JUDGMENT <NAME>, C.J.

1. On the 8th of March 1902, a decree on a mortgage was passed in favour of the defendant <NAME>. It was thereby directed in effect that on default in pay. ment of the mortgage-money within six months the property should be sold and that if the sale proceeds were insufficient to pay the amount due on the mortgage the balance was to be recovered from the defendant <NAME> personally. On the 7th of November 1902, the plaintiff applied for a sale of the mortgaged property and in June 1903 it was sold for Rs. 575. Subsequently, on the 17th of the same month, the decree-holder purporting to proceed under the personal decree for the balance, applied for attachment of a house not comprised in the mortgage. On the following day the order for attachment was made and on the 19th of June the house, to which this suit relates, was actually attached.

2. On July 2nd the judgment-debtor, <NAME>, applied to have the sale of the mortgaged property set aside and by an order passed on the 4th of August the sale was set aside.

3. On the 17th of August the judgment-debtor applied to have the attachment of the house raised. The Court directed the attachment to be maintained, but ordered that the property should not be sold until the proceeds were found to be insufficient.

4. In September 1904 the plaintiff <NAME> was born, his father being <NAME> the judgment-debtor.

5. On the 26th of November 1904, the mortgaged property was sold for Rs. 456,

6. On the 5th of January 1905, the decree-holder applied for the sale of the house and thereupon the minor <NAME> applied to have the attachment removed from his half-share in the house. His application was refused.

7. Then the minor commenced this suit, by his next friend, his mother <NAME>, asking for a declaration of his ownership of an undivided half of the house and for removal of the attachment from it. <ORG> dismissed the suit with costs, but on appeal the attachment was set aside by <ORG>. Prom this the present appeal is preferred. The order setting aside the attachment is unqualified and, so far as it purports to do more than remove the attachment from the plaintiff's moiety it is manifestly erroneous as being in excess of what is sought in the plaint. The judgment of <ORG> proceeds on the assumption that the house was attached before any sale of the mortgaged property. But this overlooks the sale effected in June 1903 and if the removal of the attachment from the plaintiff's moiety is to be supported it must be on other grounds-Now the decree was passed in disregard of the provisions of Section 90 of the Transfer of Property Act in so far as it directs personal payment by <NAME>. It is clear from the words of the section that this direction should have been in a supplemental decree to be passed when the net proceeds should be found to be in* sufficient. The original drcree should merely have reserved to the plaintiff liberty to apply for a decree under Section 90 .

8. But though the decree is erroneous, we must sec how far in the circumstances it justified an attachment.

9. The personal decree was contingent on the ascertainment of the balance and only became operative and capable of execution when that balance was ascertained. Until then the amount of the debt, for which alone the personal decree was passed, could not be stated as required by Section 235(g) of the Civil Procedure Code.

10. Then was the balance ascertained when the attachment of the 17th of June was made? Undoubtedly not. There had been no adjustment of accounts, the whole of the purchase-money had not been paid into <ORG> and there was no kind of pronouncement by the <ORG> as to what the balance was. Even the application for execution contained no statement of the debt for which the personal decree was passed and that was because the amount of the debt had not been ascertained. Then is it open to the minor plaintiff "to rely on this objection? We think it is. He is (in our opinion) entitled to establish any circumstance which affects the validity of the attachment as against his interest in the property.

11. The result then is that the decree of the lower appellate Court must be varied by directing that the house to the extent of the plaintiff's interest therein be released from attachment.

12. As the appellant has succeeded in part and failed in part, each party should bear his own costs.


PETITIONER: DHIRENDRA NATH GORAI AND <NAME> AND OTHERS Vs. RESPONDENT: SUDHIR CHANDRA GHOSH AND OTHERS DATE OF JUDGMENT: 04/03/1964 BENCH: <NAME>, K. BENCH: <NAME>, K. GUPTA, K.C. DAS DAYAL, <NAME> CITATION: 1964 AIR 1300 1964 SCR (6)1001 CITATOR INFO : RF 1981 SC 693 (5,6) ACT: Execution-Court sale of property in execution of a decree in respect of a loan-Judgment-debtor not objecting to valuation even after service of notice-Application for setting aside the sale on the ground of 1002 non-compliance of the provisions of s. 35 of the Bengal Money Lenders Act-Maintainability-Sale if, valid-Bengal Money Lenders Act, 1940 (10 of 1940), s. 35-Code of Civil Procedure, 1908 (V of 1908), O.XXI, rr. 64, 66 and 90. HEADNOTE: In execution of a decree passed in a mortgage suit, the appellant annexed in the execution application a Schedule comprising of 11 properties sought to be sold for the satisfaction of the claim. The appellant gave valuation of the said properties. Though the 1st respondent received a notice under O.XXI, r. 66 of the Code of Civil Procedure, he did not file any objection to the valuation. Though he got the sale adjourned a number of times promising to pay the decretal amount, he failed to do so. Finally, two of the said properties were sold. The 1st respondent then filed an application in the executing court for setting aside the said sale under O.XXI, r. 90 of the Code of Civil Procedure, inter alia, on the ground that s. 35 of the Bengal Money- Lender's Act was not complied with. The learned subordinate Judge held that there was no fraud in publishing and conducting the sale, that the price of the lots sold was fair and that the sale was not vitiated by reason of infringement of s. 35 of the Act. On appeal, <ORG> held that though there had not been any substantial injury to the 1st respondent, the provisions of s. 35 of the Act were mandatory and. therefore, the infringement of the said provisions would invalidate the sale. In this Court it was contended on behalf of the appellants that whether s. 35 of the Act was mandatory or directory, the sale held in violation of the said provision was only illegal but not a nullity and, therefore, it could be set aside only in the manner and for the reasons prescribed in O.XXI, r. 90 of the Code of Civil Procedure, and further that, as the respon- dents did not attend at the drawing up of the proclamation of sale, the sale could not be set aside at their instance. Held: The non-compliance with the provisions of s. 35 of the Act is a defect or a irregularity in publishing or conducting the sale. A party who received the notice of the proclamation but did not attend at the drawing up of the proclamation or did not object to the said defect cannot maintain an application under O.XXI, r. 90 of the Code of Civil Procedure. Even if he could, the sale cannot be set aside unless by reason of the said defect or irregularity he had sustained substantial injury. <NAME> v. <NAME>, I.L.R. (1944) 1 Cal. 166, distinguished. <CITATION> , (1945) 50 C.W.N. 266 and <NAME> v. <NAME>) 64 C.W.N. 20, approved. On a true construction of s. 35 of the Act, it must be held that it was intended only for the benefit of the judgment- debtor and, therefore, he could waive the right conferred on him under s. 35 of the Act. Case law reviewed. 1003 If that be the legal position, O.XXI. r. 90 of the Code of Civil Procedure is immediately attracted. The concurrent finding of the courts is that by reason of the non- observance of the provisions of s. 35 of the Act no substantial injury was caused to the judgment-debtor. Fur- ther, though notice was given to the judgment debtor' in one case he did not file objection at all and in the other case, though the judgment-debtor filed objections, he did not attend at the drawing up of the proclamation. The sales are, therefore, not liable to be set aside under the terms of the said provision. JUDGMENT:

CIVIL APPELLATE JURISDICTION: C.A. Nos. 85 and 86 of 1961. Appeals from the judgment and decree dated November 23, 1954 of <ORG> from Original Orders Nos. 84 and 83 of 1953.

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

<NAME>, for the respondents Nos. 12 and 13 (in C.A. No. 85 of 1961).

March 4, 1964. The Judgment of the Court was delivered by <NAME> two appeals raise the question of the validity of the court sale held in contravention of s. 35 of the Bengal Money-Lenders Act, 1940 (Bengal Act X of 1940), hereinafter called the Act.

