civil appellate jurisdiction civil appeal number 2071 of
1968.  from the judgment and order dated 20-4-1967 of the
madhya pradesh high companyrt in misc. first appeal number 104/66 . rameshwar nath for the appellants

r. lalit and a.g. ratnaparkhi for respondent number 1.
naunit lal and miss lalita kohli for respondent number 2.
the judgment of the companyrt was delivered by
kailasam j.--this is an appeal by certificate under
article 133  1  a  of the companystitution granted by the high
court of madhya pradesh. the appellants filed a claim for
compensation of a sum of rupees one lakh under section 110
of the motor vehicles act before the claims tribunal
jabalpur. the first claimant is the wife and the claimants
2 to 8 are the children of one purshottam tulsidas udeshi
who met with his death in a motor car accident on 18th
december 1960 when he was travelling in the car which was
driven by madhavjibhai mathuradas ved the manager of the
first opponent companypany m s. ranjit ginning and pressing company
private limited in a rash and negligent manner near a village
called chincholivad which was 16 miles from saoner. the car
which was .a hindustan ambassador saloon was insured with
second opponent union
fire accident and general insurance company limited the deceased
was aged 58 years at the time of his death and according to
the petitioners was earning annually about rs. 9000. they
claimed a companypensation of rupees one lakh. the opposite
parties the owner and the insurance companypany opposed. the
claim. while admitting that the vehicle was proceeding
from nagpur on its way to pandhurna for the purpose men-
tioned by the applicants they denied that the vehicle was
driven in a rash and negligent manner and pleaded that the
vehicle was at the time of accident in perfectly sound
condition. it was submitted that the husband of the appli-
cant number 1 was travelling in the said vehicle on his own
responsibility and for his own purpose and absolutely
gratis and number on behalf of or at the instance of the
opposite party number 1 or the driver of the vehicle and
therefore the claimants are number entitled to any companypensa-
tion. the opposite parties pleaded that the incident was as
a result of inevitable accident and number due to any act of
rashness or negligence on the part of the driver. they
opposed the claim of the companypensation as highly exaggerated. the motor accidents claims tribunal jabalpur found
that the accident of the motor vehicle was as a result of
negligent driving of the vehicle by the manager madhavjib-
hai mathuradas ved the driver of the vehicle. it also
found that the first respondent the owner of the companypany
is liable to pay companypensation to the claimants on account of
the negligence of their employee madhavjibhai which caused
the death of purshottam tulsidas udeshi. regarding the
compensation payable the tribunal fixed rs. 31209.15 as
general damages in addition to rs. 2000 as special damages
for funeral and post-funeral expenses. the owner first
opponent preferred an appeal to the high companyrt impleading
the claimants and the insurance companypany as respondents
against the award passed by the. claims tribunal. the high
court did number decide the question as to whether the accident
was due to the rash and negligent driving or the quantum of
compensation to which the claimants were entitled to as it
allowed the appeal by the owner on the ground that the owner
cannumber be held vicariously liable for the act of madhavjib-
hai in taking purshottam as a passenger as the said act was
neither in the companyrse of his employment number under any au-
thority whatsoever and that there was numberevidence that the
owners of the vehicle were aware that purshottam was being
taken in the car as a passenger by their manager madhavjib-
hai. holding that so far as the owners are companycerned pur-
shottam was numberbetter than a trespasser the high companyrt held
that the owners were number vicariously liable. on an applica-
tion by the claimants the high companyrt granted a certificate
and thus this appeal has companye before this companyrt. the questions that arise for companysideration are whether on
the facts of the case the claimants have established  1
that the accident was due to the rash and negligent driving
of madhaviibhai mathuradas ved the manager of the companypany
and  2  whether the incident took place during the companyrse of
the employment of the driver. in the event the claimants
succeed on these two points the amount of companypensation to
which they are entitled would have to be determined. the high companyrt relying on three decisions in sitgram
motilal kalal v. santanuprasad jaishankar bhatt 1  canadian
pacific railway companypany v. leonard lockhall 2  and companyway

george wimpey company limited 3  came to the companyclusion that
the rash and negligent driving by the manager was number in the
course of his employment. the learned companynsel for the
respondent relied on some other decisions which will be
referred to in due companyrse. the high companyrt has number gone into the question as to
whether the car was. being driven rashly and negligently by
the owners employee as it held that the act was number in the
course of his employment. we feel that the question as to
whether the car was being driven rashly and negligently
would have to be decided on the facts of the case first
for if the claimants fail to establish rash and negligent
act numberother question would arise. we would therefore
proceed to deal with this question first. the claimants
did number lead any direct evidence as to how the accident
occurred. numbereye-witness was examined. but p.w. 1 the
younger brother of the deceased purshottam udeshi who went
to the spot soon after the accident was examined. he stated
that he went with one of his relatives and an employee of
his brothers employer and saw that the car had dashed
against a tree while proceeding from nagpur to pandurna. the tree was on the right hand side of the road four feet
away from the right hand side of the main metalled road. the vehicle will have to proceed on the left hand side of
the road. the road was 15 feet wide and was a straight
metalled road. on either side of the road there were
fields. the fields were of lower level. the tree against
which the car dashed was uprooted about 9 to 10 inches from
the ground. the car dashed so heavily that it was broken in
the front side. a photograph taken at that time was also
filed. according to the witness the vehicle struck so
heavily that the machine of the car from its original posi-
tion went back about a foot. the steering wheel and the
engine of the car receded back on drivers side and by the
said impact the occupants died and front seat also moved
back. the witness was number cross-examined on what he saw
about the state of the car and the tree. it was number sug-
gested to him that the car was number driven in a rash and
negligent manner. in fact there is numbercross-examination on
the aspect of rash and negligent driving. the claims tribu-
nal on this evidence found that it was admittedly a mishap
on the right side of the road wherein the vehicle had dashed
against a tree beyond the pavement so violently as number only
to damage the vehicle badly but also entailing death of its
three occupants maxim res ipsa loquitur applies  see
ellor v. selfridge 1930 46 t.l.r. 236 . the tribunal
proceeded to discuss the evidence of p.w. 1 and found on the
evidence that it cannumber.help companycluding that the dashing of
the car against the tree was most violent and that it was
for the respondents to establish that it was a case of
inevitable accident. they have led numberevidence. it may at
once be stated that though the opposite parties had pleaded
that this is a case of inevitable accident they have
 1  1966 3 s.c.r. 527.

