1685 •

STATE OF U.P.

V. ' _,

POOSU AND ANOTHER

April 2, 1976

[A. N. RAY, CJ., M. H. BEG, R. S. SARKARIA, P. N. SHINGHAL ANO

JASWANT SINGH] B

Constitution of India, Articles 136 rlw 142-Re-arrest and detention of .accused during pendency of State appeal against acquittal, whether violative of

Articles 14, 19(1)(a) to (g) and 21.

The accused-respondents were acquitted by the High Court of capital oft'enccs. This Court granted the State of U.P. special leave to appeal, and under Art. 136 read with Art. 142, issued orders directing the re-arrest and detention of the accused.

The orders were challenged by the accused-respondents on the grounds that their acquittal and the findings on which it is based, remain fully in force during the pendency of the State appeal, and that in the absence _. -0f a specific statutory provision, the Supreme Courfs inherent power under the i Cr.P.C., or under Art. 142, cannot be invoked to order the deprivation of the acquitted person's liberty, and that such an order would violate Articles 14, 19(1)(a) to (g) and 21 of the Constitution.

_On a reference of this question to the Constitution Bench,

HELD : This Court, while granting specia1 leave to appeal against an order of acquittal on a capital charge, is competent by virtue of Art. 142 read with Art. 136, to exercise the same p0wers which the High Court has under .sec. 427 (re-enacted as Sec. 390 of the new Cr.P.C. of 1973). An order directing the re-arrest and detention of an accused-respondent who has been acquitted by the High Court of a capital offence, neither offends Art. 21 or any other fundamental right guaranteed in Part III of the Constitution.. nor deprives the accused-respondent of his liberty in a manner otherwise than in accordance with procedure established by law.

[!008D-E, !009AB]

-' State v. Badapalli Adi & Ors. I.L.R. 1955 Cuttack 589, En1press of India v.

Mangu & Ors. l.L.R. 2 All. 340; Queen v. Gobin Tiwari I.L.R. [18761 l Cal. 281; Queen En1press v. Gobardhan l.L.R. [18871 9 All. 528; Banna v. 1'1ethucn

& Ors. 2 Bens. 228; K. M. Nanqyati v. State of Mahara.thtra, [1962] 1 Supp.

S.C.R. 567 and The State v. Capt. Jagjit Singh [1962] 3 S.C.R. 622, referred to.

CRIMINAL APPELLATE JURISDICTION : Cr!. Mis. Petitions Nos. 1 and 243 of 1975.

(Appeal by special leave from the judgmnt and order dated the 24-10-1973 of the Allahabad High Court in Criminal Appeal No. 710 of 1973.

Referred No. 34 of 1973) R. K. Garg, S. C. Agarwal, V. J. Francis, for the petl'.ioner in Cri.

Mis. 1 and 243 of 1975.

0. P. Rana, for the petitioner/r. 2 in Cr. M.P. No. 546/75 .

D. P. Uniyal with 0. P. Rana for the opposite side in Crl. M. P.

Nos. 1 and 243 of 1975.

Pramod Swarup, for respondent No. 2 in Cr. M. P. No. 546 of 1975.

The Judgment of the Court was delivered by H

SARKARIA, J.

The common question referred to the Constitution Bench in these two cases is : Whe'.her the Supreme Court while granting 14-725SC!f76

SUPREME COURT REPORTS

[1976] 3 S .. C.R.

Special Leave to appeal under Article 136 of the Constitution, against an order of acquittal. on a capital charge,, has the power to issue a nonbailable warrant for the arrest and co11unittal to prison of the accusedrespondent who had bery. acquitted by the High Court? >-._} Mr. R. K. Garg, Counsel for the accused-respondcn'.s herein, contends that while the legislature bas, in its wisdom, empowered the High Court to cause an accused person to be arrested and committed to prison pending the disposal of the appeal against acquittal, no such power has been conferred on the Supreme Court by the Code or any other statute.

According to Counsel, in the absence of a specific statutory provision, the inherent power of the Court to do complete justice under the Code or even under Article 142 of the Constitution cannot be invoked to order deprivation of the liberty of a person who has b, een found innocent and acquitted by the High Cour, t on all the charges against him because such an order would be violative of Articles 14, 19(1) (a) to (g) and 21 of the Constitution.

It is maintained that even after the grant of special leave to appeal under Article 136 against an order of acquittal passed by the High Court, the acquittal and the findings on which it is based, remain fully in force during the pendency of appeal by the State. It is contended that once it is ensured that the accused-respondent will be. available to submit himself to the final orders of this Court that may be passed in the appeal under Article 136, the inherent powers of the Court under the Code or under Article 142 exhaust themselves.

