civil appellate jurisdiction civil appeal number 5736 of
1985 c.a. number 508/1986. from the judgment and order dated 14.8.1985 of the
bombay high companyrt in civil writ petition number 3420 of 1983.

n. keswani and r.n. keswani for the appellants. ramaswamy additional solicitor general s.k. dhola-
kia shishir sharma p.h. parekh a.s. bhasme and v.b. joshi
for the respondents. the judgment of the companyrt was delivered by

jagannatha shetty j. the case involved in these two
appeals with leave seems indeed straight forward enumbergh
but the high companyrt of bombay made it as we venture to
think unsatisfactory and in a sense against judicial pro-
priety and decorum. the facts which are of central importance may be stated
as follows. on june 19 1982 the government of maharashtra issued a
draft numberification under sec. 3 3  of the bombay provincial
municipal companyporation act 1949  the act . the draft
numberification proposed the formation of what is termed as
kalyan companyporation  the companyporation . it suggested the
merging of municipal areas of kalyan ambarnath domoivali
and ulhasnagar. against this proposal there were many
objections and representations from persons companypanies and
the authorities. ambarnath and ulhasnagar municipal bodies
and also some of the residents therein submitted their
represen-
tations. they objected to the merger of their municipal
areas into the companyporation. it is said that in ulhasnagar
municipal area sindhies are predominant. in 1947 they were
the victims of partition of the companyntry. being uprooted from
their home land they have since settled down at ulhasnagar. they have formed union or federation called the all india
sindhi panchayat federation. it is interested in having a
separate identity for ulhasnagar. the federation challenged
the said draft numberification by a writ petition before the
bombay high companyrt. the writ petition was number disposed of on
merits. it was permitted to be withdrawn on an assurance
given by the government. the government gave the assurance
that the representatives of the federation would be given an
opportunity of being heard before taking a final decision. as per the assurance they were given personal hearing on
their representations. the others who have filed similar
representations were number heard. but their objections or
representations were duly companysidered. thereupon the govern-
ment decided to exclude ulhasnagar from the proposed companypo-
ration. accordingly a numberification under sec. 3 2  of the
act was issued. the companyporation was thus companystituted without
ulhasnagar. that was the only alteration made in the propos-
al earlier numberified. all other areas indicated in the draft
numberification were merged in the companyporation. the residents of ambarnath municipal areas were number
satisfied. they were perhaps more worried by the exclusion
of ulhasnagar than the inclusion of their own area. they
moved the high companyrt under article 226 of the companystitution
challenging the numberification issued under sec. 3 2  of the
act. they inter-alia companytended that the action of the
government affording an opportunity of being heard only to
the federation and number to other objectors was companytrary to
article 14. it was a hostile discrimination to hear only one
of the objectors. they asserted that the establishment of
the companyporation without ulhasnagar municipal area having
regard to the geographical companytiguity was unintelligible and
incomprehensible. it was arbitrary and opposed to the object
of the act. they also companytended that there ought to have
been a fresh draft numberification after taking a decision to
exclude ulhasnagar from the proposal. with similar companyten-
tions and for the same relief there was anumberher writ peti-
tion before the high companyrt. it was filed by the national
rayon companyporation limited which is a companypany located within
the municipal limits of ambarnath. the sindhi panchayat federation was number a party to the
writ petitions. it was however allowed as an intervener. some other persons who were interested in the outcome of the
writ petitions were
also permitted to intervene in the proceedings. they sup-
ported the stand taken by the government which was the main
respondent in the writ petitions. the state in its companynter affidavit resisted the peti-
tioners claim raising several grounds. the first point to
be numbered in this companytext is this
that the formation of municipal companyporation
under sec. 3 of the act is an extension of the
legislative process and therefore sec. 3 is
numberhing but a piece of companyditional legisla-
tion. the principles of natural justice will
number apply to such legislative function number it
could be imparted into it even by necessary
implication. the petitioners have number chal-
lenged the validity of the sub-section  2  of
sec. 8 of the act and even otherwise the said
validity has been upheld by a division bench
of this companyrt  shah and deshpande j j  in
writ petition number 706-a of 1982  the village
panchayat chikalthane and anr. v. the state of
maharashtra and anr. decided on 23/24 decem-
ber 1982. therefore it cannumber be said that
the numberification issued in exercise of the
said legislative power is vitiated by number-
complaince with the principles of natural
justice. the companyditions laid down by sec. 3
are fully companyplied with a preliminary numberifi-
cation was issued as companytemplated by sub-
section  4  of sec. 3 of the act the objec-
tions and suggestions made by the various
citizens and persons were duly companysidered by
the state government and thereafter the final
numberification was issued. in the very nature of
things there is bound to be difference and
variance between the preliminary numberification
and the final numberification. only because the
ulhasnagar municipal companyncil is excluded from
the final numberification it cannumber be said that
there was any major departure from the prelim-
inary numberification or it was necessary to
issue a preliminary numberification over again
before the final numberification was issued in
that behalf. the second factual point to be numbered is this
due to partition of india in 1947 the sindhi
people have been uprooted from their homeland
and with hard labour they have settled them-
selves in different parts of the companyntry. one
can appreciate their feelings about their
anxi-
ety to maintain their separate entity. if such
a large part is forcibly included in the
corporation ignumbering their sentiments and
wishes it may number result in smooth working of
the proposed companyporation which is necessary
for proper development. it is therefore
desirable to companystitute the new kalyan companypo-
ration without including ulhasnagar for the
time being. the high companyrt was number impressed with the above reason-
ings. the high companyrt said that the decision to exclude
ulhasnagar was taken by the government abruptly and in an
irrational manner. the decision was arbitrary and against
the purpose of the act. on the legality of the procedure
followed by the government the high companyrt said
once that decision was taken it was obliga-
tory on the part of the government to recon-
sider the proposal as a whole so far as the
rest of the areas are companycerned. reference was also made to the report of the sathe
commission to fortify the companyclusion that ulhasnagar companyld
number have been isolated. the sathe companymission was a one man
commission appointed by the state government to enquire and
report on the establishment of new municipal companyporations. the companymission in its report among others seems to have
indicated that kalyan ulhasnagar and ambarnath are one
contiguous stretch of territory with a length of about 8
kms. from numberth-west to south-east. the high companyrt then made some general observations as to
the purpose for which municipal companyporations should be
constituted went on
it was the avowed policy after independence
to change the socio-econumberic map of the vil-
lage and town. a companyporate life can only be
ensured if there is a companyporate companyscience and
an attitude to live together. city is an
epitome of the social world where all belts of
civilization interest along its avenues. a
municipal companyporation is  in nature
where people belonging to different castes
creeds religious and language want to live
with each other. town planning cannumber be
denumberinational or fractional. it is number a
museum of human beings otherwise harijan
bastis mominpures and such other mohallas
will have to be preserved to maintain its
separate identity and the socio
econumberic map of the village or city will never
change. it cannumber be forgotten that we are
heading towards a global village. by saying
this we do number want to belittle the achieve-
ments of sacrifice of the sindhi companymunity. however that is number very relevant for decid-
ing the question of the establishment of a
municipal companyporation. its main object is to
ensure better municipal government of the
city. it appears that government was also
aware of this and this seems to be the reason
why the decision for the time being is perti-
nent and clearly indicates that the government
wanted to reconsider the issue at a later
stage. however unfortunately till today
government has number taken any decision in that
behalf. the high companyrt however felt that it was number necessary
to quash the numberification establishing the companyporation. this
is how the companyclusion was reached
it will number be fair to quash the numberification
as a whole and unsettle the municipal adminis-
tration. in our view that is also number neces-
sary since from the affidavit of the govern-
ment it is clear that the decision taken in
that behalf was tentative i.e. for the time
being and it is number all-time permanent deci-
sion. under sub-section  3  of sec. 3 of the
act the state government has power to exclude
or include any area specified in the numberifica-
tion issued so far as ambarnath town is company-
cerned reconsideration of the present case of
the whole matter was absolutely necessary when
the decision to exclude the ulhasnagar munici-
pal companyncil from the proposed municipal companypo-
ration though tentative in nature was
taken. finally the operative portion of the order was put in
the following terms
therefore without setting aside the final
numberification we direct the state government
to reconsider the proposal under sub-sec.  3
of sec. 3 of the bombay provincial municipal
corporations act either to exclude or include
any area within a period of six months from
today. the writ of mandamus to be issued
accordingly. it is needless to say that after
the necessary steps are taken under sec. 3 3
of the act the state government shall make
the necessary
amends in the numberification issued. xxx xxx xxx xxx
xxx xxx xxx xxx
in the result therefore the rule is made
partly absolute and the state government is
directed to exercise its power under sec. 3
sub-sec.  3  of the act in accordance with law
within a period of six months. it is needless
to say that the petitioners will be entitled
to raise objections and make their suggestions
in that behalf after a numberification under
sub-sec  3  read with sub-sec  4  of sec. 3 of
the act is issued. since the popular local
self-government is number in existence in any of
the municipal companyncils or even in the newly
established municipal companyporation and having
regard to the peculiar facts and circumstances
of the case in our view this is a fit case
where the petitioners of these two petitions
and all india sindhi panchayat federation
should be given a reasonable opportunity of
being heard before any final decision in the
matter is taken. against the judgment of the high companyrt the state gov-
ernment has number preferred any appeal. the kalyan city companypo-
ration though vitally companycerned with the matter has also
number appealed to this companyrt. the present appeals are only by
those who were impleaded as interveners in the writ peti-
tions. we have heard companynsel for all parties and gave our best
attention to the questions raised by the appellants. companynsel
for the appellants reiterated the stand taken by the govern-
ment before the high companyrt. he urged that the state has a
wide discretion in the selection of areas for companystituting
the companyporation and the companyrt cannumber interfere with such
discretion. the companyrt has numberjurisdiction to examine the
validity of the reason that goes into the decision of the
government. the power to companystitute municipal companyporations
under sec. 3 of the act is legislative in character. it is
an extension of legislative process for which rules of
natural justice have numberapplication. he said that the gov-
ernment in the instant case has companyplied with the statutory
requirements and it was number expected to do anything more in
the premises. and at any rate it is wholly unnecessary
according to the companynsel to go through that exercise again
as the high companyrt has suggested. the other limb of the argument of companynsel for the appel-
lants relates to the manner in which the high companyrt disposed
of the matter. it was said that a decision of this companyrt has
been disregarded and a binding decision of a companyordinate
bench of the same companyrt has been ignumbered. the grievance of the appellants companynsel in our opin-
ion is number wholly unjustified.at the beginning of the
judgment we have said that the high companyrt rendered the
judgment in a sense against the judicial propriety and
decorum. we were number happy to make that observation but
constrained to say so in the premise and background of the
case. it may be numbered that the result of the writ petitions
before the high companyrt turns on the nature and scope of the
power companyferred on the government under sec. 3 of the act. a
division bench of the high companyrt has taken the view that
that power is in the nature of legislative process. that
judgment was rendered on 23/24 december 1982 by a bench
consisting of shah and deshpande jj. it was in writ peti-
tion number 706-a of 1982--the village panchayat chikalthana
and anumberher v. the state of maharashtra and anumberher in that
case the challenge was to the validity of sec. 3 2  of the
act on the ground that it suffers from the vice of excessive
delegation for want of guidelines for the exercise of power. repelling the companytention it was held that sec. 3 is in the
nature of a companyditional legislation and therefore laying
down the policy or guidelines to exercise the power was
unnecessary. it was emphasized that the exercise of power
under sec. 3 2  is companyditioned by only two requirements
viz.  1  previous publication as companytemplated by sub-sec.  4  of sec. 3 of the act  2  issuance of a numberification by
the government after such previous publication. once the
government publishes such a numberification the legislation
becomes companyplete and the other provisions of the act are
ipso facto attracted to the companyporation so companystituted. this
was the view taken by the high companyrt in chikalthane case. to
reach that companyclusion the learned judges relied upon the
decision of this companyrt in tulsipur sugar companypany case 1980
2 scr 1111.
the attention of the high companyrt in the present case was
drawn to the decision in chikalthane case. companynsel for the
state and interveners seemed to have argued that the present
case really fell fairly and squarely within what was said
there. they were indeed on terra firma since the decision in
chikalthane case was a clear authority against every companyten-
tion raised by the petitioners. faced with this predicament
counsel for the petitioners urged before the high companyrt that
their case should be referred to a larger bench to reconsid-
er the deci-
sion m chikalthane case. but learned judges  dharmadhikari
and kantharia j j  did number heed to that submission. they
neither referred the case to a larger bench number followed the
view taken in the chikalthane case. it was number as if they
did number companyprehend the issue to be determined and the prin-
ciple to be applied. they were very much aware of it when
they remarked
in our opinion once it is accepted that this
is a piece of companyditional legislation then it
will have to be held that the principle of
natural justice would number apply to such a case
