PETITIONER: <NAME> AND SONS Vs. RESPONDENT: DAMODAR VALLEY CORPORATION DATE OF JUDGMENT: 10/09/1965 BENCH: <NAME>, A.K. BENCH: <NAME>, A.K. DAYAL, RAGHUBAR RAMASWAMI, V. CITATION: 1967 AIR 96 1966 SCR (1) 796 CITATOR INFO : R 1968 SC1165 (31) E 1971 SC2177 (10) R 1978 SC 484 (9) R 1985 SC 817 (16) RF 1990 SC 897 (9) ACT: Code of Civil Procedure (Act V of 1908), s. 153 0. 2 r. 2 and 0. 6, r. 17--Amendment of plaint-When may be allowed. HEADNOTE: The appellant filed a suit against the respondent claiming a declaration that, on a proper interpretation of one of the clauses of the contract between them, the appellant was entitled to an enhancement of 20% over the tendered rates. The plaint stated, that work had been done under the contract and that the value of the suit for purposes of jurisdiction was Rs. 65,000, but as it was a suit for a declaration only, court fees on that basis had been paid. The appellant also reserved the right to sue later for the amount found due. The respondent contested the suit on the ground that the suit was not maintainable in the form in which it was framed, and disputing the correctness of the interpretation of the clause suggested by the appellant stated that it was ever ready and willing and was still willing to pay the legitimate dues of the appellant. The issue regarding maintainability of the suit was not pressed by the respondent at the hearing; and the other issue regarding the interpretation of the clause of the contract having been decided by the trial court in favour of the appellant, the suit was decreed and leave was granted under 0. 2, r. 2, Civil Procedure Code, 1908, to sue later for the amount due. On appeal the issue as to maintainability was resuscitated and <ORG> decided it in the respondent's favour because of the proviso to s. 42 of the Specific Relief Act, 1877, and also held that the trial court was not right in granting leave under 0. 2, r. 2. <ORG> rejected a petition for amending the plaint by including a prayer for a decree for Rs. 65,000 or such other amount as may be found due on proper account being taken then made by the appellant on the ground that the claim for money was time-barred long before the petition for amendment was made, and because there were no special circumstances justifying the grant of the amendment. HELD : (Per <NAME> and <NAME>,<NAME>.) (i) If there was any case where the respondent was not entitled to the benefit of the law of limitation, the instant case was that one. It was a case in which the claim for money was in substance in the plaint from the beginning though it had not formally been made and so the respondent could not legitimately claim that the amendment would prejudicially affect his right under the law of limitation, for really he had no such right. [801 A-C] A party is not allowed to set up a new case or a new cause of action by amendment, but it is well recognised that where the amendment does not constitute the addition of a new cause of action or raise a new case,, but amounts to no more than a different or additional approach to the facts already on the record, the amendment will be allowed even after the expiry of the statutory period of limitation. The expression "new cause of action" in this context means, a new claim made on a new basis constituted by new facts, and "new case" means a new set of ideas. [799 F-H; 800 B-D] The amendment was necessary for a decision of the real dispute between the parties which was : what were their rights under the contract; and that dispute was clearly involved in the plaint as originally framed. 7 97 It was the contract which formed the cause of action on which the suit was based and the amendment sought to introduce a claim based on the same cause of action, that is, the same contract and introduced no new case or facts. Indeed, the facts on which the money claim sought to be added was based, were not in dispute, and the absence of details of work was not a legitimate ground for refusing the amendment. The respondent had notice of the amount of claim, was fully aware that the ultimate object of the appellant in filing the suit was to obtain payment of that amount, and had specifically expressed in the written statement, its willingness to pay the appellants legitimate dues. [800 F-H 802 C, D-E] I. T. Leash & Co. v. <ORG>  S.C.R. 438; <CITATION> ,  S.C.R. 595. <CITATION> . 47 I.A. 255, applied. Per <NAME>, J. (Dissenting) : An amendment which would enable a plaintiff to make a claim which has become time barred is as a rule to be refused and the Court would exercise its special power to allow such amendment only when there are special circumstances in the case. Such special circumstances can be said to exist only when the amended claim was at least intended to be made by the plaintiff who had given in the plaint all the necessary facts I,,) establish the claim but had, due to clumsy drafting, not been able to express himself clearly in the pliaint and to couch his relief in the proper legal form. Such circum- stances justify an amendment not really as a judicial concession to the plaintiff to save him from any possible loss but on the ground that the original claim in the plaint, though defectively stated, really amounted to the claim sought to be made by the amendment, so that, it does not in reality offend against the law of limitation but serves the interests of justice. [813 H; 814 A-C] The plaint gave none of the facts which were necessary for getting a decree for Rs. 65,000 or which might justify a decree for accounting To allow the amendment of the plaint would necessity lead to a further request for furnishing details about the work done and the defendant being afforded an opportunity to put in a further written In fact it would necessitate a de novo trial on the question as to the amount due to the plaintiff. When the plaintiff could not get the relief of the amended claim on the facts mentioned in the plaint as originally filed, the cause of action for a decreefor Rs.65,000 was different from the cause of action on which thesuitordeclaration was founded. It could not be said that the plaintiff intended to sue the defendant for the recovery of Rs. 65,000 but failed to express himself clearly in the plaint and that therefore he should be allowed to make the plaint precise and clear in that regard. The fact that he reserved his right to sue for the amount indicates that he did not intend to sue for the amount; and the fact that the trial court gave him leave to sue later does not justify the amendment, because leave can be given by the court under 0. 2, r. 2 only which the plaintiff omitted to sue for a certain relief arising out of the same cause of action. [814 G; 815 B-D, F, G-H-, 816 A-B] (ii) Per <NAME>, J : <ORG> was not in error in allowing the respondent to raise the objection as to the maintainability of the suit on account of the appellant not asking for further relief. [806 C] It was incumbent on the trial court not to make a declaration unless further relief had beenprayed for even if the objection was not raised by the party. Further ,it could not be said that the objection was not raised by the respondentin the trial court merely because it did riot press the contention. [805 H; 806 A-B] 798 JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 18 of 1963. Appeal from the judgment and decree, dated January 19, 1961 of <ORG> in Appeal from Original Decree No. 253 of 1955.

<NAME>, Additional Solicitor-General and <NAME> for the appellants.

<NAME> and <NAME>, for the respondent. The Judgment Of <NAME> and <ORG> was delivered by <NAME> <NAME> RAGHUBAR DAYAL, <NAME> delivered a dissenting Opinion. <NAME>, j The question raised in this appeal is whether <ORG> was in error in refusing permission to the appellant to amend its plaint. We think it was. The appellant had done work for the respondent under a contract which only specified the rates for different categories of work. The contract contained the following clause : "This quotation is based on prevailing labour rate of Rs. 1-4-0 per cooly but if there is increase of labour rate of more than 10% in any particular month, the proportionate increase in rate will be charged". Subsequent to the making of the contract there was an increase in the labour rate per cooly by 20%. The appellant claimed that under the clause it was entitled to the whole amount of the increase while the respondent contended that it was entitled to a part of it only. This was the only dispute between the parties in respect of the contract. There was no other dispute either concerning the quantity or quality of the work done or otherwise howsoever.

The appellant filed a suit against the respondent only claiming a declaration that on a proper interpretation of the clause it was entitled to an enhancement of 20% over the tendered rates as the sole difference between the parties was about the interpretation. The plaint stated that work had been done under the contract and that the value of the suit for purposes of jurisdiction was Rs. 65,000, but as it was a suit for a declaration only court fees on that basis had been paid. The respondent in its written statement challenged the appellant's interpretation of the clause but did not dispute any material fact or that the only dispute was about the interpretation. The written statement con- cluded by saying that the respondent "was ever ready and willing and is still ready and willing to pay the legitimate dues to the plaintiff."

Before the learned trial Judge several issues were raised but it is necessary to mention only two. One issue was as to the maintainability of the suit in the form in which it had been framed and the other issue was as to the proper interpretation of the clause. The first of these issues was not pressed at the hearing. The other issue having been decided by <ORG> in favour of the appellant, the suit was decreed. The other issues which had been raised, had also not been pressed. The Court had further given the appellant leave under 0. 2 r. 2 of the Code of Civil Procedure to sue later for the amount due under the con- tract.

The respondent then went up in appeal to <ORG> at Patna. There the issue as to the maintainability of the suit was resuscitated and pressed and it was decided in the respondent's favour because of the terms of the proviso to s. 42 of the Specific Relief Act , 1877. The correctness of this view is not challenged in this Court. In the result <ORG> dismissed the suit.

Now, the appellant bad in view of <ORG> decision as to the maintainability of the suit, sought its leave to amend the plaint by adding an extra relief in the following words : "That a decree for Rs. 65,000 or such other amount which may be found due on proper account being taken may be passed in favour of the plaintiff against the defendant". The amendment having been refused the present appeal has been preferred.

It is not in dispute that at the date of the application for amendment, a suit for a money claim under the contract was barred. The general rule, no doubt, is that a party is not allowed by amendment to set up a new case or a new cause of action particularly when a suit on the new case or cause of action is barred : <NAME> v. Neale.(1) But it is also well recognised that where the amendment does not constitute the addition of a new cause of action or raise a different case, but amounts to no more than a different or additional approach to the same facts, the amendment will be allowed even after the expiry of the statutory period of limitation : see <CITATION> (2) and <CITATION> principal reasons that have led to the rule last mentioned are, first, that the object of Courts and rules of procedure is to (1) 19 Q.B.D. 394.

(3) [1957] S.C.R. 438.

(2) L.R. 47 I.A. 255.

decide the rights of the parties and not to punish them for their mistakes (Cropper v. <NAME>) (1) and secondly, that a party is strictly not entitled to rely on the statute of limitation when what is sought to be brought in by the amendment can be said in substance to be already in the pleading sought to be amended <CITATION> (2) approved in <CITATION> (3).

The expression "cause of action" in the present context does not mean "every fact which it is material to be proved to entitle the plaintiff to succeed" as was said in <NAME> v. Gill(1) in a ,different context, for if it were so, no material fact could ever be amended or added and, of course, no one would want to change or add an immaterial allegation by amendment. That expression for the present purpose only means, a new claim made on a new basis constituted by new facts. Such a view was taken in <NAME> v. <ORG>(") and it seems to us to be the only possible view to take. Any other view would make the rule futile. The words "new case" have been understood to mean "new set of ideas" : <NAME> v. <ORG>). This also seems to us to be a reasonable view to take. No amendment will be allowed to introduce a new seat of ideas to the prejudice of any right acquired by any party by lapse of time.

Now, how does the present case stand on these principles ? Does the amendment introduce a new cause of action or a new case? We do not think it does. The suit was on the contract. It sought the interpretation of a clause in the contract only for a decision of the rights of the parties under it and for no other purpose. It was the contract which formed the cause of action on which the suit was based. The amendment seeks to introduce a claim based on the same cause of action, that is, the same contract. It introduces no new case or facts. Indeed the facts on which the money claim sought to be added is based are not in dispute. Even the amount of the claim now sought to be made by amendment, was mentioned in the plaint in stating the valuation of the suit for the purpose of jurisdiction. The respondent had notice of it. It is quite clear that the interpretation of the clause was sought only for quantifying the money claim. In the written statement the respondent specifically expressed its willingness to pay the appellant's legitimate dues which could only mean such amount as might be (1) (1884) 26 Ch. D. 700,710-1 (2) (1909) I.L.R. 33 Bom. 644, 651.

(3) [1957] S.C.R. 595, 603 (4) (1873) L.R. 8 C. P. 107,116 (6) [1962] 1 All E.R. 303.

(5) [1962] 2 All E.R. 24.

due according to the rates applicable on a proper interpretation of the clause. The respondent was fully aware that the ultimate object of the appellant in filing the suit was to obtain the payment of that amount. It was equally aware that the amount had not been specifically claimed in the suit because the respondent had led the appellant to believe that it would pay whatever the court legitimately found to be due. It in fact said so in the written statement. If there was any case where the respondent was not entitled to the benefit of the law of limitation, the present is that one. The respondent cannot legitimately claim that the amendment will prejudicially effect his right under that law for really be had no such right. It is a case in which the claim for money was in substance in the plaint from the beginning though it had not formally been made.

This, therefore, seems to us to be preeminently a case for allowing the amendment. The authorities also lead us to the same view. In <NAME> case(1) a suit for damages for conversion was by amendment allowed to be converted into a suit for damages for breach of contract after that claim had become barred, the necessary facts as in the case in hand, being already in the plaint. In <NAME> case(2) an amendment adding a claim for possession after a suit for such claim had become barred was allowed in a suit which originally had only claimed a declaration of a right to pre- empt. In the last mentioned case, the plaintiff bad in spite of warning at the earliest stage refused to make the amendment which he later sought and got. It was, therefore, a case where the plaintiff had initially deliberately refused to make a claim and an amendment being allowed later permitting that claim to be raised after it had become barred. It was in a sense a stronger case than the present one where the plaintiff had omitted to make the claim initially on a wrong notion and a wrong legal advice. Punishing of mistakes is, of course, not administration of justice.

It is true that the plaint does not set out the details of the work done. But there never was any dispute about them. Indeed the respondent had prepared a final bill of the appellant's dues for the work done under the contract and the appellant had accepted that bill as correct except on the question as 'to the proper rate chargeable under the clause. Strictly the details of the work done were not necessary in the plaint for it would be a waste of time of a court to go into them, it not being unusual to direct an enquiry by a Commissioner or a subordinate officer about such (1) [1957] S.C.R. 438 (2) I.R.

47. LA. 255.

L8Sup.C.1.165-8 details when, as in the present case, the items of work done are innumerable. It would be enough in such cases to file the details before the authority making the enquiry. Besides, in <NAME> case(1), in a suit for a declaration of title, this <ORG> permitted an amendment setting out the detailed facts on which the title was claimed after the suit had become time barred. The absence of the details of the work does not furnish a legitimate ground for refusing the amendment.

It may be that as a result of the amendment, if the respondent chooses to raise a controversy about the work done, that is, about the quantity, quality and other things concerning it, which it had never raised so long, the matter will have to be gone into. That again would not justify a refusal of leave to amend. It would not mean any waste of time or money or any duplication of work. That investigation would now be made for the first time and nothing done so far would become futile. Such an enquiry was indeed directed in <ORG>'s case(2). The amendment sought is necessary for a decision of the real dispute between the par-ties which is, what are their rights under the contract ? That dispute was clearly involved in the plaint as originally framed. All the necessary basic facts had been stated. Only through a misconception a relief which could be asked on those facts had not been asked. It would not have been necessary to ask for it unless the respondent had at a late stage taken the point that the suit should fail without more in the absence of that relief. We find the present case indistinguishable from <NAME> case(3).

We would for these reasons allow the appeal. The case would go back to <ORG> with a direction to it to allow the amendment sought and then to decide the correct interpretation of the disputed clause and thereafter, if the occasion arose, to ascertain the amount due by a proper enquiry to be made either by <ORG> or by the trial Court as <ORG> may think fit. <ORG> may, if the appellant asks for it, also allow an amendment setting out the particulars making up the claim of Rs. 65,000 introduced by the amendment, that is, quantity, rate etc. of the work done. The appellant will get the costs in this Court. The question of subsequent costs will be decided by <ORG>. The judgment of <ORG> in so far as it refused the amendment is set aside but the rest of that judgment will stand.

(1) [1957] S.C.R. 595.

(3) L.R. 47 I.A. 255.

(2) (1957) S.C.R, 438.

<NAME> J. This appeal, on certificate granted by <ORG> Patna, is against the judgment and decree dismissing the appellant's suit for a declaration on the ground that the plaintiff had not asked for consequential relief. <ORG> rejected the application presented to it for amendment of the plaint. The question for determination is whether <ORG> was right in rejecting the application for amendment. The plaintiff sued for a declaration that it was entitled to enhancement of 20% over the tender rates for the different categories of excavation work as detailed in para 13 of the plaint in connection with the work of excavation in foundation of the Tilaiya Dam at Katni, P. S. Koderma, in the district of Hazaribagh. Paragraphs 1 and 2 of the plaint read :

"1. That the plaintiff did excavation on work of different categories as contractor in connection with the excavation in foundation of the Tilaiya Dam at Katni in the district of Hazaribagh, P. S. Koderma. The contrac- tor's letter of 24th September 1949 (Annexure A) eventually became the tender for such work.

2. Paragraph of the contractor's letter stated 'This quotation is based on prevailing labour rate of Rs. 1-4-0 per cooly but if there is increase of labour rate of more than 10 % in any particular month, the pro- portionate increase in rate will be charged."

Paragraphs 3 to 11 state facts which indicate that the plaintiff had asked for the increase of the labour rate per cooly by 20% and that the enhanced rates approved by the Corporation-defendant were not accepted by the plaintiff. Paragraph 12 states that the plaintiff asked for payment under protest to which the defendant was not agreeable. Paragraph 13 mentions the enhanced rates to which the plaintiff considers himself entitled according to the proper interpretation of clause 17 of the tender. Paragraph 14 of the plaint reads "As the difference between the parties is about the interpretation of clause 17 of the letter of the contractor dated 24-9-1949 the plaintiff is advised to file the suit in the declaratory form.

The plaintiff reserves the right under O. 2, r. 2 of the Code of Civil Procedure to omit to sue in respect of amount that may be found due upon the interpretation placed by the plaintiff upon the said clause 17 which interpretation it is submitted is the proper interpretation.

The plaintiff reserves the right to sue later on for the amount found due, to him."

Paragraph 15 states that the cause of action arose on December 6, 1951 when the <ORG> refused to allow the increase of 20%. Paragraph 16 gives the value of the suit for the purpose of jurisdiction to be Rs. 65,000 and said that court-fees of Rs. 20-10-4 was paid as the suit was for declaration. Paragraph 17 said that the plaintiff claimed

(i) leave under O. 2, r. 2, C.P.C.; and (ii) that it be declared that the plaintiff is entitled to enhancement of 20% over the tendered rates for the different categories of excavation work as detailed in paragraph 13 of the plaint in connection with the work of excavation in foundation of the Tilaiya Dam. The plaint contained 3 annexures. Annexure A was the letter which ultimately constituted the tender. The schedule to the tender described the class and description of work to be executed, unit of calculation and the rate of payment. Annexure B was the letter from the plaintiff to the Executive Engineer dated March 11, 1950 stating the difficulties in the performance of the contract. Annexure C was the letter from the Executive Engineer dated March 15-16, 1950 conveying the approval of an enhancement of 10% in the rate over the tendered rate for the excavation work- from the date onward. Annexure D is the letter from the plaintiff to the <ORG> dated December 26, 1951 disputing the interpretation of the <ORG>. It is clear from the plaint and its enclosures that the dispute between the parties was about the rate to be paid for the different categories of work and that the plaintiff did not deliberately sue to recover the amount that might be found due upon the interpretation placed by the plaintiff upon the said clause 17.

Paragraph 13 of the written statement filed by the defendant stated that the defendant did not admit the later part of the statement in para 14 of the plaint which related to the plaintiffs reserving his right to sue later for the amount found due at the enhanced rate. The defendant, inter alia, contested the suit on the ground that the suit was not maintainable in the form in which it had been framed. Paragraph 16 of the written statement stated that the <ORG> was ever ready and willing and was still willing to pay the legitimate dues to the plaintiff. Issue No. 2 of the issues framed in the case, was : 'Is the suit maintainable in its present form ?' <ORG> stated in its judgment :

"The defendant also pleaded that the plaintiff has no cause of action, the suit is not maintainable in the present form and the court-fees paid is insufficient. But these allegations were not pressed at the time of hearing."

It accepted the contention for the plaintiff that it was entitled to over-all increase by 20% in accordance with cl. 17 of the tender. It further said :

"No objection has been pressed as to the plaintiffs prayer regarding leave under O. 2, r. 2, C.P.C. That must therefore be allowed." It accordingly decreed the suit.

On appeal, <ORG> accepted the respondent's conten- tion that in view of the proviso to s. 42 of the Specific Relief Act the suit for mere declaration was not maintainable and that <ORG> was not right in granting permission under r. 2(3) of O. 2, C.P.C. to the plaintiff to institute another suit for the amount to which the plaintiff be entitled after the declaration sought for in the suit had been granted. The prayer for amending the plaint was rejected as the money claimed had become time. barred long before the prayer was made during, the arguments before <ORG> and as there existed no special circumstances to justify the grant of the amendment against the interest,; of the defendant-respondent. <ORG> therefore allowed the appeal and dismissed the suit. It however granted leave to appeal as the requirements of art. 133 (1) (a) of the Constitution were satisfied. Learned counsel for the appellant has contended that there exists such special circumstances in the case which would have justified, in the interests of justice, the grant of the application for amendment of the plaint and, in the alternative, contended that <ORG> should not have allowed the respondent to object to the maintainability of the suit on the basis of the proviso to s. 42 of the Act and if the Court had allowed such an objection it should have, as a matter of course, allowed the application for amendment.

I Propose to dispose of the second contention first. The contention about the maintainability of the suit based on s. 42 of the Act aid had to be allowed. The <ORG> could not make a declaration unless further relief had been prayed for. It was incumbent on the <ORG> to comply with this requirement of law, even if not raised by the party, when it was clear that further relief could be claimed in the suit. Further, in this particular case, it cannot be said that no objection had been raised on this ground by the respondent up to the stage of the appeal in the High <ORG>. In paragraph 2 of the written statement, the respondent questioned the maintainability of the suit in the form in which it was instituted. Issue No. 2 was framed in that connection. The contention was not given up by the respondent. It was simply not pressed on his behalf, possibly, because it felt strong on the contention on the basis of which the declaration was sought. I therefore do not consider the High <ORG> in error in allowing the respondent to raise the objection to the maintainability of the suit on account of the plaintiff not having asked for the further relief. It does not however follow that the appellant must have been allowed, as a matter of course, to amend the plaint by adding a claim for recovery of the amount found due. The various cases relied on in support of this contention are cases in which the fresh relief claimed by way of amendment was not affected by the law of limitation and the objection to the maintainability of the suit had not been taken at an early stage of the suit. Reference need not be made to all those cases except to the one reported as <CITATION> (1) in which this <ORG> observed :

"It is a well-settled rule of practice not to dismiss suits automatically but to allow the plaintiff to make necessary amendment if he seeks to do so."

Neither the question of limitation arose in that case nor did the Court consider it necessary for the plaintiff to have asked for consequential relief. The above observation cannot be taken to be a pronouncement in connection with amendments sought in the pleadings when they be with respect to claims which had become time-barred.

It is now well-settled that the <ORG> has power to allow amendments in connection with claims which had become time- barred, if special circumstances exist and it be in the interests of justice. This is not disputed for the respondent. The real dispute between the parties is whether the circumstances of the case come within the principle laid down in the various cases. This necessarily leads to a consideration of the circumstances and the amendments sought in those cases.

(1) [1960] 2 S.C.R. 253,285.

<NAME>

Before referring to the cases, I may set out the provisions of the Code which empower the <ORG> to allow amendment of pleadings. Section 153 and O. 6, r. 17, deal with the matter. Section 153 reads :

"The <ORG> may at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceeding in a suit; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceeding."

Rule 17 of 0. 6 reads :

"The <ORG> may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties."

These indicate that the amendment should be in such manner as may be just and that, as a rule, all such amendments shall be made as be necessary for the purpose of determining the real questions in controversy between the parties. No amendment would be just if it so prejudices the interests of the other party for which that party cannot get any relief from the <ORG>. The amendments which must be allowed can be those in the absence of which the <ORG> may not be able to determine the real question in controversy between the parties. The real question in controversy must be gathered only from the plaint and to some extent from the allegations in the written statement. If the point to be decided as a result of the amendment is not covered by the controversy raised by the plaint and the written statement,, the amendment is not to be allowed necessarily, for the simple reason that it is unnecessary for determining the real questions in controversy between the parties. The <ORG> has to decide the suit instituted before it and with respect to the controversies raised in it. It follows that the amendments to be allowed relate to such matters which, due to bad drafting of the plaint, could not be clearly and precisely expressed, though the parties did really intend to have those matters determined by the <ORG>. The object of the amendment of the pleadings is to clarify the pleadings for bringing into prominence the real controversy between the parties and not for helping a party by making such amendments which be beneficial to him in connection with some dispute between the parties, a dispute which has not been really taken to the <ORG> for decision and which the parties did not really intend to be decided in that suit. This seems to me to be the real basis for an order of the <ORG> in connection with such amendments sought by a party in its pleadings as would raise a claim which has become time- barred.

None of the cases referred to by the parties hold differently.

The cases which are to be considered in this connection are : <CITATION> (1); <CITATION> (2 ) ; <CITATION> .(3); and <CITATION> (1). Reference to <NAME>'s case(1) is necessary as some of the observations in that case were approved by this Court in the last case(4).

In <NAME>'s case(1), the plaintiff sued for dissolution of partnership and accounts alleging that in pursuance of the partnership agreement they had delivered Rs. 4,001 worth of cloth to the defendants. The Court found that the allowed agreement was not a partnership agreement but evidenced the advance of a simple loan by the plaintiffs to the defendants. <ORG> held that the plaintiffs had really delivered cloth worth Rs. 4,001 to the defendants, but dismissed the suit as no decree for dissolution of partnership and for accounts could be given and the plaintiff had not asked to amend the plaint. In the first <ORG> the plaintiffs-appellants accepted the findings, of <ORG> that no partnership was constituted by the agreement and prayed for leave to amend by adding a prayer for the recovery of Rs. 4,001. The appellate Court was of opinion that the plaintiffs had from the first intended to sue only for the recovery of money but had been misled by their pleader, allowed the amendment to be made and ultimately decreed the claim for Rs. 4,001. On the date of the amendment, it may be noted, most of the claim had become time-barred. In the second appeal, <ORG> said at p. 651 :

"Falling back, then, upon the words of the Rule, I cannot follow the argument that there would be any injustice to the appellants in allowing the amendment, for the only effect of it is to enforce their liability for a debt which was claimed, disputed, and found to be due long before the defence of limitation was available."

(1) I. L.R. 33 Bom. 644.

(3) [1957] S.C.R. 438.

(2) L.R. 47 I.A. 255.

(4) [1957] S.C.R. 595.

Earlier, after referring to the provisions of O. 6, r. 17, he had said at p. 649 :

"From the imperative character of the last sentence of the rule it seems to me clear that, at any stage of the proceedings, all amendments ought to be allowed which satisfy the two conditions (a) of not working injustice to the other side, and (b) of being necessary for the purpose of determining the real questions in controversy between the parties."

These observations have been approved by this <ORG> in <NAME> case (1) where the <ORG> said, at p. 604 :

"The same principles, we hold, should apply in the present case. The amendments do not really introduce a new case, and the application filed by the appellant himself showed that he was not taken by surprise; nor did he have to meet a new claim set up for the first time after the expiry of the period of limitation."

<NAME>, further said, at p. 652 (<NAME>'s case) (2) , after referring to certain statements of the plaintiff in <ORG> "It is difficult to imagine how the plaintiff could have more clearly professed that, whatever may have been the attitude of his obstinately unskilful pleader, he for his part had no concern with the alleged partnership but was suing simply to recover his debt. I think, therefore, that the Subordinate Judge would have been well advised if he had paid more attention to the substance of the suit before him, and taken command of it himself rather than handed over the conduct of the suit to a manifestly inexpert pleader; had he taken this view of his duty as presiding Judge, the slight technical difficulty which stood in his way would have been easily removed."

In <NAME>'s case(1) amendment was allowed in the following circumstances. The plaintiff had obtained a decree for possession against defendant No. 2. He was obstructed during execution proceedings by defendant No. 1. His objection under O. 21. r. 97 was dismissed and therefore he filed a suit under O. 21, r. 103 for a declaration that he was entitled to recover possession of the suit properties from defendant No. 1. The contents of (1) [1957] S.C.R, 595.

(2) 33 Bom. 644.

the plaint did not give the facts or the grounds on which the plaintiff based his title to the properties in suit as against defendant No. 1. This difficulty was pointed out by defendant No. 1 and subsequently the plaintiff asked for permission to give further and better particulars of the claim made in the plaint. This application was rejected by the trial <ORG>. <ORG> did not allow this prayer and dismissed the suit. <ORG> allowed the amendment of the plaint and this <ORG> agreed with the order of <ORG>. It is clear, as was observed by the <ORG> at p. 604, that this was not a case where a new claim was made by the amendment but was a case where the incomplete particulars given in the plaint were sought to be made complete by giving further particulars. The main object of the plaintiff was to get a declaration of his right to possession against defendant No. 1. It was to achieve this object that be instituted the suit. He did not specify how he had a right to that property as against defendant No. 1 who was said to have no right to refuse delivery of possession to him. The only principle which can be deduced from this case is that amendment of the plaint can be allowed to make the plaint complete in particulars which would help in determining the real dispute between the parties, as raised by the plaint itself as originally presented.

Before dealing with <NAME> case(1) reference may be made to the case reported as <NAME> v. <NAME>) which has been referred to in <NAME> case(1). In this ease the plaintiff brought a suit against several persons on the allegations that defendant No. 1 had borrowed certain money on a simple money bond executed on August 9, 1856 and that the other defendants claimed her property and that therefore the suit be decreed against defendants and the property mentioned in the plaint, with interest to date of realisation. Defendant No. 1 had also executed another bond on November 28, 1857 to secure a further advance and 'had thereby pledged her zamindari estate to the plaintiff. The suit was however not based on the second bond. <ORG> found that the suit should be dismissed against defendants other than defendant No. 1 and that it was open to the defendant to ask for a decree for payment of an amount due on the bond against defendant No. 1, but could not claim a decree against the property on the basis of the second bond. In that connection it was observed at p. 473 (1) L.R. 47 I.A. 255. (2) 11 M.I.A. 468.

<NAME>

"Though this <ORG> is always disposed to give a liberal construction to pleadings in <ORG>, so as to allow every question fairly arising on the case made by the pleadings to be raised and discussed in the suit, yet this liberality of construction must have some limit. A plaintiff cannot be entitled to relief upon facts or documents not stated or referred to by him in his pleadings, and the only thing that can be rightly insisted on by the plaintiff here is a decree for payment against <NAME>."

<ORG> however considered whether inasmuch as the suit was wholly misconceived, whether the proper course was not to dismiss the appeal altogether without prejudice to the right of the plaintiff-appellant to bring a new suit against defendant No. 1 upon the first point, and decided that would not be the proper course as the fresh suit might be resisted on the ground of being barred by limitation, and as in the circumstances of the case such a defence in the fresh suit would be inequitable. <ORG> therefore allowed the plaintiff to amend his plaint so as to make it a plaint against defendant No. 1 alone for the recovery of money due on a bond. Here again the defect was in the frame of the suit and did not relate to the real claim with respect to which the sought relief from the <ORG>. The plaintiff sought recovery of money due on the bond executed by defendant No. 1. He however framed a suit not only against defendant No. 1 but against other defendants as well and claimed a decree of money against all of them and against the property. His suit was allowed to continue by making proper amendment with respect to part of the original claim, i.e., with respect to the recovery of money alone against defendant No. 1. This case shows that amendment of the plaint was allowed so as to make it a plaint against defendant No. 1 alone for the recovery of the claim even though if the original suit for that recovery had been instituted at the time it would have been barred by limitation.

In <NAME> case(1) the plaintiff sued for a declaration of his right to pre-empt certain property. The suit so framed was not maintainable in view of s. 42 of the Specific Relief Act, as the further relief for possession was not asked. <ORG> rejected the application for amending the plaint and dismissed the suit. The appeal against the dismissal of the suit was allowed and the suit was remanded for decision upon merits with (1) L.R. 47 I.A. 255.

liberty to the plaintiffs to amend their plaint by adding a claim for possession and by ante-dating the plaint according to the dates of the original suits. <ORG> approved of the permission for the amendment of the plaint and, after quoting with approval the observations of the Judicial Commissioner to -the effect :

"however defective the frame of the suit may be, the plaintiffs' object was to pre-empt the land; their cause of action was one and the same whether they sued for possession or not" said at p. 262 :

"If this be so, all that happened was that the plaintiffs, through some clumsy blundering, attempted to assert rights that they undoubtedly possessed under the statute in a form which the statute did not permit. But if once it be accepted that they were attempting to establish those rights, there is no sufficient reason shown for disturbing the judgment of the Judicial Commissioner, who thinks they should be at liberty to express their intention in a plainer and less ambiguous manner. It may be noticed that in the claim the relief sought is so awkwardly set out that it would be quite open to the interpretation that +,hey had in fact claimed pre-emption and not a declaration of right . . . . "

These observations, again, make it clear that amendment was allowed with respect to a, claim which, at the time when it was made, would have been time-barred because that claim could be spelt out of the original plaint which was held to be defectively framed. A defect in the frame of the plaint was not considered sufficient to disallow amendment and to dismiss the suit. The amendment of the plaint was necessitated to clumsy drafting. The plaintiff was allowed to express his intention in a plainer and less ambiguous manner. It was these considerations which, according to <ORG>, outweighed the consideration that the power of amendment should not as a rule be exercised where its effect be to take away from a defendant a legal right which had accrued to him by lapse of time and brought the case within the principle laid down in <NAME> case(1). The next case to be considered is Leach & Co.'S Case(2). In That case the plaintiff had filed a suit for damages for conversion (1) 11 M.I. A. 468. (2) [1957] S.C.R. 438.

<NAME>

against the defendants on the allegation that they were the agents of the plaintiffs. This plea failed. On appeal, <ORG> held that the parties stood in the relationship of seller and purchaser and not agent and principal. This <ORG>, on further appeal, agreed with the findings of <ORG> +,hat the, suit for damages on the footing of conversion must fail. The plaintiffs, however, applied to this <ORG> for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for non-delivery of the goods. The application was opposed on the ground that it introduced a new cause of action and a suit on that cause of action would be barred by )imitation. This <ORG> considered there was force in the objection but, after giving due weight to it, was of the opinion that it was a fit case in which the amendment should be allowed as the new claim was based on a clause of the same agreement on which the suit had been founded and therefore could not be said to be foreign to the scope of the suit and as the prayer in the plaint was itself general and merely claimed damages. This <ORG> observed at p. 450 "Thus, all the allegations which are necessary for sustaining a claim for damages for breach of contract are already in the plaint. What is lacking is only the allegation that the plaintiffs are, in the alternative, entitled to claim damages for breach of contract by the defendants in not delivering the goods." Here again, the amendment allowed related to the form of relief which could be claimed on the basis of the facts alleged in the plaint and a clause of the document on the basis of which the suit was founded. The defect in the plaint was in giving a correct shape to the legal claim which was open to the plaintiff and the relief sought could be covered by the original relief which was couched in general language. It may further be mentioned that the amendment was considered just as the defendants themselves had cancelled the contract without strictly complying with the terms of the contract and the <ORG> felt that the justice of the case required that the amendment be granted. It would appear from the various cases discussed above that an amendment which would enable a plaintiff to make a claim which has become time-barred is as a rule to be refused and that the <ORG> would exercise its special power to allow such amendment only when there be special circumstances in the case. The nature of those special circumstances is to be gathered from those cases in which such an amendment was allowed. It appears to me that such special circumstances can be only when the amended claim was at least intended to be made by the plaintiff who had given in the plaint all the necessary facts to establish the claim but had due to clumsy drafting not been able to express himself clearly in the plaint and to couch his relief in the proper legal form. Such circumstances justify an amendment not really as a judicial concession to the plaintiff to save him from any possible loss but on the ground that the original claim in the plaint, though defectively stated, really amounted to the claim sought to be made by the amendment. Looked at in this way, the permission to amend does not in reality offend against the law of limitation and serves the interests of justice. At this stage I may properly refer to what was said by <ORG> in <CITATION> (1). In that case <ORG> had to consider whether the amendment allowed by the Judicial Commissioner, on appeal against the order of the District Judge, could be allowed in law or not. It observed at p. 216 :

"All rules of <ORG> are nothing but provisions intended to secure the proper administration of justice, and it is therefore essential that they should be made to serve and be subordinate to that purpose, so that full powers of amendment must be enjoyed and should always be liberally exercised, but none the less no power has yet been given to enable one distinct cause of action to be substituted for another, nor to change, by means of amendment, the subject matter of the suit.

It was held that the claim after amendment would be based on a different cause of action from that on which the original claim was based and therefore was not the real question in controversy between the parties in that suit. To allow the new claim would be to go outside the provisions of O.6, r. 17, C.P.C.

I may now consider whether the fact,% of the present case are such as would justify the amendment of the plaint sought by the plaintiff-appellant. The plaint in the present case gives no facts which are necessary to establish before the plaintiff can get a decree for Rs. 65,000 or which may justify a decree for accounting. The schedule attached to the tender, Annexure A, shows that different rates of payment were agreed upon different basic, as unit of calculation for different type of work. The plaint nowhere B indicates the amount of work done under each category and unless (1) L.R. 48 I.A. 214.

the plaintiff sets out the amount of work done he cannot certainly make out any claim for payment to him. It is said that the amount due to the plaintiff can be worked out on accounting on the basis of the bills tendered by him and to which the defendant had not raised any objection. No reference to such bills has been made in the plaint. Nothing is said in the plaint that the defendant had agreed to the bills tendered. To allow the amendment of the plaint would necessarily lead to a further request for the furnishing of these details about the work done and that would necessarily lead to the defendants being afforded an opportunity to put in a further written statement in connection with the fresh facts which would come on the record. In fact the amendment sought would necessitate practically a de navo trial on the question as to what amount the plaintiff is entitled from the defendant on account of the work done. The amended claim cannot be decreed on the facts on the record.

When the plaintiff cannot get the relief, sought to be added as a result of the amendment on the facts mentioned in the plaint originally, it is clear that the cause of action for a decree for Rs. 65,000 is different from the cause of action on which the suit for declaration was founded. For the suit as originally instituted the plaintiff had merely to prove the terms of the contract between the parties and to show that his interpretation of these terms was the correct one and that interpretation justified the declaration sought. A suit based on one cause of action cannot be allowed to be changed into a suit based on another cause of action.

It cannot be said that the plaintiff intended to sue the defendant for the recovery of Rs. 65,000 but failed to express himself clearly in the plaint and that therefore he be allowed to make the plaint precise and clear in that regard. The plaintiff knew that he could make a claim for money and in para 14 reserved the right under O. 2, r. 2 C.P.C. to omit to sue in respect of that amount that be found due upon interpretation placed by him on cl. 17 of the tender. This indicates that he did not intend to sue for the amount due to him and that he anticipated the possibility of later suing for the recovery of the amount deliberately not sued for in the suit. This circumstance also justifies the rejection of his prayer for amendment. The fact that <ORG>, by its judgment, allowed leave under O. 2, r. 2 of the Code to sue for the amount due subsequently is no circumstance to justify the amendment now sought. The omission of the dependent to press any objection against the prayer of the plaintiff for leave under O. 2, r. 2 is not such a special circumstance which should justify the amend-

<NAME>

ment sought. Leave under O. 2, r. 2 can be sought by the plaintiff and can be given by the <ORG> with respect to a plaintiff's not suing for certain relief arising out of the same cause of action as subr. (3) provides that a person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs. But if he omits, except with the leave of the <ORG>, to sue for all such reliefs, he shall not, afterwards, sue for any relief omitted. It has been shown above that the cause of action for the relief of declaration was different from the cause of action for the claim of money. The relief for the money due did not arise from the cause of action on which the relief for declaration was based.

I am therefore of opinion that <ORG> was right in not allowing the amendment sought by the plaintiff. The appeal therefore fails and I would dismiss it with costs.

ORDER The appeal is allowed in accordance with the majority judg- ment.


<NAME>, C.J.

1. This is a Civil Revision Petition brought by <NAME> against an order made by the Chief Judge of <ORG> in the following circumstances. On the 17th August 1926, the petitioner was nominated as a candidate for election as a divisional Councillor for the 29th Division of the City. It is not in dispute that the nomination paper was regular on the face of it but it was said that the petitioner was disqualified for these reasons. For some time past he had been an Honorary Presidency Magistrate of the city. On the 11th of August he tendered his resignation having in mind no doubt Section 52 (1) (b) (iv) of the Madras City Municipal Act of 1919 which disqualifies a Presidency Magistrate which has been held to include an Honorary Magistrate for election as a Councillor. That resignation reached Government on the 14th of August, and Government passed a G. O. in the following terms:

The Governor-in-Council withdraws the powers of Honorary Presidency Magistrate for the City of Madras conferred on the undermentioned gentleman (i.e., the petitioner) who has resigned his appointment.

2. On the 20th of August an objection was put forward by the respondents alleging that the withdrawal by the candidate from his appointment as Presidency Magistrate only took effect by virtue of the G. O. withdrawing his powers which was subsequent to his nomination and that, therefore, the nomination was bad. The objection was heard by the Commissioner acting under Rule 4 hereinafter to be referred to of the Rules made under the Act and a petition was put in for revision before the Chief Judge of <ORG> under the same rule. Both officers pronounced the nomination to be invalid and struck his name off the list of nominations in accordance with Rule 3. Against that decision of the Chief Judge this revision petition is brought.

3. Two main points have been argued before us: the first, which goes to the root of the whole matter, being that this <ORG> has no jurisdiction to entertain any such petition, on the ground that the Chief Judge of the Small Cause <ORG> is not a <ORG> subject to the machinery of the Code of Civil Procedure but a persona designata whose decison is not only not appealable but cannot be called up in revision. It has been held by a Full Bench of this <ORG>: <CITATION> A. I. R. 1924 Mad. 561 that the fact that his decision is not appealable so far from being a ground for holding that revision will not lie points decisively in the opposite direction. The appellant's contention as to the character in which the Chief Judge decided this matter depends partly upon a consideration of the relevant sections of the Municipal Act and the rules made thereunder, partly on the effect of certain authorities which were cited to us. Section 59 (2) (b) of the Act procides that the Governor-in-Council may make rules which may provide for the adjudication by the <ORG> of Small Causes of disputes...... arising out of elections.

4. In our opinion "elections" within the meaning of that section means completed elections which have resulted in the creation of a councillor, and does not cover disputes arising before such election; but though Rule 4 with which we are primarily concerned purports to be made under Section 59 we are of opinion that it is rendered valid by a generality of the powers conferred on the Governor-in-Council by Section 347 of the Act, and that the rule is not vitiated by its description as having been made under a section which is not applicable. Rule 4 gives power to a registered voter to make an objection to the list of candidates. Thereupon the Commissioner is to give his deeisicn on the objection in writing which decision shall be final unless......a petition for revision is put in before the Chief Judge.

and in such a case it is argued that the Chief Judge acting under Rule 4, is in effect <ORG> functioning through him alone, and that his decision is, therefore, subject to revision. It is said that this position is confirmed by Order 1 (a), Rule 6, of the rules of <ORG>, 1912. That rule runs as follows:

The Judges may sit apart or together at any time and any one or more of the Judges so sitting apart shall have all the judicial authority which is given to the Court by the principal Act or any other enactment for the time being in force, except in cases in which by such Act or other enactment or any rule or order having the force of law such powers are exercisable only by two or more Judges of the Court or only by the Chief Judge.

It shall be competent to the Chief Judge to direct that any application, petition, or suit shall be heard by a Bench consisting of two or more Judges of the <ORG>.

5. The argument is that if by any Act or Rule a matter shall be referred to the Chief Judge alone, he is nevertheless acting as the <ORG>. We are of opinion that this rule only applies to cases where the reference made by the Act or rule in question is clearly to the <ORG>, though functioning through the Chief Judge and that it leaves untouched the real question which we have to decide; namely, whether this power was conferred by Rule 4 made under the Municipal Act upon the Chief Judge as the <ORG> functioning through himself or upon him as persona designata. Looking at the Municipal Act, it is clear that the draftsman of that Act was quite alive to the distinction between the <ORG> of Small Causes (vide Section 59) and the Chief Judge of that <ORG> (vide Section 54). It is difficult to resist the inference that when the Chief Judge is referred to in the Act he was meant to Act as a persona designata and not as representing the <ORG>. The <ORG> decision in <CITATION> A. I. R. 1924 Mad. 561 was relied upon for the proposition that whenever jurisdiction is vested in the Judge of a <ORG> it must be deemed to be vested in that Judge as representing that <ORG>. In that case a vesting of jurisdiction in a District Judge was held to be equivalent to vesting the jurisdiction in the District <ORG>, thereby subjecting his decision to the revisional powers of the High <ORG>.

6. It was pointed out in a judgment of a Full Bench in <ORG> <ORG> v. M. A. Shakur A. I. R. 1926 Rang. 25, reviewing all the authorities with which we respectfully agree, that though that reasoning may apply to a <ORG> which by its constitution has only one Judge it cannot govern a case where jurisdiction is conferred on a single member of a <ORG> consisting of three Judges. It is obvious that words might easily have been used to indicate that while jurisdiction was conferred on the Small Cause <ORG>, that <ORG> should only function through its Chief Judge. We think that that distinction drawn by <ORG> was correctly drawn and that nothing in the decision of <ORG> in <CITATION> A. I. R. 1924 Mad. 561 precludes us from holding, as we hold, that under the Municipal Act and the Rules the Chief Judge, for this purpose is persona designate and not merely a selected member of the <ORG> chosen to represent it. That being so, we have no jurisdiction to entertain this revision petition, and it must be dismissed with costs.

7. But we think it is desirable that we should say a few words on the second point which was elaborately argued before us. That point was that the Commissioner and the Chief Judge were confined to questions of form, and that it was entirely outside the ambit of their jurisdiction to enquire into grounds of disqualification which did not appear on the face of the nomination paper and would involve an enquiry into facts. The position of a returning officer in England is analogous generally to that of the Commissioner under the Madras Municipal Act, and it has been decided by a series of decisions in England, of which we need only cite <NAME> v. <ORG> [1888] 13 A. C. 241 and <NAME> v. <NAME> [1904] 1 K. B. 74 that the returning officer is only to decide objections arising on the face of the nomination paper itself and not to go into questions relating to the personal qualifications of the candidate. Under Section 52 of the Madras Act, among the disqualifications enumerated are that the person concerned is of unsound mind, or is interested in a contract with the <ORG>. If the position be right that such allegations are to be investigated not after election but at the stage of candidature, the Commissioner might be faced with a series of elaborate enquiries relating to persons who might never reach the stage of election or appointment as a councillor, might indeed receive no votes at all. It is said that nevertheless the effect of the Madras Act is to throw the burden of conducting such enquiries upon the Commissioner with regard to every candidate at the stage of nomination. In view of our decision on the main point, it is unnecessary to pronounce upon this question. But we think it desirable to point out the doubts that have been raised as to the effect of the Madras Act and to suggest that it should be amended in a manner that shall make it clear whether it is intended to invest the Commissioner with the wide powers suggested by the respondents or to confine him to the purely ministerial function with which alone he would he clothed if the principle of the English cases is to be applied. If the latter view is to prevail, there seems to be no good reason for granting an appeal to the Chief Judge or indeed to any other tribunal.


JUDGMENT <NAME>, J.

1. This is an appeal from a judgment of <ORG> at Calcutta in a reference under Section 66(1) of the Indian Income-tax Act, 1922.

2. The facts which are material for the purpose of deciding this appeal, may be briefly stated as follows :-

The respondent, Messrs. Isthmian Steamship Lines (hereinafter referred to as "the company") is a company incorporated in the United States of America and owns steamships which visit India. The company's Indian profits which are computed on the basis of "day on round voyage" are assessed to tax under the Indian Income-tax Act as a "company" through its agents, <ORG> In the course of the assessment for the years 1941-42, 1942-43 and 1943-44, the company claimed that its unabsorbed depreciation at the end of 1938-39 should be deemed to be a part of the depreciation allowance for 1939-40 and therefore such unabsorbed depreciation should be allowed to be further carried forward under Section 10(2) (vi) of the Income-tax Act . This claim was negatived by the Income-tax Officer, the Appellate Assistant Commissioner of Income-tax and <ORG>. The <ORG> however, at the instance of the company, referred the following question to <ORG> for its opinion :-

"Whether on the facts and in the circumstances of this case the <ORG> was right in holding that the unabsorbed depreciation at the end of the year 1938-39, which was not given effect to in the subsequent years, could not be treated as part of the allowable depreciation for the relevant assessment years which are assessment years 1941-42, 1942-43 and 1943-44."

3. <ORG> answered the question in favour of the company, and gave a certificate to the Commissioner of Income-tax under Section 66A(2) of the Act to appeal to this Court and hence this appeal.

4. Before stating the precise point which arises for determination in this appeal, it will be convenient to set out Section 10(2) (vi) of the Income-tax Act , both as it originally stood and as it now stands after being amended in 1939, in parallel columns.

SECTION 10(2)(vi) A--BEFORE AMENDMENT B--AFTER AMENDMENT IN 1939 "Such profits or gains shall be computed after making the following allowances namely:

in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed :

Provided that--

(a) the prescribed particulars have been duly furnished;

(b) where full effect cannot be given to any such allowance in any year owing to there being no profits or gains chargeable for the year, or owing to the profits or gains chargeable being less than the allowance, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following year and deemed to be the allowance for that year, and so on for succeeding years; and

(c) the aggregate of all such allowances made under this Act or any Act repealed hereby or under the Indian Income-tax Act , 1886, shall, in no case, exceed the original cost to the assessee of the buildings, machinnery, plant or furniture as the case may be."

"Such profits or gains ......................................

equivalent, (where the assets are ships other than ships ordinarily plying on inland waters) to such percentage...prescribed (and in any other case, to percentage on the written down value thereof as may in any case or class of cases be prescribed): --

Provided that--

(a) No change.

(b) where full.........any year, not being a year which ended prior to the 1st day of April, 1939, owing.................................

for succeeding years;

and

(c) No change.

[The underlined (here italicized) words have been added by the Amending Act of 1939] [The underlined words have been added by the Amending Act of 1939.]

5. The <ORG> as well as <ORG> have rightly pointed out that the material changes introduced in the amended section are :

(1) that before the amendment of 1939, depreciation was based on the original coast, whereas it is now based on the written down value for all assets except ocean-going steamers for which the old basis of original cost has been retained; and (2) that it is now provided that the unabsorbed depreciation at the end of a year, which ended prior to the 1st day of April, 1939, shall not be carried forward.

6. It is to be noticed that the amendment was to take effect from the 1st April, 1940.

7. The decision of this appeal largely turns upon the effect of the following words :-

"Where full effect cannot be given to any such allowance in any year, not being a year which ended prior to the 1st day of April, 1939, owing to there being no profits or gins chargeable for that year............. the allowance or part of the allowance to which effect has not been given..... shall be added to the amount of the allowance for depreciation for the following year and deemed to be part of that allowance..... and so on for succeeding years."

8. It may be observed that as a result of this provision, the unabsorbed depreciation for a particular year becomes, by legal fiction, part of the allowance for depreciation for the succeeding year. The material question to be decided in this case is whether the company an be allowed to carry forward the unabsorbed depreciation remaining at the end of 1938-39 and treat it as part of the depreciation for 1939-40. If so, it would necessarily be a part of the depreciation for 1940-41. The Appellate Assistant Commissioner of Income-tax answered the question in the negative and gave two reasons for not giving effect to the contention of the assessee. Firstly, he pointed out that in the course of the assessment for the year 1940-41, the question whether the unabsorbed depreciation remaining at the end of the year 1938-39 could or could not be carried forward and allowed in subsequent years had come up for consideration before the Income-tax Officer but he had decided that it could not be so carried forward. Nevertheless, the company did not appeal against the order and hence the matter could not be reopened in subsequent assessments. Secondly, by reason of the amendment of the section, the respondent-company was not entitled to carry forward the unabsorbed depreciation at the end of 1938-39.

9. <ORG> did not accept the first ground but based its decision only on the second ground. In this appeal, we are not concerned with the first ground, because, as has been pointed out by the learned Chief Justice in the order granting leave to appeal, the Income-tax authorities appear to have accepted the view of the <ORG> on the first point since they did not ask the <ORG> to state a case giving rise to the contention which had found favour with the Appellate Assistant Commissioner but had been rejected by the <ORG>.

10. The only question with which we are thus concerned in whether or not the company was entitled to carry forward the unabsorbed depreciation at the end of 1938-39. In our opinion, this question has been rightly answered by <ORG> in favour of the assessee.

11. It will be observed that we are concerned with two datum lines : (1) the 1st April, 1940, when the Act came into force, and (2) the 1st of April, 1939, which is the date mentioned in the amended proviso. The first question to be answered is whether these dates are to apply to the accounting year or the year of assessment. They must be held to apply to the assessment year, because in income-tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied. The first datum line therefore affected only the assessment year of 1940-41, because the amendment did not come into force till the 1st of April, 1940. That means that the old law applied to every assessment year up to and including the assessment year 1939- 40.

12. In the assessment year 1938-39, the assessee showed a certain unabsorbed depreciation in its accounts year for the calendar year 1937, that being the assessee's accounting year for the assessment year 1938-39. Under the unamended section, he was permitted to carry that amount forward into the accounting year 1938, add it to the depreciation for 1938 and treat the total amount as the "allowance" for the assessment year 1939-40.

13. The Income-tax Officer refused to allow that amount, but, for the reasons already stated, we have to disregard that fact and therefore, for the purpose of the present reference, must treat the unabsorbed depreciation which was carried forward from the assessment year 1938-39 into the accounts of the assessment year 1939-40 as the unabsorbed depreciation in the assessment year 1939-40 and treat it as unabsorbed for the reason that the profits in that year were not sufficient to absorb this sum, that being the position which would have resulted had the Income-tax Officer not disallowed the sum. In other words, in answering the reference, we have to accept the position which the accounts would have revealed had the Income-tax Officer not wrongly refused to allow the unabsorbed depreciation of 1938-39 to be carried forward to 1939-40. It follows from this, as the learned Chief Justice has pointed in the judgment under appeal, that according to the mandatory provision of the old section, the allowance for 1939-40 is not only the percentage allowed for that year but also the unabsorbed depreciation of 1938-39.

14. Now we come to the assessment year 1940-41. The amended section applied here and the question is whether under the new law this figure could be carried forward into 1940-41. The first question which arises is whether the assessment year 1939-40 is an assessment year which ended prior to the 1st of April, 1939. It is evident that it is not, because it ended on the 31st of March, 1940. Therefore, it is not one of the excluded years. As it is not, and as, on the facts set out above, what must be regarded as the unabsorbed depreciation for the year 1939-40 could not absorbed for the reason given in the amended section, it follows that it can be carried forward into the accounts of the assessment year 1940-41 and from there on to the accounts of the succeeding assessment year, if it is not absorbed meanwhile for the reason given in the proviso.

15. As has been pointed out already, the section provides what in order to enable the unabsorbed depreciation to be carried forward to the succeeding year, it must be shown that full effect was not given in the previous year, owing to there being no profits or gains chargeable for the year, or, owing to the profits or gains chargeable beings less than the allowance. It was argued on behalf of the appellant that in the present case full effect could not be given to the unabsorbed depreciation not for the reasons stated in the section but on account of the failure of the assessee to take the matter in appeal against the assessment for 1940-41. In our opinion, this view is based on a misreading of the section. The words used in the section are :- "where full effect cannot be given", and not "where full effect has not been given." It is not denied that the profits or against were less than the depreciation allowance, and that being to the requirements of the section were satisfied.

16. In our opinion, the view taken by <ORG> on the limited question referred to it is correct, and a we accordingly dismiss this appeal with <ORG>.

17. Appeal dismissed.


JUDGMENT <NAME> C.J.

1. The question submitted for the opinion of this Bench, as stated by Mr. Justice <NAME>, is as follows:

In this case a Hindu widow inherited the property of her husband, taking therein the estate of a Hindu widow. She afterwards married a second husband, not a Hindu, in the form provided by Act III of 1872, having first made a declaration, as required by Section 10 of the Act, that she was not a Hindu. The question is whether, by that marriage, she forfeited her interest in her first husband's estate in favour of the next heir.

2. I think that the decision in <NAME> v. <NAME> 3 W.R. 306 is wrong, and I agree with the learned Judges who referred the question that it must be answered in the affirmative. It is, I think, concluded by Section 2 of the Hindu Widow's Marriage Act , XV of 1856, and I do not think it necessary to express any opinion on the other points which have been mentioned in argument and which are discussed in the judgment of the Judges who constituted the referring Bench.

3. The first two sections of the Act are as follow:

1. "No marriage contracted between Hindus shall be invalid, and the issue of no such marriage shall be illegitimate, by reason of the woman having been previously married or betrothed to another person who was dead at the time of such marriage, any custom and any interpretation of Hindu law to the contrary notwithstanding."

2. "All rights and interests which any widow may have in her deceased husband's property by way of maintenance or by inheritance to her husband or to his lineal successors, or by virtue of any will or testamentary disposition conferring upon her, without express permission to re-marry, only a limited interest in such property, with no power of alienating the same, shall, upon her re-marriage, cease and determine as if she had then died; and the next heirs of her deceased husband or other persons entitled to the property on her death shall thereupon succeed to the same."

4. Section 1 no doubt relates to marriages between Hindus, but Section 2 includes all widows who are within the scope of the Act, that is to say, all persons who being Hindus become widows, and it must follow from this that if any such widow marries, she is deprived by the section of the estate which she inherited from her Hindu husband. The words are clear--"All rights which any widow may have in her deceased husband's property by inheritance to her husband;" the estate which a Hindu widow takes upon her husband's death in his property is an estate which she takes by inheritance to him, and such estate is expressly determined by the section.

5. My answer to the question is, that by marriage the widow forfeited her estate in her first husband's property in favour of the next heir.

6. The result will be that the appeal must be allowed and the decree of <ORG> reinstated with costs of the three hearings in this <ORG> and the costs of the Lower Appellate <ORG>.

<NAME>, <NAME>

7. I agree. I think it unnecessary to say more, as I expressed my views in making the reference.

<NAME>, <NAME>

8. I agree.

<NAME>, <NAME>

9. I agree in the answer which the Chief Justice has given to the question referred.

<ORG>, J.

10. The inclination of my own opinion has been always against the view expressed by my two learned colleagues who joined with me in referring this case to a Full Bench, and I still have doubts which the further argument has failed entirely to remove.

11. Act XV of 1856 is entitled an Act to remove all legal obstacles to the marriage of Hindu widows, and it provides for such marriages according to the rites and ceremonies current amongst Hindus. The widow in the case before us ceased to be a Hindu by a public declaration abjuring that religion, and her re-marriage was under Act III of 1872, entitled "an Act to provide a form of marriage in certain cases."

12. That Act was passed by the <ORG> expressly for cases of this description. If the widow had merely renounced the Hindu religion, admittedly she would not have ceased to hold her deceased husband's estate. She could not, after her conversion to another religion, confer on him what are known in Hindu Law as spiritual benefits, but it is said she would still be regarded as a part of her husband's body, and as such in possession of his wordly properties. It has been contended that her title is only during her widowhood, durante viduitate, in consequence of the principle under which she is recognized as proprietress after her husband's death. It is difficult to understand how that legal fiction can be maintained if after her husband's death the widow were to become a Muhammadan or Christian. The Statute, however (Act XXI of 1850), has provided that a change of religion shall not operate as a forfeiture, and according to the opinions, in which I am unable to agree, a re-marriage not as a Hindu would have that effect. We have also the anomaly that, although she may change her religion and cease to be a Hindu, so long as she remains a widow, she continues as a Hindu to hold her husband's estate that she does not forfeit this by leading a notoriously unchaste life see <CITATION> . 5 Cal. 776 but that if she re-marries she forfeits, because she ceases to be a widow, and because the conditions under which she retained her husband's estate as part of his body no longer exist. I have the misfortune of being unable to agree that Section 2 , Act XV of 1856, is of general application to all Hindu widows remarrying, for I read it as being limited only to the cases provided for by that Act, viz., Hindu widows re-marrying as Hindus under Hindu law as provided by that Act. Having still these doubts regarding the views expressed by my learned colleagues, I regret to be unable to concur in the judgment delivered. A.A.C.


<NAME>, J.

1. At the instance of the assessee in T.C. Nos. 114 to 119 of 1979, under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), he following question of law in respect of the assessment years 1969-70 to 1974-75, has been referred for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, <ORG> was right in holding that the share income of the trust should be assessed in the hands of the assessee ?"

2. The same question for the same assessment years has been referred under section 256(1) of the Act at the instance of the assessee in T.C. Nos. 108 to 112 of 1979.

3. The assessee in T.C. Nos. 114 to 119 of 1979, one <NAME> created a trust by name "<ORG>" by means of a deed dated October 14, 1968. On the same day, his wife, Smt. <NAME>, created another trust by name "<ORG>". In the first trust, the assessee in T.C. Nos. 114 to 119 of 1979 had a 5/34ths share and in the second a 10/75 ths share. The assessee in T.C. Nos. 108 to 112 of 1979, <NAME>, had a 10/34ths and 15/75ths share, respectively, in the two trusts. The first trust was created for the benefit of the prospective wife of the minor son of <NAME>, viz., <NAME>. Likewise, the second trust was created for the benefit of the would be wife of <NAME>, another minor son of <NAME>. The provision was made in the first trust deed that if <NAME> did not get married before attaining the age of 30, or died without marrying, the corpus of the trust as well as the accretions should be conveyed to the other son, <NAME>. In the second trust deed also, a similar provision was made thif <NAME> did not get married before attaining the age of 30 or died without marrying, the amounts set apart under the trust with the accumulated income should be conveyed to the other son, <NAME>. In the course of the assessment proceedings for the years in question, the Income-tax Officer assessed the share income of the assessees from the trust funds in their hands on the ground that the trusts depended upon an uncertain event, viz., the marriage of <NAME> and <NAME> and that the beneficiaries were also uncertain. On appeal by the assessees, the Appellate Assistant Commissioner, purporting to follow the decision of the <ORG> in I.T.A. Nos. 261 to 263/Mds/1974-75 dated April 28, 1976 (a reference from which was dealt with and answered by this court in the decision reported in <CITATION> ), held that the trusts were valid and that the share income from both the trusts cannot be assessed in the hands of the assessees. On further appeals before the <ORG>, at the instance of the <ORG>, it was contended on behalf of the <ORG> on the strength of another decision of the <ORG> in I.T.A. Nos. 1617, 1618 and 2233/Mads/1976-77 dated November 19, 1977, that the share income from the two trusts should be assessed in the hands of the assessee. The assessees, however, maintained that the share income from the trusts could not be assessed in their hands. Referring to the clauses in the trust deeds, the <ORG> took the view that in both the trust deeds, there is no provision as to what should happen in the event of <NAME> and <NAME> not being in existence at a time when they may become entitled to take the corpus and the accretions and that the trusts would, therefore, fail and under section 83 of the Indian Trusts Act, 1882, there would be a resulting trust in favour of the author of the trust and his wife, in which case, there could not be a transfer of the amounts set apart under the two trust deeds and the share income from the trust funds necessarily had to be assessed in the hands of the assessees.

4. Learned counsel for the assessees contended that the <ORG> fell into an error in applying section 83 of the Indian Trusts Act and that the share income of the assessees from the trust cannot be assessed in their hands, as it cannot be postulated that the trust is incapable of execution, especially when some of the events contemplated under the provisions of the respective trust deeds have not happened during the relevant assessment years is question. Learned counsel also submitted that <NAME> and <NAME> got married and there was thus no possibility of any resulting trust at all attracting the application of section 83 of the Indian Trusts Act. Strong reliance was also placed by learned counsel upon the decision in <CITATION> . On the other hand, learned counsel for the <ORG> contended that the trusts in question would fail, in the event of <NAME> and <NAME> not being in existence at that point of time contemplated under the relevant clauses of the trust deeds and that it would have the effect of creating a resulting trust in favour of the assessee and his wife as to justify the assessment of the share income of the assessees in the trust funds in their hands. Reference was also made in this connection to the decision reported as <CITATION> .

5. We may now refer to the relevant clauses, viz., clauses (5) and (6) in the deed creating "Suresh Trust" dated October 14, 1968, executed by <NAME>. They run as follow :

"(5) As soon as he said <NAME> gets married, the capital amount together with all its accretions accrued and earned up to that date including the balance of income that had arisen thereon shall be conveyed by the trustees to the said wife of <NAME> absolutely, provided she is of 21 years of age, otherwise the same shall be conveyed to her on her attaining the age of 21 years.

(6) If <NAME> does not get married before attaining the age of 30, as contemplated in the earlier clauses or dies without marrying, the trustees shall convey the capital amounts with all he income accumulated therefrom to my son, <NAME>, who shall be entitled to hold and enjoy the same absolutely."

6. There is no dispute that in the trust deed executed by Smt. <NAME> on October 14, 1968, creating "<NAME> Trust", there is a similar provision. The Income-tax Officer was of the view that the trusts so created are invalid for uncertainty and that the beneficiaries under the trusts are also uncertain and unknown and on that reasoning, the share income of the assessees in the trust funds was assessed in their hands. However, the Appellate Assistant Commissioner took a contra view on the strength of the decision of the <ORG> in Second ITO v. <NAME> (I.T.A. Nos. 261 to 263/Mad/1974-75). We may point out that the decision of the <ORG> in I.T.A. Nos. 261 to 263/Mds/1974-75 was the subject-matter of a reference in T.C. Nos. 1019, 1020 and 1045 of 1977 and this court had occasion to consider the validity of the trust in those references. The decision thereon is reported in <CITATION> relied on by learned counsel for the assessees. In that case also, two trusts were created by the assessee and his wife for the benefit of the prospective wives of their two minor sons and cash gifts were made to the two trusts on various dates by the assessee and his wife. The Income-tax Officer subjected to tax the proportionate share income of the trust in the hands of the assessee on the ground that the trusts were invalid, but the Appellate Assistant Commissioner, on appeal, held that the trusts in favour of the prospective daughters-in-law were valid. The <ORG> took the view that the trusts were valid and, consequently, the share income of the assessee in the trusts could not be included in the income of the assessee While dealing with the reference in <CITATION> , it was pointed out that to constitute a valid trust, the author of the trust must indicate with reasonable certainty his intention to create a trust, the purpose of the trust, the beneficiary, the trust property and also the transfer of the property to that trust and that though it is not possible to say at the stage of the execution of the trust as to who is the actual person who is to be benefited by the trust, so long as the trust deed gives the description of the person to be benefited, the beneficiary cannot be said to be uncertain or that the trust would be otherwise invalid. It was also laid down that the initial object of the trust is to benefit the would-be daughter-in-law through the second son and if that failed for the reason that he did not marry during his lifetime, the other beneficiary would be the would-be daughter-in-law through the first son and only if those clauses failed, hen, the question would arise whether the ultimate object was either vague or indefinite and that with reference to the beneficiaries, who are either named or can be ascertained, the trust cannot be said to be invalid. In this case also, under clause 6 of the deed of trust, referred to earlier, provision is made to the effect that if <NAME> did not get married before attaining the age of 30 or died without marrying, then, he trustees were directed to convey the capital amount as well as the accretions to the other son, Sri <NAME>. Similarly, in the other trust deed relating to "<NAME> Trust", executed by the wife of the assessee in T.C. Nos. 114 to 119 of 1979, a similar provision has been made to the effect that if <NAME> did not get married before attaining the age of 30 or died without marrying, the amounts set apart together with the accretions should be conveyed to the other son, <NAME>. It is seen that in clause 5 of the respective trust deeds, the beneficiary has been indicated with certainty, though the identity could get fixed only on the marriage of <NAME> and <NAME> taking place, in which case, their respective wives would be entitled to the trust funds with the accretions. The beneficiaries under clause 5 of the trust deeds having been indicated with reasonable certainty, the trusts cannot be held to fail for want of certainty about the beneficiary. Clause 6 of the respective trust deeds merely provided for a contingency which may or may not arise and in the events that have happened, could not have arisen at all, as it was stated at the bar that <NAME> and <NAME> go married and this has not been disputed. There is, therefore, no scope whatever for clause 6 of the respective trust deeds coming into force. We are of the view that the <ORG> was clearly in error in applying section 83 of the Indian Trusts Act to the trusts in question. Section 83 runs as follow :

"Where a trust is incapable of being executed, or where the trust is completely executed with out exhausting the trust property, the trustee, in the absence of a direction to the contrary, must hold the trust property, or so much thereof a is unexhausted, for the benefit of the author of he trust or his legal representative."

7. In this case, the trusts cannot be said to have been executed without exhausting the trust property. What remains to be considered is, whether the trusts are incapable of being executed. We are unable to agree that the trusts are incapable of execution. It may be that provision has not been made in the deeds of trust as to what should happen in a situation that may arise when both <NAME> and <NAME> are not in existence. However, during the years of account relevant to the assessment years in question, both <NAME> and <NAME> had been very much in existence and there was thus no possibility of a resulting trust in favour of the assessee in T.C. Nos. 114 to 119 of 1979 and his wife in the relevant years. Considering the objects of the trusts and also the fact that the sons of the assessee in T.C. Nos. 114 to 119 of 1979, viz., <NAME> and <NAME>, had been in existence during the period in question and had also married, as we were informed at the bar, there is no scope for applying section 83 of the Indian Trusts Act at all on the facts and the circumstances of the case.

8. We now refer to the decision in <ORG> (P.) v. <ORG> , relied on by the <ORG>. By a trust deed executed by the assessee-company, a provision was made for the payment of a pension to its then managing director for the term of his life, should he live up to the age of 55 and then retire. Under clause 2 of the deed of trust, the trustees held a sum of Pounds 8,208-19-0, which was paid to them and they held the rupee equivalent of Pounds 326-14-0 which was the annual payment, which the assessee-company undertook to make upon a trust and spend the same and the income, if any, in taking out a deferred annuity policy with an insurance society in the name of the trustees on the life of the managing director. The policy was to cover the annuity of Pounds 720 per annum payable to the managing director for life from the date when he would attain he age of 55 years. Under clause 3 of the trust deed, it was contemplated that, should the managing director and his wife be alive on the date when the managing director retired, annuity would be payable to hem for their joint lives and thereafter to the survivor of the two. A further provision was also made that if the managing director should die before reaching the age of 55, but his wife should be alive, she would get an increased annuity. Nothing was made available to either the managing director or his wife, if both died before the date on which the managing director would reach the age of 55. Likewise, here was also no provision made in the deed that if the wife of the managing director should die before he reached the age of 55, in which event, no annuity would be payable. The assessee-company claimed that the payments thus made constituted expenditure within the meaning of section 10(2)(xv) of the Indian Income-tax Act, 1922. It was held that if the managing director and his wife, both died before September 20, 1955, when the managing director was due to attain the age of 55, the trust would become incapable of being executed and the trust funds remained unexhausted and as there was no direction in the trust deed that in such a situation, monies paid to the trustees would follow any course other than that indicated in section 83 of the Indian Trusts Act, the trustees would hold the monies for the benefit of the assessee and, therefore, it could not be said that by creating a trust in such terms and putting the trustees in possession of the funds in accordance with its provisions, the assessee had wholly parted with its interest in the amounts concerned. Thus, the controversy in that case, though it incidentally involved the provisions of the deed of trust, really centred round claim for expenditure, as having been incurred within the meaning of section 10(2)(xv) of the Indian Income-tax, Act 1922, and was not in any manner exclusively concerned with the question of the validity of the trust as such. While examining the claim of the company under section 10(2)(xv) of the Indian Income-tax Act, 1922, as an expenditure, the court took into account the clauses in he trust deed and found that the amount spent would not really be an expenditure, having regard to the provisions in the trust deed. That decision cannot, therefore, be pressed into service by the <ORG> to invalidate he truss in this case. We are, therefore, of the view that the <ORG> was wrong in applying section 83 of the Indian Trusts Act to hold that there was a resulting trust in favour of the husband and wife and that the share income from the trust funds has to be assessed in the hands of the assessees. We, therefore, answer the question referred to us in the negative and in favour of the assessees. There will be, however, no order as to costs in these references.