PETITIONER: AUNDAL AMMAL Vs. RESPONDENT: SADASIVAN PILLAI DATE OF JUDGMENT09/12/1986 BENCH: <NAME>, SABYASACHI (J) BENCH: <NAME>, SABYASACHI (J) VENKATARAMIAH, <NAME> (J) CITATION: 1987 AIR 203 1987 SCR (1) 485 1987 SCC (1) 183 JT 1986 1028 1986 SCALE (2)1004 CITATOR INFO : * 1987 SC2323 (*) E 1987 SC2323 (3,7,12,13,14) RF 1988 SC 339 (6) * 1988 SC 812 (2,3,7,9,12,14,15,18,19,26,30, ACT: Kerala Buildings (Lease & Rent) Control Act, 1965, Section 18(5) & 20--Jurisdiction of <ORG> to inter- fere in revision under Section 115 C.P.C-- Whether ousted. Civil Procedure Code , 1908-- Section 115- -High Court's jurisdiction to interfere in revision with an order under the Kerala Buildings (Lease & Rent) Control Act. 1965. Words and Phrases-'Shall be final'--Shall not be liable to be called in question in any Court of Law'--Meaning of.. HEADNOTE: The Kerala Buildings (Lease and Rent Control) Act, 1965, by s. 13(3) provides that a landlord's petition for eviction of his tenant from a premises on the ground of bona fide personal need, has to be disposed of by <ORG>. Section 18(1)(b) makes provision of an appeal to <ORG> against the order of <ORG>. Sub-s.(5) of section 18 , stipulates that the decision of the appellate authority and subject to such decision, an order of the Rent Controller 'shall be final' and 'shall not be liable to be called in question in any court of law', except as provided in section 20 . By section 20 , a revision is provided where the appellate authority is Subordinate Judge to the District Judge and in other cases, that is to say, where the appellate authority is District Judge, to <ORG>. The respondent-landlord filed an eviction petition against the appellant's husband-tenant on the ground of bona fide personal need. The Rent Controller passed an order dismissing the petition. The order was confirmed in appeal filed by the respondent before <ORG>. Thereafter, the respondent preferred a revision petition before the District Judge. That petition having been dis- missed, he moved <ORG> under s. 115 of the Code of Civil Procedure. During the pendency of the second revision, the appellant's husband died and she was brought on record as the legal representative. <ORG> set aside all the orders of the courts below and ordered eviction of the appellant. 486 In appeal to this Court, it was contended on behalf of the appellant tenant that <ORG> had exceeded its jurisdiction in setting aside the judgments and orders of the courts below, since no revision lies to <ORG> against the order of the District Judge in view of s. 18(5) read with s.20 of the Act which has completely ousted <ORG>'s jurisdiction to interfere u/s. 115 of the Code of Civil Procedure. Allowing the appeal, HELD: (1) <ORG> had no jurisdiction to inter- fere in the matter u/s. 115 of C.P.C. Therefore, the judg- ment and order of <ORG> are set aside. [496 B,G] 2(i) The ambits of revisional powers are well-settled and need not be restated. It is inconceivable to have two revisions. The scheme of the Kerala Buildings (Lease & Rent Control) Act, 1965 does not warrant such a conclusion. [492 D] 2(ii) Sub-s. (5) of s. 18 of the Act says that subject to the decision of the appellate authority, the decision of the Rent Controller shall be final an,] could only be ques- tioned in the manner provided in section 20 and in no other manner. The expression 'shall be final' in the Act means what it says. The intention of the legislature in enacting the said Act is clear and manifest from s. 18(5) and the scheme of the Act, that is to say, to regulate the leasing of buildings and to control the rent of such buildings and to provide a tier of courts by themselves for eviction of the rented premises. This is writ large in the different provisions of the Act. [492 G] 2(iii) When section 18(5) of the Act specifically states that "shall not be liable to be called in question in any Court of law" except in the manner provided under section 20 , it cannot be said that <ORG> which is a court of law and which is a civil court under the Code of Civil Procedure under section 115 of the Code of Civil Procedure could revise again an order on again after revision under section 20 of the Act. That would mean there would be a trial by four courts, that would be repugnant to the scheme manifest in the different sections of the Act in question. Public policy or public interest demands curtailment of law's delay and justice demands finality within quick dis- posal of case. The language of the provisions of section 18(5) read with section 20 inhibits further revision. The courts must so construe. [494 G-495 A] Kydd y. <ORG> of City of Liverpool, (1908) Appeal Cases 327 at 331-332; <CITATION> and 487 Others,  2 SCR 756 & <CITATION> , 3 SCR 32, relied upon. <CITATION> , (1968) K.L.T. 583, over-ruled. <CITATION> , AIR 1934 P.C. 81, distinguished. <NAME> v. <NAME>, (1960) KLT 1248, approved. In the instant case, the appeal lay from <ORG> to the appellant authority who was the Subordinate Judge and therefore the revision lay to the District Judge. After the dismissal of the revision by the District Judge from the appellate decision of the Subordinate Judge who confirmed the order of the Rent Controller, the respondent- landlord chose again to go before <ORG> under section 115 of the Code of Civil Procedure. But, he could not have a second revision to <ORG>, since the jurisdiction of <ORG> u/s. 115 of the C.P.C. was excluded by the Act. [491 H-492 B, D] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5032 of From the Judgment and Order dated 20.8.1985 of <ORG> in C.R.P. Nos. 1643 and 2552 of 1980. <NAME> and <NAME> for the Appellant. <NAME>, <NAME> and <NAME> for the Respondent.

