PETITIONER: <NAME> Vs. RESPONDENT: THE STATE OF MADHYA BHARAT DATE OF JUDGMENT: 03/10/1960 BENCH: <NAME>, P.B. BENCH: <NAME>, P.B. SINHA, <NAME> P.(CJ) <NAME>, J.L. <NAME>, K. <NAME>, K.N. CITATION: 1961 AIR 298 1961 SCR (1) 957 CITATOR INFO : R 1962 SC 141 (7) R 1962 SC1288 (8,23) RF 1963 SC 332 (11) D 1963 SC 953 (12) R 1963 SC1638 (32) D 1964 SC 888 (5) R 1964 SC1043 (56,96,130,132,160) R 1964 SC1793 (11,12,13) R 1964 SC1903 (18) R 1966 SC 704 (4) RF 1968 SC1053 (2) R 1971 SC 530 (54,329) RF 1975 SC2299 (581) RF 1977 SC1361 (192) D 1987 SC 82 (11) ACT: Hereditary Military Pension--Bachat--Right to receive guaranteed by Kalambandis issued by <NAME> of Gwalior--If can be terminated by executive order--Kalambandis: if existing law--Kalambandis of 1912 and 1935 (Gwalior)--Constitution of India, Art. 372. HEADNOTE: The appellant was the recipient of a hereditary military pension called Bachat granted by the <NAME> of Gwalior to his ancestors in recognition of military service. The right to receive the said pension was recognised by the Kalambandis of 1912 and 1935 issued by the said <NAME>. When Gwalior integrated with Indore and Malwa in 1948 to form a union, s. 4 Of 122 958 Act No. 1 of 1948 provided for the continuance of all laws, ordinances, rules and regulations having the force of law in the covenanting states. After the formation of the <ORG> of Madhya Bharat under the Constitution, <ORG>, which remained liable to pay the said pension, by an executive order, terminated the right. The appellant moved <ORG> against the said order under Art. 226 of the Constitution. and his case was that the right to receive the said pension, having been statutorily recognised by the <ORG> of Gwalior, could not be extinguished by an executive order. <ORG> of <ORG> held against him. The question was whether the Kalambandis of 1912 and 1935, on which the appellant rested his case, were existing law within the meaning of Art. 372 Of the Constitution. Held, that the question must be answered in the affirmative, No distinction could be made between an executive order and a legislative command made by an absolute monarch, such as the <NAME> of the Indian <ORG> of Gwalior were, since they have the same force of law, passed in whichever capacity they may be, and govern the rights of the subjects. <CITATION> , A.I.R. 955 S.C. 352 and <CITATION> , A.I.R. 1956 S.C. 6o, referred to. Consequently, even supposing that the Kalambandis did not amount to a quanun or law technically so called, they would nevertheless be orders or regulations having the force of law in the <ORG> at the material time and would be existing law within the meaning of Art. 372 Of the Constitution. <CITATION> ,  1 S.C.R. 735, referred to. The contents of the two Kalambandis and the character of their provisions clearly show that they could not be mere administrative orders, and if not statutes, must, in any event, be rules and regulations having the force of law. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 84 of 1954. Appeal from the judgment and order dated September 1, 1954, of the former <ORG> in Civil Misc. Case No. 11 of 1952.

<NAME>, <NAME>, <NAME> and <NAME>, for the appellant.

<NAME>, Advocate-General for the State of Madhya Pradesh, <NAME> and <NAME>, for the respondents.

1960. October 3. The following Judgment of the Court was delivered by <NAME>. J.-The question of law which arises for our decision in this appeal is whether the <NAME> under which the appellant's right to receive Rs. 21/8/- per month by way of Bachat (balance) is guaranteed constitute an existing law within the meaning of Art. 372 of the Constitution. This question arises in this way. The appellant <NAME> describes himself as an Ekkan and claims that as such Ekkan he and his ancestors have been receiving the monthly payment of Rs. 21/8/-from <ORG>. It appears that the appellant's ancestors had accompanied the <NAME> to Gwalior from Maharashtra about 200 years ago, and had rendered military service in conquering the territory of Gwalior. In recognition of this service the appellant's ancestors were granted a fixed amount of money per month, and this amount has been received by the appellant's family for several generations past. The right to receive this amount has been' recognised by the Rulers of Gwalior in several statutes, orders, rules or regulations having the force of statutes; amongst them are the <NAME> of 1912 and 1935. On April 18, 1952, <ORG> issued an executive order terminating the said payment to the appellant; that is why the appellant had to file the present petition in <ORG> against <ORG> and <ORG>, <ORG>, respondents 1 and 2 respectively under Art. 226 of the Constitution. In this petition the appellant bad prayed for an order that a writ in the nature of mandamus, or in the alternative an appropriate direction or order be issued calling upon the respondents to forbear from giving effect to the said executive order. In his petition the appellant challenged the said order on two grounds. It was urged that since the appellant's right to receive the specified amount had been statutorily recognised by the State of Gwalior it was not open to respondent 1 to extinguish that right merely by an executive order. In the alternative it was contended that the right to receive the said amount from month to month was property to which the appellant was entitled, and he could not be divested of that property without the payment of compensation under Art. 31 of the Constitution.

These pleas were denied by the respondents. The respondents' case was that the payment made to the appellant's ancestors and to him was by way of emoluments for military service and did not constitute property, and that the Kalambandis on which the appellant relied did not constitute an existing law under Art. 372. It appears that along with the appellant ten other persons had filed similar petitions making prayers for similar writs or orders against the respondents and their pleas were similarly challenged by the respondents. All the eleven petitions were accordingly tried together.

These petitions were heard by a Full Bench of <ORG> consisting of <NAME>, <NAME> and <NAME> and <NAME>, JJ. All the three learned judges agreed in holding that the <ORG> on which the petitioners had rested their case were orders issued by the Ruler for the purpose of reorganising the scheme of administration and that they did not amount to law or regulation having the force of law. <NAME>, J., gave a specific reason in support of his conclusion that the <ORG> did not amount to a statute. He held that in Gwalior there was a well recognised law-making machinery or custom, and since the <ORG> in question did not satisfy the requirements of the forms and solemnities specified in that behalf they could not claim the status of a statute. In the result all the petitions were dismissed. The appellant then applied for and obtained a certificate from <ORG> under Art. 133(1)(c) of the Constitution, and it is with the said certificate that he has come to this Court in the present appeal.

When this appeal was heard by this Court on March 31, 1958, it was conceded by both the parties that it would be better that they should be allowed to adduce additional evidence before the question of law which was undoubtedly one of general importance, was decided by this Court. In fact an application' bad been made by the appellant before this Court for leave to adduce additional evidence and no serious objection was raised to the additional evidence by the respondents. Therefore, by consent the matter was sent back to <ORG> with a direction that parties should be allowed to adduce additional evidence and <ORG> should record its finding on the issue remitted to it in the light of the said additional evidence. The issue remitted to <ORG> was whether the Kalambandis in question were statutes or regulations having the force of statutes in the State of Gwalior at the material time or were they merely administrative orders.

After remand parties have led evidence before the' <ORG>, and the <ORG> has recorded its finding on the issue remitted to it. <NAME> and <NAME>, <NAME>., have found in favour of the appellant and have held that the Kalambandis in question were regulations having the force of law in the State of Gwalior at the material time; <NAME>, J., has taken a contrary view. After the finding of the <ORG> was thus recorded papers in the case have been submitted to this Court, and the appeal has now come before us for final disposal; and so we are called upon to decide the short question of law set out by us at the commencement of this judgment.

At the outset it may be relevant to refer very briefly to the historical background of the claim made by the appellant and the other petitioners in all these matters. We have already stated that the appellant claims to be an Ekkan. These Ekkans, it appears, were a class of horsemen who formed part of the Peshwa's <ORG> along with Silledars. They were single volunteers and they brought with them their own horses and accoutrements. The other petitioners claimed to be Silledars whose ancestors formed part of the Maharatta <ORG>. These Silledars were troopers who brought in their own horses and weapons. They brought bodies of troops armed and equipped at their own expense. They were also known as Paigadars. It also appears that later on an account was made as to the expenses which the Ekkan may have to bear for the maintenance of his horse, and from the total amount payable to him the amount of expenses thus determined was deducted, and that presumably left the balance Rs. 21/8/- which was paid to him as Bachat or balance. Broadly stated this appears to be the position on the pleadings of the parties in the present proceedings. The question which calls for our decision is whether the right to receive this amount is a statutory right; in other words, whether the Kalambandis on which the right is based were rules or regulations having the force of law in <ORG>?

The two <ORG>s in question were issued in 1912 A. D. and 1935 A. D. respectively. The first <ORG> was issued by the Ruler Sir <NAME> himself, whereas the second was issued by the <ORG> which was then in charge of the administration of the State subsequent to the death of Sir <NAME> which took place in 1925. It is well-known that the States of Gwalior, Indore and Malwa integrated and formed a Union in 1948. After the Union was thus formed Act No. 1 of 1948 was passed for the purpose of taking over the administration of the covenanting States. Section 4 of this Act provided for the application of local laws, and as a result all laws, ordinances, rules, regulations, etc., having the force of law in any of the covenanting States were to continue to remain in force until they were repealed or amended according to law. Thus the existing laws which were in force in the State of Gwalior continued even after the union ; and according to the appellant the operation of the <ORG>s continued under s. 4.

