PETITIONER: SUPDT. & REMEMBRANCER OF LEGAL AFFAIRS, WEST BENGAL Vs. RESPONDENT: USHA RANJAN ROY CHOUDHURY & ANR. DATE OF JUDGMENT21/05/1986 BENCH: <NAME>, M.P. (J) BENCH: <NAME>, M.P. (J) ERADI, V. <NAME> (J) CITATION: 1986 AIR 1655 1986 SCR (3) 113 1986 SCC Supl. 190 JT 1986 363 1986 SCALE (1)931 ACT: Criminal Courts and Court Martial (Adjustment of Jurisdiction) Rules, 1952, Rules 3 and 4-Offences falling within purview of section 52 of <ORG> Act, 1950-Trial by Magistrate-Procedure to be followed-'Special Judge', whether deemed to be a Magistrate. Criminal Law (Amendment) Act , 1952. Section 8(3A) . 'Special Judge'-Whether deemed to be a Magistrate for Trial of offences under section 52 of the <ORG> Act, 1950. HEADNOTE: The three respondents-accused were charged with offences which fell within the scope of section 52 of the <ORG> Act of 1950. The ordinary criminal court and the Court Martial both had concurrent jurisdiction to try the said offences. They were tried by the Judge presiding over <ORG>, Calcutta. The learned Trial Judge, while convicting one of the respondents and acquitting the remaining two, failed to follow the procedure prescribed by the Criminal Courts and Court Martial (Adjustment of Jurisdiction) Rules, 1952 framed under Section 549(1) of the Code of Criminal Procedure of 1898. <ORG>, in appeal, took the view that the learned Judge presiding over <ORG> had acted without jurisdiction in taking cognizance of the case and proceeding with the trial of three <ORG> officers resulting in the conviction of one of them, and the acquittal of the remaining two and quashed the proceedings. Dismissing the appeals, by the <ORG>, ^ HELD: 1. <ORG> was right in allowing the appeal of the officer who was convicted and dismissing the appeal of the <ORG> calling into question the acquittal of the remaining two. However, the acquittal rendered by <ORG> is on the ground of lack of jurisdiction on 114 the part of the learned Special Judge who tried the case in <ORG> and not on merits. The expression 'acquitted' has been employed by <ORG> though it was sufficient to say no more than this, 'that the order of conviction and sentence was without jurisdiction and was therefore being quashed'. In the eye of law, it is not an acquittal since it is not on merits. It is, therefore, for the competent authority to decide whether or not to subject the accused to a fresh trial after following the procedure prescribed by the Rules. [125D-F] 2.1 In order to avoid any conflict of jurisdiction between the criminal court and the court martial in regard to offenders who are charged with having committed offences which fall under the purview of Section 52 of the <ORG> Act, 1950, Section 549(1) of . provides that Central Government may make Rules consistent with Cr.P.C . and the <ORG> Act . In pursuance of this provision contained in Section 549(1) , Cr.P.C ., <ORG> has framed Rules known as Criminal Courts and Court Martial (Adjustment of Jurisdiction) Rules 1952. [117H; 118A-B] 2.2 Rule 3 of the Rules requires that when a person subject to military, <ORG> or <ORG> law is brought before a Magistrate on accusation of an offence for which he is liable to be tried by Court Martial also, the magistrate shall not proceed with the case unless he is requested to do so by the appropriate military authority. A combined reading of rules 3 and 4 shows that in case the Magistrate is of the opinion that he should proceed with the case without there being any such request from the appropriate military authority, the concerned Magistrate is enjoined to give notice to the commanding officer in this behalf. Till the expiry of seven days from the service of such notice on the commanding officer, the Magistrate is prohibited from making any order of conviction or acquittal or framing any charges or committing the accused. Therefore, the ordinary criminal court would have no jurisdiction to take cognizance of the case and to try the accused in a matter where the procedure prescribed by the Rules has not been complied with. The initial lack of jurisdiction to take cognizance and try the case would, of logical necessity, vitiate the trial and the order of conviction and sentence would be liable to be quashed as a result thereof. [118B-F] In the instant case, admittedly the procedure prescribed by the Rules was not followed. Under the circumstances it is futile to contend that the <ORG> authorities had voluntarily abandoned their option to try the accused person in the court martial. There is no substance in the plea and it has been rightly repelled by <ORG>.[123D-E] 115 <CITATION> . S.K. Loraiya.  (1)SCR 1010 relied upon. <CITATION>  (2) SCR 195 referred. 3.1 Section 13 of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 in terms accords recognition to the applicability of the Criminal Law (Amendment) Act of 1952 enacted by the <ORG> except and save some of the sections, namely, sections 6 , 7 , 8 , 9 and 10 thereof which, as provided in Section 13 , shall not apply and shall be never deemed to have applied to West Bengal. It is implicit in Section 13 of the West Bengal Act that the Central Act , namely, Criminal Law (Amendment) Act of 1952 is applicable to the <ORG> of West Bengal except and save the aforesaid five sections. There can be no doubt or debate about this position having regard to the fact that criminal law is a subject which falls under the concurrent list and the Criminal Law (Amendment) Act of 1952 enacted by the <ORG> is applicable subject to inconsistency, if any, between the said Act and the West Bengal Act . Moreover, the West Bengal Act does not contain any provision pertaining to personnel governed by the <ORG> Act . It is altogether silent in regard to the matter pertaining to the procedure to be followed in regard to <ORG> personnel from the perspective of Section 549 . and the rules framed under the authority thereof. There is thus no conflict between the Criminal Law (Amendment) Act of 1952 and the West Bengal Act in so far as this matter is concerned. Such being the position the provision contained in Criminal Law (Amendment) Act of 1952 with a special eye on the procedure to be followed in Section 8(3A) and Section 11 of the Criminal Law (Amendment) Act of 1952 will operate in this sphere without any let or hindrance. And inasmuch as Section 8(3A) in terms provides that the provision of Section 549 . shall so for as may be applied to the proceeding before the Special Judge and that for the purposes of that provision a Special Judge shall be deemed to be a Magistrate, the said provisions remain fully alive and unaffected by the West Bengal Act . [124C-H; 125A] JUDGMENT:

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos. 170 and 171 of 1977 From the Judgment and Order dated 29th May, 1975 of <ORG> in Criminal Appeal No. 308 of 1972 and Govt. Appeal No. 5 of 1973.

<NAME> and <NAME> for the Appellant. <NAME> and <NAME> for the Respondents. The Judgment of the Court was delivered by <NAME>, J. The validity of the trial of three <ORG> Officers is in question.

<ORG> has taken the view that the learned Judge presiding over <ORG> had acted without jurisdiction in taking cognizance of the case and proceeding with the trial of three <ORG> Officers resulting in the conviction of one of them, and the acquittal of the remaining two and has quashed the proceedings. The question which calls for determination in these two allied appeals by special leave preferred by the State of West Bengal is whether <ORG> was right in doing so. The following facts are not in dispute:

(1) Three accused persons who were tried by the Judge presiding over <ORG>, Calcutta (hereinafter referred to as the learned Trial Judge for the sake of brevity) were Army Officers. They were charged with offences in respect of which the ordinary Criminal Court and <ORG> both had concurrent jurisdiction.

(2) The Learned Trial Judge had failed to follow the procedure prescribed by the Criminal Courts and Court Martial (Adjustment of Jurisdiction) Rules, 1952 (referred to as Rules hereinafter) framed under Section 549 (1) of the Code of Criminal Procedure of 1898 ( Cr.P.C .) The following contentions were urged before <ORG> on behalf of the State with a view to substantiate the contention that the learned Trial Judge had jurisdiction to take cognizance of the case and that the trial was not null and void notwithstanding the fact that the procedure prescribed by the Rules had not been followed. (1) The rules framed under Section 549(1) of .

were not attracted inasmuch as the rules applied to Magistrates and not to a Judge presiding over a Special Court.

(2) Having regard to the provision contained in section 122 of the Army Act, 1950, which prescribes a period of limitation of three years, which period had already elapsed during the pendency of the proceedings in <ORG>, the Court Martial would have no jurisdiction to try the accused and that the trial held by the learned Trial Judge could not be said to have been vitiated in view of this circumstance.

(3) In view of a letter addressed by the Brigadier of the Division concerned to the Police Officer for investigating the offences, it can be said by necessary implication that the <ORG> authorities had opted for the trial of the case by the ordinary <ORG>.

<ORG> repelled all the three contentions, allowed the appeal of the officer who was convicted, and dismissed the appeal of the <ORG> calling into question the acquittal of the remaining two.

Besides reiterating the same three contentions before this Court, learned counsel for the appellant has raised a new point which was not urged before <ORG>. We propose to deal with the submissions which were urged in <ORG> before coming to grips with the new point sought to be raised by the learned counsel for the appellant State.

