s.c.B.

SUPREME COURT REPORTS 691

EBRAHIM ABOOBAKER AND ANOTHE"U

TEK CHAND DOL WANI.

EBRAHIM ABOOJ3AKER AND ANOTHER

CUSTODIAN-GENERAL OF EVACUEE

PROPERTY.

EBRAHIM ABOOBAKER AND ANOTHER

U. M. MIRCHANDANI.

[PATAN.JALI 8ASTRI C.J., MUKHERJEA, DAS, GHULAM

HABAN and BHAGWATI JJ.]

Admi?bistration of Evacuee Property Act (XXXI of 1950), ss. 2(d) and(/), 7-Proceedings fo1 declaring a person an evacuee and his properties evacuee properties -Death of person pending pro. ceedings-Abatement of proceedings-Continuation of proceedings against wccessors~ Legality.

Where a Mohammedan against whom proceedings are commenced under the Administration of Evacuee Property Act, 1950, for declaring him an evacuee and his properties evacuee properties dies during the pendency of the proceedings he cannot be declared an evacuee after his death, and his properties which on bis death vest in bis heirs under the Mohammedan law cannot be declared evacuee properties.

CIYJL APPELLATE JL1nrsDICTION: Civil Appeal No. fi5 of 1953.

Appeal by special leave granted by the Supreme Court on 13th March, 1953, from the Judgment and

Order dated the 30th July, 1951, of the Custodian General of Eyacuee Property in No. 31-A/Judi./50.

Petition No. 247 of 195Q, a petition under Article 32 of the Constitution for enforcement of fundamental rights, and Petition for Special Leave to Appeal No. 106 of 1952 were also heard ll; long with

Civil Appeal No. 65 of !9(j; j, ·

April 10.

Ebrahim Aboobake1 and Another v.

Tek Chand

Dolwani.

Ghulam Ha!an J.

692 SUPREME COUR'r REPORTS [1953]

K. T. Desai for, the appellants and petitioners.

0. K. Daphtary, Solicitor-General for India (PMus A. Mehta with him) for the respondent in Petition No, 247, .

1953, April 10, The Judgment of the Court was delivered by

GHULAM HASAN J,-ln order to understand and appreciate the point arising for consideration in this case, it will be necessary to set out a few preliminary facts:--

One Aboobaker Abdul Rehman, a resident of Bombay, received on December 16, 1949, from the Additional Custodian, Bombay, a notice under section 7 of

Ordinance No, XXVII of 1949 calling npon him to show canse why his interest in certain specific property shonld not be declared to be evacuee property.

A further notice issned 0'1January11, 1950, required him to show cause why he should not be declared an evacuee and all his properties declared to be evacuee properties, On February 8, 1950, foe Additional Custodian decided that Aboobaker was not an evasuee, but at the same time issued a fresh notice to him under section 19, requiring him to show cause why he should not be declared an "intending evacuee" and on the following day, February 9, he declared Aboobaker as an "intending evacuee" upon the same evidence.

Aboobaker does '10t appear to have contested this order, but one Tek Chand Dolwani, first informant, carried the matter in appeal to the Custodian

General, praying that Aboobaker be declared an evacuee and that the Imperial Cinema, one of his properties, be allotted to him, The Ordinanc~ expired on October 18, 1949, and was replaced by Act XXXI of 1950 (The Administration of Evacuee Property Act) which came into operation on April 17, 1950, It is not denied that although the Ordinance was repealed by section 58, the proceedings taken in the exercise of any powers conferred by the Ordinance shall be deemed to have

been taken in the exercise of the powers conferred by the Act as if the Act were in force on the day the proceedings were taken.

The appeal was heard ou May 13, 1950, when the preliminary objections iu regard to the maintainability of the appeal were argued and the appeal was adjourned to May 15 for orders.

Ou May 14, Aboobaker died leaving him surviving three sons and a

daughter as his heirs under the Mohammedan law, tbe sons taking 2/7th share each and the daughter I/7th.

On May 15, the Custodian General pronounced the order which was, however, dated May 13.

By this order he dismissed the preliminary objections and directed that further enquiries should be made and that Aboobaker be examined further on August 19,

1950. The hearing of the appeal was adjourned from time to time and was fixed for final disposal on March 7, 1951. Notice of this hearing was issued to Ebrahim Aboobaker (son) and Hawabai Aboobaker (daughter) who owned between themselves 3/7th share to appear as the heirs and legal representatives of the deceased.

The petitioners, who are residents of India-their two brothers are said to have migrated to Pakistan-filed on February 26, 1951, Miscellaneous Petition No. 15 of 1951, in the Punjab High Court for a writ of prohibition or for directions or order directing the Custodian General to forbear from proceeding with the hearing of the appeal or making any order in the said appeal or from declaring the properties left by the deceased as evacuee properties. The petitioners contended inter alia that after the death of Aboobaker the Custodian General had no jurisdiction to proceed with the appeal.

The petition was dismissed on May 24, 1951, the High Court holding that the Custodian General had jurisdiction. Leave to appeal was granted but the High Court did not stay the hearing of the appeal by the Custodian General which was fixed for July 3, 1951, and directed that the Custodian General should not pass final orders until July 23, 1951.

On July 3, the Custodian General heard the appeal and

Ebrahi"1i Aboob11ker and Another

Tsk Chanel

Dolwani.

Ghulam Haaan I.

Ebrahirn Aboobaker and Another

Tek Chand

Dolwani.

GlM, larn Jlasa1i J.

694 SUPREME COURT REPOR'fS [1953]

on July 30 which wa> the date fixed for final orders he declared Aboobaker to be an evacuee and his properties to be evacuee properties.

On August 6, 1951, the petitioners filed a petition (Miscellaneous Petition No. 191 of 1951) under article 2:26 of the Constitution in the Bombay High

Comt against the Custodian General and the Custodian, Bombay, for a writ of certiorari for quashing and setting aside the said order and for an order directing the Custodian General and the local Custodian from acting upon the order or from taking possession of the property which was situate in Bombay.

The petition was dismissed by Shah J. on October 4, 1951, on the ground that the 3ombay High Court had no jurisdiction against the Custodian General and that the petition against the local Custodian was pre mature. Appeal No. 88 of 1951 was filed on October 5, 1951, against the said order to the Bombay High Court.

An interim order was passed whereby the petitioners undertook to keep accounts and not to dispose of the properties while the Custodian General gave an undertaking not to take possession pending the hearing of tbe appeal.

The appeal came up for hearing on November '20, 1951, before the Chief Justice and Gajendragadkar J. but it was allowed to stand over with a view to await the decision of this

Court in appeal against the order of the Punjab High Court as they did not wish to pass any order which might conflict with the decision of this court.

That appeal was dismissed by this Court on May 26, HJ52.

See Ebrahim Aboobaker and Another Y. Ciistodian General of Evacuee Property.').

This Court decided only the preliminary point that Tek Chand Dolwani was entitled to prefer an appeal but left the question about the jurisdiction of. the Custodian General to declare the properties of Aboobaker as evacuee properties after his death open as that question was not raised before it, the order of the 30th July, 1951, having been passed after the filing of the appeal in the Supreme Court and also because that questioI1

(I) (I95•1 S.C.R. 6g6,

was pending determination in the appeal before the Bombay High Court.

Appeal No. 88 of 1951 was dismissed on 1st/2nd July, 1952, by the Chief Justice and Gajendragadkar J. on the preliminary ground that they had no jurisdiction to quash the order of the Custodian General passed on 30th July, 1951.

They declined to pass any order against the local Custodian observing that they could not do indirnctly what could not be done directly. A petition for leave to appeal was also rejected by the High Court on the 14th July, 1952.

Petition No. 105 of 1952 is for special leave to appeal against tpe order of the Custodian General dated July 30, 195l. Petition No. 106 of 1952 is against the order of the Appellate Bench of the Bombay High Court dated 1st/2nd July, 1952.

Petition No. 24 7 of 1952 is an independent petition under article 3:.l of the Constitution, challenging the order of the Custodian General dated July 30, 1951, as being in violation of the fundamental rights of the petitioners and being without jurisdiction. 'rek Chand Dolwani has filed a caveat against the Petition No. 105 of 1952, while the petition under article 32 has been heard upon notice to the Custodian General. In this petition it is submitted that on a true construction of the relevant provisions of the Ordinance and the Administration of Evacuee Property Act, the Custodian General had no jurisdiction to hear the appeal after the death of Aboobaker, or to make any order declaring the properties left by him to be evacuee properties as the appeal abated on his death and the propertie:> 1ested in specific shares in his heirs under the Mohammedan law. It was urged that as the said properties did not fall within the definition of evacuee property on the 30th July, 1951, or at any time after the death of Aboobaker, the Custodian General had no jurisdiction to declare the properties to be evacuee properties.

As a matter of fact, the deceased had no right, title or interest in the said properties after his death; nor were the said properties acquired by his heirs by any mode of transfer

Ebrahim Aboobn.ker and Another

Tek Oh•11d

Dolwani.

Ghula1n Hasan J.

Ebr(lhini Aboobaker and Another

Tek Chand

Dolwani.

Ghularn Hasan J.

from the deceased. The order of the 30th July, 1951, is challenged as heiug void and inoperative as it yiolates the fundamental rights of the petitioners under articles 19(1) (f) and 31(1) of the Constitution. 'rhe petitioners pray for the issue of a writ of certiorari .against the Cuotodian General calling for the records of the case relating to the above order and after looking into the same and going into the question of the legality thereof quash and set aside the same.

