DAYARAM & ORS.

DAWALATSHAH ?!< ORS.

January 8, 1971

[J. C. SHAH, C.J., K. S. HEGDE AND A. N. GROVER, JJ.]

Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahal•, Alienated Lands) Act 1 of 1951-, SS. 3, 14-S. 14 scope of-, Section on(v .. infenild to determine the Proprietary rights in lhe land qua the State-,-Dhanora-Zamindari-Succession by lineal primogeniture-'Neaf 4!st male relati, ve' does not mean eldest male re/aiive.

Under the Chanda Patent and the terms recorded in the Wajibul-Arz the 'Dhanora Zamindari was impartible and on the death df the holder it devolved upon his eldest son and in the absence of a legitimate or an adopted son it devolved upon the nearest male relative. The succession to the Zamindari was subject to the power of the Governor to dispossess a. person found unfi( to observe the conditions of loyalty, good police 11dministration and improvement of the estate. The respondent instituted an action for possession of certain immovable properties including the zamindari and for recovery of compensation, in respect of ma/guzari land•, paid to the appellants in consequence of the enactment of the Madhya Pradesh Abolition of Proprietary Rights ·· (Estate, Mahals, Alienated Lands) Act, 1951.

They claimed the Zamindari relying upon the rule of primogeniture and other estates as devisees under a Will. The trial court decreed the suit and the High Court affirtned the decree with o.light modifications. In the appeal to this Court the a~ellants urged that

(I) the Zamindari devolved on the death of the holder on the male relative who is senior most in age and not the eldest member in the senior line; (2) by the order of the Governor the Zamindari was conferred upon the first appellant as he was fotind suitable to hold the zamindari and since the Governor had thC' power to detrmine inheritance and the right to remove a person, the holder of the zamindari had merely a life interest; and (3) the compensation officer had decided by his order under s. 14 -Of the Act that compensation in respect of malqutari land was. payable to the first appellant and since no suit was filed by the plaintiffs for setting aside that decision within the period specified, the order of the compensation officer bec•me final and conclusive.

HELD : (I) By the 'JSO of the expression "the nearest male relative" the test of propinquity alone may be applied and when there are two or more claimants equally teJ110Ved from the common ancestor the eldest male member in the senior most line will be preferred. The contest between the parties had to be adjudged in the light of the rules of lineal pdmogeniture governing an impartible estate.

In determining a single heir according to the rules of primogeniture the class of heirs who would

D ,

be entitled to succeed the property if it were partible must be ascertained first, and then the single heir applying the special rule must be selected.

By the expression "nearest male relative'' it was not intended to confd: the estate upon the eldest male relative of the Zamindar. The High Court was, therefore, right in holding that the Zamindari devolved upon the first respondent to the exclusion of the first appellant. [333 C-F]

(2) The power vested in the Governdr to take extraordinary steps to protect the interest of tho zamindari by the removal of the,..bqlder did not restrict the title of the zamindar to a mere life interest. Tiie power had to be exercised in accordance with the custom of the famjly and an order by the Governor purf'orting to exercise powers under the Chanda Patent contemplated a quasi judicial inquiry.

The order does not show that any lnquiry was made for determining the rights of the contesting claimants. [334 G]

(3) Section 14 of Act 1 of 1951 does not invest the compensatioo officer with jurisdiction to determine competing claims of persons claiming proprietary rights to the property vested in the Government by the operation of s. 3 of the Act. Section 14 is intended to determine only

the proprietary rights in the land qua the State. (339 D-E]

C1VIL APPELLATE JURISDICTION: Civil Appeal No. 2433 of 1966.

Appeal from the judgment and decree dated August 2, 1965 of the Bombay High Court, Nagpur Bench in Appeal No. 113 ct.

195 9 from original decree.

V. S. Desai, v. N. Swamy, K. Rajendra Chaudhuri and K. R.

Chaudhuri, for the appellants.

M. N. Phadke and A. G. Ratnaparkhi, for the respondeints.

The Judgment of the Court was delivered by

Shah, C.J. Dawalatshah and Ranwirshah-sons of PrataP" shah-instituted an action in the Court of the Additional District Judge, Chanda, for a decree for possessi'ln of property immovable (including the Zamindari of Dhanora) and movable specified in the Schedules annexed to the plaint, and for an order for payment of mesne profits and also for recovery of the amount of compensation in respect of certain lands received by the defendants from the Government of Madhya Pradesh and for an order dedaring

their right to receive the balance of compensation remaining to be paid.

The plaintiffs relied upon the fqllowing genealogy :

Niru Thakur .

Sitaram Thakur

Bhakta Thakur

Tanba Thakur

Nilkanthshah

Pratapshah

Gangashah

Sakru Thakur

; Dawltshah

(Platff.

Ranwirshah Gutab (Platff.

Shah No. 2) (dead)

Hanmantrao

Diwakarrao (Die•J Sept., 8, 1932)

No. I)

An1arshah Bao; u

Died Dec. 9,

1950)

Chandarshah (dead)

Ball•rshah

Kajur.

Thakur

Chatturshah (dead)

Lallshah

(•lead)

Karanshah (dead)

Karansl"'ah

Day2ran1 (Deft. dt. No, 1) Indershah (Deft. No. 2)

Govinda Bud ha

Raju Thakur

Niranshah

I.axman

(dead)

The plaintiffs claimed that the property in suit originally u belonged to Gangashah. Gangashah had five sons : Hiru, Bhak:ta, Sakru, Kajur and Raju.

The branches of Sakru and Kajur became extinct a long time ago.

The branch of Hiru (who was

the eldest among the five sons of Gangashah) because extinct with the death of Amarshah on December 6,

1950. The plaintiffs claimed the Zamindari held by Amarshah relying upon the rule of primogeniture, and the other estate of Amarshah as devisees under the will of Amarshah executed on December 3, 1950. They submitted that the Dhanora Zamindari was granted to Sitaram ancestor of Amarshah as an impartible estate, devolvrig by the rule of primogeniture; that the Zamindari on that account devolved on the death of Amarshah upon Pratapshah and that on the death of Pratapshah and Zamindari devolved upon the first plaintiff.

The plaintiffs also claimed that the other property including Malguzari lands devolved upon them under a will executed on December 3, 1950 whereby Amarshah devised his estate in their favour.

Accordingly the first plaintiff claimed that he was entitled to the Zamindari on the death of Pratapshah on January 27, 1951 and the plaintiffs claimed the other estate of Amarshah as devisees under his will.

The plaintiffs submitted that Dayaram the first defendant took wrongful possession of the Zamindari and other property, movable and immovable of Amarshah.

The defendants by their written statement maintained that the genealogical table set up by the. plaintiffs was incorrect, that by the order of the Governor of Madhy11. Pradesh dated November 9, 1951, the Zamindari was conferred upon the 1st defendant Dayaram as he was found suitable to hold the Zamindari and the decision of the Governor was bidding upon the plaintiffs; that the decision of the Compensation Officer regarding Malguzari lands which vested in consequence of the enactment of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals Alienated Lands) Act 1 of 1951, had become binding and conclusive against the plaintiffs because no suit challenging the decision was instituted within two months from the date thereof andthe plaintiffs were on that account not entitled to claim the compensation paid or payable in respect of the Malguzari lands; that Amarshah did not execute the will set up by the plaintiff~ and that Amarshah had made a will dated December 8, 1950 under which his estate was devised in favour of the defendants.

The Trial Court held that the Dhanora Zamindari was impartible and was governed by the rule of primogeniture and Pratap, shah father of the plaintiffs being the eldest member of the seniormost branch from among the descendants of the cc:nmon ancestor Gangashah was entitled to the Zamindari; that the plaintiffs were entitled to receive compensation in respect of the Malguzari lands and the decision of the Compensation Officer did not operate to deprive the plaintiff of the right to those lands or compenatin

payable in respect thereof; that the will >et up by the plamttffs

32S

SUPREME COURT REPORTS [1971]3 S.C.ll.

dated .Decen_iber ~, 1950 was genuine and the plaintiffs . were A under. the will entitled. to the estate devised in their favour by Amarshah; that the will dated December 8, 1950, set up by the defendants was "a fabricated will" and conferred no right or title upon the. defendants; and that the genealogical table set up by the plamttffs represented the true relationship between the descendans of Gangashah.

In appeal jJy the defendants, the High Court of Bombay confirmed the decree of the Trial Court with a slight modification.

Th~ l; ligh Court held that the genalogical table set up by the plamttffs was correct, that accordmg to the custom governing succession Dhanora Zamindari devolved upon Pratapshah on the C death of Amarshah, and on the death of Pratapshah the firtplaintiff became entitled to the Zamindari, that the order of the Governor recognising Dayaram as Zamindar was not binding and conc:usive, for it was not shown that in making the order the Governor had acted in exercise. of the power conferred by the Chanda

Patnt; that the order was contrary to the customs and the law governing the Zamindari; that the decision of the Governor did D not oust the jurisdiction of the the Civil Court; that the will dated December 8, 1950set up by the defendants was not genuine and the will set up by the plaintiffs dated December 3, 1950, was genuine; anci that the plaintiffs' suit with regard to Malguzarl lands was not barred by the decision of the Compensation Officer.

The High Court accordingly confirmed the decree passed by the E Trial Court in respect of the Zamindari replying upon the rule of inheritance incorporated in the Wazibul-Arz of the Ch<.aua District and by succession under the will dated December 3, 1950 in respect of the other property except as to certain occupancy lands held by Amarshah.

With certificate granted by the High Court the defendants F have appealed t'J this Court.

Certain concurrent findings on which not much argument was advanced at the Bar may first be set out. The High Court agreeing with the Trial Court on appreciation of evidence held: that the

2enealogy set up by the plaintiffs represented the true relationship G between the parties.

