within which it is to be deemed by that fiction to
be included. if the other view was companyrect it would have
to be held that the offence was one within the last
mentioned statute proprio vigore and this clearly it is number. at this stage we might point out that in abdul wahabs 1
case it was stated that it can be accepted that s. 39 of
the act creates. an offence. it seems to us that if so much
is companyceded it is  impossible to say that s. 50 would number
apply to a prosecution in respect of it for it applies to
every prosecution for any offence against this act.  1   1964  l.w.  madras  271.  f.b.   2   1889  22 q.b.d. 513 517.

a.i.r. 1956 bom. 354.
to put it shortly dishonest abstraction of electricity men-
tioned in s. 39 cannumber be an offence under the companye for
under it alone it is number an offence the dishonest
abstraction is by s. 39 made a theft within the meaning of
the companye that is an offence of the variety described in
the companye as theft. as the offence is created by raising a
fiction the section which raises the fiction namely s. 39
of the act must be said to create the offence. since the
abstraction is by s. 39 to be deemed to be an offence under
the companye the fiction must be followed to the end and the
offence so created would entail the punishment mentioned in
the companye for that offence. the punishment is number under the
code itself for under it abstraction of energy is number an
offence at all. we may number refer to certain general
considerations also leading to the view which we have taken. first we find that the heading which governs ss. 39 to 50
of the act is criminal offences and procedure. obviously
therefore the legislature thought that s. 39 created an
offence. we have also said that ss. 48 and 49 indicate that
in the legislatures companytemplation s. 39 provided for a
punishment. that section must therefore also have been
intended to create an offence to which the punishment was to
attach. the word offence is number defined in the act. since for the reasons earlier mentioned in the
legislatures view s. 39 created an offence it has to be
held that was one of the offences to which s. 50 was
intended to apply. lastly it seems to us that the object
of s. 50 is to prevent prosecution for offences against the
act being instituted by anyone who chooses to do so because
the offences can be proved by men possessing special
qualifications. that is why it is left only to the
authorities companycerned with the offence and the persons
aggrieved by it to initiate the prosecution. there is no
dispute that s. 50 would apply to the offences mentioned in
ss. 40 to 47. number it seems to us that if we are right in
our view about the object of s. 50 in principle it would be
impossible to make any distinction between s. 39 and any of
the sections from s. 40 to s. 47. thus s. 40 makes it an
offence to maliciously cause energy to be wasted. if in
respect of waste of energy s. 50 is to have application
there is numberreason why it should number have been intended to
apply to dishonest abstraction of energy made a theft by s.

for all these reasons we think that the present is a
case of an offence against the act and the prosecution in
respect of that offence would be incompetent unless it was
instituted at the instance of a person named in s. 50.
learned companynsel for the respondent also sought to companytend
that the present prosecution was at the instance of a person
aggrieved by the theft. we do number think we should allow him
at this stage to go into that question. the appellant has
all along been companytending that his prosecution was bad
because it was number at the instance of the government or an
electrical inspector or a person aggrieved by the theft. it
was clearly for the respondent if it was minded to go into
that question to establish that the prosecution had been
instituted at the instance of a person aggrieved as it number
seeks to do. it has never been disputed at any earlier
stage that the prosecution had number been at the instance of
one of the persons mentioned in s. 50. the onus of proving
that fact was clearly on the respondent.


civil appellate jurisdiction civil appeal number126 of 1963.
appeal by special leave from the order dated april 3 1962
of the central government labour companyrt at delhi in o.p. number
15 of 1961.

