BARIVANSH LAL VORA

STATE OF MABAJlilB'I'li

March 19, 1971

[G. K. MITTER, K. S. ffEGDE AND P. JAGANMOHAN R.l!ooy, JJ.J

Prevention of Corruption Act 2 of 1941, s. 5(2) read with s. 5(1) (d)- Official sending goods from Goa to Bombay afttr Goa had btcom1 Part of Indian territory w)thout payment of custonu duty-No offence i1 committed bl!cause no 'customs duty was le11iable-Duty can bt levied only by law and not by admini'strative instruction1.

!be appellant was convicted of a charge under s. 5(2) read with s. 5 (I) (d) of the Prevention of Corruption Act. The allegation against him was that by utilising his position as a government' servant he sent variou1

articles such as Radios, Transistors, Qothes etc., from Goa to Bombay without paying customs duty thereon.

Against tho order of the High Court maintaining his conviction appeal was .filed in this Court. The que1tion for consideration was whether any customs duty was lcviable on goods alleged to have been sent by the appellant to Bombay from Goa which when the goods were sent, had become a parl of India.

HELD: Goa was liberated on December 20, 1961. The twelfth amendment to the Constitution which received the assent of the President on 27th March 1962 made Goa a part of India.

All territories that this country may acquire in whatever manner become a para of India in view

of Art. 1(3) (c).

[115G-116C]

According to tho prosecution the aoods complained of were all senl from Goa to Bombay after March 27, 1962.

There was no statute or statutory rule to show that any customs duty bad been imposed on tho goods transferred from Goa to other parts of India after December 20, 1961.

The trial court and the High Court wronaly held that certain customs duties were Ieviable because of some administrative instructions. No tax or duiy can be levied or collected except by authority of law.

Moreover no administrative instructions were produced before the court, privilege

being strangely claimed for them on the ground that they were confidential documents. [116C-F]

The notification issued in 1950 declaring Goa to be a foreign territory and thus bringing the exports from that country to India within the purview of the Land Customs Act, could not continue to have legal effect after Goa became a part of India. for it then ceased to be a foreign territory, [I 16G]

Section S of the Indian Tariff Act 1934 as it stood in 1950 empowered the Government to declare any territory outside India as a foreign territory for the purpose of that provision. That provision did not e1npower the government to declare any part of India as a foreign territory. Once Goa became a part of India tho Government was incompetent to declare that terrftory as a foreign territory. Nor did it appear that any ouch declaration was m"!le after December 20, 1961. [117C-D)

There was thus no legal basis for holding that the appellant bad utilised is official position to evade customs duty. His appeal muot accordingly be allowed. [1171!-0] 8-1 S. C. India/71

SUPREM!! COURT REPORTS [1971] SUPP. s.c.R.

CRIMJNAL APPELLATE JUR1so1cnoN : Criminal Appeal No. 80 of 1967.

Appeal from the judgment and order dated April 17, 1967 of the Bombay High Court in Criminal Appeal No. 1210 of 1965.

A.S.R. Chari, M. J. Mirchandani, K. K. Jain, H. K. Puri and B R. N agratnam, for the appellant.

P. K. Chatterjee, B. D. Sharma and S. P. Nayar, for the respondent.

The Judgment of the Court was delivered by

Hegde, 1.--The appellant and one R. B. Mathur were tried before the learned Special Judge for Greater Bombay under various charges including a charge of conspiracy.

Mathur was acquitted ood the appeal against his acquittal was unsuccessful. The appellant was also acquitted of all charges excepting a charge under Section 5(2) read with Section 5(1) (d) of the Prevention of Corruption Act For that offence he was sentenced to suffer rigorous imprisonment for two years and pay a fine of Rs. 5,000, in default to suffer further rigorous imprisonment for four months.

The substance of the charge under which he was convicted is that he by utilising his position as a Government servant sent various articles such as Radios, Transistors, Clothes etc., from Goa to Bombay without paying customs duty. He was also held guilty of sending his personal articles in the vehicles engaged by the postal department without paying any charge.

The trial court supported its conclusion on a further ground namely that the assets of the appellant were more than that he could have acquired by his known sources of income.

The charges framed against the appellant made no reference to the fact that his assets were more than that he could have acquired by his known sources of income.

In appeal the learned judges of the High Court did not go into that aspect of the case.

Nor was that ai; pect of the case pressed before us at the hearing.

Therefore it is not necessary to go into that aspect.

Even otherwise thait accusation appears to be without any solid basis. The learned Judges of the High Court also did not go into the allegation that the appellant utilised his official position in sending his personal goods in the vehicles engaged by the postal department.

The accusation is that the appellant sent some of his goods in the vehicles engaged by the postal department from Panjim in Goa to Margoa or Sawanthwadi or Belgaum.

These places are not very far from Panjim.

The High Court held that the offence committed by the appellant in that regard if tfue, is of a technical nature and therefore it thought it unnecessary to examine the evid ence relating to the same. Evidently in its view the accusation

ff, L. MEHRA v. MAHARASHTRA (Jfegtle, J.)

regarding the sending of some articles in the vehicles engaged by the postal department was of a trifling nature and therefore riot worth examining.

But the High Court agreed with the trial rourt that the appellant was guilty of evading payment of customs duty and he did so by utilising his official position.

In order to examine the correctness of this finding, it is necessary to set out the material facts.

In 1961, the appellant was working as a Senior Superinten dent of Post Offices at Jaipur.

On December 20, 1961 Goa was liberated by the Indian Army.

Thereafter the appellant was deputed as a Special Duty Officer to Goa.

He took charge in Goa on December 25, 1961.

He assumed additional charge as ' Director of Posts and Telegraphs on May I 1, 1962 and he held that office till August 11, 1962.

Thereafter he went back to Jaipur.

It is alleged that during the period of appellant's stay in Goa, he made large purchases of certain luxury articles. Utilis ing his official position in the Posts and Telegraphs department he transmitted those articles to Bombay where he sold the same at profits.

The prosecution relied in support of that charge on four different instances.

Voluminous evidence was led in support of the prosecution case.

But it is not necessary to go into that evidence as in our opinion the charge under which the appellant was convicted is without any legal basis.

The learned Counsel for the appellant, Mr. A. S. R. Chari has assailed the judgments of the High Court and the trial court on various grounds.

He contended that the eVidence adduced in support of the proseculion case is unreliable and insufficient to suport the conviction of lhe appellant.

He also raised various legal pleas in support of 1he appeal.

He contended that as the Prevention of Corruption Act was not in force in Goa at the relevant time, the appellant could not have been held guilty of an offence under that Act.

According to him, the investigation of this case was illegal as the required sanction had not been obtained.

But the most important plea taken by him is that no custom duty was leviable en the articles said to have been sent by the appellant from Goa to Bombay and as such the entire fabric of the prosecution case must fall to the ground.

There is force in this contention. Hence it is not necessary to examine the other contentions.

As mentioned earlier Goa was liberated on December 20,

1961. Twelfth amendment to our Constitution which received the assent of the President on 27th March 1962 made Goa a part of India.

It became a Union Territory.

The amendment in question is deemed to have come into force on December 20, 1961.

Hence Goa must be considered as a part of India from December 20, 1961 and indisputably at any rate from March 27, l 962. Article 1 of our Constitution says :

"I. India, that is Bharat, shall be a Union of States.

116 SUPUIOI COU1T UPOllTS [1971] SUPP. s.c.L

2. The States and the territories thereof 11hall be as 11pecified in the First Schedule.

3. The territory of India shall comprise-

(a) the territories of the States ;

(b) the Union territories specified in the First Schedule; B and

(c) such other territories as may be acquired."

All the territories that this country may acquire in whatever manner become part of India in view of Article I (3) (c). Further in the case of Goa by means of 12th amendment to the Consti.- tution, the same is included in the 1st Schedule. Therefore there is no room for the contention that Goa was not a part of India during the relevant time.

It may be noted that according to the prosecution the goods complained of were all sent from Goe. to Bombay after March 27, 1962.

This takes us to the question whether there is any liability to pay customs duty when someone sent goods from Goa to Bombay in 1962.

No statute or statutory rule was placed before the Court to show that any customs duty had been imposed on the goods transmitted from Goa to other parts of India after December 20, 1961. The only witness who spoke about the liabi lity to pay customs duties on the goods in question is P. W. 56 Shaikh, the Dy. Superintendent of Central Excise.

According to him customs duty on those articles was leviable because of certain administrative instructions.

But he refused to place those administrative instructions before the court. He claimed privilege on the ground that they are confidential documents-a strange claim. Stranger still is that the trial court appears to have accepted that plea.

No tax or duty can be levied or collected except by authority of law.

Hence no customs duty was leviable on the basis of any administrative instrnction.

