s.ci.R.

SUPREME COURT REPORTS 503

placed on them by the senior Judge in the High 1952 Court and that was the true construction of these two sub-sections.

This argument, in our opinion, h~ no Commissioner 01 l'd' Th d' h d . . b Income-tax va i ity. e epartment c ange its vew su se- Madras ' quently and amended the manual.

The mterpretav. tion placed by the department on these sub-sections K Srinivasa" cannot be considered to be a proper guide in a matter and K. Gopa!an like this when the construction of a statute is involved.

Mahajan J.

The result is that we allow the appeal and hold that the answer given by the senior Judge to the question referred was wrong and that the answer given by Viswanatha Sastri J. was the correct one. In the circumstances of this case we would ma.ke no order as to costs throughout.

Appeal allowed.

Agent for the appellant: G. H. Rajadhyaksha.

Agent for the respondent: M. S. K. Aiyangar.

KALIPADA CHAKRABORTI AND ANOTHER 19oa v.

PALANI BALA DEVI AND OTHERS.

[MUKHERJEA, CHANDRASEKHARA AIYAR, and

GHULAM HASAN JJ.]

Hindii law-Religious endownients-Shebaiti right-Succession by widow-Nature and extent of widow's rights-Alienation by widow-Suit by reversioner against alienee-Liniitation-Article applicable-Starting point-Adverse possession against widow, whether adverse to reversioner-Li11iitation Act (IX of 1908), Arts. 124, 141.

Though there is an element in shebaiti right which has the 111g\l, l (lh\l,!Mt11ristics of property, shebaitship is property of a peculiar and anomalous character and it cannot come under the category of immoveable property as it is known in law.

On the other hand it is clear that a shebaiti right is a hereditary office and as

Jan.16.

Kalipada Chakraborti and Anoth13r

Palani Bala Devi and Others.

such comes within the express language of Art. 124 of the Limitation ... ct. A. suit by a reversioner for recovery of a shebaiti right from persons to whom a Hindu widow, who had succeeded to the rlght on the death of her husband, had alienated it, is governed by Art. 124 of the Limitation Act and not by Art. 141, and the possession of the alienee becomes adverse to the reversioner and the period of limitation begins to run against the reversioner only when the succession opens to him, as be does not claim under the widow but under the last male holder.

Gnanasambanda v. Velit ([1900] 27 I.A. 69) explained.

Whatever might be said about the office of a trustee, which car1ies no beneficial interest with it, a shebaitship combines in it both the elements of office and property. As the shebaiti interest is heritable and follows the line of inheritance from the founder, when the heir is a female she must be deemed to have what is known as , vidow's estate in the shebaiti interest. Ordinarily there

are two limitations upon a widow's estate. In the first place, her rights of alienation are restricted and in the second place, after her death the property goes not to her heirs but to the heirs of the last male owner. The second element is present in the case of succession to the rights of a female shebait. As regards the first, it is quite true that regarding the powers of alienation, a female shebait is restricted in th8 same manner as the male shebait, but that is because there are certain limitations and restrictions attached to and inherent in the shebaiti right itself which exist irrespective of the fact whether the shebaitship vests in a male or a female heir.

Pydigantan v. Rania Dass ([1905] I.L.R. 28 Mad. 197) and.

Lilabati v. Bishen ([1907] 6 O.L.J. 621) commented upon.

The rule that adverse possession against a Hindu wido\V cannot be reckoned as adverse possession against the reversionary heirs, is not a special rule which rests entirely upon the particular provision of Art. 141 of the Limitation Act and confined in its operation to cases \vhich come within the purview of that article.

It is in accordance with the ackno\\•ledged principles of Hindu law and the general principle that as the right of the reversioner::; is in the nature of spes successionis and they do not trace that title through or from the widow, it would be manifestly unjust if they are to lose their rights by the negligence or sufferance of the widow.

Srinath Kuer v. Promnno Kwnar {[1883] I.L.R. 9 Cal. 934), Ranchordas v. Parvati °([1899] 26 I.A. 71), Jaggo v. atsava ([1929] 56 I.A. 267) approved.

Katama Natchiar v. Rajah of Shivcu; miga ([1925] 52 I.A. 332) referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 19 of 1952. Appeal from the Judgment and Decree dated 19th June, 1950, of the High Court of

. >

. i. --

Judicature at Calcutta (Das and Guba JJ.) in Appeal from Original Decree No. 48 of of 1949, a.rising out of Judgment and Decree dated the 22nd Dece1ber, 1948, of the Court of the Subordinate Judge, 3rd Court, 24-Pargauas, in Title Suit No. 53 of 1944.

N. c. Chatterjee (A. K. Dutt, with him) for the appellants.

Panchanan Ghose (Radha Kanta Bhattacharya, with him) for the respondent.

1953. January 16. The Judg, meut of the Court was delivered by

MuKHERJEA J.-'rhis appeai is on behalf of the plaintiffs and is directed against the judgment and decree of a Division -Bench of the Calcutta High Court dated June 19, 1950, reversing, on appeal, those of the Subordinate Judge, Third Court, 24-Pargauas, passed in Title Suit No. 53 of 1944.

The facts material for our present purpose are not in dispute and the controversy between the parties practically centres round one short point, namely, whether or not the plaintiffs' suit is barred by limitation.

The trial court decided this point in favour of the plaintiffs, while the High Court has taken a contrary view in appeal.

The subject-matter of dispute is one-third share of shebaiti right in respect of a private debutter dedicated to an idol known by the name of Dakshiueshwar Jew and situated at a village called Dhop Dhopi within the district of 24-Pargauas in West Bengal.

The deity is au ancient one and its reputed founder and first she bait was one U dhab Chandra Pandit. It is not disputed that by successive devolutions the rights of the shebait came to vest in one Iswar Chandra Chakroborti, who was the common ancestor of the parties to this suit.

The following genealogical table will make clear the relationship of the several persons who figure as parties to the present litigation as between themselves ud also to their commo~ !l>ncestor.

Kalipada Ghakraborti and Anoth•r

Palani Bala

D•vi and Others.

Mukhe•'jea J.

KaUpada Ghakraborti and Another

v, Palani Bala

Devi an.d Others.

Mukherjea J.

r-

Ashutsh

(dead)

Iswar

- -T- .. -

1 -1---~I- I Govinda Gopal Sadananda Tralokhya Haran I I I m. Rajlakshmi I

Surendra Sashi (adopted) I I

ni. Tarakali A bani (w) (Dett. •) ---·~---c

N .I .

I .

Kalt 1ma1 (Plfl, No. 2)

1~.---i-- I Mon1 Sarat Surendra (dead)

. I (adopted B1dhu by Gopa1) (Deft. 3) Bala (Deft. 1)

(Plfl. No. I)

I Nagendra

Pa Jani

Iswar died leaving six sons as his heirs and they were Ashutosh, Govinda, Gopal, Sadananda, Trailokhya and Haran. These six sons when they divided the properties of their father, divided the shebaiti right also which devolved upon them in six equal shares, and this 'division was by the method known as palaa or turns of worship, which means that to each one of the sons was allotted the right of worshipping the deity for 5 days every month and during these days he alone was to discharge the functions of the shebait and receive the emoluments attached to the office.

Gradually, a custom grew up in the family according to which these palas could be bought and sold or otherwise alienated amongst the members of the shebait's family.

Govinda, who was the father of the plaintiffs and who got 5 days' pala every month in his share, sold his interest in the shebaiti to Haran, a brother of his, and the result was that Haran acquired 10 days' pala every month or onethird share in the entire shebaiti right.

Haran died without any issue leaving him surviving, his widow Rajlaks)lmi as his sole heir under the Hindu law and Rajlakshmi continued to hold this one-third share of shebaiti right along with other properties of the deceased.

On 17th June, 1920, .Rajlakshmi granted an ijara lease of her shebaiti right for a term of two years to one Satish Chandra Dey. On 1st of April, 1921, Satish sold this leasehold interest in respect to the palas to one Ram Ra, khal Gh9s~.

