PETITIONER: MESSRS. DWARKA PRASAD LAXMI NARAIN Vs. RESPONDENT: THE STATE OF UTTAR PRADESH AND TWO OTHERS. DATE OF JUDGMENT: 11/01/1954 BENCH: <NAME>, B.K. BENCH: <NAME>, B.K. <NAME>, B. MAHAJAN, <NAME> (CJ) BOSE, VIVIAN HASAN, GHULAM CITATION: 1954 AIR 224 1954 SCR 803 CITATOR INFO : RF 1954 SC 465 (8) RF 1956 SC 479 (19) R 1956 SC 559 (4) F 1956 SC 676 (51) E 1957 SC 397 (16) RF 1957 SC 896 (12) F 1958 SC 538 (12) R 1958 SC 578 (168) E&D 1960 SC 475 (9,11,13) F 1961 SC 705 (15) R 1961 SC1602 (12) RF 1964 SC 370 (6) D 1971 SC 474 (6) R 1974 SC 366 (61,94) D 1974 SC 651 (17) R 1978 SC 771 (14) RF 1978 SC1457 (63) RF 1981 SC1829 (95) RF 1988 SC1089 (11) ACT: Constitution of India, Arts. 19(1) (g), 19 (6)--Clause 4(3) of the Uttar Pradesh Coal Control Order, 1953, whether ultra vires the Constitution. HEADNOTE: A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities must be held to be unreasonable. Under cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. Such provisions cannot be held to be reasonable: Held, therefore that the provision of cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, must be held to be void as 104 804 imposing an unreasonable restriction upon the freedom of trade and business guaranteed under art. 19 (1) (g) of the Constitution and not coming within the protection afforded by cl. (6) of the article. <NAME> v. <NAME> (118 U.S. 356 at 373) referred to. JUDGMENT:

ORIGINAL JURISDICTION: Petition No. 326 of 1953. Original Petition under article 32 of the Constitution of India.

<NAME> (<NAME>, with him) for the petitioners.

<NAME> for the respondents.

1954. January 11. The Judgment of the Court was delivered by <NAME> is an application presented by the petitioners under article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under article 14 and clauses (f) and (g) of article 19 (1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus.

To appreciate the contentions that have been raised on behalf of the petitioners, it would be necessary to give a short narrative of the material facts. The petitioners are a firm of traders who had, prior to the cancellation of their licenee, been carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur. It is said that the District Magistrate of Kanpur as well as the District Supply Officer, who figure respectively as respondents Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc. It is stated that prior to the 14th of February, 1953, the prices that were fixed by the District Officers left the coal dealers a margin of 20 per cent profit upon the sale of soft coke and 15 per cent profit on the sales of hard coke and steam coal, such profits being allowed on the landed costs of the goods up to the depot. The landed costs comprised several items and besides ex-colliery price, the middleman's commission and the railway freight, there were incidental expenses of various kinds including labour duty, loading and unloading charges, cartage and stacking expenses. After making a total of these cost elements, an allowance was given for shortage of weight at the rate of 5 rods and odd seers per ton in the case of soft coke and 3 rods and odd seers in the case of hard coke and steam coal, and it was on the basis of the net weight thus arrived at that the price was calculated. On the 14th of February, 1953, the District Supply Officer issued a directive reducing the selling prices of coke, coal, etc., much below the existing rates. This reduction was effected in a three-fold manner. In the first place, the allowance for shortage of weight was made much less than before; secondly a sum of Rs. 4-12-0 only was allowed for all the incidental expenses, and thirdly, the margin of profit was cut down to 10 per cent. On the 22nd of May, 1953, a representative petition was filed by seven colliery depot holders of Kanpur including the present petitioners challenging the validity of the executive order, dated the 14th of February, 1953, mentioned above inter alia on the ground that it infringed the fundamental rights of the petitioners under articles 14 and 19 of the Constitution. There was an application for ad interim stay in connection with this petition which came up for hearing before the learned Vacation Judge of this court on the Ist of July, 1953. On that day an undertaking was given by the State of Uttar Pradesh to the effect that they would withdraw the order of the 14th February, 1953, and apparently the consideration that weighed with the State in giving this undertaking was that it was a purely executive order without any legislative sanction behind it. The order of the 14th February was in fact withdrawn, but on the 10th of July, 1953, the State of Uttar Pradesh promulgated by a notification an order intituled "The Uttar Pradesh Coal Control Order, 1953" purporting to act in exercise of the powers conferred upon it by_section 3(2) of the Essential Supplies Act, 1946, read with the notified order of <ORG> issued under section 4 of the Act. As the constitutionality of this Coal Control Order is the main object of attack by the petitioners in the present proceeding, it would be convenient to set out the material provisions of the order in respect of which the controversy between the parties primarily centers:

"THE UTTAR PRADESH COAL CONTROL ORDER, 1953.

2. In this Order unless there is anything repugnant in the subject or context .

(a) "Coal" includes coke but does not include cinder and ashes.

(c) "<ORG>" means the District Magistrate of the District or any other officer authorised by him to perform his functions under this Order and includes the District Supply Officer of the district.

(d) "Licensee" means a person holding a licence under the provisions of this Order in Form 'A' or in Form 'B'.

3. (1) No person shall stock, sell, store for sale or utilise coal for burning bricks or shall otherwise dispose of coal in this State except under a licence in Form 'A' or 'B' granted under this Order or in accordance with the provisions of this Order.

(2) Nothing contained in sub-clause (1)--

(a) Shall in so far as it relates to taking out a licence for stocking or storing coal for their own consumption, apply to the stocks held by persons or undertakings obtaining coal on permits of the District Magistrate or the State Coal Controller for their own consumption.

(b) Shall apply to any person or class of persons' exempted from any provision of the above sub-clause by <ORG>, to the extent of their exemption.

4. (1) Every application for licence under this Order shall be made in the form given in Schedule I appended to this Order.

<NAME>

(2) A licence granted under this Order shall be in Form 'A' or Form 'B' appended to this Order and the holder of a licence granted under this Order shall comply with any directions that may be issued to him by <ORG> in regard to the purchase, sale, storage or distribution of coal.

(3) <ORG> may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded. Provided that every power which is under this Order exercisable by <ORG> shall also be exercisable by the State Coal Controller or any person authorised by him in this behalf.

7. The State Coal Controller may by written order likewise require any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provisions of clause (8).

8. (1) No licensee in Form 'B' and no person acting on his behalf shall sell, agree to sell or offer for sale, coal at a price exceeding the price to be declared by <ORG> in accordance with the formula given in Schedule III.

(2) A licensee in Form 'A' or any other person holding stock of coal or any other person acting for or on behalf of such licensees or person transferring or disposing of such stocks to any person in accordance with clause 6 or clause 7 shall not charge for the coal a price exceeding the landed cost,- plus incidental and handling charges, plus an amount not exceeding 10 per cent of the landed cost as may be determined by <ORG> or the State Coal Controller.

Explanations:--(1) Landed cost means the excolliery price of the coal plus the L.D.C.C. and Bihar. Sales tax plus middleman's commission actually paid and railway freight.

<NAME>

(2) Incidental and handling charges mean the cost of unloading from wagons, transporting to stacking site, unloading at the stacking site, plus godown rent, plus choukidari charges, if any, not exceeding Rs. 8-8-0 per ton as may be determined by <ORG> or <ORG> according to local conditions.

11. The District Magistrate shall within a week of the commencement of this Order prepare and publish in a local paper a list of persons carrying on the business of sale of coal in his district and upon the publication of the list, the persons included therein will be deemed for purposes of this Order to be licensee until three months next following the publication of the list in Form A or B as may be specified.

12. If any person contravenes any of the provisions of this Order, or the conditions of licenee granted thereunder, he shall be punishable under section 7 of the Essential Supplies (Temporary Powers) Act, 1946, with imprisonment for a term which may extend to three'years or with fine or with both and without prejudice to any other punishment to which he may be liable ........ " ' Schedule III referred to in the Order is as follows:

SCHEDULE III.

(Formula for declaration of prices of soft coke/hard coke/steam coal).

