PETITIONER: STATE OF PUNJAB Vs. RESPONDENT: <NAME> DATE OF JUDGMENT: 02/02/1968 BENCH: <NAME>, R.S. BENCH: <NAME>, R.S. WANCHOO, K.N. (CJ) SHELAT, J.M. MITTER, G.K. VAIDYIALINGAM, C.A. CITATION: 1968 AIR 1210 1968 SCR (3) 1 CITATOR INFO : D 1972 SC1004 (80) D 1974 SC2192 (70,71) F 1977 SC 355 (6) RF 1979 SC1073 (9) RF 1980 SC 42 (6,7) F 1980 SC 57 (3,4,5) RF 1986 SC1844 (3) R 1987 SC2135 (7) F 1988 SC 286 (4) D 1991 SC1402 (4) ACT: Punjab Educational Service (Provincialised Cadre) Class III, Rules, 1961, r. 6(3)--Probationer against permanent post allowed to continue after period of probation--Effect--When amounts to confirmation. HEADNOTE: The respondents, who were teachers in <ORG> were taken over by the State of Punjab with effect from 1st October 1957 when <ORG> in the State were provincialised. The Punjab Educational Service (Provincialised Cadre) Class III Rules were framed in 1961 but were deemed to have come into force on 1st October 1957. Under r. 6(1) of the Rules the respondents, who were officiating in permanent posts against permanent vacancies were deemed to have held their posts on probation, in the first instance, for one year from 1st October 1957. On the completion of this initial period of probation on 1st October 1958. four courses of action were open to the 'appointing authority under r. 6(3), namely, (a) to extend the period of probation, provided the total period of probation, including extensions, would not exceed three years, or (b) to revert the employee to his former post if he was promoted from some lower post, or (c) to dispense with his services if his work or conduct during the period of probation was unsatisfactory, or (d) to confirm him in his appointment. As, the respondents were not promoted from lower posts there was no question of their reversion. No other order was however passed. but the authority continued them in their posts for three years, that is, upto 1st October 1960 and even thereafter; allowed them to draw annual increments of salary including the increment which fell due on 1st October 1962; and some time in 1963, terminated their services. The orders of termination were passed without holding any departmental enquiry and without giving the respondents any opportunity to make any representation. The writ petitions filed by the respondets challenging the orders were allowed by <ORG>. <ORG> held that the respondents were not temporary employees that on the expiry of three years' period of probation they must be deemed to have been confirmed in their posts, that the impugned orders having deprived them of their right to those posts amounted to removal from service by way of punishment and were passed in violation of Art. 311 and the Punjab Civil Services (Punishment and Appeal) Rules, 1952. In appeal to this Court, HELD : The impugned orders were rightly set aside by <ORG>. [7 E] Where on the completion of the specified period of probation an employee is allowed to continue in the post without an order of confirmation, in the absence of anything to the contrary in the original order of appointment or promotion or the Service Rules,- the initial period of Probation is deemed to be extended by necessary implication. But, where, as in the present case, the Service Rules fix a certain period of time beyond which the 2 probationary period cannot be extend-ad, and an employee appointed or promoted to a post on probation is allowed to continue in that post after the completion of the maximum period of probation without an express order of confirmation, he cannot be deemed to continue in that post as a probationer. The reason is that such an implication is negatived by the service rule forbidding extension of the probationary period beyond the maximum period fixed by it. In such a case, it is permissible to draw the inference that the employee' allowed to continue in the post on completion of the maximum period of probation has been confirmed in the post by implication. [5 C, G; 6 A-B] Case law refereed to. <NAME> v. State of Punjab C.A. No. 492 of 1963 dated 29th January 1964, explained and followed. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 787 of 1966.

Appeal by special leave from the judgment and order dated November 26, 1964 of <ORG> in Letters Patent Appeal No. 354 of 1963 and Civil Appeal No. 1017 of 1966.

Appeal by special leave from the judgment and order dated January 7,1965 of <ORG> in Letters Patent Appeal No. 162 of 1964.

<NAME> and <NAME>, for the appellant (in C.A. No. 787 of 1966).

<NAME>, for the appellant (in C.A. No. 1017 of 1966).

<NAME>, for the respondent (in both the appeals). The Judgment of the Court was delivered by <NAME>, J. These two connected appeals raise a common question of construction of r. 6 of the Punjab Educational Service (Provincialised Cadre) Class III Rules, 1961, Before October 1, 1957, <NAME> and <NAME>, the respondents to these appeals, were junior teachers in <ORG> schools. The <ORG> schools were provincialised, and the services of the respondents were taken over by the Punjab State with effect from October 1, 1957 in pursuance of a scheme of provincialisation of Local Bodies schools in the State. On February 13, 1961, the Governor of Punjab in exercise of the powers conferred by the proviso to Art. 309 of the Constitution framed the Punjab Educational Service (Provincialised Cadre) Class III Rules, 1961 regulating the conditions of service of the teaching staff taken over by <ORG> from the local authorities. Rule 1 provides that the rules will be deemed to have come into force with effect from October 1, 1957. Rule 3 created the Punjab Educa-

tional (provincialised Cadre) Class III Service consisting of the posts shown in Appendix A. It is common case that the posts held by the respondents are included in Appendix A and carry time scales of pay. Rule 6 is in these terms:

"6(1). Members of the Service, officiating or to be promoted against permanent posts, shall be on probation in the first instance for one year.

