VEERAMACHINENI GANGADBARA RAO

ANDHRA BANK LTD. & ORS.

March 25, 1971

[K. S. HEGDE AND A. N. GR.OVER, JI.]

Indian Registration Act, 1908, s. 17-Mortgage by deposit of title deeds-Document evidencing mortgage when must be registered-Docuntent which itself does not create contract but is only memorandum of contract already entered into need not be registered-Further evidence to prove tcrins of agreement not barred by ss. 91 & 92 Evidence Act, 1872.

The respondent Bank gave a loan to Godavari Sugars Refiners Ltd., of which defendants 1 to 3, as partners, were managing agents. Subsequently the bank filed a suit for the recovery of the loan. The appellant, a brother of defendant No. I, was impleaded as defendant No. 4 and Godavari Sugars as defendant No. S. The suit was decreed and the decree ivas upheld by the High Court. Only Def!ndant No. 4 appealed to this Court.

The decree against the appellant was passed on the basis of Exh. 1-6, o document which was signed by Defendants 1 & 4 and in which it was recorded that the title deeds Exbs. A-7 and Exh. A-8 had been deposited with the respondent bank as security for money due.

According to the appollant the said title deeds bad been deposited by him as security for a loan given to him by the bank in his individual capacity, and that the signature of defendant no. 1 had been appended to Exh. A-6 only because he had an interest in one of the properties covered by Exhs. A-7 and A-8.

HELD : If the parties intend to reduce their bargain regarding the deposit of title deeds to the form of a document the document requires registration. If on the other hand its proper construction and the surrounding ircumstances lead to the conclusion that the parties did not intend to do so, then, there being no express bargain the contract to create a mortgage arises by implication of the law from the deposit itself \\"ith the requisite int$ntion, and the document being merely evidential does not require registration. [220H-221A]

Rachpal Maharaj v. Bhagwandas Daruka & Ors .. [1950] S.C.R. 548, • l'<mjivandas Mehta v. Chan Ma Phee, L.R. 43 I.A. 123, Shaw v. Foster, (!Sn) L.R. 5 H. L. 321, 341 and S11bramonian & Anr v. Lutchman & Ors., 50 I.A. 77, applied.

The language of Ex. A-6 was undoubtedly wide and if it governed the agreement between the parties then there could be no doubt that the suit debts were also secured by the deposit of title deeds A-7 and A-8. But Ex. A-6 could not be considered a contract governing the rights of the parties because: (a) it was incomplete inasmuch as certain unnecessary \\"ords which were meant to be struck' out were not actually struck out; (b) while according to the plaintiff the appellant agreed to secure the debt due from the first defendant to the Bank in consideration of the Bank not proceeding against defendants 1 to 3, no such term was found in Ex. A-6;

(c) from the recitals of Ex A-6 it was seen that the memorandum in question was intended to 'put on record' the terms already agreed upon. If the parties intended that the document should embody the contract between them it would have been necessary to register the same under s. 17 of the Registration ct, 1908. [220A-D]

14-1 S. C. lndia/71

29&

SUPREME COURT REPORTS [1971] SUPP. s.c.R.

Exhibit A-6. was not .1iegistered.

If. that dqument was considered as a contract of mortgage between the Bank arid tne depositors; the san1e not having been registered it was inadmissible in evidence. If on the other hand that document was considered as a mere memorandum evidencing the deposit of title deeds in pursuance of an cEµ"lier contrac, t then the correct ness of the recitals therein could be gone into without being inhibited by ss. 91 and 92 of the Evidence Act. Whichever view was taken the plaintilI"s case must fail. On an overall consideration of the evidence and probabilities of the case it was established that Exhs. A7 and AS were not deposited with the Bank to secure the debts due from defendant No. I to the Bank.

(222C-E]

The appeal must accordingly be allowed.

Ov!L APPELLATE JURISDICTION: Civil Appeal No. 786 of 1966.

Appeal by special leave from the judgment and order dated June 9, 1964 of the Andhra Pradesh High Court in Appeal No. 96 of 1969.

K. R. Chaudhuri, for the appellant.

D B. V. Subramanyam, A. Subba Rao'for A. V. Rangam, for

respondent No. I.

The Judgment of the Court was delivered by

Hegde, J.-The 4th defendant in Original Suit No. 200 of 1954 in the court of Subordinate Judge, Vijayawada is the appellant in this appeal by special leave.

That was a suit instituted by the Andhra Bank Ltd., the contesting respondent in this appeal. The suit was to recover the loans advanced to the Godavari Sugars Refiners Ltd., defendant No. 5 in the suit.

The suit was decreed against all the defendants and that decree was affirmed by the High Court in appeal. The decree against the other defendants has become final.

The only question fhat arises for decision in this appeal is whether the decree against the appellant is sustainable. The High Court rested the decree against the appellant only on the basis of Ex. A-6 a letter given by defendants l, 4 and another to the Masulipatam branch of the plaintiff bank while depositing Exhs. A-7 and A-8.

In order to decide the correctness of the decree, it is necessary to refer to the material facts as found by the trial court and the High Court and which are no more in dispute.

Defendants 1 to 3 were the partners of a company known as Aid Co. Ltd. (defendant No. 6).

That company was the managing agents of defendant No. 5, the Godavari Sugars Refiners Ltd. which will hereinafter be referred as Godavari Sugars.

The first defendant was the Managing Director of the Aid Co.

Ltd. On January 29, 1952, the first defendant made an appli-

GANGADHARA •• ANDHRA BANK (Hegde, J.)

cation on behalf of Godavari Sugars to the Andhra Bank Ltd. (which will hereinafter be referred to as the 'Bank') for a loan of three to four Jakhs of rupees under the keyloan and cash credit account and on the guarantee and co-obligation of defen' dants 1 to 3 in their personal capacity also.

The Managing Director and the General Manager recommended that application to the Board of Directors upto a limit of Rs. 1,25,000.

Before the sanction of the Board of Directors was obtained, the first defendant requested the Managing Director to sanction Rs.

50,000 tentatively as there was urgent need.

The Managing Director sanctioned a sum of Rs. 50,000 in anticipation of the loan to be granted in pursuance of th~ application (Eit, A3) made by the first defendant on January 29, 1952.

The Managing Director authorised the agent of Bhimavaram branch to obtain the necessary documents signed by defendants 1 to 3 in their personal capacity as well as the first defendant as the Managing Director of the managing agents and on behalf of Godavari Sugars.

A pronote and the cash credit agreement relating to that loan were handed over to the agent of Bhimavaram branch on April 24, 1952 after the same were executed by defendants 1 to 3.

Thereafter defendant 1 drew from the Bhimavaram branch Rs. 20.100 on April 25, 1952 and Rs. 9,000 on April 25, 1952. But he deposited a sum of Rs. 8,100 on April 25.

1952. Thus a sum of Rs. 21,000 was due to the bank under the Joan in question on April 26, 1952.

On that date the Board of Directors sanctioned the Joan asked for under Ex. A3 upto a limit of Rs. 1,25,000.

Sometime thereafter the authorities of the Bank learnt that on a creditor's winding up petition a provisional liquidator for the Godavari Sugars had been appointed by the High Court of Madras without objection from defendants

i to 3 on April 18, 1952. That fact had not been brought to the notice of the Bank authorities by defendants 1 to 3 when the advances were made on the 25th and 26th of April 1952. After coming to know of that fact, the Manager and the Managing Director of the Bank pressed defendants I to 3 to repay the amount drawn. But they were advised by Satyanarain Chowdary, the father-in-law of the first defendant (2nd defendant is the wife of the first defendant and the third defendant his mother-in-law) to plead before the High Court that the Bank was a pledgee of the articles pledged for the keyloan and as such had a lien over the pledged goods in respect of the advances made. The Bank accordingly moved the High Court claiming a lien over the goods pledged but that claim was rejected by the High Court. In connection with the proceedings before the High Court the Bank incurred an expenditure of Rs. 1548-10-6.

The claim against defendants 1 to 3 is based on the above facts. That claim has been decreed as mentioned earlier. The decree to that extent has become final.

212 SUPRllMB COURT REPORTS (1971] SUPP. s.c.R.

Now coming to the claim against the appellant which is the only claim material for our present purpose, the facts disclosing the cause of action against him as set out in the plaint paragraph 9 are as follows :

"The defendants 1 and 4 requested the plaintiff bank to refrain from taking legal action at that time (after the bank's claim was rejected by the High Court) and give them time.

For all sums due till then and owing thereafter on any account by the defendants 1 and 4 either individually or jointly with others, two titles deeds (Exbs. A 7 and A-8) were deposited with the bank on 15-1-1953 at Masulipatam thereby creating Equitable Mortgage over the properties comprised therein and situated within the jurisdiction of this Honourable Court. In consideration of the above deposit, the plaintiff-bank refrained taking legal proceedings against the defendants 1 to 3 for the amount due and loss occurred to the plaintiff-bank and an overdraft account was also sanctioned to the defendants 1 and 4. Thus the plaintiffbank bas got security over the properties shown in the schedule covered by the two title deeds deposited with the plaintiff-bank on 15-1-1953 at Masulipatam for the suit debt, the particulars of which are detailed hereunder".

According to the plaint a mortgage by deposit of title deeds was created in pursuance of the contract set out above. In this appeal we are only concerned with the truth of that contract.

The appellant denied the allegations contained in para 9 of the plaint. According to him he bad nothing to do with the suit transactions and that be never requested the Bank to refrain from taking legal action against defendants I to 3.