Previous to that, on 6th of August, 1920, Ram Rakhal had himself taken a lease from Rajlakshmi of her shebaiti right for a period of 5 years, this leas~ to commence at the close of the previous lease in favour of Satish. Ram Rakhal admittedly got possession of the office of shebait and began to exercise his rights as such on and from the 1st of April, 1921. By a deed of conveyance dated the 7th of November, 1921, 1 Rajlakshmi made an out and out sale of her shebaiti right in favour of Ram Rakhal and twenty days after this purchase, that is to say, on 27th November, 1921, Ram Rakhal m his turn sold this interest to N agendra and Surendra, two of the sons oJ Trailokhya. Surendra died some time afterwards and on 20th of June, 1925, his widow Tarakali sold her husband's share iu the shebaiti right to N agendra, her husband's brother. Thus Nag~1i<lra in addition to what he had inherited from hid own father came to hold the entirety of a third share in the shebaiti right, represented by 10 days' pala every month,. which was previously held by Haran. Rajlakshmi died on 22nd December, 1943, and the two plaintiffs, who are the two surviving sons of Govinda, filed the suit out of which this appeal arises for recovery of possession of this one-third shebaiti right of Haran on the allegation that they were the next heirs of Haran at the time of Rajlakshmi's death.

N agendra had died in the meantime and the first and the principal defendant in the suit is his daughter Palani Bala, who is a minor and is represented by her husband as guardian. The second defendant is the receiver, who has been placed in charge of the properties of Palani Bala in a guardianship proceeding pending before the District Judge of 24- Parganas. The defendants 3 and 4 are the surviving descendants of Iswar who hold the remaining interest in the shebaiti rig'ht.

The case of the plaintiffs, in substance, is that the one-third share of the shebaiti right, which was held by Haran during his lifetime, devolved upon his widow Rajlabhmi who had only the retricted right~

Kalipada Ohakraborti and Another

Palani Bala Devi and Others.

Mukhe,.jea J.

Kfllipada Chakraborti and. Another

I'alani Bala

Devi and Others.

}rf1ikherJea J.

508 SUPREME COUR'r REPORTS (1953)

of a Hindu widow in. respect to the same.

On the death of the widow, the interest vested in the plaintiff~, who were the nearest heirs of Haran at the time of Rajlakshmi's death. .They, accordingly, prayed for being put in possession of this one-third share of the shebaiti right represented, as stated aforesaid, by 10 days' pala every month after evicting the defendant No. 1 therefrom. There was a claim also for mesne_profits from the date of the widow's death. In ' the plaint a description has been given of the temple, its appurtenant lands and also of the structures standing thereupon, but there is no prayer for possession in rspect of these properties.

The suit was resisted on behalf of defendant No. 1 and the main contention raised was that as the sale of her shebaiti right by Rajlakshmi, the widow of Haran, was a void tr-ansaction which did not create any right in the transferee, the possession of Ram Rakhal and after him his vendees, who were the predecessors of defendant No. 1, was adverse against all the shebaits, and the defendant No. 1 consequently acquired an indefeasible title to this third share in the shebaiti right by adverse possession and the plaintiffs' suit was barred by limitation.

Several other contentions were raised but they are not material for our present purpose.

T, he trial Judge by his judgment dated the 22nd December, 1948, overruled the pleas taken by the defendant and gave the plaintiffs a decree.

On the question of limitation, the Subardinate Judge held that althaugh article 141 of the Indian Limitation Act was not attracted to this case, yet the plaintiffs' suit was not barred by limitation. 'fwo reasons have been assigned for this view. It has been said in the first place that N agendra purported to purchase only the life interest of Rajlakshmi;. consequently his position as puryhaser was in recognition af the interest of the reversionary heirs of Haran. It is said fmther that as Rajlakshmi and N agendra were both co-shebaits af the deity, the possession of the

latter coqld not h::ive been advwse to the former1

. ;

r -

they being in th, e position of co-sharers in law and nothing like ouster being alleged or proved in this ca.se. • Against this judgment, the defendants 1 and 2 took an appeal to the Calcutta High Court and the appeal was heard by a Division Bench consisting of Das and Gu ha J J. The learned Judges while affirming all the other findings arrived at by the trial judge disagreed with the latter on the question of limitation.

It was held by the High Court that the proper article to apply in this case-was article 124 of the J1imitation Act, and as the defendant No. 1 and her predecessors had been in possession of the hereditary office of the shebait adversely to the plaintiff for more than 12 years prior to the institution of the suit, the plaintiffs' claim was barred by limitation. [n this view, the judgment of the trial court was reversed and the plaintiffs' suit dismissed.

The only point canvassed before us in this appeal is that of limitation and the arguments that have been advanced before us on this point by the learned counsel on both sides really raise two questions for our determination. The first is, whether on the facts of the present case the plaintiffs' suit is governed by article 124 or article 141 of the Limitation Act? If article 141 is the appropriate article, it is not disputed that the praintiffs' suit is well within time; but if article 124 is applicable, the other point that would require consideration .is, when did the defendant or her predecessors take possession of the hereditary office of shebait adversely to the plaintiffs? Was their possession adverse from the very date of the transfer by Rajlakshmi or did it become so only at her death ?

The proposition is well established that the alienation of the shebaiti right by a shebait in favour of a stranger is absolutely void in Hindn law and cannot be validated even on the footing of a cnstom.

The alienee of the right is, therefore, a trespasser out and out and his possession as against the transferor is adverse from the very beginning. Mr. Chatterjee appearing for the plaintiffs appellants has not assailed

Kalipada Ohakraborti and Another v.

Palani Bala

Devi and Others.

M ulcher j ea J.

alipada Chakraborti and Another

Patani Bala

Devi a1id Others.

Mukherjsa J.

the correctness of this proposition Qf law ;'his contention is that the possession of shebaitiright by defendant No. 1 and her predecessors might have been adverse against Rajlakshmi ever since the date of transfer and on the strength of such pdssession they might have acquired a statutory title against her in respect of the shebaiti interest; but such adverse possession for more than the statutory period though it might bar the widow would not bar the reversioners who do .not derive their title from or through her.

This, it is said, is the principle underlying the law of limitation in India ever since 1871 and article 141 of the Limitation Act expressly recognises and gives effect to it. It is contended by Mr. Chatterjee that even if article 141 does not apply to the facts of the present case and article 124 is taken to be the appropriate article, the plaintiffs' suit would be quite within time as the defendant or her predecessors must be held to have taken possession of thA officA of the shebait adversely to the present plaintiffs only when the widow died and not before that.

On the other hand, it has been argued by Mr.

Panchanan Ghose that there is nothing like a general principle of law that adverse possession against a Hindu .widow could not be reckoned as adverse possession against her reversionary heirs. That, it is said, is only a special rule which rests entirely upon the particular provision of article 141 of the Limitation Act and is cqnfined in its oyeration to cases which come within the purview of that article. Mr. Ghose's contention is that article 141 has no application to the facts of this case and consequently there is no reason for holding that adverse possession against the widow if it was continued for the statutory period would not bar the reversionary heirs also. 'rhis, he says, was the law prior to the introduction of article 141 into the statute bciok and that is the law which governs all cases even now which do not directly come under that article. According to the learned counsel, article 124 is the proper article which governs this case and the possession of the transferee of the

shebaiti interest being admittedly adverse to the holder of the office at the date of the transfer, it would be adverse against the next holder also, no matter whether strictly he derives his title from tlie

previous holder or not. It is urged that in the case of a hereditary office like that of a she bait, the powers of a female shebait are in no way more restricted than those of a male shebait and as the trust estate during the incumbency of a female shebait resides in her completely and effectually as in a male trustee, the male trustee who comes after her cannot claim the benefit of the principle upon which article 141 of the Limitation Act is founded. The points raised are no doubt important and require careful examination.

It may be mentioned at the outset that in the old Limitation Act (Act XXIV of 1859) there was no specific provision relating to suits by reversioners for recovery of possession of property held by a Hindu widow in her restricted right.

There were provisions only of a most general character contained in sections

12 and 16 of the Act, .under which limitation for suits to recover immovable and movable properties was 12 and 6 years resp'ectively " from the time the cause of action arose ".

