JUDGMENT <NAME>, Kt., C.J.

1. The first application (No. 431 of 1942) raises questions, first, as to the validity of the Special Criminal Courts Ordinance (II of 1942), and, secondly, as to 'the applicability of the Ordinance if valid to the case of the petitioners. Cases raising similar points have come before <ORG> of Allahabad, Patna and Nagpur, and we have considered the judgments delivered in those cases, either as reported in <ORG> or in manuscript, as the cases have not yet found their way into the official reports.

2. The facts in this case are that the petitioners were arrested on September 6, 1942, and on October 5 a charge-sheet was placed against their names; and, some of the charges being exclusively triable by <ORG>, on October 31, the Magistrate committed the accused for trial in <ORG> of Thana, where cases are triable with a jury. On December 7 <ORG> made an order, under Section 5 of the Special Criminal Courts Ordinance, directing Mr. <NAME>, who was the Assistant Judge of Thana and a Special Judge appointed under the Ordinance, to try the petitioners' case, the order referring to the petitioners' case by its number and by the names of the accused. The Ordinance had been applied to the Province of Bombay on October 26, that is five days before the committal order.

3. The Special Criminal Courts Ordinance (II of 1942) was promulgated by the Governor General under Section 72 in the Ninth Schedule of the Government of India Act, 1935, which Schedule incorporates various provisions of the Government of India Act, 1915, which were to apply until Federation was introduced, and Section 72 enables the Governor General in cases of emergency to make and promulgate Ordinances for the peace and good government of British India or any part thereof. Under the section the Ordinance was only to remain in force for six months, but that limitation has been removed for the present under an Act of the Imperial <ORG>.

4. The Ordinance recites that an emergency has arisen which makes it necessary to provide for the setting up of Special Criminal Courts. Sub-section (3) of Section 1 provides :

It shall come into force in any Province only if the Provincial Government, being satisfied of the existence of an emergency arising from a hostile attack on India or on a country neighbouring on India or from the imminence of such an attack, by notification in the official <ORG>, declares it to be in force in the Province, and shall cease to be in force when such notification is rescinded.

Section 3 enables Courts of criminal jurisdiction to be constituted, and one class of such Courts is to consist of Special Judges. That is the only one with which we are concerned in this case. Then Section 4 directs that-

<ORG> may appoint to be a Special Judge for such area as it may think fit any person who has acted for a period of not less than two years in the exercise of the powers of a Sessions Judge or an Assistant Sessions Judge under the Code of Criminal Procedure.

Section 5 deals with the jurisdiction of Special Judges and is the really relevant section in this case. It provides :

A Special Judge shall try such offences or classes of offences, or such cases or classes of cases as <ORG>, or a servant of the <ORG> empowered by <ORG> in this behalf, may, by general or special order in writing, direct.

Section 6 deals with the procedure of Special Judges. Putting it broadly, the procedure under the Code is to apply with certain exceptions, the idea being to make trials more summary and rapid than under the normal procedure. Section 8 enables proceedings before a Special Judge to be reviewed by one of the <ORG> Judges nominated by <ORG> in cases in which a sentence of death, or transportation for life, or imprisonment for a term of seven years or more, is imposed, and other cases may be brought up on a certificate of the Special Judge. I need not refer to the provisions as to the Special Magistrates and <ORG>, because they do not arise in this case. Section 26 excludes appeals or revision applications against any sentence of a Special Judge, or any transfer application, or an application under Section 491 of the Criminal Procedure Code. Under the Ordinance the result will be that the trial is by a Special Judge, who is duly qualified as a Judge, but who proceeds by a more summary process than in an ordinary trial. The right of appeal is taken away, though there is a limited right of review, and there will be no trial by jury.

5. On August 19, 1942, the Ordinance was amended by an Ordinance (XLII of 1942) reciting that an emergency had arisen which made it necessary to amend the Special Criminal Courts Ordinance (II of 1942). The substantial amendment is in Sub-section (3) of Section 1 of the original Ordinance in which, after the words "arising from" the words "any disorder within the Province or from" are inserted, the effect being that after that date the Provincial Government can introduce the Ordinance on being satisfied of the existence of an emergency arising from any disorder within the Province, and not merely from the danger of an attack by outside enemies.

6. The validity of the Ordinance has been challenged on three grounds. The first ground is that, although it is admitted that the Governor General is the sole authority for determining whether an emergency exists or not, and although in this case the Ordinance recites that an emergency has arisen, nevertheless the Ordinance shows on its face that in fact an emergency had not arisen. The argument is that, after the promulgation of the Ordinance, no action is to be taken unless and until <ORG> brings the Ordinance into operation under Section 1 , Sub-section (3). In my opinion, there is no force whatever in that contention. The Governor General has said that an emergency exists; and to say, that there cannot be an emergency, unless it is necessary instantly to bring the terms of the Ordinance into operation, is to suggest that there can be no emergency with which the Governor General can deal before it arises. It suggests that the Governor General can never exercise any foresight in the protection of the State. It is perfectly possible to suppose that in January, 1942, owing to the approach of the Japanese army, there was an emergency which, made it necessary to look to possible future events, and to arm, <ORG>s with powers which they could bring into operation as and when they thought fit.

