JUDGMENT <NAME>, J.

1. These are appeals by special leave from the decision of <ORG>. The questions of law arising for decision in these two appeals are identical. Therefore, it would be sufficient if we set out the facts of the case in Civil Appeal No. 2569 of 1969. The respondent in that appeal is ex parte but the respondent in Civil Appeal No. 2570 of 1969 is represented by Mr. <NAME>. Hence the opposing view points on that question have been fully debated before us.

2. Now coming to the facts of the case the respondent is the Manager of a Nambudri Illom. That illom was assessed to tax under the Kerala Agricultural Income-tax Act, 1950 (hereinafter to be referred to as 'the Act') in respect of the assessment years 1958-59, 1959-60, 1960-61 and 1961-62. All the assessments were made on March 14, 1962.

3. Section 3 of the Act provides:

Agricultural Income-tax at the rate or rates specified in the Schedule to this Act shall be charged for each financial year in accordance with and subject to the provisions of this Act, on the total agricultural income of the previous year....

Sub-sections (3) and (4) of that section as it stood on March 14, 1962 read as follows:

(3) In the case of an undivided <ORG> family or branch of Maru-makkathayam tarwad including a Nambudiri family or a family like that of the Moothathu or any other class governed by the law applicable to Nambudiries consisting of more than five members and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of the agricultural income due to five members of the family or to six thousand rupees, whichever is higher.

(4) In the case of an undivided Hindu family consisting of brothers only or of a brother or brothers and the son or sons of a brother or brothers and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of income due to a brother or to six thousand rupees, whichever is higher.

Explanation-For the purposes of this sub-section

(a) the expression 'share of income due to a brother' means the portion of the total agricultural income of the family which would have accrued to a brother, if a partition of the assets had been effected according to law on the day before the assessment is made; and

(b) 'son' includes a son's son.

4. Subsequent to the passing of assessment orders on March 14, 1962, Act XII of 1964 was passed by <ORG>. That Act amended Sub-section (3) of the Act and omitted Sub-section (4). That amendment came into force with effect from April 1, 1958. Amended Sub-section (3) reads:

In the case of a Hindu undivided family consisting of more than 5 members entitled to claim a share on partition and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of the agricultural income due to five members of family or to rupees six thousand whichever is higher.

5. The amendment was given retrospective effect.

6. Subsequent to that amendment, the Agricultural Income-tax Officer by having recourse to his power under Section 36 of the Act, corrected the assessments in accordance with the amended provision. Section 35 of the Act provides for bringing to tax the income that has escaped assessment or has been assessed at too low a rate. Section 36 empowers the Agricultural Income-tax Officer to rectify the mistakes in an assessment order which are apparent on the face of the records. Under Section 35, the reassessment can be done only within three years of the end of the concerned financial year but under Section 36 the rectification can be made within three years of the date of the assessment. If the power exercised by the Agricultural Income-tax Officer can be held to have been exercised under Section 36, then all that we have to see is whether the powers exercised by the Agricultural Income-tax Officer were exercised within three years from the date of the assessment order, in respect of each one of those assessments. If, on the other hand, we come to the conclusion that the case falls within Section 35 then what we have to see is whether the power was exercised in respect of each of the assessment within the period prescribed therein.

7. <ORG> has come to the conclusion that on the facts of the case, the Agricultural Income-tax Officer could only have exercised his power under Section 35 as he was dealing with a case where assessment had been made at too low a rate.

8. For the reasons to be presently stated the judgment of <ORG> cannot be accepted as correct. Section 35 of the Act corresponds to Section 34 of the Indian Income-tax Act, 1922 and Section 36 corresponds to Section 35 of that Act. This Court had occasion to deal with the scope of Section 35 of the Indian Income-tax Act, 1922 in <CITATION> . . Therein the Income-tax Officer, by his order dated October 9, 1952, assessed the assessee for the assessment year 1952-53 and gave him credit for Rs. 50,603-15-0 as representing interest on tax paid in advance under Section 18-A(5) of the Income-tax Act. On May 24, 1953, the Indian Income-tax (Amendment) Act , 1953 came into force adding a proviso to Section 18-A(5) of the Act to the effect that the assessee was entitled to interest not on the whole of the advance tax paid by him but only on the difference between the payment made and the amount assessed. The Amendment Act provided that it shall be deemed to have come into force on April 1, 1952. The Income-tax Officer, acting under Section 35 of the Act, rectified the assessment order holding that the assessee was entitled to a credit of only Rs. 21,157-6-0 by way of interest on tax paid in advance as a result of the retrospective operation of the amendment in Section 18-A(5) and issued a notice of demand against the assessee for the balance of Rs. 29,446-9-0. The assessee filed a petition in <ORG> of Bombay under Article 226 of the Constitution praying for a writ prohibiting to be issued to the appellants from enforcing the rectified order and notice of demand. <ORG> issued the writ prayed for holding that Section 35 was not applicable to the case as the mistake mentioned in Section 35 had to be apparent on the face of the order and the question could only be judged in the light of the law as it stood on the day when the order was passed. Overruling that decision this Court held that the Income-tax Officer was justified in exercising his powers under Section 35 and rectifying the mistake. This Court held that as a result of the legal fiction brought about as a result of the retrospective operation given to the Amending Act , the subsequently inserted proviso must be read as forming part of Section 18-A(5) of the principal Act as from April 1, 1952, and consequently the order of the Income-tax Officer dated October 9, 1952, was inconsistent with the provisions of the proviso and suffered from a mistake apparent from the record. Dealing with the scope of Section 35 of the Indian Income-tax Act, 1922, <NAME>, J. as he then was, speaking for the court observed:

It is in the light of this position that the extent of the Income-tax Officer's power under Section 35 to rectify mistakes apparent from the record must be determined; and in doing so, the scope and effect of the expression "mistake apparent from the record" has to be ascertained. At the time when the Income-tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952. If that be the true position then the order which he made giving credit to the respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the, assessment order can be rectified under Section 35 , we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act . But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act . If, as a result of the said fiction we must read the subsequently inserted proviso as forming part of Section 18-A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with ' the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record. That is why we think that the Income-tax Officer was justified in the present case in exercising his power under Section 35 and rectifying the said mistakes.

