JUDGMENT <NAME>, C.J.

1. Construing this very deed in Appeal Suit No. 74 of 1896, <NAME>, C.J., and <NAME>, J., observed: There being no indication of intention to give a larger estate we must assume that the husband intended that a widow's estate only should pass." The trend of the later decisions in this Court beginning with <NAME> v. <NAME> 31 M. 179 : 3 M.L.T. 369 is against making any such assumption, and they appear to be supported by the judgment of <ORG> in <CITATION> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.): 18 M.L.J. : 10 Bom. L.R. 59 :7 C.L.J. 131 : 3 M.L.T. 144 : 35 I.A. 17, which cites with approval a ruling of <NAME>, J., in <CITATION> 24 W.R. 395 that there is no presumption that a gift to a widow means a limited gift.

2. We must, I think, lake it to be now settled, at any rate so far as this <ORG> is concerned and until the decisions to which I have referred are overruled by higher authority, that the rule laid down by <ORG> in <NAME> v. <NAME> 2 I.A. 7 : 22 W.R. 409 : 14 B.L.R. 226 (P.C.) : 3 Sar P.C.J. 405 is a rule of construction to be applied only when there is some uncertainty or ambiguity in the language of the instrument before the <ORG>.

3. The question then is, is there anything in the terms of Exhibit III which warrants the application of the rule. The opening recital is to the effect that the settler made "the following gifts (Inams)" of the properties belonging to him on the occasion of his adopting as his son a boy of ten years of age. There is, first, a gift of chattels and money to a maternal nephew, then directions that certain allowances of paddy should continue to be paid to two descendants of his maternal uncles, that six Brahmins should be fed daily from the income of certain lands, and that a saffron allowance of Rs. 25 should continue to be paid to his sister. Then comes the disposition in favour of the widows. Of the remaining property the adopted boy "is to be entitled to and enjoy one-half," "Of the remaining halt these two persons, my senior wife <NAME> and my junior wife <NAME> shall each take a half." On the language of this instrument I have come to the conclusion that there is no sufficient reason for cutting down the disposition in favour of the widows. <NAME> v. <NAME> 11 B. 573 : 66 Ind. Dec. (N.S.) 377 was decided on the view that there is a general presumption that a gift to a woman is only of a woman's estate, though, on the language of that document which was different from the language here, the rule of construction laid down in <NAME> v. <NAME> 2 I.A. 7 : 22 W.R. 409 : B.L.R. 226 (P.C.) : 3 Sar. P.C.J. 405 may have been applicable, as was held, though with a different result, in <NAME> v. <NAME> 22 M. 357 : 8 Ind. Dec. (n.s.) 255. Sir <NAME>, however, in the course of his judgment spoke of "the extreme improbability that, having adopted a son, the testator should have intended to give more than a life-estate, or, at the utmost, a widow's estate to his wife." As I stated at the hearing, my very general impression derived from the cases which have come before me is, that there is no such extreme improbability in this Presidency and my learned brother, whose opinion on such a point is entitled to much greater weight, is of the same opinion. I concur in the order proposed.

<NAME>, J.

4. I entirely agree. The suit is to recover possession of properties which were last in the enjoyment of one <NAME>. <NAME>'s husband <NAME> adopted plaintiff's father <NAME>. He executed Exhibit III on the 6th of August 1858, by which he settled one half of his properties upon his adopted son and gave the other half to his two wives. <NAME>, the junior wife, took possession of a fourth share under that settlement. The defendant claims under her Will.

5. The points for consideration are whether <NAME> took an absolute estate under Exhibit III and whether she was competent to dispose of the property by a Will.

6. I shall first deal with a few decisions of <ORG> which were quoted as indicating the principles on which an instrument like the present should be construed. The learned Advocate General relied upon <NAME> v. <NAME> 2 I.A. 7. 22 W.R. 409 : 14 B.L.R. 226 (P.C.) Swar P.C.J. 405. and <CITATION> 37 Ind. Cas. 122 : 38 A. 446 : 18 Bom. L.R. 900 : 20 M.L.T. 35 C. 896 : 12 C.W.N. 729 : 35 I.A. 118 : 4 M.L.T. 23 : 18 M.L.J. 283 : 5 A.L.J. 460 : 10 Bom. L.R. 604 : 8 C.L.J. 48 (P.C.) Mr. Ramachandra Ayyar quoted <CITATION> 30 A.84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L. 35 I.A. 17. In the first two oases the facts were -almost identical. In both of them the father gave properties to his daughter or daughters and their children. In both <ORG> held that the daughter or daughters took only a limited estate and pointed out that, in construing Wills of Hindus, their ordinary notions as to the devolution of property may be taken into account. In these cases it was clear that the daughters and their children could not have been regarded as tenants in-common, because the children were not mentioned by name and it was as a class that they were referred to. The question, therefore, was whether the words "and their children" should be regarded as mere surplusage or whether they should be referred to ascertain the intention of the donor. Their Lordships held that, ordinarily, a Hindu would desire that his properties should remain in possession of his descendants, and that consequently the donor could not have intended to give absolute powers of disposition to the daughters. I do not think that these judgments are authorities for the proposition that in all oases where gifts are made to females, a Hindu must be deemed to have given them only an estate for life. On the other hand the decision in <NAME> v. <NAME> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L.J. 131 : 3 M.L.T. 144 : 35 I.A. 17 relied upon for the appellant shows that, in the opinion of their Lordships, no difference should be made between a male and a female, provided the words of gifts are sufficiently clear to convey property. They quoted with approval the dictum of <NAME>, J., in <CITATION> 24 W.R. 395, wherein the learned Judge stated: "We must hold that the gift in question was an absolute gift, unless it can be shown that, by the Hindu Law, a gift to a female means a limited gift or carries with it the effect of creating an estate similar to the 'widow's estate' under the law of inheritance. I am not aware of any such provision in the Hindu Law nor have we been referred to any authority in support of it." There can be no doubt that the Hindu Law does not enunciate that women as donees can only take an estate for life. <ORG> say at the end of page 89: "Nothing has been found in the context here or the surrounding circumstances or is relied upon by the respondents, but the fact that the donee is a woman and a widow, which was expressly decided in the last mentioned case not to suffice." The case referred to is <CITATION> 24 C. 834 (P.C.) : 24 I.A. 76 : 1 C.W.N. 387 : 7 Sar. P.C.J. 155 : 12 Ind. Dec. (n.s.) 1224. If we remember that Mr. Justice <NAME>'s decision in <CITATION> 24 W.R. 395 was given after examining at some length the dictum of <ORG> in <NAME> v. <NAME> 2 I.A. 7 : 22 W.R. 409 : B.L.R. 226 (P.C.) : 3 Sar. P.C.J. 405, it is clear that their Lordships advisedly approved the principle enunciated by <NAME>, J. In recent years there has been practical unanimity in Madras as to the construction to be placed upon similar documents. The first decision was in <NAME> v. <NAME> 31 M. 179 : 3 M.L.T. 369, which was contemporaneous with <CITATION> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L. 35 I.A. 17, <NAME> v. <NAME> 16 Ind. Cas. 139 : 23 M.L.J. 223 : 12 M.L.T. 230 : (1912) M.W.N. 861, Bodi Muttayya v. Kavoori Kodandaramayya 23 Ind. Cas. 594 : (1914) M.W.N. 387. <CITATION> 24 Ind. Cas. 796 : 26 M.L.J. 616, <CITATION> 24 Ind. Cas. 20 : 27 M.L.J. 329 and <CITATION> 38 Ind. Cas. 840 : (1917) M.W.N. 78 : 21 M.L.T. 30 : 5 L.W. 211 have decided that the sex of the donee is not a ground for cutting down an otherwise full estate.

