ORDER <NAME>, J.

1. Heard. This is an application moved by respondent-company praying for stay of further proceedings in <ORG> Petition No. 4 of 1992, which the petitioner has preferred under Section 439 read with Sections 433 and 434 of the Companies Act, 1956, praying for winding up of <ORG> and for appointing liquidator to take charge of assets and records of the <ORG>.

2. It is averred in the application that respondent-applicant <ORG> is a Sick Industrial <ORG> within the meaning of provisions of Sick Industrial <ORG> (Special Provisions) Act , 1985 (hereinafter referred to as 'the Act'). The <ORG> has made a reference to <ORG> (hereinafter referred to as 'the Board') for determining the measures, which shall be adopted with respect to the <ORG> and as per the communication received by the applicant, the said reference stands registered as case No. 24 of 1993.

3. This application came up for orders on 31st March, 1993, on which date, learned counsel for the Company was asked to file further affidavit disclosing the stage of the proceedings before the <ORG>. Affidavit of Mr. <NAME>. Managing Director of the Company has been filed today, wherein it has been stated that no date has yet been fixed so far by the <ORG> for further proceedings. It has further been stated that the <ORG> registers a reference only when it is prima facie satisfied that the matter needs to be examined by it and it is with the registration of the case that the process of inquiry commences.

4. The petitioners have contested this application by contending that only a reference has been made by the Company to the Board and mere lodging of reference by Company and its registration by the Board does not amount to commencement of inquiry as contemplated under Section 16 of the Act. No Scheme has so far been framed under Section 17 of the Act. Since neither any inquiry has been made under Section 16 , nor an order of Scheme has been framed under Section 17 of the Act, the mere registration of the reference will not have the effect of suspension of either legal proceedings. It has further been stated that there is no lawful justification in staying further proceedings inasmuch as the applicant-Company has not disputed its liability towards the petitioner and there is no reason as to why the petition be not advertised.

5. Learned counsel for the applicant in support of his submissions that once a reference made under Section 15 is duly registered it would mean that inquiry under Section 16 is pending before the Court and in view of Section 22 of the Aet, proceedings for winding up, if any, ha veto be stayed has placed reliance upon the judgment of a single Judge of <ORG> in <CITATION> ., AIR 1988 All 170. In holding so, after examining the Act, it was held that the reference made, when on consideration is registered, the Board cannot thereafter decline to enquire into the matter. On inquiry it may come to the conclusion that application for treating the company concerned as sick unit is not acceptable and thus reject the same.

6. <CITATION> ., AIR 1990 SC 1017. it has been laid down that no proceedings for execution, distress or the like proceedings against any of the properties of the Company shall lie or be proceeded further except with the consent of the <ORG> in the light of the steps taken by the <ORG> under Sections 16 and 17 of the Act. In the said case the <ORG> has stated that it was satisfied that the Company had become a Sick Industrial Company and also directed that further proceedings under the Act shall be taken with respect to the Company.

7. In the light of the facts and circumstances of the case, what can be noticed is that under Sub-section (1) of Section 15 , after <ORG>applicant had formed an opinion that the Company had become a sick and reference deserves to be made to the <ORG> for determining the measures, which shall be adopted with respect to the Company, made reference to the <ORG>. As per <ORG>, such reference was received by the <ORG> on 13th October, 1992. It was registered as case No. 24 of 1993 on 24th February, 1993, when intimation was conveyed to the Company by the Registrar of the <ORG> through letter Annexure PA. As per the averments made in the affidavit of <NAME>, order of registration is made only after the <ORG> has come to a prima facie conclusion that inquiry deserves to be made. Section 16 of the Act provides that on receipt of a reference the <ORG> may make such inquiry as it may deem fil for determining as to whether the industrial company has become a Sick Industrial Unit or not. The procedure which is to be followed by the <ORG> or the steps, which is to be followed by the <ORG> or the steps, which are required 10 be taken by it are enumerated in Sub-sections (2) to (6) of Section 16 . Orders, if any, on completion of inquiry are required to be made under Section 17 of the Act. When an order has been made. Schemes etc. is to be prepared under Section 18 of the Act. It is not a case, in which only a reference has been received. But after receipt of the same on 13th October, 1992, the further steps which ihe <ORG> took within the next four months was to register the same, which in other words imply that the <ORG> has, on consideration thought it fit that inquiry deserves to be made. Further steps for conducting the inquiry may not have yet been taken by the <ORG> which might take sometime, may be for various reasons, such as the heavy pendency of such like cases before the <ORG> but that will not mean that inquiry is not pending before the <ORG>.

8. Section 22 of the Act is pre-emptory in nature and it lays down that where in respect of an industrial company, inquiry under Section 16 is pending or any Scheme referred to under Section 17 is under preparation or consideration, no proceedings for winding up of industrial unit or for execution, distress or the like against any properties of the industrial company shall lie or be proceeded further except with the consent of the Board. From the material placed on record, including the affidavit of Mr. <NAME> I have no hesitation in holding that on registration of the reference the stage of commencement of inquiry is reached and it would mean that inquiry is pending before the Board. Consequently, the present proceedings because,of pendency of inquiry deserves to be stayed, hence the same cannot proceed further except with the consent of the Board.

Division Bench of this Court in L.P.A. No. 15 of 1989 (Ram Krishan v. <ORG>) by an order dated 20th November, 1990, following the decision of <ORG> in <ORG> case (AIR 1990 SC 1017) (supra), directed the stay of further proceedings in the Letters Patent Appeal, after noticing the fact that the Board had in the said case registered the reference of M/s. <ORG>, Registration of reference was held to amount the pendency of inquiry, as contemplated under Section 16 of the Act.

9. In the result, the application is allowed and further proceedings in the company petition No. 4 of 1992 are stayed till further orders reserving liberty to the petitioner to approach the <ORG> for obtaining its consent to continue with these proceedings or taking such other remedies against the applicant-company, as may be deemed fit.

10. Company Petition No. 4 of 1992.

In view of order passed in Company application No. 2 of 1993, further proceedings in the petition are hereby stayed. Parties are at liberty to get the petition revised by moving an appropriate application.


ORDER

1. We make the following order for reasons which we shall give later :

(A) The position prior to the amendment of Section 4 of the Central Excises and Salt Act , 1944 by Act XXII of 1973:

The value of excisable article for determining the excise duty leviable on it under the Central Excises & Salt Act , 1944 shall be taken to be:

(i) The price at which the excisable article is sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and place of removal;

(ii) Where the excisable article is not sold by the assessee in wholesale trade, the price at which the excisable article or an article of the like kind and quality is capable of being sold in wholesale trade at the time and place of removal;

(iii) Where the excisable article or an article of the like kind and quality is not sold in wholesale trade at the place of removal, that is, at the factory gate, but is sold in the wholesale trade at a place outside the factory gate, the price at which the excisable article is sold in the wholesale trade at such place, after deducting there from the cost of transportation of the excisable article from the factory gate to such place; and

(iv) Where the wholesale price of the excisable article or an article of the like kind and quality is not ascertainable, the price at which the excisable article or an article of the like kind and quality is sold or is capable of being sold by the assessee at the time and place of removal or if the excisable article is not sold or is not capable of being sold at such place, then the price at which it is sold or is capable of being sold by the assessee at any other place nearest thereto.

