PETITIONER: THE COMMISSIONER OF INCOME-TAX, <NAME> Vs. RESPONDENT: <ORG>. DATE OF JUDGMENT: 01/11/1954 BENCH: <NAME>, <NAME> BENCH: <NAME>, <NAME> MAHAJAN, <NAME>, <NAME>, <NAME> CITATION: 1955 AIR 98 1955 SCR (1) 849 ACT: Indian Income-tax Act , 1922 (Act XI of 1922), s. 4-Profits derived by the assessee- Whether arose or were received in British Indian in the present case. HEADNOTE: The assessee company with its registered office in Mysore State and its management vested in <ORG>,Madras sold Chrome ore to buyers mostly outside India who were in America and Europe. The sales to the purchasers in Europe were put through in London by <ORG>, London, the agent of the assessee company in Europe, the said agent signing the contracts for sale in London. The sales to purchasers in America were effected through <ORG>, New, York, who bought for undisclosed principals, the contracts for sale to American purchasers being signed by <ORG>, Ltd., New York, in America and by <ORG> (Madras) in Madras. Under both forms of contracts with European pur. chasers and American purchasers the price was F.O.B. Madras. Provision was made for weighment, sampling and assay of goods at destination. The course of dealing between the assessee company and the purchasers was as follows:- Before the goods were actually shipped, the buyers used to open a confirmed irrevocable <ORG>' credit with some first class <ORG> in London. Being informed of the opening of such credit <ORG>, London, sent intimation to <ORG>, Madras, and the latter in its turn used to pass on the intimation by letter addressed to the assesses company. On receipt of such intimation the assessee company placed the contracted goods on board the steamer at Madras and obtained a bill of lading in its own name. If hereafter the assessee company used to make out a provisional invoice on the basis of the bill of lading weight and contract price for 48 percent Cr. 203 and used to draw a bill of exchange on the buyers' <ORG>, where the letter of credit had been opened, for 90 percent of the amount of the provisional invoice payable at sight in the case of European contracts and 80 percent of the amount of the provisional invoice at 90 days' sight in the case of American contracts end in either case the bills of exchange used to be drawn in favour of <ORG>, London. The bill of exchange together with the bill of lading endorsed in blank by the assessee company and the provisional invoice was then negotiated with <ORG>, Madras, the bankers of the assesses company, who used to credit the assessee company with the amount of the bill of exchange. The Eastern <ORG> Ltd., Madras, then forwarded the documents to <ORG>, London, who used to present the bill of exchange to the buyers' <ORG> in London, and upon the bill of exchange being accepted <ORG>, London, used to deliver the bill of lading and the invoice to the buyers' <ORG>. The buyers' <ORG> in due course used to pay the amount of the bill of exchange to <ORG>, London. Thereafter, on arrival of the goods and after weighment and assay, the sale price was ascertained and the balance of price after deducting the payments made against the bill of exchange, used to be paid to <ORG>, London, which was the assessee company s agent and <ORG>er in London. It was common ground between the Income-tax department and assessee company that the income arose at the place where the sales took place. It was contended on behalf of the department that the sales must be regarded as having taken place in British India because (i) the price and delivery of goods were on F.O.B. terms, (ii) that in the European contracts, the insurance, if any, was to be the concern of the buyers, (iii) that the payment of the 80 percent or 90 percent as the case may be was made in Madras by <ORG>, Madras, and as on these facts the property passed at Madras, ,;he sales were completed in British India. Held, (repelling the contention) that upon the terms of the contracts in question and the course of dealings between the parties ,he property in the goods could not have passed to the buyer earlier than the date when the bill of exchange was accepted by the <ORG> in London and the documents were delivered by the assesses company's agent, <ORG>, London, to the duyers <ORG> and this admittedly always took place in London and in the promises the sales took place outside British India and ex 851 hypothesi the profits derived from such sales arose Outside British India. Held further, that the contention submitted on behalf of the department that irrespective of the place where the sales may have taken place the profits derived from such sales were received in Madras, as after shipment the assessee company, through its managing agent` in Madras, prepared provisional invoices and drew bills of exchange for 80 percent or 90 percent as the case may be of the amount of such invoices and handed over the same to <ORG>, Madras, and received the amount of the bill of exchange from them in Madras and that the receipt of this payment ,by the assessee company was really the receipt of the price of the goods and amounted to receipt of profits in Madras, was also devoid of force because the price was paid on behalf of the buyers by their respective London <ORG>s in London to <ORG>, London, which was the agent of the assessee company. The first receipt of the price was by <ORG>, London, on behalf of the sellers and the balance of the price ascertained after weighment and assay and deducting the amount paid on the bill of exchange was similarly received in London by <ORG>, London, on behalf of the assesses company and subsequent adjustment made in the books of Eastern <ORG> Ltd., London, did not operate as receipt of profits in British India. Promz Adalbert (L.R.  A.C. 586) referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION :Civil AppealNo. 117 of 1953. Appeal from the Judgment and Order dated the 29th day of March, 1951, of <ORG> at Madras in Case Referred No. 44 of 1948.

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

<NAME> and <NAME> for the respondent. 1954. November 1. The Judgment of the Court was delivered by <NAME> is an appeal from the judgment pronounced by <ORG> at Madras on the 29th March, 1951, on a consolidated reference by <ORG> under section 66(1) of the Income-tax Act whereby <ORG> answered. in the affirmative both the referred questions which were expressed in the following terms;

(1) Whether on the facts and in the circumstances of the case the profits derived by the assessee company 'from sales made to European and American buyers arose outside British India ?

(2) Whether on the facts and in the circumstances of the case the profits derived by the assessee company from sales made to European and American buyers were received outside British India ?

The above Questions of law arose out of proceedings for the assessment to income-tax of the respondent, <ORG> (hereinafter referred to as the asseessee company), for the years 1939-1940, 1940 1941, 1941-1942 and 1942-1943. The facts leading up to the reference as found by <ORG> are shortly as follows: The assessee company is a private limited company registered in the Mysore State under the Mysore Company Regulations and has its registered office at Sinduvalli in Mysore State. The management and control of the assessee company was vested in Messrs. <NAME> & Co. (Madras) Ltd., another private limited company incorporated under the Indian Companies Act , having its registered office at No. 15, Armenian Street, Madras. The assessee company owns chromite mines in Mysore State. Chrome ores are extracted from the mines and converted into a merchantable product and then sold to buyers mostly outside India. A very small proportion of the total sales is effected in India and for the purposes of this case may be left out of consideration. The sales are mostly to buyers in America and Europe. The sales to the purchasers in Europe are put through in London by <ORG>, London, which is the agent of the assessee company in Europe holding a power of attorney from the assessee company. The contracts for sale to European purchasers are signed by <ORG>, in London. The sales to purchasers in America are effected through Messrs. <NAME> & Co., who buy for undisclosed principals. The contracts for sale to American purchasers are signed by <NAME> & Co., presumably in America and by <NAME> & Co. (Madras), Ltd., in Madras.

Specimen forms of contracts with European purchasers and those with American purchasers are set out in the order of the <ORG> dated the 22nd January,1948, out of which the present reference arises. Under both forms of contracts the price was <ORG> or Marmagoa. A very small quantity of goods was sold <ORG> and the same need not be considered here. Provision was made for weighment, sampling and assay of goods at destination. The terms of payment under the European contract were as follows:- Payment.-Buyers to open a confirmed irrevocable Bankers credit in favour of Messrs. <ORG>, Madras (to be advised to sellers) through <ORG>, for 90 per cent. (ninety per cent..) of the Provincial (sic) Invoice against documents. Documents to consist of:-

1. Bills of Lading,

2. Provisional Invoice.

Provisional invoice to be based on Bill of Lading weight and contract price for 48 per cent. Cr. 203. Balance on ascertainment of weight and analysis to be paid in London to <ORG>, within 10 days of the final invoice, based on outturn weights and assays. The corresponding terms of payment under the American contracts were as follows:-

Payment.-Letter of credit for eighty per cent. (80 per cent.) of invoice value to be available against drafts at ninety (90) days' sight with documents attached to be opened immediately in London in favour of the seller. Balance estimated twenty (20 per cent.) of the margin due to be paid by telegraphic transfer through London on receipt of information as to assay and outturn which should be submitted within a month after the arrival of the steamer at destination, Charges for such telegraphic transfer for account of beneficiary.

The European contracts also provided for insurance by buyers but no such provision was made in the American contracts.

The course of dealing as found by <ORG> was as follows. Before the goods were actually shipped, the buyers used to open a confirmed irrevocable <ORG>ers' credit with some first class bank in London. Being informed of the opening of such credit <ORG>, London sent intimation to <ORG>, Madras, and the latter in its turn used to pass on the intimation by letter addressed to the' assessee company. A specimen of such letter is also set out in the order of <ORG>. in such communication <ORG>, Madras, informed the assessee company that I 'in accordance with advices received by letter from our London Office, a confirmed and irrevocable credit has been opened in your favour by Messrs. <ORG>, Ltd., London, for account of Messrs. <NAME> & Co., New York, for a sum not exceeding pound. 7,300 (seven thousand three hundred pounds sterling) in all, available by delivery to us on or before 15th January, 1940, of the following documents............... Towards, the end of the letter <ORG>, Madras, used to write that they were "prepared in our options as customary to negotiate drafts drawn in terms of the arrangement provided that the documents as above mentioned appear to us to be in order. " The letter concluded with a warning that the advice was "given for your guidance and without involving any rosponsi- bility on the part of this <ORG>. " On receipt of such intimation the assessee company placed the contracted goods on board the steamer at Madras and obtained A bill of lading in its own name. As already mentioned, the shipments were made principally at Madras Port. Thereafter, the assessee company used to make out a provisional invoice on the basis of the bill of lading weight and contract price for 48 per cent' Cr. 203 and used to draw a bill of exchange on the buyers <ORG>, where the letter of credit had been opened, for 90 per cent. of the amount of the provisional invoice payable at sight in the case of European contracts and 80 per cent. of the amount of the provisional invoice at 90 days' sight in the case of American contracts and in either case the bills of exchange used to be drawn in favour of <ORG>, London. The bill of exchange together with the relative bill of lading endorsed in blank by the assessee company and the provisional invoice was then negotiated with <ORG>, Madras, the bankers of the assessee company, Who used to credit the assessee company with the amount of the bill of exchange. The Eastern <ORG> Ltd., Madras, then forwarded the documents to <ORG>, London, who used to present the bill of exchange to the buyers' <ORG> in London and upon the bill of exchange being accepted <ORG>, London, used to deliver the bill of lading and the invoice to the buyers' <ORG>. The buyers <ORG> in due course used to pay the amount of the bill of exchange to <ORG>, London. Thereafter, on arrival of the goods and' after weighment and assay, the sale price was ascertained and the balance of price, after deducting the payments made against the bill of exchange, used to be paid to <ORG>, London, which was the assessee company's agent and banker in London.

