COMMISSIONER OF INCOME-TAX, WEST BENGAL

ALLAHABAD BANK LIMITED

February 14, 1969

[J.C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.] B

Finance Acts, 1956 ant( 1951-Explanation to Paragraph D of Part JI-Definition 'of 'share prtmium account'; whether such account liable to be included in the paid-up-capital for computing rebate of super taxi! to qualify for inclusion it is sufficient if ii is an identifiable separate account within the reserves--Companies Act, 1956, •· 78 (3) r.w.s. 78(1) -Effect of.

In proceedings for assessment to tax for each of the assessment years 1956-57 and 1957-58, the Income Tax Officer reduced the rebate in supertax admissible to the respondent under the Finance Acts of 1956 and 1957 on the view that the respondent bank, which was a public limited company, had distributed dividends exceeding 6% of its paid-up-capital.

In reducing the rebate the Income Tax Officer excluded an amount representing share premium received by the company.

The Appellate Assistant Commissioner held that the company's share premium was liable to be added to its capital in computing the reduction in the rebate in super-tax and directed modification of the order of assessment The Appellate Tribunal in appeal, as well as the High Court, on a reference, agreed with this view.

In the appeal to this Court, it was contended on behalf of the appellant that the amount representing share premium was not to be added to the share caJ)ital because ( 1) the expression "share premium account" in the definition of ''paid-up capital" in the Explanation to Paragraph D of Part II of the Finance Acts of 1956 and 1957 means an account apart from the rP.Sel'ves maintained by the company; and ( 2) in view of the proVisions of s. 78 (3) read withs. 78(1) of the Companies Act, 1956, the respondent company was bound to maintain a separate share premium account outside the reserves and to transfer the share premium into that accow1t which the -respondent company had failed to do.

HEW : A share premium account is liable to bti included in the pai<1-u1> capital for the purpose of computing rebate if it is maintained as a separate account.

But the Explanation to paragraph D of Part II of the Finance Acts of 1956 and 1957 does not contemplate that the account must be kept apart from the reserves. If within the reserves it is an identifiable separate account, the share premium will qualify for inclusion in the paid-up capital. [~28 HJ

Although Uhder the Companies Act 1 of 1956 there was an express provision that the share p'remium a¢ount shall be maintained in a separate account and by virtue of Sch. VI of the Act the share premium has to be shown in the balance sheet under the head "Liabilities" as part of the share capital and not of reserves, on that account it cannot be assum ed t.hat if the share premium is maint.ained as a separate account within .the reserves, reduction in the rebate in super-tax is liable to be computed after excluding share premium. [728 CJ

In any event with respect to tbe assessment year 1956-57 the .<:ompany was being assessed to tax for the previous year of the company ending on

c I

December, 1955, when the Companies Act of 1956 was not in for~.

During that period the eompany was governed by Act 7 of 1913 which contained no provision analogous to s. 78. of the 1956 Act. (727 C-DJ

C1v1L APPELLATE JURISDICTION: Civil Appeals Nos. 701 and 702 of 1968.

Appeals from the judgments and orders dated December I 7, 1963 and April 6, 1965 of the Calcutta High Court in. Incometax References Nos. 87 of 1960 and 30 of 1962 respecuvely.

S. T. Desai, S. C. Manchanda and B. D. Sharma, for the appellants (in both the appeals).

Sachin Chaudhuri, Sukumar Mitra and D. N, Mukherjee, for the respondent (in both the appeals) .

The Judgment of the Court was delivered by Shah, J. The Allahabad Bank Ltd. is a public limited company. The paid-up share capital of the Company other than capital entitled to a dividend at .t fixed rate was at the relevant time Rs. 30,50,00U The Company had issued before January l, 1954, shares at premium and the premium received in cash aggregated to Rs. 45,5(\000. In each of the account years 1955 and 1956 the Company distributed Rs. 5,49,000 as dividend.

In proceedings for assessment for each of the assessment years 1956-57 and 1957-:i8 the Incom~-tax Officer reduced by Rs. 61,000 the rebate in super-tax admissible under the Finance Acts 1956 on the view that the Company had distributed dividend exceeding 6% of its paid-up capital. In reducing the rebate the Income-tax Officer did not take into consideration share premium amounting to Rs. 45,50,000 received by the Company.

The Appellate Assistant Commiss10ner held that the Company's share premium was liable to be added to the capital of Rs. 30,50,000 in computin~ the reduction in the rebate in supertax, and directed modification of the order of assessment. The Appellate Tribunal agreed with the Appellate Assistant Commissioner.

The Tribunal then submitted a statement of the case and submitted the following question in respect of the year 1956-57 to the High Court of Calcutta :

"Whether on the facts and in the circumstances of the case, the ainount of Rs. 4S,50,000 should be added to the paid-up capital of the assessee as on 1st January, 1955, for the purpose of allowing rebate to the assessee under Paragraph D of Part II of the First Schedule to the Indian Finance Act, 1956."

A similar question relating to the assessment year 1957-58 was also referred by the Tribunal. The High Court of Ca1•1tta agreed

724 [1969] 3 S.C.\l.

with the. Tribunal and held that in determining the reduction in rebate in super-tax admissible to the Company the share premium maintained by the Company within the reserves was liable to be included in the paid-up capital.

The Finance Act, 1956 prescribed the rate of super-tax in Part II. Paragraph D (in so far as it is relevant) enacted :

"In the case of every company-

On the whole of total income

Provided that-

Rate Six annas and nine pies in the rupee.

( i) a rebate at the rate of five annas per rupee of the total income shall be allowed in the case of any company which- ( a) in respect of its profits liable to tax under the Income-tax Act for the year ending on the 31st day of March,, 1957, has made the prescribed arrangements for the declaration and payment within the territory of India of the dividends payable out of such profits and for the deduction of supertax from dividends in accordance with the provisions of sub-section ( 3D) of section 18 of that Act, and

(b}

(ii) a rebate at the rate of four annas per rupee of the total income shall be allowed in the case of any Company which satisfied condition (a)

but not condition (b) of the preceding clause; F

Provided further that- ( i) the amount of the rebate under clause ( i) or

~ . . . . . . . of the preceding proviso shall be reduced by the sum, if any, equal_ to the amount or the aggregate of the G amounts as the case may be, computed as hereunder:-

(a) .

(b) in addition, in the case of a company referred to in clause (ii) of the preceding proviso which has distributed to its shareholders during the previous year "dividends in excess of six per cent of its paid-up

capital, not being dividends payable at a fixed rateon that part of the said dividends which exceeds 6 per cent but does not exceed 10 per cent of the paid-up capital;

on that part of the said dividends which exceeds 10 per cent of the paid-up capital;

(ii) .

Provided further that

at the rate of two annas per rupee

at the rate of three annas per rupee;

Explanation :-For the Purposes of Paragraph D Partof this

( i) the expression "paid-up capital" means the paidup capital (other than capital entitled to a dividend at a fixed rate) of the Company as on the first day of the previous year relevant to the assessment for the year ending on 31st day of March, 1957, increased by any premiums received in cash by the company on the issue of its shares, standing to the credit of the share premium account as on the first day of the prevmus year "

In the Finance Act of 1957 also a similar scheme of granting rebate of super-tax and reduction therein in the conditions set out in the Act, was adopted.

The reduction in rebate in super-tax depended upon the proportion which the dividend distributed bore to the paid-up capital.

If the Company distributed dividends exceeding 6% of its paid-up capital as defined in the explanation, the rebate was liable to be reduced to the extcmt provided in the second proviso. In the relevant years of account, the share premium formed an identifiable part of the reserves of the Company but was not shown in a separate share premium account apart from the reserves.

The Commissioner contends : ( 1 ) that the expression "share premium account" in the definition of "paid-up capital" in the Explanation to Paragraph D of Part II of the Finance Acts 1956 and 1957 means an account apart from the reserves maintained by the Company; and

(2) that in any event since the enactment of the Companies Act, 1956 "share premium" not maintainable as a separate account cannot be taken into consideration

SUPREMIE COURT. REPORTS

(1969) 3 S.C.R.

in dealing with the claim for rebate in the payment of super-tax and reduction in the rate thereof.

Counsel for the Commissioner relied upon s. 7 8 ( 3) read with s. 78(1) of the Companies Act l of 1956, and submitted that the Company was bound to maintain a separate share premium account outside the reserves and transfer into that account the share premium and since the Company failed to do so, in determining the paid-up capital within the meaning of the Expianation to Paragraph D of the Finance Acts 1956 and 1957 the share premium within the reserve could not be taken into account. The relevant clauses of s. 78 of the Companies Act I of 1956 provide:-

"(1)

(2)

(3)

Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called "the share premium account"; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the Company.

Where a company has passed a resolution authorising the issue of any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act :

Provided that any pari of the premiums which has been so aoolied that it does not at the commencement of this Act form an identifiable part of the company's reserves within the meaning of Schedule VI, shall be disregarded in determining the sum to be included in the share premium account."

Clause (1 ) is in terms prospective : it requires a Company to transfer premiums received in cash or otherwise on shares to the share premium account.

By clause (3) any premium received prLor to the coming into force of the Companies Act, 1956 less that part of the premium which had been so applied so that it did not, at the commencement of the Act, form an identifiable part of the Company's reserves, had also to be transferred to the share jlremium account as if the shares had been issued after the commencement of the Act. Section 78 was apparently borrowed from s. 56 of the English Companies 1948 (11 & 12 Geo. 6 ch. 38.) Before the Companies Act of 1956 there was provision in the Indian Companies Act 1913 which required a Company to maintain a separate share premium account. After the coming into force of the Companies Act 1 of 1956 a share premium account had to be maintained and the share premium could not be used otherwise than for the specific purposes mentioned in s. 7 8 ( 2) .

The plea raised by the Commissioner that the Company failed to comply with the statutory injunction contained in Cl. ( 1) of s. 78 and on that account the premium received were not "standing to the credit of the share premium accounts within the meaning of the Explanation to Paragraph D in the Finance Act 1956 may be rejected on a simple ground.

In the assessment year 1956-57 the Company was being assessed to tax in respect of the previous year of the Company ending on December 31, 1955. In the calendar year 1955, the company was governed by the Indian Companies Act 7 of 1913 which contained no provision analogous to s. 78 of the Companies Act I of

1956. The Companies Act was before the Parliament during the year 1955, but the Company was on that account not obliged to transfer to a separate share premium account independent of the reserve the premiums received prior to January I,

1955. The Companies Act came into force on April 1, 1956 : it had no retrospective operation. Since there was no obligation upon the Company to maintain a separate share premium account in the previous year corresponding to the assessment year 1956-57, the share premium account maintained as an identifiable account within the reserves qualified for being included in the paid up capital within the meaning of this expression in the Explanation to Paragraph D Part II of the Finance Act. 1956.