They also ask for a writ of prohibition or mandamus or directions or an order or a writ directing the Custodian General, his servants and agents to forbear from acting upon or enforcing the order dated the 30th July, 1951, or from taking any ;; tops or proceedings in enforcement of the same.

We heard the petitioners and the Solicitor-General on the petition under article 3:2 and reserved orders till we had heard Dolwani who was the caveator in the application for special leave to appeal.

Dolwani was served with a notice personally and through his ageut but neither put in appearance.

We granted the appliclltion for leave to appeal against the order of the Custodian General and directed the appeal to be posted for hearing along with the application under article 3:2. Dolwani again did not appear and we proceed, therefore, to dispose of the appeal and the petition by a common judgment.

The crucial question which arises for consideration before us is , whether a person can be declared an evacuee after his death and whether the properties which upon his death vest in his heirs under the Mohammedan law can be declared evacuee properties.

Before we proceed to determine that question we must notice the objection raised by the Solicitor-

General about the maintainability of the petition under article 3:2 of the Constitution. He contends that t, here is no question of any infraction of fundamental

1righ t in the present case as the petitioners have not beeh deprived of any property without the authority of law.

The Gustodian General, it is said, undoubtedly purported to act under an express statutory enactment.

He might have misapplied or

misappreciated the law or committed an error in the assumption or exercise of jurisdiction, but that would not bring the case within tbe purview of article 31 (1) read with article UJ( I) (f) of the Constitution.

The point is debatable and we do not desire to express any opinion upon this point as we propose to examine the validity of the order of the Custodian General dated July 30, 1951, in the appeal (Civil Appeal No. 65 of 1953) which arose out of Petition

No. 105 of 1952 for special leave and not on the petition under article 32.

Section 2 (d) and (f) define "evacuee" and "evacuee property" respectively as follows:-

(d) "Evacuee" means any person,-

(i) who, on account of the setting up of the Dominions of India and Pakistan or on account of civil distnrbances or the fear of such distnrbances, leaves or has, on or after the 1st day of March, 1947, left, any place in a State for any place outside the territories now forming part of India, or

(ii) who is resident in any place now forming part of Pakistan and who for that reason is nnable to occupy, supervise or manage in person his property in any part of the territories to which this Act extends, or whose 'property in any part of the said territories has ceased to be occupied, supervised or managed by any person or is being occupied, supervised or managed by an unauthorised person, or

(iii) who has, after the 14th day of August, 1947, obtained, otherwise than by way of purchase or exchange. any right to, interest in or benefit from any property which is treated as evacuee or abandoned property under any law for the time being in force in Pakistan;

( f} " Evacuee property " means any property in which an evacuee has any right or interest (whether personally or as a trustee or as a beneficiary or in any other capacity), and includes any property-

(1) which has been obtained by any person from an evacuee after the 14th day of August, 1947, by

Ebrahini Aboobnker and dn.other

T•k Chand

Dolwani.

Ghulani Hasan J.

Ebr11.hint AboobJker and Another

Tek Chand

Dolwani.

Gkulani Hasan J.

SUPREME COURT, REPORTS [1953]

any mode of transfer, unless such transfer has been confirmed by the Custodian.

The u>e of the present tense "leaves" or "has left" in the definition of evacuee and "bas" in the definition of evacuee property is relied upon in support of the contention that tbe object of the legislature in enacting these provisions was to confine their operation to a liviµg psrson only.

This line of argument may not per se be of any compelling force but it receives support from the rest of the provisions of the Act to which reference will be made hereafter. It may, however, be pointed out here that clause (£) (l) will not apply to the case of the petitioners for they do not claim the property from the evacuee after the 14th day of August, 1947, by any mode of transfer but by right of succession under the Mohammedan law.

Succession to property implies devolution by operation of law and cannot appropriately be described as a mode of tra.nsfer, a~ contended for by the tiolicitor- General, which ob,-ionsly contemplates a transfer inter vivos.

Section 7 r.efer' to the notification of tbe evacuee property. It lays down that "where the Custodian is of opinion that any property is evacuee property within the meaning of this Act, he may, after causing notice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property."

Rule 6, which is framed in exercise of the powers conferred by section 56 of the Act, lays down the manner of inquiry under section 7 and is as follows:-

" (1) Where the Custodian is satisfied from information in bis possession or otherwise that any property or an interest therein is prima facie evacuee property, he shall cause a notice to be served, in .Form No. 1, on the person claiming tit'.e to such property or interest and on any other person or persons whom he 9onsiders to be interested in the property.

{2) The notice shall, as far as practicable, mention the grounds on which the proprty is sought to be declared evacuee property and shall specify the provision of the Act under which the person claiming any title to, or interest in, such property is alleged to be an evacuee.

(3) The notice shall be served personally, but if that is not practicable the service may be effected in any manner provided in rule 28. (Tbis rule refers to a mode of substituted service). ( 4) Where a notice has been duly served, and the party called upon to show cause why the property should not be declared an evacuee property, fails to appear on the date fixed for hearing, the cutodian may proceed to hear the matter ex parte and pass such order on the material before him as he deems fit.

(5) Where such party appears and contests the notice he shall forthwith file a written statement ver1 lied in the same manner as a pleading under the Code of

Civil Procedure, 1908, stating the reasons why he should not be deemed to be au evacuee and why the property or bis interest-therein should not be declared as evacuee property. Any person or perwns claiming to he interested in the enquiry or in tbe property being declared as evacuee property, may file a reply to such written statement. Tbe Custodian shall then, either on the same day or on any subsequent day to which the hearing may be adjourned, proceed to hear the evidence, if any, which the party appearing to show cause way produce and also evidence which tbe party claiming to be interested as mentioned above may adduce.

(6) After the whole evidence has been duly recorded in a summary manner, the Custodian shall proceed to pronounce his order.

The order shall state the points for determination, and the findings thereon with brief reasons."

Form No. 1 in Appendix A to the ndes (s a,:; follows:-

Ebrahini Aboobiks1 and Another

Tek Chand

Dolwaiii.

Gh1, l1un Hasan J.

195.1

Ebrahitn Aboob iker and Another v.

Tek Chand

Dolwani.

Ghulatn Hasan J.

"WHEREAS there is credible information in possession of the Cµstodian that you are an evacuee under clause (iii) of sectiori 2(d) of the Administration of 1£vacuee Property Act on account of the grounds mentioned below:- AND WHEHEAS it is desirable to hear you in person;

Now, therefore, you are hereby called upon to show cause (with all material evidence on which you wish to rely) why orders should not be passed declaring yon an evacuee aud all your property as evacuee property under the provisions of the said Act.

Deputy -------Custodian."

Assistant The next important section is secti, on 8 the relevant portion of which is as follows:-

" (l) Any property declared to be evacuee property under section 7 shall be deemed to have veoted in the Custodian for the State,-

(a) in the case of the property of an evacuee as defined in sub-clause (i) ot clause (d) of section 2, from the date on which he leaves or left any pl.ace in a State for any place outside the territories now forming part of India;"

If we substitute in section 8 the defiriition of evacuee property given in section 2, the meaning of section 8 will become clearer. Any property declared to be:

(i) property in which an evacuee has any right or interest,

(ii) property wbich has been obtained by any person from an evacuee after the 14th of August, 1947, by auy mode of tran8fer unless that transfer has been confirmed by the Custodian under section 7, shall be deemed to have vested in the Custodian for the State:

(a) in the ca8e of the property of an evacuee as. defined in sub-clause (i) of clause (d) of section 2,

S.C.R.

SUPREME COUR'l' REPOR'l'S 701

from the date on which he leaves or left any place in a State for any place outside the territories uow forming part of India."

The language of the rule read with the Form given above, the notice issued to the person claiming interest in the property which, according to the information in the possession of the Custodian, is prima facie evacuee property, the manner of its service and the mode of inquiry, lead to the unmistakable conclusion that the object of section 7 was to take proceedings against a living person and to tbat extent the use of the present tense in the definition of "evacuee" and "evacuee property" lends corroboration to the contention raised that the proceedings are intended to be applicable to living persons only. 'l'he property which is declared to vest under (i) must be one in which an evacuee has any right or interest but the deceased has no right or interest after bis death as his property vests in his heirs. Nor does (ii) apply as petitioners have not obtained the property from an evacuee by any mode of transfer.

It is obvious that property must be declared to be eva.cuee property under section 7 before it can vest under. section 8.

There is no doubt thaR when the property does so vest the vesting takes effect retrospectively, but where the man dies before any such declaration is made, the doctrine of relation-back cannot be invoked so as to affect the vesting of such property in the legal heirs by operation of law.

To take a simple illustration, if a person leaves India after the 1st of March, 1947, tb, e date given in section 2(d), and dies in Pakistan before any notice is issued to him under section 7 and before any inquiry is held in pursuance thereof, it is obvious that the heirs, who have succeeded to his property, cannot be deprived of it by conducting an inquiry into the status of the deceased and investigating bis right or interest in property which bas already devolved on legal heirs. Section 8 in such a case will not come into play and there can be no vesting of the property retrospectively before such property is declared as e1'acuee

Ebrahini Aboobaker and Another

v, • Tek Chand D.olwan.i.

Ghulam Hasan J.

J9!J3

Ebrahini Abooba.ker and A1iother

T6lc Cha.nd.

