PETITIONER: <NAME> & SONS Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH DATE OF JUDGMENT: 24/11/1967 BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SHAH, J.C. BHARGAVA, VISHISHTHA CITATION: 1968 AIR 788 1968 SCR (2) 439 ACT: Indian Income-tax Act , 1922, s. 2(4) -Adventure in the nature of trade-What is-Tests to determine-question is mixed question of low and fact-<ORG>'s duty in preparing statement of case. HEADNOTE: The assessee firm purchased a Brengun factory from <ORG> and sold the stores and part of the lands and buildings shortly afterwards At a higher price. It admitted before the Income-tax authorities that the purchase and sale in respect of the stores constituted an adventure in the nature of trade, but in respect of the land and buildings sold it contended that they had been purchased by way of investment, and the sale of a part of them did not result in assessable profit. The claim was rejected by the Income-tax Officer, by the Appellate Commissioner, and by <ORG>. <ORG> in a reference under a. 66(1) also rejected it. The firm appealed to this Court by special leave. HELD : (i) In reaching the conclusion that a transaction is an adventure in the nature of trade, <ORG> has to find the primary evidentiary facts and then apply the legal principle involved in the statutory expression "adventure in the nature of trade,, used in s. 2(4) of the Indian Income-tax Act. A question of this description is a mixed question of law and fact and the decision of <ORG> thereon is open to challenge under s. 66(1) of the Act. [442 F-G] (ii) The question whether the transaction is an adventure in the nature of trade must be decided on a consideration of all the relevant facts and circumstances which are proved in the particular case. The answer to the question does not depend on the application of any abstract rule, principle or formula but must depend upon the total impression and effect of all the relevant facts and circumstances established in the particular case. [442 H] (iii) In the present case the appellant firm purchased the Brengun factory from borrowed money. The income from the property was only about 1/6 of the interest payable by the company on the money borrowed. The first sale was effected by the firm within three months of the purchase. and the sums received from sale were utilised for paying off the debts as also the dues to the Government. The firm had not enough financial resources to invest the money required to purchase the factory and the transaction could not therefore be with a view to making a permanent investment, but only for making profit. It had not been established by evidence that the appellant firm purchased the Brengun factory for purpose of establishing a cycle factory. Having regard to the total effect of all the relevant facts and circumstances established in the case it was rightly held by <ORG> that the transaction was an adventure in the nature of trade and part of a profit making scheme. [448 B- H] (iv) The statement of case is not intended to be a mere copy of the order sheet in a litigation but it must set out the points raised by the .aggrieved party, the reply thereto, if any, and the authorities or statutory 440 provisions relied upon for the view taken by <ORG> together with an intelligible summary of the facts found by <ORG>. The <ORG> should clearly state its conclusions and findings of fact and should not leave it to <ORG> or this Court to deduce the findings or to collect facts from a large number of documents which are part of the record of the case. [449 <CITATION> , 35 I.T.R. 594, <ORG> v. <NAME>, 5 T.C. 159, <NAME> v. <NAME>, I I T.C. 297, <NAME> v. <ORG>, 14 Tax Cases 490, <ORG> v. <NAME>, the assessee. 24 Tax Cases 498, Leeming v. <NAME>, 15 Tax Cases 333, <CITATION> , 37 I.T.R. 242 and <ORG> v. <NAME>, 34 Tax Cases 389, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 708 to 710 of 1966.

Appeals by special leave from the judgment and order dated July 23, 1964 of <ORG> in Case Referred No. 42 of 1962.

<NAME>, <NAME>, <NAME>, <NAME> and <NAME>, for the appellant (in all the appeals).

<NAME>, Solicitor-General, <NAME>, <NAME> and <NAME>, for the respondent (in all the appeals), The Judgment of the Court was delivered by <NAME>, J. These appeals are brought by special leave from the judgment of <ORG> dated 23rd July, 1964 in referred case No. 42 of 1962. The assessment years involved in these appeals are 1358 F., 1953-54 and 1954-55, the relevant accounting periods being the years ending 30-9-1948, 30-9-1952 and 30-9-1953, respectively. The assessee firm <ORG> (hereinafter referred to as the 'assessee firm') consists of three partners, <NAME>, and his two sons, <NAME> and <NAME>. The assessee firm purchased <ORG> and the properties attached to it consisting of 403 acres of land, 14 factory buildings, about on,- hundred residential quarters, and railway sidings, furnitures etc., in addition to the stores, from <ORG>. The price of <ORG> and the properties together with the furniture etc. was fixed at Rs. 27 lakhs while the price of the stores was fixed at Rs. 8 lakhs. During the relevant accounting years, the assessee firm sold a part of the stores for Rs. 9,53,918 O.S. and 46 acres of land, 14 factory buildings, furniture, railway siding, etc. for Rs. 26,48,215 O.S. It was not disputed that the excess over the price realised for the re,-sale of stores was Rs. 2,26,484 O.S. and for the re-sale of part of the factory land, building etc. was Rs. 10,46,834 O.S. It was admitted by the assessee firm before <ORG> that the surplus realised by the resale of stores was not a capital accretion but an adventure in the, nature of trade. With regard to the factory it was argued that it was an investment, and not an adventure in the nature of trade and as such the excess amount realised represented a realisation of capital asset. The contention of ,he assessee firm was rejected by the Income-tax Officer, by the Appellate Assistant Commissioner and by <ORG> in appeal. The view taken by <ORG> was that the assessee firm had planned a well calculated scheme of profit making, that it had the intention of exploiting the properties which it had purchased to its advantage, that the transactions in question constitute an adventure in the nature of trade, and any surplus which it got by sale of the portions of the properties was liable to tax. At the instance of the assessee firm, <ORG> stated a case to <ORG> on the following question of law :

"Whether the purchase of the site and buildings known as "Brengun Factory" was in the course of a profit-making scheme or an adventure in the nature of trade By its judgment dated 23rd July, 1964 <ORG>, answered the question against the assessee firm.

On behalf of the appellant Mr. <NAME> argued that the assessee firm along-with <NAME>, brother of <NAME> had been carrying on business as a partnership firm under the name of <NAME> and Company (hereinafter referred to <ORG>). It had substantial interest in various joint stock companies, and was the managing agent of several joint stock companies, and possessed considerable financial resources.- The assessee firm acquired <ORG> with the intention of starting a bicycle factory or some other industry as an investment, but not with the intention of resale. The argument was stressed that the purchase and sale of land and buildings was not in the line of business of the assessee firm. It was stated that the purchase was an isolated transaction and even after the sales, a major portion of the factory remained with the assessee firm. It was contended that the, assessee firm had not developed the land or parcelled it out with the view to sell it to purchasers as a residential area, and make a profit. The submission made on behalf of the appellant was that the transaction of purchase was in the nature of investment and was not an adventure in the nature of trade and the sales represented the realisations of capital asset.

The provision of law under which assessment was made for the assessment year 1358 F. was section 31(3) of the Hyderabad Income Tax Act (hereinafter referred to as the ' Hyderabad Act ') which corresponds to s. 23 (3) of the Indian Income Tax Act , 1922 (hereinafter referred to as the ' Indian Act ). The mnents for the subsequent years were made under the Indian Act . The charging section under the Hyderabad Act is s. 3, which corresponds to s. 4 of the Indian Art. The word "business is defined in s. 3(1) of the Hyderabad Act which is identical with the language of s. 2(4) of the Indian Act. Section 8 of the Hyderabad Act states :-

"Save as otherwise provided by this Act, the following beads of income, profits. and gains shall be chargeable to income-tax in the manner hereinafter appearing, namely

(iv) Profits and gains of business, profession or vocation".

It corresponds to s. 6 of the Indian Act.

The question whether profit in a transaction is a capital accretion or has arisen out of an adventure in the nature of trade is a mixed question of law and fact. <CITATION> (1) it was pointed out by this Court that the expression 'in the nature of trade in sub-section (4) of section 2 of the Indian Act postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business : and that a <ORG> while considering the question whether a transaction is or is not an adventure in the nature of trade before arriving at its conclusion on the facts, has. to address itself to the legal requirements associated with the concept of trade and business. In other words, in reaching the conclusion that the transaction is an adventure in the nature of trade, the Appellate <ORG> has to find the primary evidentiary facts and then apply the legal principle involved in the statutory expression "adventure in the nature of trade" used by s. 2(4) of the Indian Act. A question of this description is a mixed question of law and fact and the decision of the Appellate <ORG> thereon is open to challenge under s. 66 (1 ) of the Indian Act .

