JUDGMENT

1. These two appeals by two different Trade Unions of <ORG> are directed against the decision of <ORG> which set aside the modification of Clause 20 of the Standing Orders certified under Section 5 of the Industrial Employment (Standing Orders) Act, 1946 (hereinafter called 'the Standing Orders Act ). The brief facts giving rise to these two appeals are as under:

2. Two companies, namely, <ORG> and <ORG> amalgamated in 1964 and a new Company known as <ORG> (<ORG>) was incorporated. This newly formed company comprised essentially of two divisions, namely, (1) Marketing Division, representing the staff, assets and business of <ORG> and (2) <ORG>, representing the staff, assets and oil refinery manufacturing of petroleum products of <ORG>. The age of superannuation of the staff in <ORG> was 60 years whereas the age of superannuation for the <ORG> was fixed at 58 years under Clause 20 of the Standing Orders concerning Barauni Refinery. The <ORG> has refineries in different parts of the country including one at Barauni. The Standing Orders concerning the Barauni Refinery came into force on 5th December, 1964 as provided by Section 7 of the Standing Orders Act and apply to all workmen employed in the said industrial establishment. Clause 20 of the Standing Orders reads as under:

Every employee shall retire from service on completing the age of 58 years. Extension for a maximum period of 5 years but not for more than one year at a time may be given at the discretion of the company provided the employee is certified to be fit by the Company's Medical Officer and provided further that the employee concerned also consents to such extension.

By a Joint letter dated 15th December, 1981, 14 recognised Unions representing the employees of the <ORG> working in different refineries and pipe lines divisions submitted a charter of demands in terms of Clause 2.1.3 of the long term settlement dated 3rd December, 1979. By Clause 18 of this charter of demands the superannuation age was sought to be enhanced to 60 years. A similar charter of demands was-forwarded by <ORG> to the General Manager, <ORG>, Barauni Refinery, on 23rd December, 1981. Pursuant to the presentation of this charter of demands, meetings were held between the Management of <ORG> (R & P Division) and the recognised Unions of the said Division from time to time. As a result of discussions held at the said meetings as settlement was mutually arrived at by and between the parties on May 24, 1983. Clauses 19 and 21 of this general settlement concerning all the Refineries and Pipe Lines Divisions, inter alia provided as under:

19. The <ORG> agrees that such terms and conditions of service as well as amenities and allowances as are not changed under this settlement shall remain unchanged and operative during the period of the settlement.

21. The Unions agree that during the period of operation of this settlement, they shall not raise any demand having financial burden on the <ORG> other than bonus provided that this Clause shall not affect the rights and obligations of the parties in regard to matters covered under Section 9A of the Industrial Disputes Act, 1947.

This general settlement was to remain in force from 1st May, 1982 to 30th April, 1986. After this general settlement was signed by the Management and the <ORG> representatives a separate Memorandum of Settlement dated 4th August, 1983 was signed between the <ORG> (<ORG>), <ORG>, and their workmen represented by Barauni Telshodhak Mazdoor <ORG>, <ORG>, under Sections 12(3) and 18(3) of the Industrial Disputes Act, 1947, in conciliation proceedings initiated by the Assistant Labour Commissioner and Conciliation Officer, <NAME>. This settlement too was to remain in force from 1st May, 1982 to 30th April, 1986. Clauses 19 and 21 of this settlement were verbatim reproduction of those in the general settlement dated 24th May, 1983 extracted hereinabove. It may here be mentioned that despite the specific demand made in the charter of demands for the upward revision of the ags of superannuation, no specific provision was made in that behalf either in the general settlement or in the special settlement concerning <ORG>. On the contrary Clause 19 of both the settlements provides that the terms and conditions of service which are not changed under the Settlement shall remain unchanged and operative during the period of settlement.

3. <ORG> through its General Secretary, <NAME>, served notice on the Regional Labour Commissioner (Central) under Section 10(2) of the Standing Orders Act for modification of Clause 20 of the certified Standing Orders of <ORG> for raising the age of superannuation from 58 years to 60 years mainly on the ground that the staff members working in <ORG> superannuated on completing the age of 60 years. It was also contended by the said Union that the demand for the upward revision of the age of superannuation could not be pressed at the time of the settlement arrived at pursuant to the charter of demands because the age of retirement was fixed at 58 years under the relevant certified Standing Orders. It was, therefore, felt necessary that Clause 20 of the certified Standing Orders applicable to <ORG> of the <ORG> should be got suitably modified to raise the age of retirement to 60 years. This demand was based on the averment that the nature of work performed by the workmen in <ORG> was identical to that performed by the staff members of <ORG>. The pay-scales of the employees of <ORG> and <ORG> were also identical. It was, therefore, contended that there was no valid reason for fixing different ages for retirement for the staff members working in the said two Divisions of <ORG>.

4. The Regional Labour Commissioner after hearing the rival parties allowed the application for modification of Clause 20 of the certified Standing Orders. By his order he directed that Clause 20 should be modified as under:

Normally the age of retirement of workman of the <ORG> is fixed at 60 years. No notice is required to be given by a workman of his intention to retire on superannuation or by the Management to the workman that he is due to reach the age of superannuation on certain date. The workman should not, however, leave his place of duty without being relieved.

5. Against this order of 11th October, 1984, the <ORG> preferred an appeal to <ORG> under Section 6 read with Section 10(3) of the Standing Orders Act. <ORG> while dismissing the appeal directed a slight modification in Clause 20 of the Standing Orders. Clause 20 as modified by <ORG> was worded as under:

Every workman shall generally retire on attaining the age of 58 years. Between the 57th and 58th year Company's Medical Officer would conduct the medical test and if the workman is found to be medically fit he shall be retained in service for a period of two more years beyond the age of 58 years i.e. upto 60 years.

Feeling aggrieved by this order of <ORG> the <ORG> preferred a writ petition No. CWP No. 1717/87 in <ORG> at Delhi for quashing the impugned order of the Certifying Officer dated 1lth October, 1984 and the impugned order of <ORG> dated 4th May, 1987. The <ORG> which had initiated the proceedings for modification of Clause 20 of the certified Standing Orders also felt aggrieved by the said order of <ORG> and prefer-red a writ petition No. CWP 3417/87 in <ORG> of Delhi. Both these writ petitions were heard by a Division Bench and were disposed of by a common Judgment. The writ petition filed by the <ORG> was allowed while the other writ petition was dismissed.

6. While hearing these two writ petitions <ORG> for umlauted two points for consideration, namely, (i) "Whether <ORG> under the Standing Orders Act has the jurisdiction to entertain an application for amendment of a Standing Order which fixes the age of retirement of the workmen as 58 years which is in consonance with the model Standing Order and enhances the age of retirement to 60 years without first giving any finding whether it is practicable to give effect to the model Standing Order" and (ii) "Whether the settlement arrived at under Section 18(3) and Section 19(2) of the Industrial Disputes Act, 1947, between the petitioner and the workmen represented by their recognised majority union and which settlement was in force when impugned orders were made, had put any bar on the rights of the workmen to approach the authorities under the said Act for seeking modification of the Standing Orders with regard to the fixation of the age of superannuation of the workmen". <ORG> answered the first question in the affirmative holding that it was open to <ORG> to entertain an application for modification of the clause fixing the date of superannuation, the provisions in the model Standing Orders, notwithstanding. On the second point <ORG> came to the conclusion that the settlement arrived at in conciliation proceedings was binding on the workmen and as Clause 19 of the settlement kept the service conditions which were not changed in-tact and Clause 21 of the settlement did not permit raising of any demand throwing an additional financial burden on the <ORG>, it was not permissible to modify the certified Standing Orders by an amendment as that would alter the service condition and increase the financial burden on the Management. In this view that <ORG> took it quashed the orders passed by the two authorities below and made the rule in CWP No. 1717/87 absolute while dismissing CWP No. 3417/87 with no order as to costs. It is against this order that the Trade Unions have approached this Court.

