PETITIONER: <ORG> Vs. RESPONDENT: <ORG> & ORS. DATE OF JUDGMENT: 17/10/1997 BENCH: M.M. PUNCHHI, K. VENKATASWAMI ACT: HEADNOTE: JUDGMENT:

J U D G M E N T K. Venkataswami J.

This appeal by special leave is directed against the Division <NAME> judgment of <ORG> dated 7.2.1985. Brief facts concerning the case are given below.

The first respondent-company is engaged in the manufacture of steel tubes through its <ORG>. For the purpose of manufacture of steel tubes, hot rolled strips in coils are required as raw material. These not rolled strips were being supplied at the relevant time to the manufacturers of steel tubes like (Ambika Tubes (hereinafter referred to as the importer) through the appellant referred to as the importer) through the appellant subject to certain conditions. The manufacture who are given raw materials must posses the import licence and have to carry out certain export obligations. The obligations concerning this for the period in question, namely, April 1983 to March, 1984 were given in the import and export policy for that period. Previously a public notice in respect of scheme for supply of raw material by steel <ORG> (hereinafter called the "SAIL") against advance import licence was issued on the Scheme published on 11.12.1982 would be continued. According to that. the importer becomes eligible for supply of goods on compliance of the conditions fixed in the scheme in particular, the conditions of producing advance licenses, duty exemption entitlement certificate, legal undertaking/execution of export bond and furnishing of irrevocable letter of credit. The appellant as an indigenous supplier under the aforesaid announcement of the prices at which law the raw material will be supplied. That announcement was published in <ORG> on 10.6.1983 under the caption "Scheme for Supply of certain Categories of Indigenously Produced Steel Materials at Competitive Prices against Valid Import Licences".

Pursuant to the <ORG> announcement. the importer submitted licenses requiring supply of about 3768 tonnes of not rolled strips in coils. It was found that the licence submitted by the importer (<ORG>) did not mention that it was an advance import licence nor was it accompanied by Duty Exemption Entitlement Certificate and the bond. In addition to the submission of licences, the said <ORG> however submitted Letter of Credit dated 19.8.1983 on the same data, namely, 20.8.1983. In the Letter of Credit also there were certain infirmities and when the same was pointed out, it was rectified and submitted before 25.8.1983.

On receipt of the licence and the Letter of Credit, the appellant by a telex message dated 23.8.1983 pointed out the defects in the licence/release order and also stated that in view of the defects, the appellant are not taking any action on the Letter of Credit for the present.

In reply to the telex message, <ORG> sent a letter on the same date (23.8.1983) informing the appellant that the original release order in duplicate and the Duty Exemption Entitlement Certificate booklet had been submitted to the joint Controller at Ahmedabad and would be sent to the Bombay <ORG> office on receipt of the same. The relevant documents after carrying out the corrections were factually furnished to the appellant by <ORG> only on 26.8.1983. In the meanwhile the appellant enhanced/revised the price of their supplies (steel materials) from Rs.2460/- to 2750/- per M.T. on and from 25.8.1983. Since the relevant documents after carrying out the corrections with necessary enclosures were received by the appellant only on 26.8.1983. the importer (<ORG>) was required to pay the price for the release of steel materials at the revised rate, namely, Rs. 2750/- per M.T.

<ORG> made representation that they having submitted Letter of Credit and the necessary documents, though defective, well before 25.8.1983, the revised charges should not have been applied. The appellant gave a detailed reply to the representation of the importer. The importer moved <ORG> on 18.6.1984 for quashing the announcement made by <ORG> revising the price and for directing that the supplies must have been made at the pre- revised price and for consequential refund of difference between the pre-revised and revised prices. The appellant resisted the writ petition by filing a detailed reply to the affidavit filed in support of the writ petition.