Even before this Act was passed, in a case (1) decided by the Supreme Court of Calcutta, Peel, C. J. made the following observation:

"It has been invariably considered for many years that the widow fully represented the estate, and it is also settled law that adverse possession which bars her bars the heir after her, wh1ch would not be the case if she were a mere tenant for life, as known to the English law ".

In 1863 the case of Katama Natchier v. Rajah of Shivagunga (2) was decided by the Judicial Committee of the Privy Council and the proposition was laid down, which has not been questioned since then, that "when the estate of a deceased Hindu has vested in a female heir, a decree fairly and properly obtained

(I) Goluckmani v. Digambar, (1852) Macpherson on Mortgage, 2nd ed., 20.

(2) (1861·63) 9 Moo. I.A, 539,

Kalipada Ghalcraborti and Another

Palani Bala Devi and Others.

Mukharj•a J.

19!J3

KaZipada Chakraborti and Another v.

Palani Bala

Devi and Others.

Mukherjea J.

against her in regard to her estate is in the absence of fraud or collusion binding on the reversionary heir". 'l'urner L.J., who delivered the judgment of the B'oard, observed in course of his judgment :

" The whole estate would for the time be vested in her, a.bsolutely for some purposes, though, in some respects, for a qualified interest; and until her death it eould not be ascertained who would be entitled to succeed.

The same principle which has prevailed in the courts in this country as to tenants-in-tail representing the inheritance, would seem to apply to the case of a. Hindu widow; and it is obvious that there would be tbe greatest possible inconvenience in holding that the succeeding heirs were not bound by a decree fairly and properly obtained against the widow". 'rhe case proceeded entirely on the footing that although the widow for some purposes has only a partial interest in her husband's estate, for other purposes the whole estate vests in her, and that her interest is somewhat akin to that of a tenant-in-tail under the English law. If the suit was not in respect of a personal claim against the widow but in respect of the estate which, in law, she fully represents, a decree fairly aud properly obtained would bind the reversionary interest('). There was absolutely no question of adverse possession raised in this case but the rule enunciated in it was relied upon in deciding several cases under the Limitation Act of 1859, where the questi_on arose as to whether adverse possession for more than .the statutory period, which bars the widow, would bar her reversionary heirs also.

The leading pronouncement on this point is to be found in Nobin Chunder v. Issur Chunder(') upon which Mr.

Ghosh has laid very great stress. In that case a trespasser had taken possession of the estate against the widow and it was held that such adverse possession was effective against the reversioners as well.

The cause of action, it was said, accrued to the widow and

(1) Vide in this connection Jugal Kishore v, Jotendro, 1 c I.A. 66.' 73.

(•) 9 W.R. 505,

,. ..

a suit by her or by her reversioner must he brought within 12 years from the date of dispossession as laid down in section 12 of the Limit!l.tion Act of 1859.

The decision can certainly be justified on the law of limitation as it then stood. 'fhe Act of 1859 did not provide a separate rule as regards revers10ners and all suits for recovery of possession of immoveable property had to be brought within 12 years from the date of the accrual of the cause of action. If there was a trespass against the widow, the commencement of the trespass would constitute the cause of action for the suit and a suit against the trespasser would have to be brought within 12 years, no matter whether it was brought by the widow or by the reversioner.

The learned Judges could not overlook the fact that it was not possible for the reversionary heirs to institute a suit for possession during the lifetime of the widow.

The difficulty, however, was got over by invoking the principle of "representation of the estate by the widow". enunciated in the Shivagunga case. Sir

Barnes Peacock, C.J. observed as follows:

"It is said that the reversionary heirs could not sue for possession during the lifetime of the widow, and that therefore they ought not to be barred by any adverse holding against the widow at a time when they could not sue.

But when we look at the widow as a representative and see that the reversionary heirs are bound by decrees relating to her husband's estate which are obtitined against her without fraud or collusion, we are of opinion that they are also bound by limitation by which she, without fraud or collusion, is barred."

Since an adverse decision against a widow was held binding upon a reversioner on the principle of representation of the estate, a similar result was held to follow in the case of adverse possession against her so as to put an end to the reversionary interest.

This principle was affirmed by the Privy Council in Aumirtolall v. Ra;'onee Kant(1) and Sir Barnes Peacock, who delivered the judgment, expressly affirmeq th()

(r) (1874-75) 2 I.A. II~ .

Kalipada Ohakraborti and Another

Palani Bala Devi and Others.

Mukherjea J,

Kalipada Chakraborti

and Another v.

Palani Bala Devi and Others ..

Mukherjea J,

decision in Nobin Ohunder v. Issur Ohunder (').

Ib may be noted here that though the Privy Council judgment in this case was passed in the year 1875 it

w~1s a decision uuder the old Limitation Act of 1859.

In 1871 a new Limitation Act was passed which repealed the ear!i, er Act of 1859.

Article 142 of this Act (which corresponds to article 141 of the present Act) expressly prescribed a period of limitation of 12 years for a suit by a Hindu entitled to possession of immovable property on the death of a Hindn female heir, the limitation to run from the time when the female heir died.

This provision, extended further so as to include a suit by a Mohammedan, was reproduced in the Act of 1877 and again in article 141 of the present Act. 1t seems to us to be a correct view to take that this was a change deliberately m11de by the legislature in the existing law.

Article 141 speaks of a." like suit and this means that it is a snit for possession of immovable property which is provided for in the previous article.

The earlier Article relates to a suit by a l'emainderman or a reversioner in the technical sense of the English lawyers and lest there be confusion if the expression " reversioner" is used with reference to the estate of a Hindu or Mahommedan female heir, the legislature deliberately used the words "a Hindu or l\fahommedan entitled to possession of property on the death of a female heir." '11he estate of a Hindu female heir, as is well known, is extremely anomalous in its character; it cannot be described either as an estate of inheritance or one for life, though it partakes of the nature of both. The intention of the legislature in introducing this' provision was obviously to do away with these anomalies for the purpose of applying the law of limitation and for this purpose the Hindu widow's estate was completely assimilated to that of a tenant for life. This was the view taken, and in our opinion quite rightly, by a Full Bench of the Calcutta High Court iri Brinath Kur v. Prosunno Kumar(') and by the Bombay High

Court in Vundravandas v. oursondas(8), the decision

(t) 9 W.R. 50, s.

(2) (1883) 9 Cal. 9>i l>} (18~7) u jlom. 646.

in the latter case being affirmed by the Privy Council in Rnnchordas v. Parvati(1). The decisiou in Ranchordas's case has all along been treafled as an authority for the proposition that the statute of limitation does not begin to run against the reversioner when there is dispo3session of a Hindu female holding a limited estate; and in such cases the reversioner has a right to institute a suit within 12 years from the death of the female heir when the estate actlially falls into possession. It is to be noticed that the Judicial Committee in Ranchordas's case expre;; sly laid down that even in respect of moYables to which article 141 does not apply, the reversioner's right to property accrues on the death of the widow and not before that.

Opinion was expressed in some cases(2) that the view taken iu Ranchordas's case was shaken to a considerable extent by the later pronouncement of the Judicial Committee in Vaithialinga v. Srirangath( 3 ), and that the principle of representation of the eotate by the widow upon which the rnle in Shivagunga's case rested, could be applied to a case of adyerse possession agaimt the widow. But all doubts ou this point were set at rest by the decision of the Privy Council itself in Jaggo v. Utsava (4) and the law can now be taken to be perfectly well settled that except whllre a dec1'ee

bas been obtained fairly and properly and without fraud and collusion against the Hindu female heir in respect to a property held by her as a limited owner, the cause of action for a suit to be instituted by a reversioner to recoyer such property either against an alienee from the female heir or a trespa;; ser who held adYersely to her accrues only on the death of the female heir. 'EhiR principle, which has been recognised in the law of limitation in this country ever since 1871 seems to us to be quite in accordance with the acknowledged principles of Hindu law. The right of reversionary heirs is in the nature of spes siwcessionis, and as the reversioners do not trace their ti tie through or frorn the widow, it would be manifestly

{T) (1899) 26 I.A. 7r.