The Judgment of the Court was delivered by <NAME>, J. This appeal by special leave from the decision of learned single judge of <ORG> is disposed of on a short question of law. The appellant is a tenant. <ORG> had reversed the concurrent findings and the decisions of three courts below it and ordered eviction of the appellant. The dispute relates to a portion of the ground floor of a three-storeyed building situated in one of the busiest commercial areas Pazhavangadi of the city of Trivandrum. where the appellant had been conducting a tea shop by name '<ORG>'. In the adjacent rooms on the ground floor, the landlord was conducting a business in textiles namely '<ORG>'. The tenancy began on 12th June, 1965. The tenancy was taken by the husband of the appellant. The rent was Rs. 140 per month. The husband of the appellant died. Thereafter the appellant had been conducting the business from there.

On or about 15th April, 1976, the respondent purchased.a three storeyed building. The petition schedule premises is a portion of the ground floor of the said three storeyed building. It is the case of the appellant that there were seven rooms on the first floor of the said building out 'of which four were in the possession of the respondent and three rented out as aforesaid. The premises on the second floor were used by the respondent-landlord as a lodge. On 9th April, 1977, the respondent filed an application under section 17 of the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter called the Act) for permission to convert the non-residential building to a residential build- ing. On 30th November, 1977, <ORG> rejected the said application.

On 2nd June, 1978, the respondent filed the petition for eviction of the appellant on the ground of bona fide need of the premises in question for his residence. Arrears of rent was also one of the grounds taken against the appellant. The tenant duly filed his objection. On 31st October, 1978, <ORG> dismissed the respondent-landlord's petition for eviction. It was found that the landlord had other buildings in his own possession and therefore. no order of eviction could be passed by virtue of the first proviso to section 11(3) of the Act. <ORG> on or about 2nd July, 1979 dismissed the respondent-landlord's appeal.

On 28th March, 1980, the revision petition filed by the respondent was also dismissed by <ORG>. <ORG> was moved by the respondent-landlord under section 115 of the Code of Civil Procedure. The husband of the appellant died on 8th May, 1985. She was therefore impleaded as the legal representative and she is conducting the business since the death of her husband;

By the order dated 20th August, 1985, <ORG> by its impugned order has set aside all the orders of the courts below. The tenant, the appellant herein has come up in appeal to this Court under article 136 of the Constitu- tion.

<NAME>

Several questions were posed before us in this case, inter alia, (i) whether the revision under section 115 of the Code of Civil Procedure lies to <ORG> from a revision order passed under section 20 of the said Act? (ii) whether <ORG> has exceeded its jurisdiction under section 115 in setting aside the judgments and orders of the courts below in ordering eviction of the appellant from the premises in question reversing the findings of facts? (iii) whether eviction of a tenant from a non-residential building could be ordered for the user of the building for residence of the landlord, if the Accommodation Controller had refused permission under section 17 of the Act to convert the build- ing from non-residential to residential? (iv) where the Accommodation Controller refused the permission to convert the building from non-residential to residential, does the claim to the building by the landlord for a residential purpose become illegal and not recognised by law and whether the claim of the landlord can still be held to be bona fide?

(v) whether in ordering eviction the special reasons relied on by <ORG> on a reappreciation of facts are borne out from the evidence in this case and whether the facts stated by <ORG> constitute "special reasons" re- quired under the first proviso to section 11 (3) in ordering eviction and setting aside the judgments and orders of the courts below.

For the present purpose, it is relevant to refer to section 11(3) of the Act which provides as follows:

"11 (3). A landlord may apply to <ORG> for an order directing the tenant to put the landlord in possession of the building if he bona fide needs the build- ing for his own occupation or for the occupa- tion by any member of his family dependent on him;

Provided that <ORG> shall not give any such direction if the landlord has another building of his own in his possession in the same city, town or village except where <ORG> is satisfied that for special reasons, in any particular case it will be just and proper to do so:

Provided further that <ORG> shall not give any direction to a tenant to put the landlord in possession, if such tenant is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry on such trade or business;

Provided further that no landlord whose right to recover possession arises under an instrument of transfer inter vivos shall be entitled to apply to be put in possession until the expiry of one year from the date of the instrument; Provided further that if a landlord after obtaining an order to be put in posses- sion transfers his rights in respect of the building to another person, the transferee shall not be entitled to be put in possession unless he proves that he bona fide needs the building for his own occupation or for the occupation by any member of his family depend- ent on him."

