PETITIONER: C.I.T. ANDHRA PRADESH Vs. RESPONDENT: M/S TAJ MAHAL HOTEL, SECUNDERABAD DATE OF JUDGMENT12/08/1971 BENCH: <NAME>, A.N. BENCH: <NAME>, A.N. CITATION: 1972 AIR 168 1971 SCC (3) 550 CITATOR INFO : R 1981 SC1274 (10) R 1985 SC 679 (32) RF 1986 SC 338 (7,11) RF 1987 SC1023 (31) RF 1988 SC1087 (8) R 1989 SC 335 (9) F 1989 SC 622 (4) RF 1991 SC 686 (16) RF 1991 SC 999 (14) F 1992 SC 129 (7) F 1992 SC1782 (10) ACT: Income-tax Act  s. 10(2) (vi) and (vi-b)- 'Plant', meaning of. HEADNOTE: During the assessment year 1960-61, the assessee, a registered firm running hotels, incurred expenditure in installing sanitary and pipeline fittings in its hotels. On the question whether such fittings in a building run as a hotel fell within the meaning of the word 'plant' in s. 10(2) (vi-b) of the Income-tax Act , 1922, and the assessee was therefore entitled to development rebate under that sub- section, <ORG>, in reference, answered in favour of the assessee. Dismissing the appeal to this Court, HELD: (1) Apart from the dictionary or literal meaning of the word 'plant', the context of the provisions of the Act shows that sanitary and pipe line fittings are 'plant' under s. 10(2) (vi-b) read with s. 10(5) . [173H; 174A-B] In computing the profits and gains of a business under s. 10(1) o the Act allowances by way of depreciation in respect of 'plant' under s. 10(2)(vi) and by way of development rebate in respect of 'plant' under s. 10(2) (vi-b) have to be made. Under s. 10(5) , 'plant' includes vehicles, books, scientific apparatus and surgical equipment purchased for the purpose of the,-business profession or vocation. Where a word is not defined in a statute, it must be construed in its popular sense, that is, that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it. The word 'includes' is generally used to enlarge the meaning of words or phrases used in the statute so that, words and phrases may be construed as comprehending not only such things as they signify according to their nature and import, but also these things which the interpretation clause declares that they shall include. The fact that even books have been included in 'plant' shows that the meaning given to 'plant' is wide. It should cover sanitary and pipe-line fittings. [170E-H; 171E-H, 173F] To have such fittings in a bath room is one of the essential amenities or conveniences which are normally provided in any good hotel, and the hotelier can reasonably expect to get more custom and earn a larger profit by charging higher rates. Therefore, the fittings in the present case, were not merely a part of the setting in which the hotel business was being carried on, but were required for the purpose of the hotel business. [173C- <CITATION> ., (1 970) 75 I.T.R. 533, approved. <NAME> (Inspector of Taxes) v. <ORG>, (1963) 1 W.L.R. 214, applied. 169 J. Lyons Co. Ltd. v. Attorney General,  1 Ch. 281 and Yar mouth v. France,  19 Q.B. 647, referred to. (2) The fact that the assessee while claiming depreciation allowance had included the fittings in question under the head 'furniture and fittings' and claimed higher depreciation allowance than what would be applicable to 'plant', would not detract from the meaning of the word 'plant' in s. 10(2) (vi-b). [174C-E] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1369 of 1968. Appeal from the judgment and order dated August 1, 1967 of <ORG> in Case Referred No. 68 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.--This is an appeal by certificate from the judgment of <ORG> in a case referred under s. 66(1) of the Income Tax Act, 1922 (hereinafter referred to as the Act).

The respondent who is the assessee is a registered firm running a hotel at Secunderabad with branches at Sultan Bazar and King Kothi in Hyderabad. During the previous year ending 30th September, 1959 relating to the assessment year 1960-61, the assessee incurred an expenditure of Rs. 57,154/- in installing sanitary fittings and of Rs. 1,370/- for pipe-line fittings. The assessee claimed development rebate on these two items at the rate of 25 per cent under S. 10(2)(vi-b) of the Act amounting in the aggregate to Rs. 14,629/-. The Income Tax Officer disallowed the claim. On appeal, the Appellate Assistant Commissioner upheld the disallowance. An appeal was taken to <ORG>. The <ORG> rejected the appeal holding that the definition of "plant" must necessarily be the same, whether it was for claiming depreciation under s. 10(2)(vi) or for development rebate under S. 10(2) (vi-b). Accordingly, it was held that the sanitary and pipe-line fittings did not fall within the meaning of the word "plant". On being moved under s. 66(1) of the Act, the following question was referred for the opinion of <ORG> :-

"Whether the sanitary fittings and pipelines, installed in the King Kothi branch of the <ORG>, constituted 'plant' within the meaning of sec. 10(5) of the Indian Income-tax Act and whether the assessee is entitled to develop- ment rebate in respect thereof under sec.

10(2) of the Act <ORG> answered the question in the affirmative and in favour of the assessee.

The only question that was argued before <ORG> and which has been debated before us is whether sanitary and pipe-line fittings in a building which is run as a hotel would fall within the meaning of the word "plant" in section 10(2) (vi-b) of the Act.

Section 10(1) of the Act provides that tax shall be payable by an assessee in respect of the profits and gains of any business profession or vocation. Sub-section (2) gives the allowances which have to be made in computation of such profits and gains. Clause (vi) of that sub-section relates to the depreciation in respect of "such buildings, machinery, plant or furniture being the property of the asses see".

Clause (vi-b) of S. 10(2) is as follows:-

"(vi-b) in respect of a new ship acquired or new machinery or plant installed after the 31st day of March, 1954, which is wholly used for the purposes of that business carried on by the assessee, a sum by way of development rebate in respect of the year of acquisition of the ship or of the installation of the machinery or plant, equivalent to...........

Section 10(5) provides inter alia that in sub-section (2) " plant" includes "vehicles, books, scientific apparatus and surgical equipment purchased for the purpose of the business, profession or vocation".

The main argument of the learned counsel for the Commissioner of Income Tax who is the appellant is that the word "plant" should not have been given a wide meaning and should have been interpreted according to the common understanding in commercial circles among persons who deal in plant and machinery. It is asserted that the development rebate cannot be claimed in respect of the items which have become a part of the building itself. It has also been pointed out that the assessee while claiming depreciation allowance has included the assets in question under the head "furniture and fittings" the rate claimed being 9 per cent which was duly allowed by the Income Tax Officer. This rate of 9 per cent was applicable under Rule 8 only to furniture and fittings used in hotels etc. If the assets were to be treated as plant, only the general rate of 7 per cent would be applicable. The definition of "plant" must necessarily, therefore, be the same whether it be for claiming depreciation under s. 10(2)(vi) or for development rebate under s. 10(2) (vi-b). It has also been suggested that the primary meaning of the word "plant" has connection with mechanical or industrial business or manufacture of finis hed goods from raw goods and that sanitary and pipe- line fittings could not possibly satisfy those conditions. Now it is well settled that where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use. Popular sense means "that sense which people conversant, with the subject matter with which the statute is dealing, would attribute to it". In the present case, s. 10(5) enlarges the definition of the word "plant" by including in it the words which have already been mentioned before. The very fact that even books have been included shows that the meaning intended to be given to "plant" is wide. The word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute." When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import but also those things which the interpretation clause declares that they shall include. The word "include" is also susceptible of other constructions which it is unnecessary to go into.

The case-<ORG> v. Attorney General (1) relied upon by the learned counsel for the appellant apart from being distinguishable hardly supports the contention of the appellant. In that case, it was I held that electric lamps and fittings in a tea shop were not part of the apparatus used for carrying on the business but were part of the setting in which the business was carried on, and, therefore, were not "plant", within the meaning of certain provisions of the War Damage Act, 1943. It was observed at page 286 "if these articles are plant, it can only be by reason that they are found on premises exclusively devoted to trade purposes. Trade plant alone need be considered".' The meaning of "plant" as given in <NAME> <NAME> v. France (2) was accepted as correct. According to that meaning "plant" includes whatever apparatus or instruments are used by a businessman in carrying on his business". In our judgment, the more apposite decision is that of <ORG> in <NAME> (Inspector of Taxes) v. <ORG> (3) There the nature of the assessee's business required that its office accommodation should be capable' of sub-division into a number of rooms varying in size etc. according to the requirements from time to time of the agencies which it carried on. The office accommodation consisted of a large open floor space in which partitions could be erected so as to subdivide the floor space into a number of rooms of any size. Certain partitions were made which were screwed to the floor and ceiling only and could be easily moved if it was desired to alter the size of number of the rooms. The question was whether these partitions were plant within sections 279 and 280 of the English Income Tax Act 1952, so as to entitle the company to allowances under those sections. There the material words in the statute were "where the person carrying on a trade in any year of assessment has incurred expenditure on the provision of machinery or plant for the purposes of the trade." It was held that the partitions were "plant" as they were used in the carrying out of the company's trade or business. <NAME>, L.J. held that the partitions were used to enable the trader to cope with the vicissitudes of (1) [1944] (1) Ch. 28 1. (2) [1887] (19) Q. B. 647. (3) [1963] (1) W.L.R. 214.

the business as it increased and diminished and relied on the finding of the commissioners that the flexibility of accommodation which the partitions provided was a commercial necessity for the company. Further illustrations were given of assets which would fall within the meaning of "plant". "The heating installation of a building may be passive in the sense that it involves no moving machinery, but few would deny it the name of plant". The same thing could, no doubt be said of many air conditioning and water softening installations".