Again the High Court agreeing with the Trial Court held that the will dated December 3, 1950 set up by the plaintiffs .was genuine while the will dated December 8, 1950 set up by the defendants was not genuine.

The argument that the High Court did not give due weight to certain important circurnstances in reaching \their conclusion relating to the will set H up by the plaintiff is with9t ubstance. he c_ircumstances relied upon are that the wntmg mstrument with which the ix?dY of 1he will was written and the writing instrument with which

' 1.

""'/

Amarshah, it was claimed, signed or executed the will were different, that the will ..vas not registered, that the appearance of the will was suspicious, that the will was unnatural because it devised the estate in favour of the plaintiffs after giving a life interest in favour of the testator's widow Ratnabai, that the will haq not been produced before the revenue authorities and before the Compensation Officer when disputes in relation to the estate of Amarshah were pending before those authorities, and that it was produced for the first time nearly seven years after the death of Amarshah, and that the scribe who wrote the will did not belong to the village to which Amarshah belonged.

The Trial Court and the High Court have reached the conclusion that on the circumstances no suspicion as to the genuineness of the will dated December, 1950 arose. It may be noticed that the plaintiffs were, at the date of their father's (Pratapshah's) death minors, and soon after Pratapshah's death, their mother abandoned them and remarried.

Thereafter o one attended to the pending litigation.

Failure to produce the will before the revenue authorities was

therefore not a circumstance in the view of the High Court, which militated against the genuineness of the will.

In the view of the Courts absence of registration, appearance of the will, the contents thereof, the dispositions, thereunder, and the fact that the writer of the will belonged to another village did not in the circumstances of the case give rise to any suspicion.

We do not think that sitting in appeal we would be justified in interfering with the conclusion recorded by the Trial Court and confirmed by the High Court on what is essentially a conclusion on a question of fact.

The will set up by the defendants is not proved to be a genuine will executed by Amarshah.

This again is a concurrent finding of the two Courts and must be accepted in this Court. No

argument has been advanced to pursuade us to take a. different view. The rights of the parties must be adjudged i11 the light of these findings.

The dispute between the parties relates to three set of properties-

(a) Dhanora Zamindari

(b) Malguzari lands; ( c) Occupancy lands and movables.

The ancestors of the parties held an extensive Zamindari in the Chanda District.

After the advent of the British rule, in !!lat region, the eyenue authorities commenced settlement op:ratios.

An inquiry was held by the Settlement Officer in connechon with the lands held by the family of the. parties and statements of some

SUPREME COURT REPORT~

[1971]3 S.C.R.

members were recorded.

Chattarshah s/o Kajur stated th:1t the Zamindari of Dhanora was standing in the name of his cousin Sitaram and that all the members of the family were joint and maintained themselves out of the income from the Zamindari. In his statement Sakru admitted that the rule of primogeniture prevailed in the family.

He stated that Hiru was his eldest brother and Sitaram was the son of Hiru and the Zamindari was recorded in the name of Sitram according to Awwal Haqq i.e. rule of primogeniture from ancient times, even though he was senior in age, and that there was no quarrel between him and Sitaram and that he and Sitaram were living jointly and were taking the income from the Zamindari.

The Settlement Officer made an order on November 2, 1867 that the "Zamindari is of ancient tenure and the present Zamindar

Sitaram Thakur has proved his right to be Zamindar.

Subject to

the conditions to be embodied in patent of proprietary right.

I confer proprietary right in the Zamindari of Dhanora on Sitaram Thakur".

The Settlement Officer observed that conferment of proprietary rights was subject to conditions to be embodied in a D patent qf proprietary rights.

It may reasonably be inferred that a formal grant was made in favour of Sitaram.

The form of the grant which is known as "Chanda Patent" is reproduced in Aitchison's "Collection of Treaties, Engagements and Sanad<;"· Vol. II, pp. 573-574.

Under the Chanda Patent it was declared that the tenure shall be indivisible, and non-transferable (save to E to the nearest male heir the transfer in such case being subject to the app:uval of the Chief Commissioner) the land shall be held by one person, the Zamindar or Zamindarin for the time being and shall be held on conditions of (i) loyalty (ii) good police administratioQ and (iii) improvement and cultivation of the estate.

Clauses V, VI, VII of the grant relating to succession to F the Zamindari held under the Patent :

"V. Subject to the provisions contained in Clause VI, tbe-order of succession shall be as under:-

On the death of the Zamindar, the estates shall devolve upon his eldest son. In default of a son, and when adoption has not taken place, the succession should preferably devolve on the nearest male 'kinsman, the widow receiving a suitable riiaintenance.

VI. In the event of the first in order of succession being, in the opinion of the local Government, unfit to carry out -the conditions of Clause IV, the Zamindaree shall devolve upon the nearest heir who possesses the required qualification.

...

• j -1

VII. The Zamindar, in the case of gross misconduct, shall be liable to removal by the local Government; and if such removal be ordered, the succession shall take place as if the Zamindar removed had died.''

Tenure of the grant is entered in the Wajibul-arz.

The relevant recitals in the Wajibul-arz are as follows :

PART-I Rights and liabilities of Zamindar in relation to Government.

(1) Watan Zamindar's Watan is not partible and it cannot be given to anyone other than quite close (the nearest) male heir.

Changes taking place in this way should have sanction of the Governor-in- Council.

The Zamindari shall be in the name of only one person and the Zamindari has been granted to the Zamindar in pos!liession at present on the conditions of this remaining Joyal to the Government, managing his estate properly and improving the cultivation.

(2) Heirs On the death of Zamindar the estate shall devolve upon his eldest son. If there is no legitimate or adopted son, it shall devolve upon a very close (the nearest) male relative. If there arises a dispute regarding right of inheritance, the Governor-in- Council will decide it in accordance, with the custom in that family.

If the Governor-in-Council finds that the first heir is unable to abide by the conditions stated in BAB (clause). the Zami11dari shall be granted to a quite close (the nearest) male heir possessing the necessary qualifications. ( 3) Dispossessing the Zamindar and forfeiting his rights.

Governor-in-Council may dispossess the Zamindar on account of his behaviour and bad administration.

Such dispossession may be for a few days or permanent. If it is for a few days, the Deputy Commissioner will manage the Zamindari on behalf cf the Zamindar and if the order of dispossession is permanent, the Zamindar shall so to say be deemed to have died and the heir will get the right." The entries in the Wajibul-ar~

substantially reproduce the terms of the Chanda Patent as set out in Vol. II of Aitchison's "Collection of Treaties, Engagements and Sanads".

One Major C. B. Lucie Smith made a report relating to the Land Revenue settlement of the Chanda District, Central Pro vinces, 1869.

At pp. 179 to 180 Major Lucie Smith has referred to the Zamindarees of the Chanda District.

He has stated under the heed "Zamindarees".

"The Zamindarees were settled by me; and in order to explain the principles of settlement adopted i( will be

ncessary to touch first upon the questions of tenure and history.

The weight of testimony goes to show that the Zamindars are the descendants of men on whom were conferred tracts of country, more or less wild with the object of their being brought under cultivation and order maintained.

Naturally, .... while the law was weak and its administrators distant. the Zamindar, as the lord on the spot, exercised large powers but powers apparently never recognised by either the Gond or the Maratta Government.

He was undobutedly regarded as a noble, bound to furnish a small contingent when required by his sovereign; but there is nothing to warrant to the supposition that he possessed an absolute right in the. soil; indeed, as far as my experience goes, such a right is foreign to the ideas of the races of this part of India.

The rulers of the day evide'.ltly made and unmade Zamindars at their pleasure; . . . . . .

Under these circumstances it appeared that the Chanda Chiefs, though the Nobles of the Country, possessed no absolute rights in the soil, and ttiat it rested with Government to confer it; and in conferring it, to prescribe such conditions as might be deemed fitting.

A scheme of conditions to be embodied in the patent of proprietary right, and in the administration paper of the Zamindarees, was therefore drawn up, based upon the usages actually existing from ancient times; and, with one exception, the proposed arrangements were sanctioned in their entirety by the Government of India, who directed that they were to be taken as a generai model for those to be applied to the Zamindarees of the Bala ghat district and to the non-feudatory Zamindarees of Chutteesgurh.

The provision not approved as that on the death of a Zamindar, the estate should in default of a son, devolve upon his widow.

This code of succession has obtained among the Chanda Chiefs from time immemorial, and is the rule not only among them but among . all olasses of landholders in the district.

It suits especially the character of the Gond women, ...... .

Government, however, after weighing the arguments urged, decided that it was conducive to the interests of

A the Zamindarees that the succession should devolve only upon a male member of the hmily, and the clause was altered accordingly." Pratapshah and the 1st defendant Dayaram were descendants of Gangashah and they were related to Gangashah in the same degree.

But Pratapshah was the descendant of Bhakta, and B Dayaram was the descendant of Raju. Bhakta was the elder of the two brothers. It is recited in the Wajibul-arz that the Dhanora Zamindari is impartible, that on the death of the holder it devolv es upon his eldest son and in the absence of a legitimate or an adopted son it devolves upan the nearest male relative. Devoluti0\11 of the Zamindari closely resembles the traditional _rule of c lineal P!i?10£~1)iture. If the holder dies leaving him surviving no son legitimate or adopted, the Zamindari devolves upon a descendant from the common ancestor of the nearest degree and in the event of there more d11scendants from the common ancestor being in the same degree, the descendant in the senior line is preferred.

Succession to the Zamindari is subject to the power D of the Governor to dispossess a person found unfit to observe the conditions of loyalty, good police administration and improve• meint and cultivation of estate. But if the nearest in the line ct

succession is not selected the. estate must be given to the nearest

heir who has the prescribed qualifications and is a successor to the Zamindar.

