PETITIONER: <ORG> LTD. Vs. RESPONDENT: CAPTAIN ITBAR SINGH AND OTHERS DATE OF JUDGMENT: 11/05/1959 BENCH: ACT: Motor Car lnsurance--Suit for damages by third Party- Insurance company added defendants- Defence if other than statutory available-Interpretation of-- Motor Vehicles Act , 1939 , SS. 95, 96, HEADNOTE: A suit claiming damages, for negligent driving was filed aginst the owner of a motor car, who was insured against third party risks. The insurer, was subsequently added as defendant to the suit under s. 96(2) of the Motor Vehicles Act, 1939. it contended that the defence available to it was not restricted to the grounds enumerated in s. 96(2) Of the Act, but that it was entitled to take all defences including those on which the assured himself could have relied for his defence, subject only to the restriction that it could not in view of S. 96(3) Of the Act rely on the conditions of the policy as a defence. Held, that an insurer made a defendant to the action under S. 96(2) of the Act was not entitled to defend it on a ground not specified in that section. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 413, and 414 of 1958.

Appeals from the order dated April 27, 1955, of <ORG> in Civil Revisions Nos. 81-D of 1953 and 96-D of 1953 respectively.

1959 April 21, 22, 23, 24.-C. <NAME> Solicitor General for India, <NAME>, <NAME> and <NAME>, for the appellants. The question in the present appeals turn around S. 96 of the Motor Vehicles Act, 1939. The purpose of sub-s. (2) of S. 96 is to state those grounds based on the policy of insurance on which the insurer may rely for his defence. Sub-section (3) makes certain conditions of the policy of no effect as against the 3rd party. Both Sub-ss. (2) and (3) are concerned only with the conditions of the policy. They should not be interpreted so as to oust other defences the insurer may wish to take e.g. that there was no accident or that the plaintiff was negligent or that there was contributory negligence etc. When a person is joined as a party he has the right to take all defences permissible in law.

[<NAME>, J.-Did the insurer have a right to be joined as a party, apart from the statute ? Could he be joined under Order 1, Rule 10, of the Code of Civil Procedure ?] I am not basing my case on Order 1, Rule to of the Code of Civil Procedure. Apart from the statute, the insurer would not be liable to the third party, but only to the assured. [<NAME>, J.-Is it not correct that the statute gives the insurer a right to be joined as a party which he did not have previously ? If so, the right cannot be extended beyond what the statute gives.] It is true that the statute gives a right to the insurer to become a party to the action by the injured person which he did not have previously, but the real question before the court is whether sub-s. (2) limits the right to defend on the grounds stated in that sub-section. In my submission, subS. (2) exhausts only the defences based on the conditions of the policy which the insurer may wish to take. If it was intended that these were to be the only defences open to the insurer the word " only " should have been used instead of the words " any of " before the words " the following grounds." What the legislature meant was that the insurer could defend the action " also " on the grounds stated in sub-s. (2) in addition to other grounds. If the court finds the section is clear no words can be added. However, I submit the section is ambiguous. It can mean either that the insurer can take other defences or that he is limited to the matters stated in sub-s. (2). The <ORG> should interpret the: section to give effect to the interests of justice. The insurer is made liable to satisfy the judgmental It would be an extreme hardship if he were not allowed to defend the action on merits. Apart from the situations coming within sub-s. (2) the insurer would be condemned unheard. The legislature could not have intended such a result. Even the cases which hold that the defences of the insurer are limited to those stated in subS. (2) recognise that this causes hardship. I.L.R. 1953 Bom. 109, I.L.R. 955 Bom. 39 and I.L.R. 1955 Bom. 278. In those cases the hardship was sought to be overcome by allowing the insurer to defending the name of the insured. I do not say that this latter procedure is correct, but it shows that there is hardship.

[<NAME>, J.-How can that be done ? How can the -,insurer be allowed to defend in the name of the insured? How is the record to be kept ? There is no provision under which it can be done, not even under s. 1 5 1 of the Code of Civil Procedure.] Probably not. But that question does not arise for deter- mination in this appeal. The hardship recognised by the Bombay cases can be avoided if the interpretation of sub- S. (2) suggested by me is accepted.

[Das, J.-How is that interpretation possible in the face of sub-s. (6) ?] Sub-sectioii (6) only prohibits the insurer from avoiding liability in a manner other than that stated in sub-s. (2). The manner of avoiding liability stated in sub-s. (2) is that the insurer should apply, to be made a party. Consequently, the insurer can avoid liability, only by being joined as a party. The word ' manner ' in the context of sub-s. (6) refers only to the procedure the insurer may follow, not to the grounds the insurer may wish to take. Hence the insurer can avoid liability only by being joined as a party, but can take any defences, he chooses including those stated in sub-s.Otherwise the third party and the assured may collude and a judgment may be passed which the insurer would be bound to satisfy without having had 'an opportunity of defending himself. Or the case may go by default against the assured or may be compromised. The real party affected is the insurer and yet he is given no right to be heard except on the limited grounds stated in sub-s. (2). The assured is only a nominal party and is not likely to be interested in contesting the case, as the decree has to be satisfied by the insurer. The legislature could not have intended such a result. It is contrary to natural justice that a party likely to be affected by the proceedings should not be heard on the merits. <NAME> (with him, <NAME>) for the respondent. Chapter VIII of the Motor Vehicles Act, 1939, is based on various English Statutes (See Report of <ORG> 1936-37 known as <ORG>). For a proper appreciation of s. 96 it is necessary to consider the historical development of the law relating to compulsory third party insurance in England. Before 1930, there, was no system of compulsory insurance in respect of third party risks in England. In the event of an accident the injured third party had a right to sue the motorist and recover damages. But if the motorist was a man of straw, the injured party was in practice unable to obtain compensation. This was the situation the various Road Traffic Acts were designed to avoid.

Even in those cases in which the motorist had taken out an insurance policy, difficulties arose in the way of the injured third party recovering compensation. The injured third party had no direct right of action against the insurer. In the event of the insolvency of the assured, the injured third party would rank a,; an ordinary creditor and would not receive complete satisfaction for his decree. The Third Parties Rights Against Insurers Act, 1930, created a system of statutory subrogation in such cases. (<ORG>, 3rd Edn., Vol. 22, PP. 339, 372). The provisions of this Act have been sub- stantially reproduced in s. 97 of the Motor Vehicles Act. As a result the third party can sue the insurer directly in cases.

Next the Road Traffic Act, 1930, introduced a scheme of compulsory insurance. Section 35(1) made third party insur- ance Compulsory. Section 94(1) of the Motor Vehicles Act is worded in the Same Way. Similarly s. 36 Of the English Act is substantially reproduced in s. 9 .5 of the Motor Vehicles Act . Section 38 of the Act of 1930 made certain conditions of the policy ineffective so far as third parties were concerned. The object was that claims of injured third parties should not fail because the assured had not complied with or committed a breach of certain conditions in the policy. (Shawcross on Motor Insurance, 2nd Edn., pp. 219,

But the Act of 1930 did not go far enough. In 1934 another Road Traffic Act was passed the object of which was to compel Insurers to satisfy judgments obtained against the insured (<ORG> ibid P. 271). This Act contemplated three separate actions between the various parties. The first action was by the injured third party against the assured. By s. 10(1) of that Act, which is reproduced in s. 96(1), the insurer was obliged to satisfy the decree against the, assured. If the insurer failed to do so, the third party had a right of action against the insurer, based on the judgment Obtained against the assured. (<ORG>, p. 296 ; Halsburry 3rd Edn., Vol. 22,PP. 374-5). This was the second action. It is doubtful if even the defence of collusion would be open to the insurer in the second action. (<ORG>, P. 296). Then S. 10(2) of the Road Traffic Act of 1934, is substantially reproduced in s. 96(2)(a) . By this provision in certain events the insurers liability ceases. To appreciate s. 96(2)(b) it is necessary to keep in mind s. 38 of the Road Traffic Act of 193o and S. 12 of the Road Traffic Act of 1934. Both these letter sections made certain conditions of the policy ineffective against third parties. Whilst drafting the Motor Vehicles Act the legislature reversed the manner of statement. In s. 96(2)(b) the legislature has stated affirmatively what are the conditions on which the insurer can rely as against a third party. This was done to avoid doubt and uncertainly. Then s. 10(3) of the Road Traffic Act, 1934, gave the insurer a right to obtain a declaration that he was not liable on the policy due to non-disclosure or misrepresentation as to a material fact. In this action a notice had to be sent to the third party injured who was given a right to join as a party and oppose the action. This was the third action. The same result is achieved by s. 96(2)(C) . What s. 96 does is to roll up into one these three actions which occurred in English Law. This saves time and money and enables the three parties involved to have their respective rights and liabilities settled in one action. But s. 96 does not give any party greater rights than it would have had in English Law. At common law the insurer had no right to intervene in the action by the injured party against the insured and oppose the claim on merits, e.g., that there was no accident or negligence or that there was contributory negligence etc. The insurer could avoid liability only by showing that he was not liable for some reason connected with the -policy. This is the right which sub-s. (2) preserves. It does not give additional rights to the insurer over what he would have had at common law or in accordance with the English Statutes. On the interpretation suggested by the Solicitor- General the insurer would get a right he never had before. This is contrary to the object of Chapter VIII which is to protect the injured third party and not the insurer. The insurer is neither a necessary nor a proper party. under Order 1, Rule 10, Code of Civil Procedure, in the action by the injured third party against the assured. [<NAME>, J.-You need not deal with Order 1, Rule 10, Code of Civil Procedure, as the Solicitor-General has not relied on it.] There is no ambiguity in s. 96(2) . The sub-section clearly specifies the defences open to the insurer and it is not permissible to add to those defences. This is put beyond doubt by sub-s. (6). It prevents the insurer from avoiding liability in a ` manner' other than that stated in sub-s. (2). The 'manner' provided by sub-s. (2) is by joining as a party and defending on the grounds stated There' fore, ' manner' refers to both the procedure and the grounds. To hold otherwise is to make sub-s. (2) unnecessary. If the <ORG> intended that the insurer should be able to defend on grounds other than those stated in sub-s. (2) all it needed to say was that the insurer would be entitled to join as a party. As sub-s. (2) specifies the defenses the intention was clearly to limit the insurer to those defences.