7. The second ground on which the Ordinance is attacked is that the Governor General has delegated his authority to declare that an emergency exists to Provincial Governments. I must say that I think the use of the expression "existence of an emergency" in Sub-section (3) of Section 1 is rather unfortunate, because it leads to the suggestion that there were really two emergencies; first, an emergency which had arisen and made it necessary to arm Provincial Governments with powers, and, secondly, an emergency which might arise and require that those powers should be used, and that as to the second emergency it is <ORG>, and not the Governor General, who is to be the arbiter. I think, however, that that is not the true construction. In my view the emergency, which justified the promulgation of the Ordinance, justified the Governor General in leaving it to <ORG>s to bring the Ordinance into operation as part of the machinery for carrying out the Ordinance. This point is really concluded, so far as <ORG> is concerned, by a decision of a full bench in <NAME> v. Emperor (1932) I.L.R. 57 Bom. 93 : S.C. 34 Bom. L.R. 1523 No doubt, in that case words similar to those in Sub-section '(3) of Section 1 of the present Ordinance did not call for consideration. The position in that case was that the Governor General had promulgated an Ordinance under Section 72 of the Government of India Act, 1915, and as to a part of the Ordinance he had left it to the Local Governments to determine when the Ordinance would be brought into operation. But that case is really a stronger one than the present case, because the discretion left to <ORG> was general, whereas in the present case the grounds on which <ORG> can bring the Ordinance into operation are limited by the terms of the Ordinance. In my opinion the second ground also fails.

8. The third ground is that the subject-matter dealt with in this Ordinance falls within item 2 of List II of the Seventh Schedule of the Government of India Act, 1935, that is to say, the Provincial List, which includes jurisdiction and powers of all Courts except <ORG>, with respect to any of the matters in the List, and it is said, therefore, that the Governor General, exercising the functions of <ORG>, could not deal with the matter. Other High Courts have answered that point by saying that the subject-matter also falls within items 1 and 2 of the Concurrent List, but a more conclusive answer to the point seems to be Section 102 of the Government of India Act, which provides :

Notwithstanding anything in the preceding sections of this chapter, <ORG> shall, if the Governor-General has in his discretion declared by proclamation that a grave emergency exists whereby the security of India is threatened, whether by War or internal disturbance, have power to make laws for a province or any part thereof with respect to any of the matters enumerated in the Provincial Legislative List.

A Proclamation, such as is referred to in that section, was made by the Governor General immediately on the outbreak of the present War, and that disposes of the third objection to the Ordinance. Section 316 of the Government of India Act, 1935, substitutes <ORG> for <ORG>. The other <ORG> have held that the Ordinance is valid, and I agree with their decision on that point.

9. The next question is as to the applicability of the Ordinance to the case of the petitioners, their position being, as I have pointed out, that their case had been committed to trial by <ORG> at Thana, though the trial had not commenced when the case was placed before the Special Judge. The argument is that there is a presumption that statutes are not intended to have retrospective effect, and accordingly a statute will be so construed as not to take away vested rights, unless a contrary construction is imposed by express words or necessary intent. It is admitted that that principle does not apply to statutes dealing merely with the procedure of Courts, but it is contended that the Ordinance in question interferes with substantive rights by depriving accused persons of their right of appeal, and in the present case of a right to trial by jury, as well as rights to apply for bail and for an order under Section 491 of the Criminal Procedure Code. It is said that in respect of a right of appeal, at any rate, the authority of <ORG> in <ORG> v. <NAME>  A.C. 369 shows that such a right is a substantive right, and not a mere matter of procedure. It is then said that the rule that a right of appeal is a substantive right not to be taken away retrospectively has been applied to criminal trials in the case of The Crown v. <NAME> (1925) I.L.R. 6 Lah. 262 Then the final stage in the argument is that on the commission by the petitioners of their alleged offences, or possibly when the Magistrate took: cognizance of such offences, the accused acquired a vested right to be tried under the normal procedure, and that the Ordinance must be so construed as not to take; away that vested right, since there are no words in the Ordinance providing that it shall apply retrospectively. I will assume for the purposes of my judgment that the Special Criminal Courts Ordinance deals with something more than procedure, and that the decision of <ORG> that a right of appeal is a substantive right in a civil suit, applies to criminal trials, though I do not wish to be considered as expressing an opinion on either of those two points.