The facts in both the appeals may be briefly stated. In Civil Appeal No. 85 of 1961, <NAME>, respondent No. 1, executed a first mortgage in favour of one <NAME>, since deceased, for a sum of Rs. 12,000/-. Respondent No. 1 executed a second, third and fourth mortgages in favour of the appellant for a total sum of Rs. 7,700/-. He also executed another mortgage in favour of the 9th respondent. In the year 1948 respondents 2 and 3, representing the first mortgagee's estate, filed Title Suit No. 8 of 1948 in the 7th <ORG> at Alipore, for enforcing the first mortgage. To that suit the puisne mortgagees were also made parties. On May 24, 1948, a preliminary decree by consent was made in the suit whereunder the judgment-

<NAME>

debtor was directed to pay a sum of Rs. 15,473-7-9 to the appellant in 7 equal annual instalments. As the judgment- debtor failed to pay the said amount, in due course a final decree was passed in the mortgage suit on or about February 2, 1949. Thereafter, the decree was put in execution on January 31, 1950, and in the said execution application a schedule of properties sought to be sold for the satisfaction of the said claim was annexed. The schedule comprised 11 properties and the appellant gave valuation of the said properties. Though the 1st respondent received a notice under O. XXI, r. 66 of the Code of Civil Procedure, he did not file any objection to the valuation. Though the first respondent got the sale adjourned a number of times promising to pay the decretal amount, he failed to do so. Finally two of the said properties were put up for sale on June 23, 1951, and one of the said properties was purchased by the 12th respondent for a sum of Rs. 11,800/- and the other, by the 13th respondent for a sum of Rs. 10,100/-. On July 21, 1951, the 1st respondent filed an application in the executing court for setting aside the said sale under O. XXI, r. 90 of the Code of Civil Procedure, inter alia, on the ground that s. 35 of the Act was not complied with. The learned Subordinate Judge held that there was no fraud in publishing and conducting the sale, that the price of the lots sold was fair and that the sale was not vitiated by reason of infringement of s. 35 of the Act. On appeal <ORG> of <ORG> held that though there had not been any substantial injury to the 1st respondent, the provisions of s. 35 of the Act were mandatory and, therefore, the. infringement of the said provisions would invalidate the sale. In that view, it set aside the sale and directed the appellant to refund the money with interest.

Civil Appeal No. 86 of 1961 also arises out of the same execution proceedings. Under the said compromise preli- minary decree the judgment-debtor agreed to pay the decretal amount of Rs. 25,687/- to the executors of the estate of the first mortgagee, respondents 2 and 3. As the amount was not paid, the said respondents filed an application in <ORG>, Alipore, for the execution of the said decree. In the execution petition 8 properties were described and their valuations were given. The judgment-debtor filed objections to the valuations given by the decree-holders, but on the date fixed for settling the valuations of the said properties neither the judgment-debtor nor his advocate appeared in court. The learned Subordinate Judge, by his order dated February 11, 1950, directed that both the valuations of the decreeholders and the judgment-debtor be noted in the sale proclamation. Thereafter the sale proclamation was duly issued and the date of the sale was fixed for May 11, 1950. The judgment-debtor took as many as 15 adjournments of the sale promising to pay the decretal amount, but did not do so. Finally the sale of the properties was fixed for June 23, 1951 and on that date two lots of the property were sold in execution and the appellants purchased lot No. 1 at a price (if Rs. 14,000/- and respondent No. 9 purchased Lot No. 2 at a price of Rs. 19,600/-. On July 21, 1951, the 1st respondent filed an application before the learned Subordinate Judge for setting aside the sale under O. XXI, r. 90 of the Code of Civil Procedure, on grounds similar to those raised in the other application, the subject-matter of Civil Appeal No. 85 of 1961. The said application was heard by the learned Subordinate Judge along with the said other application. For the same reasons, he dismissed the application. On appeal, <ORG> of <ORG> heard the appeal along with the connected appeal and set aside the sale. The present appeals are filed by certificate against the common judgment of <ORG> in both the matters. Mr. <NAME>, learned counsel for the appellants in both the appeals, contends that whether s. 35 of the Act is mandatory or directory the sale held in violation of the said provision is only illegal but not a nullity and, therefore, it can be set aside only in the manner and for the reasons prescribed in O. XXI, r. 90 of the Code of Civil Procedure, and further that, as the respondents did not attend at the drawing up of the proclamation of sale, the sale cannot be set aside at their instance.

To appreciate the argument it is necessary and convenient to read at the outset the relevant provisions of the Act and the Code of Civil Procedure.

Section 35 of the Act.

"Notwithstanding anything contained in any other law for the time being in force, the proclamation of the intended sale of property in execution of a decree passed in respect of a loan shall specify only so much of the property of the judgment-debtor as the Court considers to be saleable at a price sufficient to satisfy the decree, and the property so specified shall not be sold at a price which is less than the price specified in such proclamation :

Provided that, if the highest amount bid for the property so specified is less than the price so specified, the <ORG> may sell such property for such amount, if the decree-holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest amount bid and the price so specified."

CODE OF CIVIL PROCEDURE Order XXI, r. 64 Any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same.

Order XXI, r. 66.

(1) Where any property is ordered to be sold by public auction in execution of a decree, the <ORG> shall cause a proclamation of the intended sale to be made in the language of such <ORG>.

(2) Such proclamation shall be drawn up after notice to the decree-holder and the judgment debtor and shall state the time and place of sale, and specify as fairly and accurately as possible- -

(a) the property to be sold;

Order XXI, r. 90.

(1) Where any immovable property has been sold in execution of a decree. the decree- holder, or any person entitled to share in a rateable distribution of assets or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it or on the ground of failure to issue notice to him as required by rule 22 of this Order :

Provided (i) that no sale shall be set aside on the ground of such irregularity, fraud or failure unless. upon the facts proved. the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity, fraud or failure.

(ii) that no sale shall be set aside on the ground of any defect in the proclamation of sale at the instance of any person who after notice did not attend at the drawing up of the proclamation or of any person in whose presence the proclamation was drawn up, unless objection was made by him at the time in respect of the defect relied upon.

Under O. XXI. r. 64 of the Code of Civil Procedure, the executing court may order that any property attached by it and liable to sale or such portion thereof as may seem necessary to satisfy the decree shall be sold. Under r. 66 of the said Order of the Code when a property is ordered to be sold in public auction in execution of a decree the court shall cause a proclamation of the intended sale to be made and such proclamation shall specify as fairly and accurately as possible, among others, the property to be sold and such proclamation shall be drawn up after notice to the decree-holder and the judgment-debtor: under sub-r. (4) thereof, the court may summon and examine any person or require him to produce any document in his possession or power relating thereto. Under the said provisions the court has power to direct the sale of the entire property attached or a part thereof sufficient to satisfy the decree and it shall also specify the said property directed to be sold in the proclamation fixed after giving notice to both the decree-holder and the judgment-debtor. Under s. 35 of the Act a duty is cast upon the court in settling the pro- clamation of the intended sale of property in execution of a decree passed in respect of a loan to which the Act applies to specify only so much of the property of the judgment- debtor as the court considers to be saleable at a price sufficient to satisfy the decree and not to sell the property so specified at a price which is less than the price so specified in such proclamation. This provision is in effect a statutory addition to O. XXI, r. 66 of the Code of Civil Procedure. Indeed, this provision could have been added as another clause to the said rule. This statutory provision pertains to the field of proclamation. The rule says so in terms. The said two conditions are also steps to be taken by the court in the matter of publishing or conducting the sale. If a sale is held without complying with the said conditions, what is the remedy open to a party affected thereby to get the sale set aside? Order XXI, r. 90 of the Code in terms provides for the remedy. It says that a person whose interests are affected by the sale may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it or on the ground of failure to issue notice to him as required by r. 22 of the Order. As the non-compliance with the said conditions is a material irregularity in publishing or conducting the sale the court under the first proviso to O. XXI, r. 90 of the Code cannot set aside the sale unless it is satisfied that the applicant had sustained substantial injury by reason of such irregularity. That apart, under the second proviso to the said rule, no sale shall be set aside on the ground of any defect in the proclamation of sale at the instance of any person, who after notice did not attend at the drawing up of the proclamation or of any person in whose presence the proclamation was drawn up unless objection was made by him at the time of drawing up of the proclamation in respect of the defect relied upon. Shortly stated, the noncompliance with the provisions of s. 35 of the Act is a defect or a irregularity in publishing or conducting the sale. A party who received the notice of the proclamation but did not attend at the drawing up of the proclamation or did not object to the said defect cannot maintain an application under O. XXI, r. 90 of the Code of Civil Procedure. Even if he could, the sale cannot be set aside unless by reason of the said defect or irregularity he had sustained substantial injury.

