JUDGMENT

1. It appears that on the 17th of July 1905 Bhagwan and Sumer, members of a joint Hindu family, executed a mortgage-deed in favour of the plaintiff. The period fixed in the deed for redemption was ten years. Interest was to be payable annually and in the case of default in payment of interest for any year the mortgagee had the option of suing for the whole of the mortgage money. Although there was default in the payment of interest in the very first year after the mortgage, the plaintiff mortgagee brought his suit for sale after the expiry of the ten years. He claimed a relief both against the persons of the mortgagors and the mortgaged property. To this suit the plaintiff-appellant impleaded the other members of the family of the mortgagors. The lower <ORG> has held that the plaintiff has failed to prove that the debt was taken for legitimate family purposes and it has, therefore, dismissed the suit for sale. As to the personal relief the learned Judge has arrived at the conclusion that "the executants are no doubt personally liable for the debts but the personal relief is time-barred." In this we think the learned Judge of the <ORG> below was in error. The plaintiff mortgagee was not bound to sue for the whole of the mortgage money as soon as there was failure in payment of instalment of any year. It was open to him to do so or not. In this he did not choose to exercise the option and, in our opinion, he could wait for ten years, the period fixed in the mortgage-deed, before bringing his suit. This period expired on the 17th of July 1916. The present suit was brought within three years of that date. We are, therefore, of opinion that the <ORG> below erred in saying that the claim against the persons of the mortgagors was barred by time. We, therefore, allow the appeal so far that we modify the decree of the <ORG> below by decreeing the claim of the plaintiff-appellant against the persons of the mortgagors, <NAME> and <NAME>, with costs in all <ORG>s, including in this <ORG>-fees on the higher scale. We affirm the decree of the <ORG> below so far that we dismiss the plaintiff's claim for sale and also against the persons of the other defendants who are to get their costs from the plaintiff-appellant in the <ORG>s below. As they have not appeared in this <ORG>, we do not award them costs here.


PETITIONER: <NAME> & <NAME>. Vs. RESPONDENT: STATE OF MAHARASHTRA & ORS. DATE OF JUDGMENT: 19/11/1996 BENCH: B.P. JEEVAN REEDY, K.S. PARIPOORNAN ACT: HEADNOTE: JUDGMENT:

J U D G M E N T B.P. JEEVAN REDDY, J.

Leave granted.

This appeal is preferred against the order of <ORG> dismissing the review petition filed by the appellant. The review petition was filed by the appellant against the order dismissing his writ petition by <ORG>. The matter under the land Acquisition Act , 1894.

By a notification dated November 29, 1979 issued under Section 4 of the Land Acquisition Act, 1894 [the Act], two pieces of land were notified for acquisition for a public purpose, to wit, "for <ORG> for bus station." The two pieces of land notified are C.T.S. No.218 admeasuring 1759 sq.mtrs. and C.T.S.No. 211 admeasuring 370 sq.mtrs. The appellant claims to the owner of C.T.S.No. 211. The declaration under section 6 was made on December 16, 1982. C.T.S.No. 218 belongs to a <ORG> but there are others who claim to have interest in the said land, viz., <NAME> and <ORG> Society. The <ORG> entered into a settlement with the said two persons whereunder and extent of 906 sq.mtrs. was given on a perpetual lease to <ORG> free of any charge, i.e., Re.1/- per annum. The lease deed executed by the said two persons in favour of <ORG> [representing <ORG>] is dated August 21, 1986. The remaining portion was to be utilised by the said persons for their won purposed including construction of a multi-storeyed complex for the employees of <ORG>. Under the said settlement, the said two persons also agreed to construct a bus station, in the portion leased out to <ORG>, at their own cost and hand it over to the <ORG> free of cost. This settlement was brought to the notice of the Land Acquisition Officer by the Additional Collector through his letter dated September 5, 1986. On September 18, 1986, the Land Acquisition Officer passed his award wherein he referred to the aforesaid settlement brought to his notice and, on that basis , did not deal with or make any award of compensation with respect to C.T.S.No. 218. His award was confined only to C.T.S.No. 211. When the appellant came to know of the aforesaid facts, he addressed a letter to the authorities contending that exclusion on C.T.S.No. 210 from acquisition and passing the award only with respect to C.T.S.No. 211 was illegal. On November 10, 1986, he filed a writ petition challenging acquisition of C.T.S.No. 211 on various grounds. The writ petition was summarily dismissed by a learned Single Judge by his order dated December 8, 1986 against which the appellant preferred a writ appeal/Letters Patent Appeal No. 1868 of 1986. The Letters Patent Appeal was allowed and the writ petition restored to file. It came up for hearing before <ORG> on June 15, 1995. On that day, the advocate for the appellant asked for an adjournment and on that being declined, reported "no instructions". The writ petition was dismissed with costs. The appellant then filed a review petition contending that the statement by his counsel on June 15, 1995 that he had no instructions was a false one and that the advocate had not really contracted him. He requested that the writ petition may be heard on merits. <ORG> heard the parties at length and dismissed the writ petition again. It opined that having regard to the fact that the writ petition again. It opined that having regard to the fact that the acquisition notification was issued in 1979, that the writ petition has been pending in <ORG> since 1986 and more particularly, having regard to the purpose of acquisition, no interference was warranted under Article 226 of the Constitution. <ORG> also went into the merits of the case and rejected both the contentions of the appellant on that score, viz., (1) that the public notice under Section 4(1) of the Act was not served upon the appellant and (2) that the acquisition proceedings are vitiated by malafides. The plea of malafides put forward by the appellant was based upon the following facts: the promoters of the <ORG> Society had entered into an agreement on sale with <NAME> who claims to be the owner of C.T.S.No. 218. The society formed by the employees of <ORG>. The promoters of the society wanted to purchase the appellant`s plot with a view to obtain frontage on the road. The negotiations, however, failed whereupon with a view to deprive the appellant of his title and interest on C.T.S.No. 218, the promoters got the user of the said plot changed from "residential" and "fish market". The said change of user in the development plan was approved by <ORG> and the <ORG> contrary to law. As stated above, <ORG> rejected the plea of malafides. <ORG> also observed that one <NAME> claimed to be the owner of C.T.S.No. 211 and that he had also appeared in the land acquisition proceedings whereas the appellant entered the picture much later. It is not even clear, <ORG> observed, whether the appellant had any interest in the said plot on the date of issuance of notification under Section

