PETITIONER: DR MAHABAL RAM Vs. RESPONDENT: INDIAN COUNCIL OF AGRICULTURE RESEARCH DATE OF JUDGMENT03/05/1991 BENCH: MISRA, RANGNATH (CJ) BENCH: MISRA, RANGNATH (CJ) KANIA, M.H. KULDIP SINGH (J) CITATION: 1994 SCC (2) 401 ACT: HEADNOTE: JUDGMENT:

ORDER

1. Special leave granted.

2. This matter has two aspects involved in it firstly, the question as to whether a single member of <ORG> set up under the Administrative <ORG>s Act , 1985, has jurisdiction to dispose of matters coming before the <ORG> under the Act a question which has been referred by a two-Judge Bench to a larger Bench and the second, a controversy between the parties which centres round the order of transfer of the appellant. We do not propose to finally dispose of the second aspect and would leave it to the <ORG> to deal with it in the manner which we shall presently indicate.

3. Turning to the first aspect, it would be necessary to refer to the relevant provisions of the Act. Section 5 deals with composition of the <ORG> and benches thereof. Section 5(1) , (2) and (6) provide :

"5. (1) Each <ORG> shall consist of a Chairman and such number of Vice-Chairman (and Judicial and Administrative Members) as the appropriate Government may deem fit and, subject to the other provisions of this Act, the jurisdiction, powers and authority of the <ORG> may be exercised by Benches thereof.

(2) Subject to the other provisions of this Act, a Bench shall consist of one Judicial Member and one Administrative Member. (6) Notwithstanding anything contained in the foregoing provisions of this section, it shall be competent for the Chairman or any other Member authorised by the Chairman in this behalf to function as (a Bench) consisting of a single Member and exercise the jurisdiction, powers and authority of the <ORG> in respect of such classes of cases or such matters pertaining to such classes of cases as the Chairman may by general or special order specify :

Provided that if at any stage of the hearing of any such case or matter it appears to the Chairman or such Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of (two Members) the case or matter may be transferred by the Chairman or, as the case may be, referred to him for transfer to, such Bench as the Chairman may deem fit."

4. A two-Judge Bench of this Court in <CITATION> ' dealt with the dispute where a claim had been disposed by a Single Administrative Member. This Court in that case referred to sub-section (2) of Section 5 and the observations made by the Constitution Bench of this Court in the case of <CITATION> and indicated that the scheme of statute was that cases should be heard by a Bench of two Members. From what has been said in the judgment, it appears that sub- section (6) of Section 5 was not brought to the notice of the Court.

5. Undoubtedly in <NAME> case2 this Court has clearly indicated that the jurisdiction of <ORG> had been transferred to the <ORG> and, therefore, the nature of the business transacted by the <ORG> was judicial out and out. Referring to this aspect, Chief Justice <NAME> has said: (<ORG> p. 131, para 5) "It is necessary to bear in mind that service matters which. are removed from the jurisdiction of <ORG> under Articles 226 and 227 of the Constitution and entrusted to the Administrative <ORG> set up under the impugned Act for adjudication involve questions of interpretation and applicability of Articles 14, 15, 16 and 311 in quite a large number of cases. These questions require for their determination not only judicial approach but also knowledge and expertise in this particular branch of constitutional law. It is necessary that those who adjudicate upon these questions should have same modicum of legal training and judicial experience because we find that some of these 1 (1991) 1 <ORG> 181:1991 <ORG> (L&S) 145:

1990(1) JT 558 2 (1987) 1 SCC 124: (1987) 2 ATC 82: AIR 1987 SC 386: (1987) 1 SCR 435 questions are so difficult and complex that they baffle the minds of even trained judges in <ORG> and <ORG>."

6. Sub-sections (2) and (6) appearing as limbs of the same section have to be harmoniously construed. There is no doubt that what has been said in <NAME> case2 would require safeguarding the interest of litigants in the matter of disposal of their disputes in a judicious way. Where complex questions of law would be involved the dispute would require serious consideration and thorough examination. There would, however, be many cases before the <ORG> where very often no constitutional issues or even legal points would be involved. Mr <NAME>, Senior Counsel, suggested to us in course of the hearing that keeping the principles indicated in the <ORG> judgment in view, the Single Member contemplated under sub-section (6) should be meant to cover a judicial member only. That view may perhaps not be appropriate to adopt. On the other hand, we are prepared to safeguard the interests of claimants who go before the <ORG> by holding that while allocating work to the Single Member whether judicial or administrative in terms of sub-section (6), the Chairman should keep in view the nature of the litigation and where questions of law and for interpretation of constitutional provisions are involved they should not be assigned to a Single Member. In fact, the proviso itself indicates <ORG>'s concern to safeguard the interest of claimants by casting an obligation on the Chairman and Members who hear the cases to refer to a regular bench of two members such cases which in their opinion require to be heard by a bench of two Members. We would like to add that it would be open to either party appearing before a Single Member to suggest to the Member hearing the matter that it should go to a bench of two Members. The Member should ordinarily allow the matter to go to a bench of two Members when so requested. This would sufficiently protect the interests of the claimants and even of the administrative system whose litigations may be before the Single Member for disposal. To make a distinction between Judicial Member and Administrative Member functioning under sub-section (6) of Section 5 of the Act may not be appropriate and, therefore, we have not been able to accept the approach suggested by Mr <NAME>. The observation made in the two-Judge Bench case that no provision was cited to them that a Single Member could hear cases laid before the <ORG> led to the conclusion that the judicial business of the Administrative <ORG> was intended to be carried by a bench of two Members. The vires of sub-section (6) has not been under challenge and, therefore, both the provisions in Section 5 have to be construed keeping the legislative intention in view. We are of the view that what we have indicated above brings out the true legislative intention and the prescription in sub- section (2) and the exemption in sub-section (6) are rationalised.