7. The learned Advocate-General relied upon some decisions of the other High Courts. Most of them were earlier than <CITATION> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L.J. 131 : 3 M.L.T. 144 : 35 I.A. 17 and I do not think it necessary to examine them at any length. I would only say with reference to the observations of Sir <NAME> in <NAME> v. <NAME> 11 B. 573 : 66 Ind. Dec. (N.S.) 377 that at any rate so far as the Southern Presidency is concerned, there is nothing improbable in a Hindu giving an absolute estate to his wife when he directs an adoption to be made to him. Cases have not infrequently come before us in which, in order to avoid possible conflicts between an adopted son and his widow, a Hindu has been found to give a portion of his property absolutely to his widow and the other portion to his adopted son. In deducing a rule of construction, a few considerations should be borne in mind. Section 8 of the Transfer of Property Act lays down: "Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is capable of passing in the property or in the legal incidents thereof "Therefore, unless there is an expressed or implied qualification to the contrary, the donor must be deemed to have conveyed all that he was possessed of in the property granted. <ORG> in the Supplemental Volume of Indian Appeals at page 47 <NAME> v. <NAME> I.A. Sup. Vol. 47: 18 W.R. 359 : 9 B.L.R. 377 : 2 Suth. P.C.J. 692 : 3 Sar. P.C.J. 82 (P.C.)] recognised this principle. Consequently, if the words employed are clear and unambiguous, no matter who the donee is, whether a male or a female, the language of the gift must be given effect to. This is what was laid down in <CITATION> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L.J. 131 : 3 M.L.T. 144 : 35 I.A. 17. But there may be cases in which it may be necessary, owing to the language employed not being clear and precise or being superfluous, to find out the intention of the donor. In such cases, as the learned Advocate General contended, the personal law of the donee may be taken into account. That is to say, the ordinary rule of inheritance applicable to him or her may be called in aid. This is not a rule of presumption so much as it is one for gathering the intention of the donor. Broadly speaking, it may be said that if the language of the instrument is capable of conferring an estate of inheritance, considerations regarding the sex of the donee should be discarded. Where the language is ambiguous, then recourse can be had to ordinary notions of Hindus as a rule of construction in finding out what the intention of the donor was. Now I shall turn to Exhibit Id and see whether, in the light of the above discussion, the document confers only a life estate upon <NAME>. It was not seriously argued that there is any material difference between the words employed in the case of the adopted son and the words employed in the case of the two wives. Nor was it argued that the words employed in the case of the adopted son were not capable of conveying to him absolute rights in the property. I, therefore, fail to see why a distinction should be made between the two classes of donations. Further the preamble of the deed says: "I am giving these properties as Inam." The donor was a Maharatta Brahmin who lived in Tanjore and the document was written in Maharatti. <NAME> in his glossary says about the word inam: "In India and especially in the south and amongst the Maharattas, the term was especially applied to grants of land rent-free, and in hereditary and perpetual occupation." In another dictionary by a Maharatta scholar the word inam is defined as meaning "a grant in perpetuity without conditions." These definitions support the conclusions at which I have arrived. In my opinion the gift to <NAME> was an absolute one. There are certain legacies which have been directed to be paid out of the estate. As they are in terms only for life, the main dispositions are not affected by these life grants. It was next argued by the learned Advocate General that even supposing that it was an absolute grant to <NAME>, she was not competent to dispose of the property by Will. He relied upon <CITATION> 7 M. 387 : 8 Ind. Jur. 238 : 2 Ind. Dec. (n.s.) 853 and <NAME> v. Krishnasami 14 M. 274 : 5 Ind. Dec. (n.s.) 192. At the same time, he frankly admitted that the two decisions are inconsistent with the conclusions of <ORG> in <CITATION> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L.J. 131 : 3 M.L.T. 144 : 35 I.A. 17, where one of the widows who had acquired her property under a deed of gift from her husband disposed of it by a testamentary instrument. Their Lordships upheld the Will of the Hindu widow. Reference may also be made to <CITATION> 37 Ind. Cas. 122 : 38 A. 446 : 18 Bom. L.R. 900 : 20 M.L.T. 481 : 21 C.W.N. 102 : 4 L.W. 597 : (1916) 2 M.W.N. 567 : 26 C.L.J. 182 : 43 I.A. 183 (P.C.), where it was held that a widow could dispose by Will property which had come to her under a dead of gift. I am unable to find any valid reason for the view that properties in which a Hindu widow has an absolute estate cannot be disposed of by her by a testamentary instrument. These two Madras decisions must be deemed to have been overruled by <CITATION> 30 A. 84 : 5 A.L.J. 67 : 12 C.W.N. 231 (P.C.) : 18 M.L.J. 7 : 10 Bom. L.R. 59 : 7 C.L.J. 131 : 3 M.L.T. 144 : 35 I.A. 17 and <CITATION> 37 Ind. Cas. 122 : 38 A. 446 : 18 Bom. L.R. 900 : 20 M.L.T. 481 : 21 C.W.N. 102 : 4 L.W. 597 : (1916) 2 M.W.N. 567 : 26 C.L.J. 182 : 43 I.A. 183 (P.C.). A portion of the property in suit is governed by the decision of this Court (vide Exhibit A). To that extent the defendants' claim is barred by res judicata. The decree of the Subordinate Judge must be reversed and the suit should be dismissed with costs, except in respect of the property which was the subject-matter of the suit under Exhibit A. The memorandum of objections is also dismissed with costs.


JUDGMENT <NAME>, J.

1. The appellant sued to recover money due under a mortgage deed for Rs. 3,000 executed in his favour by defendants 1 to 3 and their father on 13th March, 1917. The seventh defendant was the principal contesting defendant. His defence was in the main founded upon certain events that happened in 1918 and 1920.

2. In August, 1918, a third party who had a money claim against the mortgagors attached some of the mortgaged items, before judgment, pending his money suit against them. On 2nd October, 1918, the mortgagors purported to sell the mortgaged items to the plaintiff under the original of Ex. I partly for the mortgage amount and partly for a further consideration of Rs. 441. When the money decree-holder attempted to bring the properties to sale on the basis of the attachment already made, the plaintiff filed a claim petition (Ex. G) on 29th September, 1920. In this petition she claimed one of two reliefs: she set up her sale and asked that the property should be released from attachment, in the alternative, she asked that even if the sale should be held to be invalid as against the attaching decree-holder, the execution sale should be directed to be held subject to the mortgage in her favour. It appears from the endorsement on Ex. G that the decree-holder himself had referred in his sale proclamation to the mortgage in the plaintiff's favour but suggested that it was supported by consideration only to the extent of Rs. 2,500. When the matter carne on for final disposal the executing Court held that the sale having been effected subsequent to the attachment was invalid as against the decree-holder and it directed the sale to be held subject to the mortgage "referred to by the decree-holder." The property was accordingly sold subject to the mortgage and purchased by the decree-holder himself, who in turn conveyed it to the seventh defendant as the result of a decree for specific performance of an agreement entered into between them. The result of the execution sale was that the plaintiff was deprived of possession of items 1, 2 and 4 to 6 of the plaint schedule and retained possession only of items 3 and 7. The plaintiff accordingly filed this suit for the recovery of the amount due under the mortgage, contending that as the sale had failed, he was entitled to fall back upon the mortgage. The seventh defendant contended that the sale must be deemed to have extinguished the mortgage and that the subsequent events could not revive the plaintiff's claim under the mortgage. The learned Subordinate Judge gave effect to this contention and dismissed the suit. The seventh defendant raised other contentions which formed the subject-matter of the other issues raised in the case. One of them was a plea of partial discharge which forms the subject-matter of the fourth issue. Another was a claim that the plaintiff should give credit as against the mortgage amount and the interest due thereon for the profits realised by him during the time that he had been in possession of the properties sold to him. Finally there was a question of the amount which the plaintiff was entitled to recover in view of the fact that he still retains as vendee two items of the hypotheca.

3. So far as the lower <ORG> dismissed the plaintiff's suit, we are unable to concur in its decision. The decision is mainly based on the judgment of this <ORG> in <CITATION> (1933) 65 M.L.J. 819 : I.L.R. 57 Mad. 195. We shall presently show that that case is distinguishable on its facts; but we think it right to add that we are, with all respect, unable to concur in some of the observations in that case, in the present case, the order Ex. G-1 was clearly an order under Order 21, Rule 62, Civil Procedure Code. As we have already stated, the plaintiff put forward alternative claims in his claim petition - one on foot of the sale in his favour and the other on foot of the mortgage. The <ORG> rejected the claim based on the sale but upheld the claim based on the mortgage. Neither party took steps to impeach that order and it became conclusive between the claimant and the decree-holder in the money suit. The <ORG> accordingly purported to sell only the equity of redemption and the decree-holder (who became the auction purchaser) having purchased only the equity of redemption could convey only that interest to the present seventh defendant. In respect of these facts the position in <CITATION> (1933) 65 M.L.J. 819 : I.L.R. 57 Mad. 195 was very different. The claim petition there was dismissed as preferred too late and as no suit was brought by the claimant under Order 21, Rule 63, Civil Procedure Code, that order became final. It was in those circumstances impossible to imply any adjudication that the claim founded on the mortgage was well founded. The learned Judges had therefore to hold that the reference to the mortgage in the sale proceedings amounted to nothing more than a notice to intending purchasers under Rule 66 of Order 21, Civil Procedure Code. It is on that footing that they held that the <ORG> auction purchaser was not precluded from contesting the existence or validity of the mortgage. On the facts of the present case as we have set out above neither the decree-holder in the money suit nor the <ORG> auction purchaser nor the seventh defendant as the purchaser from him could go behind the order in the claim proceedings which upheld the mortgage claim. We may also point out that in <CITATION> (1933) 65 M.L.J. 819 : I.L.R. 57 Mad. 195 , the learned Judges laid stress on the fact that even in the claim petition the claim based on the mortgage was never put forward and that the claimant insisted that the mortgage had been discharged by the sale deed in his favour. The conclusion reached in that case that the mortgage had been extinguished has largely been based upon this ground. That ground also will not avail the seventh defendant in this case because as already stated the claim was put forward both on the mortgage and on the sale. The portion of the judgment with which we are unable to agree is the interpretation which the learned Judges have placed on Section 101 of the Transfer of Property Act. With all respect we think that in a case like the present it must be presumed that it is to the advantage of the mortgagee to keep his interest as mortgagee and his interest as purchaser of the equity of redemption distinct because of the intervening attachment against which his sale cannot be effective.