(3) (1925) 52 I.A. 3H

(2) Vide Aurobind•L v. Monoraina (1928) 55 Cal. 903,

(~) (1929) 56 LA. 267.

.Kriz.ip1da Ohakraborti and Anothei

Palani Bala Devi and Others.

Mukherjeri J .

KaUp!!da Chakraborti and Another

Palani Bala Devi and Others.

Mukherjea J,

SUPREME COURI1 REPORTS [1953)

unjust if they are to lose their rights simply because the widow has suffered the property to be destroyed by the adverse possession of a strnnger.

The contntion raised by Mr. Ghose as regards the general principle to be applied in such cases cannot, therefore, be regarded as sound.

Coming now to the specific points raised in the c:i.se, the first thing that requires consideration is, whether the present suit is governed by article 124 or . article 141 of the Limitation Act? 'l'he learned Judges of the High Court have held and quite properly that the benefit of article 141 could be claimed only if there was a qualified estate in the female heir after whose death the plaintiff was entitled to the property as the heir of the last male holder. According to the learned J ndges, however, this condition was not fulfilled in the present ease, inasmuch as the subject matter of dispute was the right of shebaitship and the rights of a female shebait, it is said, are not in any way more restricted or qualified than those of a male she bait, although she cannot transmit this office to her own heirs.

R.eliance has been placed in this connection upon a decision of the Madras High Court in Pydigantan v. Rarnx Dass('), which was followed by

a Division Bench of the Calcutta High Court in Lilabati v. Bishen(').

This method of approach seems to us to be open to doubt. Whatever might be said about the office of a trustee, which carries no beneficial interest with it, a shebaitship, as is now well settled, combines in it both the elements of office and pro-· perty.

As the shebaiti interest is heritable and follows the line of inheritance from the founder, obviously when the heir is a female, she must be deemed to have, what is known, as widow's estate in the shebaiti interest.

Ordinarily there are two limitations upon a widow's estate. In the first place, her rights of alienation are restricted and in the second place, after her death the property goes not to her heirs but to the heirs of the last male owner. It is admitted that the second element is present in the

(11 (1905) 28 Mad. 197,

(2) (1907) 6 C.L.J. 621,

• ' .. ...

8.0.R.

SUPREME COURT Kl~PORTS 517

case of succession to the rights of a female shebait.

As regards the first, it is quite true that regarding the powers of alienaLion, a female shebait is restricted in the same manner as the male shebait, but that ;_s because there are certain limitations and restrictions attached to and inherent in the shebaiti right itself which exist irrespective of the fact whether the shebaitship vests in a male or a female heir (1) .

But although we may not approve of this line of reasoning adopted by the High Court, we are in agreement with the learned Judges that the proper article to be applied in this case is article 124 and not article 141. There could be no doubt that there is an element in the shebaiti right which has the legal characteristics of property; but shebaitship is property of a peculiar and anomalous character, and it is difficult to say that it comes under the category of immovable property as it is known iu law.

Article 141 refers expressly to immovable property and not to property in the general sense of the word.

Ou the other hand, it is quite settled that a shebaiti right is a hereditary office and as such comes within the express language of article 124 of the Limitation Act.

We think that when there. is a specific article in the Limitation Act which covers a particular case, it is not proper to apply another article, the application of which is not free from doubt.

We hold, therefore, that article 124 is the proper article to be applied, and the question now aries as to whether the plaintiffs' suit is barred by limitation under this article, as has been held by the learned J udg@s of the High Court ?

Article 124 relates to a suit for possession of a hereditary office and the period of limitation prescribed for such suit is 12 years from the date when the defendant takes possession of the office adversely to the plaintiff.

The intention of the legislature is obviously to treat hereditary office like land for the J)\11'])01; e of b11.rring suits for possession of such office and extinguishing the right to the possession thereof

(I) Vide Angurbal~ v. Debabrata, [1Q51) S.C.R. 1125, u36.

Kalipad1i Ohakrabort; and Another v.

Palani Bala Devi and Other•.

Mukherjea J,

Kalipnda Ohakraborti and Another

Pa.lani Bala

Devi and Others.

Mukhcrjea J.

SU.PH.1£ME OOUHT R[<}POHTS (1950]

after a certain period.

The question is, when did the defendaut or her predecessor take possession of th-e office of shebait adversely to the plaintiffs ? It

i~ conceded that the possession was adverse to llajlakshmi, the holder of shebaiti at that time; but the contention of :Mr. Chatterjee is that as the plaintiffs did not claim through or from Hajlakshmi, the defendant could not be regarded as taking possession of the office adversely to the plaintiffs.

He refers in this connection to the definition of "plaintiff" iu section 2 (8) of the Limitation Act, where it is stated that plaintiff includes any person from or through whom a plaintiff derives bis right to sue.

In answer to this, it is argued by Mr. Gbose that a shebait like a trustee represents the entire trust estate and the next truste\)_, even though be may not strictly claim through or from the previous bolder of the office, must be deemed to be bound by acts or omissions of the latter; and in support of this contention be relies upon the judgment of the Judicial Committee in Gnanasambanda v. Velu (').

We do not think that this contention is right.

Article 124 relates to a hereditary office and this means that the office goes from one person to another solely by the reason of the latter being a heir to the former.

Under the Hindu Law of Inheritance, when a female heir intervenes, she holds dllring her lifetime a limited interest in the estate and after her death succession opens out not to her heirs but to the heirs of the last male holder. It bas not been and cannot be disputed that the same rule applies in the ease of succession to shebaitsbip.

Heading article 124 of the Limitation Act along with section 2 (8), the conclusion is irresistible that to defeat the title of the plaintiff .under article 124 it is necessary to establish that the defendant bad taken possession of the office adversely to the plaintiff or somebody from or through whom the plaintiff derives bis title, more than 12 years prior to the institution of the suit. 'l'l; iis is exactly what is laid down in Gnanasambanda v. Velu(').

In I" (1900) •7 l. A. 69,

8.U.R SUPRrnME COURT Rl!}PORTS 519

this case two persons, who were hereditary trustees of a religious endowment, sold their right of management and transferred the entire endowed property to the defendant appellant. 'l'be sales were null amd void irnd the possession taken by the purchaser was adverse to the vendors from the very beginning. '1 1he plaint, iff Velu was the son and heir of one of the hereditary trustees and be instituted the suit more than l '2 years after the date of the transaction claiming possession of the office along with the heir of the other trustee who was joined as a defendant in the suit. It was held by the Judicial Committee that the plaintiff's suit was barred and the reason given is that "the respondent Velu could only be entitled as heir to his father N ataraja, and from him and through him, and consequently bis suit was barred by article 114." This portion of the judgment, it seems, was overlooked by the learned Judges of the Calcutta High Court and also by the Madras High Court in the case referred to above.

The fact that under the ordina.ry law of inheritance the plaintiffs would come as the heirs of the husband of Hajlakshmi is immaterial. '1 1hat would not be deriving their right to sue through and from the widow, and in this view of the case the plaintiffs' suit cannot be held to be barred.

The result, therefore, is that we allow the appeal, set aside the judgment and decree of the High Court and restore those of the trial judge with costs to the appellants in all courts.

Appeal allowed.

Agent for the appellants: Sukwmar Ghose.

Agent for respondent No. 1 : R.R. Biswas.

Kalipada Ohakraborti

and Another v.

Palani Ba la

Devi and Others.

Mukherjea J

K. Gopa!an

G. H. Rajadhyaksha

M. S. K. Aiyangar

KALIPADA CHAKRABORTI AND ANOTHER

PALANI BALA DEVI AND OTHERS

MUKHERJEA

CHANDRASEKHARA AIYAR

GHULAM HASAN JJ.

