PETITIONER: UNION OF INDIA & ORS. Vs. RESPONDENT: <ORG> & ANR. DATE OF JUDGMENT03/05/1988 BENCH: <NAME>, M.H. BENCH: <NAME>, M.H. PATHAK, R.S. (CJ) CITATION: 1988 AIR 1236 1988 SCR (3) 838 1988 SCC (3) 348 JT 1988 (2) 255 1988 SCALE (1)979 ACT: <ORG> and Salt Act , 1944-Challenging demand of short payment of excise duty being violative of provisions of section 11-A of. HEADNOTE: The respondent No. 1 in this appeal was manufacturing Spun yarn. In the manufacture of the said product, the respondents used as raw material cellulosic fibres and non- cellulosic fibres. Prior to 7th July, 1983, the respondents had filed a classification list in respect of the spun yarn manufactured by them showing the same as covered by Item No. 18 (III) (i) in the first schedule to the <ORG> and Salts Act, 1944 (" <ORG> Act "). This classification was on the basis that the spun yarn was manufactured by them out of non-collulosic synthetic waste. The said classification list was approved by the excise authorities on 7th July, 1983. A supplementary classification list was approved on 15th October, 1983. Samples were drawn out of the spun yarn manufactured by the respondents and sent for chemical analysis. Reports were submitted by <ORG>. On 7th February, 1984, the Superintendent of <ORG> issued a demand notice against the respondent No. 1 on the footing that there was short payment of excise duty as the goods manufactured by the respondents were liable to be classified under <ORG> Tariff Item No. 18(III) (ii). The respondents filed a writ petition in <ORG>, challenging the notice of demand. On 9th February, 1984, the Assistant Collector of <ORG> passed an order modifying the approval granted to the classification lists submitted by the respondents and classifying the aforesaid product of the respondents under Item No. 18(III) (ii) of Schedule I of the <ORG> Act, on the basis of which the Superintendent, <ORG>, issued on the 10th February, 1984, a notice to the respondent No. 1, calling upon them to show cause why duty short-levied should not be recovered from them under the provisions of section 11-A of the <ORG> Act. A second similar show-cause notice was also issued. The Assistant Collector passed orders of adjudication dated 5th 839 March, 1984, modifying the classification lists and confirming the demand made under the aforesaid notice of demand. The respondents-petitioners thereupon amended their aforesaid writ petition to challenge the two show-cause notices and the orders of adjudication. The petitioners also filed an appeal before the Collector of <ORG> against the said orders of adjudication. <ORG> allowed the writ petition in part, quashing the notice of demand for the period 15th August, 1983 to 6th February, 1984, and the orders modifying the classification lists, and directing the Collector, <ORG> to hear the appeal of the petitioners on merits considering their evidence in respect of the period from 7th February, 1984 onwards. <ORG> took the view that the show-cause notice served on the petitioner could be treated as valid only in respect of the period from 7th February, 1984, onwards and not retrospectively from 15th August, 1983 to 6th February, 1984. <ORG>, the Collector of <ORG> and other <ORG> officers then moved this <ORG> by this appeal against the decision of <ORG>. Dismissing the appeal, the <ORG>, ^ HELD: If the Cellulosic spun yarn made by a manufacturer with the aid of power contains man-made fibre of non-cellulosic origin, it will fall under Item No, 18(III) (ii), but if it does not contain any man-made fibre of non-cellulosic origin, it will fall under Item No. 18(III) (i) and duty would be leviable there at a lower rate. [843B-C] Under the provisions of Section 11-A of the <ORG> Act, before any demand is made on any person chargeable in respect of non-levy or short levy or under- payment of duty, a notice requiring him to show cause why he should not pay the amounts specified in the notice must be served on him. In this case, no such notice was served. The aforesaid notice of demand dated 7th February, 1984, was in violation of the provisions of Section 11-A and is bad in law, and <ORG> was fully justified in quashing the same. [843G-H;844G-H] The appellants contended that although the notice of demand might be set aside, the notice to show cause dated 9th/10th February, 1984, should be treated as a valid notice in respect of the period from 15th August, 1983 to 6th February, 1984 and the period from 7th February, 1984, onwards. The notice referred to the service of notice of demand dated 7th February, 1984 on the respondent No. 1. The notice set out as an established fact that the classification lists submitted by the 840 respondents had been modified by the Assistant Collector, and the only matter with respect to which the respondents were asked to show cause was with regard to the quantification of the amount of short levy which was liable to be recovered from the respondent No. 1. The Notice could not be regarded as a show-cause notice against the modification of the classification lists in respect of the aforesaid period. The show cause notice was bad in law and of no legal effect as far as the earlier period was concerned. Under Section 11-A of the <ORG> Act, the notice can relate only to a period of six months period to the issue of that notice except in cases where it is alleged that the short levy or payment has occurred by reason of fraud, collusion or wilful misrepresentation or suppression of facts or contravention of the provisions of the said Act or rules, as contemplated in the proviso to sub-section (1) of Section 11-A . No such case was made out in the said show-cause notice. The said show-cause notice must be struck down in so far as the period upto 6th February, 1984, was concerned and could be regarded as a proper show-cause notice only in respect of the subsequent period from 7th February, 1984 onwards. Under the said show- cause notice, the question of short levy or non-levy of excise duty prior to 6th February, 1984, could not be gone into by the Collector and <ORG> was right in the view it took. [845B-C;846A- <CITATION> , A.I.R. 1987 S.C. 1161, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1110 (NT) of 1986 From the Judgment and Order dated 24.11.1984 of <ORG>, Indore Bench, passed in M.P. NO. 104 of 1984.

<NAME>, Mrs. <NAME>, Mrs. <NAME> and <NAME> for the Appellants.

Dr. <NAME>, <NAME>, <NAME> and <NAME>, for the Respondents.

The Judgment of the Court was delivered by <ORG>, J. This is an appeal against the judgment of a Division Bench of <ORG>, Jabalpur (Indore Bench) in M. Petition No. 104 of 1984. The appeal is filed at the instance of <ORG>, <ORG>, Indore and two other excise officers. The respondents are the original petitioners in the aforesaid petition. We propose to refer to the parties by the description in the petition.

The facts necessary for the disposal of this appeal can be shortly stated.