On the facts stated above the Income-tax Officer assessed the assessee company on the entire profits in respect of these sales on the footing that they arose and were also received in British India. On appeal, the Appellate Assistant Commissioner confirmed the assessment. The assessee company went up on appeal to <ORG>. The <ORG> by its order dated the 22nd January, 1948, came to the conclusion that the sales took place outside British India and that the money in respect of such sales was also received by the agent of the. assessee company in London. The Commissioner of Income-tax thereupon applied to the Appellate <ORG> requiring the latter to state a case and refer certain questions of law said to &rise out of the order of the <ORG>. The Appellate <ORG> accordingly referred the two questions of law hereinbefore set out. <ORG> in a well reasoned judgment upheld the decision of the Appellate <ORG> and answered the two questions in the affirmative and against the Commissioner of Income-tax. The Commissioner of Income-tax' has now preferred this appeal with a certificate of fitness from <ORG>.

It appears from the statement of case as also from the order of <ORG> that it was agreed between the department and the assessee company that the income arose at the place, wherever that be, where, the sales took place. This was not disputed before <ORG> or before us although in the appellant's statement of case it was suggested that this was erroneous. The point for determination, therefore, is as to where the sales took place.

Learned Solicitor-General appearing in support of this appeal contends that having regard to the terms of the contracts the sales must be regarded as having taken place in British India. The facts strongly relied on by him are

(i) that the price and delivery of goods were on F.O.B. terms, (ii) that in the European contracts the insurance, if any, was to be the concern of the buyers and (iii) that payment of the 80 per cent. or 90 per cent. as the case may be was made in Madras by <ORG>, Madras, to the assessee company on the delivery of the documents. All these facts taken together indicate, according to his submission, that the property in the goods passed at Madras and the sales accordingly were completed in British India. We are unable to accept this line of reasoning. According to section 4 of the Indian Sale of Goods Act a contract of sale of goods is a contract whereby the seller transfer,% or agrees to transfer the property in goods to the buyer for a price and where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. By sub-section (4) of that section an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. Section 18 of the Act clearly indicates that in the case of sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods, are ascertained. In 857, the present case, the contracts were always for sale of unascertained, goods. Skipping over sections 19 to 22 which deal with contract of sale of specific goods we come to section 23 which lays down that where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a,, deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. It is suggested that as soon as the assessee company placed the goods on board the steamer named by the buyer at the Madras Port the goods became ascertained and the property in the goods passed immediately to the buyer. This argument, however, overlooks the important word "unconditionally" used in the section. The requirement of the section is not only that there shall be appropriation of the goods to the contract but that such appropriation must be made unconditionally. This is further elaborated by section 25 which provides that where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the. terms. of the contract or appropriation,, reserve the right of disposal of the goods until certain conditions are fulfilled. In such a case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailer for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. The question in this case, therefore, is: was there an unconditional appro- priation of the goods by merely placing them on the ship ? It is true that the price and delivery was F.O.B., Madras but the contracts themselves clearly required the buyers to open a confirmed irrevocable <ORG>' credit for, the requisite percentage of the invoice value to be available against documents. This clearly indicated that the buyers would not be entitled to the documents,, that is, the bill of lading and the provisional invoice, until payment of the requisite percentage was made upon the bill of exchange. The bill of lading is the document of title to the goods and by this term the assessee company clearly reserved the right of disposal, of the goods until the bill of exchange *as paid'.' Placing of the goods on board the steamer named by the buyer under a F.O.B. contract clearly discharges the contractual liability of the seller as seller and the delivery to the buyer is complete and the goods may thenceforward be also at the risk of the buyer against which he may cover himself by taking out an insurance. Prima facie such delivery of the goods to the buyer and the passing of the risk in respect of the goods from the seller to the buyer are strong indications as to the passing also of the property in the goods to the buyer but they are not decisive and may be negatived, for under section 25 the seller may yet reserve to himself the right of disposal of the goods until the fulfilment of certain conditions and thereby prevent the passing of property in the goods from him to the buyer. The facts found in this case are that the assessee company shipped the goods under bill of lading issued in its own name. Under the contract it was not obliged to part with the bill of lading which is the document of title to the goods until the bill of exchange drawn by it on the buyers' <ORG> where the irrevocable letter of credit was opened was honoured. It is urged that under the provision in the contract for weighment and assay, which was ultimately to fix the price unless the buyer rightly rejected the goods as not being in terms of the contract, the passing of property in the goods could not take place until the buyer accepted the goods and the price was fully ascertained after weighment and assay. It is submitted that being the position, the property in the goods passed and the sales were concluded outside British India, for the weighment, sampling, assay and the final fixation of the price could only take place under all these contracts outside British India. It is not necessary for us to express any opinion on this extreme contention. Suffice it to say, for the purposes of this case, that in any event upon the terms of the contracts in question and the course of dealings between the parties the property in the goods could not have passed to the buyer earlier than the date when the bill of exchange was accepted by the buyers' <ORG> in London and the documents were delivered by the assessee company's agent, <ORG>, London, to the buyers" <ORG>. This admittedly, and as found by <ORG>, always took place in London. It must, therefore,. follow that at the earliest the ;property in the goods passed in London where the bill of lading was handed over to the buyers' <ORG> against the acceptance of the relative bill of exchange. In the premises, <ORG> as well as <ORG> were quite correct in holding that the sales took place outside British India and, ex hypothesis the profits derived from such sales arose outside British India. As to the second question, the.. learned Solicitor-General contends that irrespective of the place where the sale may have. taken place the profits derived from such sales were received in Madras. It is recalled that after shipment the assessee company, through its managing agent in Madras, prepared, provisional invoices and drew bills of exchange for 80 per cent. or 90 per cent., as the case may be, of the amount of such invoices and handed over the same to <ORG>, Madras, and received the amount of the bill of exchange from them in Madras. He contends that the receipt of this payment by the assessee company was really the receipt of the price of the goods and amounted to receipt of profits in Madras. He draws our attention to the terms of payment in the European contract and to the letter of intimation of the opening of the credit sent by <ORG> Madras, to the assessee company which have been quoted in part in the earlier part of this judgment. He relies on the words "through <ORG>," appearing in the contract and the words "available by delivery to us" appearing in the letter. We do not think that those words support the contention of the learned Solicitor-General. The words "through <ORG>," appear to us to go with the preceding words "to be advised to sellers" which are put within brackets which seem to have been wrongly closed after the word sellers' instead of after the words <ORG> ". Ordinarily, the buyer opens a letter of credit with his <ORG> in favour of the seller and the words "through <ORG>," would be meaningless unless it was intended to mean' that the irrevocable credit which was in favour of the assessee company was to be operated upon by the latter through <ORG> If that were the true meaning, then that certainly does not make <ORG>, the agent of the buyers. The words "available by delivery to us" occurring in the letter of <ORG>, Madras, do not appear to us to indicate that this was any part of the terms of the letter of credit. This was an intimation in accordance with the advice received by <ORG>, Madras, from <ORG>,, London, that the assessee company might avail itself of the letter of credit by delivery of the documents to <ORG>, Madras. This is made further clear by the latter part of the letter where <ORG>, Madras, expressed their willingness at their option to negotiate the drafts drawn in terms of the arrangement provided that the documents were in order, The concluding sentence of that letter whereby <ORG>, Madras, disown any responsibility in respect of the advice clearly militates against the suggestion of the learned Solicitor-General. It is, in these circumstances, impossible to accede to the argument that the payment of 80 per cent. or 90 per cent., as the case may be, of the amount of the provisional invoice by <ORG>, Madras, was a payment on account of the price. Normally, price is paid by or on behalf of the buyer. In this case the fact found is that <ORG>, Madras, and <ORG>, London., were agents of the assessee company. Neither 'of 'them had any relation with the buyers. Therefore, a payment by them cannot be regarded as a payment of the price. The true position is very clearly put by Lord <NAME> in The Prinz Adalbert(1) :

" When a shipper takes his draft, not as yet accepted, but accompanied by a bill of lading, indorsed in this way, and discounts it with a banker, he makes himself liable on the instrument as drawer, and he further makes the goods, which the bill of lading (1) L.R. [1917] A.C. 586, 589.

represents, security for its payment. If, in turn, the discounting banker surrenders the bill of lading to the acceptor against his acceptance, the inference is that he is satisfied to part with his security in consideration of getting this further party's liability on the bill, and that in so doing he acts with the permission and by the mandate of the shipper and drawer.