On September 19, 1950, a notification was issued by the Commissioner, <NAME>, <ORG>, <ORG>, declaring that in the case of army personnel described in paragraph 1, question of mutation, adoption. etc., arising in regard to the said personnel would be dealt with by the office of the Commissioner, and <NAME> and other amounts payable to the said personnel would be distributed by the same office. Members of the said army, personnel were accordingly asked to claim payment in respect of their Nemnook from the office of the Commissioner. Subsequently, under the new set up which came into existence after the formation of <ORG> the armies of the covenanting States were amalgamated and reorganised by <ORG> so as to fit them into the overall plans of the defence of the country. The report of the general administration of <ORG> shows how this reorganisation was carried out. As a result of this reorganisation the expenditure on account of hereditary military pensions of <NAME> to Silledars and Ekkans was agreed to be charged to the <NAME> department of the <ORG> Government; that is how the <ORG> Government continued to be liable to pay the amount to the appellant from mouth to month.

Then followed the impugned order passed by respondent 1 on April 18, 1952. Clauses 1 to 4 of this order made provision for the continued payment to the persons specified thereunder. Clause 5, however, declared that the distribution of amounts to Silledars and Ekkans not covered by cls. 1 to 4 would be absolutely stopped from May 1, 1952. It is this order which has given rise to the present proceedings.

Before dealing with the question as to whether the Kalambandis constitute an existing law or not it may be useful to refer very briefly to the constitutional position in regard to the Government of Gwalior at the material time. It appears that in 1905 Sir <NAME> set up an advisory council known as <ORG>. He was himself the President of this <ORG> and assumed the title of <NAME>. This <ORG> was constituted as a sort of law- making body, but in s. 5 of the Quaid <ORG> it was expressly provided that the acceptance or rejection of any recommendations made by the majority of the <ORG> would depend entirely on the discretion of the President. This was followed in 1916 by the establishment of <ORG> for the purpose of making laws for the State. With this body were associated some nominated public citizens. Section 4(a) of the Quaid <ORG>, however, made it clear that its function was merely to advise <NAME> on such matters as would be placed before it, and s. 4(b) left it to the absolute discretion of <NAME> either to accept or not the recommendations of the body. In 1918 the Constitutional Manual describing the functions of the members of the Ruler's <ORG> was pub- lished and <ORG> which was <ORG> was established. It consisted mainly of nominated members though some members elected from recognised public bodies also were associated with it. According to s. 31(6) of the relevant law creating this body, deliberations of the body were ultimately to be submitted to <NAME> for his final orders, and it was his orders which alone could be executed. It would thus be seen that though Sir <NAME> was gradually taking steps to associate the public with the government of the State and with that object he was establishing institutions consistent with the democratic form of rule, he had maintained all his powers as a sovereign with himself and had not delegated any of his powers in favour of any of the said bodies. In other words, despite the creation of these bodies the Maharaja continued to be an absolute monarch in whom were vested the supreme power of the legislature, the executive and the judiciary. In dealing with the question as to whether the orders issued by such an absolute monarch amount to a law or regulation having the force of law, or whether they constitute merely administrative orders, it is important to bear in mind that the distinction between executive orders and legislative commands is likely to be merely academic where the Ruler is the source of all power. There was no constitutional limi- tation upon the authority of the Ruler to act in any capacity he liked; he would be the supreme legislature, the supreme judiciary and the supreme head of the executive, and all his orders, however issued, would have the force of law and would govern and regulate the affairs of the State including the rights of its citizens. <CITATION> (1), this Court had to deal with the effect of a Firman issued by the <NAME>, and it observed that so long as the particular Firman issued by the <NAME> held the field that alone would govern and regulate the rights of the parties concerned though it would be annulled or modified by a later Firman at any time that the <NAME> willed. What was held about the Firman issued by the <NAME> would be equally true about all effective orders issued by the Ruler of Gwalior (Vide also: <CITATION> (2) ).

It is also clear that an order issued by an absolute monarch in an Indian State which had the force of law would amount to an existing law under Art. 372 of the Constitution. Article 372 provides for the continuance in force of the existing laws which were in force in the territories of India immediately before the commencement of the Constitution, and Art. 366(10) defines an existing law, inter alia, as meaning any law, ordinance, order, rule or regulation passed or made before the commencement of the Constitution by any person having a power to make such law, ordinance, order, rule or regulation. <CITATION> (3), this Court has held that " there is not any material difference between the expressions 'existing law.' and the 'law in force'. The definition of an, existing law in Art. 366(10) as well as the definition of an Indian law contained in <CITATION> of the General Clauses Act make this position clear ". Therefore, even if it is held that the Kalambandis in question did not amount to a quanun or law technically so called, they would nevertheless be orders or regulations which had the force of law in the State of Gwalior at the material time, and would be saved under Art. 372. The question which then arises is whether these Kalambandis were regulations having the force of law at the material time.

In support of the conclusion that they are merely administrative orders it is urged by the learned (1) A.I.R. 1955 S.C. 352. (2) A.I.R. 1956 S.C. 6o. (3) [1955] 1 S.C.R. 735.

Advocate-General of Madhya Pradesh that Sir <NAME> was an enlightened Ruler and was fully conscious of the distinction between executive orders and statutory provisions, and so if the <NAME> in question did not take the form of a quanun or a statute it would be safe to infer that they were intended to operate merely as executive orders. In support of this argument reliance has been placed on the obser- vations made by Sir <NAME>, in Volume 7 which deals with Durbar Policy. " Broadly speaking says Sir <NAME>, " all orders and directions issued by the Ruler may be regarded as laws. In the technical sense, however, the latter term signified only commands whose fulfilment is accompanied by the conferment of a particular concession and whose con- travention spells punishment or the extinguishment of a right. Orders issued for the purpose of regulating the working of a department generally take the form of Rules, Manual or Kalambandi and are superscribed as such ". It may be conceded that this statement does make a distinction between laws technically socalled and Rules, Manual or Kalambandi; but it is significant that the very statement on which this argument is founded ends with the observation that the differentiation in the Dames is merely intended to indicate the group to which a given set of orders be. <NAME>. In other words, the name given to the order would not be decisive; its character, its content and its purpose must be independently considered.

Then it is urged that the <NAME>s in question were not published in the Government Gazette as other laws are; they were published only in the military gazette, and it is argued that they are not called quanun or laws as they would have been, if they were intended to operate as laws. In this connection our attention was also drawn to certain acts passed in the <ORG> of Gwalior which are described as acts or laws. On the other hand, it is clear that the distinction between <NAME> and quanun was not always strictly observed. In regard to the jurisdiction of <ORG> and the functioning of the <ORG> rules were issued and yet they were described as a Manual. There can be no doubt that the rules contained in this Manual which govern the jurisdiction, powers and authority of Courts in the <ORG> of Gwalior had the force of law, and yet they were included in a Manual which, judging merely by the description of the document, can be distinguished from a quanun. Similarly it appears from circulars collected in a book called Majmua Circulars (1971 to 1993 Samvat) that the notification issued under the said Circular had the effect of modifying the provisions of the Customs Law. There is also another instance that amendment of statutory provisions was made by Sir <NAME> by giving directions in that behalf though such directions did not take the form of a quanun. In fact in s. 39 of the <ORG> Policy, Volume 3, Sir <NAME> has described the <NAME> of Samvat 1969 as quayada. To the same effect is the <ORG> Order No. 5 dated April 14, 1923. It would thus be clear that the decision of the question with which we are concerned cannot rest merely on the description of the order. It would not be possible to accept the argument urged by the learned Advocate-General that because the <NAME> is not described as a quanun or was not published in the government gazette therefore it should be treated as an executive order. The words used in describing the several orders issued by the Ruler can afford no material assistance in determining their character. In this connection it is necessary to recall that all orders issued by the absolute monarch had the force of law. Therefore it would be necessary to consider the character of the orders contained in these <NAME>s. The first <NAME> which was issued in 1912 consists of 54 clauses. No doubt it begins by saying that it has been issued for the purpose of arranging for the administration of the department of irregular unit of Shiledari, but the nature of the provisions contained in this document unambiguouly impresses upon it the character of a statute or a regulation having the force of a statute. It recognises and confers hereditary rights, it provides for the adoption of a son by the widow of a deceased silledar subject to the approval of the <ORG>; it also provides for the maintenance of widows out of funds specially set apart for that purpose; it contemplates the offering of a substitute when a <NAME> has become old or has other. Wise become unfit to render service; it makes detailed provisions as to mutation of names after the death of a <NAME>, and it also directs that the <ORG> being for the Shiledari service it cannot be mortgaged for a debt of any banker, and it further provides that if a decree is passed against a <NAME> and the decreeholder seeks to proceed against the amount payable to him the execution has to be carried out in accordance with the manner and subject to the limitations prescribed in that behalf. It would thus be seen that the detailed provisions made by this <NAME> deal with several aspects of the amount payable to the recipient, and considered as a whole it cannot be treated as an administrative order issued merely for the purpose of regulating the working of the administration of the department of irregular forces. The second order which was issued by the <ORG> is substantially on the same lines as the first order. It consists of 39 clauses. Its preamble shows that as per orders of the <ORG> the department of irregulars was governed by the regulations issued in that behalf in 1912 A.D., and it adds that " because the aforesaid Bedas have now been amalgamated with the regular army and are made subject to all the laws that are in force in the Gwalior army, the Regulations of 1912 are repealed and orders are issued as under ". This clearly reads like a statutory provision whereby the earlier relevant statute is repealed. The scheme of this order follows the pattern of the earlier order. It provides for succession, for the regulation of adoption, for the mutation and heirship enquiry, for a substitute being given in case the <NAME> is unable to work himself, prescribes a disqualification from service where the <NAME> is convicted, and imposes a similar limitation on execution against the amount of the <ORG>. Clause 22 of this order says that in case there is no legal heir or the widow of the deceased <NAME> his name will be struck off and the <ORG> will at once be given to other person. In no case will the <ORG> be abolished. In our opinion,. having regard to the contents of the two orders and the character of the provisions made by them in such a detailed manner it is difficult to distinguish them from statutes or laws; in any event they must be treated as rules or regulations having the force of( law. That is the finding recorded by <NAME> and <NAME>, <NAME>., and we think that the said finding is correct.