The petitioner No. 1 is a Company manufacturing spun yarn. According to the petitioners, in the manufacture of the said product they use as raw material cellulosic fibres and non-cellulosic fibres. Some time prior to 7th July, 1983, the petitioners filed a classification list in respect of the spun yarn manufactured by them showing the same as covered by Item No. 18(III) (i) in the First Schedule to the <ORG>s and Salt Act , 1944 (referred to hereinafter as the " <ORG> Act "). The said schedule is generally referred to as the "<ORG>s Tariff". This classification was on the basis that the spun yarn was manufactured by them out of non-cellulosic synthetic waste. The said classification list was approved by the excise authorities on 7th July, 1983. A supplementary classification list was approved on 15th October, 1983. The petitioners were clearing the goods on the basis of aforesaid classification lists. It appears that samples were drawn out of the spun yarn manufactured by the petitioners and sent for chemical examination. There are some reports submitted by <ORG>, with the details of which we are not concerned. Without giving any show cause notice or affording any opportunity to the petitioners to be heard, on 7th February, 1984, the Superintendent of <ORG> issued a notice of demand for a total sum of Rs.26,47,749.39 against the petitioner No. 1 on the footing that there was short payment of excise duty. This was done on the ground that the yarn manufactured by the petitioners had been manufactured out of waste of synthetic fibres in blend of viscose fibres (of noncellulosic origin) and hence the said goods manufactured by them were liable to be classified under <ORG>s Tariff Item No. 18(III)(ii). It is an admitted position that the yarn manufacturing process used by the petitioners was with the aid of power. The petitioners filed the aforesaid writ petition in <ORG> challenging the validity of the said notice of demand dated 7th February, 1984. <ORG> granted an interim stay of the operation of the demand notice on 9th February, 1984. On the same day, namely, 9th February, 1984, an order was passed by the Assistant Collector of <ORG> modifying the approval granted to the aforesaid classification lists submitted by the petitioners which had been approved as aforesaid and classifying the aforesaid product under Item No. 18(III) (ii) of Schedule 1 of the <ORG>s Act . On 10th February, 1984 a notice was issued by the Superintendent, <ORG> on the petitioner No. 1 reciting inter alia that the Assistant Collector had modified the approval of the classification lists on 9th February, 1984 and calling upon the petitioner No. 1 to show cause why the duty short levied should not be recovered from them under the provisions of Section 11-A of the <ORG>s Act. A second similar show cause notice was also issued. The petitioner No. 1 wrote to the excise authorities pointing out that in view of the aforesaid writ petition filed by the appellant, the adjudication proceedings should be stayed till writ petition was disposed of. This request was turned down on 5th March, 1984 and orders of adjudication were passed by the Assistant Collector modifying the classification lists and confirming the demand made under the aforesaid notice of demand. The petitioners thereupon amended the aforesaid writ petition filed by them and challenged the two show cause notices as well as the said orders of adjudication dated 5th March, 1984. The petitioners also filed an appeal before the Collector of <ORG>s (Appeal) against the orders of adjudication dated 5th March, 1984. On 24th November, 1984 by the impugned judgment, <ORG> allowed the aforesaid writ petition in part. <NAME>, J. held by his judgment that the writ petition was allowed to the extent that the demand for recovery of Rs.26,47,749.39 for the period 15th August, 1983 to 6th February, 1984, which was the period referred to in the demand notice was quashed. However, the learned Judge directed the Collector, <ORG> before whom the appeal filed by the petitioners was pending to decide the appeal in respect of the demand made by the excise authorities for the subsequent period. <NAME>, J., the other learned judge, in his concurring judgment set aside the two roders issued by the Assistant Collector, <ORG>, Ujjain Division both dated 5th March, 1984 as set out earlier. Copies of these adjudication orders are at Annexure R/10 and R/11 respectively to the writ petition. Very shortly put, both the Judges held that the notice of demand and the orders modifying the classification list served on the petitioners were bad in law and ordered that the same be quashed. A perusal of the judgment also clearly indicates that <ORG> directed that the Collector, <ORG> (Appeal) should hear the appeal of the petitioners on merits after giving the petitioners an adequate opportunity to put their case and their evidence before him in respect of the period from 7th February, 1984 onwards. Thus, <ORG> took the view that the show cause notice served on the petitioners could be treated as valid and effective only in respect of the period from 7th February, 1984 onwards and not retrospectively from 15th August, 1983 to 6th February, 1984 being the period for which the demand has already been made in the demand notice dated 9th February, 1984.

As far as the relevant items in the First Schedule of the Central Excises Act are concerned, it is not necessary to set out the same in detail. It will be enough to point out that if the cellulosic spun yarn made by a manufacturer with the aid of power contains man made fibre of non- cellulosic origin, it will fall under Item No. 18(III) (ii), but if it does not contain any man-made fibre of non- cellulosic origin, it will fall under Item No. 18(III) (i) and duty would be leviable there at a lower rate. The relevant portion of Section 11-A of the Central Excises Act runs as follows:

"When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:

Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of fact, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words "Central Excise Officer", the words "Collector of Central Excise" and for the words "six months", the words "five years" were substituted."

A perusal of the aforesaid provisions shows that before any demand is made on any person chargeable in respect of non-levy or short levy or under payment of duty, a notice requiring him to show cause why he should not pay the amounts specified in the notice must be served on him. It is the admitted position in the present case that no such notice was served. It would thus appear that the aforesaid demand notice dated 7th February, 1984 was in violation of the provisions of Section 11-A and is bad in law. Mr. <NAME>, learned counsel for the appellant, however, contended that although the aforesaid Section provides that no demand could be made against a person thereunder without affording that person an adequate opportunity to show cause against the same, in the present case, though no prior show cause notice was given and the petitioners were not given an opportunity to be heard before the notice of demand was issued, such a notice was issued and an opportunity to show cause was given after the demand was made and the demand confirmed after hearing and hence it must be regarded as valid. It was submitted by him that a post facto show cause notice should be regarded as adequate in law. In support of this contention Mr. <NAME> tried to place reliance on certain decisions where a view has been taken that in cases where urgent and emergent action is required, an opportunity to be heard can be given after the order affecting a person adversely is passed and that where a particular Act does not provide for any such opportunity to be heard being given before an adverse order is passed, a post facto opportunity to be heard might, in certain cases, be regarded as adequate compliance with principles of natural justice. We are of the view these cases have no relevance in considering the questions before us because it is quite apparent that in the present case no urgent or emergent action was required and Section 11-A of the Central Excises Act clearly provides that prior show cause notice must be issued to the person against whom any demand on ground of short levy or non-levy of payment of excise duty is proposed to be made. <CITATION> , A.I.R. 1987 S.C. 1161 this Court has held that the provisions of Section 11-A(1) & (2) of Central Excises and Salt Act , 1944 make it clear that the statutory scheme is that in the situations covered by sub-section (1), a notice of show cause has to be issued and sub-Section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made before making the order. Notice is thus a condition precedent to a demand under sub-Section (2).

In view of the aforesaid decision the submission of Mr. <NAME> must be rejected and it must be held that the aforesaid notice of demand was clearly bad in law and <ORG> was fully, with respect, justified in quashing the same.

The next submission of Mr. <NAME> was that, in any event, as the Collector of Central Excise (Appeals) had been directed to examine the merits of the matter in respect of alleged short levy or non-levy and the modification of the classification lists after allowing adequate opportunity to the petitioners to show cause in respect of the period from 7th February, 1984, onwards, the question as to whether there was short levy or non-levy in respect of the period from 15th August, 1983 to 6th February, 1984 should even also be allowed to be decided by the Collector. It was submitted by Mr. <NAME> that although the notice of demand may be set aside the notice to show cause dated 9/10th February, 1984 should be treated as a valid and effective notice in respect of the period from 15th August, 1983 to 6th February, 1984 as well as the period from 7th February, 1984 onwards. In this connection, it is the submission of Dr. <NAME> that this notice merely asked the petitioners to show cause against calculation or determination of the amount of short levy and not against the alteration in the classification lists on the basis of which short-levy was alleged and hence, in respect of the said period from 15th August, 1983 to 6th February, 1984 the show cause notice is liable to be struck down. In our view the submission of Dr. <NAME> deserves to be accepted. The opening paragraph of the show cause notice refers to the service of notice of demand dated 7th February, 1984 for Rs.26,47,749.39 on the petitioner. Paragraphs 2 and 3 of the said notice run as follows:

"AND whereas the Assistant Collector Central Excise, <NAME> under his letter C.N.

V(18)III/I/1/83/371-1374 dated 9th Feb., 84 has modified approval of the classification lists of the party and has directed that the short levied should be quantified by the Inspector, Central Excise, Biaora/Superintendent Central Excise, Ujjain and confirmation or otherwise of such short levied and recoveries if any would be ordered by him (Assistant Collector Central Excise, Division Ujjain) after following the prescribed procedure. THEREFORE, in accordance with the said order of the Assistant Collector, <ORG>, Ujjain, you are called upon to show cause to the Assistant Collector, Central Excise, Ujjain within 10 days of the receipt of this show cause notice as to why the short levies of Rs.26,47,749.39 should not be recovered from you, under Section 11-A of the Central Excise and Salt Act , 1944."

A reading of these paragraphs clearly shows that the notice set out as an established fact that the classification lists submitted by the petitioners had been modified by the Assistant Collector, <ORG>, Ujjain and the only matter with respect to which the petitioners were asked to show cause was with regard to the quantification of the amount of the short levy and consequently, the amount which was liable to be recovered from the petitioner No. 1. This notice, therefore, cannot be regarded as a show cause notice against the modification of the classification lists in respect of the aforesaid period. In these circumstances, the show cause notice is bad in law and of no legal effect as far as the said earlier period is concerned. Under Section 11-A of the <ORG> Act, the notice can relate only to a period of six months prior to the issue of that notice except in cases where it is alleged the short levy or short payment has occurred by reason of fraud, collusion or wilful misrepresentation or suppression of facts or contravention of the provisions of the said Act or rules made by the period concerned, as contemplated in the proviso to sub- Section (1) of Section 11-A . No such case has been sought to be made here in the said show cause notice. The result is that the said show cause notice must be struck down in so far as period upto 6th February, 1984 is concerned, and can be regarded as a proper show cause notice only in respect of the subsequent period from 7th February, 1984 onwards. We are, therefore, of the view that under the said show cause notice the question of short levy or non-levy of excise duty prior to 6th February, 1984 cannot be gone into by the Collector and <ORG> was right in the view which it took.