For the assessment year 1956-57, therefore rebate in , uper-tax was liable to be reduced, if the Company had distributed dividend exceeding six per cent of the paid-up capital inclusive of share premiums maintained as an identifiable account.

The contention raised by the Commissioner must therefore fail in respect of theassessment year 1956-57.

Counsel for the Commissioner contends that in any event in the Finance Act 2 of 1957 the expression "share premium account" has only the meaning ascribed thereto in the Companies Act, !956,

and in respect of the assessment year 1957-58, reduction in the rebate must be computed without talcing into account the share premium which was maintained by the Company in the year of 1ccount 1956 within the reserve.

Under the Finance Act 2 of 1957 rebate in super-tax is liable to be reduced in the case of Companies which have, inter a/ia, distributed to the shareholders in the previous year dividends in excess of 6 per ceint of the paid-up capital not being dividend payable at

SUPRBM~ COURT REPORTS

(1969] 3 S.C.R.

. a fixed rate.

The expression "paid-up capital" is also defined in substantially the same terms as under the Finance Act, 1956.

For the assessment year 1957-58 the Tribunal tound that the share premium was liable to be included in the paid-up capital, because it was an identifiable part of the reserves. In our judgment the Tribunal was right in so holding. The Explanation to Paragraph D Part II of the Finance Act, 1957, does not require that the share premium account must be maintained as an account outside the reserves.

Under the Companies Act 1 of 1956 there was an express provision that the share premium account shall be maintained in a separate account. It is true that in the balance-sheet in Sch. VI of the Act the share premium has to be shown under the head "Liabilities" as part of the share capital and not of reserves.

But it cannot be assumed on that account that if the share premium is maintained as a separate account within the reserves, reduction in the rebate in super-tax is liable to be computed after excluding share premium. The Explanation requires that in determining the paid-up capital for the purpose of rebate in super-tax, share premium sta.nding to the credit of a share premium account shall be excluded : it does not make maintenance of an account outside the reserve a condition of its inclusion in the paid-up capital.

Again if under the Finance Act, 1956, the expression "standing to the credit of the share premium account" did not mean that the share premiums shall be maintained in a separate account apart from the reserve, is there any reason why, under an identical scheme of reducing rebate in super-tax in the year 1957-58, it s)lould have a different meaning ? In the absence of any compelling grounds, we would not be justified in holding that the Parliament attributed to the expression "standing to the credit of the share premium account" as used in the Explanation to Paragraph D Part II of the Finance Act 2 of 1957, a meaning different from the one which it had under the Finance Act, 1956. The object of the Parliament in enacting Paragraph D of the Finance Act was that profits earned by a Company should be available for being ploughed back into the business and should not be distributed to the shareholders by way of dividend in excess of the rate prescribed. To secure that object the Parliament gave an incentive to the Company of substantial rebate in payment of super-tax which would be liable to be forfeited, if part of dividend exceeding 6 per cent was distri- .buted to the share-holders.

Share premium account is accordingly liable to be included in the paid-up capital for the purpose of computing rebate if it is maintained as a separate account. The Explanation does not contemplate that the account must be kept apart from the reserves.

If within the reserves it is an identifiable separate account, the

A share premium will qualify for inclusion in the paid-up capital in computing the reduction in rebate of super-tax.

The appeals fail and are dismissed with costs, One hearing fee..

B R.K.P.S.

Appeals dismissed ..

COMMISSIONER OF INCOME-TAX, WEST BENGAL

ALLAHABAD BANK LIMITED

February 14, 1969

C. SHAH

V. RAMASWAMI

A. N. GROVER, JJ.

Companies Act, 1956

s. 78(1)

s. 78

Companies Act, 1956

Although Uhder the Companies Act

Companies Act

s. 78

S. T. Desai

S. C. Manchanda

B. D. Sharma

Sachin Chaudhuri

Sukumar Mitra

D. N

Shah

Allahabad Bank Ltd.

January l, 1954

High Court of Calcutta

1st January, 1955

Finance Act, 1956

Income-tax Act

31st day of March,, 1957

India

section 18

31st day of March, 1957

Companies Act, 1956

SUPREMIE COURT. REPORTS

(1969) 3 S.C.R.

s. 7

s. 78(1)

Companies Act

s. 78

Companies Act I of 1956

Schedule VI

Section 78

s. 56

Before the Companies Act

Indian Companies Act 1913

s. 7

s. 78

Companies Act

s. 78

Companies Act I of

Companies Act

Parliament

Companies Act

April 1, 1956

Companies Act

Finance Act, 1956

Companies Act

Again if under the Finance Act, 1956

Finance Act, 1956


R. OBLISWAMI NAIDU

ADDL. STATE TRANSPORT

APPELLATE TRIBUNAL,

MADRAS & ORS.

February 17, 1969

[S. M. SJKRI, R. S. BACHAWAT AND K. S. HEGDE, JJ.)

Motor Vehicles Act (4 of 1939), ss. 41 and 57-App/ication for staRe carriage pern1it an new route-Procedure to be followed.

The appellant applied to the R.T.A. for a permit to ply a stage carriage on a new route on which no stage carriage was plying before. The R.T.A. published the application under s. 57(3) of the Motor Vehicles Act, 1939.

Some representations against the grant of the permit on the ground that there was no need we're received.

The R. T.A., after over~ ruling the objections granted the permit to the appellant. The appeal by. some of the objectors was allowed by the State Transport Appellate Tribunal on the ground that the procedure adopted by the R.T.A. was not in accordance with law inasmuch as it failed to determine the question of the need for a service in that 'route before entertaining the application.

The appellate order was confirmed by the High Court.

In appeal to this Court,

HELD : (Dismissing the appeal) Having regard to the purpose behind ss. 47 and 57, that only public interest should be considered and any manipulation in favoUr of a particular applicant shou1d be eliminated. there should be two independent steps before granting a stage carriage permit : (a) there should be a determination by the R.T.A., under s. 4 7 (3), of the number of stage carriages for which permits may be granted -00 that r<>ute, and (b) applications for permits for such number of stage carriages should be entertained thereafter.

Otherwise, theo R.T.A. will have no oppcrtunity to choose between competing operators.

The 're~ presentations' made under s. 57(3) cannot be considered as competing applications. Further, if 'representations' should be interpreted to include 'applications', then •· 57(3) becomes unworkable as there will be unending applications and publications. [733 B-C, F. H]

lcrya Ram Motor Service v. S. Rajarathinam, C.A. No. 95165 datcJ 27-10-1967, fOll\)Wed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1426 of 1968.

Appeal from the .iudgment and order dated April 16, 1968 of the Madras High Court in Writ Petition No. 908 of 1968.

D. Narsaraju Subramaniam, Vineet Kumar, J. Ramamurthy, P. S. Khera and Shyamala Pappu, for the appellant.

S. T. Desai, A. R. Ramanathan and R. Gopalakris/man, for respondent No. 2.

The Judgment of the Court was delivered by Hegde, J. 1:he scope of s. 47(3) of the Motor Vehicles Act, 1939 (to be hereinafter referred to as the Act) comes up for consideration in this appeal by certificate. ·

The facts of the case necessary for the purpose of deciding the point in issue are few, and they are.as follows:-

On August 8, 1966, theappellant applied to the R:T.A. Coimbatore for a permit to ply a stage carriage on the route Bhavani to Vellithiruppur. That was Mtirely a new route. No stage carriage was plying on that route at that time. The R. T.A. published that application under s. 57 (3) of the Act. Respondents Nos. 2-3 and others made representations against that application contending that there was no need to grant a stage carriage permit for that route. The R. T .A. overruled their objection and granted the permit asked for on October 9, 1967.

As against the order of the R. T.A. some of the objectors went up in appeal to the State Transport Appellate Tribunal, Madras. The Additional State Transport Appellate Tribunal allowed the appeal by its order of February 22, 1968 holding that the procedure adopted by the R. T.A. was not in accordance with law inasmuch as it had failed to determine the question of the need for a service in that !}JUie before entertaining

the application for a stage carriage permit. The Tribunal held that the procedure adopted by the RT.A. contravened s. 47(3) of the Act. The appellant challenged that order before the High Court of Madras in Writ Petition No. 908 of 1968. The High Court dismissed that application. Hence this appeal.

Section 47 of the Act prescribes the procedure to be adopted by the R.T.A. in considering applications for stage carriage permit.

That section reads :

"A Regional Transport Authority shall, in considering an application for a stage carriage pennit, have regard to the following matters namely :

(a) the interests of the public generally;

(b) the ad"antages to the public of the service to be provided, including the saving olf time likely to be effected thereby and any convenience arising from journeys not being broken; ( c) the adequacy of other passenger transport services

G operating or likely to operate in the near future, whether by road or other means, between the places to be served;

( d) the benefk to any particular locality or localities likely to be afforded by the service; ( e) the operation by the applicant of other transport services, including those in respect of which applications from him for permits are pending;

(f) the condition of the roads included in the proposed route or area;

SUPREME COURT REPORTS

(1969) 3 S.C.R.

and shall also take into consideration any representations made by persons already providing passenger transport facilities by any means along or near the proposed route or area, or by any association representing persons interested in the provision of road transport facilities recognised in this behalf the State Government, or by any local authority or pohce authority within whose jurisdiction any part of the proposed route or area lies :

Provided that other conditions being equal, an application for a stage carriage permit from a co-operative society registered or deemed to have been registered under any enactment in force for the time being shall, as far as may be, be given preference over applications from individual owners.

(2) A Regional Transport Authority shall refuse to grant a stage carriage permit if it appears from any time-table furnished that the provisions of this Act relating to the speed at which vehicles may be driven are likely to be contravened :

Provided that before such refusal an opportunity shall be given to the applicant to amend the time-table so as to conforn1 to the said provisions.

(3) A Regional Transport Authority may, having regard to the matters mentioned in sub-s. (I), limit the number of stage carriages generally or of any specified type for which stage carriage permits may be granted in the region or in any specified area or on any specified route within the region." Suo-section (3) of s. 47 ol the Act required the Regional Transport Authority to limit the number of stage carriage permits that may be granted in a route having regard to the matters mentioned in sub-s. ( 1) of that section.

The question for determination is whether the detennination as to the number of stage carriages required on a route should be done at a stage anterior !o that of entertaining applicatioris for stage carriage permits or that it could be done at the time it considers applications made by operators for stage carriage permits in that route. The RT.A. has proceeded on the basis that that question can be decided while considering the applications made to it for permits by operators whereas the Appellate Tribunal and the High Court have taken a contrary view.