Dolwani.

O-h1dain

flasan J.

SUPREME COURT REPORTS [1953)

property within the meaning of section 2(£) of the Act.

Reading sections 7 and 8 together it appears that the Custodian gets dominion over the property only after the declaration is made. The declaration follows upon the inquiry made under section 7, but until the proceeding is taken nuder section 7, there can be no vesting of the property and consequently no right in the Custodian to take possession of it.

Now if the alleged evacuee dies before the declaration, has the Custodian any right to take possession of the property?

If he cannot take possession of the property of a living person before the declaration, by the same token he cannot take possession after the death of the alleged evacuee when the property had passed into the hands of the heir>.

The enquiry under section 7 is a condition precedent to the making of a declaration under section 8 and the rig ht of the Custodian to exercise dominion over the property does not arise until the declaration is made. Tbere is no reason therefore why the heirs should be deprived of their property before-the Custodian obtains dominion. 'rhe matter may be looked at from another point of view. Section 141 of the Civil Procedure Code wbich makes the procedure of tbe Court in regard to suits applicable in all proceedings in any Court of civil jurisdiction does not apply, as the Custodian is not a Court, thougb the proceedings held by him are of a quasi-judicial nature. 8ection 45 of the Act applies the provisions of the Code only in respect of enforcing the attendance of any person and examining him on 011th and compelftng the discovery and production of documents.

The provisions of the Code relating to substitution are, therefore, inapplicable and there is no other provision in the Act for the heirs to be substituted in place of the deceased so as to continue proceedings against them. If the proceedings cannot be continued against the heirs upon tbe death of the alleged evacuee, it is logical to hold that tb ey cannot be

initiated against them.

We hold, therefore, that the proceedings must.Japse upon the death of such person.

There is no provision in the Act that after a man is dead, his property can be declared evacuee property.

If such a provision had been made, then the vesting contemplated in section 8 of the Act would have by its statutory force displ:j; ced tbe vesting of the property under the Mohammedan law in the heirs after death. It is a well recognised proposition of law that the est1:1te of a deceased Mohammedan devolves on his heirs in specific shares at the moment of his death, and tbe devQlution is neither suspended by reason -of debts due from the deceased, nor is the distribution of the shares inherited postponed till the payment of !be debts. It is also well understood that property vests in the heir"s under the Mohammedan law, unlike the.Indian Succession Act, without the intervention of an administrator.

Section 40 of the Act imposes a restriction upon the right of an evacuee to transfer property after the 14th August, 194 7.

This section prohibits transfers inter vivos but cannot affect devolution by operation of law such as, on death.

According to this section where the property of a person is notified or declared to be an evacuee property, he cannot transfer that property after the 14th of August, 1947, so as to confer any right on the transferee unless it is confirmed by the Custodian~ This shows that a transfer between the 1st of March and the 14th of August, 1947, is immune from the disability of being treated as evacuee property notwithstanding the fact that the transferor migrated after the lst of March. If he made a bona fide transfer of bis e\jtire property before the 14th of August, 1947, then the property does not acquire the character of evacuee property and such a transfer does not require confirmation by the Custodian, althogh all transfers after that date are held suspect. If tbe transfer between the two crucial dates is held valid, then on a parity of reasoning tho death of the transferor before the declaration after the 14th of August should lead to the same reult.

Ebrahitii Aboob•ker and Another

Tek Ohand

Dolwa1i.

Ghulani Hasan J.

Ebrnhim Aboob'lker and Another

Tek Chand

Dolwani.

Ghula.m Hasan J •.

70.4 SUPREME COURT REPOR'rS (1953]

It was contended before us that the Act aims at fixing the nature of the property from a pa_rticula.r date and that the proceedings taken are agamst the property and not against the person. This argument is fallacious.

There can be no property, evacuee or otberwisP, unless there is a person wbo owns that property. It is the property of the owner which is declared to be evacuee property by reason of the fact that be is subject to disability on certain grounds.

The definition of evacuee property in the Act begins by saying "property in which an evacuee bas any right or interest in any capacity". The Act alw shows that the p rnperty cannot be notified as evacuee property unless and until the person claiming interest in it bas been given notice.

Reference may also be made-to section 43 as indicating that the declaration under section 8 was intended to be made during the lifetime of the alleged evacuee. This section lays down ''where in pursuance of the provisions of this, Act any property has vested in the Custodian neither the death of the evacuee at any time thereafter, nor the fact that the evacuee who had a right or interest in that property bad ceased to be an evacuee at auy material time shall affect the vesting or render invalid anything done in consequence thereof." The section shows that where the property bas vested in the Oust, odian, then the death of the evacuee or his ceasingto be an evacuee afterwards shall not affect the vesting or render invalid anything done in consequence thereof. The section seems to suggest that the vesting must take place in the lifetime of the alleged evacuee, otherwise there was po point in providing that the vesting will not be affected by "the death of the evacuee or the evacuee ceasing to be so.

The Solicitor-General contended that section 43 embodies th, e principle "once an evacuee always an evacuee". This conclrn; ion is hardly justified on the terms of section 43 as explained above and it finds no support from the other provisions of the Act.

The object and the scheme of the Act leave little doubt

S.C.R. SUPREME COURT REPORTt; 7o5

that the Act was intended, as its title shows, to prnvide for the administration of evacuee property and it is common grnund that this property bas ultimately to 'be used for compensating the refugees who bad lost their property in Pakistan'.

The Act contains elaborate provisions as to how the administration is to be carried out.

Section 9 enables the Custodian to take possession ol the evacuee property vested in him under section 8 and section 10 which defines the powers of the Custodian generally enables him to take such measures as be considers necessary or expedient for the purposes of administering, preserving and managing any evacuee property.

These are mentioned in detail in sub-section (2) of section 10, clause (j), which authorises the Custodian to institute, defend or continue any legal proceedmgs in any civil or revenue Court on behalf of the evacuee.

Section 15 imposes an obligation on him to maintain a separate account of the property of each evacuee.

Section 16 em powers the Custodian to restore the evacuee property upon application to the evacuee or any person claiming to be his heir provided he produces a certificate from the Central Government that the evacuee property may be restored to him.

Upon restoration the Custodian shall stand absolved of all responsibilities in respect of the property so restored, but such restoration shall not prejudice the rights, if any, in respect of the property which any other person may be entitled to enforce against the person to whom the property bas been so restored. -

By section 52 of the Act it is open to the Central Government by notific:otion in the Official Gazette, to exempt any person or class of persons or any property or class of property from the operation of all or any of the provisions of this Act. In pursuance of this section the Central Government issued Notification No. S.R.O. 260, dated the 3rd July, 11!50,'which was published in tbe Ga7.ette of India, Part II, section 3,

Ebrahim Aboobnker and Another v, Tek Chand Dolwani.

Ghutant Hasan J.

Ebrahini Aboobnker and Another

Tek Chand

Dolwani.

Ghula1n Hasan J.

SUPREME COURT REPORTS [1953]

dated the 15th July, 1950, page 254, in which broadly three categories of persons were exempted: --

(a) Any person who on or after the 1st day: of March, .1947, migrated from India to Pakistan but had returned to India before the 18th day of July, 1948, and had settled therein;

(b) Any person who has left or leaves for Pakistan on a temporary visit taking with himself a "No objection to return" certificate, and has returned, or returns, to India under a valid permit issued under the Influx from Pakistan (Control) Act, 1949, for permanent return to India; and

(c) Any person who has come from Pakistan to India before the 18th day of October, l949, under a valid permit issued under the Influx from Pakistan (Control) Act, 1949, for permanent resettlement in India.

These provisions far from suggesting that the person declared an evacuee suffers a civil death and remains an evacuee for all time show on the other hand that the person may cease to be an erncuee under certain circumsta-rces that he is reinstated to his original position and his property restored to him subject to certain conditions and without prejudice to the rights if any in respect of the property wb1cb any other person may he entitled to enforce against him.

These provisions also establish that tbe fact of a property being evacuee property is not a permanent attribute of rnch property and that it may qease to be so under gi., en conditions.

Tbe property does not suffer from any inherent infirmity but becomes evacuee property because of tbe disability attaching to the owner.

Once that disability ceases, tbe property is rid of that disability and becomes liable to be restored to the owner. • Mr. Desai counsel for the petitioner referred i.n the course of the arguments to section 93 of the Presidency Towns Insolvency Act and section 17 of the Provincial Insolvency Act.

According to the former "if a debtor by or against whom an insolvency peti .. tion has been presented dies, tbe proceedings in the

matter shall, unless the Court otherwise orders, be continued as if he were alive".

By the latter section "if a debtor by or against whom an insolvency petition has been presented dies, the proceedings in the matter shall, unless the Court otherwise orders, be continued so far as may be necessary for the realisation and distribution of the property of the debtor". 'rhough there is slight difference in the language of these two sections, the principle underlying the insolvency law seems to be that the death of the insolvent during the pendency of the application for insolvency does not cause the proceedings to abate but that they must be continued so that his property could be administered for the benefit of the creditors.

There is no snch provision in the Act before us.

It follows therefore that if the intention of the legislature had been to treat the person proceeded agains1l under section 7 as alive for purposes of the proceedings even after his death, such a provision would have been incorporated into the Act.