10. Now, the other <ORG> have discussed this argument at very consider? able length. <ORG> has held that the accused acquired a vested right to be tried under the normal procedure when the Magistrate took cognizance of the case. The other <ORG> have held that accused persons did not acquire such a vested right at the moment when they committed an offence, and that seems to me to be obvious. A person cannot acquire rights by committing an offence. But the other <ORG> have intimated that they would agree with the decision of <ORG>, and hold that vested rights were acquired by the accused to be tried under the normal procedure as soon as the Magistrate took cognizance of the offence. With great respect to the learned Judges, I feel constrained to say that their judgments seem to me to be somewhat lacking in a sense of reality. All the learned Judges seem to assume that a rule of construction adapted in the first instance to statutes passed by <ORG> applies top an Ordinance promulgated to deal with an emergency under Section 72 in the Ninth Schedule of the Government of India Act, 1935. Further, none of the learned Judges seem to me to notice that this Ordinance was passed for the preservation of the public safety, and that it must be construed in the light of that paramount object. In my opinion, there is no justification for assuming that a rule of construction applicable to Acts of Parliament passed in normal times applies to an emergency Ordinance passed in time of war. The language of a Bill can be discussed and altered in <ORG>, but the language of an Ordinance' cannot be discussed. In <NAME> v. Sir <NAME>  A.C. 206 Viscount <NAME> in his speech says this. (p. 218) :

The applicant's counsel truly say that the liberty of the subject is involved. They refer in emphatic terms to Magna Carta and the Bill of Rights, and they contend that legislation dealing with the liberty of the subject must be construed, if possible, in. favour of the subject and against the <ORG>. Adopting the language of Lord <NAME>, L.C. in this <ORG> in the case of <NAME> v. <NAME> I hold that the suggested rule has 'no relevance in dealing with an executive measure by way of preventing a public danger' when the safety of the state is involved.

<ORG> in that case were dealing with a Regulation enabling the Home Secretary to arrest a man and detain him, without any trial, without any right of appeal, and without any limitation to the period of detention. As far as I can see, the Regulation in that case was not expressly made retrospective, but nobody had the temerity to challenge it on that ground. If emergency legislation is not to be construed with a presumption in favour of preserving the liberty of the subject, I fail to see why it should be construed with a presumption in favour of preserving vested rights. In my opinion the normal presumption that a statute is not intended to interfere with vested rights has no application to the construction of this Ordinance. I may also observe that this rule as to the construction of statutes does not apply even to statutes passed for the protection of the public. In Halsbury's Laws of England, 2nd edn., Vol. XXXI, at p. 513, paragraph 670, the rule is stated in these terms :-

A statute is prima facie prospective, and does not interfere with existing rights, unless it contains express words, or there is the plainest implication to that effect. The fact of a statute being remedial, or designed to protect the public interest, is matter to which great weight is to be attached, and a different principle prevails where the statute is one that introduces a new remedy.

11. The case, which is cited for the proposition that public safety is of paramount importance, is The Queen v. <NAME> (1875) L.R. 10 Q.B. 195 In that case a statute provided that :-

Every person convicted of felony shall for ever be disqualified from selling spirits by retail, and no licences to sell spirits by retail shall be granted to any person who shall have been so convicted; and if any person shall, after having been so convicted as aforesaid, take out or have a licence to sell spirits by retail, the same shall be void to all intents and purposes; and every person who, after having been so convicted as aforesaid, shall sell any spirits by retail in any matter whatever shall incur the penalty for doing so without a licence.

12. The accused in that case had been convicted of felony before the passing of the statute, but nevertheless it was held that the statute applied to him, that is to say, that it had retrospective effect. <NAME> based his opinion on the view that the object of the enactment is not to punish offenders, but to protect the public against public-houses in which spirits are retailed being kept by persons of doubtful character, and the majority of the Judges held that, as the object of the statute was to protect the public, it must be given retrospective effect.

13. I would further hold that even if the presumption in question is to apply to this Ordinance, it is clear from the circumstances in which the Ordinance was passed that such Ordinance was intended to apply retrospectively.

14. In January, 1942, when the Ordinance was first promulgated, the Japanese armies were approaching the borders of India, and it is clear from the terms of Sub-section (3) of Section 1 that the emergency which the Governor General had in mind was in connection with danger from a hostile power. Now, if a hostile power had invaded any Province of India, it might have been quite impracticable to conduct criminal trials by the normal process. The ordinary number of judges might not be available, and it might and probably would be quite impracticable to secure juries and assessors to take part in criminal trials; and it is impossible to suppose that, if it became necessary to abrogate the normal criminal procedure for any such reasons, it was intended to preserve such procedure in pending cases. Again, it might be necessary in the case of a hostile invasion to deal with a large number of persons accused of, what is generally called, "fifth columnist activity", and it seems to me impossible to suppose that, if it was thought necessary in the interest of public safety that such persons should be tried expeditiously by Special Courts, the Governor General intended to exclude from the operation of the Ordinance persons whose offences had been committed before the date when the Ordinance was promulgated, or whose offences had been inquired into before that date. It is unlikely that any sympathy would be felt for the vested rights of such persons.