2. The wholesale cash price at the factory gate is the basis for determination of value of an excisable article and whatever be the wholesale cash price at which the excisable article is sold in wholesale trade at the factory gate, would represent the value of the excisable article on which excise duty is leviable and no deduction from such wholesale cash price is permissible except in respect of trade discount and the amount of excise duty payable at the time of removal of the excisable article from the factory or any other premises of manufacture or production. No amount is deductible from such price in respect of advertisement or publicity expenses incurred by the assessee or expenses in connection with the storage of excisable article or expenses of the sales organisation or any other expenses incurred by the assessee upto the date of delivery.

3. Where sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the price at which the excisable article is sold at such place or places is to be taken as the value of the excisable article after from ducting only the cost of transportation of the excisable article from the factory gate to the place or places where it is sold, but with out any deduction in respect of advertisement or publicity expenses, cost of storage of the excisable article at the factory premises and at the place or places where it is sold as also the expenses of the sales organisation and any other expenses incurred by the assessee upto the date of delivery.

4. So far as the cost of packing is concerned, no deduction is permissible in respect of such cost from the wholesale cash price of the excisable article at the factory gate, whether the packing be primary packing or secondary packing and whether its cost is shown separately or as included in the wholesale cash price. Whatever packing is necessary for the purpose of putting the excisable article in a condition in which it is generally sold in the wholesale market at the factory gate, the cost of such packing cannot be deducted from the wholesale cash price of the excisable article at the factory gate. If, however, any special secondary packing is provided by the assessee at the instance of a wholesale buyer which is not generally provided as a normal feature of wholesale trade, the cost of such packing shall be deducted from the wholesale cash price.

5. We may make it clear that where freight is averaged and the averaged freight is included in the wholesale cash price so that the wholesale cash price at any place or places outside the factory gate is the same as the wholesale cash price at the factory gate, the averaged freight included in such wholesale cash price must be deducted in order to arrive at the real wholesale cash price at the factory gate and no excise duty can be charged upon it.

B. The position under the Central Excises & Salt Act 1944 as amended by Act XXII of 1973:

(i) The price at which the excisable goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal as defined in Sub-section (4)(b) of Section 4 is the basis for determination of excisable value provided, of course, the buyer is not a related person within the meaning of Sub-section (4)(c) of Section 4 and the price is the sole consideration for the sale. This proposition is subject to the terms of the three provisos to Sub-section (1)(a) of Section 4 .

(ii) Where the price of excisable goods in the course of wholesale trade for delivery at the time and place of removal cannot be ascertained for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in the manner prescribed by the Central Excise (Valuation) Rules, 1975 should be taken as representing the excisable value of the goods;

(iii) Where wholesale price of any excisable goods for delivery at the place of removal is not known and the value thereof is determined with reference to the wholesale price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery should be excluded from such price;

(iv) Of course, these principles cannot apply where the tariff value has been fixed in respect of any excisable goods under subsection (2) of Section 3 ;

(v) On a proper interpretation of the definition of 'related person' in Sub-section (4)(c) of Section 4 , the words "a relative and a distributor of the assessee" do not refer to any distributor but they are limited only to a distributor who is a relative of the assessee within the meaning of the Companies Act , 1956. So read, the definition of'related person' is not unduly wide and does not suffer from any constitutional infirmity. It is within the legislative competence of <ORG>. It is only when an assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through such a related person that the price at which the goods are ordinarily sold by the related person in the course of wholesale trade at the time of removal to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail is liable to be taken as the excisable value of the goods under proviso (iii) to Sub-section (1)(a) of Section 4 ;

(vi) The position as regards the admissibility or otherwise of deductions is the same under the amended Section 4 as it was under that section as it stood unamended. No deductions can be made from the wholesale price determinable under Sub-section (1) and (2) of Section 4 save and except in respect of (a) trade discount; (b) the amount of excise duty, sales tax and other taxes, if any, payable in respect of the excisable goods; and (c) averaged freight. No other expenses incurred by the assessee, such as, expenses of advertisement or publicity or expenses of storage of finished excisable goods or expenses of sales organisation or expenses of primary and secondary packing (save and except special packing in terms set out in relation to the unamended Section 4 ) shall be deductable from the wholesale price determinable under Sub-section (1) and f2) of Section 4 for the purpose of determining the value of the excisable goods for levy of excise duty.


PETITIONER: <ORG> ETC. ETC. Vs. RESPONDENT: COLLECTOR OF CENTRAL EXCISE AND ORS. DATE OF JUDGMENT27/04/1993 BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. SAHAI, R.M. (J) CITATION: 1993 AIR 2288 1993 SCR (3) 378 1993 SCC Supl. (3) 716 JT 1993 (3) 260 1993 SCALE (2)660 ACT: % Central Exercises and Salt Act , 1944: First Schedule, Item 15-Soap-Toilet Soap-"Household" and "other sorts"-Interpretation of "Toilet Soap"-Whether household soap within the meaning of Tariff item 15 (1). Interpretation of statutes; In interpreting a provision nothing to be added or deleted- Object of legislature to be gathered from the language used. HEADNOTE: The appellant-Mills claimed that the "toilet soaps" produced by them were bath soaps failing under tariff item 15 (1) of the First Schedule (Household) to the Central Excises and Salt Act , 1944, but the Assistant Collector classified the same as "other sorts" under tariff item 15(2) of the schedule attracting higher levy of excise duty. On appeal, the Collector held that they fell under tariff item No. 15 (1) "household". On second appeal, the <ORG> reversed the appellate order, against which the appellant-Mills preferred the instant appeals. The appellants contended that in 1954 toilet soap was treated as an independent tariff sub-item and household and laundry soaps were treated as separate entity and separately subjected to varied rates of tariff-, that on amendment in 1964 toilet soap was omitted as a separate entity and brought toilet soap as part of genus, namely, soap "household", as toilet soap has always been a household soap. The respondents contended that statute always kept distinction between soap "household and laundry" and "other sorts" and that toilet soap was kept in the packet of other sorts; that household and laundry soaps were being used for cleaning household articles and utensils and washing the clothes, while toilet soaps are for bathing purpose. The latter, composed of diverse varieties based on personal liking and taste, are being used; and that they are commercially known as other sorts but not household. 379 Allowing the appeals, and remitting the matter to primary authority, this <ORG>, HELD:1.1 The provisions of the Tariff do not determine the relevant entity of the goods. They deal whether and under what entry, the identified entity attracts duty. The goods are to be identified and then to find the appropriate heading, sub-heading under which the identified goods/prod- ucts would be classified. To find the appropriate classification the description employed in the tariff nomenclature should he appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules or interpretation put up thereon. For exigibility to excise duty the entity must he specified in positive terms under a particular tariff entry. In its absence it has to be deducted from a proper construction of the tariff entry. There is neither intendment nor equity in a taxing statute. Nothing is implied. It should be interpreted and construed as per the words the legislature has chosen to employ in the Act or Rules. There is no room for assumptions or presumptions.The object of <ORG> has to be gathered from the language used in the statute. (383- H, 384-A-B) 1.2"toilet soap" being of everyday household use for the purpose of the bath and having removed its sperate identity which it enjoyed preceding amendment and having been not specifically included in'other sorts', it took its shelter In commercial parlance under household'. If any body goes to the market and asked for toilet soap, he must asked any for household bathing purpose and not for industrial or other sorts. Even the people dealing with it would supply it only for household purpose. It may be true that household consists of soap used for cleaning utensils, laundry used for cleaning soiled clothes and soap toilet is used for bathing but house-hold is compendiously used, toilet soap is used only by the family for bathing purpose. Individual preference or choice or taste of a particular soap for bath is not relevant. The soap "toilet" would, therefore, fall within the meaning the word of "household" in sub-item (1) of item 15 of the Schedule. (384-B-C,) <NAME> and-Ors. v. <ORG>.,  3 SCC 127; and <CITATION> .:  3 SCC 279, distinguished <NAME> v- <NAME>, AIR 1967 SC 643; <NAME> etc. v. Asstt. Sales Tax Officer, Akola and Anr,  1 SCC 279; <CITATION> : 380  Supp. 1 SCR 498; <CITATION> etc.,  3 SCR 149; <CITATION> ,  1 SCR 545; <CITATION> .,  3 SCR 294 at 297 C; <CITATION> . Appellate Asstt. Commissioner, Madurai and Anr.,  4 SCC 30; <CITATION> ,  Supp. 1 SCR 750 at 774 B-C; <CITATION> of the city of Ahmedabad and Ors.,  Supp. 1 SCC 298; <NAME> v. <NAME>. Collector of Central Excise & Customs and Ors.,  2 SCR 253; <CITATION> .  2 SCR 98; <CITATION> ,  1 Scale 527; <CITATION> ., AIR 1986 SC 1167; <CITATION> , (1988) 3 SCR 37; <CITATION> .,  4 SCC 366 at 376 Para 17; <CITATION> , (1991) 51 E.L.T. 115 para 15; <CITATION> :  3 SCR 373; <CITATION> .,  Supp. SCC 350; <ORG> etc. v. <ORG> etc. 2 SCR %2 at 1000 <CITATION> :,  Supp. 1 SCC 150 at 153 para 18, referred to, Craises on Statute Law (7th Edition) at Page 164, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2702 of 1984. From the Judgment and Order dated 20.6.1984 of <ORG>, New Delhi in Appeal No. ED (SB) 2714/83 C.

