PETITIONER: KHEM CHAND Vs. RESPONDENT: THE UNION OF INDIA AND OTHERS DATE OF JUDGMENT: 13/12/1957 BENCH: <NAME>, <NAME> (CJ) BENCH: <NAME>, <NAME> (CJ) AIYYAR, T.L. VENKATARAMA <NAME>, S.K. SARKAR, A.K. BOSE, VIVIAN CITATION: 1958 AIR 300 1958 SCR 1080 ACT: Constitution, Interpretation of-'Reasonable opportunity of showing cause', Meaning of-Punishment of dismissal on Government Servant-Constitutional Protection-Procedure- Constitution of India, Art. 311(2). HEADNOTE: Reasonable opportunity to show cause' in Art. 311(2) Of the Constitution contemplates not merely the opportunity to do so at the enquiry stage but also when the competent authority, as a result of the enquiry, proposes to inflict one of the three punishments mentioned in the Article on the delinquent servant. Such reasonable opportunity must, therefore, include,- (1) opportunity to deny his guilt and establish his innocence which means that he must be told what the charges against him 1081 are and the allegations on which such charges are based ; (2)opportunity to cross-examine the witnesses produced against him and examine himself or other witnesses on his behalf and, (3)opportunity to show that the proposed punishment would not be the proper punishment to inflict, which means that the tentative determination of the competent authority to inflict one of the three punishments must be communicated to him. High Commissioner for <CITATION> . (1948) 75 I.A. 225, explained and relied on. Secretary of <ORG> for <CITATION> , (1945) F.C.R. I03, not followed. <CITATION> , and <CITATION> for India, L.R. (1936) 64 I.A. 55, referred to. The procedure followed in such cases must, therefore, include the giving of two notices to the servant, one at the enquiry Stage and the other when the competent authority, as a result of the enquiry, tentatively determines to inflict a particular punishment on him. Consequently, in a case where the Government Servant sought to be proceeded against for misconduct was served with a charge-sheet and appeared before two officers conducting the enquiry, one after the other, but no notice was served upon him when the competent authority accepted the report and confirmed the opinion that the punishment of dismissal should be inflicted on him, and no cause could, therefore, be shown by him, the provision of Art. 311(2) had not been fully complied with and the order of dismissal passed against him must be declared void and inoperative. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 353 of 1957.

Appeal by special leave from the judgment and decree dated November 1, 1955, of <ORG> (Circuit Bench) at <NAME> in Regular Second Appeal No. 28-D of 1955, arising out of the judgment and decree dated December 31, 1954, of <ORG> at <NAME> in Regular Civil Appeal No. 685 of 1954, affirming the judgment and decree of Subordinate Judge Third Class <NAME> in Suit No. 273/213 of 1953.

<NAME>, for the appellant.

<NAME>, Solicitor-General of India, <NAME> and <NAME>, for the respondents.

1957. December 13. The following Judgment of the Court was delivered by DAS C. J.-This appeal by special leave granted by this Court to the plaintiff-appellant is directed against the judgment and decree passed on November 1, 1955, by a single Judge of <ORG> sitting in <ORG> at Delhi in regular second appeal No. 28-D of 1955. The facts leading up to the present appeal are shortly as follows: On April 6, 1943, the appellant was appointed a sub-inspector under <ORG>. In February 1947, he was transferred to <ORG> and posted as subinspector in <ORG>. On July 3, 1947, the the appellant was confirmed by the then Deputy Commissioner of Delhi who was also the ex-officio Registrar of <ORG>. On August 1, 1948, the appellant was transferred to <ORG> and posted as sub-inspector. On July 1, 1949, the appellant was suspended by the then Deputy Commissioner, Delhi. On July 9, 1949, the appellant was served with a charge sheet under r. 6(1) of the Rules which had been framed by the Chief Commissioner, Delhi to provide for the appointment to the subordinate services under his administrative control and the discipline and rights of appeal of members of those services. After formulating eight several charges the document concluded as follows: " You are, therefore, called upon to show cause why you should not be dismissed from the service. You should also state in your reply whether you wish to be heard in person or whether you will produce defence. The reply should reach the Asst.Registrar, <ORG>, Delhi, within ten days from the receipt of this charge sheet". The chargesheet was signed by <NAME> who was at that time the Deputy Commissioner of Delhi and was admittedly the authority competent to dismiss the appellant. The appellant duly submitted his explanation in writing. One <NAME>, Inspector, Co.

operative Societies was appointed by the Deputy Commissioner, Delhi the officer to hold the enquiry. The appellant attended two sittings before the Enquiry Officer and then applied to the Deputy Commissioner to entrust the enquiry to some Gazetted Officer under him. This request of the appellant was rejected and he was informed accordingly. Indeed, the appellant was warned that the Enquiry Officer had been authorised to proceed with the enquiry ex parte if the appellant failed to attend the enquiry. The appellant, however, did not, after October 20, 1949, attend any further sittings before the Enquiry Officer. The Enquiry Officer thereupon framed four additional charges against the appellant, namely, (1) for his refusal to attend the enquiry, (2) for his refusal to accept the service of the order of the Enquiry Officer, (3) for his absence without permission and (4) for his misconduct in snatching away papers from one <NAME> and using unparliamentary and threatening language.

It appears that at or about this time the appellant became involved in a criminal case on a charge under s. 307 of the Indian Penal Code and on October 30, 1949, he was actually arrested but was released on bail two or three days later. Eventually on May 20, 1950, the appellant was discharged from the criminal charge.

On November 14, 1951, the appellant was served with a notice signed by one <NAME>, Superintendent. The notice was in the following terms: "Please note that you are to appear before Shri <NAME>, 1. A. S., Additional District Magis-trate,on the 24th November, 1951, at 10-30 a.m., in his court room in connection with the departmental enquiry pending against you". The language employed in the notice does lead some support to the conten- tion that the Enquiry Officer, <NAME>, had not concluded the enquiry entrusted to him and that the departmental enquiry was still pending.

Pursuant to the notice the appellant appeared before <NAME> and urged two points, namely, (1)  that the enquiry of the charges framed against him ought to have been held by a Gazetted Officer of <ORG> and (2) that the enquiry should have been held in his presence. It will be noticed that both the points related to the enquiry before <NAME>. On December 13, 1951, <NAME> made a report. After reciting the charge sheet containing the notice calling upon the appellant to show cause why he should not be dismissed from service and setting out the charges contained in the notice and summarising the explanation submitted by the appellant with regard to each of the charges and reciting the prayer of the appellant that the Enquiry Officer should be changed and the rejection thereof and the framing of additional charges and the appellant's absence from the enquiry with effect from October 20, 1949, the report proceeded to set out the actual charges which <NAME> was appoint- ed to enquire into. The report then stated that the enquiry with regard to the first two charges had been held in the presence of the appellant and the rest were enquired into ex parte as the appellant had absented himself from the enquiry. Then the report recited that twelve charges had been proved against the appellant and he was given the benefit of doubt in respect of charge No. (iii) and that no charge sheet had been given with regard to charges Nos.

