PETITIONER: <NAME> Vs. RESPONDENT: MIZO DISTRICT COUNCIL & ANR. DATE OF JUDGMENT: 28/10/1966 BENCH: <NAME>, J.M. BENCH: <NAME>, J.M. SUBBARAO, K. BACHAWAT, R.S. CITATION: 1967 AIR 829 1967 SCR (1)1012 CITATOR INFO : D 1972 SC1816 (16) D 1974 SC1489 (16) RF 1978 SC1457 (62) RF 1980 SC1789 (36) R 1981 SC1829 (115) RF 1985 SC 613 (5) ACT: Lushai Hills District (Trading by non-Tribals) Regulation (2 of 1963), s. 3-Trading licence to non-Tribal-If violative of Art. 19 of the Constitution-Constitution of India, Art. 19(1)(g)- If hits s. 3 of Lushai Hills District Regulation. HEADNOTE: <ORG> of Mizo District Council refused to further renew the temporary licence issued to the appellant, a non-trader, for trading in Mizo District. The licence could be issued for one year only and the appellant was trading after applying and obtaining its renewal from time to time. The appellant filed a writ petition, contending, that the order was mala fide in the sense that though the reason given for refusal was that the number of non-Tribal traders had reached the maximum, the <ORG> had in fact granted licences to new traders, and that the said order and s. 3 of the Lushai Hills District (Trading by non-Tribals) Regulation, 1953 was invalid being violative of Art. 19(1) (g) of the Constitution. <ORG> maintained the order. In appeal to this Court. HELD : (Per <NAME>, <NAME> and <NAME>, J.) : Section 3 of the Regulation is violative of Art. 19(1)(g) of the Constitution. Even if the Sixth Schedule can be said to contain a policy and the Regulation may be said to have been enacted in pursuance of such a policy an analysis of the Regulation shows that that is not sufficient. Even if a statute lays down' a policy it is conceivable that its implementation may be left in such an arbitrary manner that the statute providing for such implementation would -amount to an unreasonable restriction. A provision which leaves an unbridled power to an authority cannot in any sense be characterised as reasonable. Section 3 of the Regulation is one such provision'. The Regulation contains no principle or criterion on which the Executive <ORG> should grant or refuse to grant a licence or its renewal; nor does it provide any machinery under which an applicant can show cause why his application for a licence or its renewal should not be rejected; nor does it provide any superior authority before whom such an applicant can establish that the refusal by the <ORG> is arbitrary or without any proper cause; and it leaves the trader not only at the mercy of the <ORG> but also without any remedy. In the present case, the <ORG> had given the reason for refusal to renew the licence, but the order did not state what that maximum was or who prescribed such a number and under what authority or what was the criterion for fixing any particular maximum. [1020 D; 1021 A-F] (Per <NAME>, J. dissenting) : Section 3 of the Regulation is not violative of Arts. 14 and 19(1)(g) of the Constitution. If paragraph 10 of the Sixth Schedule of the Constitution cannot be regarded as violative of any provision in the Constitution, it is impossible to say that s. 3 of the Regulation which is in strict conformity with paragraph 10 is violative of Arts. 14 and 19(1)(g). The protection of the 1013. interests of the Scheduled Tribes is to be the guiding policy regulating the exercise of the discretion of <ORG>. in. the matter of granting or withholding trading licences to non-tribal traders. In the present case, the Executive <ORG> found that the maximum limit of non-tribal traders had been reached, and in the interest of the tribal it was not desirable to issue licence to more non-tribal traders. It was neither alleged nor shown that the <ORG> discriminated between similarly situated persons. [1023 G; 1024 C-D; 1025 H ], JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 648 of 1964. Appeal by special leave from the judgment and. order dated, November 23, 1960 of <ORG>. in Civil Rule No. 88 of 1960.

<NAME>, for the appellant.

The respondent did not appear.

The Judgment Of <NAME>, C. J. and <ORG> was delive- red by <ORG>., <ORG> delivered a dissenting Opinion.

<NAME>, J. We regret our inability to agree with the conclusion reached by <NAME>

The appellant, a non-tribal, started trading at Aijal, Mizo, District, in 1957 under a temporary licence issued by <ORG> investing about Rs. 50,000/- therein. The temporary licence could be issued at a time for a year only and therefore he applied for and obtained its renewal from time to time upto May 31, 1960. He applied for a further renewal whereupon <ORG> of <ORG> passed an order dated July 11, 1960 refusing any further renewal and -directing him to. remove his properties from the District by the end of July 1960, and imposed a fine of Rs. 5001- in case he failed to comply with it.

The appellant filed a petition under Art. 226 of the Constitution in <ORG> against the said order contending, that the said order was malafide in the sense that though the reason given for refusal was that the number of non-tribal traders had. reached the maximum the <ORG> had in fact granted licences to new traders, and that the said order and section 3 of the Lushai Hills District (Trading by non-Tribals) Regulation, 2 of 1953 were invalid being violative of Art. 19(1)(e) and (g) of the Constitution. <ORG> struck down that part of the said order which directed him to remove his properties from the District and which imposed fine but dismissed the rest of the petition, firstly, on the ground of delay and secondly on the ground that the said order was a valid order and was not discriminatory. <ORG> also repelled the contention that the power of the <ORG> was unrestricted or arbitrary. <ORG> observed "The power cannot be said to be unrestricted. The licence is to be granted or refused having regard to the underlying object (if the enactment. This Regulation was passed in pursuance of the provisions of the Sixth Schedule of the Constitution which gives specific power to the District <ORG> to pass regulations affecting the right of non-Tribals to trade within the tribal areas and in order to effect the purpose underlying the provision of the Sixth Schedule this Regulation was enacted. If having regard to the scope of trade in that locality the number of licences is restricted by the authorities, it cannot be said that the exercise of such a power is discriminatory."

This appeal by special leave challenges the correctness of this order by which <ORG> dismissed the petition. The appellant's contention before us was that the said order was invalid as it was based on an invalid provision of law which infringed his fundamental right to carry on business at Aijal under Art. 19(1)(g) that the refusal to allow him to carry on his business amounted to an unreasonable restriction and that section 3 of the Regulation which empowers the <ORG> to refuse to permit him to carry on business was invalid as it conferred on the <ORG> an arbitrary and uncanalized power enabling it to refuse to grant a licence or its renewal according to its sweet will. The Sixth Schedule to the Constitution constitutes the Mizo District, formerly known as the Lushai Hills District, as an autonomous district. Paragraph 10 of that Schedule provides for the power of the District <ORG> to make Regulation for the control of money-lending and trading by non-tribals. Clauses 1 and 2 of that paragraph read as under --

(1) <ORG> of an autonomous district may make regulations for the regulation and control of money-lending or trading within the district by persons other than Scheduled Tribes resident in the District.

(2) In particular and without prejudice to the generality of the foregoing power, such regulations may

(a)prescribe that no one except the holder of a licence issued in that behalf shall carry on the business of money landing

(b) (C)

(d)prescribe that no person who is not a member of the Scheduled Tribes resident in the District shall carry on wholesale or retail business in any commodity except under a licence issued in that behalf by <ORG>.

Paragraph 10 thus empowers <ORG> to make Regulations for regulating and controlling money-lending and trading by non-tribals in the District and in particular to provide by such Regulations that no non-tribal shall carry on any trade without a licence. In pursuance of this power <ORG>s enacted the Lushai Hills District (Trading by non-Tribal) Regulation, 2 of 1953 the preamble of which merely states that it was expedient to provide for the regulation and control of trading within the Lushai Hills District by persons other than scheduled tribes resident in the District. Section 3 of the Regulation provides that no person other than a Tribal resident in the District shall carry on wholesale or retail business in any commodities except under and in accordance with the terms of a licence issued by <ORG>. The first proviso to this section does not concern us as it deals with perma- nent licences to be issued to persons who were carrying on business prior to the enactment of the Regulation. But the second proviso seems to apply to both permanent and temporary licences and lays down that if a licence is refused, the grounds of refusal should be recorded by <ORG>. Sections 4 and 5 prescribe that a licensee should maintain accounts in prescribed forms and such accounts should be open to inspection by an authorised officer. Section 6 empowers <ORG> to make rules for carrying out the purposes of the Regulation and in particular to provide the form and conditions of the licence, the fees therefor, the procedure for applying for a licence, the forms of accounts to be maintained by the licensee and for any other matter connected with or ancillary to the matters aforesaid. Section authorises <ORG> to cancel the licence of a trader if he were convicted for contravention of any of the provisions of the Regulation. In exercise of the aforesaid power <ORG> framed the Lushai Hills District (Trading by non-Tribals) Rules, 1954. Rule 5(2)(a) provides that the terms and conditions of the licence shall be strictly adhered to by the licensee, a contravention thereof being punishable under the law for the time being in force. The Rule also provides that no temporary licence shall be granted for a period exceeding one year at one time. Rules 6 and 7 deal with permanent licences, that is, licences granted to non-tribals carrying on business before the enactment of the said Regulation. We are not concerned with those Rules as the appellant is not one of those persons entitled to a permanent licence.

