PETITIONER: <NAME> Vs. RESPONDENT: ISHWAR SINGH PUNlA DATE OF JUDGMENT22/08/1988 BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S. CITATION: 1988 AIR 2031 1988 SCR Supl. (2) 528 1988 SCC (4) 284 JT 1988 (3) 745 1988 SCALE (2)658 CITATOR INFO : E&F 1990 SC 897 (11,14) RF 1992 SC 573 (33) ACT: Haryana Urban [Control of Rent and Eviction] Act, 1973: Sections 1 [3] and 13 [1]-Exemption from applicability of Rent Control Act-Period of 'ten years' exemption-Expiring during pendency of eviction suit-Effect of-Once rights crystallise adjudication to be in accordance with law. % Statutory Constitution: Purposive interpretation in a social amelioration-An imperative of anything else. Words and Phrases:'Actus curiam neminem gravabit'- Meaning of. HEADNOTE: The appellant-landlord filed a civil suit against the respondent-tenant for possession of a shop which had been rented out by him in 1978. The suit was filed on the basis that the respondent was in arrears of rent from lst December, 1981 to 31st May,1982, that the tenancy had been terminated by giving a suit notice, and that section 1(3) of the Haryana Urban (Control of Rent and Eviction) Act , 1973_exempted the building from the purview of the Act. On or about 15th February, 1983, the respondent-tenant filed his written statement, and in November, 1984, moved an application for dismissal of the suit stating that the shop in question was constructed in June 1974 and as such, the period of 10 year had elapsed by June 1984 in terms of section 1  of the Act and as such, the immunity from the application of the Act having expired, the suit under the Act is not maintainable, and that the jurisdiction of <ORG> was barred. The Sub-Judge held that the decree was not necessary, to be passed within the exemption period of 10 years under section 1 (3) of the Act, and accordingly dismissed the respondent's application. The respondent preferred a revision petition to <ORG> , which held that as the suit had not been decreed within the period of 10 years, the building in question came within the operation of the Act and as such, PG NO 528 PG NO 529 the rent Act was applicable and <ORG> had no jurisdiction. <ORG> allowed the petition and consequently dismissed the suit pending before the Sub- Judge. The landlord appealed to this <ORG> by Special Leave. Allowing the appeal and remanding the case, HELD: l.(a) The rights of the parties will have to be determined on the basis of the rights available to them on the date of the suit. The Judgment and Order of <ORG> set aside, and order of the Sub-Judge restored. The suit to proceed in accordance with law. {533G-535F] (b) Section 13 of the Act provides that the tenant in possession of a building or a rented land shall not be evicted therefrom except in accordance with the provisions of the said Section. Those provisions world not be applicable under Section 1(3) to a suit instituted within 10 years from the date of the completion of the building in question. {534B} (c) It is well-settled that no man should suffer because of the fault of the <ORG> or delay in the procedure. "Actus curiam neminem gravabit''-an act of <ORG> shall prejudice no man. [534E] (d) Having regard to the time normally consumed for adjudication, the 10 years exemption or holiday from the application of the Rent Act would become illusory, if the suit has to he filed within that time and be disposed of finally. [534F] (e) It is common knowledge that unless a suit is instituted soon after the date of letting, it world never be disposed of within 10 years and even then within that time it may not be disposed of. That will make the 10 years holiday from the Rent Act illusory and provide no incentive to the landlords to build new holiday to solve problem of shortages of houses. The purpose of the legislation would thus be defeated. [534G] (f) Bearing in mind the well-settled principle, that the rights of parties crystallise on the date of the institution of the suit, the meaningful construction must be that the exemption world apply for a period of 10 years and will continue to be available until the suit is disposed of or adjudicated. Such suit or proceedings must be instituted within the stipulated period of 10 years. Once rights crystallise the adjudication must be in accordance with law. [535E] PG NO 530 <CITATION> ,  3 S.C.C. 352; <CITATION> ,  4 S.C.C. 382; <CITATION> . Vijendrapal Gupta,  3 S.C.R. 491; <CITATION> ,  3 S.C.C. 452, referred to. 2.(a) Purposive interpretation in a social amelioration legislation is an imperative irrespective of anything else. [534G] (b) Judicial time and energy is more often than not consumed in Finding what is the intention of the <ORG> or in other words, the will of the people. The fairest and most rational method to interpret the will of the legislator is by exploring his intentions at the time when the law was made, by signs most natural and probable and these signs are either the words, the context, the subject matter, the effects and consequences or the spirit and reasons of the law. [534H-535A] (c) Each word, phrase or sentence has to be construed in the light of the purpose of the Act itself but words must be construed with imagination of purpose behind them. Though the <ORG> is concerned with seeking of intention, it is rather looking to the meaning of the word that the legislator has used and the true meaning of the words used. {535B} <CITATION> , [1953} SCR 677 and <ORG> v. <ORG>, {1975] A.C. 591 at 613. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3081 of 1988.

From the Judgment and Order dated 25. 10. 1985 of <ORG> in Civil Revision No. 2457 of 1985.

<NAME> and Ms. <NAME> for the Appellant. <NAME> and <NAME> for the Respondent. The Judgment of the Court was delivered by <NAME>, <NAME> Special leave granted. The appeal is disposed of herein after hearing counsel for both the parties.

The appellant-landlord filed a suit for possession in <ORG> in Haryana. The respondent is the tenant in the shop situated at Raj Guru Market which had PG NO 531 been rented out to the respondent in 1978. The suit was filed on the basis that the respondent was in arrears of rent from lst December, 1982 to 3lst May, 1982 and the tenancy of the respondent had been terminated by giving him notice. The suit was filed for recovery of possession on the termination or expiry of the period of tenancy. It was filed because of Section 1(3) of the Haryana Urban (Control of Rent and Eviction) Act , 1973 (hereinafter referred to as 'the Act'). The Act was passed with the object to control the increase of rent of certain buildings and rented land situated within the limits of urban areas and the eviction of tenants therefrom. For our present purpose, it would suffice if we bear in mind two relevant provisions. Section 1(3) of the Act provides as follows :

"Nothing in this Act shall apply to any building the construction of which is completed on or after the commencement of this Act for a period of ten years from the date its completion. "

Section 13 of the Act deals with the eviction of tenants and sub-section (1) thereof provides that the tenant in possession of a building or a rented land shall not be evicted therefrom except in accordance with the provisions of that section. The section thereafter enumerates the statutory grounds for eviction upon which eviction is permitted which incidentally are more or less similar statutory ground all over the country.

On or about 15th February, 1983, the respondent-tenant filed his written statement. In November, 1984, the respondent-tenant moved an application for dismissal of the suit of the appellant stating that the shop in question was constructed in June, 1974 as such the period of ten years had elapsed by June, 1984 in terms of section l(3) of the Act. and, as such, the immunity from the application of the had expired. The suit under the Act is not maintainable and the Jurisdiction of <ORG> stands barred. The learned Sub-Judge, <NAME>. held that the decree was not necessary to be passed within the exemption period of ten years under section 1(3) of the Act. the learned Sub-Judge accordingly dismissed the respondent's application. Aggrieved thereby, the tenant-respondent preferred a revision to <ORG> and Haryana. <ORG> held that as the suit had not been decreed within the period of ten years, the building in question came within the operation of the Act and as such the Rent Act was applicable and <ORG> had no jurisdiction. In the PG NO 532 premises, the learned Judge of <ORG> dismissed the suit pending before the Sub-Judge. Aggrieved thereby the appellant has come up in appeal to this Court. More or less identical provisions of the U. P. Act had come up for consideration before this Court in the case of <CITATION> , [l984] 3 S.C.C. 352. The only point that was urged before this Court in that decision was whether the premises which was not ten years' old on the date of the suit and was exempted from the operation of the new Rent Act , could be governed by it if ten years expired during the pendency of the litigation. The relevant provisions of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act , 1972 provided as follows:

"20. Bar of suit for eviction of tenant except on specified grounds. (1) Save as provided in sub-section [2). no suit shall be instituted for the eviction of a tenant from a building, notwithstanding the determination of his tenancy by efflux of time or on the expiration of a notice to quit or in any other manner.