1. Ex-colliery Price Actuals. 2. L.D.C.C. and Bihar Sales tax Actuals. 3. Middleman's commission Actually Raid subject to the maximum laid down under clause 6 of the Government of India Colliery Order 4. Railway freight Actuals. 5. Incidental and handling chargers including Maximum of Rs. 8-8-0 per per ton as may be determ- ined by the licensing

(i) Unloading from wagons. Licensing Authority according to local condition

(ii) Transport upto premises provided that at places 0of stacking which are extra oridenarily

(iii) Unloading and stacking distant form the railway at the premises or depot. way head a higher rate may be allowed by <ORG>.

(iv) Godown rent and chaukidari charges, if any

(v) Weighing charges, if any.

6. Local taxes Octroi, etc. Actuals.

7. Shortage Not exceeding 31/2 maunds per ton in the case of soft coke and 2-1/2 maunds in the case of hard coke and steam coal as may be determined by <ORG>.

8. Profit At 10 per cent on total items 1 to 6 above except item No.5 It is said that on the 16th of July, 1953, the respondent No. 2 issued a declaration whereby he fixed the retail rates for the sale of soft coke, coal, etc. at precisely the same figures as they stood in the directive issued on the 14th of February, 1953. The result, according to the petitioners, was that the selling prices were reduced so much that it was not possible for the coal traders to carry on their business at all. In accordance with the provision of clause 11 of the Control Order set out above, the petitioners' name appeared in the list of B licence holders and they did apply for a licence in the proper form as required by clause (4). The licence, it is said, was prepared, though not actually delivered over to the petitioners. By a letter dated the 3rd of October, 1953, the Area Rationing Officer, Kanpur, accused the petitioners of committing a number of irregularities in connection with the carrying on of the coal depot. The charges mainly were that there were two other depots held and financed by the petitioners themselves in the names of different persons and that the petitioners had entered into agreements for sale of coal at more than the fixed rates. The petitioners submitted an explanation which was not considered to be satisfactory and by an order dated the 13th of October, 1953, the District Supply Officer, Kanpur, cancelled the petitioners'licence. In the present petition the petitioners have challenged the validity of the Coal Control Order of the 10th of July, 1953, the declaration of prices made on the 16th of July following and also the order cancelling the petitioners' licence on the 13th of October, 1953. 15--95 S. C. I./59 The constitutional validity of the Uttar Pradesh Coal Control Order has been assailed before us substantially on the ground that its provisions vest an unfettered and unguided discretion in the licensing authority or <ORG> in the matter of granting or revoking licenses, in fixing prices of coal and imposing conditions upon the traders; and these arbitrary powers cannot only be exercised by the officers themselves but may be delegated at their option to any person they like. It is argued that these provisions imposing as they do unreasonable restrictions upon the right of the petitioners to carry on their' trade and business conflict with their fundamental rights under article 19 (1)(g) of the Constitution and are hence void. With regard to the order dated the 16th of July, 1953, by which the prices of coke, coal, etc. were fixed, it is pointed out that it was not only made in exercise of the arbitrary power Conferred upon the licensing authority by the Coal Control Order, but the prices, as fixed, are palpably discriminatory as would appear from comparing them with the prices fixed under the very same Control Order in other places within the State of Uttar Pradesh like Allahabad, Lucknow and Aligarh. The order of the 13th OCtober, 1953, cancelling the petitioners' licenee is challenged on the ground that the charges made against the ,petitioners were vague and indefinite and that the order was made with the ulterior object of driving the petitioners out of the coal business altogether. It is said further that as a result of the cancellation order, the petitioners have been made incapable of disposing of the stocks already in their possession, though at the same time the holding of such,stock after the cancellation of their licence has become an offence under the Coal Control Order.

It is not disputed before us that coal is an essential commodity under the Essential Supplies (Temporary , Powers) Act of 1946, and by virtue of the delegation powers by <ORG> to <ORG> under section 4 of the Act, <ORG> was competent to make provisions, by notified order, for regulating the supply and distribution of coal in such a way as they considered proper with a view to secure the objects as specified in section 3 of the Act. All that is necessary is that these provisions should not infringe the fundamental rights of the citizens guaranteed under Part III of the Constitution and if they impose restrictions upon the carrying on of trade or business, they must be reasonable restrictions imposed in the interests of the general public as laid down in article 19 (6) of the Constitution. Nobody can dispute that for ensuring equitable distribution of commodities considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the controlling authorities. The power of granting or withholding licences or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretion in these matters. So far no exception can be taken; but the mischief arises when the power conferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority. A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable. As has been held, by this court in <NAME> v. The State of Madhya Pradesh(1), the phrase "reasonable restriction,' connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper balance between the freedom guaranteed under (1)  S. C.R. 759.

article 19 (1) (g) and the social control permitted by clause (6) of article 19 , it must be held to be wanting in reasonableness. It is in the light of these principles that we would proceed to examine the provisions of this control Order, the validity of Which has been impugned before us on behalf of the petitioners.

The provision contained in clause 3(1) of the Order that "no person shall stock, sell, store for sale or otherwise utilise or dispose of coal except under a licence granted under this Order" is quite unexceptional as a general provision; in fact, that is the primary object which the control Order is intended to serve. There are two exceptions engrafted upon this general rule: the first is laid down in sub-clause (2) (a) and to that no objection has been or can be taken. The Second exception, which is embodied in subclause (2)(b)has been objected to by the learned counsel' appearing for the petitioners. This exception provides that nothing in clause 3 (1) shall apply to any person or class of persons exempted from any provision of the above sub-clause by the State Coal Controller, to the extent of such exemption. It will be seen that the Control Order nowhere indicates what the grounds for exemption are, nor have any rules been framed on this point. An unrestricted power has been given to the State Controller to make exemptions, and even if he acts arbitrarily or from improper motives, there is no check over it and no way of obtaining redress. Clause 3 (2) (b) of the Cntrol Order seems to us, therefore, prima facie to be unreasonable. We agree, however, with Mr. <NAME> that this portion of the Control Order, even though bad, is severable from the rest and we are not really concerned with the validity or otherwise of this provision in the present case as no action taken under it is the subject matter of any complaint before us.

The more formidable objection has been taken on behalf of the petitioners against clause 4 (3) of the Control Order which relates to the granting and refusing of licences. The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any licenee under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. It seems to us that such provision cannot be held to be reasonable. No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. Practically the Order commits to the unrestrained will of a single 'individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same. Mr. <NAME> contends that a sufficient safeguard has been provided against any abuse of power by reason of the fact that the licensing authority has got to record reasons for what he does. This safeguard, in our opinion, is hardly effective; for there is no higher authority prescribed in the Order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer. The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person. It was pointed out and with perfect propriety by Mr. Justice <NAME> in the well-known American case of <NAME> v. Hopkins(1), that the action or non-action of officers placed in such position may proceed from emmity or prejudice, from .... partisan zeal or animosity, from favouritism and Other improper influences and motives which are easy of concealment and difficult to be detected and exposed and consequently 'the injustice capable of being wrought under'cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation. In our opinion, the provision of clause 4(3) of the Uttar Pradesh Coal control Order must be must be held to void as imposing an unreasonable restriction upon the freedom (1) 118 U. S. 356 at 373.

<NAME>

of trade and business_guaranteed under article 19(1)

(g)of the Constitution and not coming within the protection afforded by clause (6) of the article.

As this provision forms an integral part of the entire structure of the Uttar Pradesh Coal Control Order, the order cannot operate properly unless the provision of clause 4 (3) is brought in conformity with the constitutional requirements indicated above. The licenee of the petitioners having been cancelled in pursuance with the above clause of the Control Order, the cancellation itself should be held to be ineffective and is not necessary for us to enquire further whether or not the grounds upon which the licensing authority purported to act were vague or idefinite or could constitute proper grounds for cancellation.

