CASE NO.: Appeal (civil) 8574-8577 of 2001 PETITIONER: <ORG> & Anr. RESPONDENT: <ORG>. DATE OF JUDGMENT: 10/03/2003 BENCH: CJI. & AR. Lakshmanan JUDGMENT:

<NAME>, J.

By these four appeals, we are called upon to consider the legality, correctness and validity of the impugned Notification dated 7.12.2000 appointing <NAME> as the President of <ORG> at Ahmedabad. A Notification dated 7.12.2000, in this regard, was issued by the order of Governor by <ORG> of the Government of Gujarat in the Gujarat Government Gazette whereby <NAME> had been appointed as the President of <ORG> which was under challenge before <ORG> in Special Civil Application Nos. 12665/2000, 79/2001, 80/2001 and 93/2001 filed by <ORG>, <ORG>, <ORG> and Surat Textile Labour Union. As per the directions of the Chief Justice, the applications were placed before <ORG> of <ORG>. <ORG>, by its judgment dated 4.5.2001, allowed the applications and quashed the said Notification dated 7.12.2000. <ORG> further directed the respondents to proceed to make the appointment afresh on the post of the President of <ORG>, Gujarat in the light of what has been held in the said order and in accordance with law. Aggrieved by the order passed by <ORG> of <ORG>, <ORG> through its Registrar preferred Special Leave Petition (c) Nos. 11795-11798/2001 on the grounds raised in the special leave petitions. By order dated 14.12.2001, this Court granted leave and made the interim order absolute.

All these appeals involve common question of law based on same set of facts, therefore, we propose to decide these appeals by a common judgment. A Special Civil Application was filed by <ORG> <ORG>, a Registered Trade Union to direct the respondents therein not to make any appointments on the post of President of <ORG> save and except by appointing any Member of <ORG> as President and other allied reliefs. A prayer to issue a writ of quo warranto was also asked for to direct Shri <NAME> - respondent No.3 in the application to state the basis of his right to be appointed as President of <ORG> and to set aside and quash the appointment order dated 7.12.2000 purporting to appoint Shri <NAME> as President of <ORG>.

The brief facts leading to the filing of the applications are briefly stated as under:

The Bombay Industrial Relations Act, 1946 (hereinafter referred to as "the B.I.R. Act") governs the relationship between the employers and workmen in several industries operating in Gujarat and more particularly, the Industry of Textile, the Industry of Power in the late Bombay State area of Gujarat, the Surat Industry, the Banking Industry run by Banking Companies having no branches outside the State of Gujarat. Sections 9 and 10 of the B.I.R. Act thereof provide for setting up of <ORG> and <ORG>. Section 10 of the B.I.R. Act, which pertains to the setting up of <ORG> to be known as <ORG>, is provided to consist of three or more Members, one of whom shall be its President. Section 10(4) of the B.I.R. Act provides that every Member of the <ORG> shall be a person who is or has been a Judge of <ORG> or is eligible for being appointed a Judge of such Court provided, inter alia, that a person who has been a Judge not lower in rank than that of Assistant Judge, for not less than three years; or a person who has been the Presiding Officer of <ORG> for not less than five years shall also be eligible for appointment as a Member of the <ORG>. According to the respondents, there are twelve Members of the <ORG> functioning in Gujarat State and so far as the <ORG> are concerned, there are 38 Judges functioning in Gujarat, four of them are Judges who have completed more than ten years' service as <ORG> Judges and several more <ORG> Judges are those who have completed more than five years' service as <ORG> Judges and are, therefore, eligible for being appointed as Members of the <ORG>. When the post of President of the <ORG> was vacant since the retirement of <NAME>, <NAME>, the senior-most Member of the <ORG> expressed his unwillingness to be appointed as President of the <ORG>, the post was, therefore, required to be filled up by a regular appointment. According to the respondents, a person for being appointed as President should be a Member of the <ORG> and no one except a Member can be appointed as a President of the <ORG>. It was, therefore, submitted before the <ORG> that anyone from the Members of the <ORG> can be considered to be eligible for being appointed as President. It was further submitted that in view of the scheme of Section 10(2) of the B.I.R. Act, no one who is not a Member of the <ORG> can be directly appointed as President of the <ORG>. It was further argued before the High court that for Members of the <ORG>, there is no other avenue of promotion except one by way of appointment as President of the <ORG> and now, if the post of President is to be filled up by bringing someone from Judicial Service, it will cause a great frustration among Members of the <ORG> as their hopes of promotion at an appropriate time will be dashed to the ground. Opposing the applications, it was submitted by the respondents, appellants herein, that no illegality was committed by recommending the name of <NAME> for appointment as the President of the <ORG> and that under Rules 2 and 3 of the Draft Recruitment Rules, it has become necessary for the <ORG>, on its administrative side, to recommend the appointment of an appropriate person by nomination on the said post under Rule 2(b) and that <NAME>, whose name was recommended, is fulfilling the criteria prescribed by the <ORG> as per the old Rules as well. It was submitted that considering the totality of the facts, the <ORG> of Gujarat had not only acted within its rights but the same had been done in due discharge of the Constitutional duty. The petitioners, respondents herein, filed their rejoinder to the reply affidavit on behalf of the <ORG> of Gujarat reiterating the contentions raised in the applications. In the rejoinder affidavit, it was submitted that neither the appointment order nor the reply affidavit filed on behalf of the <ORG> shows that the appointment was made by the Governor of the State and that there is nothing to show that the Full Court was consulted by the appointing authority before making the appointment. It was further stated that assuming that the appointment by nomination can be made on the post of a President of the <ORG> either under the old Rules pertaining to the post of President or under the new Rules which are at the draft stage only, the candidate concerned should have atleast for ten years either held a judicial post in India or should have been an advocate for <ORG> or should have expert knowledge of Industrial matters. According to the petitioners, respondents herein, the appointee, under the impugned appointment, had not hold a judicial post for ten years and in fact he was holding the post of Joint District Judge only and he had not even completed three years on the post of Additional District Judge to which post he was directly recruited. It was, therefore, submitted that the appointment had been made without coming to the conclusion that the appointee was fulfilling the criteria for appointment as required by the Rules. An affidavit in reply was filed before the <ORG> by the Law Officer of the <ORG> of Gujarat giving all details as to how the matter was considered by the Standing Committee of the <ORG> and as to how the decision was taken to appoint <NAME> as the President of the <ORG>.

<ORG> of <ORG>, by its judgment, held that a reading of Section 10 of the B.I.R. Act would show that it provides for the constitution of <ORG> with three or more Members, one of whom as its President and it also provides the eligibility for appointment as Member of <ORG>. While the eligibility has been prescribed under Section 10(3) and (4) of the B.I.R. Act for being a Member of <ORG>, for the purpose of President of <ORG> all that has been said in sub-section (2) of Section 10 of the B.I.R. Act is that one of the Members shall be its President. Therefore, being a Member of <ORG> is a pre-requisite and condition precedent for being the President of <ORG> and no person can be appointed as the President of <ORG> unless he is a Member of <ORG>. <ORG> further held that the absence of any Rules with regard to the appointment on the post of President of <ORG> except the existing Draft Rules framed by <ORG> and the Rules as had been framed under proviso to Article 309 of the Constitution vide Gujarat Government Gazette dated 25.2.1965 being only for recruitment for the post of Member, <ORG> and the Rules for appointment of President, <ORG> as contained in the Hand Book (1992) that too not in consultation with <ORG>, the only relevant provision which can be traced is Section 10 of the B.I.R. Act and according to Section 10(2) of the B.I.R. Act, one of the Members of <ORG> has to be the President. <ORG> further held that there was no lawful justification for excluding the candidates, who were holding the post of Member, <ORG> and whereas they have been kept out of consideration on the basis of the proposed Draft Rules, the consideration for making the appointment to the post in question stands vitiated. Elaborating further, <ORG> held :

"In the first instance, there is no question of appointment by nomination on the basis of the proposed Draft Rules by holding that existing Members were not eligible because they have not completed five years as Member. In a given case when the only mode of appointment is promotion and it is found that no one is eligible for appointment by promotion, it may be open to make appointment by direct recruitment, which would mean inviting application from all eligible candidates and then making the selection. No such procedure has been followed and the consideration was kept confined to the Members of <ORG>, who had conveyed their willingness for appointment as President of <ORG>. We find that the procedure, which has been adopted and which has led to the impugned appointment, is not in conformity either with the general right of equality under Article 14 of the Constitution of India and with the right of equality in matters relating to employment as contemplated by Article 16 of the Constitution of India and, therefore, this appointment cannot be sustained in the eye of law.

It is also not in dispute that the respondent No.3 had never been appointed as Member of <ORG> and in terms of Section 10(2) of the Bombay Industrial Relations Act, without being a Member of <ORG>, there is no question of his appointment as the President of <ORG> either by promotion or by direct recruitment. Being a Member of <ORG> is a sine qua non for consideration for the post of President of <ORG> and no person who is not a Member of <ORG> could be considered for appointment as such without committing violence to the recruitment of Section 10(2).

