JUDGMENT <NAME>, J.

1. The appellant was tried for the murder of two boys, <NAME> and <NAME>, aged 7 and 5 years respectively, by administering poison to them on 18-2-1950 at Ballabgarh. He was acquitted by the Sessions Judge of Hissar but on appeal by the State Government was convicted by <ORG> and sentenced to death. Hence this appeal by him under Article 134(1)(a) of the Constitution.

2. On the afternoon of 18-2-1952 these two unfortunate boys went to witness a snake charmer's show in front of the house of one <NAME>. It is alleged that there <NAME>, the appellant, made them eat some 'Churan' which contained poison. When the boys returned home the elder one start ed having convulsions and his mother, <NAME>, sent her daughter, <NAME>, to call her father, <NAME>, from the post office, where he is employed as a telegraph peon. Her cries attracted <NAME>, <NAME>'s brother, also to the place; as soon as <NAME> arrived, he went to fetch medical aid. The first person to arrive at the scene was a homeopath, Dr. <NAME>. He diagnosed that the boy was suffering from epileptic fits and went to his shop to fetch medicines. On his return he found one <NAME>, <NAME>, at the house. Both of them gave some medicines to the boy.

The younger boy <NAME>, also began to show signs of having convulsions. <NAME> then asked <NAME> to send for other doctors, and Dr. <NAME> and a vaid, <NAME>, came. <NAME> was dead by then. The doctor treated <NAME> with salt water and gave him enema but the treatment had no effect. Then he asked <NAME>, compounder, who was standing there, to bring a tube for washing the stomach as he suspected the case to be one of poisoning. <NAME> left the place but did not return soon. The doctor himself went to get the tube and on reaching <ORG>, he wrote out a report to the police and returned with the tube but by then <NAME> had expired.

3. The report from the doctor was received by the head constable <NAME> and he registered a case at 5.45 P. M. and proceeded to the spot and prepared the inquest report which was finished by 9-30 P. M. <NAME> was arrested at 10 O'clock that night, and after investigation, was challaned for the offence of murdering the boys.

4. At the trial <NAME> (P. W. 7) a priest of Ballabgarh, and <NAME>, P. W. 8, a boy of 10 or 11 years of age, gave evidence that 'churan' was administered by <NAME> to the two unfortunate boys in their presence. Their evidence did not impress the Sessions Judge and he declined to place any reliance on it. <ORG> accepted it and remarked that the Sessions Judge unnecessarily viewed it with suspicion by being unduly impressed by the fact that in the inquest report the name of <NAME> was a subsequent interpolation. We have been taken through the evidence of these two witnesses and have no hesitation in endorsing the opinion of the trial Judge that they are not witnesses of truth. <NAME> stated as follows:

"About 5 months ago one afternoon at about 3 P. M., I was going to my house from the bazar and in the way I saw a snake charmer displaying his show in front of <NAME> house and when I was there I heard someone uttering in a 'loud voice' 'Abe-khale churan'. I turned round and I saw <NAME> accused giving 'churan' to <NAME> & <NAME>, sons of Mulchand. Two or three other little boys were also there. <NAME> placed his 'churan' on the palms of these boys and they raised palms of their hands and took it near their mouth and then I passed on. I saw all this when passing my way and I did not stay there."

In cross-examination he admitted that there was a dispute between him and the accused's father about a wall built by him on a site claimed by the father of the accused. The witness thus cannot be considered to be quite a disinterested person. He said that he voluntarily went to the police and made his statement there at about 6-15 or 6-30 P. M. His name, however, is not mentioned in the inquest report which was completed by 9-30 P. M. The courts below have found that even the name of the accused was not mentioned therein but was subsequently interpolated in it.

In these circumstances it could not be said that the Sessions Judge was in error when he rejected the evidence of this witness and described him as a chance witness. Such witnesses have the habit of appearing suddenly on the scene when something is happening and then of disappearing after noticing the occurrence about which they are called later on to give evidence. The witness did not see that '<NAME>' was eaten by the boys in his presence, he admitted the presence of a number of women and children at the time when the accused gave '<NAME>' to the two boys.

5. The next witness <NAME> is a boy of immature years. He deposed as follows:

"About six months ago one afternoon a snake charmer was showing his trick in front of <NAME> house... When the show was over and the snake charmer had left, <NAME> accused gave some 'churan' to <NAME> which he ate and then he offered some 'churan' to <NAME> to eat. I then went to my house and so did <NAME> and <NAME> go to their homes. <NAME> also saw this 'churan' being taken."

In cross-examination he gave a version different to that given by <NAME> about the administration of 'churan' by. <NAME> to the two boys. He stated that <NAME> spit some of the 'churan' but <NAME> did not and that <NAME> took only half, that there was no woman in the 'tamasha'. The spot where 'churan' was given to the boys was described by him as the Chabutra of Shambu Dayal from which <NAME> was witnessing the 'tamasha'. <NAME>, however, mentioned a different place where this event took place. The witness was confronted with his statement made before the police wherein he had stated as under:

"After the 'tamasha' was over, I was coming to my house. I saw <NAME> saying to <NAME> and <NAME>, sons of <NAME> that they should eat 'churan', so that they might never have a stomach trouble and that it was good digestive 'churan'. But <NAME> and <NAME> 'refused to take it'. 'Thereupon <NAME> threatened them and forcibly made them eat the churan'. 'At that time <NAME> and several children were present there."

No satisfactory explanation is forthcoming about these material discrepancies in the two statements made by him. Prom the statement made to the police it appears that the accused administered 'churan' to the boys by force and in the presence of a number of persons. It is highly improbable that if <NAME> was administering poison to the boys he would do so in a public place and in the presence of a number of people & in the manner deposed to by this witness. In the inquest report no mention is made of the name of this witness. It cannot be said therefore that the Sessions Judge was in error when he found that his evidence could not be accepted. The direct evidence in the case therefore is not such from which the guilt of the appellant can be held proved.

6. The boys' father, mother, uncle and sister and one <NAME>, gave evidence that the two boys stated that <NAME> had made them eat 'Churan'. The learned Sessions Judge was of the opinion that the evidence given by these witnesses was all exaggerated and not worthy of belief. <ORG> took a different view. After perusing this evidence we are inclined to agree with the view of the learned Sessions Judge before whom the witnesses appeared and made statements.

7. <NAME>, the mother of the boys who was the first to notice their illness, stated as follows:

"On my inquiry from my boys <NAME>, the elder boy first said that <NAME> had given 'churan' to both of them and then <NAME> said the same thing and also said that <NAME> had taken the whole quantity while he had taken some and had spitted the rest but <NAME> had made him eat more after threatening him. They also told me that they were in front of <NAME>'s house when <NAME> gave them 'churan' and that <NAME> and <NAME> were also present there."

In cross-examination she failed to give any satisfactory explanation for the discrepancies between her statement made in court and that made before the police. She was not able to explain why she did not mention this fact to Dr. <NAME>. If the boys had made statements as alleged by her and also had mentioned the names of the two eye-witnesses (which is highly improbable), it is most unlikely that their names would not have found place in the inquest report. <NAME> admitted that he and his brother <NAME> were inimical to the accused's family because thirty years ago their father was poisoned by accused's father.

It is thus plain that the accused could have no motive in poisoning the two unfortunate boys; on the other hand, Tribenipershad, <NAME> and their family people have certainly a motive for implicating <NAME> in a false case in order to take revenge for the alleged crime of his father. The evidence of the family witnesses as to the statement supposed to have been made by the two boys does not seem to be worthy of credence in view of the evidence of Dr. <NAME> who is an independent witness in the case. Dr. <NAME>, when called to render medical aid to the boys, made an inquiry as to what the boys had eaten and this is what he says about it:

"When I arrived at the house I found one of the boys dead, while the other <NAME> was still alive and he was having convulsions. Before I arrived there a number of doctors were already there, and they were doctor <NAME>, <NAME>, vaid, <NAME>, vaid. <NAME> was in his senses at that time and he could talk sensibly. 'On an inquiry made by <NAME> from <NAME> if he had taken any sweets or khowa, <NAME> replied in the negative'. Parents of the boys were then questioned and it was given out by them that the other boy was saying that the two brothers had been administered some 'churan' by <NAME>......... I did not mention in my statement before the police or before the committing magistrate that on an inquiry from the parents they said that <NAME> was saying that they had been given 'churan' by <NAME> accused.

I have given my evidence today on refreshing my memory from my notes Ex. P. W. 2/1 which I prepared at the house of <NAME>. Then I went there after the death of <NAME>. There is no mention in these notes about what the parents of the boys told us at that time. When I first arrived at the spot 'I did inquire from all present about the history of the boys, ................but I was not given any definite history by those persons, however, different versions were being given by different persons present. <NAME> boy did not mention about having taken churan in any form'."

