JUDGMENT Blanesburgh, J.

1. This appeal is from an order of <ORG> in Bengal, exercising appellate jurisdiction and in effect affirming an order made by Mr. Justice <NAME>, sitting in the exercise of the ordinary original jurisdiction of the <ORG>. Both were orders propounded in a suit for the dissolution of a partnership, and their result was to set aside an award of arbitrators so far as that award affected to deal with matters in question in the suit. The appellant upholds the award and asks that the orders setting it aside be discharged.

2. The circumstances are somewhat involved and, in detail, elaborate. It will be possible, however, as their Lordships hope, to state the facts in a summary form without endangering such accuracy as is requisite for the purposes of their judgment.

3. The disputants are descendants of one <NAME>, and their disputes are to a large extent, although not altogether traceable to questions concering the division of the estate of one of his sons-<NAME>-whose position in the family with his relationship to the parties before the <ORG> appears in the following pedigree, taken from the judgment of Mr. Justice <NAME> in <ORG>.

<NAME>

| | <NAME> | | ------------ ---------------------------- | | | | | <NAME> | (adopts Keahabdeo) <NAME> 4. The suit No. 120 of 1922, related to a business of brokers and bankars carried on under style of <NAME> and Company. The business originally had been started by <NAME> alone. Some years later he took into it, first as an assistant, then as a partner, his nephew, the plaintiff and present

appeallant, <NAME>. The appellant's share as a partner was, in its origin, two <NAME>; subsequently, it became one of five <NAME>. Later still, the appellant's brother, <NAME>, was admitted a partner with a two <NAME>' share. He died, however, in 1911, and after his death the business was carried on by <NAME> and the appellant together. <NAME> being treated as possessed of an eleven <NAME>' share and the appellant of the remaining share of five <NAME>. By an indenture dated October 1, 1916, and made between <NAME> and the appellant, it was agreed that this partnership should continue for twenty years There is no furtker reference in the appellant's plaint to the two <NAME>' share which belonged to <NAME> at the time of his death. The appellant appears to treat it as merged in the shares of himself and <NAME>. This position, however, is not accepted by the representative of <NAME>'s estate, as will later appear.

5. <NAME> left no issue but he was survived by his wife, the respondent, <NAME>, and on her expressing a desire to adopt as a son to her deceased husband <NAME>'s youngest son <NAME>, <NAME>, so it was alleged by the appellant, agreed with the appellant's consent, to admit <NAME> to the firm setting aside for his benefit a two annas' share out of his own share of eleven annas. This arrangement, however, if it became effective at all, was almost immediately superseded by an agreement in writing dated November 16,1916, to which <NAME>, his three sons, the appellant and <NAME> were privy or parties and under which in effect <NAME> retired from the firm and it was agreed that the business should, as from January 1, 1917, belong in stated shares to the appellant, to the son to be taken in adoption by <NAME>, and to the three sons of <NAME>, viz, <NAME>, <NAME> and <NAME>-with a variation in interest as between these three, if <NAME> proved to be the son to be taken in adoption to <NAME> as contemplated.

6. By an agreement of even date entered into by <NAME>, <NAME>'s wife, and his three sons, but to which the appellant was not a party, an arrangement was embodied with reference to the division of his property on the death of <NAME>, an event then apparently regarded as imminent. The property, dealt with by this agreement in terms extends to <NAME>'s interest in the partnership, although that interest appears to have been disposed of, and differently, by the agreement already set forth, It is stated in this second agreement that it had become necessary in order to settle the disputes which had arisen regarding the rights of <NAME> who, unlike each of his younger brothers, was an adopted son and not a natural son of <NAME>.

7. In the following month <NAME> died. The appellants's case, as set forth in his plaint, than was that the business, since the date when the first agreement of November 16, 1916, became operative, had been, carried on upon the basis of that agreement but that <NAME> had not adopted <NAME>, On the contrary, she had put forward.<NAME>, a son of <NAME>, as the son whom she had adopted to her late husband, The appellant disputed both the factum and the validity of such adoption, further alleging that <NAME> had drawn out of the firm about twenty-one lacs without the knowledge of any of the parties, that he had taken forcible possession and refused inspection of the partnership books, that he was making unauthorised entries therein to suit his own purposes and that he had been guilty of gross misconduct in the affairs of the partnership and towards the partners. Accordingly, the appellant claimed dissolution of the partnership accounts and a receiver. He cited as defendants to the suit, <NAME>, <NAME> and <NAME>, <NAME> and <NAME>. It will be noted that <NAME>, <NAME>'s widow, is not a party to the proceedings.

8. The plaint was filed on January 12, 1922. No written statements have ever b9en put in, but it may, their lordships think, be fairly gathered from his plaint that the only question which the appellant, at all events, desired to raise in the suit were, first: whether the adoption of the infant defendant <NAME> had ever taken place; whether it was valid if it had; and who, on either view, were the persons interested and in what shares in the partnership, which was treated as one constituted by the agreement of November 16, 1916; and secondly: whether the allegations made by the appellant against <NAME> were, if established, sufficient to entitle the appellant to the decree of dissolution which he sought,

9. But these did not comprise all the matters of difference then existent in the family of <NAME>. First of all, in the appellant's own immediate branch of it, there was apparently a serious dispute between him and <NAME> upon the question whether the appellant and <NAME> were joint or separate in estate; there was another as to the rights of each brother in the ancestral or self-acquired property of their father <NAME>: there was a third as to the claim of <NAME> to certain company shares standing in the name of the appellant. Next there was a question with <ORG>'s representatives in which not only the appellant but the. estate of <NAME> was concerned : namely, whether <ORG> estate was entitled to his two annas or some other share in the partnership as carried on prior to January 1, 1917, and at whose expense. In <NAME>'s branch of the family again there were further serious questions, as to the validity of the second, agreement of November 16, 1916, as to the extent of his widow <NAME>'s property, and as to the rights and interests in the property of <NAME>, both of his widow and his three sons respectively

10. The most striking feature of this second and third sets of disputes in relation to the question now before the <ORG> is the interest in them of <NAME> who, as has been pointed out, was not a party to the suit at all. Nor can it fairly be gathered from its terms, as their lordships think, that any of these questions are either raised or foreshadowed in the appellant's plaint. It may well be that some of them would have been mooted in one or other of the written statements of the defendants when put in, But this must still remain in the region of conjecture. It suffices to say that none of them have so far become matters in question in the suit.

11. After the plaint was filed the adult members of the family appear to have come to the conclusion that all The questions in difference amongst them should be referred to arbitration, and on May 11, 1922, <NAME>, <NAME>, <NAME>, <NAME>, <NAME> together with <NAME>, by <NAME> on his behalf, executed a document addressed to <NAME>, <NAME>, <NAME>, <NAME> and <NAME>, appointing them arbitrators "for the settlement of all matters in dispute amongst ourselves " agreeing to accept whatever the arbitrators might decide with reference to the said disputes and "in respect of the proceedings taken in Court with regard to this matter before this day " agreeing that the proper parties would make in accordance with the directions of the arbitrators such applications as the arbitrators might think necessary.

12. The terms in which this document is couched suggest very cogently to their lordships' minds that it was so far, at all events, the intention of all the parties to it that the proceedings in the suit should become merely ancillary to the arbitration, if indeed they were not thereby to be entirely superseded. And if the application made to the <ORG> had been that all proceedings in the suit should be stayed and an order in these terms had been made thereon, that doubtless would have been the result. But the application actually made to the <ORG> was not of that nature. It took the form of a petition presented in the suit by the appellant purporting to act with the approval of all parties and referring to the agreement of May 11, 1922 as "an agreement to refer all matters in dispute between them:" and it prayed, in effect, that the matters alluded to in the agreement should all be remitted to arbitration in accordance with its terms.