After giving our best consideration to the case we are of opinion that the order of the 30th July, 19.51, passed by the Custodian General declaring Aboobaker Abdul Rehman deceased as an evacuee and the property left by him as evacuee property cannot stand and must be set aside. We accordingly allow Appeal No. 65 of 19.53, arising out of Petition No. 10.5 of 19.52 and hold that the Custodian General had no jurisdiction to pass the order of the 30th July, 1951, and set it aside. We make no order as to costs.

Petition No. 106 of 1952 is not pressed and no order need be passed in respect thereto. In view of our order in Appeal No. 65 of 1953, no orders are called for in Petition No. 247 of 1952.

Appeal allowed.

Agent for the appellants and petitioners: Rajinder Narain.

Agent for the respondent in Petition No. 247: G. H. Rajadhyaksha.

Ebrahim Aboob'1ker and Another v.

Tek Chand

Dolwani.

Ghularn Hasan J.

U

TEK CHAND DOL WANI

EBRAHIM ABOOBAKER AND ANOTHER

MUKHERJEA

DAS

BHAGWATI JJ.

Evacuee Property Act

ss. 2(d)

Supreme Court

Article 32

Ghulam Ha!an

K. T. Desai

K. Daphtary

PMus A. Mehta

GHULAM HASAN

Aboobaker Abdul Rehman

section 7

February 8, 1950

Aboobaker

section 19

Tek Chand Dolwani

October 18, 1949

April 17, 1950

section 58

May 13, 1950

August 19,

1950

March 7, 1951

Ebrahim Aboobaker

Hawabai Aboobaker

India

February 26, 1951

May 24, 1951

July 3, 1951

Ghulam Haaan

article 2

Bombay

Shah

October 4, 1951

3ombay High Court

October 5, 1951

Bombay High Court

November '20, 1951

Gajendragadkar

Punjab High Court

May 26, HJ52

1st/2nd July, 1952

30th July, 1951

14th July, 1952

July 30, 195l

article 3

July 30, 1951

rek Chand Dolwani

article 32

Ebrahim Aboobn.ker

Ghula1n Hasan

Ghularn Hasan

articles 19(1)

article 3

Dolwani

article 3

article 3

Gustodian General

article 31

article 32

Section 2

Pakistan

14th day of August, 1947

Ebrahini Aboobnker

Ghulani Hasan

Ebr11.hint AboobJker

Gkulani Hasan

Section 7

section 56

section 7

Code of

Ebrahini Aboobiks1

Ghulatn Hasan

section 7

section 2

section 8

section 2

section 8

14th of August, 1947

section 7

section 2

S 701

section 7

section 7

section 8

1st of March, 1947

section 2(d)

section 7

Section 8

Ebrahini Aboobaker

Ghulam Hasan

Ebrahini Abooba.ker

flasan

section 2(£)

sections 7 and 8

section 7

section 7

section 7

section 8

Section 141

section 8

Indian Succession Act

Section 40

14th August, 194 7

1st of March

Ebrahitii Aboob•ker

Ebrnhim Aboob'lker

Ghula.m Hasan

section 43

section 8

section 43

section 43

S.C.R. SUPREME COURT REPORTt; 7o5

Section 9

section 8

section 10

section 10

Section 15

Section 16

Central Government

section 52

3rd July, 11!50,'which

section 3

Ghutant Hasan

18th day of October, l949

Desai

section 93

section 17

section 7

30th July, 19.51

Aboobaker Abdul Rehman

Rajinder Narain

G. H. Rajadhyaksha


April 16.

SU'PREME COURT REPOR'.I'S (1953]

DR. RAM KRISHAN BHARDWAJ

THE STATE OF DELHI AND OTHERS. [PATANJAI.t BASTRI C.J., MUKHER.JEA, s. R. DAS,

Gm:LAM HASAN and BHAGWATI JJ.]

Preventive Detention Act, 1952, s. 3-Gonstitution of India, 1950, Arts. 21, 22(5)- Detenu' s ro:ght to be supplied with full particulars- Vague ground-Right to be released-Vagneness of one of several groitnds--E:ff'ect of.

Under Art. 21 (5) as interpreted by an earlier decision of this court a person detained under the Preventive Detention Act is entitled, in addition to the right to have the ground of bis detention communicated to him, to a further right to have particulars as full and adequate as the circumstances permit furnished to him as to enable him to make a representation against the order of detention and the sufficiency of "Particulars conveyed in the second communication is a justiciable issue, the test being whether they are sufficient to enable the detained person to make a representation which on being considered may give him relief.

The constitutional requirement that the grounds must not be vague must be satisfied with rEispect to each 0£ the grounds communicated to the person detained subject to the claim of privilege under cl. (6) of Art. 22 of the Constitution. VVhere one of the grounds mentioned was "you have been organising the movement (Pra, a Parishad Movement) by enrolling volunteers among the refugees in your ca.pa.city as President of the Refugee Association of Bara Hindu Rao":

Held, that this ground was vague and even though the other grounds were not vague the tletention was not in accordance with the procedure established by Jaw and was therefore illegal.

Dictum: Preventive detention is a serious invasion of personal liherty and such meagre safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Court.

0RIG1NAL JURISDICTION: Petition No. 67 of 1958.

Petition under Art. 32 of the Constitution of India for a writ in the nature of habeas corpus.

Veda Vyas (V. N. Sethi and S. K. Kapur, with him) for the petitioner M. O. Setalvad, Attorney-General for India (G. N.

Joshi, with him) for the respondents,

S.C.R

SUPREME COURT HEPOHT::;

7U9

1953.

April 16.

The Judgment of the Court was ms delivered by

PATANJALI SASTRI C.J.-This is a petition under article 32 of the Constitution tor th~ issue of a writ in the nature of habeas corpus directing the release of the petitioner Dr. Ram Krishan Bhardwaj who is a medical practitioner iu Delhi and is now said to be under unlawful detention.

The petitioner was arrested on the 10th March, 1953, under an order of the District :Y1agistrate of Delhi made under section 3 of the Preventive Detention Act as amended.

The grounds of detention were communicated to the petitioner on the 15th March, 1953. 'rhe first paragrap<l of that communication states that " the Jan t:iangh, the Hindu Mahasabha and the l:tam Rajya Parishad have started :n1 unlawful campaign in sympathy with the Praja Parishad movement of Kashmir for defiance of the law, involving violence and threat to the maintenance of public order" as evidenced by the subparagraphs which folluw. '!'he incidents referred to in sub-paragraphs (a) to (l) are said to have ranged from the 4th to the 10th March, 1953, the date on which the petitioner was arrested, but they do not directly implicate the petitioner. '!.'hey merely give particulars of the alleged unlawful activities of the three political organizations referred to above.

Subparagraph (m) is important, as on it is founded the first contention of Mr. Veda Vyas, the learned counsel for the petitioner. It runs as follows:-

"(m) On the evening of 11th March, 1953, there was very heavy brick-batting indulged in by or at the instance of Jan l:langh and Mahasabha workers in t:iabzimandt when the police dispersed a Jan Sangh

and Hindu Mahasabha procession and several persons including policemen, journalists and other nonofticials were injured. An assault was made on Miss Mridula 8arabhai and Sri Dan Dayal one of her associates received a stab injury."

Dr. Ram Krishan Bhardwaj

The State of Delhi a.nd Other a.

Patanjali 811st?-i 0. J.

Dr. Ra1n Krishan Bhardwaj v.

The State of

Delhi and Others.

Patanjali Sastri 0. J.

SUPREME COURT REPORTS [1953]

It will be noticed that the incidents related in the sub-paragraph are alleged to have taken place on the 11th March, the day after the petitioner was arrested and detained. Mr. Veda Vyas relies upon it as showing that the District Magistrate did not apply his mind to the alleged necessity for the detention of the petitioner as, if he had done so, he could not possibly have referred to what bappened on the 11th March as a ground of justification for what he did on the 10th.

The so called grounds on which the detention is said to have been based must, it was suggested, have been prepared by some clerk or subordinate in the District Magistrate's office and mechanically signed by him. The learned Attorney-General explained that the incidents of the 11th March were referred to not as a ground for the arrest and detention of the petitioner, but merely as evidencing the unlawful activities of the movement organized by the Jan Sangh and the other political bodies of which the petitioner was an active member. The explanation is hardly convincing and we cannot but regard this lapse in chronology as a mark of carelessness.

Notwithstanding repeated admonition by this Court that due care and attention must be bestowed upon matters involving the liberty of the individual, it is distressing to find that such matters are dealt with in a careless and casual manner. In view, however, of the statements in the affidavit filed by the District Magistrate before us that he carefully perused and considered the reports and materials placed before him by responsible Intelligence Officers and that he was fully satisfied that the petitioner was assisting the movement and agitation started by the Jan Sangh1 etc., we are not prepared to hold that the District Magistrate failed to apply his mind to the relevant considerations before he made the detention order as suggested for the petitioner.

The second contention raised by Mr. Veda Vyas is more formida.ble. As already stated, the first para.-

graph of the statement of grounds, while it sets out the unlawful activities of the three political bodies,

. ,

does not directly implicate the petitioner in any of them. The second paragraph shows how the petitioner was concerned in those activities. It begins by stating " The following facts show that you are personally helping and actively participating in the above mentioned movement which has resulted in violence and threat to maintenance of public order".