In the view we have taken on the question that no revi-

sion lay to <ORG>, it is not necessary to refer to other provisions of the Act or to the details of the facts of this case. It is, however, necessary to refer to sections 18 and 20 of the Act which are as follows:

"18. Appeal--(1) (a) The Government may, by general or special order notified in the <ORG>, confer on such officers and authori- ties not below the rank of a Subordinate Judge the powers of appellate authorities for the purposes of this Act in such areas or in such classes of cases as may be specified in the order.

(b) Any person aggrieved by an order passed by <ORG> may, within thirty days from the date of such order, prefer an appeal in writing to the appellate authority having jurisdiction. In computing the thirty days aforesaid, the time taken to obtain a certified copy of the order appealed against shall be excluded.

(2) On such appeal being preferred, the appellate authority may order stay of further proceedings in the matter pending decision on the appeal.

(3) The appellate authority shall send for the records of the case from <ORG> and after giving the parties an opportunity of being heard and, if necessary, after making such further inquiry as it thinks fit either directly or through <ORG>, shall decide the appeal. Explanation:--The appellate author- ity may, while confirming the order of evic- tion passed by <ORG>, grant an extension of time to the tenant for putting the landlord in possession of the building.

(4) The appellate authority shall have all the powers of <ORG> including the fixing of arrears of rent. (5) The decision of the appellate authority, and subject to such decision, an order of <ORG> shall be final and shall not be liable to be called in ques- tion in any Court of law, except as provided in section 20 .

20. Revision:--(1) In cases where the appellate authority empowered under sec- tion 18 is a Subordinate Judge, <ORG>, and in other cases <ORG> may, at any time, on the application of any ag- grieved party, call for and examine the re- cords relating to any order passed or proceed- ings taken under this Act by such authority for the purpose of satisfying itself as to the legality regularity or propriety of such order or proceedings and may pass such order in reference thereto as it thinks fit. (2) The costs of and incidental to all proceedings before <ORG> or <ORG> under Sub-section (1 ) shall be in its discretion."

It has further to be borne in mind that the Act in question was an Act to regulate the leasing of buildings and to control the rent of such buildings in the State of Kera- la.

It was contended by <NAME>, learned counsel for the appellant, that no revision lay to <ORG>. He sub- mitted that section 18(5) read with section 20 of the Act has completely ousted <ORG>'s jurisdiction to interfere in this matter under section 115 of the Code of Civil Procedure.

Under the scheme of the Act it appears that a landlord who wants eviction of his tenant has to move for eviction and the case has to be disposed of by <ORG>. That is provided by sub-section (2) of section 11 of the Act. From <ORG>, an appeal lies to <ORG> under the conditions laid down under sub-section (1)(b) of section 18 of the Act. From <ORG> a revision in certain circumstances lies in case where the appellate authority is a Subordinate Judge to <ORG> and in other cases to <ORG>. In this case as mentioned hereinbefore the appeal lay from Rent Control Court to the appellate authority who was the Subordinate Judge and there- fore the revision lay to the District Judge. Indeed it is indisputed that the respondent has in this case taken resort to all these provisions. After the dismissal of the revision by the District Judge from the appellate decision of the Subordinate Judge who confirmed the order of the Rent Con- troller, the respondent-landlord chose again to go before <ORG> under section 115 of the Code of Civil Proce- dure. The question, is, can he have a second revision to <ORG>? <NAME> submitted that he cannot. We are of the opinion that he is fight. This position is clear if sub-section (5) of section 18 of the Act is read in conjunc- tion with section 20 of the Act. Sub-section (5) of section 18 , as we have noted hereinbefore, dearly stipulates that the decision of the appellate authority and subject to such decision, an order of the Rent Controller 'shall be final' and 'shall not be liable to be called in question in any court of law', except as provided in section 20 . By section 20 , a revision is provided where the appellate authority is Subordinate Judge to the District Judge and in other cases, that is to say, where the appellate authority is District Judge, to <ORG>. The ambits of revisional powers are well-settled and need not be re-stated. It is inconceiv- able to have two revisions. The scheme of the Act does not warrant such a conclusion. In our opinion, the expression 'shall be final' in the Act means what it says. In <NAME> v. <ORG> of City of Liverpool.  Appeal Cases 327 at 331-332. Lord <NAME> <NAME>, construing the provisions of section 11 of the Police Act, 1890 of England which provided an appeal to quarter sessions as to the amount of a constable's pension, and also stipulated that the Court shall make an order which would be just and final, observed:

"Where it says, speaking of such an order, that it is to be final, I think it means there is to be an end of the business at quarter sessions ....... "

