PETITIONER: QUDRAT ULLAH Vs. RESPONDENT: MUNICIPAL BOARD, BARELLY DATE OF JUDGMENT29/11/1973 BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. PALEKAR, D.G. SARKARIA, RANJIT SINGH CITATION: 1974 AIR 396 1974 SCR (2) 530 1974 SCC (1) 202 CITATOR INFO : RF 1975 SC1758 (27) RF 1975 SC2299 (607) R 1976 SC1860 (9) RF 1988 SC 184 (10) R 1988 SC1845 (11) RF 1990 SC 678 (6,7,8) R 1992 SC1239 (22) ACT: U.P. (Temporary) Control of Rent and Eviction Act , 1947- Whether contract was alease or licence or a composite one-Interpretation-Repeal and replacement of an earlier Act by a later Act-Whether right under the temporary Act outlives the Act itself. HEADNOTE: The appellant's father had been collecting "tahbazari' dues under a contract from <ORG>. Under the terms of the contract the contractor had the right of use of sheds and shops as enjoyed by <ORG> as proprietor and the contractor was empowered to let them to sub-tenants on rent. In addition, the contract granted certain other strips which were the flanks of the central road strip running between the stalls. In 1951, <ORG> filed a suit against the contractor praying that the <ORG> be put in absolute proprietary possession over certain sheds, passages and some shops on the ground that the contract was a licence. The contractor pleaded the status and protection of a tenant under the U. P. (Temporary) Control of Rent & Eviction Act (U. P. Act 3 of 1947). The trial court dismissed the suit, having regard to the then existing rent control law. The High <ORG> held that the contract was a combination of a lease and licence, a lease with respect to sheds and shops and licence as regards patois or footpaths adjoining the roads; that a pavement could not be said to be "accommodation" as defined in the Rent Control & Eviction Act and that the contractor was a mere licensee with respect to the pavements. Both the parties appealed to this <ORG>. Additional ground was urged by the <ORG> that the 1947 Act having been revealed by the Uttar Pradesh Urban Buildings (Regulations of Letting, Rent and Eviction) Act , 1972, the <ORG> was entitled to an ejectment decree even if the contract was a lease. HELD : (1) There is no simple litmus test to distinguish a lease as defined in s. 105 , Transfer of Property Act from a licence as defined in s. 52 , Easements Act , but the character of the transaction turns on the operative intent of the parties. If an interest in immovable property entitling the transferor to enjoyment is created, it is a lease; if permission to use land without right to exclusive possession is alone granted, a licence is the legal result. [533H] In the instant case, though the purpose of the transactions was not to grant regular leases of land but to make over to the contractor the right to collect Municipal market dues only, it is not possible to ignore the effect of clear recitals transferring to the contractor more rights than a mere licence implies. The shops and sheds referred to in the contract are the subject matter of a lease not licence only. The contract presupposes the application of the Act which is compatible only with the creation of a lease. <ORG> case,  S.C.R. 265, followed. (2)The High <ORG> was not right in holding that the agreement was a mere licence as regards the patris or footpaths adjoining the roads. The earlier contract says that "those in yellow colour shall remain in possession of the first party". Further the bazar dues constitute a benefit arising out of the land and may be immovable property which can be leased out. [536H; 537E] <NAME> v. <NAME>, I. L. R. 16 Lucknow 191, referred to. (3)By definition 'accommodation' includes gardens, grounds and outhouses, if any, appurtenant to such building or part of a building. While the pavements were appurtenant to the shops or sheds leased, the paths and walks are separate entities and not in fact or law attached to them. These are no appendages, no adjuncts, no space so bound to the use of the buildings as to be treated as belonging 531 to them. Since the patris and pavements were not appurtenances, they fell outside the contours of "accommodation" let out and constitute the subject of a distinct, though connected demise incorporated in the same documents. Every nexus is not an appurtenance. The law connotes principal and subsidiary items integrated by use which is absent in the present case. Since the contract covers one of the leases which is protected by the Act, ejectment in respect of the unprotected lease must follow. The decree for eviction granted by <ORG>, except for certain portions of the pavement, was correct. [538 A-C] (4)The general principle regarding the consequence of repeal of a statute is that the enactment which is repealed is to be treated, except as to transactions past and closed, as if it had never existed. The operation of this principle is subject to any savings which may be made expresly or by implication by tyhe repealing enact-past transactiopn it is this provisioon that will determine the liability under the repealed enactment survives or it is extinguished. Section 6 of the Uttar Pradesh General Clauses Act applies generallly in the absence of a fresh saving provision in the repealing statute. Where a repeal is followed fresh legislation on the object the <ORG> has to look to the provisions of the new Act to see whether they indicate a differentintention. Sec. 43 (2) (h) makes it clear that even if the power forrecovery of possession be one under the earlier Rent Control Law the later Act will apply and necessary amendments in the pleadings can be made. This in dicates that it is the later Act that must govern pending proceedings for recovery of possession or recovery or fixation of rent. In the instant case the suit was not even one under the Act but proceeds on the footing that the contractor was only a licensee and so none of the savings clauses in s. 43 (2) applies. [539 B; 540 A-D] HariPadaPal Ghosh v. <NAME>, 601. L. R.  Cal. 1438 and <NAME> v. <NAME>,  1 All E.R. 166; 169, referred to. The nature of the 1947 Act being temporary the right comes to an end when the temporary Act expires at least by efflux of time, if not by premature repeal. The so called right is short lived and its longevity, where it is derived under a temporary statute, cannot exceed the duration of the statute itself. [541F] Even if it was assumed that s. 3 of the 1947 Act has conferred a right on the tenant, the survival of the right or the continuation of the operation of the Act to the pro- ceedings is all that is ensured, not the expansion or extension of that right. The dispossession of the tenant was permissible only if the grounds in s. 2 were satisfied by landlord. This right was circumscribed in content to conditions set out and limited in duration to the period beyond which the Act did not exit.To hold otherwise would be to give more quantum of right to the party enjoyed had the repeal not been made. Not to affect the previous not be converted into sanctioning subsequent operation. To read postpartum operation into a temporary Act because of premature repeal of it was wrong. On this footing the right, if any, that thee contractor claimed terminated with the expiration of that temporary statute. [541 G-H] Thus (a) the disability of <ORG> to enforce its cause of action under the ordinary law might not necessarily be transmuted into a substantive right in the contractor (b) the rights of a statutory tenant created under a temporary statute go to the extent of merely preventing the eviction so long as the temporary statute lasts (c) the provisions of s.43 did not preserve, subsequent to repeal, any right to rebuff the <ORG>'s claim for eviction and (d) s. 6 of the U.P. General Clauses Act did not justify anything larger or for any time longer than s. 2 of the 1947 Act confers or lasts. [543 B_C] <CITATION> , A.I.R. 1956 S. C., 77 at 84, <NAME> and others v. <NAME> and others, A. I. R. 1941 Federal <ORG> Vol. 28, p. 5 at 6, <CITATION> , A. I. R. 1962 S.C., 945, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1727-1728 of 1968.

Appeal from the judgement and order dated the 29th September 1964 of <ORG> in First Appeal No. 320 of 1955.

<NAME>, <NAME>, <NAME>, <NAME>, <NAME>, for the appellant (in C.A. 1727/68) and respondent (in C.A. 1728/68).

<NAME> and <NAME>, for the respondent (in C.A. 1727/68) and appellant (in C.A. No. 1728/68). The Judgment of the Court was delivered by- <NAME>, J.-This litigation, started in 1951, has lived long, although the main point on which the fate of the case rests is the contraction of a contract between <ORG>, Bareilly (the respondent in Civil Appeal No. 1727 of 1968) and the The kedar under it of the Municipal market, one <NAME> (the father of the appellant in Civil Appeal No. 1727 of 1968). The present appellant is the legal representative of the defendant and has himself filed an appeal (C.A. No. 1728 of 1968) where the <ORG> is the sole respondent. Instant or early justice seems impossible without radical reorientation and systematic changes in the judicial process, as these two appeals, which have survived two decades, sadly illustrate.

Now, a brief narration of the facts. Although the canvass has been spread out, the relevant dispute lies in a narrow compass, and can be resolved by a close look at the terms of Ex. '1' (substantially repeated in Ex. '4') and by applying settled rules which tell off a lease from a licence when the deed is ambiguous. It is unfortunate that legal drafting by the respondent's lawmen has left the key documents in a blurred. state, so much so, the trial Judge and the learned judges in appeal have had to diverge in their conclusions, and before us long arguments have been hopefully addressed to help us designate the contract with certitude a lease or license.