[Subba Rao, J.-Suppose the injured third party and the insured collude or judgment is allowed to go by default, could not the insurer have the judgment set aside or bring a suit to,have it set aside ?] In. my submission even a suit for this purpose is barred as that would contravene sub-s. (6). Such a suit would enable the insurer to avoid liability in a.' manner' which sub-s. (6) does not allow.

There is no hardship caused by giving full effect to the section as it stands. The possibilities of collusion are remote, and indeed illusory. (<NAME>, P. 296). By- s. 96(3) the insurer is given a right to recover from the insured any sums paid, by him which he was not bound to pay due to breaches of conditions in the policy, but which conditions have been made ineffective as against the third party. Sub-section (4) of the same section gives the insurer the right to recover from the <ORG> the excess which he is made to pay by virtue of s. 95 , over his obligations in the policy. The judgment is still against the <ORG> who is the party primarily liable. It is only made executable against the insurer. Apart from this, by s. 1(3) of the Motor Vehicles Act, 1939, the legislature gave insurers six years to insert provisions in their policies and take such other steps to protect themselves against the <ORG> committing them to liability as they thought fit.Most insurers insert the control of proceedings clause in the policy (<ORG>, 3rd Edn., VOl. 22 p. 338). Someone had to bear the loss ultimately, and the legislature has tried so far as possible to ensure that the loss falls on the person causing the accident. But, if the insured is impecunious the choice is between allowing the loss to fall on the injured party or the insurer. The legislature, in its wisdom has provided that in such a situation the loss shall fall on the insurer. It is a part of the insurer's business to suffer such losses and when entering the contract of insurance he contemplates that he might be called upon to pay the loss.

Now, the Bombay cases referred to by the Solicitor General are right in so far as they hold that the insurer can defend only on the grounds stated in sub-s. (2). Those cases are wrong in proceeding on the assumption that there is hardship caused to the insurer by this view. They are based on a misunderstanding of the cases of <NAME> v. <NAME>, [1939] 1 K.B. 279 and Jacques v. <NAME>, 12 Q.B.D. 136, and on appeal, 12 Q.B.D. 165. It was not noticed in the Bombay cases that the provisions of Indian Law equivalent to S. 24(5) of the judicature Act and Order 27, Rule 15, R.S.C., were not as wide as the English provisions. Order 9, Rule 7, Code of Civil Procedure, allows an ex-parte decree to be set aside only at the instance of the defendant whilst there is no such limitation in 0. 27, R. 15, R.S.C. There, is no procedure known to law by which the insurer can be allowed to defend in the name of the insured. This cannot be done under s. 151 , C.P.C. as it would contravene s. 96(6) and allow the insurer to avoid liability in a 'manner' other than the one allowed. The Bombay cases have not noticed sub-s. (6) at all. The procedure stated in those cases is untenable.

[<NAME>, J. -Are we called upon to decide that point in this case ? Apparently there is a revision petition pending in <ORG> between the same parties in which that question awaits determination. Should we express an opinion on that point ?] The Solicitor-General has adopted it as apart of his reasoning He has said that if the insurer can take all the defences in the name of the insured, that is an additional reason why sub-s. (2) should not be interpreted as to limit the defences available to the insurer. I wants show that view is wrong. (The <ORG> disallowed this branch of the argument). In the case reported as <NAME> v. <NAME> [1939] 1 K.B. 279, the dissenting judgment of <NAME>, L.J., states the correct position. The judgment of Greer, L.J., show-, that lie was in considerable doubt as to the correct position in law, but felt himself bound by the earlier judgments reported in jacques v. <NAME>, 12 O.B.D. 165. <NAME>, L.J., proceeded on the footing that the assured was only a nominal defendant. As already submitted this is not correct. Even in English Law the insurer could recover against the assured. (<ORG>, 3rd Edn,, Vol. 22, PP. 374, 379, 385). The case of <NAME> V. <NAME> was decided in May 1038. The Motor Vehicles Act was passed in February, 1939. It is legitimate to assume that the persons who drafted the Act were aware of this case. I submit that the real purpose of sub-s. (6) was to give effect to the view of <NAME>, L.J.

[<NAME>, J.-That is rather far fetched.] I submit it is not. Even in England the, view of Slesser, T..J., seems to have been approved. Subsequent English cases show that the principle of Windsor v. <NAME>, is not to be extended. See <NAME> v. <NAME> [1941] 1 All E.R.231. It was not necessary to expressly over rule the case of Windsor v. <NAME> as in 1946 <ORG> was set tip in England, as a result of which an insurer is bound to satisfy a judgment obtained by a third party against a, motorist even if the motorist was not insured (<ORG>, 3rd Edn., Vol. 22, PP. 382 et. seq., <NAME>, ibid, Introduction LXXXVII et. seq.) This shows how strong the attempt to protect the third party has been. Actually the words of s. 96(2) and (6) are clear to show that the insurer can take only the defences mentioned in sub-s. (2) But if there be any doubt, a consideration of the historical development of the law and the objects to be attained puts it beyond doubt that the legislature intended this result. <NAME>, in reply. It is wrong that at common law the insurer could not be brought in as a party. At common law the guarantor or indemnifier could be brought in by means of third party procedure (see I.L.R. 35 All. 168 and <ORG>, 3rd Edn., Vol. 18, P. 535 and Gray v. <NAME>, L.R. (1873) 8 Ch. 1035, 1058).

Apart from the common law, the insurer could also be joined as a party under 0. I, R. 10, Code of Civil Procedure. I rely on the case of <ORG> <NAME>, [1941] A.C. 16. A person should be joined as a party if his presence is necessary for an effectual and complete adjudication. On this principle the insurer ought to be joined as a party, and thus can take all defences. <NAME>, in reply : The passage cited by the Solicitor General from Halsbury, 3rd Edn., Vol. 18, P. 535, is actually against him. The foot note (e) shows that at common law the insurer could not be joined as a party to the action by the insured. Third party procedure did not exist at Common Law. Even under third party procedure in England it is doubtful whether this could be done (<ORG>, pp. 150-151). In any case there is no third party procedure in Punjab. The cases 35 All. 168 and (1873) L.R. 8 ch. A. 1035 are also against him.

The insurer is neither a necessary nor a proper party as there can be a complete and effectual adjudication without his presence. The decree is to be a against the assured, not against the insurer.

Cur. adv. vult.

1959. May 11. The Judgment of the Court was delivered by <NAME> two appeals arise out of two suits and have been heard together. The suits had been filed against owners of motor cars for recovery of damages suffered by the plaintiffs as a result of the negligent driving of the cars. The owners of the cars were insured against third party risks and the insurers were subsequently added as defendants to the suits under the provisions of sub-s. (2) of s. 96 of the Motor Vehicles Act, 1939. The terms of that subsection will have to be set out later, but it may now be stated that it provided that an insurer added as a party to an action under it was entitled to defend on the grounds enumerated in it. On being added as defendants, the insurers filed written statements taking defences other than those mentioned in that sub-section. The plaintiffs contended that the written statements should be taken off the records as the insurers could defend the action only on the grounds mentioned in the sub-section and on no others. A question thereupon arose in the suits as to what defences were available to the insurers. In one of the suits it was held that the insurer could take only the defences specified in that sub-section and in the other suit the view taken was that the insurers were not confined to those defences. Appeals were perferred from these decisions to <ORG>. <ORG> held that the insurers could defend the actions only on the grounds mentioned in the subsection and on no others. Hence these appeals by the insurers.