The said observation could most appropri-

ately be applied to the expression used by the legislature in sub-section (5) of section 18 of the Act in question. It means what it says that subject to the decision of the appellate authority, the decision of the Rent Controller shall be final and could only be questioned in the manner provided in section 20 and in no other manner. The intention of the legislature in enacting the said Act is clear and manifest from this section and the scheme of the Act, that is to say, to regulate the leasing of buildings and to control the rent of such buildings and to provide a tier of courts by themselves for eviction of the rented premises. This is writ large in the different provisions of the Act. This Court, referring to the aforesaid observations of Lord <NAME>, L.C. in the case of <CITATION> .  2 S.C.R. 756 observed at page 766 of the report that the expression "final"prima facie meant that an order passed on appeal under the Act was conclusive and no further appeal lay. This Court was con- struing sections 39 and 43 of the Delhi Rent Control Act, 1958 and the effect thereof in the context of Letters Patent Appeal. There sections 39 and 43 provided as follows:--

" Section 39 . (1) Subject to the provisions of sub-section (2), an appeal shall lie to <ORG> from an order made by the <ORG> within sixty days from the date of such order. (2) No appeal shall lie under sub- section (1), unless the appeal involves some substantial question of law.

Section 43 . Save as otherwise ex- pressly provided in this Act, every order made by the Controller or an order passed on appeal under this Act shall be final and shall not be called in question in any original suit, application or execution proceedings." This Court observed at page 766 that a combined reading of the said two sec- tions made it clear that subject to the fight of appeal to <ORG> on a substantial question of law, the order passed by the Controller or an order passed on appeal was final and could not be called in question in any original suit, application or execution proceeding. The use of the expression "shall be final" will have to be understood in the proper context and keeping in view the purpose of the different sections.

On behalf of the respondent, <NAME> relied on a decision of the Full Bench of <ORG> on which <ORG> had rested its decision in <CITATION> ,  K.L.T. 583 in repelling the submission by the appellant on this aspect. There <ORG> was concerned with the identical Act. <NAME>, J. speaking for the Full Bench of <ORG> on this contention after referring to several decisions observed at pages 588-589 of the report as follows:

"The contention of the respondent that the decision of <ORG> rendered under S. 20(1) is not amenable to revisional juris- diction of <ORG> under S. 115 of the Civil Procedure Code is based mainly on the provision for finality contained in S. 18(5) of the Act. That Section is in the following terms:-- "The decision of the appellate authority, and subject to such decision, an order of <ORG> shall be final and shall not be liable to be called in question in any Court of law, except as provided in S. 20 ." What is to be noted here is that there is nothing in the Section which says that the decision of the revisional authority under S. 20 shall be final and shall not be called in question in any higher court."

The learned judge referred to the decision of the Judi-

cial Committee in the case of <CITATION> , AIR 1934 P.C. 111. The learned judge also referred to a decision of this Court in <CITATION> . (supra). The learned judge concluded that so long as there was no specific provision in the statute making the determi- nation by <ORG> final and excluding the super- visory power of <ORG> under section 115 of the Code of Civil Procedure, it had to be held that the decision rendered by <ORG> under section 20(1) of the Act being a decision of a court subordinate to <ORG> to which an appeal lay to <ORG> was liable to be revised by <ORG> under section 115 of the Code of Civil Procedure. In that view of the matter, <ORG> rejected the view of the division bench of <ORG> in <NAME> v. <NAME>,  KLT 1248. With re- spect, we are unable to sustain the view of <ORG> of <ORG> on this aspect of the matter. In our opinion, <ORG> misconstrued the provisions of subsection (5) of section 18 of the Act. Sub-section (5) of section 18 clearly states that such decision of the appel- late authority as mentioned in section 18 of the Act shall not be liable to be questioned except in the manner under section 20 of the Act. There was thereby an implied prohibi- tion or exclusion of a second revision under section 115 of the Code of Civil Procedure to <ORG> when a revi- sion has been provided under section 20 of the Act in ques- tion. When section 18(5) of the Act specifically states that "shall not be liable to be called in question in any Court of law" except in the manner provided under section 20 , it cannot be said that <ORG> which is a court of law and which is a civil court under the Code of Civil Procedure under section 115 of the Code of Civil Procedure could revise again an order once again after revision under sec- tion 20 of the Act. That would mean there would be a trial by four courts, that would be repugnant to the scheme mani- fest in the different sections of the Act in question. Public policy or public interest demands curtailment of law's delay and justice demands finality within quick dis- posal of case. The language of the provisions of section 18(5) read with section 20 inhibits further revision. The courts must so construe.

<ORG> in <CITATION> (supra) was dealing with the Provincial Insolvency Act and the <ORG> observed that when a right of appeal was given to any of the ordinary courts of the country, the procedure, orders and decrees of that Court would be gov- erned by the ordinary rules of the Civil Procedure Code, and therefore an appeal to Privy Council was maintainable from the decision of <ORG>. Here in the instant case the right of appeal has been given under the Act not to any ordinary court of the country under the Code of Civil Proce- dure but to the courts enumerated under the Rent Act . In that view of the matter, the ratio of that decision cannot be applied in aid of the submission for respondent in this case.