The two other clauses of the Control Order to which exception has been taken on behalf of the petitioners are clauses (7) and (8). Clause (7) empowers the State Coal Controller to direct, by written order, any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provision of clause (8). Clause 8 (1) provides that no licensee in Form 'B' shall sell or agree to sell coal at a price exceeding the price to be declared by the licensing authority in accordance with the formula given in Schedule III. With regard to both these clauses, the contention of the petitioners' counsel, in substance, is that the formula for determining the price, as laid down in Schedule III, is per se unreasonable as it is made dependent on the exercise of an unfettered and uncontrolled discretion by the licensing authority. An unfair determination of the price by the licensing authority, it is argued, would be totally destructive of the business of the coal traders and the grievance of the petitioners is that that is exactly what has been done by the declaration of prices made on the 16th of July, 1953.

We have examined the formula given in Schedule Iii to the Control Order with some care and on the materials that have been actually placed before us, we are not in a position to say that the formula is unreasonable. 'The prices, as said already, are calculated on the basis of the landed costs of coke and coal up to the depot, 'to which a profit of 10 per cent is added. The landed costs comprise seven items in all which are enumerated' in Schedule III. With regard to items 1, 2, 3, 4 and 6 of the Schedule the actual costs are taken into, account and to that no objection can possibly be taken. The entire dispute is with regard to incidental charges specified in item 5 and the allowance or shortage which forms item 7. So far as incidental charges are concerned, the Schedule allows a maximum of Rs. 8-8-0 per ton to be determined by the licensing authority according to local conditions. The rates undoubtedly vary according to local conditions and some amount of discretion must have to be left in such cases to the local authorities. The discretion given to the licensing authority in fixing these rates is, however, not an unlimited discretion, but has got to be exercised with reference to the condition prevalent in the locality with which the local officers, must be presumed to be familiar. The grievance of the petitioners is that in the declaration of 16th of July, 1953, the licensing authority allowed incidental charges only at the rate of Rs. 4-12-0 per ton and that is grossly unfair. It is pointed out that at Lucknow, Aligarh, Allahabad and other places much higher rates were allowed, 'though the local conditions of these places are almost identical; and there has been consequently a discrimination in this respect which makes the declaration void altogether. The statements that have been made by the petitioners in this connection are not supported by any affidavit of any person who is familiar with the local conditions in the other places and on the materials that we have got here we are unable to say that the rates fixed by the licensing authority of Kanpur are really discriminatory. It is certainly not open to us to substitute our own determination in tile matter of fixing the prices for that of the licensing authority and provided we are satisfied that the discretion that has been vested in a public officer is not an uncontrolled discretion and no unfair discrimination has resulted from the exercise of it, we cannot possibly strike down as illegal any order or declaration made by such officer.

The same reasons apply, in our opinion, to the seventh item of Schedule III which relates to allowances for shortage of weight. Here also the Control Order specifies a maximum and the determination of the allowance in particular cases has been left to the discretion of the licensing authority. We are not satisfied from the materials placed before us that this provision is unfair or discriminatory. The formula allows a profit of loper cent upon the cost items with the exception of item No. 5 which relates to incidental charges. We do not know why this item has been omitted and Mr. <NAME>, appearing for the respondents, could not suggest any possible reason for it. But even then, the result of this omission would only be to lower the margin of profit a little below 10 per cent and nothing more. If the other traders in the locality are willing to carry on business in coal with that amount of profit, as is stated on the affidavits of the respondents, such fixation of profit would undoubtedly be in the interests of the public and cannot be held to be unreasonable. The counsel for the petitioners is not right in his contention that the Control Order has only fixed the maximum profit at 10 per cent and has left it to the discretion of the licensing authority to reduce it in any way he likes. Schedule III fixes the profit at 10 per cent upon the landed costs with the exception of item No. 5 and as this is not the maximum, it would have to be allowed in all cases and under clause 8 (1), the 'B' licensees are to sell their stocks of coal according to the prices fixed under Schedule III. Clause 8 (2) indeed is not very clearly worded, but we think that all that it provides is to impose a disability upon all holders of coal stocks to charge prices exceeding the landed costs and a profit upon the same not above 10 per cent as may be determined by the licensing authority. The determination spoken of here must be in accordance with what is laid down in Schedule III and that, as has been said above, does specify a fixed rate and not a maximum and does' not allow the licensing authority to make any reduction he: likes. On the whole we are of the opinion that clauses (7 is and (8) of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration. of the 16th of July, 1953, cannot I;e held to be invalid. The result is that, in our opinion, clause 4 (3) of the Control Order as well as the cancellation of the petitioners licence should be held to be invalid and -a writ in the nature of mandamus would issue against the respondents opposite parties preventing them from enforcing the cancellation order. The rest of the prayers of the petitioners are disallowed. We make no order as to costs.

Petition partly allowed.

Agent for the petitioners: <NAME>.

Agent for the respondents: <NAME>.


ORDER <NAME>, J.

1. This is an application by <NAME> for a writ of mandamus or certiorari in respect of an order of the Assistant Collector of Excise, dated the 16th April, 1956 and an order of the Collector of Central Excise, dated the 7th May, 1956.

2. The petitioner was a temporary <ORG> Clerk. He was transferred to Kalimpong in June 1949 in the normal course. <NAME> applied thereupon for leave on the ground of illness. The Assistant Collector of <ORG>, Kalimpong directed him to appear before the Staff Surgeon for medical examination. On examination the petitioner was found fit to carry out the duties and to join the duties on the 11th July 1949. But instead of joining his duties the petitioner applied on the 12th July, 1949 for an extension of leave for three more weeks. He was again medically examined by a Staff Surgeon on the 2nd December, 1949, when this time the Staff Surgeon found him unfit to resume his duties. It was however found on the scrutiny of the service book and the leave account of the petitioner that he had exhausted all the leave that was due to him and the extraordinary leave granted to him exceeded 90 days on the 11th October, 1949. He was, therefore, regarded as having ceased to be in the employment under rule 14(c) of the Revised Leave Rules 1933. He was discharged from service with effect from the 11th October, 1949. The petitioner was in the department for 5 years by that time.

3. On purely compassionate grounds the petitioner was offered an officiating temporary post of <ORG> in the scale of Es. 80-5-120 etc. plus other allowances. This appointment was made on the 10th January, 1950. It is this appointment which came to a termination and against which the present petition was made. The petitioner assumed charge of his duties on the 31st January, 1950. His appointment as a temporary <ORG> was treated as a re-employment and his pay was accordingly fixed at the minimum of the time scale of <ORG>, that is Rs. 80/- per month. The petitioner passed his departmental examination of his grade in December, 1951. He could not however be declared "quasi-permanent" under the rules because by the 1st July, 1953 he was already more than 28 years old. When the petitioner was reappointed on the 31st January, 1950 his age was 30 years 1 month. When he became qualified for declaration as "quasi-permanent" he was already 33 years 6 months. The petitioner therefore remained a temporary hand and rule 14(c) of the Revised Leave Rules 1933 continued to be applicable to him.

4. The relevant chapter of the petitioner's complaint begins when he was ordered to be transferred to <NAME>. He submitted a representation supported by a medical certificate praying for the cancellation of the order of transfer again on the ground of ill health. This application could not be granted and the petitioner was relieved of his duties at Calcutta on the 11th August, 1955 to join at <NAME>. Instead of proceeding to <NAME> he submitted a petition on the 22nd August, 1955 for reconsideration of his case of transfer. He was thereupon directed to produce a medical certificate from <ORG>, Calcutta about his fitness or unfitness to serve in <NAME>. Thereupon the petitioner was asked to join his duties at <NAME> on the 9th September, 1955. The petitioner still refused. He did not resume his duties and he applied for leave. The petitioner had only 75 day's earned leave and 60 days' half-pay leave to his credit on 12-8-1955. As the petitioner was a temporary <ORG> servant and he had not in fact returned to duty, no half-pay leave was admissible to him in terms of Rule 12 (a) of the Revised Leave Rules. The petitioner applied for earned leave for one month with effect from 21-0-1955 and thereafter asked for an extension of 61 days' leave with effect from 21-9-1955 to the Assistant Collector of <ORG>, <NAME>. He refused the said leave and Informed the petitioner that the leave had been refused. The petitioner was asked to resume duties immediately. Again, the petitioner falled to do so.

