JUDGMENT <NAME>, J.

1. In this writ petition the order of the Additional Secretary to <ORG> is being challenged. He had held that a product known as Bentol was liable to excise duty.

2. The petitioner-company, inter alia, carries on the business of manufacturing synthetic rubber from Industrial Alcohol. The raw- material required for the manufacture of synthetic rubber are Benzene and Ethyl Alcohol. The process of manufacture which is followed, briefly stated, is that Ethyl Alcohol is first converted into Ethylune, which is reacted with Benzene to form Ethyl Benzene. Ethyl Benzene is then purified and fed to styrene Reactors for conversion into styrene by the process of dehydrogenation in the presence of a catalyst. During a subsequent process of styrene purification by distillation a mixture of Benzene and Toluene gets separated from styrene in the first column. This mixture is not a separate product but is reused for the manufacture of Benzene and Toluene by the petitioner. The petitioner uses Benzene again in the cycle for manufacture of styrene and dispose of Toluene as such. This mixture of Benzene and Toluene which, according to the petitioner, has no Chemical or trade name is colloquially called 'Bentol'.

3. The petitioner had obtained certain quantity of this mixture. Due to strike in its factory it was not possible to recover Benzene and Toluene from the Bentol. On 23rd June, 1973, the petitioner-company approached <ORG> for permission to allow the petitioner to burn this mixture. This mixture was thereafter burnt by the petitioner. The petitioner- company, however, applied for a license in L-6 form for permission to use Bentol/Toluene as fuel in their plant but this permission was refused.

4. On 9th November, 1973 and 14th November, 1973 the petitioner received two demand notices for a sum of Rs. 1,31,340/- on account of Central Excise Duty on 131,340 kilolitres of Bentol which had been so destroyed by the petitioner. The duty was based on the full rate of duty of Rs. 1000/- per kilolitres, applicable to Motor Spirit.

The petitioner protested against the said levy but the plea was rejected by the Assistant Collector. Thereafter an special appeal was filed to the Appellate Collector, <ORG>, Delhi but the same was also dismissed. A further revision, which was filed with <ORG>, was also rejected by <ORG> of 18th June, 1979.

5. The present writ petition has been filed challenging the aforesaid decisions of <ORG> and <ORG>. The contentions have been raised on behalf of the petitioner. The first is that the product Bentol was not removed from the factory premises and no duty of excise was leviable thereon. The second contention is that the product Bentol is not Motor Spirit and in any event no excise duty can be levied on the alleged manufacture of the same.

With regard to the first contention it has been stated on behalf of the petitioner that in the application which is filed for obtaining of a license under Rule 174 of the Central Excise Rules, 1944 a plan of the factory had also been filed. A license was granted by the Collector but no place of removal, as contemplated by Rule 9, was specified. The contention is that excise duty is leviable only when the excisable goods are removed from the place in which they are produced and which place of removal has been specified by the Collector. If no such place has been specified then, the contention is, the excise duty would be leviable only if the goods are removed from the factory premises. Reliance in this behalf is also placed on Rule 49, which, inter alia, provides that duty is not required to be paid in respect of excisable goods which have been made in a factory until they are about to be issued out of the place or premises specified under Rule 9. In this behalf it will also be pertinent to take into consideration that the term "place of removal" has been defined in section 4(4)(b) of the Act as under :

"place of removal " means :-

(i) a factory or other place or premises of production or manufacture of the excisable goods; or

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed."

This clearly shows that the place of removal would be the factory or any other place or premises of production or manufacture of the excisable goods.

6. On behalf of the respondent the contention of <NAME> is that the excise duty is levied at the time of the manufacture of the goods. A further contention is that as with the application for the grant of a license the petitioner had furnished the plan of the factory. That plan had indicated the exact location of the plant where Bentol was being produced. According to the respondents the moment a license is granted it would tantamount to specifying the place of manufacture as contemplated by Rule 9.

7. A similar question had come up before this Court in the case of <CITATION> - 4980 E.L.T. 320 - (Civil Writ No. 506 of 1979), decided on 16th April, 1980 by this Bench. After referring to Rules 9 and 49, it was held as follows :

"Rule 49, it will be seen, makes it clear that payment of duty is required to be made only when the goods are removed from the place or premises specified under Rule 9 or from an approved place of storage. Rule 9, inter alia, enables the Collector to specify the place where the goods can be said to be produced, cured or manufactured from which they cannot be removed without payment of duty. The Collector may specify the place of manufacture to be not only the entire factory but a part of the factory in which the actual manufacturing process is carried out, under the said Rule 9. It is admitted between the parties that in the present case the Collector has not specified and part of the factory as the place of manufacture. In the absence of any place having been so specified the place of manufacture is necessarily to be the factory in which the manufacturing process takes place."

8. The contention on behalf of the respondents that the excise duty is leviable the moment the goods are manufactured is clearly belied by the provisions of Rule 49(1) reads as under :-

"Payment of duty shall not be required in respect of excisable goods made in a factory until they are about to be issued out of the place or premises specified under Rule 9 or are about to be removed from a store-room or other place of storage approved by the Collector under Rule 47."

It is evident that even though excisable goods have been manufactured rule 49 provides that no excise duty shall be levied "until they are about to be issued out of the place or premises specified under rule 9 ....". It is, therefore, necessary that the place from where they are to be issued has to be designated and the place of issue can be called the place of removal. The place of issue need not necessarily be the same as the place of manufacture and the action of issuing is different from the action of manufacture. The action of issuing takes place after the manufacture had been completed. Rule 49 clearly refers to the place of issuing of the manufactured goods. The specification, contemplated by rule 49, takes place under rule 9. It is under rule 9 that a specific order has to be passed by the collector specifying the place for the purpose of removal. This is evident from the following words used in the rule :-

"Which may be specified by the Collector in this behalf."

It is evident that if the argument of the respondents was correct then these words would be wholly unnecessary. It is clear that what as to be specified is the place from where the goods are to be removed for the purpose of attracting the levy of duty.

9. <NAME> sought to reply on rule 47 in order to contend that the said rule contemplated the levy of excise duty even when the goods are stored within the same premises. In this case no goods have been taken for storage. Duty is sought to be levied on the goods which have been destroyed without they being removed from the factory premises. All that rule 47 says is that if excise duty is leviable at the time removal the same would not be levied in case the goods are being taken for storage in the store-room or other place or storage. In case premises under rule 9 had been specified then the petitioner would not have been able to take the goods out of those premises without paying excise duty even for the purpose of storage in another premises within the same factory area, but for the concession which is granted by rule 47.

10. In view of the fact that we are accepting the first contention on behalf of the petitioner, it is not necessary for us to go into the other contentions which are raised.

11. The writ petition is accordingly allowed and the order dated 18th June, 1970 is quashed. The parties to bear their own costs.


CASE NO.: Appeal (civil) 5950-5952 of 2007 PETITIONER: Commissioner of Income Tax, Madras RESPONDENT: <ORG> Padi Chennai DATE OF JUDGMENT: 14/12/2007 BENCH: Dr. ARIJIT PASAYAT & P. SATHASIVAM JUDGMENT:

J U D G M E N T (Arising out of SLP (C) Nos.24479-24481 of 2005) Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in these appeals is to the order passed by a Division Bench of <ORG> dismissing the Tax Case Appeals as according to <ORG> the case at hand is covered against the revenue in view of the order passed earlier by <ORG> in <CITATION> (259 I.T.R. 631).

3. These appeals relate to assessment years 1989-90, 1991- 92 and 1992-93. The core issue is the allowability of investment allowance under Section 32A of the Income Tax Act, 1961 (in short the Act). The assessing officer was of the view that it is only to be allowed in one assessment year and not several assessment years. The <ORG> and <ORG> appear to have proceeded on the basis that in view of Section 43A(1) of the Act the allowance was to be granted in different assessment years.

4. Sections 32A and 43A(1) of the Act read as under:

Section 32A - INVESTMENT ALLOWANCE. (1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent. of the actual cost of the ship, aircraft, machinery or plant to the assessee:

Provided that in respect of a ship or an aircraft or machinery or plant specified in sub-section (8B), this sub-section shall have effect as if for the words "twenty-five per cent", the words "twenty per cent" had been substituted :

Provided further that no deduction shall be allowed under this section in respect of

(a) Any machinery or plant installed in any office premises or any residential accommodation, including any accommodation in the nature of a guest- house;

(b) Any office appliances or road transport vehicles;

(c) Any ship, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33 ; and

(d) Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year. Explanation : For the purposes of this sub- section, "actual cost" means the actual cost of the ship, aircraft, machinery or plant to the assessee as reduced by that part of such cost which has been met out of the amount released to the assessee under sub-section (6) of section 32AB .