The question is whether the defences available to an insurer added as a party under s. 96(2) are only those mentioned there. A few of the provisions of the Motor Vehicles Act have now to be referred to. Section 94 of the Act makes insurance against third party risk compulsory. Section 95 deals with the requirements of the policies of such insurance and the limits of the liability to be covered thereby. Sub-section (1) of this section provides "............ a policy of insurance must be a policy which-

(a)....................................................

(b) insures the person or classes of person specified in the policy to the extent specified in subsection (2) against any liability which may be incurred by him or them in respect of the death or bodily injury to any person caused by or arising out of the use of the vehicle in a public place."

Sub-section (2) of s. 95 specifies the limits of the liability for which insurance has to be effected, and it is enough to say that it provides that in respect of private cars, which the vehicles 'with which these appeals are concerned were, the insurance has to be for the entire amount of the liability incurred. Then comes s. 96 round which the arguments advanced in this case have turned and some of its provisions have to be set out.

" Section 96 . (1) If, after a certificate of insurance has been issued under sub-section (4) of section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceeding is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:-

(a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and 23 that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of sec- tion 105; or

(b) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-

(i) a condition excluding the use of the vehicle-

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire on reward, or

(b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a public service vehicle or a goods vehicle, or

(d) without side-car being attached, where the vehicle in a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or,

(e) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular.

(2A)...................................... (3) Where a certificate of insurance has been issued under sub-section (4) of section 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub -section (1) of section 95 , be of no effect:

Provided that any sum paid by the insurer in or towards the discharge of any liability or any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person. (4) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.

(5)....................................................... (6) No insurer to whom the notice referred to in sub-section (2) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in subsection (1) otherwise than in the manner provided for in sub-section (2)."

It may be stated that the policies that were effected in these cases were in terms of the Act and the certificate of insurance mentioned in s. 96 had been duly issued. It will have been noticed that sub-s. (1) of s. 96 makes an insurer liable on the judgment obtained by the injured person against the assured. Sub-section (2) provides that no sum shall be payable by the insurer under sub-s. (1) unless he has been given notice of the proceedings resulting in that judgment, and that an insurer who has been given such a notice shall be entitled to be made a party to the action and to defend it on the grounds enumerated. The contention of the appellants is that when an insurer becomes a party to an action under sub-s. (2), he is entitled to defend it on all grounds available at law including the grounds on which the assured himself could have relied for his defence and that the only restriction on the insurer's right of defence is that he cannot rely on the conditions of the policy which sub-s. (3) makes as of no effect. This is the contention which we have to examine in these appeals.

To start with it is necessary to remember that apart from the statute an insurer has no right to be made a party to the action by the injured person against the insured causing the injury. Sub-section (2) of S. 96 however gives him the right to be made a party to the suit and to defend it. The right therefore is created by statute and its content necessarily depends on the provisions of the statute. The question then really is, what are the defences that sub-S. (2) makes available to an insurer ? That clearly is a question of interpretation of the sub-section. Now the language of sub-s. (2) seems to us to be perfectly plain and to admit of no doubt or confusion. It is that an insurer to whom the requisite notice of the action has been given " shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely," after which comes an enumeration of the grounds. It would follow that an insurer is entitled to defend on any of the grounds enumerated and no others. If it were not so, then of course no grounds need have been enumerated. When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute. Sub-section(6) also indicates clearly how sub-s. (2)should be read. It says that no insurer to whom the notice of the action has been given shall be entitled to avoid his liability under sub-s. (1) " otherwise than in the manner provided for in sub-section. (2)". Now the only manner of avoiding liability provided for in subs. (2) is by successfully raising any of the defences therein mentioned. It comes then to this that the insurer cannot avoid his liability except by establishing ,such defences. Therefore sub-s. (6) clearly contemplates that he cannot take any defence not mentioned in subS. (2). If he could, then he would have been in a position to avoid his liability in a manner other than that provided for in sub-s. (2). That is prohibited by sub-s. (6).

We therefore think that sub-s. (2) clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it. Three reported decisions were cited at the bar and all of them proceeded on the basis that an insurer had no right to defend the action except on the grounds mentioned in sub-s. (2). These are <NAME> v. <NAME> (1), <CITATION> (2) and <CITATION> (3). It does not appear however to have been seriously contended in any of these cases that the insurer could defend the action on a ground other than one of those mentioned in sub-s. (2). The learned counsel for the respondents, the plaintiffs in the action, referred us to the analogous English statute, The Road Traffic Act, 1934, in support of the view that the insurer is restricted in his defence to the grounds set out in sub-s. (2). But we do not think it necessary to refer to the English statute for guidance in the interpretation of the section that we have to construe.

We proceed now to consider the arguments advanced by the learned Solicitor-General who appeared for the appellants. He contended that there was nothing in sub-s. (2) to restrict the defence of an insurer to the grounds therein enumerated. To support his contention, he first referred to sub-s. (3) of s. 96 and said-that it indicated that the defences that were being dealt with in sub-s. (2) were only those based on the conditions of the policy. His point was that sub-s. (2) permitted defences on some of those conditions and sub-s. (3) made the rest of the conditions of no effect, thereby preventing a defence being based on any of them. He said that these two sub-sections read together show that sub-s. (2) was not intended to deal with any defence other than those arising -out of the conditions of the policy, and as to other defences therefore sub-s. (2) contained no prohibition. He further (1) I.L.R.  Bom. 296. (2) I.L.R.  Bom. 1422.

(3) A.I.R. 1956 Mad. 464.

said that as under sub-s. (2) an insurer was entitled to be made a defendant to the action it followed that he had the right to take all legal defences excepting those expressly prohibited.

We think that this contention is without foundation. Sub- section (2) in fact deals with defences other than those based on the conditions of a policy. Thus cl. (a) of that sub-section permits an insurer to defend an action on the ground that the policy has been duly cancelled provided the conditions set out in that clause have been satisfied. Clause (c) gives him the right to defend the action on the ground that the policy is void as having been obtained by non-disclosure of a material fact or a material false representation of fact. Therefore it cannot be said that in enacting sub-s.(2) the legislature was contemplating only those defences which were based on the conditions of the policy.

It also seems to us that even if sub-s.(2) and sub-s.(3) were confined only to defences based on the conditions of the policy that would not have led to the conclusion that the legislature thought that other defences not based on such conditions, would be open to an insurer. If that was what the legislature intended, then there was nothing to prevent it from expressing its intention. What the legislature has done is to enumerate in sub-s. (2) the defences available to an insurer and to provide by sub-s. (6) that he cannot avoid his liability excepting by means of such defences. In order that sub-s. (2) may be interpreted in the way the learned Solicitor-General suggests we have to add words to it. The learned Solicitor-General concedes this and says that the only word that has to be added is the word " also" after the word "grounds". But even this the rules of interpretation do not permit us to do unless the section as it stands is meaningless or of doubtful meaning, neither of which we think it is. The addition suggested will, in our view, make the language used unhappy and further effect a complete change in the meaning of the words used in the sub-section.

As to sub-s. (6) the learned Solicitor-General contended that the proper reading of it was that an insurer could not avoid his liability except by way of a defence upon being made a party to the action under sub-s. (2). He contended that the word it manner " in sub-s. (6) did not refer to the defences specified in sub.s. (2) but only meant, by way of defending the suit the right to do which is given by sub-s. (2). We think that this is a very forced construction of sub-s. (6) and we are unable to adopt it. The only manner of avoiding liability provided for in sub-s. (2) is through the defences therein mentioned. Therefore when sub-s. (6) talks of avoiding liability in the manner provided in sub-s. (2), it necessarily refers to these defences. If the contention of the learned Solicitor- General was right, sub-s. (6) would have provided that the insurer would not be entitled to avoid his liability except by defending the action on being made a party thereto. There is another ground on which the learned Solicitor- General supported the contention that all defences are open to an insurer excepting those taken away by sub-s. (3). He said that before the Act came into force, an injured person had no right of recourse to the insurer and that it was s. 96(1) that made the judgment obtained by the injured person against the assured binding on the insurer and gave him a right against the insurer. He then said that being so, it is only fair that a person sought to be made bound by a judgment should be entitled to resist his liability under it by all defences which he can in law advance against the passing of it.