5. Thereafter on 1-2-1956 a charge-sheet was issued to the petitioner by the Assistant Collector of <ORG>, <NAME>, whereby the petitioner was asked to show cause for (i) disobedience to orders, and (ii) unauthorised absence. The charge-sheet gave the fullest particulars and evidence that the applicant had to meet. It also expressly said that the petitioner was called upon to show cause in writing within 7 days of the receipt of the charge-sheet why disciplinary action should not be taken against him on the above charges and that he should submit Ms explanation to the office. The notice to show cause also expressly informed him that he should also state in writing whether he wished to be heard in person or to produce any witness or witnesses in defence and, if so, a list of such witnesses along with their addresses to be furnished with his explanation. The petitioner did show cause, and his explanation is an annexure to the petition. He never claimed to be heard in person nor did he claim to produce any evidence. In fact, there was hardly anything of which evidence was necessary. The disobedience to orders was on the facts that the petitioner refused to resume duty and obey the order of transfer. That was admitted. The other charge was "unauthorised absence" which also was admitted fact, What the petitioner was always trying was to avoid a transfer from Calcutta and whenever he was asked to join his duty at any station outside Calcutta, he was always ready with some excuse or other and granted himself leave without waiting for the Authorities to grant him leave and without determining whether any leave was due to him or not and, if so, on what account. Such an attitude or conduct would make any government or public service impossible.

6. The Assistant Collector after enquiry passed an order dated 17-4-1956. He found the petitioner guilty of both the charges. He ordered stoppage of one year's increment of the petitioner but was generous enough to order that the period of unauthorised absence from 11-8-1956 to the date of his rejoining was to be treated as a period of extraordinary leave, a generosity which I shall presently show overstepped the limits of law and the statutory rules relating to extra-ordinary leave. The order directed the petitioner to rejoin his duties within 10 days from the date of the receipt of the order.

7. The petitioner again disobeyed even this order. His excuse for disobeying this order is that he received a letter from the Deputy Head Quarters Assistant to the Collector of Central Excise which said:

"You have exhausted all kinds of leave, Including extraordinary leave for three months on 28-1-56, and under Rule 14(c) of the Revised Leave Rules, 1933 you are deemed to have resigned the post of an <ORG> Clerk in this <ORG> with effect from 29-1-56. You are, therefore, no longer in employment in the <ORG>. Formal order of termination of your service is being issued separately. As per your request, you may see the Collector on 20-1-56 at 11.00 hours."

The petitioner complains that while the Assistant Collector of <ORG>, <NAME>, was asking him to rejoin within 10 days by his order dated 17-4-1956, the Deputy Head Quarters Assistant to the Collector of <ORG>, Calcutta was informing him that he had ceased to be in the employ under Rule 14(c) of the Revised Leave Rules, 1933. There is some justification for this complaint, but there is no merit behind it. The first answer to this complaint is that even then the letter of the Deputy Head Quarters Assistant to the Collector of <ORG>, Calcutta, definitely in-

formed him that he should see the Collector on 20-4-1956 which he did not. He also definitely informed the petitioner that a formal order of termination of service was being issued, so that the formal order of termination had not been issued till then. Besides the letter of the Deputy Head Quarters Assistant of 18-4-1956 was only a reply to the petitioner's own letters dated 28-2-1956, 21-3-1956, 28-3-1956, and 5-4-1956 and; cannot be elevated into a formal order by anybody. In fact, there is nothing on record to show that the petitioner offered at any stage to rejoin his duties at Cooch Behar within 10 days' time allotted to him by the formal order passed on the employee and dated 17-4-1956.

8. Finally, on 7-5-1956 the formal order came. It is signed by the Collector of <ORG>, Calcutta, and is in these terms:

"On expiry of three months ex-leave on 28-1-56, Shri <NAME>, Upper Division Clerk is deemed to have resigned the post of Upper Division Clerk in <ORG> and accordingly ceased to be in Government employ in this Department with effect from 29-1-56 under Rule 14(c) of Revised Leave Rules, 1933."

On that the Deputy Head Quarters Assistant on 9-5-1956 makes a note that the vacancy has since been filled up.

9. To conclude the facts all that is necessary is to record that the petitioner attempted to make a representation for his reinstatement in service to <ORG> but wanted to approach it directly without going through the Collector of <ORG>, Calcutta and thus rendering the representation abortive.

10. That, briefly, is a summary of relevant facts.

11. Mr. <NAME> contends that the order in this case is an order of dismissal and violates the provisions of Article 311(2) of the Constitution. He complains that the petitioner had no reasnoable opportunity of showing cause against the action taken. I have come to the conclusion that neither in the facts of this case nor in law such objections can be sustained. I shall state my reasons very briefly.

12. Article 311 of the Constitution deals with dismissal, removal or reduction in rank I am of the opinion that in the present case it is neither dismissal nor removal nor reduction. The present case is one of due termination of service under the Rules and contract of Service in natural course of events and therefore Article 311 of the Constitution cannot be attracted to such a termination.

13. <ORG> in <CITATION> ) has explained the legal position on this point. The learned Chief Justice of <ORG> at p. 48 of the report Says:

"But if the servant has no right to the post as where he is appointed to a post, permanent or temporary, either on probation or on an officiating basis and whose temporary service has not ripened into a quasi permanent service as defined in the Temporary Service Rules, the termination of his employment does not deprive him of any right and cannot, therefore, by itself be a punishment."

Here in the present case also the applicant's temporary service has not matured into a "quasi-permanent" service as defined by the Temporary Service Rules.

14. Thereafter, the learned Chief Justice of India goes on to observe in his Lordship's judgment in the above case:

"To put it in another way if the Government has by contract, express or implied, or, under the Rules, the right to terminate the employment at any time, then such termination in the manner provided by the contract or the Rules is, prima facie and per se, not a punishment and does not attract the provisions of Article 311."

15. I consider that these observations are a complete answer to Mr. <NAME>'s argument in this case. Here also the Rules of Service expressly stipulate for the termination of service for unauthorised absence from duty without any leave. Rule 14(c) of the Revised Leave Rules, 1933 provides:

"Where a Government servant who is not in permanent employ or quasi-permanent employ fails to resume duty on the expiry of the maximum period of extraordinary leave granted to him, or where such a Government servant, who is granted a lesser amount of extraordinary leave than the maximum amount admissible, remains absent from duty for any period which together with the extraordinary leave granted exceeds the limit up to which he could have been granted such leave under Sub-rule (b), he shall be deemed to have resigned his appointment and shall, accordingly, cease to be in Government employ."

Now this is the rule and part of the contract of service of the petitioner with the <ORG>. In order to get out of the rigour and operation of this Rule, Mr. <NAME> tried to contend that this Rule was introduced in September 1953, subsequently to the appointment of the petitioner in service, and, therefore, was no part of the contract of the petitioner's service with the <ORG>. I am unable to agree with this contention. The service in this case means that the <ORG> servant accepts as part of his conditions of service these Rules as they from time to time are made and modified. In fact, Rule 2 of the Revised Leave Rules says expressly that these Rules shall apply with retrospective effect. A part of the obligations of a <ORG> servant, as I understand under these Rules, is that he takes the risk of the amendments made in these Rules from time to time. So long these Rules or their amendments do not violate any provisions of the Constitution or of any relevant Statute, mutability of these Rules forms part of the Contract and conditions of service, and are to be deemed as engrafted therein as and when they or their amendments are made, unless expressly or by necessary implication, they say otherwise.

16. Then Mr. <NAME> argued that there was no grant of extraordinary leave to the petitioner in this case and, therefore, Rule 14 (c)5 would not apply. His argument is that the extraordinary leave was only granted by the Assistant Collector's order dated 17-4-1956 and he had 10 days time thereunder to join. Therefore he contends that the order of the Collector of Central Excise dated 7-5-1956 saying that his extraordinary leave expired on 28-1-56 must be wrong. This argument has a good deal of plausibility about it. I have, however, come to the conclusion that it is essentially unsound and cannot be upheld. Here again I shall state my reasons briefly. The order of the Assistant Collector of Excise, <NAME> in directing the entire period of the petitioner's absence from duty from 11-8-1955 to the date of his rejoining as extraordinary leave, was in fact beyond and in excess of the rules. Extraordinary leave is granted under Rule 14 of the Revised Leave Rules. It can be granted to an officer only in special circumstances and the duration of such extraordinary leave under the rules cannot exceed 3 or 18 months on any one occasion, the longer period being only admissible in case of:

(i) pulmonary tuberculosis in a recognised sanatorium, or

(ii) tuberculosis of any other part of the body by a qualified tuberculosis specialist or a civil surgeon, or

(iii) leprosy The order of the Assistant Collector, therefore, was clearly beyond the rules as the applicant not satisfying the above conditions could never have more than three months' extraordinary leave. Therefore, the Collector of <ORG> by his order of 7-5-1956 being the appellate authority over the Assistant Collector rightly gave the maximum extraordinary leave permissible, that is three months. Those three months expired on 28-1-1956 on the facts of this case.