The question whether the transaction is an adventure in the nature of trade must be decided on a consideration of all the relevant facts and circumstances which are proved in the particular case. The answer to the question does not depend upon the application of any abstract rule, principle or formula but must (1) 35 I.T.R. 594.

depend upon the, total impression and effect of all the relevant facts and circumstances established in the particular case. In <ORG> v. Harris(1), Lord Justice Clerk observed, "It is quite a well settled principle in dealing with questions of assessment of income-tax that where the owner of an ordinary investment chooses to realise it, and obtains a greater price for it than he originally acquired it at, the enhanced price is not profit........ assessable to income-tax. But it is equally well established that enhanced values. obtained from realisation or conversion of securities may be so assessable where what is done is not merely a realisation or change of investment, but an act done, in what is truly the carrying on, or carrying out, of a business...... What is the line which separates the two classes of cases may be difficult to define, and each case must be considered according to, its facts; the question to be determined being-Is the sum of gain that has been made a mere enhancement of value by realising a security or is it a gain made in the operation of business in carrying out a scheme for profit making ?" But in judging the character of such transactions several factors have been treated as significant in decided cases. For instance, if a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an adventure in the nature of trade may readily be inferred. A similar inference would arise where a commodity is purchased and sub-divided, altered, treated or repaired and sold or is converted into a different commodity and then sold. The magnitude of the transaction of purchase, the nature of the commodity, the subsequent dealings of the assessee the nature, of the organisation employed by the assessee and the manner of disposal may be, such that the transaction may be stamped with the character of a trading venture In <NAME>' v. Lowry(2) the assessee purchased a large quantity of aeroplane linen and sold it in different lots, and for the purpose of selling it started an advertising campaign rented offices, engaged an advertising manager, a linen expert and a staff of clerks, maintained account books normally used by a trader, and passed receipts and payment in connection with the linen through a separate banking account. It was held that the assessee carried an adventure in the nature of trade and so the profit was liable to be taxed. The same view was taken in <NAME> v. <ORG>(3) in regard to an assessee who purchased very cheaply a vast quantity of toilet paper and within a short time thereafter- sold the whole consignment at a considerable profit. Similarly, in <ORG> v. <NAME>, the assessee (4) a woodcutter bought for resale, whisky in bond, in three lots. He (1) T.C. 159,165-6. (2) 11 Tax Cases 297.

(3) 14 Tax Cases 490. (4) 24 Tax Cases 498.

sold it later on at considerable profit. The assessee had never dealt in whisky <ORG>fore, he had no special knowledge of the trade, he did not take delivery of the whisky nor did he have it blended and advertised. Even so it was held that the transaction was not an adventure in the nature of trade. Lord President <NAME> observed in the course of the judgment : "It is in general. more easy to hold that a single transaction entered into by an individual in the line of his own trade (although not part and parcel of his ordinary business) is an adventure in the nature of trade than to hold that a transaction entered into by an individual outside the line of his own trade or occupation is an adventure in the nature of trade. But what is a good deal more important is the nature of the transaction with reference to the commodity dealt in. The individual who enters into a purchase of an article or commodity may have in view the resale of it at a profit, and yet it may <ORG> that that is not the only purpose for which he purchased the article or the commodity, nor the only purpose.. to which he might turn it if favourable opportunity of sale does not occur. In some of, the cases the purchase of a picture has <ORG>en given as an illustration. An amateur may purchase a picture with a view to its resale at a profit, and yet he may recognise at the time or afterwards that the possession of the picture will give him aesthetic enjoyment if lie is unable ultimately, or at his chosen time, to realise it at a profit. A man may purchase stocks and shares with a view to selling them at an early date at a profit but, if he does so, he is _purchasing something which is itself an investment, a potential source of revenue to him while he holds it. A man may purchase land with a view to realising it at a profit, but it also may yield him an income while he continues to hold it. If <ORG> continues to hold it, there may <ORG> also a certain pride of possession. But the purchaser of a large quantity of commodity like whisky, greatly in excess of what could <ORG> used by himself, his family and friends a commodity which yields no pride of possession, which cannot <ORG> turned to account except by a process of realisation, I can scarcely consider to <ORG> other than an adventurer in a transaction in the nature of a trade; and I can find no single fact among those stated by the Commissioners which in any way traverses that view. In my opinion, the fact that the transaction was not in the way of business (whatever it was) of the respondent in no way alters the character which almost necessarily <ORG>longs to a transaction like this". These are cases of commercial commodities but a transaction of purchase of land cannot <ORG> assumed without more to <ORG> an adventure in the nature of trade. In <NAME> v. <NAME>(", syndicate was formed to acquire an option over a rub<ORG>r estate with a view to resell it at a profit, and finding the estate too small the (1) 15 Tax Cases 333.

syndicate acquired' another estate and sold the two estates on profit. It was held that the transaction was not in the nature of trade and the profit was not liable to be assessed to tax. The same view was expressed in <CITATION> (1), in which the assessee who carried on business of engineering works purchased land which was tinder requisition by the <ORG>, negotiated a sale before the land was de- requisitioned and sold it after the land was released. Again in Commissioners of Inland Revenue v. Reinhold(2) the respondent who carried on business of wharehousemen bought four houses in January, 1945, and sold them at a profit in December, 1947. He admitted that he had bought the property with a view to resale and had instructed his agents to sell whenever a suitable opportunity arose. On behalf of the <ORG> it was contended that the purchase and sale constituted an adventure in the nature of trade and the profits, arising therefrom were chargeable to income tax. It was, held by <ORG> that the initial intention of the respondent to purchase the property with a view to resell did not per se establish that the transaction was an adventure in the nature of trade and the Com- missioners were justified in treating the profit as not assessable to income tax. But the circumstance of a particular case may lead to the conclusion that the purchase or resale of land is in the nature of trade. In <NAME> (3 ) case the appellant firm which acted as managing agents purchased, for a total consideration of Rs. 8,713 four contiguous plots of land adjacent to the place where, the mills of the company managed by it were situated. The first purchase was made in October, 1941 and the second and subsequent purchases were made in November, 1941, June, 1942 and November. 1.942. As long as the appellant was in possession of the land it made no effort, to cultivate it or erect any superstructure on it but allowed the land to remain unutilised except for the rent received from the house which existed on one of the plots. The appellant sold the land to the company managed by it in two lots in September and November, 1947, for a total consideration of Rs. -52,600. The question was whether the sum of Rs. 43,887 being the excess realised by the appellant by the two sales over its purchase price was assessable to income tax. <ORG> rejected the contention of the appellant that the properties were bought as an investment and that the plots were acquired for building tenements for the labourers of the mills but came to the conclusion that the transaction was an adventure in the nature of trade. On a reference, <ORG> expressed the same view. It was held by this Court in appeal that <ORG> was right -in inferring that the appellant knew that it would be able (1) 37 Tax Cases 242.

(3) 35 I.T.R. 594.

sup.c.1/68---14 (2) 34 Tax Cases 189.

to sell the lands to the managed company whenever it thought it profitable so to do, that the appellant purchased the four plots of land with the sole intention of selling them to the mills at a profit and that <ORG> was right in holding that the transaction was an adventure in the nature of trade.