When the Zamindar is removed, succession takes place as if the Zamindar so removed had died.

By the use of the E expression "nearest male relative" the test of propinquity alone may be applied and when there are two or more claimants equally removed from the common ancestor the eldest male member in the senior r .. ost line will be preferred. In adjudging the plaintiffs claim the Court must determine whether Pratapshah-fathor of the plaintiffs, was the ne.arest male relative of Amarshah.

F On the death of Amarshah there were two male relatives :

they were Pratapshah father of the plaintiffs and the 1st defendant Dayaram. The contest between them had to be adjud$ed in the light of the rules of lineal primogeniture governing an 1mpartible estate which are well-established : Succession is governed by the rules which governs succession to partible property subject to such modifications only as flow from the character of the impartible estate; the only modification which impartibi!ity suggests in regard to the right of succession is the existence of a special rule for the selection of a sing1e heir when there are several heirs of the same class who would be entitled to succeed to the property if it were partible under the general Hindu law; and in the absence of a special custom, the rule of primogenitur" furnishes a ground of preference.

.3.34

SUPREME COURT REPORT~ [1971 ]3 s.c.R .

Subramanya Pandya Chokka Talawar v.

Siva Subramanya A Pillai ( 1).. In determining a. single heir according to the rule of pnmogemture the class of helfS who would be entitled to succeed to the property if it were partible must be ascertained first, and then the single heir applying the special rule must be selected.

Counsel for the first defendant submitted that under the terms B of the Chanda Patent the Zamindari devolves on the death of the holder on the male relative who is the senior most in age, and not on the eldest member in the senior line.

There is nothing in the Chanda Patent which supports that contention.

By the use of the expression "nearest male relative" the rule of primogeniture is prescribed, it is not intended to confer the. estate upon the c eldest male relative of the Zamindar.

Counsel also submitted that under the terms of the Chanda Patent and the terms recorded in the Wajib-ul-arz the Governor having the right to determine inheritance and the right to remove a person who is no~ loyal or does not manage the property or does not improve the cultivation or , who is guilty of bad behaviollr or D bad admi.nistration, it must be. assumed that the holder of the Zamindari has merely a life interest and on the death of the holder, the Governor re-grants the land consistently with the rules of succession according to the law and custom amongst the memebers of the family but subject to the dominant purpose of good administration and loyalty to the Government.

Counsel for the E first defendant relied upon certain circumstances which he claimed established that the interest of the Zamindar was restricted to

hi~ life and on his death there was resumption and re-grant of the Zamindari by the Governor.

Counsel submitted that the Zamindari was impartible and develoved upon the nearest male heir, that the sanction of the Governor was necessary for transfer, F and also for recording inheritance, that loyalty, good management and improvement of cultivation were the conditions for holding the lands and that if the behaviour of the Zamindar was found unsatisfactory or that he was not capable of good administration he was liable to be removed.

On that ground, said Counsel, the Government alone was competent to decide a dispute arising out of inheritance.

But the power to take extra- G ordinary steps to protect the interest of the Zamindari by the removed of the holder does not restrict the title of the Zamindar to a mere life interest.

The incidents of the tenure are restrictions on the. estate of the Zamindar, but those restrictions do not make him a mere life-tenant.

Under the Chanda Patent the lands of the Zamindari held by B the family were confirmed in 1867 in favour of Sitaram.

On his

(1) J. L. R. 17 Mad. 316 at p. 325.

death they devolved upon Hanmantrao.

There is no evidence that any fresh grant was made.

On the death of Hanmantrao the lands devolved npon his son Diwakarrao who died on September 8, 1932.

On the death of Diwakarrao dying without leaving any male descendant there arose a dispute between Pratapshah and Amarshah.

Pratapshah claimed to be the adopted son of Diwakarrao and on that ground entitled to take the Zamindari.

An inquiry was held and it was decided that Pratapshah failed to prove the adoption set up by him.

On the death of Amarshah again without leaving any male lineal descendant disputes arose.

The evidence is not clear as to whether any formal grant was issued in favour of Sitaram.

There is no evidence that recognition of the heirs of the successive Zamindars was accompanied by the issue of fresh patents or. grants.

Succession was merely 1ecognised by the revenue authorities.

The argument. that the grant was for life of the grantee is therefore not supported by the

turns of the Chanda Patent, nor by the entries in the Wajib-ularz. nor by the history of the Zamindari. The right to determine inheritance it is true vests in the Governor but the power is exercisable in accordance with and not in violation of the custom of the family.

In determining the heir the Governor is not granting afresh the Zamindari; he merely determines the successor in accordance with the custom of the family.

The right of the Governor to remove a holder who is disloyal or does not manage his estate properly or does not improve cultivation or is otherwise of "bad behaviour" or guilty of bad administration, does not involve a conditlon that the interest of the Zamindar is only for his life.

When a holder of the Zamindari is removed, the Governor is bound to hand over the Zamindari to the next heir in the crder of succession if the Zamindar removed had died and the heir will get the right.

Counsel, then contended that in any event the decision of the Governor in 1950 declaring Dayaram to be the successor on the death of Amarshah was binding and conclusive and. could not be reopened.

Counsel urged that Pratapshah and the 1st defendant Dayaram were related to the common ancestor in the same degree, and it was open to the Govurnor to select one of the two members of the family related to the last holder in the same degree, even though the person selected did not oolong to the. senior-most line.

But if succession to the Zamindari is govemed by the rule of lineal primogeniture, selection of a member of a branch in preference to a member of the senior branch would be plainly illegal.

Again, the evidence does not warrant the view that the Governor purported to pass any order in pursuan17 of the pro~ sioM of the Chanda Patent or the rules of succession rewrded m

the Wajib-ul-arz.

The order of the Governor is in the form of a memorandum address~ to the Deputy Commissioner, Chanda, dated November 9, 1951 and it states that :

'"Government are pleased to recognise Shri Dayaram Bapu son of Ballarshah Bapu Raj Gond as the Zamindar of Dhanora Zamindari in the Carchiroli tahsil of the Chanda District till the date of vesting of the Zamindari in the State Government".

There is no evidence that the Governor made any enquiry to determine the successor of Amarshah.

An order by the Governor purporting to exercise powers under the Chanda Patent contemplates a quasi-judicial inquiry. The order does not show c that any inquiry was made for determining the rights of the c, rintesting claimants or that any notice was issued to them or that they were heard before the Governor decided the issue.

There is nothing in the pleadings in that behalf.

The Governor is invested with quasi-judicial power, and if there be a dispute, the dispute must be decided after holding an inquiry, and the decision must be reached consistantly with the rules of natural justice D and in accordance with the custom of the family.

A bald statement that the "Government are pleased to recognise Dayaram Bapu son cf Ballarsjlah Bapu as the Zamindar of Dhanora Zamindari" does not diclose the reason for rejecting the claim of Pratapshah who according to the custom of the family was "the nearest male relative".

There is no evidence on the record that E the Governor was even aware that there were other claim9.!lts and if he was aware what their claims were and that the Governor had considered those claims before recognizing the claim of Dayaram.

In the absence of any evidence that the order was made by the Governor in exercise of the power conferred by the Chanda Patent it is unnecessary to consider whether any order made by r the Governor is iin exercise or the powers Of the patent e:itcludes the jurisdiction of the civil court.

The decision of Governor was apparently reached without any inquiry and was plainly. cotrary to the rules of. Hindu Law and the custom of the family m the light of which alone the Governor was by the express mandate competent to adjudicate the claim.

G It is true that there were 'mutation .proceedings in regard to the Zamindari before the N aib Tahsildar Garchiroli Tahsil. The Naib Tahsilda~ by his order dated May 9, 1951 held that the dispute relating to the mutation was raised by Pratapshah, that Amarshah had died issueless, that the genealogical tree set up by Daulatshah son of Pratapshah was incorrect being unsupported H by reliable evidence, that copies of settlement of 1867 were mere statements of interested persons, that the genealogical tree filed by Dayaram resembled the genealogical tree filed by Pratapshah

.4"

<--

and was held to be genuine, that Amarshah had clearly admitted in his statement that Dayaram was entitled to succeed to the Zamindari after him and that Dayaram was the nearest male kinsman to the deceased Amarshah. This decision of the Naib Tahsildar proceeded upon a genealogy produced by Dayaram which on the findings of the Trial Court as well as the High Col,\tt in this case is incorrect.

The decision of . .the Naib Tahsildar in a mutation proceeding even as a piece of evidence has. little evidentiary value when it is founded on a material piece of evidence which was untrue.

The proceedings were carried in appeal before the Deputy Commissioner. The Deputy Commissioner confirmed the order by his decision dated August 8, 1951. He also accepted the genealogy set up by Dayaram and held that there were no other nearer male descendants in the branch and that Pratapshah was one degr>e more removed 1than Dayaram. In view of the infirmity atta'chin~ to the genealogy relied upon by the Revenue Officer that decision has also little evidentiary v•lue.

The orders passed by the Governor and the revenue authorities do not exclude the jurisdiction of the civil c; ourt to decide the question of kinship.

In that view we agree with the High Court that the Zamindari originally confirmed in favour of Sitaram must according to the tenure as recorded in the Wajib-ul-arz devolve upon the first plaintiff Dawalatshah to the exclusion of the first defendant Dayaram.

The right in Malguzari land was since the, death of Amarshah extinguished by the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act 1 of 1951. The Malguzarl lands are by the devise contained in the will dated December 3, 19SO given to the plaintiffs.

Compensation in respect of the lands would therefore belong to the plaintiffs.