The defendant (the appellant's father) had for several years been collecting 'tahbazari' dues from the market in Patelganj under contracts from <ORG>, the last of which, according to the plaintiff, was executed on 19-11- 44 (Ex. "1"). The defendant's case is that on the expiration of the term of Ex. '1', a fresh contract dated 31-12-47, Ex. '4' was entered into between the parties, substantially repeating the same terms and conditions. On the basis that Ex. '4' had not materialised into a binding contract for want of Government approval, the plaintiff ineffectually demanded of the defendant, by notice Ex. '6' of 1951, to desist from realising the market dues and followed it up with a suit praying for many reliefs of which the crucial one runs thus "(a) The plaintiff may be put in absolute proprietary possession after dispossessing the defendants over the sheds and passage shown in to 28 and 31 and 32 situate in Bazar Patelganj known as Cambellgunj Sabzimandi Bareilly as shown in the map attached to the plaint."

The plaintiff claims Ex. '1' to be a licence which, if correct, undoubtedly entitles him to the relief while the defendant pleads the status and protection of a tenant under the U.P. (Temporary) Control of Rent and Eviction Act (U.P. Act of 1947) (hereinafter referred to as the Act). The decision of this case largely depends on Ex. '1' being a lease or a licence. We are satisfied from the evidence on record that the finding of the Courts below that Ex. '4' is binding on the plaintiff is sound but since the effect of both the documents is fairly the same we may as well proceed to interpret them straightaway. In this Court, however, an additional ground has been urged by the respondent that the Act having been repealed by the Uttar Pradesh Urban Buildings (Regulation of letting, rent and eviction).Act, 1972 (Act of 1972) (for short, called the later Act), the Board is entitled to an ejectment decree even if Exs. '1' and '4' are leases. The trial court held that Ex. '1' and '4' were demises of the Municipal market and dismissed the suit having regard to the Rent Control Law then extant which did not exempt municipal buildings from the operation thereof. <ORG> expressed its view that "On going through the entire document, we have come to the conclusion that Ex. 1 is a combination of a lease and a license. It is a lease with respect to the sheds and eleven shops. But the agreement was a mere license as regards the parties or footpaths adjoining the roads."

Holding Ex. '1' to be a composite deed, the learned Judges declined ,the relief relating to the shops and sheds but put a different construction on the pavements and patois included in the Ex. '1' The court observed :- "A pavement cannot be said to be an accommodation as defined by section 2 of the Rent Control & Eviction Act . We have held that the defendant was merely a licensee with respect to the pavements. So the requirements of section 106 Transfer of Property Act do not came into play as regards the plaintiff's claim for ejectment from the patois. Neither the Rent Control and Eviction Act , nor section 106 Transfer of Property Act saves the defendant as regards plaintiff's claim for ejectment from the patris".

Consequent modifications in the monetary part of the decree were also made, following upon a decree for possession to the limited extent of patris and pavements. Both sides have appealed but we have proceeded, for the sake of convenience, to treat the parties as appellant and respondent as in Civil Appeal, No. 1727 of 1968. The primary bone of contention is the lease-licence controversy but even if we decide in favour of Ex. '1' and '4', being settings, the question of the impact of the later Act remains to be decided.

There is no simple litmus test to distinguish a lease as defined in s. 105 Transfer of Property Act from a licence as defined in s. 52 , Easements Act , but the character of the transaction turns on the operative intent of the parties. To put it pithily, if an interest in immovable property, entitling the transferees to enjoyment, is created, it is a lease; if permission to use land without right to exclusive possession is alone granted, a licence is the legal result. Marginal variations to this broad statement are possible and Ex. '1' and '4' fall in the gray area of unclear recitals. The law on the point has been stated by this <ORG> in <ORG> case(1). In <ORG>, Volume 23, the distinctive flavor, the deceptive labels and the crucial considerations in a lease- versus licence situation have been stated and excepts therefrom may serve as guidelines (see pages 427, 428 and

" 1022. PRINCIPLES FOR DETERMINING WHETHER AGREEMENT CREATES LEASE OR LICENCE. In determining whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licenser and licensee the decisive consideration is the intention of the parties. The parties to an agreement cannot, however, turn a lease into a licence merely by stating that the document is to be deemed a licence or describing it as such the relationship of the parties is determined by law on a consideration of all relevant provisions of the agreement; nor will the employment of words appropriate to a lease prevent the agreement from conferring a licence only if from the whole document it appears that it was intended merely to confer a licence. In the absence of any formal document the intention of the parties must be inferred from the circumstances and the conduct of the parties.

1023. NATURE OF GRANT OF EXCLUSIVE POSSES- SION. The fact that the agreement grants a right of exclusive possession is not in itself conclusive evidence of the existence of a tenancy, but it is a consideration of the first importance.

In deciding whether a grantee is entitled to exclusive possession regard must be had to the substance of the agreement. To give exclusive possession there need not be express words to that effect; it is sufficient if the nature of the acts to be done by the grantee requires that he should have exclusive possession. The grant of an exclusive right to a benefit can, however, be inferred only from language which is clear and explicit. If an exclusive right of possession is subject to certain reservations or to a restriction of the purposes for which the premises may be used, the reservations or restriction will not necessarily prevent the grant operating as a lease.

1024. WHEN GRANT CONFERRING EXCLUSIVE POSSESSION OPERATES MERELY AS LICENCE. A grant which confers the right to exclusive possession may operate as a licence in the following circumstances which negative the intention to create a lease, (1) [1959] S.C.R. 265.

1025. INSTANCES OF AGREEMENTS CREATING LICENCES'. A licence is normally created where a person is granted the right to use premises without becoming entitled to exclusive possession thereof, or the circumstances and conduct of the parties show that all that was intended was that the grantee should be granted a personal privilege with no interest in the land. If the agreement is merely for the use of the property in a certain way and on certain terms while the property remains in the possession and control of the owner, the agreement will operate as a licence, even though the agreement may employ words appropriate to a lease".

Not so much the law as the figment of the terms of a deed into the, legal could makes the forensic essay none too easy. Decisions are legion to prove the relevant propositions we have indicated above,. but we do not think it necessary to cite them all except to mention that apart from Mrs. <NAME>'s case (2) referred to by <ORG>,. a few more cases were also referred to at the <ORG>. With these factual-legal background, we may formulate the points we are called upon to decide, ignoring minor matters which do not deflect the ultimate issue one way or the other.

(1) Is Ex '1' (or Ex, '4') a lease or only a licence or a composite one ?

(2) If lease, does it embrace a demise of an 'accommodation" as defined in the Act, or more ? if it covers more than an 'accommodation', is the portion of the deed dealing with 'non- accommodation' severable so ;is to warrant a. decree for possession confined to that portion ? Similarly,. if Ex. '1' is in part a licence as <ORG> has held, what is the relief the Court can grant to the plaintiff ? (3) If Ex. '1' is a lease wholly of an accommodation, can the, plaintiff claim possession based on the repeal of the Act by the later Act during the pendency of the pre- sent appeal ?

Before proceeding to discuss these matters, it is proper to state that the maps attached to Ex.1 and Ex. 4 are integrated into the deeds we may also indicate that legal attention and cartographic precision appear to have gone into the preparation of the two the kanamas. While it is fair to infer that the purpose of these transactions was not to grant regular leases of land but to make over the right to collect municipal market dues only, even so, it is not possible to ignore the effect of clear recitals transferring more rights than a mere licence implies, to the the kadar. Clause 1 itself is tell-tale,clause 2 clinches and clause 4 virtually designates the transaction relating to the shops and sheds as letting.. They speak for themselves thus : (1) [1964] Madras Law Journal Reports, <ORG>, p. 83.

"During the entire period of <ORG>, the first party shall have all the rights and powers, as per conditions laid down in the auction sale and agreement in respect of use of sheds and shops as enjoyed by the second party as proprietor on possession of the said property'.

"The first party shall have possession of the sheds aforesaid detailed in the said map and 11 shops aforesaid".

"In all the eleven shops included in the <ORG>, I, the <ORG>dar , would be empowered to let them to the subtenants on rents mutually settled between us".