Again, we find the contention wholly unacceptable. The Statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it. It is not for us to add to those grounds and therefore to the statute for reasons of hardship. We are furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the contract of the policy he was not, bound to pay, he can under the proviso to sub-s. (3) and under sub-s. (4) recover it from the assured. It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him. But the answer to that is that it is the insurer's bad luck. In such circumstances the injured person also would not have been able to recover the damages suffered by him from the assured, the person causing the injuries. The loss had to fall on some one and the statute has thought fit that it shall be borne by the insurer. That also seems to us to be equitable for the loss falls on the insurer in the course of his carrying on his business, a business out of which he makes profit, and he could so arrange his business that in the net result he would never suffer a loss. On the other hand, if the loss fell on the injured person, it would be due to no fault of his; it would have been a loss suffered by him arising out of an incident in the happening of which he had no hand at all.

We therefore feel that the plain words of sub-s.(2) should prevail and that no ground exists to lead us to adopt the extraordinary course of adding anything to it. We think that <ORG> was right in the view that it took, In the result these appeals are dismissed with costs.

Appeals dismissed.


JUDGMENT

1. One <NAME>, the grandfather of the plaintiff and the second defendant, was the owner of one-fourth share of the <NAME> estate in the Dharwar district. On his death in 1899, <ORG> on the ground that the property was Saranjam resumed. <NAME>'s one-fourth share and granted it to <NAME>. That order was cancelled by the Secretary of <ORG> and by his orders the property was granted to <NAME>, the second defendant.

2. The Collector of Dharwar, as the guardian of <NAME>, has taken the property into his possession and the plaintiff, who claims to hold as one of the heirs of <NAME> on the footing of the estate being <NAME> of <NAME>, sued the Secretary of <ORG> and <NAME> for a declaration of title and for possession. He seeks to have it declared that the immovable property in suit is the Sarva Inam property of the plaintiff and cannot be taken from his possession by <ORG> or its officers or re-granted to any one else.

3. The question whether the <NAME> estate was Sarva Inam or Saranjam, was decided by the Inam Commissioner, Major <NAME>, in July 1858, under the provisions of Act XI of 1852. The Inam Commissioner then recorded his decision that the claimant's title (the claimant being an ancestor of the plaintiff) to hold Kasba <NAME> in Sarva Inam was invalid, and he held that it was in fact a Saranjam property.

4. The decision of the <ORG> Commissioner is, by virtue of the provisions of rule. 2 of Schedule A of Act XI of 1852, final as regards the land and interests concerned in the decision. But once it has been decided finally by the <ORG> Commissioner that the Hebli estate is Saranjam the title to and continuance of the estate must be determined, under Schedule B, Rule 10 of the Act, under such rules as Government may find it necessary to issue from time to time.

5. On the 17th of May 1898, <ORG> passed rules for the regulation of the continuance and resumption of <ORG> estates, and those rules apply to the Hebli estate as well as to other <ORG>s. In accordance with those rules, the estate was upon the death of <NAME> resumed by <ORG> and re-granted, and as a result of the revision effected by the Secretary of <ORG> the share of <NAME> in the Hebli <ORG> has been re-granted to <NAME>, the second defendant.

6. This then if a suit against <ORG> relating to land held as Saranjam, and is, therefore, excluded from the jurisdiction of <ORG> by the provisions of Sub-section (a) of Section 4 of the Revenue Jurisdiction Act X of 1876. The District Judge was, therefore, right in holding that he had not jurisdiction to entertain the suit. It has been suggested that the plaintiff has acquired certain occupancy rights in the estate of which he cannot be deprived by any decision of <ORG> under the Saranjam Rules. This is obviously an after-thought suggested by the decision of this Court in <NAME> v. <NAME> 10 B. 112. It was a point which was not raised in the plaint but is mentioned in the memo. of appeal for the first time. It is a question which, we think, ought not to be decided in this suit, and we, therefore, abstain from expressing any opinion upon it.

7. We confirm the decree of the District Judge dismissing the suit and we dismiss this appeal with costs.


JUDGMENT <NAME>, J.

1. The appellant herein obtained a decree in ejectment against the respondent in respect of a shop belonging to the appellant which had been leased to the respondent. The suit in ejectment was filed in <ORG> of Calicut some time in 1944. The precise date does not appear. During the pendency of the suit the Madras Non-Residential Buildings Rent Control Order was amended and the amended order came into force on the 11th July, 1944. An ex parte decree in ejectment was passed by the District Munsiff on the 8th September, 1944, and the property was delivered over to the appellant in execution proceedings on 15th September, 1944, but the execution application was not formally closed. Thereafter on 28th October, 1944, the respondent before me applied to <ORG> for re-delivery of the property and the same was ordered on 30th December, 1944. The District Munsiff held, upholding the contention of the respondent, that under Section 8(1) of the amended Non-Residential Building Rent Control Order, a tenant could not be evicted and accordingly held that the previous order directing delivery was wrong and the Court had jurisdiction to set aside that order and to order re-delivery as the execution petition had not been closed and the proceedings were still pending before the Court. The decree-holder took the matter in appeal to the Subordinate Judge of South Malabar at Calicut. The learned Subordinate Judge agreed with the view of the learned District Munsiff and held that Section 8(2) of the Control Order ousted the jurisdiction of <ORG> to give delivery of the shop in spite of the fact that a decree for eviction had already been passed in respect of the same. The appeal was dismissed by him and this civil miscellaneous second appeal is against the said order.

2. It is contended before me for the appellant that, as the suit had been instituted prior to 11th July, 1944, the provisions of Section 8, Clauses (1) and (2) of the amended Control Order, which came into force on nth July, 1944, should not be applied but that on the other hand the law to be administered is the law as it was in force when the suit was instituted. He relies on the decision of <NAME>, J., in <CITATION> (1945) 1 M.L.J. 441, where the learned Judge has pointed out that the rights of parties prior to the amended Control Order were altogether different and there have been substantive changes in the new Control Order from the previous law and these changes in favour of the tenant take away pre-existing rights in favour of the landlord. It was held by the learned Judge that there was no indication in the amended Control Order that the terms thereof should be construed to operate retrospectively so as to affect the rights of persons in pending litigation at the time when the amendment came into force. He overruled the contention that the new Section 8(1) and (2) merely affected the procedure of the <ORG> and not any substantive rights of parties. He expressly dissented from the obiter dictum of <NAME>, J., in an earlier case which took a different view.

3. The question before me is whether Section 8(1) and (2) of the amended Control Order should be so construed as to have retrospective operation and affect the rights of parties in pending litigation. In the particular case before me the suit was instituted much earlier than 11th July, 1944, and the landlord had apparently a good title to get a decree in ejectment as there was nothing to indicate that the tenant had obtained any rights under the provisions of the previous Control Order then in force. No doubt the decree in ejectment was one passed after 11th July, 1944. If there had been no amendment in the interval, the landlord, who had a right to obtain an executable decree in ejectment when the suit was instituted could have taken out execution proceedings and obtained delivery of possession from the tenant in due course of execution of the decree which he had obtained in the suit. Such a right could not be a mere matter of procedure which could be taken away by the amended provisions of the new Order unless there is any clear indication that the amended Order should apply so as to take away even existing rights of a substantive character, rights which had accrued prior to the coming into force of the new amendment, and indeed, rights for the enforcement of which an action had been instituted in <ORG>. Section 8(1) no doubt is very wide in its terms and operates to prevent a tenant from being evicted, Whether in execution of a decree or otherwise and whether before or after the termination of the tenancy.

The advocate for the respondent strenuously contends that these words are by themselves sufficient to indicate that the <ORG> meant to take away pre-existing rights. He lays particular stress on the words " whether in execution of a decree or otherwise." It is however possible to give a meaning to these words without necessarily construing the section as taking away the rights of parties in an action instituted before the amendment came into force. It is possible to imagine cases where an action itself had been instituted after 11th July, 1944, and a decree obtained in <ORG>. In such class of cases the decree in ejectment cannot be executed by <ORG> but the landlord will have to make an application to the authorities under the Rent Control Order. It is not therefore as if the words " in execution of a decree " would become meaningless and inoperative unless the section were construed retrospectively. It must now be taken to be well settled that a decree in ejectment could be passed by <ORG> and all that the Order provides is that during the subsistence of the Order, <ORG> cannot execute the said decree but the landlord will have to take appropriate steps under the provisions of the Order. The Order itself is only for a short duration and if and when it is repealed or it expires without being renewed, the previous decree of <ORG> will have to be executed by <ORG> as in ordinary cases. If, therefore, it is possible to give a meaning and scope for operation for the words " in execution of a decree or otherwise " in Section 8(1) by confining it to cases where the decree is obtained in a suit instituted after 11th July, 1944, and if there is nothing else in the enactment to indicate that every pending legislation or pre-existing substantive rights of parties were intended to be affected by the amended Order, I must hold in accordance with the well-established rules of construction of statutes that the amended Control Order, Section 8, Clauses (1) and (2) has no application to the present execution petition and that the order for delivery originally made was right and proper. Reference may usefully be made in the discussion of the question as to how far statutes can be taken to have retrospective operation to the judgment in The United Provinces v. Mst. <NAME> (1941) 1 M.L. J. Supp. 65 : (1940) F.C.R. 110 : 3 F.L J. 97. <NAME>, J., points out that unless either expressly or by necessary intendment it is made out in the new legislation that it applies to pending proceedings as well, it ought not to be construed to have retrospective operation so as to affect the rights of parties in pending suits. <NAME>, J., also refers to the same principle and explains the decision of <ORG> in <NAME> v. Mst. <NAME> (1935) 70 M.L.J. 195 : L.R. 63 I.A. 47 : I.L.R. 15 Pat. 268 (P.C.). In the result, this appeal is allowed with costs throughout.