7. Now in the instant case we have been told that subsequent to the decision of the <ORG>, there has been a letter from the Director of <ORG>, Karnal, that there is no scope for the appellant to be fitted into that Institute to which the appellant has been Advocates who appeared in this case:

Ms <NAME>, Senior Advocate (<NAME>, Advocate, with her) for the Petitioner;


PETITIONER: STATE OF KERALA Vs. RESPONDENT: <NAME> ETC. DATE OF JUDGMENT15/03/1977 BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. SARKARIA, RANJIT SINGH FAZALALI, SYED MURTAZA CITATION: 1977 AIR 1627 1977 SCR (3) 233 1977 SCC (2) 777 ACT: Kerala General Sales Tax Act, 1963--S. 17(3)--Scope of--Best judgment assessment made relying on entries in account books of other dealers--Assessee --If entitled to cross-examine the dealers. Natural justice--Scope in tax matters--Best Judgment assessment made relying on entries in account books of other dealers---Cross-examination of dealers--If part of principles of natural justice. HEADNOTE: Section 17(3) of the Kerala General Sales Tax Act 1963 provides that if the return submitted by an assessee appears to be incorrect or incomplete. the assessing authority may assess the dealer to the best of its judgment. The proviso to the sub-section enacts that before taking action under the sub-section, the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness to completeness of such return. Relying on the evidence furnished by entries in the books of account of some other dealers, the Sales Tax Officer disbelieved the assessee's accounts and came to the conclusion that the return field by him was incorrect and incomplete and made a best judgment assessment under s. 17(3). The assessee's request to cross-examine the deal- ers in regard to the correctness of their accounts was rejected by the Sales Tax Officer. In revision <ORG> quashed the order of the Sales Tax Officer. Dismissing the State's appeal, (Per <NAME> and <NAME>. JJ) HELD . The assessee was entitled to cross-examine the dealers under the second part of the proviso to s. 17(3). The Sales Tax Officer's refusal to summon the dealers for cross-examination by the. assessee constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the order of assessment made against him. [239 F] (1) The rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is not an inflexible rule having a fixed connotation. It has a variable content depending on the nature of the in- quiry, the framework of the law under which it is held, the constitution of the authority holding the inquiry, the nature and character of the right affected and the coil- sequences flowing from the decision. The rule of audi alterem partem does not require in every case a specified procedure to be followed. In a given case, the rule of audi alterem partem may import a requirement that witnesses, whose statements are sought to be relied upon by the author- ity holding the inquiry, should be permitted to be cross- examined by the party affected while in some other cases it may not. The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case. [237 B-D] (2) (a) It is only on the existence of one of two condi- tions, namely, that no return is .submitted by the assessee or the return submitted appears to be incorrect or incom- plete that the Sales Tax Officer gets the jurisdiction to make a best judgment assessment. [237 H] 234 (b) The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasonable opportunity to prove the correctness or complete- ness of such return. "To prove" means to establish the correctness or completeness of the return by any mode per- missible under law. The opportunity to prove would, there- fore, necessarily carry with it the right to examine wit- nesses and that would include equally the right to cross- examine witnesses examined by the Sales Tax Officer. [238 G-H] In the instant case, the assessee could prove the cor- rectness and completness of his return only by showing that the entries in the books of account of the dealers on which the Sales Tax Officer relied, were false, bogus or manipu- lated and that his return should not be disbelieved on the basis of such entries. This could not be done unless an opportunity to cross examine the dealers was given. [239 <CITATION> , 26 S.T.C. 22 and <CITATION> , 14 S.T.C. 489 approved. <NAME>, J. (concurring). Section 17(3) with the proviso thereto and r. 15, have given a statutory right to the assessee to prove the cor- rectness of his return and the assessee was entitled to cross-examine the wholesale dealers, relying on whose ac- counts the Sales Tax Officer made a best judgment assess- ment. [247 E] (1) The well-settled rules in regard to best judgment assessment are (i) The taxing authority must not act dis- honestly or vindictively or capriciously. He must make what he honestly believes to be a fair estimate, of the proper figures of assessment and for this purpose, he must be able to take into consideration all matters which he thinks will assist him in arriving at a fair and proper estimate. Though it must necessarily be guess work it must be honest guess work. [241 E] (ii) Although tax proceedings are quasi-judicial and the Sales Tax Officer is not bound strictly by rules of evi- dence, yet he must base his order on materials known to the assessee and after he has been given a chance to rebut the same. [244 E] (iii) Admissibility of a document or material in evi- dence is quite different from the value which the authority would attach to such material. The tax authority can even base its conclusion on private opinion or assessment provid- ed the same is fully disclosed to the assessee and he is given an opportunity to rebut the same. [242 <CITATION> (1937) 64 I.A. 102, 114, 115 and <CITATION> ,  1 S.C.R. 941 followed. <CITATION> 8 S.T.C. 770 and <CITATION> 45/.T.R. 206 referred to. <NAME> v. Commissioner of Income-tax Punjab,  12 I.T.R. 393 approved, 2(a) The words "opportunity of being heard" in s. 17(3) are of very wide amplitude. All that the court has. to see is whether the assessee had been given a fair hearing. Whether the hearing would extend to the right of demanding cross-examination of witnesses or not, would depend upon the nature of the materials relied upon by the tax authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case. [234F-G] 235 The second part of the proviso confers benefit on the asses- see for giving him an opportunity not only of being heard but also of proving the correctness or completeness of his return. Secondly, r. 15 clearly shows that where the return of the assessee is incorrect or incomplete he must be called upon to prove. the correctness or completeness of the same. It also enjoins on the Sales Tax Officer that a reasonable opportunity of being heard should be given to the assessee to prove the correctness and completeness of the return. The requirement of the second part of the proviso to s. 17(3) is reiterated in r. 15. [244 F; 247 D] In the instant case, if the assessee desired the dealers whose accounts were used against him to be cross-examined to prove that his return was not incorrect or incomplete, he could not be denied this opportunity. The dealers might have made the entries to embarrass the assessee or they might have animus or business rivalry with the assessee. The assessee could establish the correctness of his return only if he was allowed to cross examine the dealers. [244 <CITATION> 23 S.T.C. 11 dis- tinguished. <CITATION> , 14 S.T.C. 489 and <CITATION> , 26 S.T.C. 22 approved. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 572-574 and 575 of 1972.

(Appeals by Special Leave from the Judgment and Order dated 13-7-1971 of <ORG> in Tax Revision Cases Nos. 42, 45, 58 and 44 of 1970.) <NAME> (In CA No. 572/72), <NAME>, <NAME> and <NAME> for the appellant in all the appeals <NAME>, for the respondents in all the appeals. The Judgment of <NAME> and <NAME> was delivered by <NAME>, J., <NAME>, J. gave a separate opinion.

BHAGWATI, J. The facts giving rise to these appeals are set out in the judgment about to be delivered by our learned brother <NAME> and we do not think it necessary to reiterate them. So far as Civil Appeals 572-574 of 1972 are concerned, it would be sufficient to state briefly the following facts as these are the only facts necessary for appreciating the question of law which arises for determination in these appeals. In the assessments of the assessee to sales tax for three assessment years. the returns filed by him on the basis. of his books of account appeared to the Sales Tax Officer to be incorrect and incomplete since certain sales appearing in the books of account of one <NAME> as having been effected by the assessee in his favour were not accounted for in the books of account maintained by the assessee. The assessee applied to the Sales Tax Officer for affording him an oppor- tunity to cross-examine <NAME> in regard to the correctness of his accounts, but this opportunity was denied to him and the Sales Tax Officer proceeded to make a best judgment assessment under section 17, sub-section (3) of the Kerala General Sales Tax, 1963. The assessee ap- pealed but without success and this was followed by a revi- sion application to <ORG>. <ORG> took the view that the assessee was entitled to an opportunity to cross-examine <NAME> before any finding could be arrived at by the Sales Tax Officer that the returns filed by the assessee were incorrect and incomplete so as warrant the making of 'the best judgment assessment and since no such opportunity had been given to the assessee, <ORG> quashed the order of the Sales Tax authorities and remanded the case to the Sales Tax Officer for making fresh assessments according to law after giving an opportunity to the assessee to cross-examine <NAME>. The facts in Civil Appeal No. 575 of 1972 are almost identical, save that instead of <NAME>, certain wholesale dealers were sought to be cross-examined in that case and the opportunity to cross-examine them was denied by the Sales Tax authorities. Since <ORG> quashed the orders of assessments in both cases, the <ORG> preferred an appeal by special leave in each case challenging the correctness of the view taken by <ORG>.