All these provisions relate to the shops and sheds only. <NAME>, appearing for the respondent <ORG>, drew our attention to the controls and regulations vested in the <ORG>. These marginal restrictions cannot cancel the effect of the clauses already read which cannot be reconciled with a straightforward grant of a mere 'right to realise market fees. The municipal mind., if we may say so, went beyond the area of prudence if a licence was the intent. We are satisfied that the shops and sheds in Ex. 1 and as reconstructed by the time of Ex. 4 are the subject matter of a lease, not licence only. It is not without significance' that Ex. 4 presupposes, when making reference to the expiry of the term, the application of the Act, which is compatible only with the creation of a lease.

These two deeds, however, cover other areas, and 'there is the rub'. The <ORG> relates to patris (sidewalks) and footpaths. Out of the totality of space mapped out in the attached plans the municipal board excluded 2 categories from the transaction viz. the red and blue coloured portions i.e. the roads, the meat market and the shop buildings let out to others. Ex. 1 expressly granted to the appellant's father i.e. the first party in Ex. 1, the yellow portions which were made up of two categories viz. shops and sheds, and strips marked 4, 7, 8 :and 9 which were really the flanks of the red coloured central strips running between the stalls. It is clear that the width of these internal roads was originally 9 feet but only a middle ribbon of 31 was now left open for free passage, the belts of 31 on either side marked yellow being converted into Walks and vending sites. One question on which there was divergence of findings between the courts below was as to whether these yellow belts were leased out or only licensed for collection of Tahbazari. <ORG> argued :-

"Admittedly, the public has right of passage over roads indicated in the map in red colour. Footpaths in question are situate between shops and the public road. It is unlikely that the agreement was intended to interfere with the right of the public to pass over the footpaths adjoining the road".

and concluded that 'the agreement was a mere licence as regards the patris or footpaths adjoining the roads'. We do not agree. Maybe it was reasonable, having regard to the nature of these yellow strips and their use, not to grant leases thereof Maybe there are stricter regulations regarding the rates of fees to be levied from vendors and pedlars using those spaces; maybe the municipal board had the right to construct gates or chabutras (i.e. minor structures which are a facility for the display of wares); maybe it was not wise to part with possession over pavements and paths. But no legal bar to giving a lease, imprudent- though it be, was pointed out to us. We would have been reluctant, having regard to the social consequences, to read more than a licence into Ex. 1 and 4 but for compelling grounds already referred to. The map or the deed does not make any distinction as between yellow sheds and shops on the one hand and yellow partris on the other. 'Those in yellow colour shall remain in possession of first party' says,. Ex. 1. The very need for a recital that the thekadar will have no objection to the municipality, constructing chabutras and iron gates implies the former's possession, not mere use. The reference in the map to the green pavements and roads 2 and 3 as 'land leased out but public has got right of easement over it' has a clear 'demise' impact over the extra space beyond the shops and sheds. It may be mentioned that there was a fire in the market place which gutted many structures.. On extensive reconstruction some yellow strips and the 'green' roads 2 and 3 were obliterated and yet these reconstructed buildings were made over to the contractor. There are other features pressed by one side or, the other, but the over-all effect is that the green and yellow portions outside the shops and buildings in Ex. 1 were also leased out. The green areas though not expressly specified in Ex. 1 or Ex. 4 are clearly covered by the lease, for the reference at the foot of the map. and the circumstance that on reconstruction after the fire the roads Nos. 2 and 3 marked green were built upon and made over to the thekedar are sufficient to hold that way. Internal, connecting walks within a market or a park or entertainment complex cannot be equated with public streets and highways but have a quasi-private touch although vested in a public body. The bazar dues constitute a benefit arising out of the land and may be immovable property which can be leased out (vide s. 3 (26) General Clauses Act , 1897 and (Ram Jiwan. v. <NAME> The further point is whether the terms of Ex. 1 and 4 warrant the-lease of the whole as too integrated to be severable or sufficiently individualised that we can spell out a lease of the pavements and pathways as a separate item. If these were possible the next consideration is about the concept of 'accommodation, in the Act and the liability to eviction of the non-accommodation segment of the composite deed.

The built-up area and the open spaces are dealt with differently in regard to both the lessor's control over the lessee and the latter's,rights vis-a-vis the temporary occupants. Moreover, the two parts, are not so enmeshed or inter-dependent as to be treated as unun quid. While the 'green' pavements are appurtenant to the shops or sheds leased, the paths and walks are separate entities and not in fact or law attached to them. These are no appendages, no adjuncts, no space so bound to the use of the buildings as to be treated as belonging to them. Such being the sense of appurtenance, we have to examine whether. these open areas are part of the 'accommodation, let out to the defendant. By definition 'accommodation' includes gardens, grounds (1) I.L.R. 16 Lucknow 191.

and out-houses if any, appurtenant to such building or part of a building. Since we have held that the patris and pavements marked yellow and not rebuilt upon by the time of Ex. 4, are not appurtenances, they fall outside the contours of the 'accommodation' let out and constitute the subject of a distinct, though connected, demise incorporated in the same document Ex. 1 (and Ex. 4). Every nexus is not an appurtenance. The latter connotes principal and subsidiary items integrated by use, absent in the present case. Holding, as we do, that the <ORG> covers a couple of leases as it were and further that only one of them is protected by the Act, ejectment in respect of the unprotected lease must follow. Even on the defendant's case, it expired in 1952 and obviously the suit for recovery having been instituted (earlier), there was no holding over. The result is that though on a different basis the decree for eviction granted by <ORG>, except for the green coloured pavements, is correct.

Now comes the additional ground taken before us based on the passage of the later Act. It is admitted that, by frequent amendments, the duration of the Act was extended from time to time till at last it was to expire on September 30, 1972. Some time before this date the later Act, a permanent statute, was put on <ORG> which by s. 43 repealed the Act of 1947 and by s. 2 excluded from the scope of the protection of the Act accommodation belonging to local bodies. It is useful to extract ss. 2 and 43 at this stage :

"2' Exemptions from operation of Act.-(1) Nothing in this Act shall apply to-

(a) any building belonging to or vested in <ORG> or <ORG> or any local authority; or * * * * * "43. Repeal and savings.-(1) The United Provinces (Temporary) Control of Rent and Eviction Act , 1947 (U. P. Act No. III of 1947) is hereby repealed.

(2 ) Notwithstanding such repeal-

* * * * * We havein this case a temporary Act which would have died a natural death by the end of September, 1972 but before its life had run out was extinguished by statutory repeal on 22nd July, 1972 on which date the later Act came into force.

Surely, there has been a repeal of the Act which was relied upon successfully by the defendant and his legal representative the appellant, throughout the litigation. But now that defence or protection is no longer available. However, counsel for the appellant contends that a right has accrued to him under the Act which cannot be taken away by its repeal since the later Act is not in terms a retrospective one. Actually, it is correct to say that, s. 43 has not been made retrospective. Even so, the counsel for the respondent submits that, on the repeal of the Act, the disability which his clients suffered has disappeared and he is entitled to enforce his cause of action. According to him, the, Act did not confer any right on the tenant but imposed a disability on the landlord in enforcing his right to evict and that a mere defence cannot be described as a right in the defendant. According to him, the 'right' referred to under s. 6 of the General Clauses Act or s. 43 of the repealing Act is a substantive right and not a defensive plea. We have to examine these rival positions in some detail.

Certain propositions are clear regarding the consequence of repeal of a statute. The general principle is that an enactment which is repealed is to be treated, except as to transactions Past and closed, as if it had never existed. However, the operation of this principle is subject to any savings which may be made, expressly or by implication' by the repealing enactment (vide Halsbury's Laws of England, Vol. 36 paragraph 714). The U. P. General Clauses Act (Act 1 of 1904) provides for the consequences of a repeal under s. 6, the relevant parts of which may be reproduced here :

"6. EFFECT OF REPEAL.-Where any (Uttar Pradesh) Act repeals any enactment hitherto made or thereafter to be made, then, unless a different intention appears, the repeal shall not-

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

(e) affect any remedy, or any investigation or legal proceeding commenced before the repealing Act shall have come into operation in respect of any such right, privilege, obligation, liability; penalty, forfeiture or punishment as aforesaid:

and any such remedy may been forced and any such in investigation or legal proceeding may be continued and concluded, and any such penalty, forfeiture or punishment imposed as if the repealing Act had not been passed." If a contrary intention appears from the repealing statute, that prevails. It was pointed out to us that s. 2 of the later Act specifically states that :

"Nothing in this Act shall apply to-

(a) any building belonging to or vested in............ any local authority."