7. The Standing Orders Act was enacted to define with sufficient precision the conditions of employment for workers employed in industrial establishments and to make the same known to them. The object of the Act was to have uniform Standing Orders in respect of the matters enumerated in the schedule to the Act regardless of the time of their appointment. With this in view the Act was enacted to apply to all industrial establishments wherein 100 or more workmen were employed on any date of the preceding 12 months. Within six months from the date on which this enactment becomes applicable to an industrial establishment, the employer is obliged by Section 3 to submit to the Certifying Officer draft Standing Orders proposed by him for adoption in his industrial establishment. Sub-section (2) of Section 3 lays down that in such draft Standing Orders provision shall be made for every matter set out in the schedule which may be applicable to the industrial establishment and where model Standing Orders have been prescribed shall be, so far as practicable, in conformity with such model. Section 4 provides that the Standing Orders shall be certifiable if (a) provision is made therein for every matter set out in the schedule which is applicable to the industrial establishment and (b) the Standing Orders are otherwise in conformity with the provisions of the Act. It further casts a duty on the Certifying Officer or <ORG> to adjudicate upon the fairness and reasonableness of the provisions of any Standing Orders. On receipt of the draft Standing Orders, Section 5 requires the Certifying Officer to forward a copy thereof to the trade union, if any, of the workmen, or where there is no such trade union, to the workmen in such manner as may be prescribed, together with a notice in the prescribed form requiring objections, if any, which the workmen desire to make to the draft Standing Orders. Thereafter the Certifying Officer must hear the concerned authorities and decide whether or not any modification of or addition to the draft submitted by the employers is necessary to render the draft Standing Orders certifiable under the Act. He is then expected to certify the draft Standing Orders with modifications, if any, and send authenticated copies thereof in the prescribed manner to the employer, to the trade union or other prescribed representatives of the workmen within 7 days. Section 6 provides for an appeal against the order of the Certifying Officer. The <ORG> has to communicate its decision to the Certifying Officer, to the employer and the trade union or other prescribed representative of the workmen within 7 days from the date of its order. Section 7 provides that the Standing Orders shall, unless an appeal is preferred, come into operation on the expiry of 30 days from the date on which authenticated copies thereof are sent under Section 5(3) or where an appeal is preferred, on the expiry of 7 days from the date on which copies of the orders of the <ORG> are sent under Section 6(2) . Standing Orders duly certified as above for the Barauni Refinery came into operation on 5th December, 1964 as provided by Section 7 . We then come to Section 10 which provides for modification of certified Standing Orders. Sub-section (1) thereof states that the Standing Orders finally certified shall not, except on agreement between the employer and the work-men or a trade union or other representative body of the workmen be liable to modification until the expiry of six months from the date on which the Standing Orders or the last modification thereof came into operation. Sub-section (2) of Section 10 reads as under:

Subject to the provisions of Sub-section (1), an employer or workman or a trade union or other representative body of the workman may apply to the Certifying Officer to have the standing orders modified, and such application shall be accompanied by five copies of the modifications proposed to be made, and where such modifications are proposed to be made by agreement between the employer and the workmen or a trade union or other representative body of the workmen, a certified copy of that agreement shall be filed along with the application.

It was under this provision that Clause 20 of the certified Standing Orders was sought to be modified.

8. Since <ORG> has answered the first point in the affirmative i.e. in favour of the workmen, we do not consider it necessary to deal with that aspect of the matter and would confine ourselves to the second aspect which concerns the binding character of the settlement. Section 2(p) of the Industrial Disputes Act, 1947 defines a settlement as a settlement arrived at in the course of conciliation proceedings and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the officer authorised in this behalf by the appropriate <ORG> and the Conciliation Officer. Section 4 provides for the appointment of Conciliation Officers by the appropriate <ORG>. Section 12(1) says that where any industrial dispute exists or is apprehended the Conciliation Officer may, or where the dispute relates to a public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner. Sub-section (2) of Section 12 casts a duty on the Conciliation Officer to investigate the dispute and all matters connected therewith with a view to inducing the parties to arrive at a fair and amicable settlement of the dispute. If such a settlement is arrived at in the course of conciliation proceedings, Sub-section (3) requires the Conciliation Officer to send a report thereof to the appropriate <ORG> together with the memorandum of settlement signed by the parties to the dispute. Section 18(1) says that a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of the conciliation proceedings shall be binding on the parties to the agreement. Sub-section (3) of Section 18 next provides as under:

A settlement arrived at in the course of conciliation proceedings under this Act or an arbitration award in a case where a notification has been issued under Sub-section (3-A) of Section 10-A or award of <ORG>, <ORG> or National <ORG> which has become enforceable shall be binding on-

(a) all parties to the industrial dispute:

(b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the <ORG>, arbitrator, <ORG>, <ORG> or National <ORG>, as the case may be, records the opinion that they were so summoned without proper cause:

(c) where a party referred to in Clause (a) or Clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates:

(d) where a party referred to in Clause (a) or Clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.

It may be seen on a plain reading of Sub-sections (1) and (3) of Section 18 that settlements are divided into two categories, namely, (i) those arrived at outside the conciliation proceedings and (ii) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement but the settlement belonging to the second category has extended application since it is binding on all parties to the industrial dispute, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. Therefore, a settlement arrived at in the course of conciliation proceedings with a recognised majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To that extent it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the <ORG> signing the settlement but also on others. That is why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority. <ORG> was, therefore, right in coming to the conclusion that the settlement dated 4th August, 1983 was binding on all the workmen of <ORG> including the members of Petroleum and Chemical Mazdoor <ORG>.

9. The settlement does not make any specific mention about the age of retirement. Clause 19 of the settlement, however, provides that such terms and conditions of service as are not changed under this settlement shall remain unchanged and operative for the period of the settlement. The age of retirement prescribed by Clause 20 of the certified Standing Orders was undoubtedly a condition of service which was kept intact by Clause 19 of the settlement. The provisions of the Standing Orders Act to which we have adverted earlier clearly show that the purpose of the certified Standing Orders is to define with sufficient precision the conditions of employment of workman and to acquaint them with the same. The charter of demands contained several matters touching the conditions of service including the one concerning the upward revision of the age of retirement. After deliberation certain conditions were altered while in respect of others no change was considered necessary. In the case of the latter Clause 19 was introduced making it clear that the conditions of service which have not changed shall remain unchanged i.e. they will continue as they are. That means that the demand in respect of revision of the age of retirement was not acceded to.

10. By Clause 21 of the settlement extracted earlier the <ORG> agreed that during the period of the operation of the settlement they shall not raise any demand which would throw an additional financial burden on the management, other than bonus. Of course the proviso to that clause exempted matters covered under Section 9A of the Industrial Disputes Act from the application of the said clause. However, Section 9A is not attracted in the present case. <ORG> was, therefore, right in observing: "when the settlement had been arrived at between the workmen and the company and which is still in force, the parties are to remain bound by the terms of the said settlement. It is only after the settlement is terminated that the parties can raise any dispute for fresh adjudication". The argument that the upward revision of the age of superannuation will not entail any financial burden cannot be accepted. <ORG> rightly points out: "workmen who remain in service for a longer period have to be paid a larger amount by way of salary, bonus and gratuity than workmen who may newly join in place of retiring men". <ORG> was, therefore, right in concluding that the upward revision of the age of superannuation would throw an additional financial burden on the management in violation of Clause 21 of the settlement. Therefore, during the operation of the settlement it was not open to the workmen to demand a change in Clause 20 of the certified Standing Orders because any upward revision of the age of superannuation would come in conflict with Clause 19 and 21 of the settlement. We are, therefore, of the opinion that the conclusion reached by <ORG> is unassailable.

11. In view of the above we see no merit in these appeals and dismiss them with no order as to costs.

12. Interim orders in each appeal will stand dissolved.


JUDGMENT <NAME>, C.J.

1. The present Letters Patent Appeal is instituted by the appellants against an Order passed by the learned Single Judge on November 9, 2001 in Civil Application No.8475 of 2001 with Civil Applications 7265 of 1999 and 1101 of 2001 in First Appeals 386 and 387, both of 2001. By the said order, the learned Single Judge held that the appellants-contesting defendants, under common understanding and in furtherance of their intention, made illegal entry in the suit flats without the prior permission of the <ORG>. They were, therefore, guilty of contempt of the <ORG>. Mr.<NAME> (defendant No.5), over and above committing contempt of <ORG>, along with other defendants, also made him liable by writing a letter, dated August 2, 2001, to the Receiver making allegations against him. He was, therefore, directed to withdraw the said letter. Considering the extenuating factors, however, particularly that the defendants parted with substantial amount as consideration, and forcible entry was made by them in an anxiety to occupy the flats, the learned Single Judge thought it fit to impose a nominal fine of Rs.250 on each of them, to be paid within a period of three weeks from the date of the order. In default, they were directed to suffer simple imprisonment for a period of three days.

