JUDGMENT <NAME>, J.

1. The basic issue involved in this appeal is whether the customs authorities have the right to refuse to endorse the exports made by an Exporter in the DEEC Book of export Part II after the export is effected by the Exporter.

2. The writ petitioner had exported plastic Flat Jet Nozzles made from <ORG> Granules on 7th January, 1994 to a purchaser at Singapore. The FOB value of the Nozzles was declared as Rs. 48,46,850/-. The goods were examined by <ORG>. Samples were drawn by them to verify the value of the Nozzles. The goods were suspected of being over invoiced. Pending enquiry the export was allowed provisionally against a bond. Assessment was made provisionally and an endorsement was made on the Shipping bill to this effect by <ORG>. <ORG> however refused to endorse the fact of export in Part II of the <ORG> book of the writ petitioner. Unless <ORG> make such endorsement the writ petitioner cannot apply for transfer of the import licence for import of duty free goods to which the writ petitioner became entitled by reason of such export. It is the petitioner's case that the customs authorities were duty bound to make the endorsement of the export and they had no jurisdiction to question the valuation of the goods.

3. In this background of facts the writ application was moved by the writ petitioner on 24th March, 1995 inter alia for a direction on the customs authorities to record and certify the exports effected by the petitioner in the <ORG> book of export Part II and to return the same to the petitioner. Interim relief was also prayed for in the same terms. By an order dated 24th March, 1995 the learned Single Judge directed <ORG> to make the endorsement as prayed for by the writ petitioner and to return the <ORG> Book after such endorsement to the petitioner within 12 days. Within the same period the respondents were also directed to extend the validity period of the writ petitioner's licence by a period of six months. The learned Judge was of the view that if the goods were not worthless the valuation of the petitioner must be accepted for the time being especially because the entire foreign exchange had already been received in India. It was also noted that the validity period of the writ petitioner's licence expired on 13th February, 1995; that the export had been completed long before and the foreign buyers had made their remittance long before and that the period of licence had been allowed to expire without serving a show cause notice and also without making of any endorsement. It was recorded in the order that a show cause notice dated 20th February, 1995 had been served on the petitioner. The parties were given the liberty to proceed with the same. It was clarified that the order passed on the writ application would be without prejudice to the rights and contentions of the parties. The writ application is still pending.

4. Being aggrieved by this order the <ORG> Authorities and <ORG> preferred this appeal on 6th April, 1995. <ORG> admitted the appeal and stayed the operation of the interim order dated 24th March, 1995. In the course of hearing of the appeal it appeared that the petitioner had not replied to the show cause notice. This Court accordingly directed the petitioner to submit a reply to the customs authorities without prejudice to his rights and contentions in the appeal. The customs authorities were also directed to dispose of the matter within a specified period with a reasoned order. Pursuant to such direction the respondent writ petitioner submitted his reply to the show cause notice. The Commissioner of <ORG> granted a personal hearing. On 19th April, 1996 an order was passed by the Commissioner of <ORG> holding that the FOB value of the export consignment covered by the shipping bill should be Rs. 92,000/- against the declared value of Rs. 48,46,850/-. It was also held that the goods were liable for confiscation under Section 113(d) of the <ORG> Act, 1962 (hereinafter referred to as the Act) read with Clause 3(3) of the Export (Control) Order, 1988 and Sections 3 and 4 of the Foreign Trade (Development and Regulation) Act , 1992. As the goods had already been exported a.penalty of Rs. 20 lakhs was imposed on the writ petitioner respondent under Section 114 of the Act.

5. The matter thereafter appeared before this Court. The writ petitioner respondent was aggrieved with the finding of the <ORG> Commissioner. Liberty was given to the writ petitioner respondent to file a supplementary affidavit annexing the order of adjudication as well as setting out grounds of challenge to the order of the Commissioner of <ORG> as he might be advised. A supplementary affidavit was accordingly filed by the writ petitioner respondent challenging the order of the Commissioner.

6. When the hearing was resumed, it was conceded by the <ORG> Authorities that the order of the Commissioner could not be sustained and that it should be set aside and remanded back for re-adjudication after observing the principles of natural justice and in accordance with law. The learned Counsel for the writ petitioner respondent however submitted that he was willing to challenge the impugned order of the Commissioner by way of a departmental appeal and that the proceedings before this Court should be accordingly disposed of without disturbing the interim order dated 24th March, 1995.

7. Both the <ORG> Authorities as well as <ORG> however resisted this submission and contended that the Court should itself determine the jurisdiction of the <ORG> Authorities to determine the value of an export under the <ORG> scheme before the matter was reconsidered by the Departmental Authorities and that the order under appeal should be set aside.

8. Although the appeal is from an interim order in a pending writ, in my opinion, by such order the writ petition has virtually been disposed of. To leave the matter for determination by the Departmental Authorities or by the <ORG> would not in the circumstances be proper. Besides, the issue involved is basic to the assumption of jurisdiction by the <ORG> Authorities and since there is no clear judicial authority on the point, it is appropriate that this <ORG> should itself determine the cause on the merits.

9. The writ petitioner's argument is that the power of <ORG> to assess the value of goods is limited to Section 14 of the Act. Section 14 provides inter alia that for the purposes of Customs Tariff Act , 1975, or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be a price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. It is submitted by the writ petitioner that as no export duty was chargeable on the Nozzles in question the customs authorities could not determine the value under Section 14 of the Act or at all. According to the writ petitioner the jurisdiction of the customs authorities to determine the value was limited to cases where duty is leviable and not in the instant case. Reliance has been placed on the following decisions in this context: <CITATION> (7) CXLT (Tribunal) Cust. 158; <CITATION> . - <CITATION> . - . Incidentally, the last two decisions are now the subject matter of appeals before <ORG> (Civil Appeal No. 6366-6367/95) and an interim order has been granted staying the grant of consequential benefits flowing from the orders under appeal. We are unable to accept the submission of the writ petitioner.

10. To appreciate the scope of the powers of <ORG> it is necessary to consider the origin, nature and scope of the <ORG> scheme. The <ORG> or the Duty Exemption Entitlement Certificate scheme is a part of the package of incentives formulated by <ORG> for boosting exports. Briefly stated if envisages the grant of import licences to exporters for import of those materials duty free which were required for manufacture of the goods exported. The sale of such import licence or the materials imported duty free in the Indian market are other benefits to attract exporters to increase their exports. Another such beneficial measure for exporters is the total exemption from income tax on the export profits granted under Section 80HHC of the Income Tax Act, 1961.

11. The <ORG> scheme in so far as it relates to exemption of import duty has its origin in the Act. Under Section 12 of the Act duty of customs are leviable on all goods imported into or exported from India except as otherwise provided in the Act itself or in any other law for the time being in force. <ORG> has the power to exempt certain goods from the levy of customs duty by notification in <ORG> under Section 25(1) of the Act. On 19th May, 1992 in exercise of powers conferred by Sub-section (1) of Section 25 of the Act <ORG> published a notification being Notification No. 203/92-Cus., dated 19-5-1992 exempting materials imported into India against a value based advance licence issued in terms of Para 49 of the Export and Import Policy, 1992-97 from the whole of the customs duty leviable thereon and from the whole of the additional duty leviable thereon subject to diverse conditions including "(i) that the materials imported are covered by a Value Based Duty Exemption Entitlement Certificate (hereinafter referred to as the said certificate), issued by <ORG> in the form specified in the Schedule annexed to this notification;

* * * * * * (v) that the export obligation is discharged, within the period specified in the said certificate or within such extended period as may be granted by <ORG>, by exporting goods manufactured in India; * * * * * * (vi) where benefit of the notification is sought by a person other than licencee, such benefit shall be allowed against the said licence and the said certificate only if it bears endorsement of transferability by <ORG>." On the same date by Notification No. 204/92-Cus., dated 19-5-1992 also issued under Section 25(1) of the Act similar provisions were made for quantity based duty exemption entitlement certificates.

12. The Licensing Authorities in this case are the Respondents Nos. 2 and 3. The form specified in the schedule for Value Based Exemption Certificate (with which we are concerned in this case) consists of two parts. Part I relates to the particulars of import and Part II relates to the particulars of the export. Part II in turn consists of nine parts namely, Parts A to I. We are concerned particularly with Part F which requires the diverse particulars of exports to be entered into the certificate including the FOB value of the product in Rupees and US Dollars. Column 10 of the Part F requires the "signature of <ORG> Officer with name, designation and seal and remarks if any." At the end of the certificate the exporter has to sign a declaration that the information given in the statement are correct. The actual imports and exports are also required to be certified by a Chartered Accountant. Upon discharge of the prescribed export obligation and realisation of the sale proceeds the exporter is at liberty under Part I to apply for transfer of the licence and the <ORG> to the licensing authority.

13. The requirement in Column 10 of Part II-F of the notification for <ORG> to sign the declaration of value would appear to indicate that <ORG> would have to ascertain the correct value of the exports. If <ORG> were merely to act as a rubber stamp on the value declared by the exporter there would have been no necessity for the customs authorities to separately make an endorsement in the <ORG>. It must also be remembered that it is on the basis of the value that the exporter becomes entitled to import duty free materials.

