<NAME>, C.J.

1. In 1882 the 1st defendant executed a mortgage, Exhibit A, of the suit properties in favour of one <NAME>, who transferred it on 15th August 1892 by Exhibit B to the father of the 1st plaintiff, whose son, the 1st plaintiff, was married to the 1st defendant's daughter. On 13th February 1893, the plaintiff's father obtained a lease, Exhibit E, of the suit properties from the 1st defendant at a rent of Rs. 300, which would appear to have been an undervalue. On 9th February 1897 the 1st defendant executed a fresh mortgage, Exhibit F, in favour of the 1st plaintiff's father for the amount found due on the mortgage Exhibit A. Subsequently in December 1899, the 1st defendant's equity of redemption was sold in execution by a decree-holder (see Exhibit K) and except as regards 9-5/8 f-awnies was purchased at the Court sale for Rs. 182 by one <NAME>, who a few days later by Exhibit 3 transferred the interest he had acquired to the 1st plaintiff for the same sum of Rs. 182. Between four and five years later, the 1st plaintiff re-conveyed the suit properties except the 9-5/8 cawnies to the 1st defendant for Rs. 185. The document reads at first sight like an out-and-out sale but beneath the signature of the vendor and his witnesses there is a further statement signed by the 1st plaintiff alone, to the effect that the sale was subject to two mortgages one of which was the suit mortgage. In 1910 the 1st plaintiff and his sons instituted the present suit on the mortgage so reserved and obtained a decree and one of the main contentions raised by the present appellants, who represent subsequent alienees from the 1st defendant, is that the suit mortgage was extinguished when under Exhibit 3 the 1st defendant's equity of redemption in the suit properties was acquired by the 1st plaintiff. This acquisition must be considered to have been made on behalf of his joint family, which included a younger brother since deceased and the 1st plaintiff's sons who are co-plaintiffs with him in this case, and it was treated as joint family property in Exhibits 10 and 11. It may, therefore, be said that by Exhibit 3 the mortgagees acquired the equity of redemption except as regards 9-5/8 cawnies. The owners of these items are not parties to the present suit and though the items acquired by them may be liable for their proportionate share of the mortgage-debt, that does not appear to affect the question whether there has been a merger as regards the items of the mortgaged properties which have been acquired by the mortgagees.

2. This question of merger has recently been considered by <ORG> in <NAME> v. <NAME> (1914) A.C. 132 : 83 L.J. Ch. 349 : 110 L.T. 434 : 58 S.J. 218 and by <ORG> in <CITATION> 16 Ind. Cas. 210 : 40 C. 89 : 16 C.W.N. 985 : 23 M.L.J. 311 : 12 M.L.T. 352 : (1912) M.W.N. 944 : 14 Bom. L.R. 1046 : 16 C.L.J. 606. As pointed out in the former case by the Lord Chancellor, where the mortgagor himself has purchased the interest of the 1st mortgagee he cannot derogate from his own bargain by setting up the mortgage so purchased against the 2nd mortgage created by himself: <NAME> v. Lord Vault 2 K. and J. 650 affirmed 6 Dec. M. and G. 638 : 26 L.J. Ch. 128 : 3 Jur. (N.S.) 169 : 5 W.R. 188 : 69 K.R. 943 : 106 R.R. 235. Next there is the case of a third party purchasing the mortgaged property and paying off a prior mortgage out of the purchase-money as in <NAME> v. <NAME> 3 Mer. 210 : 17 R.R. 67 : 36 E.R. 81. <ORG> have held that decision to be inapplicable to India in <NAME> v. <NAME> 11 T.A. 126 : 10 C. 1035 : 8 Ind. Jur. 396 : 4 Sar. P.C.J. 543 and the Lord Chancellor in the case just cited, whilst refraining from expressing any opinion as to whether or not it was correctly decided, observed that it amounted to no more than this that in such circumstances the presumption was that the purchaser did not intend to keep the mortgage alive. So that even here the question was treated as one of the intention of the purchaser. Lastly we have cases like the present where it is an encumbrancer who acquires the equity of redemption see <NAME> v. <NAME> 34 Beav. 645 : 11 Jur. (N.S.) 836 : 13 L.T. 56 : 13 W.R. 1010 : 55 E.R. 784 : 145 R.R. 717 and to these cases Section 101 Transfer of Property Act, expressly applies. The section is as follows: Where the owner of a charge or other inoumbrance on immoveable property is or becomes absolutely entitled to that property, the charge or incurnbrance shall be extinguished, unless lie declares, by express words or necessary implication, that it shall continue to subsist or such continuance would be for his benefit". The word "absolutely" cannot mean that there are no mesne incunibrances outstanding, as the very object of the exception to the section is to protect the prior mortgagee against such incumbrances. When, as in the recent cases of <CITATION> 16 Ind. Cas. 210 : 40 C. 89 : 16 C.W.N. 985 : 23 M.L.J. 311 : 12 M.L.T. 352 : (1912) M.W.N. 944 : 14 Bom. L.R. 1046 : 16 C.L.J. 606 and <CITATION> 23 Ind. Cas. 121 : 38 B. 369 : 16 Bom. L.R. 26 there are no such incumbrances, there can scarcely be any room for the exception, and there is a merger under the section. In the former case where under the local revenue law, land was sold for arrears of revenue subject to any mortgage subsisting at the date the arrears fell due, and it appeared that the arrears fell due between the date when the mortgagee purchased the property under his mortgage-decree and the confirmation of the sale to him, it was held that the mortgage-debt was extinguished as from the date of the purchase and that there was consequently no mortgage subsisting at the date when the arrears fell due. The only mortgage of any of the suit properties effected by the 1st defendant subsequently to the suit mortgage and before he parted with his interest in the equity of redemption under Exhibit K was in favour of the father of the 31st defendant of items 53 and 56 for Rs. 160 under Exhibit 19. The 1st defendant whose evidence must be received with caution deposes that subsequently to the original mortgage, Exhibit A, which was renewed by the suit mortgage, Exhibit F, he executed two mortgages in favour of one <NAME>, a District Registrar, and these mortgages if are still outstanding.on the date of Exhibit 3 would have been postponed to the suit mortgage. It appears, however, from Exhibits 43 and 44 that on the 7th December 1889 the 1st defendant sold two villages for Rs. 30,000 to one <NAME>, who undertook to discharge these mortgages out of the purchase-money and as we find no reference to them either in Exibits F, L or 19--the mortgage-deeds have not been produced--I think it is not shown that these mortgages were outstanding at the date of Exhibit 3 as to afford any ground for supposing that it was the intention of tha 1st plaintiff to keep the suit mortgage alive as a protection against them or to bring the case within the exception to Section 101 of the Transfer of Property Act.

3. The subsequent mortgage of two items only for the small sum of Rs. 160 under Exhibit 19 could not affect the mortgagee's intention as regards the other items. We find the 1st plaintiff and his brother in 1901 pleading in the plaint, Exhibit 11, that by virtue of Exhibit 3, the entire interest in the suit lands, which were included in the properties mortgaged under Exhibit F, belonged exclusively to them and in 1903 by Exhibit 10, they mortgaged the suit properties for Rs. 2,000 without any reference to any subsisting mortgage on them. In these circumstances and apart from Exhibit L, I do not think it is shown that there was not a merger under the terms of Section 101 , Transfer of Property Act , when the mortgagees acquired the equity of redemption under Exhibit 3. As to Exhibit L, I cannot agree with the Subordinate Judge that the reservation of the suit mortgage inserted out of its proper place in that document is sufficient evidence of an intention, on the part of the mortgagees at the date of the purchase of the equity of redemption some five years previously, to keep alive the suit mortgage: it might be otherwise if the purchaser of the equity of redemption under Exhibit 3 by the 1st plaintiff was benami for the 1st defendant, but that is not the plaintiffs' case and is negatived by the way in which the plaintiffs subsequently dealt with the property as full owners.

4. If there was a merger under Exhibit 3, the suit mortgage was discharged and the suit as framed must fail. The Subordinate Judge has dismissed the suit as regards some of the subsequent alienees for value from the 1st defendant, on the ground that the 1st plaintiff attested the conveyances under which they claim, but has overruled that plea in the case of the present appellants in the absence of such attestation. Even if the facts do not amount to an estoppel, the conduct of the 1st plaintiff in executing Exhibit L in a form which at first sight represents the 1st defendant as purchasing free from incuinbrances and his subsequent conduct in treating the 1st defendant as full owner and attesting alienations by him to third parties, would appear to have misled the present appellants and having regard to these and to other suspicious circumstances going to the foundations of the plaintiffs' claim, I think it sufficient to say that that claim fails as laid and that the appeal must be allowed and the suit dismissed with costs throughout.

