PETITIONER: PROF.SUMER CHAND Vs. RESPONDENT: UNION OF INDIA DATE OF JUDGMENT07/09/1993 BENCH: AGRAWAL, S.C. (J) BENCH: AGRAWAL, S.C. (J) KULDIP SINGH (J) CITATION: 1993 AIR 2579 1994 SCC (1) 64 JT 1993 (5) 189 1993 SCALE (3)706 ACT: HEADNOTE: JUDGMENT:

The Judgment of the Court was delivered by S.C. AGRAWAL, J.- This appeal, by special leave, raises the question whether the period of limitation for filing a suit for malicious prosecution against a member of <ORG> is governed by the provisions of Section 140 of Delhi Police Act, 1978, hereinafter referred to as 'the Act', or by Article 74 of the Limitation Act , 1963.

2. On the basis of the report made by one <NAME>, a case in respect of offences under Sections 148 / 365 / 452 / 308 / 506 / 149  was registered against the appellant and six others, by <NAME>, respondent 4, who was Police Inspector in charge of <ORG>. After investigation, the challan was filed in the court by <NAME>, respondent 3, SHO of P.S. Naraina. The appellant and the other six accused were prosecuted before the Additional Sessions Judge, New Delhi on charges under Sections 148 , 365 / 149 , 452 / 149 , 308 / 149 and 506 / 149  in Sessions Case No. 6 of 1985. By judgment dated February 28, 1986, the appellant as well as the other co- accused were acquitted by the Additional Sessions Judge. Thereafter, on April 20, 1987, the appellant filed a suit (No. 828 of 1987) in <ORG> claiming Rs 3,00,000 by way of damages for malicious prosecution. Apart from the respondents herein, who were impleaded as defendants 1 to 4, one <NAME>, was impleaded as defendant 5 in the said suit. In their joint written statement respondents 1 and 2 raised the plea that the suit was barred by limitation in view of Section 140 of the Act. Same plea was raised by respondent 3, in his written statement. Respondent 3 also pleaded that the suit was not maintainable in view of Section 140(2) of the Act as no prior notice of the filing of the suit was served on him. Respondent 4 filed an application (I.A. No. 7672 of 1987) for rejection of the plaint under Order 7 Rule 11 and Section 151 , CPC wherein he submitted that the suit was one covered by Section 140 of the Act and since it had not been filed within a period of three months from the date of the impugned Act and was filed more than one year after the acquittal, it was barred by limitation and has to be dismissed under Section 140 of the Act. Another objection that was raised in the said application was that as per Section 140(2) of the Act, the appellant was required to give minimum one month's notice prior to filing of the suit and under Section 140(3) , the fact of the service of notice is required to be stated in the plaint and that the appellant has neither served any such notice nor has he made any averment about serving any such notice on respondent 4 in the plaint. Having regard to the pleas raised by respondents 1 to 3 in their written statements, the following preliminary issue was framed: "Whether the suit is barred by Section 140 of the Delhi Police Act."

3. A learned Single Judge of <ORG>, by judgment dated April 5, 1989, decided the said preliminary issue against the appellant and held that in view of Section 140 of the Act the suit was barred by limitation. The learned Single Judge further held that the appellant had admittedly not served any notice prior to the filing of the suit of his intention to file the suit on any of the respondents as required by Section 140(2) of the Act and for that reason also the suit was liable to be dismissed as against the respondents. Consequently the suit as against the respondents was dismissed. It, however, proceeds against defendant 5. The appeal [FAO (OS) 180/89] filed by the appellant against the said decision of the learned Single Judge was dismissed in limine by <ORG> of <ORG> on July 12, 1989.

4. This appeal was filed by the appellant in person but during the course of the hearing, it was felt that it would be better if the appellant's case is presented through a lawyer and <ORG> of <ORG> was requested to give the assistance of a senior lawyer to the appellant for presenting his case before this Court. In pursuance of the said request, <NAME>, Senior Advocate, has argued the appeal on behalf of the appellant. We record our appreciation for the assistance rendered by <NAME>.

5. Section 140 of the Act provides as under:

"140. Bar to suits and prosecutions.- (1) In any case of alleged offence by a police officer or other person, or of a wrong alleged to have been done by such police officer or other person, by any act done under colour of duty or authority or in excess of any such duty or authority, or wherein it shall appear to the court that the offence or wrong if committed or done was of the character aforesaid, the prosecution or suit shall not be entertained and if entertained shall be dismissed if it is instituted, more than three months after the date of the act complained of:

Provided that any such prosecution against a police officer or other person may be entertained by the court, if instituted with the previous sanction of the Administrator, within one year from the date of the offence. (2) In the case of an intended suit on account of such a wrong as aforesaid, the person intending to sue shall give to the alleged wrongdoer not less than one month's notice of the intended suit with sufficient description of the wrong complained of, and if no such notice has been given before the institution of the suit, it shall be dismissed.

(3) The plaint shall set forth that a notice as aforesaid has been served on the defendant and the date of such service and shall state what tender of amends, if any, has been made by the defendant and a copy of the said notice shall be annexed to the plaint endorsed or accompanied with a declaration by the plaintiff of the time and manner of service thereof."