In support of his contentions,, Counsel has referred to State of U.P.

v. Mohamed Noah('); and A. K. Gopalan v. State of Madras('); Lala Jairam Das and ors. v. King Emperor('); Sheo Swarup and ors. v. The King Emperor(') and M. G. Agarwal v. State of Maharashtra("); Prem

Chand Garg v. Excise Commissioner, U.P. Allahabad(').

As against this, Mr. Uniyal and Mr. 0. P. Rana submit that by virtue of Article 142 read with Article 136 of tne Constitution, this Court pending disposal of an appeal against an order of acquittal, is competent to exercise the same powers which are conferred on the High Court by the Code of Criminal Procedure.

In support of this contention, Mr. Rana has referred to State of U.P. v. Deoman Upadayaya( 1 ); Abdul Rehman Mahomed Yuuf v. Mahomed Haji Ahmed Agbotwale and anr.( 8).

We are unable to accept the contentions advanced by Mr. Garg.

To appreciate the point involved, it will be useful to have a look at the provisions of s. 427 of the Code of Criminal Procedure, 1898 and its historical perspective.

This section (which has been re-enacted as s. 390 of the new Code of 1973) provides :

'When an appeal is presented under s. 41 lA sub-section

(2) or section 417, the High Court may issue a warrant directing that the accused be arrested and brought before it

(1) [1958] S.C.R. 595.

(2) [1950] S.C.R. 88.

(3) 72 I.A. 120. (4)

61 I.A. 398.

(6) 1963 Supp I, S.C.R. 885

(7) [1961] I $.C.R. 14.

(8) [196011 S.C.R. 749.

or any subordinate Court, and the Court before which he is A brought may commit him to prison pending the disposal of the appeal, or admit him to bail."

It may be noted that this provision was for the first time enacted in the Code of 1882.

But even before its enactment, the High Court as a matter of judicial practice, had the power, pending the appeal against an order of acquittal, to secure the attendance of the accusedrespondent by bailable or non-bailable warrants.

As pointed out by Panigrahi C. J. in State v. Badapa/li Adi and ors.(') "what was formerly the judicial practice received statutory recognition in the year 1882 when this provision in s.427, Criminal Procedure Code was introduced." In Empress of India v. Mangu and ors.(') (which was decided several years before the addition of this provision in the Code), a Full Bench of Allahabad High Court held, that the High Court has the power to cause the rearrest and detention of the accused in prison, pending an appeal against an order of acquittal.

To the same effect was the decision of the Calcutta High Court in Queen v. Gobin Tewari('). ; Again in Queen-Empress v. Gobardhan(4 ), Sir John Edge, Chief Justice without laying down any inflexible rule, emphasised that it is not desirable that, pending the appeal against acquittal in a capital case, the prisoner should remain at large while his fate is being discussed by the High Court. The ratio of this decision was followed by a Division Bench of Orissa High Court in State v. Badapalli Adi and ors. (supra).

Viewed in this perspective, it is clear thot even before the enactment of this provision, the High Court had the power to cause, in its discretion, the arrest and detention in prison of the accused-respondent of or his enlargement on bail, pending disposal of the appeal against his acquittal.

This power was ancillary to and necessary for an effective exercise 0f its jurisdiction in an appeal against an order of

;1 acquittal, conferred on the High Court by the Code.

As far back as 1824, in the English case, Bana v. Methuen and ors. (') Bes! J. following an older precedent enunciated the rule that :

"when an act of Parliament gives a justice jurisdiction over F

an offence, it impliedly gives him a power to make out a warrant, and bring before him any person charged with such offence."

This is the rationale of s.427.

As soon as the High Court on perusing a petition of appeal against an order of acquittal considers that there is sufficient ground for interfering, and issuing process to the G respondent, his status as an accused person and the proceedings against him, revive.

The question of judging his guilt or innocence in respect of the charge against him, once more becomes sub judice.

Similar is the position when the Supreme Court, in its discretion, grants special leave to appeal under Article 136 of the Constitution, against an order of acquittal passed by the High Court.

(1) J.L.R. [1955) Cuttack 589.

(2) l.L.R. 2 All 340.

(3) !.L.R. (1876) 1 Cal. 281.

(4) I.L.R. (1887) 9 All. 52~.

(5) 2 Bens 228.

SUPREM~ COURT REPORTS

This Article is couched in very specious phraseology.

