JUDGMENT <NAME>, J.

1. This is an appeal under Section 110-D of the Motor Vehicles Act, 1939, (hereinafter called the Act), from an award of <ORG>, Indore.

2. On April 26, 1963, at about 4 p. m., <NAME>, a boy of 7 years, was sitting on the pathway a few yards away from the highway, on the outskirts of village Jamli, where he lived with his father, <NAME> (respondent No. 1). The boy was answering the call of nature. In the meantime, a passenger bus, M. P. E. 3564, belonging to <NAME> (appellant) and driven by <NAME> (respondent No. 2) came on the wrong side of the road and ran over the boy causing severe injuries to him, which resulted in his instantaneous death.

3. <ORG> lodged a claim for Rupees 20,000/- before <ORG> constituted under Section 110 of the Act against <ORG>, <NAME> and <ORG>, (respondent No. 3, hereinafter called the insurer) on the allegation that the bus was driven at a high speed and that the accident was due to negligence of the driver, <ORG> and <NAME> resisted the claim in a joint written statement. The insurer, with whom the owner was insured against third party risks, also resisted the claim by a separate written statement.

4. The Tribunal found that <NAME> was driving the bus as the employee of <ORG> and that he was driving the bus negligently and at an excessive speed and thereby caused the death of <NAME>. Accordingly he made an award for Rs. 2460/- and costs in favour of the petitioner.

5. Aggrieved by the award, <ORG> preferred this appeal challenging, inter alia, the finding of the <ORG> on the question of negligence. Initially, <ORG>, sitting singly, heard the appeal and then referred it to <ORG> of himself and <NAME>, J. It appears that a preliminary point was raised whether it was at all necessary to go into the question of negligence in this case and whether the liability of the insurer was not absolute. <ORG>, framed the question in these words:--

"Whether in compensation proceedings under Sections 110-A and 110-B of the Motor Vehicles Act, 1939, (hereinafter referred to as the Act), <ORG> is required to base its award with regard to payment of iust compensation on the finding that the accident of the nature specified in Section 110-A of the Act was a result of negligence on the part of the owner or driver of the vehicle."

He wanted to answer the question in the negative and chose to express his opinion rather elaborately, which will appear from the following narration contained in his own words. After stating the provisions contained in Sections 94 , 95(1) and 96(2) , he says:--

"No motor vehicle can be used in a public place, unless there is in force in relation to that use of that vehicle a policy of insurance complying with the requirements of Section 95 ...............These provisions ensure that third parties who suffer on account of the use of the motor vehicle would be able to get compensation for injuries suffered..................The emphasis is on compensation in respect of accidents of the nature specified in Sub-section (1) of Section 110 arising out of the use of the motor vehicles...............The <ORG> ..................is not concerned in any way with accidents arising out of the use of motor vehicles in relation to which there is no insurance policy against third party risks...............The expression 'the Claims <ORG> shall specify the amount which shall be paid by the insurer' occurring in Section 110-B ...............abundantly shows that in proceedings before the Claims <ORG> it is only the liability of the insurer that is determined and there is no question of determining the liability of any other person for payment of compensation ...............This liability to pay compensation is independent of any negligence or wrongful act in the use of vehicle. It arises under the terms of insurance contract and by virtue of the provisions of the Motor Vehicles Act referred to earlier. It is well settled that actions for money payable by terms of contract, actions in quasi contract, actions in equity and actions under statute are not actions for damages and are independent of any tort ...............The total amount of compensation that an insured person can get is dependent not on the degree of negligence in the use of the vehicle or on the part of the person who has received an injury but is really dependent on the suffering caused to him, the expenses incurred by him in treatment and on the loss of earning capacity after the accident......... Section 110-B does not in terms say that it is only when negligence on the part of the driver is established that compensation can be awarded.........The liability to pay compensation being thus absolute and statutory, all that the claimant, who has right to compensation, has to establish is that the use of the vehicle insured against third party risks resulted in the death of, or injuries to, the person concerned.........

Under Section 96(2) of the Act, an insurance company..................cannot raise a dispute about the quantum of compensation. It cannot avoid its liability for payment of compensation to a third party on the ground of negligence either on the part of the driver of the vehicle or the person suffering. See <ORG> v. <NAME>, AIR 1959 SC 1331. If the main contesting party before <ORG> is the insurance company and it can contest the claim only on the grounds specified in Section 96(2) , then it follows that the question of negligence in the use of the vehicle in no way enters in the determination or award of compensation by <ORG>."

<NAME>, J., did not agree with him in this opinion, but they agreed with each other to refer the appeal to a larger <ORG>. It is thus that this appeal is before us.

6. It seems to us quite clear that the problem referred is solved as soon as the fundamental concept and incidents of motor vehicles insurance, particularly insurance against third party risks, are first borne in mind and then the provisions of the statute are examined to ascertain their object, purpose and effect.

7. With the increase in the use of motor vehicles as a means of public and private transport on road, and its potentiality to endanger life and property, a complex form of insurance known as "motor vehicles insurance" became evolved. Initially, motor vehicles insurance was a kind of property insurance for the purpose of indemnifying the owner of the vehicle against loss or damage to it and its accessories through accident. Then arose the necessity of relief against per-

sonal injuries to the owner and also the person or property of third parties using the road. Thus came into being the comprehensive policy. In this way, the motor vehicles insurance provided for protection of the owner of the vehicle against loss of three kinds: (1) Against loss or damage to the vehicle and its accessories; (2) against personal injury to the owner; and (3) against loss arising from liability for death or injury caused to third parties or for damage to their property.

8. Regarding the third species of protection, the insurance policy is a contract of indemnity under which the insurer agrees to reimburse the assured to the extent of the amount of damages which the latter may become liable to pay for the death or injury to a third party, or damages to his property caused in an accident. This is and has always been undoubted law. It is stated in 32 Halsbury (Simonds) 354:-- "

"In its main features a contract of motor insurance is a contract of indemnity : <ORG> v. <ORG>, 1908-1 KB 1006 at page 1014; Weld Blundell v. <NAME>, 1919-1 KB 520 at p. 529 = 1920 AC 956. This means that, so far as concerns the insurance of the car as an example of property insurance or the insurance of third party liability (whether limited or general) as an example of public liability insurance, the ordinary principles of these classes of insurance are applicable."

It is stated in Preston and Colinvaus on Law of Insurance (2nd Edition) at page 4:--

"Indemnity, it has been said, is the controlling principle in insurance Law: Castellain v. <NAME>, 1883-1 QBD 380 at page 386 and by reference to that principle a great many difficulties arising on insurance contracts can be settled. Except in insurance on life and against accident, the insurer contracts to indemnify the assured for what he may actually lose by the happening of the events upon which the insurer's liability is to arise, and in no circumstances is the assured in theory entitled to make a profit of his loss. 1883-I QBD 380 at p. 386 (supra) and <NAME> v. <NAME>, 1922 AC 180. It is not however on such consideration as public policy or the prevention of crime that the principle of indemnity is based; it derives from the intrinsic nature of the bargain."

9. At one time, the legality of insurance against third party risks was in doubt. But in <NAME> v. <ORG>, 1921-3 KB 327 its validity was established. Even so, the third party had no right under the law to obtain the benefit of the insurance. The third party, being not a privity to the contract of insurance, had no right to the insurance money either under the common law or in equity. The third party could not sue the insurer directly nor indirectly in the name of the assured, to compel the insurer to pay the insurance money to him. The reason was that under the common law, a stranger to a contract could not sue upon it. In England, the Third Parties (Rights against Insurers) Act, 1930, was enacted to confer on third parties rights against insurer of third party risks in the event of an assured becoming insolvent and certain other events. But tills Act could not come to the aid of a person injured by an insolvent whose vehicle was not insured. To meet that situation, the Road Traffic Act, 1930, was enacted. It prohibits the use of a motor vehicle on a road, unless the owner or other person using it takes a policy of insurance or gives security against liability to third parties. Yet another lacuna was detected. The insurer and the insured could, while satisfying the requirements of the compulsory insurance, introduce stipulations in the policy, breach of which would render it void and by this device the insurer could escape liability to third parties. Therefore, the Road Traffic Act, 1934, was passed to prevent the insurer from escaping the liability under the insurance policy by compelling him to satisfy the judgment obtained against the assured, and also by rendering ineffective certain clauses in the policy which may be aimed at avoiding the liability arising under it.

10. In our country, before July 1, 1946, (on which date Chapter VIII of the Motor Vehicles Act, 1939, came into force) the legal position was the same as obtained in England before 1930. The case of <ORG> v. <NAME>, AIR 1938 Bom 217, serves as an illustration. In that case, a motor bus overturned because of negligent driving of the driver. A passenger in the bus sustained injuries to which he succumbed. The legal representative of the deceased passenger sued the owner, the driver and the insurance company. The person who was driving the bus had obtained it on hire purchase. The claim was dismissed on the ground that the indemnity undertaken by the insurer was for the benefit of the insured but not for the benefit of any passenger, and that the passenger or his legal representative being a stranger to the contract could not sue the insurer for money payable under the policy,

11. For the sake of brevity, we shall hereinafter use the word "claimant" for "a third party" injured in an accident arising out of a motor accident, or his legal representative, in the case of his death,

12. The provisions of Chapter VIII of the Act, particularly Sections 94 to 96 , were modelled on the English statute to meet social needs for which the three above said Acts were made In England. The objects were: (1) to enable a claimant to recover whatever sum he is in law entitled, despite the inability of the owner or the driver to pay; (2) to prevent the insurer from escaping liability on the ground of breach, on the part of the insured, of any term of the contract; and (3) to entitle the claimant to recover compensation directly from the insurer.