Now, the law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi- judicial functions and they are bound to observe principles of natural justice in reaching their conclusions. It is true, as pointed out by this Court in <CITATION> (1) that a taxing officer "is not lettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law", but that does not absolve him from the obligation to comply with the fundamental rules of justice which have come to be known in the jurisprudence of administrative law as principles of natural justice. It is, however, necessary to remember that the rules of natural justice are not a con- stant: they are not absolute and rigid rules having univer- sal application. It was pointed out by this Court in <CITATION> .(2) that "the rules of natural justice are not embodied rules" and in the same case this Court approved the following observations from the judgment of <NAME>, L.J. in <NAME> v. <NAME> of Norfolk and Ors.(3):

"There are in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth. Accordingly, 1 do not' derive much assistance from the definitions of natural justice which have been from time to time used, but, whatev- er standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case." One of the rules which constitutes a part of the prin-

ciples of natural justice is the rule of audi alterem partera which requires that (1) [1955] 1 S.C.R. 941.

(2) [1969] 1 S.C.R. 317.

(3) [1949] 1 All. England Reports 108.

no man should be: condemned unheard. It is indeed a re- quirement of the duty to act fairly which lies on all quasi judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because, as pointed out by this Court in <CITATION> ,(1) "the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice" and justice, in a society which has accepted socialism _as its article of faith in the Constitu- tion, is dispensed not only by judicial or quasi judicial authorities but also by authorities discharging administra- tive functions. This rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is also, like the genus of which it is a species, not an inflexible rule having a fixed connotation. It has a variable content depending on the nature of the inquiry, the framework of the law under which it is held, the constitu- tion of the authority holding the inquiry, the nature and character of the rights affected and the consequences flow- ing from the decision. It iS, therefore, not possible to say that in every case the rule of audi alterem partem requires [that] a particular specified procedure to be followed. It may be that in a given case the rule of audi alterem partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the in- quiry should be permitted to be cross-examined by the party affected while in some other case it may not. The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case.

Now, in the present case, we are not concerned with a situation where the rule of audi alterem partem has to be read _into the statutory provision empowering the taxing authorities to assess the tax. Section 17, sub-section (3), under which the assessment to sales tax ha's been made on the assessee provides as follows:

"If no return is submitted by the dealer under subsection (1) within the pre- scribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing author- ity shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return."

It is clear on a plain natural construction of the language of this provision that it empowers the Sales Tax Officer to make a best judgment assessment only where one of two condi- tions is satisfied:

(1) [1970] 1 S.C.R. 457.

either no return is submitted by the assessee or the return submitted by him appears to the <ORG> to be incorrect or incomplete. It is only on the existence of one of these two conditions that the <ORG> gets the jurisdiction to make a best judgment assessment. The ful- filment of one of these two pre-requisites is, therefore, a condition precedent to the assumption of jurisdiction by the <ORG> to make assessment to the best of his judgment. Now, where no return has been submitted by the assessee, one of the two conditions necessary for the applicability of section 17, subsection (3) being satisfied, the <ORG> can, after making such inquiry as he may consider necessary and after taking into account all relevant materials gathered by him, proceed to make the best judgment assessment and in such a case, he would be bound under the proviso to give a reasonable opportunity of being heard to the assessee. But in the other case, where a return has been submitted by the assessee, the <ORG> would first have to satisfy himself that the return is incorrect or incomplete before he can proceed to make the best judgment assessment. The decision making process in such a case would really be in two stages, though the in- quiry may be continuous and uninterrupted: the first stage would be the reaching of satisfaction by the <ORG> that the return is incorrect or incomplete and the second stage would be. the making of the best judgment assessment. The first part of the proviso which requires that before taking action under sub-section (3) of section 17, the assessee should be given a reasonable opportunity of being heard would obviously apply not only at the second stage but also at the first stage of the inquiry, because the best judgment assessment, which is the action under section 17, sub-section (3), follows upon the inquiry and the "reasonable opportunity of being heard" must extend to the whole of the inquiry, including both stages. The requirement of the first part of the proviso that the asses- see should be given a "reasonable opportunity of being heard" before making best judgment assessment merely em- bodies the audi alterem partem rule and what is the content of this opportunity would depend, as pointed out above, to a great extent on the facts and circumstances of each case. The question debated before us was whether this opportunity of being heard granted under the first part of the proviso included an opportunity to cross-examine <NAME> and other wholesale dealers on the basis of whose books of accounts the <ORG> disbelieved the account of the assessee and came to the finding that the return submit- ted by the assessee were incorrect and incomplete. But it is not necessary for the purpose of the present appeals to decide this question since we find that in any event the assessee was entitled to this opportunity under the 'second part of the proviso.

The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasona- ble opportunity to prove the correctness or completeness of such return. This requirement obviously applies at the first stage of the enquiry before the Sales Tax Officer comes to the conclusion that the return submitted by the assessee is incorrect or incomplete so as to warrant the making of a best judgment assessment. The question is what is the content of this provision which imposes an obligation on the Sales Tax Officer to give and confers a corresponding right on the assessee to be afforded, a reasonable opportunity "to prove the correctness or completeness of such return". Now, obviously "to prove" means to establish the correctness ,or completeness of the return by any mode permissible under law. The usual mode recognised by law for proving a fact is by production of evidence and evidence includes oral evi- dence of witnesses. The opportunity to prove the correct- ness or completeness of the return would, therefore, neces- sarily carry with it the right to examine witnesses and that would include equally the right to Cross-examine witnesses examined by the Sales Tax Officer. Here, in the present case, the return filed by the assessee appeared to the Sales Tax Officer to be incorrect or incomplete because certain sales appearing in the books of <NAME> and other wholesale dealers were not shown in the book's of account of the assessee. The Sales Tax Officer relied on the evi- dence furnished by the entries in the books of account of <NAME> and other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete. Placed in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of <NAME> and other whole- sale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross-examining <NAME> and other wholesale dealers with reference to their accounts. Since the evidentiary material procured from or produced by <NAME> and other wholesale dealers was sought to be relied upon for showing that the return submitted by the assessee was incor- rect and incomplete, the assessee was entitled to have <NAME> and other wholesale dealers summoned as witnesses for cross-examination. It can hardly be disputed that cross-examination is one of the most efficacious methods of establishing truth and exposing falsehood. Here, it was not disputed on behalf of the <ORG> that the assessee in both cases applied to the Sales Tax Officer for summoning <NAME> and other wholesale dealers for cross-examina- tion, but his application was turned down by the Sales Tax Officer. This act of the Sales Tax Officer in refusing to summon <NAME> and other wholesale dealers for cross-examination by the assessee clearly constituted in- fraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of assessment made against the assessee.