(2) Officiating service shall be reckoned as period spent on probation, but no member who has officiated in any appointment for one year shall be entitled to be confirmed unless he is appointed against a permanent vacancy. (3) On the completion of the period of probation the authority competent to make appointment may confirm the member in his appointment, or if his work or conduct during the period of, probation has been in his opinion unsatisfactory he may dispense with his services or may extend his period of probation by such period as he may deem fit or revert him to his former post if he was promoted from some lower post.

Provided that the total period of probation including extensions, if any, shall not exceed three years.

(4) Service spent on deputation to a corresponding or higher post may be allowed to count towards the period of probation, if there is a permanent vacancy against which such member can be confirmed."

The respondents were officiating in permanent posts and under r. 6(3) they continued to hold those posts on probation in the first instance for one year. The maximum period of probation fixed by the rules was three years which expired on October 1, 1960. The respondents continued to hold their posts after October 1, 1960, but formal orders confirming them in their posts were not passed. Under r. 7, the Director of Public Instruction, Punjab was the appointing authority. By two separate orders passed on February 10, 1963 and April 4, 1963, the Director terminated. their services. The order in each case stated that the services of the respondent concerned "are hereby terminated in accordance with the terms of his employment. The order shall take effect after one month from the date it is served on him." Rule 12 provides that in matters relating to discipline, punishment and appeals, members of the service shall be governed by the Punjab Civil Services (Punishment and Appeal) Rules, 1952. The orders dated February 10 and April 4, 1963, were passed without holding any departmental enquiry and without giving the respondents ;any opportunity of making representations against the action taken against them. The respondents filed separate writ petitions in <ORG> challenging the aforesaid orders on the ground that they had acquired substantive rights to their posts, and that the orders amounted to removal from service, and were passed in violation of Art. 311 of the Constitution. The appellants pleaded that the, respondents were temporary employees, that their services were terminated in accordance with the terms of their employment, and that the impugned orders did not amount to removal from service and were not in violation of Art. 31 1. Learned single Judges of <ORG> rejected the respondents' contentions and dismissed the writ petitions. The respondents filed separate Letters Patent appeals against these judgments. <ORG> allowed the appeals and set aside the impugned orders. <ORG> held that the respondents were not temporary employees, that they held the posts on probation, that on the expiry of three years' period of probation they must be deemed to have been confirmed in their posts, that the impugned orders having deprived them of their right to those posts amounted to removal from service by way of punishment and were passed in violation of Art. 311 and the Punjab Civil Services (Punishment and Appeal) Rules, 1952. It is against these appellate orders that the present appeals have been filed after obtaining special leave. <ORG> found that the respondents were officiating in permanent posts against permanent vacancies as contemplated by r. 6 and that on the coming into force of the rules, they must be deemed to have held their posts under r. 6 (1) on probation in the first instance for on-, year from October 1, 1957. The correctness of these findings is not disputed by the appellants. <ORG> also held that in the circumstances of these cases, on the completion of three years' period of probation on October 1, 1960, the respondents must be deemed to have been confirmed in their appointments. The appellants attack this finding. They submit that in the absence of formal orders of confirmation the respondents must be deemed to have continued in their posts as probationers. In the alternative, they submit that on completion of three years' period of probation, the respondents must be deemed to have been discharged from service and re-employed as temporary employees. We are unable to accept these contentions. This Court has consistently held that when a first appointment or promotion is made on probation for a specific period and the employee is allowed to continue in the post after the expiry of the period without any specific order of confirmation, he should be deemed to continue in his post as a probationer only, in the absence of any indication to the contrary in the original order of appointment or promotion or the service rules. In, such a case, an express order-of confirmation is necessary to give the employee a substantive right to the post, and from the mere fact that he., is allowed to continue in the post after the expiry of the specified, period of probation it is not possible to hold that he should deemed to have been confirmed. This view was taken in sukhbans Singh v. The <ORG> of Punjab(1), <CITATION> (2) The Accountant General, Madhya Pradesh, <NAME> v. <NAME>), <NAME> v. The Chief Conservator of. Forests, U.P. and others(4) and <CITATION> (5). The reason for this conclusion is that where on the completion of the specified period of probation the employee is allowed to continue in the post without an order of confirmation, the only possible view to take in the absence of anything to the contrary in the original order of appointment or promotion or the service rules, is that the initial period of probation has been extended by necessary implication. In all these cases, the conditions of service of the employee permitted extension of the probationary period for an indefinite time and there was no service rule forbidding its extension beyond a certain maximum period. The same view was taken in <NAME> v. <ORG>, of Punjab and another(6) It was suggested before us that the service rules in that case provided for a maximum period of probation of two years beyond which the probationary period could not be extended. The judgment in that case does not refer 'to such a rule, nor does it appear from the judgment that before the. appellant was reverted to his substantive post, the maximum period of probation in the post to which he had been promoted had expired. A reference to the paper book in that case, shows that in November, 1957 the appellant was promoted as a superintendent and on June 26, 1959 before the expiry of the maximum period of probation he was reverted to his substantive post. He thus continued to hold the post of superintendent as a probationer when the order of reversion was passed.