The appellant being a citizen of India and the Mizo District being part of the Union Territory he has undoubtedly a fundamental right under Art. 19(1)(g) to carry on trade in any part of the country including the Mizo District. Any restriction infringing such a right can only be sustained if it is a reasonable restriction imposed in the interest of the general public as envisaged by Art. 19(6).  <CITATION> (1) this Court laid down an elaborate test of reasonableness which has since been accepted in several subsequent decisions. <NAME> in that decision observed :-

"In considering the reasonableness of laws imposing restrictions on fundamental rights both the substantive and procedural aspects of the impugned law should be examined from the point of view of reasonableness and the test of reasonableness, wherever prescribed should be applied to each individual statute impugned and no abstract -standard or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent or urgency of the evil sought to be remedied thereby, the disproportion of imposition, the prevailing conditions at the time should enter into the judicial verdict. "

<CITATION> (2) clause 25 of the Rajasthan Foodgrains Control Order, 1949 empowered certain specified officers to freeze any stocks of foodgrains held by any person and further provided that such stocks were liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for the purpose of <ORG> procurement. The clause was struck down by this Court on the ground that while the authorities may fix the ceiling price at which foodgrains should be sold in the market by the dealers there was no such limitation on the power of the <ORG> to acquire the stocks. It would therefore be open to the <ORG> to requisition the stocks at a price lower than the ceiling price thus causing loss to the persons whose stocks are freezed, while at the same time the <ORG> would be free to sell the same stocks at a higher price and make profit. No dealer would therefore be prepared to buy foodgrains at the market price when he knew that he was exposed to the risk of his stocks being freezed any moment and the same being requisitioned at the procurement rate. The clause thus left it entirely to the discretion of the executive to fix any compensation it liked. The decision held that clause 25 placed an unreasonable restriction upon the carrying on of trade or business, was thus an infringement of the right under Art. 19(1)(g) and was therefore to that extent void. <CITATION> (3) two conditions subject to which the appellant was granted a licence and which compelled a licensee to exhibit in his cinema theatre at each performance (1) S. C. R. 597. (3)  1 S. C. R. 686. (2)  S. C. R. 982.

<NAME>

one or more approved films of such length and for such length of time, as the <ORG> or <ORG> may direct and which also compelled the licensee to exhibit at the commencement of each performance not less than 2000 feet of one or more approved films were struck down as imposing unreasonable restrictions on the right of the licensee to carry on his business. At page 689 of the Report the <ORG> observed :-

"Neither the length of the film nor the period of time for which it may be shown is specified in the condition and the Government is vested with an unregulated discretion to compel a licensee to exhibit a film of any length at its discretion which may consume the whole or the greater part of the time for which each performance is given.... As the condition stands, there can be no doubt that there is no principle to guide the licensing authority and a condition such as the above may lead to the loss- or total extinction of the business itself. A condition couched in such wide language is bound to operate harshly upon the cinema business and cannot be regarded as a reasonable restriction. It savours more of the nature of an imposition than a restriction."

<CITATION> (1) this <ORG> on the other hand upheld the validity of S. 25 ()(c) of the Bihar Mica Act, 1947 on the ground that the provisions of that section did not impose any unreasonable restriction. In upholding the validity of the said provisions the court observed that the section clearly provided ascertainable standards for <ORG> to apply to the facts of each case. Clauses (a), (b), (c) and (d) of section 25(1) described with sufficient particularity the nature of the defaults to be committed and the abuses to be guilty of by the licensee in order to attract the penal provisions. Clause (c) with which the <ORG> was concerned embodied the last step that could be resorted to by <ORG> to eliminate a recalcitrant operator from the field of mining industry provided he was guilty of repeated failures to comply with any of the provisions of the Act or the rules made thereunder. The discretion of <ORG> under cl. (c) of s. 25 (1) was hedged in by important restrictions, viz., the repeated failure on the part of the licensee and the necessity for <ORG> to afford reasonable opportunity to him to show cause why his licence should not be cancelled. <CITATION> (2) the majority judgment observed that in order to decide whether a provision in a pre- Constitution statute like the one in question there satisfied the test of constitutionality laid down by Art. 19(1)(g) read with Art. 19(6) the impugned section must be read (1)  2 S.C.R. 609.

M17Sup.CI/66-20 (2) [1961] 3 S. C. R. 135.

<NAME>

as a whole and in a fair and reasonable manner and should not be declared void simply because considerations relevant to those articles are not immediately apparent from its language. These observations were made in connection with a pre-Constitution enactment. Even then <NAME> (as he then was) with whom <NAME> agreed uttered a note of caution saying that it was not the function of the court to search for an undisclosed policy in the crevices of the statute, for by doing so "this court will not only be finding an excuse to resuscitate an invalid law but also be encouraging the making of laws by appropriate authorities in derogation of fundamental rights." Even according to the majority decision, there must be disclosed in the statute apparently or otherwise, a policy guiding the exercise of power conferred thereunder by the concerned authority. These authorities clearly demonstrate that the fundamental right of a citizen to carry on trade can be restricted only by making a law imposing in the interest of the general public reasonable restrictions on the exercise of such a right, that such restrictions should not be arbitrary or excessive or beyond what is required in the interest of the general public and that an uncontrolled and uncanalized power conferred on the authority would be an unreasonable restriction on such right. Though a legislative policy may be expressed in a statute, it must provide a suitable machinery for implementing that policy in such a manner that such implementation does not result in undue or excessive hardship and arbitrariness. The question whether a restriction is reasonable or not is clearly a justiciable concept and it is for the court to come to one conclusion or the other having regard to the considerations laid down in <CITATION> .(1) It is also well established that where a provision restricts any one of the fundamental rights it is for the <ORG> to establish the reasonableness of such restriction and for the court to decide in the light of the circumstances in each case, the policy and the object of the impugned legislation and the mischief it seeks to prevent.

With this background we now proceed to examine the provi- sions of the Regulation and consider whether the power granted under section 3 amounts to a reasonable restriction so as to save it under Art. 19(6). As already stated, under Paragraph 10 of the Sixth Schedule <ORG> has the power to enact Regulations for regulating and controlling money-lending or trading by non-Tribals in the District. Clause 1 empowers the <ORG> in general terms to make Regulations and Clause 2 empowers it in particular to make Regulations prescribing that a non-tribal after the enactment of such a Regulation shall not carry on trade except under a licence. Reading Paragraph 10 fairly and as a (1)  S.C.R. 597.

whole it would seem that the Constitution-makers were anxious that the tribals should be safeguarded from unfair exploitation by non-tribals entering the District and carrying on money-lending and other activities. It appears that Regulation 2 of 1953 was passed for the avowed object set out in Paragraph 10 of the Sixth Schedule though its preamble merely states that it was expedient to regulate and control trade by non-tribals. Section 3 of the Regulation lays down a prohibition against any one carrying on trade without a licence and except in accordance with the terms of such licence. The effect of this section is that if a non- tribal wishes to carry on trade in the District but is refused the licence, such refusal would result in a total prohibition against him from carrying on any trade. Even if a licence is issued it can only be a temporary licence for one year only. If <ORG> to which this power is delegated by the Rules were to refuse to renew it such refusal would mean that he has to stop the trade which he was until then carrying on. In the first case it is a prohibition and in the other a total extinction of his trade. It is clear from the Regulation and the Rules made thereunder that there is no right of appeal to any superior authority against a refusal to grant or renew a licence. There is also no provision either in the Regulation or in the Rules empowering any civil court to adjudicate against any such order of <ORG>. A nontribal trader therefore has no remedy whatsoever against such an order though the refusal to grant or renew a licence amounts to his being totally barred from trading in one case and his business or trade being destroyed in the other. Even if a non-Tribal obtains a licence and starts a trade investing therein a large, capital, there would be no security for such trade as the licence would be for one year only. <ORG> can refuse to renew his licence and such refusal would as aforesaid result in the total extinction of his trade. Under the second proviso to section 3 the <ORG> no doubt has to record the grounds for refusal but that is hardly a safeguard against an arbitrary refusal, for, the Regulation does not constitute any superior authority with power to revise such an order or to% examine whether the grounds are legal or proper. Though the Regulation provides that no non-tribal can carry on any trade without a licence issued by the <ORG> it is <ORG> under the Rules to which an application has to be made for such a licence or for a renewal thereof and in the event of the <ORG> refusing to grant such a licence or refusing to renew it the applicant is left without any remedy whatsoever. A perusal of the Regulation shows that it nowhere provides any principles or standards on which <ORG> has to act in granting or refusing to grant the licence. The non-tribal trader either wishing to start a trade or continue his trade started on a grant of licence is entirely at the mercy of <ORG> for the grant or the renewal of a licence.

There being no principles or standards laid down in the' Regulation there are obviously no restraints or limits within which the power of <ORG> to refuse to grant or renew a licence is to be exercised. This situation is clearly seen from the fact that though section 9 of the Regulation authorises <ORG> to cancel a licence-presumably both permanent and temporary-if the licensee is convicted of contravention of any of the provisions of the Regulation, the power of refusal under section 3 is not limited or circumscribed by any such provision or any other criterion. The power of refusal is thus left entirely unguided and untrammelled. How arbitrary the exercise of such unguided power can be is seen from the fact that <ORG> not only refused to renew the appellant's licence but also directed him to remove his property by the end of July 1960 and imposed a fine if he failed to do so.

It is true that <ORG> in the present case has given the reason for refusal to renew the licence, viz., that the number of licensees had reached the maximum. But the order does not state what that maximum is or who prescribed such a number and under what authority or what is the criterion for fixing any particular maximum. Indeed there is nothing in the Regulation empowering the <ORG> much less <ORG> to lay down any such maximum number nor does the Regulation prescribe any principles on which such a maximum number is to be fixed. <ORG> can at any time and on its whim arbitrarily fix a maximum number and refuse to grant or renew a licence. Such a maximum number may also vary from time to time. The result would be to prevent any newcomer to trade in the District or to destroy the trade of a licensee carrying on his business under a licence. At the end of each year every nontribal trader would be at the mercy of <ORG> and would not even know whether he would be permitted to continue his trade. Even the Rules made under section 6 do not lay down any principles or standards. Rule 7 is couched in general terms and provides that <ORG> may refuse to renew any licence granted to a non-tribal trader after the commencement of the Regulation. Rule 4 empowers the <ORG> to make such enquiry as it deems proper into the antecedents and character of any new applicant and then reject or accept his application. The Rule, however, does not lay down any standards on the basis of which the <ORG> has to decide whether the antecedents or the character are such that the application should be rejected. The <ORG> therefore can in any given case reject an application merely stating that the antecedents of an applicant are not good or proper without the applicant knowing what standards of character or antecedents he has to conform to.

