<NAME>, J.

1. The decree that was passed by the District Munsif upon this suit for redemption, though styled a preliminary decree and. passed under the Code of Civil Procedure, 1908, provided for sale of the mortgaged properties if the money required for redemption was not paid by a certain date. There was thus no need for anyone to apply for an order for sale. But in a redemption suit, the decree-holder being the mortgagor, it has been held in <CITATION> (1913) I.L.R. 36 Mad. 32. Govinda Menon v. Kombunni Mannadiar C.M.S.A and <CITATION> (1920) I.L.R. 43 Mad. 835 that he as well as the mortgagee has a right to execute the decree by applying for sale, and I think we should follow those decisions.

2. As regards the applications of 4th April 1916 and 23rd. June 1916 for an extension of time for depositing the redemption money in <ORG>, it may be conceded that. they did not aid the particular form of execution which has ultimately been reached, but if they were bona fide they may well be said to have been in aid of that portion of the decree which related to redemption, and I think the decree must be treated as a whole and not split up into sections. This is the view taken in a recent decision, <CITATION> (1922) I.L.R. 45 Mad. 35 to which I was a party. If they were in any sense aids to execution they should be treated as steps in aid of execution.

3. <CITATION> (1915) I.L.R. 38 Mad. 695 <NAME>, J., observed that an application by the decree-holder to give time to the judgment-debtor merely as a matter of grace would be a step in retardation. In the present case the applicant though he was the decree-holder was the person who had to pay and he was applying for time not as a matter of grace to a judgment-debtor, but in order the better to enable himself to execute the decree, the execution of which would have been completed as soon as the redemption money was paid.

4. The Subordinate Judge in appeal made the comment on these applications that it could not be said that they were made in execution. The law only requires that they should be applications in accordance with law to the proper Court and they appear to have been that.

5. I therefore agree with my learned colleague that this Appeal should be allowed with costs in both Courts.

Ramesam, J.

6. This is a matter arising in the execution of a decree for the redemption of a usufructuary mortgage in South Malabar. The final decree of <ORG>, dated 16th October 1913, allowed three months' time for redemption. The three months expired on the 16th (not 15th) January 1914 In his present application, dated 22nd December 1917, the decree-holder (plaintiff) applied for sale.

7. It has been held in <CITATION> (1918) M.W.N. p. 551 that in cases falling under the Malabar Tenants' Improvements Compensation Act, the provisions of Order XXXIV, Civil Procedure Code, are modified by Section 6 of that Act in so far as they are inconsistent with the latter, and that under the local Act only one decree in redemption suits need be passed. This was also acted upon by the Subordinate Judge in an earlier stage of the proceedings of this case. In this view, the question decided in <CITATION> (1913) I.L.R. 36 Mad. 32 in Govinda Menon v. Kombunni Mannadiar C.M.S.A. No. 99 of 1915 (unreported) and in <CITATION> (1920) I.L.R. 43 Mad. 835, whether a mortgagor who obtained a decree for redemption can apply for sale when no final decree is passed under Order XXXIV, Rule 4, which enables the mortgagee only to apply for the passing of a final decree, does, not arise, though I may add that, if it arises, I am inclined to follow those decisions and do not share the doubts expressed by <NAME>, in the last of them.

8. But it has also been pointed out in <CITATION> (1918) M.W.N. 551. p. 553 that Provisions like directions for sale in default, allowing time to pay moneys declared as due and so on, not inconsistent with the Improvements Act and directed or allowed by the new Civil Procedure Code to be mentioned in a decree for redemption or ejectment can, of course, be mentioned in decrees passed in suits falling under the Compensation Act also

9. It follows that the mortgagor is entitled to apply for extension of the time allowed to him in the decree for redemption. In this case, two such applications were filed by the decree-holder on 4th April 1916 and 23rd June 1916. The District Munsif held that they operated as steps in aid of execution and saved the present application from being barred by limitation. The Subordinate Judge reversed the order of the District Munsif on the ground that they were rot in aid of the execution because (1) the applications were not made when any execution application was pending and it cannot be said that they were made in execution (which is true) and (2) they retard execution and do not aid it.

10. In my opinion there is no warrant for the view that an application to take a step in aid of execution should be made in execution, and no authority has been cited by the Subordinate Judge or the learned vakil for the respondent in its support.

11. On the second ground also, I am unable to agree with the learned Subordinate Judge. Ordinarily, it is the judgment-debtors that have to pay or do some act under decrees in order to avoid sale, and applications by them for extension of time retard execution and do not aid it. But it does not follow that, in redemption decrees and similar decrees, where the decree-holder has to pay before obtaining execution and asks for extension of the time allowed to him for payment, such application does not aid him though it may retard execution of the decree. It aids <NAME> in the execution of the portion of the decree relating to redemption which he cannot get without extension of the time: see <CITATION> (1907) I.L.R. 29. All. 301. at p. 302. As my learned brother observed in the course of the argument, late redemption is better than No. redemption. It may be that those applications do not aid the particular kind of execution now sought, viz., sale which was a relief granted as an alternative to the relief of redemption. It is enough that they aid the decree-holder in the execution of some portion of the decree vide <NAME> v. <NAME> (1891) I.L.R. 15 Bom. 245. note especially when that was the primary object of the decree-holder, even though, in the events that happened, the decree-holder did not derive the assistance sought. In my opinion the proper test in deciding such a question is whether the step aids the execution. The other test, viz., whether it accelerates or retards execution see <CITATION> (1900) I.L.R. 27 Calc. 285, <CITATION> (1915) I.L.R. 38 Mad. 695 though in many cases it amounts to the same thing, may in some cases (such as this) turn out to be fallacious.

12. I would reverse the order of the Subordinate Judge and restore that of the District Munsif with costs here and in the lower <ORG>.


JUDGMENT <NAME>, J.

1. The two questions that were referred to us by <ORG> under Section 66(1) of the Indian income tax Act are as follows:

"1. Whether, on the facts and in the circumstances of the case, the film hire derived by the assessee under agreements which provided for fixed hire charges in respect of exhibition of films in Indian States is not exempt from Excess Profits Tax as profits accruing or arising in the Indian States within the meaning of the third proviso to Section 5 of the Excess Profits Tax Act.

"2. Whether, on the facts and in the circumstances of the case, the films hire derived by the assessee under agreements which provided for hire at a percentage of the collections in respect of the exhibition of films in Indian. States is not exempt from Excess Profits Tax, as profit accruing or arising in the Indian States within the meaning of the third proviso to Section 5 of the Excess Profits Tax Act."

2. The assessee is a public limited company whose registered office is at Salem and is incorporated in British India. It carried on the business of producing and distributing aims. The films are distributed to exhibitors within, and also without, British India under two classes of contracts, specimen copies of which are annexed to the case stated by <ORG> as A and B. The films are given on hire for exhibition either for a fixed sum agreed to be paid by the exhibitor, or for a percentage of the collections made by the-exhibitor at the time of the exhibition of the picture. The assessee claimed that under the third proviso to Section 5 of the Excess Profits Tax Act, the income he received by exhibiting films in the Indian States under both the types of contracts was exempt from liability to pay excess profits tax. This, contention was upheld by the <ORG>, differing from the Appellate Assistant Commissioner. Hence this reference. The crucial question that falls to be determined is whether the whole of the profits accrued, or arose, in an Indian State or not.

3. It is obvious, as found by <ORG>, that in respect of contracts entered into on percentage basis the share of the profits due to the assessee was not payable until the picture was exhibited and collections were made in the presence of a representative of the assessee. The percentage was then paid to the representative of the assessee at the place where the picture was exhibited, i.e., in the native state. So far as the lump sum contracts are concerned, it is also found that the assessee did not part with the picture until the amount was paid to him at the time of the delivery of the picture in the native State, either by sending the railway receipt by V.P.P. or by tendering the film directly to the exhibitor, or perhaps even by sending the railway receipt to a bank for collection. Whichever method was adopted by the assessee, it leaves no room for doubt that until the picture was delivered to the exhibitor, the exhibitor did not pay a single pie to the assessee. On these facts it was contended strenuously on behalf of the department by Mr. <NAME>,, the learned counsel for the Income-tax Commissioner, that, as the contracts which are the source of the profit were entered into In British India, it must be held that in respect of both the types of contracts, the profits accrued in British India and not in a native State. Having regard to the-terms of the contracts and the findings of <ORG>, it is difficult, If not impossible, to accept this contention. Under the contract, the assessee gets practically nothing except an obligation on the part of the exhibitor to receive the film when tendered to him and to exhibit it subject to the conditions of the contract. Money does not become payable and the assessee had no right to demand any payment before the film was actually delivered to the exhibitor, in these circumstances nothing accrues to the assessee until the film was put in the possession of the exhibitor with a view to exploit the same, and that was done wholly in a native State. It therefore follows that in respect of both the types of contracts the profits of the business accrued wholly in a native State, and they are therefore exempt under the third proviso to Section 5 of the Excess Profits Tax Act. It is unnecessary for us to consider whether really the second question was, or was not, pending before the Income-tax Commissioner at the time of the reference, a question which was attempted to be argued by Mr. <NAME>, the learned counsel for the respondent, as in our view under both the types of contract the profits accrued entirely in a native state.