4. The question in this class of cases is not whether the sale is not effective as between the vendor and the vendee, but whether there being the possibility of the sale proving ineffective as against a third party, it is not to the interest of the mortgagee not to treat his mortgage, as extinguished by the sale. In the application of this principle of presumed intention, it makes no difference whether the third party is allowed to claim in preference to the sale, on the ground of his being a subsequent encumbrancer or on the ground of his being an attaching decree-holder. If the decree in pursuance of which the attachment was made is paid off, the sale will of course stand as between the vendor and the vendee and the mortgage will be satisfied. But if in pursuance of the attachment the properties are brought to sale in execution, the vendee is deprived of his rights under the sale to the extent to which the properties are sold in execution and we think that there is no meaning in saying that even to this extent, the sale is operative as between the vendor and the vendee. This seems to us to be the principle of the decision in <CITATION> (1882) I.L.R. 8 Cal. 530, which we are prepared to follow. The learned Subordinate Judge distinguished that case as a decision under the Civil Procedure Code of 1882 according to which he thought that a transfer pending an attachment was wholly void whereas under the present Code, it is voidable only as against the rights enforceable under the attachment. This distinction drawn by the learned Judge is obviously erroneous. The law has always been that transfer pending an attachment is void only as against the rights enforceable under the attachment.

5. The learned Counsel for the respondent drew our attention to a decision of <ORG> in <CITATION> (1922) 20 A.L.J. 151 : 66 I.C. 203. With all respect, we are unable to follow that decision. The sale was there made to the father of the mortgagee and the father was a member of a joint Hindu family with the mortgagee. The sale deed directed that a portion of the consideration should be applied by the vendee to discharge the mortgage bond in favour of his son. The learned Judges observed that the father and the son must be treated as virtually one and the same person and that the direction to the father to pay off the mortgage must be treated as an extinction of the mortgage debt. We do not find any reference in the judgment to the principle of Section 101 of the Transfer of Property Act. In the leading case in <NAME> v. <NAME> (1884) L.R. 11 I.A. 126 : I.L.R. 10 Cal. 1035 (P.C.), their Lordships of <ORG> referred to the practice prevailing in England of circumventing the doctrine of <NAME> v. <NAME> (1817) 3 Mer. 210 : 36 E.R. 81, by taking a conveyance of the equity of redemption in favour of trustees for the benefit of the prior mortgagee and added that in India it was unnecessary to resort to this conveyancing device and as a rule of equity the principle of presumed intention to keep the mortgage alive might be applied. It seems to us that what was done in the Allahabad case was practically the conveyancing device referred to by their Lordships of <ORG> in <NAME> v. <NAME> (1884) L.R. 11 I.A. 126 : 126 I.L.R. 10 Cal. 1035 (P.C.) and if even under the decision in <NAME> v. <NAME> (1817) 3 Mer. 210 : 36 E.R. 81, such a device would have prevented the extinction of the mortgage, we venture to think with all respect that it would be a fortiori so in this country.

6. Though Section 101 of the Transfer of Property Act has generally been invoked in cases where the rights of mesne encumbrancers come up for decision, the principle of the section is not limited to those cases. It only lays down a general rule of presumed intention and where the later conveyance will be inoperative as against any intermediate right whether founded on an encumbrance or on an attachment, the principle must be held equally to apply. In <NAME> v. <NAME> (1901) 12 M.L.J. 73 : L.R. 29 I.A. 9 : I.L.R. 29 Cal. 154 (P.C.), this question had to be considered in respect of the effect of an intermediate attachment, as in the present case, and their Lordships observed (at p. 164):

It is idle to contend that there was any intention to extinguish the old mortgages for the benefit of the execution creditor or any purchaser at the sheriff's sale.

7. We must accordingly hold that the plaintiffs' claim under the suit mortgage has not been extinguished by the subsequent sale and that it is enforceable in the events that have happened.

8. Mr. <NAME> next contended that according to the proper construction of the order (Ex. G-1) the mortgage must be held to be valid only to the extent of Rs. 2,500. We do not think that is the effect of the order. The only point then decided was that as between the sale and the mortgage the <ORG> upheld the mortgage and negatived the claim under the sale. This is made clear by the use of the words 'mortgage referred to by the decree-holder' instead of words like 'mortgage admitted by the decree-holder'. The <ORG> has now found that the mortgage was fully supported by consideration and nothing has been shown against the correctness of that finding.

9. It remains to deal with two other questions raised by Mr. <NAME> on behalf of the seventh defendant. He first contended that the lower <ORG>'s finding on the fourth issue was not in accordance with the evidence and that the issue should have been found in his client's favour. This relates to a plea of discharge, it being the seventh defendant's case that in or about April, 1925, he paid to the plaintiff a sum of Rs. 1,950 in full quit of so much of the mortgage debt as would be recoverable from the properties agreed to be purchased by the seventh defendant. Though the seventh defendant is not able to fix the exact date of payment, he states that the agreement between himself and the <ORG> auction purchaser was in February, 1925, and that the payment to the plaintiff was about two months later. Though the learned Sub-Judge has not discussed in detail the evidence bearing upon this question, he has clearly indicated that he was not impressed by the evidence adduced in support of the plea of discharge. We have been taken by Mr. <NAME> through the relevant portions of the oral evidence, and we see no reason to come to a different conclusion. The seventh defendant has not thought fit to take any voucher for the payment of such a large sum of money nor has he even cared to insist upon the payment being endorsed on the mortgage bond. Even according to his version, the plaintiff promised to make the endorsement in due course and yet, after the plaintiff had failed to do so for more than a year, the seventh defendant never even thought fit to send any notice to the plaintiff complaining of her conduct. Further, the seventh defendant's evidence as to the circumstances under which the alleged payment was made and the manner in which he found the money to make the payment, is not at all convincing. It is very doubtful if at or about this time he had the money to pay at all. <NAME> whose help has been availed of to support this story apparently because he had to receive some money from the plaintiff, is the son-in-law of the seventh defendant's brother and assuming it to be true, that he had to receive a sum of Rs. 200 from the plaintiff and did receive it about this time, we are not, by any means satisfied that there is any connection between that transaction and the alleged payment by the seventh defendant to the plaintiff. The remaining witnesses who support this story of payment do not really seem to have had anything to do with the transactions between the plaintiff and the seventh defendant and, as one of them admits, it is probably the seventh defendant's local influence that has enabled him to get these witnesses to support his story. We must accordingly find against the seventh defendant on his plea of alleged discharge.

10. The second issue raised the question of the accountability of the plaintiff for the profits received by her from the lands which had been purchased by the seventh defendant. The law on this point is not, by any means, settled. We may observe in passing that the observations in <CITATION> (1917) I.L.R. 41 Mad. 513 are not wholly reconcilable with the view taken in <CITATION> (1937) 46 L.W. 332. As we do not propose to decide the question as an abstract question of law in this case, we do not think it necessary to refer to the cases in detail. We only wish to guard ourselves against being understood as concurring in all the observations in <CITATION> (1937) 46 L.W. 332. For instance, the statement that a purchase by a prior mortgagee in execution of a decree obtained in his suit without impleading the puisne mortgagee therein is a nullity and will not be effective even to pass the title of the mortgagor as against the puisne mortgagee seems to us too broadly stated. In the circumstances of the present case and in view of the fact that a petition has been filed before us on behalf of the seventh defendant for relief under the Agriculturists' Relief Act (IV of 1938), we think it best to hold that no accounting is necessary and it would be more equitable to say that after 23rd October, 1920, the plaintiff is not entitled to claim interest as against the seventh defendant to the extent of the proportion of the mortgage debt recoverable from the properties in the seventh defendant's possession. In this view, there is no occasion in our opinion, to deal with the petition under Madras Act IV of 1938 either. As the plaintiff has become the owner of the equity of redemption in some of the items of the mortgage property, the mortgage must be held to have been split up and the plaintiff will be entitled to a decree only for a proportionate share of the mortgage debt as against the properties purchased by the seventh defendant.