6. The first contention that has been urged by <NAME> is that Section 140 of the Act is in the nature of a general provision governing all suits in respect of offences or wrongs alleged to have been done by a police officer, and Article 74 of the Schedule to the Limitation Act , which prescribes the period of limitation for suits for compensation for a malicious prosecution, is in the nature of special provision and since a special provision prevails over the general provision, the limitation for the suit filed by the appellant against the respondent will have to be governed by Article 74 of the Limitation Act and if the limitation is computed in accordance with Article 74 of the Limitation Act , the suit was not barred by limitation. We do not find any substance in this contention. As indicated in the Preamble, the Limitation Act is an enactment which consolidates and amends the law for the limitation of suits and other proceedings connected therewith. It is a law which applies generally to all suits and proceedings. It is, therefore, in the nature of a general enactment governing the law of limitation. The Delhi Police Act has been enacted for the purpose of amending and consolidating the law relating to regulation of police in the Union Territory of Delhi. The Act is a special enactment in respect of matters referred to therein. Section 140 of the Act imposes certain restrictions and limitations in the matter of institution of suits and prosecutions against police officers in respect of acts done by a police officer under colour of duty or authority or in excess of such duty or authority. One such restriction is that such suit or prosecution shall not be entertained and if entertained shall be dismissed, if it is instituted more than three months after the date of the act complained of.

7. Section 29(2) of the Limitation Act provides as under:

"(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law."

8. Since the Act is a special law which prescribes a period of limitation different from the period prescribed in the Schedule to the Limitation Act for suits against persons governed by the Act in relation to matters covered by Section 140 , by virtue of Section 29(2) of the Limitation Act, the period of limitation prescribed by Section 140 of the Act would be the period of limitation prescribed for such suits and not the period prescribed in the Schedule to the Limitation Act . This means that if the suit filed by the appellant falls within the ambit of Section 140 then the period of limitation for institution of the suit would be that prescribed in Section 140 and not the period prescribed in Article 74 of the Limitation Act .

9. <NAME> has invited our attention to the decision of <ORG> in <CITATION> ' wherein it has been held that a suit for damages for malicious prosecution was governed by the general law of limitation in the Limitation Act and not by Section 42 of the Police Act, 1861. It was so held for the reason that part of Section 42 of the Police Act, 1861, which provides a period of three months for suits contemplated by it, was repealed on the passing of the Limitation Act , 187 1, and as a result such suits became subject to the general law of limitation contained in the Limitation Act and the special provision of limitation contained in Section 42 of the Police Act, 1861 ceased to be operative. The said decision has no application to the present case where there is no such repeat because the Delhi Police Act was enacted after the Limitation Act . This decision, however, shows that the Limitation Act is a general law and the Delhi Police Act is a special law and negatives the contention to the contrary urged by <NAME>.

10. The next contention of <NAME> was that the suit filed by the appellant does not fall within the ambit of Section 140 inasmuch as the acts of respondents 3 and 4 which have been complained of cannot be regarded as acts done under colour of duty or authority or in excess of such duty or authority. In support of this submission, <NAME> has placed reliance on the decisions of this Court in <CITATION> 12 and <CITATION> .

11. In this context it may be mentioned that the original enactment governing the police is the Police Act , 1861. Section 42 of the Police Act, 1861 provides as under:

"42. Limitation of actions.- All actions and prosecutions against any person, which may be lawfully brought for anything done or intended to be done under the provisions of this Act, or under the general police powers hereby given shall be commenced within three months after the act complained of shall have teen committed, and not otherwise; and notice in writing of such action and of the cause thereof shall be given to the defendant, or to the District Superintendent or an Assistant District Superintendent of the District in which the act was committed, one month at least before the commencement of the action.

Tender of amends- No plaintiff shall recover in any action if tender of sufficient amends shall have been made before such action brought, or if a sufficient sum of money shall have been paid into <ORG> after such action brought, by or on behalf of the defendant, and, though a decree shall be given for the plaintiff in any such action, such plaintiff shall not 1 AIR 1930 All 742 : 1930 ALJ 1443 2 (1964) 3 SCR 742 : AIR 1964 SC 33 : (1964) 1 Cri LJ 16 3 (1966) 3 SCR 880: AIR 1966 SC 1783 : 1966 Cri LJ 1495 have costs against the defendant, unless the Judge before whom the trial is held shall certify his approbation of the action:

Proviso- Provided always that no action shall in any case lie where such officers shall have been prosecuted criminally for the same act."

12. The said provisions are confined in their application to actions and prosecutions in respect of anything done or intended to be done under the provisions of the Police Act . They do not apply to a person who is being prosecuted for an offence under any other Act or an action being brought in respect of things or anything done under the provisions of any other Act. [See : <NAME> v. State of U. p. 41 Section 140 is based on Section 161 of the Bombay Police Act, 1951 and has a wider amplitude. The words "in any case of alleged offence", "or of a wrong alleged to have been done" and "by any act done" are also used in Section 161 of the Bombay Police Act. After referring to these words in Section 161 of the Bombay Police Act, 1951, this <ORG> in <CITATION> has held: "It appears clear that the legislature deliberately gave the protection of Section 161 ( 1) to offences against any law and there is no justification for our limiting that protection to offences under the Police Act only."(p. 16)

13. The expression "under colour of duty" are also contained in subsection (1) of Section 161 of the Bombay Police Act. Construing this expression, this <ORG> in <CITATION> has laid down:

"The expression 'under colour of something' or 'under colour of duty', or 'under colour of office', is not infrequently used in law as well as in common parlance. Thus in common parlance when a person is entrusted with the duty of collecting funds for, say, some charity and he uses that opportunity to get money for himself, we say of him that he is collecting money for himself under colour of making collections for a charity. Whether or not when the act bears the true colour of the office or duty or right, the act may be said to be done under colour of that right, office or duty, it is clear that when the colour is assumed as a cover or a cloak for something which cannot properly be done in performance of the duty or in exercise of the right or office, the act is said to be done under colour of the office or duty or right. It is reasonable to think that the legislature used the words 'under colour' in Section 16  1 (1) to include this sense." (pp. 11-1 2)

14. The Court has further observed that the words "under colour of duty" would include "acts done under the cloak of duty, even though not by virtue of the duty" and that the acts done in dereliction of duty must be held to have been done under colour of the duty (pp. 12-13). The Court rejected the view that if the alleged act is found to have been done in gross violation of the 4 1963 Supp 2 SCR 38, 45 5 1963 Supp 2 SCR 6 : AIR 1963 SC 849 :(1963) 1 Cri LJ 814 duty then it ceases to be an act done under colour of duty. It was observed that "it is only when the act is in violation of the duty, the question of the act being done under colour of the duty arises" and, therefore, "the fact that the act has been done under gross violation of the duty can be no reason to think that the act has not been done under colour of the duty" (p. 15). In that case, the allegation was that the appellant, a Police Head-Constable, had prepared a false panchnama and a false report with regard to seizure of ganja. It was held that the said preparation of the panchnama and report were acts done under colour of duty imposed upon the said Head-Constable by the Police Act .

15. <CITATION> 12 the <ORG> was dealing with Section 53 of the Madras District Police Act, 1859, which contains provisions similar to those contained in Section 42 in the Police Act , 1861. The accused were a Sub-Inspector of Police, a Head Constable and a Constable. They were prosecuted for having caused injuries to a prisoner in custody for the purpose of extorting from him information which might lead to detection of an offence and restoration of stolen property, and also for having his body thrown at the place where it was ultimately found with the intention of screening themselves from punishment. Section 53 of the Madras District Police Act uses the words "anything done or intended to be done under the provisions of this Act". Construing the said expression this <ORG> has observed: (AIR p. 37, para 14) "The <ORG> has to remember in this connection that an act is not under' a provision of law merely because the point of time at which it is done coincides with the point of time when some act is done in the exercise of the powers granted by the provision or in performance of the duty imposed by it. To be able to say that an act is done 'under' a provision of law, one must discover the existence of a reasonable relationship between the provisions and the act. In the absence of such a relation the act cannot be said to be done 'under' the particular provision of law." (p.

16. The principles laid down in <CITATION> were held applicable and it was observed that the acts complained of, viz., beating a person suspected of a crime or confining him or sending him away in an injured condition cannot be said to have any relation with any provision of law whether the Police Act or some other law. It was held that the acts complained of had no reasonable connection with the process of investigation.

17. <CITATION> a Head-Constable was charged under Section 161  and Sections 5(1)(b) and 5(2) of the Prevention of Corruption Act, 1947 for accepting a bribe for weakening the prosecution case. The question was whether the said matter was governed by Section 161(1) of the Bombay Police Act, 1951. It was held that "unless there is a reasonable connection between the act complained of and the powers and duties of the office, it cannot be said that the act was done by the accused officer under the colour of the office" (p. 883). Applying the said test, this Court held that the alleged acceptance of bribe by the accused officer was not an act which could be said to have been done under the colour of office or done in excess of his duty or authority within the meaning of Section 161 (1) of the Bombay Police Act. Reference has been made to the earlier decision in <CITATION> and it has been pointed out that in that case it was the duty of the Police Constable to prepare a panchnama and the act of preparation of false panchnama was done under the colour of his office and there was a nexus between the act complained of and the statutory duty that the Police Head Constable was to perform and the provisions of Section 161(1) of the Bombay Police Act were, therefore, applicable. (p. 884)

18. Similarly in <CITATION> it was held that the alleged act of assault and confinement of a suspect in police custody were not acts done under the colour of duty or authority since the said acts had no reasonable connection or nexus to the duty or authority imposed upon the officer under the Bombay Police Act or any other enactment conferring the powers on the police under the colour of which this act was done and that such acts fell completely outside the scope and duties of the respondent police officers and they are not entitled to the protection conferred by Section 161 (I) of the Bombay Police Act.

19. Having regard to the principles laid down in the aforementioned decisions of this Court on provisions contained in Section 161(1) of the Bombay Police Act, 1951 which are similar to those contained in Section 140(1) of the Act, we are of the view that <ORG> was right in holding that the present case falls within the ambit of Section 140 of the Act. What is alleged against respondents 3 and 4 by the appellant in the plaint is that respondent 4, who was in charge of Mayapuri police post had registered a false, vexatious and malicious report against the appellant, and respondent 3, who was Station House Officer, <NAME>, had filed the challan in the Court against appellant and other accused on the basis of the said report. The facts in the present case are similar to those in <CITATION> ' where the allegation was about the preparation of false panchnama and report of seizure of ganja. The said action of the appellant in that case was held to be done under the colour of duty since it was the duty of Police Head Constable to prepare a panchnama and for that reason it was held that there was a nexus between the act complained and the statutory duty that the Police Head Constable was to perform. Similarly in the present case it was the duty of respondent 4, being in-charge of <ORG>, to record the report and so also it was the duty of respondent 3 the SHO of <NAME> to file the challan in court. The acts complained of thus had a reasonable connection and nexus with the duties attached to the offices held by respondents 3 and 4. The acts complained of were, therefore, done under the colour of office of the said 6 AIR 1966 SC 1786 : 1966 Cri LJ 1498 respondents and fell within the ambit of Section 140(1) of the Act. It is not disputed that if Section 140(1) is found applicable the suit filed by the appellant, as against the respondents, was barred by limitation having been filed after the expiry of three months and it could not be entertained against them.