Sub-s. (3) of s. 47 of the Act if read by itself dues not throw any light on the controversy before us but if ss. 4 7 and 57 of the Act are read together it appears to us to be clear that the view

taken by the Appellate Tribunal and the High Court is the correct view. 1f contrary view i; taken it will throw open the door for manipulations and nepotism. There may be possibility of the personality of the applicant influencing the decision of the R.T.A. on the question of need for a stage carriage permit in the route and thereby public interest whih should be the main consideration while taking a decision under s. 47(3) may suffer. If we accept the view taken by the R.T.A. as correct, an operator who happens to apply for the route first will be in a commanding position. J'he R.T .A. will have no opportunity to choose between competing operators and hence public interest might suffer.

Mr. Narsaraju, learned Counsel for the appellant tried to 1.ueet the difficulty by suggesting that sub-s. ( 3) of s. 57 of the Act is wide enough to allow the competing operators to apply for the route in question when the first applicant's application is published and representations called for.

Section 57(3) reads:

"On receipt of an application for a stage carriage permit or a public carrier's permit, the Regional Transport Authority shall make the application available for inspection at the office of the Authority and shall publish the application or the substance thereof in the prescribed manner together with a notice of the date before which representations in connection therewith may be submitted and the date, not being less than 30 days from such publication, on which, and the time al!d place at which, the application and any repentation received will be considered."

(Proviso is not relevant for our present purpose).

We are unable to accept this contention.

That sub-section F merely permits representations to be made in respect of the application published.

Such representations cannot take the form of competing applications. It is difficult to accept the contention that the word "representations" in s. 57 (3) includes applications for the route. That apart if we accept Mr. Narsaraju's contention then the whole thing will become unworkable. If at the time of makin~ his representation an operator can also make an application for a G stage carriage permit for that route, that application again will have to be published under s. 57 (3) and objections called for. Extending the logic of Mr. Narsaraju's argument as we ourrht to, at the time of making representations to those applications, further applications can be made. This may turn out to be an unending chain.

H On an examination of the relevant provisions of the Act and the purpose behind ss. 47 and 57, we are convinced that before granting a stage carriage permit two independent steps have to be taken. Firstly there should a determination by the R.T.A. under LIOSap.169-12

734 SUPREMl.ii COURT REPORTS.

[1969] 3 S:C.R

s. 47(3)of the number of stage carriages for which stage carriage permits may be granted in that route. Thereafter applications for stage carriage permits in that route should. be entertained. The R.T.A. is not competent to grant stage carriage permits for more carnages than fixed under s. 4 7 ( 3). Our above conclusion accords with the view expressed by this Court in Civil Appeal No. 95 of 1965. (M/s. Jaya Ram Motqr Service v. S. Rajarathinam and orJ. )( 1). Therein the Court observed :

"The scheme of sec. 4 7 is that when a person makes an application under sections 45 and 46 the Authority first considers it under.sec: 47 ( 1) in the light of the matters set out therein and also the representations, if any, made by the persons mentioned therein. The Authority then fixed under sec. 4 7 ( 2), ha_ving regard to the matters mentioned in s. 47 ( 1), the nrimber of stage carriages for which permits may be granted in the region or on any specified route within such region. Having fixed the limit the Authority publishes under s. 57(3), tlie application with a notice of the .date before which representations in connection therewith may be submitted and the date on which such application and representations would be considered. The proviso to s. 57 ( 3) lays down that if the grant of a permit has the effect of increasing the number of vehicles operating in that region or in any specified area thereof or on the route .ithin such region beyond the limit fixed under s. 4 7 ( 3), the Authority may dismiss the application summarily. lfit does n'ot exceed such limit and the Authority decides to grant a permit it has to consider the application and the representations submitted to it in conformity with the procedure laid down in sec. 57. Therefore sec. 47 envisages two stages of the inquiry; ( i) the fixing of the number of permit under s. 47(3) and (ii) the consideration thereafter of the application for grant of a permit and the representations if any by the persons mentioned in s. 4 7 ( 1 ) . It would therefore seem that once the Authority has fixed the number of vehicles to be operated in the region or the area or the particulauoute and the number of permits to be granted therefor, the stage of inquiry under s. 4 7 ( 3) is over. The next thing that the Authority has to consider is whether grant of a permit would be within such limit or not. If it does not exceed the limit the Authority has to consider the application and the representation if

any, in connection therewith and to grant or refuse to

grt the permit under sec;. 48 ( 1 ) . Therefore, once the

(1) C.A. No. 95/65 decided en 27-10-1967 ..

R. o. NAIDU v. s.T.A.T. (Hegde, I.)

limit is fixed, if the grant of an application does not have

the effect of exceeding that limit, the only question before the Authority would be whether the applicant is a person fit to be granted the permit or not in the light of the matters set out in sub-sec. ( 1) of sec. 4 7. The question of the number of permits to be granted, having been already canvassed and decided, cannot become the subject at that stage of any further controversy. This is clear from the fact that sec. 48 ( 1) which empowers the Authority to grant or refuse to grant the permit starts with the words 'subiect to the provisions of s. 4 7'. It is therefore clear that the Authority has first to fix the limit and after having done so, consider the application or representations in connection therei:v.ith in accordance with the procedure laid down in sec. 57. As held in Abdul Mateen v. Ram Kai/ash Pandey(') the Authority may modify the limit fixed by it under sec. 4 7 ( 3) but once such a limit is fixed, it cannot ignore it while considering the applications before it under sec. 48. Sec. 47 (3), as observed there, 'is co.ncerned with a general order limiting stage carriages generally etc., on a consideration of matters specified in s. 4 7 ( 1). That general order can be modified by the Regional Transport Authority, if it so decides, one way or the other. But the modification of that order is not a matter for considera\ion when the Regional Transport Authority is dealing with the actual grant of permits under s. 48 read with s. 57 for at that stage what the Regional Transport Authority has to do is to choose between various applicants .... That, in our opinion, is not the stage when the general order passed under section 4 7 ( 3) can be reconsidered for the order under s. 48 is

subject to the provisions of s. 4 7, which includes s. 4 7 ( 3) tinder which a general order limiting the number of stage carriages etc. may have been passed.' That being so, if an application is refused such refusal is under sec. 48 (1) and the appellant who is denied the permit has a right of appeal under sec. 64(l)(a)."

In the result this appeal fails and the same is dismissed with costs.

V.P.S.

Appeal dismissed.

(I) [196'] J S.C.R. 523, 529.

R. OBLISWAMI NAIDU

February 17, 1969

R. S. BACHAWAT

K. S. HEGDE, JJ.

Motor Vehicles Act

ss. 41 and 57

s. 57(3)

Motor Vehicles Act, 1939

ss. 47 and 57

s. 4

s. 57(3)

Madras High Court

D. Narsaraju Subramaniam

Vineet Kumar

J. Ramamurthy

P. S. Khera

Shyamala Pappu

S. T. Desai

A. R. Ramanathan

R. Gopalakris

Hegde

s. 47(3)

Motor Vehicles Act, 1939

August 8, 1966

R:T.A. Coimbatore

Bhavani

Vellithiruppur

s. 57

October 9, 1967

February 22, 1968

s. 47(3)

High Court of Madras

Section 47

s. 47

s. 47

ss. 4

s. 47(3)

Narsaraju

s. 57

Section 57(3)

s. 57

s. 57

ss. 47 and 57

s. 47(3)

s. 4

sec. 4

sections 45 and 46

sec. 4

s. 47

s. 57(3)

s. 57

s. 4

sec. 57

sec. 47

s. 47(3)

s. 4

s. 4

sec. 4

sec. 48

s. 4

sec. 57

sec. 4

sec. 48

Sec. 47

s. 4

s. 48

s. 57

section 4

s. 48

s. 4

s. 4

sec. 48

sec. 64(l)(a)


7 36

HINDUSTAN STEEL LTD.

M/S. DALIP CONSTRUCTION COMPANY

February 18, 1969

[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.] B

bufion Stamp Act, ss. 35, 36 42r-Unstamped document filed in .::oUTt-lmpounded-Whether can be acted upon after payment of duty and. penalty.

The dispute between the appellant and the respondents in relation to a c:Pntract were referred in accordance with their contract to arbitration.

The award was filed in the District Court and notice of filing was given

to the parties. The appellant applied to the Court under ss. 30 and 33 of the Indian Arbitration Act, 1940 to have the award set aside on the around inter alia that it was unstamped. The District Judge ordered the doannent to be impounded and directed that an authenticated copy of the instrument be sent to the Collector together with a certificate in writing •tatin.g the receipt of the amount of duty and penalty. Against tha\,

order the appellant moved the High Court of Madhya Pradesh in exercise of ita revision3.i jurisdiction. The High Court rejected the petition. By special leave appeal was filed in thill Court. Relying on the difference ia tho phraseology between ss. 35 and 36 it was urged that an instrument which is not duly stamped may be admitted in evidence on payment of duty and penalty, but it cannot be acted upon because s. 35 operates as a bar to the admission in evidence of an instrument not duly stamped as well u to its being acted upon, and the Legislature has by s. 36 in the conditiona set out tbeuin removed the bar only aaainst admission in evidttlce of the instrument.

HELD: The appellant's argument ignored the true import of s. 36.

By that section an instrument once admitted in evidence shall not be oalled in question at any stage of the same suit or proceedings on the ground that it bas not been duly stamped. S:ction 36 does not, prohibit a challenge against an instrument that it shall not be acted upon becau.e it is not duly stamped, but on that account thc*'e is no bar against an instrwnent not duly stamped being acted upon after payment of the stamp dnty and penalty according to the procedure presc!pbed by the Act. The doubt if any is resolved by the terms of s. 42(2) which enact in terms unmistakable, that every instrument endorsed by the Collector under s. <42(1) shall be admissible in evidence and may be acted upon as if it l>ae been duly stamped. [740 C-EJ

The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments : it is not enacted to arm a litigant

with a weapon of technicality to meet the case of his opponent.

The stringent provisions of the Act are conceived in the interest of the revenue.

Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the instrument. Viewed in that light the scheme is clear. Section 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon, s. 40 provides the procedure for the instrument being impounded, sub... (I) of s. 42 provides for certifying that an instrument is duly stamped, and sub-6. (2) of s. 42 enacts the consequences resulting from such certification. [740 F-G]

Ob.ervations of Desai, J. in Mst. Bittan Bibi and Anr. v. Kantu Lill •n" Anr., l.L.R. [1952) 2 All, 984, disapproved.