Arts. 124, 141

Kalipada Chakraborti

Palani Bala Devi

Art. 124

Art. 124

Limitation Act

Art. 141

Art. 141

Limitation Act

CIVIL APPELLATE JURISDICTION

Das

Guba

N. c. Chatterjee

A. K. Dutt

Panchanan Ghose

Radha Kanta Bhattacharya

MuKHERJEA

Calcutta High Court

June 19, 1950

West Bengal

U dhab Chandra Pandit

Iswar Chandra Chakroborti

Kalipada Ghakraborti

Palani Bala

Mukhe•'jea

KaUpada Ghakraborti

Mukherjea

Mukherjea J.

r-

Ashutsh

(dead)

Iswar
-T- .. -

1 -1---~I- I Govinda Gopal Sadananda Tralokhya Haran I I I m. Rajlakshmi I

Surendra Sashi (adopted) I I

ni.

Ashutsh

Iswar

Govinda

Gopal

Sadananda

Trailokhya

Haran

Rajlaks)lmi

Rajlakshmi

17th June, 1920

.Rajlakshmi

Satish Chandra Dey

1st of April, 1921

Satish

Ram Ra

6th of August, 1920

Ram Rakhal

Satish. Ram Rakhal

7th of November, 1921

27th November, 1921

N agendra

Surendra

20th of June, 1925

Tarakali

22nd December, 1943

N agendra

Palani Bala

Iswar

Rajlabhmi

Kalipada Ohakraborti

Mukhe,.jea

Kfllipada Chakraborti

I'alani Bala

Devi

22nd December, 1948

article 141

Limitation Act

Gu

ha

article 124

article 124

article 141

Limitation Act

article 141

article 124

Chatterjee

alipada Chakraborti

Mukherjsa

India

article 141

Limitation Act

article 141

article 124

Panchanan Ghose

article 141

Limitation Act

Ghose

article 141

article 141

article 124

article 141

Limitation Act

Limitation Act

sections

12 and 16

Supreme Court of Calcutta

Kalipada Ghalcraborti

Mukharj•a

B'oard

Limitation Act

Ghosh

section 12

Shivagunga

Barnes Peacock

Barnes Peacock

Kalipada Ohakraborti

Kalipada Chakraborti

Limitation Act

Limitation Act

Article 142

article 141

article 141

Article 141

Bombay High

Court

Ranchordas

article 141

Anothei

Palani Bala Devi

Mukherjeri

KaUp!!da Chakraborti

article 124

article 141

Limitation Act

article 141

Madras High Court

article 124

article 141

Article 141

article 124

Limitation Act

Limitation Act

article 124

Article 124

Kalipad1i Ohakrabort

Kalipnda Ohakraborti

Mukhcrjea

llajlakshmi

Hajlakshmi

section 2

Limitation Act

Gbose

Article 124

shebaitsbip

article 124

Limitation Act

section 2

article 124

8.U.R SUPRrnME COURT Rl!}PORTS 519

Velu

N ataraja

article 114

Sukwmar Ghose

R.R. Biswas

Palani Ba la

Devi


19-53

Jan. 16.

5'20

SUPREME COURT REPORTS [191)3] .

'rURNBR MORRISON & CO., L1'D

COMMISSIONER OF INCOME-TAX,

WEST BENGAL.

[MEHR CHAND MAHAJAN, DAS, VIVIAN BosE and BHAGWATI JJ.]

Indian Inc"'1ie-tax Act (XI of 1922), ss. 4(1) (a), 4 (1) (c), 42, 48-Non-resident cornpany-Sale in India uf goods 1nan11, factured outside India-Person e.-O'ecting sales in India-Whether agent of non-resident-Proji, ts received in India.from sales-Whether assessable under s. 4 (1) (a) ors. 42-Liability of agent-Scope of s. 43.

'l'he Port Said Salt Association Ltd., a company incorporated in the United Kingdom carried on business in Egypt and had its headquarters in Egypt. It manufactured salt in Egypt and part of the salt so manufactured was consigned to Turner Morrison and Co. Ltd., (the assessee) for sale in India.

The assessee effected sales in India through brokers at prices approved by the A_ssociation, collected the sale proceeds and received a commission of 2-!% generally on all sales.

After deducting the expenses and commission the balance was remitted to the Association in Egypt.

On these facts the assessee was treated as agents of the Association under s. 43 of the Indian Income-tax Act and assessed to incometax under s. 4 (1) (a) or alternatively under s. 4 (1) (c) of the Act on the income derived by the Association fron) the sale of salt in India.

The High Court of Calcutta held that tbe income in question was chargeable t.o income-tax under s. 4 (1) (a) as income received in India and not under s. 42 of the Act: Held, (i) that, as the assessee was entrusted with the selling of goods consigned to them for sale, handling the cargoes, issuing delivery orders, collecting the proceeds etc., they were agents of the Association, and did not act merely as a post office;

Pondicherry Railway Co. v. OonMnissioner of Income-tax, Madras (1931) I.L.R. 54 Mad. 691 referred to.

(ii) as the goods were neitheiimported nor sold by the assessees on their own account but on account of the Association the income received by the assessees v'lere received by them on behalf of the Association and not on their own account.

Ex parte White (L.R. 6 Oh. A. 397) distinguished.

(iii) As the assessees were authorised not only to sell but to collect the price from the purchasers, the income was received by the assessee as agents of the Association.

Bi; twick v. Grant (L.R. [1924] 2 K.B. 483) distinguished.

19-58

(iv) The fact that the assessees as agents had a right to retain the expenses incurred by them and their commission out of the proceeds could not make the sale proceeds received by them as Turner agents any the less the proporty of their principals.

Morrison ct Co., • Ltd.

Colquhoun v. Brooks (2 Tax Oas. 490) and Saiyid Ali Imam v. v.

King Emperor ([19:J5] I.L.R. 4 Pat. 210) referred to.

Commissioner of

(v) When the gross sale proceeds were received by the agents Income-tare, in India they necessarily received whatever profits and gains were West Bengal. lying dormitnt in them. If on taking accounts there were income, profits or gains, then the proportionate part thereof attributable to the sale proceeds received by the agents in India was income, profits and gains received by them at the moment the gross sale proceeds were received by them in India, and s. 4 (1) (a) of the Income-tax Act was _immediately attracted and the income, profits and gains so received became chargeable to tax under s. 4 (1) (a) read with s. 3.

Grainger ct Son v. William Lane Gough (L.R. [1896] A.O. 325) ielied on.

(vi) Where income, profits and gains are actually received in India s. 4 (1) (a) applies and it is no longer necessary for the revenue to resort to the fiction introduced by s. 42, and the assessees were properly assessed under s. 4 (1) (a) and not under s. 4

(1) (c), Section 4(1) (a) applies to all categories of assessees including non-residents.

Hirn Mills v. Income-tax Officer, Cawnpore ([1946] 14 I.T.R. 417), Burugu Nagayya v. Commissioner of Income-tax, Madras ([1949] 17 LT .R. 194J and Pondicherry Railway Co. v. Commissioner of Income-tax, Madras ([1931] I.L.R. 54 Mad. 691) relied on.

(vii) The mere fact that the assessees were treated as agents under s. 43 of the Act did not 1nake it compulsory on the part of the revenue authorities to assess under s. 42, for an appointment as agent under s. 43 is for all the purposes of the Act and not only for the purposes of s. 42.

Iniperial Tobacco Co. of India Ltd. v. Secretary of State for India ([1922] I.L.R. 49 Cal. 721!, Commissioner of Income-tax, Bombay v. Metro Goldwyn Ma, yer (India) Ltd. ([1939] 7 I.T.R.176), Caltex Ltd. v. Commissioner of Income-tax, Bombay City ([1952] 21 I.T .R. 278) explained.

Judgment of the Calcutta High Court affirmed.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 41 of 1952. Appeal from a Judgment and Decree dated 25th July, 1950, of the High Court of Judicature at Oalcul:.1:.a. (Sen 11nd Chunder JJ.) exercising

Special Jurisdiction (Income-tax) in Income-tax Reference No. 31 of 1949,

522 SUPREME COUR'r R~JPORTS [1953]

1958 S. Mitra (S. N. Mukherjee, with him) for the appellant.

Turner AforriBon & Co., C. K. Daphtary, Solicitor-General for India (P. A.

Ltd.

Mehta, with him) for the respondent. v.

Co11anissioner of

Inconie-tax, TVcst Bengal.

1953.

January 16.

The Judgment of the Court was delivered by

Daa J.