From this statement it is quite clear that neither <NAME> nor the parents told Dr. <NAME>, when he arrived at the scene, that churan had been administered to the boys by <NAME>. There is no reason to distrust this testimony and if this is believed, it conclusively proves that the evidence now given by the members of the family is not true and that the story that <NAME> gave churan was an afterthought and was concocted subsequently on suspicion that in all likelihood their enemy <NAME> must have given churan to the boys. This also explains the interpolation of the name of <NAME> in the inquest report after it had been completed.

8. The homeopath, Dr. <NAME>, deposed that he saw <NAME> at the house of <NAME> at 7 or 8 p.m. and that when Dr. <NAME> arrived he did inquire the history of the boys and that at that time he did not tell him that <NAME> or <NAME> had told him that <NAME> had given churan to them nor anybody else talked about churan to Dr. <NAME>, and that he (the witness) did not tell anybody about what the boys had told him regarding churan. It is highly unlikely that if churan had been given by <NAME> and the boys had said so to all present there, then the doctor who was specially called for treatment would not have been told about it either by <NAME> or by the persons present there or that the accused would have come to <NAME>'s house after having committed the crime.

The two vaids who were admittedly there were not called to give evidence and no satisfactory explanation has been given why they were kept out of the witness box. <NAME>, P. W. 10, a neighbour, deposed that he went to see <NAME>, the ailing boy and sat by his side and inquired if he had taken anything and the boy replied that <NAME> had made him eat some 'churan'. In cross-examination he admitted that he gave evidence against <NAME> in a theft case in which <NAME> was convicted and bound over for a year. It is obvious that this witness is not on good terms with the accused. The evidence of this witness as to the statement made to him by <NAME> cannot be accepted as true in view of the evidence of Dr. <NAME> and Dr. <NAME>. The witness said that when <NAME> replied to his query both Dr. <NAME> and Dr. <NAME> were present. This has been denied by them. The trial Judge was thus right in not trusting this witness.

The evidence therefore as regards the dying declaration made by the two boys cannot be accepted as true.

9. The last piece of evidence in the case is the alleged confession of <NAME>. The confession is in these terms:

"On 10-2-1950, I went to Delhi from Ballabgarh. I was to appear in the court on 11-2-1950. At about 3 p.m. on 10-2-1950, I reached Delhi and purchased two tablets of strychnine poison (kuchia) from the shop of a Hindu in the mohalla of <NAME> for one rupee at the rate of annas eight. On 11-2-1950, I came back to my house from Delhi. I powdered two tablets of kuchia and mixed it into the churan. On 18-2-1950, I administered this poisoned churan to my both the cousin brothers. The name of one is <NAME> aged 7 years and <NAME> aged 9 years. In the noon time, I administered this poison to both of them in the street of Ballabgarh where snake show was going on.

After two hours, their body began to become stiff. At that very time, they reached their house. The mohallawalas told that they had been administered some poison by somebody. The remaining poison was mixed in the sand by me. <NAME> who is my uncle suspected me, gave my name to the <ORG>. I had enmity with <NAME>. <NAME> told one brother, <NAME> who had two sons. I gave the poison to them for experiment, in order to see if they would die or not, because I had learnt from <NAME> that a man dies with the use of kuchlas. Both the boys died after two and a half hours time."

It was made before a magistrate on the 24th February, while the accused was in the custody of the police, i.e., six days after his arrest and was retracted on the 7th March, after a fortnight of its having been made. It is a settled rule of evidence that unless a retracted confession is corroborated in material particulars, it is not prudent to base a conviction in a criminal case on its strength alone. Our attention has not been drawn to any evidence which corroborates in material particulars the statements contained in the confession. The learned Sessions Judge observed that whatever evidence had been placed on the record contradicted the confession instead of corroborating it. <ORG> was of the opinion that the oral evidence above discussed sufficiently corroborated the confessional statement. That evidence, however, is not worthy of belief and cannot be used for this purpose. The prosecution was in a position to lead evidence in corroboration of the confession but it did not do so.

<NAME> in the confessional statement had said that he went to Delhi on the 10th February to attend a case on the 11th. This fact, if true, could easily have been proved. It could have been ascertained from him in what court he had to appear on 11-2-1950. It appears that the statement made by him that he went to Delhi on the 10th is not true. It was then stated by <NAME> that he purchased two tablets of kuchia from a shop in Phatak Hashab Khan, Effort was made to find a shop-keeper in that locality but he was not called to give evidence in the case. If the statement in the confession was true that he had purchased two tablets of strychnine from a shop in Phatak Hashab Khan, this fact could easily have been proved by the evidence of the shop-keeper as no poison can be sold to a person without his signature being taken on some kind of register maintained for the purpose.

Then it was stated by <NAME> that he powdered the two tablets in a pestle and mortar, mixed them with churan and administered it to his cousin brothers and the remaining poison he mixed with sand. The pestle and mortar and the sand were sent to the chemical examiner but no traces of poison were found in them. These facts therefore instead of supporting the confession go against its truthful character. In the confessional statement no mention was made by <NAME> of the two eye-witnesses, <NAME> and <NAME>. <ORG> was therefore in error in placing reliance for the conviction of the accused on his confessional statement.

10. It seems to us that the attention of <ORG> was not drawn to this Court's decision in -- ' <CITATION> ', , wherein it was pointed out that though <ORG> has full power to review the evidence upon which an order of acquittal is founded, yet the presumption of innocence of the accused being further reinforced by his acquittal by the trial Court, the findings of that Court which had the advantage of seeing the witnesses and hearing their evidence can be reversed only for very substantial and compelling reasons. <CITATION> ', , their Lordships of <ORG> observed that no limitation should be placed upon the power of the High court to review at large the evidence upon which the order of acquittal is founded but that in exercising the power conferred by the <NAME> and before reaching its conclusions upon fact <ORG> should, and will always give proper weight and consideration to such matters as (1) the views of the trial Judge as to the credibility of the witnesses; (2) the presumption of innocence in favour of the accused, a presumption certainly not weakened by the fact that he has been acquitted at his trial; (3) the right of the accused to the benefit of any doubt; and (4) the slowness of an appellate court in disturbing a finding of fact arrived at by a judge who had the advantage of seeing the witnesses.

We have not been able to see that any compelling or substantial reasons existed for reversing the acquittal order in this case and none has been pointed out by <ORG> in its decision. No attempt has been made in the judgment to discuss the evidence of the prosecution witnesses or to explain satisfactorily the discrepancies that were of a material nature and which had been pointed out in those statements by the Sessions Judge in his careful and detailed judgment. We are satisfied that this was not a case for interference with the acquittal order in an appeal under Section 417, Criminal P. C.

11. For the reasons given above we allow this appeal, set aside the order of <ORG> and restore the order of the Sessions Judge acquitting the appellant.


JUDGMENT <NAME>, J.

1. The second respondent-insurer appeals against the award of <ORG>, <ORG>, in O. P. (M. V.) No. 206 of 1985 directing the insurer to pay compensation of Rs. 2,10,000 to the petitioners for the death of their mother, <NAME>, in a car accident, on December 7, 1978.

2. The claim was for compensation of Rs. 6,00,000 from respondents Nos. 1 and 2. The first respondent is none other than the father of the claimants. The claimants are minors represented by their next friend.

3. The car KLI 1050 belonged to the first respondent The first respondent himself was driving the car bringing his children home from their boarding school at Trivandrum. Their mother. <NAME>, was in the front seat. The accident took place at 5.30. p. m. at a road junction on the M. C. Road, south of Kottarakkara town. The vehicle capsized causing serious injuries to <NAME>. She succumbed to the injuries on the same day at about 9 p. m. The petitioners are the children of <NAME> and the first respondent. They claim compensation for the death of their mother who was a medical officer in <ORG>, Kattappana, drawing a salary of Rs. 2,500 per month. The case was posted from time to time and on March 6, 1981, it was posted to April 4, 1981 allowing the respondents a last chance to file written statements. The second respondent-insurer filed a written statement on April 4, 1981. No written statement was filed by the first respondent. Much later, on May 8, 1981, the first respondent filed a written statement wherein he has raised a contention that the liability, if any, is of the Insurer as the vehicle is covered by a policy of insurance. According to him, the cause of death of <NAME> was an accident and not due to his negligence. The second respondent-insurer disclaimed its liability to compensate the petitioners for the death of <NAME> in the accident. The <ORG> found rashness and negligence on the part of the first respondent as, according to the <ORG>, the accident speaks for itself. The <ORG> awarded a consolidated sum of Rs. 2,10,000 as compensation. The award is against both respondents Nos. 1 and 2. But the second respondent insurer is directed to pay the amount and on failure of payment, there is a further direction that execution steps should be taken first against the second respondent-insurer.

