<NAME>, J.

1. An assessee indicated the Part IV of his return of income for the assessment year 1969-70 that a receipt of Rs. 44,239 in the relevant year was not taxable on the ground that it was prize money received in a competition which was of the character of casual income earned during the previous year relevant to the said assessment year, according to the assessee, the said income of Rs. 44,239 represented the prize received by him in a crossword puzzle competition conducted by one <NAME> (hereinafter referred to as "Harifai") and, therefore, it was casual income which was not taxable, it was proved by overwhelming evidence that the story regarding winning of prize was a hoax and a device to legitimize the introduction of unaccounted money under the smoke-screen of the story. It was found as a matter of fact that the assessee had not received any such prize and the amount alleged to have been received as prize was in truth his unaccounted income. The statement, made by the assessee in Part IV of his return was thus proved to be factually false, and yet, <ORG> (hereinafter referred to as "the <ORG>"), in the appeal preferred by the assessee against the levy of penalty under s. 271(1)(c) of the I. T. Act, 1961 (hereinafter referred to as "the Act") by the <ORG>. Held that no penalty was leviable because, (i) in view of the disclosure made by the assessee in Part IV of the return, the assessee could not be said to have concealed income or furnished inaccurate particulars thereof; (ii) the <ORG> had not proved that the money which the assessee was alleged to have received as prize in the crossword puzzle competition was income earned by the assessee in the aforesaid assessment year and it was a case of mere falsity of explanation given by the assessee; and (iii) there being no gross or wilful neglect or fraud on the part of the assessee, no penalty was leviable on the basis of the Explanation to s. 271(1)(c) of the Act, notwithstanding that the assessee's case was covered by the said Explanation, in our opinion for the reasons which we shall presently state, the <ORG>'s view cannot be sustained.

2. Facts leading to this reference are as follows : Some time in June, 1968, the premises of <ORG> were seared under s. 132 of the Act. From the documents and material seized during the search and statements of various persons connected with the <ORG> recorded during the course of the investigation, it was discovered that <ORG> was conducting crossword puzzle competitions only with the object of helping the persons who had unaccounted income or money, to bring out such income or money by way of prizes at such crossword puzzle competitions. Investigation revealed that <ORG> was organised to devise a scheme to give colour of legitimate source to the unaccounted money, the scheme functioned in the following manner. Persons with unaccounted money would approach the organisers of <ORG> and on their paying commission, which was usually 10 per cent. of the unaccounted money, the organisers of the <ORG> would declare a prize equal to the amount of the unaccounted money, which persons wanted to bring out. For winning crossword puzzle competition, which was not genuine. The documents and material on record show that within a period of two years, unaccounted money totalling to about Rs. 40 lakhs of about 30 persons from various strata of society were brought out in the form of bogus prizes. The persons who brought out their unaccounted money in the aforesaid dubious manner openly utilised the money for their business and other purposes and whenever called upon to explain the source of such money by the authorities concerned, their explanation was that they had won a prize at the crossword puzzle competition. It was in this manner that the organisers of <ORG> helped the persons with unaccounted money to give colour of legitimate source to their unaccounted money. It appears that one <NAME> was the proprietor of <ORG>. This <NAME> conducted such dubious crossword puzzle competitions also in the name of Makkam <ORG> and <NAME>. The assessee was one of the persons in whose favour <ORG> had declared a prize. The evidence disclosed that the prize which was declared in favour of the assessee was Rs. 46,959 and not Rs. 44,239 as stated by the assessee had paid Rs. 4,695, being 10 per cent. commission to the organisers of <ORG>. For getting the prize declared. According to the <ORG>, both these amounts represented the unaccounted money or income of the assessee.

3. In his return of income for the year under reference, the assessee disclosed the prize money received by him from <NAME> and agricultural income which were claimed to be not taxable in Part IV of his return, the particulars of his income declared in Part IV of the return are as follows :

Particulars Amount Reasons why not taxable Lottery receipts Rs.44,239 casual income Agricultural income Rs. 3,434 -----

4. The <ORG> by a letter called upon the assessee to produce evidence in support of the claim made in Part IV of the return. The assessee, however, did not avail of the opportunity, ignored the letter and in fact failed to give any reply to this letter. Thereafter, the <ORG> issued notices under ss. 142(2) and 143(2) of the Act, calling upon the assessee to appear before him. The assessee was also called upon to produce the organiser of <ORG> with his books of account to establish his claim for exemption for the sum of Rs. 44,239 mentioned in Part IV of his return. The assessee was also called upon to furnish a statement of his total wealth as on different dates, the <ORG> called for information in respect of a number of matters, details whereof need not be mentioned for the present purposes. The <ORG> also made detailed enquiries regarding the prize money alleged to have been received by the assessee which were claimed as exempt and his enquiry showed that the prize was not genuine. The information, which the <ORG> had collected in the course of the enquiry and copies of statements of various persons which he had recorded in the course of the enquiry. Which he proposed to use against the assessee, were sent to the assessee to give him an opportunity to rebut or explain the evidence which was to be used against him. The assessee, however, refused to accept the envelope containing copies of statements sent to him, the assessee also failed to submit a statement of his wealth as required by s. 142(1) of the Act. The <ORG>, therefore, proceeded to make assessment under s. 144 of the Act and determined the total income of the assessee at Rs. 72,260, details of which are as follows :

"Cash credits as discussed in para. 9 of the assessment order 11,000 Claim of lottery receipt made in Part IV of the return. This amount is in reality for the alleged prize from Shri Kasoti Sahitya Harifai 46,959 <ORG> payment 4,695 For low household expenses - para 8 2,000 Amount paid for purchase of land not accounted for in books 3,251 Income from boarding house as declared 3,069 Income from weaving business estimated - para.10 2,189 --------- 73,163 --------- Total income 72,260 ---------

5. Proceedings for the levy of penalty under s. 271(1)(c) of the Act for the concealment of income or furnishing inaccurate particulars thereof were initiated against the assessee. It appears that the proceedings were initiated for additions made on account of unexplained cash credits, bogus prize alleged to have been received at the crossword puzzle competition, commission payment and amount paid for purchase of land which was not accounted for in the books, so far as the present reference is concerned, the only addition which is relevant is the addition made on account of bogus prize alleged to have been received by the assessee at the crossword puzzle competition, as no penalty has been levied for other additions, it may also be mentioned that the addition of Rs. 3,251, which was made on account of unexplained investment in purchase of land, was deleted by the <ORG> in the appeal preferred by the assessee against the order of the <ORG>, confirming the assessment framed by the <ORG>, the <ORG>, to whom penalty proceedings were referred, as the concealed income exceeded Rs. 25,000, called upon the assessee to show cause why penalty should not be imposed for concealing income or furnishing inaccurate particulars thereof, in response to this notice, the defence of the assessee was that the crossword puzzle competition, in which, according to him he had participated and won a prize. Was genuine competition. He contended that the prize which he had received by cheque was a genuine prize. According to the assessee, he had filled in entry forms and paid the prescribed fee to take part in the competition. He further contended that he was in no way concerned with the object with which the organiser of <ORG> were conducting the crossword puzzle competition, so far as he was concerned, he was a genuine competitor and that a prize was genuinely won by him in truth. Therefore, according to him, he was not guilty of having concealed the income or furnishing inaccurate particulars thereof, the assessee further contended that there was absolutely no evidence to prove that the prize money which he had received from <ORG> represented his unaccounted income, or money.

6. The <ORG> gave opportunity to the assessee to lead evidence to prove the genuineness of the prize received by him and to rebut the evidence which was collected by the <ORG> authorities. The assessee, however, did not produce any evidence. He, however, raised preliminary objections against the validity of the proceedings initiated against him.

7. The <ORG>, in his elaborate and well-reasoned order, overruled the preliminary objections raised on behalf of the assessee and on an appreciation of the evidence and material on record, came to the conclusion to the effect that the crossword puzzle competition conducted by <NAME> was merely a device to convert unaccounted money into accounted money under the smoke-screen of competition giving it the appearance of prize money. He found as a matter of fact that participation by the assessee in the crossword puzzle competition was not genuine and the prize of Rs. 46,959 which was stated to have been received by him was camouflage and a deliberate device to convert his unaccounted money into ostensible prize money with a view to claiming exemption under the provisions of the Act. The <ORG> further held that the assessee's case was covered by the Explanation to s. 271(1)(c) of the Act, as the difference between the income returned and that assessed was more than 20 per cent. Is pointed out above, the income returned was Rs. 1,892 while the income assessed was Rs. 69,009 (after giving effect to the <ORG>'s order). The <ORG> observed that the Explanation to s. 271(1)(c) prescribes a rule of evidence and raises a presumption of concealment of income and filing of inaccurate particulars of the income when the differences between the returned income of the assessee and the assessed income is more than 20 per cent. The presumption was no doubt rebuttable, if the assessee could prove that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. In the opinion of the <ORG>, however, the assessee had filed to dislodge the presumption and, consequently, he was to be deemed to have concealed the particulars of income or furnished inaccurate particulars thereof for the purpose of clause (c) of s. 271(1). In the result, the <ORG> levied a penalty of Rs. 60,000 as against the maximum penalty of Rs. 1,09,810 leviable under the said provision.