..In the instant case, we find that the mode of direct recruitment is not contemplated and even if any direct recruitment is held for the post of President of <ORG> when no Member is eligible, such direct recruitment is required to be held after affording equal opportunity to all those, who are eligible. The proposed Draft Rules 2(a) seeks to render the Members of the <ORG> to be ineligible by putting the condition of the completion of 5 years service on the post of Member. When the Act has not put any such fetter and the Act contemplates that one of the Members of the <ORG> shall be the President and it is not stated that he must complete certain years of service as Member, through executive instructions such a requirement could not be pressed so as to defeat the right of consideration of the Members of the <ORG> for consideration of the post of the President. Under Section 10(2) every Member of the <ORG> is eligible to be considered for the post of President notwithstanding the number of years of service put in by him as a Member.

In our considered opinion, Section 10 of the Bombay Industrial Relations Act, 1946 is the only relevant provision to be taken note of for the purpose of appointment of the President and the only mode of appointment is by way of promotion from amongst the Members of <ORG> and in this regard, if any Rules are to be framed in exercise of the powers under Chapter VI of Part VI of the Constitution of India, the same cannot be inconsistent with the requirements of the Bombay Industrial Relations Act, 1946"

<ORG>, for the reasons stated above, quashed the Notification which is impugned in the applications and further directed the respondents therein to proceed to make the appointment afresh on the post of the President of <ORG> Gujarat in the light of what has been held in the said order and in accordance with law.

Aggrieved by the impugned judgment, the above four appeals, by way of special leave petitions, were preferred by <ORG>. We heard <NAME>, learned senior counsel, for the appellants and <NAME>, learned senior counsel, for the contesting respondents.

Learned senior counsel appearing for the appellants submitted that the provisions of Section 10 of the B.I.R. Act clearly spells out that apart from the mode of selecting the President, by promotion from amongst the Members, the President can also directly be appointed from the sitting or retired <ORG> Judges. He further submitted that the <ORG> failed to appreciate that Section 10(2) of the B.I.R. Act does not envisage the mode of appointment and that the <ORG> failed to appreciate that the words of Section 10(2) of the B.I.R. Act are not that the President shall be appointed from one of the current Members of <ORG> and, therefore, the <ORG> has erroneously read these words in Section 10(2) of the B.I.R. Act. He further submitted that the <ORG> failed to appreciate that Section 10(4) of the B.I.R. Act provides for eligibility criteria and <NAME> fulfills the eligibility criteria. He further submitted that the <ORG> proceeded on an erroneous footing that the B.I.R. Act does not contemplate the appointment by direct recruitment and only the Members of <ORG> from the zone of consideration for appointment to the post of President, <ORG>.

Per contra, <NAME>, learned senior counsel, appearing for the respondents, apart from reiterating the contentions in the applications, submitted that Section 10(2) of the B.I.R. Act clearly indicates that only Member of <ORG> is eligible for becoming the President of the <ORG> and that becoming Member of the <ORG> is sine qua non for being considered for the post of President of the <ORG>. According to him, <NAME> does not fulfil any of the three eligibility conditions mentioned in Section 10(4) of the B.I.R. Act and that mandatory consultation with <ORG> was not followed. He further urged that the plain and natural meaning of Section 10(2) of the B.I.R. Act is capable of only one construction and that is only Members of the <ORG> could become its President. He further submitted that unless one is or has been the Judge of <ORG>, the post of the President of the <ORG> could be filled up only and only by way of promotion, because there exist only one post for the whole State of Gujarat. He further contended that the impugned appointment was void and stillborn since the same was not made by His Excellency, the Governor of Gujarat, but the same was purported to have been made in the name of the Governor of Gujarat. It was further contended that the appointment on a judicial post can be made only by His Excellency, the Governor, under Article 234 of the Constitution of India and the State Government cannot issue Notification appointing Judicial Officer under the business rules by and in the name of His Excellency, the Governor of the State. He further submitted that even assuming the appointment to the post of President can be made through nomination or direct recruitment, all the Members of the <ORG> were qualified for being appointed as President of the <ORG> by nomination in accordance with the Draft Rules that were relied upon by the Government supporting the appointment of <NAME> and that the Members of the <ORG> were eligible for appointment by nomination according to the Draft Rules also and that Rule 2(ii) of the Draft Rules provides, inter alia, that appointment to the post of President shall be made either (a) by promotion from amongst the Members of the <ORG> on the basis of seniority-cum-merit subject to the provision that for being considered as eligible for such promotion, the Member concerned should have completed five years' service as a Member of the <ORG> ;

(b) by nomination. Draft Rule 3, inter alia, provides that to be eligible for appointment by nomination, a candidate must have atleast ten years either held a judicial post in India or been a Advocate of <ORG> or have expert knowledge of industrial matters. It was further contended that the appointment of Shri <NAME> straightaway by nomination without taking into consideration the cases of nomination of existing Members of <ORG> who had completed ten years' functioning as a Judicial Officer has been rightly held by the <ORG> as violative of Articles 14 and 16 of the Constitution of India and that, therefore, no public appointment can be made in disregard of consideration of the cases of those who were qualified for the post.

Arguing further, learned senior counsel for the respondents, submitted that the appointment of a Junior Judicial Officer as President of <ORG> without considering the cases of existing Members of <ORG> who are senior on the basis of longer experience on equivalent post will also not be conducive to the judicial service which, according to him, will result in a Junior Judicial Officer presiding over <ORG> who have Members far senior to the President and that Junior Judicial Officer will thus exercise administrative powers of control over undisputedly Senior Judicial Officers. It was further submitted that assuming that a District Judge can be directly appointed to the post of President, <ORG> carrying a higher pay scale than that of the District Judges in Gujarat, and assuming that even if somebody is already a Member of the Judiciary, he can be nominated or directly appointed and that he did not pass through the channel of promotion or selection meant for those who are already in service in view of Article 234 of the Constitution, even in that case, there was no justification for <ORG> on the administrative side to pick up <NAME> who was 9th in the list of seniority at the relevant time. He submitted that the appointment of <NAME> was also vitiated on account of the fact that if nomination or direct recruitment was a permissible course in the matter of appointment of the President of <ORG>, then a large number of <ORG> Judges, Advocates apart from the Members of <ORG> who had completed ten years of practice or seven years of judicial work were also qualified for that appointment and, therefore, they could not be excluded from consideration. Concluding his arguments, he submitted that <ORG>'s conclusion that Section 10(2) of the B.I.R. Act does not provide for nomination or direct recruitment and someone has to be appointed from amongst the Members of <ORG> only is correct and that there is no other provision in the entire B.I.R. Act to provide for the mode of appointment of the President of <ORG>. In that view, it is quite reasonable to read Section 10(2) of the B.I.R. Act as providing that President can be appointed only from amongst the Members.

We have given our thoughtful consideration on the rival submissions made by the respective counsel appearing on either side. Before proceeding to consider the rival submissions, it is useful to reproduce the relevant provisions governing the controversy which run as follows:

"Section 10. Industrial Court.- (1) The State Government shall constitute <ORG>.

(2) <ORG> shall consist of three or more members, one of whom shall be its President.

(3) Every member of <ORG> shall be a person who is not connected with the industrial dispute referred to such court or with any industry directly affected by such dispute:

Provided that no person shall be deemed to be connected with the industrial dispute or with the industry by reason only of the fact that he is a shareholder of an incorporated company which is connected with, or likely to be affected by such industrial dispute; but in such a case, he shall disclose to <ORG> the nature and extent of the shares held by him in such company.

(4) Every member of <ORG> shall be a person who is or has been a judge of <ORG> or is eligible for being appointed a judge of such Court:

Provided that-

(a) a person who has been a Judge not lower in rank than that of Assistant Judge, for not less than three years; or

(b) a person who has been the presiding officer of <ORG> constituted under any law for the time being in force, for not less than five years; or

(c) a person who holds a degree in law of a <ORG> established by law in any part of India and is holding or has held an office not lower in rank than that of Assistant Commissioner of Labour under <ORG>, for not less than ten years, shall also be eligible for appointment as a member of <ORG>.

Provided further that, one member of <ORG> may be a person not so eligible, if in the opinion of <ORG> he possesses expert knowledge of industrial matters.

DRAFT RULES

1. These rules may be called the Recruitment Rules for the post of President, <ORG>, Gujarat, 1998.

2. The appointment of President, <ORG>, Gujarat, shall be made by the Governor of Gujarat, in consultation with <ORG> and <ORG>, either-

(a) by promotion from amongst the Members, <ORG> on the basis of seniority-cum-merits provided that a person shall not be eligible to be promoted to the post of President, <ORG>, unless he has completed five years' service on the post of Member, <ORG>, or

(b) by nomination.

3. To be eligible for appointment by nomination, mentioned in rule 2(b), a candidate must not be connected with any industry as defined in the Bombay Industrial Relations Act, 1946 and must

(i) not be less than 45 years of age, and

(ii) have for at least 10 years either held a judicial post in India or been an Advocate for <ORG> or have expert knowledge of Industrial matters.