13. But whatever may have then been the desire of the parties, including it may well be even Annardeyi, and whatever may have been the belief of the arbitrators as to the terms of the order actually made, the <ORG> had on that application no power to refer to arbitration any questions between the parties to the suit other than those in question in the suit or any questions in which was concerned anyone not a party to the suit. Nor did. it exceed its power in this matter for by its order made on May 23, 1922, although not actually drawn up until the following month, what the <ORG> did was to refer all matter in difference in the suit between the parties to the suit to the final decision of the arbitrators named in the agreement of May 11, 1922, in terms of that agreement, with Consequential directions applicable to such a reference, the minor defendant, <NAME>, being given liberty to appear in the proceedings through his attorney.

14. In their lordships judgment the decision of this appeal really turns upon the effect of that order properly interpreted. It was an order made in pursuance of paras. 1 and 2 of the second schedule to the Code of Civil Procedure, and in the exercise of power thereby given to the <ORG> to refer to arbitration matters in difference in a suit defined by itself in the order of reference. It is incumbent upon arbitrators acting under such an order strictly to comply with its terms, The <ORG> does not thereby part with its duty to supervise the proceedings of the arbitrators acting under the order. An award made otherwise than in accordance with the authority by the order conferred upon them is, their lordships cannot doubt, an award which is "otherwise invalid" and which may accordingly be set aside by the <ORG> under para 15 of the same schedule.

15. The difficulties in this case have all arisen from the fact that the arbitrators (misled it may well be by the attitude of the parties at the time of their appointment) have not fully appreciated the importance of the fact that some of the questions consensually submitted to them were already the subject matter of a pending suit to which one of the persons appointing them was not even a party.

16. The arbitrators did not wait for the <ORG>'s formal order on the application of May 23, They proceeded at once with the arbitration, and on May 27, 1922, they published their award. That award not only dealt with all the disputes above detailed but it is clear on its face that the arbitrators in no way discriminated between those disputes which were at issue in the suit and those which were not. The order of May 23 is recited as one;-

By which all matters in dispute between the parties were referred to our arbitration provided that the arbitration is to be in terms of the said agreement dated May 11, 1922, and that the attorney for the guardian ad! littm of the infant defendant be allowed to represent him.

17. And it is clear to their lordships from the terms of the award itself-and there is extrinsic evidence to the same effect that in reaching their conclusions the arbitrators took a comprehensive view of the family situation and made an award which doubtless they regarded as just on the whole and as a whole, but which probably they would not, in any of its parts, have themselves made precisely in the same terms, if the dispute thereby dealt with had alone or separately been submitted to them for adjudication.

18. To illustrate by a striking example what their lordships mean, they would point to the shares to be taken in the new partnership provided for by the award. These precise shares have apparently no counterpart in the shares taken in the dissolved partnership according to either of the agreements with reference thereto which the arbitrators themselves find to be binding on the parties.

19. The award, an elaborate document, has been carefully analysed by the learned Judges in the <ORG> in India. It is not necessary that their lordships should again go through it in detail. It finds both of the agreements of November 16, 1916, to be binding: it declares that the appellant and <NAME> were not joint but separate in estate and-a finding which vitally concerns the estate of <NAME>-that they are respectively entitled to a five annas and a two annas' share in . the partnership business up to December 31, 1916 : that the adoption of <ORG> was valid : while, with special reference to the partnership business, the award declares that the partnership is to be dissolved with effect from June 30, 1922 : it prescribes the shares in which the old partners are to be interested therein, and with reference to that partnership declares that in case any of the partners do not agree to the prescribed conditions he shall inform the firm in writing, whereupon his capital will be returned to him and his connection with the firm shall cease and his share be taken up equally by the remaining partners. This last is the only provision in the award for the satisfaction of the claims against the property and assets of the dissolved partnership of any partner who does not choose to come into the new partnership. The award contains elaborate further provisions for the adjustment of the other disputes above referred to.

20. In their lordships' judgment such an award is in no true sense one made in obedience to the order of May 23, 1922. While it would not be easy to segregate the findings with reference to the matters in question in the suit from those not so in question-the findings in which <NAME> was interested from those in which she was not-it is, their lordships think, impossible to uphold an award in relation to a suit the conclusions of which were plainly coloured, if not dictated, by the view taken by the arbitrators of other questions between the parties or some of them to which the suit had no reference.

21. Taking even a narrower view of the matter the award so far as it purported to constitute a new partnership, giving to a party who refused to come into it only rights which were far below those to which as a member of a dissolved partnership he was entitled was not in their lordships' judgment an award in any way contemplated or authorised by the order of reference.

22. To the award when published Musammat Surji, as guardian ad litem of <ORG>, took strong exception, and on July 5, 1922, gave notice to the other parties to the suit of an application by her for an order that the award should be set aside or modified or corrected by expunging therefrom all passages relating to matters that were not in question in the suit. On that application Mr. Justice <NAME> by order dated July 24, 1922, set aside the award in so far as it purported to deal with matters referred to in the suit. His order, as above stated, was affirmed by the appellate <ORG> by an order dated July 19,1923. Mr. Justice <NAME> based his decision primarily upon the view that the provisions of the award relating to the new partnership were quite unauthorised and invalid, The appellate <ORG> based their decision upon the ground that it was really impossible according to the statute law of India that one and the same arbitration should be held, as <NAME> expresses it:-

As to matters within the jurisdiction of the <ORG> and matters without the jurisdiction the <ORG>; between the parties to the suit and between them and other persona; under the code provided by the Indian Arbitration Act and under the cade provided by the Second Schedule under the superintendence and control of the Judge who has seizin of the suit and of the Judge disposing of business under the Indian Arbitration Act ; partly upon an order of reference and partly under an agreementi.

23. Their lordships desire to reserve their opinion upon the question whether there may not be exceptions to that comprehensive statement.

24. They are satisfied, however, for the reasons they have given, that the order actually made by one <ORG> and affirmed by the other was, in this case, the proper order to be made.

25. They will accordingly humbly advise his Majesty that this appeal therefrom should be dismissed and with costs.


<NAME>, J.

1. Take the question of estoppel first.

2. It does not arise at all. A former abuse of trust cannot be pleaded against a trustee who seeks to prevent a repetition of that abuse, even if he were formerly implicated in the same indefensible course against which he is seeking to protect the trust property: <NAME> v. <NAME> (1871) 14 Mad. I. A. 289 : 17 W. R. 41, 44. and <NAME> v. <NAME> (1897) 1 C. W. N. 493.

3. What do yon say as to the case of <NAME> v. <NAME> (1842) 3 Q. B. D. 760, 766 : 61 R. R. 397. In that case the mortgagors were empowered to raise money on mortgage, while here the palms cannot be alienated.

4. There was no issue on estoppel; that question has been raised here for the first time.

5. Here the transfer is void under Statute, i.e., Scripture of Hindu Law. For the principle against estoppel, see Bigelow p. 514, Ch. 17, Section 1.

6. Next, as regards the second contention of the appellant, I submit that the custom of transferring a pala or selling the office of a shebait: even to a person of the same caste or sect can never be reasonable and valid: see <CITATION> (1882) I. L. R. 6 Mad. 76., <NAME> v. <NAME> (1867) 7 W. R. 266. and <CITATION> (1876) I. L. R. 1 Mad. 235 : L. R. 4 I. A. 76.