Provided that nothing in this sub-section shall bar a suit for the eviction of a tenant on the determination of his tenancy by efflux of time where the tenancy for a fixed term was entered into by or in pursuance of a compromise or adjustment arrived at with reference to a suit, appeal, revision or execution proceeding, which is either recorded in court or otherwise reduced to writing and signed by the tenant."

<CITATION> , [supra], the respondent-landlord filed a suit for eviction and for arrears of rent and damages, inter alia, on the grounds that the building in question was not covered by the U.P. Urban Buildings [Regulation of Letting, Rent and Eviction] ct, 1972 in view of the exemption granted to new buildings under section 2  of the said Act and that the defendant- appellant had defaulted in payment of rent. The tenant had resisted the claim on the ground that having regard to the date of construction of the building, it was covered' by the Act, that the plaint having not been amended so as to bring the suit under the Act, it was barred by section 20 and that term was no default in payment of rent. As mentioned hereinbefore, during the pendency of the litigation the exemption granted under section 2  expired. The question was whether the premises which was not ten years' old on the PG NO 533 date of the suit and was exempted from the operation of the Rent Act , would be governed by it if ten years expired during~, the pendency of the litigation. Allowing the appeal, this Court held that the appellant must get benefits of the Act which became applicable to the premises in question during the pendency of the litigation. That would not affect the cause of action in that case. It was held that the contention that the Court had to decide the case on the basis of cause of action that accrued prior to the date of filing the suit and not on a new cause of action was not sustainable. It was further held that normally amendment in plaint is not allowed if it changes the causes of action. However, where the amendment does not constitute an addition of a new cause of action, or raise a new case, but amounts to no more than adding to the facts already, on the record, the amendment would be allowed even after the statutory period of limitation. This Court observed that processual justice required that the events and developments subsequent to the institution of proceedings must be taken into consideration in appropriate cases to promote substantial justice. <NAME> case (supra] was discussed and explained by this Court in Nand Kishore Marwah und <CITATION> ,  4 S.C_'.C. 382. This Court held that in view of section 2(2) of the 1972 Act, if an assessment is made of the newly built house then the date of completion of the building, the date from which 10 years have to be computed will be the date on which the first assessment was made. Therefore, the period of 10 years have to be computed from October. 1976. This Court further hold that if a tenant is entitled to the advantage of sections 39 and 40 of the Act and the period of 10 years elapses during the pendency of the eviction suit or appeal before this Court (which is the continuation of the suit), then the tenant would be entitled to the benefits of the Act. This Court further held that within 10 years as provided for in section 2(2) restriction on the institution of suit as provided for in section 20 (1) will not be applicable. It was held that during the pendency of the litigation even if 10 years expired the restriction under section 20 will not be attracted as the suit had been instituted within 10 years. It is well-settled that the rights of the parties will have to be determined on the basis of the rights available to them on the date of the suit. This Court pointed out that the attention of the Court had not been drawn to the decision of this Court in <CITATION> . <NAME>,  3 S.C.R. 491. This Court referred to the words used in section 20 of the said Act which emphasised that "no suit shall be instituted for eviction." 'This clearly indicates that the restriction put under section 20 of the said Act is to the institution of the suit itself and, therefore, it is clear that if the provision of PG NO 534 this Act applies then no suit for eviction can be instituted except on the grounds specified in the sub-sections of that section of the Act. This applies more so in the instant case where the section 13 of the Act provides that the tenant in possession of a building or a rented land shall not be evicted therefrom except in accordance with the provisions of this section. Those provisions would not be applicable to a suit instituted within 10 years from the date of the completion of the building in question. That is the plain meaning of the expression "use". It was further to be borne in mind that in finding out the plain meaning of the expression "use"z the language, the background, the context, the purpose, these all have to be borne in mind. <CITATION> ,  3 S.C.C. 452, <NAME>, J. has explained the section 2(2) of the U. P. Act as follows ;

"The legislature found that rent control law has a chilling effect on new building construction, and so, to encourage more building operations, amended the statute to release, from the shackle of legislative restriction, 'new constructions' for a period of ten years. So much so, a landlord who had let out his new building could recover possession with-out impediment if he instituted such proceedings within ten years of completion ?' It is well-settled that no man should suffer because of the fault of the <ORG> or delay in the procedure. <NAME> has stated the maxim "actus curiam neminem gravabit"-an act of <ORG> shall prejudice no, man. Therefore, having regard to the time normally consumed for adjudication, the 10 years exemption or holiday from the application of the Rent Act would become illusory, if the suit has to be filed within that time and be disposed of finally. It is common knowledge that unless a suit is instituted soon after the date of letting it would never be disposed of within 10 years and even then within that time it may not be disposed of. That will make the 10 years holidays from the Rent Act illusory and provide no incentive to the landlords to build new houses to solve problem of shortages of houses. The purpose of legislation would thus be defeated. Purposive interpretation in a social amelioration legislation is an imperative irrespective of anything else. Judicial time and energy is more often than not consumed in finding what is the intention of the <ORG> or in other wards, the will of the people. <NAME> tells us that the fairest and most rational method to interpret the will of the legislator is by exploring his inten tions at PG NO 535 the time when the law was made, by signs most natural and probable. And these signs are either the words, the context, the subject matter, the effects and consequence, or the spirit and reason of the law. (Underlined by the <ORG>). See Commentaries on the Laws of England (facsimile of lst edition of 1765, <ORG>, 1979 Vol. 1, p. 59). <NAME>, J. as the learned Chief justice then was, in <CITATION> ,  SCR 677 said that each word, phrase or sentence was to be construed in the light of purpose of the Act itself. But words must be construed with imagination of purpose behind the said Judge <NAME>, long time ago. It appears, therefore, that though we are concerned with seeking of intention, we are rather looking to the meaning of the words that the legislator has used and the true meaning of what words as was said by Lord <NAME> in <ORG> v. <ORG>,  Appeal Cases 591 at 613. We are clearly of the opinion that having regard to the language we must find the reason and the spirit of the law. If the immunity from the operation of the Rent Act is made and depended upon the ultimate disposal of the case within the period of exemption of 10 years which is in reality ability, then there would be empty reasons. In our opinion,bearing in mind the well-settled principle that the rights of the parties crystallise on the date of the institution of the suit as enunciated by this <ORG> in <CITATION> , (supra), the meaningful construction must be that the exemption would apply for a period of 10 years and will continue to be available until suit is disposed of or adjudicated. Such suit or proceeding must be instituted within the stipulated period of 10 years. Once rights crystallise the adjudication must be in accordance with law.