2. To appreciate the controversy in the Letters Patent Appeal, few facts relevant to the question, as narrated in the order passed by the learned Single Judge, may now be stated:

Respondent No.1-original plaintiff filed a suit in <ORG> at Bombay for permanent injunction against defendants 1 to 38 (appellants 1 to 34 and respondents 2 to 5), inter alia, alleging that the plaintiff was in exclusive use, occupation, possession and enjoyment of land bearing Survey No.15, Hissa No.1(P), C.T.S.No.124, 124/1 to 124/3, 120/3 and 123/1 of Village Eksar Original Plot No.178 of the Town Planning Scheme Borivli (Final) admeasuring about 2044 sq.yds., situate at Gaothan Road, Babhai Naka, Thakurwadi, Borivli (West), Mumbai (hereinafter referred to as "the suit property"). It was his case that Smt.<NAME> and three others were the owners of the property. By an Agreement dated November 18, 1980, the owners agreed to sell the property to one M/s.Sainath Enterprises, a partnership firm (defendant <ORG>) on the terms and conditions mentioned in the Agreement. In pursuance of the said Agreement, defendant <ORG> was put in actual and physical possession of the property in part performance of the Agreement. According to the plaintiff, the partners of defendant <ORG> were known to him and by a Memorandum of Understanding, dated October 14, 1983, the plaintiff was asked to develop the suit property and to carry out various acts, deeds and things relating to the suit property. The plaintiff did necessary acts for making construction over the suit property after obtaining approval from <ORG> and constructed three buildings consisting of 49 flats. The plaintiff also entered into individual agreements with defendants 1 to 38 to whom he had agreed to sell those flats. It was asserted by the plaintiff that he had completed about 90% of construction work. He, therefore, called upon the defendants to pay arrears of instalments, so that the construction work could be completed and possession be handed over to them. The defendants, however, failed to pay the remaining amounts, as also regular instalments, and the plaintiff had to spend some amount from his own pocket. A criminal complaint was filed by defendant No.1 against the plaintiff alleging various illegal and unlawful acts.

3. On summons of suit being served, the defendants appeared, and filed Written Statement, denying all the facts stated, averments made and allegations levelled against them. It was their case that they were the promoter-members of the <ORG>, known as "Ratna-Vijay Co-operative Housing <ORG> (Proposed), Mumbai", formed in the year 1983. For various reasons, however, the <ORG> could not be registered. Their case was that they acquired the suit property from their joint contribution. The plaintiff was also one of the employees of <ORG>, Mumbai, where some of the defendants were serving. He was, therefore, elected as the Chief Promoter of the proposed <ORG> only for the purpose of acquiring the suit property in his name and for the development as the Chief Promoter, and the plaintiff did not acquire the property in his individual or personal capacity. He was merely a trustee or representative of the contesting defendants. It was also the allegation of the defendants that a sizeable amount has been paid by them to the plaintiff. According to them, the original estimated cost of the whole project was about Rs. 28 lacs, and even though an amount of Rs.46 lacs was paid to the plaintiff, an additional amount was claimed by the plaintiff from the defendants, which was illegal and unlawful. The defendants also demanded accounts from the plaintiff, but the plaintiff did not render accounts. On the contrary, the plaintiff had invested huge amount in other projects, though he had no authority to do so.

4. The defendants also preferred a Counter claim against the plaintiff, contending therein that the plaintiff was bound to follow the provisions of the Maharashtra Ownership Flats Act, 1963, but he failed to act in accordance with the provisions of the said Act. The defendants were, therefore, entitled to specific performance of the agreement.

5. It may be stated, at this stage, that by an Order dated September 30, October 1/4, 1993 in Notice of Motion Nos.6965 of 1992 and 1291 of 1993 in S.C.Suit No.442 of 1992, <ORG> appointed the Court Receiver, <ORG>, as Receiver with direction to take possession of the flats on or after October 31, 1993. It was also directed that the Receiver would call upon the plaintiff and defendants to suggest the names of Architects and/or the parties themselves may suggest the names of their Architects, so that the Court Receiver may instruct such Architects to inspect each of the flats in the building, and to prepare the list of items remained to be completed. It was further observed that the Court Receiver, after ascertaining the cost of construction, dues payable by each of the defendants, and on receiving the amount payable by them, may hand over possession of respective flats to the defendants. It was then stated:

"The Court Receiver after handing over possession of the flats to the defendants shall submit his detailed report including the amount so received by him and incurred by him to this Court within one month, after handing over such possession to the Defendants. The plaintiff is entitled to receive the balance amount from the Court Receiver on settlement of the accounts. Each of the party is at liberty to move this Court for any clarification at any time by giving notice to the other side."

6. It was the allegation of the plaintiff that disregarding the order passed by the <ORG> and by taking law in their hands, the defendants made forcible entry in the flats, which were in the possession of the Receiver as custodia legis. The Receiver submitted a report on September 4, 2001, stating therein that the contesting defendants had forcibly entered the flats by breaking open locks and by putting their own locks without the prior permission of the <ORG> Receiver or of the <ORG>. The Receiver, therefore, submitted her report for the following directions:-

"a) Whether the Court Receiver, <ORG>, Bombay should proceed to take back actual physical possession of the flats mentioned in the <ORG> letter dated 16th May 2001 addressed to the Officer In-charge, <ORG>, from whomsoever found in possession, by breaking open the lock/s, if necessary, with the help of police and thereafter lock and seal the same.

"b) If the answer to prayer (a) is answered in affirmatively, the concerned Police Station may be directed to provide necessary Police assistance to the Court Receiver for executing the order.

"c) The Defendants herein may be directed to deposit in <ORG> a sum of Rs.3,77,200/- being the amount of arrears towards security charges @ Rs.4,600/- per month for a period from October 1994 to 31st July 2001 within a stipulated time as <ORG> may deem fit to enable the Court Receiver to make payment thereof to the said Security Agency.

"d) Mr.<NAME>, C.A. of the Defendants may be directed to withdraw his letter dated 2nd August, 2001 addressed to the Court Receiver.

"e) Any other directions that <ORG> may deem fit to give to the Court Receiver in the matter.

"f) That his cost of and incidental to this application and of the Order to be made thereon be fixed at Rs.1000/- and be directed to come out of the funds lying in his hands as Receiver herein."

7. The parties to the suit were called upon to file their objections, if any, in support of or against the directions sought by the Court Receiver. The parties accordingly filed the affidavits.

8. The case of the Defendants was that all of them were in possession of the flats, and it was not correct to say that they had committed any illegality by entering the flats when the possession was with the Receiver. According to the defendants, they were already in possession since 1992. Some of them were actually occupying and also staying in the flats, whereas the others had only applied their locks, but they were in lawful possession. When a direction was issued to the Court Receiver to protect possession of the flats, it was understood by all parties, as well as the Receiver, that the possession of the Receiver would be symbolic and formal possession, inasmuch as all the defendants were in possession of the flats. Only thing was that some of them were in actual occupation of flats and were staying therein while others were not in actual occupation.

9. The case of the plaintiff was to the contrary. According to him, the defendants themselves have stated that they were not in possession of the flats, as the construction was not full and complete. The defendants insisted that the plaintiff should carry out the remaining construction, and for that purpose, possession was given to the plaintiff. It was also the case of the defendants that the plaintiff had illegally parted with the possession to third party, which necessitated the defendants to make an application in <ORG> for appointment of Receiver. After the Receiver was appointed, the defendants could not have entered the flats without the prior permission of the Receiver or without obtaining order from the Court. The said action was, therefore, illegal and unlawful, and the defendants were liable to be dealt with accordingly.

10. The learned Single Judge, after perusing the relevant materials on record, held that it was clearly established from the entire materials that the defendants were not in possession of the flats, except some of them, and in the report submitted by the Receiver, it was so stated. The learned Single Judge also held that most of the defendants had forcibly entered the flats by breaking open locks and by applying their own locks. They thereby interfered with the course of justice. Since the Receiver was holding the property as custodia legis, it was incumbent on the defendants to obtain prior permission of the <ORG> or of the Receiver before taking over possession of the flats. By not doing so, they had interfered with the course of justice and they were liable for the contempt of <ORG>. Accordingly, the learned Single Judge held the defendants liable, and imposed punishment, as stated hereinabove.