4. In the petition itself, it is stated "the accident involving the death of the deceased was only accidental". There is no averment of rashness or negligence on the part of the first respondent in driving the vehicle. The first respondent in his written statement, though filed at a belated stage, had also raised a contention that the accident was not due to negligence on his part. When examined as R. W. 1, the first respondent spoke about the incident as a pure accident which could not have been avoided by him while driving the vehicle. P. Ws. Nos. 1 to 4 examined on behalf of the petitioners also spoke about the incident as a pure accident. There is neither pleading nor proof that the accident was due to negligence on the part of the first respondent <ORG> of this Court in <CITATION>  KLT 750, following the decisions of <ORG> in <CITATION>  47 Comp Cas 736 and <CITATION>  51 Comp Cas 128 (SC), stated at page 751 :

"A liability can be cast on another only if he is in any way responsible for the accident which occasioned the injury. In other words, there is no scope for any absolute liability on the owner of the vehicle to compensate the injured. The provisions of the Motor Vehicles Act do not contain any statutory provision to that effect. The Act does not provide a new right or a new remedy to a person who is injured by an accident. The provisions of the Act do not in any way interfere with the substantive common law on the subject. It follows that the petitioner has to prove that the opposite party used the vehicle in such a negligent way and occasioned the injury for which compensation is claimed."

5. <CITATION>  47 Comp Cas 736 (SC) referred to above, the conclusion is stated at page 751 :

"We conclude by stating that the view of the learned judges of <ORG> has no support in law and hold that proof of negligence is necessary before the owner or the insurance company could be held to be liable for the payment of compensation in a motor accident claim case."

6. The accident in the present case was on December 7, 1978, long before Section 92A of the Act came into force. Section 92A was introduced by the Amendment Act 47 of 1982 that came into force with effect from October 1, 1982. Section 92A introduced by the amendment dispenses with proof of negligence in the matter of award of compensation to the extent indicated therein. The section indicates that the substantive law is changed only to the extent altered by the Amending Act . <CITATION>  62 Comp Cas 609 (SC), it is stated at page 620 :

" Section 92A of the Act provides that where the death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicle shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of the said section. The amount of compensation which is payable thereunder in respect of the death of any person is a fixed sum of fifteen thousand rupees and the amount of compensation payable under it in respect of the permanent disablement of any person is a fixed sum of seven thousand and five hundred rupees. Sub-section (3) of Section 92A of the Act provides that in any claim for compensation under Sub-section (1) of Section 92A , the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any other person. It is thus seen that to a limited extent relief has been granted under Section 92A of the Act to the legal representatives of the victims who have died on account of motor vehicle accidents. Now they can claim Rs. 15,000 without proof of any negligence on the part of the owner of the vehicle or of any other person. This part of the Act is clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicle before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. To that extent, the substantive law of the country stands modified."

7. It is thus clear that but for the modification, thus effected, the substantive law continues to be in force and no claim for compensation is sustain-able without proof of negligence except to the extent such proof is dispensed with by Section 92A of the Act.

8. In the present case, the petition itself shows that there was no negligence on the part of the first respondent who was driving the vehicle at the time of the accident. The evidence of all the witnesses examined on behalf of the petitioners as well as of the first respondent examined as R. W. 1 also is to the same effect. We are, therefore, clearly of the view that no case has been made out for award of compensation in the present case.

9. Counsel for the respondents submits that the defences open to the insurer are only those enumerated in Sub-section (2) of Section 96 and a plea that the accident was not due to the negligence of the first respondent is not available to the second respondent. It is also contended that such a defence cannot be the basis of an appeal under Section 110D of the Motor Vehicles Act. Counsel for the respondents relies on the decision of a Division Bench of this court in <CITATION>  KLT 547 wherein it is held that it is not open to the insurer to canvass the merits of the award by reason of the prohibitions contained in Sub-sections (2) and (6) of Section 96 of the Motor Vehicles Act. The restrictions in regard to the defences available to an insurer relate to the insurer's liability under Section 96(1) and in a case where there is no such liability, there is no question of the defences being restricted as provided for under Section 96(2) of the Act. That apart, in the present case, the insurer is also entitled to take all the defences by virtue of the provisions contained in Section 110C of the Act. As adverted to earlier, the first respondent did not file a written, statement within the time allowed by the <ORG>. It is seen that a written statement was filed subsequently without even furnishing a copy of the same to the insurer. There was also no petition to receive the written statement. The written statement filed at a belated stage was not even brought to the notice of the <ORG> and it is apparently for that reason that the <ORG>, in its order, has stated that the first respondent had not filed any written statement in the case. The insurer was impleaded as a party to the proceedings by the petitioners themselves, and the insurer is entitled to contest the claim on all or any of the grounds available to the first respondent by virtue of the provisions contained in Section 110C of the Act.

10. For the aforesaid reasons, we allow the appeal and set aside the award of the <ORG> as against the appellant. The parties will suffer their respective costs.


JUDGMENT <NAME>, K.C.I.E., C.J.

1. This is a suit instituted by one <NAME> as the widow and heiress of one <NAME> against <NAME>, <NAME> his brothers, in their personal character, and also as executors of the last Will and Testament of her husband, the said late <NAME>, and against one <NAME>, a Hindu widow; and the object of the suit is to have a certain Trust Deed, of which the said <NAME> was the surviving trustee, and dated the 24th of May 1877, an award dated the 16th of July 1889, and a certain decree, dated the 29th of August 1889, declared fraudulent and void as against her and in no way binding upon the plaintiff, and to have the Will of the said <NAME> construed and the rights of all parties thereunder ascertained and declared, for the administration of his estate, and for certain consequential relief.

2. The defendant <NAME> did not appear in this suit, but the other defendants put in written statements, and the case came on for hearing in due course before Mr. Justice <NAME>, and after hearing, which occupied many days, suggestions for a compromise of this and of other litigation between the parties were made.

3. It is alleged for the respondents in the present appeal, namely, the plaintiff, and the defendant, <NAME>, that after certain negotiations a compromise of this suit and the other suits, to which I have referred, was effected, that the defendant <NAME> expressly authorized his counsel to consent to this compromise on his behalf, that the terms of the compromise came before Mr. Justice <NAME>, and that he made a decree in terms of the compromise so alleged to have been entered into.

4. <NAME>, the present appellant, however, contends that though admittedly there were negotiations for a compromise, he never authorized his Counsel to agree to the compromise alleged, that his Counsel had no such authority, and that the compromise was not effective as against him. Holding that view, he, on the 15th of July 1899, gave the notice of motion, which will be found set out at page 1 of the paper book which in effect was one asking the <ORG> to stay the drawing up of the so-called compromise decree, and to have the alleged compromise set aside.

5. Although the defendant <NAME> did not, as I said before, appear to the suit or upon the hearing before Mr. Justice <NAME>, she was served with the notice of motion, and upon that motion coming on for hearing, Mr. Justice <NAME> refused to hear her by her Counsel, on the ground that as she had not previously appeared in the suit, she was not entitled to be heard on the motion.

6. The motion was supported by two affidavits of <NAME> himself with certain documents exhibited to those affidavits and by the affidavit of <NAME>, the solicitor of <NAME>, of one <NAME>, the son of <NAME>, and of one <NAME>, who appears to have been a friend of the defendant <NAME>, and to have been present at some of the interviews to which I shall refer in a moment, as also a joint-affidavit in reply by <NAME> and <NAME>.

7. The respondents supported their case by an affidavit of <NAME>, the attorney of the plaintiff, of one <NAME>, a brother of the plaintiff, of the said <NAME>, and of his solicitor <NAME>, and by a statement made from his place at the <ORG> by Mr. <NAME>, a member of the <ORG> and an advocate of this <ORG>, and who was at the time leading Counsel for <NAME>.

8. The matter was heard before Mr. Justice <NAME> on three or four days during the month of last July, and, in the result, Mr. Justice <NAME> dismissed the application with costs, and <NAME> has appealed to this <ORG>.

9. His principal ground of appeal is that he never gave Mr. <NAME> any authority to settle litigation, involving not only this suit but some other four or five suits, upon the terms of the alleged compromise. He further challenges the decree made on the ground that the learned Judge in the <ORG> below ought not to have accepted the unsworn statement of Mr. <NAME> when objection was taken by the appellant's Counsel that Mr. <NAME> ought to have been sworn, that the decree was made in the absence of <NAME> who was a party, and a necessary party to the suit, and that the decree determines certain trusts and provisions relating to a portion of the property in dispute, which under the award and decree of 29th August 1889 was declared to be <ORG>, and that it was not competent to the <ORG> with the consent only of some of the parties interested, to set aside the decree of the 29th August 1889, which was a decree of a competent <ORG>, and in the absence of those members of the family who were, or who might be interested in maintaining the <ORG> character of such property.

10. On the present appeal, we have allowed the respondent, <NAME>, to be heard by her Counsel, and to put in an affidavit, which she desired to put in the lower <ORG>, but which she was unable to put in by reason of the ruling of the learned Judge that he could not hear her. In our opinion, as she was a party to the suit and had been served with notice of the application to set aside the compromise decree, she was entitled to be heard.