Civn, APPELLATE JURISDICTION : Civil Appeal• 'No, 2425 ot 1968.

Appeal by special leave from the judgment and order daled August 30, 1968 of the Madhya Pradesh High Court in Civil Revision No. 764 of 1967.

C. K. Daphtary, and /. N. Shroff, for the appellant.

Rameshwar Nath and Mahinder Narain for the respondent.

The Judgment of the Court .. was delivered by Shah, J. The respondents entered into a contract witJa Hindust!lj]l Steel Ltd. for 'raising, stacking, carting natl loadi-.g into wagons limestone at Nandini Mines".

Dispute whicJa arose between the parties was referred to arbitration, pursaant to cl. 61 of the agreemQ!J!.

The arbitrators differed, and the dispute was referred to an umpire who made and published his award on April 19, 1967. The umpire filed the award in the Caurt of the District Judge, Rajnandgaon in the State of Madhya Pradesh and gave notice of the filing of the award to tbe parties to the dispute. On July 14, 1967 the appellant filed aD.

application for setting aside the ward under ss. 30 and 33 of the Indian Arbitration Act, 1940. One of the contentions railed by the appellants was that the award was unstamped and on that account "invalid and illegal 3llld Hable to be set aside".

The respondents then applied to the District Court that the award be impounded and validated by levy of stamp duty and penalty.

By order dated September 29, 1967, the District Judge directed that the award be impounded.

He then called upon the respondents to pay the appropriate stamp duty on the award aind penalty and directed that an authenticated copy of tac instrument be sent to the Collector, Durg, together with a certificate in writing stating the receipt of the amount of duty and penalty.

Against that order the apoe!Jant moved the High Court of Madhya Pradesh in exercise of its revisional jurisdiction.

The High Court rejected the petition and the appellant. appeals to this Court with special leave.

It is urged by Co~! for the appellant that an instrument wllich is not stamped as required by the Indian Stamp Act, may, Oil payment of stamp duty and penalty, be admitted in evidence, but cannot be acttd upon, for, "the instrument has no existence

• the eye of law".

Therefore, counsel urged, in proceeding to entertain the application for filing the award, the District JudiC, Rajnandgaon, acted without jurisdiction.

The relevant provisions of the Stamp Act may be summarised.

Section 3 of the Act provides :

738 SUPREMI! COURT Rl!PORTS

[1969] 3 S.C.R.

"Subject to the provisions of this Act . . . . . the A following instruments shall be chargeable with duty of the amount icated in that Schedule as the proper duty therefor, respectively, that is to say- ( a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or ll after the first day of July, 1899; "Inatrument" is defined m s. 2(14) as including "every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded".

An instrument is said. to be "duly stamped" within the meaning of the Stamp Act when the instrument bears an adhesive or im- C prOiSOCI stamp of. not less than the proper a.tnount and that such stamp has been affixed or used in accordance with the law for the time being in force in India : s. 2 ( 11).

Item 12 of Sch. I . prribes the stamp duty payable in respect of an award.

Section 33 ( l) provides, insofar as it is relevant :

" ( l) Every person having by law or consent of D parties authority to receive evidence. . . . . before 'lfhom any instrument, chargeable. . . . . with duty, ill produced or comes in the perfom1ance of his functions, shall, if it appears to him that such instrument

ill not duly stamped, impound the same." Sectioo 35 of the Stamp Act provides, insofar as it is relevant : E "No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such imistrument is duly stamped: F

Provided that .................... "

Section 36 provides :

"Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the G aame suit or proceeding qn the ground that the instrument has not been duly stamped."

Section 38 deals with the impounding of the instruments : it prcmdes:

" ( l ) When the person inlpounclif1g an instrumet H 11Dder sectiQD 3 3 has . . . . . . authonty to receive evidence and admits such instrument in evidence upon payment of a penialty as provided by section 3 5 or

........ , he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writiJig, stating the amount of duty and penalty levied in respect thereof, ........ "

By s. 39 the Collector is authorised to adjudge proper penalty

and to refund any portion of the penalty which has been paid in respect o.f the instrument, sent to him.

Section 40 prescribes the procedure to be followed by the Collector in respect of an i; nstrument impounded by h!m or sent to him under s. 38. If the Collector is of the opinion that the instrument is chargeable with duty and is not duly stamped, he shall require the payment or proper duty or the amount required to make up the same together with a penalty of five rupees; or, if he thinks fit, an

amount not exceeding ten times the amount of the proper dut) or of the deficient portion thereof.

Section 42 provides :

" ( 1) When the duty and penalty (if any), Jeviable in respect of a, ny instrument have been paid under section 3 5, section 40 or ...... , the person admitting such instrument in evide; nce or the Collector, as the case may be, sha]J certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been levied in respect thereof, ..... .

(2) Every instrument so endorsed shall thereupon be admissible in evidence. and may be registered and acted upon and authenticated as if it had been duly stamped, and shall be delivered on his application in this behalf to the person from whose possession it came into the hands of the officer impoundin~ it, or as such person may direct :

Provided !; hat- ........... ; ; . ; ; . ; ........... . " The award, whidh is an "instrument" within the meaning\ oe the Stamp Act was required to be stamped.

Being unstamped, the aw.ard could not be received in evidence by the Cami, nor could 1~ be acted upon.

But the Court was competent to impound 11 and to send it to the Collector with a certificate in writing sating the amount of duty and penalty levied thereon.

On the instrument so received the Collector may adjudge whether it. is duly stamped and he may require penalty to be paid thereon, j, f in his view it has not been duly stamped. If th( duty and penalty are paid, the Collector will certify by endorse ment on the instrument that the proper duty and penalty hav• been paid.

740 SUPREME COURT ll.EPORTS

An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence, and it cannot be acted upon by that person or by any public officer.

Section 35 provides that the admissibility of a• instrument qnce admitted in evidence shall not, except as provided in s. 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. Relying upon the difference in the phraseology betweein ss. 35 and 36 it was urged that an instrument whiclt is not duly stamped may be admitted in evidence. on pa)ment of duty and penalty, but it cannot be acted upon because s. 35 operates as a bar to the admission in evidence of the instrument not duly stamped as well as to its being actcti upon, and the Legislature has by s. 36 in the conditions set out therein removed the bar only against admission in evidence of the instrument.

The argument ignores the true import of s. 36.

By that section an instrument once admitted in evidence shall not be called in question at any stage of the same suit or prt:>· ceeding on the ground that it has not been duly stamped. Sectio•

36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not duly stamped, but on. that account there is no bar against an instrument not duly

stamped being acted uporr after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the terms of s. 42(2) which enact, in terms unmistakable, that every instrument endorsed by the Collector under s. 42 ( 1) shall be admissible in evidence and may be acted upon as if it had been duly stampoo.

The Stamp Act is a fiscal measure enacted to secure revenue for the State Ol!l certain classes of instruments : it is not enacted to a'1ll a litigant with a weapon of technicality to meet the case of his opponent.

The stringent provisions of the Act are conceived in the interest of the revenue.

Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial de.feet in the instrument.

Viewed in that light the Scheme is clear : s. 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon; section 40 provides the pocedure for instruments being im pounded, sub-s. ( 1) of s. 42 provides for certifying that an instrument is duly stamped, and sub-s. (2) of s. 42 enacts tho cQ\llsequences resulting from such certmcation.

Our attention was invited to the statement of law by M.C.

Desai, J., in Mst. Bittan Bibi and Another v. Kuntu La~ ami 14.nother(') that : ----

(1) I.LR . .' 195:1 2 All. 9€4.

"A court is prohibited from admitting an instrument in evidence ainkl a Coun and a public officer both are prohibited from acting upon it.

Thus a Court is prohibited from both admitting it in evidence and acting upon it.

It foilows that the acting upon is not included in the admission aUld that a document can be admitted in evidence but not be acted upon.

Of course it cannot be acted upon without its being admitted, but it can be admitted and yet be not acted upon. 1f every document, upon admission, became automatically liable to be acted upon, the provision in s. 35 that an instrument chargeable with duty but not duly stamped, shall not be acted upon by the Court, would be rendered redundant by the provisio11. that it shall not be admitted in evidence for adv purpose.

To act upon an instrument is to give effect to it or to enforce it"

In 011r judgment, the learned Judge attributed to s. 36 a meanin~ wlLich the Legislature did not intend.

Attentiqn of the learnca Judge was apprently not invited to s. 42(2) of the Act which expte!sly renders an instrument, when certified by endorsement that proper duty and penalty have been levied i.'l respect thereof. capable of being acted upon as if it had been duly stamped.

The appeal fails and i~ dismissed with costs.

o.c.

Appeal dismissad.

36

HINDUSTAN STEEL LTD

S. DALIP CONSTRUCTION COMPANY

February 18, 1969

C. SHAH

V. RAMASWAMI

A. N. GROVER, JJ.

ss. 35, 36

ss. 30 and 33

Indian Arbitration Act, 1940

High Court of Madhya Pradesh

ss. 35 and 36

s. 35

s. 36

s. 36

s. 42(2)

Stamp Act

Section 35

s. 40

s. 42

s. 42

Desai

C. K. Daphtary

N. Shroff

Rameshwar Nath

Mahinder Narain

Shah

cl. 61

ss. 30 and 33

Indian Arbitration Act, 1940

September 29, 1967

Durg

Indian Stamp Act

Section 3

India

first day of July, 1899

s. 2(14)

s. 2

Section 33

Section 36

section 61

Section 38

section 3

s. 39

Section 40

s. 38

Section 42

section 3

section 40

Section 35

s. 61

ss. 35 and 36

s. 35

s. 36

s. 36

s. 42(2)

s. 42

s. 35

section 40

s. 42

s. 42

M.C.

Desai

s. 35

s. 36

s. 42(2)


YOGENDRA NATH NASKAR v.

COMMISSIONER OF INCOME-TAX, CALCUTTA

February 18, 1969

{I. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.) 8

Income-tax A.ct (11 of 1922)-Hindu Deity-If can be tax.<d througlt shebtlits.

Finding that the assessments of the income from the properties of two Hindu. deities in the hands of its shebaits as trustees were set aside on th~ footing that the status of the assessees had not been correctly determined, the Income-tax Officer initiated proceedings for the assessments again!ft th~ shebaita of the deities and c:Ompleted the assessments on the deities in th!! statuo of an individual and through the shebaits. On the question wh<ther tlae auessments on the deities through the i; hebaits were in accordance with law,

HELD : The Hindu idol is a juristic entity capable of holding property and of being taxed through its shebaits who are entrusteJ with the possession and management of its proper.ty.