4. <NAME>, learned counsel for the appellant, urged the following contentions:

(a) that once a notification under Section 4(1) of the Act was issued with respect to C.T.S.No. 218 as well as C.T.S.No. 211, the Land Acquisition Officer was bound to pass an award with respect to both the pieces of land. He had no jurisdiction or authority not to pass the award in respect of C.T.S.No. 218 on the ground of an alleged settlement reported to him by the person for whose benefit it was being acquired. Until and unless a notification was issued under Section 48 of the Act, the Land Acquisition Officer had no option but to pass an award with respect to both the lands notified. The illegality committed by the Land Acquisition officer in not passing an award with respect to C.T.S.No. 218 vitiates the award as a whole; it is liable to be struck down even with respect to C.T.S. No.

(b) The result of the alleged settlement between the <ORG> and the two persons aforesaid [<NAME> and <ORG>] is that as against the total extent of 1759 sq.mtrs. in C.T.S.No. 218 notified for acquisition, the <ORG> is satisfied with only 906 sq.mtrs. Together with 370 sq.mtrs. in C.T.S.No. 211, the <ORG> would be having approximately 1276 sq.mtrs. which is obviously sufficient for its purpose, viz., for establishing the bus station. If an extent of 1320 sq.mtrs. is sufficient for its purposes, there is no explanation why a larger extent of 2129 sq. mtrs. was notified for acquisition. It was not open to <ORG> [<ORG>] to give up a part of the land proposed to be acquired under a private treaty with the persons interested. The very fact that part of the land notified for acquisition for an alleged public purpose has been surrendered to others including for the purpose of constructing a residential complex for the employees of the <ORG> shows that the alleged public purpose mentioned in the notification under Section 4 is not real and is only a ruse to help the aforesaid housing society. The plea of malafides has been erroneously rejected by <ORG>.

(c) The malafides of the <ORG> is also evident from the fact that it has not yet got possession of even the 906 sq.mtrs. which it bargained under the settlement. A good amount of litigation has ensued and is pending in that behalf. The church is disputing the settlement and no bus station has been established so far on the land. All this shows that entire proposal for acquisition has failed, mainly on account of the private settlement between <ORG> and the said two persons. Acquisition of C.T.S.No. 211 with a small extent of 370 sq.mtrs. Serves no purpose.

On the other hand, Sri <NAME>, learned Solicitor General, supported the validity of the acquisition of C.T.S.No. 211. He submitted that the settlement was arrived at in good faith and in the interests of the <ORG> which is evident from the fact that the <ORG> got an extent of 906 sq.mtrs. free of cost on perpetual lease. In addition to that, it has also got a bus station to be constructed by the said two persons free of any cost to the <ORG>. It is true, the learned Solicitor General said that the proper course would have been to have a notification issued under Section 48 of the Act deleting C.T.S.No. 218 from acquisition by that was not done because of the constriction of time. The award had to be passed on or before September 23, 1986 and waiting for a notification under Section 48 would have meant dropping the acquisition proceedings altogether in as much as no award could have been passed after September 23, 1986 by virtue of the provisions contained in Section 11 of the Act. It was for this reason that the award had to be and was passed on September 18, 1986. The learned solicitor General further submitted that in the context of the above facts, the circumstance that the award passed by the Land Acquisition Officer does not pertain to C.T.S.No. 218 cannot constitute a ground for quashing the acquisition with respect to C.T.S.No. 211 so long as the public purpose behind its acquisition remained. The malafides is totally unacceptable and has unacceptable and has rightly been rejected by <ORG>.

We are of the opinion that the straight-froward course for the Land Acquisition Officer and for the BEST [Bombay Municipal Corporation] was to press ahead with the acquisition proceedings even with respect to C.T.S.No. 218 and have it acquired according to law, along with C.T.S.No.

211. Instead of adopting the straight-forward course, the <ORG> entered into a settlement withe the aforementioned <NAME> and the housing society- and that seems to have spawned a good amount of litigation. It is said that some suit is still pending with respect to C.T.S.No. 218. May be or may not be. But one thing is clear: all this could have been avoided and the land could have been acquired for the <ORG> by pressing ahead with the land acquisition proceedings, in which case, the land would have vested in the government free of all claims and which could have in turn been vested in <ORG> [<ORG>]. Not following this course has led to perhaps avoidable litigation though it si true, the <ORG> claim to have obtained half the extent in C.T.S.No. 218 free of cost in addition to the bus station. We presume that the settlement aforesaid was entered into by <ORG>/<ORG> in good faith and with a view to advance the interests of <ORG> and that the error, if any, is an error of judgment.

Coming to the first contention of <NAME>, we agree with the proposition of law that once a notification under Section 4 and a declaration under Section 6 of the Act is made, the Land Acquisition Officer has no power to decline to pass the award in respect of the land(s) notified, either partly or wholly. Unless and until the land

(s) are denotified under and in accordance with Section 48 , the Land Acquisition Officer has to pass an award with respect to the lands notified. <NAME> may also he right in saying that Land Acquisition Officer had no jurisdiction to take notice of a private settlement and making it a basis for not passing the award with respect to C.T.S.No. 218. But the question is whether it can be said in the facts and circumstances of this case, that the acquisition of C.T.S.No. 211 is liable to be quashed on the said ground. We think not. We have already held that in the absence of any material to the contrary, we must assume that the said settlement was arrived at keeping in view the best interests of <ORG>. Even the 906 sq.mtrs. of land obtained on perpetual lease under the settlement is meant for being used for the purpose stated in the notification under Section 4 . There is also no material to show that the purpose stated in the said notification is not true or real. The fact that instead of 1759 sq.mtrs., <ORG> got only 906 sq.mtrs. under the settlement does not establish the absence of the need. It may well be a case of adjusting to the realities of the situation. In such a situation, it is difficult to say that the acquisition of C.T.S.No.211 is either unnecessary or that it is neither be consistent with law nor with public interest. It should also be remembered in this context that the appellant is not disputing the purpose of acquisition. His only contention is that since the award has "deleted" C.T.S.No. 218, the land C.T.S.No. 211 should also be deleted

- an argument which we have rejected. Indeed, he had not challenged the acquisition from 1979 to 1986. only after the award was passed, did he choose to challenge the acquisition on the aforesaid grounds. Accordingly, we reject the first contention of <NAME>.