For a proper appreciation of the first point, a quick look at the statutory provisions and the position emerging therefrom is called for. In regard to the offences which fall within the purview of Section 70 of the Army Act of 1950, an offender can be tried only by Court Martial whereas in regard to offences falling within the purview of Section 52 of the said Act, the offences can be tried both by the ordinary criminal court as also by the Court Martial both of which have concurrent jurisdiction. The offences with which the concerned accused were charged before the learned Trial Judge were offences which fell within the scope of Section 52 of the Army Act of 1950 and accordingly the ordinary criminal court as also the Court Martial had concurrent jurisdiction. In order to avoid any conflict of jurisdiction between the criminal court and the court martial in regard to offenders who are charged with having committed offences which fall under the purview of Section 52 of the Army Act, 1950, Section 549(1) 1 of Cr. P.C. provides that Central Government may make Rules consistent with Cr. P.C. and the Army Act . In pursuance of this provision contained in Section 549(1) Cr. P.C. <ORG> has framed Rules known as Criminal Courts and Court Martial (Adjustment of Jurisdiction) Rules, 1952. Rule 3 of the said Rules requires that when person subject to military, <ORG> or <ORG> law is brought before a Magistrate on accusation of an offence for which he is liable to be tried by Court Martial also the magistrate shall not proceed with the case unless he is requested to do so by the appropriate military authority. On a combined reading of rules 3 and 4/2, it is evident that in case the Megistrate is of the opinion that he should proceed with the case without there being any such request from the appropriate military authority, the concerned Magistrate is enjoined to give notice to the commanding officer in this behalf. Till the expiry of seven days from the service of such notice on the commanding officer, the Magistrate is prohibited from making any order of conviction or acquittal or framing any charges or committing the accused.

1 "The Central Government may make rules, consistant with this Code and the Army Act , the Naval Discipline Act and the Indian Navy (Discipline) Act, 1934 and the Air Force Act and any similar law for the time being in force, as to the cases in which persons subject to military, naval or air-force law shall be tried by a Court to which this Code applies, or by court-martial; and when any person is brought before a Magistrate and charged with an offence for which he is liable to be tried either by a Court to which this Code applies, or by a court-martial, such Magistrate shall have regard to such rules, and shall in proper cases deliver him, together with a statement of the offence of which he is accused, to the commanding officer of the regiment, corps, ship or detachment to which he belongs, or to the commanding officer of the nearest military, naval, or air-force station, as the case may be for the purpose of being tried by the Court-Martial."

2. "3. Where a person subject to military, naval or <ORG> law is brought before a Magistrate and charged with an offence for which he is liable to be tried by a court- martial, such magistrate shall not proceed to try such person or to issue orders for his case to be referred to a Bench, or to inquire with a view to his commitment for trial by <ORG> or <ORG> for any offence triable by such Court, unless

(a) he is of opinion, for reasons to be recorded, that he should so proceed without being moved thereto by competent military, naval or <ORG>, or

(b) he is moved thereto by such authority.

It is in the background of these provisions that <ORG> has taken the view that compliance with the procedure prescribed by the Rules is a mandatory requirement and that any proceedings undertaken by the learned Trial Judge without compliance with the aforesaid mandatory procedure would vitiate the trial before the ordinary criminal court and the entire proceedings would be rendered null and void. Faced with this situation, counsel for the <ORG> contended before <ORG> that the procedure embodied in Section 549(1) of the Cr. P.C. and Rules framed thereunder were applicable only to the court presided over by a magistrate and not to a Judge presiding over <ORG>. This contention was negatived by <ORG>. And it has now been reiterated before us, it being an admitted position that the prescribed procedure has not been followed by the learned trial judge in the case giving rise to the present appeals. This argument was possibly inspired by a point debated in <CITATION> .  (2) S.C.R. 195. The view was taken therein that inasmuch as the aforesaid Rules refer to a Magistrate the Rules were not attracted with regard to a trial before a Special Judge. It was presumably on accout of this decision that the Criminal Law (Amendment) Act of 1952 was amended by incorporating Sections 8 (3A) and 11, reading as under:

Section 8(3A) : In particular, and without prejudice to the generality of the provisions contained in sub-section (3), the provisions of Sections 350 and 549 of the Code of Criminal Procedure, 1898 shall, so far as may be, apply to the proceedings before a Special Judge, and for the purposes of the said provisions a Special Judge shall be deemed to be a Magistrate.

Section 11 : Military, naval and air force laws not to be affected-

4. Before proceeding under clause (a) of rule 3 the Magistrate shall give written notice to the Commanding Officer of the accused and until the expiry of a period of seven days from the date of the service of such notice he shall not

(a) Convict or acquit the accused under sections 243 , 245 , 247 or 248 of the Code of Criminal Procedure, 1898(V of 1898), or hear him in his defence under section 244 of the said Code, or

(b) frame in writing a charge against the accused under section 254 of the said Code; or

(c) make an order committing the accused for trial by <ORG> or <ORG> under section 213 of the said Code."

(1) Nothing in this Act shall affect the jurisdiction exercisable by, or the procedure applicable to, any <ORG> or other authority under any military, naval or air-force law. This amendement was effected by virtue of Central Act XXII of 1966. Having regard to the provision contained in Section 8 (3 A) of the Criminal Law (Amendment) Act of 1952 as it now stands it is clear that a Sepcial Judge is deemed to be a Megistrate for the purposes of the Rules framed under Section 549 (1) of the Code of Criminal Procedure with the end in view to eschew the conflict between <ORG> Martial on the one hand and the ordinary criminal courts on the other. The High <ORG> was therefore perfectly justified in repelling this contention urged on behalf of the appellant State, albeit on a reasoning which is somewhat obscure. Confronted by this situation counsel for the appellant State has raised a new point to which a reference was made in the earlier part of the judgment. The new point which has been so raised is that Sections 8(3A) and 11 quoted hereinabove which were incorporated by Central Act 11 of 1958 as further amended by Central Act XXII of 1966 were not applicable to the State of West Bengal from where the matter giving rise to the present appeals stems. Since no such argument was advanced before the High <ORG>, initially, we were reluctant to permit counsel to raise this new point. But having regard to the fact that it goes to the root of the matter we have permitted counsel to urge this contention. We will however deal with it after exhausting all the points which were urged before the High <ORG>.

The next point which was unsuccessfully urged before <ORG> was in the context of Section 122 of the Army Act of 1950 which prescribes a period of limitation of three years. <ORG> did not accede to the submission in this behalf having regard to the law enunciated by this Court in <CITATION> . <NAME>.  (1) S.C.R. 1010. We are of the opinion that <ORG> was right. This Court in the aforesaid case has taken the view to the effect that the question being essentially one of the initial jurisdiction of the ordinary criminal court on the one hand and the court-martial on the other, unless the procedure prescribed by the rules is complied with the ordinary criminal court would not have initial jurisdiction in regard to the matter, as is evident from the following passage:

"It is an admitted fact in this case that the procedure speci-

fied in rule 3 was not followed by the Special Judge, <NAME> before framing charges against the respondent. Section 549 (1) Cr. P.C. and rule 3 are mandatory. Accordingly the charges framed by the Special Judge against the respondent cannot survive. But counsel for the appellant has urged before us that in the particular circumstances of this case the respondent is not 'Iiable to be tried' by a Court-martial.

Section 122 (1) of the Army Act , 1950, provides that no trial by court-martial of any person subject to the Army Act for any offence shall be commenced after the expiry of the period of three years from the date of the offence. The offences are alleged to have been committed by the respondent in November-December, 1962. So more than three years have expired from the alleged commission of the offence. It is claimed that having regard to Sec. 122(1), the respondent is not liable to be tried by court-martial. This argument is built on the phrase "is liable to be tried either by the court to which this Code applies or by a Court-martial" in section 549(1) . According to counsel for the appellant this phrase cannotes that the ordinary criminal court as well as the court-martial should not only have concurrent initial jurisdiction to take cognizance of the case but should also retain jurisdiction to try him up to the last stage of conviction or acquittal. We are unable to accept this construction of the phrase.

As regards the trial of offences committed by <ORG> men, the <ORG> Act draws a threefold scheme. Certain offences enumerated in the <ORG> Act are exclusively triable by a <ORG>-martial; certain other offences are exclusively triable by the ordinary criminal courts; and certain other offences are triable both by the ordinary criminal court and the court-martial. In respect of the last category both the <ORG> have concurrent jurisdiction. Section 549 (1) Cr. P.C. is designed to avoid the conflict of jurisdiction in respect of the last category of offences. The clauase "for which he is liable to be tried either by the <ORG> to which this Code applies or by a court-martial" in our view, qualifies the preceding clause "when any person is charged with an offence" in s. 549 (1). Accordingly the phrase "is liable to be tried either by a court to which this Code applies or a court-martial" imports that the offence for which the accused is to be tried should be an offence of which cognizance can be taken by an ordinary criminal court as well as a court-martial. In our opinion, the phrase is intended to refer to the initial jurisdiction of the two courts to take cognizance of the case and not to their jurisdiction to decide it on merits. It is admitted that both the ordinary criminal court and the court-martial have concurrent jurisdiction with respect to the offences for which the respondent has been charged by the Special Judge. So, s. 549 and the rules made thereunder are attracted to the case at hand"

Having regard to the enunciation of law to this effect it is evident that the ordinary criminal court would have no jurisdiction to take cognizance of the case and to try the accused in a matter where the procedure prescribed by the Rules has not been complied with. The initial lack of jurisdiction to take cognizance and try the case would of logical necessity vitiate the trial and the order of conviction and sentence would be liable to be quashed as a result thereof. We are therefore unable to accede to the submission urged on behalf of the appellant State that even if the rules are applicable, having regard the fact that more than three years have expired from the date of the commission of the alleged offence, the trial is not vitiated.