4. Leave granted.


ORDER

1. This revision petition is directed against the judgment dated 30-6-1958 passed by the Sessions Judge, South Kanara in Criminal Appeal No. 16 of 1958. By the aforesaid judgment the learned Sessions Judge confirmed the conviction of the petitioners for an offence under Section 8(1) of the Foreign Exchange Regulation Act of 1947 read with Notification No. 12 (11)(f) 1-48 dated 25-8-1948 (as amended), but acquitted them of the offence under Section 167(81) of the Sea Customs Act but confirmed the composite sentence of one year's rigorous imprisonment and a fine of Rs. 1,111/- in respect of the first petitioner and a fine of Rs. 111/- in respect of the other petitioners, passed on each of them by the District Magistrate, South Kanara, in Criminal Case No. 87 of 1957.

2. A foreign vessel M. L. Anwar captained by the first petitioner <NAME> entered the Mangalore Port on 13-10-1957 from Muskat with the cargo of 341 bundles of wet dates. The first petitioner filed the entry and other papers on 14-10-1957 and declared that the vessel contained only 341 bundles of wet dates and no other dutiable articles in it. After verification the cargo of 341 bundles of wet dates was discharged by <ORG> on 16-10-1957.

The fact that only a small cargo of 341 bundles of wet dates had been brought all the way from Muskat to India roused the suspicion of <ORG> and they subjected the vessel to a thorough rummaging for some days from 18th October 1957 hut nothing was found in it. But the Authorities had some credible information that the members of the crew had brought gold concealed in the vessel and therefore, they kept a keen and continuous watch over the vessel. On 31-10-1957 one of the Customs Officials, who was inspecting the vessel once again observed certain cavities underneath the ridge of the hatchway on the port side of the vessel covered with thin deal-wood planks. He suspected that they may be cavities in which gold had been concealed.

He, therefore, secured some respectable persons to the place and in the presence of all the petitioners and another member of the crew got the deal-wood planks covered at four places removed. On removing the planks the cavities were searched and they were found to contain gold bars in cotton cloth belts and they were taken out. There were in all 33 belts in the four cavities. On counting the 33 belts they were found to contain 1,390 pieces of gold bearing foreign marks weighing 13,894 1/8 tolas. None of the petitioners had with them any permit to import gold into India. The first petitioner, who was the Captain of the vessel had not declared that he had brought gold into India in the declaration filed by him on 14th of October 1957. These gold bars valued at Rs. 12,50,471/25nP. were seized by the <ORG> Authorities under a mahazar drawn up at the place in the presence of these petitioners.

Necessary proceedings under the Sea <ORG> Act and the Foreign Exchange Regulation Act were then started against these petitioners and another person. The Collector of <ORG> and Mysore who held an enquiry under the Sea <ORG> Act confiscated the gold which had been brought in contravention of the Foreign Exchange Regulation Act without paying the import duty. He further levied heavy fines on the petitioners. After the proceedings were concluded, the Collector of <ORG> and Mysore under the Sea <ORG> Act directed <NAME>, the Assistant Collector of Central Excise, <ORG> Preventive Kozhikode to file a complaint against the petitioners and another member of the crew for offences punishable under Section 167(81) of the Sea <ORG> Act and under Section 8(1) of the Foreign Exchange Regulation Act after investigation.

Accordingly a complaint against the petitioners-and another was lodged in the Court of the District Magistrate of South Kanara, Mangalore for the above said offences. All the petitioners pleaded not guilty to the charges and denied that the gold belonged to them and that they had brought the same into India. The petitioners examined one witness to prove their innocence. On the evidence adduced in the case the learned District Magistrate held that the petitioners were guilty of both the charges and convicted them but passed a composite sentence against each of the petitioners for both the offences. He sentenced the first petitioner to rigorous imprisonment for one year and to pay a fine of Rs. 1,111/- and sentenced each of the remaining petitioners and another person (who was acquitted by the appellate Court) to pay a fine of Rs. 111/- each.

Being aggrieved by the judgment of the learned District Magistrate, the petitioners and the pilot of the vessel, who had also been convicted filed an appeal to the Sessions Judge, South Kanara Division in Criminal Appeal No. 16 of 1958 challenging the correctness and legality of their convictions. Several contentions were raided by the petitioners. The learned Sessions Judge held (i) that none of the petitioners was guilty of an offence punishable under the provisions fit Section 167(81) of the Sea Customs Act since the prosecution had failed to establish mens rea and he, therefore set aside the conviction of all the petitioners on the said charge and (ii) that the third accused, who was the pilot of the vessel was not guilty of any of the two charges and acquitted him.

In so far as the charge for contravention of tin-provisions of Section 8(1) read with Section 23(1) of the Foreign Exchange Regulation Act of 1947 is concerned, the learned Sessions Judge held that the finding of the District Magistrate that the petitioners were all guilty was based on proper appreciation of the evidence on record and confirmed the same. As already stilted, the learned Sessions Judge confirmed the composite sentences passed against the petitioners. It is the legality of this judgment that is now challenged before me by the petitioners in this revision petition.

3. It is no longer in dispute that the vessel M. L. Anwar which was captained by the first petitioner <NAME> arrived at Mangalore Port from Muskat on 13-10-1957; that thy first petitioner filed the necessary papers including the entry papers and customs declaration on 14-10-1957 and that the declared cargo of 341 bundles of wet dates was discharged by <ORG> on 16-10-1957. It cannot also be disputed that the vessel was being subjected to continuous search from 18-10-1957 by <ORG> on suspicion that gold had been concealed in it till 31-10-1957.

The fact that a large quantity of gold valued at Rs. 12,50,471/25nP. was recovered from the cavities which had been made underneath the ridge of the hatchway on the port side of the vessel on 31-10-1957 and those gold pieces which were 1,390 in all, bore foreign marks on them has been satisfactorily established and is not disputed before me. The Courts below have reached the conclusion that the gold seized by the <ORG> Authorities is foreign gold and had been brought by the petitioners concealed in the cavities made in the vessel without obtaining any permit from the Government of India or <ORG> and in contravention of the Foreign Exchange Regulation Act with a view to evade payment of duty which would amount to over two lakhs of rupees.

On this finding the learned District Magistrate held that all the petitioners were liable both under Section 167(81) of the Sea Customs Act and also under Section 8(1) read with Section 23(1) of the Foreign Exchange Regulation Act. As already stated, the learned Sessions Judge acquitted the petitioners of the charge under Section 167(81) of the Sea Customs Act on the ground that the prosecution had failed to establish mens rea or knowledge and in the absence of a clear finding to that effect none of the petitioners can be held liable under the above said section. But the learned Sessions Judge was of the opinion that mens rea was not a necessary element in so far as the offence under Section 8(1) of the Foreign Exchange Regulation Act 1947 read with Section 23(1) of the said Act is concerned and that proof of the fact that the petitioness had brought gold into India without obtaining necessary permit from <ORG> was sufficient to make them liable to answer the said charge and confirmed the convictions of the petitioners of the said charge.

4. It was contended by <NAME>, learned counsel for the petitioners, that the learned Sessions Judge on the evidence on record having reached the conclusion that no offence was made out against any of the petitioners for an offence under Section 167(81) of the Sea Customs Act was not justified in finding the petitioners guilty for an offence under Section 8(1) of the Foreign Exchange Regulation. Act of 1947 on the very same evidence. <NAME>, the learned Government Pleader, contended that the conclusion of the learned Sessions Judge that mens rea was a necessary element for an offence under Section 167(81) of the Sea Customs Act and that there was no evidence or material on re-cord to point out that the petitioners had knowledge that the gold was being smuggled or had intention to bring the same into India it not based on proper appreciation of the facts established in the case and therefore, there is no substance in the contention of the petitioners that they should have been acquitted for an offence under Section 8(1) of the Foreign Exchange Regulation Act.