We do not wish to refer to the decisions of various High Courts on this point Since our learned brother has dis- cussed them in his judgment-. We are of the opinion that the view taken by <ORG> in <CITATION> (1) and <ORG> in <CITATION> (2) and the present cases represents the correct law on the subject. We accordingly dismiss the appeals with no order as to costs. (1) 26 S.T,C, 22. (2) 14 S.T.C, 489.

FAZAL ALl, J.--These appeals by special leave involve an interesting question of law as to the interpretation of s. 17(3) of the Kerala General Sales Tax, 1963--hereinafter referred to as 'the Act'--and the proviso thereof read with r. 15 framed under the Act. The assessment years in question are 1965-66, 1966-67 and 1967-68. in the case of the re- spondent <NAME> in Civil Appeals Nos. 572-574 of 1972 and 1967-68 in the case of <NAME> in Civil Appeal No. 575 of 1972. But both the cases involve an identical question of law. In this view of the matter, we propose to deal with all these appeals by one common judg- ment.

The assessee in Civil Appeals Nos. 572-574 of 1972 filed his sales-tax returns before the Sales Tax Officer who on an examination of .the accounts found that the returns submit- ted by the assessee were both incorrect and incomplete inasmuch as certain entries in the books of account of <NAME> revealed Certain transactions which were not accounted for in the assessee's book's of account. The Sales Tax Officer, after hearing the assessee, made an assessment to the best of his judgment under s. 17(3) of the Act read with r. 15 made under the Act. The Sales Tax Officer thus rejected the accounts of the assessee as they did not re- flect the goods said to have been purchased by <NAME>. The assessee sought an opportunity to cross- examine <NAME> with respect to the correctness of his accounts which were relied upon by the Sales Tax Offi- cer, but this opportunity was refused to him by the Sales Tax Officer as also the other appellate authorities. Simi- larly in the case of the respondent <NAME>, in Civil Appeal No. 575 of 1972, the return filed by the asses- see was rejected by the Sales Tax Officer on the ground that certain transactions shown in the accounts of some wholesale dealers were not reflected in his books of account and the opportunity asked for by the assessee for cross-examining the said wholesale dealers was refused to him. The order of the Sales Tax Officer was confirmed by the Appellate Author- ities under the Act. Both the assessees then filed a revi- sion application before <ORG> which allowed the application of the assessees, quashed the orders of <ORG> and remanded the cases to the Sales Tax Officer for giving an opportunity to the respondents for cross-examining the wholesale dealers concerned and then making assessments in accordance with the law. The <ORG> having obtained special leave from this Court hence these appeals before us.

The short question that fell for determination before <ORG> was, whether under the provisions of the Act the opportunity of being heard which was to be given to the assessees, would include within its sweep the right of cross-examination of a third party whose accounts were the basis of the best judgment assessments made by the Sales Tax Officer and the examination of which later on showed that the returns filed by the assessees were incorrect and incom- plete. <ORG>, on a consideration of s. 17(3) and the Rules made under the Act came to the conclusion that the assessees were entitled to a fair hearing and the opportuni- ty of being heard could not be said to be complete unless in the circumstances of these cases the as-

sessees were allowed to cross-examine <NAME> and other wholesale dealers on whose accounts reliance was placed by <ORG>.

A provision of law authorising <ORG> to make a best judgment assessment in default of the assessee complying with the legal requirements is not a new one, but existed in s. 23(4) of the Income-tax Act, 1922 as amended by the Indian Income-tax (Amendment) Act , 1939, the relevant part of which runs thus:

If any person fails to make the return required by any notice given under sub-section (2) of section 22 and has not made a return or a revised return under sub-section (3 ) of the same section or fails t6 comply with all the terms of a notice issued under sub-section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of this section, the Income-tax Officer shall make. the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered:

Describing the nature and character of a best judgment assessment, Lord <NAME> of Killowen in delivering the judgment of <ORG> in <CITATION> ,(1) observed as follows:

"The Officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying informa- tion. He must not act dishonestly or _vindic- tively or capriciously, because he must exer- cise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him. in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guess-work."

These observations were quoted with approval by this Court in <CITATION> (2). Mr. <NAME> learned counsel for the appellant submitted that the main object of the best judgment assessment was to pena- lise the (1) (1937) 64 IA. 102, 114-115.

(2) 8 S.T.C.770.

assessee for either not filing a return or for filing a return which was defective and if at this stage he is given a full-fledged 'hearing including the right to summon and cross-examine witnesses, then this would amount to condoning the default committed by the assessee. It was also argued that as the Income-tax authorities are not bound by the technical rules of evidence, the assessee cannot claim cross-examination of witnesses as a matter of right. In support of his submission he relied upon a decision of this Court in <CITATION> (1), where agreeing with a similar argument put forward by the Solicitor-General in that case this Court observed thus:

"As regards the second contention, we are in entire agreement with the learned Solici- tor-General when he say's that the Income- tax Officer is not lettered by technical rules of evidence and pleadings, and that he is entitled to action material which may not be accepted as evidence in a Court of law, but there the agreement ends, because it is equal- ly clear that in making the assessment under sub-section (3) of section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23 (3)."

There can be no doubt that the principle that as the tax proceedings are of quasi-judicial nature, the Sales Tax authorities are not strictly bound by the rules of evidence which means that what the authorities have to consider is merely the probative value of the materials produced before them. This is quite different from saying that even the rules of natural justice do not apply to such proceedings so as to deny the right of cross-examination to the assessee where the circumstances clearly justify such a course and form one of the integral parts of the materials on the basis of which the order by <ORG> can be passed. The admissibility of a document or a material in evidence is quite different from the value which the authority would attach to such material. <ORG> has held that <ORG> can even base their conclusion on their private opinion or assessment provided the same is fully disclosed to the assessee and he is given an opportu- nity to rebut the same. In these circumstances, therefore, we do not agree with Mr. <NAME> that merely because the technical rules of evidence do not strictly apply, the right of crossexamination cannot be demanded by the assessee in a proper case governed by a particular statute. This Court further fully approved of the four proposi- tions laid down by <ORG> in <NAME> v. Commissioner of Income-tax, Punjab(2). This Court was of the opinion that <ORG> had violated certain fundamental rules of (1) [1955] 1 S.C.R. 941.