11. It must be obvious, from what I have said, that if we are of opinion upon the evidence--for it is a question of fact--that the present appellant did not authorize his Counsel Mr. <NAME>, to consent to this compromise, the compromise decree cannot stand, and equally obvious that the other questions, except that, as to the admissibility of Mr. <NAME>'s statement, would become of no practical importance; and the stress of the argument adduced on behalf of the respondent's Counsel has been to show that such authority was, in fact, given by <NAME> to Mr. <NAME>.

12. There cannot, I think, be any reasonable doubt at the present day that Counsel possesses a general authority,--an apparent authority, which must be taken to continue until notice be given to the other side by the client that it has been determined--to settle and compromise the suit in which he is actually retained as Counsel, and in the exercise of his discretion to do that which he considers best for the interest of his client in the conduct of the particular case in which he is so retained. Here, however, the compromise extended to collateral matters, to matters quite outside the scope of the particular case in which Mr. <NAME> was retained as Counsel, and, in order to bind the client, it must be shown that Mr. <NAME> had, from his client, a special authority to compromise, and compromise upon the definite terms which are set up by the present respondents. This proposition was not disputed in the lower Court, nor has it been contended for before us. As to the authority of Counsel to compromise on behalf of his client, I may refer to the cases of <NAME> v. <NAME> (1866) L.R..1Q.B., 379; <NAME> v. <NAME> (1857) 1 C.B.N.S., 364: 2 De. Gex. and <NAME>, 381; and <NAME> v. <NAME> (1887) L.R., 20 Q.B. Div., 141.

13. There are other authorities, but I need not refer to them as the proposition of law is not questioned.

14. Before I deal with the facts of the case, I must say a word or two as to whether or not the statement of Mr. <NAME>, not being on oath, was admissible in evidence. So far as my personal experience goes, it has been the undoubted practice in the <ORG>s in England to accept the statement of Counsel in matters of this nature, statements made from their place at the bar. I am not prepared, however, to go so far as to say that if that course be objected to by the opposite side, the party putting forward such statement could insist upon its being made without the sanctity of an oath. In the recent case of <NAME> v. <NAME> (1897) 2 Ch. Div., 534, it was thought prudent, as there was some doubt upon the point, to have the learned Counsel sworn, as they were, and they gave their evidence from their places at the bar. That course was not adopted in the case of <NAME> v. <NAME> (1895) 2 Ch. Div., 638, 640, but there is nothing in that case to indicate that any objection was raised. I entertain great doubt whether, if there be any such objection, the other side can insist upon the statement being accepted, unless upon oath, and in making this observation, I am not unmindful of what Lord <NAME> is stated to have said--for we have not Lord <NAME>'s own words--that he would never admit an affidavit in such cases. I should have thought, however, that as a matter of substance, the matter was not of much practical importance, for I can scarcely suppose that any Counsel, if he understood that the other side were not prepared to accept his statement made upon his word of honor, would not himself ask that he might be allowed to give his evidence in the usual way. I need not discuss this matter further, for we should not have been disposed to allow the appeal on this ground, but if necessary would have given the respondent the opportunity of putting in an affidavit by Mr. <NAME>, saying that his statement before the <ORG> below was a true one. In this view it becomes unnecessary to discuss whether, as the Advocate-General urged, the statement was admissible, not only under the Indian Evidence Act , but as a statement made by a quasi officer of the <ORG> to whose word some sort of special sanctity must be taken to attach, a proposition which, before its acceptance, would require much consideration; or to deal with the argument of Sir <NAME> that having regard to Section 13 of the Oaths Act, it made no difference whether the statement was or was not upon oath, a proposition which is at once novel and startling, and which, if well founded, must apply to the case of every witness, and possibly to every Juryman.

15. I will now proceed to deal with the facts of the case, and, I think, I am doing no injustice to the judgment of the learned Judge in the Court below when I say that it appears to be almost entirely based upon the statement of Mr. <NAME>, which the learned Judge regards as clear, cogent and convincing. Save a quite passing reference to the evidence of <NAME> and <NAME> I can find no reference to any of the affidavits on either side, nor can I discover any analysis of the statement made by Mr. <NAME> himself. This, to my mind, is a case in which the evidence ought to be scrutinized with very careful attention.

16. I will now deal with Mr. <NAME>'s statement with the view of ascertaining and determining whether, if there were nothing but that statement in the way of evidence in the case, the respondents have satisfactorily made out that the appellant <NAME> did give an express, or special, authority to his Counsel to consent to the terms of the compromise.

17. It is not necessary to go back further than Monday, the 26th June, when it was mentioned to the Court that negotiations for settlement were proceeding, and the case was adjourned. It is clear from Mr. <NAME>'s own statement that at the consultation, which took place between <NAME> and his Counsel, on Monday, <NAME> offer was to pay Rs. 60,000 to the plaintiff as a lump sum to be paid by instalments, and that on that occasion <NAME> never agreed to pay any of the plaintiff's costs, but was willing to pay a lump sum to cover everything. There were several other points discussed at that interview, but to cite Mr. <NAME>'s own words, our offer was that "each party was to pay their costs." It will be seen from this, that from the very outset the appellant objected to paying the plaintiff's costs of the suit, which admittedly amounted to a very large sum. According to Mr. <NAME> he handed over the terms to Mr. <NAME>, who was the plaintiff's leading Counsel, the same day (Monday), and Mr. <NAME> said that his client would not take the Rs. 60,000, but she must have the costs as between party and party. It is obvious that from the very first, one of the main, if not the main points in dispute was the payment of the plaintiff's costs of the suit.

18. On Tuesday morning, the 27th, the case again stood over, and ultimately on that day Mr. <NAME> put down his terms in writing; and those terms were given to Mr. <NAME>.

19. I may here interpose that according to the evidence of <NAME>, who was the attorney for <NAME> (see paragraph 14 of his affidavit) Mr. <NAME>, Mr. <NAME> and himself had on Tuesday a discussion as to the terms of the proposed compromise, and it was arranged that Mr. <NAME> should see the defendant <NAME> and try to induce him to accept the plaintiff's terms of payment to her of Rs. 40,000, and her party and party costs of the suit, and that Mr. <NAME> left that interview in order to see <NAME>, that he came back to <ORG> after a short time, and told Mr. <NAME> and <NAME> that he had succeeded in inducing <NAME> to accept the above last mentioned terms, and that thereupon Mr. <NAME> put the terms into writing and wrote out the Exhibit marked A. Mr. <NAME> does not say a word about all this. It is, therefore, reasonably clear that the memory either of Mr. <NAME>, or of <NAME>, must be defective upon this point.

20. However be that as it may, Mr. <NAME> saw <NAME> at about 1 o'clock in Mr. <NAME>'s Chambers, and there were present at that interview besides the two Counsel Mr. <NAME> and Mr. <NAME>, <NAME>, his two sons, his attorney, <NAME> and his friend one <NAME>

21. I may, perhaps, mention that when this motion was being heard before Mr. Justice <NAME>, Counsel for <NAME> asked that Mr. <NAME> should be asked to state his recollection of what passed, but the learned Judge in the <ORG> below declined to allow that course to be pursued.

22. On the occasion of this interview on Tuesday Mr. <NAME> went through with the present appellant all the terms suggested by Mr. <NAME> and wrote down his objections, and I will take it for the moment that the paper Exhibit B. did indicate all the objections which <NAME> had to Mr. <NAME>'s terms.

23. It is perfectly clear that at that interview <NAME> was unwilling to pay the costs of the suit as between party and party. Mr. <NAME> says so, and he also says that the only two points as to which there was any difference were the party and party costs of the suit and the costs of suit No. 68. However he sums up the result of these interviews by saying that both he and Mr. <NAME> were perfectly certain that the only thing that stood in the way of a settlement was the plaintiff's claim to a separate house worth Rs. 10,000, or the value thereof. I confess feeling some difficulty as to how Mr. <NAME> could have arrived at this conclusion, in the face of his own memorandum in writing which indicates that there were other points in dispute still open.

24. Mr. <NAME> then went back to Mr. <NAME>, and Mr. <NAME> on behalf of his client refused to accept the terms as proposed by Mr. <NAME>.

25. There then for the moment was an end of the matter in the sense that the negotiating parties were not at one, and that there was then no concluded agreement of compromise.

26. The only express or special authority, which Mr. <NAME> then had to compromise on behalf of his client <NAME>, was thus at an end, as Mr. <NAME> would not accept the terms proposed by <NAME> through his Counsel Mr. <NAME>. I am taking it that looking at Exhibit B. the words as to all parties paying their own costs applied only to suit No. 68 of 1898. That suggestion was, however, met by a direct negative from Mr. <NAME>, but I am not unmindful that Mr. <NAME> says that he understood <NAME> to say that was not to stand in the way of a settlement.