a.i.r. 1943 p.c. 63.  3  1951 1 a.e.r. 363.
number led any evidence to establish their plea. the burden
rests on the opposite party to prove the inevitable acci-
dent. to succeed in such a defence the opposite party will
have to establish that the cause of the accident companyld number
have been avoided by exercise of ordinary care and caution. to establish a defence of inevitable accident the defendant
must either show what caused the accident and that the
result was inevitable or he must show all possible causes
one or more of which produced the effect and with regard to
each of such possible causes he must show that the result
could number have been avoided.  halsburys laws of england
third ed. vol. 28 p. 81 . numbersuch attempt was made and
before us the plea of inevitable accident was number raised. we have therefore to companysider whether the claimants have
made out a case of rash and negligent driving. as found by
the tribunal there is numbereye-witness and therefore the
question is whether from the facts established the case of
rash and negligent act companyld be inferred. the tribunal has
applied the doctrine of resipsa-loquitur. it has to be
considered whether under the circumstances the tribunal
was justified in applying the doctrine. the numbermal rule is that it is for the plaintiff to prove
negligence but as in some cases companysiderable hardship is
caused to the plaintiff as the true cause of the accident is
number knumbern to him but is solely within the knumberledge of the
defendant who. caused it the plaintiff can prove the acci-
dent but cannumber prove how it happened to establish negli-
gence on the part of the defendant this hardship is sought
to be avoided by applying the principle of res ipsa loqui-
tur. the general purport of the words res ipsa loquitur is
that the accident speaks for itself or tells its own
story. there are cases in which the accident speaks for
itself so that it is sufficient for the plaintiff to prove
the accident and numberhing more. it will then be for the
defendant to establish that the accident happened due to
some other cause that his own negligence. salmond on the
law of torts  15th ed.  at p. 306 states the maxim res
ipsa loquitur applies whenever it is so improbable that such
an accident would have happened without the negligence of
the defendant that a reasonable jury companyld find without
further evidence that it was so caused. in halsburys laws
of england 3rd ed. vol. 28 at p. 77 the position is
stated thus an exception to the general rule that the
burden of proof of the alleged negligence is in the first
instance on the plaintiff occurs wherever the facts already
established are such that .the proper and natural inference
arising from them is that the injury companyplained of was
caused by the defendants negligence or where the event
charged as negligence tells its own story of negligence on
the part of the defendant the story so told being clear
and unambiguous. where the maxim is applied the burden is
on the defendant to show either that in fact he was number
negligent or that the accident might more probably have
happened in a manner which did number companynumbere negligence on his
part. for the application of the principle it must be shown
that the car was under the management of the defendant and
that the accident is such as in ordinary companyrse of things
does number happen if those who had the management used proper
care. applying the principles stated above we have to see
whether the requirements of the principle
have been satisfied. there can be numberdispute that the car
was under the management of the companypanys manager and that
from the facts disclosed by p.w. 1 if the driver had used
proper care in the ordinary companyrse of things the car companyld
number have gone to the right extreme of the road dashed
against a tree and moved it a few inches away. the learned
counsel for the respondents submitted that the road is a
very narrow road of the width of about 15 feet on either
side of which were fields and that it is quite probable that
cattle might have strayed. into the road suddenly causing
the accident. we are unable to accept the plea for in a
country road with a width of about 15 feet with fields on
either side ordinary care requires that the car should be
driven at a speed in which it companyld be companytrolledif some
stray cattle happened to companye into the road. from the
description of the accident given by p.w. 1 which stands
unchallenged the car had proceeded to the right extremity
of the road which is the wrong side and dashed against a
tree uprooting it about 9 inches from the ground. the car
was broken on the front side and the vehicle struck the tree
so heavily that the engine of the car was displaced from its
original position one foot on the back and the steering
wheel and the engine of the car had receded back on the
drivers side. the car companyld number have gone to the right
extremity and dashed with such violence on the tree if the
driver had exercised reasonable care and caution. on the
facts made out the doctrine is applicable and it is for the
opponents to prove that the incident did number take place due
to their negligence. this they have number even attempted to
do. in the circumstances we find that the tribunal was
justified in applying the doctrine. it was submitted by the
learned companynsel for the respondents that as the high companyrt
did number companysider the question this point may be remitted to
the high companyrt. we do number think it necessary to do so for
the evidence on record is companyvicing to prove the case of
rash and negligent driving set up by the claimants. the second companytention that was raised by the companynsel for
the appellants is that the high companyrt was in error in hold-
ing that the incident did number take place in the companyrse of
the employment or under the authority of the companypany. the
high companyrt found that there is numberevidence that the owner of
the vehicle was aware that purshottam was being taken in the
car as a passenger by madhavjibhai and in the circumstances
the owner cannumber be held liable for the tortious act of the
servant. the high companyrt found that the car was going from
nagpur to pandhurna on the business of the companypany and it
may also be that madhavjibhai the manager of the owners
car was also going on the business of the owner and it may
also be that he had implied authority to drive the
vehicle. having agreed with the companytentions of the claim-
ants so far the high companyrt came to the companyclusion that there
were numberpleadings or material on record to establish that
purshottam was travelling in the vehicle either on some
business of the owner of the vehicle or under any ostensible
authority from them to their manager madhavjibhai to take
purshottam as a passenger in the vehicle. before dealing
with the right of purshottam as a passenger we will companysid-
er the question whether the
accident took place during the companyrse of the employment of
madhavjibhai by the companypany. it is admitted in the written
statement by the owner that madhavjibhai was the manager of
opposite party number 1 and that the vehicle was proceeding
from nagpur on its way to pandhurna for purpose of deliver-
ing an amount of rs. 20000 to the ginning. and pressing
factory at pandhurna. the tribunal found on the plead-
ings that madhavjibhai was the employee of the companypany and
during the companyrse of employment by driving the motor car he
negligently caused the death of purshottam. the high companyrt
also companyfirmed the findings and found that madhavjibhai the
manager .of the owner of the car was going on the business
of the said owner and that it may be that the manager had
the implied authority to drive the vehicle. on such a
finding which is number disputed before us it is difficult to
resist the companyclusion-that the accident was due to the
negligence of the servant in the companyrse of his employment
and that the master is liable. on the facts found the law
is very clear but as the question of the companypanys liability
was argued at some length we will proceed to refer to the
law on the subject. it is number firmly established that the masters liability
is based on the ground that the act is done in the scope or
course of his employment or authority. the position was
stated by lord justice denning in young v. edward box and
co. limited 1 . the plaintiff and fellow workmen were given a
lift on one of the defendants lorries with the companysent of
his foreman and of the driver of the lorry. on a sunday
evening the plaintiff in the companyrse of that journey was
injured by the negligence of the driver of the lorry and the
plaintiff brought an action against the defendants claiming
damages for his injuries. the defence was that the plain-
tiff when on the lorry was a trespasser. the traffic
manager of the defendants pleaded that he had never given
instructions to the foreman that he should arrange for lifts
being given to the plaintiff and his fellow-workmen on
sundays and that the foreman had numberauthority to companysent to
the plaintiffs riding on the lorry. while two learned
judges held that the right to give the plaintiff leave to
ride on the lorry was within the ostensible authority of the
foreman and that the plaintiff was entitled to rely on that
authority and in that respect was a licensee lord denning
held that although the plaintiff when on the lorry was a
trespasser so far as the defendants were companycerned the
driver was acting in the companyrse of his employment in giving
the plaintiff a lift and that was sufficient to make the
defendants liable and that he did number base his judgment on
the companysent of the foreman. lord justice denning stated the
position thus
 the first question is to see
whether the servant was liable. if the
answer is yes the second question is to see
whether the employer must shoulder the serv-
ants liability. so far as the driver is
concerned his liability depends on whether
the plaintiff was on the lorry with his company-
sent or number. x x x x x.  1   1951  1 t.l.r. 789 at 793.
the next question is how far the employers
are liable for their servants companyduct. in
order to make the employers liable to the
passenger it is number sufficient that they
should be liable for theft servants negli-
gence in driving. they must also be responsi-
ble for his companyduct in giving the man a lift. if the servant has been forbidden or is unau-
thorised to give anyone a lift then number
doubt the passenger is a trespasser on the
lorry so far as the owners are companycerned but
that is number of itself an answer to the claim. x x x x x in my opinion when the owner of a
lorry sends his servant on a journey with it
thereby putting the servant in a position number
only to drive it but also be give people a
lift in it then he is answerable or the
manner in which the servant companyducts himself
on the journey number only in the driving of it
but also in giving lifts in it provided of
course that in so doing the servant is acting
in the companyrse of his employment. lord justice denning companycluded by observing that the passen-
ger was therefore a trespasser so far as the employers were
concerned but nevertheless the driver was acting in the
course of his employment and that is sufficient to make the
employers liable. it will thus be seen that while two of
the learned judges held that the right to give the plaintiff
leave to ride on the lorry was within the ostensible author-
ity of the foreman and the plaintiff was entitled to rely on
that authority as a licensee lord denning based it on the
ground that even though the plaintiff was a trespasser so
far as the defendants were companycerned as the driver was
acting in the companyrse of his employment in giving the plain-
tiff a lift it was sufficient to make the defendants li-
able. applying the test laid down there can be numberdifficul-
ty in companycluding that the right to give leave to purshottam
to ride in the car was within the ostensible authority of
the manager of the companypany who was driving the car and that
the manager was acting in the companyrse of his employment in
giving lift to purshottam. under both the tests the respond-
ents would be liable. we will number refer to the three cases relied on by the
high companyrt for companying to the companyclusion that the accident
did number take place during the companyrse of employment. the
first case referred to is sitaram motilal kalal v. santanu-
prasad jaishankar bhatt 1 . the owner of a vehicle entrust-
ed it to a for plying it as a taxi. b who used to clean the
taxi was either employed by the owner or on his behalf by a.
a trained b to assist him in driving the taxi and took b for
obtaining a licence for driving. while taking the test b
caused bodily injury to the respondent. a was number present
in the vehicle at the time of the accident. on the question
whether the owner was liable the majority held the view that
the owner was number liable. on the facts the companyrt found that
the person who had borrowed the taxi for taking out a
licence and the driver who lent the same was number acting in
the companyrse of his business. the companyrt on an application of
the test laid down in various decisions held that there is
numberproof that the second defendant the driver was author-
ized to companych the cleaner so that the cleaner
 1  19661 3 s.c.r. 527.
might become a driver and drive the taxi and that it ap-
peared more probable that the second defendant wanted some-
one to assist him in driving the taxi for part of the time
and was training the third defendant to share the task of
driving. the owners plea that it had number given any such
authority was accepted by the companyrt. holding that it had
number been proved that the act was impliedly authorized by the
owner or to companye within any of the extensions of the doc-
trine of scope of employment the companyrt held that the owner
is number liable. this companyrt has held that the test is whether
the act was done on the owners business or that it was
proved to have been impliedly authorized by the owner. at
page 537 it is stated that the law is settled that master is
vicariously liable for the acts of his servants acting in
the companyrse of his employment. unless the act is done in the
course of employment the servants act does number make the
employer liable. in other words for the masters liability
to arise the act must be a wrongful act authorised by the
master or a wrongful and unauthorized mode of doing some act
authorised by the master. the extension of the doctrine of
the scope of employment numbericed in the judgment refers to
the decision of ormrod and anumberher v. crosville motor serv-
ices limited and anumberher  1  where lord denning stated it
has often been supposed that the owner of a vehicle is only
liable for the negligence of the driver if that driver is
his servant acting in the companyrse of his employment. this is
number companyrect. the owner is also liable if the driver is
with the owners companysent driving the car on the owners
business or for the owners purposes. the supreme companyrt
accepted the test and to that extent this may be taken as an
extension of the doctrine of scope of employment. thus on
the facts as we have found that the accident took place
during the companyrse of employment the decision in sitaram
motilal kalal is of numberhelp to the respondents. the next ease which is referred to by the high companyrt is
canadian pacific railway companypany v. lockhart 2 . in that
case one s was employed as a carpenter by the railway companypa-
ny. in the companyrse of his employment he was required to make
repairs of various kinds to employers property. he made a
key for use in a lock in the station at n far away from his
headquarters at w. he was paid per hour and the railway
company kept vehicles to be used by s available for him. s
however had a car of his own and without companymunicating his
intention to anyone he used it on his way to n. an accident
happened on the way owing to ss negligence. it was also in
evidence that the railway companypany had issued numberice to its
servants particularly to s warning him against using
their private cars unless they had got their cars insured
against third party risk. on the facts the privy companyncil
held that the means of transport used by the carpenter was
clearly incidental to execution of that for which he was
employed. as what was prohibited was number acting as a driver
but using a number-insured car the prohibition merely limited
the way in which the servant was to execute the work which
he was employed to do and that breach of the prohibition
did number exclude the liability of the master to third party. we do number see how this case would help the respondents. on
 1   1953  2 all. e.r. 753.  2   1942  a.c. 591.
the other hand it supports the companytention of the companynsel for
the appellants that when the manager was driving the car
for the purposes of the companypany it was in the companyrse of his
employment. the third case that is referred to by the high companyrt is
conway v. george wimpey company limited  1 . the defendants a
firm of companytractors were engaged in building work at an
aerodrome and they provided lorries to companyvey their employ-
ees to the various places of their work on the site. in the
cab of each lorry was a numberice indicating that the driver
was under strict orders number to carry passengers other than
the employees of the defendants during the companyrse of and in
connection with their employment and that any other person
travelling on the vehicle did so at his own risk. further
the driver of the lorry had received clear oral instructions
prohibiting him fro.m taking other persons. the plaintiff
who was employed as a labourer by anumberher firm of companytrac-
tors at the aerodrome while on his way to work was permit-
ted by the driver to ride on one of the defendants lorries
for some distance across the aerodrome and while dismounting
the plaintiff was injured owing to drivers negligence. the
court held that on the facts of the case the taking of the
defendants employees on the vehicle was number merely a wrong-
ful mode of performing an act of the class which the driver
in the present case was employed to perform but was the
performance of an act of a class which he was number employed
to perform at all. the facts stated above are entirely
different from those which arise in the present case before
us as in the case before the companyrt of appeal 2  there was a
numberice indicating that the driver was under strict orders
number to carry passengers and the driver was instructed number to
carry others while in the present case a responsible officer
of the companypany the manager had permitted purshottam to
have a ride in the car. taking into account the high posi-
tion of the driver who was the manager of the companypany it is
reasonable to presume in the absence of any evidence to the
contrary that the manager had authority to carry purshottam
and was acting in the companyrse of his employment. we do number
see any support for the companyclusion arrived at by the high
court that the driver was number acting in the companyrse of his
employment. we will number proceed to refer to some cases which were
cited by the learned companynsel for the respondents. the
learned companynsel placed reliance on the decision in houghton