8. Being aggrieved by the penalty imposed by the <ORG>, the assessee carried the matter in appeal to the <ORG>. The <ORG>, following its decision in the case of <NAME>, <ORG>, in appeal (I.T.A. No. 373/AHD/74-75 decided on October 18, 1975) held that levy of penalty for concealment of income or furnishing inaccurate particulars thereof was not justified as the assessee had disclosed income in question in Part IV of his return of income. The <ORG> further held that all that the revenue authorities had been able to establish was that the explanation given by the assessee as regards the money as received by him by way of a prize from the crossward puzzle competition was false, however, mere falsity of the explanation was not enough to attract penalty under s. 271(1)(c). The <ORG> observed that the <ORG> had failed to prove that the money which the assessee had shown as prize money was the assessee's income earned during the year under reference. The <ORG> further found that even though the assessee's fell within the purview of the Explanation to s. 271(1)(c), no penalty was leviable inasmuch as the assessee had proved that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. In the opinion of the tribunal, the disclosure made by the assessee in Part IV of his return "would take the case out of the charge of gross or wilful neglect". While dealing with the question whether there was any fraud on the part of the assessee, the <ORG> held that since the <ORG> had failed to establish that the income disclosed by the assessee in Part IV of his return was the income of the assessee earned during the year under reference, the penalty under s. 271(1)(c) could not be sustained. In the result, the <ORG> quashed the order of the <ORG> levying penalty under s. 271(1)(c) on the assessee and directed the <ORG> to refund the amount of penalty, if paid. The <ORG> has challenged the legality and validity of the order passed by the <ORG> and at its instance the following questions are referred to us for our opinion under s. 256(1) of the Act :

"(1) Whether, on the facts and in the circumstances of the case, the <ORG> was right in law in holding that due to disclosure made by the assessee in Part IV of the return, the assessee could not said to have furnished inaccurate particulars of income within the meaning of s. 271(1)(c) of the Act, and, consequently. The levy of penalty under said section was not justified ?

(2) Whether the <ORG> was right in law in holding that there was no gross or wilful neglect on the part of the assessee, nor was it a case of fraud, and, therefore, levy of penalty on the basis of the Explanation to section 271(1)(c) of the Act on the facts of the case was not justified ?"

9. It passes our comprehension as to how the assessee can escape payment of penalty for concealing income or furnishing inaccurate particulars thereof, in view of the admitted facts, merely because of the statement incorporated in Part IV of his return, which statement is proved to be a false one. The inclusion in Part IV throws a protective armour when with candour, frankness and truthfulness income is indicated by giving true facts in view of a bona fide belief that such an income is not taxable. Non-inclusion in return may be justifiable if it involves interpretation for some provision or decision on a debatable point of law. It must, however, be admitted that it is income and its true nature, character and source must be stated. Of course, having made a true disclosure, he can say that according to his interpretation such income is not taxable because of his bona fide doubt about its includibility under law, the belief may or may not turn out to be right. The protection will be available. But when he states that it is prize won at, say, lottery, and that statement is false to his knowledge and found to be false as a matter of fact, he cannot earn immunity, that would be placing dishonesty and prevarication of tax dodgers at a premium. It could not have been (and we do not believe it ever was) the intention of the <ORG> to protect perpetrators of frauds and falsehood. It is not an amulet for cheats. It is an armour for the honest taxpayer who need not anticipate an interpretation or view against himself and may bona fide interpret in his favour requiring the <ORG> to prove that his interpretation is wishful or over-optimistic but untenable. It is not possible to comprehend how the assessee can claim immunity by falsely indicating Part IV of his return that he had earned an income of casual nature by way of winning a prize was ever won and that it was hoax and it was, therefore, not a casual income by way of prize money, remains unchallenged and undisturbed. It may be recalled that the assessee did not disclose the income as taxable income, but as casual income which was not taxable, by making a false statement that it was prize money. Receipts of casual and non-recurring nature were not includible in computing the total income of a previous year of any person under s. 10(3) of the Act before its amendment by the Finance Act , 1972, with effect from April 1, 1972. It was only after the amendment of s. 10(3) by the Finance Act , 1972, that winnings from lotteries became includible in computing the total income of any person. With the amendment of s. 10(3) by the Finance Act , 1972, corresponding amendment of s. 2(24) , the income is artificially declared to include various items. The definition of "income" in this clause is inclusive and not exhaustive. This clause was amended by the Finance Act , 1972, and sub-clause (ix) was inserted with effect from April 1, 1972. Under sub-clause (ix), any winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever were included in the definition of "income". Thus, as a result of the amendment of s. 2(24) and s. 10 (3) by the Finance Act , 1972, winnings, from crossword puzzles became includible in the taxable income. However, prior to this amendment, winnings from crossword puzzle competitions were considered to be income of casual and non-recurring nature, which were not includible in the taxable income and did not fall within the definition of "income" as defined in s. 2(24) . It was in view of this legal position that the assessee claimed in his return of income for the assessment year 1969-70 that the prize money received by him from the crossword puzzle was casual income which was not taxable. The claim made by the assessee that it was prize money and casual income was proved to be false. It was proved that he had not participated in any genuine crossword puzzle competition and the prize which he was alleged to have won at such crossword puzzle competition was not a genuine prize. In view of the fact that the assessee had shown the prize money in Para IV of his return, there was clear admission on his part that he had earned the income shown therein in the year under consideration. He showed the prize money as a casual income earned in the year in question. However, the <ORG> was able to positively establish by evidence that the income which the assessee had disclosed in Part IV of his return as casual income was not really casual income. That it was income, earned in the year in question, was not disputed by the assessee. Since he failed to prove that it was income which was exempt, or which did not fall within the definition of "income" as defined in s. 2(24) as it then stood, this income became taxable. Since it was established that the assessee had not genuinely won any prize at any genuine crossword puzzle competition, but the whole thing was a hoax, the only inference that can be legitimately drawn is that he had sought to introduce his unaccounted income earned during the year under reference under the guise of prize money which he disclosed in Part IV of his return as such. This income, since it was not proved to be of a casual and non-recurring nature, was not to be excluded in the computation of total income of the assessee in the year under reference. The assessee. However, attempted to practice a fraud and to mislead the <ORG> authorities by showing this income in Part IV of his return, it is obvious that the showing this income in Part IV of his return. It is obvious that the assessee attempted to conceal his income which was liable to tax and to evade payment of tax. In the face of the evidence on record, the only conclusion which can be reached is that the assessee concealed his income. When we say that he concealed his income, what we mean is that he concealed that income which was taxable. In any case, the assessee must be ground guilty of having furnished inaccurate particulars of his income. He deliberately and intentionally showed income which was taxable as casual income in Part IV of his return. The disclosure, which he made in Part IV of his return was false, fraudulent and deliberately made with a view to mislead the <ORG> authorities. Had the <ORG> accepted the return filed by the assessee as correct, the above income would have escaped assessment and payment of tax. In our opinion, therefore, the mere fact that the assessee had disclosed the above income in Part IV of his return cannot and does not absolve him of the liability to pay penalty under s. 271(1)(c) of the Act. Particularly when it is established that false statements were deliberately made therein : (i) that it was prize money, and (ii) it was income of a casual nature on that account, when in fact it was not prize money as has been conclusively established. We, therefore, find ourselves unable to uphold the view taken by the <ORG>, which, in our opinion, is patently an impossible view.

10. Under the Explanation to s. 271(1)(c) (as it stood at the relevant time), where the total income returned by any person was less than eighty per cent. of the total income as assessed, such person was deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c), unless he proved that failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, therefore, once it was proved that the difference between the returned income and the assessed income was more than 20 per cent., the presumption, no doubt rebuttable, arose that the assessee had concealed the particulars of his income or furnished inaccurate particulars thereof. Presumption could be dislodged, if the assessee proved that failure to return the correct income did not arise from any fraud or gross or wilful neglect. In the instant case, as pointed out above, the income which the assessee had returned in his return of income was Rs. 1,892, while the income as assessed after giving effect to the order of the <ORG> was Rs. 69,009. There was thus clearly a difference of more than 20 per cent. between the income returned and the income assessed, the Explanation to s. 271(1)(c) would, therefore, be attracted.

11. It was not disputed before the <ORG> that the Expln. to s. 271(1)(c) was applicable to the facts of the case. The <ORG>. However, declined to levy penalty even with the aid of the Explanation on two grounds, namely, (i) it was a case of mere falsity of explanation and as the <ORG> had failed to prove that the prize money shown by the assessee in Part IV of his return was income earned by the assessee in the year in question; and (ii) in any case, since the assessee had disclosed the above income in Part IV of his return, it must be held that the failure to return the income did not arise on account of any fraud or gross or wilful neglect on the part of the assessee, both the grounds which appealed to the <ORG> are devoid of any substance.