14. This inference is supported by the provisions of the Duty Exemption Scheme itself. The scheme forms part of the Export and Import Policy for the period 1992-97 formulated in exercise of the powers under Section 3 of the Imports and Exports (Control) Act, 1947. The Imports and Exports (Control) Act has been replaced by the Foreign Trade (Development and Regulation) Act , 1992. The policy is now deemed to have been notified under Section 5 of the 1992 Act. The procedures laid down for implementation of the policy are contained in the Handbook of Procedures issued by <ORG>, Government India for the period from 1-4-1992 to 31-3-1997. Chapter VII of the Handbook deals with the Duty Exemption Scheme. Para 119 incorporates the substance of the Notifications 203/92 and 204/92. The nature of the obligation of the customs authorities vis-a-vis Column 10 of Part II-F is clear from this paragraph. It requires "the details of the actual imports and exports made" to "be entered and authenticated by the customs authorities". The word 'authentication' has been defined as to "to establish the truth of" (See : Shorter Oxford English Dictionary, 3rd Edn., The World Book Dictionary and Black's Law Dictionary, 6th Edn.). Given this meaning of authentication, the submission of the writ petitioner that the customs authorities have to accept the declaration of the exporter as to the value of the goods as being correct is unacceptable.

15. The <ORG> is in the form of a Book according to Appendix XX to the Handbook. The prescribed format is a substantial reproduction of Notification No. 203/92-Cus., dated 19-5-1992 and 204/92-Cus., dated 19-5-1992 with the same requirement of the signature of the <ORG> Officer.

16. The only method in which <ORG> can discharge this obligation to authenticate the value is under Section 14(1) of the Act.

17. This follows from Section 20 of the General Clauses Act, 1897 which provides for the construction of notifications etc. issued under enactments and which reads :

"20. Whereas, by any Central Act or Regulation, a power to issue any notification, order, scheme, rule, form, or bye-law is conferred then expressions used in the notification, order, scheme, rule, form or bye-law, if it is made after the commencement of this Act, shall unless there is anything repugnant in the subject or context, have the same respective meanings as in the Act or regulation conferring the power."

[emphasis supplied] As the <ORG> scheme in fact incorporates the exemptions granted under Section 25(1) of the Act, the value must be determined with reference to the definition of the word in the Act itself.

18. The word value has been defined in the Act in Section 2(41) as follows:

"(41) "value", in relation to any goods, means the value thereof determined in accordance with the provisions of Sub-section (1) of Section 14 "

Section 14(1) of the Act therefore merely lays down a method for the determination of the value of goods and does not limit the jurisdiction of the customs authorities to determine the value of [goods] only to cases of assessment of duty.

19. In fact Section 14 is utilised for determination of value under several other enactments where duty is not assessable at all. For example, under the Export Control Order, 1988 Clause 2-h also defines value as having the same meaning as in Section 14(1) of the Act. Clause 3(3) of the order also provides that if the value of the goods has been incorrectly declared by the exporter then the export of such goods is prohibited. The export of prohibited goods is impermissible under Section 11 of the Act. It is the customs authorities which will have to determine the question of value under Section 14(1) for the purpose of prohibiting the export of goods in question. This is independent of any question of assessability of the goods exported to duty.

20. Similarly, under the Foreign Trade (Regulation) Rules, 1993 which have been framed under the Foreign Trade (Development and Regulation) Act , 1992, Rule 2(i) provides that "value" would have the same meaning as was assigned to it in Section 2(41) of the Act. Thus the procedure for determination of value under Section 14 of the Act is brought in for the purposes of the 1993 Rules. Rule 11 of the 1993 Rules clearly states that the value of the goods must be stated whether the goods are liable to duty or not and such statement must be certified as being correct. If therefore an incorrect declaration is made this would be a violation of Rule 11 of the 1993 Rules. If an incorrect declaration of the value is made this would violate Section 11 of the 1992 Act which forbids the export or import of goods in violation of the Rules. This in turn would attract the provisions of Sections 111 and 113 of the Act as goods imported or exported contrary to law and give <ORG> the power to investigate the correct value of the goods in question and for that purpose utilise the method prescribed under Section 14(1) .

21. Finally, the Foreign Exchange (Regulation) Act , 1973 also provides in Section 18(1) that no goods can be exported unless the exporter furnishes to the prescribed authority a declaration in the prescribed form of inter alia the full export value of the goods supported by evidence. The prescribed authority under Section 18(1) is the customs authorities. Under Section 67 of the 1973 Act, the restriction imposed by inter alia Section 18 "shall be determined to have been imposed under Section 11 of the Customs Act and all the provisions of that Act shall have effect accordingly." In other words, the correctness of the declaration may be investigated into by the customs authorities and for such purpose resort may be had to Section 14(1) .

22. The argument of the writ petitioner overlooks the provisions of the notifications under Section 25(1) as also the Export Policy as contained in the Handbook of Procedures. Besides if goods are in fact over-invoiced, this means that the exporter is realising proceeds not really relatable to the export made. Yet by virtue of the exporter's declaration the excess amount would enjoy the benefit of the concessions to which they would otherwise not be entitled. This possibility cannot be ruled out at this stage.

23. In this case, according to the customs authorities, the writ petitioner had inflated the value of the Jet Nozzles 84 times so that the profit earned was 8,429 per cent. It is not unreasonable in the circumstances for the customs authorities to hold an enquiry into the proper value after an appropriate enquiry. This determination would be essential particularly in the case of value based license as exemption of duty would be granted on the goods imported corresponding to the export value. To compel <ORG> to make the endorsement on the <ORG> certificate would be to deny the customs authorities' right and indeed their obligation to question the value of the exports made - an obligation which is not discharged only because the foreign exchange had been received on the invoiced amount. In fact the receipt of foreign exchange might in reality be a mirage. Apart from the public revenue being defrauded of large amounts of money both on account of income tax and on account of import duty by a false declaration, of value of exports by the exporter, no benefit would accrue to the national exchequer at all as the foreign exchange earned would be used to purchase the duty free imported material.

24. To sum up : the <ORG> Authorities power to assess the value of goods is not limited to cases where the goods are assessable to duty. The <ORG> Authorities are to certify the correctness of the value of the goods under the DEEC Scheme and they cannot be compelled to accept the declared value as correct. For the purposes of ascertaining such correct value the <ORG> are required to follow the mode prescribed in Section 14(1) of the Act.

25. For the reasons stated the order under appeal cannot be sustained and is accordingly set aside. The order of the Commissioner of <ORG> which was passed during the pendency of the appeal is also set aside as it is not sought to be supported by any of the parties before us. The Commissioner will now re-determine the matter from the point of the issue of the show cause notice [See Guduthur Bros. v. I.T. Officer - and Dy. Comm. of <CITATION> (82) STC 24]. Any material relied upon by the department must be furnished to the petitioner and the Commissioner must decide the issue after giving the petitioner a reasonable opportunity of hearing.

26. There will be no order as to costs.

Sd/-

<NAME>, J.

27. I agree.

Sd/-

<NAME>, J.

28. The parties are agreed that the only issue in the writ application being decided by this appeal, the writ petition itself may be disposed of in terms of this Judgment and Order.

29. The Writ petition is accordingly dismissed.

30. There will be no order as to costs.

31. Let xerox copies of this Judgment and Order, duly signed by the Assistant Registrar of this Court, be supplied to the parties upon their undertaking to apply for and obtain certified copies thereof upon payment of usual charges.

taking to apply for and obtain certified copies thereof upon payment of usual charges. taking to apply for and obtain certified copies therof upon payment of usual charges.

Sd/-

<NAME>, J.

33. I agree.


JUDGMENT <NAME>, J.