27. On Tuesday then no agreement binding on either party had been arrived at. On Wednesday, the 20th, it was stated to the <ORG> that the parties had been unable to come to terms, and the case was again adjourned in the hope of an amicable settlement. Mr. <NAME> stated that there was only one very small item, which had not been settled, but, if the evidence filed on behalf of the appellant to be trustworthy, Mr. <NAME> must have known on the Tuesday afternoon, that even if in his interview with Mr. <NAME> on the Tuesday <NAME> had agreed to pay the plaintiff's costs of this suit he had resiled from that position later on in the same day. It is quite clear on Mr. <NAME>'s own showing that <NAME> never agreed to contribute anything towards finding a residence for the plaintiff, and it is equally clear that on the evening of the Wednesday Mr. <NAME> was expressly told that <NAME> was not willing to pay the plaintiff her party and party costs. On the Wednesday then the whole matter was open, for the terms offered by <NAME> through Mr. <NAME> had not been accepted; that this was so is clear from Mr. <NAME>'s statement on the Thursday morning to the <ORG>: "I am sorry to say we have been unable to settle and the case must proceed," and the case did proceed.

28. By the Thursday morning then there was no agreement of settlement, and it is important to see what took place on that day in the way of express authority being given to Mr. <NAME> to compromise on his client's behalf. After the midday adjournment on that day Mr. <NAME> mentioned to the <ORG> that the case had been settled, the only obstacle in the way of settlement having been removed. I will quote what he says: "I was also informed by <NAME> that <NAME> and <NAME> had gone to see <NAME> on the subject and before the mid-day adjournment I was informed that <NAME> had consented either to buy a house worth Rs. 10,000 or to pay the Rs. 10,000 himself. The only obstacle in the way of settlement being removed your Lordship will remember that Mr. <NAME> was putting in some Bengali accounts, which had not been translated, I said that Mr. <NAME> would undertake to translate them, if necessary, because I had then been informed that the only obstacle had been removed, and after the mid-day adjournment I mentioned to the <ORG> that the case had been settled. <NAME> was present in <ORG> at that time and also <NAME>, and the other son of <NAME> and also <NAME> and several others. Then the terms were fair copied in <ORG> by Mr. <NAME>, and whilst being copied, I was told by <NAME> that <NAME> wanted to see the terms. I told him that the terms were the same as agreed to by him on Tuesday last. The only difference was that the plaintiff's maintenance, instead of being a charge upon moffusil properties, had been charged upon the dwelling houses of <NAME> and <NAME>. <NAME> said that <NAME> was particularly anxious to see the terms."

29. I feel some difficulty in understanding how Mr. <NAME> could have thought, and told the <ORG> that the only obstacle in the way of a settlement had been removed, when on the previous evening he had been expressly told that <NAME> was unwilling to pay the plaintiff's costs, or what authority he had to agree to the terms of the previous Tuesday, as in the interval, <NAME> had told him that he would not pay the party and party costs of the plaintiff.

30. I can only suppose that this important point has escaped his memory. Taking Mr. <NAME>'s statement most favourably to the plaintiff, the only special authority which <NAME> gave Mr. <NAME> was to agree to Mr. <NAME>'s terms in Ex. A., as modified by Ex. B. and when those modifications were rejected by Mr. <NAME> it seems to me that Mr. <NAME>'s special authority was determined, and that in order to bind <NAME>, as to any fresh terms, a further special authority would be requisite.

31. We now come to the interviews of the 29th between Mr. <NAME> and <NAME> at which the solicitor <NAME>, <NAME>'s son, <NAME>, and one <NAME> were present. Mr. Justice <NAME> would appear to regard this as the only important part of the statement; I am unfortunately unable to share that view, for, to my mind, it is extremely important to ascertain what preceded that interviews It is quite clear that at that interview <NAME> objected to pay the party and party costs of the plaintiff or her costs of suit No. 68. He commenced the conversation in that way.

32. It is clear that be was determined not to pay those costs, for he had told <NAME> only an hour or so before that he would not pay the plaintiff's costs. Seeing <NAME> in that state of mind, his solicitor very properly suggested to the Counsel that he should get the terms signed by <NAME>, when Mr. <NAME> said that he would not insult <NAME> by asking him to put his signature to the paper. The suggestion of the solicitor is, to my mind, very significant by indicating that he at any rate was under the impression that there was at least great doubt whether <NAME> was agreeing to the terms. <NAME> said nothing more. He only smiled and Mr. <NAME> told him, "I am going back to <ORG> and these terms will be put in," and he also told him that he was going to consent on his behalf, to which <NAME> said nothing, and so the interview came to an end.

33. If this were all the evidence in the case I should entertain a very grave doubt whether, having regard to the fact that <NAME> had at the very outset of the interview of 29th said that he would not pay the party and party costs of the plaintiff' in this suit, but only a specified sum, and would not pay the costs of Suit No. 68, we should be justified in holding that under the circumstances narrated by Mr. <NAME>, the latter was justified in consenting to the minutes, or that we should be justified in saying that <NAME> gave him express authority to consent to these terms. I do not think we should be warranted under all the circumstances in inferring from the smile and the subsequent silence of <NAME> Bose, a tacit acquiescence on his part to the terms proposed, or as giving any authority to Mr. <NAME> to consent on his behalf.

34. It is significant that according to Mr. <NAME>'s own statement the solicitor <NAME> followed him into <ORG> and told him that he had no instruction from him to consent to this compromise.

35. I have hitherto dealt with the case entirely upon the statement of Mr. <NAME>, but there is a great deal of evidence in the matter to which the learned Judge in the <ORG> below has given no attention. We have the affidavits filed on behalf of the appellant, and, if the story of these witnesses is to be believed and none of them have been cross-examined, <NAME> never did agree to the terms of this compromise or authorized his Counsel to agree to them. As regards <NAME> affidavits I will only deal with those portions of them in which he speaks from his own personal knowledge. He tells us in paragraphs 18 to 20 of his affidavit, the terms upon which he was prepared to settle the matter at his interview with Mr. <NAME> on Tuesday, the 27th. It is to my mind reasonably clear that, whilst he did not object to pay Rs. 20,000 towards the plaintiff's costs of this suit, which sum was subsequently raised to Rs. 25,000, he did object to an unlimited liability in respect of those costs, and he tells us that at this interview he did not give Mr. <NAME> authority to settle the suit on his behalf. He tells us that at the interview at which he was present at his attorney's office at about half-past 12 on the 29th (the Thursday) he absolutely declined to settle the suit unless the costs of the plaintiff in the suit were limited to Rs. 20,000 and in this he is substantially corroborated by <NAME> himself who says that <NAME> said" I won't pay any costs of the plaintiff, why should I pay any costs to her and settle this suit." This is extremely probable as he had learnt that the costs would be very heavy, certainly exceeding 25,000 rupees.

36. And, now I come to what he says as to the interview between Mr. <NAME> and himself on Thursday, the 29th, and his account of that interview will be found at paragraphs 43,48, and 49 of his affidavit. I may perhaps here interpose the observation that Mr. <NAME>, at the moment that he left the <ORG> to see <NAME> on the Thursday, could"scarcely have thought that he had any sufficient authority from him to consent to the proposed compromise, for, if so, he would not have thought it necessary to go outside the precincts of the <ORG> to the office of the attorney who was instructing him to interview his lay client. It is clear that at this interview the defendant <NAME> went through the proposed terms and put marks in blue pencil against those terms to which he objected, one of which admittedly was as to the payment of the party and party costs and the costs of Suit No. 68. If <NAME> is to be believed he pointed out other objections as well. It is, however, very unfortunate that this document is not forthcoming; its disappearance is not, I think, satisfactorily accounted for. <NAME> says he never authorized Mr. <NAME> to accept the terms of the compromise, or to compromise or settle the suit on those terms, and it will be observed that Mr. <NAME> himself does not go so far as to say that he had authorized him, but only that he honestly believed that <NAME>l had accepted the terms. I am not desirous of making or suggesting any imputation upon Mr. <NAME> in the matter: I am prepared to accept, to the fullest extent, his statement as to the honesty of his belief that <NAME> had authorized him to act as he did; for I should be sorry to think that any member of the bar could act as Mr. <NAME> has done, unless he were under such a belief. But the question of such an honest belief in the mind of Counsel is one thing, whilst the question of whether special authority to settle were actually given by the client is quite another. As to this interview between Mr. <NAME> and <NAME> Bose, the latter's account of it is corroborated by his solicitor <NAME>, his son <NAME>, and <NAME>, as to which evidence the learned Judge in the <ORG> below has been altogether silent. It would appear from the evidence of <NAME> that at the interview which took place between Mr. <NAME> and <NAME> on Tuesday, when Mr. <NAME>'s written terms were discussed, an assurance was given to <NAME> that the plaintiff's costs of the present suit would not exceed Rs. 20,000, and according to his statement the consent of <NAME> to pay those costs was conditional upon the other terms upon which he insisted being complied with, and that afterwards when <NAME> learnt from his solicitor that the costs of the suit would, in all probability, exceed Rs. 20,000, he instructed his solicitor to go to Mr. <NAME> and tell him that he would not pay those costs, unless they were limited to that amount, and the solicitor says he went and told Mr. <NAME> so, and if this story be true, and it is not an improbable one, Mr. <NAME> knew on the Tuesday, through his own professional client, that <NAME> Bose would not pay the party and party costs of the plaintiff of the suit, unless they were limited to Rs. 20,000. Anyway he knew on the Wednesday evening.