(xiii) and (xiv) and that no enquiry had been held on those charges. Out of the twelve charges said to have been proved against the appellant, <NAME> found that no charge had been actually framed in one case and, therefore, he reduced the number of proved charges to eleven and proceeded to base his recommendation on them. After stating that the charges of embezzlemient, acceptance of illegal gratification and borrowing of money from societies were so serious that even one of them alone was sufficient to demand the appellant's dismissal and that the entries made in his character roll disclosed that his work and conduct had not been satisfactory and explaining that the enquiry had been held up by reason of the appellant having been challaned under s. 307 , Indian Penal Code , <NAME>

<NAME>, in his report, formulated the following points for consideration: namely, (1) what penalty should be imposed on <NAME> for the eleven charges proved against him? (2) Whether his gun licence should be cancelled and (3) whether the dues of societies, which had been proved, might be realised out of the security deposit furnished by him? Then, after stating that a personal hearing was given to the appellant who raised the two points mentioned above and holding that there was no substance in either of them, paragraph 16 of the report ran as follows:

" The charges of embezzlement, acceptance of illegal gratification, making wrong statement, misbehaviour at the time of enquiry and refusal to receive orders to attend enquiry which had been proved against him are so serious that, I am sorry, I cannot suggest lesser punishment than dismissal from service and he may be dismissed." The report also recommended that the appellant's gun licence be cancelled and that he be directed to surrender his licence and deposit the gun in the district Malkhana and that the money, which had been proved to have been taken by the appellant from various societies, might also be recovered from the security deposit furnished by him. There is no positive and definite statement in <NAME> report that <NAME> had concluded the enquiry or submitted a formal report. The general tenor of <NAME> report, however suggests that <NAME> did arrive, at definite findings on twelve charges. The appellant's grievance is that he was not given a copy of the report of <NAME>, if any had been made, and no such report has been exhibited in this case. At the foot of <NAME> report the following endorsement appears over the signature of the Deputy Commissioner, Delhi under date December 14, 1951: " The report is approved. Action accordingly." Thereupon on December 17, 1951, a formal order was issued over the signature of the Deputy Commissioner, Delhi. It was in the following terms: -

"I, the undersigned, do hereby dismiss <NAME>, sub-inspector, <ORG>, Delhi, from <ORG> with effect from the date of this order. He has been found guilty of the charges of embezzlement, acceptance of illegal gratification, making wrong statement,misbehaviour at the time of the enquiry and refusal to receive order to attend the enquiry. I further order that money which has been proved to have been taken by <NAME> from various societies be recovered from the security deposit furnished by him.

On March 15, 1952, the appellant appealed to the Chief Commissioner, but his appeal was dismissed on December 8, 1952. Thereafter the appellant served a notice of suit on the respondents under s. 80 of the Code of Civil Procedure and on May 21, 1953, filed civil suit No. 213 of 1953 complaining, inter alia, that Art. 311(2) had not been complied with. The suit was decreed by the subordinate judge, Delhi on May 31, 1954, declaring that the plaintiff's dismissal was void and inoperative and that the plaintiff continued to be in the. service of the State of Delhi at the date of the institution of the suit and awarding costs to the plaintiff. <ORG> preferred an appeal against the judgment of the subordinate judge, Delhi, but the appeal was dismissed by the senior subordinate judge, Delhi on December 21, 1954, and the decree of the trial court was confirmed. A second appeal was taken by the defendants to <ORG>. By his judgment dated November 1, 1955, the Single Judge held that there had been a substantial compliance with the provisions of Art. 311 and accordingly accepted the appeal, set aside the decree of the courts below and dismissed the plaintiff's suit. On September 6, 1956, the plaintiff obtained special leave from this <ORG> and has preferred this appeal against the order of the learned Single Judge. The appellant has also been allowed to prosecute the appeal in forma pauperis. In the courts below a point was raised as to whether the appellant was a member of any of the services referred to in Art. 311. But it was a conceded before the High <ORG> and has also been admitted before us that the appellant was such a member and consequently that point does not arise. The only point that has been canvassed before us, as it had been before the High <ORG>, is: Was the appellant given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him ? There is no dispute that the appellant was served with a charge sheet on July 9, 1949, as required by r. 6 of the Rules which had been framed by the Chief Commissioner, Delhi and which governed the appellant's conditions of service. It is also conceded that the appellant actually appeared at two hearings before the Enquiry Officer, <NAME>, but that subsequently he wanted a transfer of the enquiry to some other officer and that that prayer having been refused he did not take any further part in the enquiry before that officer. There is no grievance that no opportunity had been given to him to defend himself against the charges levelled against him in that enquiry. It is also an admitted fact that some time after the appellant was discharged from the criminal case, be received a notice on November 14, 1951, requiring him to appear before <NAME> on November 25, 1951, in connection with the pending enquiry. The appellant did appear on the appointed day, bad been given a personal hearing and in fact raised two several objections against the enquiry held by <NAME>. His only grievance is that, after <NAME> had made his report on December 13, 1951, recommending the dismissal of the appellant and the Deputy Commissioner had on the very next day approved of the report and proposed to take action accordingly, the appellant was not given an opportunity to show cause against the action so pro. posed to be taken in regard to him, as he was entitled to under Art. 311 of the Constitution.

In order to appreciate the arguments advanced by learned counsel for the parties, it is necessary at this stage to set out the provisions of the Constitution qearing on them. The relevant portions of Arts. 310 and 311 of the Constitution, which substantially reproduce sub-ss. (1), (2) and (3) of s. 240 of the Government of India Act, 1935, are as follows:-

" 310(1) Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the <ORG> or of an all- India service or holds any post connected with defence or any civil post under the <ORG>, holds office during the pleasure-of the President, and every person who is a member of a civil service of a <ORG> or holds any civil post under a <ORG> holds office during the pleasure of the Governor of the <ORG>.

(2)...................................................... 311(1) No person who is a member of a civil service of the <ORG> or an all-India service or a civil service of a <ORG> or holds a civil post under the <ORG> or a <ORG> shall be dismissed or removed by an authority subordinate to that by which he was appointed.

(2)No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him:

Provided................................................. (3) If any question arises whether it is reasonably practicable to give to any person an opportunity of showing cause under clause (2), the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank, as the case may be, shall be final." The answer to the question canvassed before us depends on a true construction of the aforesaid pro,visions and in particular on the view we take as to the meaning, scope and ambit of Art. 311(2). In <NAME> case (1) it wag said that the word "removed " was not in s. 240(3) but had been introduced in Art. 311(2). It may be mentioned that although the word " removed " was not actually used in s. 240(3), the reference to dismissal, according to s. 277 , included a reference to removal.

(1) Civil Appeal No. 65 Of 1957, decided on November 1, 1957.

<NAME>

Article 310(1) no doubt provides that every person falling within it holds office during the pleasure of the President or the Governor, as the case may be. The language of both cls. (1) and (2) of Art. 311 are prohibitory in form and was held by <ORG> in High Commissioner for India v. <NAME> to be inconsistent with their being merely permissive and consequently those provisions have to be read as qualifications or provisos to Art. 310(1) as has been held by <ORG> in that case and recently by this Court in <CITATION> (2) in a judgment pronounced on November 1, 1957. The limitations thus imposed on the exercise of the pleasure of the President or the Governor in the matter of the dismissal, removal or reduction in rank of government servants constitute the measure of the constitutional protection afforded to the government servants by Art. 311(2).

Clause (1) of Art. 311 is quite explicit and protects government servants of the kinds referred to therein by providing that they cannot be dismissed, or re. moved or reduced in rank by a lesser authority than that which appointed them. Likewise cl. (2) protects government servants against being dismissed, removed or reduced in rank without being given a reasonable opportunity to show cause against the action proposed to be taken in regard to them. As has been explained by this Court in <NAME> case (2), the expressions 'dismissed', 'removed' and ,reduced in rank' are technical words taken from the service rules where they are used to denote the three major categories of punishments.

In exercise of powers conferred by s. 96-B(2) of the Government of India Act, 1915, the Secretary of <ORG> in <ORG> framed Civil Service (Governors Provinces Classification) Rules. Rules (x) and (xiii) of those rules provided that local government might, for good and ,sufficient reasons, inflict the several punishments therein mentioned on persons therein indicated. Rule (xiv) prescribed the procedure for all cases in which dismissal, removal or reduction in rank of any officer was intended (1) L.R. (1948) 75 I.A. 225 at P. 241.

to be ordered. These rules were reproduced with some modifications in the Civil Services (Classification, Control and Appeal) Rules which were, on May 27, 1930, ,promulgated by the Secretary of <ORG> in <ORG> in exercise of the same powers under s. 96-B of the Government of India Act, 1915. Rule 49 of those rules specified seven different kinds of punishments which could, for good and sufficient reasons, be imposed upon the members of the services therein specified. Rule 55 reproduced old r. (xiv) with greater details. It provided:

" Without prejudice to the provisions of the Public Servants (Inquiries) Act , 1850, no order of dismissal, removal or reduction shall be passed on a member of a Service (other than an order based on facts which have led to his conviction in a criminal court or by a Court Martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself The grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges which shall be communi- cated to the person charged, together with a statement of the allegations on which each charge is based and of any other circumstances which it is proposed to take into consideration in passing orders on the case He shall be required, within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person. If he so desires, or if the authority concerned so direct, an oral inquiry shall be held. At that inquiry oral evidence shall be heard as to such of the allegations as are not admitted, and the person charged shall be entitled to crossexamine the witnesses, to give evidence in person and to have such witnesses called, as he may wish, provided that the officer conducting the inquiry may, for special and sufficient reason to be recorded in writing, refuse to call a witness. The proceedings shall contain a sufficient record of the evidence and a statement of the findings and the grounds thereof. This rule shall not apply where the person concerned has absconded, or where it is for other reasons impracticable to com- municate with him. All or any of the provisions of the rule may, in exceptional cases, for special and sufficient reasons to be recorded in writing, be waived, where there is a difficulty in observing exactly the requirements of the rule and those requirements can be waived without injustice to the person charged."