He went further and averred in his written statement that he did not know anything about the suit transactions till the Bank refused fo return to him Exhs. A 7 and A-8.

Dealing with the deposit of Exhs. A 7 and A-8, be averred that those documents were deposited to create an Equitable Mortgage to secure an overdraft loan of Rs. 25,000 borrowed by him and that deposit bas nothing to do with the suit transactions.

The only question for decision is whether Exhs. A-7 and A-8 were deposited to secure the suit debts. In order to decide that question it is necessary to set out a few more facts. Defendants I and the appellant are divided brothers. The first defen dant was having bis business in Madras. The appellant was having his business at Masulipatam.

Madras and Masulipatam are quite far off from one another.

Both the appellant and defendant No. 1 appear to have bad separate dealings witb the

GANGADHAllA •. ANDHltA BANE (Hegde, J.)

Bank even prior to the suit jransactions. We have earlier referred to the loan application Exh. A-3 made by the first defendant and the advances made. From the pronote as well as the cash credit agreement referred to earlier, it appears that the loan was made on the security of the good~ belonging to Godavari Sugars as well as on the personal security of defendants 1 to 3. That is also the basis on which the Board of Directors of the Bank sanctioned the loan-see Exh. A-71. Neither in Exh. A-3 nor in Exh. A-71 nor in any of the correspondence that passed between the Bank and defendant No. l there is any reference to the fact of appellant's either standing as a surety for the loans advanced to the Godavari Sugars or his having given his property as security for that loan. It is also admitted that in the books of account kept by the Bank, the Equitable Mortgage created by the deposit of Exhs. A-7 and A-8 is not shown as a security for the advances mentioned in the plaint. There is neither documentary evidence nor reliable oral evidence to support the averments in para 9 of the plaint. In none of the correspondence that passed between the Bank and defendant No. 1 or that passed between the Bank and the appellant, there is any mention of the fact that at the instance of the appellant, the Bank had refrained from taking action against defendants 1 to 3.

Nor is there any mention in them that because of the deposit of A-7 and A-8 alongwith the memorandum Ex. A-6 the Bank refrained from taking action against defendants 1 to 3. Neither the Manager nor the Managing Director of the Bank who have been examined in support of the Bank's claim spoke to the fact that they refrained from taking action against defendants 1 to 3 at the instance of the appellant or that they refrained from taking action against them because of the equitable mortgage referred to earlier.

Three witnesses namely P. Ws. 1 to 3 were examined in support of the plaintiff's case. Neither P.W. 1 nor P.W. 2 speaks to the circumstances under which Ex. A-6 came to be executed.

P.W. 3, the Managing Director of the Bank deposed in his Chief Examination as follows:

"D-4 applied for a "loan as per Ex. A-67. He met me in that connection. D-1 also met me in that connection. D-4 represented that D-1 had commitments in regard to Godavari Sugars, that he and D-1 wanted monies and requested. me to get Ex. A.fJ7 be sanctioned representing that they would deposit title deeds that would be additional security to safeguard the interest of the bank. I told him that the loan of Rs. 50,000 could be Sanctioned if he agreed to pay outright the amount due from D-1.

D-4 represented that might prejudice our claim before

the High Court as pledgee and that there would be

SUPREME COURT REPORTS [1971] SUPP. s.c.R..

deposit of title deeds he made a request ultimately to sanction at least Rs. 25,000.

D-1 also represented that title deeds would be deposited and requested that the loan might be granted. Under Ex. A-67 loan of Rs. 25,000 was granted. D-1 and D-2 gave title deeds as security for it. We did not take criminal action on the assurances given by them.

This evidence is not consistent with the averments in plaint paragraph 9 to which reference has been made earlier. It makes out a new case.

Further from that evidence, it is .clear that the deposit of title deeds Ex. A-7 and Ex. A-8 were made to secure only the loan of Rs. 25,000 given to the appellant.

The uncontroverted evidence in this case clearly establishes that the said loan was borrowed by the appellant for his own business.

Further in his cross-examination P.W. 3 deposed that "the deposit of title deeds was niade in terms of Board's Resolution and as agreed to between the parties''. The Board's Resolution granting loan to the Godavari Sugars on the application of defendant No. l does not either directly or indirectly refer to any mortgage by deposit of title deeds or even to any security of immovable property for the loan In question. The question of depositing title deeds was not befote the Board when the loan was sanctioned to Godavari Sugars. But the loan granted to the appellant as we shall presently s~ was on the basis of a mortgage by deposit of title deeds.

Before considering the scope and effect of Ex. A-6, it is necessary to refer to the cireumstances leading to the execution of Ex. A-6. On October 15, 1'952 under Ex. A-67, the appellant applied for a loan of Rs. 50,000.

Column , four in that application refers to the purppse for which the loan was asked. The answer given was "For business". Under column "Other additional guarantee or security", aJ1$Wer given was "On the security of title deed i.e. sites possessed by me at Vijayawada Krishna District which costs about one Lakh. at present-Market value".

In the covering letter the appellant stated ·

"Sir.

As desired above, I request for sanction of loan of Rs. 50,000 on secured over-draft.

Being bound by your previous Bank Rules and also bound by any changes in them, we will clear the loan according to your current Bank rate. Otherwise if we fail to clear the loan in time, we will not only pay, as and when necessary, the penal interest, but also agree to be hound by all the actions taken against us.

GANGADHARA v. ANDHRA BANK (Hegde, J.) 215

Further changes in the particulars of the property given in the list have been effected.

We have not made any sort of alienations whatsoever on this property.

Until your loan is cleared, we are not going to make any sort of alienations. If becomes necessary to do so, we wilt do the same after obtaining your consent.

Be pleased to consider,

Sd/- Veeramacha11eni Gangadhara Rao (In Telugu)".

This application was placed before the Board of Directors on January 11, 1953. The relevant agenda for the Board's consideration reads as follows:

"Loans and Overdrafts :

3. To consider the application of Mr. Veeramachaneni Gangadhararao. Masulipatam, for a secured overdraft limit of Rs. 50,000 for one year at 7 % p.a. on the co-obligation of Messrs. Kolli Surya Prakasa Rao and Adusumilli Venkata Krishna Rao and on the mortgage by deposit of title deeds relating to the applicant's sites of the extent of about 2,662 sq. yds. at Vijayawada of the approximate value of about Rs. One Lakh.

Resolution: Sanctioned Rs. 25,000."

From the above facts it is clear that the loan of Rs. 25,000 granted to the appellant was a secured loan-secured by a mortgage by deposit of title deeds in respect of his sites at Vijaywada. It may be noted that neither the appellant nor his co-obligants are shown to have had anything to do. with Godavari Sugars.

It appears from the rds of the Bank that some of documents deposited .were not originals. Therefore the Bank found . it necessary to have legal advice in the matter. According to the appellant one of the items covered by Exh. A-7 was of the joillt ownership of himself and his brother defendant No. l, hence the officers of the Bank wanted defendant No. l also to join in making the deposit of title deeds: but defendant No. l was at that time in Madras; therefore a printed form was given to. him for getting the signatures of defendant No. l; the place at which defendant No. l was to sign in that form was marked in pencil; I.hat form was sent to Madras with his clerk accompanied by a bank official: defen9ant No. 1 's signatures were obtained; there- •lfter the same was signed by him in the presence of the Bank's agent at Masulipatam and given to the Bank's agent without scoring out any of the words in the printed form. The appellant does not appear to be familiar with English language. As could

SUPREME COURT RllPORTll [1971] SUPP. s.c.R.

be seen in Ex. A-67, he has signed the same in Telugu. Ex. A-6,

a~ mentioned earlier, is in a printed form. That was a ready made form which could be used for various purposes. It was an all comprehensive form relating to the deposit of title deeds. It is clear from the terms in that form that the parties were required to strike out the unnecessary terms and conditions in that form.

Admittedly no term in Exh.

A-7 was struck out.

According to P.W. 1, the agent of the Bank, the appellant brought that form at about 5p.m. just when the Bank was about to close.

Therefore he did not strike out the unnecessary words in that document. In this background, we have to see whether Exh. A-6 is only a memorandum in support of the deposit of Exhs. A-7 and A-8 to secure the loan advanced to the appellant under Exh. A-67 or whether the deposit of title deeds in question were intended to secure that loan as well as all amounts due from defendant No. I to the Bank. The loan advanced to the appellant under Ex. A-67 has been admittedly discharged and the pronote executed by him in that connection had been returned to him.

The loans granted to Godavari Sugars were disbursed at the Bhimavaram Branch of the Bank as could be gathered from plaint paragraph 5. The loan sanctioned to the appellant was disbursed at the Masulipatam branch. Exh. A-6, A-7 and A-8 were produced in the Masulipatam Branch. The Masulipatam Branch does not appear to have had anything to do with the loans advanced to Godavari Sugars.

We have earlier mentioned that in the accounts relating to the loan given to Godavari Sugars, there is no mention as to the deposit of title deeds.

All the correspondence relating to the loans granted to Godavari Sugars proceed on the basis that they were granted on the personal responsibility of the defendants I to 3 and Dn the pledge of the goods belonging to that company-see Ex. A-3, loan application Ex. A-2, agreement for cash credit on the security of pledged goods, Ex. A-13, letter written to the agent, Bhimavaram Branch by the General Manager of the Bank on April 15, 1952, Exh.