So far as the plea of a malafides is concerned, we do not find any adequate material to record a finding in favour of the appellant. There is no material to hold that the acquisition notifications was issued at the instance of the aforementioned employees of the housing society or for that matter at the instance of <NAME>. There is no material to hold that the <ORG> was acting at the instance of the said persons or that there was no real or genuine need for a bus station there. We are also not able to say that the change of user has any relevance to the plea of malafides put forward by the appellant.

Lastly, we must also refer to the lack of diligence on the part of the appellant. His writ petition was pending since 1786. It came up for hearing in 1995. His counsel asked for an adjournment which was declined whereupon the counsel stated that the appellant had taken away all the papers and has not given him any instructions in the matter. He reported "no instructions". <ORG> was of the opinion that it was only apply to protract and delay the disposal of the writ petition. It dismissed the same. When a review petition was filed by the appellant with a certain explanation. We cannot say that <ORG> was not justified in doing so. Be that as it may, <ORG> also went into the merits of the case though it was not obliged to do so in a review petition. On merits also, it found no case for the appellant. We too have come to the same conclusion.

Before parting with this case, we think it necessary to make a few observations relevant to land acquisition proceedings. Our country is now launched upon an ambitious programme of all-round economic advancement to make our economy competitive in the world market. We are anxious to attract foreign direct investment to the maximum extent. We propose to compete with china economically. We wish to attain the pace of progress achieved by some of the Asian countries, referred to as "Asian tigers", e.g., South Korea, Taiwan and Singapore. It is, however, recognised on all hands that the infrastructure necessary for sustaining such a pace of progress is woefully lacking in our country. The means of transportation, power and communications are in dire need of substantial improvement, expansion and modernisation. These things very often call for acquisition of land and that too without any delay. It is, however, natural that in most of these cases, the persons affected challenge the acquisition proceedings in courts. These challenge the acquisition proceedings in courts. These challenges are generally in shape of writ petitions filed on <ORG>. Invariably, stay of acquisition is asked for and in some cases, orders by way of stay or injunction are also made. Whatever may have been the practices in the past, a time has come where the courts should keep the larger public interest in mind while exercising their power or grant in stay/injunction. The power under Article 226 is discretionary. It will be exercised only in furtherance of interests of justice and not merely on the making out of a legal point. And in the matter of land acquisition for public purposes, the interests of justice and the public purposes, the interests of justice and the public interest coalesce. They are very often one and the same. Even in civil suit, granting of injunction or other similar orders, more particularly of an interlocutory nature, is equally discretionary. The courts have to weigh the public interest vis-a-vis the private interest while exercising the power under Article 226 - indeed any of their discretionary powers. It may even be open to <ORG> to direct, in case it finds finally that the acquisition was vitiated on account of non-compliance with some legal requirement that the persons interested shall also be entitled to a particular amount of damages to be awarded as a lumpsum or calculated at a certain percentage of compensation payable. There are many ways of affording appropriate relief and redressing a wrong; quashing the acquisition proceedings is not the only mode of redress. To wit, it is ultimately a matter of balancing the competing interests. Beyond this, it is neither possible nor advisable to say. We hope and trust that these considerations will be duly borne in mind by the courts while dealing with challenges to acquisition proceedings.

The appeal fails and is dismissed. There shall, however, be no order as to costs.


PETITIONER: <NAME> AND COMPANY Vs. RESPONDENT: STATE OF MADRAS DATE OF JUDGMENT: 07/05/1964 BENCH: <NAME>, RAGHUBAR BENCH: <NAME>, RAGHUBAR SUBBARAO, K. HIDAYATULLAH, M. SHAH, J.C. MUDHOLKAR, J.R. CITATION: 1964 AIR 1729 1964 SCR (8) 217 CITATOR INFO : RF 1969 SC 147 (19) D 1972 SC 217 (18) APL 1974 SC1111 (10) RF 1974 SC2344 (1) D 1977 SC 548 (4,6,7) R 1979 SC 321 (5) RF 1980 SC1227 (6) RF 1980 SC1789 (36) R 1986 SC 63 (36) RF 1987 SC1885 (8) F 1987 SC1922 (7,10,12) RF 1990 SC 820 (15) F 1992 SC1952 (10) ACT: Sales Tax-Distinction between tanned and untanned hides- Whether s. 2 ultra vires-Act whether discriminatory-Whether legislature can enact retrospective legislation-Constitution of India, Arts. 14, 19(1)(f) and (g), 31, 286(2), 301, 304- Madras General Sales tax (Turnover and Assessment) Rules, r. 16(2)(ii)-Madras General Sales Tax (Special Provisions) Act, 1963, s. 2. HEADNOTE: The petitioners are dealers in skins in the State of Madras. They purchased raw skins from places both within and outside the State of Madras, tanned the same and sold them through their agents in Madras. They were assessed to a certain amount of sales-tax in accordance with the provisions of the Madras General Sales Tax Act, 1939, and r. 16(2)(ii) of the Madras General Sales Tax (Turnover and Assessment) Rules, on the turnover of hides and skins purchased in the untanned condition outside the State and tanned within the State with respect to the assessment years 1955-56. 1956-57 and 1957- 58. The tax was assessed at 3 pies per rupee on the price of tanned hides and skins for the years 1955-56 and 1956-57 and at the rate of 2 per cent on the turnover for the year 1957-58. The petitioners filed three writ petitions under Art. 32 of the Constitution in which they contended that 8. 2 of the Madras General Sales Tax (Special Provisions) Act, 1963 was ultra vires the Constitution and was otherwise invalid and had no effect. Allowing the petition. Held, that s. 2(1) discriminates against imported hides and skins which were sold upto August 1, 1957 upto which date the tax on sale of raw hides and skins was at the rate of 3 pies per rupee and is therefore void. As sub-s. (1) of s. 2 is invalid, the other provisions of that section become unenforceable. Raw hides and skins and dressed hides and skins constitute different commodities for merchandise and hence can be treated as different goods for the purposes of the Act. Sub-rule (1) of r. 16 did not become invalid on this <ORG>'s declaring sub-rule (2) of that rule invalid in <ORG> v. State of Madras,  Supp. 2 S.C.R. 435. Held, that <ORG> was competent to enact the provisions of sub-s. (1) of s. 2 of the Act. The <ORG> can enact laws having retrospective operation. The competence of a <ORG> to make law 218 for a certain past period depends on its present legislative power and not on what power it possessed at the time when it is to operate. <ORG> v. State of Madras, [1963) Supp. 2 S.C.R. 435 <CITATION> , 7 S.T.C. 568, <CITATION> ., 9 S.T.C. 23 1, <CITATION> ,  S.C.R. 53, <CITATION> , 11 S.T.C. 173 and <CITATION> , 11 S.T.C. 149, referred to. JUDGMENT:

Original Jurisdiction: Writ Petition Nos. 201 to 203 of 1963.

Petitions under Art. 32 of the Constitution for the en- forcement of the fundamental rights.

<NAME>, <NAME> and <NAME>, for the petitioner (in all the petitions).

<NAME> and <NAME>, for the respondent (in all the petitions).

May 7, 1964. The Judgment of the Court was delivered by: <NAME> are three petitions under art. 32 by the petitioners, which is a partnership firm, praying fora declaration that s. 2 of the Madras General Sales Tax (Special Provisions) Act , 1963 (Act No. 11 of 1963)hereinafter called the Act, is ultra vires the Constitution and of no effect and for a writ of mandamus directing the State of Madras to refrain from enforcing any of the provisions of that section. Each of the petitions relates to a particular assessment year.

The petitioners are dealers in skin, carrying on business at Shenbakkam, Vellore, North Arcot District. in the State of Madras. They purchase raw skins from places both within and outside the State of Madras, tan the same and sell them through their agents in Madras. They were assessed to a certain amount of sales-tax, in accordance with the provisions of the Madras General Sales Tax Act 1939 (Madras Act IX of 1939) and r.16(2)(ii) of the rules framed thereunder viz., the Madras General Sales Tax (Turnover and Assessment) Rules, on the turnover of hides and skins purchased in the untanned condition outside the State, but tanned within the State, with respect to each of the assessment years 1955-56, 1956-57 and 1957-

The petitioners challenged earlier the validity of r. 16 on the ground that it contravened Art. 304 of the Constitution. Their contentions were negatived by <ORG>. The petitioners then filed writ petition No. 148 of 1959 in this Court against the assessment of tax for the year 1957-58. This Court allowed it as it had held on November 22, 1962 in Firm Mehtab Majid and Co. v. State of Madras(1) that r. 16(2) of the rules was invalid as it discriminated against the imported hides and skins which had been purchased or tanned outside the State. Subsequently, the validity of r. 16(1) of the rules was challenged in this Court in writ petitions Nos. 43 and 44 of 1963 by <NAME> & Co. Those writs were filed on March 5, 1963 and it was contended that subrule (1) standing by itself was ultra-vires the Constitution as it had the effect of selecting for discriminatory taxation only raw hides and skins and leaving un-taxed sales of tanned hides and skins in Madras.

On June 10, 1963, the Governor of Madras promulgated Madras Ordinance No. 3 of 1963. The explanatory statement attached to the Ordinance stated:

"The decision of <ORG> (in W.P. 147 of 1959-Firm ATB Mehtab Majid & Co. v. The State of Madras) will result in claims for refund of tax being preferred by dealers in hides and skins already assessed under the impugned rule thereby resulting in huge loss of revenue and will also result in administra-

tive complications. It is therefore considered necessary to avoid these

difficulties by removing the discrimination in the matter of levy of (1) [1963] SUPP. 2 S.C.R. 435 tax on hides and skins pointed out by <ORG> and to provide for the assess- ment or reassessment and collection of the ax from the dealers in hides and skins without any discrimination by levying the tax in all cases on the basis of the purchase price of the hides and skins in the untanned condition."

The relevant provisions of the Ordinance read: "2. Special provisions in respect of tax on sale of hides and skins in certain cases:- (1) Notwithstanding anything contained in the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939) (hereinafter referred to as the said Act), or in the rules made thereunder (hereinafter referred to as the said rules), the following provisions shall apply in respect of tax on sale of hides and skins during the period commencing on the 1st April 1955 and ending on the 31st March 1959.

(i) In the case of raw hides and skins, the tax under the said Act shall be levied from the dealer who is the last purchaser in the State and not exempt from taxation under sub- section (3) of s. 3 of the said Act at the rate of two percent of the amount for which they are bought by him.

(ii) In the case of dressed hides and skins (which were not subjected to tax under the said Act as raw hides and skins), the tax under the said Act shall be levied from the dealer who in the <ORG> is the first seller in such hides and skins not exempt from taxation under sub-section (3) of section 3 of the said Act at the rate of two percent of the amount for which such hides and skins were last purchased in the untanned condition.

Explanation II-For the removal of doubts it is hereby declared that in respect of sales to which sub-section (1) applies, nothing in rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, shall apply or shall be deemed ever to have applied.

(2) Any dealer in hides and skins who has been finally assessed under the provisions of the said Act and the said rules, may within a period of ninety days from the date of the commencement of this Ordinance apply to the authority or officer concerned for reassessment under the provisions of this Ordinance along with the correct and complete return; (3) Subject to the provisions of sub-section (1), the provisions of the said Act and the said rules shall be deem- ed to be in force for the purpose of assessment or re- assessment and recovery of the tax on sale of hides and skins during the period mentioned in sub-section (1) and, notwithstanding any provision regarding limitation in the said Act and the said rules, it shall be competent for the authority or officer concerned to assess or reassess and recover the tax on sale of hides and skins during the period mentioned in sub-section (1) as if this Ordinance had been in fore at the relevant time.