In the present case, r. 6(3) forbids extension of the period of probation beyond three years. Where, as in the present case, the service rules fix a certain period of time beyond which the probationary period cannot be extended, and an employee appointed or promoted to a post on probation is allowed to continue in that post after completion of the maximum period of probation without an express order of confirmation, he cannot be deemed to (1) [1963] (1) S.C.R. 416, 424-426 (2) [1964] 6 S.C.R. 278, 288-289 (3) C.A. No. 548 of 1962 decided on January 23, 1964. (4) C.A. No. 259 of 1963 decided on February 24,1965. (5) [1966] 3 S.C.R. 821, 825-826.

(6) C.A. No. 492 of 1963 decided on January 29, 1964.

continue in that post as a probationer by implication. The reason is that such an implication is negatived by the service rule forbidding extension of the probationary period beyond the maximum period fixed by it. In such a case, it is permissible to draw the inference that the employee allowed to continue in the post on completion of the maximum period of probation has been confirmed in the post by implication.

The employees referred to in r. 6(1) held their posts in the first instance on probation for one year commencing from October 1, 1957. On completion of the one year period of probation of the employee, four courses of action were open to the appointing authority under r. 6(3). The authority could either (a) extend the period of probation provided the total period of probation including extensions would not exceed three years, or (b) revert the employee to his former post if he was promoted from some lower post, or (c) dispense with his services if his work or conduct during the period of probation was unsatisfactory, or (d) confirm him in his appointment. It could pass one of these orders in respect of the respondents on completion of their one year period of probation. But the authority allowed them to continue in their posts thereafter without passing any order in writing under r. 6(3). In the absence of any formal order, the question is whether by necessary implication from the proved facts of these cases, the authority should be presumed to have passed some order under r. 6(3) in respect of the respondents, and if so, what order should be presumed to have been passed.

The respondents were not promoted from lower posts and there was no question of their reversion to, such posts at any time under r. 6(3).

The initial period of probation of the respondents ended on October 1, 1958. By allowing the respondents to continue in their posts thereafter without any express order of confirmation, the competent authority must be taken to have extended the period of probation up to October 1, 1960 by implication. But under the proviso to r. 6(3), the probationary period could not extend beyond October 1, 1960. In view of the proviso to r. 6(3), it is not possible to presume that the competent authority extended the probationary period after October 1, 1960, or that thereafter the respondents continued to hold their posts as probationers.

Immediately upon completion of the extended period of pro- bation on October 1, 1960, the appointing authority could dispense with the services of the respondents if their work or conduct during-the period of probation was in the opinion of the authority unsatisfactory. Instead of dispensing with their services on com-

pletion of the extended period of probation, the authority continued them in their posts until sometime in 1963, and allowed them to draw annual increments of salary including the increment which fell due on October 1, 1962. The rules did not require them to pass any test or to fulfil any other condition before confirmation. There was no compelling reason for dispensing with their services and re-employing them as temporary employees on October 1, 1960, and <ORG> rightly refused to draw the inference that they were so discharged from service and re-employed. In these circumstances, <ORG> rightly held that the respondents must be deemed to have been confirmed. in their posts. Though the appointing authority did not pass formal orders of confirmation in writing, it should be presumed to have passed orders of confirmation by so allowing them to continue in their posts after October 1, 1960. After such c confirmation, the, authority had no power to dispense with their services under r. 6(3) on the ground that their work or conduct during the period of probation was unsatisfactory. It follows that on the dates of the impugned orders, the respondents had the right to hold their posts. The impugned orders deprived them of this right and amounted to removal from service by way of punishment. The' removal from service could not be made without following the procedure laid down in the Punjab Civil Services (Punishment and Appeal) Rules, 1952 and without conforming to the con- stitutional requirements of Art. 311 of the Constitution. As the' procedure laid down in the Punjab Civil Services (Punishment and Appeal) Rules, 1952 was not followed and as the constitutional protection of Art. 311 was violated, the impugned orders' were rightly set aside by <ORG>. In the result, the appeals are dismissed with costs. There will be one hearing fee.

V.P.S. Appeals dismissed.


<NAME>, J.

1. Dealing first with the question whether the plaintiff was represented in the former suit O.S. No. 5 of 1886, and the execution proceedings which followed on the decree in that suit, I find no difficulty in accepting the District Judge's conclusion on that point.