After the finding was recorded and submitted to this Court the appellant has made one more application for permission to lead another piece of additional evidence. This evidence consists of a book named " Guide Book <NAME> " of October 1, 1899. It has been printed, published and issued under the signature of the Ruler, and it relates among other things to the administration of <ORG> of the State of Gwalior; it is written in Hindi. It contains a preface and introduction. According to the appellant the relevant portions of this document would clearly show that <NAME> was treated as indistinguishable from quanun or law. This position in not seriously disputed by the respondents; but they contend that the appellant should not be allowed any further opportunity to lead additional evidence because by the order of remand he was given such an opportunity and he should have produced all the evidence on which he wanted to rely before <ORG>. There is some force in this contention ; on the other hand it is clear that publications like the one on which the appellant now seeks to rely would be primarily within the knowledge of respondent I and respondent I should have produced all relevant and material documents to assist <ORG> in determaining the issue sent to it after remand. However, in view of the conclusion which we have reached on the material that has already been adduced on the record we do not think it necessary to consider whether the additional evidence should be allowed to be adduced.

It is not disputed that if the Kalambandis on which the appellant's right is based are rules or regulations having the force of law the impugned executive order issued by respondent 1 would be invalid. The right guaranteed to the appellant by an existing law cannot be extinguished by the issue of an executive order. In fact on this point there has never been a dispute between the parties in the present proceedings. That is why the only point Of controversy between the parties was whether the Kalambandis in question amount to an existing law or not. Since we have answered this question in favour of the appellant we must allow the appeal, set aside the order passed by the High Court and direct that a proper writ or order should be issued in favour of the appellant as prayed for by him. The appellant would be entitled to his costs throughout.

Appeal allowed.


JUDGMENT <NAME>, J.

1. This is plaintiffs appeal against the Judgment and Decree dt. 23-11-1977 made by the I Additional Civil Judge, <NAME> in O.S.No. 10/1974 on his file.

2. The appellant and respondents in this appeal would be hereinafter referred, with reference to the rank and position given to them in the array in the Original Suit.

3. <ORG> instituted the suit, out of which this appeal has arisen, for recovery of a sum of Rs. 31,602/- including the notice charges of Rs. 100/- and interest of I? s. 17,544-44 paise on Rs. 23,957.56 paise with costs, current interest and such other reliefs as the <ORG> may deem it fit to grant to the plaintiff in the circumstances.

4. The averments in the plaint are these :

The plaintiff -Society insured the electrical goods in the premises of its Electrical Section with defendant- I against accidents off ire and consequent losses under Policy, No. 12832(X)OO. Defendant-I accepted the policy and assured the plaintiff against any losses due to accidents by fire.

On 17-0-1972, the electrical goods stored in the Electrical Section of the plaintiff were damaged due to accidental fire, resulting in a total loss of Rs. 23,957-56 paise. The plaintiff reported the occurrence to defendants-I and 2 and the authorities of <ORG>-operation. The Divisional Manager of defendant- 1, arrayed as defendant-2, advised the plaintiff to send the claim forms in order to settle the claim of the plaintiff.

At the request of defendants-I and 2, the Fire Loss Surveyor and Assessor, examined as P. W. I at the trial of the suit was deputed to estimate the loss that resulted in the fire accident. <ORG> inspected the premises of the plaintiff and assessed the loss at Rs. 22,47525 paise.

Defendant-2 assured the plaintiff to settle the claim on several occasions and agreed to compensate the loss by payment of money. But defendants-1 and 2 put off the payment for no valid reasons at all. Defendants informed the plaintiff in the month of April, 1973, by the letter marked as Ex-P-15, offering to pay a sum of Rs. 5,000/- in full settlement of the claim without assigning any reasons for educing the claim put forward by it.

The defendants, by their own assessment of the loss, correspondence carried on with the plaintiff, and conduct, have conceded the total loss suffered by the plaintiff as claimed. The stand taken by them is unreasonable. unjustified and devoid of any reasons.

5. With these averments, the plaintiff instituted the suit on 1-4-1974 for the recovery of the money.

6. Defendants-I and 2in their joint written statement, while admitting the fact of plaintiff having insured the electrical goods against fire accidents and consequential losses under the policy referred to in the plaint, contended that the insurance was subject to the terms and stipulations mentioned in the policy and the suit was not maintainable by virtue of Cl. 18 of the policy expressly providing for arbitration as a condition precedent to any right to action or suit upon the policy. They denied the averments in the plaint with regard to the damage suffered by the electrical goods in the Electrical Section of the plaintiff on 17-6-1972 due to any accidental fire, adding that the say of the plaintiff that the total loss was in a sum of Rs. 23,957-56paise was not correct. They contended that the claim put forth by the plaintiff was false, fraudulent and exaggerated.

According to the defendants, the loss at Rs. 22,375-25 paise arrived at by <ORG> was baseless and was made on the basis of the plaintiff's self-serving statement and the books of accounts. Defendants-I and 2 denied the assurance imputed to them and stated that they agreed to pay Rs. 5,000/-only in full settlement of the claim, subject to the acceptance of the same by <ORG>.

According to them, the amount of Rs. 5,000/- offered was agreed as ex gratia payment after discussion with the Secretary of the plaintiff, examined &s P.W.3. They also contended that the plaintiff had not complied with the terms and conditions of the policy, particularly Cls. 11, 12 and 13, adding that in view of the non-compliance with the aforesaid clauses, the plaintiff was riot entitled to any benefit under the terms of the policy.

7. On the basis of these pleadings, the learned Civil Judge formulated as many as 5 issues for adjudication The issues read thus

1.Wheffier the plaintiff proves that the electrical goods in the electrical section of the plaintiff -Society were damaged due to the accidental fire resulting in a total loss of Rs. 23,957-56?

2. Whether the plaintiff further proves that the second defendant offered in his letter of April, 1973 to pay Rs. 5000/- in full settlement of the claim?

3. Whether the defendants prove that the plaintiffs have not complied with the terms and conditions of the policy particularly Cls. 11, 12 and 13 to negative their claim to the benefit under the policy?

4. Whether the suit is not maintainable by virtue of Cl. 18 of the Insurance policy?

5. Whether the plaintiff is entitled to recover Rs. 31,601/-?

8. At the trial of the suit, the plaintiff examined <NAME> (P.W. 1), the Fire Loss Surveyor and Assessor, who at the instance of the defendants, went to the premises of the plaintiff -Society and assessed the loss; <NAME> (P.W. 2), who was working in the office of the Deputy Registrar of <ORG> at <ORG> at the material time and who, on being deputed at the request of plaintiff, had gone to the premises of the plaintiff-Society to estimate the loss, and <NAME> (P.W. 3), the Secretary of the plaintiff-Society. In all 7 documents came to be admitted in evidence for the plaintiff.

9. As against this, on behalf of the defendants, <NAME> gave evidence as D.W. 1. Four documents were admitted in evidence for the defendants.

10. The learned Civil Judge, on consideration of the evidence, held that the plaintiff had failed to establish that the damage due to accidental fire resulted in a total loss of Rs. 23,957-56 paise. He also held that the defendants had established non-compliance with the Cls. 11 and 13 of the policy by the plaintiff. It was his conclusion that in view of the plaintiff having not availed of the arbitration clause in the policy, it was not entitled to maintain a suit. Recording his findings accordingly on all the issues, the learned Civil Judge dismissed the suit with no order as to costs.

11. The points that arise for determination in this appeal are these:-

1. Whether the plaintiff has established that the total loss suffered by it as a result of the accidental fire, damaging, its electrical goods, was in the sum of Rs. 23,957.56 ?

2. Whether the plaintiff has shown that its suit was maintainable not with standing the fact that it had not availed of the arbitration clause in the policy ?

3. Whether the judgment and Decree of the <ORG> below are correct and legal"

12. Our findings on the above points are in the negative on points Nos. 1 and 2 and in the affirmative on point No. 3.

The evidence of P.W.1 would show that he visited the premises of the plaintiff- Society on 21-6-1972 with the representative of defendant-1 Company and assessed the damages caused to the electrical goods by verifying the account books of the plaintiff such as Stock Register, Stock Verification Register, Daily Sales Book, Purchase Invoices Book, and the Statement of Stocks submitted to <ORG>, furnished by the Plaintiff on each fortnight. It is in his evidence that according to the Stock Register, the value of the stock of electrical goods in the Sales Rooms was about Rs. 44,000/- that some of them were found affected by fire and damaged; that lie took the inventory of the undamaged electrical goods that the value of the undamaged electrical goods was Rs. 10,000/-and that the remaining goods worth-Rs. 34,000/- were to be accounted for. P.W. 1 has clearly stated that it was the Sales Clerk of the Society who prepared the list of electrical goods involved in the accident; that he did not depend upon that fist and asked the Special Officer to certify the list and after receiving the certificate from the Special Officer, he assessed the loss. It is his evidence that the value of the salvage left over was to an extent of Rs. 2,800/1- and the same was handed over to the plaintiff.

13. We may observe here that the Sales Clerk of the <ORG>, who prepared the list of electrical goods involved in the accident, has, not been examined by the plaintiff at the trial of the suit. The plaintiff also gave no explanation for non-examination of the Sales Clerk, whose evidence was the best evidence available to it to prove the claim.