11. The said Order is challenged by the appellants in the present Letters Patent Appeal.

12. We have heard the learned counsel for the parties at length. It was strenuously argued by the learned counsel for the appellants that it is not true that the contesting defendants-appellants were not in possession. According to the counsel, all of them were in possession since 1992. The possession of the defendants continued since then. The defendants had to take appropriate proceedings against the plaintiff in a competent <ORG> of law and had to make a prayer for appointment of Receiver, as the plaintiff refused to carry out the work as per the agreement arrived at between the parties. That, however, did not change the position. Possession of the defendants continued to remain with them with a rider that the Receiver was to get the remaining work carried out as per the order of the <ORG>. It, therefore, could not be said that either the defendants were deprived of possession of flats or actual and physical possession was taken over by the Receiver; and the defendants, in violation of the order of the <ORG>, made forcible entry in the flats. It was also stated that the learned Single Judge has not appreciated the documentary and oral evidence in its proper perspective and has committed an error of fact as well as of law in observing that, except few, the rest of the defendants were not in actual and physical possession of the flats and they had made forcible entry. The true position was that whereas some of the defendants were in possession as well as in occupation of the flats, the remaining defendants were in possession, though not in actual occupation of the flats. Thus, when the Receiver was appointed to look after the flats as custodia legis, possession of the defendants continued to remain as such. The defendants, who were in actual occupation of the flats, continued to occupy them. Regarding other flats, though the defendants were in possession, as they were not in occupation thereof, the Receiver remained in symbolic possession. It was incorrect to contend that the Receiver was in possession of the suit flats and the defendants forcibly entered those flats and made themselves answerable to the <ORG>.

13. The learned counsel for the respondents, however, submitted that the report made by the Receiver was self-explanatory. From the said report, it was clearly established that the locks were broken open by the defendants, and they forcibly entered the suit flats. It is further clear from the report that only few defendants were in actual possession as well as occupation of the flats. It is not even the case of the defendants, submitted the learned counsel for the plaintiff, that before making such entry, the contesting defendants had either applied to the <ORG> or to the Receiver. The Receiver was, therefore, right in submitting that in violation of the order passed by the <ORG>, the defendants made forcible entry in the flats and, hence, they were liable to be dealt with accordingly. He, therefore, submitted that the order passed by the learned Single Judge does not deserve interference.

14. Having heard the learned counsel for the parties, in our opinion, the order passed by the learned Single Judge is legal, valid and is based on materials on record. Keeping in view the entirety of facts, it is clear that the defendants were put in possession in 1992. But it was their case that the construction had not been carried out fully and completely as per the Agreement. A grievance was, therefore, made by the defendants against the plaintiff and the latter was asked to complete the construction work. It was also their case that even though the work was to be carried out by the plaintiff, he had illegally parted with possession of the flats to third party, i.e., <ORG>. It is also clear that as per the order passed by <ORG>, the plaintiff was to hand over possession of the completed flats to the defendants on or before October 30, 1992. Thus, from the evidence on record and from the orders passed, it is established that the defendants were not in possession in 1993 or thereafter. Even from the Order dated September 30; October 1/4, 1993, it was clear that certain directions were sought by the defendants against the Court Receiver to hand over possession of the flats to each of the defendants after getting the work completed. It clearly appears to us that the defendants were not in possession.

15. The learned Single Judge, in our opinion, was also right in relying upon facts stated and averments made by the defendants themselves in Civil Application No.8475 of 2001. In paragraph 18, it was stated by the defendants that Receiver be appointed for the suit property. They also sought possession of their respective flats. In paragraph 24, it was expressly stated that the defendants were in possession of the suit property till July 13, 1992, on which date the learned Advocate for the defendants wrote a letter to the Advocates and Solicitors of the plaintiff that possession would be handed over to the plaintiff in order to enable him to complete the construction work in terms of the consent orders passed by the trial Court on July 1, 1992 and "accordingly the possession was handed over to the Respondent No.1 on 14.7.1992 for the limited purpose of completing the balance construction work on or before 31.10.1992". In paragraph 25 of the application, it was averred that the plaintiff could not complete the construction work before the stipulated time, i.e., October 31, 1992, and, thus, there was contravention of the order passed by a competent Court. Moreover, the plaintiff inducted a third party, viz., <ORG>, on the suit property as a contractor. It was also alleged that the plaintiff had mortgaged the property by entering into an agreement with <ORG>, Dadar, and obtained an amount of Rs.32 lacs approximately. In paragraph 39, it was stated that some of the defendants were in possession of the respective flats since 1988. In paragraph 48, it was their case that they were middle-class people and most of them were without any shelter of their own. In paragraph 50, it was mentioned that the defendants were constrained to file the application, as most of them had suffered mental anguish and torture over the last 17 years, and many of them were without roof despite sizeable payment being made to the plaintiff. It was then stated;

" This Civil Application is an attempt to resolve the stalemate created by the dismissal of the proceedings of the rival parties and this will pave the way for giving possession to the homeless Petitioners who are anxiously waiting for their turn for getting their tenement."

In paragraph 63, a prayer was made by the defendants to direct the Court Receiver to hand over possession of the respective tenements to the defendants, except those who were in actual possession. A further prayer was made to refund the amount of Rs.30.81 lacs to the defendants so as to enable them to complete the remaining construction.

16. In view of the above pleadings and the orders passed by the Court, there is no doubt in our minds that the appellants-defendants (except the defendants who were actually occupying flats and which fact has been reflected in the report submitted by the Receiver) were not in possession of flats. It is precisely for that reason that an application was filed by the defendants, and a prayer was made to appoint a Receiver. Thereafter, the possession of the flats remained all through out with the Receiver as custodia legis. Obviously, therefore, it was not only expected, but obligatory on the appellants/defendants, if they wanted possession of the flats, either to approach the Receiver and to make demand of possession of flats or to apply to a competent Court for an appropriate direction to the Receiver to hand over possession to them. The appellants/defendants, unfortunately, failed to adopt such legal course. Instead, they took law in their hands and made forcible entry in the flats. The report dated September 4, 2001 submitted by the Receiver makes this position amply clear. The Receiver was also right in making complaint against <NAME>, who had addressed a letter on August 2, 2001 to the Receiver, making allegations against her. The learned Single Judge was, in our view, right in holding him liable for contempt of Court for writing such a letter, in addition to the role played by him along with other contesting defendants/appellants. The learned Single Judge was also right in directing him to withdraw the said letter. It may, however, be stated that <NAME> has filed an undertaking on affidavit in this Court on February 4, 2002 withdrawing the said letter and expressed his sincere apology for writing the letter. The learned Single judge was also justified in directing the defendants-appellants to deposit an amount of Rs.3,77,200.00, being the amount of arrears towards security charges, as the said action was taken by the Receiver at the request of learned advocate for the defendants wherein it was clearly mentioned that the defendants were ready to bear the expenses of security guards but they had failed to pay the amount from October, 1994.

17. It was, no doubt, contended by the learned counsel for the appellants that the defendants had not committed any breach or violation of the order passed by the <ORG>, nor took forcible possession of flats. But even if this <ORG> holds that there was some mistake on the part of the appellants, liberal view may be taken by dropping the proceedings.

18. In this connection, our attention was invited by learned counsel to a decision of <ORG> in <ORG>Ltd. v. State of Bihar and Ors. . In that case, a suit against the Receiver was instituted without obtaining prior leave for filing the suit. Though the Court held that leave ought to have been obtained prior to institution of the suit, it was not a case for initiating contempt proceedings. The Court also observed that failure to take prior leave was not so grave a vice that later on leave sought and got before the decree would not purge the so-called contempt.

19. In our opinion, the ratio laid down in <ORG> would not be of any help to the appellants. In the instant case, it was the appellants who prayed for appointment of a Receiver, so that their rights would be protected by her. The prayer was accepted by the <ORG>, and an order was made for appointment of Receiver. The Receiver remained in possession as custodia legis. It was thereafter not open to the appellants/defendants to interfere with the possession of the Receiver without the prior permission of the Receiver or without obtaining an appropriate order from a competent <ORG>. Forcible entry in the flats was, thus, clearly an unlawful act. As observed in <ORG> itself, when a <ORG> puts a Receiver in possession of property, the property comes under the <ORG> custody, and the Receiver is merely an officer or agent of the <ORG>. Any obstruction or interference with the <ORG>s possession sounds in contempt of that <ORG>.

20. <CITATION> . also, <ORG> observed that it is well-settled that no proceedings can be taken in respect of a property which is in possession and management of the Receiver appointed by the <ORG>, without the leave of the <ORG>. When the property is in custodia legis through its duly appointed Receiver, the <ORG> has exercised the power with a view to preserving the property for the benefit of the original owner as judicially determined. Such an order, therefore, will have to be respected and obeyed.