This payment by <ORG>, Madras, therefore, is nothing but an advance made by them to their own customer on the security of the goods covered by the bill of lading reinforced by the 'benefit of the liability taken up by the assessee company as drawer of the bill which in its turn is backed by the confirmed and irrevocable credit of the buyers' <ORG>. If this payment was on account of the price, why should the assessee company, as the seller, undertake any liability to <ORG>, as the drawer of the bill of exchange ? The truth of the matter is that the price was paid on behalf of the buyers by their respective <ORG>s in London to <ORG>, London which was the agent of the assessee company. The first receipt of the price, therefore, as pointed out by <ORG>, was by <ORG>, London, on behalf of the sellers. There is no dispute that the balance of the price ascertained after weighment and assay and deducting the amount paid on the bill of exchange was similarly received in London by <ORG>, London, on behalf of the assessee company. The subsequent adjustment made in the books of <ORG>, London, did not operate as a receipt of profits in British India. In our opinion <ORG> correctly answered the second question also in favour of the assessee company. For reasons stated above, this appeal must stand dismissed with costs and we order accordingly.

Appeal dismissed.


CASE NO.: Appeal (civil) 971 of 2003 PETITIONER: <ORG> & Others RESPONDENT: <NAME> & Others DATE OF JUDGMENT: 03/10/2005 BENCH: ASHOK BHAN & S.B. SINHA JUDGMENT:

J U D G M E N T BHAN, J.

This appeal is directed against the judgment of <ORG> of <ORG> in Writ Petition No.727 of 1989 wherein and whereunder <ORG> while setting aside the judgment of the learned Single Judge in Writ Petition No.15487 of 1987 issued a direction to <ORG> (for short "the <ORG>"), the appellant herein, to issue possession certificate to the writ petitioner i.e. the 1st respondent herein in respect of 6 acres and 20 guntas of land as per its Resolution dated 19.4.1972 and to allot alternative plots/sites of equal size to the persons who had been allotted sites carved out of 6 acres and 20 guntas of land The City of Bangalore Improvement Act, 1945 was enacted by the then <ORG>. Under Section 3 of the said Act <ORG> was constituted to implement the purposes of the Act. The Board (commonly known as <ORG>) was given the power to draw the improvement scheme and for undertaking any work for improvement or development of any area in or around the city of Bangalore. The Board was also given the power to acquire land by agreement and was deemed to be a local authority for the purposes of Section 50(2) of the Mysore Land Acquisition Act which was in pari materia with the Land Acquisition Act of 1894.

On 28.1.1960 a preliminary notification dated 26.11.1959 was published in the official <ORG> proposing to acquire the land of the 1st respondent for formation of a scheme to set up a layout called the Koramangala Layout. Final notification was published on 28.9.1965 and the award was made on 29.11.1966. The amount of compensation was paid and in some cases it was deposited in the treasury. 1st respondent sought a reference for enhancement of the compensation. In the cases in which a reference had been sought by the 1st respondent the amount of compensation was deposited in <ORG>. Immediately after the passing of the award the possession of the land in question was taken.

On 26.6.1968 a resolution was passed by <ORG> (wrongly typed as 26.6.1969 in the impugned judgment) to re-convey an extent of 8 acres and 21 guntas of the land out of the total land acquired to the 1st respondent. On 19.4.1972 another resolution was passed by the <ORG> modifying its earlier resolution and agreeing to re-convey 6 acres, 20 guntas and 44 square yards in favour of the 1st respondent subject to the following conditions.

"1. He should arrange to withdraw immediately the cases pending in the civil court.

2. He should withdraw the compensation deposited in the court and <ORG> and re-deposit the same to the <ORG> funds within 30 days.

The details of compensation deposited are noted below. The Additional Special Land Acquisition Officer (CITB) may be consulted if any difficulty arises in withdrawing the amounts in courts or <ORG>.

1. S.

No.32/6 Rs.24,845.

Civil Judge's Court

2. S.

No.32/8 Rs.

2,763.45 Civil Judge's Court

3. S.

No.32/9 Rs.

1,265.00 <ORG>

4. S.

No.32/11 Rs.

3,004.37 Civil Judge's Court

5. S.

No.32/12 Rs.

6,008.75 Civil Judge's Court

6. S.

No.32/10 Rs.

1,265.00 <ORG>

Compensation paid in respect of Sy. No.32/17 amount to Rs. 3,162.50 ps. may also be credited to the <ORG> funds, together with interest at 9% on the compensation amount drawn upto the date of repayment.

Possession of S.No.26/1 may be handed over to the Additional Special Land Acquisition Officer immediately, and informed to take further action. "

It is suffice to mention that in so far as the refund of compensation amount was concerned it was found to be neither feasible nor practicable for the 1st respondent to withdraw the amount and re- deposit it and he, therefore, gave it in writing to the authority that these amounts would not be withdrawn by him or claimed by him whereupon the amounts in question were ultimately re-claimed by the authority. He withdrew his reference applications filed under Section 18 of the Act.

On 10.7.1974 layout plan was approved by the <ORG> in respect of the land which had been acquired for the development of the area. In the layout plan the land to the extent of 6 acres and 20 guntas was shown separately being reserved for re- conveyance.

In the year 1976, The City of Bangalore Improvement Act, 1945 was repealed and in its place <ORG> Act, 1976 was enacted. <ORG> constituted under the 1976 Act succeeded to <ORG>.

The resolution passed by the <ORG> to re-convey 6 acres and 20 guntas of land was not given effect to as <ORG> of Karnataka in a series of judgment held that the land acquired for the development scheme could not be returned or re- conveyed to the owner and that it must be applied for the purpose for which it was acquired and the sites formed therein should be distributed according to the allotment rules. In view of the declaration of law made by <ORG> the resolution was not given effect to by the <ORG> and sites were formed by the appellant in the said 6 acres and 20 guntas of land and the sites were allotted sometime in the year 1985-86.

After the formation of sites in said 6 acres and 20 guntas and their allotment the 1st respondent approached <ORG> at Bangalore seeking a writ of mandamus directing the <ORG> to re- convey 6 acres and 20 guntas of land as per resolution of <ORG> dated 19.4.1972. A learned Single Judge of <ORG> dismissed the writ petition summarily at the admission stage as being concluded by the decision of <ORG> in <NAME> Vs. State of Karnataka , ILR 1987 Karnataka 790. The writ appeal filed by the 1st respondent was also dismissed summarily at the initial stage as being covered by the earlier decisions of <ORG>. 1st respondent thereafter approached this Court in CA.5165 of 1992 and this Court by its order dated 31.1.2001 accepted the appeal and set aside the orders impugned in the appeal and remitted the case back to the Division Bench to reconsider the appeal on merits in view of the contentions raised on behalf of the 1st respondent that in a later judgment in <NAME> Vs. <ORG> , ILR 1992 Karnataka 125, <ORG> had taken a view that re-conveyance was permissible.

<ORG> after remand considered the matter afresh and set aside the judgment of the Single Judge inter alia holding that there was change in the judicial thinking and in <NAME>'s case (supra) <ORG> taking a wider perspective of the entire case law had held that it was permissible to restore or re-allot the land to the owners. That in the previous judgments rendered, <ORG> had failed to take into consideration certain important factors such as that the <ORG> being the acquiring authority and the <ORG> being the beneficiary only, the <ORG> could withdraw the acquisition or prune the area of acquisition. Drawing support from Section 21 of the General Clauses Act it was held that the authority vested with the power to do a thing had a corresponding right to undo it as well. Since the <ORG> was the acquiring authority it could withdraw the acquisition or prune the area of acquisition. That the <ORG> was barred by doctrine of promissory estoppel to withdraw/not act upon the resolution dated 19.4.1972 specially when the 1st respondent in pursuance to the resolution passed had acted prejudicially to his interest. That the decision of the <ORG> was binding on the <ORG> being a successor. It was further held that land which was the subject matter of the resolution of re- conveyance could not and should not have allotted at all. That the acquisition proceedings in the process of vesting of the land had not reached finality in respect of 6 acres and 20 guntas of land as 1st respondent had re-deposited the amount of compensation as per resolution dated 19.4.1972 and thus had not received the amount of compensation. In view of the above findings <ORG> held that there was no necessity to give a direction to re-convey the land but the proper direction would be to direct the <ORG> to issue the possession certificate to 1st respondent in respect of the land which is the subject matter of the writ petition. It was further held that since the allottees of the sites out of 6 acres and 20 guntas were likely/bound to be affected by the order a direction was required to be issued to <ORG> to allot equivalent sites/plots of land to such allottees within 4 months of the passing of the order.

Learned counsels for the parties have been heard at length.

A Division Bench of <ORG> in Writ Appeal No.729 of 1983 (Sri. A.V. Lakshman Vs. B.D.A. & Others) upheld the order of the Single Judge by observing that the owners of the land did not have a right in law to seek re-conveyance of the acquired land. Another Division Bench in Writ Appeal No.581 of 1975 (<NAME> & Others Vs. State & Others) held that the lands acquired become the property of <ORG> and it has to be dealt with in accordance with the law and owners of the land in the absence of a statutory provision entitling them to get the land re-conveyed would not be entitled to seek relief from the <ORG> under Article 226 of the Constitution of India. It was observed as under:-

"Assuming for the sake of argument that the other lands which have been acquired by <ORG> have been re-conveyed that by itself is not sufficient to hold that the appellants have a legal right in their favour for getting the lands acquired from them re-conveyed to them. When the lands are acquired by <ORG> they become the property of <ORG> and <ORG> has to deal with its own sites in accordance with law. In the absence of a statutory provision entitling the appellants to get re-conveyance they would not be entitled to seek any relief from this Court under Article 226 of the Constitution on the ground that <ORG> has in similar cases re-conveyed lands in favour of persons from whom they were acquired. Hence this prayer cannot be granted."