15. In August, 1942, when the Ordinance was amended by a further Ordinance and applied to internal disorders, it is notorious that the action of certain political leaders in India, and the counteraction taken by Government, had made it practically certain that serious disorders would take place, and it must have been apparent to the Governor General that Provincial Governments would very probably not introduce the Ordinance until disorders had started. That in fact is what happened in this Province and in the other Provinces in which these matters have been discussed. It seems to me almost fantastic to suggest that the Governor General intended that, if the misconduct of certain persons rendered it necessary to introduce special criminal Courts, those persons themselves should not be tried by such special criminal Courts, because they had committed an offence before the Ordinance was made applicable. In construing the Ordinance we have, according to the ordinary canons of construction, to ascertain what was the intention of the authority promulgating the Ordinance. We have to ascertain that intention from the language used giving to such language its natural meaning, we must have regard to the context in which the particular words are found, and we must also have regard to the circumstances in which the Ordinance was passed. In my judgment, it is a profound mistake for <ORG>, in construing emergency legislation introduced for the protection of public safety, to refuse to give effect to the plain and natural meaning of the words used on some supposed reluctance of the enacting authority to interfere with individual liberties and vested rights. In point of fact it is of the essence of most emergency legislation in war time that it does interfere, often very drastically, with individual rights and liberties, the justification being that the rights of individuals must yield to considerations of public safety. I cannot imagine a presumption better calculated to defeat the intention of the authors of emergency war time legislation than a presumption that such legislation was not intended to interfere with vested rights and the liberty of the individual.

16. I propose, therefore, to construe Section 5 of the Ordinance free from the supposition that it was not intended to interfere with possible vested rights. Now, the words are perfectly plain. The section says :

A Special Judge shall try such offences or classes of offences, or such cases 01 classes of cases as <ORG>, ... may, by general or special order in writing, direct.

Offences, no doubt, mean alleged offences, or offences charged, and the direction of the Government may be by reference to offences, that is to any, offences of murder, or arson, or as the case may be, or by reference to particular cases as happened with the petitioners' case. Their case was transferred by reference to its number and the names of the accused. But why is it not a case? To my mind, any case or offence which is awaiting trial can be placed for trial before a Special Judge. If the trial had commenced difficulty might arise, but in the present case the trial had not commenced. It is not necessary to express any opinion as to whether a case can be put before a Special Judge, the trial of which has already commenced in one of the ordinary Courts. But if the trial has not commenced, it seems to me plain, that, under Section 5 , the case can be placed before a Special Judge, and I see no reason why this Court should not give effect to the plain and natural meaning of the words used. The view of <ORG>, with which the other <ORG> seem to agree, that a case cannot be transferred after the Magistrate has taken cognizance, is based on the ground that the Ordinance must be construed so as not to interfere with vested rights, and if that view is wrong as I think it is, the basis of the decision falls to the ground.

17. In my judgment, therefore, this Ordinance was valid, and was applicable to the accused's case which has been validly transferred to a Special Judge in the Thana District. Therefore, the application fails. Rule discharged.

<NAME>, <NAME>

18. Two points have been urged before us, the first relating to the alleged invalidity of the Special Criminal Courts Ordinance, and the second to its applicability to the present case. On the first point I agree with the conclusion as well as the reasons given by the learned Chief Justice, and need not, therefore, dwell upon it.