There is another decision of this Court bearing on the question of law which we are considering and that decision is <CITATION> assessee in that case was a Private Ltd. Co. It was assessed to income-tax for the assessment year 1953-54 under the provisions of the Indian Income-tax Act . 1922. As per the assessment order dated June 30. 1955. the amount of depreciation allowed under Section 10(2)(vi) of the Act was Rs. 3,48,105/-. By his order of February 27 1956, the Income-tax Officer corrected the written down value of the different properties of the assessee and determined the total allowable depreciation to be Rs. 1,94,074/-. The (appellant) assesses challenged the order dated February 27, 1956 on the grounds, infer alia, (1) that he was not given a written notice of the intended rectification of the written down value, (2) that the provisions under which the Income. tax Officer acted, i.e., Section 35 of the Act, was not meant for the purpose of making corrections in written down values, the correct provision being Section 34 which specifically refers to excessive depreciation, and (3) that, in any case, he had exceeded his jurisdiction under Section 35 of the Act in calculating the depreciation on the written down value of the buildings and the machinery of the appellant acting sua motu, and that he could correct only those mistakes which had been pointed out by it. It was found that notice was given to the appellant of the intended determination of the written down value, though it was not a written notice, and that the matter was discussed with the assessee's representative. Overruling the contentions of the assessee this Court held that the rectification in question could be made under Section 35 of the Indian Income-tax Act, 1922 even though a re-assessment could have been made under Section 2A of that Act.

9. Unfortunately in the present case the attention of the learned Judges of <ORG> was not invited to any of the two decisions referred to earlier. For the reasons mentioned above, we come to the conclusion that the Agricultural Income-tax Officer was empowered to make the rectification under Section 36 of the Act. But from the material before us, it is not possible for us to decided which of all assessments would fall within the period prescribed in Section 36 of the Act. For that reason these cases have got to go back to <ORG> for deciding that question in accordance with the decision.

10. In the result' these appeals are allowed and they are remitted to <ORG> for disposal according to law as stated earlier. No costs.


PETITIONER: STATE OF BIHAR Vs. RESPONDENT: RAMESH SINGH DATE OF JUDGMENT02/08/1977 BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. SHINGAL, P.N. CITATION: 1977 AIR 2018 1978 SCR (1) 257 1977 SCC (4) 39 CITATOR INFO : R 1979 SC 366 (8) F 1980 SC 52 (18) F 1980 SC1780 (4) RF 1986 SC2045 (45) RF 1990 SC 121 (9) RF 1990 SC1962 (6) ACT: Criminal Procedure Code 1973- Sections 226 , 227 and 228 . Tests for discharging an accused-Presumption of innocence- Difference between case for conviction or case for proceeding further. HEADNOTE: At 3.00 A.M. on the 26th of November 1973 Smt. <NAME>, wife of respondent, a professor of Economics, in <ORG>, Motihari in <ORG> of Bihar, was found burning in the, Kitchen of their house. She died as a result of excessive burn injuries on her person. The brother of <NAME> rushed to the spot and found that respondent and his brother were standing near the burning body of <NAME> but were not taking any steps to extinguish the fire. He lodged the F.I.R. at Police Station charging the respondent for having committed the offences under s. 302 and 201 of Penal Code. Charge sheet was submitted against him by the police and the case was committed to <ORG> for trial of the respondent u/s. 209 of Cr. P.C. 1973. The Sessions Judge discharged the accused under s. 227 of Cr. P. Code 1973 on the ground that there was not sufficient ground for proceeding with the trial against respondent and he was discharged in accordance with section 227 . The <ORG> of Bihar went in revision before Patna High <ORG>, which was dismissed by <ORG>. Allowing the appeal by special leave, HELD : (1) Under s. 226 of the Code the prosecutor while opening the case has got to describe the charge against the accused and <ORG> by what evidence he proposes to prove the guilt of the accused. Thereafter, comes it the initial stage, the duty of the <ORG> to consider the record of the case and the documents submitted therewith. The Judge has then to pass an order either u/s. 227 or u/s. 228 of Code . [259C, D] If the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing as enjoined by s. 227. If on the other hand, the Judge is of opinion that there is ground for presuming that the accused has committed an offence which (b)is exclusively triable by the court, he shall frame in writing a charge against the accused as provided in s. 228 . Reading the two provisions together in juxta a position at the initial stage of the trial, the truth, veracity and effect of the evidence which the prosecutor proposes to adduce are not to be meticulously judged. Nor is any weight to be attached to the probable defence of the accused. [259E-F] The standard of test and judgment which is to be finally applied before recording a finding regarding the guilt or otherwise of accused, is not exactly to be applied at the stage of deciding the matter under s. 227 and 228 of the Code. [259G] Strong suspicion against the accused, if it remains in the region of suspicion, cannot' take the place of proof of his guilt at the conclusion of trial. But at the initial stage, if there is a strong suspicion which leads the court to think that there is a ground for presuming that the accused has committed an offence then it is not open to the court to say that there is no sufficient ground for proceeding against the accused. It is only for the purpose of deciding 258 prima facie whether the court should proceed with the trial or no,,. The evidence which the Prosecutor proposes to adduce to prove the guilt of the accused even if fully accepted before it is challenged in cross-examination or rebutted by the defence evidence, if any, cannot show that the accused committed the offence, then there will be no sufficient ground for proceeding with the trial. [259H, 260A-B] If the scales of pan as to the, guilt or innocence of the accused are something like even, at the conclusion of the trial, then, on the theory of benefit of doubt the case is to end in his acquittal. But if on the other hand, it is so at the initial stage of making an order under s. 227 or s. 228 then in such a situation ordinarily and generally the order which will have to be made will be one under s. 228 and not under s. 227 . [260C-D] Nirmal Jeet Singh Hoon v. <ORG> of West Bengal (1973) 2 SCR 66 has followed <CITATION> (1964) 3 SCR 639 wherein it was laid down that the test is whether there is a sufficient ground for proceeding and not, whether there is a sufficient ground for conviction. After setting aside the orders of High <ORG> and <ORG>, the <ORG> directed that appropriate charge or charges be framed against the respondent and trial to proceed in accordance with law. [261H] The <ORG> observed that nothing stated in the judgment is meant to prejudice in the least the case of either party at the trial. [259C] JUDGMENT:

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 51 of 1977.

Appeal by Special Leave from the Judgment and Order dated 18-2-1976 of <ORG> in Crl. Rev. No. 699/75. <NAME> and <NAME>, for the, Appellant. <NAME> and <NAME>, for the Respondent. The following Judgment of the Court was delivered by UNTWALIA, J.-The respondent in this appeal by special leave is a Professor of Economics in <ORG>, Motihari in the State of Bihar. At about 3.00 A.M. on the 26th of November, 1973, Smt. <NAME>, wife of the respondent, was found burning in the kitchen of his house. A hulla was raised. <NAME>, brother of <NAME>, who is a Professor of Botany in the said College and lives nearby came to the scene of occurrence. It is said he found the respondent and his brother standing near the burning body of <NAME> but not taking any steps to extinguish the fire. <NAME> died apparently as a result of the extensive burn injuries on her person. A First Information Report was lodged by <NAME> at the Police Station charging the respondent for having committed the offences under sections 302 and 201 of the Penal Code. Eventually Charge-Sheet was submitted against him by the police and the case was committed to <ORG> for trail of the respondent under section 209 of the Code of Criminal Procedure, 1973-hereinafter called the Code .