(2) (1944) 12 I.T.R. 393.

natural justice in that they did not disclose to the asses- see the information supplied to it by the departmental representatives. This case was relied upon by this Court in a later decision in <NAME> case (supra) where it reiterated the decision of this Court in <ORG>'s case (supra), and while further endorsing the decision of <ORG> in <NAME> case(") pointed out the rules laid down by <ORG> for proceeding under sub-s. (3) of s. 23 of the Income-tax Act and observed as follows:

"The rules laid down in that decision were these: (1 ) While proceeding under sub-section (3) of section 23 of the Income-tax Act, the Income-tax Officer is not bound to rely on such evidence produced by the assessee as he considers to be false; (2) if he proposes to make an estimate in disregard of the evidence, oral or documentary, led by the assessee, he should in fairness disclose to the assessee the material on which he is going to found that estimate; (3) he is not however debarred from relying on private sources of informa- tion, which sources he may not disclose to the assessee at all; and (4) in case he proposes to use against the assessee the result of any private inquiries made by him, he must commu- nicate to the assessee the substance of the information so proposed to be utilised to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and should further give him ample opportunity to meet it, if possible."

It will thus be noticed that this Court clearly laid down that while the Income-tax Officer was not debarred from relying on any material against the assessee, justice and fair-play demanded that the sources of information relied upon by the Income-tax Officer must be disclosed to the assessee so that he is in a position to rebut the same and an opportunity should be given to the assessee to meet the effect the aforesaid information.

We, however, find that so far as the present appeals are concerned, they are governed by the provisions of the Kerala General Sales Tax Act, the provisions of which are not quite identical with the provisions of the Income-tax Act and the Kerala Act appears to have fully incorporated all the essen- tial principles of natural justice in s. 17(3) of the Act. In these circumstances, therefore, the answer to the ques- tion posed in these appeals would have to turn upon the scope, interpretation and content of s. 17(3) of the Act, the proviso thereto and r. 15 framed under the Act. It is true that the words "opportunity of being heard" are of very wide amplitude but in the context the sales-tax pro- ceedings which are quaSi-judicial proceedings all that the <ORG> has to see is whether the assessee has been given a fair hearing. Whether the hearing would extend to the right of demanding cross-examination of witnesses or not would naturally depend upon the nature of the materials relied upon by the sales-tax authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case. It is .difficult to lay down any hard and fast rule of universal application. We would, therefore, first try to interpret the ambit of s. 17(3) and the proviso thereof in order to find out whether a right of cross-examination of witnesses whose accounts formed the basis of best judgment assessment is conferred on the assessee either expressly or by necessary intendment. Section 17(3) of the Act runs thus:

"If no return is submitted by the dealer under subsection (1) Within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing author- ity shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such re- turn."

An analysis of this provision would show that this sub- section contemplates two contingencies--(1) where the asses- see does not file his return at all; and (2) where the assessee files his return which, however, is found to be incorrect or incomplete by the assessing authority. The sub-section further enjoins on the assessing authority a duty to consider the necessary materials and make an enquiry before coming to its conclusion. The proviso expressly requires the assessing authority to give to the assessee a reasonable opportunity of being heard even if the assessee had committed default in not filing the return. Since the statute itself contemplates that the assessee should be given a reasonable opportunity of being heard, we are not in a position to agree with the contention of the learned counsel for the appellant that if such an opportuni- ty is given, it will amount to condonation of default of the assessee. The tax proceedings are no doubt quasi-judicial proceedings and the Sales-tax authorities are not bound strictly by the rules of evidence, nevertheless the authori- ties must base their order on materials which are known to the assessee and after he is given a chance to rebut the same. This principle of natural justice which has been reiterated by this <ORG> in the decisions cited above has been clearly incorporated in s. 17 (3) of the Act as men- tioned above. The statute does not stop here, but the second part of the proviso confers express benefit on the assessee for giving him an opportunity not only of being heard but also of proving the correctness or completeness of such return. In view of this provision it can hardly be argued with any show of force that if the assessee desires the wholesale dealers whose accounts are used against him to be cross-examined in order to prove that his return is not incorrect or incomplete he should not be conceded this opportunity. Apart from anything else, the second part of the proviso itself confers this specific right on the asses- see. It is difficult to conceive as to how the assessees would be able to disprove the correctness of the accounts of <NAME> or the other wholesale dealers, unless he is given a chance to cross-examine them with respect to the credibility of the accounts maintained by them. It is quite possible that the wholesale dealers may have mentioned certain transactions in their books of account either to embarrass the assessees or due to animus or business rivalry or such other reasons which can only be established when the persons who are responsible for keeping the accounts are brought before the authorities and allowed to be croSs-examined by the assessees. This does not mean that the assessing authority is bound to examine the whole- sale dealers as witnesses in presence of the assessees: it is sufficient if such wholesale dealers are merely ten- dered by the sales-tax authorities for cross-examination by the assessees for whatever worth it is. In view of the express provision of the second part of the proviso, we are fully satisfied that the respondents had the undoubted right to crosS-examine the wholesale dealers on the basis of whose accounts the returns of the assessees were held to be incor- rect and incomplete. We are fortified in our view by a decision of this <ORG> in <NAME> and Co. v. Commis- sioner of Income-tax, Bombay City(1), where this <ORG> observed as follows:

"The Income-tax Officer is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry.But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it."

It will be noticed that if the Sales-tax authorities refused the prayer of the assessees to cross-examine the wholesale dealers, then such refusal would not amount to an adequate opportunity of explaining the material collected by the assessing authority.

Mr. <NAME> learned counsel for the appellant relied on a decision of <ORG> in <CITATION> (2). In the first place <ORG> in that case was concerned with the Bombay Sales Tax Act which did not contain any .express provision like the one which is to be found in the second part of the proviso to s.17(3) of the Kerala General Sales Tax Act and, there- fore, any decision given by <ORG> would have no application to the facts of the present appeals. In <NAME> case (supra) the Court was merely called upon to interpret the import of the words "reasonable opportunity of being heard" and the Judges held that as ample opportunity was given to the assessee therefore concerned to show cause why the sales said to have been suppressed (1) (1962) 45 I.T.R. 206, 209.

(2) 23 S.T.C. 11.

