PETITIONER: GIRDHARILAL BANSIDHAR Vs. RESPONDENT: UNION OF INDIA DATE OF JUDGMENT: 06/03/1964 BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA GAJENDRAGADKAR, <NAME>, K.N. SHAH, J.C. SIKRI, S.M. CITATION: 1964 AIR 1519 1964 SCR (7) 62 CITATOR INFO : D 1971 SC1558 (6,16,18) F 1973 SC 194 (9) ACT: Sea <ORG> Act, 1878(8 of 1878)-Prohibition on import of certain article-Component parts of that article if within prohibition-Conclusions of <ORG> authorities based on several items of Hand-book-Correctness thereof, whether can be considered by High Court-Constitution of India, Art. 226. Evidence taken into consideration though not mentioned in notice to show cause-Natural justice, if violated. HEADNOTE: The appellant who was granted a license to import "iron and steel bolts, nuts, set screws, machine screws and machine studs, excluding bolts, nuts and screws adopted for use on cycles", imported nuts and bolts which were the components of "Jackson Type Single bolt oval plate belts fasteners" which were described in the bill of Entry as "Stove Bolts and Nuts." The importation of "Jackson Type Single bolt oval plate belt fasteners" had been prohibited. When the goods were attempted to be passed through the customs, the collector issued notice to the appellant to show cause why penalties should not be imposed on him(a) for misdescribing the goods and (b) for attempting to import goods without a proper import license. After receiving his explanation, penalties were imposed on the appellant. One of the facts which the Collector of <ORG> bad taken into consideration in arriving at the conclusion that the nuts and bolts imported were in reality the actual components of the prohibited articles was that washers, the third component of the prohibited articles were imported by a firm owned or controlled by close relations of the appellant. An appeal to <ORG> from the order of the Collector imposing the penalties was dismissed. Thereafter, the appellant filed a writ petition under Art. 226 of the Constitution in <ORG> which was dismissed in limine. On appeal by special leave: Held: (i) A component part which has no use other than as a component of an article whose importation is prohibited is included in a ban or restriction as regards the importation,of that article. <CITATION> . 4 of 1959 of <ORG> referred to. (ii) There was no force in the contention that the decision of the Collector of <ORG> was vitiated by a patent error, in that he misconstrued the scope of Entry 22 of Part 1 of the Import Trade Control Hand-book. A court dealing with a petition under Article 226 is not sitting in appeal over the decision of the <ORG> Authorities and therefore the correctness of the conclusion reached by those authorities on the appreciation of the several items in the Hand-book or in the Indian Tariff Act which is referred to in these items, is not a matter which falls within the writ jurisdiction of <ORG>. 63 <CITATION> ,  1 S.C.R. 753, referred to. (iii)Taking into consideration the importation of washers by another firm was merely evidence to confirm the conclusion reached by the Collector that the nuts and bolts imported were in reality the components of the prohibited article. The charge which the importer was called upon to answer did specify the nature of offence which he was alleged to have committed and if the evidence which the appellant could have rebutted was brought on record and considered in his presence and that evidence conclusively proved the real nature of the articles imported, there could be no justifiable complaint of violation of the principles of natural justice. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 318 of 1962. Appeal by special leave from the judgment and order dated November 27, 1959 of <ORG> (Circuit Bench) at Delhi in Civil Writ Petition No. 545-D of 1959. <NAME>, <NAME> and <NAME>, for the appellant.

<NAME> and <NAME>, for the respondent. March 6, 1964. The Judgment of the Court was delivered by AYYANGAR, J.--There are no merits in this appeal by special leave and it deserves to be dismissed. The appellant obtained, in November 1951, an import licence from <ORG>, for importing "iron and steel bolts, nuts, set screws, machine screws and machine studs, excluding bolts, nuts and screws adapted for use on cycles". In purported conformity with this licence the appellant imported from Japan through the Bedi port 221 cases of bolts and nuts during the period April 4, 1952 to July 14, 1952. The cases were described in the Bills of Entry which he filed as "Stove Bolts and Nuts" and he produced the import licence of November 1951 as his authority to clear the goods. One hundred and ninety-two of these cases were cleared out of the port customs but before the rest of the 89 cases could be cleared, the <ORG> authorities got suspicious that the goods were mis-described and though called "Stove Bolts and Nuts" in the invoices and relative documents they were really identifiable parts of bolts and nuts of the "Jackson Type single bolt oval platebelt fasteners" whose importation had been prohibited by a Notification of the Ministry of Trade issued in January 1952. Their suspicions got confirmed after examination of the samples of the nuts and bolts imported and thereafter a notice was issued to the appellant to show cause why he should not be proceeded against (a) for mis-describing the goods as "stove bolts and nuts" and (2) for importing and attempting to import goods without a proper import licence this being an offence under s. 167(8) of the Sea <ORG> Act. The appellant showed cause and in the written pleas which he filed, he raised two defences; (1) that the description of the goods as "stove and nuts" was merely a description given by the manufacturers in their invoices and he himself not being acquainted with the technical details could not be held responsible for the description given in the invoices which was copied in the Bill of Entry not being precise or exact and (2) that even if the bolts and nuts which he imported were identifiable parts of the "single bolt belt fasteners" whose importation was banned, there had been, on a proper construction of the import licence, read in conjunction with the Import Trade Regulations under which it was issued, no contravention since the ban on importation by the notification was confined to a complete "Jackson type single bolt belt fastener" and did not extend to the importation of the component parts of such a belt fastener. These two defences were examined by the Collector of <ORG>. As regards the first he found from the cor- repondence exchanged between the appellant and his foreign suppliers and produced by the appellant himself in his de- fence at the hearing, that the name "stove bolts and nuts" had been decided upon by the appellant himself after samples of the nuts and bolts which he desired to import had been received and examined by him. Practically therefore during the hearing before the Collector the appellant conceded that the name "stove bolts and nuts" was a misdescription of the articles which he actually imported. The next question was whether the appellant was guilty of an offence of the nature described in s. 167(8) of the Sea <ORG> Act. The Collector recorded a finding that the appellant was guilty of a contravention of this provision which reads:

"If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction-, or if any attempt be made so to import or export any such goods;........"

in reaching this finding the Collector was satisfied from the samples which were forwarded to the appellant and which were approved by him before finalising the indent, that the appellant was really ordering and importing nuts and bolts which were identifiable components of "Single bolt belt fasteners" whose importation was prohibited. He arrived at this conclusion because (1) the bolts and screws imported by the appellant were those specially adapted by reason of their structure and details for use as "single bolt belt fasteners" and (2) these nuts and bolts could not be put to any use other than as components of a belt fastener of the type whose import was prohibited.