DAs J.-'l'his appeal arises out of six references made by the Calcutta Bench of the Income-tax Appellate Tribunal under section 66(1) of the Indian Income-tax Act, two of them relating to the incometax assessment years 1943-44 and 1944-45 and the remrtining four re_lating to excess profits tax for the chargeable accounting periods ending on the 31st December of each of the years 1940, 1941 1943 and 1943 respectively.

The relevant facts ap-pearing in the statements of the case are as follows: Messrs. Port Said Salt Association Ltd, (hereinafter referred to as "the Association") is a company incorporated in the United Kingdom and has its registered office there. 'rhe Association, however, carries on business in Egypt and its head office is situate in Alexandria where tbe annual general meetings of its shareholders are held.

Not being resident in the United Kingdom the Association pays no British income-tax on its profits.

For the purposes of assessment under the Indian Income-tax Act the As'sociation has been considered to be a non-resident.

The association manufactures salt in ]gypt where it has certain concessions and the salt as manufactured is sent for sale in any country where there is.a ~.uitable market.

Part of the salt so manufactured by the Association is consigned to Messrs. Turner Morrison & Company Ltd.

for sale in India.

All shipping operations, i e., chartering of steamer, loading, insurance etc., are effected in Egypt by the Association wlio sends the documents to Messrs. Turner Morrison & Company Ltd. Messrs. Turner Morrison aud Company Ltd. (lffect sales i11 India through brokers at the best price

S.C.R.

SUPREME OOURT REPORTS 523

obtainable at or above the prices approved by the 1959 Association.

Turner Morrison & Company Ltd. are T paid commission at the rate of 2-1£ per cent. generally lviorri;;:~; co., on all the sales except in some cases where It pe1 Ltd. cent. is paid. All handling of the cargoes when they v. arrive at Calcutta and the necessary disbursementsOommissionei of in connection therewith are carried out and made by Income-tax, Turner Morrison & Company Ltd. The sale proceeds West Bengal. are collected by rrurner Morrison & Company Ltd.

Das J. and credited to the account kept in their own name with the Hongkong and Shanghai Banking Corporation.

After deducting the expenses including their commission the balance is remitted by Turner Morrison & Company Ltd. to the Association in Egypt. On these facts the Income-tax Officer treated Turner Morrison & Company Ltd. as the agents of the Association under section 43 of the Indian Income-tax Act and assessed them to income-tax for the two assessment years mentioned above under section 4 (1) (a) or, alternatively, under the first part of section 4 (1) (c). They were also assessed to excess profits tax for the four chargeable accounting periods hereinbefore mentioned.

Turner Morrison & Company Ltd. (hereinafter referred to as the Agents) preferred appeals against the aforesaid assessment orders to the Appellate Assistant Commissioner who, however, dismissed the appeals.

The Agents took a further appeal to the Income-tax Appellate Tribunal.

The submission of the Agents before the Tribunal was that the asse;:.sment under section 4(1) (a) was bad and that the assessment should have been made under section 42 of the Act.

The 'l'ribunal, on a co1isideration of the facts, came to the conclusion that the assessment was properly made under section 4( 1) (a) and incidentally the Tribunal also came to the conclusion that the alternative contention of the Income-tax authorities that the assessment should be made under the first part of section 4(1) (c) was also well-founded and that section 42 had no application to the Cfli'i<'.

f?8

1968 The result was that the Tribunal confirmed the findings of the Income-tax Officer and the Appellate

Afon~:;:~ Go., Assistant Commissioner and dismissed the appeals.

Ltd. • On the application of the Agents made under v. section 66 (1) of the Act the Appellate Tribunal Commissioner of referred the following questions to the High Court:-

Jncnne-tax, H , . west Bengal. (1) 'Whether, m the facts and circumstances of this case, the Tribunal was right in holding that Das J. the income, profits and gains derived from the sale of salt in British India are assessable to tax as income, profits and gains received or deemed to be received under section 4(1) (a) ?

And if the answer to .the first question is in the negative, ,-

(2) Whether, in the facts and circumstances of this case, the Tribunal was right in accepting the contention of the Department that the income accrued or arose or is deemed to accrue or arise in India and is assessable to tax as contemplated by section 4 (1) (c)? (3) whether the Tribunal was right in the cir- cumstances of this cse in rejecting the contention of the assessee (applicant) that the income, profits and

gains am chargeable to tax from the sale of salt in British India under section 42 only?"

'rhe reference came up for disppsal before a Bench of the Calcutta High Court consisting of Sen and Chunder JJ. The learned Judges gave the following answers to the questions:-

" Question (1).

The answer is in the affirmative so far as income.tax is assessed. Excess profits tax, however, cannot be levied on this basis.

Question (2). 'l'he Tribunal was wrong in accepting the contention of the department that the income accrued or arose in India.

The Tribunal did not hold that the income is income which should be deemed to accrue or arise in India.

The part of the question which states that the Tribunal did so is not iu accordance with fact.

We find that the iucome,

 profits and gains must be deemed to have arisen or 1953 accrued in India so far as excess profits tax is concerned and that section 42(3) of the Income-tax M T"r"": 0 A t 1. h 1 f fi b . • arr.so" "' o., c a pp ies to t e evy o excess pro ts tax y virtue Ltd. of section 21 of the Excess Profits Tax Act. v.

Question (3).

The Tribunal was right in reject- Oommissionei 01 ing the contention that the income, profits and gains Inconie-tax, West Bengal. are chargeable to tax under section 42 only.

They are also chargeable to income-tax as falling within Das J. the purview of section 4 (1) (a) of the Income-tax Act as income received in India on behalf of the assessee company.

In such a case section 42 of the Income-tax Act would have no application." It will be noticed that the Agents succeeded in their contentions so far as they related to the assessment of ecess profits tax.

The answers given by the High Court, however, went against them in so far as they related to the assessment of income-tax for both the assessment years.

The Agents thereafter made two applications to the High Court under section 66A for leave to appeal to this Court in respect of the income-tax assessments for each of the two assessment years.

The High Court certified that the cases were fit for app_eal to this Court and granted leave to appeal and directed that the two appeals be consolidated.

The Commissioner of Income-tax, \Vest Bengal, however, has not preferred any appsial from that part of the judgment of the High Court which sets forth its opinion on the questions in so far as they relate to the assessment of excess profits tax.

This appeal is, therefore, concerned only with the answers given by the High Court to the questions in so far as they relate to the assessments of income-tax only.

The first main contention urged by Mr. S. Mitra appearing in support of this appeal is that no income, profits and gains were received in India by or on be~ half of the Association.

He seeks to make good this contention on a variety of reasons all of which are not quite consistent with each other and some of

SUPREME COUR1' REPORTS [1953)

1953 which may even he mutually destructive.

Relying ori

T . the decisions in Narasammal v. The Secretary of State Morri:;,;•; 0 0.,•for India( 1 ) and Pondicherry Railway Company Ltd.

Ltd.

v. Commissioner of Income-tax, Madras('), Mr. Mitra v, urges that no income, profits and gains were Oommissionmof "received" in India at all, for the Agents were nothing ;";•;•-taxi but "an animated Post Office". \Ye are bound to

" '"9" • reject this reasoning as unsound on the same grounds

Das J. on which the Privy Council rejected a similar contention in the case of Pondicherry Railway Company Ltd.('). In the language of Lord Macmillan the functions of the Agents far transcended the mere mechanical act of transmitting the sums collected by them to the Association in .B; gypt. They were entrusted with important duties on behalf of the Association, namely, selling of the goods consigned to them for sale, handling the cargoes, issuing delivery orders, collecting the sale proceeds and then to remit the same after deducting the exenses incurred by them and their own commission.

The description of "an animated Post Office" can hardly apply to an agent of this description.

Mr. Mitra thereupon shifts his ground and urges that even if income, profits and gains were received . in India, the receipt was not by or on behalf of the< Association. 1'he contention is that though the Agents are described as agents, they were not so in fact or in law and reliance is P.laced on the well known case of Ex parte White(').

A perusal of that case will clearly show that there the person to whom goods were consigned, together with a price list, was, by their course of dealings, entitled to sell the . goods at any price he liked and that he remitted to the consignor of the goods only the listed price.