21. By violating the order passed by a competent <ORG> and by entering forcibly in the flats, which were in possession of the Receiver as custodia legis, the appellants had interfered with the course of justice. They were, therefore, liable to be dealt with for the contempt of <ORG>. The learned Single Judge, in our considered opinion, has not committed any illegality in issuing necessary directions and in passing the order, and we see no infirmity or illegality therein.

22. For the foregoing reasons, we see no ground to interfere with the order passed by the learned Single Judge. The Letters Patent Appeal deserves to be dismissed, and is, accordingly, dismissed. In the facts and circumstances, however, there shall be no order as to costs.

<NAME>, J.

23. The learned counsel for the appellants prays for six weeks time so as to enable the appellants to take an appropriate decision in the matter. The prayer is strongly objected by the learned counsel for respondent No.1.

24. The learned counsel for respondent No.1 further states that if the appellants intend to move <ORG>, respondent No.1-original plaintiff may be informed in advance so as to enable him to appear before <ORG>.

25. In the facts and circumstances, let the operation of the judgment be kept in abeyance for a period of six weeks. It would also be appropriate if we direct, and we so direct that the appellants shall give 72 hours notice in advance if they decide to move <ORG>.


JUDGMENT <NAME>, J.

1. This is an appeal from the decision of the Subordinate Judge, First Class, Belgaum, rejecting darkhast No. 443 of 1908, presented by the appellant for execution of the decree in suit No. 434 of 1897. The ground of rejection is that the darkhast is barred by time, inasmuch as the previous five darkhasts were not in accordance with law, having each claimed relief or reliefs which it was not competent for the <ORG> to grant.

2. The decree of which execution was sought by the darkhast in question had been passed originally on the 17th of November 1897; but it was amended on the 20th of January 1899. The amount payable under it was split up into four items. The first was a sum of Rs. 575 for costs made payable at once. The second consisted of two sums of Rs. 6,000 each; the first sum was directed to be paid by the end of January 1908; in case of non-payment, interest at 4 1/2 per cent, was made to run on the sum from the 1st of November 1897 up to the date of payment. As to the second sum of Rs. 6,000, the decree directed that interest should run at 4 per cent, from its date to the date of payment. The third item of the decree was a sum of Rs. 44,000 with Rs. 1,980 as interest thereon. The decree made Rs. 44,000 payable in forty-four years by instalments each of Rs. 1,000 a year. For satisfaction of Rs. 1,980 the judgment-debtor was directed to put the decree-holder in possession of certain lands; and it was provided that should the profits thereof fall short of the amount payable, the judgment-debtor should make up the deficiency by payment in cash. It was also provided in the decree that if the judgment-debtor should put the decree-holder in possession of only part of the lands, instead of the whole, the former should place the latter in possession of other lands so as to enable the decree-holder to obtain the full amount of interest. The decree then wound up with a final clause, making the whole of the mortgaged property therein mentioned security for the whole of the decretal amounts.

3. The first darkhast for execution was presented on the 18th of June 1898; the second on the 4th of January 1901; the third on the 13th of August 1901; the fourth on the 4th of August 1904; the fifth on the 26th of July 1907. These were all prima facie sufficient in law to keep the decree alive, because every application after the first was within three years of the last preceding application. And the present darkhast, having been presented on the 2nd of December 1909, is also prima facie in time, being within three years of its immediate predecessor, the darkhast of the 26th of July 1907.

4. But the Subordinate Judge has disallowed the darkhast now in dispute on the ground that all the previous darkhasts were not "in accordance with law." And they are not "in accordance with law," in the opinion of the Subordinate Judge, because every one of them sought relief or reliefs which, on considering the merits of the darkhast, the <ORG> could not have granted.

5. In so construing the words "applying in accordance with law to the proper <ORG> for execution" the learned Subordinate Judge has put upon them a construction not warranted by their plain meaning. To apply for the execution of a decree in accordance with law is to apply in the manner provided for by the law relating to execution of decrees. And that law is embodied in the Code of Civil Procedure, which is for its purposes an exhaustive Code. Chapter XIX of the Code of 1882, which was in force when the first five darkhasts in the present case were presented, deals in sub-division B of the Chapter with "Application for Execution." The provisions therein point out, first, who may apply for execution, and against whom the application may be made; secondly, what the contents of the application should be; and thirdly, what should accompany the application and in what cases. These are specific provisions and they must be the guide in determining whether, under Article 179 of Schedule II to the Limitation Act , a darkhast is "in accordance with law." Section 235 Clause (j) requires the application for execution to state "the mode in which the assistance of the Code is required." The last words of the clause "as the nature of the relief sought may require" show that even if the application seek relief not strictly claimable, yet the application would not be bad in itself, In the present Code (Act V of 1908) for "sought" we have "granted"--i.e., granted by the decree. If a person other than one entitled to apply applies for execution, or if the person entitled applies for execution in a mode and for a relief outside the decree, the application is not in accordance with law for the plain reason that the decree of which execution is sought is not in reality the decree to which the application professes to relate but some other decree, one not existing and, therefore, incapable of execution according to law. The decree in such a case not existing, the application made as to it shares its fate and is treated as non-existent. Where, on the other hand, a decree gives certain reliefs, and the application for execution seeks some or all of them, it may be that, after going into the merits of the application and considering on evidence all the circumstances and equities of the case, the <ORG> comes to the conclusion that the particular relief or reliefs sought shall not be granted. But that decision of the <ORG> on the merits cannot affect the application for the purposes of the question whether it is by itself in accordance with law, provided it meets in substance the requirements of the Code of Civil Procedure or any other law relating to execution.

6. Where, again, the application asks partly for reliefs granted by the decree and partly for reliefs totally outside the decree, the application may be void as to the latter, but all the same it is good in law as to the former and therefore "in accordance with law."

7. In the present case the fallacy of the Subordinate Judge's reasoning is that he has held every previous darkhast to be not in accordance with law after examination of the merits and surrounding circumstances of the darkhast. That is going outside the darkhast, whereas all that the law ( Article 179 of the Limitation Act ) requires the <ORG> to see for the purposes of limitation is whether the darkhast itself, whatever its merits on the evidence, is an application made in due conformity with the requirements of the law relating to execution.

8 According to the Subordinate Judge, the second darkhast is not in accordance with law because at that point of time the only relief which the decree-holder could claim under the decree was to bring the mortgaged property to sale, whereas, instead of seeking that relief, the decree-holder prayed for payment of Rs. 12,575. That might or might not be; that was a question to be determined on a consideration of the circumstances extrinsic to the decree and depending on questions of default, and waiver. But because a decree-holder does not ask by his application for execution for that relief to which he is entitled under the decree in a certain event, and asks for a relief given by the decree until the happening of that event, it does not follow that he has applied for relief outside the decree and that, therefore, his application is not in accordance with law. It is this view which has substantially affected the Subordinate Judge's judgment with reference to each of the darkhasts. In the case of some of them, he has assigned the additional ground that the darkhasts were not accompanied by inventories--a purely technical defect which could not affect the question whether the darkhast itself was substantially in accordance with law.

9. Each of the first five darkhasts in the present case claimed relief granted by and, therefore, within the decree. Whether on a consideration of all the facts the <ORG> could, in the events that had happened, grant the relief was a question for trial on the merits. But each application by itself was in order in that it sought relief which was in the decree.

10. Hence it was "in accordance with law."

11. On these grounds the decree appealed from must be reversed and the darkhast remanded to the lower <ORG> for disposal on the merits according to law. The appellant must have the costs of this appeal from the respondents; other costs to be costs in the darkhast. At the fresh hearing in the <ORG> below it will be open to the respondents to object to execution on any ground such, for instance, as that all or any of the items in the decree are time-barred. Parties will be at liberty to adduce evidence.

<NAME>, <NAME>

12. The question before us is whether limitation in this case is saved by certain previous darkhasts under Clause 4 of Article 179 of the Limitation Act (Act XV of 1877). That clause provides a period of three years from the date of applying in accordance with law to the proper <ORG> for execution. The only question before us is whether the earlier darkhasts were cases of applying in accordance with law or not. If they were cases of applying in accordance with law, then, admittedly, the present darkhast is saved. If I were free to decide the present question solely upon the authority of the words of the Statute, I should be inclined to think that those words had no reference to the application's likelihood of success or to the <ORG>'s competency to award any particular relief which had been prayed. As I understand the words, they are merely an adverbial qualification of the word "applying," and they seem to me to look only to the form or procedure of the application. I should think, moreover, that the words as they stand receive ample meaning by reference to Sections 235 and 236 of the Code of Civil Procedure of 1882, which sections prescribe the particulars to be furnished with an application for execution. It is worthy of remark that the critical words qualify the word "applying."