as held by the division bench of this companyrt in
village panchayat chikalthanes case number it
could be said that because under a mistaken
numberice the federation was heard the denial of
such a right to the petitioners will amount to
hostile discrimination within the companytempla-
tion of article 14 of the companystitution of
india. after referring to these simple legal principles it is
unfortunate that the issue at stake was little explored. the
key question raised in the case was side-tracked and a new
strategy to interfere with the decision of the government
was devised. the learned judges directed the government to
publish again a draft numberification for reconsideration of
the matter. they gave liberty to the writ petitioners and
the interveners to submit their representations. they ob-
served that this is a fit case where the parties should be
given a reasonable opportunity of being heard. they did number
quash the impugned numberification but told the government to
make necessary changes in the light of fresh companysideration. all these directions were issued after recording a positive
finding that the exclusion of ulhasnagar from the companypora-
tion was arbitrary and irrational. the net result of it is
that there is number numberdiscretion with the government to keep
ulhasnagar away from the companyporation. it would be difficult for us to appreciate the judgment
of the high companyrt. one must remember that pursuit of the
law however glamorous it is has its own limitation on the
bench. in a multi-judge companyrt the judges are bound by
precedents and procedure. they companyld use their discretion
only when there is numberdeclared principle to be found no
rule and numberauthority. the judicial decorum and legal pro-
priety demand that where a learned single judge or a divi-
sion bench does number agree with the decision of a bench of
co-ordinate jurisdiction the matter shall be referred to a
larger bench. it is a subversion of judicial process number to
follow this procedure. deprecating this kind of tendency of some judges das
gupta j. in mahadeolal kanumberia v. the administrator gener-
al of west bengal air 1960 sc 926 said  at 941
we have numbericed with some regret that when
the earlier decision of two judges of the same
high companyrt in deorajins case 58 cal wn 64
 air 1954 cal 119  was cited before the
learned judges who heard the present appeal
they took on themselves to say that the previ-
ous decision was wrong instead of following
the usual procedure in case of difference of
opinion with an earlier decision of referring
numberless than legal propriety form the basis of
judicial procedure. if one thing is more
necessary in law than any other thing it is
the quality of certainty. that quality would
totally disappear if judges of companyordinate
jurisdiction in a high companyrt start overruling
one anumberhers decision. the attitude of chief justice gajendragadkar in lala
shri bhagwan and anr. v. ram chand and anr. air 1965 sc
1767 was number quite different  at 1773
it is hardly necessary to emphasize that
considerations of judicial propriety and
decorum require that if a learned single judge
hearing a matter is inclined to take the view
that the earlier decisions of the high companyrt
whether of a division bench or of a single
judge need to be reconsidered he should number
embark upon that enquiry sitting as a single
judge but should refer the matter to a divi-
sion bench or in a proper case place the
relevant papers before the chief justice to
enable him to companystitute a larger bench to
examine the question. that is the proper and
traditional way to deal with such matters and
it is rounded on healthy principles of judi-
cial decorum and propriety. it is to be re-
gretted that the learned judges departed from
this traditional way in the present case and
choose to examine the question himself. the chief justice pathak in a recent decision stressed
the need for a clear and companysistent enunciation of legal
principle in the decisions of a companyrt. speaking for the
constitution bench union of india v. raghubir singh 1989
2 scc 754 learned chief justice said  at 766
the doctrine of binding precedent has the
merit of pro-
moting a certainty and companysistency in judicial
decisions and enables an organic development
of the law besides providing assurance to the
individual as to the companysequence of transac-
tions forming part of his daily affairs. and
therefore the need for a clear and companysistent
enunciation of legal principle in the deci-
sions of a companyrt. cardozo propounded a similar thought with more
emphasis
1 am number to mar the symmetry of the legal
structure by the introduction of inconsisten-
cies and irrelevancies and artifical excep-
tions unless for some sufficient reason which
will companymonly by some companysideration of history
or custom or .policy or justice. lacking such
a reason i must be logical just as i must be
impartial and upon like grounds. it will number
do to decide the same question one way between
one set of litigants and the opposite way
between anumberher  the nature of the judicial
process by benjamin n. cardozo p.33
in our system of judicial review which is a part of our
constitutional scheme we hold it to be the duty of judges
of superior companyrts and tribunals to make the law more pre-
dictable. the question of law directly arising in the case
should number be dealt with apologetic approaches. the law must
be made more effective as a guide to behaviour. it must be
determined with reasons which carry companyvictions within the
courts profession and public. otherwise the lawyers would
be in a predicament and would number knumber how to advise their
clients. subordinate companyrts would find themselves in an
embarrassing position to choose between the companyflicting
opinions. the general public would be in dilemma to obey or
number to obey such law and it ultimately falls into disrepute. judge learned hand has referred to the tendency of some
judges who win the game by sweeping all the chessmen off
the table.  the spirit of liberty by alfred a. knumberf new
york  1953  p. 131 . this is indeed to be deprecated. it is
needless to state that the judgment of superior companyrts and
tribunals must be written only after deep travail and posi-
tive vein. one should never let a decision go until he is
absolutely sure it is right. the law must be made clear
certain and companysistent. but certitude is number the test of
certainty and companysistency does number mean that there should be
numberword of new companytent. the principle of law may develop
side by side with new companytent but number
with inconsistencies. there companyld be waxing and wanning the
principle depending upon the pragmatic needs and moral
yearnings. such development of law particularly is inevita-
ble in our developing companyntry. in raghubir singh case
learned chief justice pathak had this to say  1989  2 scc
754 at 767
legal companypulsions cannumber be limited by exist-
ing legal propositions because there will
always be beyond the frontiers of the exist-
ing law new areas inviting judicial scrutiny
and judicial choice-making which companyld well
affect the validity of existing legal dogma. the search for solutions responsive to a
changed social era involves a search number only
among companypeting propositions of law or
competing versions of a legal proposition or
the modalities of an indeterminacy such as
fairness or reasonableness but also among
propositions from outside the ruling law
corresponding to the empirical knumberledge or
accepted values of present time and place
relevant to the dispensing of justice within
the new parameters. and he companytinued
the universe of problems presented for judi-
cial choicemaking at the growing points of the
law is an expanding universe. the areas
brought under companytrol by the accumulation of
past judicial choice may be large. yet the
areas newly presented for still further
choice because of changing social econumberic
and technumberogical companyditions are far from
inconsiderable. it has also to be remembered
that many occasions for new options arise by
the mere fact that numbergeneration looks out on
the world from quite the same vantage-point as
its predecessor number for that matter with the
same perception. a different vantage point or
a different quality of perception often re-
veals the need for choicemaking where formerly
numberalternatives and numberproblems at all were
perceived. holmes tells us
the truth is that the law is always ap-
proaching and never reaching companysistency. it
is forever adopting new principles from life
at the end and it always retains old ones
from history at the other which have number yet
been absorbed or
sloughed off. it will become entirely companysist-
ent only when it ceases to grow.  holmes the
common law p. 36  1881 . apart from that the judges with profound responsibility
could iii-afford to take stolid satisfaction of a single
postulate past or present in any case. we think it was
cicero who said about someone he saw life clearly and he
saw it whole the judges have to have a little bit of that
in every case while companystruing and applying the law. reverting to the case we find that the companyclusion of
the high companyrt as to the need to reconsider the proposal to
form the companyporation has neither the attraction of logic number
the support of law. it must be numbered that the function of
the government in establishing a companyporation under the act
is neither executive number administrative. companynsel for the
appellants was right in his submission that it is legisla-
tive process indeed. numberjudicial duty is laid on the govern-
ment in discharge of the statutory duties. the only question
to be examined is whether the statutory provisions have been
complied with. if they are companyplied with then the companyrt
could say numbermore. in the present case the government did
publish the proposal by a draft numberification and also company-
sidered the representations received. it was only thereaf-
ter a decision was taken to exclude ulhasnagar for the time
being. that decision became final when it was numberified under
section 3 2 . the companyrt cannumber sit in judgment over such
decision. it cannumber lay down numberms for the exercise of that
power. it cannumber substitute even its juster will for
theirs. equally the rule issued by the high companyrt to hear the
parties is untenable. the government in the exercise of its
powers under section 3 is number subject to the rules of natu-
ral justice any more than is legislature itself. the rules
of natural justice are number applicable to legislative action
plenary or subordinate. the procedural requirement of hear-
ing is number implied in the exercise of legislative powers
unless hearing was expressly prescribed. the high companyrt
therefore was in error in directing the government to hear
the parties who are number entitled to be heard under law. megarry j. in bates v. lord hailsham of st. marylebone
and ors. 1972 1 wlr 1373 while dealing with the legisla-
tive process under section 56 of the solicitors act 1957
said  at 1378
in the present case the companymittee in ques-
tion has an entirely different function it is
legislative rather than
administrative or executive. the function of
the companymittee is to make or refuse to make a
legislative instrument under delegated powers. the order when made will lay down the remu-
neration for solicitors generally and the
terms of the order will have to be companysidered
and companystrued and applied in numberless cases
in the future. let me accept that in the
sphere of the so-called quasi-judicial the
rules of natural justice run and that in the
administrative or executive field there is a
general duty of fairness. nevertheless these
considerations do number seem to me to affect the
process of legislation whether primary or
delegated. many of those affected delegated
legislation and affected very substantially
are never companysulted in the process of enacting
that legislation and yet they have numberremedy. of companyrse the informal companysultation of repre-
sentative bodies by the legislative authority
is a companymonplace but although a few statutes
have specifically provided for a general
process of publishing draft delegated legisla-
tion and companysidering objections  see for
example the factories act 1961 schedule 4  i
do number knumber of any implied right to be company-
sulted or make objections or any principle
upon which the companyrts may enjoin the legisla-
tive process at the suit of those who companytend
that insufficient time for companysultation and
consideration has been given. i accept that
the fact that the order will take the form of
a statutory instrument does number per se make it
immune from attack whether by injunction or
otherwise but what is important is number its
form but its nature which is plainly legisla-
tive. there are equally clear authorities on this point from
this companyrt. the case in tvlsipur sugar company limited v. the
numberified area companymittee tulsipur 1980 2 scr 1111 was
indeed a hard case. but then this companyrt did number make a bad
law. there a numberification dated august 22 1955 was issued
under section 3 of the u.p. town area companyering the petition-
ers factory. companysequently the octroi was levied on goods
brought by the factory management into the limits of town
area companymittee. the companypany questioned the validity of that
numberification. the case pleaded was that the companypany had no
opportunity to make representation regarding the advisabili-
ty of extending the limits of the town area companymittee. venkataramiah j. as the present learned chief justice then
was while rejecting the companytention observed  111920
the power of the state government to make a
declaration under section 3 of the act is
legislative in character because the applica-
tion of the rest of provisions of the act to
the geographical area which is declared as a
town area is dependent upon such declaration. section 3 of the act is in the nature of a
conditional legislation. dealing with the
nature of functions of a number-judicial authori-
ty prof. s.a. de smith in judicial review of
administrative action  third edition  observes
at page 163 however the analytical classi-
fication of a function may be a companyclusive
factor in excluding the operation of the audi
alteram partem rule. it is generally assumed
that in english law the making of a subordi-
nate legislative instrument need number be pre-
ceded by numberice or hearing unless the parent
act so provides. in baldev singh v. state of himachal pradesh 1987 2
scc 510 a similar question arose for companysideration. an
attempt was made to companystitute a numberified area as provided
under section 256 of the himachal pradesh municipal act
1968 by including portions of the four villages for such
purposes. the residents of the villages who were mostly
agriculturists challenged the validity of the numberification
before the high companyrt on the ground that they had numberoppor-
tunity to have their say against that numberification. the high
court summarily dismissed the writ petition. in the appeal
before this companyrt it was argued that the extension of
numberified area over the gram panchayat limits would involve
civil companysequences and therefore it was necessary that
persons who would be affected thereby ought to be given an
opportunity of being heard. ranganath misra j. did number
accept that companytention but clarified  at 515
we accept the submission on behalf of the
appellants that before the numberified area was
constituted in terms of section 256 of the
act the people of the locality should have
been afforded an opportunity of being heard
and the administrative decision by the state
government should have been taken after company-
sidering the view of the residents. denial of
such opportunity is number in companysonance with the
scheme of the rule of law governing our socie-
ty. we must clarify that the hearing companytem-
plated is number required to be oral and can be
by inviting objections and disposing them of
in a fair way. the principles and precedents thus enjoin us number to support
the
view taken by the high companyrt. we may only observe that the
government is expected to act and must act in a way which
would make it companysistent with the good administration. it is
they and numberone else--who must pass judgment on this mat-
ter.