In other words, although the parties looked upon their dealings as constituting an agency the consignee did not in fact sell. the goods as agent of the consignor but did so on his own account and any price realised in excess of the listed price was his own

II) [19t6] l.L.R. 39 Mad, 885, (2/ I 1931jLL.R. ;4 Mad, 691; LR. 58 I.A. 239.

(3) L.R. 6 Ch. A. 397

profit.

On the facts found by the Tribunal, which 1958 the _learned counsel is not entitld to . ch.allen.ge Tnrner for the pu.rposes of these proceedmgs, it is q.rnte Morrison & co., clear that the goods were not imported by the Ltd.

Agents on their own account and they never became v. a purchaser at any stage. 'l'hey could not sell the Commissioner of goods at any price they liked, for they had to sell Income-tax, h t b h . d b h A . !Vest Bengal. t em a or a ove t e price approve y t e ssomation. If the sale was at a rate above the approved Das J. price the excess was never retained and appropriated by the Agents as their own profits.

Mr. Mitra thereupon contends that assuming that the Agents had sold the goods as agents of the Association they did not necessarily have the authority to receive payment of the price.

Reliance is placed on Butwick v.

Grant(1) in support of the proposition that an authority to sell does not of necessity imply an authority to receive payment of the price.

The argument is then formulated that as the Agents had no authority to receive the price, it cannot be said that the receipt was by or on behalf of the Association.

This argument again overlooks the course of business as found by the 'l'ribunal which clearly implies that the Agents were not only agents for selling the s.alt but also for collecting the sale proceeds.

The third ground urged in support of the first main contention is that the entire amounts collected by the Agents were not receivable by the Association, for the agents were entitled to a portion of it, namely, the amount spent by them in meeting the handling charges and their own commission. On the authority of Oolqtthoun v. Brooks(2) and Saiyid Ali Imam v. King-

Emperor(3) Mr. Mitra contends that the sale proceeds collected by the Agents were not so completely under the control of the Association that it could by an act of its own have the entire sale proceeds actually transferred to it in Egypt. This argument is obviously fallacious.

The concession that the Agents were

(r) [1924] 2 K.B. 483.

(2) 2 Tax Cas. 490.

(3J (1925) I.L.R. 4 Pat, 210; A.LR. 1925 Pat, 381,

l95B entitled to deduct their disbursements and their com-

T mission out of the sale proceeds clearly implies that

Morri:::~ co., th~ sale proceeds belonged to the Association, for the Ltd.

Agents could not deduct the dues by the Assov. ciation from something which did not belong to the Oommissfoner of Association.

Section 217 of the Indian Contract Act Income-ta•1• gives to an agent the right to retain, out of any sum West Benga • d f h · 1 h b receive on account o t e prmmpa m t e usmess

Das J. of the agency, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business and such remuneration as may be payable to him for acting as agent.

Section 221 also confers a right on the agent to retain the goods, papers and other property of the principal received by him until the amount due to him for commission, disbursements and services in respect of the same has been paid or accounted for to him. The right of retainer and lien conferred on the agent does not make the amount received by the agent on behalf of the principal any the less the property of the principal.

The principal is the full owner and has complete control over his properties in the hands of the agent subject only to the latter's statutory right of retainer and lien .. It follows, therefore, that the entire sale proceeds received by the Agents in the case before us were received on behalf of the Association and belonged to i~ subject to the rights of the Agents.

Finally, Mr. Mitra urges that the gross sale proceeds were not really income, for they were only credit items in the account and that several amounts were to be debited in the same account and if there remained any credit balance, such balance alone could be regarded as stamped with the formal impress of the character of income, profits and gains and capable of being dealt with as such and income, profits and gains could be said to have been received only at that stage.

We have been referred, in support of this contention, to certain observations in the cases, of Commissioner of Taxes v. The•Melbourne Trust Ltd.('), Russell v. Aberdeen Town and County Bank('), Re Rogers Pyatt Shellac

ltJ (1914] A.C. 1001 at p. 10II.

(2) 2 Tax Cas. 321 at p. 3z7.

& Co. v. Secretary of State for India(1), Commissioner 1953 of Income-tax, Bombay City v. Agarwal & Company, Turner Bombay(2), In re Govind Ram Tansukh Rai(3), and Morrison ct co., other cases.

The observations in those several cses Ltd. have to be read in the light of the facts of those cases . v'. and the subi'ect which was then under discussion. So Comm.sB<oner of Income-tax, read those observations can have no application to West Bengal.' the facts of this case.

The case Morley v. Tattersall(4) also relied on by Mr. Mitra is clearly distinguishable because the liability for t.he sale proceeds received by the auctioneers continued to exist even

Da• J.

after the unclaimed balances were transferred to the

accoun~ of the partners and, therefore, they could not be regarded as trade receipts.

On the other hand, the case of Grainger & Son v. William Lane Gough(5 ) will clearly show that the moneys received by an agent on behalf his foreign principal could be regarded as including trade profits within the meaning of section 41 of the-English Income Tax Act of 1842 (See per Lord Herschel'l at p. 337 and Lord Morris at p. 345). The several passages quoted in the judgment under appeal from the cases of Neilson Anderson & Company v. Collins and Taru v. Scanlan(6) clearly indicate that the net sale proceeds are included in the gross sale proceeds.

The same principle, as pointed out inBangalore Woollen, Cotton & Silk Mills Co. Ltd. v. Commissioner of Income-tax,

Madras(7) is implicit in the decisions of the Privy Council in Commissioner of Income-tax, Bombay Presidency and Aden v. Chunilal B. 111ehta(8 ) and Commissioner of Income-tax, Madras v. S. L. Mathias(°). There ean, therefore, be no question that when the gross sale proceeds were received by the Agents in India they necessarily received whatever income, profits and gains were lying dormant or hidden or otherwise embedded in them.

Of course, if on the taking of accounts it be found that there was no

(r) [1925) LL R. 52 Cal. r at p. 3r.

(2) [I952] 2I I.T, R. 293.

(6) Il Tax Cas gr.

(3) (1944] 12 I.T.R. 450,

(7) [1950] r8 I.T.R. 423 at p. 438.

(4) [1938] 3 All E.R. 296,

(8) (1938) 65 I.A. 332.

(~) [1896) A.C. 32~,

(9) I.L.R. [19391Mad.178; 7I.T.R.1s.

1958 profit during the year then the question of receipt of

Tnrner inco11!e, profits and gains w?uld not arise but if. there , irorrison & Go., were mcome., profits and gams, then the proport10nate

Ltd. par~ thereof attributable to the sale proceeds received v. by the Agents in India were income, prnfits and gains Commissioner 0/received by them at the moment the gross sale

Income-tax, proceeds were received by them in' India and that

1Ve,<f Bengal. b th "t• th . f t" 4 (1) ( ) emg e pos1 10n e prov1s10ns o sec 1011 a

Da.• J. were immediately attracted and the income, profits and gains so received became chargeable to tax under

section 3 of the Act.

In our opinion, there is no ) substance in the first main contention adumbrated by Mr. S. Mitra ..

Mr. Mitra's second.main point is that, assuming that there was receipt of income, profits and gains within India, such income, profits and gains clearly arose through or from a business connection in India and, therefore, the provisions of section 42( l) would apply and such income, profits and gains should be dealt with as income; profits and gains deemed to accrue or arise in India and consequently the inclusion of such income, profits and gains in the total income should be under section 4 ( 1) (c) for the Association is nonresident.

Mr. Mitra urges that the charging under section 3 is to be " in accordance with and subject to the provisions of this Act".

Likewise, section 4 (1) is also " subject to the provisions of this Act." This, according to Mr. Mitra, at once attracts section 42 and such income, profits and gains being within section 42 must be included in section 4 ( l) (c) and the other alternative, i.e.; section 4 (1) (a), is no longer applicable. In other words, according to Mr. Mitra's contention, section 4

(1) (a) becomes a dead letter so far as income, profits and gains arising or accruing to a non-resident are concerned, We are unable to accede to this contention.