A single Judge in Writ Petition No.8321 of 1984 (<NAME> Vs. State & Others) again held that <ORG> had no power to pass a resolution of re-conveyance. It was observed that it was not open to the <ORG> to pass a resolution to re-convey the property and create a right in favour of the owner-writ petitioner. In <NAME> Vs. State of Karnataka a learned Single Judge, [which decision was later on affirmed by the Division Bench] held that there was no provision in the Act and the Rules framed thereunder enabling the <ORG> to re-convey the sites. Re-conveyance was opposed to the scheme itself. The scheme was framed for forming of sites and allotting them as per rules. The rules did not provide for re-conveyance and, therefore, it was not possible to hold that there is any right to seek re-conveyance. It was also held that it was not possible to apply the rule of promissory estoppel on the facts of the case as there was no provision in the Act, or in the Rules framed thereunder enabling the <ORG> to allot or re-convey the sites in the manner proposed to be done by the Notification. Therefore, the <ORG> could not be directed to allot or re-convey the sites on the ground that it had promised to allot or re-convey the sites. It was observed in para 4: "Learned Counsel for the petitioner has not been able to place reliance on any of the provisions in the Act or on the Rules framed thereunder which enable the <ORG> to re-convey the site. Re-conveyance in a way is opposed to the scheme itself. Scheme is formed for the purpose of forming site for allotting them as per the Rules. The rules do not provide for re-conveyance. Therefore it is not possible to hold that the petitioners have a right to seek re-conveyance."

Plea of promissory estoppel noticed in para 5 of the order to the effect:

"However, the learned Counsel for the petitioners has tried to take refuge under the equitable doctrine of promissory estoppel on the basis of the notification issued by the then Chairman of the <ORG> dated 14.7.76 as per Annexure-B. The petitioners claim that as per and in pursuance of the notification (Annexure-B) they have filed the affidavits and have not challenged the acquisition and have altered their position to their disadvantage, therefore, it is not now open to the <ORG> to resile from the notification and deny allotment of sites to the petitioners by way of re-

conveyance."

The said plea was rejected by observing thus:

"In addition to this it is not possible to apply the rule of promissory estoppel in cases where there is no provision contained in the Act, or in the Rules framed thereunder enabling the <ORG> to allot or re-convey the sites in the manner proposed to be done by the notification. (Annexure-B). Therefore I am of the view that the <ORG> cannot be directed to allot or re-convey a site to each of the petitioners on the ground that it had promised to allot or re-convey a site to each one of the petitioners."

In Writ Petition No.12119 of 1988 (Bangalore District Co-operative Central Bank Employees Co-op. Society Ltd. Vs. <ORG> and Another), Justice <NAME> expressed his agreement with the view taken by <NAME>, J. to the following effect:-

"If the <ORG> were to be given the power to re-convey the land vested in it by exercising the power under Section 13 of the Act, that would be self-defeating the destructive of the purpose of constituting a special authority for the development of the City of Bangalore."

In view of the above quoted judgments and some other judgments of <ORG> from 1983 onwards holding that the acquired land cannot be re- conveyed, the extent of 6 acres and 20 guntas which was originally earmarked for re-conveyance was also developed and sites were carved out and allotted.

In <NAME>'s case (supra) on which reliance has been placed in the impugned judgment to come to the conclusion that there was shift in the judicial thinking regarding the power of the <ORG>, to re- convey the land acquired to the owner, the facts were:-

A Writ Petition No.2495 of 1979 was filed by the owners of the land seeking issuance of a Writ of Mandamus directing the <ORG> to deliver possession certificate in respect of 1 acre of land in Survey No.5/3 C of Jadahalli. The Single Judge held that <ORG> had/has no power to re-convey the land acquired to implement the scheme and negatived the plea of the writ petitioner. Aggrieved against the order passed by the Single Judge the writ petitioner filed the appeal which was accepted. It was held that no material had been placed on record to hold that the land in question had in fact been acquired for a scheme or that the allotment of site contravened the scheme. <ORG> expressed its agreement with the proposition that <ORG> which is a statutory body working under the Act had no power under the Act or the Rules framed thereunder to re-convey the lands which had been acquired for implementation of the scheme. The agreement was expressed in para 3 of the judgment in the following words:-

"The learned Single Judge has pointed out that the <ORG> had or has no power to re-convey the lands acquired to implement a scheme relying upon the decisions of this <ORG> in B.N.

<NAME> Vs. State of Karnataka, ILR 87 Kar. 790, and in <NAME> Vs. State of Karnataka, ILR 1989 Kar. 75. This proposition is absolutely unexceptionable having regard to the provisions of the B.D.A. Act as also the Rules of Allotment of Sites framed under the said Act."

[Emphasis supplied] The Bench after going through the pleadings of the party came to the conclusion that it was not a case of re-conveyance of the land but allotment of the site as contemplated under Rule 5 and the word "re-conveyance" appears to have been used in a loose sense because the allottee happened to be the owner of the land prior to its acquisition. It was held:-

".. Further, the <ORG> had the power to allot site under Rule 5 without following the procedure prescribed in Rule 3 provided the other requirements of Rule 5 are fulfilled. No serious contention could be urged on behalf of the respondent to rebut the contention urged on behalf of the appellant that the word 'reconveyance' had been used in the Resolution dated 12.1.1972 and all the subsequent correspondence in a loose sense and in fact the said word meant allotment/grant of site within the meaning of Rule 5. As seen earlier the earliest Resolution dated 7.8.1963 only spoke of grant and not re-conveyance.

When that is so, and when in fact the Resolution coupled with the correspondence between the petitioner and the <ORG> shows that what was done was an allotment as contemplated under Rule 5, the contention the word 're-conveyance' appears to have been used in a loose sense because the allottee was the previous owner of the said land prior to the acquisition, but in truth it is a case of allotment has to be accepted. If that be so, it has to be held that there was a valid allotment of 1 acre of land in Sy. No.5/3C as per Resolution No.646 dated 12.1.1972 by the <ORG> in favour of the petitioner-appellant. Further he had also complied with all other requirements imposed by the <ORG>."

On close scrutiny it has to be held that in <NAME>'s case (supra) the Bench did not express an opinion contrary to the opinion which had been expressed in the earlier decisions to the effect that there was no power under the Act or the Rules with the <ORG> to re-convey the acquired land, on the contrary the Bench expressed its agreement with the view taken in <NAME> case (supra) and other cases to the effect that the <ORG> was not vested with the power under the Act or Rules to re-convey the land which had been acquired for a scheme. On the facts of the case the Bench came to the conclusion that it was a case of allotment as contemplated under Rule 5 and not that of re-conveyance. <ORG> in the impugned judgment has misread and misapplied <NAME>'s case (supra) judgment to come to the conclusion that there was a shift in the judicial thinking and that the land acquired could be re- conveyed to the owners. The findings recorded which are based on misreading of the <NAME>'s case (supra) are unsustainable and therefore set aside.

State of Karnataka amended the Bangalore Development Authority Act, 1976 by the Bangalore Development Authorities (3rd Amendment) Act , 1993 (for short "the Amendment Act ") which came into force with effect from 31st March, 1994. Section 5 of the Amendment Act introduced Section 38-C in the Act and Section 9 of the Amendment Act validated the allotments made between 20.12.1973 to 8.5.1986 retrospectively.

Although <ORG> in the impugned judgment held that though the issue regarding applicability of Section 38-C after its incorporation in the BDA Act lifting the ban on re- conveyance was irrelevant because the 1st respondent did not contend that he was entitled to any relief under this provision but indirectly relying upon it <ORG> held that in a given case for good reasons it would be permissible for the authority to alter the terms of the acquisition and restore the lands that had been acquired under the provisions of the Land Acquisition Act if the facts and circumstances so justified.

Section 38-C and Section 9 of the Amendment Act are reproduced below:-

"38-C. Power of <ORG> to make allotment in certain cases.  Notwithstanding anything contained in this Act or in any other law or any development scheme sanctioned under this Act, or <ORG> Act, 1985 where the <ORG> or the erstwhile <ORG>, Bangalore has already passed a resolution in favour of any persons any site formed in the land which belong to them or vested in or acquired by them for the purpose of any development scheme and on the ground that it is not practicable to include such site for the purpose of the development scheme, the <ORG> may allot such site by way of sale or lease in favour of such persons subject to the following conditions, -

(a) the allottee shall be liable to pay any charges as the <ORG> may levy from time to time; and

(b) the total extent of the site allotted under this section together with the land already held by the allottee shall not exceed the ceiling limit specified under Section 4 of the Urban Land (Ceiling and Regulation) Act , 1976."

"9. Validation of certain allotment.  Notwithstanding anything contained in any law or any judgment, decree or order of any court where in pursuance of any resolution passed by the <ORG> or the erstwhile <ORG>, Bangalore to re-convey in favour of any person any site out of the land which belonged to them or vested in or acquired by them for the purpose of any development scheme, the <ORG> has made allotment of such site by way of sale, lease or otherwise in favour of such person after the twentieth day of December, 1973 and before eight day of May, 1986, such allotment shall be deemed to have been validly made and shall have effect for all purpose as if, it had been \made under Section 38-C of the Principle Act as amended by this Act and accordingly

(a) all acts, proceedings and things done or allotment made or action taken by the authority shall for all purpose be deemed to be and to have always been done or taken in accordance with law;

(b) no suit or other proceedings shall be instituted, maintained or continued in any court for cancellation of such allotment or for questioning the validity of any action or things taken or done under Section 38-C of the Principle Act as amended by this Act, and no court shall enforce or recognize any decree or order declaring such allotment made or any action taken or things done under the Principle Act as invalid."