(4) The amount of tax on sale of hides and skins during the period mentioned in sub-section (1) already collected from any dealer shall be adjusted towards the tax due from him on such sale as a result of assessment or re-assessment in accordance with the provisions of this Ordinance and it the tax on such assessment or reassessment-

(i) is in excess of the amount of tax on such sale of hides and skins already collected from such dealer, such excess shall be recovered from him; or

(ii) is less than the amount of tax on such sale of hides and skins already collected from such dealer, the difference shall be refunded to him.

On July 12, 1963, <ORG>, Madras dealt with the appeals of the petitioners against the assessment for the year 1955-56 and 1956-57, and in view of s. 2(3) of the Ordinance, set aside the orders of assessment and remanded the matter for re-assessment in accordance with the provisions of the aforesaid Ordinance. On. August 28, 1963, the Act received the assent of the Governor. Sub-s.(2) of s. I provided that the Act would be deemed to have come into force on June 10, 1963. Subsection (1) of s. 2 of the Act reads:

"(1) Notwithstanding anything contained in the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939) (hereinafter referred to as the said Act), or in the rules made thereunder (hereinafter referred to as the said rules), during the period commencing on the 1st April, 1955 and ending on the 31st March 1959, in respect of sale of dressed hides and skins (which were not subjected to tax under the said Act as raw hides and skins), the tax under the said Act shall be levied from, the dealer who in the State is the first seller in such hides and skins not exempt from taxation under sub-section (3) of section 3 of the said Act at the rate of two per cent of the amount for which such hides and skins were last purchased in the untanned condition. Explanation I.The burden of proving that a transaction is Dot liable to taxation under this ,sub-section shall be on the dealer. Explanation II.-For the removal of doubts it is hereby declared that in respect of sales to which sub--section (1) applies, nothing in rule 16(2) of the Madras General Sales Tax (Turnover & Assessment) Rules, 1939, shall apply or shall be deemed ever to have applied."

It is to be noticed that s. 2(1) of the Act is in respect of tax on sale of dressed hides and skins and not in respect of tax on sale of raw hides and skins with which clause (i) of s. 2(1) of the Ordinance dealt. Consequently the other provisions of the other sub-sections of s. 2 , though practically the same as those of the Ordinance, have been suitably modified. They are therefore not set out. It is the validity of s. 2 of the Act that is challenged in these petitions, on the ground that it violates the provisions of Arts. 14, 19(i) (f) and (g), 31, 286(2), 301 and 304 of the Constitution for the following reasons:-

1. Persons who had purchased raw hides and skins in the <ORG> of Madras in the years 1955-56 and 1956-57 paid sales tax at 3 pies per rupee and paid no further tax when those hides, after being tanned, were sold. The petitioners having purchased raw hides and skins from outside the <ORG>, did not at the time pay tax at that rate on the purchase price of the raw hides and skins but were now liable, under the impugned provision, to pay tax at the rate of 2 per cent of the amount for which such hides and skins were last purchased in untanned condition. Thus the petitioners would pay a higher tax than what was paid by the seller of dressed hides and skins purchased in the <ORG> in the raw condition and then tanned and sold and that therefore s. 2(1) discriminates against imported untanned hides and skins.

2. In the case of sale of dressed hides and skins, s. 2(i) levies a tax at the rate of 2 per cent of the amount for which hides and skins in the untanned condition were last purchased by a dealer himself outside the <ORG>. S. 2 (i) creates discrimination between the case of a local mer- chant,selling locally dressed hides and skins and the case where the dealer who is the first seller in the <ORG> and who purchased only dressed hides and skins outside the <ORG> and then sold them in the <ORG> for in his case be had not purchased such hides and skins in the untanned condition and has therefore not become liable to be assessed under s. 2(1)

3. <ORG> had by The Essential Goods (Declaration & Regulation of Tax on Sale or Purchase) Act 52 of 1952 declared hides and skins essential for the life of the com- munity. The Act provided for taxation on the sale of hides and skins during the period such declaration was in. force, i.e., between 1-4-1955 and 11-9-1956 and therefore required the assent of the President, in view of Art. 286(3) of the Constitution as it stood prior to its repeal in Sep- tember, 1965. As no such assent had been received, the Act cannot affect the sales prior to September 11, 1956 and so no tax can be levied in respect of those sales.

4. Rule 16(1) became invalid when this Court held r.16(2) invalid. Rule 16(1) has not been revived by the new Act. It follows that no tax on sale of raw hides and skins during the period 1955-57 is valid and that therefore the imposition of a tax under sub-section ( 1 ) of s. 2 of the, impugned Act imposes a tax on the imported hides and skins when sold in the <ORG> in the tanned condition while no tax is to be levied on the sale of the hides and skins purchased in the <ORG> in the raw condition, then tanned' and sold. These contentions are sought to be met for the respondent <ORG> on the following grounds:

1. It is open to the legislature to treat dressed hides and skins as a separate category from raw hides and skins. They are in fact commercially different commodities and' that therefore different rates of tax for the two different categories of goods can be legally levied. No discrimination is made between locally tanned goods and outside-tanned goods as in both cases tax is levied on the first sale of such goods within the <ORG>. It does not matter that the hides and skins tanned locally do not at- tract that liability on the first sale in view of their having been taxed earlier at the untanned stage because of the special provision of exemption.

2. It is not correct that s. 2 (1) will not apply to a dealer purchasing tanned hides and skins outside the-State and' selling them within the State. It is not necessary that the seller of the tanned hides and skins in the State be himself the last purchaser of the untanned hides and skins: for the purpose of his liability under s. 2(1) .

3. Art. 286(3) as it stood prior to the amendment in 1956 imposed fetters only on post-Constitutional law and therefore it could not operate on the Madras General Sales Tax Act, 1939, which had been enacted much earlier. S. 2(1) of the impugned Act simply lay down the machinery for the assessment and collection of tax -imposed by s. 3 as modified by s. 5 of the 1939 Act which did not require Presidential assent.