Every levy of customs duty or any other tax must be sanctioned by law.

It is surprising that both the trial court as well as the High Court were of the opinion that certain customs duties were Jeviable because of some administrative instructions.

It appears that there was a notitl.- cation issued in the year 1950 declaring Goa to be a foreign territory and thus bringing the exports from that country to India within the purview of Land Customs Act.

But that notification cannot continue to have a legal effect after Goa became a part of India.

On becoming a part of India Goa ceased to be a foreign territory.

The notification in question must have been issued under Section' 5 of the Indian Tariff Act, 1934 as it stood in 1950 ('that section has been repealed now). That section read:

"Where a customs duty at any rate prescribed by or under this Act or any other law for the time being in force is

H. L. MllHRA •• MAHARASHTRA (Hegde, J.)

leviable on any articles when imported into, or any article when exported from, a port in India the Central Government may, by notification in the official gazette, direct that a duty .of customs at the like rate shall be leviable on any such article when imported or exported, as the case may be, by land from or to any territory outside India which it may, by a like notification, declare to be foreign territory for the purposes of this section."

The notification under this section could have been issued <0nly in respect of any territory outside India and not in respect of any part of India.

That provision empowered the Government to declare any territory outside India as a foreign territory for the purposes of that provision.

That provision did not empower the Government to declare any part of India as a foreign territory.

But it gave power to the Central Government not to treat any territory outside India as a foreign territory for the purposes of that provision.

To illustraie the position, the Central Government' could not have declared either Delhi or Bombay as a foreign territory but it could have treated Nepal or Bhutan as not a foreign territory for the purposes of that provision. Once Goa became part of India, the Government was incompetent to declare that territory as a foreign territory. Nor does it appear that any such declaration was made after December 20, 1961.

Unfortunately the High Court allowed itself to be influenced by what it says the practical considerations.

It is likely that there were considerable foreign goods in Goa which had been imported into that territory before it was liberated, may be even without paying customs duty and those goods were available for being transmitted to other parts of India.

But this circumstance does not change the position in law.

It is not necessary for us to consider whether after integration of Goa, the Government

could have imposed any duty on the goods that were sent from Goa to other parts of India.

Suffice it to say that our attention was not invited to any law imposing such duties.

That being so, the conclusion that the appellant had utilised his official position to evade customs duty must fail.

lI! the result this appeal is allowed and the conviction and sentence imposed on the appellant are set aside.

He is on bail.

His bail bond do stand cancelled, and fine if paid refunded.

G. C.

Appeal allowed.

G. K. MITTER

Prevention of Corruption Act

s. 5(2)

s. 5(1)

s. 5(2)

s. 5

Prevention of Corruption Act

Art. 1(3)

Customs Act

Section S of the Indian Tariff Act 1934

Section 5(2)

Section 5(1)

Prevention of Corruption Act

Article 1

First Schedule

First Schedule

Customs Act

Indian Tariff Act, 1934


JL B. PBADNIS ,,

STATE OF MAHARASHTRA

March 19, 1971

[S. M. SIKRI, C. ]., J. M. SHELAT, C. A. VAIDIALINGAM,

A. N. GROVER, AND A. N. RAY, JJ.]

Civil Servant-Holding temporary post-Reversion to substantive post -When amounts to punishment and violation of Art. 311, Constitution.

Tho appellant was repatriated from the temporay post of Controller of Food Grains Department to his parent department of Excise and Pro hibition. His record of service showed that he was chosen to go on depu

talion twice in 1942 and in 1957 and that he was chosen for his experi ence. The. record also showed that he was promoted from time to time.

While holding the post of Controller, the Director of Civil Supplies asked him about certain charges of receiving money and gifts at the time of the marriage of his daughter and that he forced bis peons to do menial work at the marriage. The Secretary to the Government virtually threatened to repatriate him to bis parent .department, and the Minister visited the office of the appellant and said there were complaints against him. The appellant asked for an inquiry and the police conducted an inquiry. The investigation indicated that the appellant was totally free from blame or taint. At the time of the passing of thQ-- order of reversion the appellant protested and asked the Government to wait for the completion of the investigation but the Government did not accede to the request.

On the question whether there was violation of the provisions in Art. 311 of the Constitution,

HELD: The facts and circumstances bring out in bold relief that the order of reversion was in the nature of punishment and was passed without complying with the provisions of the Constitution. [123H]

The post which the appq_lant was holding was a temporary one. but the appellant was reverted neither because the temporary post was abolished nor because he was unsuitable to continue nor because the parent department of the appellant wanted him back. A Government servant holding a temporary post and having a lien on his substantive post may be sent back to the substantive post in ordinary routine administration or becaul:! of exigencies of service.

Such a person may have been drawing a salary higher than that of his substantive post but when he is reverted to the parent department the loss of salary cannot be said to have any penal consequences. The matter bas to be viewed as one of substance and all relevant factors have to be considered in ascertaining whether the order is a genuine one of accident of service in which a person sent from the substantive post to a temporary post has to go back to the parent post without any aspersion against his character or integrity, or whether the order amounts to a reduction in rank by way of punishment. [123C-G]

Parshotam Lal Dhingra v. Union of India [1958] S.C.R. 828; Sukhban1 Singh v. State of Pun; ab, [1963] 1 S.C.R. 416 and Aypar A.par Singh v. '.TM State of Puniab, C.A. No. 25/67 dt. 3·12-1970, followed.

PHADNIS V. MAHARASHTRA (Ray, J,) 119

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 381 of A 1967.

Appeal from the Judgment and order dated June 30, 1966, July 4, 1966 and. July 5, 1966 of the Bombay High Court in Appeal No. 111 of 1963.

R. K. Garg, S. C. Agarwala, D. P. Singh, V. J. Francis and B R. K. Jain, for the Appellant.

V. S. Desai and S. P. Nayar, for the respondent.

The Judgment of the Court was delivered by

Ray, J.-This is an appeaJ by special leave from the judgment dated 30 June, 1966 and 4 and 5 July, 1966 of the High Court at Bombay reversing the judgment of the learned Single Judge dated 29 October, 1963.

The only question in this appeal is whether the order of the Government of Bombay dated 8 May, 1962 "repatriating" the appellant from the temporary post of Controller of Foodgrains Department, Bombay to his parent Department of Excise and Prohibition amounted to a reduction in rank in violation of the provisions contained in Article 311 of the Constitution.

The appellant joined service as Sub-Inspector of Excise in the Excise and Prohibition Department of the Government of Bombay in the year 1938.

He was thereafter selected for transfer to the Bombay City Police Department.

In 1942 he was sent on "deputation" to the Civil Supplies Department as an Inspector.

He continued to work in that department up to the month of February, 1955.

By February, 1955 he had by various promotions become Rationing Officer which was a gazetted post and he was then drawing a salary of Rs. 530 p. m. in the grade of Rs. 350-20-550. fo 1955 there was decontrol of foodgrains. The post was abolished.

The appellant was reverted to the ExciSe Department.

In course of time he was promoted to the post of District Inspector in the Excise Department in the grade of salary of Rs. 220-10-300. In 1957, the Government of Bombay again introduced the system of distribution of foodgrains on the basis of household cards.

The appellant in view of his record of service in the Civil Supplies Department was asked to go on "deputation" in the Agriculture and Forests Department as a Subll)spector under the Controller of Foodgrains Distributon, Bombav.

Jn 1960, the appellant was appointed to a temporary po.•t f Controller of Foodgrains Distribution, Bombay in the grade of Rs. 475-25-600-50-750.

In 1961 the appellant was drawing a salary of Rs. 500 p. m. as a Controller of Foodgrains Distribution.

SUPIU!llll COUJ.T lll!PollTS [1971] SUPP. s.c.ll.

The llppeilant married his daughter in the month of December, 1961.

The appellant's daughter, a qualified doctor, was then working aa a Resident Medical Officer in the Bombay Municipal Corporation.

The appellant was asked by the Director ?f Civil Supplie.ll in the montbJ of January to March, 1962 partly m writing and partly orally first whether he had forced his peons to do menial work at the marriage of his daughter, secondly, if he had taken cash and gifts from Fair Price Shop-owners ; and. thirdly, whether he had forced the staff to contribute in cash for the marriage of his daughter.

The appellant denied these allegations.

Thereafter, the Secretary to the Government of Maharashtra. Agriculture and Fore.llts Department told the appellant in the month of April, 1962 that there were complaints against him and that "there could be no 11moke without fire", and the appellant would be "repatriated" to the Prohibition and Excise Department.

The Minister of Civil Supplies in the month of April, 1962 visited the appellant'i; office and llaid that there were. complaints against him.

The appellant requested a thorough enquiry in connection with such complaints.