But it 1s urged that notwithstanding the devise, because of the order of the Claim Officer under Section 14 of Act 1 of 19Sl, the plain tiffs were not entitled to agitate the question of heirship. It is enacted by s. 3 of the Act that on and from a date to be specified by a notification by the State Government in .that behalf, all proprietary rightsin an estate, mahal, alienated viJlage or alienated land as .the case may be, in the area specified in the notification, ve, sting m a propretor of such es!ate, mahal, alienated village,

a~1enated land, or m a person havmg interest in such proprietary nght through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the

State free of all encumbrances. Section 4 sets out of the ccinSequences o~ the. ves!ing of the land in the ovemment by virtue of the nottficatton issued under s. 3.

Section 8 provides for assessment of compensation payable to every proprietor, who 'is

3-L807SupCI/71

divested of proprietary rights.

The compensation is to be determined in accordance with the rules contained in Sch. I.

Section 12 requires that a proprietor who is divested of proprietary rights by virtue of a notification issued under s. 3 shall, within such period as may be prescribed, file a statement of claim in the prescribed form and specify the particulars mentioned therein.

Section 13 authorises the Compensation Officer to determine the amount of compensation.

Section 14 provides :

" ( 1 ) If during the course of an enquiry by the Compensation Officer, any question is raised regarding the proprietary right in any property divested under Sec. 3 and such question has not already been determined by a court of competent jurisdiction. the Compensation Officer shall proceed to enquire summarily into the merits of such question and pass such orders as he thinks fit."

( 2) The order of the Compensation Officer under sub-section ( 1) shall not be subject to any appeal or revision, but any party may, within two months fo•m the date of such order. institute a suit in the civil court to have the order set aside, and the decision of such court shall be binding on the Compensation Officer, but subject to the result of such suit, if any, the Compensation Officer shall be final and conclusive".

Counsel for Dayaram urged that the Compensation Officer had decided by his Order dated August 30, 1951 that compensation in respect of the M alguzari land was payable to Dayaram and since no suit was filed by the plaintiffs for setting aside that decision. the order of the Compensation Officer became final and conclusive and could :not be reopened in a suit filed more than

six years after that date.

We are unable to accept that contention.

The Compensation Officer is entitled to decide a question only regarding the proprietary right in the property divested under s. 3.

He is not concerned with determination of any question relating to a private dispute between two or more persons who make competing clailllS in the matter of compensation, relying upon their respective titles.

A question regarding the proprietary rights may in ordinary course be raised only in a claim against the State, and if that claim be decided against the claimant in a summary inquiry held by the Compensation Officer, a suit to set aside the decision must be filed within two months from that date and if no suit is filed, the order becomes final and conclusive.

S. 14 was enacted with a view to put an end to disputes with regard to the claims to proprietary rights which by

,, ' ";';/

virtue of the notilication issued under s. 3 are extinguished.

It is not intended by an Order under section 14 to determine complicated questions of title by the adjudication of a revenue officer in a summary inquiry without even a right of appeal and to make his adjudication conclusive unless a suit be filed within two months from the date of the order.

That is also clear from the terms of s. 35(7) of Act 1 of 1951 which provides:

"The payment of compensation under this Act to the creditors of a proprietor or to the proprietor in accordance with the prescribed manner shall be a full discharge of the State Government from all liability to pay compensation for the divesting of proprietary rights, but shall not prejudice any rights in respect of the said rights to which any other person may be entitled by due process of law to enforce against the person to whom compensation has been paid as aforesaid".

The Civil Court is declared competent to determine disputed questions with regard to title to compensation.

We agree with the High Court thats. 14 of Act 1 of 1951 does not invest the Compensation Officer with jurisdiction to determine competing claims of persons claiming proprietary rights to the property vesting in the Government by the operation of s. 3 of the Act.

Section 14 is intended to determine only the proprietary rights in the land qua the State.

Finally it was urge, d that the Trial Court granted Rs. 10,0001as mesne profits, and even though the High Court disallowe<J, the claim of the plaintiffs with regard to certain items no reduction was made in the total amount of mesne profits awarded corresponding to the claim disallowed.

Counsel for the plaintiffs concedes that the High Court was in error in not reducing the amount of mesne profits awardable to the plaintiffs.

He agrees that mstead of the figure of Rs. 10,000/- awardable to the plaintiff Rs. 8,000/- should be substituted.

We modify the mesne profits awarded.

Subject to this modification, this appeal fails and is dismissed with costs.

K.B.N.

Appeal dismissed.

DAYARAM & ORS

DAWALATSHAH ?!< ORS

January 8, 1971

C. SHAH, C.J.

K. S. HEGDE

A. N. GROVER, JJ.

SS. 3, 14

S. 14

s. 14

Section 14

s. 3

Section 14

Bombay High Court, Nagpur Bench

K. Rajendra Chaudhuri

K. R.

Chaudhuri

M. N. Phadke

A. G. Ratnaparkhi

Shah

C.J. Dawalatshah

Ranwirshah

Sitaram Thakur

Bhakta Thakur

Sakru

Kajur

Hiru

Gangashah

Amarshah

Sitaram

Pratapshah

Zamindari

Dayaram

Dayaram

December 8, 1950

High Court of Bombay

Dhanora Zamindari

Dayaram

Chanda

December 3, 1950

Ratnabai

Chanda District

Chattarshah

Dhanora

Sitram

Awwal Haqq

November 2, 1867

Sitaram Thakur

Aitchison

Zamindar

Zamindar

Watan Zamindar

C. B. Lucie Smith

Lucie Smith

Gond

Maratta Government

India

Government of India

Bala ghat district

Chutteesgurh

Bhakta

B Dayaram

Raju

Hanmantrao

Diwakarrao

September 8, 1932

Pratapshah

Chanda

Dayaram Bapu

Ballarshah Bapu Raj Gond

Ballarsjlah Bapu

Daulatshah

August 8, 1951

Dawalatshah

December 3, 19SO

Section 14

s. 3

Section 4

s. 3

Section 8

Section 12

s. 3

Section 13

Section 14

Sec. 3

August 30, 1951

s. 3

S. 14

s. 3

section 14

s. 35(7)

s. 3

Section 14


:340

RAM GOBINDA DA WAN & ORS.

SMT., BHAKTABALA

Janitary 8, 1971

[J. M. SHELAT AND C. A. VAJDIALINGAM, JJ.]

Practice-Re~ judicata- Land acquisitiod proceedings-Claim of one party to compensation dismissed for default-Acquisition of other plots -Interest of parties same-Claim of title-If erlier decision operates as res judicata.

Certain plots in a Municipality were acquired under the Land Acqui- •ition Act, 1894, and the predecessor of the appellants and the predeces- Eor of the respondents, each claimed the compensation amount on the basis of title. The matter was referred to the Court of the District Judge.

The claim of the predecessor of the respondents was dismissed for default and the claim of the predecessor of the appellants was therefore upheld.

O:rtain other plots pe'rtaining to thr same title and interest were later .acquired and th• question arose as to whether appellants or respondents

were entitled to the compensation.

Since the test of res judicata is the identity of _title in tht two litigations and not the identity of the actuai property involved, the appellants pleaded that the earlier decision by the District Jud11e operated as res judicata.

HELD : The earlier decision did not operate as res judicata against ihc respondents insmuch as the matter was not heard and finally decided on merits after contest. If a matter was heard and finally decided on merits, then such a decision operates as res judicata, even though an appeal against the decision was dismissed on a preliminary round such a1 limitation default in printin1, or default of appears.nee! because, it .amounts to the appeal havin11 been heard and finally deeded on the

merits whatever might have been the around of dismi11al of the appeal, and has the effect of confirming the decision of the trial court on merits. '.But If there hacl been no contest, no hearing and final decl1Jon by any court, at any stage, the decision would not operate a1 rts /udlcata. [350 AEl .

Raj Laksml Dasi & Or.. v, Banamall Sen & Ors., [1953] S.C.R. 154,

•Pulvrthl Benkata Subba Rao & Ors. v. Yalluri Jagannadha Rao & Ors., [1964]

2 S.C.R. 310 and Sheodan Singh v. Smt. Daryao Kunwar, [ 19661 3 S.C.R. 300. referred to. .

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 436 and

G 437 of 1967.

Appeals from the judgmenv and decrees dated March 27, 1962 of the Calcutta High Court in First Appeals Nos. 311 and 312 of 1956.

D. N. Mukher; ee, for the appellants (in all the appeals).

The respondent did not appear.

G ..

R. G. DAWAN v. BHAKTABALA (Vaidialingam, J.) 341

The Judgment of the Court was delivered by Valdlaliugam, J, Theiie two appeals on certificate are directed against the judgment of the Calcutta High Court dated March 27, 1962 in First Appeals from the Original Decree Nos. 311 ano 312 of 1956.

Two plots of land bearing No. 936 of Mouza Asansol a.nd plot No. 9202 of Mouza Asansol Municipality were acquired under the Land Acquisition Act. The notification under s. 4 of the Land Acquisition Act dated December 13, 1947 was published in the Calcutta Gazette of 25th December, 194 7. The declaration under s. 6 dated December 30, 1947 was published in the Calcutta Gazette on 8th January, 1948. For plot No. 936 of Mouza Asansol measuring about 31 acres, the Land Acquisition Collector awarded a total compensation of Rs. 1707 I - including Rs. 1 J.- 1/6 on account of the .landlord's interest. The entire compensation in respect of this plot was directed to be paid to Bhaktabala Dasi, the sole respondent in Civil Appeal No. 436 of 1967. In respect of plot No. 9202 of Mouza Asansol Municipality, the Land Acquisition Officer awarded as compensation a sum of Rs. 825/15/6 including Rs. 6/5/6 on account of the landlord's interest. This entire amount of compensation was directed to b~

paid to Bhaktabala Dasi and her sister Subasini Dasi.