13. Section 94 makes it imperative that there must be an insurance policy in relation to a motor vehicle before it can be used or allowed to be used in a public place. The law thus created compulsion for insurance against third party risks.

14. Section 95 lays down the requirements of insurance policies, particularly prescribing the minimum pecuniary limits for which a vehicle must be insured, and also the limits of liability of the insurer.

15. Section 96 deals with the obligation of the insurer to satisfy a judgment against the insured in respect of third party risks, the limits of such liability and other incidental matters.

16. Section 97 enacts the rights of third parties against the insurer on insolvency of the insured.

17. Section 98 casts a duty on a person against whom the claim is made to give information as to insurance.

18. Section 103 sets out the effect of a certificate of insurance.

19. Section 96 is a substantive provision which declares the liability of the insurer to pay the claimant directly. It enacts that the insurer is bound to pay to the person entitled to the benefit of a decree against the insured as if the insurer is the judgment-debtor in respect of the liability. To this extent alone the right of the claimant is enlarged. Secondly, the section prescribes the limit of the insurer's liability which does not exceed the sum assured payable under the policy, as read with Section 95 . This point is fully discussed in <NAME> v. <NAME>, 1968 Ace CJ 1 (MP). Where the sum assured is not specified in the insurance policy, or the specified sum is less than the sum payable under Section 95(2) of the Act, the maximum liability will foe that as laid down in Section 95 (2). But if the sum specified in the insurance policy as payable thereunder, exceeds the sum as fixed under Section 95(2) , the maximum liability shall be the sum specified in the policy. Thirdly, it exhaustively enumerates the grounds of defence available to the insurer to avoid his liability to satisfy a judgment against the insured. One thing to be particularly noted is that the provisions of Section 96 relate to the liability of the insurer which arises only when the insured has incurred liability but not independent of it.

20. It is thus seen from the above provisions that: (1) A claimant is entitled to recover from the insurer the amount of compensation which he is in law entitled to obtain from, the insured, subject to the statutory limits of liability of the insurer. (2) Insurance against third party risks is compulsory which secures payment to the claimant against the insolvency or liquidation of the insured. (3) The insurer cannot escape liability under the policy on the ground that because of breach of any term of the contract on the part of the insured, the claim of third party was not covered, or, otherwise, the insurer is entitled to avoid the policy. But these provisions do not go beyond this. They leave untouched the question what would make the insurer liable to pay the insurance money to the claimant. To put it differently, they lay down when the insurer is liable and to what extent he is liable, but not what makes him liable. We shall leave this topic here for a moment and first turn to the remaining sections of this Chapter,

21. Sections 110 to 110-F were introduced in the Act by the Motor Vehicles (Amendment) Act (No. 100) of 1956. Prior to their enactment, in every case a claimant had to sue the insured in <ORG>, and notice had to be given to the insurer if the claimant desired to avail himself of the benefits of Section 96 of the Act. The legislature then decided to substitute the ordinary remedy of a civil suit by a special remedy which is summary in nature. Section 110 provides for the constitution of <ORG> and confers jurisdiction on it to adjudicate upon claims for compensation in respect of accidents involving death or bodily injuries to persons arising out of the use of motor vehicles. Section 110-A provides for the procedure for setting up a claim for compensation. Section 110-B relates to an award of <ORG> after giving the parties an opportunity of being heard and after enquiry into the claim. Section 110-C deals with the procedure and powers of <ORG>. Subject to any rules that may be made in that behalf, the <ORG> may follow such summary procedure as it thinks fit. Section 110-D provides for an appeal from the award made by <ORG>. Section 110-E provides for recovery from the insurer of compensation money awarded by the <ORG>, as arrears of land revenue. Section 110-F excludes, where <ORG> has been constituted for any area, the jurisdiction of <ORG> to entertain any question relating to any claim for compensation which may be adjudicated upon <ORG> for that area. <ORG> is debarred from issuing any injunction in respect of any action taken or to be taken by or before <ORG> in respect of a claim for compensation

22. An award under Section 110-B has three components: (1) It determines the amount of compensation which appears to the <ORG> to be just; (2) it specifies the person or persons to whom compensation is to be paid; and (3) it specifies the amount which shall be paid by the insurer. Now, to specify the limit of liability of the insurer, the <ORG> will have to go back, to the substantive provisions contained in Section 96 . It is clear that these provisions merely substitute a summary remedy for civil suits and for adjudication of claims before the Motor Accidents Claims <ORG>, instead of <ORG>, in respect of personal injury in accident arising out of the use of the motor vehicle. These provisions do not lay down the criteria or ingredients of liability which will entitle the claimant to compensation.

23. From the above resume of all the sections contained in Chapter VIII of the Motor Vehicles Act, it must be said, in short, that Sections 94 to 96 provide for compulsory insurance of a motor vehicle, before it can be used on a public road; lay down the liability of the insurer to pay to the claimant directly, when there is a decree or judgment of the <ORG> and also fix the limits of pecuniary liability of the insurer in certain cases. Sections 110 to 110-F lay down the procedure for enforcement of the substantive rights of the claimant as enlarged and circumscribed by Section 96 . As provided in Section 110-B , <ORG> shall in its award determine the total amount of compensation and then specify the sum which shall be paid by the insurer. And, by virtue of Section 110-E , the latter sum is recoverable from the insurer as arrears of land revenue. However, the ingredients of the liability of the insurer are nowhere provided in this special statute. Necessarily, therefore, that aspect of the matter will be governed by the general substantive law, which remains untouched by this special law. We have already shown that it is on the contract of indemnity that the insurer is liable to pay compensation only if the insured is liable to pay damages to the claimant. If the insured is not liable, then the insurer is also not liable. In other words, the liability of the insurer depends upon the liability of the insured. Now, the liability, direct or vicarious, of the owner of a motor vehicle involved in an accident resulting in injury to, or death of, a third party, to pay damages arises from the law of, torts. Under that law, negligence of the owner or driver is the sine qua non for, such liability. So was held in <CITATION> , AIR 1962 Punj 540; <CITATION> , 1968 Acc CJ 401 = (AIR 1969 Punj 172); <NAME> v. <NAME>, 1969 Acc CJ 204 (Australia H. C.) and <NAME> v. General Manager, <ORG>, 1969 Ace CJ 327 (Orissa).

24. From the mere statutory requirement of insurance, without which a vehicle cannot be used, there can be no inference of absolute liability, independent of proof of negligence. We have already stated the object and effect of compulsory insurance.

25. It is true that the provisions of the Motor Vehicles Act do not lay down affirmatively that negligence must be proved before the insurer is held liable to pay the claimant compensation, but this is because the Act is not intended to substitute the law of torts in its application to the case of an accident,

26. A flood of light is received In a comparison of the case of an accident in an area for which <ORG> has not been constituted under Section 110 of the Act, with the case of an accident in an area for which there is <ORG>. In the former case, the claimant has to obtain a decree for damages against the insured from <ORG> to be able to recover the amount from the insurer; such a decree can be passed only if the insured is found liable, directly or vicariously, on the ground of negligence, but not otherwise. In the latter case, although the claimant makes a claim before the <ORG>, the substantive law which governs the rights and liabilities of the parties is the same for both the proceedings. It cannot be accepted that in the former case damages cannot be decreed without proof of negligence because the suit is before the civil <ORG>, while in the latter case compensation will be awarded even without proof of negligence merely because the proceeding is before the <ORG>. The same substantive rights and liabilities must govern both the cases, although the procedures may differ.

27. It is an argument that negligence of the insured is irrelevant in a claim before the <ORG> against the insurer because under Section 96(2) of the Act, the defences open to the insurer are limited to those enumerated in that section. In our view that is not so. The insurer may resist the claim against him in two ways: (1) That the insurer is not liable although the insured may be liable; and (2) that the insurer is not liable because the insured is not liable. Under the first head, the insurer is entitled to escape liability by saying that the policy is void because it was obtained by the insured on a false representation or non-disclosure of a material fact; or that the policy was cancelled before the accident; or that there has been a breach of a specified condition of the policy being one of the conditions enumerated in the section. The insurer is debarred from raising any other ground of defence to avoid his liability, if the insured is found to have incurred the liability. Under the second head, the insurer can plead that there was no negligence on the part of the insured, to show that the insured incurred no liability so that the insurer's liability under the contract of indemnity does not arise. The insurer is entitled to raise all such pleas in defence as the insured can take to show that he (the insured) has not incurred the liability. This the insurer can do, as of right, in the name of the insured, provided that right is reserved in the policy. Section 96(2) has nothing to do with the second head of defences. All that Section 96(2) does is that it debars the insurer from taking up any defence, other than those enumerated in it, to show that the insurer is not liable although the insured has incurred liability. This position is plain enough and is fully supported by the following observations in AIR 1959 SC 1331 (supra):--

"The insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship, if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do."

28. It is a further argument that the Insured is neither a party to the proceeding before <ORG>, nor can there be any adjudication against him in the award made by the <ORG>, and. that being so, the question of negligence cannot be tried. As we read the provisions of the Act and the rules made there-under, we must hold that the insured is a necessary party, that he is bound by the award; and that he is liable to pay the amount of compensation minus that sum which the <ORG> specifies as the share payable by the insurer. The provisions contained in Sections 110 to 110-F enact complete procedure for the trial of claims, and determination of compensation. Under the Madhya Pradesh Motor Accidents Claims <ORG> Rules, 1958, made under Section 111-A of the Act, an application for claim is to be made in, Form A (under Rule 3). The owner, the driver and the insurer have to be impleaded as "opposite party" and notice has to be issued to them under Rule 7. If the opposite party does not appear, the proceedings can be ex parte. The opposite party can file written statement and produce evidence. Similar provisions are made in the Rules made, for instance, in Delhi, Bihar and Bengal.