In further support of his conclusion that the appellant really intended to evade the prohibition imposed by the Notification of January 1952 by which the importation of" single bolt belt fasteners" was prohibited, the Collector referred to the fact that these single bolt belt fasteners were composed of three components (1) a bolt (2) a nut and (3) washers. The washers to fit into the bolts and nuts imported by the appellant were found to have been separately imported by a firm called <ORG> which was owned or controlled by close relations of the appellant. Having thus received confirmation about the real intention of the appellant to evade the prohibition contained in the Notification and thus contravene the provisions of s. 167(8) of the Sea Customs Act, the Collector imposed the penalty of confiscation of the goods and gave the owner under s. 183 of the Sea Customs Act the option to pay a fine of Rs. 5 1,000 to redeem the confiscated goods. He also imposed a personal penalty of Rs. 1,000 on the appellant under s. 167(37)(c) of the Sea Customs Act for misdescribing the goods in the Bills of Entries which he had filed. The appellant filed an appeal to the <ORG> which was dismissed. The argument before the appellant authority again was that what was prohibited was an assembled "Jackson Type single belt oval plate belt fasteners" but that this notification could not be read as imposing a ban on the importation of the parts of such a belt fastener though these parts may be identifiable and the parts could have no use other than as components of the article whose importation was prohibited. This submission was rejected, and appeal was dismissed. Thereafter the appellant applied to <ORG> for the issue of a writ of certiorari under Art. 226 of the Constitution and this having been dismissed in limine, moved this <ORG> for special leave which was granted. That is how the appeal is before us.

Two points were urged by Mr. <NAME> on behalf of the appellant. The first was that the appellant having been granted a licence to import "nuts and bolts" falling under item 22 of Part 1 of the Import Trade Control Hand-book for the relevant year, the appellant was entitled to import iron and steel bolts and nuts, whatever be the purpose they served. The only limitation imposed upon the appellant by the import licence which was granted to him and which re- produced the terms of Entry 22 in the Hand-book was that he could not import bolts and nuts adapted for use on cycles. The limitation thus imposed, it was urged, also indicated that if the nuts and bolts were adapted for use on articles other than on cycles they could still import them unless the importation not merely of the other article but its compo- nents was also prohibited or restricted. In this connection our attention was drawn to item 28 of Part II in the same Hand-book reading 'Belting for machinery, all sorts, includ- ing belt laces and belt fasteners'. The Notification dated January 12, 1952 was a clarification issued in respect of licensing policy for January-June, 1952. Dealing with serial No. 28 of Part 11 which we have extracted just now, the notification stated:

"<NAME> type oval plate belt fasteners (other than single bolt). General licences will be granted freely subject to the provisions of Public Notice No. 189-ITC(PN)/51, dated the 28th December, 1951.

<NAME> type oval plate single bolt belt fasteners. No imports will be granted from any source."

It was not disputed that having regard to the terms of the import licence issued to the appellant the Notification as regards the prohibition against the importation of "Jackson Oval Plate Single Bolt belt fasteners" would apply to the appellant's licence and these belt fasteners could not be imported after January 1952. For the import licence specifically stated:

"This licence is granted under <ORG>, <ORG>, Notification No. 23-ITC/ 43, dated the 1 st July, 1943, and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of their arrival."

The point, however, sought to be made was that the components of such a belt fastener could still be imported because it was said that the scheme of the Import Trade Control Hand-book was to specify wherever it was so intended "component parts" along with the articles of which they formed components, when a restriction or prohibition was intended to be imposed upon them also. It is, no doubt, true that in some cases component parts are specifically in- cluded in some of the items in the Hand-book. It might very well be that this feature might be explained on the ground of the specification being by way of abundant caution, or possibly because in them the component parts might have an independent use other than as components of the articles specified. It appears to us that it does not stand to reason that a component part which has no use other than as a component of an article whose importation is prohibited is not included in a ban or restriction as regards the importa- tion of that article. Expressed in other terms. we cannot accede to the position that it is the intention of the rule that importers are permitted to do indirectly what they are forbidden to do directly, and that it permits the importation separately of components which have no use other than as components of an article whose importation is prohibited, and that an importer is thereby enabled to assemble them here as a complete article though if they were assembled beyond <ORG> the importation of the assembled article into India is prohibited. Learned Counsel, however, relied upon an unreported judgment of <ORG> delivered by Mr. Justice <NAME> when a judge of that <ORG>, in Appeal No. 4 of 1959 ( <CITATION> .) in support of his submission that a ban on a completed article, having regard to the phraseology employed in the Hand-book cannot be read as a restriction or prohibition of the separate importation of the component parts which when assembled result in the article whose import is prohibited. We do not read the judgment in the manner suggested by learned Counsel. The learned Judge in the judgment recorded an admission that the articles imported which were components of a motor-bicycle, would not when assembled form a complete cycle which was the article whose importation was restricted, because of the lack of certain essential parts which were admittedly not available in India and could not be imported. The next submission of the learned Counsel was that the decision of the <ORG> Collector was vitiated by a patent error, in that he misconstrued the scope of Entry 22 of Part 1 of the Import Trade Control Hand-book. In support of this submission the learned Counsel invited our attention to the decision of this <ORG> in <NAME> Collector of <ORG>. <CITATION> .(1). We see no force in this argument. The decision of this <ORG> referred to proceeded on the basis set out on page 757 of the Report where this <ORG> said:

"The learned Solicitor-General appearing for the appellant argued the appeal on the basis that the view of the learned Judges of the Bombay [1962] 1 S.C.R. 753.

L/P(D)-3(a) High Court that on any reasonable

interpretation of the items in the Schedule to the Tariff Act the consignment imported by the respondent could have been liable only to a duty of 30 per cent under item 45(3) was correct."

Learned Counsel cannot therefore derive any support from this decision. Besides, what we have said earlier should suffice, to show that the conclusion reached by the authority that the offence under s. 167(8) has been made out, is not incorrect. This apart, we must emphasise that a court dealing with petition under Art. 226 is not sitting in appeal over the decision of the <ORG> authorities and therefore the correctness of the conclusion reached by those authorities on the appreciation of the several items in the Hand-book or in the Indian Tariff Act which is referred to in these items, is not a matter which falls within the writ jurisdiction of <ORG>. There is, here, no complaint of any procedural irregularity of the kind which would invalidate the order, for the order of the Collector shows by its contents that there has been an elaborate investigation and personal hearing accorded before the order now impugned was passed.

Learned Counsel next submitted that the Collector of <ORG> had taken into consideration the importation of the washers by <ORG> in arriving at the conclusion that the appellant had violated s. 167(8) of the Sea <ORG> Act and that as in the notice that was served upon him to show cause this was not adverted to, the order adjudging confiscation was illegal and void for the reason that there had been a violation of the principles of natural justice and procedural irregularity in the hearing. We are not impressed by this argument. This submission proceeds upon a total misapprehension of the significance of the separate import of the washers by the sister concern. That import was not and could not be the subject of any charge against the appellants, and the appellants were not punished for that importation. It was merely evidence to confirm the conclusion reached by the Collector that the nuts and bolts imported were in reality the actual components of the Jack- son type belt fastener whose importation was prohibited. The charge which the appellant was called on to answer did specify the nature of the offence which he was alleged to have contravened, and if evidence which the appellant could have rebutted was brought on record and considered in his presence and that evidence conclusively proved the real nature of the articles imported, there could certainly be no justifiable complaint of violation of the principles of natural justice. The misdescription of the article imported in the Bill of Entry having practically been admitted and there being not much dispute that the goods imported were really com- ponents of the <NAME> type single belt fasteners, nothing more was needed to establish a contravention of s. 167(8) . The reference therefore to <ORG>

-which imported the washers merely confirmed the finding. In these circumstances we do not consider that there is any substance in this objection.

The result is that this appeal fails and is dismissed with costs.

Appeal dismissed.