Similar rules were framed and are to be found in the Indian Railway Establishment Code which governs the railway servants. Rule 6 of the Rules framed by the Chief Commissioner, Delhi, referred to above, is more or less on the same lines.

<CITATION> for India it was held, with reference to the rules made under s.96-B of the Government of India Act, 1915, that while that section assured that the tenure of office, though at pleasure, would not be subject to capricious and arbitrary action, but would be regulated by the rules, it gave no right to the appellant, enforceable by action, to hold his office in accordance with those rules. It was held that s. 96-B and the rules made thereunder only made provisions for the redress of grievances by administrative process. The position of the Government servant was, therefore, rather insecure, for his office being held during the pleasure of the <ORG> under the Government of India Act, 1915, the rules could not over-ride or derogate from the statute and the protection of the rules could not be enforced by action so as to nullify the statute itself. The only protection that the Government servants had was that, by virtue of s. 96- B(1), they could not be dismissed by an authority subordinate to that by which they were appointed. The position, however, improved to some extent under the 1935 Act which, by s. 240(3) , gave a further protection, in addition to that provided in s. 240(2) which reproduced the protection of s 96-B(1) of the Government of India Act, 1915. We have, therefore, to determine the true meaning, scope and ambit of this now protection given by s. 240(3) of (1) L. R. (1936) 64 I.A. 55.

the Government of India Act, 1935, which has been reproduced in Art. 311(2).

The majority of the Judges of <ORG> (<NAME>, <NAME>, and <NAME>, J.) in <NAME> case (1) took the view that in sub-s. (3) of s. 240 there had been enacted provisions of a very limited scope in permanent statutory form as compared with the provisions under the rules considered in <NAME> case (2). Further down, after referring to the fact that prior to 1935 a sort of protection for the servants of the Crown provided by sub-s. (3) was merely to be found in the rules, many and various and liable to change, their Lordships proceeded to state that from those rules had been picked out and enacted in the section itself certain limited specific provisions only. The majority of <ORG> at page 138 construed s. 240(3) as follows:

"In our judgment the words "against the action proposed to be taken in regard to him " require that there should be a definite proposal by some authority either to dismiss a civil servant or to reduce him in rank or alternatively to dismiss or reduce him in rank as and when final action may be determined upon. It should be noted that the sub-section does not require any inquiry, any formulation of charges, or any opportunity of defence against those charges. All that it expressly requires is that where it is proposed to dismiss or reduce in rank a civil servant he should be given reasonable opportunity of showing cause against the proposal to dismiss or reduce him. It is also significant that there is no indication as to the authority by whom the action is to be proposed. It does, however, seem to us that the sub- section requires that as and when an authority is definitely proposing to dismiss or to reduce in rank a member of the civil service he shall be so told and he shall be given an opportunity of putting his case against the proposed action and as that opportunity has to be a reasonable opportunity, it seems to us that the section requires not only notification of the action proposed but of the grounds on which the authority is proposing that the (I) (1945) F.C.R. I03, 136.

(2) L.R. (1936) 64 I.A. 55 action should be taken, and that the person concerned must then be given reasonable time to make his representations against the proposed action and the grounds on which it is proposed to be taken. It is suggested that in some cases it will be sufficient to indicate the charges, the evidence on which those charges are put forward and to make it clear that unless the person can on that information show good cause against being dismissed or reduced if all or any of the charges are proved, dismissal or reduction in rank will follow. This may indeed be sufficient in some cases. In our judgment each case will have to turn on its own facts, but the real point of the sub-section is in our judgment that the person who is to be dismissed or reduced must know that that punishment is proposed as the punishment for certain acts or omissions on his part and must be told the grounds on which it is proposed to take such action and must be given a reasonable opportunity of showing cause why such punishment should not be imposed. That in our judgment involves in all cases where there is an enquiry and as a result thereof some authority definitely proposes dismissal or reduction in rank, that the person concerned shall be told in full, or adequately summarised form, the results of that enquiry, and the findings of the enquiring officer and be given an opportunity of showing cause with that information why he should not suffer the proposed dismissal or reduction of rank. " The above passage indicates that in the view of the majority of the judges of <ORG> s. 240(3) corresponding now to art. 311(2) does not " require any inquiry, any formulation of charges or any opportunity to defend against those charges ". According to them " all that it expressly requires is that where it is proposed to dismiss or reduce in rank a civil servant he should be given reasonable opportunity of showing cause against the proposal to dismiss or reduce him ".Their Lordships added that as that opportunity had to be a reasonable opportunity the section must be taken to require "not only notification of the action proposed but of the grounds on which the authority is proposing that the action should be taken and that the person concerned must then be given reasonable time to -make his representations against the proposed action and the grounds on which sit is proposed to be taken ". It is quite clear that the majority of <ORG> put a somewhat narrow interpretation on the relevant provision in that they considered that the requirement of reasonable opportunity contemplated by it arose only at a later stage when the competent authority definitely proposed to take a particular action and that this opportunity did not cover the earlier stage where charges were formulated and enquired into. <NAME>, <NAME>... in his dissenting judgment took much the same view on this point as did <ORG>. <ORG> observed as follows:

"The plaintiff's contention is that this opportunity should have been afforded to him after the finding of the enquiring officer had been considered and the punishment decided upon. With this contention we are unable to agree. Eight charges were served on the plaintiff and at the end he was asked to show cause why he should 'not be dismissed, removed or reduced or subjected to such other disciplinary action as the competent authority may think fit to enforce for breach of Government Rules and conduct unbecoming to the Indian Civil Service. He was aware 'from the very start of the enquiry against him that removal from service was one of the various actions that could have been taken against him in the event of some or all the charges being established, and in this sense he was showing cause during the course of the inquiry against the action proposed. The plaintiff's contention that there should be two enquiries the first to establish that be had been guilty and the second to determine what should be the appropriate punishment, and that in each stage he should have reasonable and independent opportunities to defend and show cause does not appear to be correct or intended by the <ORG> (1). " In agreement with <ORG> <NAME> held that the requirements of sub-s. (3) of s. 240 (1) (1944) I. L. R. 25 Lah. 325, 347, 348.

demanded nothing beyond what was required for compliance with the provisions of r. 55 of the Civil Services (Classification, Control and Appeal) Rules. His Lordship found nothing in the language of el. (3) to indicate that anything more or anything different was contemplated or to suggest that a further opportunity was to be given after the enquiry had been completed in the presence of the officer charged and the enquiring officer had made his report. The learned Judge was unable to accept the suggestion that the words of the statute were appropriate only to the stage when the authorities would be in a position to indicate definitely what action they intended to take, namely, whether it was to be one of dismissal or one of reduction and that this could be predicated only after the Enquiring Officer had made his report.