A Hindu deity fell within the meaning of the word 'individual' under s. 3 of the Act ;,.ind couid be treated as a unit of assessment undl!r the section and was capable of being taxed through its shebaits.

Tne word 'individual' in s. 3 of the 1922 Act included within its connotation al! artificial juridical persons and this legal position was n1ade explicit and beyond challenge in the 1961 Act. (750 C; 751 DJ

Neither God nor any supernatural being could be a person in law.

But liO far as the deity stands as the representative and symbol of rh.:- particular purpose whic.in is indicated by the donor; it can figure as a legat persoo and in that capacity alone the dedicated property vests in it. Th,:-r~

is no principle why a deity as such a legal person should not bt! taxed if such a legal person is allowed in law to own property even though in the ideal sense and to sue, for the prvperty, to realise rer..t and to dcfen\.~ such property in a court of law again in the ideal sense. [749 F]

Manohar Ganesh v. Lakshmira1n, I.L.R. 12 Born. 247; Vidyap1!l'J11!

Tirtha Swami v. Vi<l, vonldhi Tirtha Swami & Ors., !.L.R. 27 fad. 435;

.Maharant Shibessouree Dehia v. Mothocrariath Acharjo, 13 1\1.L:A. 270; ./'rosanna Kw:ir.ri Dcbya v. Golab Chand Baboo,

L.R. 2

I.A. 145; l'ramotha Nath Mullick v. Pradyumna Kumar Mullick & Ors., 52 I.A.

245; Bhupati v. Ram/al, 10 C.L.J. 355; Hindu Law of Religious & Clra1i1- G

ahl~ Trust by Mr. B. K. 1\lukherjea; The Commissioner of lncome•tax, Madhya Pradesh & JJhopal v. Sodra Devi, (1958] S.C.R. I; Cape Br"ndy

Syndical~ v. l.R.C., (1921] 2 K.B. 403 and Attorney General v. Clarkson, .(1900] 1 Q.B. 156. referred to. ·

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 690 • 694 of 1968.

Appeals from the i.udgment and order dated April 3 4, 5. 1965 of the Calcutta High Court in Income-tax Reference 1'1o. 50 of 1961.

A M. c. Chagla and B. P. Maheshwari, for the appellant (i; n all

the appeals).

S. T. Desai, G. C. Sharma and B. D. Sharma, for the reopondent (in all the appeals).

The Judgment of the Court was delivered by Ramaswami, J.

These appeals are brought from the judg- :11.cnt of the Calcutta High CoUrt dated 3rd, 4th and 5th April, 1965 in Income Tax Reference No. 50 ot 1961 on a certificate granted under section 66A of the Iµdian Income Tax, Act, 1922 (hereinafter called the Act).

One Ram Kristo Naskar left a will dated 17th May, 1899 by which he left certain properties as debuttar to two deities Sri Sri Iswar Kubereswar Mahadeb Thakur and Sri Sri Anandamoyee Kalimata in the land adjoining hi.s residential house at 7 4 /7 5 Beliaghata Main Road.

He appointed his two adopted sons Hem Chandra Naskar (since deceased) and Yogendra Nath N askar as the shebaits. Elaborate provision was made as to the liWmer in which the income from the property was to be spent.

For a long time the income from the property was assessed in the hands of the shebaits as trustees. In respect of the assessment years 1950-51 and 1951-52, the two shebaits contended that there was no trust executed n the case and as such the income from the property did not attract liability to tax and particularly the assessments made in the name of Hem Chandra ]'(askar and his brother Yogendra Nath Naskar as trustees of the debuttar estate could not be sustained.

The Appellate Assistant Commissioner accepted this contention oo appeal and set aside the assessments. finding that the assessments have been set aside on the footing that the status of the assessee.; had aot been correctly determined the Income Tax Officer initiated proceecliiugs for the assessment years 1952-53 and 1953-54 a!Jlinst Hem Chandra Naskar and Yogendra Nath Naskar, the shebaits of the two deities and completed the assessments on the deities in the status of an individual and through the shebaits.

The claim for exemption under the proviso to section 4(3)(i) of the Income Tax Act was rejected. On appeal the Appell.ate Assistant Commissiqner upheld the assessment orders of the Income Tax Officer.

The assessee appealed to the Appellate Tribunal and coatended that the deities were not chargeable

to tax under s. 3 of the Act; that section 41 of the Act did not apply to the facts of the case.

Though the shebaits were the managers who could come under the ambit of section 41, they had not been appointed by or under lli!l!y order of the court and dlercfore the assessments were invalid and should be set aside.

It was also contended that the case of the trustee having been 1pccifically giwn . up it would not be open to the Income Tax

Department to bring the shebaits upder any of the categori~ mentioned in section 4 L The departmental representative contended that the assessments bad been made on the shebaits not under section 41 as trustees or managers but that the deities had beem assessed as individuals and that section 41 was a surplusage in. making the assessments. The Tribunal held that though the shebaits were the managers for the purpose of section 41, they were not so appointed by or under any order of the court, and, .therefore, the second condition required by section 41 was not fulfilled, and the shebaits could pPt be proceeded against.

The' Appellate Tribunal added that the specific provision which the Tribunal first relied. was that of trustees under section 41, but that case having been given up the further attempt to a5sess the shebaits as managers .under section 41 could not be upheld .. At the insta, nce of the Commissioner of Income Tax, the Appellate Tribunal referred the _ followin~ ·

question of law for the opinion of the High Court 'Q, rider section 66(1) of the Act:

"Whether on the facts and in the circumstances of the case, the assessment on the deities through the shebaits under the provisions of section 41 of the Indian Income Tax Act were in accordance ·with law?" After having heard learned cOunSel for both the parties we

are satisfied that in the question referred by . the Appellate E Tribunal the words 'under the provisions of section 41 of the , Indian Income Tax Act' should be deleted as superfluous and the question' should be modified in the follo, wing manner to bring out the question in real controversy between the parties :

"Whether ari the facts and in the circumstances of the case, the assessments on the deities through the

F . shebaits were in accordance with law." The main question hence presented for determination in these appe'als is whether a Hindu deity can be treated aS a unit . of assessment under section 3 mid 4 of the Income Tax Act, 1922.

G It is well. established by high authorities that a Hindu idol is. a juristic person in whom the dedicated property vests. In \ Manohar Ganesh v. Lakshmiram(') called the Dakor temple case, \ West and Birdwood, JJ. state: . . . · ·

' "The Hindu Law, like the Roman Law and those derived from it, recognises not only incorporate bodies H with rights of property vested m the corporation apart

(1) I.L.R. 12 Born. 247.

Y. N. NASKAR v. C, I.T. (Rnmaswami, J.) 745

from its individual members but also juridical persons called foundations.

A Hindu who wishes to establish a religious or charitable institution may according to his law express his purpose and endow it and the ruler will give effect to the bounty or at least, protect it so far at any rate as is consistent with his own Dharma or conceptiQll or morality. A trust is not required for the purpose; the necessity of a trust in such a case is indeed a peculiarity and a modern peculiarity of the English Law. In early law a gift placed as it was expressed on the altar of God, sufficed it to convey to the Church the lands thus dedicated. It is consistent with the grants having been made to the juridical person symbolised or pernonified in the iclol".

The same view has been expressed by the Madras High Court in Vidyapurna Tirtha Swami v. Vidyanidhi Tirtha Swami & Ors. ( 1) ill which Mr. Justice Subrahmania Ayyar stated :

"It is to give due effect to such a sentiment, widespread and deep-rooteq as it has always been, with reference to something not capable of holding property as a natural per.; on, that the laws of most countries have sanctioned the creation ol a fictitious person in the matter as is implied in the felicitous observation made in the work already cited "Perhaps the oldest of all juristic pernons is the God, hero or the saint"

(Pollock and Maitla.nd's History of English Law, Volume I, 481).

That the consecrated idol in a Hindu temple is a juridical pernon has been expl'a%1y laid down in Manohar Ganesh's case('), which Mr.

Prannath Saraswati, the author of the 'Tagore Lectures on Endowments' rightly enough speaks ol as one ranking as the leading case on the subject, and in which West J., discusses the whole matter with much erudition.

And in more than one case, the decision of the Judicial Committee proceeds on precisely the same footing (Maharanee Shibessouree Dehia v.

Mothocrapath Acharjo(1 ) and Pr0sanna Kumari Debya v. Golab Chand Baboo(•). Such ascription of legal personality to a, n idol must however be incomplete unless it be Jinked of human guardians for them variously designated in Debya v. Golab Chand Baboo(•) the Judicial Committee observed thus : 'It is only in an ideal sense that

(t) I.LR. 27 Mad. 435.

(2) 1.l.R. 12 Born. 247.

(3) 13 M.l.A. 270.

(4) L.R. 2 I.A. 145.

property can be said to belong to an idol and the possession and managemi; nt must in the nature of things be entrusted with some person as shebait or manager.

It would seem to follow that the person so entrusted must be necessity be empowered to do whatever may be required for the service of the idol and for the benefit and preservation of its property at least to as great a degree as the manager of an infant heir'-words which seem to be almost on echo of what was said in relation to a church in a judgment of the days of Edward I : 'A church is always under age and is to be treated as an infant and it is not according to law that infants should be disinherited by the negligence of their guar- . / dians or be barred of an action in case th_ey would ./ complain of things wrongfully done by their guardians while they are under age' (Pollock and Maitland's 'History of English Law', Volume I, 483".

In Pramatha Nath Mullick v. Pradyumna Kumar Mullick &:

Ors.( 1) Lord Shaw observed:

."A Hindu idol is, according to long . established authority, founded upon the religious customs of the Hindus, and the recog1tiition thereof by Courts of law, a 'juristic entity'. It has a juridical status with the power of suing and being sued.

Its interests are attended to by the person who has the deity in his charge and who -is in law its manager with all the powers which would, in such circumstances, on analogy, be given to the manager of the estate of an infant heir. It is unnecessary to quote the authorities; .

- for this doctrine thus simply stated, is firmly estal>- lished".

It should however be remembered that the juristic person in the idol is not the material image, and it is an exploded theory that the image itself develops. into a legal person as soon as it is consecrated and vivified by the Pran Pratishta ceremony. It is _111ot also correct that the supreme being of which the idol is a symbol or image is the recipient and owner of the dedicated property.

This is clearly laid down in authoritative Sanskrit Texts. Thus,

in his Bhashya on the Purva Mimamsa, Adhyaya 9, Pada I, Sabara Swami states : ~T ~'l:r'1';'1fa, '3"'!'11('11\'lli._ I

'IT 'Rf>ra'

f<tfifl[frr, 'i'!'). I 'f 'I" m1f mf

"IT

(1) 52 I.A. 245.