PETITIONER: COMMISSIONER OF INCOME-TAX, GUJARAT Vs. RESPONDENT: A. RAMAN & COMPANY DATE OF JUDGMENT: 18/07/1967 BENCH: <NAME>, <NAME>: <NAME>, J.C. SIKRI, S.M. RAMASWAMI, V. CITATION: 1968 AIR 49 1969 SCR (1) 10 CITATOR INFO : RF 1972 SC 29 (4) E 1973 SC2330 (13) F 1974 SC1358 (10) RF 1975 SC 703 (11) AFR 1976 SC 203 (1,4,12,15,16) F 1977 SC 757 (31) RF 1977 SC2129 (12) R 1979 SC1960 (6,14) RF 1986 SC 649 (16,47) RF 1986 SC1853 (19,21) ACT: Indian Income-tax Act , 1961, s. 147-Conditions for the exercise of power to re-open assessment. Constitution of India, 1950, Art. 226- Powers of <ORG> to issue writ when Income-tax Officer's jurisdiction to issue notice under S. 147 of the Indian Income-tax Act, 1961 is questioned-<ORG> must not re-appraise evidence. HEADNOTE: The assessee firm consisted of two partners who were managers of their respective <ORG>. The firm sold its goods to the aforesaid families and the families again sold the goods on their own account. In income-tax proceedings for the years 1959-60, 1960-61 and 1961-62 the firm and the <ORG> were separately assessed in respect of their incomes. Subsequently <ORG> took view that the sale of goods by the firm to the families was only a device to divert the profits of the firm and on this view issued notices under s. 147 of the Incometax Act, 1961 requiring the assessee to show cause why the assessments for the years 1959-60, 1960-61 and 1961-62 should not be reopened. The <ORG> of Gujarat in a petition for a writ under Art. 226 of the Constitution quashed those notices and restrained the Income-tax Officer from taking proceedings in pursuance thereof. With special leave granted by this Court, the Revenue appealed. Held:(i) The <ORG> may issue a high prerogative writ prohibiting the Income-tax Officer from proceeding with reassessment when it appears that the Income-tax Officer had no jurisdiction to commence proceedings because the conditions precedent do not exist. [12G-H; 13B- <CITATION> 1, Calcutta, & Anr. 41 I.T.R. 191, followed. It is however not open to the <ORG> exercising powers under Art. 226 to set aside or vacate the notice for reassessment by itself re-appraising the evidence. [15B] (ii)The condition which invests the Income-tax Officer with jurisdiction has two branches: (i) that the Income-tax Officer has reason to believe that income chargeable to tax has escaped assessment; and (ii) that it is in consequence of information which he has in his possession and that he has reason so to believe. The expression 'information' in the context of which it occurs must mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. If he has such information the Income-tax Officer may commence proceedings under s. 147(1)(b) . But to commence such a proceeding it is not necessary that on the materials which came to the notice of the Income-tax Officer, the previous order of assessment was vitiated by some error of fact or law. [13C-G] (iii)In the present case however the pre-conditions for the issue of a notice of re-assessment did not exist. The law does not oblige a trader to make the maximum profit that he can out of his 11 trading transactions. Income which accrues to a trader is taxable in his hands: income which he could have, but has not earned is not made taxable as income accrued to him. Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed is not prohibited. [15D-G] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 768 of 1966. Appeal by special leave from the judgment and order dated December 18, 1964 of <ORG> in Special Civil Application No. 332 of 1964.

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

<NAME> and <NAME>, for the respondent. The Judgment of the Court was delivered by <NAME>, J.-The assessees--<ORG>-are dealers in "mill stores" in the course of their business they sell " mill stores" to other dealers including two concerns trading in the names of M/s A. M. <NAME> & Co. and <ORG>, which are owned by the Hindu undivided families, managers of which are the only partners of the assessees. For the assessment years 1959-60, 1960-61 and 1961-62 the assessees were originally assessed by the Income-tax Officer, Circle-1, Ward-A, Ahmedabad, while the partners of the assessees and the Hindu undivided families which traded in the names of M / s A. M. <NAME> & Co. and <ORG> were assessed by Income-tax Officers in other Circles. The cases of assessees, of the partners of the assessees and of the two Hindu undivided families trading in the names of A. M. <NAME> & Co. and <ORG> were later transferred to the Income-tax Officer, Group Circle-J, Ahmedabad. That Officer by letter dated March 20, 1964 informed the assessees that he was convinced from a perusal of the assessment records of the assessees, their partners and their individual Hindu undivided families, that the partners of the assessees had contrived to divert profits of the assessees to their respective Hindu undivided families and had tried to "evade proper taxation", and on that ground he called upon the assessees to submit their objections, if any, to the reopening of the assessments for the years 1959- 60, 1960-61 and 1961-62. The assessees in reply contended that the Income-tax Officer had no jurisdiction to reopen the assessments since the Hindu undivided families of the two partners and the assessees had submitted "effect and complete returns of income" supported by their books of account, "quantity details" of purchases, sales and expenses, and had given all material facts and relevant information necessary for assessment at the time of each assessment.

The Income-tax Officer issued three separate notices under s. 147 of the Income-tax Act , 1961, requiring the assessees to show cause why the assessments for the years 1959-60, 1960-61 and 1961-62 should not be reopened. <ORG> in a petition for a, writ under Art. 226 of the Constitution quashed those notices and restrained the Income-tax Officer from taking proceedings in pursuance thereof. With special leave granted by this Court, the Commissioner of Income-tax has appealed to this Court. In support of the claim of the Income-tax Officer, to reopen the assessments, reliance was placed in <ORG> on cl. (b) of s. 147 (1), of the Income-tax Act , 1961. The material part of s. 147(1)(b) may be read:

"If-

(a)

(b)notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153 , assess or reassess such income or recompute the loss or the depreciation allowance as the case may be, for the assessment year concerned.

Explanation 1-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:-

(a) where income chargeable to tax has been underassessed; or * * * * *"

Under s. 147(1)(b) reason to believe that income chargeable to tax has escaped assessment in consequence of information in the possession of the Income-tax Officer is a condition precedent to the exercise of his jurisdiction to assess or reassess the income of the assessee. If that condition does not exist, steps taken by the Income-tax Officer to assess or reassess the income will be without jurisdiction. It was held by this <ORG> in <CITATION> (1) that <ORG> in appropriate cases has power to issue an order prohibiting the Income-tax Officer from proceeding to reassess the income when the conditions precedent do not exist. At p. 207, <NAME>, J., delivering the majority judgment of the <ORG> observed:

"It is well-settled however that though the writ of prohibition or certiorari will not issue against an executive authority, <ORG> have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an exe- cutive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, <ORG>, it is well settl- ed, will issue appropriate orders or directions to prevent such consequences".

<ORG> may, therefore, issue a high prerogative writ prohibiting the Income-tax Officer from proceeding with re- assessment when it appears that the Income-tax Officer had no jurisdiction to commence proceeding.