7. To validate such a custom would tend to public mischief in inducing needy incumbents of hereditary religions offices who desire to sell them to give a dishonest recognition to qualifications, which in fact were not the qualifications demanded by the nature of the office. I submit that no custom can validate an act which is clearly against public policy. The offerings made by Hindus to a public shrine constitute a public trust, in which the trustee can never have any beneficiary interest, and any appropriation by them of the same would be a clear breach of trust; no custom recognising such appropriation can alter the character of such a transaction, or validate the same.

8. <CITATION> (1907) I. L. R. 35 Calc. 226, 229., which lays down the rule that shebaits cannot bequeath their office by will to non-shebaits. See also <NAME> v. <NAME> (1874) 14 B. L. R. 166. Even if the owners of private temples may alter the character of the trust to a certain extent by family arrangement, still the trustees of the Kalighat temple can never do so, because, as both the Courts below have found, it is a public temple.

<NAME>

9. Then you have been abusing your trust, and you now want the <ORG>" to put you in a position to continue doing so.

10. Further, the alleged custom of transferability of palas does not bear the requisite characteristics of a valid legal custom. For it is not certain, reasonable, immemorial, legal or moral. The earliest instance of transfer of a pala goes back only to 4th October 1819 or about 90 years before the institution of this suit; not even to the beginning of the establishment of regular <ORG> in British India, while the foundation of this <ORG> is lost in the oblivion of mythical ages.

11. The transfer of palas is an abuse of trust, and by implication, mis-appropriation: <CITATION> (1867) 7 W. R. 266. For the personal debt of a shebait, trust property cannot be sold; of. the position of the manager of an infant heir.

<NAME>

12. There is great danger in developing superficial analogies.

13. If this custom be upheld, extravagance among shebaits will be encouraged. Public policy must be vindicated, whether the plaintiff lose her money or not.

<NAME>

14. But yon have not got beyond extravagance, encouraged by any possible decision of ours.

15. Misappropriation does not alter the character of the trust. Even a mourasi mokurari lease of landed property granted to a co-shebait has been held to be void. Regarding the <ORG> case, is pala or turn of worship the same as charao?. No custom was pleaded there; <CITATION> (1896) I. L. R. 23 Calc. 645.

<NAME>

16. The contention of the other side is not that the Kalighat temple palas are transferable, as a matter of right under Hindu Law, but that they are so by custom.

17. Even if such a custom is proved, it is bad in law: see <NAME> v. <NAME> (1897) 1 C. W. N. 493.

18. Instances of continued abuse of trust for 90 years will not make the custom valid.

19. <NAME> v. <NAME> (1882) I. L. R. 6 Mad. 76; custom was not pleaded there. See also <NAME> Hindu Law, p. 486, 491.

20. The custom found by the District Judge to be in existence relates to private and not public endowments: <CITATION> (1877) I. L. R. 2 Calc. 365. See also <NAME> on Hindu Law, p. 453. A turn of worship, cannot be called a shape. [<NAME>'s Hindu Law paras, 437, 438.]

21. As to a foreclosure decree, I submit that a pala or turn of worship has been held in all the reported cases to be moveable property. As a foreclosure decree can only he made with respect to mortgages of immoveable property, the provisions of the Transfer of Property Act which refer to foreclosure of mortgages of immoveable property only, and Order 34 of the Civil Procedure Code of 1908 (applying also to mortgages of immoveable property) are inapplicable to mortgages of palas. There is no provision of Indian Law for granting a decree for foreclosure in the case of pledge, or mortgage of moveables.

22. <NAME>, in reply. It has been urged, that we cannot have a foreclosure decree because a pala is not immoveable property. See Fisher on Mortgage, 6th Edition, Article 985 , p. 505. A pledge presupposes delivery of possession. (Contract Act , Sections 172 . 148.)

23. For the difference between a pledge and a mortgage, I refer to pages 107 and 320 of Ghose's Mortgage. A pledgee can realise his money by sale of the pawn: <NAME> v. <NAME> (1). Regarding foreclosure of a mortgage of moveables, see <ORG>, 7th edition. Ch. 49, para I, p. 1019.

24. [<NAME>. See Halsbury's Laws of England, Vol. I, p. 123. Section 58 of the Transfer of Property Act refers to mortgages of immoveable property.]