It cannot be denied that the business of hotelier is carried on by adapting a building or premises in a suitable way to be used as a residential hotel where visitors come and stay and where there is arrangement for meals and other amenities are provided for their comfort and convenience. To have sanitary fittings etc. in a bath-room is one of the essential amenities or conveniences which are normally provided in any good hotel, in the present times. If the partitions in <NAME>'s case (supra) could be treated as having been used for the purpose of the business of the trader, it is incomprehensible how sanitary fittings can be said to have no connection with the business of the hotlier. He can reasonably expect to get more custom, and earn larger profit by charging higher rates for the use of rooms if the bath-rooms have sanitary fittings and similar amenities. We are unable to see how the sanitary fittings in the bath- rooms in a hotel will not be "plant" within s.10(2)(vi-b) read with Section 10(5) when it is quite clear that the intention of the <ORG> was to give it a wide meaning and that is why, articles like books and surgical instruments were expressly included in the definition of "plant". In decided cases, <ORG> have rightly understood the meaning of the term "Plant" in a wide sense. ( <CITATION> .). (1) If the dictionary meaning of the word "plant" were to be taken into consideration on the principle that the literal construction of a statue must be adhered to unless the context renders it plain that such a construction cannot be put on the words in question-this is what is stated in Webster's Third New International Dictionary:- (1)  (75) I.T.R. 533.

17 4 "Land, buildings, machinery, apparatus and fixtures employed in carrying on trade or other industrial business......

It is, however, unnecessary to dwell more on the dictionary meaning because looking to the provisions of Act, we are satisfied that the assets in question were required by the nature of the hotel business which the assessee was carrying on. They were not merely a part of the setting in which hotel business was being carried on.

<ORG> was right in not accepting the reasoning of the <ORG> based on the rates relating to depreciation under s.10(2)(vi) and the assessee having claimed that the sanitary and pipe-line fittings fell within the meaning of "furniture and fittings' in Rule 8(2) of the Rules. It has been rightly observed that the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect. If the assessee had claimed higher depreciation allowance that would not detract from the meaning of the word plant in clause (vi-b) of S. 10(2) . In the result, this appeal fails and it is dismissed with costs.

<ORG> Appeal Dismissed.


PETITIONER: <ORG> & <ORG>. Vs. RESPONDENT: <ORG> & ORS. DATE OF JUDGMENT: 25/04/1969 BENCH: <NAME>, M. (CJ) BENCH: <NAME>, M. (CJ) SHELAT, J.M. BHARGAVA, VISHISHTHA HEGDE, K.S. GROVER, A.N. CITATION: 1970 AIR 192 1970 SCR (1) 358 1969 SCC (2) 283 CITATOR INFO : R 1970 SC1292 (7) RF 1971 SC 231 (6) R 1972 SC1061 (89,100,139,174) RF 1972 SC1148 (5) RF 1972 SC2205 (21) RF 1973 SC1461 (596) R 1974 SC1069 (63) RF 1975 SC1116 (3) RF 1975 SC2299 (190,607) R 1977 SC1686 (6) R 1978 SC 803 (26) R 1979 SC1550 (14,19) E 1984 SC1291 (12) RF 1984 SC1780 (11) F 1985 SC1683 (6,7) RF 1988 SC 587 (15) R 1989 SC 516 (30) F 1990 SC 781 (47) ACT: Bombay Municipal Boroughs Act, 1925, s. 73-Levy of 'rate' on tax and buildings-'Rate' held not to include tax on capital value or percentage of capital value-Defect sought to be removed by Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963-Enactment of s. 99 of Gujarat Municipalities Act to give power to municipalities to levy tax on capital value or percentage of capital value of lands and buildings-Power of State Legislature under item 49 List II of Seventh Schedule to Constitution levy tax on capital value of buildings-Efficacy of Validating Act-Principles on which retrospective validation can be upheld.. HEADNOTE: Section 73 of the Bombay Municipal Boroughs Act, 1925 allows the municipality to levy 'a rate on building or lands or both situate within the municipality'. The Rules under the Act applied the rates on the basis of the percentage on the capital value of lands and buildings. <CITATION> ,  2 S.C.R. 608 this <ORG> held that the term 'rate' must be given the special meaning it had acquired in English law and must be confined to an impost on the basis of the annual letting value; it could not be validly levied on the basis of capital value though capital value could be used for the purpose of working out the annual letting value. Faced with this decision <ORG> passed the Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963. By s. 3 of this Act past assessment and collection of 'rate' on lands and buildings on the basis of capital value or a percentage of capital value was declared valid despite any judgment of a court or <ORG> to the contrary, and future assessment and collection on the basis of capital value for the period before and after the Validation Act was authorised. At the same time s. 99 was enacted in the Gujarat Municipalities Act to provide for the levy of a tax on lands and buildings "to be based on the annual letting value or the capital value or a percentage of capital value of the buildings or lands or both." Appellant No.1 was a company carrying on the manufacturers of cotton goods at <ORG>. It was assessed for the assessment years 1961-62, 1962-63 and 1963-64 to a rate on lands and buildings under s. 73 of the Bombay Municipal Boroughs Act on the basis of a percentage of the capital value. It filed writ petitions in <ORG> challenging the said assessments. After the Validation Act of 1963 was passed it amended the petitions to challenge the validity and efficaciousness of s. 3 of the said Act. <ORG> dismissed the writ petitions. Appeals with certificate were filed before this <ORG>. HELD : (i) When a legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition is that the legislature must possess the power to impose the tax, for if it does not, the action must ever remain ineffective and illegal. Granted legislative competence it is not sufficient to declare merely that the decision of the 389 court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A <ORG>'s decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. [392 H-393 8] Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the 'rules or both are invalid or do not sufficiently create jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction has not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives it own meaning and interpretation of the law under which the tax was collected and by legislative flat makes the new meaning binding on courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. [393B-D] Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject-matter and competence to make a valid law, it can at. any time make such a valid law and make it retrospectively so -as to bind even past transaction. The validity of a Validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in Validating law for a valid imposition of the tax. [393D-F] (ii) After this <ORG>'s decision in <NAME> case it could no longer be questioned that <ORG> had power under entry 49 of List II of the Seventh Schedule to the Constitution to levy a tax on the capital value of lands and buildings. It was open to the State legislature to authorise the municipality to levy the same tax indicating the mode of levy. This the legislature had done by enacting s. 99 of the Gujarat Municipalities Act and by indicating the different modes which may be adopted in making the levy, one such mode being a percentage of the capital value. [394C- <CITATION> , A.I.R. 1969 S.C. 59, applied. (iii) The legislature by the Validation Act provided for the following matters. First, it stated that no tax or 'rate by whichever name called and laid on the capital value of lands and buildings must be deemed to be invalidly assessed, imposed, collected or recovered simply on the ground that a rate is based on the annual letting value. Next it provided that the tax must be deemed to be validly assessed, imposed, collected or recovered and the imposition must be deemed to be always so authorised. The legislature by this enactment retrospectively imposed the tax on lands and buildings based on their capital value and as the tax was already imposed, levied and collected on that basis, made the imposition, levy collection and recovery of the tax valid, notwithstanding the declaration by the court that as 'rate', the levy was incompetent. The legislature not only equated the tax collected to a tax on lands and buildings which it had the power to levy, but also to a rate giving a new meaning to the word 'rate' Sup.C.I/69-11. 390 and while doing so it put out of action the effect of the decisions of the courts to the contrary. The exercise of power by the legislature was valid because the legislature does possesses the power to levy a tax on lands and buildings based on capital value thereof and in validating the levy on that basis, the implication of the word 'rate' could be effectively removed and the tax on lands and buildings imposed instead. The tax therefore could no longer be questioned on the ground that s. 73 spoke of a rate and the imposition was not a rate as properly understood but a tax on capital value. [394F-395E] JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeals. Nos. 2197 and 2198 of 1966.

Appeals from the judgment and decree dated September 10, 1966 of <ORG> in Special Civil Applications Nos. 846 of 1963 and 765 of 1964.

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

<NAME> and <NAME>, for the respondents Nos. 1 and 2 (in both the appeals).

<NAME> and <NAME>, for respondent No. 3 (in both the appeals).