The condition which invests the Income-tax Officer with jurisdiction has two branches: (i) that the Income-tax Officer has reason to believe that income chargeable to tax has escaped assessment; and (ii) that it is in consequence of information which he has in his possession and that he has reason so to believe. Since the learned Judges of <ORG> have concentrated their attention upon the second branch of the condition and have reached their conclusion in favour of the assessees on that branch, it would be appropriate to deal with the correctness of that approach. The expression "information" in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. If as a result of information in his possession, the Income-tax Officer has reason to believe that income chargeable to tax had escaped assessment, the Income-tax Officer has jurisdiction to assess or reassess income under s. 147(1)(b) of the Income-tax Act, 1961. Information in his possession that income chargeable to tax has escaped assessment furnishes a starting point for assessing or reassessing income. If he has that information, the Income-tax Officer may commence proceedings for assessment or reassessment. To commence the proceeding for reassessment it is not necessary that on the materials which came to the notice of the Income-tax Officer, the pre- vious order of assessment was vitiated by some error of fact or law.

<ORG> exercising jurisdiction under Art. 226 of the Constitution has power to set aside a, notice issued under s. 147 of the Income-tax Act , 1961, if the condition precedent to the exercise of the jurisdiction does not exist. The <ORG> may, in exercise of its powers, ascertain whether the Income-tax Officer had in his possession any information: the <ORG> may also determine whether from that information the Income-tax Officer may have reason to believe that income chargeable to tax had escaped assessment. But the jurisdiction of the <ORG> extends no further. Whether on the information in his possession he should commence a proceeding, for assessment or reassessment, must be decided by the Income-tax Officer and not by the High <ORG>. The Incometax Officer alone is entrusted with the power to administer the Act: if he has information from which it may be said, prima facie, that lie had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High <ORG>, exercising powers under Art. 226 of the Constitution, to set aside or vacate the notice for reassessment on a re-appraisal of the evidence. <ORG> in this case was apparently of the view that the information in consequence of which proceedings for reassessment were intended to be started, could have been gathered by the Income-tax Officer in charge of the assessment in the previous years from the disclosures made by the two Hindu undivided families. But that, in our judgment, is wholly irrelevant. Justification of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information, must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. <ORG> was also of the view that the inference raised by the Income-tax Officer that the Hindu undivided families of the assessees had made profit by sale of articles purchased from the assessees larger than the profit which the assessees had made, was not justified, since there was no evidence on the record about the price at which similar goods were sold by the assessees to other merchants and about the profit which those other merchants made by sale of those goods. But in a petition under Art. 226 of the Constitution the taxpayer may challenge the validity of a notice under s. 147 of the Income-tax Act, 1961, on the ground that either branch of the condition precedent does not exist, but an investigation whether the inferences raised by the Income-tax Officer from the information are "correct or proper" cannot be made. Counsel for the Commissioner is, therefore, right in contending that the High <ORG> entered upon an investigation of matters which were not within their competence.

But the appeal of the Commissioner must still fail. The case of the Commissioner on the materials placed before <ORG>, suffers from a serious infirmity on the first branch of the jurisdictional condition. The averments made in the affidavit filed by the Income-tax Officer in that behalf do not establish the existence of that branch of the condition. In reply to the averment by the assessees that the Income-tax Officer had no reason to believe that income had escaped assessment, the Income-tax Officer stated:

"In the course of the discussions I had at the several meetings hereinabove referred, I also learnt that in the earlier years also the petitioners (the assessees) had effected such sales to the said Hindu undivided families, and that over and above the margin of profits earned by the petitioners (the assessees) from the Hindu undivided families, the Hindu undivided families had earned substantial profits on the resale of such goods. 1, therefore, came to the conclusion that the creation of the Hindu undivided family business was merely a subterfuge or a contrivance by the partners of the petitioner firm (the assessees) to divert the huge profits made by the petitioners (the asses- sees) on imported articles".

The plea raised by the Income-tax Officer is that income which could have been earned by the assessees was not earned, and a part of that income was earned by the Hindu undivided families. That according to the Income-tax Officer was brought about by "a subterfuge or contrivance". Counsel for the Commissioner contended that if by resorting to a "device or contrivance", income which would normally have been earned by the assessee is divided between the assessee and another person, the Incometax Officer would be entitled to bring the entire income to tax as if it had been earned by him. But the law does not oblige a trader to make the maximum profit that he can out of his trading transactions. Income which accrues to a trader is taxable in his hands: income which he could have, but has not earned, is not made taxable as income accrued to him. By adopting a device, if it is made to appear that income which belonged to the assessee had been earned by some other person, that income may be brought to tax in the hands of the assessee, and if the income has escaped tax in a previous assessment a case for commencing a proceeding for reassessment under s. 147(1)(b) may be made out. Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed is not prohibited. A taxpayer may resort to a device to divert the income before it accrues or arises to him. Effectiveness of the device depends not upon considerations of morality, but on the operation of the Income-tax Act . Legislative injunction in taxing statutes may not. except on peril of penalty, be violated, but it may lawfully be circumvented. If the goods were nominally transferred to the Hindu undivided families the latter acting merely as benamdars for the assessees, and the profits were earning in truth by the assessees, income earned by sale of the goods by the Hindu undivided families may be held chargeable to tax as income which has escaped assessment to tax in the hands of the assessees. In the present case,, no such case was attempted to be made out in the affidavit filed by the Income-tax Officer. We hold, therefore, that on the materials on the record, the Income-tax Officer. had no reason to believe that income chargeable to tax had escaped assessment for the three years in question. The order passed by <ORG> is therefore confirmed. There will, however, be no order as to costs in this <ORG> and <ORG>.

<NAME>

Appeal dismissed.


PETITIONER: <ORG>. Vs. RESPONDENT: <NAME> DATE OF JUDGMENT: 18/08/1967 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. HIDAYATULLAH, M. CITATION: 1968 AIR 266 1968 SCR (1) 251 CITATOR INFO : R 1968 SC 236 (9) ACT: Industrial Dispute--Domestic Enquiry--Employee admitting charges and pleading extenuating circumstances--Examining him before other witnesses and asking him questions whether violative of natural justice. HEADNOTE: The respondent who was an employee of the appellant bank was charged with issuing unauthorised overdrafts to a constituent. A domestic enquiry was held against him. In two written explanations before the enquiry he admitted, the allegations against him and only pleaded extenuating circumstances. At the enquiry he was examined in the first instance; having again admitted his fault he was asked certain questions by the Enquiry Officer in respect of the extenuating circumstances pleaded by him. Two more witnesses were then examined by the Enquiry Officer. Finally, according to the latter's report the respondent was discharged. In proceedings under s. 33(2)(b) of the Industrial Disputes Act, 1947 <ORG>, Dhanbad held that the enquiry was bad for violation of natural justice inasmuch as the respondent had teen examined before other witnesses and was unduly cross-examined. The bank appealed by special leave. Held: The rules of natural justice as laid down by this Court have to- be observed in the conduct of a domestic enquiry against a workman. If the allegations are denied by the workman the burden of proving the truth of those allegations will be on the management; and the witnesses called by the management must be allowed to be cross- examined by the workman and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose, in support of his plea. But if the workman admits his guilt, to insist upon the management to let in evidence about the allegations will be an empty formality. In such a case it will be open to the management to examine the workman himself, even in the first instance, so as to enable him to offer any explanation for his conduct, or to place before the management any circumstances which will go to mitigate the gravity of the offence. But, even then, the examination of the workman, under such circumstances, should not savour of an inquisition. If, after the examination of the workman the management chooses to examine any witnesses, the workman must be given a reasonable opportunity to cross-examine those witnesses and also to adduce any other evidence that he may choose. [259D-F] In the present case the respondent in his written explanations had admitted the charges and therefore there was no violation of natural justice in first examining him. The questions put to him were not unfair. <ORG> was wrong in not giving approval to his discharge. [258F; 259A, G] <ORG>, v. Workman  3 S.C.R. 652, distinguished. <CITATION> ,  Supp. 3 S.C.R. 618, referred to.251 252 JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 440 of 1966. Appeal by special leave from the order dated May 30, 1964 of <ORG>, Dhanbad in Application No. L.P. 123 of 1962.