Even though it may perhaps be said that the Sixth Schedule to the Constitution shows a policy to safeguard the tribals from being exploited and the Regulation was enacted in exercise of the power conferred thereunder that is not enough to save the restriction from the vice of being unreasonable. It provides no principles on which such a policy is to be implemented. As already stated, the Regulation contains no principle or criterion on which <ORG> should grant or refuse to grant a licence or its renewal. It does not provide any machinery under which an applicant can show cause why Ms application for a licence or its renewal should not be rejected. It does not also provide any superior authority before whom such an applicant can establish that the refusal by the <ORG> is arbitrary or without any proper cause. Indeed the Regulation does not contain any provision laying down what is and what is not a proper cause for refusal. Equally it does not show any guiding criterion on which the <ORG> should decide to grant or refuse a licence or its renewal. The Regulation contains no provisions on the basis of which an applicant would know what he has to satisfy in order to entitle him to a licence. The power to grant or not to grant is thus entirely unrestrained and unguided. The Regulation leaves a trader not only at the mercy of the <ORG> but also without any remedy. Therefore even if the Sixth Schedule can be said to contain a policy and the Regulation may be said to have been enacted in pursuance of such a policy the analysis of the Regulation shows that that is not sufficient. Even if a statute lays down a policy it is conceivable that its implementation may be left in such an arbitrary manner that the statute providing for such implementation would amount to an unreasonable restriction. A provision which leaves an unbridled power to an authority cannot in any sense be characterised as reasonable. Section 3 of the Regulation is one such provision and is therefore liable to be struck down as violative of Art. 19(1)(g). For the reasons aforesaid, we would declare that section 3 of the Regulation is an unreasonable restriction on the fundamental right guaranteed under Art. 19(1)(g) and therefore void. The said order dated July 11, 1960 having been made under such a void provision is illegal and void. We would therefore set aside the said order as having been made under an illegal provision of law and allow the appeal with costs.

Bachawat, J. The appellant is a non-tribal trader. Since 1957 he carried on business at Aijal in Mizo District under temporary licenses issued on behalf of <ORG>. The license was renewed from time to time. In 1959, a license valid till December 31, 1959 was issued, and at the appellant's request, the period of the license was extended from time to time up to May 3 1, 1960. By his letter dated July 11, 1960, the Revenue Officer, Mizo <ORG> informed the appellant that <ORG> of the Mizo <ORG> had decided that his license could not be extended as the number of the license- holders had reached its maximum limit, and the appellant was directed to shift all his properties outside the Mizo District within July 1960, failing which a fine of Rs. 400/- would be imposed upon him. The appellant filed a writ application in <ORG> asking for the issue of a writ setting aside this order and directing the Mizo <ORG> to renew his license. <ORG> quashed the order in so far as it imposed a fine of Rs. 500/-, and directed the appellant to remove his goods. <ORG>, however, maintained the order in so far as it refused to renew the license. The appellant now appeals to this Court by special leave.

The Mizo District formerly known as the Lushai Hills District is a tribal area in Assam, and is one of the autonomous districts constituted by paragraph 1 of the Sixth Schedule to the Constitution of India. Paragraph 10 of the Sixth Schedule gives power to <ORG> to make regulations for the control of money lending and trading by non-tribals. The material part of paragraph 10 is in these terms;

"10. Power of <ORG> to make regulations for the control of money-lending and trading by non-tribals.-

(1)The District Council of an autonomous district may make regulations for the regulation and control of money-lending or trading within the district by persons other than Scheduled Tribes resident in the district.

(2)In particular and without prejudice to the generality of the foregoing power, such regulations may.

(d)Prescribe that no person who is not a member of the Scheduled Tribes resident in the district shall carry on wholesale or retail business in any commodity except under a licence issued in that behalf by <ORG> :

Provided that no regulations may be made under this paragraph unless they are passed by a majority of not less than three-fourths of the total membership of <ORG> : Provided further that it shall not be competent under any such. regulations to refuse the grant of a licence to a money- lender or a trader who has "been carrying on business within the district since before the time of the making of such regulations."

On March 17, 1953 <ORG> with the assent of the Governor of Assam and in exercise of its powers under paragraph 10 of the Sixth Schedule to the Constitution made and promulgated the Lushai Hills District (Trading by non- Tribals) Regulation, 1953 (Regulation No. 2 of 1953). Section 3 of the Regulation reads:

"3. No person, other than a Tribal resident in the District shall carry on wholesale or retail business in any commodities in this District except under and in accordance with the -terms of a license issued in that behalf by <ORG> under the provisions of this Regulation:

Provided that such a license shall not be refused to a person who has been carrying on such business within the district since before the commencement of this Regulation : Provided further that if such a license is refused, the grounds of refusal shall be recorded in writing by <ORG>."

The contention of the appellant is that s. 3 of the Regulation gives to <ORG> an arbitrary power of issuing and withholding licenses to a non-tribal and is repugnant to Arts. 14 and 19(1)(g) of the Constitution. <ORG> held that the section is not violative of Art.

14. The point that the section infringes Art. 19(1)(g) was not argued in <ORG>. However, on the merits the attack on s. 3 based on both Arts. 14 and 19(1)(g) must fail.

Paragraph 10(2)(d) of the Sixth Schedule to the Constitution of India specifically empowers <ORG> of an autonomous district to make regulations prescribing that a nontribal resident of the District shall not carry on business in any commodity except under a license issued in that behalf by <ORG>. The Sixth Schedule to the Constitution lays down the policy for the administration of the tribal areas in the State of Assam. Paragraph 10 is an integral part of this Schedule. This paragraph is not violative of Arts. 14 and 19(1)(g), nor is it so contended. Section 3 of the Regulation is in strict conformity with this paragraph. If paragraph 10 of the Sixth Schedule cannot be regarded as violative of any provision in the Constitution, it is impossible to say that s. 3 of the Regulation which is in strict conformity with paragraph 10 is violative of Arts. 14 and 19 (1)(g) of the Constitution. This conclusion is sufficient to dispose of the argument based on Arts. 14 and 19(1)(g).

The attack based on Arts. 14 and 19(1)(g) must fail on other grounds also. For economic and political reasons, our Constitution has taken special care of the Scheduled Tribes. One of the guiding principles of <ORG> policy embodied in Art. 46 of the Constitution is that the <ORG> shall promote with special care the edu-

cational and economic interests of the weaker sections of the people and, in particular, the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. Pursuant to this policy, the Constitution itself has made numerous provisions for the protection of the Scheduled Tribes. Paragraph 10(2)(d) of the Sixth Schedule is one of such provisions. Section 3 of the Regulation has been enacted pursuant to the power conferred by paragraph 10(2)(d)of the Sixth Schedule with the object of preventing exploitation of the Scheduled Tribes by non- tribal traders and protecting the interests of the Scheduled Tribes. The licensing power is vested in <ORG> which is a high ranking body with legislative, judicial and executive functions. It is apparent on the face of the Constitution of which paragraph 10(2)(d) of the Sixth Schedule forms an intergral part and on a fair reading of s. 3 of the Regulation read in the light of paragraph 10(2)(d) that the protection of the interests of the Scheduled Tribes is to be the guiding policy regulating the exercise of the discretion of <ORG> in the matter of granting or withholding trading licenses to non- tribal traders. It is left to <ORG> to decide in each individual case whether the grant of the license would best promote the interests of the Scheduled Tribes. The restriction imposed by s. 3 on the right of a non-tribal to carry on business in a tribal area is not arbitrary or unreasonable and is not violative of Arts. 14 and 19(1)(g).

Another contention of the appellant is that the licensing authority could refuse to issue license only if it found that the appellant did not show good conduct and behaviour while in the Mizo Hills, as stated in condition No. 1 of the temporary trading license. I am unable to accept this contention. Rules 2 (a), 4, 5 and 7 of the Lushai Hills District (Trading by non-Tribals) Rules, 1954 made by <ORG> with the previous approval of the the Governor of Assam in exercise of the powers conferred by s. 6 of the Regulation are as follows :

"2. Definition.-In these rules, unless there is anything repugnant or the context otherwise requires :-

(a)'Executive Committee' means <ORG> of <ORG> constituted under the Assam Autonomous Districts (Constitution of the District Councils) Rules, 1951.

"4. Verification of applicant's antecedents and character.--The Executive Committee may after making such enquiries as it deems proper into the antecedents and character of any new applicant, reject or accept any application,

5.Grant of License.-(1) When application is accepted a license to trade shall be issued to the applicant (hereinafter called 'Licensed Trader') after receipt of the fee as specified in these rules.

Temporary trade License.-(2)(a). The terms and conditions of the license as entered on the face of the license as in Appendix 'A' shall be strictly adhered to by the licensee, and any contravention thereof shall be punishable under the law for the time being in force.

(b)No temporary License shall be granted for a period exceeding one year at any one time.

7.Provision for refusal to renew permanent license.-Subject to the provisions of section 3 of the Lushai Hills District (Trading by Non-Tribals) Regulation, 1953, <ORG> may refuse to renew any license granted to the Non-Tribal Traders after the commencement of the Regulation." The standard terms and conditions of the temporary license in Form 'T' are as follows : "1. This license is cancellable or renewable by <ORG> as and when thought fit contingent on good conduct and behaviour while in Lushai Hills.