19. On the second point about the applicability of the Ordinance to the present case, the contention on behalf of the petitioners is that although the Ordinance relates to criminal procedure, it cannot divest the accused of certain vested rights which they had when the <ORG> order applying the Ordinance to the present case was made. The contention is that certain rights relating to the trial, viz. trial by jury, the right of appeal in case of conviction, and even the right of bail throughout the pendency of the criminal proceedings, are substantive and vested rights in the accused which could not be taken away by changing the procedure after the commencement of the criminal proceedings. On this point reliance has been placed not only in the arguments before us but also in the several judgments recently given by other <ORG> on the analogy between civil actions and criminal proceedings. It may be taken as established that a right of appeal, a right to be tried by jury and even a right to get bail are substantive rights. The question, however, is at what stage they would come into existence in the sense of being such vested rights as cannot be taken away by subsequent legislation. The analogy of trial of civil cases on that point does not seem to me to be quite appropriate. As held in <ORG> v. <NAME> [1905] A.C. 369 it is quite true that the right to appeal would begin on the date of the trial of the civil suit, and to the same effect is the decision of <ORG> in <NAME> v. <NAME> (1928) I.L.R. 56 Cal. 512 in which it is observed that a suit, appeal and second appeal are really but steps in a series of proceedings connected by an intrinsic unity. When we come, however, to the application: of this principle' to criminal cases, the difficulty is that it is not in every criminal case that the trial begins when cognizance of the complaint is taken by a Magistrate. In cases which could be tried by a Magistrate, the trial may begin when cognizance was taken but in cases which are exclusively triable by <ORG> the trial does not begin unless and until an order of commitment is made. All the previous proceedings before the commitment are stages of enquiry at the end of which the accused may or may not be committed. The provisions of the Criminal Procedure Code with regard to cases exclusively triable by <ORG> are that during the pendency of the Magisterial enquiry the accused may be discharged under Section 209 of the Criminal Procedure Code, and even if a charge is framed against him under Section 210 , the Magistrate may, under Section 212 , examine the defence witnesses whose names might have been given by the accused in the list under Section 211 , and after such examination the Magistrate may, under Section 213 , Sub-section (2), cancel the charge and discharge the accused if he is satisfied that there are not sufficient grounds for committing him. It is only if the accused is not thus discharged either under Section 209 or under Section 213 , Sub-section (2), that the order of commitment to <ORG> is made, and thereafter the trial takes place. It is really when the trial begins that the right to be tried by a jury and the right of appeal might arise. Till then they are not acquired rights, because at any stage the accused might be discharged by the Magistrate. That being so, if the law relating to the procedure of the trial is changed before the date of the trial, the accused is liable to be tried by the amended procedure as he has not acquired any vested right to be tried by the original law. It is only if the law: is changed after the trial begins that an accused might claim to be tried by the original law as the right had vested in him. The general principle is that a statute is not to be construed to have a greater retrospective operation than its language renders necessary, and that no person has a vested right in any course of procedure, and therefore, alterations in procedure are to be retrospective unless there is some good reason against it. That good reason would be the possession of the right in the accused when the trial begins. In all the cases before us it is admitted that the offences with which the accused have been charged are exclusively triable by <ORG>. In the first case the order of commitment was passed on October 31, 1942, after the Ordinance was promulgated in the Bombay Province on October 26 and the trial began on December 16. In the rest of the cases no order of commitment was even made before the cases were directed to be sent to the Special Judge. In my view, even in the first case the accused had not acquired any vested right at the date of the commitment inasmuch as the Ordinance had already been applied to the Bombay Province five days earlier, and under Section 5 of the Ordinance the case of the accused was liable to be sent to a Special Judge by the order of the <ORG>.

20. It is, however, contended by Mr. <NAME> that the rights were vested in the accused on the date of the commitment in spite of the Ordinance having been applied to our Province before that date because the order of the <ORG> sending the case to the Special Judge was passed on December 7 after the commitment and therefore the order cannot take away the right which had vested in the accused. In my opinion, the material date is the date of the trial, but even taking it that the date for determining whether the rights have been acquired is the date of commitment, the <ORG> under Section 5 acquired the power of sending any case, which had not yet been tried, to a Special Judge before the commitment was made. As the liability of the accused to be tried by a Special Judge came into existence when the Ordinance was applied to our Province, it cannot be said that the rights had remained vested in them at the date of commitment. The rights ceased to exist at the date when the law of procedure was changed in our Province and not at the date when the administrative order of sending the case to the Special Judge was passed. The general principle is that once the trial proceeds under the existing law and if the law is amended during the pendency of the trial, the accused cannot be tried to his detriment under the new law. But that has not taken place even in the first case before us. With respect to the right to apply for bail, the accused had that right under the Criminal Procedure Code till the Ordinance was applied and also till it was ordered that the trial was to take place before <ORG>. Even thereafter the right was not taken away, but Section 24A , which was added to the Ordinance before it was promulgated here, allows the right to apply for bail to the special Courts and bail may be granted if the Court is satisfied that there were reasonable grounds for believing that the accused is not guilty of the offence. With respect to the right to apply to <ORG> under Section 491 of the Criminal Procedure Code, which is taken away by Section 26 of the Ordinance, that right could be exercised only if the Ordinance is invalid or does not apply to the case against the accused, but if it does, as we have held, there is no question of the exercise of the right.

21. In my opinion, therefore, even on the basis that the Ordinance was not meant to be retrospective in the sense of depriving the accused of their existing and substantial rights, in none of these cases were the accused in possession of such rights at the date of their trial. It is, therefore, not necessary to go into the question as to whether the Ordinance was, by its nature as an emergency war time measure, retrospective in its operation. It is sufficient to say that the accused had not any vested rights in them at the date when their trial began.