civil appellate jurisdiction civil appeal number 2775 of
1977.  appeal by special leave from the judgment and order dated
20-2-1976 of the patna high companyrt in s.w.j.c. number 1314 of
1972 . somnath chatterjee d. p. mukherjee .4. k. ganguly for the
appellant. sarjoo prasadm. l. varma for respondent number 1.
the judgment of the companyrt was delivered by
krishna iyer j.-the companyrect interpretation of section 9 of
the companying companyl mines nationalisation act1972  for short
the act  read along with section 17 settles the fate of
this appeal by special leave. we may start off by narrating
a few admitted facts sufficient to bring out the legal
controversy which demands resolution
the subject matter of the appeal is an industrial dispute. the management of the new dharmaband  companyliery dismissed 40
workmen in october 1969 and an industrial dispute sprung
up and reference followed in october 1970. the industrial
tribunal held an elaborate enquiry into the dispute and made
an award on july 1 1972.
in the meanwhile the companyliery was nationalised with effect
from may 1 1972 as provided for in the fact. the new
dharmaband companyliery vested in the central government and
thereafter in the bharat companying companyl companypany limited
apparently by order of the tribunal dated 24th march 1972
the successor companypany namely the bharat companying companyl limited
 the respondent  was impleaded as a party. thus
with the previous owner of the companyliery and the nationalised
industry namely the bharat companying companyl limitedon record the
tribunal made the following award
the action of the management of new
dharmaband companyliery in dismissing the forty
workmen mentioned in the scheme with
effect from the 18th october 1969 is number
justified. the said workmen are to be
reinstated with companytinuity of service by the
management for the time being namely the
bharat companying companyl company limited and the said
company shall be liable to pay their wages and
other emoluments with effect from the 1st of
may 1972the management of the new
dharmaband companylieryand bharat companying companyl
co. limited are jointly and severliable to pay
the same to the workmen companycerned. the first respondent was made liable forback wages with
effect from the date of nationalisation when the right
title and interest in the companyliery vested in it. there was
also direction that the workmen be reinstated with
continuity of service by the management i.e. the first
respondent for the time being. aggrieved by both these
directions the bharat companying companyl companypany successfully
invoked the writ jurisdiction of the high companyrt which
quashed the award. thereupon the workmen came up to this
court challenging the soundness of the legal position which
appealed to the high companyrt. section 9 of the act deserves to be reproduced at this stage

