PETITIONER: <NAME> & <NAME>. Vs. RESPONDENT: UNION OF INDIA & ORS. DATE OF JUDGMENT: 25/04/2000 BENCH: <NAME>, S.R.Babu, <NAME> JUDGMENT:

<NAME> J. :

Civil Appeal No. 5086 of 1994 This appeal is directed against the order made by <ORG>, <ORG> [hereinafter referred to as `the <ORG>'] on November 5, 1993 in O.A. No. 286/92. Respondents Nos. 3 and 4 filed an application O.A. No. 286/92 before the <ORG>. The pleadings raised in the application, briefly stated, are as under.

The respondents were directly recruited through <ORG> as Assistant Executive Engineers (Electrical) Class I in <ORG>, while respondents Nos. 3 to 5 before the <ORG> were recruited as Assistant Engineers (Electrical) Class II and both the applicants and the other respondents were subsequently promoted on ad hoc basis and thereafter they were regularised as Executive Engineers (Electrical). The two respondents were aggrieved by the letter sent on February 6, 1992 which was accompanied by a seniority list of <ORG> whereby the ad hoc services rendered by respondents 3 to 5 before the <ORG> as Executive Engineers from May 25, 1977, February 21, 1982 and April 16, 1982 respectively being treated as regular services and counted for the purpose of seniority in that grade and proposed to re-fix that position in the final seniority list of Executive Engineers as on April 1, 1985 and thus the applicants before the <ORG> being pushed down in the seniority list.

There are two channels of recruitment under the relevant recruitment rules and promotions to the post of Executive Engineer are to be made from two categories, namely, Assistant Executive Engineer Class I with five years regular service on seniority-cum-fitness basis (non-selection) in the 2/3rd quota and the other being Assistant Engineer Class II with eight years regular service on seniority-cum-merit basis (selection method) in the 1/3rd quota selection being made by <ORG> with a member of the <ORG> as Chairman.

The stand taken by the applicants before the <ORG> is that while regular promotions to the grade of Executive Engineers from the Assistant Executive Engineers cadre was made regularly from 1976. However, the seniority in respect of Assistant Engineers Class II was not finalised till November 1987 in view of certain disputes inter se the promotees in the cadre. The <ORG> thereafter selected from the category of Assistant Engineers Class II in a meeting held only in May 1988 when the <ORG> selected the appellants for the vacancies belonging to their quota for the years 1977 to 1982. The appellants had thus worked for long period varying from 6 to 11 years in the post of Executive Engineer on ad hoc before the <ORG> could meet for finalising regular promotion. The revision of the seniority list which was challenged before the <ORG>, it was submitted, was only a corrective action though belated to render justice to the affected persons and is in compliance of the judgment of the Madras Bench of the <ORG> dated October 12, 1990 in O.A. No. 113/89 directing disposal of the representation regarding the seniority of one of the appellants. It was further made clear in the said direction that it has to be decided after taking into account the decision of the Principal Bench of the <ORG> in <NAME> case in O.A. No. 978/87 and of this <ORG> in <CITATION> ., 1990 (2) SCC 715. After noticing several decisions of this <ORG> and of the <ORG>, it was held that under the statutory recruitment rules promotions to the post of Executive Engineer were to be made from among the Assistant Engineers Class II with eight years regular service on seniority-cum-merit by selection method in the 1/3rd quota and admittedly the appellants were promoted on ad hoc basis as Executive Engineers on different dates mentioned earlier. The relevant appointments were purely temporary and on ad hoc basis and were for a limited duration and it was also made clear that services on ad hoc basis will not confer any claim in the matter of seniority, confirmation, etc. Thus it was noticed that the ad hoc promotions were made in administrative exigencies since seniority lists of Assistant Engineers could not be finalised in view of pending litigation and, therefore, the <ORG> meeting for regular selection could not be arranged. Non- selection for a selection post can hardly be considered to be a minor procedural deficiency and, therefore, the <ORG> concluded that selection was not by a competent <ORG> and the ad hoc promotion was itself for a limited time and, therefore, does not fulfil the conditions mentioned in the decision in <CITATION> .., 1993 (3) SCC 371. The <ORG> is of the view that ad hoc service to count for seniority must be rendered continuously till the date of regularisation for 15 years or more and, therefore, it held that the appellants could not take advantage of the ad hoc promotions made purely as a stop gap arrangement and it is only in special circumstances such ad hoc service could be counted for purpose of seniority as noticed in some of the decisions of this <ORG>. Consequently, the application filed by the contesting respondents was allowed and it was declared that the appellants were not entitled to count their ad hoc service in the post of Executive Engineers (Electrical) for seniority, confirmation, promotion, etc. It is contended before us that regular promotions from Executive Engineers, which is a feeder cadre, to the grade of Superintending Engineer could not take place immediately and four vacancies of Superintending Engineers had arisen by the time the meeting of <ORG> was held on October 17, 1984. Strong reliance was placed on the counter affidavit filed before the <ORG> which is to the following effect :- "The first two points after Point No. 7 of seniority list dated 10-4- 85 thus, go to the officers promoted from the rank of AEE(E) and SL No. 10 goes to the officer promoted from the rank of AE(E). A point was left blank in seniority list to accommodate an officer promoted from Group B. This was erroneously shown as Sl No. 9 instead of SL No. 10. This mistake has later on been rectified. The applicant cannot presume that in the selection process, he will find the top most position on the panel. The <ORG> chaired by a Member of <ORG> will draw a select panel according to statutory Recruitment Rules."

Appellant No. 1 claimed that he was assigned top most position by the <ORG> held on May 13, 1988 but the provisional seniority list dated January 12, 1989 did not reflect his position and in those circumstances he sought permission to withdraw the pending application with liberty to file a fresh application. So far as appellant No. 2 is concerned, he filed an O.A. before the Madras Bench of the <ORG> claiming seniority from the year 1982 when he was promoted on ad hoc basis to the grade of Executive Engineer (Electrical). The <ORG> rejected the contention raised by the <ORG> that he is deemed to be on regular basis only with effect from May 13, 1988 when the <ORG> met. Since the seniority list dated January 12, 1989 was only provisional the <ORG> directed appellant No. 2 to make another representation to the <ORG> which the <ORG> was directed to dispose of in accordance with law. Pursuant to this direction given by the Madras Bench of the <ORG> it is stated that the seniority had to be re-fixed and, therefore, it is contended that inasmuch as they had rendered service for a long period at any rate in higher cadre and their promotions having been subsequently regularised ought to be treated as giving them seniority in the matter.

The stand taken by the contesting respondents is that under the relevant rules the <ORG> should be headed by a member of <ORG> which was not done in the case of the appellants at the time of their ad hoc appointment and appellant No. 1 was duly considered in 1978 and was not found suitable and for that reason his name did not figure in the selection list and there was no additional quota vacancy in the grade of Executive Engineer (Electrical) meant for group B cadre officers upto 1985. As a matter of fact, <NAME>, who is admittedly senior to both the appellants, was only regularised on June 28, 1985 with effect from April 1, 1975 as he came under the purview of clause 4C of amended rules published on September 22, 1984. Since the appellants herein were not covered under clause 4C of amended rules 1984 and also additional quota was not available as such, they could not be regularised prior to 1985. The <ORG> has taken note of the fact that the ad hoc promotions given to the appellants were not de hors the rules. It was contended that there were four vacancies against Assistant Engineers' quota but <ORG> had informed the <ORG> to fill two vacancies from direct recruitment and the <ORG> accordingly selected <NAME> and <NAME> though <NAME> and the first appellant were also eligible and vacancies were existing they were not regularly promoted by wrong interpretation of rules and separately reserving two vacancies for promotee cadre. Such provision is not existing in recruitment rules and the petitioners are the initial constituents in Assistant Engineer (Electrical) grade and are much above promotees in the Assistant Engineer (Electrical) seniority list. There was considerable delay in the introduction of initial constitution clause and the same was published only in 1984 after a gap of 9 years and came into force with effect from April 5, 1975. <ORG> was thereafter convened by the <ORG> on August 16, 1985 and appellants and officers, including <NAME> and several other officers, were promoted on the dates indicating against their names. Appellant No. 1 and <NAME> were not included as initial constituents since they neither completed eight years of service nor on ad hoc before April 5, 1975. Their promotions fall under maintenance clause 4A and 4B of amended rules 1984. They, however, formed the initial constituents in Assistant Engineer (Electrical) or Assistant Executive Engineer (Electrical) cadre separately. On that basis it was contended that the seniority list published is in order.

<ORG> has also filed two appeals - one (Civil Appeal No. 3018 of 1997) arising out of judgment dated June 27, 1996 in O.A. No. 108/96 passed by the Madras Bench of <ORG> and other (Civil Appeal No. 5081 of 1994) against judgment and order dated November 5, 1993 passed by the <ORG> in O.A. No. 286/92. In O.A. No. 108/96 the Madras Bench of <ORG> merely followed the judgment of the <ORG> which is under appeal before us in Civil Appeal No. 3018 of 1997.