20. The appeal, therefore, fails and it is accordingly dismissed, but without any order as to costs.


<NAME>, J.

1. The deceased, Sri <NAME>, was partner in the firm of Messrs. <NAME> and <NAME>, Sira, under a partnership agreement dated November 28, 1947. The deceased had a half share in the said business. The capital standing to the credit of the deceased in the books of the firm as on June 30, 1954, was Rs. 1,07,148. On June 30, 1954, this amount was divided into three parts of four annas, two annas and two annas, respectively, and the two shares of two annas each in the capital were transferred to the accounts of the two sons of the deceased, viz., <NAME> and <NAME>. The shares so transferred to the accounts of the sons amounted to Rs. 28,796 each. With sons and <NAME> and his son, <NAME>, the profit-sharing ratio being four annas for the deceased, two annas each for his two sons, and four annas each for <NAME> and his son. A fresh partnership deed was duly drawn on this basis and this re-constituted firm continued to exist till the death of the deceased on November 16, 1957. A copy of the partnership deed dated July 1, 1954. together with a free English translation of the same is appendix "A" and forms part of statement.

2. In the estate duty proceedings that followed upon the death of the deceased, the accountable persons contended that the capital of Rs. 57, 594 transferred by the deceased to the sons on June 30, 1954, was an absolute transfer and the deceased did not get any interest whatever in the capital transferred or in the profits. The Assistant Controller of Estate Duty, however, did not accept this contention and held that the amount transferred by the deceased to his sons came under the purview of gifts and that the gifts so taken by the sons were not retained by them to the entire exclusion of the deceased and that, therefore, this amount must be deemed to be the property that passed on the death of the deceased as per the provisions of section 10 of the Estate Duty Act. The order of the Assistant Controller is a appendix "B" and forms part of the statement.

3. The accountable persons preferred an appeal before the Appellate Controller of Estate Duty against the said order of the Assistant Controller. It was contended by them that, since the right to the benefit of the partnership could not be referable to the gifts, the gifts were complete and the deceased did not retain any benefit. Reliance was placed upon the decision in <NAME>'s case. The Appellate Controller rejected this contention and, relying upon the decision in <NAME>'s case 2, held that the property gifted by the deceased to his sons was not retained by them to the entire exclusion of the deceased or of any benefit to him. He, therefore, confirmed the addition of the amount of Rs. 57,594 to the value of the estate of the deceased. The order of the Appellate Controller is appendix "C" and forms part of the statement.

4. Against this order of the Appellate Controller, the accountable persons preferred an appeal before the <ORG>. It was contended on their behalf that the admission of the two sons of the deceased into the partnership which was already in existence merely increased the number of partners in the firm and that all partners in the enlarged firm were governed by the provisions of the Indian Partnership Act regarding their rights and obligations in respect of the firm; that all the partners were independent of one another and every one of the partners was the absolute owner of his share in the business of the partnership and that, therefore, the deceased could not be said not to have been excluded from the property gifted by him to his sons or from any benefit arising therefrom. On the other hand, it was contended by the department that by taking the sons into the partnership with the funds he had given, the deceased had brought back his money and so benefit accrued to the father. The <ORG> held that the transfer of Rs. 28,796 to each of the two sons was not tied with strings and that there were also no strings attached to the entry of the sons into the partnership with the father. The <ORG> further held that the firm and the individuals were different and, to the extent of the benefit derived by the father from the firm, he had his capital in it and only if any benefit was left over, after the sons had their share, could any go to the father. But that could not be so, because the benefit derived was proportionate to the money invested. The <ORG> held that the decision in <NAME>'s case was more opposite of application than that of <NAME>. The <ORG> finally held that there was nothing to show that the gifted property or any part of it came back to the deceased on July 1, 1954, and that, therefore, there was no ground for adding a sum of Rs. 57,594 in the computation of the estate left. The copy of order of the <ORG> is appendix "D" and forms part of the statement.

5. This order of the <ORG> was subsequently rectified by substituting the figure of Rs. 73,695 for the figure Rs. 57,594. The order of the <ORG> in the Misc. Application in E. D. A. No. 77 of 1962-63 dated November 4, 1964, is appendix "E" and forms part of the statement.

6. The following question is referred :

"Whether, on the facts and in the circumstances of the case, the sum of Rs. 73,695 is not to be included in the computation of the estate left by the deceased ?"

7. This is a reference under section 64(1) of the Estate Duty Act, 1953, to be hereinafter referred to as the "Act". This reference was made at the instance of the Controller of Estate Duty. The facts of the case are fully set out in the statement submitted by <ORG>.

8. There is no dispute about the truth or the validity of the gifts made by the deceased on June 30, 1954. It is not the case of the department that the deceased had any interest in the amounts gifted to his sons on June 30, 1954, after the gifts in question were made. Section 10 of the Act reads :

"Property taken under any gift, whenever made, shall be deeded to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise :

Provided that the property shall not be deemed to pass by reason only that it was, not as from the date of the gift, exclusively retained as aforesaid, it, by means of the surrender of the reserved benefit or otherwise, it is subsequently enjoyed to the entire exclusion of the donor or of any benefit to him for at least two years before the death. " Once it is proved gift of property had been made by the deceased two years before his death the value of that property can be taken in determining the value of the property that has passed on the death of the deceased only when one of the two conditions are satisfied, namely :

(1) that bona fide possession and enjoyment of that property was not immediately assumed by the done; and (2) thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise.