The Judgment of the Court was delivered by <NAME>, <NAME> These matters arise under Art. 226 of the Constitution and are appeals by certificate granted by <ORG> against its judgment and order, September 10, 1966. The appellant No. 1 is a Company which has spinning and weaving mills at Broach and manufactures and sells cotton yarn and cloth. Respondent No. 1 is the Broach Borough <ORG> constituted under S. 8 of the Bombay Municipal Boroughs Act, 1925. In the assessments years 1961-62, 1962-63 and 1963-64 the <ORG> purporting to act under s. 73 of the Bombay Municipal Boroughs Act, 1925 and the Rules made thereunder imposed a purported rate on lands and buildings belonging to the respondent at a certain percentage of the capital value. Section 73 of the Act allows the <ORG> to levy "a rate on buildings or lands or both situate within the municipal borough". The Rules under the Act applied the rates on the basis of the percentage on the capital value of lands and buildings., The assessments lists were published and tax was imposed according to the rates calculated on the basis of the capital value of the property of the appellant and bills in respect of the tax were served. The writ petitions were filed to question the assessment and to get the assessment cancelled.

During the pendency of the writ petitions the legislature of Gujarat passed the Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963. As a result the writ petitions were amen-

ded and the Validation Act was also questioned. The appellants also filed a second writ petition questioning the validity of the Validation Act under Arts. 19(1)(f), (g) and 265 of the Constitution. By the order under appeal here both the writ petitions were dismissed although a certificate of fitness was granted.

The Validation Act was presumably passed because of the, decision of this Court reported in <CITATION> (1). In that case the validity of the Rules framed by <ORG> under s, 73 were called in question, particularly Rule 350A for rating open lands which provides that the rate on the area of open lands shall be levied at 1 per centum on the valuation based upon capital value. Dealing with the word 'rate' as used in these statutes, it was held by this Court that the word 'rate' had acquired a special meaning in English legislative history and practice and also in Indian legislation and it meant a tax for local purposes imposed by local authorities. The basis of such tax was the annual value of the lands or buildings. It was discussed in the case that there were three methods by which the rates could be imposed : the first was to take into account the actual rent fetched by the land or building where it was actually let the second was,. where it was not let, to take rent based on hypothetical tenancy, particularly in the case of buildings; and the third was where neither of these two modes was available, by valuation based on, capital value from which annual value had to be found by applying suitable percentage which might not be the same for lands and buildings. It was held that in S. 73 the word 'rate' as used must have been used in the special sense in which the word was understood in the legislative practice of India before that date. Rule350A Which laid the rate on land at a percentage of the valuation based upon capital was therefore declared ultra vires the Act itself. In short, the word 'rate' was given a specialised meaning and was held to mean a kind of imposition the annual letting value of property, if actually let out, and on a notional letting value if' the property was not let out. The legislature of Gujarat then passed the Validation Act seeking to validate the imposition or the tax as well as to avoid any future interpretation of the Act on the lines on which Rule 350A was construed. The Act came into force on January 29, 1964. After defining the expressions used in the Act and providing for its application, the Act enacted S. 3 which concerned validation of impositions and collections of taxes or rates by Municipalities in certain cases. That section reads as. follows "3. Validation of imposition and collection of taxes or rates by municipalities in certain cases.

(1) [1954] 2 S.C.R. 608.

Notwithstanding anything contained in any judgment, decree or order of a Court or <ORG> or any other authority, no tax or rate assessed or purporting to have been assessed by a municipality under the relevant municipal law or any rules made thereunder on the basis of the capital value of a building or land, as the case may be or on the basis of a percentage of such capital value, or recovered by the municipality commencement of this Act shall be deemed to invalidly assessed, imposed, collected or recovered by reason of the assessment being based on the capital value or the percentage of the capital value, and not being based on the annual letting value, of the building or land, as the case may be, and the imposition, collection and recovery of the tax or rate so assessed and the provisions of the rules made under the relevant municipal law under which the tax or rate was so assessed shall be valid and shall be deemed always to have been valid and shall not be called in question merely on the ground that the assessment of the tax or rate on the basis of the capital value of the building or land, as the case may be, or on the basis of a percentage of such capital value was not authorised by law; and accord- ingly any tax or rate, so assessed before the commencement of this Act and leviable for a period prior to such commencement but not collected or recovered before such commencement, may be collected and recovered in accordance with the relevant municipal law, and the rules made thereunder."

If this section is valid then the imposition cannot be questioned and the short question which arises in this case is as to the validity of this section. It is not denied that a legislature does possess the power to validate statutes and to pass retrospective laws. It is, however,, contended that the Validation Act is ineffective in carrying out its avowed object. This is the only point which falls for consideration in these appeals.

Before we examine s. 3 to find out whether it is effective in its purpose or not we may say a few words about validating statutes in general. When a legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legis-

lative competence, it is not sufficient to declare merely that the decision of the <ORG> shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to' tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected and by legislative fiat, makes the new meaning binding upon courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a Validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating law for a valid imposition of the tax.

The inquiry in this case may begin by asking whether the legislature possesses competence to pass a law imposing a tax on lands and buildings on the basis of a percentage of their capital value. If the legislature possesses that power then it can authorise the Municipality to levy that tax. To test the proposition we may consider s. 99 which has now been enacted in the Gujarat Municipalities Act. It reads :

"99. Taxes which may be imposed. (1) Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 101 and 102 , a municipality may impose for the purposes of this Act any of the following taxes, namely:-

(i) a tax on buildings or lands situate with in the municipal borough to be based on the annual letting value or the capital value or a percentage of capital value of the buildings or lands or both;

Learned counsel for the appellants did not contend that this section was outside the powers of the legislature. In fact, he could not, in view of entry 49 of List II of the Seventh Schedule to the Constitution. That entry reads : "Taxes on lands and buildings" and a tax on lands and buildings based upon capital value falls squarely within the entry. The doubt which is created by entry 86 of List I "Taxes on the capital value of assets", no longer exists after the decision of this Court in <CITATION> (1). In that case the respective ambits of the two entries are explained. It is pointed out that unlike the tax contemplated by _entry 49 (List II) the tax under entry 8 6 (List 1) is not a direct tax on lands and buildings but on net assets, the components of which may be lands and buildings and other items of assets excluding such liabilities as may exist. The incidence of the tax is not on lands and- buildings as units of taxation but on the net assets of which lands and buildings are only some of the components. This is not the case under entry 49 (List 11) where the tax can be laid directly on lands and buildings as units of taxation. Therefore, a tax on lands and buildings is fully within the competence of the legislature and it is open to it to authorise the municipality to levy the same tax indicating the mode of levy. This the legislature has done by indicating the different modes which may be adopted in making the levy, one such mode being a percentage of the capital value.

The legislature in S. 73 had not authorised the levy of a tax in this manner but had authorised the levy of a rate. That led to the discussion whether a rule putting the tax on capital value of buildings answered the description of the impost in the Act, namely, 'a rate on buildings or lands or both situate within the Municipal borough'. It was held by this Court it did not, because the word 'rate' had acquired a special meaning in legislative practice. Faced with this situation the legislature exercised its undoubted powers of redefining 'rate' so as to equate it to a tax on capital value and convert the tax purported to be collected as a 'rate' into a tax on lands and buildings. The legislature in the Validation Act , therefore, provided for the following matters. First, it stated that no tax or rate by whichever name called and laid on the capital value of lands and buildings must be deemed (1) A.I.R. 1969 S.C. 59.

to be invalidly assessed, imposed, collected or recovreed simply on the ground that a rate is based on the annual letting value. Next it provided that the tax must be deemed to be validly assessed, imposed, collected or recovered and imposition must be deemed to be always so authorised. The legislature by this enactment retrospectively imposed the tax on lands and buildings based on their capital value and as the tax was already imposed, levied and collected on that basis, made the imposition, levy collection and recovery of the tax valid, notwithstanding the declaration by the <ORG> that as 'rate', the levy was incompetent. The legislature not only equated the tax collected to a tax on lands and buildings, which it had the power to levy, but also to a rate giving a new meaning to the expression 'rate', and while doing so it put out of action the effect of the decisions of the courts to the contrary. The exercise of power by the legislature was valid because the legislature does possess the power to levy a tax on lands and buildings based on capital value thereof and in validating the levy on that basis, the implication of the use of the word 'rate' could be effectively removed and the tax on lands and buildings imposed instead. The tax., therefore, can no longer be questioned on the ground that S. 73 spoke of a rate and the imposition was not a rate as properly understood but a tax on capital value. In this view of the matter it is hardly necessary to invoke the 14th clause of s. 73 which contains a residuary power to impose any other tax not expressly mentioned.

In our judgment these appeals possess no merits after the passing of the Validation Act and must be dismissed but in the circumstances without any order about costs.

G.C. Appeals dismissed.


JUDGMENT <NAME>, J.