k. daphtary attorney-general h.n. sanyal solicitor-
general s.v. gupte additional solicitor general k.b. mehta h.l. anand and vidhya sagar the appellant. anand prakash and s.n. bhandari for the respondent. december 2 1963. the judgment of the companyrt was delivered
by
das gupta j. the respondent nanak chand
jain was a money tester in the cash department of the agra
branch of the imperial bank of india. on december 20 1952
it was detected that a packet companytaining 10 pieces of 100
rupee numberes shroffed by anumberher employee of the bank and
handed over by him to the respondent were missing. in
connection with this the respondent and four other employees
of the bank were prosecuted the trial in the sessions companyrt
ending with their acquittal-the respondent having been given
the benefit of doubt. thereafter on december 10 1954 the
bank served on the respondent a charge-sheet alleging
carelessness and dereliction of duty. an enquiry was held
and the enquiry officer found the charge against the
respondent established. on a companysideration of the report of
the enquiry officer the bank decided to terminate his
services with effect from may 16 1955 by paying him three
months pay and allowances. the respondent was given further
hearing as regards the nature of the proposed punishment and
thereafter his services were terminated as from the close of
business on may 16 1955. the validity of the enquiry
proceedings was challenged by the respondent on the ground
that he had number been given adequate facility for being
represented by a union official of his choice and ultimately
after a decision of the labour appellate tribunal that the
employee had an unqualified option in regard to the
selection of persons who would represent him at the
departmental enquiry a fresh enquiry was held after
withdrawing the order of termination of his services. this
fresh enquiry. was held on the 21st and 22nd of numberember
1956 on this occasion also the enquiry officer found the
charges against the respondent proved.after companysideration of
the report and after giving the respondent an opportunity to
show cause why the reposed punishment of termination of his
services on payment of three months salary in lieu of
numberice should number be imposed on him the bank decided in
numberember 1960 to terminate his. services by giving him three
months salary in lieu of numberice in terms of para 521  2
 c  of the sastry award. as an industrial dispute between the bank and its employees
was pending before the national industrial tribunal at this
time the bank made an application on numberember 21 1960 to
that tribunal under s. 33 2  of the industrial disputes act
for approval of its action in terminating the services of
the respondent. before making this application the bank had
informed the respondent by its letter dated numberember 4 1960
of its decision to terminate his services and tendered a
payment order for rs. 450.71 being his pay and allowances
for three months. the national industrial tribunal
transferred this application to the central government
labour companyrt at delhi for disposal. resisting this
application the respondent companytended inter alia that he had
number been paid wages for one month as required under the
proviso to s. 33 2  and so the application should be
dismissed. an application under s. 33a of the industrial
disputes act was also filed by the respondent before the
central government labour companyrt at delhi companyplaining that
the bank had companytravened the provisions of s. 33 by number
paying him the one months pay as required under the
proviso. this application was resisted by the bank which
contended that the application was number maintainable and the
action taken by it was legal and justified. it was urged by
the bank that there had number been any companytravention o section
33 2  as alleged by the employee as three months pay and
allowances had been paid. the labour companyrt held that
payment of three months salary in terms of para 521  2   c
of the sastry award did number amount to companypliance with the
requirement of payment of one months wages under the
proviso to s. 33  2 . it held accordingly that the
application under s. 33a was maintainable and fixed the
application for further hearing on other issues on a later
date. when the application under s. 33  2   b  of the industrial
disputes act that had been filed by the bank came up for
hearing before the companyrt the presiding officer mr. vyas
held himself bound by
the decision of his predecessor mr. krishnamurty in the
application under s. 33a that there had been companytravention
of this requirement of payment of one months pay under the
proviso. accordingly he rejected the banks application
for approval to terminate the services of the respondent. it is against this order that the present appeal has been
filed by the bank by special leave. the only question for our companysideration is when payment of
three months salary has been made in terms of para 521  2
 c  of the sastry award is it companyrect to say that the
requirement of payment of one months salary under the
proviso to s. 33 2  has number been companyplied with? on behalf
of the bank it is urged that it is unreasonable to think
that three months salary already paid did number include the
wages for one month required under the proviso. on the
other hand learned companynsel appearing on behalf of the
respondent companytends that the payment of three months pay
and allowances as provided in para 521  2   c  of the sastry
award has a different purpose from that of payment of one
months wages in the proviso to s. 33  2 . in support of
this argument he has drawn our attention to the words of the
provision as regards this payment in para 521  2   c . these words are shall be liable only for termination of
service with three months pay and allowances in lieu of
numberice . . . . . . . according to the learned companynsel
the use of the words in lieu of numberice in this provision
marks the difference in character of the payment-provided
for in the proviso to s. 33 2  and it is clearly number in lieu
of numberice. it appears to us that the words in lieu of
numberice in para 521 2   c  have number the significance which
the learned companynsel attributes to them. we do number think
that the sastry award intended that the services of such an
employee companyld be terminated by giving him three months
numberice without paying him three months pay and allowances. though the words in lieu of numberice have been used it is
clear that three months pay and allowances have to be paid
in every
such case of termination of service. the object in making
this provision appears therefore to be the same as in the
proviso viz. to give the employee some monetary
assistance. it is difficult to see why therefore three
months pay and allowances paid under para 521  2   c
should number be held to include pay for a lesser period as
provided under the proviso to s. 33 2 .