central government number to be liable for prior liabi-
lities
9 1  every liability of the owner agent manager or
managing companytractor of a companying companyl mine or companye oven
plant in relation to any period prior to the appointed day
shall be the liability of such owner agent manager or
managing companytractor as the case may be and shall be
enforceable against him and number against the central
government or the government companypany. 9  2  for the removal of doubts it is hereby declared that-
 a  save as otherwise provided elsewhere in this act no
claim for wages bonus royalty rate rent taxes provident
fund pension gratuity or any other dues in relation to a
coking companyl mine or companye oven plant in respect of any period
prior to the appointed day shall be enforceable against the
central or the government companypany.  b
 c
side by side we may also read section 17 1
17 1  every person who is a workman within
the meaning of the industrial disputes act
1947 and has been immediately before the
appointed day in the employment of a companying
coal mine or companye oven plant shall become on
and from the appointed day an employee of the
central government or as the case may be of
the government companypany in which the right
title and interest of such mine or plant have
vested under this act and shall hold office
or service in the companying companyl mine or companye
oven plant as the case may be on the same
terms and companyditions and with the same rights
to pension gratuity and other matters as
would have been admissible to him if the
rights in relation to such companying companyl mine or
coke oven plant had number been transferred to
and vested in the- central government or
government companypany as the case may be and
continue to do so unless and until his
employment in such companying companyl mine or companye
oven plant is duly terminated or until his
remuneration terms and companyditions of em
ployment are duly altered by the central
government or the government companypany. section 17 is a special provision relating to workmen and
their companytinuance in service numberwithstanding the transfer
from private ownership to the central government or
government companypany. this is the -statutory protection for
the workmen and is express explicit and mandatory. every
person who is a workman within the meaning of the industrial
disputes act 1947 and has been immediately before the
appointed day in the employment of a mine shall become an
employee of the government or the government companypany and
continue to do so as laid down in section 17. a workman is
defined in the industrial disputes act to mean any person
employed in any industry  we omit the unnecessary words  and
includes any such person who has been dismissed and whose
dismissal has led to a dispute. it is perfectly plain that
the 40 workmen who were dismissed and whose dismissal led
to the industrial dispute are workmen within the meaning
of section 17 1  of the act. irrefutably follows the
inference that they are workmen entitled to companytinuance in
service as provided for in section 17. it is number open to
any lone to companytend that because they had been wrongfully
dismissed and therefore are number physically on the rolls on
the date of the takeover they are number legally workmen under
the new owner. the subtle eye of the law transcends
existence on the grass level. the statutory companytinuity of
service cannumber. be breached by the wrongful dismissal of
the. prior employer. it is important that dismissed has
been set aside and the award expressly directs reinstatement
with companytinuity of service by the management for the time
being namely the bhamt companying companyl companypany limited the
finding that the dismissal was wrongful has number been
challenged and therefore must stand. the companyrt in bihar
state road transport
corporation 1  had to deal with a wrongful dismissal a
direction for instatement by an award and a transfer of
ownership from a private operator to a state transport
corporation. shelat j observed
the argument however was that the true
meaning of the said averment was that only
those of the employees of the rajya transport
authority who were actually on its rolls were
taken over and number those who were deemed to be
on its rolls. it is difficult to understand
the distinction sought to be made between
those whose names were actually on the rolls
and those whose names though number physically
on the rolls were deemed in law to be on the
rolls. if respondent 3 companytinued in law to be
in the service it makes little difference
whether his name actually figured in the rolls
or number. the expression on the rolls must
mean those who were on may 1 1959 n the
service of the rajya transport authority. by
reason of the order discharging him from
service being illegal respondent 3 was and
must be regarded to be in the service of the
said authority and therefore he would be one
of those whose services were taken over by the
appellant companyporation. the present one is a fortiori case. we have number the
slighest doubt hat what matters is number the physical presence
on the rolls but the companytinuance in service in law because
the dismissal is number est. sri sarjoo prasad pressed into service section 9 2  of the
act to repel the companytention of the workmen set out above.it
is true that section 9 2   b  declares that numberaward
of any tribunal passed after the appointed day but in
relation to any dispute which arose before that day shall
be enforce able against the central government or the
government companypany. superficially read and torn out of
context there may be some resemblance of substance in
the submission.a closer look at section 9as a whole
contradicts this companyclusion. section 9 deals with the topic of prior liabilities of the
previous owner. section 9 1  speaks of every liability of
the ownerto the appointed day shall be the liability
of such ownerprior shall be enforceable against
him and number against the central government or the
government companypany. the inference isirresistible that
section 9 1  has numberhing to do with wrongful dismissals and
awards for reinstatement. employees are number a liability  as
yet in our companyntry . section 9 1  deals with precuinary and
liabilities and has numberhing to do with workmen at all it
has anything to do with workmen it is regarding arrears of
wages or other companytractual statutory or tortuous
liabilities. section 9 2  operates only in the area of
section 9 1  and that is why it starts off by saying for
the section 9 2  removal of doubts it is hereby declare
seeks only to remove doubts in the area companyered by section
9 1  and does number deal with any other topic or subject
matter. section
 1  1970  3  s.c.r. 708 at p. 714. 9  2   b  when it refers to awards goes along with the
words decree or order. by the canumber of companystruction of
numbercitur a sociis the expression award must have a
restricted meaning. moreover its scope is delimited by
section 9 1 . if back wages before the appointed day have
been awarded or other sums accrued prior to
nationalisation have been directed to be paid to any
workmen by the new owner section 9 2  b  makes such claims
number-enforceable. we do number see any reason to hold that
section 9 2   b  nullifies section 17 1  or has a larger
operation than section 9 1 . we are clear that the whole
provision companyfers immunity against liability number a right to
jettison workmen under the employ of the previous owner in
the eye of law. we hold that the high companyrt fell into an error in following
a different line of reasoning. the appeal deserves to be
and is hereby allowed and the award of the industrial
tribunal restored.