<NAME>, <NAME>, Miss <NAME>, <NAME>, <NAME>, Miss <NAME> and Miss <NAME> for <ORG> for the Appellants.

<NAME>, k.<NAME>, <NAME> and <NAME> for the Respondents.

The Judgment of the Court was delivered by <NAME> J.: Common questions of law arose for decision in these 8 appeals need disposal by this judgment. The question relates to classification of "toilet soap" in Excise item 15 of the First Schedule to the Central Excise and Salt Act 1 of 1944 as amended in 1964 for short the Act'. In addition, in C.A. Nos. 81 3/86, 3632-34/88 and 1 102/89 sequal to its finding, they claim refund of excess excise duty. The facts in C.A. Nos. 2702/84 and 2785/84 are sufficient for disposal. The appellants laid before <ORG> or classification list claiming "toilet soaps" Kalpa and Oasis, in other appeals Jai, O.K. Moti, Rain drop, Gold and Ria as bath soaps under Tariff item 15 (1) of the First Schedule (Household). By notice dated August 31, 1982, the Assistant Collector called upon the appellants to show cause as to why they cannot be classified under tariff item 15(2) other sorts and to levy excise duty at 15 per cent ad valorem (as then stood). The appellants after filing their reply thereto and having had personal hearing, by proceeding dated November 27, 1982, the <ORG>. Collector classified toilet soaps as "other sorts" under tariff item 15(2) of the Schedule. On appeal the Collector by Order dated January 21, 1983 classified them under tariff item No. 15(1) "household" On second appeal, the <ORG> by its order dated June 20, 1984 reversed the appellate order and upheld the <ORG>. Collector's order, Same is the case with regard to all other appeals except resultant claim for refund. In 1954 tariff item No. 15A was introduced in the First Schedule of the Act thus:

"15(A) 'Soap' all varieties of the product known commercially as soap-

1. Soap, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power or of steam for heating:-

(1) Soap, household and laundry:-

(a) Plain bars of not less than Rupees one pound in weight fives & annas four per cwt. (b) ther sorts Rupees six & annas two per cwt. (2) Soap toilet Rupees fourteen per cwt. (3) Soap, other then household Rupees and laundry or toilet. fourteen per cwt. This entry as amended in 1964 reads thus

" 15 'Soap' means all varieties of product known commercially as soap-:

(1)Soap, household and 20 per cent Laundary ad valorem (2) Other sorts 20 per cent ad valorem

(Ad valorem rate of tarrif varies from time to time as per amendments).

Later it was amended in the year 1979 empowering the <ORG>. to grant exemption under section 8 of the Act. The details thereof are not material for the purpose of these cases. It is seen that in 1954 in Tariff entry 15A "soap" means all varieties of the product known commercially as soap. Item 1 provided that soap in relation to its manufacture with the aid of power or of steam for heating, they were classified as Plain bars, other sorts, toilet soaps and soap, other then husehold or laundry or toilet. While amending the entry in 1964 the language couched therein as seen earliar is thus: 'soap' means all varities of products known commercially as soap.

1) Soap, household and Laundry

2) "Other sorts" and graded ad valorem tariff has been prescribed. It is seen that household and laundry soap was subjected to levy of tariff at a lesser rate than other sorts" ad valorem. The contention of <NA<ORG>E>, the learned Senior counsel for the union is that statute always kept distinction between soap "household and laundry" and "other sorts". Toilet soap was kept in the packet of other sorts. Household and laundry soaps are being used for cleaning household articles and utensils and washing the clothes while toilet soaps are for bathing purpose. The latter compose of diverse varieties, based on personal liking and taste, are being used. They are commercially known as other sorts but not household. The legislative history furnishes unimpeachable evidence that soaps used for household and laundry are compendiously treated as a class and are subjected to imposition of lesser tariff. They receive their colour from each other as compendiously known in the commercial parlance that the former are meant for use for household purposes while toilet soap are for use for bath and are subject to higher rate of tariff at par with soap for commercial and industrial purposes. They bear higher rate of tariff. The explanatory note appended to the Finance Bill 1964 would furnish the legislative intendment to amend the tariff item and the treatment meted out to toilet soap for tariff purpose. It is accordingly understood by the department and also by the trade circles. The appellants too intially treated toilet soap as other sorts but later, on legal opinion, they claimed them as household soaps. The construction adopted by the tribunal is consistent with the standard works on soaps. <ORG>/s <NAME> and <NAME>, contended that in 1954 toilet soap was treated as an independent tariff sub-item and household and laundry soaps were treated as separate entity and separately subjected to varied rates of tariff. On amendment in 1964 toilet soap was omitted as a separate entity and brought toilet soap as part of genus, namely, soap "house hold", as a toilet soap is always a household soap. Therefore, the reliance by revenue on varied rates of duty or departmental contemporenia expositio have no bearing. The object of classification does not show that toilet soap is not part of the genus, "soap household" unless it is established otherwise.