28. An regards, the second question, it has riot been disputed on behalf of the mortgagee that in the absence of a custom or usage to the contrary or any term to that effect in the deed of endowment, a religions trust or the right of management of a religious or charitable endowment or a religious office attached to a temple or any other endowment cannot be alienated by the holder: <CITATION> (1876) I. L. R. 1 Mad. 235 : L. R. 4 I. A. 76., <CITATION> (1882) I. L. R. 5 Mad. 89., <NAME> v. Nila Kandan (1884) I. L. R. 7 Mad. 337., <NAME> v. <NAME> (1902) I. L. R. 26 Mad. 31., <NAME> v. <NAME> (1899) I. L. R. 23 Mad. 271; L. R. 27 I. A. 69., <NAME> v. <NAME> (1896) I. L. R. 24 Calc. 83., <CITATION> (1891) I. L. R. 15 Mad. 183., <NAME> v. <NAME> (1892) I. L. R. 15 Mad. 389., <CITATION> (1894) I. L. R. 19 Mad. 211., <CITATION> (1907) I. L. R. 34 Calc. 828; I. L. R. 35 Calc. 226., <NAME> v. <NAME> (1881) I. L. R. 4 All. 81., Rup Narain v. <NAME> (1878) 3 C. L. R. 112., <NAME> v. <NAME> (1897) 1 C. W. N. 493., <CITATION> (1892) I. L. R. 16 Mad. 146., <NAME> v. <NAME> (1898) I. L. R. 23 Bom. 131., <NAME> v. <NAME> (1865) 3 W. R. 152., <NAME> v. <NAME> (1867) 7 W. R. 266., <NAME> v. <NAME> (1871) 6 B. L. R. 727; 15 W. R. 339, <NAME> v. <NAME> (1870) 5 B. L. R. 617., <CITATION> (1903) I. L. R. 27 Mad. 192., <NAME> v. <NAME> (1895) I. L. R. 20. Bom. 495., <CITATION> (1882) I. L. R. 6 Mad. 76. There is also authority for the proposition that alienation of a religious office may be validly made in favour of a person standing in the line of succession and not disqualified by personal unfitness, <NAME> v. <NAME> (1869) 6 Bom. H. C. R. 250., <NAME> v. <NAME> (1882) I. L. R. 6 Bom. 298., <CITATION> , (1900) I. L. R. 36 Calc. 975., <NAME> v. <NAME> (1909) I. L. R. 36 Calc. 375. But the appellant does not invite us to go even as far as this proposition. She asks us to assume that a pala or turn of worship is not alienable, except by custom, and contends' that the custom which has been proved in this case should be recognised by the <ORG>: <CITATION> (1876) I. L. R. 1 Mad. 235 : L. R. 4 I. A. 76., Gnanasamandha v. <NAME> (1899) I. L. R. 23 Mad. 271 : L. R. 27 I. A. 69. This raises the question, whether the custom possesses the characteristics deemed essential for the validity of a custom. These essential attributes were specified by <ORG>, in <NAME> v. <NAME> (1838) 9 Ad. & E1. 406., in these terms; "A, custom, to be valid mast have four essential attributes: first, it mast be immemorial; secondly, it must be reasonable; thirdly, it mast have continued without interruption since its immemorial origin; and fourthly, it must be certain in respect of its nature generally, as well as in respect of the locality where it is alleged to obtain and the persons whom it is alleged to affect." See also <NAME> v. <NAME> (1876) L. R. 3 I. A. 259., <CITATION> (1876) I. L. R. 1 Mad. 235 : L. R. 4 I. A. 76., <CITATION> (1882) I. L. R. 9 Calc. 698., <NAME> v. <NAME> (1893) I. L. R. 21 Calc. 149. In the case before us, the custom obviously satisfies the first, third and fourth requirements. The time when the custom originated is unknown; all that has been ascertained is that, as far as the evidence can be carried back, it has "been in existence. This takes the case out of the rule formulated by <NAME>, in Mayor of London v. <NAME> (1867) L. R. 2. H. L. 239, 258. that "a custom originating within time of memory, even though existing in fact, is void at law." There is no force in the contention that the proof of the existence of the custom should have been carried back by direct evidence to 1793 when the first Regulations were passed by <ORG>, if not to the year 1773, when <ORG> was established. It is well settled, that evidence showing exercise of a right in accordance with an alleged custom as far back as living testimony can go, raises the presumption, though only a rebuttable presumption, as to the immemorial existence of the custom. As <NAME>, C.J., said in <NAME> v. <NAME> (1837) 2 Moo. & R. 129, 136., yon cannot reasonably expect to have it proved that the custom did in fact exist before time of legal memory; but you are to require proof, as far back as living memory goes, of a continuous, peaceable and uninterrupted use of the custom. To the same effect is the observation of <NAME>, J., in <NAME> v. <NAME>  2 Ch. 534, 550. (1): "not only ought the <ORG> to be slow to draw an inference of fact which would defeat a right that has been exercised during so long a period as the present, unless such inference is irresistible, but it ought to presume everything possible to presume in favour of such a right." It is interesting to note that <NAME> in his Mitakshara enunciated a similar rule (<NAME>, Book 11, 27). On the authority of a text of <NAME>, he holds that "time within the memory of man extends as far as a hundred years", as a man has, according to <NAME>, a hundred years' duration of life. (Mitakshara, trans., Gharpure, p. 50). <NAME>, in his commentary on the same text of <NAME>, treats a period beyond three generations (that is one hundred and five years) as time immemorial, and, refers to an earlier text to show that a period beyond sixty years might be treated as time beyond human memory. In any event, it is well settled that if the existence of the custom has been proved for a long period, the onus lies on the person seeking to disprove the custom, to demonstrate its impossibility; in this case, the mortgagors have entirely failed to meet the evidence of the custom adduced by the plaintiff. There is also no room for serious controversy as regards the certainty and continuity of the custom. The only question, consequently, for consideration is, whether it is reasonable as the appellant contends or unreasonable and opposed to public policy us the respondent asserts. It is indisputable that if a custom be against reason, it has no force in law; but as explained in Co. Litt., 62a, the reason here referred to is not to be understood as meaning every unlearned man's reason, but artificial and legal reason warranted by authority of law; or, as Blacks tone puts it, (Commentaries, Vol. I, p. 77) it is sufficient if ho good legal reason can be assigned against it. When, however, it is said that a custom is void, because it is unreasonable, nothing more is meant than that the unreasonable character of the alleged custom conclusively proves that the usage, even though it may have existed from time immemorial, must have resulted from accident or indulgence and not from any right conferred in ancient times. <NAME> v. <NAME> (1861) 9 H. L. C. 691, 700, 701. It is also well settled that the period for ascertaining, whether a particular custom is reasonable or not, is the time of its possible inception; this is in accord with the observation in the Tanistry Case (1608) <NAME> 29, 32.: "the commencement of a custom (for every custom hath a commencement, although the memory of man doth not extend to it, as the river Nile hath a spring although geographers cannot Audit) ought to be upon reasonable ground and cause, for if it was unreasonable in the original, no usage or continuance can make it good: Quod ab initio non valuit tractu temporis non convalescet." When tested in the light of these principles, no good ground can be assigned why the custom should be condemned as unreasonable. There is no force in the contention of: the respondents that because the custom contravenes the rule that a religious office is inalienable, it must be pronounced to be against public policy; if this argument were to prevail, all customs would be unreasonable. Since customs in general involve some inconsistency with the general common law of the realm or are contrary to a particular maxim, the fact of this inconsistency is not of itself a ground for holding the custom unreasonable and bad: <NAME> v. <NAME> (1838) 9 A. & E. 406, 422. Thus in the Tanistry Case (1608) <NAME> 29, 33., it is said that "several customs which had been adjudged void in our books as being unreasonable against common right or purely against law, if their nature and quality be considered, will be found injurious to the multitude and prejudicial to the Commonwealth. To the same effect is Co. Litt. 113a; "Consuetudo ex certa causa rationabili usitata privat communem begem." Is there then anything to show that the custom is injurious to the endowment or to the Commonwealth? One of the mortgagors has a turn of worship or pala; he is entitled in this character to collect the offerings made to the goddess on the day on which his turn falls; he applies a portion of the income for the worship of the goddess and appropriates the remainder for his personal use. It is not material to consider whether he should not apply the whole of the income for religious and charitable purposes; but let us assume that he and every shebait like him who has a pala may be compelled to do so. He transfers his turn of worship to a person who, in certain contingencies, might in his own right, have been a shebait and might, have held a pala. The transferee, as holder of the pala, is under precisely the same obligation to the endowment as the transferor himself. It is difficult to appreciate how a custom which recognises and validates a transfer to members of a limited circle under these circumstances can be detrimental to the endowment or to the public. There is no question that a pala of the Kalighat temple is heritable, and it is immaterial whether the heir is a male or female; the custom in this respect is established' beyond doubt: <CITATION> (1877) I. L. R. 2 Calc. 365, 372. There is also no question that though probably religious offices were originally indivisible, they are now deemed partible: <NAME> v. <NAME> (1895) I. L. R. 20 Bam. 495., <NAME> v. <NAME> (1874) 14 B. L. R. 166; 22 W. R. 437., Elder Widow v. Younger Widow (1807) 1 Mac. Sel. Rep. 180, <CITATION> (1909) I. L. R. 34 Mad. 470., <NAME> v. <NAME> (1892) I. L. R. 17 Bam. 271., <CITATION> (1900)11 Mad. L. J. 215, 222., <CITATION> (1888) I. L. R. 13 Bam. 548., <CITATION> (1897) I. L. R. 19 All. 428., <CITATION> (1907) I. L. R. 34 Calc. 828., <NAME> v. <NAME> (1867) 8 W. R. 193., <NAME>. v. <NAME> (1872) 19 W. R. 28., <NAME> v. <NAME> (1878) I. L. R. 3 Calc. 390., Eshan <NAME> v. <NAME> (1878) I. L. R. 4 Calc. 683., <NAME> v. <NAME> (1882) I. L. R. 8 Calc. 807. Indeed, the very name pala or turn of worship shows that the right is partible. This involves, by necessary implication, the attribute of transferability as amongst the members of the family of shebaits; partition signifies the surrender of a portion of joint right in exchange for a similar right from the co-owner. There is further no question that a pala has not only been deemed heritable and partible; it has also been treated as devisable, as is illustrated by the case of the 'Mister of the first defendant, who obtained a, pala under the testamentary devise of her father. This, again, involves the recognition of the transferable character of a pala; the exercise of thy right to make a bequest implies an assertion of the right to make a transfer inter vivos. It follows, consequently, that the customary right to make a sale, mortgage, gift or lease of a, pala in favour of persons within a limited circle is closely associated with and possibly developed out of the heritable, devisable, and partible character of a pala. A custom of this description clearly cannot be characterised on any rational ground as unreasonable or opposed to public policy, it is further worthy of note that this is not a novel view of the true character of such a custom; for, as early as 8th August 1810, the validity of a conditional mortgage of a pala effected on the 18th February, 1835, was upheld in a contested litigation. Since every custom sanctioned by the <ORG>s must be reasonable, it follows that every case where a custom has been upheld by the <ORG>s is an example of a reasonable custom. When the evidence is examined from this point of view, the case for the mortgagee is materially strengthened; for, as is clear from the record, not only the existence but also the validity of the custom has been repeatedly recognised by the <ORG>s during at least 70 years prior to the institution of this suit, while no single instance has been found where its reasonableness has been successfully assailed. The diatom of transferability of a pala in favour of a limited circle of transferees must accordingly be held valid, and no good reason has been assigned why it should be deemed unreasonable or opposed to public policy.