11. The parties are not able to agree before us as to the proportion. The lower <ORG> will ascertain the amount due for principal and interest as per terms of the mortgage bond, on 23rd October, 1920, the date on which the seventh defendant's vendor became the <ORG> auction purchaser; out of that amount, there will be a decree for sale of the properties purchased in that <ORG> sale by the seventh defendant's vendor for an amount bearing the same proportion to the mortgage debt due on that date as the said properties bear to the entirety of the mortgaged properties valued as on the date of the mortgage.

12. The appeal is allowed and the case will be sent back to the lower Court to give effect to the above directions and pass a preliminary decree for sale for the amount ascertained as above. The plaintiff and the seventh defendant will pay and receive proportionate costs both here and in the Court below.


PETITIONER: <ORG>. Vs. RESPONDENT: THE STATE OF UTTAR PRADESH AND ANOTHER DATE OF JUDGMENT: 17/04/1961 BENCH: <NAME>, T.L. VENKATARAMA BENCH: <NAME>, T.L. VENKATARAMA DAS, S.K. KAPUR, J.L. HIDAYATULLAH, M. SHAH, J.C. CITATION: 1961 AIR 1534 1962 SCR (2) 1 CITATOR INFO : R 1962 SC1753 (19) R 1963 SC 966 (19) C 1963 SC1667 (15) R 1965 SC 560 (1,23,18) RF 1972 SC2455 (12,13) R 1973 SC 376 (10) F 1973 SC1034 (13,28) ACT: Sales Tax-Enactment enabling Government to fix rate of tax by notification-Notification declared invalid by court- Enactment validating notification-Retrospective operation- Validity of enactment-U. P. Sales Tax (Validation) Act, 1958 (U. P. 15 of 1958), s. 3-U.P. Sales Tax Act, 1948 (U.P. 15 of 1948), s. 3A-Constitution of India, Seventh Schedule, List II, Entry 54. HEADNOTE: In exercise of the power conferred by s. 3A(2) of the U.P. Sales Tax Act, 1948, which enabled <ORG>, by notification, to fix the rate of the tax to be levied on the sales of goods specified in the section not exceeding nine pies per rupee, the Government issued at notification dated June 8, 1948 imposing a tax of six pies in the rupee on sales of jute. On March 31, 1956, the Governor of Uttar Pradesh issued an Ordinance, inter alia, amending S. 3A(2) of the Act, the effect of which was to enact one ceiling rate of one anna per rupee on the sale proceeds for all goods leaving it to the <ORG> to fix within the ceiling such rates of tax for such goods as it might determine. On the same date the Government issued a notification by which sales on jute were liable to pay sales tax at the rate of one anna per rupee on the sale proceeds. The Ordinance was replaced by U.P. Sales Tax (Amendment) Act, 1956, under which the amended section shall "be deemed to have effect on and from April 1, 1956". One of the dealers who had been assessed to sales tax in accordance with the notification filed an application under Art. 226 of the Constitution of India, calling in question its validity, and <ORG> held that there was no power in the <ORG> to issue the notification under s. 3A(2) on March 31, 1956, as that section was itself to come into force only on April 1, 1956. With a view to remove the defect pointed out in said decision, the <ORG> Legislature passed the U.P. Sales Tax (Amendment) Act, 957, but this in turn having been declared by <ORG> not being effective in saving the notification, the legislature ultimately enacted the U.P. Sales Tax (Validation) Act, 1958. Section 3 of this Act provided that notwithstanding any judgment of any court the notification dated March 31, 1956, shall be deemed to have been issued in exercise of the powers conferred by s. 3A of the U.P. Sales Tax Act, 1948, as if the said section was in force on the date on 2 which the notification was issued in the form in which it was in force immediately before the commencement of this Act. The petitioner who was carrying on business in the manufacture and sale of jute goods filed an application under Art. 32 of the Constitution and contended that the Validation Act of 1958, had not brought about any change in the situation on the grounds (1) that the words "in the form in which it was in force immediately before the commencement of this Act" in s. 3 must be read as qualifying the word "notification" and not the word "section" and in that view the notification in question was subject to the same infirmity which attached to it when it was published on March 31, 1956, and (2) that the <ORG> Legislature was not competent to enact a law imposing sales tax retrospectively and therefore the Validation Act was ultra vires. Held: (1) that on its proper construction, the words "in the form in which it was in force immediately before the commencement of this Act" in s. 3 of the U.P. Sales Tax (Validation) Act, 1958, qualify the word "section" and not the word "notification", and that on that view the impugned notification was within the saving clause of the Validation Act . <CITATION> , A.I.R. 1959 All. 208, approved. (2) that the power of a legislature to enact a law with re- ference to a topic entrusted to it is unqualified and that in the exercise of such a power it will be competent for the legislature to enact a law which is either prospective or retrospective. Accordingly, the Validation Act is not ultra vires the powers of the legislature under entry 54 in List II of the Seventh Schedule to the Constitution, for the reason that it operates retrospectively. The fact that the seller is not in a position to pass the sales tax on to the consumer does not affect the competence of the legislature to enact a law imposing a sales tax retrospectively as that is a matter of policy. <CITATION> ,  F.C.R. go, explained. <CITATION> ,  S.C.R. 1355, <CITATION> , A.I.R. 1958 S.C. 756 and <CITATION> ,  S.C.R. 1422, followed. <CITATION> ,  S.C.R. 541, relied on. JUDGMENT:

ORIGINAL JURISDICTION: Writ Petition No. 108 of 1961. Writ Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights.

<NAME>, Attorney-General of India, <NAME>, <NAME> and <NAME>, for the petitioner. <NAME>, Solicitor-General of India, <NAME>, Advocate-General, U.P., <NAME> and <NAME>, for the respondents.

1961. April 17. The Judgment of the Court was delivered by <NAME>, J. - The petitioner is a company incorporated under the Indian Companies Act , its registered office being at Kanpur in the State of Uttar Pradesh, and it is carrying on business in the manufacture and sale of jute goods. By a notification dated March 31, 1956, the State of Uttar Pradesh imposed a tax of one anna in the rupee on the sale proceeds of jute. Previously thereto, the tax payable on sale of jute was six pies in the rupee. This notification having been struck down by <ORG> as unauthorised and inoperative, the State legislature enacted the U. P. Sales Tax (Validation) Act,. 1958 (U. P. Act XV of 1958), hereinafter referred to as the Validation Act , validating the said notification as from March 31, 1956. In this petition filed under Art. 32 of the Constitution, the petitioner contends that notwithstanding the Validation Act , the notification in question continues to be void and inoperative, because it has not in fact been validated, and because the Act itself is ultra vires. The impugned notification was, it may be mentioned, superseded by a fresh notification on August 1, 1956, and the present dispute relates only to the tax on sales effected between April 1, 1956, and July 31, 1956. If the Validation Act is intro vires, the tax payable by the petitioner would, in accordance with the impugned notification, be Rs. 1,26,529-3-0, whereas if the said Act is ultra vires, the tax would be reduced by half Though the point for decision is a simple one lying within a narrow compass, to reach it one has to wade through a perfect morass of statutes, notifications and judicial pronouncements. We begin with what has been termed the "Principal Act" by which sales tax was imposed in the Province. That is the U. P. Sales Tax Act No. XV of 1948, and that came into force on April 1, 1948. There were subsequent amendments to it in 1948, 1950 and 1952, but they are not material for the present discussion. It is sufficient to refer to s. 3-A as it stood on March 31, 1956, when the notification in question was issued. This section ran as follows:

"3-A. Single point taxation-(1) Notwithstanding anything contained in Section 3 , <ORG> may by notification in the official Gazette declare that the turnover in respect of any goods or class of goods shall not be liable to tax except at such single point in the series of sales by successive dealers as <ORG> may specify.