22. I, therefore, agree that the applications should be dismissed.

Weston, J.

23. I agree with the judgment given by Lord the Chief Justice, and have very little to add. On the question of the applicability of the Ordinance to the facts of this case, once it is held that' the principle of construction that what are called vested rights have not been intended to be disturbed will not apply to emergency legislation, such as Ordinance No. II of 1942, it seems to me that there is no good ground, in view of the wide terms of Section 5 of the Ordinance, which states :

A Special Judge shall try such offences or classes of offences, or such cases or classes of cases as <ORG>, or a servant of the Crown empowered by <ORG> in this behalf, may, by general or special order in writing, direct, to exclude from the application of this section offences or classes of offences, or cases or classes of cases which have been the subject of preliminary enquiry, but which have not yet come to the stage of trial. There seems to be abundant authority in <NAME> v. Sir <NAME> [1942] A.C. 206 that, when interpreting emergency legislation designed to ensure the safety of the <ORG>, the ordinary presumption that no interference is contemplated with rights of the subject should not be drawn. Lord <NAME> in the opinion delivered by him says (p. 251):

In the first place, it is important to have in mind that the regulation in question is a war measure. This is not to say that the <ORG> ought to adopt in wartime canons of construction different from those which they follow in peace time. The fact that the nation is at war is no justification for any relaxation of the vigilance of the <ORG> in seeing that the law is duly observed, especially in a matter so fundamental as the liberty of the subject-rather the contrary. But in a time of emergency when the life of the whole nation is at stake it may well be that a regulation for the defence of the realm may quite properly have a meaning which because of its drastic invasion of the liberty of the subject the <ORG> would be slow to attribute to a peace time measure. The purpose of the regulation is to ensure public safety, and it is right so to interpret emergency legislation as to promote rather than to defeat its efficiency for the defence of the realm. That is in accordance with a general rule applicable to the interpretation of all statutes or statutory regulations in peace time as well as in war time.

Agreeing, as I do, that no presumption exists that individual rights are not to be affected by the Ordinance, in my opinion the wording of Section 5 is sufficiently wide to cover the order made by <ORG> in this case directing that it should be tried by a Special Judge. I agree, therefore, that this application must be dismissed.

24. <NAME> applied for leave to appeal to <ORG>. This case involves a substantial question as to the interpretation of the Government of India Act. That question is whether the expression "cases of emergency" in Section 72 in the ninth schedule to the Act means a threatened emergency or an actual emergency. No question of an Order in Council is involved here. An Ordinance is not an Order in Council. We have here an instrument purporting to be made under Section 72 . The question is, Is it validly made ? When the Governor General makes an Ordinance saying that an emergency has arisen, the question, is, Is there an emergency for the purposes of Section 72 ? What is the authority of the Governor General and to what extent can he part with his powers ? There is also a question about the interpretation of the items in the Legislative Lists appended to the Act.

25. N.P. Engineer. The question about the interpretation of items in the lists becomes irrelevant in view of the terms of Section 102 of the Government of India Act. There is no question of interpretation of any section of the Act. In the Allahabad case the Court refused leave to appeal to <ORG>.

26. The other Applications Nos. 423, 435 and 436 of 1942 and No. 2 of 1943, being on similar facts, are also rejected.

27. In Application Nos. 431 and 436 of 1942 leave to appeal to <ORG> is refused, as no substantial question of law as to the interpretation of the Government of India Act, 1935, arises.


<NAME>, J.

1. This is an appeal by leave of <ORG> from a judgment of that Court dismissing an appeal by the appellant <ORG> from a judgment of <ORG> answering in favour of the respondent the Commissioner of Income-tax, Bombay District, certain questions of law referred to <ORG> by <ORG>.

2. Two questions are in issue : first, the validity of certain provisions of the Indian Income-tax Act , 1922-1939, by virtue of which there was made on the appellant company an assessment to income-tax on income which included income arising without British India, and second, the jurisdiction of a particular Income-tax Officer to make that assessment.

3. The directly relevant provisions of the Income-tax Act , 1922-1939, are contained in Sections 3 , 4 , 4A and 64 . These so far as it is necessary to state them are as follow:

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

4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which-

(a) are received or are deemed to be received in British India in such year by or on behalf of such person, or

(b) if such person is resident in British India during such year-

(i) accrue or arise or are deemed to accrue or arise to him in British India during such year, or

(ii) accrue or arise to him without British India during such year, or....

4A. For the purposes of this Act-

(c) a company is resident in British India in any year (a) if the control or management of" its affairs is situated wholly in British India in that year, or (6) if its income arising in British India in that year exceeds its income arising without British India in that year.