As we have already said it is not possible to evolve any legal test or formula which can be applied in determining whether a transaction is an adventure in the nature of trade or not. The answer to the question must necessarily depend in each case on the total impression and effect of all the relevant factors and circumstances proved therein and which determine the character of the transaction. What then are the material facts found in the present case ? <ORG> was the managing agent of several joint stock companies viz., <ORG> (hereinafter referred to as <ORG>), <ORG> (hereinafter referred to as <ORG>), <ORG> (hereinafter referred to as <ORG>) and others. <ORG> started <ORG> in 1946 and <ORG> in 1947. <ORG> had 50% share holding in both these companies. Negotiations for the purchase of <ORG> situate in the out-skirts of Hyderabad commenced in December, 1946. On 18th December, 1946, there took place a meeting between <NAME> and <NAME> on behalf of <ORG> and <NAME>, the then Additional Financial Adviser to <ORG>. The latter informed the two <NAME> brothers that <ORG> had decided to sell the <ORG> as the war had ended and it was going cheap. It was agreed that the price of the factory building should be fixed at Rs. 27 lakhs, and of the stores at Rs. 9 lakhs. <ORG> asked for six months' time for making the payment but finally it was agreed that the price should be paid in four equal monthly installments commencing from 1st January, 1947. The contract of sale was made subject to the condition that <ORG> was no longer interested in the factory and also subject to the confirmation by <ORG>. By its letter dated December 24, 1946, <ORG> accepted the proposal and informed the Additional Financial Adviser that the Board had agreed to purchase the <ORG> and the first payment would be made on 1st or 2nd January, 1947. Not having ready cash to pay the first instalment the firm borrowed the sum from <ORG> and <ORG> pledging the shares of the partners valued at about Rs. 20 lakhs for Rs. 9 lakhs. It is significant that the assessee firm invested very little of its own money in the purchase of the factory and the stores. It got six months time from <ORG> to pay the price in instalments, and paid it by pledging its shares with the Banks, by obtaining further loan from the Banks on over drafts, and by selling portions of the factory to <ORG> and <ORG>, and <ORG> The balance sheet of the assessee firm as on 31-9-1948 disclosed that the assessee firm owed about Rs. 7 lakhs to <ORG>, though by that time it had sold properties valued over Rs. 30 lakhs. It is a significant circumstance that on 23rd December, 1946 a meeting of <ORG> of <ORG> was held and in that meeting a resolution was passed that the <ORG> should be approached in the matter of the valuation of the site and building in tile establishment of <ORG> in the premises of the <ORG> purchased by the assessee firm and that the managing agents be authorised to address <NAME> Bahadur in that behalf. The notice convening the meeting was issued on the 23rd December, 1946, on which date, the assessee .firm had not even intimated their acceptance of offer made by <ORG> for the sale of <ORG>. Pursuant to the resolution of 28th December, 1946, <ORG> resolved to purchase 14 acres of land, buildings etc. for Rs. 5 lakhs. It should be noticed that the valuation by -the P.W.D. which was considered necessary on the 28th December, 1946 was given up and the price of Rs. 5 lakhs was accepted by <ORG>. In the circumstances, the inference that that resolution was passed at the instance of the assessee firm is not unreasonable. Pursuant to the resolution a sale-deed appears to have been executed in favour of <ORG> on 31st March, 1947. It is apparent that the interval of time between the purchase of the factory and the sale was about 3 months, and this is hardly consistent with the contention of the assessee firm, that it had purchased the property as an investment. It is also admitted that the sale-deed in favour of <ORG> as well as <ORG> and <ORG> were executed by <ORG> in their favour direct. The sale was in favour of <ORG> pursuant to a resolution passed on 17th September, 1947. On that day the company resolved that in view of the special facilities for power, water and railway siding at the <NAME> Industrial Estate, Sanathnagar, sanction should be accorded for the acquisition of the, proposed area of 8 acres of land for the location of the company's factory as per the rate offered to the company i.e., at O.S. Rs. 5,000 per acre and a sum of Rs. 40,000 was agreed to be paid towards the price. A sale-deed was executed pursuant to the resolution in June, 1948. The next transaction relates to the purchase by <ORG> <ORG> at its meeting on October 29, 1947, resolved to sell away their existing factory buildings at Azamabad to the Nizam's State Railway, and purchase the new factory, land and buildings as Sanathagar, for Rs. 25 lakhs. The property purchased consisted of 24 acres, of land, factory buildings ,,Ind furniture,- and the sale deed was executed on February 11, 1948. It is manifest that within one year of the purchase of the <ORG>, the assessee firm realised Rs. 13,99,753 by the sale of stores and Rs. 33,90,908 by the sale of 46 acres of land and buildings, in all making a profit of Rs. 11,90,661. It appears -from the balance sheet as on September 30, 1948 that even after the extended date, it still owed Rs. 7 lakhs to the <ORG> though by that time it had sold over Rs. 30 lakhs worth of property. The assessee firm was thus paying off the dues to the <ORG> and also discharging its debts by selling fractions of the property. In other words, the assessee firm was purchasing, selling and liquidating the loans, which would all show the commercial nature of the transaction. These facts establish that the assessee firm had not enough financial resources to invest Rs. 36 lakhs on <ORG> <ORG> and that the transaction was launched upon with a view to make profit and not as a permanent investment. There is another aspect of the matter to be taken into account. The property income from <ORG> fac- :tory during the year 1953-54 as would appear from the Assessment Orders of the years, 1953-54, 1954-55 was about Rs. 22,000 I.G. The interest on loans on over-drafts is paid to be 41 per cent. on 27 lakhs the balance of price payable to the <ORG>, the :annual interest would be about Rs. 1,21,500. It is manifest that the assessee firm could not have borrowed the money to purchase the property as an investment when the income was about 1/6 of the interest payable on the amount borrowed. Mr. <NAME> suggested that the assessee firm intended to develop the <ORG> as an Industrial Estate and referred to certain correspondence in this connection. But the correspondence does not establish that any of the foreign companies agreed to start a cycle factory of their own or in collaboration with the assessee firm. The correspondence between the parties admittedly ended in February 1946. Mr. <NAME> also referred to the correspondence between January 8, 1947 to March 10, 1947 but this also does not show that there was any prospect of the assessee firm starting a cycle industry or any other industry either solely .or in collaboration with a foreign company.

Having regard to total- effect of all the relevant facts and circumstances established in this case we are of the opinion that <ORG> was right in its conclusion that the purchase of the site and the buildings of <ORG> was an adventure in. the nature of trade and was- in the course of a profit making scheme and the question was rightly answered by <ORG> .against the assessee firm.

<NAME>

We consider it necessary to add that the statement of the case made by <ORG> is unsatisfactory and gives no information whatever about the arguments respectively advanced by the parties or the findings recorded by <ORG>. The statement of the case is not intended to be mere copy of the order sheet in a litigation but it must set out the points raised by the aggrieved party, the reply thereto, if any and the authorities or statutory provisions relied upon for the view taken by <ORG> together with an intelligible -summary of the facts found by <ORG>. A statement of the case should fully, clearly and precisely set out all the relevant facts, or if the facts have been fully set out in the judgment of the <ORG> they may be incorporated in the statement of the case by a reference to particular paragraphs of the judgment in which the facts are so set out. In any event, it is important that <ORG> should state clearly its conclusions and findings of fact and should not leave it to <ORG> or this Court to deduce the findings or to collect the facts from a large number of documents which are part of the record of the case. A statement of the case which does not set out precisely the findings of <ORG> on the questions of law and fact serves no 'useful purpose. It merely gives an opportunity to the parties to put forward arguments at the stage of reference which are often untenable, For the reasons already expressed we hold that these appeals must be dismissed with costs. There will be one hearing fee.

G.C. Appeals dismissed.


JUDGMENT <NAME>, J.

1. <ORG> referred the following question (as directed by this Court) to <ORG> under Section 66(2) of the Indian Income-tax Act for opinion :

Whether, under the facts and circumstances of the case, the amount of Rs. 1,30,785 being the excess of sale proceeds of the building, plant and machinery over the written down value of the business of the said newspaper publications could, in law, be termed to be income, profit and gain of the petitioner ?

2. For some time there was difference of opinion in <ORG> on the question whether it is open to the income-tax authorities in proceedings for assessment of tax to discard the legal character of a transaction and to determine "the substance of a transaction". But it has now been settled by several decisions of this Court that in taxing a receipt to income-tax the authorities are only concerned with the legal effect or character of the transaction and not the substance of the transaction.

3. See the judgment of this Court in <CITATION> . 1678 of 1966, decided on August 13, 1968.

4. In the present case the transaction which gave rise to the receipt sought to be brought to tax was of the nature of sale; and it was not even contended that it was not intended to be a sale. It was argued, however, that the vendor and the purchaser being the same the profits arising there from were not taxable. That contention cannot be accepted. <ORG> was, in our judgment, right in deciding against the assessee.

5. The appeal fails and is dismissed. No order as to costs.


PETITIONER: <NAME> AND OTHERS. Vs. RESPONDENT: <NAME> AND OTHERS. DATE OF JUDGMENT: 28/09/1954 BENCH: <NAME>, VIVIAN BENCH: <NAME>, VIVIAN MAHAJAN, <NAME> (CJ) MUKHERJEA, <NAME>, <NAME>, GHULAM CITATION: 1954 AIR 686 1955 SCR 608 CITATOR INFO : D 1955 SC 756 (6) D 1965 SC 183 (26) RF 1975 SC 349 (29) RF 1975 SC2299 (140) R 1980 SC 354 (5) RF 1990 SC1023 (12) C 1991 SC2001 (5) ACT: Constitution of India, Art. 19(1) (a)- Representation of the People Act (XLIII of 1951). ss. 123(5) and 124(5)- Whether ultra vires the Constitution. HEADNOTE: Held, that sections 123(5) and 124(5) of the Representation of the People Act (XLIII of 1951) are not ultra vires article 19(1) (a) of the Constitution. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 156 of 1954. Appeals by Special Leave against the Judgment and Order dated the 24th December, 1953, of <ORG>, Gwalior, Madhya Bharat, in Election Petition No. 263 of 1952.

<NAME>, (<NAME> and <NAME>, with him) for the appellants.

<NAME>, Solicitor-General for India (<NAME>, with him) for the respondents Nos. I and 5.