<NAME>, <NAME>, <NAME>, land 0. C. Mathur, for the appellant.

<NAME>, for the respondent.

The Judgment of the Court was delivered by <NAME>, J. This appeal, by special leave, by the appellant <ORG>, is directed against the order, dated May 13, 1964, of <ORG>, Dhanbad, rejecting an application, filed by the <ORG>, under s. 33(2)(b) , of the Industrial Disputes Act , 1947 (Act XIV of 1947) (hereinafter called the Act), and declining to grant approval of the action taken, by the <ORG>, by way of discharging the respondent-workman, from the <ORG>'s services. The respondent was, at the material time, the Assistant Ac- countant, at the main Office of the <ORG>, at Calcutta. In view of certain serious irregularities, noticed by the <ORG>, in respect of the work of the respondent in <ORG> and, in particular, in current account ledgers Nos. 4 and 6, by order dated March 8, 1961, the respondent was suspended, with immediate effect. He was also informed that the charges against him would be communicated, in due course.

By a further communication, dated March 13/14, 1961, the respondent was required to offer his explanation, in respect of four allegations made in the said communication. The main allegations were that, in respect of ledger 'accounts Nos. 4 and 6, standing in the names of Messrs. <ORG> and Messers <ORG> and Messrs. <NAME>, respectively, overdrafts had been allowed, by the respondent, from time to time, without obtaining the sanction of the authorities competent to allow overdrafts. The other allegations were to the effect that the respondent, who was charged with the duty of supervising both these ledgers. did not bring to the notice. of the authorities the said irregularities, that must have come to his knowledge, and that the pass -book of ledger No. 4 was missing. The respondent sent a reply, dated March 17, 1961, wherein he has admitted that, in the course of discharge of his routine duties and responsibilities, in good faith and honestly, he had granted overdrafts to the parties referred to, by the <ORG>, temporarily, in excess of their credits or limits, without reference to the higher authorities. He also admitted that it was a blunder on his part and that he should not have done so. He offered an explanation to, the effect that he was led to believe in the credit-worthiness of the individuals, because of their long association with the <ORG> and also because of the fact that, on prior occassions, overdrafts had been granted to them, in excess of permissible limits. He also stated that the <ORG> had not been put to any financial loss because of his having granted the overdrafts; but, he again admitted his negligence, in not strictly abiding by the <ORG>'s rules, when he made the overdrafts. He, however, added that his conduct had always been guided by good faith and honesty. This Was the answer, regarding the main allegations, contained in the <ORG>'s letter, dated March 13/14, 1961. He also stated, regarding the other minor allegations, that it was not his duty to report about the debit balances, which was the function of the ledger- keeper, and that he was not also responsible for the loss of the pass book, of ledger No. 4. He wound-up his explanation by stating that his conduct, in making the overdrafts, without obtaining the sanction of the higher authorities,, was an omission which had been, unfortunately, committed by him, and he expresed regret for the same and requested the management to excuse him, accepting his explanation. The appellant <ORG> was not satisfied with the explanation offered by the respondent, and communicated a charge-sheet, on June 3, 1961. The main charges related to the overdrafts, paid by the respondent, in ledger Nos. 4 and 6, without obtaining the permission of the proper sanctioning authority. The <ORG> also informed the respondent that he would, be given a further opportunity to explain his conduct, in relation to those matters, and defend himself in the enquiry which would be held by the Agent of the <ORG>, on June 20, 1961, at 3.30 p.m. The respondent again sent a reply, dated July 11, 1961, to the charge-sheet served on him. In this reply also, he admitted that, in the course of discharge of his routine duties and responsibilities, he had allowed the parties, mentioned in the charge-sheet, to overdraw, in excess of their credits, without reference to the higher authorities, and that it was a blunder on his part which he should not have committed. But, he again reiterated that he, in good faith and bona fide, was led to believe about the credit- worthiness of the parties, who had long association, with the <ORG>. He also emphasized, here again, that the <ORG> had not been put to any financial loss, because of his conduct. He again admitted that this act of permitting the parties concerned to overdraw, in excess of their limits, without reference to the sanctioning authorities, amounted to negligence, but his conduct was perfectly bona fide and honest. He also offered explanation, on the minor alle- gations, to the effect that it was the duty of the ledger- keeper to give the figures regarding the overdrafts and that he had not done any mis-reporting to the higher authorities. Finally he made a plea that he had been serving the institution for over 20 years without any blemish, and the unfortunate omission, done by him, in the matter of not taking the sanction of the higher authorities, might be excused, accepting his expression of regret, The inquiry proceedings (conducted by the Agent, who was the Inquiry Officer), produced before <ORG>, shows that the respondent was examined in the first instance. After eliciting answers regarding the duration of his employment, in the institution, and as to the nature of the work he was discharging, he was asked about the charge-sheet served on him, as well as the explanation, furnished by him. The respondent has categorically answered to the effect that he has understood the charge-sheet and that he does not want to add anything more to the explanation that he has already submitted. This answer must have reference to the explanation, furnished by him, on June 20, 1961, in answer to the charge-sheet, wherein he has admitted his mistake in sanctioning the overdrafts, to the parties concerned, with- out obtaining the sanction of the appropriate authorities. But, inasmuch as he has stated, in his explanation, that on prior occasions also overdrafts have been allowed beyond the permissible limits, certain questions were put to him, in respect of those matters. The respondent, no doubt, appears to have stated that some of the cheques, issued to the parties concerned, have been initialled by an Officer of the <ORG>, Mr. <NAME>. The respondent, again, squarely admitted, in his answers, that he has committed a blunder in granting advances, on his own responsibility, of about Rs. 87,000. He has also admitted that he did not make any reference to the Agent, when passing the cheques, regarding the accounts of Messrs. <ORG> or Messrs. <NAME>.

During the course of the inquiry, the respondent was allowed to search the records concerned, and trace, if possible, any cheques that may have been initialled by Mr. <NAME>, and no such cheque could be traced. Inasmuch as three other officers, whose conduct was being enquired into, had made certain statements against the respondent, the latter was asked as to whether he wanted to examine, or cross-examine those persons; and the respondent very clearly stated that he did not like to cross-examine anybody.

