PETITIONER: <NAME> Vs. RESPONDENT: THE STATE OF UTTAR PRADESH AND ANOTHER DATE OF JUDGMENT: 04/04/1962 BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA GAJENDRAGADKAR, <NAME>, <NAME>, <NAME>, J.R. CITATION: 1962 AIR 1563 1963 SCR (1) 220 CITATOR INFO : RF 1963 SC1667 (12) R 1964 SC 925 (44,70) F 1969 SC1094 (15) R 1970 SC 169 (8,11) R 1972 SC 845 (14) R 1976 SC1742 (7) R 1978 SC 68 (94) F 1980 SC 271 (41,49) R 1990 SC 85 (22) ACT: Land Holding--Notice of Assessment-- Determination of annual value-Constitutional validity of enactment- U. P. Large, Land Holdings Tax Act, 1957 (U. P. 31 of 1957), ss. 7 (2), 5 (1)-Constitution of India, Arts. 14, 19 (1) (b), 31, Sch. VII, List II, Entry 49. HEADNOTE: This petition challenged the constitutional validity of a notice of assessment served under s.7 (2) of the U. P. Large Land Holdings Tax Act, 1957. <ORG> had found against the petitioner. His case was that the relevant provisions of the Act were unconstitutional as <ORG> was incompetent to pass the Act, that the Act violated Arts. 14, 19 and 31 of the constitution and that the rates fixed by <ORG> under s. 5(1) of the Act were invalid as being contrary to that section. The impugned Act has since been repealed by the U. P. Imposition of ceiling of Land Holdings Act, 196 1, with effect from the 30th June, 196 1. Held, that the contentions were without substance and the petition must fail. The cardinal rule of interpreting the words used by the Constitution in conferring legislative power was that they must receive the most liberal construction and if they are words of wide amplitude the construction must accord with it. If a general word was used it must be so construed as to extend to all ancillary or subsidiary matters that can be reasonably included in it. So construed, there could be no doubt that the word land' in Entry 49, List 11, 7th Schedule includes all lands, whether agricultural or non- agricultural. Since the impugned Act imposed tax on land holdings, it was within the competence of <ORG> and its validity was beyond challenge. <CITATION> ,  1. S.C.R. 829, and United Provinces v. Mt. Atiqa Begum,  F. C. R. 110, referred to. The word 'may' in s.5(1) of the Act could not in the 221 context mean shall or must'. While prescribing the maximum limit of the multiple which could not be exceeded, that section rightly left it to the discretion of <ORG> to adjust it suitably to local requirement and the quality of the land involved. The notification issued <ORG> under s. 5(1) must, therefore, be held to have complied with the statutory requirements prescribed therefor. It is now settled law that a taxing statute can be challe- nged on the ground that it infringes a fundamental right guaranteed by the Constitution. <CITATION> ,  S. C. R. 578, <CITATION> .  S. O. R. 1069, <CITATION> ,  2 s C. R. 603, Ch. Pika Ramji v. State of U. P.  S. C. R. 393 and <CITATION> tax Officer,  2 S. C. R. 983, relied on. <CITATION> tax Officer, 1 S. C. R. 127 and <CITATION> ,  1 S. C. R. 769, considered M. Cullock v. Maryland,  4 L. ed. 579, referred to. Therefore, a taxing statute can be challenged under Art. 14 if it purports to impose on the same class of property, similarly situated an incidence of taxation which leads to obvious inequality. The legislature can freely choose its objects of taxation, fix the rate and classify persons and properties for that purpose, and the classification, if rational, cannot be challenged merely because the rates are different for different classes or objects. But if the taxing status contravenes Art. 14 of the Constitution in its operation, the <ORG> are free to interfere. Similarly if it provides no machinery or procedure for the recovery or assessment of the tax, so that the- imposition partakes of the character of a purely administrative affair, the statute can, in a proper case, be challenged under Art. 19 (1) ( f). A taxing statute that affects no fundamental rights meets the requirement of Art. 31 (1).  Article 31 (2) can have no application to such a statute even though the tax may be excessive and may ultimately lead to the loss of the assessee's property. This is evident from the provisions of Art 31 (2A) and 31 (5) (b) (i), Section 5 (1) of the impugned Act did not confer no unbettered power on <ORG> so as to contravene Art. 14 and 19 (1) ( f ) of the Constitution. 222 No taxing statute can be said to be a colourable legislation simply because the tax it levies is excessive. The plea of colourable legislation can succeed only when the relevant circumstance are strong enough to justify the inference that it is so and so it amounts to a fraud. <NAME> v. State of Kerala, held in applicable. JUDGMENT:

ORIGINAL JURISDICTION : Petition No.327. of 1. 960. Under Article 32 of the Constitution of India for enforcement of Fundamental Rights.

<NAME> for the Petitioner.

<NAME>, Advocate-General for the State of Uttar Pradesh, <NAME>, <NAME> and <NAME> for the Respondents.

1962. April 4. The Judgment of the Court was delivered by <NAME>, J.--The petitioner <NAME> was a Taluqadar of Rehwan Estate in District Rai Bareli, under the U.P. Zamindari Abolition and Land Reforms Act (U.P. Act 1 of 1951), the petitioner's Zamindari property vested in <ORG>, and the groves and other agricultural land were left with the petitioner as a Bhumidar under the said Act. In 1957, <ORG> passed the U. P. Large Land Holdings Tax Act (No. XXXI of 1957) (hereinafter called the Act) and under section 7(2) of the Act the petitioner was served with a notice along with a provisional assessment of the annual value of the land in his possession for the year 1365 fasli. Similar notices were served on the petitioner subsequently for the years 1366 and 1367 fasli. In response to the said notices, the petitioner filed his returns and objected to the annual value of the land calculated by the assessing authority. After the petitioner received notices for the years 1365 and 1366 fasli, he filed writ petition in <ORG> challenging the validity of the said notices on the ground that the material provisions of the. Act on which the said notices were based ultra vires and unconstitutional. These writ petitions were numbered 3146 of 1958 and 1354 of 1959 in the said <ORG>. Several other writ petitions bad also been filed by other assesses challenging the validity of the Act, and the whole group of these petitions was heard together by <ORG>. In substance, the pleas, made by the petitioners challenging the validity of the Act were rejected by the <ORG> and it was held that the Act was valid and constitutional, vide <ORG>, Hargaon v. State of U. P. (1). This decision was pronounced on the 12th of October, 1959.

On the 22nd November, 1960, the petitioner filed three petitions in this Court under Art. 32 of the Constitution. These petitions were Nos. 325, 326 & 327 of 1960. These three petitions were directed against the notices served on the petitioner for the years 1365, 1366 and 1367 fasli respectively. Out of these petitions, the first two were dismissed on the ground that they were barred by resjudicata. It is common ground that after <ORG> dismissed the petitioner's writ petitions, he applied for and obtained a certificate from the said <ORG> to appeal to this Court, but he failed to deposit the necessary security for printing charges as required by the rules of <ORG>, and, in consequence, on the 9th August, 1960, the certificate granted to him was cancelled. That is how the two writ petitions which purported to challenge the validity of the notices served on the petitioner for the two years 1365 and 1366 fasli were held to be barred by res judicata. On the petitioner's writ petition No. 327 of 1960 which is concerned (1) A.I.R. 1960 All. 136.

with the assessment for the year 1367 fasli, rule was ordered. to be issued by this Court and it is on this rule that the present petition has come for final disposal before us today. This writ petition is confined to the assessment levied on the petitioner for the year 1367 fasli. It appears that for the relevant year a notice has been served on the petitioner under s. 7(2) of the Act and a tax of Rs. 15,838/92 nP was assessed on his total holding of 1152A-IIB-IB with a valuation of Rs. 44,464/88nP. After hearing the petitioner, <ORG> has decided that the amount recoverable from the petitioner by way of tax for the relevant year is Rs. 14,882/86nP. The petitioner contends that since the Act is unconstitutional, it is not open to respondent No. 1, the State of U. P. and respondent No. 2, the assessing authority to claim the said tax from him on his holding.

The petitioner's case is that the relevant provisions of the Act are unconstitutional because <ORG> was not competent to pass the Act. He also contends alternatively that the said Act violates the fundamental rights guaranteed by Articles 14, 19 and 31 and as such, is void. According to him, the rates fixed by <ORG> in pursuance of the authority conferred on it by section 5(1) of the Act, are invalid because in fixing the said rates, <ORG> has not complied with the provisions of the said section. Broadly stated, it is on these three grounds that the validity of the Act is challenged. These grounds are denied by the respondents and it has been alleged by them that <ORG> was competent to pass the Act, that the Act does not violate the fundamental rights guaranteed by Articles 14, 19 and 31 and that the rates have been fixed in accordance with the provisions of s. 5(1) of the Act.

Before. dealing with these. contentions, it is necessary to consider briefly the scheme of the Act.

The Act has been passed because the Legis-lature thought it expedient to provide for the imposition and collection of a tax on large land holdings. Section 28 of the Act repeals the earlier U. P. Agricultural Income Tax Act, 1948. It may The pointed out that this Act itself has been subsequently repealed by section. 45 of the U. P. Imposition of Ceiling of Land Holdings Act 1961 (1 of 1961) as from the 30th June, 1961, so that as from the 30th June, 1961, this Act is no longer in force.