When the case was opened in <ORG> IIIrd Additional Sessions Judge at Motihari in Sessions Trial No. 66/1975 by the Additional Public Prosecutor in accordance with section 226 of the Code, a plea was raised on behalf of the respondent that there was not any sufficient ground for proceeding with the trial against him and he should be discharged in accordance with section 227 . The Additional Sessions Judge accepted the plea and discharged the accused by his order dated April 30, 1975. The State of Bihar the appellant in this appeal went in revision before <ORG> to assail the order aforesaid of <ORG>. <ORG> by its order dated the 18th February, 1976 dismissed the revision. Hence this appeal. It is neither necessary nor advisable for us to mention in any great detail the facts of the prosecution case against the respondent or refer to all the materials and the evidence which may be produced by the prosecutor when a trial proceeds in <ORG>. Unnecessary details in that regard have got to be avoided so that it may not prejudice either the prosecution case of the appellant or the defence of the respondent. Since for the brief reasons to be stated hereinafter we are going to set aside the orders of the Courts below and direct the trial to proceed against the respondent, we would like to caution that nothing which may have to be said in support of our order in this judgment is meant and should be understood to prejudice in the least the case of either party at the trial. Under section 226 of the Code while opening the case for the prosecution the Prosecutor has got to describe the charge against the accused and state by what evidence he proposes to prove the guilt of the accused. Thereafter comes at the initial stage the duty of the Court to consider the record of the case and the documents submitted therewith and to hear the submissions of the accused and the prosecution in that behalf. 'The Judge has to pass thereafter an order either under section 227 or section 228 of the Code. If "the Judge consider that there is not. sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing", as enjoined by section 227 . If, on the other hand, "the Judge is of opinion that there, is ground for presuming. that the accused has committed an offence which-

(b)is exclusively triable by the <ORG>, he shall frame in writing a charge against the accused'-', as provided in section 228 . Reading the two provisions together in juxta position, as they have got to be, it would be clear that at the beginning and the initial stage of the trial the truth, veracity and effect of the evidence which the Prosecutor proposes to adduce are not to be meticulously judged. Nor is any weight to be attached to the probable defence of the accused. It is not obligatory for the Judge at that stage of the trial to consider in any detail and weigh in a sensitive balance whether the facts, if proved, would be incompatible with the innocence of the accused or not. The standard of test and judgment which is to be finally applied before recording a finding regarding the guilt or otherwise of the accused is not exactly to be applied at the stage of deciding the matter under section 227 or section 228 of the Code. At that stage the <ORG> is not to 'see whether there is sufficient ground for conviction of the accused or whether the trial is sure to end in his conviction. Strong suspicion against the accused, if the matter remains in the region of suspicion, cannot take the place of proof of his guilt at the conclusion of the trial. But at the initial stage if there is a strong suspicion which leads the <ORG> to think that there is ground for presuming that the accused has committed an offence then it is not open to the <ORG> to say that there is no sufficient ground for proceeding against the accused. The presumption of the guilt of the accused which is to be drawn at the, initial stage is not in the sense of the law governing the trial of criminal cases in France where the accused is presumed to be guilty unless the contrary is proved. But it is only for the purpose of deciding prima facie whether the <ORG> should proceed with the trial or not. if the evidence which the Prosecutor proposes to adduce to prove the guilt of the accused even if fully accepted before it is challenged in cross-examination or rebutted by the defence evidence, if any, cannot show that the accused committed the offence, then there will be no sufficient ground for proceeding with the trial. An exhaustive list of the circumstances to indicate as to what will lead to one conclusion or the other is neither possible nor advisable. We may just illustrate the difference of the law by one more example. If the scales of pan as to the guilt or innocence of the accused are something like even at the conclusion of the, trial, then, on the theory of benefit of doubt the case is to end in his acquittal. But, if, on the other hand, it is so at the initial stage of making an order under section 227 or section 228 , then in such a situation ordinarily and generally the order which will have to be made will be one under section 228 and not under section 227 . <CITATION> and an- other(1)-Shelat, J. delivering the judgment on behalf of the majority for the <ORG> referred at page 79 of the report to the earlier decisions of this <ORG> in <CITATION> (2) where this <ORG> was held to have laid down with reference to the similar provisions contained in sections 202 and 203 of the Code of Criminal Procedure, 1898 "that the test was whether there was sufficient ground for proceeding and not whether there was sufficient ground for conviction, and observed that where there was prima facie evidence, even though the person charged of an offence in the complaint might have a defence, the matter had to be left to be decided by the appropriate forum at the appropriate stage and issue of a process could not be refused." Illustratively, <NAME>, further added "Unless, therefore, the Magistrate finds that the evidence led before him is self-contradictory, or intrinsically untrustworthy, process cannot be refused if that evidence makes out a prima facie case."

The fact that <NAME> died an unnatural death and there were burn injuries on her person does not seem to be in doubt or dispute. The question to be decided at the trial would be whether the respondent, as is the prosecution case, had murdered her and set fire to her body or whether she committed suicide by herself setting fire to , it This undoubtedly is a serious matter for decision at the trial. But at the stage of framing the charge, copious reference to <NAME>'s Medical Jurisprudence and judging the postmortem report of the Doctor who performed the autopsy over the dead body of the lady meticulously was not quite justified as has been done by the Trial Judge (1) [1973] 2 S.C.R. 66.

2. [1964] 3 S.C.R. 629.

According to the persecution case the respondent was in love with one of his girl students, named, <NAME> and this led to the serious differences between the respondent and his wife, the unfortunate <NAME>, inducing the former to clear the path of his misadventure in the manner alleged by the prosecution. On the other hand, the defence seems to suggest that the 'alleged love-affair of the respondent led <NAME> to commit suicide. Whether the respondent will be able to prove his defence at the final stage of the trial may not be of much consequence. Surely the prosecution will have to prove its case beyond any reasonable doubt. Although at the time of the alleged occurrence were present in the house of the respondent his brother, his brother's wife, and children the prosecution does not seem to be in possession of any oscular testimony of an eye witness of the occurrence. The case will largely, rather, wholly, depend upon the circumstantial evidence. A stricter proof will have to be applied for judging the guilt of the accused with reference to the various circumstantial evidence against him. The at this stage the Additional Sessions Judge was not right when he said-"it appears that there is neither direct evidence nor any circumstantial evidence to connect the accused with the alleged murder of <NAME>".' He also ought not to have referred to the varying opinions of the Circle Inspector and the Superintendent of Police, <NAME> as to the submission of Charge-Sheet against the respondent. Apart from some other circumstances, as it appears, the prosecution proposes to prove in this case, and whether it will succeed in proving them or not is a different matter, <ORG> has enumerated three circumstances in its impugned order. We may just add, and that is only for the purpose of a cursory observation for deciding the matter at this stage, that the story of assault on <NAME> by the respondent a day prior to the occurrence is perhaps sought to be proved by the evidence of <NAME>, the informant, and it seems, he would also try to say, rightly or wrongly, that at the time of the said assault the respondent had given her a threat to kill her. <ORG> felt persuaded to take the view that the three circumstantial facts, even if proved, would not be incompatible with the innocence of the accused and then added "There may be strong suspicion against the opposite party, but the three circumstances which I have just mentioned above, cannot be said to be incompatible with the defence of the accused." The said observation of <ORG> is not quite apposite in the background of the law which we have enunciated above with reference to the provisions of sections 227 and 228 of the Code. For the reasons stated above, we set aside the impugned orders of <ORG> and <ORG> and direct that appropriate charge or charges will be framed against the respondent and the trial shall proceed further in accordance with the law.