37. <NAME> story is corroborated in important particulars by the evidence of the witnesses he has called, and coupling that evidence with Mr. <NAME>'s own statement, I think it clear that <NAME> was throughout determined not to pay these costs, if they exceeded Rs. 20,000 or Rs. 25,000.

38. I must now say a word or two as to what occurred after the interview on the Thursday. After some conversation between <NAME> solicitor, and his son and his friend <NAME>, the solicitor, <NAME> followed Mr. <NAME> into <ORG> and made the observations which he states in paragraph 47 of his affidavit and which are corroborated by the son <NAME>. Mr. <NAME> admits that something to the effect stated by <NAME> passed, but he says that he does not recollect the exact words, but that something was said about responsibility in the matter is apparent, not only from the evidence filed on behalf of the appellant, but also from that filed on behalf of the respondent, and <NAME>, though he denies hearing what Babu <NAME> says he said as to his client not being willing to settle the suit/admits that he heard something being said about responsibility in settling the suit, but that he regarded it as a joke. It must be remembered, in this connection that only an hour or two previously <NAME> himself had heard <NAME> say that he would not pay the plaintiff's costs and why should he settle the suit.

39. Looking then at the evidence, as a whole, I am satisfied that <NAME> did not authorise his Counsel Mr. <NAME> to accept the terms of the proposed compromise.

40. It is contended, however, that, as the respondents were not told that Mr. <NAME> had no authority to settle, the appellant is bound. I am unable to take that view. Counsel no doubt has an apparent authority to compromise the case in which he is retained, and the other side are entitled to rely upon the continuance of that apparent authority, until they receive notice that it has been determined. But that principle does not apply to the present case, where an express or special authority was requisite. The respondent must be taken to know that as this compromise covered matters outside the scope of the suit an express authority to Mr. <NAME> to settle was requisite, and if, in fact, that authority were not given, the respondents cannot avail themselves of the position that they did not know that it had not been given. They were not entitled to assume as in the case of an apparent authority that it was given and was existing. This is pointed out by <NAME>, J., in the case of <NAME> v. <NAME> (1857) 1 C.B.N.S., 364. That learned Judge says: "If therefore in such a case (i.e. a case of special authority given) a Counsel under a misapprehension of his client's instructions, and believing himself to have authority, acts in fact without it, he cannot in my opinion bind his client."

41. In this view it becomes immaterial to consider whether such a compromise, even if otherwise binding, should have been adopted by the <ORG> in the absence of <NAME>, though I must confess I feel considerable doubt upon the point, nor is it necessary to decide the question, whether it was competent to the <ORG> by this compromise decree not made in the presence of all the members of the family of <NAME> and <NAME>, to virtually set aside the decree of the 29th August 1889, which had declared that certain portions of the property in dispute were clothed with a Debuttar character, and to direct part of She property to be divided between <NAME> and <NAME>.

42. For the reasons I have given, the appeal must succeed and the order of the <ORG> below must be discharged, and <NAME> must have the costs of the motion in the <ORG> below.

43. As regards the costs of this appeal, seeing that the respondents have at the bar offered to the appellant all that, and even more than he had previously asked for with a view of putting an end to this litigation, there will be no costs of this appeal.

<NAME>, <NAME>

44. I agree.

<NAME>, J.

45. I also agree.


JUDGMENT <NAME>, J.

1. The statement of the case raises the following two points for an answer :

"1. Whether, on the facts and in the circumstances of the case, the <ORG> was right in holding that the statutory percentages applicable under Section 23A(1) of the Income-tax Act, 1922, to the distribution of dividends on 24th March, 1960, were 45 per cent. and 60 per cent. in respect of processing receipts and trading receipts respectively ?

2. Whether, on the facts and in the circumstances of the case, the shortfall in the distribution of dividend by the assessee was less than 5 per cent. of the total income as reduced by the amounts mentioned in Section 23A(1) of the said Act, and the assessee as such was entitled to a notice under Section 23A(2)(ii) thereof ? "

2. The facts giving rise to this question may be briefly summarised : The assessee, <ORG>, is a private limited company to which the provisions of Section 23A are applicable. In the present case, the assessment year is 1960-61 for which the previous year ended on June 30, 1959. The assessee's net profit accounts came up to Rs. 72,959. The Income-tax Officer determined the assessee's total income at Rs. 87,103 and tax payable thereon at Rs. 39,196, leaving a balance of Rs. 47,907 available for distribution as dividend. According to the Income-tax Officer, the effective statutory percentage applicable to the company was 57.5 per cent. and on this basis the minimum distribution of dividend required for complying with the provisions of Section 23A was Rs. 27,546. The actual distribution made by the company was Rs. 20,295. The shortfall was therefore more than 5% of the distributable surplus. The Income-tax Officer accordingly passed an order under Section 23A with the previous approval of the inspecting Assistant Commissioner of Income-tax levying additional super-tax @ 37 per cent. on the undistributed balance of Rs. 27,612. On appeal before the Appellate Assistant Commissioner, there was an interim order dated December 13, 1962, by which he asked for a report from the Income-tax Officer. The Income-tax Officer submitted his remand report on January 24, 1963.

3. The statement of the case also makes it clear that the assessee carried on two activities : (1) developing and printing, and (2) trading. The Income-tax Officer adopted 50 per cent. in respect of the first part and 65 per cent. in respect of the second part of the business and this resulted in the average statutory percentage 57'5 per cent. The assessee's contention then was that having declared a dividend of Rs. 20,295 in March, 1960, when the statutory percentages were 45 per cent. and 60 per cent., respectively, for these two activities, the average would be only 52.5 per cent. In fact the assessee claimed to be entitled to be given an opportunity for declaring additional dividends. The Appellate Assistant Commissioner negatived the contention and held that the statutory percentages would be 50 per cent. and 65 per cent. as enacted by the Finance Act of 1959 and therefore the assessee was not entitled to an opportunity to declare additional dividends. It was further held by the Appellate Assistant Commissioner that further distribution of dividends was not impossible. In the result, the Appellate Assistant Commissioner upheld the Income-tax Officer's order under Section 23A .

4. Before the <ORG> the main contention was that the percentage of 50 per cent. and 65 per cent. would be effective on and from the 1st April, 1960, and for distributions prior to that date the applicable statutory percentages were 45 per cent. in respect of manufacture, etc., and 60 per cent. in respect of trading. The <ORG> came to the conclusion that the exposure of the film was one of the stages of taking and producing of the photograph and that when admittedly developing of the exposed film was processing, there was every justification to treat the exposure of the film itself as part of the proceeding. On that basis the assessee's net profit consisted of Rs. 67,006 arising from processing and Rs. 5,95.3 for trading. The <ORG> applied 45 per cent. and 60 per cent. to these two activities of the business, and came to the conclusion that the shortfall worked out to be less than 5 per cent. of the distributable surplus. The conclusion of the <ORG> therefore was that the assessee should be afforded an opportunity to make a further distribution of dividends to raise it up to the requisite statutory percentage. The Commissioner therefore called for this reference.

5. As will be clear from the facts stated above the answers to the questions mainly depend on an interpretation of Section 23A of the Income-tax Act. The battle of arguments raged round the point of time and the law applicable in this respect. It has already been noticed that the previous year in this case is 1959-60. The actual distribution of the dividends could be made in the 12 months following the previous year according to Section 23A which means 1960-61. Thirdly, the assessment year in this case as already noticed is also 1960-61. It may be noticed also that the actual assessment by the Income-tax Officer was made on the 17th March, 1961. The order of the Appellate Assistant Commissioner covered a period from 13th December, 1962, when the remand order was made and the report and orders following thereafter in 1962-63, culminating in the final order of the <ORG> on the 4th August, 1965.

6. The main controversy arises out of the fact that the Finance Act , 1959, amended the rate of statutory percentage. The crux of the problem is which statutory percentage applies to the facts of such a case on these facts ? Does the old rate apply which ruled at the time of the previous year or does the amended rate apply ? The major argument in favour of applying the old rate of statutory percentage is that that was the rate governing at the time of the previous year. The major argument in favour of applying the new rate of statutory percentage is that that was the rate which governed at the point of time when the Income-tax Officer made his assessment and order and he could look to the rate as amended and not to the old rate which had been repealed.

7. Quite a good deal of argument has been advanced from the <ORG> on the question of prospective and retrospective legislation. Much of it is not quite relevant on the point though such arguments create a good deal of confusion. The answer primarily must depend on the correct interpretation of Section 23A of the Income-tax Act read with the relevant provisions of the Finance Act , 1959. Proceeding to the interpretation of Section 23A of the Income-tax Act bearing on the points arising for an answer, the following considerations are relevant:

8. First, the words "in respect of any previous year"; secondly, "distributed within 12 months immediately following the expiry of the previous year"; thirdly, "are less than the statutory percentage of the total income" ; fourthly, "of that previous year". Section 23A of the Income-tax Act, inter alia, provides as follows:

"Where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the 12 months immediately following the expiry of that previous year are less than the statutory percentage of the total income of the company of that previous year.....' What follows is that this amount is reduced by certain considerations mentioned in Clauses (a), (b) and (c) of that section.