29. As regards the third question, it has been argued on behalf of the mortgagors respondents that as Order 34 of the Civil Procedure Code of 1908 applies only to mortgages of immoveable property, the plaintiff is not entitled to a decree for foreclosure; and in this connection, reference has been made to <NAME> v. <NAME> (1878) I. L. R. 4 Calc. 683., and <CITATION> (1911) I. L. R. 39 Calc. 227., to show that a pala or turn of worship is not immoveable property. There is no substance in this contention. It is well settled that foreclosure is a remedy of the mortgagee which is not confined to mortgages of land; it is equally applicable to mortgages of chattels, as decided by <ORG> in <NAME> v. <NAME> (1726) 1 Comyn. 393; 2 Eq. Cas. Abr. 6., <NAME> v. <ORG>, 5th Ed., 261 n., <NAME> v. <ORG> (1749) 1 Ves. Sen. 278. The case before us is cleanly not that of a pledge of a moveable; such a pledgee, as pointed out hi <NAME> v. <NAME> (1901) 2 Ch. 314., is in a very different position from an ordinary mortgagee, as he has only a special property in the thing pledged and may obtain a sale but not a foreclosure. The plaintiff is a mortgagee, not of immoveable but of intangible property, and he is entitled to foreclose the mortgagor quite as much as a mortgagee of chattels. [Jones, on Chattel Mortgages, 1908, Sections 699 and 776 .] It is worthy of note that, as early as 1181, <ORG> described in detail a remedy applicable to chattel mortgages which is substantially equivalent to the modern procedure for foreclosure and order absolute on failure of the mortgagor to redeem within the period fixed by the Court [<ORG>, Tr. Beames, Book X, Ch.. 6-8; Ed. Beale, 1900, pages 201-210]. It may be added that if the contention of the mortgagors were to prevail, they might find themselves in a worse position, than what they would occupy under a foreclosure decree; for, if the procedure for foreclosure, with its consequent opportunity to the mortgagor to redeem, is not applicable, the mortgagee may very well contend that the contract between the parties must be strictly enforced and that, as the time for repayment has passed away, the title of the mortgagee to the mortgaged property has become absolute; such a result could hardly have been contemplated by the mortgagors.

30. The result is that this appeal is allowed and the decree of the District Judge discharged. On account taken of the sum due on the conditional mortgage in suit on the 16th. November next, it transpires that the mortgagee will be entitled to Rs. 3,421 for principal and interest up to that date. The decree will direct that if the defendants pay this sum, together with costs of all the <ORG> with 'interest' thereon (as specified in the decree of this <ORG>) on or before the 16th November 1914, the mortgage will stand redeemed. On default, the mortgage will, be foreclosed after the decree absolute has been made by <ORG> in due course. The hearing fee in this <ORG> is assessed at thirty gold mohurs.

<NAME>

31. I agree with the proposed order on the second ground discussed by my learned brother. On the question of estoppel, I prefer to reserve my opinion.


PETITIONE<NAME>: COMMISSIONE<NAME> OF INCOME-TAX, <NAME> Vs. <NAME>ESPONDENT: SI<NAME> <NAME>UKUMC<NAME>AND MANNALAL & CO. DATE OF JUDGMENT: 20/07/1970 BENC<NAME>: <NAME>, J.C. BENC<NAME>: <NAME>, J.C. <NAME>, K.S. CITATION: 1971 AI<NAME> 383 1971 SC<NAME> (2) 846 1970 SCC (2) 352 CITATO<NAME> INFO : <NAME>F 1992 SC 66 (17) <NAME> 1992 SC 197 (17) ACT: Income-tax Act , 1922, S. 26-A --Partnership including two partners representing interest of same <O<NAME>G>--If can be registered--Whether members of <O<NAME>G> suffer from any disability from entering into contract inter-se. <NAME>EADNOTE: <NAME> and his son <NAME> were two out of the five partners of the respondent firm and represented the interest of a <NAME>indu undivided family. The Income-tax Officer granted registration of the firm under s. 26A of the Income-tax Act, 1922. In 1954-55, he declined to grant such registration. The Appellate Assistant Commissioner confirmed his order on the ground that two coparceners could not represent the interest of the <O<NAME>G> in a partnership. The <ORG> reversed this order and the <NAME>igh Court, upon a reference of the question whether the respondent firm could be granted' registration, answered it in the affirmative. On appeal to this Court, <NAME>ELD : Dismissing the appeal, That a partnership in which two members of a coparcenary represent same beneficial interest of an <O<NAME>G>, may be validly registered under the Income Tax. [648 C-D] <NAME>am Lax an <CITATION> . 66 I.T.<NAME>. 613, P. K, P. S. Pichappa Chittiar & Ors. v. Chokalingam Pillai & Ors. A.I.<NAME>. (1934) P.C. 192 and <CITATION> . 39 I.T.<NAME>. 202, referred to. The Indian Contract Act imposes no disability upon members of a <NAME>indu undivided family in the matter of entering into a contract inter se or with a stranger. A member of a <NAME>indu undivided family has the same liberty of contract as any other individual : it is restricted only ill the manner and to the extent provided by the Indian Contract Act .[648 <NAME>] It is now settled law that in considering an application for registration of a firm, the Income-tax Officer is not concerned to determine in whom the beneficial interest in the share in the partnership vests. [649 <CITATION> . 55 I.T.<NAME>. 651 and Commissioner of income- <CITATION> . 55 I.T.<NAME>. 660, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1774 of 1969.

Appeal from the judgment and order dated February 12, 1965 of <ORG> in Misc. Civil Case No. 112 of 1963.

<NAME>, <NAME> and <NAME>, for the appellant.

<NAME>, <NAME>, <NAME> and <NAME>, for the respondent.