5. <NAME>, J.--I entirely agree with my <NAME>. The 1st defendant was the owner of the properties in <NAME> suit. He mortgaged them to the father of the 33rd defendant in 1882 (Exhibit A). The 1st plaintiff's father obtained an assignment of that mortgage (Exhibit B) in 1892. Some payments were made towards the debt. Finally in 1897, the 1st defendant executed Exhibit P for the debt remaining unpaid under Exhibit A to the 1st plaintiff's father. Previous to it a lease (Exhibit E) was granted to the mortgagee for a period of 10 years from 1893. The 1st plaintiff's father was in possession under that lease. The rent reserved was only Rs. 300 a year, which on the evidence was far below what the 1st defendant could have got as income from the mortgaged property. It was suggested that this low rent was paid as the arrangement was that the 1st plaintiff's father should pay himself the amount due under the mortgage from the surplus income. But there is no clear evidence of this agreement. While the 1st plaintiff's father was in possession, a money decree was-obtained against the 1st defendant by a third party, and in execution of that decree the equity of redemption in the mortgaged properties was purchased by one" <NAME> for Rs. 185. It was said' that this purchase by <NAME> was really benami for the plaintiff. There are recitals in some of the documents which show that <NAME> was only a name-lender for the 1st plaintiff; but it is not necessary to pursue this matter further, because nothing turns upon it. <NAME> conveyed the equity of redemption purchased by him to the 1st plaintiff by Exhibit III in 1900. The 1st plaintiff sold to the 1st defendant all his right, title and interest in the properties subject to a reservation, which I shall refer to later on, under Exhibit L on the 30th of June 1905. It is proved that after this purchase by the 1st defendant, he either sold or mortgaged the properties as if he were absolute owner thereof. On the 20th March 1906 he mortgaged to the 6th defendant some of the properties which were covered by Exhibit L for Rs. 1,000 (Exhibit XX). This was attested by the 1st plaintiff. By Exhibit IV on the 27th April 1906 the 1st defendant transferred to his daughter another portion of the property. This again was attested by the 1st plaintiff. By Exhibit II of the 13th May 1906, he transferred to his wife some property. On the 26th November 1906 he mortgaged to certain persons another portion of the property under Exhibit IX. Both these alienations were similarly attested by the 1st plaintiff. I will now refer to transactions which were not attested by the 1st plaintiff. On the 7th April, 1907, the 1st defendant by Exhibit XV mortgaged to the 8th defendant some properties included in Exhibit L. By Exhibit XIII on the 10th May 1907, he mortgaged to the same person, the 8th defendant, another property for Rs. 600. On the 15th August 1907 by Exhibit XVI, he sold other properties to the 12th defendant. In all these documents, whether attested by the 1st plaintiff or not, there are recitals which were calculated to induce the transferee to believe that the 1st defendant was the absolute owner of the properties ho was dealing with. The 1st plaintiff instituted the present suit to enforce his mortgage rights under Exhibits A and F. No claim is put forward in respect of the reservation contained in Exhibit L. The basis of the 1st plaintiff's claim is that the mortgage of 1892 and of 1897 is still subsisting, and that he is entitled to proceed against the properties for the debt duo to him. The 1st defendant is the original mortgager and the transferee of the rights of the 1st plaintiff in the equity of redemption. The other defendants are the alienees of the mortgaged properties from the 1st defendant. The defence of these alienees was, the right of the 1st plaintiff under the mortgages was extinguished by the transfer which he obtained from <NAME> of the equity of redemption. The Subordinate Judge came to the conclusion that as against those alienees whose conveyances or mortgages were attested by the 1st plaintiff, the 1st plaintiff is not entitled to rely on his mortgage to bring the properties in their possession to sale, but that the 1st plaintiff was entitled to proceed against the properties of the other defendants whoso alienations were not attested by him (1st plaintiff). These latter defendants have preferred this appeal.

6. Before dealing with the questions of law argued by Mr. <NAME>, it is well to point out that the 1st plaintiff is the son-in-law of the 1st defendant, and that the appellants are strangers to both the 1st plaintiff and the 1st defendant. The result of the 'conclusion at which the Subordinate Judge has arrived is to throw on the property in the hands of these appellants the whole burden of the mortgage-debt amounting to Rs. 23,000 and odd. It is clear that those properties are not worth more than Rs. 16,000 or Rs. 17,000 at the utmost. There is the question that these appellants wore liana fide purchasers for value. I am unable to accept the contention of the appellants that the Ist plaintiff is estopped by his conduct in attesting the sale-deeds in favour of his wife and mother-in-law from now disputing that the 1st defendant had riot an absolute interest in the properties. There is unfortunately no clear evidence that these appellants took the properties on the faith of the conduct of the 1st plaintiff. Although I have come to the conclusion, I feel little hesitation in saying that this is an iniquitous attempt on the part of the 1st defendant to charge the whole mortgage-debt upon properties in the hands of strangers after having secured to his relations with the concurrence of the 1st plaintiff a large slice of the property originally mortgaged.

7. One other circumstance may be mentioned. This suit is not based upon Exhibit L, which is a conveyance from the 1st plaintiff to the 1st defendant and which also contains a reservation in 1st plaintiff's favour in respect of his, mortgage. It was argued by the learned <NAME> for the appellants that the clause in this document which says the amount due to the said Visvanatha Aiyar is Rs. 2,000. This sum of rupees two thousand and the hypothecation right which I have and which is mentioned on the first page hereof are not discharged from the deed", can have no effect as against the clear and unambiguous recital in the operative portion of the document. It has to be noticed that, while the-first portion of the document was signed and attested, this latter portion is not attested. It has been suggested that this latter clause was a memorandum made at the time of registration to enable the executant to pay less stamp duty upon the document than he would have been obliged to do if the" property was conveyed free of encumbrances. This suggestion receives support from the fact of the so-called reservation not being attested and also from the fact that subsequently the Collector to whom the document was sent by the Registrar levied the full stamp duty on the document, treating apparently the new clause as of no effect. It has also been argued before us that if in a deed the subsequent clause is inconsistent with the operative portion of it, effect should not be given to it. <NAME> on Deeds, page 80, and the observations of <ORG>, in <ORG> v. <NAME> 2 Q.B. 940 at p. 967 : 2 G. and D. 326 : 11 L.J. Ex. 442 : 114 E.R. 364 : 57 R.R. 842. were quoted for the proposition. It is not necessary to give a decision whether the highly artificial rules of construction regarding deeds drawn up by solicitors fully, conversant with conveyancing can be applied to documents executed in this country. The cardinal principle which should guide <ORG> in such matters is to ascertain the intention of the parties. Technical rules of construction should as far as possible be avoided. Therefore, I do not rest my decision upon the construction to be placed on Exhibit L. This suit was not based upon that document; it is not necessary in the view I am taking to decide whether by this memorandum, made at the end of the document, the 1st plaintiff reserved to himself the right to proceed against the properties. Exhibit L will be relevant in considering whether the alienees, who must be deemed to have had constructive notice of its contents, understood the document to convey only a limited interest to the 1st defendant. This document and the other evidence bearing on the question will be considered in that connection.

8. The main point for decision is whether, by the purchase of the equity of redemption from <NAME>, the 1st plaintiff's mortgage-debt was extinguished. Mr. <NAME> contended that if there are intervening incumbrances, the purchaser of the equity of redemption may use his mortgage as a shield to protect himself against them, but that he could not sue upon his mortgage. There is no document from the 1st defendant to the 1st plaintiff which secures any right to proceed against the property in the hands of the former. Section 101 of the Transfer of Property Act was relied upon very strongly by Mr. <NAME> for the respondent. That section was intended to introduce with some limitations the rule of law enunciated in <NAME> v. <NAME> 3 Mer. 210 : 17 R.R. 67 : 36 E.R. 81. That decision has been the subject of considerable adverse criticism in the English Courts. Quite recently, <ORG> in <NAME> v. <NAME> (1914) A.C. 132 : 83 L.J. Ch. 349 : 110 L.T. 434 : 58 S.J. 218 discussed that judgment. Some of the observations of the learned Lords who delivered their opinions indicate that this case is no longer a binding authority. However that may be, Courts in India are governed by the statutory provisions contained in Section 101 of the Transfer of Property Act. It is clear that section contemplates the existence of puisne encumbrances. Unless that may be the object, the clause relating to the subsistence of the encumbrance being for the benefit of the purchaser can have no meaning. The person who becomes absolutely entitled to the property cannot reserve in his favour and ss against himself his own mortgage. As I read the section, it leaves untouched the general rule of law that when a mortgagee purchases the equity of redemption the incumbrance in his favour is extinguished. It only enacts that where there are other mortgages on the property, an intention will be imputed to the mortgagee-purchaser that he intended to keep alive his own mortgage as a protection against subsequent claimants. The discussion in <ORG> in the case already referred to shows that the rule enabling the purchaser to fall back on his mortgage is an infringement of legal rights. Consequently a strict construction should be placed on this provision of law. I am of opinion that the mortgagee-purchaser can use his previous mortgage only as a shield if there are mesne encumbrances, and that also only in respect of the properties which are covered by such encumbrances. I shall deal with the questions whether there were any subsisting encumbrances at the time the equity of redemption was purchased later on. Even if there are such encumbrances, I am of opinion that the mortgagee-purchaser is not entitled to sue upon his mortgage. I am also of opinion that the 1st plaintiff did not intend to keep alive the 1st mortgage for his benefit. The clause in Exhibit L reserving such right is suspicious; The relationship of the parties (son-in-law and father-in-law) suggests that the 1st plaintiff parted with his absolute rights. It is true that the low price for which the sale was effected is an element for consideration. As against this, there is the fact that upon the properties of the value of over Rs. 50,000 the 1st defendant recovered only Rs. 300 a year for 10 years. It may be that the son-in-law-parted with his full rights in view of his having enjoyed the large income from the properties. There is the further fact that after the transfer under Exhibit L absolute conveyances attested by the 1st plaintiff were effected of the properties. The 1st plaintiff could not have intended to reserve his mortgage rights when he knew that these properties were to be sold to his own wife and his mother-in-law. To my mind the relationship of the parties, the enjoyment of a large income by the 1st plaintiff without accounting for it to the 1st defendant and the subsequent conduct in attesting conveyances, all show unmistakably that the 1st plaintiff never intended to keep his mortgage alive. Further, the 1st plaintiff before the sale to the 1st defendant conducted proceedings as absolute owner. See Exhibits XI, S, X and Q 4. It is clear from these documents that it was not for his benefit to regard himself as a mortgagee.