A-14 letter written by the General Manager to the Agent, Bhimavaram Branch on April 16, 1952, Ex. A-17, letter written by the first defendant to the Bank on October 29, 1952. But the correspondence that passed between the appellant and the Bank shows that the deposit of title deeds was made to secure the loan advanced to him under Ex. A-67. Under Ex. A-20;' the appellant wrote to the Bank on October 15, 1952 as follows:

"Dear Sir,

I have two sites at Bezwada worth about Rs. l,00,000 and I propose to deposit Title Deeds of the same and require a secured over-draft of Rs. 50,000 against the same. My property statement is with you. I shall therefore be glad if you sanction the sanie at an early date ...... "

GANGADHAR.A v. ANDHR.A BANK (Hegde, J.) 211

To the same effect is the loan application made by him on A the same date. But an overdraft of Rs. 25,000 only was sanctioned.

On February 6, 1954, the appellant wrote to the Bank that he had cleared the overdraft account of Rs. 25,000 but he wanted a renewal of over-draft arrangement (Ex. A-22). He sent a reminder in that connection on April l, 1954 ·(Ex. A-23).

As the Bank delayed in making available the over-draft facility B asked for, he wrote to the Bank on Septr. 20, 1954 under Ex. A-25 as follows :

"Masulipatam Dated 20-9-54.

V. Gangadhara Rao Chowdary Managing Director, Indian Industrial & Scientifii:; Co. Ltd.

Sir,

The General Manager, The Andhra Bank Ltd., Masulipatam.

Sub: Over Draft Facility granted to me.

With reference to the ovei draft renewed by your Board of Directors in the month of May 1954, for Rs. 25,000 and which was not allowed to be drawn by me, I specially request you to kindly facilitate for my drawing an amount up to Rs. 15,000 from the over draft account, is due to the stoppage of this facility, which I am enjoying since 4 years, my business is suffering a lot and immediate investment is necessary to meet urgent demands in my business of Scientific Apparatus etc.

In this connection I confifl)l the discussion I had with your Managing Director at my residence, requesting me io mediate for the amicable settlement of the affair of my brother, Sri V. Butchiyya Chowdary with your bank regarding the keyloan account granted to Godavary Sugars and Refiners Ltd.

 I shall be obliged for immediately allowing me to draw the amount.

Thanking you.

Yours faithfully, Sd I Illegible."

Frpm this letter it is clear that the Bank was putting pressure on the appellant to persuade his brother defendant No. 1 H to amicably settle the suit loans. That is also the evidence of the appellant The allegation in this letter that the Managing

SUPREME COURT REPORTS [1971] SUPP. s.c.R.

Director was requesting the appellant to mediate for the amicable settlement of the affairs of defendant 1 with the Bank regarding suit loans does not appear to have been repudiated in any of the letters written by the Managing Director to the appellant.

Though the Board of Directors of the Bank sanctioned on February 14, 1954, the renewal of the over-draft facility asked for by the appellant the appellant was not permitted to utilise that facility. The appellant's case is that the Managing Director of the Bank was using that opportunity to put pressure on him to see that defendant 1 discharged the suit loans.

Being fed up with the delaying tactics of the Bank, the appellant withdrew his loan application and asked the Bank to return his title deeds.

It is only at that stage that the Bank took up the position that the title deeds deposited were also intended to secure the amounts due from defendant 1 to the Bank.

The appellant repudiated that claim. Then the Bank issued the lawyers' notice Ex. A-18 to all the defendants on April 5, 1954.

Therein it was stated for the first time that the Bank refrained from proceeding against defendants I to 3 in respect of the suit transactions at the instance of Satyanarayan Chowdary and the appellant and those two persons had agreed to indemnify the Bank any loss that may be caused due to those transactions.

Further suggestion in that notice is that in pursuance of that agreement Ex. A-7 and A-8' were deposited under Ex. A-6. These allegations were repudiated' by the appellant in his registered reply notice Ex. A-19 dated' April 21, 1954.

From the above discussion it is clear that apart from Ex. A-6,. there is absolutely no evidence to show that the deposit of Exhs.

A-7 and A-8 was intended to secure not merely the Joan advanced' to the appellant under Ex. A-67 but also to secure the suit loans. or other debts aue from defendant l to the Bank. The oral evidence of P.W. 3, the Managing Director is of no assistance as seen earlier. It does not connect the deposit of title deeds Exhs. A-7 and A-8 with any of the debts due from defendant 1.

This leaves us with Ex. A-6, the printed form containing the terms and conditions under which Exhs. A-7 and A-8 were de-- posited. The material portion of that document reads as follows:·

"To

The Agent, The Andhra Bank Ltd., Masulipatam.

H Dear Sir,

I/We write to put on record that as already agreed upon I/We have on 15-1-53 delivered by way of deposit

No.

GANGADHARA l'. ANDf!RA BANK (Hegde, J.)

at Masulipatam the following documents of title to immovable property with intent to secure the repayment to the Bank of moneys that are now due or shall from time to time or at any time be due from me/us either solely or jointly with any other person or persons to the Bank whether on balance of account or by discount or otherwise in respect of Bills of Exchange, Promissory Notes, Cheques and other negotiable instruments or in any manner whatsoever and including interest, commission and other banking charges and any law costs incurred in connection thereto.

LIST OF DOCUMENTS

Nature of Title deed and date

Sale Deed D/ 4·2-49.

Rcaistration Extract of

S•le Deed D/ 30-12·36.

Encumbrance certificate Ee. 574/52.

Encumbrance cet"tificate

No. Ee. SSS/52.

Nam• and Address :

Plan of (sic) in N. T. S.

No. 66~ Black No. 13 of Ward No. 9, Vijaya .. wada Town.

Description of property and Estimated exact situation value

Two plots of house site bearing

assessment No. 7 501 in ward No. 22 and bearing No. 216/2 N. T. s. 663 Block No. 13 (sic) Ward No. 9 measuring 0.28 (sic) and the other 0.27 (sic)

House site measuring 1140 Sq. Yds.

bearing Town s. No. 599 in new Ward No- 19 in Bezwada Town.

Yours faithfully

Sd./l. Vecramanchaneni Oana:adhara Rao

2. v. Butehaigh Chowdary

3, Sri Krishna Prasad

beina minor by father

Vceramachaneni Gansadhara Rao

SUPREME COUllT REPORTS (1971] SUPP. s.c.R.

As mentioned earlier this is a printed form.

No part of that form had been struck out though the expressions "I" "Me" found in that document are inconsistent with the other portions of that document. We have earlier referred to the evidence of the agent of the Masulipatam branch of the Bank (P. W. !) that he did not strike out the unnecessary words in Ex. A-6 as it was presented before him late in the evening.

The language of Ex. A-6 is undoubtedly wide and if it governs the agreement between the parties then there can be no doubt that the suit debts are also secured by the deposit of title deeds A-7 and A-8. In the first place Ex. A-6, for the reasons already mentioned must be held to be an incomplete document.

Therefore it can not be considered as a contract between the parties. According to the plaintiff, the appellant agreed to secure the debt due from the first defendant to the Bank in consideration of the Bank not proceeding against defendants 1 to 3. No such term is found in Exh. A-6.

From the recitals of Exh. A-6, it is seen that that memorandum in question was intended to "put on record" the terms already agreed upon. That being the case, the document cannot be considered as a contract entered into between the parties. If tlie parties intended that it should embody the contract between them, it would have been necessary to register the same under s. 17 of the Registration Act, 1908.

As observed by this Court in Rachpal Maharaj v. Bhagwandas Daruka and ors.(') that "when a debtor deposits with the creditor title deeds of his property with intent to create a security, the law implies a contract between the parties to create a mortgage and no registered instrument is required under s. 59 as in other forms of mortgage. But if the parties choose to reduce the contract to writing, the implication is excluded by their express bargain o--d the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. As the deposit alone is not intended to create the charge and the document, which constitutes the bargain regarding the security, is also necessary and operates to create the charge in conjunction with the deposit, it requires registration under s. 17 of the Indian Registration Act, 1908, as a non-testamentary instrument, creating an interest in immovable property, where the value of such property .Js one hundred rupees and upwards." Therefore the crucial question is : Did the parties intend to reduce their bargain regarding the deposit of the title deeds to the form of a document? If so, the document requires registration. If on

ct> [t9sOJ s.c.R. 548.

OANGADHAllA ¥. ANDHRA BANli; (H tgdt, J,)

the other hand, its proper construction and the surrounding cir cumstances lead to the conclusion that the parties did not intend to do so, then, there being no express bargain, the contract to create the mortgage arises by implication of the law from the deposit itself with the requisite intention, and the document being merely evidential does not require registration.

The' law relating to the nature of a memorandum filed along with the deposit of title deeds or one filed thereafter bas come up for consideration by courts in this country as well as in England. The decisions on the subject are numerous. We have already referred to the decision of this Court in Rachpa/ Maharaj's case ('). We shall now refer to two of the decisions of the Judicial Committee. In Pr<injivandas Mehta v. Chan Ma Phee(') dealing with the law on the subject Lord Shaw of Dunfermline observed :

"The law upon this subject is beyond any doubt :

(!) Where titles of property are handed over with nothing said except that they are to be security, the law supposes that the scope of the security is the scope of the title.

(2) Where however, titles are banded over accompanied by a bargain, that bargain must rule.

(3) Lastly, when the bargain is a written bargain, it, and it alone, must determine what is the scope and the extent of the security. In the words of Lord Cairns in the leading case of Shaw v. Foster ('), "Although it is a wellestablished rule of equity that a deposit of a document of title, without more, without writing, or without word of mouth will create in equity a charge upon the property referred to, I apprehend that that general rule will not apply where you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document, and any implication that might be raised, supposing there were no document, is put out of the case and reduced to silence by the document by which alone you must be governed."