There is considerable force in the contention of the learned Government Pleader. The learned Sessions Judge held that the statements made by the petitioners before the Customs Authorities, viz., Exs. P-18 to P-26 were inadmissible in evidence and that if that evidence is excluded there was no other evidence to prove the knowledge or intention of the petitioners. It is urged by the learned Government Pleader that the finding of the learned Sessions Judge that Exs. P-18 to P-26 are inadmissible in evidence is erroneous and I am inclined to agree with him. I will advert to this contention, later on. I am unable to accept the contention of the learned counsel for the petitioners that because the learned Sessions Judge acquitted the petitioners on a charge under Section 167(81) of the Sea Customs Act, the petitioners are entitled for an acquittal on a charge under Section 8(1) of the Foreign Exchange Regulation Act.

The learned Sessions Judge considered as to whether the evidence on record was sufficient to hold all the petitioners liable for an offence under Section 8(1) of the Foreign Exchange Regulation Act and held that the first petitioner brought the gold into India without the necessary permit secreted in the cavities of the vessel with a view to evade payment of the customs duty and that the other petitioners had abetted him to do so. He has assessed the evidence separately in respect of this charge. There is, therefore, no substance in this contention of the petitioners.

5. It is further urged by <NAME>, the learned counsel for the petitioners, that P. W. 1 <NAME>, the Assistant Collector of Central Excise, Customs Preventive, who lodged the complaint, had not been authorised by a competent authority to file the complaint and therefore, the complaint itself is incompetent. This argument is based on the fact that no notification has been issued by <ORG> or <ORG> after Sub-sections (2) and (3) of Section 23 of the Foreign Exchange Regulation Act were amended. Section 3 of the Act enables <ORG> to appoint a Director of Enforcement for purposes of enforcing the provisions of the Foreign Exchange Regulation Act .

It is not disputed that the amendment in question had come into operation before the prosecution in this case was lodged. The procedure to be followed in taking cognizance of an offence for contravention of Section 8(1) of the Foreign Exchange Regulation Act is governed by Section 23(3)(b) of the Foreign Exchange Regulation Act. This section as it stands lays down that no <ORG> should take cognizance of any such offence except upon any complaint in writing made by the Director of Enforcement or any officer authorised in this he-half by <ORG> or <ORG> by general or special order.

It is contended that since the Government of India or <ORG> had not issued any general or special order empowering <NAME> to file such a complaint and since no Director of Enforcement has been appointed by <ORG>, <NAME> was not competent to file a complaint. There is a fallacy in this argument. The only change made in Sub-section (3) by the amendment is that the Director of Enforcement was added as one of the officers entitled to lodge a complaint. The section as it stood originally provided that a complaint may be made in writing by any person authorised in this behalf by <ORG> or <ORG> by a general or special oider.

The mere fact that the Director of Enforcement has not been appointed as contemplated by the amending Act and no fresh notification is issued does not mean that the notification that had already been issued before the amendment which empowered the several officers named therein to file complaints has become invalid and ceased to operate. This will be abundantly clear if we bear in mind that Act 39 of 1957 was merely an unending Act and has not repealed the previous Act. Section 23(3)(b) of the amended Act as it now stands empowers two authorities to lodge a complaint in writing in regard to the enforcement of the provisions of the Act one of them being the Director of Enforcement and the other authority is any officer authorised in that behalf by <ORG> or <ORG> by general or special order.

It is not disputed that before this amendment, a notification dated 12-1-1932 had been issued by <ORG>. <ORG> empowering the Collector and the Assistant Collector of <ORG> in charge of customs preventive to file such complaints. It is not also disputed that <NAME> was competent under the said notification to lodge the complaint in question by virtue of the notification dated 18th January 1952. It is undisputed that the <ORG> has appointed the Collector of <ORG>, Madras as the Chief Executive officer of <ORG> for all the ports in the State of Madras including Mangalore Port. It is the Collector of <ORG>, Madras as the Chief Executive officer of <ORG> who had jurisdiction over the port of Mangalore that empowered <NAME> to lodge the complaint. It cannot therefore, reasonably be urged that <NAME> was not duly authorised by general or special order to lodge the complaint for enforcement of the provisions of the Foreign Exchange Regulation Act .

I am unable to accept the contention of <NAME>, the learned counsel for the petitioners, that in the absence of a notification issued subsequent to the amendment of the Act by Act 39 of 1957 the old notification which empowered <NAME> and the other customs officers to lodge complaints became inoperative and that <NAME> was not competent to file the complaint. Section 24 of the General Clauses Act provides that where any Central Act or Regulation is repealed and re-enacted with or without modification then unless it is otherwise expressly provided any appointment, notification, order etc., issued under the repealed Act or Regulation shall so far as they are not inconsistent with the provisions re-enacted continue in force and be deemed to have been made or issued under the provisions of the new Act unless and until it is superseded by any appointment, notification etc., issued under the provisions of the new Act.

It is, therefore, clear that the general notification issued by <ORG>, <ORG> dated 12-1-1952 empowering all the Collectors and the Assistant Collectors of <ORG> to lodge complaints continued to be in force even after the section of the Regulation was amended. There is, therefore, no substance in the second contention of the petitioners and it must fail.

6. The next contention urged by <NAME>, the learned counsel for the petitioners, is that the complaint lodged against the petitioners without affording an opportunity as contemplated in proviso under Sub-section (1) of Section 23 of the Foreign Exchange Regulation Act to show cause whether they had a permit is invalid. Relying upon the proviso to Section 23 of the Foreign Exchange Regulation Act he contended that in the absence of anything to indicate that the mandatory requirements of the proviso to Section 23 of the Foreign Exchange Regulation Act were complied with by the prosecution, no prosecution could be launched against the petitioners.

In support of this contention he relied upon an unreported decision of <ORG> in Criminal Appeal No. 59 of 1952 D/- 17-6-1952. The argument of <NAME> the learned counsel for the petitioners, ran in this way. In accordance with the provision referred to above the <ORG> Authorities should give a notice in writing to the petitioners and afford an opportunity to tbe petitioners by giving due notice of the fact to show that they had permission to bring gold into India. It may at once be stated that there is no substance in this contention. It is not at all the case of the petitioners that they had any permit to bring the gold into India.

Their defence from the beginning is one of denial. They denied the ownership of the gold and have been throughout contending that the gold seized by the <ORG> officers must have been planted after they arrived at Mangalore Port by some one at the instance of the <ORG> Authorities. They never took the stand that they had brought the gold with any authority or permission obtained from <ORG> or <ORG> or they kept the gold with a view to take it to any other country. Proviso to section 23 of the Foreign Exchange Regulation Act reads thus :

"Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission."

The evidence of P. W. 1 Sri Parameshwara makes it abundantly clear that such an opportunity was given to the petitioners by the <ORG> authorities. Exhibit P-2 is the copy of the notice served on each of the petitioners. Exhibits F-3 to P-11 are the replies given by the petitioners. It is clear from a perusal of these Exhibits that the petitioners were given an opportunity of showing cause whether they bad any permit or authority to bring the gold into India and all of them have uniformly stated that they had no permits with them. The petitioners cannot now be allowed to contend that they had not been given an opportunity. The decision of <ORG> cited by the learned counsel for the petitioners does not in any way help the Petitioners in any manner.

7. It was next urged by the learned counsel appearing for the petitioners that there was absolutely no reliable and sufficient evidence placed on record by the prosecution to reach the conclusion that the petitioners intentionally brought the gold into India without any necessary permit in that behalf. It was strenuously urged that the evidence on records is not sufficient even if accepted on its face value to lead one to the conclusion that the petitioners had brought the gold into India and that the gold in question had foreign marks on it and had been actually smuggled into India so as to make the petitioners liable under Section 8(1) of the Foreign Exchange Regulation Act. There appears to be no substance in this contention.

It is clear from a perusal of the judgment of the learned Sessions Judge that the petitioners did not seriously challenge before him that the gold seized by the <ORG> Authorities was actually found concealed in the cavities of the vessel brought into Managalore Port by the petitioners. In Exts. P-18 to P-26 which are the statements purported to have been made by the petitioners before the <ORG> authorities, the petitioners had unequivocally admitted that they brought the gold without any permit from the Government of India or <ORG>. The learned Sessions Judge held that these statements of the petitioners are inadmissible in evidence since they amounted to confessions and had been made before officers who are considered to be police officers.

It is now argued that the other evidence on record is not sufficient to reach the conclusion that the petitioners brought the gold into India in the vessel. Sri <NAME>, the learned Government Pleador, on the other hand contended that the conclusions reached by the learned Sessions Judge that Exts. P-18 to P-26 which are the statements made by the several petitioners before the <ORG> authorities during the enquiry under the <ORG> Regulation are hit by Section 25 of the Evidence Act lince they amounted to statements made before the <ORG> is not sound in law. The learned Sessions Judge appears to have relied upon a decision of <ORG> reported in <CITATION> . AIR 1956 Cal 219, and a Sind decision reported in <NAME> v. Emperor, AIR 1938 Sind 1 (FB), in preference, to the decisions of <ORG> in <NAME> v. Emperor, 1946 Mad WN (Cri) 144: (AIR 1947 Mad 308). <CITATION> , 1947 Mad WN (Cri) 120: (AIR 1948 Mad 116), <CITATION> , 1944 Mad WN (Cri) 31: (AIR 19-14 Mad 169), in coming to the conclusion that the above statements are inadmissible in evidence.