In that view of the matter, we are of the opinion that <ORG> was in error in the view it took. The judgment and order of <ORG> are set aside and the order of the learned Sub-Judge is restored. The suit will now proceed in accordance with law in the light of the observations herein as expeditiously as possible. The costs of the appeal will be the costs of the suit.

N.V.K. Appeal allowed.


PETITIONER: COLLECTOR OF <ORG>, INDORE. Vs. RESPONDENT: <ORG>, CHHINDWARA. DATE OF JUDGMENT: 03/08/2000 BENCH: <NAME>, R.C.Lahoti, N.S.Hegde JUDGMENT:

SANTOSH HEGDE, J.

In the above appeals, common questions of law are involved, hence these appeals are disposed of by this common order. For the purpose of convenience, we shall refer to the facts of the case as found in C.A. Nos.303-304 of 1999. The respondent in the above appeals is engaged in the manufacture of Toilet Soaps and organic surface active agents. It submitted various price lists under Rule 173-C of the Central Excise Rules, 1944 (for short the Rules) claiming deductions from the assessable value. The Assistant Collector provisionally approved the prices after disallowing some of the deductions claimed. Being aggrieved by the said order of disallowing some of the deductions claimed by it, the respondent preferred appeals before the Commissioner of Appeals who allowed most of the deductions sought by the respondent except three items out of which discount damages was one of the items. In an appeal filed to <ORG> (CEGAT), the <ORG> allowed the said appeal following its earlier orders in <ORG>Ltd. vs. Collector of Central Excise (1989 (43) ELT 360) and <CITATION> (1992 (60) ELT 512) and directed the original <ORG> to consider afresh claim for deduction in accordance with law in the light of observations contained in the said order. On remand, the original <ORG> again disallowed some of the deductions claimed by the respondent including the deductions in regard to damages. Having failed in the appeal before the Appellate <ORG>, the respondent approached the <ORG> once again and the <ORG> by the impugned order allowed the appeal of the respondent once again solely relying on its judgments in <ORG> and <ORG> cases (supra) and held that discount should be allowed in regard to the value of compensation paid to the buyers in lieu of damages caused to goods during transit depending on the nature and extent of damage. It is against this order of the <ORG>, the Collector of Central Excise has preferred the above appeals. Learned Attorney General for India appearing for the appellant contended that the <ORG> erred in placing reliance on <ORG> and <ORG> cases (supra) as they had no relevance whatsoever to the facts of the case in hand. He further contended that the deduction claimed being in the nature of a post- manufacturing deduction, under Section 4(4)(d)(ii) of the Central Excise Act, 1944 (hereinafter referred to as the Act), the same is not deductible from the assessable value. He also contended that assuming that such post-manufacturing expenses are deductible, the assessee will have to establish that such deduction is being claimed because same is a part of the trade discounts allowed in accordance with normal practice of that wholesale trade which fact, according to learned Attorney General, the respondent has failed to establish. He also argued that the contention of the respondent that, as a matter of fact, such a practice existed stood belied by the agreement entered into by the respondent with its buyers. <NAME>, learned senior counsel appearing for the respondent firstly contended that the appellants should not be permitted to question the finding of the <ORG> as to the deductibility of the damage discount because this question was finally adjudicated and decided by the <ORG> in the first round of litigation between the parties and the appellants did not, at that stage, question the finding of the <ORG> which remanded the matter back to the original <ORG> to decide certain other questions. Hence, the issue in hand having attained finality, the same should not be permitted to be reopened by way of the present appeal. He also defended the impugned order of the <ORG> on the ground that the deductions permissible under Section 4(4)(d)(ii) are not confined only to deductions available at the time of removal of the goods from the factory-gate but are also available to such of those deductions whose existence in practice has been established even though they get computed subsequent to the removal of the goods from the factory gate. He also contends that the respondent has established the normal practice of the wholesale trade with reference to this deduction by filing affidavits of its buyers and certificates of the Chartered Accountants. He contended that the respondent is not relying upon the agreement referred to by the learned Attorney General for the purpose of claiming the deductions in question. We will first deal with the objection of <NAME> which is in the nature of a preliminary objection. As noted, he contended that the issue in question is finally decided inter se between the parties in an earlier proceedings which was not challenged by the <ORG>; therefore, so far as the parties to these appeals are concerned, the matter stands concluded and the parties cannot reopen the said issue. It is true that this issue was decided by the <ORG> in the earlier round of litigation primarily relying upon two orders to which we have already made reference; the correctness of that finding was not challenged in this <ORG> because the matter stood remanded to the original <ORG>. Inspite of this finding of the <ORG>, the parties again joined issue before the original <ORG> on this issue by producing materials like affidavits and made their submissions based on which the original <ORG> gave a finding against the respondent, who took the matter in appeal before the Appellate Commissioner and having lost before the Appellate Commissioner, the respondent once again took the matter before the <ORG>. From the materials on record, we do not find any argument based on finality of the decision having been urged before the <ORG> nor the <ORG> having decided this issue on that basis. On the contrary, it seems that the <ORG> considered the issue afresh but, relying on the two decisions referred to above, once again decided to hold in favour of the respondent which decision is now under challenge before us. Therefore, on facts, finality is not the ground on which the <ORG> allowed the appeal. That apart, even in law, so far as this <ORG> is concerned, it is not bound by the finding of the <ORG> rendered in the first instance while remanding the case to the lower authorities because this <ORG> is now hearing an appeal against the order of the <ORG> in which the earlier order has merged. This <ORG> in the case of <CITATION> {} has held :- In an appeal against the High <ORG>s finding the Supreme <ORG> is not bound by what the High <ORG> might have held in its remand order. It is true that a subordinate court is bound by the direction of the High <ORG>. It is equally true that the same High <ORG>, hearing the matter on a second occasion or any other court of coordinate authority hearing the matter cannot discard the earlier holding, but a finding in a remand order cannot bind a higher <ORG> when it hears the matter in appeal. (emphasis supplied).

Therefore, the above contention of the respondent has to be rejected. In support of the contention as to the applicability of Section 4(4)(d)(ii) of the Act, the learned Attorney General relied on the observation of this Court in the case of <CITATION> . (1986 Supple. SCC 751) wherein this Court held at para 9 of the said report that trade discounts of any nature should be allowed to be deducted provided, however, the discount is known at or prior to the removal of the goods. Taking support from these observations, learned Attorney General contended that the discounts in regard to which the deduction is sought by the respondent pertain to the damages to the goods which have occurred in transit, admittedly after the goods were removed from the factory-gate; therefore, such a deduction is not permissible in law. He also relied upon a subsequent decision of this Court in <ORG> case reported in , at page 384) wherein this Court after referring to the judgment in the earlier case of M.R.F. (supra) held: - As rightly pointed out by <NAME>, C.J. in the order dated 20.12.1986, what is really relevant is the nature of the transaction (SCC p.760, para 8). The learned Chief Justice pointed out further that the warranty is not a discount on the tyre already sold, but relates to the goods which are being subsequently sold to the same customers. It cannot be strictly called as discount on the tyre being sold. It is in the nature of a benefit given to the customers by way of compensation for the loss suffered by them in the previous sale (SCC p.760, para 8). He characterised it as a compensation in the nature of warranty allowance on a defective tyre (SCC p.760, para 11). We express our respectful concurrence with the said observations.