<NAME>, Solicitor-General for India (<NAME>, with him) for respondent No. 4.

1954. September 28. The Judgment of, the Court was delivered by <NAME> is an appeal from a decision of <ORG> in which the petitioner, an elector, sought to set aside the elections of the appellants (respondents 1 and 2 to the petition) who were the successful candidates. The constituency is Bhilsa, a double member constituency in Madhya Bharat. The petitioner seems to have been fighting on behalf of the 6th and 7th respondents to the petition because one of his prayers is that they be declared to have been duly elected in place 'of the appellants (respondents 1 and 2). The petitioner succeeded and the <ORG> declared the elections of the two appellants to be void and further declared that the 6th and 7th respondents had boon duly elected, We will first consider that part of the decision which declares the election of the two appellants to be void. The <ORG> finds, among other things, that the' appellant No. 1 (1st respondent) published certain pamphlets which contain statements listed as (a), (b), (c), (e), (f) and (g) by the <ORG>. The <ORG> holds that these statements are false and that the 1st appellant (1st respondent) did not believe them to be true. It also holds that these statements reflect on the personal character and conduct of the 6th respondent and are reasonably calculated to prejudice his prospects in the election. These findings were contested and the learned counsel for the appellants contended that the attack was on the public and political character of the 6th respondent and was a legitimate attack. We do not intend to examine this as a Court of appeal because this is a special appeal and all we are concerned to see is whether a <ORG> of reasonable and unbiased men could judicially reach such a conclusion. We have had some of these pamphlets read out to us and we are of opinion that the conclusion of the <ORG> is one which judicial minds could reasonably reach. We decline to examine the matter further in special appeal. Under the law the decision of the <ORG> is meant to be final. That does not take away our jurisdiction but we will only interfere when there is some glaring error which has resulted in a substantial miscarriage of justice. On those findings a major corrupt practice on the part of the 1st respondent (1st appellant here) under section 123(5) of the Representation of the People Act, 1951, is established.

The next finding concerns the 2nd respondent (appellant No. 2). The <ORG> finds that he made a systematic appeal to Chamhar voters to vote for him on the basis of his caste. There is evidence to support this finding. The leaflets marked N and 0 place that beyond doubt. This constitutes a minor corrupt practice under section 124(5) of the Act.

Both these provisions, namely sections 123(5) and 124(5) , were challenged as ultra vires article 19(1)(a) of the Constitution, It was contended that article 245(1)   prohibits the making of laws which violate the Constitution and that the impugned sections interfere with a citizen's fundamental right to freedom of speech. There is nothing in this contention. These laws do not stop a man from speaking. They merely prescribe conditions which must be observed if he wants to enter <ORG>. The right to stand as a candidate and contest an election is not a common law right. It is a special right created by statute and can only be exercised on the conditions laid down by the statute. <ORG> has no bearing on a right like this created by statute. The appellants have no fundamental right to be elected members of <ORG>. If. they want that they must observe the rules. If they prefer to exercise their right of free speech outside these rules, the impugned sections do not stop them. We hold that these sections are intra vires.

In addition to these findings, the <ORG> found that both the appellants committed an illegal practice within the meaning of section 125(3) in that they issued a leaflet and a poster which did not have the name of the printer on them. This is a pure question of fact.

The result of committing any corrupt practice is that the election of the candidate is void under section 100(2)(b) . It is not necessary to prove that the result of the election was materially affected thereby because clause

(b) is an alternative that stands by itself. All that need be proved is that a corrupt practice has been committed, and that the <ORG> finds to be the fact. The <ORG> was accordingly justified in declaring the election of the first appellant to be void.

In addition to this the <ORG> found that the corrupt practice committed by the second appellant respondent No. 2) also materially affected the result of the election. This was challenged but we need not go into that because the finding that the second appellant committed a minor corrupt practice and also an illegal practice is clear and so his case falls under clause (a) of sub-section (2) of section

100. Sub-section (2)(a), so far as it is material here, runs........................ if the <ORG> is of opinion-

(a)that the election of a returned candidate has been procured or induced or the result of the election has been materially affected, by any corrupt or -illegal practice the <ORG> shall declare the election of the returned candidate to be void."

The <ORG> finds as a fact that the second appellant's election was procured by a corrupt practice. His case therefore falls within the first of the three alternatives envisaged by clause (a), so it is not necessary to enquire whether it also falls under the third. We hold that this election was also rightly declared to be void. That disposes of the first and second appellants (respondents 1 and 2).

We now turn to respondents 6 and 7 to the petition. They are the 4th and 5th respondents before us, <NAME> and <NAME>]. The <ORG>, acting under section 101 (b), declared them to be duly elected. Here, we are of opinion that the <ORG> was wrong. Before this can be done, it must be proved that " but for the votes obtained by the returned candidate by corrupt or illegal practices...... such other candidate would have obtained a majority of the valid votes. "

The Constituency was a double member constituency. The following stood for the General Constituency and obtained the votes shown against them:

<NAME> (Respt. No. 1) 13,669 <NAME> (Respt. No. 3) 1,999 <NAME> (Respt. No. 4) 1,350 <NAME> (Respt. No. 6) 12,750 The <ORG> says that the difference invotes between respondents I and 6 is 919. We presume that this is meant to show that the voting between them was close. From that the <ORG> jumps to the following conclusion:

" Considering the scandalous nature of the false statement regarding respondent No. 6 and the mode of systematic appeal on the basis of caste made by respondent No. 2 we have no doubt in our minds that...... respondent No. 1 got more votes simply because of corrupt practices and if these. corrupt practices had not been there respondent No. 6 undoubtedly would have obtained a majority of valid votes."

This, in our opinion, is pure speculation and is not a conclusion which any reasonable mind could judicially reach on the data set out above. There is nothing to show why the majority of the 1st respondent's voters would have preferred the 6th respondent and ignored the 3rd and 4th respondents. An exactly similar process of reasoning was followed in the case of the 7th respondent. He was a Scheduled Caste candidate and the voting there was as follows:

<NAME> (Respt. No. 2) 12,452 <NAME> (Respt. 5) 601 <NAME> (Respt. 7) 10,889

Here, again, there is no basis for concluding that those who voted for the 2nd respondent would, if they had not done so, have preferred the 7th respondent to the 5th. We set aside this part of the order.

The result is that the appeal fails in so far as it attacks the <ORG>'s declaration voiding the election of the two appellants but succeeds against that part of the order which declares the 6th and 7th respondents to have been elected. In the circumstances there will be no order about costs in either <ORG>.

Order accordingly.


PETITIONER: THE STATE OF UTTAR PRADESH Vs. RESPONDENT: <NAME> DATE OF JUDGMENT: 30/09/1957 BENCH: <NAME>, VIVIAN BENCH: <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, A.K. CITATION: 1958 AIR 86 1958 SCR 595 ACT: Certiorari, writ of-Principles governing issue-Availability of alternative remedy by appeal, if a bar-Departmental en- quiry Violation of principles of natural justice-Presiding officer himself witness-- order of dismissal made previous to the Constitution Revision disallowed after the Constitu- tion-Such order, if can be quashed-Constitution India, Art. 226. HEADNOTE: A departmental enquiry against the respondent, a Head Con- stable, was held by the District Superintendent of Police. During the enquiry the District Superintendent of Police himself became a witness and gave evidence at two stages against the respondent, his statement being recorded by a Deputy Superintendent of Police. The District Superintend- ent of Police then found the respondent guilty and on April 20, 1948, passed an order of dismissal against him. The respondent went up in appeal to the Deputy Inspector General of Police but the appeal was dismissed on May 7, 1949. The respondent then filed a revision application to the Inspec- tor General of Police which was also dismissed on April 22, 1950. Thereupon, the respondent filed a writ petition under Art. 226 of the Constitution before <ORG> praying for the setting aside of the order of dismissal. <ORG> held that the rules of natural justice and fair-play had been disregarded and accordingly, quashed the proceed- ings and set aside the three several orders. The <ORG> obtained a certificate of fitness and appealed. Held, (percuriam) that the District Superintendent of Police who had acted both as the judge and as a witness had dis- qualified himself from presiding over the enquiry. The procedure adopted was contrary to the rules of natural justice and fair-play. Decisions and orders based on such procedure are invalid and not binding. There is no rule with regard to certiorari, as there is with mandamus, that it will lie only where there is no other equally effective remedy. The existence of another adequate remedy may be taken into consideration in the exercise of the discretion. If an inferior <ORG> or tribunal of first instance acts without jurisdiction or in excess of it or contrary to the rules of natural justice, the superior <ORG> may quite properly issue a writ of certiorari to correct the error, even if an appeal to another inferior <ORG> or tribu- nal was available, whether recourse was or was not had to it. This would be so all the more in the case of departmen- tal tribunals composed of persons without adequate legal training and background. 76 596 <CITATION> , (1951) S.C.R. 344 referred to. King v. Postmaster-General, Exparte Carmichael (1928) i K.B. 291 ; <NAME> v. <NAME> justices, Exparte Read, (1942) I K.B. 281; <CITATION> . (1947) Bom. 46; <CITATION> , (1952) 56 C.W.N. 453 relied on. Held, (per <NAME>, <NAME>, <NAME>, <NAME> and <NAME>, <NAME> <NAME>, <NAME>, dissenting) that Art. 226 of the Constitution is not retrospective and <ORG> could not exercise its powers under Art. 226 to quash the order of dismissal passed before the commencement of the Constitu- tion. It is wrong to say that the order of dismissal passed on April 20, 1948, merged in the order in the appeal dated May 7, 1949, and the two orders merged in the order in the revision dated April 22, 1950, or that the original order of dismissal became final only on the passing of the order in revision. The original order of dismissal was operative on its own strength. Per <NAME>, <NAME>--<ORG> had jurisdiction to quash all the orders, as the proceedings should be regarded as still pending till the order in revision was passed on April 22, 195o. The District Superintendent of Police was acting in a judicial capacity and was bound to observe principles of natural justice. These principles he ignored. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 130 of 1956. Appeal from the judgment and decree dated the 10th March, 1952, of <ORG> in Civil Writ No. 737 of 1951.