12. We are unable to see how the doctrine of mere falsity of on the facts of each case, for instance, in a case of an unexplained cash credit, the mere fact that the explanation offered by the assessee that it was a dowry amount paid at the time of his son's marriage which was lying in his cupboard, is found to be untrue, in such a case, perhaps the doctrine may be resorted to. It depends on the facts of each case. It is not the equivalent of an "open sesame", so that all that one needs to say is that 'false explanation' is the valid answer, which takes away the power to levy penalty, it has been proved to the hilt in the present case that the assessee had not won any prize at the crossword puzzle competition. The crossword puzzle competition in which he was alleged to have participated and won the prize, was not a genuine competition. No competition, in fact, was held and the so-called competition was merely a device to help the assessee to bring out his unaccounted money or income as an ostensible prize won at the competition. The above finding, recorded by the <ORG>, was confirmed in appeals by the <ORG> and the <ORG>, the <ORG> reappreciated the evidence which was placed on record, in the course of the assessment proceedings. And also closely examined the evidence and material which was produced before him and reached the same conclusion which was reached in the assessment proceedings by the <ORG>, the <ORG> and the <ORG>. In other words, the <ORG>, on considering the evidence on record afresh, held that the crossword puzzle considering the evidence on record afresh, held that the crossword puzzle competition, in which the assessee was alleged to have participated and won the prize, was not a genuine prize. It was proved beyond any shadow of doubt that the assessee had, in conspiracy with the organisers of <ORG>, made arrangement to give colour to his unaccountef income or money of prize money won at the competition. In the face of this overwhelming evidence, we are unable to see how this is a case of mere falsity of explanation as held by the <ORG>. If the view taken by the <ORG> is correct, in no case could the <ORG> succeed, even with the aid of the Explanation to s. 271(1)(c) , ultimately what would be proved would be that the explanation given by the assessee was false. In the instant case, the assessee himself had shown the prize money as his casual income earned in the year under reference, if the income which the assessee described as the casual income was not the income earned by the assessee in the year under reference. There was no reason to show that income in the return of his income for the said years It was because the assessee had earned that income in the year under reference that he disclosed it in Part IV of his return. Therefore, on the assessee's own admission, it was income earned in the year under reference. The assessee's assertion that the above income was casual income was proved to be false. It was the assessee who was claiming exemption from payment of tax in respect of his income on the ground that it was casual income. He, however, did not choose to lead any evidence to establish his claim, on the other hand, the evidence led on behalf of the <ORG> not only proved that the claim made by the assessee was false, but that it was as a part of a design or device to deceive and mislead the authorities concerned that the unaccounted money of the assessee was given the colour of prize money. If the assessee had a satisfactory explanation for the money which he had shown as prize money, he could have certainly come forward with such explanation. Having regard to the evidence on record the only inference which could be drawn is that the assessee sought to bring out his unaccounted income as ostensible prize money. The prize money was also not correctly shown in the return. The prize which he had won was not Rs. 44,239, as disclosed by him in Part IV of his return, but it was proved to be Rs. 46,959. The evidence also showed that the assessee had paid a commission of Rs. 4,695 to the organisers of the <ORG> for conducting false crossword puzzle competition to bring out his unaccounted money. The evidence and the statement made in Part IV of the return, filed by the assessee, proved that the sum of Rs. 46,959 received by the assessee as so-called prize money was clearly the assessee's income earned in the year under reference. The assessee's assertion that the above income was casual income was proved to be false. It was the assessee who was claiming exemption from payment of tax in respect of his income on the ground that it was casual income. He, however, did not choose to lead any evidence to establish his claim, on the other hand, the evidence led on behalf of the <ORG> not only proved that the claim made by the assessee was false, but that it was a part of a design or device to deceive and mislead the authorities concerned that the unaccounted money of the assessee was given the colour of prize money, if the assessee had a satisfactory explanation for the money which he had shown as prize money. He could have certainly come forward with such explanation. Having regard to the evidence on record the only inference which could as ostensible prize money, the prize money was also not correctly shown in the return. The prize which he had won was not Rs. 44,239, as disclosed by him in Part IV of his return, but it was proved to be Rs. 46,959. The evidence also showed that the assessee had paid a commission of Rs. 4,695 to the organisers of the <ORG> for conducting false crossword puzzle competition to bring out his unaccounted money. The evidence and the statement made in Part IV of the return, filed by the assessee, proved that the sum of Rs. 46,959 received by the assessee so-called prize money was clearly the assessee's income earned in the year under reference. In our opinion, the <ORG> has proved beyond doubt that this amount of Rs. 46,959 was the income of the assessee earned in the year under reference. We are, therefore, unable to agree with the conclusion reached by the <ORG>.

13. <CITATION>  97 ITR 440 (Guj), the question of the nature and extent of the burden of proof, in a case covered by the Explanation, was examined and the following pertinent observations were made by this court (p. 445) :

"The fact of the total returned income being less than eighty per cent. of the total income assessed is sufficient to bring the assessee within the penal provision enacted in section 271(1)(c) . That is achieved by the legal fiction enacted in the Explanation...... If the assessee wants to repel the legal fiction and throw the burden of bringing the case within section 271(1)(c) again on the <ORG>, as it would be in the absence of the Explanation, the assessee has to show-and this burden is upon him-that his failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part.... It is a burden akin to that in a civil case where the determination is made on a preponderance of probabilities. It is also not necessary that any positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to have discharged the burden by relying on the material which is on record in the penalty proceedings, irrespective of whether it is produced by him or by the <ORG>. The only question to which the income-tax authority has to address itself is, whether, on the material on record in the penalty proceedings, can it be said, on a preponderance of probabilities, that the failure to return the total assessed income has not arisen on account of any fraud or any gross or wilful neglect on the part of the assessee, if the answer to the question is in the affirmative, the legal fiction enacted in the Explanation cannot arise and the <ORG> must fail in its attempt to impose penalty on the assessee."

14. <CITATION>  122 ITR 341, this court had an occasion to consider the true content and effect of this Explanation; it was observed (p. 354) :

"The Explanation consists of two parts. The first part sets out the facts which. It proved, give rise to a rebuttable presumption. It provides, in order to raise the presumption, that the case must be one where the total income returned by any person is less than eighty per cent. of the total income as assessed under s. 143 or s. 144 or s. 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction). If these facts are shown to exist, a presumption would be raised that such person shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purpose of clause (c) of s. 271(1) . This presumption would of course be a rebuttable presumption and it would be open to such person to establish that despite there being a difference of more than twenty per cent. between the income returned and the income assessed (such difference having been arrived at in the manner indicated in the first part of the Explanation), the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. It is only if he fails to discharge the burden of displacing the presumption in the manner aforesaid on the basis of preponderance of probabilities by leading evidence or by relying on the material which is already on record that the penalty under s. 271(1)(c) for concealment of income would be attracted."

15. As pointed out in the aforesaid decisions, as the total income returned by the assessee was less than eighty per cent. of the total income as assessed, a rebuttable presumption that the assessee had concealed particulars of income or furnished inaccurate particulars thereof would arise. As observed above, the presumption would be rebutted if the assessee succeeds in proving that failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. In the instant case, the view taken by the <ORG> is that the assessee has rebutted the presumption, the finding which the <ORG> has recorded is again founded on the disclosure made by the assessee in Part IV of his return that it shut its eyes to the evidence on record and the glaring facts established by such evidence. The disclosure in Part IV of the return was not an honest and bona fide disclosure. It was made to throw dust in the eyes of the taxing authorities and to conceal the real source of the unaccounted income to the extent of Rs. 46,959. There was no crossword puzzle competition and there was no prize won at such competition, in the face of these glaring facts established by the evidence on record, we are unable to understand how one can reasonably come to the conclusion that failure to return the correct income did not arise on account of fraud or any gross or wilful neglect on the part of the to a case of gross or wilful neglect on the part of the assssee, since the assessee, with the intention to practice deceit, had instead of showing the above income as taxable income, showed it as casual income which was not taxable. In our opinion, therefore. The view taken by the <ORG> is unreasonable and unsustainable. The assessee has failed to discharge the burden which lay on him to prove that failure to return the correct income did not arise on account of any fraud or any gross or wilful neglect on his part. Besides making a statement in Part IV of his return which was proved to be false, the assessee has not led any evidence nor is there any material on record to rebut the presumption which arose under the Explanation to s. 271(1)(c) . The <ORG>, therefore, erred in holding that the assessee had rebutted the presumption and, therefore, was not liable to pay any penalty under s. 271(1)(c) . In our opinion, the findings and conclusions reached by the <ORG>, in his well-reasoned order, is unassailable and no other view is possible.