The question, therefore, emerges whether "toilet soap" would be household soap within the meaning of Tariff item 15(1) of the Schedule. Undoubtedly true, as contended by <NAME>, that preceding amendment toilet soap was classified separately under sub item 2 and assessed to duty accordingly. But by amendment the distinction was wiped out and toilet soap was brought into common hotchpoch. So the contention that the variety of products known commercially as soaps have been enumerated or included compendiously, retaining their original colour even after the amendment made in the Finance Act , 1964 and falls into "other sorts" same genus, prima facie, though attractive, on consideration from proper perspective and in its setting in common commercial parlance, soap "toilet" appears to fall in household in sub-item 1 of tariff item 15 of the Schedule. It is true that the heading "soaps" are commercially known to be of diverse variety.

The provisions of the Tariff do not determine the relevant entity ofthe goods. They deal whether and under what entry, the indentified entity attracts duty. The goods are to be identified and then to find the appropriate heading, sub- heading under which the identified goods/products would be classified. To find the appropriate classification description employed in the tariff nomenclature should be appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules or interpretation put up thereon. For exigibility' to excise duty the entity must be specified in positive terms under a particular tariff entry. In its absence be deduced from a proper construction of the tariff entry. There is neither intendment nor equity in a taxing statute. Nothing is implied. Neither can we insert nor anything can we delete but it should be interpreted and construed as per the words the legislature has chosen to employ. in the Act or Rules. There is no room for assumption or presumptions. The object of the parliament has to be gathered from the language used in the statute. The contention that toilet soap is commercially different from household and laundry soaps, as could be seen from the opening words of entry 15, needs careful analysis. It is well, at the outset, to guard against confusion between the meaning and the legal effect of an expression used in a statute. Where the words of the statute are plain and clear, there is no room for applying any of the principles of interpretation which are merely presumption in cases of ambiguity in the statute. The court would interpret them as they stand. The object and purpose has to be gathered from such word themselves. Words should not be regarded as being surplus nor be rendered Otiose. Strictly speaking there is no place in such cases for interpretation or construction except where the words of statute admit of two meanings. The safer and more correct course to deal with a question of construction of statute is to take the words themselves and arrive, if possible, at their meaning, without, in the first place, reference to cases for theories of construction. Let us, therefore, consider the meaning of the word soap "household". The word household signifies a family living together. In the simplistic language toilet soap being used by the family as household soap is too simplification to reach a conclusion. Therefore, one has to gather its meaning in the legal setting to discover the object which the Act seeks to serve and the purpose of the amendment brought about. The task of interpretation of the statute is not a mechanical one. It is more than mere reading of mathametical formula. It is an attempt to discover the intention of the legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts. it is also idle to expect that the draftman drafted it with divine prescience and perfect and unequivocal clarity. Therefore, court would endeavour to eschew literal construction if it produces manifest absurdity or unjust result. In <NAME> v. <NAME>, AIR 1967 SC 643 a Constitution bench held as follows:

"The ordinary rule of construction is the provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a leteral construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out".

In <NAME> v. Assit. Sales Tax Officer, <NAME> and Anr. [1962] 1 SCR 279, another Constitution Bench was to consider whether "betal leaves" are "vegetable" within the meaning of item 6 of the 11 Schedule to the M.P. Sales Tax Act. It was contended that betal leaves are vegetable and, therefore, they are exempted from the payment of sales tax. While construing item 6, this court held that the words must be construed not in any technical sense nor from the botanical point of view but as, understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute. to it". It is to be construed as understood in common language. Therefore, betal leaves were held to be not vegetable. The term 'vegetables' is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table. The same view was reiterated in <CITATION>  Supp. 1 SCR 498 and <CITATION> etc. 3 SCR 149. In <NAME> case green ginger was held to be vegetable within the meaning of the word used in common parlance. In <NAME> case it was held that sugarcane was not vegetable. In <ORG> v. State of Haryana,  1 SCR 545 this Court held that Dryer felts' are not textiles. In that context the principle of understanding the meaning of the word in common parlance was adopted. <CITATION> . U. P.,  3 SCR 294 at 297C this Court held that "it is well settled that in interpreating items in statutes like the Excise Tax Acts or Sales Tax Act s, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to "the scientific anti technical' meaning of the terms or expression used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them.If any term or expression has been defined in the (emphasis supplied) enactment then it must he understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted. In that case the clinical syringes manufactured and sold by the assessee were not considered as glassware' falling within entry 39 of the First Schedule of the Act. In commercial sense Glassware would never comprise of articles like clinical syringes etc., or specialised significance and utility. Same view was reiterated in <CITATION> . Appellate Asst. Commissioner. <NAME> and Anr.  4 SCC 30 that coconut is neither a fresh fruit nor a vegetable. In khandelwal <CITATION> ,  Supp. 1 SCR 750 at 774 B-C this Court held that court cannot decide classification of goods under Import Tariff by implication. If rules of interpretation are made in the Act, they should be applied and interpretation would be made with their aid for classification. The court held that brass scrap is not metal alloy. Craises on Statute Law (7th Edition) at pace 164 specified one of the Rules of Interpretation of Statutes as extracted below:

"The second Rule is that if the statute is passed with reference to a particular trade, business or transaction and, words are used therein which everybody conversent with that trade, business or transaction knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning" <CITATION> of the city of Ahemdabad and Ors.,  Suppl. 1 SCC 298 this Court applied the test as "would a householder when asked to bring some fresh fruits or some vegetable for the evening meal bring Coconut too as vegetable? Obviously the answer is in the negative". Again when a person goes to a commercial market ask for coconuts, "no one will consider brown coconut to be vegetable or fresh fruit, no householder would purchase it as a fruit. Therefore, the meaning of the word brown coconut, whether it is a green fruit has to be understood in its ordinary commercial parlance". Accordingly it was held that brown coconut was not green fruit. In interpreting the statute the individual appraisal of the wisdom or unwisdom of a particular course consciously selected by the <ORG> is to be put aisde. In <NAME> v. <ORG> Collector of <ORG>., [ 1969] 2 SCR 25 3 this court held that the operation of the statutory notification had to be judged not by the object which authority had in mind but by the words it had employed to effectuate the legislative interest. The question whether the cotton textiles manufactured by handlooms are entitled to exemption, this court held to be positive. It may be noted that marketability of the product is an essential facet to attract dutiability of the goods under the Act. The general purpose or common use of the product though may not be conclusive but may be relevant to classify it in a tariff entry when it was not specifically enumerated in a particular entry or sub-entry. The construction of the word must yield in favour of promoting and effectuating the object and purpose of the Act. <CITATION> .  2 SCR 98 this Court found the entry not in residuary but placed in the parentage and relieved it from orphanage. in <CITATION> ,  1 Scale 527, this Court was to consider whether imported cloves fell with item 169 in List 8 of Appendix 6 or para 167 of chapter 8 of import and export policy 1990-93. Para 167 of Chapter 8 of import policy clearly provided the heading-Import of Spices includes cloves, cinnamon/ cassia, nupneg and Mace. Therefore, it was held that import permit is necessary. The doctrine of popular sense or trade or its use in making medicine as crude drug was not accepted. Dictionary meaning or meaning given in Indian Pharmaceutical Codex was not accepted as given in in view of specific enumeration. In Superintendent of central <CITATION> . AIR 1986 SC 1167 when the revenue contended that metalised yarn fell within general Tariff entry 18 yarn and synthetic fibres", this court held that entry 15A (2) first schedule of Central Excise & Salt Act 's specific entry relating to articles made of plastics of "all sorts" and metalised yam wax exigible to lessor tariff duty. <CITATION> . Bombay  3 SCR 37 whether special purpose complex machine tool fell in entry 84-89 or 84,45/48, this court held, after taking into account the purpose and use of it, that it is a multipurpose machine tool and fell in item 84, 45/48 of 1st Schedule. The contention of the <ORG> which finds favour with the tribunal that the legislative history and memorandum appended to the Finance Bill would furnish aid to the construction of the word "household" soap is not apposite to the fact situation. When there is ambiguity in the word, statement and objects the legislative history, the memorandum appended to the Bill and the speech of the mover of the Bill are relevant material to discover the intention intention of the legislature. <CITATION> .,  4 SCC 366 at 376 para 17 this Court held that "for determining the purpose or object of the legislation, it is permissible to look into the circumstances which prevailed at the time when _the law was made, the Statement of Objects and, Reasons of the Bill which actuated the step to provide a remedy for the then existing malady can be used for the limited purpose of appreciating the background and the antecedent state of affairs leading to the legislation. The memorandum explaining the provisions in the Finance Bill which were not part of the 'Notes on Clauses' appended to the Statement of Objects and Reasons of the Bill cannot be used to draw support therefrom as it is not an accurate guide of the final Act. In that behalf this Court relied on the statement of law profounded by <NAME> in his Statuitory Interpretation, Second Edition, 1984 at p. 529 relied on by the appellants in this case too. <CITATION> .  3 SCC 127 relied on by <NAME> in this behalf renders no assistance to the <ORG>. Therein the question was the object of delegated legislation. Therein the memorandum appended to the Bill incorporating s. 16 of the General Insurance Business (Nationalisation) Act, 1972 was considered in the context of fixation of the pay scales of the employees. The doctrine of reading down, placing reliance on <ORG> contranctors and <ORG>. and <CITATION> .  3 SCC 279 also is of no assistance to the <ORG>. The doctrine of reading down has been applied only to sustain the constitutionality of the statute which question is not before us. There is no quarrel with the proposition that in ascertaining the meaning of the word or a clause or sentence in the statute in its interpretation, everything which is logically relevant should be admissible. It is no doubt true that the doctrine of Noscitur A Sociis, meaning thereby, that it is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them i.e. when two or more words which are susceptible of analogous meaning are clubbed together, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general is restricted to a sense analogous to a less general. The philosophy behind it is that the meaning of doubtful words may be ascertained by reference to the meaning of words associated with it. This doctrine is broader than the doctrine of ejusdem generis. This doctrine was accepted by this Court in catina of cases but its application is to be made to be context and the setting in which the words came to be used or associated in the statute or the statutory rule. Equally the doctrine of' contemporanea erpositio is also being invoked to cull out the intendment by removing ambiguity in its understanding of the statute by the executive. This Court in a latest case <ORG> v. Collector of central Excise (1991) 51 E.L.T 165 (S.C) cited all the decisions upto date and applied the doctrine to the understanding by the revenue of the provisions in income- <CITATION>  3 SCR 373 this Court held that this principle can be invoked, though the same will not always be decisive on the question of construction. But the contemporaneous construction placed by administrative or executive officers charged with executing the statute, although not controlling, is nevertheless entitled to considerable weight as highly persuasive. We may also add that if the interpretation is erroneous, court would without hesitation refuse to follow such construction. This Court also equally expressed the view that its application was in restricted sense to ancient legislation in <CITATION> .  Supp. SCC 350 and in Doypack Systems Pvt. Lid. case  2 SCR 962 at 1000 <CITATION> ,  Supp. 1 SCC 150 at 153 para 18, this Court doubted the application of the doctrine of contemporanea exposito as given to the construction or its applicability to a recent statute that too in the first few years of its enforcement. In this case also the question whether toilet soap is a household soap had arisen within a short period after the Amendment Act , 1964 came into force, Therefore the understanding by the executive and its interpretation in bringing toilet soap in sub-item (2) "other sorts" instead of item (1) "household" being of formative period of statutory operation the doctrine became inapplicable.

The ratio in Indo Metal case, therefore, is inapplicable. As rightly contended by <NAME> that the doctrine of placement of a particular goods in a particular tariff item or residuary i.e. parentage or orphanage i.e. in placement of toilet soaps in either sub-items is not attracted to the facts as it is not a case of residuary items but of sub-classification within the same item.

Thus considered in the legal setting and commercial parlance we are of the considered view that "toilet soap" being of everyday household use for the purpose of the bath and having removed its separate identity which it enjoyed preceding amendment and having been not specifically included in "other sorts", it took its shelter in commercial parlance under "household". As stated if any body goes to the market and asks for toilet soap he must ask only for household bathing purpose and not for industrial or other sorts. Even the people dealing with it would supply it only for houshold purpose. It may be true that Household consists of soap used for cleaning utensils, laundry used for cleaning soiled clothes and soap toilet is used for bathing but household is compendiously used, toilet soap is used only by the family for bathing purpose. Individual preference or choice or teste of a particular soap for bath is not relevant. The soap "toilet" would, therefore fall, within the meaning the word of "household" in sub-item (1) of item 15 of the Schedule. The classification shall accordingly be adopted. The appeals are accordingly allowed. the cases are remitted to the primary authority to deal with the matters accordingly. We do not propose to go into the question of refund as it is a matter to be dealt with by the authorities concerned in accordance with the law., The appellants shall have to apply for refund and the authorities shall be required to deal with it in accordance with law. It is for the authority, therefore, to decide the question as per law. In the circumstances parties are directed to bear their own costs.

<NAME>

Appeal allowed.