14. Ex.P-2 is the certificate issued by P.W. 1 to the plaintiff estimating the loss at Rs. 23,825-25 paise. The evidence of P.W-1 would show that he sent two reports, one preliminary and another final, to the defendants. Ex.D-1 is the report and Ex.D-2 is the clarification given by him on certain points asked by defendant-2. The admissions of P.W-1 would go to show that from the account books produced by the plaintiff, he could not find the description of the electrical goods damaged by fire and that on the basis of the certificate issued by the Special Officer, he made the assessment. It is in his evidence that he did not go to the office of the Deputy Registrar to verify the truth of the certificate. He revised his preliminary report on the basis of the said certificate and sent final report. These admissions make it amply clear that there was no material before P.W-1 which could have enabled him to inspect the electrical goods with a view to ascertain the extent of loss. The evidence of P.W-2 would not in any manner help the plaintiff in establishing the claim put forward by him as the loss occasioned as a result of the accidental fire. It is in the evidence of P.W. 2 that after inspecting the burnt and unburnt electrical goods, he called for accounts of the electrical goods from the Secretary; that the Audit Report, Invoices and Cash Book were produced before him; and that he was informed that the Stock Book was also burnt. On the basis of the opening stock as on 1-71971, the purchases made from 1-7-1971 to 17-6-1972, the sales effected and the stock available, he estimated the value of the burnt electrical goods at Rs. 23,825-19. The opening balance of the electrical goods as on 1-7-1971 was of Rs.-60,206.03 paise. The purchases made from 1-7-1971 to 17-6-1972 amount to Rs. 44,615.78. Thus, the total stock as on17-6-1972 a. mounts to Rs. 1.04,821-81 paise. The stock available as on 17-6-1972 was of the value of Rs. 30,416.02. Part of it was burnt. There is no explanation from any of the witnesses examined on behalf of the plaintiff .as to what happened to the balance stock worth Rs. 73,000/- and odd. P.W-2 did not inspect the Stock Register and Purchase Register expected to be in the custody of the Secretary, and the Sale Receipt Books showing the sales. Details of the electrical goods were not found mentioned in Ex.P-7, the Cash Book. The accounts of the <ORG>, from 1-7-1971 to 17-6-1972 had not been audited.

15. Admittedly, the Stock Register was not produced either before P.W. 1 or before P.W-2. P.W-2 in his cross-examination has stated that there would be a Stock Register, and Purchase Register in the Society which would be in the custody of the Secretary. It is' also in his cross-examination that the Sales Book and Stock Book would give the correct picture of the articles that are said to have been burnt. P.W-3, the Secretary of the plaintiff-Society in his evidence stated that the Stock Book of the electrical goods was with him and not with the Sales Clerk. P.W-3 denied the suggestion that the Stock Book had not been placed along with the electrical goods and was not burnt. In his further cross-examination, he stated that the Verification Statement Book was also in the Electrical Section and it was also burnt. It is difficult to accept the plaintiff's case that the Stock Book and the Verification Statement Book which were not expected to be kept in the Electrical Section where the electrical goods had been stored, were burnt. The Verification Register containing the verification of electrical goods was not produced before the Trial court or the ground that it did not relate to electrical goods.

16. The learned Civil Judge referring to the evidence of P.W-1 and the initial estimation of loss made by him and reading. the evidence of P.Ws-2 and 3 and the other documentary evidence Ex.P-5 the Audit Report, Ex.P-6 the Invoices and Ex.P-7 the Cash Book, has rightly held that the plaintiff has failed to establish the total loss as claimed by it in the suit. The Sales Clerk of the plaintiff <ORG>, who prepared the statement of electrical goods said to have been burnt on memory and who assisted <ORG> in the estimation of loss, and the Special Officer who had certified the list of electrical goods involved in the fire accident (prepared by the Sales Clerk), were not examined by the plaintiff. In the absence of the evidence of these witnesses, the documentary evidence lost its probative value and could not come to the help of the -plaintiff, who withheld the best available evidence from the <ORG>, in establishing the loss.

17. For the reasons aforesaid, we concur with the findings recorded by the learned Civil Judge on Issue Nos. 1 and 5.

18. The learned Civil Judge after extracting Cls. 11, 12, 13 and 18, has held that the plaintiff has not complied with Cls. 11 and 13. He has also held that the plaintiff's suit was not maintainable by virtue of Cl. 18 of the Policy. Clause 18, of the Policy reads thus :

"If any difference arises as to the amount of any loss or damage such difference shall independently of all other questions be referred to the decision of an arbitrator, to be appointed in writing by the parties in difference, or if they cannot agree upon a single Arbitrator, to the decision of two disinterested persons as Arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party. In case either party shall refuse or fail to appoint an Arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint a sole arbitrator; and in case of disagreement between the Arbitrators, the difference shall be referred to the decision of an Umpire who shall have been appointed by them in writing before entering on the' reference and who shall sit with the Arbitrators and, preside at their meetings. The death of any party shall not revoke or affect the authority or powers of the Arbitrator, arbitrators or Umpire respectively; and in the event 6f the death of an Arbitrator or Umpire another shall in each case be appointed in his stead by the party or Arbitrators (as the case maybe) by whom the, arbitrators or Umpire so dying was appointed. The costs of the reference and of the award shall be in the description of the Arbitrator, Arbitrators or Umpire making the award. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such Arbitrator, Arbitrators or Umpire of the amount of the loss or damages if disputed shall be first obtained."

19. There is no dispute that the plaintiff filed the suit without seeking arbitration as required by Cf. 18 of the Policy.

20. <NAME>, the learned counsel for the plaintiff, contended that since defendants-1 and 2 repudiated the claim and disputed liability under the policy, Condition No. 18 was not a bar for the plaintiff to approach <ORG> for the recovery of damages. In support of that contention, he relied upon the decision of <ORG> in <CITATION> , . In para 12 of the Judgment at Page 2'90, the dicta of <ORG> is as follows :

".... It may well be that after the liability of the <ORG> is established in such a suit for determination of the quantum of the loss or damage, reference to arbitration will have to be resorted to in accordance with Cl. 18. But the arbitration clause, restricted as it is by the use of the words "if any difference arises as to the amount of any loss or damage", cannot take within its sweep a dispute as to the liability of the <ORG> when it refuses to pay any damage at all."

21. Ex.P-15 clearly evidences that there was an agreement between the plaintiff and defendants, that there should be a settlement of the loss on payment of Rs. 5,000/_ for which a voucher was sent along with Ex.P-15. Therefore, it is not a case of repudiation of the claim or dispute of liability on the part of the Insurer, but offering to pay less than the claim put forward as loss. The difference was as to the amount of loss. Therefore, the quantum of damages claimed by the plaintiff attracted arbitration under Cl. 18. Therefore, the view of the learned Civil Judge that the plaintiff was not entitled to maintain the suit cannot be held to be incorrect. However, we proceed to make the observation that the learned Civil Judge has committed an error of law in holding that the suit has been filed 12 months after the occurrence of the loss due to fire, contrary to Condition No. 19 of the policy and, therefore, the suit was barred by time. We must state the correct position in law. Perhaps, the insurance forms were all printed long prior to the coming into force of the present Limitation Act on 1-4-1964. Under Art. 44(b) of the Schedule to the Limitation Act , three years period is provided for filing a suit to recover damages sustained on account of any loss under an Insurance Policy. The time starts running against the plaintiff only on the date of the occurrence causing the loss or the date on which the claim is denied by the Insurance Company. Therefore, the view expressed by the learned Civil Judge is not sustainable in law, as well as on the ground that the defendants did not plead that, nor was an issue raised for <ORG> to come to a conclusion.

22. Subject to the above observation, we affirm the finding on issue No. 4. No other point was canvassed in support of the appeal. We find the appeal devoid of merit. We therefore, dismiss the appeal.

In the circumstances of the case, there will be no order as to costs in this appeal.

23. Appeal dismissed.


PETITIONER: <ORG> Vs. RESPONDENT: <NAME> AND OTHERS(And connected Appeal) DATE OF JUDGMENT: 03/02/1955 BENCH: <NAME>, <NAME>: <NAME>, <NAME>, <NAME>, SYED JAFFER CITATION: 1955 AIR 258 1955 SCR (1)1241 ACT: Industrial Disputes (Appellate <ORG>) Act, 1950 (XLVIII of 1950), s. 22-Whether Labour Appellate <ORG> has Jurisdiction to impose conditions when granting permission- Industrial Disputes Act , 1947 (XIV of 1947), s. 33 and Industrial Disputes (Appellate <ORG>) Act, 1950-S. 23- Jurisdiction of authority not only to decide whether there has been failure to obtain permission but also to give decision on the merits of an industrial dispute- Industrial Disputes Act , 1947 (as amended), s. 33 and s. 33-A - Industrial Disputes (Appellate <ORG>) Act-Ss. 22 and 23- Meaning and scope of. HEADNOTE: Held, (i) that the ordinary and primary jurisdiction of <ORG> constituted under the Industrial Disputes (Appellate <ORG>) Act, 1950 is appellate; (ii) that s. 22 of the Act confers on the appellate tribunal a special jurisdiction which is in the nature of original jurisdiction; (iii) that s. 23 also vests in the tribunal an additional jurisdiction to decide the complaint as if it were an appeal pending before it; and (iv) that s. 23 confers on the 1242 workmen an additional remedy which they did not have under the Industrial Disputes Act , 1947. The two now ss. 33 and 33-A inserted in the Industrial Di-- putes Act 1947 (XIV of 1947) by Act XLVIII of 1950 confer distinct benefits on the workmen and give some additional jurisdiction and power to the authorities mentioned therein. Section 33-A enjoins the <ORG> to decide the complaint "as if it were a dispute referred to or pending before it" and to submit its award to the appropriate <ORG> and provides that the provisions of the Act shall apply to the award. The provisions of these two new ss. 33 and 33-A of the 1947 Act correspond to and are in pari materia with the provisions of ss. 22 and 23 of the 1950 Act and are more or less in similar terms. A ban has been put by s. 22 of 1950 Act and s. 33 of the 1947 Act upon the ordinary right, which the employer has under the ordinary law governing a contract of employment with a view to protect the workmen against victimisation by the employer and to ensure the termination.of the proceedings in connection with industrial disputes in a peaceful atmosphere and the only thing that the authority is called upon to do is to grant or withhold the permission i.e. to lift or maintain the ban. These sections do not confer any power on the authorities to adjudicate upon any other dispute. Under s. 22 of the Industrial Disputes (Appellate <ORG>) Act, 1950 (XLVIII of 1950) <ORG> has no jurisdiction to impose conditions as a pre-requisite for granting permission to the employer to retrench its workmen. Under s. 33-A of the Industrial Disputes Act 1947 and s. 23 of the 1950 Act the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to give a decision on the merits of an industrial dispute and grant appropriate relief which when published by the appropriate <ORG> will become enforceable under the respective Acts. <ORG> v. <ORG> ( 1 Lab. L.J. 341), <CITATION> ( 54 Bom. L.R. 922), <NAME> v. <ORG> ( 1 Lab. L.J. 381), <ORG> v. <ORG> ( 1 Q.B. 386), <ORG> v. Their Workmen ( 1 Lab. L.J. 85), <CITATION> ( S.C.R. 780) and <NAME> v. <ORG>, Calcutta ( 2 Lab. L.J. 635), referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2 and 4 of 1955.