The last contention raised before <ORG> was that having regard to the fact that the investigation which preceded the lodging of the complaint before the learned Trial Judge was commenced in pursuance of a letter written by the Brigadier of the <ORG>, which contained a request for investigation by the <ORG> into alleged offences, it can be said that the <ORG> authorities had opted for the trial of the accused person by the ordinary criminal court. The argument was that by necessary implication this would follow as a logical corollary. <ORG> brushed aside this contention as untenable, taking into account the contents of the letter in question. The said letter was in the following terms:

"Dear Sir, (1) Please refer to Memo No. 8940 dated August 28,  from Shri <NAME>, Superintendent of Police, D.E.B., Darjeeling.

(2) At appendix 'A' please find a copy of the investigation that had been carried by us. We request you to take over the case and submit your detailed report to us at your earliest convenience."

<ORG> relied on the fact that the <ORG> had called for a detailed report by the <ORG> which would show that the <ORG> authorities had not taken any such decision either expressly or by necessary implication. Counsel for the appellant has not been able to press this point with any vigour for the obvious reason that it relates to the stage of investigation preceding the complaint. The question regarding exercise of jurisdiction by the court-martial would arise only after the investigation was completed and the police report was available. What is more, it is only after the prescribed procedure under Rules 3 and 4 of the Rules is resorted to by the ordinary criminal court that the question of exercising an option can arise. In the present matter, admittedly the procedure prescribed by the Rules was not followed. Under the circumstances it is futile to contend that the <ORG> authorities had voluntarily abandoned their option to try the accused person in the court-martial. There is no substance in the plea and it has been rightly repelled by <ORG>.

At long last, we come to the last point, the point which was not urged before <ORG> but which we have permitted the learned counsel for the State to raise before us. It is argued that the Criminal Law (Amendment) Act of 1952 was not applicable to the State of West Bengal inasmuch as the State of West Bengal had enacted an Act of its own known as West Bengal Criminal Law Amendment (Special Courts) Act, 1949 which was in operation throughout the whole of West Bengal. No doubt it is true that Criminal Law is a subject which falls within the scope of Entry 1 of List III (concurrent list) embodies in 7th Schedule to the Constitution of India. <ORG> as well as <ORG> both can therefore legislate in regard to criminal law. The contention that the Criminal Law (Amendment) Act , 1952 enacted by <ORG> is not applicable to the State of West Bengal is altogether misconceived. It is necessary to advert to the legislative history for a proper appreciation of the point at issue. In 1938 <ORG> had enacted the Criminal Law (Amendment) Act of 1938. In 1949 the State of West Bengal introduced the State legislation being the West Bengal Criminal Law Amendment (Sepcial Courts) Act, 1949 (West Bengal Act ). This Act was further amended after the enforcement of the Constitution of India by incorporating Section 13 in 1953-3. The said Section 13 has great significance from the stand point of the present argument:

"Certain Sections of Act XLVI of 1952, not to apply to West Bengal:

13. Sections 6 , 7 , 8 , 9 and 10 of the Criminal Law Amendment Act, 1952 shall not apply and shall be deemed never to have applied to West Bengal."

It will thus be seen that Section 13 of the West Bengal Act in terms accords recognition to the applicability of the Criminal Law (Amendment) Act of 1952 except and save some of the sections namely sections, 6, 7, 8, 9 and 10 thereof which as provided in Section 13 shall not apply and shall be never deemed to have applied to West Bengal. It is implicit in Section 13 of the West Bengal Act that the Central Act namely Criminal Law (Amendment) Act of 1952 is applicable to the State of West Bengal except and save the aforesaid five sections. There can be no doubt or debate about this position having regard to the fact that criminal law is a subject which falls under the concurrent list and the Criminal Law (Amendment) Act of 1952 enacted by the <ORG> is applicable subject to inconsistency, if any, between the said Act and the West Bengal Act . So far as the coverage of the present point is concerned, there is no such inconsistency. The West Bengal Act does not contain any provisions pertaining to personnel governed by the <ORG> Act . It is altogether silent in regard to the matter pertaining to the procedure to be followed in regard to <ORG> personnel from the perspective of Section 549 Cr. P.C. and the rules framed under the authority thereof. There is thus no conflict between the Criminal Law (Amendment) Act of 1952 and the West Bengal Act in so far as this matter is concerned. Such being the position the provisions contained in Criminal Law (Amendment) Act of 1952 with a special eye on the procedure to be followed in Section 8(3A) and Section 11 of the Criminal Law (Amendment) Act of 1952 will operate in this sphere without any let or hindrance. And inasmuch as Section 8(3A) in terms provides that the provision of Section 549 Cr. P.C. shall so far as may be applied to the proceeding before the Special Judge

3. This section was added by Section 3 of the West Bengal Criminal Law Amendment (Special Courts) Amending Act of 1953 (West Bengal Act of 1953).

and that for the purposes of that provision a Special Judge shall be deemed to be a Magistrate, the said provisions remain fully alive and uneffected by the West Bengal Act . In view of this provision the procedure prescribed by Section 549 Cr. P.C. read with the rules framed thereunder which have been quoted in the earlier part of the judgment will be applicable to a proceeding before a Special Judge in West Bengal as well. In so far as the <ORG> personnel are concerned therefore the law governing them and the procedure required to be followed in their case would be the same in West Bengal as elsewhere in India as it should be. It may incidentally be mentioned that in the West Bengal Act also the Judge presiding over <ORG> is called a Special Judge (vide Schedule to the West Bengal Act ). He would therefore deemed to be a Magistrate for the Purposes of the Rules in view of Section 8(3A) of the Criminal Law (Amendment) Act of 1952. The mandatory procedure prescribed by the Rules is accordingly obligatory even in respect of proceedings before <ORG> under the West Bengal Act . There is thus no substance in this point. We are of the opinion that this feeble and faint-hearted attempt is born out of desperation and deserves no more consideration. We have therefore no hesitation in negativing this plea. No other point has been urged. The appeal must therefore fail. But before we write 'finis' it may be made clear that the acquittal rendered by <ORG> is on the ground of lack of jurisdiction on the part of the learned Special Judge who tried the case in <ORG> and not on merits. The expression 'acquitted' has been employed by <ORG> though it was sufficient to say no more than this, that the order of conviction and sentence was without jurisdiction and was therefore being quashed. In the eye of law, it is not an acquittal since it is not on merits. It is thereore for the competent authority to decide whether or not to subject the accused to a fresh trial after following the procedure prescribed by the Rules. With these observations, we dismiss the appeal.

M.L.A. Appeal dismissd.


ORDER <NAME>, C.J.

1. This batch of revisions is filed against the order of <ORG> holding that the material used to pack the redried tobacco was the subject of sale and was, therefore, liable to sales tax.

2. The petitioners <ORG> & Co. have a plant for redrying raw tobacco. Owners of tobacco give them tobacco for redrying, the petitioners purchase the material necessary for packing, redry the tobacco and pack it before delivering it to the customer. They collect from each customer a consolidated charge for redrying as well as packing. Aggregate charges are levied at the rate of one anna per Ib. besides a charge of Re. 1 per bale. For the years 1950-51, 1951-52, 1952-53 and 1953-54 they were assessed to sales tax on the sale turnover of the packing material. <ORG> held, that, though tobacco was exempt from sales tax, the packing material was not exempt and that, as the packing materials were transferred to the constituents for consideration the transactions amounted to sales and, therefore, they were liable to sales tax.

3. Mr. <NAME>, learned counsel for the appellants, contended that packing is an integral part of the drying process and, therefore, the contract between the parties is one of work and labour and that no sale is involved in the transaction. The learned Government Pleader, on the other hand, argued that the process of packing is not a part of the drying process but is entirely extraneous to it. As the material is purchased by the assessees and the property therein is transferred to the customers for price, the transaction, in so far as the packing material is concerned, is clearly one of sale.

4. Before adverting to the contentions of the parties it may be convenient to notice briefly the manner in which raw tabacco undergoes the drying process. Why and how are the packing materials used ? Are they used only to pack the dried tobacco to keep it intact and to prevent pollution and exposure, or, do they form an integral part of the drying process itself ?

5. <NAME> in his book on the production of tobacco says at page 422 :

When the storage room is artificially heated the fermentation begins at once and the process is termed forced sweating.... Perhaps the chief weakness of the sweating procedure is the increased danger of decay from black rot because of lack of control of the moisture content of the steam at the time of packing. Turkish cigarette tobaccos are fermented chiefly in bales and there is a moderate rise in temperature in the course of the process.