Section 38-C commences with non obstante clause. It provides that irrespective of anything contained in any law or any judgment, decree or order of any Court where in pursuance of any resolution passed by the authority or the erstwhile <ORG>, Bangalore in favour of any person re-conveying the site formed in the land which belong to them or vested in or acquired by them for the purpose of any development scheme and on the ground that it is not practicable to include such site for the purpose of any development scheme, the <ORG> allot such site for the purpose of development scheme by way of sale or lease in favour of such persons subject to the allottee paying such charges which the authority may levy from time to time and the extent of site allotted under this provision together with the land already held by the allottee shall not exceed ceiling limit specified under Section 4 of the Urban Land (Ceiling & Regulation) Act , 1976.

Section 9 of the Amendment Act speaks of validation of certain allotment. It also starts with the non obstante clause and provides that if a resolution has been passed by <ORG> or <ORG> to re-convey in favour of any person any site out of the land which belonged to him or vested or acquired from him for the purpose of any development scheme, the <ORG> has already made allotment of such site by way of sale, lease or otherwise in favour of such person after 20th of December, 1974 and before 8th of May, 1986, then such allotment shall be deemed to have been validly made and shall have effect for all purpose as if, it is \made under Section 38-C of the Principal Act as amended by Act 17 of 1984.

On a conjoint reading of Section 38-C read with Section 9 of the Amendment Act it would be seen that Section 38-C gives the authority to make allotment in certain cases. It gives the authority to the <ORG> to re-convey/allot in favour of any person any site formed in the land which belonged to them or vested in or acquired by them for the purpose of any development scheme and on the ground that it is not practicable to include such site for the purpose of development scheme by way of sale or lease in favour of such person whose land was acquired subject to his liability to pay any charges that the authority may levy from time to time and that the total extent of site allotted under this Section together with the land already held by the allottee would not exceed the ceiling limit under Section 4 of the Urban Land (Ceiling and Regulation) Act , 1976. Section 9 of the Amendment Act validates the allotment made between 20th December, 1973 to 8th May, 1986. Section 38-C only authorises the <ORG> to allot a site in a development scheme to a person whose land had been acquired. It does not give any power to the <ORG> to re-convey the land or a part of the land by withdrawing the acquisition itself. Observations made by the Division Bench in the impugned judgment that Section 38-C enabled the <ORG> to re-convey the land which had been acquired for a development scheme for a purpose other than implementing the scheme are not sustainable.

This apart Section 38-C is prospective in its application except to the extent of the allotment made between 20th December, 1973 to 8th May, 1986 which are saved by Section 9 of the Amendment Act. The resolution of <ORG> of 1972 agreeing to re-convey the part of the land acquired is not covered by the provisions of Section 9 of the Amendment Act. In the present case, the resolution of the <ORG> predecessor-in-interest is dated 19.4.1972 and it would not be deemed to be validated by the deemed fiction created by Section 9 of the Amendment Act to bring it within the provisions of Section 38 -C.

We may here notice the judgment of this Court in <NAME> Vs. <ORG> , 2001 (9) SCC 204, on which reliance has been placed by the counsel for the respondent to contend that Section 38-C would be applicable to the present case. In this case the <ORG> had acquired land for the development of the scheme called "Rajamahal Vilas II Stage." <ORG> passed a Resolution on 26.6.1984 whereunder it was decided that each of the owners of the land whose land had been acquired would be given a site measuring 40' x 60' free of cost. <ORG> did not implement the decision on the ground that the Resolution was not approved by <ORG>. The appellants challenged the decision of <ORG> by way of a writ petition under Article 226 of the Constitution of India before <ORG>. A Division Bench of <ORG> by the judgment dated 8.2.1991 dismissed the writ petition. Aggrieved against the decision of <ORG> appeals were filed in this Court which were accepted. Taking note of Section 38-C read with Section 9 of the Amendment Act it was held that the provisions of Section 9 were fully applicable to the allotments made to the appellants during the period 1984-85. It was observed in later part of para 10 as under:-

"...Even if it is assumed that the basis for the allotment of sites to the appellants was not the same as has been provided by the Amendment Act under Section 38-C , but that would not invalidate the allotments because the deeming fiction crated by Section 9 of the Amendment Act would bring the allotments within the purview of Section 38-C . The effect of the deeming fiction is that even though these allotments may not have been made under Section 38-C they would be saved by Section 9 of the Amendment Act by virtue of the deeming fiction."

It was further observed in para 11 as under:- "Even otherwise we are of the view that the resolution of <ORG> did substantial justice to the appellants. A situation was created where it may not have been possible for <ORG> to implement the scheme. The <ORG> entered into a settlement with the farmers and took a conscience decision to allot plots to them. It was neither fair nor just on the part of <ORG> and <ORG> to have gone back on their decision which was taken with an open mind and after discussion with the farmers. <ORG> by passing the resolution, in a way, accepted the demand of the farmers for enhanced compensation. The allotment of plots to them was to further compensate them for acquiring their land for the development scheme."

This decision is of no assistance to the 1st Respondent as it was a case of allotment of a site formed under the scheme and not of re-conveyance by withdrawing from the acquisition itself. Moreover, Section 9 of the Amendment Act would also be not applicable as the resolution of <ORG> does not fall within the prescribed dates i.e. 20.12.1973 to 8.5.1986.

<ORG> in the impugned judgment has taken the view that the correspondence exchanged between the parties established that the respondent acting on the representation or the promise held out to him to his prejudice and altered his position to his detriment in not pressing his claim for higher compensation and withdrawing the legal proceedings. That the respondent had also not claimed the compensation that was offered to him, which was re-deposited by him with the authority. That the appellant could not be permitted to resile from the representation or promise made by it to the respondent as the respondent had acted on the representation and altered his position to its prejudice. Plea taken by the appellant that rule of promissory estoppel shall not apply to do or perform an act prohibited by law or not authorised by law was rejected by observing that Act to re- convey the land was not prohibited as there was a shift in the judicial thinking in <NAME>'s case (supra). It was held that the appellant was bound to re-convey the land to the petitioner as per its resolution. That the appellant was debarred from resiling from the promise/representation made especially in view of the fact that the respondent acting on the promise made to him had altered his position to his prejudice.

The doctrine of promissory estoppel is not based on the principle of estoppel. It is a doctrine evolved by equity in order to prevent injustice. Where a party by his word or conduct makes a promise to another person in unequivocal and clear terms intending to create legal relations knowing or intending that it would be acted upon by the party to whom the promise is made and it is so acted upon by the other party the promise would be binding on the party making it. It would not be entitled to go back on the promise made. This <ORG> in M/s. <ORG> Vs. State of Uttar Pradesh, 1979 (2) SCC 409, after analyzing the doctrine of promissory estoppel as applied in the <ORG>s of England and the United States held that in India the law may be taken to be settled that principle of promissory estoppel would be applicable to the <ORG> as well where it makes a promise knowing or intending that it would be acted upon by the promisee, and the promisee in fact acting on the promise alters his position, then the <ORG> will be held bound by the promise and such a promise would be enforceable against the <ORG> at the instance of the promisee. That the <ORG> stood on the same footing as a private individual so far as the obligation of law is concerned. The <ORG> committed as it is, to the rule of law, cannot claim immunity from the applicability of Rule of Promissory Estoppel and repudiate a promise made to it on the ground that such a promise may fetter its future executive action. It was pointed out that since the doctrine of promissory estoppel is equitable doctrine it must yield when the equity so requires and if it can be shown by <ORG> that, having regard to the facts as they have transpired, it would be inequitable to hold the <ORG> to the promise made by it, the <ORG> will not raise an equity in favour of the promisee and enforce the promise against the <ORG>. Another exception carved out was that doctrine of promissory estoppel cannot be invoked to compel the <ORG> or even a private party to do an act prohibited by law. It was observed in para 28 as under:-

"....It may also be noted that promissory estoppel cannot be invoked to compel the <ORG> or even a private party to do an act prohibited by law. There can also be no promissory estoppel against the exercise of legislative power. The <ORG> can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel. <ORG> Vs. <ORG>, 1973 (2) SCC 713."

In <ORG> Vs. Prof. <NAME> (<ORG>.) , 2001 (2) SCC 62, it was held that there can be no estoppel against the statute. Rejecting the plea for applying the principle of promissory estoppel, it was observed in para 69 as under:-

"The learned <ORG> erred in thinking that because of the approval of plan by the <ORG>, or conversion of land use by the Collector or grant of letter of intent by the Central <ORG>, a case for applying principle of "promissory estoppel" applied to the facts of this case. There could be no estoppel against the statute. The Industry could not therefore seek an NOC after violating the policy decision of the <ORG>. Point 4 is decided against the 7th respondent accordingly."

[Emphasis supplied] Similarly, in <ORG> represented by <NAME> Vs. <ORG> of A.P. , 2002 (2) SCC 188, it was held that the <ORG> as a public authority cannot be compelled to carry out a representation or promise which is prohibited by law or which was devoid of authority or power of the officer of the <ORG> or the public authority to make the promise. It was observed in para 24 as under:-

"It is equally settled law that the promissory estoppel cannot be used to compel the <ORG> or a public authority to carry out a representation or promise which is prohibited by law or which was devoid of the authority or power of the officer of the <ORG> or the public authority to make. Doctrine of promissory estoppel being an equitable doctrine, it must yield place to the equity, if larger public interest so requires, and if it can be shown by the <ORG> or public authority for having regard to the facts as they have transpired that it would be inequitable to hold the <ORG> or public authority to the promise or representation made by it. The <ORG> on satisfaction would not, in those circumstances raise the equity in favour of the persons to whom a promise or representation is made and enforce the promise or representation against the <ORG> or the public authority. These aspects were highlighted by this <ORG> in <NAME> Vs. <ORG>, 1991 (1) SCC 761, STO Vs. <ORG>, 1998 (1) SCC 572 and <NAME> (Dr.) Vs. State of U.P., 1998 (2) SCC 502, Above being the position, the plea relating to promissory estoppel has no substance."