4. A person appointed by direct recruitment shall normally be on probation for a period of one year and shall have to pass an Examination in Hindi and/or Gujarati, according to the Rules prescribed by the <ORG>.

Existing Rules The Recruitment Rules for the post of President, Industrial Court ,is as under:

Unless the post is filled up by appointment of a serving or retired Judge of <ORG>, appointment shall be made either (a) by nomination or (b) by promotion from among the Members of <ORG>.

To be eligible for appointment by nomination, the candidate must not be connected with any industry as defined in the Bombay Industrial Relations Act, 1946 and must-

(i) not be less than 45 years of age;

(ii) have for atleast 10 years either held a judicial post in India or been an Advocate for <ORG> or have expert knowledge of Industrial matters."

In the background of the facts and circumstances and the provisions of law extracted above, the following points arise for consideration by this Court :-

(a) What is the true scope and interpretation of Section 10(2) read with Section 10(4) of the B.I.R. Act ?

(b) Whether Section 10(2) of the B.I.R. Act can be read to mean that the President of <ORG> must be appointed from among the existing Members of <ORG> when the provision in fact is not in such terms?

(c) Whether the reading of the provisions of Section 10 of the B.I.R. Act clearly spells out that apart from the mode of selecting the President, by promotion from amongst the Members, the President can also directly be appointed from the sitting or retired <ORG> Judges or from the Judges of <ORG>, Ahmedabad and District Judges, who fulfills the eligibility requirement for appointment as Member of <ORG>?

(d) Whether <ORG> has failed to appreciate that Section 10(2) of the B.I.R. Act does not envisage the mode of appointment?

Our attention was drawn to the relevant pleadings filed before <ORG> and also in this Court.

As already noticed, the appointment of <NAME> as the President of <ORG> vide Notification dated 7.12.2000 issued by <ORG>, <ORG>, is under challenge by way of these appeals. The circumstances and the process, which had culminated in the appointment of <NAME> as the President of <ORG>, had been fully narrated in the affidavit in reply filed on behalf of respondent No.2 in <ORG>. Since <NAME>, who was working as the President of <ORG>, was to retire on 31.1.2000 and, therefore, <ORG>, <ORG>, sent a communication dated 7.1.2000 to <ORG> of Gujarat, inter alia, stating therein that, due to the retirement of <NAME>, the post will fall vacant and the question of preparing recruitment Rules for the post of President of <ORG> is under consideration by <ORG> and till the Rules are not finalized, <ORG> cannot take a decision in respect of the appointment on the said post. Under these circumstances, it was decided to place the matter for consideration of <ORG> of <ORG> of Gujarat, as to by which mode the post of the President, <ORG> is to be filled up. Accordingly, the said matter was considered by <ORG> of <ORG> of Gujarat and it was decided on 8.2.2000 that the post of President, <ORG>, Ahmedabad, be filled up by nomination under clause (b) of Rule 2 of the proposed Rules, as none of the present Members of <ORG> is eligible to be appointed to the said post by promotion, having not completed five years' service on the post of Member, <ORG>. The claim of all the incumbents of the post of Member of <ORG> was examined in light of the criteria prescribed by <ORG> of Gujarat for appointment on the post of President of <ORG>. It was decided by <ORG> to fill up the post of President of <ORG> by nomination as stated above. In the light of the decision of <ORG> to fill up the post of the President of <ORG> by way of nomination, it was further decided to ask for the willingness of the Judicial Officers working in the cadres of City Civil Court Judges and District Judges, who are not less than 45 years of age and have put in ten years of service in judiciary including the period of practice at the <ORG> for being considered for appointment in question. Pursuant to the said decision, the willingness was called for and in all, nine judicial officers had expressed willingness for being considered for the post in question, the details of which have been furnished at page 92 of the paper book. Thereafter, the said matter was placed for consideration of <ORG> of <ORG> of Gujarat and in the meeting of <ORG> held on 30.3.2000, it was decided to direct the office to resubmit the matter along with the recruitment Rules prescribing eligibility criteria for appointment to the post of President, <ORG>. Pursuant to the said decision, the matter was again considered in the light of the existing Rule provision by the office. As per the directions of <ORG>, the matter was again placed before <ORG> for further consideration along with the Rule stated above. In the meeting of <ORG> of <ORG> held on 1.5.2000, the consideration of the subject was deferred, however, in the meantime, the office was directed to resubmit the matter, pointing out the provisions of law in the matter, particularly mentioning the provisions regarding eligibility, experience and age of superannuation etc. prescribed for the post in question. Pursuant to the said direction of <ORG>, a detailed note was submitted for consideration of <ORG> and after considering all aspects, in the meeting held on 29.6.2000, <ORG> had taken decision to the effect that the name of <NAME>, Joint District Judge, Vadodara may be recommended to <ORG>, <ORG>, for appointment as President of <ORG>, Ahmedabad by nomination provided under the Recruitment Rules for the post in question. Accordingly, the office had sent a communication to the <ORG> on 5.7.2000 recommending the name of <NAME> for appointment on the post of President, <ORG>, Ahmedabad. Soon after the recommendation was made by <ORG> to the <ORG> as aforesaid, a representation was received by <ORG> from <NAME>, the President, <ORG>, Ahmedabad in connection with the filling up of the post of President, <ORG>, Ahmedabad. In this connection, <NAME> was called for personal hearing on 11.8.2000 and he was heard by the Chief Justice on the issue. Again, <NAME>, President (In- charge) of <ORG> vide his letter dated 4.11.2000 expressed his unwillingness to be promoted as the President of <ORG>.

On the basis of what is stated above, it is clear that the decision to fill up the post of the President of <ORG> by way of nomination as provided under the Rules, was arrived at, after considering all aspects, not only that the process of selecting the person to be recommended to the Government was also undertaken transparently and before taking the decision, the matter was considered from time and again by <ORG> of the High Court of Gujarat and after due consideration and deliberations, the decision was taken to recommend the name of Shri <NAME>. Considering the totality of the facts, it is clear to us that there is neither illegality nor arbitrariness in taking the decision of recommending the name of Shri <NAME> for appointment on the post of President, <ORG>, Ahmedabad.

It is seen from the records that at the request of the <ORG>, the eligibility criteria for appointment on the post of President, <ORG> has been determined by <ORG> and the same has been incorporated in the Draft Recruitment Rules. We have already extracted Rules 2 & 3 of the Draft Recruitment Rules. Shri <NAME> is eligible for the post of the President, <ORG>, Ahmedabad as he has completed ten years' service in judiciary including the period of practice at the <ORG>. The period of practice/service of Shri <NAME> is given below:-

"Period of Practice/Service or Mr. <NAME>

1.8.1978 to 30.11.1983 :- Worked as Civil Judge(JD) Resigned on :- 30.11.1983 Period of Practice :- Enrolment No.G/296/1974 on 30.10.74 Practice : 30.10.1974 to 31.7.1978 1.12.1983 to 19.2.1992 From 20.2.1992 to 22.12.1999 -Addl. Public Prosecutor, <ORG>, Ahmedabad From 23.12.1999 to 21.12.2000 - Worked in the cadre of District Judge at Vadodara. From 22.12.2000 - As President, <ORG>." -

In our opinion, in the case of appointment of President of <ORG> by nomination, it is not necessary that he must be appointed as Member at the first instance. Section 10(2) of the B.I.R. Act deals with the composition of <ORG>, which does not lay down the mode of appointment. The words of Section 10(2) of the B.I.R. Act are not that the President shall be appointed from one of the current Members of <ORG>. In our view, <ORG> has erroneously read these words in Section 10(2) of the B.I.R. Act. It is also seen that the proposed Recruitment Rules were framed by <ORG> at the request of the <ORG> and pending approval of the <ORG>. We are, therefore, of the opinion that the appointment of <NAME> as President of <ORG> is not in breach of Section 10(2) of the B.I.R. Act and also not violative of Articles 14 and 16 of the Constitution of India. To be eligible for appointment by nomination, the candidate must not be connected with any Industry as defined in the B.I.R. Act and must (1) not be less than 45 years of age, and (2) have for atleast ten years either held a judicial post in India or been an advocate for <ORG> or have expert knowledge of Industrial matters. Based on the recommendation of <ORG>, on its administrative side, the <ORG> of Gujarat issued the Notification on 7.12.2000 whereby <NAME> had been appointed as the President of <ORG>. Considering the totality of the facts, it is clear that by recommending the appointment in question, <ORG> of Gujarat had not only acted within its rights but the same had been done in due discharge of the constitutional duty.