Indeed this view, in our opinion, is concluded by the decision of this Court in the case of <CITATION> ,  3 S.C.R. 32 where this Court was concerned with section 115 of the Code of Civil Procedure and the amendments made therein which superseded the bifur- cation of the revisional jurisdiction between <ORG> and <ORG>. <ORG> possessed revisional jurisdiction from an order of District Judge disposing of revision petition. This Court observed that section 115 of the Code of Civil Procedure conferred on <ORG> of a State power to remove any jurisdictional error committed by a subordinate court in cases where the error could not be corrected by resort to its appellate jurisdiction. There after tracing the history of the amendment of the Code of Civil Procedure by Amendment Act , 1976, this Court observed that the amendment superseded the scheme of bifurcation of revisional jurisdiction with effect from 1 st February, 1977. Section 25 of the Provincial Small Cause Courts Act was amended from time to time in its application to the State of U.P. The two questions that fell for consideration before this Court were (i) whether <ORG> possessed the revisional jurisdiction under section 115 of the Code of Civil Procedure in respect of an order of <ORG> under section 115 disposing of a revision petition and (ii) whether <ORG> possessed revisional jurisdiction under section 115 of C.R.C. against an order of <ORG> under section 25 of Provincial Small Cause Courts Act. It was held that <ORG> was not vested with that. revisional jurisdiction. This Court was of the view that an order under section 25 of the Provincial Small Cause Courts Act was not of a court of <ORG> and was not amena- ble of revisional jurisdiction. This COurt 'further observed that an examination of the several provisions of the Provin- cial Small Cause Courts Act indicated that it was self- sufficient code so far as the enquiry covered by that Act was concerned. All the indications in the Act were to that effect. After analysing the scheme and referring to the decisions of this Court, this Court held that the jurisdiction of <ORG> under section 115 of the Code of Civil Procedure was excluded.

In that view of the matter, we are of the opinion that the Full Bench of <ORG> was in error and <ORG> in the instant case had no jurisdiction to inter- fere in this matter under section 115 of C.P.C. It was urged that in case we are of the opinion that a revision under section 115 of the Code of Civil Procedure does not lie, the case should be remitted to <ORG> for consideration as a petition under article 227 of the Constitution. We are unable to accede. A petition under article 227 of the Constitution is different from revision under section 115 of the Code of Civil Procedure. The two procedures are not interchangeable though there are some common features. It must, however, be emphasised that we are not dealing in this appeal with the constitutional powers of <ORG> under article 227 of the Constitution nor are we concerned with the powers of <ORG> regulating appeals under <ORG> Act, 1958. We are con- cerned in this case whether <ORG>, in view of the scheme of the Act, had jurisdiction to interfere under section 115 of the Code of Civil Procedure. We reiterate that to vest <ORG> with any such jurisdiction would be contrary to the scheme of the Act, would be contrary to the public policy, and would be contrary to the legislative intent as manifest from the different sections of the Act. In that view of the matter, the appeal must be allowed on that ground alone and it is not necessary for us to refer to the other grounds. We must necessarily overrule the decision of the Full Bench of <ORG> referred to hereinbefore.

Before we conclude, we must, however, note that <NAME> appearing for the tenant has conceded that rent should be increased to Rs. 500 per month for the premises in ques- tion, as the existing rent is too low. The appeal is accord- ingly allowed and we direct on the concession of <NAME> that rent would be Rs. 500 per month from this date. The judgment and order of <ORG> are set aside. In the facts and circumstances of this case, there will be no order as to costs.

M.L.A. Appeal allowed.


PETITIONER: <ORG>, MADURAI Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX, MADRAS DATE OF JUDGMENT: 19/09/1966 BENCH: SHAH, J.C. BENCH: SHAH, J.C. BHARGAVA, VISHISHTHA CITATION: 1967 AIR 444 1967 SCR (1) 392 CITATOR INFO : RF 1971 SC2129 (7) R 1972 SC 19 (6) ACT: Income-tax Act , 1922 , s. 10(2)(xv) -Expenditure in curred for proceedings to prevent enforcement of order interfering with business-It admissible deduction. HEADNOTE: The assessee-mill claimed deduction under s. 10(2) (xv) of the Indian Income-tax Act of the expenses incurred by it and the costs awarded to <ORG> in respect of unsuccessful writ petition and appeals therefrom. The deduction was disallowed by the departmental authorities, and the question was answered against the assessee by <ORG>. In appeals to this <ORG>. HELD: The appeal must be allowed. The proceeding started by the assessee was in relation to the business of the assessee. Expenditure incurred to resist in a civil proceeding the enforcement of a measure-legislative or executive, which imposes restrictions on the carrying on of a business or to obtain a declaration that the measure is invalid would.. if other conditions are satisfied, be admissible under s. 10(2) (xv) as a permissible deduction in the computation of taxable income, even though the expenditure does not directly relate to the earning of income. Expenditure may not be denied admission as a permissible deduction in computing the taxable income merely because the proceeding has failed. Persistence of the assessee in launching the proceeding and carrying it from <ORG> to <ORG> and incurring expenditure for that purpose again cannot be a ground for disallowing the claim. (396 B-C; 399 <CITATION> 23 I.T.R- 427, Morgan (Inspector of Taxes) v. <ORG> 26 I.T.R. 195 : 35 T.C. 367 and <CITATION> ., (196 HI 7 S.C.R. 693, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 557 & 558 of 1965, Appeal by special leave from the judgment and order dated September 19, 1962 of <ORG> (in Tax Case No. 87 of 1960).