9. In the instant case, gifts made were shares in an existing firm. The firm in question continued to be in existence even after the gifts, till the date of the death of the deceased, <NAME>. It is not denied that ever since the gift, the profits accruing from the shares gifted to the two sons of <NAME> were being paid to the donees. All the partners of the firm including the deceased were in management of the firm as partners. In these circumstances, the possession that the donees could have taken in pursuance of the gifts mentioned earlier is only a legal possession. It was not possible for any one of the partners to take physical possession of any portion of the assets of the firm. It is established that the property gifted was in the management of the donees. On the facts of the case, it cannot be said that, after the gifts, the donees did not retain the property gifted to the entire exclusion of the donor or that the donor had any benefit by contract or otherwise in the property gifted. That in order that the property could deem to pass and estate duty could be leviable in such cases, the benefit of the donor must be a benefit referable to the gift and not a benefit referable to his won property. The view, that if it is once found that the deceased had some benefit in the property, that in itself was sufficient to bring the case within the ambit of section 10 irrespective of the question whether that benefit was referable or not referable to the gift, in our opinion, is erroneons.

10. For the reasons mentioned above, we are in agreement with the <ORG> that the gifts with which we are concerned in this case do not come within the ambit of section 10 of the Act. That being so, our answer to the question referred is that, on the facts and circumstances of case, the sum of Rs. 73,695 is not to be included in the computation of estate left by the deceased.

11. The assessee is entitled to his costs of these proceedings from the department. Advocate's fee Rs. 250.


PETITIONER: UNION OF INDIA AND <ORG>. Vs. RESPONDENT: BABUBHAI NYLCHAND MEHTA DATE OF JUDGMENT18/12/1990 BENCH: KASLIWAL, N.M. (J) BENCH: KASLIWAL, N.M. (J) AGRAWAL, S.C. (J) CITATION: 1991 AIR 407 1990 SCR Supl. (3) 559 1991 SCC Supl. (2) 348 JT 1990 (4) 790 1990 SCALE (2)1269 ACT: Central Excises & Salt Act , 1944: Section 2(f) and Schedule Item 17(2)--Processed <ORG> Paper-- Assessability to duty. HEADNOTE: The respondent is the proprietor of a company which carried on business of manufacturing Waterproof <ORG> Paper. The company purchased kraft paper as well as other material from the open market and combined these materials with kraft paper in its factory. The company claimed that as the manu- facturing process was not carried out in bringing into existence various kinds of kraft papers, it was not liable to pay any excise duty in respect of the products produced in its factory. The Assistant Collector of Central Excise held that the kraft paper marketed by the company was bituminised water proof packing papers which were different and distinct products than the original kraft paper and hence were liable to payment of excise duty. The company filed a writ petition in <ORG>. The 1earned Single Judge held that the process carried on by the company could not be considered as manufacture of a new commodity with a different name and different use. On ap- peal, the Division Bench affirmed the judgment of the learned Single Judge. Before this <ORG> it was contended on behalf of the <ORG> that the case was covered by the recent decision of this <ORG> in laminated <CITATION> ,  Vol. 4 SCC 51 in which, in similar circumstances, it was held that by the process of lamination of <ORG> paper with polyethylene, different goods came into being- The learned counsel on behalf of the company tried to distinguish the Laminated Packings case. in the alternative, it was urged that no evidence was placed on record by the appellant to show that the goods in 560 question were known in the market having distinct, separate and identifiable function. Allowing the appeal, this <ORG>, HELD: (1) The coating and lamination and other process applied the company in its factory amounted to manufacture, because kraft paper did not remain an ordinary kraft paper, and as such it was liable to excise duty under Central Excise Tariff Item No. 17(2). [564G] <CITATION> ,  Vol. 4 SCC 51, followed. <CITATION> ,  ECR 2639, referred to. (2) In the facts and circumstances of this case there could be no controversy that new goods came into being, and laminated papers were sold in the market as distinct, sepa- rate and different goods. [565B] JUDGMENT:


PETITIONER: COMMISSIONER OF INCOME- TAX, BOMBAY Vs. RESPONDENT: SMT. INDIRA BALKRISHNA DATE OF JUDGMENT: 14/04/1960 BENCH: DAS, S.K. BENCH: DAS, S.K. KAPUR, J.L. HIDAYATULLAH, M. CITATION: 1960 AIR 1172 1960 SCR (3) 513 CITATOR INFO : R 1961 SC1043 (6,7,8) RF 1961 SC1261 (6) RF 1965 SC1752 (8) R 1968 SC 317 (22) RF 1970 SC1707 (8) R 1973 SC2369 (7,10) RF 1977 SC 394 (5,6) ACT: Income-tax-Association of Persons-Meaning of- Indian Income-tax Act , 1922 (XI of 1922), s. 3 . HEADNOTE: A Hindu governed by the Mitakshara School of Hindu Law died leaving three widows as his legal heirs. The widows took the estate as joint tenants and did not exercise their right to separate possession and enjoyment. The main income was from dividends and from immovable property. The latter was held under s. 9(3) of the Income-tax Act not to be assessable as income 514 of an association of persons. The question was whether the three widows could be assessed as an association of persons in respect of the rest of the income: Held, that the three widows did not have the status of an association of persons within the meaning of s. 3 of the Income-tax Act. An association of persons is one in which two or more persons join in a common purpose or common action and, for purposes of the income-tax law, one of its objects must be to produce income, profits or gains. It must be a combination of persons formed for the promotion of a joint enterprise for producing income. In the present case except for receiving the dividends and interest jointly the widows had done no act which helped to produce the income. In <NAME> : <NAME>,  3 I.T.R. 408, <CITATION> ,  5 I.T.R. 484 and Re. Dwayakanath Harishchandra,  5 I.T.R. 716, approved. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 249 & 250 of 1958.