It may be mentioned that Bhaktabala Dasi is the first respondent and on the death of Subasini Dasi, her son Sunil Kumar Roy, who has been impleaded in the proceedings is the second respondent in Civil Appeal No. 437 of 1967. Before the Land Acquisition Collector, in respect of both these plots, one Kashi Nath Dawn claimed title to the land and as such to the er.tire compensation amount. The appellants in these two appeals are the legal representatives oi Kashi Nath Dawn.

The case of Kashi Nath Dawn was that both the plots of land belonged to Panchanan Roy. husband of Sutiasini Dasi, against whom a money. decree had been obtained b} one J atin Kumar Roy. In executtol) of the money decree (Execution Case No 120 of 1929. Subordinate Judge's Court, Asansol), the deiiree-h0ider &ought these t":'o items and certain other properties to sale. Kashi Nath Dawn claimed to have -purchased these items in the Court sale and obtained the sale certificate Ex. 2. The sale was confirmed on November 27. 1930 and delivery of possession was also taken ?n December .10. 1930. It was on the strength of this purchase m Court auction that Kashi Nath Dawn claimed title to the two plots.

The. case of Bhaktabala Dasi, who alone contested the claim of Kash1 Nath Dawn was briefly as follows : Panchanan Roy had

no title to the properties and that on the other , hand they belonged to Ramanugraha Roy, who died leaving his widow Manmohini and furee daughters, Santabala, Subasini and Bhaktabala. On the death of Ramai:mgraha Roy, his widqw.Marunohini succeeded to the property as life estate holder. As Santabala died shortly after

her father's death, the properties devolved on the, other two sisters namely, Subasini and Bhaktabala, on the death of Manmohini B Panchanan Roy had married Santabala and on her death he married her sister Subasini. Panchanain Roy during the life time

of his mother-in-law Manmohini was allowed to manage the properties. In the settlement proceedings of 1918-21 he surreptitiously got his name recorded as owner of one half share in the estate of his father-in-law in Mouza Asansol aind of the entire interest in Mouza Asansol Municipality.

Panchanan Roy was never in possession and enjoyment of the properties whereas Manmohiini Dasi during her lifo time and on her death her daughter Subasini and Bhaktabala were in possession and enjoyment.

There was a partition between the two sisters of Mouza Asansol property and in consequence plot No. 936 of Mouza Asansol was obtained as her share by Bhaktabala Dasi. It was D on this bas.is that Bhaktabaia Dasi claimed exclusive title to plot No. 936 and the right tci receive the entire compensation amount for that land. She claimed that in respect of plot No. 9202 of Mouza Asansol Municipality, she and her sister Subasini Dasi, had a title to half share each and asserted the right to receive compensation on that basis.

E In view of the dispute regarding right to receive the compe11sation amount, the Land Acquisition Collector-referred the matter to the Additional District Judge, Burdwan for determination of the said dispute.

The stand taken before th,. Land Acquisition Collector was reiterated before the learned Additional District Jµdge.

With re.ference to plot No"936 of Mouza Asainsol, the learned Additional District Judge held that Panchanan Roy had wrongfully and fraudulently got recorded his name as owner of

the half share when he was managing the property on behalf of his mother-in-law Manmohi.ni widow of Ramanugraha Roy. The Court further held . that Panchanan Roy was never in possession and enjoyment of both the plots in question. Regarding plotNo. G 9202 of Mouza Asansol Municipality, it was held that Jong before the sale in Execution Case No. 120 of 1929, the Katiyans and the maps had been published and they conclusively .show that Mouza Asansol Municipality was a Mouza different from Mouza Asansol with different J.L. number. The sale certificate Ex. 2 under which Kashi Nath Dawn claimed title was scrutinized by the Court which held that the description of the various items clearly showed that no land of Mouza Asansol Municipality was included therein. The Court did not also accept the claim of Kashi Nath

,. •

• \

R. G. DAWAN v. BHAKTABALA (Vaidia/ingam, J.) 343

Dawn that for the purpose of C. S. operation only the lands within Mouza Asansol Municipality were separately recorded and that they were also i!ncluded within Mouza Asansol. In this view the learned Additional District Judge held that Kashi Nath Dawn did not purchase in the court sale any plot of land within Mouza Asansol Municipality and as such he had no title to plot No. 9202.

The court accepted the plea of Bhaktabala Dasi that she and her sister Subasini Dasi were entitled to the compensation amount in equal shares. Finally the Additional District 'Judge held that Kashi Nath Dawn was r.ot entitled to claim any portion of the compensation amount in respect of the two plots.

Kashi Nath Dawn filed two appeals before the Calcutta High Court, being First Appeals Nos. 311 and 312 of 1956. As the Land Acquisition Collector had made separate references in respect of each of the plots and as the two references were disposed of separately, though by a common judgment, two 1jppeals were filed in the Jiigh Court. The First Appeal No. 311 of 1956 related to plot No. 936 and First Appeal No. 312 of 1956 related to plot No. 9202. At this stage it may be mentioned that Civil Appeals No. 436 and 437 of 1967 against the decision of the High Court in First Appeals Nos. 311 and 312 of 1956 respectively.

The High Court did not agree with the learned Additional District Judge that Panchanan Roy had fraudulently got his name entered in the settlement re11ister as owner of half share in plot No. 936.

It is the view of the High Court that the plea set up by Bhaktabala Dasi that she was absolutely entitled. to the said item has not been substa,11tiated.

The High Court held that the settlement register established that Panchanan Roy's name has been recorded as owner of half share and Manmohini as the owner of another half share in the properties owned by Ramanugraha Roy in Mouza Asansol and that there was no fraud on the part of Panchanan Roy in having his name so entered. The High Court further held that in the court sale, Kashi Nath Dawn had purchased the half share owned by Panchanan R"i:iy in Mouza Asansol and as such he had title to half share in plot No. 936 notwithstanding the fact that Kashi Nath Dawn was not able to establish that Panchanan Roy was in possession and actual enjoyment of his half share. In this view the High Court modified the decree of the ]earned Additional District Judge and held that in respect of plotNo: 936 both Kashi Nath Dawn and Bhaktabala Dasi were entitled to half share each and in that proportion were also entitled to the compensation amount. As the fulJ ri!;!ht of Kashi Nath Dawn in plot No: 936 was not recognised by the High Court. Civil Appeal No. 436 of

J 967 has been filed.

Regarding plot No. 9202 the High Court areed with the Land Acquisition Court and held that in the court sale, Kashi

A Nath Dawn had not purchased any property in Mouza Asansol Municipality and therefore he had no title thereto.

The claim that Panchanan Roy was in possession of this plot was also rejected. A plea of res judicata raised by Kashi Nath Dawn based upon Ex. 7 the decree of the Land Acquisition Case No. 242 of 1938, with reference to plot No. 9202, was also Pjected by the High Court.

The lequest for adducing additional evidence made on B behalf of Kashi Nath Dawn was also rejected'by the High Court.

In consequence First Appeal No. 312 of 1956 was dismissed against which Civil Appeal No. 437 of 1967 has been filed.

We will first take up the claim of full ownership made by Kashi Nath Dawn in respect of plot No. 936 of Mouza Asansol, c which is.the subject of Civil Appeal No. 436 of 1967.

Mr. Dr, N. Mukherjee, learned counsel for the appellants, who, as we have stated earlier, are the legal representatives of deceased Kashi Nath Dawn, urged that the High Court .. should h!!ve acctheptefd1 t 1 he pleahade bthy' Kas1 hi NThath Dawn that hede whas enhtitled D ( to e u owners 1p of 1s p ot. e counsel urg t at t e relevant entries )n the settlement registers have not been properly construed by the High Court.

According to him all the rights which Ramanugraha Roy had in plot No. 936 of Mouza Asansol had accrued to Panchanan Roy, whose rights had been purchased by Kashi Nath.Dawn in court sale. The High Court having held that there was no fraud, perpetrated by Panchanan Roy i11 having E his ; n'ame entered in the. settlement registers, the full rights of Panchanan :Rov in plot No. 936 as the original owner and of Kashi Nath Dawn as purchaser in court.sale should have been upheld.

We are illOt inclined to accept this contention of th'e learned counsel. No doubt, the learned District Judge held tht P; mchanan F Roy fraudulently got his name. entered in the settlement registers when he }Vas in managemenFof the properties during the life time of Manmohini, widow of Ramanugraha Roy.

This finding was not accepted by the High Court. The High Court has considered the recitals in Ex. A, the Settlement Khatian No. 16 of Mauza Asansol which is also a khatian in respect of the permanent ten- G ute Jagir Nakari Ramakrishna Roy. The High Court has adverted to the fact that in.Ex. A the holders are divided into 17 groups but the holders of 'ka' group were described as Manmohini wife of Ramanugraha Roy and Panchanan Roy s/o Umesh Chandra Roy.

These two persons were also described as being entitled to 8 g. 1 k. 15 tils each. Plot No. 936 has been .found to be one of the plots recorded as in khas psio, n of 'ka' .group in Ex. A.

It is H on this basis that tl\e High Court differing from the learned Dis- \ trict Judge held that Panchanan Roy had been the owner of half '

\ H -

R. G. DAWAN v. BHAKTABALA (Vaid1'alingam, l.) 345

share in thiS plot and Kashj Nath Dawn .as purchaser of this halt share of Panchanan Roy was entitled to half of the compensation pmount. Mr. Mukherjee was not able to satisfi as to how Kashi Nath Dawn was entitled .to full ownership of plot No. 936. We arein agreement with the decision of the High Court on this point; and as such hold that there is no merit in Civil Appeal No. 436 of 1967.