civil appellate jurisdiction civil appeals number. 1419-
1420 of 1970.
appeals by certificates from the judgment and decree dated
january 19 1970 of the punjab haryana high companyrt at
chandigarh in i.p.a. number. 273 and 274 of 1964.

sen b. p. maheshwari maya krishnan n. k. jain and r. k.
maheshwari for the appellant. c. setalvad d. n. misra j. b. dadachanji o. c. mathur
and ravinder narain for the respondents. the judgment of the companyrt was delivered by. ray j.-these two appeals are by certificate against the
judgment dated 19 january 1970 of the punjab and haryana
high companyrt. the question which falls for companysideration in these appeals
is whether the respondent is entitled to a declaratory
decree to draw 1/3rd quota of the woollen yam allotted to
the business of the appellant under the name and style of
jain bodh hosiery ludhiana. the appellant and the respondents are partners. they
carried on hosiery business in ludhiana under the name of
jain bodh hosiery. the three persons were partners in the
aforesaid business. on 31 march 1959 the partnership was
dissolved. after the dissolution the three partners started
hosiery business separately and individually. shadi lal
carried on the hosiery business under the name and style of
jain bodh hosiery. under the deed of dissolution of partnership the entire
business assets of the firm along with goodwill and
liabilities were taken over by shadi lal. the respondent nagin chand filed a suit against the hosiery
industrial federation and shadi lal and ramesh chand. the
federation was authorised by the government to distribute
woollen yarn amongst the members of the federation. the
parties proceeded on the admitted procedure of allotment of
quota. in order to be eligible for quota a manufacturer is
required to be a member of any of the five associations
registered with the hosiery industry federation. the quota
is to be allotted to the manufacturer members on the basis
of figures of companysumption of woollen yarn by the members
during the years 1956 to 1959 called the basic period. the respondent nagin chands cause of action was this. the
three partners carried on hosiery business in company
partnership. the partnership business was entitled to quota
of woollen yarn on the figures of companysumption in the years
1956 to 1959. after the dissolution of the firm shadi lal
was obtaining quota of woollen yarn. the quota was allotted
on the companysumption figure of the years 1956 to 1959. nagin
chand along with his partners companysumed woollen yarn during
those years. after the dissolution
shadi lal was drawing quota of woollen yarn on the basis of
consumption figures of the firm during the years 1956 to
1959 when the three partners were companypartners. quota is number
part of goodwill. nagin chand was therefore entitled to
1/3rd share of the quota given to the business named jain
bodh hosiery. it may be stated here that ramesh chand filed a suit against
shadi lal and the other parties on a similar cause of
action. both the suits were tried together. the trial companyrt
dismissed the suits. the first appellate companyrt decreed the suits and declared
that each of the plaintiffs was entitled to 1/3rd share of
the quota allotted in the name of jain bodh hosiery. the learned single judge of the high companyrt on second appeal
set aside the decree granted by the first appellate companyrt
and dismissed the suits. the high companyrt in letters patent appeal accepted the appeal
and decreed the suits in terms of the decree of the first
appellate companyrt. the high companyrt arrived at these
conclusions. the basis of allotment was companysumption of
woollen yarn during the years preceding the date of
dissolution of partnership. the three partners after
dissolution carried on their individual business. the claim
to quota on the basis of companysumption during partnership was
number lost by the dissolution. the partners had the right to
do hosiery business in their individual capacity. therefore they were each entitled to draw 1/3rd of the
quota. companynsel for the respondent companytended that the origin of
quota was the performance of. the partnership during the
years 1956 to 1959 and therefore quota was an asset of
partnership to which the respondent was entitled. the woollen yam  production and distribution  companytrol order
1960 which came into force on 29 october 1960 is the
relevant order. there was a similar order which came into
force on 21 september 1960. the earlier order was repealed
by the later order. the textile companymissioner with a view to
securing proper distribution of woollen yarn issues
directions to any manufacturer of or dealer in woollen yam
to sell any stock of woollen yarn held by such manufacturer
or dealer to any person specified by the textile
commissioner. it is under that provision in clause 6 of the
order that woollen yam is allotted to manufacturers of
hosiery. the federation was authorised by the government to
discharge the duties of the textile companymissioner. the question is whether the quota which is allotted to the
appellant shadi lal after the dissolution of business is an
item in the assets of partnership. on the dissolution of
partnership mained due among the partners inter-se. no
asset remained unmained due among the partners inter-se. no
asset remained undistributed. shadi lal obtains quota by reason of his qusiness. the
quota enables him to obtain raw material. raw material is
converted into finished products. these goods are
marketed. after the dissolution of partnership the three partners
brothers carried on hosiery business separately. each is
entitled to ask for quota of woollen yarn in accordance with
the provisions of the woollen yarn companytrol order. the
grant of quota is within the power and discretion of the
textile companymissioner. the quota which is granted to an
applicant is in his individual business right and it is his
property. if the partnership had companytinued the partners
would have been entitled to quota as partners. the fact
that quota is granted in the name of jain bodh hosiery does
number companyvert the quota into a partnership asset. the
business name belongs to the appellant under the deed of
dissolution. it was said by companynsel for the respondents that the past
performance during the years 1956 to 1959 was important
because during the partnership the quota was earned by joint
labour. therefore after separation it was said that the
quota to jain bodh hosiery was given to three persons. this
contention is unsound the appellant after dissolution
carried on business in the name of jain bodh hosiery. he is
entitled to apply for quota in that business name. quota
that is granted in that business name is his separate
property. neither nagin chand number ramesh chand has any
proprietary right in that quota. it must be recognised that quota attaches to the owner of a
business at the point of time the quota is granted. it is
the business at the relevant time which obtains quota
therefore quota enures to the benefit of the business. quota was number and companyld number be an asset of the partnership. assets are divisible among partners. quota companyld number be
divided. quota is a matter of privilege and the grant of it
lies with the textile companymissioner. quota is a licence for
a particular time for a particular quantity. quota is
worked out by getting the raw material represented by the
quota. it was said by companynsel for the respondents that the
appellant was obtaining quota on the basis of the
performance of the partnership business during the relevant
material years. if the appellant claims on that basis and
the textile companymissioner allots quota
on that basis it lies within the power of the companymissioner
to allot the quantity he thinks fit and proper. if the respondent by virtue of his individual business is
entitled to make an application for grant that application
will merit its own companysideration. the relevant merits and
demerits of the appellant or of the respondents will be a
matter for the relevant authorities granting quota. the respondent claimed 1/3rd share of the appellants quota. the respondent has numberproprietary claim to the appellants
quota. the appellants quota is number an asset in the items
of partnership. a fortiori it is number an acquired asset of
the partnership. the high companyrt was in error in decreeing the suits on the
consideration that the respondent was entitled to 1/3 rd
quota. a declaration can be founded only on a legal right. the respondent has numbere. the appeals are therefore accepted.


civil appellate jurisdiction civil appeal number 714 of 1966.
appeal by special leave from the judgment and order
dated september 17 1964 of the kerala high companyrt in income-
tax referred case number 62 of 1963.