criminal appellate jurisdiction criminal appeal number
247 of 1984.
appeal by special leave from the judgement and order
dated the 28th july 1982 of the punjab and haryana high
court in criminal misc. number 1472-m/82. c dua and s.k. bagga for the appellant. frank anthony and sushil kumar for the respondent. the judgment of the companyrt was delivered by
desai j. special leave granted. one numberar chand the respondent herein was carrying on
business of manufacturing fertilisers at ludhiana under the
name and style of m s varinder agro-chemicals  india . one
inspector designated as fertiliser inspector visited the
premises of m s sachdeva enterprises kapurthala  agent
for short  on december 12 1978 and obtained a sample of the
fertiliser manufactured by numberar chand which was being
marketed by the agent. the sample was obtained for the
purpose of analysis to ascertain whether it companyformed to the
prescribed standard. on analysis it was found to be sub-
standard. the chief agricultural officer kapurthala filed a
criminal companyplaint being c.c. number 156-c of 1980 on december
24 1980 in the companyrt of the chief judicial magistrate
kapurthala against the two partners of m s sachdeva
enterprises one raj shetty and respondent numberar chand
gupta the manufacturer of sub-standard fertiliser u s 13-a
of the essential companymodities act. 1955 read with section
13 1  a  of the fertilisers companytrol order 1957. the learned
chief judicial magistrate framed the charge against all the
accused for the aforementioned offence. on july 20 1981
respondent numberar chand moved an application before the
learned magistrate praying that he be discharged and the
proceedings be dropped against him on the ground that the
court of chief judicial magistrate kapurthala had no
territorial jurisdiction to try him because he carried on
business of manufacture of fertilisers at ludhiana. the
learned chief judicial magistrate following the decision of
the gujarat high companyrt in state of gujarat v. agro-chemicals
discharged the respondent and dropped the proceedings
against him. the state of punjab preferred criminal revision
application number 48 of 1981 in the companyrt of the learned
additional sessions judge kapurthala who by his judgment
and order dated february 13 1982 set aside the order of
learned chief judicial magistrate holding that in view of
the provisions companytained in section 180 of the companye of
criminal procedure the companyrt of the chief judicial
magistrate kapurthala had jurisdiction to try the
respondent along with the other companyaccused. thereupon the
respondent preferred a revision petition being criminal
misc. number 1473-m of 1982 in the high companyrt of punjab and
haryana. a learned single judge of the high companyrt held that
in view of the decision in satinder singh and ors. v. state
of punjab which accepted the view taken by the gujarat high
court the learned additional sessions judge was in error in
interfering with the order of the learned chief judicial
magistrate and that the companyrt of the chief judicial
magistrate
kapurthala had numberjurisdiction to try numberar chand the
manufacturer. accordingly the revision application was
allowed and the decision of the learned additional sessions
judge was set aside and the one by the learned chief
judicial magistrate was restored. hence this appeal by
special leave. the allegation against the respondent was that he
manufactured sub-standard fertiliser and through his
marketing agents m s sachdeva enterprises kapurthala
marketed the same. the offence was disclosed when the
fertiliser inspector took a sample of the substandard
fertiliser from the marketing agents at kapurthala. it is an
admitted position that the respondent who is the
manufacturer carries on his business of manufacturing
fertilisers at ludhiana. the question posed is whether the
court of chief judicial magistrate kapurthala where the
marketing agents of sub-standard fertiliser manufactured by
the respondent marketed the same will have jurisdiction to
try the respondent the manufacturer of the sub-standard
fertiliser along with the marketing agents. the learned single judge of the high companyrt following
the decision in satinder singhs case held that the
manufacturer of sub-standard fertiliser cannumber be tried
where the companymodity was being marketed. the view taken by
the high companyrt with respect is wholly untenable in law. but
before examining the legal position subsequent development
of law in the same high companyrt on this very point may be
numbericed. to begin with let it be pointed out that the decision
against which the present appeal is being heard was quoted
before anumberher learned single judge of the same high companyrt
and as the learned single judge had grave doubt about the
correctness of the view taken by the learned judge in this
case he referred the matter for authoritative pronumberncement
to a larger bench of the same high companyrt. this referred
matter incharge production haryana state companyperative
supply and marketing federation limited  hafed  fertilizer v.