64. (1) Where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situate or, where the business, profession or vocation is carried on in more places than one, by the Income-tax Officer of the area in which the principal place of his business, profession or vocation is situate.

4. The material facts are that the appellant company was incorporated in the United Kingdom and that the control and management of its affairs are situate exclusively in that country. It is a member of the firm of <ORG> which carries on business in Bombay. <ORG> found as a fact that the appellant company was a "sleeping partner" in that firm. Their Lordships understand this finding to mean that the appellant company took no part in the management of the firm's affairs. In the year 1938-1939"the previous year" for the purposes of this casethe income of the appellant company arising in British India was Rs. 17,85,831 and its income arising without British India was Rs. 7,48,427. On February 12, 1941, the appellant company was assessed to tax for the assessment year 1939-1940 on the whole of its income. That assessment was made by the Additional Income-tax Officer within whose district the firm's place of business was situate.

5. Upon these facts, which are to be found in the ease stated by them, the <ORG> referred the following questions of law to <ORG>:

(i) Whether in the circumstances found by the <ORG> in its order under Section 33 , the assessee company was taxable to income tax and super tax for the assessment year 1939-1940 in respect of the income (Rs. 7,48,427 less Rs. 4,500) which accrued or arose to it without British India in the previous year?

(ii) Are the provisions of Section 4A(c) and 4(1)(b)(ii) of the Income-tax Act ultra vires <ORG>?

(iii) Is Sub-clause (6) of Clause (c) of Section 4A of the Amended Act applicable to the assessment of the assessee company for the year 1839-1940?

(iv) Whether on the facts found by the <ORG> the additional Income-tax Officer, Companies Circle, Bombay, had jurisdiction under Section 64(2) or Section 64(2) to make the assessment?

6. <ORG> and <ORG> answered all four questions in favour of the respondent. In the appeal before their Lordships the appellant company did not challenge the answer to the third question.

7. Their Lordships will deal first with the subject-matter raised by the first two questions.

8. The sub-sections referred to in the second question contain only definitions of "total income" and "residence of a company." By themselves these definitions do nothing. Taken in isolation they raise no question of ultra vires. But the use of the defined terms in the charging section of the Act ( Section 3 ) may result in ultra vires legislation. The question at issue here is but one question only; namely the effectiveness in law of the charging section in its application to companies which satisfy the test set forth in the definition of residence, as respects their total income computed as including income arising without British India.

9. The general nature of the charging section is clear. First the charge for tax at the rate fixed for the year of assessment is a charge in respect of the income of the "previous year," not a charge in respect of the income of the year of assessment as measured by the income of the previous year. That has been decided and the decision was not questioned in this appeal.

10. Second the rate of tax for the year of assessment may be fixed after the close of the previous year and the assessment will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone, and it arises not later than the close of the previous year though quantification of the amount payable is postponed. The fact of residence or non-residence of a company as gathered from the application of the statutory test has become established, though not formally ascertained, at the close of the previous year. The legislation therefore purports to tax a company which when the liability arose satisfied one or other of the conditions set forth in the definition of residence.

11. The precise question at issue can now be stated. The particular circumstances affecting the appellant companynamely that it was a member of a partnership carrying on business in British India and the size of the excess of its British Indian income over its other income are of course irrelevant in considering the validity of the legislation. Further it is not disputed that it is competent to <ORG> to subject to income tax all income arising in British India: the relevant definition of residence does not apply to individuals : and the legislation does not affect to impose a lien on income arising without British India but to tax companies in respect of income which includes such income. The second limb of the definition of residence is alone in issue. It is to be assumed that there is no connexion between the companies and British India except the derivation from British India of the major part of their income during the previous year. Are such companies in respect of their total income for that year persons subject to the power of <ORG> to legislate as respects taxes on income?

12. The contentions of the appellant company were that legislation in regard to income tax having an extra-territorial operation was ultra vires <ORG> and that the impugned legislation had that operation. Both contentions were disputed by the respondent.

13. Their Lordships do not approach the matter on the formal lines embodied in these contentions. There is no rule of law that the territorial limits of a subordinate legislature define the possible scope of its legislative enactments or mark the field open to its vision. The ambit of the powers possessed by a subordinate legislature depends upon the proper construction of the statute conferring those powers. No doubt the enabling statute has to be read against the background that only a defined territory has been committed to the charge of the legislature. Concern by a subordinate legislature with affairs or persons outside its own territory may therefore suggest a query whether the legislature is in truth minding its own business. It does not compel the conclusion that it is not. The enabling statute has to be fairly construed.