17. Mr. <NAME> realised the force of this! argument. He, therefore, contended that if that was the position, then the Collector of <ORG> was retrospectively granting extraordinary leave with which the petitioner could not possibly comply in order to come under rule 14(c) of the Revised Leave Rules. It is quite true that the Assistant Collector on 17-4-1956 by making the entire period of unauthorised absence from 11-8-1955 to the future date of joining ten days ahead was putting forward a prospective date with which the applicant could comply. But then as I have said this was illegal and not permissible under the rules. The Collector of Excise took the only permissible part of this as the maximum, three months of extraordinary leave. It is true that as the Collector was making the order on 7-5-1956 his order naturally became retrospective because he stated that the three months' extraordinary leave expired on 28-1-1956. But then the short answer to this is that by rule 14(d) it is expressly provided that periods of absence without leave may be commuted to extraordinary leave retrospectively. Rule 14(d) of the Revised Leave Rules, 1933 states as follows:

"The authority empowered to grant leave may commute retrospectively periods of absence without leave into extraordinary leave."

I am, therefore, of the opinion that the Collector of Excise's order of 7-5-1956 was justified under this rule. This inevitably brings into operation Rule 14(c) whereby the service must be deemed to be terminated and the Collector had no other option but to declare that fact by his order.

18. This disposes of the objections made on behalf of the applicant in this case. On the facts I find that the petitioner had ample opportunities to show cause against the two charges (1) of disobedience to orders and (2) of unauthorised absences. He was found guilty of both these charges. What thereafter happened by the order of 7-5-1956 by the Collector of <ORG> is only a declaration of the fact that the applicant had ceased to be in service under the Rules of Service. According to the decision of <ORG> which I have quoted it is not a case of dismissal, removal or reduction. I need only point out here that the applicant is not even in "quasi-permanent service". Under rule 3 of the Central Civil Service Temporary Service Rules, 1949 a Government servant can be deemed to be in quasi-permanent service only if there has been a declaration to that effect. No such declaration was issued ini this case for the reasons which I have already mentioned. In those circumstances the observations made by the learned Chief Justice of India in the case quoted above apply with all the vigour to the facts of the present case. In that view of the matter Article 311 of the Constitution does not at all apply to the facts of the present case and Rule 14(c) of the Revised Leave Rules 1933 being part of the Contract and Rules of Service providing for termination of service in due course under its very terms and contract cannot be regarded as ultra vires Article 311 of the Constitution as contended by Mr. <NAME>.

19. Before I conclude it is necessary to state that the petitioner has not at all been vigilant. The order declaring that he had ceased to be in the employment of the <ORG> is dated 7-5-1956. The petitioner does not move for this Rule until 12-2-1957. He knew that the vacancy also had been filled up when he was served with that order of 7-5-1956 because it stated that the vacancy had been filled up. Administration, in my view, cannot be allowed to wait indefinitely in this manner because an aggrieved person does not choose to move the court with reasonable diligence for redress of his alleged grievance. Even if I were satisfied on the merits of this application, which I am not, to allow this application after this long delay would not only prejudice the administration but the new appointment which has since been made, and would therefore be unjust An effort was made by Mr. <NAME> to explain the delay by showing that his client wrote a solicitor's letter. But then that solicitor's letter was not written until 14-8-1956. In fact even the letter from <ORG> which directed the petitioner to come through the proper channel, namely, the Collector of Central Excise, Calcutta, was dated 5-7-1956 and no step was taken thereafter until 12th February of the following year. Finally, I am satisfied that this is an unmeritorious application. A <ORG> servant who has consistently refused to obey orders of transfer and who has consistently absented himself from duty without being granted leave does not discharge the minimum obligations of a <ORG> servant; and when even under the formal order of the Assistant Collector of Excise dated 17-4-1956 he did not even offer to rejoin within the time of 10 days given to him and does not move the <ORG> until long after the vacancy has been filled up then he is not in my opinion a fit, proper and deserving case to be helped and aided with a constitutional writ of mandamus or certiorari from this <ORG>.

20. I, therefore, dismiss this application and discharge the Rule. All interim orders are vacated. I make no order as to costs.


PETITIONER: PURSHOTTAM DAS Vs. RESPONDENT: SMT. RAJ MANI DEVI DATE OF JUDGMENT: 30/10/1968 BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SIKRI, S.M. CITATION: 1970 AIR 763 1969 SCR (2) 588 ACT: U.P. (Temp.) Control of Rent and Eviction Act 1947, ss. 3 and 7F--Rent Control Officer permitted institution of suit for ejectment--Suit filed--Commissioner revokes permission--State Government allows filing of suit--Defence for ejectment passed--Effect. HEADNOTE: The respondent-landlord obtained permission to institute a suit from the Rent Control & Eviction Officer under s. 3(1) of the U.P. (Temp.) Control of Rent and Eviction Act , 1947, for ejecting from his house the Appellant-tenant. The respondent filed a suit for eviction against the appellant. Later the Commissioner acting under s. 3(3) revoked the permission But <ORG> on March 30, 1963 acting under s. 7F set aside the Commissioner's order and gave leave to the respondent to file the suit after 4 months of the date of the order i.e., July 30. 1963. On July 11, 1963 the trial court decreed the suit. The appellant filed an appeal. The appellate court set aside the trial court's decree and remanded the suit for fresh trial. On remand, the trial court decreed the suit on March 2, 1964 holding that the permission granted by <ORG> became effective from July 30, 1963 and as the suit was. still pending a decree could be passed in the suit. This decision was affirmed by the first appellate court, and also by <ORG>. Dismissing the .appeal this Court. HELD: If <ORG> acting under s. 7F sets aside the order of the Commissioner revoking the permission. the order under s. 3(1) granting permission is revived. The 'result is that there is an effective permission to institute the suit under s. 3(1) and the suit is validity instituted. [578 D] The direction of the 'State 'Government to file the suit after four months of the order meant that the permission under s. 3(1) would become effective on the expiry of 4 months i.e. from July 30, 1963. The landlord had thus an effective permission to institute the suit under s. 3(1) from July 30, 1963. The decree in the suit was passed on March 2. 1964. On that date the landlord had a valid permission to institute the suit. The suit was therefore maintainable. [578 <CITATION> ,  2 S.C.R. 297, distinguished. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1449 of 1966.

Appeal by special leave from the judgment and decree dated April 28, 1966 of <ORG> in Second Appeal No. 289 of 1965.

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

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

The Judgment of the Court was delivered by <NAME>, J. The appellant is the tenant and the respondent is the landlord of House No. 5B, Old 122 Maya Mirganj, Allahabad. The appeal arises out of a suit for ejectment by the landlord against the tenant from the house. On October 11, 1961, the landlord obtained permission to institute the suit from the Rent Control and Eviction Officer under s. 3 (1) of the U.P. (Temp.) Control of Rent and Eviction Act , 1947. On October 14, 1961 the landlord instituted the present suit for eviction against the tenant. On March 27, 1962 <ORG> acting under s. 3 (3) revoked the permission to institute the suit. On March 30, 1963 <ORG> acting under s. 7F set aside the Commissioner's order and gave leave to the landlord to file the suit with effect from July 30, 1963. On July 11, 1963 <ORG> decreed the suit. The tenant filed an appeal against the decree. On November 4, 1963 the appellate court set aside the decree and remanded the suit for fresh trial. After the suit went back on remand <ORG> decreed the suit on March 2, 1964. <ORG> held that the permission granted by <ORG> became effective from July 30, 1963 and as the suit was still pending a decree could be passed in the suit. An appeal against the decree was dismissed on November 28, 1964. A second appeal was dismissed by <ORG> on April 28, 1966. The present appeal has been filed by the tenant after obtaining special leave. The sole question in the appeal is whether in the circumstances there was a valid permission to institute the suit under s. 3 (1 ).