9. The contention that the purchaser has two distinct and separate interests in the property in all cases where there are mesne incumbrances found favour with <NAME>, J., in the case reported as <NAME> v. <NAME> 7 C.L.J. 1 at p. 32 but <ORG> reversed this decision. <CITATION> 16 Ind. Cas. 210 : 40 C. 89 : 16 C.W.N. 985 : 23 M.L.J. 311 : 12 M.L.T. 352 : (1912) M.W.N. 944 : 14 Bom. L.R. 1046 : 16 C.L.J. 606. The observations of their Lordships leave no room for doubt that where there are no encumbrances, there is an extinguishment of the right under the mortgage when the equity of redemption is acquired. <CITATION> 23 Ind. Cas. 121 : 38 B. 369 : 16 Bom. L.R. 26 and <CITATION> 23 Ind. Cas. 559 : 36 A. 327 : 12 A.L.J. 457 are to the same effect. In <NAME> v. <NAME> 7 M.H.C.E. 229, it was decided by this Court that the mortgage right can only be used as a shield against puisne encumbrances. Considerable stress was laid on behalf of the respondent upon the decision of the Full Bench in <CITATION> 9 Ind. Cas. 513 : (1911) 1 M.W.N. 165 : 21 M.L.J. 213 : 9 M.L.T. 431 (F.B.). In that case there was first a simple mortgage, then the mortgagor granted a <ORG> mortgage. The first mortgagee became the owner of the equity of redemption by purchasing it at a sale in execution of a decree in a suit on his mortgage to which the <ORG> mortgagee was not a party; and then brought a suit to recover possession of the property from the <ORG> mortgagee. The learned Judge held that he was not entitled to possession, the ground of decision being that the 1st mortgagee can only claim to stand in the shoes of the mortgagor, and as the mortgagor had given a <ORG> mortgage the first mortgagee-purchaser acquired no right to sue for possession. There can be no question that this conclusion is correct. But the respondent's <ORG> relies upon certain observations in the judgment for the position where there are puisne encumbrances, the first mortgagee-purchaser can never get an absolute title to the property. In page 225 it is stated: Merger, on principle, is impossible, for the case of first mortgagee acquiring the equity of redemption, when a second mortgage is still outstanding, is not one of the rights and correlative objection coalescing in the same person, or of a smaller interest getting absorbed by a larger, or of two contiguous interests carved out of property combining to form a larger whole." No authority is quoted for this broad proposition excepting an extract from Lindley's Jurisprudence, Appendixes 57 and 58 I may mention that the term merger is not appositely used in this connection. The rights of puisne encumbrancers are neither lost nor merged in the title acquired by the mortgagee-purchaser. They would be outstanding--See Section 55 , Clause (d) of the Transfer of Property Act . The only question is whether the first mortgage is capable of enforcement as such in a suit founded on it. If it was intended to lay down that it is open to a mortgagee purchaser to sue on his mortgage to foreclose the latter mortgages, I respectfully dissent from the conclusion. In my view the mortgage was extinguished when the 1st plaintiff acquired the equity of redemption and it is not open to him to sue upon it, whatever may be his rights to use the mortgage as a defence against puisne encumbrancers. <CITATION> 16 Ind. Cas. 877 : 38 M. 18. Moreover, there is no satisfactory evidence in this case of any subsequent mortgages having subsisted at the time the ejuity of redemption was purchased from Suudara Raja Aiyangar. This question was not argued before the Subordinate Judge; the documents creating these mortgages have not been exhibited. But reliance is placed upon two judgments in which reference is made to, them. Those judgments do not show that the mortgages were valid and subsisting at the time when the equity of redemption was acquired by the 1st plaintiff and his predecessor. On-the other hand Exhibits 43 and 44 show that the previous encumbrances were intended to be paid off in 1889. Non const at, they have not been discharged.

10. I would, therefore, allow the appeal and dismiss the suit against these defendants with costs here and in the Court of first instance.


JUDGMENT <NAME>, J.

1. This application under Article 32 of the Constitution is directed against the order of detention of the petitioner Under Section 3(2) of the National Security Act, 1980. The order is dated September 16, 1984, and was made at a time when the petitioner had already been in Mainpuri Jail as an under trial prisoner in connection with certain pending criminal cases. The grounds of detention were served on the petitioner along with the order of detention. Petitioner asked for certain papers with a view to making an effective representation but when the request was rejected, the petitioner made a representation. The <ORG> did not accept the petitioner's plea. The petitioner's detention was confirmed by <ORG>. Thereupon the writ petition has been filed.

2. A return has been made to the rule nisi and the detaining authority has justified his order. It may be pointed out that the petitioner had '. been detained under the same provision by an earlier order dated December 7, 1981. That detention was quashed by <ORG> by order dated May 27, 1982, in writ petition No. 2649/82.

3. Five grounds were advanced in support of the order of detention. They are :

(1) An incident of April 16, 1980, when the detenu and the members of his gang came armed with dangerous weapons and committed a dacoity in the house of one <NAME> on the basis of which Crime No. 72/80 Under Section 395 / 197 , I.P.C . was registered and the trial was pending;

(2) On may 10/11, 1980, the detenu along with members of his gang armed with dangerous weapons committed a dacoity at the house of one <NAME> and a case Under Section 396 , I.P.C . was pending;

(3) On July 4, 1980, the detenu along with others opened fire on a police party with the intention to kill them. When the police finding the detenu and the gang of dacoits accosted them, a kidnapped boy was recovered from the gang of dacoits and a prosecution Under Sections 147 , 148 , 149 , 307 and 364 , I.P.C . is pending;

(4) The detenu is an active member of the inter-District gang enlisted as No, I.D. 64;

(5) On January 8, 1983, information was received by the police that a gang of dacoits were present in Village Kapreta. When the police accosted there was exchange of fire as a result of which three dacoits of the gang of the detenu died. Though the detenu was identified he escaped. A criminal case was instituted for offences Under Sections 147 , 148 , 149 , 307 , IPC read with Section 25 of the Arms Act and Sections 5 / 7 of the Explosives Act but the detenu was acquitted after trial for want of evidence.

4. In the grounds of detention, apart from specifying the above five grounds, reference was made to the fact that the detenu creates public terror on account of his criminal activities which are absolutely prejudicial to the maintenance of public order. It was further mentioned therein:

At this time you were detained in the District Jail, Mainpuri and you have filed an application for bail in <ORG> which is fixed for hearing on September 17, 1984, and there is positive apprehension that after having bail you will come out of the jail and I am convinced that after being released on bail you will indulge in activities prejudicial to the maintenance of public order.

5. Five grounds were indicated of which four are referable to specific incidents. Of these four, three are of 1980, prior to the making of the previous order of detention. They are certainly stale and not available to be used in an order of detention of 1984. The only other incident which was subsequent to the quashing of the previous detention and which may have some nexus with the present order of detention is of 1983. Admittedly, a trial had taken place and there has been acquittal. That ground, therefore, was not available to be used.

6. On a reading of the grounds, particularly the paragraph which we have extracted above, it is clear that the order of detention was passed as the detaining authority was apprehensive that in case the detenu was released on bail he would again carry on his criminal activities in the area. If the apprehension of the detaining authority was true, the bail application had to be opposed and in case bail was granted, challenge against that order in the higher forum had to be raised. Merely on the ground that an accused in detention as an under trial prisoner was likely to get bail an order of detention under the National Security Act should not ordinarily be passed. We are inclined to agree with counsel for the petitioner that the order of detention in the circumstances is not sustainable and is contrary to the well settled principles indicated by this <ORG> in series of cases relating to preventive detention. The impugned order, therefore, has to be quashed.

7. We allow the writ petition, and direct that the petitioner be set at liberty forthwith unless he is in lawful detention otherwise.


PETITIONER: RAM <NAME>AYAL Vs. RESPON<NAME>ENT: BRIJRAJ SINGH AN<NAME> ORS. <NAME>ATE OF JU<NAME>GMENT: 30/04/1969 BENCH: <NAME>, J.C. BENCH: <NAME>, J.C. MITTER, G.K. CITATION: 1970 AIR 110 1970 SCR (1) 530 1969 SCC (2) 218 CITATOR INFO : R 1971 SC 267 (33) R 1971 SC1295 (17) R 1972 SC 580 (22) E 1973 SC 178 (9) R 1975 SC 308 (13,14) RF 1975 SC2299 (118,495,498) <NAME> 1985 SC1133 (6,21) ACT: Representation of the People Act , 1951, ss. 31(1) , 77(1)  81(1) --If material amendment of election petition can be allowed after expiry of period in S. 81(1) within which petition itself must be filed-Signature and authentication of petition under S. 31(1) -If authentication can be done subsequent to presentation of petition--Voluntary expenses to help candidate's election-If liable to be included within limits under S. 77(1) . HEA<NAME>NOTE: The first respondent was elected to <ORG> in February 1967. The appellant, a voter in the constituency, challenged his election by an election petition claiming that the nomination paper of one <NAME> was illegally rejected by the Returning Officer and that the respondent had committed several corrupt practices; it was also alleged that the Maharaja and Rajmata of Gwalior had helped the first respondent's election in a number of ways and had in effect acted as his agents and had incurred considerable expenditure which exceeded the limits prescribed by the statute. <ORG> dismissed the petition and also dismissed an application made by the petitioner for amendment of the petition to include a new allegation on the ground that it was made after the expiry of the period prescribed for filing an election petition. On appeal to this Court, HEL<NAME> : <NAME>ismissing the appeal : (i) <ORG> had rightly held that it could not exercise its power to permit amendment of a petition so as to allow new grounds or char- es to be raised or the character of the petition to be so altered as to make it in substance a new petition, if a fresh petition on those allegations would be barred on the date of the proposed amendment. <CITATION>  S.C.R. 370; followed. (ii) The mark made by the proposer on <NAME>'s nomination paper was not authenticated or attested by one of the designated officers as required under s. 31(1) read with the definition of the expression "sign" in s. 2(1) of the Representation of the People Act, 1951, and the provisions of r. 2(2) of the Conduct of Election Rules. 1961. It was therefore rightly rejected by the Returning.- Officer. The requirement of s. 33(1) of the Act that the nomination shall be signed by the candidate and by the proposer is mandatory. Signing, whenever signature is necessary, must be in strict accordance with the requirements of the Act and where the signature cannot be made it "must be authorised in the manner prescribed by the Rules." Attestation is not a mere technical or unsubstantial requirement within the meaning of s. 36(4) of the Act -and cannot be, dispensed with. The attestation and the satisfaction must exist at the stage of presentation and omission of such an essential feature may not be subsequently validated at the stage of scrutiny any more than the omission of a candidate to sign at all could have been. [532 F, 533 <NAME>-F] 531 <CITATION>  1 S.C.R. 481; referred to. (iii) <ORG> had rightly held on the evidence that none of the corrupt practices alleged was proved. Unless it is established that expenditure was incurred in connection with the election by the candidate or by his election agent or was authorised by him it is not liable to be included under s. 77 of the Representation of the People Act. Expenses incurred by any other agent or person without anything more need not be included in the account or return, as such incurring of expenditure would be purely voluntary. Assuming in the present case that expenditure was incurred by the Maharaja and the Rajmata of Gwalior for the purpose of canvassing votes against the principal candidate opposing the first respondent, in the absence of any evidence to show that the Maharaja and the Rajmata of Gwalior acted as election agents of the first respondent or the expenditure was authorised by him it was not liable to be included in the account of the election expenses. [541 <NAME>-F] JU<NAME>GMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1526 of 1968.