The power under it can be exercised in respect of "any judgment, decree, determination, sentence or order in any cause, matter passed or made by any court or tribunal in the territory of India." As pointed out by this Court in K. M. Nanavati v. State of Maharashtra('), "this wide and comprehensive power in respect of any determination of any court or tribunal must carry with it the power to pass orders incidental or ancillary to the exercise of that power." That is why, Article 142 in equally extensive terms gives this Court power" to make such order as is necessary for doing complete justice in any cause or matter before it and any decree so passed or order so made shall be enforceable i, throughout the territory of India".

With the same end in view, clause (2) of that Article (subject of course to law, if any, made by Parliament) gives this Court "all and every power to make any order for the purpose of securing the attendance of any person".

Thus there can be no doubt that this Court while granting special leave to appeal against an order of acquittal on a capital charge is competent by virtue of Article 142 read with Article 136, to exercise the same powers which the High Court has under s. 427.

Whether in the circumstances of the case,, 1lhe attendance ,¢ the

accused respondent can be best secured by issuing a bailable warrant ,,. or non-bailable warrant is a matter which rests entirely in the discretion of the Court.

Although, the discretion is exercised judicially, it is not possible to computerise and reduce into immutable formulae the diverse considerations on the basis of which this discretion is exercised.

Broadly speaking, the Court would take into account the various factors such as, "the nature and seriousness of the offence, the character of the evidence, circumstances peculiar to the accused, possibility of his absconding, tampering with evidence, larger interest of the public and State"-see The State v. Capt. Jagjil Singh(').

In addition, the Court may also take into consideration the period during which the proceedings against the accused were pending in the courts below and the period which is likely to elapse before the appeal comes / up for final hearing before this Court.

In the context, it must be remembered. that this over-riding discretionary jurisdiction under Article 136 is invoked sparingly, in exceptional cases, where the crder of acquittal recorded by the High Court is perverse or clearly erroneous and results in a gross miscarriage of justice.

(l) [19621 !Supp. 567.

(2) [(962] 3 S.C.R. 622.

Nor do we find any merit in the contention that an order directing A tbe re-arrest and detention of an accused-respondent who had been acquitted by the High Court of a capital offence, in any way, offends Article 21 or any other fundamental right guaranteed in Part IH of the Constitution.

Such an order is made by this Court in the exercise of its plenary jurisdiction conferred by Articles 136 and 142 of the Constitution.

By no stretch of imagination can it be said t!hat such an B order deprives the accused-respondent of his liberty in a manner otherwise than in accordance with procedure established by law.

It is not necessary to burden this judgment with a discussion of the rulings cited by Mr. Garg.

Suffice it to say that the facts of those cases were entirely different and they have no bearing on the point in issue before us. c

For all the foregoing reasons, we answer the question posed at the

"Icommencement of this judgment in the affirmative and dispose of the references accordingly.

M.R.

Reference answered against the accused/respondents.

STATE OF U.P

POOSU AND ANOTHER

April 2, 1976

A. N. RAY, CJ.

M. H. BEG

R. S. SARKARIA

JASWANT SINGH

Constitution of India

Articles 136

Articles 14, 19(1)(a)

State of U.P.

Art. 136

Art. 142

Supreme Courfs

Cr.P.C

Art. 142

Articles 14, 19(1)(a)

Constitution Bench

Art. 142

Art. 136

sec. 427

Sec. 390

Cr.P.C

Art. 21

[1962] 3 S.C.R. 622

R. K. Garg

S. C. Agarwal

V. J. Francis

P. Rana

D. P. Uniyal

Pramod Swarup

H

SARKARIA

Article 136

Supreme Court

Article 142

Articles 14, 19(1)

Article 136

Article 136

Article 142

Uniyal

0. P. Rana

Article 142

Article 136

Code of Criminal Procedure

Rana

Garg

s. 427

Code of Criminal Procedure, 1898

s. 390

s. 41

section 417

Panigrahi

Criminal Procedure Code

Allahabad High Court

Calcutta High Court

Orissa High Court

Parliament

Article 136

Article 142

India

Article 142

Article 136

s. 427

Article 136

Article 21

Articles 136 and 142


PREM KAKAR v.

STATE OF HARYANA AND ANR.

April 5, 1976

[A. N. RAY, C.J. AND )ASWANT SINGH, J.)

Writ of Manda1nus-Whether Rule Nisi can be issued to co1npel the State to n1ake a reference uls 10(1) of the Industrial Disputes Act-Art 226 fl/ the Constitutio11-lnd11strial Dfaputes Act, Ss. 10(1) and 12(5)-Scope of.