<NAME>, for the appellant.

<NAME> and <NAME>, for the respondent. The Judgment of the Court was delivered by <ORG> company incorporated under the Indian Companies Act with its registered office at Madurai carries on business of cotton spinning and weaving. In the premises "of the factory of the <ORG> there are installed 80 handloorns These handlooms were found inadequate to weave the yarn pro- duced by the factory and a part of the yarn produced was distributed to weavers outside the factory who were engaged by the <ORG> to weave the yarn into cloth. Under cl. 18-B of the Cotton Cloth and Yarn (Control), Order, 1945, issued by <ORG>, the Textile Commissioner was authorized to direct ally manufacturer or dealer or any class of manufacturers or dealers, inter alia, not to sell or deliver any yarn or cloth of specified description except to such person or persons and subject to such conditions as the Textile Commissioner may specify. On February 7, 1946, the Textile Commissioner issued an order directing the <ORG> not to sell or deliver any yarn manufactured by the <ORG> except to such person or persons as the Textile Commissioner may specify. It was recited in the order that "nothing in this Order shall apply to a sale or delivery made, in pursuance of clause 18-A of the said order, to any dealer in yarn not engaged in the production of cloth on handlooms or powerless". The <ORG> addressed a letter on February 13, 1946 to the Textile Commissioner submitting that the prohibition in general terms was ultra wires the authority conferred by the Cotton Cloth and Yarn (Control) Order. The <ORG> continued notwithstanding the prohibition to deliver yarn to weavers and did so till February 20, 1946. This yarn was seized under the orders of the Textile Commissioner. On February 20,1946, the Provincial Textile Commissioner, purporting to act in exercise of authority conferred upon him by a notification issued by <ORG>, issued an order addressed to the <ORG> that:

"You should accordingly confine your delivery to the categories of persons notified below:-

(a) Licensed yarn dealers (in accordance with the said 18-A of the Control Order).

(b) to consumers who purchased yarn directly from you during the basic period 1940-42 (in accordance with my circular letter dated 4th January 1946 referred to above).

(c) your handloom factory situated in the premises of your Mill at Madurai (just the quantity of yam required).

"Note:-Any other delivery of yarn by you which is not covered by a special order or permission of <ORG> will accordingly be a contravention of the Textile Commissioner's order under clause 18-B referred to above."

After this order was issued, the Company did not deliver any yarn to weavers.

On March 4, 1946 the <ORG> filed a petition for a writ of nandamus in <ORG> under s. 45 of the Specific Relief Act praying for an order directing <ORG>, Madras to desist from seizing the yarn supplied to the weavers at or around Madurai and Rajapalayam for the purpose of converting the yarn belonging to the <ORG> into cloth; to restore to the <ORG> or to direct <ORG> and his subordinates to restore the yam already seized; and to forbear from seizing or to direct the subordinates of <ORG> to forbear from seizing the yarn that may be entrusted to the weavers by the <ORG> in the -usual course of business according to the practice already obtaining for conversion into cloth. This petition was dismissed by <NAME>, J, and the order of dismissal was confirmed in appeal by <ORG>. The matter was then carried in appeal to <ORG>. <ORG> dismissed the appeal filed by the <ORG>. They held, agreeing with <ORG>, that the expression "deliver" in cl. 18-B sub- cl. 1(b) of the Cotton Cloth and Yarn (Control) Order, 1945, is used in its ordinary broad sense of handing over possession, as distinct from passing of property, and would include delivery of possession to a bailer. Accordingly, delivery of part of its yarn by the <ORG> to owners of handlooms outside the mill premises for conversion of the yarn into cloth for the <ORG> was in contravention of the order made under cl. 18-B sub. cl. (1) (b). <ORG> also held that a petition under S. 45 of the Specific Relief Act, 1877, directing <ORG> to desist from seizing the yam supplied to the weavers and to restore to the <ORG> the yarn already seized was incompetent as the acts in respect of which relief was asked for took place outside the limits of the ordinary original civil jurisdiction of <ORG>. The <ORG> spent Rs. 20,035/- in prosecuting the proceed- ings under s. 45 of the Specific Relief Act and had also to pay Rs. 5,912/- as costs to the Government of the unsuccessful appeal to <ORG>. In its returns of income the <ORG> claimed deduction of the amounts of Rs. 20,035/- and Rs., 5,9121/for the assessment years 1949-50 and 1950-51 respectively as being expenditure wholly and exclusively laid out for the purpose of its business. The claims were rejected by the departmental authorities, and by <ORG>. The <ORG> then referred the following question to <ORG> of Judicature at Madras :

"Whether the expenses of Rs. 20,035/- incurred in the assessment year 1949-50 and Rs. 5,912/- (relating to the assessment year 1950-5 1) being the cost paid to Government as directed by <ORG> were expenses incurred in the ordinary course of business and allowable as deductions?"

