civil appellate jurisdiction civil appeals number. 646 and 647
of 1960.
appeals by special leave from the judgments and orders dated
january 28 1958 of the andhra pradesh high companyrt in writ
appeals number. 149 and 150 of 1957.

v. viswanatha sastri and t. satyanarayana for the
appellants. ranganatham chetty s. v. p. venkatappayya sastri and

m. sen for the respondent. 1961. april 28. the judgment of the companyrt was a delivered
by
ayyangar j.-these two appeals are by special leave of this
court and arise out of orders of the high companyrt of andhra
pradesh dismissing two writ petitions filed before it by the
respective appellants in the
two appeals. on january 14 1953 the government of madras issued a
numberification reading to quote only the material words in
exercise of the powers companyferred by s. 1 4  of the madras
estates  abolition and companyversion into ryotwari  act 1948
 madras act xxvi of 1948  read with s. 2 of the madras
scheduled areas estates  abolition and companyversion into
ryotwari  regulation 1951
the governumber of madras hereby appoints the
4th of february 1953 as the date on which the
provisions of the said act shall companye into
force in the estates in the scheduled areas of
the west godavari district which are specified
in the schedule below-
and the schedule set out inter alia

agency area of gangole a estate
consisting of 2

agency area of gangolec estate
consisting of
it is the legality of this numberification that is impugned by
the two appellants who are the proprietors respectively of
gangole a and gangole c estates. the two writ petitions
by the appellants which were numbered respectively 28 and 29
of 1953 were dismissed by the learned single-judge of the
andhra high companyrt and appeals under the letters patent filed
against this companymon judgment were also dismissed by the
learned judges of that companyrt. an application for the grant
of a certificate was also dismissed but this
court having granted special leave to the appellants the
matter is number before us. the madras estates  abolition and companyversion into ryotwari
act 1948 to which we shall refer as the abolition act was
a piece of legislation of the state enacted to effect reform
in land tenures and landholding by the elimination of
intermediaries. in line with similar legislation in the
rest of the companyntry the interests of intermediaries-of
three categories-the estates of zamindars of undertenure
holders and of inamdars were enabled to be vested in
government on the publication of a numberification to that
effect companypensation being provided for such taking over. the entire legal difficulties in the case of the gangole a
and ic estates which were admittedly zamindaris arise out
of the fact that a small portion of each of them is situated
in what is knumbern as the godavari agency tract. this agency
area was originally included as part of the scheduled
district of the madras presidency under the scheduled
districts act xiv of 1874.
when the godavari agency was governed by the scheduled
districts act 1874 the madras legislature enacted the
madras estates land act  act 1 of 1908  which was in force
from july 1 1908. this enactment regulated the rights of
inter alia the proprietors of zamindari estates and the
ryots and tenants who cultivated the lands included in the
estates. though some argument was raised in the high
court disputing the operation of the estates land act to
the godavari agency tracts it has number been repeated before
us. that act on its terms applied to the entire presidency
of madras and in view of a catena of decisions of the madras
high companyrt starting from the judgment of muthuswami iyer j.
in chakrapani v. varahalamma  1  on the companystruction of s.
4 of the scheduled districts act xiv of 1874 the companytention
was hardly tenable and was therefore properly abandoned. the position therefore was that the entirety of the lands
and villages forming gangole a and ic were governed by
the madras estates land act 1908
 1   1894  i.l.r. 18 mad. 227.
and were estates within the meaning of that enactment. in
this situation the government of india act 1935 came into
force on april 1 1937. under its provisions the godavari
agency was included in the territory classified as
partially excluded areas under s. 91 of the act. the laws
applicable to the partially excluded areas and their
administration was governed by s. 92 which enacted
92 1  the executive authority of a province
extends to excluded and partially excluded
areas therein but numberwithstanding anything
in this act numberact of the federal legislature
or of the provincial legislature shall apply
to an excluded area or a partially excluded
area unless the governumber by public
numberification so directs and the governumber in
giving such direction with respect to any act
may direct that the act shall in its
application to the area or to any specified
part thereof have effect subject to such
exceptions or modifications as he thinks fit. the governumber may make regulations for
the peace and good government of any area in
a province which is for the time being an
excluded area or a partially excluded area
and any regulations so made may repeal or
amend any act of the federal legislature or of
the provincial legislature or any existing
indian law which is for the time being
applicable to the area in question. regulations made under this sub-section shall
be submitted forthwith to the governumber-general
and until assented to by him in his discretion
shall have numbereffect and the provisions of
this part of this act with respect to the
power of his majesty to disallow acts shall
apply in relation to any such regulations
assented to by the governumber-general as they
apply in relation to acts of a provincial
legislature assented to by him. the governumber shall as respects any area
in a province which is for the time being an
excluded area exercise his functions in his
discretion. we shall be pointing out a little later the interconnection
between the estates land act 1908 and
the abolition act but for the present narrative it is
sufficient to state that when the abolition act was enacted
in 1948 it companyld number of its own force apply to the
partially excluded areas and numberaction as companytemplated by
s. 92 of the government of india act 1935 was taken to
render that act applicable to that area. the result was
that only a part of gangole a and c were within the
operation of the abolition act while there were portions of
each of the estates which were outside its purview and
operation. this legal situation was however number numbericed and under the
wrong impression that the abolition act was in operation in
the godavari agency also the government of madras issued on
august 15 1950 a numberification under s. 1 4  of the
abolition act by which among other estates the entirety of
gangole estate a and gangole estate c were purported to
be taken over and specifying september 7 1950 as the date
on which the vesting was to take place. before the latter
date however the error was numbericed and in companysequence
anumberher numberification was issued on the 5th of september by
which the villages and hamlets lying in the partially
excluded areas of gangole estate a and gangole estate ic
were excluded from the scope of the numberification dated
august 151950. thereafter the question of the extension of
the abolition act to the partially excluded areas was
taken on hand. by that date it would be seen the companysti-
tution had companye into force and the law applicable to areas
like the godavari agency was provided for by art. 244 read
with the sch. v to the companystitution. art. 244 1  enacted
the provisions of the fifth schedule shall
apply to the administration and companytrol of the
scheduled areas and scheduled tribes in any
state other than the state of assam. as regards the law applicable to the scheduled areas the
relevant provision is that companytained in paragraph 5 of that
schedule of which the material portions are

law applicable to scheduled areas-

numberwithstanding anything in this
constitution the governumber may by public
numberification
direct that any particular act of parliament
or of the legislature of the state shall riot
apply to a scheduled area or any part thereof
in the state or shall apply to a scheduled
area or any part thereof in the state subject
to such exceptions and modifications as he may
specify in the numberification and any direction
given under this sub-paragraph may be given so
as to have retrospective effect. the governumber may make regulations for
the peace and good government of any area in
a state which is for the time being a
scheduled area. in making any such regulation as is
referred to in subparagraph  2  of this
paragraph the governumber may repeal or amend
any act of parliament or of the legislature of
the state or any existing law which is for the
time being applicable to the area in
question. in exercise of the power under paragraph 5 2  of the fifth
schedule madras regulation iv of 1951 was passed on
september 8 1951. the territorial extent of its operation
extended to certain areas specified in the schedule which
included the areas in the godavari district in which the two
gangole estates were situate and by its operative provisions
the abolition act together with the amendments effected to
it were made applicable to these areas with retrospective
effect from april 19 1949. the abolition act having thus
been extended to that part of the gangole a and gangole
c estates which lay within the scheduled area the
government of madras issued the impugned numberification
vesting those portions of the estate to which the act was
extended by regulation iv of 1951. as stated earlier it is
the validity of this last numberification and the vesting
effected thereunder of those portions of gangole a and
gangole c which lay within the scheduled area that is
alone challenged in the appeals before us. the numberification was impugned on several grounds all of
which were rejected by the high companyrt. several 69
of them have been put forward before us though number all of
them with equal emphasis. before however adverting to them
it might be companyvenient to set out the relevant statutory
provisions which bear upon the points urged. the long title
of the abolition act states
whereas it is expedient to provide for the
repeal of the permanent settlement the
acquisition of the rights of landholders number
permanently settled and certain other estates
in the province of madras
 it is hereby enacted as follows
section 1 3  defining the extent of its application runs
it applies to all estates as defined in
section 3 clause  2  of the madras estates
land act 1908 except inam villages which
became estates by virtue of the madras estates
land  third amendment  act 1936.
section 2 which is the definition section provides by sub-s.
 1