pilkington.  1  in that case the plaintiff at the request
of a servant of the defendant got into the defendants cart
which was then in the chrage of the servant in order to
render assistance to anumberher servant of the defendant who
had been rendered unconscious by an accident. the plaintiff
fell out of the cart and was injured through the negligence
of the servant in charge of the cart in causing the horse to
start. in an action against the defendent for damages for
the injuries sustained by the plaintiff it was held that the
existence of an emergency gave numberimplied authority to the
servant to invite the plaintiff into. the cart and that the
defendant was number liable
 1   1951   1  all. e.r. 363.  2  62 t.l.r. 458.  3   1912  3 k.b. 308.
to the plaintiff. justice bankes while agreeing with justice
bray who delivered the leading judgment expressed his view
that the lower companyrt had taken the view that an emergency
had arisen which gave the defendants servant implied au-
thority to invite the plaintiff into the cart for the pur-
pose of rendering assistance to. the injured boy. the
learned judge was first inclined to agree with that view but
because of the case being governed by company v. midland companyn-
ties ry. company  3 ex. 268  he felt he companyld number companysistent-
ly with that decision hold that in the circumstances the
driver of the cart had any implied authority to invite the
plaintiff to get into the car. the facts in houghton v.
pilkington are entirely different and the decision was based
on the ground that existence of the emergency did number companyfer
on the driver of the cart authority to invite the plain-
tiff into the cart. the next case that was cited by the learned companynsel for
the respondents was twine v. beans express limited 1 . the defendants provided for the use of a bank a companymercial
van and a driver on the terms that the driver remained the
servant of the defendants and that the defendants accepted
numberresponsibility for injury suffered by persons riding in
the van who were number employed by them. there were two
numberices on the van one stating that numberunauthorized person
was allowed on the vehicle and the other that driver had
instructions number to allow unauthorized travellers in the
van and that in numberevent would the defendants be responsi-
ble for damage happening to them. one t who was number author-
ized to ride in the van got a rift in the van with the
consent of the driver. owing to the negligence of the
driver the accident occurred and t was killed. the companyten-
tion that the accident arose while the driver was engaged on
a duly authorized journey was negatived and it was held that
defendants owed numberduty to t to take care. this case was
taken up on appeal which companyfirmed the view of the trial
court holding that the driver in giving the lift to t was
clearly number acting within the scope of his employment and
his employers were companysequently number liable. the facts are
totally different. the learned companynsel for the respondents
was number able to produce any authority which would support
his companytention that on the facts of the case found the
company should number be held liable. before we companyclude we would like to point out that the
recent trend in law is to make the master liable for acts
which do number strictly fall within the term in the companyrse of
the employment as ordinarily understood. we have referred
to sitaram motilal kalal v. santanuprasad jaishankar bhat
 supra  where this companyrt accepted the law laid down by lord
denning in ormrod and anumberher rs. crosville motor services
ltd. and anumberher  supra  that the owner is number only liable
for the negligence of the driver if that driver is his
servant acting in the companyrse of his employment but also when
the driver is with the owners companysent driving the car on
the owners business or for the owners purposes. this
extension has been accepted by this companyrt. the law as laid
down by lord denning in young v. edward box and company limited
already referred to i.e. the first question is to see wheth-
er the servant is liable
 1  62 t.l.r. 19. 155 year 1945-56. 10--36sci/77
and if the answer is yes the second question is to see
whether the em1oyer must shoulder the servants liability
has been uniformally accepted as stated in salmond law of
torts 15th ed. p. 606 in crown proceedings act 1947 and
approved by the house of lords in staveley iron chemical
co. limited v. jones 1  and i.c.i. limited v. shatwell 2 . the
scope of the companyrse of employment has been extended in
navarro v. moregrand limited anr 3  where the plaintiff who
wanted to acquire the tenancy of a certain flat applied to
the second defendant a person with ostensible authority to
conduct the business of letting the particular fiat for the
first defendant the landlord. the second defendant demand-
ed from the plaintiff a payment of pound 225 if he wanted
the flat and the plaintiff paid the amount. the plaintiff
sought to recover the sum from the landlord under the land-
lord and tenant  rent companytrol  act 1949. the companyrt of
appeal held that the mere fact that the second defendent was
making an illegal request did number companystitute numberice to the
plaintiff that he was exceeding his authority and that
though the second defendant was number acting within his actual
or ostensible authority in asking for the premium a.s the
landlord had entrusted him with the letting of the flat and
as it was in the very companyrse of companyducting that business
that he companymitted the wrong companyplained of he was acting in
the companyrse of his employment. lord denning took the view
that though the second defendant was acting illegally in
asking for and receiving a premium and had numberactual or
ostensible authority to do an illegal act nevertheless he
was plainly acting in the companyrse of his employment because
his employers the landlords had entrusted him with the
full business of letting the property and it was in the
very companyrse of companyducting that business that he did the
wrong of which companyplaint is made. this decision has extended
the scope of acting in the companyrse of employment to include
an illegal act of asking for and receiving a premium though
the receiving of the premium was number authorized. we do. number
feel called upon to companysider whether this extended meaning
should be accepted by this companyrt. it appears lord goddard
chief justice had gone further in barker v. levinson 4  and
stated that the master is responsible for a criminal act of
the servant if the act is done within the general scope of
the servants employment. lord justice denning would number
go to this extent and felt relieved to find that in the
authorized law reports  1951  1 k.b. 342 the passage quoted
above was struck out. we respectfully agree with the view
of lord denning that the passage attributed to lord chief
justice goddard went a bit too far. on a companysideration of the cases we companyfirm the law as
laid down by this companyrt in sitararn motilal kalal v. santa-
nuprasad jaishankar bhatt  suvra  and find that in this case
the driver was acting in the companyrse of his employment. and
as such the owner is liable. we therefore set aside the
finding of the high companyrt that the act was number companymitted in
the companyrse of employment or under the authority of the
master and allow the appeal.  1956  a.c. 627. 2   1965  a.c. 656.  3   1951  2 t.l.r. 674.  4  66 the times l.r.  pt. 2  717.
the only point that remains is the determination of the
quantum of companypensation to which the appellants are entitled
to. the high companyrt did number go into this question but the
tribunal after taking into companysideration the various facts
fixed the companypensation at rs. 33209.15 with companyts and
directed that the insurance companypany shall indemnify the
owner to the extent of rs. 15000. the tribunal fixed
special damages for funeral and post-funeral expenses in-
cluding transport charges at rs. 2000. this item is number
disputed. the second item is a sum of rs. 31209.15 which
according to the tribunal would have been the amount which
the deceased would have earned by companytinuing to work for a
period of 5 years. the tribunal accepted the documents
produced by the claimants regarding the income of the de-
ceased and fixed it at rs. 9316.83 per annum. out of this
amount the tribunal rightly excluded a sum of rs. 1875
which is the bonus the deceased would have got as it cannumber
be taken into account and fixed the net amount of earning at
rs. 7441.83 per year and rs. 37209.15 for 5 years. after
deducting rs. 6000 which the deceased might have spent on
himself the tribunal arrived at a figure of rs. 31209.15
under this head. the learned companynsel for the respondents
referring to item number 27 pointed out that the pay of the
deceased was only rs. 425 per month and that the tribunal
was in error in including the dearness allowance companyveyance
allowance and other expenses and that the income of the
deceased should have been taken as only rs. 425 per month. the learned companynsel for the appellants accepts this figure. taking rs. 425/- being the monthly income the annual income
totals up to rs. 5100/-and for 5 years to rs. 25500/-. adding to this rs. 2000/- which was given as special dam-
ages the total amount will companye to rs. 27500/-. we accept
this calculation as companyrect and restore the award passed by
the claims tribunal but restrict it to an amount of rs. 27500/-. as the union fire accident general insurance company limited
paris carrying on business at nagpur has been nationalised
though the second respondent before the tribunal was repre-
sented by a companynsel we directed numberice to the nationalised
insurance companypany so. that they would also be heard. the nationalised insurance companypany has taken numberice and
appeared through mr. naunit lal advocate. the insurance
company had numberhing further to add except as to the quantum
of liability of the insurance companypany so far as injuries to
the passengers are companycerned. mr. naunit lal submitted that
the scope of the statutory insurance does number companyer the
injury suffered by the passengers and as the owner has
specifically insured under the insurance policy the risk to
passengers to the extent of rs. 15000 only the liability of
the insurance companypany should be limited to rs. 15000. on
behalf of the owner it was submitted that the insurance
cover under the act extended to the injury to the passengers
also and sought to support his companytention by referring to
section 95 1  b  i  which provides against any liability to
the owner which may be incurred by him in respect of death
of or bodily injury to any person or damage to any property
of a third party caused by or arising out of the use of the
vehicle in a public place. as section 95 of the motor vehicles act 1935 as amended
by act 56 of 1969 is based on the english act it is useful
to refer to that. neither the road traffic act 1960 or
the earlier 1930 act required users of. motor vehicles to be
insured in respect of liability for death or bodily injury
to passengers in the vehicle being .used except a vehicle in
which passengers were carried for hire or reward or by
reason of or in pursuance of a companytract of employment. in
fact sub-section 203 4  of the 1960 act provided that the
policy shall number be required to companyer liability in respect
of death of or bodily injury to persons being carried in or
upon or entering or getting on to or alighting from the
vehicle at the time of the occurrence of the event out of
which the claims arise. the provisions of the english act
being explicit the risk to passengers is number companyered by the
insurance policy. the provisions under the english road
traffic act 1960 were introduced by the amendment of
section 95 of the indian motor vehicles act. the law as
regards general exclusion of passengers is stated in hals-
burys laws of england third edition vol. 22 at p. 368
para 755 as follows --
subject to certain exceptions a policy
is number required to companyer liability in respect
of the death of or bodily injury to a person
being carried in or upon or entering or
getting into or alighting from the vehicle at
the time of the occurrence of the event out of
which the claim arises
it is unnecessary to refer to the subsequent development of
the english law and as the subsequent changes have number been
adopted in the indian statute. suffice it to say that the
motor vehicle  passenger insurance  act 1971 made insur-
ance companyer for passenger liability companypulsory by repealing
paragraph  a  and the proviso of sub-section 203 4 . but
this act was repealed by road traffic act 1972 though under
section 145 of 1972. act the companying into force of the provi-
sions of act 1971 companyering passenger liability was delayed
under december 1 1972.  vide binghams motor claims
cases 7th ed. p. 704 . section 95 a  and 95 b  i  of the motor vehicles act
adopted the provisions of the english road traffic act
1960 and excluded the liability of the insurance companypany
regarding the risk to the passengers. section 95 provides
that a policy of insurance must be a policy which insures
the persons against any liability which may be incurred by
him in respect of death or bodily injury to any person or
damage to any property of a third party caused by or arising
out of the use of the vehicle in a public place. the plea
that the words third party are wide enumbergh to companyer all
persons except the person and the insurer is negatived as
the insurance companyer is number available to the passengers made
clear by the proviso to sub-section which provides that a
policy shall number be required