2. The only evidence in the plaintiff's favour consists of two facts, first, in such of the documents relating to the execution proceedings as have been preserved, the date given as that of the decree is that of the decree against the father of plaintiff and not that of the final decree against the plaintiff and his brother and his father; that it is suggested shows that the decree against plaintiff was never executed. But the two decrees were identical and the one was substituted for the other after the appointment of a new guardian for the plaintiff and his brother, and the failure of that guardian to put in a defence. The date is therefore pro bably a mere mistake. Secondly the name of the plaintiff's father in some of these documents appears as his guardian, and not that of his maternal uncle <NAME> who is proved to have been duly appointed his guardian for the suit in supersession of his father. Obviously these irregularities may have been due to carelessness of the court officials, and the effect of this evidence is more than counteracted by the fact that <NAME> did as a matter of fact act in the execution proceedings. He preferred an appeal to <ORG>, the nature of which cannot at this date be ascertained, and he prosecuted unsuccessfully an application for stay of the sale pending the disposal of the appeal. It is not shown that his locus standi was questioned by any one at that time, and it is clear that he could have had no locus standi except as guardian of the present plaintiff. His own story is that all he did was done under the directions of the plaintiffs father and that may probably be true, for it is shown that the plaintiff's father himself declined to represent his sons in the suit. No proof was laid before us that the plaintiff's father was in collusion with the mortgagee; if he had been so he would probably have remained on the record as his son's guardian; it is more likely that he wanted to set up the familiar case that his sons were not bound by the debts contracted by him, and looked to <NAME> to make good that case. He and <NAME> were late for court as <NAME> says and so the suit was decided ex parte, but it has been argued here that <NAME> was negligent or corrupt. I find no reason to suppose that the plaintiff was not duly represented throughout the execution proceedings. As a matter of fact it has not been | contended here that the plaintiff and his brother had any good defence to the suit. They were both born after the mortgages; they attempted before the District Judge to show that their father's debts did not bind them, but they failed there and have not renewed the attempt here. The other question is whether by reason of the provisions of Section 90 of the Trusts Act the mortgagee-defendants hold the equity of redemption for the benefit of the plaintiff, so that it is still open to him to redeem the mortgages.

3. It is urged that the sale was in contravention of the provisions of Section 99 of the Transfer of Property Act (since amended and incorporated in the Civil Procedure Code), and by this illegality the mortgagee who brought about the sale gained an advantage in derogation of the rights of the mortgagor and so became constructively a trustee for him. It is clear to me that Section 99 has no application. The sale was on a decree for sale, inartistically drawn, no doubt, but clearly a decree for sale, made in a suit for sale on a mortgage on the land sold, and there can so far as I can see be no objection to it under Section 99 . Sufficient time was allowed for redemption before the sale and the fact that a date for payment was not fixed in the decree has not therefore prejudiced the mortgagor. Then it is said that the mortgagee failed to bring into his suit for sale two prior mortgages one in his own favour, and the other assigned to him before the sale, and having failed to bring them into the suit, he notified them as reserved in the proclamation of sale, and so deterred investors from competing with him for the acquisition of the equity of redemption, Thus he gained an advantage in derogation of the right of the mortgagor. Assuming that Section 90 of the Trusts Act is applicable to the case of a mortgagee who is not in possession, and taking it that the proclamation of sale is an act of the mortgagee as such, I do not think that the mortgagee in this case has been shown to have brought himself within the section.

4. The mortgagor has a right to a reasonable time for redemption : that he has had : he has no right to require that prior mortgages should not be disclosed in the proclamation of sale: if he had any objection on that ground either to the decree or to the sale he could have made his objection before the sale and not now, 25 years after it. So far as we know he did not then suggest that there was any illegality in the mortgagee's proceedings; if he did he failed to convince this Court that he had any grievance. Nor can it be said that there was any such illegality; however convenient it may be to require a mortgagee to bring in all his mortgages in his suit for sale on one of them, the weight of authority in this Presidency seems to be against the view that he can be compelled to do so. <CITATION> (1892) 2 M.L.J. 188. <NAME> v. <NAME> (1908) I.L.R. 31 M. 530 : 18 M.L.J. 564 and <NAME> v. <NAME> (1900) I.L.R. 24 M. 96 : 12 M.L.J. 383.

5. In these circumstances the plaintiff, it seems to me, must fail. He does not allege in his plaint that the mortgagee's proceedings, though legal, were contrived with a view to secure an advantage to himself, and there is no issue framed for the investigation of that question. Some evidence was given as to the value of the property, and the District Judge finds that the mortgagee bought it cheap, but neither side considered that a very material question before the District Judge.

6. To direct an issue now to this point so long after the sale would seem to be futile; moreover it would raise a question which properly should have been and possibly was raised by the plaintiff's guardian before the sale, or in an application to set aside the sale under Section 311 of the Code. I do not think that the plaintiff can ask for an enquiry now and he did not in fact ask for it. I would dismiss the appeal with costs.

7. If it was necessary to decide the question, I should have no difficulty in accepting the conclusion of the District Judge that defendants Nos. 6 to 15 are bond fide transferees for consideration within the meaning of Section 96 of the Trusts Act, and so are not affected by the trust. There is really no evidence pointing the other way.

Tyabji, J.

8. The question involved in this appeal is whether the plaintiff is entitled to claim that he has the equity of redemption in certain lands notwithstanding that the defendant's father through whom the defendants claim the lands (and whom I shall include in the terms "defendants") purchased the lands in an auction sale in execution of a decree for sale; in other words, the question is whether the defendants are owners of the lands or merely mortgagees. The decree for sale is dated 15th April 1886. It is not in strict accordance with the form laid down in the Transfer of Property Act for decrees for sale to be passed at the instance of mortgagees, but for the purposes of the present appeal it is not disputed that it must be taken to have ordered the sale of the mortgaged property for the purposes of satisfying the claims of the mortgagee. The plaintiff however claims that the purchase by the defendants in execution of that decree cannot avail against the plaintiff's right to redeem, mainly on three grounds.