<CITATION> (1) this Court held that a suit validly instituted after obtaining permission of the Commissioner under s. 3(3) did not become incompetent if the State Government acting under s. 7F revoked the permission after the institution of the suit. In that case the District Magistrate refused to give permission under s. 3 (1) to. institute the suit. The Commissioner acting under s. 3 (3) set aside the order and granted permission to institute the suit. The suit was decreed by <ORG> on November 2, 1960. The tenant filed an appeal against the decree. During the pendency of the appeal the State Government acting under s. 7F revoked the permission granted by the Commissioner. The Court held that though the order under s. 3(3) was subject to an order under s. 7F the Government's power under s. 7F to revoke the permission granted by the Commissioner became exhausted once the suit was validly instituted.

In support of his contention that the present suit is not maintainable, the appellant relies on the following observations of <NAME>, J. :-

[1969] 2 S.C.R. 297.

"When the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails. If he cancels the permission granted by the District Magistrate there is no effective permission left and the suit instituted by the plaintiff without a- waiting his decision must be treated as one filed without any valid permission by the District Magistrate."

Having regard to these observations the present suit though validly instituted after obtaining the permission under s. 3 (1) became incompetent when the permission was revoked by the Commissioner under s. 3 (3). But the order under s. 3 (3) itself was set aside by <ORG> under s. 7F during the pendency of the suit. The question is what is the effect of this order under s. 7F . Now, s. 3(4) provides that the order of the Commissioner under s. 3(3) subject to an order passed by <ORG> under s. 7F . If <ORG> acting under s. 7F sets aside the order of the Commissioner revoking the permission, the order under s. 3 (1) granting permission is revived. The result is that there is an effective permission to institute the suit under s. 3 (1) and the suit is validly instituted.

In <NAME> Case (1) the suit was validly instituted after obtaining permission from the Commissioner under s. 3 (3). <ORG> could not render such a suit incompetent by any order under s. 7F . In the present case the suit was validly instituted after obtaining permission from the Rent Control and Eviction Officer under s. 3 (1). The effect of the order of the Commissioner revoking the permission was that the suit became incompetent. <ORG> acting under s. 7F had power to revise and set aside the Commissioner's order and restore the permission granted under s. 3 (1) so as to make the suit competent.

The order of <ORG> after stating that in the interest of justice the house should be available to the landlord for his use, set aside the Commissioner's order under s. 3(3) . The result was that the order of the Rent Control and Eviction Officer passed .under s. 3 (1) stood restored. The further direction in the order that the landlord "is advised to file a suit for eviction from the house in dispute against the opposite party in a civil court under s. 3 of the Act, which will be applicable four months after the date of the order" really means that the permission under s. 3(1) would become effective on the expiry of 4 months. The landlord had thus an effective permission to institute the suit under s. 3(1) on the expiry of four months from March 30, 1963, that is to say, as from July 30, 1963. The (1)  2 S.C.R. 297.

<NAME>

decree in the suit was passed on March 2, 1964. On that date the landlord had a valid permission to institute the suit. The suit was therefore maintainable.

In the result, the appeal is dismissed. There will no order as to costs.

<ORG> dismissed.


<NAME>, J.

1. The plaintiff and the defendant first party were so-sharers in an estate in which one <NAME> had an occupancy holding Sometime in 1899 or 1900 defendant No. 1 brought a suit against <NAME> and purchased the occupancy holding and has continued to be in possession of the holding which has belonged to <NAME>. There has recently been a Collectorate partition between the plaintiff and defendant No.. 1 and on such partition the lands in question have been allotted to the share of the plaintiff. The plaintiff, taking the view that upon the purchase of the occupancy holding by defendant No. 1 that holding became the bakasht of the plaintiff and defendant No. 1, claimed to be put in possession of the land in dispute. The <ORG> below, agreeing with the view of the plaintiff, have decreed his suit.

2. It is necessary to remember that in dealing with the question we are governed by the Bengal Tenancy Act of 1885 and we have nothing whatever to do with the amendment of the Act in 1907. Now Section 22, Clause (2), of the Bengal Tenancy Act as it existed before the amendment in 1907 ran as follows:

If the occupancy right in land is transferred to a person jointly interested in the land as proprietor or the permanent tenure-holder, it shall cease to exist;but nothing in this sub-section shall prejudicially affect the rights of any third person.

3. The question was debated so far back as the year 1896 as to the position of a co-sharer proprietor purchasing an occupancy holding. It was ruled in the case of <CITATION> 24 C. 143 : 1 C.W.N. 166 : 12 Ind. Dec. (N.S.) 761 that there is no law which prevents one of the several co-proprietors from holding the status of a tenant under the other co-proprietors of land which appertains to the common estate and that the effect of the purchase by one co-owner of land of the occupancy right is, not that the holding ceases to exist, but only the occupancy right which is an incident of the holding.

4. According to decision of <ORG>, there was nothing in the sub-section inconsistent with the continuance of the holding divested of this right of occupancy which attached to it.

5. The point again came up for consideration before <ORG> in the case of <NAME> v. Sheikh Kachu 33 C. 386 : 1 C.L.J. l; 9 C.W.N. 249 (F.B.). The Full Bench in that case agreed with the decision of <CITATION> 24 C. 143 : 1 C.W.N. 166 : 12 Ind. Dec. (N.S.) 761. Mr. Justice <NAME> in the course of his judgment pointed out that since the Bengal Tenancy Act contemplated a class of raiyats different from raiyats with right of occupancy, namely, non-occupancy raiyats, and since Section 22 of the Bengal Tenancy Act deliberately stated that the occupancy right shall cease to exist, it followed that the holding did not cease by virtue of the purchase by the co-sharer landlord. In his view the holding still continued notwithstanding the purchase by the co-sharer landlord.

6. Now if this be correct, then something must happen subsequent to the acquisition of the holding by the co-sharer landlord to put an end to the holding. It is suggested that the partition between the co-sharer landlord puts an end to the holding; but in my judgment there is no foundation for this argument in the Bengal Tenancy Act and we have not been referred to any cases which support the argument put before is by the learned <NAME> on behalf of the respondent. I do not desire to express any opinion on the question as to what the position will be tinder the Amending Act of 1907. In my judgment the view taken by the <ORG> below is incorrect, and I would allow the appeal, set aside the judgments and decrees of the <ORG> below and dismiss the plaintiff's action with costs throughout.