[Emphasis supplied] In Pune Municipal Corporation and Another Vs. Promoters and Builders Association and Another, 2004 (10) SCC 796. it was held that it is a settled preposition of law that there could be no "promissory estoppel" against the statute. Relying upon the earlier decisions of this Court and overturning the view taken by <ORG> in invoking the principle of promissory estoppel it was held in para 6 as under:-

"DCR are framed under Section 158 of the Act. Rules framed under the provisions of a statute form part of the statute. (See General Officer Commanding-in- Chief Vs. Dr. <NAME>, 1988 (2) SCC35, para 14). In other words, DCR have statutory force. It is also a settled position of law that there could be no "promissory estoppel" against a statute.

(<ORG> Vs. Prof. <NAME>, 2001 (2) SCC 62, para 69, STO Vs. <ORG>, 1998 (1) SCC 572, paras 21 and 22 and <ORG> Govt. of A.P., 2002 (2) SCC 188, paras 13 to 24.) Therefore, <ORG> again went wrong by invoking the principle of "promissory estoppel" to allow the petition filed by the respondents herein."

[Emphasis supplied] Reliance placed by the counsel for the respondent on the decision in State of Punjab Vs. <ORG> , 2004 (6) SCC 465, to contend that the principle of promissory estoppel would be applicable to the present case cannot be accepted. In the aforesaid case, the State of Punjab had come up in appeal against the order passed by <ORG> quashing the demand raised by the State of Punjab for purchase tax on milk for the period 1996-97. <ORG> quashed the demand raised by the State of Punjab on the principle of promissory estoppel as the State of Punjab had promised to abolish the purchase tax on milk for the period in question and was estopped from contending to the contrary. The respondent writ petitioners were the factories producing various milk products. As registered dealers under the Punjab General Sales Tax Act, 1958 the respondent writ petitioners had been paying purchase tax on milk in terms of Section 4-B of the Act however for one year i.e. from the period 1.4.1996 to 4.6.1997 none of the respondents paid the purchase tax on the plea that the Government had decided to abolish purchase tax on milk for the period in question and was estopped from contending to the contrary.

It was averred in the writ petition that the Chief Minister of Punjab on 26.2.1996 while addressing dairy farmers at the State level function had announced that <ORG> had abolished purchase tax on milk and milk products in the State. Similarly, the Finance Minister in his Budget Speech echoing the view of the Chief Minister had stated that <ORG> had abolished the purchase tax on milk. The Financial Commissioner in its memo dated 26.4.1996 addressed to <ORG> had written that it has been decided in principle to abolish purchase tax on milk with effect from 1.4.1996. In a meeting held under the Chairmanship of Chief Minister a decision was taken to abolish the purchase tax on milk and it was decided to issue a formal notification in a day or two. Later on, the Government resiled from its promise and issued demand notices raising the demand of purchase tax for the year 1996-97. Upholding the decision of <ORG> and noticing and analyzing the entire case law on promissory estoppel it was held that <ORG> in view of the provisions of the Punjab General Sales Tax Act, 1948 had the power to exempt the purchase tax on milk. Since there was nothing in law which prohibited it from doing so, <ORG> was held bound to act upon its representation and exempt the milk from purchase tax for the relevant period. It was held that no representation could be enforced which is prohibited by law but this principle would not be applicable to the cases where there is power under the statute to grant exemption. Grant of exemption could not be said to be contrary to the statute. Statute did not debar the grant of exemption rather it envisaged it. Distinguishing the judgment in <ORG> Vs. State of Punjab, 1992 (2) SCC 411, it was observed as under:-

"<ORG> Vs. State of Punjab, 1992 (2) SCC 411, is an example of where despite the petitioner having established the ingredients of promissory estoppel, the representation could not be enforced against the <ORG> because the Court found that the <ORG>'s assurance was incompetent and illegal and "a fraud on the Constitution and a breach of faith of the people". This principle would also not be applicable in these appeals. No one is being asked to act contrary to the statute. What is being sought is a direction on the <ORG> to grant the necessary exemption. The grant of exemption cannot be said to be contrary to the statute. The statute does not debar the grant. It envisages it."

There is no provision in the Act and the Rules framed thereunder enabling the <ORG> to re-convey the land acquired to implement a scheme for forming of sites and their allotment as per rules. The rules do not provide for re-conveyane. In the absence of any provision in the Act or the Rules framed thereunder authorizing the <ORG> to re-convey the land direction cannot be issued to the <ORG> to re- convey a part of the land on the ground that it had promised to do so. The rule of promissory estoppel cannot be availed to permit or condone a breach of law. It cannot be invoked to compel the Government to do an act prohibited by law. It would be going against the statute. The principle of promissory estoppel would under the circumstances be not applicable to the case in hand.

It is well-settled that there cannot be any estoppel against a statute. In <ORG> Vs. State of Jharkhand and Others [(2005) 4 SCC 272], this Court observed:

"53. This is also not a case where the appellant altered its position pursuant to or in furtherance of a promise made to it by the <ORG>. The doctrine of promissory estoppel, therefore, is not applicable. It is not even a case where the doctrine of legitimate expectation could be invoked. ( <CITATION> )

54. We, however, are not oblivious that the doctrine of promissory estoppel would be applicable where a representation has been made by the <ORG> in exercise of its power to exempt or abolish a commodity as taxable commodity. Such promise, however, must be made by the persons who have the power to implement the representation."

In <NAME> Vs. State of Gujarat and Others [(2005) 3 SCC 636], this Court observed:

"17. In <NAME> case plea similar to the one advanced in the present case that the appellant was not informed about the respondent's earlier marriage when she married him was held to be of no avail. The principle of estoppel cannot be pressed into service to defeat the provision of Section 125 of the Code."

Recently in <NAME> (D) BY LRS. Vs. P. Savithramma & <NAME>. [2005 (7) SCALE 322], this Court observed:

"The doctrine of approbate and reprobate is a species of estoppel. However, there cannot be any estoppel against a statute. [See <NAME>, <ORG> Vs. <ORG> Vs. <ORG>, (2004) 9 SCC 619]"

Learned counsel for the respondent vehemently contended that Section 29 of the City of Bangalore Improvement Act, 1945 was different in content and scope than Section 38 of the Bangalore Development Act. Since the resolution was passed under the City of Bangalore Improvement Act, 1945, the resolution has to be seen and interpreted in the light of Section 29 of the City of Bangalore Improvement Act, 1945. That Section 76(3) of the BDA Act provides that any right, privilege, obligation or liability acquired, accrued or incurred arising under the old Act shall remain intact. We do not find any force in the submission.

Section 27-A of the City of Bangalore Improvement Act, 1945 provided that notwithstanding anything contained in the Act during a period of fifteen years from the date of commencement of the Act, the Government may acquire the land under the Mysore Land Acquisition Act, 1894 for the purpose of improvement, expansion or development of the City of Bangalore or any area to which this Act extends, and any land so acquired after it has vested in the Government, stand transferred to the Board and such land may be dealt with under the provisions of Sections 28 and 29 , or in such manner as the Government may direct. Section 29 of the said Act reads as under:-

" Section 29 . Power of <ORG> to acquire, hold and dispose of property.  (1) The <ORG> shall for the purposes of this Act, have power to acquire and hold movable and immovable property, whether within or outside City.

(2) Subject to such restrictions, conditions and limitations as may be prescribed by rules made by the <ORG>, the Board shall have power to lease, sell or otherwise transfer any movable or immovable property which belongs to it, and to appropriate or apply any land vested in or acquired by it for the formation of open spaces or for building purposes or in any other manner for the purpose of any improvement scheme.

(3) The restrictions, conditions and limitations contained in any grant or other transfer of any immovable property or any interest therein made by the <ORG> shall, notwithstanding anything contained in the Transfer of Property Act , 1882 (Central Act 4 of 1882) or any other law, have effect according to their tenor."

First part of Clause (1) of Section 29 provides that the <ORG> shall have the power for the purpose of the Act to acquire and hold movable and immovable property, whether within or outside the city. Clause (2) provides that subject to such restrictions, conditions and limitations as may be prescribed by rules made by the <ORG>, (i) the <ORG> shall have power to lease, sell or otherwise transfer any movable or immovable property which belongs to it, and, (ii) to appropriate or apply any land vested in or acquired by it for the formation of open spaces or for building purposes or in any other manner for the purpose of any improvement scheme. The first part deals with the power of the <ORG> to lease, sell or otherwise transfer any movable or immovable property which belongs to it and, second, to appropriate or apply any land vested in or acquired by it for the formation of open spaces or for the building purposes or in any other manner for the purpose of any improvement scheme. The present case falls in the second part which provides that the lands which have been acquired by it or have been vested in it for formation of open spaces or for building purposes shall be utilized for the purpose of the improvement scheme for which the lands have been acquired. It cannot be used for any purpose other than for which it was acquired which in the present case was for formation of open spaces or for building purposes and since the land was acquired for the purpose of forming sites it could only be used for the purpose of forming sites and their allotment. There is no power as per this provision to re-convey the lands which have been acquired under a scheme for forming sites. The power of the <ORG> to lease or sell or transfer the sites was made subject to the restrictions, conditions and limitations which may be prescribed by the Rules. In the Rules framed there is no provision for re-conveying the land and, therefore, power does not vest in the <ORG> to re-convey the lands which were acquired for formation of sites in an improvement scheme.

On comparison and reading of Section 29 of the City of Bangalore Improvement Act, 1945 and Section 38 of the Amendment Act we do not find any material difference between these two sections. In fact both these sections are pari materia with each other. The arguments raised, based on Section 76(3) of the BDA Act, therefore, has no force and hence rejected.