Under the Act, ,land" means land, whether assessed to land revenue or not, which is held or occupied for a purpose connected with agriculture, horticulture, animal husbandry, pisciculture or poultry farming and includes uncultivated land held by a land-holder as such [s. 2 (15)]; and acc- ording to s. 2(16), ',land-holder" means (i) an intermediary, where the land is in his personal cultivation or is held as sir, khudkasht or grove and (ii) any other person who holds or occupies land otherwise than as-(a) an asami, (b) a sub-tenant, (e) a tenant of sir, or (d) a sirtan, and includes a manager or principal officer, as the case may be. These two definitions give an idea as to the property over which the Act purports to impose a tax and as to the person from whom the tax is recoverable. Section 4 defines a "land-holding". It provides that "land-holding" means the aggregate of all land held or occupied on the first day of July each year by a land-holder, whether in his own name or in the name of any member of his family, and all such land shall be deemed to form part of the land holding of such land-holder. With the rest of the section we are not concerned in the present petition. It is the land- holding thus defined which is the subject matter of taxation imposed by s. 3. Section 3(1) provides that there shall, save as hereinafter provided, be charged levied and paid, for each agricultural year, on the annual value of each land holding, a tax, hereinafter called the "Holding Tax" at the rates specified in the Schedule. The proviso to s. 3 makes it clear that no such tax shall be charged on , any land holding the area whereof does not exceed 30 acres. Sub-section (2) empowers the State Govern- ment to exempt or remit in whole or in part, for such period as it may think fit and as often as it may consider necessary, the holding tax chargeable under sub-section (1) in respect of any class or classes of land holdings as may be prescribed. Under sub-section (3) the land covered by building with the area appurtenant thereto which does Dot exceed five acres, shall be excluded in computing the area of land under the proviso to sub-section (1). The Schedule prescribes the rates of the Holding Tax. No tax is levied up to Rs. 3,600/- of annual valuation. When the annual valuation exceeds Rs 3,600/the rate is prescribed on a graded scale beginning with 5nP in a rupee when the annual valuation is between Rs. 3,600/- to Rs. 5,000/- and ending with 60 napes in a rupee where the annual valuation exceeds Rs. 30,000/-. The intermediate rates are 10 nP in a rupee, 25nP in a rupee and 40nP in a rupee and they are prescribed for where the annual valuation is between Rs. 5,001/- to Rs. 10,000/-, Rs. 10,001/-to Rs. 20,000/-and Rs. 20,001/-to Rs. 30,000/-respectively. Thus, reading section 3 and the Schedule together, it follows that where the annual valuation of the landholding exceeds Rs. 3,600/-, tax is leviable at a graded scale and is recoverable from the land holder, subject to conditions (a) & (b) specified in the Schedule.

Section 5(1) provides for the determination of the annual value. It lays down that the annual value of a land holding shall be deemed to be an amount equal to the rent payable for the land or lands included therein multiplied by such multiple not exceeding 12-1/2 as may be prescribed and different multiples may be prescribed for different districts or portions of districts or for different classes of lands included in a land holding. Section 5(2) provides that for the purposes of sub-section (1), the rent payable shall be deemed to be an amount calculated at the sanctioned hereditary rates applicable to the land or lands included in the land holding and where there are no sanctioned heredi- tary rates, on such principles as may be prescribed, provided that the State Government may, where such rates were sanctioned prior to the first day of July, 1927, enhance the rates by such percentage not exceeding fifty as may be specified by notification in <ORG> and different percentages may be specified for the different classes of lands and for different areas of Uttar Pradesh. The scheme of taxation evidenced by sections 3, 4 and 5 is thus clear. Where the area covered by a land holding exceeds 30 acres, the tax is leviable, The tax is leviable at the rates prescribed by the Schedule and the rates prescribed by the Schedule are fixed by a reference to the annual value of the land determined in the manner provided by s. 5. That, in effect, is the result of the relevant provisions of Chapter II of the Act which deals with the imposition of holding tax.

Chapter III consists of ss. 6 to 16 which are concerned with the procedure prescribed for the assessment of holding tax. Section 6 deals with <ORG>. Section 7 requires notice regarding return of land holdings to be served on the assessee. Section 8 deals with the levy of the assessment and prescribes an enquiry in connection therewith. Section 9 provides that proceedings may be taken against the legal representative of the assessee. Section 10 deals with notice of demand. Section 11 allows an appeal against the assessment of holding tax. Section 12 permits a revision to be preferred to <ORG> and s. 13 makes the order passed by <ORG> final. According to s. 14 the procedure prescribed by the relevant provisions of the U.P. Land Revenue Act, 1901, are made applicable to the proceedings before <ORG> under s. 12. Section 15 deals with cases of land holdings that escaped assessment and s. 16 empowers the appropriate authority to rectify mistakes. It would thus be seen that Chapter III provides for the procedure which has to be followed before levying a tax on the assessee. This procedure contemplates a notice to be given to an assessee who would be heard, and gives the assessee a right to make an appeal and to move the <ORG> in revision. Chapter IV deals with the payment of Holding Tax, and provides that tax shall be payable by the land-bolder and that in case the land-holder dies, it has to be paid by his legal representative. Under a. 19, the said tax shall be payable in four equal installments. The last Chapter deals with miscellaneous provisions to which it is unnecessary to refer, excepts. 24 which, inter alia, bars a suit in <ORG> to set aside or modify any assessment made under the Act.

The first contention which has been raised by Mr. <NAME> before us is that the Act is unconstitutional and void inasmuch as it is beyond the legislative competence of <ORG> , and this contention raises the question about the construction of Entry 49 in List II of the 7th Schedule of the Constitution. This Entry relates to taxes to lands and buildings. The argument is that 'Lands' in the context does not include agricultural lands and so, <ORG>e was not competent to levy the tax. In considering the merits of this argument, it is necessary to bear in mind that we are interpreting the words used in the Constitution and it is an elementary cardinal rule of interpretation that the words used in the Constitution which confer legislative power. must receive the most liberal construction and if they are words of wide amplitude, they must be interpreted so as to give effect to that amplitude. It would be out of place to put a narrow or restricted construction on words of wide amplitude in a Constitution. A general word used in an entry like the present one must be construed to extend to all ancillary or subsidiary matters which can fairly and reasonably be held to be included in it, vide, <CITATION> (1) and <ORG> Mt. Atiqa Begum (2). If this principle is borne in mind, it is obvious that the words "lands" cannot be interpreted in the manner suggested by Mr. <NAME>. The word "lands" is wide enough to include all lands, whether agricultural or not, and it would be plainly unreasonable to assume that it includes non-adricultural lands but does not include agricultural lands.

It is, however, urged that since Entry 46 in list II refers to taxes on agricultural income, it follows that agricultural income is not included in Entry 49. That, no doubt, is true; if <ORG> purports to impose a tax on agricultural income, it would be referable to Entry 46 and not Entry 49 and in that sense, agricultural income is not covered by Entry 49. But it must be remembered that both Entries 46 and 49 are in List II and it would make no difference whether the State legislation imposing taxes on agricultural income is sustained by reference to Entry 46 rather than by reference to Entry 49. Therefore, the fact that agricultural income having been specifically provided by Entry 46 cannot be deemed to be included in Entry 49, does not Justify the argument that the word ',lands" in the latter Entry does not include agricultural lands. (1) (1955) 1 S.C.R. 829, 836.

(2) (1940) F.C.R. 110, 134.

It is then argued that when the Constitution wanted to refer to agricultural land, it has used the expression agricultural land' as, for instance. Entries 86, 87 and 88 in List 1. This argument is entirely fallacious. The three Entries in which agricultural land has been specifically mentioned clearly indicate that agricultural land had to be excluded from their purview and so, it was necessary to describe the land as agricultural land in the context. The

-fact that the necessity of the context required the use of the expression agricultural land, in the said three Entries, cannot possibly lead to the conclusion that wherever the word 'land' is used, it should mean non-agricultural lands. We have, therefore, no hesitation in rejecting the argument that Entry 49 in List II does not take in agricultural lands. If agricultural lands are included in the said Entry, the validity of the Act would be beyond challenge, as in substance and in fact, it imposes a tax on land holding and as such, is within the competence of <ORG>. As we have already seen the scheme of the Act is to impose a tax on land holdings, though the measure of the tax has to be determined by its annual value as is ascertained in the manner prescribed by section 5. The object of the tax is land holding and the extent of the tax leviable is determined in the light of the annual value of the land. Thus there can be no doubt that the Act was within the legislative competence of <ORG> and so, the challenge to its validity on the ground that it has been passed without legislative competence must be rejected.

Mr. <NAME> then contends that the multiple prescribed by <ORG> is invalid because it has been prescribed in a manner contrary to the mandatory requirement of a. 5(1). This argument proceeds on the assumption that s. 5(1) imposes an obligation on <ORG>. to adopt different multiples in different districts and in reference to different classes of laud included in the land holding. Mr. <NAME> suggests that when s. 5 (1) provides that the rent may be multiplied by such multiple not exceeding 12 1/2 as may be prescribed and different multiples may be prescribed for different districts or portions of districts or for different classes of land included in a land holding, the <ORG> intended that different multiplies must be prescribed as therein indicated. In other words, "may" in the context means ",must" and since different multiples have not been prescribed for different districts and in reference to different classes of land, the multiple value of the petitioner's land holding cannot be determined under the uniform multiple prescribed by <ORG>. In our opinion, there is no substance in this argument. It is quite clear that' the word " may" in the context cannot mean "shall" or "must". Section 5 (1) has prescribed the maximum limits of the multiple which may be adopted and it has left to the discretion of <ORG> to adopt such multiple for different districts or by reference to different classes of land as it may deem proper. In other words, having prescribed the maximum beyond which the multiple will not go, discretion has been left to <ORG> to make suitable adjustments according to the requirements of local condition and varying qualities of lands.

In fact, the notification issued by <ORG> on the 23rd April, 1958, shows that it has complied with the provisions of 5 (1). Under this notification, the multiple of 12-1/2 has been fixed for determining the annual value throughout U. P. for agricultural lands, but in respect of different kinds of groves planted before 1st July, 1957, the multiple is prescribed at 5 for the whole of the State. Then there a variation made in respect of Kumaun Division and the district of Tehri-Garhwal. In respect of groves planted on or after the 1st July, 1957, the multiple is prescribed at 4 for the 1st year, 2 for the second year and nil for the 3rd and subsequent years. The notification further provides for reduced multiples as specified in it in respect of 'banjar' or user land newly brought under cultivation subject to the conditions therein specified. It would thus be seen that in prescribing the multiple, <ORG> has classified lands and has varied multiple accordingly. Therefore, there can be no doubt that the notification issued by <ORG> under s. 5 (1) has complied with the statutory requirements prescribed therefore.