Section 42 only speaks of deemed income. 'rhe whole object of that section is to make certain income, profits and gains to be deemed to arise in India so as to bring them to charge.

The receipt of the income, profits and gains being one of the yests of liabilit; v1

where the income, profits and gains are actually 1953 received in India it is no longer necessary for the revenue authorities to have recourse to the fiction u Turn; 0 and this has been held quite clearly in Hira Mills?, td. omt~. o.,

v. Income-tax Officer, Cawnpore (1) and in Burugu v.

Nagayya and Rajanna v. Commissioner of Income-tax, Commissioner of Madras (2). '!'his is also implicit in the decision of Incorne-tax, h

P .

C '] . n d' h R 'l C West Bengal. t e n vy ounc1 m ron io erry ai way ompany Ltd. v. Commissioner of Income-tax, Madras( 3), to which Das J. reference has already been made.

Section 4( J) (a) in terms is, unlike section 4 (1) (b) or 4 (1) (c), not confined in its application to any particular category of assessees.

Section 4 (1) (a) is general and applies to a resident or a non-resident person. The second proviso to section 4 (1), although it relates to the case of a person not ordinarily resident, also indicates that income, profits and gains wh :ch accrue or arise to such . a person without the taxable territories can be included in his total income if they are brought into or received in the taxable territories and become chargeable to tax under section 3 read with section 4

(1) (a).

For reasons hereinbefore stated this contention of Mr. Mitra must be rejected. It may be that the construction we are adopting in agreement with the High Court may operate harshly against nonresidents in that income, profits and gains attributable to business operations outside India may also be brought to charge as having been received in India and such consequence may deter non-resideRt merchants from doing business in India. These indeed are serious considerations but the Courts have to construe the statute according to the plain language and tenor thereof and if any untoward consequences result therefrom it is for authority other than this

Court to rectify or prevent the same.

The last main point urged by Mr. Mitra is that as soon as Turner Morrison & Co. Ltd., were treated as agents under section 43, the provisions of section 42 were immediately attracted. In support of this contention Mr. Mitra relies on the decisions in Imperial

(1) [1946] 14 I.T.R. 417 at p. 423.

(2) [1949] 17 I.T.R. 194,

(3) (1931) I.L.R. 54 Mad, 691; L.R, 58 I.A. 239.

t; i9

rnsa Tobacco Company of India Ltd. v. The Secretary of

Turner State for India (1), Commissioner of Income-tax,

Mor.ison .t Go., Bombay v. Metro Goldwyn Mayer (India) Ltd.(2) and Ltd.

Caltex (India) Ltd. v. Commissioner of Income-tax, _v._ Bombay City('), where it has been held that section 43 Oommiss.aner of is only a machinery for giving effect to section 42.

Income-tam.

To say that section 43 is really only machinery for lVest Bengal.

giving effect to section 42 is not to say that section Das J. 43 has no other purpose. Section 42 refers to income, profits or gains accruing or arising directly or indirectly through or from (i) any business connection in India, (ii) any property in India or (iii) any assets or sources of income in India, or (iv) any money lent at interest and brought into India in cash or in kind or (v) the sale, exchange or transfer of a capital asset in India. All these incomes by virtue of this section have to be deemed to be income accruing or arising within India and where the person entitled to such income, profits or gains is a non-resident such income, profits and gains are .made chargeable to income-tax either in his name or in the name of his agent who is to be deemed to be for all the purposes of this Aet the assessee in respect of such income-tax.

Section 43, however, refers to a person (a) employed by or on behalf of a non-resident, (b) having any business connection with such non-resident or (c) through whom such non-resident is in receipt of any income, profits or gains. A person who comes within one or other of these three categories, may, under this section, be treated by the Incomectax Officer as agent of the non-resident and such person is for all the purposes of this Act to be deemed to be such agent. 'rhe third category refers to a person through whom the non-resident is in receipt of any income, profits or gains.

The portion of section 43 which refers to the person through whom the non-resident is in receipt of any income, profits or gains does not necessarily attract the provisions of section 42, for the income, profits and gains received by the person

(t) (1922) l.L.R. 49 Cal. 721.

(2) ~1939) 7 I.T.~. 176.

' ,. --

who is treated as agent under section 43 may not fall

19S3 within any of the several categories of income, profits T f d ' 4" Th 1 urnar or gams re erre to m section :6. e anguage Mmrison ct co., of section 43 will also attract the provisions of Ltd. section 40, for that section also contemplates a v. person who is entitled to receive on behalf of the Commissioner 01 non-resident any income, profits and gains chargel~cotnBie-tao:, t b d . d h . 'es enga • a le un er this Act an may even attract t e provi- sions of section 4(l)(a). In our opinion there is no Das J. warrant for the contention that an appointment of a person as a statutory agent under section 43 only attracts section 42 for such appointment is for all purposes of the Act and not only for the purposes of section 42.

In our judgment, for reasons stated above, the answers given to the questions by the High Court, in so far as they relate to the assessment of incometax with which alone we are now concerned, are correct and this appeal must be dismissed with costs.

Appeal dismissed.

Agent for the appellant: P. K. Mukherii.

Agent for the respondent: G. H. Raiadhyaksha.

N ALINAKHYA BY SA OK

SHYAM SUNDER HALDAR AND OTHERS. [MEHR CHAND MAHAJAN, DAS, and BHAGWATI JJ.]

West Bengal Premises Rent Control (Temporary Provisions) Act (XVII of 1950), s. 18 (I)- T-Vhether applies to orders for recovery of possession made by Presidency Small Cause Court-" Decree for recovery of possession "-Construction of stat1ites-Mistakes of legislature.

The expression "decree for recovery of possession" in s. 18

(1) of the West Bengal Premises Rent Control (Temporary Provisions) Act (Act XVII of 1950) does not include an order for recovery of possession made under s. 43 of the Presidency Small Cause Courts Act, 1882, and a person against whom an order fo1

Jan. 29.

MEHR CHAND MAHAJAN

DAS

VIVIAN BosE

BHAGWATI JJ.

ss. 4(1)

s. 4

s. 43

Port Said Salt Association Ltd.

United Kingdom

Egypt

Turner Morrison and Co. Ltd.

India

s. 43

Income-tax Act

s. 4

s. 4

High Court of Calcutta

s. 4

s. 42

s. 4

Income-tax Act

s. 4

s. 3

s. 4

s. 42

s. 4

s. 4

Section 4(1)

s. 43

s. 42

s. 43

s. 42

Calcutta High Court

S. N. Mukherjee

C. K. Daphtary

P. A.

Ltd.

Mehta

Daa

DAs

section 66(1)

Income-tax Act

Port Said Salt Association Ltd

Alexandria

Income-tax Act

gypt

Turner Morrison & Company Ltd.

Turner Morrison aud Company Ltd.

Turner Morrison & Company

Calcutta

rrurner Morrison & Company Ltd.

Das

section 43

Income-tax Act

section 4

section 4

Turner Morrison & Company Ltd.

Income-tax Appellate Tribunal

section 4(1)

section 42

section 4( 1)

section 4(1)

section 42

section 66

section 4(1)

section 4

section 42

Sen

Chunder

section 42(3)

section 21

section 42

section 4

Income-tax Act

section 42

Income-tax Act

section 66A

S. Mitra

Pondicherry Railway Company Ltd.

Macmillan

Mitra

LR. 58 I.A. 239

Section 217

Indian Contract Act

Section 221

West Bengal

section 41

English Income Tax Act

Morris

sec 1011

section 3

S. Mitra

section 42( l)

section 4

section 3

section 4

section 42

section 42

section 4

section 4

section 4

Section 42

Section 4( J)

section 4

Section 4

section 4

section 3

section 4

Turner Morrison & Co. Ltd

section 43

section 42

section 43

section 42

section 43

section 42

Section 42

Section 43

section 43

section 42

section 43

section 43

section 40

section 4(l)(a)

section 43

section 42

section 42

P. K. Mukherii

G. H. Raiadhyaksha

N ALINAKHYA

SHYAM SUNDER HALDAR

s. 18

s. 18

s. 43

Presidency Small Cause Courts Act, 1882