9. The first of these grounds is that the plaintiff was a minor interested in the ancestral property forming the subject of the mortgage and yet he was either not at all, or not properly, represented in the suit on the mortgage, and consequently that the equity of redemption which was vested in the plaintiff was not sold in execution of the decree passed in such a suit. The suit on the mortgage is O.S. No. 5 of 1886 in <ORG>. In that suit the plaintiffs father was the first defendant; the plaintiff was the second defendant and a brother of the plaintiff now deceased was the 3rd defendant. The first defendant there was described as the guardian of his minor sons 2nd and 3rd defendants. The acting District Judge in his judgment dated 15th April 1886 states what occurred before him in the following terms.

10. The first defendant appeared and said he was not the guardian of his sons and admitted the claim in other respects. The first defendant is undoubtedly the guardian of his minor sons. He cannot discharge himself of that responsibility by his bare assertion'. The learned District Judge accordingly passed a decree against the first defendant personally and for sale of the property, leaving the 2nd and 3rd defendants parties to the decree, as represented by their father the 1st defendant. Subsequently the same learned Judge held on an application by one <NAME> the maternal uncle of the 2nd and 3rd defendants in that suit that " the appointment of the 1st defendant as guardian was illegal and accordingly set aside the decree as against 2nd and 3rd defendants and appointed <NAME>ar, guardian instead by order dated 10th November 1886. The case stood posted to 15th November 1886 and <NAME> was ordered to put in his written statement on the date. On that date he did not appear. " Thereupon on 15th September 1886 a decree was again passed for the recovery of the sums due on the mortgage "from the 1st defendant personally and by sale of the mortgaged property.'' The two decrees thus passed on 15th April 1886 and 15th September 1886 in Suit No. 5 of 1886 were substantially in identical terms the only material difference being that in the latter judgment and decree the 2nd and 3rd defendants were represented by their maternal uncle <NAME> as guardian and not by their father. The execution proceedings in the said suit were begun on 16th August 1886 a month prior to the amended decree. The first step in execution was by application No. 57 of 1886 for execution of the decree of 15th April 1886 as it then was. In pursuance of this application, on 21 St. January 1887 there was a proclamation for the sale of the property. On 29th February 1887 the mortgagee decree holder obtained leave to bid at the <ORG> sale. In the meantime <NAME> the newly appointed guardian of the minor sons of the mortgagor had applied to the High <ORG> to stay the sale. The application, was dismissed by <NAME> on 1st August 1887. The sale was consequently held on 19th September 1887 and the mortgagee the father of the present defendants having been the highest bidder he obtained a sale certificate on the 1st of February 1888. There were some other proceedings in the High <ORG>, described in the final order of the High <ORG> as an appeal against the order of the District <ORG> of North Arcot dated 14th September 1887 passed on Miscellaneous Petition No. 57 of 1887 and execution Application No. 57 of 188 5 ( O.S. No. 5 of 1886) and the appeal was dismissed. It would appear however that <NAME> the guardian of the minors was not a party to these proceedings nor were the minors otherwise represented in them.

11. Under these circumstances the question is whether the minors are bound by the sale of 19th September 1887, evidenced by the sale certificate of 1st February 1888. There is no doubt that though in the decree as ultimately passed the minors were represented by <NAME> and not by their father; still in the execution proceedings the father was stated to be the guardian. Yet it is clear that <NAME> knew of the execution proceedings, that he went up to <ORG> for stay of the sale and was not able to satisfy that Court that there was any ground for staying the sale. It cannot be said therefore that the misdescription of the person representing the minors was more than an irregularity. It misled no one. It did not prevent the minor's interests being watched by the guardian.

12. I am therefore of opinion that the execution must be taken to have been under the amended decree in which the minors were properly represented, and that they are bound by the sale notwithstanding that in the execution proceedings the guardian was misdescribed.

13. Next it was argued that the sale was invalid because it was not in accordance with the Transfer of Property Act , Sections 99 and 67 of the Transfer of Property Act were relied upon. The argument was that Section 99 of the Transfer of Property Act provides in effect that the sale of a mortgaged property shall be made at the instance of the mortgagee only in pursuance of a mortgage suit in accordance with the provisions of the Act. Assuming that the principle underlying Section 99 may be stated broadly as above it seems to me that there is no provision of the Transfer of Property Act which was disregarded in the suit of 1886, so as to make the decree passed in the suit any the less effective against the parties to the suit.

14. The facts relevant to this contention are as follows:

There were three mortgages on the property which is the subject matter equally of the present suit and of Suit No. 5 of 1886. These mortgages were dated 12th December 1876, 7th January 1879 and 10th May 1881 respectively.

15. The holder of the second of these mortgages was the father of the present defendants.

16. He became the assignee of the 3rd and 1st mortgages on the 20th January 1886 and 2nd November 1886 respectively.

17. On 19th March 1886, i.e. after taking the first of these assignments the mortgagee instituted a Suit No. 5 of 1886, to which I have before referred. This suit was based on the 3rd mortgage alone and the plaintiff made no mention of the other mortgage which was in favour of the same mortgagee nor of the 1st mortgage which was in favour of a third party, but which also as I have stated was assigned to the plaintiff in the suit on 2nd November 1886, i.e., about 8 months after the plaint was filed. In this suit the two decrees were successively passed to which I have referred in the earlier part of my judgment. The decree in neither form made any mention of any other mortgages on the property. But in execution proceedings and when the property was proclaimed for sale, the other mortgages were mentioned as prior encumbrances and, the sale certificate declared that the purchase at the sale by public auction was" subject to encumbrances.