Appeal under S. 116-A of the Representation of the People Act, 1951 from the judgment and order dated May 4, 1968 of <ORG> in Election Petition No. 39 of 1967.

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

<NAME>, <NAME>, <NAME> and <NAME>, for respondent No. 1.

<NAME>, for respondent No. 4.

The Judgment of the Court was delivered by <NAME>, J. At the general elections held in February 1967, <NAME> (first respondent in this appeal) was declared elected to a seat in <ORG> from the Sabalgarh Constituency defeating his rival candidate <NAME> by 1706 votes. The appellant <NAME> who is a voter in the constituency moved an election petition in <ORG> for an order setting aside the election on two grounds :

(1) that the nomination paper of one <NAME> was illegally rejected by the Returning Officer; and (2) that <NAME> and his agents committed several corrupt practices in relation to the election.

A third ground that <NAME> (third respondent in this appeal) when his nomination was accepted was below the age of 25 and was on that account incompetent to stand for election, was sought to set up a new ground made after the expiry of the period prestion. The application was disallowed by <ORG>. <ORG> held that an application for amendment which sought to be set up by an application for amendment of the election peticribed for filling an election petition cannot be entertained. On a consideration of the evidence <ORG> rejected the other grounds, and dismissed the petition. The appellant has appealed to this Court.

An election petition has, under S. 81 (1) of the Representation of the People Act , 1951, to be filed within 45 days of the date of the publication of the result of the election. An application for setting aside the election, that <NAME> was below the age of 25 and on that account the election was liable to be set aside under S. 100(1)(d)(i) of the Act made on August 15, 1967, would plainly have been barred, and by amendment the ground could not be permitted to be added. This Court in <CITATION> (1) held that <ORG> has power to allow an amendment in respect of particulars of illegal and corrupt practices, or to permit new instances to be included. provided the grounds or charges are specifically stated in the petition, but its power to permit amendment of a petition under O. VI r. 17 of the Code of Civil Procedure will not be exercised so as to allow new grounds or charge,; to be raised or the character of the petition to be so altered as to make it in substance a new petition, if a fresh petition on those allegations would on the date of the proposed amendment be barred. By the amendment a new ground for setting aside the election was sought to be introduced, and <ORG> was right in rejecting the application for amendment.

The plea that the rejection of the nomination paper of <NAME> by the Returning officer was illegal has no substance. On January 19, 1967 <NAME> delivered to the Returning Officer two nomination papers signed by him. Each nomination paper bore a thumb impression of one <NAME> as the proposer. But the thumb impressions were not authenticated or attested in the presence of the Returning officer or any other officer specified in the Rules. The Returning Officer rejected the nomination papers.

Sec. 33(1) of the Representation of the People Act , 1951, requires that each candidate shall deliver to the returning officer a nomination paper completed in the prescribed form and signed by the candidate and by an elector of the constituency as proposer. The expression "sign" is defined in s. 2 (1) of the Act as amended by Act 27 of 1956 as meaning "in relation to a person who is unable to write his name authenticate in such manner as may be prescribed". Rule 2(2) of the Conduct of Election Rules, 1961 provides :

"For the purposes of the Act or these rules, a person who is unable to write his name shall, unless otherwise expressly provided in these rules, be deemed to have signed an instrument or other paper if-

(1) [1957] S.C.R. 370.

(a) he has placed a mark on such instrument or other paper in the presence of the Returning officer or the Presiding officer or such other officer as may be specified in this behalf by <ORG>.

(b) such officer on being satisfied as to his identity has attested the mark as being the mark of that person.

Where a person is unable to write his name, he may place his mark on the instrument or other paper and the requirements of law are complied with, provided he puts the mark in the presence of the Returning officer or the Presiding officer or such other officer as may be specified in that behalf by <ORG> and such officer on being satisfied as to his identity attests the mark as being the mark of that person. <NAME> was illiterate. He impressed his thumb mark on the nomination paper : but it was not placed in the presence of any of the designated officers, nor was there any authentication or attestation of the thumb-mark The requirement under s. 33 (1) of the Act that the nomination

-shall be signed by the candidate and by the proposer is mandatory. Signing, whenever signature is necessary, must be in strict accordance with the requirements of the Act and where the signature cannot be written it must be authorised in the manner prescribed by the Rules. Attestation is not a mere technical or unSubstantial, requirement within the meaning of s. 36(4) of the Act and cannot be dispensed with. The attestation and the satisfaction must exist at the stage of presentation and omission of such an essential feature may not be subsequently validated at the stage of scrutiny any more than the omission of a candidate to sign at all could have been : <CITATION> .(1). The nomination papers of <NAME> were filed on the last day fixed for receiving the nomination papers. Not being attested as required by law on the date of filing, the defect could not be rectified at the time of scrutiny. Evidence of witnesses for the appellant who deposed that that at the date of scrutiny. <NAME> was present outside the office of the Returning Officer and that <NAME> brought to the notice of the Returning Officer that <NAME> was present and that his signature may be attested, and that the Returning officer declined to accede to the request need not be considered. The Returning officer could not allow <NAME> or his proposer to rectify the defect in the nomination papers after the last date of nomination.

Several corrupt practices were set up in the petition. The corrupt practices relied upon by the appellant in this appeal may be broadly classified under three heads (1) [1955] 1 S.C.R. 481.

(1) that on January 19, 1967, <NAME> paid Rs. 250 to <NAME> respondent No. 5 at <ORG> and successfully persuaded him not to file his nomination paper.

(2) that <NAME> and his agents toured the constituency in a jeep fitted with a microphone and visited many villages and delivered speeches reflecting upon the character and conduct of <NAME> a candidate sponsored by <ORG>. One <NAME> respondent No. 4 was made to contest the election by <NAME> to "divide the votes of <NAME>" and that <NAME> who supported the candidature of <NAME> made statements between January 20, 1967 and February 19, 1967 and distributed leaflets containing statements of fact relating to the personal character and conduct of <NAME> which were false to the knowledge of <NAME> or who did not believe them to be true, and that the leaflets were issued and circulated with the consent of <NAME>, and (3) that the Maharaja Scindia of Gwalior accompanied by <NAME> visited several villages in a helicopter and addressed election meetings in support of the candidature of <NAME> and the Maharaja acted as his agent and incurred expenditure for carrying on election propaganda : if the expenditure incurred for the purpose of obtaining the use of the helicopter and a fleet of motor cars used by him were taken into account, such expenses being incurred or authorised by <NAME> would considerably exceed the limit prescribed by the statute. In the view of <ORG> <NAME> did commit a cor- rupt practice in that he distributed on January 29, 1967 at Kelaras village leaflets containing statements of fact relating to the personal conduct of <NAME>, but it was not proved that <NAME> contested, the election at the instance of <NAME> "to divide the votes of <NAME>" or that he was the agent at any time of <NAME> nor was it proved that <NAME> had ever supported the candidature of <NAME> or that any pamphlet of the nature circulated by <NAME> was issued or circulated by <NAME>. In that view <ORG> held that the election of <NAME> was not materially affected by the candidature of <NAME>. 'Me <ORG> rejected the contention of the appellant that <NAME> committed other corrupt practices alleged. The <ORG> accord-

ingly passed an order declaring that the appellant had failed to establish that <NAME> had committed any corrupt practice with which he was charged. <ORG> dismissed the election petition filed by the appellant with costs, but declared that the 4th respondent <NAME> was guilty of the corrupt practice within the meaning of s. 123 (4) of the Act and was on that account disqualified for a period of six years from the date of the order under s. 8A of the Act. Against that order this appeal has been preferred by the appellant.

<NAME> has not appealed against the order recorded against him. He is impleaded as a party-respondent and he has appeared before this Court through counsel. At the hearing counsel appearing for <NAME> urged that the finding of <ORG> that <NAME> was guilty of the corrupt practice charged against him is contrary to evidence. But in the absence of an appeal filed by <NAME> the ground cannot be permitted to be agitated by him. The appeal was filed by the appellant challenging the order of <ORG> refusing to set aside the election of <NAME> on the three grounds set out hereinbefore. the scope of the appeal cannot be expanded by permitting <NAME> who could have but has not chosen to appeal, to plead that he has not committed any acts amounting to a corrupt practice.

The case that <NAME> gave Rs. 250 to <NAME> and induced him to withdraw his candidature is unreliable. One <NAME> deposed that on January 19, 1967, he met <NAME> and <NAME> in the compound of the office of the Collector, Morena, and the former induced <NAME> not to contest the election and offered to pay a bribe of Rs. 250, and paid Rs. 250 to <NAME>. According to the witness there were several persons present at the time when the bribe was offered and paid, but none of those persons was called as a witness on behalf of the appelant. One <NAME> who was alleged to be present was examined on behalf of <NAME> and he denied that any such offer was made or bribe paid. <NAME> also denied that he had received any bribe from <NAME>. He stated that he had borrowed Rs. 200 from his maternal uncle to deposit the amount for his candidature but since his maternal uncle declined to incur any further expenditure and dissuaded him from contesting the election he had to abandon his candidature. In the opinion of the Trial Judge the witness <NAME> was an untruthful witness and we see no reason to disagree with that view.