It is urged that the view taken by the Calcutta and Sind <ORG> that an Assistant Inspector of Customs is a Police Officer and any statement made before him is hit by Section 25 of the Evidence Act is untenable. After carefully examining the decisions, I am inclined to agree with the consistent view taken by <ORG>. Dealing with this question somewhat elaborately in <CITATION> , AIR 1958 Mad 31, <NAME> held that so long as the forest officers are not invested with powers of an officer in charge of a police station they cannot be considered to be police officers under the Code of Criminal Procedure and therefore, any statement made by an ac-eused to the said forest officer is admissible in evidence and is not hit by Section 25 of the Evidence Act.

This view consistently taken by <ORG> has been accepted as correct by <ORG> in Public Prosecutor v. <NAME>, 1957 Cri LJ 623: (AIR 1957 Andh Pra 81). The learned Sessions Judge has not given reasons as to why he found it difficult to follow the reasoning adopted by the Madras and <ORG>s. I am of the opinion that the view taken by the Madras and <ORG>s that <ORG> are not police officers as they are not invested with powers of an officer in charge of a police station and powers of investigation is sound and is acceptable. I am unable to accept the view of <ORG> that statement made to <ORG> Authorities by a person, who may later on be accused of an offence under the Foreign Exchange Regulation Act is hit by Section 25 of the Evidence Act and is therefore, inadmissible in evidence.

It is conceded by the learned counsel for the petitioners that if Exts. P-18 to P-26 are held to be admissible in evidence there is sufficient evidence to indicate that the petitioners had knowledge of the fact that the gold was being smuggled from, Muskat to India and that their convictions are perfectly justified. As already indicated, I have no doubt in my mind that Exts. P-18 to P-26 are admissible in evidence and any statements made by the petitioners before <ORG> can be taken into consideration against the petitioners.

8. It was faintly urged by Sri. <NAME>, the learned counsel for the petitioners, that there is intrinsic evidence in the case to prove that those statements were not actually recorded in the very words of the petitioners und that the petitioners did not understand the implications of the statements made by them in these statements before they affixed their signatures and there are, no value, should be attached to them. I am unable to accept this argument. The Courts below have concurrently held that these statements were duly recorded by the <ORG> Authorities after taking the necessary precautions of securing persons who knew the language of the petitioners and that the questions put to them were translated to them and answers given by them are duly, recorded. This contention of the petitioners should, therefore, tail.

9. It was finally urged by <NAME>, the learned counsel for the petitioners, that since the prosecution had failed to examine some independent witnesses to establish that the gold was actually found in the ship secreted in the cavities in the ship and that there was no possibility of other persons gaining entrance to the said vessel during that period that the vessel was in the Port before the gold was seized by the <ORG> Authorities, the charge against the petitioners had not been satisfactorily established. I am unable to accept this argument. <ORG> which had the opportunity to watch the demeanour of the witnesses examined by the prosecution has believed those witnesses and accented their version and based a conviction against the petitioners.

It is seen from the records that none of the witnesses were seriously cross-examined by the petitioners on the material facts deposed by them. For very good reasons the learned Trial Judge did not accept the version given by the only defence witness examined in the case that these petitioners were throughout in the hotel. In these circumstances. I cannot, sitting as a revision Judge, dislodge the findings of fact. This contention of the learned counsel for the petitioner should, therefore, fail.

10. The last contention urged by <NAME>, the learned counsel for the petitioners, was that the learned Sessions Judge was not justified in ton-firming the composite sentence awarded by the learned trial judge in spite of the fact that he acquitted the petitioners of the offence under Section 167(81) of the Sea Customs Act. According to the learned counsel for the petitioners the sentences awarded to the petitioners should have been proportionately reduced. There is no substance in this contention. It cannot reasonably be urged that the sentences awarded to the petitioners are in any way severe. I am of the opinion that the sentences awarded to any of the petitioners do not call for any interference.

11. In the result, therefore, this revision petition fails and the same is dismissed. The first petitioner is on bail and should surrender to his bail and undergo the imprisonment and also pay the fine. The sentences of fine awarded to the other petitioners shall be enforced if they have not already paid the fine amounts.

12. Revision dismissed.


JUDGMENT <NAME>, J.

1. The defendants in a suit for ejectment on the ground of forfeiture have come up on appeal against the judgment and decree passed by a Subordinate Judge at Asansol. The suit was by a lessor against the lessees for khas possession on ejectment of the latter from the leasehold property on the ground of forfeiture by the breach of an express condition in the lease providing that on breach thereof the lessor would be entitled to re-enter.

2. Messrs. <ORG> who we the respondents in this appeal gave a sub-lease in respect of a coal mining area in the year 1948 to appellants 1 to 4 who carried on business in the name of a partnership firm named "<ORG>", which is appellant No. 5 in this appeal. The indenture of lease provided that, "if any rent, royalty, or any other sum of money reserved and made payable or any part thereof shall be in arrear or unpaid for the space of six calendar months next after the day whereon the same ought to be paid ...... it shall be lawful for the lessors at any time thereafter to re-enter into and upon the said premises or any part thereof. ............"

It was alleged that the defendants-appellants defaulted in the payment of rents and royalties, etc., as stipulated in the indenture and thereby their lease became liable to forfeiture. The said lease was determined by service of notice in November 1952 and thereafter the present suit was instituted. The plaint also included a prayer for recovery of rents and royalties, etc. with interest thereon.

3. The defendants filed a joint written statement denying that any amount was due from them on account of arrears of rent or royalty, the same having been paid to the plaintiff in due course. The defendants also denied receipt of any notice determining the tenancy as alleged.

4. The learned Subordinate Judge found that there was nothing to prove that the defendant paid any amount beyond what was admitted by the plaintiff Company and was credited to the account of the defendants in schedule B of the plaint. He found that the defendants had made default in payment of rents, royalties, etc. in terms of their lease and that because of a breach of an express condition in the covenant which provided for a right of re-entry on breach thereof, the plaintiff Company was entitled to forfeit the lease and to re-enter the leasehold premises. On the question of service of notice under Section 111(g) T. P. Act he found that the same was duly served on the defendants.

5. During the trial the defendants raised a plea that the plaintiff was not entitled to khas possession in view of the vesting of intermediary interests in mining rights in <ORG> under the provisions of the West Bengal Estates Acquisition Act of 1953. The learned Subordinate Judge considered this contention and found that considering the position of the parties at or about the time when the cause of action for the suit arose and without allowing extraneous matters to crop up it would appear that the defendants were already trespassers on the leasehold property before the Act of 1953 came into operation and that such unlawful possession of trespassers which kept the plaintiff out of khas possession of the property would not disentitle them to the relief claimed in the suit. In other words he found that in the circumstances of the case there was no vesting of the plaintiffs interest in the disputed coal mining property in <ORG> in terms of the W. B. Estates Acquisition Act.

6. After the conclusion of arguments in the suit the defendants filed a petition offering to pay to the plaintiff Company the rents in arrears with interest and cost of the suit within 15 days and praying for relief against the forfeiture. The learned Subordinate Judge considered the prayer in his judgment, but refused to give the relief prayed for.

7. As a result of its findings the trial court granted a decree for khas possession after ejecting the defendants from the leasehold property and a further decree for recovery of the amount as detailed in schedule B of the plaint together with further Interest at the rate of six per cent per annum from the date of the decree till realisation.

8. Against this decree the defendants have come up on appeal. Mr. <NAME> appearing on behalf of the appellants urged that the trial court erred in finding that there was a forfeiture of the lease as claimed and that the defendants were not entitled to any relief in view of Section 114 of the Transfer of Property Act. He contended that on the materials on record the trial court should have found that there was no service of notice under Section 111(g) T. P. Act on defendants 3 and 4 and further that it should have been held that the plaintiff Company was not entitled to recover possession in view of the vesting of their intermediary interest in <ORG> under the provisions of the W. B. Estates Acquisition Act.