In Subramanian and anr. v. Lutchman' and ors.(') Lord Carson speaking for the Judicial Committee stated the law thus:

"The law upon the subject admits of no doubt. In the case of Kedarnath Dutt v. Sham/oil Kheltry (') Couch C. J. ,:aid: "The rule with regard to writings

(I) 119501 s.c.R.548.

(3) [1872] L.R. S H.L.321, 341.

(5) t I Ben. L.R.(O.C.J.)405.

(2) L.R.43 I.A.123.

(4) 50, I.A.77.

SUPRBME COURT REPORTS [1971] SUPP. s.c.R.

is that oral proof cannot be substituted for the written evidence of any contract which the parties have put .into writing. And the reason is that the writing is tacitly considered by the parties themselves as the only repository anci the appropriate evidence of their agreement.

If this memorandum was of such a nature that it could be treated as the contract for the mortgage and what the parties considered to be the only repository and appropriate evidence of their agreement it would be the instrument by which the equitable mortgage was created, and would come within section 17 of the Registration Act.fl

Exhibit A-6 is not registered. If that document is considered as a cl'Jntract of mortgage between the Bank and the depositors, the same having not been registered, it is inadmissible in evidence.

If on the C>thcr hand that document is considered as a mer~ memorandum evidencing the deposit of title deeds in pursuance of an earlier contract then the correctness of the recitals therein can be gone into without being inhibited by ss. 91 and 92 of the Evidence Act. Whichever view is taken the plaintiff's case must fail.

On an overall consideratioa of the evidence and the probabilities of the case, we are satisfied that Exhs. A-7 and A-8 were not deposited with the Bank to secure the debts due from defendant No. 1 to the Bank.

In the result this appeal is allowed, the decree and judgment against the appellant is set aside and the suit against him is dismissed with costs throughout o.c Appeal allowed.

VEERAMACHINENI GANGADBARA RAO

K. S. HEGDE

Indian Registration Act, 1908

s. 17

ss. 91 & 92

Evidence Act, 1872

L.R. 43 I.A. 123

s. 17

ss. 91 and 92

Being bound by your previous Bank Rules

s. 663

s. 17

Registration Act, 1908

s. 59

s. 17

Indian Registration Act, 1908

section 17

Registration Act

ss. 91 and 92


SHEIKllUPURA TRANSPORT CO. LID.

NORTHERN INDIA TRANSPORT INSURANCE CO.

March 16, 1971

(K. S. ffBG[)E AND P. JAGANMOHAN REDDY, JJ.J

Motor Vehicles Act, 1939 s. llOB and s. 95(2) (b)-Principles of compensation to be granted to legal representatives of person dyinK in accident U1'der s. 1108-Maximum amount of liability of insurer und.r s. 95 (2)(b).

A passenger bus belonging to the appellant met with an accident, as a result of which two persons B and N died on tho spot.

Tho legal representativt:s of the deceased persons applied for compensation before the tribunal appointed under the Motor Vehicles Act. Their claim was opposed by tho appellant as well as by the insurance company. The tribunal found that the accident was due to the negligence of the driver and therefore the claimants were entitled to compensation. The tribunal compued the co?/.penstion due to the legal representatives of B at Rs. 18000. Out of that sum jt determined the compensation due to the widow at Rs. 8000; the compensation duo to one of his daughters was fixed at Rs. 4000 and to the other at Rs. 6000. But as tho daughters had not made their claims during the prescribed time, the Tribunal disallowed the compensation <lue to them and 1tranted a decree in favour onlv of B's widow.. In the case of N the tribunal computed the total compensation payable at Rs. 18000 and granted that sum to his legal representatives. It directed that the entire sum payable by the appellant should be paid by the insurance company.

The insurance company as well as the legal representatives of the dl":ceased

persons appealed to the High Court. The High Court enhanced tho compensation payable to the legal representatives of both B and N frnm Rs. 18000 to Rs. 36000. It. condoned the delay in making the claim by tho

dahters of B and made the entire sum payable to his legal representa tives. It also allowed the appeal of the insurance company and limited the amO\IDt payable by the insurance company to Rs. 2000 in the case of each of the deceased persons in accordance with s. 95(2) of the Motor Vehicles Act.

By special leave appeals were filed in this Court. The appellant challenged (i) the amount of compensation as granted by tho High Court,

(ii) the condonation of delay in the case of B's daughters and (iii) the limiting of the amount payable by the insurance company to Rs. 2000.

HELD: (i) Under s. llOB of the Motor Vehicles Act, 1939 the tribunal is required to fix such compensation as appears to it to be just. The power given to the tribunal is wide. The pecuniary loss to the aggrieved party would depend on data which cannot be ascertained accurately but must necessarily be an estimate or even partly a conjecture. The general principle is that the pecuniary loss can be ascertained only by balanci11g on the one hand the loss to the claimants of the future pecuniary benefit, and on the other any pecuniary advantage which from whatever sources comes to them by reasons of the death, that is, the balance of loss and gain to a dependant by the death must be ascertained. (25B-DJ Gobald Motor Service Ltd. v. R. M. K. Ve/uswami & Ors., [1962] I S.C.R. 929, relied on.

The determination of the queirition of compensation depends on several imponderables. In the assessment of those imponderables there is likely to be a margin of error. If the assessment made by the High Court cannot

SHEIKHUPURA TRANSPORT •. NORTHERN INDIA TRANSPORT (Hegde, J.) 21

be considered to be unreasonable-and in the present case it could not be A said to be unreasonable-it will not be proper for this court to interfere \\'ith the same. Taking an overall assessment of the facts and circumstances of the present case it could not be held that the Compensation awarded to the legal representatives of the deceased persons by the High Court was excessive.

[24E]

(ii) By the time B's daughters were in1pleaded the time for filing applications for compensation by them had elapsed.

It was conceded that B Tribunal had jurisdiction to condone the delay in making the claim. The Tribunal had not chosen to condone the delay.

But the High Court has in its discretion condoned the delay. The wife of B was an illiterate lady ; she was helpless and without assist:ince.

In the circumstances this Court would not be justified in interfering with the discretion exercised by the High Court in condoning the delay in question. [23C-D]

(iii) Reading together the provisions in ss. 95(1) (b), 95(2) and 96 of C the Motor Vehicles Act it is <; kar that the statutory liability of the insurer to indemnify the insured is as prescribed in s. 95(2). Under that section the maximum liability on an insurer in the case of a vehicle carrying more than six passengers i~ Rs. 2000 per passenger and the maximum total liability is Rs. 20000.

In the present case the vehicle was one in which more than six passengers were allowed to be carried. The limit of liabi lity of the insurer prescribed under s. 95(2) (b) can be enhanced by a contract to the contrary. No clause of the policy issued to the appellant in D the present case provided for the payment of any amount higher than that fixed by s. 95(2) (b). The High Court was therefore right in its conclusion that the li.!lbility of the insurer in the present case only extended up to Rs. 2000. [24G, 250, 268, D] CML APPELLATE JURISDICTION: Civil Appeals Nos. 501 to 504 of 1967.

Appeals from the judgments and orders dated December IS, !96S of the Punjab High Court in First Appeals from Order Nos. 145 and 155 of 1960 and 6 and 7 of 1961.

S. K. Mehta, K. L. Mehta and K. R. Nagaraia for the appellant (in all the appealsT.

Hardev Singh a!ld H. L. Kapur, for respondent No. I (in C. A. Nos. 501 )Uld S02 of !967) respondent No. 4 (in C. A. No. 503/67) and, respondent No. to (in C. A. No. 504 of 1967).

S. , K. Bagga, B. K. Bagga and S. Bagga, for respondent Nos. 2 (in C. A. No. SOI of 1967) respondent Nos. 1 to 8 (in C. A. No. 504 of 1967) respondent No. 2 (in C. A. No. 502 of 1967 and respond, nts Nos. I and 2 (in C. A. No. 503 of 1967).

The Judgment of the Court was delivered by

Hegde, 1. A passenger bus belonging to the appellant while travelling from Ludhiana to Rajkot met with an accident at about 9 a.m. on February II, 19S9. As a result of this accident, two persons name!y Bachan Singh and Narinder Nath died on the spot and some others received minor injuries. The legal representatives of the deceased persons applied for compensation before

11'

SUPREME COURT 11.BPOll.TS (1971] SUPP. s.c.11..

the tribunal appointed under the Motor Vehicles Act. Their claim was opposed by the appellant as well as by the insura.nce company.

Overruling the objections of the appellant as well as the insurance company, the tribunal found that the accident WBB due to the negligence of the driver and therefore the claimants were entitled to compensation. The tribunal computed the compensation due to the legal representatives of Bachan Singh at Rs. 18,000. Out of that sum it determined the compensation due to the widow at Rs. 8,000; Rs. 4,000 to his daughter Harbans Kaur and Rs. 6,000 to his another daughter Balbir Kaur. But as the daughters had not made their cla.ims within the prescribed time, it disallowed the compensation dne to them and only granted a decree in favour of the widow of Bachan Singh. In the case of Narinder Nath, it computed the total compensation payable at Rs. 18,000/- and granted that sum to the legal representatives of Narinder Nath.

It directed that the entire sum payable by the appellant should be pa.id by the insurance company. The insurance company as well as the legal representatives of the deceased persons appealed to the High Court. The High Court enhanced the compensation payable to the legal representatives of both Bachan Singh a.nd Narinder Nath from Rs. 18,000/- to Rs. 36,000/-. It condoned the delay in making the claim by the daughters of Bachan Singh and consequently mMle the entire sum payable to his legal represenmtives. It also allowed the appeal of the insurance company and limited the amount payable by the insurance company to Rs. 2,000 I - in the case of each one of the deceased persons.