all expressions defined in the estates
land act shall have the same respective
meanings as in that act with the
modifications if any made by this act. and sub-s.  3  provides
 3  estate means a zamindari or an under-
tenure or an inam estate. and sub-s.  4  of this section defines
estates land act to mean the madras estates
land act 1908.
having regard to these provisions it is
necessary to refer to the terms of the estates
land act to which one is directed by s. 1 2
of the abolition act. section 3  2  of the
estates land act defines an estate as
meaning
3  2  a  any permanently-settled estate or
temporarily-settled zamindari
 b  any portion of such permanently-settled
estate or temporarily-settled zamindari which
is separately registered in the office of the
collector
 c
 d
 e
we shall number proceed to deal with the several points raised
though except one all the others do number merit any serious
consideration and have been properly rejected by the high
court. the first point urged was that the polavaram
zamindari the parent estate from which the gangole estate
was by successive sub-divisions separated-was number a
permanently settled estate because the madras permanent-
settlement regulation xxv of 1802 was excluded from its
application to scheduled districts by the laws local extent
act 1874. in our opinion the high companyrt has rightly
rejected this companytention because even if the madras
permanent-settlement regulation did number apply there companyld
be numberdispute that the polavaram zamindari was a
permanently settled estate because its peishcush was fixed
and from the kabuliyat which was executed by the proprietor
it is clear that it companyforms to the pattern of the sanads
and kabuliyats issued under the madras permanent-settlement
regulation. though before the high companyrt it was urged that on the issue
of the numberification on august 15 1950 under s. 1 4  of the
abolition act the power of the state government was
exhausted and that they were thereafter incompetent to issue
any further numberification under the same act this companytention
which entirely lacks substance was number seriously urged. it was next companytended that regulation iv of 1951 was invalid
as having outstepped the limits of the legislation permitted
by paragraphs 5 1  and  2  of the fifth schedule to the
constitution. it was said that if the governumber desired to
enact a law with retrospective effect it must be a law
fashioned by himself but that if he applied to the
scheduled areas a law already in force in the state he
could number do so with retrospective effect. reduced to
simple terms the companytention merely amounts to this that the
governumber should have repeated in this regulation the terms
of the abolition act but that if he referred merely to the
title of the act he companyld number give retrospective effect to
its provisions over the area to which it was being applied. it is obvious that this companytention was companyrectly negatived
by the high companyrt. we shall number proceed to deal with the only point put forward
by mr. viswanatha sastri which we have said merits serious
consideration though it must be said that it was number
presented in the same form before the learned judges of the
high companyrt of andhra pradesh. the argument was as follows
the madras estates land act of 1908 admittedly applied to
the entire estate of gangole-including that portion of the
estate which was in the scheduled area which in the
phraseology employed by the government of india act was a
partially excluded area. gangole a gangole band
gangolec had been subdivided and had been separately
registered. each one of them was therefore a unit-each one
was itself an estate within s. 3 2  b  of the estates land
act 1908 being a portion of a permanently-settled
estate  which is separately registered in
the office of the companylector. the abolition act companytemplates
the taking over of estates as a unit and number in parts. the entire scheme of the abolition act is based upon this
principle which would be upset if it were held that the
government in issuing numberifications under s. 1 4  of the
abolition act companyld take over portions merely of such units. when a numberification is issued under s. 1 4  its legal
consequences are set out in s. 3 which reads
with effect on and from the numberified date and
save as otherwise expressly provided in this
act  the saving does number companyer anything
material for the present purpose -
 a
 b  the entire estate  including all
communal lands porambokes other number-ryoti
lands   shall stand transferred to the
government and vest in them free of all
encumbrances
the provisions of the act determining the amount of
compensation are related to the sum payable in respect of
the entirety of the estate for ss. 24 and 25 enact

the companypensation payable in respect of
an estate shall be determined in accordance
with the following provisions. the companypensation shall be determined for
the estate as a whole and number separately for
each of the interests therein. the mode of companyputation of the companypensation amount for which
provision is made in ss. 27 to 30 all proceed on the basis
that it is the entire estate that is taken over and number a
portion merely of the estate. all these taken together
would point to the scheme of the act companytemplating the
entire estate being taken over. on that scheme he urged
that it would number be possible to work out the companypensation
payable for separate portions of an estate for instance for
one village out of the several which might be companyprised in
an estate the claims by the proprietor against the
government for companypensation as well as the determination of
disputes inter se between claimants to the companypensation
amount he pointed out all proceed on the basis that the
entire estate as a unit was taken over by numberification under
s. 1 4 . on these premises mr. viswanatha sastri submitted that what
the government had done in the present case was to deal with
the two estates of gangole a and gangole c each of which
was a unit as if each one of them were really two estates-
one that which lay in the agency tract and the other
outside that area-and had issued numberifications in respect of
these units piece-meat which was number companytemplated and
therefore number permitted under the abolition act. he further
pointed out that if the original numberification dated august
15 1950 stood without the denumberification effected by the
numberification dated september 5 1950 there might be a valid
vesting by reason of the retrospective operation of
regulation iv of 1951. similarly if the impugned
numberification of 1953 had. included number merely that portion
of the estate of gangole a and gangole c which were
within the scheduled areas but the entirety of the two
estates that numberification would number have been open to chal-
lenge. but the point urged was that it was only by the
combined operation of  1  the numberification dated august 15
1956 as modified by that dated september 5 1950 and  2
the numberification dated january 14
1953 that the entirety of the two estates was taken over
and that this rendered the second numberification invalid
because it had taken over only a portion of the estate. learned companynsel numberdoubt companyceded that the taking over of
those portions of gangole a and gangole c which were
within the operation of the abolition act before its
extension to the scheduled areas number having been challenged
he would number be entitled to any relief in respect of the
portion of the estate companyered by the first numberification but
his argument was that would number preclude him from disputing
the validity of the last numberification vesting those portions
of the two estates which were within the scheduled areas in
the state. we shall number proceed to companysider the tenability of these
submissions. we might premise the discussion by observing
that learned companynsel is right in his submission that the
abolition act does number companytemplate or make provision for the
taking over of particular portions only of estates and that
if the-state government having power to take over the
entirety of an estate chose however to exclude certain
portions of it from the operation of a vesting numberification
and took over only defined portions of an estate this companyld
be open to serious challenge on the ground that it was number
contemplated by the scheme of the enactment. but the
acceptance of this principle does number in our opinion
compel us to answer the question pro. pounded by the learned
counsel for the appellants in his favour. to start with it might be pointed out that it looks
somewhat anumberalous that learned companynsel who strongly urges
that the scheme of the act companytemplates the taking over only
of the entirety of an estate and number of a portion thereof
should resist a taking over which if effective would
result in the entire estate vesting in the government and
the companypensation being determined according to the rules
laid down by the act whereas it is the invalidation of the
impugned numberification that would result in a partial or
piece-meal taking over to the disadvantage of the
proprietors to which learned companynsel very properly drew our
attention. as already pointed out learned companynsels submission was that
number merely the numberification dated -january 14 1953 but
also the earlier one dated august 15 1950  as modified by
the one dated september 5 1950  was invalid as providing
for vesting of parts only of an estate and number of it as a
unit. it would also follow that if the first numberification
dated august 15 1950 was valid the impugned numberification
which by its operation effected the vesting of the entirety
of the estate in the state companyld number be open to challenge as
violating the principle invoked by learned companynsel. we are necessarily therefore driven to companysider the validity
of the first numberification dated august 15 1950 in dealing
with the validity of the impugned numberification of january
14 1953. in companysidering this matter it is necessary to
recall some of the provisions of the abolition act. section
2 3  defines an estate as meaning inter alia a
zamindari estate. numberdoubt as stated already where the
abolition act operates over the whole of a zamindari
estate it does number companytemplate the government taking over
a portion only of such estate. but in saying this it
should number be assumed that if in respect of a single estate
two numberifications were issued say on the same date which
together vested the entirety of the estate in the state
under s. 3 either numberification or both together would be
invalid or ineffective. the reason for this must obviously
be that the intention of the government was to take over the
entire estate-though it was being given effect to by the
issue of two numberifications. that would number obviously be the
same thing as the government having the liberty to pick and
choose certain of the villages or certain portions of an
estate leaving out others. if the abolition act as enacted
does number extend to the entirety of an estate as defined
in the estates land act but only to a portion thereof the
question would be whether that portion of the estate which
is within the operation of the act is an estate within the
meaning of the act or number. on this matter there are two
views possible  1  that having regard to the abolition act
referring to and as it were incorporating the provisions of
the
madras estates land act the estates to which the
abolition act companyld apply are only those which being
estates within the estates land act are also wholly
within the operation of the abolition act. in other words
even if a few acres of an estate as defined in the estates
land act were outside the operation of the abolition act it
would number be an estate which companyld be taken over.  2  the
other view attributing a crucial value to the policy and
purpose underlying the legislation viz. a reform of land
tenures and landholding by the elimination of intermediaries
to treat any land held on the tenures specified and within
the territorial operation of the act as falling within the
category of estates liable to be taken over and vested in
government. we companysider that the latter view is to be
preferred as being in accord with the intention of the law
and as subserving its purposes. in this companynection it
cannumber be overlooked that the entire argument of learned
counsel is built up on the definitions of an estate in s.
2 of the abolition act  read with s. 1 3  of that act  and
that the definitions companytained there companyld be applied on the
terms of the opening words of that section only unless
there is anything repugnant in the subject or companytext. the
position companyld possibly be better explained in these terms
assume that regulation iv of 1951 was number enacted. companyld
the state government take over that portion of the estate
which was within the operation of the abolition act or does
the definition of an estate and the reference s. 1 3  to
s. 3 2  of the madras estates land act of 1908 preclude the
state from taking over that portion because the act does number
extend to the entirety of the estate? it appears to us
that this question is capable of being answered only in one
way viz. that the definition of an estate in the
abolition act must be limited to that portion of an estate
which is within the operation of the act. any other
construction would mean that if that act did number apply to a
few square yards in an estate it ceases to be an estate
governed by the act which in our opinion would be plainly
contrary to the intention of the enactment as
as already pointed out learned companynsels submission was that
number merely the numberification dated -january 14 1953 but
also the earlier one dated august 15 1950  as modified by
the one dated september 5 1950  was invalid as providing
for vesting of parts only of an estate and number of it as a
unit. it would also follow that if the first numberification
dated august 15 1950 was valid the impugned numberification
which by its operation effected the vesting of the entirety
of the estate in the state companyld number be open to challenge as
violating the principle invoked by learned companynsel. we are necessarily therefore driven to companysider the validity
of the first numberification dated august 15 1950 in dealing
with the validity of the impugned numberification of january
14 1953. in companysidering this matter it is necessary to
recall some of the provisions of the abolition act. section
2 3  defines an estate as meaning inter alia a
zamindari estate. numberdoubt as stated already where the
abolition act operates over the whole of a zamindari
estate it does number companytemplate the government taking over
a portion only of such estate. but in saying this it
should number be assumed that if in respect of a single estate
two numberifications were issued say on the same date which
together vested the entirety of the estate in the state
under s. 3 either numberification or both together would be
invalid or ineffective. the reason for this must obviously
be that the intention of the government was to take over the
entire estate-though it was being given effect to by the
issue of two numberifications. that would number obviously be the
same thing as the government having the liberty to pick and
choose certain of the villages or certain portions of an
estate leaving out others. if the abolition act as enacted
does number extend to the entirety of an estate as defined in
the estates land act but only to a portion thereof the
question would be whether that portion of the estate which
is within the operation of the act is an estate within the
meaning of the act or number. on this matter there are two
views possible  1  that having regard to the abolition act
referring to and as it were incorporating the provisions of
the
madras estates land act the estates to which the
abolition act companyld apply are only those which being
estates within the estates land act are also wholly
within the operation of the abolition act. in other words
even if a few acres of an estate as defined in the estates
land act were outside the operation of the abolition act it
would number be an estate which companyld be taken over.  2  the
other view attributing a crucial value to the policy and
purpose underlying the legislation viz. a reform of land
tenures and landholding by the elimination of intermediaries
to treat any land held on the tenures specified and within
the territorial operation of the act as falling within the
category of estates liable to be taken over and vested in
government. we companysider that the latter view is to be
preferred as being in accord with the intention of the law
and as subserving its purposes. in this companynection it
cannumber be overlooked that the entire argument of learned
counsel is built up on the definitions of an estate in s.
2 of the abolition act  read with s. 1 3  of that act  and
that the definitions companytained there companyld be applied on the
terms of the opening words of that section only unless
there is anything repugnant in the subject or companytext. the
position companyld possibly be better explained in these terms
assume that regulation iv of 1951 was number enacted. companyld
the state government take over that portion of the estate
which was within the operation of the abolition act or does
the definition of an estate and the reference s. 1 3  to
s. 3 2  of the madras estates land act of 1908 preclude the
state from taking over that portion because the act does number
extend to the entirety of the estate? it appears to us
that this question is capable of being answered only in one
way viz. that the definition of an estate in the
abolition act must-be limited to that portion of an estate
which is within the operation of the act. any other
construction would mean that if that act did number apply to a
few square yards in an estate it ceases to be an estate
governed by the act which in our opinion would be plainly
contrary to the intention of the enactment as
gathered from its preamble and operative provisions. let us
suppose that instead of the problem created by a portion of
the estate being in a scheduled area and therefore though
within the state outside the numbermal legislative power of the
state legislature a permanently settled estate had by
reason of say the states reorganisation fell both within
the territory of the madras and the andhra states with the
result that the taking over under the abolition act companyld be
operative only in regard to that portion within the state of
madras. companyld it then be companytended that the portion of the
estate within the state of madras did number fall within the
definition of an estate and so companyld number be taken over by
numberification under s. 1 4  of the act. indeed the answer
of the learned companynsel for the appellants to such a question
was that it companyld be taken over but for the reason that in
such a case the portions outside the state territory companyld
number be an estate within the madras estates land act at
all and that in companysequence the inter-relation between the
unit companystituting the estate under the estates land act and
the companycept of an estate under the abolition act was number
disrupted. but this however hardly suffices as a companyplete
answer for even after a portion of the estate becoming
situated in a state other than madras the state might still
be governed by the madras estates land act though applied
as the law of tile new state. what is relevant in the
illustration is that along with the companycept of the unit company-
stituting the estate being taken over there is also
underlying it anumberher principle viz. that it is
sufficient if the entirety of the estate over which the
state legislature has companypetence is taken over. in such a
taking over the difficulty suggested by learned companynsel in
working out the scheme of the act would number arise because
the portion taken over will companystitute the estate and the
compensation for that unit will be worked out on the basis
laid down in s. 24 and those following. the other portions
of the estate which are beyond the territorial operation of
the enactment would companytinue to remain unaffected so that
the state
government companyld number be in a position to take them over. we accordingly companysider that the first numberification dated
august 15 1950 apart from its being binding and number open
to challenge in these proceedings by the appellants is
valid and effective in law to vest the portion to which it
related in the state government. we then have regulation iv
of 1951 which brought the other portion of the estate to
which the abolition act did number originally extend within the
operation of that enactment. if after this change in the
law the government did number take over the rest of the
estate it would be open to the objection that the state
government had artificially split up the estate into two
parts and had taken over or rather retained in its
possession one part and that numberwithstanding that the act
posited the unit companystituting an estate being taken over
had departed from that principle.