29. As already pointed out, in its award the <ORG> determines not only the person or persons to whom compen-

sation shall be paid, but also the amount of compensation to which he or they are entitled. Who is to pay the amount so determined? The insurer is to pay only that much which is separately specified as payable by him. If the insurer is liable to pay the entire amount, then it is the end of the matter. But if the amount specified, which shall be paid by the insurer, is less than the amount of compensation so determined, then necessarily it is the insured who has to pay the balance and no one else conceivably. When the <ORG> is required to determine the amount of compensation, it is not possible, to think that the legislature wanted such determination in vacuo, that is, without contemplating who will pay. And, if the only purpose was to determine such compensation as was payable by the insurer, then the words "determining the amount of compensation which appears to it to be just", in Section 110-B , would be otiose because, then the only requirements of the award would have been (1) to, specify the person or persons to whom compensation shall be paid, and (2) to specify the amount which shall be paid by the insurer.

30. We have not the slightest doubt, after a close examination of the scheme and the provisions of Chapter VIII, that all claims by third parties against the insured as well as the insurer must be settled by <ORG>. We will now examine this aspect by another approach. If <ORG> is not to determine the liability of the insured, it must necessarily follow that the third party will have to sue the owner in the civil Court for that portion of the compensation money awarded by the <ORG> which the insurer is not liable to pay. Firstly, this will mean multiplicity of proceedings which is contrary to the policy of the law, particularly when it will drive the third party to a second proceeding. The object of introducing the provisions contained in Sections 110 to 110-F was to provide a speedy and summary remedy to the third party. It may be mentioned here that in introducing Bill No. 57 of 1955 of the Motor Vehicles (Amendment) Act No. 100 of 1956 in <ORG>, <NAME> rendered the following Statement of Objects and Reasons:--

"The State Governments are being empowered to set up tribunals to determine and award damages in cases of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles and also to adjudicate on the liability of the insurer in respect of payment of damages awarded. At present, a <ORG> decree has to be obtained before the obligation of the insurance company to meet the claims can be enforced. The amendment is designed to remove the existing difficulty experienced by persons of limited means in preferring claims on account of injury or death cause by motor vehicles."

[See Gazette of India, Extraordinary, Part II, Section 2 , No. 47 dated November 12, 1955, page 565 (626)] Secondly, it will also involve the possibility, even likelihood, of conflicting decisions in the same matter, on the quantum of damages. The civil Court may not only arrive at a different conclusion of the quantum but may even take a different view on the factum of the accident. It cannot be thought that such an anomalous position was contemplated by the <ORG>. Above all, if we thought that the language of Section 110-B was of doubtful meaning, the rules of interpretation permitted us to supply words to the section.

31. Shri <NAME> laid considerable stress on the absence of an express provision in the Act regarding execution of the award made by the <ORG>, so far as the insured is concerned. This has been called a lacuna in some reported decisions. In the Punjab, a rule has been made that Order 21 of the Code of Civil Procedure "shall so far as may be apply to proceedings before the Claims <ORG>", and the award can, thus, be executed as if it is a decree of a civil Court. <CITATION> , 1969 Acc CJ 34 = (AIR 1968 Mad 436), it is observed that a claimant can file a suit on the basis of the award against the driver as a debt and such a suit would not be barred by Section 110-F of the Act. In our view, in the absence of an express provision in the Act for execution of the award against the insured (for the total amount of compensation payable to the claimant minus the amount payable by the insurer) and so long as such an express provision is not made, the following rule, which has been restated by <ORG> in <CITATION> . Civil Appeal No. 1164 of 1966, D/- 11-9-1968 = (reported in AIR 1969 SC 430), must be applied:--

"It is a firmly established rule that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective."

Their Lordships have relied on Sutherland Statutory Construction, and have also quoted <NAME> on Interpretation of Statutes, 11th Edition, at page 350, where it is stated thus:--

"Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui Jurisdictio data est, ea quoqe conscessa esse videntur, sine ouitus Jurisdictio explicari non potuit. Thus, an Act, which empowered justices to require per-

sons to take an oath as special constables, and gave them jurisdiction to inquire into an offence impledly empowered them to apprehend the persons who unlawfully failed to attend before them for those purposes. Otherwise the jurisdiction could not be effectually exercised. Where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be useless if it could not be enforced.

Where a statute empowers a justice to bind a person over, or to cause him to do something, and the person, in his presence, refuses, the justice has implied authority to commit him to jail till he complies."

Their Lordships have also quoted the following passage from <NAME>'s Civil Law Cushing's Edition, Vol. 1, at page 88:--

"It is the duty of the Judges to apply the law, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made and which appear to be comprehended either within the consequences that may be gathered from it."

It is stated in Sutherland Statutory Construction (3rd Edition, Vol. 3, Sections 5401 and 5402 ):--

"In a number of instances, the Courts have given statutes an extended operation without express or clear authorization from the letter of the statute ............

It will be observed that the effect of the statutes in those cases is closely related to the situations where a statute is extended or restricted by its equity or spirit ............... This rule has become firmly established that an express grant of statutory power carries with it by necessary implication, authority to use all reasonable means to make such grant effective ............... Where a statute confers powers and duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication."

However, it is clear that the question whether proof of negligence is essential or not for an award of compensation, does not depend on whether the award can be enforced by the <ORG> itself or by the civil <ORG> under Order 21, Civil Procedure Code, or otherwise.

32. The conclusions we have reached so far may now be stated: (1) Under the policy of insurance, the insurer contracts to indemnify the insured against third party risks, in case the insured is found liable to pay damages to a third party. If the insured is liable, then that liability has to be discharged by the insurer under the contract of indemnity, and the insurer cannot be heard to say that because of the breach of any terms of the policy of insurance the policy has become unenforceable. This is subject to the statutory limit of liability of the insurer. (2) On the other hand, if the insured is not liable to pay damages to the claimant, there is no liability of the insurer to pay any compensation, either in law or in equity. The insurance is not of the third party; it is of the insured. There is no privity of contract between the insurer and the third party. (3) Nor is there any statutory liability of the insurer to pay compensation to the claimant merely because of use of the motor vehicle of the insured. There are no provisions in the Motor Vehicles Act to hold the insurer liable to pay to the third party independent of the liability of the insured. (4) The provisions of the Motor Vehicles Act have left wholly untouched the question what makes the insured liable. (5) The essential question what makes the insured liable, directly or vicariously, to pay damages is governed by the general substantive law the law of Torts, under which negligence is the sine qua non for the liability of the owner of the vehicle. (6) Sections 94 to 96 of the Act provide for compulsory insurance, the right of the third party to claim directly from the insurer, limits of liability of the insurer, and the defences open to him to avoid liability even if the insured has incurred liability. (7) Sections 110 to 111-F are only adjective in their character and scope. They provide a remedial machinery as a substitute for the ordinary remedy in a civil Court. Jurisdiction of the civil Court is excluded. (8) The insurer may resist a claim proceeding in two ways: (a) That the insurer is not liable although the insured may be liable; and (b) that the insurer is not liable because the insured is not liable. Section 96(2) limits the defences available to the insurer under the first head, but not under the second. The insurer can, in the name of the insured, raise every such defence, as the insured can raise, including that there was no negligence, provided he has reserved by the policy that right. (9) The claimant has the right to claim compensation not only from the insurer but also from the insured in a claim proceeding under Chapter VIII of the Act. In that case, the insured is bound by the award made under Section 110-B and is liable to pay the total amount of compensation determined in the award which for practical purposes means the total amount minus the amount specified as payable by the insurer. (10) The ultimate result is that there must be a finding of negligence of the insured which makes him liable in torts, before compensation can be awarded to the claimant from the insurer under Section 110-B of the Motor Vehicles Act.

33. As this appeal itself, not only the question, has been referred to us, we shall now proceed to decide it on merits.

34. The claimant's case was that <NAME> was sitting on the pathway of the road, to answer the call of nature. The bus came at a high speed and while attempting to bypass a marriage party, which was coming from the opposite direction, the driver swerved the vehicle which ran over the boy. The boy died instantaneously on the spot. On the other hand, the appellants' case was that the boy came running in front of the bus and thus came under a rear wheel. It is not disputed that he was crushed under the bus and died instantaneously.

35. We have gone through the evidence of <NAME> (A.W. 2), <NAME> (A.W. 3) and <NAME> (A.W. 4). It is in the evidence of <NAME> that the width of the road is 24 feet. He says that the bus was running at a high speed. ("Bus fast bahut ja rahi thi"). It is clear from the evidence of these witnesses that the bus ran over the boy, who was crushed under a front wheel, and the driver then lumped out of the bus and ran away. For the opponents, <NAME> (N.A.W. 1), <NAME> (N.A.W. 2), <NAME> (N.A.W. 3) and <NAME> Khan (N.A.W. 4) were examined. <NAME> and <NAME> have been disbelieved by the trial Court, when they say that they had seen the boy running towards the bus from the front. <NAME> (N.A.W. 3) also stated that the driver swerved the vehicle in order to save a bullock-cart and in that process the front wheel of the vehicle got down from the road. <NAME> Khan (N.A.W. 4), the driver, stated in cross-examination that he had seen the boy running at a distance of 10 to 20 paces and that the bus came down two feet away from the road and then he saw that the boy was dead. There is no reason not to believe the ocular evidence of the claimant's three witnesses.