<NAME> and <NAME>, for the appellant. <NAME> and <NAME>, for the respondent. 1957. September 30. The judgment of <NAME>, <NAME>, <NAME> and <NAME> was delivered by <NAME> Bose J. delivered a separate judgement.

DAS <NAME> is an appeal filed under a certificate of fitness granted by <ORG> at Allahabad under Arts. 132 (1) and 133 (1) (c) of the Constitution. It is directed against the judgment and order of <ORG> of the said <ORG> pronounced on March 10, 1952, in Civil Misc. Writ No. 7376 of 1951 quashing the depart- mental proceedings against the respondent and the orders passed therein, namely, the order for his dismissal passed by the District Superintendent of Police on -December 21, 1948, the order of the Deputy Inspector General of Police passed on June 7, 1949, dismissing his appeal against the order of his dismissal and the order of the Inspector General of Police dated April 22,1950 rejecting his application for revision. The judgment of the <ORG> also directed that, if it were desired to proceed against the respondent, the trial should be presided over by a person other than the District Superintendent of Police who gave evidence in the case and also passed the order of dismissal against the respondent and that it should be in strict conformity with the relevant Police Regulations.

The respondent was a constable in <ORG> and was, at the material time, officiating as a Head Constable and posted in the District of Fatenpur. In Decem- ber, 1947, sixty candidates had to be selected from <ORG> for training at <ORG>, Moradabad. The respondent was sent up for selection from the District of Fatehpur. He, however, failed in the Hindi test and was not selected and sixty other candidates were selected for the training.

On December 8, 1947 a letter, purporting to have been issued from Lucknow, was received in <ORG> at Allahabad intimating that the respondent had been select- ed for training at <ORG>. As there were only sixty vacancies and as sixty candidates had al- ready been selected, the <ORG> people were led to make enquiries as to how this letter came to be issued from Lucknow. The letter having been placed before the Inspector General of Police, Lucknow,he declared it to be a forgery. As the letter was ostensibly for the benefit of the respond- ent, it was naturally suspected that it must have been sent by or at his instance.

On March 15, 1948 the respondent was placed under suspen- sion. Under s. 243 of the Government of India Act, 1935, which was then in force, the respondent, who was in the police force, was not governed by sub-s. (3) of s. 240 which corresponds to art. 311 (2) of the Constitution but was governed by the Police Act , 1861 (Act V of 1861) and the Regulations made thereunder by the <ORG> Government. Accordingly, under s. 7 of the Police Act read with Uttar Pradesh Police Regulations, a departmental enquiry, called a "trial" in the Regulations, was started against the respondent. One <NAME>, the then District Superintendent of Police, Fatehpur, was deputed to hold the trial. He found the respondent guilty and on April 20, 1948 passed an order of dismissal against him. The respondent went up on appeal to the Deputy Inspector General of Police under Reg. 508. That appeal was dismissed on June 7, 1949. The respondent then filed a revision application to the Inspector General of Police under Reg. 512. That application was also dismissed on April 22, 1950. Having exhausted all his remedies under the Police Act read with the Regulations thereunder the respondent on February 24, 1951, filed a writ petition under Art. 226 of the Con- stitution, praying that the file of the applicant (now respondent) be called for and his dismissal be set aside and that he be given such further and other relief as he may, in law, be entitled to. The main point taken in the affidavit filed in support of the petition and urged before <ORG> was that <NAME>, District Superintendent of Police, who presided over the trial and as such had to come to a finding and to make an order, also gave his own evi- dence in the proceedings at two stages and had thus become disqualified from continuing as the judge, as, in the cir- cumstances he was bound to be biased against the respondent. A preliminary objection was taken on behalf of the appellant <ORG> that <ORG> had no power, under Art. 226 , to deal with the order of dismissal which had been passed at a time when the Constitution of India had not come into force, but <ORG> rejected that plea as it took the view that the order of dismissal passed by the District Superin- tendent of Police on December 20, 1948, and the order of dismissal of the appeal passed by the Deputy Inspector General of Police on June 7,1949, had not become final until the Inspector General of Police, on April 22, 1950, made his order dismissing the revision application filed by the respondent under Reg. 512 and that as the last mentioned order had been passed after the Constitution had come into force, and had, by Art. 226 , vested powers in <ORG> to issue prerogative writs, <ORG> had ample juris- diction to exercise its newly acquired powers under that article. On the merits <ORG> came to the conclu- sion that the rules of natural justice and fair-play had been disregarded, in that the District Superintendent of Police had continued to preside over the trial even after it had become necessary for him to put on the record his own testimony as against that of another witness and it held that the presiding officer had, in the circumstances, become disqualified, on the ground of bias, from further acting as the presiding officer and that the departmental trial con- ducted by him thereafter had become vitiated. <ORG>, accordingly, quashed the proceedings and set aside the three several orders herein before mentioned. The appellant <ORG> on February 4, 1955, obtained from <ORG> a certificate of fitness under Arts. 132(1) and 133(1)(c) and hence the present appeal to this Court. It will be recalled that the forged letter of December 8, 1947, was suspected to have been manufactured or sent by or at the instance of the respondent to further his interest. The case against the respondent was that the offending letter had been typed by one <NAME>, the typist attached to the office of <NAME>, Fatehpur, and, therefore, it was essential for the depart- ment to establish that the respondent was in friendly rela- tions with <NAME> who was said to have typed the letter. Apparently in some preliminary enquiry and in the presence of <NAME> one <NAME>, a Head Constable, had spoken about <NAME> being very friendly with the respondent. But while giving his evidence at the departmental trial the said <NAME> denied having made any such statement. In the circumstances it became necessary to contradict him by the testimony of <NAME> in whose presence that witness had, on a previous occasion, stated that <NAME> was very friendly with the respondent. According- ly <NAME> had his testimony recorded by a Deputy Superintendent of Police. This was done at two stages, namely, once before the charges were framed and again after the framing of the charges. The respondent's grievance is that <NAME>, who had thus become a witness in the case, ought not to have further continued to act as the presiding officer and that his continuing to do so vitiated the trial and his order was a nullity. That <NAME> had his own testimony recorded in the case is not denied. Indeed the appellant <ORG>, in opposition to the respondent's writ application, filed an affidavit affirmed by <NAME>, paragraph 8 of which runs as follows: " 8. That the deponent gave his first statement on 13th October, 1948, which was recorded by <NAME>, Deputy Superintendent of Police before the charge and the second statement on 25th October, 1948, which was recorded by another Deputy Superintendent of Police after the charge. One Head Constable, <NAME>, who was prosecution witness in the case, when cross-examined denied to have said that the applicant and <NAME> were on friendly terms. He turned hostile and it became necessary for the deponent to depose about certain facts which had happened in his presence and which belied the testimony of <NAME> - "

The salient facts being thus admitted there can be no escape from the conclusion that <NAME> should not have presided over the trial any longer. The point in issue was whether <NAME> was in friendly relationship with the respondent. <NAME> had in his evidence at the trial denied having made any statement to this effect. <NAME> gave evidence that <NAME> had in his presence admitted this friendship of <NAME> with the respondent. Which of the two witnesses, <NAME> and <NAME>, was to be believed was the duty of the person presiding over the trial to determine. <NAME> was obviously most ill suited to undertake that task. Having pitted his evidence against that of <NAME> <NAME> vacated the Judge's seat and entered the arena as a witness. The two roles could not obviously be played by one and the same person. lndeed <NAME> himself realised it and accordingly bad his own evidence recorded on both the occasions by other high officers. It is futile to expect that he could, in the circumstances, hold the scale even. it is suggested that there might have been other evidence establishing the friendship between <NAME> and the respondent and that the evidence of <NAME> might not have been relied on or might Dot have been the deciding factor. There is nothing on the record before us to support this suggestion. But assuming that <NAME> did not rely on his own evidence in preference to that of <NAME>-a fact which is hard to believe, especially in the face of his own affidavit quoted above-the act of <NAME> in having his own testimony recorded in the case indubitably evidences a state of mind which clearly discloses considerable bias against the respondent. If it shocks our notions of judicial propriety and fair-play, as indeed it does, it was bound to make a deeper impression on the mind of the respondent as to the Unreality and futility of the proceedings Conducted in this fashion. We find ourselves in agreement with <ORG> that the rules of natural justice were completely discarded and all canons of fair-play were grievously violated by <NAME> continuing to preside over the trial. Decision arrived at by such process and order founded on such decision cannot possibly be regarded as valid or binding.