1. The facts leading up to this appeal may briefly he narrated. <ORG>, hereinafter called "the company". is a limited company having its registered office at Ahmedabad. In the year 1938, the company appointed Messrs. <NAME> and Co., hereinafter called "the agency firm", as its managing agents. On February 28, 1938, a formal agreement was entered into between the company and the agency firm. The said agency firm was formed under an instrument of partnership, dated February 26, 1938, with II partners - 3 of them are compendiously described as the "<ORG> group" and the remaining 8 of them as the "<ORG> group". With certain variations in the constitution of the agency firm, the said firm functioned as the managing agents of the company till September, 1946. In September, 1946, the shareholding of the partners of the agency firm in the company was as follows :

<ORG> ... 32,500 shares <ORG> ... 26,362 shares

2. Because of certain differences between the partners, they decided among themselves to sell shares and to surrender their managing agency. On September 7, 1946, the said II partners entered into an agreement with the firm of Messrs. <NAME> and Sons of Bihar, hereinafter called the "purchaser firm." Under that agreement it was provided that 65,012 shares held by the II partners of the agency firm, directly or thought their nominees, should be sold to the purchaser firm at Rs. 65 per share and that the agency firm should before November 15, 1946, resigns its office of managing agency of the company. It was a condition of the agreement that it should have operation only after the purchaser firm or its nominees were appointed as the managing agents of the company. On October 30, 1946, the company held its general body meeting and accepted the resignation of the agency firm and by another resolution appointed the purchaser firm as the managing agents in its stead. In terms of the agreement, the purchaser firm paid for the entire shareholding of the partners of <ORG> at Rs. 65 per share. The appellant is a Hindu undivided family. Its <ORG> was one <NAME> and the present karta is his son <NAME>. The said family was one of the 11 partners of <ORG> belonging to <ORG>. Out of the total shareholding the appellant held 11,230 shares. It received the price for the said shares at the rate of Rs. 65 per share. It was assessed to income-tax for the year 1948-49 and <ORG> by his order, dated June 5, 1952, assessed the excess amount of Rs. 2,98,909 realized by the assessee under the head "income from business," i.e., the difference in the amount for which it purchased the shares and that for which it sold them. On appeal, the Appellate Assistant Commissioner of Income-tax confirmed the same. On further appeal, <ORG>, Delhi Bench, held that the said receipt had to be taxed as "capital gains" under S. 12B of the Income-tax Act, 1922, and directed <ORG> to modify the assessment in accordance with its order. The assessee made an application under S. 35 of the Income-tax Act to the <ORG> for further directions and the <ORG>, by its order, dated March 26, 1954, amended its previous order, dated August 3, 1953, by substituting the word "processed" in place of the word "assessed" in its previous order. The assessee raised various contentions before <ORG>, inter alia, that the said income was not liable to be taxed under S. 12B of the Income-tax Act under the head "capital gains" and that in any case in order to determine the amount of capital gains the market value of the shares only should be taken into consideration, as the price of Rs. 65 per share included also the consideration for the relinquishment of the managing agency rights. The Income-tax Officer rejected the said contentions of the assessee. He re-determined the assessable income under the heading "capital gains" but did not issue a notice of demand as prescribed in S. 29 of the Income-tax Act. After making an infructious attempt to get suitable directions from the Appellate <ORG>, on March 5, 1956, the assessee filed an application before <ORG> to issue a notice of demand under S. 29 of the Income-tax Act so that it might prefer an appeal against the same to the appropriate authority. But <ORG> refused to issue any such notice. The assessee preferred an appeal against that order to the Appellate Assistant Commissioner under S. 30 of the Income-tax Act and that was dismissed on March 8, 1957, on the ground that it was not maintainable. Meanwhile on September 27, 1956, the appellant filed an application before the Commissioner of Income-tax under S. 33A (2) of the Income-tax Act for revising the order of <ORG>, dated September 28, 1955. On March 28, 1959, the Commissioner dismissed the revision petition on two grounds, namely, (i) that it was not clear where the revision petition under S. 33A of the Income-tax Act was maintainable, and (ii) on merits. It may be noticed that long before the revision petition was dismissed, the appeal filed by the assessee against the order of <ORG> to the Appellate Assistant Commissioner was dismissed on March 8, 1957. On November 18, 1957, the attention of the Commissioner was also drawn to the fact that <ORG> in the case of a reference to that Court at the instance of <ORG> held that the market value of the shares should be taken into consideration to ascertain the excess realized on the sale of the shares of the assessee for the purpose of capital gains tax. The Commissioner ignored that decision in dismissing the revision. Thereafter, on July 28, 1959 the assessee filed Writ Application No. 2071 of 1959 in <ORG> at Allahabad, inter alia, for a writ of certiorari or any other direction or order of like nature to quash the order of the Income-tax Commissioner, Lucknow, dated March 28, 1959, and the Order of <ORG> dated September 28, 1955, and for a writ of mandamus or any other order or direction of the like nature directing the Commissioner to pass a fresh order in accordance with the decision of <ORG> and direct <ORG> to pass a fresh order in accordance with law and to issue a notice of demand as required by S. 29 of the Income-tax Act. <ORG> dismissed the said application in limine mainly on the following 8 grounds; (1) the affidavit filed in support of the writ petition was highly unsatisfactory and on the basis of such an affidavit it was not possible to entertain the petition; (2) the facts given in the affidavit were incomplete and confused; and (3) even on merits, there was no force in the revision petition.

Hence the appeal.

3. Mr. <NAME>, learned counsel for the appellant, contended that the affidavit filed in support of the petition was in accordance with law, and that, even if there were any defects, the court should have given an opportunity to the appellant to rectify them; and that <ORG> should have held that the revision against the order of the Income-tax Officer to the Commissioner was maintainable under section 33A of the Act, as the appeal against that order to the Appellate Assistant Commissioner was not maintainable and that it should have directed the commissioner of entertain the revision and dispose it in accordance with law directing the Income- tax Officer to issue a notice of demand under section 29 of the Income-tax Act. He further contended that the high Court went wrong in holding that the facts in the Bombay decision were different from those in the present case, for the facts in both cases were the same and in fact they arose out of the same transaction namely, the sale of the shares by the agency firm to the purchaaser firm.

4. Mr. <NAME>, learned counsel for the revenue, while supporting the order of <ORG> raised a preliminary objection, namely, that the order of the Commissioner under section 33A of the Income-tax Act was an administrative act, and therefore, no writ of certiorari would lie to <ORG> to quash that order under article 226 of the constitution.

5. We shall first take the preliminary objection, for if we maintain it, no other question will arise for consideration. Article 226 of the Constitution reads :

"... <ORG> shall have power, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases any <ORG>, within those territories directions, orders, or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose."

6. This article is couched in comprehensive phraseology and it ex facie confers a wide power on the high court to reach injustice wherever it is found. The constitution designedly used a wide language in describing the nature of the power, the purposes for which and the person or authority against whom it can be exercised. It can issue writs in the nature of prerogative writs as understood in England; but the scope of those writs also is widened by the use of the expression "nature", for the said expression does not equate the writs that can be issued in India with the those in England, but only draws in analogy from them. That apart, <ORG> can also issue directions, orders or writs other than the prerogative writs. It enables the <ORG> to mould the reliefs to meet the peculiar and complicated requirements of this country. Any attempt to equate the scope of the power of <ORG> under article 226 of the Constitution with that of the English courts to issue prerogative writs is to introduce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary from of Government to a vast country like India functioning under a federal structure. Such a construction defeats the purpose of the article itself. To say this is not to say that the <ORG> can function arbitrarily under this Article. Some limitations are implicit in the article and others may be evolved to direct the article through defined channels. This interpretation has been accepted by this Court in <CITATION> , and <CITATION> , .

7. But we are satisfied that this case falls directly within the confines of the certiorari jurisdiction as understood in England. It is well settled that a writ of certiorari can be issued only a quash a judicial or a quasi-judicial act and not an administrative act. It is, therefore, necessary to notice the distinction between the said two categories of acts. The relevant criteria have been laid down with charity of <ORG> in <ORG>, elaborated by Lord Justice <NAME> in <NAME> v. <ORG> and authoritatively restated in <CITATION> . The said decisions laid down the following conditions to be complied with : (1) The body of persons must have legal authority; (2) the authority should be given to determine questions affecting the rights of subjects; and (3) they should have a duty to act judicially. So far there is no dispute. But in decided cases, particularly in India, there is some mixing up of two different concepts, viz., administrative tribunal and administrative act. The question whether an act is a judicial act or an administrative one arises ordinarily in the context of the proceedings of an administrative tribunal or authority. Therefore, the fact that an order was issued or an act emanated from an administrative tribunal would not make it any the less a quasi-judicial act if the aforesaid tests were satisfied. The concept of a quasi-judicial act has been conceived and developed by English Judges with a view to keep the administrative tribunals and authorities within bounds. <NAME>, J., in R. v. <ORG>, 1952-2 QB 413, 428, brought out the distinction between judicial and administrative acts very vividly in the following passage.tribunal and administrative act. The question whether an act is a judicial act or an administrative one arises ordinarily in the context of the proceedings of an administrative tribunal or authority. Therefore, the fact that an order was issued or an act emanated from an administrative tribunal would not make it any the less a quasi-judicial act if the aforesaid tests were satisfied. The concept of a quasi-judicial act has been conceived and developed by English Judges with a view to keep the administrative tribunals and authorities within bounds. <NAME>, J., in R. v. <ORG>, 1952-2 QB 413, 428, brought out the distinction between judicial and administrative acts very vividly in the following passage.

"The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and indeed, inadvisable, to attempt to define exhaustively... When, on the other hand, the decision is that of an administrative body and is actuated in whose or in part by questions of policy, the duty to act judicially may arise in the course of arriving at the decision, the body concerned had to consider proposals and objections and consider evidence, then there is the duty to act judicially in the course of that inquiry...

Further, an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of and are not in accordance with the practice of a court of law...

If, on the other hand, an administrative body on arriving at its decision at no stage has before it any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially."