The <ORG> proceedings on a wrong premise, namely, that <ORG> (appellant) was a department of <ORG> but its administration is run separately in the interest of efficiency; held that the importer (Ambica Tubes) was not responsible for the defects pointed out in the license/release order and it was the office of Joint Chief controller order and it was the office of Joint Chief Controller of imports and Exports alone responsible for the defects for which the importer should not be punished. In other words. the <ORG> was of the view that the license though defective must be deemed to have been presented on 20.8.1983 long before the revised price was announced. Therefore., the appellant was not entitled to charge for the supply of raw materials at the revised rate. The <ORG> also directed the refund of the difference between the pre- revised and the revised rates. The <ORG> further observed that the action of the appellant in not registering the petitioners' indent No. 7 of the 1986 dated 19.8.1983 latest on 24.8.1983 was an action bad at law, arbitrary an unreasonable'.

We are not concerned with the other relief granted against <ORG> in this appeal.

Though the main relief in the writ petition was the challenge to the right of <ORG> to fix the price from time to time, <ORG> left open that issue without deciding the same. The entire reasoning of <ORG> is found in paragraph 16 of its judgment which reads as follows:-

"16. We have analysed the facts above very clearly and held that the petitioners had done whatever was required to be done by them. They had procured the release order in time. On had of the <ORG> acting in the Joint Controller's office committed some blunders because of the lackadaisical fashion in which the things are handled there. It forgot to mention about the Duty Exemption Entitlement Certificate. It forgot to mention that it is an advance release order, though the covering letter did mention it. The petitioners no doubt got these things rectified, but because no doubt the communication difficulties, there was a delay of a day or two. How can that fortuitous circumstance be exploited by <ORG> by seeking a pound of flesh? They should have seen reason and should not have chastised this petitioner-company for the Faults of the employees of the very <ORG>, their masters. Such amendments required to be made later on because of the negligence and carelessness of the employees of the <ORG> are to be legitimately treated as having been effected retroactively. This is the only reasonable and rational way of looking at the things. Negligence of one branch of the <ORG> cannot be capitalized by another branch is per arbitrary, capricious and whimsical. Such an illegal action is taken by the Ahmedabad office or Bombay office. Another reasonable office of this very <ORG> say at Madras or Bangalore would not do such things would be favorably treated. In this sense of the term, it could be said that possibly inconsistent stand, and therefore, discriminatroy stand, can be there in the action of the respondent no.

1. On this short ground, the petition of the petitioners can be allowed, because we hold that this executive power has been exercised by the <ORG> absolutely unreasonably and justification for them to sit tight on that date 24.8.1983 and all that was required to be done was done by these petitioners. If such things are allowed to go, it would set a very bad example in the working of rule of law in practical and final analysis. It is because of this necessity of striking out the action of the public authority, namely, the <ORG>, that we are inclined to entertain this petition and decide it and if for that purpose we have to strike a departure from the normal rule of the not entertaining even money claims, we would very willingly do so, so that such actions would not be repeated in future. We, however, add that here essentially the challenge was to the right of fixation of price at any capricious time and that was the subject matter of the petition, but we are not required to go into it and, therefore, we do not go into it. Otherwise, much could be said in favour of the petitioners when they contend that the prices are required to be fixed quarterly. The term quarterly' would mean every three months and the <ORG> has fixed the price on 11.12.82, 14.3.93, 7.6.83, 25.3.83 and had we been required to decide this question, we would have in all probability interpreted clause 6 read with clause 10 to mean that the prices are to the fixed for the period of three months and they are to remain operative for theat period, but we are not to opinion on that point because the ultimate relief of the petitioners can be granted without deciding the point."

Aggrieved by the judgment of <ORG>, the present appeal is filed by the <ORG>.

Mr. <NAME>, learned counsel appearing for the appellants submitted that <ORG> erred in assuming that the appellant was a department of <ORG> forgetting totally that it is a company incorporated under the Companies Act and it is a separate entity, notwithstanding the fact that the company is entirely owned by <ORG>. It will not be a wing/department of the <ORG>. In support of his contention, he placed reliance on the judgment of this Court in <CITATION> . (AIR 1970 SC 1150), <CITATION> . (AIR 1982 SC 697). He also submitted the power of <ORG> to revise the pricelist from time to time the relief given by <ORG> would amount to refund of money by exercising the jurisdiction under Article 226 which is against the ruling for this Court in <CITATION> . (AIR 1965 SC 1740). He also submitted that the importer being a party to the contract and having paid the price as revised and taken delivery of the goods cannot now turn around and challenge the action of the <ORG> by invoking the writ jurisdiction under Article 226 of the Constitution of India. In support of this submission, he placed reliance on a judgment of this Court in <NAME> & <NAME>. The Dy. Excise & Taxation Commissioner & <NAME>. (1975 (1) SCC 737).