In our judgment neither of the two views can be accepted as a completely correct exposition of the intendment of the provisions of s. 240(3) of the Government of India Act, 1935, now embodied in Art. 311(2) of the Constitution. Indeed the learned Solicitor-General does riot contend that this provision is confined to guaranteeing to the government servant an opportunity to be given to him only at the later stage of showing cause against the punishment proposed to be imposed on him. We think that the learned Solicitor General is entirely right in not pressing for such a limited construction of the provisions under consideration. It is true that the provision does not, in terms, refer to different stages at which opportunity is to be given to the officer concerned. All that it says is that the government servant must be given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. He must not only be given an opportunity but such opportunity must be a reasonable one. In order that the opportunity to show cause against the proposed action may be regarded as a reasonable one, it is quite obviously necessary that the government servant should have the opportunity, to say, if that be his case, that he has not been guilty of any misconduct to merit any punishment at all and also that the particular punish-

ment proposed to be given is much more drastic and severe than he deserves. Both these pleas have a direct bearing on the question of punishment and may well be put forward in showing cause against the proposed punishment. If this is the correct meaning of the clause, as we think it is, what consequences follow ? If it is open to the <ORG> servant under this provision to contend, if that be the fact, that he is not guilty of any misconduct then how can he take that plea unless he is told what misconduct is alleged against him? If the opportunity to show cause is to be a reasonable one it is clear that he should be informed about the charge or charges levelled against him and the evidence by which it is sought to be established, for it is only then that he will be able to put forward his defence. If the purpose of this provision is to give the government servant an opportunity to exonerate himself from the charge and if this opportunity is to be a reasonable one he should be allowed to show that the evidence against him is not worthy of credence or consideration and that he can only do if he is given a chance to cross-examine the witnesses called against him and to examine himself or any other witness in support of his defence. All this appears to us to be implict in the language used in the clause, but this does not exhaust his rights. In addition to showing that he has not been guilty of any misconduct so as to merit any punishment, it is reasonable that he should also have an opportunity to contend that the charges proved against him do not necessarily require the particular punishment proposed to be meted out to him. He may say, for instance, that although he has been guilty of some misconduct it is not of such a character as to merit the extreme punishment of dismissal or even of removal or reduction in rank and that any of the lesser punishments ought to be sufficient in his case.

To summarise: the reasonable opportunity envisaged by the provision under consideration includes-

(a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based;

(b) an opportunity to defend himself by crossexamining the witnesses produced against him and by examining himself or any other witnesses in support of his defence; and finally

(c) an opportunity to make his representation as to why the proposed punishment should not be inflicted on him, which he can only do if the competent authority, after the enquiry is over and after applying his mind to the gravity or otherwise of the charges proved against the government servant tentatively proposes to inflict one of the three punishments and communicates the same to the government servant. In short the substance of the protection provided by rules, like r. 55 referred to above, was bodily lifted out of the rules and together with an additional opportunity embodied in s. 240 (3) of the Government of India Act, 1935 so as to give astatutory protection to the government servants and has now been incorporated in Art. 311 (2) so as to convert the protection into a constitutional safeguard. We find support for our above mentioned conclusion in the judgment of <ORG> in <NAME> case (1). It is true that after quoting a portion of the passage from the judgment of the majority of <ORG> set out above their Lordships at page 242 stated that they agreed with the view taken by the majority of <ORG>, but their Lordships did not stop there and went on to say: " In their opinion, sub-s. 3 of s. 240 was not intended to be, and was not, a reproduction of r. 55, which was left unaffected as an administrative rule. , Rule 55 is concerned that the civil servant shall be informed " of the grounds on which it is proposed to take action ", and to afford him an adequate opportunity of defending himself against charges which have to be reduced to writing; this is in marked contrast to the statutory provision of " a reasonable opportunity of showing cause against the action proposed to be taken in regard to him ". In the (1) L.R. (1948) 75 I.A. 225 at 241.

opinion of their Lordships, no action is proposed within the meaning of the sub-section until a definite conclusion has been come to on the charges, and the actual punishment to follow is provisionally determined on. Before that stage, the charges are unproved and the suggested punishments are merely hypothetical. It is on that stage being reached that the statute gives the civil servant the opportunity for which sub-s. 3 makes provision. Their Lordships would only add that they see no difficulty in the statutory opportunity being reasonably afforded at more than one stage. If the civil servant has been through an inquiry under r. 55, it would not be reasonable that he should ask for a repetition of that stage, if duly carried out, but that would not exhaust his statutory right, and he would still be entitled to represent against the punishment proposed as the result of the findings of the inquiry."

The above passage quite clearly explains that the point on which their Lordships of <ORG> agreed with the majority of <ORG> is that a further opportunity is to be given to the government servant after the charges have been established against him and a, particular punishment is proposed to be meted out to him. The opening sentence in the above passage, namely, that s. 240 (3) was not a reproduction of r. 55 and that r. 55 was left unaffected as an administrative rule does seem to suggest that s. 240 (3) is not at all concerned with the enquiry into the charges which comes at the earlier stage, but a close reading of the rest of that passage will indicate that in their Lordships' view the substance of the protection of r. 55 is also included in s. 240 (3) and to that is superadded, by way of further protection, the neces- sity of giving yet another opportunity to the government servant at the stage where the charges are proved against him and a particular punishment is tentatively proposed to be inflicted on him. Their Lordships referred to " statutory opportunity being reasonably afforded at more than one stage ", that is to say, that the opportunities at more stages than one are comprised within the opportunity contemplated by the statute itself. Of course if the government servant has been through the enquiry under r. 55, it would not be reasonable that he should ask for a repetition of that stage, if duly carried out, which implies that if no enquiry has been held under r. 55 or any analogous rule applicable to the particular servant then it will be quite reasonable for him to ask for an enquiry. Therefore, in a case where there is no rule like r. 55 the necessity of an enquiry was implicit in s. 240 (3) and is so in Art. 311(2) itself. Further their Lordships say that an enquiry under r. 55 " would not exhaust his statutory right and he would still be entitled to make a representation against the punishment proposed as the result of the findings of the enquiry ". This clearly proceeds on the basis that the right to defend himself in the enquiry and the right to make representation against the proposed punishment are all parts of his " statutory right " and are implicit in the reasonable opportunity provided by the statute itself for the protection of the government servant.

The learned Solicitor General appearing for <ORG>, then, contends that assuming that the government servant is entitled to have an opportunity not only to show cause against his guilt but also an opportunity to show cause against the punishment proposed to be inflicted on him, the appellant in the present case has had both such opportunities, for by the notice served on him on July 9, 1949, the appellant was called upon to show cause against the charges as well as against the punishment of dismissal in case the charges were established. He points out that in <NAME> case (1) the notice given to <NAME> did not specify dismissal as the only and particular punishment proposed to be imposed on him, but called upon him to show cause why he should not be dismissed, removed or reduced or subjected to such other disciplinary action as the competent authority, might think fit to enforce, whereas in the present case the notice referred to above clearly indicated that the punishment of dismissal alone was proposed to be inflicted.

L.R. (1948) 75 1. A. 225.

The learned Solicitor General in support of his contention relies on the observations of the majority of <ORG> quoted above and in particular on the passage where their Lordships stated " that in some cases it would be quite sufficient to indicate the charges, the evidence on which those charges are put forward and to make it clear that unless the person can on that information show good cause against being dismissed or reduced in rank if all or any of the charges are proved, dismissal or reduction in rank would follow and that this would be sufficient in some cases." He also strongly relies on the circumstance that their Lordships of <ORG>, after quoting the above passage, stated that they agreed with the view taken by the majority of <ORG>. But as we have already explained, the other observations of their Lordships of <ORG>, which follow immediately, quite clearly indicate that what they agreed with was that a second opportunity was to be given to the government servant concerned after the charges had been brought home to him as a result of the enquiry. Their Lordships made it clear that no action could, in their view, be said to be proposed within the meaning of the section until a definite conclusion had been come to on the charges and the actual punishment to follow was provisionally determined on, for before that stage the charges remained unproved and the suggested punishments were merely hypothetical and that it was on that stage being reached that the statute gave the civil servant the opportunity for which sub-s. (3) made provision. A close perusal of the Judgment of <ORG> in <NAME> case will, however, show that the decision in that case did not proceed on the ground that an opportunity had not been given to <NAME> against the proposed punishment merely because in the notice several punishments were included, but the decision proceeded really on the ground that this opportunity should have been given after a stage had been reached where the charges had been established and the competent authority had applied its mind to the gravity or otherwise of the proved charge tentatively and proposed a particular punishment. There is as the Solicitor-General fairly concedes, no practical difficulty in following this procedure of giving two notices at the two stages. This procedure also has the merit of giving some assurance to the officer concerned that the competent authority maintains an open mind with regard to him. If the competent authority were to determine, before the charges were proved, that a particular punishment would be meted out to the government servant concerned, the latter may well feel that the competent authority had formed an opinion against him, generally on the subject matter of the charge or, at any rate, as regards the punishment itself. Considered from this aspect also the construction adopted by us appears to be consonant with the fundamental principle of jurisprudence that justice must not only be done but must also be seen to have been done.