except where the vehicle is a vehi-
cle in which passengers are carried for hire
or reward or by reason of or in pursuance of a
contract of employment to companyer liability in
respect of the death of or bodily injury to
persons being
carried in or upon or entering or mounting or
alighting from the vehicle at the time of the
occurrence of the event out of which a claim
arises. therefore it is number required that a policy of insurance
should companyer risk to the passengers who are number carried for
hire or reward. as under section 95 the risk to a passenger
in a vehicle who is number carried for hire or reward is number
required to be insured the plea of the companynsel for the
insurance companypany will have to be accepted and the insurance
company held number liable under the requirements of the
motor vehicles act. the insurer can always take policies companyering risks
which are number companyered by the requirements of section 95. in
this case the insurer had insured with the insurance companypany
the risk to. the passengers. by an endorsement to. the
policy the insurance companypany had insured the liability
regarding the accidents to passengers in the following
terms
in companysideration of the payment of an
additional premium it is hereby understood and
agreed that the companypany undertakes to pay
compensation on the scale provided below for
bodily injury as hereinafter defined sustained
by any passenger
the scale of companypensation is fixed at rs. 15000. the
insurance companypany is ready and willing to pay companypensation
to the extent of rs. 15000 according to this endorsement
but the learned companynsel for the insured submitted that the
liability of the insurance companypany is unlimited with regard
to risk to the passengers. the companynsel relied on section ii
of the policy which relates to liability to third parties. the clause relied on is extracted in full
section ii--liability to third parties. the companypany will indemnify the in-
sured in the event of accident caused by or
arising out of the use of the motor car
against all sums including claimants companyts
and expenses which the insured shall become
legally liable to pay in respect of
 a  death of or bodily injury to any person
but except so far as is necessary to meet the
requirements of section 95 of the motor vehi-
cles act 1939 the companypany shall number be
liable where such death or injury arises out
of and in the companyrse of the employment of such
person by the insured. it was submitted that the wording of clause 1 is wide enumbergh
to companyer all risks including injuries to passengers. the
clause provides that the companypany will indemnify the insured
against all sums including claimants companyts and expenses
which the insured shall become legally liable. this accord-
ing to the learned companynsel would include legal liability to
pay for risk to passengers. the legal liability is re-
stricted to
clause 1  a  which states that the indemnity is in relation
to the legal liability to pay in respect of death of or
bodily injury to any person bur except so far as is neces-
sary to meet the requirements of section 95 of the motor
vehicles act. the companypany shall number be liable where such
death or injury arises out of and in the companyrse of the
employment of such person by the insured. clause 1 and 1
 a  is number very clearly worded but the words except so far
as is necessary to meet the requirements of section 95 of
the motor vehicles act 1939 would indicate that the
liability is restricted to the liability arising out of the
statutory requirements under section 95. the second part of
clause 1 a  refers to the number-liability for injuries arising
in the companyrse of employment of such person. the meaning of
this sub-clause becomes clear when we look to the other
clauses of the insurance policy. the policy also provides
for insurance of risks which are number companyered under section
95 of the act by stipulating payment of extra premium. these clauses would themselves indicate that what was in-
tended to be companyered under clause 1 and 1  a  is the risk
required to be companyered under section 95 of the motor vehi-
cles act. on a companystruction of the insurance policy we accept the
plea of the insurance companypany that the policy had insured
the owner only to the extent of rs. 15000 regarding the
injury to the passenger. in the result we hold that the
liability of the insurance companypany is restricted to rs.


criminal appellate jurisdiction criminal appeal number 96
of 1973.
appeal by special leave from the judgment and order dated
4th december 1972 of the bombay high companyrt at bombay in
criminal appeal number 1439 of 1972.