8. The relevant principles have been succinctly stated in Halsbury's Laws of England, 3rd edition, vol. II, at pages 55 and 56, thus :

"It is not necessary that it should be a court : an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities, of and are not in accordance with the practice of a law. It is enough if it is exercising, after hearing evidence, judicial functioning in the sense that it has to decide on evidence between a proposal and an opposition. A body may be under a duty, however, to act judicially (and subject to control by means of these orders) although there is no form of lis inter parts before it : it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous considerations.

Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision.... If, on the other hand, an administrative body in arriving at its decision has before it at no stage any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially."

9. There are innumerable decisions of this court were it issued a writ of certiorari to quas a quasi-judicial act of an administrative tribunal or authority. This court set aside the order of <ORG> approving the order of nationalization of road transport made by <ORG>, the order if <ORG> canceling the examination results on the ground that it did not give opportunity to the examines to be heard before the order was made in <CITATION> and the order of <ORG> made in a revision petition against the order of the Deputy Commissioner impounding the document without hearing the aggrieved party in Board of revenue, <CITATION> all these cases the <ORG>, <ORG> and <ORG> were administrative bodies, but the acts impugned were quasi-judicial ones, for they had a duty to act judicially in regard thereto. The Law on the subject may be briefly stated thus: The provisions of a statute may enjoin on an administrative authority to act administratively or judicially. If the statute expressly imposes a duty on the administrative body to act judicially, it is a clear case of a judicial act. But the duty to act judicially may not be expressly conferred but may be inferred from the provisions of the statute. It may be gathered from the cumulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterion to be adopted, the phraseology used, the nature of the power conferred, of the duty imposed on the authority and other indicia afforded by the statute. In short, a duty to act judicially may arise in widely different circumstances and it is not possible or advisable to lay down a hard and fast rule or an inflexible rule of guidance.

10. With this background let us look at the relevant provisions of the Income-tax Act .

11. Section 33A . (2) The commissioner may, on application by an assessee for revision of an order under this act passed by any authority subordinate to the Commissioner, made within one year from the date of the order (or within such further period as the commissioner may think fit it allow on being satisfied that the assessee was prevented by sufficient cause from making the application within that period), call for the record of the proceeding in which such order was passed, and on receipt, of the record may make such inquiry or cause such inquiry to be made, and subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit :

provided that the Commissioner shall not revise any order under this sub-section if -

(a) where an appeal against the order lies to the Appellate Assistant Commissioner or to <ORG> but has not been made, the time within which such appeal may be made has not expired, or, in the case of an appeal to <ORG>, the assessee has not waived his right of appeal, or

(b) where an appeal against the order has been made to the Appellate Assistant Commissioner the appeals is pending before the appellate assistant Commissioner, or

(c) the order has been made the subject of an appeal to the Appellate tribunal :

Provided further that an order by the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the assessee."

12. Under this sub-section an assessee may apply to the commissioner for revision of an order under the Act by an authority subordinate to him. Such application shall be find within one year from the date of the order or within such further period as the commissioner may think fit to allow. On receipt of such an application the commissioner may call for the record of the proceedings in which such order was made and make such enquiry or cause such enquiry to be made. After such enquiry, he can make an order not to the prejudice of the assessee but to his benefit. Such revision is not maintainable if the time prescribed for an appeal against such an order appropriate authorities has not expired or of an appeal against such an order of is pending before the appropriate authorities. The scope of the revision is, therefore, similar to that prescribed under different status. Prima facie, the jurisdiction conferred under section 33A(2) of the Act us a judicial one. The order that is brought before the commissioner affects the right of the assessee. It is implicit in revisional jurisdiction that the revising authority shall give an opportunity to the parties affected to put forward their case in the manner prescribed. The nature of the jurisdiction and the rights decided carry with them necessarily the duty to act judicially in disposing of the revision. The fact that the Commissioner cannot make an order to the prejudice of an assessee does not possibly change the character of the proceeding. Though the Commissioner may not change the order of the inferior authority to the prejudice of the assessee, he may not give the full relief asked for by the assessee.

13. But it is said that the commissioner exercising jurisdiction under section 33A of the Act us only functioning as an administrative authority and all his orders make thereunder partake of that character. Reliance is placed on the decision of the Judicial committee of <CITATION> . There, <ORG> held that the assessments, which were duly by the Income-tax Officer in the proper exercise of his duty, were not a nullity, but were validity made and were effective until they were set aside; and that a reference to <ORG> did not lie from an order under section 33 of the act unless that order was prejudicial to the assessee in the sense that he was in a worse position than before the order was made. But the Board incidentally made the following observations :

"On the contrary, section 33 follows upon a number of sections which determine the rights of the assessee and is itself, as its language clearly indicates, intended to provide administrative machinery by which a higher executive officer may review the acts of his subordinates and take the necessary action upon such review. It appears that, as a matter of convenience, a practice has grown up under which the commissioner has been invited to act of his own motion, under the section, and where this occurs a certain degree of formality has been adopted. But the language of the section does not support the contention, which lies at the root of the third question and is vital to the respondent's case, that it is affords a claim to relief."

14. Continuing the same idea, the Board observed :

"The commissioner may act under section 33 with or without the invitation of the assessee : if he does so without invitation, it is clear that if he does nothing to worsen the position of the assessee, the latter can acquire no right; the review may be a purely departmental matter of which the assessee knows nothing. If on the other hand, the commissioner acts at the invitation of the assessee and again does nothing to worsen his position. there is no justification for giving him a view right of appeal."

15. These observations were made in the context of a question whether a reference would lie to <ORG> against an order of the commissioner, But the question whether the order of the commissioner under section 33 of the Act was a judicial or a quasi-judicial act subject to the prerogative writ of certiorari was neither raised nor decided in that case : that question was not germane to the enquiry before the <ORG>, for the appeal did not arise out of any order made in a writ of certiorari. Section 33 , which was considered by <ORG>, was repealed by the Amending Act of 1939; but by the Act XXIII of 1941 the revisional powers of the commissioner were restored. Section 33A took the place of section 33 with certain modifications. Sub-section (1) of section 33A provided for the commissioner acting suo motu; and sub-section (2) thereof, on the application of the assessee. Under this section the commissioner can exercise the revisional jurisdiction subject to the conditions mentioned therein. While Section 33 only provided for suo motu exercise of the jurisdiction. S. 33A enables an assessee to apply to the Commissioner to revise the order of his subordinate officer. Some of <ORG>s, under the impression that <ORG> held that the act of the Commissioner was an administrative one, ruled that a writ of certiorari would not lie to quash the order of the Commissioner under S. 33-A of the Act: see Sitalpore Colliery Concern. <CITATION> , ; <CITATION> ., ; and <CITATION> , . They did not consider the scope of the revision before the Commissioner and whether the orders made thereunder satisfied the well settled tests of "judicial act" laid down by this Court. In our view, for the reasons mentioned by us earlier, the said judgments were decided wrongly.

16. That apart, on the assumption that the order of the commissioner under section 33A of the Act was an administrative one, the respondent would not be in a better position. What the appellant complains is that the Income-tax Officer in terms of section 29 of the Act is under an obligation to issue a demand notice. If the said contention was correct, he did not discharge the duty imposed on him by the statute. If the commissioner only made an administrative order in refusing to give any direction to the Income-tax Officer, it would not exonerate the said officer from discharging his statutory duty. In that event the assessee would certainly be entitled to approach the High court under article 226 of the constitution for the issue of a writ of mandamus or other appropriate direction to the Income-tax Officer to discharge his statutory duty. We, therefore, reject the preliminary objection of the respondents.

17. <ORG> mainly dismissed the writ petition on the ground that the affidavit filed in support of the writ petition was highly unsatisfactory and that on the basis of such an affidavit it was not possible to entertain the petition. In exercise of the powers conferred by article 225 of the constitution and of other powers enabling it in that behalf of <ORG> framed the Rules of Court. Chapter XXII thereof deals with the procedure to be followed in respect of proceeding under article 226 of the constitution other than a writ in the nature of habeas corpus. The relevant rule is sub-rule (2) of rule 1 of Chapter XXII, which reads :

The application shall set out concisely in numbered paragraphs the facts upon which the applicant relies and the grounds upon which the court is asked to issue a direction, order or writ and shall conclude with a prayer stating clearly, so far as circumstances permit, the exact nature of the relief sought. The application shall be accompanied by an affidavit or affidavits in proof of the facts referred to in the application. Such affidavit or affidavits shall be restricted to matters which are within the deponent's own knowledge."

18. The application filed in <ORG> certainly complied with a provisions of sub-rule (2) of rule 1 of chapter XXII of the Rules of court of the Allahabad high Court. It set out concisely in numbered paragraphs the facts upon which the applicant relied, the grounds on which the court was asked to issue the direction and the exact nature of the relief sought. But it is said that the affidavit filed in support if the application did not speak to matters which were within the depondent's own knowledge. <NAME>, the deponent of the affidavit, is a relative of the petitioner and he also looked after the case on his behalf as his pairokar and was fully conversant with the facts. He solemnly affirmed and swore as follows :

19. I, <NAME>, aforesaid deponent do hereby solemnly affirm and swear that the contents of paragraphs 1,2,3 and 50 partly are true to my personal knowledge, that the contents of paragraphs 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 20, 21, 25, 27, 29, partly 31, 32, 34, 37, 38, 41, 42, 44, are based on 46 and 50 partly paragraphs 17, 18, 19, 22, 23, 24, 26, 28, 29 partly, 30, 33, 36, 39, 40, 43 partly are based on persual of the record, those of paragraphs 47, 48, partly 49, 50, partly are based on legal advice, which I believe to be true, that no part of this affidavit is false and nothing material has been concealed in it."