Com; ng to plot No. 9202 of Mouza Asansol Mwiicipality Mr.

D. N. Mukherjee raised two coPtentions: (i) the Hjgh Court was. in error in holding that Ex. 2, the sale. certificate does not take in this item and (ii) the claim of the respondent was barred by res judicata, by. the decree of the Land Acquisition Court Ex. 7 and the High Court was again .in error in holding that there is no bar of res-judicata.

So far as the first contention is concerned, it is an attack on . a finding of fact recorded by the High Court. We have already pointed out that even the Land Acquisition Court held that Kashi Nath Dawn did not purchase in the court sale any property of

Pancha.nan Roy in Mouza Asansol Municipality, The High Court has agreed with this finding. The entire claim of title in respect of both the items was based on the sale certificate Ex. 2. Both the District Judge and the High Court have held that what was sold in court sale was only the interest of Panchanan Roy in the permanent tenure in respet of Mouza Asansol and not in respect of any other Mouza. The High Court has further held that Mouza Asansol Municipality and Mouza Asansol were different entities even from about 1896 and the court sale which took place in or about 1930 related only to ihe properties in Mouza Asansol. The description of the properties given in the sale certificate Ex. 2, according to the High Court, clearly establishes that what was sold in court auction a.nd purchased by Kashi Nath Dawn was only the property that was situated in Mouza Asansol as defined by the District Settlement Operations and not a different -Mouza Asansol as it might have existed prior to 1896. The High Court has gone more elaborately into this aspect than the District Court and held that Kashi Nath Dawn did not purchase in the court auction any property of Panchanan Roy in Mouza Asansol Mni cipality. We find no flaw in the finding of the High Court. Therefore, on this findhng it follows that Kashi Nath Dawn, through whom the appellants claimed, had no right, title or interest in plot No. 9202. .

Faced with this situation Mr. Mukherjee raised his second contention that the claims of Bhaktabala Dasi and her sister Subasini Dasi were barred by res-iudicata.

The bar of res-judicata is pleaded as follows : Certain other plots in Mouza Asansol Municipality were acquired under the Land Acquisition Act and there was a dispute regarding the persons entitled to compensation amount.

Kashi Nath Dawn macfe a claim for payment of the full compensation as the owr of those plots.

That claim was resisted by Subasi.ni Dasi and her sons and they claimed in turn to be entitled to the compensation amount. . But the Land Acquisition Court upheld the claim of Kashi Nath' Dawn and that decree has become final. Under Ex. 7 the title of Kashi Nath D; iwn in the properties of Monza Asansol Municipality having been recognised, it was no longer open to the respondtmts herein to urge that Kashi Nath Dawn had no title to plot No. 9202, which is situated in Monza Asansol Municipality.

The High Court had rejected fhis plea on the ground that the daims of. Subasini Dasi in the prior land acquisition proceediiigs

having been dismissed for default, would not prevent her from claiming title to other plots pertaining to the same interest inasmuch as the question of ownership of the interest as a whole was not heard and dedded.

M1 Mukherjee, learned counsel for the appellants attacks this reasoning of the High Court as fallacious. He urged that Subasini Dasi and her sons havi.ng made a claim before the Land Acquisition Court for payment of compensation on the basis of their title, which was rejected are not entitled to put forward. any further claim to this item. This plea of res-judicata raised by Mr.

Mukherjee has to be approached from !Wo points of view : (i) as a. bar against Bhaktabala Dasi and (ii) as a bar against Subasini Dasi. We have already referred to the case set up by Bhaktabala Dasi regarding the interest of herself and her sister Subasini Dasi in plot No. 9202. This ca_se has been accepted by both the courts.

From the nature of the claim, it is clear that Bhaktabala Dasi was not Claiming any title through Subasini Dasi, on the other hand .she was claiming half share -in her own right as the daughier of Ramanugraha Roy and according tc her. her sister Subasini Dasi was also entitled to an equal share. Bhaktabala Dasi, it is admitted, was not a party to the decree Ex. 7. If that is so, there is no question of any bar of res-judicata so far , as half share of Bhaktabala Dasi is concerned. Then the question is whether the claim of Subasini Dasi to half share in this item is barred by Ex.

7. If the appellants' contention in this regard is accepted, they will be entitled to at least claim the half share of Subasini Dasi in plot No. 9202. Now it is necessary to refer to the nature of the proceedings covered by Ex. 7.

Nine plots of land referred to therein and situate in Monza Asansol Municipality appear to have been acquired under the Land Acquisition Act for the expansion of a road level crossin!(. There appear to have been disputes amongst various parties with regard to right to receive coll}pensa-

..,,,,

R. G. DAWAN r. BHAKTABALA (Vaidlalingam, J.) 347

tion and therefore the matter was referred to the Court of the District Judge.

Burdwan in Land Acquisition Case No .. 42 of

1938. Neither the actual pleadings in order to ascertam the nature of the claim that was made by the parties oor the judgment in the land acquisition case have been filed in these procedings.

The only document that has been filed is the decree Ex. 7. From the decree it is seen that Kashi Nath Dawn was party No. 7 a.nd

SubilSini D11J>i and her sons were parties Nos. 9 to 12. Par.ties Nos. 9 to 12 claimed compensation amount as against party No. 7, and the claim of Subasini Dasi was dismissed for default by the learned Distriot Judge under Ex. 7 dated March 3, 1939 and the result of the decision was that the claim of Kashi Nath Dawn was upheld and that of Bubasini Dasi and her sons was rejected, though on default.

Mr. Mukherjee, learned counsel for the appellants has urged that the same title to the property which was in dispute and deCiaed in Ex .. 7 in favour of Kashi Nath Dawn again arises for c011sideration in these proceedings. The title of Subasini Dasi having been~ rejected by the court cannot again be t.he subject matter of a ftesh adjudication. We are not inclined to accept the contention of Mr. Mukherjee that Ex. 7 operates as res-judicata in respect of the claim even of Subasini Dasi and her sons in respect of half share claimed in plot No. 9202. Though it is true that Subasini Dasi appears to have contested the claim of Kashi Nath Dawn in the proceedi:ngs leading upto Ex. 7, in our opinion, it cannot be &iid that in those proceedings the issue as to title was heard and finally decided. We have already pointed out that the claim of Subasini Dasi was dismissed for default. ·

Mr. Mukherjee drew our attention to certain decisioni; and urged that the decision of the Land AcquisitiOjll Court lllperlites as

11es judicata; He further urged that even though the property in the previous land acquisition proceeqings may have been of a very small extent, when once the title to the compensation amount which really relates to the nature of the title to the property has been raised ll!lld decided, that decision will operate as res-judicata.

The propositicn enunciated by Mr. Mukherjee and set out .above as such are beyond controversy but we are of the opinion that the facts before us are totally different. ·

We will now advert to the decisions cited by Mr. Mukherjee.

In Raj Lakshmi Dasi and others v. Banama/i Sen a,.d others(')

this Court had to consider the question whether a previous.. decision on title in land acquisition proceedings operated as resc

judicata in a subsequent suit between the same parties when the

(I) [1953! S.C.R. 154.

questio; n of title was again raised. The facts in that case were briefly as follows : Certain properties were acquired in land acquisition proceedings and the; e was a triangular contest about the right to receive compensation between A and B, the rival olaimants, ll{nd C, a mortgagee from B. All the parties required the question of apportionment to be referred to the Land Acquisition Court. The court decided the ql:i, estion of title in favour of B after contest. This decision was confit; med by the High Court on appeal.

That means that the title of 8 and his mortgagee C to receive compensation amount was upheld by the Land Acquisition Court a; nd the High Court. A took the matter to the-, Privy Cou. 1cii1 which reversed the decision of the High Court and the Land Acquisition Court and the title of B and C were negatived.

In a subsequent suit between the same parties the question of title was again raised and this Court held that the decision of the Privy

Counci'I opi;_rated as res-judicata in respect (lf the subsequent proceedings notwithstanding the fact that B and his mortgagee C did not appear before the Privy Council and their claim was rejected in default.

Considerable reliance has been placed by Mr.

Mukherjee on this decision in support of his contention that Ex. 7 though a decision given against Subasini basi and hr sons in default of tJ-..ir appearance operates res-judicata.

In our opinion, the decision of this Court referred to itbove does not assist the appellants.

It is now well established that where a dispute as to title to receive compensation amolJlllt has been refrred to a court, a decree thereon not appealed from renders the question of title res-judicata in a suit between the sa.me parties to the dispute.

A party in such circumstances cannot be heard to say that the value of the subject matter on which the former decision was pronounced was comparatively so trifling that it was not worth their while to appeal from it. It is true tha't the test of resjudicata is the identity of title in the two litigations and not the identity of the actual property involved in the two cases but the previous decision must be one on a title in respect of which a dispute has been 1t:ais'ed and which dispute was heard and firially decided by the court.

IHs interesting to note tbat though it was urged that the decision of the Privy Council was given fo default of appearance of 'B and his mortgagee C and therefore the said decision will not operate as. res-judicata, this Court did not hold that a decision given even in the first instance in default of appearance of a party will operate as res-judicata. On the other hand, this Court categorically held that C, the mortgagee had fought out the title of mortgagor B, both before the Land. Acquisition Court and the High Court and had obtained-ajudgment in his favour after a fu!l con lest.

F •

R. G. DAWAN v. BHAKTABALA (Vaidialingam, J.) 349

It is the view of this Court that the mere fact that the mortgagee did not choose to appear before the Privy Cou; ncil and the decision of the Privy Council was given in the absen£e of the mortgagee, is of no consequence as the decisions of the High Court and the District Court have been given after contest. Therefore it will be seen that the decision of this Court relied on by Mr.