16. In the result, we answer both the questions referred to us in the negative and against the assessee.

17. Reference answered accordingly with costs.


JUDGMENT <NAME>, J.

1. In this case an idol, by his Paricharaks and Shebaits, sued to recover mining royalties under a lease of his colliery property in Burdwan. The Shebaits, who made the agreement in suit, were four brothers and the property was the ijmali debottar property of their family deity. Owing to some quarrel the collection of rents was not always joint and, at the time when the principal defendant was making default in paying the royalties, one of the brothers obtained from him payment of 4,000 rupees on account of his share, on. the terms that, if his co-sharers did not agree to give up their claim to interest and be content with like sums, he was to be paid by the principal defendant in the same proportion as the co-sharers might be paid. This brother was accordingly unwilling to join as a plaintiff in bringing the suit and so was joined as a second defendant. As such he appended to his defence a claim against the first defendant to recover pari passu with the plaintiffs, after giving credit for the 4,000 rupees already paid, in case they should make out their claim. This was, of course, quite irregular in point of pleading and gives-rise to a technical question of minor importance. The suit was begun more than three and less than six years after the cause of action accrued and the main question is whether or not the whole claim is Statute-barred.

2. The lease was effected by a mokurari <ORG> and a pottah expressed in similar terms. The first defendant agreed that if the failed to cut any coal at all, he would pay a minimum royalty of 4,000 rupees per annum. It is certain that he cut no coal : whether or not he even entered or took possession is not so clear. The sum to be paid per maund of coal gotten is called " commission " and not " rent," but the right acquired by the principal defendant is described as a "settlement." <ORG> runs-

On a proposal being made to take a settlement of the rights of your family deity in this mouzah for the purpose of raising coal from below the surface of the said mouzah by making pits, you, for the benefit of your family god and with the object of increasing the income of the debottar property, are making a settlement with me of the right and interest in the said mouzah to the extent owned by your family deity.

3. Their Lordships accordingly take it, as seems to have been done by the Courts below, that the minimum royalty sued for would be "rent" within Article 110 of Act XV of 1877, which is the enactment applicable.

4. The <ORG> sued on was a registered instrument and the question is whether the suit is one for arrears of rent, as the appellant lessee says and so is barred by Article 110 , or whether, as the respondent lessors contend, it falls within Article 116 as a suit for " compensation for breach of contract in writing registered," and thus was brought within time. The argument for the appellant is that the suit being for arrears of "rent" is in terms within Article 110 and is not, truly speaking, a suit for compensation for breach of contract at all, since the lessee does not covenant to get coal but is at liberty, on paying the agreed minimum royalty, to let the coal alone and commits no breach of contract if he chooses to do so.

5. The Limitation Act (No. XIV of 1859) provided that the period of limitation applicable to "all suits for the rents of any buildings or lands" should be three years (§ 8); the period applicable to suits brought, "for the breach of any contract" three years, unless in the case of a contract which could have heen registered such registration had taken place within six months from the date of the contract (§ 10); and, thirdly, that the period applicable " to all suits for which no other limitation is herein expressly provided " should be six years. Act IX of 1871 repeals the Act of 1859 and adopts the present framework of a schedule subdivided into articles and columns. Schedule 2, Part VI, the part which comprises the cases to which the period applicable is three years, includes Article 110 " for arrears of rent" and Article 115 ' for the breach of any contract, express or implied, not in writing registered and not herein specially provided for." Part VII, which included the cases to which the period applicable was to be six years, contained Article 117-" on a promise or contract in writing registered." This Act in turn was repealed by Act XV of 1877, which re-enacted Article 110 in the same terms and Article 115- almost in the same terms, viz., "for compensation for the breach of any contract, express or implied, not in writing registered and not herein specially provided for," and in Part VII substituted Article 116 for Article 117 , thus, "for compensation for the breach of a contract in writing registered."

6. Both these Acts draw, as the Act of 1859 had drawn, a broad distinction between unregistered and registered instruments much to the advantage of the latter. The question eventually arose whether a suit for rent on a registered contract in writing came under the longer or the shorter period. On the one hand it has been contended that the provision as to rent is plain and unambiguous and ought to be applied and that in any case " compensation for the breach of a contract" points rather to a claim for unliquidated damages than to a claim for payment of a sum certain. On the other it has been pointed out that "compensation" is used in the Indian Contract Act in a very wide sense and that the omission from Article 116 of the words, which occur in Article. 115, " and not herein specially provided for," is critical. Article 116 is such a special provision and is not limited and therefore, especially in view of the distinction long established by these Acts in favour of registered instruments, it must prevail. There is a series of Indian decisions on the point, several of them in suits for rent, though most of them are in suits on bonds. They begin in 1880 and are to be found in all the Indian <ORG>. In spite of some doubts once only waa it held, in 1903, in <CITATION> (1903) I.L.R. 26 All. 138 that in such a suit Article 110 and not Article 116 applied. Then in 1908 and in this state of the decisions, Act IX of 1908 replaced the Limitation Act of 1877 without altering the language or arrangement of the Articles and in 1913, in <CITATION> (1913) I.L.R. 37 Bom. 656 <ORG> held that, especially in view of this re-enactment, the current of decisions must be followed and <NAME> case (1903) I.L.R. 26 All 138 must be disapproved. In the present case <ORG> treated the matter as settled law in the same sense.

7. Where the terms of a Statute or Ordinance are clear their Lordships have decided that even a long and uniform course of judicial interpretation of it may be overruled, if it is contrary to the meaning of the enactment: <NAME> v. <NAME> [1915] A.C. 1100. Such is not the case here. However arguable the construction of Act XV of 1877 may have been when the matter was one of; first impression, it certainly cannot be said that the construction, for which the appellants argue, was ever clearly right. On the contrary, their Lordships accept the interpretation so often and so long put upon the Statute by the Courts in India and think that the decisions cannot now be disturbed.

8. The question of limitation was not discussed at the trial. The principal defendant pleaded payment, made it his main case, failed in it and now acquiesces in his failure. The decree passed was for royalties up to a certain amount and was in favour of the plaintiffs for three-fourths and of the second defendant for one-fourth, less credit for the sum admittedly received by him on account. In form this decree was erroneous and this was admitted in <ORG>. The point was doubtless not brought to the attention of the Trial Judge; otherwise the proceedings could readily have been put in proper form, all the more because the second defendant, though concluding his defence with a claim for a decree against his co-defendant, had previously pleaded that he was entitled to part of the entire arrears of royalties, the subject of the plaintiffs' claim and had prayed " that this suit may be ordered to be prosecuted upon making this defendant a plaintiff." <ORG> corrected the admitted error by making a decree for the entire amount in favour of the plaintiffs and declaring that, as to a named part, it was for their share and as to the residue it was for the second defendant's share. The principal defendant by his appeal had brought the entire decree before <ORG>, disputing it in toto. It was one decree, not two. The second defendant had not appealed. The now appellant argues that, for want of a separate appeal by the second defendant, <ORG> had no jurisdiction to award to the plaintiffs for his benefit the sum which had been awarded to him directly by the Trial Judge. It was said that, as the second defendant, by not appealing, stood by the decree as made below and as in that form it was wrong, he must lose his right altogether. It would be unjust if this were so. Nevertheless, if the appellant could have shown any provision of the Civil Procedure Code, or of any other enactment, which showed clearly that <ORG> had no such power, the objection must have prevailed. No such provision was cited. The appellant himself had brought the entire decree of the Trial Judge before <ORG> for review and thus they were right in making the decree, which should have been made below, even though the second defendant had given no notice of appeal.

9. A point was also made that as to the royalty for one kist the claim was in any case Statute-barred and that the amount of the decree should be reduced accordingly. Their Lordships think that this point is not open to the appellant. There is no trace of its having been raised before either <ORG> below. It does not appear in either the notice of appeal to the High <ORG> or in the grounds for applying for leave to appeal to their Lordships' <ORG>. If it is raised at all by the appellant, in the Reasons appended to his Case, it is raised only obscurely. It depends on the construction of the kabuliyat in a respect not submitted to either <ORG> below and their Lordships decline to entertain it.