20. In paragraphs which are based on a persual of the record the deponent referred to the relevant orders if the income-tax authorities and also to the relevant agreements and the copies of the said orders and agreements were also annexed to the affidavit as schedules. it is not clear from the schedules whether certified copies or the original of the orders received by the appellant were filed. The said agreements and the orders afford sufficient basis to appreciate the case of the appellant and for disposing of the same."Deponent's own knowledge" in rule 1(2) of chapter XXII of the Rules is wide enough to comprehend the knowledge of the appellant derived from a persual of the relevant documents; and the affidavit in express terms disclosed and specified the documents, the source of the appellant's knowledge. He swore in the affidavit that the documents annexed to the affidavit were true copies of public documents. If they are certified copies of public documents, they prove themselves; if they are originals OF the orders sent to the appellant; the deponent, as his agent, speaks to their receipt. It is, therefore, not correct to say that the facts stated in the affidavit are not based on the deponent's knowledge. The other facts alleged in the affidavit are only introductory in nature and if they are excluded, the result will not be affected. That apart, if the affidavit was defective in any manner <ORG>, instead of dismissing the petition in limine, should have given the appellant a reasonable opportunity to file a better affidavit complying with the provisions of R. 1 of Ch. XXII of the Rules. We cannot, therefore, agree with <ORG> that the petition was liable to be dismissed in limine in view of the alleged defects in the affidavit.

21. Nor can we agree with the high <ORG> that the facts given in the affidavit are incomplete and confused. On the other hand, a careful persual of the affidavit, along with the documents annexed thereto, discloses clearly the appellant's case; it gives the necessary facts and the reliefs sought for. We did not find any missing link in the narrative of facts or any confusion in the nature of the reliefs asked for.

22. We cannot also agree with <ORG> that the decision of <ORG> in <CITATION> was given on different facts and that it was impossible to contend that any part of the money paid by Messrs. <NAME> and Sons was really compensation for the managing agency rights. The Bombay decision was given in the context of the dispute between the Bombay group and the income-tax authorities and was based upon the consideration of the very documents which are the basis of the appellant's claim. We do not purpose to express any opinion on the correctness or otherwise of that decision. But the fact that a Division Bench of one of <ORG>s in India had taken the view in favour of the appellant indicates that the question raised is, in our view, an arguable one and it requires serious consideration.

23. We are satisfied that this is not a case where <ORG> should have dismissed the writ petition in limine. We find in the decree issued by the high Court that <NAME> appeared on behalf of the opposite parties : presumably he appeared as the appellant must have issued notice in terms of rule 1(4) of chapter XXII of the Rules. Be that as it may, <ORG> did not finally decide two important questions that really arose for consideration before it, namely, (i) whether a revision lay to the commissioner under section 33A(2) of the Act against the order of the Income-tax Officer' and (ii) whether the Income-tax Officer should have issued a demand under section 29 of the Act. If a revision lay to the commissioner, the commissioner should have considered the second question before dismissing it. Therefore, the question is whether a revision lay to the commissioner under section 33A(2) of the Act. A revision does not lie to the commissioner against an order where an appeal against that orderlies , pursuant to the directions of the tribunal, Delhi Bench, the Income- tax officer determined the assessee's capital gains under section 12B of the Act, not did he issue a regular notice of demand a subscribed under section 29 of the Act. The Officer to the Appellate Assistant Commissioner reject the appeal filed by the appellant as being not maintainable. As no appeal lay to the Appellate Assistant Commissioner, against the calculations made by the Income-tax Officer, the commissioner had certainly power to revise the said order.

24. On March 5, 1956, the appellant filed an application requesting <ORG> to issue a notice of demand as required by section 29 of the Act. But the said officer declined to issue the notice of demand. The question is whether he was bound to issue a notice of demand under section 29 of the Act. Section 29 of the Act reads :

"29. When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable."

25. Under this section, if a tax is due in consequence of an order from an assessee, the Income-tax Officer us under a duty to serve on him a notice of demand. Pursuant to the directions given by the tribunal the Income-tax Officer made fresh calculations under the head "Capital gains", and pursuant to the said calculation, he should have passed an order and issued the Income-tax Officer did not discharge his duty which he was bound to do under the Act; with the result he had become amendable to a writ of mandamus directing him to do what he should have done under the Act.

26. In the result, the order of the high Court is set aside and we issue a writ of certiorari quashing the order of the commissioner and a writ of mandamus directing the Income-tax Officer to pass as order and issue a notice in accordance with law. The appellant will have his costs throughout.

27. Appeal allowed.


JUDGMENT <NAME>, J.

1. This is an appeal from a decree of <ORG> which confirmed a decree of the Subordinate Judge of Murshidabad.

2. The suit was brought in September 1902 by the respondent <NAME> against the appellant for a declaration that the purchase by the appellant of a house at an auction sale, held under the order of <ORG>, in certain execution proceedings, was invalid on the ground that it was brought about by the fraud of the appellant and the other defendants <NAME>, the judgment creditor, and <NAME>, the judgment debtor, in those proceedings.

3. The respondent <NAME> was a creditor of <NAME> and held a decree for the amount of his debt, Rs. 10,000. He applied to <ORG> for execution against <NAME>'s properties and accordingly in September 1900 the house in question was attached and ordered to be sold on the 15th January 1901. The debtor procured a postponement of the sale until the 21st March 1901 by a part payment of Rs. 4,000. In January and February 1901 suits were begun by the debtor's two sons against the respondent, alleging that the house was family property; that they were entitled to shares therein according to the Mitakshara law, and asking for injunctions restraining the sale of their shares. The sale was accordingly stayed in February 1901, on terms that security for the whole amount of <NAME>'s debt should be furnished. This was done on the 8th March 1901, and the sale on behalf of the respondent thus indefinitely stayed.

4. In the meantime proceedings were also being taken against <NAME> by the defendant <NAME>, who had obtained a decree in <ORG> for the amount of his debt, Rs. 1,800, as far back as September 1896. That decree was transmitted to <ORG> for execution, and on the 22nd February 1901 the house in question was duly attached, and the sale fixed for the 15th May 1901. On that day the judgment debtor petitioned the <ORG> to postpone the sale for seven days. On his promise that the debt should be paid in that time, <NAME> consented, and this delay was granted by the <ORG>. The promise was not kept, and the sale accordingly took place on the 22nd May 1901, when the appellant <NAME> became the purchaser at the price of Rs. 12,000. That sum was paid by him, and has since been distributed among the general body 'of creditors. It is now alleged that the real purchaser was the judgment debtor himself, and that the appellant was only a "benamidar" or mere nominee.

5. The charges of fraud made by the respondent in his settlement of claim were of a sweeping character. It was alleged that <NAME> decree was false, and obtained by collusion with the judgment debtor; that there was similar fraud in relation to the attachment and the sale proclamation; that the suits by the sons were really instituted by the judgment debtor in order to obtain a stay of the respondent's suit, and so enable a sham sale to be effected in the collusive suit of <NAME>; that the sale fixed for the 15th May 1901 was then adjourned with the fraudulent consent of <NAME> because it was known that effective bidders would be present; that on the 22nd May the judgment debtor's pleader, one <NAME>, fraudulently told the respondent's agent that the sale was again to be adjourned, and thus prevented him from attending, and that only dependants and followers of the judgment debtor were present at the sale. The charges against <NAME> in relation to his debt and decree were conclusively disproved. There can be no doubt that <NAME> decree, which was of long standing, was genuine, and that he sought and obtained execution under it in perfect good faith. Both the Subordinate Judge and <ORG> have found in the appellant's favour on this very important part of the case.

6. The learned Subordinate Judge has also found that the purchase money for the house was found by the appellant himself and not, (as the respondent alleges), by the judgment debtor. <ORG> do not dissent from this view, so that on the evidence it cannot be said that the appellant was a mere " benamidar," Further, it was found that the respondent's allegations of fraudulent non-service of process of attachment and sale were not correct.

7. These findings materially attenuate the general case of fraud set up by the respondent and, in what remains of the case, their Lordships are unable to see any sufficient or substantial evidence of fraud on the part of the appellant.