The Judgment of the Court was delivered by <NAME>, J. A firm styled Sir <ORG> was formed under a deed dated July 16, 1948 to carry on the business of "managing and selling agents" of <ORG> Sir <NAME> and his son <NAME> were two of the five partners of the firm. They represented the interest of the Hindu undivided family of Sir <NAME> and his sons. On March 31, 1950 the property of the Hindu undivided family was partitioned and the interest of the family in the partnership was taken over by a private limited company styled Sir Sarupchand <NAME> Ltd. For the assessment years 1950-51, 1951-52, 1952-53 and 1953- 54 the Income-tax Officer granted registration of the firm under s. 26A of the Indian Income-tax Act, 1922. In 1954-55 the Income-tax Officer declined to grant registration. In appeal the Appellate Assistant Commissioner confirmed the order on the ground that two coparceners could not represent the interest of the Hindu undivided family in a partnership. The <ORG> reversed the order. They held that Sir <NAME> and his son <NAME> were partners in the firm on behalf of the Hindu undivided family and there was nothing in law which prevented two or more coparceners of a Hindu undivided family representing the family from entering into a partnership with a stranger or strangers. At the instance of the Commissioner of Income-tax the following question was referred by the <ORG> :

"Whether in the facts and circumstances of the case the firm <ORG> and <ORG> could be granted registration under s. 26A of the Act ?"

<ORG> answered the question in the affirmative. The Commissioner of Income-tax has appealed to this Court with certificate granted by <ORG>. <CITATION> .(1) this Court observed :

"A Hindu undivided family is x x x x a "person" within the meaning of the Indian Income-tax Act : it is however not a juristic person for all purposes, and cannot enter into an agreement of partnership with either (1) 66 I.T.R. 613.

another undivided family or individual. It is open to the manager of a joint Hindu family as representing the family to agree to, become a partner with another person. The partnership agreement in that case is between the manager and the other person, and by the partnership agreement no member of the family except the manager acquires a right or interest in the partnership. The junior members of the family may make a claim against the manager for treating the income or profits received from the partnership as a joint family asset, but they cannot claim to exercise the rights of partners nor be liable as partners."

This position in law was not disputed on behalf of the Commissioner. But it was urged that since two members of a coparcenary represented in the firm the same beneficial interest of a Hindu undivided family, and since they were incompetent to enter into a contract inter se, the partnership agreement could not be registered. There is no substance in that contention. In <NAME> & Ors. v. <NAME>) <ORG> obsered, approving the observations made in Mayne's Hindu Law (9th Edn.) at p. 398 to the following effect "Where a managing member of a joint family enters into a partnership with a stranger the other members of the family do not ipso facto become partners in the business so as to clothe them with all the rights and obligations of a partner as defined by the Indian contract Act, in such a case the family as a unit does not become a partner, but only such of its members as in fact enter into a contractual relation with the stranger the partnership will be governed by the Act." It is clearly enunciated that one or more members of a Hindu undivided family may enter into a contractual relation in the nature of a partnership with a stranger and they qua the stranger become partners. The view expressed by <ORG> was approved by this Court in <NAME> & Anr. v. commissioner of Income-tax, Bombay North, Kutch and Saurashtra, Ahmedabad & Anr. (2). The Indian Contract Act imposes no disability upon members of a Hindu undivided family in the matter of entering into a ,contract inter se or with a stranger. A member of a Hindu undivided family has the same liberty of contract as any other individual : it is restricted only in the manner and to the extent provided by the Indian Contract Act . Partnership is under s. 4 (1) A.I.R. (1934) P.C. 192.

(2) 39 I.T.R. 202.

<NAME>

of the Partnership Act the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all : if such a relation exists, it will not be invalid merely because two or more of the persons who have so agreed are members of a, Hindu undivided family. It is now settled law that in considering an application for registration of a firm, the Income-tax Officer is not concerned to determine in whom the beneficial interest in the share in the partnership vests: <CITATION> .('); <CITATION> .('). In our judgment, <ORG> was right in answering the question in the affirmative.

The appeal fails and is dismissed with costs.

R.K.P.S. Appeal dismissed. (1) 55 I.T.R. 651. (2) 55 I.T.R. 660.


JUDGMENT <NAME>. J.

1. This appeal under Clause 15 of the Letters Patent is directed against the order dated December 6, 1988 passed by a learned Judge of this Court issuing a Rule Nisi and an interim injunction on a petition under Article 226 of the Constitution of India filed by <ORG> ('Association' for short) and its five members. Facts relevant for the purpose of disposal of the appeal are as under.

2. <ORG> ('<ORG>' for short) is a <ORG> incorporated under the Indian Companies Act , 1913, with the liability of its members limited by shares, having its registered office at 3-A Shakespeare Sarani, Calcutta and carries on business at, amongst other places, Andul Road, Howrah where it has one of its factories. The <ORG> is engaged in the business of, amongst others, manufacture of iron and steel materials. The <ORG> is managed and controlled by a Board of Directors, which include two nominee Directors, one nominated by <ORG> and the other by <ORG>. The work-force of the <ORG> in its factory at Howrah includes a category of staff called Junior Management Staff whose duties are primarily supervisory in nature. They have an Association of their own called <ORG>.

3. On October 28, 1987 the Company declared a lock-out of the factory at Howrah on the ground, inter alia, that workmen employed in its various divisions had resorted to illegal strike. Though the Junior Management Staff were kept outside the purview of the lock-out, the Company did not pay their salaries from November, 1987 onwards, on the plea that there was acute shortage of funds, though earlier assurances were given that salaries would be paid soon.

4. The <ORG> and its six members (hereinafter collectively referred to as the 'Writ Petitioners') thereupon filed the writ petition on September 23, 1988, wherein they have contended, inter alia, that the Company has a sound financial base and sufficient funds to pay its employees. Inspite thereof, the Company taking advantage of the prolonged lock-out and the financial strait of the members of <ORG>, is luring them to a Voluntary Retirement Scheme. The writ petitioners have further alleged that the Company's management has been coercing the members of the <ORG> individually to voluntarily retire or face termination of service. Accordingly, they have sought for various reliefs, as detailed in the petition, through issuance of appropriate Writs against the Company.

5. When the writ petition was presented before the learned Trial Judge on September 23, 1988, directions were issued for filing affidavits. Thereafter, when the petition came up for hearing preliminary objections as to its maintainability were raised on behalf of the <ORG> on the grounds, that no writ lay against the <ORG> and even if such writ lay the reliefs sought for in the petition could not be granted as they were for enforcement of a contract of employment. After hearing the parties, the learned Trial Judge issued a Rule Nisi as prayed for and passed an interim order. Aggrieved thereby, the <ORG> has filed the appeal.

6. Before us also, the threshold questions about the maintainability of the writ petition and the reliefs sought for therein were raised and argued at length. First, it was contended on behalf of the appellant that by no stretch of imagination could it be said that the Company answered to the definition of 'State' within the meaning of Article 12 of the Constitution of India so as to make it amenable to the writ jurisdiction of <ORG>. The other contention was that a contract of employment, which the writ petitioners were seeking to enforce, could not be executed through issuance of Writs.

7. In elaborating the first contention, it was submitted on behalf of the <ORG> that <ORG>, through its various decisions, had laid down the tests for ascertaining whether a <ORG> was an instrumentality or agency of the <ORG> so as to answer to the description of 'other authorities', and for that matter 'State' within the meaning of the Article 12 of the Constitution of India and if the status of the <ORG> was scrutinised in the light of the above tests it would be found, that none of them stood satisfied. Consequently, it was argued that no writ would lie against the <ORG>. Though a number of cases of <ORG> dealing with the above question were cited at the <ORG> during the hearing of the appeal, we would, to avoid restatements and prolixity, refer to a few of them. The first of the cases which requires to be considered in this respect is that of <CITATION> (1981-I-LLJ-103), which was decided by its Constitution Bench. In that case, the question -arose whether <ORG>, which was a society registered under the Jammu & Kashmir Registration of Societies Act , 1898 was an authority within the meaning of Article 12 of the Constitution of India. In answering the question,' the <ORG> observed (pp. 112-113):

"The tests for determining as to when a corporation can be said to be an instrumentality or agency of <ORG> may now be culled out from the judgment in <ORG> case (1979-II-LLJ-217). These tests are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression 'other authorities', it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the <ORG> within the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in <ORG> case as follows:

(1) "One thing is clear that if the entire share capital of the corporation is held by <ORG>, it would go a long way towards indicating that the corporation is an instrumentality or agency of <ORG>."