36. Negligence is omission to do something which a reasonable man guided upon those considerations, which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. The standard to determine whether a person has been guilty of negligence is the conduct of a prudent man in the particular circumstances, the amount of care, skill, diligence or the like, varying according to the particular case. The standard of care is that of the hypothetical reasonable man and in applying this standard, it is necessary to ask what in the circumstances a reasonable man could have foreseen. It is stated in <NAME> on Tort (VIII Edition) p. 59:--

"In most capes the Courts can apply the standard of care of the reasonable man with some confidence for it is to be assumed that Judges who staff them have the qualities of that creature well In mind."

It must always be remembered that the question for determination is foreseeability, not probability. The more serious the consequence if care is not taken, the greater the degree of care which must be exercised. Time out of mind it has been held that men must use care in driving vehicles on the highway. As said in Manjula Devi Bhuta (supra), the criterion is not merely whether the vehicle was on its left side. So also speed is not always the test of negligence. The test is whether the accident could have been averted if the driver had exercised that care and diligence which an ordinary cautious person put in similar circumstances would have done.

37. There can be no doubt that in an action for negligence, the legal burden of proof rests on the claimant. But, barring exceptional cases, it may not be possible for the claimant to know what precisely led to the accident. It may peculiarly be within the means of knowledge of the driver or the owner. This hardship to the claimant can be avoided by the application of the maxim "res ipsa loquitur" which is not a principle of liability but a rule of evidence. The principle is that there are certain happenings which do not occur normally, unless there is negligence. Therefore, in the case of such happenings, the claimant is entitled to rely, as evidence of negligence, upon the mere happening of such accident. In Clerk and <NAME> on Torts, 12th Edition, at p. 441, <ORG> classic statement of the circumstances in which the plaintiff is able to do so, is stated:--

"There must be a reasonable evidence of negligence. But where the thing is shown to be under the management of the defendant or his servants and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care."

<NAME> v. <NAME> and St. Catherine Docks, (1865) 3 H and C 596. In <NAME> v. <NAME>, reported in <NAME> v. <ORG>, 1933-2 KB 453, it has been held that it is evidence of negligence when a pedestrian walking in the road way is struck from behind, neither party knowing more about it. It is also prima facie evidence of negligence if a motor van mounts the pavement and strikes bystanders and this will be so even if the immediate cause is a skid of which the driver can offer no reasonable explanation. See <NAME> v. <ORG>

Ltd., 1942-1 KB 152 and <NAME> v. <NAME>, 1966-1 WLR 57.

38. What then must the defendant do to discharge this burden? This question is answered in Winfield on <ORG> in these words:--

"This is a problem which has given rise to difference of opinion and even now the Law cannot be regarded as settled. Two things however can be said with some confidence: (1) If the defendant shows how the accident actually occurred and the explanation is consistent with the diligence on his part, then he is not liable. (2) Even if he cannot explain the accident, if the defendant shows that there was no lack of reasonable care on his part or on the part of the person for whose negligence he is responsible, then he has again exonerated himself from the liability."

The defendant cannot escape liability merely by providing possible explanations of the accident, some of which at least are consistent with due care on his part. <NAME>, L.J., observed in <NAME> v. <ORG>, 1948-2 All ER 460 at p. 471.

"The position as to onus of proof in this case seems to me to be fairly summarised in the following short propositions : (i) If the defendants' omnibus leaves the road and falls down an embankment, and this without more is proved, then res ipsa loquitur, there is a presumption that the event is caused by negligence on the part of the defendants, and the plaintiff succeeds unless the defendants can rebut this presumption, (ii) It is no rebuttal for the defendants to show, against without more, that the immediate cause of the omnibus leaving the road is a tyre-burst, since a tyre-burst per se is a natural event consistent, and equally consistent, with negligence or due diligence on the part of the defendants. When a balance has been tilted one way, you cannot redress it by adding an equal weight to each scale. The depressed scale will remain down."

<NAME> adds:--

"This in itself suggests that res ipsa loquitur does more than cast provisional burden on the defendant and the suggestion is confirmed by certain remarks of <NAME>, M. R., in <NAME> v. R. Fox and Sons, 1956-1 QB 596."

In the case of 1956-1 QB 596 (supra), a workman in the employ of the defendants, who were cellulose and bronzing specialists, was killed by an explosion while operating a de-rusting tank. The explosion was due to accumulation of unburnt gas exploded by one of the continuously burning jets, but the reason why the gas accumulated was never determined. It was held: "(1) that the doctrine of res ipsa loquitur applied and that the employers had not discharged the onus of proof placed on them merely by showing that the accident was inexplicable; that it was not sufficient to show several hypothetical causes consistent with the absence of negligence and that the accident might have occurred without negligence on their part; but that to discharge the onus they had to go further and either show that they had not been negligent, or give an explanation of the cause of the accident which did not connote negligence by them, (2) alternatively, that the onus of proving negligence had rested on the plaintiff, but that she had discharged the onus by establishing that the explosion would not have occurred if proper care and attention had been applied to the apparatus." We are firmly of the view that, having regard to the local conditions in this country, the principle of 1956-1 QB 596 (supra), which is the authority for the view that the defendant in case of res ipsa loquitur cannot discharge the burden cast upon him by preferring hypothetical explanations, however plausible, must be applied; and, that any view taken to the contrary in English decisions should not guide the decision of cases in this country. Moreover, it is very difficult, if not impossible to prove by positive evidence the owner's or driver's negligence. We are emphatically of the view that, for the above reasons, as wide an amplitude and as long a rope as possible must be given to the principle res ipsa loquitur in its application to the case of a motor accident.

39. The conclusions to which the latter discussion leads are:-- (1) The standard to determine whether a person has been guilty of negligence is the standard of care which, in the given circumstances, a reasonable man could have foreseen. (2) The test is foreseeability, not probability.

(3) The more serious the consequences if care is not taken, the greater is the degree of care which must be exercised.

(4) While the initial burden of proof of negligence is on the claimant, barring exceptional cases, the principle 'res ipsa loquitur' comes into play. It is a rule of evidence and does more than cast a provisional burden on the defendant. (5) Having regard to the local conditions prevailing in this country, when res ipsa loquitur is attracted, it should be given as wide an amplitude and as long a rope as possible in its application to the case of a motor accident. (6) The defendant cannot escape liability merely by preferring hypothetical explanations, however plausible, of the accident.

40. In the present case, a boy who was sitting on a pathway was run over by the appellants' bus. It is in evidence that the road is 24 feet wide. The usual width of a bus is about 8 feet. The principle res ipsa loquitur applies here. The defendant's explanation is that the boy came running from another direction and ran in front of the vehicle. The driver saved him from being run over by the front wheels but the boy could not check himself and came under the rear wheel. There were bullock-carts in front from whom the driver was blowing the horn from a long distance. This story has not been proved, as rightly held by the <ORG>. On the contrary, it is proved by cogent evidence that the boy was run over while he was answering the call of nature on the pathway. How this happened is not known. On the principle res ipsa loquitur, therefore, negligence must be found.

41. The claim was for Rs. 20,000/-. The <ORG> allowed Rs. 2,460/- only, on the basis indicated in its award. The <ORG> was not challenged before us, nor do we find anything for which we should interfere in that finding.

42. We thank Shri <NAME> for his valuable assistance as amicus curiae.

43. The appeal is dismissed. The award of the <ORG> is maintained. Parties shall bear their own costs in this appeal as incurred.


PETITIONER: COMMISSIONER OF INCOME-TAX, MADRAS Vs. RESPONDENT: INDIAN BANK LID. DATE OF JUDGMENT: 26/10/1964 BENCH: <NAME>, S.M. BENCH: <NAME>, S.M. <NAME>, K. SHAH, J.C. CITATION: 1965 AIR 1473 1965 SCR (1) 833 CITATOR INFO : RF 1971 SC2434 (8) ACT: Income Tax-Deductible expenditure-Tax-free income from securities -Interest paid on money borrowed for investment in such securities Whether deductible ?- Indian Income-tax Act , 1922 , s. 10(2) (iii). HEADNOTE: <ORG>, Madras, in the course of its business received money in deposit from its constituents and invested the same, inter alia, in <ORG> securities which were free from lncome-tax and super-tax. The <ORG> claimed the whole of the interest paid by it to its depositors as a deduction under s. 10(2) (iii) of the Indian Income-tax Act , 1922. The Income-tax Officer disallowed the claim in part, holding that interest paid in respect of money which had been invested in the tax-free securities was not an admissible deduction. The Appellate Assistant Commissioner and <ORG> having affirmed the above order, a reference under s. 66(1) was, at the instance of the a , made to <ORG>. The reference was answered in favour of the assessee. The <ORG> appealed to this Court by special leave. It was contended on behalf of the <ORG> that no expenditure could be allowed as a deduction from the profits of a business unless the part of the business to which the expenditure was attributable was capable of producing income or profits liable to be taxed under the Act. HELD : In construing an Act it is necessary to adhere closely to the language employed in it. Only if the terms of a provision are ambiguous can recourse be had to the well-established principles of construction. It is not permissible first to create an artificial ambiguity and then try to resolve it by some general principles. [836 B] There is nothing in the language of s. 10 of the Indian Income-tax Act, 1922 from which it can be fairly implied that an expenditure or allowance falling within the section must fulfill some other condition before it can be allowed. Sub-section (1) of s. 10 directs that an assessee must be taxed in respect of the profits and gains of business carried on by him. Then under sub-s. (2) all the allowances permissible to him must be deducted. There is no provision which would justify looking behind the expenditure, if it fell within the term of sub-s. (2), to see whether it had the quality of directly or indirectly producing taxable income. Perhaps the legislature assumed that most types of expenditure which are laid out wholly and exclusively for the purpose of business would directly or indirectly produce taxable income. [836 C-H] In the instant case, however, it was controverted that the profits and losses accruing from the sale and purchase of the securities in question had been included in the assessment. it followed that the said securities were capable of producing taxable income and the appeal by the <ORG>, could be dismissed on this ground alone. [835 G-H] Hughes v. <ORG> of New Zealand, 21 T.C. 472, relied on. <CITATION> , approved. <CITATION> , 1 A.I.R. 1928 Mad. 487, <CITATION> , 6 I.T.C. 21 and 834 <CITATION> , 45 I.T.R. 210, distinguished. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1095 of 1963.