s. chitle y. n. ganpule and p. c. kapur for the
appellant

r. khanna and m. n. shroff for the respondent
the judgment of the companyrt was delivered by
khanna j. janardhan narayan suroshe and krishna vithu
suroshe were companyvicted by the additional sessions judge
thana under section 302 indian penal companye on the allegation
that they had caused the death of bhaskar narayan suroshe. each of them was sentenced to undergo imprisonment for life. krishna vithu suroshe filed an appeal against the judgment
of the trial companyrt but the same was dismissed summarily by
the bombay high companyrt. krishna vithu suroshe thereafter
filed the present appeal to this by special leave.at the
time the leave was granted it was directed that the appeal
would be limited only to the ground wherein it had been
stated that the high companyrt should number have dismissed the
appeal in limine. bhaskar narayan suroshe was the brother of janardhan narayan
suroshe accused. the houses of bhaskar narayan suroshe and
janardhan narayan suroshe are situated in village raite and
there intervenes a small lane between the two houses. on
march 24 1972 at about 9 p.m. it is stated the two
accused started abusing bhaskardeceased. bhaskar then came
to the kitchen of his house and standing in the door of the
kitchen he also abused the accused. the exchange of abuses
went on for about 10-15 minutes. janardhan accused
according to the prosecution than came forward and gave a
blow with a long knife in the abdomen of bhaskar. janardhan
also tried to pull bhaskar. krishna vithu suroshe a pellant
then gave a blow with a long knife in the back of bhaskar. the occurrence it is stated was witnessed by parvatibai
and janabai the two wives of bhaskai deceased as well as by
ms daughter lata. pandurang servant of bhaskar was also
attracted to the place of occurrence. bhaskar was
thereafter taken in a cart to govili dispensary. the doctor
incharge of the dispensary advised that bhaskar should be
removed to the hospital. bhaskar was thereafter taken in a
taxi to kalyan but by the time they arrived in the hospital
at kalyan. bhaskar was declared to be dead. report about
the occurrence was lodged by parvatibai at kalyan police
station at 11.45 p.m.
at the trial parvtibai janabai and lata gave ocular
evidence regarding the occurrence. the appellant in his
statement under section 342 companye of criminal procedure
denied his presence at the scene of occurrence and his
participation in the assault on bhaskar deceased. according
to the appellant he was falsely involved in this case at
the instance of haribabu with whom the appellant had
business rivalry. haribabu is anumberher brother of bhaskar
deceased. the trial companyrt accepted the prosecution allegations and
convicted and sentenced the accused as mentioned earlier. mr. chitale on behalf of the appellant has urged before us
that the appeal filed by the appellant before the high companyrt
raised arguable and substantial points and the high companyrt
as number justified in dismissing the appeal in limine. the
learned companynsel in this companynection has invited our attention
to that part of the judgment of the trial companyrt which deals
with the evidence of janabai and lata pws. it would appear
from the judgment of the trial companyrt that janabai and lata
only saw the infliction of the blow on the deceased by
janardhan accused. janabai and lata did number see krishna
vithu suroshe appellant at the time of the occurrence much
less did they see the appellant inflicting knife blow on the
back of bhaskar deceased. the evidence of janabai and lata
it is urged creates companysiderable doubt regarding the
correctness of the statement of parvatibai in so far as she
has stated that the appellant too was present at the time of
the occurrence and he gave a knife blow in the back of
bhaskar deceased. it is also pointed out that the injury on
the back of the deceased companyld also be caused with the same
weapon with which janardhan gave the blow in the abdomen of
the deceased. in our opinion the appellant had an arguable case and the
high companyrt was number justified in dismissing summarily the
appeal of the appellant. it is that under section 421 companye
of criminal procedure the high companyrt can dismiss an appeal
in limine if on a perusal of the petition of appeal and the
judgment appealed from it were to form the view that there
was numbersufficient reason for its interference. at the same
time it is number settled law repeatedly laid down by this
court in a series of decisions that the high companyrt would
number be justified in dismissing. summarily and without a
speaking order an appeal which raises arguable questions
either on points of law or on points of fact  see in this
context two of our recent decisions shaikh mohd. ali v.
state of maharashtra 1  and kapurchand kesrimal jain v.
state of maharashtra 2 . mr. khanna on behalf of the state has invited our attention
to the decision of this companyrt in chittaranjan das v. state
of west bengal 3 .


ltd. a.i.r. 1963 rajasthan 134 india nutriments limited v.
registrar of companypanies 1934 34. companypanies cases 160 p. s.

saa. chettiar companypany v. registrar of companypanies

i.r. 1966 madras 415 registrar of companypanies v. h. mishra

i.r. 1969 orissa 234 state v. linkers private limited

i.r. 1969 patna 445  1970  40 c.c. 17 registrar of
companies v. gopala pillai ors. 1951 k.l.j. 490 debendra
nath das gupta v. registrar of joint stock companypanies i.l.r. 1918 calcutta 486 ballev dass v. mohan lal sadhu 1934-35
39 calcutta weekly numberes 1152 and bhagirath v. emperor

i.r. 1948 calcutta 42 and re cangipati appayya a.i.r. 1952 madras 800 disapproved. imperator v. the pioneer clay and industrial works limited

l.r. 1948 bom. 86 a.i.r. 1948 bombay 357 vulcan
industries  p  limited v. registrar of companypanies orissa i.l.r.  1972  cuttack 373 and re narasimha rao a.i.r.  1937
madras 341 approved. criminal appellate jurisdiction-criminal appeal number 34 of
1970.
appeal by certificate under article 134 1  c  of the
constitution of india from the judgment and order dated
18-3-1969 of the andhra pradesh high companyrt in criminal
revision case number 360 of 1968.

s. nariman additional solicitor general of india and

v. rangam for the appellants. n. sinha solicitor general of india and a. v. v. nair
for the advocate general andhra pradesh. the judgment of the companyrt was delivered by
alagiriswami j.-this is an appeal against the judgment of
the full bench of the andhra pradesh high companyrt reported in

i.r.  1970  a.p. 70. it arises out of a companyplaint filed
against the 1st respondent companypany and its directors for
failure to me with the registrar of companypanies on or before
30-10-1967 the balance sheet and profit and loss account of
the companypany as required under section 220 1  of the
companies act 1956 which is punishable under sub-section
 3  of that section. admittedly numbergeneral body meeting had
been held and therefore the balance sheet and profit and
loss account had number been laid before a general body meeting
number companyld it be so laid. the full bench speaking through jaganmohan reddy c.j. as
our learned brother then was held that if numberbalance sheet
is laid before a general body there can be numberquestion of
that balance sheet number being adopted number of companyplying with
the requirements of section 220 and though wilful omission
to call a general body meeting and to lay the balance sheet
and profit and loss account before it may expose the person
responsible to punishment under other provisions of the act
it certainly does number make him liable under the provisions
of section 134 4  of the companypanies act 1913 or section 220
of the companypanies act 1956. in this the bench was taking a
view companytrary to that of most of the high companyrts after the
decision of this companyrt in the state of bombay v. bandhan ram
bhandani ors.  1  in that case this companyrt
 1  1961  1  s.c.r. 801
had taken the. view that a person charged with an offence
cannumber rely on his default as an answer to the charge and
so if he was responsible for number calling the general
meeting he cannumber be heard to say in defence to the charges
brought against him that because the general meeting had number
been called the balance sheet and profit and loss account
could number be laid before it. in that case the directors of
a companypany were prosecuted under ss. 32 5  and 133 3  of the
companies act 1913 for breaches of ss. 32 and 131 of that
act for having knumberingly and wilfully authorized the failure
to file the summary of share capital for the year 1953 and
being knumberingly and wilfully parties to the failure to lay
before the companypany in general meeting the balance sheet and
profit and loss account as at march 31 1953.
the bombay high companyrt however following its earlier
decision in imperator v. the pioneer clay and industrial
works limited 1  had upheld the acquittal of the directors by
the presidency magistrate. referring to the decision of the
bombay high companyrt in that case this companyrt pointed out that
decision turned on s. 134 of the companypanies act 1913 the
language of which was to a certain extent different from the
language used in ss. 32 and 131 and refrained from going
into the question whether the difference in language in
section 134 on the one hand and ss. 32 and 131 on the other
made any difference to the decision of the case. after
referring to the decisions in gibson v. barlon 2  edmonds v.
foster 3  and park v. lawton 4  where it was held that a
person charged with an offence companyld number rely on his own
default as an answer to the charge and so if the person
charged was responsible for number calling the general meeting
he cannumber be heard to say in defence to the charge that the
general meeting had number been called and that the companypany
and its officers were bound to perform the companydition
precedent if they companyld do that in order that they might
perform their duty this companyrt companysidered that as the
correct view to take. as we have numbericed this companyrt was number dealing there with
the provisions of section 134 of 1913 act which companyresponds
to section 220 of the 1956 act. that question number directly
arises for decision in this case. as we said earlier most
of the high companyrts which have companysidered this question after
the decision of this companyrt have proceeded on the basis that
the decision necessarily led to the companyclusion that even in
a prosecution under s. 134 of the 1913 act  companyresponding to
section 220 of the 1956 act  the companypany and its directors
could number rely upon their failure to call the general body
meeting as a defence to the prosecution. under this
category fall the decisions in dulal chandra bhar v. slate
of west bengal 5  and gopal khaitan v. state  6  of the
calcutta high companyrt. ramachandra sons  p  limited v.
state t  of the allahabad high companyrt state v. t. c.
printers  p  limited  8  of the rajasthan

i.l.r.  1948  bom. 86 a.i.r. 1948 bombay 357.  2  1875 l. r. 10 q. b. 329.  3   1875  45 law j. rep.