Then follow four sub-paragraphs (a) to (d) which refer to private meetings of the Working Committee of the Jan Sangh in January and February, 1953, where, it is alleged, it was decided to launch and intensify the campaign and the petitioner made inflammatory speeches. Sub-paragraph (e) on which this contention is based runs thus:

"(e) You have been organising the movement by enrolling volunteers among the refugees in your capacity as President of the Refugee Association of the Bara Hindu Rao," a local area in Delhi. It is argued by Mr. Veda Vyas that this ground is extremely vague and gives no particulars to enable the petitioner to make an adequate representation against the order of detention and thus infringes the constitutional safeguard provided in article 22 (5). Learned counsel relies on the decision in Atma Rani Vaidya's case(') where this Court held by a majority that the person detained is entitled, in addition to the right to have the grounds of his detention communicated to him, to a further right to have particulars "as full and adequate as the circumstances permit " furnished to him so as to enable him to make a representation against the order of dete, ution. It was further held that the sufficiency of the particulars conveyed in the

"second communication" is a justiciable issue, the test being whether it is sufficient to enable the detained person to make a representation "which, on being considered, may give relief to the detained person".

On this interpretation of article 2<l (5) two questions arise for consideratiGn : first, whether the ground mentioned in sub-paragraph {e) is so vague

(1) (1951] S.C.R. 67 .

Dr.Ram

Krishan Bha1dwaj

Th• Stat• of

D•lhi and Others.

PatanjaU Sastri O. J.

Dr. Bllmi

K1ishan lJhfJ.rdwaj

The State of Delhi and Other&.

Patanjali Sastri C. J,

712 SUPREME COUR'l

1 REPORTS [1953]

as to render it difficult, if not impossible, for the petitioner to make an adequate representation to the appropriate authorities, and second, if it is vague, whether on vague ground among others, which are clear and definite, would infringe the constitutional safeguard provided in article 22(5).

On the first question, the Attorney-General argued that the grounds must be read as a whole and so read, the ground. mentioned in sub-paragraph (e) could reasonably be taken to mean, that the petitioner was organizing tbe movement by enrolling volunteers from the 4th to 10th March in the area known as Bara Hindu Rao.

This interpretation is plausible, but the petitioner, who is a layman not experienced iu the interpretation of documents, can hardly be expected without legal aid, which is denied to him, to interpret the ground in the sense explained by the Attorney-

Geueral.

Surely, it is up to the detaining authority to make his me:i.ning clear beyond doubt, without leaving the person deta, iued to his own resource for interpreting the grounds.

We must, therefore, hold that the the ground mentioned in sub-paragraph (e) of paragraph 2 is vague in the sense explained above.

Ou the second question, there is uo considered pronouncement by this Court, though in some cases it would appear to have been assumed, iu the absence of any argument, that one or two vague grounds could not affect the validity of the detention where there are other sufficiently clear and definie grounds 1io support the detention. Mr. Veda Vyas now argues that even though the petitioner might succeed in rebutting the other grounds to the satisfaction of the Advisory Board, his represe1itation might fail to carry conviction so far as the ground mentioned in 8Ubparagraph (e) was concerned in tbe absence of particulars which he could rebut and the Advisory Board might, therefore, recommend the continuance of his detention.

The argument is not without force, as the possibility suggested cannot altogether be ruled out. 'rhe Attorney-General drew attention to the recent amendment of section 10 of the Preventive Detention

Act as a result of which the petitioner would be entitled to be heard in person before the Advisory Board if he so desires aud, it was said, that he would thus have the opportunity of getting tbe necessary particulars through the Board who could call upon the appropriate Government to furnish particulars if the Board thought that the demand for them was in the circumstances just and reasonable. The petitioner would thus suffer no hardship or prejudice by reason of sufficient particulars not having been already furnished to him. 'rhe question however is not whether the petitioner will in fact be prejudicially affected in the matter of securing his release by his representation, but whether his coustitutional safeguard has been infringed. v'Preventive detention is a serious invasiou of personal liberty and such meagre safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Comt. In this case, the petitioner has tho right, under article 22(5), as interpreted by this Court by a majority, to be furnished with particulars of the grounds of his detention "sufficient to enable him to make a representation which on being considered may give relief to him." We are of opinion that this constitutional requirement must be satisfied with respect to each of the grounds communicated to the person detained, subject of course to a claim of privilege under clause (6) of article 22. 'l'J'hat not ha viug beer1 done in regard to the ground mentioned in sub-paragraph (e) of paragraph 2 of the statement of ground,;, the petillioner's detention cannot be held to be il1 accordance with the procedure established by law within the meaning of article 21. 'l'he petitioner is therefore entitled to be released and we accordingly direct him to be set at liberty forthwith.

Petition allowed.

Agent for t.he petitioner: Ganpat Rai.

Agent for the respondent : G. H. Rajadhyaksha.

Dr. Ram Krishan Bhardwaj v.

The State of

Delhi ana Others.

Patanjali Sa;:; fri 0. J.

RAM KRISHAN BHARDWAJ

THE STATE OF DELHI AND OTHERS

s. R. DAS

Gm:LAM HASAN

BHAGWATI JJ.

Preventive Detention Act, 1952

s. 3

Arts. 21, 22(5)

Art. 21

Art. 22

Refugee Association of Bara Hindu Rao

0RIG1NAL JURISDICTION

Art. 32

Constitution of India

Veda Vyas

V. N. Sethi

S. K. Kapur

M. O. Setalvad

G. N.

Joshi

PATANJALI SASTRI

article 32

Ram Krishan Bhardwaj

section 3

Praja Parishad movement of Kashmir

10th March, 1953

Veda Vyas

Mridula 8arabhai

Dan Dayal

Ram Krishan Bhardwaj

State of Delhi

Ra1n Krishan Bhardwaj

State of

Delhi

Patanjali Sastri

Jan Sangh

Delhi

article 22

Atma Rani Vaidya

article 2

Ram

Krishan Bha1dwaj

PatanjaU Sastri

article 22(5)

Geueral

section 10

article 22(5)

article 22

article 21

Ganpat Rai

G. H. Rajadhyaksha


April 17.

SUPREME COURT REPORTS (1953]

COMMISSIONER OF INCOME-TAX,

WEST BENGAL v.

H. HIRJEE.

[PATAN.JALI SASTRI C.J., MUKHEHJEA, s. R. DAS

and GHULAM HASAN JJ.]

Indian Income-tax Act (XI of 1922), s. 10 (2) (xv)-Business expenditure-Expenses incurred IYy businessman in defending against criminal prosectltion for offence under Hoarding and Profiteering Act-Finding of fact-When final.

The respondent who c""ried on business was prosecuted under s. 13 of the Hoarding and Profiteering Ordinance of 1943 on a charge of selling goods at an unreasonable price.

He was finally acquitted and claimed in his assessment for a subsequent year that the suni of Rs. 10,895 which he had spent in defending himself against the charge should be deducted from his income under s. 10(2)(xv) of the Income-tax Act as "expenditure laid out or expended wholly and exclusively for purposes of the business". The Appellate •rribunal held that in the absence of any evidence that personal liberty was likely to be jeopardised there was only a chance of his being fined, that the object of saving himself from fine was so inexticably mixed with the main purpose of the defence which was solely for the purpose of maintaining the respondent's name as a good bu3inessman a.nd also to save his stock from being undersold, that it could be ignored, and that, therefore, the claim was allowabb under s. 10(2)(xv).

On a reference the High Court held that tl:te finding of the Tribunal was one of fact and was binding on it. On further appe0, l: Held (i) that the finding of the Tribunal was not one of fact and was not decisive of the reference; (ii) the finding of the Tribunal was vitiated by its refusal to consider the possibility of the prosecution ending in a sentence of imprisonment ancl throwing on the Income-tax authorities the burden to prove that the prosecution might result in his imprisonment ; and the finding was not therefore binding on the Court; (iii) in any event, the expenses could not be said to be "expenditure laid out or expended wholly and exclusively for the purposes of the business" withins. 10(2)(xv) of the Act.

Legal expenses incurred in civil litigation arising out of matters incidental to the carrying on of a business stand an a different :footing as in such a case no question could arise as to the primar.y or secondary purpose for which the expenses could be said to have been incurred.

The deductibility of such expenses under s. 10 (2) (xv) must depend on the nature and purpose of the legal proceeding and not

on the final outcome of it and a distinction cannot therefore be drawn between expenses of a successful and unsuccessful defence 1958

for purposes of s. 10 (2) (xv).

Commissioner of J.B. Advani v. Commissioner of Income-tax ([1950] 18 I.T.R

557) referred to. Commissioner of Income-tax v. Maharajadhirnj of Darbhanga ([1942] L. R. 69 I.A. 15) distinguished.

CIVIL APPELLH'E JURISDICTION: Civil Appeal No. 75 of 1952.

Appeal from the Judgment aud Order dated the 16th January, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) in Incometax Reference No. 46 of 1950.

C. K. Daphtary, Solicitor-General for India (G. N.

Joshi, with him) for the appellant.

N. C. Chatterjee (P. K. Sen Gupta, with him) for the respondent.

1953.

April 17.

The Judgment of the Court was delivered by

PATANJALI SAsTRI C.J.-This is an appeal from a judgment of the High Court of Judicature at Calcutta answering a reference under section 66-A of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act) in favour of the respondent herein.