He also placed reliance on other judgment of this Court in <CITATION> . (AIR 1977 SC 1946), <CITATION> . (1996 (5) SCC 740) and <CITATION> . (1994 (4) SCC

On facts, <NAME>, learned counsel for appellant submitted that on the admitted position that the documents, namely, licence/release order after rectification having been furnished only on 25.8.1983, the importer cannot claim the application of pre-revised price on the ground that the mistake, if at all, was on the part of the office of the joint Chief Controller of Imports and Exports and, therefore, it should not be penalised. According to the learned counsel, the conditions of Scheme published enable the appellant to insist upon all the documents to be furnished before release of the raw material. The <ORG> w as not concerned with the party responsible for the defect in the document. Therefore, <ORG> was not justified in making certain observations against the appellant. According to Mr. <NAME>, the appeal should be allowed.

Mr. <NAME>, learned counsel appearing for the first respondent, placing reliance on para 2.3 of the Scheme announced on 10.6.1983 submitted that the Letter of Credit having been furnished after `rectifying the defects before 25.8.1983, the importer is entitled to get the supplies at the pre-revised rate notwithstanding the defects in the licence/release order as the importer was not responsible for the defects. He also submitted that <ORG> was well within its jurisdiction in entertaining the writ petition and granting the relief. According to the learned counsel, the judgment under appeal does not call for any interference by this <ORG>.

Before considering the rival submission, it is necessary to set out the relevant Paragraph in the Scheme announced on 10.6.1983.

"2.2 When a valid and eligible import license is surrendered by an import Licence holder to the concerned office of <ORG> for supply of materials under this Scheme, the approximate quantity of the material which can be supplied against the import licence will first be determined keeping in view

(a) the utilised value available on the licence, (b) the price of the concerned item as Scheme, Thereafter, the Import Licence holder will be requested by the concerned office of <ORG> to make appropriate financial arrangements taking into account, besides (a) and (b) mentioned above, the approximate amount of duties/taxes/levies, etc. chargeable on such supplies. The actual supply will be restricted to the quantity which can be supplied against the surrendered import licence provided the amount for which financial arrangements are made permits the same."

Para 2.3 reads as follows:- "2.3 The price as announced for supply of materials under this Scheme shall be subjects to periodic revisions. The prices chargeable shall be the prices ruling on the date of delivery which shall be the date of <ORG> in the case of direct dispatches by rail and, the date of the Delivery Challan of <ORG>'s stockyard in the case or ex- yard delivery, except in the following cases where in the chargeable prices shall be the prices ruling on the date on which acceptable and operative financial arrangements are made in favour of <ORG> by import licence holders eligible to get supplies under this scheme.

a) Where the financial arrangements made in favour of <ORG> is such that it enable <ORG> to effect dispatches on a continuing basis without any restrictions about delivery schedule; this will also include an irrevocable confirmed automatic revolving Letter of Credit (L/C) without recourse to the drawer which would enable <ORG> to effect dispatches on a continuing basis without quantitative or other restrictions.

b) Where the financial arrangement made in favour of <ORG> is such that despatches have to be completed within a period of 3 months from the date on which the financial arrangement became operative but is for a quantity less than the tonnage covered by the import licence, the despatches shall be restricted to the quantity covered by the financial arrangement.

c) In all cases, the interpretation and decisions of <ORG> as to the acceptability, adequacy, effectiveness and operativeness of the financial arrangement made by eligible import licence holders in favour of <ORG> for supply of material under this Scheme shall be final and binding."

Coming to the merits of the case, we accept the contention of the learned for the appellant that <ORG> went wrong in holding that <ORG> was a department of <ORG>. In <NAME>'s case (supra), a <ORG> of this Court while considering a similar question held as follows:-

"We must, therefore, hold that the corporation which is <ORG> in this case is not a department of the <ORG> nor are the servants of its holding posts under the <ORG>. It has its independent existence and by law relating to Corporations, it is distinct even from its members."