On this question a divergence of views is reflected in the decisions cited at the <ORG>. <NAME> and <NAME>, <NAME>., in <NAME>) set aside the order of the executing court and sent the case back to that court, as the said court inserted in the proclamation the valuation of the property given by the judgment-debtor as well as that given by the decree-holder and did not, as it should do under s. 3  5 of the Act, determine the price of the property which was to be put up for sale on proper evidence. This decision has no relevance to the question raised before us, as the appeal before <ORG> was against the order made by the executing court dismissing the application filed by the judgment-debtor requesting the court to demarcate the property to be sold pursuant to the provisions of s. 35 of the Act. The question whether a sale held in non-compliance with the said provisions could be set aside de hors the provisions of O. XXI, r. 90 of the Code of Civil Procedure did not arise for consideration therein. The question now posed before us directly arose for decision before a <ORG> of <ORG>, consisting of <NAME> and <NAME>, <NAME>., in <NAME> v. <NAME>, J., met the objection raised by the judgment-debtor who sought to set aside the sale on the ground of non-compliance with the provisions of s. 3  5 of the Act, thus :

(1) I.I..R. [1944] 1 Cal. 166.

134-159 S.C.-64 (2) (1945) 50 C.W.N. 266,270.

"It (s. 35 of the Act) is a provision relating to the contents of the sale proclamation and its effect, to my mind, is to amend or supplement Or. 21, r. 66 (2) (a) which directs the <ORG> to specify in the sale proclamation "the property to be sold". Any objection regarding non-compliance with sec. 35 in specifying the property to be sold is, in my view, a defect in the sale proclamation within the meaning of the second proviso to Or. 21, r. 90, C.P.C. It follows that an objection that the sale proclamation did not conform to sec. 35 of the Bengal MoneyLenders Act cannot avail a judgment-debtor in an application under Or. 2 1, r. 90, if he was present at the drawing up of the sale proclamation and did not raise any such objection at the time, nor can it avail a judgment-debtor who, after receiving notice did not attend at the drawing up of the sale proclamation at all."

We agree with this reasoning. <ORG> of <ORG>, consisting of <NAME> and <NAME>, <NAME>., in <CITATION> (1), considered the entire case law on the subject, including the decision now under appeal, and differed from the view expressed by <NAME>

-Gupta and <NAME>, <NAME>., in the decision now under appeal and agreed with the view expressed by <NAME> and <NAME>, <NAME>., in <CITATION> (2). The said decisions are in accord with the view we have expressed earlier. The contrary view is sustained by <ORG> in the present case on the principle that the sale held in contravention of the provisions of s. 35 of the Act was a nullity and, therefore, no question of setting aside the sale within the meaning of O. XXI, r. 90 of the Code of Civil Procedure would arise. This raises the question whether such a sale is a nullity. If a provision of a statute is only directory, an act done in contravention of the provision is manifestly not a nullity. Section 35 of the Act is couched in a mandatory form and it casts in terms a duty on the court to comply with its (1) (1959) 64 C.W.N. 20.

(2) (1945) 50 C.W.N. 266, 270.

provisions before a sale is held. Prima facie the provision is mandatory; at any rate, we shall assume it to be so for the purpose of these appeals.

Even then, the question arises whether an act done in breach of the mandatory provision is per force a nullity. In <NAME> v. <NAME>), <NAME>, J., after referring to <NAME> on "Nullity and Irregulari- ties", observed :

no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated."

Whether a provision falls under one category or the other is not easy of discernment, but in the ultimate analysis it depends upon the nature, scope and object of a particular provision. A workable test has been laid down by Justice <NAME> in <NAME> v. Russell(2), which reads:

"It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity."

A waiver is an intentional relinquishment of a known right but obviously an objection to jurisdiction cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. <NAME> in his book "On the (1) (1908) I.L.R. 35 Cal. 61, 72. (2) [1841] 9 Dowl. 487.

<NAME>

Interpretation of Statutes", 11th Edn., at p. 375, describes the rule thus:

"Another maxim which sanctions the non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy."

The same rule is restated in "Craies on Statute Law", 6th Edn., at p. 269, thus :

"As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court."

<ORG> in AL. AR. Vellayan Chettiar v. <ORG>) pointed out that there was no inconsistency between the propositions that the provisions of s. 80 of the Code of Civil Procedure were mandatory and must be enforced by the court and that they might be waived by the authority for whose benefit they were provided. In that case <ORG> held that s. 80 of the Code of Civil Procedure was explicit and mandatory; but still it held that it could be waived by the authority for whose benefit that was provided. This aspect of the law in the context of s. 35 of the Act was considered by a Division Bench of <ORG> in <NAME> v. <NAME> (1)  L.R. 74 I.A. 223, 228.

<NAME>

<NAME>). Dealing with this argument, <NAME>, J., speaking for the court, observed :

"It is true that section 35 of the Bengal MoneyLenders Act casts a duty upon the court but such duty is solely for the benefit-the private benefit-of the judgment-debtor. It is, therefore, open to him to waive this benefit, or, in other words, to waive his objection of nonobservance of that statutory provision by the court. . . . . .

<NAME> and <NAME>, JJ., expressed much to the same effect in <CITATION> (2) thus, at p. 30:

"The Bengal Money-Lenders Act, 1940 enacted for the purpose of making better provision for the control of money-lenders and for the regulation and control of money-lending, has certainly a public policy behind it. But some of its provisions, and section 35 one of them, are intended for the benefit of the individual judgment debtors and have no public policy behind them. Such provisions may be waived by the person for whose benefit the same were enacted."

A Division Bench of <ORG> in <NAME> v. <NAME>), speaking through <NAME>, J., in the context of the provisions of s. 13 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939, which are pari materia with the provisions of s. 35 of the Bengal Money-Lenders Act, 1940, rejected the contention that a sale held in contravention thereof was a nullity in the following words "Illegal the sale may have been, in the limited sense that it was held in a manner at variance with a mandatory statutory provision. That provision, however, has no reference at all to the jurisdiction of the <ORG>. It affords no foundation for (1) (1953) 58 C.W.N. 503. 508.

(2) 64 C.W.N. 20.

(3) (1942), I.L.R. 21 Pat. 281, 286.

<NAME>

the contention that the sale was one which the <ORG> concerned had no power at all to hold."

Where the court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a manda- tory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. In the present case the executing court had inherent jurisdiction to sell the property. We have assumed that s. 3  5 of the Act is a mandatory provision. If so, the question is whether the said provision is conceived in the interests of the public or in the interests of the person affected by the non-observance of the provision. It is true that many provisions of the Act were conceived in the interests of the public, but the same cannot be said of s. 35 of the Act, which is really intended to protect the interests of a judgment-debtor and to see that a larger extent of his property than is necessary to discharge the debt is not sold. Many situations may be visualized when the judgment-debtor does not seek to take advantage of the benefit conferred on him under s. 3  5 of the Act; for instance, if the part of the property carved out by the court for sale is separated from the rest of his property, the value of the remaining property may be injuriously affected by the said carving out, in which case the judgment-debtor may prefer to have his entire property sold so that he may realize the real value of the property and pay part of the sale price towards the decretal amount. He cannot obviously be compelled to submit to the sale of a part of the property to his disadvantage. A provision intended for his benefit cannot be construed in such a way as to work to his detriment. But it is said that the proviso to s. 35 of the Act indicates a contrary intention. Under that proviso, "if the highest amount bid for the pro- perty so specified is less than the price so specified, the <ORG> may sell such property for such amount, if the decree- holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest bid and the price so specified". This is only an option given to the decree-holder : he may exercise this option, if he does not like to go through the entire sale proceedings overagain. In one contingency this proviso also Works for the benefit of the judgment-debtor, for he will be relieved of part of his indebtedness. But anyhow this does not show that the main provision is not intended for the benefit of the judgment-debtor. We are, therefore, satisfied, on a true construction of s. 3  5 of the Act, that it is intended only for the benefit of the judgment-debtor and, therefore, he can waive the right conferred on him under s. 35 of the Act.