1. At a bye election held in April 1967 to elect a member of <ORG> from the Srikakulam parliamentary constituency there were two contesting candidates <NAME> called "the appellant" - and <NAME>-hereinafter called "the respondent". The respondent was declared elected. The appellant filed an application in <ORG> to set aside the election of the respondent on the ground that the respondent had committed diverse corrupt practices described in Section 123(1)(A)(a), (b), (5) and (6) of the Representation of the People Act , 1951. The respondent denied the allegations made in the petition. He also submitted that the allegations were vague and indefinite and some of those allegations did not constitute any corrupt practice within the meaning of the Representation of the People Act , 1951. The appellant amended the petition and submitted particulars of certain corrupt practices set out in the original petition. The appellant then filed his additional written statement. <ORG> held on a detailed consideration of the evidence that the corrupt practices alleged by the appellant in the petition were not proved, and dismissed the petition. The appellant has appealed to this Court under Section 116A of the Representation of the People Act, 1951.

2. Counsel for the appellant restricted his argument to the following charges set out in the petition:

(1) A charge of bribery in respect of an amount of Rs. 4,000/- paid to a candidate in the election as gratification for not standing for election, Rs. 10,000/- for constructing a high school building in the village Kothakota with the object of inducing the voters in the village and three other contiguous polling stations to vote for him; and Rs. 1,000/- paid for completing the excavation of a well in consideration of promise of votes for the respondent. Thereby corrupt practices of bribery within the meaning of Section 123(A) & (IB) were committed;

(2) Providing on the day of polling a number of motor-vehicles for the free transport of voters to the polling stations, and especially motor-jeep No. APK-9486, motor-lorry No. APK- 9250, motor-lorry No. APG-35 11 and motor-bus No. APS-1315. Thereby a corrupt practice under Section 123(5) was committed;

(3) Causing the printing and publication of a leaf-let containing false and defamatory statements in relation to the personal character of the appellant. Copies of the leaflet were distributed at several meetings held by <ORG> at Srikakulam and other places. The respondent and his election agent also exhorted, with the object of tarnishing the image of the appellant and lowering him in the estimation of the voters, the voters at those meetings not to vote for the appellant who it was alleged had misappropriated public funds. Thereby the respondent committed a corrupt practice under Section 123(4) of the Representation of the People Act.

(4) That the account of the expenditure returned by the respondent did not disclose many items of expenditure which were incurred in connection with the election. The respondent had expended a sum exceeding Rupees 3 lakhs, and the expenditure returned was a gross under estimate of the expenses incurred by the respondent in connection with his election. Thereby he committed a corrupt practice under Section 123(6) read with Section 77 of the Representation of the People Act, 1951.

In respect of the charge of bribery there were three heads - (i) that the respondent and his election agent <NAME> induced one <NAME> not to stand as a candidate at the election by paying him Rs. 4,000/-as gratification. According to the appellant <NAME> who was defeated in the contest for a seat in <ORG> of Andhra Pradesh in the general elections held in 1962 and February, 1967, intended to contest for the <ORG> seat in the bye-election and was canvassing support before the appointed date for filing nominations, but the respondent and his election agent at a meeting on March 29, 1967 in the travellers' bungalow at <NAME> dissuaded <NAME> from contesting the election in consideration of payment of Rs. 4,000/-. This was denied by the respondent. In support of his case the appellant examined <NAME> P.W. 24 and <NAME> 25. He relied also upon two documents Exts. P-41 and P-83. In rebuttal the respondent relied upon his own testimony and of his election agent <NAME>. <NAME> was also examined as a witness <NAME>. The respondent examined a number of other witnesses <NAME>, <NAME> <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, Kolanganti Sathi Raju <NAME>5 and Cokina Chandra Rao <NAME>6 and relied upon certain documents. The two witnesses examined on behalf of the appellant deposed to the circumstances leading to their presence at <NAME> travellers' bungalow and payment of Rs. 4,000/- to <NAME> by <NAME> after the respondent and <NAME> had requested him not to file the nomination paper and to help the respondent in the election. The learned Trial Judge made a detailed analysis of the evidence and held that there were "contradictions and material discrepancies" in the statements of the witnesses for the appellant, and that the statements of the witnesses "did not inspire confidence". The burden of proving that the respondent and his election agent went to <NAME> travellers' bungalow and persuaded <NAME> not to file his nomination paper in consideration of receiving a bribe lay upon the appellant. The witnesses examined on his behalf are, as found by <ORG>, "highly interested and their testimony was rebutted by the witnesses named by him as the persons present at the time". Besides, the evidence of the witnesses as found by <ORG>.

was discrepant and did not accord with probabilities. Both the oral and documentary evidence falsified it. There were inherent improbabilities in the allegation itself.

No substantial argument was advanced before us to persuade us to take a different view.

3. (ii) In respect of the charge of bribery of Rs. 10,000/-, it was alleged in the petition that <NAME>, election agent of the respondent visited Kothakota at 8-00 p.m. on April 26, 1967 and paid Rs. 10,000/- to one <NAME> a resident of that village for constructing a "High School building" in that village. The payment, it was said, was made with the object of inducing the voters of Kothakota and three contiguous polling stations to vote for the respondent. This was denied by the respondent. In support of the allegation the appellant examined Dhavala Appalla Suri P. W. 7, Kusumanchi Adinarayana P. W. 8, Galala Ramulu P. W. 9 and Amballa Appalla Suri P. W. 11 and relied upon some documentary evidence also. In answer the respondent examined himself, his election agent and witnesses <NAME>, R. W. 1, <NAME>, <NAME> and <NAME> 16, and relied upon certain documentary evidence. On a consideration of the evidence the learned Judge observed that the entire oral evidence in support of the appellant's case was "highly discrepant and did not "merit credence". <ORG> observed that the petition did not refer to the place of incident, whether it was rice mill premises or outside the rice mill where the payment is alleged to have been made. While some of the witnesses said it was rice mill premises itself, others said that it was near the rice mill.

<ORG> also observed that apart from the interested nature and the fact that their testimony was replete with material contradictions, there were inherent improbabilities in the story told, which made it highly difficult to accept the testimony.

After considering the testimony of the respondent and his witnesses the <ORG> observed that the oral testimony on behalf of the appellant was inconsistent and did not make out a case of corrupt practice, that the probabilities of the case were strongly against the appellant's contention and there was no reason to disbelieve the testimony of the witnesses for the respondent. Even in respect of this charge of corrupt practice no argument seeking to persuade us to take a different view was advanced by counsel for the appellant.

4. (iii) In respect of the third head of the charge of bribery, it was alleged by the appellant in his petition that at Pathokota a village falling within the limits of Budarsingi polling station the respondent and his election agent convened an election meeting on April 23, 1967, that the villagers assembled at that meeting requested the respondent to donate a sum of Rupees .1,000/- to complete the excavation of a well in return for their votes, and that as directed by the respondent on the same day at about 5-00 P.M. Negineni Venkayya agent of the respondent paid Rupees 1,000/- to <NAME> and <NAME>, members of the village Youth League in the presence of the Sarpanch and village elders. In support of this plea the appellant examined <NAME> and <NAME>. In rebuttal, the respondent examined himself, his election agent <NAME>, <NAME>, <NAME> of village Patakota and two others of the same village <NAME> and <NAME>. On a consideration of the evidence, the Court held that the evidence on behalf of the appellant was "marred by improbabilities", and it could not be accepted. Again the evidence for the respondent in the view of <ORG> was "sufficient to disprove the corrupt practice" alleged. <ORG> held that the corrupt practice was accordingly not established even in respect of this head of charge. Counsel did not urge any substantial argument to persuade us to take a different view.

5. The charge of corrupt practice under Section 123(5) arose out of the allegation that <ORG> procured a number of lorries, jeeps, motor cars, buses and other vehicles, for free transport of voters to the polling stations on the date of polling. It was averred in the petition that jeep No. APK-9486 was used for the free transport of voters between 10-00 A.M. and 2.00 P.M. on the polling day from Killoi village and Killoi Colony to the polling station at Konkadapatti. The jeep, it was said, carried the <ORG> Flag as well as the agent of the respondent one <NAME> This was witnessed by the Presiding Officer, among others, when a com plaint was made by the agent of the appellant <NAME> to the Presiding Officer. In support of this plea of corrupt practice the appellant examined three witnesses <NAME>, Presiding Officer, P. W. 10, <NAME> P. W. 20 and <NAME> 26. The respondent denied that the jeep No. APK-9486 was used for transporting voters as alleged. According to him the vehicle belonged to the <ORG> and stood registered in the name of <NAME> Secretary of the <ORG>.