Aggrieved by the decision of the High Court, these appeals have been brought by special lelwe.

Now coming to the enhancement made by the High Court both Bachan Singh and Narinder Nath were 42 to 43 years old at the time of their death~ both the tribunal and the High Court have come to th.e conclusion that .Bachan Singh had an annital income of about Rs. 9,000/-. Out of Rs. 9,000/-, Rs. 2,000/- was his income from immovable property: that income continued to accrue to the benefit of his wife and children; therefore only the income other than the income from immovable property which Bachan Singh was earning from his contract Wlll!I taken into consideration. The Bish <:ourt has come to the conclusion that Bachan Singh must have been spending at least Rs. 200/- on his family every month. It must be remembered that Bachan Singh had to marry two daughters. Therefore whatever he might have been able to save after meeting the family expenses and his own, the same would have been utilised for the marriage expenses of the daughters. Both the tribunal and the High Court have computed the Joss to the family of Bachan Singh by capitalising the benefit that the family was getting from him durfag his life time. The

SllBICHUPURA TRANSPORT •• NORTHERN INDIA TRANSPORT (Hegde, J.)

High Court did not accept the computation of the tribunal that Bachan Singh would have spent only Rs. 100 /- on his family during his life time. We think the High Court was right in its conclusion.

Taking into consideration the total income of Bachan Singh as well as the requirements of the family, it is reasonable to hold that he would have spent a.I least Rs. 200 Iper month on his family. We cannot also overlook the fact that Bachan Singh in all reasonable possibility would have been able to earn more in the years to come, if he had not died.

It is true that Bachan Singh's daughters were not made parties to the petition filed by the widow of Bachan Singh, when she field that petition, but later on they were impleaded. By the time they were impleaded, the time for filing application for compensation by the da.ughters had elapsed. It is conceded that under Jaw, the tribunal had jurisdiction to condone the delay in making the claim.

The tribunal had not chosen to condone the delay. But the High Court bas in its discretion condoned the delay. It is seen that the wife of Bachan Singh was an illiteraite lady. She appears to have been quite helpless. In fact in her petition she specifically stated that she had no assistance and therefore she requested the court to give her the assistance of some lawyer. We do not think tha.t we will be justified in interfering with the discretion exercised by the High Court in condoning the delay in question.

In the case of Narinder Nath, the evidence adduced on behalf of the claimants clearly establishes that he was earning about Rs. 6,000 /- per year as Commission Agent and that his income was going up from year to year. But yet the tribunal thought that his income could be computed at Rs. 5,000/- per year. There wa.s no basis for such a conclusion. Further the tribunal held that Narinder Nath must have been spending aboU! Rs. 100/- per month on his family.' This conclusion is a wholly fallacious one.

The evidence disclosed that he was spending on his family abou~ two to. three hundred rupees a month. The High Court has arrived at the conclusion that he must have been spending Rs. 200 / per month on his family. Herc again it may be noted-that he had the prospect of earning more in the years to come a.nd consequently he would have spent more on his family if he had lived longer.

On the basis that he was spendit1g about Rs. 200/- per month on his family, the High Court has computed the total Compensation at Rs. 36,000/-. It has computed the compensation on the basis of 15 ears' purchase of the benefits that were accruing to the family as in tbe case of Bachan Singh.

It was contended on behalf of the appellants' that the computation of compensation was excessive a.nd the High Court erred in not giving due deductions for circumstances like the widow remarrying, the possibility of the deceased persons dying before they

SUPREME COURT REPORTS [1971] SUPP. s.c.R.

reached the age of 58 years and the children of the deceased per sons getting other source of income after they completed their education.

Under s. llOB of the Motor Vehicles Act, 1939 the tribunal is required to fix such compensation which appe11rs to it to be just. The power given to the tribunal in the matter of fixing com pensation under that provision is wide. Even if we assume (we do not propose to decide that question in this ca6e) that compen sation under that provision has to be fixed on the same basis as is required to be done under Fatal Accidents Act, 1855 (Act 13 of 1855), the pecuniary loss to tlie aggrieved party would depend upon data which cannot be ascertained accurately but must necessarily be an estimate or even partly a conjecture. The general prin ciple is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecu niary benefit a.nd on the other any pecuniary advantage which from whatever sources come to them by reason of the death, that is, the balance of loss and gain to a dependant by the death must be ascertained-see Goba/d Motor Service Ltd. and anr. v. R.N.K.

Veluswami and ors.(') The determination of the question ot compensation depends on several imponderables. In the assessment of those imponderables, there is likely to be a margin of error. If the assessment made by the High Court cannot be considered to be unreasonable -and we do not think it to be unreasonable-it will not be proper for this Court to interfere with the same. Ta.king an overall as sessment of the facts and circumstances oI this case, we are unable to agree with the contention of the appellant's Counsel that the compensation awarded to the legal representatives of the deceased persons is excessive. Nor a.re we able to accept the contention that the High Court erred in condoning the delay in the matter of the claim made by the daughters of Bachan Singh.

This takes us to the question as to the extent of the liability of the insurance company. The measure of liability of the insurer has to be ascerta.ined with reference to s. 95(2) of the Motor Vehicles Act. Section 94 of that Act requires that every passenger bus should be insured against third party risk. Section 95(1) prescribes the requirements of policies. The provision relevant for our pre sent purpose is s. 95(2). That provision as it stood at the relevant time read thus :

"Subject to the proviso to sub-section (!), a policy of in surance shall cover a•ny liability incurred in respect of any one accident up to the following limits namefy :-

(a) where the vehicle is a goods vehicle, a limit of twenty tho)lSand rupees in all including the liabilities, if any,

(I) [1~62] IS. C.R. 529.

SHEKHUPURA TRANSPORT v. NORTHERN INDIA TRANSPORT (Jfegde, J.)

arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding six in number, being carried in the vehicle. ibl where the vehicle is a vehicle in which pai; sengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, in respect of persons other than passengers carried for hire or reward, a limit of twenty thousand rupees; and in respect of passengers a limit of twenty thousand rupees in a.II, and four thousand rupees in respect of an individual passenger, if the vehicle is registered to carry not more than six passengers excluding the driver or two thousand rupees in respect of an individual passenger. if the vehicle is registered to carry more than six passengers excluding the driver;

(c) where the vehicle is a vehicle of any other class, the amount of. the liability incurred."

In the present case we are dealing with a vehicle in which niore than six passengers were allowed to be carried. Hence the maximum liability imposed under s. 95(2) on the insurer is Rs. 2,000 /- per passenger though the totaA liability may go upto Rs. 20,000 /-..

This is also the view taken by the High Court. The limit of insurer prescribed under s. 95(2)(b) of the Motor Vehicles Act can be enhanced by any contract to the contrary. Therefore we have to see whether the contract of insurance entered into between the appellant and the insurance company provided for the pa.yment of enhanced amount in case the owner of the bus involved in an accident is required by the decree of a court to pay any higher amount as compensation. The insurance policy issued by the insurer is muked as Exh. R. W. 3 I B. aause (I) of that policy says :

"Subject to the limit of liability the Company will indeminfy the insured in the event of accident caused by or arising out of the use of the Motor Vehicle in a public place against all sums including claimants costs and expenses which the insured shall become legally liable to pay in respect of death of or bodily injury to any person."

The opening words of the clause "subject to the limit of liability the Company" evidently refer to the limit precribed under s. 95(2)(b) of the Motor Vehicles Act. No clause in the insurance policy specifically providing for the payment of any amount higher than that fixed under s. 95(2)(b) was brought to our notice. The

cla.ue dealing with avoidance of certain terms and the right of recovery reads :

"Nothing in this policy or any endorsement thereon shall affect the right of any person indemnified by this

SUPREJ.IE COURT REPORTS [1971] SUPP. s.c.R.

policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act 1939 Section 96".

This clause makes it abundantly clear th.at the extent of the right of the person indemnified is as prescribed in s. 96 of the Motor Vehicles Act.

Under that provision the amount to b1t recovered is that covered by cl. (b) of sub-i:. (1) of s. 95. Clause

(b) of s. 95(1) says:

"In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-

(b) insures the person or classes of person specified in the policy to the extent specified in sub-section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle Ill a public place ............ "

Reading all these provisions together, it is clear that the statutory liability of the insurer to indemnify the insured is as prescribed in s. 95(2).

Hence the High Court was right in its conclusion that the liability of the insurer in the present case only extends up to Rs. 2,000 /- each, in the case of Bachan Singh and Narinder Nath.

For the reasons mentioned above these appeats fail and they are dismissed with costs.

G.C.

SHEIKllUPURA TRANSPORT CO. LID

NORTHERN INDIA TRANSPORT INSURANCE CO

P. JAGANMOHAN REDDY, JJ

Motor Vehicles Act, 1939

s. 95(2)

s. 1108

s. 95

Motor Vehicles Act

s. 95(2)

Motor Vehicles Act

OB of the Motor Vehicles Act, 1939

ss. 95(1)

Motor Vehicles Act

s. 95(2)

s. 95(2)

s. 95(2)

Motor Vehicles Act

OB of the Motor Vehicles Act, 1939

Fatal Accidents Act, 1855

s. 95(2)

Motor Vehicles Act

Section 94

Section 95(1)

s. 95(2)

Compensation Act, 1923

s. 95(2)

s. 95(2)(b)

Motor Vehicles Act

s. 95(2)(b)

Motor Vehicles Act

s. 95(2)(b)

Motor Vehicles Act 1939

Section 96

s. 96

Motor Vehicles Act

s. 95

s. 95(1)

s. 95(2)


.2:1.3

RARKISHAN SINGH

STATE OF PUNJAB & ORS.