If that be the legal position, O. XXI, r. 90 of the Code of Civil Procedure is immediately attracted. The concurrent finding of the courts is that by reason of the non- observance of the provisions of s. 35 of the Act no substantial injury was caused to the judgment-debtor. Further, though notice was given to the judgment-debtor, in one case he did not file objections at all and in the other case, though the judgment-debtor filed objections, he did not attend at the drawing up of the proclamation. The sales are, therefore, not liable to be set aside under the terms of the said provision.

In the result the orders of <ORG> are set aside and those of the Additional Subordinate Judge are restored. The appellants will get their costs throughout from the 1st respondent. There will be one set of hearing fee. Appeals allowed.


PETITIONER: <ORG> Vs. RESPONDENT: C. RAJASEKHAR RAO DATE OF JUDGMENT27/07/1987 BENCH: <NAME>, <NAME> (J) BENCH: <NAME>, <NAME> (J) OZA, G.L. (J) CITATION: 1987 SCR (3) 653 1987 SCC (4) 93 JT 1987 (3) 239 1987 SCALE (2)218 ACT: Arbitration Act , 1940: Sections 3 , 28 and 33- -Arbitra- tion proceedings-Not to be unduly prolonged--Whether <ORG> has power to extend time for giving award after award is made--Award--When can be set aside Reasons not given by arbitrator--Whether court entitled to speculate and probe mental process by which arbitrator reached conclusion. HEADNOTE: There was an Agreement between the respondent-contractor and the appellant-construction company in respect of certain works. Differences and disputes arose and there were pro- ceedings before the arbitrators named in the Agreement. As the arbitrators could not agree and there were differences, this <ORG> by an Order dated 16th June, 1983 directed that the arbitrators appointed by each of the parties be appoint- ed arbitrators and if there was disagreement between the arbitrators, the matter was to be referred to the <ORG>. In pursuance of the said directions the parties appeared before the arbitrators who referred the matter to the <ORG> and the <ORG> after consideration made an award dated 15th July, 1985. The petitioner-construction company made a petition to this <ORG> for a decree in terms of the award, which was opposed by the respondent-contractor contending that (a) the <ORG> had made a speaking award and that the validity or otherwise of the said award was justifiable in a <ORG> of law, (b) that the <ORG> had no jurisdiction to proceed with the arbitration on or about 18th December, 1984 as the period of two months from the date of his entering upon the reference had expired and consequently the award was beyond time, and (c) that the award contained error of law on the face of the award and there were inconsistent findings. The <ORG> while confirming the award, HELD: 1.1 The policy of law is that arbitration proceed- ings should not be unduly prolonged. The arbitrator, there- fore, has to give the award within the time prescribed, or such extended time as the 654 court concerned may in its discretion extend, and the <ORG> alone had been given the power to extend the time for giving the award. [656E] 1.2 The <ORG> has got power to extend time even after the award has been given or after the expiry of the period prescribed for the award. But the court has to exercise its discretion in a judicial manner. This power could be exer- cised even by the appellate court. [656F] 1.3 The arbitrator gets the jurisdiction to enlarge the time for making the award only in a case where after enter- ing on the arbitration, the parties to the arbitration agreement consent to such enlargement of time. [657B] In the instant case, in view of the policy of law that the arbitration proceedings should not be unduly prolonged and in view of the fact that the parties have been taking willing part in the proceedings before the arbitrator with- out a demur and had all along been willing to extend time, this will be a fit case for the extension of time, and the time for giving the award is accordingly extended and the award will be deemed to have been given in time. [656F-G] 2.1 An award might be set aside by the court on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument, it might be demonstrated that the arbitrator had committed some mistake in arriving at his conclusion. [657D] <CITATION> ,  5 S.C.R. 480, followed. 2.2 Only in a speaking award the <ORG> could took into the reasoning of the award. It is not open to the <ORG> to speculate, where no reasons are given by the arbitrator, as to what impelled him to arrive at his conclusion. It is also not open to the <ORG> to attempt to probe the mental process by which the arbitrator had reached his conclusion where it is not disclosed by the terms of his award. [657D, H, 658A] The instant case is not one of a speaking award. The <ORG> had not spoken his mind indicating why he has done, what he has done, he has narrated only how he came to make the award. No reasons have been given for the purpose of making the award. There is no legal proposition in the award which is unsustainable or improper. The challenge to the award cannot, therefore, be accepted. [659G-H] 655 <CITATION> ,  3 S.C.R. 649; H.K. Wattal v. V.N. Pandya,  1 S.C.R. 259 and <CITATION> . 50 I.A. 324, referred to. CIVIL APPELLATE JURISDICTION: Civil Misc. Petition No. 28356 of 1986. IN JUDGMENT:

CIVIL APPEAL No. 5579 of 1983.

From the Judgment and Order dated 22.4.1983 of <ORG> in Civil Rev. Petn. No. 2626 of 1982.

Dr. <NAME> and <NAME> for the Appellant. <NAME> and <NAME> for the Respondent. The Judgment of the <ORG> was delivered by <NAME> J. This is an application filed by <ORG> for filing the award of the <ORG> appointed by this <ORG>, Shri Justice <NAME>, retired Judge of this <ORG> and for passing a decree in terms of the said award. It appears that there was an agreement between <NAME>, the contractor and the <ORG>, petitioner, in respect of certain works. Differences and disputes arose, and there were proceedings before the arbi- trator named in the Agreement and there were certain pro- ceedings, the detail of which is not necessary to refer. As the arbitrators could not agree, there were differences. This <ORG> by an order dated 16th of June, 1983 directed that arbitrators appointed by each of the parties be ap- pointed arbitrator to adjudicate upon the dispute between the parties. It was stipulated therein that in the said order of this <ORG> dated 16th of June, 1983, it would be no longer open to the party to question the validity of the appointment of the arbitrators. In the event of any disa- greement between the two arbitrators, Shri <NAME>, a former Judge of this <ORG> was directed to act as the <ORG>. Further consequential directions were also given. Thereafter the parties appeared before the arbitrators and referred the matter to the umpire. The <ORG> after consid- eration has made the award dated 15th of July, 1985 which has been filed in this <ORG> and the petitioner seeks a decree in terms of the award. The respondent-contractor, <NAME> ob- jects to the award being made a rule of the <ORG>. He states in his objections that the umpire had made a speaking award, therefore according to his counsel the validity or otherwise of the said award was justifiable in a court of law. He, however, firstly contends that the award was made beyond time. He further contends that the umpire had no jurisdiction to proceed with the arbitration on or about 18th of December, 1984 as the period of two months from the date of his entering upon the reference viz, October 20, 1984 had expired on December 18, 1984. According to the said objections, the umpire became functus-officio. It was con- tended that the power to extend the period of passing the award was vested in the court alone under section 28 of the Arbitration Act and it was not permissible for the parties to extend the time. We are unable to accept this position. Mr. <NAME> drew our attention to certain observations of this <ORG> in the case of <CITATION> ,  3 S.C.R. 649. He relied on the observations of the <ORG> at page 656 and emphasised that law precludes parties from extending time after the matter had been referred to the arbitrator, it would be contradiction in terms to hold that the same result could be brought about by the conduct of the parties. These observations, in our opinion, are out of the context. The policy of law is that the arbitration proceedings should not be unduly prolonged. The arbitrator therefore has to give the award within the time prescribed or such extended time as the court concerned may in its discretion extend and the court alone has been given the power to extend time for giving the award. The court has got the power to extend time even after the award has been given or after the expiry of the period prescribed for the award. But the court has to exercise its discretion in a judicial manner. In that case this <ORG> found that the High <ORG> was justified in taking the view that it did. This power, however, could be exercised even by the appellate court. In view of the policy of law that the arbitration proceedings should not be unduly prolonged and in view of the fact that the parties have been taking willing part in the proceedings before the arbitrator without a demur and had all along been willing to extend time, this will be a fit case, in our opinion, for the extension of time. We accordingly extend the time for giving the award and the award will be deemed to have been given in time. In this case, it appears that under section 28 and in the light of section 3 of the First Schedule the parties are allowed to extend the time. In this connection reference may be made to <NAME> v. V.N. Pandya,  1 S.C.R. 259, where this <ORG> reiterated that sub-section (2) of section 28 indicated one exception to the above rule that the arbitrator could not enlarge the time, and that was when the parties agreed to such an enlargement. It is clear this <ORG> reiterated that the arbitrator gets the jurisdiction to enlarge the time for making the award only in a case where after entering on the arbitration the parties to the arbitration agreement consent to such enlargement of time. In this case precisely it happened. Furthermore the parties have proceeded before the umpire on that basis which is just and proper and further- more the time should be extended as was done in the case of <CITATION> , (supra). In the aforesaid view of the matter we are unable to accept the submission on behalf of Shri <NAME> that the award of the umpire was beyond time.