'f'nfmn<f fef; p:r'f'T~ ~T I ffi'l1A <f5flf"<!i'l'olcf 11 ..:> ..:>· •

~'l'IJ<." I"· I ujj a <HT 'ITf<Nefa, ~<rarrf'tll'f 'fa <'f'R!lf I "Words such as 'village of the Gods', 'land d the.Gods; are used. in a figurative sense. That is property which c;¢ be said to belong to a person, which he can make use of as he desires. God. however does not make use of the village or lands, according to its desires". Likewise, Medhathithi in commenting on the expression 'Devaswam' in Manu, Chapter XI, Verse 26 writes : .... ~'fl'ffB<>:r, .. llT'!TlG' f'l"IT<l <!'if ~·. "' "' "'"' d~'lf'l'l ,' lf"'1<'! f'lffif!f<f'Flm', ~00 om'1'11?: I ... "' ... ' "Property of the Gods, Devaswam, means whatever is abaindoned .. for Gods, for. purposes of sacrifice and the like, because ownership in the primary sense, as showing the relationship between the owner and the property owned, is 'impossible of application._ to Gods". Thus, according to the texts, the Gods have no beneficial enjoyment of the properties, 'aJ!ld they can be described as their owners only in a figurative sense ( Gaunartha).

The correct legal position is that the idol as representing and embodying the spiritual purpose of the donor is the juristic person._ recognised by law and in this juristic persOJil the dedicated pro- - perty vests. As observed by Mr. Justice B. K. Mukherjea :

"With regard to Debutter, the position seems to be somewhat different. What is personified here is not the entire property which is dedicated to the deity but the deity itself which is the central part of the foundation and stands as the material symbol and embodiment of the pious purpose which the dedicator has in view. "The dedicatioin to deity", said Sir Lawrence Jenkins in Bhupati v. Ram/a/(1 ) "is nothing but a compendious expression of the pious purpose for which the dedication is designed". It is not only a compendious expression but a material embodiment: of thepious purpose and though there is difficulty in holding that property can reside in the aim or purpose itself, it would be quite cQ'1Sistent with sound principles of Jurisprudence to say that a material object which represents or symbolises a particular purpose can be given the status of a legal person, and regarded as owner of the property which is dedicated to it."(2) The legal position is comparable in many respects to the development in Roman Law. So far as charitable endowment is concerned Romalll. Law. as later developed recognised two kinds of juristic persons.

One was a corporation or aggregate of

(I) JO C.L.J. 355 at 369.

(2) Hindu Law of Religious & Charitable Trust by Mr. B.K. lvfukherjee.

persons which owed its juristic personality to State sanctin. A private person might make over property by way . of gift or legacy to a corporation already in existence and might at the sa.me time prescribe the particular purpose for which the property wu to be employed e.g. feeding the poor, or giving relief to the poor or distressed. The recipient corporatiqib wpuld be in a position of a trustee and would be legally bound to spend the funds for the particular purpose. The other alternative was for the donor to create an institution or foundation himself. This would be a j!lew juristic person which depended for its origin upon nothing else but the will of the founder provided it was directed to a charitable purpose. The foundation would be the owner of the dedicated property in the eye of law and the administrators would be in the position of trustees bound to carry out the object of the foundation.

As observed by Sohm :

"During the later Empire-from the fifth century onward&--foundations created by private individuals came to be recognised as foundations in the true legal iense, but only Ji they took the form of a ipia causli

('pium corpus') i.e. were devoted to 'pious uses', only in short, if they were charitable institutions.

Wherever a person dedicated property-whether by gift inter vivos or by will-ijll favour of th!l poor, or the sick, or prisoners, orphans, or aged people, be thereby created ipso facto a new subject of legal rights -the poor-house, the hospital, and so forth-and the dedicated property became the sole property of this new subject; it became the sole property of the new juristic person whom the founder had called into being.

Roman Jaw, however, took the view that the endowments , of charitable fobndations were a species of Church property. Pioe causae were subjected to the control of the Church, that is, of the bishop or the ecclisiastical administrator, as the case might be. A pitz causa was regarded as an ecclisiastical, and consequently, as a public institution, and as such it shared that corporate capacity which belonged to all ecclisiastical institutions by virtue of a general rule of law.

A pia causa did not require to have a juristic personality expressly confered upon it.

According to Roman law the act-whether a gift inter vivos or a testamentary disposition-whereby the founder dedicated property to charitable uses was sufficient, without more, to constitute the pia causa a foundatioo in the legal sense, to make it, in other words, a new subject o.f legal rights"(').

(1) 111''.:iute of Roman Lw. 3rd Edition pp. 197-198.

A We should, in this context, make a distinction between the spiritual and the legal aspect of the llindu idol which is installed and worshipped.

From the spiritual standpoint the idol may be to the worshipper a symbol (pratika) of the Supreme Godhead intended to invoke a sense of the .vast and intimate reality, and suggesting the essential truth of the R~ that is beyond B all name or fonn.

It is basic postulate of Hindu religion that different images do 'not represent different divinities, they are really symbols of One Supreme Spirit and in whichever name or fonn the deity is invoked, the Hindu worshipper purports to worship the Supreme Spirit and nothing else.

~>it fir.I 3ff"111; 3\1§1 " ......

q;'!i f'fl!T qg~T <Rfli'I' I (Rig Veda I. 164)

(They have spoken of Him as Agni, Mitra, Varuna, Indra; the one Existence the sages speak of in many) .

The Bhagavad Gita echoes this verse when it says :

'"'!' <r•ftsfr.i<: ~: mrr~=

llorN~ <ii llf<r~ I (Chap. xi-3 9) (Thou art Vayu and Yama, Agni, Varuna and Moon: Lord of creation art Thou, and Grandsire).

Samkara, the great philosopher, refers to the one Reality, who, E owing to the diversity or intellects ( matibheda) is conventionally spoken of (parikalpya) in various ways as Brahma, Visnu and Mahesvara.

It is however possible that the founder of the endowment of the_ worshipper may not conceive on this highest spiritual plane but hold that the idol is the very embodiment of a' personal God, but that is not a matter with which the law is concerned.

Neither God nor any supernatural being could be F a person in Jaw. But so far as the deity stands as the representative and symbol of the particular purpose which is indicated by the donor, it can figure as a legal person. The true legal view is that in that capacity alone the dedicated property vests in it.

There is no principle why a deity as such a legal person should not be taxed if such a legal person is allowed in law to G own property even though in the ideal sense and to sue for the property, to realise rent and ti> defend such property in a court of law again in the ideal sense. -Our conclusion is that the Hindu idol is a juristic entity capable of holding property and of being taxed through its shebaits who are entrusted with the possession and management of its property. It was argued on behalf of the appellant that the word 'individual' in s. 3 of the H Act should not be construed as including a Hindu deity because it was not a real but a juristic person. We are unable to accept this argument as correct. We see no reason why the meaning LIOSup./69-13

of the word 'individual' in section 3 of the Act should be restricted to human being and not to juristic entities. In The Com- .mlsioner of Income Tax, Madhya Pradesh & Bhopal v. Sodra Devi(') Mr. Justice Bhagwati pointed out as follows :

"the word 'individual' has not been defined in the Act and there is authority, for the proposition that the word 'individual' does not mean only a human being but is wide enough to include a group of persons forming a unit. It has b~ held that the word 'individual' includes a Corporation created by a statute, e.g., a University or a Bar Council, or the trustees of a baronetcy trust incorporated by a Baronetcy A.ct".

We are accordingly of opinion that a Hindu deity falls within the meaning of the word fadividual" under section 3 of the Act and can be treated as a unit of assessment under that section.

On behalf of the appellant Mr. Chagla referred to section 2 .sub-section (31) of the Income Tax Ad, 1961 (Act No. 49 of

1961 ) which states : D

''2. In this Act, unless the context otherwise requires-

( 31) 'person' includes-

(i) an individual,

(ii) a Hindu undivided family,

(iii) a company,

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) a local authority, and

(vii) every artificial juridical person, not falling within any of the preceding sub-clauses".

Counsel, so referred to s. 2 ( 9) and s. 3 of the Income Tax Act, G 1922 which state : . "2. In .this Act, unless thre is anything repugnant m the subject or context-

( 9) 'person' includes Hindu undivided family and H local authority".

(I) (1958] s.c.R. 1a1p,6.

A "3. Where any Central Act enacts that income-tax shall be charged for any year at , any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, B company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually".

On a comparison of the provisions of the two Acts counsel on behalf of the appellant contended that a restricted meaning C should be given to the word 'individual' in section 3 of the earlier Act. We see no justification for this argument. On the other hand, we are of the opinion that the language employed in 1961 Act may be relied upon as a Parliamentary exposition of the earlier Act even on the assumption that the language employed in section 3 of the earlier Act is ambiguous.

It is clear that the word 'individual' in section 3 of the 1922 Act D includes within its connotation all artificial juridical persons and this legal position is made explicit and beyond challenge in the 1961 Act. ln Cape Brandy Synilicate v. I.R.C.(1), Lord Sterndale M.R. sfild: '

"I think it is clearly established in A. ttorney Gen era! v. Clarkson(') that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous.

I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier Act".

For the reasons expressed we hold that the question of law relerred by the Income-tax Appellate Tribunal and as modified by us should be answered in the affirmative and in favour of the Commissioner of Income-tax.

We accordingly dismiss these G appeals. with costs.

One hearing fee.

Y.P.

Appeals dismissed.

(1) (1921) 2 K.B. 403.

(2) (1900) I Q.B. IS6, 163, l64.

YOGENDRA NATH NASKAR

COMMISSIONER OF INCOME-TAX, CALCUTTA

February 18, 1969

I. C. SHAH

V. RAMASWAMI

A. N. GROVER, JJ.

s. 3

s. 3

L.R. 2

I.A. 145

B. K. 1\lukherjea

CIVIL APPELLATE JURISDICTION

B. P. Maheshwari

S. T. Desai

G. C. Sharma

B. D. Sharma

Ramaswami

section 66A

Ram Kristo Naskar

Iswar Kubereswar Mahadeb Thakur

Anandamoyee Kalimata

Hem Chandra Naskar

Yogendra Nath N askar

Hem Chandra ]'(askar

Yogendra Nath Naskar

a!Jlinst Hem Chandra Naskar

section 4(3)(i)

s. 3

section 41

section 41

section 4

section 41

section 41

section 41

section 41

section 41

section 41

section 66(1)

section 41

section 41

Indian Income Tax Act

section 3

Income Tax Act, 1922

Birdwood

Madras High Court

Subrahmania Ayyar

Pollock

Maitla.nd's

Manohar Ganesh

Prannath Saraswati

West

L.R. 2 I.A. 145

Pollock

Maitland

Shaw

Sabara Swami

Medhathithi

Manu

B. K. Mukherjea

Lawrence Jenkins

B.K. lvfukherjee

Sohm

Bhagavad Gita

Samkara

Brahma

Visnu

Mahesvara

s. 3

section 3

Bhagwati

section 3

Chagla

section 2

s. 2

s. 3

section 3

section 3

section 3

Sterndale M.R.