March 25, 1971

[C. A. VAIDIALINGAM AND A. N. RAY, JJ.J

Punjab Civil Medical Service Class I (Recruitment and Conditions of Service) Rules, rr. 2(c) 5 and 9(3)-Direct recruitment to Selection Gradel/ permitted by rules-Fixation of seniority in absence of rules.

The appellant and the third respondent were members of the Punjab

Civil Medical Service, Class I.

The second Respondent, who was serv C ing abroad, was offered the post of Civil Surgeon in the Punjab Civil Medical Service and he joined the post of Chief Medical Officer in the Punjab Civil Medical Service, Class I, temporarily. Applications for fill ing up the post permanently were invited through the Public Service Com mission, and the second respondent was selected and appointed. Thereaiter, he was appointed in the Selection Grade of the Punjab Civil Medical Service.

Ten day• later, the appellant and the third respondent were also appointed to the selection Grade.

The appellant impeached the second respondent's appointment to the Selection Grade on two grounds: (I) that the appointment to the Selection Grade could only he by promotion from Punjab Civil Medical Service, Oass I, and not by direct appointment; and (2) even if the second respondent could be appointed direct to the Selection Grade his seniority should be below that of the appellant and the third respondent, on the ground E Jhat the appellant and the dlird respondent were senior to the second respondent in the time scale of Class I Service.

HI:LD: (I) The Service as defined in r. 2(c) of the Punjab Civil Medical Service Class I (Recruitment and conditions of Service) Rules, means the Punjab Civil Medical Service Class I and the Selection Grade is a part and parcel of the Punjab Civil Medical Service Class I. Therefore, when F r. 5 specifically speaks of appointment to the Service by direct recruitment it embraces both Class I and the Selection Grade. The word appointment means both by promotion and by direct recruitment and is used in that sense in relation to the selection grade in r. S and in relation to the total number of appointments to the service in r. 9(3).

Direct appointment to Selection Grade is not only contemplated in rr. 5 anll 9(3) but is also implicit in them.

Further, the rules contemplate direct appointment to Selection Grade in proper cases when there are no suitable persons in G Class I time scale who can be promoted to the Selection Grade.

(226!-; 2288-F]

(2) The second respondent's appointment to the post of Chief Medical Officer was in consultation with the Punjab Public Service Commission as contemplated by r. 3, but the seniority list of the Class I service to which the appellant and the respondeqts belonged was not fixed.

Where there are no specific rules in regard to the fixation of seniority in the Selection H Grade in the case of direct appointment, the second respondent, having been recruited earlier than the appellant and the third respondent, his seniority should not be disturbed.

[:1.28G; 229CFJ

224 SUPl\l!ME COURT l\l!l'ORTS (1971] SUPP. s.c.a.

A CivIL APPELLATE JUIUSDICTION : Civil Appeal No. 430 of 1970.

Appeal by special leave from the judgment and order dated August 13, 1969 of the Punjab and Haryana High Court in L.P.A. No. 288 of 1968.

Jagjit Singh Chawla, K. L. Mehta and S. K. Mehta, for the appellant.

H. L. Sibbal, Advocate-General, Punjab and R. N. Sachthey for respondent No. I.

V. C. Mahajan, S. S. Khanduja and V. P. Kohlo, for respondent No. 2.

The Judgment of the Court was delivered by

Ray, J.-This is an appeal by special leave from the judgment dated 13 August, 1969 of the High Court of Punjab and Haryana.

The appellant was appointed and confirmed in Punjab Civil Medical Service Class I with effect from 26 February, 1955.

Respondent No. 3 Dr. S. S. Sekhon was confirmed in the same Class I service on 28 February, 1955. The time scale salary of Class I service is Rs. 60040-8()().50-900 with efficiency bar at 800 /-.

A class I officer on promotion to the selection grade is entitled to Rs. 1000 /-.

Dr. Pritam Singh is a Fellow of the Royal College of Surgeons.

He obtained qualifications in various post graduate medical courses in England and America. In 1961 he was serving the Government of Uganda in Africa at a salary of Rs. 30001p.m. in a permanent pensionable post. The Punjab Government in the year 1961 offered him the post of Civil Surgeon in the Punjab Civil Medical Service.

Dr. Pritam Singh expressed his willingness to accept the post at a suitable salary.

Respondent No. 2 Dr. Pritam Singli was appointed on 16 July, 1962 as Chief Medical Officer in the Punjab Civil Medical Serviee Class I in the scale of Rs. 8()().50-1500 with a starting salary of Rs. 1000/- p.m. with such allowances as might be admissible under the rules.

He joined the post with effect from 4 August, 1962. By an order of the Governor of Punjab dated 18 December, 1962 the post was directed to be in addition to the existing posts of Civil Surgeons both in the selection grade and ordinary grade.

The Government of Punjab thereafter took steps of filling the post of the Chief Medical Officer, Chandigarh on a permanent basis through the Public Service Commission.

A public notice

inviting applications for the post was issued under the authority of the Commission in the month of April, 1963.

Dr.. Pritam Singh applied for the post. Neither the appellant nor respondent Dr. Sekhon applied for the post because they did not have the requisite qualification prescribed 1or the post. Dr. Pritam Singh was selected by the Punjab Public Service C011llllission.

The order of appointment by the Governor was issued on JO May, 1963.

Dr. Pritam Singh was on probation for a period of two years with effect from the date on which he joined as Chief Medical Officer, namely, 4 August, 1962, and he was governed by the Punjab tivi.1' Medical Service Class 1 Rules.

On 30 August, 1963 a fonnal letter was issued to Dr. Pritam Singh that the Governor of Punjab in consultation l; Vith the Punjab Public Service Commission had allowed Dr. Pritam Singh the grant of higher starting pay of Rs. 1250/· p.m. on his appointment as Chief Medical Officer on a regular basis in the time scale of Rs. 8()().5()..1500 with effect from 17 April, 1963 as Principal Medical Officer, Chandigarh which was the name of the redesignated post of the Chief Medical Officer. On 9 December, 1965 Dr. Pritam Singh was confinned with effect from 17 April, 1963 as Principal Medical Officer, Chandigarh.

On 20 October, 1966 the respondent Dr. Pritam Singh was appointed by the President of India in the selection grade of Punjab Civil Medical Service in the scale of Rs. 130()..5()..1600 with effect from 20 October, 1966.

The appellant impeached the order dated 20 October, 1966 appointing the respondent Dr. Pritam Singh in the selection grade to be in violation of the Punjab Civil Medical Service (Recruit ment and Conditions of Service) Rules, 1940 on two broad

grounds ; first, that thQ appointment to t!he selection grade of F Punjab Civil Medical Service could be only by promotion from Punjab Civil Medical Servic.e Class I and not by direct appointment, and, secondly, even if Dr. Pritam Singh could be appointed direct to the selection grade his seniority would be below that of the appellant and Dr. Sekhon.

When Dr. Pritam Singh was appointed to the selection grade he was placed at the bolltom of the selection grade. The appellant nd the respondent Dr. Sekhon were also appointed to the selection grade with effect from I November, 1966 JO days subsequent •to the appointment of Dr. Pritam Singh. The appellant and Dr. Sekh9n contended that they had been senior to Dr. Pntam S[ngh in the time scale of Class I Service and therefore the res pondent Dr. Pritam Singh should not have been placed senior to them in the selection grade.

15-1 S.C. lndia/71

Slll'RBME COURT Rl!PollTS [1971] SUPP. s.c.R.

The Punjab Civil Medical Service, Oass I (Recruitment and Conditions of Service) Rules are 17 in number. Rule 2(c) defines the service to mean the Punjab Civil Medical Service Class I.

Rule 3 states that all appointments to the service shall be made by the Government on the advice of the Commission from time to time as required. The other relevant Rules necessary for the purpose of the present appeal are rules 5, 6, 7(1), 8 and 9 which are as follows :-

" 5. Appointment to the serVice shall be made either by promotion from the Class II service or by direct recruitment in India or in England and when any vacancy occurs or is about to occur, Government shall determine in what manner such vacancy shall be filled.

Note : Except with the previous sanction of Government only such persons shall be eligible for direct appointment as are not already in Government service.

6. (I) The service shall consillt of such number of posts of Civil Surgeons as may be determined by Government from time to time.

(2) Not less than nine posts shall be filled by promotion from the Class II service.

Provided that recruitment by promotion shall be made by strict selection and no member of the Gass II service shall have any claim to such promotions of right.

7. (!) Members of the service who are appointed against permanent vacancies shall on appointment remain on probation for a period of two years If recruited by direct appointment and one year if recruited otherwise than by direct appointment.

Explanation : Officiating service shall be reckoned as period spent on probation but no member of the ser vice who is officiating in any appointment shall on the completion of his period of probation be entitled to be confirmed until he is appointed against a permanent vacancy.

8. The seniority of the members of the service shall be determined by the dates of their confirmation in the service:

Provided that if two or more members are confirm H ed on the same date:

(a) A member recruited by direct appointment shall be senior to a member recruited by promotion.

HARUSHAN V. PUNJAB (Ra)', J.)

Cb) in the case of members who are both or all ap pointed by promotion from the Class II service, seniority shall be determined according to the seniority of those members In that service; and

(c) in all other cases Government shall decide the seniority.