6. <NAME> 26 was examined on behalf of the appellant in support of his case on this plea of corrupt practice. The witness said that the jeep was entrusted to him at Sompeta to deliver it to <NAME>, polling agent of the respondent at Konkadaputti. According to the witness it was jeep No. APK-9486 which <NAME> had brought from "Guntur side for purposes of election", that the jeep was delivered to the polling agent for bringing voters from neighbouring villages to the polling booths, that the jeep was used for that purpose from 10 A.M. to 2 P.M. and that he reached Konkadaputti at 9.30 A.M. and remained near the polling station till 2 P.M. asking voters to vote for the "Star Symbol" of <ORG>. The learned Judge observed that the witness, "did not impress him as a witness of truth and it was impossible 'to place reliance upon his testimony". His story that the voters were transported free of charge in the jeep to the polling station on the date of polling could not therefore be believed.

7. <NAME>, the Presiding Officer, stated that a complaint was lodged by the agent of the appellant that the voters were being brought by the supporters of <ORG> to the polling station. The witness also stated that he saw voters getting down the jeep and joining the queue and that there were 7 or 9 such voters. But the witness admitted that the people who were getting down the jeep were not known to him, that he had no opportunity to get them identified, that they had joined the queue but whether they were voters or not he could not say, that he asked the agent to put his complaint in writing but that was not done, and that the agent was not known to him and he had never seen him afterwards. The witness did not mention this incident in the report "as such complaints were not usually mentioned at all." He did not give the number of the jeep, nor did he state that he had seen the Swatantra flag on the jeep. He could not vouch for the fact that those who alighted were voters or that they had voted at that polling station. In the view of the learned judge the testimony of <NAME>, P.W. 10, did not satisfy all the component elements of the corrupt practice alleged."

8. <NAME> was the polling agent of the appellant. He stated that <NAME> was bringing voters from Killoi Colony and Killoi village between 10 A.M. and 2 P.M. and on seeking this he told <NAME> that it was not proper for him to bring the voters in jeep cars and when the latter asserted that he had a right to do so, he complained "to the Presiding Officer who asked for a written complaint which he could not comply with as he was not proficient enough to write one and none on behalf of the appellant had come who could do the needful".

The witness did not give the number of the jeep nor the names of the voters. In the view of the learned Judge the "procurement of the jeep for free conveyance was not proved." <ORG> observed that it was unnecessary to discuss the evidence on behalf of the respondent for the appellant had failed to establish the corrupt practice alleged.

9. The next head under this charge of corrupt practice as alleged by the appellant related to the use of motor-lorry No. APK-9250 which was flying the <ORG> flag and was used for free transport of voters on the polling day between 10 A.M. and 2 P. M. from the surrounding villages to the polling station at Guttavalli. During one of the trips, it was said that there ensued a free fight between the persons who were carried by the lorry and others who were present near the polling station as the former raised slogans acclaiming the respondent and denouncing the appellant. A complaint was given to the police by some of the voters that they were being conveyed in the lorry, two of those voters being <NAME> and <NAME>. It was admitted therein that while they were being transported for exercising their vote for the respondent there was obstruction from the supporters of the appellant <NAME> and his son and that a free fight ensued. The respondent denied these allegations. In support of the allegations, the appellant examined <NAME> P. W. 12, <NAME> 16, <NAME> 21, <NAME> and <NAME>. In rebuttal, the respondent examined <NAME> 7, <NAME> 11 and <NAME> and relied upon "the first information" which was lodged about the fight. <ORG> analysed the evidence of the witnesses on behalf of the appellant. In regard to the testimony of <NAME> P.W. 12 <ORG> observed that his assertion that he went in a lorry was "highly doubtful" and that the story deposed to by the witness was "palpably false", that the story that the witness <NAME> 16 that he travelled by the lorry was "open to doubt", that testimony of <NAME> who is "closely related" to the appellant "was tainted", and that the evidence of <NAME> was also "not believable". On a review of the evidence <ORG> observed that the number of the lorry was not given by any of the witnesses, and there was no evidence about its ownership. There was again no evidence "as to its procurement for free conveyance" and "the alleged use of the vehicle for free conveyance was, therefore, not established. Thus the contention as to the alleged incidence must be held against the appellant."

10. The third branch under this head related to the use of motor-lorry No. APG-3911 and motor-bus No. APS-1315. It was alleged in the petition that the two vehicles were "flying the <ORG> flag" and were used for transporting voters free of charge on the polling day to Torrivandan polling station from Puruinwada and Appanyaturu that a report was lodged by <NAME> and <NAME> to the police Sub-Inspector of Kothun who was on election duty at Sarnakota stating that a number of voters were being carried by lorry No. APG-3911 and bus No. APS-1315 to vote for the respondent, that the Sub-Inspector prepared the statement of the bus conductor, the lorry driver and other persons and that a mediation report" was also recorded in that connection. The respondent denied the allegations. In his additional written statement he also pleaded that there was absence of essential particulars relating to the names of the voters and that the petition did not disclose a cause of action since the allegations did not make out a corrupt practice. In support of his case the appellant relied upon his own evidence and the evidence of the with nesses <NAME> P. W. 13 and Boyina Kama Raju P. W. 14. It was the case of the appellant that these witnesses had seen the incident and had given a report promptly to the Sub-Inspector of Police, and that Sub-Inspector had detained the motor lorry and bus and got a mediators' report prepared. But the Sub-Inspector of police to whom the report is alleged to have been made was (though cited as a witness) not examined in the case and the report or the proceedings started pursuant thereto were not brought on the record. After the evidence was closed the appellant applied for calling the Sub-Inspector as a Court witness but the application was rejected. <NAME> P.W. 13 and <NAME> are cousins of the appellant. In their evidence they did not specify the persons who used the said lorry and bus on behalf of the respondent, nor did their evidence disclose the names of the voters conveyed by the said lorry or bus.

11. In the view of <ORG> the conditions of a corrupt practice falling within the meaning of Section 123(5) of the Representation of the People Act were not established. <ORG> pointed out that even if it be held that what <NAME> 13 and Boyina Kama Raju P. W. 14 said that certain persons travelled by the lorry and bus was true unless it was established that the voters were taken to and from the polling stations at the instance of the respondent, no charge of corrupt practice can be deemed to be made out for not a single person was named and no person was brought before the Court to prove that he had travelled in the bus or the lorry. <ORG> held that the case set up in respect of the two vehicles was also not established.

12. The finding of the learned Trial Judge is based upon appreciation of evidence of the witnesses in the light of probabilities. A charge of corrupt practice under the Representation of the People Act must be established by clear and cogent evidence. When <ORG> on a consideration of the evidence of the wit nesses has refused to place any reliance upon their testimony the burden lying upon the party setting up a plea of corrupt practice becomes no lighter in appeal. The charge cannot be held established merely upon suspicion, or preponderance of probabilities. Unless the appellant establishes that the appreciation of evidence was vitiated by gross misreading or misconception of the evidence or because of failure to consider important pieces of evidence which had a bearing on the charge or because of serious irregularities in procedure which amount to a denial of a fair trial the appellate court will not proceed to re-appreciate the evidence on which the findings are recorded by <ORG> on the credibility of witnesses.

13. The third head of charge relates to the printing and publication of a leaflet defamatory of the appellant and falling within Section 123(4) of the Act. It was stated in the petition that one <NAME> agent of the respondent caused the printing and publication at the instance of the election agent of the respondent of a leaflet containing the following false and defamatory statements in relation to the personal character of the appellant:

(a) that the appellant misappropriated large amounts to the tune of about Rs. 60 lakhs belonging to <ORG> and <ORG> for his own ends;

(b) that <ORG> con firmed the order of <ORG> sentencing the appellant for contempt of Court. The leaflet posed the question whether <ORG> could not get a candidate with better character and record of selfless public service?

The appellant said that the leaflet was printed at Sri Ramakrishna Printing Works at Srikakulam and the printing expenses thereof amounting to Rupees 85/- were according to the appellant defrayed by the election agent of the respondent, that the election agent of the respondent caused the distribution of those leaflets at several meetings held by <ORG> at Srikakulam at 9-00 P.M. on April 24, 1967, at Mandasa at 6-00 P.M. on April 21, 1967, at Takkali at 7-00 P.M. on April 20, 1967 and at Palasa at 11-00 AM. on April 21, 1967 and at other places to sponsor the candidature of the respondent to a seat in the <ORG>. It was further averred that the respondent and his election agent exhorted the people at those meetings not to vote for a person who had misappropriated public funds. The respondent denied that he and his election agent had knowledge or had consented to, or were concerned with the leaflet, its printing, publishing and distribution. He also denied that he or his election agent exhorted the voters as alleged by the appellant.

14. The leaflet in question is in the form of several interrogations. The caption of the leaflet is "Peoples' Questionnaire to the Respected Minister." The relevant part of the leaflet is:

1. Did not 18 gentlemen including <ORG> Secretary <NAME>, <ORG> President <NAME>, <ORG><ORG><ORG> member <NAME>, Sri <NAME> and others, present a memorandum in June 1966 to the Chief Minister and to the Minister for Co<ORG>operation stating that Sri <NAME>, who is to contest as a <ORG> party candidate in the Srikakulam Parliamentary Constituency bye<ORG>election on the 27th of this month, had misused like water nearly 60 lakhs of rupees of governmental monies and peoples' monies belonging to Co<ORG>operative Sugar Factory, District Co<ORG>operative Central Bank and such other co<ORG>operative institutions which were treated as his own and managed under his control? What action has been taken against it by the Government?