18. It may be argued at the highest that the mortgagee by not having sued on his prior mortgages lost the right of suing on them at a later date. But how can that fact affect the suit on the later mortgages ? If it did in any way affect the interests of the mortgagor (who was the only other person concerned), it is extraordinary that the point was not taken in his written statement. I am unable to hold that as a matter of law the decree obtained in O.S. No. 5 of 1886 is the less binding because the suit was based on only one out of several mortgages. It seems to me therefore that the decree for sale must be considered to bind the defendants.

19. The third ground on which it is contended that the plaintiff may redeem the properties is that the defendants were themselves the mortgagee-decree-holders, as well the purchasers in execution of the decree, and that their purchase of the mortgaged property under the circumstances to which I shall refer below, was an advantage gained by a mortgagee which must enure to the benefit of the mortgagors by virtue of Section 90 of the Trusts Act.

20. In order that the plaintiff may succeed in this contention it must be shown that the mortgagee (a) availed himself of his position as such (b) that by doing so gained an advantage (c) that such advantage was in derogation of the rights of other persons interested in the property.

21. The advantage that the mortgagee is alleged to have gained is that he had the property put up for sale subject to his own prior mortgages (which it is alleged he was not entitled to do) and that, on this being done the bids at the auction sale must have been less high than they would otherwise have been. It seems evident that the contention under Section 90 of the Trusts Act could not have been taken in this form in the lower Court. For one necessary ingredient in it is that the properties as a matter. of fact brought a smaller price than they ought to have that the mention of the other mortgages in favour of the decree-holder deterred other would-be purchasers from bidding for the property. The fact that the properties were worth much more than they fetched in the auction sale is no doubt to be inferred from the finding by the learned Judge that the properties were really worth between Rs. 50,000 and Rs. 60,000 at the time of the sale, though they fetched only Rs. 8341 at the auction sale. The learned Judge however does not draw the inference, but on the contrary states in express terms that "both sides pointed out that the question of price is not material in the case." But though the argument under Section 90 does not seem to have been taken in the same form in the lower court as before us, yet that section was evidently relied upon, and is referred to in the judgment of the lower court. Under these circumstances the mere omission to notice the importance of proving the actual price of the properties and deducing from it that some advantage was gained by the mortgagee, might not in itself have been a sufficient reason in a case of such difficulty as the present for preventing us from asking any further finding on the issues necessary for determining the applicability of Section 90 . But there are other reasons why the course does not seem to me to be advisable. I shall indicate those reasons in considering the facts that are now before us and in applying them to Section 90 of the Trusts Act.

22. The first difficulty in the way of the appellant's contention is to show that in the suit of 1886 the mortgagee availed himself of his position as such. What the mortgagee did was to sue on one of his mortgages without mentioning his other mortgages. The mortgagor did not apply that the other mortgages should also be made subject of the suit in 1886, nor does it appear that the mortgagee did anything that he was enabled to do because he was the mortgagee and by which the other mortgages were prevented from being included in the suit. The plaintiff in that suit had at the time when the suit was instituted only one other mortgage on the property. He became the assignee of the third mortgage only after instituting the suit. Can it be said that the holder of the third mortgage also availed himself of his position as mortgagee by permitting the suit being brought on only one of the mortgages in derogation of the rights of the mortgagor ? If the other mortgagee was not doing anything in derogation of the rights of the mortgagor can the plaintiff in the suit of 1886 be placed on a different footing.

23. I have already referred to the next point which must be considered in connection with Section 90 of the Trusts Act whether the mortgagee has gained an advantage and whether as a matter of fact other bidders were deterred from bidding for the property.

24. The third point connected with Section 90 is assuming that some advantage was gained by the mortgagee was it in derogation of the rights of the mortgagor ? It is difficult to say what rights of the mortgagor were violated. I have already given reasons for coming to the conclusion that the suit was not instituted by the mortgagee in 1886 and that the decree was not passed in contravention of any law. Were any rights of the mortgagor violated by the mortgagee being permitted to bid at the auction sale? The mortgagee was entitled to ask for permission to bid, and there is nothing to show that in getting the permission he was guitly of any fraud or otherwise violated the rights of the mortgagor. The fact that there were other mortgages outstanding and that they were both in favour of the decree-holder, ought to have been a consideration to be borne in mind by the <ORG> in permitting the mortgagee-decree-holder to bid at the auction sale in execution of the decree. But it would be wrong after the lapse of so many years and in the absence of clear evidence to proceed on the basis that this matter was not placed before the <ORG> and due weight was not given to it, this is the more so as the sale was sought to be stayed by an order of the High <ORG> and the High <ORG> saw no reason to stop it. Then can it be said that the rights of the mortgagor were violated by the properties having been put up for sale subject to the prior encumbrances ? It is true that in the events that happened, the mortgagee having himself purchased the properties the saving of those encumbrances could have no effect or meaning for the holder of the encumbrances having become the owner of the property he could not have a mortgage on his own property. But when the mortgagee was permitted to bid, it did not mean that no other person was to bid. Had any other person been the purchaser at the auction sale, he would I presume have had to purchase the property subject to the prior encumbrances and then it could not have been said that the saving of the rights under the prior encumbrances, was unmeaning. So that the proclamation of sale subject to prior encumbrances cannot be said to be in violation of the rights of the mortgagor, and if so, then the purchase in pursuance of that proclamation by a person who had obtained leave to bid was not in such violation.