4. Mr. <NAME> then attempted to raise the further question, that in any event the profits should be apportioned between British India and the native Suite under the third proviso to Section 5 of the Excess Profits Tax Act. We searched in vain to find any trace of this argument before any of the Income-tax authorities who had to deal with this matter, it is not a question which has been referred to us by <ORG>, nor did the Income-tax Commissioner ask for a reference of this question to this Court. It is further Claimed by the learned counsel for the In come-tax Commissioner that the questions actually referred to us are wide enough to cover the question of apportionment, for it is said that it is open to us to and that not the whole of the profits but only a part of the profits accrued and arose in a native State. That may be so; but we have to understand the questions referred to us in the light of the statement of facts and the statement of the case which have been the basis of the reference to this Court. As pointed out by this Court in '<NAME> v .Com missioner of Income-tax, Madras', 1947-2 Mad LJ 215 the question must arise out of the order of <ORG>. It can arise out of the order of <ORG> only if the order of <ORG> discloses that the question was raised before it. In the present case a perusal of the order of <ORG> discloses that the only question that was argued was with reference to the place of accrual of the profits, whether they were wholly in a native state or they accrued in British India. The question of apportionment was not raised before <ORG>, not to speak of the Appellate Assistant Commissioner. In these circumstances it is impossible to hold that it is a question which arises out of the order of <ORG> and which is covered by the questions that are actually referred to us. It will be wholly inconvenient to allow such a question to be raised for the first time before us without "an investigation of the facts and also without an apportionment of the profits by the department. In these circumstances we must answer the questions referred to us by the <ORG> in favour of the assessee and in the affirmative. As the commissioner of Income-tax has failed in this reference, he must pay the costs of the assessee which we fix at Rs. 250.


JUDGMENT <NAME>, Ag. C.J.

1. This is a rule obtained by the Secretary of <ORG> for India in <ORG> calling upon the opposite party, <ORG>, to show cause why an application filed in <ORG> on 12th June 1931, praying for a review of the judgment and decree in First Appeal No. 30 of 1925 disposed of by <NAME> and <NAME>, JJ., on 25th January 1929, should not be entertained, though filed out of time, and why the said judgment and decree should not be reviewed upon certain grounds stated in the said application or why such other or further order should not be made as to this <ORG> may seem fit and proper.

2. The facts involved in the said appeal and in the application on which this rule was issued, shortly stated, are as follows: It appears that <ORG> formulated a schema, namely, Scheme No. 15 for the improvement of certain areas in Ballygunge. Thereafter a declaration was made and published under Section 6, Land Acquisition Act , notifying for acquisition of certain lands in that area for the purposes of the said scheme. The lands under acquisition were part of a larger area measuring about 162 bighas and they had been purchased by <ORG> on certain dates between August 1917 and May 1918. It further appears that <ORG> had prepared a scheme for developing their property as building sites with roads giving access thereto. As regards the land under acquisition, the Collector under the Land Acquisition Act valued the same at Rs. 32,000. <ORG> was dissatisfied with this valuation and also with the method of valuation adopted by the Collector. They accordingly applied for and obtained a reference to <ORG> under Section 18 , Land Acquisition Act read with the relevant sections in the Calcutta Improvement Act. In then-Scheme No. 15 <ORG> provided for a roadway 100 feet in width running" east to west and passing through the area belonging to <ORG>. It appears that at the hearing of the reference, <ORG> accepted the valuation of the land under acquisition as made by the Collector and dismissed the reference. <ORG> being dissatisfied with the order made by <ORG> preferred an appeal to this Court being First Appeal No. 30 of 1925. That appeal came up for hearing as stated above before <NAME> and <NAME>, JJ. The learned Judges came to the conclusion that <ORG> had become aware of the said Scheme No. 15 for constructing a road which was to run partly through the area belonging to the <ORG>.

3. The learned Judges observed as follows in the course of their judgment:

The document I refer to is Ex. F, dated 10th August 1918, which contains the proceedings of a meeting of the directors of the society. From that document it appears that they became aware of the scheme of <ORG> for building a road which was to run partly through the society's property and the construction of which was to be taken up as an urgent matter. Then it proceeds thus: "This might have operated as a bar to the immediate sale of a considerable number of the society's proposed plots. It was however found possible to avoid this contingency by making this society's proposed development road in Scheme No. 2 follow the slightly different line of a road projected by the trust (thus avoiding all cross-roads in this scheme) and leaving out of the scheme a strip of land alongside <ORG> drainage road alignment to which the Chairman of the <ORG> agreed. From this document, as well as the evidence of the Secretary of the society, Mr. <NAME>, and that of Mr. <NAME>, an Engineer examined on behalf of the society, it is apparent that it was their intention to drive a 40 feet broad road at or about the place which they knew was going to be acquired by the <ORG>. The disposition of the property should therefore be held to be building sites with a road 40 feet wide for allowing access to the sites that were going to be sold. The knowledge of the fact that the Improvement; <ORG> was going to build a 100 feet road by acquiring a part of their property induced the society to keep vacant a 100 foot broad plot of land. Bui that, I have already said, cannot be taken as the present disposition of the land. The question now is what should be the valuation of the land acquired. Sir <NAME>, on behalf of the Secretary of <ORG> argued that the matter should be sent back to the tribunal for working out the valuation. We are unable to agree with that suggestion in the particular case. The learned Advocate General, on behalf of the appellant, pointed out that the valuer on behalf of the Secretary of <ORG> has worked out the market value of the land according to the scheme as given by Mr. <NAME> on behalf of the <ORG>, and we are of opinion that, if that be taken as the proper valuation of the land acquired, the respondent has no right to complain. The valuation cannot, in any case, be lower than what was stated by the respondent's valuer, <NAME>. After deducting the value of the land for a 40 feet road and the cost of making the roadway, he has put the value of the land at Rs. 94,330, and it seems to me that that is the most equitable way of valuing the land acquired. It was contended on behalf of the appellant, that the valuation was increased by that witness during his cross-examination to one lakh odd. We have gone through his cross-examination, and it seems that that increase was made on a hypothetical basis and cannot be taken as a proper valuation. The appeal is, accordingly, allowed in part, the award of the Collector and the <ORG> is varied and the <ORG> is allowed Rs. 94,000 as the market value according to the disposition of the land at the time of the declaration plus the statutory allowance and damages at the rate allowed by the Collector. Having regard to the fact that there has been a partial success on both sides, there will be no order as to costs in either of the Courts.

4. The Secretary of <ORG> thereafter applied for and obtained leave to appeal to <NAME> in Council against the judgment and decree of <NAME>, J., and <NAME>, J. Leave was granted on 2nd July 1929. At the time when the Secretary of <ORG> obtained the said leave, <ORG>, who were of opinion that a larger sum of money should have been allowed on account of compensation, also applied for and obtained a similar leave to appeal to His Majesty in Council. The two appeals to His Majesty in Council were numbered 16 and 19 of 1929 and were disposed of by their Lordships of <ORG> on 20th March 1931. Their Lordships held that the appeals were incompetent and they accordingly dismissed the same on the ground that the statute did not provide for an appeal to His Majesty in Council, having regard to the circumstances disclosed on the record.

5. It is stated on behalf of the Secretary of <ORG> that the fact of the dismissal of the said appeals by their Lordships became known in Calcutta about the end of April or at any rate in the first week of May 1931. There is some dispute about this as is evidenced by an affidavit made by Mr. <NAME>, an Advocate of this Court, but for the purposes of this Rule we shall proceed on the footing that the Secretary of <ORG> became apprised of the fact of the dismissal of the said appeals in the first week of May 1931 and pay no attention to Mr. <NAME>'s affidavit which ought not to have been made.

6. It is now alleged on behalf of the Secretary of <ORG> in the present claim that in taking the figure Rs. 94,330 as the estimate of the value of the land acquired after making the necessary deductions including the cost of constructing a roadway, the learned Judges (<NAME> and <NAME>, <NAME>.) fell into an error, namely, that the Government expert referred to in the said judgment arrived at the said figure allowing a road 1,600 feet long and 40 feet wide, whereas as a matter of fact the Government expert calculated the value on Mr. <NAME>'s lay out as shown in Ex. 22 which provided only for four small roads of 100 feet long, two only 40 feet wide and two others 20 feet wide, covering a total road space of 16 cottas 10 chattaks 30 square feet. In this connexion attention is drawn by the Secretary of <ORG> to the evidence of the Government expert as also to the deposition of Mr. <NAME>, and it is claimed by the Secretary of <ORG> that giving effect to the findings of the learned Judges as regards the principle of valuation, the value of the land in question could not possibly exceed Rs. 40,000.