2. Trading should be done on cash basis only.

3. The License holder should report without fail to <ORG> on the expiry of the validity of this license, and submit this license."

<ORG> of <ORG> is constituted under r. 19 of the Assam Autonomous District (Constitution of District Councils) Rules, 1951 framed by the Governor of Assam in exercise of the powers conferred by sub-paragraph (6) of paragraph 2 of the Sixth Schedule to the Constitution, and is vested, inter alia, with the executive functions of <ORG>. The validity of the Rules is not in issue. It is not contended that the Rules are ultra vires the Regulation. The discretion vested in the licensing authority by Rules 4, 5 and 7 is not restricted by condition No. 1 of the license. The licensing authority may refuse to renew or to issue the license if it finds that such a course would promote the interests of the Scheduled Tribes. In the present case, <ORG> found that the maximum limit of non- tribal traders had been reached, and in the interest of the tribals it was not desirable to issue license to more non-tribal traders. It is neither alleged nor shown that <ORG> discriminated between similarly situated persons.

In the result, the appeal is dismissed.

ORDER In accordance with the Opinion of the majority, the appeal is allowed with costs.

Y.P.


PETITIONER: CHAINRUP SAMPATRAM Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX,WEST BENGAL. DATE OF JUDGMENT: 09/10/1953 BENCH: <NAME>, <NAME> BENCH: <NAME>, <NAME> DAS, <NAME>, VIVIAN HASAN, GHULAM BHAGWATI, NATWARLAL H. CITATION: 1953 AIR 519 1954 SCR 211 CITATOR INFO : RF 1991 SC1338 (17) ACT: Indian Income-tax Act (XI of 1922), ss. 4(1)(b) and 14(2)(c) -Ascertainment of profit by valuation of stock-Stock-in-trade removed to Native State-Place where profit accrues -Exemption under s. 14 (2) (c)-Principles underlying valuation of stock. HEADNOTE: The assesses firm which carried on business at Calcutta in bullion despatched during the accounting year to Bikaner, where its partners resided, a certain quantity of silver bars and showed them a,; having been sold to the partners. The Income-tax authorities disbelieved the story of the sale and, treating the bars as stock-in-trade and valuing them at their market value at the close of the year which was much higher than the cost, assessed the firm's profits at Rs. 2,20,887. The assessee contended that, even admitting that the bars were the stock-in-trade of the business, the increased value at the close of the year accrued at Bikaner and was exempt from tax in British India under s. 14(2)(c) of the Income-tax Act. <ORG> held that the notional profit representing the appreciation in value of the stock-in-trade emerged out of the valuation and the profit accordingly arose at the time when, and at the place where, the valuation was made, and as the valuation was made at Calcutta s. 14(2)(c) did not apply and the profit was taxable. On appeal, 212 Held, that the view of <ORG> that the profit &rose out of the valuation of the closing stock and the situs of its accrual or arising was therefore where the valuation was made, was erroneous. The conclusion of <ORG> that the profit did not accrue in Bikaner but at Calcutta could, however, be supported on another ground, viz., that the source of the profit was the business and as the profit could be correctly ascertained according to the method adopted by the assessee only after bringing into the trading account his closing stock wherever it may exist, the whole of the profits must be taken to accrue or arise at the place of carrying on the business, viz., Calcutta, The principles underlying the method of ascertaining profits by valuation of stock at the beginning and close of the year and of the rule that the closing stock is to be valued at cost or market value, whichever is the lower, explained. <CITATION> (12 Tax Cas. 813) and <CITATION> . 48 Mad. 836) referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION Civil Appeal No. 142 of 1952.

Appeal by special leave granted by <ORG> by its order dated the 14th March, 1952, from the Judgment and Order dated the 4th day of June, 1951, of <ORG> (<NAME> and <NAME>.) Special Jurisdiction (Income-tax) in I.T.R. Nos. 7 and 6 of 1947 arising out of the Order dated the 26th day of March, 1946, of <ORG>, Calcutta Bench, in 66 R.A. No. 3 Bengal 1946-47 and 66 R.A. No. 4 Bengal 1946-47.

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

<NAME>, Solicitor-General for India (<NAME>, with him) for the respondent.

1953. October 9. The Judgment of the Court was delivered by <NAME> is an appeal by special leave from a judgment of <ORG> at Calcutta answering a reference by <ORG> under section 66 (2) of the Indian Income-tax Act , 1922, hereinafter referred to as "the Act".

The appellant is a registered firm consisting of two brothers as partners with equal shares. The firm was carrying on business at Calcutta as bullion merchants dealing mainly in silver and kept its books of account on the mercantile basis. In the course of the year of account 1997 (Ramnavami) corresponding to 1941-42, 582 bars of silver (some from the old stock in hand at Calcutta and some purchased elsewhere during the year) were sent to Bikaner where the partners resided, and their value at cost was credited in the books of the firm. In the assessment of the firm for the year 1942-43, it was alleged that the said silver bars had been sold to the partners for their domestic use but the Income-tax authorities held that the alleged sale was not "genuine and that the said silver bars still formed part of the stock-in-trade of the firm at the close of the previous year 1997, and they accordingly included in the taxable profits a sum of Rs. 2,20,887 as the excess arising from the valuation of the said 582 bars at market price on the closing day. They were valued at market rate at which the rest of the closing stock at Calcutta was valued in the books of the firm.

On appeal <ORG>, on a consideration of all the facts and circumstances of the case, recorded its finding as follows:

"All these circumstances make it clear to us that the action of the Income-tax authorities in treating the stock of silver bars in Bikaner as part of the stock-in-trade of the Calcutta business was amply justified. The appellant on account of the panic in Calcutta had to remove the valuable stock-in-trade to a safe place in Bikaner just as many other Calcutta businessmen did at that time. The partners of the firm then noticed the upward trend of the silver market, and decided to take advantage of the camouflage afforded by the entries in the books of account and the story of sale to partners, so that the profit of the year of account could be substantially reduced artificially."

The appeal was accordingly dismissed. The application by the firm under section 66(1) of the Act asking  for a reference to <ORG> of six questions as questions of law arising out of the order of the <ORG> was also rejected.

Thereupon the firm moved <ORG> under section 66(2) , and the court directed the <ORG> to refer the following question of law for its decision:

Whether in the circumstances of the case and on a true construction of section 4 (1) (b) and section 14 (2) (c) of the Indian Income-tax Act , the sum of Rs. 2,20,887 was in law assessable to tax ?

The reference was heard by <NAME> and <NAME>, who answered the question in the affirmative. The firm being admittedly resident and ordinarily resident within the meaning of sections 4-A and 4-B in what was then known as British India, its total income would include also income accruing or arising to it without British India under section 4 (1) (b) (ii). The firm, however, claimed exemption in respect of the said sum under section 14(2)(c) which provided that the tax shall not be payable by an assessee in respect of any income, profits or gains accruing or arising to him within an Indian State. It was contended that even on the finding of the Income-tax authorities that the silver bars in question formed part of the stock-in-trade of the business at Calcutta and their removal to Bikaner had been effected only for reasons of security, the said bars having remained there during the rest of the accounting year, their value at the market rate at the close of the year being an increment to the goods at Bikaner, the profit accrued at Bikaner (their an Indian State), with the result that it was exempted under section 14 (2) (c).

<ORG> rejected this contention on the ground that the " notional profit " represented by the appreciation in value of the stock-in-trade " emerges out of the valuation and only when it so emerges it arises or accrues. The source of the profit is thus the valuation, and its situs is where the valuation is made. What is valued is the firm's business at the site of the firm and all the stock-in-trade of the firm is necessarily drawn into the valuation wherever they may be physically situated. The profit which is the result of the stock valuation of a business is thus sui generis, a type by itself, to which the ordinary notions of a physical accrual will not apply. It comes into existence when the valuation is made and since it arises out of the valuation, it arises, in respect of the whole stock-in-trade, at the site of the firm whose stock-in-trade is being valued irrespective of where parts of the stock-in-trade may be."

While we agree with the conclusion that no part of the profits of the firm in the accounting year can be said to have accrued or arisen at Bikaner, the reasoning by which the learned Judges arrived at that conclusion seems to us, with all respect, to proceed on a misconception. It is wrong to assume that the valuation of the closing stock at market rate has, for its object, the bringing into charge any appreciation in the value of such stock. The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered on the other side of the account at the time of their purchase, so that the cancelling out of the entries relating to the same stock from both sides of the account would leave only the transactions on which there have been actual sales in the course of the year showing the profit or loss actually realised on the year's trading. As pointed out in paragraph 8 of the Report of the Committee on Financial Risks attaching to the holding of Trading Stocks, 1919, " As the entry for stock which appears in a trading account is merely intended to cancel the charge for the goods purchased which have not been sold, it should necessarily represent the cost of the goods. If it is more or less than the cost, then the effect is to state the profit on the goods which actually have been sold at the incorrect figure...... From this rigid doctrine one exception is very generally recognised on prudential grounds and is now fully sanctioned by custom, viz., the adoption of market value at the date of making -up accounts, if that value is less than cost. It is of course an anticipation of the loss that may be made on those goods in the following year, and may even have the effect, if prices rise again, of attributing to the following year's results a greater amount of profit than the difference between the actual sale price and the actual cost price of the goods in question" (extracted in paragraph 281 of the Report of <ORG> presented to British <ORG> in April, 1951). While anticipated loss is thus taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into the account, as no prudent trader would care to show increased profit before its actual realisation. This is the theory underlying the rule that the closing stock is to be valued at cost or market price whichever is the lower, and it is now generally accepted as an established rule of commercial practice and accountancy. As profits for income-tax purposes are to be computed in conformity with the ordinary principles of commercial accounting, unless, of course, such principles have been superseded or modified by legislative enactments, unrealised profits in the shape of appreciated value of goods remaining unsold at the end of an accounting year and carried over to the following year's account in a business that is continuing are not brought into the charge as a matter of practice, though, as already stated, loss due to a fall in price below cost is allowed even if such loss has not been actually realised. As truly observed by one of the learned Judges in <CITATION> (1), " Under this law (Revenue law) the profits are the profits realised in the course of the year. What seems an exception is recognised where a trader purchased and still holds goods or stocks which have fallen in value. No loss has been realised. Loss may not occur. Nevertheless, at the close of the year he is permitted to treat these goods or stocks as of their market value."