SUKHRAM SINGH AND ANOTHER

SMT. HARBllEJI

February 19, 1969

[M. HIDAYATULLAH, C.J. AND G. K. MITTER, J.]

U.P. Zamindari Abolition end Land Reforms Act 1951-Sections 21 and i51-Amertdment by Act 20 of 1954-Express provision for retrospective application of atnended s. 21-No provision for retrospective effect of s. 157-lf s. 157 also deemed to have been emended retrospectively-Stc.ten1ent b, v Con1pensation Officer under section 240(F)-When final.

The respondent as Blmmidhar filed an objection under section 240( G) of the U.P. Zamindari and Land Abolition Act, 1961. in respect of a preliminary statement compiled by the Compensation Officer under section 240(F) showing the appellants as Adhivasis of certain land. The objection was dismissed by the Compensation Officer on October 25, 1956. who held that the appellants had Adhivasi rights and the objector had no interest in the land. The Compensation Offider decided the matter without framing an issue and referring it for decision to a competent court. In the meantime, in consolidation proceedings the respondent applied for correction of the records under section 10(1) of Consolidation of Holdings Act, but her objection was dismissed by the Consolidation Officer. However, on appeal. the Settlement Officer, (Consolidation), reversed this de cision holding that the appellants were Asainis. The Director of ConsOlidation, U .P. dismissed a revision application.

In these consolidation proceedings, the respondent claimed the advantage of the amendment of secltion 21(h) and section 157 introduced by the U.P. Land Reforms Act, XX of 1954, on the ground that her husband was suffering from physical infirmity and was incapable of cultivating land.

The appellants' conten tion was that while section 21 had been expressly amended to have retrospective effect, the amendment of section 157 was not effective retros' pectively; the respondent was therefore not entitled to claim the advantage from the amendment of section 157. It was further contended by the appellants that the order of the Compensation Officer made on October 25, 1956, had finally decided the status of the appellants as Adhivasis and not having been appealed against, the question could not now be reopened.

HELD: Section 157(1)(a) must be read to apply retrospectively.

If the new s. 21 (h) is to be read retrospec/tively from the commence ment of Land Reforms Act. the amendment of section 1Sl(l) which was made simultaneously must also be clearly intended to operate with re..

G trospection.

There would be no point in making the amendment of s. 21 (h) retrOiSpective if the other clauses were to apply prospectively for then the force of the retrospectivitv of clause (h) of s. 21 would be made neutral. [759 E-F]

A law is undoubtedly retrospective if the law says so expressly but it is not always necessary to say so expressly to malle it retrospective. ll There are occasions when a law may be held to be retrospective in opera lion.

Retrospection is not to be presumed for the presumption is the - other way but many statutes have been regarded as retrospective without , a decllaration.

Thus it is that remedial staes are always regarded as

prospective but declaratory statutes are considered retrospective. Similarly sometimes statutes have a retrospective effect \.vhen the declared intention is cleatly and unequivocally manifest from the language employed in the particular 1aw or in the context of connected provisions.

It is always a question whether the legislature has sufficiently expressed itself. To find this one must look at the general scope and purview of the Act and the remedy the legislature intends to apply in the fOrmer state of the law and then determine what the legislature intended to do. This line of investigation is, df course, only open if it is necessary. [758 HJ

Main v. Stark [1890] 15- A.C. 384 at 388; referred to.

The Order of the Compensation Officer under s. 240-F did not have that finality which was claimed for it. That finality attaches only to the order of the Assistant Collector under s. 229-B on a reference of an issue from the Compensation Officer.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 666 of 1966.

Appeal by special leave from the judgment and order dated September 20, 1963 of the Deputy Di.rector of Consolidation,

U.P. Lucknow in Revision No. 91 of _1963.

)) J. P. Goyal and R. S. Gupta, for the appellants.

S. P. Sinha and M. I. Khowaja, for the respondents.

The Judgment of the Court was delivered by Hidayatullah, C.J. The parties in this appeal are the same as in Civil Appeal No. 286 of 1966 which we declared to have become infructuous because of the operation of s. 5 of the Uttar Pradesh Consolidation Act. The judgment in that appeal was delivered by us on February 7, 1969. For the narration of facts in this appeal we have, however, referred to certain orders which were passed by the High Court from the sister appeal. The parties to this appeal as in the other appeal are Sukhram Singh and Laiq Singh of the one part and Smt. Harbheji of the second part. These two parties have been fighting a long drawn litigation over khata No. 271 of village Shahgarh. Two separate proceedings took place before the Revenue Courts and reached this Court by way of special leave, one of which has been disposed of and the other is now before us.

The points involved in this appeal are short but in view of the length of litigation a Jong narration is necessary.

On March 10, 1954 Smt. Harbheji as bhumidar filed a suit (No. 38 of 1954) under s. 202 of the U.P. Zamindari Abolition and Land Reforms Act, 1955 agaitist the other party in the court of the Assistant Collector, !st Class, Aligarh. The allegation in the suit was that Sukhram Singh and Laiq Singh were Asamis who were leased the khata in 1947 from year to year. Smt.

Harbheji asked for their ejectme; nt from the khata.

The defence of the other side was that the occupants were Adhivasis. The

Land Reforms Act was passed in 1951. Under the Act the intermediaries were abolished and their rights and title vested in the State from July 1, 1952. The Act was later amended from time to time and we are concerned with one such amendment made by the U.P. Land Reforms Act XX of 1954 which came into force on October 10, 1954.

Reverting to the facts, the suit No. 38 of 1954 was dismissed by the Assistajnt Collector, 1st Class, Aligarh on April 20, 1956 and it was held that Sukhram Singh and Laiq Singh were not

Asamis and therefore not liable to ejectment.

On appeal the Civil Judge of Aligarh allowed it on February 1, 1957 and declared Sukhram and Laiq Singh to be Asamis. A second appeal in the High Court before a Single Judge succeeded on February 19, 1958. Sukhram Singh and Laiq Singh were again declared to be Adhivasis.

A Letters Patent Appeal was filed in the High Court. Meanwhile the Consolidation of Holdings Act was brought into force in this area and a notification under s. 4 of the Consolidation of Holdings Act declaring village Shahgarh area to be under consolidation was published on November 11,

1961. The appeal in the High Court was decided on February 8, 1962. It appears that the arguments were already heard and the case was reserved for judgment when the notification came into force.

The learned Judges did not apply s. 5 of the Consolidation of Holdings Act which provides that on notification issuing any suit, proceeding or appeal must be taken to have abated.

The Division Bench gave its decision reversing the judgment of the Single Judge.

As a result Sukhram Singh and Laiq Singh were again declared to be Asamis. An appeal was then brought to this Court by special leave and it is that appeal which we declared had become infructuous by reason of the abatement of the suit. This was the end of the proceedings under s. 202 of the Land Reforms Act.

Meanwhile Smt. Harbheji as bhumidar was entitled to compensation for the extinguishment ()f her rights.

The Compensation Officer prepared a preliminary statement under s. 240F and showed Sukhram Singh and Laiq Singh as Adhivasis.

Smt .. ar bheji filed an objection under s. 240G but on the date of heanng (October 25, 1956) she did not appear before the Compensation Officer who dismissed her objection holding that Laiq Singh and Sukhram Singh had Adhivasi rights aind the objector had no interest in the land.

The statement of compensation was also confirmed on the <; ame date.

In the consolidation proceedings Smt. Harbheji applied for correction of the records under s. 10(1) of the Consolidation of Holdings Act. This niatter was decided by the Consolidation Officer ill Khera Narainsingh on March 7,

1963. The objection filed by Smt. Harbheji was dismissed. On the Settlement Officer (Consolidation) reversed the above

SUKHRAM v. HARBHEJI (Hidayatul/ah, C.J.) 755

decision on June 14, 1963 holding that Sukhram Singh and Laiq Singh were Asamis.

The Deputy Director of Consolidation, exercising the powers of the Director of Consolidation Uttar Pradesh dismissed the revision petition on September 20, 1963 filed by Sukhram Singh and Laiq Singh. The present appeal is from the last decision by special leave.

Two points were argued before us, namely, that Smt. Harbheji was not entitled to the benefit of s. 21 as amended by Act XX of 1954 and secondly that the order of the Compensation Officer made on October 25, 1956 had finally decided the status of Sukhram Singh and Laiq Singh as Adhimsis and not having C been appealed against, the question cannot now be reopened. We shall take these points one by one.

The U.P. Zamindari Abolition and Land Reforms Act was amended in 1954 by the above amending Act in several respects.

We are only concerned with the amendment of ss. 21 and 157 and the addition of Chapter IX-A. Stll; tion 21 leaving out portions not necessary for our purposes provides after the amendment as follows :

"Sec. 21. Non-occupancy tenants, sub-tenants of grove-lands and tenant's mortgagees to be assamis.

( 1) Notwithstanding anything contained in this Act, every person who, on the date immediately preceding the date of vesting, occupied or held as--

(h) A tenant of sir land referred to in sub-clause

(a) of clause (i) of the Explanation under section 16, a sub-tenant referred to in sub-clause (iI) of clause (a) of Section 20 or an occupant referred to in sub-clause (i) of clause (b) of the said section where the landholders or if there are more than one landholders, all of them were person or persons belonging-

(b) if the land was let out or occupied on "' after the ninth day of April, 1946, on.the date of letting or occupation, to any one or more of the clauses mentioned in

sub-section (1) of Section 157

shall be deemed to be 8'1) asami thereof."

Before the amendment the corresponding part of the section read A ls follows:

"Section 21 ( 1). Notwithstanding anything contained in this Act, every person who, on the date immediately preceding the date of vesting, occupied or held land as-

(h} a tenant of sir or land referred to in sub-clause

(a) of clause ( i) ol' the explanation under section J 6, a sub-tenant or an occupant referred to in section 20, where the landholder or if there are more than one landholder all of them were person or persons belonging, both on the date of letting and on the date immediately preceding the date of vesting, to any one or more of the classes mentioned in sub-section ( 2) of section 1 O or clause (e) of sub section (1) of section 157. shall be deemed to be an asami thereof."