In our view, Section 10(2) of the B.I.R. Act cannot be read to mean that the President of <ORG> must be appointed from amongst the existing Members of <ORG> when the provision in fact is not in such terms. <ORG> has confused the concept of the President of <ORG> being from among the Members of the said Court with the erroneous concept that the said President must be from amongst the existing members of that Court. A reading of the provisions of Section 10 of the B.I.R. Act clearly spells out that, apart from the mode of selecting the President by promotion amongst the Members, the President can also directly be appointed from the sitting or retired <ORG> Judges or from the Judges of <ORG>, Ahmedabad and District Judges, who fulfills the eligibility requirement for appointment as Member of <ORG>. <ORG>, in our view, has failed to appreciate that the words of Section 10(2) of the B.I.R. Act are not "that the President shall be appointed from one of the current Members of <ORG>". The narrow interpretation of Section 10(2) of the B.I.R. Act and the reasoning of the <ORG>, in our view, completely rules out the appointment of President, <ORG> through the mode of nomination. In other words, the <ORG> failed to appreciate that once a person is appointed as the President of <ORG>, he automatically becomes a Member. Section 10(2) of the B.I.R. Act only envisages that the President is the senior Member of <ORG> and that the appointment of President of <ORG> is inherent in his appointment as Member of <ORG>.

This Court, in the case of <CITATION> ., , held that the <ORG> Judges and the Judges of <ORG> belong to Judicial service and recruitment is to be made in accordance with Article 234 of the Constitution of India. The existing Recruitment Rules did not comply with the provision of Article 234 of the Constitution of India. The State Government, therefore, referred to <ORG> for consultation and approval of the Rules. The administrative side of <ORG> framed the Draft Rules and the appointment offered to <NAME> was in accordance with the Draft Rules. This apart, the eligibility criteria for appointment on the post of the President of <ORG> has been determined by the High court and the same has been incorporated in the Draft Recruitment Rules at the request of the Government.

For the foregoing reasons, we are of the opinion that no illegality is committed by recommending the name of <NAME> as the President of <ORG>, for appointment by nomination.

The appeals are allowed. However, in the facts and circumstances of the case, there shall be no order as to costs.


<NAME>, J.

1. The petitioner herein unsuccessfully contended before the District <NAME>, in E.A. No. 374 of 1979 on the file of his Court that the decree for ejectment passed against him in the above suit was inoperative, inexecutable and null and void. The said petition was filed under Sections 47 and 151, Civil Procedure Code, read with Section 18 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960(hereinafter referred to as the Act). Consequent on the dismissal of the petition the petitioner has approached this Court for reliefs.

2. The facts lie within a narrow compass. The respondent sought ejectment of the petitioner from the house leased out to him and succeeded in obtaining a decree for possession in the above said suit. The petitioner preferred an appeal in A.S. No. 438 of 1974 on the file of <ORG>, Tiruchirapalli. During the pendency of the appeal, the town where the suit property is situate was constituted a municipality and automatically the provisions of the Act became applicable to that area. Notwithstanding this fact, the appeal was argued with reference to the provisions of the Transfer of Property Act . One of the main defences taken by the petitioner in the appeal was that the tenancy had not been properly terminated by issue of a valid notice under Section 106 of the Transfer of Property Act. The petitioner's contentions were rejected and the appeal was dismissed. He preferred a second appeal to this Court in <CITATION> . 640 of 1976, and the only question argued in the appeal was about the valid termination of the tenancy. <NAME>, J., who heard the second appeal, rejected the contentions of the petitioner and dismissed the second appeal, but nevertheless, gave the petitioner time for one year to vacate the premises. When the said period of one year was nearing completion, the petitioner came forward with the petition, from out of which the revision arises, for declaration that the decree in ejectment passed against him was inoperative, inexecutable and null and void. The principal contention of the petitioner is that consequent on the introduction of the Act to the area where the building is situate, the decree-passed earlier has become inexecutable and therefore, notwithstanding the expiry of the time-limit granted to him in S.A. No. 640 of 1976 be is entitled to be in occupation of the building as a statutory tenant until a valid order of eviction is passed against him under Section 10 of the Act. The learned District Munsif has taken the view that since the Act was introduced subsequent to the filing of the* suit by the landlady, the jurisdiction of <ORG> is not taken away and hence it is not open to the petitioner to question the validity and executability of the decree passed against him. For reaching this conclusion, the learned District Munsif has followed the ratio laid down in <ORG>, Koranad by its trustee <CITATION> (1977) 90 L.W. 162.

3. Mr. <NAME>, learned Counsel for the petitioner, submits that Section 10 of the Act is clear in its terms and it expressly forbids the eviction of the petitioner, who is a tenant, in any other manner, except in accordance with the provisions of that section or Sections 14 to 16 of the Act and the section further provides that a tenant cannot be evicted even in execution of a decree obtained by the landlord. For appreciating the contention of the learned Counsel for the petitioner, it is necessary to refer to the definition of 'tenant' in the Act and the prescription contained in Section 10 for the eviction of the tenant. Section 2(8) of the Act defines a 'tenant' as follows--

'tenant' means any person by whom or on whose account rent is payable for a building and includes the surviving spouse, or any son, or daughter, or the legal representative of a deceased tenant who--

(i) in the case of a residential building, had been living with the tenant in the building as a member of the tenant's family upto the death of the tenant, and

(ii) in the case of a non-residential building, had been in continuous association with the tenant for the purpose of carrying on the business of the tenant upto the death of the tenant and continues to carry on such business thereafter, and a person continuing in possession after the termination of the tenancy in his favour but does not include a person placed in occupation of a building by its tenant or a person to whom the collection of rents or fees in a public market, cart stand or slaughter-house, or of rents for shops has been farmed out or leased by <ORG> or <ORG> or <ORG> or <ORG>.

Section 10 of the Act deals with the eviction of tenants and Sub-section (1) of Section 10 reads as follows--

10(1). A tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of this section and Sections 14 to 16 :

Provided that nothing contained in the said section, shall apply to a tenant whose landlord is the <ORG>:

Provided further that where the tenant denies the title of the landlord or claims a right of permanent tenancy, the Controller shall decide whether the denial or claim is bona fide and if he records a finding to that effect, the landlord shall be entitled to sue for eviction of the tenant in a civil Court and the Court may pass a decree for eviction on any of the grounds mentioned in the said sections, notwithstanding that the Court finds that such denial does not involve forfeiture of the lease or that the claim is unfounded.

Sub-section (2) of Section 10 states that a landlord seeking eviction of his tenant, should apply to the Controller for a direction in that behalf and if the Controller, after giving the tenant a reasonable opportunity of showing cause against the application is satisfied, he may make an order directing the tenant to put the landlord in possession of the building. Clauses (i) to (vii) in Section 10(2) and Sub-section (3)(a) lay down the grounds on which a landlord can seek an order of eviction against his tenant. Besides the grounds mentioned in the above sub-sections, Sections 14 to 16 also indicate the grounds on which a landlord can seek the recovery of possession of a building from his tenant on a temporary or permanent basis, as the case may be.

5. From the terms of the definition of 'tenant' contained in the Act, it goes without saying that the petitioner herein has to be recognised as a tenant of the respondent-landlord. Though the tenancy in favour of the petitioner had been terminated, yet inasmuch as be continues in possession of the property even after the determination of the tenancy, he will be deemed to be a tenant. Once this position is recognised, then automatically the embargo contained in Section 10(1) of the Act will be attracted. In this connection it is apposite to point out that Section 10 > (1) does not inhibit the filing of suits during the time the Act was in force. All that Section 10(1) says is, that during the period the Act is in force, a tenant shall not be evicted from the premises occupied by him in execution of a decree for ejectment passed against him. This position is now well-settled and I need refer only to a few cases on this aspect. One of the earliest case on the subject is <NAME> v. <NAME> (1949) 1 M.L.J. 417 : A.I.R. 1949 Mad. 784, which arose under the Madras Non-Residential Buildings Rent Control Order, 1942. Clause 8 in the said order was more or less similar to Section 10(1) of the Act. A Bench of this <ORG> held that the eviction of a tenant can only be in accordance with the provisions of clause 8, that there is nothing in the clause or in any of the other clauses of the Order, expressly prohibiting the institution of a suit for possession or prohibiting a civil <ORG> from passing a decree for possession though a decree for possession that may be passed by the civil <ORG>, will not be capable of execution by the civil <ORG>. The abovesaid view has been taken even with reference to Section 10(1) of the Act by a Division Bench of this <ORG>, to which was a party in <CITATION> (1979) 2 M.L.J. 413 : 92 L.W. 611(D.B.). The Supreme <ORG> too has laid down the same ratio in <CITATION> , though that case arose under the Mysore House Rent and Accommodation Control Order, 1948.

6. The resultant position therefore, is that the filing of a suit for recovery of possession of a property from a tenant or the passing of a decree therein by the <ORG> in favour of the landlord, is not prohibited under the Act. But, the decree cannot be executed so long as the Act remains in force.

7. In the instant case, at the time the suit was filed, the area where the building is situate was not covered by the Act, because the Act had not been extended to that area. Subsequently, the town where the building is situate, was constituted a Municipality and the provisions of the Act became automatically extended to that area. What we have to see is, whether, by reason of this fact, the petitioner herein is precluded from relying upon Section 10(1) and invoking the interdiction contained therein for obtaining the declaration that the decree obtained against him is inexecutable.