An illustration of the rule in its practical working is to be found in the case of the <CITATION> (2). In 1921 the (1) 12 Tax Cas. 813, 827. (2) (1925) I.L.R. 48 Mad. 836.

assessee purchased a large stock of piece-goods at Rs. 13-8 a piece. At the end of the year the market value fell to Rs. 6 a piece, and he made out a loss by valuing the whole stock at the market rate, including the unsold pieces in hand at the end of the year. The loss was allowed in his assessment to income-tax. In the following year (1922), however, he entered the same unsold goods as opening stock at the cost price of Rs. 13-8. Some of those pieces remained unsold at the end of 1922 also and he credited their value at Rs. 8-8 a piece, the market rate then prevailing, and showed a loss on the year's trading. The Income-tax authorities refused to allow the loss thus calculated, and assessed him as having made a profit on the footing that the opening stock of 1922 should have been valued at Rs. 6 a piece and the unsold pieces at Rs. 8-8 a piece. The assessment was upheld as properly made, though, it will be seen, the transactions of 1922, or even of the two years taken together, ended actually in a loss. Thus, while the valuation of the unsold stock at the end of each year at market rate which was less than cost was accepted, the valuation of the unsold goods carried over as opening stock of 1922 at Rs. 6 a piece consistently with their valuation as the closing stock of 1921 was insisted upon in order to rectify the distorted picture of the trading results of 1921 which were not correctly reflected in the accounts by reason of the assessee having adopted the lower market rate instead of cost as the value of the closing stock in 1921. If the market had risen to, say, Rs. 15 instead of to Rs. 8-8 a piece at the end of 1922, then' on the principles indicated above, it would have been open to the assessee to value the closing stock at cost (Rs. 13-8), and the Income-tax authorities could not have claimed to bring into the assessment the appreciated value of the unsold goods. It will thus be seen that no question of charging the-appreciated value of closing stock as " notional profits " can really arise. In the present case, although it would appear that the cost price of part of the silver despatched to Bikaner was less than the market price at the end of the year, the reference did not raise any question regarding the basis on which the amount in dispute, viz., Rs. 2,20,887, was arrived at. On the other hand, the question referred assumed that the said sum was correctly computed and put in issue only its assessability in law on a true construction of section 4(1) (b) and section 14(2) (c) of the Act. Again, it is a misconception to think that any -profit " arises out of the valuation of the closing stock and the situs of its arising or accrual is where the valuation is made. As already stated, valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period, and can in no sense be regarded as the " source " of such profits. Nor can the place where such valuation is made be regarded as the " situs of their accrual ". The source of the profits and gains of a business is indubitably the business, and the place of their accrual is where the business is carried on. As such profits can be correctly ascertained according to the method adopted by an assessee only after bringing into the trading account his closing stock wherever it may exist, the whole of the profits must be taken to accrue or arise at the place of carrying on the business. On the finding of the Income-tax authorities that the 582 bars of silver lying at Bikaner had not been really sold but remained part of the unsold stock of the firm's business at the end of the accounting year, the whole of the profits of that year must be taken to have accrued or arisen at Calcutta where the business was carried on, no part of that business having admittedly been transacted at Bikaner.

We agree with <ORG> that the question referred should be answered in the affirmative though on different grounds. The appeal is accordingly dismissed with costs.

Appeal dismissed.

Agent for the appellant: <NAME>.

Agent for the respondent: <NAME>.


<NAME>, J.

1. The appellant-union had filed a complaint before <ORG> under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (the 'Act') complaining of the breach of Items 1(a), (b), 4(a), (f) and 6 of Schedule II and Items 7, 9 and 10 of Schedule IV of the said Act. The case of the complainant-union was that the 21 workmen who were working in one of the canteens of the respondent-company, were not given the service conditions as were available to the other workmen of the company and there was also a threat of termination of their services. It is an admitted fact that these workmen were employed by a contractor who was given a contract to run the canteen in question. The com plaint, however, was filed on the footing that the workmen were the employees of the company and, therefore, the breach committed and the threats of retrenchments were cognizable by <ORG> under the said Act. Even in the complaint, there was no case made out that the workmen in question had ever been accepted by the company as its employees. However, the complaint proceeded on the basis as if the workmen were a part of the work-force of the company. The facts on record reveal that the workmen were never recognised by the respondent- company as its workmen and it was the consistent contention of the company that they were not its employees. <ORG> dismissed the complaint holding that since the workmen were not the workmen of the respondent-company, the complaint was not maintainable under the said Act. <ORG> in writ petition confirmed the said finding and dismissed the petition also on the same ground. Hence the present appeal.

2. As pointed out both by <ORG> and <ORG>, it was not established that the workmen in question were the workmen of the respondent-company. In the circumstances, no complaint could lie under the Act as is held by the two courts below. We, therefore, find nothing wrong in the decision impugned before us. The workmen have first to establish that they are the workmen of the respondent-company before they can file any complaint under the Act. Admittedly, this has not been done. It is open for the workmen to raise an appropriate industrial dispute in that behalf if they are entitled to do so before they resort to the provisions of the present Act.

3. The appeals, therefore, stand dismissed with no order as to costs.


ORDER <NAME>, C.J.

1. Pursuant to directions given by this Court in in ITC No.44/92 under Section 256(2) of the Income-tax Act, 1961 (in short the 'Act') following question has been referred for opinion of this Court by <ORG>. Delhi Bench 'C' (in short the <ORG>):

"Whether on the facts and in the circumstances of the case, <ORG> was justified in holding that the Trust settled for the benefit of the sole beneficiary first son of Shri <NAME> who was unborn at the time of creation of the Trust, is a valid trust?"

2. Factual background in nutshell is as follows:

assessed settled 60,000 equity shares of <ORG> of the face value of Rs.5/- each for the benefit of first son of <NAME>. Son of late Col. <NAME>. For this purpose a trust was created on 2.5.1974. Income-tax Officer (in short the 'ITO') was of the view that the trust was not valid and effective as there was no existence of any beneficiary. Income arising out of the aforesaid shares was included in the income of the assessed. Matter was carried in appeal before the Commissioner of Income-tax (Appeals)(in short the 'CIT(A)'). Adopting the view expressed earlier, in some cases the CIT(A) deleted the addition. Matter was carried in appeal before the <ORG> by the <ORG>. It was revenue's stand that in the absence of a definite or known beneficiary, creation of the trust itself was invalid. <ORG> did not accept the stand. A prayer for reference under Section 256(1) of the Act was turned down. Subsequently, pursuant to the directions of this Court, the aforesaid question has been referred for opinion along with statement of case.

3. We have heard learned counsel for the parties. Stand of learned counsel for <ORG> is that in the absence of known beneficiary, a trust is a misconceived idea. According to him, for constituting a valid trust there must be a definite and an existent beneficiary. According to learned counsel for the assessed, if the description of the beneficiary is there, it would be sufficient compliance with the requirements of law.

4. In order to constitute a valid trust the author of the trust must indicate with reasonable certainty:

(a) the intention on his part to create a trust, (b) the purpose of the trust, (c) the beneficiaries, (d) the trust property and (e) transfer of property to the trust. According to learned counsel for the <ORG> except condition (c) all other conditions are present here. We find that it is not a case where the beneficiary was unknown or indefinite. In fact it was clearly stipulated that the beneficiary was the first son of <NAME>. At this juncture, it would be also relevant to take note of Section 13 of the Transfer of Property Act, 1882 (in short 'T.P.Act'). Section 13 reads as follows:

"13. Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property."

As per the illustration appended to the provision where A transfers his property to B in trust for A and his prospective wife successively for their life and after the death of the survivor, for the eldest son of the intended marriage for life and after his death for A's second son, interest created for the benefit of the eldest son does not take effect for the reason that it does not extend to the whole of A's remaining interest in the property.

5. A transfer cannot be made directly to an unborn person, for the definition of transfer in Section 5 is limited to living persons. Such transfer can only be made by the machinery of trusts. Possibly, to express this distinction, the expression "for the benefit of" has been used, since trustees being the transferees hold the property for the benefit of the unborn person.

6. In the case at hand the entire interest in the property goes to the benefit of the child to be born to <NAME>. As the facts go to show, in fact a child was born in August 1977, What would have happened if <NAME> did not get a male child is also spelt out in the trust deed.

7. Above being the position the <ORG> was justified in its conclusion. The question referred is answered in the affirmative, in favor of the assessed and against the <ORG>.

8. The reference stands disposed of.


JUDGMENT

1. On September 30, 1973, <ORG> (hereafter called "the <ORG>"), issued notice, annexure B, under Regulation 7 of the Restrictive Trade Practices (Inquiry) Regulations, 1970, stating that the <ORG> had reasons to believe that the companies mentioned in the notice including the petitioners had entered into an agreement on September 9, 1973, and were indulging in restrictive trade practices of the nature specified in the notice. In response, the petitioners filed applications contesting the validity of the notice and, amongst others, urged that the agreement referred to in the notice already had the approval of <ORG> within the meaning of Section 33(3) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereafter called "the Act"), and, therefore, it was outside the purview of Sections 20 and 37 of the Act. It was further urged that on the face of it the agreement did not operate to result in restrictive trade practice within the meaning of Section 2(o) of the Act and the <ORG>, therefore, had no jurisdiction to proceed in the matter. These objections were treated by the <ORG> as preliminary objections and were decided against the petitioners by, the impugned orders dated March 5, 1974, and October 21, 1974, which are assailed by this petition under Article 226 of the Constitution.