c. 41.  4  1911 1 k. b. 588.  5   1962  32 companypany
cases 1143.  6  1969 39 companypany cases 150.  7  1967 11 company 1 j. 92  1966  36 companypany cases 585.

a.i.r.  1963  rajasthan 134.
high companyrt india nutriments limited v. registrar of
companies 1  and p.s.n.s.a. chettiar companypany v. registrar
of companypanies 2  of the madras high companyrt. the orissa high
court had taken a similar view in registrar of companypanies v.
misra  3  but in a latter decision in vulcan industries  p
ltd. v. registrar of companypanies orissa 4  it has taken a
contrary view and followed the decision of the andhra
pradesh high companyrt in the judgment under appeal. that
decision is also pending in appeal before this companyrt. the
patna high companyrt in state v. linkers private limited 5  and the
kerala high companyrt in registrar of companypanies v. gopala pillai
ors.  6  have also taken a similar view. we may number refer to some of the earlier decisions on this
point. the earliest decision is the one in debendra nath
das gupta v. registrar of joint stock companypanies. ?  in that
case the principle laid down in park v. lawton 8  was
applied and it was held that it is number open to the
petitioner to plead in answer to a charge under sections 134
his prior default in respect of the calling of the
prescribed general meeting and of placing before the companypany
at such meeting a duly prepared and audited balance sheet. the decision in ballav dass v. mohan lal sadhu 9  did number
refer to the wording of the section but merely stated that
the provisions of section 134 were number companyplied with. the
same companyrt in bhagirath v. emperor 10  took the same view. in re varaszmha rao 11  a learned single judge of the madras
high companyrt took the view that the same persons cannumber be
charged in respect of the same years with offences
punishable both under ss. 131 and 134 companypanies act because
s. 134 clearly companytemplates the sending of a companyy of the
balance-sheet only after it has been placed before the
company at a general meeting under s. 131 and that where in
a case there is numbersuch placing of the balance-sheet before
the companypany at a general meeting the offence under s. 134
cannumber be companymitted. in re gangipati appayya 12  a view
contrary to the one taken earlier by a judge of that high
court was taken. we may number set out the reasoning which weighed with the
andhra pradesh high companyrt in the decision under appeal
the reference to section 210 by the use of
the word aforesaid and the emphasis indicated
by the words were so laid make the filing of
copies of those balance-sheets and the profit
and loss accounts which are laid before the
general body meeting an essential
prerequisite. if numbergeneral body meeting is
held it is obvious that numbercopies of the
balance sheet
 1   1964  34 companypany cases 160.

a.i.r. 1969 orissa 234.

a.i.r. 1969 patna 445  1970  40 c.c. 17.  6  1961 k.l.j. 490.  8  1911 1 k.b. 588

a.i.r. 1948 calcutta 42.

a.i.r. 1952 madras 800.

a.t. r. 1966 madras 415.

i.l.r. 1972 cuttack 373.

i.l.r. 1918 calcutta 486.  9  1934-35 39 calcutta weekly numberes 1152.

a.i.r. 1937 madras 341.
and profit and loss account can be filed even
though the default may be wilful. both under
section 134 of the old companypanies act and
section 220 of the act the laying of the
balance sheet and the profit and loss account
before an annual general meeting is a
condition precedent to the requirement that
copies of such documents so laid should be
filed before the registrar. the intention is
made further clear by the provision under sub-
section  2  of the respective sections of both
the acts that if the balance sheet is number
adopted at the general meeting before which it
is laid a statement of that fact and of the
reasons therefore have to be annexed to the
balance sheet and to the companyies thereof
required to be filed with the registrar. if
numberbalance sheet is laid before a general
body there can be numberquestion of that balance
sheet number being adopted number of companyplying with
the requirements of the sub-section
 2  of
section 134 of the old companypanies act or
section 220 of the act as the case may be
while wilful omission to call a general body
meeting and omit to lay the balance sheet and
profit and loss account before it may expose
the person responsible to punishment under
other provisions of the act it certainly does
number make him liable udder aforesaid
provisions. the punishment under these
sections is for default in filing companyies of
the balance sheet or the profit and loss
account which are laid before a general body
and for number sending a statement of the fact
that the balance sheet was number adopted. it
may be that companyies of the balance sheet so
laid before the general body may have been
forwarded under sub-section  1  of section 134
of the old companypanies act or sub-section  1  of
section 220 of the act but numberetheless if the
requirements of sub-section  2  of the
respective sections have number been companyplied
with even then the persons companycerned would
be liable for punishment for that default. in our view these provisions unmistakably
indicate as we said earlier that the holding
of the annual general meeting and the laying
before it of the balance sheet and the profit
and loss account is a sine qua number for filing
of the companyies thereof before the registrar. if numbergeneral body meeting is held the
persons companycerned cannumber be said to have
committed a default in companyplying with those
provisions. in this state of difference of opinion among the various
high companyrts and the absence of a decision of this companyrt on
section 134 this appeal has been filed. though the
respondent was number represented before this companyrt the learned
addl. solicitor general who appeared for the state of
andhra pradesh and the learned solicitor general who
appeared for the advocate general of andhra pradesh fairly
placed before this companyrt all the decisions for and against
which we have already referred to and also placed before us
all the relevant companysiderations. it was urged before us
that the principle accepted by this companyrt in the state of
bombay v. bandhan ram bhandani ors.  supra  that a companypany
or its directors in a prosecution under section 32 and
section 133 of the 1913 act companyld number in defence to such
prosecution rely upon their own
failure to call the general body meeting applies with equal
force to a prosecution under section 134 of the act. but it
appears to us that there is a very clear distinction between
ss. 32 and 133 on the one hand and s. 134 on the other. section 32 relates to the preparation of a list of members
of the companypany and of persons who have ceased to be members
as well as a summary and also provides that it shall be
completed within 21 days after the day of the first or only
ordinary general meeting in the year. it also provides that
the companypany shall forthwith file with the registrar a companyy
of the list and summary and any default hi companyplying with
the requirements of the section is made punishable. under
section 131 the laying of a balance-sheet and profit and
loss account before the companypany in the general meeting is
made obligatory. under section 133 the failure to companyply
with section 131 is made punishable. but section 134 lays
down that after balance-sheet and profit and loss account or
the income and expenditure account as the case may be have
been laid before the companypany at the general meeting three
copies thereof shall be filed with the registrar and a
failure to do so is made punishable under sub-section  4  of
that section. the difference in language is very clear and
pointed. the responsibility of sending three companyies of the
balance-sheet and profit and loss account or the income and
expenditure account as the case may be arises only after
they have been laid before the companypany at the general
meeting. without so laying companyies companyld number be sent to the
registrar and even if they are sent it would number be a
compliance with the provisions of the section. it is
possible to companyceive of the law providing that the balance-
sheet and profit and loss account shall be sent to the
registrar even without the necessity of their being laid
before the general body meeting of the companypany. in that
case any failure to do so would be punishable and the
question whether a general body meeting had been held and
the balance-sheet and profit and loss account have been laid
before it will number arise. therefore the companydition precedent
or the essential prerequisite of the balance-sheet and the
profit and loss account being laid before the general
meeting of the companypany number being fulfilled the requirement
of section 134 cannumber be companyplied with. while the appeal to
a question of principle might be attractive we cannumber ignumbere
the clear words of the section. where the words of the
section are very clear it is unnecessary to companysider whether
it embodies any principle and whether that principle is
consistent with the principle as embodied a certain other
sections which are differently worded. in interpreting a
penal provision it is number permissible to give an extended
meaning to the plain words of the section on the ground that
a principle recognised in respect of certain other
provisions of law requires that this section should be
interpreted is the same way. we may also point out that in park v. lawton  supra  the
principle laid in which has been adopted in this companyrt-
decision in the state of bombay v. bandhan ram bhandani
ors.  supra  it is realised that there might be
circumstances where the principle laid down in that decision
will number apply. the companyrt there observed
if it were the case that everything required
to be inserted in the list was dependent on
the fact of the general meeting having been
held it might perhaps have been companytended
with
some force that it is impossible to calculate
a companytinuing penalty from a day which has
never companye into existence but when one sees
that s. 25 requires a number of most important
matters to be included in the list of members
which are entirely independent of the holding
of a general meeting this very much weakens
the companytention that numberlist need be companypiled
if owing to the failure to hold a general
meeting it is impossible to say what day is
the fourteenth day thereafter. this observation may provide numberdefence to a prosecution
under section 133 but it might well do so in a prosecution
under section 134. this was what the learned solicitor
general was fair enumbergh to point out with regard to the
difficulty of working out the daily penalty under s. 162
after the thirtieth day mentioned in section 220 1  of the
1.956 act. he pointed out that where numbermeeting has been
held it was number possible to calculate the period of 30 days
specified in that section and it would number be possible to
give effect to the provisions of that section. the bombay
high companyrt pointed out in emperor v. pioneer clay in-
dustrial works 1  that the decision in park v. lawton 2  is
based on s. 36  it is a mistake for s. 26  of the english
act which in its scheme and terms is entirely different
from the section with which they  the bombay high companyrt
were companycerned and that the section in the english act is a
composite one which lays down various requirements which are
to be companyplied with by the companypany under its first four sub-
clauses and sub-cl.  5  is the penal sub-section which
penalises the failure to companyply with any of the requirements
contained in any of the four preceding sub-sections. in our
act various stages have to be gone through before we reach
the stage of a companyy of the balance-sheet and the profit and
loss account being filed with the registrar and the failure
to reach any one of the stages within the time prescribed is
made penal by the act. the companyrt pointed out that this is
number a case where an accused person relies on his default and
pleads his innumberence. what he says is i may have companymitted
an offence but the offence that i have companymitted is number the
one with which i am charged. on the facts proved by the
prosecution an offence is number disclosed under s. 134 4 . a
different offence might have been companymitted either under s.
76 2  or under s. 133 3 . it is interesting to numbere that it was argued in park v.
lawton 2  that the fact that s. 26 makes the offence a
continuing one also shows that the obligation to file the
list is independent of the holding of a general meeting. the observations which we have extracted earlier will show
that the submission on behalf of the prosecution that
provisions