13. It is not even an application, but it is the applying which must be in accordance with law, and the meaning seems to me to be wholly distinct from what would be conveyed if the words ran "applying for execution in accordance with law."

14. On the other hand if it is to be said that a decree-holder is not applying in accordance with law merely because he asks for something, which under the decree the <ORG> cannot grant him, we are, I think, confronted, at least in all cases where the decree is complicated or intricate, with this difficulty that the question whether an applying is made according to law can only be decided by an adjudication of the application on its merits. I venture respectfully to doubt whether that is intended. If the applying complies with the forms and the procedure prescribed in that behalf, I should be disposed to say that the applying was in accordance with law, and not the less so, because, on the merits of the application, whether for one reason or another, the application had to be refused; nor do I think that the difficulty which I have mentioned is satisfactorily removed by any distinction between what appears on the face of the application and of the decree and what appears by a more careful consideration of those documents; for in practice I should doubt whether it would be possible to maintain any such distinction. If, however, the decisions of this <ORG> oblige us to reject this view of the meaning of the words in Clause 4 of Article 179 , then, I am of opinion that in this particular case the appeal should be allowed on the other ground that, as explained in my learned colleague's judgment, the former applications asked for reliefs which were not wholly outside the decree.


PETITIONER: <ORG>, AGRA Vs. RESPONDENT: UNION OF INDIA & ORS. DATE OF JUDGMENT: 29/02/2000 BENCH: M.B.Shah, D.P.Wadhwa JUDGMENT:

<NAME>, <NAME>

Leave granted in special leave petitions.

Civil Appeal No.1843 of 1989 & C.A. NO. OF 2000 SLP(C) No. 15477-80 of 1988:

The Appellants, in C.A.No.1843 of 1989, are all employees of <ORG>, Agra, working in different offices and governed by the Rules framed by the Government. Apart from their salary and other perquisites they are getting compensatory allowance in the form of City Compensatory Allowance (hereinafter referred to as CCA), Dearness Allowance (hereinafter referred to as DA) and House Rent Allowance (hereinafter referred to as HRA). Appellants filed Civil Misc. Petition No.470/98 in <ORG> challenging the inclusion of DA, HRA & CCA paid to them in their income for the purpose of Income Tax. Various other petitions raising similar contentions were filed by the central government employees, employees of central government undertakings, bank employees, state government employees and general insurance employees. One such petition is before us being Civil Appeal No. of 2000 S.L.P.(C ) Nos.15477-80 of 1988 disputing the taxability of various allowances, namely, D.A., CCA, HRA, Leave encashment, linked with leave, travel concession, running allowance, night allowance, etc. All the writ petitions were disposed of by common judgment and order dated 12.9.1988 by <ORG>.

The question for consideration before <ORG> was - whether the receipts on account of <ORG>, <ORG> and DA are in the nature of income entailing tax liability? Before deciding the above question, the Court considered the legislative intent behind the passing of relevant section 17 which defines salary, and the addition of Explanation to sub-section (14) of Section 10. <ORG> dismissed the writ petitions holding inter alia that: (1) the Income Tax, 1961 is a self contained code to judge the taxability of a particular receipt and the taxability of D.A., H.R.A. and <ORG> will have to be seen only within the scheme of the Act. That <ORG>, <ORG> and DA are not the reimbursements of necessary disbursements. It is only for determination of <ORG> that the Central Govt. will take care that grant of compensatory allowance does not become a source of profit to the employees, but it does not mean that the allowance in the nature of <ORG>, <ORG> and DA do not amount to an advantage. The allowances are surely in addition to pay. (2) The tuition fees reimbursement is fully covered by S.17(3)(ii), and the payment is not covered by any of the clauses of Section 10. (3) The leave encashment linked with leave travel concession is taxable, being the profits in lieu of salary within the meaning of section 17(3)(ii). (4) The running allowance and night allowance come to the employees as an advantage by virtue of their employment. They are, therefore, perquisite within the meaning of s.17(I)(iv) read with s.17(2) and hence are taxable under the head salaries under s.14, read with s.17.

The <ORG> held that any type of reimbursement is fully covered by Section 17(3)(ii) of the Income Tax Act, 1961 (hereinafter referred to as the Act) inasmuch as the payment is not covered by any of the clauses of Section 10 as mentioned in parenthetical clause of Section 17(3)(ii) . The <ORG>, therefore, held that CCA, HRA and D.A. would be taxable income.

Civil Appeal Nos.1784-86 of 1988.

These appeals are filed by the Commissioner of Income Tax, West Bengal-II, Calcutta against the judgment and order dated 24th July, 1987 of <ORG> passed in Income-tax Reference No.97 of 1977 holding that the CCA paid to the assessee did not have the character of income within the meaning and scheme of the Income Tax Act , 1961. Following three questions were referred to <ORG> by the Tribunal for decision: -

1. Whether, on the facts and in the circumstances of the case the <ORG> was right in holding that C.C.A. cannot come within the charging sections and/or within the meaning of income of a Government Servant in accordance with Section 2(24) of the Income Tax Act, 1961 read with the Fundamental Rules and cannot come within the ambit of meaning of total income as contained in section 2(45) of the Act? 2. Whether on the facts and in the circumstances of the case when the assessees case cannot come within the provisions of sections 15 and 17 of the Act, the <ORG> was right in not considering the applicability of the provisions of section 16(v) of the Act? 3. Whether on the facts and in the circumstances of the case upto the assessment year 1974-75 because of the deletion of section 16(v) of the Act with effect from Ist April, 1975 C.C.A. could be allowed as an admissible deduction under Section 16(v) of the Act.

It was contended before <ORG> that the amount received by way of CCA cannot be included in the total income of the assessee inasmuch as the same was receivable by him by virtue of the Fundamental Rules which govern the terms and conditions of service of a Government employee. The Fundamental Rules indicate that CCA is given not as a source of profit or gain. In support of this submission counsel relied upon the decisions in <CITATION> 99 ITR 14; <NAME> v Commissioner of Income Tax, MP 103 ITR 813 and <CITATION> 124 ITR 391. It was also contended that the assessee is entitled to claim exemption in respect of CCA under Section 10(14) of the Income Tax Act and in any case, CCA cannot come either within the scope of salary or within the definition of special allowance or perquisite. Hence, it cannot be termed as income and cannot be included within the total income and cannot be assessed to tax as per sections 4 and 5 of the Income Tax Act.

After a careful consideration of the facts, <ORG> held that <ORG> paid to the assessee was neither an emolument nor a fee nor a profit nor perquisite but was only a payment for part reimbursement of the extra expenses incurred by the assessee as of necessity by reason of his posting. The said allowance does not have the character of income within the meaning and scheme of the Income Tax Act , 1961. This is not an allowance granted to the assessee specifically to meet his personal expenses, but it is an allowance meant for part reimbursement of the extra expenditure necessarily to be incurred by him as a result of his being posted in a city. Amount paid to the assessee on account of this allowance does not come within the definition of income or total income nor within the purview of the computation or charging sections under the Income Tax Act , 1961. <ORG> answered Question Nos.1 and 2 in the affirmative and in favour of the assessee. In view of answers to the said questions, <ORG> did not consider it necessary to answer question no.3.

C.A. Nos.6054/94 and 6058/94.

Respondents-employees of the <ORG> and <ORG> filed petitions under Article 226 of the Constitution before <ORG> in Matter No. nil of 1988 praying inter alia for issue of a writ or order directing the appellants herein not to treat CCA paid and payable to the employees of the appellants-Companies as their taxable income and not to deduct income tax at source on CCA paid to them. <ORG> by order dated 21.3.1988 following an earlier decision given by it on 17.3.1988 in Syndicate bank <CITATION> allowed the writ petitions and passed an order restraining the appellants-Companies and other Insurance Companies from deducting any tax on C.C.A. or any allowance in the nature of CCA. in computing taxable income of the employees for the year 1987-88 onwards. Hence, these appeals by special leave are filed by the Corporations.

Whether CCA, HRA or other such payment to the employee is covered by the word income as defined under the Act?