It was next contended that the award contained error of law on the face of the award and there were inconsistent findings. It has to be borne in mind that it was only in a speaking award that the court could look into the reasoning of the award. In the case of <CITATION> ,  5 S.C.R. 480, this <ORG> observed that an award might be set aside by the court on the ground of error on the face of the award, but an award was not invalid merely because by a process of inference and argument it might be demonstrated that the arbitrator had committed some mistake in arriving at his conclusion. The law on this point is well-settled. <ORG> in <CITATION> . 50 I.A. 324 clarified that an error of law on the face of the award means, that one could find in the award or a document actu- ally incorporated thereto, as for instance a note appended by the "arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which one could then say was erroneous. It did not mean that if in narrating a reference was made to a contention of one party, that opened the door to seeing first what that con- tention was, and then going to the contract on which the parties' rights depended to see if that contention was sound". It has been further reiterated by this <ORG> in the aforesaid decision relying on <NAME> Company's case (supra) that in dealing with an application to set aside an award the court had not to consider whether the view of the arbitratorr on the evidence was justified. The arbitrator's adjudication was generally considered binding between the parties, for he was the tribunal selected by the parties and the power of the <ORG> to set aside the award was restricted to cases set out in section 30 of the Arbi- tration Act. It is not open to the court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. It is not open to the <ORG> to attempt to probe the mental process by which the arbitrator had reached his conclusion where it is not disclosed by the terms of his award. In this case this is not a speaking award. The learned Umpire has not spoken his mind indicating why he has done, what he has done, he has narrated only how he came to make the award.

Counsel drew our attention to page 26 of the award where different items have been set out and referred to page 30 of the award where the arbitrator noted as under:

"The Respondent demurs to this and its officers have denied having received them in their affidavits and in their oral testimo- ny. No officer of <ORG> from which the letter was sent by Registered Post or of <ORG> through which delivery of that Registered letter was effected to the address- ee has been summoned to establish that these letters did not emanate from their <ORG> or that <ORG> seals affixed on the "Certificates of Posting" and "Postal Acknowledgements" were not of those <ORG>s which delivered them to <ORG> or that they were forged or fraudulent, nor was any- thing produced to show that these were not posted or registered from <ORG>s from which they emanated".

Counsel further drew our attention to the statement at page 33 of the award about the losses. Mr. <NAME> con- tended that these were the reasons given by the learned umpire. We are unable to accept. What the learned umpire did in the aforesaid paragraphs was to narrate the facts and state the history and state of pleadings. The umpire in the operative part of the award observed as under:

"WHEREAS I perused and considered the entire record with great care including the record of affidavits, the oral evidence ten- dered before me, the statement of claim dated 12.10.1983; the counter-statements dated 27/31-101983 and the Rejoinder of the claimant and considered the documents filed in support of the case of the respective parties as also the written and oral submissions made before me by counsel for the parties in support of their respective cases of the parties for which they have appeared; and having duly considered the dispute in its varied aspects placed before me by the parties and in the light of the entire material in the case as above narrated. <NAME>, the <ORG>, nominated by <ORG> as aforesaid, and having jurisdiction to adjudi- cate the dispute between the parties in the claims and counter-claims relating to Work Orders Nos. 3, 4, 5, 6 and 8 concerning the concerning <ORG> and the contention of the claimant and the respondent in respect of the said Claims and counter claims. (1) I DO HEREBY MAKE MY AWARD, order and direct that the Respondent do pay to the claimant a sum of Rs.31,740-30p. (Rupees thirty one thousand seven hundred and forty and thirty paise) only in full satisfaction of its liability for the claim made by the Claim- ant-Contractor against the Respondent with interest at the rate of six per cent per annum from the date of Award.

(2) I further award and direct that the counter-claims made by the respondent do stand dismissed.

(3) I further award and direct that the parties do bear their respective costs incidental to these proceedings. (4) I further direct that the amounts paid by the parties towards the heating fees etc., from time to time in respect of the several heatings of these arbitration proceed- ings and the amount in deposit be appropriated and has/ have accordingly been appropriated towards the remuneration of the Umpire".

Therefore, in his award as a whole no reasons have been given for the purpose of making the award. In other words, it is not a speaking award at all. The Award did not speak as to why the umpire has awarded as he did. It does not speak the mind of the umpire. It mentions the events leading to the making of the award. In the award, there is no legal proposition which is unsustainable or improper. In that view of the matter the challenge to the award cannot be accepted.

In the premises, the objections are rejected. There will be decree in terms of the award of the Umpire, <NAME>. There will be interest on the judgment at 9% until realisation. The applicant will have the costs of this application.

N.P.V. Award Confirmed.


PETITIONER: M/S. CHOWRINGHEE SALES BUREAU (P) LTD. Vs. RESPONDENT: C.I.T., WEST BENGAL DATE OF JUDGMENT10/10/1972 BENCH: <NAME>, HANS RAJ BENCH: <NAME>, HANS RAJ HEGDE, K.S. REDDY, P. JAGANMOHAN CITATION: 1973 AIR 376 1973 SCR (2) 618 1973 SCC (1) 46 CITATOR INFO : F 1975 SC 198 (7,8,10,12,14) R 1980 SC2047 (17) R 1988 SC1263 (15) ACT: Bengal Finance (Sales Tax) Act, 1941-Whether "Auctioneer" covered by expression "Dealer' in explanation 2 of Sec. 2(c)-Definition of the word "Dealer" whether ultra vires the power of the <ORG> legislature under Entry 48, List II, Schedule VII of Govt. of India Act, 1935-Assessee company acting as autioneer-Amount realised as sales tax in auction sales and credited separately under Sales Tax Collection Account, whether part .,of appellant's income. HEADNOTE: The appellant assessee is a private limited Company dealing in furniture and also acts as an auctioneer. In respect of the sales effected by the appellant as auctioneer, it realised, during the year in question, in addition to the commission, Rs. 32,986/- as sales tax. This amount was credited separately in the books under the Sales Tax Collection Account. This sum was neither paid over to the ex-chequer nor was it refunded to the persons from it had been collected. For the year in question, the I.T.O. held that the sum of Rs. 32,986/- was a part of the appellant's income of the same nature as the commission received by it on the auction sales. The appellant relying on the decision of <ORG>, [1961] 12 S.T.C. 535 contended that as the <ORG> Government had legislative competence to include "auctioneer" in the definition of "dealer" in the Bengal Finance (Sales Tax) Act, 1941, the amount in question was not a trade receipt liable to tax under Income Tax Act . The Appellate Asstt. Commissioner and <ORG> held in favour of the appellant. However, a reference under Sec. 66(1) of the Indian Income Tax Act , was answered by <ORG> against the appellant. Two questions were posed before this Court : (1) Whether the decision of <ORG> in  12 S.T.C. 535 was correct and (2) whether the answer to the reference by <ORG> was right ? HELD : An auction sale in, view of the provisions of Sec. 4 read with 64 of the Sale of Goods Act would have to be considered to be a sale for the purpose of Sale of Goods Act . There is nothing in Entry 48 of List II of Schedule VII of the Government of India Act (corresponding to Entry 54 of List II of the Seventh Schedule of the Constitution) which restricts the power of the <ORG> in the matter of the imposition of the Sales Tax to the levy of such tax an the owner of the goods on whose behalf they are sold or the purchaser where the transaction is one of sale of goods. In view of the wide amplitude of the power of the <ORG> or provincial legislature to impose tax on transactions of sale of goods, it would be impermissible to read a restriction in entry 48 on the power of the <ORG> legislature as would prevent the <ORG> legislature from imposing, tax on an auctioneer who carries on the business of selling of goods and who has in customary course of business authority to sell goods belonging to the people. What is sought to be taxed is the transaction of the sale of goods. If there is a close and direct connection between the transaction of sale and the person made liable for the payment of tax as in the present case, the statutory provision providing for, such levy on 'sales tax would not 619 offend entry 48. As such, the definition of the word "Dealer" in explanation 2 of S. 2(c) of the Bengal Act cannot be deemed to be ultra vires. It Was within the competence of the provincial legislature to include within, he definition of the word "dealer" an auctioneer who carries on the business of selling of goods and who has in the customary course of business, authority to sell goods belonging to the principal. [622H] <CITATION> ,  12 S.T.C. 535, overruled. <CITATION> .  9 S.T.C 353, <CITATION> ,  16, S.T.C. 213, <CITATION> ,  12 S.T.C. 429, followed. <CITATION> ,  16 S.T.C. 136, referred to. As the amount of sales tax was received by the appellant in its character as an auctioneer, the amount should be held to form part of its trading or business receipts. The appellant would, of course, be entitled to claim deduction of the amount as and when it pays to <ORG> Government. The fact that the appellant credited the amount received as sales tax under the head "Sales Tax Collection Account" would not make any natural difference. , It is the nature and the quality of the receipt and not he head under which it is entered in the account books that is decisive. [624B] <CITATION> 1959, 35 I.T.R., followed JUDGMENT:

CIVIL, APPELLATE JURISDICTION : Civil Appeal Nos. 168, (NT), of 1969.

Appeal by special leave from the judgment and order dated June 18,1968 of <ORG> in Income-tax Refe- rence No. 77 of 1966.

<NAME> and <NAME>, for the appellant. <NAME>, Additional Solicitor-General, <NAME>, <NAME> and <NAME>, for the respondent, <NAME>, <NAME>, for Intervener, (for the State of West Bengal & Advocate-General West Bengal). The Judgment of the Court was delivered by <NAME>, J.-This appeal by special leave is directed against the judgment of Calcutta High Court whereby that court answered ,he following question referred to it under section 66(1) of the Indian Income Tax Act, 1.922 in the negative and against the assessee appellant "Whether on the facts and in the circumstances of the case the sum of Rs. 32,986 had been validly excluded from the assessee's business income for the relevant assessment year The matter relates to the assessment year 1960-61 for which the relevant previous year ended on March 31, 1960. The appellant assessee is a private, limited company dealing in furniture. It also acts as an auctioneer. In respect of the sales effected by the appellant as auctioneer, it realised during the year in question, in addition to the commission, Rs. 32,986 as sales tax.amount was credited separately in the books under the sales tax collection account. The total balance standing to the, credit of this account since 1946 up to the end of the relevant previous year stood at Rs. 2,71,698. This sum was neither paid over to the exchequer nor was it refunded to the persons from whom it had been collected. In the earlier years these collections were not added to the appellant's income. For the year in question, however, the Income Tax Officer held that the said sum was in reality a portion of the sale price itself because the sales tax was not the liability of the purchasers of the goods but was the liability of the sellers of the goods only. The owners, of the goods who sent them to the appellant for being auctioned had received only their sale price less the amount charged by the appellant as sales tax from the purchasers. The Income Tax Officer held that the sum of Rs. 32.986 was a part of the appellant's income of the same nature as was the commission received by it on the auction sales. The said sum was accordingly added to the appellant's income.

The appellant preferred appeal to the Appellate Assistant Commissioner who took note of the fact that the appellant had not treated the amount as part of its income. The Appellate Assistant Commissioner referred to a decision of a single judge of <ORG> in a writ petition filed by the appellant against the State of West Bengal. The decision in that case is reported in (1961) 12 S.T.C.

535. It was held by <ORG> that where an auctioneer is selling specific chattel, or goods for an unknown or a disclosed principal and where the buyer knows that the auctioneer is not the owner, the auctioneer cannot be considered as the seller and there is no contract of sale between him and the buyer. In such a case the auctioneer, according to <ORG>, is not even a party to the sale and cannot be made liable for payment of sales tax. The definition of the word "dealer" in Explanation 2 of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the Bengal Act ) was held to be ultra vires in so far as it included an auctioneer. As an appeal was pending against the above decision of the learned single judge in <ORG>, the Appellate Assistant Commissioner observed that it was only when the matter was finally decided by <ORG> or when the assessee itself 'treated the said sales tax receipt as income that the said sum (could be included in the assessee's total income and only in the year in which that event came to pass. The amount of Rs. 32,986 was accordingly excluded from the assessee's income. On further appeal the decision of the Appellate Assistant Commissioner was affirmed by <ORG>. The question reproduced above was thereafter referred to <ORG>. <ORG>, as already stated, answered the question against the assessee appellant.

When the appeal came up for hearing before us on September 21, 1972 Dr. <NAME> on behalf of the appellant assailed the correctness of the answer given by <ORG> and in this connection relied upon the dictum laid down in the appellant's case reported in (1961) 12 S.T.C. 535. As against that the learned Additional Solicitor General on behalf of the respondent questioned the correctness of that decision. As the said decision related to the vires of the provisions of section 2(c) of the Bengal Act we directed that notice be issued to the State of West Bengal as well as its Advocate General. Arguments have thereafter been addressed before us by Mr. <NAME> on behalf of the appellant and the Additional Solicitor General on behalf of the respondent. Mr. <NAME> on behalf of the State of West Bengal has adopted the arguments of the Additional Solicitor General.

Before dealing with other matters, it would be convenient to examine the correctness of the view taken by <ORG> that the definition of the word "dealer' in Explanation 2 of section 2(c) of the Bengal Act was ultra vires in so far as it included an auctioneer'. The, Bengal Act was enacted by <ORG> in 1941 in pursuance of the powers conferred by entry 48 of List II of Schedule VII of the Government of India Act, 1935. The said entry relates to "taxes on the sale of goods and on advertisements". The entry in so far as it relates to taxes on sale of goods corresponds to entry 54 in List 11 of the Seventh Schedule of the Constitution. The words "sale of goods" in entry 48 in List II of Schedule VII of the Government of India Act, 1935 were the subject matter of judicial interpretation by this <ORG> in the case of <CITATION> .(1). It was held that those words cannot be construed in the popular sense but must be interpreted in the legal sense and should be given the same meaning which they had in the Sale of Goods Act , 1930. In arriving at this conclusion the <ORG> acted on the principle that words having known legal import should be construed in the sense which they had at the time of the enactment. Another dictum which was laid down in that ease was that "a power to enact a law with respect to tax on sale of goods under entry 48 must, to be intra vires, be one relating in fact to sale of goods and, accordingly, the Provincial (1)  9 S. T. C. 353.

Legislature cannot, in the purported exercise to tax sales, tax transactions which are not sales by merely enacting that they shall be deemed to be sales." This Court in that case dealt with a building contract which was one, entire and indivisible, and observed that in the case of such a contract there is no sale of goods and it is not within the competence of <ORG> under entry 48 to impose a tax on the supply of the material used in such a contract by treating it as A state.

The view taken by this, <ORG> in the Gannon Dunkerley's Case (supra) that the word "sale" in entry 48 of List II of Schedule VII of the Government of India Act and entry 54 of List 11 of the Seventh Schedule of the Constitution has "he same meaning as that given in the Sale of Goods Act , 1930 was reiterated by this <ORG> in <CITATION> (1) while dealing with a contract of hire purchase.