4. The decision of this <ORG> in Firm <NAME>'s Case(1) does not affect the validity of r.16(1). Sub-rule (1) and sub-rule (2) of r. 16 are severable. We are of opinion that the first contention for the peti- tioners is sound.

The effect of sub-section (1) of s.2 of the Act is the same as was the effect of sub-rule (2) of r.16 of the Turnover and Assessment Rules, 1939, and which was held to be invalid by this Court in <NAME>'s Case(1) . The impugned sub-section provides for the assessment of tax on the sale of dressed hides and skins which were not subjected to tax under the 1939 Act as raw hides and skins and thus exempts from taxation, in accordance with the provisions of sub-section (1) of s.2 of the Act the sale of tanned hides and skins with respect to which tax had been paid on their sale in the raw condition. Such tanned hides and skins had been exempted from taxation under sub-clause (ii) of r. 2 of the Turnover and Assessment Rules. The same is the position in the present case. The present rule therefore is discriminatory and invalid for the same reasons which led this Court to hold sub-rule (2) of r. 16 invalid in <NAME>'s Case(1). There is no escape from this conclusion. In the earlier case, discrimination was broughtabout on account of sale price of tanned hides and skinsto be higher than the sale price of untanned hides andskins,:bough the rate of tax was the same, while in the present case, the discrimination does not arise on account of difference of the price on which the tax is levied as the tax on the tanned hides and skins is levied on the amount for (1) [1963] SUPP. 2 S.C.R. 435.

51 S.C.-15.

which those hides and skins were last purchased in the un- tanned condition, but on account of the fact that the rate of tax on the sale of tanned hides and skins is higher than that on the sale of untanned hides and skins. The rate of tax on the sale of tanned hides and skins is 2 per cent on the purchase price of those hides and skins in the untanned condition while the rate of tax on the sale of raw hides and skins in the State during 1955 to 1957 is 3 pies per rupee The difference in tax works out to 7/1600th of a rupee i.e. a little less than 1/2 nayepaise per rupee. Such a discri- mination would affect the taxation up to the 1st of August 1957 when the rate of tax on the sale of raw hides and skins was raised to 2 per cent of the sale price.

The second contention has no force. There is nothing in sub-section (1) of s.2 of the Act to suggest that the seller of the tanned hides and skins in the <ORG>, should himself be the purchaser of those hides and skins in the raw condition from outside the <ORG>. An importer can import tanned hides and skins as well as untanned hide and skins from outside the <ORG>. If he imports tanned hides and skins, he need not necessarily be the last purchaser of those hides and skins in the untanned condition In that case, it may be difficult to assess the tax on the basis laid down in sub-section (1) of s.2, as the imported may not be able to inform about the price at which those hides and skins were last purchased. Such a price may then have to be determined by estimate. In case the importer himself purchases the untanned bides and skins and then imports them either in the same condition or in the tanned condition, there would be no such difficulty. The difficulty existing in the former case does not necessarily mean that the importer of tanned hides and skins when he himself is not the last purchaser, cannot be taxed under sub-section (1 ) of s.2 of the Act.

The next question is whether sub-rule (1) of r.16 be came invalid when this <ORG> declared sub-rule (2) in valid in <NAME>'s Case(1). The contention for the pettioner is that it became invalid because hides and skins whether tanned or untanned, constituted one commodity (1) [1963] SUPP. 2 S.C.R. 435.

and that therefore tax cannot be levied on the sale of hides and skins in the raw condition when no tax is levied on the sale of hides and skins in the tanned condition. It is contended for the <ORG> that they are different commodities, and constitute two separate categories for purposes of taxation. We are inclined to the view that they form dif- ferent categories.

Hides and skins in the untanned condition are undoubtedly different as articles of merchandise than tanned hides and skins.

It is urged for the petitioners that tanning is only a pre- servative process which makes no change in the nature of the article itself.

The question whether tanned skins and hides are different commodities from raw skins and hides has bee& considered by Courts a few times.

<CITATION> (1) is the observation:

"The tanning of raw hides and skins is a manufacturing process as a result of which the product that emerges is different from the raw material."

<CITATION> .(1) is also an observation to the same effect, it being:

"The stage of collection is also appropriate as, after the tanning, the hides and skins become different commodities.......... " In Encyclopaedia Britannica, Vol. 13, p. 845, it is stated, in connection with 'leather: "Leather is manufactured from the hides and skins of various animals. The object of tannin(, (or the manufacture of leather) is the conversion of the putresible skin into a material which under ordinary conditions of use does not putrefy, and which can be wetted and subsequently dried without becoming hard or horny."

(1) 7 S.T.C. 568, 573.

(2) 9 S.T.C. 231, 237.

Reference may also be made to <CITATION> (1) in which it was held that raw cashewnuts become a different commodity commercially after the application of certain processes as a result of which they are converted into edible kernels. It is therefore not correct to say that the process of tan- ning brings about no change in the raw hides and skins and that therefore both types of hides and skins form one com- modity.

The petitioners rely on two cases in support of their contention that the tanned and untanned hides and skins do not form-different commodities but constitute one commodity. <CITATION> (1) is the observation:

" Section 14(3) of the Central Sales Tax Act, 1956 (Act 74 of 1956) also treats hides and skins, whether dressed or raw, as a single commodity..... Since skins tanned or untanned, constitute only one class of goods and the sale of that class of goods can be taxed only at a single point, obviously there can be no tax on a sale of tanned goods, if tax has already been paid on an earlier transaction when those skins were untanned.' No reason is given why the two kinds of hides and skins are treated as a single commodity.

The other case relied on is <CITATION> ("). This case does not directly concern hides and skins. It however held that ginned cotton and un-ginned cotton constitute one commodity, as the process of ginning just separates the seeds as the character or identity of cotton is not altered thereby, and as ginning is not a manufacturing process. It was taken into consideration that the Constitution as well as the statutes dealing (1)  S-C.R. 53. (3) xi S.T.C. 149.