Appeal by Special Leave from the Order dated the 18th day of November 1954 of the Labour Appel-

<ORG>, Bombay in Application (<ORG>.) <ORG> 773 of 1954.

<NAME>, <NAME> and <NAME>, for the appellant in Civil Appeal No. 2 of 1955 and respondent in Civil Appeal No. 4 of 1955.

<NAME> and <NAME>, for the respondents in Civil Appeal No. 2 of 1955 and appellants in Civil Appeal No. 4 of 1955.

<NAME>, Attorney-General for India (<NAME> and <NAME> with him), for the Intervener (<ORG>).

1955. February 3. The Judgment of the Court was delivered by <NAME> is an appeal by special leave from the order of <ORG>, Bombay Bench, dated the 18th November 1954 which was made on an application made by the appellant company on the 6th September 1954 under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (Act XLVIII of 1950) which is hereinafter referred to as the 1950 Act.

The appellant company carries on business as assemblers of motor vehicles from "completely knocked down" assemblies imported into India. There was some appeal pending before <ORG> arising out of disputes between the appellant company and its workmen. It is alleged that the name of the appellant company had been removed by <ORG> from the list of approved manufacturers maintained by them and that, in the result, it had been unable to secure further import licenses for the import of completely knocked down assemblies of motor vehicles and that consequently on and from the 1st November 1953 the company had to lay off a number of its workmen, for it had to operate the various departments of its factory at greatly reduced strength. As the appellant company saw no prospect of any increase in the scope of its present operation which would provide employment for the workmen who had been laid off, it had become necess-

<NAME>

sary to retrench the workmen named in Annexure A to the application. As those workmen were concerned with the appeal pending before <ORG> the company applied to <ORG> under section 22 of the 1950 Act for permission to retrench them. The respondents through their Union, <ORG>, Bombay, filed a written statement on the 1st November 1954 making diverse allegations against the company and contending that the company bad itself to blame for having brought about the lay off. It was contended that there was no immediate cause for making the application, that the company was motivated by ulterior motives to deprive the workmen of their dues which even according to the company would become due and payable to the workmen on the expiry of the one year of the said lay off period. It was further alleged that in or about April 1954 the company recalled some of the workmen out of those who had been laid off since November 1953 violating all principles on which a recall should have been made and that by such arbitrary and unscientific recall the company had imposed disproportionate work loads on the recalled workmen, thereby altering their conditions of service to their prejudice. The respondents maintained that the application was not maintainable in law, was mala fide and should be dismissed. In the penultimate paragraph of the written statement it was submitted that in the event of <ORG> granting the permission in whole or in part such permission should be granted subject to the following conditions:-

(1) Payment of full wages with dearness allowance for the entire period of lay off;

(2) Payment of one month's notice pay and retrenchment compensation at the rate of one month's wages including dearness allowance for every completed year of service and part thereof in addition to the gratuity as per the scheme in force in the company;

(3) Alternatively to (2) above and in cage <ORG> took the view that the lay off was governed by section 25-C of the Industrial Disputes Act, 1947, payment of compensation at 50 per cent. of their wages plus dearness allowance for the entire period of lay off to the date of discharge in addition to the notice pay and gratuity as claimed in (2) above; and (4)Payment of leave wages as per existing rules, taking the entire period of lay off as service.

A number of documents were filed in support of the respective contentions.

-The Labour Appellate <ORG> at the very outset of its judgment under appeal states its finding on the merits of the action proposed to be taken by the company as follows:- "There can be little doubt that the retrenchment has been occasioned by the failure of the concern to secure sufficient work owing to absence of licenses from Government and, therefore, retrenchment must be regarded as inevitable and the application before us bona fide. Permission to retrench cannot be refused but for the reasons that we shall state hereafter we make that permission conditional upon the fulfilment of certain terms by the concern". The company contended before <ORG> that its function, while dealing with an application under section 22 of the 1950 Act, was only to give or withhold permission. This contention was rejected by <ORG> with the following observation:- "That view is quite untenable as has been repeatedly held by this <ORG>. We are the authority to whom an application has to be made for permission to retrench, and when such an application is made we must of necessity exercise our judgment and discretion and satisfy ourselves that when the company retrenches it does justice by its employees". The Labour Appellate <ORG> was clearly influenced by the consideration which, stated in its own words, was as follows:-

"We do not think that we will be advancing the interest of the employees or of the concern by refusing retrenchment because the case for retrenchment has been established, and the sooner the workmen are allowed to leave and find for themselves other employment the better for them. But in order to assure ourselves that on retrenchment the employees receive what in justice they should have, we have decided to give permission to retrench subject to cer- tain conditions which in our view are inherent under the Act., and which apart from the Act we consider to be just and equitable in the particular circumstances of this case". In this view of the matter <ORG> definitely declined "to leave over the question of compensation for lay off as a legacy of the present troubles; the employees to be retrenched have enough to worry them without having to make claims and have them decided after contest before a <ORG>". In the result, <ORG> gave the appellant company permission to retrench "subject to the terms and conditions of Act XLIII of 1953, provided that each workman is paid at the rate of half basic wages and dearness allowance for the whole period from the date of lay off up to the date of retrenchment (less sums already received as lay off compensation)". Liberty was given to the company to set off the lay off compensation protanto against the retrenchment relief given by the Act.

Aggrieved by this decision the appellant company applied for and obtained from this Court special leave to appeal against this order. The respondents subsequently filed an application for special leave to appeal against this decision in so far as <ORG> had not allowed their full claim as surmmarised above and in so far as the names of 17 persons had been struck off on the allegation of the company that they were not workmen. This application of the respondents was also acceded to and the two appeals have been heard together. <ORG> asked for leave to intervene as important questions of construction of the provisions of the Industrial Disputes Act , 1947 (hereinafter referred to as the 1947 Act) and the 1950 Act were involved. Such leave was granted. and we have heard learned counsel for <ORG> along with learned counsel for the parties. The question as to the propriety of permitting the names of 17 workmen to be struck off from the application has not been seriously pressed before us. Only two questions have been canvassed at some length before us, namely-.- (1)Whether under section 22 of the 1950 Act the <ORG> has jurisdiction to impose conditions when granting the permission asked for; and (2)Whether the conditions imposed in this case are in conformity with law.

It is plain, however, that in case the first question is answered in the negative, the second question will not call for any decision on the present occasion.

In order to correctly answer the questions it will be necessary to bear in mind the general scheme of the two Acts. The purpose of the 1947 Act is, inter alia, to make provision for the investigation and settlement of industrial disputes. In order to achieve this avowed object different authorities have been constituted under this Act. Thus section 3 provides for the constitution of <ORG> whose duty is to promote measures for securing and preserving amity and good relations between the employers and workmen. The appropriate <ORG> is authorised by section 4 to appoint conciliation officers charged with the duty of mediating in and promoting the settlement of industrial disputes and by section 5 to constitute <ORG> promoting the settlement of industrial disputes. Section 6 empowers the appropriate <ORG> to constitute <ORG> for enquiring into any matter appearing to be connected with or relevant to an industrial dispute. Finally, section 7 provides for the constitution of Industrial <ORG>s for the adjudication of industrial disputes in accordance with the provisions of the Act. Section 10 of this Act provides for reference of disputes to a <ORG>, <ORG> or <ORG>. It will be noticed that under this section it is the appropriate 160 <ORG> which alone can make the reference and set the authority in motion. The procedure, powers and duties of conciliation officers, <ORG>s, <ORG>s and <ORG>s are elaborately prescribed and defined in sections I 1 to 15. It is to be noted that the conciliation officer, <ORG>, and <ORG> are required to make a report to the appropriate <ORG> while the <ORG> is enjoined to submit its award to the appropriate <ORG>. The report of a <ORG> or <ORG> and the award of a <ORG> are under section 17 to be published by the appropriate <ORG> within a month from the date of their receipt. Section 17-A provides that the award of a <ORG> shall become enforceable on the expiry of 30 days from the date of its publication and, subject to the provisions of sub-section (1) shall come into operation from such date as may be specified therein and if no date is so specified from the date when the award becomes enforceable as aforesaid. Section 19 prescribes the period of operation of settlements and awards. Chapter deals with strikes and lock-outs. Sections 26 to 31 which are grouped together under the heading "Penalties" prescribe punishments. Section 31 (I) provides that any employer who contravenes the provisions of section 33 shall be punishable with imprisonment for a term which may extend to 6 months or with fine which may extend to Rs. 1,000 or with both. Section 33 , a contravention of which is made punishable by section 31 , as it stood before 1950, forbade an employer, during the pendency of any conciliation proceedings or proceedings before a <ORG>, to alter, to the prejudice of the workmen concerned in the dispute, the conditions of service applicable to them immediately before such proceedings, nor, save with the express permission of the conciliation officer, <ORG> or <ORG>, as the case may be, to discharge, dismiss or otherwise punish during the pendency of the proceedings any workman, except for misconduct not connected with the dispute. It may be noted that under this section the ban on the alteration of the conditions of service was absolute and that permission was necessary only in case of discharge or dismissal or punishment and even in such case no permission was necessary when the workman was guilty of misconduct not concerned with the pending dispute. The Only deterrent against a contravention by an employer of the provisions of section 33 was the prosecution of the employer under section 31 . This was hardly any consolation for the workmen, for if an employer took the risk of a prosecution and acted in contra- vention of section 33 the workmen could only raise an industrial dispute and ask the appropriate <ORG> to refer the same to a <ORG> but if the <ORG> declined to accede to their prayer the workmen were without any remedy. This was the position under the 1947 Act before it was amended in 1950.