PETITIONER: <NAME> Vs. RESPONDENT: STATE OF MADHYA PRADESH & ORS. DATE OF JUDGMENT21/09/1979 BENCH: DESAI, D.A. BENCH: DESAI, D.A. PATHAK, R.S. CITATION: 1980 AIR 517 1979 SCC (4) 458 ACT: M.P. Cinema (Regulation) Act 1952, S. 5(3) & M.P. Cinema (Regulation) Rules 1972, Rules 3-6-Objection not raised at the time of granting of no objection certificate- Objection if could be raised at the time of renewal of quasi-permanent cinema licence. Administrative Law-Doctrine of natural justice- Administrative authority-Whether under a duty to give notice and hear parties at every renewal of licence-Whether under a duty to hear all objectors. M.P. Cinema (Regulation) Act 19 S. 5(3). HEADNOTE: The third respondent made an application for the grant of a licence for a temporary cinema and the District Magistrate issued a no-objection certificate for a period of six months. This licence was renewed twice but a subsequent application for renewal was turned down by the District Magistrate on the ground that <ORG>' with a permanent cinema Licence in the locality which was hitherto closed had started functioning and, therefore, a renewal of the licence for a temporary cinema in the same locality would not be proper. In appeal, <ORG> granted respondent 3 a licence for a quasi-permanent cinema. The appellants in their writ petition questioned the validity of <ORG>'s order on the ground that they were the residents of the locality and that they had objected to the grant/renewal of licence on the ground that there was a mosque, a madrasa and a temple in the vicinity of the place, where the cinema house was to be constructed and even though their objections were upheld by the licensing authority, the District Magistrate, they were not heard in the appeal preferred by the third respondent and therefore, the order of the first respondent, State of M.P. suffers from the vice of violation of the principles of natural justice. <ORG> held that since the matter was left to the subjective satisfaction of <ORG>, <ORG> on being satisfied that there was no impediment to the grant of such a licence, was perfectly justified in granting the same, and that this was not a fit case for interference by <ORG>. In the appeal to this Court it was contended on behalf of the appellants, that as objectors they should have been heard and the decision arrived at by <ORG> in appeal at their back was violative of the principles of natural justice and the order granting licence for a quasi- permanent cinema by <ORG> was invalid. Dismissing the appeal, ^ HELD: ( per <NAME>, J.) 1. There is nothing in M.P. Cinema (Regulation) Act, 1952 or the M.P. Cinema (Regulation) Rules 1972 which require the licensing authority 793 to invite objections before grant of a quasi-permanent cinema licence. The right to object is at the initial stage when a no-objection certificate is applied for by the intending applicant for such a certificate. But there is no provision for inviting objections when the application is for a permanent or quasi-permanent cinema licence or a touring cinema licence. [800 G] 2. There is no provision in the Act or Rules which requires advertisement of such an application inviting objections and consideration of the objections before grant of a cinema licence. [800 H] 3. When an application for no-objection certificate is made, objections have to be invited in the prescribed manner. There can conceivably be hundred of objections. There is no question of giving a personal hearing to each objector. If after taking into consideration the objections a no-objection certificate is granted, there ends the matter subject, of course, to any properly constituted legal proceedings, conceivably a writ petition under Article 226. [800 Cl 4. Sub-s. (3) of s. 5 of the Act is unambiguous when it provides for an appeal only at the instance of a person aggrieved by the decision of the licensing authority refusing licence. A fortiori every objector to grant of a no-objection certificate is not entitled to file an appeal if such certificate is granted rejecting his objections. Nor in an appeal by the aggrieved person within the meaning of s. 5(3) every objector to the grant of a no-objection certificate is entitled to be joined as a party respondent or that each objector is entitled to notice of hearing of the appeal. [800 D-E] 5. The grievance of the appellants is without merits because initially when no-objection certificate was applied for they did not object and one who has not objected cannot subsequently make a grievance. [800 <CITATION>  3 SCR 58. referred to. 6. A right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an. interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed. If the duty to give notice and to hear the party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was given no notice of the matter. [1801 <CITATION> .  2 SCR 422 at 431, referred to 7. There is no substance in the grievance that before granting renewal of quasi-permanent cinema licence <ORG> in the appeal filed by the third respondent had not heard them and that such a decision was rendered in violation of the principles of natural justice. [801 E] In the instance case, the application for a no- objection certificate and granting of the same had passed muster long before, and appellants had not raised any objection to the grant of no-objection certificate. When the present appellants objected to the renewal of a quasi- permanent cinema licence it was not the 794 stage for grant of a no-objection certificate but it was the stage of renewal of quasi-permanent licence subsequent to the stage of granting of a no objection certificate, when there was no statutory obligation in the licensing authority to invite objections nor were the appellants entitled to file objections and nor were they entitled to be heard. [801 A-B] (per <NAME> concurring) 1. Rules 3 to 6 of the M.P. Cinema (Regulation) Rules 1972, relate to the grant of a "No objection" certificate. The Rules contemplate the filing of objections by local residents. That is the stage at which opposition to the establishment of a cinema at the proposed side is specifically provide for. Any person opposing the establishment of a cinema at the proposed location must do so before a 'No-objection' certificate is granted. [802 B-C] In the instant case, the appellants did not file any objections opposing the establishment of a cinema A "No- objection certificate" was granted to the third respondent. When the third respondent applied for a cinema licence, the appellants for the first time opposed the application on the grounds that there was a mosque, a madras and a temple in the vicinity. Inasmuch as these grounds were available to them during the proceedings for considering the grant of a 'No-objection' certificate, and they did not file any objection, they cannot now be permitted to plead a right to oppose the grant of a cinema licence. Had they, opposed the grant of the 'no-objection' certificate and their objection had make out a good case, it is possible that the 'no- objection' certificate would have been refused, and in that event the applicant would not have applied for a cinema licence. [802 D-F] 2. The question whether a person who has objected to the grant of a "NO objection certificate" certificate when that grant was under consideration can subsequently oppose the grant of a cinema licence on the same grounds which he took against a 'no-objection' certificate left open. [802 H- 803 A] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1199 of 1978.

Appeal by Special Leave from the Judgment and order dated 6-3-1978 of <ORG> in M.P. No. 109/78.

<NAME> and <NAME> for the Appellant. <NAME> for Respondents 1 and 2 <NAME>, <NAME> and <NAME> for The following Judgments were delivered:

DESAI, J.-This appeal by special leave is directed against the order date 27th December 1977 made by the State of Madhya Pradesh granting a licence for a quasi-permanent cinema to respondent no. 3 <NAME> son of <NAME>, proprietor, <ORG>, Lalbagh, Burhanpur (M.P.) against which a petition under  Article 226 of the Constitution by the petitioners was dismissed in limine by a speaking order by <ORG> at Jabalpur on 6th March 1978.

Third respondent made an application on 5th December 1975 for grant of a licence for a temporary cinema and the District Magistrate having jurisdiction issued a no objection certificate vide his order dated 10th February 1976 for a period of six months. This licence was renewed upto 30th June 1976 and there was a further renewal up to 30th September 1976. A subsequent application for renewal was turned down by the Distt. Magistrate by his order dated 29th June 1977 on the ground that <ORG> with permanent cinema licence which was closed, has now been functioning in the locality and, therefore, a renewal of the licence for a temporary cinema in the same locality would not be proper. Respondent 3 carried the matter in appeal to <ORG> which by its order dated 27th December 1977 granted a licence for a quasi-permanent cinema under the M.P. Cinemas Regulation Rules to the third respondent Present petitioners filed a petition under Article 226 questioning the validity of the aforementioned order of <ORG> conceding, inter alia, that they were the residents of the locality and that they had objected to the grant/renewal of licence on the ground that there is a mosque a madrasa and a temple in the vicinity or the place where the cinema house is to be constructed, and even though their objections were upheld by the licensing authority, the District Magistrate, they were not heard in the appeal preferred by the third respondent and, therefore the order of the first respondent State of Madhya Pradesh suffers, inter alia, from the vice of violation of the principles of natural justice. <ORG> was of the opinion that District Magistrate was not influenced by the fact that there was a mosque, and a temple in the vicinity of the place where the proposed cinema house was to be constructed but he was influenced by an extraneous consideration that a cinema having a permanent cinema licence having been re- opened in the locality there was no need for a cinema house with a 'temporary' licence and that it being a matter left to the subjective satisfaction of <ORG>, <ORG> on being satisfied that there was no impediment to the grant of such a licence, was perfectly justified in granting the same and, therefore, it is not a fit case for the interference of <ORG>. The appellants thereupon filed this appeal by special leave.