Appeals by special leave from the judgment and order dated March 7, 1956, of <ORG> in I.T.R. Nos. 52 and 53 of 1955.

<NAME> and <NAME>, for the appellant (in both the appeals).

<NAME>, <NAME> and <NAME>, for the respondent (in both the appeals).

1960. April 14. The Judgment of the Court was delivered by <NAME>, J.-These two appeals with special leave have been heard together. They arise out of similar facts and the question of law arising therefrom is the same.

The short facts are these. One <NAME> died on November 11, 1947. He left behind him three widows and two daughters. The three widows were named <NAME>, <NAME> and <NAME>. These widows as legal heirs inherited the estate of the deceased, which consisted of immovable properties situate in Ahmedabad, shares in <ORG>, money lying in deposit, and share in a registered firm. For the two assessment years 1950-51 and 1951-52 (the corresponding account years being the Sambat years 2005 and 2006) the Incometax Officer issued notices to the legal heirs of <NAME>. Pursuant to those notices, returns were filed under the heading, " Legal heirs of <NAME> ", in one case and in the name of the 'estate of <NAME> in the other; the status was shown as " individual " in one case and " association of persons " in -the other. They were signed by <NAME>, one of the three widows. For the assessment year 1950-51 the total income was shown as under-

Rs.

Property.. 11,011 Share from registered firm. 4,071 Dividends. 51,796 Interest.. 22,343 Ground rent.... 125 Total..... 69,346

For the assessment year 1951-52, the total income was shown as-

Rs.

Property-. 10,879 Share from registered firm. 460 Dividends. 80,426 Interest on deposits..... 536 Ground rent.... 125 Total..... 92,426

For both years the Income-tax Officer took the status of the assessee as an " association of persons " and on that footing made two assessment orders. There was an appear to the Appellate Assistant Commissioner, and two of the points taken before him were(a) that the three widows ought to have been assessed separately and not as an " association of persons ", and (b) that in any event, the income from property ought to have been assessed separately in the hands of the three widows by reason of the provisions in s. 9(3) of the Income-tax Act, 1922. The Appellate Assistant Commissioner rejected point (a) but accepted point (b). Then, there was a further appeal to <ORG>, Bombay. The <ORG> held that the entire estate of deceased <NAME> was inherited and possessed by the three widows as joint tenants and its income was liable to be assessed in their hands in the status of an association of persons. The <ORG> further held that the Appellate Assistant Commissioner was wrong in holding that the shares of the three widows were definite and determinable and s. 9(3) was applicable. The assessee then moved the <ORG> to refer certain questions of law which arose out of its orders to <ORG>. The <ORG> referred four such questions, but we are now concerned with only one of them, viz., question No. 3 which was in the following terms:

" (3) Whether on the facts and in the circumstances of the case the <ORG> was right in holding that the assessment made on the three widows of Balkrishna Purushottam Purani in the status of an association of persons is legal and valid in law ? "

Two references were made to <ORG> in respect of the orders passed for two assessment years and they gave rise to Income-tax References Nos. 52 and 53 of 1955. The leading judgment was given in T. T. It. 52 of 1955. <ORG> held that the <ORG> was in error in coming to the conclusion that the three widows could be assessed in the status of an association of persons with regard to the income which they earned as heirs of their deceased husband. Therefore, it answered question No. 3 in the negative. The department represented by the Commissioner of Income-tax, Bombay, then applied to this Court and obtained special leave to appeal from the judgment and orders of <ORG> of Bombay in the two References. These two appeals have been filed in pursuance of the special leave granted by this Court. The appellant is the Commissioner of Income- tax, Bombay, and the assessee is the respondent. The argument on behalf of the appellant is that <ORG> was in error when it said that " what is required before an association of persons can be liable to tax is not that they should receive income but that they should earn or help to earn income by reason of their association, and if the case of the <ORG> stops short at mere receipt of income, then the <ORG> must fail in bringing home the liability to tax of individuals as an association of persons." It is submitted that <ORG> did not, in the statement quoted above, lay down the correct test for determining what is an " association of persons " for the purposes of the Income-tax Act .