25. I come therefore to the conclusion that Section 90 of the Trusts Act cannot avail the appellants, because assuming that the mortgagee gained some advantage at the expense of the mortgagor, I am unable to say in the circumstances of this case that the advantage was gained by the mortgagee having availed himself of his position as such or that the advantage was gained in derogation of the rights of the mortgagor. I do not come to this conclusion without some hesitation as there seem to be indications that the mortgagee took full advantage both of his own position and of what seems to be incomprehensible torpor and incompetence of the mortgagor. It is difficult to understand why the mortgagor did not take any of the steps that were available to him for safe guarding his interest why he did not apply that the other mortgages be included in the suit, why he did not ask for the mortgagee to be put on terms before being permitted to bid at the auction sale as for instance that if the mortagee-decree-holder wished to bid at the auction sale then the sale should not be subject to the previous encumbrances in favour of the decree-holder himself. It may be that the mortgagee acted upon a scheme for bringing the mortgaged property to sale under such conditions as to permit of his buying it up at a very low price. But if there was such a scheme it seems to have been so planned as hot to contravene any provision of the law. On the other hand it is possible that there were satisfactory explanations for all these matters, and that the mortgagee acted not only within his strict rights, but that he did not do anything which the <ORG> would have disapproved or desired to prevent, The events are too distant and the mortgagor was too careless of his own interests to allow the plaintiffs now to seek the assistance of the <ORG>.

26. I agree that the defendants 6 to 15 are bona fide transferees for consideration.

27. For these reasons I agree that the appeal should be dismissed with costs.

<NAME> and <NAME>, <NAME>.

28. There will be one set of costs against the appellants: but so that out of the costs that are allowed the transferees (respondents 6,8, 10 to 13 and 15) will get their full costs, and the balance will be received by respondents 1 to 5.


JUDGMENT

1. This petition by the Deputy Commissioner of Sales Tax, South Zone, <NAME>, is directed against the decision of <ORG>, Trivandrum, in <ORG> of 1962. That decision is to the effect that the respondent, <ORG>, Alleppey, is not a dealer as defined in Section 2 (b) of the Central Sales Tax Act , 1955, In respect of its sales of rubber and that those sales are not as a result liable to taxation under the said enactment.

2. The definition of the expression "dealer" as given in Section 2 (b) of the Act reads as follows :

" 'dealer' means any person who carries on the business of buying or selling goods and includes a Government which carries on such business", It is common ground that all that the company does is to convert the latex tapped from its rubber trees into sheets and effect a sale of those sheets to its customers. The sole question for determination is whether in these circumstances the company can be considered to be a person who carries on the business of selling goods.

3. Latex is an opaque liquid resembling milk. It is not disputed thit the usual method of selling it is after converting it into sheets, and that the conversion is not a manufacturing process but a process essential for the transport and marketing of the produce concerned.

4. We take the view that an agriculturist selling his own produce either as gathered or after subjecting it to the minimum requirements necessary for transport and marketing cannot be considered to be a person engaged in the business of selling. The sale which he effects, as we see it, is only the culmination of his agricultural operations; it is not separate and distinct from his agricultural avocation; and he cannot be considered to be a person carrying on a business of selling simply because he effects a sale of his own agricultural produce.

5. <CITATION> , 1958-9 STC 397 : (AIR 1958 SC 756) <ORG> had to deal with the definition of turnover in the Hyderabad Gdneral Sales Tax Act, 1950, as it stood prior to ths amendment by the Hyderabad General Sales Tax (Amendment) Act, 1953. The definition before the amendment read as follows :

" 'turnover' means the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration".

<ORG> said that the definition showed that turnover "only refers to the turnover of a dealer and not of an agriculturist". The definition of dealer embodied In the Hyderabad General Sales Tax Act, 1950 -- Section 2(e) is in essential particulars the same as the definition of that expression in the Central Sales Tax Act , 1956. The definition in the Hyderabad Act reads as follows:--

" 'dealer' means any person, local authority, company, firm, Hindu undivided family or any association or associations of persons engaged in the business of buying, selling or supplying goods in the Hyderabad State whether for a commission, remuneration or otherwise and includes <ORG> which carries on such business and any society, club or association which buys or sells or supplies goods to its members".

6. The view we have taken is the samei as the view taken by <NAME>, J., in <CITATION> , 1962-13 STC 54 (Ker). The relevant considerations are discussed at lengtfi in that decision and it is unnecessary to go over the ground afresh in any greater detail.

7. List II (State List) in the Seventh Schedule to the Constitution deals with agricultural income and sales tax separately. Item 46 of that List is :

"Taxes on agricultural income";

and <NAME> is :

'Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92 A of List I."

Item 92-A of List 1 (Union List) is:

"Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce".

These entries give an indication of the scheme of Indian taxation and afford soms support to the conclusion we have reached.

8. Counsel for the respondent suggested that the proceeds of the sale of the rubber sheets constitute agricultural income and any taxation thereof by the <ORG> legislature will be ultra vires of the Constitution. In view of our conclusion that the respondent is not a dealer as defined in Section 2(b) of the <ORG> Sales Tax Act, 1956, it is not necessary to evaluate this contention and It is not considered in this judgment.