(2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the following, namely :-

(a) A new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships or aircraft;

(b) Any new machinery or plant installed after the 31st day of March, 1976 -

(i) For the purposes of business of generation or distribution of electricity or any other form of power; or

(ii) 454 in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing; or

(iii) In any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule :

Provided that nothing contained in clauses

(a) and (b) shall apply in relation to, -

(i) A new ship or new aircraft acquired, or

(ii) Any new machinery or plant installed, after the 31st day of March, 1987 but before the 1st day of April, 1988, unless such ship or aircraft is acquired or such machinery or plant is installed in the circumstances specified in clause (a) of sub-section (8B) and the assessee furnishes evidence to the satisfaction of the Assessing Officer as specified in that clause;

(c) Any new machinery or plant installed after the 31st day of March, 1983, but before the 1st day of April, 1987, for the purposes of business of repairs to ocean-going vessels or other powered craft if the business is carried on by an Indian company and the business so carried on is for the time being approved for the purposes of this clause by <ORG>.

Explanation : For the purposes of this sub- section and sub-sections (2B), (2C) and (4), - (1)(a) "new ship" or "new aircraft" includes a ship or aircraft which before the date of acquisition by the assessee was used by any other person, if it was not at any time previous to the date of such acquisition owned by any person resident in India;

(b) "New machinery or plant" includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely :-

(i) Such machinery or plant was not, at any time previous to the date of such installation by the assessee, used in India;

(ii) Such machinery or plant is imported into India from any country outside India; and

(iii) No deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of the Indian Income-tax Act , 1922 , or this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee, (2) An industrial undertaking shall be deemed to be a small-scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed, -

(i) In a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees;

(ii) In a case where the previous year ends after the 31st day of July, 1980, but before the 18th day of March, 1985, twenty lakh rupees; and

(iii) In a case where the previous year ends after the 17th day of March, 1985, thirty-five lakh rupees, and for this purpose the value of any machinery or plant shall be, -

(a) In the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee; and

(b) In the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant.

(2A) The deduction under sub-section (1) shall not be denied in respect of any machinery or plant installed and used mainly for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule, by reason only that such machinery or plant is also used for the purposes of business of construction, manufacture or production of any article or thing specified in the said list. (2B) Where any new machinery or plant is installed after the 30th day of June, 1977 but before the 1st day of April, 1987, for the purposes of business of manufacture or production of any article or thing and such article or thing -

(a) Is manufactured or produced by using any technology (including any process) or other know-how developed in, or

(b) Is an article or thing invented in, a laboratory owned or financed by the Government, or a laboratory owned by a public sector company or a <ORG> or by an institution recognised in this behalf by the prescribed authority 463 , the provisions of sub-section (1) shall have effect in relation to such machinery or plant as if for the words "twenty-five per cent.", the words "thirty-five per cent" had been substituted, if the following conditions are fulfilled, namely :-

(i) The right to use such technology (including any process) or other know-how or to manufacture or produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner;

(ii) The assessee furnishes, along with the return of income for the assessment year for which the deduction is claimed, a certificate from the prescribed authority to the effect that such article or thing is manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory; and

(iii) The machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule. Explanation : For the purposes of this sub- section, -

(a) "Laboratory financed by the Government" means a laboratory owned by any body [including a society registered under the Societies Registration Act , 1860 ] and financed wholly or mainly by the Government;

xx xx xx

(c) "University" means a University established or incorporated by or under a Central, State or Provincial Act and includes an institution declared under section 3 of the University Grants Commission Act, 1956 , to be a University for the purposes of that Act. (2C) Where any new machinery or plant, being machinery or plant which would assist in control of pollution or protection of environment and which has been notified 466 in this behalf by <ORG> in the Official Gazette, is installed after the 31st day of May, 1983 but before the 1st day of April, 1987, in any industrial undertaking referred to in sub-clause (i) or sub-clause (ii) or sub-clause

(iii) of clause (b) of sub-section (2), the provisions of sub-section (1) shall have effect in relation to such machinery or plant as if for the words "twenty-five per cent", the words "thirty- five per cent" had been substituted. (3) Where the total income of the assessee assessable for the assessment year relevant to the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, or, as the case may be, the immediately succeeding previous year [the total income for this purpose being computed after deduction of the allowance under section 33 and section 33A , but without making any deduction under sub-section (1) of this section or any deduction under Chapter VI-A is nil or is less than the full amount of the investment allowance, -

(i) The sum to be allowed by way of investment allowance for that assessment year under sub- section (1) shall be only such amount as is sufficient to reduce the said total income to nil; and

(ii) The amount of the investment allowance, to the extent to which it has not been allowed as aforesaid, shall be carried forward to the following assessment year, and the investment allowance to be allowed for the following assessment year shall be such amount as is sufficient to reduce the total income of the assessee assessable for that assessment year, computed in the manner aforesaid, to nil, and the balance of the investment allowance, if any, still outstanding shall be carried forward to the following assessment year and so on, so, however, that no portion of the investment allowance shall be carried forward for more than eight assessment years immediately succeeding the assessment year relevant to the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, as the case may be, the immediately succeeding previous year. Explanation : Where for any assessment year, investment allowance is to be allowed in accordance with the provisions of this sub- section in respect of any ship or aircraft acquired or any machinery or plant installed in more than one previous year, and the total income of the assessee assessable for that assessment year [the total income for this purpose being computed after deduction of the allowance under section 33 and section 33A , but without making any deduction under sub- section (1) of this section or any deduction under Chapter VI-A] is less than the aggregate of the amounts due to be allowed in respect of the asset aforesaid for that assessment year, the following procedure shall be followed, namely :-

(a) The allowance under clause (ii) shall be made before any allowance under clause (i) is made; and

(b) where an allowance has to be made under clause (ii) in respect of amounts carried forward from more than one assessment year, the amount carried forward from an earlier assessment year shall be allowed before any amount carried forward from a later assessment year.

(4) The deduction under sub-section (1) shall be allowed only if the following conditions are fulfilled, namely :-

(i) The particulars prescribed 468 in this behalf have been furnished by the assessee in respect of the ship or aircraft or machinery or plant;

(ii) An amount equal to seventy-five per cent of the investment allowance to be actually allowed is debited to the profit and loss account of any previous year in respect of which the deduction is to be allowed under sub-section (3) or any earlier previous year [being a previous year not earlier than the year in which the ship or aircraft was acquired or the machinery or plant was installed or the ship, aircraft, machinery or plant was first put to use] and credited to a reserve account (to be called the "Investment Allowance Reserve Account") to be utilised

(a) For the purposes of acquiring, before the expiry of a period of ten years next following the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, a new ship or a new aircraft or new machinery or plant [other than machinery or plant of the nature referred to in clauses (a), (b) and (d) of the second proviso to sub-section (1)] for the purposes of the business of the undertaking; and

(b) Until the acquisition of a new ship or a new aircraft or new machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India :

Provided that this clause shall have effect in respect of a ship as if for the word "seventy- five", the word "fifty" had been substituted. Explanation : Where the amount debited to the profit and loss account and credited to the Investment Allowance Reserve Account under this sub-section is not less than the amount required to be so credited on the basis of the amount of deduction in respect of investment allowance claimed in the return made by the assessee under section 139 , but a higher deduction in respect of the investment allowance is admissible on the basis of the total income as proposed to be computed by the Assessing Officer under section 143 , the Assessing Officer shall, by notice in writing in this behalf, allow the assessee an opportunity to credit within the time specified in the notice or within such further time as the Assessing Officer may allow, a further amount to the Investment Allowance Reserve Account out of the profits and gains of the previous year in which such notice is served on the assessee or of the immediately preceding previous year, if the accounts for that year have not been made up; and, if the assessee credits any further amount to such account within the time aforesaid, the amount so credited shall be deemed to have been credited to the Investment Allowance Reserve Account of the previous year in which the deduction is admissible and such amount shall not be taken into account in determining the adequacy of the reserve required to be credited by the assessee in respect of the previous year in which such further credit is made :

Provided that such opportunity shall not be allowed by the Assessing Officer in a case where the difference in the total income as proposed to be computed by him and the total income as returned by the assessee arises out of the application of the proviso to sub-section (1) of section 145 or sub-section (2) of that section or the omission by the assessee to disclose his income fully and truly. (5) Any allowance made under this section in respect of any ship, aircraft, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act

(a) If the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed; or

(b) If at any time before the expiry of ten years from the end of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, the assessee does not utilise the amount credited to the reserve account under sub-section (4) for the purposes of acquiring a new ship or a new aircraft or new machinery or plant [other than machinery or plant of the nature referred to in clauses (a), (b) and (d) of the second proviso to sub-section (1)] for the purposes of the business of the undertaking; or

(c) If at any time before the expiry of the ten years aforesaid, the assessee utilises the amount credited to the reserve account under sub-section (4) for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India or for any other purpose which is not a purpose of the business of the undertaking, and the provisions of sub-section (4A) of section 155 shall apply accordingly :

Provided that nothing in clause (a) shall apply - (i) Where the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 or ; or

(ii) Where the sale or transfer of the ship, aircraft, machinery or plant is made in connection with the amalgamation or succession, referred to in sub-section (6) or sub-section (7).