10. Their Lordships will humbly advise His Majesty that this appeal should be dismissed with costs.


JUDGMENT

1. The suit which led to this second appeal was instituted for a declaration that the compromise and the decree passed in pursuance of it in A.S. Nos. 31 and 36 of 1908 in <ORG> were not binding on the plaintiffs and the other Brahmin residents of the two villages, for an injunction restraining defendants 1 to 3 from executing the decrees in those appeals, and for recovering possession of 4 items of properties which the defendants had taken possession of in execution. The decrees which the plaintiffs wanted to avoid were passed on appeals from the decree of <ORG> in O.S. No. 167 of 1906. That suit was instituted by plaintiffs Nos. 1 to 5 in the present suit for recovery of possession of certain items of property including items Nos. 1 to 4 in the plaint schedule which were claimed to belong to a certain charity. Plaintiff's Nos. 1 to 5 obtained a decree in O.S. No. 167. Some of the defendants in that suit preferred the appeals Nos. 31 and 36 of 1908. While the appeals were pending the parties entered into a compromise by which the appellants there were to be allowed to remain in possession and enjoyment of the lands from which they had been directed to be ejected by the District Munsif on condition of performing certain services but they were not to be entitled to alienate the properties. The suit No. 167 was instituted by the plaintiffs Nos. 1 to 5 on behalf of themselves and other Brahmin residents of two villages with leave obtained under Section 30 of the Old Civil Procedure Code, all the Brahmin residents being according to the allegations in the plaint equally entitled to the properties on behalf of the charity. Item No. 4 in the plaint was delivered to the 2nd defendant in pursuance of the decree which was passed in pursuance of the compromise. The present suit was at first instituted by the same persons who had launched the previous suit as the representatives of the Brahmins, but subsequently plaintiffs Nos. 6 to 11 were also made plaintiffs. The plaintiffs alleged in the present suit that the compromise in the previous suit was brought about by the fraud of the 5th Defendant, who caused the plaintiffs' <ORG> to sign the compromise by misrepresentation. The District Munsif found that the Vakalat, Exhibit D, executed by the plaintiffs to their <ORG> for the conduct of the appeals, itself authorised the <ORG> to enter into a compromise and that the <ORG>'s act was therefore binding on the plaintiffs in the previous suit and those represented by them. The Subordinate Judge took the same view with respect to the <ORG>s' authority under Exhibit D to compromise the appeals. He also found that the conduct of the plaintiffs showed that their allegation that the compromise was entered into against their wishes was baseless.

2. We agree with the Subordinate Judge on the construction of the <ORG> Exhibit B. It is contended by Mr. <NAME>, the learned pleader for the appellant, that, as a decree had been passed in favor of the Brahmins in the Munsif's <ORG>, their representatives had no right to give up the advantage obtained under it by a compromise and that the authority given to the <NAME> by the representatives was invalid in law and not binding on the Brahmins. The appeal to the District <ORG> and the second appeal to this <ORG> were preferred only by the representatives of the Brahmins who were actually parties to the appeals that were compromised. In consequence of a question put from the Bench to the appellants' <NAME>, whether in any event there would not be a bar by personal estoppel to the maintainability of this second appeal by those who were actually parties to the previous appeals, 31 and 36 and who had executed a <ORG> authorising their pleader to enter into a compromise, he asked for permission to allow plaintiff's Nos. 6 to 11 to come in as parties to the second appeal and to conduct it on behalf of the Brahmin residents of the two villages concerned. We have allowed them to do so and the appeal has been argued on their behalf.

3. The question for decision is whether persons conducting a suit on behalf of themselves and others with the leave of the <ORG> obtained under Section 30 of the repealed Civil Procedure Code have no authority to enter into a compromise so as to bind those whom they represent. The learned <NAME> is hardly prepared to contend that such representatives cannot enter into a reasonable and honest compromise while the suit is pending in the <ORG> of First instance; but he argues that when a decree has been passed in favour of a class represented by some members of it, the representatives cannot compromise the matter in appeal, foregoing either in whole or in part, the benefit of the decree, for that would be in effect a renunciation by them of a right belonging in common to themselves and others. Prima facie it is difficult to support the view that there should be a difference between the powers of the representatives in the original litigation and in appeal. The question in each case would be whether the compromise was unreasonable, fraudulent, or dishonest so as to entitle the members of the class to repudiate the action of their representatives and to claim a declaration that the compromise is not binding on them. If a decree has been passed by one <ORG> in their favor, a compromise by which any portion of the benefit obtained by the decree is given up might require explanation, and it might be more easy to impeach such a compromise as dishonest than a compromise entered into while the litigation is pending in the <ORG> of first instance. This does not however show that there is any difference in principle between the authority of the representatives according as the suit is pending in the <ORG> of first instance or in a <ORG> of appeal when the subject matter of the litigation is brought within the cognisance of the <ORG> of appeal, the decree obtained in the first <ORG> is put in peril and there is no reason why the representatives of the class should not have the right to enter into a reasonable and honest compromise. Mr. <NAME> felt himself compelled to go to the length of contending that once there is a decree, the representatives have no power to enter into any compromise at all so as to bind the class, even if the original decree should happen to be against the class. For this proposition, however, we are of opinion there is no real foundation. In a representative suit under Section 30 the representative is dominus litis until judgment, he can discontinue the suits make admissions or compromise the dispute, it is open to any member of the class who may not have confidence in the representative to get himself made a party, and, if at any stage of the suit he has reason to apprehend the honesty of the representative he can take steps to prevent it. In <NAME> v. <NAME> (1894) L.T. 502 it was held that if the representative becomes brankrupt the action abates and may be stayed unless the trustee in bankruptcy elects to continue, but it is open to the other members of the class to come in and prosecute the suit. See <NAME> v. <NAME> (1878) 9 Ch. D. 552, <NAME> v. <NAME> (1881) 17 Ch. D. 19. See also <NAME> v. <NAME> (1876) W.N. 381. In re <ORG> (1903) 1 Ch. 203, In re <ORG> (1908) 2 Ch. 652 and <NAME> v. <NAME> (1867) L.R. 1 H.L. & Sc. & D. 117 were relied on in support of the appellant's contention. In the first of these cases <ORG> merely referred to the rule that the plaintiff in a creditor's administration action is precluded from discontinuing his action after judgment and held that the rule did not apply to a debenture-holder's action on behalf of himself and all others-the holders of the debentures. The rule with regard to the authority of a plaintiff-creditor in an administration action is based on the ground that when a decree has been obtained for administration, the <ORG> has taken upon itself the duty of administering the assets and that the <ORG> having undertaken that duty will not allow the assets to be wasted by creditors outside. "Therefore in a case like that until there is a certificate, that all the other debts have been paid, the plaintiff after decree is not dominus litis". It is clear that in such a case the decree for administration is by no means imperilled by the further proceedings in the action and it is obvious that one of a number of persons entitled to a right cannot make a renunciation so as to bind the others. The second case also proceeds on the same principle. It was a representative action on behalf of debenture-holders and the <ORG> had ordered that the trusts of the deed should be carried into execution and the usual accounts were directed. It was held that, as a, matter of fact, the representatives had done no act which would amount to a waiver of any of the rights obtained under the order of the <ORG>, though <ORG> thought that the previous orders made between the representatives and the opposite party might give rise to a personal estoppel as against the former. The <ORG> was of opinion that the representative could not voluntarily give away what the debenture-holders were entitled to under the order of the <ORG> so as to bind them. In the third case <NAME> v. <NAME> (1867) L.R. 1 H.L. & Sc. D. & A. 117 the Provost Bailies and Councillors of a burgh instituted an action in the <ORG> of Sessions in Scotland on behalf of the inhabitants and of the public for a declaration that there existed a public right of way for foot passengers along the bank of a river near a town. A decree was passed in their favour. The defenders moved for a rule to show cause why a new trial should not be granted on the ground that the verdict was against evidence. The <ORG> granted a new trial. In this state of matters a compromise was effected whereby the plaintiffs who had instituted the litigation and got a verdict abandoned it and further agreed to pay the defendants two hundred pounds for expenses. It was under these circumstances that a fresh action was instituted by certain persons for the same relief as in the previous action constituted the matter in dispute res judicata. The <ORG> <ORG>s held that it did. <ORG> reversed that judgment. The Lord Chancellor observed that a compromise cannot be admitted as res judicata and expressed a doubt whether any individual may constitute himself the representative of the public in an action of declarator, of a public right of way so as to preclude an action by any other person and to make the plea of res judicata a bar to such action. Lord <NAME> observed that according to <ORG> law an action of declarator could be maintained by some individuals only so as to bind all members of the public. With respect to the question of res judicata he based his judgment that the principle of res judicata should not apply, on the ground that otherwise it would follow that in every case, where any person had brought an action of declarator which had been compromised, the public would be bound unless some stranger could prove that the judgment had been obtained by fraudulent collusion between the parties". Lord <NAME> observed that there was a material distinction between the law of Scotland and the law of England in regard to the right of an individual member of the community to institute an action of declarator to establish a right of public way. An individual had no such right in England, but it was recognised in <ORG> law. With respect to the question whether a compromise decree in such an action would be binding on the community he was not prepared to lay down any general rule that it would not be binding. He agreed with the conclusion of the Lord Chancellor on the ground that the compromise in the particular case was a corrupt one. The judgment of the Lord Chancellor and Lord <NAME> might induce the belief that a compromise decree would not make the matters in dispute in the suit res judicata. This notion, however was shown to be substantially wrong in In re South American and Mexican Co. (1895) 1 Ch. 37, I when the <ORG> of appeal laid down that a judgment by consent is as effective an estoppel between the parties as a judgment whereby the <ORG> exercises its mind on a contested case. The <ORG> did not consider that <NAME> v. <NAME> (1867) L.R. 1 H.L. & Sc. & D. 117 laid down a different rule. The latter case, it must be observed, is not similar to a representative action under Section 30 of the old code corresponding to Order I Rule 8 of the present Code. It does not appear whether, according to <ORG> law, other members of the public could claim, as a matter of right, to intervene as parties in an action instituted by an individual for a declaration of a right of way. If they could not, it would certainly be unreasonable as pointed out by Lord <NAME>, to make a compromise entered into by him binding on the whole community, though a decree passed by <ORG> in an action fairly contested by him might be held to be binding on the public. In the case of a representative suit under Section 30, all the members of the class represented are in effect parties to the suit and any one of them is entitled to bring himself on the record as an actual party. It was held in <CITATION> . <NAME> (1910) I.L.R. 33 M. 483, that a similar right to intervene exists during the pending of an appeal also. By not intervening the absent members of the class in effect constitute the parties Eo nominee their representatives for the conduct of the suit and they must take the consequences of their doing so. They are entitled to the advantage of any judgment passed in the action and must equally suffer any disadvantage arising from it, and there can be no difference in principle in this respect between a decree passed on contest, and a decree passed by the consent of their representatives. They can of course avoid any adjudication or compromise which is the result of fraud on the part of their representatives, and a compromise which is unreasonable and unjustifiable may also possibly be avoided on the same principle. There is no foundation for any distinction on the ground that the compromise was made while the litigation was pending in appeal and not in the <ORG> of first instance.