9. (I) A member of the service shall on appoint men! be entitled to a pay of a scale rising from Rs. 600 a month by an annual increment of Rs. 40 a month to Rs. 800 a month and then by an annual increment of Rs. 50 a month to Rs. 900 a month with an efficiency bar at Rs. 800 a month. In addition a member if he is of non-Asiatic domicile shall be entitled to receive such overseas pay as may be prescribed by Government from time to time.

(2) Members of -the service shall be eligible for prom., tion to a selection grade and on such promotion shall be entitled to a pay of Rs. 1000 a month.

Provided that promotion to the selection grade shall be made strictly by selection and no member of the service shall be entitled as of right to such promotion.

13) The number of appointments in the selection grade shall not exceed 25 per cent of the total number of appointments in the service "

Counsel for the appellant contended that rule 9(21 which stated that the members of the service shall be eligible for promotion to the selection grade meant that only the members of Class I service could be promoted to a selection grade and there could be no direct appointment to a selection grade. A direct appointment to the selection grade was said by the appellant to be an infraction of rule 9(2). The contention of the appellant with regard to rule 5 was that it spoke of appointment to the service either by promotion from Class II or by direct recruitment and therefore there could be direct recruitment only to Class I service and not to the selection grade. It was emphasised that rule 5 did not specifically provide for direct appointment to selection grade.

Rule 9(2) does not contain any restrictive word that only members of the service sh.all be eligible to promotion to a selec tion grade. The proviso to rule 9(2) contains a word of limitation and it Is that no member of the service shall be entitled as of right to such promotion. To exclude appointment to selection grade would be to rob rule 5 as well as rules 9(2) and 9(3) of t\leir content because rule 5 speaks of appointment to the service to be

SUPREME COURT REPORTS [1971] SUPP. s.c.R.

either by promotion or by direct recruitment.

Rule 9(2) speaks of eligibility of members of the service for promotion to the selection grade and rule 9(3)speaks of the number of appointments in the selection grade not to exceed 25 per cent of appointments in the §ervice. The service as defined in rule 2(c) means the Punjab Civil Medical Service Class I. Selection grade is the Punjab Civil Medical Se.rvice Class I. That is not disputed.

Therefore rule 5 which specifically speaks of appointment to the service by direct recruitment embraces Class I and the selection grade which is a part and parcel of Class I. The word 'appointment' in rule 9(3) in regard to selection grade as not exceeding 25 per cent of the total number of appointments in the service contemplates both promotion and direct appointments in the service to the selection grade. The word "appointment" cannot mean only promotion.

It means appointment both by promotion and by direct recruitment. That Is why the word 'appointment' is used in that sense once in relation to selection grade and again in relation to the total number of appointments to the service. Direct appointment to selection grade is not only contemplated in the rules particularly rules 5, 9(2) and 9(3) but is also the implicit idea inherent in the words "direct recruitment and direct appointment" in Rule 5 for the purpose of attracting able and meritorious persons to the service including the selection grade. The fallacy in the appellant's contention is that though selection grade will be within the definition of the service in rule 2(c), wherever the word "service" occurs In rules 5 and 9, the construction put upon the words 'service' is members of the service who are in Class I on time scale appointment and who alone can be promoted to the selection grade and that there cannot be any direct appointment to selection grade.

There is another reason as to why the rules contemplate direct appointment to selection grade in proper cases. If it appears that there are not suitable persons in Class I time scale who can be promoted to the selection grade persollll of ability will have to be brought in to the selection grade from outside.

A contention was advanced by counsel for the appellant that rule 3 contemplated appointment by the Government on the adviCe of the Public Service Commission and that the appointment of Dr. Pritam Singh was not made on such adv'ice. The recruitment of Dr. Pritam Singh to the post of Chief Medical Officer was in consultation with the Punjab Public Service Commission.

That appointment was made in the month of May, 1963. Being a direct recruit he was on probation for two years. He was confirmed thereafter. His starting salary was higher and at th~ time of confirmation he was getting a salary of Rs. 1,250 p.m. m the scale of Rs. 8()().50-1500. Dr. Pritaim Singh prior to his appoit ment to the selection grade in the Punjab Civil Mical oc Class I was getting a salary of Rs. 1,250 p.m: which was higher than the limit of time scale pay in Class I service.

The other contention on behalf of the appellant was that Dr.

Pritam Singh should not have got seniority, over the appellant and the respondent Dr. Sekhon in the selection grade. Prior to the appointment of Dr. Pritam Singh to the selection grade the seniority list of Class I service to which the appellant and the two respondents belonged was not fixed because of representations A. made by various persons including the appellant and Dr. Sekhon.

We are not called upon to go into the seniority list of Class I service because the only controversy now is with regard to the seniority list of the selection grade.

The appointment of Dr. Pritam Singh to the selection grade was earlier than that of the appellant and Dr. Sekhon. Therefore, B there cannot be any cause for complaint on ground of senionty.

When Dr. Pritam Singh was appointed to the selection grade his position was last in the list. That was on 20 October, 1966. The appellant and Dr. Sekhon were promoted to the selection grade

10 days thereafter and their position would be in the ordinary c . course befow Dr. Pritam Singh. It would be unjust to hold that the appellant and Dr. Sekhon would be put at a place higher than Dr. Pritam Singh. in the seleetion grade.

The High Court correctly expressed the view that there are no specific rules in regard to the fixation of seniority in the selection grade in the case of a direct appointment. If _there are no relevant rules with regard to fixation of seniority m the case of a direct appointment to the selection grade, Dr. Pritam Singh having been recmited by direct appointment earlier than the appellant and Dr. Sekhon, Dr. Pritam Singb.'s seniority cannot be disturbed. That will be unjust.

For these reasons, the appeal fails and is dismissed.

The parties will pay and bear their own costs.

V.P.S.

A ppea/ dismissed.

3

RARKISHAN SINGH

STATE OF PUNJAB & ORS

A. N. RAY, JJ


SAHODARA DEVI & ORS.

GOVERNMENT OF INDIA & ANR.

March 26, 1971.

(J. M. SHELAT, I. D. DUA AND V. BHARGAVA, JJ.)

Cantonment Land Administration Rules, 1937, r. 21-Power under rule to grant lease whether discretionary-Use of word 'May', effect of.

The appellant filed a petition under Art. 226 of the Constitution agaJns! the refusal of the Defence Ministry to execute a lease under r. 27 of the Cantonment Land Administration Rules, 1937 in respect of a bungalow situated in a cantonment area, on o.ccupancy land held on 'old grants lease'.

The single Judge directed the respondents to execute the lease but the Division Bench held that the power to grant a lease under r. 27 was discretionary. The Division Bench therefore set aside the o.rders of the single Judge and issued orders to the respondents to reconsider the request of the appellants for grant of lease under r. 27 and Sch. VII of the Rules in accordance with law. With certificate the present appeal was filed in this Court. The only question for consideration was ~-hether the appellants were entitled to a direction against the respondents to issue a lease tu thenl under r. 27 and Sch. VII of the 1937 Rules.

HELD: Rule 27 only confers a power in general on the Military Estates Officer to grant leases and, by using the word 'may•, it clearly givrs: him discretion to grant leases in suitable cases. There is the further circumstance that the exercise of the power by the Military Estate Officer haso been made subject to the approval of the Central Government or such other authority as the Central Government may appoint for that purpose.

The power of the Military Estates Officer being subject to such discretionary approval or disapproval of another authority cannot possibly be held to be required to be exercised in all cases without any discretion. [234G-

235A]

In the present case therefor~ the High Court in directing a reconsideration of the case in accordance with law was quite correct. so that the application of the appellants must be decided afresh after keeping in view the principle that the power to grant a lease under r. 27 is discretionary, but the r.efusal should only be in suitable cases where sufficient reasons exist for the purpose. [235C]

Sardar Govindrao & Ors. v. State of Madhya Pradesh, [1965) I S.C.~. 678, distinguished.

OVIL APPELLATE JURISDICTION : Civil Appeal No. 2246 of 1969. .

Appeal from the judgment and decree dated April 11, 1969 of the Allahabad High Court in Special Appeal No. 469 of 1968.

Yogeshwar Prasad, S. K. Bagga and S. Bagga, for the appellants.

V. A. Seyid Muhammad and S. P. Nayar, for the respondents.

SAHODARA DEVI .. GOVT. OF INDIA (Bhargava, J.)

The Judgment of the Court was delivered by

Bbargava, J.-The appellants are admittedly the joint owners of Bungalow No. 45, situated along Tagore Road, In the Cantonment of Kanpur. These premises are recorded in the General Land Reter of the .Cantonment as occupancy land on old grant terms. It appears that the words "old grant terms" referred to grants made by the Government under .the General Order of the Governor-General in Council dated 12th September, 1836. Subsequently, the first Act to be passed in respect of these lands was the Cantonments Act No. 13 of 1889. This was followed by Cantonments Act No. 15 of 1910 and Cantonments Code, 1912.

These were a111ended by Cantonments Act No. 2 of 1924 which still continues to be in force. On the 26th June, 1925, Rules were framed for the first time under section 280 of the Cant0nme11ts Act of 1924, regulating administration of Cantonment lands.

These Rules were, however, superseded by fresh Rules by Government nOtification dated 23rd November, 1937. The new Rules are described as "Cantonment Land Administration Rules, 1937".

Under these Rules, a provision was made in rule 27 for regularisation of old gr11nts by issue of fresh leases. The appellants did not have any documents to show how the original title of their predecessors was acquired in respect of these lands. Tl!e earliest d\)Cument, which the appellants could produce, was a sale-deed executed by Ram Nath and others, sons of Roop Kishore, in favour of Dost Moha.mmad Estate, on the 8th September, 1943.