It is on the facts quite clear that, when <NAME> concluded his enquiry and definitely found the appellant guilty of practically all the charges he for the first time suggested that the punishment of dismissal should be the proper form of punishment in this case. <NAME> was not, however, the competent authority to dismiss the appellant and, therefore, he could only make a report to the Deputy Commissioner who was the person competent to dismiss the appellant. When the Deputy Commissioner accept- ed the report and confirmed the opinion that the punishment of dismissal should be inflicted on the appellant, it was on that stage being reached that the appellant was entitled to have a further opportunity given to him to show cause why that particular punishment should not be inflicted on him. There is, therefore, no getting away from the fact that Art. 311(2) has not been fully complied with and the appellant has not had the benefit of all the constitutional protection and accordingly his dismissal cannot be supported. We, therefore, accept this appeal and set' aside the order of the Single Judge and decree the appellant's suit by making a declaration that the order of dismissal passed by the Deputy Commissioner on December 17,1951, purporting to dismiss the appellant from service was inoperative and that the appellant was a member of the service at the date of the institution of the suit out of which this appeal has arisen. The appellant will get costs throughout in all courts. He must pay all court fees that may be due from him. Under order XIV, Rule 7 of the Supreme Court Rules were direct that the appellants could be paid his fees which we assess at Rs. 250.

Appeal allowed.


PETITIONER: <ORG> Vs. RESPONDENT: THE COMMISSIONER OF INCOME TAX, <NAME> DATE OF JUDGMENT: 03/04/1967 BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SHAH, J.C. SIKRI, S.M. CITATION: 1967 AIR 1554 1967 SCR (3) 359 CITATOR INFO : D 1976 SC 10 (43) F 1976 SC1836 (16) R 1977 SC1548 (3) RF 1977 SC2211 (11) R 1978 SC1443 (9) R 1980 SC 387 (5) ACT: Indian Income-tax Act , 1922 (Act 11 of 1922), Ss. 4(3) (1) and 15B-Donation to <ORG>-One object not charitable in nature, and income to be utilised for any one of the objects-If exempted. HEADNOTE: The assessee claimed exemption from tax under s. 14-B of the Incometax Act, 1922 for a sum donated to a <ORG>, whose most of the objects were charitable and religious in nature, but one was not, and it was open to the trustees to utilise the income of any one of the objects to the exclusion of all other objects. The <ORG> rejected the claim for exemption , but <ORG> allowed it as it had in relation to the previous assessment year held that the <ORG> was a public trust.On reference, <ORG> answered the question against the assessee.In appeal to this Court, the assessee contended that (i) this particularobject must not be read isolated from the other object.-, of the trust but having regard to the immediately preceding object which was to run hospitals and dispensaries, the impugned object, viz., the manufacture of pharmaceutical and medicinal preparations must be deemed to be for the purpose of carrying out the earlier object, and (ii) <ORG> acted in excess of jurisdiction in raising a new question which was not raised by <ORG>, namely, whether the trust itself was constituted for wholly religious or charitable purposes within the meaning of s. 4 (3) (i) of the Act. HELD :-The appeal must fail. (i)There was no connection between the two objects of the trust and upon an interpretation of the document as a whole, it could not be said that the earlier object was the dominant object of the trust and the latter was a subsidiary object. In view of the absolute power of selection ,ranted to the trustees to select between charitable and non- charitable objects, the provision of s. 4 (3) (i) of the Act could not be ipplied to the <ORG> and no exemption could be granted to the assessce under s. of the; Act. [360D- <CITATION> , Nagpur, 57 I.A. 260; <ORG> v. Inland <ORG> Commissioner  2 All. E.R. 537 and <NAME> v. lnland <ORG> Comrs. 17 T.C. 27, 40 applied. (i)The High Court was within its jurisdiction in examining the question whether the <ORG> was eligible for exemption from income-tax under s. 4(3) (i) of the Act. Even where a question of law was not raised before the <ORG> but the <ORG> deals with it, it must be deemed to be one arising out of its order. [364B- <CITATION> . 42 T.T.R. 589, followed. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1399 of 1966.

Appeal by special leave from the judgment and order dated October 25, 1961 of <ORG> in Tax Case No. 62 of 1958 (Reference No. 37 of 1958).

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

The Judgment of the Court was delivered by <NAME>, J. This appeal is brought, by special leave, from the judgment of <ORG> dated October 25, 1961 in T.C. No. 62 of 1958.

The assessee, <ORG>, paid a donation of Rs. 7,500 to a trust called "<ORG> and claimed exemption from tax under S. 14-B of the Income- tax Act, 1922, hereinafter called the 'Act'. The trust had been created by the partners of a business firm, <ORG>. This firm had been carrying on business in <ORG> paper. Under the terms of the partnership it was setting apart 80 per cent of the profits for charitable and religious purposes. On July 1, 1944, a trust deed was executed by <NAME>. The claim of the assessee to exemption from tax was rejected by the Income Tax Officer on the ground that the trust did not fulfil the conditions laid down under S. 15-B of the Act. The Appellate Assistant Commissioner to whom an appeal was preferred took the same view. The matter was taken up in further appeal to <ORG> which observed that in relation to the previous assessment year, it had held that <ORG> was a public trust and that any donation made to that trust was an allowable deduction under s. 15-B . At the instance of the Commissionerof Income-tax the <ORG> referred the following question of law for the determination of <ORG> under s. 66(1) of the Act:

"Whether on the facts and in the cirmustances of the case the assessee is entitled to claim deduction under Section 15-B in respect of the donation paid to <ORG> ?" <ORG> answered the question against the assesee who has brought the present appeal to this Court by special leave.

Section 15-B of the Act provides for exemption from tax in respect of any sums paid by the assessee as donations to any institution or fund to which the section applies. Sub- section (2) reads as follows "(2) This section applies to any institution or fund established in the taxtble territories for a charitable purpose-

(i)the income whereof is exempt under clause

(i) of sub-section (3) of section 4 ;

Section 4(3)(i) of the Act states as follows "(3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them;

(i)Subject to the provisions of clause (c) of subsection (1) of section 16 , any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anythincg done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto :

Paragraph 2 of the trust deed dated July 1, 1944 sets out the objects of <ORG> as follows "(a) to establish, conduct and maintain residential schools, colleges, workshops and other institutions for imparting general, technical, vocational, professional, in- dustrial or other kind of education and training for the utility and welfare of the general public;

(b)to make pecuniary grants by way of scholarship, donation, subscription, allowance, gratuity, guarantee or othe rwise to and for the benefit of students, scholars and other persons,-,

c)to establish,, maintain and conduct hospitals, clinics, dispensaries, maternity houses and other institutions for affording treatment, cure, rest, recuperation and other reliefs;

(d)to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical, and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives of food;

(e)to establish and maintain choultries and rest-houses,to provide food, clothes, medicines and other articlesof necessity free or at concessional rates and to make money grants to the poor, needy for celebration of marriages or ceremonies of, for other purposes, floods, famine, pestilence, and other causes;

(f)to collect, encourage, conduct research in, interpret and popularise Nadis (ancient manuscripts inscribed on palm leaves in Indian languages with authorship ascribed to Devas, rishis, saints, sages and seers);

(g)to promote and encourage the study of and research in religion and to propagate religious principles;

(h)to buy, print, publish, sell for profit or distribute free or at concessional rate such literature as may be thought beneficial for the objects of the trust;

(i)to conduct worship and festivals in temples, shrinesand other places of worship, to build, maintain,administer and manage temples, shrines and other places of worship;

(j)to do all such other things as may be necessary, incidental conducive or convenient to the attainment of the above objects or any of them and the decision of the trustees that any particular thing is necessary, incidental, conducive or convenient to the attainment of the above objects or any of them shall be conclusive."