THE AGING PROCESS :

Although the general objective is much the same, the very slow natural aging which flue-cured tobacco normally undergoes after packing perhaps stands in strongest contrast with the rapid and vigorous fermentation characterising cigar tobacco and certain other types when they contain high percentages of moisture. Prior to packing, the moisture content of flue-cured tobacco is standardised at a low level (10 to 12 per cent) and this is necessary, for flue-cured leaf will not ferment normally with a high moisture content but instead it will quickly blacken and spoil. As the tobacco emerges from the redrying machine the hands are promptly packed in hogsheads under hydraulic pressure while tobacco is still warm.

6. The aforesaid two passages do not establish that packing is an integral part of the drying process. The redried tobacco is immediately packed to preserve the chemical changes obtained by the drying process and to prevent decay. So, too, scents, medicines, salt, alcohol and similar commodities are bottled or packed to preserve the high quality obtained by scientific processing. It cannot be said that bottles are a part of the process of manufacture of medicine, scent or alcohol as the case may be.

7. We shall first consider the decisions relied upon by the learned counsel for the petitioners in support of his contention. In Clay v. Yates 108 E.R. 46, the contract was that the plaintiff, a printer, should print for the defendant a second edition of his book, the plaintiff to find the materials including the paper. It was held that this was not a contract for the sale of a thing to be delivered at a future time nor a contract for making a thing to be sold when completed but a contract to do work and labour, furnishing the materials. As it was a contract for work and labour, it was ruled that the said contract was not covered by the 17th section of the Statute of Frauds which required a memorandum in writing if the contract was one of sale. <NAME>, C.B., laid down the following rule to ascertain the character of contracts in similar cases :

Whether the work and labour is of the essence of the contract or whether it is the materials that are found." He proceeded to state : "My impression is that, in the case of a work of art, whether it be silver or gold or marble, or common plaster, that is a case of the application of labour of the highest description and the material is of no sort of importance as compared with the labour and therefore that all this would be recoverable as work and labour and materials found. I do not mean to say the price might not be recovered as goods sold and delivered if the work were completed and sent home. I am rather inclined to think it is only where the bargain is merely for goods thereafter to be made and not where it is a mixed contract of work and labour and materials found that the Act of Lord Tenterden applies.

8. <NAME>, B., said : "There are three matters of charge well known in the law : for labour simply, for work and materials and another for goods sold and delivered." He added: "Suppose an artist paints a portrait for three hundred guineas and supplies the canvas for it, which is worth 10s., surely he might recover under a count for work and labour.

9. In Lee v. Griffin 124 E.R. 555, the opinions expressed by <NAME>, C. B., and <NAME>, B., were not followed and the learned Judges held that, in the case of a contract to make two sets of artificial teeth, the contract is one of sale and not of labour and work. <NAME>, J., said : "When the contract is such that a chattel is ultimately to be delivered by the plaintiff to the defendant when it has been set, then the cause of action is goods sold and delivered.

10. In <NAME> v. <NAME> [1935] 1 K.B. 579, the defendant orally commissioned the plaintiff, an artist, to paint the portrait of a lady and promised to pay 250 guineas therefor. The defendant subsequently repudiated the contract before the portrait was completed. In an action by the plaintiff for the agreed price of the portrait, it was held that the contract was a contract of work and labour and not for the sale of goods as the substance of the contract was that skill and labour should be exercised upon the production of the portrait and that it was only ancillary to that contract that there would pass from the artist to his customer some materials, namely the paint and the canvas, in addition to the skill and labour involved in the production of the portrait. At page 584, <NAME>, L. J., says :

I can imagine that nothing would be more surprising to a client going to a portrait painter to have his portrait painted and to the artist who was accepting the commission than to be told that they were making a bargain about the sale of goods.

11. At page 585, he quoted with approval the statement of <NAME>, B., in Clay v. <NAME> 108 E.R. 461 as follows :-

I am of the same opinion. There are three matters of charge well known to the law, viz., for labour simply, for labour and materials, and for goods sold and delivered.

12. It is not necessary to multiply cases.

13. The English decisions cited do not turn upon any question of the taxability of the materials forming part of a finished product. Invariably, the application of the provisions of the Sale of Goods Act or the Statute of Frauds was in question and it became necessary to ascertain whether the contract was one of sale of goods or only of work and labour. The said decisions and others recognised four categories of contracts : (i) contracts for labour and work sudh as one for the production of a work of art, picture, statue, etc., (ii) contract primarily for labour and the materials supplied are only ancillary, i.e., paper and ink used by a painter or an artist, (iii) contract of sale of the finished product-denture or a ship of which the parts supplied become an integral part of the denture or the ship as the case may be, and (iv) contract of sale of the finished product but some of the materials supplied do not form part of the finished product but are sold separately. The present case is not covered by any of the aforesaid principles. Here, there is no sale of any finished product, for the assessee has no property in the tobacco and has undertaken only to perform the drying process for consideration. It is simply a contract of work and labour so far as the drying process is concerned.

14. It cannot be said that the packing material has become an integral part of the drying process like the parchment and ink of an artist. They are extraneous marketable material used to preserve dried tobacco from contamination or loss.

15. Now, coming to the Indian decisions, strong reliance is placed on the decision of <CITATION> (1955) 1 M.L.J. 87. One of the questions raised in that case was whether a building contract involved the sale of the materials used in the building separately. The learned Judges held, that, unless there was an intention in the contract specifically to pass the property in the materials as and when they are brought to the site, the property in the materials passes only when they are fixed to the building. At page 95, <NAME>, J., observed :-

This leads us to the consideration of the question whether the contracts of the assessees, which are mostly building contracts, constitute contracts of sale of goods and contain any element of the nature of the sale of goods to justify the imposition of the tax upon them. Contracts, which involve labour and work, may relate to a chattel, such as building a ship or an engine or painting a picture, or may relate to immovable property, such as building contracts, contracts for the construction of bridges, dams, laying roads and so on. A contract purely for the supply of labour and work is not a contract of sale of goods, as labour and work cannot be deemed to be goods in any sense of the term. In the case of a chattel, it has to be produced by the labour and work of the contractor and also by the supply of materials necessary for producing the thing. This was the subject-matter of consideration in a number of cases in England and the question arose whether such contracts are contracts for the sale of goods or contracts for work and labour and materials furnished.

16. After considering the case law on the subject, the learned Judge held that the contract in question was a building contract and that the material used was not the subject-matter of sale.

17. A different view was taken by <ORG> in <CITATION>  6 S.T.C. 93., Hidayatullah, J., as he then was, observed at page 106 thus :

We are here concerned with a taxing measure and the power to levy the tax can only be determined by a fair consideration of the ambit of the entry by which the power is conferred. If the pith and substance of the Act come within that ambit, the power is there, otherwise not. If a building contract was not split up into its component parts, that is to say, material and labour, in legislative practice relating to the ordinary regulation of sale of goods, there is no warrant for holding that it could not be so split up even for purposes of taxation. The reasoning in the <NAME> case does not take into account the fundamental fact that the <ORG> could select out of a composite transaction the actual sale of materials and tax such sale in the exercise of undoubted plenary powers.

18. It is not necessary to express in this case our preference to one of the two views. Even if the Madras view be correct, it has no bearing on the present case as the learned Judges held that the contract in that case was one of labour and the material supplied became an integral part of the building.

19. We shall now turn our attention to some of the cases, which are really relevant to the enquiry before us. <CITATION> (1950) 2 M.L.J. 449, a Division Bench of <ORG>, of which one of us was a member, had to consider whether gunny bags in which salt was packed was also exempt from sales tax along with the salt. The salt was exempt from sales tax. But the assessee was taxed on the turnover calculated on the price of the gunny bags sold by him. It was admitted, in that case, that the assessee bought the gunny bags and included the cost price of the gunny bags in the ultimate price charged by him for the salt bags. It was contended on his behalf that, as the article was capable of being sold without being packed in gunny bags, the gunny bags must be exempted from sales tax as salt was exempted on the ground of necessity. The Division Bench held that the assessee in that case was carrying on the business of buying and selling gunny bags in addition to the business of buying and selling salt. At page 450, <NAME>, J., observed :

Thus, if salt is exempted but not the gunny bags in which it is packed and sold, if we exempt the gunny bags without a special exemption to that effect, then gunny bags in which rice and other articles are packed, and drums and tins in which oil is packed, etc., will also claim exemption.

20. <CITATION>  4 S.T.C. 129, the question was whether the turnover from gunny bags in which the rice was packed was liable to sales tax. As in the case of salt, rice was an exempted commodity. The learned Judges of <ORG> held that gunny bags came within the definition of "goods" and that as the assessee charged the <ORG> for the bags which contained the rice, the transaction came within the definition of "sale" and the assessee was, therefore, a dealer within the meaning of the definition and was liable to sales tax. When it was contended that the rice could not be sold without packing them in gunny bags, following the Madras decision, they did not accept it.

21. <ORG> again in <CITATION> (1954) 2 M.L.J. 588 rejected a similar contention. There, the assessee sold tobacco and also included the price of the packing material in the sale price of the tobacco. When exemption was claimed from sales tax in regard to the packing material, <NAME>, J., who delivered the judgment on behalf of the Bench, rejecting the claim, observed as follows :-

The sum of Rs. 1,70,105-6-0 represented the estimated value of the packing materials in which tobacco was consigned to the purchasers outside the State of Madras. The claim based upon Section 4 of the Act is easiest dismissed. Packing materials cannot obviously come within the scope of tobacco in any form within the meaning of Section 4 of the Act.... The value of the packing materials themselves had to be estimated.