8. Mr. <NAME>, learned Counsel for the respondent, concedes that the petitioner will no doubt fall within the definition of 'tenant' under the Act, but would however contend that he is estopped from relying upon Section 10(1) to seek a declaration of the non-executability of the decree passed against him. The argument of Mr. <NAME> is that as soon as the provisions of the Act were extended to the area where the building is situate, the petitioner ought to have sought stoppage of further proceedings in the suit and should have exercised his option to seek protection of his rights under the Act. The learned Counsel argues that the conduct of the petitioner in filing an appeal and a second appeal against the decree passed against him, amounted to waiver of his rights under the Act and especially after having obtained one year's time from this Court for vacating the premises, the petitioner should not now be allowed to make a volte face and rely upon the provisions of the Act to seek protection from eviction. In support of his contention, Mr. <NAME> places reliance on the following cases. He first relies on the decision in <NAME> v. <NAME> , wherein it has been held that it is open to the landlord to give up his rights under U.P. (Temporary) Control of Rent and Eviction Act (III of 1947) and enter into a binding contractual agreement with the tenant. This decision cannot apply to the facts of this case, because there is no agreement between the petitioner and his landlord whereunder the petitioner has agreed to waive his rights under the Act.

9. Mr. <NAME> then states that the petitioner is estopped by conduct from seeking the protection under Section 10(1) of the Act. For this argument, he relies upon <CITATION> . The argument cannot be countenanced, because the petitioner had nowhere stated that he was giving up his rights under the Act. Even in the suit, the petitioner had taken the stand that he was not liable to be evicted. Therefore, there is no inconsistency between the stand taken by him in the suit and the stand taken in the present proceedings. The learned Counsel then cites <CITATION> . , and <CITATION> . , to argue that the doctrine of promissory estoppel is attracted and on that basis, the petitioner should be denied the relief. I have already stated that the petitioner has not taken inconsistent stands and he has not misled the respondent at any time as regards the rights claimed by him as a tenant. Lastly, Mr. <NAME> cited <NAME> v. <NAME> , to argue that the petitioner had elected to seek enforcement of his rights under the Transfer of Property Act in the suit and therefore, he has lost his rights under the Act to claim the status of a statutory tenant. This is also a fallacious contention, because the rights of the petitioner under the Act are not lost to him, merely because he contested the civil suit filed by the respondent for recovery of possession. Finally, the respondent's counsel cites <CITATION> . . In that case, the legal representatives of a deceased tenant were denied protection from eviction under Section 10 of the Act, when they resisted the execution of a decree in ejectment passed against the deceased tenant on the ground that they did not constitute tenants, but were mere trespassers in possession of the property. The denial of protection to the respondents in that case was not because the civil <ORG>'s decree was held executable in spite of the provisions of Section 10(1) of the Act, but because the respondents were held to be trespassers and not tenants of the property. As regards the submission that the conduct of the petitioner in dragging on the proceedings till the stage of second appeal and also in availing of one year's time granted by this <ORG> and then putting forth his contentions under Section 10(1) of the Act is an unconscionable one, it must be pointed out that where the interpretation of a statute is concerned, equitable considerations cannot be taken note of. As pointed out by a Bench of this <ORG> in <ORG> v. <NAME> (1944) 2 M.L.J. 306 : 57 L.W. 598 : I.L.R. (1945) Mad. 395 : A.I.R. 1945 Mad. 65, where the extension of a tenancy is by operation of a statute, the <ORG> is not concerned with the lack of merit in the tenant or the hardship caused to the landlord. The ratio contained in <ORG>, Keranad, by its trustee, <CITATION> (1977) 90 L.W. 162, which has been applied by the learned District Munsif to this case, will not govern the situation, because we are not concerned with the validity of the decree that has been passed in the suit. We are only concerned with the executability of the decree. For that question, Section 10(1) of the Act provides an answer in unmistakable terms. The mandate of the <ORG> has been expressed in unambiguous terms in Section 10(1) and the petitioner's application has to be dealt with in accordance with that provision. Such being the case, there cannot be a plea of estoppel by the respondent, because there cannot be estoppel, by conduct or promise, against statute. So too, the doctrine of election cannot be projected as a valid defence for the petitioner's application.

10. For the aforesaid reasons, the contentions of the petitioner have to be sustained. However, it is made clear that the decree passed against the petitioner is not a null and void one. Only its executability has been impugned by Section 10(1) of the Act. Therefore, there can only be a declaration that so long as the petitioner merits the status of tenant under the Act and so long as Section 10(1) remains on the statute book, the decree obtained by the respondent will be inexecutable. There will be a declaration to that effect in the petitioner's application. The revision will stand allowed accordingly, but there will be no order as to costs. It is also made clear that notwithstanding the decree for possession already obtained by the respondent, it is open to him to seek eviction of the petitioner by instituting appropriate proceedings under Section 10(1) of the Act, if there are grounds for the same.


PETITIONER: D. CAWASJI AND CO. <NAME> Vs. RESPONDENT: THE STATE OF <NAME> AND ANR. DATE OF JUDGMENT26/09/1984 BENCH: SEN, <NAME> (J) BENCH: SEN, <NAME> (J) BHAGWATI, P.N. MISRA RANGNATH CITATION: 1984 AIR 1780 1985 SCR (1) 825 1984 SCC Supl. 490 1984 SCALE (2)545 CITATOR INFO : RF 1988 SC 587 (15) ACT: Mysore Sales Tax Act 1957, Mysore Act 25 of 1957-Second Schedule Column No. 3 Serial No. 39-Provision whether constitutionally valid. Arrack-Sale by <ORG> to licensed contractors- Recovery of sales tax at 6112% on total amount of selling price-High Court holding provision void and that sales tax can be collected only on basic price excluding excise duty- Amendment introduced by the Mysore Sales Tax (Amendment) Act 1969-Rate of tax enhanced to 45% with retrospective effect from April 1, 1969-Validity of amendment. Interpretation of Statutes: Amending Act and Validating Act -Difference between-Explained. HEADNOTE: The appellants were Excise Contractors who had secured the excise privilege of retail sale of Toddy, Arrack or Special Liquor. The <ORG> <ORG> had the monopoly of the first sale of Arrack which is country liquor other than Toddy. The manufacture of Arrack by distillation is done in the <ORG> under <ORG> control and the entire quantity manufactured in the <ORG> is sold to <ORG> which in its turn supplies it to the bonded depots in Taluks. Under the Mysore Excise Act, Arrack is liable to excise duty at rates prescribed by the <ORG>. The <ORG> does not collect excise duty from the distillers. From the distillery arrack is transferred to <ORG> and excise duty together with cesses thereon is collected from the contractors who are given the privilege or right to effect retail sales of Arrack. The exclusive privilege of retail vending of Arrack for each excise year which commences on the first day of July and ends on 30th June of the following year is sold by the <ORG> by auction. Under the terms and conditions governing the licenses, granted to the contractor whose bid is accepted and to whom the licenses for vending arrack is granted, the licensees were required to deposit in the <ORG> <ORG> under separate heads of account the sales tax payable to <ORG> and the excise duty with cesses. 826 However, with effect from 1.4.1966 <ORG> started collecting sales tax computed on the sale price of Arrack together with excise duty and cesses payable thereon. So computed sales tax came to about 24 Paise a litre which was collected alongwith the price of Arrack sold to the licensees. The validity of the collection of the sales tax on the aforesaid basis was challenged by the appellants. A Division Bench of <ORG> allowed the writ petition, <CITATION> 1969 (1) Mys. L.J. 461, holding that <ORG> could not under S.19 of the Sales Tax Act, collect sales tax on excise duty which is not a part of the selling price of Arrack. The appeal preferred by <ORG> to this Court was withdrawn. During the pendency of the appeal the privileges of vending liquor in the excise year 1968-69 were sold without any variation in the price of Arrack fixed by the <ORG> during the previous year at 55 paise a litre. During the year 1968-69 <ORG> collected sales tax computing the same @ 6.1/2% of the actual sale price without including therein excise duty and cess. As the liability of the <ORG>s to refund the amount collected as sales tax in excess amounted to lacs of Rupees, and with the object of avoiding the liability of refund by <ORG> of the excess amount so collected, the <ORG> passed Ordinance No. 3 of 1969 on 17th July, 1969 which was replaced by the Mysore Sales Tax (Amendment) Act, 1969 on 19th July, 1969. The validity of this Amending Act was challenged by the appellants on the ground that the Amending Act was unreasonable and arbitrary but <ORG> dismissed the writ petition. In the appeal to this Court, it was contended on behalf of the appellant that the Amending Act does not seek to rectify or remove the defect or lacuna on the basis of which the collection of the excess sales tax had been set aside by <ORG>, and that the increase in the rate of sales tax from 61/2% to 45% with retrospective effect is clearly arbitrary and unreasonable for if, any particular provision of the statute is for some lacuna or defect in the statute declared unconstitutional or invalid, it is open to the <ORG> to pass a Validating Act with retrospective effect so that the <ORG> may not be saddled with liability of refund or other consequences which may arise as a result of the particular provision being declared invalid. On behalf of the respondent-<ORG> it was contended that by the enactment of S.2 of the impugned Act the very basis of the complaint made by the appellants in the earlier writ petitions that the <ORG> was collecting amounts by way of tax in excess of what was authorised under the Act had been removed. Allowing the Appeals, 827 ^ HELD: 1. The only object of enacting the amended provision it appears is to nullify the effect of the judgment which became conclusive and binding on the parties to enable <ORG> to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lacuna but merely raises the rate of duty from 6.1/2% to 45% and further proceeds to nullify the judgment and order of <ORG>. [841E-F] 2. The enhancement of the rate of duty from 6.1/2% to 45% with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable. The defect or lacuna is not even sought to be remedied and the only justification for the steep rise in the rate of duty by the amended provision is to nullify the effect of the binding judgment. [841 F] 3. The vice of illegal collection in the absence of the removal of the illegality which led to the invalidation of the earlier assessments on the basis of illegal levy. continues to taint the earlier levy. This is not a proper ground for imposing the levy at the higher rate with retrospective effect. [841G] 4. It may be open to the <ORG> to impose the levy at the higher rate with prospective operation but levy of taxation at higher rate which really amounts to imposition of tax with retrospective effect has to be justified on proper and cogent grounds. [841H] 5. The amendment does not proceed to cure the defect or the lacuna by bringing in an amendment providing for exigibility of sales tax on excise duty, health cess and education cess. The impugned Amending Act cannot therefore be considered to be a Validating Act . A Validating Act seeks to validate the earlier Acts declared illegal and unconstitutional by Courts by removing the defect or lacuna which led to invalidation of the law. With the removal of the defect or lacuna resulting in the validation of any Act held invalid by a competent Court, the Act may become valid if the Validating Act is lawfully enacted. To provide that no liability may be imposed on the <ORG> in respect of acts done before the passing of the Validating Act making such act valid, a Validating Act is usually passed with retrospective effect. The retrospective operation relieves the <ORG> of the consequences of acts done prior to the passing of the Validating Act . The retrospective operation of a Validating Act properly passed curing the defects and lacuna which might have led to the invalidity of any act done may be upheld, if considered reasonable and legitimate. [840E-A] In the instant case, the <ORG> instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6.1/2% to 45% with retrospective effect from the 1st April 1966 to avoid the liability of refunding the excess amount collected and has further purported to nullify the judgment and order passed by <ORG> directing the refund of the excess amount illegally collected by providing that the levy at the higher 828 rate of 45% will have retrospective effect from 1st of April 1966. The judgment of <ORG> declaring the levy of sales tax on excise duty, education cess and health cess to be bad became conclusive and was binding on the parties. It may or may not have been competent for the <ORG> <ORG> to validly remove the lacuna and remedy the defect in the earlier levy by seeking to impose sales tax through any amendment on excise duty, education cess and health cess but in any event, <ORG> has not purported to do so through the Amending Act . [841A- <CITATION> , 1969 (1) Mys. L.J. 461, <CITATION> 1968 (16) L.R. 641, <ORG>, Chindwara etc. v. <ORG>, 3 SCR 745, <CITATION> . and <ORG> etc  1 SCR 288 and <CITATION> .,  1 SCR 388, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1353 & 1354 of 1973.