Mr.<NAME> contends that if the word "may" is construed as giving discretion to <ORG> and not imposing, an obligation on it, then s. 5 (1) contravenes Art. 19 (1)

(f) as well as Art. 14; and his argument is that the charging section also contravenes the said two Articles as well as Art. 31. This contention raises the familiar problem as to whether a taxing statute is subject to the provisions of Part III of the Constitution or not; and it arises in regard to a statute which has been, passed for the purpose of only raising revenue. The power of taxation is, no doubt, the sovereign right of the <ORG>; as was observed by Chief Justice <NAME> in <NAME> v. Maryland (1): "The power of taxing the people and their property in essential to the very 'existence of Government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it". In that sense, it is not the function of the <ORG> to enquire whether the power of taxation has been reasonably exercised either in respect of the amount taxed or (1) (1819) 4 L. ed. 579. 607.

in respect of the property which is made the object of the tax'. Article 265 of the Constitution provides that no tax shall be levied or collected, except by authority of law; and so, for deciding whether a tax has been validly levied or not, it would be necessary first to enquire whether the <ORG> which passes the Act was Competent to pass it or. not. But that is not the only enquiry which is relevant in deciding the validity of 'a taxing statute. Since a taxing statute is a law, it is a law for the purpose of Art. 13 and so, its validity can be challenged on the ground that 'is contravenes one or the other of the fundamental rights guaranteed by part Ill. It is thus clear that a citizen can challenge the validity of a taxing statute on the ground that it offends Art. 14 of the Constitution. At one stage, it appears to have been assumed in some of the earlier decisions of this <ORG> that Art. 31 was concerned with deprivation of property otherwise than by imposition or collection of tax and inasmuch as the right conferred by Art. 265 is not a right conferred by Part III of the Consti- tution, it could not be enforced under Art. 32. In these decisions, certain general observations were made which would indicate that the fundamental rights guaranteed in Part III could not be invoked in respect of taxing statutes, vide, <CITATION> , <NAME> (1), and <CITATION> (2). But in recent years, there has been a consensus of opinion in the decisions of this <ORG> that the validity of the legislation imposing a tax can be challenged not only on the ground of lack or absence of legislative competence, but also on the ground that the impugned legislation violates the fundamental right guaranteed by Part III of the Constitution, vide <CITATION> .

(1) [1951] S. C. R. 127.

(2) [1955] 1. S. C. R. 769, 772.

(3) [1952] S. C. R. 578,  <CITATION> , <CITATION> (2). <CITATION> , (3) and <CITATION> . (4). Therefore, it must now be taken to be settled that the validity of a tax law can be challenged on the ground that it infringes one or the other of the fundamental rights guaranteed by Part III, and so, the argument that the tax with which we are concerned is invalid because it offends against Arts. 14 and 19 (1)(f), cannot be rejected as inadmissible.

A taxing statute can be held to contravene Art. 14 if it purports to impose on the same class of property similarly situated an incidence of taxation which leads to obvious inequality. There is no doubt that it is for the <ORG> to decide on what objects to levy, what rate of tax and it is not for the <ORG> to consider whether some other objects should have been taxed or whether a different rate should have been prescribed for the tax. It is also true that the legislature is competent to classify persons or Properties into different categories and tax them differently, and if the classification thus made is rational, the taxiing statute cannot be challenged merely because different rates of taxation are prescribed for different categories of persons or objects. But, if in its operation, any taxing statute is found to contravene Art. 14 , it would be open to <ORG> to strike it down as denying to the citizens the equality before the law guaranteed by Art. 14.

Similarly, if a taxing statute makes no specific provision about the machinery to recover tax and the procedure to make the assessment of the tax and leaves it entirely to the executive to devise such machinery as it thinks fit and to prescribe such procedure as appears to it to be fair, an occasion (1) [1953] S. C. R. 1069.

(3) [1956] S. C. R. 393.

(2) [1955] 2 S. C. R. 603.

(4) (1962)2 S. C. R. 983.

may arise for the <ORG> to consider whether the failure to provide for a machinery and to prescribe a procedure does not tend to make the imposition of the tax an unreasonable restriction within the meaning of Article 19 (5). An imposition of tax which in the absence of a prescribed machinery and the prescribed procedure would partake' of the character of a purely administrative affair can, in a proper sense, be challenged as contravening Art. 19 (1) (f). Therefore, whenever the validity of a taxing statute is challenged on the ground that it contravenes Art. 14 or Art. 19 , the challenge cannot be thrown out on the preliminary ground that a tax law is beyond such challenge, but its merits must be carefully examined.

The position, however. is different when the challenge is made on the ground that the Act is inconsistent with Art.

31. So far as Art. 31 (1) is concerned, all that it requires. is that no person can be deprived of his property save by authority of law, and as we have just observed, the authority of law postulated by Art. 31 (1) is obviously the authority of a valid law. If the law is not valid because it offends against Art. 14 or Art. 19 or some other fundamental right guaranteed by Part III then the imposition of tax levied by it cannot be said meet the requirements of Art. 31 (1). But if the Act in question is otherwise valid, then the Art. 31 (1) is complied with. Article 31 (2) would be inapplicable to a taxing statute because the taxing statute does not purport to acquire or requisition any property. It may be that the imposition of the tax levied by the statute is excessive and may ultimately lead to the loss of the assessee's property, but even so, it cannot be said that by virtue of the Act, the property has been acquired or requisitioned. Article 31 (2A) clearly brings out the limits of the application of Art. 31 (2). Similarly, Art. 31 (5) (b) (i) specifically provides that nothing in Cl. (2) shall affect the provisions of any law which the <ORG> may hereafter make for the purpose of imposing or levying any tax or penalty. Thus it is clear that the provisions of Art. 31 (2) cannot be invoked in impeaching the validity of a taxing statute and so, we come back to the position that a taxing law which does not offend against any of the fundamental rights guaranteed by Part 111, would justify the imposition of a tax and would meet the requirements of Art. 31 (1). Therefore, in our opinion the challenge to the validity of the Act on the ground that it contravenes Act. 31 (1) is not well-founded.

Let us now turn to the merits of the argument that s. 5 (1) contravenes Arts. 14 and 19 (1) (f)._It is urged that since discretion has been left to <ORG> to prescribe the multiple without any guidance, the prescription of the necessary multiple by <ORG> at its own sweet-will will amount to an unreasonable restriction under Art. 19(5) and so, Art. 19 (1) (f) must be held to have been contravened. On the same ground, it is said that Art. 14 has also been contravened. We are not impressed by this argument. It is 'clear that the policy of the Act is to argument the revenues of the <ORG> and for that purpose, the tax has been levied on land holdings, subject to the important proviso that holdings the area whereof does not exceed thirty acres would not be taxed. In other words, it is only big holders whose land holdings are subjected to tax by this Act. Even so, the basis adopted for levying the tax is ultimately the rent payable for the land or lands in question and taking the basis of the said rent, the annual value of the land is required to be determined by adopting a suitable multiple. Section 5 (1) prescribes the maximum limit of this multiple and leaves it to the discretion of <ORG> to adjust the multiple as local conditions and conditions of land may require. It would obviously not have been prac- ticable for the <ORG> to provide for different multiples in respect of different districts or in regard to difference classes of lands. Having laid down the general policy in that behalf, the <ORG> naturally left the adjustment of the multiple to the discretion of <ORG> because the said adjustment had to be made in the light of local conditions and by reference to the class of the land. Therefore, we do not think that the discretion left to <ORG> can be said to be unfettered or uncanalised so as to amount to an unreasonable restriction as contended by Mr. <NAME>; as we have already pointed out the notification issued by <ORG> prescribing the multiple has clearly complied with the requirement of s. 5 (1). We must accordingly hold that the challenge to the validity of s. 5 (1) on the ground that it contravenes Articles 14 and 19 (1) (f)must fail.

Then it is urged that the rates fixed by the Schedule contravene Arts. 14 and 19. It is not easy to appreciate this argument. Section 5 (1) makes it clear that the rent is to be taken as the basis for fixing the annual value and s. 5 (2) provides for the method of calculating the said rent. Thus the rent being determined, the annual value has to be ascertained by adopting a suitable multiple and it is on the annual value. thus determined that the Schedule prescribes a grading scale of rates, for Holding Tax. The tax being on land holding,the measure of the tax is thus fixed in the light of the annual value of the land holding. In other words, the land holding is taxed on the basis of its annual value and it is difficult to understand how the Schedule can be successfully challenged as being inconsistent with Arts. 14 and 19 (1) (f).

That leaves one more question to be considered. Mr. <NAME> argues that the Act is confiscatory in (character and must be struck down as being a colorable piece of legislation, and in support. of this argument he suggests that the rates prescribed by the Schedule are so heavy that the assessees would virtually have to part with their properties within a short time in order to bear the burden of the tax. This plea raises the question as to whether a taxing statute can be challenged on the ground that the burden of tax imposed by it is unreasonably high or excessive. We have already seen that the provisions of Art. 31 (2) cannot be invoked in challenging the validity of a taxing statute on the ground that the tax levied is unreasonably high and we have also noticed that if the taxing statute does not contravene any other fundamental right guaranteed by part III, it would normally be treated as a valid law by whose authority tax can be collected without infringing Art. 31 (1). Though the validity of a taxing statute cannot be challenged merely on the ground that it imposes an unreasonably high burden, it does not follow that a taxing statute cannot be challenged on the ground that it is a colourable piece of legislation and as such, is a fraud on the legislative power conferred on the <ORG> in question. If, in fact, it is shown that the Act which purports to be a taxing Act is a colourable exercise of the legislative power of the <ORG>, then that would be an independent ground on which the Act can be struck down. Colourable exercise of legislative power is not a legitimate exercise of the said power and as such, it may be open to challenge. But such a challenge can succeed not merely by showing that the tax levied is unreasonably high or excessive, but by proving other relevant circumstances which justify the conclusion that the statute is colourable and as such, amounts to a fraud.