(2) If <ORG> makes a declaration under sub- section (1) of this section, it may further declare that the turnover of the dealer, who is liable to pay tax on the sale of such goods, shall in respect of such sales, be taxed at such rate as may be specified not exceeding one anna per rupee if the sale relates to goods specified below:-

(i) Motor vehicles including motor cars, motor taxi-cabs, motor cycles and cycle combinations, motor scooters, motorettes, motor omnibuses, motor vans and motor lorries. Chassis of motor vehicles. Articles including rubber and other tires and tubes and batteries adapted for use as motor part and accessories of motor vehicles, not being such arti- cles as are ordinarily also used for other purposes than as parts of accessories of motor vehicles.

(ii) Refrigerators and air conditioning plants.

(iii) (a) Wireless reception instruments, apparatus and component parts thereof, including all electrical valves, accumulators, amplifiers and loudspeakers which are not specially designed for purposes other than wireless reception.

(b) Radiogramophones.

(iv) Cinematographic, photographic and other cameras. projectors and enlargers and films, plates, papers and cloth required for use therewith.

(v) Scents and perfumes, and nine pies per rupee if it relates to any other goods." It was under this provision that <ORG> had issued a notification on June 8, 1948, imposing a tax of six pies in the rupee on the sale of jute. In exercise of the power conferred by Art. 213(1) of the Constitution, the Governor of Uttar Pradesh issued on March 31, 1956, Ordinance No. IX of 1956, and that was published in <ORG> on the same date. Under this Ordinance the whole of subsection (2) of s. 3-A as it then stood was deleted and the following substituted:- "(2) If the <ORG> Government makes a declaration under subsection (1), it may further declare that the turnover in respect of such goods shall be liable to tax at such rate not exceeding one anna per rupee as may be specified." The effect of this provision was to exact one ceiling rate of one anna per rupee on the sale proceeds for all goods leaving it to the <ORG> to fix within the ceiling such rates of tax for such goods as it might determine. On the same date, the Government published the following notification No. ST. 905/X on which the entire controversy has arisen.

"In exercise of the power conferred by section 3-A of the U. P. Sales Tax Act, 1948, as amended from time to time, and in supersession of all previous notifications on the subject, the Governor of Uttar Pradesh is hereby pleased to declare that the turnover in respect of the goods specified in the List below shall not with effect from April 1, 1956, be liable to tax except-

(a) in the case of goods imported from outside, Uttar Pradesh at the point of sale by importer; and

(b) in the case of goods manufactured in Uttar Pradesh, at the point of sale by the manufacturer;

and the Governor is further pleased to declare that such turnover shall with effect from the said date be taxed at the rate of one anna per rupee.

List

18. Jute goods"

In due course, the U. P. Sales Tax Ordinance No. IX of 1956 was replaced by the U. P. Sales Tax (Amendment) Act XIX of 1956, and that came into force on May 28, 1956. It merely reproduces the terms of the Ordinance No. IX of 1956 with this modification which is consequential, that the amended section including s. 3-A shall "be deemed to have effect on and from the first day of April, 1956". If notification No. ST. 905/X dated March 31,1956, is valid there is no question that the petitioner would be liable to pay sales tax for the period in question at the rate of one anna per rupee on the sale proceeds.

One of the dealers who had been assessed to sales tax in accordance with this notification filed an application under Art. 226 in <ORG> calling in question its validity and this proved successful, the court holding that there was no power in the State to issue the impugned notification under s. 3-A on March 31, 1956, as that section was itself to come into force only on April 1, 1956, vide <CITATION> (1). The correctness of this decision is not under challenge in these proceedings. We do not therefore desire to express any opinion on it. With a view to remove the defect pointed out in <CITATION> (1), the State legislature passed the U. P. Sales Tax (Amendment) Act XXIV of 1957. That Act received the assent of the President on August 31, 1957, and was published on September 3, 1957. It runs, so far as is material, as follows:-

"For sub-section (2) of Section I of the U. P. Sales Tax (Amendment) Act, 1956, the following shall be and be deemed to have always been substituted:-

'This Section, so much of Section 3 , as relates to the substitution of the second proviso to sub-section (1) of Section 3 of the U. P. Sales Tax Act, 1948 (hereinafter called the principal Act) and section 4 shall have effect on and from the 31st day of March, 1956'."

(1) A.I.R. 1957 All. 475.

The result of this amendment was that s. 3-A was given retrospectively operation from March 31, 1956, instead of April 1, 1956, as originally enacted. The intention behind the legislation is obvious. If the impugned notification was, as held in <CITATION> (1), invalid, because it was issued before s. 3-A was in operation, that objection could no longer hold good as that section would now operate from a point of time anterior to the issue of the notification. If the <ORG> thought that this legislation would give a quietus to the controversy, they were sadly mistaken. After the Amendment Act of 1957 came into force, another dealer who was sought to be assessed pursuant to the notification dated March 31, 1956, filed a petition under Art. 226 before <ORG> and raised the contention that as the Amendment Act merely amended s. 3-A and did not in terms validate the impugned notification, no proceedings could validly be taken under that notification and that therefore the proposed levy was illegal. This contention was again upheld by a Full Bench in <CITATION> (2), which held that there was a difference between the existence of a power and its actual exercise, that while by reason of Act XXIV of 1957, a power had been conferred on <ORG> to issue a notification on March 31, 1956, the notification actually issued on that date could not be referred to that power, that it was in exercise of the power supposed to have been conferred by s. 3-A as it stood on March 31, 1956, and that in consequence the impugned notification was not saved by the new Act.

This decision set the legislature again on the move and that brings us to what may be said to be the final round in the game. The State legislature enacted a fresh legislation for the purpose of effectuating the impugned notification. That was U. P. Sales Tax Validation Act XV of 1958. It received the assent of the President on May 3, 1958, and was published in <ORG> on May 6, 1958. The preamble to the Act states that "it is expedient to provide for (1) A.I.R. 1957 All. 475.

(2) A.I.R. 1958 All, 478.

the validation of certain notifications issued under the U. P. Sales Tax Act, 1948, (U. P. Act XV of 1948) and any action taken in pursuance thereof". Section 3 of the Act which deals with the present matter runs as follows:- "3. Validation of certain notifications and action taken in pursuance thereof.-

(1) Notwithstanding any judgment, decree or order of any court, the notifications specified in Part A, Part B and Part C of the Schedule shall be deemed to have been issued in exercise of the powers conferred respectively by section 3 , section 3 -A and section 4 of the U. P. Sales Tax Act, 1948, as if the said sections were in force on the date on which the notifications were issued in the form in which they were in force immediately before the commencement of this Act and all the said notifications shall be valid and shall be deemed always to have been valid and shall continue in force until amended, varied or rescinded by any notification issued under any of the said section.

(2) Anything done or any action taken (including any order made, proceeding taken, direction issued, jurisdiction exercised, assessment made or tax levied or collected) purporting to have been done or taken in pursuance of any of the notifications specified in the Schedule shall be deemed to be and to have been validly and lawfully done or taken."

In Part B are set out the notifications issued in exercise of the powers conferred by s. 3A of the U.P. Sales Tax Act, 1948, and one of them is the impugned notification No. ST. 905/X. If this legislation is valid, the impugned notification stands validated and the petitioner would be liable to pay tax in accordance therewith. But the petitioner contends that the Validation Act has not brought about any change in the situation and that the notification dated March 31, 1956, continues to be null and void now as before the Act. Two grounds have been urged in support of this contention that on its true construction the Act does not in fact validate the impugned notification and that it is not a law which the State legislature was competent to enact and it is therefore a nullity. We must now examine these contentions. As regards the first contention, the argument in support of it is that the words, "in the form in which they were in force immediately before the commencement of this Act" in s. 3 must, in their setting, be read as qualifying the word, "notifications" and not the word "sections", and in that view the notification in question is subject to the same infirmity which attached to it when it was published on March 31., 1956. We are wholly unable to appreciate this contention. The object of the legislation as stated in the long title and in the preamble to the Act was to validate the impugned notification in relation to the amended section. Schedule B to the Act expressly mentions that notification. And if we are now to accede to the contention of the petitioner, we must hold that though the legislature set about avowedly to validate the notification dated March 31, 1956, it failed to achieve that object. A construction which will lead to such a result must, if that is possible, be avoided. The words, "in the form in which they were in force immediately before the commencement of this Act", no doubt occur after the word, "notifications". But then the words, "in the form" can have no reference to the impugned notification, because it had never changed form, whereas they were quite appropriate to s. 3A , because it had been amended. It should further be noted that the Validation Act was published both in Hindi and in English, and both of them were authorised versions. The words in the Hindi version make it clear beyond all doubt that the words, "in the form in which they were in force immediately before the commencement of this Act" qualify the word "sections" and not the word "notifications". That is the view expressed by a Bench of <ORG> in <CITATION> (1), on a comparison of the two versions, and we are in agreement with it. There would have been no scope for this argument if transposing the 'words, the section read, "as if the said (1) A.I.R. 1959 All. 208.

sections were, in the form in which they were in force immediately before the commencement of this Act, in force on the date on which the notifications were issued." But even in its present setting that is the meaning of the section, and the impugned notification must be-held to be within the saving of the Validation Act .