2. Did not your <ORG> appoint the Regional Officer of Co-operative Societies, <NAME>, <NAME>, to inquire into the affairs of <ORG> which is managed under the control of Sri <NAME> who is the brother of <NAME>, member of <ORG>? Could anybody deny the fact that when that officer brought to light the inner secrets and brought them to the notice of the <ORG>, the <ORG> on the ground that that officer did not obey their instructions, brought him out in the mid-night, beat him almost to death and broke his legs and threw him on the road ? Is he not still in the hospital? When he complained to the police authorities, what action has been taken? Is there no protection under your <ORG> to your officers who are just and impartial?

3. Did not <ORG> confirm the fine of Rs. 500/- imposed by <ORG> on <NAME> for contempt of court because he flouted the orders of <ORG> in that he by force, oppressive behavior and threat to the Factory Manager, forcibly took all ballot papers and himself, acting as an officer, conducted the <ORG> elections in an irregular manner? When it is clearly stated in the Co-operative Act that such persons should not be even primary members in co-operative societies, could you tell how this person could still be in the governing body of co-operative societies?

Could you not get a candidate who is better and who could render selfless service to people? Of course, it is difficult to get men of high and moral caliber in the 1967 model <ORG>.

15. Section 123(4) of the Re presentation of the People Act , 1951, defines one of the corrupt practices, as under:

The publication by a candidate or his election agent or by any other person with the consent of a candidate or his election agent of any statement of fact which is false, and which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate, or in relation to the candidature, or withdrawal, of any candidate, being a statement reasonably calculated to prejudice the prospects of the candidate's election.

16. To constitute a corrupt practice under Section 123(4) four conditions are required to be fulfilled: (1) that there should be publication of a statement of fact relating to the personal character or conduct of the candidate; (2) that the statement should be false; (3) that the person making it should either believe it to be false or should not believe it to be true and that the statement was reasonably calculated to prejudice the prospects of that candidate's election; and (4) that it was published by the candidate or his election agent or by any other person with the consent of a candidate or his election agent. If the publication is by a person other than the candidate or his election agent, the consent of the candidate or his election agent must be established before the charge is held proved. Proof of express consent is not necessary; inference of such consent may be raised from the circumstances. Prior knowledge of the contents and the knowledge that it is likely to be published may raise an inference of consent, if the candidate deliberately keeps quiet and does not stop the publication if it be within his power. Where the offending matter has already been published and thereafter it comes to the knowledge of the candidate at the election and he does not take steps to repudiate it, the consent may not necessarily be inferred unless the candidate or his election agent permits or aids in publication. Section 100 of the Act sets out the grounds on which the election may be held to be void and one of the grounds is that if <ORG> is of opinion that any corrupt practice has been committed by a returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent, <ORG> shall declare the election of the returned candidate to be void. Mere commission of a corrupt practice is not sufficient: it is proof of consent of the candidate or his election agent to the commission of the corrupt practice which requires the <ORG> to declare the election void. In the matter of publication of statements which are false and are reasonably calculated to prejudice the prospects of the candidate's election, proof of consent not infrequently assumes great importance, for, even if it be proved that the publication has been made, unless it is shown that it was with the consent of the candidate or his election agent, the corrupt practice may not be held to be committed so as to invalidate the election. Case of publication without authority or with a view to create evidence by interested persons against the candidate who is likely to be successful are not unknown.

17. It is not in dispute that the leaflet Ext. P-357 was published. The leaflet was again reasonably calculated to prejudice the prospects of the appellant's election. Parts of the leaflet related to the personal character and conduct of the appellant and were defamatory of him and were likely to lower him in the estimation of the electorate.

18. It is not necessary to decide whether the statements of fact made were false, for <ORG> has held that it is not proved that the respondent or his election agent was concerned with the publication or distribution of the leaflet and we agree with that view.

19. The evidence on this part of the case may be considered in three sections: evidence relating to the printing of the leaflet; evidence relating to the distribution of the leaflet at the meetings held at several places as part of the election campaign of the respondent; and evidence relating to the making of oral statements reproducing the contents of Ext. P-357 at those meetings.

20. It is common ground that one <NAME> procured the leaflet printed at <ORG> at Srikakulam. It was averred in the election petition that the printing expenses were de frayed by <NAME> the election agent of the respondent and that <NAME> had caused distribution of the leaflet at several meetings held by <ORG> at Srikakulam on April 24, 1967; at Mandasa on April 21, 1967, at Takkali on April 20, 1967; and at Palasa on April 21, 1967. This was denied by the respondent. <NAME> was examined as a witness for the respondent. He de posed that he did get the leaflet print ed on his own account and not at the instance of anybody else, that he defrayed the expenses and paid on April 9, 1967 the printing charges amounting to Rs. 85, that he wrote the draft of the leaflet in his house at Srikakulam; that no one else was pre sent on that occasion, that he did not consult any other person nor did he take any other person's advice in that behalf; that before he took it to the press he did not show it to any other person, and that as the printers could not properly decipher the manuscript they got prepared a fair copy by their own employee.

21. The witness admitted that he was a Swatantra party worker and put his signature on the fair copy of the leaflet. Consent of the candidate or his election agent to the printing of the pamphlet cannot be inferred from that circumstance. To establish the consent of the respondent or his election agent to the printing of the leaflet, the appellant examined the Managing Proprietor of <ORG> who deposed that <NAME> placed with him an order for printing 10,000 copies of the leaflet Ext. P-357 and that in his books of account the name of <NAME> was entered as of the person who ordered printing of the leaflet. The witness stated that <NAME> had brought the written matter on 2 or 3 pages, and that the Manager of the Printing Press got "it fair copied" and took his signature on the fair copy which is Ext. P-358. At the time when he took delivery of the printed leaflet, <NAME> paid an amount of Rs. 85 for printing charges. The witness stated that one <NAME> also came over to the printing press but only after <NAME> had paid the charges and that <NAME> had nothing to do with that leaf let. In support of the evidence the witness produced Exts. P-346 and P- 346/1 copies of the order and the voucher evidencing payment by <NAME>. This testimony fully supported the case of <NAME>. There was some discrepancy about the date of placing the order. <NAME> said that the order was placed on April 7, 1967: the Managing Proprietor said it was on April 4, 1967, but that was a minor discrepancy which did not affect the testimony of either witness.

22. This evidence did not sup port the case of the appellant. He examined <NAME> who stated that the leaflet Ext. P-357 was drafted in the house of <NAME> by <NAME> to the dictation of <NAME> in the presence of <NAME>, that one week thereafter the leaflets were got printed by <NAME> and <NAME>, and that <NAME> gave them Rs. 300 and sent them to <NAME>. In cross-examination the witness stated that he could not write Telugu, though he could read a little. He also admitted that he was not usually consulted in any matter, but whenever required the members of the party used only to take work from him. To explain his presence at the drafting of the leaflet he stated that <NAME> called him on April 25, 1967 at his residence, that when he reached <NAME>'s place the leaflet was being drafted and that he was detained till the drafting was over and thereafter he was sent away. The witness could not explain the reason why the leaflet was not printed at Guntur. Witness <NAME> sought to support the case of the appellant on several other matters. <ORG> observed that his statement was "highly artificial", that there was no reason why he should have been called by <NAME> to be a witness to the drafting of the manuscript of the leaflet, and that the "artificiality of his statement was obvious on the face of it and further his testimony did not bear scrutiny at all". Nothing has been said before us which would justify us in taking a different view.

23. <NAME>, P.W. 1 was examined on behalf of the respondent. He denied that he wrote the draft or took any part in the printing of the leaflet at <NAME>'s instance. He said that he had seen the leaflet for the first time only after it was printed and <NAME> had taken delivery and never thereafter.

24. <NAME> denied all knowledge in connection with the printing and dictation of the contents of the leaflet Ext. P-357.

25. The evidence clearly does not make out the case of the appellant. It was the case of the appellant, that <NAME> got the leaflet drafted and printed. From the mere fact that <NAME> was a partyman and a member of <ORG> of <ORG> of which <NAME> was the President, and that <NAME> had contested on <ORG> ticket for a seat in <ORG> in the general elections in 1967, no inference arises that the leaflet was published with the consent of the respondent or his election agent.