Learned counsel appearing for the appellant <ORG> then urges that, assuming that any error, irregularity or illegality had been committed by <NAME> in the course of the trial held by him, a writ application under art. 226 was not the proper remedy for correcting the same. Reference is made to s. 7 of the Police Act, 1861 which, subject to such rules as the <ORG> Government may make under the Act, gives power to certain specified Police Officers of high rank to dismiss, suspend or reduce any Police Officer of the subordinate ranks whom they may think remiss or negligent in the discharge of his duties or unfit for the same. Regulation 508 of the Police Regulations made by the <ORG> of Uttar Pradesh provides for an appeal from the decision of the officer holding the trial. Likewise Reg. 512 confers on an officer whose appeal has been rejected to submit an application for revision to the authority next in rank above that by which his appeal has been rejected. The argument is that the Police Act and the Regulations made thereunder having provided for an appeal and a revision and having set up special forums with full powers and jurisdiction to correct the error, irregularity or illegality touching jurisdiction, procedure and the merits committed by the officer presiding over the trial, such forums alone are competent to correct all such errors, irregularities and illegalities. In this case admittedly the respondent preferred an appeal and then went up to <NAME> in revision. In the appeal and in the revision the respondent either took the plea of the breach of the rules of natural justice and fair-play now complained of or he did not. The respondent knew the material facts and must be deemed to have been conscious of his legal rights in the matter and, therefore, if he failed to raise the objection before the officer who was dealing with his appeal or revision he cannot, it is urged, be permitted to do so for the first time on a writ petition under Art. 226 before <ORG>, as has been held by this <ORG> in <CITATION> (1). On the other hand if he had raised the question in his grounds of appeal or in his revision petition and insisted on it at the hearing of his appeal or his revision application then the orders of dismissal of his appeal and his revision petition by authorities fully competent and having full powers and jurisdiction to decide the question must be taken as a rejection of that plea on its merits and as no error or irregularity or illegality is alleged to have been committed at the stages of the appeal or the revision proceedings, <ORG> could not, under Art. 226 , interfere in the matter. In support of this argument learned counsel for the appellant <ORG> relies upon the decision of this <ORG> in <CITATION> (1). In that case the petitioners were convicted by a special Tribunal of Hyderabad of murder and other offenses and sentenced to death by hanging. Their Convictions and sentences had been Confirmed by <ORG> before January 26, 1950, when the Constitution of India came into force. It was after the commencement of the Constitution that the petitioners applied to this <ORG> under Art. 32 praying (1) for a writ in the nature of certiorari calling Upon the Government of Hyderabad and the Special Judge to produce the records of the case and to show cause why the convictions and sentences should not be quashed and (2) for a writ of prohibition directing the Government and the Special Judge not to execute the petitioners. Subsequently the petition was amended, with the leave of the court, by adding prayer (3) for a writ of habeas corpus. A number of points were raised before this <ORG>. As regards the several points complaining of alleged illegality by reason of misjoinder of charges and the infliction of the sentence of death by hanging and not decapitation this <ORG> at page 351 observed " But, for the purpose of the present case, it is ,sufficient to point out that even if we assume that there was some defect in the procedure followed at the trial, it does not follow that the trial court acted without jurisdiction. There is a basic difference between want of jurisdiction, and an illegal or irregular exercise of jurisdiction, and our attention has not been drawn to any authority in which mere non-compliance with the rules of procedure has been made a ground for granting one of the writs prayed for. In either case, the defect, if any, can according to the procedure established by law be corrected only by a court of appeal or revision. Here the appellate court which was competent to deal with the matter has pronounced its judgment against the petitioners, and the matter (1)  S.C.R. 344.

having been finally decided is not one to be reopened in a proceeding under article 32 of the Constitution." As regards the prayers for writs of certiorari and prohibition it was held that the writs of certiorari and prohibition were hardly appropriate remedies in that case, because they were usually directed to an inferior court, but at the date when <ORG> dealt with those cases and confirmed the convictions and sentences of the petitioners, this <ORG> was not in existence, and at that point of time, by no stretch of reasoning, <ORG> could be said to have been subordinate to this court. Then this <ORG> went on to consider the remaining question, namely, whether after the commencement of the Constitution this <ORG> could exercise its newly acquired jurisdiction under Art. 32 and issue a writ of habeas corpus as the detention of the petitioners was continuing even after the commencement of the Constitution. It was urged that it was open to the petitioners to prove by affidavit that the court which passed the order had acted without jurisdiction or in excess of it and the superior court was free to investigate the matter. After stating that a return that the persons were in detention in execution of sentences on indictment on criminal charges was a sufficient answer to the application for a writ of habeas corpus, this <ORG> proceeded at pages 366-367 to observe as follows:

" Assuming however, that it is open even in such cases to investigate the question of jurisdiction, as was held in In re Authers (1), it appears to us that the learned judges who decided that case went too far in holding that notwithstanding the fact that the conviction and sentence had been upheld on appeal by a court of competent jurisdiction, the mere fact that the trial court had acted without jurisdiction would justify interference, treating the appellate order as a nullity. Evidently, <ORG>, in a case which properly comes before it on appeal, is fully competent to decide whether the trial was with or without jurisdiction, and it has jurisdiction to decide the matter rightly as well as wrongly. If it affirms the conviction (1) I. L.R. 22 B.D.

and thereby decides wrongly that the trial court had the jurisdiction to try and convict, it cannot be said to have acted without jurisdiction, and its order cannot be treated as a nullity. It is true that there is no such thing as the principle of constructive res judicata in a criminal case, but there is such a principle as finality of judgments, which applies to criminal as well as civil cases and is implicit in every system, wherein provisions are to be found for correcting errors in appeal or in revision." In the first place it must be noted that the two obser- vations quoted from the decision of this Court on which reliance is placed on behalf of the appellant <ORG> were made in a case where the alleged error, irregularity or illegality was committed by a special tribunal which had not merely the trappings of a court but was a court of law presided over by a judge with legal training and background and bound by rules of evidence and procedure laid down for it and the appeal from its decision lay before the highest and final court of the <ORG>-a superior court of record. But orders made on departmental "trial" held by an officer in the department without any legal training and orders passed by his superior officers in the same department on appeal or in revision which, in the words of <NAME> in <CITATION> (1) were only in the nature of an appeal from Caesar to Caesar and which might not be regarded with any great confidence by persons brought before them can hardly be equated with reasonable propriety with the orders passed by <ORG> and an appeal therefrom by <ORG> with reference to which bodies alone the said observations had been made.

In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute. (Halsbury's Laws of England, 3rd Ed., Vol. 11, p. 130 and the cases cited there). The fact (1) (1952) 56 C.W.N. 43, 46.

that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. In the <NAME> v. Postmaster General Ex parte <NAME> (1) a certiorari was issued although the aggrieved party had an alternative remedy by way of appeal. It has been held that the superior court will readily issue a certiorari in a case where there has been a denial of natural justice before a court of summary jurisdiction. The case of <NAME> v.<NAME> Justices Ex parte <NAME> (2) is an authority in point. In that case a man had been convicted in a court of summary jurisdiction without giving him an opportunity of being heard. It was held that his remedy was not by a case stated or by an appeal before the quarter sessions but by application to <ORG> for an order of certiorari to remove and quash the conviction. At page 284 Viscount Caldecote C.J. observed:

" It remains to consider the argument that the remedy of certiorari is not open to the applicant because others were available. It would be ludicrous in such a case as the present for the convicted person to ask for a case to be stated. It would mean asking this court to consider as a question of law whether justices were right in convicting a man without hearing his evidence. That is so extravagant an argument as not to merit a moment's consideration.. As to the right of appeal to quarter sessions, it may be that the applicant could have had his remedy if he (1)[1928] 1 K.B. 201.