We now proceed to examine the second contention of the petitioner that the validation Act is itself invalid as being ultra vires the powers of the State legislature under the Constitution. The argument of the learned Attorney- General in support of this contention may thus be stated. The State legislature derives its authority to enact a law with respect to tax on the sale of goods under entry 54 in List II of the Seventh Schedule to the Constitution. It has been held that a sale for the purpose of the entry must be what in law is recognised as sale. Likewise, a law imposing tax on sales of goods must, to be intra vires, possess certain well-defined characteristics associated with such laws. <CITATION> (1) it has been held that sales tax is a tax on the occasion of sale. In the present case, the sales sought to be taxed took place between April 1, 1956 and July 31, 1956, whereas the Validation Act , by force of which the tax becomes payable, came into force in 1958. It is therefore not a tax on the occasion of sale. Moreover a sales tax is an indirect tax which can be passed on by the seller to the purchaser. The Sales Tax Act s passed by the legislatures of several States provide for the seller collecting the tax from the purchaser as does the U. P. Sales Tax Act XV of 1948, vide s. 8A . That could be done only if the tax was levied before the sale took place. Therefore by the very nature of it there could be no retrospective legislation in respect of sales tax. And finally it is argued that the imposition of a tax retrospectively would be inconsistent with the provisions of the U.P. Sales Tax Act, 1948, and could not have been contemplated by that Act. Such for example are the provisions of S. 8A which provide for the registration of dealers for (1)  F.C.R. 90.

the assessment years, the deposit into <ORG> of sales tax collected from the purchasers in certain contingencies, S. 14 of the Act which imposes penalty for non-registration under s. 8A , and rule 63 which provides for the deposit of the sales tax collected under s. 8A(4) within thirty days of the expiry of the month in which the amount is charged. It is accordingly contended that whether we have regard to the true features of the sales tax legislation or the provisions of the U.P. Sales Tax Act, the Validation Act could not be held to be one with respect to sales tax, that it is therefore not within entry 54, and as there is no other entry in List II or List III of the Seventh Schedule to the Constitution, under which the legislation could be justified, it must be held to be ultra vires. So ran the argument.

The point for decision., stating it succinctly, is whether the Validation Act is within the ambit of entry 54 in List II of the Seventh Schedule to the Constitution. That entry confers on the States authority to enact a law with respect to tax on sales of goods. Now what is the extent of that authority? There must be in fact a sale as recognised by law. It is only then that a tax could be imposed. But if the transaction sought to be taxed is not a sale, a law which seeks to tax it, treating it as a, sale, would be ultra vires. Thus in <CITATION> . <NAME> (1) a tax on agreement to sell was held to be not authorised by the entry, and in <CITATION> . (2), a tax on the supply of materials in a contract for the construction of works simpliciter, on the footing of a sale was held to be outside the entry, and the legislation which imposed such a tax was struck down as ultra vires. But where the transaction is one of sale of goods as known to law, the power of the State to impose a tax thereon is plenary and unrestricted subject only to any limitation which the Constitution might impose, and in the exercise of that power, it will be competent to the legislature to impose a tax (1)  1 S.C.R. 243. (2)  S.C.R. 379.

on sales,which had taken, place prior to the enactment of the legislation.

But it is urged on the strength of certain observations in <CITATION> (1) that a sales tax is a tax on the occasion of sale, and that therefore it could not be imposed with retrospective operation. This contention is, in our judgment, wholly without substance. Now, the point for decision in that case was whether a tax imposed by a Provincial legislature on the sale of oil by a person who manufactured it was bad on the ground that it was in essence an excise duty. While a sales tax could be imposed by a Provincial legislature, an excise duty could be imposed only by the Federal legislature. In holding that the tax in question was a sales tax and not an excise duty, the court observed as follows:-

"The duties of excise which the Constitution Act assigns exclusively to <ORG> are, according to the Central Provinces Case, duties levied upon the manufacturer or producer in respect of the manufacture or production of the commodity taxed. The tax on the sale of goods, which the Act assigns exclusively to <ORG>, is a tax levied on the occasion of the sale of the goods. Plainly a tax levied on the first sale must in the nature of things be a tax on the sale by the manu- facturer or producer; but it is levied upon him qua seller and not qua manufacturer or producer." (P. 101).

In the context, the words, "on the occasion of the sale" have reference to the character of the transaction and not to the point of time at which the duty becomes leviable, and they have no bearing on the question as to when such a tax could be imposed.

And then it is argued that a sales tax being an indirect tax, the seller who pays that tax has the right to pass it on to the consumer, that a law which imposes a sales tax long after the sales had taken place deprives him of that right, that retrospective operation is, in consequence, an incident inconsistent with the true character of a sales tax law, and that the Validation Act is therefore not a law in respect of tax on the (1)  F.C.R. 90.

sale of goods, as recognised, and it is ultra vires entry

54. We see no force in this contention. It is no doubt true that a sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the legislature. This question is concluded by the decision of this Court in <CITATION> (1). The following observations of <NAME>, C. J., bearing on this question might be quoted:-

" Under the 1947 Act the primary liability to pay the sales tax, so far as the State is concerned, is on the seller. Indeed before the amendment of the 1947 Act by the amending Act the sellers had no authority to collect the sales tax as such from the purchaser. The seller could undoubtedly have put up the price so as to include the sales tax, which he would have to pay but he could not realise any sales tax as such from the purchaser. That circum- stance could not prevent the sales tax imposed on the seller to be any the less sales tax on the sale of goods. The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to collect the sales tax as a tax from the purchaser does not do away with the primary liability of the seller to pay the sales tax. This is further made clear by the fact that the registered dealer need not, if he so pleases or chooses, collect the tax from the purchaser and some- times by reason of competition with other registered dealers he may find it profitable to sell his goods (1) [1958] S.C.R: 1355.

and to retain his old customers even at the sacrifice of the sales tax. This also makes it clear that the sales tax need not be passed on to the purchasers and this fact does not alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller. The buyer is under no liability to pay sales tax in addition to the agreed sale price unless the contract specifically provides otherwise. See <NAME> v. <ORG> If that be the true view of sales tax then <ORG> acting within its own legislative field had the powers of a sovereign legislature and could make its law prospectively as well as retrospectively." (pp. 1378-1379).

The decision of this Court in <CITATION> (1) is also to the same effect.

The power of a legislature to enact a law with reference to a topic entrusted to it, is, as already stated, unqualified subject only to any limitation imposed by the Constitution. In the exercise of such a power, it will be competent for the legislature to enact a law, which is either prospective or retrospective. <CITATION> (2) it was held by this <ORG> that the power to impose tax on income under entry 82 of List I in Schedule VII to the Constitution, comprehended the power to impose income-tax with retrospective operation even for a period prior to the Constitution. The position will be the same as regards laws imposing tax on sale of goods. <CITATION> (3), this <ORG> had occasion to consider the validity of a law enacted by <ORG> giving retrospective operation to laws passed by the State legislatures imposing a tax on certain sales in the course of inter-State trade. One of the contentions raised against the validity of this legislation was that, having regard to the terms of Art. 286(2 ), the retrospective legislation was not within the competence of <ORG>. In rejecting this contention, the <ORG> observed: (1) A.I. R. 1958 S.C. 756, 759-60. (2)  S.C.R. 541.

(3) [1958] S.C.R. 1422.