26. At the trial the appellant relied also upon the publication of the contents of the leaflet in two weekly newspapers - <ORG> and <ORG> in their issues of April 17, 1967, and April 24, 1967 respectively. In the first newspaper the caption shows that it was a questionnaire of Srikakulam public to the Minister; and in the second newspaper the caption showed that it was a questionnaire by the Srikakulam public through <NAME>, President of <ORG>. <NAME> is the printer, publisher and editor of <ORG>. The contents which were published in the <ORG> largely tally with Ext. P-357. The caption, however, is different. <NAME> deposed that he did not send the leaflet for publication in the newspaper from Srikaku lam to Hyderabad. He denied the suggestion that it was not <NAME> but he himself who caused the publication of the article in <ORG>. He further stated that though he was the editor of the paper he was away from Hyderabad and in his absence his brother's son <NAME> was editing the paper, and that he came to know of the publication many days after the election was completed. There was no allegation in the petition that the publication in the <ORG> was caused by <NAME> of by the respondent. The evidence brought before the <ORG> could not cure the defect in the pleadings. There is no evidence also that either the respondent or his election agent <NAME> had knowledge before the date of the publication or even before the date of the election of the respondent.

27. It was said that the respondent had expressed his thanks for the work done by the <ORG> news paper during the election. This was not a matter relevant to the issue under consideration, and <ORG> was right in holding that it would be extending the scope of the inquiry contemplated to be made on the allegations made in the petition to hold that by reason of the publication in the <ORG> and <ORG> the respondent or his election agent were guilty of any corrupt practice. In the petition it was expressly averred that the leaflet Ext. P-357 was published by the respondent and his election agent. It was not pleaded that the contents of the leaflet Ext. P-357 with some modifications were published in the <ORG> and <ORG> and that by that publication a corrupt practice under Section 123(4) was committed by the respondent.

28. The appellant also alleged that at meetings held at four places Takkali, Palasa, Mandasa and Srika kulam - these leaflets were distributed. In support of this case <NAME> 25, <NAME> 26, <NAME> 28, <NAME> 29, <NAME> 30 and <NAME> 31 were examined. In rebuttal, <NAME> 1, <NAME>, <NAME> 3, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME> and <NAME> besides the respondent and his election agent, were examined to disprove the case of the appellant. The case of the respondent was that he was not present at any of the meetings except at Srikakulam which he attended at its concluding stage. <NAME> also denied that he was pre sent at any of those meetings.

29. <ORG> made a painstaking analysis of the evidence of the witnesses relating to the holding of the meetings and the distribution of the leaflet Ext. P-357 and the witnesses examined on behalf of the respondent, which ran into as many as 23 printed pages, and in conclusion observed:

From the above discussion it is clear that it was <NAME> himself who got printed Ext. P-357 of his own accord and neither the respondent nor his election agent was in any way concerned with it. The respondent and the election agent were in no way connected with its publication, when several thousands of copies of the pamphlet had been printed; they must of course be for purposes of distribution. <NAME> could have personally distributed them or caused their distribution through others. But there is no positive evidence that these pamphlets were distributed amongst the public either by <NAME> himself or by the election agent, as alleged, or to the knowledge of either the respondent or his election agent.

We see no reason to disagree with the view of <ORG> on the evidence.

30. The question which re mains to be considered is whether a corrupt practice falling within Sub-section (6) of Section 123 was committed by the respondent. Incurring or authorizing expenditure in contravention of Section 77 is a corrupt practice. Section 77 requires that every candidate at the election shall either by himself or by his election agent keep a separate and correct account of all expenditure in connection with the election incurred or authorised by him or by his election agent between the date of publication of the notification calling the election and the date of declaration of the result thereof, both dates inclusive. By Sub-section (3) of Section 77 the total of the said expenditure shall not exceed such amount as may be prescribed. For the parliamentary election an amount of Rs. 25,000/- was prescribed as the maximum amount to be spent. The respondent submitted a return disclosing expenditure of Rs. 15,834-92.

31. It was averred in the election petition that the total expenditure of Rs. 15,834.92 returned by the respondent as election expenditure under Rule 86 was a "gross underestimate of the expenses incurred by the respondent in connection with the election", that the respondent had not included in the account various items of expenditure incurred and had also "given grossly diminished figures in respect of items included therein", that "it was obvious that his accounts did not reflect the expenditure actually incurred, but it only represented a fictitious figure manipulated with a view to conform to R. 90". It was further averred that a large amount aggregating to Rs. 3 lakhs and more was spent for the purpose of the election. After setting out certain argumentative matters, it was stated in the petition that the expenditure in respect of the following items "had been sup pressed or diminished or reduced in the account rendered by the respondent":

1) the amount of Rs. 1,192/- paid to <ORG> under voucher dated April 30, 1967 for the purchase of diesel oil motor-spirit and lubricants was not included;

2.) though in fact the respondent incurred and paid an amount of Rupees 10,000/- for the purchase of motor spirit from <ORG> Bunk, Srikakulam, only an expenditure of about Rs. 200/- was shown in the account of election expenses;

3) that an amount of Rs. 6,000/- was spent for the purchase of motor- spirit from <ORG>, Sompet, but only Rs. 607-94 were shown in the account;

4) that various amounts aggregating to Rs. 10,000/- were paid at different bunks for motor spirit and diesel oil but those amounts had been deliberately suppressed from the account. Thereafter- five names of the proprietors of those petrol bunks were mentioned.

The petition then proceeded to say that the total expenditure incurred on motor spirit was far in excess of Rs. 1,000/- odd shown in the account rendered, and that the motor spirit purchased during the period from the motor spirit bunks at Srikakulam, Sompet, Itchapuram, Amadalavalasa and Takkali and other places was "ridiculously low', that a number of lorries from outside or within the District were engaged by the respondent during the last week of the election for propaganda purposes, as also on the polling day for conveying voters to the polling stations, and the expenditure on diesel oil, drivers and cleaners in respect of those vehicles had not been included in the account. The petition then referred to the expenditure on "wall posters", on printing, distributing and exhibiting them was far below the amount incurred, and only an amount of Rs. 2,081/- was shown as expenditure incurred by the respondent in his account of election expenses on that account. It was then stated that the expenditure incurred by the respondent in respect of "cycle rickshaws and jutkas" was not shown, that wages and maintenance of about 1,000 workers for about three weeks and about 1500 polling agents on the day of poll "was not accounted for", that no expenditure incurred towards boarding and lodging of the workers at the election "was accounted for"; that the amount of Rs. 4,000/- paid by the election agent of the respondent <NAME> to <ORG> was "suppressed in the account" of election expenses: and finally an amount of Rs. 500/-incurred for the purchase of voters' lists for the seven assembly constituencies was also not included.

32. The case of the appellant was sought to be proved by examining a large number of distributors at "petrol bunks" from whom motor-spirit was purchased on cash in respect of various vehicles. It was sought to be proved that a large number of vehicles were used for his election campaign by the respondent and the expenditure incurred according to the appellant exceeded Rs. 23,000/- for motor-spirit alone. A copy of a bank account maintained in the name of <ORG> with <ORG>, <NAME>, was tendered in evidence to support the case of the appellant that large amounts were withdrawn from time to time during the election days and it was suggested that all the money withdrawn was utilized by <ORG> for the election campaign of the respondent. It was the respondent's case that <ORG> did not have custody of the funds intended to be used for the election campaign, that he the respondent had kept his money for the election campaign with one <NAME> and that the latter spent the amount for election purposes. The respondent said that the amount spent by him was partly his own and partly received from donations. He denied that any election fund was opened by him, nor was such fund opened by <ORG>. He further stated that apart from Rs. 3,500/- provided by him in cash and Rs. 5,000/- being the proceeds of a cheque received by him as donation, a sum of Rs. 6,000/- was handed over to <NAME> and that some postal money orders addressed to him were received by <NAME> in his absence. Those amounts were sent by his friends who were interested in him. The total amount that was received by way of donations or contributions from others was Rs. 18,000/-or Rs. 19,000/-. The entire amount was not spent for the election, and <NAME> who had opened a bank account and kept the amounts in that account, returned the balance to him. According to the respondent the expenses of the election were met out of the amounts maintained in K. <NAME>'s name and not from the monies that belonged to <ORG> or <ORG> or any other person. The case of the respondent was supported by <NAME>. <ORG> also supported that case. <ORG> was the President of <ORG>. He stated that in the general elections, <ORG> had spent large amounts of money and had incurred debts, and in order to pay off those debts the party had asked for donations from members of <ORG> and also <ORG>, that an appeal was also made to the press to invite donations and also a request was made to <ORG> to make some grants, that in March and April 1967 some amounts were received in respect of which he maintained an account with <ORG>, <NAME>, and a joint account in <ORG> at Sompeta in the names of his wife and himself, that certain amounts were received in his name by cheques and drafts and they were put in the joint current account at <NAME>. but "not one pie out of this account"' was used for the bye-election, and out of the amount that was left as balance after discharging debts he paid Rupees 16,000/- for the purchase of a jeep for <ORG>.

33. A mere general allegation that more than Rs. 3 lakhs were spent by the respondent or his election agent or other persons for the purposes of the election is not sufficient to make out a case under Section 123(6) of the Representation of the People Act, 1951. It is not sufficient merely to allege that large sums of money were spent for the purpose of the election.