In all these appeals it is conceded that in view of the amendment of clause (24) of Section 2 of the Act, it would be difficult to say that the amount received as CCA or HRA would not be covered by the inclusive definition of the word income. Relevant clauses of Section 2(24) read as under: -

2(24) Income includes (i) to (iii) (iiia) any special allowance or benefit, other than perquisite included under sub-clause (iii), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit;

(iiib) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living..

The said clauses are added by Director Tax Laws (Amendment) Act, 1989, w.e.f. 1.4.1962. <CITATION> (1988) 169 ITR 162, <ORG> considered this argument in detail and arrived at the conclusion that considering Rule 44 of Fundamental Rules applicable to the <ORG> employees, CCA paid to them is neither an emolument nor a fee nor a profit nor even a perquisite but was only a payment for part of the reimbursement of the extra expenses incurred by the assessee as of necessity by reason of his posting. The Court observed the said allowance does not have the character of income within the meaning and scheme of the Income-tax Act , 1961. This is not an allowance granted to the assessee specifically to meet his personal expenses but it is an allowance meant for part reimbursement of the assessee for the extra expenditure necessarily to be incurred by him as a result of his being posted in a city.

In view of the afore-quoted amendment of the word income, any special allowance or benefit specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the purpose of the duties of an office would be included in the word income. It has also been pointed out that under sub-clause (iii b) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office are ordinarily performed by him or a place where he ordinarily resides or to compensate him for the increased cost of living is also to be included in income. Therefore, it is conceded that the payment of HRA or CCA, would be covered by the word income. Hence, the basis of the decision rendered by <ORG> would not survive.

Whether such amount is taxable?

Once it is conceded that receipt of such amount is income of the assessee, the only question would be whether it is taxable under the head salary. For that purpose, we have to refer to Section 17 of the Act to find out as to what meaning can be given to the phrase profits in lieu of salary. For appreciating the contentions raised by the learned counsel for the parties, we would straightway refer to the relevant part of Section 17 of the Act, which is as under: -

17. For the purposes of sections 15 and 16 and of this section (1) Salary includes

(i) wages; (ii) any annuity or pension; (iii) any gratuity; (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;

(iv) any advance of salary; {(va) any payment received by an employee in respect of any period of leave not availed of by him;} (v) the annual accretion of the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule; and (vi) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of Rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof; (2) Perquisites include (3) Profits in lieu of salary includes

(i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto;

(ii) any payment (other than any payment referred to in clause (10) [clause (10A], [clause 10(B)], clause (11), [clause 12) [clause (13) or clause (13A] of section 10 ), due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or [interest on such contributions or any sum received under the Keyman insurance policy including the sum allocated by way of bonus on such policy Explanation. For the purposes of this sub-clause, the expression Keyman insurance policy shall have the meaning assigned to it in clause (10D) of section 10 .] Reading of sub-section (1) of Section 17 of the Act makes it abundantly clear that the word salary is given exhaustive meaning as stated in clauses (i) to (vii). The inclusive definition of the word salary given in Section 17 provides that apart from salary received by the employee, it includes wages, any annuity or pension, any gratuity, any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages, any advance of salary, any payment received by an employee in respect of any period of leave not availed by him and other payments mentioned in clauses (va), (vi) and (vii). These clauses (i) to (vii) of sub- section (1) indicate that <ORG> intended to include in salary the specified or named amount paid to the employee in respect of services rendered by him. Clause

(iv) of sub-section (1) provides inclusion of four types of payments in the word salary (i) fees (ii) commissions

(iii) perquisites and (iv) profits in lieu of or in addition to salary. In common parlance, fees, commissions, perquisites or payments of profits in lieu of salary may not be considered to be salary. But by this inclusive definition, it has been provided so. After giving this exhaustive definition of the word salary, further inclusive definition is given to the word perquisite, with which we are not concerned in these appeals. Thereafter, sub-section (3) provides for inclusive definition of the phrase profits in lieu of salary. Clause (i) of sub-section (3) inter alia includes the amount of any compensation received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto. Inclusion of this amount of compensation has direct connection with the employment or terms and conditions relating thereto. In the context of the aforesaid sub- sections (1), (2) and (3), appropriate meaning to the words and phraseography used in clause (ii) is to be given.

It has been contended by the learned counsel for the <ORG> that clause (ii) of sub-section (3), inter alia, provides that profits in lieu of salary includes any payment received by an assessee from an employer. He, therefore, submitted that City Compensatory Allowance (CCA), House Rent Allowance (HRA) and Dearness Allowance (DA) would be covered by clause (ii) of sub-section (3). Learned counsel submitted that salary includes profits in lieu of salary and profits in lieu of salary includes any payment received by the assessee from the employer except which are excluded.

As against this, the learned counsel for the assessee submitted that the contention raised by the <ORG> is without any substance. If any payment de hors the profits was to be included then <ORG> would not have given such exhaustive definition of the word salary and thereafter would not have given further meanings to the word perquisite and the phrase profits in lieu of salary. <ORG>, without anything more, could have easily provided that salary would include any payment due to or received by an assessee from an employer except the payments which are exempted under the Act. The contention is, if the <ORG> wanted to include any payment received by the employee in its widest sense, there was no necessity to give such an exhaustive definition of the word salary in Section 17 of the Act and to connect it with profits in lieu of salary. If such a simple definition that salary includes any payment received by the employee from the employer was intended to be given, the legislature would not have given inclusive meaning to the expression profits in lieu of salary and the phrase any payment received by the employee would be sufficient for all the purposes. Further the legislature could have easily avoided giving of not only such exhaustive definition but number of amendments and additions to the said section. The learned counsel for the appellant further made it clear that for D.A., he is not pressing the contention that it is not included in the word salary. He submitted that C.C.A. and H.R.A. cannot be included in the word salary as defined under Section 17 of the Act.

Hence, the question would be, what does the expression profits in lieu of salary signify? Whether profits in lieu of salary would include any payment received from the employer relatable to or out of profits or it has nothing to do with the profits as understood in common parlance? Or whether profits is to be understood as any gain or advantage in lieu of salary or in addition to salary for which any payment is received by the assessee It is submitted that salary includes any payment out of profit in lieu of salary. Instead of salary any amount is paid in terms of profits, then the same is included in salary as it is profits in lieu of salary. The basis for payment of such amount is profits. So the expression any amount received by the employee is relatable to the profits of employer and that payment out of profit is considered to be the salary by inclusive definition. Reference is made to <NAME> of English Law which mentions profit asan arrangement whereby an employer agrees that his employees shall receive a share, fixed before hand, in the profits of the undertaking. Hence, it is submitted that payment received by the employee should be relatable to profits and whatever amount is paid to an employee - is paid in lieu of salary out of profits. Instead of paying salary, if percentage out of the profits is paid by the employer, it would be included in the word salary and it would be considered to be profits in lieu of salary. It may be in addition to the salary or only profits in lieu of salary. It is contended that this would be the natural meaning of the phrase profits in lieu of salary and in the present case as there is no question of payment of C.C.A. or H.R.A. out of profits earned by the <ORG> or statutory corporations, receipt of such amount would not be covered by the phrase profit in lieu of salary'.

For this purpose, it is submitted that the word profits is not defined, but Section 28 of the Act provides that the income mentioned therein shall be chargeable to income tax under the head of profits and gains of business or profession and hence, the word profits is to be understood under the Act in its natural and proper sense and as understood since years in commercial terms. Reliance is placed on the following passage referred to by <ORG> in <ORG> Vs. Commissioner of Income-tax, Madras (Reported in A.I.R. 1931 Privy Council 165) dealing with the word profits under the Income Tax Act . <ORG> relied upon the principle laid down by Lord Chancellor <NAME> in <ORG> by stating that it is of general application unaffected by the specialities of the English tax system, existing as under: -

The thing to be taxed, said his Lordship, is the amount of profits or gains. The word profits I think is to be understood in the natural and proper sensein a sense which no commercial man would misunderstand. But when once an individual or a company has in that proper sense ascertained, what are the profits of his business or his trade, the destination of those profits or the charge which has been made on those profits by previous agreement or otherwise is perfectly immaterial. The tax is payable upon the profits realized and the meaning to my mind is rendered plain by the words payable out of profits. (emphasis supplied) Further, the meaning of the word profit as given in Blacks Law Dictionary is as under: - Profit. Most commonly, the gross proceeds of a business transaction less the costs of the transaction; i.e. net proceeds. Excess of revenues over expenses for a transaction; sometimes used synonymously with net income for the period. Gain realized from business or investment over and above expenditures.