The 1950 Act was enacted for establishing <ORG> in relation to industrial disputes. Chapter II of the Act deals with the constitution, composition and functions of the appellate tribunal. Section 7 formulates the jurisdiction of the appellate tribunal. Section 9 confers on the appellate tribunal all the powers which are vested in <ORG> when hearing an appeal under the Code of Civil Procedure, 1908. Section 10 prescribes the period of limitation within which appeals are to be brought before the appellate tribunal. Under section 15 the decision of the appellate tribunal becomes enforceable on the expiry of 30 days from the date of its pronouncement, provided that where the appropriate <ORG> is of opinion that it would be inexpedient, on public grounds, to give effect to the whole or any part of the decision the appropriate <ORG> may, before the expiry of the said period of 30 days, by order in <ORG> either reject the decision or modify it. Section 22 of this Act provides:

"22. During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act, no employer sball-

(a) alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or

(b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission in writing of <ORG>". Section 23 on which reliance is placed by learned counsel for the respondents and for the intervener, reads as follows:-

"23. Where an employer contravenes the provisions of section 22 during the pendency of proceedings before <ORG>, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner to such Appellate Tribunal and on receipt of such complaint, <ORG> shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly".' Section 29 of this Act provides for penalty for con- travention of the provisions of section 22 , namely, imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both. From what has been stated so far four things are to be noted, namely, (i) that the ordinary and primary jurisdiction of the appellate tribunal is appellate, (ii) that section 22 of this Act confers on the appellate tribunal a special jurisdiction which is in the nature of original jurisdiction, (iii) that section 23 also vests in the tribunal an additional jurisdiction to decide the complaint as if it were an appeal pending before it; and

(iv) that section 23 confers on the workmen an additional remedy which they did not have under the 1947 Act. To fill up the lacuna in the 1947 Act section 34 of the 1950 Act provided for certain amendments of the 1947 Act. Amongst other things, it substituted a new section for the old section 33 of the 1947 Act. The new section 33 runs as follows--

"33. During the pendency of any conciliation proceedings or proceedings before a <ORG> in respect of any industrial dispute, no employer- shall-

(a)alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings; or

(b)discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the express permission in writing of the conciliation officer, <ORG> or <ORG>, as the case may be".

It will be noticed that this section has made several changes. Thus under this section provision is made for obtaining permission as a condition precedent both for altering the conditions of service and for discharging or punishing the workmen and no exception is made for a case of misconduct unconnected with the pending dispute. Besides this, the following new section was added to the 1947 Act as section 33-A :

"33-A. Where an employer contravenes the provisions of section 33 during the pendency of proceedings before a <ORG>, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner to such <ORG> and on receipt of such complaint that <ORG> shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit its award to the appropriate Government and the provisions of this Act shall apply accordingly".

It may be pointed out that the new sections 33 and 33-A thus inserted into the 1947 Act confer distinct benefits on the workmen and give some additional jurisdiction and power to the authorities mentioned therein. Section 33-A enjoins the <ORG> to decide the complaint "as if it were a dispute referred to or pending before it" and to submit its award to the appropriate <ORG> and provides that the provisions of the Act shall apply to the award. It is quite clear that the provisions of these two new sections 33 and 33-A of the 1947 Act correspond to and are in pari materia with the provisions of sections 22 and 23 of the 1950 Act and are more or less in similar terms. The question for our conside-

ration is: What are the meaning, scope and effect of these sections.

A cursory perusal of section 33-A of the 1947 Act as well as section 23 of the 1950 Act will at once show that it is the contravention by the employer of the provisions of section 33 in the first case and of section 22 in the second case that gives rise to a cause of action in favour of the workmen to approach and move the respective authority named in the section and this contravention is the condition precedent to the exercise by the authority concerned of the additional jurisdiction and powers conferred on it by the sections. The authority referred to in the sections is, as we have seen, a Court of limited jurisdiction and must accordingly be strictly confined to the exercise of the functions and powers actually conferred on it by the Act which constituted it. What, then, are the scope and ambit of the functions and powers with which it has been vested by these sections?

When an employer contravenes the provisions of section 33 of the 1947 Act or of section 22 of the 1950 Act the workmen affected thereby obviously have a grievance. That grievance is two-fold. In the first place it is that the employer has taken a prejudicial action against them without the express permission in writing of the authority concerned and thereby deprived them of the salutary safeguard which the legislature has provided for their protection against victimisation. In the second place, and apart from the first grievance which may be called the statutory grievance, the workmen may also have a grievance on merits which may be of much more seriousness and gravity for them, namely, that in point of fact they have been unfairly dealt with in that their interest has actually been prejudicially affected by the highhanded act of the employer. These sections give the workmen the right to move the authority by lodging a complaint before it. This is a distinct benefit given to them, for, as we have seen, apart from these sections, the workmen have no right to refer any dispute for adjudication. This complaint is required to be made in the prescribed manner. Form DD prescribed by rule 51-A of the Industrial Disputes (Central) Rules, 1947, framed under section 38 of the 1947 Act, like Form E prescribed under section 35 of the 1950 Act, requires the complaining workmen to show in their petition of complaint not only the manner in which the alleged contravention has taken place but also the grounds on which the order or the act of the management is challenged. This clearly indicates that the authority to whom the complaint is made is to decide both the issues, namely (1) the fact of contravention and (2) the merits of the act or order of the employer. It is also clear that under section 33-A of the 1947 Act the authority is to adjudicate upon the complaint "as if it were a dispute referred to or pending before it" and under section 23 of the 1950 Act the authority is to decide the complaint "as if it were an appeal pending before it". These provisions quite clearly indicate that the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to go into the merits of the complaint and grant appropriate reliefs. The extreme contention that under section 33-A of the 1947 Act, on a finding that there has been a contravention of the provisions of section 33 , the <ORG>'s duty is only to make a declaration to that effect, leaving the workmen to take such steps under the Act as they may be advised to do, has been negatived by the Labour Appellate <ORG> in <ORG> v. <ORG>) and by <ORG> in <CITATION> (1). The same principle has been accepted and applied by a Full Bench of the Labour Appellate <ORG> to a case under section 23 of the 1950 Act in <NAME> v. <ORG>). We find ourselves in agreement with the construction placed upon section 33-A of the 1947 Act and section 23 of the 1950 Act by these decisions. In our view the scope and ambit of the jurisdiction conferred on the authority named in those (1) (1951) 2 Lab. L.J. 341.

(2) [1952] 54 Bom. L.R. 922.

(3) [1962] 1 Lab. L.J. 381, sections is wider than that conferred on <ORG> by section 31 of the 1947 Act and section 29 of the 1950 Act. <ORG> under the two last mentioned sections is only concerned with the first issue herein before mentioned, namely, yea or nay whether there has been a contravention of the respective provisions of the sections mentioned therein, but the authority exercising jurisdiction under section 33-A of the 1947 Act and section 23 of the 1950 Act is to adjudicate upon or decide the complaint "as if it were a dispute referred to or pending before it" in the first case or "as if it were an appeal pending before it" in the second case. The authority is, therefore, enjoined to go into the merits of the act complained of under section 33-A of the 1947 Act and section 23 of the 1950 Act. In this sense the jurisdiction of the authority named in these two sections is certainly wider than that of <ORG> exercising jurisdiction under the penal sections referred to above. Having regard to the scope of the enquiry under section 33-A of the 1947 Act and section 23 of the 1950 Act it must follow that the power of the authority to grant relief must be co-extensive with its power to grant relief on a reference made to it or on an appeal brought before it, as the case may be. The provision that the authority concerned must submit its award to the appropriate <ORG> and that the provisions of the respective Acts would be applicable thereto also support the view that the decision of the authority is to partake of the nature of a decision on the merits of an industrial dispute which when published by the appropriate <ORG> will become enforceable under the- respective Acts. It follows, therefore, that the authority referred to in these sections must have jurisdiction to do complete justice between the parties relating to the matters in dispute and must have power to give such relief as the nature of the case may require and as is also indicated by the prayer clause mentioned in the two Forms DD and E referred to above. In short, these two sections give to the workmen a direct right to approach the <ORG> or Appellate <ORG> for the redress of their grievance without the intervention of the appropriate <ORG> which they did not possess before 1950 and they provide for speedy determination of disputes and avoid multiplicity of proceedings by giving complete relief to the workmen in relation to their grievances arising out of the action taken by the employer in contravention of the provisions of the relevant sections. It is significant that this jurisdiction or power has been vested in the <ORG> or Appellate <ORG> whose normal duty is to decide or adjudicate upon industrial disputes and not on any conciliation officer or <ORG> who are normally charged with the duty of bringing about settlement of dis- putes.

it is submitted by learned counsel for the Respondents and of the intervener that the scope of section 33 of the 1947 Act and of section 22 of the 1950 Act is precisely the same as that of section 33-A of the 1947 Act and section 23 of the 1950 Act. The argument is that the two last mentioned sections were enacted only in order to afford an opportunity to the workmen to do what they had been prevented from doing at the earlier stage by reason of the employer taking the law into his own hands and taking action against them without previously obtaining the sanction of the appropriate authority to do so. If the law permits the workmen to ventilate their grievances at a later stage under section 33-A of the 1947 Act and section 23 of the 1950 Act there can be no logical reason why the law should not permit them to do so at the earlier stage under section 33 of the 1947 Act and section 22 of the 1950 Act. It is submitted that the purpose of labour legislation being to maintain industrial peace and restore amity and goodwill between the employer and his workmen, it should be the attempt of the <ORG> or the Appellate <ORG> at every stage to try to resolve all disputes which are connected with the matter which is brought before it. Finally, it is urged that whenever an authority is vested with the power to do or not to do an act it must be regarded as having a discretion and  that in exercise of such discretion the authority must be presumed to be vested with power to impose suitable conditions. Reliance is placed on the decision in <ORG> of West Riding of Yorkshire(1). The argument is that the authority concerned may under section 33 of the 1947 Act and section 22 of the 1950 Act grant by way of imposing conditions the same relief which it can grant to the workmen under section 33-A of the 1947 Act and section 23 of the 1950 Act. We are unable to accept this contention as correct for reasons which we now proceed to state.