The respondent carries on business as selling agents of the Bengal Potteries Ltd., and he was prosecuted under section 13 of the Hoarding and Profiteering Ordinance, 1943, (Ordinance No. XXXV of 1943) on a charge of selling goods at prices higher than were reasonable in contravention of the provisions of section 6 thereof .. It appears that before the prosecution was launched in August, 1944, respondent's business premises were searched and a part of his stock was seized and taken away. The respondent defended the case, spending a sum of Rs. 10,895, and the prosecution ended in an acquittal on February 16, 1945. In bis assessment to income-tax for the year 1945-46, the respondent claimed the deduction of the said sum of Rs. 10,895 from the profits of his business under section 10(2) (xv) of the Act. The Income-tax Officer

I1ico11ie-tax, Weat Bengal

H. Hirjee.

716 8UPREME COUR'l' REPORTS (1953]

w; s disallowed the claim but the Appellate Assistant Come .-. 1missioner allowed it, and his decision was confirmed ommimonor o h I A II 'T 'b j

C J Iicom..tax by t e ncome-tax ppe ate n una, a cutta U:est Bengl Bench. Thereupon, the Commissioner of Iucome-tax, v.

West Bengal, applied to the Tribunal to state a case H. Hirjeo. for decision by the High Court under section 66-A of the Act, and the Tribunal accordingly referred the Patanjali · h C f d · Bastri c. J. followmg question to~ at ourt or its ec1s10n :- Whether in the circumstances of this case the Tribunal was rig ht in holding that the sum of Rs.10,895 spent in defending the criminal proceeding was an expenditure laid out or expended wholly and exclusively for the purpose of business as contemplated by section 10(2) (xv) of the Indian Iucome-tax Act?

In dismissing the appeal preferred by the Incometax Officer, the Tribunal observed:

"It may be stated straight off that it has not been established by any material that the conviction in caseo like this may end in imprisonment. 'The question that personal liberty was likely to be jeopardised therefore will not be considered by us .................. In any case, in the absence of any material in this particular cae that personal liberty was likely to be jeopardised, all that we can say is that there was a chance of conviction in which the respondent might have been fined.

No doubt, the element of saving himself from the fine, if any, might be there, but it is so inextricably mixed up with the main purpose for the defence that we are prepared to ignore that little element.

In our opinion, the defence was solely for the purpose of maintaining his name as a good businessman and also to save his stock from being uuderso ld if the Court held that the prices charged by the respondent were uureasoua b le."

In the order made on the reference Harries C. J. (with whom Banerjee J. concurred) remarked:

"In every criminal prosecution where the matter is defended to protect the good name of a business or

a professional man, the fear of possible fine or

8.0.R.

SUPREME COUR'l' REPORTS 717

imprisonment must always be there. But the Tribunal

I958 have pointed out that this was so inextricably mixed 0 .-.

/ . h th . f h d f h b .

0 "" 11'"' 011 "

0 up wit e protection o t e goo name o t e us1- Incom•-t•• ness that it can well be found that the money spent w., t Bengl in defence in the criminal prosecution was spent v. solely and exclusively for the purpose of the business.

H. HirJee.

The finding is a finding of fact and is binding upon Patanjali us." 8 a.stri a. J.

The learned Judges proceeded to refer to a ruling of the Bombay High Court-J. B. Advani v. Commissioner of Income-tax(')-and held that the respondent satisfied both the tests laid down tqere as applicable in such cases: He was charged with regard to a transaction which took place in the ordinary course of business and he was charged in his capacity as a trader. "If these two tests were satisfied and the Court came to the conclusion that the primary object of incurring the expenditure was to protect the good name of business, then it could be said that the expenditure was wholly and exclusively for the purposes of the business". The learned Judges accordingly answered the question referred to them in the affirmatiye. They, however, granted a certifica.te under section 66-A (2) of the Act that the case is a fit one for appeal to this Court.

We are unable to' agree that the finding of the Tribunal, to which reference has been made, is binding on the Court as a finding of fact and is decisive of the reference.

The finding of the Tribunal is vitiated by its refusal to consider the possibility of the criminal proceeding terminating in the conviction and imprisonment of the respondent. As has been stated, the respondent was prosecuted under section 13 which provides : '' Whoever contravenes the provisions of this Ordinance shall be punishable with imprisonme.nt for a term which may extend to five years or with fine or with both." The respondent was charged with contravention of section 6, which by sub-sec-. tion (1) prohibits the sale by a dealer or producer of a.n article for a consideration which is unreasonable

(1)[1950) 18 I.T.R. 557.

1958 and sub-section (2) defines "unreasonable considera- ~~ tion". The fram@rs of the Ordinance thus appear to

aom"'• 0;" •!have regarded the offence as one calling for a deter-

;.:m; n~:i rent punishment in view of its anti-social character,

v. and it is idle to suggest that it is for the Income-tax H. Hirjee. authorities to prove in such cases that the conviction might result in a sentence of imprisonment and that,

:.::; tb~

1 ~. in the absence of such proof, there was, at the most, only a chance of conviction and fine.

We cannot appreciate the remark that "even this chance of conviction and fine was so inextricably mixed up with the main purpose of the defence that it could be ignored." A finding arrived at on this line of reasoning is obviously vitiated by a serious misapprehension regarding the risk involved in a prosecution under the Ordinance and it cannot be regarded as binding on the Court in dealing with the reference.

If, as the High Court realised, in every criminal prosecution where the matter is defended to protect the good name of a business or a professional man, the fear of possible fine or imprisonment must always be there, it must ordinarily be difficult for any Court to say, that the expenses incurred for the defence, even if they are not to be regarded as the "personal expenses" of the person a.ccused, constituted "expenditure laid out or expended wholly and exclusively for the purposes of the business".

Learned counsel for the respondent frankly admitted that he was not able to find a single case in the books where the expenses incurred by a person exercising a trade or profession in def ending a, criminal prosecution, which arises out of his business or professional activities, were allowed to be deducted in the assessment of his profits or gains for income-tax purposes.

Reference was made in the course of argument to numerous cases where legal expenses incurred in civil litigation, arising out of matters incidental to the carrying on of a business, were allowed as a deduction in the computation of its profits, e.g., Commissioner of Income-tax v. Maharajadhiraj of Darbhanga('), where

(1) (1942) L.R. 69 l.i\.. 15.

the Privy Council held that law charges incurred in 1968 defending an action brought against a money-lender -'-- for damages for conspiracy, misrepresentation and Gommi,.ion.r 01

b h f d ffi . f d focon••taoo reac o con tract to a vance su c1ent un s to we.t B• '1 finance a company were allowable as business expendv. nga iture.

In that class of case, no question could arise H. ffirj••· as to the primary or secondary purpose for which the legal expenses could be said to have been incurred as Pata,.jali . h f . . .

SBstri a. J. m t e case o a cnmmal prosecution where the defence cannot easily be dissociated from the purpose of saving the accused person from a possible con viction and imposition of the prescribed penalty.

Nor are we satisfied, as at present advised, that a distinction drawn in the Bombay case(') between the legal expenses of a successful and unsuccessful defence is sound.

The deductibility of such expenses under section 10(2)(xv) must depend on the nature and purpose of the legal proceeding in relation to the business whose profits are under computation, and cannot be affected by the final outcome of that proceeding.

Income-tax assessments have to be made for every year and cannot be held up until the final result of a

legal proceeding, which may pass through several courts, is announced.

For the reasons indicated we allow the appeal and answer the question referred in the negative.

The appellant will be entitled to his costs both here and in the Court below.

Appeal allowed.

Agent for the appellant: G. R. Rajadhyaksha.

Agent for the respondent: S. C. Banerjee.

(I) (1950] •8 l.!.R. 5S7

COMMISSIONER OF INCOME-TAX,

WEST BENGAL

H. HIRJEE

PATAN.JALI SASTRI C.J.

s. R. DAS

GHULAM HASAN JJ.

Indian Income-tax Act

s. 10

s. 13

s. 10(2)(xv)

Income-tax Act

s. 10(2)(xv)

s. 10

s. 10

L. R. 69 I.A. 15

High Court of Judicature at Calcutta

Harries C.J.

Banerjee

C. K. Daphtary

G. N.

Joshi

N. C. Chatterjee

P. K. Sen Gupta

PATANJALI SAsTRI

Court of Judicature at Calcutta

section 66

Indian Income-tax Act, 1922

Bengal Potteries Ltd.

section 13

section 6

February 16, 1945

section 10(2)

section 66

section 10(2)

Harries

H. HirJee

Patanjali

Bombay High Court

section 66

section 13

section 6

section 10(2)(xv)

G. R. Rajadhyaksha

S. C. Banerjee


195.1

720 SUPREME cotrR~ 1 REPOR'l'S [19531

JIIO'I'fPUR ZAMINDARI CO. LTD. v.

THE STATE OF BIHAR AND ANO'I'HER.

RAJA JA:N"JUNATH ROY AND NARENDRA

NATH ROY AND CO. TJTD. v.

'I'HE STA'I'E OF BIHAR AND ANOTHER. [PATANJALI SASTRI C. J., MuKHERJEA, S. R. DAs.

GHULAM HASAN and BHAGWATI JJ.]

Bihcir Laud Reforms Act, 1950, ss. 2 (o) aiid (r), 3-Applicabil ity of Act to cmnpanies-'iPerson'', "proprietor'', ''tenure-holder", meaniuys of . .