As an illustration of such a colourable statute, we As an illustration of such a colourable statute, may refer to the decision of this Court in <CITATION> (1). In that case, the provisions of' Sections 4 and 7 of the Travancore-Cochin Land Tax Act (XV of 1955) as (1)  3. S. C R. 77.

amended by Act X of 1957, were declared to be unconstitutional in view of the provisions 'of Articles 14 and 19 (1) (f) of the Constitution. These provisions along with the provisions of section 5A which was held to contravene Art. 19 (1 ) (f ), were the main provisions of the Act and as such, as soon as the said provisions were struck down as unconstitutional the whole Act inevitably became void. In dealing with the validity of the said Act, this <ORG> had occasion to consider also the confiscatory character of its operative provisions. On making calculations, it was found that the petitioner who challenged the validity of the said Act in that case was making an income of Rs. 3,100 per year out of his forests and his liability for taxation in respect of the forest land amounted to Rs. 54,000. So, it was held that the provisions of the Act were confiscatory. It would thus be noticed that the main sections of the Act were found to be discriminatory and were also found to have imposed unreasonable restrictions on the citizens' right to hold property. Besides, it appeared that in their effect they were confiscatory, in character. In other words, careful examination of the material provisions of the Act disclosed a design to impose a discriminatory tax and make its realisation amenable to an executive fiat. Consistently with this design, the Act had levied an impost which was confiscatory in character. The judgment of this <ORG> shows that the confiscatory character of the levy imposed by the Act proved to be the proverbial last straw on the camel's back. It is in the light of these facts that the whole of the Act was struck down. This decision illustrates how a taxing statute though ostensibly passed in exercise ,of the legislative powers conferred on the <ORG>, can be struck down as being a colourable exercise of the said power. In other words, the conclusion that a taxing statute is colourable would not and cannot normally be raised merely on the finding that the tax imposed by it is unreasonably high or heavy, because the reasonableness of the extent of the levy is always a matter within the competence of the <ORG>. Such a conclusion can be reached where in passing the Act the <ORG> has merely adopted a device and a cloak to confiscate the property of the citizen taxed. If, however, such a conclusion is reached on the consideration of all relevant facts, that is a separate and independent ground for striking down the Act. There is no doubt that the decision in the case of <NAME> is not an authority for the proposition that in testing- the validity of a taxing statute ', the <ORG> can embark upon. an enquiry whether the tax imposed by the statute is unreasonably high and whether it should have been fixed at a lower level. Let us now see what the petitioner has proved in the present case in support of his plea that the Act is confiscatory and should, therefore, be struck down as a colourable piece of legislation. It appears that when the petition was first filed, it had not clearly made out a case on this. point. The petitioner had, no doubt, alleged that approximately 3/5th of the income had to be utilised for the cost of production in terms of raw materials, labour, capital and the risk taken by the farmer, and so, according to the petitioner, only 1/5th of the gross agricultural income can be termed to be the net agricultural income of the farmer. On this basis, the Act was described as confiscatory. Later on, an application for amendment of the petition was filed on the 30th January, 1961, and in this application, some additional facts were alleged in support of the plea that the Act is confiscatory. In paragraph 6 of this amendment petition, it was sought to be shown that 14% of the gross produce had to be spent in purchasing seeds, 14% was required to be spent or irrigation facilities, 14% for ploughing the fields and 14% for extra labour and general management and 15% would be needed to pay rent. On this calculation, it was urged, that the tax levied by the Act was confiscatory and as such, amounted to a colourable piece of legislation.

The allegations thus made by the petitioner have been denied by the respondents in their counter-affidavit. The calculations made in the counter affidavit show that the gross income of the petitioner is Rs. 1, 07,362. According to the counteraffidavit, cost of cultivation would not exceed 40% and that amounts to about Rs. 42,000. Deducting this total cost of cultivation from the gross income, the petitioner would be left with a net income of Rs. 65;362 and on this net income of Rs. 65,362 he is called upon to pay a tax of Rs. 14,882/86 nP. If the facts stated in the counter affidavit are accepted as true, it is obvious that the tax imposed on the petitioner cannot by any stretch of imagination be deemed to be confiscatory. In this connection., it is significant that in his' amendment petition, the petitioner has not stated the extent of the rent which he is required to pay for his land holdings. He holds the lands as <NAME> and the respondents contend that the rent recovered from <NAME>s is very low. It was even suggested during the course of argument by Mr. <NAME> that the rent recovered from the <NAME>s would not exceed 1% of the gross income and in some cases, it may even be less. Unfortunately, the petitioner has not made any statement I about this important particular. The operation of the rates prescribed by the Schedule is based on the annual valuation of the lands, and the said valuation is determined ultimately on the basis of the rent, so that unless the rent is known, the extent of the impost cannot be adequately judged. Therefore, ,in our opinion, on the material added by the petitioner before us, it is impossible to accept the argument that the tax levied by the Act is confiscatory. Besides, as we have already seen, the scheme of the present Act does not disclose any constitutional infirmity either in its charging sections or in the sections providing for the procedure for the levy of the tax and its recovery. That is why we feel no hesitation in holding that there is no substance in the plea that the Act is a colorable piece of legislation.

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

Petition dismissed.


PETITIONER: V RAJLAL MANILAL & CO. Vs. RESPONDENT: UNION OF INDIA AND ANR. DATE OF JUDGMENT: 10/03/1964 BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA GAJENDRAGADKAR, <NAME>, K.N. SHAH, J.C. SIKRI, S.M. CITATION: 1964 AIR 1643 1964 SCR (7) 97 CITATOR INFO : D 1987 SC1802 (29) ACT: Mines and Minerals-State Government refuses to renew Certificate of approval-Review petition to Central Government -Central Government receives report and information from <ORG> behind the back of the appellants-Central Government acting quasi-judicially- Violation of natural justice -Mines and Minerals (Regulation and Development) Act , 1948 (No. XLIII of 1948)-Mines Concession Rules, 1949 rr. 57, 59. HEADNOTE: The appellants constitute a partnership engaged in mining and they held a prospecting license as well as a certificate of approval from <ORG> under the Mineral Concessions Rules, 1949 framed under the Mines and Minerals (Regulation and Development) Act , 1948. The approval certificate was granted for one year and until December 1955 it had been renewed from year to year when <ORG> refused to renew it on the ground that the partners composing the firm had changed. Thereupon the appellants applied under r. 57 of the Minerals Concession Rules to <ORG> for the review of the order of <ORG> refusing to renew the certificate of approval. While this application Was pending <ORG> corresponded with <ORG> and gathered information and received the latter's remarks -regarding the merits of the matter behind the appellants' back. The request made by the appellants for copies of the correspondence and for an opportunity to be heard was refused by <ORG>. Ultimately <ORG> refused the review application on the ground that there was no valid ground to interfere with the decision of <ORG>. The present appeal was filed on special leave granted by this '<ORG>. On behalf of the appellants it was contended that <ORG> while disposing of an application under r. 57(2) in terms of r. 59 acts as a quasi-judicial authority and the ,order which was passed taking into consideration the report of <ORG> behind the appellants' back and without affording a reasonable opportunity for presenting their case was contrary to natural justice and was therefore void. Held:(i) The Union Government when disposing of an ap- plication for review under r. 59 is functioning as a quasi- judicial authority. <CITATION> ,  S.C.R. 775, relied ,on. (ii)Though <NAME> case was concerned with a case where an order had been passed prejudicial to the respon- dents before <ORG> without affording them L/P(D)1 SCI-4.. 98 an opportunity to meet the case of an applicant for review the same principle would apply even where a petition for review is rejected based on materials which were not made available to the applicant for review. (iii) Applying the above principle to the present case the order of <ORG> is vitiated as being contrary to the principles of natural justice in that the decision was rendered without affording to the appellants a reasonable opportunity of being heard which is a sine qua non of a fair hearing. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 11 5 & 116 of 1963. Appeals by special leave from the judgment and orders dated July 9, 1958, September 24, 1958 of <ORG> (<ORG>, New Delhi) and <ORG> (<ORG>) at Delhi respectively. <NAME>, <NAME> and <NAME>, for the. appellant (in both the appeals).

<NAME> and <NAME>, for respondent No. 1 (in both the appeals).

I. N. Shroff, for respondent No. 2 (in C.A. No. 116/1963). March 10, 1964. The Judgment of the Court was delivered by <NAME>, J.-Civil Appeal No. 115 is by special leave granted by this Court under Art. 136 of the Constitution and is against an order of <ORG> (<ORG>) dated July 9, 1958 rejecting an application filed by the appellants under rule 57 of the Mineral Concession Rules, 1949 to review an order passed by <ORG> rejecting their application for the renewal of the Certificate of Approval granted to them. The appellants filed a petition to <ORG> Punjab under Art. 226 of the Constitution praying for a writ of certiorari to quash the above order of <ORG>. This petition was dismissed by <ORG> in limine and Civil Appeal No. 116 of 1963 is by special leave of this Court against this order of <ORG>, Punjab. It would thus be seen that both the appeals are directed to challenge the validity of the same order and we shall therefore deal with them together.