Therefore, it is contended that the claim of the respondent for deduction being one arising out of a post-manufacturing situation, the same is outside the purview of Section 4(4)(d)(ii) of the Act. He further contended that the claim of the respondents based on normal practice of the wholesale trade is also unacceptable in view of the agreement between the respondent and its buyers wherein at Clause 14 of the agreement it is unequivocally stated that the claim for damages in transit to the goods sold will be borne by the buyer. Therefore, according to the appellant, the respondent cannot claim any trade practice in regard to reimbursement of any value of the goods which have suffered damage in view of Clause 14 of the said agreement. He further contended that the affidavits of the buyers filed by the respondents which are contrary to the terms of the agreement are neither admissible nor can be relied upon. <NAME>, per contra, contends that the deductions contemplated under Section 4(4)(d)(ii) of the Act are not confined only to deductions that could be attributable to a stage prior to the removal of the goods from the factory gate only. According to him, even those expenses which have occurred subsequent to removal of the goods from the factory gate have been held to be deductible expenditure from the assessable value of the goods by this <ORG>. As an example, he submitted that the expenses incurred on the insurance of the goods, year ending discount, interest on receivables etc. even though are expenses incurred after the removal from the factory gate have been accepted as deductible expenditure by various pronouncements of this <ORG>; on this basis he contends that the respondents are entitled for damage deduction. In support of this contention, Mr. <NAME> relied on the judgments of this <ORG> in <ORG> . (1986 Supp. SCC 751), <ORG> . (1995 (4) SCC 349), <ORG>Ltd. vs Collector of Central Excise (1993 (63)ELT 710) and <ORG> (1998 (9) SCC 138), wherein this <ORG> according to Shri <NAME> has allowed deductions which are referable to expenditure occurring after the removal from the factory. He laid special emphasis on deduction allowed on account of insurance. He said that the deductions now sought by the respondent are similar to the insurance deductions and as a matter of fact in the instant case in effect the company is acting as an insurer of its own goods. We will now consider the correctness of the <ORG> finding based on its earlier two decisions in the cases of <ORG> and <ORG> (supra). The <ORG> was of the view that the said decisions fully covered the issue that arose for its consideration in the impugned order. In <ORG>, the <ORG> at para 6 of its order held thus: In Appeal No.E-396/80-A, there is an additional point of dispute. It relates to the quantum of discount or reduction in value for damaged goods cleared by the appellants. The lower authorities have allowed the minimum discount of 25%. Before the Appellate Collector, the appellants claimed that they had allowed 40% to 50% discount for the damaged goods. In the appeal before us, it is contended that there was reduction of upto 75% in some cases. The appellants explained that the nature and extent of damage on different pieces of their products was not uniform and hence the price reduction for the damaged goods could not be uniform. They had allowed varying discount/reduction depending upon the nature and extent of the damage in each case and they prayed that the discount/reduction so actually allowed from case to case may be accepted after necessary verification by the authorities. The learned representative of the department had no comments to make. We find the appellants request quite fair and reasonable, and allow it.

From a perusal of this part of the order, we are unable to deduce any principle either in law or in facts decided by the <ORG> so as to make it applicable to the issue that arose before it in the case with which we are concerned. None of the questions which are addressed before us or decisions cited have been considered by the <ORG> in the said order in Assam Valley case. After carefully considering the said order, we are unable to agree with the <ORG> that those cases either wholly or in part cover the issue involved in the present case. While in the case of <ORG> case (supra), the <ORG> held in para 19 of its order thus: Admittedly, the appellants are giving discount for damages to the goods caused during transit. <NAME> relied on the order on this <ORG> in <ORG> reported in 1989 (43) ELT 360 (<ORG>.). According to the said order, varying discount reduction depending upon the nature and extent of damage in each case is admissible. It is also a case of damage caused to the goods during transit. Following the above order, we direct the <ORG> to verify the nature and quantum of discount for damage caused to the goods in the transit and allow the same.

It is seen that this order of the <ORG> is based on certain admissions made by the parties and reliance was once again placed on the order in Assam Valley which, according to us, does not lay down any principle in law. <ORG>, in our opinion, erred in applying the orders delivered by it in the cases of Assam Valley and <ORG> to the facts of the present case.

This, however, will not assist us to dispose of these appeals finally. When the original <ORG> took up the matter for consideration after remand, the respondent filed certain affidavits of its buyers who in their own words have stated that some trade practice was existing whereby the respondent company was reimbursing the loss suffered by the buyers due to the damages caused to the goods. Learned Attorney General has argued that these affidavits cannot be relied upon. He also urged that the appellant has produced a copy of the agreement between the respondent and its buyers which, according to him, belies the existence of the trade practice as claimed by the respondent. Even though this document was produced only at the first appellate stage, we find it has direct bearing on the question in issue in view of the contents of clause 14 of the said agreement. Based on this clause, it is contended for the appellant that no trade practice in regard to damage deduction is in existence. On behalf of the respondent, it is contended that they are not relying on the agreement to establish the trade practice; still, to rebut the argument of the appellant based on clause 14 of the agreement. the respondent places reliance on clause 15 of the said agreement which, according to the respondent, creates an obligation on the respondent to compensate the buyers for the loss suffered by them due to damage to the goods. We do not want to express any opinion in regard to these arguments addressed by the parties. The authorities below have not gone into the impact of the various clauses of the agreement on the claim of the respondent as to the existence of trade practice in the wholesale market. We feel this raises primarily a question of fact and is a matter which goes to the root of the claim, therefore, it should be decided in the first instance by the original <ORG>. Therefore, we consider it appropriate to remand the matter back to the original <ORG> directing it to decide the matter afresh after giving the parties concerned an opportunity of producing such evidence as they desire to produce and after hearing the parties. We make it clear that we have not expressed any opinion with reference to the various arguments addressed before us and referred to in this order of ours except to the extent of the finding delivered by us in regard to the finality of the decision rendered by the <ORG> in the earlier round of proceedings and in regard to the correctness of the reliance placed by the <ORG> on the two orders of its own while allowing the appeal of the respondent, which according to us, is unsustainable.

For the reasons stated above, the impugned order is quashed, the matter is remitted to the original <ORG> for fresh disposal in accordance with the observations made hereinabove. The appeals are disposed of accordingly.


JUDGMENT <NAME>, J.

1. It is not necessary to narrate all the allegations made in the affidavit, the counter-affidavit, the supplementary affidavit and the rejoinder-affidavit filed in this case. For the purposes, of the decision of this petition the following admitted facts alone are material:-

2. The petitioners were the owners of certain plots of land measuring 5 bighas and 5 biswas situated in the Civil Lines of the town of Muzaffarnagar. On the request of the respondent No. 4 <ORG>, Muzaffarnagar (hereinafter called the Committee), proceedings for acquiring the plots mentioned above were started and notifications under Sections 4 and 6 of the Land Acquisition Act (hereinafter referred to as the Act) were issued, and proceedings for payment of compensation were also started. The Land Acquisition Officer, who in this particular case is not the Collector and District Magistrate of Muzaffarnagar but a Deputy Collector, held an enquiry under Section 11 of the Act and not only prepared but also signed an award. Purporting to act under section 12(2) of the Act as amended by U. P. as also under paras 430 and 497 of the Manual of Government Orders of U. P. in <ORG>, the Land Acquisition, Officer sent a copy of the award to the Land Reforms Commissioner, U. P., and a letter to the <NAME>, Muzffarnagar, who is the ex-officio Secretary of the Committee (hereinafter referred to as the Secretary) directing him to deposit Rs. 18,000 and odd as the cost of the land in dispute.