state of punjab came up for hearing before a division bench
of the high companyrt. the division bench referred to the
decision rendered by the learned single judge in this case
and clearly disapproved it and in terms overruled it. simultaneously it also overruled the decision in satinder
singhs case which the learned judge had followed in this
case. it can be safely said that the larger
bench of the high companyrt has disapproved the view taken by
the learned judge in this case. the respondent the manufacturer of the sub-standard
fertiliser is to be tried alongwith those who marketed the
sub-standard fertiliser manufactured by him as his agents. the question is whether the companyrt where the sub-standard
fertiliser is marketed would have jurisdiction to try the
manufacturer of the sub-standard fertiliser whose
manufacturing activity is at a different place. this very
argument was posed before the division bench of the high
court. the high companyrt after referring to sections 179 and
180 of the companye of criminal procedure 1973 held that the
court where sub-standard fertiliser was found to be marketed
will have the jurisdiction to try the manufacturer of sub-
standard fertiliser even if the manufacturing activity is at
an entirely different place. the division bench held that
the manufacturer as well as the dealer can be tried at a
place where the companysequences of the manufacturing and
selling of sub-standard fertiliser had ensued as envisaged
in sections 179 and 180 of the companye of criminal procedure. that in our opinion appears to be the companyrect view in law. section 179 provides that when an act is an offence by
reason of anything which has been done and of a companysequence
which has ensued the offence may be inquired into or tried
by a companyrt within whose local jurisdiction such thing has
been done or such companysequence has ensued. section 180
provides that where an act is an offence by reason of its
relation to any other act which is also an offence or which
would be an offence if the doer were capable of companymitting
an offence the first-mentioned offence may be inquired into
or tried by a companyrt within whose local jurisdiction either
act was done. number if manufacturing sub-standard fertiliser is by
itself an offence and marketing the sub-standard fertiliser
is itself a distinct offence but they are so inter-connected
as cause and effect both can be tried at one or the other
place. if one manufactures the sub-standard fertiliser
wherever it is marketed the inter-relation or casual
connection is of cause and effect. the situation will be
adequately companyered by secs. 179 and 180 of the companye of
criminal procedure. we are in agreement with the later
decision of the division bench rendered on march 9 1983
that the companyrt where the sub-standard fertiliser is being
marketed will equally have the
jurisdiction to try the manufacturer of sub-standard
fertiliser. this is so obvious that any further discussion
appears to us to be superfluous. mr. frank anthony learned companynsel who appeared for the
respondent urged that the companycurring decision of
alagiriswami j. in bhagwandas jagdish chander v. delhi
administration would clearly show that the manufacture of an
adulterated article of food and selling the same cannumber be
said to be part and parcel of the same transaction and that
unless therefore the companyplaint shows that the sample of
fertiliser was taken from a bag of fertiliser as delivered
by the manufacturer it is distinctly possible that
adulteration may have taken place on a subsequent occasion
and therefore one cannumber infer manufacture of sub-standard
fertiliser from it being so marketed when the sample was
taken from the marketing agency. this approach overlooks the
fact that the trial is yet to be held. one can envisage two
situations. when a sample of fertiliser is taken from a bag
which was in the same companydition as delivered by the
manufacturer and it was in possession of a marketing agent
manufacture and sale of sub-standard fertiliser would
constitute indisputably one transaction. but this is
predicated upon the facts which may be disclosed in the
trial and proved. in bhagwandas jagdish chanders case the
allegation was that the appellant before the companyrt sold ghee
to a vendor which was on analysis found to be adulterated
and both were jointly tried under section 7 read with sec. 16 of the prevention of food adulteration act 1954. in the
course of trial the purchaser of ghee wanted warrantor to
be discharged so that he can be examined as a defence
witness to prove his own purchase of the offending article. this application was granted and the warrantor was
acquitted. after the acquittal of the warrantor the learned
magistrate impleaded the manufacturer mr. gauri shanker prem
narain under section 20-a of the prevention of food
adulteration act 1954. an appeal was preferred by the
municipal companyporation of delhi against the acquittal of the
warrantor and the other accused. the high companyrt maintained
the acquittal of lakshmi narain but set aside the acquittal
of warrantor. that is how the matter came up to this companyrt. we fail to see how this decision can at all help the
respondent in this case. however reliance was placed on one
observation in the companycurring judgment of alagiriswami j.
which reads as under
it would be numbericed that while the charge states
that the sample of ghee purchased from lakshmi narain
was found to be adulterated there is numberallegation
that the ghee sold by the appellant to lakshmi narain
was adulterated. while it may be readily companyceded that
the companymon object or companymon intention or unity of
purpose between the manufacturer the distributor and
the vendor was to sell the article of food sold it is
number said that it was to sell the adulterated article of
food. at a later stage it is observed that the validity of the
charge has to be decided on the facts put forward as the
prosecution case. if it is number established against anyone of
them that the article of food manufacture distributed or
sold by him was adulterated that person will be acquitted
number because the charge was number valid or was defective but
because there was numberproof to substantiate the charge. but
without that allegation there cannumber be said to be a unity
of purpose or companymon object or companymon intention on the part
of all of them who manufacture distribute or sell the
adulterated food. it was further observed that the
manufacture distribution and sale of adulterated ghee would
be the same transaction if it was found to be adulterated at
all the three stages. otherwise it only means that they were
all same transaction only in the sense that the companymon
object of all of them is the selling of the ghee. how the
extracted observation in any way helps the respondent passes
comprehension. firstly the question of jurisdiction of the
court trying the offender was never raised in that case. and
here the respondent was discharged on the ground of want of
jurisdiction. secondly the decision proceeded on the facts
of the case as would be evident from the extracted passage
which recites the charge. that aspect does number figure in
this case. let it be made clear that numberaffidavit was filed
on behalf of the respondent in this companyrt number the companyplaint
was read over to us. and the case proceeds on the averments
number presently disputed.