22. No doubt, in that case, it was held that the assessee was not entitled to the benefit of Rule 5(1)(g)(ii) of -the Turnover and Assessment Rules as he charged an inclusive price for both the tobacco and the packing materials when he sold the goods to the purchasers. In the present case, no attempt was made to rely upon the aforesaid rule, presumably because the assessment related to a period prior to the coming into force of the rule.

23. <CITATION>  5 S.T.C. 428, the petitioner owned a cotton press with which he pressed gin cotton belonging to his clients and recovered only the pressing charges. The question whether the hessian and iron hoops used for packing the bales were sold by the assessee and were, therefore, liable to sales tax was raised. In that context, the learned Judges observed at page 443 :

The order is silent as to the person supplying hessian and iron hoops. If they are supplied by the owner of cotton, then there is no transfer of ownership of hessian and iron hoops from the petitioner to its client. But if this material, which is indispensable for turning out a pressed cotton bale, is supplied by the petitioner, a question may well arise whether there is any sale of this material.

24. Though the learned Judges did not finally decide the point, they brought out the distinction between a case where the material was supplied by the owner of the cotton and a case where the assessee supplied it.

25. The only distinction that can possibly be attempted to be made between the aforesaid cases and that on hand is that, in the former the exempted goods were also sold along with the material, while in the latter there was no sale of the exempted goods. It was argued that as the sale of the exempted goods along with the packing material was admitted in those cases, the <ORG> have held that there was a sale of the materials. We cannot see any distinction on principle between those cases and the present one. There, the question was whether when the salt or tobacco, not a taxable product, was sold, the bags or the materials used to preserve the said product were taxable. If, as was contended, the packing material became an integral part of the dried tobacco, there could not have been a sale of the material apart from the tobacco. So too, if the gunny bags should be treated as an integral part of the salt, the bags should have been exempted along with the salt. They were taxed because they were held to be extraneous and separate marketable material though necessary and convenient for the preservation and the delivery of the tobacco or salt as the case may be.

26. In the case of tobacco given for drying purposes, the owner may supply the material or the assessee may supply the material himself. If, in the first case, the material cannot be part of the drying process, we do not see how in the second case it becomes part of the drying process. It may be that the labour involved in the packing may be charged for as part of the drying process but the material is clearly separable from the process.

27. Now, let us scrutinise the relevant provisions of the Madras General Sales Tax Act, for, in the ultimate analysis, the point has to be decided on the terms of those provisions. Section 3(1) says that, subject to the provisions of this Act, every dealer shall pay for each year a tax on his total turnover for such year. "Dealer" is defined to mean any person, who carries on the business of buying or selling goods [Vide Section 2(b) ]. Under Section 2(c) " 'goods' means all kinds of movable property other than actionable claims, stocks and shares and securities and includes all materials, commodities and articles including those to be used in the construction, fitting out, improvement or repair of immovable property or in the fitting out, improvement or repair of movable property." Section 2 (h) defines sale thus :-

'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge.

28. Section 2(i) defines "turnover" thus :-

'Turnover' means the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover.

29. A combined reading of the provisions relevant to the question raised may be stated thus: Every person, who carries on the business of transferring property in any kind of movable property including materials, commodities and articles in the fitting out, improvement or repair of movable property to another for valuable consideration would be liable to tax on the turnover. It cannot be said that packing material is not "goods" as defined under the Act. They are clearly movable property within the wide meaning of the word "goods" in the Act. The assessee had property in these goods, for, it is conceded, that he purchased the material. It cannot also be disputed that he transferred the property in the goods to his customer for consideration. The amounts clearly show that he charged for the material in addition to his remuneration for drying the tobacco, though the price shown in the accounts is the inclusive one. All the ingredients of the charging section, read with the definition, are satisfied. Unless we can hold that the materials, after being packed, have been transformed into some other commodity not covered by the definition of goods, it is not possible to hold that there was no sale of that material. Though the learned counsel for the petitioner argued that packing material was an integral part of the drying process, he did not go to the extent of contending that the material lost its character as movable property. When the provisions of the Sales Tax Act clearly apply, there is really no scope for exempting them on some hypothetical considerations.

30. We will close our judgment with a citation from the decision of <ORG> in <ORG> v. Minister of Customs [1928] A.C. 340. Unlike the cases cited by the learned counsel for the petitioners, this case arose under a taxing statute. The appellants there supplied at an agreed price printed bill-heads and other commercial stationery to the order and to suit the individual requirements of individual customers. No privity of contract existed between the supplier of the paper used and the customer. Under the Act of 1922, a tax of 21/2% was imposed on sales and deliveries by Canadian manufacturers or producers and wholesalers or jobbers. It was argued before <ORG> that the contract was for work and labour done and materials supplied within the authority of <NAME> v. <NAME> 108 E.R. 461. Their Lordships in rejecting that contention, observed :-

In their Lordships' opinion the material matter to be considered is as to the meaning of the expression 'sales and deliveries by Canadian manufacturers or producers' as used in the statute.

Having regard to the language of the first proviso and to the general scope of the enactment, their Lordships entertain no doubt that these contracts were contracts of sales and deliveries by Canadian manufacturers or producers within the meaning of the taxing statute, and that the payments made under them constituted the sale price of goods produced or manufactured in Canada.

31. We have cited this decision only to show that, in the case of a taxing statute, we should be guided by the general scope of the enactment and the express provisions of the statute and not by considerations that might weigh in a case arising under the Statute of Frauds or similar statutes.

32. For the aforesaid reasons, we hold that the packing materials were goods and that there was a sale in regard to them within the meaning of the Act. If so, the turnover in respect of the transactions in question was certainly liable to sales tax. <ORG> was, therefore, right in negativing the contention of the petitioners.

33. The revision petitions fail and are dismissed with costs. Advocate's fee Rs. 250 in all the revisions.


<NAME>, J.

1. This second appeal is preferred by defendants Nos. 1 and 2 in a suit for recovery of possession of certain land. At the date of the suit the defendant No. 2 was a tenant of defendant No. 1. We are informed that there is reason to believe that defendant No. 2 has since purchased the rights of defendant No. 1. As to the facts found, it appears that on the 31st March 1895, one <NAME> mortgaged the property in suit with other properties to the plaintiffs. The property in suit is a raiyati holding.

2. On the 6th May 1896 <NAME>, the father of defendant No. 1, in execution of a money-decree obtained by him against the mortgagor purchased the property and subsequently in the same year obtained actual possession from the <ORG>.

3. In 1907 the plaintiff brought a suit upon the mortgage of 1895 against the heirs of the mortgagor and others. To that suit he did not make the father of defendant No. 1 a party. Accordingly on the 29th May 1907 <NAME> applied by a petition to be joined as a party defendant. The plaintiff opposed the application, which was rejected by the <ORG>. The mortgage suit proceeded and in the result the plaintiffs obtained a mortgage decree in the usual form and in execution purchased the property themselves on the 9th September 1908. On the 2nd March 1909 the plaintiffs obtained symbolical possession from <ORG>. Their subsequent efforts to obtain actual possession led to a criminal proceeding under Section 145, Criminal Procedure Code , which was decided on ' the 24th February 1909 in favour of defendant No. 1. The plaintiffs then instituted the present suit on the 18th June 1912. At this stage of the suit all that is claimed by the defendants-appellants is that the plaintiffs' title to eject them from the disputed land is subject to their right to redeem the plaintiffs--a right which the <ORG>s below have by these decrees concurrently refused to recognise. In denying any right to redeem in the defendants-appellants the <ORG>s below have acted on two grounds. The first ground appears to be that they were under the impression that the defendants did not claim the right to redeem in this suit and were unwilling to redeem. The second ground which is the more substantial ground is that the defendants, if they ever had any right to redeem, are precluded from exercising that right by reason of the application which <NAME> made in the mortgage suit of 1895. I will deal first with the second of these two grounds.