The Secretary wrote back to the Land Acquisition Officer saying that the amount was excessive and should be reduced. The Land Reforms Commissioner, U. P., also asked the Land Acquisition Officer to review his award and to reduce the amount of compensation payable to the petitioners. At first the Land Acquisition Officer wrote back saying that the petitioners had filed copies of sale deeds from which it was apparent that adjoining plots of land had been sold at the rate of Rs, 3/8/-to Rs. 12/- per square yard whereas compensation had been awarded to the petitioners at the rate of Rs. 1/4/- per square yard only and further that no evidence had been produced on behalf of the respondent No. 4 which could have thrown any light on the value of the petitioners' land which was sought to be acquired. The Land Acquisition Officer also pointed out that in some cases in the vicinity of the land in dispute land had been sold at the rate of Rs. 40/- to Rs. 56/- per square yard. That did not however satisfy the Land Reforms Commissioner who persisted in asking the Land Acquisition Officer to reframe the award with the result that the Land Acquisition Officer yielded and gave an altogether fresh award dated 24-12-1957 drastically reducing the amount of compensation.

3. The only two questions that require consideration in this case are, firstly, whether after having given his award but before it was filed under Section 12 of the Act, it was open to the Land Acquisition Officer to review or revise the earlier award and substitute it by a completely fresh one and, secondly, whether he could do so on the instructions of the Land Reforms Commissioner or at the request of the Secretary. Learned counsel for the parties have stated that no other question is involved in the case.

4. Under the provisions of Section 8 of the Ace the land which is sought to be acquired has got to be marked out and measured. Thereafter under Section 9 of the Act notices have got to be issued to all the persons interested in receiving compensation for the land which is sought to be acquired. Under the provisions of Section 10 the Collector has been given the power to require any person to make or deliver to him at any time and place a statement containing, so far as may be practicable, the names of every other person possessing any interest in the land or any part thereof as co-proprietor, sub-proprietor, mortgagee, tenant or otherwise and of the nature of such interest and of the rents and profits, (if any) received or receivable on account thereof for three years next preceding the date of the statement. After the Collector has issued notices under Section 9 and also, if asked for, received the statements and the names as contemplated by Section 10 , he has to make an enquiry under Section 11 of the Act. Section 11 of the Act reads as follows :

"11. Enquiry and award by Collector.--On the day so fixed, or on any other day to which the enquiry has been adjourned, the Collector shall proceed to enquire into the objections (if any) which any person interested has stated pursuant to a notice given under Section 9 to the measurements made under <CITATION> , and into the value of the land at the date of the publication of the notification under Section 4 , Sub-section (1), and into the respective interests of the persons claiming the compensation and shall make an award under his hand of-

(i) the true area of the land; (ii) the compensation which in his opinion should be allowed for the land and (iii) the apportionment of the said compensation among all the persons known or believed to be interested in the land, of whom or of whose claims, he has information whether or not they have respectively appeared before him." After that is done he is required to file the award under Section 12 of the Act. Section 12 of the Act reads as follows : "12. Award of Collector when to be final,-- (1) Such award shall be filed in the Collector's office and shall, except as hereinafter provided, be final and conclusive evidence, as between the Col- lector and the persons interested, whether they have respectively appeared before the Collector or not, of the true area and value of the land and the apportionment of the compensation among the persons interested, (2) The Collector shall give immediate notice of his award to such of the persons interested as are not present personally or by their representatives when the award is made."

A perusal of Section 11 along with Section 12 of the Act clearly reveals that an award becomes final only after it has been filed in the Collector's office. It may also be noticed that Section 11 does not specifically require the award to be dated. In fact it is not clearly mentioned therein that it should also be signed though the expression "under his hand" occurring in that section may lead to the inference that he has to sign, the award. It cannot be denied that proceedings under the Act for awarding compensation are administrative in their nature. Even if they were judicial (by now it has been held in several decided cases that they are not) there would be no bar to the Land Acquisition Officer tearing out or destroying an award which he had written out and signed.

Such a view was taken by <ORG> in the case of <NAME> v. Asstt. Collector, Surat, 59 Ind Cas 429 : (AIR 1920 Bom 265). <ORG> in the case of <CITATION> ., AIR 1954 SC 194 was called upon to decide as to whether an opinion written out on behalf of a Bench of this Court and signed by one of the Judges constituting the Bench could be validly pronounced after he had died by the other learned Judge who constituted the Bench. On the ground that until the judgment was pronounced it was open to the learned Judge who had written and signed it to change his mind, <ORG> held that that document was a mere opinion and could not be treated to be a valid judgment. From this decision it is clear that till that particular act which gives a judgment or order final solemnity is not performed the judgment or order even though, written and signed can be changed.

The requirement of Sections 11 and 12 of the Act is that after an award is made the same has got to be filed in the Collector's office and once that is done it becomes final. In the present case it cannot be said that the Land Acquisition Officer had not given the touch of finality to his award made earlier because not only he wrote it out and signed it but he also issued a notice calling upon the respondent No. 4 to deposit a sum of Rs. 18,000 and odd and further sent information to the Land Reforms Commissioner, U. P. as required by Section 12(2) of the Act and Paras 430 and 497 of the Manual of Orders of the Government of U. P. in <ORG>. In other words he not only prepared the award but also acted upon it with the result that the award was finally made as contemplated by Section 11 of the Act. It is true that an officer can after writing out and signing an award change his mind and destroy it but this can be done only up to a particular stage i.e., before it is filed. In the present case he not only prepared, signed and filed the award but also took further steps to implement it. To my mind in these circumstances, he has no power left to change the award. If that view were not to be taken disputes between parties could never be finally settled.

There is a difference between the writing out and signing of an award and making an award. Making of an award presupposes a final determination to decide the dispute in a particular manner. Making an award may include the process of writing out and signing the award but so long as the mind has not been finally determined and the process of consideration is still going on the signatures must be held to be provisional and it cannot be said that the award has been made. On the facts of the present case I am satisfied that the earlier award had been made under Section 11 , It is true that in connection with Section 18 of the Act there is some conflict of opinion as to when an award would be deemed to have been made. We are however not concerned with Section 18 of the Act in the present case.

5. The next question to consider is whether the award was filed in the Collector's office as required by Section 12 of the Act. The expression "Collector's office" has given me some difficulty, The question for consideration is whether the words ''Collector's office" denote the collectorate i. e., the office attached to the Collector and District Magistrate or it includes the office of the Land Acquisition Officer performing the functions of the Collector. The word "Collector" has been defined in the Land Acquisition Act as follows:-

<CITATION> . The expression 'Collector' means the Collector of a district, and includes a Deputy Commissioner and any officer specifically appointed by the appropriate Government to perform the functions of a Collector under this Act."

The definition clearly discloses that any person other than the Collector or the Deputy Commissioner of a district can also be appointed to perform the functions of the Collector under the Act and that person will also be deemed to be a Collector for purposes of the Act. That being so it must be held that the expression "Collector's office" also includes the office of the Land Acquisition Officer. Learned counsel has placed reliance upon the definition of the word "Collector" occuring in the U. P. General Clauses Act. There is good authority for the proposition that the provisions of the General Clauses Act do not apply when a particular statute deals with the matter (see <CITATION> , AIR 1952 SC 362). In the present case the earlier award was put on the file of the case and acted upon by issuing notices to the Secretary as also to the Land Reforms Commissioner, U. P. It must therefore be held that it was filed within the meaning of Section 12 of the Act.