(2) [1942] 1 K.B. 281.

had pursued that course, but I am not aware of any reason why, if in such circumstances as these, he preferred to apply for an order of certiorari to quash his conviction, the court should be debarred from granting his application." Likewise in <CITATION> (1), it was held that <ORG> would not refuse to issue a writ of certiorari merely because there was a right of appeal. It was recognized that ordinarily <ORG> would require the petitioner to have recourse to his ordinary remedies, but if it found that there had been a breach of fundamental principles of justice, <ORG> would certainly not hesitate to issue the writ of certiorari. To the same effect are the following observations of <ORG> in <CITATION> (2) at page 470: " There can, I think, be no doubt that <ORG> can refuse to issue a certiorari if the petitioner has other remedies equally convenient and effective. But it appears to me that there can be cases where the court can and should issue a certiorari even where such alternative remedies are available. Where a <ORG> or <ORG>, which is called upon to exercise judicial or quasi-judicial functions discards all rules of natural justice and arrives at a decision contrary to all accepted principles of justice then it appears to me that the court can and must interfere." It has also been held that a litigant who has lost his right of appeal or has failed to perfect an appeal by no fault of his own may in a proper case obtain a review by certiorari. (See Corpus Juris Secundum Vol. 14, art. 40 , p. 189). If, therefore, the existence of other adequate legal remedies is not per se a bar to the issue of a writ of certiorari and if in a proper case it may be the duty of the superior court to issue a writ of certiorari to correct the errors of an inferior court or tribunal called upon to exercise judicial or quasi-judicial functions and not to relegate the petitioner to other legal remedies available to him and if the superior court can in a proper case exercise its jurisdiction

1) A.I.R. 1 Bom. 6.

2) 1952) 6 C.W.N. 3.

in favour of a petitioner who has allowed the time to appeal to expire or has not perfected his appeal, e.g., by furnishing security required by the statute, should it then be laid down as an inflexible rule of law that the superior court must deny the writ when an inferior court or tribunal by discarding all principles of natural justice and all accepted rules of procedure arrived at a conclusion which shocks the sense of justice and fair play merely because such decision has been upheld by another inferior court or tribunal on appeal or revision? The case of In re, <NAME> (1) referred to in <NAME> case, (2) furnishes the answer. There the manager of a club was convicted under a certain statute for selling beer by retail without an excise retail license. Subsequently he was convicted of selling intoxicating liquor, namely, beer without a license under another statute. Upon hearing of the later charge the magistrate treated it as a second offence and imposed a full penalty authorised in the case of a second offence by the latter statute. His appeal to the quarter sessions having been dismissed, he applied for a writ of habeas corpus and it was granted by the King's Bench Division on the ground that the magistrate could not treat the later offence as a second offence, because it was not a second offence under the Act under which he was convicted for the second time. Evidently the point was taken that if there had been any error, irregularity or illegality committed by the magistrate, the quarter sessions could have on appeal corrected the same and that the quarter sessions having dismissed the appeal the court of Queen's Bench Division could not issue the writ of habeas corpus. This was repelled by the following observation of <NAME>: " This is true as a fact, but it puts the prosecution in no better position, for if the magistrate had no power to give himself jurisdiction by finding that there had been a first offence where there had been none, the justices could not give it to him."

On the authorities referred to above it appears to us that there may conceivably be cases-and the instant (1) 889 L.R. 22 Q.B.D 345.

(2) [1951] S.C.R. 344.

case is in point-where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior court or tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision. If an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court's sense of fair play the superior court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the court or tribunal of first instance, even if an appeal to another inferior court or tribunal was available and recourse was not had to it or if recourse was had to it confirmed what ex facie was a nullity for reasons aforementioned. This would be so all the more if the tribunals holding the original trial and the tribunals hearing the appeal or revision were merely departmental tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally come to our notice. The superior court will ordinarily decline to interfere by issuing certiorari and all we say is that in a proper case of the kind mentioned above it has the power to do so and may and should exercise it. We say no more than that.

Learned counsel for the appellant <ORG> next urges that because the order of dismissal was passed by the District Superintendent of Police on December 20, 1948, and the order dismissing the appeal was passed by the Deputy Inspector General of Police on June 7, 1949, both of which were before the commencement of the Constitution, <ORG> could not exercise its powers under Art. 226 to quash those orders. This argument is countered by the respondent by the argument that the dismissal order of December 20, 1948, did not become final until after the Inspector General of Police had dismissed the revision, application on April 22,1950, that is to say, after the Constitution came into force, and, therefore, <ORG> had ample power to quash all the three orders. It is not disputed that our Constitution is prospective in its application and has no retrospective operation except where the contrary has been expressly provided for. It has been held in a series of decisions of <ORG>s, some of which are referred to in the judgment under appeal, that Art. 226 and Art. 227 have no retrospective operation and transactions which are past and closed and the rights and liabilities which have accrued and vested would remain unaffected. The correctness of this principle has not been questioned by <ORG> when dealing with the present case and has not been disputed before us. It is, therefore, conceded that if the matter had rested with the order of dismissal passed by the District Superintendent of Police on April 20, 1948, and the order passed by the Deputy Inspector-General of Police on June 7, 1949, dismissing the appeal and confirming the order for the dismissal of the respondent, an application for a writ under Art. 226 would not lie in <ORG> to set aside those orders as this was not one of <ORG>s that had writ jurisdiction before the Constitution. It is, however, contended that the order of dismissal dated April 20, 1948, had merged in the order passed on appeal on June 7,1949, and that both the orders merged in the order passed by the Inspector-General of Police on April 22, 1950, on the revision application. It is said that the revisional jurisdiction is a part of the appellate jurisdiction and the principle on which a decree of the court of first instance in a civil suit merges in the decree on appeal applies with equal force to an order made on an application for revision and consequently both the orders passed by the District Superintendent of Police and that passed on appeal by the Deputy Inspector General of Police merged in the order passed on revision by the Inspector-General of Police on April 22, 1950. To put it shortly, the contention of the respondent is that the order of dismissal passed on April 20,became final only on the passing of the order in revision on April 22, 1950, and as that order was passed after the date of the commencement of the Constitution, its validity could be called in question on an application under Art. 226.

There appear to be two answers to the foregoing contention. As we have already observed an order of dismissal passed on a departmental enquiry by an officer in the department and an order passed by another officer next higher in rank dis- missing an appeal therefrom and an order rejecting an application for revision by the head of the department can hardly be equated with any propriety with decrees made in a civil suit under the Code of Civil Procedure by the court of first instance and the decree dismissing the appeal there- from by an appeal court and the order dismissing the revision petition by a yet higher court, as has been sought to be done by <ORG> in this case, because the departmental tribunals of the first instance or on appeal or revision are not regular courts manned by persons trained in law although they may have the trappings of the courts of law. The danger of so doing is evident from what has happened in the very case now before us. In the next place, while it is true that a decree of a court of first instance may be said to merge in the decree passed on appeal there- from or even in the order passed in revision, it does so only for certain purposes, namely, for the purposes of computing the period of limitation for execution of the decree as in <CITATION> (1), or for computing the period of limitation for an application for final decree in a mortgage suit as in <CITATION> (2). But, as pointed out by Sir <NAME> in delivering the judgment of <ORG> in <CITATION> (3), whatever be the theory under other systems of law, under the Indian Law and' procedure an original decree is not suspended by the presentation of an appeal nor is its operation interrupted where the (1) (1914) L.R. 41 I.A. 104.

(2) (1926) L.R. 53 1 A. 197.