5. The decision of <ORG> must be affirmed and we dismiss the second appeal.


JUDGMENT <NAME>, J.

1. Three points have been argued on these appeals, one by Mr. <NAME>, the leading counsel for the appellant, and two others by Dr. <NAME>, the junior counsel.

2. The plaintiff, the present appellant, had agreements with three persons, who are the respondents, only two of whom, however, appear, by counsel, under which he purported with great elaboration to purchase from them their expectations under the will of their uncle, or alternatively their rights as his nephews expectant upon the termination of the surviving widows' rights in the property of the uncle, and among many other purposes which are recited in this agreement, for which advances are agreed to be made, one, and apparently the principal one, was that an appeal might be prosecuted ultimately to His Majesty in Council for the purpose of establishing a will which the deceased was said to have made. Unfortunately their Lordships, affirming the decision in the <ORG> below, found that that will was a forgery. That therefore reduced the expectations of the three respondents to their interest in the property after the widows' rights should come to an end, and as a matter of fact after a time one widow died and a compromise was entered into with the approbation of the <ORG> in respect of the rights of the other widow, the effect of which was to accelerate the time when the nephews became entitled to the inheritance.

3. In the present suits in India the trial Judge stated ten issues. The first four of those issues were argued and dealt with by him. The point in substance upon which those four issues turned was whether or not the agreements were illegal or void on the ground that they dealt with an expectancy. There were a number of othersas a matter of fact, eleven in allbut the remaining seven were not dealt with by the learned Judge. An application was made to him that he should pronounce a decree giving effect to his determination of the first four issues, which he declined to do upon the ground that there remained some issues in the case which had not been dealt with, one of them, for example, being an issue whether the plaintiff was entitled to a refund of the amounts which he had in fact paid or any of them, and another whether his rights were barred by limitation.

4. The present appellant was advised that his best course was to obtain an immediate decree upon the four issues, which had been dealt with and appeared at that time to be the only, substantial ones, in order that he might prosecute his appeal to <ORG>, and ultimately to His Majesty in Council, and he therefore elected to abandon all the other issues, whatever they might be; in fact, he never called any evidence in support of them, and a formal order was made upon his petition disposing of them all in that way. We are told, and very likely it may be so, that at that time the advice was largely influenced by the consideration that it was still thought to be an open question before their Lordships whether, apart from the Transfer of Property Act , it might be held competent to these heirs, according to the ordinary Hindu law, to contract to transfer, and ultimately to transfer their expectation, such as it was, and no doubt, if that was the real point of the litigation it was worth while to abandon minor points in order to get that issue determined. Between the time when the decree was asked for and obtained and the present time there has been a decision of their Lordships' Board in the case of <NAME> v. <NAME> (1922) L.R. 50 J.A. 69 and although, as it appears to their Lordships, it simply restates what had frequently been stated before, the appellant now recognises that the last word has been said, so far as he is concerned, about the possibility under Hindu law of such an interest being transferred.

5. Under these circumstances an application was made to their Lordships by Mr. <NAME> to allow the petition which had been presented to <ORG> to be recalled, and the decree that was made upon that petition to be set aside and so to allow in some shape or form discussion, if not proof, of the remaining issues in the case, the object being to show that there were, or might be, circumstances in which it possibly could be held that the time of the discovery of the illegality of the contracts was not the time when the contracts Were made and the parties knew the law or must be presumed to have known it, but at a later date (what date their Lordships are not exactly told). It was urged that, if such circumstances could be suggested here, a view similar to that which the <ORG> took in the case above mentioned might be taken in favour of the present appellant also. In that case, however, there were special circumstances, wholly differant from those in the present case, circumstances which were proved in evidence and were sufficient for their Lordships to act upon and to enable them to say that the discovery in the case was later than the date of the contract itself. There has been no suggestion anywhere in the course of the present proceedings that any such facts occurred as could alter the view which must normally be taken of the meaning of the word "discovery" and of the time at which that discovery must be held to have occurred. Not only so, but it was by the deliberate act of the appellant himself, for considerations which at the time were very likely wise considerations, that he closed the door to any investigation of that issue at all. Their Lordships are content to dispose of the first point by saying that the additional issues cannot be gone into now and that upon the face of the matter the appeal must be dealt with upon the question whether, either under the Transfer of Property Act or under the Hindu law applying to purchases of expectations of inheritances, there is any ground upon which these contracts can be supported.

6. Dr. <NAME> has developed these points, and his points appear to be two, setting aside for the moment the Transfer of Property Act , upon the ground that it deals with an actual transfer or conveyance and not with a contract to transfer. It is contended that there is nothing in the reason of the thing to prevent two parties, who are concerned in the way in which these parties were concerned, from entering into a contract for the future sale of future expectations. It is admitted that there is no authority to be found anywhere, which supports the view that such a contract is possible, and it in admitted that there is authority in India to the contrary, the authority in question being the case of <CITATION> (1915) I.L.R. 39 Mad. 554, which so satisfied the learned Judge at the trial that he expressed his assent to the reasoning, without further discussion, and <ORG> in its turn was satisfied also. The reasoning of that decision may well be summed up first in a quotation from the judgment of Chief Justice <NAME>, and secondly, in a quotation from that of his colleague, Mr. Justice <NAME>.

7. The learned Chief Justice says, at page 558:

On this question, looked at apart from authority, I should not entertain any doubt, as it seems futile to forbid such transfers of expectancies if contracts to transfer them are to be enforced as soon as the estate falls into possession. In these circumstances it seems to me that it is our duty to give effect to what we consider plain provisions of our statute law instead of following a course of English decisions, which would appear to have been based, from the very first, on a regard for long established practice rather than on principle and to have failed to commend themselves to Lord <NAME>.

8. Then Mr. Justice <NAME>, at page 559, says:

The Transfer of Property Act does not permit a person having expectations of succeeding to an estate as an heir, to transfer the expectant benefits) when such a transfer is purported to be made an attempt is in effect made by the two persons to change with each other their legal positions, an attempt by the one to clothe the other with what the <ORG> refuses to recognise as rights, but styles as a mere chance incapable of being transferred. It would be defeating the provisions of the Act be hold that though such hopes or expectations cannot be transferred in present or future, a person may bind himself to bring about the same results by giving to the agreement the form of a promise to transfer not the expectations but the fruits of the expectations, by saying that what he has purported to do may be described in a different language from that which the <ORG> has chosen to apply to it for the purpose of condemning it. When the <ORG> refuses to the transaction as an attempt to transfer a chance, it indicates the true aspect in which it requires the transaction to be viewed.

9. Their Lordships think that they are only following oat numerous other passages which have been referred to in earlier judgments of this <ORG> when they accept that reasoning and that conclusion. It is impossible for them to admit the common sense of maintaining an enactment which would prevent the purpose of the contract, while permitting the contract, to stand as a contract, or to see how by appealing to Section 65 of the Indian Contract Act, or to the nature of the bargain as a mere bargain de future, they could uphold it as a contract when it is a contract as to which, not only must specific performance be refused under the Transfer of Property Act , but as to which damages can never be recovered, because the contract is not a performable contract until the realisation of the expectation occurs.