There is another dimension to the case by reason of the introduction of the Rules called "The Posts & Telegraphs Civil Engineering (Electrical Gazetted Officers) Recruitment (Amendment) Rules, 1984", which were given retrospective effect from April 5, 1975. It is explained that the reason for introduction of these Rules is that for recruitment to the various posts in the Electrical Branch of the Civil Wing of <ORG>, the rules of recruitment were published on the April 5, 1975. Prior to commencement of the said Rules, there were officers who had joined directly as Assistant Executive Engineer (Electrical) through the Combined Engineering Services Examination held by <ORG>. Those who had come on deputation from C.P.W.D. were also deemed to have been regularly appointed in <ORG> pursuant to a decision of <ORG>. Some of the officers were promoted to the higher grades on ad hoc basis. In order to ensure that these officers are not deprived of the service rendered by them before commencement of the rules, it was proposed to incorporate retrospectively a provision for initial constitution of these posts. Therefore, though the rules were amended by a notification issued on April 22, 1984 published in <ORG> and it was given retrospective effect but the purpose of giving retrospective effect to the provision relating to the initial constitution of these posts would not prejudicially affect the interests of any person already in service. It is in this background, it is contended before us, that the cases of the appellants could not be considered to the post of Superintendent Engineers although they were functioning as the Executive Engineers without determining their position in the initially constituted cadre and that could be done with reference to the rules, as amended in 1984 which came into effect from April 5, 1975. Though there may have been some delay and complications arising thereto there is another factor which needs to be considered in these cases. The case of the 1st appellant was considered by <ORG> in which Air Marshal <NAME> was present on behalf of the <ORG> and who presided over that meeting for selection of officers for officiating promotion to the grade of Executive Engineer (Electrical) and it was noticed that out of four vacancies, two vacancies are to be filled by promotion of direct recruit Assistant Engineer (Electrical) and the remaining two vacancies were kept reserved for the promotion of Assistant Engineer (Electrical). As no officer was available for consideration at present and the Committee accordingly considered the 4 eligible officers and assessed them. While <NAME>, <NAME> and <NAME> were found to be `very good', the 1st appellant was assessed to be only `good'. This was recorded in the minutes of the meeting of <ORG> held on June 2, 1978 in the office of the <ORG>. Thereafter, in the minutes of the meeting of the meeting of <ORG> held on May 13, 1988, the 1st appellant was found to be `very good' for the year 1977 as an Executive Engineer (Electrical) Group A. It is in these circumstances, it is to be considered whether the case of the 1st appellant could have been considered earlier to the date he was found fit to be promoted. The initially constituted cadre is of the date April 5, 1975 and on that date the 1st appellant had not been considered for promotion to the post of Executive Engineer and he was found fit to be promoted as Executive Engineer only with effect from 1977, i.e., much later to the promulgation of these rules. Reliance has been placed on the decision of this Court in <ORG> [supra]. That is a case where the quota rule between the direct recruits and the promotees had broken down and the appointments were made from one source in excess of the quota, but were made after following the procedure prescribed by the rules for the appointment; therefore, it was held that the appointees should not be pushed down below the appointees from the other source inducted in the service at a later date. In that case the direct recruits were not available in adequate number for appointment and appropriate candidates in the subordinate rank capable of efficiently discharging the duties of Deputy Engineers were waiting in their queue. The development work of the <ORG> pre-emptorily required experienced and efficient hands and in that situation the <ORG> Government took a decision to fill up the vacancies by promotion in excess of the quota, but only after subjecting the officers to the test prescribed by the rules. Therefore, in those peculiar conditions certain directions had been given by this Court inasmuch as the rigours of the quota rule having been neutralised and the seniority being dependent on continuous officiation, the seniority so fixed would not be defeated by the ratio fixed by the rules. It is difficult to appreciate as to how the principle stated in that case could be extended to the case of 1st appellant in the present case as the quota rule had not broken down in any manner nor is there any material before the court to show that he has not been duly considered by <ORG> before appointment to the higher grade. Again in the case of <CITATION> [supra] the same question arose. In that case it was noticed that when reckoning seniority the length of the service may be a relevant factor. If the ad hoc selection is followed by regular selection, then the benefit of ad hoc service is not admissible if ad hoc appointment is in violation of the rules. If the ad hoc appointment has been made as the stop gap arrangement and where there was a procedural irregularity in making appointments according to rules and that irregularity was subsequently rectified, the principle to be applied in that case was stated once again. There is difficulty in the way of the appellants to fight out their case for seniority should be reckoned by reason of the length of the service whether ad hoc or otherwise inasmuch as they had not been recruited regularly. As stated earlier, the appellants were regularly found fit for promotion only in the year 1977 and if that period is reckoned their cases could not be considered as found by the <ORG>. The view expressed by this Court in these cases have been again considered in the decisions in <CITATION> ., 1998 (5) SCC 293; <CITATION> ., 1999 (1) SCC 280; <CITATION> ., 1997 (2) SCC 150; <CITATION> ., 1997 (6) SCC 406; <CITATION> , 1995 Supp. (1) SCC 16, but all these decisions do not point out that in case the promotions had been made ad hoc and they are subsequently regularised in the service in all the cases, ad hoc service should be reckoned for the purpose of seniority. It is only in those cases where initially they had been recruited even though they have been appointed ad hoc the recruitment was subject to the same process as it had been done in the case of regular appointment and that the same was not a stop gap arrangement. That is not the position in the present cases at all. Therefore, we are of the view that conclusions reached by the <ORG> appear to us to be correct and call for no interference. However, we make it clear, as noticed earlier, that while amending the rules of recruitment in the 1984 all those who are already in service will be borne in mind in adjusting the seniority amongst the promotees inter se and suitable adjustments could be made and so far as the direct recruits are concerned, their cases will go by their quota rule and the view taken by the <ORG> in this regard cannot be taken exception of.

Appeals stand dismissed accordingly.


JUDGMENT <NAME>, J.

1. Though these three appeals have been filed against the decisions of different courts and are not connected either as regards community of purpose or the identity of the accused they have been heard together, because the points of law raised in them are identical and the arguments of counsel have proceeded on common lines. Hence a common judgment dealing with the legal aspect would be apt in the circumstances.

2. Criminal Appeal No. 42 of 1954 has been preferred by <NAME> against the dismissal of his Revision Petition by <ORG>, thereby affirming the appellate decision of the Sessions Judge of Kumaun who in his turn maintained the sentence of rigorous imprisonment for one year and a fine of Rs. 500 passed on the appellant by the Special 1st Class Magistrate of Nainital on April 30, 1953, under Section 409 of the Indian Penal Code. This appellant was a clerk in <ORG> of Haldwani <ORG> and the charge against him was that he received three sums of money :

Rs. 242/5/9 (Ex. P. 14) on July 28, 1951, Rs. 70/- (Ex. P. 17) on October 19, 1951, Rs. 135/- (Ex. P. 13) on October 23, 1951.

aggregating to Rs. 447/5/9 and misappropriated the whole amount, though his defence was that having received the money, he gave it to his official superior, Electrical Engineer <NAME> ; and did not have anything more to do with the money. The <ORG> charge sheet was under Sections 409 and 467 of the Indian Penal Code, but the conviction was only under the former section. The conviction and sentence imposed upon him by the trial court having been confirmed in appeal by the learned Sessions Judge and further having been affirmed by dismissal of his revision by <ORG>, have now become the subject of appeal, as special leave has been granted on the question of law raised.

3. <NAME>, the appellant in Criminal Appeal No. 3 of 1955, had obtained leave to appeal from <ORG> against the opinion of a Full Bench of that court in Criminal Revision No. 141 of 1951, by which it affirmed the order of the Civil and Sessions Judge of Sitapur in Criminal Revision No. 5 of 1951, holding that <NAME> was improperly discharged by the learned Magistrate of an offence under Section 409 , Indian Penal Code , and directing the Magistrate to make a further inquiry into the matter of that offence. It may be mentioned that the learned 1st Class Magistrate held that sanction was essential for the prosecution of <NAME> and as the same had not been granted, the prosecution was not maintainable. This view did not find acceptance at the hands of the learned Sessions Judge, whose decision was affirmed by <ORG>. The charge against him was that as a canal accountant in a Divisional Engineer's office he committed criminal breach of trust of a certain sum of money.

4. <NAME>, the appellant in Criminal Appeal No. 97 of 1955, was the Director of Agriculture in the Indian State of Rewa and for the offence of having committed criminal breach of trust of an amount of Rs. 586/10/- on December 4, 1948, he was prosecuted under Section 409 of the Indian Penal Code, on August 13, 1949, and after inquiry, charges were framed against him on February 24, 1950, resulting in a judgment of conviction by the trial court on September 29, 1950, and a sentence of one year's rigorous imprisonment and a fine of Rs. 500. His appeal to the Sessions Judge was dismissed on September 29, 1951, and the revision to the Judicial Commissioner shared the same fate on January 16, 1952. Special leave having been granted to him, Criminal Appeal No. 97 of 1955 was the outcome.