The object of section 22 of the 1950 Act like that of section 33 of the 1947 Act as amended is to protect the workmen concerned in disputes which form the subject-matter of pending proceedings against victimisation by the employer on account of their having raised industrial disputes or their continuing the pending proceedings. It is further the object of the two sections to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of those pro- ceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relation between the employer and the workmen. To achieve this object a ban has been imposed upon the ordinary right which the employer has under the ordinary law governing a contract of employment. Section 22 of the 1950 Act and section 33 of the 1947 Act which impose the ban also provide for the removal of that ban by the granting of express permission in writing in appropriate cases by the authority mentioned therein. The purpose of these two sections being to determine whether the ban should be removed or not, all that is required of the authority exercising jurisdiction under these sections is to accord or withhold permission. And so it has been held-we think rightly-by <ORG> in <ORG> v. Their (1) [1S96] 2, Q.B. 386.

Workmen(1) which was a case under section 33 of the 1947 Act. Even a cursory persual of section 33 of the 1947 Act will make it clear that the purpose of that section was not to confer any general power of adjudication of disputes. It will be noticed that under section 33 of the 1947 Act the authority invested with the power of granting or withholding permission is the conciliation officer, <ORG> or <ORG>. The conciliation officer or the <ORG> normally has no power, under the 1947 Act, to decide any industrial dispute but is only charged with the duty of bringing about a settlement of dispute. It is only the <ORG> which can by its award decide a dispute referred to it. ' Section 33 by the same language confers jurisdiction and power on all the three authorities. Power being thus conferred by one and the same section, it cannot mean one thing in relation to the conciliation officer or the <ORG> and a different and larger thing in relation to the <ORG>. There is no reason to think that the legislature, by a side wind as it were, vested in the conciliation officer and the <ORG> the jurisdiction and power of adjudicating upon disputes which they normally do not possess and which they may not be competent or qualified to exercise. Further, if the purpose of the section was to invest all the authorities named therein with power to decide industrial disputes one would have expected some provision enabling them to make and submit an award to which the provisions of the Act would apply such as is provided in section 33-A of the 1947 Act or section 23 of the 1950 Act. There is no machinery provided in section 33 of the 1947 Act or section 23 of the 1950 Act for enforcing the decision of the authority named in those sections. This also indicates that those sections only impose a ban on the right of the employer and the only thing that the authority is called upon to do is to grant or withhold the permission, i.e. to lift or maintain the ban. And so it has been held by this Court in <CITATION> (1) which was a case under clause 23 of the U. P. Government Notification quoted on p. 785.

(1) [1953] 1 Lab. L.J. 85.

(2) [1953] S.C.R, 780, 786-7,  Section 22 of the 1950 Act is in pari materia with section 33 of the 1947 Act and the above clause 23 of the U. P. Government Notification and most of the considerations noted above in connection with these provisions apply mutatis mutandis to section 22 of the 1950 Act. Imposition of conditions is wholly collateral to this purpose and the authority cannot impose any condition. And it has been so held-we think correctly-in <NAME> v. <ORG>, Calcutta(1). In view of the scheme of these Act summarised above and the language of these sections the general principle laid down in the case of <ORG> v.<ORG> supra can have no application to a case governed by these sections. In our judgment <ORG> was in error in holding that it had jurisdiction to impose conditions as a prerequisite for granting permission to the company to retrench its workmen and the first question must be answered in the negative.

In the view we have taken on the first question we do not consider it necessary on this occasion to express any opinion on the other question canvassed before us. The result, therefore, is that this appeal is allowed and the decision of <ORG> is set aside and the matter is remanded to <ORG> to deal with the application of the company and make the appropriate order according to law. In the circumstances of this case we make no order as to costs. Appeal No. 4 of 1955 is dismissed also without costs.

(1) [1954] 2 Lab. L.J. 635.

<NAME>


PETITIONER: <NAME> Vs. RESPONDENT: THE STATE OF MADRAS.UNION OF INDIA AND OTHERS-Interveners. DATE OF JUDGMENT: 30/03/1953 BENCH: <NAME>, B.K. BENCH: <NAME>, B.K. <NAME>, NATWARLAL H. SASTRI, <NAME> (CJ) BOSE, VIVIAN HASAN, GHULAM CITATION: 1953 AIR 274 1953 SCR 677 CITATOR INFO : R 1955 SC 661 (93,147) RF 1958 SC 452 (14,26) RF 1958 SC 468 (6,14,17) R 1958 SC 560 (14,32) R 1959 SC 887 (16) RF 1961 SC 347 (20) RF 1961 SC1065 (4) R 1963 SC1207 (42,50) R 1965 SC 161 (8) RF 1966 SC 376 (5) F 1985 SC1034 (15) R 1988 SC2031 (9) ACT: Madras Sales Tax Act (IX of 1939), Ss. 2, 8 (before amendment of 1947)-" Sale within the province", meaning of- Levy of tax on sales where property in the goods passed outside the province-Legality-Provincial <ORG>- Territorial jurisdiction. HEADNOTE: Under the Madras Sales Tax Act, 1939, as it stood before it was amended by the Madras Act XXV of 1947,the mere fact that the contract of sale was entered into within the Province of 88 678 Madras did not make a transaction which was completed in another province where the property in the goods passed, a sale within the Province of Madras and no tax could be legally levied upon such a transaction under the provisions of the Act. Though <ORG> could not pass a taxation statute which would be binding on any other part of India it was quite competent for a province to enact a legislation imposing taxes on transactions concluded outside the province provided there was a sufficient and real territorial nexus between such transactions and the taxing province. The title and preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intention and design of the <ORG> and indicate the scope and purpose of the legislation itself. It is a settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute are to be taken together and each word phrase or sentence is to be considered in the light of the general purpose and object of the statute. Judgment of <ORG> reversed. JUDGMENT:

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 92 of 1952.

Appeal under articles 132(1) and 134(1) (c) of the Constitution of India from the Judgment and Order dated the 29th August, 1952, of <ORG> (<NAME> and <NAME>) in Criminal Appeal No. 129 of 1952 arising out of the-order dated the 25th February, 1952, of <ORG>, Egmore, Madras, in C. T. No. 1358 of the Calendar for 1950.

<NAME> (<NAME>, with him) for theappellant.

<NAME>, Advocate- General of Madras (<NAME> and <NAME> with him) for the respondent. <NAME>, Attorney-General for India (<NAME> and <NAME>, with him) for <ORG>. <NAME> for the State of Bihar.

<NAME>, Advocate-General of Punjab (<NAME>, <NAME>, with him) for the State of Punjab.

<NAME>, Advocate-General of Mysore (<NAME>, with him) for the State of, Mysore.

<NAME> for the State of Uttar Pradesh. <NAME>, Advocate-General of Travancore- Cochin (<NAME> and <NAME>, with him) for the State of Travancore Cochin.

<NAME> for the State of Madhya Pradesh. <NAME> for <ORG> (Intervener No. 8).

1953. March 30. The Judgment of the Court was delivered by <NAME> appeal, which has come before us on a certificate granted by <ORG> under articles 134(1) (e) and 132(1) of the Constitution, is directed against an appellate judgment of <ORG> of <ORG>, passed in Criminal Appeal No. 129 of 1952, by which the learned Judges affirmed an order of the Seventh Presidency Magistrate, Madras, dated February 25, 1952, convicting the appellant of an offence punishable under section 15 of the Madras General Sales Tax Act and sentencing him to pay a fine of Rs. 1,000; in default to suffer imprisonment for a period of 3 months. The appellant is a partner of a firm of merchants called <ORG> which has its head office in the city of Madras and carries on the business of selling and purchasing groundnut oil, sago and kirana articles. For the period-April 1, 1947, to December 31, 1947-the company was assessed to sales tax under the Madras Act IX of 1939 for an amount of Rs. 37,771 annas odd on a total turnover of Rs. 37,75,257 and for failure to pay the same were instituted against him under the provision of section 15 of the Act which resulted in his conviction as mentioned above. The course of business, which is usually followed by the company and which was actually followed during the period for which assessment is made, is as follows: The company receives orders-in its Madras office from' Calcutta merchants for supply of certain articles. These articles are purchased in the local markets and they are despatched to Calcutta by rail or steamer. The railway receipts and bills of lading are taken in the name of the vendor company and so also are the insurance policies, and they are sent to the company's bankers in Calcutta who deliver the same to the consignees on payment of prices and other charges. The sole point that requires consideration is, whether in these circumstances the sale transactions were liable to be taxed under the General Sales Tax Act of Madras?