7. In the events which have occurred the Secretary of <ORG> claims that the present application, in view of the provisions of <CITATION> and 14 (2), Limitation Act , should be hold to be in time and that on the merits it may be held that there is an error apparent on the face of the record, namely, that the said figure of Rs. 94,330 was arrived at not after allowing for a 40 feet road of the entire length of 1,600 feet, but on <NAME> lay out which provided for only four small roads each 100 feet long of which two were of 40 feet wide and the other two 20 feet wide.

8. The present application is strenuously resisted on behalf of <ORG> on the ground that the application itself is hopelessly barred by limitation. It is argued on their behalf that the Secretary of <ORG> has not given any explanation whatsoever as to why the following period of delay should be excused under <CITATION> , Limitation Act , namely, the period from 25th January 1929 when the judgment of this <ORG> was pronounced on the appeal itself, and 22nd April 1929 when the Secretary of <ORG> applied for leave to appeal to His Majesty in Council, and the period from 20th March 1931, when their Lordships pronounced judgment and 12th June 1931, when the present application for review was filed in <ORG>. It is further submitted on behalf of <ORG> that the period between 22nd April 1929 and 20th March 1981 cannot be excused under the provisions of Section 14 (2), Limitation Act . On the merits, <ORG> contend that there has been no error whatsoever apparent on the face of the record as claimed by the Secretary of <ORG>.

9. We are by no means sure that on the merits the Secretary of <ORG> has no grievance. As far as we can make out from the record before us, the position of affairs was as follows: <ORG> purchased a large area of land and proceeded to develop the same as building sites. In 1918 they came to know that <ORG> intende 1 to run a 100 feet east to west road through their land and they prepared a lay out incorporating this road and leaving a vacant strip of 100 feet for a roadway. The Collector held that this was land over which the owners of plots adjacent to it had rights of way and that it was not building land, and he awarded compensation on that basis. <ORG> upheld the finding of the Collector. This Court however set it aside and found that the <ORG>'s intention had been to run a 40 feet cast to west road which <ORG> subsequently made a 100 feet road. Their Lordships' finding was that the disposition of the property should be held to he building sites with a 40 foot wide road for allowing access to the sites that wore going to be sold. The learned Judges stated that the value of the land should not be less than what was stated by the Government valuer after deducting the value of land for a 40 feet road and the cost of making the roadway. He (the Government valuer) according to the Judges, put the value of the land at Rs. 94,330 and it seemed to the Judges that this was the most equitable way of valuing the land.

10. It is reasonably clear to our minds from the record that the valuation of Rs. 94,330 by the Government expert was not the valuation of the land after deducting the land for a 40 feet road and the cost of making the roadway, but it appears to have been the valuation of the land as building sites according to the lay out by <ORG> export Mr. <NAME> which did not show a 40 feet east to west road, hut only one or two-short lengths 40 feet and 20 foot north to south roads. The contention on behalf of the Secretary of <ORG> is that as the learned Judges found that there must be an east to west road but that its width should be restricted to 40 feet they should have found the value of the land to be about Rs. 31,075 plus l/5th of the said amount, the aggregate amounting to Rs. 37,290. We are of opinion that on the merits there is a great deal to be said on behalf of the Secretary of <ORG> and that it does appear that the learned Judge fell into an error in arriving at the figure Rs. 94,330 on the assumption made by them and that the Secretary of <ORG> had a real grievance.

11. But be that as it may, for the reasons about to be given we are of opinion that it is not possible for us, on the facts placed before us, to hold that the present application does properly come within Section 5 and Section 14 (2), Lim. Act and that the delay which was taken place should therefore be excused. Now it appears that immediately after the judgment of this Court had been pronounced, the Secretary of <ORG> became aware of the mistake which according to him had been made by the learned Judges who disposed of the said appeal. This is apparent from the grounds taken in the appeal to <NAME> in Council. But the Secretary of <ORG> now says that as he had been advised to file an appeal to <NAME> in Council, he did not apply for review of judgment at that time. This is a position so extraordinary and so strange that we feel some difficulty in believing that the Secretary of <ORG> could have been so advised by any responsible lawyer. It is also claimed on behalf of the Secretary of <ORG> that he had good grounds for believing that an appeal lay to <NAME> in Council and that at no time prior to 20th March 1931 did he become aware of the fact that an appeal to <NAME> in Council was incompetent and that under the law there could be no such appeal. In passing, we may remark that the Secretary of <ORG> knew at all .material times that his right to appeal to <ORG> was being contested and would be contested before <ORG>. It is also claimed on behalf of the Secretary of <ORG> that there has not been any undue delay between 20th March 1931 and 12th June 1931.

12. As regards the period between 20th March 1931 and 12th June 1931 we are not prepared to say that the delay has been such as cannot be excused, if it stood by itself, under Section 5 , Lim. Act. But the delay between the two dates mentioned above does not stand by itself; the period between these two dates has got to be taken along with the period which elapsed since the date when judgment was pronounced by <NAME> and <NAME>, JJ. and must be considered in relation thereto. Now on the facts stated it cannot be maintained that the Secretary of <ORG> discovered the error in question after the pronouncement of the judgment of their Lordships. Indeed it is not disputed and it cannot be disputed that the Secretary of <ORG> was aware of the error referred to above immediately the judgment of this Court was pronounced. It is incomprehensible as to why steps were not immediately taken to apply for review of judgment. The learned Judges, if their attention had been drawn at that time, would no doubt have considered the matter and would have been in a position to pass suitable orders; but instead of that the Secretary of <ORG> took the extraordinary step of including in his grounds of appeal to His Majesty in Council the ground relating to the matter now under discussion and chose to content himself by taking that ground with full notice of the precarious nature of the right to appeal to <ORG> and trusting to the chances of the litigation in which he had been engaged see in this connexion Order 47, Rule 1, Clause (a), Civil P.C.

13. We can find nothing in the circumstances disclosed which can induce us to excuse the period between the date when the judgment was pronounced and the date when leave to appeal to His Majesty in Council was applied for. And in the circumstances of the present case, we are not prepared to hold that the Secretary of <ORG> has made out any good ground for the contention he has put forward, namely that the period between the date when leave to appeal to His Majesty in Council was applied for and the date when their Lordships of <ORG> pronounced judgment should be excused on the ground that the Secretary of <ORG> was engaged in a bona fide manner in carrying on the litigation. We are not prepared to say that because the then Sir-Lancelot Sanderson, <NAME> and <NAME>, J. had given leave to appeal to His Majesty in Council in a. previous case that in itself was sufficient to warrant the conclusion that as a matter of law an appeal to His Majesty in Council in the circumstances disclosed in the present record was competent and that the Secretary of <ORG> had any good ground for believing that the mistake such as it was might be rectified; by their Lordships of <ORG>. This is not and cannot be treated as an application for amendment of decree.

14. In this view of the matter the only conclusion to which we can come is that a sufficient case has not been made out for excusing the period between the date when leave to appeal to His Majesty in Council was applied for and the date when their Lordships of <ORG> pronounced judgment. But assuming that this period can, even at the risk of straining the matter in favour of the Secretary of <ORG> be condoned under Section 14 (2), Lim. Act, the earlier period has got to be taken along with the time which has elapsed till 12th June 1931 when the present application for review was filed in <ORG>, and on consideration of the entire circumstances it is impossible for us to hold that the application itself can be brought within the, purview of Section 5 , Lim. Act. Under these circumstances, much as we regret the conclusion it is impossible for us to afford any relief to the Secretary of <ORG> and we are of opinion that this Rule must be discharged. There will be no order for costs.

<NAME>, <NAME>

15. I agree with the learned Chief Justice in the conclusion he has arrived at in this case. I regret 1 have to come to the conclusion that the Rule obtained by the Secretary of <ORG> for review of the judgment of <NAME> and <NAME>, JJ. must be discharged on the ground of limitation for the merits of the Rule seem to my mind to be in favour of the applicant's contention. But this is a conclusion we have been constrained to arrive at for though the merits of the Rule are in favour of the applicant for review the opposite party in this Rule, viz., the; <ORG> have acquired a valuable right by reason of the statute of limitations. It is not necessary to restate the facts as they have been stated with very great lucidity in the judgment just delivered by the learned Chief Justice.