P. H. P. Appeal allowed.


JUDGMENT <NAME>, J.

1. This is an appeal against the order of the District Judge, Assam Valley Districts, dated 21st June 1939, reversing an order of the Special Subordinate Judge of the same district made on 23rd March 1989. The appellant obtained a money decree against the respondent in <ORG> on 19th March 1927. He applied for transfer of this decree for execution to <ORG>, Calcutta, on 9th February 1939. On 10th February 1939, the Subordinate Judge issued the necessary certificate of non-satisfaction of decree to <ORG>, Calcutta, for execution and transferred the decree to that Court without giving any notice to the judgment-debtor. Thereafter <ORG> arrested the judgment-debtor in execution of the decree. On 23rd March 1939, the judgment-debtor made an application before the Subordinate Judge, Assam Valley Districts, who made the order for transfer for recalling the said order. The learned Subordinate Judge refused this prayer of the judgment-debtor. The latter thereupon appealed to the District Judge. The learned District Judge allowed the appeal and recalled the order of transfer made by the Subordinate Judge. Hence this appeal to this Court.

2. The first point urged by Mr. <NAME> in support of this appeal is that the learned District Judge was wrong in recalling the order inasmuch as the order was good in law though it was made ex parte. The learned District Judge has found that the order of transfer was bad in law inasmuch as the decree was above Rs. 2000 and <ORG>, Calcutta, has no power to execute decrees exceeding Rs. 2000. Mr. <NAME> contention is that the view taken by the learned District Judge is wrong inasmuch as there is no limitation as regards the pecuniary jurisdiction in cases coming under Section 39, Clause (i), Civil P.C. His argument is that Clause (ii) of the said Section expressly refers to the jurisdiction of the <ORG>, but Clause (i) does not mention anything about the competency of the <ORG>. The opening words of Clause (i) of Section 39 are in these terms:

The <ORG> which passed a decree may, on the application of the decree-holder, send it for execution to another <ORG>.

3. It was argued by Mr. <NAME> that the expression "another <ORG>" includes <ORG> of any jurisdiction, viz. that of a Munsif or a Subordinate Judge and consequently a decree passed by a Subordinate Judge can be transferred for execution to the <ORG> of a Munsif. I am unable to "accept this contention. Section 6 of the1 Code runs thus:

Save in so far as is otherwise expressly provided, nothing herein contained shall operate to give any <ORG> jurisdiction over suits the amount or value of the subject-matter of which exceeds the pecuniary limits (if any) of its ordinary jurisdiction.

4. There is no express provision in Section 39, Clause (i) that the transferee Court "may be a Court of any pecuniary jurisdiction. The transferee Court contemplated by Section 39 must be therefore a Court of competent jurisdiction, that is, a Court which has the same pecuniary jurisdiction as the transferor Court. This view is supported by the decision in <CITATION> (1889) 16 Cal. 465 and <CITATION> (1910) 37 Cal. 574. The learned District Judge was therefore right in holding that the order of the Subordinate Judge transferring the decree for execution to <ORG>, Calcutta, was bad in law.

5. Mr. <NAME> next contended that the learned District Judge had no jurisdiction to set aside an order made by the Subordinate Judge rejecting the judgment-debtor's objection to the order of transfer. It was argued by him that the order of transfer, though it was ex parte, being an order under Section 47 of the Code was appealable and as that appeal was barred by time, the judgment-debtor was precluded from questioning the validity of the said order by another petition under Section 47, Civil P.C. I am unable to accept this view. The order for transfer was made ex parte. The judgment-debtor no doubt did not appeal against that order in time. There is nothing in the law which precludes him from raising his objection to the said ex parte order under Section 47 of the Code. This he did. This objection is an objection relating to the execution of the decree as it is an objection relating to the first step in execution. His objection was overruled by the Subordinate Judge. The order of the Subordinate Judge therefore was an order under Section 47 and was consequently appealable to the District Judge. The District Judge had therefore jurisdiction to set aside the order of the Subordinate Judge. The points taken by the learned advocate for the appellant fail and this appeal is accordingly dismissed. There will be no order as to costs.

<NAME>, J.

6. I agree.


JUDGMENT

1. Whether the proviso to Section 43B of the Income-tax Act, 1961 (hereinafter called the "Act"), inserted by the Finance Act , 1987, with effect from April 1, 1988, shall apply to an assessment proceeding in respect of the assessment year 1984-85 is the question involved in this application.

2. The fact of the matter lies in a very narrow compass.

3. The petitioner is a partnership firm and is an assessee under the Act as a registered firm. The petitioner maintains its accounts under the accounting system which is commonly known as the mercantile system of accounting and its accounting year is from January to December. For the accounting year January to December, 1983, the petitioner filed a return under the Act on August 30, 1984. In its return, it showed a net taxable income of Rs. 4,30,970.

4. In pursuance of a notice issued by respondent No. 3, the petitioner produced its books of account. Respondent No. 3 found that the statutory dues payable during the accounting year on account of Bihar sales tax, additional sales tax, <ORG> sales tax, provident fund and family pension amounting to Rs. 21,15,885 had not been paid by the petitioner; this amount was added to the net income of the petitioner under Section 43B of the Act. The order of assessment is contained in annexure-1 to the writ petition.

5. Dr. <NAME>, learned counsel appearing on behalf of the petitioner, firstly contended that Section 43B of the Act is ultra vires the Constitution.

6. Having regard to the decisions in <CITATION>  160 ITR 50 ( <CITATION>  173 ITR 708 (AP), he, however, did not press the same, but submitted that Section 43B of the Act being a declaratory statute must be held to have retrospective operation as, otherwise, the same would be rendered ultra vires Article 14 of the Constitution.

7. Learned counsel submitted that it was never the intention of <ORG>, by introducing Section 43B in the Act, not to give deduction of the amount also payable by an assessee by way of tax or by way of contribution to the provident fund or family pension scheme which has been paid within reasonable time after the expiry of the accounting year. He submitted that the correct interpretation of Section 43B is that if an assessee has paid the dues under the aforesaid account before the due date applicable to an assessee for furnishing the return of income under Section 139 , the assessee shall be entitled to deduction of that amount. According to Dr. <NAME>, that that is the correct interpretation of Section 43B will appear from the statement of the Finance Minister made in <ORG> and also the purpose for which this section was introduced when the Finance Bill for the insertion of this section was introduced in 1983.