In <ORG> case (supra), this <ORG> held as follows:-

"It is contended by the Attorney General that since the appellant- companies are wholly owned by <ORG>, the lands and buildings owned by the companies cannot be subjected to property tax. The short answer to this contention is that even though the entire share capital of the appellant-Government has been subscribed by <ORG>, it cannot be predicted <ORG>. The companies which are incorporated under the Companies which are incorporated under the Companies Act have a corporate personality of their own, distinct from that of <ORG>. The lands and buildings are vested in and owned by the companies, <ORG> only owns share capital."

In the view of the above decisions of this Court, we have no hesitation to hold that <ORG> erred in thinking that <ORG> was a department of <ORG> and most of the reasons given in the judgment are based on this wrong premise.

The importer in this case, it is an admitted fact, is a register exporter of steel pipes entitled to priority allotment of steel either through imports or from indigenous plants like the appellant. The allotment of steel was four manufacture of steel pipes for export against Advance Licence granted to the importer from time to tome. During the relevant period, hot rolled strips in coils manufactured by plants under <ORG> were available in sufficient quantity and hence the direct imports of the raw material were banned and the manufacturers were required to obtain the supplies of the raw materials from the appellant against the import licences with them and/or release orders issued by the licensing authority, namely the Chief Controller of Imports and Exports.

Various categories of licences are granted for the purpose of imports to the manufacturers. One such licence was Advance Licence. Paragraph 149 of the import policy provided for grant of Advance Licence/imprest licences and the relevant part of paragraph 149 reads `the term Advance Licence refers to c ases where the import is allowed under the Duty Exemption Scheme whereas the term imprest licence will be used where the import is allowed outside the Duty Exemption Scheme. The Advance Licences, it is stated, which include release orders are intended to supply import input or inputs in short supply for export production. It is also stated that the licensing authority issuing the Advance Licences will simultaneously issue the collected Duty Exemption Entitlement Certificate. The Policy does not provide for issuance of Advance Licence without duty exemption.' Bearing the above-said facts in mind, let us now consider the issue raised before us.

Admittedly when the importer wanted to register the indent for supply of hot rolled strips in coils, the licences / Release Orders produced lacked in material particulars and relevant enclosures. In other words, the licence did not mention that it was an Advance Licence and no Duty Exemption Entitlement Certificate was enclosed and legal undertaking/exemption of export bone was also not enclosed. It was on this admitted position, the appellant declined to register the indent of the importer. No doubt, the mistake was committed by the licensing authority. Does that mean that the appellant can ignore the lacuna in the documents and register the indent placed by the importer contravention of the requirements of the Scheme? The High <ORG> held that the licensing authority and the appellant being two different wings/departments of <ORG>, the appellant on receipt of rectified documents on 26.8.1983 must register the indent as if it was presented on 20.8.1983. We are afraid, we cannot accept the above reasoning of <ORG> as we have pointed out that the basic error committed by <ORG> was in assuming that the appellant was a Department of <ORG>. We have already noticed that there are number of judgments of the <ORG> taking the view that a company though fully owned by <ORG> when incorporated takes its own entity/identify and cannot be considered as department of the <ORG>. Further, it is seen from the records that the importer in this case is not a new entrant to plead ignorance though that may not be an excuse. He has presented applications for registration before and after the application in question and, therefore, it must be taken that the importer new fully well about the requirements for registering the indent. It is also relevant to note that the appellant on receipts of the application for registration expressly in writing replies not only pointing out the defects but also stated that they are not taking any action on the Letter of Credit enclosed along with the licence. it is also an admitted fact that the indent was registered only on 26.8.1983 when all the relevant documents after curing the defects was presented on that date. Under these circumstances and in the light of the Scheme published by the appellant, we hold that the import (Ambica Tubes) cannot claim as of right its order must be deemed to have been registered for supply of raw materials on 20.8.1983 when the documents with all defects were presented.