16. It appears that the judgment of <ORG>, which is sought to be reviewed, was delivered on 25th January 1929. On 22nd April 1929 the Secretary of <ORG> applied for leave to appeal to His Majesty in Council and in the grounds of appeal a specific ground was taken to the effect that the valuation made by <ORG> in modification of the Collector's award and <ORG>'s decision is not supported by the decision and finding arrived at by the Honourable Court in its judgment, that it was the intention of the society to drive a 40 feet broad road at or about the place which they knew was going to be acquired by the trust in view of the evidence in the case": see Gr. No. 10, p. 302 of the Privy Council Paper Book.

17. This ground was also taken in other forms in grounds 13 and 14 which are to the following effect:

13. For that at least 40 feet ought to have been excluded on <ORG> finding about the disposition of this strip; and (14) for that <ORG> is in error in referring to 20 feet and 40 feet north to south road as shown in Ex. 22 as a 40 feet road.

18. Although those grounds were raised in the Secretary of <ORG>'s petition for leave to appeal to His Majesty in Council it seems somewhat strange that no attempt was made for applying for review of judgment, on a ground which it is now alleged was apparent on the face of the record. <ORG> was not satisfied with the amount, enhanced by <ORG> and they wanted a greater increase of the compensation money and they applied for review on 22nd April 1929 and after that also made an application for leave on 17th May 1929. It appears to me that the scheme of the order relating to review in the Civil Procedure Code is that in those cases in which an appeal lies the application for review should be filed before the appeal is lodged. In this case, at any rate the Secretary of <ORG> thought that an appeal would lie to His Majesty in Council against the order of <ORG> and in this view they were fortified by the decision of <NAME>, C. J. and <NAME>, J., in a previous case and as a matter of fact it was also so held by the learned Chief Justice (Sir <NAME>) when he granted leave to appeal in this case. I fail to understand why in these circumstances the application for review was not made prior to the filing of the application for leave. There seems to be no reasonable excuse for this course. The advisers of the Secretary of <ORG> knew then that in their view two remedies were open, one an application for review of judgment and the other an appeal. The Secretary of <ORG> knew as appears from the affidavit of Mr. <NAME> that their right to appeal to His Majesty in Council was being contested by the <ORG>. They knew also that the question was raised before the Judges who were dealing with the leave application and must have anticipated that this objection as to the competency of the appeal would be repeated before their Lordships of <ORG>. In these circumstances it is difficult to understand why the Secretary of <ORG> was not advised to take the course which the law suggests that in - appealable cases the review application should be filed before the appeal is lodged: see Order 47, Rule 1, Clause (a), Civil P.C.

19. I felt some doubt in the course of argument if an application for review would lie after the appeal had been dismissed by their Lordships of <ORG> on the ground that the appeal to their Lordships was incompetent. It had been held in some cases that when an appeal, has been preferred before the application for review and the appeal had been dismissed no application can be made for review of the decree. In a case relied on by the learned Advocate-General in the course of argument it has been laid down that a party against whom a decree has been passed is precluded after dismissal of the appeal under Order 41, Rule 11 from applying for a review: see <NAME> v. <NAME> [1906] 30 Bom. 625. The same view has been taken in <NAME> v. <NAME> A.I.R. 1929 Bom. 225 but it has been contended on behalf of the Secretary of <ORG> that these cases are distinguishable from the present as in the present case there is no decision by their Lordships of <ORG> on the merits of the appeal and the effect of their Lordships' order is to declare that they had no jurisdiction to entertain the appeal. There is some substance in this contention of the Secretary of <ORG> but it is not necessary to express any final opinion in the view which we have taken on the question of limitation. Regarding the merits of the review application I had some doubt in the course of argument as to whether the ground of review was not the misapplication of the evidence of <NAME> and the <ORG> valuer by the learned Judges, and if that was so there was no ground for review within the meaning of Order 47, R. (1) of the Code, but on further consideration I was of opinion that it is possible to regard the ground having regard to the findings of the learned Judges read with the evidence of <NAME> and the <ORG> valuer as an error apparent on the face of the record. It is not the case of a rehearing for the purpose of seeing whether a different conclusion on the merits should be adopted, but an application for varying the judgment which would have been different if the apparent error had been discovered.

20. I would therefore rest my decision on the ground that no explanation has been given as to why the review was not filed between the date of judgment and the application for leave to His Majesty in Council. The Secretary of <ORG> might have pursued both the remedies simultaneously and in the ordinary course of human events one would have expected that application should have been made a day before the time limited by law on half the court-fee to the learned Judges who decided the appeal who might have yet matters right, if they were convinced of the apparent error on the face of the record and this period has to be taken into account for considering whether sufficient cause has not been made out for extending the period of limitation. I am of opinion that no sufficient cause has been made out and the rule must be discharged.

21. The learned senior Government Pleader has then sought to induce us to treat this application as an application for the amendment of the decree or judgment under Section 152 , Civil P.C. I am of opinion that this contention cannot be accepted. This is not merely an error in calculation but at any rate the two depositions referred to and the findings have to he considered before the error could be discovered. The learned Judges have put down the sum of Rs. 94,000 odd in their judgment and in doing so have overlooked the effect of the Government valuer's evidence. In these circumstances this cannot be treated as an arithmetical error as to be capable of being corrected under Section 152 , Civil P.C. If we had been of opinion that the application of the Secretary of <ORG> was not barred by limitation it is doubtful if we might not have to rehear the appeal instead of rectifying the judgment and decree in this proceeding for review.

22. It is said that the Secretary of <ORG> was mislead by a mistake in law that an appeal was competent and did not file the application for review in the hope that the same relief would be granted in appeal but a mere mistake in law is not per se sufficient for asking the Court to exercise its discretion under Section 5 , Lim. Act: see the decision of <ORG> in <CITATION> A.I.R. 1917 P.C. 156 and it has been already said that there was no reasonable cause for not filing both the appeal and review.


JUDGMENT <NAME>, C.J.

1. The institution of the hereditary office of trustee of religious and charitable endowments is in accordance with the custom of the country recognized in Madras Reg. VII of 1817 and Act XX of 1863 and is too firmly established to be altered without legislation. It affords however no guarantee of fitness for the exercise of the office and may be held largely responsible for the numerous cases of waste and misappropriation of these endowments which come before the <ORG>, and, it is to be feared, for a still larger number which are never brought before it. The exercise and enjoyment of the office in the event of the successive partitions to which families in India are liable also present difficulties which are illustrated by <CITATION> (1903) I.L.R. 27 M. 192 which was affirmed by <ORG> in <CITATION> . (1906) I.L.R. 29 M. 283 (P.C.). In these circumstances it would perhaps be better if it had never been held that on failure of the line of devolution prescribed by the founder the trusteeship reverted as an hereditary office to the heirs of the founder. But, as observed in the order of reference, this view has been regarded as unassailable by a long course of decisions, and I do not feel at liberty to differ from them. This being so, there is, I think, much to be said for the view of the Allahabad and Calcutta <ORG>s recognizing the right of the founder's heirs to make fresh arrangements for the devolution of the trust instead of leaving it to devolve as otherwise it must in the family of the founder subject to the difficulties as to its exercise and enjoyment to which I have already alluded. The institution of hereditary trusteeship is held to rest on the intention of the donor either expressed in the instrument of trust or to be presumed from usage, and the doctrine of reverter to the heirs of the donor on failure of the line of devolution prescribed by him must also it seems to me rest on his presumed intention. This being so I do not see much difficulty in presuming an intention that the heirs should be at liberty to make fresh arrangements for the devolution of the trust instead of leaving it to devolve in the family a result which the founder had shown himself anxious to avoid. <CITATION> (1903) I.L.R. 27 M. 192, <NAME> and Bhashyam Ayyangar, JJ., were of opinion, that, when the office of trustee devolved upon the members of a Hindu family, it was open to them to settle a scheme for the enjoyment and exercise of the office in rotation, and their decision was upheld in <CITATION> (1906) I.L.R. 29 M. 283, by their Lordships of <ORG> who held that the arrangement was one which the parties interested were competent to make without applying to the <ORG>. That no doubt was not a case in which the trusteeship had reverted to the heirs of the founder on failure of the line prescribed by him. But in such an event also it seems to me more convenient and more in accordance with the presumed intention of the founder to allow fresh arrangements to be made instead of leaving the office to devolve on the heirs. It might I agree bs still better if it were opes to us in such a case to exclude the heirs of the founder altogether and leave a scheme to be settled by the <ORG>, The right of nomination in such circumstances appears to have been recognised by the <ORG> of Sudder Adalat, Mad. S.D.A. No. 52 of 1857. The decision of <NAME> J., in <CITATION> (1890) I.L.R. 14 M. 1, does not in my opinion help either side. What the learned Judge did was to recognize a right of appointment, not in the plaintiff as heir of the founder or in the <ORG>, but in the plaintiff and his family as the beneficiaries under the trust. At page 13 the proper decree is said to be to declare the respondent's right to appoint a person qualified to discharge the peculiar trusts as new trustee with the concurrence of the members of the family. The statement as to the decree in the order of reference was made under a mis-apprehension, as what the decree does isto declare the right of the plaintiff to nominate with the concurrence of his family and to direct the properties to be handed over to the person so nominated, and in default of nomination to dismiss the suit, and this appears to me to have given effect to the intention of the learned Judge. The other cases are sufficiently dealt with in the order of reference and the opinions of my learned brothers and it is unnecessary to refer to them. I would answer the question in the affirmative.