4. The petition which <NAME> presented to the <ORG> in that suit has not been produced by either of the parties to the present suit. But we have the order of the <ORG> on the petition passed on the 30th May 1907. The order begins in this way: "I have heard the Pleader for the plaintiff and the Pleader for the person who 'prays to be added as a defendant. The plaintiff's Pleader objects to the third party being joined as a defendant." Then it goes on to say: The plaintiffs sue on a mortgage of a raiyati. The third person who seeks to be made a defendant says he purchased the land at a money sale and got himself registered in the sherista of the landlord. He claims the land on the strength of such recognition also." He concludes with these words: "I do not think I should be justified in adding this person as a defendant against the will of the plaintiff, particularly when he claims a title which may be pleaded as defeating the plaintiff's right of mortgage." Now upon the terms of that order it is clear that <NAME>'s application to be made a party was rejected at the instance of the mortgagee plaintiffs. The grounds on which the <NAME> based his order are not very clear. It may be that <NAME> indeed set up a title which was paramount to the mortgage title of the plaintiffs. His plea may have been of the same nature as the plea which was put forward by the purchaser of a part of the mortgaged property in the case of <CITATION> 13 Ind. Cas. 698 : 39 C. 513 : 16 C.W.N. 475 : 15 C.L.J. 369. If that was the plea of <NAME>, it is possible that if he had been made a party and the plea had been tried it would have proved unsuccessful in the event as it did in the case cited. But, apart from that plea, it is not at all clear. <NAME> did not also set up the case on which the defendant No. 1 now relies. The pleadings in the present suit lend some support to the view that <NAME> also put forward the contention that the plaintiffs' mortgage was not a bona fide transaction. If, therefore, <NAME> had been permitted at his own instance to become a party defendant in the suit, he might have filed a written statement putting forward both defences to the plaintiffs' claim. As a matter of fact, however, lie was not made a party, he had no opportunity of filing a written statement or of stating his case in a formal way. In that state of things, in my opinion, the <ORG>s below were wrong in holding, on the authority of such cases as <NAME> v. <NAME> 12 C. 414 : 12 I.A. 171 : 9 Ind Jur. 439 : 4 Sar. P.C.J 685 : 6 Ind. Dec. (N.S.) 281 ( <CITATION> 33 C. 425 : 3 C.L.J. 205 that the defendant-appellants are precluded in the present suit from asserting any right to redeem. In the case of <NAME> v. <NAME> 12 C. 414 : 12 I.A. 171 : 9 Ind Jur. 439 : 4 Sar. P.C.J 685 : 6 Ind. Dec. (N.S.) 281 (P.C) decided by <ORG> the defendant who claimed the right to redeem had been made a party to the mortgagee's suit. In that suit he had set up the paramount title which he claimed and he had said nothing about his right to redeem. Having been a party to the suit and the suit having been dismissed as against him on the ground that as he claimed a paramount title he was not a proper party to the suit, it was held that in the subsequent suit brought by the mortgagee for possession of the property, it was too late for him then to set up a new title under which he would have the right of redemption. The present case is almost the converse of that case. <NAME> was not permitted to become a party to the mortgage suit; and, as I have said he had no opportunity in that suit to put forward the case that even if he failed to establish a paramount title he had at least a right which would entitle him to redeem the plaintiffs. In my opinion, therefore, the <ORG>s below are wrong in their conclusion that in the present suit the defendant-appellants are debarred from setting up a right of redemption.

5. Coming next to the first ground I find it somewhat difficult to reconcile the statements in the judgment of the <ORG> below that the appellant claims no right to redeem with the fact that this question is discussed in both the <ORG> in connection with issues Nos. 2 and 9 framed by the first <ORG>. As regards the lower Appellate <ORG>, it appears that the right to redeem was expressly asserted and insisted upon in paragraph 4 of the grounds of appeal filed in that <ORG>. As to the plaintiffs' pleadings paragraphs 6 and 8 of the plaint embody an admission of the right of the defendants to redeem, should they be able to prove that the decree under which <NAME> obtained possession was not a decree founded upon a collusive transaction. In paragraph 6 of the plaint the plaintiffs say: "Particularly, even if the defendant No. 1 or his predecessor <NAME> had any decree, still the plaintiffs' mortgage being preferential, they had no right to retain the land of the schedule in their possession without redeeming the same." In paragraph 8 the plaintiffs say again: "If it is held that defendant No. 1 has any right to redeem any mortgage, then he may be given the opportunity to pay what is justly due to the plaintiffs on account of their mortgage; and if that opportunity he not availed, then a decree for possession may be awarded to the plaintiffs." Each party was, as usual, disputing the validity of the transaction under which the other claimed title. The plaintiffs said that <NAME>'s money-decree was based on a collusive deed without consideration. The defendants impugned the mortgage of the plaintiffs on very much the same ground. What the <ORG> below have found is that both the transactions were bona fide and real transactions. It would seem to follow from the admissions in paragraphs 6 and 8 of the plaint that the plaintiffs' right to eject the defendants must be subject to the defendants' right to redeem the plaintiffs. There is nothing, so far as I can see, in what happened in the previous suit or in the conduct of the present suit by the defendants to debar them from this right of redemption, to which on the facts found they are clearly entitled. In that view, in my opinion, the decree of the <ORG> below must be modified and the right of the defendants to redeem the plaintiffs declared.

6. The result, therefore, is that this appeal is allowed, the right of the defendants-appellants to redeem the plaintiffs in respect of the property in dispute is declared and the case remitted to the Court of first instance for that Court to take the proper accounts, determine the amount which the defendants should pay the plaintiffs for the purpose and make a decree accordingly. The appellants are entitled to their costs of this appeal. We make no order as to the costs in the <ORG> below. The costs of the further enquiry as to accounts now directed will be in the discretion of the Court of first instance.

7. Let the record be sent down as soon as possible.

Beachcroft, J.

8. I agree.


PETITIONER: <ORG>. Vs. RESPONDENT: <NAME> & ORS. ETC. DATE OF JUDGMENT: 08/02/1996 BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J) G.B. PATTANAIK (J) CITATION: 1996 AIR 1328 1996 SCC (7) 470 JT 1996 (2) 569 1996 SCALE (2)423 ACT: HEADNOTE: JUDGMENT:

WITH CIVIL APPEAL NO.4232 OF 1994 O R D E R These appeals by special leave arise from the orders of <ORG> of <ORG> made on August 27, 1993 in Misc. Petition Nos.1965/90 and 2091/90. The facts not in dispute are that the respondents while working as Middle Management Grade Scale II officers (for short, "MMGS-II") in <ORG>, its Bhopal Circle have challenged the policy of the appellant-Bank dated March 21, 1990 and August 6, 1990 whereunder the officers who have not completed two years of line assignment and two years Rural/Semi-urban service were to be considered eligible for promotion to Middle Management Grade Scale III (for short, "MhGS-III"). <ORG> has held that they are ineligible and such a clubbing of ineligible officers with eligible officers is violative of Article 14 and accordingly struck down the criteria and given directions in the order. Calling in question of the said order, these appeals by special leave came to be filed.

The Preamble of <ORG>, Act 23 of 1955 (for short, the "Act~) envisages establishment of <ORG> (for short, the "<ORG>") for extending banking facility on a large scale more particularly in the rural/semi urban area and for diverse other public purposes. Section 43(1) of the Act gives power to the <ORG> to appoint such number of officers, advisers or employees as it considers necessary or desirable for the efficient performance of its functions and to determine the terms and conditions of their appointment and service. Regulation 55 of <ORG> General Regulations (for short, the "Regulations") provide the power of <ORG> in respect of the staff. Regulation 55(2)(a) envisages that appointing and/or promoting authority for various categories/Grades of officers and employees shall be such as <ORG> may by general or special order designate from time to time. The operation of the <ORG> is regulated by <ORG> of the <ORG> which empowers appointment of the Committee. The <ORG> consists of the Chief General Manager and such of the officers designated thereunder. It would appear that the Board or <ORG> issues policy directions from time to time. The State <ORG> of India Officers (Determination of Terms and Conditions of Service) Order, 1979 (for shorts the "Rules") was made in exercise of the aforesaid power under Section 43(1). Rule 17 provides procedure for promotion. It envisages that:

"Promotions to all grades of officers in the <ORG> shall be made in accordance with the policy laid down by <ORG> or <ORG> from time to time.

EXPLANATION: For the avoidance, of doubts, it is clarified that the provisions of this paragraph shall also apply to promotions of any category of employees to the junior management grade."

<ORG> issued circulars from time to time. In 1990, for promotion from MMGS-II to MMGS-III effective from August 1, 1986, the eligibility criteria laid down is as under:

"(a) The eligibility criteria will be reckoned with reference to a date of eligibility which will normally be 1st of August every year.

(b) 2 years service as MMGS-II and both parts of C.A.I.I.B.; or 3 years" service as MMGS-II and Part I of C.A.I.I.B.; or 5 years" service as MMGS-II and no Part of the C.A.I.I.B.

(c) The officer should have completed satisfactorily 2 years of line assignment.

NOTE:

For the promotions effective from the year 1988 onwards, to become eligible for promotion to <ORG>-III, an officer should have also completed 3 years' stay in rural/semi-urban branch."

In 1990, by memo dated March 21, 1990 general guidelines for promotion to MMGS-III were envisaged which read as under:

"Line Assignment:

Satisfactory completion of Line assignment as Branch Manager or as Manager of a business division for a minimum period of 2 years is a pre-requisite for consideration for promotion. Officers who have not completed the full 2 years tenure of the line assignment but are otherwise eligible for consideration far promotion to MMG Scale III would have to be placed in the line assignment position for a minimum period of not lass than six months so as to complete or exceed a minimum period of two years service in the line assignment.

Rural/Semi Urban Service in a Branch:

As approved by <ORG> of <ORG> at its meeting held on 21.10.1989, it was advised that as per the <ORG> guidelines, all officers JMG Scale I and MMG Scale II are required to put in the undernoted minimum stipulated service in a Rural or Semi Urban branch before they are considered for promotion to MMG Scale II and MMG Scale III.

Grade of Stipulated period of Officer Service JMG Scale I Minimum 2 years service in a rural branch.