The difference between the two sections material for our purposes lies in the mention of all clauses of s. 157 sub-section 1 after the amendment whereas before the amendment only clause

(e) of sub-section 1 of s. 157 was mentioned. Section 157 also was amended. Again for the purposes of this case it is not necessary to reproduce the whole of the section. It read before the amendment as follows :

"Section 157(1). A bhumidhar or a sirdar or an asami holding the land in lieu of maintenance allowance under section 11, who is--

(a) an unmarried woman, or if married, divorcea or separated from her husband, or a widow;

(b) a minor whose father has died; ( c) a lunatic or an idiot; ( d) a person incapable of cultivating by reason of blindness or other physical infirmity; ( e) prosecuting studies in a recog)nised institution and does not exceed 25 years in age;

(f) in the Military, Naval or Air service of the Indian Dominion; or

(g) under detention or imprisonment. may let the whole or any part of i)is holding." After the amendment it reads as follows :

"Section 157-Lease by a disabled person.-(1) A bhumidhar or a sirdar or an asami holding the land in

lieu of maintenance allowance under Section 11 who is-

(a) an unmarried woman, or if married divorced or separated from her husband or whose husband suffers, from any of the disqualifications mentioned in clause (e) or (d) or a widow;

(b) a minor whose father suffers from any of the disqualifications mentioned in clause (cl or (d) or has died; and

(c) a lunatic' or an idiot;

(d) a person incapable of cultivating by reason of blindness, or other physical infirmity; ( e) prosecuting studies in a recognised institution and does not exceed 25 years in age and whose father suffers from any of the disqualifications mentioned in clause ( e) or ( d) or has died : "

"(f) in the Military, Naval, or Air service of the Indian Dominion; or

(g) under detention or imprisonment;

may let the whole or any part of his holding." The difference here is that a lease by a woman although married was possible if her husband was suffering from insanity or idiocy or was a person incapable of cultivating by reason of

blindne$s or other physical infirmity. Smt. Harbheji in her applications wished to take advantage of the amendments of ss. 21 and 157 on the ground that her husband was suffering from sinus and hence from physical infirmity and was incapable of cultivating the land. The difficulty arises because the Legislature while making the amendment made the amendment in clause (h) of s. 21 retrospective from the date of the passing of the Abolition Act but in s. 157 it did not expressly state that the amendments were retrospective. The short guestion that arises is whether s. 157 when read with s. 27 also becomes recrospective notwithstanding that there are no express words of retrospectivity.

The second point is concerned with the addition of Chapter IX-A which is headed Conferment of Sirdari Rights on Adhivasis.

The grounds on which the ejectmf\ltt of an A dhivasi could be made were contained in s. 234 of the Land Reforms Act but none the grounds applies here. Thus if Sukhram Singh and Laiq Singh were adhivasis they could not be ejected by Smt. Harbheji .but if they were only asamis then the ejectment could take place because they were only tenants from year to year. Chapter IX-A added sections 240A to 240N. Jt provides that the Government

may by a notification declare that the rights, title and interest of the landholders in the land held by Adhivasis shall cease and vest in the State and also provides for payment of compensati<Jill to the landlord whose rights, title or interest iu the land are acquired.

The compensation statement is required to be published under s. 240F and s. 2400 gives a right to any person interested to file objections.

Section 240H deals with the procedure for disposal of the objections under s. 240G. It provides that the Compensation Officer shall frame an issue regarding it and refer it for disposal to the Court which has jurisdiction to decide a suit under s. 229B read with s. 234A and that thereupon all the provisions relating to the hearing and disposal of such suit shall apply to his reference as if it were a suit. Section 229B provides that any person claiming to be an Asami of the whole or a part of it may sue the landlord for a declaration of his rights as Asami. Subsection 3 of the same section provided that the provisions are to apply mutatis mutandis to a suit by a person claiming to be sirdar (Adhivasi).

Section 234A then provides that the provisions of s. 229B mentioned above shall apply to lil1l Adhivasi as if he were an Asami. Schedule II to the Land Reforms Act in Item 34 appoints the Assistant Collector, 1st Class, as competent court for the trial of suits for declaration of rights under s. 229B. The Schedule also provides for an appeal to the Commissioner from the order and to the Board of Revenue by a second appeal.

In the present case the Compensation Officer who passed the order on October 25, 1956 was also Assistant Collector, 1st Class but he did not refer the case to himself after framing an issue and hence his order has been treated to have been passed by him in his capacity as a Compensation Officer.

We will now come to the question whether s. 157 also operates retrospectively with s. 21.

The latter was made retrospective expressly.

The High Court in the Division Bench decision held that s. 157 was also retrospective by implication. The contention of the. appellant~ is that Smt. Harbheji was not entitled to take the benefit of the amendment and to plead that she could let out her sir Ia; nd because her husband was suffering form an infirmity and was not able to look after the cultivation. If Smt. Harbheji is entitled to plead the amended section then under s. 21 Sukhram Singh arui Laiq Singh must be treated as Asamis because that is what s. 21 enacts. If the unamended section is to be read with s. 21 the, n the contrary result is reached.

Now a law is undoubtedly retrospective if the Jaw says so ex• pressly but it is not always necessary to say so expressly to make the law retrospective.

There are occasions when a law may be held to be retrospective in operation. Retrospection is not to be presumed for the presumption is the other way b1Jt many statutes

SUKHRAM v. HARBHEJI (Hida.vatu/lah, C.J.) 759'

have been. regarded as retrospective without a declaration. Thus it is that remedial statutes are always regarded as prospective but declaratory statutes are considered retrospective. Similarly sometimes statutes have a retrospective effect when the declared intention is clearly and unequivocally manifest from the language employed in the piirticular law or in the context of connected provisions.

It is always a question whether the legislature has sufficiently expressed itself. To find this one must look at the general scOpe and purview of the' Act and the remedy the legislature intends to apply in the formet state of the law and then determiqle what the legislature intended to do. ThiS line of investigation is, of course, only open if it is necessary.

In the words of Lord Selbome in Main v. Stark(') there might be something in the context of an Act or collected from its language, which might giveto words prima facie prospective a large operation. More retrospectivity. is not to be given than what can be 'gathered from expressed or clearly implied intention of the legislature.

Applying these tests to the statute we have in hand, we are clear that section 157(1 )(a) must.be read to apply retroSpectTvely.

It is clear that s. 21 (h) mentioned only one of the clauses viz. clause (e) as furnishing a ground for declaration. After the amendment of clause (h) one or more of the clauses of s. 157(1) are to be taken into account. Now there would be no point i,11 making the amendment of s. 2l(h) retrospective if the other clauses E were to apply prospectively for then the force of the retrospectivity of clause (h) of s. 21 is made neutral. Therefore if the new s. 21

(h) is to be read retrospectively from the commencement of Land Reforms Act, the amC\nldment of section 157 ( 1) which was made simultaneously must also be clearly intended to operate with retrospection. The legislature intended that at any givein moment of time from the commencement of the Lands Refonns Act all the clauses or one or more them and not clause (e) alone were to be taken note of. The amendment of clauses (h) speaks of one or F

more clauses and when we read the clauses of s.' 157(1) we find them altered also. Therefore the new clauses must be read and not the old clauses.

The High Court was thus right in its conclusion that the clauses of s. 157 (1) as amended also operate retrospectively.

This disposes of the first point.

The next point is about the finality of the order of October 25, 1956 passed by the Compensation Officer. We cannot refer that order to his capacity as the Assistant Collector. An act would, no doubt be refemble to a capacity which would give it validity.

But the law required the compensation officer to frame an issue and refer it to the competent court.

He could not decide the matter without dog so. One of the parties was before it and he

(I) [1890) 15 A.C. 384 at 388.

ought to have asked that party to prove its case. He did nothing.

A It is, therefore, not wrong for the Settlement officer and the Deputy Director to treat the order as proceeding from the Compensation Officer. Further since proceedings under s. 202 of the I.:and Reforms Act were already pending for the decision of the identical question the Compensation Officer ought to have stayed his hands.

In our opinion, the order of the Compensation Officer did not haye B that finality which is claimed for it.

That finality attaches only to the order of the Assistant Collector on a reference of an issue from the Compensation .Officer.

There was thus no finality.

The order of the Deputy Director ot, therefore, be assailed. The appeal must fail and is dismissed but in view of the fact that an amendment of the law deprives the present appellants of C a valid plea we make no order about costs.

R.K.P.S.

Appeal dismissed.

SUKHRAM SINGH AND ANOTHER

February 19, 1969

M. HIDAYATULLAH, C.J.

G. K. MITTER, J.

Sections 21

s. 21

s. 157

s. 157

section 240(F)

section 240( G)

Zamindari and Land Abolition Act, 1961

section 240(F)

October 25, 1956

section 10(1)

Consolidation of Holdings Act

.P.

section 157

Land Reforms Act

section 21

section 157

section 157

Section 157(1)(a)

s. 21

Land Reforms Act

section 1S

s. 21

s. 21

s. 240

s. 229

J. P. Goyal

R. S. Gupta

S. P. Sinha

M. I. Khowaja

Hidayatullah

s. 5

February 7, 1969

Sukhram Singh

Laiq Singh

Harbheji

Shahgarh

March 10, 1954

Harbheji

s. 202

July 1, 1952

Land Reforms Act

October 10, 1954

Aligarh

April 20, 1956

Civil Judge of Aligarh

February 1, 1957

Sukhram

February 19, 1958

s. 4

November 11,

1961

February 8, 1962

s. 5

s. 202

s. 240F

s. 240G

s. 10(1)

Khera Narainsingh

September 20, 1963

s. 21

ss. 21 and 157

Sec. 21

section 16

Section 20

Section 157

Section 21

section 20

section 1

section 157

s. 157

section 1

section 1

s. 157

Section 157

Section 157(1)

section 11

Section 157

Section 11

ss. 21 and 157

s. 21

s. 157

s. 157

s. 27

s. 234

sections 240A to 240N

s. 240F

s. 2400

Section 240H

s. 240G

s. 229B

s. 234A

Section 229B

section 3

Section 234A

s. 229B

Schedule II to the Land Reforms Act

s. 229B

s. 157

s. 21

s. 157

s. 21

Sukhram Singh arui Laiq Singh

s. 21

s. 21

Selbome

section 157(1 )(a)

s. 21

s. 157(1)

s. 2

s. 21

s. 21

Land Reforms Act

section 157

s. 157

s. 202