(2) II S.T.C. 173,184.

with the matter treat ginned and un-ginned cotton under the same head, indicating thereby that the legislature looked upon ginned and un-ginned cotton as one and the same thing. The fact that certain articles are mentioned under the same heading in a statute or the Constitution does not mean that they all constitute one commodity. The inclusion of several articles under the same heading may be for a reason other than that the articles constitute one and the same thing. In this connection we may refer to the Madras General Sales Tax Act, 1959. Section 4 of this Act provides that the sales tax on the sale or purchase of declared goods will be payable at the rate and only at the point specified against each article in the 11 Schedule.

The Second Schedule refers to raw hides and skins separately from dressed hides and skins against serial No. 7. The rate of tax is different and so is the point at which the tax is to be levied. This will indicate that in 1959 the legis- lature in Madras considered raw hides and skins a different commodity from dressed hides and skins. There is no good reason why the legislature be not attributed the same inten- tion when it enacted the 1939 Act especially when there are other reasons also to point to the same conclusion. We therefore hold that raw hides and skins and dressed hides and skins constitute different commodities of merchandise and they could therefore be treated as different goods for the purposes of the Act.

The provision of the Act at the relevant time for the levy of tax on the sale of hides and skins was s.5, cl. (vi) which reads:

"Subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees. - - - -

(vi) the sale of hides and skins, whether tanned or untanned shall be liable to tax under section 3 , sub-section (1) only at such single point in the series of sales by successive dealers as may be prescribed."

In 1957 this provision was replaced by s.5A(4) which read:

The sale of hides and skins, whether in a raw or dressed state, shall be liable to tax only at such single point in the series of sales by successive dealers as may be prescribed but at the rate of two percent on the turnover at that point."

The series of sales referred to in this provision, to our mind, meant the series of sales of each kind of hides and skins namely the series of sales of raw hides and skins and the series of sales of dressed hides and skins and do not mean a single series of sales which includes successive sales in the first instance of raw hides and skins and after tanning successive sales of tanned hides and skins. The real question is whether these provisions treat raw hides and skins and dressed or tanned hides and skins as one class of goods for the purpose of taxation or as two different classes of goods. If they treat them as one class of goods, the contention for the petitioner loses force as taxing of hides and skins at the time of their sale in a raw condition meets the requirements of law as hides and skins could be taxed only it a single point. If the dressed or tanned hides and skins are not taxed at the time of their sale that does not offend against the statutory provisions. No question of discrimination arises as a sale of raw hides and skins of whatever origin, i.e., whether produced in the <ORG> or imported into the <ORG> would be equally liable to the levy of tax.

If the statute treats both these kinds of hides and skin as different commodities the provision of sub-rule (1) of r.16 providing for the levy of tax on raw hides and skins at a certain point even in the absence of any provision for the taxation of dressed hides and skins cannot be said to be discriminatory and invalid. The articles to be taxed were not the same and the legislature could provide differently not their taxation.

We therefore hold that sub-rule (1) of r.16 did not become invalid on this <ORG>'s declaring sub-rule (2) of that rule invalid in <NAME>'s Case(1).

The only question that now remains for consideration is whether the State legislature was competent to enact the provisions of sub-section (1) of s. 2 of the Act. Hides and skins had been declared under Act LII of 1952 to be essen- tial for the life of the community. Art. 286(3) of the Constitution as it stood before its amendment by the Consti- tution VI Amendment Act of 1956, on September 11, 1956, read:

No law made by <ORG> State imposing or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by <ORG> by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent."

This provision, however, did not apply. to the 1939 Act which had been enacted much earlier than the commencement of the Constitution. By August 28, 1963, when the Act was enacted by <ORG>, Art. 286(3) had been amended and Act Lll of 1952 had also been repealed. Consequently there was no Constitutional requirement for the Act being reserved for the assent of the President before it could be enforced. It is contended for the petitioner that the Act really enacted for a period, when if passed, it bad to receive the President's assent for its enforcement and that therefore <ORG> could not even in 1963 enact this provision affecting the taxation law in respect of the sale or purchase of goods which were goods declared essential for the of the, commissioner. We do not see why such a fetter be placed on the legislative power of <ORG>. The State legislature is free to enact laws which would have retrospective operation. Its competence to make law for a certain past period, depends on its present legislative power and not on what it possessed at the period of (1)  Supp. 2 S.C.R. 435.

time when its enactment is to have operation. We there fore do not agree with this contention.

The matter can be looked at in a different way. The 1939 Act required no assent of the President. <ORG> was doing in 1963 what the legislature enacting the 1939 Act was supposed to have enacted and therefore its enactment was not governed by the Constitutional requirement for an Act to be enacted during the period Act LII of 1952 was in force. Lastly, it has been urged for the petitioner that hides and skins have been declared to be of special importance in inter-<ORG> trade or commerce by s.14 of the Central Sales Tax Act of 1956. The tax imposed by sub-section (1) of s. 2 of the Act is a tax on the sale of hides and skins in the course of inter-<ORG> trade or commerce and therefore fen within entry No. 92A of list 1 of Seventh Schedule and that therefore the <ORG> legislature was not competent to impose it. It could impose by virtue of entry No. 54 in List II of Seventh Schedule tax on the sale or purchase of goods subject to the provisions of entry No. 92A of List 1. There is no force in this contention. The tax is imposed on the sale which took place within the <ORG>. The <ORG> legis- lature is competent to impose such a tax. The mere fact that the article sold in the <ORG> had been brought from outside the <ORG> does not make the sale of that article a sale in the course of inter-<ORG> trade or commerce. It is only when A, in <ORG> X, purchased through a commission agent in a <ORG> Y and receives the articles purchased through the commercial agency that the sale comes within the expression 'in the course of inter-<ORG> trade': <CITATION> - tory(1). (supra at p. 70).

It has been argued for the <ORG> that the Act is not affected by the provisions of Arts. 301 to 304 of the Constitution as they affect the legislative power with respect to Acts to operate in the future and not the power to enact Acts which would operate in the past. We do not consider the contention sound. The Act makes provision for a period (1)  S.C.R. 53.

subsequent to the commencement of the Constitution and therefore is to be subject to the provisions of the Constitution.