9. It will be clear from the above words that the expressions quoted above are relevant for a determination of this question. This is a section for assessing companies to super-tax on the undistributed income in certain cases. It is not a charging section as has been said and as has been noticed in different authorities, to some of which I shall make a reference later on in this judgment. It is a statutory liability recognised by this particular section of the Income-tax Act . The basic condition is satisfaction of the Income-tax Officer. The next consideration is that it is with regard to dividends. The third consideration is that it is not with regard to dividends actually declared or proposed by the company itself but which the Income-tax Officer thinks should have been distributed. The distribution period is expressly said to be within the 12 months immediately following the expiry of that previous year. But nevertheless the dominating consideration which must operate on the Income-tax Officer is that it is "in respect of any previous year." The next consideration is that the Income-tax Officer has to be satisfied that the dividend which the company distributed fell short or were less than the statutory percentage. The question, therefore, arises, statutory percentage at what point of time? Is it the statutory percentage prevailing at the time of the previous year ? If the Income-tax Officer is considering dividends which should have been declared in respect of the previous year but in fact was not done, common sense and plain logic, apart from fairness, demand that the rate should be the rate prevailing for the previous year. The words "of that previous year", although coming after the words "total income" in the portion of Section 23A quoted above, can very well govern not merely the total income of the previous year but the statutory percentage itself of the previous year. These considerations lead to the conclusion that the <ORG> was right in holding that the statutory percentage operating for the previous year was the right and proper statutory percentage to apply in this case.

10. There are some other considerations bearing on this point. Explanation 2 of Section 23A sets out for the purpose of that section the statutory percentages. The relevant statutory percentages here in this case are to be found in Sub-clauses (ii) and (iii) of Explanation 2 of Section 23A of the Income-tax Act. These statutory percentages appearing in this Section 23A were altered and raised by the Finance Act of 1959. It will be appropriate now to make a reference to the Finance Act of 1959. Section 11 of the Finance Act, 1959, which received the assent of the President on the 28th April, 1959, provides:

"11. Amendment of Section 23A .--In Section 23A of the Income-tax Act, in Explanation 2, for the figures '45 per cent. and 60 per cent.' in both the places where they occur, the figures '50 per cent. and 65 per cent.' shall respectively be substituted."

11. The message of the expression "shall respectively be substituted" should not be missed because it indicates that it is a future and not a past. The substitution is to take place in the future. The second relevant section is Section 19(3) of the Finance Act, 1959, which provides :

"The amendments to the Income-tax Act made by Section 5 , Section 7 , Clause (ii) of Section 8 , Section 11 , Section 12 , Section 13 , Section 14 and Section 15 shall have effect on and from the 1st day of April, 1960."

12. In short, its effect is that this Section 19(3) says that the amendment made by Section 11 of the Finance Act, 1959, in Section 23A of the Income-tax Act "shall have effect on and from the 1st day of April, 1960." That expression "shall have effect on and from the 1st day of April, 1960" again indicates that the effect of the amendment of raising the statutory percentages will only operate on and from the 1st day of April, 1960, and not before. Now, reading Section 11 and Section 19(3) of the Finance Act, it seems to follow that the substitution was to take effect in future and that it would take effect from the 1st April, 1960. The express language, "shall respectively be substituted", in Section 11 and "shall have effect on and from the 1st day of April, 1960" in Section 19(3) of the Finance Act of 1959 clearly indicates that the old statutory percentage was to continue until the 1st of April, 1960. Therefore, the previous year and its dividend and the consideration how much should have been declared on the basis of statutory percentage under Section 23A of the Income-tax Act can only mean the statutory percentage prevailing for the previous year in this case.

13. This meets the argument that at the time when the Income-tax Officer was making the assessment and the order under Section 23A of the Income-the Act, he could not apply the old statutory percentage, because it had already gone amended and repealed. It was not amended or repealed in that sense but it preserved its vitality and effect until the 1st April, 1960, as expressly indicated by the language used in Section 11 and Section 1 .9(3) of the Finance Act , 1959. Had the old rate completely gone in the sense that it was even inoperative for the previous year 1959-60, then in that case the more serious consequence would have been that the assessee would be totally exempt from the operation of Section 23A of the Income-tax Act for the very simple reason that the Income-tax Officer could not apply the old rate which was gone according to this contention and could not apply the new rate which was not operative for the period for which the super-tax was being determined by the Income-tax Officer.

14. But, then, Mr. <NAME>, for the revenue, here raised another consideration for this court by relying on Section 19(4) of the Finance Act, 1959, which says:

"Notwithstanding anything contained in Sub-section (2) or Sub-section (3), in relation to dividends declared or payable by a company in respect of any previous year relevant to any assessment year prior to the assessment year 1960-61, the Income-tax Act shall have effect as if the amendments contained in Section 5 , Section 7 , Section 9 , Section 10 , Section 14 , Section 15 , Section 16 and Section 18 had not been made."

15. Therefore, Mr. <NAME> for the revenue argues that the omission to state Section 11 in Section 19(4) of the Finance Act, 1959, shows that assessments under Section 23A of the Income-tax Act do not get the benefit mentioned in Section 19(4) of the Finance Act, 1959. On a careful consideration of this branch of the argument I am unable to accept Mr. <NAME>'s contention for the revenue on this point. The primary reason for not accepting is that Section 19(4) of the Finance Act, 1959 was only speaking of "dividends declared or payable by a company" Section 23A of the Income-tax Act and therefore Section 11 of the Finance Act of 1959 do not deal with dividends declared or payable by a company. In fact it is the dividend which the Income-tax Officer is satisfied should have been distributed but in fact not done by the company. Another argument was advanced by Dr. <NAME>, appearing for the assessee, on the basis that the sections mentioned in Section 19(4) of the Finance Act, 1959, are sections which relate more or less to grossing up of dividends and specially dividends which have passed into the hands of the shareholders. In fact Dr. <NAME> was prepared to take us through, and he in fact did, the Finance Minister's Budget Speech introducing the Finance Act of 1959, specially paragraphs 67, 68 and 69, which is to be found in  35 I.T.R. (St.) pages 57-58. It will not be necessary for us to refer to the Finance Minister's Budget Speech on that point. On the construction itself, as I have said, it is clear that Section 19(4) deals only with "dividends declared or payable by a company" and not such dividends as mentioned in Section 23A of the Income-tax Act.

16. It is plain that under Section 23A of the Income-tax Act what the Income-tax Officer considers is first, the dividend actually distributed by the company with the 12 months immediately following the expiry of the previous year and, secondly, whether that distribution is less than the statutory percentage of the total income of the company of that previous year. The distribution of the dividend therefore by the company is the first consideration and the second consideration is whether such distribution is less than the statutory percentage. It is possible that when the company has distributed dividends it could not anticipate what amendments in rates, if at all, would be proposed by the Finance Act . No doubt it covers a whole period of 12 months following the expiry of the previous year which in this case would include the last two or three months on the dates mentioned above. But that is a question bearing on the possibility of knowledge of the assessee of the new amended rate during the course of the 12 months immediately following the previous year. But the question of knowledge is irrelevant in the construction of Section 23A that I have proposed. It is to be borne in mind that here is an instance when a temporary annual Act like the Finance Act was amending a permanent Act like the Income-tax Act itself by altering the rates of statutory percentages engrafted in Section 23A of the Income-tax Act. This is one of the examples where a yearly temporary Act like the Finance Act produces a permanent change in the permanent statute like the Income-tax Act , a questionable but permissible device frequently adopted in modern statutory jurisprudence.

17. This brings me to the consideration of another aspect of this problem. What the revenue is really trying to do in this is to tax an assessee only by implication. Normally, a tax should be imposed in clear language without leaving any doubt whether the tax is payable or not. It would be unnecessary to go into the leading authorities or. this subject except perhaps to refer to two leading cases--one of <ORG> and another of <ORG>--definitely laying down the law that there can be no tax by implication or inference. The first case is <CITATION> ,  38 T.C. 86 where Viscount <NAME> observed at page 115 as follows :

"My Lords, I cannot accede to this argument. I hesitate, in any case to introduce by way of implication in a taxing statute a provision which cries aloud for express statement, if it is intended. But I am not satisfied of any such intention."

18. Surely, this is one of these cases. Here, the revenue is trying to impose a higher rate of super-tax under Section 23A , which was, at any rate, not prevailing for the previous year and that, in my view, must be done in clearer language if that was the intention of the legislature.