(3) (1918) L.R. 46 I.A, 52; I.L.R. 46 Cal. 670, 678-679.

decree on appeal is merely one of dismissal. There is nothing in the Indian Law to warrant the suggestion that the decree or order of the court or tribunal of the first instance becomes final only on the termination of all proceedings by 'way of appeal or revision. The filing of the appeal or revision may put the decree or order in jeopardy but until it is reversed or modified it remains effective. In that view of the matter the original order of dismissal passed on April 20, 1948, was not suspended by the presentation of appeal by the respondent nor was its operation interrupted when the Deputy Inspector-General of Police simply dismissed the appeal from that order or the Inspector General simply dismissed the application for revision. The original order of dismissal, if there were no inherent infirmities in it, was operative on its own strength and it did not gain any greater efficacy from the subsequent orders of dismissal of the appeal or the revision except for the specific purposes hereinbelow mentioned. That order of dismissal having been passed before the Constitution and rights having accrued to the appellant <ORG> and liabilities having attached to the respondent before the Constitution came into force, the subsequent conferment of jurisdiction and powers on <ORG> can have no retrospective operation on such rights and liabilities. Even if the order of dismissal of the respondent was a nullity on the ground that it was passed by disregarding the rules of natural justice, <ORG> could not properly be asked to exercise its newly acquired jurisdiction and powers under Art. 226 to correct errors, irregularities or illegalities committed by the inferior departmental tribunal before the commencement of the Constitution, for then there will be no limit to its going backward and that will certainly amount to giving the provisions of Art. 226 a retroactive operation. This aspect of the matter does not appear to have been pressed in <ORG> or adverted to by it. It is only on this ground that we are constrained, not without regret, to accept this appeal.

The appeal is, therefore, allowed, but in the circumstances of the case we make no order as to costs.

<NAME> great respect I am unable to agree. I respectfully agree with my Lord that <NAME> case (1) must not be construed to mean that <ORG> can never interfere under Art. 226 once a competent <ORG> of appeal has finally decided whether a <ORG> subordinate to it has jurisdiction or not in a given matter. I also accept the position that the Constitution is not retrospective and that the <ORG>s cannot exercise any new jurisdiction and powers conferred by it to reopen decisions and orders that had become final before it came into being. But I cannot agree that is the case here.

The very wide powers conferred on <ORG> by Art. 226 , and on this <ORG> by Art. 136 , were given in order to ensure that justice is done in this land and that the Rule of Law prevails. I see no reason why any narrow or ultra technical restrictions should be placed on them. Justice should, in my opinion, be administered in our <ORG>s in a common-sense liberal way and be broad-based on human values rather than on narrow and restricted considerations hedged round with hairsplitting technicalities. What is the position here ? What would have been the result if the order of April 20, 1948, dismissing the respondent had been passed after the Constitution instead of before it ? At what point of time would the High <ORG> have entertained a petition under Art. 226 ?

I think it is elementary that, save in exceptional cases, the <ORG> will not interfere under Art. 226 until all normal remedies available to a petitioner have been exhausted. The normal remedies in a case of this kind are appeal and revision. It is true that on a matter of jurisdiction, or on a question that goes to the root of the case, the High <ORG> can entertain a petition at an earlier stage but they are not bound to do so and a petition would not be thrown out because the petitioner had done that which the <ORG> usually direct him to do, namely, to exhaust his normal remedies before invoking an extraordinary jurisdiction. Therefore, if this order of dismissal had (1) S.C.R.344.

been made after the Constitution, the petitioner would have been expected to pursue his remedies of appeal and revision first and could not have come to <ORG> in the ordinary way until he had exhausted them; and having come at that stage he could not have been turned away unheard on the ground that he was out of time because his grievance was against the original order. The very decisions to which my Lord has referred establish that for these purposes, at any rate, the earlier orders would merge in the final one. But I am not basing on technicalities. What is plain to me is that if this order of dismissal had been made after the Constitution, the petitioner would have been entitled to wait for the final order (and in the ordinary way would have been bound to wait) before coming to <ORG>. Why is the position any different because he has done before the Constitution exactly what he would have been expected, and in the ordinary course bound, to do after it ? The final order was passed after the Constitution on April 22, 1950. It is true that if it had been passed before the Constitution came into force on January 26, 1950, the petitioner would have had no remedy in the Courts. But the Constitution breathed fresh life into this land and conferred precious rights and privileges that were not there before. Why should they be viewed narrowly ? Why should not that which would have been regarded as still pending for present purposes, if all had been done after the Constitution, be construed in any different way when the final act, which is the decisive one for these purposes, was done after it ?

I regard it as unduly narrow and restrictive to equate these broad-based constitutional privileges to highly technical procedural decisions dealing with limitation and the merger of decrees. The question to my mind is not whether there has been merger but whether those proceedings can, on any broad and commons view, be regarded as still pending for the purposes of Art. 226. If they would be so regarded when all is done after the Constitution (and about that I have no doubt), what conceivable justification is there for holding that they cannot in this case just because a part of the process had started before it ?

The principle that new rights conferred under the Constitution can be used in pending proceedings with devastating effect has been accepted by this <ORG> in many cases. <CITATION> (1) my Lord the Chief Justice, delivering the judgment of the <ORG>, pointed out at page 734 that though the <ORG> had power to take away normal rights of, among other things, transfer and revision in a criminal case before the Constitution, that kind of legislation became bad after the Constitution, even if it bad been enacted before, because of the new rights conferred by Art. 14. The principle was also applied in <CITATION> (2), <CITATION> (3), <CITATION> (4) <CITATION> (5) and <CITATION> (6). These cases are not exactly in point but the principle is there and it is that principle that I invoke here. On the merits I am clear that the appeal should be dismissed. In the first place, this <ORG>, following the English decisions, has decided in <CITATION> (7) that the principles of natural justice must be observed not only by <ORG>s proper but also by " all tribunals and bodies which are given jurisdiction to determine judicially the rights of parties"; and if they are not observed, the decision is vitiated. So that is now beyond controversy.

Next, there can, I think, be no doubt that the District Superintendent of Police, who conducted the departmental trial and found the respondent guilty, acted in a judicial capacity. The Departmental Rules that require an enquiry in such cases call the 2,0.7 (1) [1952) S.C.R. 710.

(2) [1955] 1 S.C.R. 787, 798.

(3) [1955] 1 S.C.R. 224,237.

(4) [1953] S.C.R. 661.

(5) [1953] S.C.R. 589.

(6) [1951] 9.C.R. 228.

(7) A.I.R. 1957 S.C. 425, 429.

proceedings a trial and the procedure ,set out in them indicates the judicial nature of the enquiry. So that condition is also fulfilled.

Then, thirdly, were the principles of natural justice ignored in this case ? That also is, I think, settled by authority.

What happened here ? The District Superintendent of Police examined a certain witness in the course of the enquiry. It seems that witness's evidence was considered a vital link in the chain of evidence against the respondent. The District Superintendent of Police reached the conclusion that the witness had turned hostile. He may have been right about that, but he also considered it necessary to refute this evidence and make good the lacunas by bringing other material on record. Apparently, no other witness was available, so the District Superintendent of Police, who seems to have had personal knowledge about the facts, stepped down from the Bench and got his testimony recorded by another authority, once before charge and again after charge, and each time, after that was done, stepped back on to the Bench in order solemnly to decide whether he should believe his own testimony in preference to that of the witness who, in his judgment, had committed perjury and gone back on the truth. It hardly matters whether this was done in good faith or whether the truth lay that way because the spectacle of a judge hopping on and off the bench to act first as judge, then as witness, then as judge again to determine whether he should believe himself in preference to another witness, is startling to say the least. It would, doubtless delight the hearts of a <ORG> audience but will hardly inspire public confidence in the fairness and impartiality of departmental trials; and certainly not in the mind of the respondent. Even before the Constitution, departmental trials were instituted to instil a sense of security in the services and inspire confidence in the public about the treatment accorded to government servants. The question in these cases is always: Whether it is likely to produce, in the minds, of the litigant or the public at large a reasonable doubt about the fairness of the administration of justice. ( <CITATION> ) (1).

One of the English cases relied on by this <ORG> in the case just cited was <ORG>' decision in <ORG> v. <ORG>). At page 600 Lord <NAME> cited an instance which is almost on all fours with the present case. He said:

" It could not possibly have been intended by this statute to authorise a practice which would, I think, be inconsistent with the proper administration of justice- namely, that a licensing justice, one of the members of the compensation authority, should, on a given occasion, descend from the Bench, give his evidence on oath, and then return to his place upon the Bench to give a decision possibly based on his own evidence. "

The matter is, as I said, covered by authority and I need say no more except that, even if it were not, I would have had no hesitation in reaching the same conclusion. Some question arose about waiver. If the respondent, knowing his rights, had acquiesced in the continuance of the trial despite this defect, then, of course, he would not have been allowed to complain at a later stage. I do not know whether he was represented by counsel in the enquiry or whether, if he was not, he was aware that this kind of action vitiated the proceedings; nor do I know whether he protested and took the point in the appeal and revision. Those papers have not been filed. But I do know that waiver is not raised in the grounds of appeal to this Court nor is the point taken in the appellant's statement of the case. As this is a question of fact, I, for one, would not allow it to be urged at this stage.

I would dismiss the appeal.

ORDER.

In accordance with the opinion of the majority, the appeal is allowed.

(1) A.I.R. 1957 S.C. 425, 429.

(2) (1926) A.C. 586.