8. The genuineness of <NAME> debt and decree being now admitted, it becomes necessary to scrutinize carefully the charges brought against him in relation to the execution. His consent to the postponement of the sale for seven days on the debtor's promise of payment was necessarily fraudulent. No doubt it fitted in well with the specific charges of fraud originally brought against him but, when those charges are eliminated from the case, there is nothing to show that this particular act may not have been quite innocent. The respondent however, can make no case unless it be treated as a step in the alleged conspiracy. Nor can much importance be attached to the fact that <NAME> pleader had intimate business connections with the judgment debtor's pleader, <NAME>. The fact is that <NAME> agent, <NAME>, desired to retain <NAME> in the proceedings, but <NAME>, being already retained for the judgment debtor, recommended his friend <NAME>, who thereupon acted for <NAME>.

9. The appellant is a money lender and a man of substance. When cross-examined as to his means he staled his income tax and offered to produce the receipts, so the suggestion that he was merely an impecunious nominee was not sustained.

10. He said he had heard of the proposed sale at the house of his pleader, <NAME>, who had also acted occasionally for <NAME>. <NAME> told him the property would be sold cheap, owing to the litigation of the sons which, he thought would come to nothing in the end--an opinion which proved correct. The appellant thereupon instructed him to arrange for a representative to attend the sale on his behalf and to bid up to Rs. 10,000 or Rs. 12,000. He forthwith paid Rs. 3,000 to <NAME> to meet the deposit that might be required and afterwards sent, out of his own funds, the balance of Rs. 9,000. Other bidders competed for the property. They are said, perhaps truly, to have been friends or associates of the judgment debtor, but it is not correct to say they were "followers and dependants;" nor is there anything in the evidence or the circumstances to establish the suggestion that they were acting in collusion with the appellant.

11. The respondent says he was willing to give Rs. 60,000 for the house, but was prevented from attending by <NAME> telling his agent on the day of the sale that he was instructed to apply for another postponement. <NAME> was called by the respondent, and would only say that he had no recollection of this; but, assuming that he said it, there is nothing to show that the appellant should be held responsible for any misrepresentation by <NAME>.

12. On the 20th June 1908 the respondent preferred a claim under Section 311 of the Civil Procedure Code, in <ORG>, praying that the sale might be set aside, but his petition was dismissed, and the sale duly confirmed after evidence had been heard on both sides in relation to the points raised by the respondent.

13. Litigation also arose after the sale between the appellant and the sons of the judgment debtor, who set up against him their claim to shares in the house under the Mitakshara law. That claim was dismissed and the appellant obtained possession in January 1902. It is said that he has made no use of the property and still holds it for the benefit of the judgment debtor, but this suit was commenced in September 1902 so that the appellant has not been able to deal effectively with what was probably a speculative purchase.

14. Their Lordships are of opinion that the allegations of fraud and conspiracy made against the appellant have not been brought home to him and that, under all the circumstances, there is no sufficient ground for setting aside a sale, confirmed by the <ORG> after prompt local inquiry, and for inflicting on the appellant a forfeiture of the considerable purchase money paid by him out of his own funds.

15. Their Lordships will therefore humbly advise His Majesty that the decrees of <ORG> and of <ORG> ought to be reversed and this appeal allowed, with costs here and in the <ORG> below.


PETITIONER: STATE OF HARYANA ETC. Vs. RESPONDENT: <ORG> DATE OF JUDGMENT03/09/1975 BENCH: <NAME>, V.R. BENCH: <NAME>, V.R. GUPTA, A.C. FAZALALI, SYED MURTAZA CITATION: 1975 AIR 1952 1976 SCR (1) 626 1975 SCC (2) 810 ACT: Construction of Statutes-Interpretation of land reform statutes or agrarian laws-Construction to promote the general purpose of the act-Punjab Security of Land Tenures Act, 1953-Section 10A and 19B-Validity of the Transfers reducing surplus lands. HEADNOTE: The respondents were small land owners within the meaning of Punjab Securrity of' Land Tenures Act, 1953. The respondents, later on inherited certain lands which together with the lands already held by them exceeded the ceiling area. The respondents, therefore, ceased to be small land- owners. The respondents thereafter divested themselves of the excess lands by executing gift deed, mortgage with possession and pursuant to decrees passed in favour of their near relations. The Collector after investigating into the matter declared the lands in excess of the ceiling area as surplus lands and ignored the subsequent transfers. An appeal filed by the respondents was rejected by the Commissioner. Respondents Revision Applications to the Financial Commissioner were also rejected. The respondents thereafter filed Writ Petitions in <ORG>. <ORG> allowed the Writ Petitions holding that section 19B read with section 10A did not affect the transfers made by the respondents. According to <ORG> the transfers affected during the period prescribed for filing returns are valid since they were consistent with the scheme of' the act which requires that no one should hold land in excess of permissible limits. Section 2(2) of the Act defines small land owner as a person owning less than certain area of land. Permissible area is defined limiting the maximum permissible extent a person may hold land. So long as a person does not hold lands in excess of permissible area he is a small land holder. He can evict his tenants from the holding and be in actual enjoyment as provided by the Act. If any person has lands beyond the permissible area he becomes a large land owner and he has to surrender the excess land after choosing the best area he desires to keep. Such excess land goes to the surplus pool which is distributed for the rehabilitation of ejected tenants and landless persons. The Act was amended by inserting section 10A and Section 19B with retrospective effect. Section 10A provides that for the purpose of determining the surplus area of any person any judgment, decree or order of a <ORG> or authority contained after the commencement of the Act and having the effect of diminishing the area of such person which could have been declared as his surplus area shall be ignored. Section 19B provides that if after the commencement, of the Act any person whether as land owner or tenant acquires by inheritance or by bequest or gift from a person to whom he is an heir or if any person after the commencement of the Act acquires in any other manner any land and which with or without the lands already owned or. held by him exceeds in the aggregate the permissible area such a person is required to file a return with the Collector in the prescribed form giving the necessary particulars and selecting the land not exceeding the permissible area which he desires to retain. The section further provides that the surplus land in excess of the permissible area would be distributed among the tenants who are evicted or landless persons. On an appeal by certificate under Article 133(1)(c) in one appeal and in an appeal by Special Leave in another allowing the appeals held ^ 1. Land reform is so strategic that special constitutional concern has been shown for this programme. The <ORG> naturally enacted the Act whereby ceiling on land ownership was set. surplus lands were taken over for settling ejected tenants and others. If constitutionally envisioned socio-economic revolution is 627 not to be a paper tiger, agrarian lands have to be meaningfully enacted, interpreted and executed and the <ORG> is not the anti-hero of the Drama of limping land reform. The decision of this <ORG> in <NAME> case A.I.R. 1974 SC 994, 996 followed. [628 B-C 631 A] 2. It is settled law that <ORG>s should favour an interpretation that promotes the general purpose of an Act rather than one that does not. [634-E] 3. The agrarian reform laws with special constitutional status, as it were warrant interpretative skills which, will stiffle the evasive attempts, specialty by way of gifts and bequests and suspect transfers. [635 C-D] 4. The profound concern of the law to preserve the surplus stock is manifest from the obligation cast by section 19B to declare and deliver excess lands. The agrarian policy is equitable ownership and the reform philosophy is redistributive justice, the rural goal being small peasant proprietorship. What difference does it make as to how you came by a large holding from the standpoint above outline ? The thrust of section 19B is that even if the source of the excess area is inheritance. bequest or gift the capacity to own is conditioned by the permissible limit. Section 10A does not militate against the mandate of section 19B. Section 19B had to be enacted because <ORG> took the view that the area which became surplus subsequent to the commencement of the Act was not hit by the ceiling and land acquired by an heir by inheritance is saved from utilisation by the <ORG>. [633H-634A-C] 5. The reasoning of <ORG> that the scheme of the Act was that no one should held land in excess of the permissible area and since after the transfers the land held by the respondent was within permissible limits there was no frustration of the policy of the law is repugnant to the basic scheme because the Surplus pool would be adversely affected if gifts and other transfers which would skim off surplus were to be allowed. A legislation which has provided for ignoring decrees diminishing surplus lands and has otherwise prevented the escape of excess area by voluntary transfers cannot conceivably be intended to permit inherited excesses. [634-F-G] 6. The further reasoning of <ORG> that since section 19B gives to the owner who by inheritance comes to own an excess area. a certain time for making a declaration, that during this period land owner can effect transfers, is obviously absurd. What is intended to give some time to the heir to ascertain the assets he has inherited, make the choice of his reserved area which he likes to keep and make the necessary declaration. The processual facility cannot be converted into an opportunity to prevert and thwart the substantive object of the law. After all courts faced with special case situations, have creatively to interpret legislation [634 H; 635 A-B] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 123 of 1969 and 2023 of 1972.

From the Judgment and order dated the 25th October 1967 of <ORG> in Civil Writ No. 525 of 1966 and Civil Appeal No. 2023 of 1972.

Appeal by Special Leave from the order dated the 20th May, 1970 of <ORG> in L.P.A. No. 231 of 1970.

<NAME> and <NAME> for the Appellant in both the appeals.

<NAME> and <NAME> for the Respondent in C.A 123 of 1969.