Appeals from the Judgment and Order dated the 6th December, 1972 of <ORG> in Writ Petitions Nos. 3964 & 3996/1970.

S.T: <NAME>, D.N. <NAME> and Mrs. <NAME> for the Appellants.

<NAME> for the Respondents.

The Judgment of the Court was delivered by <NAME>, J. The question of constitutional validity of the Mysore Sales Tax (Amendment) Act, 1969 (Mysore Act of 1969), (hereinafter referred to as the Act) falls for determination in these two appeals preferred by the appellants with certificate granted by <ORG> under Art. 133(1) of the Constitution.

The question arises under the following circumstances: The appellants are Excise Contractors who had secured excise privilege of retail sale of Toddy, Arrack or Special Liquor. The <ORG> Government has the monopoly of the first sale of Arrack which is country liquor other than Toddy. The manufacture of Arrack by distillation is done in the <ORG> under <ORG> control and the entire quantity manufactured by distillation in the <ORG> is sold to <ORG> which in its turn supplies Arrack to bonded depots in Taluks. Under the Mysore Excise Act Arrack is liable to excise duty at the rates prescribed by the Government. The <ORG> does not collect excise duty from the distillers. From the distillery arrack is transferred to Bonded Depots and excise duty together with cesses thereon is collected from the contractors who are given the privilege or right to effect retail sales of Arrack. The exclusive privilege of retail vending of Arrack for each excise year which commences on the first day of July and ends on 30th June of the following year, is sold by the <ORG> by auction. The successful bidders whose bids are accepted are granted licences for the exclusive privilege of retail vending. The retail selling price of Arrack by the licensees is fixed by <ORG> at or before the time of notifying sales of the exclusive privilege in respect of each year. The excise duty of arrack together with cesses there on is collected from the licensees before the date of delivery. Under the terms and conditions governing the licensees, granted to the contractors whose bid is accepted and to whom the license for exclusive privilege of vending arrack is granted, the licensees were required to deposit in the <ORG> Treasury under separate heads of account the sales tax payable to <ORG> and the excise duty with cesses. There was no dispute as to the amount of sales tax payable by the licensees upto 1.4.1966. However, with effect from 1.4.1966, <ORG> started collecting sales tax computed on the sale price of Arrack together with excise duty and cesses payable thereon. So computed sales tax came to about 24 paise a litre which was collected alongwith the price of Arrack sold to the licensees.

Challenging the validity of the collection of the sales tax on the aforesaid basis the appellant filed a writ petition in <ORG> at Bangalore being writ petition No. 644 of 1966. As this writ petition No. 644 of 1966. related to the excise year 1966-67 only, the appellant filed two other writ petitions being writ petitions nos. 1012 and 1013 both of 1966 for subsequent excise years. These three writ petitions of the appellant along with similar writ petitions filed by other contractors were disposed of by a common judgment by a division Bench of <ORG> on 12th July, 1968. <ORG> for reasons recorded in the judgment held:

"We allow the rest of the petitioners only to the extent of holding that <ORG> is not entitled to collect from the petitioners any amount by way of Sales Tax on the following, viz., Excise Duty, Health Cess and Education Cess imposed on arrack or special liquor. In the said petitions, we hereby issue writs directing <ORG> to forbear from collecting from the petitioners any amount representing Sales Tax on the following viz. Excise Duty, Health Cess and Education Cess imposed on arrack or special liquor, and to refund to the petitioners any amount that might have been collected from them, by way of Sales Tax on items of Excise Duty, Health Cess and Education Cess on arrack or special Liquor." <ORG> in the course of the Judgment in D.

<CITATION> (1), observed at p. 483:-

"It is difficult to see how Excise Duty paid, not by the seller but by the purchaser, to <ORG>, can become a part of the price at which the goods are sold by that seller to that purchaser. If that is the true position, we think <ORG> cannot, under S.19 or the Sales Tax Act , collect Sales Tax on Excise Duty which is not a part of its selling price."

Against the judgment of <ORG> the State preferred an appeal to <ORG>; but the appeal was subsequently withdrawn. It appears that during the pendency of the appeal the privileges of vending liquor in the excise year 1968-69 were sold without any variation in the price of Arrack fixed by the <ORG> during the previous year at 55 paise a litre. During the year 1968-69 the State <ORG> collected Sales Tax computing the same @61/2% of the actual sale price without including therein excise duty and cess.

It may be noticed that although the appellants had obtained an order of stay of payment of the disputed sales tax amounts from 27.4.1966 from <ORG>, there were various other contractors who had paid the same computed on the sale price of <ORG> together with excise duty and the cess. When the decision of <ORG> pronouncing the illegality of the levy and collection of sales tax on the price of <ORG>, including in the price the excise duty and cess, became final and conclusive in consequence of the withdrawal of the appeal filed by the <ORG> in this Court against the said judgment and decision of <ORG>, the <ORG> Government became liable to refund the excess amount of sales tax collected to the licensees and contractors. It appears that the liability of the <ORG> to refund the amount collected as sales tax in excess amounted to lacs of Rupees. Faced with this situation and with the object of avoiding the liability of refund by the <ORG> Government of the excess amount so collected, the Governor of the <ORG> passed Ordinance No. 3 of 1969 on 17th July, 1969. The Ordinance was replaced by the impugned Act which came into force on 19th July, 1969.

It will be convenient at this stage to set out the provisions of the Act, which is a short one consisting of four sections, in its entirety. The Act provides as follows:-

S.1 (1). This Act may be called the Mysore Sales Tax (Amendment) Act, 1969.

(2). It shall be deemed to have come into force on the nineteenth day of July, 1969.

S.2. In the Second Schedule to the Mysore Sales Tax Act, 1957 (Mysore Act 25 of 1957) in Column 3 of Sl. No. 39, for the words "Six and a half per cent", the words "Forty-five per cent", shall be and shall be deemed to have been substituted with effect from the first day of April, 1966.