We may now turn to the plea that <NAME> made false allegations against the personal conduct and 'character of <NAME> orally and by circulating pamphlets, on which a great deal of argument was advanced before us. It was the case Sup, C.1.169-5 of the appellant that <NAME> and his two workers <NAME> and <NAME> visited several villages between February 2, 1967 and February 26, 1967, in connection with the election campaign and made false statements against the character and conduct of <NAME> in the meetings held in those villages, and "in door to door canvassing in" those villages. Those allegations are denied by <NAME> and by <NAME> and <NAME>. The case of the appellant was that these allegations were made in the course of the election propaganda in ten villages. but evidence was led in respect of statements made in six villages. It is said that <NAME> and his supporters visited the village Narhela and held a meeting in that village. One Dhaniram stated that a meeting was held at the village Narhela, but the witness did not say that either <NAME> or his workers made any allegations against the personal character of <NAME>. According to this witness <NAME> merely requested the persons assembled therein the. meeting to vote for him. Witness <NAME> stated that a meeting was held at the village Narhela and the same was addressed by <NAME> and <NAME> and that these two persons stated that <NAME> was " associating with dacoits" and had misappropriated money belonging to a school and had got the school closed and that whenever any member of the legislative assembly sought to visit him be set his dogs at him. In the election petition there was no reference to any meeting held at Narhela or of any offending statements made at any such meeting. It was stated in paragraph III(a) of the election petition, in setting out the details of the corrupt practices, that the first respondent accompanied by <NAME> and <NAME> toured in a jeep fitted with a microphone and visited the village Narhela on February 2, 1967 and canvassed votes going from door to door. The witness <NAME> did not belong to Narhela, and no witness from village Narhela was examined. <NAME>, <NAME> and <NAME> denied that any statement against the personal conduct and character of <NAME> was made by them at Narhela either in any meeting or in "door to door canvassing". <NAME>-the only witness examined on behalf of the appellant-did not support his case that <NAME> at Budhreta. About the village <NAME>, witness <NAME> stated that <NAME> and <NAME> had held meetings and had -made statements against the personal conduct and character of <NAME>. But the witness did not belong to the village <NAME> : he is a resident of Pahadgarh village which is at a distance of fifteen miles from <NAME>. No witness from <NAME> was examined. Witness <NAME> said that at a meeting held at Sujarma, <NAME> had made any statements derogatory of Pancham <NAME>." But the testimony of the witness who is said to be constantly under "police surveillance" is unreliable. About the meeting held at Village Kelaras the appellant examined three witnesses-<NAME>, <NAME> and <NAME>. The first two. witnesses said nothing about any statement made about the personal character of <NAME> at the meeting. <NAME> supported the case, of the appellant, but the testimony of the witness was inconsistent with the case of the appellant. About the meeting held at village Kulouli the appellant examined witness <NAME> who stated that both <NAME> and <NAME> had made statements derogatory of <NAME>. His explanation about his presence at the village Kulouli was apparently untrue and his testimony was otherwise unreliable.

The learned Judge summarised the evidence of the witnesses. on behalf of the appellant and concluded that the appellant had, "miserably failed" to establish that <NAME> and his agents <NAME> and <NAME> had made any statements derogatory to the personal character of <NAME>. In the view of the learned Judge it was not proved that <NAME> and his two agents had made statements that <NAME> was an associate of dacoits, nor was the statement that <NAME> had misappropriated the funds of the school proved. The learned Judge, also held that the statement alleged to have been made by <NAME> and his agents that <NAME> was responsible for getting the school at Pahadgarh closed and that "he lets loose ferocious dogs towards the persons who go to see him" were trivial and did not involve any moral turpitude, and even assuming that those statements were made, no corrupt practice could we said to have been committed on that account under s. 123 (4) of the Act.

The learned Trial Judge found that <NAME> committed a corrupt practice by distributing pamphlets casting reflections upon the personal character of <NAME>. But in the view of the learned Trial Judge there was no reliable evidence to prove that <NAME> acted on behalf of <NAME>. or that the latter defrayed the expenses of the pamphlet or that the agents of <NAME> distributed the offending pamphlets. The learned Judge has carefully considered the evidence and no serious argument has been advanced before us on that part of the case which may justify as in taking a different view. Not a word was said that the expenses incurred by <NAME> for getting the pamphlets printed were reimbursed, nor was the evidence of the witnesses <NAME>, <NAME> examined on behalf of the appellant hat <NAME> and his agents circulated the Pamphlets true. The learned Judge observed that the story that out of the 2,500 copies of the pamphlets printed, 2,000 copies of the pamphlet had been handed over by <NAME> to <NAME> on the night on January 19, 1967, was "a clumsy and crude invention of these wo witnesses", and "was utterly false and unreliable". After con-

sidering the various improbabilities and the discrepancies relating to the testimony of the witnesses <NAME> and <NAME>, the learned Judge observed that these witnesses "invented lies" and did "their best to introduce clumsy and crude improvements at the stage of evidence" with the "object of bolstering up" the appellant's case and through him that of <NAME>. In his view the story that the pamphlet Annexure 'A' was issued or circulated with the consent of <NAME> was false. The learned Judge also found on a consideration of the evidence that at no stage did <NAME> support the candidature of <NAME> and that it was not proved that the pamphlet Annexure 'A' was ever issued or circulated with the consent ,of <NAME>. In his view <NAME> had no connection -with the printing and publication of the pamphlet and on that account the plea of corrupt practice set out and founded on the ,circulation of the pamphlet was not proved. We see no reason to disagree with the view expressed by the learned Judge.

It was then urged that the Maharaja Scindia of Gwalior in- curred considerable expenditure as agent of <NAME> in canvassing votes and the expenditure so incurred was liable to be included in the election expenses of <NAME>. It was claimed -that the, Maharaja and the Rajmata of Gwalior as agents of <NAME> took a leading part in canvassing votes in different villages .and in doing so used a helicopter and a fleet of motor cars and spent large sums of money which were not disclosed in the account ,of election expenses filed by the &St respondent <NAME>. <NAME> had contested the election as an independent candidate. But the appellant says that the, Maharaja and the Rajmata of Gwalior addressed election meetings and in those meetings they declared that <NAME> was sponsored as a candidate by them, and that the voters should support <NAME>. <NAME> in his evidence stated that the Maharaja had the "Central Election office of Maharaja Gwalior' representing the alliance of various political parties and individuals opposed to the <ORG> candidate and in propagating its views and policy during the election this Organisation also supported the candidates who ,opposed <NAME>.

There was no reliable evidence that the candidature of <NAME> was sponsored by the Maharaja and the Rajmata of Gwalior. The opinion expressed by the witness <NAME> cannot do duty for evidence in support of the case of the appellant. <NAME> and <NAME> stated that they had requested the Maharaja to adopt <NAME> as his candidate for election but they were told by the Maharaja that he had already decided to set up <NAME> as his candidate -and that they also should actively

-support him. The evidence of these witnesses was found to be unreliable by <ORG>. In our judgment <ORG> has rightly rejected their testimony. It was said that in certain villages speeches were made by <NAME> that he was set up as a candidate by the <NAME> of Gwalior. But there is no reliable evidence in support of that case. Reliance was strongly placed upon visits made by the <NAME> of Gwalior at villages Kelaras and Sabalgarh on Feb. 4 or Feb. 5, 1967, with a fleet of motor cars and about the speeches delivered in those villages declaring that <NAME> was set up by her and that the voters should vote for him -and strengthen her hands. It is also said that the <NAME> visited Kelaras, Pahadgarh, Sujarma, Budhreta, Kulhouli, Sabalgarh, Jhunpura and Narhela on Feb. 11 or 12, 1967 in a helicopter and addressed meetings in those villages and in Ms speeches declared that <NAME> was sponsored as a candidate by him and his mother -and the voters should vote for him.

A large number of witnesses <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, Mata Prasad, <NAME>, <NAME>, <NAME>, besides the appellant, were examined in support of that case. <NAME> admitted that on Feb. 4 or 5, 1967, the <NAME> had visited the villages Kelaras and Sabalgarh and had addressed meetings in those villages. But he denied that she declared in those meetings that he was set up as a candidate by her. He further stated that the <NAME> had visited on Feb., 11 or 12, 1967, five villages, Kelaras, Pahadgarh, Budhreta, Jhundpura and Sabalgarh in a helicopter and addressed meetings in those villages. But in none of those meetings did he declare that <NAME> was a candidate set up by the <NAME>. The witnesses examined on behalf of the appellant were, in view of their general tenor, found unreliable. The learned Judge therefore stated his conclusion that on Feb. 4 or 5, 1967 the <NAME> of Gwalior visited two villages, Kelaras and Sabalgarh and addressed meetings there; and her -son the <NAME> visited five villages, namely, Kelaras, Pahadgarh, Budhreta, Thundpura and Sabalgarh in a helicopter on or about Feb. II or 12, 1967 and addressed meetings there, but there was no reliable evidence to prove that <NAME> was sponsored as a candidate by the <NAME> or the <NAME> of Gwalior. In the view of the learned Judge the testimony of the witnesses on behalf of the appellant was "so thoroughly unreliable" that no reliance could be placed upon it. He concluded, after considering the evidence of Budharam, that <NAME> was an independent candidate and contested the election as an independent candidate, and even though meetings were addressed by the <NAME> and his mother-the <NAME>-they did not say that <NAME> was set up as their candidate." We have carefully gone through the evidence of the witness and heard the arguments ad at the <ORG> and see no reason to disagree with the view taken by the learned Judge.