The other clauses of the trust deed provide for the appointment of additional trustees, the administration and management of schools, colleges, etc., that may be set up, investment of the moneys, the power conferred on the trustees to alter the form of the properties and re-invest the funds, to grant leases, to borrow, and lastly to conduct or carry on any business or undertaking alone or in part- nership with any other person for the benefit of the trust. The question to be considered is whether the property from which the income of the <NAME> trust is derived is held under trust or other legal obligation wholly for religious or charitable purposes within the meaning of S. 4(3)(i) of the Act. In the present case, it appears from the deed of trust that one of the objects of the trust, namely item 4, is not for charitable or religious purposes. Item No. 4 is "to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical, and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives of food". It may be that most of the other objects of the trust are religious and charitable in nature but if item 4 is not charitable, then the conditions envisaged by S. 4(3) (i) of the Act are not fulfilled and the exemption conferred by s.15 -B of the Act cannot be applied. Clause 5 (i) of the trust deed states that "the trustee shall have power to apply the whole of any part of the trust property or fund whether capital or income in or towards payment of the expenses of the trust or for or towards all or any of the purposes of the trust provided any property or money held in special trust shall be applied only for that purpose and not otherwise". In the present case, there is no special trust, that is to say, no particular item of property has been burdened with the performance of any specific object of the trust. It is therefore manifest that under cl. 5(i) of the trust deed it is open to the trustees to utilise the income for any one of the objects of the trust to the exclusion of all other objects. In other words, it would not be a violation of the trust if the trustees devoted the entire income to the carrying on of a business of manufacture, sale and distribution of pharmaceutical, medicinal and other preparations. In our opinion, this particular object of the trust is neither charitable nor religious in character. If the trustees can, under a trust held validly, spend the entire income of the trust on this non-charitable object, it is difficult to hold that the trust property is held under a trust or other legal obligation wholly for religious or charitable purposes within the meaning of s. 4(3)(i) of the Act.

It was argued by Mr. <NAME> on behalf of the appellant that this particular object must not be read isolated from the other objects of the trust but having regard to the immediately preceding object which is to run hospitals and dispensaries, the impugned object, viz., the manufacture of pharmaceutical and medicinal preparations must be deemed to be for the purpose of carrying out the earlier object, viz., running of hospitals and dispensaries. We are unable to hold that there is any connection between the two objects of the trust and upon an interpretation of the document taken as a whole, it is impossible to accept the appellant's contention that cl. 2(c) is the dominant object of the trust and cl. 2(d) is a subsidiary object. The argument of the appellants is, in fact, contradictory of the last clause of para 2 of the trust deed which states that the objects shall be independent of each other, notwithstanding that any of the objects shall be void for any reason whatsoever, the trust shall be valid and operative with respect to the other objects. This clause expressly provides that the trustees shall have discretion "to apply the property of the trust in carrying out all or any of such objects of the trust as the trustees may deem fit". Having regard to the language of paragraph 2 of the trust deed in the context of other paragraphs of the document, we are of opinion that the trust deed, on a proper interpretation, gives an absolute power of selection to the trustees to choose between charitable and non-charitable objects of the trust for spending the entire income of the trust properties. It follows that the <NAME> trust does not fulfil the conditions imposed by s. 4(3)(i) of the Act and the donation made by the assessee to the <NAME> trust cannot therefore be exempted under s. 15- B of the Act.

The view that we have expressed is borne out by the decision of <ORG> in <CITATION> -,tax, Nagpur(1) in which it was held that if there (1)57 I.A. 260.

are several objects of the trust, some of which are charitabel and some non-charitable, and the trustees have unfettered discretion to apply the income to any of the object, the whole trust would fail and no part of the income would be exempt from tax. The same view has been expressed by <ORG> in <ORG> v. <ORG>). In that case, the memorandum of association of the <ORG>, a company limited by guarantee, set out the following as the objects of the

-company "3(A) The advancement of the Christian religion, and, in particular, by the means and in accordance with the principles of <ORG>, founded in or about the year 1921 by <NAME>. (B) The maintenance, support, development and assistance of <ORG> in every way...... (C) (9) To establish and support or aid in the establishment and support of any charitable or benevolent associations or institutions, and to subscribe or guarantee money for charitable or benevolent purposes in any way connected with the purposes of the association or calculated to further its objects. (10) To do all such other things as are incidental, or the association may think conducive, to the attainment of the above objects or any of them."

<ORG> sought exemption from income tax on the ground that it was a body of persons established for charitable purposes only. It was admitted by the <ORG> that, if object A of the objects clause of the company's memorandum of association stood alone, the company would be established for charitable purposes only. It was, however, held by <ORG> that the words in cl. 3(B) of the memorandum of association, "the maintenance, support, development and assistance of <ORG> in every way," extended beyond purely religious activities, permitted the company to engage in secular activities, and authorised the expenditure of its funds on matters which were not charitable, and, therefore, the company could not be said to be formed for charitable purposes only. It was also observed that although a religious body might, without losing its religious character, engage in a number of subsidiary activities which were not -purely religious, a trust which was so worded as to permit the expenditure of income by such a body in such subsidiary activities was not a good charitable trust. It was further held that the objects set forth in cl. 3(C), paras (9), (10), of the memorandum of association were not merely ancillary to the main objects expressed in sub-cls. (A) and (B), but themselves conferred powers on the company which were so wide that they could not be regarded as charitable. The primi-

(1)[1949] 2 All. E.R. 537.

ciple has been clearly expressed by <ORG> in <ORG> v. <ORG>. (1) as follows "The instrument with which this case is concerned consists of the memorandum of association of the company and it is essential to bear in mind that in order to obtain exemption from income tax under the section it is not enough that the purposes described in the memorandum should include charitable purposes, the memorandum must be confined to those purposes so that any application by the company of its funds to non-charitable purposes would be ultra vires .... The extensive powers conferred on the company by sub-cls. (2) to (22) (to some of which I have referred in order to indicate their character), although purporting to be secondary to the object mentioned in sub-cl. (2), are nevertheless objects for which the company is established. The company can exercise any or all of these powers whenever in its opinion such an exercise would be conducive to the attainment of the so-called primary object which, from a practical point of view, means that it can exercise them whenever it is minded to do so, and whether such exercise is in fact conducive to the attainment of that object or not, as neither the court nor any one else can control the company's opinion, or otherwise interfere with the manner in which it chooses to carry out its objects. It would be difficult in any case to determine whether any particular enterprise undertaken by the company under its wide powers was or was not in fact conducive to the attainment of the primary object, but when the question of whether it is or is not so conducive is left to the decision of the company itself, I cannot avoid the conclusion that the objects mentioned in sub-cls. (2) to (22) can be carried out by the company just as freely as the object mentioned in sub-cl. (I ) and that there is no substantial difference in degree between them."

As we have already stated, on a proper interpretation of the terms of the trust deed in the Present case we are satisfied that paragraph 2(d) is not subsidiary in character to paragraph 2(c) and the trustees have been expressly granted the discretion- to apply the income of the trust wholly to a non-charitable object to the exclusion of charitable objects. It follows therefore that in view of the absolute power of selection granted to the trustees to select between charitable and non-charitable objects, the provisions of s. 4(3)(i) of the Act cannot be applied to the <NAME> trust and no exemption can be granted to the assessee under S. 15- B of the Act. We (1) 17 T. C. 27, 40.

accordingly hold that <ORG> rightly answered the question of law against the assessee and in favour of the Commissioner of Income-tax.