(3) 14 S.T.C. 489.

by him should not be included in his turnover, the rules of natural justice were duly complied with. The Court further pointed out that the sales-tax authorities were not strictly bound by the rules of evidence nor did the Act require the assessing authorities to do more than what they had done in that case. <ORG> seems to have dissent- ed from the view taken by a single Judge of <ORG> in <CITATION> (3). Finally, it does not appear from the facts mentioned in the judgment of <ORG> that the assessee had at any time made a specific prayer for cross-examining the representa- tives of the firm of <ORG> In these circum- stances, therefore, <NAME> case (supra) does not appear to be of any assistance to the appellant. We might, however, state that we are not prepared to go to the extent to which <ORG> has gone even in interpreting the content and ambit of an opportunity given to the assessee of being heard so as to completely exclude the right of cross-examination. We have already held that whether the reasonable opportunity would extend to such a right would depend upon the facts and circumstances of each case.

We feel that the correct law on the subject has been laid down by a Division Bench of <ORG> in <CITATION> 07 Orissa(1) where <ORG>, while adumbrating the 4th proposition, namely, as to how the assessee was to rebut the.., material used by the <ORG> against him, observed as follows:

"It is the amplitude and ambit of this fourth proposition which needs examination. There cannot be any controversy that the assessee can adduce independent evidence of his own to disprove the particulars proposed to be used against him ........ A third party's accounts are proposed to be used against the assessee and if such accounts are relied on, the assessee's accounts are to be discarded .......... If the assessee gets an opportunity by cross-examination, he can establish that the accounts of the third party are wrong and manipulated to suit the interest of the third party, or that they were intended to be adversely used against the assessee with whom the third party had inimical rela- tionship. It is difficult to accept the contention in such a case, that the ample and reasonable opportunity to be given to the assessee would not include within its sweep the right of cross-examination."

<ORG> in the present appeals has relied on its earlier decision in <CITATION> (supra) where a single Judge of <ORG> pointed out that the fact that a third party maintaining some secret accounts had made certain entries in his accounts which may connect the assessee will not give jurisdiction to the assessing authority to use that information unless the assessee has been (1) 26 S.T.C. 22.

given an opportunity to Cross-examine him effectively.. As no such opportunity was given, the Court held that the proceedings stood vitiated. In our opinion, the decision of <ORG> was substantially correct and in consonance with the language of s. 17(3) and the proviso thereto.

Other cases have also been cited before us which, howev- er, are based on the peculiar language of the statutes which the <ORG> were construing and which are different from the language used in the Act.

Finally, apart from the provisions of s. 17 (3.) and the proviso thereto, the rules further reiterate what the provi- so contemplates. Rule 15 which deals with provisional as- sessment where a return is incorrect and incomplete runs thus:

"If the return submitted by the dealer appears to the assessing authority to be incorrect or incomplete, the assessing author- ity shall, after issuing a notice to the dealer calling upon him to produce his ac- counts to prove the correctness or complete- ness of his return at time and place to be specified in the notice and after scrutiny of all the accounts if any, produced by the dealer and after taking into account all relevant materials gathered by it determine the turnover of the dealer to the best of its judgment, and fix provisionally the annual tax or taxes payable at the rate or rates speci- fied in Section or notified under Section 10 . Before determining the turnover under this rule, the dealer shall be given a reasonable opportunity of being heard and also to prove the correctness or completeness of the return submitted by him."

The Rule clearly shows that where the return of the assessee is incorrect or incomplete he must be called upon to prove the correctness or completeness of the same. It also en- joins that a reasonable opportunity of being heard should be given to the assessee to prove the correctness or complete- ness of the return submitted by him. Thus the requirement of the second part of the proviso to s. 17(3) is reiterated in r. 15. We understand that such a provision in the Act is peculiar to the Kerala Act and is not to be found in other sales-tax statutes which provide for best judgment assess- ment. Thus on a true interpretation of s. 17(3) , the proviso thereto and r. 15, the inescapable conclusion would be that the assessee has been given stationary right to prove the correctness of his return by showing that the materials on the basis of which his return is found to be incorrect or incomplete are wrong and if for this purpose the assessee makes an expire prayer for cross-examining the wholesale dealers whose accounts formed the sheet- anchor of the notice issued to the assesee, he is undoubted- ly entitled to cross-examine such wholesale dealers. In view of the language in which the Rules are couched it seems to us that a determinative issue arises in this case--the <ORG> taking the stand that the returns filed by the assessees are incorrect and incomplete, whereas the assessees contend that the 17--240SCI/77 returns are correct and that the accounts of the wholesale dealers which formed the basis of the information of <ORG> were wrong and incorrect. Such an issue can only be determined after examination of' the accounts of both the parties and after affording the asses- sees the right to cross-examine the wholesale dealers con- cerned, particularly when the assessee makes a specific prayer to this effect.

For these reasons, therefore, we are convinced that the judgment passed by <ORG> in all these appeals is correct in law and <ORG> has rightly decided the issues involved. The appeals accordingly fail and are dismissed with no order as to costs.

P.B.R. Appeals dismissed.


PETITIONER: <NAME>, Vs. RESPONDENT: UNION OF INDIA DATE OF JUDGMENT03/03/1971 BENCH: <NAME>, A.N. BENCH: <NAME>, A.N. SIKRI, <NAME>, G.K. HEGDE, K.S. <NAME>, P. JAGANMOHAN CITATION: 1971 AIR 2111 1971 SCR (3) 908 1971 SCC (1) 780 ACT: Constitution of India, 1950- Article 311- Civilian employee of Defence Service-If entitled to protection of Article. Statuory Rules-Breach of-justiciability Natural Justice-If can be invoked under general law of master and servant. HEADNOTE: The appellant was appointed in 1942 as Labour Supervisor, <ORG>. In 1951, pending inquiry into certain charges against him his service was terminated by giving him one month's notice under rule 5 of the Civilians in Defence Services (Temporary Service) Rules, 1949. He challenged the legality of the order of termination on the grounds that it had been passed by an officer subordinate to the authority who appointed him and that no adequate opportunity had been afforded to him of defending himself. He also alleged that the Order was vitiated by mala fides. In the appellant's appeal against the dismissal of his suit <ORG> held that Article 311 of the Constitution was inapplicable, that breach of the Rules did not give an aggrieved party a right to go to the Court and that the Order was not vitiated by mala fides.-Dismissing the appeal to this Court. HELD : The appellant, holding a post connected with Defence cannot claim the protection of Article 311 of the Constitution. <NAME> v. <ORG> C.A. 1185 of 1965 dt. 6-2-67 and <NAME> v. <ORG> C.A. 1918 of 1966 dt. 8-3-68: followed. (ii)The view of <ORG> that the rules are not justifiable cannot be sustained. Breach of statutory rules in relation to conditions ,of service would entitle the aggrieved government servant to have recourse to the court for redress. <CITATION> , A.I.R. 1937 P.C. 31, <CITATION> ,  2 S.C.R. 671 and <CITATION> ,  7 S.C.R. 471, referred to. In the present case the order of discharge has been passed by the ,appointing authority as required by rule 5. (iii)In the appeal before this Court the finding on the point of mala fides must be accepted as final and the appellant cannot be allowed to re-agitate that matters. (iv)As regards the applicability of the rule-of natural justice it has not been shown how under the general law of master and servant, in the absence of any protection conferred by Article 311 of the Constitution such a rule can be invoked. 909 JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 17-19 or 67. Appeal from the judgment and decree dated May 23, 1961 of e Punjab High Court, Circuit Bench at Delhi in Regular Second appeal No. 43-D of 1956.