5. The first question for consideration is whether Section 409 of the Indian Penal Code, in so far as it applies to a public servant (in this case the three appellants were admittedly public servants), has been impliedly repealed by the enactment of Sections 5(1) (c) and 5(2) of the Prevention of Corruption Act II of 1947, and if that is so, whether a prosecution of the appellants for an offence of criminal breach of trust without the requisite sanction and without conforming to the provisions of the Prevention of Corruption Act , can be legally sustained. Two other questions have also been urged before us and they are: Assuming that there was no such implied repeal, would the application of Section 409 of the Indian Penal Code to a public servant infringe Article 14 of the Constitution, now that the provisions of the Prevention of Corruption Act and the procedure laid down thereunder are available to deal with a breach of trust by a public servant; and next, if the appellants do not succeed on the first two points, whether the provision for sanction required by the Prevention of Corruption Act would also similarly apply to a prosecution under Section 409 of the Indian Penal Code.

6. What is first to be determined is whether Section 409 of the Indian Penal Code, deals with the same offence as that contemplated under Sections 5(1) (c) and 5(2) of the Prevention of Corruption Act , and if so, has there been an overlapping of legislation over the same field ; and has the latter one impliedly repealed the earlier. For that purpose the provisions of the two statutes have to be succinctly analysed to understand the full scope and the import of the two.

7. The fasciculus of sections contained in Chapter XVII of the Indian Penal Code beginning with Section 405 of the Indian Penal Code and ending with section 409 of the Indian Penal Code deals with criminal breach of trust. Section 405 of the Indian Penal Code defines criminal breach of trust and Section 409 of the Indian Penal Code is an aggravated form of criminal breach of trust when the same is committed by a public servant, banker, merchant, etc. Analysing Section 405 of the Indian Penal Code, into its component ingredients, it is seen that the following essential ingredients are absolutely necessary to Attract the operation of the section:

(i) The accused must be entrusted with property or dominion over property ;

(ii) The person so entrusted must (a) dishonestly misappropriate or convert to his own use that property, or

(b) dishonestly use or dispose of that property or wilfully suffer any other person to do so in violation (I) of any direction of law prescribing the mode in which such trust is to be discharged, or (II) of any legal contract made touching the discharge of such trust.

In the above cases he is said to commit a criminal breach of trust.

8. Section 409 of the Indian Penal Code lays down the punishment when such criminal breach of trust is committed by a public-servant, banker, merchant, etc.

9. Now we have to ascertain the provisions of the Prevention of Corruption Act dealing with criminal misconduct.

10. The preamble of the Act makes it clear that the intention was to make more effective provisions for the prevention of bribery and corruption. From this itself, it is clear that the legislature was alive to the fact that something more stringent and drastic than Section 409 of the Indian Penal Code was necessary in the case of bribery and corruption by public servants and it was to effectuate that intention that the Act was put on the statute book. The duration of his piece of legislation in the first instance was only for a period of five years which later on was extended by Act II of 1952 for ten years which would mean that automatically the Act would expire by about the middle of 1957.

11. Section 3 lays down that offences under Sections 161 , 165 and 165-A of the Indian Penal Code which under the provisions of the Criminal Procedure Code were not cognizable are made cognizable. Section 5 enacts that where a public servant accepts, agrees to or obtains gratification other than legal remuneration, then it shall be presumed unless the contrary is proved, that he accepted, obtained or agreed to accept or attempted to obtain that gratification or valuable thing as a motive or reward such as is mentioned in Section 161 , etc., etc. Sub-section 2 of Section 4 also deals with this presumption. We are concerned in these appeals with Section 5 . Sub- sections 1 (a) and 1 (b) of Section 5 , which is designated as criminal misconduct in discharge of official duty by a public servant, deal with persons who habitually accept or obtain or agree to obtain gratification other than legal remuneration as a motive or reward as mentioned in Section 161 of the Indian Penal Code. It is not necessary to deal with these two sub-clauses in detail because there is no question of any acceptance of illegal gratification in the present cases but one thing that has to be remembered is that these sub-sections deal with habitual acceptance or obtaining, etc., whereas Sections 161 and 165 deal with even a single acceptance or obtaining. The result is that under Sections 161 and 165 of the Indian Penal Code a prosecution can be laid even in the case of a single act by which a public servant has accepted an illegal gratification, but in order to attract Clauses 5(1) (a) and 5(1)(b), there must be habitual commission of the crime. Any stray or a single instance would not suffice to bring within the ambit of the section the offence as contemplated in Sections 5(1) (a) and 5 (1) (b). The result is that the offences under Sections 5 (1)(a) and 5(1) (b) are an aggravated form of the offence under Sections 161 and 165 of the Indian Penal Code.

12. As we are concerned with Section 5 (1) (c), the same may be quoted in extenso :

"If he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do."

13. Section 5 (1) (d) lays down that if a public servant by corrupt or illegal means or by otherwise abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage, he commits the offence.

14. Section 5(2) makes the offence of criminal misconduct punishable with imprisonment which may extend to seven years or with fine or with both. Sub-section (3) is an important piece of legislation to the effect that where a person is charged under Section 5(1) and it is found that the accused person cannot satisfactorily account for the pecuniary resources or property disproportionate to his known sources of income, then the fact that he has such extensive pecuniary resources or property is sufficient to presume, until the contrary is proved, that the accused person was guilty of criminal misconduct in the discharge of his official duty and a conviction for that offence shall not be invalid by reason only that it is based solely on such presumption. It is clear, therefore, that where a person is charge with criminal misconduct and it is seen that he is in possession of property or income which could not have been amassed or earned by the official remuneration which he had obtained, then the court is entitled to come to the conclusion that the amassing of such wealth was due to bribery or corruption and the person is guilty of an offence of criminal misconduct. Such a presumption cannot be. drawn in the case of a prosecution under Sections 161 , 165 and 409 of the Indian Penal Code.

15. Section 6 provides that for the prosecution of an offence of criminal misconduct under Section 5(2) or for an offence under Section 161 or 165 of the Indian Penal Code , previous sanction is necessary of either the Central Government or <ORG> or the authority competent to remove the Government servant-The last section of the statute is a departure or deviation from the procedure till then obtaining in a criminal case and thereby an accused person is held competent to be a witness on his behalf. Whereas under Section 342 , Indian Penal Code , as it stood before the recent amendment, no accused person was entitled to be administered on oath and thereby competent to testify in a court of law in a case in which he is accused ; under Section 7 any person charged with an offence punishable under Section 161 or Section 165 or 165-A of the Indian Penal Code , or under Sub-section (2) of Section 5 of the Prevention of Corruption Act, is a competent witness for the defence and may give evidence on oath in disproof of the charges made against him or any person charged together with him at the same trial ; and there are also certain safeguards provided in the matter of giving such testimony.

16. We have now referred to the relevant provision of Act II of 1947 in which the most important one for our present consideration is Section 5(1)(c) . It will be useful to institute a comparison between Section 405 of the Indian Penal Code and Section 5(1) (c) of Act II of 1947. The question of entrustment is common under Section 405 of the Indian Penal Code and under Section 5(1)(c) of the Prevention of Corruption Act. Whereas under section 405 of the Indian Penal, Code dishonest misappropriation or conversion to his own use of that property would be the necessary criterion, with regard to Section 5(l)(c) the misappropriation or conversion may be either dishonestly or fraudulently or otherwise.

17. Then again there is a further fact under Section 5(1) (d) that if the public servant by corrupt or illegal means or otherwise abuses his position as a public servant and obtains for himself or for any other person any valuable thing or pecuniary advantage, then he will be guilty of the offence. We may, therefore, give below the ingredients of the two sections :-- Section 405 of the Indian Penal Code.

1. Entrusting any person with property or with any dominion over property.

2. The person entrusted (a) dishonestly misappropriating or converting to his own use that property. (b) dishonestly using or disposing of that property or wilfully suffering any other person to do so in violation- (i) of any direction of law prescribing the mode in which such trust is to be discharged, or (ii) of any legal contract made touching the discharge of such trust. Prevention of Corruption Act II of 1947 : Section 5(1) : (c) dishonestly or fraudulently misappropriating or otherwise converting for his own use any property entrusted to him, or under his control as a public servant or allowing any other person to do so. (d) If he by corrupt or illegal means or by otherwise abusing his position as a public servant, 18. obtains for himself or for any other person any valuable thing or pecuniary advantage.

19. Now 'dishonestly' as defined in Section 24 of the Indian Penal Code connotes the doing of anything with the intention of causing wrongful gain to one person or wrongful loss to another person and Section 25 defines 'fraudulently' as doing a thing with intent to defraud but not otherwise. It is, therefore, clear that Section 5(1)(c) is wider in ambit than Section 405 of the Indian Penal Code.

20. The argument of the learned counsel for the appellants is that though the offences under the two provisions are indetical, there are some advantages where the trial is under Section 5(1) (c) and certain disadvantages as well. The advantages are :--

(1) The punishment for criminal mis-conduct is less than the punishment for breach of trust by a public servant ;

(2) It is necessary to obtain previous sanction for a prosecution under Section 5(1)(c) , whereas in the case of breach of trust by a public servant, such sanction may or may not be necessary ;

(3) The investigation of an offence under Section 5(1)(c) slxould be by an officer of a higher grade though that does not obtain so far as the present appeals are concerned ; and (4) The accused person has the right of giving evidence on his behalf.

21. The disadvantages are that in such a trial the presumption referred to in Section 4(3) can be drawn against the accused if it is found that he has pecuniary resources or property disproportionate to his known sources of income and also the two presumptions regarding the acceptance of a valuable tiling from any person by a public servant as contemplated in Sub-sections (1) and (2) of Section

4. These differences, according to the learned counsel for the appellant, do not in any way make the offence under Section 5 (1)(c) different from the offence under Section 409 of the Indian Penal Code, but that only another method of procedure is prescribed and a different mode of approach is laid down when an offence under Section 5(1) (c) is enquired into or tried.

22. Mr. <NAME> strenuously urges that if there are two different statutes, one enacted later than the other, and if the later statute deals with the same subject matter, the two cannot stand together and the earlier one being redundant or repugnant must be deemed to have been repealed. The result is that whereas in this case there are penal statutes dealing with the same subject matter and the penalties and procedure prescribed by the statutes are different from each other, then the later one must be taken to repeal or supersede the earlier.

23. Reliance is placed on certain observations contained in <CITATION> , containing some quotations from the judgment of <NAME> in <NAME> v. <NAME>,  1 K.B. 518 to the following effect :--"That if a later statute again describes an offence created by a previous one, and imposes a different punishment, or varies the procedure, the earlier statute is repealed by the later statute : see <NAME> v. <NAME>,  1 E. & E. 267, 274, 117 R.R. 206 per Lord <NAME> and also Attorney-General for Ontario v. Attorney-General for the Dominion,  A.C. 348.

24. On the footing that Section 5 (1) (c) of Act II of 1947 deals with the same subject with regard to public servants as that portion of Section 409 of the Indian Penal Code, Mr. <NAME> drew our attention to <CITATION> , 1952 Punj. 89. In that case <NAME> in delivering the judgment of a Bench consisting of himself and <NAME> held that so long as Section 5 of Act II of 1947 remained in force, the provisions of Section 409 of the Indian Penal Code, so far as it related to offences by public servants, stood repealed. The learned Judge after referring to the various provisions of the Prevention of Corruption Act came to the above conclusion. After adverting to Section 26 of the General Clauses Act and its counterpart, Section 33 of the Interpretation Act and also passages from <NAME> on Interpretation of Statutes, the learned Judge was of opinion that it is not possible to infer that there was no implied repeal.

25. Before we advert to the Indian cases, the first thing that has to be remembered in this connection is that the Prevention of Corruption Act being a temporary one, the legislature would not have intended in the normal course of things that a temporary statute like the one in question should supersede an enactment of antiquity, even if the matter covered the same field. Under Section 6(a) of the General Clauses Act if by efflux of time the period of a temporary statute which had repealed an earlier statute expires, there would not be a revival of the earlier one by the expiry of the temporary statute.

26. A <ORG> of <ORG> in <CITATION> , held that the language used by the legislature in Section 5 (4) of the Prevention of Corruption Act clearly negatived any suggestion that the legislature intended to repeal the provisions of Section 409 of the Indian Penal Code. It cannot also be held that Section 409 of the Indian Penal Code is impliedly repealed by the Prevention of Corruption Act because it is impossible to say that the provisions of the two are wholly incompatible or that the two statutes together would lead to wholly absurd consequences. Therefore, it was open to the prosecution to proceed with a trial under Section 409 of the Indian Penal Code or under Section 5(2) of "the Prevention of Corruption Act even before the amendment of the latter Act by Act LIX of 1952 and if the prosecution was launched under Section 409 and if the status of the accused was such that no sanction was required under the provisions of the Criminal Procedure Code , then the prosecution is good and the conviction is proper notwithstanding the fact that if the prosecution had been lauched under Section 5(2) , a sanction would have been necessary. The learned Judges dissented from the opinion expressed by <NAME> in <CITATION> (supra) and also overruled certain earlier Bombay cases. This court is in agreement with the expression of opinion by the learned Chief Justice of <ORG> in the above <ORG> decision.

27. <NAME> of <ORG> in Re. V. V. Satyanarayanamurthy, A.I.R. [1953] Mad came to the conclusion that Section 5(1) (c) of the Prevention of Corruption Act does not repeal Section 409 of the Indian Penal Code, and he accordingly dissented from the view taken in the case <CITATION> (supra).

28. <ORG> in <NAME> v. <ORG>, has taken a similar view dissenting from <CITATION> (supra). There is a large body of case law in this direction and it is unnecessary to mention all except the following :

(a) <CITATION> , ,

(b) <CITATION> , ,

(c) <CITATION> , .

29. As against all these cases the long voice of <ORG> in <CITATION> (supra) is the only dissentient one and after considering the matter carefully, it seems to us that the view taken by <ORG> is not sound.

30. We now proceed to consider whether the two sections are identical in essence, import and content and in our opinion the argument on behalf of the <ORG> carries much force when it is suggested that by enacting the Amending Act of 1952 and creating Sub- section 4 to Section 5 the legislature specifically stated that the offence under Section 5(1) (c) is different from any previous existing offences under any penal statute and there can, therefore, be no scope for speculation about repeal. The words used in Sub- section 4 "any other law" made the position quite clear and explicit. Other law does not mean identical law in which case the word 'other' will have no meaning. At an earlier stage of this judgment we have already tabulated the different elements constituting the two offences and a clear comparison and contract of these elements would show that an offence under Section 405 of the Indian Penal Code is separate and distinct from the one under Section 5(1) (c). There are three points of difference between Section 405 of the Indian Penal Code and Section 5(1) (c). The dishonest misappropriation contemplated in Section 405 of the Indian Penal Code is different; whereas that under Section 5(1)(c) is either dishonest misappropriation or fraudulent misappropriation. The latter section is much wider in amplitude than the former. In Section 405 of the Indian Penal Code the words used are "In violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied." There are no such expressions in Section 5(1)(c) . It is clear, therefore, that whereas under Section 405 of the Indian Penal Code there are three essential ingredients to constitute the offence, each one of them being separate and distinct, in Section 5(1)(c) there are only two. Now considering Section 5(1)(c) there are certain matters in it which are absent in Section 405 of the Indian Penal Code. The words 'dominion' and 'entrustment' connote two different things. The word 'dominion' is not in Section 5(1)(c) . We have already stated that the word 'fraudulently' is not present in Section 405 and in Section 5(1)(c) the gist of the offence can also be made out if the offender allows any person so to do, i.e., allows "any person to derogate from the law as contemplated in the earlier portion of the section. The meaning put on the word 'allows' would certainly be different from 'dishonest misappropriation' by the offender himself. It may be that the word can mean allowing by negligence or without any volition on the part of the offender. It may also mean that there is some kind of positive and tacit acquiescence necessary to bring home the offence. In any event, allowing other persons so to do does not find a place in Section 405 of the Indian Penal Code though this section also contemplates "wilfully suffering any other person so to do." There is an essential difference between "allowing" a person and "wilfully suffering" a person to do a certain thing.

31. There can, therefore, be no doubt whatever that Section 5(1)(c) of the Prevention of Corruption Act creates a new offence called "criminal misconduct" and cannot by implication displace the offence under Section 405 of the Indian Penal Code. In this connection it is useful to compare Sections 5(1) (a) and 5(1) (b) with Sections 161 and 162 of the Indian Penal Code. As has already been referred to, these two sections are aggravated forms of Sections 161 and 162 of the Indian Penal Code and the intention cannot be to abrogate the earlier offence by the creation of the new offence. These two offences can co-exist and the one will not be considered as overlapping the other. A course of conduct can be proved when a person is arraigned under Sections 5(i)(a) and 5(1)(b) , but such a course is impossible to be let in evidence when an offence under Sections 161 and 162 is being enquired into or tried. Similarly there are a number of elements which can be proved in* an inquiry or trial under Section 5(1) (c) that cannot be lei in by the prosecution when a person is charged for an offence under Section 405 of the Indian Penal Code. In Section 405 of the Indian Penal Code the offender must wilfully suffer another person to misappropriate the properly entrusted, but in Section 5(1)(c) if he alllows another person to dishonestly or fraudulently misappropriate or otherwise convert for his own use any property so entrusted, then it is an offence. There is a vast difference between wilfully suffering another and allowing a person to do a particular thing and in our view the word "allows" is much wider in its import. Wilfully pre-supposes a conscious action, while even by negligence one can allow another to do a thing.

32. It seems to us, therefore, that the two offences are distinct and separate. This is the view taken in <NAME> v. The <NAME> (supra) and we endorse the opinion of the learned Judges, expressed therein. Our conclusion, therefore, is that the offence created under Section 5(1) (c) of the Prevention of Corruption Act is distinct and separate from the one under Section 405 of the Indian Penal Code and, therefore, there can be no question of Section 5(1)(c) repealing Section 405 of the Indian Penal Code. If that is so, then, article 14 of the Constitution can be no bar.

33. The last argument of Mr. <NAME> is that despite the fact that the prosecution is under Section 409 of the Indian Penal Code, still sanction to prosecute is necessary. Quite a large body of case law in all the <ORG> has held that a public servant committing criminal breach of trust does not normally act in his capacity as a public servant, see

(a) <CITATION> (supra),

(b) <CITATION> (supra), and

(c) <CITATION> , .

34. We are in agreement with the view expressed by <NAME> and <NAME> that no sanction is necessary and the view expressed by <NAME> to the contrary is not correct.

35. Criminal Appeal No. 3 of 1955 will accordingly be dismissed. Criminal Appeals Nos. 42 of 1954 and 97 of 1955 will be heard on merits.


<NAME>, J.

1. These are appeals by certificate. They raise common questions of law for decision, and they are directed against a common judgment of <ORG>.

2. The facts of the case lie within a narrow compass. The appellants are dealers in foodgrains including cereals and pulses especially split or processed foodgrains and dal. The dispute in this case centers round the question whether the Government is competent to levy sales-tax on the purchases made by the appellants of split processed foodgrains and dal under the provisions of the United Provinces Sales Tax Act, 1948 as amended by the Uttar Pradesh Sales Tax Act (Amendment and Validation) Act . 1970 (which will hereinafter be referred to as the Act).

3. Under the Sales Tax Act as it originally stood (which will hereinafter be referred to as the principal Act), the purchases of split or processed foodgrains and dal by dealers were sought, to be brought to tax Under <CITATION> of the principal Act read with the notification issued. The validity of the levy was challenged by <NAME>, the appellant in Civil Appeal No. 1625 of 1971 in respect of the assessment made on him for the assessment year 1966-67 by assessment order dated June 30, 1968 by means of a writ petition under Article 226 of the Constitution. <ORG> of Allahabad struck down the levy holding that the dal purchased by the petitioner before it could not be said to be a commodity essentially different from the arhar dal purchased by the dal mills and accordingly the purchases effected by the petitioner could not be regarded as the first purchases. This decision is reported in 25, S.T.C. p. 118. Thereafter the Governor of U.P. issued an ordinance known as Uttar Pradesh Sales Tax (Amendment and Validation) Ordinance, 1970 (U.P. Ordinance No. 2 of 1970) adding inter alia Explanation II to <CITATION> as well as Section 7 to the principal Act. This ordinance was later on enacted as an Act to which we have already made reference. The provisions of the Amending Act are identical with the provisions in the Ordinance. Though at the time of the institution of the writ petitions from which these appeals arise, the Ordinance had not yet been made into the Act, the Amending Act came into force during the pendency of the writ petitions. Hence we shall refer to the provisions of the Amending Act .

4. Under the principal Act a dealer is defined in Section 2(c) as :

"dealer" means any person or association of persons carrying on the business of buying or selling goods in Uttar Pradesh, whether for commission, remuneration or otherwise, and includes any firm or <ORG> and any society, club or association which sells goods to its members and also includes any department of <ORG> or <ORG> which carries on such business and any undertaking engaged in the generation or distribution of electrical energy or any other form of power.

(Explanation to the section is not relevant for our present purpose).

5. Section 3 of the Act provides for the levy of multi-point tax. The portion of that section which is material for our present purpose reads :

Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rate of two naye paise per rupee on his turnover of such year, which shall be determined in such manner as may be prescribed....

6. Section 3-A provides for a single point taxation in respect of sale of certain goods. At present we are only concerned with Section 3-D(l) . It provides :

Except as provided in Sub-section (2), there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in such manner as may be prescribed, of first purchases made by a dealer or through a dealer, acting as a purchasing agent in respect of such goods or class of goods, and at such rates, not exceeding two paise per rupee in the case of foodgrains, including cereals and pulses, and five paise per rupee in the case of other goods and with effect from such date, as may, from time to time, be notified by <ORG> in this behalf.

(Explanation I to this Section is not relevant for our purpose).

7. The notification issued Under Section 3-D of the principal Act on October 1, 1964 (Notification No. S. T. 7122/X) provided that with effect from October 1, 1964, the turnover of purchases in respect of goods mentioned therein shall be liable to tax Under Section 3-D at the rate mentioned :

Foodgrains .. 1.5 paise per rupee on first: purchases x x x x

8. On the basis of Section 3-D read with the notification, as mentioned earlier, the authorities under the Act sought to bring to tax under the principal Act the first purchases of processed or split food-grains including dal on the ground that they constituted a separate item of foodgrains quite independent of the unprocessed or unsplit foodgrains. This view, as seen above, was negatived by <ORG>. After the decision of <ORG>, the principal Act was amended. Under the Amending Act one more Explanation viz., Explanation II was added to Section 3-D .

For the purposes of this Sub-section, split Or processed foodgrains, such as in the form of dal shall be deemed to be different from unsplit or unprocessed foodgrains, and accordingly, nothing in this sub-section shall be construed to prevent the imposition, levy or collection of the tax in respect of the first purchases of split or processed foodgrains merely because tax had been imposed levied or collected earlier in respect of the first purchases of those foodgrains in their unsplit or unprocessed form.

9. The Amending Act also added a validating provision to the principal Act viz. Section 7 . That section reads :

Notwithstanding any judgment, decree or order of any court or tribunal to the contrary, every notification issued or purporting to have been issued Under Section 3-A or Section 3-D of the principal Act before the commencement of this Act shall be deemed to have been issued under that section as amended by this Act and shall be so interpreted and be deemed to be and always to have been as valid as if the provisions of this Act were in force at all material times; and accordingly anything done or any action taken (including any order made, proceeding taken, jurisdiction exercised, assessment made, or tax levied, collected or paid purporting to have been done or taken in pursuance of any such notification) shall be deemed to be, and always to have been, validly and lawfully done or taken.

10. It will be necessary later on to consider what was the vice that the legislature intended to cure by the Amending Act . The sequence of events itself discloses the purpose of the Ordinance as well as the Amending Act . That apart, the statement of objects and reasons which can be usefully looked into for the purpose of finding the vice that the legislature was trying to provide against reads thus :

Sections 3-A and 3-D of the U.P. Sales Tax Act, 1948 provide for single point taxation. Under the former section the tax is levied on the turnover of sales, while under the latter the tax is levied on the, turnover of first purchases. Plain and ornamented glass bangles are subject to tax separately Under Section 3-A . Similarly, unsplit and split pulses are separately subject to tax Under Section 3-D . It has been held by <ORG> in one case that tax cannot be levied separately on plain and ornamented glass bangles Under Section 3-A and in another that tax cannot be levied separately on unsplit and split pulses Under Section 3-D because in their opinion plain glass bangles are not a commodity different from ornamented glass bangles and similarly unsplit pulses and split pulses are also not two different commodities. These judgments have created legal difficulties in the assessment and collection of tax on the aforesaid commodities. Besides, the dealers have started applying for the refund of tax already collected on these commodities. This will have serious repercussions on the State's revenue. Accordingly, it is proposed to amend Sections 3-A and 3-D to provide for the levy of tax on the aforesaid commodities as separate items. It is also proposed to validate the past levy, assessment and collection of tax on the above commodities....

(The remaining part of the statement of objects and reasons is not relevant for our present purpose).

11. The appellants challenged the validity of Explanation II of Section 3-D as well as Section 7 introduced by the Amending Act before <ORG> in petitions under Article 226 of the Constitution. They further took the plea that the amendments incorporated were not effective enough to bring to tax the first purchases of split or processed foodgrains and pulses. <ORG> rejected these contentions and dismissed the writ petitions. Thereafter these appeals have been brought after obtaining certificates from <ORG>.

12. The validity of the levy in question was challenged on the following grounds :

(1) That no fresh levy can be imposed by a retrospective legislation;

(2) That the legislature cannot in case of legislation of the nature with which we are concerned, separate into independent commodities split and unsplit pulses or processed or unprocessed pulses and on that footing seek to impose tax twice over on the same commodity in respect of the goods liable to be taxed at a single point;

(3) That the newly added Explanation to Section 3-D read with Section 7 of the Amending Act amounts to an unlawful usurpation of judicial power by the legislature;

(4) The newly added Explanation II to Section 3-D is violative of Article 14 of the Constitution. There is no rational basis for separating split or processed pulses from unsplit or unprocessed pulses;

(5) On a true construction of Explanation II to Section 3-D no fresh charge can be held to have been imposed:

(6) No levy of purchase tax can be made without a fresh Notification Under Section 3-D read with Explanation II showing therein separately foodgrains unsplit or unprocessed as well as foodgrains split or processed; and (7) That the power conferred on the <ORG> Under Section 3-D amounts to an excessive delegation of legislative power and consequently void.

13. The source of the legislative power to levy sales or purchase tax on goods is Entry 54 of the List II of. the Constitution. It is well settled that subject to Constitutional restrictions a power to legislate includes a power to legislate prospectively as well as retrospectively. In this regard legislative power to impose tax also includes within itself the power to tax retrospectively- <CITATION>  S.C.R. 541. <CITATION> .  S. C. R. 1422; <CITATION> . 12 S.T.C. 429. <CITATION> .  Supp. (2) S.C.R. p. 1; <CITATION> the last mentioned case it was specifically decided that where the legislature can make a valid law, it can provide not only for the prospective operation of the material provisions of the said law but it can also provide for the retrospective operation of the said provisions.

14. We see no force in the second contention advanced on behalf of the appellants. As seen earlier the general rule as enunciated in Section 3 is multi-point tax-sales tax or purchase tax; but power is conferred on the Government to select any transaction in respect of such goods or class of goods as the Government may choose to levy a single point sales tax or purchase tax. It is open to the legislature to define the nature of the goods, the sale or purchase of which should be brought to tax. <ORG> was not incompetent to separate the processed or split pulses from the unsplit or unprocessed pulses and treat the two as separate and independent goods.

15. <CITATION> , . question arose for decision whether it was open to the legislature to impose separate excise duty on tobacco leaf as well as on broken leaf of tobacco. This Court overruled the contention that such a levy was invalid. It held that it was open for the legislature to separate the two items. We see no basis for the contention that the legislature cannot for the purpose of tax under the Act separate the split or processed pulses from the unsplit or unprocessed. The power of the legislature to specify the nature of the goods the sale or purchase of which, it will bring to tax is very wide.

16. Now coming to point No. 3, there is no justification for the contention that the legislature has usurped any judicial power. The legislature has not purported either directly or by necessary implication to overrule the decisions of <ORG> in <NAME> case (supra). On the other hand it has accepted that decision as correct; but has sought to remove the basis of that decision by retrospectively changing the law. This Court has pointed out in several cases the distinction between the encroachment on the judicial power and the nullification of the effect of a judicial decision by changing the law retrospectively. The former is outside the competence of the legislature but the latter is within its permissible limits. From the statement of objects and reasons, it appears that in the principal Act, the legislative intent was not clearly brought out. By means of the Amending Act the legislature wanted to make clear its intent.

17. The fourth contention also appears to be without any basis. It is true that the taxing statutes are not outside the scope of Article 14 of the Constitution. But the legislature has wide powers of classification in the case of taxing statutes.

18. In <NAME>'s case (supra), this Court ruled that there was no unconstitutional discrimination in the imposition of the excise duty on tobacco in the broken leaf form. Therein it was observed that tobacco in the broken leaf form was capable of being used in the manufacture of bidis while tobacco in the whole leaf form could not be so used economically; the two forms of tobacco were different by the test of capability of user; the tariff is not based either wholly or even primarily by reference to the use of tobacco and there was a clear and unambiguous distinction between tobacco in the whole leaf form covered by item 5 and tobacco in the broken leaf form covered by item 6 which had a reasonable relation to the object intended by the imposition of the tariff.

19. <CITATION> , . this Court laid down the tests to find out whether there are discriminatory provisions in a taxing statute. Therein this Court observed that in order to judge whether a law was discriminatory what had primarily to be looked into was not its phraseology but its real effect. If there was equality and uniformity within each group, the law could not be discriminatory, though due to fortuitous circumstances in a peculiar situation some included in a class might get some advantage over others, so long as they were not sought out for special treatment. Although taxation laws could be no exception to this rule, the courts would, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the legislature in the matter of classification so long as there was no transgression of the fundamental principles underlying the doctrine of classification. The power of the legislature to classify must necessarily be wide and flexible so as to enable it to adjust its system of taxation in all proper and reasonable ways.

20. It must be noticed that generally speaking the primary purpose of the levy of all taxes is to raise funds for public good. Which person should be taxed, what transaction should be taxed or what goods should be taxed, depends upon social, economic and administrative considerations. In a democratic set up it is for the legislature to decide what economic or social policy it should pursue or what administrative consideration it should bear in mind. The classification between the processed or split pulses and unprocessed or unsplit pulses is a reasonable classification. It is based on the use to which those goods can be put. Hence, in our opinion, the impugned classification is not violative of Article 14.

21. A feeble attempt was made to show that the retrospective levy made under the Act is violative of Article 19(1)(f) and (g). But we see no substance in that contention. As seen earlier, the amendment of the Act was necessitated because of the legislature's failure to bring out clearly in the principal Act its intention to separate the processed or split pulses from the unsplit or unprocessed pulses. Further the retrospective amendment became necessary as otherwise the <ORG> would have to refund large sum of money. The contention that the retrospective levy did not afford any opportunity to the dealers to pass on the tax payable to the consumers has not much validity. The tax is levied on the dealer: the fact that he is allowed to pass on the tax to the consumers or he is generally in a position to pass on the same to the consumer has no relevance when we consider the legislative competence.

22. It was next urged that on a true contribution of Explanation II to Section 3-D , no charge can be said to have been created on the purchases of split or processed pulses. It was firstly contended that an Explanation cannot extend the scope of the main section; it can only explain that section. In construing a statutory provision, the first and and the foremost rule of construction is the literary construction. All that we have to see at the very outset is what does that provision say ? If the provision is unambiguous and if from that provision, the legislative intent is clear, we need not call into aid the other rules of construction of statutes. The other rules of construction of statutes are called into aid only when the legislative intention is not clear. Ordinarily a proviso to a section is intended to take out a part of the main section for special treatment. It is not expected to enlarge the scope of the main section. But cases have arisen in which this Court has held that despite the fact that a provision is called proviso, it is really a separate provision and the so called proviso has substantially altered the main section. <CITATION> , . this Court held that by the fiction in Section 10(2) (vii) second proviso read with Section 2 (6C) of the Indian Income-tax Act, 1922 what is really not income is, for the purpose of computation of assessable income, made taxable income.

23. <CITATION> ., this Court observed :

The primary purpose of the proviso now under consideration is, it is apparent, to provide a substitute or an alternative remedy to that which is prohibited by the main part of Section 4(1) . There is, therefore, no question of the proviso carving out any portion out of the area covered by the main part and leaving the other part unaffected. What we have stated earlier should suffice to establish that the proviso now before us is really not a proviso in the accepted sense but an independent legislative provision by which to a remedy which is prohibited by the main part of the section, an alternative is provided. It is further obvious to us that the proviso is not coextensive with but covers a field wider than the main part of Section 4(1) .

24. <CITATION> . . this Court was called upon to consider the Explanation to Section 48(1) of the Bihar and Orissa Co-operative Societies Act , 1935. Therein this Court observed :

The question then arises whether the first Explanation to the section widens the scope of Sub-section (1) of Section 48 so as to include claims by registered societies against non-members even if the same are not covered by Clause (c).

25. On the basis of the language of the Explanation this Court held that it did not widen the scope of Clause (c). But from what has been said in the case, it is clear that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect must be given to the legislative intent notwithstanding the fact that the legislature named that provision as an Explanation. In all these matters the courts have to find out the true intention of the legislature.

26. We are unable to accept the contention that Explanation II to Section 3-D did not widen the scope of Section 3-D . Section 3-D as it originally stood dealt with foodgrains and pulses. It did not treat the unprocessed or unsplit foodgrains and pulses as a separate item but because of Explanation, II, we have now to read the expression "foodgrains" in Section 3-D as containing two separate items viz. (1) foodgrains unprocessed or unsplit and (2) foodgrains processed or split. It is true that Explanation II is not very happily worded but the intention of the legislature is clear and unambiguous. The newly added Explanation brings to tax with retrospective effect the split or processed foodgrains as well.

27. We next come to the contention that no levy of purchase tax can be made on split or unprocessed pulses without a fresh notification Under Section 3-D read with Explanation II showing therein separately foodgrains unsplit or unprocessed as well as foodgrains split or processed. As seen earlier that the notification issued merely refers to foodgrains. That notification does not classify foodgrains into two separate categories-processed or split and unprocessed or unsplit. Therefore we were told that no tax can be levied on processed or split foodgrains on the basis of that notification. This contention cannot be accepted as correct. The notification in question was issued Under Section 3-D . Section 3-D refers to foodgrains; but because of Explanation II to that Section. we have now to read the expression "foodgrains" as containing two different items, processed or split foodgrains and unprocessed or unsplit foodgrains. Consequently while reading the expression "foodgrains" in the notification also, we must adopt the same approach. This conclusion is also obvious from Section 7 . If the legislature had not retrospectively validated the assessments made on the first purchases of split or processed foodgrain. what did Section 7 seek to achieve ? That section says in plain words that notwithstanding any judgment, decree or order of any court or tribunal to the contrary, every notification issued or purporting to have been issued Under Section 3-D of the principal Act. before the commencement of the Amending Act shall be deemed to have been issued under that section as amended by the Amending Act and shall be so interpreted and be deemed to be and always to have been as valid as if the provisions of the amending Act were in force at all material times and accordingly, anything done or any action taken (including any order made, proceedings taken, jurisdiction exercised, assessment made, or tax levied, collected or paid, purporting to have been done or taken in pursuance of any such notification) shall be deemed to be, and always to have been validly and lawfully done or taken.

28. We asked the learned Counsel appearing for the appellants to let us know the field in which Section 7 can be said to operate. Their answer was that though the legislature intended to validate the assessments made on the first purchases of the split or processed dal, it failed to achieve that object because of the defective phraseology employed in Explanation II to Section 3-D and Section 7 of the Amending Act. In other words their submission was that Section 7 has become otios. It was urged on behalf of the appellants that a taxing provision will have to be strictly interpreted and in finding out the intention of the legislature in the matter of imposing tax, we cannot travel beyond the words of the section.

29. There is no doubt that a taxing provision has to be strictly interpreted. If any legislature intends to impose any tax, that intention must be made clear by the language employed in the statute; but that does not mean that the provision in a taxing statute should not be read reasonably. The contention that we should ignore Section 7 of the Amending Act is a contention difficult of acceptance. Dealing with a similar contention <NAME> speaking for the <ORG> in <NAME> case (supra) observed at p. 435 :

The object of the legislation as stated in the long title and in the preamble to the Act was to validate the impugned notification in relation to the amended section. Schedule B to the Act expressly mentions that notification. And if we are now to accede to the contention of the petitioner, we must hold that though the legislature set about avowedly to validate the notification dated March 31, 1956, it failed to achieve that object. A construction which will lead to such a result must, if that is possible, be avoided.

30. We have earlier come to the conclusion that because Explanation II to Section 3-D the expression "foodgrains including pulses" in Section 3-D should be read as including two different items i.e., (1) unsplit or unprocessed foodgrains including pulses and (2) split or processed foodgrains including pulses. Consequently the expression "foodgrains" in the notification will also have to be read in the same manner. This, in our opinion, is the reasonable way of reading the notification in the light of Section 3-D , Explanation II to that section and Section 7 of the Act.

31. The only remaining contention is that the delegation made to the executive Under Section 3-D is an excessive delegation. It is true that the legislature cannot delegate its legislative functions to any other body. But subject to that qualification, it is permissible for the legislature to delegate the power to select the persons on whom the tax is to be levied or the goods or the transactions on which the tax is to be levied. In the Act , Under Section 3 the legislature has sought to impose multi-point tax on all sales and purchases. After having done that it has given power to the executive, a high authority and which is presumed to command the majority support in the legislature, to select for special treatment dealings in certain class of goods. In the very nature of things, it is impossible for the legislature to enumerate goods, dealings in which sales tax or purchase tax should be imposed. It is also impossible for the legislature to select the goods which should be subjected to a single point sales or purchase tax. Before making such selections several aspects such as the impact of the levy on the society, economic consequences and the administrative convenience will have to be considered. These factors may change from time to time. Hence in the very nature of things, these details have got to be left to the executive.

32. <CITATION> .  S.CR. 427. the question arose whether it was permissible for the legislature to empower the executive to amend the Schedule relating to exemptions. This <ORG> by majority answered that question in the affirmative. It further held that it is not unconstitutional for the legislature to leave it to the executive to determine the details relating to the working of the taxation laws, such as the selection of the persons on whom the tax is to be levied, the rates at which it is to be charged in respect of different classes of goods and the like.

33. We have not found any substance in any of the contentions advanced on behalf of the appellants. Hence these appeals fail and they are dismissed with costs-hearing fee one set.


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In view ol the order dated 28. 102(11 0. tIi appeal taIKI diinissed, Sd/ 3tJDGE AI


JUDGMENT <NAME>, J.

1. Delay Condoned.

2. Leave granted.

3. Challenge in these appeals is to the direction given to the <ORG> by <ORG> of <ORG> to dispose of application for renewal filed by the respondents expeditiously, in the background of views expressed on the factual aspects.

4. Shorn of theatric and bereft of legal controversy which constitutes bulk of the armoury as regards attack to the legality of judgment of <ORG> by which four Letters Patent Appeals were disposed of, the factual background is as follows:

5. The respondents applied for and were granted permits under the provisions of the Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Act, 1981 (in short 'the Act') and the Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Rules, 1982 (in short 'the Rules'). Permits were granted in the Exclusive Economic Zone of India in the prescribed form. The said permit authorized the applicants respondents to obtain on lease and operate Foreign Deep Sea Fishing Vessels in terms of the Act and the Rules. The permit was, however, not renewed after its period of initial currency. Stand of the applicants was that in each case permit was valid for a period of 15 years from the date of issue, since they were granted in accordance with the Government of India's policy relating to fishing of Deep Sea Resources in India Exclusive Economic Zone by leased Foreign Deep Sea Fishing Vessels, and were operative for a period of 15 years. There is a marked distinction between periods have been prescribed for currency of the concerned permits. Though applications for renewal were filed with requisite fees, no express order was passed in any of the cases declining to grant permit. However, pay orders covering renewal fee were returned to the applicants. Grievance is made that no reason has been indicated and, there is also no reference to any policy decision for not effecting the renewal. The applicants filed writ applications before <ORG>. The applications were taken up by a learned Single Judge. With reference to earlier order passed by <ORG> in the case of <ORG> and Anr. v.

<ORG> and the counter affidavit filed by the present appellants, the writ applications were dismissed. In the said case <ORG> noticed that renewal of permission was not a matter of right, since there was change in <ORG> policy. In larger public interest, the deep sea fishing policy had to be reframed. <ORG> was appointed which submitted its recommendations, and in that view of the matter there was no question of directing renewal of the permits. It was noticed by the <ORG> that having regard to the policy decision adopted by the <ORG> of India in the year 1996 pursuant to the report of <ORG> constituted under the Chairmanship of Mr. <NAME>, the <ORG> was in the process of formulating a new deep sea fishing policy. In view of the non-success before the learned Single Judge, the applicants filed Letters Patent Appeals before the High <ORG>, wherein the impugned judgment has been passed. The High <ORG>, inter alia, came to the conclusions that renewal of the permit is a valuable right; it could be refused only on cogent and valid grounds; though plea was taken that the renewal period was mentioned by mistake same appears to be an afterthoughts, and the concerned authorities were required to consider the prayer for renewal of the permit in accordance with law. The authorities were directed to pass an appropriate order thereupon. Principles of natural justice were required to be applied. Though licence has not been granted for a period of 15 years, there has been a legitimate expectation that renewal shall be granted. Policy decision which is contrary to the statute cannot be upheld. The earlier decision in <ORG> (supra) was not a binding precedent, as several relevant provisions had not been brought to the notice of <ORG> hearing the case.

6. However, it was held that in the circumstances relief was not available by issuing & Mandamus directing the concerned officials to renew the licence. Consideration was to be made by the statutory authorities at the first instance. With the aforesaid conclusions, the authorities were directed to consider the applications and take a decision within a period of six weeks from the date of communication.

7. In support of the appeals, Mr. <NAME>, learned Solicitor General submitted that <ORG> has lost sight of the fact that if the license/permit is renewed, it would be only by going against the specific stipulations in the policy decision. <ORG> was not justified in its conclusion that there was legitimate expectation or promissory estoppel involved, and that the policy decision was contrary to the statute. Reference was made to the recommendations made by <ORG> which specifically prohibit renewal, extension of existing licence and put prohibition on issuance of permits in future for fishing to joint venture/charter/lease/test fish vessels. The recommendations were approved and accepted. It was pointed out that fishing in Indian Exclusive Zone by foreign vessels is governed and regulated by the Act and the Rules thereunder while fishing by Indian vessels in the said zone is governed by executive orders.

8. Responding to the aforesaid pleas, learned counsel for the respondents submitted that <ORG> judgment is flawless and suffers from no infirmity to warrant interference. It was rightly turned down the plea that the authorities were not bound by the period indicated in several documents so far as currency of the licence/permits is concerned. Merely because licence was not indicated to be valid for a period of 15 years that did not clothe the authorities with any jurisdiction to refuse renewal. It was highlighted that in respect of 32 vessels a departure was made from the so-called policy and they were permitted to fish in the concerned zone. This clearly establishes the discrimination, and is impermissible in law. The 32 vessels are secondhand deep sea fishing vessels and could not have been imported except against vessel specific import licence granted by Director General of Foreign Trade, which has not been granted though it is a pre-requisite for import. The so-called import, have been made by companies, which were not in existence at the time permits were granted to operate. One of the companies which has been given permission to operate is only <ORG> with no financial resources. The factual aspects brought on record clearly establish that illegally and without any justifiable reasons, they have been permitted to operate, while the same benefit was not extended to the respondents herein. I was further pointed out that <ORG> has not in reality granted any relief to which the applicants were entitled in law. It has merely directed that the applications for renewal were to be disposed of expeditiously preferably within a period of six weeks from the date of communication of its order.

9. By way of reply to the submissions made by learned counsel for the respondents, learned Solicitor General submitted that directions were not merely to consider. Had it been so, and the matter would have been left open to be decided in accordance with law, there could have been no difficulty. But in view of the specific findings recorded by <ORG> on several aspects more particularly policy being opposed to statute, and/or that the documents established entitlements for renewal, the exercise by the concerned authorities in dealing with the applications for renewal would amount to an empty formality. Further, 32 vessels to which reference has been made stood on entirely different footing. The vessels in question were imported under the prevailing policy of the <ORG> and were registered by <ORG> under the Merchant Shipping Act , 1958. The said vessels were not in any way connected with the cases at hand which relate to lease and charter permits. The aforesaid 32 vessels were imported as per EXIM policy of the <ORG>. The said EXIM policy in the year 2000-2001 allowed import of deep sea fishing vessels by surrendering special import licence which had been done in the case of the concerned vessels and, therefore, the licences on those cases have no relevance so far as the present appeals are concerned. Even if it is conceded for the sake of argument that there was anything improper in the permission granted it may be ground for taking action against the concerned vessels, but it cannot be a ground to renew licence of the applicants.

10. Though there can be quarrel with the proposition that renewal of a permit carries with it a valuable right, it cannot be lost sight of that for outweighing reasons of public interest renewal can be refused. It is not in dispute that licences have not been granted for a period of 15 years. If at the time when the matter is taken up for considering whether renewal to be granted, there is a change in policy; it cannot be said that the right is defeated by introduction of a policy. In such an event, the question of applying doctrine of legitimate expectation or promissory estoppel looses significance. It has not been disputed that in fact the policy decision exists. But the stand of the respondents is that it cannot outweigh the legitimate expectation or the unbuilt rights. Additionally it is submitted that the issue has to be considered in the background of 32 vessels referred to above.

11. Rival contentions need to be cogitated.

12. Legitimacy of the policy decision has not been questioned by the respondents. What is highlighted is that notwithstanding the policy their rights are unaffected.

13. Doctrines of promissory estoppel and legitimate expectation cannot came in the way of public interest. Indisputably, public interest has to prevail over private interest. The case at hand shows that a conscious policy decision has been taken and there is no statutory compulsion to act contrary. In that context, it cannot be said that respondents have acquired any right for renewal. <ORG> was not justified in observing that the policy decision was contrary to statute and for that reason direction for consideration of the application for renewal was necessary. Had <ORG> not recorded any finding on the merits of respective stands, direction for consideration in accordance with law would have been proper and there would not have been any difficulty in accepting the plea of the learned counsel for the respondents. But having practically foreclosed any consideration by the findings recorded, consideration of the application would have been mere formality and grant of renewal would have been the inevitable result, though it may be against the policy decision. That renders <ORG> judgment indefensible.

14. What remains now to be considered, is the effect of permission granted to the 32 vessels. As highlighted by learned counsel for the appellants, even if it is accepted that there was any improper permission, that may render such permissions vulnerable so far as 32 vessels are concerned. But it cannot come to the aid of respondents. It is not necessary to deal with that aspect because two wrongs do not make one right. A party cannot claim that since something wrong has been done in another case; direction should be given for doing another wrong. It would not be setting a wrong right, but would be perpetuating another wrong. In such matters there is no discrimination involved. The concept of equal treatment on the logic of Article 14 of the Constitution of India, 1950 (in short 'the Constitution') cannot be pressed into service in such cases. What the concept of equal treatment presupposes is exis ence of similar legal foothold. It does not countenance repetition of a wrong action to bring both wrongs or par. Even if hypothetically it is accepted that wrong has been committed on some other cases by introducing a concept of negative equality respondents cannot strengthen their case. They have to establish strength of their case on some other basis and not by claiming negative equality.

15. It is (SIC) law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the <ORG>, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional.

16. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily on by any ulterior criteria. The wide sweep of Article 14 and the requirement of every <ORG> action qualifying for its validity on this touchstone irrespective of the field of activity of the <ORG> is an accepted tenet. The basic requirement of Article 14 is fairness in action by the state, and non-arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the <ORG> must act validly for a discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.

17. Where a particular mode is prescribed for doing an act and there is not impediment in adopting the procedure, the deviation to act in different manner which does not disclose any discernible principle which is reasonable itself shall be labelled as arbitrary. Every State action must be informed by reason and it follows that an act uninformed by reason is per se arbitrary.

18. The courts as observed in <CITATION> are kept out of lush field of administrative policy except where policy is inconsistent with the express or implied provision of a statute which creates the power to which the policy relates or where a decision made in purported exercise of power is such that a repository of the power acting reasonably and in good faith could not have made it. But there has to be a word of caution. Something overwhelming must appear before the <ORG> will intervene. That is and ought to be a difficult onus for an applicant to discharge. The courts are not very good at formulating or evaluating policy. Sometimes when the <ORG>s have intervened on policy grounds the <ORG>'s view of the range of policies open under the statute or of what is unreasonable policy has not got public acceptance. On the contrary, curial views of policy have been subjected to stringent criticism.

19. As Professor <NAME> points out (in Administrative Law by H.W.R. <NAME> 6th Edition) there is ample room within the legal boundaries for radical differences of opinion in which neither side is unreasonable. The reasonableness in administrative law must, therefore, distinguish between proper course and improper abuse of power. Nor is the test <ORG>'s own standard of reasonableness as it might conceive it in a given situation. The point to note is that the thing is not unreasonable in the legal sense merely because the <ORG> thinks it to be unwise.

20. <CITATION> , it was observed that decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest where the doctrine of legitimate expectation can be applied. If it is a question of policy, even by ways of change of old policy, the <ORG> cannot intervene with the decision. In a given case whether there are such facts and circumstance giving rise to legitimate expectation, would primarily be a question of fact.

21. As was observed in <CITATION> .

/SC/0326/1999, the change in policy can defeat a substantive legitimate expectation if it can be justified on "Wednesbury reasonableness". The decision maker has the choice in the balancing of the pros and cons relevant to the change in policy. It is, therefore, clear that the choice of policy is for the decision maker and not the <ORG>. The legitimate substantive expectation merely permits the <ORG> to find out if the change of policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. A claim based on merely legitimate extension without anything more cannot ipso facto give a right. Its uniqueness lies in the fact that it covers the entire span of time: present, past and future. How significant is the statement that today is tommorrows' yesterday. The present is an we experience it, the past is a present memory and future is a present expectation. For legal purposes, expectation is not same anticipation. Legitimacy of an expectation can be inferred only if it is founded on the sanction of law.

22. As observed in Attorney General for New Southwale v. <NAME> [1990 (64) Australian LJR 327) 'to strike the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the negotiation of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law; 'If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased gross abuse of power or violation of principles of natural justice, the same can be questioned on the well known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider, but the court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognized general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It follows that the concept of legitimate expectation is 'not the key which unlocks the treasure of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits', particularly, when the element of speculation and uncertainty is inherent in that very concept. As cautioned in Attorney General for New Southwale's case the <ORG> should restrain themselves and respect such claims duly to the legal limitations. It is a well-meant caution. Otherwise, a resourceful litigant having vested interest in contract, licences, etc. can successfully indulge in getting welfare activities mandated by directing principles thwarted to further his own interest. The caution, particularly in the changing scenario becomes all the more important.

23. If the <ORG> acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies. As noted above, the ultimate test is whether on the touchstone of reasonableness the policy decision comes out unscathed.

24. Reasonableness of restriction is to be determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interest of persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable nearly because in a given case, it operates harshly. In determining whether there is any unfairness involved; the nature of the right alleged to have been infringed the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time, enter into judicial verdict. The reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Cancalization of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. ( <CITATION> .

/ <CITATION> , <CITATION> .

/ <CITATION> . (AIR 1997 SC 129).

25. As noted above, the appellants have relied upon the change in Government policy prescribing that there shall be no grant of renewal/extension for charter/lease permits. Learned Solicitor General has stated that if respondents apply in terms of prevailing EXIM policy, as was done by the affronted 32 vessels, due consideration in accordance with law shall be made.

26. Keeping in view the analysis made of legal positions, and in the absence of any material to discount legitimacy of policy, the respondents have not made out a case for interference.

27. In the aforesaid background the residual plea of the respondents regarding legitimate expectation is also sans merit.

28. The appeals deserve to be allowed; which we direct. Costs made easy.