The appellants, who constitute a partnership, are engaged inter alia in the business of mining and they held a prospecting licence in the State of Madhya Pradesh. They hold concessions in regard to prospecting and working minerals in several areas of the State to the details of which it is not necessary to refer. Under the scheme of the Mines and Minerals (Regulation and Development) Act , 1948 (Act No. XLIII of 1948) and the Mineral Concession Rules, 1949 framed thereunder, in order that a prospecting licence may be granted to a person he has to hold a certificate of approval from <ORG> concerned and similarly the rules provide that no mining lease shall be granted to any person unless he held a similar certificate of approval. To enable them to do the prospecting in lands in which they had obtained mineral concessions, the appellants applied for and obtained from <ORG> a certificate of approval under the Mineral Concession Rules from 1952 onwards. The duration of the certificate is one calendar year and the same has to be renewed every year, if it is to be in force. The original certificate granted to the appellants for the year 1952 was being renewed from year to year and as a result they held a valid certificate of approval up to the period ending on December 31, 1955. Being desirous of having the same renewed for the following calendar year 1956 they made an application to <ORG> on November 22, 1955. The information required by the form of application prescribed by the rules was furnished and the necessary documents were filed and this application was recommended by the District Officer, Bhandara. <ORG>, however, by an order dated September 21, 1956 rejected the application, the reason given being that the partners composing the firm had changed. This order was communicated to the appellants on October 6, 1956 and thereupon the appellants made an application on November 15, 1956 to <ORG> for a review of the order of <ORG> under rule 57 of the Mineral Concession Rules. Rule 57(2) which was invoked by the appellants provides:

"Where a State Government has failed to dispose of an application for grant of renewal of a certificate of approval or prospecting licence or a mining lease within the period prescribed therefor in these Rules, such failure shall, for the purpose of these rules, be deemed to be a refusal to grant or renew such certificate, licence or lease, as the case may be, and any person aggrieved by such failure may, within two months of the expiry of the period aforesaid, apply to <ORG> for reviewing the case." The procedure for review is laid down by rule 59 which ,reads:

,,Review-Upon receipt of such application, <ORG> may, if it thinks fit, call for the relevant records and other information from <ORG>, and after considering any explanation that may be offered by <ORG> cancel or revise the order of <ORG>, or pass such order as <ORG> may deem just and proper."

L/P(D)1SCI---4(a) Thereafter correspondence seems to have ensued between <ORG> and the Government of Madhya Pradesh in regard to the propriety of granting the application for review. The appellants having come to know from a letter addressed to them by <ORG> that <ORG> had been required to send a report of their remarks in connection with their application for review made enquiries as to what had happened and also requested that they might be informed as to the progress of their application and that they might be given an opportunity of a personal hearing at which they would be able to satisfy the Government about the genuineness of their case. Some portions of this correspondence between <ORG>. and <ORG> as to the merits of the appellants' application are now on record but it is common ground that the appellants were not informed of these documents prior to the order now impugned rejecting the application for review was passed. On July 9, 1958 the application of the appellants was rejected by <ORG>, the order stating:

"<ORG> have come to the conclusion that there is no valid ground for interfering with the decision of <ORG> rejecting your application for renewal of a certificate of approval for the year 1956."

The appellants thereafter applied to <ORG> requesting for a copy of the report of <ORG> on the basis of which the application was rejected. The reply that the appellants received was that <ORG> regretted their inability to accede to their request. It is the validity of this order dated July 9, 1958 that is challenged in appeal No. 115 of 1963. Mr. <NAME>, learned Counsel for the appellants, submitted that <ORG> when disposing of an application under s. 57(2) in terms of rule 59 is acting as a quasi- judicial authority and the order which was passed taking into consideration the report of <ORG> and without their knowing the contents of the report and without affording them a reasonable opportunity of presenting their case was contrary to natural justice and was therefore void. In this connection learned Counsel relied on the decision of this Court: <CITATION> (1). Mr. <NAME> is well-founded in his submission as to the nature of the jurisdiction exercised by <ORG> when disposing of an application for review under Rule 59 and the decision referred to does (1)  2 S.C.R. 775.

support him that the <ORG> acting under the rule referred to is functioning as a quasi-judicial authority. It does follow therefore that they could not act on the basis of material as regards which the appellants had no opportunity to make their representation. No doubt, the decision in <NAME> v <ORG>) was concerned with a case where an order had been passed prejudicial to the respondents before the <ORG> without affording them an opportunity to meet the case of an applicant for review but the same principle would, in our opinion, apply even where a petition for review is rejected based on materials which were not made available to the applicant for review.

As we have already indicated, <ORG> had refused renewal of the certificate of approval because they considered that there had been a change in the composition of the firm which destroyed its identity. On the other hand, the case of the appellants was that the terms of the partnership deed made express provisions for the continuance of the identity of the firm, notwithstanding changes in the persons composing the firm by death, retirement or because of the accession of new members to replace deceased or retiring partners or even otherwise. If the report of <ORG> made any points against the representations made by the appellants, and these were being taken into consideration by <ORG>, in common fairness, the appellants were entitled to be informed as to what these were and an opportunity to point out how far they militated against the contentions raised by them.

Learned Counsel for the respondent-Union of India, did not seek to support the position taken by <ORG> that they were justified in refusing to disclose the con- tents of the report they obtained from <ORG> which afforded them the factual basis on which they rejected the application for review. We have therefore no hesitation in holding that the order of <ORG> now under appeal is vitiated as being contrary to the principles of natural justice, in that the decision was rendered without affording to the appellants a reasonable opportunity of being heard which is a sine qua non of a fair hearing. The learned Judges of <ORG> dismissed the petition filed before them under Art. 226 , apparently be- cause they proceeded on the view that the exercise of jurisdiction of <ORG> under rules 57 and 59 of the Mineral Concession Rules was really administrative in character so that the reasonable opportunity that is an essential requisite of quasi-judicial procedure was not attracted to the (1) 1960 2 S.C.R. 775.

case. That was the view taken by that <ORG> in the <CITATION> .(1) which decision was reversed by this <ORG>. It might be mentioned that the decision of this <ORG> was rendered subsequent to their judgment now under appeal and therefore the learned Judges had not the advantage of the pronouncement of this <ORG>. The result is that the appeals are allowed and order of <ORG> dated July 9, 1958 and of <ORG> dated September 24, 1958 are set aside. <ORG> will consider the review application afresh and dispose of the same in accordance with law and in the light of the observations contained in this judgment. The appellants are entitled to their costs in this <ORG> (Hearing fee one set). Appeals allowed.

(1) [1960] 2 S.C.R. 775.


PETITIONER: <ORG>. Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX, WEST BENGAL DATE OF JUDGMENT: 09/12/1969 BENCH: <NAME>, J.C. (CJ) BENCH: <NAME>, J.C. (CJ) HEGDE, K.S. CITATION: 1970 AIR 1076 1970 SCR (3) 314 1970 SCC (1) 112 ACT: Income-tax Act , s. 10(2)(xv) -Payment of remuneration by, employer to employee-Jurisdiction of tax officers to hold that expenditure was not laid wholly and exclusively for the purpose of business-Whether question of Law. HEADNOTE: The appellant, which was doing the business of manufacturing enamelled ware, appointed a technical adviser and <ORG> resolved to pay him 15% of the gross annual profits as his remuneration. .For the assessment years, 1951-52, 1952-53 and 1953-54, the appellant claimed the amounts paid to the technical adviser as admissible allowances under s. 10(2)(xv) of the Income-tax Act, 1922. The Income-tax Officer found, that the technical adviser was a doctor of medicine without any special qualification for the post, that he was not trained in the technique of enamelled ware, that he and his father-in law, by the number of shares they held, were able to control the voting before <ORG>, that good technical experts in enamelling could have been secured for a smaller remuneration, that the remuneration agreed to be paid to the technical adviser was influenced by extra-commercial considerations and therefore, disallowed a part of the amount, holding that it was expenditure not incurred wholly and exclusively for the purpose of the business. The order was confirmed by the Appellant Assistant Commissioner, the <ORG> and <ORG>. In appeal to this <ORG>. HELD : The question whether an amount claimed as expenditure was laid out or expended wholly and exclusively for the purpose of the business must be decided on the facts and circumstances of each case, and the inference drawn from the facts found is one of law. Ordinarily, an employer, in fixing the remuneration of his employee, is entitled to take into consideration the extent of his business, the nature of duties to be performed, the special aptitude of the employee, the future prospects of the business and other related circumstances, and the taxing authorities cannot substitute their own view as to the reasonable remuneration which should have, been agreed to be paid to the employee. But, the taxing authority may disallow an expenditure claimed, on the ground that the payment is not real or is not incured by the assessee in the course of his business or that it is not laid out wholly and exclusively for the pur- pose of the business. In doing so, the authority does not substitute its own view of how the assessee's business affairs should be managed, but proceeds to disallow the expenditure, because, the condition of its admissibility is absent. [316 B, D; 317 F-H', 318 <CITATION> . 63 I.T.R. 57 (S.C.), followed. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2143 to 2145 of 1968.

Appeals from the judgments and orders dated March 18, 1965 of <ORG> in Income-tax References Nos. 154, 155. and 156 of 1961.

<NAME>, <NAME>, and <NAME>, for the appellant (in C.As. Nos. 2143 and 2144 of 1968). <NAME>, <NAME> and <NAME>, for the appellant (in C.A. No. 2145 of 1968).

<NAME>, <NAME> and <NAME>, for the respondent (in all the appeals).

The Judgment of the Court delivered by <NAME>, <NAME> These appeals relate to the assessment to tax of <ORG> public limited com- pany-for the assessment years 1951-52, 1952-53 and 1953-54. The <ORG> is doing business of manufacturing "enamelled- ware. It had originally employed a "technician' at a monthly salary of Rs. 5001-. In June 1941 the technician was relieved, and one Col. <NAME> who was a director of the <ORG> was appointed its "Technical Adviser." He was to receive as remuneration 15% of the gross annual profits of the <ORG>. Col. <NAME> resigned his office and Dr. <NAME> (son-inlaw of Col. <NAME>) was appointed to that office. <ORG> resolved on May 18, 1950 to pay to Dr. <NAME> 15% of the gross annual profits (without deducting depreciation) as his remuneration. In the assessment years 1951-52, 1952-53 and- 1953-54 the <ORG> claimed under s. 10(2) (xv) of the Income-tax Act , 1922, as admissible allowance, in computing its taxable income, Rs. 52,947/-, Rs. 64,356/- and Rs. 79,227/- respectively, paid as remuneration to Dr. <NAME> under the terms of the resolution dated May 48, 1950. The Income-tax Officer, Companies District III, Calcutta, allowed for each of the years remuneration at the rate of Rs. 42,000/- only as a permissible deduction. The order was confirmed in appeal to the Appellate Assistant Commissioner and by the <ORG>.

The <ORG> referred in respect of each of the three years the following question:

"Whether on the facts and in the circumstances of the case, the disallowance of a part of the expenses incurred by the assessee 'for payment of remuneration to its Technical Adviser is permissible under the Provisions of s. 10(2) (xv) of the Indian Income-tax Act )"

<ORG> answered the question in the affirmative, and

-disallowed the claim of the <ORG>. With certificate of fitness, these appeals are preferred against the order of <ORG>.