The evidence of the witnesses that <NAME> travelled with the <NAME> of Gwalior in his helicopter and visited several villages for his election campaign was also unreliable and was, in our judgment, rightly disbelieved. The evidence shows that when the <NAME> visited the village Kelaras the only occupants in the helicopter were the <NAME> and the pilot and that <NAME> was not in the helicopter when the <NAME> visited Kelaras. Similarly about the village Jhundpura there is evidence that <NAME> was not with the <NAME> in the helicopter. About the village Budhreta the witness <NAME> deposed that <NAME> was in the helicopter travelling with the <NAME>. But from the cross-examination of the witness it appears that his testimony was "worthless." The testimony of <NAME> was inconsistent with the testimony of <NAME> of the village. Similarly about the visit to Sabalgarh village two of the witnesses examined were <NAME> and <NAME>. <NAME> said nothing about <NAME> accompanying the <NAME> in the helicopter. <NAME> supported the case of the appellant, but having regard to his interest in the appellant and the general unreliability of his testimony, he could not be believed. About the village Pahadgarh, according to <NAME> examined on behalf of the appellant, <NAME> was in the helicopter and the witness claimed that he had taken photographs of <NAME> while he was in the helicopter. We have seen the original photographs Exts. P-11A, P-11B, P-12A, P-12B, P- 13A and P-14A which are in respect of the journeys by the helicopter, the helicopter getting ready for take off, of the meetings addressed by the <NAME> and of the occupants in the helicopter. Some of the photographs are so hazy and indistinct that it is impossible to identify any one in the group. For instance the photograph Ext. P-13A in which it is claimed that <NAME> was in the helicopter shows merely a smudge and it is impossible to say that any one was sitting in the helicopter. In the view of the learned Judge the witness <NAME> and <NAME> had been tutored to give false testimony that <NAME> had accompanied the <NAME> at the time when the helicopter landed and also when it took off and on the consideration of the evidence it was established that <NAME> was not with the <NAME> of Gwalior either at the time when the helicopter landed at the five villages--Kelaras, Jhundpura, Budhreta, Sabalgarh and Pahadgarh or when the helicopter took off. The learned Trial Judge disbelieved the witness <NAME>. We have scrutinized the evidence of <NAME> and have seen the original photographs and have no doubt that the learned Judge was right in holding that the testimony of the witness <NAME> was unreliable.

In the absence of any connection between the canvassing activities carried on by the <NAME> and the Rajmata with the candidature of <NAME>, it is impossible to hold that any expenditure was incurred for <NAME> which was liable to be included in the election expenses of the first respondent. Under s. 123(6) of the Representation of the People Act, 1951, the incurring or authorizing of expenditure in contravention of S. 77 is -a corrupt practice and s. 77 provides, insofar as it is material "(1) Every candidate at an election shall, either by himself or by his election agent, keep a separate and correct account of all expenditure in connection with the election incurred or authorised by him or by his election agent between the date of publication of the notification calling the election and the date of declaration of the result thereof, both dates inclusive.

(3) The total of the said expenditure shall not exceed such amount as may be prescribed." Unless it is established that the expenditure was incurred in connection with the election by the candidate or by his, election agent or was authorised by him it is not liable to be included under s. 77 of the Representation of the People Act. We agree with <ORG> that under s. 77(1) only the expenditure incurred or authorised by the candidate himself or by his election agent is required to be included in the account or return of election expenses and thus expenses incurred by any other agent or person without any- thing more need not be included in the account or return, as such incur-ring of expenditure would be purely voluntary. Assuming that expenditure was incurred by the Maharaja and the Rajmata for the purpose of canvassing votes against <NAME>, in the absence of any evidence to show that the Maharaja and the Rajmata of Gwalior acted as election agents of <NAME> or the expenditure was authorised by <NAME> it was not liable to be included in the account of the election expenses.

We agree with <ORG> that there is no evidence on the record to prove that <NAME> actually spent any money on the helicopter used by the Maharaja in visiting the five villages and the two cars used by the <NAME> in visiting the two villages. There is no evidence on the record direct or circumstantial to prove that <NAME> had authorised the Maharaja and his mother to incur the expenditure on the helicopter and the two cars. It is not necessary then to consider whether the expenditure incurred by the Maharaja and the <NAME> of Gwalior in respect of the helicopter and the motor cars can be said to be expenditure incurred by a political party for carrying on propaganda to promote their views and their party interest and their policies and to educate the electoral constituency, and on that account is non liable to be included in the election expenses of the candidate.

Having carefully considered the evidence and having heard the arguments advanced at the <ORG> at considerable length, we are ,of the view that the appellant has failed to establish that <NAME> was set up as a candidate by the Maharaja or the Rajmata of Gwalior as their nominee or that the Maharaja and the Rajmata had incurred any expenditure as an agent of <NAME> or the expenditure incurred by the Maharaja and the Rajmata of Gwalior was authorized by <NAME> and was liable to be included in his account of election expenses under s. 77 of the Representation of the People Act, 1951.

The appeal fails and is dismissed with costs in favour of the first respondent. The order of costs in favour of the 4th respondent passed by <ORG> is set aside.

R.K.P.S. Appeal dismissed.


JUDGMENT <NAME>, J.

1. The faots are shortly these. The plaintiff decree-holder instituted a suit to enforce a mortgage-bond. A decree was passed for the sale of the mortgaged property and there was a further direction that if the whole amount was not realised by the sale of the mortgaged property for the rest of the claim, if legally realisable, the defendant No. 1 would be liable.

2. It appears that after this decree was obtained and before the mortgaged properties could be sold, a third party brought a suit for, a declaration that the mortgaged property could not be sold in execution of the decree and succeeded in getting such a declaration in the presence of the decree-holder and the judgment-debtor. There upon the decree-holder applied to proceed against the other properties of, the judgment-debtor, but the <ORG> asked him to make an application under Order XXXIV, Rule 6. He made such an application, but he was absent when it was taken up for disposal and it was rejected. The decree-holder afterwards made the present application under Order XXXIV, Rule 6, and this application has given rise to this appeal, the judgment debtor being the appellant before us.

3. The points raised are, first, that the preliminary decree to which I have already referred was a composite decree which, enabled the decree-bolder to proceed against, the other properties of the judgment-debtor without a fresh decree obtained under Order XXXIV, Rule 6, and that, therefore, he is not entitled to a fresh decree, secondly, it is argued that the previous application for a decree under Order XXXIV, Rule 6, being rejected, the decree-holder cannot, make a second application for such a decree.

4. As regards the second point, it seems to me that this not being a point which is raised in the grounds of appeal we ought not to allow the learned <NAME> for the appellant to raise it, and there is another, reason why he should not be allowed to raised the point and that is this; several points, and this was one of them, were raised in the lower <ORG> but were Abandoned at the hearing of the appeal. The only question, therefore, which I need consider is the question whether the decree-holder is entitled to a fresh decree. I think he is so entitled. In the first place, the preliminary decree was not a composite decree allowing the decree holder to proceed against the other properties of the judgment debtor. It says that he may proceed if he were legally entitled to do so, thus leaving it for future decision whether the decree-holder was legally entitled to obtain such a decree. It seams to me that although the language of the decree may be somewhat unfortunate, it was intended only to give leave to the decree-holder to apply for a personal decree for the amount of the balance. It has also been pointed out to us by the learned <NAME> for the respondent that in the final decree that was passed there was no provision for any personal decree.

5. I, therefore, think that the decree passed, by the Court below is correct and this appeal should be dismissed with costs.

Walmsley, J.

6. I agree.


PETITIONER: COMMISSIONER OF INCOME-TAX, BIER Vs. RESPONDENT: <ORG>. DATE OF JUDGMENT: 08/05/1997 BENCH: K. S. PARIPOORNAN, S. SAGHIR AHMAD ACT: HEADNOTE: JUDGMENT:

WITH CA NOS. 505/92, * SLP(C) 22644/94, CA 3974/92, 4777-78/89, 4534/91, 1635/94, 1648-1649/94, 2380-82/94- SLP (C) 2811/94, CA 8046/95, 1773/92, 4303/95, 3840/96 AND 10194/95. * CA 3382/97 ** CA 3383/97 Present:

Hon'ble Mr. Justice <NAME> Hon'ble Mr. Justice <NAME>, <NAME>, Sr. Advs, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>. for M/s. <NAME>, <NAME>, <NAME> and <NAME>, Advs. with therm for the appearing parties.

J U D G M E N T The following Judgment of the Court was delivered. PARIPOORNAN, J.

Special leave granted in SLP (C) Nos. 22644/94 and 2811/94.

2. This batch of 23 cases was posted together. That was so done on the basis that the same and identical point arises for consideration in all of them. On further verification, it turned out that in 7 appeals, the point that arises for consideration is little different. On the question arising in those appeals no arguments were advanced. So, the said seven appeals are de-linked, to be posted later for hearing.

3. For convenience sake, the 23 cases including seven appeals which are de-linked can be classified into 5 groups. Group-A: C.A. Nos. 854- <CITATION> : C.A. Nos. 505/92 and 3974/92 - Commissioner of Income-tax. <ORG> v. <ORG>, Group-C: C.A. No. 5382./97 (arising out of SLP (C) No.22644/94 and C.A. No.10194/95 - Commissioner of Income tax <CITATION> ; Group-D: C.A. Nos. 1635/94 * 1648-49/94, 2380-82/94 and C.A. No. 3583/97 (arising out of SLP (C) No. 2811/94) - Commissioner of Income tax <NAME> v. <ORG>, Group-E: C.A. Nos. 4777-78/89, 4534/91, 8046/95, 1773 (NT)/92, 4303/95 and 3840/96 - Commissioner of Income tax, Kanpur v. <ORG>

4. As state earlier, the appeals coming within Group - E - CIT, <ORG> (seven appeals) are de- linked and they will be posted separately to be heard on merits. We shall indicate the reason for this a little later.

5. We heard counsel. The following vital aspects should be borne in mind in adjudicating the question that arises for consideration in this batch of 16 appeals (covered by <ORG>). The <ORG> is the appellant in all the appeals. The respondents in all the appeals are "<ORG>". They are also called "social action groups". They are all companies, registered under Section 25 of the Companies Act, 1956 - "non-profit companies". The respondents are assessees to income tax. They claimed exemption on their "surplus receipts" on the ground that they are "clubs" - a species of mutual undertaking, and do not carry on any "trade or business". They do not earn any profit. The income received by the clubs by extending facilities to non-members is not in issue in this batch of appeals. According to <ORG>, even the surplus receipts of the clubs by affording facilities to its members, is "income" and so, taxable. That is the sole question arising for consideration in this batch of appeals.