<NAME>, <NAME>

7. I agree.


PETITIONER: <ORG>, <NAME> & <NAME>. Vs. RESPONDENT: STATE OF KERALA & ORS. DATE OF JUDGMENT: 01/11/1962 BENCH: <NAME>, <NAME> BENCH: <NAME>, <NAME> DAS, S.K. KAPUR, J.L. SARKAR, A.K. HIDAYATULLAH, M. CITATION: 1963 AIR 760 1963 SCR Supl. (1) 823 CITATOR INFO : D 1964 SC 572 (10) F 1968 SC1213 (3,4) R 1976 SC1790 (18) R 1977 SC 489 (22) F 1988 SC1435 (32) ACT: Agricultural Income Tax-Tea Plantations-Computation of agricultural income-Deductions-<ORG> Statute disallowing expenditure on immature plants-Validity of-Agricultural Income-Tax (Amendment) Act, 1961 (Ker. IX of 1961) s. 2- Indian Income-tax Act, 1922 , s. 2(1) -Indian Income-tax Rules, 1922, rr. 23, 24-Constitution of India, Art. 366 , Seventh Schedule, List II Item No. 46. HEADNOTE: Entry 46, List II of the Seventh Schedule to the Consti- tution empowers the <ORG> to legislate with respect to taxes on agricultural income. Article 366(1) provides that the expression "agricultural income" in the Constitution means agricultural income as defined in the Indian Income-tax Act . Under the Agricultural Income-tax Act , 1950, agricultural income from tea plantations was to be computed in the same manner as it was done under the Indian Income-tax Act , 1922 read with rr. 23 and 24 of the Indian Income-tax Rules. Section 5 of the 824 Agricultural Income-tax Act provided for certain deductions and cl. (j) provided for deductions corresponding to s. 10(2)(xv) of the Income-tax Act. The Agricultural Income- tax (Amendment) Act , 1961, introduced Explanation 2 to s. 5 which provided that no deduction shall be allowed of any ex- penditure laid out or expended for the cultivation, upkeep, or maintenance of immature plants from which no agricultural income war derived during the previous year. The petitioner, an owner of certain tea estates, contended that the amendment was beyond the competency of the <ORG> Legislature. Held, that Explanation 2 to s. 5 of the Agricultural Income- tax Act added by the Amendment Act did not extend to the computation of agricultural income derived from tea plantations. If Explanation 2 was applied to agricultural income from tea plantations it would make such income diffe- rent and higher than such income calculated in accordance with Income-tax Act and r. 24 and would make it void. For the purpose of agricultural income one had to look not merely to the definition in the Income-tax Act but also to the rules made thereunder. The rules were in existence when the Constitution incorporated the definition of "agricultural income" from the Income-tax Act by reference ; the definition of the term was bound up with the rules. JUDGMENT:

ORIGINAL JURISDICTION : Petitions Nos. 234 to 236 of 1961. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights.

<NAME>, Attorney-General for India, <NAME> , Solicitor General of India, <NAME>, <NAME>, <NAME>, <NAME> and <NAME>, for petitioners.

<NAME>, Advoeate-General for the State of Kerala, <NAME> and <NAME>, for respondents.

1962. November 1. The judgment of the Court was delivered by RAGHUBAR DAYAL, J.-These are three petitions under Art. 32 of the Constitution by <ORG>, <NAME> and one of its directors and members praying for a declaration that the Agricultural Income Tax (Amendment) Act, 1961 (Ker. IX of 1961), hereinafter called the Amendment Act , enacted by <ORG>, is null and void and that the State's power to tax income from tea to agricultural income-tax is limited to taking 60% of the income computed for the purpose of the Indian Income-tax Act (hereinafter referred to as the Income-tax Act ) as if it were income derived from business and for the issue of appropriate orders to the respondents viz., the State of Kerala, the Assistant Commissioner of Agricultural Income-tax, <NAME>, and the Deputy Commissioner of Agricultural Income-tax, <NAME>, restraining them, their agents and servants from enforcing or acting upon the provisions of the aforesaid Amendment Act against the petitioner company.

<ORG>, Kottayam, petitioner No. 1, hereinafter called the petitioner, are the owners and managers of the <ORG> and <ORG> situate at Peermade in Kerala State. The Agricultural Income-tax Act , 1950 (originally the Travancore-Cochin Agricultural Income-tax Act XXII of 1950, amended as the Agricultural Income-tax Act , 1950 by Act VIII of 1957 of <ORG>), hereinafter called the Agricultural Income-tax Act , has been in force in the State of Kerala during the assessment years 1958-59, 1959-60 and 1960-61 for which the accounting years of the petitioner were 1957, 1958 and 1959 ending on December 31 of' each year., The petitioner was assessed to agricultural income-tax under the provisions of the Agricultural Income-tax Act during those years. The grievance of the petitioner is that in computing the taxable income in the accounting years for the purpose of assessment of tax under the Agricultural Income-tax Act , the assessing authority did not allow deduction of the expenses incurred by it in the upkeep and maintenance of immature tea plants from which no agricultural income had been derived during those years, though such expenses were deducted by <ORG> in connection with the assessment of income-tax with respect to the non-agricul- tural portion of the income from the petitioner's tea estate in those years. The petitioner filed appeals against the three assessment orders dated August 12, 1960, for assessment years 1958-59 and 1959-60 and dated October 11, 1960, for assessment year 1960-61, before the Deputy Commissioner of Agricultural Income-tax, <NAME>. Those appeals are still pending.

On March 30, 1961, the Agricultural Income-tax (Amendment) Act, 1961, received the assent of the Governor of the State of Kerala. Sub-section (2) of s. 1 provides that this Act would be deemed to have come into force with effect on and from April 1, 1951. Section 2 provides for the addition of Explanation 2 to s. 5 of the Agricultural Income-tax Act, 1950. This Explanation reads "Nothing contained in this section shall be deemed to entitle a person deriving agricultural income to deduction of any expenditure laid out or expended for the cultivation, upkeep or maintenance of immature plants from which no agricultural income ha s been derived during the previous year."

The petitioner challenged the validity of the Amendment Act stating that it was not within the competence of <ORG> and that its provisions contravened the provisions of Arts. 14, 10(1)(f) and (g) and 31 of the Constitution. At the hearing, however, the contentions about the Act contravening Arts. 19(1) (f) and (g) and Art. 31 were not raised. The main contention raised at the hearing is that <ORG> cannot enact such a provision which would make agricultural income under it different from 'agricultural income' as defined in the enactments relating to the Income-tax Act and that the impugned Explanation 2 to s. 5 , if applicable to the income from tea plantations, would make the income from such plantations, for the purpose of the Agricultural Income-tax Act , higher than what it would be if computed in accordance with the definition in the Income-tax enactments. The contention is well-founded.

Entry 46, List 11, of the Seventh Schedule to the Constitution relates to taxes on agricultural income. In view of cl. (1) of Art. 246 <ORG> can enact laws about these taxes. Art. 366 provides that unless the context. otherwise requires, the expression 'agricultural income' in the Constitution means agricultural income as defined for the purposes of the enactments relating to Indian income-tax. Therefore, the agricultural income about which <ORG> may enact under Entry 46 of List II would be such income as defined in the Indian Income-tax Act . The relevant portion of the definition of 'agricultural income' in the Income-tax Act , 1922, reads :

"(1) 'agricultural income' means-

(a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such ;

(b) any income derived from such land by-

(i) agriculture, or

(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent- in-kind to render the produce raised or received by him fit to be taken to market, or

iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii); x x x x x"

The income derived from the sale of tea grown and manufactured by the seller is not solely derived from agriculture. It is an income which is derived partially from agricultural operations and partially from manufacturing processes. The income is partly derived from land by agriculture and partly from business. It becomes necessary to determine the proportions of the two incomes in the entire income. Section 59 of the Income-tax Act provides for the making of rules for such determination. The relevant portion of s. 59 of the Income-tax Act empowering <ORG> to make rules reads:

" x x x x x (2) Without prejudice to the generality of the foregoing power, such rules may-

(a) prescribe the manner in which, and, the procedure by which, the income profits and gains shall be arrived at in the case of-

(i) incomes derived in part from agriculture and in part from business;

x x x x (3) In cases coming under clause (a) of sub- section (2), where the income, profits and gains liable to tax cannot be definitely ascertained or can be ascertained only with an amount of trouble and expense to the assessee which, in the opinion of <ORG>, is unreasonable, the rules made under that sub-section may-

(a) prescribe methods by which an estimate of such income, profits and gains may be made, and

(b) in cases coming under sub-clause (1) of clause (a) of sub-section (2), prescribe the proportion of the income which shall be deemed to be income, profits and gains liable to tax; and an assessment based on such estimate or proportion shall be deemed to be duly made in accordance with the provisions of this Act.

x x x x x (5) Rules made under this section shall be published in the official <ORG>, and shall thereupon have effect as if enacted in this Act."

Rules 23 and 24 of the Indian Income-tax. Rules, 1922, made under the above-quoted section, provide for the determination of income for the purposes of income-tax when the entire income is partially agricultural income and partially income chargeable to income-tax under the head 'business'. Rule 23 deals with such cases in general. Rule 24 deals with the case of tea grown and manufactured by the seller, and reads :

"24. Income derived from the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business, and 40 per cent of such income shall be deemed to be income, profits and gains liable to tax Provided that in computing such income an allowance shall be made in respect of the cost of planting bushes in replacement of bushes that have died or become permanently useless in an area already planted, unless such area has previously been abandoned."