Notification under Section 4 was issued under the Mysore Land Acquisition Act, 1894 which is pari materia with the Central Act i.e. Land Acquisition Act . By the Land Acquisition (Karnataka Extension & Amendment) Act , 1961 (Karnataka Act No.17 of 1961) the earlier Act of Mysore State was repealed and the Land Acquisition Act of 1894 (Central Act 1 of 1894) was extended to the whole of the State of Karnataka in its application to the State of Karnataka. It was specifically provided that all amendments made by the Act repealed shall cease to continue and shall be omitted from the Land Acquisition Act of 1894 and such of the provisions thereof as were affected by the repealed Act shall stand revived to the extent to which they would have otherwise continued in operation but for the passing of the repealed Act.

Preliminary notification under Section 4 dated 26.11.1959 was published under the Karnataka Land Acquisition Act, 1894 (The Mysore Land Acquisition Act). But all proceedings thereafter including the final notification and the subsequent proceedings were under the Land Acquisition Act , 1894. <ORG> in the impugned order has taken the view applying the principle laid down in Section 21 of the General Clauses Act which provides that power to issue the notification, order or rules or bye-laws would include the power to add, amend, vary or rescind any notification, order, rule or bye-law held that where the authority is vested with the power to do something then it is entrusted with the power to undo it as well. Since the State Government had the power to acquire the land it has the power to release the land from acquisition as well.

In our considered view, <ORG> has erred in holding that <ORG> could release the lands in exercise of its power under Section 48 of the Land Acquisition Act, 1894 from the acquisition.

This Court in Lt. Governor of Himachal Pradesh Vs. Sri <NAME>, 1970 (2) SCC 149, has held in para 6 as under:-

"Power to cancel a notification for compulsory acquisition is, it is true, not affected by Section 48 of the Act; by a notification under Section 21 of the General Clauses Act, the Government may cancel or rescind the notification issued under Sections 4 and 6 of the Land Acquisition Act. But the power under Section 21 of the General Clauses Act cannot be exercised after the land statutorily vests in <ORG>."

It was concluded in para 8 that:- "..It is clearly implicit in the observations that after possession has been taken pursuant to a notification under Section 17(1) the land is vested in the <ORG>, and the notification cannot be cancelled under Section 21 of the General Clauses Act, nor can the notification be withdrawn in exercise of the powers under Section 48 of the Land Acquisition Act. Any other view would enable the State <ORG> to circumvent the specific provision by relying upon a general power. When possession of the land is taken under Section 17(1) , the land vests in the <ORG>. There is no provision by which land statutorily vested in the <ORG> reverts to the original owner by mere cancellation of the notification."

Again in <NAME> Vs. State of Rajasthan, 1996 (3) SCC 1, it was reiterated that once the possession is taken and the land vests in the <ORG> then the <ORG> cannot withdraw from acquisition under Section 48 of the Land Acquisition Act. Same view was reiterated by this Court in <NAME> Vs. <ORG> , 1997 (9) SCC 132, and in <ORG> Vs. <ORG> , 2004 (4) SCC 460.

The possession of the land in question was taken in the year 1966 after the passing of the award by the Land Acquisition Officer. Thereafter, the land vested in the <ORG> which was then transferred to <ORG>, predecessor-in-interest of the appellant. After the vesting of the land and taking possession thereof, the notification for acquiring the land could not be withdrawn or cancelled in exercise of powers under Section 48 of the Land Acquisition Act. Power under Section 21 of the General Clauses Act cannot be exercised after vesting of the land statutorily in the State <ORG>.

<ORG> also erred in holding that land acquisition process and the vesting process became incomplete since the land owners were asked to re- deposit the amount of compensation. <ORG> failed to take notice of Section 31 of the Land Acquisition Act. Section 31 contemplates that on making of an award under Section 11 the Collector shall tender amount of compensation awarded by him to the person interested and entitled thereto according to the award and shall pay to them unless prevented by any one or more of the contingencies mentioned in the subsequent clauses. None of those contingencies arose in the present case. Thus, once the amount was tendered and paid the acquisition process was complete. After making the award under Section 11 the Collector can take possession of the land under Section 16 which shall thereupon vest absolutely in the <ORG> free from all encumbrances. In the instant case, after making the payment in terms of the award, possession was taken. The acquisition process stood completed. The subsequent development will not alter the fact that the acquisition was complete.

This brings us to the last contention raised by the counsel for the respondent. Respondent placed on record copy of the letter No.UDD/260/2005 dated 12.7.2005 addressed by the Principal Secretary to the Government, <ORG>, Bangalore to the Commissioner, <ORG>, Bangalore. This letter was addressed by the <ORG> with reference to Chief Minister's note No.CM/SCM- 2/49/BDA/05 dated 5.7.2005. The letter reads as under:-

"With reference to the above subject the copy of the note under reference is enclosed along with this Letter and the subject is self explanatory.

I have been directed to inform you that in the light of the order of the Hon'ble Chief Minister, an extent of 6 acres 20 guntas of Land should be re-

conveyed to Sri. <NAME> in accordance with the decision rendered by <ORG> in Writ Appeal No.727/1989, dated 9/10.7.2001, you should take necessary action immediately and send a report to the Government regarding the action taken."

<ORG> sent their reply contending inter alia that the directions issued by the Chief Minister were contrary to law and the third party rights had set in and therefore, not capable of being implemented. Thereafter, there has been no communication from the office of the Chief Minister to the <ORG>.

The letter was written on behalf of the Government in purported exercise of its power under Section 65 of the Act which reads:

" Section 65 : Government's power to give directions to the <ORG>.  The Government may give such directions to the authority as in its opinion are necessary or expedient for carrying out the purposes of this Act, and it shall be the duty of the authority to comply with such directions."

We do not agree with the contention raised by the counsel for the respondent that the directions issued by the Chief Minister through his note were binding on the <ORG> or that the <ORG> was bound in law to re-convey the land in terms of the directions issued in the impugned judgment. It has not been shown that the Chief Minister was authorised to issue the directions to the <ORG> to re-convey the land. Under Section 65 the <ORG> can give such directions to the authority which in its opinion are necessary or expedient for carrying out the purpose of the Act. It is the duty of the <ORG> to comply with such directions. Contention that <ORG> is bound by all directions of the <ORG> irrespective of the nature and purpose of the directions cannot be accepted. Power of the <ORG> under Section 65 is not unrestricted. Directions have to be to carry out the objective of the Act and not contrary to the provisions of the Act. The <ORG> can issue directions which in its opinion are necessary or expedient for "carrying out the purposes of the Act".

Directions issued by the Chief Minister in the present case would not be to carry out the purpose of the Act rather it would be to destroy the same. Such a direction would not have the sanctity of law. Directions to release the lands would be opposed to the statute as the purpose of the Act and object of constituting the <ORG> is for the development of the city and improve the lives of the persons living therein. The authority vested with the power has to act reasonably and rationally and in accordance with law to carry out the legislative intent and not to destroy it. Direction issued by the Chief Minister run counter to and are destructive of the purpose for which the <ORG> was created. It is opposed to the object of the Act and therefore, bad in law. Directions of the Chief Minister is to re-convey the land in terms of the decision rendered by <ORG> in the impugned judgment i.e. Writ Appeal No.727 of 1989. Since we are setting aside the impugned judgment, the <ORG> as per directions issued by the Chief Minister cannot re-convey the land to the respondent in terms of the decision rendered by <ORG> in the impugned judgment i.e. Writ Appeal No.727 of 1989.

The Land Acquisition Act , 1894 is a code by itself. It not only deals with acquisition of land but also deals with payment of compensation as also release of the acquired lands.

<ORG> is a creature of statute. Its functions and duties are delineated by <ORG> Act, 1976. Its jurisdiction to re-convey the land vested in it in exercise of its power. The said Act does not confer any power from the said authority to re-convey the land vested in it. Upon acquisition of the land, the same vests in the <ORG>. The <ORG> only in terms of Section 13 of the said Act can re-convey the said acquired land of the said authority.

It is not in dispute that Section 48 of the Land Acquisition Act would apply to the acquisitions made under the 1976 Act and in that view of the matter the <ORG> could exercise its jurisdiction for re-conveyance of the property in favour of the owner thereof only in the event possession thereof had not been taken. Once such possession is taken even the <ORG> cannot direct re-convey the property. It has been accepted before us that Section 21 of the General Clauses Act has no application but reliance has been sought to be placed on Section 65 of the 1976 Act which empowers the <ORG> to issue such directions to the authority as in its opinion are necessary or expedient for carrying out the purpose of the Act. The power of the <ORG> <ORG> being circumscribed by the conditions precedent laid down therein and, thus, the directions can be issued only when the same are necessary or expedient for carrying out the purpose of the Act. In a case of this nature, the <ORG> <ORG> did not have any such jurisdiction and, thus, <ORG> has rightly refused to comply therewith.

Recently in <ORG> Vs. <ORG> [2005 (7) SCALE 386], this Court noticed:

" <CITATION> [AIR 1952 SC 16], it is stated :

"We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind; or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself."

Yet again in <NAME> (supra), this Court observed :

"The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of <NAME>, <NAME> in <NAME>."

Referring to <NAME> (supra), it was further observed :

"Orders are not like old wine becoming better as they grow older."

[The said decisions have been followed by this Court in <NAME> Vs. <NAME> and Others [(2004) 2 SCC 65]."

Equally untenable is the plea of the Respondents that promise of the <ORG> to re-convey is enforceable in law.

<ORG> has been constituted for specific purposes. It cannot take any action which would defeat such purpose. The State also ordinarily cannot interfere in the day to day functioning of a statutory authority. It can ordinarily exercise its power under Section 65 of the 1976 Act where a policy matter is involved. It has not been established that the Chief Minister had the requisite jurisdiction to issue such a direction. Section 65 of the 1976 Act contemplates an order by the State. Such an order must conform to the provisions of Article 166 of the Constitution of India.