(6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated company any ship, aircraft, machinery or plant, in respect of which investment allowance has been allowed to the amalgamating company under sub- section (1), - (a) The amalgamated company shall continue to fulfil the conditions mentioned in sub-section (4) in respect of the reserve created by the amalgamating company and in respect of the period within which such ship, aircraft, machinery or plant shall not be sold or otherwise transferred and in default of any of these conditions, the provisions of sub- section (4A) of section 155 shall apply to the amalgamated company as they would have applied to the amalgamating company had it committed the default; and

(b) The balance of investment allowance, if any, still outstanding to the amalgamating company in respect of such ship, aircraft, machinery or plant, shall be allowed to the amalgamated company in accordance with the provisions of sub-section (3), so, however, that the total period for which the balance of investment allowance shall be carried forward in the assessments of the amalgamating company and the amalgamated company shall not exceed the period of eight years specified in sub-section (3) and the amalgamated company shall be treated as the assessee in respect of such ship, aircraft, machinery or plant, for the purposes of this section.

(7) Where a firm is succeeded to by a company in the business carried on by it as a result of which the firm sells or otherwise transfers to the company any ship, aircraft, machinery or plant, the provisions of clauses (a) and (b) of sub-section (6) shall, so far as may be, apply to the firm and the company.

Explanation : The provisions of this sub- section shall apply only where - (i) All the property of the firm relating to the business immediately before the succession becomes the property of the company;

(ii) All the liabilities of the firm relating to the business immediately before the succession become the liabilities of the company; and

(iii) All the shareholders of the company were partners of the firm immediately before the succession.

(8) <ORG>, if it considers necessary or expedient so to do, may, by notification in <ORG>, direct that the deduction allowable under this section shall not be allowed in respect of any ship or aircraft acquired or any machinery or plant installed after such date as may be specified 475 therein. (8A) <ORG>, if it considers necessary or expedient so to do, may, by notification in <ORG>, omit any article or thing from the list of articles or things specified in the Eleventh Schedule. (8B) Notwithstanding anything contained in sub-section (8) or the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. G.S.R. 870(E), dated the 12th June, 1986, issued thereunder, the provisions of this section shall apply in respect of, - (a)(i) A new ship or new aircraft acquired after the 31st day of March, 1987 but before the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that he had, before the 12th day of June, 1986, entered into a contract for the purchase of such ship or aircraft with the builder or manufacturer or owner thereof, as the case may be;

(ii) Any new machinery or plant installed after the 31st day of March, 1987 but before the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that before the 12th day of June, 1986, he had purchased such machinery or plant or had entered into a contract for the purchase of such machinery or plant with the manufacturer or owner of, or a dealer in, such machinery or plant, or had, where such machinery or plant has been manufactured in an undertaking owned by the assessee, taken steps for the manufacture of such machinery or plant :

Provided that nothing contained in sub- section (1) shall entitle the assessee to claim deduction in respect of a ship or aircraft or machinery or plant referred to in this clause in any previous year except the previous year relevant to the assessment year commencing on the 1st day of April, 1989;

(b) A new ship or new aircraft acquired or any new machinery or plant installed after the 31st day of March, 1988, but before such date as <ORG>, if it considers necessary or expedient so to do, may, by notification in <ORG>, specify 477a in this behalf.

(8C) Subject to the provisions of clause (ii) of sub-section (3), where a deduction has been allowed to an assessee under sub-section (1) in any assessment year, no deduction shall be allowed to the assessee under section 32AB in the said assessment year (hereinafter referred to as the initial assessment year) and a block of further period of four years beginning with the assessment year immediately succeeding the initial assessment year.

5. Learned counsel for the appellant submitted that Section 43A(1) relates to fluctuations of foreign exchange and its effect on the valuation of the assets. It has nothing to do with the question as to whether it is allowable in one year. Therefore, the decision relied upon by <ORG> has no application.

6. Learned counsel for the respondent fairly accepted this position.

7. In that view of the matter, we set aside the impugned order of <ORG>, remit the matter to it for fresh adjudication after formulating the question of law involved.

8. The appeals are allowed to the aforesaid extent. No costs.


PETITIONER: STATE OF ORISSA & ANR. Vs. RESPONDENT: <NAME> DATE OF JUDGMENT: 11/04/1969 BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. BACHAWAT, R.S. HEGDE, K.S. CITATION: 1969 AIR 1249 1970 SCR (1) 255 1969 SCC (2) 149 CITATOR INFO : R 1972 SC2350 (14) RF 1975 SC2045 (7,13) RF 1977 SC 965 (14) RF 1991 SC 471 (10,13) ACT: The <ORG> (Regulation of Seniority) Rules, 1954, r. 3(3) (b), second proviso-Select List, Meaning of- Whether second proviso governs main rule or first proviso- Whether choice of date for fixing seniority arbitrary and discriminatory. HEADNOTE: In pursuance of an agreement dated October 21, 1946, between the Central and Provincial Governments regarding the constitution of an <ORG>, certain draft 'rules were framed and the appellant <ORG> constituted a <ORG> under the draft rules for preparing a list of <ORG> Police Officers who are considered suitable for promotion. The <ORG> prepared a list of officers 'fit for trial to promotion posts' in the <ORG> and the list was approved by the <ORG> on September 6, 1951. On October 29, 1951, the All India Services Act , 1951, came into force and the <ORG> (Regulation of Seniority) Rules, 1954 and the Indian Police. Service (Appointment by Promotion) Regulation, 1955, were framed under the Act. Rule 3 (3) (b) of the Seniority Rules provides that the year of allotment of an officer appointed to the service by promotion shall be the Year of allotment of the junior most direct-recruit who officiated continuously in a senior post from a date earlier than the date of commencement of continuous officiation by the promotee. The second proviso to, the rule provides that an officer shall be deemed to have officiated continuously in a senior post prior to the date of the inclusion of his name in the Select List if the period of such officiation was approved by <ORG>. The respondent was appointed as a Dy. S.P. in the appellant-<ORG> in 1947. In 1950, he was confirmed as D.S.P. and he was officiating continuously from 1951 to 1957 in senior officiating appointments of the <ORG> His name was included in the List of officers considered suitable for pro. motion which was approved by the <ORG> on September 6, 195 1, and in similar 'fit for trial' lists prepared for the years 1952 and 1954. On November 10, 1955, <ORG>, set up in accordance with Regulation 3 of the Promotion Regulation, selected and recommended officers for officiating appointment in the <ORG> and the respondent's name was included in that list also. That list was approved by the <ORG> on February 10, 1956. On December 1, 1956, <ORG> consulted the <ORG> as to whether this list of November 10, 1955 could be treated as the 'Select List' within the meaning of the second proviso to r. 3(3)(b) of the Seniority Rules. The <ORG> wrote back saying that it could not be so considered, because, the <ORG> only recommended officers who were considered suitable to hold <ORG> posts in an officiating capacity and not for appointment to <ORG> The Selection <ORG> of the appellant-<ORG>, therefore, on February 15, 1957, prepared a 'Select List' for substantive posts in the <ORG> and included the respondent's name in it. <ORG> decided that the officiation in the senior posts of the officers included in the 'fit for trial' lists could not be counted for the purpose of determining the seniority of such officers under the Seniority Rules. On July 10, 1957 the respondent was appointed to the <ORG>, and on July 22, 1958, <ORG> wrote to the appellant-<ORG> that the approved continuous officiation of the 256 respondent for seniority commenced from February 10, 1956 the date on which the <ORG> approved the 'fit for continuous officiation list' containing the respondent"s name, and, on that basis, the respondent was allotted the year 1951 as his year of allotment for purposes of seniority under r. 3 (3) (b) of the Seniority Rules. The respondent filed a writ petition in <ORG> contending that : (1) Rule 3 (3) (b)is not governed by its second proviso, 'that his case was governed by the main r. 3 (3) (b) and on the basis of his continuous officiation in a senior post as an officer included in the Select List of the years 1952 and 1954 approved by the <ORG> and accepted by <ORG> his year of allotment should be 1948 which was the year of allotment of a junior most direct-recruit officer who officiated continuously in a senior post from a date earlier than the date of commencement of the officiation by the respondent; (2) Even if the second proviso governed the main r. 3(3)(b) and only the list of February 15, 1957 was the Select List his year-of allotment should be 1948, on the basis that his continuous officiation throughout from 1951 to 1957 was approved by <ORG> by inclusion in the approved lists; (3). The choice of February 10, 1956 mentioned in <ORG> communication dated July 22, 1958 was arbitrary; and (4) There was discrimination between him and another officer. <ORG> allowed the writ petition. In appeal to this Court, HELD : (1) The object of the second proviso is to cut down the period of officiation which could be taken into consideration under r. 3 (3) (b). Therefore, the second proviso governs r. 3 (3) (b). The Promotion Regulation and the draft rules acted upon before the Promotion Regulation came into force, show that the <ORG> preparing the Select Lists should think of substantive appointments in the service and not officiating appointments. In the present case when the lists of 1951, 1952 and 1954 were prepared the names were not selected for the purpose of substantive appointment but only for the purpose of officiation. Therefore, the 'fit for trial' lists could not be deemed to be 'Select Lists' and hence the respondent's officiation was not continuous officiation of -an officer in the 'Select List'. Only the List of February 15, 1957. could be deemed to be such Select List. Though in the letter of July 22, 1958, there was a reference to a list called 'fit for continuous officiation list', there was in fact no such list and the expression referred only to the list of November 10, 1955, of officers for promotion in an ,officiating capacity. [264 C, E; 265 A, C-D, G-266 A] (2) Since the 'second proviso governs the main r. 3(3)(b), it was for <ORG> to approve or not to approve, the period of officiation prior to the date of inclusion of the respondent in the Select List of February 15, 1957. In the present case, <ORG>, after applying its mind to the problem, approved the period from February 10, 1956 to July 10, 1957; and there was no evidence to show that the period of officiation prior to February 10, 1956, of the respondent was approved by <ORG>. Such approval had to be accorded after the appointment to the <ORG> [265 E-,G; 266 <CITATION> ,  2 S.C.R. 325, referred to. (3) The date February 10, 1956, was not arbitrarily chosen. It has -a definite relation to the question of approved period of officiation, becaue, it was on that date that the <ORG> approved the inclusion of 257 the respondent in the list for officiating appointment for the first time after the Promotion Regulation had come into force. [266 B-C] (4) There was no discrimination between the respondent and the. other officer, because, the latter was appointed on June 1, 1955, after the Seniority Rules had come into force and was governed by the first proviso to r. 3(3)(b). [266 E- F] JUDGMENT:

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2162 of 1968.

Appeal from the judgment and order dated October 23, 1967, of <ORG> in O.J.C. No. 156 of 1965. <NAME>, Attorney-General, <NAME> and <NAME>, for the appellants.

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

The Judgment of the Court was delivered by <NAME>, J. This is an appeal by certificate granted by <ORG> under art. 133 (1) (c) of the Constitution from the judgment and order of <ORG> in Writ Petition O.J.C. No. 156 of 1965 filed by <NAME>, I.P.S., hereinafter-referred to as the petitioner, against the State of Orissa and the Union of India. In this petition the petitioner had prayed for a writ of mandamus directing the respondents to fix the petitioner's seniority and year of allotment as 1948 instead of the year 1951 fixed by <ORG>. <ORG> quashed the order of <ORG>, dated July 22, 1958, and directed <ORG> to fix the year of allotment and, seniority of the petitioner in accordance with its judgment and, the law. In order to appreciate the points raised before us it is necessary to set out the facts somewhat in detail. The petitioner was appointed as Deputy Superintendent of Police in the State of Orissa on January 1, 1947. On January 1, 1950, he was confirmed as D.S.P. In the mean time an agreement had been arrived at between <ORG> and some State Governments, including Orissa, regarding the constitution of <ORG>. This agreement is printed as annexure to the Indian Police Cadre Rules, 1950. This agreement provided for various matters such as the strength, including both the number and' character of posts of <ORG>, the method of recruitment to the Service, framing of rules regarding conditions of service, the penalties which could be imposed, etc. We are concerned, in particular, with para 2(e) and para 7 which are as under "2 (e) The rules regulating the promotion of Provincial Police Service Officers to <ORG> shall be framed by the Provincial Government concerned in consultation with <ORG> and shall provide that no Provincial Police Service Officer shall be appointed to hold a superior post included in the Schedule for a period of more than one year unless <ORG> have certified that the officer is in every way fit to hold a superior post in <ORG>.

7. In order to ensure that the conditions of service applicable to officers of <ORG> are as uniform as possible, rules regulating pay and other conditions of services will be framed by <ORG> to such extent as may be considered necessary. Provincial <ORG>s will, however, be consulted before the rules are framed, and before they are amended in any manner. In respect of matters not covered by the said rules, an officer of <ORG> will be governed by such rules as may be framed by the, <ORG> under which he is for the time being serving and, if no such rules are framed, by the rules applicable to the Central Service/Provincial Police Service Class 1, as the case may be." The <ORG>s Act , 1951, came into force on October 29, 1951. Section 3 enabled <ORG> to make rules for the regulation of recruitment and conditions of service, of persons appointed to an <ORG> which was defined to include, among others, <ORG>. Section 4 provided :

"All rules in force immediately before the commencement of this Act and applicable to <ORG> shall continue to be in force and shall be deemed to be rules made under this Act."

On April 30, 1951, <ORG> wrote to the Secretary, <ORG>, that they proposed 'to hold a meeting of the committee (to be constituted in accordance with rule 2 of the Draft Rules) sometime in June- 1951 with a view to prepare a select list of officers suitable for promotion to <ORG>. The <ORG> was asked -to depute one of its members to preside over the said meeting in accordance with rule 3 of the Draft Rules. On September 6, 1951, the <ORG> approved the recommendation of the above committee which met to prepare the select list for promotion to <ORG>, and agreed to the select list as drawn up by the <ORG>. The petitioner's name appears at No. 5 of Part 11 of the list which is in the following form "1. List of Officers fit for confirmation in promotion post.

11. List of officers fit for trial to promotion posts.

1. <NAME>

5. <NAME>

6. <NAME>".

On May 14, 1952, the petitioner was promoted as Additional Superintendent of Police in the <ORG> cadre. On August 21, 1952, his name again appeared in the list which we may call "fit for trial list". His name also appeared in a similar list on July 12, 1954, One of the questions which has to be decided in this case is whether these lists can come within the expression "select list" used in the second proviso in r. 3 (3) of the Indian Police Service (Regulation of Seniority) Rules, 1954, hereinafter referred to as the Seniority Rules, which came into force on September 8, 1954.

On November 10, 1955, the first meeting of <ORG> set up in accordance with Regulation 3 of the Indian Police Service (Appointment by Promotion) Regulation, 1955, hereinafter referred to as the Promotion Regulations, was held at Cuttack. In this meeting the <ORG> selected and recommended officers for officiating appointment in the <ORG> and the petitioner's name appeared as No. 2 in the List.

On February 10, 1956, <ORG> approved the recommendations of the above selection com- mittee. On December 1, 1956, <ORG> wrote to <ORG> requesting for its advice as to whether the list prepared by <ORG> could be treated as "Select List" as recommended by the State Government. On January 10, 1957, the <ORG> replied as follows "I am directed to refer to <NAME>

<NAME>'s letter No. 5/l/56-AIS(I), dated the 10th Dec. 1956 and to say that <ORG> which met at Cuttack on the 10th Nov. 1955 did not recommend any officer for appointment to <ORG>. The Committee only recommended officers who were considered suitable to hold <ORG> cadre posts in an officiating capacity. Lists of such officers are made to avoid frequent references to the <ORG> in making interim arrangements in cadre posts till cadre officers become available and these lists cannot be considered as Select Lists. I am to suggest that the State <ORG>. may be advised to place the cases of all these officers before <ORG> when- it meets again in Orissa sometime in the, month of Feb. 1957, for preparation of the Select List."

On February 15, 1957, <ORG> met. and placed the petitioner, including some others, in the "Select List" for substantive appointment to <ORG>. The Committee also recommended some persons for holding cadre posts in an officiating capacity. Reiterating the view that it had already expressed on Janu- ary 23, 1957, on March 27, 1957, the <ORG> wrote to <ORG> stating :

"(i) that the 'fit for trial' list is intended merely in order to avoid specific references to the <ORG> for casual appointments to senior <ORG>/Indian Police Service Posts.

(ii) that the <ORG> have advised in para 2 of their letter No. F.950/55-R.III, dated the 25th Sept. 1956, that the 'fit for trial' list being not a list envisaged under the Indian Administrative Service/ Indian Police Service (Appointment by Promotion) Regulations, any officiation of an officer included in the 'fit for trial' list cannot be taken as approved officiation for purposes of seniority and......

On May 7, 1957, <ORG> wrote to the State Governments and observed :

"The question whether the officiation in senior posts of the State Civil Service/State Police Officer after in-

clusion of their names in the 'fit for trial list' should or should not be taken into account for the purpose of seniority, on their subsequent appointment to <ORG>, <ORG>, has been engaging the attention of <ORG> for some time past. As <ORG>s are aware, the Indian Administrative/Police Service (Appointment by Promotion) Regulations do not provide for the preparation of any such fit for trial list. Such a list has been devised merely to enable <ORG> to try out a few officers irrespective of their seniority with a view to test their suitability for senior posts and is intended only to avoid specific reference to <ORG> for casual short term appointments of the State Civil Service/State Police Service officers to senior <ORG>/<ORG> posts. <ORG>, who were consulted in this respect, have advised that any officiation of State Civil Service/State Police Service officers included in the fit for trial list should not be taken into account to determine their seniority in <ORG>/<ORG>." <ORG> further stated : "The Government of India have accordingly decided that wherever such lists have been, prepared in some States, the officiation in the senior posts of the State Civil Service/State Police Service officers included in the 'fit for trial' list cannot be. counted for the purpose of determining the seniority of such officers, under <ORG>/<ORG> (Regulation of Seniority) Rules, 1954.

On July 10, 1957, the petitioner was appointed to <ORG>. On July 22, 1958, <ORG> wrote to <ORG> regarding the seniority of the petitioner. It stated "The approved continuous officiation of these officers counting for seniority commenced from the 10th February, 1956-the date on which <ORG> approved the 'fit for continuous officiation list containing their names. This date being later than the date i.e. 7-9-55 on which <NAME> (1951 R.R.) started officiating in the senior posts but earlier than the date on which regular recruits of 1952 started officiating it has been decided that these officers may be finally allotted to 1951 and placed L13SupCI69-3 en-bloc below <NAME> (1951-R.R.) and above <NAME> (1952-R.R.)."

It is this order which has been quashed by <ORG>. The learned Attorney General, who appears for the appellant, urges that the case of the petitioner is covered by the second proviso to r. 3 (3) of the Seniority Rules and is not governed only by r. 3 (3) (b). He urges that the lists of 1951, 1952 and 1954, mentioned above, were not Select Lists within the meaning of the second proviso, and it is only the Select List which was made on February 15, 1957, which is the Select List within the second, proviso, and that there has been no discrimination or breach of art. 14 , as held by <ORG>.

The learned counsel for the petitioner on the other hand contends that the second proviso does not govern r. 3 (3)

(b) but in fact governs the first proviso only. He says that the Select List of 1951 was a Select List within the meaning of the second proviso and the seniority of the petitioner should be counted from that date' In the alternative he contends that the petitioner's officiation in senior posts prior to July 10, 1957, had in fact been approved and was approved officiation within the second proviso. He further contends that the date, February 10, 1956, mentioned in the order dated July 22, 1958, is an arbitrary date and the Government has, in fact, not applied its mind to the question. He further says that there has been discrimination and one <ORG> has been given benefit which has been denied to the petitioner. The main point that arises in this case is whether the Select Lists of 1951, 1952 and 1954 can be deemed to be treated as Select Lists within the second proviso. It is necessary to set out rule 3 of the Seniority Rules in order to deal with this point.

Rule 3 reads thus :

"3. Assignment of Year of Allotment-(1) Every officer shall be assigned a year of allotment in accordance with the provisions hereinafter contained in this rule.

(2) The year of allotment of an officer in service, at the commencement of these rules shall be the same as has been assigned to him or may be assigned to him by <ORG> in accordance with the orders and instructions in force immediately before the commencement of these rules:

Provided that where the year of allotment of an officer appointed in accordance with rule 9 of the Re-

cruitment Rules has not been determined prior to the commencement of these Rules, his year of allotment shall be determined in accordance with the provision in clause (b) of sub-rule (3) of this rule and for this purpose such officer shall be deemed to have officiated in a senior post only if and for the period for which he was approved for such officiation by <ORG> in consultation with the <ORG>.

(3) The year of allotment of an officer appointed to the Service after the commencement of these rules, shall be-

(a) where the officer is appointed to the Service on the results of a competitive examination, the year following the year in which such examination was held;

(b) where the officer is appointed to the Service by promotion in accordance with rule 9 of the Recruitment Rules, the year of allotment of the junior-most among the officers recruited to the Service in accord- ance with rule 7 of those Rules who officiated continuously in a senior post from a date earlier than the date of commencement of such officiation by the former;

Provided that the year of allotment of an officer appointed to the Service in accordance with rule 9 of the Recruitment Rules who started officiating continuously in a senior post from a date earlier than the date on which any of the officers recruited to the Service, in accordance with rule 7 of those Rules, so started officiating shall be determined ad hoc by <ORG> in consultation with <ORG> con- cerned;

Provided further that an officer appointed to the Service after the commencement of these Rules in accordance with rule 9 of the Recruitment Rules shall be deemed to have officiated continuously in a senior post prior to the date of the inclusion of his name in the Select List prepared in accordance with the recruitment. of the Indian Police Service (Appointment by Promotion) Regulations framed under rule 9 of the Recruitment Rules, if the period of such officiation prior to that date is approved by <ORG> in consultation with the Commission. Explanation 1-An officer shall be deemed to have officiated continuously in a senior post from a certain date if during the period from that date to the date of his confirmation in the senior grade he continues to hold without any break or reversion a senior post otherwise than as a purely temporary or local arrangement.

Explanation 2.-An officer shall be treated as having officiated in a senior post during any period in respect of which <ORG> concerned certifies that he would have so officiated but for his absence on leave or appointment to any special post or any other exceptional circumstance."

It seems to us that the 1951, 1952 and 1954 lists cannot be deemed to be Select Lists within the second proviso because, as a matter of fact, <ORG> did not select names for the purpose of substantive appointment but only selected names for the purpose of officiation in the senior posts of <ORG>. Regulation 5(1) of the Promotion Regulations inter alia provided :

"5. Preparation of a list of suitable officers.-(1) The committee shall prepare a list of such members of <ORG> as satisfy the condition specified in regulation 4 and as are held by the committee to be suitable for promotion to the Service. . . . "

Now this clearly means that the <ORG> should think of substantive appointments in the service and not officiating appointments.

Similarly, the draft rule 2, which was being acted upon before the Promotion Regulations came into force, provided :

"A committee shall be constituted by <ORG> composed.... (for <ORG>) of the Chief Secretary, the Inspector General of Police and Deputy Inspectors General of Police. This Committee shall prepare a select list of <ORG>.... Police Service Officers who are considered suitable for promotion. The list will be renewed and revised annually." .

Draft rule 3 provided that "<ORG> should invite <ORG> to depute one of their members to preside at the meetings of the <ORG>." Draft rule 4 provided that "in preparing this list, the <ORG> shall be guided by the suitability of the officers for appointment to <ORG>. No officer shall be included in the list who has not definitely proved his fitness for such appointment. . . . It seems to us that <ORG> and <ORG> were quite right in deciding that the 'fit for trial' lists could not be deemed to be select lists made within the draft rules or the Promotion Regulations. In view of this conclusion it is not necessary to decide the question, which was raised by the learned Attorney General, that in any event the second proviso is only dealing with select lists made after the Promotion Regulations came into force and not with select lists made under the so-called draft rules. We are assuming, without deciding, that if a proper select list had been made under the draft rules it would be a select list within the meaning of the second proviso.

This takes us to the next point whether the petitioner is governed by the main portion of rule 3 (3) (b) and not by the second proviso. In our opinion, the object of the second proviso is to cut down the period of officiation which would be taken into consideration under rule 3 (3)

(b). It is common ground that the case of the petitioner is not covered by the first proviso. We are unable to agree with the learned counsel for the petitioner that the only object of the second proviso is to Emit the operation of the first proviso.

Explanation I really explains the expression "officiated continuously" occurring in rule 3 (3) (b). But it does not mean that where Explanation I applies the second proviso does not apply. The object of Explanation I is to deal with the problem arising in the case of officers holding appointments as a purely temporary or local arrangement. If the second proviso applies, as we hold it does, it was for <ORG> to approve, or not to approve, the period of officiation prior to the date of inclusion of the petitioner in the Select List. As observed by this Court in <CITATION> (1) "the first period (i.e. period before the date of inclusion of an officer in the Select List) can only be counted if such period is approved by <ORG> in consultation. with the <ORG>." They have approved the period from February 10, 1956 to July 10, 1957. No material has been brought to our notice to show that <ORG> did not apply its mind to the problem.

The learned counsel for the petitioner contends that in the letter dated July 22, 1958, a list called the "fit for continuous officiation list" is mentioned which is said to have been approved by <ORG>. The learned counsel rightly points out that no such list exists. Apparently this is an expression coined by the draftsman to express the views of <ORG> which clearly stated in the letter dated February 10, 1956, that they approved the recommendation of (1) [1967] 2 S.C.R. 325, 329.

<ORG> which met at Cuttack for the selection of police officers for promotion to <ORG> in an officiating capacity. There is no doubt from the correspondence we have set out above that <ORG> were quite aware of the requirements of a <ORG> list.

We are unable to agree with the learned counsel that Febru- ary 10, 1956, is an arbitrary date. It has definite relation to the question of approved period of officiation because it is on this date that <ORG> approved the inclusion of the petitioner in the list for officiating appointment for the first time after the Promotion Regulations had come into force. The next point which we may now consider is whether the officiation period prior to February 10, 1956, was, as a matter of fact, approved by <ORG>. The learned counsel has taken us through the correspondence. He has been able to point out some letters written by <ORG> on the point but no letter from <ORG> has been shown which could possibly be read as approving his period of officiation prior to February 10, 1956. At any rate the approval of <ORG> has to be accorded after the appointment to <ORG> and not before.

The only point that remains now is the question of discrimi- nation. <NAME> was an officer who wag appointed on June 1, 1955, after the Seniority Rules had come into force and he seems to be, governed by the first proviso. We have not been able to appreciate how this case has any relationship to the case of the petitioner.

The learned Attorney General had raised the point that all the officers who were likely to be affected by the decision of the writ petition had not been impleaded as parties to the petition, and he referred to us the decision of this <ORG> in <NAME> v. Union of India(1), where <NAME>, J., speaking for the <ORG> observed :

"But we are unable to investigate the question whether there has been infringement of the rules governing fixation of seniority, for a majority of those who were placed above the appellant in the seniority list are not impleaded in the petition before the Judicial Commissioner and are not before this Court.

It is impossible to pass an order, assuming that the appellant is able to convince us that a breach of the rules was committed, altering the list of seniority, unless those who are (1) Civil Appeal No. 405 of 1967; Judgment dated August 14,  likely to be affected thereby are before the <ORG> and have an opportunity of replying to the case set up by the appellant."

This is a salutary rule and should be observed. But the learned counsel for the petitioner says that he wag concerned with his year of allotment and in that question no body else was interested directly. Each officer has to have a year of allotment and no other officer is directly interested in it. But as we are allowing the appeal it is not necessary to finally decide whether the petition should have been dismissed only on this ground. In the result the appeal is allowed, the judgment and order of <ORG> set aside and the petition dismissed, but there will be no order as to costs here and in <ORG>.

V.P.S. Appeal allowed.


PETITIONER: <ORG> ETC. ETC. Vs. RESPONDENT: UNION OF INDIA ETC. ETC. DATE OF JUDGMENT23/08/1972 BENCH: <NAME>, A.N. BENCH: <NAME>, A.N. HEGDE, K.S. <NAME>, D.G. CITATION: 1973 AIR 1150 1973 SCR (1) 973 1973 SCC (2) 337 ACT: Land Acquisition Act , 1894-s. 5A-No opportunity was available to the appellant to file objection u/s. 5-A in absence of definite scheme and the public purpose for which the land was required was vague and indefinite-Whether the acquisition proceedings bad in law. HEADNOTE: Under the U.P. (Regulation of Building Operations) Act, 1958, a notification was issued by the U.P. Government, declaring Ghaziabad a regulated area under S. 3 of the said Act. On July 16, 1960 a notification under S. 4 of the Land Acquisition Act, was issued by <ORG> declaring its intention to acquire land measuring about 34,000 acres for planned development of the area. On December 23, 1961, a notification was issued under Sections 6 and 17 of the Acquisition Act in respect of an area of 19.75 acres. This was followed by other notifications and on February 9, 1962, by another notification under S. 4 was issued by modifying the earlier notification dated July 16, 1960, By this notification, the said 34000 acres was reduced to 6158 acres. On July 4, 1962, the appellant made an application to the Land Acquisition Officer, for supplying a copy of the scheme in order to file objection under S. 5-A of the Acquisition Act. The Land Acquisition Officer however, ordered that no such schemes of the planned development was available in his office. On September 4, 1962, <ORG> sanctioned the Master Plan of Ghaziabad under the Regulation Act . Thereafter, the appellants filed a writ petition in <ORG> challenging the validity of the aforesaid notification. A batch of 39 writ petitions, including the appellants were allowed by <ORG> and the notifications under S. 6 of the Acquisition Act were quashed by <ORG> on the ground of invalidity of piecemeal notifications. On February 9, 1966, this Court decided in State of Madhya Pradesh and others v., <NAME> & Ors.  3 S.C.R. 557, that piecemeal and successive notifications was not permissible. On February 20, 1967, the President of India promulgated the Land Acquisition (Amendment and Validation) Ordinance and this Ordinance was challenged in <ORG> by the appellant. Thereafter, an Act was passed on the same lines as, the Ordinance. The provision of the Act were also challenged before <ORG> by necessary amendments in the writ petitions. This Court in <ORG> v. <ORG>,  3 S.C.R. 41, upheld the validity of the. Acquisition (Amendment) Act of 1967. Thereafter, <ORG> dismissed the writ petitions of the appellants. The counsel for the appellants confined his arguments mainly to one, question. namely that no proper, reasonable, or effective opportunity was available to the appellant to file by objection under S. 5-A of the Acquisition Act, inasmuch as the notification gave no indication that different pieces of land would be acquired for different authorities in different circumstances and for different purposes. Further, the appellant did not get a reasonable opportunity of objecting under s. 5-A since the purpose shown was extremely vague and there was no definite 974 scheme before <ORG> at the material time to show bow the land would be developed and to what use it will be put. It was pointed out that different notifications published under S. 6 of the Acquisition Act from time to time clearly indicated that <ORG> did not have any specific scheme of development at the time the notification under S. 4 was published. It was pointed out that the whole object of s. 5-A would be defeated if the public purpose was stated vaguely and without any indication of the nature or the purpose for which the land is being or is intended to be acquired. Allowing the appeal, HELD : (i) The Acquisition Act was enacted to amend the law for the acquisition of land for public purpose and for Companies. The expression "Public Purpose" was defined by S. 3-F. The expression "Public Purpose" includes provision for or in connection with the laying out of village sites, townships or the extension of planned development or im- provement of existing village sites or townships. S. 5-A provides that any person interested in any land which has been notified under S, 4. Sub-Section (1) as being needed for a public purpose, may object to the acquisition within 30 days after the issue of the notification. Every ob- jection under Sub-Section (1) shall be made to the Collector in writing, and the Collector shall give the objector an opportunity of being heard. The Collector after hearing all such objections, may make a report to the appropriate Government. The decision of the appropriate government on the objection shall be final.- [981F] It is apparent from Sub-Section (2) of S. 4 that the public purpose which has to be stated in Sub-Section (1) of S. 4 has to be particularised because, unless that is done, the various matters which were mentioned in Sub-Section (2) cannot be carried out. If the public purpose stated in S. 4(1) is planned development, without anything more, it is extremely difficult to comprehend how all the matters set out in Sub-Section (2) can be carried out by the officer concerned. [981C] (ii) S. 5-A embodies a very just and wholesome principle that a person who is deprived of his property, is given a reasonable opportunity to be heard. The right to file objection under S. 5-A is a substantial right when a person's property is being threatened with acquisition, and that right cannot be taken away as if by sidewind. [981D] Nandeshwar Prasad & Anr. v. The State of U.P. & Ors.,  3 S.C.R. 440. In the present case, the notification under S. 4 all that was stated was that the land was required for planned development 'of the area. There was no indication whatsoever, whether the development was to be of residential and building sites, or commercial and industrial class, nor was it possible for any one to find out that kind of planned development was under contemplation. If the Master Plan which came to be sanctioned in September 4, 1962, was available for inspection, the position may have been different. The words that were found in the notification, "planned development of the area" were wholly insufficient and conveyed no idea as to the specific purpose for which the lands were to be utilised. [982B] (iii) The Acquisition Act did not originally provide for filing or hearing of objections to the proposed acquisition., It was only by the Amending Act of 1923 that S. 5-A was inserted in the Acquisition Act . Upto that time, the view was that the wishes of the owners of the land were wholly irrelevant. But after the insertion of S. 5-A the position has completely changed, and it cannot be said that the owner's wishes are 975 not relevant and he does not need an opportunity to file his objections. A person whose land is likely to be acquired must have an opportunity to submit his objections and that he can do only if the notification tinder S. 4(1) , while mentioning the public purpose, gives some definite indica- tion or particulars of the said purpose which would enable the persons concerned to object effectively, if so desired. In the absence of such specific or particular purpose, the objector cannot file any proper or cogent objections under S. 5-A which he has a right to do under that provision. In the present case, owing to the vaguness and indefiniteness of the public purpose stated in the notifications under S. 4(1) and in the absence of any proof that the appellants were either aware of or were shown this scheme or Master Plan in respect of the, planned development of the area in question, the appellants were wholly unable to object effectively and exercise their right under S. 5-A of the Acquisition Act. [983E] <NAME> v. <ORG> & Ars.  1 S.C.R. 128, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeals No. 2356 of 1968.

Appeal by certificate under Article 133 of the Constitution of India from the judgment and order dated March 26, 1968 of <ORG> in Civil Writ No. 662 of 1971 and Civil Appeals Nos. 1139, 1475 and 1476 of 1971. Appeals by certificate from the judgment and order dated April 2, 1968 of <ORG> in Civil Misc. Writ No. 3671, 3670 and 3669 of 1967 respectively andCivil Appeals Nos. 1140,and 1785 of 1971 Appeals by certificate from the judgment and order dated April 2, 1968 of <ORG> in Civil Misc.Writ Nos. 3667 and 3668 of 1967 respectively and Civil Appeal No. 1888 of 1970 Appeal by certificate from the judgment and decree dated March 26, 1968 of <ORG> in Civil Misc. Writ No. 465 of 1967.

<NAME>, for the appellant (in C.A. No. 2356 of 1968).

<NAME> and <NAME>, for respondent No. 1 (in C.A. No. 2356/68) and <NAME>, <NAME> and <NAME>, for the State of U.P., Collector of <ORG> & Special Land Acquisition Officer, <ORG> (in all the appeals).

<NAME>, for <ORG>, Ghaziabad (in all the appeals).

<NAME> and <NAME>, for the appellant in C.A. Nos. 1139, 1140 and 1785 of 1971).

<NAME>, <NAME>, for the appellants (in C. A. Nos. 1475 and 1476 of 1971).

<NAME>, <NAME> and <NAME>, for the appellant (in C.A. No. 1888 of 1970).

<NAME>, <NAME> and <NAME>, for respondent No. 4 (in C.A. No. 1888/70).

The Judgment of the Court was delivered by <NAME>, J. These appeals from the decision of <ORG> involve a common point and shall stand disposed of by this judgment.

It is necessary to state the facts only in C.A.1888 of 1970. The U.P. (Regulation of Building Operations) Act 1958 received the assent of the President on October 8, 1958. On December 10, 1958 a notification was issued by the U.P. Government declaring Ghaziabad a regulated area under S. 3 of the aforesaid Act. In February 1959 <ORG> under S. 4 of the Regulation Act was constituted. On July 16, 1960 a notification was issued under S. 4 of the Land Acquisition Act by <ORG> declaring its intention to acquire land measuring about 34,000 acres in fifty villages of Ghaziabad for planned development of the area. On December 23, 1961 a notification was issued under ss. 6 and 17 of the Acquisition Act in respect of an area of 19.75 acres. This was followed by successive piecemeal notifications on various dates in 1962 and 1963. On Feb- ruary 9, 1962 another notification was issued under S. 4 of the Acquisition Act modifying the earlier notification dated July 16, 1960. By this notification the proposed area from 34,000 acres was reduced to 6158 acres. On July 4, 1962 the appellants made an application to the Special Land Acquisition Officer Ghaziabad for supplying a copy of the scheme of the planned development for which notification under S. 4 had been issued to enable them to make representations at the hearing of the objections filed under S. 5 A of the Acquisition Act . It was mentioned inter alia in that application that the Government had not published the scheme of the planned development and without a copy of the scheme for which the notification had been published "no forceful arguments could be submitted". The Special Land Acquisition Officer made the following order on that application :

"The scheme of the planned development is not necessary for a notification under S. 4 of the Act, as such, no such scheme of the planned development is available in this office."

On September, 4, 1962 the State Government sanctioned the Master Plan of Ghaziabad under the Regulation Act . On Sept- ember 27, 1962 a writ petition was filed by the appellants in <ORG> challenging the validity of the aforesaid notifications. Several other writ petitions were also filed by other petitioners. On December 10, 1965 a batch of 39 writ petitions including the appellants' petition were allowed by <ORG> and the notifications under s. 6 of the Acquisitions Act were quashed on the ground of invalidity of piecemeal notifications. Another batch of writ petitions Was similarly allowed quashing the notifications under s. 6 of the Acquisition Act on the same ground. On February 9, 1966 this court decided in <CITATION> (1) that piecemeal and Successive notifications under s. 6 of the Acquisition Act was not permissible. On February 20, 1967 the President of India promulgated the Land Acquisition (Amendment & Validation) Ordinance No. 1 of 1967. The validity of this Ordinance apart from the legality of the notifications issued was challenged in <ORG> by the appellants in February 1967. In April 1967 an Act was passed on the same lines as the Ordinance. The provisions of the Act were also challenged before <ORG> by necessary amendment in the writ petitions filed by the appellants. This Court in <ORG>. v. <ORG>) upheld the validity of the Acquisition Amending Act of 1967. On March 26, 1968 <ORG> dismissed the writ petition of the appellants. In view of the judgment of this Court <ORG> repelled the contentions of the appellants impugning the validity of the Acquisition Amendment Act 1967. Another point which was agitated before <ORG> was that the notification under s. 4 was too vague and afforded no adequate basis for the lodging of objection under s. 5A of the Acquisition Act. Certain other points were also raised which need not be mentioned. <ORG> observed that all these points had been urged in the writ petition No. 55 of 1963 which had been heard along with any other writ

-petitions by <ORG> which, by its judgment dated December 24, 1965, had negatived them. For the reasons mentioned in that judgment these contention were also repelled.

Dr. <NAME> sought to raise a number of points before us but ultimately he confined his arguments mainly to one question. Reference has been made to the notification dated July 14 1960 issued under s. 4 as also to subsequent notification dated February 9, 1962 amending the earlier notification. The earlier notification to the extent it is material is as follows :-

"In pursuance of the provisions of under (?) sub-s. (1) of section 4 of the Land Acquisition Act, 1894 (Act No. 1 of 1894), the Governor of U.P. is pleased (1)  3 S.C.R. 557.

L172Sup CI/73 (2) [1968] 3 S.C. R. 41.

to notify for general information that the land mentioned in the schedule is likely to he needed for a public purpose.

2.Under Section 5-A of the said Act, any person interested in the land may, within thirty days after the issue of this notification, make an objection to the acqui- sition of the land for any land in the locality in writing to the Collector, Meerut. For what purpose : For planned development of the area.

Note :-A plan of the land may be inspected in the office of Collector, Meerut."

In the writ petition a specific plea was taken in paras 3 5

(b) and 36 that no proper, reasonable or effective opportunity was available to the appellants to file any objections under s. 5A of the Acquisition Act inasmuch as the notification gave no indication that different pieces of land would be acquired for different authorities in different circumstances and for different purposes. Accord- ing to para 36 the appellants did not get any effective or reasonable opportunity of objecting under s. 5A of the Acquisition Act inasmuch as the purpose shown was extremely vague and there was no definite scheme before <ORG> at the material time to show how the land would be developed and to what use it would be put. Para 33 of the petition may also be noticed. It is stated therein that different notifications published under S. 6 of the Acquisition Act from time to time clearly indicated that <ORG> did not have any specific scheme of deve- lopment at the time the notification under s. 4 was published, nor had it any idea as to whether the land would be utilized by it or would be utilized for the purposes of <ORG> or <ORG>, Ghaziabad. In the return which was filed Para 9 contained the reply to Para 33 and this is what was stated:

" That the allegations made in paragraph 33 of the petition are denied. The scheme for the planned development of the area was there when the notification under section 4 of the Land Acquisition Act was issued although the scheme at that stage had not been finalised in the details".

No reply is to be found in the return to paragraphs 35(b) and 36 of the writ petition. We may also refer to paragraph 14 of the petition in which the order of the Special Land Acquisition Officer was reproduced in respect of the applications filed by the appellants for supplying the copy of the scheme of the planned development. It is noteworthy that in the return nothing was said about this order.

Dr. <NAME> has based his argument on the above significant facts. According to him the words in the notification, namely, "for planned development of the area" gave no indication whatsoever as to the precise purposes for which the land was required Planned development could be of various kinds. It could be for residential, industrial or some similar purpose. Moreover for development of a particular area the <ORG> may acquire the land itself and develop it or it may control the development of that area by making a scheme or a Master Plan. It is urged that the scheme of the Acquisition Act shows that public purpose for which the land is needed or is likely to be needed should be stated with sufficient particularity and in such a manner that a land owner should be able to file an objection under s. 5A . The whole object of s., 5A would be defeated if the public purpose is stated vaguely and without any indication of the nature of the purpose for which the land is being or is intended to be acquired.

It is necessary to examine the scheme of the Acquisition Act . This Act was enacted to amend the law for the acquisition of land for public purpose and for companies. The expression "public purpose" is defined by s. 3(f) . By the Land Acquisition (U.P. Amendment) Act 1954 s. 3 was amended and for clause (f) in the Central Act the following clause was substituted "(f) the expression "public purpose" includes provision for or in connection with--

(i)..............................

(ii)the laying out of village sites, townships or the extension, planned development or improvement of existing village sites or townships;

(iii)..............................

Section 4(1) provides for a notification to be issued and public notice of the same to be Riven whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed for any public purpose. Sub-s. (2) is in these terms :

"4 (2) "Thereupon it shall be lawful for any officer, either generally or specially authorised by such Government in this behalf, and for his servants and workmen,- to enter upon and survey and take levels of any land in such locality;

to dig or bore into the sub-soil; to do all other acts necessary to ascertain whether the land is adopted for such purpose; to set out the boundaries of the land proposed to be taken and the intended line of the work (if any) proposed to be made thereon; to mark such levels, boundaries and line by placing marks and cutting trenches; and, where otherwise the survey cannot be completed and the levels taken and the boundaries and line marked, to cut down and clear away any part of any standing crop, fence or jungle Provided that............................

Sub-sections (1) and (2) of s. 5A being material for purposes of the present appeal may be set out in extenso :

(1) "Any person interested in any land which has been notified under section 4 , sub-s. (1), as being needed or likely to be needed for a public purpose or for a <ORG> may, within thirty days after the issue of the notification, object to the acquisition of the land or of any land in the locality, as the case may be. (2) Every objection under subsection (1) shall be made to the Collector in writing, and the Collector shall give the objector an opportunity of being heard either in person or by pleader and shall, after hearing all such objections and after making such further enquiry, if any, as he` thinks necessary either make a report in respect of the land which has been notified under section 4 , sub- section (1) or make different reports in respect of different parcels of such land to the appropriate, <ORG> containing his recommendations on the objections, together with the record of the proceedings held by him, for the decision of that <ORG>. The decision of the appropriate <ORG> on the objection shall be final".

Section 6(1) says, inter alia, that when the appropriate Government is satisfied, after considering the report made under s. 5A(2) that any particular land is needed for a public purpose or for company a declaration shall be made to that effect by the authority mentioned therein. According to sub-s. (3) such a declaration shall be conclusive evidence that the land is needed for a public purpose or for a company as the case may be. After the declaration under s. 6 the Collector has to take orders for acquisition under s. 7 Section 8 provides for land to be marked out, measured and planned and s. 9 for notices to persons interested. Section II deals with inquiry into measurements, value and claims and the award by the Collector. It is not necessary to refer to any other provision.

It is apparent from sub-s.(2) that the public purpose which has to be stated in sub-s. (1) of s. 4 has to be particularised because unless that is done the various matters which are mentioned in sub-s.(2) cannot be carried out; for instance, the officer concerned or his servants and workmen cannot de any act necessary to certain whether it is suitable for the purpose for, which it is being acquired. If the public purpose stated in s. 4(1) is planned development of the area without anything more it is extremely difficult to comprehend how all the matters set out in sub-s. (2) can be carried out by the officer specially authorised in this behalf and by his servants and workmen.

Section 5A embodies a very just and wholesome principle that a person whose property is being or is intended to be acquired should have a proper and reasonable opportunity of persuading the authorities concerned that acquisition of the property belonging to that person should not be made. We may refer to the observation of this Court in <NAME> v. The State of U.P. & Others(1) that the right to file objections under s. 5A is a substantial right when a person's property is being threatened with acquisition and that right cannot be taken away as if by a side wind. Sub-section (2) of s. 5A makes it obligatory on the Collector to give an objector an opportunity of being heard. After hearing all objections and making further inquiry he is to make a report to the appropriate <ORG> containing his recommendation on the objections. The decision of the appropriate <ORG> on the objections is then final. The declaration under s. 6 has to be made after the appropriate <ORG> is satisfied, on a consideration of the report, if any, made by the Collector under s. 5A(2) . The legislature has, therefore, made complete provisions for the persons interested to file objections against the proposed acquisition and for the disposal of their objections. It is only in cases of urgency that special powers have been conferred on the appropriate <ORG> to dispense with the provisions of s. 5A : (See s. 17 (4) of the Acquisition Act ).

As already noticed in the notifications under s. 4 all that was stated was that the land was required for "planned development of the area". There was no indication whatsoever whether the (1)  3 S.C.R. 440.

development was to be of residential and building sites or of commercial and industrial plots nor was it possible for any one interested in the land sought to be acquired to find out what kind of planned development was under contemplation i.e. whether the land would be acquired and the development made by the <ORG> or whether the owners of properties would be required to develop a particular area in a specified way. If the Master Plan which came to be sanctioned on September 4, 1962 had been available for inspection by the persons interested in filing objections or even if the knowledge of its existence on the part of the appellants had been satisfactorily proved the position may have been different. In that situation the appellants could not claim that they were unable to file objections owing to the lack of any indication in the notification under s. 4 of the nature of development for which the area was being requisitioned. On behalf of the <ORG> it has been pointed out that the appellants had themselves filed a copy of the Master Plan which was sanctioned on September 4, 1962 and that it was a matter of common knowledge that the Master Plan was under preparation. The details relating to the Master Plan and the Plan itself had been published in the local newspapers and the appellants could have easily dis- covered what the proposed scheme was with regard to the development of the area in which they were interested. In view of the peculiar circumstances of these cases we gave an opportunity to the <ORG> to apply for amendment of its return since nothing had been said about these matters therein and to produce additional evidence in support of its allegations. Such a petition was filed and certain documents were sought to be placed on the record. After a careful consideration of the petition for amendment and the evidence sought to be adduced we dismissed the prayer for amendment as well as for production of additional evidence as we were not satisfied that the documents sought to be produced were either relevant or were required to enable this Court to pronounce judgment.

Learned counsel for the <ORG> next contended that the proposed acquisition was in pursuance of the activity under the Regulation Act . Moreover planned development is one of the public purposes as defined in s. 3 (f) as amended by the U.P. Amending Act 1954. Mere-mention of such a public purpose was sufficient to satisfy the requirement of law. Reliance has been placed on a decision of this Court in <CITATION> (1) in which in the notification under s. 4 it was stated that the land was needed "for a public purpose, viz, for development and utilisation of the said lands as an industrial and residential area". It was said that the purpose specified was a public purpose within the Acquisition Act , The points which arose for (1)  3 S.C.R. 885.

determination in that case were entirely different. At any rate, the public purpose was stated with sufficient particularity, namely, for development and utilisation of the land as an industrial and residential area. Once it was stated that the land will be utilised for the aforesaid purpose the persons interested could certainly object effectively. But tile mere words, as are to be found in the notifications here "planned development of the area" were wholly insufficient and conveyed no idea as to the specific purpose for which the lands were to be utilised. It must be remembered that the Acquisition Act is silent as to the nature of objections that could be raised. In some of the, States executing instructions have been issued or rules have been framed which indicate the classes of objections which are contemplated. In Madras the classes of objections that the Collectors inquiry should specifically deal with are the following:

(a) that the purpose for which the land is acquired is not a public purpose;

(b) that the land notified is not the best adapted to the purpose intended or that its area is greater than is actually required for the purpose, and

(c) that the acquisition of the land or any land in the locality is not desirable or expedient.

<CITATION> (1) it was stated in the notification under S. 4(1) that the land was likely to be needed for purposes of a. company which was named. A challenge was made against the validity of that notification on the ground that it was not stated that the land was-required for a public purpose. It was laid down that where the land was required for a company the requirement of the law would be sufficiently met if the appropriate <ORG> was satisfied on a report under s. 5A(2) or by an inquiry under s. 40 that the purpose of the acquisition was the same as contemplated by s. 40 of the Act. This Court said that the purpose of the notification under s. 4 was to carry out a preliminary investigation with a view to find out after the necessary survey and taking of levels and, if necessary, digging or boring into sub-soil whether the land was adapted for the purposes for which it was sought to be acquired. It was only under s. 6 that a firm declaration had to be made by the <ORG> that land with proper description and area was needed for a public purpose or a company. Hence it was not correct to say that any defect in the notification under, s. 4 was fatal to the validity of the proceedings particularly when the acquisition was for a company. We are unable to accede to the suggestion on behalf of the <ORG> that the observations made (1)  1 S.C.R. 128.

in this decision can be of any avail to it in the present cases. The question which we are called upon to decide is of an entirely different nature. It relates to the notification under s. 4 in the light of s. 5A with a view to giving full effect to that section and not simply wiping it out. We need only point out that the Acquisition Act did not originally provide for filing or hearing of objections to the proposed acquisition. It was only by the Amending Act 38 of 1923 which came into force on January 1, 1924 that s. 5A was inserted in the Acquisition Act . Up to that time the view was that the wishes of the owners of the land were wholly irrelevant but after the insertion of s. 5A the position has completely change and it cannot be said that the owner's wishes are not relevant and that he does not need an opportunity to file his objections. To take such a view would render s. 5A otios. If it has any purpose and if it has to be given its full effect the person interested in the land proposed to be acquired must have an opportunity to submit his objections and that he can do only if the notification under s. 4(1) while mentioning the public pur- pose gives some definite indication or particulars of the said purpose which would enable the persons concerned to object effectively if so desired. In the absence of such specific or particular purpose being stated the objector cannot file any proper or cogent objections under s. 5A which he has a right to do under that provision. We would accordingly hold that owing to the vagueness and indefiniteness of the public purpose stated in the notifications under s. 4(1) and in the absence of any proof that the appellants were either aware of or were shown the scheme or <ORG> in respect of the planned development of the area in question the appellants were wholly unable to object effectively and exercise their right under s. 5A of the Acquisition Act.

For the reasons given above these appeals must succeed and are hereby allowed. The entire acquisition proceedings in respect of the lands of the appellants in all the appeals are, hereby quashed. In matters of this nature we would have taken due notice of laches on the part of the appellants while granting the above relief but we are satisfied that so far as the present appellants are concerned they have not been guilty of laches, delay or acquiescence at any stage. The appellants shall be entitled to costs in this Court. C.M. Petition No. 6852 of 1971 is disposed of by observing that it will be open to the partly to file a suit for damages, if any, if so desired.

S.C. Appeals allowed.