Appeal by special leave from the judgment dated November 9, 1960 of <ORG> ;in T. C. No. 41 of 1959. <NAME>, Solicitor-General, <NAME>, R. H.

<NAME> and <NAME>, for the appellant. <NAME> and <NAME>, for the respondent. The Judgment of the Court was delivered by <NAME> This is an appeal by special leave against the judgment of <ORG>, answering a question referred to it under S. 66(1) of the Indian Income Tax Act, 1922, hereinafter referred to as the Act, against the <ORG>.

The question referred to it was the following: "Whether on the facts and circumstances of the case the <ORG> was entitled to claim the deduction of the entire interest paid by it on fixed deposits, either under s. 10(2) (iii) or 10(2) (xv)?"

The relevant facts and circumstances are these. The respon- dent, <ORG>, Madras, hereinafter referred to as the assessee, carried on the business of banking. In the normal course of its business, it received deposits from constituents and paid interest to them. It invested a large sum in securities both of the Central and <ORG> Governments (including <ORG>). The interest on <ORG> securities was exempt from income tax and super tax under the provisions of a notification issued under s. 60 of the Act. It bought and sold these securities, and the profits and losses on the purchase and sale of such securi- ties were duly taken into account in computing the income of the assessee, under the head 'Business'. For the assessment year 1951-52 (accounting year Calendar Year 1950) it claimed a deduction of Rs. 25,91,565 as interest paid to various depositors, under S. 10(2) (iii) of the Act. The Income Tax officer. the Appellate Assistant Commissioner and <ORG> disallowed interest amounting to Rs. 2,80,194. This amount was arrived at by calculating the Proportionate interest which would be payable on money borrowed for the purchase of Mysore securities for Rs. 2,49,93,511. We need not describe the formula adopted for calculating the proportionate interest for nothing turns on it.

The grounds given by <ORG> for disallowing the deduction of the proportionate interest were two-fold: first, as 'income from securities can be taxed only under section 8 , the allowance that could be a charge on that income can only come under that section and no other'; and secondly, 'the trend of authorities also seems to be in favour of <ORG>'s view that the assessee is not entitled to a double benefit, (i) exemption from tax in respect of certain securities, and (ii) to an allowance of interest on the money utilised to purchase those securities'.

At the instance of the assessee, <ORG> referred the question reproduced above to <ORG>. <ORG> has answered the question in favour of the assessee on the ground that the entire interest paid by the <ORG> was a permissible deduction under s. 10(2) (iii) of the Act.

It is common ground among the parties that s. 8 of the Act does not apply. The learned counsel for the <ORG>, Mr. <NAME>, submits that there is a general principle that no expenditure can be allowed as a deduction from the profits of a business unless the part of the business to which the expenditure is attributable is capable of producing income or profits liable to be taxed under the Act. In other words, he contends that if a part of profits of a business is not taxable, no expenditure incurred for the purpose of earning those profits can be allowed as a deduction. He says this is the position specially after the amendments made in the Act by the Amending Act of 1939, in s. 4, whereby all income accruing or deemed to accrue to a person resident in India is attributed a taxable quality. He goes on to say that if a particular income has no taxable quality, it also loses quality for qualifying for expenditure allowable under s. 10 .

The learned counsel for the assessee, Mr. <NAME>, says that even if the proposition be accepted, it does not assist the <ORG> in this case. He points out that in the case before us it is not controverted that the profits and losses accruing from the sale and purchase of securities have been included in the assessment. Therefore, the tax free securities are capable of producing profits and losses. There is force in the contention of Mr. <NAME>, and the appeal must fail on this ground alone. But as the question has been debated before <ORG>, and before us, we do not desire to rest our decision on this narrow ground. 2Sup./65-10 Then is there such a principle as has been formulated above ? If there is one, can it be invoked to cut down the express language of S. 10(2) (iii), which expressly allows as a deduction interest on capital borrowed for the purpose of the business ? In our opinion. in construing the Act, we must adhere closely to the language of the Act. If there is ambiguity in the terms of a provision, recourse must naturally be had to well-established principles of construc- tion but it is not permissible first to create an artificial ambiguity and then try to resolve the ambiguity by resort to some general principle.

We are concerned with the interpretation of S. 10 . Let us then look at the language employed. Sub-section (1) directs that an assessee be taxed in respect of the profits and gains of business carried on by him. What is the business of the assessee must first be looked at. Does he carry on one business or two businesses along with the business carried on by him some activity which is not a business? If he is carrying on an activity which is not business, we must leave out of account the receipts of that activity. That is the first step. Secondly, we must look at S. 10(2) and deduct all the allowances permissible to him. In allowing a deduction which is permissible the question arises: Do we look behind the expenditure and see whether it has the quality of directly or indirectly producing taxable income ? The answer must be in the negative for two reasons: First, <ORG> has not directed us to undertake this enquiry. There are no words in s. 10(2) to that effect. On the other hand, indications are to the contrary. In S. 10(2) (xv), what <ORG> requires to be ascertained is whether the expenditure has been laid out or expended wholly and exclusively for the purpose of the business. The legislature stops short at directing that it be ascertained what was the purpose of the expenditure. If the answer is that it is for the purpose of the business, <ORG> is not concerned to find out whether the expenditure has produced or will produce taxable income. Secondly, the reason may well be that <ORG> assumes that most types of expenditure which are laid out wholly and exclusively for the purpose of business would directly or indirectly produce taxable income, and it is not worth the administrative effort involved to go further and trace the expenditure to some taxable income.

Therefore, it seems to us that there is nothing in the language of S. 10 from which it can be fairly implied that an expenditure or allowance falling within the section must fulfill some other condition before it can be allowed.

A similar question arose in England in <NAME> v. <ORG>), and all the Judges took the view that interest paid by the <ORG> on capital borrowed in the course of its business and utilised in buying tax-free securities had to be deducted in arriving at the taxable profits of the business notwithstanding that the interest earned by the <ORG> on the tax-free securities could not be taxed.

Lord <NAME> put the reason shortly thus "It is perhaps enough to say that the Crown are unable to point to any statutory provision in support of their contention, whereas the Respondents find full justification for their resistance in the provisions of Rule 3 of the rules applicable to cases I and II of Schedule D".

This rule is similar to s. 10(2) (xv) of the Indian Income Tax Act . After setting out the rule and noticing its effect he says "It seems to me to be incontrovertible that, in the present case, the investments in question were part of the business of the Respondents' trade, and that the expense connected with them was wholly and exclusively laid out for the purposes of the trade.

Expenditure, in course of the trade which is unremunerative is none the less a proper deduction, if wholly and exclusively made for the purposes of the trade. It does not require the presence of a receipt on the credit side to justify the deduction of an expense."

Although the Master of Rolls found force in the argument of the <ORG>, he could find nothing in the language of the English Act to eliminate a part of the expenses of an indivisible trade. Similarly, <NAME> <NAME>, could find no warrant in the language of the Statute to give effect to the contention of the <ORG>. He observed that "when the Statute says that interest is to be exempt, I am quite unable to read it as meaning that in giving effect to that exemption by implication, some repercussion is to take place on a different provision of the Act altogether....... I can find nothing in the Statute which requires this interest to be treated, so to speak, as a trade within a trade. This is really what the <ORG> contend that in some way this interest which is to be brought into account as an item of receipt is to be taken out of it with some (1) 21 T C 472 apportioned expenses appropriated to it as though it were a trade by itself."

Mr. <NAME> urges that the authority of the above decision has been shaken in <ORG> (H. M. Inspectors of Taxes) v. Ross(1), but we are unable to accept this contention. The, point ,urged in this case was that the authority of <NAME> v. <ORG> (2) had been qualified by the decision in <NAME> v. <ORG>), but this was negatived.

A number of Indian cases have been cited before us and we will now proceed to examine them.

<ORG> decision in <CITATION> (4) does not assist Mr. <NAME>. The carried on business at Madras, where his head office was, and <ORG>, a place in <ORG>. Money was borrowed ,at Madras and part of it sent to <ORG> where it was used as capital in the conduct of <ORG> business. <ORG> held that interest ,on the part of the borrowed money used at <ORG> was rightly disallowed as a deduction because the business which was being taxed was the business at Madras and not the business at <ORG>. No exception can be taken to the decision but it does not advance the appellant's case because we are concerned with one indivisible business.

<CITATION> (5), the assessee, <ORG>, borrowed some money in India and purchased sterling securities out of it and retained them in India. <ORG> held that interest on the borrowed money could not be deducted because "qua the capital which it (the company) is using outside British India and retaining for that length of time outside British India, is not carrying on business in respect of which profits assessable to Indian Income,tax can be earned so that allowance can be claimed for interest on capital borrowed within the meaning of S. 10(2) (iii). It :appears to us that <ORG> divided the business in two separate businesses. But the business of the present assessee cannot be divided into two separate businesses. It is one and indivisible.

<CITATION> (6), the assessee carrying on business as a moneylender (1) 40 T.C. II.

(2) [1930] A.C. 432.

(3) 21 T.C. 472.

(4) A.I.R. 1928 Mad. 487.