8. Mr. <NAME>, learned standing counsel, <ORG>, on the other hand, submitted that the proviso cannot be given a retrospective effect as the same has come into force with effect from April 1, 1988, and thus the petitioner cannot get any benefit thereunder.

9. Learned counsel contended that, on a plain reading of Section 43B of the Act, it would be evident that, in terms thereof, the petitioner is not entitled to claim any deduction on account of payment of sales tax as the said amount had not actually been paid by the assessee during the currency of the relevant accounting year.

10. Mr. <NAME> submitted that Section 43B of the Act is intra vires the Constitution of India as has been held in <CITATION>  160 ITR 50 (Kar) and in <CITATION>  173 ITR 708 (AP).

11. It was further submitted that the special leave petition filed against the judgment of <ORG> in <NAME> case was dismissed by <ORG> on November 10, 1987.

12. Section 43B was inserted in the Act by the Finance Act , 1983, with effect from April 1, 1984. The section as it stood then read as follows:

"43B. Certain deductions to be only on actual payment.--Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-

(a) any sum payable by the assessee by way of tax or duty under any law for the time being in force, or

(b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him.

Explanation.-- For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in Clause (a) or Clause (b) of this section is allowed in computing the income referred to in Section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him."

13. If the section is literally interpreted, the submission of Dr. <NAME> must fail, because it has been made clear therein that an assessee shall be entitled to claim deduction of such amount of sales tax, provident fund, etc., in that year only if such sum has been actually paid by him during the currency of the relevant accounting year, in this case by December 31, 1983.

14. It is not disputed that, in terms of Section 15 of the Bihar Finance Act, a dealer is required to furnish a return of its transaction for each completed quarter on or before the end of the month following the end of the quarter and is also required to file an annual return for each year on or before July 31, of the following year. A dealer is further required to deposit the tax along with the return and if tax is paid, he is entitled to a rebate.

15. The petitioner, therefore, was entitled to file the annual return on or before July 31, 1984, for the accounting year 1983-84.

16. From the aforementioned provisions, it is further evident that the quarterly return for the quarter ending December 31, 1983, was to be filed by the petitioner on or before January 31, 1984. The petitioner, therefore, contended that as it is statutorily liable to deposit the sales tax in respect of the last quarter after the expiry of its accounting year, it would not be disentitled to claim allowance in relation thereto in terms of Section 43B of the Act.

17. On the face of Section 43B of the Act, the same appears to be harsh and manifestly unjust.

18. In this situation, it would be permissible and necessary to consider the object of insertion of Section 43B of the Act as stated by the Finance Minister in his Budget Speech which is as follows [ 1983] 140 ITR (St.) 31:

"Several cases have come to notice where taxpayers do not discharge their statutory liability such as in respect of excise duty, employer's contribution to provident fund, Employees' State Insurance Scheme, for long periods of time. For the purpose of their income-tax assessments, they none the less claim the liability as deduction even as they take resort to legal action, thus depriving the <ORG> of its dues while enjoying the benefit of non-payment. To curb such practices, I propose to provide that irrespective of the method of accounting followed by the taxpayer, a statutory liability will be allowed as a deduction in computing the taxable profits only in the year and to the extent it is actually paid. This would result in a revenue gain of Rs. 100 crores in a full year and Rs. 80 crores in 1983-84."

19. It will thus appear from the Budget Speech of the Finance Minister that the object of Section 43B was to refuse deduction to such an assessee in respect of provident fund, etc., where the assessee does not discharge his statutory liability, or where the assessee disputes his liability under the provisions of the Sales Tax Act .

20. In other words, an assessee who claims deduction on account of sales tax, provident fund, etc., without depositing the same and thus deprives the <ORG> of its dues while enjoying the benefits of non-payment was not entitled to claim deduction of such an amount. There was no dispute at the <ORG> that Section 43B was introduced not to give any benefit of deduction to unscrupulous assessees.

21. But how do we interpret the words "actually paid by him" appearing in the section ? If it is to be interpreted, as submitted by Mr. <NAME>, that "actually paid" in this case will mean payment by the petitioner by December 31, 1983, we will require the petitioner to do an impossibility. Sales tax collected by the petitioner on December 31, 1983, could, under no circumstances, be deposited by it on that date, and the earliest that the petitioner could have deposited that amount was on January 1, 1984, which, admittedly, was not during the currency of the accounting year.

22. Mr. <NAME> submitted that the words "actually paid by him" would be clear from the provisos to Section 43B inserted by the Finance Act , 1987, with effect from April 1, 1988. Mr. <NAME> submitted that the law as it stood on April 1, 1984, shall have to be looked into and applied, and any amendment made in Section 43B which was not applicable to the assessment year from April 1, 1984, to March 31, 1985, cannot be looked into.

23. Let us read the original provisos introduced in Section 43B by the Finance Act , 1987 (see  166 ITR (St.) 9) :

"Provided that nothing contained in this section shall apply in relation to any sum referred to in Clause (a) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under Sub-section (1) of Section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return :

Provided further that no deduction shall, in respect of any sum referred to in Clause (b), be allowed unless such sum has actually been paid during the previous year on or before the due date as defined in the Explanation below Clause (va) of Sub-section (1) of Section 36 ."

24. It will appear from the first proviso that an assessee was entitled to claim deduction on account of payment of tax if he has actually paid it on or before the due date applicable to his case for furnishing the return of income. It will appear from the second proviso that an assessee was entitled to claim deduction on account of the provident fund, etc., if he has paid the same during the currency of the accounting year on or before the due date as defined in the Explanation below Clause (va) of Sub-section (1) of Section 36 . Both the provisos have been amended by the Finance Act , 1989. The amendments to the first proviso are not material. In the second proviso, the words "during the previous year" have been deleted. The position under the second proviso is that an assessee may claim deduction on account of contribution to be made by him to provident fund, etc., in a particular accounting year if it was paid by him on or before the due date as defined in the Explanation below Clause (va) of Sub-section (1) of Section 36 . The object of deleting the words "during the previous year" was clarified in the Memorandum to the Finance Bill, 1989, which reads as follows  176 ITR (St.) 124:

"Under the existing provisions of Section 43B of the Income-tax Act, it is also provided that any sum payable by the assessee as an employer by way of contribution to the provident fund or superannuation fund, etc., is not allowable as a deduction unless the same is paid 'during the previous year on or before the due date'. The payment in respect of the last month of a previous year shall have to be made by the due date and cannot possibly be made in the previous year itself. It is, therefore, proposed that the words 'during the previous year' occurring in the second proviso to Section 43B be deleted."