Even so, we have to read this provision in conformity with s. 43 which repealed the Act viz. U. P. Act No. 3 of 1947. Section 43(2) is the savings clause. If the repealing enactment, as in this case, makes a special provision regarding pending or past transactions it is this provision that will determine whether the liability arising under the repealed enactment survives or is extinguished. (See I. L. R. 1955 Cuttack, 529, I. L. R. 1963 (1) Kerala, 402 and A.I. R. 1960 Cal.,388). Section 6 of the General Clauses Act applies generally in the absence of a special saving provision in the repealing statute, for when there is one then a different intention is indicated. In any case where a repeal is followed by a fresh legislation on the subject, the <ORG> has to look to the provisions of the new Act to see whether they indicate a different intention.

Section 43 (2) (h) states that notwithstanding the repeal of the earlier Act any Court before which any suit or other proceeding relating to the............. eviction from any building is pending immediately before the commencement of this Act may, on an application being made to it within 60 days from such commencement, grant leave to any party to amend its pleadings in consequence of the pro-. visions of this Act." It is, therefore, clear that even if the statute for recovery of possession be one under the earlier Rent Control Law the later Act will apply and necessary amendments in the pleadings can be made. This definitely indicates that it is the later Act that must govern pending proceedings for recovery of possession or recovery or fixation of rent. However, the suit with which we are concerned is not even one under the Act, but proceeds on the footing that the defendant is only a licensee. So much so, none of the savings clauses in s. 43 (2) applies. The result is that the application of the old Act is repelled by the general rule that on repeal a statute is deemed not to have been on the Statute Book at all.

Let us assume that s. 6 of the General Clauses Act applies. Even so, what is preserved is (a) the previous operation of the repealed enactment, (b) rights, privileges, obligations and liabilities acquired, accrued or incurred under the enactment repealed and (c) investigations, legal proceedings and remedies in respect of any such right, privilege, obligation or liability. According to <NAME> for the respondent, the defendant had no right or privilege under the repealed Act, since s. 3 is only a procedural restriction and does not create a substantive right. All that s. 3 therein laid down was that :-

"No suit shall, without the permission of the District Magistrate, be filed in any civil Court against a tenant for his, eviction from any accommodation except on one or more of the following grounds........................"

it is more a procedural disability that is cast, not a substantive cause of action that is created. Citing the authority in <NAME> v. <NAME> (1), he argued that by operation of the repeal,. the restriction on his right is removed and so he can now support his present action even if previously the Act had barred it. It is true that a Division Bench of <ORG> in the case cited, dealing with a situation where an Act had been repealed by another, observed:--

"The disability, which was imposed by the previous law having been removed, there was nothing that stood in the way of the plaintiffs recovering rent at the contract rate, when (1) 60 I.L.R. [1933] Cal. 1438.

the cause of action for the same arose. The effect of substitution of the new section 48 for the old section 48 by section 31 of Act IV of 1928, was that the old section was repealed. The effect of repeal of a statute in the absence of saving clauses is that it has to be considered as if the statute, so repealed, had never existed."

There is force in this submission.

A ruling which lends more support to the position we take may be referred to here. <NAME> v. <NAME> (1) dealt with a case where the landlord of a holding served on the tenant a notice to quit without the consent in writing of the Minister of Agriculture and Fisheries, as required by Regulation 62 (4A) of the Defence (General) Regulations, 1939. Before the period of notice expired, the Defence Regulations Order, 1948 revoked the earlier regulation. Dealing with s. 38 of the Interpretation Act, 1889, which corresponds to S. 6 of the General Clauses Act, <ORG>, M. R. disposed of the contention of the tenant that the repeal would not affect anything duly done under another statute thus :

"...... nor do I think that the tenant's protection under the regulation could be fairly described in the words of sub-s. (2)

(c) as a "right" or "privilege", or the. limitation of the landlord's right be fairly described as an "obligation" or "liability", nor do I think that it is a penalty or a punishment in respect of an offence within para (d)."

The <ORG> eventually concluded that the notice to quit was valid since the regulation requiring consent had been revoked and the landlord was entitled to possession. Moreover, the nature of the Act being temporary, the right, if we can attribute that quality to a disability of the other party to enforce his right unless additional grounds were made out, comes to an end when the temporary Act expires at least by efflux of time, if not by premature repeal. The so-called right is short-lived and its longevity, where it is derived under a temporary statute, cannot exceed the duration of the statute itself. Let us assume for argument's sake that s. 3 of the Act has conferred a right on the tenant in which case it survives by virtue of s. 6 of the General Clauses Act. What follows ? The survival of the right or the continuation of the operation of the Act to the proceedings is all that is ensured, not the expansion or extension of that right. For the normal life of the Act i.e. till September 30, 1972, the dispossession of the tenant is permissible only if the grounds in s. 2 are satisfied by the landlord. This right is circumscribed in content to conditions set out and limited in duration to the period beyond which the Act does not exist. To hold otherwise would be to give more quantum of right to the party than he would have enjoyed had the repeal not been made. Not to affect the previous operation cannot be converted into sanctioning subsequent operation. To read postmortem operation (1)  1 All E.R. 166; 169.

602 Sup CI/74 into a temporary. Act because of a premature repeal of it is wrong. To adopt the words <NAME>, <NAME> in <CITATION> (1) has observed :-

"What in effect, learned counsel for the appellant contends for is not the "previous operation of the repealed law" but the "future operation of the Previous law." On this footing the right, if any, that the defendant claims terminates with the expiration of that temporary statute. The only further question is whether it is permissible for this <ORG> to take note of the extinguishment of the statutory tenancy at this stage and grant relief to the appellant accordingly. The leading case of <NAME> and others v. <NAME> and others (2) lays down the law on the point. <NAME>, C. J., quoted with approval the following observations of <NAME>, C.J. "We have frequently held that in the exercise of our appellate jurisdiction we have power not only to correct error in the judgment under review but to make such disposition of the case as justice requires. And in determining what justice does require, the <ORG> is bound to consider any change, either in fact or in law, which has supervened since the judgment was entered."

Justice <NAME>, J. in the same case stated that in this country the <ORG> have recognised an appeal to be in the nature of a rehearing and that "in moulding the relief to be granted in a case on appeal, <ORG> is entitled to take into account even facts and events which have come into existence after the decree appealed against." This appellate obligation is almost jurisdictional. In a sense, the multi-decked mechanism of the legal process, at every tier, is the handmaid, not the mistress of justice. We may mention as an additional reason for our conclusion that the provisions of s. 6 of the General Clauses Act in relation to the effect of repeal do not ordinarily apply to a temporary Act. Stating this proposition, <NAME>, J., as he then was, indicated the consequence of repeal of a temporary Act. <CITATION> (3), the learned Judge continued "As observed by <NAME>, as he then was, in <CITATION> , 1951 SCR 621 (AIR 1951 SC 301), the general rule in regard to a temporary statute is that in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires.

That is why the <ORG> can and often does, avoid such an anomalous consequence by enacting in the temporary statute a saving provision, the effect of which is in some res- pects similar to that of s. 6 of the General Clauses Act.

(1)A.I.R.1956 C.Vol 43,77at84.

(2) A.I.R. 1941 Federal Court Vol. 28, p. 5 at 6. (3) A.I.R. 1962 S.C. Vol. 49, 945.

The U. P. Act , 1947, however, expressly attracts s. 6 of the U. P. General Clauses Act 1 of 1904 (vide s. 1 (4)) and that is why we have discussed the position even with reference to the Genera ' Clauses Act .