Before we go on to discuss the argument presented on behalf of the appellant, it is necessary to clear the ground by stating what is the position of co-widows in Mitakshara succession and what are the findings arrived at by the <ORG>. The position of co-widows is well-settled. They succeed as co-heirs to the estate of their deceased husband and take as joint tenants with rights of survivorship and equal beneficial enjoyment ; they are entitled as between themselves to an equal share of the income. Though they take as joint tenants, no one of them has a right to enforce an absolute partition of the estate against the others so as to destroy their right of survivorship. But they are entitled to obtain a partition of separate portions of the property so that each may enjoy her equal share of the income accruing therefrom. The <ORG> found that the widows in this case did not exercise their right to separate possession and enjoyment and " they chose to manage the property jointly, each acting for herself and the others and receiving the income of the property which they were entitled to enjoy in equal shares." Learned counsel for the appellant has emphasised before us the aforesaid finding of the <ORG> and has contended that on the finding of joint management, the widows fulfilled even the test laid down by <ORG> and constituted an an "association of persons" for taxing purposes. <ORG>, however, rightly pointed out that the only property which the widows could have managed jointly was the immovable property which fetched an income of about Rs. 11,000, and as to that property, the Appellate Assistant Commissioner had held that s. 9 (3) applied. There was no appeal by the <ORG> against that finding and it was not 68 open to the <ORG> to go behind it. Even on merits the <ORG> was wrong in thinking that the respective shares of the widows were not definite and ascertainable. They had an equal share in the income, viz., one-third each, and the provisions of s. 9 (3) clearly applied in respect of the immovable property.

With regard to the shares, dividends and interest on deposits there was no finding of any act of joint management. Indeed, the main item consists of the dividends and it is difficult to understand what act of management the widows performed in respect thereof which produced or helped to produce income. On the contrary, the statement of the case shows that the assessee filed lists of shares, copies whereof are marked annexure C and form part of the case, which showed that the shares stood separately in the name of each one of the three widows and this was not denied by the <ORG>.

We now come to the main question in this appeal. What constitutes an " association of persons " within the meaning of the Income-tax Act ? It has been repeatedly pointed out that the Act does not define what constitutes an association of persons, which under s. 3 of the Act is an entity or unit of assessment. Previous to the year 1924, the words of s. 3 were " individual, company, firm and Hindu undivided family." By the Indian Income-tax Amendment Act of 1924 (Act XI of 1924) the words " individual, Hindu undivided family, company, firm and other association of individuals " were substituted for the former words. By the Income-tax Amendment Act of 1939 (Act VII of 1939) the section was again amended and it then said:

" Where any Act of <ORG> enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually."

<NAME>

By the same Amending Act (Act VII of 1939) sub-s. (3) of s. 9 was also added.

Now, s. 3 imposes a tax " in respect of the total income...................... of every individual, Hindu un- divided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually." In the absence of any definition as to what constitutes an association of persons, we must construe the words in their plain ordinary meaning and we must also bear in mind that the words occur in a section which imposes a tax on the total income of each one of the units of assessment mentioned therein including an association of persons. The meaning to be assigned to the words must take colour from the context in which they occur. A number of decisions have been cited at the bar bearing on the question, and our attention has been drawn to the controversy as to whether the words " association of individuals " which occurred previously in the section should be read ejusdem generis with the word immediately preceding, viz., firm or with all the other groups of persons mentioned in the section. Into that controversy it is unnecessary to enter in the present case. Nor do we pause to consider the widely differing characteristics of the three other associations mentioned in the section, viz., <ORG>, a company and a firm, and whether in view of the amendments made in 1939 the words in question can be read ejusdem generis with <ORG> or company.

It is enough for our purpose to refer to three decisions: In re: B. N. Elias and Others (1); <CITATION> ("); and In re: <NAME> and Another(3); In In re: B. N. Elias and Others (1) <NAME>, C. J., rightly pointed out that the word " associate " means, according to the Oxford dictionary, " to join in common purpose, or to join in an action." Therefore, an association of persons must be OD e in which two or more persons join in a common purpose or common action, and as the words occur in (1)  I.T.R. 408. (2)  5 I.T.R. 484. (3)  5, I.T.R. 716.

a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains. This was the view expressed by <NAME>, C. J., in <CITATION> (1) at page 589 and also in Re: <NAME> and Another (2). In re: <NAME> (3 ) <NAME>, J., put the test in more force full language. He said "It may well be that the intention of the legislature was to hit combinations of individuals who were engaged together in some joint enterprise but did not in law constitute partnership When we find that there is a combination of persons formed for the promotion of a joint enterprise then I think no difficulty arises in the way of saying that these persons did constitute an association We think that the aforesaid decisions correctly lay down the crucial test for determining what is an association of persons within the meaning of s. 3 of the Income-tax Act, and they have been accepted and followed in a number of later decisions of different <ORG> to all of which it is unnecessary to call attention. It is, however, necessary to add some words of caution here. There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a conclusion that there is an association of persons within the meaning of s. 3 ; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not.

Learned counsel for the appellant has suggested that having regard to ss. 3 and 4 of the Indian Income-tax Act, the real test is the existence of a common source of income in which two or more persons are interested as owner or otherwise and it is immaterial whether their shares are specific and definite or whether there is any scheme of management or not. He has submitted that if the persons so interested come to an arrangement, express or tacit, by which they divide the income at a point of time before it emanates from the source, then the association ceases; otherwise it continues to be an association.

(1) [1937] 5 I.T.R. 484. (2) [1937] 5 I.T.R. 716. (3) [1935] 3 I.T,R. 408.

We have indicated above what is the crucial test in determining an association of persons within the meaning of s. 3 , and we are of the view that the test suggested by learned counsel for the appellant are neither conclusive nor determinative of the question before us.

Coming back to the facts found by the <ORG>, there is no finding that the three widows have combined in a joint enterprise to produce income. The only finding is that they have not exercised their right to separate enjoyment, and except for receiving the dividends and interest jointly, it has been found that they have done no act which has helped to produce income in respect of the shares and deposits. On these findings it cannot be held that the three widows had the status of an association of persons within the meaning of s. 3 of the Indian Income Tax Act.