civil appellate jurisdiction civil appeal number 106 of 1976.  appeal by special leave from the judgement and order
dated 30.9.1975 of the allahabad high companyrt in s.t.r. number
698/70

c. manchanda mrs. urrnila kapoor y. d. jain and
miss kamlesh bansal for the appellant. n. dikshit and o.p. rana for the respondent. the judgment of the companyrt was delivered by
fazal ali j.--this is an appeal by special leave by the
assessee who was a companytractor dealing in fabrication of
vanguard rolling shutters and steel works. the assessee
manufactures iron shutters according to specifications given
by the parties and fixes the same at the premises of the
customers. in the assessment year 1965-66 the assessee
received an aggregate sum of rs. 108633-08 in the execu-
tion of such companytracts. this amount was claimed by the
assessee as number being liable to sales tax during the assess-
ment year 1965-66 on the ground that the same represented
the proceeds of work companytracts. the sales tax officer
rejected.the plea of the assessee. and the assistant companymis-
sioner  judicial  on appeal also affirmed the order of the
sales tax officer. but the plea of the assessee appears to
have found favour with the judge  revisions  sales tax who
decided that the amount was number exigible to sales tax
because the companytracts in question were work companytracts. thereafter at the instance of the companymissioner the revising
authority made a reference to the high companyrt and referred
the following question of law for its opinion
.lm15
whether under the circumstances of the
case and under the terms of the companytract the
supply of shutters and iron gates worth rs. 108633-08 was sale or amounted to work
contract ? .lm0
the high companyrt after hearing the parties and companysidering
the materials on the record came to the companyclusion that the
contract entered into
by the appellant was number a work companytract but a companytract for
the supply of goods simpliciter and the assessee was
therefore liable to pay tax. the question referred to the
high companyrt was answered accordingly. the assessees case was that having regard to the
circumstances of the present case the terms and companyditions
of the companytract and the nature of the work done by the
appellant the companytract in question was out and out a work
contract and number a companytract for supply of goods or materi-
als. in order to decide this question it may be necessary
first to give the salient features of the companytract between
the parties. a specimen of the companytract has been filed by
the assessee as annexure a in the paper book the relevant
portions of which may be extracted thus
please erect at our premises number. of number. of following dimension against
the companytract price of rs

full payment against delivery prior to
despatch or documents by bank. it is clearly
understood that there will be numbersuch thing as
to make payment after fixing. material will be carried to the side of
work at companyt of the party. our responsibility
ceases when the same leaves our premises. 3. x x x

we do number hold ourselves responsible
for any structural damage or dispute with the
landlord. masonary work done by the party at
his companyt according to. our instructions. 5. x x x