S.3. Notwithstanding anything contained in any judgment, decree or order of any court or other authority, the sales tax on country liquor other than toddy levied or collected or purported to have been levied or collected shall, for all purposes, be deemed to be and to have always been validly levied or collected in accordance with law, as if this Act had been in force at all material times when such tax was levied or collected and accordingly-

(a) all acts, proceedings or things done or taken by any authority or officer or person in connection with the levy or collection of such tax, shall, for all purposes, be deemed to be and to have always been done or taken in accordance with law;

(b) no suit or proceeding shall be entertained, maintained or continued in any court for the refund of any tax as paid; and

(c) no court shall enforce any decree or order directing the refund of any tax so paid.

S.4-The Mysore Sales Tax (Amendment) Ordinance, 1969 (Mysore Ordinance No. 3 of 1969) is hereby repealed.

The Statement of objects and Reasons for the passing of the amendment may appropriately be set out at this stage. The Statement of Objects and Reasons runs as follows:-

"Clause (j) of sub-rule (4) of Rule 6 of the Mysore Sales Tax Rules, 1957, provided for the exclusion of excise duty paid by a dealer from the computation of his taxable turnover. By <ORG> Notification No. GSR 882, dated 16th March, 1966, this clause was deleted from the rules with the object of recovering sales tax even on the excise duty portion of the turnover of dealers. In respect of arrack which falls under entry relating to Sl. No. 39 of the Schedule, sales are made by <ORG> to licensed contractors and sales tax was recovered from them at 6 1/2% on the total amount payable by them including the excise duty from 1st April, 1966. <ORG> in W.P. No. 644 of 1966 <CITATION> ,(1) held that on the sales of arrack, the sales tax cannot be collected on the total amount but has to be collected only on the basic price excluding excise duty on the ground that the duty in such a case does not form part of the sale price but is a separate "levy" made by the <ORG> at the time of releasing the stocks from the <ORG> Bonded warehouses. Consequently, a considerable amount already recovered may become refundable. In order to get over the effects of the <ORG> decision and retain the money already recovered by the <ORG>, it is proposed to enhance the rate of tax on arrak to 45% with retrospective effect from 1st April, 1966. The enhanced rate of tax on the basic price would be absorbed in the price already recovered, and no additional tax is expected to be realised from this Bill. Since the <ORG> was not in session and in view of the urgency, an ordinance was promulgated. The Bill is to replace the ordinance."

The validity of this Amending Act has been challenged on the ground that the Amending Act is unreasonable and arbitrary. The principal contention raised on behalf of the appellant is that the Amending Act does not seek to rectify or remove the defect or lacuna on the basis of which the collection of the excess sales tax had been set aside by <ORG>. It is argued by the learned counsel for the appellant that <ORG> had held that the sales tax could not be levied on collected on Excise duty Health cess and Education cess imposed on Arrack or special liquor and had directed the refund of the amount collected on excise duty and cess which were included in the selling price of arrack. The learned counsel has submitted that by the amendment the said lacuna or defect of including the excise duty and cess in the price of Arrack on which the sales tax has been charged has not been sought to be removed, as this defect or difficulty could not possibly have been removed, because sales tax could not be levied on excise duty by virtue of the judgment of <ORG>. The learned counsel points out that the appeal which was filed by <ORG> against the judgment of <ORG> had been withdrawn by the <ORG> and as such the judgment of <ORG> has become final and conclusive and on the basis of the judgment, a large amount has become refundable by the <ORG> to the appellants. It is the submission of the learned counsel that the amendment has been brought about only for the purpose of circumventing the judgment of <ORG> with the object of avoiding the liability to refund the amount wrongfully and illegally collected as sales tax from the appellant by raising the amount of tax from 6 1/2% to 45%. The learned counsel contends that the increase in the rate of sales tax from 6 1/2% to 45% with retrospective effect is clearly arbitrary and unreasonable. It is the contention of the learned counsel that if any particular provision of the statute is for some lacuna or defect in the statute declared unconsti-

tutional or invalid, it is open to the legislature to pass a Validating Act with retrospective effect so that the State may not be saddled with liability of refund or other consequences which may arise as a result of the particular provision being declared invalid. The learned counsel argues that such a Validating Act with retrospective operation can be passed if the lacuna or the defect, because of which the provision is declared to be unconstitutional and invalid, be properly rectified by the Amending Act which seeks to validate the statutory provision which has been struck down as unconstitutional and invalid. It is his argument that without seeking to remove or rectify the defect or lacuna, no Validation can be made to defeat the judgment of the <ORG> striking down any particular statutory provision. The learned counsel contends that enhancing the rate of tax from 6 1/2% to 45% with retrospective effect must necessarily be held to be arbitrary. It is his contention that mere enhancement of the rate without seeking to validate the provision by removing or rectifying the defector lacuna clearly results in retrospective imposition of tax and any such imposition of tax with retrospective effect must be held to be unreasonable and arbitrary. In support of the submissions made, particular reliance has been placed on the two decisions of this <ORG> in the case of <ORG>, <ORG> etc. v. <ORG>), and <CITATION> . etc.(2) The material facts in the case of <ORG>, <ORG> (supra) may briefly be indicated.

In 1935, <ORG>, Chindwara, constituted under C.P. Local Self Government Act, 1920, resolved to levy a cess on coal extracted within the area at 3 pies per ton. The sanction of <ORG>, as required by S.51 (2) of Act, was obtained for the levy. In 1943, the levy was enhanced to 4 pies, in 1946 to 7 pies and in 1947 to 9 pies. The validity of the enhanced levy was challenged and this Court, in appeal, held that the increased levy would also require the previous sanction of <ORG> and such sanction not having been obtained, the levy at a rate higher than 3 pies was illegal. <ORG> thereafter enacted the Madhya Pradesh Koyala Upkar (Manyata karan) Adhinayam, 1964. Section 3(1) provides that 'notwithstanding a judgment of any Court, cesses imposed, assessed or collected by the <ORG> in pursuance of the notifications and notices specified in the Schedule shall, for all purposes, he deemed to be, and to have always been validly imposed, assessed or collected as if the enactment under which they were issued stood amended at material times so as to empower the <ORG> to issue the said notifications. In the Schedule were specified the three notifications enhancing the rate of cess. On the question whether the enhanced levy was validated by the 1964 Act, a five Judge Bench of this Court held that it did not give legal effect to the imposition of cess at the enhanced rate. This Court observed at p. 751:

"The nature of the amendment made in Act 4 of 1920 has not been indicated. Nor is there anything which enacts that the notifications issued without the sanction of <ORG> must be deemed to have been issued validly under S.51 (2) without the sanction of <ORG>. On the words used in the Act, it is plain that the <ORG> attempted to overrule or set aside the decision of this <ORG>. That, in our judgment is not open to the <ORG> to do under our constitutional scheme. It is open to the <ORG> within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the <ORG> to say that a judgment of a <ORG> properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the <ORG>."

In <ORG>. v. <ORG> & <ORG> etc. (supra) the appellant corporation assessed the immovable properties of the respondents to property-tax for the year 1964-65 and 1965-66 on the basis of the 'flat rate' method under the Bombay Provincial Municipal Act. 1949. The assessments were challenged in <ORG> but the petitions were dismissed. While appeals were pending in this Court, <ORG>, initiated proceedings for the recovery of the taxes and attached the properties of the assessees. The assessees challenged the attachment proceedings but their petitions were again dismissed. In appeal against these orders in this Court the assessees prayed for interim stay, but this Court did not grant stay because <ORG> had undertaken to return the amounts if the respondents succeeded. This Court thereafter allowed the appeals by the assessees. Meanwhile an Amending 8 Act called the Bombay Provincial Municipal Corporation (Gujarat Amendment) Act, 1969 had been passed introducing s. 152 A into the 1949 Act, but that provision was not brought to the notice of this Court. However, when the assessees demanded refund of the amounts illegally collected from <ORG> did not comply and hence the assessees moved <ORG> again. These petitions were allowed and <ORG> appealed to this Court. While the appeals were pending the Bombay Provincial Municipal Corporation (Gujarat Amendment and Validity Provision) Ordinance, 1969, was passed and sub-s. (3) was introduced in s. 152A .