We cannot agree with the contention of Mr. <NAME> that mere presentation of an irrevocable Letter of Credit covering the value of requirement of raw materials is sufficient for registering the indent. We have already set out para 2.3 Paragraph 2.3 of the paid for the indent. Mr. <NAME> placed reliance on the last part of Paragraph 2.3 to contend that the date of presentation of irrevocable Letter of Credit will be relevant for fixing the price. We have seen that it says price changeable shall be the price ruling on the date on which acceptable and operative, financial arrangements are made in favour of <ORG> by import licence holder eligible to get supplies under this Scheme. Mr. <NAME> wants us to ignore the portion underlined above. Mere production of Letter of Credits will not be sufficient to determined the price ruling on the date. It must be given by an import licence holder eligible to get the supplies under the Scheme. In this case, we have sen that the importer will not fall under the category of `import licence holder eligible to get supplies under the Scheme' as on the date when the Letter of Credit was presented, the licence / release order was defective. Therefore, we cannot agree with Mr. <NAME> that the importer having produced the Letter of Credit well before 25.8.1983, the price payable for the supplies must be pre-revised one.

In view of our above conclusion, it is not necessary for us to consider and decide the other points raised by learned counsel for the appellant.

We have seen that <ORG> has not decided but left open the question relating to the right of the appellant to fix the price from the time to time even though that was the main issue raised in the writ petition before <ORG>. As we are not in agreement with the view expressed by <ORG> on other issues, it is now necessary for <ORG> to consider the issue relating to the right of the appellant to fix the price from time to time.

It is open to the appellant to raise the question of unjust enrichment when the matter is taken up by <ORG> pursuant to this remit order. The parties car place before <ORG> necessary material in support of their respective contention on the issue of unjust enrichment.

Before parting with the case, we would like to observe that the observations of <ORG> in the judgment condemning the appellant for not registering the order placed by the importer on the data when the relevant documents were presented with defects were totally uncalled for and, therefore, we expunge all those observations from the judgment.

In the result, the appeal is allowed and the judgment of <ORG> is set aside and the matter is remitted to <ORG> to decide the right of the appellant to fix the price from time to time and also the question of unjust enrichment. No costs.


JUDGMENT <NAME>, J.

1. In pursuance of the directions of this court in T.C. P. No. 186 of 1984, dated December 4, 1934, <ORG>, Madras, has referred the following question of law under section 256(2) of the Income-tax Act for the assessment year 1980-81 for our opinion :

"Whether, on the facts and in the circumstances of the case, <ORG> was justified in holding and had valid materials to hold that the assessee is entitled to the deduction under section 35B in respect of the commission paid to <ORG> and also on its share of contribution paid to <ORG> for participating in a trade exhibition ?"

2. The question referred to us consists of two parts one regarding the claim of the assessee for weighted deduction in respect of the commission paid to <ORG>, and another in respect of its share of its contribution paid to <ORG> for participating in an international trade exhibition.

3. The assessee is a company and the assessee claimed weighted deduction under the provisions of section 35B of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), in its assessment proceedings for the assessment year 1980-81 and the claim of the assessee for weighted deduction in respect of the commission paid to <ORG>, and another in respect of its share of its contribution paid to <ORG> for participating in an international trade exhibition.

4. The assessee is a company and the assessee claimed weighted deduction under the provisions of section 35B of the Income-tax Act 1961 (hereinafter referred to as "the Act"), in its assessment proceedings for the assessment year 1980-81 and the claim of the assessee related to the following items of expenditure.

Rs.

1. Share of Australian office expenditure 12,000 paid to <ORG> 2. Share of export promotion division 3,600 expenditure paid to <ORG> 3. Commission paid to <ORG> on export sales 4. Share of expenditure for participation 32,450 in Second Asian Automotive and Accessories Exhibition at Singapore --------- 65,480 --------- 1/3rd thereof Rs. 21,827.