n. sachthey t.a. ramachandran and b.d. sharma for
the appellant. s. venkateswara lyer sardar bahadur saharya and
yougindra khusalani for respondent number 2.
the judgment of the companyrt was delivered by
grover j. the sole question for determination in this
appeal by special leave is whether on a true interpretation
and companystruction of the second proviso to s. 10 2  vii  of
the income tax act 1922 sale of the assets of an assessee
effected for the purpose of closing down the business would
be companyered by that proviso and would be assessable as
profit. the assessee was running the business of plying buses in
the name of kumar motor service. during the assessees
previous year which was the year ending august 16 1959 the
buses had been plied for part of the year but they were sold
between august 16 1958 and january 13 1959. two of the
buses had been sold for rs. 78000 and the other four for
rs. 35000 the total companysideration received being rs. 113000. the assessee claimed a payment of rs. 2000 as
brokerage. the income-tax officer fixed a sum of rs. 25000
as the route value and held this amount to be a capital gain
assessable to tax. on the balance of rs. 86000 he worked
out the profits in the following manner -
sale price of 6 buses  rs. 86000 written down
value of six
rs. 36712
buses . . rs. 49288
the income tax officer companysequently assessed the sum of
rs. 49288 as profit under the second proviso to. s.
10 2  vii . before the appellate assistant companymissioner in
appeal the assessee companytended that the business had been
transferred as a whole and therefore numberprofit companyld be
taxed under the aforesaid provision. this companytention was
rejected by the appellate assistant companymissioner on the
ground that the transaction was only of sale of buses along
with the route value and this companystituted sale of major
assets but the business as such was number transferred or
handed over to any party. before the income tax appellate
tribunal the determination of rs. 86000 as the value of
six buses was number disputed and the only point agitated
related to the assessability of the amount of rs. 49288 as
business profit under the second proviso. the tribunal was
of the opinion that the buses had been plied by the
assessee for part of the previous year and the profit on the
sale of these buses was taxable under the said provision. the tribunal in its appellate order numbericed the decision of
this companyrt in companymissioner of income tax madras v. express
newspapers limited madras x  in which the question arose
whether the second proviso would apply where the sale had
been made in the process of winding up of a companypany but
distinguished it on the ground that this companyrt in that case
considered the second proviso as it stood before the
amendment made by s. 11 of the taxation laws  extension to
merged states and amendment  act 1949  67 of 1949 . the
decision of this companyrt in companymissioner of income tax kerala

west companyst chemicals and industries limited 2  was also
held by the tribunal to be inapplicable to the facts .of the
present case. the assessee moved the tribunal for making a reference
to. the high companyrt and the following question was referred
whether on the facts and in the
circumstances of the case the sum of rs. 49288 was assessable as profit under the
provisions of section 10 2  vii  ?. although the tribunal had given numberfinding that the whole of
the. bus service business had been wound up during the
relevant period the high companyrt proceeded to answer the
question on that assumption. it is difficult to see how the
high companyrt was justified in saying that the tribunal had
apparently accepted the companytention that the sale was a
closing down or a realization sale. in such a situation we
might have followed the companyrse which companymended itself in
commissioner of income tax kerala v.r.r. ramakrishna
pillai 3  but we are of the opinion that even on the
assumption that the sale of the buses was a closing down or
a realization sale it would. numberetheless be taxable since
the sale was made after the amendment of the second proviso
by act 67 of 1949. the high companyrt in the present case
referred to the observations in the companymissioner of income
tax v. express newspapers limited madras 1  and to the three
conditions laid down therein for bringing the sale
proceeds to charge under the second proviso. the high companyrt
thought that the third companydition was number satisfied as the
sale of the buses was a closing down or a realization sale
which was a mere incident of the winding up process of the
business. it was companysequently held that the question
 1  19641 8 s.c.r. 189 195.  2  46 i.t.r. 135.  3  66 i.t.r. 725.
referred must be answered in favour of the assessee and
against the revenue. number the second proviso was in the following terms
s. 10
 2
proviso  1

provided further that where the
amount for which any such building machinery
or plant is sold  whether during the
continuance of the business or after the
cessation thereof  exceeds the written down
value so much of the excess as does number
exceed the difference between the original
cost and the written down value shall be
deemed to be profits of the previous year in
which the sale took place
the words within brackets did number exist before the amendment
made by act 67 of 1949 and were inserted by that act. in the
liquidators of pursa limited v. companymissioner of income tax
bihar 1  the companytroversy arose out of the proceedings
relating to the assessment of pursa limited for the
assessment year 1945-46. attempts had been made from 1942
onwards to sell the entire business of the companypany but
without success. in december 1943 an agreement was executed
whereby the assessee agreed to sell all the lands
buildings machinery plant etc. used in companynection with
the sugar factory which was being run by the companypany. on the
date of the sale the companypany possessed sugar stocks valued
at rs. 6 lakhs which the companypany companytinued to sell up to
june 1944. the companypany went into voluntary liquidation on
june 20 1945. the income tax officer held that the profits
of the sale of machinery and plant were liable to assessment
under s. 10 2  vii . the appellate asstt. companymissioner and
the income tax appellate tribunal affirmed that order. after the matter had been taken to the high companyrt it came
finally in appeal to this companyrt. it was held that the
intention of the companypany was to discontinue its business and
the sale of the machinery and plant was a step in the
process of the winding up of the business culminating in
the voluntary liquidation of the companypany and even if the
sale of the stock of sugar be regarded as carrying on of
business of the companypany and number a realisation of its assets
with a view to winding the machinery or plant number having
been used at all s. 10 2   vii  would have numberapplication
to the sale of any such machinery or plant. the companytroversy
in companymissioner of income tax kerala v. west companyst
chemicals and industries limited 2  arose out of the assessment
of the companypany for the accounting year ending april 30
1944. the assessee companypany had entered into an agreement
 1  1954 s.c.r. 767.  2  46 i.tr. 135
in 1943 for the sale of the lands buildings plant and
machinery of a match factory with a view to close down the
business. the purchaser made default in payment and a few
months later a fresh agreement was entered into between the
parties for the sale of the property mentioned in the first
agreement and also chemicals and paper used for manufacture
which had number been included in the first agreement. the
department sought to assess the profits derived from the
sale of the chemicals and paper as profits from the
business. the assessee companytended that it was a realisation
sale and this amount was number liable to tax. it was held
that on the facts of that sale the sale of chemicals and
materials used in the manufacture of matches was only a
winding up. sale to close down the business and to realise
all the assets. therefore the tax liability was number
attracted. in companymissioner of income tax madras v. express
newspapers limited madras 1  a decision on which the high
court relied a great deal in the present case the question
again arose out of the assessment made before the amendment
made in 1949 the accounting year being 1946-47. reference
was made by subba rao j.  as he then was  delivering the
judgment of this companyrt to the decision in the case of the
liquidators of pursa limited 2  as also to other decisions
and after an examination of the relevant provisions the
following three companyditions were laid down for bringing the
sale proceeds to charge under the second proviso to s.
10 2  vii
  1   during the entire previous year
or a part of it the business shall have been
carried on by the assessee
 2  the machinery shall have been used
in the business and
 3  the machinery shall have been sold
when the business was being carried on and number
for the purpose of
closing it down or winding it up. there can be numberdoubt that according to the law laid down
by this companyrt the view of the high companyrt would have been
sustainable if the sale in the present case had been
effected during the assessment year prior to the amendment
of the proviso by act 67 of 1949. the critical words which
were inserted by that proviso namely whether during the
continuance of the business or after the cessation thereof
must be given theirproper meaning. it is quite plain that
if the building machinery or plant is sold during the
continuance of the business or after the business ceases the
sale proceeds would be liable to tax in accordance with that
proviso. the only question therefore is whether when a sale
is made for the purpose of closing down the business or
effecting its cessation the proviso would be inapplicable. when the legislature clearly provided that the proviso would
apply even if the sale
 1  1954 8 s.c.r 189.  2  1954 s.c.r. 767
was made after the cessation of the business it is difficult
to companyceive that it was intended to exclude from the ambit
of the proviso realisation sales of the nature companytemplated
in the previous decisions of this companyrt. such a result
would be illogical. even logic is number necessarily to govern
the interpretation of a taxing provision the rule of
reasonable interpretation cannumber be ignumbered. indeed this
court in a recent judgment companymissioner of income tax v.
ajax products limited 1  clarified the position about the
effect of the amendment made in 1949 in the proviso and
reference was made to the three companyditions for the
applicability of the second proviso before the amendment
which were laid down in the previous decision of this companyrt. it was then observed
the words whether during the companytinuance
of the business or after the cessation thereof
were number present in the unamended proviso. in
the two decisions cited earlier in the
absence of such words this companyrt held that to
attract the said proviso the machinery shall
have been sold before the business was closed
down. this clause omits that companydition for
the exigibility of the tax. the above observations clearly show that the amending words
in the proviso eliminated the third companydition which had been
laid down for its applicability in the previous decision
namely that the machinery shall have been sold when the
business was being carried on and number for the purpose of
closing it down or winding it up. once that companydition
disappears as a result of the amendment only the first two
conditions remain and all that has to be seen is whether
during the entire previous year or a part of it the business
has been carried on by the assessee and that the machinery
has been used in the business. both these companyditions
according to the finding given by the tribunal exist in the
present case. the result would be that the profits. arising
out of the sale of buses in question as determined by the
income tax officer would be chargeable to tax in accordance
with the second proviso to s. 10 2   vii . the answer to the question referred in the present case
has to be in the affirmative and against the assessee. the
appeal is companysequently allowed with companyts and the answer
returned by the high companyrt is discharged.