Sub-section (3) which was introduced by the ordinance was in the following terms:

"Not withstanding anything contained in any judgment, decree or order of any Court, it shall be lawful, and shall be deemed always to have been lawful, for <ORG> to withhold refund of the amount already collected of recovered in respect of any of the property taxes to which sub-section (1) applies till assessment or reassessment of such property taxes is made and the amount of tax to be levied and collected is determined under sub-section (1):

Provided that the <ORG> shall pay simple interest at the rate of six per cent per annum on the amount of excess liable to be refunded under subsection (2), from the date of decree or order of the <ORG> referred to in subsection (1) to the date on which excess is refunded,"

This <ORG> held that under. S. 152 A of the Act before the <ORG> could detain any amount collected as property tax there must be an assessment according to law; but in the present case there were no assessment orders in accordance with the provisions of 1949 Act and the rules as amended by the Amending Act, 1968 and, therefore, the appellant corporation was not entitled to retain the amount collected as the Section did not authorise the <ORG> to retain the amounts illegally collected. This <ORG> has further held that sub- section (3) of S. 152 A which commands the <ORG> to refuse to refund the amount illegally collected despite the orders of this <ORG> and the High <ORG>. makes a direct inroad into the judicial powers of the <ORG>; and the Legislatures which under the Constitution have, within prescribed limits powers to make laws prospectively and retrospectively are competent in exercise of these powers to remove the basis of a decision passed by a competent <ORG> thereby rendering the decision ineffective, but no legislature in this country has power to ask the instrumentalities of the <ORG> to disobey or disregard the decision given by <ORG> and S. 152 A (3) was repugnant to the Constitution. This <ORG> at p. 295 has referred to the following observations made in <CITATION> :-

"Before we examine s. 3 to find out whether it is effective in its purpose or not we may say a few words about validating statutes in general. When a legislature sets out to validate a tax declared by a <ORG> to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the <ORG> shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A <ORG>'s decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a <ORG> holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometime this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the reenacted law."

This <ORG> at p. 296 and 297 relied on the earlier decision of this <ORG> in the case of <CITATION> . (supra). This <ORG> finally observed at page 297:

"We are clearly of the opinion that sub-section (3) of S. 152A introduced by the ordinance is repugnant to our Constitution. That apart, the said provision authorises the <ORG> to retain the amounts illegally collected and treat them as loans. That is an authority to collect forced loans. Such conferment of power is impermissible under our Constitution."

The learned counsel appearing on behalf of the <ORG> has submitted that this very contention that the <ORG> has sought to enhance the rate of tax without seeking to remove or rectify the lacuna which was there in the earlier Act and for which the earlier provision has been struck down by <ORG>, was raised in the writ petition filed in <ORG> by the appellant. It is the submission of the learned counsel that this contention has been rejected by <ORG> for reasons indicated in the judgment. The learned counsel has referred to the following observation made by <ORG>:-

"This Court has not held that the <ORG> is not at all entitled to collect any amount by way of tax on the sale of arrack. The sale price of arrack during the years 1966 to 1969 was fixed at 55 paisa a litre. The amount which the <ORG> was authorised to collect was six and a half per cent of 55 paise on the sale of a litre of arrack which comes to about three and a half paise; instead, the <ORG> collected 24 paise and the excess collection was 20.5 paise a litre. The decision of this Court is that the <ORG> without authority of law was collecting excess amounts by way of tax on the sale of arrack. It is relevant to state that under the Act where the <ORG> is deemed to be a dealer entitled to collect tax under Section 19 , there is no provision for making an assessment of tax by the assessing authorities as in the case of ordinary dealers Without making an assessment, the <ORG> Government is entitled to collect amounts by way of tax in the same manner as any other registered dealer authorised to do so under Section 1B . By enhancing the rate of tax from six and half to 45 per cent with retrospective effect by enacting Section 2 in the impugned Act, it has to be deemed that the rate of tax under the Act has always been 45 per cent of the taxable turnover ever since 1. 4. 66. If the rate of tax was 45 per cent on the sale price of arrack which was 55 paise a litre, then the amount the <ORG> was authorised to collect comes to about 25 paise. Thus it will be seen that by the enactment of Section 2 of the impugned Act the very basis of the complaint made by the petitioners before this Court in the earlier writ petitions as also the basis of the decision of this Court in <NAME>'s case that the <ORG> is collecting amounts by way of tax in excess of what was authorised under the Act has been removed. Thus the decision of this Court has been rendered ineffective."

The learned counsel seeks to adopt the aforesaid observations of <ORG> as his submissions and contends that in view of the aforesaid reasoning which are cogent and sound it cannot be said that the impugned amendment is unconstitutional. He submits that there are no valid grounds for interfering with the judgment of <ORG>.

In the earlier case between the parties to which reference has already been made, <ORG> issued writs directing <ORG> to fore-bear from collecting from the appellant any amount representing the sales tax on the following, namely, excise duty, health cess and education cess imposed on Arrack or special liquor and to refund to the appellant what might have been collected from them by way of sales tax on items of excise, health cess and education cess on Arrack or special liquor. <ORG> had passed the aforesaid order issuing appropriate writ in view of <ORG>'s finding that sales tax is not payable on excise duty, health cess and education cess.

In view of the aforesaid judgment and order passed by <ORG> amounts collected by the <ORG>s by way of Sales Tax on items of excise, health cess and education cess on Arrack or special liquor from the appellant became refundable to the appellant. The impugned amendment has been passed, as the <ORG>ment of objects which we have earlier set out clearly indicates to over-ride the judgment of <ORG> and to enable the <ORG> to hold on to the amount collected as sales tax on excise duty, health cess and education cess, if any, on Arrack or special liquor. It has to be noted that the said judgment of <ORG> in the earlier case had become final and conclusive inasmuch as the special leave petition filed against the judgment by the <ORG> was withdrawn. The <ORG> instead of seeking to test the correctness and effect of the judgment and order of <ORG> thought it fit to have the judgment and order nullified by introducing the impugned amendment. The amendment does not proceed to cure the defect or the lacuna by bringing in an amendment providing for exigibility of sales tax on excise duty, health cess and education cess. The impugned Amending Act may not, therefore, be considered to be a Validating Act . A Validating Act seeks to validate the earlier Acts declared illegal and unconstitutional by Courts by removing the defect or lacuna which led to invalidation of the law. With the removal of the defect or lacuna resulting in the validation of any Act held invalid by a competent Court, the Act may become valid, if the Validating Act is lawfully enacted. But the question may still arise as to what will be the fate of acts done before the Validating Act curing the defect has been passed. To meet such a situation and to provide that no liability may be imposed on the <ORG> in respect of such acts done before the passing of the Validating Act making such act valid, a Validating Act is usually passed with retrospective effect. The retrospective operation relieves the <ORG> of the consequences of acts done prior to the passing of the Validating Act . The retrospective operation of a Validating Act properly passed curing the defects and lacuna which might have led to the invalidity of any act done may be upheld, if considered reasonable and legitimate.

In the instant case, the <ORG> instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6.1/2% to 45% with retrospective effect from the Ist April 1966 to avoid the liability of refunding the excess amount collected and has further purported to nullify the judgment and order passed by <ORG> directing the refund of the excess amount illegally collected by providing that the levy at the Higher rate of 45% will have retrospective effect from Ist of April, 1966. The judgment of <ORG> declaring the levy of sales tax on excise duty, education cess and health cess to be bad has become conclusive and is binding on the parties. It may or may not have been competent for the <ORG> <ORG> to validly remove the lacuna and remedy the defect in the earlier levy by seeking to impose sales tax through any amendment on excise duty, education cess and health cess; but in any event, the <ORG> Government has not purported to do so through the Amending Act . As a result of the judgment of <ORG> declaring such levy illegal, the <ORG> became obliged to refund the excess amount wrongfully and illegally collected by virtue of the specific direction to that effect in the earlier judgment. It appears that the only object of enacting the amended provision is to nullify the effect of the judgment which became conclusive and binding on the parties to enable the <ORG> Government to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lacuna but merely raises the rate of duty from 6.1/2% to 45% and further proceeds to nullify the judgment and order of <ORG>. In our opinion, the enhancement of the rate of duty from 6.1/2% to 45% with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable. The defect or lacuna is not even sought to be remedied and the only justification for the steep rise in the rate of duty by the amended provision is to nullify the effect of the binding judgment. The vice of illegal collection in the absence of the removal of the illegality which led to the invalidation of the earlier assessments on the basis of illegal levy, continues to taint the earlier levy. In our opinion, this is not a proper ground for imposing the levy at the higher rate with retrospective effect. It may be open to the <ORG> to impose the levy at the higher rate with prospective operation but levy of taxation at higher rate which really amounts to imposition of tax with retrospective operation has to be justified on proper and cogent grounds. This aspect of the matter does not appear to have been properly considered by <ORG> and <ORG> in our view was not right in holding that by the enactment of S. 2 of the impugned Act the very basis of the complaint made by the petitioner before this Court in the earlier writ petition as also the basis of the decision of this Court in <NAME>'s case that the <ORG> is collecting amounts by way of tax in excess of what was authorised under the Act has been removed". We, accordingly, set aside the judgment and order of <ORG> to the extent it upholds the validity of the impugned amendment with retrospective effect from Ist of April, 1966 and to the extent it seeks to nullify the earlier judgment of <ORG>. We declare that S. 2 of the impugned amendment to the extent that it imposes the higher levy of 45% with retrospective effect from the Ist day of April, 1966 and S. 3 of the impugned Act seeking to nullify the judgment and order of <ORG> are invalid and unconstitutional.

We accordingly allow the appeals to this extent. The appellants shall be entitled to costs of these appeals with one set of hearing fee.

<ORG> allowed.