(2) "Where the financial assistance of the <ORG> is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character."

(3) "It may also be a relevant factor .......whether the corporation enjoys monopoly status which is <ORG> conferred or <ORG> protected."

(4) "Existence of deep and pervasive <ORG> Control may afford an indication that the corporation is a <ORG> agency or instrumentality".

(5) "If the functions of the corporation are of public importance ahd closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government."

(6) "Specifically, if a department of <ORG> is transferred to a corporation, it would be a strong factor supportive of the inference of the corporation being an instrumentality or agency of <ORG>."

If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of <ORG>, it would, as pointed out in <ORG> case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12."

Applying the above tests in the facts of that case, the Court found that the Society which managed <ORG> at Srinagar was a 'State' under Article 12. The above quoted tests have been quoted with approval and followed by <ORG> in the latest cases of <CITATION> (1988-I-LLJ-3-41) and <ORG> v. Defence Minister-cum-Chairman BOG, <ORG> (1989-I-LLJ-263).

8. In the earlier case of <NAME> v. <ORG> (1981-I-LLJ-79) the above tests were quoted with approval. It was pointed out by <ORG> that the finale was reached when their cumulative effect was assessed and once the body was found to be an instrumentality or agency of the <ORG>, the further conclusion emerged that it was 'State' and subject to the same constituional limitations as <ORG>. In <NAME> case (supra), it was similarly observed that it was not necessary that all the tests should be satisfied for reaching the conclusion either for or against holding an institution to be 'State' and in a given case, some of the features might emerge so boldly and prominently that a second view might not be possible, but there might be other cases where the matter would be on the border line and it might be difficult to take one view or the other outright. When judged in the light of the above tests, keeping in view the observation made by <ORG> in the case of <NAME> (supra) in the passage quoted earlier that "the tests were neither clinching nor conclusive but they were merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression 'other authorities', it must be realised that it should not be stretched so far as to bring in every autonomous body which had some nexus with the <ORG> within the sweep of the expression" (exphasis supplied), the conclusion is inevitable that the appellant-Company cannot be brought within the meaning of 'State' under Article 12 of the Constitution.

9. Admittedly, the <ORG> is incorporated under the Indian Companies Act , 1913 and 73.23 % of its equity share capital are held by individuals and other limited Companies, including some foreign Companies and the balance 26.77% shares are held by financial institutions. It is common knowledge that in the normal course of their business, financial institutions advance money to entrepreneours and established undertakings, some of them on the condition that a portion of such loans might be converted into equity capital. Besides, the financial institutions make purchase of shares in the market as business investments. The acquisition and holding of only 26.77% shares of the <ORG> by the financial institutions through such routine business transactions cannot certainly satisfy the first two tests laid down by <ORG>. Mr. <NAME>, appearing for the writ petitioners, in his usual fairness, conceded that not only the above two tests, but the fifth and sixth tests were also not satisfied in the facts of the instant case. He, however, asserted that the third and fourth tests stood satisfied in respect of the appellant <ORG>. According to Mr. <NAME>, as the <ORG> was engaged in a core industry like steel and iron and was one of the largest undertakings in that field, it could certainly be said to be holding a monopoly status. Even if we, for our present purposes, accept the fact that the <ORG> enjoys a monopoly status, still then the third test would not stand satisfied as such status has to be '<ORG> conferred or <ORG> protected'. As there is no material on record to even indicate far less prove, the above ingredient, the contention of Mr. <NAME> in this regard must be negatived.

10. To bring home his contention that the fourth test stood conclusively satisfied, in the instant case, Mr. <NAME> strongly relied upon the determination of <ORG> in the case of <CITATION> . It will be necessary, therefore, to refer to and deal with the case of MC. <NAME> (supra) at length.

11. On December 4, 1985, a major leakage of oleum gas took place from one of the units of <ORG> and <ORG> in Delhi. This leakage affected a large number of persons, both amongst the workmen and the public, and an Advocate practising in <ORG> of Delhi died on account of inhalation of oleum gas. Hardly had the people got out of the shock of this disaster when, within two days, another leakage, though this time a minor one, took place as a result of escape of oleum gas from the joints of a pipe. Applications were, thereafter filed by <ORG> and <ORG> in <ORG> for award of compensation to the persons who had suffered harm on account of escape of oleum gas. As those applications for compensation raised a number of issues' of great Constitutional importance, the Bench of the three Judges which was hearing the applications forwarded them to a larger Bench of five Judges. One of the questions which arose for consideration at the time of hearing was whether Article 21 of the Constitution was available against <ORG> declared industrial policies, was ultimately intended to be carried out by shares and which was engaged in an industry vital to public interest and with potential to affect the life and health of the people. On behalf of the applicants, it was contended that Article 21 was available as <ORG> was carrying on an industry which, according to the <ORG>'s own declared industrial policies, was ultimately intended to be carried out by itself, but instead of the <ORG> immediately embarking on that industry, <ORG> was permitted to carry it on under the active control and regulation of the <ORG>. Special emphasis was laid on behalf of the applicants on the regulatory mechanism provided under the Industries (Development and Regulation) Act , 1951, where industries are included in the schedule if they vitally affect public interest. It was pointed out that regulatory measures were also to be found under the Environment Act , 1986 and other allied legislations. Reliance was also placed upon the fact that sizeable aid in loans, lend and other facilities were granted by the <ORG> to <ORG> in carrying on the industry. Taking aid of the American <ORG> Action doctrine, it was also argued on behalf of the applicants that private activity, if supported, controlled or regulated by the <ORG> might get so entwined with <ORG>al activity as to be termed <ORG> action and it would then be subject to the same constitutional restraints on the exercise of power as the <ORG>.

12. In controverting the above contentions, it was submitted on behalf of Shriram that control or regulation of a private corporation's functions by the <ORG> under general statutory Law, such as the Industries (Development and Regulation) Act , 1951 was only in exercise of police power of regulation by the <ORG> and such regulation did not convert the activity of the private corporation into that of the <ORG>. It was contended that control which deemed a <ORG> an agency of the <ORG>, must be of the type where the <ORG> controlled the management policies of the <ORG>, whether by sizeable representation on the board of management or by necessity of prior approval of the <ORG> before any new policy of management was adopted, or by any other mechanism.

13. In order to deal with the rival contentions, <ORG> traced that part of the development of Article 12 where it embarked on the path of evolving criteria by which a <ORG> could be termed 'other authority' under Article 12. In doing so, the <ORG> considered its earlier decisions and quoted with approval the tests laid down in <ORG> case (supra) as applied in <NAME> case (supra) and the observations made in the latter. The <ORG> then pointed out that the controversy as to whether the manner in which a <ORG> was brought into existance had any relevance to the question whether it was <ORG> instrumentality or agency was set at rest in the case of <NAME> (supra). The <ORG> further pointed out that a <ORG> might be a Statutory <ORG> created by a statute or it might be a society registered under the Societies Registration Act or a <ORG> formed under the Companies Act : any such <ORG> would come within the ambit of Article 12 , if it was found to be an instrumentality or agency of the <ORG> on proper assessment of the relevant factors.