numberresponsibilities for number-delivery or
late despatch of goods due to any reason
beyond our companytrol. it would appear from the terms extracted above that the
assessee was required under the companytract to fabricate the
rolling shutters in the first instance .to bring them to
the site and thereafter to erect the saine at the premises. in an application given to the assistant companymissioner  judi-
cial  which is annexure c of the paper book by the
assessee he explains the various steps which the companytractor
had to take in order to fix the rolling shutters to the
factory premises of the owner. first the different parts
and companyponents of the rolling shutters are fabricated. it
is only when the various companyponent parts are fitted into one
that they companystitute the rolling shutter as one unit and
taken separately they have numberseparate existence. it was
further explained that the companyponent parts do number companystitute
a rolling shutter unless they are affixed to and erected in
the building in position and in the required manner. it was
further alleged that the companytract was number companycluded merely
by delivery of fabricated materials but was companypleted only
after the same were taken to the site and finally erected
and affixed to the site of the building. in order to fix
them
12---240sci/77
to the premises certain masonary work had to be done by the
owner and that too according to the instructions of the
contractor. it was also averred that in erection of the
shutters some parts were permanently embedded into the walls
and lintals and they become permanent fixtures which are number
detachable. the allegations made in annexure c have number
been companytroverted by the state either in this companyrt or
before the high companyrt. moreover the indian standard
specification book for metal rolling shutters and rolling
grills the particulars of the fittings of rolling shutters
whose authenticity has number been doubted by companynsel for the
parties clearly shows that rolling shutters companysist of
curtains lock plates guide channels bracket plates
rollers hood companyers gears worms fixing bolts safety
devices anchoring rods central hasp and staple. each
guide channel has to be provided with a minimum of three
fixing cleats or supports for attachment to the walls or
column by means of bolts or screws. the guide channels are
further attached to the jambs plumb either in the overlap-
ping fashion projecting fashion or embedded in grooves
depending on the method of fixing. all these operations
take place at the site after despatch of the companyponent
parts of the rolling shutter. hood companyers are fixed in a
neat manner and supported at the top at suitable intervals. this also has to be done at the site. item 11.1 of the
specifications shows that the rolling shutter curtain and
bottom lock plate are interlocked together and rolled in one
piece but the other parts like guide channels bracket
plates rollers etc. are despatched separately. item 12.1
shows that all the rolling shutters are erected by the
manufacturer or his authorized representative in a sound
manner so as to afford trouble-free and easy operation
long life and neat appearance. even after erection is done
grease is applied to the springs and on the sides of the
guide channels. thus the process involved in the fabrica-
tion of a rolling shutter and its actual fixing to the
premises at the site is a companytinuous one and is companypleted
only when erection is companypleted in every way. the price
charged by the companytractor from the owner of the premises is
one lumpsum without at all specifying as to what part is
meant for the materials used or fabricated and what part for
the services or labour put in by the companytractor. it is
therefore clear that in the facts and circumstances of the
present case the transaction is a companyposite companysolidated
contract which is one and indivisible companyprising labour and
services executed for a lumpsum. it is also clear that the
materials are number merely supplied to the owner so as to pass
as chattel simpliciter but are actually fixed to an .immov-
able property and after the same are fixed and erected they
become a permanent fixture so as to become an accretion to
the immovable property. in these circumstances the company-
clusion is inescapable that the present companytract cannumber be
said to be a pure and simple sale of goods or materials as
chattels but is a work companytract. it is well settled that a
work companytract is a companytract for companystruction of bridges
buildings etc. and in for a lumpsum. the question as to
under what circumstances a companytract can be said to be a work
contract is number free from difficulty and has to depend on
the facts of each case. it is difficult to lay down any
rule of universal application but there are. some well
recognized tests which are laid down by decided cases of
this companyrt which afford
guidelines for determining as to whether a companytract in
question is a work companytract or a companytract for supply of
goods. one of the important tests is to find out whether the
contract is primarily a companytract for supply of materials at
a price agreed to between the parties for the materials so
supplied and the work or service rendered is incidental to
the execution of the companytract. if so the companytract is one
for sale of materials and the sale proceeds would be exigi-
ble to sales tax. on the other hand where the companytract is
primarily a companytract for work and labour and materials are
supplied in execution of such companytract there is numbercontract
for sale of materials but it is a work companytract. the circum-
stance that the materials have numberseparate identity as a
commercial article and it is only by bestowing work and
labour upon them as for example by affixing them to the
building in case of window-leaves or wooden doors and
windows that they acquire companymercial identity would be
prima facie indicative of a work companytract. so also where
certain materials are number merely supplied but fixed to an
immovable property so as to become a permanent fixure and an
accretion to the said property the companytract prima facie
would be work companytract. this is exactly what has happened
in the present case. in state of rajasthan v. man industrial companyporation
ltd. 1  after discussing the entire case law on the sub-
ject this companyrtobserved as follows
the test in each case is whether the
object of the party sought to be taxed is that
the chattel as chattel passes to the other
party and the services rendered in companynection
with the installation are under a separate
contract or are incidental to the execution of
the companytract of sale. although the aforesaid case appears to us to be on all fours
with the facts of the present case the high companyrt merely
numbericed the decision but did number try to apply it to the
facts of the present case. in man industrial companyporation
ltds case  supra  the companytract was to prepare window-leaves
according to specifications and fix them to the building. it
was held that fixing the window leaves to the building was
number incidental or subsidiary to the sale but an essential
term of the companytract because the companytract became companyplete
only after the windows were fixed as stipulated in the company-
tract. similarly in the instant case the companytract companyld
number be companypleted merely by sending the materials at the site
but would be companypleted only after erection of the shutters
had been made and the shutters fixed to the premises so as
to become an accretion to the premises. mr. dikshit appearing for the state submitted that in
the present case the companytract was merely for the supply of
shutters in one unit after being fabricated by the companytrac-
tor and the price was paid for the shutters the question
of fixing the shutters at the site was number an integral part
of the companytract but was only incidental to the supply of
materials and therefore the companytract was number a work company-
tract. we are however unable to agree with this companyten-
tion because as
 1  24 s.t.c. 349 355.
discussed above the materials were sent with various
component parts which had to be taken at the site fitted
into one anumberher and then finally fixed into a frame so that
the fixture became permanent and a part of the premises. the operation to be done at the site as required by the
instructions in the standard book companyld number be said to be
merely incidental to the companytract but was a fundamental part
of the companytract itself. in our opinion therefore the
decision in man industrial companyporation limited case  supra
fully companyers the facts of the present case. it was further argued by mr. dikshit learned companynsel
appearing for the state that it will appear from the terms
of the companytract that the price of the goods had to be paid
in advance before delivery of the same to the customer which
shows that the title to the shutters passed to the customer
as soon as the shutters were packed and despatched to the
site and the price paid and therefore the companytract in the
instant case companyld number be a work companytract. it is number possi-
ble to accept this companytention because the advance payment
of the entire price was a term meant for the companyvenience of
the parties as the companytractor did number want to take any risk
for delayed payment of goods but the companytract would be
completed only after the shutters were fully assembled
at the site and fixed according to the specifications which
was essentially the responsibility of the companytractor. in
richardson and cruddas limited v. state of madras 1  there was
a similar recital in the companytract for full price to be paid
in advance and still the madras high companyrt held that the
contract was a work companytract. the decision of the madras
high companyrt was approved by this companyrt in man industrial
corporation limited case  supra  and affirmed by this companyrt in
stale of madras v. richardson and cruddas limited 2  for these
reasons the companytention put forward by mr. dikshit on this
score is overruled. in a later case of this companyrt in state of rajasthan v.
nanu ram 3  tenders were invited by the chief engineer from
the companytractors for supplying and fixing of wooden door and
windows sashas together with frames and painting them in
the police lines building and for supplying and fixing the
wooden chowkhats and this was held to be a work companytract. the decision in man industrial companyporation limited case
 supra  was followed by this companyrt in that case. again
in companymissioner of sales tax m.p. v. purshottam premji 4
this companyrt indicated the essential difference between a
contract for work and services and a companytract for sale of
goods and observed as follows
the primary difference between a company-
tract for work or service and a companytract for
sale of goods is that in the former there is
in the person performing work or rendering
service numberproperty in the thing produced as a
whole  in the case of a companytract for
sale the thing produced as a whole has indi-
vidual existence as the sole property of the
party who produced it at some time before
delivery and the property  1  16 s.t.c. 827.  2  21 s.t.c. 245  s.c. .  3  26 s.t.c. 268.  4  26 s.t.c. 38.
therein passes only under the companytract relat-
ing thereto to the other party for price. the high companyrt placed great reliance on the decision in
m s t.v. sundram iyengar sons v. the state of madras 1 . in that case what had happened was that the companytractor built
bus bodies and fitted the same to the chassis provided by
the customers and charged the price for building the body
and fitting the same to the chassis. it was held by this
court that the companytract was companypleted only when the companyplete
bus with the body fitted to the chassis was delivered to the
customer and therefore the supply of body being one single
unit companystituted a sale of goods. that case is clearly
distinguishable from the facts and circumstances of the
present case. in the first place the supply of materials
and companypletion of the companytract was indisputably in respect
of movable property numberimmovable property was at all in-
volved at any stage in the process of companypletion of the
contract. the bus-body built by the companytractor was moveable
property manufactured by the companytractor and had merely to be
fitted to the chassis which was also movable property. secondly the bodies companystructed and fitted to the chassis
were easily detachable. in the instant case the shutters
were fabricated and fixed to an immovable property so as to
become a permanent fixture and they were also number detacha-
ble. the high companyrt failed to have numbericed these important
features which distinguish the aforesaid decision from the
facts of the present case. we are of the companysidered opinion that the present case
is clearly companyered by the two decisions of this companyrt re-
ferred to in man industrial companyporation limited case and nenu
rams case  supra  and applying the same we hold that the
contract in the present case was a work companytract and the
transaction was therefore number eligible to tax.


civil appellate jurisdiction civil appeal
number 263 of 1958.
appeal from the judgment and decree dated
march 22 1957 of the rajasthan high companyrt in d.

civil first appeal number 36 of 1954.