Mr. <NAME>, learned counsel who appeared for the petitioners, contended that if before the grant of a quasi- permanent cinema licence to the third respondent the appellants filed their objections which were taken into consideration by the Distt. Magistrate, the licensing authority, and if the Distt. Magistrate was impressed by the objections and, therefore, turned down the request for 'temporary cinema licence, in an appeal against this order preferred by the third respondent, the appellants as objectors should have been heard and the decision arrived at by the <ORG> appeal at their back was violative of the principles of natural justice and the order granting licence for quasi-permanent cinema by the <ORG> is invalid.

Before we examine the contention canvassed on behalf of the appellants it is necessary to glance at the relevant provisions of M.P Cinemas (Regulation) Act, 1952 ('Act' for short). Section 3 imposes a restriction on exhibition by means of cinematograph at any place other than a licensed place under the Act in compliance with the restrictions or conditions imposed by such licence. Section 4 nominates the Distt. Magistrate as the licensing authority. Section 5 provides for conditions subject to which licence may be granted. Sub-s. (3) of s. 5 provides for an appeal at the instance of a person aggrieved by the decision of a licensing authority refusing to grant a licence under the Act to <ORG> within the prescribed time. Section 6 confers power on <ORG> or the local authority to suspend exhibition of films. Section 7 prescribes penalties for breach of the provisions of the Act. Section 8 confers power to revoke a licence under certain circumstances. Two things emerge from the Act. Firstly, that the detailed provisions for the grant of a licence at three distinct stages by the licensing authority in the process of licensing a cinema house, viz., (i) no- objection certificate for the site on which the cinema house is to be constructed; (ii) licence for the building conforming to the rules where films are to be exhibited; and

(iii) licence for exhibition of films, are made in the rules and there is no reference to any of the three licences in the Act. Secondly, appeal is provided against the order of a licensing authority only at the instance of a person aggrieved by the decision of the licensing authority refusing to grant a licence. The Act does not confer any right of appeal on a person who might have raised objections before the licensing authority against the grant of a no- objection certificate or a licence, as the case may be. This last aspect is very relevant because the entire submission is based on a contention that the appellants who had objected to the grant of a no-objection certificate to the third respondent and had succeeded in persuading the licensing authority to refuse the grant of no-objection certificate to the third respondent, yet in the appeal preferred by the third respondent under sub-s. (3) of s. 5 the State Government did not give any opportunity to the successful objectors and decided the appeal at their back and thus the decision was rendered in violation of the principles of natural justice.

Next a reference to the relevant rules of M.P. Cinema (Regulation) Rules, 1972 ('Rules' for short), is necessary. Rule 3(2) provides that any person desirous of erecting a cinema or converting existing premises into a cinema shall first make public his intention to do so by exhibiting a notice in the prescribed form on a board on the proposed site in such position that it can be plainly seen from the public thoroughfare upon which the site of such proposed cinema abuts. This rule also prescribes the size of the board, the language in which the notice is to be published, etc. Sub-rule (3) of rule 3 provides that such a person shall also give a similar notice in writing to the licensing authority, viz., the Distt. Magistrate and make an application to him for the grant of a no-objection certificate specifying therein whether the application is in respect of a permanent cinema or a touring cinema. Rule 4 provides that on receipt of notice as envisaged by Rule 3, the licensing authority shall, at the cost of the applicant, notify the public such intention in such manner by publication in newspapers or otherwise that may deem fit for the purpose of inviting objections. It is also obligatory for the licensing authority to issue a notification inviting objections specifying therein the period within which the objections shall be lodged. Rule 5 provides that the licensing authority shall on the expiry of the period for receipt of the objections, submit a report to <ORG> in the prescribed form along with his recommendation whether a no-objection certificate shall be granted or not. Sub-rule (2) of rule 5 provides that <ORG> may, on consideration o. the report of the licensing authority, grant permission for the issue of no-objection certificate to the applicant or may refuse to grant the same. Rule 6 provides that without prejudice to the right of the licensing authority to refuse or to grant a cinema licence under rules 101 and 102', the licensing authority may, with the previous permission of the government, grant a certificate to the applicant that there is no objection to the location of the cinema at the site notified by the applicant under rule 3. Sub-rule (2) of rule 6 provides that such a no-objection certificate shall be valid for a period of two years from the date of issue in the case of permanent cinemas and six months in the case of touring cinemas. Chapter VII of the Rules provides for cinema licence. Rule 100 provides that an application for a cinema licence shall be accompanied, amongst others, by a copy of the no-objection certificate issued under rule 6. Rule 101 confers power on the licensing authority to grant a cinema licence on being satisfied that all the relevant rules have been complied with and the licence may be granted on such terms and conditions and subject to such restrictions as the licensing authority may determine. There is a proviso to rule 101 which reads as under:

"Provided that a touring cinema licence shall not be beyond the district of issue and ordinarily touring cinema licences shall not be granted for places where there is already a permanent or a quasi-permanent cinema, but the licensing authority may in its discretion permit a touring cinema to operate at a place where there is already a permanent or quasi- permanent cinema on occasions such as fairs and melas or when the touring cinema exhibits films of a kind different from those exhibited by non-touring cinemas such as educational films or where it caters for a different public".

In view of the proviso, it would not be correct to say that District Magistrate was influenced by an extraneous consideration, namely, re-opening of <ORG> with a permanent cinema licence while rejecting the application of third respondent for renewal of his licence by the order dated 29th June 1977. Rule 104 provides that a 15 permanent cinema may be licenced for any period not exceeding one year and a quasi-permanent cinema or a touring cinema may be licenced for any period not exceeding six months.

A perusal of the relevant provisions of the Act and the Rules extracted above will show that there are various stages through which an application for a cinema licence has to be processed. It also transpires that the Rules envisage issuance of a licence for a permanent cinema and quasi- permanent cinema as well as a touring cinema. Cinema in this context has been defined to mean any place wherein an exhibition by means of cinematograph is given.

Rule 3 envisages construction of a cinema house and as a first step, selection of a site where the cinema house is to be located. Selection of the site and its clearance by the licensing authority by the issuance of a no-objection certificate is an important step to be taken in the direction of finally constructing a cinema house and obtaining a licence for the same. In the facts of this case the application is for a quasi-permanent cinema licence. When any person desires to erect a cinema meaning thereby a place where an exhibition by means of cinematograph is to be given, he must apply for a no-objection certificate in respect of the site where the cinema house is to be constructed. When such an application is received, it is to be advertised in the manner prescribed inviting the public to file objections. After considering the objections the licensing authority has to decide whether to grant or refuse the no-objection certificate. This scheme emerges from the combined reading of rules 3, 5 and 6. Chapter III in the Rules prescribes rules in respect of the building to be used as a cinema house. But before one proceeds to construct the cinema, obtaining of a no-objection certificate relevant to the site on which cinema to be constructed is a sine qua non.