<NAME>, J.

2. To my mind the question whether the right of nominating a trustee to a Hindu religious endowment vests in the heirs of the founder in the absence or failure of a specific provision in the deed of endowment or where there are No. special usages or circumstances indicating a different mode of devolution, is concluded by authority and must be answered in the affirmative. It is not suggested that there is any text of Hindu Law bearing on the point, but the question has been the subject of unanimous rulings of this Court as well as the Allahabad and Calcutta <ORG>, the later decisions bsing mainly founded on the pronouncement of <ORG> in <CITATION> (1889) I.L.R. 17 C. 3 at page 20.

3. To begin with the earlier cases. Of the two Madras Sudder Dewany decisions cited by Mr. <NAME> his <ORG> (paragraph 440) as negativing the right of nomination by the heirs of the founder, all that was decided in Case No. 50 of 1851, page 57 was that the heirs of a founder were not entitled to recover possession of the endowed properties from a trustee who had been properly appointed or to demand accounts from him. The statement that "it is obvious that in the management of charitable institutions, the heirs of the founder can have no legal right to interfere unless under some special powers given to them by the founder" should not be given a wider application. Case No. 52 of 1857 (at page 152) clearly ruled that on the death of the first <NAME> appointed by the founder the latter's heir had the right to appoint a fresh trustee. In 1870 <ORG> of <ORG> of which <NAME>, J. an eminent authority on <ORG>, was a member, held in <NAME> and <NAME>. v. <NAME>, (1870) 13 W.R. 396 same case - <NAME> v. <NAME> (1870) 5 B.L.R. 181 that where the <NAME> of an endowment dies without nominating a successor, the management must revert to the heirs of the person who endowed the property. The endowment in question in that case, it may be mentioned, was made by a Hindu for an idol though the words <NAME> and waqfae (Mahomedan Law terms for trustee and deed of endowment respectively) were used in connection with the dedication.

4. The principle of the decision in Peet Koonwar and Anr. v. Chuttur Dharee Singh (1870) 13 W.R. 396, was affirmed by <ORG> in <CITATION> (1889) I.L.R. 17. Cal. 3. at p. 21 where they lay down, "According to Hindu Law, where the worship of a Thakur has been founded, the Shebaitship is held to be vested in tha heirs of the founder, in default of evidence that he has disposed of it otherwise, or there has been some usage, course of dealing, or some circumstances to show a different mode of devolution." It was so held also in <CITATION> (1891) I.L.R. 19 Cal. 513 at p 532 and the rule was re-affirmed in <CITATION> (1904) I.L.R. 32. Cal. 129 at p. 139 their Lordships saying that in the absence of evidence as to the terms or conditions of the foundation the legal inference is that the title to the property, or to the management and control of the property, as the case may be, follows the line of inheritance from the founder. <CITATION> (1913) I.L.R. 35. All 283 they made it clear that the rule enunciated in Gossami sri Gridharji v. Romanlalji Gossami (1889) I.L.R. 17. Cal. 3. at p. 21, was subject to the condition that the devolution in the ordinary line of descent is not inconsistent with or opposed to the purpose the founder had in view in establishing the worship.

5. It is contended that the right of the heirs of the founder is limited to their holding the office themselves and does not include the power to nominate or appoint a trustee. No such limitation has however been recognised by the courts and I am not persuaded that it was ever within the contemplation of <ORG>. Soonjafter the judgment of <ORG> in the case in <CITATION> (1889) I.L.R. 17. Cal. 3. at p. 21, <NAME>, J., had to consider in <CITATION> (1890) I.L.R. 14 M. 13 the precise question now raised before us with reference to a mutt. He laid down at page 13, "in the absence of a qualified disciple in whom the right of succession has already vested, the beneficiaries, who are the menibers of the <NAME>'s family, are the only persons interested in the appointment and entitled as, such to express an opinion regarding the fitness of the proposed new trustee for the office, The case is then analogous to that of a vacancy arising from the death of a paradesi without appointing his successor. The proper decree is to declare the respondent's right to appoint a peirson qualified to discharge the peculiar trusts as new trustee with the concurrence of the rest of his family, to direct him to do so witbtin a given time, and, upon his doing so, to confirm such appointment after notice to the other members of the respondent's family, and to direct that upon such confirmation the properties in dispute be made over to the person newly appointed to be administered so as to carry out the trusts of the institution in accordance with its usage". On referring to the decree passed in accordance with the above direction it is evident that the suggestion made in the Order of Reference that the decree drawn up by <ORG> only declared the right of the heir of the founder "to offer advice" was based on a clear misapprehension. In fact that was the important point on which thes decree of <ORG> was modified by <ORG>, the modification consisting in declaring the right of the Rajah to appoint or nominate the paradeai subject to confirmation by the <ORG>.

6. Then, I am unable to draw from the passage in <CITATION> (1904) I.L.R. 27 M. 435 at 457 alluded to in the Order of Reference any conclusion that Mr. Justice <NAME>, intended to negative the right of the heirs of the founder to make nomination in the case of a vacancy. If he intended to lay that down, one would have expected him to do so in express terms especially as he was one of the vakila who argued the case before <NAME>, J. The learned Chief Justice and <NAME>, J. in <NAME> v. <NAME> (1915) M.W.N. 478, on the other hand held that on failure of the provision originally made by the founder for management of a charitable trust, the right to provide for succession to the trust reverted to him.

7. <CITATION> (1896) I.L.R. 18 A. 227 at p. 232 the law is taken to be well-settled that in the absence of provision for the nomination of a trustee, the right to nominate vests in the founder of the endowment and continues to his heirs and the ruling of <ORG> in <CITATION> (1889) I.L.R. 17 Cal. 3 is referred to as having accepted the principle. The rule is followed in <NAME> v. <NAME> (1906) I.L.R. 28 A. 689, <CITATION> (1907) I.L.R. 29 A. 663, Gobind Prasad v. <NAME> (1908) I.L.R. 30. A. 288 and <CITATION> (1913) 18 I.C. 232.

8. That has also been the course of decisions in Calcutta. <CITATION> (1885) I.L.R. 12 C. 375 at p. 380 it was held by Norris and <NAME>, JJ. following Peet Koonwar and Anr. v. <NAME> (1870) 13 W.R. 396 that on failure of the provision for the appointment of a <NAME> or manager, the office reverted to the heirs of the founder. <NAME>, J., a very learned Hindu lawyer stated in <NAME> v. Runjit Singh I.L.R. 25 Cal. 354 the rule as enunciated in <NAME> and Anr. v. <NAME> (1870) 13 W.R. 396 and <CITATION> (1889) I.L.R. 17 C. 3 in general terms to the effect that when there is no other provision for the appointment of <NAME> the management of the endowment must revert to the heirs of the founder. The same view of the law is upheld by <NAME>, J., in <NAME> v. <NAME> (1909) 11 C.L.J. 2, and <CITATION> (1912) I.L.R. 40 C. 251.

9. In the face of these authorities I feel myself bound to hold that the question referred to us is no longer an open one. Up to now there has been no expression of judicial dissent from the view of the law expressed in the above dicisions.

10. I may mention that Mr. <NAME> Aiyar referred us to <CITATION> (1915) 28 M.L.J. 571, where it waa held that an alienation of the office of trustee by the hereditary trustee of a temple is absolutely void. But it does not seem to me that nomination of a trustee by the heirs of the founder who on the failure of the line of trustees indicated by the deed of endowment would themselves be entitled to act as trustees is ipso facto the same thing as alienation of the office of a trustee by the hereditary trustee. It is no more an alienation of the office, properly speaking, than the provision for appointment of a trustee when made by the founder himself.

11. Nor can it be said that the nomination of a trustee by the heirs of the founder would not be in accordance with the genesis of the Hindu Law relating to trusts. That system recognises the hereditary principle with reference to trusteeships, such office is liable to partition like ordinary joint family property and it has been held to be capable of being acquired by prescription. It would doubtless be more in accordance with modern legal notions to release the office of trustee from the domination of the joint family and hereditary principles relating to tenure of property and the arguments of convenience probably preponderate in the same direction. At the same time I am not convinced that there are really insuperable difficulties in working out the view which upholds the right of the heirs of the founder to nominate and appoint trustees. Such of them as arose in actual cases have apparently been solved.

<NAME> J.