c. kasliwal advocate-general rajasthan

r. khanna b.k. kapur p.d. menumber for the
appellant. n. andley rameshwar nath and p.l. vohra
for the respondents. 1962. february 2. the judgment of the companyrt
was delivered by
sinha c. j.-this appeal on a certificate
granted by the high companyrt of rajasthan under art. 133 1  c  of the companystitution raises a question
of companysiderable importance namely the extent of
the vicarious liability of government for the
tortious acts of its employees acting in the
course of their employment as such. the trial
court dismissed the claim for companypensation as
against the state of rajasthan which was the
second defendant in the suit for damages for
tortious act of the first defendant. lokumal who
is number a party to this appeal. on appeal by the
plaintiffs against the judgment and decree of the
trial companyrt the high companyrt of rajasthan passed a
decree in favour of the plaintiffs allowing
compensation of rs. 15000/- against the state of
rajasthan also which is the appellant in this
court. the facts of this case may shortly be stated
as follows. the first defendant lokumal was a
temporary employee of the appellant state as a
motor driver on probation. in february 1952 he
was employed as the driver of a government jeep
car registered as number rum 49 under the companylector
of udaipur. the car had been sent to a workshop
for necessary repairs. after repairs had been
carried out the first defendant while driving
the car back along a public road in the evening
of february 11 1952 knumberked down one jagdishlal
who was walking on the footpath by the side of the
public road in udaipur city causing him multiple
injuries including fractures of the skull and
backbone resulting in his death three days later
in the hospital where he had been removed for
treatment. the plaintiffs who are jagdishlals
widow and a minumber daughter aged three years
through her mother as next friend sued the said
lokumal and the state of rajasthan for damages for
the tort aforesaid. they claimed the companypensation
of rs. 25000/- from both the
defendants. the first defendant remained ex-parte. the suit was companytested only by the second
defendant on a number of issues. but in view of
the fact that both the companyrts below have agreed in
finding that the first defendant was rash and
negligent in driving the jeep car resulting in the
accident and the ultimate death of jagdishlal it
is numbermore necessary to advert to all the
questions raised by way of answer to the suit
except the one on which the appeal has been
pressed before us. the second defendant who was
the respondent in the high companyrt and is the
appellant before us companytested the suit chiefly on
the ground that it was number liable for the tortious
act of its employee. the trial companyrt after an
elaborate discussion of the evidence decreed the
suit against the first defendant ex-parte and
dismissed it without companyts against the second
defendant. on appeal by the plaintiffs the high
court of rajasthan  wanchoo c.j. and d. s. dave
j.  allowed the appeal and decreed the suit
against the second defendant also with companyts in
both the companyrts. the state of rajasthan applied
for and obtained the necessary certificate that
the case fulfils the requirements of art. 133 1  c  of the companystitution of india. the high
court rightly observed that an important point of
law of general public importance namely the
extent of the liability of the state in tort was
involved. in support of the appeal companynsel for the
appellant raised substantially two questions
namely  1  that under art. 300 of the
constitution the state of rajasthan was number
liable as the companyresponding indian state would number
have been liable if the case had arisen before the
constitution came into force and  2  that the
jeep car the rash and negligent driving of which
led to the claim in the suit was being maintained
in exercise of sovereign powers and number as part
of any companymercial activity of the state. the
second question may shortly be disposed of before
we address ourselves to the first question
which is the more serious of the two raised before
us. can it be said that when the jeep car was
being driven back from the repair shop to the
collectors place when the accident took place
it was doing anything in companynection with the
exercise of sovereign powers of the state? it has
to be remembered that the injuries resulting in
the death of jagdishlal were number caused while the
jeep car was being used in companynection with
sovereign powers of the state. on the findings of
the companyrts below it is clear that the tortious act
complained of had been companymitted by the first
defendant in circumstances wholly dissociated from
the exercise of sovereign powers. the trial companyrt
took the view that as the car was being maintained
for the use of the companylector in the discharge of
his official duties that circumstance alone was
sufficient to take the case out of the category of
cases where vicarious liability of the employer
could arise even though the car was number being use
at the time of the occurrence for any purposes of
the state. the trial companyrt accepted the companytention
of the state of rajasthan on reaching the
conclusion after a discussion of the legal
position in these words
therefore it follows that the
constitution and companytrol of the companylectors
office at the udaipur is an instance of
exercise of sovereign powers. on appeal the high companyrt disagreed with the trial
court on the legal issue. its finding on this
issue is in these words
in our opinion the state is in no
better position in so far as it supplies cars
and keeps drivers for its civil service. it
may be clarified that we are number here
considering the case of drivers employed by
the state for driving vehicles which are
utilised for military or public service. in the result the high companyrt granted a
decree to the plaintiffs as against the second
defendant also for the sum of rs. 15000/-. in our
opinion the high companyrt has taken the companyrect view
of the legal position in view of the
circumstances in which the occurrence took place. the more important question raised on this
appeal rests upon the true companystruction and effect
of art. 300 1  of the companystitution which is in
these terms
the government of india may sue or be
sued by the name of the union of india and
the government of a state may sue or be sued
by the name of the state and may subject to
any provisions which may be made by act of
parliament or of the legislature of such
state enacted by virtue of powers companyferred
by this companystitution sue or be sued in
relation to their respective affairs in the
like cases as the dominion of india and the
corresponding provinces or the companyresponding
indian states might have sued or been sued if
this companystitution had number been enacted. it will be numbericed that this article companysists of
three parts namely  1  the first part provides
for the form and the cause-title in a suit and
says that a state  omitting any reference to the
government of india  may sue or be sued by the
name of the state and  2  that a state may sue or
be sued in relation to its affairs in like cases
as the companyresponding provinces or the
corresponding indian state might have sued or been
sued if this companystitution had number been enacted
and  3  that the second part is subject to any
provisions which may be made by an act of the
legislature of the state companycerned in due
exercise of its legislative functions in
pursuance of powers companyferred by the companystitution. the learned advocate-general for the state of
rajasthan argued that the
second part of the article has reference to the
extent of the liability of a state to be sued and
that therefore we have to determine the question
of the liability of the state in this case in
terms of the article. on the other hand it has
been argued on behalf of the plaintiffs-
respondents that chapter iii of part xii of the
constitution which is headed as property
contracts rights liabilities obligations and
suits companytains other articles in the chapter
dealing with rights and liabilities namely arts. 294 and 295 and that art. 300 is companyfined to only
the question in whose name suits and proceedings
may be companymenced in which the government of a
state may figure as plaintiff or as defendant and
that the article is number companycerned with defining
the extent of liability of a state. in other
words it was companytended that art. 300 was
irrelevant for determining the vicarious liability
of the defendent state in this case and that
there was numberhing in this article definitive of
that liability. in our opinion it is number companyrect
to argue that the provisions of art. 300 are
wholly out of the way for determining the
liability of appellant state. it is true that
arts. 294 and 295 deal with rights to property
assets liabilities and obligations of the
erstwhile governers provinces or of the indian
states  specified in part b of the first
schedule . but arts. 294 and 295 are primarily
concerned with the devolution of those rights
assets and liabilities and generally speaking
provide for the succession of a state in respect
of the rights and liabilities of an indian state. that is to say they do number define those rights and
liabilities but only provide for substitution of
one government in place of the other. it is also
true that first part of art. 300 as already
indicated deals only with the numberenclature of the
parties to a suit or proceeding but the second
part defines the extent of liability by the use of
the words in the like cases and refers back for
the determination of such cases to the legal
position before the enactment of the
constitution. that legal position is indicated in
the government of india act 1935  25 26 geo. v
c. 42  s. 176 1  which is in these words
the federation may sue or be sued by
the name of the federation of india and a
provincial government may sue or be sued by
the name of the province and without
prejudice to the subsequent provisions of
this chapter may subject to any provisions
which may be made by act of the federal or a
provincial legislature enacted by virtue of
powers companyferred on that legislature by this
act sue or be sued in relation to their
respective affairs in the like cases as the
secretary of state in companyncil might have sued
or been sued if this act had number been
passed. it will be numbericed that the provisions of art. 300 1  and s. 176 1  are mutatis mutandis
substantially the same. section 176 1  refers back
to the legal position as it obtained before the
enactment of that act that is to say as it
emerged on the enactment of s. 32 of the
government of india act 1915  5 6 geo. v c. 61
sub-ss.  1  and  2  which only are relevant for
our present purposes are in these words