6. Under the Income-tax Act (hereinafter referred to as 'the Act') what is taxed is, the "income, profits or gains earned or "arising", "accruing' to a person". The question is whether in the case of Members' Clubs - a species of mutual undertaking - in rendering various services to its members which result in a surplus, the club can be said to "have earned income ar profits" In order to answer the question, it is necessary to have a background of the law relating to "Mutual trading" or "Mutual undertaking" and <ORG>".

7. In Halsbury Laws of England, 4th Edition Reissue Volume 23 paras 161 and 162 (pages 130 and 132), the relevant law is stated thus:

"Where a number of persons combine together and contribute to a common fund for the financing of some venture or object and will in this respect have no dealings or relations with any outside body, then any surplus returned to those persons cannot be regarded in any sense as profit. There must be complete identity between the contributors and the participators.

If these requirements are fulfilled, it is immaterial what particular form the association takes. Trading between persons associating together in this way does not give rise to profits which are chargeable to tax.

Where the trade or activity is mutual, the fact that, as regards certain activities, certain members only of the association take advantage of the facilities which it offers does not affect the mutuality of the enterprise. xxx xxx xxs Members clubs are an example of a mutual undertaking, but, where a club extends facilities to non-members, to that extent the element of mutuality is wanting............. "

(Emphasis supplied) Simon's Taxes Vol.B 3rd Edition, paragraphs B 1.218 and B1.222 (pages 159 and 167), formulate the law on the point, thus:

"........ it is settled law that if the persons carrying on a trade do so in such a way that they and the customers are the same persons, no profits or gains are yielded by the trade for tax purposes and therefore no assessment in respect of the trade can be made. Any surplus resulting from this form of trading represents only the extent to which the contribution of the participators have proved to be in excess of requirements. Such a surplus is regarded as their own money and returnable to them. In order that this exempting element of mutuality should exist it is essential that the profits should be capable of coming back at some time and in some form to the persons to whom the goods were sold or the services rendered. ......................." "lt has been held that a company conducting a members' (and not a proprietary) club, the members of the company and of the club being identical, was not carrying on a trade or business or undertaking of a similar character for purposes of the former corporation profits tax.

A members' club is assessable, however, in respect of profits derived from affording its facilities to non-members. Thus, in Carlisle and Silloth Golf Club v. <NAME> [1913(3) K. B. 75], where members' golf club admitted non members to play on payment of green fees it was held that it was carrying on a business which could be isolated and defined and the profit of which was assessable to income tax. But there is no liability in respect of profits made from members who avail themselves of the facilities provided for members."

(emphasis supplied) In British Tax Encyclopedia (I) 1962 edition (edited by <NAME>) at pages 1200 and 1201, dealing with "Mutual trading operations", the law is stated, thus:-

"In several early cases there were dicta to the effect that a man could not make a profit be trading with himself this developed into the proposition that when persons contribute to a common fund in pursuance of a scheme for their mutual benefit, having no dealings or relations with any outside body, they cannot be said to have made a profit when they find they have overcharged themselves and that some portion to their contributions incorporate themselves into a separate entity to carry out the mutual scheme and the surplus contributions are put to reserve and not immediately returned. For this doctrine to apply it is essential that all the contributors to the common fund are entitled to participate in the surplus and that all the participators in the surplus are contributors so that there is complete identity between contributors and participators. This means identity as a classs so that at any given moment of time the persons who are contributing are identical with the persons entitled to participate; it does not matter that the class may be diminished by persons going out of the scheme or increased by other coming in. .. ... ... ... ...

The doctrine now has application in three areas. First, it applies to mutual insurance companies; secondly, it applies to certain municipal undertakings and, thirdly, to members' clubs, and mutual associations generally, whether incorporated or unincorporated, except registered industrial and provident societies. ... ... ... ..."

(emphasis supplied) It should be noticed that in the case of "mutual society or concern" (including a "Members' club"), there must be complete identity between the class of contributors and the class of participators. The particular label or form by which the mutual association is known, is of no consequence. The said principle which has been laid down in the leading decisions and emphasised in the leading English text books mentioned above, has been explained with reference to Indian decision in "The Law and Practice of Income Tax" (8th edition vol. 1, 1990) by <ORG> at page 113, thus:-

"...... The contributors to the common fund and the participators in the surplus must be an identical body. That does not mean that each member should contribute to the common fund or that each member should participate in the surplus or get back from the surplus precisely what he has paid. The Madras. Andhra Pradesh and Kerala High Courts have held that the test of mutuality does not require that the contributors to the common fund should willy-nilly distribute the surplus amongst themselves: it is enough if they have a right of disposal over this surplus, and in exercise of that right they may agree that on winding up the surplus will be transferred to a similar association or used for some charitable objects "

8. The crucial issue that arises for consideration in cases where it is claimed that on the basis of the principle of mutuality, the receipts by the "society" or "club" is exempt from taxation, has been succinctly stated by the judicial <ORG> in <NAME> v. Income Tax Commissioner [1971 (3) AJI ER 1185 at page 1189], thus:

"... ... ... Is the activity, on the one hand, a trades or an adventure in the nature of trade producing a profit, or is it, on the other, a mutual arrangement which, at most, gives rise to a surplus?"

In substance, the arrangement or relationship between the club and its members should be of a non-trading character.

9. In C.A. Nos. 854-858184 (Group-A), the assessee is <ORG>.. The appeals are preferred against the common judgment of <ORG> rendered in T.C. No.46-50/70 dated 14.10.1980 reported as Commissioner of Income-tax, Bihar v Bankipur Club Ltd. (129 ITR 787). The questions referred to <ORG> are the following:

"(i) Whether, on the facts and in the circumstances of the case the profits arising from the sales made to the regular members of the club is entitled to exemption on the doctrine of mutuality.

(ii) Whether, on the facts and in the circumstances of the case the directions given by the <ORG> are valid in law?"

The assessment years involved are 1960-61 to 1964-65.

The assessee club filed "nil" returns. The assessee had income from house property and also from business or professica. The receipt under the head "sale of drinks at the Bar" was alone disputed in all the aforesaid five years. The Income Tax Officer held that the profit on the sale proceeds of the drinks by the club in income and so, liable to be taxed. It is seen that the main object of the club, as per the memorandum of association, is to afford to its members all the usual privileges, advantages, conveniences and accommodation of a club. Clause 5 of the memorandum of association makes a provision that upon a winding-up or dissolution of the company if there remains any property left after the satisfaction of all debts and liabilities the same shall be paid to and distributed amongst the members of the company in equal shares. Article 6 of Articles of Association reads thus:

"Only permanent members shall be deemed to be members of the club."

Article 15 speaks of temporary members who may be elected for non exceeding three months in any calendar year. To become a temporary member the person would be a person not permanently residing at Patna or within ten miles of it. No entrance fee is payable by them, but they are to pay a fixed monthly subscription. Under Article 5 , the Governor and the Chief Minister of the State may be invited by the committee to become honorary members of the club. Article 17 is a provision for giving to the temporary and the honorary members all the privileges of the club, subject to such restrictions and regulations as may be prescribed by the rules or bye-laws of the club. They have, however, no right to vote at a meeting or be elected on committees or bring any guest. The assessments were upheld by the Appellate tribunal accepted the plea of the assessee that the principle of mutuality would apply in regard to the sale of drinks at the bar. It was held that as regards sales to regular members the profit arising from sales to them is not liable to be taxed under the principle of mutuality. <ORG> adverted to the fact that nobody is allowed to enjoy the privileges of the club other than its members and the bar in question where drinks are sold is open to its members, both permanent as well as temporary, and that no outsider can purchase any drink from the said club. <ORG> took the view that while selling drinks to its members, it is not done with motive of profit earning which can be said to be tainted with "commerciality". The members pay the monthly subscription and in addition, they enjoy the benefit of this privilege of supply of drinks to them on additional payment and so there is no profit earning motive so far as this transaction is concerned. The Court concluded that the profits arising from the sales of drinks at the bar to the regular members of the club is entitled to exemption on the doctrine of "mutuality".

10. In C.A No. 505/92 and C.A No. 3974/92 (Group-B), the assessee is <ORG> The main decision is one rendered in T.C. 54/80, subject matter of C.A. 505/92. The judgment is dated 24.9.1991 and is reported in <CITATION> . [196 ITR 137 (FB)]. The questions referred to <ORG> are as follows:

"(1) Whether on the facts and in the circumstances of the case. the <ORG> has rightly held that the assessee-club is a mutual concern?

(ii) Whether, on the facts and in the circumstances of the case, the <ORG> has rightly held that the income derived by the assessee- club from its house property let to its members and their guests is not chargeable to tax?

(iii) Whether, on the facts and in the circumstances of the case, the <ORG> has rightly held that the income derived by the assessee-club from sale of liquor, etc, to its members and their guests is not taxable in its hands"

In these cases, the assessee was a company formed with the main object of providing a club house and other conveniences for the use of its members and their friends. The memorandum of association provided for contribution has the members to the common fund of the club, guarantee towards debts and liabilities, and upon winding up, their participation in the surplus. Apart from the concept of "member" envisaged a in the memorandum, it had created one more class described as temporary members. The temporary members were not deemed to be members. For the assessment year 1977-78. the assessee had filed its return showing its income under the head property" representing the income arising out of gross rent and reservation charges received by it from persons other than members. But, the Income-tax officer, while assessing the income, also the Income-tax Officer, while assessing the income, also included the amount received by the assessee even from its members on account of rent from the club property and the receipts on sale of liquor, etc, to its members and their guests. The decision rendered by <ORG> as summarised in the head-note (196 ITR 137 at page 139) is as follows:-

".. .. that merely because the assessee company had entered into transactions with non-members and earned profits out of transactions held with them, its right to claim exemption on the principle of mutuality in respect transactions held by it with its members was not lost. The assessee was a mutual concern. The income derived by it from its house property let to its members and their guests and from the sale of liquor etc.. to its members and their guests was not taxable in its hands."