i.r.l. 1948 bom. 86 a.i.r. 1948 bom. 357.  2  1911 1 k.e. of s. 26 show that the obligation to file the list is
independent of the holding of the general meeting was
accepted. but under section 134 of the 1913 act the
obligation to send a companyy of the balance-sheet and profit
and loss account is dependent companypletely on its being laid
be fore a general meeting.


civil appellate jurisdiction civil appeal number 465 of
1985.
from the judgment and order dated 20.9.1983 of the
andhra pradesh high companyrt in appeal number 858 of 1976.

ramaswamy additional solicitor-general and p.

parekh for the appellant. v.s.n. chari ms. vrinda grover charanjeet v.d. miracee and b.p. maheshwari for the respondents. the judgment of the companyrt was delivered by
dutt j. this appeal by special leave is at the
instance of the appellant the bank of india a nationalised
bank and is directed against the judgment and decree of the
andhra pradesh high companyrt in so far as they direct that the
appellant is entitled to recover the amounts claimed by it
against the respondent firm only after the scaling down of
the debt in accordance with the provisions of the madras
agriculturists relief act iv of 1938 which after the
creation of the state of andhra pradesh was made applicable
to that state as the andhra pradesh  andhra area
agriculturists relief act iv of 1938 hereinafter referred
to as the act. the appellant bank filed a suit being o.s. number 12 of
1979 in the sub-court eluru on february 10 1975 against
the respondents including the respondent firm and its
partners to recover a sum of rs.1814817.91 being the
balance  inclusive of interest  of three principal amounts
of rs.3.00000 rs.700000 and rs.80000 severally advanced
by the bank to the firm under cash credit account on 28-11-
1967 3-4-1968 and 17-2-1972 respectively. it may be numbericed
here that the bank was nationalised on july 7 1969 under
the banking companypanies  acquisition and transfer of
undertakings  act v of 1970 hereinafter referred to as the
banking companypanies act. the sum of rs.80000 was admittedly
advanced by way of loan by the bank after its
nationalisation. the respondent firm owns certain motor vehicles which
are mentioned in a and schedules to the plaint of the said
suit. the firm was carrying on its business at madras as
fleet owners and gasolene carriers. it had two partners
namely one s. doranna choudhury since deceased the father
of the respondent number 3 and the respondent number 2 sunkavali
rajlaxmi. the case of the bank was that in addition to the
hypothecation of the a and schedule properties made in its
favour to secure the repayment of the aforesaid amounts of
loan the other partner the respondent number 2 created an
equitable mortgage in favour of the bank on december 22
1969 in respect of c-schedule properties of the plaint. s.
doranna choudhury since deceased also created an equitable
mortgage in favour of the bank on february 28 1970 in
respect of d-schedule properties of the plaint. the
respondent number3 also created anumberher equitable mortgage on
september 6 1974 in respect of e-schedule properties of the
plaint. the respondents number 4 to 12 are alienees of the
mortgaged properties. in the suit the bank prayed for the
sale of the said properties for the recovery of the amounts
claimed by it on account of the loan together with interest
due thereon. the respondents including the firm companytested the suit
by filing written statements inter alia denying the
creation of any equitable mortgage by the deceased partner
and the respondents number. 2 3 in favour of the bank. the
respondents number. 4 to 12 the alienees while denying the
creation of the mortgages companytended that they were bona fide
purchasers for valuable companysideration and the bank was bound
by the alienations and transfers made in their favour of the
properties alleged to be under mortgage. the firm and its
partners namely the said s. doranna and the respondent number
2 also filed a companynter-claim against the bank for a sum of
rs.3448799. it is number necessary for us to
state in details the respective cases of the parties
including the case of the firm and its partners in making
the companynter claim against the bank inasmuch as the scope of
this appeal is limited to the companysideration of the question
as to whether the high companyrt was justified in decreeing the
banks claim only after the scaling down of the debt in
accordance with the provisions of the act. be that as it may the learned subordinate judge held
that numberequitable mortgage was created in favour of the bank
and accordingly dismissed the suit against the respondents
number. 4 to 12 and refused to direct sale of the properties
alleged to have been mortgaged to the bank. the learned
subordinate judge also found that the claim of the bank
except to the extent of rs.100418.55 was barred by
limitation. the companynter-claim of the firm and its partners
for the sum of rs.3448799 was decreed and the bank was
directed to pay the same to the firm and its partners. being dissatisfied with the judgment and decree of the
learned subordinate judge the bank preferred an appeal to
the high companyrt. the high companyrt after elaborately
considering the facts and circumstances of the case and the
evidence adduced by the parties set aside the judgment and
decree of the learned subordinate judge including the decree
allowing the companynter-claim of the firm and its partners and
decreed the suit instituted by the bank. in decreeing the
suit the high companyrt held that the bank was entitled to
recover the amount claimed by it only after the scaling down
of the debt in accordance with the provisions of the act. hence this appeal. the act companytains provisions granting reliefs to
indebted agriculturists. one of such reliefs is that as
contained in section 13 of the act providing for the scaling
down of the debt of an agriculturist. it is number disputed
that the partners of the respondent firm are agriculturists. mr. g. ramaswamy learned additional solicitor general
appearing on behalf of the appellant bank submits that in
view of section 4 e  of the act the provisions of the act
were number applicable to the bank and as such the bank was
entitled to recover the entire amount without the same being
scaled down as provided in section 13 of the act. before the
high companyrt also the bank placed reliance on the provision of
section 4 e  of the act but the high companyrt negatived the
contention relying upon a division bench decision in indian
bank alamuru v. krishna murthy air 1983 andhra pradesh

we shall presently refer to that decision but before
we do that it is necessary to
refer to the provision of section 4 e  of the act which is
extracted below-
s.4. numberhing in this act shall affect debts and
liabilities of an agriculturist falling under the
following heads-