10. There is another way in which the learned Counsel for the appellant puts the point, namely, that there is here a contract wholly distinguishable from any contract as to spes successione, because, after carefully providing for all eventualities, the documents deal with the possibility of the widows, or one of them, relinquishing their life intersts either jointly or severally, or selling them to the reversionary heirs, in which event from the date of the relinquishment or sale the heirs would become the present owners of the estate by right of inheritance. It is suggested that this provision ought to be read as relating to a transaction with strangers, embedded in the middle of a much longer contract with the parties to this appeal and relating to their hopes of inheritance; in other words, that it should be treated as though it read : "Further, if we can obtain by purchase from total strangers to the family a portion of our late uncle's property, then we undertake to sell it to you on the same terms as those upon which we have undertaken to sell our spes successione." It is not necessary to discuss how far such a contract might be supportable, because it is quite plain upon the documents that this is not such a contract, and therefore the point, ingenious though it is, is sufficiently dealt with by dismissing it.

11. The result, therefore, is that on all the points the appeal fails. As they have been consolidated in India and before their Lordships there will be one set of costs only, and the two successful respondents who appear by counsel will get that set of costs, and their Lordships will humbly advise. His Majesty accordingly.


<NAME>, J.

1. This appeal arises out of a judgment dated 30th June, 1976 passed by <ORG> of <ORG>, in Misc. Appeal No. 194 of 1967 arising out of the decision of the learned Additional Subordinate Judge, Patna in Misc. Case No. 38 of 1961 since renumbered as Misc. Case 14 of 1962. The said Misc. Case arises cut of an application made by the appellant <NAME> for making an award in an arbitration proceeding, a Rule of Court after directing the arbitrator to file the award. The relevant facts relating to the appeal may be indicated as follows:

2. A contract was entered between the appellant <NAME> and the President of India on 10th December, 1957 for loading, unloading and handling of goods at Gaya Goods Shed of the <ORG> for the period of 3 years. Such contract however was terminated by <ORG> before the completion of the period of contract namely with effect from 2nd August, 1960. In terms of arbitration clause in the argument for reference of the dispute arising out of the contract, an arbitrator was initially appointed by the General Manager, <ORG>. There was dispute about such appointment. Ultimately, <ORG> of Patna, appointed <NAME> Deputy General Manager, <ORG> as the sole arbitrator by consent of the parties, and such arbitrator entered upon the reference and after hearing the parties, made an award in favour of the appellant for a sum of Rs. 82,100. Such award was made on 26th February, 1965. The arbitrator sent carbon copies of the award signed by him to both the parties. So far as the appellant is concerned, the arbitrator forwarded the signed copy of the award to the appellant alongwith a forwarding letter dated 20th February, 1965, indicating therein that he had signed and published the award on 26th February, 1965, and the same was being sent for the information of the appellant. There is a dispute as regards the date when the said copy of the arbitration award and the forwarding letter dated 26th February, 1965 of the arbitrator were received by the appellant.

3. The appellant made an application on May 20, 1966 for making the award a Rule of Court and for directing the arbitrator to file the award in Court before the learned Subordinate Judge, Patna. The case of the appellant was that the said application was made by him under Section 17 of the Arbitration Act and not under Section 14 of the said Act. In the petition of objection to the said application for making the award a Rule of Court the plea of bar of limitation was not taken by the respondent and only at the stage of arguments, such contention of bar of limitation was raised by the respondent. The learned Subordinate Judge upheld the award as valid. The learned Subordinate Judge also rejected the plea of bar of limitation. Accordingly the Misc. Case was allowed by the learned Subordinate Judge and the award was made a Rule of Court.

4. Being aggrieved by such decision of the learned Subordinate Judge, the respondent, <ORG> preferred a Misc. Appeal No. 194 of 1961 in <ORG> at Patna. In the appeal, the bar of limitation was raised by the <ORG> for challenging the correctness of the decision made by the learned Sub Judge. It was contended on behalf of the applicant <NAME> that the application was not barred by limitation and in any event, it was a fit case where delay, even if any, in presenting the application for making the award a Rule of Court should be condoned. It was contended by the applicant that he had received the signed copy of the award alongwith forwarding letter of the arbitrator only in first week of May, 1965 and as such the application made by him was not time barred. <ORG> made a limited remand for answering two issues framed by it by the learned Subordinate Judge by keeping the Misc. Appeal pending. The issues directed to be decided by the learned Subordinate Judge are to the following effect:

(i) When did the petition respondent get notice of the making of the award from the arbitrator?

(ii) whether on the findings arrived at by the court below, the application itself is barred by limitation?

5. After hearing the parties and considering the evidences and material on record the learned Subordinate Judge came to the finding that in view of the presumption that the registered cover containing the signed award and the said forwarding letter should reach the addressee (the appellant) in time, it should be held that such signed copy of the award and the forwarding letter must have reached by first week of March, 1965.

6. The learned Subordinate Judge, however held that the case of the applicant, <NAME>, was that he had filed the award in the <ORG> under the authority of the Arbitrator. Although the Arbitrator in his evidence had stated that he had not given any authority to the applicant for filing the award in <ORG>, but as he had sent the signed copy of the award to the applicant for appropriate action, it should be held that although no written authority was given by the arbitrator, an implied authority of the arbitrator was there. The learned Subordinate Judge further held that the signed copy of the award filed by the applicant should be treated as an original award and as such the prayer made by the applicant for calling for the award from the arbitrator was simply redundant and superfluous. The court was competent to pass appropriate order on the basis of the signed copy of the award since filed by the applicant. In such circumstances, the provisions of Article 119(a) of the Limitation Act was not attracted. The learned Subordinate Judge also held that in the aforesaid facts, the residuary Article, namely, Article 137 of the Limitation Act was attracted and the period of limitation being three years under the residuary Article, the application made by the applicant was not time barred. The learned Subordinate Judge further held that even if it was assumed that the case was governed by Article 119(a) of the Limitation Act , it was a fit case for condoning the delay in presenting the application beyond the period of limitation. In view of the conflicting decisions as to the applicability of the said Article 119(a) when a party to the agreement filed the original award and also in view of the fact that the arbitration proceeding was initiated as far back as in the year 1961 when the old Limitation Act was in force and the period of limitation for filing an application for making the award rule of court was ninety days under Article 178 of the old Limitation Act and the new Limitation Act having come into force only with effect from January, 1964 prescribing the period of limitation as thirty days, a litigant might bona fide think that the arbitration proceeding having been initiated in 1961, the old Limitation Act would be applicable. In the aforesaid facts, it was a fit case where the delay, even if any, in presenting the application should be condoned under Section 5 of the Limitation Act.

7. Such findings on the aforesaid two issues were taken into consideration by <ORG> in disposing of the Miscellaneous Appeal No. 194 of 1967. It may be noted here that <ORG> has come to the finding that the award was otherwise valid and there was no misconduct on the part of the arbitrator for which the award was liable to be set aside. The postal receipt and the acknowledgment receipt of the postal cover by the appellant since sent to the <ORG> of the learned Subordinate Judge along with the award by the arbitrator could not be found with the record of the case and the responsibility for the loss of those papers could not be precisely fixed. <ORG>, however took into consideration the account of postage expenses incurred in connection with the sending of the arbitration award (Ext. B) to the appellant which showed that on February 27, 1965 the said award was sent under a registered cover. The stenographer of the arbitrator had also deposed to the effect that he had received the acknowledgment receipt of the registered letter from the applicant within ten days from the date of dispatch and he had handed over the same to the arbitrator. <ORG> was of the view that the evidence of posting of the award and the deposition of the stenographer that he had received the acknowledgment receipt got corroboration from the documentary evidence and also from the facts and circumstances of the case. <ORG> was of the view that the evidences of the arbitrator and the stenographer were more reliable than the oral evidence adduced on behalf of the applicant. <ORG> also drew adverse inference against the applicant for not producing the registered cover which admittedly the applicant received from the arbitrator. Considering the fact that at the relevant time there was no disturbance in Calcutta during the period when the registered cover was addressed to the applicant, <ORG> was of the view that it should be presumed that the said registered cover had reached by the first week of March, 1965. <ORG> referred to a decision of this <ORG> made in the case of <NAME> v. <ORG> , wherein it has been held that mere handing over a signed copy of the award to a party does not mean that there was any implied authority from the arbitrator to file the award in <ORG> on his behalf. Such authority from the arbitrator is required to be satisfactorily alleged and approved. <ORG> has come to the finding that there was no implied authority from the arbitrator given to the applicant to file the same to make it a rule of court and the forwarding letter of the arbitrator had indicated that the same was sent only for information of the concerned party. Accordingly, the application made by the applicant must be held to be made under Section 14(2) of the Arbitration Act and Article 119(a) of the Limitation Act was attracted in the facts of the case. The contention of the applicant that the application presented by the applicant should be treated as an application under Section 17 of the Arbitration Act was not accepted by <ORG> and the contention that the case was governed by the residuary Article 137 and not by Article 119(a) of the Limitation Act was also not accepted by <ORG>. <ORG> also did not accept the case of the applicant for condonation of delay under Section 5 of the Act in view of the fact that it was the positive case of the applicant that he had filed his application within three weeks from the date of receipt of the award. In such circumstances, the contention of the applicant that he was not aware of the change of the law of Limitation as sought to be contended was completely contradictory to the firm stand taken by the applicant that he had filed the award within three weeks from the date of receipt of the award. <ORG> was of the view that in the aforesaid facts, the case of the applicant that he was misled because of the provisions of the old Limitation Act , was not acceptable. <ORG> also noted that the applicant had not consulted any lawyer after receiving the copy of the award and if the appellant had not cared to ascertain the period of Limitation he was squarely to be blamed and there was no occasion to condone the delay by the court. The applicant also contended that the application for making the award a rule of court having been served on the counsel of the opposite party, the objection to the said application should have been filed within a period of thirty days from the date of such service. When admittedly such objection had not been filed within thirty days, such objection must be held to be time barred and the application of the applicant should have been accepted by the court without considering any of the objections of the opposite party. <ORG> rejected such contention. <ORG> held that service of a copy of the application on a counsel of the opposite party who had appeared in an earlier proceeding under Section 8 of the Arbitration Act did not amount to service of notice of filing the award as contemplated by the Arbitration Act and Article 119(b) of the Limitation Act . <ORG> held that the award was actually filed in <ORG> on June 12, 1965 by the Arbitrator and on June 20, 1965 the court directed that the opposite party should be informed about the filing of the award and objection petition was filed within thirty days from the date of such direction. Accordingly, there was no occasion to hold that the objection petition was itself barred by limitation. In that view of the matter, <ORG> allowed this appeal, set aside the order passed by the learned Subordinate Judge and dismissed the application made by the applicant to make the said award a rule of court. The cross objection filed by the applicant for future and pendentelite interest on the sum awarded was also dismissed.