The result of rule 24 is that the income derived from the sale of tea grown and manufactured by the seller is to be computed in the first instance as if it was income derived from business. Consequently, the income would be computed in accordance with the provisions of s. 10 of the Income-tax Act. Clause (xv) of sub-s. (2) of s. 10 provides that in computing the income any expenditure by an assessee not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive and not being in the nature of capital expenditure or personal expenses of the assesee laid out or expended wholly and exclusively for the purpose of such business, would be deducted of the income so computed, 40 per cent is, under rule 24, to be treated as income liable to income-tax and it would follow that the other 60 per cent only will be deemed to be 'agricultural income' within the meaning of that expression in the Income- tax Act. It follows, therefore, that the power of <ORG> to make a law in respect of taxes on agricultural income arising from tea plantations will be limited to legislating with respect to the agricultural income so determined. <ORG> is free in the exercise of its plenary legislative power to allow further deductions from such computed agricultural income as it considers fit, but it cannot add to the amount of the agricultural income so computed by providing that certain items of expenditure deducted in the computation of the income from a business under the provisions of the Income-tax Act be not deducted and be considered to be a part of the taxable agricultural income.

The relevant portion of the definition of 'agricultural income' in the Agricultural Income-tax Act reads :

"2. In this Act, unless there is anything re- pugnant in the subject or context-.

(a) 'Agricultural income' means- (1) any rent or revenue derived from land which is used for agricultural purposes (2) any income derived from such land in the State by-

(i) agriculture, or

(ii) the performance by a cultivator or receiver of rent-in-kind (of any process ordinarily employed by a cultivator or receiver of rent-in-kind) to render the produce raised or received by him fit to be taken to market, or

(iii)the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii); Explanation.-Agricultural income derived from such land by the cultivation of tea means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the pur-

poses of the enactments relating to Indian Income-tax;

This definition practically conforms to the definition of 'agricultural income' in sub-cls. (a) and (b) of cl. (1) of s. 2 of the Income-tax Act . The Explanation added in the definition of "agricultural income' in the Agricultural Income-tax Act in substance adopts what has been provided in rule 24 of the Income-tax Rules about the proportion of agricultural income from tea plantations. It follows therefore that agricultural income from tea plantations is to be computed in the same manner as it is computed under the provisions of the Income-tax Act .

Section 5 of the Agricultural Income-tax Act provides for certain deductions to be made in the computation of the agricultural income' of a person and its clause

(j)provides for the deduction of any expenditure not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly or exclusively for the purpose of deriving the agricultural income. This clause corresponds to cl. (xv) of sub-s. (2) of s. 10 of the Income-tax Act. The proviso at the end of the various clauses of s. 5 states that no deduction shall be made under that section if it has already been made in the assessment under the Income-tax Act . This avoids a double deduction. Now, explanation 2 added to s. 5 by the Amendment Act takes away the advantage of the provisions of cl. (j) of s. 5 with respect to the expenses incurred in the upkeep and maintenance of immature plants from which no agricultural income has been derived during the accounting year. We are not concerned in this case With the 'validity of this provision so far as agricultural income from land in which crops other than tea are raised. Here we are concerned with its validity with respect to its application to the income from tea plantations. Explanation 2 in s. 5 of the Agricultural Income-tax Act is obviously not consistent with the Explanation to sub-cl. (2) of cl. (a) of s. 2 of the Agricultural Income-tax Act and also the rule for computing agricultural income made under the Income-tax Act and results in making the agricultural income from tea plantations, for the purpose of the Agricultural Income-tax Act , to be different and higher than such agricultural income when calculated in accordance with the provisions of the Income-tax Act and rule 24. The different provisions of an Act are to be construed in such manner as to make them harmonious. Explanation 2 to s. 5 should be so construed as makes it harmonious with Explanation to subcl. (2) of cl.

(a) of s. 2 of the Agricultural Incometax Act which provides a special definition for agricultural income for tea plantations, such income being that portion of the income derived from land by the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purposes of the enactments relating to Indian Income-tax. Explanation 2, if applied to income from tea, would, create an agricultural income which is not contemplated by the Income-tax Act and the Constitution and would then be void. Though wide in terms, Explanation 2 to s. 5 should therefore be construed, not to apply to the computation of agricultural income derived from land by the cultivation of tea. Such a construction would make it harmonious with the Explanation to sub-cl. (2) of cl. (a) of s. 2 of the Agricultural Income-tax Act.

It is true, as urged for the respondents, that <ORG> has full freedom to enact such provisions as it considers fit in respect of tax on agricultural income and that such power includes the power to enact for matters subsidiary and incidental to the taxation of agricultural income. We also agree that <ORG> is free to provide the method of computation of the taxable agricultural income and is free to allow any particular deductions from the gross income as it considers fit. It is not disputed for the respondent that the power of <ORG> to enact a law in respect of agricultural income relates only to such agricultural income as is defined in Art. 366 of the Constitution.

It is however urged that for the purpose of this definition, one has to look to the definition of 'agricultural income' in the Income-tax Act and not to the rules made thereunder. We do not agree. 'Agricultural income' as defined in the Constitution means ' agricultural income for the purpose of the enactments relating to income-tax'. One such enactment is the Income-tax Act . Rule 24 of the Income-tax Rules has been made under the powers conferred by s. 59 of the Income- tax Act and has effect as if enacted in that Act. When s. 59 of the Income-tax Act provides for the rules made under that Act to prescribe the proportions of income from business and income from agriculture in the entire income derived in part from agriculture and in part from business, the proportion so prescribed must be taken to be prescribed by the Act. These rules were in existence in 1950 when the Constitution incorporated the definition of 'agricultural income' from the Income-tax Act by reference. The definition of the term was bound up with the Rules. It has been further submitted for the respondents that cl.

(xv) of sub-s. (2) of s. 10 of the Income-tax Act is a general provision and should give way to the special provision of the Agricultural Income-tax Act with respect to the deductions from the gross income for the purpose of computing the agricultural income. This cannot be, as we have to take the definition of agricultural income' from what it is in the Income-tax Act . The provisions of the Income-tax Act and the rules made thereunder will control the provisions of the Agricultural Income-tax Act enacted by <ORG>.

The contention that the amount spent for the upkeep and maintenance of the immature plants till they become mature is in the nature of a capital expenditure is also not sound. It is a running expenditure and not of the nature of capital expenditure.

It is further contended that if such expenditure be held to be deductible expenditure, the proviso to rule 24 would be redundant. Again, we do not agree. The proviso allows the deductions of the cost of planting bushes in replacement of bushes which died or became permanently useless in an area already planted. It deals with the cost of planting bushes and not with the expenses incurred in the upkeep and maintenance of bushes already planted. These petitions are not with respect to the expenses incurred in the planting of immature tea bushes but are with respect to expenses incurred in the upkeep and maintenance of immature plants. We therefore construe Explanation 2 to s. 5 of the Agricultural Income-tax Act not to extend to the computation of agricultural income derived from tea plantations and hold that in computing such agricultural income for the purpose of taxation under the Agricultural Income-tax Act , the Explanation to s. 2 of that Act must be kept in mind and the income must be taken to be as defined for the purposes of the enactments relating to Indian income-tax. In view of our opinion it is not necessary to consider the other contention for the petitioner that Explanation 2 to s. 5 is discriminatory and contravenes the provisions of Art. 14 of the Constitution.

We therefore allow these petitions to this extent that we declare that Explanation 2 to s. 5 of the  Agricultural Income-tax Act added by the Amendment Act does not cover the expenses incurred in the upkeep or maintenance of immature tea plants from which no income has been derived during an accounting year and that the agricultural income derived from tea plantations will be computed in accordance with the provisions of the Income-tax Act and the Income-tax Rules. We order that a writ be issued to the respondents restraining them, their agents and servants from enforcing or acting upon the provisions of Explanation 2 to s. 5 of the Agricultural Income-tax Act against <ORG>, Kottayam, viz., petitioner No. 1. We direct the respondents to pay the costs of petitioner No. 1, on eset.

Petitions allowed in part.