The grievance of the appellants is that when their objections were invited before issuance of a no-objection certificate and they filed the same, the Distt. Magistrate as the licensing authority was persuaded to accept the objections and reject the application for a no-objection certificate and thereafter when under s. 5(3) of the Act respondent preferred ar. appeal against the refusal to grant the no-objection certificate, the appeal was decided at the back of those who had not only filed objections but whose objections had prevailed with the licensing authority and, therefore, the order granting the no-objection certificate is violative of the principles of natural justice. There is a two-fold fallacy in this submission.

Respondent 3 has been granted a quasi-permanent cinema licence by <ORG> allowing his appeal against the order of the E Distt. Magistrate refusing such a licence. The order impugned by the third respondent in the appeal before <ORG> is Annexure 'E' dated 29th June 1977. A perusal of this particular order would show that initial application for no-objection certificate was made by the third respondent on 5th December 1975. An advertisement was issued in 'Nai Duniya' dated 5th January 1976 by the licensing authority that an application for a temporary cinema licence akin to quasi-permanent cinema licence has been received and that any one who desires that no-objection certificate should not he given may file his objections. After considering those objections no-objection certificate was granted by order dated 10th February G. 1976. No exception appears to have been taken to this order granting no-objection certificate. English rendering of the order raised some doubt whether a no-objection certificate was granted or a quasi-permanent cinema licence was granted. Original file was called. Simultaneously, a certified copy of the original order in Hindi was shown to us at the hearing of the appeal which clearly H. shows that a no- objection certificate was granted limited to the duration of six months. Thereafter a quasi-permanent cinema licence was granted. This licence was renewed twice over up to and inclusive of 30th September 1976. Subsequently by the impugned order dated 29th June 1977 this licence was not renewed. Let it again be made clear that the application was for a quasi-permanent cinema licence. This order refusing to renew quasi-permanent cinema licence was challenged by the third respondent before <ORG> and which appeal was allowed giving rise to the petition by the appellants.

When an application for no-objection certificate is made, objections have to be invited in the prescribed manner. There can conceivably be hundreds of objections. There is no question of then giving a personal hearing to each objector. If after taking into consideration the objections. a no-objection certificate is granted, there ends the matter subject, of course, to any properly constituted legal proceedings, conceivably a writ petition under Article 226. But sub-s. (3) of s. 5 of the Act is unambiguous when it provides for an appeal only at the instance of a person aggrieved by the decision of the licensing authority refusing licence. A fortiori, every objector to renewal is not entitled to file an appeal if licence is granted rejecting his objections. Nor in an appeal by the aggrieved person within the meaning of s. 5(3) every objector to the grant of no-objection certificate is entitled to be joined as a party respondent or that each objector is entitled to notice of hearing of the appeal. however, the grievance of the appellants it without merits because initially when no-objection certificate was applied for they did not object and one who has not objected cannot subsequently make a grievance [see <CITATION> (1)].

The second fallacy is that rules 3 to 6 envisage an advertisement of an application for a no-objection certificate and inviting objections 'hereto and disposal of such an application. There is, however, nothing in the Act or the rules which requires the licensing authority to invite objections before grant of a quasi-permanent cinema licence. The right to object is at the initial stage when a no-objection certificate is applied for by the intending applicant for such a certificate. But there is no provision for inviting objections when the application is for a permanent or quasi-permanent cinema licence or a touring cinema licence. There is no provision in the Act or Rules which requires advertisement of such an application inviting objections and consideration of the objections before grant of a cinema licence. In A this case the application which was turned down by the <ORG> was one for renewal of a quasi-permanent cinema licence. The application for a no- objection certificate and granting of the same had passed muster long before on 10th February 1976 and appellants had not raised any objection to the grant of no-objection certificate. When the present appellants objected to the renewal of a quasi-permanent cinema licence it was not the stage for grant of a no-objection certificate but it was the stage of renewal of quasi-permanent licence subsequent to the stage of granting of a no-objection certificate, when there was no statutory obligation on the licensing authority to invite objections nor were the appellants entitled to file objections and nor were they entitled to be heard. A right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed. If the duty to give notice and to hear the party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was given no notice of the matter [see <CITATION> was no statutory or mandatory duty to hear the appellants. There fore, there is no substance in the grievance that before granting renewal of such licence <ORG> in the appeal filed by the third respondent had not heard them and that such a decision was rendered in violation of the principles of natural justice.

Mr. <NAME>, learned counsel for the respondents, wanted to contend that the appellants are not acting bona fide in vindication of their own rights but they are a fence or a cloak for the owners of <ORG>, the holders of permanent cinema licence in the locality, and the appellants thus being proxies for such a trade rival, they have no locus standi to file the objections. Mr. <NAME> heavily drew upon the observations of this <ORG> in <NAME> case (supra) to make good the submission. Undoubtedly, in the aforementioned case this <ORG> in terms held that a rival in cinema business has no locus standi to question the validity of the order under which the other person has been granted a cinema licence, but as the only contention raised on behalf of the appellants does not commend to us and, therefore, the appeal is likely to fail on that ground alone, it is not necessary to explore this contention advanced on behalf of the respondents.

There was only one point raised in this appeal and as there is no merit in it, the appeal fails and is dismissed but with no order as to costs.

PATHAK, J.-I agree that the appeal should be dismissed, but on a very short ground.

Rules 3 to 6 of the Madhya Pradesh Cinemas (Regulation) Rules, 1972 relate to the grant of a "no-objection" certificate, that is to say a certificate that there is no objection to the location of the cinema at the site proposed by the applicant. The Rules contemplate the filing of objections by local residents. That is the stage at which opposition to the establishment of a cinema at the proposed site is specifically provided for. Any person opposing the establishment of a cinema at the proposed location must do so before a "no-objection" certificate is granted. The appellants did not file any objection at that stage "no- objection" certificate was granted to the third respondent. Thereafter, when the third respondent applied for a cinema licence, the appellants for the first time opposed the application. They opposed it on the ground that there was a mosque, a "madarsa" and a temple in the vicinity and that the cinema, if permitted, would constitute an obstruction and annoyance to the local residents. Inasmuch as those grounds were available to them during the proceedings for considering the grant of a "no-objection" certificate, and they did not file any objection, they cannot now be permitted to plead a right to oppose the grant of a cinema licence. Had they apposed the grant of the "no-objection" certificate and their objection had made out a good case, it is possible that the "no-objection" certificate would have been refused, and in that event the applicant would not have applied for a cinema licence. on that short ground the appeal must fail.

That being so, I need not consider the further question whether in an appeal filed by an applicant, who has been refused a cinema licence, the local residents, who had objected to the grant of a "no-objection" certificate and had been over-ruled, can contest the claim of the applicant to a cinema licence. Rule 102 empowers the licensing authority to refuse a cinema licence if the cinema is likely to cause obstruction, inconvenience, annoyance, risk, danger or damage to residents, or passers by in the vicinity of the cinema. Rule 6 declares that the. grant of a "no-objection" certificate is without prejudice to the right of the licensing authority to refuse a cinema licence under Rule

102. I leave the question open whether a person who has objected to the grant of a "no-objection" certificate when that grant was under consideration can subsequently oppose the grant of a cinema licence on the same grounds which he took against the "no-objection" certificate.

The appellants not being entitled to challenge the grant of the cinema licence to the third respondent, I need express no opinion on the validity of that grant.

The appeal is dismissed but without any order as to costs.

N.V.K. Appeal dismissed.