The Management then examined Mr. <NAME> and Mr. <NAME>, two Officers of the <ORG>, in the presence of the respondent. It is also seen that the respondent has also put certain questions to those two witnesses; and he has also stated that he has no further questions to be put to them. At the conclusion of the recording of the evidence, it is seen that the respondent finally made an appeal to the Enquiring Officer to consider his case sympathetically, at the same time admitting his acts of omission, in the discharge of his duties. He has also expressed his gratitude for the patient hearing that has been given to him during the inquiry. The Enquiry Officer, in his report, dated November 10, 1961, has, after referring to the nature of the enquiry conducted by him, found the respondent guilty of the main charges of having permitted the parties concerned, to obtain overdrafts, beyond the permissible limits, without having obtained the sanction of the appropriate authorities. In this connection, the Enquiry Officer has referred to the fact that these allegations have been admitted by the respondent. Regarding the other minor allegations, that the respondent caused other officers to record debit balances incorrectly, and the loss of the pass book relating to ledger No. 4, the respondent was exonerated. The Enquiry Officer was of the view that the offence committed by the respondent, of which he had, been found guilty, was very serious which merited dismissal; but, in view of the long number of years of service put in by the respondent and as no loss has resulted to the <ORG> itself, he held that the respondent should be discharged from service.

The <ORG> communicated the order of discharge, by its letter, dated June 27, 1962, enclosing a pay-order for Rs. 472.70 being the wages for one month, viz., July 1962. The respondent, who had a right to file an appeal, against this order of discharge, based upon the finding of the Enquiry Officer, does not appear to have had recourse to any appeal, but, on the other hand, filed a representation, dated July 11, 1962, before the Managing Director of the appellant <ORG>. Even in this representation, he has not, in any manner, attacked the enquiry proceedings, nor the findings recorded by the Enquiry Officer. On the other hand, he again admitted his fault in having permitted, overdrafts, to the parties concerned, without obtaining the sanction of the appropriate authorities after expressing regret for his conduct. He also stated that the <ORG> had not suffered any financial loss, because of his conduct. Having due regard to these circumstances, he made a plea for mercy being shown to him, by cancelling the order of discharge and permitting him to resume his duties in the <ORG>. The Managing Director, by his communication, dated September 17, 1962, rejected the representation made by the respondent, and declined to reinstate him in the <ORG>'s service. In the meanwhile, inasmuch as an industrial dispute was pending before <ORG>, the appellant had filed, an application, before the said <ORG>, on March 17, 1962, under s. 33(2) of the Act, seeking approval of the action taken against the respondent, on the basis of the recommendation of the Enquiry Officer. This application was transferred to <ORG>, Dhanbad, on April 18, 1962. in the objections, dated September 2, 1963, filed by the respondent before <ORG>, for the first time he raised the plea that in view of the advice given by the officers of the <ORG>, he sent replies admitting his guilt regarding the allegations made against him, by the <ORG>. He also raised the plea that the overdrafts, that were given by him, to the parties concerned, were really due to oral orders given by the then Agent and the Superintendent, on telephone. He also raised the plea that he was not allowed to represent his case, through the <ORG>, before the Enquiry Officer, nor was he allowed to cross- examine the persons making allegations against him. We have elaborately referred to the matters, mentioned above, because the question, that arises for consideration, in this appeal, is as to the correctness of the view of <ORG>, that the domestic enquiry conducted by the <ORG>, as against the respondent, is not fair and that principles of natural justice have been violated. <ORG>, by its order under attack. has held that the domestic enquiry, conducted by the <ORG>, is not proper and that rules of natural justice have not been observed; and, in consequence, it has declined to grant the approval, sought for, by the <ORG>.

At this stage, it may be mentioned that <ORG> has held in favour of the management, that it has complied with the proviso to s. 33(2)(b) of the Act, as interpreted, by this <ORG>, in its decision in <CITATION> (1). That is, it has held that the action of the <ORG>, by way of discharge, payment of wages and making of the application for approval, have been taken as part of the same transaction. For coming to the conclusion that the inquiry proceedings are violative of the rules of natural justice, <ORG> has given three reasons (i) in the inquiry, the respondent has been examined, even in the first instance, and he was cross-examined, to elicit points in support of the charges; (ii) the respondent was not allowed to crossexamine witnesses; and (iii) the respondent was prejudiced, in his defence, as he had to conduct his defence without the assistance of the <ORG>, during the enquiry. There can be no controversy that the principles of natural justice must be observed, in the conduct of a domestic enquiry, and the workman, concerned, must be allowed reasonable opportunity to defend himself. It has also been held, by this <ORG>, that rules of natural justice require that the workman, proceeded against, should be informed clearly of the charges levelled against him; witnesses should be normally examined in the presence of the employee, in respect of the charges; if statements, taken previously and given by witnesses, are relied on, they should be made available to the workman concerned the workman should be given a fair opportunity to examine witnesses, including him-self in support of his defence; and the Enquiry Officer should record his findings, based upon the evidence so adduced.

So far as grounds Nos. 2 and 3, given by <ORG> are concerned, it is clear from the record of the enquiry proceedings, that the respondent was permitted to put questions to Mr <NAME> and Mr. <NAME>, who were examined, during the enquiry (1) [1962] Supp. 3 S.C.R. 618.

We have also referred to the fact that the Enquiry Officer has recorded that the respondent has stated that he has no further questions to be put to them. We have also referred to the fact that the inquiry proceedings show that the respondent was specifically asked as to whether he wanted to examine or cross-examine the three other Officers, whose conduct was also under enquiry, and who had made certain statements against the respondent; but the respondent categorically stated that he did not like to examine or cross-examine any of those persons. The respondent has not stated, even in the representations made by him to the Managing Director, that he was not given any opportunity to cross-examine the witnesses produced in the inquiry. Again, even in his evidence before <ORG>, the respondent has categorically stated that he has not made any request, in writing, for being represented by the <ORG>, at the inquiry. Apart from the fact that he has no such right, even factually it is seen that he made no such request. Therefore the findings of the <ORG> that the respondent was not permitted to cross-examine the witnesses during the domestic enquiry, and, that he was prejudiced in his defence because he was not permitted to have the assistance of the <ORG>, are both erroneous.

Then the question is as to whether the inquiry proceedings can be considered to have been conducted in violation of the rules of natural justice, inasmuch as the respondent was examined, even in the first instance. We have already indicated that, as a fact, it is borne out by the records that the respondent, so far as the inquiry against him was concerned, was examined, in the first instance, and Mr. <NAME> and Mr. <NAME>, were examined later. According to <ORG>, the object of the management, in examining the respondent, in the domestic enquiry even in the first instance, was to have the charges substantiated by statements got out of the mouth of the employee, rather than to examine witnesses for the <ORG>, in support of the charges. It is the further view of <ORG> that the respondent has been, so to say, cross-examined, just to elicit points in substantiation of the charges. These circumstances, according to <ORG>, violate the principles of natural justice and, as such vitiate the domestic enquiry.

In this connection, <ORG> has relied upon certain observations, contained in the judgment of this Court in <CITATION> (1) viz.:

"It seems to us that it is not fair in domestic enquiries against industrial employees that at the very commencement of the enquiry, the employee should be (1) [1964] 3 S.C.R. 652, 661.

closely cross-examined, even before any other evidence is led against him."

and draws the inference that under no circumstances should a workman, whose conduct is the subject of disciplinary proceedings, by a domestic tribunal, should be examined, in the first instance. We are of the opinion that no such conclusion could be drawn from the decision, referred to above. In that case, it will be Seen', the management had charge-sheeted one <NAME>, with disorderly behaviour when a cinema, show was being given. <NAME>, at all stages, stoutly denied his having taken part in any hooliganism or rowdyism, as alleged by the management. Under those circumstances, instead of adducing evidence, in the first instance, regarding the allegations made against <NAME>, in the domestic enquiry, the management commenced the proceedings, with a very close examination of <NAME> himself. The nature of the questions put to him also clearly indicated that the worker was being cross-examined, and answers sought to be elicited in support of the allegations made by the management. This <ORG>, in coming to the conclusion that the conduct of an enquiry, in that manner, constitutes a very serious infirmity, made the ob- servations, quoted above. Therefore, it will be seen, that in that case, when the workman concerned was totally denying the allegations made against him, it was the duty of the management to let in evidence, in the first instance, to substantiate its allegations, and permit the workman to cross-examine those witnesses and also permit him to let in independent evidence, in defence of his plea; and this <ORG> emphasized that the normal rule to be followed, in such, enquiries, is, as stated above.