5. The Income-tax Officer rejected the claim of the assessee for weighted deduction in so far as it related to the commission paid to <ORG>, on export sales and the share of its expenditure for participation in Second Asian Automotive and Accessories Exhibition at Singapore on the ground that the assessee has not established the link between the expenditure and the items enumerated under section 35B of the Act. The assessee preferred an appeal before <ORG>) against the order of <ORG> denying its claim for weighted deduction on the share of export promotion division expenditure and the commission paid to <ORG> and on the share of the expenditure for participation in the second Asian Automotive and Accessories Exhibition. The Commissioner of Income-tax (Appeals) held that the commission paid to <ORG>, was not covered by any of the provisions of section 35B of the Act, and further the commission was also paid in India and hence the assessee was not entitled to claim weighted deduction. In so far as the share of expenditure for participation in the Second Asian Automotive and Accessories Exhibition is concerned, he held that the assessee has not participated in the said exhibition and, therefore, the assessee was not entitled to claim weighted deduction.

6. The assessee carried the matter in appeal before <ORG>. In so far as the claim of the assessee relating to the commission paid to <ORG> is concerned, <ORG> followed its earlier order passed for the assessment years 1976-77 and 1979-80 and held that the assessee is entitled to weighted deduction in respect of the commission paid to <ORG> As regards the claim of the assessee for weighted deduction in respect of the share of expenditure in participating the Second Asian Automotive and Accessories Exhibition is concerned, the Tribunal has found that on the basis of the bills produced by the assessee, the assessee had participated in the exhibition and, therefore, the assessee is entitled to weighted deduction under section 35B of the Act in respect of the sum of Rs. 32,450 also. <ORG> thus allowed the appeal preferred by the assessee as regards the two items claimed by the assessee for weighted deduction.

7. Mr. <NAME>, learned counsel for the <ORG>, submitted that the assessee is not entitled to weighted deduction in respect of both the items as the expenditure incurred cannot be brought in within in any of the items enumerated under section 35B of the Act and there is no nexus between the expenditure and the items mentioned under section 35B of the Act, and the assessee is not entitled to weighted deduction. He however, fairly brought to our notice an earlier unreported decision of this court in <CITATION> . 245 of 1984, dated February 11, 1997 - since reported at  240 ITR 59), wherein this court has held that the assessee was entitled to weighted deduction in respect of the commission paid to <ORG>, Mr. <NAME>, learned counsel for the assessee, submitted that the decision of this court in <CITATION> .  240 ITR 59 cited supra would apply to the commission paid to <ORG> As regards the share of expenditure incurred by the assessee in the participation in the Second Asian Automotive and Accessories Exhibition is concerned, learned counsel for the assessee submitted that the assessee had participated in the exhibition by exhibiting its goods in the foreign country and thereby it has incurred an expenditure towards either advertisement or publicity of the goods or for obtaining information regarding the market outside India, and, therefore, the assessee is eligible to claim weighted deduction in respect of its share of expenditure incurred for participating in the exhibition.

8. We have carefully considered the submissions of learned counsel. In so far as the commission paid to <ORG> is concerned, this court in <CITATION> .  240 ITR 59 cited supra rendered in the assessee's own case, has held that the assessee is eligible to claim weighted deduction in respect of the commission paid to <ORG> This court in the above judgment has upheld the view of <ORG> that the assessee was eligible for weighted deduction in respect of the said expenditure. We are of the view that since the facts prevailing in the earlier decision rendered in the assessee's own case are the same, we hold that <ORG> was right in holding that the assessee is entitled to weighted deduction under section 35B of the Act in respect of the commission paid to <ORG>

9. In so far as the claim of the assessee for weighted deduction in respect of his share of contribution paid to <ORG> is concerned, the Income-tax Officer has not allowed the claim of the assessee on the ground that there was no nexus between the expenditure and the items enumerated under section 35B of the Act. The Commissioner of Income-tax (Appeals) disallowed the claim on the ground that the assessee had not participated in the said exhibition The order of the assessment clearly shows that the exhibition was held in a foreign country, viz., Singapore. <ORG> on a perusal of the material came to the conclusion that the assessee had participated in the exhibition. The logical inference that flows from the above finding of <ORG> is that the assessee had displayed its articles in the Second Asian Automotive and Accessories Exhibition held at Singapore and since there was a display of the assessee's articles in a foreign country, it would amount to either advertisement of its goods or publicity of its goods outside India. The purpose behind the act of the assessee in participating in the exhibition also shows that it was inviting trade enquiries about the assessee's products in the foreign country which would enable the assessee to obtain information regarding the markets outside India and it is significant to note that the expenditure was incurred only in connection with the export of the assessee's products. Since by the display of the goods made in an international exhibition there was a publicity or advertisement of its products eliciting information regarding markets outside India, we are of the view that the claim of the assessee would fall either under sub-clause (i) or sub-clause (ii) of clause (b) of sub-section (1) of section 35B of the Act. We are, therefore, of the view that there is no infirmity in the order of <ORG> in holding that the assessee is entitled to weighted deduction in respect of the share of contribution by <ORG>, when it participated in the international trade exhibition held in the foreign country.