In computing the taxable income of an assessee, whether an amount claimed as expenditure was laid out or expended wholly and exclusively for the purpose of the, business, profession or vocation of the assessee must be decided on the facts and in the light, of the circumstances of each case : <CITATION> .(1). Resolution of the assessee fixing the remuneration to be paid to an employee and production of vouchers for payment together with proof of rendering service do not exclude an enquiry whether the expenditure was laid out wholly and exclusively for the purpose of the assessee's business. It is open to the Tax Officers to hold agreement to pay and payment notwithstanding-that the expenditure was not laid out wholly and exclusively for the purpose of the business: <ORG> case('). But an inference from the facts found that the expenditure was, wholly and exclusively laid out for the purpose of the business is one of law and not of fact, and <ORG> in a reference under s. 66 of the Income-tax Act is competent to decide that the inference raised by the <ORG> is erroneous in law.

In the present case, the facts found are these : Col. <NAME> and his son-in-law Dr. <NAME> were two of the directors of the Company who between them held on January 1, 1950 49% of the total number of shares of the Company and the other directors of the Company held only I % of the shares. Dr. <NAME> had received no training in the technique of enamelling : he was a medical practitioner earning Rs. 20,000/- per annum by the exercise of his profession. Apparently no applications were invited for the appointment of a Technical Adviser when Col. <NAME> resigned his office. In the resolution passed by the Directors it was recorded that many "personal enquiries" regarding the post were made, but no candidate was found suitable The Board, it was recorded, considered the applications of <NAME> and <NAME> but the qualifications of these two candidates did not impress the directors: moreover the terms of service offered by <NAME> were not acceptable to the Board and therefore the only applicant Dr. <NAME> who was working on Probation in the post for some time past and had worked without remuneration up to December 31, 1949 was considered the applications of S. urbeneck and <NAME> though called for by the Incometax Officer were not produced by the Com- pany. At the relevant time "a good technical expert in enamelling"

(1) 63 I.T . R. 57.

could be secured for a monthly remuneration of Rs. 1,000/- or Rs. 1,200/- provided that appointment was not for a short period.

In the view of the Income-tax Officer, Dr. <NAME> came to be appointed to the post of Technical Adviser of the Company as soon as, his father-in-law vacated the post and "the generous remuneration offered to him was influenced by factors other than commercial considerations, and considering that Dr. <NAME> was giving up his professional practice in allopathic medicine which yielded him an annual income of Rs. 20,000/- to engage himself as a whole-time Adviser attending to the development of the industry a gross remuneration of Rs. 3,500/- per month, beside the .remuneration of Rs. 1,000/- per month that he obtained as Secretary of the Managing Agents of the Company, would be adequate." With that view the Applicate Assistant Commissioner and <ORG> have substantially agreed. The <ORG> observed that they were inclined to conclude that "extra-commercial considerations" had influenced the fixation of remuneration of Dr. <NAME> and that partial disallowance of the remuneration "so influenced seems quite fair".

Counsel for the Company urged, relying upon the judgments of this Court in <CITATION> .(1) and <CITATION> .(') that in determining the admissibility of an allowance as expenditure laid out and expended wholly and exclusively for thee purpose of the business has to be adjudged from the point of view of the employer and not of the revenue, the Taxing authorities had no power to disallow the remuneration paid to its Technical Adviser, merely because they think that the Company may probably have secured the services of another Adviser for a smaller remuneration. But these cases, in our judgment, have no bearing here. The departmental authorities have not attempted to reduce the allowance on the ground that the remuneration paid to Dr. <NAME> was in their view excessive. Indisputably an employer in fixing the remu- neration of his employee is entitled to take into consideration the extent of his business, the nature of duties to be performed, the special aptitude of the employee, the future prospects of the business and other related circumstances and the taxing authorities cannot substitute their own view as to the reasonable remuneration which should have been agreed to be paid to the employee. But the taxing authority may disallow an expenditure claimed on the ground that the payment is not real or is not incurred by the assessee in the course of his business, or that it is not laid out wholly and exclusively for the purpose of the business (1) A.I.R. 1969. S.C. 609.

(2) 65 I.T.R. 381.

of the assessee. Thereby the authority does not substitute its own view of how, the assessee's business affairs should be managed, but proceeds to disallow the expenditure because the condition of its admissibility is absent. It, has been uniformly found by all the authorities that the remuneration agreed to be paid to Dr. <NAME> was influenced by "extra-commercial considerations". Dr. . <NAME> and Col. <NAME> were able to control the voting before <ORG>. Dr. <NAME> was not trained in the technique of . enamelled-ware," and had no special qualifications for the post. The remuneration agreed to be paid was much in excess of what was normally payable, and also of what Dr. <NAME> was earning by practising his profession as a doctor of medicine. The criticism that the <ORG>'s finding was based on no evidence or was based on irrelevant considerations cannot therefore be accepted. Where an amount paid to an-employee pursuant to an agreement is excessive because of "extra-commercial considerations," the taxing authority has jurisdiction to disallow a part of the amount as expenditure not incurred wholly and "elusively for the purpose of the business : <ORG>

The appeals fail and are dismissed with costs. One hearing fee.

<ORG> dismissed. (1) 63 I.T.R. 57.


JUDGMENT <NAME>, J.

1. This is an appeal by the plaintiff against the preliminary decree in a suit for partition of joint properties. The subject matter of the litigation originally belonged to one <NAME>, who left a widow, <NAME>, and four song, <NAME>, <NAME>, <NAME> and <NAME>. On the 10th August 1917 the plaintiff purchased from <NAME> his right, title and interest in the ancestral properties. On the 8th April 1919 the plaintiff instituted the present suit for partition of the properties in which he had become a joint owner by purchase, and claimed to be planed in separate possession of a one fourth share after partition by metes and bounds. The widow of the original owner who was joined as a defendant, contended that she was entitled to a share in the event of partition, and that the plaintiff was consequently not entitled to more than a one-fifth share. The Subordinate Judge has given effect to this contention and has made a decree accordingly, The substantial point whish has been argued on the present appeal is, that the widow is not entitled to a share, inasmuch as partition is claimed, not by one of her sons, but by the purchaser from one of them. We are of opinion that there is no foundation for this contention.

2. It was ruled by Mr. Justice <NAME> in the case of <CITATION> 27 C. 551 : 4 C. W. N. 764 : 14 Ind. Dec. (n. s.) 362, that, as a Hindu mother is entitled under the law to be maintained out of the joint family property, if anything is done affiliating that right, as, for instance, by the sale of any particular share by any of her sons, her right comes into existence. The position of a purchaser from a son is exactly that of a son himself; he has the same rights and takes it subject to the name liabilities as those of the person from whom he purchased. This decision is precisely in point and was given twenty one years ago. We have not been able to trace any judicial pronouncement where it has been doubted or dissented from or where an inconsistent rule has been formulated. Apart from this, it is plain that the view adopted by Mr. Justine <NAME> was not a new departure but purported to follow the opinion expressed by <NAME>, C. J., and <NAME>, J., in 1899 in the case of <NAME> v. <NAME> 27 C. 77 : 4 C.W.N. 254 : 14 Ind. Dec. (n. s.) 51. <NAME>, C. J., observed, no doubt with reference to an entirely different set of circumstance, that as the widow's maintenance specially as against the sons is a charge on the estate, a right in rem in the fullest sense, adhering to the property into whatever hands it may pass, a right convertible in the event of a partition into a right to a share equal to that of eons, it is difficult to see upon what principle a son can so deal with his share as to defeat that right of his mother. Mr. Justice <NAME> emphasised the view that, as a general rule, no owner of property can convey to any person a higher right than what he himself possesses, and that, consequently, the purchaser of joint family property from a member of a joint Hindu family must take it subject to the right of his vendor's co-sharers to demand partition and subject also to such rights of other persons (who were not, strictly speaking, so sharers with the vendor at the date of the alienation) as nay arise under the Hindu Law upon partition. A similar view had been adopted in 1680 by a Full Bench of <ORG> in <NAME> v. <NAME> 3 A, 88 : 5 Ind. Jur. 489 : 2 Ind. Dec. (n. s.) 61 (F. B.) where it was ruled that a Hindu widow, entitled under the Mitakshara Law to a proportionate share with sons upon partition of the family estate, can claim such share, not only against the sons, but as against on auction-purchaser, at the Bale in the execution of a decree of the right, title and interest of one of the sons in such estate, before voluntary partition. It was explained that the right the mother has is aright to participate in the property left by her husband, a latent and inchoate right of participation which becomes effective when separation takes place; in other words, she has, as <NAME>, C. J., put it in the case already mentioned, a quasi contingent right which may ripen or crystallise, if and when the partition takes place. (Sir <NAME> on Considerations on Hindu Law, page 57). It would be contrary to elementary principles to hold that a right of this nature is liable to be defeated by recourse to the devise of an alienation, by one of the sons, of his share in the ancestral estate. The same doctrine was substantially recognised by <NAME>, C. J., in 1855 in the case of <NAME> v. <NAME> (1885) 1 Boul 223 at p 233: 3 Ind. Dec. (o. s.) 163; Reversed on Appeal 6 M. I. A. 52 at p 539 : 1 Ind. ur (n. s.) 37; W. R. P. C. 11(sic) Suth. P. C. J. 291 : 1 Sar P. C. J. 583, 19 E. R. 188, when he said that the rights of a co-parcener in an undivided family may, in his life time, pass to strangers, either by alienation, or, as in the case of creditors, by operation of law, but in all cases those who come in, in the place of the original co-sharer, by inheritance, assignment or operation of law, tan take only his rights as they stand, including of course the right to call for a partition. The view we take is not affected by the decision in <ORG> v. Debkamini Debi 20 C. 682; C. Ind. Dec. (n. s.) 460 which is an authority for the proposition that as the share allotted to a mother on a partition between her sons is given to her in lieu of or by way of provision for her maintenance, [ <CITATION> 15 C 29 : 17 Ind. Dec (n. s.) 779, <CITATION> 16 I. A 15 : 6 C. 758 : 3 Ind. Jur. 210, 5 Sar, P. C. J. 874 : 8 Ind. Dec. (n. s), 502, she is not entitled to a share, if a portion only of the joint property is divided and the bulk of the property, ample for her maintenance, remains undivided.