In the result, the appeal fails and is dismissed with costs.

S.L. Appeal dismissed.


JUDGMENT

1. On the first point taken we agree with the lower <ORG> that the <ORG>'s jurisdiction to refer to arbitration is confined to matters in difference in the suit itself and does' not extend to all matters in dispute between the parties. Though the wording of paragraph 1, Clause (1) of the Second Schedule, Civil Procedure Code, is not free from ambiguity when taken by itself, the matter is made clear by a reference to forms Nos. 1 and 2 of the Schedule, particularly the latter. Under the old Code the corresponding Section 506 clearly referred to matters in difference in the suit. We think no change in the law was intended by the change in the wording of the rule in the new Code; but it was only a verbal change. Furthermore, on principle, it is difficult to hold that the <ORG> intended that a <ORG> which has no jurisdiction over the subject matter in dispute should have power to refer it to arbitration. Such a result would follow if we give to the words "any matter in difference between them" in paragraph 1(1), Schedule II, Civil Procedure Code, an extended meaning to include all matters in dispute between the parties and not included in the suit. We consider, therefore, the reference in this case was not a valid reference and the award on such a reference cannot be treated as a valid award and it was rightly rejected by the lower <ORG>, cf. <CITATION> 51 Ind. Cas. 155 : 42 M. 632 : 36 M.L.J. 539.

2. It is nest urged that the award should have been accepted as a lawful agreement or compromise of the suit claim under Order XXIII, Rule 3, Civil Procedure Code, and a decree passed in accordance with it so far as it related to the suit. Now it does not appear from the records that such an application was made to the lower Court and it is doubtful if the point should be allowed to be taken before us. However, as the petitioner's <NAME> says the point was taken, we have not refused to, hear, it.

3. We are, however, inclined to think that an award under an invalid reference, being itself invalid, gives no rights either as an award or as a compromise,

4. We are further inclined to follow the view taken by <NAME>, J., (now Chief Justice) in <CITATION> 37 Ind. Cas. 140 : 40 B. 386 : 18 Bom. L.R. 559 that Section 89, Civil Procedure Code, is a bar to the present contention, but it is not necessary to express a final opinion on the point.

5. The civil revision petition fails and is dismissed with costs.


PETITIONER: <ORG> Vs. RESPONDENT: SIPAHI <NAME> & OTHERS DATE OF JUDGMENT01/09/1977 BENCH: <NAME>, JASWANT BENCH: <NAME>, JASWANT GOSWAMI, P.K. KAILASAM, P.S. CITATION: 1977 AIR 2149 1978 SCR (1) 375 1977 SCC (4) 145 CITATOR INFO : RF 1979 SC 621 (30) R 1980 SC1109 (4) RF 1980 SC1285 (33) R 1988 SC2143 (14) ACT: Civil Procedure Code (Act V of 1908), Order XLI Rules 4 and 33-Right to obtain reversal of whole decree where it proceeds on ground common to all, applies even at appellate stage. Constitution of India 1950, Article 299 , Settlement of the Jalkar incomplete, not made and executed in the manner prescribed by Article 299 of the Constilion, whether valid. Transfer of Property Act (Act IV) 1882, sections 54 and 107 , General Clauses, Act, v. 3(26)- Registration Act 1908, section 17(1)(d) -Contract of Sale/ Lease of fshing rights to be valid, being a "profit a preadre", must be by means of a registered instrument. Constitution of India, Article 226- When can malidamus issue. Estoppel-Promissory estoppel-There cannot he any estoppel against the <ORG>. HEADNOTE: The fishery rights in <ORG> which settled with the appellant for the year 1974 to 1975 (i.e. 1-7-1974 to 30--6-1975) at the <ORG> of Rs. 1,50,000/- was, however, made in favour of one <NAME> (Respondent No. 1) for the period commencing from July 1, 1975 to June 30, 1976, as a result of the public auction at which respondent No. 1 offered the highest bid of Rs. 1,65,000/-. On a representation made by respondent No. 1, on 1-2-1976, for a remission in the amount at which the settlement had been made in his favour, on the ground that he had suffered a heavy loss during the year 1975-76, as a result of the unlawful activities of the members of the appellant society, or in the alternative for continuance of fishery rights for the years 1976-77 and 1977-78 the <ORG> made the deposit by respondent No. 1 of one year's settlement fee at Rs. 1,65,000/- a sine qua non to the issue of the order of settlement in his favour. Respondent No. 1 made this deposit informed the <ORG>. However, taking a favorable presentations made by the appellant society on February 18, 9, 1976 to its Revenue Minister and the Chief Minister <ORG> of Bihar changed its mind and settled the fishery rights with the appellant, vide its letter No. 10/S.-4032/76-1976, date June 29, 1976, on condition of the deposit by the latter of Rs. 1,65,000/- plus the earlier arrears of Rs. 58,868/-, in three equal installments; the first instalment to be deposited before taking the settlement and within a week from that date. It was also made clear that in case the appellant failed to make the deposit aforesaid the settlement be issued by highest bid. On June 30, 1976, when respondent No. 1 went to obtain the "dakhil parwana", he was informed of this subsequent decision of <ORG>. Respondent No. 1 challenged the said orders by filing a writ petition under Art 226 of the Constitution. Though <ORG> found that there was no binding or enforceable contract between respondent No. 1 and <ORG>, it allowed the writ petition relying on the doctrine of promissory estoppel. Allowing the appeal by special leave, the <ORG>, HELD : (1) It is no doubt true that the year 1976-77 has run out and the State has not preferred any appeal against the adverse decision of the High <ORG> but since it has been implemented as a respondent to the present appeal and in actively supporting the appellant who was indisputably in possession and 376 enjoyment of the Jalkar at the commencement of the Proceedings under Article 226 of the Constitution and lost the same as a result of the judgment and order of the High <ORG> and the appellant could not effectively pursue the application for the lease for the year 1977-78 and the reversal of the judgment and order of the High <ORG> which proceeds on grounds common to the appellant and the respondents 2 to 4 can be made in favour of respondent No. 1 to meet the ends of justice under Order XLI Rules 4 and 33 of the Code of Civil Procedure and <ORG> might have been prevented from settling the Jalkar in favour of the appellant because of the mandatory injunction granted by the High <ORG>. The appellant, is vitally interested in the matter and is entitled to maintain and continue to prosecute the appeal and to showthat the writ of mandamus issued by the High <ORG> is unsustainable in law.[380 E-G] (2) The provisions, of Article 299 of the Constitution which are mandatory in character require that a contract made in the exercise of the executive power of the <ORG> or of a State must satisfy there conditions namely, (i) it must be expressly made by the President or by the Governor of the State as the case may be; (ii) it must be executed on behalf of the President or the Governor as the case may be; and (iii) its execution must be by such person and in such manner as the President or Governor may direct or otherwise. Failure to comply with these conditions nullifies the contract and renders it void and unenforceable. [380 H, 381 A, D-E] In the instant case, the settlement of the Jalkar with respondent No. 1 was not made and executed in the manner prescribed by Article 299 of the Constitution. Accordingly, it could not be said to be valid and binding on State. Respondent No. 1 could not base his claim thereon. <CITATION> .  1 S.C.R. 827; <CITATION>  2 S.C.R. 880' <CITATION>  Supp. 1 S.C.R. 876 and <CITATION>  3 S.C.R. 214 applied. (3)The right to catch and carry away the fish being a 'profit a prendre' and as such an immovable property within the meaning of the Transfer of Property Act read in the light of <CITATION> of General Clauses Act, its grant has to be by means of a registered instrument if it is a tangible immovable property exceeding in value of Rs. 100/- under s. 54 of Transfer of property Act and if it is intangible whatever its value. The transaction of sale of the right to catch and carry away the fish if not effected by means of a registered instrument would pass no title or interest. User of the term 'lease' would not make any difference because a lease of fishery which is immovable property, as defined in s. 2(6) of the Registration Act , if it is, for any term exceeding one year or reserves a yearly rent has also to be registered as required by s. 17(1)(d) of the Registration Act 1908 and section 104 of the Transfer of Property Act. In the instant case the transfer of the 'profit a prendre' in favour of respondent No. 1 was admittedly for two years reserving a yearly rent and was not evidenced by a registered instrument. He had therefore no right, title or interest which could be enforced by him. [381 E-H, 382 <CITATION> .  2 SCR 919 followed. (4)There cannot be any estoppel against the <ORG> in exercise of its sovereign legislative and executive functions. The instant case is not one where respondent No. 1 could invoke the doctrine of promissory estoppel particularly in view of the fact that be neither deposited Rs. 3,713/- required for execution of the lease agreement nor was any parwana issued to him. [382 F, G] Excise Commissioner, U.P., Allahabad etc. etc. v. <NAME> etc. etc. A.I.R. 1976 S.C. 2237, applied. 377 <CITATION> .  2 S.C.R. 366, distinguished. (5)The chief function of a writ is to compel the performance of public duties prescribed by statute and to keep subordinate tribunals and officers exercising public function within the limit of their jurisdiction. In order that mandamus may issue to compel the parties to do something, it must be shown that there is a statute which imposes a legal duty and the aggrieved party has a. legal right under the statute to enforce its performance. In the instant case respondent No. 1 was not entitled to apply for grant of a writ of mandamus under Article 226 of the. Constitution and the High court was not competent to issue the same when it has not been shown that 'there is any statute or rule having the force of law which casts a duty on the respondents 2 to 4 which they fail to perform. [383 <CITATION> .  1 S.C.R. 120; <CITATION>  Supp. 2 S.C.R. 144 and Dr. <NAME> v, State of Bihar & Ors. A.I.R. 1973 S.C. 964, referred to. (6)It is within the competence of the <ORG> to give preference to <ORG> and to settle the Jalkar according to the revised policy and procedure formulated by it in exercise of its absolute authority and incorporated in its circular dated April 18, 1974. Respondent No. 1 is entitled to refund on the basis of s. 70 of the Contract Act, proportionate grant of the <ORG> deposited by him for the year 1977-78 for the period commencing from May 1, 1977 to 30th August 1977. [384 A-G] JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1478 of 1976.