10. We answer the question of law referred to us in the affirmative and against the <ORG>. No costs.


JUDGMENT <NAME>, J.

1. This is an appeal from a judgment of the Subordinate Judge of Burdwan whereby he affirmed a decision of the <NAME> of the third Court at Burdwan.

2. The facts out of which these proceedings arose are stated by the learned <NAME> in the early part of the judgment which he gave on January 15, 1934.

3. The present appellant <NAME> had made an application under Section 47 of the Code of Civil Procedure. The present respondent <NAME> had obtained a decree against the appellant for a certain sum for rent. The decree was dated July 26, 1930, and that decree was put to execution, and proceedings which were described as Rent Execution Case No. 252 of 1930 in <ORG> at Burdwan, were started. Subsequently, on August 13, 1930, there was an agreement between the parties as to the method in which the decree was to be satisfied, or to put the matter in another way, there was an adjustment of the decree. By that agreement the amount due under the decree was made payable by certain instalments, and there was a provision in the agreement, for payment of interest at a certain rate. It also contained a provision that if the judgment-debtor failed to pay any instalment in proper time, the decree-holder would be entitled to realise the whole amount by means of execution proceedings.

4. In June, 1931, there were further proceedings in execution which were described as Rent Execution Case No. 305 of 1930. That case was disposed of on June 20, 1931. There were further execution proceedings being Rent Execution Case No. 53 of 1933, which were disposed of on July 25, 1933. In those proceedings the judgment-debtor filed an objection which was heard as Miscellaneous Case No. 39 of 1935, and finally the present proceedings were started on August 9, 1933.

5. At the hearing before the 3rd <NAME> at <NAME>, the applicant, that is to say the judgment-debtor contended that me present execution petition was barred by limitation and also by res judicata and that the solenama (or adjustment) which had been made in Rent Execution Case No. 252 of 1930 was not a part of the decree, and it was not legal, or valid or binding on the parties. It was further contended that the solenama was at the most a mere contract which could not be enforced in execution proceedings, but could only be enforced by means of a regular suit. The learned <NAME> said in his judgment:

It appears that the rent decree passed on July, 26, 1930, was completely superseded by a solenama on August, 13, 1930. It further appears that the old rent decree being non-existent, was found not capable of execution.

6. Then follows this very important observation:

In the present execution case the decree-holder seeks to execute the solenama or the adjusted decree and not the superseded decree which has been extinguished by virtue of the solenama or adjustment.

7. It is obvious that there are no real merits in this case as regards the attitude adopted by the judgment-debtor or on the contentions pat forward on his behalf. It appears that at the time when the solenama was entered into, that is to say on August 13, 1930, a sum of Rs. 61 was paid by the judgment-debtor to the decree-holder, and after that nothing more whatever was paid and so on August 9, 1933, the present proceedings were instituted. The learned <NAME> came to the following conclusion:

The solenama although it is an agreement, is binding upon the parties and is executable as a decree without recourse to any suit.

8. Then he said:

The period of limitation will run from the date of adjustment.

9. In support of that view he relied upon a decision of this Court in <NAME> v. <NAME> .

10. The Subordinate Judge on all material points agreed with the view taken by the learned <NAME>, and he seems to have come to the conclusion that:

In the present case the <ORG> varied the decree by noting the instalments in <ORG>.

11. In the concluding paragraph of his judgment the learned Subordinate Judge said:

The last execution in which the decree-holder was trying to execute the original decree gave rise to an objection case by the appellant who contended that after the adjustment the original decree was no longer executable. The <ORG> accepted that contention and nobody appealed against that order.