Subliequent to the visit of the Minister, an Inspector of Police of the Anti-corruption Branch took posses- Ilion of liCVeral files of various fair price i; hop-keepers for scrutiny.

Thereafter, the Government of Bombay by a resolution dated 8 May, 1962 directed that the appellant who was "on deputation from the Excise and Prohibition Department should be repatriated to his parent department with immediate effect". The appellant was asked to hand over charge and the appellant was posted by the Director of Excise and Prohibition in the Office of Officiating Inspector in his Department.

In the month of July, 1962 the appellant came to know that the Anti-corruption Branch of the Police submitted a report to the Government and the appellant was found to be exonerated from all charges.

The appellant made a representation to the Government bringing the said fact to the notice of the relevant authorities and requested for appointment to the post of Controller of Foodgrains. The Government did not send him any reply to the appellant'i; representation.

The appellant contended that the resolution was in the nature of punishment by way of reduction in rank in violation of the provisions contained in Article 311 of the Constitution and made an application under Article 226 of the Constitution impeaching the order of reversion as an action of punishment taken on false reports without waiting for the investigation by the police to be complete.

The learned Single Judgo of the Bombay lffsh Court held that the order ot 8 May. 1962 was an act ot punishment and reduction in rank. The Division Bench of the Bombay High Court

PHADNIS J. ilAHAliSHTRA (Ray, J.)

reversed that judgment and held that the appellant had no legal right to the post in the Department of Agriculture and Forests and therefore his reversion was not a punishment.

This Court in Parshotam Lal Dhingra v. Union of India (') laid down three propositions ; First, Article 311 makes no distinction between permanent and temporary members of the iervices or between persons holding permanent or temporary posts and aa'.ords protection to both classes of servants; secondly, if a Government servant has no right to the particular rank his reduction from an officiating higher rank to his substantive lower rank will not by itself be a punishment ; and, thirdly, the mere fact that the sccvant has no title to the post or the rank and the Government has by contract, express or implied or under the rules governing the conditions of his service, the right to reduce him to a lower post does not mean that the order of reduction of a servant to a lower post or rank cannot in any circumstance be a punishment.

In determining whether the reduction is or is not by way of punishment it has to be found out if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or the stoppage or postponement of his future chances of promotion, or that irr truth and reality the Government has passed the order as and by way of penalty.

In applying these principles Dhingra's(') case laid down two tests; first, whether the servant had right to the post or the rank, or, secondly, whether he has been: visited with evil consequences of the kind mentioned in that decision.

This Court in Sukhbans Singh v. State of Punjab(') in dealing with the question: as to whether a probationer has any right to hold the post said that. it would not be correct to say that a probationer has a right to the higher post in which he is officiating or a right to be confirmed, but a probationer could not be punished for misconduct without complying with the requirements of Article 31 \.

The appellant in that case was recruited as Tehsildar in 1936. He was thereafter selected by the Purrjab Public Service Commission and appointed as an Extra Assistant Commissioner on probation in 1945.

On 20 May, 1952 he was reverted to his substantive post of Tehsildar.

He asked for the grounds of reversion.

He was denied the same.

This Court held on the facts that the Government wanted to punish him for what it thought was mis- . conduct and therefore reverted hjm.

Thus, reversion by way of punishment without complying with the provisions of Article 311 <lallllOt be Sustained.

(I) (1958] s. c. R. 828

(2) [1963] l s. c. R. 416

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

In the recent unreported decision in Appar Apar Singh v. The State of Punjab & Ors.(') the question for consideration was whether an order reverting the appellant in that case from a p06t in Class I service in which he was officiating to his substantive post in Qass II amounted to reduction in rank. The appellant was employed in the Punjab Education Service Class II.

He was promoted to Class I on an officiating post as Principal of the Government College, Muktsar.

He had trouble with the members of the staff.

The appellant as Principal of the College in. reading the annual report made certain aspersions against some members of the teaching staff.

Thereafter, an enquiry was made pursuant to the demand of some of the parents of the students.

Two Deputy Directors made an enquiry.

At that enquiry the appellant was neither given copies of statements recorded nor was he allowed to cross-examine the witnesses.

The State contended that it was a preliminary confidential enquiry into the affairs of the College and that the appellam had no right to continue in Class I appointment where he was only officiating.

The High Court held that the order of reversion was not by way of punish ment but only because the person reverted was not found suitable to hold the post and an enquiry was only to find out the state of affairs of the normal functioning of the College.

This Court held that the enquiry by the Deputy Directors was to investigate alle gations against the Principal and the Deputy Directors recommended exemplary punishment.

Therefore the order amounted to re duction in rank and as no enquiry regarding disciplinary proceed ings was held, the order was in violation of the provisions of Article 31 I.

The most pre-eminent features which accentuate the order of reversion to be in the nature of punishment in the present case are these; The appellant was faced with certain charges of receiving money and gifts at the time of the marriage of his daughter. The appellant denied the allegations. The Secretary to the Government virtually threatened to repatriate the appellant to his parent department.

The Minister visited the office of the appellant.

The Police conducted an enquiry.

The appellant himself had asked for an enquiry.

At the time of the passing of the order of reversion the appellant not only protested but also asked the Government to wait for the completion of the investigation. The Government did not accede to that request.

Subse-. quently, the investigation indicated that the appellant was totally free from blame or taint.

The entire service record of the appellant showed that the appellant was chosen to go on "deputation" twice once in 1942 and'

(I) Civil Appeal No. 2S of 1967 decided on 3·12·1970

PUADNIS v. MAHARASHTRA (Ray, I.)

again in 1957.

From 1942 to 1955 he was in the Food Depart ment and he was promoted from time to time.

Between 1942 and 19 55 the appellant rose from the post of Permit Officer to that of Rationing Officer at the salary of Rs. 530 p. m. In 1955 the post was abolished.

The appellant was reverted to his parent department. In his parent department the appellant was also promoted to the post of Inspector and thereafter District Inspector in the grade of Rs. 220-10-300. In 1957, the appellant was again sent on deputation to the Food Department.

The appellant was chosen for his experience.

Again, he received a promotion and increment in salary.

It is true that the post which the appellant held was a tem porary one, but the post continued for several years.

The indi cations were that the post was practically of a quasi-permanent character.

Th~ appellant was reverted neither because the. tem porary post was abolished nor because he was found unsuttable to continue.

The parent department of the appellant did not want him back.

The order of reversion simplii; iter will not amount to a reduction in rank or a punishment.

A Government servant holding a temporary post and having lien on his substantive post may be sent back to the substantive post in ordinary routine administra tion or beca.use of exigencies of service. A person holding a temporary post may draw a salary higher than that of bis subs tantive post and when be is reverted to bis parent department the loss of salary cannot be said to have any penal consequence.

Therefore though the Government bas right to revert a Government servant from the temporary post to a substantive post, the matter bas to be viewed as one of substance and all relevant factors are to be considered hr ascertaining whether the order is a genuine one of "accident of service" in which a person sent from e substantive post to a temporary post has to go back to the parent post without an aspersion against bis character or integrity or whether the order amounts to a reduction in rank by way of punishment.

Reversion by itself will not be a stigma.

On the other band, if there is evidence that the order of reversion is not "a pure accident of service" but an order in the nature of punish ment, Article 311 will be attracted.

In the present case, the facts and circumstances to which reference has already been made bring out in bold 'relief that the order of reversion was in the nature of punishment: The order was not in compliance with the provisions of the Constitution.

124 SUPR.EID! couar REPORTS [1971] SUPP. s.c.R.

A For these reasons, we arc of opinion that the learned Single Judge was correct in his judgment. The appeal is allowed. The Bench decision of the Bombay High Court is 1et aside and the judgment of the learned Single Judge i! restored.

The appellant will be entitled to costs in this Court

V.P.S.

Appal allowed.

STATE OF MAHARASHTRA

S. M. SIKRI

M. SHELAT

A. N. GROVER

A. N. RAY, JJ.

Art. 311

Art. 311

[1963] 1 S.C.R. 416

Article 311

Article 311

Article 226

Article 311

Article 31

Article 311

Article 31

Article 311


iTATE OF MADHYA PRADESH

MIR BASrr ALI DIAN & ORS.

March 22, 1971

[S. M. Smu, C. J., P. JAGANMOHAN REDDY AND I. D. DUA, JJ.]

Indian Penal Code, s. 420-Money circulation schemes-No cheating without misrepresentation or dishonest concealment of facts.