25. So far as the insertion of the first proviso in Section 43B in the Memorandum explaining the provisions in the Finance Bill, 1989, is concerned, the following was stated  176 ITR (St.) 123:

"Under the existing provisions of Section 43B of the Income-tax Act, a deduction of any sum payable by way of tax, duty, cess or fee, etc., is allowed on actual payment basis only. The objective behind these provisions is to provide for a tax disincentive by denying deduction in respect of a statutory liability which is not paid in time. The Finance Act , 1987, inserted a proviso to Section 43B to provide that any sum payable by way of tax or duty, etc., liability for which was incurred in the previous year will be allowed as a deduction, if it is actually paid by the due date of furnishing the return under Section 139(1) of the Income-tax Act, in respect of the assessment year to which the aforesaid previous year relates. This proviso was introduced to remove the hardship caused to certain taxpayers who had represented that since the sales tax for the last quarter cannot be paid within that previous year, the original provisions of Section 43B will unnecessarily involve disallowance of the payment for the last quarter."

26. It will thus be noticed that it was found impossible for an assessee to comply with Section 43B as it stood in the year 1984 and to make it workable, amendments in Section 43B were introduced, The law, therefore, as it stands today is that if an assessee had paid the sales tax, additional sales tax, Central sales tax, etc., on or before the due date applicable in his case for furnishing the return of income, he shall be entitled to claim deduction of that amount; with regard to the provident fund, family pension, etc., the assessee shall be entitled to claim deduction if the same has been paid on or before the due date, The advantage of the amendment to Section 43B will be available to the petitioner only if it is held that although the amendments were inserted after April 1, 1984, the same shall apply to the cases in which the assessment year was 1984-85.

27. Amendments to Section 43B which we have noticed above have either been introduced as a proviso or as an Explanation. Although the same has been labelled either as a proviso or as an Explanation, what is their purpose ? To ascertain this, let us read Explanation 2, which is as follows :

"Explanation 2.--For the purposes of Clause (a) as in force at all material times, 'any sum payable' means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law."

28. This was inserted by the Finance Act , 1989, with effect from April 1, 1984.

29. In the Memorandum explaining the provisions in the Finance Bill, 1989, the following was stated about this Explanation : [1989] 176 ITR (St.) 123 :

"Certain courts have interpreted the provisions of Section 43B in a manner which may negate the very operation of this section. The interpretation given by these courts, revolves round the use of the words 'any sum payable'. The interpretation given to these words is that the amount payable in a particular year should also be statutorily payable under the relevant statute in the same year. This is against the legislative intent and it is, therefore, proposed by way of a clarificatory amendment and for removal of doubts, that the words 'any sum payable' be defined to mean any sum, liability for which has been incurred by the taxpayer during the previous year irrespective of the date by which such sum is statutorily payable."

Explanation 2 was treated as an interpretation clause. In <NAME> v. <NAME>, AIR 1985 SC 582, <ORG> considered the scope and ambit of the proviso and the Explanation. After noticing a number of cases, including authoritative books on the question, it was held that both a proviso and an Explanation may function as interpretation clauses.

30. We have already noticed above that, in the Memorandum explaining the provisions in the Finance Bill, 1989, Explanation 2 was stated to be an interpretation clause. Surely, under the two provisos, a class of assessees has not been carved out. Under both the provisos, the words "actually paid" have, in fact, been interpreted. The provisos are, therefore, to be held to be interpretation clauses, or clauses which explain what is meant by "actually paid". The interpretation given to the words "actually paid" in the provisos is different from their literal interpretation. The provisos were inserted to clear doubts as to the meaning of "actually paid" in Section 43B . The Finance Act , 1987, so far as the provisos are concerned, is an explanatory Act (see <CITATION> , AIR 1968 SC 1336). If it was to explain the original Section 43B , it would be without any object unless construed as retrospective in its operation. That such an interpretation is permissible has been stated by <ORG>, 7th edition, page 395.

31. It is no doubt true that, ordinarily, a statute, and particularly when the same has been made applicable with effect from a particular date, should be construed prospectively and not retrospectively (State of M. P. v. <NAME>, AIR 1990 SC 1849).

32. However, the matter shall stand on a different footing if the Act is merely an explanatory, clarificatory or declaratory statute (See para 4 of Rathod's case, AIR 1990 SC 1849).

33. The general presumption of prospective operation of law is stated in Maxwell on the Interpretation of Statutes (12th Edition), at page 215, in the following terms :

"It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication."

34. <NAME>, in his Statutory Interpretation, at page 444, however, states : "It is too dogmatically framed and describes as a rule what is really no more than a presumption which may be outweighed by other factors."

35. The learned author in Section 115 of his treatise, at page 256, states :

"The guides to legislative intention consist of various rules, principles, presumptions and linguistic canons applied at common law or laid down by statute for assisting in statutory interpretation."

36. In Maunsell v. <NAME>, reported in [1975] 1 All ER 16, (HL), <NAME> observed : "Let the advocates one after the other put the weights into the scales--'the nicely calculated less or more' but the judge at the end decides which way the balance tilts, be it ever so slightly." (sic)

37. It is now well known that such interpretation should be preferred which upholds the constitutionality of the statute (See CWT v. Smt. Hashmatunnisa Begum [1989] 176 ITR 98 (SC)).

38. <CITATION>  188 ITR 402 (SC) ; [ 1990] 2 SCC 71, <ORG> held that a rule of reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purport of the Act.

39. From what has been stated hereinbefore, it is absolutely clear that the first proviso to Section 43B of the Act inserted by the Finance Act , 1987, was enacted in order to suppress the mischief, and for the purpose of giving relief to an assessee who is not an unscrupulous dealer.

40. The said Act, further, is explanatory in nature and thus had to be enacted for the purpose of supplying an obvious omission in a former statute, and thus the same would relate back to the time when the prior Act was passed (See R v. Dursley Inhabitants [1832] 110 English Reports 168).

41. <NAME> in his 'Interpretation and Application of Statutes', at page 135, observed :

"The essence of the language is to reflect, express and perhaps even affect the conceptual matrix of established ideas and values that identifies the culture to which it belongs. For this reason, language has been called "conceptual map of human experience."

42. <CITATION> .  61 Comp Cas 663, 692 (SC) ;  1 SCC 424, it was held as follows :

"Interpretation must depend on the text and the context. They are the basis of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at in the context of its enactment, with the glasses of the statute maker provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With those glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and every thing is in its place..."

43. If we interpret Section 43B as inserted by the Finance Bill, 1983, to mean that deduction could be claimed only if payment of sales tax, provident fund, etc., was made in fact during the financial year of the assessee, we will require the assessee to do an impossibility, for, in this case, the petitioner could not have cleared its tax, provident fund, etc., liability for the financial year January to December, 1983, in December, 1983 itself. If it is to be literally interpreted, it must be struck down as it provides for doing an impossible act. But it can be upheld by holding that an assessee, like the petitioner, for the assessment year 1984-85 was entitled to have the benefit of the provisos introduced subsequent to 1984-85.