" Article 286(2) merely provides that no law of a State shall impose tax on inter-State sales 'except in so far as <ORG> may by law otherwise provide'. It places no restrictions on the nature of the law to be passed by <ORG>. On the other hand, the words 'in so far as' clearly leave it to <ORG> to decide on the form and nature of the law to be enacted by it. What is material to observe is that the power conferred on <ORG> under Art. 286(2) is a legislative power, and such a power conferred on <ORG> carries with it authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power." (p. 1460). And it was held that the law was within the competence of the legislature. We must therefore hold that the Validation Act is not ultra vires the powers of the legislature under entry 54, for the reason that it operates retrospectively. It was finally urged on the basis of ss. 8-A , 14 and rule 23 of the U. P. Sales Tax Act that they contemplated only a prospective legislation and that those sections would be impossible of compliance under the present legislation. This is a consideration which is wholly foreign to the present question. The point which we have got to decide is whether the Validation Act is ultra vires. That has to be determined solely on the construction of entry 54 in List II in the Seventh Schedule, and any other provisions of the Constitution bearing on the question. Even assuming that the provisions of the U. P. Sales Tax Act XV of 1948 contemplate a levy of tax in future, that does not affect the power of the legislature under entry 54 to enact a law with retrospective operation. It can only result in those provisions being unenforceable as regards the levy under the impugned notification. Dealing with a similar contention in <CITATION> (1), this Court observed:

"It is also contended that under the Sales Tax (1) [1958] S.C.R. 1422.

Acts, the levy of tax is annual and the rules contemplate submission of quarterly returns and payment of taxes every quarter on the admitted turnover, and that a conditional legislation under which payment of tax will become enforceable in fururo would be inconsistent with the scheme of the Act and the rules. But this argument, when examined, comes to no more than this that the existing rules do not provide a machinery for the levy and the collection of taxes which might become payable in future, when <ORG> lifts the ban. Assuming that is the true position, that does not affect the factum of the imposition, which is the only point with which we are now concerned. That the States will have to frame rules for realising the tax which becomes now payable is not a ground for holding that there is, in fact, no imposition of tax." (p. 1454).

None of the grounds urged by the petitioner in support of the contention that the Validation Act is ultra vires can be sustained. In the result we must hold that the Validation Act is intra vires, and the impugned notification dated March 31, 1956, stands validated by it. This petition must therefore be dismissed with costs.

Petition dismissed.


JUDGMENT <NAME>, J.

1. The main complaint of the appellant in this case is that the learned Single Judge did not frame any issues in the case and although contentions of fact were raised in the written statement, the suit was disposed or without recording any evidence.

2. The suit was filed under Section 92 of the Code of Civil Procedure by <NAME> and four others against <NAME> and <NAME> initially. It was prayed that this <ORG> may declare that the plaintiffs were competent to make an immediate donation of Rs.2,50,000/- towards the establishment of <ORG> in Delhi with the aim to evolve it into a full-fledged institute of opthalmology and to repeat and augment such donations as occasion arises and the finance of <ORG> permit. The plaintiffs alleged that they are the members and office bearers of <ORG>, Sis Ganj. Chandni Chowk, Delhi, which is a religious and charitable institution registered under the Societies Registration Act , 1860 and this Society manages and controls all historical Gurdwaras of Delhi and was running numerous religious and chargeable institutions, colleges, dispensaries etc. It was alleged that written consent of the Collector of Delhi to institute this suit was granted on September 22, 1970 to the plaintiffs who have filed the suit not only for themselves but also on behalf of <ORG> as represented by its Secretary and President. The activities of <ORG> are enumerated in the plaint where it is also stated that the idea of establishing a <ORG> in Delhi was mooted with the aim to evolve it into a full-fledged institute of ophthalmology provided the Government was prepared to build the hospital and to run it; that the Lieutenant Governor of Delhi assured full Government support; that <ORG> should make substantial contribution keeping in view the financial position and should to start with contribute Rs.2,50,000/- for the purpose and invite contributions from the Sikh Public; that for this purpose legal opinion was taken as to whether <ORG> could under its bye-laws lawfully make such contributions and upon receipt of the opinion it was decided to seek appropriate directions from a competent Civil <ORG> under Section 92 of the Code of Civil Procedure. The plaint recited the opening of free dispensaries. It further stated that during the financial year 1970 the income of <ORG> was over Rs.45,50,000/- and that with these funds at its disposal it had every right to donate funds to an institute of ophthalmology without offending its bye-laws particularly when this donation was to be made in the scared name of the founder of Sikhism and in commemoration of is 50t birthday. It was averred in <ORG> was unanimously in favor of such a donation and that the initial donation of Rs.2,50,000/- was to be repeated as and when its resources allowed. It was for these reasons that the suit was filed for the approval of the <ORG> after obtaining the necessary sanction under Section 92 of the Code of Civil Procedure.

3. The plaint bore a fixed courtfee of Rs.19.50 under Art. 17 (iv) of the Second Schedule to the <ORG>-fees Act and the value of the suit for purposes of jurisdiction was fixed at Rs.2,50,000/- which was the amount in respect of which sanction of the <ORG> was prayed for.

4. Along with the suit, an application was filed under Order 1, Rule 8, of the Code of Civil Procedure in pursuance of which notices were issued and the four appellants came to defend the suit.

5. In the written statement filed by the appellants it was denied that this Court has jurisdiction to entertain the suit. It was further denied that the suit had been filed with the requisite permission under Section 92 of the Code of Civil Procedure and it was averred that all the facts were not disclosed to the authority concerned whose consent to file the suit had been obtained fraudulently. It was further averred that <ORG> had served connection with <ORG> about 10 years ago and <ORG> had not followed its bye-laws inasmuch as the consent of <ORG> had not been obtained for expenses beyond Rs.2,000/- incurred by <ORG>. For various reasons set out in the written statement the valid constitution of <ORG> was denied. The written statement further contained a bare denial of the factum and validity of the consent of the Collector as alleged in the plaint. Various instances of unauthorised expenses by <ORG> have been cited in the written statements making allegations against the plaintiffs but in connection with the opening of the Eye Hospital it was stated:- "The answering defendants are whole-heartedly with the scheme mentioned and would also contribute their mite in a reverential spirit, but they can't allow the present G.P.C. to take personal advantages, to which they are prone, and against which the said Advocate is not prepared to give any assurances."

It is clear from the above quoted plea that the appellants are not against the scheme nor do they aver that the proposed donation of RS.2,50,000/- was not justified.

6. The respondents filed a replication reiterating the statements made in the plaint and controverting the allegations of unauthorised expenditure and improper constitution of <ORG> pleaded in the written statement.

7. The learned Single Judge who dealt with the suit did not frame any Issues because he seems to have heard arguments on the contentions which were raised on behalf of the appellants. He held that this <ORG> had jurisdiction to entertain the suit in view of its value being Rs.2,50,000/- that no exception could be taken to the functioning of the present <ORG> pending the disposal of R.F.A. No. 110 of 1967 pending in this <ORG> in which an order had been made by one of us (<NAME>) on May 8,1967, upon consent to the effect that both the parties to the appeal had undertaken not to elect fresh committee during the pendency of the appeal; that no details of fraud having been given by the appellants in obtaining the consent of the Collector the plea was not open to them; that the <ORG> was not called upon in this suit to decide the allegations to squandering by the respondents as the only direction that was sought for was for the payment of RS.2,50,000 for the opening of <ORG> which was one of the objects under the bye-laws of <ORG>. The learned Judge was of the view that there was an admission by the appellants with regard to the desirability of making the donation and therefore, a direction for making that donation could be given under Order 12, Rule 6 of the Code of Civil Procedure on that admission. In the result, the learned Judge decreed the suit and declared that the respondents were competent to make the donation of Rs.2,50,000/- towards the establishment of <ORG> in Delhi and to make further donations to the said institution an occasion arose provided the finances of the <ORG> so permitted. The learned Judge directed that such contributions should be made through a cross-cheque drawn in payee's account.

8. We do not find any substances in the complaint of the appellants that Issues were not framed in the suit. The object of framing Issues in a suit is to determine the rival contentions of the parties so that the suit may proceed with respect to those contentions. The appellants have not pointed out to us any contention raised by them in the written statement which has not been dealt with by the learned Single Judge. That being so, the absence of Issues cannot be said to have prejudiced the appellants. Even the complaint of the appellants that they were not allowed to lead evidence seems to be frivolous because the contentions raised in the suit are legal contentions for which hardly any evidence was necessary in view of the pleas raised.

9. The first contention that has been raised by Mr. <NAME>, learned counsel for the appellants, is that this Court has no jurisdiction to entertain this suit. This argument is that a suit as authorised by Section 92 of the Code of Civil Procedure has to be filed in the principal civil Court of original jurisdiction which in Delhi is <ORG>, Delhi, by reason of Section 24 of the Punjab Courts Act which provides that <ORG> shall be deemed to be <ORG> or <ORG> of original jurisdiction in the district. On this question it is relevant to mention that the valuation of the suit was fixed in the plaint at Rs.2,50,000/- and no plea has been raised in the written statement objecting to this valuation. This question has, therefore, to be decided on the basis that the valuation of the suit has been fixed correctly at Rupees 2,50,000/-.