It is true that the position with regard to the two awards in this case is the same. If one of them will be deemed to have been filed in the office of the Collector the other must also be deemed to have been filed there. However in view of the fact that in my opinion the first award had become final and it was no longer in the power of the Land Acquisition Officer to have changed it the second award must be held to have been given without jurisdiction.

6. The next point that requires consideration is whether the second award given by the Land Acquisition Officer was at his own instance or under the pressure or advice of the Land Reforms Commissioner. In fact it is not really necessary to go into this question in view of my finding that the second award is without jurisdiction. However in view of the, fact that this order of mine is appealable and the point has been raised at the bar I think it proper to deal with it though only briefly. It is well established that if an authority called upon to pass a judicial, quasi-judicial or administrative order acts under instructions from other and does not exercise his independent judgment the order is liable to be quashed (see <CITATION> , AIR 1958 SC 667). In that case their Lordships of <ORG> observed as follows :-

"From the detailed narration of the facts regarding this particular assessment it is quite clear that the first respondent did not exercise his own judgment in the matter of the assessment in question. Even though he was convinced to the contrary, he asked for the instructions of the Assistant Commissioner (C. S.) and followed the same and assessed the appellants to sales tax in respect of the disputed transactions. The order which he ultimately passed on 15th January, 1955, further showed that he was merely voicing the opinion of the Assistant Commissioner (C. S.) without any conviction of his own and the only thing he had to say in regard to the various grounds mentioned in the letters dated, 21st November, 1953 and 19th June, 1954, was that they appeared to him to be not at all satisfactory. This was hardly a satisfactory way of dealing with the matter. If the Assistant Commissioner (C. S.) had been dealing with the same he could have by all means given in the assessment order which he made his reasons for doing so and these reasons would have been open to scrutiny in further proceedings taken by the appellants either by way of appeal or otherwise ........

We are really surprised at the manner in which the first respondent dealt with the matter of this assessment. It is clear that he did not exercise his own judgment in the matter and faithfully followed the instructions conveyed to him by the Assistant Commissioner (C. S.) without giving the appellants an opportunity to meet the points urged against them. The whole procedure was contrary to the principles of natural justice. The procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of <ORG> concerned. We would have, simply on this ground, set aside the assessment order of the first respondent and remanded the matter back to him for his due consideration, in accordance with law."

7. In the case of <CITATION> , AIR 1946 PC 75, their Lordships of <ORG> emphasised the importance of the awards being made by Land Acquisition Officers under Section 11 on the basis of their own judgment and not even on the agreement of the parties. In the present case it is clear that the Land Acquisition Officer abdicated his functions, in favour of the Land Reforms Commissioner. It has been contended by Mr. <NAME> the learned counsel for the respondent No. 4 that the subsequent award of the Land Acquisition Officer would show that he had applied his own mind to the facts of the case and even though a suggestion had been received from the Land Reforms Commissioner the Land Acquisition. Officer did not surrender his judgment to that of the Land Reforms Commissioner. Mr. <NAME> has also filed a supplementary affidavit along with a true copy of the award dated 24th December, 1957. I am unable to agree that the Land Acquisition Officer set aside the earlier award on the basis of his own judgment.

I have already mentioned above that not only he wrote out and signed his first award and further sent notices to the respondent No. 4 and the Land Reforms Commissioner but also replied back to the Land Reforms Commissioner that his award was a correct one and he had no reason to change it. It is only later on when pressure was brought upon him that he changed his mind. Considering the circumstances of this case I have no hesitation in rejecting the suggestion that the subsequent award was made by the Land Acquisition Officer exercising his own judgment without having been dictated to by the Land Reforms Commissioner. It also appears that the Land Acquisition Officer received some fresh material on the record at the time of preparing the second award without giving the petitioners an opportunity to meet that material. Such a procedure is clearly against the principles of natural justice (see <ORG> v. Commissioner of Income-tax, West Bengal, (S) AIR 1955 SC 65 and <CITATION> , AIR 1959 SC 1238). The second award is bad on this ground also.

8. Before parting with the case I would like to point out that the procedure adopted by the Land Reforms Commissioner was not only illegal but highly improper. There is no provision in the Act under which he could have issued directions to the Land Acquisition Officer to change his award. It is true that there are some paragraphs of the Manual of Orders of the U. P. Government under which the Land Reforms Commissioner can make suggestions. Similar paragraphs or rules have been held to be ultra vires by several High Courts in this country (see <CITATION> , ILR 36 Bom 599, <NAME> v. Special Collector, <NAME>, AIR 1936 Rang 206 and <CITATION> , (AIR 1936 Pesh 217). When the Act does not give the Land Reforms Commissioner any power to interfere he cannot do so even under the cover of paras 430 and 497 of the Manual of Government Orders which are no better than departmental instructions and have no statutory force having no statutory foundation. The Land Reforms Commissioner should have realised that he was a superior officer to the Land Acquisition Officer who was only a Deputy Collector and if he interfered in the manner in which he has done it would become impossible for the Land Acquisition Officer to exercise his own judgment and not to be swayed by what the Land Reforms Commissioner told him. Acts like these are likely to lead the public to lose confidence in land acquisition proceedings and the Land Reforms Commissioner should realise this.

9. The result is that the petition is allowed and the subsequent award i.e. the one dated 24th December, 1957, is quashed. A writ of mandamus is also issued commanding the Land Acquisition Officer to take proceedings under Section 12 of the Act in respect of the first award. In the circumstances of this case I direct the parties to bear their own costs.


PETITIONER: STATE OF HARYANA Vs. RESPONDENT: <NAME> & ORS. DATE OF JUDGMENT06/05/1988 BENCH: <NAME>, L.M. (J) BENCH: <NAME>, L.M. (J) PATHAK, R.S. (CJ) CITATION: 1988 AIR 1301 1988 SCR (3)1013 1988 SCC (3) 416 JT 1988 (2) 444 1988 SCALE (1)889 CITATOR INFO : F 1990 SC1417 (12) RF 1991 SC 564 (4) ACT: Mines & Minerals (Regulation & Development) Act , 1957- Whether a mining lease can be prematurely terminated in purported exercise of powers under Section 4A of-Without notice to the party affected and opportunity to that party to place its view point-Whether such termination is violative of principles of natural justice. HEADNOTE: These appeals were directed against the common judgment of <ORG> in Writ applications filed by different petitioners, challenging the termination of the mining leases granted to them. The State of Haryana which had executed the mining leases in favour of the writ petitioners for ten years under the provisions of the Mines & Minerals (Regulation & Development) Act (the Act), terminated the said leases prematurely in the purported exercise of powers under Section 4A of the Act without prior notice to the writ petitioners or any opportunity to them to defend their cases. The leases were so terminated on the ground that <ORG>-a public sector undertaking-had fully equipped itself to undertake the mining operations. <ORG> allowed the writ petitions. The State of Haryana and <ORG> appealed to this <ORG> by Special leave against the decision of <ORG>. According to the appellant, the necessary consultation between <ORG> and <ORG> was held, fulfilling the conditions under Section 4A of the Act and the decision impugned was taken. The appellant contended that the writ petitioners-lessees had no locus standi to place their view point and it was not necessary to give them notice, and that there was no violation of the principles of natural justice. Dismissing the appeals, the <ORG>, ^ HELD: The language of Section 4A indicates that the Section by itself does not permaturely terminate any mining lease. A decision in this regard has to be taken by <ORG>. The question of <ORG> granting a fresh mining lease in favour of a <ORG> or a <ORG> arises only after the existing mining lease is terminated, the section does not direct termination of all mining leases merely for the reason that a Government Company or a <ORG> has equipped itself for the purpose. It is not correct to say that an existing mining lease can be terminated for the reason that a Government Company or a <ORG> is ready to undertake the work. Viewed thus, the section must be interpreted to imply that a person who may be affected by such a decision should be afforded an opportunity to prove that the proposed step would not advance the interest of mines and mineral development. Not to do so will be violative of the principles of natural justice. Since there is no suggestion in the section to deny the right of the affected persons to be heard, the provisions have to be interpreted as implying to preserve such a right. A final decision to prematurely terminate a lease can be taken only after notice to the lessee.[1019C-H;1020E] The Writ Petitioners-respondents before the <ORG> were never given an opportunity to be heard. If such an opportunity had been afforded, they would have shown that their standard of mining operations was very high and favourably measured against the expected standard and was superior to that of the <ORG>. [1021G] There was no effective consultation between <ORG> and <ORG>, and <ORG> did not form any opinion as required under Section 4A of the Act. The respondents before the <ORG> were entitled to be heard before a decision to prematurely terminate their leases was taken but they were not given any opportunity to place their cases. The respondents must succeed. [1022A- <CITATION> ,  2 SCC 510; <CITATION> , AIR 1987 SC 1802; <CITATION> , AIR 1987 SC 1463 and <CITATION> , etc.,  2 SCR 742, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals No.1472-77 of 1987.