<NAME> for Respondent No. 1 (In C.A. 2023/72). The Judgment of the Court was delivered by <NAME>, J. These two appeals turn on the construction of s. 19B of the Punjab Security of Land Tenures Act, 1953 (Act X of 1953) (for short, the Act). This legislation was enacted to bring about an agrarian re-ordering so pivotal to the progress of our rural economy. Haryana, happily a granary of our country, is one of the <ORG>s where land reform laws are likely to generate great changes by banishing big concentration of Natur's bounty in a few feudal hands, creating an enthusiastic sense of distributive justice and exploiting the productive potential of land by the possessive passion of the landless many. So strategic is land reform that special constitutional concern has been shown for this programme. Naturally the <ORG> enacted the Act whereby ceiling on land-ownership was set; surplus lands were taken over for settling ejected tenants and others and peasant proprietorship created. The scheme of the Act with which we are concerned is fairly simple and somewhat scientific, although its language, what with frequent amendments dovetailed from time to time, has made for ambiguity, obscurity, marginal inconsistency and a rich crop of litigation. Indeed, the conflict of opinion at the <ORG> level and the bone of contention before us arise from this drafting deficiency Legal Preface:

A thumb-nail sketch of the Act is a prefatory necessity. the defines 'small land-owner' [S. 2(2)] having in mind the optimum ownership in the given conditions. 'Permissible area' [s. 2(3)] is a cognate concept limiting the maximum permissible extent a person may hold, and so long as he does not have any excess, he is a small landholder. He can evict the tenants from his holding and be in actual enjoyment as provided by the Act. If, however, he has lands beyond the permissible area, he becomes a large land-owner and has to cough up the excess. However, he is given the option to choose there best area he desires to keep, called 'reserved area' [s. 2(4)] and then he must make available to the <ORG> such excess called surplus area [s. 2(5-a)]. This creation of a surplus pool or reservoir is vital to the success of the statutory project since, by distribution of such lands, rehabilitation of ejected tenants and landless persons is to be "accomplished. Maximisation of the surplus pool and suppression of evasion by large holders are of profound legislative, concern.

Even if a person is a small holder, it is quite on the cards that, by inheritance or other operation of law, or by voluntary transfer, he may acquire lands in excess of the permissible limit. The law takes care to see that such excess is also made available for re-settlement of ejectees and their ilk. In short, the legislative mandate is that every agricultural holder in the <ORG> shall hold no more than the permissible area and the surplus in the hands of large holders, whether acquired by voluntary transactions or involuntary operation of law, will go to feed the surplus pool.

A semi-medieval set-up where considerable estates are cornered by a landed gentry, will naturally resist re- distributive reform measures and try ingenious methodology to defeat the law. But the legislature has to be astute enough to outwit such devious devices and subtle subterfuges. With this end in view, the Act has been amended to block all escape routes unearthed by the law-makers as often as <ORG> has upheld certain patterns of alienations and oblique dealings by interpretative process. A study of the history of the Act and the provocation for and frequency of amendments thereto, suggests an unspoken criticism about judicial approach which we will refer to later. Suffice it to say that the law we are construing is a radical agrarian measure; its basic goals are to cut down large holdings and distribute lands to various landless people according to a design and to foster, according to legislative policy, an agrarian community of peasant proprietors. De-hoarding and defeating hide-outs are essential to make the twin objects successful and so ss. 10A and 19B among others, have been written into the Act. To explore the import and ambit of these two provisions, particularly the former, with a view to see whether it strikes at a gift made by, the respondent in. favour of his sons whereby he sought to stow away some of his lands, shed some of his excess lands and look slim on as a small holder before the law Language permiting, the <ORG> as interpretor, must fulfil, not frustrate the legislative mission.

Factual Silhouette At this stage it is appropriate to set out the facts in the two appeals which are not in dispute and speak for themselves.

C.A. 123 of 1969:

One <NAME> who owned 450 bighas and 9 biswas of land, acting with foresight, gifted half of it to his mother in 1951, perhaps with a premonition of coming restrictions by way of ceiling on owner ship. We need not speculate on that point in the light of subsequent happenings. The Act came into force on April 15, 1953 but even before that date the. Owner (who was the petitioner before <ORG> under Art. 226 and respondent before us) executed a mortgage with possession over 12 bighas and 5 biswas. There was also some waste land included in his total holding which fell outside the scope of the Act. So much so, on the date when the Act came into force, he was the owner of about 178 bighas which, admittedly, fell safely short of the permissible area of 30 standard acres [vide s. 2(3)]. Having thus dwarfed himself into a small land owner as defined in s. 2(2), the 'ceiling' provision held out no threat to him. Certain small extents of land which were legally deductible from his total holding brought down the area in his possession to 138 odd bighas. Unfortunately for him, his mother passed away in February 1958 and, he being the heir, all that he had gifted to her earlier came back to him as successor. The unhappy consequence was that his holding expanded to 363 odd bighas, far in excess of the permissible area as set out in s. 2(3) of the Act. Necessarily, this spill-over became surplus area as in s. 2(5-a) of the Act. Sensing the imminent peril to his property and manoeuvring to salvage it from the clutches of the legal ceiling the petitioner executed a gift of 182 bighas of land to his son by deed dated February 11, 1959. He also executed three mortgages with possession. The cumulative result of the shedding operations was to shrink the size of his holding to well within the permissible area. The Collector, however, investigat ed into the matter and declared an area of 117 bighas as surplus in his hands. He reached this conclusion by ignoring the tell-tale gift of February 1, 1959 in favour of the son and the three possessory mortgages executed in June 1958. The status of 'small land-owner' thus being forfeited, the threat lo the surplus lands revived but was sought lo be warded off by the petitioner moving an unsuccessful appeal Lo the Commissioner, and a further fruitless revision to the Financial Commissioner. Eventually, he challenged the Collector's order i Writ Petition which, met with success. There was disagreement between the two learned Judges on the Bench and the third learned Judge decided in favour of the petitioner holding that s. 19B, read with s 10A. did not affect the petitioner's transfers. The two Judges, whose opinion upheld the claim of the petitioner, substantially concurred in their reasonings but the scope of the interpretative exercise. is somewhat limited. We, therefore, propose straight to go into a study of the relevant provisions and may perhaps indicate our conclusion in advance. We wholly disagree with <ORG> and hold that to accept the construction which has appealed to the learned Judges is to frustrate the agrarian reform scheme of the Act and the alternative reading gives life to the law, teeth to its provisions and fulfilment to its soul.

C.A. 2023 of 1972: The facts in this appeal are different but the point of law involved is identical. In both the cases the State of Haryana has come up to this <ORG> in appeal, the former by certificate under Art. 133(1)(c) and the latter by special leave granted by this <ORG>. Anyway, in C.A. 2023 of 1972, respondent no. 1 owned 86 odd ordinary acres of land on April 15, 1953 when the Act came into force. After the commencement of the Act he inherited nearly 30 ordinary acres and thus he held well above the permissible area and ceased to be a small land owner. Around the year 1957 he transferred 167 bighas of land to respondents nos. 3 to 6 pursuant to a <ORG> decree passed in 1957 in favour of his sons and wife. We may mention here, parenthetically but pathetically, that the weapons in the armoury of large land owners to defeat the land reform law included securing simulactral decrees from civil courts against themselves in favour of their close relations, thus using the judicial process to have. their excess lands secreted in the names of their dear and near. This invited legislative attention and an amendment of the Act was made viz., s. 10A whereby decrees and orders of courts were to be ignored in dealing with surplus lands. Thus, the Collector ignoring the transfer of 167 bighas of land by respondent no. 1 (which resulted ill civil court decrees of 1957 in favour of his sons and wife declared 38.41 ordinary acres as surplus with respondent no. 1. The statutory. remedies did not see the first respondent (writ- petitioner) safe ashore and so he sought harbourage by moving <ORG> under Art. 26 where he urged that the land inherited by him and later transferred to his sons and wife were not hit by s. 10A and s. 19B of the Act He succeded in the <ORG> in view of a certain strict construction adopted by the <ORG> and the State has come up in appeal challenging the soundness of <ORG>'s approach.

Statutory Construction:

The key-thought that pervades our approach is that if the constitutionally envisioned socio-economic revolution is not to be a paper tiger, agrarian laws have to be meaningfully enacted, interpreted and executed and the court is not the anti-hero in the drama of limping land reform. Much to the same effect this <ORG> observed in <NAME> Case(1):

"We have to 'bear in mind the activist, though inarticulate, major premise of statutory construction that the rule of law must run close to the rule of life and the court must read into an enactment, language permitting, that meaning which promotes the benignant intent of the legislation in preference to the one which perverts the scheme of the statute on imputed legislative presumptions and assumed social values valid in a prior era. An aware court, in formed of this adaptation in the rules of forensic interpretation, hesitates to nullify the plain object of a land reforms law unless compelled by its language, and the crux of this case is just that accent when double possibilities in the chemistry of construction crop up."