Since the 1st respondent has re-deposited the amount of compensation received and also withdrew his reference applications seeking enhancement of the compensation, the equities have to be balanced. As per the averments made in para 5.2 of the writ petition the question of compensation for lands acquired were finally decided by <ORG> in MFA No. 217 of 1974 and MFA No. 219 of 1974 decided on 11th September, 1975 and MFA No. 545 of 1974 decided on 29th September, 1975. <ORG> enhanced the compensation to Rs. 10,000/- per acre excluding interest and statutory allowances. On adding of interest and statutory allowances the amount would come approximately to Rs. 19,000/- per acre. But for the promise made by the appellant, the 1st respondent would have been entitled to compensation at the said rate for the extent of 6 acres 21 guntas 42 square yards as well.

In equity we deem it appropriate to direct the appellant to pay the amount of compensation which was determined by the Land Acquisition Officer along with enhanced compensation which may have been granted by <ORG> in any of the reference filed either by the 1st respondent or any other land owner inclusive of statutory benefits with interest @ 9% per annum with effect from the date on which it became due till its payment. As the 1st respondent has been deprived of the amount due for quite some time we direct the appellant to re-deposit the entire amount within three months from today. In case the amount is not deposited within three months then the 1st respondent would be entitled to interest @ 12% per annum. On deposit of the amount the first respondent would be entitled to withdraw the same.

We accept this appeal and set aside the judgment of <ORG> as well as the directions issued by <ORG> on the asking of the Chief Minister vide letter dated 12th July, 2005 to the <ORG> to re-convey the land measuring 6 acres, 20 guntas and 42 Sq. Yds. to the 1st Respondent. The judgment under appeal is set aside and that of the Single Judge is restored. The writ petition is dismissed except to the extent that the 1st respondent would be entitled to re-claim the amount of compensation along with interest as indicated in the earlier paragraphs. Parties shall bear their own costs.


PETITIONER: <NAME>. Vs. RESPONDENT: ASSISTANT SALES TAX OFFICER, <NAME> DATE OF JUDGMENT: 14/03/1961 BENCH: <NAME>, J.L. BENCH: <NAME>, J.L. AIYYAR, T.L. VENKATARAMA DAS, S.K. HIDAYATULLAH, M. <NAME>, J.C. CITATION: 1961 AIR 1325 1962 SCR (1) 279 CITATOR INFO : R 1962 SC 660 (4) RF 1962 SC1621 (19,41) F 1963 SC 351 (2) F 1967 SC1454 (4) F 1971 SC 65 (5) RF 1973 SC 78 (5) F 1974 SC 390 (2) R 1974 SC1362 (3) RF 1976 SC2463 (15) R 1977 SC 597 (33) F 1977 SC1132 (3) R 1977 SC1638 (2) R 1979 SC 300 (3) R 1981 SC1079 (4) F 1989 SC 622 (4) RF 1989 SC1011 (9) ACT: Sales Tax-'Betel leaves', if taxable--'Vegetabls', Meaning of--Central Provinces and Berar Sales Tax Act, 1947 (C. P. XXI of 1947), s. 6(1)(2), Second Schedule, Items Nos. 6 and 36. HEADNOTE: The petitioners who were dealers in betel leaves were asses- sed to sales tax by the Assistant Sales Tax Officer under the provisions of the C. P. and Berar Sales Tax Act, 1947. The contention of the petitioners was that under s. 6 read with the second schedule of the Act betel leaves were not taxable. Under S. 6 of the Act articles mentioned in the said Schedule were exempt from Sales Tax and articles not mentioned were taxable. There were two items in the Schedule, namely, item 6, "vegetables", and item 36, "betel leaves", but subsequently item No. 36 was omitted by an amendment of the Act. Held, that the use of two distinct and different items i.e., "vegetables" and "betel leaves" and the subsequent removal of betel leaves from the Schedule were indicative of the <ORG>'s intention of not exempting betel leaves from taxation. The word "vegetable" must be interpreted not in a technical sense but in its popular sense as understood in common language i.e., denoting a class of vegetables which are grown in a kitchen garden or on a farm and are used for the table. <ORG> v. <ORG>, (1952) 1 Dom. L.R. 385, <ORG>, Santra Market, Nagpur v. The State of Madhya Pradesh (Sales Tax Departmwnt) [1956] 7 S.T.C. 99, <CITATION> ,  8 S.T.C. 798, <NAME> v. The State of Bihar,  1 S.T.C. 217 and <NAME> v. <NAME>,  8 S.T.C. 194, considered. <NAME> v. The State of Uttar Pradesh,  7 S.T.C. 206 and <CITATION> ,  7 S.T.C. 742, referred to. JUDGMENT:

ORIGINAL JURISDICTION: Petitions Nos. 4,36 and 37 of 1958. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights.

<NAME> and <NAME>, for the petitioners. <NAME>, Solicitor General of India, <NAME> an(! P. M. Sen, for the respondents.

1961. March 14. The Judgment of the Court was delivered by KAPUR, J.-These are three petitions under Art. 32 of the Constitution challenging the imposition of sales tax on betel leaves by the Sales Tax Officer, Akola. The question raised in all the three petitions is the same and can conveniently be disposed of by one judgment. The petitioners in the three petitions are dealers in betel leaves at Akola, now in the State of Maharashtra and at the relevant time in the State of Madhya Pradesh. The Assistant Sales Tax Officer at Akola assessed the petitioners under the provisions of the C. P. & Berar Sales Tax Act, 1947 (Act XXI of 1947), hereinafter termed the "Act" to the payment of gales tax as follows:

Writ Petition period Amount No.

---------------------------------------------------------- W.P.

No. 4/58 7-11-53 to 26-10-54. Rs. 1882-9-0 & 27-10-54 to 14-11-55. Rs. 1885-13-0 W.P.

No. 36/58 27-10-54 to 26-10-55. Rs. 1890-3-0 W.P.

No. 37/58 27-10-54 to 14-11-55. Rs. 3530-4-0

--------------------------------------------------------- The petitioners in W. P. Nos. 4 and 36 did not appeal under s. 22 of the Act but the petitioner in W. P. No. 37 did appeal under that section. As he did not deposit the amount of tax the petition was dismissed. He then filed a petition under Art. 226 in <ORG> but that petition was withdrawn and therefore no decision was given on the merits of the case. In all the petitions the submission of the petitioners is that the order demanding tax was without authority of law inasmuch as betel leaves were not taxable under s. 6 read with the second Schedule of the Act. The imposition of the tax, it is alleged. is an infringement of the petitioners' right to carry on trade or business guaranteed under Art. 19(1)(g) of the Con- stitution and the prayer is for the issue of a writ of certiorari quashing the order of the Assistant <ORG> and for prohibition.

Section 6 of the Act under which the exemption is claimed provides:

S.6(1) "No tax shall be payable under this Act on the Sale of goods specified in the second column of Schedule II, subject to the conditions. and exceptions, if any, set out in the corresponding entry in the third column thereof (2)The State Government may, after giving by notification not less than one month's notice of their intention so to do, by a notification after the expiry of the period of notice mentioned in the first notification amend either Schedule,, and thereupon such Schedule shall he deemed to be amended accord- ingly."

Thus under the Act all articles mentioned in the Schedule were exempt from Sales Tax and articles not so specified were taxable. In the Schedule applicable there were originally two items which are relevant for the purposes of the case. They were items Nos. 6 and 36: Item 6 Vegetables-Except when sold in sealed containers.

Item 36 Betel leaves.

The Schedule was amended by the C. P. & Berar Sales Tax Amendment Act (Act XVI of 1948) by which item No. 36 was omitted. It is contended that in spite of this omission they were exempt from Sales Tax as they are vegetables. The intention of the legislature in regard to what is vegetables is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from Sales Tax. Subsequently betel leaves were removed from the Schedule which is indicative of the legislature's intention of not exempting betel leaves from the imposition of the tax. But it was submitted that betel leaves are vegetables and therefore they would be exempt from Sales Tax under item

6. Reliance was placed on the  dictionary meaning of the word "vegetable" as given in Shorter Oxford Dictionary where the word is defined as "of or pertaining to, comprised or consisting of, or derived, or obtained from plants or their parts". But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it." It is to be construed as understood in common language; Caries on Statute Law, p. 153 (5th Ed.). It was so' held in <ORG> v. <ORG> (1). This interpretation was accepted by <ORG> in <ORG>, Santra Market, Nagpur v. The State of Madhya Pradesh (<ORG>) (2) where it was observed:-

"In our opinion, the word "vegetables" cannot be given the comprehensive meaning the term bears in natural history and has not been given that meaning in taxing statutes before. The term "vegetables" is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table."

In that case the word "vegetables" was construed and in our opinion correctly construed in relation to the very provisions of the Act which are now in controversy before us. In cases under the U. P. Sales Tax Act betel leaves have been held not to be within the expression "green vegetables"; <NAME> v. <ORG>); <CITATION> (4). <CITATION> (5) they were held not to be plants and in <NAME> & Sons v. The State of Bihar (6), it was held that vegetables meant plants cultivated for food and Paw are not foodstuffs. in <CITATION> (1) (1952) 1 Bom. L.R. 385. 389.

(3) [1956]7 S.T.C 2o6.

(5) [1957] 8 S.T.C. 798.

(2) [1956]7 S.T.C. 99, 102.

(4) [1956] 7 S.T.C. 742.

(6) [1949]1 S.T.C. 217 Taxes also they were held not to be vegetables which specifically meant Sabzi, Tarkari and Sak. Therefore &part from the fact that the legislature by using two distinct and different items i.e. item 6 "vegetables" and item No. 36 "betel leaves" has indicated its intention, decided cases also show that the word "vegetables" in taxing statutes is to be understood as in common parlance i.e. denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table.

In our view, betel leaves are not exempt from taxation. Those petitions therefore fail and are dismissed with costs. One hearing fee.

Petitions dismissed.