12. The argument before <ORG> in which however nothing new was said and the further consideration which I have given to this matter have in no way changed the opinion which Mr. Justice <NAME> and myself expressed in the referring order. It is remarkable that in support of the doctrine of reversion of the management of trusteeship to the founder or his heirs which is applicable only to charities founded by Hindus, no <ORG> text or Commentary was cited; and in <NAME> v. <NAME> (1870) 5 Eng. B.L.R. page 181 (same case 13 W. R. 396.) 2, in which the doctrine was first formulated, the learned Judges do not treat it as one based on <ORG> or Usage. They say that as one of the provisions of the trust, that which related to the management failed, and as the idol cannot manage the property, the managership must revert to the heirs of the person who endowed the property. I am unable to see why it must; in the absence of any person nominated for the purpose of appointing new trustees by the deed of endowment and in the absence of a statutory power, the <ORG> will appoint a person to carry out the trusts. (<NAME> on Trusts Section 294.)

13. A Hindu who makes a gift to an idol or founds a charity does not resort to the machinery of trusts, but makes a direct gift to the charitable object which is conceived of as a juridical person; and there is no need of incorporation either. In such a case where he does not appoint another person to manage the properties so given, or settle a scheme for such management, as he is entitled to do at the time of the endowment and as a part of the same transaction, the natural presumption or the legal inference is, that he intends to manage the property himself on behalf of the charity or reserves the management to himself. Such management may pass to his heirs by inheritance, just as a legal estate of herit&nce may pass in England. That is the utmost extent to which the decisions of <ORG> take us, though no doubt in <NAME> v. <NAME> (1889) 16 I.A. p. 137, Peet Koonwar v. <NAME> (1870) 13 W.R. 396 was approved. It is to be observed, however, that the principle of Hindu Law - it is here for the first time it is said to be a principle of Hindu Law - which their Lordships lay down is, "that when the worship of a Thakoor has been founded the Shebaitship is held to be vested in the heirs of the founder in default of evidence that he has disposed of it otherwise or there has been some usage, course of dealing or some circumstance to shew a different mode of devolution." In a very recent case, <CITATION> (1912) L.R. 40 I.A. p. 97, their Lordships explained that the vesting of the management in accordance with the rules of inheritance applicable to private ptoperty, "must from the very nature of the right, be subject to the condition that the devolution in the ordinary line of descent is not inconsistent with or opposed to the purpose the founder had in view in establishing the worship." It seems to me fairly clear from the above observations that whatever other rights the founders' heirs may have, they had no right of nomination; for even if they were incompetent to perform the Sheba or worship, they were not incompetent to nominate persons qualified to perform the worship; and their Lordships do not appear to contemplate the existence of a power of nomination at all, which power is certainly not necessarily appendant to the trusteeship or Shebaitship as is assumed in the Allahabad cases.

14. The only case in which the foundation of this doctrine of reversion of management or the power of nomination is examined is <NAME> v. <NAME> (1909) 11 C.L.J. 2. There <NAME> after stating the two propositions both of them well established, namely (1) that the devolution of the management of the trust depends upon the terms of its original constitution whether they are proved by direct evidence as for example the production of a deed of endowment, or by the proof of usage, (2) that the office of <NAME> is held to be vested in the founders' heirs in default of evidence that he has disposed of it otherwise, proceeded to lay down a third proposition and said that "from these propositions it necessarily follows that when a <NAME> appointed by a founder fails to nominate a successor in accordance with the condition or usage of the endowment the management reverts to the representative of the founder." As I have said already I am unable to see the necessity. Where a founder commits the management of the charity to a trustee, the presumption raised or the legal inference drawn in cases where he makes no arrangement for the management, does not arise; and there is no presumption under the Hindu Law, any more than under the English Law, that he reserves any right of interference or reversion of management after he has once definitely placed the properties given by him in the possession and management of third parties. In a later case <CITATION> (1912) I.L.R. 40 C. 245 at 257, that same learned Judge after stating the above 3 propositions held that on the failure of the scheme of management originally provided by the founder at the time of the foundation, it became incumbent on the representatives of the founder to make an appointment of a <NAME>t Why the <NAME>ship did not vest in all the representatives of the founder according to his third proposition is not clear. If it did the decree should be for settlement of a scheme providing for the actual exercise of the functions of the <NAME>, by the numerous persons in whom that office vested as suggested in <CITATION> (1906) I.L.R. 29 M., and not for the appointment of a trustee. It appears to me that these cases treat the trusteeship or <NAME>ship as a species of private property which is vested as an absolute estate of inheritance in the founder, an estate in fee simple if I may borrow an expresion from the English Law of Real Property, from out of which the founder is entitled to carve out a particular estate retaining the reversion which again becomes an estate in possession vesting in him or his heirs as the case may be, on the determination of the particular estate, the founder or his heirs being entitled either to enjoy it themselves or again to carve out a particular estate therefrom. This is to some extent natural if we remember that in northern India private religious endowments, as for instance to family idols, are very common. That certain kinds of 'She-baitships' are treated as private property capable of being transferred by act of parties, and of being actually divided into shares is clear from <CITATION> . 40 I.A. p. 37 where a devise of <NAME>ship was without question assumed to be valid and from <NAME> v. Nikunja Behari Doss 22 C.L.J. p. 404 where its partibility was assumed. It need scarcely be pointed out that the office of trustee as we have in this case is inalienable and cannot be delegated, and any notion of their alienability, is contrary to the express decisions of <ORG> as regards the trusteeship of Hindu Religious Endowments and religious offices. In several cases in this <ORG> alienation of the trustee office which could have been supported as an exercise of the power of nomination if any such existed were held to be wholly void.

15. The assumption made in the Allahabad cases that a power of nominating new trustees is a right appendant to trusteeship.appears to me, with all respect, to be equally contrary to settled principles. An appointment of new trustee by the existing trustee or trustees is in effect nothing less than the transfer of the trusteeship, and a power to appoint new trustees cannot exist unless given by the founder at the time of foundation (see Perry on Trust, Section 287).

16. <NAME>, J. also compared the rights of the Hindu charit able donor or his heirs to the rights of the founder of eleemosynary corporations. In the first place the establishment of an idol, the building of a temple, mutt or chatt Ram or the endowment of property for their upkeep and maintenance may not be a 'foundation' at all and the principle of Hindu Law laid down by <ORG> does not appear to be confined to charity corporations. Further though I have no precise notion of the nature of the rights of patronage and visitation vested in the private founder and his heirs, so far as I understand it, such rights cannot from the nature of the case, include a right of nomination of trusteRs. See Lord <NAME>'s opinion in <NAME> v. <NAME> 2 Term Rep. 352.

17. It remains now to consider the decisions of this Court. In appeal No. 50 of 1850 <ORG> held in general terms with reference to a katlai in the famous temple at Madura that the founders' representatives - I am using the term 'founder' in this judgment generally in the sense of donor of property to charity - had no right to interfere in any way in the management unless a power was reserved at the time of the gift. In appeal No. 52 of 1857 a right to appoint was upheld as such a power was found on the evidence to have been given by the founder.

18. The most important case in this <ORG>, however, is <CITATION> (1889) I.L.R. 14 M. p. 1. That was a case of a private religious endowment called <ORG> which was first established by one of the <NAME>s of <NAME>. The position of the head of the <ORG> towards the endowment was not merely that of a secular trustee; he was himself a beneficiary under the endowment, he being entitled to the income of the properties subject to certain disbursements. The <NAME> <NAME>s and the members of their family were beneficiaries only in a spiritual sense. The mode of succession prescribed by the original endowment was, for each head of the mutt called <NAME>, to appoint his successor. The last <NAME> who so succeeded was found guilty of breach of trust and was removed and there was a vacancy which could not be filled in accordance with the prescribed mode. The <NAME> of <NAME>, the sole heir of the founder, - <NAME> is an impartible <NAME>y - prayed for possession of the endowed properties in order that they may be delivered over to another <NAME> to be appointed by him. It is not clear from the plaint whether he claimed the reversion of management or a right of appointment. The right of the plaintiff <NAME> is discussed in several places in the judgment. At page 7 of the report <ORG>usami Ayyar, <NAME> than whom no one knew more of the religious and charitable institutions of this part of the country, said that "Exhibit I, the deed of endowment, shows that the land in dispute was given for a specific religious purpose in order that that purpose might be carried out in perpetuity for the benefit of the grantor's family, and the respondent, as the representative of that family for the time being, is entitled to step forth when that purpose is neglected and the produce of the land is misapplied, and to ask the <ORG> to prevent the misappropriation, and to see that the "income of the endowment is applied to its legitimate purposes." This passage does not necessarily mean that as representative of the founder the plaintiff was only entitled to invoke the power of the <ORG>, but that that evidently was his opinion will be clear from other portions of his judgment. At page 12 he expressly negatived the right of reversion of management and the reason which he gives, viz. that on the construction of the deed of endow ment no such right can be deduced, conclusively shews that the very learned Judge never imagined that under the Hindu Law there was any such reversion on the failure of the otiginal line of trustees. The next paragraph is equally important. The first <ORG>'s decree which is set out at page 3 of the report declared that a trustee would be appointed by the <ORG> after consulting the wishes of the plaintiff the <NAME> and the defendant the dismissed trusteee. The <NAME> the respondent insisted that the dismissed trustee should have no voice in the appointment, and that was allowed. He further claimed that the power of appointment vested in the <NAME> for the time being, that is, the heir of the founder. This again was negatived, for the right of nomination allowed to him, was in his capacity of one (though the most important) of the beneficiaries, and the concurrence of all the other beneficiaries was required. Even this right of nomination conceded to the beneficiaries, not be it noted to the heirs of the founder appears to be nothing more than a consultation of their wishes, though the decree is in a more positive form; in fact the learned Judge at page 12 states in terms that the only right which the plaintiff had was the right of a beneficiary under a private trust which is declared in Section 60 of the Indian Trusts Act That that was the opinion of <NAME>, <NAME> is clear; for he agreed in dismissing the memorandum of objections of the plaintiff <NAME> except in so far as it related to the dismissed trustee having a voice in the appointment of a new trustee. The reference to the decree in the order of reference was however made under a misapprehension.