While dealing with a somewhat analogous set of provisions under the same Act. The emphatic importance of augmenting the surplus pool for distribution by the <ORG> is brought out in <NAME> (supra) thus:

"The triple objects of the agrarian reform projected by the Act appear to be (a) to impart security of tenure (b) to make the tiller the owner, and (c) to trim large land holdings, setting sober ceilings. To convert these political slogans and into legal realities, to combat the evil of mass evictions, to create peasant proprietorships and to ensure even distribution of land ownerships a statutory scheme was fashioned the cornerstone of which was the building up of a reservoir of land carved out of the large landholdings and made available for utilisation by the <ORG> for re-settling ejected tenants." (p. 998) Unfortunately, judicial decisions construing the language of the law have resulted in stultifying the objectives of the enactment leading to further amendments. We are concerned in the present case with ss. 10A and 19B which, in their final form, appeared by an amendment of 1962 (Act XIV of 1962), but retrospective effect was given with effect from the commencement of the Act, viz., April 1953.

In this context it is convenient to excerpt the observations of this <ORG> in <NAME> (supra) at p. 999:

(1) A.I.R.. 1974 S.C. 994, 996.

"The objects and reasons of Punjab Act 14 of 1962, which brought in certain significant restrictions on alienations and acquisitions of large land-holders starts off in the statement of objects thus: "Some of the recent judicial pronouncements have the effect of defeating the objectives with which the Punjab Security of Land Tenures Act, 1953, was enacted and amended from time to time. It was intended that the surplus area of every land-owner recorded as such in the revenue records should be made utilisable for the settlement of ejected tenants."

Certain specific decisions and their impact on the legislative operation were mentioned, and then the statement of objects proceeded:

"In order to evade the provisions of section 10-A of the Parent Act interested persons, being relations, have obtained decrees of courts for diminishing the surplus area. Clause (43 of the Bill seeks to provide that such decrees should be ignored in computing the surplus area."

The short point which confronts us in both these appeals is as to whether the gifts made by land-owners who exceeded their permissible area having come by additional lands by inheritance are to be ignored or taken into account when computing the surplus area in their hands, having regard to the specific provision in s. 19B living in fellowship with s. 10-A.

It is appropriate to read ss. 10A and 19B here, before proceeding to the crucial discussion in the case:

10-A.-(a) The State Government or any officer em powered by it in this behalf shall be competent to utilize any surplus area for the resettlement of tenants ejected, or to be ejected, under clause (i) of sub-section (1) or section 9 .

(b) Notwithstanding anything contained in any other law for the time being ill force and save in the case of land acquired by <ORG> under any law for the time being in force or by an heir by inheritance no transfer or other disposition of land which is comprised in surplus area at the commencement of this Act, shall affect the utilization thereof in clause (a) Explanation.-such utilization of any surplus area will not affect the right of the landowner to receive rent from the tenant so settled.

(c) For the purposes of determining the surplus area of any person under this section, any judgment, decree or order of a court or other authority, obtained after the commencement of this Act and having the effect of diminishing the area of such person which could have been declared as his surplus area shall be ignored."

"19B. Future acquisition of land by inheritance, in excess of permissible area.-

(1) Subject to the provisions of s. 10-A , if after the commencement of this Act, any person, whether as land-owner or tenant, acquires any inheritance or by bequest or gift from :. person to whom he is an heir any land, or in after the commencement of this Act and before the 30th of July, 1958, any person acquires by transfer, exchange, lease, agreement or settlement any land, or if, after such commencement, any person acquires in any other manner any land and which with or without the lands already owned or held by him exceeds in the aggregate the permissible area, then he shall within the period prescribed, furnish to the Collector, a return in the prescribed form and manner giving the particulars of all lands and selecting the land not exceeding in the aggregate the permissible area which he desires to retain, and if the land of such person is situated in more than one patwar circle, he shall also furnish a declaration required by section 5-A . (2) If he fails to furnish the return and select his land within the prescribed period, then the Collector many in respect of him obtain the information required to be shown in the return through such agency as he may deem fit and select the laud for him in the manner prescribed in sub section (2) of section 5-B . (3) If such person fails to furnish the declaration the provisions of section 5-C shall apply. (4) The excess land of such person shall be at the disposal of <ORG> for utilization as surplus are; under clause (a) of section 10-A or for such other purposes <ORG> may by notification direct."

Unclouded by case law, we first study s. 1953 .

Forgetting s. 10-A for moment, we find that if, after the commencement of the Act, April 15, 1953, any person acquires any land by inheritance or bequest or gift which, with the lands already held by him exceed in the in the permissible area, than he shall furnish to the Collector a return indicating the permissible area he desires to retain. This he shall do within the prescribed period [S 19B(1)]. If he defaults to make the return, the Collector will select the land for him [19B(2). He will suffer a penalty for failure to furnish the declaration [19B(3)]. The excess land, i.e., the surplus area shall be at the disposal of <ORG> for utilization under s. 10-A [19B(4)1. The surplus land will be used for re-settlement of tenants ejected or to be ejected under cl. (i) sub-s. (1) of s. 9 or other purpose notified by <ORG>. The profound concern of the law to preserve the surplus stock is manifest from the obligation cast by sub-ss. (1) and (4) of 19B to declare and deliver excess lands. How you came to hold the excess is not the question. Why you should be permitted to keep more than what others can lawfully own is the query. A might have 10-925 Sup CI/75 acquired by paying hard cash might have received by gift and by bequest and D by settlement and by partition. The agrarian policy is equitable ownership and the reform philosophy is redistributive justice the rural goal being small peasant proprietorship. What difference does it make as to how you came by a large holding from the standpoint above outlined? The thrust of s. 19-B is that even if the source of the excess area is inheritance, bequest of gift, the capacity to own is conditioned by the permissible limit.

Section 10-A does not militate against this mandate of s. 19-B. Indeed, s. 19-B had to be enacted because <ORG> took the view that area which became surplus subsequent to April 15, 1953 was not hit by the ceiling set and land acquired by an heir by inheritance is saved from utilisation by the <ORG>. Section 10-(a) is wide in its terms and encompasses all surplus area, howsoever obtained. Even s. 10A(b) strikes not discordant note. All that it says and means is that lands acquired by an heir by inheritance are saved in so far as dispositions of such lands are concerned. The drafting of the saving clause is cumbersome but the sense is and, having regard to the conspectus, can only be that although in the hands of the propositus, it is surplus land, if among the heirs it is not, then their transfers will not be affected by the interdict of s. 10- A(a) the sins of the father shall not set the teeth of the children on edge. If the heirs are otherwise small holders, the fact that their father was a large owner will not deprive the former of their heritage, if it is less than the permissible area. We see no conflict between s. 10-A and 19B . Assuming some inconsistency, primacy goes to s. 19B which effectuates the primary object. It is settled law that Courts should favour an interpretation that promotes the general purpose of an Act rather than one that does not.

Counsel for the respondents adopted the arguments which found favour with <ORG> and pressed two points. The scheme of the Act, according to the learned Judges, was to see that no one held in excess of the permissible area and since by the gift to the son or wife the latter had only lands within permissible limits, there was no frustration of the policy of the law This reasoning is repugnant to the basic scheme because the surplus pool will be adversely affected if gifts and other transfers which will skim off surplus were to be allowed. Indeed, the flaw in <ORG>'s argument is that if it were allowed to prevail, there will be no surplus land at all, every large holder being free to screen his surplus in the names of his with and kin or servants or reliable friends, by going through alienatory exercises. A legislation which has provided for ignoring decrees diminishing surplus lands and has otherwise prevented the escape of excess area by voluntary transfers, cannot conceivably be intended to permit inherited excesses.

The second argument which appealed to <ORG> is a little curious, and somewhat difficult to follow. Section 19-B directs the owner who, by inheritance, comes to own an excess area, to make a declaration of his lands within a prescribed time. This does rot mean that the time lag is statutorily given for executing gifts and transfers to defeat the law itself. Such a conclusion would be obviously absurd. What is intended is to give some time to the, heir to ascertain the assets he has inherited, make the choice of his 'reserved area' which he likes to keep and make the necessary declaration. A processual facility cannot be converted into an opportunity to pervert and to thwart the substantive object of the law. After all, courts, faced with special case situations, have 'creatively' to interpret legislation. The courts are 'finishers, refiners and polishers of legislation which comes to them in a state requiring varying degrees of further. processing', said <NAME>, in <ORG> v. <ORG>) and indeed it is no secret that courts constantly give their own shape to enactments.

We feel that when economic legislation in the implementation of Part lV of the Constitution strikes new ground and takes liberties with old jurisprudence, there looms an interpretation problem of some dimensions which Indian jurists will have to tackle. The genre of agrarian reform laws, with special constitutional status, as it were, warrants interpretative skills which will stifle evasive attempts, specially by way of gifts and bequests and suspect transfers. Here ss. 10-A , 19-A and 19B , inter alia, strike at these tactics.

Our conclusion, in conformity with the principles of statutory construction we have projected, is that the gifts in both the appeals fail in the face of s. 19B . It follows that the appeals have to be allowed, which we hereby do without hesitation, without costs how ever to either party at any stage.

P.H.P. Appeals allowed. (1) [1968] 3 W.L.R. 714, 732.