12$

The respondents organised a money circulation scheme. For alleged cheating and misrepresentation in connection therewith they were convicted by the Sessions Judge, Bhopal under s. 120B and s. 420 Indian Penal C Code. The. High Court however acquitted them. The State of Madhya Pradesh by special leave appealeil to this CourL In support of the appeal the following fact> were stressed: _(!) None of the 200 odd persons who purchased the policy issued under the scheme received Rs. 2309. 50, the assured amount in the policy: (2) The large amounts of Rs. 90,750 and Rs. 5,52,587.95 were. detained by the respondents and showed the extent of wrongful gain by them. (3) The policy holders had no control over other policy holders which would assure continuance of the scheme. (4) D Merely because some persons receive some amount it could not be inferr~ ed that the scheme was not fraudulent. (5) The evidence showed that tho names entered in columns 3, 4, S, 6 and 7 of the pamphlet, issued by the respondents were bogus and that 2696 money orders were sent back to the remitter, as the persons were not traceable because of wrong address on the form.

HELD : As held by the Calcutta High Court in Radha Ballav Paf J E case and Harida:1 Barafs case there was an element of speculation in money circulation schemes, but those who ran them could not be held guilty of cheating unless there was misrepresentation or dishonest concealment of facts. It could not be said in the present case that the respondents had deceived the public aod thereby induced it to contribute money to the scheme. The appeal must accordingly fail.

[131H-132F]

Redha Ballav Pal v. Emperor, A.I.R. 1939 Cal. 327 and Hari Das F Baral v. Emperor, 1939 II I.LR. Cal. 81, approved.

Nadir Barga Zaidi v. State of U.P. A.I.R. 1960 All. 103 and ln re M. K. Srinivasan, A.I.R. 1944 Mad 410, referred to.

It is for the legislature to intervene if it wants to protect people who participate in these schemes, knoWing that sooner or later the schemea are bound to fail. [132F-G)

CRIMINAL APPELLATB JURISIDCl10N: Criminal Appeal No. 142 of 1968.

Appeal by special leave from the judgment and order dated September 8, 1967 of the Madhya Pradesh High Court in Criminal Appeal No. 81 of 1966.

I. N. Shroff, for the appellant.

U. P. S.iri.gh and Nur-ud-din Ahmed, for the respondent.

i26

SUPRBMB COURT REPORTS [1971J;':Sl.(PP. s.c.~.

The Judgment of the Court was delivered by

Sikri, C. J~This appeal by special leave by the State cf Madhya Pradesh is against the judgment of the High Court allow ing the appeal of the respondents, Mir Basi Ali Khan, Mir Shahni waz Ali Khan and Mir Sarfaraz Ali Khan, and setting aside th': conviction and sentences passed on them by the learned Fmt Additional Sessio!ls Judge, Bhopal, who had convicted them under Section 120B and Section 420, I. P. C.

The respondents weri, however, acquitted of the charge under Section 406, I. P. C.

W: may mention that there were two committal orders made by th'' learned Magistrate, First Class, Bhopal, on April 5, 1965 and 011 October 12, 1965, respectively, which gave rise to two Sessions Trials, No. 90 of 1965 and No. 98 of 1965.

The learned Sessions Judge disposed of both the trials by a single judgment as he was of the view that both the trials were in effect a single trial of a single conspiracy and of several incidents of cheating.

The res pondents also filed one appeal before the High Court and the High Court disposed of t appeal by one judgment.

The facts are not very much in dispute.

The prosecutio11 case, in brief, was that Mir Bas it Ali Khan, the father, and hi> two sons, Mir Shahniwaz Ali Khan and Mir Sarfaraz Ali Khiln, entered into a partnership which was registered on September l.

1959, under the Indian Partnership Act of 1932 in the State of Andhra Pradesh at Hyderabad.

The registration number of th•: firm was 1468.

Mir Basit Ali Khan started a money circulation scheme known as Multi-Purpose Constructive Circulation Schem1: with its head office at Hyderabad. in the year 1960.

He, along with others, was prosecuted in the City • Magistrate's Court at Hyderabad, but they were acquitted and the acquittal was main tained in the High Court.

The Magistrate had come to the con clusion that though the scheme appeared to be speculative yet it could not be said that the accused were running the said schem1: with a dishonest intention to cheat the public.

It is alleged that Mir Basit Ali Khan again organised th<: Multi-Purpose Constructive Circulation Scheme on Septem ber 20, 1961, at Bhopal with its principal office at Bungalow No. 59, Roshanara Naka, T. T. Nagar, Bhopal.

The firm issued . policies and printed pamphlets and handbills representing that i':

was a Governmenf of India Registered firm No. 1468.

We may reproduce the pamphlet, Ex.-P-9 /I, which was oi.t: of the pamphlets issued by the firm :

"1. Perform the marriage of marriageable girls by spending only S.50 np.

2. Only after spending once Rs. 5 . 50 np. send your A pi:omising children to America or England for Education.

3. By spending Rs. 5·50 nP. only once, you can meet your daily necessities.

4. By spending Rs. 5 50 nP. only once make provision for education, and books, stationery, etc., etc.

5. By spending Rs. 5.50 nP. get a big sum of Rs. 2,309 for the progress of your business.

For obtaining all the above mentioned thing, you can get a big sum of Rs. 2,309 by spending only Rs. 5 50 nP.

Please do come and meet on the address noted below so c that you may know how to do it and how to utilise this golden opportunity.

Otherwise please do not say that you did not get intimation."

It is necessary to reproduce another pamphlet, Ex. P-12, because according to the State there were clear misrepresentations of fact which amounted to cheating :

"Phone : 1266. M. C. C. Bhopal M. P. Grams :

"Jansewak" Government of India's Registered Firm, 1468.

The Government of India after establishing the social service Department are doing a great service for the puiilic and to the nation as a whole by spending lacks of rupees.

The public have also been exerting manual labour in addition to giving their valuable time.

But this Public Service scheme of ours is so unique that without any difficulty every individual of the country receives direct benefit to the extent of Rs. 2,309.50 by sitting at home.

That is, remit your admission fee once through the de T. T. (sic.) and the Government postman will knock down at your doors several times to pay you up the amount.

The Founder of this unique formula has placed before you in such a way that a person with ordinary intelligence will be pleased to understand it.

HOW THIS IS POSSIBLE : Collect Rs. 5.50 from each of your three friends, and out of this keep Rs. 5.50 for yourself and this remaining Rs. 1 J.00 may be remitted according to the schedule. It is thus clear that you have received your original amount of Rs. 5 .50 in full immediately after the sale of three Policies.

StlPkld coti.? llU'OllTS [1971] SlJPP. s.e.lt.

From the procedure explained above, it is very clear that this is neither a Gamblins lottery, Riddlo nor Salta.

There is not the least possibility of your losing the amount. Of course, such persons "ll'ill be losers who will not be in a position to sell their three policies.

Ther~ fore, those persons who do not have the capacity of selling their 3 Policies need not join this scheme. But in our opinion we are confident that there Is no such an' unfortunate person who is not having even three well wishing friends, or relatives in this vast world. But the question of selling 3 policies by an individual is most important.

How.-Y ou should purchase one policy by paying Rs. 5.50 nP. from any person who has already enrolled in this scheme. or write to the Firm for the policy, by sending M. 0. of Rs. 5.

Now select tlu:ee energetic and enthusiastic friends, collect Rs. 5.50 from each of them and remit the M. Os. to the members and the Firm as shown in the schedule.

Write down the names of your selected 3 friends with their address in full in BLOCK

LETTERS ONLY.

Send the Policy along with the M. 0. receipts to the firm by EXPRESS DELIVERY

ONLY.

Never send M. Os. to persons in column nos. 2 they will not get any amount to the extent of THIS POLICY ONLY BUT as and when this Policy goes in circulation they will automatica!ly change their places and enjoy with their expected amount.

FIRM'S RESPONSIBILITY : The firm will send you 3 policies in which you will stand in column No. 2 and thai of the new member in column No. 1.

Hand over these policies immediately to your friends carefully.

As sOOll' as you finish this job, YOUR RESPONSIBILITY IS OVER The chain of M. Os., will be continued in such a way that your neighbours will be fed up with postman's voice.

Because the beauty of our scheme is that we allow 15 days period for the sale of the policy to each of our member after the expiry of the period we cancel such slack members and the same cancelled policy in which you stand in No. 2 is sold to other new members through our authorised agents and field officers, who are spread all over India thereby we try our utmost to continue your chain.

The cause of failure of other previous Schemes is only due to not having this wonderful arrangement of continuation of Chain to which we give much importance.

For this reason only we arc having a very

good response & o.ur to days membership number is more A than a lack all over India.

Under unavoidable circumstances, extension of one week can be given on payment of extension fee of 0.37 nP.

SCHEDULE

S.No.

No. of Policies Amount payable Column No.

I l 5.50

2 3 Nil

3 9 9.00

4 27 27.00 5 81 81.00

6 243 364.50

7 729 1822.50

Total No. of Policies 1093

2309.SO

MOST IMPORTANT : If your chain of M. O.s. are dis-continued for two weeks Please 'inform ui; immediately so that they may be continued.