MMG Scale II Minimum 3 years servi ce in a rural and/or semi-urban branch including 2 years rural service as officer, JMG Scale I.

This stipulation is effective for promotions to be made from 1988 onwards and shall be one of the eligibility criteria for promotions to MMG Scale II and MMG Scale III with effect from 1.8.1988 and onwards."

In the light of these guidelines, the promotions are to be considered and the eligibility criteria prescribed thereunder regulates the eligibility of the candidates for promotion. The case of the respondent is that for the promotions that have arisen from 1988, 1989 and 1990, as per the rules and the policy, the officer in <ORG> should put in minimum of two years in "line assignment" and three years in rural/semi urban service even for consideration. Line assignment has been stated as exposure to work in the line or branches like <ORG> of the segmental division both of which involved in discharging budgetary responsibility and fulfillment of targets in banking business. Raral/Semi urban service would mean working experience on being posted in various area where the population is less than 10,000 in rural area and more than 10,000 but less than one lakh as a semi urban area.

It would thus be seen that for the candidate to become eligible for consideration for promotion the criteria required under the guidelines requires to be fulfilled. But it is seen from the record that for reasons of non- availability of the posts or due to nonenforcement of the conditions, many of the officers have not had the benefit of working in the line assignment and the rural service. Consequentially, the question arose whether rule requires to be adhered to or the policy requires to be changed. In that behalf the <ORG> has decided to relax the condition for the posts as one time measure to give the chance to the officers to fulfill the conditions. Nonetheless, the conditions have not been fulfilled due to the diverse reasons which include mismanagement at circle levels as noted by the <ORG>. Consequentially, they have decided to arrange three lists. List A consists of officers who have put in two years required service of line assignment; in list B composing of officers who have not completed two years service but have done partly and list 'E' consists of officers who have not had the service at all. The officers who have not completed the rural or semi-urban service are not included in list B. But they are separately dealt with. In this case we are concerned with List B officers and we are not concerned with List 'C' officers.

It is stated by the Board in their circular that in spite of repeated instructions given to the circles, they have not complied with the directions of posting the officers to the line assignment as well as rural/seme-urban services. As a consequence, heart burning was brewing up among the officers who did not have the opportunity to serve in the line assignment and also rural/seme-urban services. Consequentially, the Board had decided that all those who were required to he promoted would be considered subject to the fulfillment of the eligibility criteria. Officers who have completed the required service and found fit for promotion would be promoted immediately; officers who have not completed two years service in the line assignment and also in rural/semi-urban service would be considered for promotion and if found fit would be selected, put in B list would be promoted only on their completing their required service. Thereafter, their placement on completion of the above service conditions would be below his immediate senior in MMGS-II but promoted earlier to them in MMGS-III.

The respondents, therefore, have contended in <ORG> that clubbing the officers in List B with those of List A is unconstitutional violating Article 14 , being unequals they are treated as equals with them and that, therefore, it is not permissible in law. That contention was found favour with <ORG>. It is contended by <NAME>, the learned senior counsel for the appellant that the policy adopted by the appellant was not in relaxation of the essential conditions of the service, but providing eligibility for the officers who for fortuitous circumstance of not completing the service were given opportunity to consider eligibility for promotion and thereby making everyone on par so as to avoid hardship or injustice for no fault of theirs to those officers who are otherwise eligible, may be some of them more seniors to the officers who are placed in List A. Thereby there is no injustice meted out to anyone.

Ms. <NAME>, learned counsel for the respondents contended that the entire exercise is illegal. According to her, under the Rules, having made the satisfactory completion of line assignment and rural/semi urban service being a condition precedents unless officers in MMGS-II complete those conditions, they are not eligible to be considered; ineligibles cannot be made eligibles by virtue of instructions issued by the <ORG> which is inconsistent with the rules. The consideration for promotion should be made as and when vacancies have arisen. These directions by way of circulars were issued by the <ORG> in 1990 for the vacancies that have arisen in 1988, 1989 and 1990 and that, therefore, the criteria cannot be applied to the vacancies that have arisen in 1988, 1989 and 1990. It may be prospective for the vacancies to be filled up in future. She also contended that when the respondents filed the Writ Petitions in <ORG> assailing the correctness thereof, the <ORG> had come forward with the relaxation subsequently to undo the mischief which the respondents had pointed out.

Having considered the respective contentions, the question. arises whether the action taken by the appellant in making the officers who have not completed the required service of the line assignment and rural/semi-urban service and considering their case, found them fit and placed them in list B is violative of Article 14? We find that the stand taken by the <ORG> appears to be just and fair on the facts of the case. It would be seen that from 1986 onwards no promotions have been made. Despite directions issued in 1986 as one time measure directing all the circles to post the officers to line assignment and for rural/semi urban assignment from 1989, no steps have been taken at the circle level to comply with the directions given by the <ORG> and <ORG>. Consequentially, officers, who are otherwise eligible and entitled to be considered were made ineligible for no fault of theirs. Under those circumstances, it necessitated to relieve hardship to such officers due to the inaction or skillful maneavour at circle level. Fortuitous circumstances of some officers completed the criteria would be a ground to scale march over officers who are otherwise legible and they cannot be made to suffer injustice, denial of their legitimate expectation to consider their cases for promotion would be unjust and unfair. It is true. as rightly Contended by Ms. <NAME>, that the criteria being conditions of service cannot be relaxed. Service conditions being essential conditions cannot be relaxed and it is not the case of the appellant-<ORG> that they have done that exercise. What the <ORG> has done is giving an opportunity to the officers, who are otherwise eligible, to complete the required service conditions and then would be given promotion, on completion of requisite conditions thereof. In view of the fact that they did not have the opportunity to serve and complete the qualifying service, with a view to see that those who had the advantage of completing the service would not scale a march over the seniors, they equally adopted an equitable principle of putting the officers in list B and being given seniority after promotion below his immediate senior in MMGS-II so that injustice will not be meted out to such officers for no fault of them. The procedure adopted by the <ORG> is just, fair and reasonable.

The question is: whether such exercise is in violation of Article 14. The contention of Ms. <NAME> is that weightage provided in the criteria for consideration by the committee get defeated is without force. The committee is required to consider the overall experience for the period specified therein. The mere fact that the fortuitous factor of officers officiating in MMGS-III would not be a wedge to walk over those who did not have such fortuitous opportunity nor they denied of equal opportunity. This Court had considered an analogous situation in <CITATION> . [1971 Suppl. SCR 549]. Therein, the UDCs and <ORG>s in a district were unit-wise. The <ORG>s were entitled to be considered for promotion as UDCs. The UDCs were eligible to be considered for promotion as Grade II Sub-registrars in <ORG>. Grade II Sub-Registrars was Statesise cadre while lDCs and UDCs were districtwise cadre. In some Districts where persons appointed as <ORG>s though seniors, due to lack of opportunities, they could not get the chance to become UDCs, but they get the chances lately. In some districts, due to frequent of successive vacancies, <ORG>s appointed later to those appointed in other districts would get chances for promotion as UDCs over their counter part seniors in other districts thereby they would steal a march over <ORG>s working in other districts. With a view to see that all of them would become eligible for consideration as Sub-Registrars Grade II, the UDCs and <ORG>s were clubbed together as a unit and for Statewise promotion as Sub- Registrar Grade II. That criteria was adopted to avoid hardship and injustice to such of those senior <ORG> candidates. When the validity of the rule was questions, <ORG> declared rule 5 of the Special Rules to be ultra vires of Article 14. When the matter had come up, this Court had held thus;

"On the facts before us we are unable to agree that for the purpose of recruitment with which we are concerned herein the <ORG> should have classified the U.D.Cs. and L.D.Cs. separately. If the <ORG> had treated the U.D.Cs. as being superior to the L.D.Cs. for the purpose of that recruitment it would have resulted in a great deal of injustice to a large section of the clerks. The fortuitous circumstance of an officer in a particular district becoming a U.D.C. would have given him an undue advantage over his seniors who might have as efficient or even more efficient than himself, merely because they chanced to serve in some other district. For the reasons mentioned above, we do not think that in the present case the <ORG> can be said to have treated unequals as equals. The rule of equality is intended to advance justice by avoiding discrimination. In our opinion <ORG> by overlooking the reason behind Rule 5 came to the erroneous conclusion that the said rule violated Art.14 of the Constitution."

It would thus be seen that it is not a case of ineligible persons made eligible, but a case of giving opportunities to those officers, who for no fault of theirs, were not made eligible to be considered and given opportunity to be considered for promotion and after consideration, on fulfillment of the service of line assignment and rural/semi-urban service for a minimum of two years were promoted to the MMGS-III. Thus, we hold that the policy adopted by the <ORG> is not violative of Article 14 of the Constitution. But it must be remembered that in considering whether the candidate has completed the line of assignment or rural/semi-urban service for the required period, a clear demarcation be drawn between the officers who either due to volitions refusal to serve and those on account of inaction or deliberate omission on the part of the controlling authority did not have an opportunity as the case may be, to get the required service qualifications. Therefore, an exercise requires to be done by the appellant to identify this grouping and consider all those candidates who have otherwise become eligible but did not get opportunity, for no fault of theirs', to secure the service qualification but should be denied to those who volunteered not to go for line assignment or rural or semi-urban service as the case may be, and then to consider according to the criteria prescribed under the rules or the circulates issued from time to time.