B Mukherjee is no authority for the wide proposition that evtm if there has been no hearing and final decision by any court at any stage, after contest, the decision will operate as res-judicata.

For an earlier decision to operate as res-judicata it has been held by this Court in Pulavarthi Venkata Subba Rao and others

v. Valluri Jagannadha Rao and others(') that the same must have bee, ti on a matter which was 'heard and finally decided'.

In Sheodan Singfl v. Smt. Daryao Kunwar(') the question whether a decjsion given by the High Court dismissing certain appeal on the ground of limitation or on the ground that the party had not taken ste12s to prosecute the appeal operates as resjudicata, was considered by this Court. In that cas\l A had instituted against B two suits asserting title to a certain property. B contested those claims and also instituted two other suits to establish his title to the same property as against A.

A's suits were decreed and B's suits were dismissed; B filed four appeals, two appeals against the decision given in A's suits and two appeals against the dismissal of his two suits. It is seen that all the appeals were taken oin the file of the High Court but the two appeals filed by B against the decision in the suits instituted by him were dismissed by the High Court on the groll!Ilds that one was filed beyond the period of limitation and the other for non-prosecution.

At the final hearing the' High Court took the view that the dismissal of B's two appeals, referred to above, operated as res- .iudicata in the two appeals fited by B against the decision in A's suits on the question of title to the property. It was urged before this Court on behalf of B that the dismissal of his appeals on the grounds of limitation and non-prosecution by the High Court does not operate a~ res-judicata as the High Court cannot be considered to have 'heard and finally decided' the question of title.

This contention was not accepted. This Court referred to instances where a fc, rmer suit was dismissed by a trial court for want of jurisdiction or for default of plaintiff's appearance etc. and pointed out that in respect of such class of cases, the decision :not being on merits, would not be res-judicata in a subsequent suit. It was further pointed out that none of those cQ!lSiderations apply to a case where a decision is given on the merits by the trial court and the matter is taken in appeal arul: the appeal is dismis.sed on some

(I) [1964] 2 S.C.R. 310.

A preliminary ground, like limitation or default in prhlting. It was held that such dismissal 'by an avpellate court has the effect of cql?finning the decision of the trial court on merits, and that it "amo.unts to. the appeal being heard and finally decided on the merits whatever may be the ground for dismisse, l of the appeal".

It will be sn from the above reasoning that in order to operate B as resjudicata, the previous decision must have been given after the matter was heard and finally decided on merits. This Court has further held that the High Court, in that case, when it dismissed the two appeals in question, though on a preliminary ground of limitation or default in printing must be considered to have heard and finally decided on merits.

Far from supporting Mr. Mukherjee's contention that a decision given in default of appearance under any circumstance, operates as re§-judicata, the above decision lays down clearly that a previous decision to operate as res-judicata must be one in a case heard and finally decided on merits.

To conclude Ex. 7, i; n our opinion, does not operate as res-judicata even against the claim of Subasini Dasi and her sons inasmuch as the matter was not heard and finally decided on merits after contest by the Land Acquisition Court. We have already pointed out that if the plea of res-judicata is not accepted the decision of the two courts regarding Subasini Dasi's having in plot No. 9202 half share will have also to be sustained.

In the result the appeals fail and are dismissed. As there is no appearance for the respondents, there will be no order as to costs.

V.P.S.

Appeals dismissed.

340

RAM GOBINDA DA WAN & ORS

BHAKTABALA

Janitary 8, 1971

M. SHELAT

[1964]

2 S.C.R. 310

CIVIL APPELLATE JURISDICTION

D. N. Mukher

Valdlaliugam

Calcutta High Court

s. 4

December 13, 1947

s. 6

December 30, 1947

8th January, 1948

Bhaktabala Dasi

Mouza Asansol Municipality

Subasini Dasi

Bhaktabala Dasi

Sunil Kumar Roy

Kashi Nath Dawn

Panchanan Roy

Sutiasini Dasi

J atin Kumar Roy

Subordinate Judge's Court, Asansol

November 27. 1930

December .10. 1930

Kash1 Nath Dawn

Ramanugraha Roy

Manmohini

Santabala

Subasini

Bhaktabala

Ramai

:mgraha Roy

Marunohini

Manmohini B Panchanan Roy

Subasini. Panchanain Roy

Mouza Asansol

Manmohiini Dasi

Bhaktabaia Dasi

Additional District Judge, Burdwan

Mouza Asainsol

Manmohi.ni widow

Mouza Asansol Municipality

Kashi Nath

Mouza Asansol

Kashi Nath Dawn

Panchanan R"i

Kashi

A Nath Dawn

N. Mukherjee

Panchanan :Rov

mchanan F Roy

Mauza Asansol

Jagir Nakari Ramakrishna Roy

Umesh Chandra Roy

Kashj Nath Dawn

Mukherjee

Mouza Asansol Mwiicipality

D. N. Mukherjee

Pancha.nan Roy

Mouza Asansol Mni cipality

Subasi.ni Dasi

Kashi Nath' Dawn

Kashi Nath D

Monza Asansol Municipality

Monza Asansol Municipality

Mukherjee

R. G. DAWAN

Vaidlalingam

SubilSini

March 3, 1939

Bubasini Dasi

Subasini basi

B Mukherjee

[1964] 2 S.C.R. 310


INDIAN ALUMINIUM CO. LTD. v.

COMMISSIONER OF INCOME TAX, WEST B.ENGAL

January 12, 1971

(K. S. HEGDE AND A. N. GROVEi\, JJ.J

Income Tax Act, 1922, s. !0(2)(xi) arrd I0(2)(xv)-Fee paid to foreign collabqrator for technical know.fio}v-No provision in contra.cl for payment of tax on fee by Indian Company-Assessee held in default and tcu recovered frofn it-If allowable as business expenditu1'e and deductible.

The appellant Company which was engaged in the manufacture of aluminium products, entered into a contract with another company in Montreal, Canada, for the supply of technical know-how etc. for the development of its production. This agreement provided for payment of a retainer fee by the appellant on an annual basis and there was no condition or stipulation that the fee would be payable by the assessee without deduction of income tax. In 1951 the Income Tax Officer treated the assessee as being in default under section 18(7) of the Income Tax Act, 1922 in respect of a sum of Rs. 1,24,199 which the appellant was

hable to deduct from the payments made to the Montreal Company under the provisions of sections 18(3-A), 18(3-B) and. 18(3-C). The appellant was required to pay this amount and the Montreal Company refused to accept its claim fdr reimbursement.

The appellant claimed the amount as a deduction from its business income under S. 10( 1) or 10(2) (xi) or

I0(2)(xv) of the Act. Although this claim was allowed by the Appellate Assistant Commissioner. the Tribunal, in appeal. held that the amount in

que, stion was neither expenditure incidental to the business nor was it wnolly and exclusively laid out for that purpose: and nor was it claimabie as a ba; I debt in view of the fact that it had not been incurred as a trade debt in the course of the business.

The High Court. upon a reference made to it, held against the a>i.essee. On appeal to this Court,

F HELD : Dismissing the appeal,

(i) It is well settled that a business or trading debt should spring directly from .the carrying on of a business or trade anu shoulu be incidental to it and it cannot be just any loss sustained by the assessee even if it has some Connection with his business. [355 E]

Although the retamer fees were paid by the assessee to the Montreal Company for technical assistance which had a connection with the bu_siness of the assessee it was not possible to regard the amount which the assessee was bound to deduct from the payment made to the Montreal Company under s. 18(3-B) of the Act and which it failed to recover from that company, as a debt which could be deducted under s. !0(2)(xi).

The debt was not incidental to the business because it arose out of noncompliance with the provisions of the Act.

The payment which the assessee made to the income tax authorities and which it failed to recover from the Montreal Company was . more a matter of commercial expediency and proceeded out of motives of business relationship, because the assessee was anxious not to annoy or offend the Montreal Company so as to ayail of its continued teehnial assistance and advice. [355 G]

A. V. Thomas & Co. Ltd. v. Commissioner of Income Tax,. 48 I.T.R. 67 at. p. 75, referred to.

(ii) The assessee was presumed to kriow the relevant, provisions of lhe Act at the time when it entered -into an agreement with the Montreal Company.

There was no provision in the agreement with the Montreal Company which created a contractual obligation on the assessee to make payment of the taxes deductible under s. 18(3, B). A payment made under a statutory obligation, because the assessee was in default, could not constitute expenditure laid out .for the purpose of the assessee's business and was not tlierefore deductible under s. 10(2) (xv). [356 El

Commissioner of Income Tax, Bombay v. M/s. Pannalal Narotamdas & Co, Bombay, 1969 1 J.T.J. 32, distinguished.

CIVIL APPELLATE JURISDICTION : 1967.

Civil Appeal No. 24 of

Appeal by special leave from the judgment and order dated April 27, 1966 of the Calcutta High Court in Income-tax , Reference No. 90 of 1962. ·

M. C. Chag/a, S. R. Banerjee, N. N. 'Goswami and S. N.

Mukherjee, for the appellants.

Jagad{sh Swarup, Solicitor-General, Ram Panjavani and R. N.

Sachthey, for the respondent.

The Judgment of the Coun was delivered by Grover, J. This is an appeal by special leave from a judgment of the Calcutta High Court answering the following question referred to it under s. 66 (I) of the Indian Income-tax Act, 1922, hereinafter called the "Act" in the negative and agains_t the assessee :-

"Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,24, 1991was deductible from the business income of the assessee either under Section 10(1) or 10(2) (xi) or 10(2)(xv) of the Incometax Act?"