This document recited that Roop Kishore, the father of vendors Ram Nath and others, purchased the property in various instalments by documents executed between the years 1901 and 1908.

The appellants acquired the rights to the Bungalow by. a saledeed executed In their favour by Dost Mohammad Estate on 30th April, 1958. Allter tl!king tbis sale-deed, they applied for mutation to Cantonment authorities ; but objectiOJlll were raised and the authorities did not agree to mutate lthe. names of the app>l !ants until the appellants agreed to give .an undertaking to be bonnd by the terms of the Governor-General's Order of September 12, 1936. Their names were then mutated on 13th September, 1961, which, had to be followed by a deed of admis8ion executed by the appellants on 15th September, 1961. Sul!sequently, the appellants approached the authorities to get .their rights defined and. to have their possession regularised under r. 27 of the Rules of 1937. The request not having been grante9, the appellants, on 12th April, 1966, moved the Military Estates Officer, . Lucknow for the Slime purpose and, according to the appellants, no attention was paid to tbis request of theirs. On 15\}\ October, 1966 .• they sent a reminder to the Military Estates Officer, Lucknow and, in addition, requested him to supply tbem with a form prescribed by Schedule V of the Rules of 1937. It may be mentioned ,

that the lease under r. 27 was required to be executed in the form in Schedule VII and not in Schedule V. On 25th October, 1966, the Military Estates Officer wrote to the appellants to collect the form from the Cantonment Executive Officer, Kanpur Cantonment, who was the Agent of the Military Estates Officer, and to submit it, after completion, to the Military Estates Officer, Luck' now, along with a site plan. The letter contained an additional sentence that this reply sent also disposed of the earlier letter of the appellants dated 12th April, 1966.

The appellants had also, in the meantime, moved the Defence Ministry by a letter dated 27.tho August, 1966, for grant of a lease under r. 27 read with Schedule VII of the Rules of 1937, quoting an instance of one Mr. Packwood, resident of Kanpur Cantonment, in whose case a similar lease had already been issued.

By the letter dated 25th October, 1966, the Joint Secretary to the Defence Ministry informed the appellants that a lease under r. 27 and Sch. VII could not be granted ; but, if the appellants so desired, the Government were prepared to consider their case under r. 28(1) and Schedule VIII of those Rules. The appellants made a representation against this letter by a letter dated !st November, 1966 ; but, when no reply was received, they gave a notice to the Government on 28th February, 1967, to execute the lease in two months under r. 27 and Sch. VII. Again, there was no reply and, thereupon, the appellants moved a petition under Art. 226 of the Constitution In the High Court of Allahabad on 18th. March, 1967, seeking a writ of mandamus directing the Military authorities to issue a lease to them under r. 27 and Sch. VIL The petition was heard by a single Judge of the High Court and he issued a directiqn to the respondents to grant a lease as prayed.

He rejected the plea of the respondents that the case fell within Rules 16 to 26 and 28 and not under Rule 27. The respondents appealed to a Division Bench which agreed with the learned single Judge that rules 16-26 and 28 were inapplicable to the case of the appellants. 1t was, however. of the view that, though the case was covered by r. 27, that rule did not contain any mandatory provision requiring a lease to be given in all cases of old grants and that there was a discretion vested in t'ie authorities acting under that rule not to give-a lease in suitable cases. It was also held that the appellants had no right to claim such a lease under that rule. Consequently, the Division Bench set aside the direction of the single Judge and issued orders to the respondents to reconsider the request of the appellants for grant of lease under r. 27 and Sch. VII of the Rules in accordance with. law. It Is against this order that the appellants have come up to this Court by certificate under Art. 133(1)(b) of the Constitution.

In this appeal, we are concerned with only one single point relatina to the natilre of the direction contained in r. 27 of the

SAHODARA DEVI .. GOVT. Of INDIA (Bha•gava, J.) 2l3

Rules of 1937. The concurrent decision of the single Judge and A the Division Bench, holding that rules 16-26 and 28 are inapplicable, has not been challenged in this case before us. The only point that has been canvassed is whether the appellants are entitled to a direction against the respondents to issue a lease to them under r. 27 and Sch. VII of the Rules of 1937.

Rule 27 of the Rules of 1937 is as follows:-

"27. Special Lease for the Regularisation of Old Gra11t3.-- NotWithstanding an)'thing contained in rules 16 to 26 the Military Officer in any case where a site is held without a regular lease, may, on application by the holder, grant, with the approval of the Central Government or such other authority as the Central Government may appoint for this purpose, a lease of the said land in the form set out In Schedule VII."

In this Rule, thus, the power to grant a lease for regularisation of old grants has been given to the Military Estates Officer by using the word "may'', and the power is further subject to the approval of the Central Government or such other authonty as the Central Government may appoint for the purpose. In view of this language used, we think that ¢he High Court was quite right in holding that this rule does not envisage a mandatory direction to the Military Estates Officer to grant a lease in all cases where the question of regularisation of old grants arises.

Normally, the word "may" is used to grant a discretion and not to indicate a mandatory direction. Had the intention been that the Military Estates Officer must grant a lease in all cases, the word used would have been "shall" instead of "may". lt is true that the word "may", in some context, has been interpreted as containing a mandatory direction and the authority g'iven the power has to ellercise that power unless there be special reasons.

Such a case came before this Court in Sardar Govindrao and Others v. State of Madhya Pradesh ('). That was a case 'where a rule relating to grant of money or pension was sought to be enforced. This Court held :-

"This Is an instance where, on the existence of the condition precedent, the grant of money or pension becomes obligatory on the Government notwithstanding that in s. 5(2) the Government has been given the power to pass such orders as it deems fit and in sub-s: (3) the word "may" is used. The word "may" is often read as "shall" or "must" when there is something In the nature of the thing io be done which makes it the duty of the

(I) [1965] S.C.R. 678

person on whom the power is conferred to exercise the power. Section 5(2) is discretionary because it takes into account all cases which may be; brought before the Gov ernment of persons claiming to be adversely affected by the provisions of s. 3 of the Act. Many such persons may have no claims at all althqugh they may in !I general way be said to have been adversely affected by s. 3. If the power was to be discretionary in .every case there was no need to enact further than sub-s. (2). The reason why two sub-sections were enacted is not far to seek.

That Government may have to select some for considera tion under sub-s. (3) and some under s. 7 and may have to dismiss the claims of some others requires the confer

ment of a discretion and sub-s. (2) does no more than to give that discretion to Government and the word "may" in that sub-section bears its ordinary meaning. The word "may" in sub-s. (3) has, however, a different purport.

Under that sub-section, Government must, if it is satisfied that an institution or service mu.st be continued or that there is a descendant of a former ruling chief, grant money or pension to the institution or service or to the descendant of the former ruling chief, as the case llll!Y be. Of course, it need not make a grant if the person claiming is not a descendant of a former ruling chief or there is other reasonable ground not to grant money or pension. ]lut, except in those cases where there are good grounds for not granting the pension, Government is bound to make a grant to those who fulfil the required condition and the word "may" in the third sub-section though apparently discretionary has to be read as "must".

It may be noticed .that, in that case, the word "may" as used it1 the general sub-s. (2) was not held to . indicate a mandatory direc tion.

Ft was only in sub-s. (3), because of the special context, that the Court held that the word "may" was equivalent to "shall" or "must". In the case before us, rule 27 only confers a power in general on the Military Estates Officer to grant leases and, by us'ing the word "may", it clearly gives him discretion to grant it in suitable cases. There is further the circumstance that the exercise of the power by the Military Estates Officer has been made subject to th~ approval of the Central Govenunent. or such other authority as the Central Government may appoint for that purpose. If the power had to be exercised by the Military Estates 0fficer In all cases, its being made subject to the approval of another authority wo11ld meaningless. When a rule envisages approval of the proposed action of the Military Estates Officer, it lilso implies that his action can be disapproved. This approval or disapproval will necessarily be at the discretion of the Central

SAHODAltA DEVI v. GOVT. OF INDIA (Bhargava, J.) 235

Government or the authority appointed by it for that purpose.

A The power of the Military Estates Officer being subject to such discretionary approval or disapproval of another authority cannot possibly be held to be required to be . exercd in all cases without any discretion. The Division Bench was, therefore, perfectly correct in holding that the power under r. 27 is a discretionary power, and both the Military Estates Officer as well as 8 the Central Government or the other authority appointed by it for that purpose in exercising their power have the discretion in suitable cases not to proceed under this rule. The High Court, in directing a reconsideration of the case in accordance with law, was, therefore, quite correct, so that the application of the appellants must be decided afresh, after keeping in view the principle that the power to grant a lease under rule 27 is discretionary; but C tl:.e refusal should only be in suitable cases where sufficient reasons exist for that purpose.

The appeal fails and is dismissed. In the circumstances of this case, we make no order as to costs.

G. C.

Appeal dismbsed.

SAHODARA DEVI & ORS

GOVERNMENT OF INDIA & ANR

M. SHELAT

I. D. DUA

V. BHARGAVA, JJ.

Art. 226

Cantonments Act

Cantonments Code, 1912

Cantonments Act

section 280

Schedule V of the Rules

Schedule VII

Schedule V

Schedule VII of the Rules

Schedule VIII of those Rules

Art. 226

Art. 133(1)(b)

Schedule VII

s. 5(2)

Section 5(2)

s. 3

s. 3

s. 7