From what we have stated above, it follows that the argument of any vested right in the defendant being taken away does not hold good; nor is there any foundation for the contention that the later Act is being applied retrospectively. All that we hold is (a) that a disability of the plaintiff to enforce his cause of action under the ordinary law may not necessarily be transmuted into a substantive right in the defendant, (b) that rights of a statutory tenant created under a temporary statute, as in this case, go to the extent of merely preventing the eviction so long as the temporary statute lasts, (c) that the provisions of s. 43 do not preserve, subsequent to repeal, any right to rebuff the plaintiff's claim for, eviction and (d) that S. 6 of the General Clauses Act does not justify anything longer or for any time longer than s. 2 of the Act confers or lasts. It-is appropriate for a <ORG> to do justice between parties to the litigation and in moulding the relief in the light of the subsequent developments, to take note of legislative changes. A court of justice should, if it could, adjudicate finally and not leave the door ajar for parties to litigate again. In the present case, it is not seriously disputed that if the plaintiff were to sue for recovery of possession today, the Rent Control Law does not stand in the way. Therefore, it is manifestly a measure of doing justice between the parties and ending litigation which has seen two decades pass, to conclude it here by taking cognizance and adjusting the relief in the light of the later Act and repeal of the earlier Act. Nevertheless, it is contended that the present suit cannot be decreed in view of the provisions of the U. P Public Premises (Eviction of Unauthorised Occupants) Act , 1972. This statute 'which provides for summary eviction of unauthorised occupants cannot obstruct the suit for eviction of a tenant. The far-fetched submission has hardly any substance and we reject it.

In the result, C.A. 1727 of 1968 is dismissed and C.A. No. 1728 of 1968 is allowed. It falls to be observed that a public body statutorily charged with running a public market should have been party to an ambiguous deed resulting in waste of public money in long-lived litigation Had sufficient care been bestowed at the formative stages of the transaction, these could have been averted. We are not satisfied that the defendant is solely to blame for the suit and appeals and therefore, direct that parties will bear their costs throughout.

P.B. R. C. A. 1727168dismissed. C. A. 1728168 allowed.


PETITIONER: <ORG>. Vs. RESPONDENT: COMMISSIONER OF INCOME TAX, BOMBAY DATE OF JUDGMENT: 10/09/1968 BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SHAH, J.C. GROVER, A.N. CITATION: 1969 AIR 460 1969 SCR (2) 46 CITATOR INFO : RF 1970 SC 394 (7) ACT: Indian Income Tax Act , 1922, s. 66(1) -Mixed questions of fact and law-What are-Jurisdiction of <ORG> in dealing with such questions is the same as in dealing with questions of law-Appropriate farm for such questions. HEADNOTE: For the assessment years 1940-41 to 1943-44 the assessee company claimed to be an investor in shares and properties and not a dealer. The contention was rejected by the Income- tax Officer, the Appellate Assistant Commissioner and the <ORG>. The company then applied to the <ORG> under s. 66(1) of the Income tax Act, 1922 for a reference of the following questions of law for the opinion of the <ORG>: (i) whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties ? (ii) whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits. The <ORG> refused to make the reference and the <ORG> dismissed the application under s. 66(2) . On appeal by special leave this Court held that the question as to what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of law and fact. It remanded the case to the <ORG> for directing the <ORG> to state a case under s. 66(2) on the following questions: (i) whether there are any materials on the record to support the finding of the Income tax Officer that the assessee company was a dealer in shares., securities and immovable property during the assessment year in question (ii) whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be treated as business property ? On these questions being referred to the <ORG> by the <ORG>, the <ORG> decided them against the assessee company. The company again appealed to this Court. It was contended on behalf of the appellant that the questions as framed by this. Court did not reflect the real controversy 'and therefore the questions as originally framed in the company's application under s. 66(1) should be referred to the <ORG> in a fresh statement of case to be made by the <ORG>. HELD: (i) The questions framed by this Court and the form in which they were framed seemed to assume that the questions involved were questions of fact for it is only in regard to a question of fact that the question can properly be framed "as to whether there was material to support the said finding". This Court had itself held that the questions involved in the present case were mixed questions of law and fact. Therefore the questions framed by this Court were not appropriate and did not reflect the real controversy between the parties. It was therefore appropriate that the questions should be modified as suggested by the appellant in its petition under s. 66(1) to the <ORG>. [53 G--54 B] (ii) The proper construction of statutory language is always a matter of law and therefore the claim of the assessee that the profits and losses arising from the sale of shares securities etc. cannot be treated as profits 47 of a business involves the application of law to the facts found in the setting of the particular case. In dealing with findings on such questions of law and fact the <ORG> must no. doubt accept the findings of the. <ORG> on the primary questions of fact; but it is open to the <ORG> to examine whether the <ORG> had 'applied the relevant legal principles correctly or not in reaching its final conclusion; and in that sense, the scope of enquiry and the extent of the jurisdiction of the <ORG> in dealing with such points is the same as in dealing with pure questions of law. [53 <CITATION> ., 35 I.T.R. 594, relied on. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 651 to. 655 of 1967.

Appeals from the judgment and order dated March 2, 1966 of <ORG> in Income-tax Reference No,. 73 of 1962.

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

<NAME>, Attorney-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 certificate from the judgment of <ORG> dated March 2, 1966 in Income Tax Reference No. 73 of 1962. The appellant company, hereinafter called the assessee company, was incorporated on July 29, 1924, as an investment company, the objects of which are set out in el. III of the memorandum of association and more particularly in sub-cls.. 1, 2, 15 and 16 of that clause. The assessment years in question are 1943-44 to 1948-49, excepting the year 1947-48. According to its petition made in <ORG>, the assessee company dealt with its assets as follows:

"The petitioner company purchased during the period 1st July, 1925 to 30th June, 1928, shares of the value of Rs. 1,86,47,789 major portion of which was comprised of shares in <ORG>. During the year ended 30th June, 1929, the petitioner company promoted two companies known as <ORG>, and <ORG> and took over all their shares of the value of Rs. 101/2 lacs. In the year 1930, the petitioner company purchased shares of Rs. 1,33,930. During the period of 9 years from Ist July, 1930, to 30th July, 1939, no purchases. were made with the exception of a few shares of <ORG> taken over from the staff of <ORG>, who retired from service. In the year ended 30th June, 1940, reconstruction scheme of <ORG>

took place under which debentures held by the petitioner company in <ORG>, were redeemed and the proceeds were .reinvested in the new issue of shares made by <ORG> Out of the purchases of the value of Rs. 2,794 made by the petitioner company during the year ended 30th June, 1941, Rs. 2,000 was the value of shares of <ORG>, taken over from the retiring staff. In the year ended 30th June, 1943, the petitioner company took over from <ORG>, shares of <ORG>, of the value of Rs. 56,700. After this there were no purchases at all to this date excepting purchases. of the value of Rs. 34,954 during the year ended 30th June, 1946."

The sales are contained in paragraph 3(b) which states:

"In relation to the purchases made by the petitioner company as stated above no appreciable sales of shares were made during the period 29th July, 1924 to 30th June, 1942, the sales made in the year ended 30th June, 1929, of the value of Rs. 1,29,333 included shares of the value of Rs. 45,000 in <ORG>, sold to the members of the staff and shares of the value of Rs. 83,833 representing sterling investments handed over to the creditors of the petitioner company in part repayment of the loan taken from them in the year ended 30th June, 1931, shares of the value of Rs. 7,48,356 were handed over to the creditors in payment of the loan granted' by them. From the year ended 30th June, 1943, <ORG>, started relinquishing the managing agencies of the various mills under their agency and the shares held by the petitioner company in <ORG> were handed over to the respective purchasers. of the mills agencies."

Prior to 1940 the assessee company made a claim every year being treated as a dealer in investments and properties but this contention was repelled by the Income Tax authorities and upto the assessment year 1939-40 the assessee company was assessed on the basis of being an investor but it appears that for the assessment years 1940- 41, 1941-42 and 1942-43 the Income Tax department accepted the plea of the assessee company and treated it as a dealer in shares, securities and immovable properties and assessed it on that basis. For these years and for the assessment year 1943-44 the assessee company made its return in that basis. But after the return had been filed for the year 1943-44, the assessee company withdrew its return and filed a revised return on March 7, 1944, contending that it was not a dealer but merely an investor. Along with the return it filed a letter dated March 6, 1944 in which it stated:

"The return of Total Income which was submitted with the Company's letter of 25th May 1943 was prepared in conformity with the ruling of the Income-tax Officer in the 1940- 41 assessment that the company was to be assessed as a dealer in Investments. Since that return was submitted <ORG> has decided that the Company is an Investment Holding Company, and accordingly an amended Return of Total Income under Section 22 ( 1 ) of the Indian Income-tax Act is submitted herewith on which the assessment for 1943-44 may be based, as on this particular question the company obviously cannot have one status for Excess Profits Tax and another for Income-taX."