2. The learned counsel appearing for the petitioner has argued at length but we see no prima facie case. The <ORG> is not unanimous on the question as to whether the agreement can be said to have the approval of <ORG> for purposes of the Act even though two of the three members have taken the view that it did not have the said approval. We need not, however, enter into that controversy. Assuming that the agreement did have the approval of <ORG>, the inquiry before the <ORG> would still be competent under the Act. For this purpose, we may refer to Section 37 of the Act, relevant part of which reads as under:

"37. (1) The <ORG> may inquire into any restrictive trade practice, whether the agreement, if any, relating thereto has been registered under Section 35 or not, which may come before it for inquiry and, if, after such inquiry it is of opinion that the practice is prejudicial to the public interest, the <ORG> may, by order direct that...... "

3. According to this section the <ORG> has the jurisdiction to hold investigation and make inquiry irrespective of the fact whether the agreement is registered under Section 35 of the Act or not. It makes no exception in cases where the agreement has the approval of the <ORG>.

4. Our attention was drawn to Sub-section (3) of Section 33 which provides that no agreement falling within this section shall require registration under this Chapter if "it is expressly authorised by or under any law for the time being in force or has the approval of <ORG> or if the Government is a party to such agreement". The learned counsel conceded that the agreement in question is not authorised by or under any law in force nor is the Government a party to the agreement but he said that this agreement had the approval of <ORG>. As we have stated earlier, this approval has nothing to do with Section 37 of the Act. This approval has reference only to the registrability of the agreement. Sub-section (3) of Section 33 for that reason is of no avail to the petitioners.

5. The agreement provides that 75 per cent. of the production of the parties named therein including the petitioners, who are the major producers of nylon yarn in the country, will be sold at concessional rates to a restricted class of users. It cannot be disputed that nylon yarn is in short supply. The result of the agreement is that only 25 per cent. of the actual production of the country as far as the manufacturers mentioned in this agreement are concerned is available for sale in the open market. The <ORG> on the basis of this agreement has observed that it operates to limit, restrict and withhold the output, or supply of filament yarn within the meaning of Section 33(1)(g) of the Act and tends to bring about the manipulation of prices and affects the flow of supply in the market and imposes on the consumer unjustified cause of restrictions within the meaning of Section 2(o) of the Act. This finding cannot be said to be a finding without evidence inasmuch as it is based on the agreement itself which was not disputed before the <ORG>. All that is held in the impugned order dated October 21, 1974, is that the result of the operation of the agreement is the coming into being of a practice in the nature of a restrictive trade practice. The <ORG>, after deciding the preliminary issues in the impugned order, has observed as under :

"The preliminary issues having been answered, the matter will now proceed to final hearing, inter alia, for determining whether the restrictive trade practices found are not prejudicial to public interest and as to what orders under Section 37(1) will be appropriate."

6. The above referred observations of the <ORG>, therefore, are not a final decision. The matter has yet to be looked into with reference to the criteria provided by Section 38 of the Act. We are, therefore, unable to agree with the learned counsel that the question has been finally decided as, indeed, if that were so, Section 55 of the Act which provides that any person aggrieved by an order made by the <ORG> under Section 37 can prefer an appeal to <ORG> would provide a conclusive answer to this writ petition.

7. An attempt was made to urge that Section 38 of the Act itself is ultra vires of Articles 14 and 19(1)(f) and (g) of the Constitution. We find, as stated earlier, that no final order with reference to Section 38 of the Act has so far been made against the petitioners ; and as such it is premature to consider this plea. This is especially so because on the facts of the case the <ORG> has to give reasons if it comes to a conclusion that the restrictive trade practice is prejudicial to the public interest. In the absence of those reasons, to embark upon an inquiry into the constitutionality of Section 38 of the Act would be purely academic.

8. It was also urged that in the instant case a complaint was filed by <ORG> on the basis of which the <ORG> issued the notice and because provisions of Section 11 of the Act were not complied with, the whole proceedings are void ab initio. We see no substance in this argument. Section 10 authorises the <ORG> to inquire into any restrictive trade practice not only upon receiving a complaint but also "upon its own knowledge and information." It is true that <ORG> had filed the complaint but thereafter the <ORG> has taken upon the matter itself and we see no bar to its doing so. This aspect of the matter was fully gone into by the <ORG> in its order dated March 5, 1974, with which we agree.

9. In paragraph 5 of the petition, the petitioners have split up the contentions already dealt with by us into sub-paragraphs. It is unnecessary to deal with each sub-paragraph individually in view of what we have already said. The conclusions which we have stated above briefly sufficiently dispose of the contentions.

10. Civil Writ Petition No. 1409 of 1974 is dismissed in liming.


IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL Nos. 4849-4850 of 2000 Sita Ram Bhandar Society, New Delhi ....Appellant Vs. Lt. Governor, Govt. of N.C.T. Delhi & Ors. ......Respondents JUDGMENT

<NAME>J.

1. These appeals are directed against the judgment of the Division Bench of <ORG> dated 2nd September 1998 dismissing the writ petitions. The facts are as under:

2. On 13th November 1959, a Notification was issued by the Chief Commissioner of Delhi under 4 of the Land Acquisition Act (hereinafter called the "Act") notifying the Government's intention to acquire 34070 acres of land for the "Planned ...2/...

CA Nos.4849-4850/2000 Development of Delhi". This notification had, within its ambit, agricultural land belonging to the appellant society, bearing Khasra No. 157 in Village Lado Sarai, Tehsil Mehrauli, Delhi measuring 8 Bighas and 11 Biswas or 8620 sq. yards equivalent to 1.8 acres. The appellant filed objections under Section 5A of the Act on the 10th December 1959 submitting that the land be exempted from the proposed acquisition. It pointed out that the appellant body was a registered trust and a religious body managing three temples in Pilani, Rajasthan and several gardens, water tanks etc. having religious significance. The objections raised were apparently found without merit whereafter the Chief Commissioner issued a declaration under Section 6 of the Act which was published on 16th May 1966 pertaining to 2153 Bighas 2 Biswas corresponding to about 448 acres. The Collector, Land Acquisition also rendered his award on 19th June 1980 clarifying that it pertained only to 1996 Bighas 18 Biswas leaving out an area of 156 Bighas 4 Biswas for the time being CA Nos.4849-4850/2000 as it was built up and that the award for this area would be given later. The appellant's property Khasra No.157 was, however, included in the award of 19th June, 1980. It appears that pursuant to the award possession of 1933 Bighas and 2 Biswas was taken by the Collector, Land Acquisition on the 20th June 1980 and further handed over to the beneficiary department. It was, however, observed in the proceedings of 20th June 1980 that the possession of the balance area of about 61 Bighas would be taken after the removal of the structures with the help of the demolition squad. On the 29 th July 1980 a Notification under Section 22 (1) of the Delhi Development Act, 1957 was issued by the Central Government, placing the acquired land at the disposal of <ORG> for the planned development of Delhi. At this stage, the appellant filed CWP No.1068 of 1980 in <ORG> challenging the validity of the Notification under Section 4 and Declaration under Section 6 of the Act. This petition was dismissed in limine on the 18 th August 1980. The appellant thereupon preferred Special CA Nos.4849-4850/2000 Leave Petition in this Court and after leave was granted the appeal was registered as C.A. No. 1738 of 1981. While the appeal was still pending, the appellant filed Writ Petition No.2220/1981 under Article 32 of the Constitution of India in <ORG>. It appears that an interim order was made by <ORG> in these proceedings on 15th of July 1981 staying dispossession of the appellant from the property in dispute and the said order was confirmed on 16th September 1982. Both the Civil Appeal and the Writ Petition aforementioned were, however, dismissed by this Court on the 20th July 1993. It also appears from the record that while the aforementioned two matters were pending in this Court, the appellant filed Suit No. 1226 of 1992 on the Original Side of <ORG> praying for an injunction against the respondents, including <ORG>, that no structure be demolished and that no interference be made with the plaintiff's possession and management of the Suit land. An interim injunction was also sought and obtained in these proceedings. It is the appellant's case that though the CA Nos.4849-4850/2000 aforesaid Suit was transferred to <ORG> in Delhi on account of the revision of the pecuniary jurisdiction of <ORG>, the said interim injunction still continued to operate, but despite the interim orders <ORG> continued to impinge on the appellant's property on which a Contempt Petition was filed in the High Court, which in its order dated 19th May 1992, directed the respondent authorities to ensure compliance with <ORG> order dated 2nd April 1992 made in the civil suit. It is further the case of the appellant that some time later <ORG> again tried to interfere with the appellant's property on which yet another Contempt Petition No.36 of 1993 was filed and the same is said to be pending. The appellant, however, continued to be persist in its efforts to save the acquired land and at this stage filed C.W.P.No.700 of 1994 in <ORG> on 28th January 1994 challenging, inter-alia, the constitutional validity of Section 22 of the Delhi Development Act, whereunder the acquired land had been handed over to the <ORG>, and also praying for the CA Nos.4849-4850/2000 allotment of an alternative site in lieu of the acquired land. This writ petition was dismissed as withdrawn on September 8, 1995 the prayer of the counsel for the petitioner (the present appellant) in the following terms:

"Mr. <NAME> says, in view of the order dated 29.11.94, he would not press this petition at this stage and would apply for allotment of alternative land in the institutional area.