<NAME>, for the appellant.

<NAME> and <NAME>, for the respondent. The Judgment of the Court was delivered by <NAME>, L This is an appeal by certificate from a judgment and decree of <ORG> (<ORG>, Delhi) by which the suit filed by the appellant for a declaration that the order dated May 26, 1951 directing his removal from service was wrongful, illegal and void and that he still continued to be in the service of the respondent as Supervisor, <ORG>.

According to the allegations in the plaint the appellant was appointed by the Governor-General in July 1942 as Supervisor, <ORG> which, according to him, was a civil post under the <ORG> in India. In the months of September and October, 1950 the appellant was served with chargesheets by the Ordnance Officer, <ORG>, Shakurbasti, Delhi State, where he was posted at that time calling upon him to submit his defence to the charges of making serious false allegations against his superior officer Maj. <NAME>. The appellant asked for grant of time for submitting his defence and be also demanded copies of certain documents etc to prove his case. On May 26, 1951 while this inquiry was pending he was served with an order by the Ordnance Officer, <ORG>, Shakur- basti, Delhi which was as follows--

"Under instructions received from <ORG> Head- quarters you are hereby given one month's notice of discharge with immediate effect, services being no longer required. Your services will be terminated on 25th June, 1951".

The appellant challenged the legality of the above order principally on the ground that it had been passed by an officer who was subordinate to the authority who appointed him and that no inquiry "as required by Fundamental Rules and under the provisions of the Constitution of India" had been held in the matter of allegations against him and that no adequate opportunity had been afforded to him of defending himself or of show-

ing cause against the action proposed to be taken. He all raised the question of the order being vitiated by mala fid In the written statement filed by <ORG> it was stat that the appellant had been appointed as a Labour Supervisor he Extra Temporary Establishment by the COO/Ordnan Officer Incharge, Ammunition Depot, Kasubegu under t authority of Financial Regulations, India, Part 1, Volume and not by the Governor General. It was pleaded, inter all that it was decided by the Government of India vide Army Headquarter's letter dated May, 25, 1951 to terminate the services by serving one month's notice. Consequently a notice of discharge from the service was given to him by the Ordnance Officer, Administration, who was competent to serve the notice on him under the authority of the Army Order No. 1202/1943 read in conjunction with 'Financial Regulations referred to before. The sole material issue which was framed was whether the order dated May 26, 1951 removing the appellant from service was illegal, wrong, void, ultra vires and inoperative. The trial judge held that Art. 311 of the Constitution was applicable to the case of the appellant and that his removal had not been ordered by the appointing authority. The suit was decreed. respondent preferred an appeal which was decided by the Additional District Judge, Delhi. It :Was held by him that Art. 311 was not applicable to the appellant as he held a post connected with defence. According to the learned judge the appellant's services were terminated under Rule 5 of the Civilians in Defence (Temporary Services) Rules, 1949, hereinafter called the 'Rules'. It was found that the order terminating the services had been passed by the proper authority. The appeal was allowed and the suit was dismissed. The appellant appealed to <ORG> which was dismissed. His appeal was heard along with certain other appeals in which similar points were involved. It was found that the salary of the appellant was paid out of the estimates of <ORG> and he was intimately connected with the defence of the country not as a combatant but as a person holding a post the object of which was exclusively to serve <ORG>. In the opinion of <ORG> Articles 309 and 310 were applicable to the case of the appellant but Article 311 was inapplicable. On the question whether the services of the appellant were terminated without complying with the rules <ORG> expressed the view that the breach of such rules did not give the aggrieved party a right to go to the court Reliance in that connection was placed on the decision of <ORG> in <NAME> v.

Secretary of State(1) and certain other cases in which that decision was followed. In the case of the appellant the only other point which appears to have appear to have been argued on his behalf and which was decided by <ORG> related to the allegation of mala fides. The decision went against him on that, point.

The question whether the case of the appellant was governed by Art. 311 of the Constitution stands concluded by two decisions of this court. In <NAME> v. <ORG>) it was held that an Engineer in <ORG> who was drawing these salary from <ORG> could not claim the protection of Art. 311(2) of the Constitution. In that case also the appellant was found to have held a post connected with <ORG> as in the present case. This decision was followed in <NAME> v. <ORG> (3). Both these decisions fully cover the case of the appellant so far as the applicability of Art. 3 1 1 is concerned.

Learned counsel for the appellant sought to argue that since the appellant was admittedly governed by the rules which framed under s. 241(2) 'of the Government of India Act 1935 he was entitled to the protection of s. 240 of that Act. Chapter I of Part 10 of that Act related to <ORG>. According to ss. 239, 235, 236 and 237 were applicable to persons who not being members of His Majest's Forces held or had held posts in India connected with the equipment or administration of those forces or otherwise connected with <ORG> as they applied in relation to persons who were or had been members of those forces. Section 240, to the extent it is material was in the following terms:-

"240(1) Except as expressly provided by this Act, every person who is a member of a civil service of the <ORG> in India, or holds any civil post under the <ORG> in India, holds office during His Majesty's pleasure. (2) No such' person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed.

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

(1) A.I.R. (1937) P.C. 31.

(3) C, A 1918 of 1966 dt. 8-3-68. 14-L1100sup.CI/72 (2) C. A. 1185 of 1965 dt. 6-2-67.

Provided................ Section 241 provided for recruitment and conditions of service.

On behalf of the appellant it was contended that since his conditions of service were governed by the rules which were framed under the above section, s.240 was clearly applicable and his services could not have been terminated in terms of subs. (2) of that section by any authority subordinate to that by which he was appointed nor could he be dismissed or reduced in rank until he had been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. At no stage of the proceedings in the courts below the appellant relied on s. 240 of the Government of India Act and rightly so because the order of his discharge or termination of service was made after the Constitution had come into force. It was apparently for that reason. that protection was sought from Art 311 and not s. 240 of the Government of India Act 1935. We see no reason or justification in the present case for determining whether a person holding a civilian post which is connected with the defence and for which he is paid salary and emoluments from the Defence Estimates would be governed by the provisions of section 240 of the Government of India Act if the provisions of that Act were not applicable to the case of such a servant.