The. word" person" in the definitions of

1 ' proprietor" and "tenure-holder" contained in s. 2 (o) and s. 2 (r) respectively of the Bihar Land Reforms Act, 1950, includes companies incorporated under the Indian Companies Act, 1913. There is nothing repugnant in the subject or context of the Act to prevent the inclusion of a company within the terms " proprietor" and

• 0 tenure-holder".

On the contrary such inclusion is necessary in order to give full effect to the object of the Act.

Pharmaceutical Society v. The London and Provincial Suppl11 Association, Limited (1880) 5 App. Oas. 857 distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 6'2 and 63 of 1953. Appeals under Article 13'2

(1) of the Constitution of India from the Judgment aud Order dated '22nd December, 195'2, of the High Court of Judicature at Patna (Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous Judicial Cases Nos. '238 and '24'2 of 1952.

P. R. Das (J. C. Sinha and L. K. Chaudhry, with him) for the appellant in both the appeals.

M. 0. Setalvad, Attorney-General for India (L. N.

Sinha and Bajrang Sahai, with him) for the respondents in both the appeals.

1953. April 17. The Judgment of the Court was delivered by S. R. DAS J.

' DAS J.-Tbis judgment disposes of Civil Appeals No. 62 of 1953 and No. 63 of 1953 which have been heard together.

The Motipur Zamindari Company Ltd., the appellant in Civil Appeal No. 62 of 1953, was incorporated in 1932 under the Indiau Companies Act and has its registered office in Bengal. It supplies sugar-cane to a sister concern named Motipur Sugar Factory Ltd.

Raja J ankinath Roy and N arendra Nath Roy and

Co., Ltd., the appellant in C. A. No. 63 of 1953, was incorpor:i.ted in 1933 under the Indian Companies Act and also has its registered office in Bengal. This company owns Zamindari properties in Purnea in the

State of Bihar as well as in Maida in the State of West Bengal. It carries on business, amongst others, as banker and financier.

On the 30th December, 1949, a bill entitled the Bihar Land Reforms Bill was passed by the Bihar

regislature and having been reserved for the consideration of the President received bis assent on the 11th September, 1950. 'l'be Act so passed and assented to was published in the Bibar Gazette on the 25th September, 1950, and was brought into force on the same day by a notification made by the State Government in exercise of powers conferred on it by section 1(3) of the Act. Many of the proprietors and tenureholders of Zamindari estates took proceedings against the State of Bihar for appropriate orders restraining the State Government from taking over the estates under the provisions of the Act which they claimed to be beyond the legislatiye competency of the Bihar Legislature and otherwise void.

On the 12th March, 1951, a Special Bench of the Patna High Court held that the Act was unconstitutional on account of its contravention of article 14 of the Constitution.

The State of Bihar appealed to this Court.

Pending that appeal, the provisional Parliament passed the Constitution (First Amendment) Act, 1951. The respondents in the main appeal took proceedings in this .Court, contending that the Act amending the Constitution w11s invalid. This

Motipur z.,.mindari

Co. Ltd. v.

The State of

Biht1r and A not her.

Da11J,

Motipur Za1nindari

Oo. Ltd. v.

The Stato of

Bihar and Another.

Da.s J.

• Court, however, on 5th October, 1951, upheld the validity of the amending Act.

On 6th November, 1951, notifications were issued under section 3 of the Bihar Act declaring that certain Touzies belonging to the appellants specified in the notification had passed to and become vested in the State. Both the appellants made separate applications to the Patna High Court under article 226 of the Constitution praying for mandamus or suitable direc tion or' order restraining the respondent from taking possession of their respective estates or tenures by virtue of the said notifioations and for other ancillary reliefs. The appeals filed by the State of Bi bar against the order of the Special Bench declaring the Act to be void came up for hearing before this Court and this Court upheld the validity of the Act, except as to a few provisions mentioned in the majority judg ment which were held to be severable.

Thereafter, the two applications made by the two appellants under article 226 before the Patna High Court came up for bearing and were dismissed by a Bench of that Court on the 22nd December, 1952.

The present appeals have been filed with leave of the Patna High Court against the said dismissal.

The question raised before the High Court was whether the Act was, on its true construction, intended to apply to Zamindari estates of companies incorpor ated under the Indian Companies Act. In support of the appellants' contention that it was not, it was urgedthat the Bibar Legislature bad no authority to legislate with respect to trading corporations or non-trading corporations whose objects were not confined to one State. Reference was made to entries 43, 4411.nd 45 of List I to show that it was Parliament alone which was authorized to make law with respect to matters set forth in those entries. 'rbe contention was that the Bibar Legislature in enacting the Act invaded the Union field and so the Act was invalid. '.1 1bis argument was sought to be reinforced by reference to the provisions of t,)ie Act and the winding up provisions of the Companies Act. The Patna. High

Court overruled this contention and Mr. P.R. Das appearing in support of these appeals has not challenged this part of the decision of the Patna High Court. The main point urged by Mr. P.R. Das is that even if the Bihar Legislature could make a law for acquiring Zamindari estates of incorporated companies it did not, by the Act, in fact do so. Section 3 authorises the State Government to declare by notification that the estates or tenures of a proprietor or tenure-holder have passed to and become vested in the State. It will be recalled that it was under this section that the State Government on the 6th November, 1951, issued thenotificationswith respect to the estates of the appellants situate within the State.

Mr. P. R. Das's principal contention is that the appellant companies do not come within the terms "proprietor" or "tenureholder" as defined by the Act and consequently no part of their estates were intended to be vested or did in fact vest in the

State. "Proprietor" -is defined by section 2(o) as meaning a person holding in trust or owning for his own benefit an estate or a part of an estate and includes the heirs and successors-in-interest of a proprietor and, where a proprietor is a minor or of unsound mind or an idiot, his guardian, committee or other legal curator.

Tenure-holder is defined by section 2 (r} as meaning a person who has acquired from a proprietor or from any tenure-holder a right to hold land etc. The argument is that the word "person" in the two definit'1ons referred to above does not, in the context of the Act, include a company. It is conceded that under section 4(40) of the B1har General Clauses Act the word "person" would ordinarily iuclude a company, but it is urged by Mr. P.R. Das that the definitions given in that section apply only where there is nothing repugnant in the subject or context.

His contention is that the definition of "proprietor" and "tenureholder" indicates that a company which owns Zamindaries is not covered by that definition. We are unable to accept this contention. It is not disputed 9t

Motipur Zamindari

Co. Ltd. v.

The State of Bihar and A not her.

Das J,

Moti1n1, r Za1nindari

Go, Ltd. v.

The State of

Bihar and Another.

Das J,

that a company can own an estate or a part of an estate and, indeed, the appellant companies are fighting these appeals only to protect the estates they own.

Therefore, they CO!lle within the first part of the definition.

The definition after stating what the word means proceeds to state what else the definition would include under certain specified circumstances, namely, the heirs and successor-in-interest etc.

The word "heir" certainly is inappropriate with regard to a company, but there is nothing inappropriate in the comp:rny having a successor in-interest.

It is pointed out that there is no provision in the definition of proprietor to include the directors, managing agents and, in case of winding up, the liquidator of the company. This circumstance does not appear to us to be a cogent reason for holdfog that the word "proprietor" as defined does not cover a company. It is to be noted that the agent or, in case of insolvency, the official assignee or receiver of an individual proprietor are alw not included in the definition.

Reference to proprietor who is a minor or of unsound mind or an idiot and his guardian etc., was obviously necessary because those proprietors suffer from legal disabilities.

M~. P.H. Das refers us to various sections and rules framed under section 43 of the Act to show that only natural persons were intended to be affected by the Act, because, he urges, the company is not competent to do the acts therem referred to.

It is not disputed by Mr. P. R. Das that there is no difficulty on the part of an incorporated company to do all these acts by its directors or managing agents or other officers empowered in that behalf by its articles of association, but his contention is that tbe provi.'>ions of the Indian Companies Act should not be imported into the consideration of the provisions of hiK Act.

He relies primrily on the case of PharnMl'eutical Society v. The London and Provincial Snpply Association, Limited(') where it was held that a corporation

('! (1880) L.R. 5 App. Cas. 857.

8.C.R.

SUPREME COURT REPOitTS

72S

did not come within the word "person" used in th~ Pharmacy Act, 1868 (31 & 32 Vic., Chapter 121).

Reliance was placed upon the observations of Lord Selborne L.C. at page 863. 'The preamble to that Act recited, amongst other things, that it was "expedient for the safety of the public &bat persons keeping open shop for the retailing, dispensing or compounding of poisons, and persons known as chemists and druggists should possess a competent practical knowledge of their business." This clearly comtemplated • persons skilled in matters pharmaceutical and not impersonal corporate bodies which would know nothing about that particular business.

Indeed, Ijord Blackburn in bis speech in the House of Lords in the Pharmaceutical Society's case(') referred to this preamble and observed at page 870 :-

"Stopping there, it is quite plain that those who used that language were not thinking of corporations.

A corporation may in one sense, for all substantial purposes of protecting the public, possess a competent knowledge of its business, if it employs competent directors, managers, and so forth. But it cannot possibly have a competent knowledge in itself.

The metaphysical entity, the legal 'person', the corporation, cannot possibly have a competent knowledge.

Nor, I think, Qan a corporation be supposed to be a 'person known as a chemist and druggist'."

His Lordship then referred to the provisions of sections 1 and 15 of that Act and came to the conclusion that the word "person" in that Act . meant a natural person. 'The effect of that case is that whether the word "person'' in a sLatute can be treated as including a corporation must depend on a consideration of the object of the statute and of the enactments passed with a vie\v to carry that object into effect.