It cannot be disputed that sale by an auction is a sale as contemplated by these Sale of Goods Act , 1930 . Section 4 of that Act provides, inter alia, that a contract of sate of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price. Where under a contract of sate, the property in the- goods is transferred from the seller to the buyer, the contract is called sale. Further, according to section 64 of that Act, in the case of sale by auction where the goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of :ale. <ORG> in holding the definition of the word "dealer" in Explanation 2 of section 2 (c) of the Bengal Act to be ultra vires in the appellant's case reported in (1961) 12 S.T.C. 535 observed :

Entry 48 authorizes the imposition of tax either on a seller or a purchase or both. if, however, the legislature purports to levy a tax upon a person who is neither a seller nor a purchaser, the legislation must be declared ultra view, because it treats an operation as a sale of goods which, according to the Sale of Goods Act ,, does not amount to such a sale."

We find ourselves unable to agree with the above observations. An auction ale in view of the provisions of section 4 read with section 64 of the Sale of Goods Act would have to be considered to be a for the purpose of the sale of goods Act. There is nothing in entry 48 which restricts the power of the legislature in the matter of the imposition of the sales tax to the levy of such tax on the owner of the goods on whose behalf they are sold or (1)  16 S.T.C.213 the purchaser only. Where transaction is one of sale of goods as known to law, the power of the legislature to impose a tax thereon, in our view, is plenary and unrestricted subject only to any limitation which might have been imposed by the Government of India Act or the Constitution ( <CITATION> (1). In view of the wide amplitude of the power of the State or <ORG> to impose tax on transactions of sale of goods, it would, in our opinion, be impermissible to read a restriction in entry 48 on the power of <ORG> as would prevent the said <ORG> from imposing tax on an auctioneer who carries on the business of selling goods and who has in the customary course of business, authority to sell goods belonging to the principal. What is sought to be taxed is the transaction of the sale of goods. If there is a close and direct connection between the transaction of sale and the person made liable for the payment of sales tax, the statutory provision providing for such levy of sales tax would not offendentry 48. It cannot be disputed that there is a close and direct connection between an auctioneer and the transaction of auction sale. As such, the definition of the word "dealer" in Explanation 2 of section 2 (c) of the Bengal Act cannot be deemed to be ultra vires the power of the Provincial or State <ORG> on the ground that the legislature purports to levy tax on a person who is neither a seller nor a purchaser. It was, in our opinion, within the competence of the <ORG> to include within the definition of the word "dealee' an auctioneer who carries on the business of selling goods and who has in the customary course of business authority to sell goods belonging to the principal.

We may also observe that <ORG> of <ORG> in the case of <CITATION> (1) has dissented from the view taken by <ORG> in the appellant's case against the State of West Bengal.

It is apparent from the order of the Appellate Assistant Commissioner and has not been disputed before us in the present case that in the cash memos issued by the appellant to the purchasers in the auction sales it was the appellant who was shown as the seller. The amount realised by the appellant from the purchasers included sales tax. The appellant, however, did not pay the amount of sales tax to the actual owner of the goods auctioned because the statutory liability for the payment of that sales tax was that of the appellant. The appellant company did not also deposit the amount realised by it as sales tax in the <ORG> "chequer because it took the position that the statutory provision creating that liability upon it was not valid. As the amount of sales tax was received by the appellant in its character as an auctioneer, the (1) (1961) 12 S. T. C. 429.

(2) (1965) 16 S. T. C. 136.

amount, in our view, should be held to form part of its trading or business receipt. The appellant would, of course, be entitled to claim deduction of the amount as and when it pays it to <ORG>.

The fact that the appellant credited the amount received as sales tax under the head "sales tax collection account" would not in our opinion, make any material difference. It is the true nature and the quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt is a trading receipt, the fact that it is not So shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. We may in this context refer to the case of <CITATION> (1). In that case certain amounts received by the assessee were described as security deposits. This Court found that those amounts were an integral part of the commercial transaction of the sale of liquor and were the assessee's trading receipt. In dealing with the contention that those amounts were entered in a separate ledger termed "empty bottles return security deposit account", this Court observed :

"So the amount which was called security deposit was actually a part of the consideration for the sale and therefore part of the price of what was sold. Nor does it make any difference that the price of the bottles was entered in the general trading account while the so-called deposit was entered in a separate ledger termed "empty bottles return deposit account" for, what was a consideration for the sale cannot cease to be so by being written up in the books in a particular manner."

We, therefore, agree with <ORG> in so far as it has answered the question referred to it in the negative and against the appellant. The appeal consequently fails and is dismissed witH costs.

S.B.W. Appeal dismissed. (1) [1959] 35 I.T.R. 519.


JUDGMENT <NAME>, J.

1. This application arises out of a proceeding under Section 145 of the Code of Criminal Procedure, and the point raised is whether the com-potency of <ORG>, as provided in Section 146 of the Code of Criminal Procedure consists in its territorial jurisdiction alone or also in its pecuniary jurisdiction.

2. The facts, as stated in the order under revision, show that the value of the property in dispute was perhaps more than Rs. 4,000/- and the reference, as provided under Section 146 of the Code of Criminal Procedure, had been made by the Magistrate, before whom the proceeding under Section 145 of the Code of Criminal Procedure was originally pending, to a munsif whose pecuniary jurisdiction., admittedly extended only up to Rs. 1000/- in those circumstances a preliminary objection was raised in <ORG> that as the value of the property involved in the reference was more than Rs. 1,000/- that court had no jurisdiction to hear the reference.

The <ORG>, however, on hearing the parties came to the view that "the word 'competent' means the competent court of territorial jurisdiction and Section 6 of the C. P. C. will apply to suits and not to a proceeding" and accordingly held that the objection was not tenable in law. And it is against this order that the present rule has been issued.

3. Before however, I enter into the discussion of the question raised, I think it is necessary to set out the relevant provisions of the Code of Criminal Procedure bearing on the subject. Clause (6) of Section 145 of the Code of Criminal Procedure provides :.

"145(6) If the Magistrate decides that one of the parties was or should under the second proviso to Sub-section (4) be treated as being in such possession of the said subject, he shall issue an order declaring such party to be entitled to possession thereof until evicted therefrom in due course of law and forbidding all disturbance of such possession until such eviction and when he proceeds under the second proviso to Sub-section (4) may restore to possession the party forcibly and wrongfully dispossessed."

4. Thereafter Section 146 (1), so far as is relevant for the purpose of this case, states :.

"146(1): If the Magistrate is of opinion that none of the parties was then in such possession, or is unable to decide as to which of them was then in such possession of the subject of dispute, he may attach it, and draw up a statement of the facts of the case and forward the record of the proceedings to a Civil Court of competent jurisdiction to decide the question whether any and which of the parties was in possession of the subject of dispute at the date of the order as explained in Sub-section (4) of Section 145 , and he shall direct the parties to appear before <ORG> on a date to be fixed by him."

And finally Sub-clause (IB) of that section directs that on the conclusion of the inquiry <ORG> will "transmit its finding together with the record of the proceeding to the Magistrate by whom the reference was made and the Magistrate shall, on receipt thereof, proceed to dispose of the proceeding under Section 145 in conformity with the decision of <ORG>." These provisions, in my opinion, make it clear that notwithstanding the reference, if any, made to <ORG>, for a finding on the point of possession, the proceeding itself at no stage is ever transferred as a whole to the civil <ORG>, so much so that on receipt of the opinion from <ORG>, it is again the criminal <ORG> which finally disposes of that application.

Further, even while it is pending there it lies within the discretion of the criminal <ORG>, if it so likes as is provided in the proviso to Section 146(1) of the Code of Criminal Procedure, to drop the proceeding finally and to withdraw the attachment. That means, the proceeding even on reference made to the Civil <ORG> on the point of possession retains its old moorings and does not change its character from a criminal proceeding to a civil proceeding and is as such all along kept in the seizin of the criminal <ORG> for its final conclusion.