<ORG> of India in <CITATION> ., reaffirmed at page 195 the previous decision in <CITATION> ,  8 S.T.C. 561 in these terms : "If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter." 19. Now, what the revenue is trying to do before us in this reference is to impose the higher rate of super-tax by inference or by analogy or by inviting us to probe into the intention of <ORG> and by asking us to consider what was the substance of the matter against which <ORG> made the above observations 20. As already indicated, quite a storm of argument was raised to distinguish some of the cases on which Mr. <NAME> for the revenue relied. Mr. <NAME> relied first on <CITATION> ,  13 I.T.R. 221 (P.C.) a decision of <ORG>, where Lord <NAME> observed, inter alia, as follows at pages 223-24 of the report: "In the second place, it should be remembered that the Indian Income-tax Act , 1922, as amended from time to time, forms a code, which has no operative effect except so far as it is rendered applicable for the recovery of tax imposed for a particular fiscal year by a Finance Act ...... This can only refer to the Indian Income-tax Act , 1922, as it stood amended at the date of the Indian Finance Act , 1939, and necessarily includes the alterations made by the Amending Act , which had already come into force on the 1st April, 1939." 21. The next case relied on by Mr. <NAME> was the decision of <ORG> in <CITATION> , where <NAME>, at page 70, observed as follows :

"Nor can it be said, in strictness, that the Finance Act , 1950, is retroactive legislation. That Act , as already noticed, purports by Section 2 to charge income-tax and super-tax at specified rates 'for the year beginning on the 1st day of April, 1950'. The case is thus one where the statute purports to operate only prospectively, but such operations, as, under the scheme of the Indian income-tax law, could take into account income earned before the statute came into force. Such an enactment cannot, strictly speaking, be said to be retroactive legislation, though its operation may affect acts done in the past."

22. The third case on which the revenue relied is again one of <ORG>, in <CITATION> , where <NAME>, at page 677, observed as follows:

"The legal position as we apprehend may be stated thus : under the Act, an individual is assessed to income-tax on the income of the previous year at the rate or rates fixed for the year by the annual Finance Act . The total income of the assessee during the previous year is computed in accordance with the provisions of the Income-tax Act after giving the relevant allowances and deductions therefrom. If during the assessment year an individual is assessable to tax, the fact that during the previous year he was not liable to tax at all because there was no Income-tax Act in the area to which the Act was extended or because that under an Income-tax Act in force therein during that year his income was exempted from tax or because of any other law, including International law, he was so exempt from tax, would not be of any relevance."

23. Dr. <NAME>, appearing for the assessee, tried to draw a distinction based on the theory that all these cases were really on the basis of the charging sections like Section 3 of the Income-tax Act and he tried to distinguish such a charging section as Section 3 of the Income-tax Act from Section 23A of the Income-tax Act which is not a charging section but a section creating a statutory liability for super-tax under certain circumstances on the dividends mentioned here. But whether that distinction is followed or not need not deter us because we are of the view that legislation must be interpreted on its own terms and having regard to the language used in Section 23A of the Income-tax Act and Sections 11 and 19 of the Finance Act of 1959, we have come to the conclusion that, quite independent of any consideration of retrospective or retroactive or prospective legislation, the point is quite clear that the statutory percentage rate remained operative and was to be the rate applicable by reason of the fact that the higher amended rate did not come into effect until 1st April, 1960, indicating thereby that the old statutory percentage was effective until April 1, 1960.

24. Dr. <NAME> also relied on two decisions on this point. One is the decision of <ORG> in <NAME>, Income-tax Officer, Special Investigation Circle 'B' v. <ORG> .

The gist of that decision is that an order under Section 23A of the Income-tax Act, as amended by the Finance Act s of 1955 and 1957, is not an order of assessment within the meaning of Section 34(3) of the Act and, therefore, to such an order the period of limitation prescribed under Section 34(3) did not apply. It further decides that every order which contemplates computation of income for determination of the amount of tax payable is not an order of assessment within the meaning of the Act; nor does prescribing of procedure for determining and imposing tax liability make it an order of assessment. In fact, this case draws a vital distinction between the assessment of tax under Section 23 and imposition of liability under Section 23A . It makes clear that the tax liability quantified by an order under Section 23 is a charge statutorily imposed by Sections 3 and 4 of the Act. Under Section 23A , there is no statutory charge in respect of additional super-tax and the liability is imposed by the order of the Income-tax Officer. This case proceeds to point out that the source of the liability to pay additional super-tax is not Sections 3 and 4 of the Act; it lies in and arises out of the order of the Income-tax Officer. That consideration, however, is not so much in support of Dr. <NAME>'s contention for the assessee as in favour of Mr. <NAME>'s contention for the revenue. <NAME>, at page 672, of that report, however, makes the following point clear:

" Section 23A , before it was amended by the Finance Act , 1955, was undoubtedly procedural ...... Section 23A(1) after it was amended by the Finance Act , 1955, provides within itself machinery for imposition of liability to pay additional super-tax, but it has not on that account been made a charging section. A charge to tax arises under Sections 3 , 4 and 55 of the Act for payment of income-tax and super-tax and not under Section 23A ."

25. The other authority, which we need not discuss in detail, is Dr. <NAME>'s reference to the Finance Minister's Budget Speech introducing the Finance Act , 1959, the relevant paragraphs of which we have already mentioned.

26. For the reasons and on the authorities stated above, we answer the first question in the affirmative in favour of the assessee and hold that the <ORG> was right in applying the statutory percentage rates of 45% and 60% in respect of processing receipts and trading receipts respectively.

27. The second question is a shorter one. Normally, on the facts of this case, the answer to the second question should follow the first one. The answer to the second question should, therefore, be also in the affirmative. But then Mr. <NAME> for the revenue tried to raise this question that even then the application of 5% rule is open to objection on the <ORG>'s decision. The point shortly is that by the order of the Income-tax Officer, the net profit from processing was taken to be Rs. 17,714. But what the <ORG> did was to increase this figure to Rs. 67,006 as the net profit from processing without sufficient consideration or without any real basis of evidence on the point. There is some force in the argument of Mr. <NAME> for the revenue in this branch of the case. But his handicaps are many and, in our view, insuperable in the particular facts of this case. In the first place, it raises the question whether the exposure of the film is one of the stages of the whole process of taking and developing the photograph, specially in the light of the distinction made between the trading activities of the assessee and his other activities, viz., developing and printing. The first handicap of Mr. <NAME> on this branch is the finding of the <ORG>, which may be called a finding of fact of some kind, to the effect that the <ORG> disallowed to question which was attempted to be raised before it. However, the "exposure" of the film came into the question of "processing" of films. This is really an intricate way of bringing up this rejected question on which no further attempt was made to ask for a reference by the revenue. Dr. <NAME> naturally described this as a back-door way of opening a question, the front-door of which was closed. He was not wrong. But then it was perhaps within the ambit of the second question in the way it has been framed. The second question as stated above raised the problem of shortfall in the distribution of dividend by the assessee and whether such shortfall was less than 5% of the total income as reduced by the amounts mentioned in Section 23A(1) of the Income-tax Act, Whether the shortfall was less than, 5% would depend on the amount of processing receipts and trading receipts. The Income-tax Officer applied the rule of thumb of 50 : 50 to this branch of the case. He came to the finding that the assessee has classified "Studio Receipts" at Rs. 98,585 under the head of "processing". His view was that processing of films and exposure of films were two different aspects and he indicated that it was possible for an individual to run a photographic studio where he could only expose the films and get them processed elsewhere. Therefore, in that view of the matter, he said he could not consider the whole of the receipts of Rs. 98,585 under the head "Studio receipts" as "processing receipts". That is the reason why he took it at 50 : 50. We do not think that sufficient consideration was paid by the <ORG> to the processing receipts and to consider what exactly processing was on the facts of this case. Exposing a film may or may not be a part of the "processing" depending on the nature of the business carried on by the assessee. If the assessee only prints and develops exposed films brought by customers, then the "exposure" is not part of "processing" as a business by the studio itself. Whether it is so or not in a particular case depends on the facts. The <ORG> should have applied its mind to this consideration and, if necessary, to take technical evidence on the point or asked for it. In the accounts themselves also, there does not seem to be an indication of the awareness either of the assessee or of the revenue on this point. The figure of Rs. 67,006 which the <ORG> has taken, however, may not altogether be unsupportable having regard to the fact that the net profit for processing, as appearing from the order at Rs. 70,306 when reduced by the director's remuneration at Rs. 3,300, exactly leaves the sum of Rs. 67,006. Therefore, in these circumstances and facts, we are not in a position to say that the <ORG>'s order is entirely without any evidence at all. We must, however, make it plain to the <ORG> and the authorities concerned that in such cases there should be a more careful regard to the actual parts of business and specially in a photographic business where processing may be a technical term influenced by the actual consideration of the facts of the business of the particular studio whose assessment is under consideration.

28. We, therefore, do not wish to interfere in this matter. The answer to question No. 2 also follows in the affirmative in favour of the assessee.

29. No order as to costs.

<NAME>, J.

30. I agree.