Dismissed as withdrawn. However, we will make it clear that allotment of the alternative land be made to the petitioner as per policy."

3. Still dissatisfied, the appellant filed W.P. No. 623 of 1995 in <ORG> challenging some facets of the alleged violation of the Master Plan of 2001 which had statedly made the entire proceedings for the planned development of Delhi incohate and which had rendered the acquisition without any authority of law . This matter came up before <ORG> after notice on 20th February 1995 on which <ORG> observed that the petitioner was seeking two distinct prayers in the Writ Petition, (1) that the land which had been CA Nos.4849-4850/2000 acquired under the Land Acquisition Act should be released from acquisition and (2) that the <ORG> should not be permitted to use the aforesaid land for a purpose other than that postulated in the Master Plan and the Zonal Development Plan and as the two prayers were mutually distinct and pertained to different causes of action, one writ petition was not maintainable. On this, the learned senior counsel for the appellant, Mr. <NAME> stated that he would file two separate writ petitions for which liberty was granted and the papers of CWP No. 623 of 1995 were accordingly returned to the counsel. The appellant thereupon moved two writ petitions i.e. W. P. Nos. 1628/1995 praying that the respondent <ORG> be restrained from taking over possession of the land and Writ Petition No. 1629/1995 seeking to challenge the land acquisition proceedings which had been initiated by the Notification under Section 4 and Declaration under Section 6 of the Act in the year 1959 and 1966 respectively and also pleading that as the possession had not been taken, the land be released under Section 48 of the Act. The Division CA Nos.4849-4850/2000 Bench while dealing with the question of possession held that the writ petitioner had only relied on two stray entries in two Khasra Girdawaris for the period 13th October 1980 to 11th March 1981 which had recorded the land to be "Gair Mumkin Kotha Pukhta and Char Diwari" and that this entry was meaningless in the light of the fact that the land had been described as "Rosli" (agricultural) and not a built up property in the award No.36/80-81 dated 19.6.1980 and that in any case the plea appeared to be an after thought as it had not been taken by the petitioner though it was available at the time when Writ Petition No. 1068/1980 (in <ORG>) and Writ Petition No.2220/1981 had been directly filed in this Court. The Court further held that it was clear from the proceedings recorded by <NAME>, Land Acquisition, on 20th June 1980 in the presence of a large number of Revenue Officials that possession had indeed been taken over on that day after demarcation had been made with respect to 1933 bighas 2 biswas, including the land belonging to the appellant, and that boundary pillars had been affixed CA Nos.4849-4850/2000 round the demarcated land and that the possession had further been handed over to <NAME>, Tehsildar on 20th, 21st, 23rd and 24th of June 1980. The Court also noted that the proceedings aforementioned were witnessed as to their authenticity by <NAME>, and the two <ORG> Officials, <NAME> and <NAME>. The Division Bench in this background observed that possession had, in fact, been taken over after appropriate proceedings. The two writ petitions were accordingly dismissed by the Division Bench of <ORG> vide the impugned judgment leading to the present appeals as a consequence.

4. At the very outset, Mr. <NAME>, the learned senior counsel for the appellant has candidly stated at the <ORG> that the appellant was no longer challenging the acquisition and the relief claimed in W.P. 1629/1995 was, therefore, not being pursued in this appeal. He has, however, prayed with the greatest emphasis, that in so far as the claim arising out of W.P. No.1628/1995 was concerned it was clear from the record that possession of the appellant's land i.e. 1 acre 8 CA Nos.4849-4850/2000 Biswas continued to remain with the appellant despite the findings to the contrary recorded by <ORG>, and as such it was open to the Government to withdraw from the acquisition if it so desired, under Section 48 of the Act.

5. In this background, Mr. <NAME>, has raised three arguments before us during the course of hearing. He has first pointed out that it was the positive case of the appellant that the land in dispute was encircled by a boundary wall and as such possession thereof could be taken only after entering the land and not by any symbolic or paper possession. As a corollary, it has been submitted, that there was no material on record to show that the actual physical possession had been taken as would preclude the withdrawal of the acquisition under Section 48 of the Act. In this connection, the learned counsel has placed reliance on <CITATION> .  and <NAME> Anr. Vs. State of U.P. & Ors.  which had been subsequently followed in <CITATION> . . It has finally been CA Nos.4849-4850/2000 submitted that there was ample evidence on record to show that the property in dispute was, in fact, surrounded by a wall and had some other structures as well, and in view of the positive stand taken by the Land Acquisition Collector in his award dated 19th June 1980 that the possession of the area covered by structures would be the subject matter of a supplementary award, the very basis of the judgment of <ORG> that the possession had been taken on the 20th June 1980 was erroneous.

6. Mr. <NAME> and Mr. <NAME>, the learned counsel appearing for the <ORG> and <ORG> respectively have controverted the submissions and have pointed out that the appellant had, for almost 30 years, been able to scuttle the development of the area by taking piecemeal stands in the writ petitions and civil suits from the year 1980 onwards and though the aforesaid matters had been rejected with positive findings that possession had been taken, and that there was no wall or structure on the land in question. It has also been submitted that the proper procedure had been adopted by the CA Nos.4849-4850/2000 Naib Tehsildar and that the possession had been taken over as per law on the 20th June 1980 and there was ample evidence to this effect which had been considered by <ORG>.

7. We have heard the learned counsel for the parties very carefully. The Act provides a machinery for the acquisition of the land. An acquisition is set in motion by a Notification under Section 4 when it is proposed to acquire any land for public purpose and Section 5A envisages the filing of objections with regard to the proposed acquisition. After the objections under Section 5A have been considered and been found without merit, a declaration under Section 6 of the Act is published that the land is indeed required for a public purpose. Section 9 of the Act provides that after all the proceedings and certain other formalities have been completed the Collector shall give public notice that the <ORG> intends to take possession of the land and calling upon the persons interested to file their claims for compensation. The matter is then enquired into by the Collector who renders his award under Section 11 of the Act and possession is taken by CA Nos.4849-4850/2000 the Collector under Section 16 on which the land vests absolutely in the <ORG> free from all encumbrances. It is the case of the respondent that all the procedures had been followed and that possession had been taken under Section 16 on the 20th June 1980, and as such, the question of its release under Section 48 of the Act did not arise, as this provision gives "liberty to withdraw from the acquisition of any land of which possession has not been taken". The question raised by Mr. <NAME> is that as the area in question was very extensive i.e. about 1933 bigas and the land belonging to the appellant was surrounded by a boundary wall, symbolic possession was meaningless and some more positive action was called for. To support this view he has relied on the three judgments cited earlier. We find, however, that the aforesaid judgments, in fact, help the case of the respondent rather than the other way around. In <NAME> case, which was heard by three Hon'ble Judges of this Court one of the Hon'ble Judges (<NAME>,J.) held that the principles underlying Order 21, Rules 35, 36, 95 and 96 of the <ORG> prescribing the modes of CA Nos.4849-4850/2000 delivery of possession including symbolic and actual could be applied to proceedings under the Act but the other two Hon'ble Judges (<NAME> and <NAME>,<NAME>.) held that the said provisions could not be applied to proceedings under the Act and that actual possession thereof was required to be taken. In this background, the two Hon'ble Judges observed as under:-

"We think it is enough to state that when the <ORG> proceeds to take possession of the land acquired by it under the Land Acquisition Act , 1894, it must take actual possession of the land, since all interests in the land are sought to acquired by it. There can be no question of taking `symbolical' possession in the sense understood by judicial decision under the Code of Civil Procedure. Nor would possession merely on paper be enough. What the Act contemplates as a necessary condition of vesting of the land in the <ORG> is the taking of actual possession of the land. How such possession may be taken would depend on the nature of the land. Such possession would have to be taken as the nature of the land admits of. There can be no hard and fast rule laying down what act would be sufficient to constitute taking of possession of land. There cannot be an absolute and inviolable rule that merely going on the spot and making a declaration by beat of drum or otherwise would be sufficient to constitute taking of possession of land in every case. But here, in CA Nos.4849-4850/2000 our opinion, since the land was lying fallow and there was no crop on it at the material time, the act of the Tehsildar in going on the spot and inspecting the land for the purpose of determining what part was waste and arable and should, therefore, be taken possession of and determining its extent, was sufficient to constitute taking on possession. "

8. In <NAME> case (supra) the basic issue was as to whether the land which was the subject matter of acquisition could be acquired in view of the State policy that Abadi land was not to be acquired. It is in this connection, the Court observed that there appeared to be no conclusive evidence that possession had been taken from the land owner, and the matter was left open for the land owner to approach <ORG> under Section 48 of the Act to have land released. In <NAME>'s case (supra), a reference was made to the judgment in <NAME> case (supra) and it was once again reiterated that the procedure for taking possession would depend upon the nature of the land and the extent thereof. A cumulative reading of the aforesaid judgments would reveal that while taking symbolic and notional CA Nos.4849-4850/2000 possession is perhaps not envisaged under the Act but the manner in which possession is taken must of necessity depend upon the facts of each case. Keeping this broad principal in mind, this Court in <CITATION> ) by Lrs. AIR 1996 SC 3377 after considering the judgment in <NAME> case, observed that while taking possession of a large area of land (in this case 339 acres) a pragmatic and realistic approach had to be taken. This Court then examined the context under which the judgment in <NAME> case had been rendered and held as under:

"It is settled law by series of judgments of this Court that one of the accepted modes of taking possession of the acquired land is recording of a memorandum or Panchanama by the <ORG> in the presence of witnesses signed by him/them and that would constitute taking possession of the land as it would be impossible to take physical possession of the acquired land. It is common knowledge that in some cases the owner/interested person may not cooperative in taking possession of the land."