Appeal by Special Leave from the Judgment and Order dated 20-8-76 of <ORG> in Civil Writ Jurisdiction Case No' 1463/76.

<NAME>, Miss <NAME> and <NAME> for the Appellant.

<NAME> and <NAME>, <NAME> and <NAME>, for Respondent No. 1.

<NAME> for Respondent Nos. 2 and 3 and 4. The Judgment of the Court was delivered by <NAME>, J.-This appeal by special leave is directed against the judgment and order dated August 20, 1976, of <ORG> at Patna in Civil Writ Judicial Case No. 1463 of 1976 (filed by respondent No. 1) restraining the appellant and respondents 2 to 4 herein from acting on the basis of letter No. 10-S4032/76-1976 R dated June 29, 1976 addressed by <ORG>, <ORG>, to the Deputy Commissioner, <NAME>, Dumka (which formed Annexure- 4 to the aforesaid writ petition) and directing respondent No. 2 to execute the lease of the fishery rights in question in favour of respondent No. 1 and to, put him in possession thereof, if not already done.

The facts and circumstances giving rise to this appeal are : The appellant which is a co-operative society commenced taking settlement ,of Gangapath Islampur <ORG>, bearing Tauzi No. 614 (hereinafter referred to as the '<ORG>') immediately after its establishment and. registration in 1950 (A. D.) The fishery rights in the <ORG> which were settled with the appellant for the year 1974-75 as theretofore was to run from July 1, 1974, to the end of June, 1975 at the <ORG>. of Rs. 1,50,000/-. At the end of the said year, it was discovered that the appellant had defaulted in payment of the <ORG> to the extent of Rs. 66,869/-. The settlement of fishery rights in the <ORG> for the period commencing from July 1, 1975 to June 30,1976 was made in favour of respondent No. 1 by respondent No. 2 through its <ORG> as a result of the public auction at which the former offered the highest bid of Rs. 1,65,000/-. In February, 1976, respondent No. 1 made a representation to the <ORG> of <ORG> praying for a remission of Rs. 75,000/- in the amount at which the settlement had been made in his favour on the ground that he had suffered a heavy loss during the aforesaid period of settlement as a result of the unlawful activities of the members of the appellant society. In the alternative, he prayed that in case the State <ORG> was not in a position to grant the remission, the settlement of fishery rights of the <ORG> be continued with him for a further period of three years at the same amount in order to enable him to recoup the aforesaid loss suffered by him. After some inquiry and consideration of the matter, the <ORG> of <ORG> ordered that the. settlement of the <ORG> should continue with respondent No. 1 for the years 1976-77 and 1977-78 at Rs. 1,65,000/- per year. Their <ORG>, however, made the deposit of the settlement fee of Rs. 1,65,000/- by respondent No. 1 a sine qua non to the issue of the order of settlement. An intimation of this order was given by the <ORG> to its Deputy Commissioner, <NAME>, Dumka, vide its latter No. 10-S-4032/76R dated April 30, 1976, forming Annexure-1 to the writ petition. A copy of this communication was also sent to respondent No. 1 with the direction that he should deposit Rs. 1,65,000/- before the issue of the settlement order for the aforesaid two years. In compliance with this order, respondent No. 1 deposited a sum of Rs. 1,65,000/- on May 3, 1976, vide challan No. 18 (Bank) dated May 3, 1976 and by his letter of the even date, he requested the Sub- Divisional Officer, Sahibganj, to issue the <NAME> of settlement of the <ORG> for the years 1976-77 and 1977-78 in his favour. Respondent No. 1 also communicated the fact of the deposit by himof Rs. 1,65,000/- to the Secretary to <ORG>,<ORG>, by telegram dated May 5, 1976. How-ever, taking a favourable view of the representations made by the appellant on February 18, 1976 and March 9, 1976 to its Revenue Minister and the Chief Minister respectively, <ORG> changed its mind and informed the Deputy Commissioner of Santhal Paragana, Dumka vide its letter No. 10/S-4032/76- 1976-R dated June 29, 1976 that it had "taken the decision that settlement of the aforesaid <ORG> with the Society (i.e. the appellant) be done for the year 1976-77 on the additional conditions (besides those laid down by the prescribed rules and conditions) that it would make the de- posit of all earlier arrears of Rs. 58,868/- along with the amount of settlement of Rs. 1,65,000/- for this year (i.e 1976-77) in three equal instalments, the first instalment to be deposited before taking the settlement" and within a week from that date. It was made clear in the concluding part of the communication that in case the appellant failed to makethe deposit as aforesaid, 'the settlement be issued by highest bid.'On June 30, 1976, when respondent No. 1 went to obtain the'dakhil parwana', he is stated to have been informed of this subsequent decision of the, State <ORG>. Averring that he had been put to a considerable financial loss as a result of the aforesaid subsequent order of the <ORG> settling the fishery rights in <ORG> in favour of the appellant, respondent No. 1 filed a petition under Article 226 of the Constitution in <ORG> at Patna on July 2, 1976 praying that the aforesaid order settling the fishery rights of the <ORG> with the appellant be quashed by a writ of certiorari and the, State <ORG> be directed by a writ of mandamus to execute the lease in his favour for the years 1976-77 and 1977-78 and not to disturb his possession over the fishery right in question during the currency of the term of the lease, The respondent also prayed for such other orders, as the Court might think fit and proper.