In the case before us, we have already referred to the various proceedings that have taken place, from which it will be seen clearly that the workman was' at all stages, admitting the truth of the allegations made against him, by the management. In his communication, dated March 17, 1961, as well as, in his reply, to the charges, made by him on June 20, 1961, he has `categorically admitted that he has committed a mistake in permitting the constituents concerned to overdraw, without obtaining the sanction of, the appropriate authorities. Even when the enquiry proceedings began, he had stated that he had nothing more to add, in respect of the charges framed against him. When once the workman himself has, in answer to the charge levelled against him, admitted his guilt, in our opinion, there will be nothing more for the management to enquire into. That was the position in the case before us. Therefore, we are not inclined to agree with the reasoning of <ORG> that when there has been an admission' of guilt, by the respondent himself, it can still be stated, that there is a violation of the principles of natural justice merely because of the fact that the workman was examined, in the first instance. Nor, are we impressed with the further view, expressed by <ORG>, that the way in which answers were elicited from the workman, showed that there has been a cross-examination, by the management, to obtain points in substantiation of the charges. We have gone through the entire examination of the respondent at the domestic enquiry, and we are satisfied that there is no such infirmity. In fact, the question of the management trying to obtain answers to support the charges, does not arise at all, in this case because the respondent has consistently admitted his guilt, at all stages. On the other hand, the nature of the questions put to the respondent clearly indicate that the management, when once the workman had, admitted his guilt, was only giving him an opportunity to explain his conduct or to refer to circumstances, if any, which could be taken into account in extenuation of his conduct. The management had also permitted the respondent to put questions to the other two witnesses, examined during the enquiry, viz., Mr. <NAME> and Mr. <NAME>. We must, however, emphasize that the rules of natural jus- tice, as laid down by this <ORG>, will have to be observed, in the conduct of a domestic enquiry against a workman. If the allegations are denied, by the workman, it is needless to state that the burden of proving the truth of those allegations will be on the management; and, the witnesses called, by the management, must be allowed to be cross- examined, by the workman, and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose, in support of his plea. But, if the workman admits. his guilt, to insist upon the manage- ment to let in evidence above the allegations, will, in our opinion, only be an empty formality. In such a case, it will be open to the management to examine the workman himself, even in the first instance, so as to enable him to offer any explanation for his conduct, or to place before the management any circumstances which will go to mitigate the gravity of the offence. But, even then, the examination of the workman, under such circumstances, should not savour of an inquisition. If, after the examination of the workman, the management chooses to examine any witnesses, the workman must be given a reasonable opportunity to cross- examine those witnesses and also to adduce any other evidence' that he may choose.

Having considered the enquiry proceedings, in its entirety, in this case, we are satisfied that there has been no violation of the rules of natural justice. Therefore, it follows that the order of <ORG>, refusing to grant approval, as asked for, by the management, is erroneous and, as such, it is set aside. In the result, the appeal is allowed-, but parties will bear their own costs in this appeal.

<NAME>

Appeal allowed.


PETITIONER: STATE OF U.P. Vs. RESPONDENT: POOSU AND ANOTHER DATE OF JUDGMENT02/04/1976 BENCH: SARKARIA, RANJIT SINGH BENCH: SARKARIA, RANJIT SINGH RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SHINGAL, P.N. SINGH, JASWANT CITATION: 1976 AIR 1750 1976 SCR (3)1005 1976 SCC (3) 1 CITATOR INFO : RF 1990 SC1480 (77) R 1991 SC2176 (51) ACT: Constitution of India, Articles 136 r/w 142-Re-arrest and detention of accused during pendency of <ORG> appeal against acquittal, whether violative of Articles 14, 19(1) (a) to (g) and 21. HEADNOTE: The accused-respondents were acquitted by <ORG> of capital offences. This <ORG> granted the <ORG> of U.P. special leave to appeal, and under Art. 136 read with Art. 142 , issued orders directing the re-arrest and detention of the accused. The orders were challenged by the accused - respondents on the grounds that their acquittal and the findings on which it is based remain fully in force during the pendency of the <ORG> appeal, and that in the absence of a specific statutory provision, <ORG> inherent power under the Cr.P.C ., or under Art. 142 , cannot be invoked to order the deprivation of the acquitted pension's liberty, and that such an order word violate Articles 14 19(1)(a) to (6) and 21 of the Constitution. On a reference of this question to the Constitution Bench, ^ HELD: This <ORG>, while granting special leave to appeal against an order of acquittal on a capital charge, is competent by virtue of Art. 142 read with Art. 136 , to exercise the same powers which <ORG> has under sec. 427 (re-enacted as Sec. 390 of the new Cr.P.C . Of 1973). An order directing the re-arrest and detention of an accused- respondent who has been acquitted by <ORG> of a capital offence, neither offends Art. 21 or any other fundamental right guaranteed in Part III of the Constitution. nor deprives the accused-respondent of his liberty in a manner otherwise than in accordance with procedure established by law. [1008D-E, 1009A-B] <ORG> v. Badapalli Adi & Ors. I.L.R. 1955 Cuttack 589, <CITATION> . 2 All. 340; 'Queen v. <NAME>  I Cal. 281: Queen Empress v. Gobardhan I.L.R.  9 All. 528; Banna v. Methuen & ors. 2 Bens. 228; <CITATION> ,  I Supp. S.C.R. 567 and The <ORG> v. Capt. <NAME>  3 S.C.R. 622, referred to. JUDGMENT:

CRIMINAL APPELLATE JURISDICTION Crl. Mis. Petitions Nos. I and 243 of 1975.

(Appeal by special leave from the judgment and order dated the 24-10-1973 of <ORG> in Criminal Appeal No. 710 of 1973. Referred No. 34 of 1973) <NAME>, <NAME>, <NAME>, for the petitioner in Cri. Mis. I and 243 of 1975.

<NAME>, for the petitioner/r. 2 in Cr. M.P. No. 546/75.

D.P. Uniyal with o. P. Rana for the opposite side in Crl. M. P. Nos. 1 and 243 of 1975.

<NAME>, for respondent No. 2 in Cr. M. P. No. 546 of 1975.

The Judgment of the Court was delivered by <NAME>, J. The common question referred to <ORG> in these two cases is: Whether <ORG> while granting Special Leave to appeal under Article 136 of the Constitution, against an order of acquittal on a capital charges has the power to issue a non bailable warrant for the arrest and committal to prison of the accused respondent who had been acquitted by <ORG>?