In view of the object of that Act as recited in the preamble there could be no manner of doubt that the word "person" in that Act could not possibly include a corporation. Lord Selborne towards the end of page 863 indicated, by reference to the 18th

• (11 (1880) L.R. 5 App. Cas. s,57

Motipur Zamind11ri

Go. Ltd. v.

Th• Stat• of

Bih(l, r a.nd Another.

Da• J,

Motipur Zamindart

Co. Ltd. v.

The State of Bihar a nil Another.

Das J.

stiction, that the Legislature hy the word "person"

referred only to individual persons as it was clearly repugnant to the subject of tha~ Act to include a corporation within the word "per.<on" as ued in that Act.

Mr. 1'. R Das urges that the judgment of Lord Selborne was founded on the fact that the corporation could not come within the term "person" on the ground that it could not make an application in writing signed by it.

From this Mr. P. R. Das urges that the necessary implication of this part of the judgment of Lord Selborne is that it was not permissible to take tbe provisions of tbe Companies Act into consideration for construing another Act. If that were the implication of the speech of Lord Selborne, with respect, we are unable to accept the same.

Indeed, one cannot think of a company unless one has in view the provisions of tbe Companies Act, for a company is the creature of the Companies Act.

Its existence, powers and rights are all regulated by that Act. 'fhe trend of the speeches of !he noble Lords in the case relied on by Mr. P. R. Das is that the object of the particular Act uuder consideration was entirely repugnant to the word "corpora.tion" being included within the term "person" as used in that Act, and as we apprehend it, that decision lays down nothing beyond that.

In support of his contention tht a company owning an estate was never intended to be affected by the Act, Mr. P. R. Das draws our attention to the winding up sections of the Indian Companies Act and urges tha"t it is not possible to fit in the scheme of winding up into the scheme of the Bihar Act. If the Zamindari assets of the company are faken over and compensation is paid by non-transferable bonds it will, he contends, he impossible to a.pply the law of winding up in case the company goes into liquidation. '!.'here will, according to him, be conflict of jurisdiction between the Court where the winding up is ptoceeding, which may conceivably be in another State, and the Bihr1t Government and its officers.

We see no force in this contention.

U pou a

S.C.R.

SUPREME COURT REPOR'fS 727

notification being issued under section 3, the Zamindari estate will vest in the 8tate and the company will cease to have auy interest in it.

Its only right will be to receive compensation. In case of winding up the liquidator will have to pursue the remedy provided by this Act.

He or the company will be in no worse position than the official assignee or official receiver of an individual proprietor who may happen to become insolvent in another State.

Finally, Mr. P.R. Das strongly relies on section 41 of the Act and contends that that section would be wholly inapplicable to a company and that circumstance by itself would indicate that the Bthar Legislature did not intend that a company owning an estate should be governed by this Act. A corporation, it is true, cannot be made liable for treason, felony or any misdemeanour involving personal violence or for any offence for which the ouly penalty is imprisonment or corporal punishment. (Halobury, 2nd J!; dition, Volume IX, article 5, p. 14).

Section 41 dot!s not prescribe punishment by imprisonment only. Mr.

P. R. Das suggests that the infliction of imprisonment or fine would depend upon the gravity of the offence and not on the character of the offender.

This argument, however, would seem to run counter to the opinion of Lord Blackburn set forth at pages 869-870 of the report of the vary case relied on by Mr. P. R. Das. The reeent cases of Director of Public Prosecutions v. Kent and Sussex Contractors Limited( 1 ) and Rex v. I.C.R. Haulage, Limited and Another(2) seem to indicate that a corporation may be convicted even of an offence requiring an act of will or a state of mind.

Apart, however, from the consideration whether a company may be held guily of wilful failure or neglect, as to which we need not express any definite opinion on this occasion, there can be no difficulty in applying the provisions of section 41 to the officers or agents of the company.

On.a notification under section 3(1) being published the estate vests in the State. Section 4 sets out the

(r) [I9H] l K.B. 146.

(2) [r9HJ l K.B. 551.

Motipu.r Zamindari

Co. Ltd. v, The State of

Bihrir and An.other.

Das J,

Motipur Zamindrtri

Co. Ltd. v.

Th• St•te of Bihar and Another.

Das J.

consequences of such vesting. Clause (g) of that section empowers the Collector by written order served in the prescribed manner to require any person in possession of such an estate or tenure or any part thereof to give up possession of the same by a date specified in the order and to take such steps or nse such, force as may be necessary for securing compli:.noe with the said order. If any officer or agent of the company in the possession of the estate wilfully fails or ignores to comply with snob lawful order, then surely he can be proceeded against under section 41.

Likewise, under section 40, the officers therein mentioned are authorized at any time before or after the date of vesting by a written order served in the prescribed manner to require a proprietor or tenureholder or any other person in possession of such an estate or tenure or any agents or employees of such proprietor, tenure-holder or other person to produce at a time and place specified in the order such documents, papers or regiiters or to furnish such information relating to such estate or tenure as such officer may from time to time require for any of the purposes of this Act. A wiliul failure or neglect to comply with such oder would clearly bring the recalcitrant officer or agent of the company within the penalty provided under section 41. Section 41. therefore, does not necessarily preclude Lhe application of the Act to incorporated companies.

It cannot be denied that a company is competent to own and bold property. 'fhe whole object of the impugned Act is thus stated by Mahajan J. in the State of Bihar v. Kameshwar Singh\ 1):

"Now it is obvious that 0oncentration of big blocks of land in the hands of a few individuals is contrary to the principle on which the Constitution of [ndia is based .. The purpose of the acquisition contemplated by the impugned Act therefore is to do away with the concentration of big blocks of land and means of production in the hands of a few individuals and to so distribute the ownership and contro! of the

(1) [1952] S.C.R. 889 at p. 941.

material resources which come in the hands of the

State as to subserve the common good as best as possible.

Iu other words, shortly put, the purpose behind the Act is to bring about a reform in the land distribution system of Bihar for the general benefit 'of the community as advised."

In view of this purpose there is no reason to differentiate between au individual prnprietor and a company which owns egtates or tenures. Indeed, there is not only nothing repugnant in the. subject or context of the Act which should prevent the inclusion of a company owning estate within the definition of "proprietor", such inclusion is necessary iu order to give full effect to the very object of the Act.

In Appeal No. 63 of 1953 Mr. P.R. Das raises an additional point. namely, that the appellant company in that appeal owns estates which are situate in Purnea in the district of Bibar and in Maida in tbe district of West Bengal but it bas to pay a single

Government revenue at Purnea. It is further alleged that the appellant company h:i.s let out portion" of the estates on Patni leases, e:i.ch of the Patnis comprising land situate both within and out, ide Bihar.

The acquisition of that part of the estate which is situate in Bihar has made it difficult, if not impossible, for the appellant company to pay its revenue or recover its rent.

That part of the estate which is in Bihar cannot be severed frnm the rest and therefore the notification covering only the portion of the estate situate in Bihar is invalid.

We do not think there is any substance in this argument. As stated by the High Court it is a simple case of apportionment of the revenue and also apportionment of the rent.

The necessity for such apportionment cannot possibly affect the validity of the notification.

For reasons stated above these appeals fail and must be dismissed with co>.ts.

Appeals dismissed.

Agent for the appellants: R. R. Biswas.

Agent for the respondents: G. H. Rajadhyaksha,

Motipur Za1nindari

Co. Ltd. v.

Tho State of Bihar and Another.

I'fPUR ZAMINDARI CO. LTD

THE STATE OF BIHAR AND ANO'I'HER

PATANJALI SASTRI

MuKHERJEA

S. R. DAs

GHULAM HASAN

BHAGWATI JJ.

Bihcir Laud Reforms Act, 1950

ss. 2

s. 2

s. 2

Bihar Land Reforms Act, 1950

Indian Companies Act, 1913

Article 13

Constitution of India

High Court of Judicature at Patna

J. C. Sinha

L. K. Chaudhry

M. 0. Setalvad

L. N.

Sinha

Bajrang Sahai

S. R. DAS

Motipur Zamindari Company Ltd.

Companies Act

Motipur Sugar Factory Ltd.

Raja J ankinath Roy

N arendra Nath Roy

Companies Act

Bengal

Purnea

Bihar

Maida

West Bengal

30th December, 1949

25th September, 1950

section 1(3)

State of Bihar

article 14

State of Bihar

Motipur z.,.mindari

Co. Ltd.

State of

Biht1r and A not her

Stato of

Bihar

Ltd. v.

The Stato of

Bihar and Another.

section 3

article 226

article 226

22nd December, 1952

Bibar Legislature

Parliament

Patna. High

Court

P.R. Das

Bihar Legislature

Section 3

6th November, 1951

P. R. Das

section 2(o)

section 2

section 4(40)

General Clauses Act

Das

State of

Bihar

P.H. Das

section 43

Companies Act

Pharmacy Act, 1868

Selborne L.C.

Ijord Blackburn

sections 1 and 15

Selborne

State of Bihar

R Das

Companies Act

Companies Act

Companies Act

Bihr1t Government

section 3

section 41

Halobury

article 5

Section 41

Blackburn

section 41

section 3(1)

Section 4

section 41

section 40

section 41

Section 41

Mahajan

Bibar

R. R. Biswas

G. H. Rajadhyaksha