34. It is the case of the respondent that his friends and sympathisers sent him certain sums of money, and that whatever monies were received by him or in the name of his wife or by <NAME> under his authority remained with <NAME>. These receipts aggregated to Rs. 19,000 out of which Rs. 15,834-92 were spent for the election. Expenditure, if any, incurred by the party which sponsored the candidature of a candidate cannot be taken into account for the purpose of determining whether the corrupt practice within the meaning of Section 123(7) was committed by the candidate. <CITATION> this Court held that expenditure incurred by persons other than candidate for election purposes will not be taken into account (unless it is incurred by such third person as the candidate's agent) in determining whether a corrupt practice was committed by the candidate: see also <CITATION> and <CITATION> . 1069 (1094) of 1969 decided on September 10, 1970 (SC). It is true that <NAME> had from time to time withdrawn from <ORG> various amounts of money. Those amounts, he says, were utilised for satisfying the debts of the party incurred in the general elections There is no evidence to the contrary led by the appellant. Nor is there any evidence to show that the respondent had received any amount in excess of Rs. 19,000/- out of which he claimed he had spent Rs. 15,834-92.

35. A considerable body of evidence was tendered by the appellant to prove that a large number of vehicles were used for the election campaign of the respondent. Many witnesses were examined to support that case. <ORG> made a detailed analysis of the evidence and held that only four vehicles Nos. APK-9486 jeep, (2) APU 7414 Ambassador-car, (3) APY-7719 Ambassador-car and (4) APG-4329 Fiat-car, were retained and used for "election purposes" and expenses for purchase of motor-spirit and oil for those vehicles during the election days were shown in the account. Besides this, in the view of <ORG> two more vehicles Nos. APG-2123 and APP-97 were used for some time for the purpose of the election. These two vehicles were taken by <NAME> and <NAME> once to Kanchili petrol bunk, and to that extent they may be held to have been used for the errand of the respondent. Taking into account this amount, the total amount in relation to the motor-spirit used for Kanchili was Rupees 1,141-13. <ORG> held that on the evidence, the cash bills which were produced by the appellant in respect of the motor-spirit expenses were not connected with the motor vehicles of the respondent or of his agent or of any vehicles maintained by the respondent for election purposes. <ORG> found the books of account of <ORG> and the "petrol bunk" of <ORG> at Kanchili unreliable, and held that only those bill-books may be taken into consideration which recorded transactions signed by persons admitted to be the agents of the respondent. <ORG> accordingly held that in addition to the amount admitted by the respondent an amount of Rs. 1,521-21 was proved. No substantial argument was advanced before us challenging the finding recorded by the learned Trial Judge on the question as to the expenditure incurred for the motor vehicles employed in the course of the election of the respondent, and we see no reason to disagree with the conclusion recorded by <ORG> on a very elaborate and painstaking analysis of the evidence.

36. It was urged that as many as 1100 persons were employed by the respondent during the election days in the campaign for the respondent, and besides their remuneration, expenses for their boarding and lodging were incurred by the respondent, and that amount was not disclosed in the account filed under Section 77(3) . It was the case of the respondent that several persons had worked for the <ORG> candidate at the election According to the rules of the <ORG> they worked voluntarily, and no remuneration was paid to any of the workers, because payment of remuneration to any party workers was against the principles of that party. <ORG> held that transport charges and expenses for meals for the workers were not incurred by the respondent, but by the <ORG>. In argument it was conceded there was nothing to show that any expenditure was incurred by the respondent for those workers. <NAME> had, it is said, paid under the directions of <ORG> certain amounts of money for the expenses incurred for the workers of the <ORG>. But in the absence of any evidence to show that any specific sums of money were expended on certain items by the respondent or his election agent, no conjecture can be permitted to defeat a candidate who has been elected.

37. Towards the boarding and lodging expenses of the workers, it appears, <NAME>, President of <ORG> had paid Rs. 5,000/- and Rs. 1,200/ after the election. It was proved by the evidence that the party office was in the house of <NAME>. The workers were lodged and boarded at a place called Sri Venkateswara Lodging and Boarding Lodge at Srikakulam, and the expenditure incurred for them was met by Sri Venkateswara Lodge. The amounts which were paid by <NAME> were not shown to be paid towards the expenses of lodging and boarding of the workers at Sri Venkateswara Lodge. The Manager of Sri Venkateswara Lodge apparently boarded and lodged those workers free of charge. In the absence of any reliable evidence to the contrary, the finding of <ORG> that no expenditure was incurred in respect of those workers by the respondent must be accepted.

38. The appellant's case that expenditure was incurred for "wall posters" and for printing, distributing and exhibiting them amounting to Rs. 2,081/- was not pressed, nor was the case about the expenditure incurred in respect of "cycle-rickshaws and jutkas" pressed before us. Even if it be granted that an amount of Rupee 500/- which was incurred for purchasing voters' lists be taken into account the total amount proved to have been expended by the respondent does not exceed Rs. 25,000/- prescribed under the Act.

39. We have carefully considered the evidence in the light of the arguments advanced at the <ORG>, and we are of the view that no case is made out for our interference with the conclusion recorded by <ORG>.

40. The appeal fails and is dismissed with costs.


CASE NO.: Appeal (civil) 3609 of 2006 PETITIONER: Ganpatibai and Anr. RESPONDENT: State of M.P. and Ors. DATE OF JUDGMENT: 23/08/2006 BENCH: ARIJIT PASAYAT & <NAME> JUDGMENT:

J U D G M E N T (Arising out of S.L.P. (C) No. 6509 of 2002) ARIJIT PASAYAT, J.

Leave granted.

Challenge in this appeal is to the legality of judgment rendered by <ORG> of <ORG>, Jabalpur dismissing appellants Letters Patent Appeal by order dated 7.11.2001. By the said order, <ORG> dismissed the Letters Patent Appeal directed against order of learned Single Judge dated 23.8.2001 dismissing writ petition filed by the appellant.

Appellant had challenged notification issued under Section 4 and declaration under Section 6 of the Land Acquisition Act, 1894 (in short the 'Act') and the subsequent award passed by the Land Acquisition Officer. The writ application was dismissed primarily on the ground of delay and also on the ground that the award had already been passed. <ORG> concurred with the view expressed by Learned Single Judge.

Learned counsel for the appellants submitted that <ORG> should not have considered the writ petition to be belated. In fact, a suit was filed in the year 1990 immediately after notification was issued under Section 4 and declaration under Section 6 of the Act on 16.9.1987 and 6.12.1988 respectively. The suit was held to be not maintainable by learned Civil Judge, <NAME> on 16.3.2001. Thereafter, the writ petition was filed.

In response, learned counsel for the respondent- State of M.P. and its functionaries and <ORG> (in short the 'Authority') supported the order of learned Single Judge and the appellate judgment.

A few dates need to be noted for dealing with the rival contentions. The <ORG> passed a resolution on 13.3.1981 to frame scheme under Section 50(1) of M.P. Nagar Tatha Gram Nivesh Adhiniyam, 1973 (in short the 'Adhiniyam'). The scheme was finally published in terms of Section 50(7) of the Adhiniyam on 1.5.1984. Certain additional lands were included in the scheme on 22.6.1984. Notification under Section 4 of the Act was issued on 16.9.1987, while the declaration under Section 6 of the Act was issued on 6.12.1988. The civil suit was filed on 6.9.1990 challenging the scheme, the notification and the declaration.

Written statement was filed stating that the suit was not maintainable. Certain landowners whose lands were acquired challenged the notification under Sections 4 and declaration under Section 6 of the Act and subsequent award passed. <ORG> quashed the proceedings and the award; but clarified that the said order would be applicable only to those who had approached <ORG> and not to others. By order dated 16.3.2001 learned Single Judge accepted the primary objections raised regarding maintainability and jurisdiction of <ORG> and held that the suit was not maintainable. On 20.7.2001 the writ petition was filed for quashing the notification, declaration, scheme as also the award which had been published on 08.06.2001. Learned Single Judge dismissed the writ petition holding that there was gross delay in approaching the Court. As noted above in the Letters Patent Appeal filed before <ORG>, view of learned Single Judge was maintained.

It is not in dispute that right from the beginning the State Government and the <ORG> were taking the stand that the suit was not maintainable.

<CITATION> . (1995 (4) SCC 229), this Court had observed that Civil Suit was not maintainable and the remedy to question notification under Sections 4 and declaration under Section 6 of the Act was by filing a writ petition. Even thereafter the appellant, as noted above, pursued the suit in <ORG>. The stand that five years after the filing of the suit, the decision was rendered does not in any way help the appellant. Even after the decision of this Court, the appellant continued to prosecute the suit till 2001, when the decision of this Court in 1995 had held that suit was not maintainable.

That being so, the learned Single Judge and <ORG> were justified in holding that the writ petition was highly belated.

We find no infirmity in the order of the learned Single Judge as affirmed by <ORG> to warrant interference.

The appeal is dismissed without any order as to costs.