Profit means accession of good, valuable results, useful consequences, avail, gain, as an office of profit, excess of returns over expenditures or excess of income over expenditure. U.S. v. <NAME>, D.C.Md., 304 F.Supp. 1305, 1312.

The benefit, advantage, or pecuniary gain accruing to the owner or occupant of land from its actual use; as in the familiar phrase rents, issues and profits, or in the expression mesne profits.

Profit-sharing plan. A plan established and maintained by an employer to provide for the participation in the profits of the company by the employees or their beneficiaries. In order to qualify for tax benefits, the plan must provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the funds accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as layoff, illness, disability, retirement, death, or severance of employment. Such plans are regulated by the federal Employee Retirement Income Security Act (ERISA). See also Employee Stock Ownership Plan (ESOP).

Qualified profit sharing plan. An employer-sponsored plan that meets the requirements of I.R.C. 401. If these requirements are met, none of the employers contribution to the plan will be taxed to the employee until distributed to him or her (402). The employer will be allowed a deduction in the year the contributions are made. (404) It is submitted that similar should be the interpretation of Section 17(1)(iv) read with sub- section 3(ii) of the Act. This clause is for taxing salary payable out of the profits realized by the employer and the said meaning is rendered plain by the words profits in lieu of salary. Foundation of any such payment is the profits. It is, therefore, submitted that the result would be salary includes profits in lieu of salary, which includes any payment, but such payment should have connection with or referable to profits of the employer.

The learned counsel for the assessee further submitted that the <ORG> in sub-sections (1), (2) and (3) of s. 17 has used the word includes to give wider meaning than natural meaning which is given to the said word or phrase and, therefore, the definition given by the <ORG> is to be accepted as it is without any further enlargement. It is contended that the word include is generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include. The learned counsel referred to <ORG>, Employees state <CITATION> , [AIR 1992 SC 129] wherein this Court considered the inclusive definition of the word seasonal factory given under Section 2(12) of the Employees State Insurance Act, 1948 and held that what is included in the meaning of seasonal factory is a factory which is engaged for the purpose mentioned therein. That is to say, it is first a factory and then it would be considered to be a seasonal factory. Relying on the aforesaid observations, learned counsel for the employees submitted that by the inclusive definition of the phrase profits in lieu of salary what is included is any payment which must be out of the profits i.e. sharing of the profits by the employer. For this purpose, he further referred to the words any fee, commission, perquisites or profits used in clause (17)(1)(iv) and pointed out that in the inclusive definition the <ORG> wanted to include fee, commission or perquisites which normally cannot be included in the word salary by specifically mentioning the same. It is also submitted that similarly what is included in the word salary is only profits in lieu of salary. Therefore, any payment received by the employee from the employer would have limited meaning and is referable to only payments received out of profits.

As against this, learned counsel for the <ORG> submitted that salary includes profits in lieu of salary which in turn includes any payment received by an assessee from an employer. The word profits is to be given its plain meaning to mean any benefit, advantage or pecuniary gain accruing to the assessee. Therefore any payment received by an assessee from an employer would be profits in lieu of salary or in addition to salary. For the purpose of income tax, even if the payment is made towards the additional expenses incurred by the employee for the purpose of service, yet it is taxable income, unless there is an exemption as provided under different clauses of Section 10 .

In our view, even though there is much substance in the contentions raised by the learned counsel for the assessee yet it is to be stated that the Act is a self-contained Code and the taxability of the receipt of any amount or allowance is to be determined on the basis of meaning given to the words or phrases in the Act. Section 2(24) of the Act gives wide inclusive definition to the word income. Similarly, for levying tax on salary income, exhaustive definition is given under Section 17 , which includes perquisites and profits in lieu of salary. Only exclusion provided under sub- section 3 is any payment referable to clause (10) [clause (10A], [clause 10(B)], clause (11), clause (12), clause (13) or [clause (13A)] of section 10 . In view of this specific inclusion and exclusion in the meaning of the word income and salary, it is rightly submitted that payment received by the assessee has no connection with the profits of the employer. The word profits is used only to convey any advantage or gain by receipt of any payment by the employee.

Websters Comprehensive Dictionary gives meaning of the word profit inter alia to mean advantage or benefit. It states:

ProfitSynonyms: advantage, avail, benefit, emolument, expediency, gain, good, improvement, proceeds, receipts, return, returns, service, utility, value Advantage is that which gives one a vantage ground, either for coping with competitors or with difficulties, needs, or demands; as, to have the advantage of a good education; it is frequently used to what one has beyond another or secures at the expense of another; as, to have the advantage in argument, or to take advantage in a bargain.

Applying the aforesaid general meaning of the word profits and considering the dictionary meaning given to it under Section (17)(1)(iv) and 3 (ii), it can be said that advantage in terms of payment of money received by the employee from the employer in relation or in addition to any salary or wages would be covered by the inclusive definition of the word salary. Because of the inclusive meaning given to the phrase profits in lieu of salary would include any payment due to or received by an assessee from an employer, even though it has no connection with the profits of the employer. It is true that <ORG> might have avoided giving of inclusive meaning to the word salary by stating that any payment received by the employee from an employer would be considered to be salary except the payments which are excluded by Section 17(3)(ii) i.e. clauses (10), (10A), (10B), (11), (12), (13) or (13A) of Section 10 . However, it is for the <ORG> to decide the same. This would not mean that by giving exhaustive and inclusive meaning, the word profits can be given a meaning only when it pertains to sharing of profits by the employer. For the assessee, the receipt of such amount would be a profit, gain or advantage in addition to salary, even though it is not named as salary. Therefore, the word profits in context is required to be understood as gain or advantage to the assessee. Hence, it is not possible to accept the contention of the learned counsel for the employees that as the <ORG> amount is paid to meet the additional expenditure as contemplated by the statutory Service Rules, it cannot be said to be profit, gain or additional salary. Under the Act , such receipt of the amount as conceded is covered by the definition of the word income and as provided it would be in addition to salary. Hence, it would be part and parcel of income by way of salary, which would be taxable one. Learned counsel for the appellant further submitted that assuming for the purpose of profits in lieu of salary, employer is not required to give any share out of the profits, yet even in the hands of the employees, receipt of the amount must be profits. It is his contention that whatever <ORG>, <ORG> or Statutory Corporations pay to the employees, cannot be termed as profits by any standard because the amount is calculated in such a manner that it reimburses less than extra cost incurred by them at a station where they are posted. It is further submitted that by including these payments as taxable, it would cause hardship to the honest employees whose source of income is limited and are required to meet extra expenses at the station where they are transferred and posted for which service rules provide for reimbursement of extra cost. He referred to the decision rendered by <ORG> in <CITATION> (1975) 99 ITR 14, wherein the Court considered whether <ORG> was taxable as perquisite as contended by the revenue. The Court negatived it by holding that payment of taxable allowance under the order of the <ORG> is neither an emolument nor fee nor profit, but it is a reimbursement of personal expenses required by the <ORG> servant to be incurred on account of expenses of living at a particular place.

May be that this is true to the extent that <ORG> or statutory corporations do pay something less than what is required to be reimbursed and the receipt of CCA can not be termed as profit in common parlance. However, for income, salary and its taxability under the Act, the dictionary meaning given by the <ORG> is to be taken into consideration as for that purpose, it is a complete code. Income tax is attracted at the point when the income is earned. Taxation of income is not dependent upon its destination or the manner of its utilisation. [Re: <CITATION> ]. Therefore, there is no question of referring to the Fundamental Rules framed by <ORG> or by the statutory authorities for payment of CCA, HRA or other such allowance for reimbursing the expenditure incurred by the employees. Further, equity or hardship would hardly be relevant ground for interpretation of tax law. It is for the <ORG> or the statutory bodies to do the needful. However, equitable it may be that CCA cannot be held to be profit in the hands of the assessee or it is not share out of profit, yet it cannot be helped in view of inclusive and exclusive meaning given under the Act.

In the result, we hold that DA, <ORG> and <ORG> would be taxable income. Since, counsel for the employees did not make any submission with regard to other allowances like, night allowance, tuition fee, leave encashment linked with leave travel concession, running allowance etc. we do not pass any order with regard to those allowances.

Accordingly, Civil Appeal Nos.1784-86 of 1988, 6054/94 and 6058/94 filed by <ORG> and others respectively are allowed and Civil Appeal No. 1843/89 and C.A. No._____of 2000 SLP(C) No.15477-80 of 1988 filed by <ORG>, <ORG> and <ORG>, <ORG> and others respectively are dismissed. There shall be no order as to costs.