(5) 6 I.T.C. 21 (6) (1937) 5 I.T.R. 97.

had borrowed money and lent it out to constituents. He was obliged to receive agricultural lands in repayment of his debts from such constituents. The question arose whether he was entitled to a deduction in respect of the interest paid by him on capital represented by the agricultural lands. The <ORG>, following <NAME> v. <ORG>) held that he was entitled notwithstanding that agricultural income was not taxable under the Income Tax Act . Mr. <NAME> says that this was wrongly and was in fact dissented from by the Rangoon High <ORG> in C.I.T. Burma v. N.S.A.R. Concern(2). <NAME>, in the Rangoon case, distinguished <NAME> v. <ORG>) because he thought that the scheme of the Burma Income Tax Act was entirely different from the scheme of the English Income Tax Act, 1918. He observed that "in England a person is assessed to income tax in respect of his income, while under the Burma Act it is the income which is taxed. Under the English Act no class of income is outside the scope of the Act whereas by s. 4(3) of the Burma Act the Act is made inapplicable to a number of classes of income. The English Act merely confers certain exemptions on a person in respect of his income up to a certain amount or certain kinds, similar to the exemptions conferred on certain classes of income by the provisos to Secs. 8 and 9 of the Burma Act." Then he noted the difference between the wording of s. 10 (2) (ix) of the Burma Act and the corresponding clause in the English Act . But we are unable to appreciate that these differences necessitate the rejection of the principle laid down in <NAME> v. The <ORG>). It is true that under the Indian Income Tax Act it is income that is taxed but it is not taxed in vacuo. It is taxed in the hands of a person. In England, the interest of tax-free securities was exempted much in the same way as in India. It did not matter there who held them. <NAME> v. The <ORG>) cannot be distinguished on the grounds mentioned by the Rangoon High <ORG>. In our judgment <CITATION> (3) was correctly decided. The decision of this <ORG> in indore <CITATION> (4 ) is distinguishable. It appears to us that it was because s. 14 (2) (c) and s. 4 (1 ) (a) and (c) existed at the relevant time that the words 'profits and gains' in s. 24 were limited to such profits and gains as would have been assessable (1) 21 T.C 472. (2) (1938) 6 I.T.R. 194.

(3) (1937) 5 I.T.R. 97. (4) [1962] Supp. 3 S.C.R. 310 in British India or the taxable territories. This is apparent from the judgment and from the following observations of <NAME>

"Reading the provisions in section 24 with the provision in section 4 (1) (a) and (c) and section 14 (2) (c) it seems clear to us that section 24 (1) when it talks of profits or gains has reference to taxable profits and gains; in other words, it has reference to such profits and gains as would have been assessable in British India or the taxable territories. It has no reference to income accruing or arising without British India or without taxable territories which were not liable to be assessed in the case of non- residents."

We cannot imply from this judgment that there is a general principle that if a part of the income of a business is tax- free, expenditure incurred for the purpose of earning this income is outside the purview of s. 10 .

In the result we agree with <ORG> that the answer to the question is in the affirmative. The appeal is accordingly dismissed with costs.

Appeal dismissed.


<NAME>, J.

1. Two questions referred to this Bench are :

1. If in a suit instituted by a landlord for ejectment of his tenant with the permission of the District Magistrate obtained under Section 3 (1) of the U. P. (Temporary) Control of Rent and Eviction Act , <ORG> on being moved by the tenant to pass an appropriate order under Section 7F on the record of the case granting permission passes an order suspending the operation of the permission, what is its effect on further proceedings in the suit pending in court ?

2. If the above mentioned suit is decreed in the landlord's favour and the tenant files an appeal and during its pendency the State Government passes an order purporting to be one in exercise of the power conferred by Section 7-F directing that the permission granted by the District Magistrate would have effect after a certain date, which date is subsequent to the date of the decree under appeal, what is its effect on the decree ?

2. I do not propose to answer the first question in this case. The answer to the second question is determinative of the case. There has been little argument at the bar about the power of <ORG> to pass an interim order suspending the operation of the permission of the District Magistrate. As at present advised, I am inclined to the view that <ORG> has no such power.

3. On the second question I am of opinion that the order of <ORG> would have no effect on the decree under appeal. My opinion is based on a very simple reasoning which I had indicated at the time of arguments. I still adhere to it.

4. The order of <ORG>, it may be observed, affirms the grant of permission by the District Magistrate; only the date of its operation is varied. The lower appellate Court could not take on record the order of <ORG> under Rule 27 of Order 41 of the Code of Civil Procedure. The order could not be admitted on record under Section 151 of the Code of Civil Procedure, as such admission would encourage multiplicity of proceedings and would not he in the interests of justice. The lower appellate Court wrongly admitted the order as additional evidence. As the order cannot be read in evidence, it can have no effect on the decree under appeal.

5. Plurality opinions traverse a wider ground in answering the second question. If the State Government had cancelled the permission of the District Magistrate, it would have been necessary to cover that ground. But that is not so in this case, The second question has a narrow range. I would reserve opinion on the wider aspect for a suitable case. I am not in favour of expressing opinions which may after all be no more than obiter dicta. I doubt if the obiter dictum of a Full Bench is binding on a single Judge or <ORG>.

<NAME>, <NAME>

6. This is a defendant's appeal arising out of a suit for possession, arrears of rent and <ORG> profits.

7. The respondent, who is the landlord of the premises in suit, sued the appellant for ejectment alter obtaining permission on October 17, 1958 from the District Magistrate under Section 3 of the U. P. (Temporary) Control of Rent and Eviction Act , 1947 and after terminating the appellant's tenancy by a notice under Section 106 of the Transfer of Property Act. Against the grant of permission the appellant proceeded in revision before the Commissioner but the revision application was dismissed on March 3, 1959. He then filed an application under Section 7-B of the Act before <ORG> on April 6, 1959.

Pursuant to the permission granted by the District Magistrate, the respondent filed the instant suit when the application under Section 7-F was pending before <ORG>. On May 19, 1959 <ORG> passed an order purporting to suspend the operation of the permission granted by <ORG> during the pendency of the application under Section 7-F , but the trial court rejected the contention of the appellant that it had no jurisdiction to proceed further with the suit and passed a decree for ejectment on April 13, 1960. Against the trial court decree an appeal was filed before the learned Additional Civil Judge, <NAME> and during the pendency of this appeal, on July 23, 1960, <ORG> passed an order purporting to be under Section 7-F directing that the permission granted by the District Magistrate would have effect only after December 31, 1960. It was contended before the learned Additional Civil Judge that this order had the effect of invalidating the proceedings in the suit as no suit could be filed before December 31, 1960.

8. Two questions have been raised on behalf of the appellant. It is contended that the effect of the order dated May 19, 1959 purporting to suspend the permission granted by the District Magistrate was to prohibit the court from proceeding further with the trial of the suit and, therefore, all proceedings taken thereafter were invalid. It is next urged that the order under Section 7-F resulted in nullifying the proceedings in the suit altogether as the permission to institute the suit could be effective only after December 31, 1960. On behalf of the respondent it was submitted that when the orders purporting to suspend the permission granted by the District Magistrate and subsequently making the permission effective only after December 31, 1980 were passed the suit had already been instituted, and no subsequent order could have any effect upon the validity of the proceedings in the suit. It was urged that, therefore, the State Government had no jurisdiction to pass the aforementioned order under Section 7-F . A further argument raised on behalf of the respondent to meet the second contention of the appellant is that the State Government had no jurisdiction to attach any condition to the permission granted by the District Magistrate.

9. It appears to me that the central issue in controversy is whether upon a suit being instituted upon permission duly obtained from the District Magistrate a subsequent order made by the State Government under Section 7-F could have any legal effect upon the proceedings in the suit.

10. Section 3 of the Act declares :

"Subject to any order passed under Sub-section (3) no suit shall, without the permission of the District Magistrate, be filed in any civil court against the tenant for his eviction from any accommodation, except on one or more of the following grounds. ...."

Learned counsel for the appellant contends that the permission granted by the District Magistrate under Section 3(1) is dependent for its validity upon an order passed in revision by the Commissioner under Section 3(4) and an order passed by the State Government under Section 7F and that it is immaterial that the suit for ejectment has already been instituted before the orders under Section 3(4) and 7F were passed. We have been referred to the decisions in <CITATION> ., 1958 All LJ 724 and Munshi Lal v. Shambhu Nath Ram Kishan, 1958 AH L J 584, both of which were influenced by the consideration that if the contention advanced by the landlord in those cases were accepted, a landlord securing the permission of the District Magistrate could nullify the effect of the statutory provisions of Section 3 (4) and Section 7F by rushing to court and instituting his suit for ejectment. Reference was also made to the decision in <NAME> v. State of U. P., Civil Misc. Writ. No 910 of 1957, D/. 20-3-1959 (All) which reaffirmed the view taken in Dr. <NAME>'s case, 1958 All L J 724 (supra). Reliance was also placed upon a decision of Dhavan. J., in <CITATION> , 1963 All LJ 620 : (AIR 1964 All 210). On the other hand reliance is placed for the respondent on the view taken by one of us in <NAME> v. <NAME>. 1961 All L J 353 and it is urged that the provisions of the section merely bar the institution of a suit for ejectment, that the bar is removed if the District Magistrate grants permission and that once permission is granted the bar is raised and a landlord can enter a court and that any subsequent order can have no effect.