19. I have dealt with this case at some length as I consider that this decision is authority against the propositions laid down by <NAME>, J. though it is cited by him as supporting those propositions. For the same reasons I am unable to agree in the judgment in <CITATION> 1 on this point where moreover the right of nomination of fresh trustees was conceded to a Christian settlor I would therefore answer the question in the negative.


JUDGMENT <NAME>, C.J.

1. Only a few facts require to be stated in order to explain how the question referred in this case arises.

2. The assessee, Messrs. Kamani Industrial Bank is a limited company and on 6-4-1938, it acquired from one of its creditors some cinematographic machinery at the price, as was claimed, of Rs. 3,94,000/-. That figure of the cost of the machinery was accepted in successive assessments of the assessee, but was doubted for the first time in the course of the assessment for the year 1946-47. That year, the Income-tax Officer seems to have made an enquiry into the circumstances in which the machinery had been acquired and he came to the conclusion that its real cost to the assessee had been not Rs. 3,94,000/-, as claimed and as also allowed in previous assessments, but only Rs. 2,80,000/-. Since he found that depreciation allowance of the amount of Rs. 2,84,000/- had already been allowed to the assessed, he came to the conclusion that the written down value had been reduced to a minus figure and, therefore, there was no further depreciation allowance to be allowed. Necessarily, in the next assessment also, that for the year 1947-48, he made a similar order.

3. The assessee's contention is that the Income-tax Officer was not entitled to determine afresh, as it were the original costs of the machinery to the assessee, but had merely to take the written down value of the previous year and to work out there-bom the written down value for the assessment year and then allow the statutory percentage of deduction. The authorities below did not agree and decided against it. Thereupon, the <ORG> was required to refer the matter to this <ORG> which has been done in the form of the I following question:

Whether the Income-tax Officer, dealing with the assessments for the years 1946-47 and 1947-48, was entitled in law to go behind the original cost which was accepted by his predecessor ever since the assessment year 1939-40?

4. As framed, the question seems to raise a point of estoppel or 'res judicata.' It refers to what had been done by successive Income-tax Officers since the assessment year 1939-40 and asks whether the Income-tax Officer, dealing with the assessments for the two years in question, could take a view different from theirs with regard to the original costs of the machinery. Mr. <NAME>, however, appearing for the assessee, expressly disclaimed any intention to put his argument on the ground of anything like res judicata or estoppel. He said that the terms of Section 10 (2) (vi) sufficed for him and he would only draw attention to what the section enjoined. According to Mr. <NAME>, the language of Section 10 (2) (vi) limited the Income-tax Officer to working down to the written down value for the year for which he was making the assessment from the written down value accepted for the previous year. Further behind he could not, under The terms of the section, go.

5. Section 10 (2) (vi) is expressed in the follow ing terms:

10 (2) "Such profits or gains shall be computed after making the following allowances, namely:

(vi) in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent, where the assets are ships other than ships ordinarily plying on inland waters, to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of cases be prescribed .....".

We are really concerned with the last clause of the section. This is not a case of ocean-going ships, but one of "other" cases and, therefore, under the language of the section, the depreciation is the prescribed percentage on the written down value of the machinery or plant concerned in the case.

6. Mr. <NAME>'s contention was that the written down value had a well understood meaning in commerce and so far as the Income-tax Act was concerned, both the method of determining it and the quantum at which it was to be determined were regulated by the rules framed. He pointed out that whereas the written down value, entered by the owner of a business in his own books, might be what he considered to be proper in view of the principles of commercial accounting and the exigencies of the case, the Income-tax Act laid down a fixed percentage which had to be applied. All that had to be done in the first year was to fix the original cost and thereafter the Income-tax Officer had merely to write the value down from the figure of the original cost to a figure to which the figure of the original cost would be reduced if the statutory percentage was deducted, and then allow the statutory percentage of the written down value so determined, as an allowance. Similarly, in the next year, he had to write the written down value further down by deducting once again the same statutory percentage and grant the assessee an allowance of the statutory percentage of the value written further down in the manner stated above.

As this was the process contemplated and directed by the Act, Mr. <NAME> contended that when in a particular year the Income-tax Officer had to decide what depreciation allowance he would grant the assessee, he had merely to see what the written down value of the previous year was and then apply the statutory percentage in the two ways I have already indicated. The section, Mr. <NAME> reminded us, spoke of "such percentage on the written down value thereof as may in any case or class of cases be prescribed." In those words there was no room, according to Mr. <NAME>, for looking further behind than at the written down value immediately preceding and if that was so, any revision of the basic figure of the original cost which had been gradually scaled down to the written, down value of the previous year, was wholly excluded by the section and entirely unwarranted.

7. As Mr. <NAME> said that he would not rely upon the principle of 'res judicata' or anything like the rule of estoppel, but would be content to rely upon the statute itself, Mr. <NAME> sought to meet section by section. He referred us to the definition of 'written down value', as contained in Section 10 (5) of the Act. According to that section, 'written down value' means we are not concerned with Clause (a)--

"(b) in the case of assets acquired before the previous year the actual cost to the assessee, less all depreciation actually allowed to him under this Act, or any Act repealed thereby, or under executive orders issued - when the Indian Income-tax Act , 1886  was in force."

Mr. <NAME> contended that Clause (b), although it was a definition section, clearly indicated what the task of the Income-tax Officer was when he had to determine the depreciation allowance for any year other than the year following the year of the purchase. He had to see what the actual cost to the assessee had been and then see how much depreciation allowance had been granted to him in all up to the time and then take the difference between the two sums as the written down value for the year concerned. Since the two component parts of the definition were, (a) actual cost to the assessee, and (b) depreciation so far allowed, Mr. <NAME> contended that there was nothing to prevent the Income-tax Officer from determining for himself what the actual cost had been and, in fact, the section required him to do so. He might certainly accept the cost as originally determined and in most cases would probably do so, but if he thought that the original determination was erroneous, the section left him free and indeed made it his duty to find the actual cost for himself.

It was pointed out that even the method suggested by Mr. <NAME> implied some reference to the original cost, because the written down value of the previous year on which, according to Mr. <NAME>, the Income-tax Officer would have always to rely, was only the resultant figure that had been reached by working down from the figure of the original cost.

As regards Mr. <NAME>'s actual argument, Mr. <NAME>'s answer was that if the intention of the <ORG> was to limit the Income-tax Officer in the way contended for by Mr. <NAME>, then Clause (b) of Section 10 (5) might well have said that in the case of assets acquired before the previous year, the written down value would be the value determined by deducting from the written down value of the previous year the amount of the statutory percentage. Instead of doing so, the section specifically referred the Income-tax Officer back to the original cost and back to the amounts of allowance granted in the past and thus committed to him a task of not merely performing a mathematical operation on the basis of the written down value of the previous year, but one of determining the written down value himself.

8. In my view, the contention of Mr. <NAME> is right. The definition, it appears to me, completely excludes the view suggested by Mr. <NAME> as to the nature of the operation to be performed under the latter part of Section 10 (2) (vi). Clearly, the limit to which the income-tax Officer can go back does not stop at the written down value of the previous year, but extends up to the figure of the original cost, and the method enjoined by Section 10 (5) (b) is not that the Income-tax Officer should merely scale the written down value of the previous year down, but that he should take into consideration the actual cost, determining it for himself, if necessary, take also into consideration the allowance granted in the past and then make his own computation as to the written down value for the assessment year with which he is concerned. It appears to me that neither is there any principle of 'res judicata' or estoppel standing in the way of the Income-tax Officer proceeding in the manner I have mentioned above, nor do the terms of Section 10 (2) (vi) themselves limit him in the way suggested by Mr. <NAME>.