The writ petition was contested by the appellant as also by respondents Nos. 2 to 4 herein. In the counter affidavit jointly filed by them in opposition to the, petition, respondents Nos. 2 to 4 averred inter alia that there was no completed contract and hence no formal agreement was executed between the <ORG>. and respondent No. 1 and no 'parwana' was issued in favour of the latter, that the <ORG> had full right and authority to revoke its decision be-fore execution of the agreement and that in view of the well established principles, 'the settlement of the Jalkar had to be, given to the appellant if it was willing to take the lease'. The respondents also denied their liability: for the expenses alleged to have been incurred by respondent No. 1 in connection with the preparation for the lease ordered in his favour by the <ORG> vide the aforesaid Annexure- 1 to the writ petition. They, however, admitted that the appellant indulged in unlawful activities for four days in 1975-76 which had caused a meager loss to respondent No. 1. In the counter affidavit filed by it. the appellant while denying that it was a defaulter, averred that its petition for remission was pending before <ORG> appointed by the <ORG>; that the Assistant Registrar and the Registrar of the Cooperative Societies had recommended the settlement of fishery rights of the Jalkar in its favour and on representations made by it to the Revenue Minister and the Chief Minister, the <ORG> of Bihar had, in conformity with mandatory orders and instructions, issued an order of settlement in its favour on June 28, 1976; that pursuant to that order, it made the necessary deposit by 10.35 A.M. on July 1, 1976 and that respondent No. 1 had no right to challenge the settlement of the fishery rights of the Jalkar in its favour.

<ORG> while holding that there was no binding or enforceable contract between respondent No. 1 and <ORG> allowed the writ petition relying on the doctrine of promissory estopped. Aggrieved by this judgment and order, the appellant has as already stated, come up in appeal to this Court.

Appearing on behalf, of the appellant, Mr. <NAME> has urged the following points :

1. That since there was no completed, binding and enforceable contract between the State of Bihar and respondent No. 1 as contemplated by Article 299 of the Constitution, the aforesaid writ petition filed by respondent No. 1 was not maintainable.

2. That to a case like the present one, the doctrine of promissory estopped had no application and <ORG> has erred in relying upon the same.

3. That in any case, since there was no breach of any statutory duty in the present case, a writ of mandamus could not have been issued by <ORG>.

Mr. <NAME> has, on the other hand, submitted that in the facts and circumstances of the case, <ORG> was justified in applying the principle of promissory estoppel and there is no warrant for interfering with the judgment and order passed by <ORG>. We shall deal seriatim with the aforesaid three contentions raised on behalf on the appellant. But before attempting to do, that, we would like to dispose of the, preliminary objection raised on behalf of respondent No. 1 to the effect that as the period for which the impugned order dated June 29, 1976 settling the Jalkar with the appellant was issued has expired and the State has not chosen to prefer any appeal against the aforesaid. judgment and order of <ORG> the appellant has no manner of right or locus standi to challenge the continuance of settlement with respondent No. 1 for the year 1977-78 and to continue to prosecute the present appeal. It is no doubt true that the year 1976-77 has run out and the State has not preferred any appeal against the adverse decision of <ORG> but since it has been impleaded as a respondent to the present appeal and is actively supporting the appellant who was indisputably in possession and enjoyment of the Jalkar at the commencement of the proceedings under Article 226 of the Constitution and lost the same as a result of the judgment and order of <ORG> and the appellant could not effectively pursue the application for the lease for the year 1977-78 and the reversal of the judgment and order of <ORG> which proceeds on grounds common to the appellant and respondents 2 to 4 can be made in favour of respondent No. 2 to meet the ends of justice under Order 41 Rules 4 and 33 of the Code of Civil Procedure and the State Government might have been prevented from settling the Jalkar in, favour of, the appellant because of the mandatory injunction granted by <ORG>, the appellant is, in our judgment, vitally interested in the matter and is entitled to maintain and continue to prosecution the appeal and to show that the writ of mandamus issued by <ORG> is unsustainable in law. We accordingly overrule the preliminary objection and proceed to consider the aforesaid contentions raised on behalf of the appellant.

Re : Contention No. 1 :-It is now well settled that the provisions of Article 299 of the Constitution which are mandatory in character require that a contract made in the exercise of the executive power of the <ORG> or of a <ORG> must satisfy three conditions viz.

(i) it must be expressed tobe made by the President or by the Governor of the State, as thecase may be;

(ii) it must be executed on behalf of the President orthe Governor, as the case may be and (iii) its execution must be bysuch person and in such manner as the President or Governor may direct or authorise. Failure to comply with these conditions nullifies the contract and renders it void and unenforceable. (See decisions of this Court in <ORG> O. M/s Karam Chand Thapar & Brothers Ltd.(1) <CITATION> ( 2 ) and <CITATION> . (3) It will also be useful to refer to the Judgment of this Court in <CITATION> ( 4 ) where while reiterating the principles laid down in the aforesaid decisions, it was observed "There is no question of estoppel or ratification in a case where there is contravention of the provisions of Article 299(1) of the Constitution. The reason is that the provisions of section 175(3) of the <ORG> of India Act and the corresponding provisions of Art. 299(1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the <ORG>, against unauthorised contracts. The provisions are embodied in s. 175(3) of the <ORG> of India Act and Art. 299(1) of the Constitution on the ground of public policy--on the ground of protection of general public .... and these formalities cannot be waived or dispensed with."

In the instant case, it is obvious that the settlement of the <NAME> with respondent No. 1 was not made and executed in the manner prescribed by Article 299 of the Constitution. Accordingly, it could not be said to be valid and binding on the State of Bihar and respondent No. 1 could not base his claim thereon.

That apart, there is an additional reason for holding that the settlement of Jalkar with 'respondent No. 1 was not valid and enforceable. The right to catch and carry away the fish being a 'profit a prendre' i.e. a profit or benefit arising out of the land, it has to be regarded as immovable property within the meaning of the Transfer of Property Act , read in the light of <CITATION> of the General Clauses Act. If a 'profit a prendre' is tangible immovable property, its sale has to be by means of a registered instrument in case its value exceeds Rs. 100/- because, of section 54 of the Transfer of Property Act. If it is intangible, its sale is required to be effected by, a registered instrument whatever its value. Therefore, in either of the two situations, the grant of the 'profit a prendre' has to be by means of a registered instrument. Accordingly, the transaction of sale of the right to catch and carry away the fish if not effected by means of a registered instrument, would pass no title or interest. ( <CITATION> & (1)  1 S.C.R. 827.

(2) [1962] 2 S.C.R. 880.

(3) [1962] Supp. 1 S.C.R. 876.

(4) [1968] 3S.C.R.214.

Anr.(1) Even if the settlement of Jalkar with respondent No. 1 is regarded as lease as described by him in Annexure-2 to the writ petition, it would not make any difference because a lease of fishery which is immovable property as defined by section 2(6) of the Registration Act if it is for any term exceeding one year or reserves a yearly rent has also to be registered as required by section 17(1) (d) of the Indian Registration Act, 1908 and section 107 of the Transfer of Property Act. As in the instant case, the transfer of the 'profit a prendre' in favourof respondent No. 1 was admittedly for two years reserving a yearlyrent and was not evidenced by a registered instrument.he had no right, title or interest which could be enforced by him. Manifestly therefore, the writ petition was misconceived and ought to have been dismissed.

Re : Contention No. 2 : It is also not a case where respondent No. 1 could invoke the doctrine of promissory estoppel particularly in view of the fact that he neither deposited Rs. 3,713/- (Rupees three thousand, seven hundred and thirteen only) required for execution of the lease, agreement nor was any 'Parwana' issued to him and <ORG> rejected his plea that after the receipt of the Government order, he invested large amounts of money in purchasing boats etc. and had to enter into contracts with large number of employees whose services were needed for the <ORG>. It would be appropriate to refer to the following observations of <ORG> in this respect :-

"The statement referred to above is such too vague and general. No details or particulars have been given, nor any document annexed to the original writ application, or the rejoinder aforesaid in support of these averments. therefore, do not accept the correctness of the statements. However, it was very unlikely that the petitioner 'who had already a subsisting lease would not be having enough or sufficient materials and it was after the communication regarding lease for the period 1976 to 1978 that the petitioner started purchasing boats etc. The vague and general statements that have been made in paragraph 17 of the original writ application do not appear to me to be acceptable."

The doctrine of promissory estoppel could also not be, pressed into service in the present case, as it is well settled that there cannot be any estoppel against the, <ORG> in exercise of its sovereign legislative and executive functions. (See Excise Commissioner, U.P., Allahabad etc. etc. v. <NAME> etc. etc.(2) The decision of this Court in <ORG> v. <ORG>) on which strong reliance is placed by counsel for respondent No. 1 is clearly distinguishable. In that case, unlike the present one, the respondents were not seeking to enforce any contractual right. They were merely seeking to enforce compli- (1) [1955] 2 S.C.R. 919.