The question as framed is somewhat vague. But it is common ground that the Company claimed deduction under s. 10(2)

(xv) of the Indian Income-tax.Act, 1.922 on the footing that the two amounts represented expenditure laid out wholly and, exclusively by the <ORG> for the purpose of its business. <ORG> answered the question in the negative. 'With special leave, the <ORG> has appealed to this Court. The <ORG> has found that after the order dated February 20, 1946 was issued, the <ORG> did not deliver yarn to any weaver. it is recited in the judgment of the <ORG> that a "correct order by the proper authorities was passed" on February 20, 1946 and, thereafter the <ORG> did not distribute any yarn to weavers. The averments made by the <ORG> in the petition under s. 45 of the Specific Relief Act, are somewhat involved, but in substance the claim of the <ORG> was that <ORG> was incompetent to pass the order dated February 20, 1946 which placed restrictions on the business of the <ORG> and the order was "likely to cause irreparable and irretrievable injury", and it was prayed that an order do issue under s. 45 of the Specific Relief Act restraining <ORG> from enforcing the order and the Textile Commissioner be prohibited by an order from seizing the yarn delivered to the weavers outside the factory and be further ordered to restore the yarn already seized. No clear averment was made in the petition about the date on which the yarn seized had been delivered by the <ORG> to the weavers.

This petition failed, because <ORG> had no jurisdiction to entertain the petition, and also because the expression "deliver" used in cl. 18-B of the Control Order included handing over of yarn to the weavers outside the premises of the factory for conversion into cloth. But expenditure incurred in prosecuting a civil proceeding relating to the business of an assessee is admissible as expenditure laid out wholly and exclusively for the purpose of the business even if the proceeding is decided against the assessee. It was held by this Court in <CITATION> (1) that the deductibility of expenditure under s. 10(2) (xv) must depend on the nature and purpose of the legal proceeding in relation to the business whose profits are under computation and cannot be affected by the final outcome of that. proceeding. The proceeding started by the Company was in relation to the business of the Company. The Company was thereby seeking relief against interference by the executive authorities in the conduct of its business in the manner in which it was being carried on previously. It was also seeking to obtain an order for restoration of its goods which were seized. It may be (1)  S.C.R. 714 : 23 I.T.R. 427.

M15Sup CI/66 12 granted that the Company was, in starting the proceeding, ill-advised. However wrongheaded, ill-advised, unduly optimistic, or overconfident in his conviction the assessee may appear in the light of the ultimate decision, expenditure in starting and prosecuting the proceeding may not be denied admission as a permissible deduction in computing the taxable income, merely because the proceeding has failed, if otherwise the expenditure is laid out for the purpose of the business wholly and exclusively, i.e. reasonably and honestly incurred to promote the interest of the business. Persistence of the assessee in launching the proceeding and carrying it from <ORG> to <ORG> and incurring expenditure for that purpose again cannot be a ground for disallowing the claim.

Under s. 10(2)(xv) of the Indian Income-tax Act as amended by Act 7 of 1939 expenditure even though not directly related to the earning of income may still be admissible as a deduction. Expenditure on civil litigation commenced or carried on by an assessee for protecting the business is admissible as expenditure under s. 10(2) ((xv) provided other conditions are fulfilled, even though the expenditure does not directly relate to the earning of income. Expendi- ture incurred not with a view to direct and immediate benefit for -purposes of commercial expediency and in order indirectly to facilitate the carrying on of the business is therefore expenditure laid out wholly and exclusively for the purposes of the trade. In <NAME> (Inspector of Taxes) v. <ORG>) <ORG> held that expenditure incurred by a <ORG> engaged in :sugar refining, in a propaganda campaign to oppose the threatened nationalization of the industry was a sum wholly and exclusively laid out for the purpose of the <ORG>'s trade and was an admissible deduction from its profits for income- tax purposes. A'. majority of the <ORG> held that the object of the expenditure being to preserve the assets of the <ORG> from seizure and -so to enable it to carry on and earn profits, the expenditure was a permissible deduction under r. 3(a) of the Rules applicable to cases (1) & (2) of Sch. D of the Income-tax Act, 1918.