From the Judgment and Order dated 4.12.1986 of <ORG> in Civil Writ Petition Nos. 2148 of 1986, 2417, 2173, 2174, 2175 and 2166 of 1986.

<NAME>

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

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

The Judgment of the Court was delivered by SHARMA, J. The present appeals by the State of Haryana and <ORG> are directed against the common judgment of <ORG> disposing of 6 writ applications filed by different petitioners impleaded as respondent No. 1 herein.

2. Separate mining leases were executed on behalf of the State of Haryana with respect to Silica sand and ordinary sand in favour of the writ petitioners for a period of 10 years, in accordance with the provisions of the Mines & Minerals (Regulation & Development) Act , 1957, hereinafter referred to as the Act. The State of Haryana, in purported exercise of powers under Section 4A of the Act prematurely terminated the leases by its order dated 1st October, 1986 which is quoted in the judgment of <ORG>, stating that it was proper to do so as <ORG>, respondent No. 4 (appellant No. 2 herein) a public sector undertaking had informed that it had fully equipped itself to undertake the mining operation and that necessary permission in terms of the Section had been obtained from <ORG> to prematurely terminate the leases. Admittedly no prior notice to the writ petitioners or any opportunity to them to place their case was given.

3. The lessees contended before <ORG> that essential conditions for exercises of the powers under Section 4A are not satisfied in the present cases and further, the impugned decision is violative of the principles of natural justice. It was also urged that so far as the lease in respect of ordinary sand which is a minor mineral under the Act, is concerned, Section 4A being excluded by the provisions of Section 14 is not applicable. It was also averred that forcible possession of the mining areas was taken even before communicating the impugned order. <ORG> agreed with these contentions and allowed the writ petitions. The State of Haryana and <ORG>, respondents No. 2 and 4, respectively, in the writ cases were allowed special leave to appeal under Article 136. Hence these appeals.

<NAME>

4. Section 4A as it stood at the relevant time read as follows:

"4A.(1) Where <ORG>, after consultation with <ORG>, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may request <ORG> to make a premature termination of a mining lease in respect of any mineral, other than minor mineral, and, on receipt of such request, <ORG> shall make an order making a premature termination of such mining lease and granting a fresh mining lease in favour of such <ORG> company or corporation owned or controlled by <ORG> as it may think fit.

(2) Where <ORG>, after consultation with <ORG>, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may, by an order, make premature termination of a mining lease in respect of any minor mineral and grant a fresh lease in respect of such mineral in favour of such <ORG> company or corporation owned or controlled by <ORG> as it may think fit."

5. Silica sand being a major mineral is governed by Sub-section (1) of Section 4A and ordinary sand by Sub- section (2). According to the appellant, full and necessary consultation between the two Governments i.e. <ORG> and <ORG> was held and it was considered expedient in the interest of regulation of mines and mineral development to take the impugned decision. Reference in this regard was made by the learned counsel to the report of <ORG> referred to in the letters of the Director, <ORG>, <ORG> to the Chief Secretary, <ORG>, dated 20th April, 1985, 8th July, 1985 and 10th July, 1985 and the <ORG>'s letters dated 14th July, 1986, 17th September, 1986 and 29th September, 1986. It has been contended that since a decision was jointly taken by the two Governments to grant mining lease of the entire area to <ORG>, this by itself fulfilled the necessary conditions under Section 4A and as the writ petitioners-lessees had no locus standi to place their point of view with respect to this aspect, it was not necessary to give them a notice. The argument is that in the circumstances there is no question of violation of principles of natural justice. It was also claimed that the <ORG> was the final authority to take a decision under Section 4A with respect to both major and minor minerals.

6. Mr. <NAME>, Additional Solicitor General, stated on behalf of <ORG>, respondent No. 2 that the respondent is ready to reconsider the matter after hearing the parties concerned. He refuted the claim of the appellant that the <ORG> is the ultimate authority to take a decision under Section 4A with respect to major minerals and he appears to be right. Sub-section (1) which deals with major minerals empowers <ORG> to consider the matter and, after having consultation with the <ORG> Government, to take a decision in this regard and once it does so and makes a request to the <ORG> Government for prematurely terminating a lease, the <ORG> Government shall be under an obligation to act. The use of "shall" in this context indicates the binding nature of the request.

7. The language of Section 4A clearly indicates that the Section by itself does not prematurely terminate any mining lease. A decision in this regard has to be taken by <ORG> after considering the circumstances of each case separately. For exercise of power it is necessary that the essential condition mentioned therein is fulfilled, namely, that the proposed action would be in the interest of regulation of mines and mineral development. The question of <ORG> granting a fresh mining lease in favour of a Government Company or a <ORG> arises only after a decision to terminate the existing mining lease is arrived at and given effect to. The Section does not direct termination of all mining leases, merely for the reason that a Government Company or <ORG> has equipped itself for the purpose. The Section was enacted with a view to improve the efficiency in this regard and with this view directs consulation between <ORG> and <ORG> to be held. The two Governments have to consider whether premature termination of a particulare mining lease shall advance the object or not, and must, therefore, take into account all considerations relevant to the issue, with reference to the lease in question. It is not correct to say that an existing mining lease can be terminated merely for the reason that a Government Company or <ORG> is ready to undertake the work.