Mr. <NAME>, Counsel for the accused-respondents herein, col tends that while the legislature has, in its wisdom, empowered <ORG> to cause an accused person to be arrested and committed to prison pending the disposal of the appeal against acquittal, no such power has been conferred on <ORG> by the Code or any other statute. According to Counsel, in the absence of a specific statutory provision, the inherent power of the <ORG> to do complete justice under the Code or even under Article 142 of the Constitution cannot be invoked to order deprivation of the liberty of a person who has been found innocent and acquitted by <ORG> on all the charges against him because such an order would be violative of Articles 14, 19(1)(a) to (g) and 21 of the Constitution. It is maintained that even after the grant of special leave to appeal under Article 136 against an order of acquittal passed by <ORG>, the acquittal and the findings on which it is based, remain fully in force during the pendency of appeal by the <ORG>. It is contended that once it is ensured that the accused-respondent will be available to submit himself to the final orders of this <ORG> that may be passed in the appeal under Article 136 , the inherent powers of the <ORG> under the Code or under Article 142 exhaust themselves.

In support of his contentions" Counsel has referred to <CITATION> (1); and <CITATION> (2); <NAME> and ors. v. King Emperor(3). <CITATION> (4) and M. a. <CITATION> (5); <CITATION> (6).

As against this, Mr. <NAME> and Mr. <NAME> submit that by virtue of Article 142 read with Article 136 of the Constitution, this <ORG> pending disposal of an appeal against an order of acquittal, is competent to exercise the same powers which are conferred on the High <ORG> by the Code of Criminal Procedure. In support of this contention, Mr. <NAME> has referred to <CITATION> (7); <CITATION> and anr.(8).

We are unable to accept the contentions advanced by Mr. <NAME>.

To appreciate the point involved, it will be useful to have a look at the provisions of s. 427 of the Code of Criminal Procedure, 1898 and its historical perspective. This section (which has been re-enacted as s. 390 of the new Code of 1973) provides:

'When are appeal is presented under s. 411A subsection (2) or section 417 , <ORG> may issue a warrant directing that the accused be arrested and brought before it or any subordinate <ORG>, and the <ORG> before which he is brought may commit him to prison pending the disposal of the appeal, or admit him to bail."

It may be noted that this provision was for the first time enacted in the Code of 1882. But even before its enactment, <ORG> " as a matter of judicial practice, had the power, pending the appeal against an order of acquittal, to secure the attendance of the accused respondent by bailable or non-bailable warrants. As pointed out by , <NAME> in <ORG> v. <NAME> and ors (1) "what was formerly the judicial practice received statutory recognition in the year 1882 when this provision in s.427, Criminal Procedure Code was introduced." <CITATION> .(2) (which was decided several " years before the addition of this provision in the Code ), a full Bench of <ORG> held, that <ORG> has the power to cause the rearrest and detention of the accused in prison, pending an appeal against an order of acquittal. To the same effect was the decision of <ORG> in <CITATION> (8). Again in <CITATION> (4), Sir <NAME>, Chief Justice without laying down any inflexible rule, emphasised that it is not desirable that, pending the appeal against acquittal in a capital case, the prisoner should remain at large while his fate is being discussed by <ORG>. The ratio of this decision was followed by a Division Bench of <ORG> in <ORG> v. <NAME> and ors. (supra).

Viewed in this perspective, it is clear that even before the enactment of this provision, <ORG> had the power to cause, in its discretion, the arrest and detention in prison of the accused-respondent of or his enlargement on bail, pending disposal of the appeal against his acquittal. This power was ancillary to and necessary for an effective exercise Of its jurisdiction in an appeal against an order of acquittal, conferred on <ORG> by the Code .

As far back as 1824, in the English case, <NAME> v. <NAME> and ors. Best J. following an older precedent enunciated the rule that:

"when an act of <ORG> gives a justice jurisdiction over an offence, it impliedly gives him a power to make out a warrant, and bring before him any person charged with such offence".

This is the rationale of s.427. As soon as <ORG> on perusing a petition of appeal against an order of acquittal considers that there is sufficient ground for interfering, and issuing process to the respondent, his status as an accused person and the proceedings against him, revive. The question of judging his guilt or innocence in respect of the charge against him, once more becomes sub judice.

Similar is the position when <ORG>, in its discretion, grants special leave to appeal under Article 136 of the Constitution, against an order of acquittal passed by <ORG>.

<NAME>

Article 136 confers on <ORG>, the same power which was vested in the Crown to grant special leave to appeal to His Majesty-in-Council (which in practice meant <ORG> in England) to convicted persons from India. This Article is couched in very specious phraseology. The power under it can be exercised in respect of "any judgment, decree, determination, sentence or order in any cause, matter passed or made by any court or tribunal in the territory of India." As pointed out by this <ORG> in <CITATION> (l), "this wide and comprehensive power in respect of any determination of any court or tribunal must carry with it the power to pass orders incidental or ancillary to the exercise of that power." That is why, Article 142 in equally extensive terms gives this <ORG> power" to make such order as is necessary for doing complete justice in any cause or matter before it and any decree so passed or order so made shall be enforceable throughout the territory of India". With the same end in view, clause (2) of that Article (subject of course to law , if any , made by <ORG>) gives this <ORG> "all and every power to make any order for the purpose of securing the attendance of any person".

Thus there can be no doubt that this <ORG> while granting special leave to appeal against an order of acquittal on a capital charge is competent by virtue of Article 142 read with Article 13 , to exercise the same powers which the High <ORG> has under s. 427 . Whether ill the circumstances of the case" The attendance of the accused respondent can be best secured by issuing a bailable warrant or non-bailable warrant is a matter which rests entirely in the discretion of the <ORG>. Although, the discretion is exercised judicially, it is not possible to computerise and reduce into immutable formulae the diverse considerations on the basis of which this discretion is exercised. Broadly speaking, the <ORG> would take into account the various factors such as, "the nature and seriousness of the offence, the character of the evidence, circumstances peculiar to the accused, possibility of his absconding, tampering with evidence, larger interest of the public and State"-see The State v. Capt. Jagjit Singh(2). In addition, the <ORG> may also take into consideration the period during which the proceedings against the accused were pending in the courts below and the period which is likely to elapse before the appeal comes up for final hearing before this <ORG>. In the context, it must be remembered that this over-riding discretionary jurisdiction under Article 136 is invoked sparingly, in exceptional cases, where the order of acquittal recorded by the High <ORG> is perverse or clearly erroneous and results in a gross miscarriage of justice.

Nor do we find any merit in the contention that an order directing the re-arrest and detention of an accused- respondent who had been acquitted by <ORG> of a capital offence, in any way, offends Article 21 or any other fundamental right guaranteed in Part III of the Constitution. Such an order is made by this Court in the exercise of its plenary jurisdiction conferred by Articles 136 and 142 of the Constitution. By no stretch of imagination can it be said that such an order deprives the accused-respondent of his liberty in a manner otherwise than in accordance with procedure established by law.

It is not necessary to burden this judgment with a discussion of the rulings cited by Mr. <NAME>. Suffice it to say that the facts of those cases were entirely different and they have no bearing on the point in issue before us.

For all the foregoing reasons, we answer the question posed at the commencement of this judgment in the affirmative and dispose of the references accordingly. <NAME>

Reference answered against the accused/respondents.