14. In the light of the above principles of law, the <ORG> proceeded to examine whether a Private Corporation such as <ORG>, which was engaged in the manufacture of chemicals and fertilisers, came within the ambit of Article 12 so as to be amenable to the discipline of Article 21. For that purpose, the <ORG> first examined <ORG> Industrial Policy Resolutions of 1948 and 1956 and then the Industries (Development and Regulation) Act , 1951 enacted to carry out the objectives of the policy, resolutions. On such examination, the <ORG> found that the industry of 'Chemicals and Fertilisers' was specified in the First Schedule of the above Act as it was deemed by the <ORG> to be an industry of vital public interest, whose public import necessitated that the activity should be ultimately carried out by the <ORG> itself, though in the interim period with <ORG> support and under the <ORG> control, Private Corporations might also be permitted to supplement the <ORG> effort. The <ORG> next took notice of fact that the Industries (Development and Regulation) Act , 1951 made the activities of an undertaking engaged in an industry scheduled therein subject to extensive and detailed control and supervision by the <ORG> and even empowered the <ORG> to take over and manage such undertaking if after investigation held under the Act it was found that its affairs were being managed in a manner detrimental to public interest. The <ORG> also took notice of the fact that <ORG> was required to obtain licences, under the Factories Act and Delhi Municipal Act and was subject to extensive environment regulation under the Water (Prevention and Control of Pollution) Act , 1974 and Air (Prevention and Control of Pollution) Act , 1981, that is, all such activities which could jeopardise public interest. The <ORG> next observed that such functional control was of special significance as it was the potentiality of the fertiliser Industry to adversely affect the health and safety of the community and its being impregnated with public interest which perhaps dictated the policy decision of the <ORG> to ultimately operate this industry exclusively and invited functional control. The <ORG> next took note of the fact that, along with the extensive functional control, <ORG> received sizeable assistance in the shape of loans and overdrafts running into several crores of rupees through various agencies. It was men said by the <ORG>, "Moreover, <ORG> is engaged in the manufacture of Caustic soda, Chlorine etc. Its various units are set up in a single complex surrounded by thickly populated colonies. Chlorine gas is admittedly dangerous to human life and health. If the gas escapes either from the storage tank or from the filled cylinders or from any other point in the course of production, the health and well-being of the people living in the vicinity can be affected. Thus, <ORG> is engaed in an activity which has the potential to invade the right to life of large sections of people."

15. The Court then posed the question whether those factors were comulatively sufficient to bring Shriram within the ambit of Article 12 and observed "Prima, facie it is arguable that when the <ORG>'s power as economic agent, economic enterpreneur and allocator of economic benefits was subject to the limitations of fundamental rights vide <CITATION> ; <CITATION> ; <CITATION> (supra) and <NAME> v. <ORG> of Jammu and Kashmir (1980) 3 S.C.R. 1388 , why should a private corporation under the functional control of the <ORG> which is hazardous to the health and safety of the community and it is imbued with public interest and which the <ORG> ultimately proposes to exclusively run under its industrial policy, not be subjected to the same limitations. But we do not propose to decide this question and make any definite pronouncement upon it for reasons which we shall point out later in the course of this judgment". That the Court did not propose to decide the questions has been reiterated in paragraph 30 of the judgement with the following words:

"But we do not propose to decide finally at the present stage whether a private corporation, like <ORG>, would fall within the scope and ambit of Article 12 because we have not had sufficient time to consider and reflect on the question in depth."

16. The <ORG> then proceeded to deal with the other question raised in the case and after answering the same, observed in paragraph 33 that since it was not deciding the question as to whether <ORG> was an authority within the meaning of Article 12 so as to be subjected to the I discipline of the fundamental right under Article 21 , it did not think it would be justified in setting up a special machinery for investigation of the claims for compensation made by those who alleged that they had been victims of oleum gas escape.

17. A detailed and careful reading of the above case clearly indicates that <ORG>, in no uncertain terms, stated that it was not deciding the question as to whether a private corporation could be made amenable to the discipline of fundamental rights. In other words, even though the <ORG> mooted the question whether a <ORG>, like <ORG>, could be included within the ambit of Article 12 , it did not answer the same. It cannot, therefore, be said that <ORG> has expressed any opinion on the subject as to be binding upon us either as obiter or ratio decidendi.

18. Mr. <NAME>, however, submitted that even if it was held that <ORG> did not make any decision on the point, still then the observations made by it would have a persuasive effect. Accordingly, Mr. <NAME> submitted that from the observations made therein, he could successfully argue that the appellant-company was an intrumentality or agency of the <ORG>. We are unable to persuade ourselves to rely upon the observations of <ORG> referred to earlier for, in making the same, it was largely influenced by the fact that Shriram was engaged in an activity which was dangerous to life and health and had the potential to invade the right of large sections of people.

19. It is of course true that the appellant-Compahy, like <ORG>, is engaged in an industry which comes under the purview of the first schedule to the Industries (Development and Regulation) Act , 1951 and as such, the <ORG> has powers to assume management and control of the Company if it is found that its affairs are being managed in a manner detrimental to public interest. In other words, the <ORG> has the regulatory control over the affairs of the Company through various legislations. But in our view, such control cannot be said to be "deep and pervasive <ORG> control" so as to satisfy the fourth test. In the case of <CITATION> (1975-I-LLJ-399), Justice <NAME> pointed out that a mere finding of the <ORG> control was also not determinative of the question whether a <ORG> was an instrumentality or agency of the <ORG>, since a <ORG> had considerable measures of control under its police power over all types of business operations and it was not possible to assume that panoply of law and authority of a <ORG> under which people carry on ordinary business or their private affairs or own property, each enjoying equality in terms of legal capacity, would be extraordinary assistance. The learned judge next observed that a finding of <ORG> financial support plus an unusual degree of control over the management and policies might lead one to characterize an operation as <ORG> action. While on this point, we may, even at the risk of repetition, remind ourselves of the observation made in the case of <NAME> (supra) that the six tests were to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression 'other authorities' it must be realised that it could not be stressed so far as to bring other autonomous body which has some nexus with the <ORG> within the sweep of the expression; a wide enlargement of the meaning must be tempered by a wise limitation.

20. If merely on the basis of the facts that a Company incorporated under the Companies Act is running a business in any of the industries appearing in the first schedule of the Industries (Development and Regulation) Act , 1951 and that for running its business it has obtained loans from financial institution for which such institution has placed a Director in <ORG>, an inference that it is an instrumentality or agency of the Government has to be drawn, then in that case a private limited company carrying on business in cigarettes, which also finds place in the first Schedule of the above Act, with <ORG> loan would have to be called an instrumentality or agency of the <ORG>. Widening of the scope of Article 12 to such an extent will not only be unwise but unjustified also.

21. In view of our above discussion, we must hold that by no stretch of imagination can the appellant-Company be said to be an instrumentality or agency of the <ORG> so as to bring it within the ambit of Article 12 of the Constitution of India. The first point raised on behalf of the appellant must, therefore, succeed. In view of that success, the other point raised on behalf of the appellant in support of the appeal need not be gone into.

22. In the result, the appeal succeeds and the same is hereby allowed. The impugned order is hereby set aside and the Rule issued on the writ application is discharged. There will be no order as to costs.