11. I am inclined to accept the contention of the respondent. The bar being to the institution of the suit, the moment the suit is filed the permission exhausts itself, and the suit has to be decided in accordance with law on the basis of the pleadings of the parties and the evidence on the record. It is true that the permission to sue granted by the District Magistrate is subject to any order passed in revision by the Commissioner under Section 3 (4) and thereafter by the State Government under Section 7F , but it the order under Section 3 (4) or Section 7F is to have any effect in law it must be passed before the suit is instituted. There is nothing in the Act which expressly makes the proceedings in a suit dependent upon an order subsequently passed under Section 3 (4) or Section 7F , and the words "subject to any order passed under Sub-section (3) "in Section 3 (1) do not make the validity of the proceedings in a pending suit dependent upon any such order. There is nothing in the Act, it appears to me, which requires the landlord to wait before he institutes a suit, and that being so, there can be no question of a landlord "hurrying or rushing" to a court to institute the suit.

It the contrary view is accepted, then it must be logically held that the landlord should wait until the tenant has exhausted his remedy before the Commissioner and subsequently before <ORG>. There is no period of limitation within which the tenant must have recourse to the remedy under Section 7F and upon a suit instituted by the landlord for ejectment a tenant may prolong the proceedings by resorting to the remedies available to him by appeal to the first appellate court, and then to this court and even further to <ORG>, and he may at a very late stage of the litigation approach <ORG> under Section 7F and succeed in obtaining an order quashing the permission and thus nullifying the entire proceedings in the litigation. If the fear of haste on the part of the landlord in instituting the suit without waiting for the Commissioner's order or <ORG>'s order is the basis of the view in support of the appellant, equally can much be said for the view against it where the ultimate decision in a suit for ejectment can depend entirely upon a tenant who tarries in applying to <ORG> under Section 7F .

11A. The question is not free from difficulty, especially if the matter be viewed from the respective disadvantages which are bound to be suffered by the landlord or the tenant according as one contention or the other is preferred. But where the language of the statute is plain, as it seems to be here, the <ORG> would not be justified in paying excessive regard to the loss of advantage Or convenience of either party. It is said that acceptance of the contention advanced for the respondent would frustrate the object of the enactment, and that object, we are told, is the protection of the tenant from the rapacity of the landlord. But how far should this protection be construed? Clearly, within the limits of the legislation. In their task of protecting the tenant, executive and judicial authorities have not been conferred powers carte blanche. They must be guided by the language of the statute. If there is a lacuna in the statute or if the statute contains a detective provision, it is a matter for the <ORG> to remedy. As the provision stands, it merely imposes a ban upon the institution of the suit and it does not make the validity of the proceedings in the suit dependent upon any order passed alter the suit has been instituted. I am not convinced that the <ORG> intended that a suit for ejectment, filed after permission was granted, must fail because subsequently the order granting permission was quashed or modified by a superior administrative authority.

12. My answer to the two questions referred is that, the suit having been instituted after permission to do so was granted, neither the subsequent order under Section 7F by the State Government suspending the operation of the permission nor the later order under that provision purporting to make the permission operative after a certain date can have any effect on the proceedings in the suit or the decree passed in it.

<NAME>, <NAME>

13. I agree with my brother <NAME>. The words ''subject to any order passed under Sub-section (3)" govern the ban on the filing of a suit in civil court without the District Magistrate's permission. Only the filing of a suit is subject to any order passed under Sub-section (3) of Section 3 . Obviously the order contemplated is one which conflicts with the ban on the filing of a suit without the District Magistrate's permission. There can be a question of the ban being subject to an order only it the order has something to do with the ban. There is no sense in saying that the ban is subject to an order which has no connection with it. The only order that has a connection with or bearing on the ban is one which refers to the banned act, i.e. refers to the filing of a suit without the District Magistrate's permission. The ban is not on the filing of a suit in a civil court but on the filing of a suit without the District Magistrate's permission. It must be this ban which is affected by the order passed under Sub-section (3) in order that it is subject to it. When an order contemplated by the provision is passed the ban will apply subject to it, i.e. in respect of a conflict between the ban and the order, the order will operate and not the ban. In order that the order operates and not the ban the order must deal with the filing of a suit without the District Magistrate's permission. No such order, however, is contemplated by Section 3 (3) at all. The only order that can be in conflict with the ban is one which says that a suit can be filed without the permission of the District Magistrate, or with the permission of an authority other than the District Magistrate. No other order can possibly conflict with the ban.

The words ''subject to... Sub-section (3)" are not to be read with the words "without the permission of the District Magistrate"; they do not mean that the permission granted by the District Magistrate is subject to any order under Sub-section (3). They must be read with the whole clause "no suit shall...... from any accommodation" and not with only some of the words taken at random. It is not possible to read the words "subject to ..... Subsection (3)" simply with the words "without the permission of the District Magistrate". The provision deals with not the permission of the District Magistrate but with the absence of such a permission. Therefore, even if the words "subject to ... .Sub-section (3)" were to be read only with the words ''without the permission of the District Magistrate" it is the absence of the permission that has to be subject to an order under Sub-section (3) and not the granting of the permission. Consequently an order under Sub-section (3) cancelling the permission granted by the District Magistrate is an order not conflicting with the words "without the permission of the District Magistrate" but agreeing with them and cannot be said to control them. In any case whatever order controls the ban on the filing of a suit must exist before the suit is filed. The ban is only on the filing of a suit and if the filing of a suit is not within the ban the provision in Section (3) (1) becomes inapplicable. The circumstances on which the ban rests must exist at the time of the filing of the suit; they cannot come into existence subsequently in the absence of an express provision giving retrospective effect to them. Now no retrospective effect is given to an order passed under Sub-section (3). When there is the District Magistrate's permission at the time of the filing of the suit the ban does not operate and there is nothing in Sub-section (3) (1) to suggest that any subsequent event such as the passing of an order under Sub-section (3) can bring it into operation. Sub-section (3) does not deal with the passing of an order affecting the ban, either imposing it or restricting it. When it is realised that it is the filing of a suit without the District Magistrate's permission that is subject to an order under Sub-section (3), it would become obvious that the cancellation of the permission by an order under Sub-section (3), whether before or after the filing of the suit, has no effect on it.

14. If the legislature intended to provide (1) that a suit may be filed with the permission of the Commissioner granted under Sub-section (3) or the State Government under Sub-section (4) or that (ii) a suit may not be filed with the permission of the District Magistrate or the Commissioner if in the meanwhile it is cancelled by the Commissioner by an order under Sub-section (3) or the State Government under Sub-section (4) respectively or that (iii) even if a suit has been filed with the permission of the District Magistrate or the Commissioner it cannot be decreed it is cancelled by an order under Sub-section (3) or under Sub-section (4), it has wholly failed to carry out its intention through the provision in Sub-section (1). It is impossible to read Sub-section (1) as containing these provisions or any of them. There is absolutely nothing in the Act barring the provisions under consideration suggesting that the legislature had such an intention and it is not open to the <ORG> to make a wild guess at the legislature's intention and to place upon the words used by it the interpretation to effectuate it even though they are not capable of bearing it. The court cannot change the language used by a legislature and cannot give to it a meaning which it is not capable of bearing. A <ORG> can only construe a statute and cannot construct one and there is no problem of construing when the words used in a statute bear only one meaning.

15. The provision in Sub-section (3) (1) imposes a Restriction upon a landlord's right to sue for ejectment of a tenant whose tenancy has been terminated in accordance with the provisions of the Transfer of Property Act . A tenant, who does not surrender possession even though his tenancy has been terminated is liable to be used and the landlord has a right to sue him. Section 3(1) imposing a restriction upon this right can be said to restrict his right to hold and dispose of property and also to discriminate him from another person who has been kept out of possession by the trespasser, it section 3 (1) infringes the rights guaranteed by Articles 19 and 14 of the Constitution it must be reasonable in order to be valid. It cannot be said to be reasonable if the landlord is required to wait indefinitely for an order under Sub-section (3) or Sub-section (4) or Section 3 . A tenant is required to apply to the Commissioner to revise the District Magistrate's order granting permission within thirty days but the Commissioner can delay the revision of the order indefinitely. No limit is placed upon the time for a tenant's applying to <ORG> to revise the Commissioner's order under Sub-section (4).

16. Sub-section (1) of Section 3 does not refer to any order passed by <ORG> under Sub-section (4); the ban is not expressed to be subject to such an order. Sub-section (3) refers only to an order that the Commissioner passes to revise the District Magistrate's order granting or refusing to grant the permission. It is immaterial that an order passed by the Commissioner under Sub-section (3) is declared to be subject to <ORG>'s order; this provision does not make the ban subject to <ORG>'s order. An order by <ORG> may control the Commissioner's order but does not thereby take its place and the words "any order passed under Sub-section (3)" do not mean an order passed under Sub-section (41 revising "any order passed under Sub-section (3)."

Consequently as far as the filing 01 a suit is concerned Sub-section (1) does not make it dependent upon any order under Sub- section 4 . In this case we are concerned with the effect of an order under Sub- section 4 and not with the effect of an order passed under Sub- section 3 on the filing of a suit.

17. The provisions in Sub- section 2 that an application can be made to the Commissioner to revise the District Magistrate's order granting or refusing to grant permission and the provisions in Sub- section 3 , that the Commissioner can alter or reverse the District Magistrate's order or make such other order as may be just and proper do not lay down the effect of the order passed by the Commissioner under Sub- section 3 . One provision simply empowers a person to apply to the Commissioner to revise the District Magistrate's order and the other simply empowers the Commissioner to alter or reverse the District Magistrate's order or to make any other just and proper order. If the permission granted by the District Magistrate is cancelled by the Commissioner before the suit is filed it may be said that the ban comes into operation and that it is a case of "without the permission of the District Magistrate" because of the cancellation. In such a case the words "subject to any order passed under Sub- section 3 " are redundant; even without them the ban would exist. If the Commissioner cancels the permission after the suit has been instituted, in the absence of an express or necessarily implied provision that it must be deemed to be a suit filed without the permission of the District Magistrate or that it must not be decreed, the cancellation is of no effect.