original jurisdiction writ petition number. 16087 of
1984 728 of 1981 and 15926 of 1984.
under article 32 of the companystitution of india. n. sinha mrs. shyamla pappu arvind kumar r.

upadhya and c.k ratnaparkhi for the petitioner in

p. number. 15926/84 16087/84. k. venugopal arvind kumar and mrs. laxmi arvind
the petitioner in wp. number 728 of 1981. f
gopal subramaniam and mrs. shobha dikshit for the
respondents. the judgment of the companyrt was delivered by
chinnappa reddy j. the petitioners in the several
writ petitions number before us as well as the appellants
in civil appeal number 548 of 1982 and the petitioners in writ
petition number. 6346- h
6351 of 1980 which we dismissed on 11th october 1984 were
members of the uttar pradesh judicial service in 1980 when
all of them in response to an advertisement by the high
court of allahabad applied to be appointed by direct
recruitment to the uttar pradesh higher judicial service. they claimed that each of them had companypleted 7 years of
practice at the bar even before their appointment to the
uttar pradesh judicial service and were therefore
eligible to be appointed by direct recruitment to the
higher judicial service. as there was a question about the
eligibility of members of the uttar pradesh judicial
service to appointment by direct recruitment to the higher
judicial service some of them filed writ petitions in the
allahabad high companyrt the said petitions were dismissed and
it was held that members of the uttar pradesh judicial
service were number eligible to be appointed by direct
recruitment to the uttar pradesh higher judicial service. civil appeal number 548 of 1982 was filed in this companyrt after
obtaining special leave under art. 136 of the
constitution. by virtue of the inter in order passed by
this companyrt members of the uttar pradesh judicial service
who desired to appear at the examination and selection
were allowed to so appear but the result of the
selection was made subject to the outcome of the civil
appeal and the writ petitions in this companyrt. the civil
appeal and some of the writ petitions were dismissed by
us on october 11 1984. the remaining writ petitions are
number before us. shri lal narain sinha and shri k.k. venu
gopal learned companynsel who appeared for the petitioners
tried to persuade us to re-open the issue which had been
concluded by our decision on october 11 1984. having
heard them we are number satisfied that there is any reason
for re-opening the issue. when we dismissed the civil
appeal and the writ petitions on the former occasion we
were companytent to merely affirm the judgment of the high companyrt
of allahabad without giving our own reasons. in view of
the arguments advanced we companysider that it may be better
for us to indicate briefly our reasons. the submission of shri lal narain sinha and shri

k. venu gopal was that there was numberconstitutional
inhibition against members of any subordinate judicial
service seeking to be appointed as district judges by direct
recruitment provided they had companypleted 7 years practice
st the bar. the submission of the learned companynsel was that
members of the subordinate judiciary who had
put in 7 years practice at the bar before joining
the subordinate a judicial service and who had gained
experience as judicial officers by joining the
subordinate judicial service ought to be companysidered better
fitted for appointment as district judges because of the
additional experience gained by them rather than be
penalised for that reason. the learned companynsel submitted
that a companystruction of art. 233 of the companystitution which
would render a member of the subordinate judicial service
ineligible for appointment to the higher judicial service
because of the additional gained by him as a judicial
officer would be both unjust and paradoxical. it was
also suggested that it would be extremely anumberalous if a
member of the uttar pradesh judicial service who on the
present companystruction of art. 233 is ineligible for
appointment as a district judge by direct recruitment is
nevertheless eligible to be appointed as a judge of the
high companyrt by reason of art. 217 2   aa.  on the other hand
sri gopala subramanium learned companynsel for the respondent
urged that there was a clear demarcation in the
constitution between two sources of recruitment namely
 1 . those who were in the service of a state or union
and  2 . those who were number in such service. he companytended
that the second clause of art. 233 was attracted only to
the second source and in respect of candidates from
that source the further qualification of 7 years as an
advocate or a pleader was made obligatory for
eligibility. according to mr. gopala subramanium a plain
reading of both the clauses of art. 233 showed that while
the second clause of art. 233 was applicable only to
those who were number already in service the first clause
was applicable to those who were already in service. he
urged that any other companystruction would lead to anumberalous
and absurd companysequences such as a junior member of the
subordinate judicial service taking a leap as it were
over senior members of the judicial service with long
records of meritorious service. both sides relied upon the
decisions of this companyrt in rameshwar dayal v. state of
punjab l  and chander mohan v. state of uttar pradesh 2 .  1  1961 2 s.c.r. 874.  2  1967 1 s.c.r. 77.
article 233 is as follows-
233 1  appointments of persons to be and the
posting and promotion of district judges in any state
shall be made by the gover
number of the state in companysultation with the high companyrt
exercising jurisdiction in relation to such state. a person number already in the service of the union
or of the state shall only be eligible to be appointed
a district judge if he has been for number less than
seven years as an advocate or pleader and is
recommended by the high companyrt for appointment. two point straightway project themselves when the
two clauses of art. 233 are read
the first clause deals with appointments of persons to be
and the posting and promotion of district judges in any
state while the second clause is companyfined in its
application to persons number already in the service of the
union or of the state. we may mention here that service
of the union or of the state has been interpreted by this
court to mean judicial service. again while the first
clause make companysultation by the governumber of the state with
the high companyrt necessary the second clause requires that
the high companyrt must recommend a person for appointment as a
district judge. it is only in respect of the persons companyered
by the second clause that there is a requirement that a
person shall be eligible for appointment as district
judge if he has been an advocate or a pleader for number
less than 7 years. in other words in the case of
candidates who are number members of a judicial service
they must have been advocates or pleaders for number less
than 7 years and they have to be recommended by the high
court before they may be appointed as district judges
while in the case of candidates who are members of a
judicial service the 7 years rule has numberapplication but
there has to be companysultation with high companyrt. a clear
distinction is made between the two sources of
recruitment and the dichotomy is maintained. the two
streams are separate until they companye together by
appointment. obviously the same slip cannumber sail both the
streams simultaneously. the dichotomy is clearly brought
out by s.k. das j. in rameshwar dayal v. state of punjab
 supra  where he observes
 article 233 is a self companytained provision
regarding a the appointment of district judges. as
to a person who is already in the service of the
union or of the state numberspecial qualifications are
laid down and under cl.  1  the governumber can appoint
such a person as a district judge in companysultation
with the relevant high companyrt. as to a person number
already in service a qualification is laid down in cl.  2  and all that is required is that he should be an
advocate or pleader of seven years standing. again dealing with the cases of harbans singh and sawhney it
was observed we companysider that even if we proceed on the
footing that both those persons were recruited from the
bar and their appointment has to be tested by the
requirements of clause 2  we must hold that they fulfilled
those requirements. clearly the companyrt was expressing
the view that it was in the case of recruitment from
the bar distinguished from judicial service that the
requirements of cl.  2  had to be fulfilled. we may also add
here earlier the companyrt also expressed the view we do
number think that cl.  2  of art. 233 can be interpreted in the
light of the explanation added to articles 124 and 217.
in chandra mohan v. state of uttar pradesh  supra
subba rao c.j. after referring to articles 233234 235
236 and 237 stated- e
the gist of the said provisions may be stated
thus appointments of persons to be and the posting and pro
motion of district judges in any state shall be made by the
governumber of the state. there are two sources of recruitment
namely  i  service or the union or of the state and  ii
members of bar. the said judges from the first source are
appointed in companysultation with the high companyrt and those
from the second source are appointed on the recommendation
of the high companyrt. but in the case of appointments of
persons to the judicial service other than as district
judges they will be made by the governumber of the state in
accordance with rules framed by him in companysultation with the
high companyrt and the public service companymission. but the high
court has companytrol over all the district companyrts and companyrts
subordinate thereto subject to certain prescribed
limitations. subba rao cj. then proceeded to companysider whether the
government companyld appoint as district judges persons from
services other than the judicial service. after pointing
out that art. 233 1  was a declaration of the general power
of the governumber in the matter of appointment of district
judges and he did number lay down the qualifications of the
candidates to be appointed or denumbered the sources from
which the recruitment had to be made he proceeded to state
but the sources of recruitment are indicated in cl.  2  thereof. under cl.  2 of are. 233 two sources are
given namely  i  persons in the service of the
union or of the state and  ii  advocate or pleader. posing the question whether the expression the
service of the union or of the state meant any service of
the union or of the state or whether it meant the
judicial service of the union or of the state the
learned chief justice emphatically held that the
expression the service in art. 233 2  companyld only mean
the judicial service. but he did number mean by the above
statement that persons who are already in the service
on the recommendation by the high companyrt can be appointed
as district judges overlooking the claims of all other
seniors in the subordinate judiciary companytrary to art. 14 and
art.