It was contended by the assessee company that it never carried on any business in the purchase or sale of shares, securities or properties- In support of this contention the assessee company relied on the order of <ORG> dated August 18, 1943 passed under s. 26(1) of the Excess Profits Tax Act. The Income. Tax Officer rejected the plea and held that the investments were held by the assessee company as the stock-intrade of its business which it carried on during the previous year and also in the preceding years. The assessee company took the matter in appeal to the Appellate Assistant Commissioner who dismissed the appeal and upheld the order of the Income Tax Officer. The assessee thereafter appealed to <ORG> and the same contentions were urged on behalf of the assessee company. <ORG> rejected the assessee's claim that it was showing itself as a dealer in shares, securities and immovable properties under a misapprehension and without appreciation of the correct facts. <ORG> held that in the case of the assessee company not only the Memorandum of Association gave the power to the company to deal in investments but the case of the company all along in the past was that it was a dealer in investments and properties. Consequently, the <ORG> held that the assessee company was a dealer in shares, securities and properties and dismissed the appeals. Thus the grounds on which the case was decided against the assessee company were (1) that the assessee claimed to. be a dealer or an investor according as it incurred losses or made profits and (2) that because of the objects contained in the memorandum of association and because of its assertion made in the past as being a dealer the assessee company could not be held to be an investor. The assessee company then applied to the Appellate <ORG> under s. 66(1) of the Income Tax Act, 1922, hereinafter called the 'Act' for a reference of the following questions of law for the opinion of <ORG>:

"(i) Whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties; and

(ii) Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits."

The application was rejected by <ORG> on the ground that no question of law arose out of its order. The assessee company then made an application under s. 66(2) of the Act to <ORG> which dismissed the application by its order dated June 15, 1952. The assessee company thereupon obtained special leave to appeal to this Court. The appeal was allowed by this Court by its judgment dated May 22, 1957 and the order of <ORG> dated June 15, 1952 was set aside. It was pointed out by this Court that <ORG> in arriving at its finding that the assessee was a dealer and not an investor, had relied on two basic facts, viz., the objects set out in the Memorandum of Association and the previous assertion made by the assessee company that it was a dealer in investments and properties and not merely an investor. It was observed that merely because the company had within its objects the dealings. in investments, shares and properties the circumstance did not give it the characteristics of a dealer in shares. The circumstance, though relevant, was not conclusive. It was pointed out in the judgment of this Court that the question as to. what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of fact and law and what was the legal effect of the facts found by <ORG>. and whether as a result thereof the assessee could be termed a dealer or an investor was itself a question of law. Accordingly the Court formulated the following two .questions of law as arising out of the order of the <ORG>:

"( 1 ) Whether there are any materials on the record to support the finding of the Income Tax Officer that the assessee company was a dealer in shares, securities and immovable property during the assessment year in question?

(2) Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits. ?"

The case was therefore remanded to <ORG> for directing <ORG> to state a case on the aforesaid questions of law under s. 66(2) of the Act. In accordance with the direc-

tion of this Court <ORG> made a statement of the case on June 12/13, 1962. The reference being Income-tax Reference No. 73 of 1962 was heard by <ORG> which by its judgment dated March 2, 1966 answered both the questions. against the assessee company and in favour of the Commissioner of Income Tax.

On behalf of the assessee company Mr. <NAME> argued that the question whether the assessee company was a dealer dealing in investments and properties or whether it was a mere investor will have to be judged on a proper scrutiny of the transactions themselves considered in the light of the Circumstances in which the transactions 'both of purchase and sale had .been brought about. If it is found on an examination of the transactions themselves that the essential characteristics of the business of the assessee were of dealing in shares and investments, the assessee will undoubtedly be taken as a dealer. If, on the other hand, the characteristics revealed by the transactions are those' peculiar to mere investments in shares, securities and properties, the finding of the <ORG> must be that the assessee is an investor and the profits made by it are only excess obtained on realisations of the investments and not liable to be taxed. According to Mr. <NAME>, neither the Memorandum of Association nor the previous assertions made by the assessee company either under a misconception or even deliberately will not have the effect of changing the legal nature of the transactions as revealed by the transactions themselves and the circumstances in which the transactions have taken place. In support of this argument reference was made on behalf of the appellant to the statements of the transactions, Annexures 'E' and 'F' of the statement of the case and detailed explanations, statements M-1 and M-2. The substance of the argument of the appellant was that (1 ) most of the shares, securities and properties acquired by the assessee company were the properties of <ORG> and the family of <NAME>; (2) a large block of shares held by the company consisted of the shares of <ORG> and the' block was held all along since its acquisition before the year 1930 until <ORG> and the <NAME> continued to be interested in the said <ORG> and they were realised by sale only when <ORG> and the <NAME> decided to relinquish their interest in the said <ORG>, and (3) neither the mode of acquisition of these shares. and properties nor the mode and manner of their disposal have any of the distinctive characteristics of business dealings.

On the questions actually formulated by this <ORG> upon which <ORG> has made a statement of the case it is not possible for us to entertain the argument advanced by Mr. <NAME>. It was contended on the contrary by the Attorney-General that upon the questions actually referred, the answers must be against the asses.see company. It was said that there were at least two materials on record to support the finding of <ORG> that the assessee-company was a dealer in shares, securities and immovable properties during the assessment year in question. The first is that in its own memorandum dated October 2, 1942, the assessee company contended' that it was a dealer in shares and investments and set out various reasons in support of its contention. The second circumstance is that el. 3 of the Memorandum of Association gave the power to the assessee company to deal with investments. The contention of the Attorney General was that there was material on the record to support the finding of <ORG> that the assessee-company was a dealer in shares, securities and immovable properties and the questions, as already framed, were rightly answered by <ORG> in the affirmative and against the assessee company. In answer to this contention Mr. <NAME> submitted that the real controversy in this case is not reflected in the two questions framed by this <ORG> in its judgment dated May 22, 1957. It was argued that the two questions up.on which the assessee company applied for a reference under s. 66(1) of the Act were properly framed and were questions arising out of the order of <ORG>. Mr. <NAME> urged that we should modify the questions in a manner suggested by the assessee company in the application under s. 66(1) of the Act and ask <ORG> to make a fresh statement of the case. In our opinion, the argument put forward on behalf of the appellant is well rounded and as we shall presently point out, it is necessary in the interest of justice that we should modify the questions framed by this <ORG> on the last occasion and call upon <ORG> to make a fresh statement of the case. There is no doubt that the jurisdiction conferred on <ORG> by s. 66(1) of the Act is limited to entertain references involving questions of law. If, fo.r instance, the point raised on reference relates to the construction of a document of title or interpretation of relevant provisions of a statute, it is a pure question of law. In dealing with it, <ORG> may have due regard for the view taken by the <ORG>, but its decision would not be lettered by that view. In some cases, the point sought to be raised in a reference may turn out to be a pure question of fact and if that be so, the finding of fact recorded by the Appellate '<ORG> must be regarded as conclusive in a proceeding under 's. 66(1). But it would be open to challenge the conclusion of fact drawn by <ORG> on the ground that it is not supported by any legal evidence or material or that the conclusion of fact drawn by <ORG> 'is perverse and is not ration,ally possible. It is within these narrow limits that the conclusions of fact by <ORG> can be challenged under s. 66(1) . Such conclusions can never be challenged on the ground that they are based on misappreciation of evidence. There is, however, a third class of cases in which the assessee or the department may seek to challenge the correctness of the conclusion reached by the <ORG> on the ground that it is a conclusion on a question of mixed' law and fact. Such a conclusion is no doubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles. To put it differently, the proper construction of statutory language is always a matter of law and therefore the claim of the assessee that the profits and losses arising from the sale of shares, securities etc. cannot be taxed as profits of a business involves the application of law to the facts found in the setting of the particular case. In dealing with findings on such questions of mixed law and fact <ORG> must no doubt accept the findings of the <ORG> on the primary questions of fact; but it is open to <ORG> to examine whether the <ORG> had applied the relevant legal principles correctly or not in reaching, its final conclusion; and in that sense, the scope of enquiry and the extent of the jurisdiction of <ORG> in dealing with such points is the same as in dealing with pure points of law. (See the decision of this <ORG> in <CITATION> .(1)). On the last occasion it was pointed out by this <ORG> that the question as to what are the characteristics of the business in shares or that of an investor is a mixed question of fact and law. To put it differently, the question as to what is the legal effect of the facts found by the <ORG> and whether as a result the assessee can be treated as a dealer or an investor is itself a question of law. The final conclusion of the <ORG> can, therefore, be challenged on the ground that the relevant legal principles have been mis-applied by the <ORG> in reaching its decision on the point; and such a challenge is open under s. 66 ( 1 ) because it is a challenge on a ground of law. It is because the question involved in this case was not a question of pure fact but was a mixed question of fact and law that this <ORG> allowed the appeal on the last occasion and set aside the judgment of <ORG> dated June 15, 1952 and directed <ORG> to state a case, but owing possibly to some mistake or inadvertence the actual questions framed by this <ORG> (quoted at page 676 of 32 I.T.R.) and the form in which the questions were framed by this <ORG> seem to assume that the questions involved are questions of fact. The reason is that it is only in regard to a finding of fact that the question can be properly framed "as to whether there was material to support the said finding". We are accordingly of the opinion that the questions actually framed by this <ORG> on the last occasion are not appropriate and (1) 35 I.T.R. 594 do not reflect the real controversy between the parties. It is therefore, expedient in the interest of justice that the questions should be modified as suggested by the assessee company in its .petition under s. 66 ( 1 ) of the Act to <ORG> and <ORG> should be asked to make a fresh statement of the case. For these reasons we allow these appeals and set aside the judgment of <ORG> dated March 2, 1966 and direct <ORG> to make a fresh statement of the case on the following questions of law:

"( 1 ) Whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties; and (2) whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits."

After <ORG> has made a statement of the case <ORG> will dispose of the reference in accordance with law. The appellant must pay the costs of this appeal in this Court to the respondent. We should like to add that we have not considered whether <ORG> has in its judgment reached the correct conclusion on what <ORG> assumed were 'the questions to be decided by it. We are setting aside the judgment of <ORG> only on the ground that the enquiry made by <ORG> was, .on the view taken by us, not competent on the questions as framed at present. We therefore express no opinion on the merits of the dispute. We trust that the <ORG> will make the fresh reference with the least practicable delay.

G.C. Appeals allowed.


JUDGMENT

1. This is an appeal against an order of the Subordinate Judge of South Malabar at Calicut who, reversing the order of the District Munsif, held that the decree-holder appellant's application to transfer the decree in O.S. No. 226 of 1916 from <ORG> to <ORG> of Vaiyitri for execution was barred by limitation. A prior petition for execution, E.P. No. 458 of 1919, had been presented on the 4th of July, 1918. In the course of that petition an application was put in by the judgment-debtor to record satisfaction of the decree on the 1st of August, 1919. A statement was then filed by the appellant on the 18th of August, 1919 praying that the judgment-debtor's petition to record satisfaction of the decree should be dismissed. The present application for transfer was made on the 26th of August, 1922. If time is calculated from the date of E.P. No. 458 of 1919, it is admitted that the present application is barred by time; but it was contended before the Subordinate Judge that the written statement of objections filed on the 18th of August, 1919 should be taken as "a step-in-aid of execution" under Article 182(5) of the Limitation Act and that if time is calculated from the date the present application is not barred. <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 it was held that a statement filed by a decree-holder objecting to the judgment-debtor's application to enter up satisfaction of. the decree is not a step-in-aid of execution. Relying on that decision the learned Subordinate judge overruled the appellant's contention and dismissed his petition.

2. The same contention has again been pressed before us; and the learned <NAME> for the appellant has tried to distinguish the case in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 on the ground that there was no pending execution application in that case, arguing from this fact that if there was a pending application in that case the learned Judges would have arrived at a different conclusion. He has also argued on the authority of various decisions that a statement of objections filed by the decree-holder in circumstances like the present should be held to be a step-in-aid of execution under Article 182(5) of the Limitation Act .

3. The facts of the case in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 were as follows:

The decree was dated the and May, 1916 and the only prior execution petition presented by the appellant-decree-holder was dismissed on the 7th of September, 1916. Admittedly the execution petition out of which the appeal arose was presented out of time but it was said as in the present case that prior to the application for execution the judgment-debtor had put in a petition for entering up satisfaction of the decree and that in connection therewith the decree-holder had filed a counter-statement denying the receipt of money;and praying that the petition should be dismissed. It was contended that the application to reject the petition to record satisfaction of the decree was a step-in-aid of execution, but this contention was overruled. In the course of his judgment, <NAME>, J. (who delivered the leading judgment) stated thus:

The Article 182(5) classes together an application for execution and an application to take some step-in-aid of execution and the latter words appear to be intended to cover an application, which is not an initial application for execution, but is an application to take some step to advance an execution proceeding, which is already pending, e.g., application to bring to sale properties already under attachment (p. 469).... But (whatever case may be made out for an application made in connection with a pending execution petition is one for taking a step-in-aid as furtherance of it, an application made at a time when no execution petition is pending stands on an obviously different footing.

4. It is argued that two conclusions follow from these extracts: (1) that an application to be a step-in-aid of execution should be one made in pending execution application, and (2) that if there was a pending execution application in that case as in the one before us, then the learned Judges would have certainly held that the statement of objections filed by the decree-holder to the recording of satisfaction would be a step-in-aid of execution. As regards the first conclusion sought to be deduced from the judgment, no doubt the decision in <CITATION> (1924) 48 M L J 506 supports the appellant's contention; but it is not necessary to discuss the correctness of that conclusion in this case as admittedly here there is a pending execution application. If we really had to decide the question we should hesitate to accept this decision without further consideration of the matter in the light of all the decided cases of our Court which have not been referred to in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303. It seems to us that the remarks referred to were made by the learned Judge only to distinguish those cases, wherein questions of a similar nature arose in connection with pending execution applications. As regards the second conclusion sought to be deduced from that judgment, we have no doubt that the appellant's contention cannot be accepted because the learned judge's decision is based upon an interpretation of the decree-holder's objection petition in view of what he considers should be the meaning of the expression "applying to take some step-in-aid of execution," for, the learned Judges state at p. 470:

The petition, Ex. E, may tend to prevent the <ORG> placing an obstacle in the way of future execution of the decree, but it does not ask the <ORG> to take any step-in-aid of execution. Supposing it. to be successful; execution of the decree is no further advanced than it was before the petition was presented.

5. This shows that even if there was a pending execution application, the learned Judge would have come precisely to the same conclusion because in his view the decree-holder did not by filing his objection statement ask the <ORG> to take any step-in-aid of execution. We respectfully accept this view.

6. According to the third column of Article 182(5) of the Limitation Act , time for execution is to be calculated from " the date of applying in accordance with law to the proper Court for execution, or to take some step-in-aid of execution of the decree or order "

7. The latter part of this clause specifies the date of applying to the Court asking it to take some step-in-aid of execution of the decree or order as the date from which the period of limitation should be computed and not the date of the petitioner's taking some step-in-aid of execution. If this distinction is well kept in mind, much of the diversity of the views among the various <ORG> as regards the meaning of the expression "applying to take some step-in-aid of execution" can easily be explained. As pointed out by <CITATION> (1920) 12 L W 9 at 10 It is material that the starting point under Article 182 , Scheduel I of the Limitation Act is not the taking of a step-in-aid of execution, but the application to take such a step.

8. In the same judgment <NAME>, J. refers to the same matter thus:

Two things are essential. There must be an application and that application must ask the <ORG> to take a step-in-aid of execution.... The fact that a party took some steps would not be enough.

9. The distinction we are referring to is nowhere better pointed out than in <CITATION> (1896) I.L.R. 23 C 690 at 692. In that case the learned Judges were considering whether an application by a decree-holder for leave to bid at a sale in execution of the decree is a step-in-aid of execution within the meaning of the Limitation Act (XV of 1877), Scheduel II, Article 179 (corresponding to Article 182 of the present Limitation Act ). In coming to the conclusion that it is not such a step the learned Judges state:

We do not think an application of this kind is an application seeking the action of the <ORG> in execution of a decree. It may be in one sense a step-in-aid of execution of the decree, but it is not a step by the <ORG>. Before a judgment-debtor can) get any benefit he must show that he asks the <ORG> to take some step-in-aid of execution. A step taken by the judgment-creditor himself is not sufficient.

10. This case has been followed in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303. If this distinction is borne in mind, it is obvious that a statement of objections filed by the decree-holder objecting to the recording of satisfaction cannot in any way be considered to be a step-in-aid of execution. By filing the statement the decree-holder does not ask the <ORG> to take any step-in-aid of execution. In the words of <NAME>, J. in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 " supposing it to be successful, execution of the decree is no further advanced than it was before the petition was presented ". We will now discuss the cases referred to by the learned vakils on both sides.