If that is so then what is referred to <ORG> under Section 146(1) of the Code of Criminal Procedure is neither a suit, as contemplated under the Code of Civil Procedure, nor a proceeding as provided in its Section 141 , for Section 141 , as interpreted by their Lordships of <ORG> in <NAME> v. <NAME>, 22 Ind App 44 (PC) (A), is meant to include original matters in the nature of stilts, namely, matters which originate in themselves and not those which spring up from a suit or from some other proceeding or arise in connection therewith <CITATION> , AIR 1927 Cal 534 (B). Therefore, in coming to a true decision on the point raised here what has to be considered is whether in a proceeding like the one stated above the jurisdiction of <ORG> rests exclusively on territorial consideration or both on territorial and pecuniary.

5. Generally speaking, no doubt, it is true that the competency of <ORG> under the Code of Civil Procedure cannot be determined irrespective of its pecuniary jurisdiction. But the language of Section 6 whereunder the Code of Civil Procedure deals with the pecuniary jurisdiction of <ORG> is rather limited in its scope. It says :

"6. Save in so far as is otherwise expressly provided, nothing herein contained shall operate to give any Court jurisdiction over suits the amount or value of the subject matter of which exceeds the pecuniary limits (if any) of its ordinary jurisdiction."

This shows that the consideration of pecuniary jurisdiction in the case of jurisdiction oi <ORG> arises in the case of suits alone or at best for that reason in the case of tho e proceedings which are in continuation of suits or arise therefrom but in no case in the case of those which are neither suits nor arise therefrom or are connected therewith. Therefore, in my opinion, a reference made under Section 146 (1) of the Code of Criminal Procedure to <ORG> not being either a suit or a proceeding, as held above, cannot be put to any limitation of pecuniary jurisdiction nor there is any indication cither in that section or in Section 6 of the Code of Civil Procedure in support of any construction like that, That being so, the contention, raised in this case 011 behalf of the petitioner that the learned Munsif to whom the reference was made is not competent to hear it fails. As for the decisions relied upon in support of that contention, namely, those in <NAME> under <CITATION> 37 CM 574 (C); <CITATION> , ILR 16 Cal 457 (D); <NAME> v. <NAME>, AIR 1922 Pat 188 (E); <CITATION> , AIR 1940 Cal 161 (F); <CITATION> , AIR 1934 All 86 (G) and <NAME> v. <NAME>, ILR 35 Cal 571 (H), it is enough to say that they do not apply to the facts of this case. The first four cases deal with the pecuniary jurisdiction of a <ORG> to which a decree is transferred for execution either under Section 39 of the Code of Civil Procedure or some such similar provision provided in other Acts and the decision in those cases is broadly speaking based on the principle that the word 'suit' as contemplated in Section 6 of the Code of Civil Procedure is not limited only to the proceedings in cause up to the passing of the decree hut on the other hand covers all its proceedings including those in execution. Therefore, they are not of any assistance in disposing of the present case. In the case reported in AIR 1934 All 86 (G), the reference made to <ORG> was by a revenue <ORG>, and in those circumstances the question raised was whether the provision of the Code of Civil Procedure applied to that proceeding. In answer thereto the learned Judges held that it was a proceeding of a character as contemplated under Section 141 and therefore the procedure laid down in the Code of Civil Procedure did apply to it. So the decision in that case is not based on the consideration of jurisdiction. In the last case, namely, the one reported in ILR 35 Cal 571 (H), the reference was under Section 55 of the Land Registration Act and originally <ORG> had referred it to the District Judge. The District Judge in his own turn, however, transferred it to <ORG> whose pecuniary jurisdiction was less than Rs. 2000/-. But as the value of the property involved in the proceeding was more than Rs. 2,000/- an objection was taken in that <ORG> that it was not competent to hear the reference. The objector having failed there brought that question to <ORG>. But unfortunately by the time the case came up for decision in the <ORG>, <ORG> became functus officio in that matter and so the proceeding in the <ORG> had to be finally disposed of without any relief to the objector. Yet in the course of discussion, their Lordships expressed the view that the objection taken on the ground of pecuniary jurisdiction was a valid one. But the discussion on this point is rather scanty and is based on the general proposition that the competency of a <ORG> consists both in territorial and pecuniary jurisdiction without any detailed discussion on the consideration as to whether the provisions of Section 6 of the Code of Civil Procedure did at all apply to a case like that. Therefore, these cases do not throw any light on the point raised here.

6. Lastly, our attention has also been drawn by the petitioners to the difficulties, which may arise in cases where Civil <ORG> of different grades having the same territorial jurisdiction are found situated in the same area. In that case no doubt a ticklish question may arise as to which of the different <ORG> a reference under Section 146 of the Code of Criminal Procedure will have to be made. The section, as it stands, is silent, on that point and this certainly may give rise to some unnecessary controversy. Therefore, perhaps it is better if the <ORG> removes this lacuna as early as possible. But on the language as it stands at present, it has to be held that in such cases all these <ORG> will have concurrent jurisdiction and in law the reference to any of them shall be a valid reference. So it will be open to the referring Magistrate to choose either of them for the matter of reference. Generally, however, I think it would be better if the Magistrate in making the reference avoid in over-crowding the <ORG> of higher grade with unnecessary burdens. That means, in cases of proceedings under Section 145 of the Code of Criminal Procedure it would be better if the reference to <ORG> be as a rule, made to a Court of the lowest grade unless otherwise the Magistrate is of opinion that the reference to a Court of higher grade is necessary in the circumstances of the case.

7. For the reasons stated above, I think it has to be held that this application is one without substance. It is accordingly dismissed but in the circumstances of the case there will be no order as to costs.

<NAME>, <NAME>

8. I agree. In my opinion, the question of pecuniary jurisdiction of <ORG> in order to make it <ORG> of competent jurisdiction within the meaning of Section 116 (1) of the Code of Criminal Procedure cannot reasonably arise. It is plain that pecuniary jurisdiction is out of place under Section 145 and for that matter under Section 146 of the Code of Criminal Procedure which is exclusively concerned with territorial jurisdiction. The legislature while amending the Code of Criminal Procedure under the 1955 Act and introducing these words hat not defined 'competent jurisdiction'. It has no doubt introduced some ambiguity. But to import the notion of pecuniary jurisdiction along with territorial in construing the scope of this expression is not warranted. The cases relied upon by learned counsel for the petitioner are all of them of a character which could be finally disposed of by <ORG> to which they were referred either for execution or under the Bengal Land Registration Act of 1876 or under the Revenue Law. My learned brother has already pointed out that it is not so in respect of the reference under Section 146 (1) of the Code of Criminal Procedure. A finding by <ORG> on the dispute as to which party is in possession is again sent back to <ORG> which has to pass the final order.

9. The <ORG> appears to have adopted this procedure in view of the fact that <ORG> is in a better position to record a finding in such contentions disputes than <ORG>. <ORG> acts thus for a limited purpose in aid of <ORG> as a friendly <ORG>, as an amicus curiae, of that <ORG>. This conclusion is further fortified by the fact that the legislature has carefully excluded any right of appeal, review or revision to the aggrieved party against the finding of <ORG> on such reference under Sub- section 1 (c) of that section. There is yet another pertinent question of practical value. If this expression 'Civil <ORG> of competent jurisdiction' were to include pecuniary jurisdiction as well, the referring Magistrate in every case will have to determine the value of the subject matter in dispute before him which may necessitate the recording of fresh evidence. It will, in any case, give rise to a new proceeding of an incidental character which may be open to challenge in a superior <ORG>. If the Civil <ORG> to which the reference is made has to determine the issue, the position, is worse still as that <ORG> after recording evidence on the point may have to transmit back the record to me Magistrate making the reference if it finds that it is beyond its pecuniary jurisdiction.

10. In my opinion, therefore, any consideration of pecuniary jurisdiction which is relevant when <ORG> after the case is transferred to it for execution of a decree or for other matters to record a final decision disposing of the rights of the parties in so far as it is concerned does not arise in the reference under Section 146 (1) of the Code of Criminal Procedure.