(emphasis supplied)

11. C.A. No. 10194/95 and C.A. No...../97 (arising, out of SLP (C) 22644/94) relate to the assessee, <ORG>. The proceedings relate to Assessment years 1977-78 and 1978-79. Amongst others, <ORG> was in receipt of income from property owned by it - chambers in the building of the assessee let out to members, annual value of the club house and annual value of Patiala Pavilion. The above facilities were provided only to members of the association and that too temporary accommodation. The arrangement was essentially for the benefit of the members. Following the decision rendered by <ORG>, for the assessment years 1974-75 and 1976-77 rendered in ITA Nos. 1730 and 1913 (Bombay) of 1980 the appellate tribunal held that no portion of <ORG>. Patiala Pavillion etc. is let out to strangers and that these portions are let out only to the members and so, even if an income had actually accrued due from the members on the above counts, it will not be taxable on the principles of mutuality. In the application filed under Section 256(2) of the Act, <ORG> declined to refer the question of law posed by the <ORG>, to the effect, "whether the appellate tribunal was justified in law in holding that the income from the property held by the assessee could not be brought to charge under the provisions of Sections 22 to 26 of the Act?" The decision was followed for the assessment year 1978-79 - C.A. 10194/95 and <ORG> declined to refer any question of law for this year as well. In fact both the years. the decision of the appellate tribunal to the effect that the income received from the aforesaid counts is exempt under the principle of mutuality, was not doubted by <ORG>? holding that no referable question of law arose by its decision.

12.We now come to Group-D In C.A. Nos. 1635/94. 1648-49/94, 2380-82/94 and C A 3383/97 @ SLP 2811/94) come within this group. The assessee in this case is <ORG>. The details with regard to the above appeals are as follows:

S. NO. NO. ASSESSMENT REMARKS YEARS

1. CA No.1635 of 1987-88 Appln. U/S 1994 256(2) rejected

2. CA Nos. 1648- 1982-83 & 1985- do 49 of 1994 86

3. CA Nos. 2380- 1974-75 to 1976- Reference 82 of 1994 77 answered in favour of assessee

4. SLP (C) No. 2811 1989-90 Appln. U/S.

of 1994 256(2) rejected

The assessee is an association consisting of Film Distributors and Exhibitors incorporated as a company under Section 25 of the Companies Act? 1956 ( Section 26 of the Companies Act, 1913) in the year 1949 The income of the <ORG> consists of (i) admission fees, readmission fees, periodical subscriptions from the members, etc. under the head "others" and (ii) service charges from the members for rendering specific services to the members under the head "Service to the members". The income under the head "Service to the members" was always offered for tax and assessed to tax under Section 28(iii) of the Act and there is no dispute about the same. The income under the head "others" was claimed to be not taxable on the principle of mutuality. The claim of the assessee for exemption from levy of tax, on the ground of "mutuality" was denied in view of clause 7 of the Memorandum of <ORG> of the Assessee. which was to the following effect:-

"If upon the winding up or dissolution of the <ORG> there remains after the satisfaction of all its debts and liabilities any property whatsoever the same shall not be paid to or distributed amongst the members of the <ORG> but shall be given or transferred to such other institution or institutions having objects similar to the objects of the <ORG> to be determined by the members of the <ORG> at or before the time of dissolution or in default thereof by the Prime Minister of East Punjab, and if and so far as effect cannot be given to the aforesaid provision then to some charitable object."

(emphasis supplied) In an earlier assessment year, 1977-78 an identical question relating to the same assessee arose before <ORG> in ITR No. 69/81. The decision thereon dated 27.4.1989 is reported in <CITATION> [180 ITR 160]. The following questions were referred to <ORG>

"(1) Whether, on the facts and in the circumstances of the case. the principle of mutuality is applicable to the assessee's receipts under the head 'Others'? (2) Whether, on the facts and in the circumstances of the case, the <ORG> was right in holding that the receipts under the head 'Others' were neither income liable to be taxed under the head 'Business' nor under the head 'Other sources?

The facts in the said case and the decision by <ORG> are neatly summarised in the head note of the reports at pages 160-161:-

"<ORG> was an association and its members were film distributors and exhibitor's.

The association protected the rights of, its members in return for admission fees and periodical subscription and also rendered specific services in return for separate charges. The Income-tax Officer wanted to subject the assessee to tax on the income derived from the admission fee, periodical a subscriptions and specific service charges received from the members. The assessee pleaded that the receipts were exempt from tax on the general principle of mutuality. The Income-

tax Officer did not agree with the plea on the grounds that in clause 7 of the memorandum of association it was provided that upon winding up or dissolution of the association, the remaining property, after the satisfaction of its debts and liabilities, shall not be paid or distributed amongst the members but shall be given or transferred to such other institution or institutions having similar objects to be determined by the members at or before the time of dissolution, or in default thereof by the Prime Minister of the East Punjab and if this could not be done, then, to some charitable object and hence the amount was not to go back to the members. The <ORG> however held that the income of the assessee was not taxable. On a reference:

Held, that the contributors by incorporating clause 7 did not deprive themselves of the control on the disposal of the surplus.

Ultimately, they could agree to divide the surplus among themselves or to contribute the amount to a similar association or to a charitable trust. The assessee was a mutual benefit association and its income was not taxable."

The said judgment was followed subsequently in all matters arising under Sections 256(1) and 256(2) of the Act. So, for the assessment years which are subject matter of cases falling under Group-D stated herein above, the above decision reported it 180 ITR 160 was followed and the income received by the assessee under the head "Others" - admission fees readmission fee. periodical subscription from the members etc. were held to be exempt or non-taxable on the principle of mutuality.

13. The above four sets of cases falling in Groups A to D shall alone be covered by this Judgment. With regard to 7 cases/appeals falling in Group-E the Assessee is <ORG> It is seen that the income that was sought to be assessed in the case of assessee, was one derived from property let out and also Interest received from <ORG>, N.S.C. etc. In these cases the Court held that income should be assessed as one from other sources" and not income from property. It does not appeal that the larger plea that the income is totally exempt on the principle of mutuality, was decided in favour of the assessee in the appeals filed by the <ORG> the only question that may probably arise is whether income received from the property let out and interest by way of F.D.R<ORG>., N.S.C. etc. can be brought to tax under the head; income from property". Since the issue raised in this batch of seven cases, is not similar to or same as the one involved in the other cases coming under Groups A to D. we do not propose to deal either a with the facts or the decisions rendered be the authorities in this batch of cases (Group-E). All that we propose to do is to delink the cases coming under Group-E and direct them to be posted separately for hearing and disposal before an appropriate Bench.

14. Now we turn to the main question canvassed be the <ORG> in the appeals coming under Groups A to D, namely, whether the assessees, mutual clubs. are entitled to exemption for the receipts or surplus arising from the sales of drinks refreshments etc. or amounts received be way of rent for letting out the buildings or amounts received by way of admission fees periodical subscriptions and receipts of similar nature, from its members? In all these cases. the appellate tribunal as also <ORG> have found that the amount received by the clubs were for supply of drinks? refreshments or other goods as also the letting out of building for rent or the amounts received be way of admission fees. periodical subscription etc. from the members of the clubs were only for/towards charges for the privileges, conveniences and amenities provided to the members, which they were entitled to as per the rules and regulations of the respective Clubs. It has also been found that different clubs realised various sums on the above counts only to afford to its members the usual privileges, advantages, conveniences and accommodation. In other words, the services offered on the above counts were not done. with any profit motive and were not tainted with commerciality. The facilities were offered only as a matter of convenience for the use of the members. (and their friends, if any, availing of the facilities occasionally) In the light of the above findings, it necessarily follows that the receipts for the various facilities extended by the clubs to its members, as stated herein above as part of the usual privileges, advantages and conveniences; attached to the members of the club, cannot be said to be "a trading activity." The surplus - excess of receipts over the expenditure - as a result of mutual arrangement, cannot be said to be income" for the purpose of the Act.

15. Our attention was invited to a few decisions which have dealt with the subject matter in issue herein. The list of the various English decisions has been succinctly summarised in the textbooks which we have adverted to herein above (<ORG>, <ORG>, <NAME> etc.). Particular stress was laid on the decisions of <ORG> in Commissioner of Income-tax. <CITATION> [24 ITR 551], Commissioner of Income-tax. <CITATION> [53 1TR 241], <NAME> (on his own behalf and on behalf of Trustees and <ORG>) v. lncome Tas Commissioner [1971 (3) All ER (PC) 1185]. We do not think it necessary to deal at length with the above decisions except to state the principle discernible from them. We understand these decisions to lay down the broad proposition - that if the object of the assessee company claiming to be a "mutual concern" or "club", is to carry on a particular business and money is realised both from the members and from non-members, for the same consideration by giving the same or similar facilities to all alike in respect of the one and the same business carried on by it, the dealings as a whole disclose the same profit earning motive and are alike tainted with commerciality. In other words, the activity carried on by the assessee in such cases, claiming to be a "mutual concern" or "Members' club" is a trade or an adventure in the nature of trade and the transactions entered into with the members or non-members like a trade/business/transaction and the resultant surplus is certainly profit -- income liable, to tax. We should also state, that "at what point? does the relationship of mutuality end and that of trading begin" is a difficult and question. A host of factors may have to be considered to arrive at a conclusion. "Whether or not the persons dealing with each other, is a "mutual club" or carrying on a trading activity or an adventure in the nature of trade".is largely a question of fact. [ <NAME>'s case - 9 Tax Cases 111, (132) C.A. (1925) (1) KB 30 at 44 and 45.].

16. In the result, we hold that ht judgment and orders passed by <ORG> covered by Groups A,B,C And D, as stated above, do not merit any interference. The reasoning and conclusion of <ORG> in the judgments and orders impugned are in accord with the settled legal principles as laid down by <ORG>. The 16 appeals covered by Groups A to D filed by the <ORG> are, therefore, dismissed with costs, including advocate's fees which we estimate at Rs. 5,000/- in each appeal.