8. Considered in this light, the Section must be interpreted to imply that the person who may be affected by such a decision should be afforded an opportunity to prove that the proposed step would not advance the interest of mines and mineral development. Not to do so will be violative of the principles of natural justice. Since there is no suggestion in the Section to deny the right of the affected persons to be heard, the provisions have to be interpreted as implying to preserve such a right. Reference may be made to the observations of this Court in <CITATION> ,  2 SCC 510, that where exercise of a power results in civil consequences to citizens, unless the statute specifically out the application of natural justice, such rules would apply. The cases, <CITATION> , AIR 1987 SC 1802; <CITATION> , AIR 1987 1463 and <CITATION> etc.,  2 SCR 742, relied upon by Mr. <NAME> do not help the appellant. The learned counsel placed reliance on the observations in paragraphs 5 to 7 of the judgment in <CITATION> . which were made in connection with legislative activity which is not subject to the rule of audi alteram partem. The principles of natural justice have no application to legislative activities, but that is not the position here. It has already been pointed out earlier that the existing mining leases were not brought to their and directly by Section 4A itself. They had to be terminated by the exercise of the executive authority of the State Government. Somewhat similar was the situation with regard to Section 4A of Haryana Board of School Education Act, 1969 which was under Consideration in <CITATION> , AIR 1987 SC 1463. A matter of policy was adopted and included by the legislature in the impugned section. Besides, the validity of the Section was not under challenge there, as was expressly stated in paragraph 6 of the judgment. So far as the case, <CITATION> is concerned, the learned counsel for the appellant cited it only with a view to emphasise the importance of the mineral wealth of the nation which nobody denies. We, therefore, held that a final decision to prematurely terminate a lease can be taken only after notice to the leassee.

9. Coming to the facts of the present case it will be observed that the question of terminating the mining leases in question before us was introduced for the first time under the letter dated 14.7.1986 (page 80) of the State of Haryana. The earlier letter dated 20.4.1985 and 8.7.1985, of <ORG>, Union of India sent to <ORG> discussed the general question about the desired improvement in the mining field and referred to the report of <ORG> on silica sand mining in Haryana. The report had highlighted various aspects of silica sand mining in the State and made several positive suggestions. It was stated in the letter dated 20th April, 1985 that if the lessees did not comply with the requirements mentioned therein, their leases "deserve to be terminated in accordance with the procedure established under law." In the letter dated 8th July, 1985, further emphasis was laid on ensuring scientific mining of optimum utilisation of natural resources, ensuring safety in operation and ensuring payment of fair wages to the mine workers. In this letter the desirability of entrusting mining operations to the public sector was mentioned but it was also stated that the representatives of <ORG> had in the earlier meetings expressed their inability to entrust <ORG> (appellant No. 2 before us) with the mining operations in the entire State immediately. Additional terms and conditions were also suggested to be imposed in the future mining leases to be granted in favour of private parties. Later on, it appears that <ORG> became ready to take over the mining operations and intimated its preparedness by letter dated 10.7.1986 and thereupon the State of Haryana wrote on 14.7.1986 to <ORG> that it was appropriate to prematurely terminate the 6 leases mentioned in the letter of the date. It will be significant to note that <ORG> did not take a decision to terminate all the mining leases; on the countrary, fresh mining leases in favour of private individuals were in contemplation of the State authorities, as indicated by the aforementioned letters and by Annexure P-5 (page 273) to the Writ Petition of <NAME> in <ORG>. The State's letter dated the 14th July, 1986 was followed by another letter dated 5.9.1986 and in reply to it, <ORG> asked for a report on several specific points mentioned in their letter which is at page 85 of the paper-book. In place of sending the required information, <ORG>, in its letter dated 17.9.1986, took the erroneous stand that the information sought for was not relevant. Instead of pointing out that the information demanded was very pertinent in the context of the proposed termination of the mining lease, <ORG> by its letter dated 26th November, 1986 agreed to the proposal, but took care to advice that while taking any action for premature termination of the leases the authority should "ensure that the provisions of Section 4A of the Act are complied with". As has been mentioned earlier, <ORG> does not deny the right of hearing to the affected lessees and is ready, even now, to give an opportunity to them. Admittedly, the writ petitioners who are respondents before us were never given any such opportunity and according to their assertion if such an opportunity had been afforded, they would have shown that the standard of their mining operation was very high and favourably measured against the expected standard suggested in the report of <ORG> and mentioned in the letter of the Mines Department of <ORG> and that it was definitely superior to that of <ORG>.

10. On a consideration of the facts and circumstances of the present case, we are of the opinion that there was no effective consultation between <ORG> and <ORG>, and <ORG> did not form any opinion as required under Section 4A of the Act. We are further of the view that the lessees, the respondents before us, were entitled to be heard before a decision to prematurely terminate their leases was taken but they were not given any opportunity to place their case.

11. Mr. <NAME>, the learned counsel for the respondents, very fairly stated that he could not support the plea that leases in respect of minor minerals are saved from the application of Section 4A altogether by reason of Section

14. This Court in <CITATION> ,  2 SCR 742 (at pages 746H and 747A) pointed out that perhaps since Section 4A(1) is inapplicable to minor minerals because of the provisions of Section 14 , Section 4A(2) has been specially enacted making somewhat similar provision. It must, therefore, be held that leases in respect of minor minerals also can be prematurely terminated in appropriate cases. However, in view of our earlier finding the respondents must succeed. We accordingly dismiss these appeals with costs.

S.L. Appeals dismissed.


JUDGMENT

1. An ex parte decree for rent; was obtained against the present appellants and they succeeded in having that decree set aside. On the rehearing of the case the suit against them was dismissed with costs. They applied to <ORG> by one application for execution of the final decree for costs and for restitution of the amount of the ex parte decree which had been satisfied by them before it was set aside.

2. <ORG> has held that although the application was in time as regards costs, it was not in time as regards the refund, because the appellants were entitled to apply for the refund immediately on the setting aside of the ex parte decree. The date on which the ex parte decree was set aside has not been stated; but, as <ORG> says, it must have been more than three years before the date on which the application in question was made. The learned Judge has accordingly held, applying Article 178 of the second schedule of the Limitation Act , that that application was barred so far as the refund was concerned.

3. The main contention before us, and in fact, the contention on which all the other arguments which have been addressed to us depend, is that <ORG> was in error in holding that, the right to apply accrued on the setting aside of the ex parte decree, and that it should have held that the right accrued on the passing of the final decree dismissing the suit against the appellants, because, until the suit was finally dismissed, the appellants could not tell whether they might not ultimately be obliged to satisfy the decree. We think that there is nothing in this contention. The decree which had been satisfied was the ex parte decree. Since that decree was set aside, the appellants were entitled to a refund. They were in no way bound to allow the amount which they had already paid to remain in the decree-holder's hand in case the suit should eventually be decreed against them.

4. The question has been raised whether Article 178 or Article 179 of the second schedule of the Limitation Act properly applies to an application such as that in question. It has been pointed out that in the case of <CITATION> (1886) I.L.R. 8 All. 545 where a refund was sought in execution of a decree of <ORG>, modifying the decree of <ORG>, the application was held to be an application made according to law in the proper Court in the sense of Article 179 of the Limitation Act .

5. On the other hand, the learned pleader for the respondent has referred to the case of <NAME> v. <NAME> (1886) I.L.R. 10 Mad. 66 in which the learned Judges, who disposed of the case, were inclined to think that an application for refund after a decree passed in appeal was governed by Article 178 , since it was not one for execution of a decree or order, but to enforce a benefit by way of restitution under a decree passed in appeal.

6. It does not appear that in the Allahabad case the question was considered whether Article 179 was the one most properly applicable to the case, and we are disposed to agree with the learned Judges of <ORG> in considering that Article 178 is that which applies. In either case the real question is as to the starting point from which limitation began to run, and, whether Article 178 or Article 179 be applied, the appellants would be out of time.

7. The appeal is accordingly dismissed with costs.