12. We have been invited by Mr. <NAME> on behalf of the appellants before us to come to the exclusion that the decision of. Mr. Justice <NAME> and Mr. Justice <NAME> in the case I have just mentioned is no good law. In that case it was held that since the parties, by agreement, can arrange their own procedure and give jurisdiction to the <ORG> to adopt that procedure, and since the parties agreed that the money due should be realised by execution, the <ORG>-had jurisdiction to proceed by way of execution. That decision is based on a number of cases, notably the following: <NAME> v. Attorney-General for Gibraltar (1874) 5 PC 516 : 22 WR 900 : 30 LT 729, <NAME> v. <NAME> 2 IA 219 : 24 WR 193 : 3 Sar. 519 : 15 BLR 383 : 3 Suth. PCJ 190 (PC), <NAME> v. <NAME> 20 C 22 and <NAME> v. <NAME> 11 A 228 : AWN 1889, 53.

13. There are, however, a number of authorities, chiefly it is true, in other <ORG> and one or two in this <ORG>, in which a contrary view has been taken and in my opinion it is extremely doubtful whether the proposition laid down in the case of <NAME> v. <NAME> (supra) is really good law. If in the present circumstances it was simply a question of our having to decide that whether in any circumstances it is possible for an agreement between the parties to supersede a decree of the <ORG> and then to put it to execution as if it were itself a decree, it would be extremely difficult to hold that the parties can by an agreement substitute as it were a fresh decree in place of the original decree, or even vary the terms of the original decree. In our opinion, however, it is not necessary that we should decide that point, because in the present instance we are disposed to hold on the authority of a decision of the Full Bench of the Allahabad High <ORG> in <CITATION> . in which a number of previous decisions were considered and reviewed, that in the circumstances of this case it was not open to the parties to extend by their agreement, the period of limitation laid down as applicable to execution matters. If in the present case the decree-holder had sought to put to execution the solenama within a period of three years from the date of the original decree then it would have been necessary to decide whether we ought to follow the judgment of Mr. Justice <NAME> and Mr. Justice <NAME>. But in the present instance it is clear from the dates that the present execution proceedings were instituted at a time when more than three years had elapsed from the date of the original decree. The original decree was made on July 26, 1930, and these proceedings were instituted in August, 1933, so that whether the matter falls within the provisions of the ordinary law of limitation or under the provisions of the Bengal Tenancy Act, it was outside the period prescribed.

14. In these circumstances while deprecating the attitude and action taken up by the judgment-debtor, we find ourselves forced to the conclusion that the decree-holder had lost whatever rights he possessed so far as enforcing her claim in execution proceedings.

15. In that view of the matter we come to the conclusion that this appeal must be allowed. But having regard to the circumstances we make no order as to costs.

<NAME>, J.

16. I agree with my learned brother that this appeal should be allowed.

17. It was a rent decree obtained on July 26, 1920. In the first execution case there was an adjustment between the parties on August 13, 1930, by which the judgment-debtor agreed to pay the decretal amount by cert in instalments. The instalments not being paid, the decree-holder instituted a further execution case which the judgment-debtor opposed on. the ground that the decree had been superseded by the subsequent agreement. The <ORG> accepted the judgment-debtor's plea and dismissed the execution petition. Thereafter the decree-holder instituted the present execution case on August 9, 1933, asking execution of the agreement of August 13, 1930. Both the <ORG>s below held on the authority of the case of <NAME> v. <NAME> , that an agreement which superseded the original decree is executable as a decree.

18. Having regard to the various decisions of this <ORG> and of other High <ORG>s which have been cited before us, the question in my opinion in not free from difficulty, but it is, as my learned brother stated, not necessary to decide the question in this case. It is clear having regard to the provisions of Article 6 of Schedule Ill of the Bengal Tenancy Act, which limits the life of a rent decree to three years, that the present decree was barred on August 9, 1933 when the execution case was instituted.

19. I agree that the appeal should be allowed, and having regard to the conduct of the judgment-debtor no cost should be allowed to him.