10. If only Section 24 of the Punjab <ORG>s Act were to be taken into consideration then there will be no doubt that the principal Civil <ORG> of original jurisdiction to try this suit would be <ORG>, Delhi. But a change was brought about by the Delhi High <ORG> Act , 1966, as amended, by sub-section (2) of Section 5 which provides that notwithstanding anything contained in any law for the time being in force, <ORG> shall also have in respect of the territory of Delhi ordinary original civil jurisdiction in every suit the value of which exceeds fifty thousand rupees. This sub-section starts with a non-obstante clause and is applicable to "every" suit the value of which exceeds fifty thousand rupees. This being a suit the value of which exceeds fifty thousand rupees would be covered by this sub-section. The argument of Mr. <NAME> is that there could be two principal <ORG> of original jurisdiction within the meaning of Section 92 of the Code of Civil Procedure. It is difficult to accept this contention. After the coming into force of the Delhi High <ORG> Act , 1966, as amended, this <ORG> has become the principal Civil <ORG> of original jurisdiction with respect to every suit the value of which exceeds fifty thousand rupees. In view of the non obstante clause contained in sub-section (2) of Section 5 of the Delhi High <ORG> Act, 1966, <ORG>, Delhi, has ceased to remain the principal Civil <ORG> of original jurisdiction with respect to any suit value of which exceeds fifty thousand rupees. Full effect has to be given to the language employed in sub-section (2) of Section 5 "notwithstanding anything contained in any law for the time being in force" and that can be done only by saving that for purposes of Section 92 of the Code of Civil Procedure, <ORG>, Delhi, will be the principal Civil <ORG> of original jurisdiction in every suit the value of which does not exceed fifty thousand rupees but in other suits the value of which exceeds fifty thousand rupees, this High <ORG> will be the principal Civil <ORG> of original jurisdiction. It cannot be disputed that if original jurisdiction had been completely taken away from <ORG>, Delhi and conferred upon this High <ORG>, then notwithstanding Section 24 of the Punjab <ORG>s Act, this High <ORG> will be the principal Civil <ORG> of original jurisdiction irrespective of the valuation of the suit as in the case of what are called the Presidency High <ORG>s. Reference in this connection may be made to in re: <CITATION> , where it has been held that the Bombay High <ORG> in the City of Bombay is the principal Civil <ORG> of original jurisdiction. The original jurisdiction value of this High <ORG> is in every suit the value of which exceeds fifty thousand rupees and therefore, this High <ORG> is the principal <ORG> of original civil jurisdiction in every such suit. A jurisdiction of <ORG>, Delhi has been conferred upon this High <ORG> and, therefore, with respect to such part, this High <ORG> will be the principal <ORG> of ordinary original civil jurisdiction notwithstanding Section 24 of the Punjab <ORG>s Act. We, therefore, agree with the learned Single Judge that for the purpose of this suit the value of which exceeds fifty thousand rupees, the High <ORG> is the principal Civil <ORG> of original jurisdiction as contemplated by Section 92 of the Code of Civil Procedure.

11. The next contention raised by the appellants is with respect to the factum and validity of the sanction under Section 92 of the Code of Civil Procedure for filling this suit. The bald plea raised by the appellants in their written statement was that they denied "the factum and the validity of the consent of the Collector as alleged". No details are given as to why the factum of the consent is denied. The fact of the matter is that the consent was given by Mr. <NAME> who has described himself as "Addl; District Magistrate (North) exercising powers of Advocate General under Section 92 of the Civil Procedure Code." If the appellants wanted to question the authority of Mr. <NAME> to grant the consent under Section 92 of the Code of Civil Procedure, they should have pleaded facts and made averments to show the basis for this contention. The consent obtained by the respondents had been filed with the plaint. It was for the appellants to give reasons to show that the consent granted was not the consent of the Collector within the meaning of Section 92 and 93 of the Code of Civil Procedure. The pleading as to the factum of the consent of the Collector is completely value and did not give rise to any Issue in the absence of particulars. In fact, the judgment of the learned Single Judge does not record any contention relating to the factum of the consent by the Collector, Mr. <NAME> has attempted to argue that Mr. <NAME> does not describe himself as the Collector but only as the Additional District Magistrate (North) and as such ex facie the consent is not that of the Collector. If particulars of the plea had been given in the written statement, it would have been open to the respondents to show that Mr. <NAME> had been appointed under Section 93 of the Code of Civil Procedure to exercise the powers of the Advocate General. We are not, therefore, prepared to entertain the plea that the consent has not been granted by the Collector.

12. The connected contention is that the consent was not validly obtained. All that has been pleaded in paragraph 2 of the preliminary objections in the written statement amounts to a denial that all the facts were disclosed to the authority concerned with a view that the consent has been fraudulently obtained. The facts which were not disclosed or the facts relating to the alleged fraud have not been disclosed in the written statement. The learned Single Judge was, therefore, right in observing that the details of the allegation fraud stated to have been committed by the respondents on the Collector while obtaining the consent under Section 92 of the Code of Civil Procedure are lacking and not a single instance of the fraud has been cited by the appellants in the written statement O.6 R. 4 of the Civil P.C. requires that in all cases in which the party pleading relies on, inter alia any fraud particulars with dates and items if necessary shall be stated in the pleading. In the absence of such particulars, the plea of fraud is not open to the appellants and the mere allegation that the consent had been fraudulently obtained would not call for the farming of an Issue or the taking of any evidence. We, therefore, hold that in the state of the pleadings in this suit, the appellants cannot be heard to deny the factum or validity of the consent granted by Mr. <NAME> to the respondents.

Mr. <NAME> argued that the respondents had applied for sanction in their capacity as office-bearers of <ORG> but sanction was given only to the respondents personally. We do not find any substance in this connection because in the order granting consent, the respondents are named in their personal capacity and their capacity qua <ORG> has been mentioned as a description. In the plaint the respondents have stated that the suit has been instituted by them and also purports to be on behalf of <ORG> as represented by its Secretary and President as required by Section 6 of the Societies Registration Act, 1860. It is, therefore, clear that the suit has been filed by the respondents in their personal capacity and also as office bearers of <ORG>. Even if the suit on behalf of <ORG> is not competent, no objection could be raised to the competency of the respondents to file the suit as the consent has not been granted to them in their names. This contention is also without force.

13. The last contention is that there was no admission by the appellants in their written statement as contemplated by Order 12, Rule 6 of the Code of Civil Procedure and, therefore, the learned Single Judge was not right in stating that there was such an admission and deciding the suit on its basis. Even though there is strictly no admission to invoke Order 12, Rule 6 of the Code of Civil Procedure, the question is whether the parties were at Issue with regard to the desirability of making the donation of RS.2,50,000/- for the purpose of <ORG>. As has been mentioned in the earlier part of this judgment, the appellants themselves have stated that they are whole heartedly with the scheme mentioned and would also contribute their mite in a reverential spirit. No averments has been made that looking to the finances of <ORG> such a donation cannot be made. In these circumstances even though there is no admission on the part of the appellants, they have not raised any objection to the desirability of making the donation. In fact, they have gone to the extent of saying that they will themselves contribute to the scheme. Their only objection is that they cannot allow the present <ORG> to take personal advantages. What those advantages are has not been specified. Keeping in view that there was no objection to the desirability of making the donation and also the fact that there is pending litigation between the parties, the learned Single Judge has taken care to give a direction that the donations must be made through a cross cheque drawn in the payee's account. This direction will ensure that the donations to be made by the <ORG> will go into proper hands and we have really been unable to find why the appellants who admit the desirability of the donations have filed a written statement to this suit.

14. Questions have been raised in the written statement as to the legality of <ORG> as at present constituted. Allegations have been made that the funds of <ORG> are being squandered by the present Committee. These questions are irrelevant for the purpose of the present suit. In the case of a public trust where directions of the <ORG> are considered necessary any two or more persons having an interest in the trust can file a suit under Section 92 of the Code of Civil Procedure after obtaining the necessary consent. The respondents could in their personal capacity have filed the suit and in this suit the only question which falls for consideration is whether the proposed donation should be made by <ORG> irrespective of who its present office bearers may be. The allegations made in the written statement cannot be tried in this suit and did not call for any issue.

15. This appeal is, therefore, dismissed but there will be no order as to costs.

16. Appeal dismissed.