(2) A.I.R. 1976 S.C. 2237.

(3) [1968] 2 S.C.R. 366.

ance with the obligation which was laid upon the Textile Commissioner by the terms of the Export Promotion Scheme providing for grant ,(by way of incentives to exporters of woollen textiles and goods) of Entitlement Certificate to import raw materials of a total amount ,equal to 100% of the F.O.B. value of their exports. Their claim was founded upon the equity which arose in their favour as a result of the representation made on behalf of the Government in the aforesaid Scheme, the exports of woollen goods made by them Lo Afghanistan acting upon the representation and curtailment of the import Entitlement by the Textile. Commissioner without notice to them.

Re : Contention No. 3 :-This contention is also well founded and must prevail. There, is abundant authority in favour of the proposition that a writ of mandamus can be granted only in a case where there is a statutory duty imposed upon the officer concerned and there is a failure on the part of that officer to discharge the statutory obligation. The chief function of a writ is to compel performance of public duties prescribed by statute and to keep subordinate tribunals and officers exercising public functions within the limit of their jurisdiction. It follows, therefore, that in order that mandamus may issue to compel the authorities to do something, it must be shown that there is a statute which imposes a legal duty and the aggrieved party has a legal right under the statute to enforce its performance. ( <CITATION> .(1) <CITATION> (2) and <CITATION> .(3) In the instant case, it has not been shown by respondent No. 1 that there is any statute or rule having the force of law which casts a duty on respondents 2 to 4 which they failed to perform. All that is sought to be enforced is an obligation flowing from a contract which, as already indicated, is also, not binding and enforceable, Accordingly, we are clearly of the opinion that respondent No. 1 was not ,entitled to apply for grant of a writ of mandamus under Article 226 of the Constitution and <ORG> was not competent to issue the same. This brings us to the consideration of the last question of the relief which can be granted to the appellant. The settlement of <NAME> with respondent No. 1 undoubtedly did not create any legal right in his favour but as the year 1976-77 has already run out, the appeal in so far as that year is concerned has become infructuous but in so far as the appeal relates to the year 1977-78, we are of the opinion that as respondent No. 1 is not validly exploiting the <NAME> and the application by the appellant for settlement thereof with it is pending with the authorities and according to the revised policy and procedure formulated by it in exercise of its absolute authority and incorporated in its <ORG>'s circular letter No. S. 8 Serial (1)  1 S.C.R. 120.

(2) [1962] Supp. 2 S.C.R. 144.

(3) A.I.R.1973 S.C. 964.

6-0-4663R dated April 18, 1974, addressed to all the Collectors of the, State, it is within the competence of the Government to give preference to <ORG> and to settle the Jalkar with the. appellant for the remainder of the year 1977-78 at 90% of the highest bid amount i.e. 10% less of the highest auction amount but it may not be possible for it to, do so in.... face of the impediment created by the mandamus issued by <ORG>, we would allow the appeal': in so far as the current year is concerned and leave it open to the Government to grant the fishery rights to the appellant in conformity with the aforesaid policy and procedure in case the latter fulfills the conditions laid down therein. In the event of the Government settling the Jalkar with the appellant or any other <ORG> in accordance with the policy and procedure laid down in the aforesaid circular letter, it shall, on the basis of section 70 of the Contract Act refund to respondent No. 1 proportionate amount of the <ORG> deposited by him for the year 1977-78 after going into the accounts which he was bound to, maintain under order passed by this Court on May 6, 1977 for the period commencing from May 1, 1977 to August 30', 1977.

In the circumstances of the case, there will be no order as to costs..

<NAME>

Appeal., allowed..


JUDGMENT <NAME>, J.

1. This appeal has been filed by <ORG> against the order of <ORG> awarding a sum of Rs. 20,000 as compensation to the first respondent herein in respect of an accident resulting in the death of the first respondent's husband, one <NAME>, that took place on 13th June, 1971, when he was hit by a lorry owned by the second respondent and driven by one <NAME>.

2. The first respondent, who is the wife of the deceased <NAME>, filed an application claiming a compensation of Rs. 20,000 before <ORG> under Section 100-A of the Motor Vehicles Act in respect of the accident that took place at 6.00 A.M. on 13th June, 1971, on the ground that the lorry, belonging to the second respondent and driven by its driver in a careless and negligent manner, hit the deceased who was standing near the bus stop, resulting an the death of the deceased on the spot and that as a result of the death, the petitioner had lost her husband and also incurred monetary loss. It is her case that the deceased was earning a minimum of Rs. 12 per day as an artificial diamond worker and that source of income has been entirely lost to her. The said application for compensation was resisted by the second respondent the owner of the lorry and the appellant, the insurer. The first respondent, owner of the lorry, raised the following contentions : The deceased used to get fits. The deceased while crossing the road got fits and fell down on the right rear wheel of the vehicle. The accident was not due to the rash and negligent driving by the driver of the lorry. The insurer raised the following contentions. The accident occurred solely due to the negligence of the deceased who darted across the road and fell on the right rear wheel of the vehicle. The accident was not due to the negligent driving of the lorry by the driver. It also denied the age, earning capacity, etc. of the deceased and said that the compensation claimed was excessive.

3. After analysing the evidence adduced by the parties, the <ORG> took the view that the accident was entirely due to the rash and negligent driving of the lorry by R.W. 1 and that there is no evidence to show that the deceased used to get fits often that while crossing the road in a careless manner, he suddenly swooned and fell under the right rear wheel of the lorry, that the sketch Exhibit A-6 prepared by P.W. 4, the Inspector of Police within whose jurisdiction the place of occurrence is situate, showed that the dead-body was lying 85 feet north of the place where the lorry came to a halt after the impact, that it showed R.W. 1, the lorry driver, should have driven the lorry on the wrong side of the road instead of keeping to the left, and that from this it was clear that he was driving the lorry in a rash and negligent manner when he hit and caused the death of the deceased. The <ORG> has also relied on the evidence of P.W. 2, the eye-witness, who says that the deceased and one <NAME> were waiting for the bus on the eastern side to go to Trichy and as there was no room in the bus, they crossed and came to the mud portion of the road with a view to take tea in his tea-shop, that while were they walking in the mud portion towards his tea-shop, the lorry came from north at a high speed in the wrong side and its front bumper hit <NAME> and threw him away, that <NAME> fell on the road facing down and the front right wheel run over his legs, that the lorry came to a stop after running a distance of 50 feet from the deceased and that the deceased died on the spot. P.W. 2 has also been earlier examined by <ORG>.

4. As regards the quantum of compensation, the <ORG> found that the petitioner is a young girl aged 19 years and the deceased was aged 23 years at the time of his death, that the deceased would have lived for another 40 years if he had not met with the accident, that the deceased was hale and healthy at the time of his death, that as per the evidence of P.W. 3 in whose shop the deceased was working he was getting a daily wage of Rs. 7 to Rs. 12 and that he was a permanent employee in <NAME> shop. On that basis, the <ORG> held that the deceased would have earned daily a sum of Rs. 7 and would have worked for 20 days in a month. On that basis, a sum of Rs. 140 was fixed as his earnings per month, and after giving allowances for his own expenses his contribution to the family was determined at Rs. 70 per month and the annual dependency at Rs. 840. Multiplying the sum by 40, as the deceased would have lived for a period of 40 years, the amount was arrived at Rs. 33,600, but as the claimant had restricted her claim for Rs. 20,000 the <ORG> granted a sum of Rs. 20,000 as compensation. The owner of the lorry has not filed an appeal and the insurance company has alone filed this appeal challenging the said award of compensation.

5. In this appeal, the findings of the <ORG> that the accident was due to rash and negligent driving of the lorry by its driver and that the claimant is entitled to a sum of Rs. 20,000 as compensation, have both been questioned.