3. It has been contended, however, that the decision in <CITATION> (1) is opposed to the test of the Dayabhaga, which provides as follows, in Chapter III, section 2, paragraph 29: "When partition is made by brothers of the whole blood after the demise of the father, an equal share must be given to the mother; for the text (of <NAME>) expressed, the mother should be made an equal sharer". This passage has been treated as authority for what must now he deemed nettled his, namely, that the mother's right to claim a share arises only when her sons some to a partition, in other words, that she cannot enforce her claim to share so long as her sons remain joint and do not ask for partition; <CITATION> 31 I. A. 10 at p. 15 : 31 C. 262 : 14 M. L. T. 8 : 8 C. W. N. 146 : 8 Sar. P. C. J. 575 : 6 Bom. L. R. 1 (P. C.). Now it has been argued by the appellant that under this text of the Dayabhaga, strictly construed, the mother is entitled to a share, only when her sons make a partition, and that, consegnently, if a partition takes place at tie instance of the purchaser of the share of a son, the mother cannot obtain a share. This mode of interpretation is manifestly fallacious and proves too much; for it may as well be maintained that the purchaser of a share of a son cannot at all maintain a suit for partition, inasmuch as such a suit is not explicitly authorised by the text of the Dayabhaga. The truth is, that the author of the Dayabhaga bad before him the problem of the partition of the family estate at the instance of a member thereof; be did not deal with the Question of partition enforced by a stranger, who, by his purchase, becomes a joint owner of the family property but not a member of the joint family itself; a partition at his instance cannot, by any stretch of language, be Ballad Dayabhaga or partition of heritage, and must consequently be regarded as foreign to the proper scope of the treatise of <NAME>, When partition of the family properties is claimed in such circumstances by a stranger to the family, the question which arise must accordingly be determined by reference to general principles not inconsistent with those formulated for the case of partition enforced by a so parcener in the joint family, One of such general principles, as we have already explained, is that a member of the family cannot, by alienation of his interest, prejudice the position of another member, because no owner of property is competent, as a general rule, to convey to any person a higher right than what he himself possesses The substance of the matter thus is, that although the text of the Dayabhaga Chapter III, Section 2, paragraph 23, speaks only of a partition made by sons and the allotment thereupon of a share to the mother, there is nothing said in the passage or in any other authoritative text of Hindu Law which we have been able to discover, as to the mother's right to a share on partition being so absolutely nonexistent before partition, that it may be defeated by any of her sons alienating his share before a partition. Apart from this, it is plain that the literal and restrictive construction of the passage of the Dayabhaga, as interpreted by the appellant, would lead to the obviously unreasonable conclusion that if the suit were instituted by one of the tons, the mother would be entitled to a share, even though one of the defendants happened to be the purchaser of the share of another son, while the mother would not be entitled to a share if the suit happened to be instituted by such purchaser himself; surely the rights of the mother could not, on any rational ground, be made dependent upon a purely accidental circumstance, namely, whether the purchaser of the share of one of her sons is plaintiff or defendant. We hold accordingly that though a mother cannot compel a partition so long as the sons remain united, if a partition does take place between the Sons, she is entitled a share equal to that of a son to the co-parcenary property, and she is entitled to a similar share on a partition between the sons and the purchaser of the interest of one or more of them. The share of the plaintiff has consequently been correctly determined to be one-fifth.

4. A subordinate point which has been argued before us requires consideration. The plaintiff alleged in the plaint that the lady had been given by her husband Government Promissory Notes of the value of Rs. 8,00), and that she was consequently not entitled to put forward a claim for maintenance. In his deposition the plaintiff asserted that the lady had got from her husband Government Promissory Notes worth Rs. 5,000, The lady admitted that her husband gave her G. P. Notes of the value of Rs. 1,500 and that her father gave her G. P. Notes of the value of Bs. 3,500 The Sub-ordinate Judge, has believed her statement and has directed that at the time of partition the value of her allotment weald be the value of one fifth share of the estate minus the value of the G. P. Notes the received from her husband of which the nominal value is Rs. 1,500. The appellant has contended before this Court that this direction is erroneous, that no distinction should have been made between the G. P. Notes received from her husband and those received from her father, and that the value of her allotment should be the value of one fifth share of the estate Minim the actual value of the G. P. Notes for Rs. 5,000. We are of opinion that this contention should not prevail. It is well-settled that if the mother has received stridhan from her husband or father in law, its value should be deducted from her share. Mr. Justice <NAME> held in <NAME> both <NAME> v. Brojonath Dey 12 B. L. R 885 that on partition of the family property by the sons after their father's death, their mother is entitled to a share equal to that of a son, but if she has, before the partition, received property from their father either, by gift or Will, amounting to more than a son's share, she is entitled to nothing more on partition; if, on the other hand, she has received less, she is entitled on partition to as mush as will make what she has received equal to a son's share. Raference was made to a text of Yajnavalkya where a share is allotted, in the case of a partition in the father's lifetime, to such wives as have had no separate properly given to thorn by their husband or father-in-law. Reliance was also placed upon the Dayabhaga, Chapter III, Section 2, paragraph 31; and Jagannath's Digest, tr. by <ORG>, Book V. Section 2, Pl, 87. This view was approved in <CITATION> 12 C. 165 : 6 Ind. Dec. (n. s.) 112 and also receives support from the decision in <CITATION> 1 Ind. Cas. 523 : 36 C. 75 : 12 C. W. N. 1002. which followed <CITATION> 3 C. 149; I Ind. Dec. (n. s.) 684. The rule is stated in similar terms in paragraph 587 of the latest edition of the Vyavastha Darpana of Syamacharan Sarkar (3rd Ed. 1883, Pt. I, P. 517): "the equal participation, however, of the mother with her song takes effect, if no separate property have been given her by her husband or any of his kinsmen; bat, if any have been so given, she is to have ardha or a portion which, together with the stridhan, will be equal to a son's share." The statement is amply supported by the authorities set out in paragraph 55200 (p. 199) and paragraph 552 (p. 42c). It is thus indisputable that the approved opinion is that the deduction to be allowed is in respect of stridhan received from the husband, from the father-in law, and possibly also from any of the kinsmen of the husband; it does not include stridhan received from the family of the father of the lady. This position is eminently reasonable; the primary responsibility for maintenance rests upon the husband and the father in law, and gifts made by them may well be set off against the share of the family estate receivable in lieu of maintenance, on the occasion of a partition amongst her son*; the same theory cannot be predicated in respect of gifts received from her father and members of his family who are not primarily responsible for her maintenance. We accordingly hold that the plaintiff is not entitled to impose on the lady a further reduction in respect of the G. P, Notes received by her from her father.

5. The result is, that the decree of the Subordinate Judge is affirmed and this appeal dismissed with costs. We assess the hearing fee at ten gold mohurs.

Buckland, J.

6. I agree.


JUDGMENT

1. This appeal is directed against the dismissal of an application filed by the appellant under Section 56 of the Trade and Merchandise Marks Act for rectification of the register by removing the trade mark NG. 164933 or by deleting from the said mark the words 'Thennamarakkudi oil.'

2. The facts as set out in the application for rectification are as follows :The appellant's father <NAME> started, in or about the vear 1918. a business in the manufacture and sale of a medicinal oil preparation for curing sprains. and fractures under the name and style of <NAME> and Co. In order to distinguish his goods from that of the other merchants the appellant's father adapted mark consisting of a device in which the word 'Thennamarakkudi oil' formed an essential part. The appellant's father, and. after his death. the appellant have been continuousIv using the said mark on the tins of the medicinal oil prepared and sold by them. The mark adopted by them for their goods had been registered in the name of appellant's father under No. 89873 and a certificate of registration dated 4-3-1949 has been issued. After the appellant's father he has been continuing the business as sole Proprietor and using his mark on the oil manufactured by him. In or about October 1952. the first respondent company has been using a similar trade mark in the medicinal oil Preparations with the same name, The appellant Issued a lawyer's notice dated 7-10-1952. apprising the first respondent about his prior user of the mark by his father and about the registration of the same. The first respondent by his rely dated 13-10-1952 Promised to take step to effect the changes in the mark but, however, without effecting any change in tine mark it has been selling medicinal. preparations of 'Thennamaraikkudi ad.' Subsequently he came to know that the first respondent had also registered his mark as No. 164933 in pursuance of an application made an 112-7-1954. Hence the appellant had to file an application for rectification of the register on the -around that the mark containing t he words 'Thennamarakkudi oil' registered bv the first respondent is a clear infringement of his mark and its user bv the first respondent is likely to cause deception or confusion in the minds of the Purchasing public.

1975 R. P. C. 453, Tujuana Smalls Tm 8

3. The said application for rectification was resisted by the first respondent contending that 'Thennamarakkudi' is a village' in Nannilam taluk in Thaniavur district where a family of native physicians been to manufacture such oil preparations and sell it to the public more than half a century ago. and their operation. took its name from the village. that in view of the popularity of that oil several merchant's in Thennamarakkudi Mannaraudi. Mavuram. Kumbakonarn and other places in Thaniavur district. have been selling the medicinal oil as Thennamarakkudi oil. and that, the said word is no' distinctive of the medicinal oil prepared and sold by the respondent.