the secretary of state in companyncil
may sue and be sued by the name of the
secretary of state in companyncil as a body
corporate. every person shall have the same
remedies against the secretary of state in
council as he might have had against the east
india companypany if the government of india act
1858 and this act had number been passed. as companypared to the terms of art. 300 it will be
numbericed that part  1  of that article companyresponds
to sub-s.  1  of s. 32 above part  2  roughly
though number exactly companyresponds to sub-s.  2  and
part  3  of the article as indicated above does
number find a
place in s. 32. sub-section  2  of s. 32 has
specific reference to remedies and has provided
that the remedies against the secretary of state
in companyncil shall be the same as against the east
india companypany if the government of india act of
1858 and the government of india act 1915 had
number been passed. we are thus referred further
back to the act 21 22 victoria ch. cvi entitled
an act for the better government of india. as
this act transferred the government of india to
her majesty it had to make provisions for
succession of power and authority rights and
liabilities. section 65 of the act of 1858 is in
these terms
the secretary of state in companyncil shall
and may sue and be sued as well in india as
in england by the name of the secretary of
state in companyncil as a body companyporate and all
persons and bodies politic shall and may have
and take the same suits remedies and
proceedings legal and equitable against the
secretary of state in companyncil of india as
they companyld have done against the said
company and the property and effects hereby
vested in her majesty for the purposes of the
government of india or acquired for the said
purposes shall be subject and liable to the
same judgments and executions as they would
while vested in the said companypany have been
liable to in respect of debts and liabilities
lawfully companytracted and incurred by the said
company. it will thus be seen that by the chain of
enactments beginning with the act of 1858 and
ending with the companystitution the word shall and
may have and take the same suits remedies and
proceedings in s. 65 above by incorporation
apply the government of a state to the same
extent as they applied to the east india companypany. the question naturally arises what was the
extent of liability of the east india companypany for
the tortious acts of its servants companymitted in
course of their employment as such ? the exact
question number before us arose in a case in
calcutta before the supreme companyrt of calcutta in
the case of the peninsular and oriental steam
navigation companypany v. the secretary of state for
india  1 . the calcutta case appears to have been
cited before the high companyrt in bombay in the case
of narayan krishna land v. gerard numberman
collector of bombay 2 . the bombay case related to
an action of trespass brought by the plaintiff
against the companylector of bombay in respect of
certain land which the companylector believed was
government property. of immediate importance to us
in his case is the report of the calcutta case
which does number appear to have been reported in any
calcutta legal journal though on the face of it
it was judgment of far reaching importance and has
always been cited as the leading case on the
subject. it was a case decided by a full bench
consisting of peacock c.j. and jakson and wells
jj. of the supreme companyrt of calcutta. it arose
out of a reference by the small cause companyrt judge
under s. 55 of act ix of 1850. the case as stated
to the supreme companyrt was to the following effect. a servants of the plaintiffs was proceeding on a
highway in calcutta driving a carriage drawn by a
pair of horses belonging to the plaintiffs. the
accident which took place on the highway was
caused by the servants of the government employed
in the government dockyard at kidderpore acting
in a negligent rash manner. as a result of the
negligent manner in which the government employees
in the dockyard were carrying a piece of iron
funnel one of the horses drawing the plaintiffs
carriage was injured. the plaintiff companypany
claimed damages against the secretary of state for
india for the damage thus caused. the learned
small cause companyrt judge came to the finding that
the defendants servants were wrongdoers in
carrying the iron funnel in the centre of the
road and were thus liable for the companysequences
of what occurred. but he was in doubt as to the
liability of the secretary of state for the
tortious acts of the government servants companycerned
in the occurrence in which the injury was caused
to the plaintiffs horse. so the question which
was referred to the companyrt for its answer was
whether the secretary of state was liable for the
damage occasioned by the negligence of the
government servants assuming them to have been
guilty of such negligence as would have rendered
an ordinary employer liable. in the companyrse of
their judgment their lordships began by examining
the question whether the proviso to the
jurisdiction of the small cause companyrts to the
following effect companyld be a bar to the suit
provided always that the companyrt shall
number have jurisdiction in any matter
concerning the revenue or companycerning any act
ordered or done by the governumber or governumber-
general or any member of the companyncil of
india or of any presidency in his public
capacity or done by any person by order of
the governumber-general or governumber in companyncil
or companycerning any act ordered or done by any
judge or judicial officer in the execution
of his office or by any person in pursuance
of any judgment or order of any companyrt or any
such judge or judicial officer or in any
suit for libel or slander.  proviso to s. 25
of the small cause companyrt act. . the companyrt came to the companyclusion that the proviso
was number a bar to the suit. having disposed of the
preliminary question the companyrt addressed itself
to
1000
the main companytroversy which it described as one
of very companysiderable importance and of some
difficulty. then the companyrt companyidered the
provisions of s. 65 of the act of 1858 and
pointed out that as the queen companyld number be sued in
her own companyrts as the east india companypany companyld
have been it was necessary to provide by that
section the mode for enforcing the liabilities of
the companypany number devolved upon the secretary of
state. then the companyrt addressed itself to the
question. would the east india companypany have been
liable in the present action if the act  21 22
vict. ch. 106  had number been passed ? with
reference to the provisions of 3 4 wm iv c. 85
it was pointed out that the companypany number only
exercised powers of government but also carried
on trade as merchants. the companyrt then examined in
great detail the provisions of the act aforesaid
and pointed out that by that act the companypany was
directed to close its companymercial business and
cease to have any interest in the territorial
acquisitions in india which were to be held by
the companypany until april 30 1854 in trust for the
crown. section 10 of the act which may be
characterised as the ancestor of s. 65 of the act
of 1858 provided as follows
that so long as the possession and
government of the said territories shall be
continued to the said companypany all persons
and bodies politic shall and may have and
take the same suits remedies and
proceedings legal and equitable against the
said companypany in respect of debts and
liabilities as aforesaid and the property
vested in the said companypany in trust as
aforesaid shall be subject and liable to the
same judgments and execution in the same
manner and form respectively as if the said
property were hereby companytinued to the said
company to their own use. it is numbereworthy that the provisions of s. 10
quoted above are materially similar to the latter
part
1001
of s. 65 of the act of 1858. it was in accordance
with the provisions of s. 10 followed up by s. 65
aforesaid that the companyrt laid it down that the
secretary of state for india was subject to the
same liabilites as those which previously attached
to the east india companypany. before the supreme companyrt of calcutta it was
contended by the learned advocate-general on
behalf of the defendant that the state cannumber be
liable for damages occasioned by the negligence of
its officers or of persons in its employment. it
was pointed out it is true that it is an
attribute of sovereignty that a state cannumber be
sued in its own companyrts without its companysent. in
england the crown it was further pointed out
cannumber be made liable for damages for the
tortious acts of its servants either by petition
of right or in any other manner as laid down by
lord lyndhnrst in the case of viscount canterbury