MEER BAS!TH ALI KHAN

Autlur of Dukhi Kisan approved by the Ministry of Agr. Govt. of India, Founder of full House Talkie Formula Regd. by Govt. of India No. 104

Proprietor M. C. C. Govt. of India's Regd. Fifm No. 1468 Bhopal.

TIME IS MONEY : If you are inclined to become agent, contact us and enjoy with the commission of 3.50 np. per member.

The Chief agent will get 75 P. M. salary as well as commission of Rs. 3 50 per member.

The a ivertisement expenses will also be borne by the firm."

The learned Sessions Judge had come to the conclusion that the respondents by using the expression "Government of India Registered Finn , No. 1468" in their policies and pamphlets misled the public into believing that the scheme was sponsored by the Government of India or it had its approval.

He also came to the conclusion that there was a misrepresentation in the pamphlet that the scheme was neither a gambling, lottery, riddle . or a satta, but was an ordinary financial scheme.

The learned 9-1 S.C. lndia/71

SUPREME COURT REPORTS [1971] SVPP. s.c.ll

Sessions Judge had further found that as the remitter of the money orders was always Mir Basit Ali Khan, respondent No. I and the Proprietor of M. C. C., the member of the policy was left cnly with a small piece of papr. Ex. P-69, the scheme contained a misrepresentation and suppression of material facts which made the respondents liable for conspiracy to cheat and cheating.

The High Court, however, held that it being not in dispule that the firm was registered and its number was 1468 there w<.s no fraudulent or deceitful representation.

The High Court fur ther held that most of the witnesses had clearly stated that thiy had known the fact 'that it was a private firm and the Government had nothing to do with it. The High Court was of ·· the view that the statement may be an exaggeration or a puffing. The High Court, after going through the evidence and the various pamphlets came to the following conclusion :

"There appears to be no misrepresentation or suppression of any material facts with a view to defraud or cheat. How-so-ever speculative and unworkable the scheme may be, unless it is shown that there is a false representation or suppression of the material facts which might render it to be fraudulent, it cannot be said that the offence of cheating has been committed. Of course, to judge its effect, the policy and the pamphlet has to be read as a whole." ·

The High Court further observed, after referring to a number Jf cases which we will presently deal with :

"In this scheme as aforesaid, the purchaser also got his amount alright and one can expect to get even more provided the Chain contiuned.

As the policy with its rules and pamphlet make it quite clear, the appellants cannot be held guilty unles it is positively shown that some deception had been practised on the public with the result that they were deceived and they had paid the money.

The prosecution has not produced any witness to say that some money was due from the company and they have been in any way deceived and the amount has not been paid.

It is only the Jhabua lot of witnesses who could not be paid because of the police raid and the M. Os. being withheld by the Magistrate." •

The High Court further found that the name of Mir Basit Ali Khan, proprietor, M. C. C., was mentioned simply because it was a chain scheme and that it may go on working continuously, otherwise there is every possibility that some policy holder might not send the full amount or may not be traceable for one reason

M. P. STA'IB V. BASITA!J (Sikri, C.J.) 131

.or the other.

The High Court observed that nothing was kept

A - , secret from the policy holders and it was known to them alright that they had joined the scheme with the conditjon20 !~1 :!:;~;; L'! !he pQ!icy <iiiu U-..: pamphlet The High Court did not think that the size of the token had anything to do with cheating. The High Court accordingly came to the conclusion that the respondents had committed no offence.

Regarding the money which had been seized by the polic~ the High Court said that the money belonged to the policy holders and the respondents and it was a case where the money in question had to go back to them and it could not be ordered to be confiscatcil.

The High Court accordingly directed that the respondents would be entitled to get back their amount which had C been Withheld as property in the Sessions Trials referred to above.

It is common ground that the Scheme is highly speculative, and the question which arises is whether it amounts to cheating under Section 420, I. P. C.

The learned eounsel for the State stresses the following facts : D (]) None of the 2000 odd persons who purchased the policy had received Rs. 2309 50, the assured amount in the policy.

(2) . The large amounts of Rs. 90,750 and Rs. 5,52,587 95 were obtained by the respondents showed the extent of wrongful gain by them.

(3) The policy holders had no control over other policy holders which would assure continuance of the .scheme.

(4) Merely because some persons received some amount jt could not be inferred that the scheme was not F fraudulent.

(5) The evidence showed that the names entered in columns 3, 4, 5, 6 and 7 were bogus and that 2696 money orders were sent back to the remitter, as the persons were not traceable because of wrong addresses on the form.

The learned counsel for the respondents contends that since the year 1939 similar schemes have been held not to fall within Section 420, I. P. C. , and the legislature must be deemed to have accepted the law as laid down in the cases.

The learned counsel has drawn our attention to two decisions of the Calcutta High Court on similar schemes.

The earliest case pointed out by the learned counsel is Radha Bal/av Pal v. Emperor ('). In that case

(I) A. I. R. 1939 Cal. 327.

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

the society was described as Government Registered No. 5934, registered under Act 11 of 1932.

The High Court held that it was not a misrepresentation as this society was actually registered under that Act.

Regarding tjie scheme the High Court held on the facts of that case that the scheme was one of those snowball schemes which were speculative to the highest degree and unworkable but it was not dishonest or fraudulent in the sense that it either represented to the public something which was not true or concealed from them something which should have been disclosed.

The High Court thought that it was an appeal to the gambling instinct of humanity but this cannot per se amount to cheating.

This case was followed by another Bench of the Calcutta High Court in Hari Das Barat v. Emperor (1).

The headnote brings out the decision thus :

"Promoters of a financial snowball scheme, which could run only so long as there would be a continuous uninterrupted and enormously progressive increase in subscribers, but which could not go on indefinitely, would not be guilty of cheating, in the absence of false representations and dishonest concealment of facts either in the prospectus issued or in the conduct of the promoters, calculated to deceive the public and thereby induce it to contribute money to the scheme."

These cases were distinguished in Niulir Barga Zaidi v. The State of U. P. (~ as the High Court felt that on the facts of that case there were misrepresentations made to the depositors and certain facts had been dishonestly concealed from them.

In re M. K. Srinivasan (') the facts were slightly different and the case does not assist us.

F It seems to us that the Calcutta cases, referred to above, were correctly decided and the High Court came to the correct conclusion.

This appeal must accordingly fail.

It is for the legislature to intervene if it wants to protect people who participate in these schemes knowing that sooner or later the schemes are bound to fail.

G In the result the appeal fails and is dismissed.

G.C. ---·---·---

(1) [1939] II I. L. R. Cal. St.

(2) A. I. R. 1960 All. 103.

(3) A.I. R.1944 Mad. 410.

Appeal dismissed.

P. JAGANMOHAN REDDY

I. D. DUA, JJ.

Indian Penal Code

s. 420

s. 120B

s. 420

Indian Penal C Code

The State of Madhya Pradesh

Section 120B

Section 420

Section 406

Indian Partnership Act

Section 420

Section 420


SHYAM DEO PANDEY & ORS.

STATE OF BIHAR

March 23, 1971

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

Code of Criminal Procedure (Act 5 of 1898), s. 423-Absence of appellants and counsel al the time of final disposal-Dismissal on merits- Duty of ppellate court to peruse records.

The appellants were convicted and sentenced for the offence of kidnapping. They filed an appeal which was admitted by the High Court and notice was ordered to be issued.

On tho date on which the appoal C was posted for hearing neither the appellants nor their counsel appeared .and the High Court dismissed the appeal in the following terms: 'On perusal of the Judgment under appeal I find no merits in the case. It is ac- .cordingly dismissed.'

On the question whether the disposal of the appeal by the High Court is in conformity .with s. 423, Cr. P. C.,

HELD: lf a criminal appeal by the accused is not dismissed summa- rily uoder s. 421 of the Code and notice as required by s. 422 is issued. then, under s. 423, it is obligatory for the appellate court to send for the record, if it is not already before the Courl After the records are before the court and the appeal is set down for hearing, it is essential that the appellate court should: (a) peruse such record; (b) hear the appellant or his pleader if he appears; and (c) hear the public prosecutor if be appears.

After complying with these requirements, the appellate court has full power E :to pass any of the orders mentioned in the section. If the appellant and his counsel are not present the appellate court cannot dismiss the appeal for default. The court has either to adjourn the hearing of the appeal to enable them to, appear or it should consider the appeal on merits and pass final orders. The tonsideration of the appeal on merits at the stage -0f final hearing and deciding the appeal on merits and passing final orders will not be possible unless the reasoning and findings recorded in the judg~ ment under appeal -are tested in the light of the record of the case. While p there i<.; no emphasis on the perusal of the record in s. 421 at the admission stage, under s. 423, one of the essential requirements and a condition pre~

cedent to a final disposal of the appeal either by dismissing it or in any other manner contemplated by the section. is that. the appellate court should peruse the record. The requirement regarding the perusal of the record that has been sent for and received in court before disposing of an .appeal is not an empty formality. On the contrary, the expressiqn •after

perusing the record' in the section assumes importance in the context of G the enormous powers that the appellate cour't has in the final disposal of the criminal appeal.