11. In <NAME> v. <NAME> (1883) I.L.R. 5 A 576 it was held that An application by a decree-holder praying that the objections taken by the judgment-debtor to the sale of property belonging to him in execution of the decree should be disallowed and the sale be confirmed is an application from the date of which the period of limitation for a subsequent application for execution of the decree may be computed.

12. This judgment simply records this opinion and does not contain any discussion of the question. It is conceded that the decision in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 is opposed to this view. This decision was followed by <ORG> in <CITATION> (1910) 5 I C 292. <CITATION> (1918) I.L.R. 40 A 668, brought to our notice, it was held that an application to the <ORG> executing a decree asking that certain objections to the execution of the decree be rejected is a step-in-aid of execution within the meaning of Article 182(5) of the First Schedule of the Limitation Act. Here also the judgment does not contain any discussion of the question. In <NAME> v. <NAME> (1906) I.L.R. 28 A 387 it was held that the mere filing of an answer by the decree-holder resisting an application of a declaration of insolvency filed by the judgment-debtor cannot be deemed to be an application to take a step-in-aid of execution within the meaning of Article 179. This view is opposed to th"t earlier and later decisions of the same <ORG>.

13. <CITATION> (1889) I.L.R. 16 C 747 it was held that the appearance of a decree-holder by his pleader to oppose an application made by the judgment-debtor to set aside a sale in execution of the decree is not an application within the meaning of Article 179 of Scheduel II of the Limitation Act to take a step-in-aid of execution. The learned Judges stated that The implication contemplated by that article of the Limitation Act is an application to get some order of the <ORG> in furtherance of the execution of the decree. The appearance of the pleader cannot be regarded as such an application.

14. The decisions in <CITATION> (1889) I.L.R. 17 C 268 and <CITATION> (1896) I.L.R. 23 C 690 at 692 also take a similar view of Article 179 , Scheduel II of the Limitation Act. These cases have been followed in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 as regards the interpretation of the article in question [see also <NAME> v. <NAME> (1903) I.L.R. 30 C 761. On the facts, the decision in <CITATION> (1893) I.L.R. 21 C 23 can be distinguished. In that case it was held that an application by a decree-holder, praying that a petition of the judgment-debtor to set aside the sale of property belonging to him should be rejected and the sale be confirmed is an application falling within the meaning of Article 179(4) of Scheduel II of the Limitation Act of 1877. The facts of the case show that after the sale was confirmed the judgment-debtor applied for a review of the order confirming the sale and the review was granted in spite of the objections of the decree-holder who appeared and opposed it. Subsequently the decree-holder put in an application praying that the judgment-debtor's application to set aside the sale might be rejected at the same time applying for confirmation of the sale. In view of the "review order" that was passed against the decree-holder, we are inclined to think that the decree-holder's application was in furtherance of execution proceedings. The decision in <CITATION> (1917) 40 I C 1005 is also distinguishable. In that case the judgment-debtor raised objections to the delivery of possession by the Commissioner and the <ORG> found it necessary to determine the standard of measurement and for that purpose to take evidence in the matter. An application was then made by the decree-holder for summoning witnesses.It was held that this was a step-in-aid of execution within the meaning of Article 182(5). It is clear from the facts that In the opinion of the <ORG> execution could not proceed without determining the standard of measurement. In this view the application to file a list of witnesses may be deemed to be a step-in-aid of execution. The learned Judges in arriving at this conclusion follow the prior decisions of their <ORG> already referred to. <CITATION> (1918) 44 I C 604, when the decree-holder applied for execution of his decree the judgment-debtor put in an objection to its execution. Both the parties having been directed by the <ORG> to adduce evidence in support of their respective cases, the decree-holder filed a list of witnesses and intimated to the <ORG> that he was ready to proceed with his case. The <ORG> held that the filing of the list of witnesses and intimating to the <ORG> that he was ready to proceed with the case implied an application on the part of the decree-holder to the <ORG> to take the evidence which he was prepared to adduce and repel the objection taken by the judgment-debtor and in effect this should be taken to be an application to the <ORG>, to take some step-in-aid of execution. This decision to some extent supports the appellant. Excepting this decision the Calcutta High <ORG> has taken a view consistently opposed to the contentions of the appellant.

15. The Bombay cases relied upon by the appellant need nor. be discussed in detail. The latest decision of that Court is reported in <NAME> v. <NAME> (1914) I.L.R. 39 B 20 in which it was held that an appeal against an order adjudging the judgment-debtor an insolvent was a step-in-aid of execution. This has been expressly dissented from in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303. In <NAME> v. <NAME> (1912) I.L.R. 37 B 317 an application filed by the decree-holder for extension of time to produce an extract from the Collector's record ordered by the Court to be filed within a particular date but which was not so filed was held to be a step-in-aid of execution. With all deference to the learned Judges, we cannot accept this conclusion or the reasoning on which it is based.

16. Thus far, we have discussed the decisions of the other <ORG>s brought to our notice. Our own <ORG> has always held the position that an application to be a step-in-aid of execution must be one in furtherance of execution proceedings. We have already indicated the interpretation put upon the article by the learned Judges in <CITATION> (1920) 12 L W 9 at 10. Having reference to the facts of the case, the decision in <CITATION> (1882) I.L.R. 5 M 141 does not really help the appellant. In that case it was held that an application by a judgments-debtor to the <ORG> which passed a decree Tor a certificate that a copy of the <ORG> register of the land is necessary to enable him to obtain such a copy from the Collector's Office and thereupon to execute the decree by attaching the land, is a step-in-aid of execution within the meaning of Article 179(4). <NAME>, j, pointed out that "the production of the copy of the register was a necessary preliminary to execution and the application made by the decree-holder to the Subordinate Judge's <ORG> would enable him to obtain it." In this view the application was one in furtherance of execution proceedings and was a step-in-aid of execution. The decision in <CITATION> (1913) I.L.R. 38 M 695 : 26 M L J 433 no doubt supports the appellant. There it was held that an application by a decree-holder for an adjournment to enable him to adduce further evidence was a step-in-aid of execution. We may point out that <NAME>, J, in <CITATION> (1917) I.L.R. 41 M 251 : 33 M L J 219 found it impossible to concur with this view. The latest decision of our own <ORG> is the one in <CITATION> (1924) 48 M L J 506 already referred to in another connection. The facts of the case are as follows:A mortgage decree in favour of the plaintiffs was passed on the 14th of September, 1916, and an execution application was filed on the 25th of September, 1917. It was dismissed on the 17th of October, 1918. The application that gave rise to the appeal was dated the 9th of March, 1923. A certain sum of money in <ORG> was paid to the decree-holder by order, dated the 31st of March, 1920, and a cheque was actually issued on the 1st of April, 1920. The money in <ORG> had been paid by a mortgagee of the joint-debtor who had been directed to pay off the decree amount The decree-holder relied to save his application from the bar of limitation on the date of the order for payment to him of the money in <ORG>. " The learned Judges held that the application of the decree-holder is not a step-in-aid ' of execution. They base their decision on two grounds, (I) that in the circumstances of the case an application for an order for payment out by the <ORG> is not a step-in-aid of execution, and (2) that as there was no pending execution application the order relied upon could not be considered to be a step-in-aid of execution. As regards the latter ground, we have already expressed our opinion. It is not necessary to discuss the first ground either as the decision, if correct, certainly supports the view that the application we have got to deal with in the present case is not a step-in-aid of the execution. If we hold that the application in that case amounts to a step-in-aid of execution our opinion cannot help the appellant because as we have already pointed out Mis objection application cannot in any sense be deemed to be one in furtherance of execution proceedings.

17. The cases examined above show that there has been much diversity of opinion as regards the interpretation of the expression "applying to take some step-in-aid of execution." In our opinion, the decision in <CITATION> (1921) I.L.R. 45 M 466 : 43 M L J 303 interprets that expression correctly, and the weight of authority is in support of that interpretation. That decision must govern the present case. In this view the filing of statement by the decree-holder in this case objecting to the judgment-debtor's application to record satisfaction of the decree is not a step-in-aid of execution and cannot therefore save his last application from being barred by limitation. We therefore dismiss this appeal with costs.