9. The learned Advocate-General cited before us certain cases under the Indian Income-tax Act , 1922, cases like <CITATION> , 3 ITC 378 (Mad). Those cases are of no assistance in deciding the question with which we are concerned. All that they say is that income derived from agricultural lands situate in a foreign State would fall outside the definition of "agricultural income" in Section 2 (1) of the Indian Income-tax Act , 1922, corresponding to Section 2(1) of the Income-tax Act, 1961, and that the entire income from purely agricultural operations as well as from manufacture would be taxable as an income from business.

10. In the light of what is stated above the T. R.C. has to be dismissed and we do so. In the circumstances of the case, however, there will be no order as to costs.


JUDGMENT

1. This is an Appeal from the judgment of <ORG> of Cocanada in a mortgage suit and a question of some importance has been argued before us by Mr. <NAME> as to whether the starling point for an application for a decree absolute under Order XXXIV, Rule 5, Civil Procedure Code, which is governed by Article 181 of the Limitation Act , is the date of the original decree or the date of the appellate decree which affirmed the original decree.

2. It had long been regarded as well-settled in this <ORG> that the starting point under Article 181 was the date of the appellate decree, and there is a decision of <ORG> in <NAME> v. <NAME> (1901) I.L.R., 23 All., 152 (P.C.) which strongly supports that view. In that case, the District Judge passed a decree giving the plaintiff possession with future mesne profits. That decree was set aside by <ORG> and was restored after a great many years by <ORG>. The question then arose in execution as to the date from which mesne profits should be calculated under the provisions of Section 211 of the Old Code (Act XIV of 1882), and their Lordships observed, at page 158, The <ORG> is now executing not the District Judge's decree of 1887, but the Queen's Order of 1895 which, by affirming the District Judge's decree, has adopted its terms and has carried on their effect down to a later date.

3. Those observations of <ORG> are entirely in accordance with what has till recently been the established view in this <ORG>. If the date of the final decree was the proper date to have regard to for the purposes of Section 211 , Civil Procedure Code, it follows that it is equally the proper date to have regard to with reference to an application for a decree absolute under Order XXXIV, Rule 5.

4. We have, however, been asked to hold that this authority should be disregarded on the authority of a more recent decision of <ORG> in <NAME> v.. <NAME> (1919) I.L.R., 46 Calc. 670 (P.C.) and certain observations of <NAME>, J., one of the learned Judges who decided <CITATION> (1921) 18 L.W., 37, which go to support this contention, The observations were obiter because both the learned Judges concurred in holding that the case was governed by Article 182 , the general article relating to execution. We have carefully examined <CITATION> (1919) I.L.R., 46 Calc., 670 (P.C.), and have come to the conclusion that it is not inconsistent with the previous decision to which we have referred. In the recent case, an auction-purchaser sued to recover from certain decree-holders his purchase money in consequence of the sale being set aside. Assuming that Article 97 was the article applicable, <ORG> held that consideration failed when the sale itself was set aside in the first Court, that time then began to run under Article 97 and that consideration did not fail afresh when the order setting aside the sale was affirmed by <ORG>. Here, as in the well-known case of <NAME> v. <NAME> (1889) I.L.R., 11 All., 47 (P.C.) the question their Lordships had to decide was when the consideration in fact failed. Once that was established the application of Article 97 was clear. With reference to this question they observed, in accordance with the express provisions of the Code, that an original decree is not suspended by presentation of an appeal nor is its operation interrupted where the decree on appeal is one of dismissal, but those observations must in my opinion be considered as inapplicable to questions arising under Articles 181 and 182. By Article 182 the appellate decree is expressly made a fresh starting point for purposes of execution, and an appellant is not required to proceed with the execution of a decree, against which he has appealed, while the appeal is pending on pain of becoming barred if he does not. It would be strange if a different rule were applicable under Article 181 as regards applications for a decree absolute where the preliminary decree is under appeal, an application so much resembling an application for execution that, under the repealed chapter of the Transfer of Property Act , it was held by this Court to be one. That was a question which their Lordships were not considering.

5. The view that for the purpose of such an application the appellate decree supersedes the original decree appears to be in accordance with the earlier decision in <NAME> v. <NAME> (1901) I.L.R., 23 All., 152 (P.C.) where their Lordships held that the decree that they were executing was the decree of <ORG>;. Applying that to the present case the preliminary decree which is being executed must be held to be the preliminary decree passed by <ORG>. It would obviously be so if the decree of <ORG> had varied the preliminary decree passed by the lower Court and there are no good reasons for applying different rules as regards questions arising under Article 181 , when <ORG> affirms the decree of the lower Court and when it varies it. Consequently, an application for a decree absolute has to be made under Article 181 within three years from the passing of the preliminary decree by <ORG>, and therefore the present application was in time and the objection fails.

6. The other objection which was taken is an objection to the preliminary decree which has already been confirmed by this Court and cannot be now questioned.

7. Objection has then been taken that the legal representative of the fourth defendant, who was one of the representatives of the original mortgagee, was not brought on record in time. We think that in the circumstances, if that is so, the delay should be excused.

8. The Appeal accordingly fails and is dismissed with costs.