The object of the petition filed by the <ORG> was to secure a declaration that the order dated February 20, 1946 insofar as it sought to put restrictions upon the right of the <ORG> to carry on its business in the manner in which it was accustomed to do was unauthorized and to prevent enforcement of that order: thereby the <ORG> was seeking to obtain an order from the Court ,enabling the business to be carried on without interference. Expenditure incurred in that behalf would without doubt be expenditure laid out wholly and exclusively for the purpose of the business of the <ORG>.

(1) 26 I.T.R. 195 : 35 T.C. 367.

It was argued however that the any delivered by the <ORG> to the weavers contrary to the prohibitory order dated February 20, 1946 was attached under the order of the Provincial Textile Commissioner, and since the <ORG> violated the prohibitory order, the primary object of the petition for mandamus instituted by the <ORG> was to secure protection against prosecution of the <ORG> and an order for return of the goods in respect of which an offence was committed. Expenditure incurred,in prosecuting that claim was, it was said, not laid out wholly and exclusively for the purpose of the business. Reliance was placed upon the judgment of this Court in <NAME> case(1) in which it was held that a person who was prosecuted for an offence under s. 13 of the Hoarding and Profiteering Ordinance, 1943, on a charge, of selling goods at prices higher than were reasonable, in contravention of the provisions of s. 6 thereof, and a part of his stock was seized and taken away, was not entitled to claim deduction under S. 10(2)(xv) of the Income-tax Act for the sums spent in defending the criminal proceedings against him because the expenditure could not be said to have been laid out and expended wholly and exclusively for the purpose of the business. But the assumption underlying the argument is not true. The <ORG> has in the statement of the case observed in paragraph-2 :

"Subsequently, on 20th February 1946, a proper order by the appropriate authority was passed and it is common ground that after that date, at any rate no further distribution of yarn was made by the assessee. In the interim (period) between 7th February 1946 and 20th February 1946, the yarn which was distributed to the handloom weavers was the subject of seizure by the provincial Textile Commissioner and this the assesse sought to resist by filing an application under section 45 of the Specific Relief Act 1, of 1877 In the view of the <ORG> the Company did -not act in violation of the terms of the order dated February 20, 1946;

it cannot there fore be said that the Company was seeking to protect itself against a criminal prosecution and the consequences arising from infringement of the order dated February 20, 1946.

It is true that in the judgment in appeal from the order refusing mandamus, <NAME>, C.J. speaking for the <ORG> observed: (see <CITATION> (2):

"In spite of the fact that this order in effect prohibited the appellant delivering yarn to owners of handlooms situate outside the mill premises, the appellant continued to deliver yarn to such weavers.", and (1) [1953] S.C.R. 714 23 I.T.R. 427. (2) A.I.R. 1947 Mad. 82, <ORG> observed: "Despite. the prohibition the appellant continued to deliver yarn to such owners in order (as already mentioned) that they might turn the yarn into. cloth and bring the article back to the mills."

( <CITATION> ; Madras(1).

But the <ORG> has observed in its order dismissing the appeal filed by the <ORG> that it was "not disputed before" them that, after February 20, 1946 the <ORG> did not distribute any yam.

The question referred in this case must be decided not on what was found or observed by <ORG> in appeal from order, in the proceedings under s. 45 of the Specific Relief Act or by <ORG>, but upon findings of fact recorded by. the <ORG>. It is unfortunate that <ORG> took the facts, not from the statement of the case, but apparently from the judgment. of <ORG>. <ORG> assumed that the Company had contravened the law because it delivered yarn to weavers in contravention of the order dated February 20, 1946. But the assumption on which the discussion is founded is erroneous. <ORG> also thought that expenditure to fall within the terms of s. 10(2)(xv) must be one for the purpose of earning income, and there was no material on the record to show that the expenditure was so incurred. If it is intended thereby to imply that the primary motive in incurring the expenditure admissible to deduction under s. 10(2)(xv) must be directly to earn income thereby, we are with respect unable to agree with that view. This Court in Commissioner of Income-tax, Kerala v. <ORG>) observed:

"The expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits". It's range is wide: it may take in not only the day to day running of a business, but also the rationalizationof administration and modernization of its machinery: it may include measures for the preservation of the business or for the protection of its assets and property from expropriation coercive process or assertion of hostile title: it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for carrying (1)L.R. 76, I.A. 191, 195.

(2)[1964] 7 S.C.R. 693,705:53 I.T.R. 140, 150.

on of a business; it may comprehend many other acts incidental to the carrying on of a business."

Expenditure incurred to resist in a civil proceeding the enforcement of a measure-legislative or executive, which imposes restrictions on the carrying on of a business, or to obtain a declaration that the measure is invalid would, if other conditions are satisfied, be admissible, in our judgment, under s. 10(2)(xv) as a permissible deduction in the computation of taxable income.

The appeals are therefore allowed. The question referred is answered in the affirmative.- The appellant-Company will be entitled to its costs in this <ORG> and the High <ORG>. One hearing fee.

y. P.

Appeals allowed.