The next question is whether rule 5 of the Rules was applique able and whether the appellant could claim the benefit of that rule. It provided, inter-alia, that the service of a temporary government servant who is not in quasi-permanent service shall be liable to termination at any time by notice in writing given either by the", government servant to the appointing authority or by the appointing authority to the government servant. The view of <ORG> that the rules were not justifiable cannot be sustained as the decision of <ORG> in <NAME>'s case (supra) and the other cases following that view have not been accepted as laying down the law correctly by this court. It has been held that the breach of a statutory rule in relation to the conditions of service would entitle the government servant to have recourse to the court for redress; vide <CITATION> (1) and <CITATION> (1). Now Exhibit P. 3 which is a letter dated May 26, 1951 and which was produced by the appellant himself shows that one months notice of discharge was given by the ordnance Officer, <ORG>, under instructions received from <ORG>. A copy of another letter Exht. P-2 dated May 27, 1951 was produced according to which it had been decided by the Government (1)  2 S.C.R.671.

(2) [1964] 7 S.C.R.471.

<NAME>

of India that the services of the appellant be terminated by giving him one month's notice. It is true that the origin of that letter was not produced although it had been summoned by the appellant It is at least clear that the. Ordnance Officer, Administration, had served the notice of discharge under instructions from <ORG>. In this view of the matter there is no substance in the contention raised on behalf of the appellant that the order of discharge had not been made by the appointing authority. At any rate before <ORG> there was no challenge to the finding of the learned District Judge on the point and a question of fact cannot be allowed to be reopened at this stage. The learned counsel for the appellant attempted to reopen the finding on the question of mala fides and also invoked the rule of natural Justice in so far as the appellant had not been afforded any opportunity of showing cause against his discharge or termination of services. In the appeal before this Court the finding on the point of mala fides must be accepted as final and the appellant cannot be allowed to reagitate that matter. As regards the applicability of the rule of natural justice it has not been shown to us how under the general law of master and servant, in the absence of any protection conferred by Article 311 of the Constitution such a rule can be invoked. The appeal fails and it is dismissed but in view of the cir- cumstances we leave the parties to bear their own costs in this Court.

R.K.P.S. Appeal dismissed.


JUDGMENT <NAME>, <NAME>

(1) We are fully satisfied, after a careful consideration of the arguments urged by the learned counsel for the appellants, that this Letters Patent Appeal ought not to be admitted. The facts are clear. The appeal is sought to be filed by the owner of a motor vehicle and by the Insurance company, with regard to a case of a fatal motor accident, which gave rise to a justifiable claim for compensation. Not merely <ORG> constituted under the Motor Vehicles Act . which went into the question, but also the learned Judge(Venkatadri J.) who heard the civil miscellaneous appeal, both came to the unambiguous conclusion on the merits that this was a case of a motor accident that ended fatally, under such circumstances as to justify, and fully justify, the claim for compensation.

(2) The main argument pressed before us was that the claimant was the married sister of the victim, a bachelor who died without leaving a child, parents or any other heir. Our attention was then drawn to the provisions of the Fatal Accidents Act (Central Act 13 of 1855), under Section 1-A of which an action of that kind should be brought forward by an "executor, administrator or representative of the person deceased". There are authorities of High Courts, into which we need not proceed here, since this proposition is not really relevant for out purpose, that the word "representative" in S. 1-A does not mean a legal representative of the kind contemplated in the Civil Procedure Code, but must have reference to the earlier words in the same section "for the benefit of the wife, husband, parent and child". There is much to be said for the view that, if this Central Act 13 of 1855 is to govern the claim, a married sister of the victim, who died a bachelor without leaving behind a wife, child or parents, cannot bring forward a claim of this sort for her own benefit.

(3) But the law has not been stationary since the Central Act was enacted in 1855. On the contrary, there has been considerable development since then, and it is also obvious that in the subsequent century that has elapsed, the volume of motor traffic and the statistics or motor accidents, fatal or otherwise, must both have originated and increased beyond all proportions. In this perspective, the legislature has deliberately enacted the Motor Vehicles Act , and provided by virtue of Ss. 110 to 110-F of that Act, not merely a self-contained Code for the adjudication of claims to compensation on behalf of the victims of a motor accident, but also a complete machinery for the adjudication of such instances. Under S. 110-F , the jurisdiction of <ORG> is specifically ousted by <ORG> for the area. The claim in the present case is under Ss. 110 to 110-F of the Motor Vehicles Act. It has no connection whatever with the Indian Fatal Accidents Act (Act 13 of 1855) and is not advanced under any section or provision of that Act. It is noteworthy that Ss. 110 to 110-F that we have referred to, make no mention of any kind concerning any of the provisions of the Fatal Accidents Act , and do not incorporate any such provision even by the most oblique reference.

(4) Notwithstanding all this, and notwithstanding the fact, which is undeniable, that under S. 110-A of the Motor Vehicles Act, an application for compensation arising out of an accident can be put forward "by the legal representatives of the deceased", the ground is urged that the Fatal Accidents Act (Act 13 of 1855) ousts the relevant provisions of the Motor Vehicles Act . We are unable to accept this argument, and it is not related to the structure of either Act. On the contrary the relevant part of the Motor Vehicles Act is free of any reference, even obliquely, to the Fatal Accidents Act . An argument is further advanced that the Motor Vehicles Act (Ss. 110 to 110-F) does not lay down any new liability; it only provides for machinery for the adjudication of claims to compensation. Certain observations of <ORG> in <NAME> v. General Manager <ORG>, are relied upon, in support. We have looked into this decision, and we do not find there any reference to the provisions of the Fatal Accidents Act , as excluding the application of the Motor Vehicles Act . It is true that the learned Judge states that Ss. 110 to 110-F of the Motor Vehicles Act do not supersede the cardinal principles of liability in tort. But that observation was made, in the context of a situation when it had to be considered whether it was necessary or not necessary to establish, in support of a claim for compensation under the Motor Vehicles Act that the accident was the result of negligence on the part of the owner or driver of the vehicle. In the present case, we have already affirmed that, on the merits, both <ORG> and the learned Judge found that this was an accident which could give rise to a claim for compensation under the law. The only point was whether the claim could be advanced by the married sister of the deceased, who died a bachelor. It can certainly be so advanced, since S. 110-F definitely provides for the foundation of a claim by any legal representative of the victim of the accident.

(5) We have also been invited to consider the argument that the non-joinder of the driver of the vehicles, as a party to the proceedings, will vitiate the proceedings. We can find nothing in the record, or in the provisions of the Act, to justify this view. In our view this is a simple case of a claim to compensation arising out of a fatal motor accident, preferred by the immediate next-of-kin and legal representative of the victim, under the provisions of the Motor Vehicles Act , which was justly recognised by the courts. Neither the owner of the vehicle, nor the Insurance company, can be said to have suffered any prejudice, or to have sustained any ground of grievance. This Letters Patent Appeal is dismissed.

(6) Appeal dismissed.