9. For the reasons given above, the answer to the question referred must, in my opinion, be in the affirmative.

10. The Commissioner of Income-tax will have his costs of this Reference.

11. Certified for two Counsel.

<NAME>

12. I agree.


JUDGMENT <NAME>,J.

1. In March, 1920, the second plaintiff in this case, <NAME>, who is not a certified share-broker, and who describes himself as the sub-broker of the first plaintiff <NAME>, who is a certified share-broker, sold on <ORG> to first defendant, <NAME>, one hundred and twenty-nine shares of a company called <ORG>, for delivery on April 14, 1920, Neither of the two plaintiffs was the registered holder of any such shares. In order to make good the delivery the first plaintiff acquired the requisite number of shares in the market from various brokers, and took from these brokers blank transfers signed by the registered holders along with the corresponding certificates. These certificates and blank transfers were handed by the second plaintiff to the first defendant at 6 p.m. on April 14, At 8 P.M. a cheque for the sum due under the contract in favour of the first plaintiff was handed to the second plaintiff, This cheque was dishonoured on the next day.

2. The first defendant, having had the blank transfers and certifi. cates thus delivered to him, made certain propositions as to the raising of money to <NAME>, a partner in the firm of <ORG>, the second defendant, and handed the certificates and transfers to him. The second defendant in turn handed them to the third defendant, <NAME>, again on certain propositions as to raising money.

3. The cheque was never honoured, and the first defendant absconded, The present action is brought by the first and second plaintiffs against all the three defendants, asking for re-turn of the certificates and blank transfers or otherwise for damages.

4. Proof was led before the trial Judge, who held in fact (1) that plaintiff No. 2 acted as sub broker to plaintiff No. 1, and that, accordingly, plaintiff No. 1 had a direct title to sue the other defendants; (2) that <ORG>, the defendant No. 2, knew when he took the certificates and shares that the cheque of <ORG>, defendant No. 1, was not likely to be honoured, He gave a decree in favour of plaintiff No. 1 against all defendants. The ratio of this judgment is to be found in the following passage :-

<ORG> was only an ostensible owner and the plaintiffs, who were the unpaid vendors, had equity in them, and they could have stopped <ORG> from getting these shares transferred in his name in the books of the <ORG>, but if <ORG> had passed on these shares either by way of sale or by way of pledge to any third person who acted bona fide, and without notice, then I certainly think that such a person would have a better title to these shares than the plaintiffs. But in this case it is abundantly clear that <ORG> himself left that he was not the owner.... <ORG> had notice that these shares were not paid for, and <NAME>, being a mere nominee of <ORG>, <NAME> was in no better position than <ORG> himself, They took these shares with the infirmity from <ORG>, and therefore they cannot claim these shares in priority to the plaintiffs.

5. He had previously pointed out that in a question with the company the owners of the shares were the old owners who had signed the blank transfers.

6. On appeal by the second and third defendants the learned Judges of <ORG> of <ORG> reversed the judgment of the trial Judge and dismissed the action as against them. They held on the facts that plaintiff No. 2 had acted as agent for plaintiff No. 1, and that, consequently, as plaintiff No. 2 was not a certified broker, the buyer was not affected by the rules of <ORG>. This is only of importance as regards a certain Rule C, with which their lordships will afterwards deal. On the merits of the case they held that, under the Indian Contract Act , the property of the shares as sold passed on the delivery of the certificates and blank transfers to <ORG>; that, after that, plaintiff No. 1 had no claim against <ORG> except upon the cheque; that consequently he had no claim against defendants Nos. 2 and 3, and could not have a judgment against defendant No. 3 for delivery of the certificates and transfers. They held further that Section 121 of the Indian Contract Act, which is in these terms-

When goods sold have been delivered to the buyer, the seller is not entitled to rescind the contract on the buyer's failing to pay the price at the time fixed unless it was stipulated by the contract that he should be so entitled.

7. prevented the plaintifi from rescinding the sale, there having been no stipulation provided in the contract for sale that he should be so entitled. Appeal was then taken by the plaintiffs to the King in Council.

8. Their lordships agree that the stipulation referred to in the section must be an express stipulation and that as nothing was proved to the contrary, it must be presumed that the contract here was an ordinary contract for the sale of shares effected by bought and sold notes.

9. On the hearing of the appeal to their lordships, the view expressed by the trial Judge that <NAME> was only an ostensible owner of the shares and the plaintiff, who was the unpaid vendor, had the equity in them, was elaborated into an argument that, according to the law of England, there would be an equitable lien in favour of the unpaid purchaser and that that law applied. Such a view would be so far-reaching in ordinary <ORG> transactions that their lordships think it necessary to emphasize their view of its unsoundness. In the first place, so far as lien is concerned, the law as to lien is statutory and is contained in the 95th and following sections of the Indian Contract Act . Section 95 applies to this case; unless there is possession there is no lion. But, farther, there seems to their lordships a good deal of confusion arising from the prominence given to the fact that the full property in shares in a company is only in the registered holder. That is quite true. It is true that what <NAME> had was not the perfected right of property, which he would have had if he had been the registered holder of the shares which he was selling. The company is entitled to deal with the shareholder who is on the register, and only a person who is on the register is in the full sense of the word owner of the share. But the title to get on the register consists in the possession of a certificate, together with a transfer signed by the registered holder. This is what <NAME> had. He had the certificates and blank transfers, signed by the registered holders. It would be an upset of all <ORG> transactions if it were sug-gestad that a broker who soil shares by general description did not, implement his bargain by supplying the buyer with certificates and blank transfers, signed by the registered holders of the shares described. <NAME> sold what he had got. He could sell no more. He sold what in England would have been choses in action, and he delivered choses in action. But in India by the terms of the Indian Contract Act , these choses in action are goods. By the definition of goods as every kind of move-able property it is clear that, not only registered shares, but also this class of choses in action are goods, Hence equitable considerations not applicable to goods do not apply to shares in India.

10. Now Section 78 is as follows :-

Sale is effected by offer and acceptance of ascertained goods for a price, or of a price for ascertained goods, together with payment of the price or delivery of the goods....

11. Here the goods were not ascertained goods at the time of the contract, for the contract was only for so many shares of <ORG>', not of any particular shares, but then Section 83 provides:-

Where the goods are not ascertained at the time of making the agreement for <NAME> sale goods answering the description in the agreement are subsequently appropriated by one party for the purpose of the agreement, and that appropriation is aasented to by the other, the goods have been ascertained, and the sale is complete.

12. So soon, therefore, as <NAME>, acting for <ORG>, handed <ORG> the certificates and transfers and <ORG> accepted them and gave the cheque, the goods became ascertained goods, the sale was complete and the property passed, From that time onward <ORG> and <NAME> could only sue <ORG> on the cheque, or for the price of the shares unpaid in respect that the cheque had not been honoured. They had no longer any jus in re of the certificates and transfers. They had no statutory lien, for they had parted with possession, and, consequently, as they had no contract with defendants Nos. 2 and 3, they could not sue them for delivery of the shares, whether the defendants had got good title as against <ORG> or had not.

13. Their lordships have already metioned that the trial Judge held that the sale was between brokers, and was, therefore, under the rules of <ORG>, from which finding <ORG> dissented. In their lordships' view it is not necessary to decide this question of fact. They will assume, for the purpose of the argument, that the sale was as between brokers. That brings in Rule C of <ORG>-change which is as follows :-

C. If the cheque given for the monies of the shares will not be honoured at the bank on the day following the day when the cheque is given, the shares shall have to be returned immediately be the person selling (them), and the person purchasing (them) shall have to take away those shares having paid the rupees in cash before two o'clock on that very day. And if the person purchasing shall fail to do so, those shares will be sold off by (sic) before three o'clock.

14. It was argued that the effect of this rule was for make the delivery not actual but conditional with the result that the property did not really pass till the cheque was honoured. Their lordships consider this argument quite unsound. The Contract Act settles that property is to pass on delivery. Delivery is a fact, and the statutory result must follow. Further, the rule cannot be read as an express stipulation in the sense of Section 121 because it does not say what Section 121 provides must be said. But in truth, in their lordships' view, the rule in question had nothing to do with the perfection of contracts or the passing of property. It is for quite another purpose. The buyer may be unable, from temporary embarrassment, to meet his cheque on an exact day. Time is of the essence of this ordinary contract of sale of shares, therefore he is enjoined by the rule to hand back the shares; he is given the latitude of paying up till 2-0 o'clock, but if he does not do so then they are sold by the authorities, so as to fix, without further ado, the damages which are become due for breach of contract.

15. Their lordships will accordingly humbly advise His Majesty to dismiss the appeal with costs.