8. Mr. <NAME>, learned Counsel for the appellant has very strenuously contended that the plea of limitation had never been taken by the objector-respondent either in the petition of objection or even in the two applications for amending the objection petition. It was only during the argument, a plea of limitation was vaguely raised. In such circumstances, <ORG> was not justified in allowing the parties to raise the plea of limitation and sending the aforesaid two issues to the learned Subordinate Judge for deciding and reporting back to <ORG>. Mr. <NAME> has also contended that unfortunately the appellant could not file the registered cover but it was specifically stated by the appellant that the registered cover was received by him only in the first week of May. In the absence of any document showing such service of the copy of the award along with the forwarding letter of the arbitrator, <ORG> was not justified in proceeding on the presumption that the registered cover must have been received within reasonable time, namely, by first week of March, 1965. He has contended that the evidence adduced by the arbitrator and his stenographer should not have been accepted by <ORG> for coming to the finding that the registered cover had in fact been sent on February 27, 1965. Mr. <NAME> has contended that in the instant case, the award made by the arbitrator who was the Dy. General Manager of <ORG>, was otherwise found to be valid and the same was not liable to be discarded on account of the misconduct of the arbitrator. It is only unfortunate that the application of the said award has not been made a rule of court and the application has been set aside only on the ground of limitation. Referring to a decision of this Court made in the case of <CITATION> , wherein this Court has held that resort to plea of limitation by a government or public authority to defeat a just claim of a citizen is not fair and such practice should be depreciated, Mr. <NAME> has submitted that a belated plea of bar of limitation should not be allowed to be raised to defeat a just claim of the appellant whose contract had been unduly terminated to his serious loss and prejudice. He has also submitted that the original applicant has died and it will cause serious hardship to the heirs of the original applicant to refund the awarded sum since received by the applicant. Mr. <NAME> has also contended that it is an admitted case of the parties that the carbon copy of the signed award had been sent to the applicant and such copy had been filed by the applicant to make the award a rule of court. Although the applicant in his application has stated that the direction should be given to the arbitrator to produce the award in Court, such statement, in the facts of the case, should not have weighed with the court because the original award itself had been filed by the applicant. In the aforesaid circumstances, the provision of Section 14 of the Arbitration Act was not attracted and the case being governed by Section 17 of the Arbitration Act, the limitation for presenting the application for making the award filed by the applicant a rule of court was not referable to Article 119(a) of the Limitation Act but such case was squarely governed by Article 137. Mr. <NAME> has further submitted that even if such contention is not accepted by this Court, in the special facts and circumstances of the case, the delay in presenting the application should be condoned. In this connection, he has referred to the decisions of this Court in <NAME> and Ors. etc. v. Special Land Acquisition Officer, Bangalore and in Banarsi. <CITATION> . , wherein this Court indicated that 'sufficient cause' appearing in Section 5 of the Limitation Act should be considered with a pragmatic approach and the court should be slow in shutting the door of justice to a litigant on the score of limitation to defeat a just claim because a litigant does not stand to gain by coming late to a court and then suffer a prejudice by making his case barred by limitation.

9. The learned Counsel appearing for the respondent has, however, disputed the contentions made by Mr. <NAME> and has contended that the case is squarely governed by Article 119(a) of the Limitation Act and the application presented by the applicant cannot be held to be an application made under Section 17 of the Arbitration Act. In the instant case, there was no express authority from the arbitrator to file the award for making it a rule of court and the decision of this <ORG> in <NAME> case (supra) is squarely applicable. The learned Counsel has further contended that the appellant did not come with a clean hand and he made a false statement and stuck to such false case that he had received the signed copy of the award in the first week of May, 1965. In the aforesaid circumstances, the High <ORG> was justified in not accepting the prayer for condonation of delay. The High <ORG> has clearly come to the finding that the case of the appellant was untrue and he had received the copy of the award some time in the first week of March, 1965. The learned Counsel has submitted that the High <ORG> has given very cogent reasons for allowing the appeal and setting aside the decision of the learned Subordinate Judge in making the said award a rule of court and interference by this <ORG> is not called for.

10. After giving our anxious consideration to the facts and circumstances of the case, we do not find any reason to interfere with the decision of <ORG>. In our view, <ORG> has rightly held that the application made by the appellant was an application for directing the arbitrator to file the award in <ORG> so that such award is made a rule of <ORG>. In this case, there was no express authority given by the arbitrator to the applicant to file the award to make it a rule of <ORG> although a signed copy of the award was sent to the applicant. The forwarding letter clearly indicates that the award was sent for information. Accordingly, the decision of this <ORG> made in <NAME> case (supra) is applicable. The High <ORG> has given very cogent reasons which, we have indicated in some details, for not accepting the case of the appellant that he had received a signed copy of the award and the forwarding letter some time in May, 1965 and we do not find any reason to take a contrary view. The applicant has not produced the registered cover received by him which would have established the actual date of the receipt of the postal cover by the applicant convincingly. We are also not inclined to hold that the delay in presenting the application deserves to be condoned in the facts and circumstances of the case. The appellant has taken a very bold stand that he had received the signed copy of the award only in May, 1965 and only within three weeks of such receipt, he had filed the application. On the face of such statement, the plea of ignorance of the change in the Limitation Act need not be considered and accepted. As the case sought to be made out by the appellant that he had received the signed copy of the award only in May, 1965 has not been accepted, and we may add, very rightly by the <ORG>, the question of condonation of delay could not and did not arise. In our view, it is not at all a fit case where in the anxiety to render justice to a party so that a just cause is not defeated, a pragmatic view should be taken by the <ORG> in considering the sufficient cause for condonation of delay under Section 5 of the Limitation Act. Coming to the contention of Mr. <NAME> that to defeat a just claim of the appellant, the ignoble plea of bar of limitation sought to be raised by the respondent should not be taken into consideration, we may indicate that it may not be desirable for the government or the public authority to take shelter under the plea of limitation to defeat a just claim of a citizen. But if a claim is barred by limitation and such plea is raised specifically the court can not straightway dismiss the plea simply on the score that such plea is ignoble. A bar of limitation may be considered even if such plea has not been specifically raised. Limitation Act is a statute of repose and bar of a cause of action in a court of law, which is otherwise lawful and valid, because of undesirable lapse of time as contained in the Limitation Act , has been made on a well accepted principle of jurisprudence and public policy. That apart, the appellant, in this case, having taken a false stand on the question of receipt of the signed copy of the award to get rid of the bar of limitation, should not be encouraged to get any premium on the falsehood on his part by rejecting the plea of limitation raised by the Respondent. We may also indicate here that <ORG> is justified in its finding that the objection petition has been filed within time by the respondent and the service of the copy of the application made by the appellant on the counsel of the respondent who had appeared in an earlier proceeding did not constitute a notice as contemplated under Article 119(b) of the Limitation Act . In the aforesaid circumstances, the appeal must fail and is dismissed but we make no order as to costs.