9. On the question of forfeiture, the plaintiff adduced oral evidence to prove non-payment of rents and royalty. None of the defendants were examined in the suit, and no evidence was adduced in support of the plea of payment that was raised in the written statement. According to <NAME> the defendants have their books of accounts and receipts showing payments, but these were not produced in the suit. As a matter of fact no evidence was adduced to prove the payments alleged and on the evidence on record there is no escape from the conclusion that the amounts claimed in the suit as arrears of rent, royalty, etc. are due and payable and have remained unpaid since the end of 1949. The relevant term in the indenture of lease regarding payment of rent and royalty, etc. and the provision regarding the landlord's right of re-entry on failure to pay the same is embodied in Clause VI (6) of Exhibit 1, the purport whereof has been noted earlier in the judgment. There is no question that breach of the covenant in this regard did entail forfeiture of the lease in terms of Section 111(g) T. P. Act.

10. The question is whether the defendants are entitled to relief against the forfeiture for non-payment of the rent in arrears in terms of Section 114 T. P. Act. The granting of the relief under the section is a matter within the discretion of the court. The petition filed by the defendants in this regard is printed at page 13 of the Paper Book. The offer that was made was not an unconditional one. The defendants still denied that the plaintiff Company was entitled to re-enter and stated that in case the court was inclined to pass a decree for ejectment they would be agreeable to pay the rents in arrears with interest and the full costs of the suit within fifteen days. What Section 114 T. P. Act contemplates is payment or tender to the lessor or the giving of such security as the, court thinks sufficient for making such payment within 15 days. In the present case the offer that was made after conclusion of the arguments was neither a payment nor a tender to the lessor nor was any security furnished to the court with an undertaking to make the payment within 15 days. The offer, thus, was not strictly in terms of Section 114 T. P. Act, and that is virtually what the court has found while rejecting the defendant's prayer in this connection. In order to get the benefit of relief against forfeiture under the Section the lessee is required at the hearing of the suit either to pay or to tender to the lessor the rent in arrear together with the interest thereon and the full cost of the suit or to give sufficient security with the undertaking to make the necessary payment within 15 days. A simple offer to pay the requisite amount within 15 days would not be in compliance with the requirements of the Section and on the strength of such offer relief against forfeiture cannot be claimed. We find that the defendant's prayer for relief has been rightly rejected.

11. So far as the question of service of notice under Section 111(g) on the defendants is concerned, it is not in dispute that the same was duly served on defendants 1, 2 and 5. Ex. 2 is the notice which was served. Clause IX (iii) to the indenture Exhibit 1 provides as follows:

"Every notice requiring to be served hereunder shall be sufficiently and properly served if sent by registered Post to the address of the <NAME> as given before....."

The address given before is the address in paragraph 1 of Exhibit 1 and is village Domohoni, Thana Baraboni Sub-Division Asansol in the District of Burdwan.

12. Exhibits 3 to 3(d) are the postal registration receipts which show that the notices on the defendants were sent to the address above which is within <ORG>. Exhibits 4 to 4(d) are the postal acknowledgments. Exhibits 4(c) and 4(d) are the acknowledgments in respect of the notice addressed to defendants 3 and 4. In the former the address as originally given is as per the terms of Clause IX (iii) of the indenture (Exhibit 1). But the same appeal's to have been penned through and another address was substituted thereof. So far as Exhibit 4 (d) acknowledgment is concerned the address thereon is as required in the clause above. The postal seal on these two acknowledgments show, however, that they were actually delivered by <ORG> in Santnal Parganas. The two notices whereof Exhibits 4(c) and 4(d) are the acknowledgments must have been redirected after they had been registered and posted by or on behalf of the plaintiff Company. Where or by whom this was done has not come out in evidence; but the notices must have been redirected by the postal authorities on some instruction given by or on behalf of the addressees. Exhibit 4(d) was delivered by <ORG> although the address of the addressee on it is Domohoni within P. S. Charanpur in the District of Burdwan. Apparently, the redirected address was noted on the envelope containing the notice and the address on the acknowledgment was not corrected accordingly. Whatever that be, the position stands that the notices were directed to the address as given in the indenture Exhibit 1 in terms of Clause IX (in) thereof and in accordance with those terms the giving of the notice by registered post to that address, is to be treated as sufficient and proper service thereof. It was for the defendants to prove that the notices were not duly served, but neither defendant No. 3 nor defendant No. 4 came forward to deny the service.

13. In the case <NAME> v. <NAME>, ILR 46 Cal 458: (AIR 1918 PC 102) was involved a question similar to the one raised in this suit. It was held "the personal tender or delivery may take place anywhere: the vicarious tender or delivery must take place at the residence of the person intended to be bound by the notice. In the case of joint tenants, each is intended to be bound and it has long ago been decided that service of a notice to quit upon a joint tenant is prima facie evidence that it has reached the other joint tenants".

In dealing with service by registered post it was stated.

"........ but it is an entire mistake to suppose that the addressee must sign the receipt for a registered letter himself or that he cannot do so by the hand of another person or that if another person does sign it on the addressee's behalf, the presumption is that it never was delivered to the addressee himself mediately or immediately."

The statements above lay down a rule governing the mode of proof relating to service and says in effect that service by registered post of a notice directed to the correct address is prima facie proof if the acknowledgment receipt comes back with the signature of somebody thereon and further that service of such a notice upon one joint tenant is prima facie evidence of service on the others when similar notices on all the joint tenants are sent by post to the correct address.

14. We were further referred to the case <CITATION> , which says that service on all joint tenants in terms of Section 106 T. P. Act is necessary in order to determine a tenancy, but that is a proposition with which nobody will quarrel.

15. On behalf of the respondent <ORG> we were further referred to the case <CITATION> which lays down that notice served on one of the joint tenants is sufficient to terminate a lease. The question involved does not appear to have been discussed in detail as it was not necessary in view of the fact that the learned Advocate concerned conceded the position, but even apart from the broad proposition of law laid down in the case, there is ample justification in the materials on record in the present case in support of the trial court's finding in favour of the service of notice on defendants 3 and 4. The notices on these two defendants were sent by registered post to the address mentioned in the indenture of lease Exhibit I as per Clause IX(iii) thereof. So far as the lessor is concerned he did what he was required to do in terms of the contract and proper service of the notice is to be deemed to have been effected. Further, in view of the fact that the notices were sent by registered post, as evidenced by postal receipts Exhibits 3(b) and 3(d), there would be a presumption of effective service, and the further fact that the acknowledgements of the notices directed to the address given in the indenture Exhibit 1 came back with the signature of somebody would provide prima facie evidence of service. All these taken together would throw the onus on the defendants to prove that they did not in fact receive the notices and that onus remains undischarged. Evidence was adduced to show that <NAME> whose signature appears on the acknowledgments of Exhibits 4(c) and 4(d) never worked for the defendants concerned. But the best evidence in support of the denial is wanting because of the non-examination of <NAME> and of the defendants concerned and because of the non-production of the books and registers of the <ORG> which according to the two witnesses for the defendants examined in the case would show the names of all the persons working for the defendants concerned. The evidence on behalf of the plaintiff was that <NAME> works under these defendants. On a consideration of the evidence and of the legal position involved we find that the notices under Section 111(g) T. P. Act were duly served on defendants 3 and 4 as well.

Coming now to the question of vesting of the mining interest of intermediaries in terms of Section 28 of the W. B. Estates Acquisition Act, the question came up for consideration in the case <CITATION> wherein it has been held that there has been no such vesting for non-service of notice under Section 4 of the Act after amendment of the definition of the term 'intermediary' by including within the same the interests of intermediaries in mining interest. We find, however, that the question of vesting is not relevant for the purpose of determining the right of the plaintiff Company to <ORG> possession as claimed. If the interest of the plaintiff Company had vested in <ORG>, it would be entitled to receive compensation in respect thereof and a decree for <ORG> possession though it may not be executable would be evidence of plaintiff's right to receive compensation in respect thereof and would entitle it thereto in terms of the Act. The principle that the <ORG> should not pass a decree which would be unexecutable would not be attracted to the case as in any case the decree confers on the decree-holder some legal right of which he would otherwise be deprived. In this view of the matter we are of the view that the provisions of the W. B. Estates Acquisition Act would not in the facts of the case stand in the way of the plaintiff getting a decree in the suit. On the facts proved the plaintiff Company was entitled to a decree if the W. B. Estates Acquisition Act had not been passed. The <ORG> would certainly take into account changes in the law pending the suit that might affect the rights of the parties which are being canvassed therein. But when the right to get <ORG> possession is substituted as a result of the subsequent change in the law by a right to get compensation which would be assessed by the Revenue Officers a refusal by the <ORG> to grant a decree for <ORG> possession would deprive the plaintiff of the right to get full compensation and this is an aspect of the matter which the <ORG> must consider while considering the change in the law pending the suit. In this view of the matter we find that the trial court was amply justified in rejecting the objection taken in this regard by the defendants.

16. In view of tie above discussion the suit must be held to have been correctly decreed. The appeal, accordingly, fails and is dismissed with costs. The judgment and decree appealed against are affirmed.

A.C. Sen, <NAME>

17. I agree.