<ORG> correctly answered question No. 3 in the negative. Accordingly, the appeals fail and are dismissed with costs. There will be one set of hearing fee in the two appeals.

Appeals dismissed.


JUDGMENT

1. Section 57 of the Transfer of Property Act does. not apply to this case, as it involves a question of the adjustment of a decree out of <ORG>.

2. The decree of this Court is not a decree for payment of money, but an ordinary mortgage decree for sale in case the money due is not paid.

3. That being so, Section 258 , Code of Civil Procedure, is not applicable compare <CITATION> . 22 Mad. 182. The respondent was therefore not precluded by limitation under Article 173A of the second schedule of the Limitation Act from proving the agreement set up by him under Section 244 , Clause (c) of the Code of Civil Procedure.

4. There being no doubt as to the agreement, the appeal fails and is dismissed with costs.


PETITIONER: UNION OF INDIA AND ORS. Vs. RESPONDENT: <NAME> DATE OF JUDGMENT20/11/1990 BENCH: MISRA, RANGNATH (CJ) BENCH: MISRA, RANGNATH (CJ) SAWANT, P.B. RAMASWAMY, K. CITATION: 1991 AIR 471 1990 SCR Supl. (3) 248 1991 SCC (1) 588 JT 1990 (4) 456 1990 SCALE (2)1094 CITATOR INFO : R 1992 SC2219 (139) ACT: Constitution of India, 1950-- Article 311(2)-- Deletion of second notice proposing punishments mentioned in Article 311(2 ), by the FortySecond Amendment--Whether delinquent entitled to copy of inquiry report before imposing punish- ment--Non-supply of report--Whether violates rules of natu- ral justice. Constitution of India, 1950--Articles 14, 311--Supply of inquiry report in the case of the inquiry officer not being the disciplinary authority and non-supply of the report in the case of the inquiry officer being the disciplinary authority---Whether Article 14 attracted. HEADNOTE: In the civil appeals by special leave, the short point for determination was whether with the alteration of the provisions of Article 311(2) under the Forty-Second Amend- ment of the Constitution doing away with the opportunity of showing cause against the proposed punishment, the delin- quent has no right to be entitled to a copy of the report of inquiry in the disciplinary proceedings. Dismissing the appeals, this <ORG>, HELD: 1. The Forty-Second Amendment has deleted the second stage of the inquiry which would commence with the service of a notice proposing one of the three punishments mentioned in Art. 311(1) and the delinquent officer would represent against the same and on the basis of such repre- sentation and/or oral hearing granted, the disciplinary authority decides about the punishment. Deletion of this part from the concept of reasonable opportunity in Art. 311(2) does not bring about any material change in regard to requiring the copy of the report to be provided to the delinquent. [255H-256C] 2. Deletion of the second opportunity from the scheme of Art. 311(2) has nothing to do with providing of a copy of the report to the delinquent in the matter of making his ï7 3 in Art. 311(2) has been abolished by amend- 249 ment, the delinquent is still entitled to represent against the conclusion of the Inquiry Officer holding that the charges or some of the charges are established and holding the delinquent guilty of such charges. For doing away with the effect of the enquiry report or to meet the recommenda- tions of the Inquiry Officer in the matter of imposition of punishment, furnishing a copy of the report becomes neces- sary and to have the proceeding completed by using some material behind the back of the delinquent is a position not countenanced by fair procedure. [257C-F] 3. While by law application of natural justice could be totally ruled out or truncated, nothing has been done here which could be taken as keeping natural justice out of the proceedings and the series of pronouncements of this <ORG> making rules of natural justice applicable to such an in- quiry are not affected by the 42nd Amendment. Supply of a copy of the inquiry report along with recommendations, if any, in the matter of proposed punishment to be inflicted would be within the rules of natural justice and the delin- quent would, therefore, be entitled to the supply of a copy thereof. The Forty-Second Amendment has not brought about any change in this position. [257E-H] 4. Where the disciplinary authority is the Inquiry Officer there is no report. He becomes the first assessing authority to consider the evidence directly for finding out whether the delinquent in guilty and liable to be punished. Even otherwise, the inquiries which are directly handled by the disciplinary authority and those which are allowed to be handled by the Inquiry Officer can easily be classified into two separate groups one, where there is no inquiry report on account of the fact that the disciplinary authority is the Inquiry Officer and inquiries where there is a report on account of the fact that an officer other than the discipli- nary authority has been constituted as the Inquiry Officer. [258A-C] 5. Wherever there has been an Inquiry Officer and he has furnished a report to the disciplinary authority at the conclusion of the inquiry holding the delinquent guilty of all or any of the charges with proposal for any particular punishment or not, the delinquent is entitled to a copy of such report and will also be entitled to make a representa- tion against it, if he so desires, and non-furnishing of the report would amount to violation of rules of natural justice and make the final order liable to challenge hereafter. [258E-G] ï73 80; <CITATION> for India, 64 IA 55; High Commis- 250 sionerror India v. LM. <NAME>, 75 IA 225; Secretary of <ORG> for <CITATION> ,  FCR 103; <CITATION> .,  3 SCR 917; <NAME> v. Inspector General, SLR (1968) SC 131; <CITATION> ,  4 SCR 718; <CITATION> .,  1 SCR 251; <CITATION> ,  Suppl. SCR 354; <CITATION> .,  4 SCC 537, referred to. Prof. <NAME> on Administrative Law, referred to. JUDGMENT: