PETITIONER: MRS. KUSUMBEN D. MAHADEVIA Vs. RESPONDENT: THE COMMISSIONER OF INCOME-TAX,BOMBAY. DATE OF JUDGMENT: 30/03/1960 BENCH: <NAME>, M. BENCH: <NAME>, M. DAS, S.K. <NAME>, J.L. CITATION: 1960 AIR 907 1960 SCR (3) 417 CITATOR INFO : R 1961 SC 107 (13) RF 1961 SC1633 (13,26) RF 1963 SC1356 (121) R 1963 SC1484 (7) RF 1973 SC1023 (13) ACT: lncome-tax--Reference--<ORG> jurisdiction-If can decide a question not decided by the <ORG>--Indian Income-tax Act, 1922 (XI of 1922), s. 66--The States (Taxation Concessions) Order, 1949, Para. 4. HEADNOTE: The appellant was a shareholder of a company known as <ORG> The Company with its registered office at Bombay was at all material times resident in British India. It was also doing business in the former Baroda State and used to keep its profits derived in that State with <ORG>, Navsari. In the year 1949 <ORG> declared dividends out of profits which had accrued partly in British India and partly in the Indian State. The appellant was assessed to income-tax on the dividends earned by her. She did not bring those dividends into British India and claimed the benefit of para. 4 of the Merged States (Taxation Concessions) Order. The <ORG> held that the income did not accrue to the appellant in the Baroda State but it did not decide the question whether she was entitled to the benefits of the Taxation Concessions Order. <ORG> on a reference to it held that para. 4 of the Taxation Concessions Order. did not apply to the assessee but it did not decide the other question as to where the income had accrued to the assessee. On appeal by special leave the appellant contended, inter alia, that since the <ORG> had not gone into the question of the applicability to the assessee of the Concessions Order and had not expressed any opinion thereon, <ORG> could not raise the question on its own and decide it: Held, that <ORG> exceeded its jurisdiction in going outside the point of law decided by the <ORG> and deciding a different point of law. Section 66 of the Income-tax Act which confers jurisdiction upon <ORG> only permits a reference of a question of law arising out of the order of the <ORG>. It does not confer jurisdiction on <ORG> to decide a different question of law not arising out of such order. <CITATION> ,  37 I.T.R. 11, <CITATION> ,  26 I.T.R. 686, Commissioner of Incometax v. <ORG>,  27 I.T.R. 279 and <ORG> v. Commissioner of Incometax,  31 I.T.R. 433, distinguished. <CITATION> ,  30 I.T.R. 388, considered. 418 JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 507 of 1957. Appeal by special leave from the order and judgment dated September 28, 1955, and February 20, 1956, of <ORG> in Income-tax Reference No. 28 of 1955. <NAME> and <NAME>, for the appellant. <NAME>, Solicitor - General of India,<NAME> and <NAME>, for the respondent.

1960. March 30. The Judgment of the <ORG> was delivered by HIDAYATULLAH, J.-This is an appeal with the special leave of this <ORG>, and is directed against an order dated September 28, 1955, and a judgment dated February 20, 1956, of the High <ORG> of Bombay. By the order, the High <ORG> reframed a question referred to it by <ORG> at Bombay, which it answered by its judgment. Mrs. <NAME> (hereinafter referred to as the assessee) who has filed this appeal, was, at all material times, residing in Bombay. She was a shareholder, holding 760 shares of <ORG>, Bombay. For the assessment year 1950-51 (the previous year being the calendar year 1949), she was assessed to income-tax on a total income of Rs. 1,50,765 which included a grossed-up dividend income of Rs. 1,47,026. In the latter income was included a sum of Rs. 47,120 being the dividends declared by <ORG>, Bombay. <ORG>, is a private limited Company with its registered office at Bombay. It was, at all material times, 'resident and ordinarily resident' in British India. It was also doing business in the former Baroda State, and used to keep its profits derived in that State with <ORG>, Navsari. In the year 1949 <ORG>, declared dividends out of these accumulated profits by three resolutions, which are reproduced:

25-3-1949. " That a further dividend of Rs. 17 per ordinary share free of income-tax for the year 1947 be and is hereby declared absorbing Rs. 4,29,250 and the same be payable in Navsari out of the profits of the year 1947 lying at Navsari."

24-9-1949. " That a further dividend of Rs. 24 per ordinary share free of income-tax for the year 1948 be and is hereby declared absorbing Rs. 6,06,000 and the same be payable in Navsari out of the profits of the year 1948 lying at Navsari with Messrs. <ORG> on -or after 30th April, 1949."

24-9-1949. " Resolved that an Ad-interim dividend of Rs. 21 per ordinary share free of income-tax absorbing Rs. 5,30,250 be and is hereby declared for the year 1949 out of the income of the Company for the year 1949 remaining unbrought with Messrs. <ORG>, Navsari, and that the same be payable in Navsari on or after 30th April, 1949."

The assessee did not bring these dividends into British India. She claimed the benefit of para. 4 of the Merged States (Taxation Concessions) Order, 1949 (hereinafter referred to briefly as the Concessions Order); but the <ORG> held that the income did not accrue to her in the Baroda State. The <ORG> pointed out that the dividends were declared by <ORG>, out of its profits which had accrued partly in, what was then called, British India and partly in the Indian State. The dividend was thus declared out of ' composite profits'. It further pointed out that the assessee had paid for and acquired the shares of a Company in British India and was thus holding an asset in British India, and that the income was from that asset. The <ORG>, however, at the instance of the assessee drew up a statement of the case under s. 66(1) of the Indian Income-tax Act, and referred the following question to <ORG>:

" Whether the net dividend income of Rs. 47,120 accrued to the assessee in the former Baroda State, or whether it is income accrued or deemed to have accrued to the assessee in British India ?"

When the reference was heard, <ORG> was of the opinion that the <ORG> ought to have decided and referred also the question whether the Concessions Order applied to the assessee. <ORG> recognised the grievance of the assessee that no such point was raised before the <ORG>. <ORG>, however, by its order dated September 28, 1955, decided that there was no need to send the case back for a supplemental statement, since all the facts necessary to decide the two questions were before <ORG>. <ORG> then reframed the question, as it said, to comprehend the two points of law in the following words:

" Whether the assessee is entitled to any concession under the Merged States (Taxation Concessions) Order, 1949, with regard to the net dividend income of Rs. 47,120?" The reference then came up for final disposal on February 20, 1956, and <ORG> answered the question in the negative, holding that para. 4 of the Concessions Order did not apply to the assessee. <ORG> did not decide where the income had accrued to the assessee. Leave to appeal to this Court was refused by <ORG>, but the assessee applied to this Court for special leave against both the order and the judgment and obtained it, and the present appeal has been filed.

At the very outset, the assessee has questioned the jurisdiction of <ORG> to frame and deal with a question of law not arising out of the order of the <ORG>. The assessee points out that the <ORG> had decided that the income had accrued in British India. The assessee had challenged this part of the decision, and if the Commissioner felt it necessary, he should have obtained the decision of the <ORG> and asked for a reference on the other point also. Since the <ORG> had not gone into the question of the applicability to the assessee of the Concessions Order and had not expressed any opinion thereon, the assessee contends that <ORG> could not raise the question on its own, and decide it. The assessee strongly relies upon a decision of this Court in <ORG> v. Commissioner of <ORG> (1). In that case, <ORG> had (1) [1959] 37 I.T.R. 11.

directed the <ORG> to submit a supplementary statement of the case on points not arising from the order of the <ORG>, and this Court held that <ORG> had no jurisdiction to do so. The learned counsel for the Commissioner, on the other hand, contends that the question was the assessability of the assessee, who claimed the benefit of the Concessions Order. The main question was thus the applicability of the Concessions Order, and the question of the accrual of the income, whether in British India or in Baroda, was merely ancillary. The latter question was, according to the respondent, included in the first question, and <ORG> was right when it framed a comprehensive question and answered it in the sequence it did. The respondent points out that <ORG> having held that the Concessions Order did not apply, was not required to decide the other limb of the question, as it became unnecessary to do so.

In our opinion, the objection of the assessee is well- founded. The <ORG> did not address itself to the question whether the Concessions Order applied to the assessee. It decided the question of assessability on the short ground that the income had not arisen in Baroda but in British India. That aspect of the matter has not been touched by <ORG>. The latter has, on the other hand, considered whether the Concessions Order applies to the assessee, a matter not touched by the <ORG>. Thus, though the result is the same so far as the assessment is concerned, the grounds of decision are entirely different.

<ORG> felt that the question framed by it comprehended both the aspects and, perhaps it did. But the two matters were neither co-extensive, nor was the one included in the other. The question of accrual of income has to be decided under the Incometax Act, and has but little to do with the Concessions Order. That question can be adequately decided on the facts of this case without advertence to the Concessions Order. It cannot, therefore, be said to be either coextensive with or included in the decision of the question actually considered by <ORG> to wit, whether the Concessions Order applied or not. If this  be so, it is manifest that the <ORG> decided something which stands completely outside the decision of <ORG>. <ORG> also decided a matter which was not considered by the <ORG> even as a step in the decision of the point actually decided. The two decisions are thus strangers to each other, though they lead to the same result.

Section 66 of the Income-tax Act which confers jurisdiction upon <ORG> only permits a reference of a question of law arising out of the order of the <ORG>. It does not confer jurisdiction on <ORG> to decide a different question of law Dot arising out of such order. It is possible that the same question of law may involve different approaches for its solution, and <ORG> may amplify the question to take in all the approaches. But the question must still be one which was before the <ORG> and was decided by it. It must not be an entirely different question which the <ORG> never considered. The respondent attempted to justify the action taken by contending that the decision of the question of the accrual of the income with reference to the place of accrual implied the applicability of the Concessions Order. We do not agree. If this were so, there would be no necessity to frame the question again. Indeed, <ORG> itself felt that there were two limbs of the question of assessability, and reframed the question to cover both the limbs. Where <ORG> went wrong was in not deciding both the limbs but one of them and that too, the one not decided by the <ORG>. The resulting position can be summed up by saying that <ORG> decided something which the <ORG> did not, and the <ORG> decided something which <ORG> did not. This is clearly against the provisions of s. 66 . The respondent referred to <CITATION> - tax (1), <CITATION> (2 ) and <CITATION> (3). They (1)  26 I.T.R. 686. (2)  27 I.T.R. 279. (3)  31 I.T.R. 433.

were all decisions of the same <ORG>, and arose in different circumstances. In two of them, the question was wide enough to take in a line of reasoning not adopted by the <ORG>, and in the third, the question was widened by deleting a reference to a section, when another section was also material. They were not cases where the issues of law as decided by the <ORG> and the High <ORG> were entirely different, which is the case here. The Punjab High <ORG> has taken a contrary view in <ORG> v. Com- missioner of Income-tax (1).

For the reasons given above, we are of opinion that <ORG> exceeded its jurisdiction in going outside the point of law decided by the <ORG> and deciding a different point of law. The order of <ORG> will, therefore, be set aside, and the case will be remitted to <ORG> to decide the question framed by the <ORG>. In view of the fact that both the assessee and the Commissioner pointed out the anomaly to the : <ORG> and the question was reframed in spite of this, the costs of this appeal shall be costs in the reference to. be heard by <ORG>, and will abide the result.

Appeal allowed.

Case remitted.


JUDGMENT <NAME>, J.

At the instance of the assessees who are four in numbers, <ORG>, Allahabad, by a consolidated order dated 24-3-1982, has referred the following two common questions of law under section 27(1) of the Wealth Tax Act, 1957 (hereinafter referred to as "the Act") for opinion to this court :

" 1. Whether, on the facts and in the circumstances of the case and on a true interpretation of the trust deeds, <ORG> was justified in law in concluding that the interest of each of the beneficiaries under these trusts on each of the valuation dates, was indeterminate and the beneficiaries were unknown and accordingly in holding that the assessments of the beneficial interests in the trust properties of the beneficiaries could be made on the trustees only under section 21(4) of the Wealth Tax Act, 1957 ?

2. Whether, on the facts and in the circumstances of the case and on a true interpretation of the provisions of section 25(2) of the Wealth Tax Act, 1957, the Commissioner had validly assumed jurisdiction and was justified in law in holding that the assessment made by the Wealth Tax Officer under section 21(2) of the Wealth Tax Act, 1957 were erroneous ?"

It may be mentioned here that in respect of the wife of <ORG>, the assessment years involved are 1974-75 to 1976-77 whereas in respect of the other three assessees, the assessment years involved are 1973-74 to 1977-78.

2. Briefly stated, the facts giving rise to the present reference are as follows:-

Each of the assessees is a private <ORG>. The following is the table of relationships :

<NAME> (deceased) <NAME> Lt. Col.

Sukhdeo Mohan Lt. Col. <NAME> <NAME> (Died) <NAME> <NAME> Vinay Mohan Hemant Mohan Lt. Col. <NAME> executed a deed dated 20-10-1973 in respect of 60,000 equity shares of <ORG> for the benefit of the wife of <NAME>. Under clause 2 of the said trust deed, in the event of her death or her otherwise becoming incapable of acquiring any interest in the property, the beneficiary was to be the second wife of <NAME> (in case he married again) and in case his wife (first) became incapable of acquiring property, then the first son of Shri <NAME> on his attaining majority. In clause 3 it was further provided that if the said Shri <NAME> did not marry and/or in any manner all possibilities of his marriage disappeared, the beneficiary of the trust was to be Shri <NAME> (upon his attaining majority) and failing him, to the other surviving heirs of Shri <NAME>. In clause 4 it was provided that the trustee shall hold the trust property absolutely in trust for and for the benefit of the beneficiary named hereinbefore and administer the same in the manner provided therein. In clause 6 of the deed it was provided that the trust shall come to an end upon the transfer and delivery of the trust property and all the accumulation thereto to the beneficiary in the manner indicated therein whereupon the trustee shall stand discharged, otherwise the trust shall remain in full force.

3. Three similar trusts were earlier created on 22-5-1973 in respect of 60,000 equity shares of <ORG> (i) by <NAME> for the benefit of the first son of <NAME> (in any circumstance), (ii) by Smt. <NAME> for the benefit of the first son of <NAME> and (iii) by Lt. Col. <NAME> for the benefit of the first son of <NAME>. In these trusts it was provided that in case the son named therein died before attaining the age of majority or otherwise became incapable of acquiring any interest in property, the beneficiary will be the next surviving male child. They also provided that if <NAME>, <NAME> or <NAME> (as the case may be) did not beget a son and in any manner all possibilities of begetting a son disappeared and/or the male children having been born, died before attaining majority, the beneficiary would be <NAME>, <NAME> or <NAME> himself (as the case may be).

Accordingly, the trustees named in each case, for the valuation dates as on 31-3-1973 to 31-3-1977 filed the return of wealth declaring the value of shares and accretions in regard thereto in the assessment years subsequent to 1973-74. The Wealth Tax Officer completed the assessments of these assessees in the status of individuals by invoking the provisions of section 21(1) / 21(2) of the Act on the basis that on each of the valuation dates the beneficiaries were known and that their shares were determinate. Subsequent to the making of these assessments and in view of the objection raised in the audit note the Wealth Tax Officer sought to rectify the assessments by issuing notices dated 27-8-1979 under section 35 of the Act on the ground that the status of the assessees had been wrongly adopted. However, the Wealth Tax Officer dropped the reassessment proceedings after considering the replies of the assessees.

4.Thereafter, the Commissioner acting under section 25(2) of the Act, issued notices to the assessees on 13-12-1979 to the effect that the assessments made by the Wealth Tax Officer under section 16(3) were erroneous insofar as they were prejudicial to the interest of the revenue inasmuch as the Wealth Tax Officer had assessed the assessees in the status of the individuals on the ground that the shares of the sole beneficiaries were determinate and had allowed exemptions under section 5(1A) . After considering the replies dated 20-10-1979 filed by each of the assessees, the Commissioner held that the beneficiaries for whom the assets were held by the trustees, were indeterminate and unknown and that the assessees should have been assessed to tax under section 21(4) of the Act. The exemption under section 5(1A) was also held to be inadmissible and, therefore, the tax was held to be leviable at the higher rate of 1.5%. He held that on the relevant valuation date <NAME> had not married, <NAME> and <NAME> were themselves minors, and that <NAME> had no son as he was married only in April, 1977.

5. The assessees being aggrieved preferred separate appeal before the <ORG>. The <ORG> after considering the submissions made by the respective parties was of the view that on each of the valuation date, there was no beneficiary named in the trust deed who could be said to have vested interest in the property of the trust and everyone named as beneficiary in the trust deed was to have a contingent interest which was incapable of getting vested on each of the valuation dates. Therefore, it was held that the assessment of beneficial interest in the trust property of the beneficiaries could be made on the trustees only under section 21(4) of the Act. The order passed by the Commissioner was upheld.

6. We have heard <NAME>, the learned senior counsel assisted by <NAME>, Advocate, on behalf of the applicants, and <NAME>, the learned Standing counsel appearing for the revenue.

The learned counsel for the applicants submitted that each of the trusts has been validly created. The beneficiaries and their interest was also known and determinate and, therefore, they were assessable under section 21(1) of the Act and not under section 21(4) of the Act. He further submitted that the Commissioner had initiated proceedings under section 25(2) of the Act on the basis of an audit objection to which the stand of the department was that the trust is assessable under section 21(1) of the Act and, therefore, the assessment order could not have been said to be either erroneous or prejudicial to the interest of the revenue. He submitted that the proceeding initiated under section 25(2) of the Act was wholly illegal and unwarranted. He relied upon the following decisions:

(i) <CITATION> . Kapil Mohan (2001) 252 ITR 830 (Del);

(ii) <CITATION> (2000) 243 ITR 83 (S C);

(iii) <CITATION> . (1983) 140 ITR 490 (P &H))

(iv) <CITATION> (19971 228 ITR 195 (MP);

(v) <CITATION> (1979) 119 ITR 996 (SC)

(vi) CWT v. Smt. Arundhati Balkrishna Trust (1975) 101 ITR 626 (Guj);

(vii) Jeewanlal (1929) <CITATION> . CIT(1977) 108 ITR 407 (Cal.);

(viii) <CITATION> (2003)259 ITR 5025 (Guj);

(ix) Padmavati Jaykrishna Trust (1966) 61 ITR 66 (Guj);

(x) <CITATION> (1984) 147 ITR 5006 (Mad.);

(xi) <CITATION> (1989) 176 ITR 442 7 (Mad.);

(xii) <ORG> v. CWT(1970) 77 ITR 6 (SC) and

(xiii) Aditanar Educational Institution v. Addl. CIT(1997) 224 ITR 310 (SC).

7. Sri <NAME>, the learned counsel for the revenue, however, submitted that from a perusal of the trust deed it is clear that beneficiaries were not in existence on the relevant valuation dates in respect of each assessment years in question and, therefore, the beneficiaries were indeterminate and the provision of section 21(4) of the Act was applicable. According to him, the Wealth Tax Officer had assessed the trust under section 21(1) of the Act which order was not only erroneous but also prejudicial to the interest of the revenue and the Commissioner was within his right to exercise his jurisdiction under section 25(2) of the Act on the basis of the audit objection. He relied upon the following decisions:

(i) <ORG> (supra); and

(ii) CWT v. Trustee of <ORG> (1977) 108 ITR 555 (SC).

8. Having heard the learned counsel for the parties, we find that the Wealth Tax Officer has assessed each of the applicants under section 21(1) of the Act. Subsequently, on the basis of the objection raised in the audit note, the Wealth Tax Officer sought to rectify the assessment by issuing notice under section 35 of the Act on the ground that the status of the assessees had been wrongly adopted which proceeding was subsequently dropped. Thereafter, the Commissioner initiated the proceeding under section 25(2) of the Act on the ground that the assessment order are erroneous and prejudicial to the interest of the revenue. The said action has been taken on the basis of the audit objection.

9. In the case of <ORG> (supra), <ORG> has held that the opinion of an internal audit party of <ORG> on a point of law cannot be regarded as information within the meaning of section 147(b) of the Income Tax Act, 1961 for the purpose of reopening an assessment. It has further held that although an audit party does not possess the power to pronounce on the law, it nevertheless may draw the attention of the <ORG> to it. Law is one thing and its communication another.

10. In the case of <ORG> (supra), <ORG> has held that only if the order is erroneous and is likely to prejudice the interest of the revenue, the provision of section 263(1) of the Income Tax Act, 1961 which is analogous to the provision of section 25(2) of the Act, shall be attracted.

11. In the case of <ORG> (supra), <ORG> has held that the prerequisite for exercise of jurisdiction by a Commissioner suo motu under section 263 of the Income Tax Act, 1961 is that the order of the <ORG> is erroneous insofar as it is prejudicial to the interest of the revenue. The Commissioner has to be satisfied of the twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the revenue. If one of them is absent, i.e., if the order of the <ORG> is erroneous but is not prejudicial to the interest of the revenue or if the order of the <ORG> is not erroneous but is prejudicial to the interest of the revenue, recourse cannot be had to section 263(1) of the Income Tax Act, 1961 and the provision cannot be invoked to correct each and every type of error committed by the assessing officer. It is only when an order is erroneous then the section will be attracted. <ORG> has further held that the incorrect assumption of fact or incorrect assumption of law will satisfy the requirement of order being erroneous. The phrase "prejudicial to the interest of the revenue" is of wide import and is not confined to loss of tax. If due to an erroneous order of the <ORG>, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. <ORG> has further held that every loss of revenue as a consequence of an order of the assessing officer, cannot be treated as prejudicial to the interests of the revenue, for example, when an <ORG> adopted one of the course permissible in law and it has resulted in loss of revenue and where two views are possible and the <ORG> has one view with which the Commissioner does not agree, it cannot be treated as erroneous order prejudicial to the interests of the revenue unless the view taken by the <ORG> is unsustainable in law.

12. In the case of <ORG> (supra), <ORG> has held that the notice under section 263 of the Income Tax Act, 1961 at the instance of <ORG> without exercising his own discretion and judgment cannot be sustained.

13. In the case of <NAME> (supra), <ORG> has followed the principle laid down by <ORG> in the case of <ORG> (supra).

14. In the case of <ORG> (supra), <ORG> has held that the power of revision conferred on the Commissioner by section 25 of the Act is not administrative but is quasi-judicial and in exercise of that power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party and decide the dispute according to procedure consistent with principles of natural justice. He cannot permit his judgment to be influenced by matters not disclosed to the assessee nor by direction of another authority.

15. In the case of Brig. <NAME> (supra), <ORG> has held that the first son of <NAME> trust to be valid trust.

16. In the case of <NAME> (supra), <ORG> has held that if a trust specifies the condition laid down in section 13 of the Transfer of Property Act, 1882 a trust may be created even in favour of an unborn person.

17. In the case of <NAME> (supra), <ORG> has held that a valid trust can be created for prospective wives of minor sons.

18. In the case of <ORG> (supra), <ORG> has held that the language of section 10(22) of the Income Tax Act, 1961 is plain and clear and the availability of exemption should be evaluated each year to find out whether the institution existed during the relevant year solely for educational purposes and not for purposes of profit. The emphasis is that for considering the exemption evaluation should be made each year regarding the purpose for which the institution existed.

19. In the case of <ORG> (supra), <ORG> has held that section 21(4) of the Act would apply where the shares of the beneficiaries were indeterminate or unknown, i.e., where the settler had not determined or specified the shares.

20. In the case of <ORG> (supra), <ORG> was considering a case under section 161(1) of the Income Tax Act, 1961. In that case., a registered settlement deed on 26-11-1979 was executed by <NAME> creating a private clause 4 of the deed dealt with the distribution. It provided that the date of distribution means the day on which shall expire the period of 20 years after execution of the settlement or such earlier or later day as the trustees may in their absolute discretion at any time appoint. The shares of the beneficiaries were also specified. <ORG> had held that the beneficiaries were not required to do anything but to stand wait for something to fall to their respective shares in accordance with the settlement deed, They were merely body of individual and not an association of persons with any intention to carry on common activity to produce taxable income and, therefore, the assessment of the trust would be made under section 161(1) of the Income Tax Act, 1961.

21. In the case of <ORG> (supra), <ORG> was considering a case where under the term of the trust deed the income from the trust properly was made payable to the daughter, in law of the settler for. a life and thereafter the corpus was to be divided and distributed in equal shares amongst the male child or children of the settler's son. During the accounting year relevant to 'the assessment year 1958-59, the settler's son had two sons, namely, 31-12-1957, the number of beneficiaries was definite and their shares were equal, there was no question of their shares being indeterminate and unknown arid, consequently, the provisions of sub-section (4) of section 21 would not apply. It further held that the possibility of a variation in the constitution of the family in future was immaterial and the assessment would have to be made under section 21(1) of the Act.

22. In the case of Trustee of HEM <NAME>'s Family (Remainder Wealth) Trust (supra), <ORG> has held that the question in regard to applicability of sub-section (1) or (4) of section 21 of the Act has to be determined with reference to the relevant valuation date. The Wealth Tax Officer has to determine who are the beneficiaries in respect of the remainder on the relevant valuation date and whether their shares are indeterminate or. unknown. It is not at all relevant whether the beneficiaries may change in subsequent years before the date of distributor depending upon contingencies which may come to pass in future arid so long it is possible that the beneficiaries are known and their shares are determinate, the possibility that the beneficiaries may change by reason of subsequent events such as birth or death would not take the case out of the ambit of sub-section (1) of section 21 of the Act. It has further held that if on the relevant valuation date it is not possible to say with certainty and definiteness as to who would be the beneficiaries and whether their shares would be determinate arid specific, if the event on the happening of which the distribution is to take place occurred on that date, the case will be governed by sub-section (4) of section 21 of the Act. <ORG> has further held that when the beneficiaries are indeterminate or unknown then obviously their shares would also be indeterminate and unknown and they cannot conceive of a case where the share would be determined or named while the beneficiaries are indeterminate or unknown. According to <ORG>, the expression "where the shares of the beneficiaries are indeterminate or unknown" carries with it, by necessary implication, a situation where the beneficiaries themselves are indeterminate or unknown.

23. In the case of <ORG> v. <ORG> (1999) 240 ITR 409 (SC), <ORG> was considering the following clauses of the trust deed executed by Sri <NAME> of Kadiam in East Godavari District for the benefit of his three grandchildren and daughter:--

"18. The trustee for the time being may, at his discretion, apply the whole or any portion of the income of the trust fund for the maintenance, education or advancement in life of the beneficiary and shall accumulate all the residue by investing the same in the aforesaid manner.

20. On the beneficiary completing the age of 25 years, the trustee shall transfer and make over to the beneficiary all the trust funds and on so transferring, this trust deed shall stand cancelled and be of no effect.

21. If the object for which the trust has been created fails and cannot be fulfilled, the trustee for the lime being shall be at liberty to apply the trust property to the benefit of the other sons, daughters of my last daughter, Mrs. <NAME>, in the proportion of one share for a son and half-share for a daughter'." (p. 414) <ORG> has held that-

"On the basis of the aforesaid terms and conditions, it. is apparent that the rights of the beneficiaries to get the corpus of the trust fund conic into existence at the future date when the condition regarding the survival is fulfilled. <ORG>, therefore, rightly arrived at the conclusion that interest of beneficiary is indeterminate or unknown and is contingent and, therefore, held that section 21(4) would be applicable. In this view of the matter, there is no substance in the contention of learned counsel for the appellant that the trust should be assessed tinder section 21(1) of the Wealth Tax Act." (p. 414)

24. From a perusal of the notice issued under section 25(i) of the Act, it appears that the Commissioner had examined the assessment record of each of the assessees and had independently arrived at the conclusion that the orders passed under section 16(3) of the Act by the Wealth Tax Officer was erroneous and prejudicial to the interest of' the revenue. The audit objection was only a piece of opinion which might have been taken into consideration by the Commissioner but his decision is not solely based on (lie audit objection. He has also applied his independent mind and, therefore, in view of the principle laid down by <ORG> in the cases of Trustee of HEM <ORG> (supra) and <ORG> (supra), the view taken by the Wealth Tax Officer that the assessment should have been made tinder section 21(1) of the Act is unsustainable in law. Thus, the orders are not only erroneous but also prejudicial to the interest of the revenue. In this view of the matter, the Commissioner was justified in assuming jurisdiction under section 25(2) of the Act..

25. So far as the question as to whether the shares of the beneficiaries were determined or not, it may be mentioned here that each of the four trust deeds contained identical clauses with variations in the names. In the trust deed dated 20-10-1975, executed by Major <NAME>, on 20-10-1975, the beneficiaries of the trust had been the wife of Sri <NAME> son of late Padma Bhushan Col. <NAME>. The following clauses 2 and 3 of the said trust deed are relevant and are reproduced below:-

"2. That the beneficiary of this trust is and shall be the wife of <NAME> son of Padma Bhushan Lt. Col. <NAME> and in case she dies or otherwise becomes incapable of acquiring any interest in property the beneficiary of this trust shall be the second wife of <NAME> in case he marries again and in case his first wife becomes incapable of acquiring property, then the first male child of <NAME> on the attainment of majority of such male child.

3. If the said <NAME> does not marry and/or in any manner all possibilities of marrying shall disappear then and in that event the beneficiary of this trust shall be the first son of Sri Pankaj Mohan son of' Padma Bhushan Lt. Col. V.R. Mohan upon his attaining majority and failing him to the other surviving heirs of Sri Pankaj Mohan son of Padma Bhushan Lt. Col. V.R. Mohan."

26. It is admitted that <NAME> was not married on the valuation date of each of the assessment years in question nor <NAME>, <NAME> and <NAME> had any son on the respective valuation date. Thus, the beneficiary was unknown. Even though a trust can be created in respect of future wife or an unborn child but the position in law would be that the beneficiary is unknown. As held by <ORG> in the cases of Trustee of HEM Nizam's Family (Remainder Wealth) Trust (supra) and <ORG> (supra), where the beneficiaries are unknown, the shares would also be taken to be indeterminate. In this view of the matter, the provision of section 21(4) of the Act would be applicable and not section 21(1) of the Act. The <ORG> has rightly applied the provisions of section 21(4) of the Act.

27. In view of the foregoing discussion, we answer both the questions of law referred to us in the affirmative, i.e., in favour of the revenue and against the assessees. There shall be no order as to costs.


PETITIONER: <ORG> Vs. RESPONDENT: STATE OF WEST BENGAL & ANR. DATE OF JUDGMENT11/11/1974 BENCH: <NAME>, A.N. (CJ) BENCH: <NAME>, A.N. (CJ) MATHEW, KUTTYIL KURIEN UNTWALIA, N.L. CITATION: 1975 AIR 266 1975 SCR (2) 674 1975 SCC (1) 70 CITATOR INFO : RF 1977 SC1496 (20) R 1978 SC 930 (15,16,17,18) R 1979 SC1628 (12,21) RF 1987 SC1086 (28) ACT: Constitution of India, 1950, Art. 14- Black listing of contractors without opportunity to show cause-Validity. HEADNOTE: Certain persons engaged in the business of purchase export of Cinchona pro ducts, and others who were on the approved list of the Director General, <ORG>, were put on the black list by the <ORG>, because, <ORG> had information that they were indulging in some malpractices. On the question whether they were entitled to a notice to be heard, before they were put on the black list, HELD : (1) Under Art. 298 of the Constitution the executive power of the <ORG> and the <ORG> shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The <ORG> can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the <ORG> is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity applies to matters of public contracts. The <ORG> need not enter into any contract with anyone but if it does, it must do so fairly without discrimination and without unfair procedure. No one has any right to enter into a contract with the Governor quotations for the purchase of goods. This privilege arises because it is the <ORG> which is trading With the public, and the democratic form of <ORG> demands equality and absence of arbitrariness and discrimination in such transactions. The activities of the <ORG> have a public element and, therefore, there should be fairness and equality. [677C-E, G; 678D-E] (2) A body maybe under a duty to give fair consideration to the facts and to consider the representation but not to disclose details of information in its possession. Sometimes the duty to act fairly can also be sustained without providing opportunity for an oral hearing. It will depend upon the nature of the interest affected, and the circumstances in which the power is exercised and the nature of sanctions involved therein. [678H-679B] (3) Exclusion of 'a member of the public from dealing with a <ORG> in sales transactions has the effect of preventing him from purchasing and doing a lawful trade in goods by discriminating against him in favour of other people. The <ORG> can impose reasonable conditions regarding rejection and acceptance of bids or qualifications of bidders. Just as an exclusion of the lowest tender will be arbitrary, similarly exclusion of a person. who offers the highest price from participating in a public auction would also have the same aspect of arbitrariness. [678F-G] (4) Black listing has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the <ORG> for purposes of gain. A person who is on the approved list is unable to enter into advantageous relations With the <ORG> because of the order of black listing. A person who has been dealing with the <ORG> in the matter of sale and purchase of materials ha& a legitimate interest or expectation. Black listing tarnishes one's reputation and reputation is a part of person's character and personality. The fact that a disability is created by the order of black listing indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before be is put on the black list. [678EF; 679B-C] 675 JUDGMENT:

ORIGINAL JURISDICTION : Writ Petitions Nos. 34 of 1974 and 959 of 1973.

Petition under Art. 32 of the Constitution of India and Civil Appeal No. 318 of 1974.

From the judgment and order dated the 15th September 1973 of <ORG> in Appeal No. 38 of 1973. <NAME>, <NAME>, (In W.P. No. 34/74), <NAME> and <NAME>, (In W.P. No. 959/73) and <NAME>, for the petitioners (In W.P. No. 34/74 & 959/73). <NAME>, <NAME>, <NAME> and <NAME>, for the respondents (In W.P. No. 34/74 and 959/73).

<NAME>, Solicitor General of India, <NAME> and <NAME>, for the appellant (In C.A. No. 318/74). <NAME> and <NAME>, for the respondents (In C.A. No. 318/74).

The Judgment of the Court was delivered by RAY, C.J.-The two Writ Petitions and the Civil Appeal raise the question as to whether a person who is put on the black list by <ORG> is entitled to a notice to be heard before the name is put on the black list. Sale of Cinchona is held by <ORG> at meetings of <ORG>. Sealed quotations are invited for intending buyers. The State maintains a list of buyers or bidders. The State has the right to reject a bid at an auction.

The petitioners in the Writ Petitions were engaged in the business of purchase and export of Cinchona products between the years 1966 and 1971. They submitted tender for purchase of Cinchona. Their tender was accepted. They entered into contracts with <ORG> during those years for purchase of Cinchona for large sums of money. The petitioners submitted tender once on 15th February, 1973 and again on 4 December, 1973. The petitioners allege that since the month of December, 1970 all offers of the petitioners were rejected though in most cases their offer was the highest. The petitioners contend that there is discrimination and lack of fair play at the sale. The petitioners submit that they are entitled to receive the same treatment and to be given the same chance as anybody else for the purchase of Cinchona. The petitioners are interested in the purchase of Cinchona in course of their trade and business.

The respondent <ORG> alleges that the petitioners were guilty of misdeclaration of goods in their export transactions. <ORG> of the <ORG> learnt from a secret letter from the Collector of <ORG>, Calcutta that the firm of the petitioners was involved in malpractices, and their case was under investigation. <ORG> at a meeting on 21 January, 1971 resolved not to deal with the firm of the petitioners till the firm was cleared of charges of malpractices. It is because of this resolution that the tender of the petitioners was not accepted. The petitioners according to the respondent came to know this resolution at the meeting of <ORG> on 4 December, 1973. The <ORG> could not however produce the original resolution in this Court. It may be mentioned here that the petitioners have challenged the charges and cases under the Foreign Exchange Regulations Act in <ORG> at Calcutta in Writ Petition No. 959 of 1973 which is pending.

The respondent in Civil Appeal No. 318 of 1974 was on the, approved list of <ORG> since the year 1942. The last renewal of registration of the respondent was on 5 June, 1963 for three years. Certain reports were received against the respondent regarding shortage of timber. <ORG> took charge of account books of the respondent in the month of August, 1964. A Departmental enquiry was made against the store-keeper and the Store-holder in <ORG>. Those two employees were suspended in the month of December, 1964. On 4 December, 1965 the department put the name of the respondent on the black list. The employees of the <ORG> who had been suspended in the year 1964 were dismissed on 1 June, 1967. In the month of January, 1968 the respondent applied to the <ORG> for return of the account books which had been taken by <ORG>. In the month of March, 1968 the account books were ordered to be returned. The respondent filed Writ Petition in the High <ORG> at Bombay on 20 January, 1969. On 12 January, 1973 the High <ORG> allowed the writ petition of the respondent setting aside the order whereby the respondent was blacklisted. The State filed an appeal. The High <ORG> of Bombay dismissed the appeal. The present appeal is against that judgment. The employees who had been dismissed by the State also applied to the High <ORG> for setting aside their dismissal. The High <ORG> accepted the prayer of the employees by an order dated 3 August, 1972.

In Writ Petitions counsel for the <ORG> submitted that the petitioner was not entitled to any order of mandamus inasmuch as the sales were contractual. It was said that the petitioner was not entitled as of right to acceptance of tender. It was also said that the attitude of the <ORG> was not discriminatory against the petitioner but that the <ORG> wanted that the pending proceedings against the petitioner for alleged violation of Foreign Exchange Regulation Act should be adjudicated first and thereafter the <ORG> would deal with the petitioner.

The Solicitor General on behalf of the appellant in Civil Appeal No. 318 of 1974 made these submissions. The <ORG> could choose any person for entering into a contract. Further, the <ORG> could insist on dealing with persons in whom the <ORG> had trust for integrity. The sales were not under a statute. Black-listing is an inter- nal and confidential step. Rights under Articles 14, 19 and 21 do not extend to the compelling of any third party including the <ORG> to negotiate or enter into a contract. The duty to act fairly may include in many cases duty to act judicially and those would be cases where there is existing vested rights. The duty to act fairly would not always mean a duty to hear the party affected. Whereas public blacklisting is not confidential, departmental black- listing will be a confidential matter. If natural justice does not come into play in rejecting a bid, natural justice does not operate at the time of entering into contract. Under Article 298 of the Constitution the Executive power of the <ORG> and the <ORG> shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The <ORG> can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the <ORG> is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal, protection of the laws. Equality of opportunity should apply to matters of public contracts. The <ORG> has the right to trade. The <ORG> has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The <ORG> cannot choose to exclude persons by discrimination. The order of black- listing, has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the <ORG> because of the order of black- listing. A person who has been dealing with the <ORG> in the matter of sale and purchase of materials has a legitimate interest or expectation. When the <ORG> acts to the prejudice of a person it has to be supported by legality.

But for the order of blacklisting, the petitioner would have been entitled to participate in the purchase of cinchona. Similarly the respondent in the appeal would also have been entitled but for the order of blacklisting to tender competitive rates.

The <ORG> can enter into contract with any person it chooses. No person has a fundamental right to insist that the Government must enter into a contract with him. A citizen has a right to earn livelihood and to pursue any trade. A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling.

The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the <ORG> in the matter of transactions. The blacklists are "instruments of coercion".

In passing an order of blacklisting the <ORG> department acts under what is described as a standardised Code. This is a Code for internal instruction. The <ORG> departments make regular purchases. They maintain list of approved suppliers after takings into account the financial standard of the firm, their capacity and their past performance. The removal from the list is made for various reasons. The grounds on which blacklisting may be ordered are if the proprietor of the firm is convicted by court of law or security considerations so warrant or if there is strong justification for believing that the proprietor or employee of the firm, has been guilty of malpractices such as bribery, corruption, fraud. or if the firm continuously refuses to return <ORG> dues or if the firm employs a <ORG> servant, dismissed or removed on account of corruption in a position where he could corrupt <ORG> servant. The petitioner was blacklisted on the ground of justification for believing that the firm has been guilty of malpractices such as bribery, corruption, fraud. The petitioners were blacklisted on the ground that there were proceedings pending against the petitioners for alleged violation of provisions under the Foreign Exchange Regulations Act . The <ORG> is a government of laws and not of men. It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods. This privilege arises because it is the <ORG> which is trading with the public and the democratic form of <ORG> demands equality and absence of arbitrariness and discrimination in such transactions. <NAME> treats privileges as a form of liberty as opposed to a duty. The activities of the <ORG> have a public element and, therefore, there should be fairness and equality. The <ORG> need not enter into any contract with any one but 'if it does so, it must do as fairly without discrimination and without unfair procedure. Reputation is a part of person's character and personality. Blacklisting tarnishes one's reputation. Exclusion of. a member of the public from dealing with a <ORG> in sales transactions has the effect of preventing him from purchasing and doing a lawful trade in the goods by discriminating against him in favour of other people. The <ORG> can impose reasonable conditions regarding rejection and acceptance of bids or qualifications of bidders. Just as exclusion of the lowest tender will be arbitrary similarly exclusion of a person who offers the highest price from participating at a public auction would also have, the same aspect of arbitrariness.

Where the <ORG> is dealing with individuals in transactions of sales and purchase of goods, the two important factors are that an individual is entitled to trade with the Government and an individual is entitled to a fair and equal treatment with others. A duty to act fairly can be interpreted as meaning a duty to observe certain aspects of rules of natural justice. A body may 'be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It win depend upon the nature of the interest to be affected, the circumstances in which a power is exercised the nature of sanctions involved therein. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent.his case before he is put on the blacklist. With regard to the case of the petitioners, it is made clear that the authorities will give an opportunity to the petitioners to represent their case, and the authorities will hear the petitioners as to whether their name should be put on the blacklist or not. This is made clear that the decision on this question will not have any effect on the proceedings pending in <ORG> where the peti- tioner has challenged the adjudication proceedings under the Foreign Exchange Regulations Act . Any decision of the authorities on the blacklisting will have no effect on the correctness of any of the facts involved in those proceedings.

For these reasons, the petitioners succeed. The appeal is dismissed. The parties will pay and bear their own costs.

<ORG> dismissed.


PETITIONER: FIRM SETH RADHA KISHAN (DECEASED)REPRESENTED BY HARI KISHAN Vs. RESPONDENT: THE ADMINISTRATOR, MUNICIPALCOMMITTEE, LUDHIANA DATE OF JUDGMENT: 07/03/1963 BENCH: <NAME>, K. BENCH: <NAME>, K. DAYAL, RAGHUBAR MUDHOLKAR, J.R. CITATION: 1963 AIR 1547 1964 SCR (2) 273 CITATOR INFO : RF 1966 SC1089 (8) E 1968 SC 271 (12) R 1970 SC1002 (5) RF 1975 SC2238 (2) E&D 1977 SC 955 (23) R 1979 SC1250 (11,24A) ACT: Terminal Tax-Municipality-Collection of--Remedies by way of appeal provided in the Act-Express or implied exclusion of Civil courts-Punjab Municipal Act, 1911 (Punj. III of 1911), ss. 61, 78, 84, 86-Punjab Government Notification No. 26443 dated July, 21, 1932-Items 68 69 of the Schedule-Code of Civil Procedure, 1908 (Act 5 of 1908), s. 90. HEADNOTE: The appellant is a firm carrying on business within the octroi limits of Ludhiana Municipality. On the Sambhar salt imported by it into the limits of the Municipality terminal tax was imposed and the appellant made payment of the said tax. Under item 68 of the Schedule to the relevant Government Notification the Municipality is entitled to impose a certain rate of tax on common salt and under item 69 it is entitled to impose a higher rate of tax in respect of salt of all kinds other than common salt. In the present case the higher rate was imposed. The appellant filed a suit against the respondent in the civil court, Ludhina, for the refund of the amount paid by him. 274 <ORG> held that Sambhar salt was common salt within the meaning of item 68, that the imposition of tax on it by the respondent under item 69 was illegal and that there fore the court had jurisdiction to entertain the suit. On appeal <ORG> proceeded on the assumption that Sambhar salt was common salt but held that, even so, <ORG> had no jurisdiction to entertain the suit as the Act provided a remedy by way of appeal against the wrong orders of the authorities thereunder. The present appeal is by way of certificate granted by <ORG>. On behalf of the appellant it was contended that the respondent had no power to impose terminal tax on common salt under item 69 of the Schedule and therefore the tax having been imposed contrary to the provisions of the Act, <ORG> has jurisdiction to entertain the suit. The contention on behalf of the respondent was that the respondent has power to impose terminal tax on common salt under the provisions of the Act, that the imposition of tax under a wrong entry could be rectified only in the manner prescribed by the Act and that <ORG> has no jurisdiction to entertain the suit for the refund of the tax collected when a specific remedy is available under the Act. Held, that a statute can expressly or by necessary implica- tion bar the jurisdiction of Civil Courts in respect of a particular matter. The mere confirment of special jurisdiction on a tribunal in respect of the said matter does not in itself exclude the jurisdiction of civil Courts. The statute may specifically provide for vesting the jurisdiction of civil Courts, even if there was no such specific exclusion, if it creates a liability not existing before and gives a special and particular remedy for the aggrieved party, the remedy provided by it must be followed. The same principle would apply if the statute had provided for the particular forum in which the same remedy could be had. Even in such cases <ORG> jurisdiction is not completely ousted. A suit in a civil Court will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by necessary implication, made final, if the said tribunal abuses its power or does no act under the Act but in violation of its provision. <ORG> v. <NAME>, (1859) 6 C. B. (N. S.) 336, <CITATION> ., (1940) L. R. 67 1. A. 222, <CITATION> . (1907) 1. L. R. 31 Bom. 604, Zamindar of Ettayapuram v. <NAME>, 1904) 1. L. R. 27 Mad. 483 East Fremantle Corporation V., Annois,  A. C. "21 275 <NAME> of Baroda v. Gandhi Kachrabhai, (1903) I.L.R. 27 Bom. 344, <CITATION> ., (1935) I. L. R. 57 All. 916, Municipal Committee, Montgomery v. <NAME>, A. I. R. 1940 Lah. (F. B.) 377 and Ad- ministrator, Lahore v. <NAME>, A. I. R. 1945 Lah. 81. In the present case the liability to pay terminal tax is created by the Act and a remedy is given to a party aggrieved in the enforcement of the liability. The party aggrieved can only pursue the remedy provided by the Act and he cannot file a suit in a civil court in that regard. Provisions of ss. 84 and 86 of the Act exclude the jurisdiction of <ORG> in respect of the tax levied or the assessment under the Act. In a case where <ORG> has undoubted power to levy tax under a particular entry in respect of an article but it levies tax under a wrong entry not applicable to that article the said committee only commits a mistake or an error in fixing the rate (of tax payable) in respect of the said article and no question 'of jurisdiction but only a question of detail is involved. Such a mistake can be corrected only in the manner prescribed by the Act. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 45 of 1961. Appeal from the judgment and decree dated April 16, 1959, of <ORG> at Chandigarh in Regular First Appeal No. 30 of 1952.

<NAME>, for the appellants.

<NAME>, for respondent.

1963. March 7. The Judgment of the Court was delivered by <NAME> -This appeal raises the question whether a suit would lie in a civil Court claiming refund of the terminal tax collected by a municipality under the provisions of the Punjab Municipal Act, 1911 (Punjab Act III of 1911), hereinafter called the Act.

The appellant is alleged to be a firm registered under the Indian Partnership Act . It carries on business within the limits of the Ludhiana Municipality. It imported Sambhar salt into the octroi limits of the Ludhiana Municipality. <ORG>, Ludhiana, imposed terminal tax on the said salt and the appellant paid a sum of Rs. 5,893/7/0 towards the said tax between October 24, 1947 and December 8, 1947. Under the Punjab Government Notification No. 26463, dated July 21, 1932, terminal tax was payable under item 68 of the Schedule attached to the said Notification at the rate of 3 pies per maund in respect of salt common, and under item 69 at the rate of As./10/-per maund in respect of salt of all kinds other than common salt. <ORG>, Ludhiana, collected terminal tax on the Sambhar salt at the higher rate under item 69 of the Schedule on the ground that it did not fall under item 68 of the Schedule. The appellant filed a suit against the respondent in <ORG>, Ludhiana, claiming refund of the said amount with interest. The respondent, inter alia, contended that Sambhar salt was not common salt and <ORG> had no jurisdiction to entertain the suit. The Senior Subordinate judge, Ludhiana, held that Sambhar salt was common salt within the meaning of item 68 of the Schedule, that the imposition of tax on it by the respondent under item 69 of the Schedule was illegal and that, therefore, the Court had jurisdiction to entertain the suit. On appeal, <ORG> proceeded on the assumption that Sambhar salt was salt common, but held that, even so, <ORG> had no jurisdiction to entertain the suit as the Act provided for a remedy by way of appeal against the wrong orders of the authorities thereunder. It further held that, in any view, the suit was premature as the appellant should have pursued his remedies under the Act before coming to <ORG>. In the result, the decree of the Subordinate judge was set aside and the suit was dismissed. The present appeal has been preferred by the appellant by way of certificate issued by <ORG>.

Mr. <NAME>, learned counsel for the appellant, contends that the respondent has no power to impose terminal tax on salt common under item 69 of the Schedule to the said Notification and therefore the tax having been imposed contrary to the provisions of the Act, <ORG> has jurisdiction to entertain the suit.

On the other hand, Mr. <NAME>, learned counsel for the respondent, argues that the respondent has power to impose terminal tax on common salt under the provisions of the Act, that the imposition of tax under a wrong entry could be rectified only in the manner prescribed by the Act and that <ORG> has no jurisdiction to entertain a suit for the refund of tax collected when a specific remedy is available under the Act.

It would be convenient at the outset to notice the relevant provisions of the Act. Under s. 61 (2) <ORG> has power to impose, with the previous sanction of <ORG>, any tax which <ORG> has power to impose in the State, subject to any general or special orders which <ORG> may make in that behalf. The State Government issued the Notification No. 26463 dated July 24, 1932 to come into force from November 1, 1932 empowering <ORG> to impose terminal tax at the rates shown in Col. 3 of the Schedule attached thereto upon the articles mentioned in Col. 2 thereof which are imported into or exported out of the municipal limits by rail or by road. The relevant items are items 68 and 69. Item 63 is "salt common" and the rate prescribed is 3 pies per maund; and item 69 is "salt of all kinds other than common salt" and the rate fixed is As. /10/- per maund. Section 78 provides for a penalty if any person brings any article liable to the payment of terminal tax into the prescribed limits without paying the said tax. Section 84 gives a right of appeal. against any levy or refusal to refund any tax collected under the Act to the Deputy Com missioner or such other officer as may be empowered by <ORG> in that behalf ; under sub-s. (2) thereof, if on hearing of an appeal under the section., any question as to the liability to, or the principle of assessment of a tax arises, on which the officer hearing the appeal entertains reasonable doubt, he may,. either of his own motion or on the application of any person interested, state the case and refer the same for the opinion of <ORG>; and after <ORG> gives its opinion on the question referred to it, the appellate authority shall proceed to dispose of the appeal in conformity with the decisions of <ORG>. Under s. 86, the liability of any person to be taxed cannot be questioned in any manner or by any authority other than that provided in the Act; under sub-s. (2) thereof, no refund of any tax shall be claimed by any person otherwise than in accordance with the provisions of the Act and rules thereunder. It will be seen from the aforesaid provisions that the power to impose a terminal tax and the liability to pay the same is conferred or imposed on the municipal com- mittee and the assessee respectively by the provisions of the Act. The Act also gives a remedy to an aggrieved party to challenge the correctness of the leavy or to seek refund of the same. Not only an appeal has been provided for against the order of municipal committee levying the tax or refusing to refund the same, but the appellate authority is empowered to get an authoritative opinion of <ORG> on any question as to the liability or on the principle of assessment; and on receiving such opinion, the said authority is bound to dispose of the appeal in the light of the said opinion. It is said that the reference provided to <ORG> is in the discretion of the appellate authority and he can with impunity refuse to do so, even if any difficult question is involved in the appeal. The question is not whether a particular officer abuses his power but whether a remedy is available under the Act or not. It cannot be assumed that an officer, though he entertains reasonable doubt on the question as to liability or on the principle of assessment, he will deliberately and maliciously refuse to do his duty : if he does, other remedies may be available. The Act also in specific terms debars any authority other than that prescribed under the Act from deciding the question of liability of any person to tax or his right to get refund of a tax paid. In short, the Act contains a self-contained code conferring a right, impossing a ability and prescribing a remedy for an aggrieved party. In such a situation, the question arised whether <ORG> can entertain a suit for a refund of the tax wrongfully collected from an assessee; and if so, what are the limits of its jurisdiction ?

We shall now proceed to consider the relevant principles governing the said question. <NAME>, J., in <ORG> v. <NAME> (1), describes as follows the three classes of cases in which a liability may be established founded upon a statute :

"One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law : there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy the party suing has his election to pursue either that or the statutory remedy. The second class of case is, where the statute gives the right to sue merely, but provides no particular from of remedy : there, the party (1) (1859) 6. C.B. (N.S.) 336, 356.

can only proceed by action at common law. But there is a third class, viz., where a liability not. existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it.......... The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class."

It is clear from the said passage that in a case where the liability is created by a statute, a party aggrieved must pursue the special remedy provided by it and he cannot pursue his remedy in <ORG>. This principle was approved by <ORG> in <CITATION> . (1). The High Courts in India also accepted the principle and applied it to different situations : see <CITATION> (2); Zamindar of Ettayapuram v. <NAME> (3). But there is also an equally well settled principle governing the scope of <ORG> jurisdiction in a case where a statute created a liability and provided a remedy. Lord <NAME> in <ORG> v. <NAME> (4), states the principles thus :

"The law has been settled for last hundred years. If persons in the position of the appellants, acting in the execution of a public trust and for the public benefit, do an act which they are authorised by law to do, and do it in a proper manner, though the act so done works a special injury to a particular individual, the individual injured cannot maintain an action...... In a word, the only question is, 'Has the power been exceeded?' Abuse is only one form of excess."

In <NAME> of <ORG> v. <NAME>) the defendants by the negligent construction of railway made in exercise of their powers under the (1) (1940) L.R. 67 I.A 222.

(3) (1904) I.L.R. 27 Mad. 483. (5) (1903) I.L.R, 27 Bom. 344.

(2) (1907) I.L.R. 31 Bom. 604.

(4) (1902) A.C. 213.

Railways Act had caused the plaintiff's land to be flooded in the rainy season and consequently damaged. The Railways Act provided that a suit shall not lie to recover Compensation for damage caused by the exercise of the powers thereby conferred, but that the amount of such compensation shall be determined in accordance with the Land Acquisition Act , 1870. In spite of this bar the plaintiff brought a suit for damages for injury alleged to have been caused to his field. It was argued that though the statutory authority of the Act, of 1890 might have been abused or exceeded, the of the aggrieved party was only to proceed under the Land Acquisition Act and not by a civil suit. Rejecting that plea the judicial Committee observed:

"It would be simply a waste of time to deal seriously with such contentions as these. It has been determined over and over again that if a person or a body of persons having statutory authority for the construction of works...... exceeds or abuses the powers conferred by the <ORG>, the remedy of a person injured in consequence is by action or suit, and not by a proceedings for compensation under the statute which has been so transgressed."

<ORG>, in the context of Municipal Acts had occasion to apply both the principles. <CITATION> . (1), it was held that no suit for a refund of an octroi charge, which has been assessed and levied by a municipality, lies in <ORG> on the ground that the goods were not in fact assessable to octroi duty or that the amount of assessment was excessive. There, the assessment was made in accordance with the provisions laid down in the Municipalities Act and the rules made thereunder. In <ORG>, <NAME> v. <NAME> (2), a Full Bench of <ORG> had to consider the question (1) (1935) I.L.R. 57 All. 916 (2) A.1.R. 1940 Lah. (F.B.)377, 380, whether a suit would lie in <ORG> for an injunction restraining <ORG> from realizing the tax demanded from a person on the ground that he was not the owner of the lorries the subject matter of tax, and consequently the demand made on him was illegal and ultra vires of the <ORG>. <NAME>, speaking for the <ORG>, elaborately considered the case law on the subject and expressed his conclusion in the following words :

"Any special piece of legislation may provide special remedies arising therefrom and may debar a subject from having recourse to any other remedies, but that bar will be confined to matters covered by the legislation and not to any extraneous matter. A corporation is the creature of a statute and is as much bound to act according to law as the constituents thereof, namely, the individuals ruled by the corporation and if the corporation does an act in disregard of its charter and intends to burden any individual with the consequences of its illegal act, an appeal by that individual to the general law of the land can in no cir- cumstances be denied."

This is a case where it may be said that <ORG> acted not under the Act but outside the Act in as much as the tax on vehicles was payable by the owners only but not by those who did not own them. Another Full Bench of <ORG>, in Administrator, Lahore v. <NAME> (1), had to deal with the jurisdiction of <ORG> to entertain a suit for an injunction restraining a municipal committee from interfering with the construction of the plaintiff's proposed building on the ground that its order refusing sanction under s. 193 (2) of the Punjab Municipal Act was an abuse of its power. <NAME>, delivering (1) A. 1. R. 1945 Lah. 81.

the judgment on behalf of the Full Bench observed at p. 84 :

"The provisions of s. 225 which make the decision of the Commissioner final can only mean this that that decision is final only so far as the proceedings under the Act are concerned. But when an order is made which is outside that Act, then the provisions of S. 225 can have no application to such an order which itself is outside the Act........................................ In short the Bench laid down that in two kinds of cases s. 225 was no bar to the jurisdiction of a civil court in examining the order of the municipal committee passed under s. 193 (2), Punjab Municipal Act. The first case is where a committee acts ultra vires and the second case is where it acts arbitrarily or capriciously. In other words, where it abuses its statutory powers."

The learned judge concluded thus, at p. 85 "The remedies given to the subject by a statute are for relief against the exercise of power conferred by a statute but those remedies are not contemplated for usurpation of power under cover of the provisions of the statute. The civil Courts are the proper tribunals in those kinds of cases and their jurisdiction cannot be held barred by reason of statutory remedies provided for grievances arising in exercise of statutory powers. To cases of this kind the rule that where a statute creates a right and provides at the same time a remedy, that remedy and no other is available, has no application.

Further citation is unnecessary. The law on the subject may be briefly stated thus :

Under s. 9 of the Code of Civil Procedure the <ORG> shall have jurisdiction to try all suits of civil nature excepting suits of which cognizance is either expressly or impliedly barred. A statute, therefore, expressly or by necessary implication, can bar the jurisdiction of civil <ORG>s in respect of a particular matter. The mere conferment of special jurisdiction on a tribunal in respect of the said matter does not in itself exclude the jurisdiction of civil courts. The statute may specifically provide for ousting the jurisdiction of civil <ORG>s ; even if there was no such specific exclusion, if it creates a liability not existing before and gives a special and Particular remedy for the aggrieved party, the remedy provided by it must be followed. The same principle would apply if the statute had provided for the particular forum in which the said remedy could be had. Even in such cases, the Civil <ORG>'s jurisdiction is not completely ousted. A suit in a civil <ORG> will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by necessary implication, made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions.

Let us now apply the said principles to the facts of the present case. The liability to pay terminal tax is created by the Act and remedy is given to a party aggrieved in the enforcement of that liability. As has been already indicated, against the order of the municipal committee levying terminal tax an appeal lies to the Deputy Commis- sioner and a reference to <ORG>. Applying one of the principles stated supra, the party aggrieved can only pursue the remedy provided by the Act and he cannnot file a suit in a civil Court in that regard. Provisions of ss. 84 and 86 of the Act exclude the jurisdiction of the civil Court in respect of the tax levied or the assessment made under the Act.

But the learned counsel for the Appellants contends that the impugned levy was not made under the Act but in derogation of the provisions thereof. There is no force in this contention. Section 61 (2) of the Act specifically empowers <ORG> to levy any tax other than those specified therein with the previous sanction of the State Government. The levy of terminal tax was sanctioned by <ORG> by Notification No. 26463 dated July 21, 1932, at the rates shown in column 3 of the Schedule to the said Notification. Under the said Notification, read with s. 61 of the Act, <ORG> is empowered to levy terminal tax on salt whether it is common salt or not. The Committee has, therefore, ample power under the Act and the Notification issued by the State Government to impose the said tax. The only dispute was as regards the rate of tax payable in respect of the salt brought by the appellant into the limits of <ORG>. The rate depended upon the character of the salt. The ascertainment of the said fact is a necessary step for fixing the rate and it is not possible to say that in ascertaining the said fact the authorities concerned travelled outside the provisions of the Act. The learned counsel contends that if a municipal committee levies terminal tax on an article not liable to tax under the Act, a suit would lie and, therefore, the same legal position should apply even to a case where the municipal committee levies the tax in respect of an article under an entry not applicable to if. We do not see any analogy between these two illustrations : in the former, the municipal committee does not act under the Act, but in the latter it only commits a mistake or an error in fixing the rate of tax payable in respect of a particular commodity ; one is outside the Act and the other is under the Act ; one raises the question of jurisdiction and the other raises an objection to a Matter of detail. We, therefore, hold that in the present case the mistake, if any, committed in imposing the terminal tax can only be corrected in the manner prescribed by the Act. The appellants have misconceived their remedy in filing the suit in the civil Court. The conclusion arrived at by <ORG> is correct.

In the result, the appeal fails and is dismissed with costs.

Appeal dismissed.


PETITIONER: ASSTT. CUSTODIAN, E.P. & ORS. Vs. RESPONDENT: BRIJ KISHORE AGARWALA & ORS. DATE OF JUDGMENT07/10/1974 BENCH: <NAME>, A. BENCH: <NAME>, A. MATHEW, KUTTYIL KURIEN CITATION: 1974 AIR 2325 1975 SCR (2) 359 1975 SCC (1) 21 CITATOR INFO : RF 1976 SC2237 (22) RF 1979 SC 621 (28) R 1980 SC1285 (28) ACT: U.P. Administration of Evacuee Property Ordinance 1949 s.2(c)(i) & (ii)-Scope of. Custodian first stated that the property was not evacuee property and the respondent acted on it-later acquired it as evacuee property-whether Custodian bound by the earlier statement. HEADNOTE: The disputed property belonged to a Muslim who left India in 1942. After the partition of the country she migrated to Pakistan in 1948, without coming to India. In 1962 she came to India and sold the property to respondent no. 1 for a sum of Rs. 42,000. Respondent no. 1 purchased the property after ascertaining from appellant no. 1 Custodian of Evacuee Property that the property was not evacuee property. Later, however, the appellant passed an order declaring the property to be evacuee property. On a petition by respondent no. the Assistant Custodian General directed that the property be handed over to the respondent no. and the sale price deposited in the bank could be taken by the Custodian. Since the Custodian did not issue a sale certificate in his favour respondent no. I filed a writ petition in <ORG> which was dismissed by a single Judge on the ground that the seller was an evacuee. The Division Bench on the other hand held that the seller was not an evacuee under s.2 (c)(i) of the United Provinces Administration of Evacuee Property ordinance 1949 but refused to consider whether the seller was an evacuee under s. 2(c)(ii) thereof. According to s. 2(c)(i) of the ordi- nance "evacuee" means, any person who leaves or has on or after the 1st day of March 1947, left any place in the United Provinces for any place outside the territories now forming part of India while according to sub clause (ii) "evacuee" means any person who is resident in any place now forming part of Pakistan and is for that reason unable to occupy, supervise or manage in person his property in the United Provinces. Allowing the appeal, (1) There could be no doubt that the seller was an evacuee within the meaning in Teheran till she left for Pakistan from there cl. 2(c)(i) would not apply but clearly cl. 2(c)(ii) would. There was no doubt that she was resident in Pakistan after the partition of India and was, therefore unable to occupy, supervise or manage her property in the United Provinces. [361 G; C-D] (2)The fact that the first respondent had made an inquiry from the Assistant Custodian whether the property was evacuee property and was told that it was not, did not make any difference to this question. [362 <CITATION> .,  A.C. 837 at 845, <CITATION>  S.C.R. 691 <CITATION>  1 SCR 749 referred to. (3)Once it is declared that the property was evacuee property, the sum of Rs. 42,000 paid by respondent no. 1 to the seller and deposited in the bank could not also be evacuee property. Either the one or the other could be evacuee property. This sum must be held to be in trust for the first respondent. [363 F] JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 170 of 1969.

Appeal from the Judgment and Order dated the 15th April, 1968 of <ORG> (<ORG>) in Special Appeal No. 258 of 1966.

<NAME> and <NAME>, for the appellants. <NAME>, for respondent No. 1.

The Judgment of the Court was delivered by ALAGIRISWAMI, J.-Mrs. <NAME>, the wife of a <ORG> official of the then United Provinces (now Uttar Pradesh) was in Teheran in the year 1947 alongwith her husband. She purchased a property from <ORG>, Lucknow for a sum of Rs. 6,400/-. It appears that Mrs. <NAME> did not come to India at all till 1962 when she sold this property to the sons of respondent No. 1 and one Mrs. <NAME>. On 24-6- 1949 the, United Provinces Administration of Evacuee Property Ordinance, 1949 came into force. This would be a proper stage at which the relevant provisions of the Ordinance should be noticed. Under that Ordinance "evacuee property" means any property in which an evacuee has any right or interest, or which is held by him under any deed of trust or other instrument, and an "unauthorised person" means any person (whether empowered in this behalf by the evacuee or otherwise) who, after the 15th day of August, 1947, has been occupying, supervising or managing the property of an evacuee without the approval of the <NAME>. Under section 5 of that Ordinance all evacuee property situate in the United Provinces shall vest in the <NAME>.

We may now continue the narration of events. Before the purchase of this property the 1st respondent had applied to the 1st appellant to be informed whether the property in question is an evacuee property and received a reply in the negative. But on 25-3-1963 the 1st appellant passed an order declaring the property as an evacuee property. It should be noticed that an evacuee property automatically vests in the Custodian under section 5 and the notification under section 6 of the Ordinance is not a necessary condition for such vesting. Section 6 only enables the Custodian to notify the properties which have already vested in him under the Ordinance. On 7-3-1964 a notification was issued acquiring the disputed plot under section 12 of the Displaced Persons (Compensation & Rehabilitation) Act , 1954. The 1st respondent filed a revision petition to the Assistant Custodian General who directed that the property should be handed over to the 1st respondent but that the sum of Rs. 42,000/- being the sale price of the property, which had been deposited with <ORG>, Lucknow could be taken by the Custodian. The 1st respondent's application to the 1st appellant to issue a sale certificate in his favour not having produced my result he filed a writ petition out of which this appeal arises. The petition was dismissed by a learned Judge of <ORG> but on appeal a Division Bench of <ORG> allowed the respondents' appeal. This appeal has been filed on the basis of a certificate granted by <ORG>. The learned Single Judge took the view that Mrs. <NAME> was an evacuee because she had left Uttar Pradesh after the 1st day of March, 1947 to a place outside the territories of India. The Assistant Custodian General had also taken a similar view when the revision petition was filed by 1st respondent before him. <ORG> on the other hand took the view that as Mrs. <NAME> had not left the United Provinces on or after 1st March, 1947 but her husband had been posted in Teheran since some time in 1942 and she had migrated to Pakistan from Teheran after 1st March, 1947 it would not make her evacuee under section 2(c)(i) of the Ordinance. It was urged before the Bench that she would be an evacuee under section 2(c)(ii) of the Ordinance but the Bench refused to consider that question.

Thus the first question to be decided is whether Mrs. <NAME> was an evacuee. As it is clear that she left the United Provinces even before the 1st March, 1947 and was in Teheran till she left for Pakistan from there, clause 2(c)(i) would not apply to her but clearly clause 2(c)(ii) would apply to her. There is no doubt that she was resident in Pakistan after the partition of India and she was, therefore. unable to occupy, supervise or manage here property in the United Provinces. We do not think that the learned Judges of <ORG> who heard the appeal were right in refusing to consider this aspect of the matter. The 1st respondent in his writ petition clearly averred that as Mrs. <NAME> migrated to Pakistan from Persia she could not be treated as an evacuee. The order passed by the 1st appellant also pro- ceeded on the basis that Mrs. <NAME> had migrated to Pakistan from Persia in 1948 and was still living there. He also referred to the fact that she had sent the money from Teheran in 1947 and the possession of the property had been taken by her son who came to India in 1948 for that purpose specifically whereas Mrs. <NAME> continued to reside in Pakistan till she came to India in 1962 for selling the plot and that she was a Pakistani national, In the revision peti- tion filed before the Assistant Custodian General by the 1st respondent also it is admitted that Mrs. <NAME> migrated to Pakistan from Teheran as was held by the Assistant Custodian. Therefore, merely because in his order in revision the Assistant Custodian General had relied upon section 2(c)(i) to hold that Mrs. <NAME> was an evacuee that cannot prevent the consideration of the fact whether she was an evacuee under section 2(c)(ii) .

There can be no doubt that she was an evacuee within the meaning of that word under section 2(c)(ii) and the property in question was an evacuee property. The property automatically vested in the <NAME> by virtue of the provision of section 5 of the United provinces Ordinance No. 1 of 1949. The U. P. Ordinance No. 1 of 1949 was repealed by section 58 of the Central Administration of Evacuee Property Act , 1950. The result of such repeal and reenactment was that the property in question which had vested in the <NAME> continued to vest in him notwithstanding the repeal of the Ordinance and there was no need to take any action under section 7 of that Act. Such action is necessary only in cases where the property had not already vested under the provisions of the repealed Ordinance. We do not consider that the fact that the 1st respondent had made an enquiry from the Assistant <NAME> whether the property in question was an evacuee property and was told that it was not makes any difference to this question, We do not think that the reliance placed on behalf of the respondents on the decision in <NAME> v. Minister of Pensions(1) where Lord <NAME> observed "I come therefore to the most difficult question in the case. Is <NAME> bound by the <ORG> letter ? I think he is. The appellant thought, no doubt, that. as he was serving in the army. his claim to attributability would be dealt with by or through the <ORG>. So he wrote to the <ORG>. The <ORG> did not refers into <NAME>. They assumed authority over the matter and ass ured the appellant that his disability had been accepted as attributable to military service. He was entitled to assume that they had consulted any other departments that might be concerned, such as <ORG>, before they gave him the assurance. He was entitled to assume that the board of medical officers who examined him were recognised by <NAME> for the purpose of giving certificates as to attributability. Can it be seriously suggested that, having got that assurance, he was not entitled to rely on it In my, opinion if a government department in its dealings with a subject takes it upon itself to assume authority upon a matter with which he is concerned, he is entitled to rely upon having the authority which it assumes. He does not know, and cannot be expected to know, the limits of its authority. The department itself is clearly bound, and as it is but an agent for the <ORG>, It binds the <ORG> also, and as the <ORG> is bound, so are the other departments, for they also are but agents of the <ORG>. The <ORG> letter therefore binds the <ORG> and, through the <ORG>, it binds <NAME>. The function of the Minister of Pension is to administer the royal warrant issued by the <ORG>, and be must so administer it as to honour all assurances given by or on behalf of the <ORG>."

can help the respondents. That decision has been disapproved by <ORG> in <NAME> v. <ORG>) Lord <NAME> referred to the observation of Lord <NAME> in <NAME> v. Minister of Pensions(3) and observed :

"My Lords, I know of no such principle in our law nor was any authority for it cited. The illegality of an act is the same whether or not the actor has been misled by an assumption of authority on the part of a government officer however high or low in the hierarchy. I do not doubt that in criminal proceedings it would be a material factor that the actor had been thus misled if knowledge was a necessary element of the offence, and in any case it would have a bearing on the sentence to be imposed. But (1) [1949] 1 K. D. 227.

(2) [1951] A.C. 837 at 845.

(3) [1949] 1 K. D. 227.

that is not the question. The question is whether the character of an act done in face of a statutory prohibition is affected by the fact that it has been induced by a misleading assumption of authority. In my opinion the answer is clearly No. Such an answer may make more difficult the task of the citizen who is anxious to walk in the narrow way; but that does not justify a different answer being given."

Lord <NAME> in dealing with this question observed at page 849 after referring to the statement of law by Lord <NAME>: "As I understand this statement, the respondents were, in the opinion of the learned Lord Justice, entitled to say that the <ORG> was barred by representations made by Mr. <NAME> and acted on by them from alleging against them a breach of the statutory order, and further that the respondents were equally entitled to say in a question with the appellant that there had been no breach. But it is certain that neither a minister nor any subordinate officer of the <ORG> can by any conduct or represen-

tation bar the <ORG> from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it.,, We are. of opinion that the view taken by <ORG> is the correct one and not the one taken by Lord <NAME>. We see nothing in the decisions of this <ORG> in <CITATION> (1) or <CITATION> (2) which can be of any help to the respondents. This appeal, therefore, would have to be allowed.

But there is one further question to be decided. Once it is declared that this property is an evacuee property it is obvious that the sum of Rs. 42,000/- paid by the 1st respondent to Mrs. <NAME> and deposited by her in <ORG>, Lucknow cannot also be an evacuee property. Either the one or the other can be an evacuee property. This sum must he held to be in trust for the 1st respondent. This principle is not disputed by Mr. <NAME> appearing on behalf of the appellants. While the appeal would be allowed there would be an order directing that the 1st respondent would be entitled to withdraw the sum of Rs. 42,000/- deposited by Mrs. <NAME> in <ORG>, Lucknow along with any interest that might have accrued on it. In the circumstances of this case there will be no order ,as to costs.

Appeal allowed.

<NAME>

(1) [1953] 1 S.C.R. 691.

(2) [1962] 1 S.C.R. 749.