It was, however, contended by Mr. <NAME> on behalf of the assessee that <ORG> had no jurisdiction to go into the question whether the <NAME> trust was held for a wholly religious or charitable purpose under s. 4(3)(i) of the Act. It was pointed out that the only question of law arising from the order of the <ORG> was with respect to the examination of the eligibility of the <NAME> trust for exemption under S. 4(3)(i)(b) of the Act. It was contended that the scope of the appeal from the order of the <ORG> was confined to the question whether the income from the business owned by the trust was entitled to exemption under s. 4(3)(i)(b) of the Act and whether the conditions of that proviso were satisfied. It was submitted that <ORG> acted in excess of jurisdiction in raising a new question which was not raised by the Appellate <ORG>, namely, whether the trust itself was constituted for wholly religious or charitable purposes within the meaning of S. 4(3)(i) of the Act. We are unable to accept the argument put forward on behalf of the appellants as correct. It appears that before the Appellate <ORG> there was no detailed examination of the question of law. The <ORG> merely referred to an earlier case it had dealt with regarding the same assessee. The <ORG> apparently took the view in the earlier case that even if the income which the trust earned in business was not exempt from tax, the income derived from donations which was utilised for charitable purposes would be eligible for exemption. So far as the assessment for the year 1955-56 is concerned, the question was not considered by the Appellate <ORG> at any length. But the Income Tax Officer held that the trust did not fulfil the conditions laid down by S. 15-B of the Act. The Assistant Commissioner, however, in appeal specifically stated that one of the conditions was that the income of the institution or fund should be exempt under cl. (1) of sub-s. (3) of S. 4 and dealt with the argument relating to the business carried on by the trust and observed " Property' as used in section 4(3)(i) includes business also and unless the business also is exempt, donation to such an institution will not be eligible for concession given in Section 15-B ." The question therefore before the <ORG> was whether the trust income was exempt under S. 4(3)(i) of the Act. In the course of its order dated July 27, 1957 for the assessment year 1.955-56 the Appellate <ORG> stated as follows :

"With reference to the first contention, we have held in I.T.A. No. 5707 of 1955-56 that <ORG> was a public trust and hence any donation made to the said trust is an allowable concession under Section 15-B . Therefore, the claim of the assessee is allowed on this contention."

We are therefore unable to accept the contention of the appellants that the question whether S. 4(3)(i) of the Act applies to the <NAME> trust was not within the scope of the question referred to <ORG> by <ORG> or that <ORG> went beyond its jurisdiction in answering that question. <CITATION> .(1) this Court examined the scope of the jurisdiction of <ORG> in a reference under S. 66(1) and it was pointed out that even where a question of law was not raised before the <ORG> but the <ORG> deals with it, it must be deemed to be one arising out of its order. Applying the principle to the present case, we hold that <ORG> was within its jurisdiction in examining the question whether the <NAME> trust was eligible for exemption from income-tax under S. 4(3)(i) of the Act. We accordingly reject the argument of the appellants on this aspect of the case. For these reasons we hold that this appeal is without merit and must be dismissed with costs.

Y.P. Appeal dismissed. (1) 42 I.T.R. 589.


PETITIONER: COMMISSIONER OF SALES TAX, <NAME> Vs. RESPONDENT: JASWANT SINGH CHARAN SINGH DATE OF JUDGMENT: 23/02/1967 BENCH: <NAME>, J.M. BENCH: <NAME>, J.M. MITTER, G.K. CITATION: 1967 AIR 1454 1967 SCR (2) 720 CITATOR INFO : E 1973 SC 78 (5) F 1973 SC2440 (3) R 1974 SC1362 (3) R 1977 SC 153 (7) R 1977 SC 597 (34) R 1981 SC1079 (4) D 1985 SC1201 (12) R 1985 SC1387 (11) F 1985 SC1644 (8) RF 1989 SC 516 (27) R 1990 SC1579 (39) RF 1991 SC 583 (29) ACT: Madhya Pradesh General Sales Tax Act, 1958-- Charcoal whether 'coal' within meaning of Entry I Part III of Sch. II to the Act-rate of tax applicable. HEADNOTE: The respondent was a dealer in firewood and charcoal. in ings for assessment of sales tax under the Madhya Pradesh, General sales Tax Act . 1958, the respondent claimed that charcoal was 'coal' within the meaning of Entry I of Part Ell of the Schedule II to the Act and fore was taxable at the rate of 2%. The sales tax authorities however held that charcoal was not 'coal' and was taxable at 4% as it fell the rwsiduary Entry I of Part VI of Schedule II. <ORG> the High Court held in favour of the respondent relying on the dictionaty meaning of the word 'coal'. The Commissioner of <ORG> appealed. It was urged on behalf of the appellant that coal wag a mineral while charcoal was manufactured from products like wood and other things by human agency and therefore the dictionary meaning ought not to have been relied upon. Reliance was also placed on legislative practice which had treated coal and charcoal as different items. In interpreting items in statutes like the Sales Tax resort should be had not to the scientific or technical meaning of the terms used but to their popular meaning or the meaning attached ter them by those dealing in them, that is to say, in their commercial sense. Viewed from this angl both a merchant dealing in coal and a consumer wanting to purchase it would reaard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoar in the term 'coal'. Under the Entries.' 'coal' as well as 'firewood' were taxed at 2%. It could not have been intended to tax charcoal alone at 4%. Entry I of Part III of Sch. II must therefore be read broadly and held to include charcoal. It was not possible to adopt its connotation from other statues passed for different purposes or in the context of different objects.[713 B; 725 A-E; 726 c] <NAME> etc. v. Assistant Sales Tax Officer, <NAME>,  1 S.C.R. 279 and His Majesty the King v. <ORG>,  C.L.R. (Ex.) 122, relied on. Attorney-General v. <NAME>, (1831) 2 D & Cl. 302, Grenfell v. Inland Revenue Commissioner, (1876) 1 Ex-. D. 242 Holt & Co. v. <NAME>, (1881) 16 Ch. D. 718, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2011 of 1966.

Appeal by special leave from the judgment and order dated February 23, 1966 of <ORG> in M.C.C. No. 169 of 1965.

<NAME> and <NAME> for the appellant.

<NAME> and <NAME>, for the respondent. The Judgment of the Court was delivered by <NAME>, J. The appellant has been carrying on business and s a dealer in firewood and charcoal. For the period from March 29, 1962 to April 29, 1962, he was assessed to sales tax under s. 18(6) of the Madhya Pradesh General Sales Tax Act, 1958 as he did not have any registration certificate in respect of this period. The Additional Sales Tax Officer, Ujjain, and the Additional Appellate Assistant Commissioner, <NAME>, both held that charcoal in which the appellant was dealing was not covered by Entry I of Part III of Sch. II to the Act, but that it fell under the residuary Entry I of part VI of that Schedule; and consequently was liable to be assessed at the rate of 4 % of the price of charcoal. In a further appeal before <ORG>, the <ORG>, relying on the dictionary meaning of the word 'coal' as given in Blackies' concise Dictionary, held that charcoal would be included in the term 'coal', and, therefore, Entry I in Part III of Schedule II would Apply and the tax chargeable would be at 2 % only. At the instance of the Commissioner of Sales Tax, the <ORG> referred the following question to <ORG> "Whether charcoal is covered under Entry I of Part III of Sch. 11 to the M.P. General.

Sales Tax Act , 1958, and is taxable at the rate of 2 % or will be taxable at the rate of 4 % under Entry I of Part VI of Sch. II to the M.P. General Sales Tax Act, 1958 ?"

<ORG> held that while construing entries in a sta- tute like the Sales Tax Act s, the court should prefer the popular meaning of the terms used in such entries and not their dictionary meanings and that so construed charcoal would be included in the word 'coal'. Consequently, it answered the question, in favour of the respondent. According to <ORG>, charcoal would be covered by Entry I of Part III of Sch. 11 and was taxable at 2 %. Hence this appeal by special leave.

Entry I of- Part III of Sch. 11 reads as follows "1. Coal, including coke in ill its forms..2 per cent" Entry I of Part VI of the said Schedule reads as follows "I All other goods not included in Schedule 1 or any other part of this Schedule. 4 per cent"

We may also reproduce Entry 8 of Part III of Schedule II2 percent" which is "8. Firewood The meaning given to the word 'Coal' in Blackies' Concise Dictionary, New Edition, page 134 relied on by the <ORG> reads as follows :-

"Coal : Kol : A piece of wood or other combustible substance burning or charred; charcoal; a cinder; now, usually a solid black substance found in the earth, largely employed as fuel, and formed from vast masses of vege- table matter deposited through the luxurious growth of plants in former epochs of the earth's history."

The Shorter Oxford English Dictionary at pages 330 and 331 gives the meaning of coal as follows :-

"1. A piece of carbon glowing without a flame.