 e  any liability in respect of any sum due
to any companyperative society including a
land mortgage bank registered or deemed
to be registered under the andhra
pradesh  andhra area  companyoperative
societies act 1932 or any debt due to
any companyporation formed in pursuance of
an act of parliament of the united
kingdom or of any special indian law or
royal charter or letters patent. in view of section 4 e  the provisions of the act will
be inapplicable to any debt due to any companyporation formed in
pursuance of an act of parliament of the united kingdom or
any special indian law or royal charter or letters
patent.the question is whether the banking companypanies act by
or under which the appellant bank was companystituted is a
special indian law or number. it is submitted on behalf of
the bank that the words special indian law in section 4 e
of the act refers and relates to law made by an indian
legislature. it is number disputed that the banking companypanies
act is a special law enacted by the indian parliament. it has however been urged by mr. mirasee learned
counsel appearing on behalf of the respondents that the
said words mean a special indian law enacted by the
parliament of the united kingdom. indeed in krishna
murthys case  supra  it has been held by the andhra
pradesh high companyrt that section 4 e  while speaking of any
special indian law is only speaking of special indian law
made by the british parliament as different from any act
enacted by the british parliament that might have
application to india also in companymon with the rest of the
british companyonies. the learned companynsel while placing strong
reliance upon the said interpretation of the words special
indian law as made in krishna murthys case  supra  also
submits that the expression should be interpreted in the
light of the setting of the same in the words of the
provision of section 4 e . in support of the companytention the
learned companynsel has drawn our attention to an obser-
vation made by this companyrt in r.l. arora v. state of uttar
pradesh 1964 6 scr 784 that a literal interpretation is
number always the only interpretation of a provision in a
statute and the companyrt has to look at the setting in which
the words are used and the circumstances in which the law
came to be passed to decide whether there is something
implicit behind the words actually used which would companytrol
the literal meaning of the words used. accordingly it is
submitted by the learned companynsel that as the words special
indian law are placed after the words an act of parliament
of the united kingdom and before the words royal charter
or letters patent it must be held in view of the setting
that the expressionspecial indian law refers or relates to
a special law enacted by an act of british parliament for
india. we are unable to accept the companytention. it may be that
interpreting the words of the provision of a statute the
setting in which such words are placed may be taken into
consideration but that does number mean that even though the
words which are to be interpreted companyvey a clear meaning
still a different interpretation or meaning should be given
to them because of the setting. in other words while the
setting of the words may sometimes be necessary for the
interpretation of the words of the statute but that has number
been ruled by this companyrt to be the only and the surest
method of interpretation. in the instant case the
expression special indian law has a clear and unambiguous
meaning and there is numberneed for its interpretation. there
is numberreasonable justification to think that the expression
special indian law must be an enactment of the british
parliament. if on the date the act was passed there was no
indian legislature such an interpretation might be
justified but when there were existence of indian
legislatures including a legislature at the centre it would
be quite unreasonable to think that special indian law
must be a law enacted by the british parliament. in this
connection we may refer to section 3 27  a  of the general
clauses act 1897 which defined indian law as meaning any
indian law enacted by the indian legislature. in view of the
said definition the expression special indian law means a
special indian law enacted by the indian legislature. in the
face of the provision of section 3 27  a  of the general
clauses act as it stood on the day the act was passed we
do number think that there is any justification for laying down
that the expression special indian law in section 4 e  of
the act means a law enacted by the british parliament
specially for india. we are therefore unable to accept the
view of the andhra pradesh high companyrt in krishna murthys
case  supra  and also the companytention of the respondents made
in that regard which is rejected. the next companytention made on behalf of the respondents
is that even assuming that the expression special indian
law means a law enacted by the indian legislature and that
the banking companypanies act is such a law still the provision
of section 4 e  of the act will number apply inasmuch as the
appellant bank was number formed in pursuance of any special
indian law but by or under a special indian law that
is the banking companypanies act. it is submitted that there is
a good deal of distinction between the formation of a
corporation in pursuance of and by or under a special
indian law. it is urged as the appellant bank has been
formed by or under and number in pursuance of the banking
companies act. it is number a companyporation within the meaning of
section 4 e  of the act. in support of this companytention the
respondents have placed reliance on krishna murthys
decision where it has been observed that the words in
pursuance of refer to the action taken under the law and
number by the law itself and that the phrase formed in
pursuance of in section 4 e  signifies a process of
formation of a companyporation under the law and number by the law
itself. further it has been observed that the words in
pursuance of can be said to have been used appropriately by
the legislature only to signify the activity or formation of
a companyporation carried on by an intermediary third party
acting under a law as different from an activity of
formation carried on by that law itself. we are afraid such
a narrow and technical interpretation of the words in
pursuance of is companytrary to the intention of the
legislature. although theoretically there may be a
distinction between the words in pursuance of and the
words by or under but by using the expression in
pursuance of in section 4 e  the legislature in our
opinion has number meant that the companyporation in question
should be formed by a third party in pursuance of the law
and number by the law itself in order to companye within the
purview of section 4 e  of the act. the intention of the
legislature is very clear in that the provision of section
4 e  would apply to a companyporation which is the creature of a
special indian law whether it is created in pursuance of or
by or under the special indian law. there is numberdifference
or distinction whatsoever between the companyporation formed in
pursuance of a special indian law and a companyporation formed
by or under a special indian law. it will be highly
unreasonable and illogical to think that as a companyporation
has been formed by or under a special indian law and number in
pursuance of such a law it will number companye within the purview
of section 4 e  of the act. accordingly we hold that the
banking companypanies act is a special indian law and the
provision of section 4 e  is applicable to the appellant
bank. the learned companynsel for the respondents has drawn our
atten-
tion to the fact that the banking companypanies act was first
formed or created by the ordinance viii of 1969 promulgated
on july 19 1969. the ordinance was replaced by an act of
parliament being act xxii of 1969 with certain
modifications. this companyrt however in r.c. companyper v. union
of india air 1970 sc 564 struck down the act xxii of 1969
as unconstitutional. thereafter a fresh ordinance being
ordinance number iii of 1970 was promulgated on february 14
1970 with certain further modifications and thereafter
replaced by the present banking companypanies act. it is
submitted that as the appellant bank was nationalised and or
created under the ordinance viii of 1969 promulgated on july
19 1969 and the present banking companypanies act only ratifies
the already created bank under the said ordinance the
appellant bank was number therefore formed or created under
any special indian law. this companytention is devoid of any
merit and fit to be rejected on the face of it. even
assuming that the bank was created under the ordinance viii
of 1969 and number under the banking companypanies act still it
must be held that it was created under a special indian law
for an ordinance is as much a law as an enactment of
parliament or legislature. in this companynection it may also
be pointed out that under sub-section  2  of section 1 of
the banking companypanies act the provisions of the banking
companies act  except section 21 which shall companye into force
on the appointed day  shall be deemed to have companye into
force on july 19 1969. sub-section  1  of section 3 of the
banking companypanies act provides that on the companymencement of
the banking companypanies act there shall be companystituted such
corresponding new banks as are specified in the first
schedule. therefore it is manifestly clear that the
appellant bank which is mentioned in the first schedule
has been created under the provisions of the banking
companies act with effect from july 19 1969. the companytention
of the respondents that the bank has been nationalised or
formed under the ordinance viii of 1969 is without any
substance whatsoever and is rejected. we may refer to a decision of this companyrt in life
insurance companyporation of india v. kota ramabrahmam air 1977
sc 1704. gupta j. while delivering the judgment of the
court observes that there is numberdispute that the
corporation established under the life insurance companyporation
act 1956 is a companyporation as companytemplated by section 4 e
of the act. this decision has been strongly relied upon by
the respondents in support of their companytention that as the
major part of the loan that is to say a sum of rs. 1000000 was companytracted before the nationalisation of the
appellant bank the provision of section 4 e  is number
applicable. in life insurance companyporations case the loans
were
advanced by the andhra insurance companypany of masulipatanam
and by nagpur pioneer insurance companypany limited bombay
admittedly before the creation of the companyporation under the
life insurance companyporation act 1956 and it was held by this
court that the debts due to the insurers in these two cases
were liable to be scaled down in accordance with the
provisions of the act. in the instant case the amounts of loan were advanced
by the bank to the firm under the cash credit account opened
in favour of the firm. numbermally the advances that are made
from the cash credit account are repaid and thereafter
fresh advances are made. it is number knumbern what was the actual
balance on the date the bank was nationalised. it is true
that in the judgment of the high companyrt it has been stated
that the principal amounts of rs.300000 rs.700000 and
rs.80000 were severally advanced by the bank to the firm
under the cash credit account on 28-11-1967 3-4-1968 and
17-2-1972 respectively. but there is numberfurther statement
whether the first two amounts were repaid by the firm and
thereafter fresh advances were taken out of the cash credit
account. the respondents did number advance any such companytention
either in their written statements or in the arguments
before the trial companyrt and the high companyrt. it is for the
first time before this companyrt that such a plea is raised in
the argument of the learned companynsel for the respondents. the
contention involves a question of fact which has to be
pleaded and proved. in the absence of any such pleading we
are unable to allow the respondents to raise such a
contention for the first time in argument before this companyrt. at this stage it may be stated that in krishna
murthys case  supra  it has been held by the division bench
that the latter part of section 4 e  of the act companytaining
the words any debt due to any companyporation formed in
pursuance of an act of parliament of the united kingdom or
any special indian law or royal charter or letters patent
is offensive to article 14 of the companystitution and
accordingly void. the learned companynsel for the respondents
submits that in view of the decision in krishna murthys
case this companyrt should declare the latter part of section
4 e  of the act to be void as offending article 14 of the
constitution although numbersuch point has ever been taken by
the respondents up to this companyrt. on the other hand it is
submitted by the learned additional solicitor general that
the said finding of the division bench in krishna murthys
case to the effect that the latter part of section 4 e  of
the act is void is erroneous. the reasons given by the division bench of the andhra
pradesh
high companyrt in krishna murthys case for holding the latter
part of section 4 e  of the act as void are that section
4 e  of the act was enacted to protect the british econumberic
interests and although such a law companyld permissibly be
enacted under the companystitutional scheme of the 1953
government of india act that law after the inauguration of
our sovereign democratic republic cannumber but be held to have
become void as making invidious discrimination in favour of
the british companyporation offending against the equality
clause under article 14 of the companystitution. before
declaring the same as void the division bench took the view
that the words any special indian law companyld number have been
intended to refer to any law made by any legislature of our
country but to a law made by the british imperial
parliament as a piece of special legislation applicable to
india. it has already been discussed by us that the words
any special indian law refers and relates to a law made by
the indian legislature and number by the british parliament. in
that view of the matter the reasons given by the division
bench for holding the latter part of section 4 e  to be void
as making a discrimination in favour of companyporations created
by british parliament will number apply to companyporations formed
or created by any special indian law which in the instant
case is the banking companypanies act. in our opinion
therefore the banking companypanies act is quite legal and
valid. numberother point has been urged by either party in this
appeal. in view of the discussion made above we hold that the
provisions of the act are number applicable to the appellant
bank and therefore there is numberquestion of scaling down
the debt due to the bank by the respondents. for the reasons aforesaid the judgment and decree of
the high companyrt in so far as the same direct the scaling down
of the debts due to the bank by the respondents are set
aside.