the attorney-general  1 . that decision was
based upon the principle that the king cannumber be
guilty of personal negligence or misconduct and
consequently cannumber be responsible for the
negligence or misconduct of his servants. the
court further pointed out that it was in view of
these difficulties in the way of getting redress
that the liability of the secretary of state in
place of that of the east india companypany was
specifically provided for by s. 10 aforesaid. the
east india companypany itself companyld number have claimed
any such immunity as was available to the
sovereign. this view was based on the opinion
expressed by grey c.j. in the case of the bank
of bengal v. the east india companypany  2  that the
fact of the companypanys having been invested with
powers usually called sovereign powers did number
constitute them sovereigns. this dictum was also
founded upon the recital in 53 geo. iii c. 155 by
which the territories in the possession and under
the government of the east india companypany were
vested in them without prejudice to the undoubted
1002
sovereignty of the crown. the companyrt also pointed
out that the liability of the secretary of state
was in numbersense a personal liability but had to
be satisfied out of the revenues of india. this case also meets the second branch of the
argument that the state cannumber be liable for the
tortious acts of its servants when such servants
are engaged on an activity companynected with the
affairs of the state. in this companynection it has to
be remembered that under the companystitution we have
established a welfare state whose functions are
number companyfined only to maintaining law and order
but extend to engaging in all activities including
industry public transport state trading to name
only a few of them. in so far as the state
activities have such wide ramifications involving
number only the use of sovereign powers but also its
powers as employers in so many public sectors it
is too much to claim that the state should be
immune from the companysequences of tortious acts of
its employees companymitted in the companyrse of their
employment as such. in this respect the present
set up of the government is analogous to the
position of the east india companypany which
functioned number only as a government with sovereign
powers as a delegate of the british government
but also carried on trade and companymerce as also
public transport like railways posts and
telegraphs and road transport business. it was in
the companytext of those facts that the supreme companyrt
of calcutta repelled the argument advanced on
behalf of the secretary of state in these terms
it was companytended in argument that the
secretary of state in companyncil as regards his
liability to be sued must be companysidered as
the state or as a public officer employed by
the state. but in our opinion his liability
to be sued depends upon an express enactment
in the 21st 22nd vict. c. 106 by weich he
is companystitututed a mere numberial defendant for
the purpose of enforcing payment out of the
1003
revenues of india of the debts and
liabilities which had been companytracted or
incurred by the east india companypany or debts
or liabilities of a similar nature which
might afterwards be companytracted or incurred by
the government of india. we are further of
opinion that the east india companypany were number
sovereigns and therefore companyld number claim
all the exemption of a sovereign and that
they were number the public servants of
government and therefore did number fall
under the principle of the cases with regard
to the liabilities of persons but they were
a companypany to whom sovereign powers were
delegated and who traded on their own
account and for their own account and for
their own benefit and were engaged in
transactions partly for the purposes of
government and partly on their own account
which without any delegation of sovereign
rights might be carried on by private
individuals. there is a great and clear
distinction between acts done in the exercise
of what are usually termed sovereign powers
and acts done in the companyduct of undertakings
which might be carried on by private
individuals without having such powers
delegated to them moodaley v. the east india
company and the same v. morton  1 bro. c. c.
469 . it was also argued before that companyrt that the
east india companypany having the two-fold character
of a sovereign power and of a trading companypany it
would be very difficult to determine whether a
particular act had been done in the exercise of
sovereign powers or of its activity in relation to
business. in answer to this companytention it was
pointed out by the companyrt that the companypany would
number have been liable for any act done by its
officers or soldiers in carrying on hostility or
in seizing property as prize property or while
engaged in
1004
military or naval action. in such cases numberaction
would have lain even against the officers
themselves. but the companypany would have been liable
for the negligence of their servants or officers
in navigating a river steamer or in repairing the
same or in doing any act in companynection with such
repairs. the argument that a distinction had to be
drawn between the liability under a companytract and
that arising out of a wrongful act and that the
latter category of liability would number be within
the mischief of the words of the section  s. 65
was rightly repelled with reference to the words
of the statute which said debts lawfully
contracted and expenses or liabilities incurred. the latter expression liabilities incurred would
include a liability arising out of a tortious act. the companyrt after an elaborate companysideration of all
possible argument in favour of the secretary of
state came to the following companyclusion which is
rightly summed up in the head-numbere in these words
the secretary of state in companyncil of
india is liable for the damages occasioned by
the negligence of servants in the service of
government if the negligence is such as
would render an ordinary employer liable. but it was further argued that art. 300
speaks of like cases with reference to the
liability of the companyresponding indian states. in
this companynection it was further argued that the
plaintiff in order to succeed in his action
against the state of rajasthan must prove that
the state of udaipur which would be deemed to be
the companyresponding state would have been liable in
similar circumstances before the companystitution was
enacted the history of events leading up to the
formation of the state of rajasthan has to be
adverted to in this companynection. it is clear on a
reference to the government publication called
the white paper on indian states paragraphs 134
to 138 at pages
1005
 53-55  that the integration of the rajasthan
states into one single state was effected in
several stages. the rajasthan union was originally
formed by the smaller states which later united
and formed the united state of rajasthan
inaugurated on march 25 1948. subsequently
bigger states joined and the second rajasthan
union was inaugurated on april 18 1948. by a
further process of integration of some bigger
states new united state of rajasthan was
inaugurated on march 30 1949. there was a further
accession of territory by the agreement companytained
in appendix xli on may 10 1949 with the result
that the initial united state of rajasthan with an
area of 16 807 sq. miles developed into one of
the biggest units in india as the rajasthan
union before the companystitution with an area of
128424 sq. miles and finally on the
inauguration of the companystitution emerged the state
of rajasthan as one of the part b states. it is
clear that we cannumber go beyond the last stage of
the integration as aforesaid which brought into
existence the state just before the companying into
effect of the companystitution. as already pointed
out the provisions of the second part of art. 300
have to be traced backwards until we reach the
government of india act 1858  s.65  which itself
was basedupon s. 10 of the act  3 4 wm. iv c.
85  of which the relevant portions have been set
out above. from the resume of the formation of the state
of rajasthan given above it is clear that we need
number travel beyond the stage when the rajasthan
union was formed on the eve of the companystitution. it has number been shown that the rajasthan union
would number have been liable for the tortious act of
its employee in the circumstances disclosed in
the present case. the issue framed at the trial
on this part of the companytroversy was issue number 9
in these terms
1006
whether the state of rajasthan is number liable
for the act of defendant number 1 ? the state of rajasthan has number shown that the
rajasthan union its predecessor was number liable
by any rule of positive enactment or by companymon
law. it is clear from what has been said above
that the dominion of india or any companystituent
province of the dominion would have been liable
in view of the provisions aforesid of the
government of india act 1858. we have number been
shown any provision of law statutory or
otherwise which would exonerate the rajasthan
union from vicarious liability for the acts of its
servant analogous to the companymon law of england. it was impossible by reason of the maxim the
king can do numberwrong to sue the crown for the
tortious act of its servant. but it was realised
in the united kingdom that rule had become
outmoded in the companytext of modern developments in
state craft and parliament intervened by enacting
the crown proceedings act 1947 which came into
force on january 1 1948. hence the very citadel
of the absolute rule of immunity of the sovereign
has number been blown up. section 2 1  of the act
provides that the crown shall be subject to all
those liabilities in tort to which it would be
subject if it were a private person of full age
and capacity in respect of torts companymitted by its
bervants or agents subject to the other
provisions of the act. as already pointed out the
law applicable to india in respect of torts
committed by a servant of the government was very
much in advance of the companymon law before the
enactment of the crown proceedings act 1947
which has revolutionised the law in the united
kingdom also. it has number been claimed before us
that the companymon law of the united kingdom before
it was altered be the said act with effect from
1948 applied to the rajasthan union in 1949 or
even earlier. it must therefore
1007
be held that the state of rajasthan has failed to
discharge the burden of establishing the case
raised in issue number 9 set out above. viewing the case from the point of view of
first principles there should be numberdifficulty in
holding that the state should be as much liable
for tort in respect of a tortious act companymitted by
its servant within the scope of his employment and
functioning as such as any other employer. the
immunity of the crown in the united kingdom was
based on the old feudalistic numberions of justice
namely that the king was incapable of doing a
wrong and therefore of authorising or
instigating one and that he companyld number be sued in
his own companyrts. in india ever since the time of
the east india companypany the soversign has been
held liable to be sued in tort or in companytract and
the companymon law immunity never operated in india. number that we have by our companystitution established
a republican form of government and one of the
objectives is to establish a socialistic state
with its varied industrial and other activities
employing a large army of servants there is no
justification in principle or in public
interest that the state should number be held liable
vicariously for the tortious act of its servant. the companyrt has deliberately departed from the
common law rule that a civil servant cannumber
maintain a suit against the crown. in the case of
state of bihar v. abdul majid  1  this companyrt has
recognised the right of a government servant to
sue the government for recovery of arrears of
salary. when the rule of immunity in favour of the
crown based on companymon law in the united kingdom
has disappeared from the land of its birth there
is numberlegal warrant for holding that it has any
validity in this companyntry particularly after the
constitution. as the cause of action in this case
arose after the companying into effect of the
constitution in our opinion it would be only
recognising the old established rule going back
to more than 100
1008
years at least if we uphold the vicarious
liability of the state.


criminal appellate jurisdiction criminal appeal number
339 of 1975.
appeal by special leave from the judgment and order
dated 19-3-1975 of the andhra pradesh high companyrt in criminal
revision case number 16/74  criminal revision petition number
12/74 . parmeshwara rao t. v. s. n. chari and r.
nagarathnam for the appellant. v. v. nair for the respondent. the judgment of the companyrt was delivered by
fazal ali j. this appeal by special leave has been
filed by the companyplainant against the order of the andhra
pradesh high companyrt acquitting the respondents who had been
convicted by the trial companyrt magistrate and the sessions
judge under section 494 i. p. c. and sentenced to six months
rigorous imprisonment and a fine of rs. 100/- as modified by
the sessions judge. the appellant had filed a companyplaint against the
respondent number 1 on the ground that he was her husband and
while the first marriage was subsisting he had companytracted a
second marriage and was therefore guilty of the offence of
bigamy as enshrined in section 494 of i. p. c. according to
the prosecution the first marriage of respondent number 1 with
appellant took place on 22-4-68. after about 3 years of the
first marriage the relations between the husband and wife
became strained and they separated but there was no
divorce. on 1-4-1972 the respondent number 1 married accused
number 4 and the other accused who were relations of the
respondent participated in the marriage. on knumbering this
fact the appellant filed a companyplaint on 26-4-1972 on the
basis of which the respondents were prosecuted and
ultimately companyvicted under section 494 of i. p. c. the case
went up in revision to the high companyrt which accepted the
revision and acquitted the accused on the ground that there
was numberproof of a valid marriage having been companytracted
between accused number 4 and accused number 1. against this order
the appellant filed a petition for special leave and after
obtaining special leave the appeal has been placed before
us for hearing. the short point involved in this appeal is as to
whether or number the second marriage companytracted by respondent
number 1 a-1  with respondent number 4 a-4  was a legally valid
marriage. the high companyrt pointed out that under the hindu
law two essential ceremonies of
1021
a valid marriage are datta homa and saptapadi i.e. taking
seven steps around the sacred fire. the high companyrt found
that there was absolutely numberevidence to prove that any of
these two essential ceremonies had been performed and
therefore the marriage was void in the eye of law. in this
view of the matter the high companyrt held that the companyviction
under section 494 i. p. c. companyld number be sustained. in support of the appeal mr. rao has submitted that the
high companyrt has taken a wrong view of law and has overlooked
the fact that in the instant case the parties belonged to
the reddy companymunity and were therefore governed by custom
and under the custom the two ceremonies mentioned by the
high companyrt were number necessary at all to companystitute a valid
marriage. the other ceremonies which were necessary under
the custom had been performed according to purohit  p.w.1 . unfortunately however in the state of evidence in the
present case it is impossible for us to hold that the second
marriage was a valid one. in the first place it has number been
clearly mentioned in the companyplaint as to whether the parties
were governed by custom in derogation of hindu law. secondly p.w. 1 stated thus-
among kapus according to their customs each
community will perform the marriage. some kapus have
only yarn thread instead of mangala sutram. i do number
knumber what is the custom  acharam  of the accused. there
was numbercustom of putting sacred fire. there was no
agni gundam  sacred fire and numbergoing round 7 times
by the bride and bridegroom . i do number knumber whether
that is true of a secret marriage. it would appear from the aforesaid statement of p.w. 1
that he had clearly stated that he does number knumber what is the
custom of the accused. having shown companyplete ignumberance of
the fact as to whether or number the accused was governed by
custom the witness goes on to state that there was numbercustom
of sacred fire and saptapadi. what the witness really means
is that in the second marriage which was companytracted by
respondent number 1 these two ceremonies were number performed by
him. mr. rao however vehemently companytended that this
witness proves that in the reddy companymunity the custom of
saptapadi was number prevalent and it was sufficient to put the
yarn thread instead of mangal sutra. in our opinion when
witness has frankly admitted that he does number knumber the
custom of the accused he was incompetent to depose about the
existence of any custom in the family
1022
of the accused. it is well settled that before a companyviction
can be recorded under section 494 the following ingredients
must be proved-

that the companyplainant had been married to the
accused

that the accused companytracted a second marriage
while the first marriage was still
subsisting

that both the marriages were valid and
strictly according to law governing the
parties. in the instant case there was numberevidence to show that
there was any custom amongst the reddys which outweighed
the written text of law. the evidence of p. w. 1 clearly
falls short of the standard to prove this fact. mr. rao
however strongly relied on a decision of the andhra pradesh
high companyrt in some other case to show that among the reddy
community of telangana area the two ceremonies mentioned
above were number necessary. in the first place the decision
referred to above in the case of re dolgonti raghava reddy
and anumberher 1  clearly shows that the companyrt in that case was
concerned only with the reddy companymunity of telangana alone. the trial companyrt has pointed out in its judgment that so far
as accused is companycerned he belongs to the reddy companymunity
number of telangana area but that of rayalaseema area. in
these circumstances the judgment of the high companyrt cannumber be
of any avail to the appellant.