4. The Assistant Registrar of Trade Marks dismissed the application for rectification by his order dated 22-5-1961 on the ground that 'he appellant had not adduced any evidence of the distinctiveness of the word 'Thennamarakkudi' as Postulated under Section 9 (12; that there was no evidence to show that' there was a quality in the word 'Thennamarakkudi' which earmarked the appellant's goods as distinct from from those of other producers of such goods. The appellant cannot have a monopoly the word in question and that in the absence of such a monopoly he cannot prevent other persons from using that word,

5. The appellant took the matter in appeal. <NAME> dismissed the appeal holding that the applicaiton for rectification has rightly been refused by the Assistant Registrar of Trade Marks as '<NAME>! was a geographical. name in which none can acquire a trade mark. The matter was taken further in Letters Patent at Deal by the appellant in L. P. A. No. 66 of 1965. On the ground that the appellant cannot be called upon in his application for rectification under S. 56(2) to Drove the invalidity of his own registration on the ground of want of distinctiveness and that it is for the Person who wanted to contend to the contrary to lead evidence to establish that <NAME> oil has not been used to denote the distinctive character of the medicinal Preparation of the appellant. the Letters Patent anneal was allowed and the matter was remitted to the Assistant Registrar of Trade Marks for fresh disposal in the light of the appellate judgement.

6. After the said remit order the Assistant Registrar of Trade Marks considered the matter afresh and by his order dated 19th February. 1976. He again rejected the application for rectification and the reasons for refusing rectification of the register are these:-

1. Thennamarakkudi oil had no status as a distinctive expression at any time much less. on the date of the commencement of these rectification proceedings.

2. The appellant himself did not demur against the use of the expression Thennamarakkudi by other Person but he objected only to the use of a similar label by him:

3. Thennamarakkudi oil is a common descriptive expression of a medicinal oil Preparation and the word 'Thennamarakkudi' was not distinctive of the applicant's goods and therefore the appellant cannot claim any valid exclusive right or conclusive title to the expression 'Thennamarakkudi oil' by virtue of the registration of his mark under No. 89873; and

4. It is open to the first respondent to Drove invalid a registration to any word or words contained in a trade mark if the word or words are not descriptive the goods manufactured by the appellant and as a fact. the first respondent herein has clearly proved by evidence that the words "Thennamarakkudi oil appearing in the appellant's mark have a well known. and established use f the name or description of ayurvedic medicinal oil and the words are benefit so used by Persons trading in the said medicinal oil and, therefore. Thenriamarakkudi oil should be taken as a general term or Public juris. descriptively used to denote a medicinal oil having certain ingredients and used for the cure of certain diseases and the expression has been common1v. appropriated by all merchants in the trade for describing a medicinal oil. The correctness of the view taken by the Assistant Registrar has been challenged in the appeal by the appellant.

7. According to the appellant. the Assistant Registrar of Trade <NAME>.,, has gone beyond the remit order. that the remit order merely directs the Assistant Registrar to allow the parties to adduce evidence on the distinctive character of the words 'Thennamarakkudi oil' but the Assistant Registrar has proceeded on the basis that it is geographical name and therefore, no one can claim a trade mark in respect of that time. A perusal of the order of the Assistant Registrar clearly indicates that he has not dismissed the rectification application merely on the ground that 'Thennamarakkudi' is a geographical name. The learned counsel for the appellant further submits that the evidence does not sustain the finding of the Assistant Registrar that Thennamarakkudi is not a distinctive name for the medicinal preparation made by the appellant and that~ it is a common name applied to the preparation of the medicinal oil under a formula, Thus, the main question is whether the first respondent has made out his case that the expression 'Thennamarakkudi' is a common name as used for the preparation of medicinal oil under a particular formula and it is not distinctive of the appellant's medicinal preparations.

8 In this case. admittedly the appellant did not register the word 'Thennamarakkudi' as a mark. He has merely registered a label containing a device wherein the word 'Thennamarakkudi' is found. However. according to the appellant the word 'Thennamarakkudi' formed an essential Dart of the trade mark and, therefore, no one can use the word 'Thennamarakkudi' in respect of Preparations made by him. But, a Perusal of the label which has been registered as his (appellants) trade mark would show that it contains not only the word'Thennamarakkudi' but also several other words and therefore the whole label containing the word 'Thennamarakkudi' along with other features should be taken into consideration. It has been Pointed out by <ORG> in Registrar - of Trade 111 rks v <ORG> SC 558. 'that when a distinctive label is registered as a Whole. such registration cannot possibly give an exclusive statutory tight to the Proprietor of the trade mark to the use of any Particular word or name contained therein apart from the mark as a whole. Therefore. it is for the appellant who has filed the application for rectification to establish that the word 'Thennamarakkudi. has been used in the label registered as a trade mark to distinguish his goods from those of others. Thennamarakkudi. being a geographical name. the appellant could claim a trade mark in that name only if he establishes that . the geographical name has acquired a distinctive character and has been associated with his goods and therefore, it is a distinctive mark for his goods.

It has been held in a number of , cases that a geographical distinctive mark any idea of the association would (e) of S. 9(1) and as if the Registrar is name adopted as a without its conveying geographical origin or come within clause such. registrable satisfied of its distinctiveness. In this case it has been found by the Registrar that several merchants in Thaniavur district are manufacturing medicinal oil preparation called 'Thennamarakkudi oil' and the preparation itself took its name from. the village Thennamarakkudi in Nannilam taluk. Although a geographical name is prima facie not adapted to distinguish. it may be considered for registration upon evidence of its distinctiveness as will be clear from S. 9(2) of the Act. In this case, apart from the use of the word 'Thennamarakkudi' in the appellant's label no evidence has been adduced by him to show that he is the only Person manufacturing such a medicinal preparation in that place that the name has come to indicate only the oil manufacture d by him and that there are no other persons manufacturing the same oil in the Place Thennamarakkudi.

As pointed out by <NAME> in Tui uana Smalls Tm 1975 R. P. C. 453. there are words whose primary signification is geographical. and where the geographical significance is so general and so likely to be adopted or desired for use by more than one trader it would be wrong. however distinctive they may in fact have become, even to allow one trader by registration to seek to monopoliesthem.......There are other 'geographical' words where for one reason or another, when considered as applied to the goods in respect of which it is sought to reLrFter1975 R. P. C. 453, Tujuana Smalls Tm 8 them. it is clear that the use is infact clearly not geographical. but fanciful and is, therefore at least capable, particularly by use. by being distinctive in practice of one manufacturer's goods and registration can. therefore. in such cases be allowed without causing inconvenience to or encroaching upon the reasonable trading rights of other manufacturers. But. however. the question whether it falls in the former or latter category. will have to be decided on the facts and circumstances of each individual case.

9. In this case. the appellant had his mark registered on 6-12-1943 and we are not concerned in these proceedings as to the validity of the said mark. The appeal having arisen out of the Proceedings for rectification of the first , respondent's mark we cannot now go into the question as to whether the appellant's mark containing the word 'Thennamarakkudi' has been rightly registered in the year 1943. Therefore. in these Proceedings we have to consider whether the first respondent by virtue of registration of his label mark could use the word 'Thennamarakkudi' on the medicinal oil Prepared and dealt with by him. In this the Assistant Registrar held that particular medicinal preparation case the goes by the common name Thennamarakkudi oil. As a matter of fact. he has referred to another instance wherein the appellant did not question the use of the word 'Thennamarakkudi oil' by a rival trader but he merely objected to the similarity in the label. and ultimateIv1975 R. P. C. 453, Tujuana Smalls Tm 8 compromised the -matter with the rival trader in 0. S. No. 11 of 1947 wherein. he has not objected to the use of the word Thennamarakkudi oil with a slight change in the label.

It is also found by the Assistant Registrar that at least other person are using the name Thennamarakkudi on their medicinal oil preparation. It is well established that any symbol. word or get-up commonly used by traders in connection with their trade and in respect of which no particular trader can claim as exclusive right to use may be considered common to that particular trade. or public juris. Thus words, expressions or devices which are descriptive of particular goods are open to use by all persons dealing with those goods. It is true, whether a mark is,or is not common to a trade is a question of fact. It is equally well established that a mark was common to the trade at. one time may in the course of time become distinctive. and vice versa. In <NAME> v. <NAME>. (1872) 7 Ch A 611. it has been held that a word or device which was originally a trade mark. to the exclusive use of which a Particular trader or his successors in business may have been entitled. may subsequently become public juris and the exclusive right may be lost. Therefore. even assuming that the appellant's father used the word 'Thennamarakkudi' to show a distinctive character of the medicinal Preparation as it has subsequently been used by persons making similar medicinal oil Preparations, the expression has become public juris. If the mark has come to be so public and in such universal use that nobody can be deceived by the use of it. or can be induced from the use of it to believe that he is buying the goods of the original trader the right to the trademark must have gone. The proper test to decide whether a mark which was originally a trade mark has become public juris. is to see whether the use of it by other Persons is still calculated to deceive the public.

10. Apart from these things the appellant herein has registered his label which contains a Particular device as his trade mark it is true that the label contains the words 'Thennamarakkudi oil'. But there is no clear evidence whether the appellant's father at the time of registration of this label intended to claim proprietary right in the word 'Thennamarakkudi'. Admittedly. there is no separate registration of the word as a trade mark. Therefore, the appellant cannot be taken to have acquired a proprietary right in the word 'Thennamarakkudil though he might have acquired the proprietary right in the label by its registration. especially when Thennamarakkudi is a geographical name not shown to have been used to distinguish the medicinal oil Prepared by the appellant's father.

If the word 'Thennamarakkudi' which is admittedly a geographical name, had been specially and separately registered as a mark after establishing its distinctiveness by the appellant's father the position would have been different. But where the word 'Thennamarak.kudi' finds a Place along with the other features in the label is not possible to assume that the geographical name has been used in the label to show the distinctiveness of the goods. Further the conduct of the appellant in keeping quiet since the registration of the first respondent's mark in the year 1954 also indicates that the name 'Thennamarakkudi! cannot be distinctive in its use. Even before the first respondent registered his name. the appellant caused a notice to be issued claiming proprietary right in the label and not Particularly with reference to the use of the word 'ThennamarakkudL nor did he file any opposition for the registration of the first respondent's mark in the year 1954. In this view. of the matter. I am inclined to agree with the view taken by the Assistant Registrar.

11. The appeal is. therefore dismissed. There will however be no order as to costs.

12. Appeal dismissed,