6. After going through the evidence of P.W. 2 the eye-witness and R.W. 1, the driver of the lorry, we are satisfied that the <ORG> is justified in its conclusion that the accident was due to rash and negligent driving of the lorry. Exhibit P-6, sketch prepared by the Inspector of Police immediately after the accident, shows the position of the lorry when it came to a halt with reference to the place of impact. Exhibit P-6 shows that the lorry came to a halt after running to a distance of 85 feet. That shows that the lorry was coming at a fairly high speed. Further, the sketch shows that the impact was on the mud portion on the right side of the road, which indicates that the lorry was driven on the wrong side and that the driver did not keep the vehicle to the left side of the road. Therefore, there are enough materials to support the finding of the <ORG> that the accident was due to rash and negligent driving of the lorry by its driver and that it was not due to the deceased's fault in crossing the road carelessly and swooning and falling down on the right rear wheel of the vehicle as spoken to by the lorry driver.

7. On the question of compensation, the learned Counsel for the appellant would, however, say that in any event the compensation awarded is excessive. The learned Counsel for the first respondent had raised a legal plea that <ORG> cannot question the quantum of compensation that the defences open to an insurance company in a claim for compensation under Section 110-A of the Motor Vehicles Act are very limited, and that its objection cannot extend to the quantum, of compensation. The learned Counsel for the appellant contends that all defences that are open to the insured are also open to the insurer, as the ultimate liability for compensation has to foe met only by the insurer under the terms of the insurance policy.

8. Before we proceed to consider the tenability of the relative contentions, we may note the relevant statutory provisions. Section 96(1) of the Motor Vehicles Act says that if judgment in respect of any liability under a certificate of insurance under Section 95(4) is obtained against any person insured by the policy, the insurer shall, subject to the provisions of that section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor in respect of the liability. Sub-section (2) to Section 96 , however, says that no sum shall be payable under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice of the proceedings through the <ORG> and the insurer to whom notice of the proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the grounds set out in Clauses (a), (b) and (c) thereunder. Section 96(2) , therefore, indicates that the defences that are normally open to an insurer as against the claim of a third party in respect of the policy issued by it can be only on certain stated grounds. Section 110-C (2-A) dealing with the procedure and powers of the <ORG> says that where in the course of any enquiry, the <ORG> is satisfied that there is collusion between the person making the claim and the person against whom the claim is made or the person against whom the claim is made has failed to contest the claim, the <ORG> may direct the insurer to be impleaded as a party to the proceedings and the insurer so impleaded shall thereupon have the right to contest the claim on all or any of grounds that are available to the person against whom the claim has been made. A conjoint reading of both the Sections 96(2) and 110-C (2-A) indicates that it is only when there is collusion between the person making the claim and the person against whom the claim is made, or the person against whom the claim is made has failed to contest the claim, the insurance company is enabled to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made, and not in every case where the insurance company has been impleaded.

9. The above provisions of the Motor Vehicles Act have come up for consideration in a series of decisions. <CITATION> , it has been held that the insurer can take only those defences which are open to him under Sub-section (2) of Section 96 of the Motor Vehicles Act, 1939, and that apart from the extent indicated by the statute, an insurer has no right to be made a party to the proceedings initiated by the injured against the insured causing the injury. However, it has been held in that case that the insurer has the right to defend the action on all grounds that are open to the insured, provided he has reserved that right by the terms of the policy and defends the action in the Dame of the assured. <NAME> v. G. Veerappan 1966 A.C.J. 101 (Mad.), this Court has observed that the insurance company could not question the quantum of compensation in appeal on the principles laid down in <CITATION> . In <NAME> v. <NAME> 1967 A.C.J. 150 (Punj.), it has been held that the insurance company was not entitled to appeal against the quantum of compensation in view of the clear terms of Section 96(2) , and that an appeal against the order of the <ORG> by the insurance company which he could not contest before the Motor Accidents <ORG>, was not competent. In <NAME> v. <NAME> ; a Division Bench held that Section 96 of the Motor Vehicles Act, makes it clear that in the application for damages under the Motor Vehicles Act an insurance company need not be made a party by the claimant, but under Sub-section (2), it is the duty of the Court to issue a notice of the proceedings to the insurance company and on such notice being issued, the insurer in entitled to be made a party and defend the action only on the ground that the policy stood cancelled on the grounds stated in the sub-section, and that it is only on those limited grounds that the insurer is entitled to contest the proceedings. <CITATION> 1974 A.C.J. 234, a Division Bench of this Court had expressed the view that the defences that are open to the insurance company are only those which are specified under Section 96(2) of the Motor Vehicles Act and that however if the insurance policy provides for a reservation of the right to the insurance company to defend and raise all defences that are open to the insured, the insurance company can by itself raise those defences. <CITATION> (1972) A.C.J. 420, a bench of <ORG> has held that the insurer can urge all the defences open to the insured in the name of the insured as per the terms of the policy, if there is reservation to that effect in the policy or if the conditions set out in Section 110-C (2-A) are satisfied. <CITATION> , an appeal had been filed by the insurer against the award of the claims <ORG> questioning only the quantum of compensation. The question that arose in that appeal was as to what are the defences that are open to the insurance company. It was held that it is not open to the insurance company to assail the findings of the <ORG> on merits, and that the grounds that can be raised in the appeal by the insurance company can only be those set out in Clauses (a) to (c) of Sub-section (2) of Section 96 .

10. The decisions referred to above seem to lay down the following two exceptions to the limitation contained in the provisions of Section 96(2) as to the nature of the defences that are open to the insurer in a claim under Section 110-A . One exception is that contained in Section 110-C (2-A) where is a collusion between the claimant and the insured or where the insured has not chosen to defend the proceedings. The second exception is where the insurance policy itself enables the insurer to defend the action in the name of the insured in respect of the claims arising under the policy.

11. In this case, Section 110-C (2-A) cannot apply as the insured resisted the claim before the <ORG>, but has not chosen to file the appeal. The mere fact that the insured has not filed an appeal does not mean that there is collusion between him and the claimant. The insured has not remained ex parte before the <ORG> and therefore, he cannot be said to have abandoned the defence. Similarly, it is not shown that the insurance policy contains a clause enabling the insurer to raise all defences that are open to the insured in the proceedings under the policy. Even assuming that there is such an enabling provision in the policy, still the insurer can himself raise all contentions that are open to the insured only if he defends the action in the name of the insured. In this appeal, the insured is shown as one of the respondents and he is not shown as a co-appellant along with the insurance company which is the appellant. Therefore, both the exceptions cannot come into play in this case.

12. The learned Counsel for the appellans would, however, submit that the limitation contained in Section 96(2) as to the defence that are open to the insurance company will apply only to the proceedings before the <ORG> and not before the appellate <ORG> and that once an appeal is filed under Section 110-D of the Motor Vehicles Act, the insurance company is entitled to question the award on all grounds that can be raised by the insured. We are unable to accept this contention of the learned Counsel. The fact that an appeal by the insurance company is maintainable under Section 110-D of the Act will not mean that the insurance company can raise all contentions that are open to the insured The statutory limitations contained in Section 96(2) will still apply and it cannot be said that those limitations will govern only the proceedings before the <ORG>, at the initial stages and not the <ORG> at the appellate stage. In our view, the limitations contained in Section 96(2) will equally apply to the appeal filed by the insurance company. Since the insurance company has not filed the appeal in the name of the insured and as there is no collusion proved between the insured and the claimant, the defences that are open to it under Section 96(2) can alone be canvassed in the appeal.

13. Though we have held that the appellant is not entitled to question the quantum of compensation, awarded by the <ORG> as it is not one of the grounds that could be urged by the insurance company under Section 96(2) , we however proceed to deal with the appellant's contention in the appeal regarding the quantum of compensation, as it was also argued. In this case, the wife of the deceased was aged only 19 years at the time of the death of the deceased who was aged 23 years. There is clear evidence that he was earning a minimum sum of Rs. 7 per day. The employer, P.W. 3, has given evidence that he is a permanent worker and he was earning anything between Rs. 7 and Rs. 12 per day. The <ORG> appears to be right in holding that out of his earnings, a sum of Rs. 70 be taken as the monthly dependency of the claimant. On that basis, the annual dependency works out to Rs. 840 and even taking thirty years as the remaining span of life of the deceased, the compensation will easily work out to more than Rs. 20,000. We do not, therefore, see that the compensation fixed in this case by the <ORG> is in any way excessive.

14. In any view of the matter the appeal has to be dismissed and it is dismissed accordingly with costs of the first respondent.