It is true as contended by Ms. <NAME>, learned counsel, that due to the accelerated promotions, the line-up promotions have been scaled in quick succession from Scale II to Scale III and then to Scale IV but, unfortunately, no factual foundation has been placed before us to find out as to when and under what circumstances such exercise came to be made and in what circumstances the accelerated promotions came to be given. But these are the matters to be looked into after doing the exercise as indicated above.

Learned counsel for the respondents is not right to contend that the vacancies have arisen in 1988, 1989 and 1990 and that the rule of relaxation cannot be given in 1990 to the vacancies that have arisen in 1988, 1989 and 1990 and be considered according to the rules in vogue when the vacancies had arisen. It is seen that the policy decision was taken for the first time on March 21, 1990 effective from August 1, 1988. In other words, the promotions are required to be considered retrospectively in the light of the decision to fill up the vacancies existing as on August, 1988. Therefore, it is not a case of applying a rule which were made later to a vacancy which was existing anterior thereto. Equally, it is not correct to state that this principle is an unjust principle. It is true that this <ORG> in <CITATION> [] had considered the question of retrospective application of the rule to the vacancies existing prior to the rules, in paragraphs 7 and 8 of the Judgment. But in that case, the rule was in vogue for Sub-Registrars Grade II in <ORG> Andhra Pradesh. But no list was prepared, promotion was not made according to the existing rules. The list of eligible candidates was prepared according to the amended Rules, consequential to the zonal system introduced in Andhra Pradesh under Article 371D of the Constitution and Presidential Order. It was held that the vacancies that had arisen prior to making the amendment to the Rules should be filled in accordance with the rules that were in vogue prior to the amendment and vacancies that arose subsequently should be filled according to the amended rules. That situation does not apply to the factual matrix.

It would appear that the confidential reports and character rolls are being prepared by the officers of the same rank in the same <ORG> working in the establishment department over the same cadre officers working elsewhere and the reporting officers are the same. Ms. <NAME> is right and <ORG> is well justified in holding that such a procedure is violative of the principles of natural justice. Such procedure and practice is obviously pernicious and pragrant with prejudices and manipulative violating the principles of natural justice and highly unfair. The object of writing confidential report is two fold, i.e. to give an opportunity to the officer to remove deficiencies and to inculcate discipline. Secondly, it seeks to serve improvement of quality and excellence and efficiency of public service. This <ORG> in <ORG> case pointed out pitfalls and insidious effects on service due to lack of objectives by the controlling officer. Confidential and character reports should, therefore, be written by superior officers higher above the cadres. The officer should show objectively, impartially and fair assessment without any prejudices whatsoever with highest sense of responsibility alone to inculcate devotion to duty, honesty and integrity to improve excellence of the individual officer. Lest the officers get demoralized which would be deleterious to the efficacy and efficiency of publish service. Therefore, they should be written by superior officer of high rank, who are such high rank officers is for the appellant to decide. The appellants have to prescribe the officer competent to write the confidential. There should be another higher officer in rank above the officer who was written confidential report to revies such report. The appointing authority or any equivalent officer would be competent to approve the confidential reports or character rolls. This procedures would be fair and reasonable. The reports thus written would form basis for consideration for promotion. The procedure presently adopted is clearly illegal, unfair and unjust.

It would also appear from the record that the confidential reports submitted were adopted in toto by the <ORG> considering promotion without any cross verification from the character rolls or the record and independent assessment of merit and ability. That would also be clearly illegal. Being a competent authority to consider the claim of the candidates, the <ORG> for promotion has to independently assess the merit and ability of each candidate from the reports and the records etc. consistent with the weightage prescribed in the rules and then to determine the relative merit and ability of officers and then to arrange order of merit of the officers for promotion. Being selection posts, the selection record also must indicate reasons, however, brief they may be, so that when tested by judicial review, the <ORG> would be better assisted by such record to reach correct decision in law. This exercise should also be done by the appellant. If the confidential reports written earlier are by superior officers, then the entire record could be secured by the controlling officers. They should be considered by the promotion <ORG> and each case must be examined in the light of the record of each officer. It would be desirable to prepare a columnar statement with all relevant columns. The C.Rs. and other relevant record should be preserved. The matters considered by the promotion committee should also be preserved.

Accordingly, we hold that <ORG> was not right in setting aside the promotions and giving directions to promote all the officers in list A and then to consider the officers in list B and then to go on doing the exercise as indicated in the order. The promotions made remain ad hoc pending regular consideration and promotion. The appellant is directed to identify the officers who have voluntarily did not opt to serve in the line assignment or rural/semi- urban service and then eliminate such officers for List B, and put them in list 'C'. Thereafter, consider the officers within the zone of consideration of all the officers in List A and B together, who are eligible to be considered for promotion subject to other ralevant criteria. Those found fit be promoted be put in List 'A' and 'B' respectively and take action thereon.

The appeals are accordingly allowed and the orders of <ORG> are set aside. The appellant should consider the case of all the officers in accordance with law now laid down. Prepare A and B lists promote all the officers in List A, Officers in List B, be posted in line assignment and also rural/semi-urban service. On completion of the required service be given promotion to MMGS-III. They would be placed in seniority below their respective immediate senior in MMGS-II. The appellant is directed to complete the exercise within a period of nine months from the date of the receipt of this order. No costs.

Application for intervention is allowed.


CASE NO.: Appeal (civil) 14152 of 1996 PETITIONER: STATE OF U.P. RESPONDENT: ALLIED CONSTRUCTIONS DATE OF JUDGMENT: 31/07/2003 BENCH: V.N. KHARE CJ & K.G. BALAKRISHNAN & S.B. SINHA JUDGMENT:

JUDGMENT 2003 Supp(2) SCR 55 The following Order of the Court was delivered :

Under a contract entered into by and between the appellant and the respondent, the respondent undertook construction of bridge-cum-fall at Munda Khera Scape at the estimated cost of Rs. 37.2 lakhs. While the work was in progress, the work area was flooded in the night of August 25 and 26, 1991.

The respondent-contractor herein filed a claim on account of loss sustained by him due to flooding of the work area. Ultimately, the matter was referred to an arbitrator. The arbitrator gave an award for payment of a sum of Rs. 12,55,365 together with interest at the rate of 18 per cent from 1.11.1991 till the date of the award and 6 per cent thereafter. The respondent filed the award for being made rule of the <ORG>. The appellant herein filed a petition, inter alia, on the ground that the arbitrator has misconducted the proceedings, inasmuch as the force majeure contained in Clause 47 disentitled the respondent from making any claim which was on account of unprecedented rain. The said objection was rejected and the award was made rule of the <ORG>. The appellant thereafter filed a first appeal from order before the High <ORG> and the same was dismissed. It is against the said judgment, the appellant is in appeal before us.

Learned counsel appearing for the appellant reiterated his argument raised before <ORG>. In fact, his argument based on force majeure is that because of unprecendented rain the liability of loss cannot be thrust upon the appellant. We do not find any merit in this contention. Clause 47 of the Agreement runs as under:

"Neither party shall be liable to the other for any loss or damage occasioned by or arising out of act of God, such as unprecedented flood, volcanic eruption, earthquake or other convulsion of nature and other acts such as but not restricted to general strikes, invasion, the act of foreign countries; hostilities or warlike operations before or after declaration of war; rebellion, military or usurped power which prevent performance of the contract and which could not have been foreseen or avoided by a prudent person."

A perusal of Clause 47 reproduced above shows that it protected the State from liability and damage occasioned by unprecedented flood which could not have been foreseen or avoided as a prudent person. The appellant herein did not lead any evidence before the arbitrator that the rain as a result of which the loss was sustained by the respondent was unprecedented and in fact it was an act of God. In absence of such an evidence, the arbitrator as well as <ORG> has recorded a finding of fact that the flood which has caused loss to the respondent was not due to the unprecedented rain and, therefore, Clause 47 of the Agreement was not attracted.

Any award made by an arbitrator can be set aside only if one or the other term specified in Sections 30 and 33 of the Arbitration Act, 1940 is attracted. It is not a case where it can be said that the arbitrator has misconducted the proceedings. It was within his jurisdiction to interpret Clause 47 of the Agreement having regard to the fact-situation obtaining therein. It is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. Interpretation of a contract, it is trite, is a matter for arbitrator to determine (see <CITATION> , AIR (1989) SC 890). Section 30 of the Arbitration Act, 1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in Section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The <ORG> is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the <ORG> unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the arbitrator is a plausible one, the <ORG> will refrain itself from interfering [see <CITATION> .,  3 SCC 397 and <CITATION> ,  6 SCC 347].

For that reason, we are of the view that the appeal has no merit and must fail. However, the parties are agreed that from the date of filing of the claim till the date of award the interest chargeable would be at the rate of 1? per cent in place of 18 per cent. For that reason, the award and judgment under challenge stand modified to that extent.

The appeal is disposed of in the aforesaid terms. There shall be no order as to costs.