44. We are of the opinion that, upon a contextual interpretation of statutes, the proviso to Section 43B of the Act should be construed as retrospective in its operation and Explanation 2 thereto should be held to be subject to the said proviso. Explanation 2 appended to Section 43B of the Act does not control the proviso thereto.

45. Such a construction will not only be in consonance with the rule of harmonious construction but shall advance the object and purport of insertion of the said proviso by the Finance Act , 1987.

46. In <ORG> [1986] 160 ITR 50 (Kar), it was held that Section 43B was not violative of Article 14 of the Constitution, and it does not unreasonably interfere with the freedom of trade and business guaranteed under Article 19(1)(g) of the Constitution. We are not concerned with these articles in this case. <ORG>'s case  160 ITR 50 (Kar), has, therefore, no application to this case. In <NAME> and Co.  173 ITR 708 (AP), the original Section 43B inserted by the Finance Act , 1983, was interpreted. It was held in that case that not only should the liability to pay the tax or duty be incurred in the accounting year, but the amount also should be statutorily payable in the accounting year under the relevant Sales Tax Act and other relevant Acts. <ORG> took notice of such interpretation and introduced Explanation 2 which has been quoted above with effect from April, 1984, to nullify such an interpretation.

47. It is, therefore, held that the petitioner was entitled to claim deduction of such sum on account of Bihar sales tax, additional sales tax and Central sales tax, if actually paid by it on or before the due date applicable to it for furnishing its return of income under Sub-section (1) of Section 139 . With regard to the amount on account of provident fund and family pension scheme, if it was paid on or before the due date as defined in the Explanation below Clause (va) of Sub-section (1) of Section 36 , the petitioner shall be entitled to claim deduction of the same.

48. Keeping in view the interpretation that we have put on Section 43B , for the purpose of allowing the claim of deduction made by the petitioner as sales Lax, additional sales tax, Central sales tax, provident fund and family pension scheme, the assessment year of which was 1984-85, the factual position shall have to be ascertained from the books of account of the petitioner.

49. We are, therefore, of the opinion that, for this purpose, the matter may be decided by respondent No. 3, the Assessing Officer, afresh in the light of this judgment.

50. It may be mentioned that the petitioner preferred an appeal against the order of assessment and the appellate authority, taking note of the fact that the matter is pending consideration in this court, allowed the said appeal and remitted the matter to the assessing authority with a direction to abide by the result of this writ application. In this view of the matter, the order of assessment as contained in annexure 1 to the writ petition need not be quashed.

51. We allow this application and direct respondent No. 3 to pass a fresh order of assessment for the assessment year 1984-85 keeping in view the provisions of Section 43B of the Income-tax Act as interpreted in this judgment. There will be no order as to costs.


<NAME>, J.

1. Leave granted in all these special leave petitions.

2. These appeals arise out of a common judgment dated 9.8.1996 delivered in RSA No. 1972/88 and other connected appeals, by <ORG> at Chandigarh confirming the judgment of the first appellate court and decreeing the suits of the plaintiffs.

3. The plaintiffs, who are the respondents in these appeals, had filed suits for declaration and mandatory injunction against the appellant herein, namely, <ORG> (for short 'the <ORG>'), to allot them plots in lieu of lands acquired from them. The trial court in some cases decreed the suit and in others, dismissed the suit. In appeal, the first appellate court decreed all the suits and granted the relief prayed for. The <ORG> preferred second appeals before <ORG> which confirmed the decree of the first appellate court, giving rise to these appeals. The claim of the respondents in all these appeals arises on the basis that they are all 'local displaced persons' who are entitled to a plot each in lieu of the lands acquired from them by the appellant-<ORG>, in view of the preference given to such local displaced persons under the allotment rules.

4. Acquisitions involved in these appeals are made under Section 36 of the Punjab Town Improvement Act, 1922 (for short 'the Improvement Act ') which empowers the authorities concerned to prepare and publish improvement schemes within the local areas concerned. Section 73 thereof empowers <ORG> to make rales consistent with the Act and applicable to all improvement trusts including the appellant herein.

5. The State Government exercising the power vested in it under Section 73 of the Improvement Act on 5.1.1954 notified the Jullundur Improvement Land Disposal Rules, 1954. Rule 2(b) of the said rales defines 'local displaced person' as a person whose property has been acquired by <ORG> execution of a scheme under the Punjab Development of Damaged Areas Act, 1951 (for short 'the Damaged Areas Act). Rule 5(ii) of the said Rules provides for certain preferential allotments in favour of local displaced persons, among others.

6. On 18.9.1975, <ORG> promulgated a Rule titled as "Utilisation of Land and Allotment of Plots by Improvement <ORG> Rules, 1975". Rule 2(a) thereof defines ""local displaced person" means a person who is the owner of a property acquired by the <ORG> for the execution of a Scheme and has been such owner for a continuous period of two years immediately before the first publication of the Scheme by the <ORG> under Section 36 of the Punjab Town Improvement Act, 1922.". Sub-rule (ii) of Rule 7 of the said Rules makes reservation of plots and tenements in favour of local displaced persons. On 22.12.1983, <ORG> promulgated another Rule titled "The Punjab Town Improvement (Utilisation of Land and Allotment of Plots) Rules, 1983. Rule 2(d) of the said Rules defines `local displaced person' as follows:-

Local displaced person" means a person who is the owner of any land acquired by the <ORG> for the execution of any scheme under the Act and who has been such owner for a continuous period of two years immediately before the first publication of such scheme by the <ORG> under Section 36 .

7. Rule 4(2) of the said Rules provides for preferential allotment in favour of a local displaced person.

8. A perusal of the above Rules shows that so far as the 1954 Rules are concerned, the definition of 'local displaced person' is confined to a person whose lands have been acquired for a scheme to be executed under the Damaged Areas Act. It is not applicable to any other scheme. So far as the 1975 and 1983 Rules are concerned, the definition of 'local displaced person' applies to a person whose property has been acquired and who has been owner of such property for a continuous period of two years immediately before the first publication of the scheme by the <ORG>, Thus, it is seen from all these three set of rules that in order to have the benefit of a preferential allotment reserved for a local displaced person, there are certain qualifying standards. Unless and until a person who wants to take benefit of the preferential reservation qualifies to be a local displaced person, the said benefit is not available to him.

9. In the suits filed by the respondents, the main claim of the plaintiffs was that they were 'local displaced persons' inasmuch as under the various schemes executed by the <ORG>, their lands had been acquired and, therefore, they became local displaced persons entitled for preferential allotment in their favour. They also contended that the persons who are similarly situated as themselves, have been allotted plots on the basis of their being local displaced persons. Therefore, they are also entitled to the same. It was also contended on behalf of some of the respondents that the <ORG> had initially made allotments in their favour, pursuant to which they had even deposited certain sums of money, hence, it is not open to the <ORG> to cancel the allotments.