The assessee is •a public limited company having its registered -0ffice at Calcu'lta. Its principal business consists of manufacturing aluminium ingots, sheets and such other products from aluminium.

There is another company known by the name of Alumi-· nium Laboratories Limited, Montreal, i; n Canada, hereinafter called the "Montreal Company", which provided the assessee with technical kaow-how, engineering services etc. regarding development of a production of the goods: An agreement was entered into on January 31, 1947 between the-Montreal Company and the assessee. The agreement provided for payment of a retainer fee on an annual basis. There was no condition or stipulation

~ ''

that the fee would be payable by the assessee without deduction. of tax under the provisions of the Act.

The assessee credited a total fee of Rs. 2,50,808/- in favour of the Montreal Company for a period of seven years between the accounting year ending September 30, 1944 and September 30, 1950.

B In 1951 the Income-tax Officer treated the assessee as being in default under s. 18(7) of the Act in respect of the amount of tax wiJich the assessee was liable to deduct from the payments made to the Montreal Company under the provisions of ss, 18(3-A), 18(3-B) and 18(3-C) of the Act. The amount of tax c which was found to be payable by the assessee came to a toal sum of Rs. 1,24, l 991-. The assessec wrote to the Montreal Company asking for reimburBC111ent of the said amount.

The Montreat Company, however, refused to accept the assessee's claim for reimbursement by means <)f a letter dated August 3, 1954. The assessee wrote off the amount of Rs. 1,24,199/- during the rele- D vant previous year ending on December 31, 1954. The assessee appealed to the Appellate Assistant Commissioner who allowed its claim.

The department preferred an appeal to the Tribunal which held that the amount in question was neither expenditure incidental to the business nor was it wholly and exclusively laid' out for that purpose nor was it claimable as a bad debt in view of the fact that it had not been incurred as a trade debt in the E , course of the business.

The departmental appeal was therefore allowed and the order of the Income-tax Officer was restored.

The High Court was of the view that there was a nexus betwp payment and the business of the assessee inasmuch as it had an indirect bearing upon the technical aid which the assessee l):ad

obtained from the Montrealompany but was of the opinion F . that even if the payment had some connection with the business it could not be said to be incidental to it as the liability could have been avoided by the assessee if it had deducted at the source the required amount of income-tax from the retainer fee which was payable to the Montreal Company.

The High Court also considered the question whether the amount paid to the Montreal G Company could be treated as a bad debt 'within the meaning of s. 10(2) (xi) but came to the conclusion that as it had not been advanced as a trading debt in the course of business it was not deductible as a bad debt. According to the High Court the provisions of s. 18(3-B) had not been complied with and since the statutory provisions had been disobeyed and as a result thereof H the assessee had incurred a liability it could not be construed as a part of business expense within the meaning of s. 10(2)(xv} nor could it be said that such an expense was wholly and exclusively laid out for the purpose of the business. 9-L807SuP.Cl/71

,._ /

In order to decide the contentions raised before us it is neces- :sary to refer only to ss. 18 ( 3 -B) and 18 ( 7) of the Act as they .stood at the material time :- ·

S. 18(3-B)-"A, ny person responsible for paying to a person not resident in the territories any interest not being "interest on securities" or any other sum chargeable under the provisions of this Act shall, at the time of payment, unless he is himself liable to pay any income-tax an._d super-tax thereon as an agent, deduct income-tax at the maximum rate. and super-tax at the rate applicable to a company or in accordance with the provisions of sub-clause (b) of sub section (1) of section 17, as the case may be :

Provided tht where the person not resident. is. not a company, the proviso to sub-section (2B) shall apply to the deduction of ineome-tax and super-tax under this sub-section as it applies to the <!eduction of income-tax and super-tax under sub-section (2B) : ' ' Provided further that notbing in this section shall apply. to any payment made in the course of transac. tions in respect of which a person responsible for the payment is deemed unr the first proviso to ection 43 to be an agent of the payee.''

S. 18(7)-"If any such person does not deduct or after deducting fails to pay the tax as required by or under this, section, he, and in the cases specified in sub-

ection (3D) the company of which he is the principal 9fficer sball, without prejudice. to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax."

Provided that .............. " Now the Act contains provisions for collecting taxes in two modes; one is by direct levy and the other by means of deduction at the source.

SeC't[Qn 18 provides for deduction in cases inter alia of "Salaries" ".Interest on securities", "Dividends", interest and other sums chargeable under the Act and paid to non-residts.

There is no dispute that in-the present case the assessee was bound under sub-section (3-B) to deduct the sum chargea.ble under the provisions of the Act at the time of payment of the retainer fees to the Montreal Company.

Under sub-section (7) if the assessee did not deduct the amount of tax as required under the section it was to be deefiled to be in dault in reSpect of 'he tax. The argument raised on Oeh!llf of the apoell; mt is that th~ Montreal Company refused to reimburse it for the payment of the.

amount in questio11 for the reasons stated in the letter dated August 3, 1954.

It was stated in this letter that the Montreal Company was not contractually bound to meet the obJlgation of Indian tax liability. The concluding partion of the letter was as follows :-

"Again, this invqlves a question of principle for us.

If every State to whih we have to render technical assistance, based on the researches carried on by us in our plant and laboratories, starts demanding incometax and super-tax on our charges, no such State could ever receive any technical assistance at all and we ourselyes could hardly affprd to render such technical assistance and the expensive taxes involved. We have given this matter our serious consideration and cannot bring ourselves on any score, equitable, legal contractual, or moral to reimburse to you any monies you may have to pay to the Indian-taxing Authorities." o The claim of the assessee principally is two fold. It is maintained firstly that after the refusal of the Montreal Company in the matter of reimbursement the amount of Rs. 1,24, 1991was written off as a bad and irrecoverable debt. It was, therefore, deductible under s. 10(2) (xi) of the Act.

In the section the debt certainly means something more than a mere advance. It E is something which is related to business or re!ul.ts from it. To be. claimable as a bad and irrecoverable debt it must first be shown as aproper debt. (vide A. V. Thomas & Co. td. v.

Commissioner of lncome-tax( 1). It is well settled that a busi- 1ness or trading debt should spring directly from the carrying on of a business or trads and should be incidental to it and it cannot be just any loss sustained by the assessee even if it has some F connection with his business.

Although it is true that the retainer fees were paid by the assessee to the Montreal Company for technical assis•tance which had a connection with the business of the assessee but it is not possible to regard the amount which the assessee was bound to deduct from the total payment made to the Montreal Company under s. l S ( 3-B) of the Act and which it failed to recover from that company as a debt which could be deducted ooder s. 10 ( 2) (xi). The debt was not incidental to the businesLJiecause it arose out of non-compliance with the provisions Act. The . payment which the assessee made to the income-tair authorities and which it failed to recover frQm the Montreal Company was H more a matter of commercial expediency and proceeded out of motives of business relation-ship because the assessee was anxious

' (I) 48T.T.R.67atp.75.

SUPREME COURT REPORTS [1971 ]3 s.c.Ji.

not to annoy or offend the Montreal Company so as to avail of its continued technical assistance and advice.

Indeed the argument on behalf of the appellant has rested a great deal <ill this aspect of the matter and it has been urged strenuously that the assessee could not afford to displease the Montreal Company as it stood greatly in need of the latter's technical assistance.

Secondly tht; question is whether the assessee could claim deduction under s. 10(2) (xv) of the Act. For that purpose the assessee had to establish that the amount in question had been

wolly and exclusively laid out for the purpose of its business. 01.<r attention has been invited to a decision of the B.:>mbay High Court in Commissioner of Income-tax, Bombay v. M/s. Pamrplµ/

Narotamdas & Co. Bombay('') in which it was @Id that the amount of penalty imposed not for the fault of the assessee but because he had to pay the same for the purpose of getting the goods released from the Customs Aut!lorities could be regarded as wholly and exclusively incurred for the purpose of hise business.

We consider it umlecessary to prnnolljllce on the correctness of this decision. The point which came up for consideration there was altogether different and it can afford no assistance to us in determining whether B!Il amount which an assessee had to pay by virtue of the provisions of the Ast could be regarded as an expense incurred wholly and exclusively for the purpose of the business.

The assessee was presumed to know the relevant provisions of the Act at the time when it entered into an agreement with the Montreal Company. There was no provision in the agreement with the Montreal Company which created a contractual obligation on the assessP.e to make payment of the 1axes deductible under s. 18(3-B). At any rate it is difficult to understand how a payment made under a statutory obligation because the assessee was in default, could constitute expenditure laid out for the purpose of the assessee's business.

We find no reason or justification to interfere with the answer returned by the High Court with the result that the appeal fails and it is dismissed with costs.

R.K.P.S.

Appeal dismissed.

(I) [1969] 1 L.T.J. 3~.

INDIAN ALUMINIUM CO. LTD

January 12, 1971

K. S. HEGDE

Income Tax Act, 1922

Montreal

Canada

section 18(7)

Income Tax Act, 1922

Montreal Company

sections 18(3-A), 18(3-B)

S. 10( 1)

s. 18(3-B)

s. 18(3, B)

s. 10(2)

S. R. Banerjee

N. N. 'Goswami

S. N.

Mukherjee

Jagad{sh Swarup

Ram Panjavani

R. N.

Sachthey

Grover

Calcutta High Court

s. 66

Indian Income-tax Act, 1922

Section 10(1)

Calcu'lta

Alumi-· nium Laboratories Limited

January 31, 1947

September 30, 1944

September 30, 1950

s. 18(7)

Montreal G Company

s. 10(2)

s. 18(3-B)

S. 18(3-B)

section 17

S. 18(7)

August 3, 1954

s. 10(2)

s. 10

s. 10(2)

B.:>mbay High Court

s. 18(3-B)