CA Nos.4849- <CITATION> . AIR 1996 SC 1239 yet again the question was as to the taking over of the possession of agricultural land and it was observed thus:

"It is seen that the entire gamut of the acquisition proceedings stood completed by April 17, 1976 by which date possession of the land had been taken. No doubt, <NAME> has contended that the appellant still retained their possession. It is now well-settled legal position that it is difficult to take physical possession of the land under compulsory acquisition. The normal mode of taking possession is drafting the Panchnama in the presence of <NAME> and taking possession and giving delivery to the beneficiaries is the accepted mode of taking possession of the land. Subsequent thereto, the retention of possession would tantamount only to illegal or un lawful possession."

9. It would, thus, be seen from a cumulative reading of the aforesaid judgments, that while taking possession of a large area of land with a large number of owners, it would be impossible for the Collector or the Revenue Official to enter each bigha or biswas and to take possession thereof and that a pragmatic approach has to be adopted by the <ORG>. It is CA Nos.4849-4850/2000 also clear that one of the methods of taking possession and handing it over to the beneficiary department is the recording of a <ORG> which can in itself constitute evidence of the fact that possession had been taken and the land had vested absolutely in the Government.

10. The question arises as to whether in the face of the above observations, the procedure adopted by <NAME>, Land Acquisition <NAME> was the correct one. The Award was rendered in the present matter on the 19th June 1980. As per the possession proceedings (Panchnama) recorded by <NAME> dated the 20th June 1980, possession of 1933 bighas 2 biswas of land had been taken over and handed over to <ORG> on the 21st June 1980, 23rd June 1980 and 24th June 1980. In the Panchnama it was also observed that the land had been demarcated and pillars had been affixed and that the physical possession had further been handed over to <NAME>, Tehsildar, the representative of the beneficiary department. Admittedly, Khasra No.157 was covered by this document. It is CA Nos.4849-4850/2000 recorded that the possession of the land under the built up area of 160 bighas 6 biswas could not be handed over and the details of this land have also been provided in the aforesaid document. Khasra No.157 does not come in this category. Mr.<NAME> has, however, emphasized that some material documents which show the possession had not been taken on 20th June, as alleged, had been ignored by <ORG> which he has referred us to <ORG> for the years 1980-81 and 1981-82 showing the existence of <ORG>. He has, accordingly, submitted that the observations in the award that the appellant's land was "Rosli" was incorrect in the light of this record. We find absolutely no merit in this plea. A Khasra Girdwari which is a mere crop inspection report entered twice a year (Kharif and Rabi crops) has no presumption of truth attached to it. Even otherwise the state of the land as on the date of the Notification under Section 4 of the Act (which is 13th November 1959) would be the relevant date as to the nature of the land and a crop inspection report 20 years later cannot be taken as proof of some facts said to CA Nos.4849-4850/2000 exist in the year 1959. Mr. <NAME> has also stressed that from the Award itself it was clear that the wall standing on Khasra No.157 had been assessed to a compensation of Rs.420/- and as such the observations in the award that land was agricultural was erroneous. Mr. <NAME> has, however, pointed out that the part of the Award to which reference has been made by Mr. <NAME> is captioned as "Wells and Structures' and that a reference to a wall in the body is typographical error. We reproduce the relevant portion of the award herein under:

Wells and Structures "The land under acquisition has number of wells, water channel and structures. The Assistant Engineer (Valuation) has made the rate assessment of each of these items to which I agree and award accordingly subject to the verification at the time of possession as per details given as under: -

Value Kh.No. Item Assessed Well, Drain, Water 555/2/2 tank Rs.6920/-

254 Well Structure Rs.2490/- 577/430 -do- Rs.2130/- 217 Well Structure Rs.2730/- 100 Structure Rs.260/- 670/27 -do- Rs.3320/- 15 Well Rs.4030/- CA Nos.4849-4850/2000 Structure/Room Well, Water tank, 29 Room & Structures Rs.3490/- Well, Structures, Water tank, rooms & 139 drains 4600/- Well Structures, 160 room & drain Rs.2750/- 394 Well Structures Rs.4690/- 399 -do- Rs.2380/- 242 Structure Rs.540/- 149 -do- Rs.260/- 580/148 Wall Rs.1264/- 157 -do- Rs.420 Well, Water Tank, 172 drain Structure Rs.7960/- 298 -do- Rs.4890/- 333 wells, Structure Rs.5350/- Structure & 20 Compound wall Rs.3300/- Well, Water drains, 195/2 Water tank & room Rs.7530/- 321 -do- Rs.7250/- Well, Water tank 478 drains & rooms Rs.6665/- Room, water tank, 321 drain Rs.1125/- 478 Drain Rs.360/- Well, water tank, 92 drain, Khurli, rooms Rs.7260/- Well, water tank, drain khurli, rooms, 155 verandah Rs.6720/- Well, Water tank, 597/202/264 Room Rs.2700/- Well, Water tank, Water Channel 455 room Rs.2790/- Well, Water tank, 86 drains, rooms Rs.3320/- Value No. Item assessed 514 Well Rs.1720/- 464 -do- Rs.2850/- 688/518/119/2 -do- Rs.2290/- 189 -do- Rs.1820/- 436 Well, structures Rs.1020/- 210 Well Rs.2060/- 453 -do- Rs.5650/- CA Nos.4849-4850/2000 Total: Rs.1,21,189-00 There are water channels running

through <ORG>. Nos. 228, 635/251, 254, 253, 255, 250, 263, 597/262, 261, 269, 434, 435, 440, 442, 443, 444, 445 & 446. The Naib-

<ORG> has made a detailed valuation to which I agree and award Rs.2870/- as compensation as these channels."

11. A reading of the above extract reveals that wells, and structures connected with wells, and irrigation facilities have been referred to therein and an independent wall is not even remotely the subject matter. Mr. <NAME> has, however, seriously objected to this explanation by submitting that no plea doubting the accuracy of the document having been raised in the counter affidavit, the respondents were now precluded from making this submission. We, however, feel that in the light of the context in which the entire matter has been dealt with in the Award, there can be no doubt that the entry `wall' should be read as `well' vis-`-vis Khasra No.157. There is yet CA Nos.4849-4850/2000 another circumstance, perhaps even more relevant. We find that no question had ever been raised by the appellant with regard to the presence of a wall in the objections filed under Section 5A or even in the responses filed to the notices under Section 9 of the Act and the only prayer was that the land be exempted from acquisition (Item no.36). These omissions become more significant as several other landowners had claimed compensation for the superstructures that were existing on the acquired land. It is also equally significant, as pointed out by Mr. <NAME>, that no question had ever been raised by the appellant with regard to the existence of a wall or superstructure in any of the litigations prior to the present set of Writ Petitions. Mr. <NAME> has, however, referred us to the objections dated 15th November 1966 showing the existence of a wall. These objections are, to our mind, meaningless as they had not been filed in response to the notification CA Nos.4849-4850/2000 under Section 4 which had been published in the year 1959 and were filed after the declaration under Section 6 had been made and are, therefore, an obvious after thought. It also bears notice that despite the claim under this document, no plea with regard to the existence of a wall had been raised at any stage till the filing of the present petitions in the year 1995.

12. Mr. <NAME> has, with great emphasis, pointed out that from the affidavit dated 30th July 1996 sworn by Mr. <NAME>, Under Secretary, <ORG>, it was clear that the appellant continued to remain in possession on account of the stay of dispossession granted by <ORG> on 15th July 1981 in WP No. 2220/1981 and the confirmation of the said order on 16th September 1982 and as such the stand of the appellants that possession had been taken was not correct. We have, however, already observed that possession had been taken between 20th and 24th June 1980, and the acquired land thus stood vested in the State CA Nos.4849-4850/2000 free from all encumbrances under Section 16 of the Act. It is also relevant that the afore-referred writ petition was dismissed meaning thereby that the said order should automatically be vacated as well. Even assuming for a moment that the petitioner had re-possessed the acquired land at some stage would be of no consequence in view of the provisions of section 16 ibidem. In <NAME> case (supra) one of the arguments raised by the land owner was that as per the communication of the Commissioner the land was still with the land owner and possession thereof had not been taken. The Bench observed that the letter was based on a misconception as the land owner had re-entered the acquired land immediately after its possession had been taken by the government ignoring the scenario that he stood divested of the possession, under Section 16 of the Act. This Court observed as under:

"This was plainly erroneous view, for the legal position is clear that even if the appellant entered upon the land and resumed possession of it the very next moment after the land was actually taken possession of and CA Nos.4849-4850/2000 became vested in the Government, such act on the part of the appellant did not have the effect of obliterating the consequences of vesting."

To our mind, therefore, even assuming that the appellant had re-entered the land on account of the various interim orders granted by the courts, or even otherwise, it would have no effect for two reasons, (1) that the suits/petitions were ultimately dismissed and (2) that the land once having vested in the <ORG> by virtue of Section 16 of the Act, re-entry by the land owner would not obliterate the consequences of vesting.

12. We must also observe that the petitioner has been able to frustrate the acquisition and development of the land right from the 1980 onwards by taking recourse to one litigation after the other. The record reveals that all the suits/writ petitions etc. that had been filed had failed. Undoubtedly, every citizen has a right to utilize all legal means which are open to him in a bid to vindicate and protect his rights, but if the court comes to the CA Nos.4849-4850/2000 conclusion that the pleas raised are frivolous and meant to frustrate and delay an acquisition which is in public interest, deterrent action is called for. This is precisely the situation in the present matter. The appeals are, accordingly, dismissed with costs which are determined at Rupees two lacs. The respondents, shall, without further loss of time proceed against the appellant.

..................................J. (Dalveer Bhandari) .................................J.

(<NAME>) New Delhi, Dated: September 15, 2009