10. As stated above, the trial court decreed some of the suits and dismissed the rest of them. The first appellate court decreed all the suits and the same was confirmed by <ORG>. It is contended on behalf of the appellant before us that none of the respondents-plaintiffs qualify to be 'local displaced person' so as to entitle him for a preferential allotment under the category of 'local displaced person'. It was also contended that the courts below erroneously relied upon a decision of this Court in <CITATION> . . On behalf of the respondents it was contended that all the respondents qualify to be beneficiaries under the reservation made for local displaced persons because their lands have been acquired. Even otherwise, in view of the fact that similarly situated persons were allotted lands on preferential basis, they too are entitled to the same. Hence, the impugned judgments do not call for any interference.

11. learned Counsel for the appellant has furnished us a Chart showing the dates of Section 36 Notification in each of these cases and the year of purchase by the respective respondents of the lands concerned. A copy of which was handed over to the learned Counsel for the respondents and the statement made in the said Chart has not been controverted before us. From the said Chart, it is seen that the Notification under Section 36 applicable to the acquisitions of the respondents in these appeals are dated 7.6.1963, 27.8.1964, 7.11.1966 and 3.9.1974, a date anterior to the coming into force of the 1975 and 1983 Rules. It is not disputed in these cases, on the contrary it is admitted that the acquisitions made under the Notifications referred to above, are not made under the Damaged Areas Act. That being so, the definition as found in the 1954 Rules of 'local displaced person' does not apply to the acquisitions concerned in these appeals. If that be so, none of the respondents could claim a preferential allotment as contemplated under Rule 4(2) of the 1954 Rules. Therefore, the very basis of the claim of preferential allotment is non est in these cases. Assuming for argument's sake that the 1975 or 1983 Rules are applicable to the acquisitions in question even then a bare perusal of the statements in the Chart referred to above, shows none of these respondents qualifies to be a local displaced person even under those Rules because they have not been owners of the lands acquired for a continuous period of two years immediately before' the first publication of the scheme by the <ORG> under Section 36 of the Improvement Act. Therefore, none of these respondents qualifies to be a local displaced person for the purpose of preferential allotment of plots by the <ORG>. Since it is the respondents who claim preferential allotment under the Rules, the onus is on them to establish the fact that they do fall within the definition of the 'local displaced persons' so as to entitle them to the benefit of preferential allotment. In our view, the respondents-plaintiffs have failed to discharge this burden and the courts below have erred in presuming that the respondents were entitled to preferential allotment reserved for the category of local displaced person. As a matter of fact, it seems that the courts below have proceeded on the basis that all persons whose lands have been acquired for the execution of any scheme by the <ORG>, automatically become local displaced persons. This view of the courts below is unsustainable. The benefit of reservation made for local displaced person will be available only to such of those persons who fulfil the requirements of the definition of 'local displaced person' under the relevant Rules applicable to the acquisition of their property.

12. The lower appellate court and <ORG> relied upon a decision of this <ORG> in <ORG> case (supra) for decreeing the suits. We have carefully perused the above judgment. In the said case, the appellant before this <ORG> challenged the validity of a notice issued under Section 36 of the Improvement Act as also the Award dated 5.10.1972 made by the Collector, determining the compensation for the land acquired under the impugned Notification. this <ORG> while refusing to quash the notice under Section 36 of the Act came to the conclusion that the amount awarded as compensation for the acquisition of the land was patently inequitable inasmuch as that while the appellant purchased the land from <ORG> at the price of Rs. 2,43,050/- on 25.6.1971, the Collector awarded the compensation only in amount of Rs. 1,10,561/-. Because of this inequitable situation, this <ORG> enhanced the compensation to Rs. 2,43,050/- and in addition, directed payment of Rs. 50,000/- to the appellant for the improvements made in the acquired land. this <ORG>, however, observed in para 9 of the judgment as thus: "Only one aspect remains to be dealt with Dr. <NAME> urged that whenever land of anyone was acquired for the purpose of scheme, each such owner, whose land was acquired, was allotted one plot admeasuring 1 Kanal at reserved price. We see no justification in treating the appellant differently." It is this observation that was relied upon by the courts below in support of its finding. With respect, we are unable to agree with the courts below on this aspect also. In <ORG> case (supra) this <ORG> did not have an opportunity of analysing the definition of local displaced person nor did it have an occasion to consider the applicability of the reservations made under various allotment rules. The observations made in para 9 of the said judgment was based on a submission of the learned Counsel and not based on any principle of law. Therefore, we are of the opinion that the said judgment does not lay down as a proposition of law that every person whose land is acquired for the purpose of execution of a scheme under the Improvement Act will be entitled to preferential allotment of a plot as a local displaced person'. In the said view of the matter, we are of the opinion that the reliance placed on Northern Carriers' (supra) by the lower appellate court and <ORG> is erroneous.

13. <ORG> as well as the lower appellate court also relied upon the fact that the <ORG> had made similar preferential allotments as local displaced person in favour of other persons. Therefore, the courts below came to the conclusion that even the plaintiffs-respondents were entitled to such allotment. In our opinion, before coming to this conclusion the courts below should have first decided the question whether the allotment in favour of those persons was within the scope of the Rules applicable. If it was not within the scope of the Rules then even those allotments in favour of other persons will not create a right in the respondents to claim equality with them; may be, if the allotments were made wrongly in favour of those persons, the same may become liable for cancellation, if permissible in law, but that will not create an enforceable right on the respondents to claim similar wrongful allotments in their favour. In our opinion, even this ground relied upon by <ORG> as well as the lower appellate court is unsustainable. The courts below next relied upon the fact that in regard to some of the respondents, the <ORG> itself at a point of time made allotments and accepted initial deposits towards the consideration of the plot which was subsequently cancelled. Based on those facts, the courts below held that the <ORG> having once allotted the plots and having collected part of the consideration, it could not have cancelled the allotments, probably basing the respondents' case on the principle of promissory estoppel. Here the courts below have failed to notice the legal principle that there is no estoppel against law. The allotment of plots by the <ORG> is controlled by the statutory Rules. Any allotment contrary to those Rules will be against the law. Since the allotments made in favour of some of the respondents was based on wrong application of the reservation made for "local displaced person" those allotments were contrary to law. Hence, the principle of promissory/equitable estoppel cannot be invoked to protect such illegal allotments. In the said view of the matter, we are unable to sustain the judgments and decrees impugned in these appeals.

14. However, we were told at the Bar that the amount deposited by some of the respondents/allotters is still with the <ORG>. If so, they are entitled to get back those deposit without driving them to other legal proceedings. We direct the <ORG> to refund all such amounts deposited pursuant to the allotments in question made in favour of such of those respondents herein, with 12 per cent interest per annum from the date of deposit till the date of payment.

15. For the reasons stated above, these appeals are hereby allowed, setting aside the judgments and decrees impugned in these appeals. No costs.