15. For the reasons stated in the main judgment in C.M.A. No. 534 of 1975, this petition, is dismissed.


PETITIONER: STATE OF ORISSA & ORS. Vs. RESPONDENT: LALL BROTHERS DATE OF JUDGMENT25/08/1988 BENCH: <NAME>, <NAME> (J) BENCH: <NAME>, <NAME> (J) RANGNATHAN, S. CITATION: 1988 AIR 2018 1988 SCR Supl. (2) 579 1988 SCC (4) 153 JT 1988 (3) 552 1988 SCALE (2)542 CITATOR INFO : RF 1989 SC 606 (7) ACT: Arbitration Act 1940: Sections 14, 17, 30 and 33- Unreasoned award-No ground to set aside award-Lump sum award-Not bad perse. HEADNOTE: The respondent-firm was entrusted with the construction work of a `Minor Irrigation Project' by the State of Orissa- Petitioner. The work was due to be completed on 3rd August, 1977 but it was actually on 31st March? 1978. Disputes arose in regard to the payment for the work. The respondent- contractor raised certain claims and gave notice for the appointment of an arbitrator according to the contract. On 22nd April, 1980, the Chief Engineer appointed an arbitrator but, on an application by the respondent, the judge removed him and appointed another arbitrator. Before the arbitrator, the respondent filed its claim along with some documents and the petitioner filed its counter statement. No further evidence was adduced and on 23rd June, 1982. the arbitrator gave a lump sum award for Rs. 14.67 lakhs with interest at 9% from 30th April, 1978. On 11th July 1983, the Sub-Judge made the award rule of the <ORG> with the modification that the interest was directed to run from 23rd June, 1982, instead of 30the April, 1978. The High <ORG> allowed the appeal in part and deleted the direction regarding future interest awarded by the arbitrator and modified by the Subordinate Judge. In the appeal by special leave to this <ORG>. it waS contended on behalf of the State-petitioner that the award in the instant case was an unreasoned award and a lump such amount was awarded without specifying the amount awarded on particular grounds. Dismissing the special leave petition . PG NO 579 PG NO 580 HELD: 1. The fact that there is an unreasoned award, is no ground to set aside an award. Lump sum award is not bad per se, as such. [583A] In the instant case, the award contained the recitals to the effect that the arbitrator had gone through the claim statement, counterstatement and documents produced before him and heard the representations made by the parties. There is no error of law apparent on the face of the award. There was no misconduct on the part of the arbitrator or in the conduct of the proceedings. [582G] <CITATION> ,  1 SCR 105; <CITATION> .,  1 SCR 324 and Allen Berry JUDGMENT:

282, referred to.

2. An award is conclusjve as a judgment between the parties and the court is entitled to set aside an award only if the arbitrator has misconducted himself, or where an award has been inproperly procured, or is otherwise invalid under Sections 30 and 35 of the Arbitration Act 1940. [583B]

3. An award may be set aside by the <ORG> on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion [583C]

4. It is not open to the Court to speculate, where no reasons are given by the arbitrator, its to what impelled him to arrive at his conclusions. [593D] <CITATION> & weaving co. Ltd., L. R. 50 <CITATION> .  5 SCR 480 referred to.

5. If a question of law was not specifically referred to the arbirator his decision is not final. [583F] <CITATION> ,  3 SCC 82 distinguished.

& CIVIL APPELLATE JURISDICTION : Special Leave petition (civil) No. 7396 of 1987.

PG NO 581 From the Judgment and Order dated 8.4. 1997 of <ORG> in M. A. No. 378 of 1983.

<NAME>, Solicitor General, <NAME> and Miss <NAME> for the Petitioners.

<NAME>, <NAME> and <NAME> for the Respondent The Judgment of the Court was delivered by <NAME>, J. This is an application for leave to appeal under Article 136 of the Constitution from the decision and judgment of <ORG>, dated 8th April, 1987. By the judgment <ORG> had allowed the appeal in part and modified the award so far as it related to the payment of interest in the awarded amount. Another appeal challenging the validity of the award was, however, dismissed.

In or about 1975-76 the respondent was entrusted with the work of "Construction of balance work of earth dam of <ORG>" vide an agreement No. 207 F-

2. The said work was due to be completed on 3rd August, 1977 but it was actually completed on 31st March, 1978. The estimated of value of the work was Rs.25,06,299. It is stated that the contractor, respondent herein, had executed only 18 out of 33 items of work beside one extra item and he was paid a sum of Rs.23.63.122 for the work done. According to, the petitioner no further amount was due to, the contractor, the respondent.

Final bill was prepared on 12th February, 1980 and it was unconditionally accepted be the respondent- contractor. This contention, however, was sought to be disputed before us by the respondent contractor by producing certain bill stated to be the final bill which was `accepted under protest '. It is, however, not necessary for us to go into this question at this stage.

On or about 16th April, 1980, the respondent-contractor raised certain claims and gave notice far appointment of an arbitrator according to the contract. On 22nd April, 1980, the Chief Engineer appointed <NAME> as arbitrator. However. on the application of the respondent the subordinate Judge removed <NAME> and instead appointed <NAME> as the arbitrator. Before the arbitrator the respondent filed its claim along with some documents and the petitioner filed his counter statement. It is stated on behalf of the State that no further evidence PG NO 582 was adduced by the respondent but the petitioner produced the measurement books. The petitioner contended that no amount was due. The respondent disputed that. The arbitrator on behalf of the claim statement and some document filed by the respondent-contractor, gave a lump sum award for Rs. 14,67,000 plus interest at 9% from 30.4. 1978. The award was given on 23rd June, 1982. On 11th July, 1983, the learned Subordinate judge made the award rule of the Court with the modification that the interest was directed to run from 23.6.1982 instead of 30.4. 1978. <ORG> allowed the appeal in part and deleted the direction regarding future interest awarded by the arbitrator and modified by the learned Subordinate Judge. In appeal it was contended before <ORG> for the said judgment by the Subordinate Judge that the following objections were taken against the award, namely:

"(i) that there is an error of law apparent on the face of the award ;

(ii) that the arbitrator has misconducted himself by giving a lump sure award without examining, each item of the claims,

(iii) that the claimant having accepted the final bill unconditionally deposit, the contract between the parties stood closed and, therefore, the arbitration clause was not operative and the arbitrator appointed had no jurisdiction to adjudicated upon the disputes ;

(iv) that the award of interest is without jurisdiction". Except the documents on record, neither of the parties adduced any evidence. It was urged before us that <ORG> did not accept challenge to the award but modified the order of interest as indicated before. The award in question contained the recitals to the effect that the arbitrator had gone through the claim statement, counter statement and documents produced before him and heard the representations made by the parties. There is no error of law apparent on the face of the award. There was no misconduct an the part of the arbitrator or in the conduct of the proceedings. It was contended before us that this is an award which was an unreasoned and a lump of amount was awarded without specifying the amount awarded on particular grounds.

PG NO 583 In our opinion, <ORG> was right in refusing to accept the challenge to the award. The fact that there is an unreasoned award, is no ground to set aside an award. Lump sum award is not bad per se. as such. An award is conclusive as a judgment between the parties and the court is entitled to set aside an award only if the arbitrator has misconducted himself in the proceedings or when the award has been made after the issue of an order by the <ORG> superseding the arbitration or after arbitration proceedings have become invalid under section 35 of the Arbitration Act or where an award has been improperly procured or is otherwise invalid under section 30 of the Act. An award may be set aside by the <ORG> on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and agrument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.

It is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impellied him to arrive at his conclusions. See in this connection the observations of <ORG> in <CITATION> . 50 I.A. 324 and of this Court in <CITATION> .,  5 SCR 480. The fact that a lump sum award has been given, is no ground to declare the award bad. See further <CITATION> ,  1 SCR 105 and <CITATION> .,  1 SCR 324 as well as the decision of this Court in <ORG>,. ( <CITATION> ,  3 SCR 282.

Learned Solicitor General for the petitioner relied on <CITATION> ,  3 SCC 82.Reliance was misplaced. If a question of law was not specifically referred to the arbitrator his decision is not final. It was reiterated that the arbitrator is bound by law, and if an error of law in the award is on the face of it, it is amenable to be corrected.

In that view of the matter the points sought to be urged in this application for leave, are not entertainable. The application fails and is accordingly dismissed.

N.V.K. Petition dismissed.