We therefore hold that sub-section (1) of s. 2 of the Act discriminates against imported hides and skins which were sold up to the 1st of August 1957 upto which date the tax on sale of raw hides and skins was at the rate of 3 pies per rupee or 19/16th percent. This however does not mean that the sub-section is valid with respect to the sales which took place subsequent to August 1, 1957. The subsection being void in its provisions with respect to a certain initial period, we cannot change the provision with respect to the period as enacted to the period for which it could be valid as that would be re-writing the enactment. We have therefore to hold that sub-s.(1) of s. 2 void accordingly hold so.

In view of the provisions of sub-section (1) of s. 2 being invalid the other provisions of that section become unenforceable.

We therefore allow the petitions with costs, one hearing fee, and hold s. 2(1) of the Act invalid and order the issue of a writ of mandamus to the State of Madras and <ORG> under the Act to refrain from enforcing any of the provisions of s. 2 of the Act.

Petitions allowed.


PETITIONER: MS. SWATI GUPTA Vs. RESPONDENT: STATE OF U.P. & ORS. DATE OF JUDGMENT02/02/1995 BENCH: <NAME>, R.M. (J) BENCH: <NAME>, R.M. (J) SEN, S.C. (J) CITATION: 1995 SCC (2) 560 JT 1995 (2) 438 1995 SCALE (1)480 ACT: HEADNOTE: JUDGMENT:

ORDER

1. The petitioner who appeared for the Combined Pre- Medical Test of 1994 held in the State of U.P. challenged a circular issued by <ORG> based on a letter dated 17th May 1994 issued by the Secretary, Government of U.P. It was claimed that reservation of 65% general seats in the, medical colleges was violative of the constitutional guarantee Under Articles 16, 14, 19 and 21 of the Co stitu- tion and the ratio laid down by this Court in <CITATION> . (1992) Supp. 3 SCC 217. Af- ter the petition was filed the Government issued another notification on 17.12.1994 clarifying its stand in respect of reservations. The relevant portions of it are extracted below:

"In continuation of G.O. No.2697/Sek14/V/- 94/III/93 dated 17.5.94 or the above subject, 1 am directed to say clarifying the <ORG>.

policy that horizontal reservation be granted in all medical colleges on total seats of all the all the courses to be filled through combined Pre Medical Test [C.P.M.T.] 1994 a s given below :-

1. Real dependents of freedom fighters 05 percent 2. Sons/daughters of deceased/disabled soldiers 02 percent 3. Physically handicapped candidates 02 percent 4. Candidates belonging to hill areas 03 percent 5. Candidates belonging to Uttaranchal areas 03 percent

The above reservation would be 'horizontal', and the candidates of the above categories selected on the basis of merit would be kept under the categories of Scheduled Caste/ Scheduled Tribes/ Other Backward Classes/ General to which they belong. For example. if a candidate dependent on a Freedom Fighter selected on the basis of reservation,belongs to the Scheduled Caste, he will be adjusted against the seats reserved for scheduled caste. Similarily, if a physically handi- capped candidate selected on the basis of reservation belongs to other bakward class or general category, he would be adjusted against the seats reserved for other backward classes or general category.

[a] Scheduled caste candidates -21 percent] 30 per cent [b] Scheduled tribe candidates -02 percent] seates ] in each [c] Other backward ] category class candidates-27 percent] reserved for ladies"

In the earlier circular the provision for reservation which is relevant read as under:-

"Out of the total seats being filled up thruogh the C.P.M.T. 1994, 35% seats are reserved for the candidates belonging to the general category and remaining 65% seats shall be for the reserved categories which are limited to the percentage mentioned against the following categories of the candidates :-

Percentage of the reserved seats.

Reserved Categories

1.Backward Classes 27 (of them 30% reserved per cent for ladies.)

2.Hilly area 3 per (of them 30 per cent cent reserved for ladies.)

3.Uttrakhand Area 3 % (30% reserved for ladies.)

4.Scheduled Caste 21 % (30% for ladies)

5.Schedule Tribes 2 % (30% reserved for ladies.)

6.Actual dependents 5 % (30% percent reserved of the freedom fighters for ladies.)

7.Daughter/sons of soldiers 2 % (30% reserved for who became handicapped or ladies) killed in action/war.

8.For handicapped candidates 2 % (30% reserved for ladies.)

65 per cent

The remaining seats will be of the general category in which 30 % reservation will be for the ladies. "

2.Reservation of 65% resulting in reducing the general category to 35% was undoubtedly violative of Article 16. Further by reserving 30% of the general seats for ladies the general category shrinked to 5%. But these glaring infirmities have been rectified by the amended circular. Reservation of 30% for ladies has now been confined to paragraph (3) of the amended circular. Dr. <NAME>, the learned senior counsel appearing for the <ORG> clarified that he has instructions to make a statement on the amended circular that now there is no reservation for ladies in the general category.

3. Similarly, the other defect in the circular reserving 35% seats for general category has been removed. The vertical reservation is now 50 % for general category and 500 % for scheduled caste, scheduled tribes and backward classes. Reservation of 15% for various categories mentioned in the earlier circular which reduced the general category to 35% due to vertical reservation has now been made horizontal in the amended circular extending it to all seats. The reservation is no more in general category. The amended circular divides all the seats in C.P.M.T. into two categories one, general and other reserved. Both have been allocated 50%. Paragraph 2 of the circular explains that candidates who are selected on merit and happen to be of the category mentioned in Paragraph 1 would be liable to be adjusted in general or re- served category depending on to which category they belong, such reservation is not contrary to what was said by this <ORG> in <NAME> (supra). Whether the reservation for such persons should have been made or not was not challenged, therefore, this <ORG> is not required to examine it.

4. In the result this petition is disposed of by directing that in view of the circular issued by the <ORG> on 17.12.1994 clarified by paragraph (2) the grievance of the petitioner cannot be said to The interim order passed by this Court staying the declaration of results is discharged.