Record of the case does not mean only the judgment, because, that must have already been perused under s. 421 when the High Court admits the appeal

[140A-B, C, E, G-H; 141A-D, H; 1428- C, 0-E, F-H; , l43A-B]

In the present case, there is no indication in the order that it was H passed after perusing the record that must have been sent for as requtred by s. 423(1). From the mere recital in the High Court's order that there is no merit in the case it is not possible to infer that the High Court has come to the conclusion after applying its judicial mind and after perusing ,

SUPREME COURT REPORTS

(1971] SUP~S.C.R.

the record. There must be a clear indication in the judgment or order of the appellate court that it has applied its judicial mind to the particular appeal it was dealing with.

Such an indication will be available when. the appellate court bas considered the material on record which means. not only the judgment and petition of the appeal, but also other relevant materials. Since the impugned order of the High Court was passed without considering the material on record the order was not in conformity with s. 423 of the Code and had to be to set aside. [l43C-D, E-G, H;

144A-C]

Sankatha Singh v. State of U.P. [1962] Supp. 2 S.C.R. 817,

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 283 of 1968.

Appeal by special leave from the judgment and order dated May 10, 1968 of the Patna High Court in Criminal Appeal No. 453 of 1966.

S. N. Prasad, for the appellants.

R. C. Prasad, for the respondent.

The Judgment of the Court was delivered by :

Vaidialingam, J~The short question that arises in this appeal, by special leave~ is whether the judgment and order of the Patna High Court dated May 10, 1968, dismissing the Criminal Appeal No. 453 of 1966, are in conformity with Section 423 of the Code of Criminal Procedure, (hereinafter to be referred as the Code).

The appellants, who are accused Nos. 2 to 5, along with the first accused Sia Devi (wife of 5th accused) were tried by the learned First Assistant Sessions Judge, Biharsharif, for an offence under Section 363 of thq Indian Penal Code.

The case of the prosecution was as follows :

One Kanta Kumari, an orphan minor, and niece of the complainant (P. W. I) Parmeshwar Pandey was under the lawful guardianship and protection of the latter and residing with him since the death of her parents.

At about 8 P. M. on February. 14, 1965, the fifth accused and his wife, the first accused, cameto the house of the complainant and called Kanta Kumari. Kanta Kumari responded to the call by coming out. When she was questioned by her uncle as to where she was going out with the tw<> accused, Kanta Kumari replied that she was going out for singing marriage songs_ Kanta Kumari went away with the two accused and returned home by about mid-night. In the morning ot February 15, 1965, the complainant found that Kanta Kumari: was ulissing from his house.

On a search m .. de by him, he came to know 1hat Kanta Kumari was seen early th&t morning at about

s. D. PANDEY v. BIHAR (Vaidialingam, J.)

3 A. M. going in the company of all the five accused persons for Ganga Ashnan.

He was expecting Kanta Ktnnari to return. But on the evening of February 17, 1965, when he met the first and the fifth accused in the village, he was informed by the fifth accused that his paternal cousins, accused Nos. 2 and 3, had taken away Kanta Kumari with them.

On receiving this information, Parmeshwar Pandey lost all hope of his niece Kanta Kumari coming. back and on February 18, 1965' he filed a complaint before the police alleging that his niece Kanta Kumari, a minor, ha.s been kidnapped from his lawful guardianship by the five accused.

All the five accused were charged under Section 363 I. P. C. for kidnapping the minor girl Kanta Kumari on February 15, 1965 from the lawful guardianship of her uncle Parmeshwar Pandey without his consent.

All the accused pleaded not guilty before the tQal court and stated that they were falsely implicated by Parmeshwar Pandey on account of long standing enmity.

In particular they pleaded :

(a) that Parmes)lwar Pandey had no niece called Kanta Kumari :

(b) they have not kidnapped Kanta Kumari ; and

(c) in any. case Kanta Kumari was not a minor as alleged but was a major about 18 years of age.

The learned Assistant Sessions Judge by his judgment and order dated August 31, 1966 substantially rejected all the pleas of the accused.

The learned Judge held that the complainant Parmeshwar Pandey, who had given evidence as P. W. I had a niece by name Kanta Kumari, who was living with him under his guardianship as she had lost her parents.

Though Kanta Kumari was not traced and as such she was not before the court, the learned Judge held that Kanta Kumari at the time of the occurre.ttce must have been only 9 or 10 years old.

The learned Judge further held that accused Nos. 2 to 5 (appellants herein) have kidnapped Kanta Kumari, a minor girl, on February ts, 1965 from the lawful guardianship of her uncle Parmeshwar Pandey withoqt his consent and as such they were guilty of the offence under Se~ tion 363 I. P. C. Accordingly he convicted appellants of the said offence and sentenced them to. undergo rigorous imprison ment for five years.

Each of them was also fined a sum of {ls. 500 and in default of payment of fine to undergo further rigorous imprisonment for six months.

The learned Judge, however, held that the case against accused No. I, Sia Devi has not bec:n proved beyond reasonable doubt and as such acquitted her.

. The appellants filed Criminal Appeal No. 453 of 1966 in the Patna High Court on September 8,. 1966 challenging the various

A findings recorded by the learned Assistant Sessions Judge and contending that those findings were not supported by the evidence adduced.

They also pleaded that their conviction is illegal.

In particular they have pleaded that the finding regarding the age of Kanta Kumari, when she has not appeared before the court is based on pure conjecture and surmise and not on any legal evid- B ence.

On September 9, 1966 the High Court admitted the appeal and passed the following order :

"9.9.66 This appeal will be heard. Issue notice.

Pending the hearing of this appeal the appellants will continue on bail to the satisfaction of the District Magistrate.

The realisation of fine also will remain stayed during the pendency of this appeal."

The appeal was posted for hearing on May 10, 1968.

On that date neither the appellants nor their counsel seems to have appeared and the Court dismissed the appeal and passed the following order and judgment.

"10-5-68.

No one appears to press this appeal. On perusal of the judgment under appeal, I find no merit in the case.

It is accordingly dismissed."

The appellants on the same day filed Criminal Miscellaneous Application No. 556 of 1968 praying for restoration of the Criminal Appeal which had been dismissed by the Court.

After issu ing notice in the said application, the High Court on July 12, 1968 dismissed the application for restoration on the ground that no sufficient cause has been shown by the appellants. The appellants filed an application for grant of a certificate under Article 134(1)

(c) of the Constitution to appeal to this Court together with an application to excuse delay in filing the application.

The High Court dismissed this application on August 2, 1968. This Court, however, on December 11, 1968, granted special leave to appeal against the judgment and order of the High Court dated May

IO, 1968.

Mr. S. N. Prasad, learned counsel for the appellanis, raised two contentions : (i) that the disposal of the appeal by the High Court on May IO, 1968 is contrary to the terms of Section 423 of the Code ; and (ii) that the order pronounced by the High Court is not a judgment as understood in law as it does not contain the . point or points for determination, the decision thereon and the reasons for the decision.

Mr. R. C. Prasad, learned counsel for the State, has urged that the order dated May I 0, J 968 complies in all respects with Section 423 of the Code.

He has further urged that Section 367 -0f the Code relating to the contents of the judgment does not apply to the High Court and in this connection he relied on Section 424 -0f the Code.

In the view that we take regarding the first contention of Mr.

S. N. Prasad, that the judgment is not in compliance with Section 423 of the Code, we do not think it necessary to express any opi nion as to whether Section 367 applies to the judgment delivered by the High Court as also the scope of Section 424 of the Code.

The question whether the High Court has got jurisdiction to restore a criminal appeal has also not been agitated before us.

The contention of Mr. S. N. Prasad is that the High Court having admitted the appeal on September 9, 1966 and issued notice to the State, it has no power under Section 423 of the Code to <lismiss the appeal summarily as it has done on May 10, 1968. The manner of disposal of the appeal, the counsel pointed out, shows ; a complete disregard by the High Court of the provisions of Section 423 of the Code enjoining the appellate court to look into the entire record and give reasons for the decision arrived at. Accord fog to the counsel, this approac)l should be made by the appel late court irrespective of the fact whether the appellant or his pleader or the public prosecutor for the State appears or not.

Mr. R. C. Prasad, learned counsel for the State, on the other band, pointed out that the impugned order clearly shows that the

High Court has gone through the judgment of the trial court, which was under appeal and as it found no merit in the case, it <lismissed the same.