Before <ORG> both the parties seem to have accepted the position that if on the facts stated above, which were not disputed by either side, the sales could be hold to have taken place within the Province of Madras, the tax could legitimately be levied on them but not otherwise. The parties differed, however? as regards the test to. be applied, in determining whether the sales did take place within the Province of Madras or not. On behalf of the appellant the contention raised was that the place of sale in regard to all the transactions was Calcutta, as the property in the goods sold admittedly passed to the purchasers in that city. The contention of the respondent State on the other hand was that the true test for determining the locality of the sale was not where the property in the goods sold passed, but where the actual transaction was put through. As the company had its head office in the city of Madras, its accounts were maintained there and the goods were delivered to the common carrier in that city, the sale, according to the respondent, must be deemed to have taken place in Madras even though the property in the goods sold passed outside the province. <ORG> accepted this contention of the respondent State. In the opinion of the learned Judges, the word "sale" has both a legal and a popular meaning. In the legal sense, it imports passing of property in the goods and it is in this sense that the word is used in the Sale of Goods Act . 'In the popular sense, however, it signifies the transaction itself which results in the passing of property. As the object of the <ORG> in the Sales Tax Act is to impose a tax on the occasion of the sale, it is immaterial that the sale has been completed outside the province. The place where the property passes is, it is said, a matter of no concern to the taxing author- ity and in such context the popular meaning of the word is more appropriate and should be adopted. The further contention raised on behalf of the appellant, that if this view was accepted, the sales tax would have to be regarded as being extra-territorial, in its operation and as such ultra vires the Provincial <ORG>, was repelled by <ORG> on the authority of the well known decision of <ORG> in Wallace Brothers etc., & <CITATION> (1). It is the propriety of this decision that has been challenged before us and the contentions raised by Mr. <NAME>, who appeared in support of the appeal, are of a two-fold character : The learned counsel has argued in the first place that the Provincial <ORG> functioning under the Government of India Act, 1935, was constitutionally incompetent to enact a legislation of this character which according to the interpretation put upon it by <ORG> is capable of operating on sale transactions concluded outside the province. The other contention is that on a proper construction of the relevant provisions of the Madras Sales Tax Act <ORG> ought to have held that they do not authorise the imposition of sale tax in respect of a transaction of sale where property in the goods sold passes outside the province. The first contention appears to us to be unsustainable. Section 100 (3) of the Government of India (1) (1948] F.C.R. I (P.C.).

Act, 1935, upon which Mr.<NAME> relied and which corresponds to article246(3) of the Constitution runs as follows :

``Subject to the two preceding sub-sections, <ORG> has and <ORG> has not, power to make laws for a province or any part thereof with respect to any of the matters enumerated in List II in the Second Schedule."

The entry in the Provincial List that is relevant for our purpose is Entry No. 48 and that speaks of " taxes on the sale of goods and on advertisements." The entry does not suggest that a legislation imposing tax on sale of goods can be made only in respect of sales taking place within the boundaries of the province ; and all that section 100(3) provides is that a law could be passed by <ORG> for purposes of the province itself. It admits of no dispute that <ORG> could not pass a taxation statute which would be binding on any other part of India outside the limits of the province, but it would be quite competent to enact a legislation imposing taxes on transactions concluded outside the province, provided that there was sufficient and a real territorial nexus between such transactions and the taxing province. This principle, which is based upon the decision of <ORG> in <ORG>. & <CITATION> (1) has been - held by this court to be applicable to sale tax legislation, in its recent decision in the Bombay Sales Tax Act case (2) and its propriety is beyond question. As a matter of fact, the legislative practice in regard to sale tax laws adopted by the Provincial Legislatures prior to the coming into force of the Constitution has been to authorise imposition of taxes on sales and purchases which were related in some manner with the taxing province by reason of some of the ingredients of the transaction having taken place within the province or by (1)  F.C.R. I (P.C.).

(2) The State of Bombay d Another v. <ORG> & Others-Civil Appeal NO. 204 Of 1952.

reason of the production or location of goods within it at the time when the transaction took place. If in the Madras Sales Tax Act the basis adopted for taxation is the location of the place of business or of the goods sold, within the Province of Madras, undoubtedly it would be a valid piece of legislation to which no objection on constitutional grounds could be taken. The controversy, therefore, narrows down to the short point as to what exactly has been adopted as the basis of the levy of sale tax by <ORG>. This leads us to the question of interpretation of the statute which is involved in the second point raised by Mr. <NAME>.

It is a settled rule of construction that to ascertain the legislative intent, all the constituent parts of a statute are to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself. The title of the Madras Sales Tax Act describes it to be an Act, the object of which is to provide for the levy of a general tax on the sale of goods in the Province of Madras and the very same words are repeated in the preamble which follows. The title and preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intent and design of the <ORG> and indicate the scope and purpose of the legislation itself. The title and preamble of the Madras Sales Tax Act clearly show that its object is to impose taxes on sales that take place within the province, though these words do not necessarily mean that the property in the goods sold must pass within the province. The expression "sale of goods " is a composite expression consisting of various ingredients or elements. Thus, there are the elements of a bargain or contract of sale, the payment or promise of payment of price, the delivery of goods and the actual passing of title, and each one of them is essential to a transaction of sale though the sale is not completed or concluded unless the purchaser becomes the owner of the property. The question is-what element or elements have been accepted by the Madras <ORG> as constituting a sale in the province upon which it is the object of the statute to levy tax. Section 2(h) gives the definition 'of "sale" and it is defined as meaning, every, transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge."

Unmistakably the stress is laid in this definition on the element of transfer of property in a sale and no other. The language gives no indication of the popular meaning of sale in which according to <ORG>, the word was used. It is to be noticed that there was no provision by way of explanation of this definition, in operation, at the material time to indicate in what cases a sale would be regarded as taking place within the Province of Madras, although the property in the goods sold did pass outside the boundaries of the province. Such explanations were added by the Madras Act XXV of 1947 and one of these explanations, namely explanation 2, provides as follows : " Notwithstanding anything to the contrary in the Indian Sale of Goods Act , 1930, the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made-

(a) if the goods were actually in this Province, at the time when the contract of sale or purchase in respect thereof was made, or

(b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made." It would be clear from this that these transactions were not considered by the <ORG> to constitute sales within the Province of Madras under the definition itself, but by resort to a legal fiction they were declared to be so, notwithstanding any provision in the Sale of Goods Act to the contrary which it was assumed, would otherwise be applicable,. The explanation further shows that in defining "sale" in section 2(h) , the <ORG> had in mind a sale in the Province of Madras and as these words occur in the title and preamble of the Act it was not deemed necessary to repeat them in the definition or the charging sections. Section 3 is the charging section in the Act and it provides for the levy of a tax on the total turnover of a dealer for a particular year. A "turnover" is defined to be the aggregate amount for which goods are either bought or sold. The charging section purports to levy a tax on the sale of goods and the tax is on the sale of goods in the Province of Madras as defined in section 2(h) of the Act read in the light of its title and preamble. In our opinion, the mere fact that the contract for sale was entered into within the Province of Madras does not make the transaction, which was completed admittedly within another province, where the property in the goods passed, a sale within the Province of Madras according to the provisions of the Madras Sales Tax Act and no tax could be levied upon such a transaction under the provisions of the Act. A contract of sale becomes a sale under the Sale of Goods Act only when the property in the goods is transferred to the buyer under the terms of the contract itself. The presence of the goods within the province at the time of the contract would undoubtedly make the sale, if subsequently completed, a sale within the province by reason of the explanation added by Act XXV of 1947 ; but as this explanation was not in operation during the relevant period with which we are concerned, the assessment of sale tax, in our opinion, on the transactions during this period is illegal and not warranted by the provisions of the Act. It is worthwhile to mention in this connection that except for the period in question no tax was attempted to be levied on similar transactions of the appellant by the taxing authorities in any of the  previous years,though the Act came into operation as early as the year 1939. It is not disputed also that the company is paying sale tax on its transactions with the Calcutta merchants since the explanation added by Act XXV of 1947 came into force. 'In our opinion, the appeal should be allowed and the conviction and sentence passed by the courts below should be set aside. The fine and sale tax, if actually paid, should be refunded to the appellant.

Appeal allowed.

Agent for the appellant: <NAME>. Agent for the respondent (the State of Madras), the Union of India, and the States of Punjab, Mysore, Madhya Pradesh and Travancore Cochin (Interveners): <NAME>.

Agent for the State of Bihar: <NAME>.

Agent for the State of U. P. <NAME>.

Agent for Intervener No. 8: <NAME>.


JUDGMENT <NAME>, J.

1. The plaintiffs are the daughters of <NAME> who died on 5th December 1925. They claim that, on their mother's death, they became entitled to the properties of their father <NAME> and in this suit they seek to get certain alienations set aside. The suit was filed in December 1926 and on 10th March 1927 one <NAME> sent a notice to defendants, claiming the properties to which the suit relates, on the ground that he is the reversionary heir of <NAME>, the son of <NAME>. The question really resolves itself into this. Who died later the son or the father? In other words, who is the last male holder. The plaintiffs' case is that <NAME> was, whereas <NAME>'s case is that <NAME> was. One of the issues framed in the suit reads thus :.

Who was the last male holder of the suit properties?

2. In these circumstances, the defendants in the three suits in question applied that Nagabhushanam might be made a party defendant. There was some delay in making the application and the District Munsif naturally felt disinclined to comply with the request. I should not ordinarily interfere with an order of this kind; but it is very necessary to do that if possible conflicting findings should be avoided. A finding may be arrived at in favour of the plaintiffs in the present suits. What prevents a different finding being reached in a suit Naghabhushanam may choose to file? I would therefore set aside the order of the District Munsif and direct Nagabhushanam to be made defendant in each of the three suits. As the application was made late, I direct the defendants to pay the costs here as well as in the lower Court. I fix the costs of the revision petitions at Rs. 50 and the costs below at Rs. 50 (total Sections 100), in all the three suits, to be paid in three equal shares by the three sets of defendants.