2. A piece of burnt wood, etc. that is still capable of combustion without flame, cinder, ashes, 3. Charcoal. 4. A mineral, solid, hard, opaque black or blackish, found in seams in the earth, and largely used as fuel; it consists of carbonized vegetable matter". At page 293, the said Dictionary gives the meaning of charcoal as follows "The suggestion that Char=chare v. or sb. as if turn coal, i.e. wood turned into coal, lacks support. 1. The black porous residue, consisting (when pure) wholly of carbon, obtained from partly burnt wood, bones, etc. Hence specified as wood, vegetable, animal etc.".

The Webster's New International Dictionary gives the following meaning of charcoal at page 452 :-

"(Char to burn, reduce to coal; Coal);

1.A dark coloured or black porous form of carbon prepared from vegetable or animal substance, as that made by charging wood in a kiln, retort, etc., from which air is excluded."

According to these Dictionaries 'coal' would appear to in- clude 'charcoal'. The contention of the respondent was that charcoal is one of the species of coal, and, therefore, would be covered by Entry I of Part 111, and, therefore, the answer given by <ORG> is correct. Counsel for the <ORG>, however, raised three contentions; (1) that coal and charcoal are different products, one being a mineral product and the other prepared from wood and other articles by human agency, and, therefore, the term 'coal' would not cover charcoal; (2) that while construing such entries, the dictionary meaning should not be preferred to the popular meaning or the meaning in the commercial sense; and (3) that the <ORG> policy in reference to the term 'coal' shows that it is not used by the <ORG> in India so as to include charcoal.

Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is now well-settled that while interpreting items in statutes like the Sales Tax Act s, resort should be had not to the scientific or the technical meaning of such terms' but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. In <NAME> v. Assistant Sales Tax Officer, Akola,(1) the petitioners who were dealers in betel leaves were assessed to sales tax under the C.P. and Berar Sales Tax Act, 1947. They contended that under section 6 read with the Second Schedule of the Act betel leaves were not taxable. Section 6 provided that articles mentioned in that Schedule were exempt from gales tax and articles not mentioned were taxable. There were two items in the, Schedule, namely, item 6, "vegetables", and item 36, "betel leaves", but subsequently item. No. 36 was deleted by an amendment of the Act. This Court held that the use of two distinct and different items i.e., 'vegetables' and 'betel leaves' and the subsequent removal of betel leaves from the Schedule were indicative of the <ORG>'s intention of not exempting betel leaves from taxation. The Court laid down that the word 'vegetable' must be interpreted not in a technical sense but in its popular sense as understood in common language i.e., denoting a class of vegetables which are grown in a kitchen garden or on a farm and are used for the table. The same principle was also laid down in <NAME>. The question there was whether salted peanuts and cashew nuts fell within the category of either fruits or vegetables. A considerable expert opinion was led in that case, but the court ultimately found that the <ORG> in enacting the, Excise Tax Act, 1927, Part XIII and Schedule III was not using words which were applied to any particular science or art and, therefore, the words used are to be construed as they are understood in common language. It also held that what constitutes a 'fruit' or 'vegetable' within the meaning of the Excise Tax. Act is what would ordinarily in matters of commerce in Canada be included therein and not what would, be a botanist's conception of the subject matter. If a statute uses the ordinary words in every day use, such words should be construed according to- their popular sense. At page 128 of the Report <NAME>, <NAME> observed, "The object of the Excise Tax Act is to raise revenue, and for this purpose to class substance according to the general usage and known denominations of trade. In my view, therefore, it is not the botanist's conception as to what constitutes a (1)  1 S.C.R. 279.

(2), [1951] C.L.R. 122.

'fruit' or 'vegetable' which must govern the interpretation to be placed on the words, but rather what would ordinarily in matters of. commerce in Canada be included therein. Botanically, oranges and lemons are berries, but otherwise no one would consider them as such." This rule was stated as early as 1831 by Lord <NAME> in Attorney-General v. <NAME>). Similarly, in Grenfell v. Inland Revenue Commissioner(2) <NAME>, <NAME> observed, "that if a statute contains language which is capable of being construed in a popular sense such statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words 'popular-sense', that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it.". But "if a word in its popular sense and read in an ordinary way is capable of two constructions, it is wise to adopt such a construction as is based on the assumption that <ORG> merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers. In other words, the construction of the words is to be adapted to the fitness of the matter of the statute"., On the other hand, as <ORG> said in <ORG> v. <NAME>) "If it is a word which is of a technical or scientific character then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning."

Our attention was drawn to the decision in <NAME>, Agricultural Income Tax and Rural Sales Tax Officer, <NAME> and others(4), where green leaves plucked from tea bushes were held to fall under the word 'tea'. But this decision turned on the definitions of turnover in s. 3 of the Travancore General Sales Tax Act, XVIII of 1124 which while including sales of agricultural ,or horticultural produce included 'tea, coffee, rubber' etc. in the turnover. The court held there that 'tea' was not in the statute in the sense in which it is used in commerce but in the sense of a product of plant life, and, therefore, green leaves plucked from tea plants were covered by the term 'tea. The result emerging from these decisions is that while cons- truing the word 'coal' in Entry I of Part III of Sch. II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art, be presumed to hive used an ordinary term as coal according to the meaning ascribed 'to it in common parlance. Viewed (1) 11831] 2 D & Cl. 302.

(3) [1881]16 Ch. D. 718,720.

(2) [1876] I Ex-D. 242,248.

(4) [1954] S S.T.C. 384.

from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'. It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal and charcoal; otherwise, both of them would in ordinary parlance as also in their commercial sense be spoken as coal. There is another aspect also from which Entry I of Part III may be considered. Section 14 of the Central Sales Tax Act, 1956 declares certain goods as goods of special importance in inter-<ORG> trade or commerce. One of these is 'coal including coke in all its forms'. Section 15 of that Act provides that the <ORG> <ORG> in theirrespective sales tax laws can impose only 2 % tax on these goods.That is why in Entry I of Part III 'coal' is stated to include 'coke in all its forms', and coal including coke in all its forms is charged at 2 % tax. <ORG>, however, knew or must be presumed to know that firewood is also used by the people as fuel, but would not fall within that Entry, and, therefore, provided 2 % tax on it by a separate entry, namely, Entry 8 in Part III. Having taxed coal and firewood at 2 %, it does not appear to be possible that the <ORG> deliberately left out charcoal from the connotation of the word 'coal' and left it to be charged ,it 4% under the residuary Entry 1 in Part VI. The object of the <ORG> clearly was to tax coal and firewood as articles used as fuel and did not make a separate entry in regard to charcoal as it must be aware that coal is understood in ordinary and commercial sense would include charcoal. Had that not been so, instead of leaving it to be dealt with under the residuary item, it would have enacted a separate entry just as it did in the case of firewood which it knew would not in its ordinary meaning fall under the term 'coal'. In this view, the contention of counsel for the <ORG> must be rejected.

Counsel then relied upon s. 5 of the Colliery Control Order, 1945, in order to show that the <ORG> there had dealt with coal in its strict and technical meaning. He also relied upon certain other statutory provisions with a view to show that the <ORG> has all along been using the word 'coal' as a mineral product only. The Colliery Control Order deals with collieries and obviously, therefore, the term 'coal' there is used as a mineral product. It is a well-settled principle that in construing a word in an Act motion is necessary in adopting a meaning ascribed to that word in other statutes. As Lord <NAME> stated in <NAME> v. Chislett,(1) 'it would be a new terror in the construction of Acts of Parliament if we were required to limit a word to an unnatural (1)  A.C. 220.224.

sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone'. The strict sense in which such a word is to be found in another statute may mean the.etymological or scientific sense and would not in the context of another statute be applicable. From the Colliery Control Order, 1945 or the other provisions to which our attention was drawn, it would neither be possible nor safe to adopt the meaning of the word 'coal' given in those provisions for the purposes of the Act under construction. Nor can we infer that there is a Legislative policy consistently followed by the <ORG> merely because the word 'coal' has been used as meaning a mineral product in the context of these statutes, It would not, therefore, be possible to discard the meaning of the word 'coal' in this statute as understood in its commercial or popular sense and to adopt its connotation from other statutes passed for dif- ferent purposes or in context of different objects. We agree with the meaning of the word 'coal' given by <ORG> and hold that charcoal would be taxable at the rate of 2 % only.

The appeal is consequently dismissed with costs. Appeal dismissed.