There is no illegality or any violation of Section 423 of the Code in the manner of disposal of the appeal by the High Court.

In order to appreciate the contentions taken by the counsel -of both sides, it is necessary to advert to the material provisions -0f the Code bearing on the point arising for consideration.

Part VII deals with Appeal, Reference and Revision. Chapter XXXI in the said part deals with Appeals. Section 410 of the Code gives a right to any person convicted on a trial held by a Sessions Judge or an Additional Sessions Judge to appeal to the High Court.

Sub-section (i) of Section 418 provides that an appeal may lie on a matter of fact as well as a matter of law, excepting

'Yhere the trial was by the Jury, in which case the appeal shall he on a matter of law only.

The Explanation provides that the alleged severely of a sentence shall for the purpose of Section 418 be deemed to be a matter of law.

Under Section 4)9, the appeal

A is to be made in the form of a petition in writing presented by the appellant or his pleader. Unless the court otherwise directs, the petition of appeal shall be accompanied by a copy of the judg ment or order appealed against.

Section 420 provides for the manner of filling an appeal when the appellant is in jail. Sections 421, 422 and 423, which, in our opinion, are important are as B follows :

"Section 421. (!) Summary dismissal of appeal : On receiving the petition and copy under Section 419 or section 420, the appellate C01p:t shaill peruse the same, and, if it considers that there is no sufficient ground for interfering, it may dismiss the appeal summarily :

Provided that no appeal presented under Section 419 shall be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of the same.

(2) Before dismissing an appeal under this section, the Court may call, for the record of the case, but shall not be bound to do so.

"S". 422. Notice of appeal : If the Appellate Court does not dismiss the appeal summarily, it shall cause notice to be given to the appellant or his pleader, and to such officer as the Staie Government may appoint in this behalf, of the time and place at which such appeal will be heard, and shall, on the application of such officer, furnish him with a copy of the grounds of appeal ;

and, in cases of appeals under Section 41lA sub-section (2) or section 417, the Appellate Court shall cause a like notice to be given to the accused. ,

Section 423 : Powers of Appellate Court in disposing of appeal : (]) The Appellate Court shall then send for the record of the case, if such record is not already in Court. After perusing such record, and hearing the appellant or his pleader, if he appears, and the Public Prosecutor, if he appears, and, in case of an appeal under Section 4 llA, sub-section (2) or Section 417, the accused, if he appears the Court may, if it considers that there is no sufficient ground for interfering, dismiss the appeal, or may-

(a) in an appeal from an order of acquittal, roverse such order and direct that further inquiry be made, or that the accused be retried or committed

s. D. PANDEY v. BIHAR (Vaidia/ingam, J.) 139

for trial, as the case may be, or find him guilty and A pass sentence on him according to law ;

(b) in an appeal from a conviction, (I) reverse the finding and sentence, and acquit or discharge the accused, or order him to be retried by a Court of competent jurisdiction subordinate to such Appellate Court or committed for trial or (2) alter the finding, maintaining the sentence, or, with or without altering the finding, reduce the sentence, or, (3) with or without such reduction and with or without altering the finding, alter the nature of the sentence, but, subject to the provisions of section 106, sub-section (3), not so as to enhance the same ; C

(c) in an appeal from any other order, alter or reverse such order ;

(d) make any amendment or any consequential or incidental order that may be just or proper.

(IA) Where an appeal from a conviction lies to the High Court, it may enhance the sentence, notwithstanding anything in consistent therewith con' tained in clause (b) of sub-section (I) :

"Provided that the sentence shall not be so enhanced, unless the accused has had arr opportunity of showing cause against such enhancement.

(2) Nothing herein contained shall authorise the Court to alter or reverse the verdict of a jury, unless it is of opinion that such verdict is erroneous owing to a misdirection b¥ the Judge, or to a misunderstanding on the part of the jury of the law as laid down by him."

From the scheme of the sections referred to above, the following facts emerge : The appellants had a right under Secion 410 to file an appeal to the High Court against their conviction.

Under Section 418 they were entitled to challenge the correctness of the findings of the trial court, both on facts and law, as admittedly their trial was not by the jury.

They were also entitled as a matter of law to urge the severely of the sentence imposed on them.

The appellants had filed the appeal in due form as required by Section 419 accompanied by a copy of the judgment or order appealed against.

Under Section 421 the Appellate Court is bound to peruse the appeal petition and the copy of the

judent or order appealed against If the Appellate Court, on perusal of the same, considers that there was no sufficient ground for interfering with the judgment and order appealed against, it

can dismiss the appeal summarily.

Under sub-section (2) of Section 121, it is open to the Appellate Court before dismissing the appeal to call for the record of the case ; but it is not mandatory that the Appellate Court should call for the record. The stage under Section 421 is to enable the Appellate Court to decide whether the appeal should be admitted or dismissed summarily. In the case before us on September 9, 1966 when the High Court ordered "this appeal will be heard.

Issue notice", it is clear that on perusal of the petition of appeal and the judgment of the Sessions Court, the High Court did not take the view that there was no sufficient ground for interference so as to dismiss the appeal summarily.

On the other hand, the order of the High Court, extracted above, clearly indicates that the appeal is to be heard and disposed of on merits and for that purpose it issued notice to the State.

In fact the provisions regarding issue of notice as provided under Section 422 has also been followed by the High Court.

The procedure under Section 422 has to be followed. only when the appeal is not dismissed summarily under Section 421.

In this case the stages envisaged by Sections 421 and 422 have passed.

The appeal has been admitted and taken on file and notice must have been also issued to the appellants or their counsel, as envisaged in the section.

Coming to Section 425, which has already been quoted above, it deals with powers of the Appellate Court in disposing of the appeal on merits.

It is obligatory for the Appellate Court to , send for the record of the case, if it is not already before the Court.

This requirement is necessary to be complied with to enable the court to adjudicate upon the correctness or otherwise of the order or judgment appealed against not only with reference to the judgment but also with reference to the records which will be the basis on which the judgment is founded.

The correctness or otherwise of the findings recorded in the judgment on the basis of the attack made against the same, cannot be adjudicated upon without reference to the evidence, oral and documentary and other materials relevant for the purpose.

The reference to "such record" in "after perusing such record" is to the record of the case sent for by the Appellate Court.

A reading of Section 423 makes it clear that a criminal appeal cannot be dismissed for default of appearance of the appellants or their counsel.

The court has either to adjourn the !hearing of the appeal in order to enable them to appear or it should consider the appeal on merits and pass final orders.

The consideration of the appeal on merits at the stage of final hearing and to arrive at a decision on merits so as to pass final orders will not be possible unless the reasoning and fiindings recorded in the judgme11t under appeal are tested in ihe light of the record

r.f

s. o. PANDEY v. BIHAR (Vaidialingam, J.\

of the case.

After the records are before the court and the appeal is set down for hearing, it is essential that the Appellate Court should : (a) peruse such record, (b) hear the appellant or his pleader, if he appears, and (c) hear the public prosecutor, if he appears.

After complying with these requirements, the Appellate Court has full power to pass any of the orders mentioned in the section.

It is to be noted that if the appellant or his pleader is not present or if the public prosecutor is not present, it is not obligatory on the Appellate Court to postpone the hearing of the appeal.

If the appellant or his counsel or the public prosecutor, or both, are not present, the Appellate Court has jurisdiction to proceed with the disposal of the appeal ; but that disposal must be after the Appellate Court has considered the appeal on merits.

It is clear that the appeal must be considered and disposed of on merits irrespective of the fact whether the appellant or his counsel or the public prosecutor is present or not.

Even if the appeal is disposed of in their absence, the decision must be after consideration on merits. Under Section 421 the Appellate Court has to decide whether the appeal is to be taken. on file or dismissed summarily.

The obligation of the court at that stage is only to peruse the petition of appeal and the copy of the order or judgment appealed against A summary dismissal of the appeal will then be legal if the Appellate Court considers that there is no sufficient ground for interference.

But even in

suh circumstances it has been held that a summary decision is a judicial decision which vitally affects the convicted appellant and in a fit case, it is also open to be challenged on an appeal before this Court.

Though a summry rejection, without giving any reasons, is not violative of any statutory provisions, such a manner of disposal removes every opportunity for detection of errors in the order.

It has been further held that when an appeal in the High Court raises a serious and substantial point, which is prima facie. arguable, it is improper for an Appellate Court to dismiss the appeal summarily without giving some indication of its view on the point The interest of justice and fair play require that in such cases an indication must be given by the Appellate Court of its views on the point argued before it The earliest decision on this. aspect is the one reported in Mushtak Hussein '" The State of Bombay. (1) The entire case law has been referred to and reiterated in Govinda. Kadtuji Kadam and others v.

The State of Maharashtra (2).

The recent decision on this aspect is of Challappa Ramaswami v. State of Maharashtra.(') We have referred to the above decisions to show that though a summary rejection by an Appellate Court under Section 421 may not

(I) [193S) S.C.R. 809.

(2) A.I.R. 1970 S.C. 1033.

(3) A.I.R. 1971 S.C. 64.

H2 SUPllEME COURT REPORTS [1971] SUPP. s.c.R.

be violative of the section, nevertheless when an arguable or substantial question arises for consideration, the Appellate Court in its order should indicate its views on such point.

If the position is as indicated above that even under Section 421, which contemplates dismissal of an appeal summarily, under Section. 423, in our opinion, a very rigorous test must be applied to find out whether the Appellate Court has complied with the provisions contained therein. There is no emphasis on the perusal of the recorc\ in Section 421 whereas under Section 423 one ot the essential requirement is that the Appellate Court should peruse the record.

There cannot be any controversy that Section 423 applies to cases in which appeals have been presented and admitted.

Though Section 423 does not provide any limitation on the power of the Appellate Court that it is incompetent to dispose of the appeal, if the appellant or his pleader is not present, nevertheless there is a limitation.

That limitation, which is provided by the section is that the Appellate Court, before disposing of the appeal, must peruse the record. No doubt if the appellant or his pleader is present, he must be heard.

Similarly, if the public prosecutor is present, he too must be beard. The Legislature in S. 423 contemplates clearly that in certain cases a criminal appeal might be disposed of without hearing the appellant or any one on his behalf or the public prosecutor. The expression "after perusing such record" in the section is, in our opinion, a condition precedent to a proper disposal of an appeal either by dismissing the same or in any. other manner contemplat ed in the said section.' The powers which the Appellate Court in criminal appeals possesses are depicted in Section 423.

It ha~ power not only to dismiss the appeal but also pass any one of the orders enumerated in clauses (a),; (b), (c) and (d) and sub-section

(IA).

These provisions show the enormous powers which the Appellate Court possesses in regard to a criminal appeal. These powers, it cannot be gainsaid are very vast Any one of the orders, mentioned above, could be passed by the Appellate Court whether the appeal is disposed of on hearing or without hearing the appellant or his pleader.

These provisions, in our opinion, clearly indicate the nature of a judgment or order that is expected of the Appellate Court in its judgment.

It is in this context that the expression "after perusing such record" assumes great importance. Absence of these words in Section 421, brings out in bold contrast the difference in the nature of jurisdiction exercised under the two sections.

It is not necessary to deal exhaustively with the connotation of the expression "after perusing such record" occuring in Section

423(1).

That will depend upon the nature of the order or judg ment appealed against as well as the point or points that are taken before the Appellate Court.

But one thing is clear. There

must be a clear indication in the judgment or order of the Appel

late Court that it has applied its judicial mind to the particular appeal with which it was dealing.

Such an indication will be available when the Appellate Court has considered the material OD record. which means not only the judgment and petition of appeal, but also the other relevant materials.

The Appellate Court is bound to have looked into the judgment of the lower court appealed against.

The petition of appeal must hav~ also been looked into to know the nature of the attack that is made against the judgment.

There will be other materials on record and they will ljave to be perused by the Appellate Court.

The nature of such perusal to be indicated in the Appellate judgment may also differ under different circumstances.

Applying the above tests, we find that the order passed by the High Court in the case before us does not satisfy the above requirement.

There is no indication in the order that it was passed .. after perusing the record" that it must have sent for as required in the earlier part of Section 423(1).

Admittedly the -0rder does not state that the court has perused "such record"

meaning the record sent for by it.

On the other hand, the recital in the judgment is "on a perusal of the judgment under appeal. I find no merit in the case." Under Section 421. as we have already pointed out. the High Court should persue the petition of appeal and the copy of the judgment or order appealed against. l;:ven for a summary rejection under Section 421, apart from perusal of the judgment, it is obligatory for the Appellate Court w

peruse the petition of appeal also.

The High Court in this cast has admitted the appeal under Section 421 and issued notice. By this it is clear that the High Court was of the opinion that there were arguable points raised in the appeal, which required coi:· sideration on merits under Section 423. Under Section 423 one of the impor.tant requirement is that the Appellate Court must peruse the record.

Record of the case does not mean only the judgment, because that must have already been perused on September 9. 1966 under Section 421, when the High Court admitted the appeal.

We have already poirted out that there is no indication in the order of the High Court that it has perused any

reord.

Without a perusal of the record of a particular case and giving any indication of such perusal in the appellate order or

judment. an .or.der. similar .to the oe in question could be passed m any crunmel appeal m a routine manner. when the appellant. or his pleader does not appear or even in appeals where parties ha1e been heard.

From the mere recital in the High Co':'rt's order that terc is no merit in the case, it is not possible to mfer that the High Court has come :o that conclusion afrer applying its judicial mind and after per.i:.mg the record.

In fact the conclusion that there is "no merit in the case" is arrived

at, as the High Court itself says, only on the basis of its "perusal of the judgment under appeal".

The requirement regarding the perusal of the record that has been sent for and received in court. before disposing of an appeal, is not to be treated as an rnpiy formality, as is evident by the vast powers conferred on the Appellate Court to pass the various types of orders enumerated in the section.

We are of the opinion, that in passing the impugned order the High Court has not considered the material on record before corning to the conclusion that there was no case for interference.

As such the order is not in conformity with Section 423 of the Code; hence it has to be set aside.

Mr. R. C. Prasad, learned counsel for the State, drew our attention to the decision of this Court reported in Sankatha Singh vs. State of U. P. (') and urged that a similar order has been sustained by this Court.

We have gone through the said decision and it does not support the respondent.

This Court was not dealing with an order passed by the High Court as an Appellate Court.

On the other hand, the Sessions Judge had dismisseJ a criminal appeal stating that the appellants and their counsel were absent and that he has perused the judgment of the trial court and seen the record and that it finds no ground for interference.

This order was passed on November 30, 1956.

Later on, the appellants had filed an application to the Sessions Judge for restoring the appeal to file.

On July 2. 1957 the Sessions Judge allowed the application and restored the criminal appeal to tilt: the appeal which had been dismissed on November 30, 1956.

But when the criminal appeal so restored came up for hearing before the successor Sessions Judge, he took the view that the order of restoration passed on July 2, 1957 by his predecessor was illegal and without jurisdiction.

This order was challenged in revision and the High Court agreed with the view of the Sessions Judge that the original order of restoring the criminal appeal to file was illegal. This Court held that the order of the High- Court holding that the criminal appeal should not have been res tored, was correct.

Therefore, this Court was only dealing with the correctness of the view of the High Court regarding the legality of the order of restoration passed by the Sessions Judge. This Court has, no doubt, observed that the order passed on November 30, 1956 by the Sessions Judge after perusing tbe record and judgment without giving any other reasons may not be a strict compliance with the provisions of Section 367 of the Code and that ii may be set aside by a superior court; but the point that was emphasised was that the nature of the order passed by the Sessions Judge on November 30, 1956 will not give power to the Sessions Judge, an Appellate Court, to set aside the said judgment for the

(I) [1962] Supp. 2 S.C.R. 817.

purpose of rehearing the appeal.

Therefore, the above facts A\ clearly show that the point that we have decided in this appeal never arose for consideration in that decision.

To conclude the appeal is allowed. The judgment and order of the High Court dated May 10, 1968 in Criminal Appeal No. 453 of 1966 are set aside and the said appeal is remanded to that ' R court for hearing and disposal according to Jaw and in the light of the observations contained in the judgment.

V. P. S.

Apea/ allowed.

SHYAM DEO PANDEY & ORS

STATE OF BIHAR

A. N. RAY, JJ

Code of Criminal Procedure

s. 423

s. 423

s. 421

s. 422

s. 423

s. 421

s. 423

s. 421

s. 423(1)

s. 423

Section 423

Code of Criminal Procedure

Section 363

Indian Penal Code

Section 363

Article 134(1)

Section 423

Section 423

Section 367

Section 424

Section 423

Section 367

Section 424

Section 423

Section 423

Section 423

Section 410

Section 418

Section 418

Section 4

Section 420

Sections 421, 422 and 423

Section 421

Section 419

section 420

Section 419

Section 41

section 417

Section 423

Section 4

Section 417

section 106

Section 418

Section 419

Section 421

Section 121

Section 421

Section 422

Section 422

Section 421

Sections 421 and 422

Section 425

Section 423

Section 421

Section 421

Section 421

Section 421

Section 423

Section 423

Section 423

S. 423

Section 423

Section 421

Section

423(1)

Section 423(1)

Section 421

Section 421

Section 421

Section 423

Section 423

Section 421

Section 423

Section 367