14. The relevant power ( Section 99(1) and Section 100 of the Government of India Act, 1935) is a power to make laws for the whole or part of British India or any Federated State with respect to "taxes on income other than agricultural income." The power to tax agricultural income is given to the Provincial legislatures and the exception throws no light on the construction of the phrase "taxes on income." None of the other provisions of the Act affords any guidance as to the income or persons who may be subjected to tax. Only Sub-section (2) of Section 99 need be particularly referred to. That sub-section provides that "without prejudice to the generality of the powers conferred by the preceding sub-section no Federal law shall, on the ground that it would have an extra-territorial operation, be invalid so far as it applies to" certain persons and things. In their Lordships' view this sub-section does no more than assume that there may be some laws having an extra-territorial operation validly made pursuant to Sub-section (1). It is no help one way or another in determining the authorized area of taxes on income.

15. Where <ORG> has conferred a power to legislate on a particular topic, it is permissible and important in determining the scope and meaning of the power to have regard to what is ordinarily treated as embraced within that topic in the legislative practice of the United Kingdom : see <NAME> v. <NAME> [1933] A.C. 156. The point of the reference is emphatically not to seek a pattern to which a due exercise of the power must conform. The object is to ascertain the general conception involved in the words used in the enabling Act.

16. Income tax legislation in the United Kingdom hasputting the matter broadlyproceeded on the lines that there is subjected to income tax all income arising within the United Kingdom and (independently of remittance to the United Kingdom) some, but not all, income arising abroad belonging to a person resident in the United Kingdom.

17. The resulting general conception as to the scope of income tax is that given a sufficient territorial connection between the person sought to be charged and the country seeking to tax him income tax may properly extend to that person in respect of his foreign income.

18. In their Lordships' view that general conception finds a place in the phrase "taxes on income" as used in the Government of India Act, 1035. That conclusion marches with the construction which their Lordships would, without the aid of a consideration of the British legislation, have placed on the Government of India Act, 1935.

20. The provisions of the British Income-tax Acts do not in their Lordships' view give any further definition of the scope of the power to impose taxes on income. The distinction drawn in British legislation between those foreign incomes which are, and those foreign incomes which are not, taxable in the hands of a "resident" does not mark any matter of principle which can be considered as imported into the phrase "taxes on income." In their Lordships' opinion-they confine their attention to companies-the necessity that the territorial connection should be residence as understood for the purpose of the British Income-tax Acts is not embedded in the terms of the power. It is artificial in any event to attribute residence to a company. No less artificial is the selection as a matter of judicial construction of the British Income-tax Acts of the place at which central control is exercised as the residence of a company. The principlesufficient territorial connectionnot the rule giving effect to that principleresidenceis implicit in the power conferred by the Government of India Act, 1935.

21. The result is that the validity of the legislation in question depends on the sufficiency for the purpose for which it is used of the territorial connection set forth in the impugned portion of the statutory test. Their Lordships propose to confine themselves to that short point and do not propose to lay down any general formula defining what territorial connection is necessary. In their view the derivation from British India of the major part of its income for a year gives to a company as respects that year a territorial connection sufficient to justify the company being treated as at home in British India for all purposes relating to taxation on its income for that year from whatever source that income may be derived. If it is so at home in British India, it is a person properly subject to the jurisdiction of <ORG>.

22. Unlike an individual a company has an economic existence only. No activities other than the making and spending of money are open to it. When a company in any particular year derives the major portion of its income from a country, it is a legitimate conclusion that the company has rooted itself there for that year. The connection that results is at least as solid as the connection given by the place of central control; and in a search for a home for income tax purposes as respects that year that connection might well be thought more pertinent than the connection, readily changeable and often changed, given by the place of central control. In such a search the place where commercial activities yield the result is at least as relevant as the place where they are conceived. A company which in substance lives on a country may rationally be treated as living in it.

23. It is unnecessary to consider whether the statutory test is a satisfactory definition of residence. That is an abstract question. It is sufficient to come to the conclusion that a company satisfying the statutory test is a person within the territory of British India so far as concerns taxes on its income accruing during the period when the test is satisfied.

24. The remaining question relates to procedure. The submission of the appellant is that, assuming the challenged provisions not to be ultra vires, the assessment was not made by the proper officer. The relevant provision is Section 64 , and the facts have already been stated. The contention of the appellant company was that by reason that it took no active part in the partnership business it did not carry on business at the partnership place of business. There is no substance in this contention. There is no particular provision in the partnership articles which needs consideration. The essence of partnership is that each of the partners is the agent of the others for the purpose of carrying on the partnership business. Failure by any one partner to take part in the mangement of the business does not therefore have the result that he is not carrying on business as a partner.

25. Their Lordships will humbly advise His Majesty that this appeal be dismissed. The appellant company will pay the costs of the appeal.