The power to pass an order is one thing and the effect of the order another. The effect of the order depends upon its words. The only order that would have any effect on a suit already filed is one directing that it must be deemed to have been filed without the permission or that it must be dismissed. An order simply cancelling the District Magistrate's permission has not the effect of such an order. The question whether the Commissioner has power under Sub- section 3 to pass an order that the suit, though filed with the District Magistrate's permission must be deemed to hive been filed without it, or that it must be dismissed has not been raised before us. The District Magistrate if concerned only with the question whether the filing of the suit should be permitted or not; he has no other jurisdiction under Sub- section 1 . The Commissioner when trying to revise his order has not any greater jurisdiction than him and cannot pass any order which could not have been passed by him. Since the District Magistrate has no jurisdiction over the suit after it has been instituted, the Commissioner also has no jurisdiction after it has been instituted and cannot in his order under Sub- section 3 require it to be dismissed. He has also not been authorised by Sub- section 3 to enact the legal fiction that the suit must be deemed to have been filed without the District Magistrate's permission.

So it appears to me that though what he can do under Sub- section 3 is expressed in wide language he cannot pass either of the orders which only would have effect upon the suit already filed. If the District Magistrate has refused permission the ban comes into operation and no suit can be filed. There can be no question of an order affecting the ban unless it lays down that a suit can be filed even without the District Magistrate's permission, either unconditionally or on the fulfilment of certain conditions. In the absence of such a provision it cannot be said that any order affects the filing of a suit without the permission of the District Magistrate. Naturally the order must be one allowing a suit to be filed without the District Magistrate's permission and neither Sub- section 3 nor Sub- section 4 authorises such an order. Neither of them gives a landlord a right to file a suit without the District Magistrate's permission. Neither deals with the Bling of a suit at all. Both deal with the District Magistrate's order (granting or) refusing permission. They authorize revision but the authority does not comprehend a direction that a suit may be filed without the District Magistrate's permission. They do not give the right to give a direction contrary to the ban on the filing of a suit without the District Magistrate's permission.

18. When <ORG> passes an order under Sub- section 4 there are several possibilities. One is that the District Magistrate granted the permission, it was maintained by the Commissioner and it is maintained by <ORG> or is cancelled by it. Another is that the District Magistrate and the Commissioner both refused permission and <ORG> maintain their refusal or grant the permission. Third is that the District Magistrate granted the permission, the Commissioner cancelled it and <ORG> restores it or upholds the Commissioner's order. Fourth is that the District Magistrate refused the permission, the Commissioner granted it and <ORG> maintains the grant or cancels it. Sub- section 1 does not refer to any of the orders that may be passed by <ORG> and, the ban is not made subject to any of them. An order passed under Sub- section 3 by the Commissioner may be subject to any order passed by <ORG> but not the ban imposed by Sub- section 1 . Sub- section 1 does not use even these words "subject to any order passed under Sub- section 4 "; thus the effect of such an order is even less than that of an order passed under Sub- section 3 .

19. Under Section 7-F <ORG> has jurisdiction, in a case "granting or refusing to grant permission for the filing of a suit for eviction referred to in Section 3 ". Section 3 (1) applies to all suits against tenants for their eviction from any accommodation; therefore, it cannot be said that the Bling of certain suits for eviction is referred to in it and not the filing of other suits for eviction. The words "referred to in Section 3 " must, therefore, govern the words "granting or refusing to grant permission." <ORG> has jurisdiction under Section 7-F over the case granting or refusing to grant the permission referred to in Sub-section (1). Though Section 7-F speaks of the permission referred to in Section 3 actually it is referred to in Sub-section (1) and Sub-section (2) only. Neither Sub-section (3) nor Sub-section (4) refers to any permission at all (Neither of them refers to the filing of a suit also). Both Sub-section (1) and Sub-section (2) refers to the permission of the District Magistrate; neither of them refers to the permission of any other authority such as the Commissioner or <ORG>.

In the instant case the permission was granted by the District Magistrate and the State Government had jurisdiction under Section 7-F to call for the record of the case disposed of by him and to make such order as it thought necessary. I am not concerned with the question whether the State Government has jurisdiction under Section 7-F to call for the record of the case disposed of by the Commissioner granting the permission refused by the District Magistrate. Though the power conferred by Section 7-F upon the State Government is wide (''e. g. make such order as appears to it necessary for the ends of justice") it cannot be wider than the District Magistrate's. When the whole provision in Sub-section (1) deals with the stage of the filing of a suit and the District Magistrate has no jurisdiction to pass any order after the suit has been filed the State Government can have no jurisdiction to interfere with a suit after it has been filed, such as that of staying further proceedings in it. Without an express provision empowering it to do so it cannot stay further proceedings. Even if an order under Sub-section (4) were treated as coming within the scope of the words "order passed under Sub-section (3)" it would affect only the filing of the suit and not further proceedings.

Section 7-F deals not only with a casa of granting or refusing to grant permission but also with an order passed under Section 7 or under Section 7A ; because power has been conferred upon it over the records of any of these three kinds of cases what it can do is expressed in such wide language. The legislature had to use wide language to cover all possible orders that it permitted <ORG> to pass. The width of the power conferred by Section 7-F must be limited by the scope of Sub-sections (1), (3) and (4) of Section 3 .

20. The State Government exercising jurisdiction under Section 7-F in respect of permission granted under Section 3 does not exercise jurisdiction over the civil Court in which a suit has been filed on the basis of the permission. <ORG> is not subordinate to it and no order passed by it is under appeal or revision before it. Consequently it has no jurisdiction to pass any order against it or directing it to do or not to do a certain act. It has no jurisdiction to stay proceedings in the suit or to direct that it should not be decreed. The proceedings remain unaffected by the jurisdiction assumed by <ORG> under Section 7-F . This means that any order passed by <ORG> has no effect on them.

21. In <NAME> v. <NAME>, 1951 All L J 285, <NAME> and <NAME>, JJ. held on p. 287 as follows ;

"Subsequent event cannot re-impose a bar against the plaintiff which was removed by the grant of permission to him by the District Magistrate. The bar once removed cannot be re-imposed."

In <ORG> v. <NAME>, (S) AIR 1956 S C 213 the principle laid down by <NAME>, J. was :

"The validity of a petition must be judged on the facts as they were at the time of its presentation, and a petition which was valid when presented cannot, in the absence of a provision to that effect in the statute, cease to be maintainable by reason of events subsequent to its presentation. In our opinion, the withdrawal of consent by 13 of the members, even if true, cannot affect either the right of the applicant to proceed with the application or the jurisdiction of the <ORG> to dispose of it on its own merits." (at p. 215).

An application under Section 153-C of the Companies Act could be made if consent of a certain number of share-holders have been obtained. In the case consent of the requisite number had been obtained and after the application was made some of the shareholders withdrew their consent. <ORG> repelled the argument that the application thereupon became un-maintainable. The same principle applies in the instant case. The share-holders had a right to revoke the consent given by them just as a Commissioner or the State Government has a right to revoke the permission granted by the District Magistrate. The effect of the revocation on the suit filed must be the same in the two cases. <CITATION> , AIR 1952 All 414, Bind <NAME> and <NAME> held that "if permission has been acted upon and a suit has been instituted on its basis" (and even a decree has been obtained in it) it is not "competent for the Controller at that stage to recall the permission." The reason given was that the permission he had granted had spent itself out.

In <NAME> v. State of Uttar Pradesh, Special Appeal No. 870 of 1982, D/- 9-11-1262 (All), I sitting with <NAME> held that cancellation of a permission under Sub-section (3) or Sub-section (4) had no effect on the suit already filed. I respectfully disagree with the view expressed by <NAME> in 1983 All L J 620 : (AIR 1964 All 210). I have explained in 1961 All L J 353 (infra) that the interpretation that I have placed on Sub-section (1) of Section 3 does not militate against the provisions of Sub-section (3) and Sub-section (4) and does not necessarily render them nugatory. When the permission is cancelled under Sub-section (3) or Sub-section (4) it may not be availed of for the purpose of filing a suit; so the provisions in the sub-sections are not nugatory. The provisions of Sub-sections (3) and (4) have not been given retrospective effect and there is no justification for implying that orders under these sub-sections cancelling the District Magistrate's permission renders the suit filed on its basis one filed without it. Our learned brother has not considered the meaning of the words "subject to" used in Sub-section (1) and has not considered what is subject to an order passed under Sub-section (3).

With great respect I also disagree with the decision in the case of <NAME>, 1958 All LJ 724 (infra). <CITATION> , AIR 1964 All 393, S.D. Singh, J. disagreed with my decision in <NAME> case, 1961 All LJ 353 because "the order which a District Magistrate may pass under Sub-section (1) has been specifically made subject to the order which may be passed by the Commissioner under Sub- section 3 ." With great respect I am unable to take this view which is against the structure of the sentence. I have explained above that according to the rules of grammar the words "subject to any order passed under Sub-section (3)" can be read only with the words "no suit shall be filed." In re <NAME>, <ORG>, <NAME> observed that whether a sanction for instituting a legal proceeding is required or not is to be determined at the time when the <ORG> first takes cognizance of the matter. If sanction is required if certain circumstances exist it is to be seen whether they exist or not on the day on which the legal proceeding is taken cognizance of. This supports the view that the question of sanction is relevant only at the time of taking cognizance.

22. My answers to the two questions are as follows :

1. No effect.

2. No effect.

BY THE COURT

23. Our answers to the two questions referred to the Full Bench are ' No effect" and "No effect" respectively. Lay the case before the bench concerned with these answers.