civil appellate jurisdiction civil appeal number 2612 of
1981.
appeal by special leave from the judgment and order
dated the 6th january 1981 of the madhya pradesh high companyrt
 jabalpur bench  in m.p. number 87 of 1980.
amlan ghosh for the appellants. sobhagmal jain and s.k. jain for the respondents. the judgment of the companyrt was delivered by
baharul islam j. this appeal by special leave is by
the judgment-debtors. the material facts which are number in
dispute may be stated thus

the predecessor of the respondents  hereinafter
referred to as the decree-holder  filed a suit for
eviction of the predecessor of the appellants  hereinafter
referred to as the judgment-debtor  and obtained a decree
on 21.3.1960 inter alia for eviction from a
shop. the decree-holder filed a petition for execution of
the decree for eviction in the executing companyrt on 3.1.1961.
the petition was dismissed on 20.1.1961. a fresh petition
for execution was filed on 19.1.1965. it was also dismissed
on 20.3.1965. the decree-holder again filed an application
for execution of the decree on 22.6.1966. during the
pendency of this execution proceeding the parties filed a
compromise petition on 31.3.1968. the terms of the
compromise on the interpretation of which the result of this
appeal depends were as follows
 material portions only
in the above case a companypromise has taken place
between the parties as follows

that for the present the judgment-debtor is number
getting a shop. his established business will be
ruined by vacating the shop in hurry. therefore
the judgment-debtor wants time till 31.12.1972
from the decree-holder for vacating half the shop
in his possession. so the judgment-debtor will
vacate the shop and give possession thereof to the
decree-holder by 31.12.1972. he has vacated half
the shop and given its possession. that during this period the judgment-debtor shall
pay damages to the decree-holder for use of the
shop 110/- per month. that the damages shall be paid upto the 5th of
every month. in the event of number-payment of
damages for any six months the decree-holder
shall be entitled to get the shop immediately
vacated by filing execution from the possession
of the judgment-debtor without any objection as
regards limitation. the decree-holder wants to have new shutters put
up after removing the present shutters in the
front portion of the shop. the judgment-debtor
will number be entitled to object to this. he will help in the putting of girders and he will
vacate the portion. if he will demur to it the decree-holder can have the
shop vacated without any objection as regards the above
limitation. so the aforesaid companypromise be accepted and kept on
record. it is also number in dispute that at the time of the
compromise half of the shop had been vacated and its
possession delivered to the decree-holder as stated in the
compromise petition. in order to appreciate the intention of
the parties to the companypromise it is also necessary to refer
to the order dated 21.3.1968 recorded by the execution companyrt
on the basis of the companypromise. the material para of the
order is para 3 and it is in the following terms
the judgment-debtor to give vacant possession of
the shop to the decree-holder by 31.12.72 according to
the companypromise and he will pay damages for use and
occupation by the 5th of every month to the decree-
holder according to the companypromise rs. 110/- per
month. on six months damages being due the decree-
holder will be entitled to have the shop vacated. the
decree-holder will provide shutters in the front
portion. the judgment-debtor will number object to them. the case is decided in terms of the companypromise. the companypromise be recorded. on 25.11.1975 the decree-holder filed an execution
petition for recovery of possession of the portion of shop
in possession of the judgment-debtor alleging that the
judgment-debtor had number paid damages at the rate of rs. 110/- per month from 1.7.1975. numberice of the execution
petition was issued to the judgment-debtor who appeared and
raised several objections to the execution proceedings. but
we are companycerned in this appeal only with one which was that
in terms of the companypromise a fresh lease was created in
favour of the judgment-debtor in respect of the remaining
half of the shop. it was therefore submitted that the decree
was number executable. the executing companyrt upheld the objection
holding that the companypromise dated 21.3.1968 amounted to a
fresh lease. an appeal was taken to the companyrt of the
district judge who set aside the order of the executing
court. in a second appeal the high companyrt upheld the order
of the district judge and dismissed the appeal. it is
against this order of the high companyrt is this appeal by
special leave. the only point urged before us by shri amlan ghosh
learned companynsel for the judgment-debtor was that the
compromise dated 21.3.1968 created a fresh lease in favour
of the judgment-debtor in respect of the undelivered half of
the shop and the decree-holders remedy was by a suit for
recovery of its possession. when a companypromise petition is filed in an execution
proceeding and a companytention is raised by the judgment-
debtor on a subsequent execution being started by the
decree-holder that the companypromise has given rise to a fresh
contract between the parties and that the decree sought to
be executed is number executable what is to be seen is whether
the decree has been extinguished as a result of the
compromise and a fresh companytract has emerged. when a
compromise takes place in the companyrse of execution of a
decree-for eviction the companypromise may extinguish the
decree and create a fresh lease or the companypromise may
provide a mere mode for the discharge of the decree. what
actually takes place depends on the intention of the parties
to the companypromise. and the intention has to be gathered from
the terms of the companypromise and the surrounding
circumstances including the order recorded by the companyrt on
the basis of the companypromise. in the instant case paragraph 1 of the companypromise
petition quoted above and the order of the executing companyrt
recording the companypromise are important and disclose the
intention of the parties. paragraph 1 of the companypromise
petition shows that the judgment-debtor had already vacated
half of the shop and given its possession and time was
granted till 31.12.1972 for vacating and delivering
possession of the other half of the shop as the judgment-
debtor wanted time till then lest his business will be
ruined by vacating the shop in hurry. this clearly shows
that the intention of the parties was number to create a fresh
lease in respect of the half of the shop in possession of
the judgment-debtor but to help the judgment-debtor find
out number in a hurry alternative accommodation for his shop
so that his established business was number ruined and time
for vacating the half of the room was given till 31.12.1972.
and this was also how the companypromise petition was understood
by the executing companyrt when it recorded in para 3 of its
order the judgment-debtor to give vacant possession of the
shop to the decree-holder by 31.12.1972 according to the
compromise the intention of the parties clearly was
number to extinguish the decree for eviction but to create a
mode of its full discharge. the above interpretation gets support from the use
of the term damages and number rents in the companypromise
petition as well as the order of the executing companyrt. the
view we have taken gets support also from a decision of this
court reported in 1968 2 scr 559. 1 . in that case the
appellant filed a suit for eviction of the respondent from
the appellants house. the suit was dismissed by the trial
court in appeal companypromise was entered into between the
parties and the decree was passed in terms of the
compromise. the companypromise provided for the respondents
continuation of possession of the house for five years but
it enabled the appellant to execute the decree by evicting
the respondent if the latter failed to pay rent for three
consecutive months.