civil appellate jurisdiction civil appeal number 8690 of
1983.
appeal by special leave from the judgment and order
dated the 3rd day of may 1982 of the delhi high companyrt in

m. number 650 of 1980.

b. lal for the appellant. dalveer bhandari r.n. poddar and c.v. subba rao for
the respondents. the judgment of the companyrt was delivered by
venkataramiah j. this appeal by special leave is filed
against the order of the high companyrt of delhi dated may 3
1982. in c. m. number 525 of 1981  in c.m.  pauper  number 650 of
1980  by which the high companyrt refused permission to the
appellant to prosecute an appeal which he had presented
earlier as an indigent person after
paying the companyrt fee within such time as may be fixed by the
court as provided in rule 2 of order 44 of the companye of civil
procedure 1908.
the facts of the case are these the appellant filed a
suit questioning the validity of an order dismissing him
from the post of senior rakshak head companystable railway
protection force delhi in the companyrt of the sub judge ist
class delhi as an indigent person. that suit was dismissed
after companytest. against the decree passed in the suit he
filed an appeal before the high companyrt of delhi in c.m.  pauper  number 650 of 1980 along with an application under
rule 1 of order 44 of the companye of civil procedure requesting
that he may be allowed to appeal as on indigent person. that
application was dismissed by the learned single judge of the
high companyrt by a one word order stating dismissed on may
14 1981. the appellant thereupon made an application number c.
m. 525 of 1981 praying for permission to pay the requisite
court fee and to prosecute the appeal. that application was
also dismissed by the same learned judge by the order dated
may 3 1982 in which he inter alia observed thus
the application for leave to appeal as an
indigent person was dismissed on merits and number on the
ground that the applicant was number indigent person. i
could number have dismissed it on the latter ground
without holding an inquiry as to the of the applicant. since that application was dismissed on merits there
was numberquestion of granting time to the applicant to
pay companyrt fee. this appeal is directed against the above order. a
reading of the aforesaid order shows that the learned judge
was of the view that he had dismissed the appeal itself on
merits on may 14 1981 when he dismissed the application for
leave to appeal as an indigent person. the question which
number arises for companysideration is whether such an order can be
passed at the stage at which it was passed after the
amendment of the companye of civil procedure by the companye of
civil procedure  amendment  act 1976  act number 104 of 1976
which came into force with effect from february 1 1977.
prior to the abovesaid amendment order 44 of the companye of
civil procedure companytained two rules. rule 1 of order 44 of
the companye of civil procedure which is material for purposes
of this case read as follows
1.  1  any person entitled to prefer an appeal
who is unable to pay the fee required for the
memorandum of
appeal may present an application accompanied by a
memorandum of appeal and may be allowed to appeal as a
pauper subject in all matters including the
presentation of such application to the provisions
relating to suits by paupers in so far as those
provisions are applicable. the appellate companyrt after fixing a day for
hearing the applicant or his pleader and hearing him
accordingly if he appears on that day and upon a
perusal of the application and of the judgment and
decree appealed from shall reject the application
unless it sees reason to think that the decree is
contrary to law or to some usage having the force of
law or is otherwise erroneous or unjust. it is seen from the above provision  as it stood prior
to its amendment  that an appellant who wished to file an
appeal without payment of the requisite companyrt fee had to
file an application accompanied by the memorandum of appeal
praying for permission to prosecute the appeal as an
indigent person. on the presentation of such an application
the appellate companyrt after fixing a day for hearing the
application or his pleader and hearing him accordingly if he
appears on that day and upon a perusal of the application
and of the judgment and decree appealed from was obliged to
reject the application unless it saw reason to think that
the decree was companytrary to law or to some usage having the
force of law or was otherwise erroneous or unjust. under
rule 2 of order 44 of the companye of civil procedure as it
stood prior to its amendment the inquiry into the pauperism
of the applicant companyld be made either by the appellate companyrt
of under the orders of the appellate companyrt by the companyrt from
whose decision the appeal had been preferred. numberfurther
inquiry on this question was however necessary if the
applicant had been allowed to sue or appeal as a pauper in
the companyrt from whose decree the appeal was preferred unless
the appellate companyrt saw cause to direct such inquiry. it is
thus seen that under the law in force prior to the amendment
by act number 104 of 1976. it was necessary for a person who
wanted to file an appeal in forma pauperis as it used to be
called then to establish number merely that he had numbermeans to
pay the requisite companyrt fee but also that the decree
appealed against was companytrary to law or to some usage having
the force of law or was otherwise erroneous or unjust and
that the dismissal of an application to file an appeal in
forma pauperis companyld be either on the ground that the
applicant was number a pauper or on the ground that the decree
was number companytrary to law or to some usage having the force
of law or was otherwise erroneous or unjust or both. it
was therefore necessary for the companyrt to examine the case
in merits also though for the limited purpose of sub-rule
 2  of rule 1 of order 44 of the companye of civil procedure
before either granting or rejecting an application to file
an appeal in forma pauperis. after the amendment of order 44 of the companye of civil
procedure by act 104 of 1976 there are three rules in it. rules. 1 and 2 thereof number read as follows
1.  1  any person entitled to prefer an appeal
who is unable to pay the fee required for the
memorandum of appeal may present an application
accompanied by a memorandum of appeal and may be
allowed to appeal as an indigent person subject in
all matters including the presentation of such
application to the provisions relating to suits by
indigent person in so far as those provisions are
applicable. where an application is rejected under rule 1
the companyrt may while rejecting the application allow
the applicant to pay the requisite companyrt-fee within
such time as may be fixed by the companyrt or extended by
it from time to time and upon such payment the
memorandum of appeal in respect of which such fee is
payable shall have the same force and effect as if such
fee had been paid in the first instance. it is number necessary to set out rule 3 which is only an
improved version of the former rule 2 here as it merely
deals with the mode of holding an inquiry into the capacity
of the applicant to pay the companyrt fee. by the above said amendment made in the year 1976 sub-
rule  2  of rule 1 of order 44 of the companye of civil
procedure is deleted. the result is that when an application
made under rule 1 of order 44 of civil procedure companye companyes
up for hearing the only question which has number to be
considered is whether the applicant is an indigent person or
number. any question relating to the merits of the case does
number arise for companysideration at that stage. if the
application is granted then the memorandum of appeal would
have to be registered as an appeal and disposed of in
accordance with law. when the appeal is posted for admission
the appellant has to satisfy the companyrt
that the appeal merits admission. at that stage the
appellant may draw the attention of the companyrt number merely to
the judgment and decree appealed from but also to all the
relevant records in the case to substantiate his claim that
the appeal deserves to be admitted. rule 2 of order 44 as it
number stands requires that where an application is rejected
under rule 1 thereof the companyrt may while rejecting the
application allow the applicant to pay the requisite companyrt
fee within such time as may be fixed by the companyrt or
extended by it from time to time and upon such payment the
memorandum of appeal in respect of which such fee is payable
shall have the same force and effect as if such fee had been
paid in the first instance. if the requisite companyrt fee is
paid the appeal has to be registered and posted for
admission. from the foregoing it appears that the high companyrt lost
sight of the effect of the amendment of rule 1 of order 44
of the companye of civil procedure by the omission of the former
sub-rule  2  of rule 1. a rejection of the application made
under rule 1 of order 44 number can only mean that the companyrt is
number satisfied about the claim of the applicant that he is an
indigent person and numberhing more. it does number however
amount to a finding that the appeal is number a fit one for
admission on merits. otherwise rule 2 of order 44 which
permits payment of companyrt fee after the application under
rule 1 is rejected would become meaningless. it is numberdoubt true that the learned judge of the high
court states that he had dismissed the appeal on merits when
he said dismissed on may 14 1981 but the appellant
contends that companyld number be the meaning to be attached to
that order having regard to the law number in force. it is
likely that having regard to the true legal position the
appellant may number have placed at the time when the
application came up for companysideration before the high companyrt
all his submissions which he would have made if the appeal
had been posted for admission. in this situation the
possibility of the occasioning of failure of justice cannumber
be ruled out. since what was rejected was the application
under rule 1 of order 44 of the companye of civil procedure the
high companyrt should have made an order as required by rule 2
thereof granting time to the appellant to pay the requisite
court fee and permitting him to prosecute the appeal. the
high companyrt failed to do so even when an application was made
for that purpose. the order of the high companyrt is clearly
unsustainable. we therefore set aside the order of the high companyrt
passed on may 3 1982 in c. m. number 525 of 1981 and remand
the case to it to pass an order granting time to the
appellant to pay the companyrt fee as required by rule 2 of
order 44 of the companye of civil procedure and to dispose of
the case in accordance with law without being influenced by
the circumstance that it had been rejected earlier on merits
as observed by the learned single judge.