Under section 12(5) read with 10(1) of the JndJJstrial Disputes Act, if on consideration of a failure rep_ort u/s 12 ( 4) from the conciliation officer, the appropriate Government is satisfied and is of opinion that there is an industrial dispute and a case for reference, it may make such reference to the labour court.

On considering the "failure report", of the conciliation proceedings in respect of the appellant, an Electrical foreman, the respondent state informed him that his duties being supervisory with wages more than Rs. 500/ - his ca'ic was not covered by the definition of the terms "workrnan" under the Industrial Disputes Act and therefore, not a fit case for adjudication. rhe appellant assailed the said orders under Art. 226, which was dismissed.

On appeal by special leave the appellant contended that the question whether an employee is a workman or not was a disputed question of fact and law and, therefore could only be decided by a Jabour court and on a reference only; but-not by the State Gover:riment \vhile exercising its powers u/s 12(5).

Dismissing the appeal, the Court

HELD : (1) The order of the Government acting under s. 10(1) read \Vith section 12(5) of the Industrial Disputes Act passed after subjective satisfaction is an administrative order and not a judicial or a quasi-judicial one. [1012A]

Stae of Madras v. C. P. Sarathy, [1953] S.C.R. 334 and State of Bon1bay

v. K. P. Krishnan & Ors. [1961] I S.C.R. 227 [followed].

(ii) In entertaining 'OO application for a writ of lnandarnus against an order made by the appropriate Government under section 10(1) read with s. 12(5) of the Act the court does not sit in appeal over the order and is not entitled to consider the propriety or the satisfactory character of the reasons.

If it appears from the reasons j;!; iven that the appropriate Government took into account any consideration irrelevant or foreign, then the court may in a given case consider the case for a writ of mandanuts.

[1012-A-C]

Bo1nbay Union of Journalists & Ors. v. The State of Bolnbay & A~1r. [1964] • 6 S.C.R. 22 (followed).

G CIVIL APPELLATE JURISDICTION: Civil Appeal No. 119 of 1975. ~

Appeal by Special leave from the Judgment and order 15-4-1974 of the Punjab and Haryana High Court in Civil Petition No. 4289 of 1973.

N. N. Goswami and Arvind Minocha for the Appel!ant.

dated Writ

G. B. Pai, S. R.

Agarwal, Parveen Kumar and Khaitan & Co. for Respondent No. 2.

• PREM KAKKAR v. HARYANA (Ray, C.J.)

10J1

A The Judgment of the Court was delivered by

' .- RAY, C.J.-This appeal by special leave turns on the question

whether the State can be asked by a writ of mandamus to make a reference under section 10(1) of the Industrial Disputes Act (herir inafter referred to as the Act).

The appellant was employed by the respondent company Hindustan Dowidat Tools Ltd.

The services of the appellant were terminated on 4th September, 1972. The appellant thereafter demanded reinstatement.

The Conciliation Officer started conciliation proceedings under section 12 of the Act.

No settlement could be arrived at.

The Conciliation Officer sent a report to the State Government under section 12 ( 4) of the Act.

The State Government by letter dated 7 June, J 973 informed the appellant that the Government had considered the appellant's case not fit for reference to the Labour Court for adjudication.

The Government in the letter stated as follows :

"The Government have not found your case fit for

adjudication to a Labour Court because you were working D as an Electrical Foreman in this concern, which was a supervisory job and your wages were more than Rs. 5001per month.

Therefore, your case is not covered by the definition of the terms "Workman" given in the Industrial Disputes Act." The appellant under Article 226 of the Constitution applied for a writ of mandamus directing the State to make a reference.

The E High Court dismissed the application.

The appellant contended that the question whether the appellant was a workman was a disputed question of fact and law which could be decided only by an awropriate Labour Court.

The appellant also submitted that if the dispute in question raises questions of law the appropriate Government should not give a final decision on the F question. ' In short, the appellant's contention is that the issue whether the appellant is a workman or not could only be decided by the "Labour Court and, therefore, reference should have been made.

Under Section 10 of the Act where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time refer the dispute, inter alia, to a National Tribunal for adjudication .

Section 12 of the Act deals with duties of Conciliation Officers.

If the Conciliation Officer cannot arrive at a settlement of the dispute he sends a report to the appropriate Government.

Under seclion 12(5) of the Act if, on a consideration of the report referred to in sub-section ( 4) , the appropriate Government is satisfied that there is a case for reference, it may make suh reference.

Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor .

SUPREME COURT REPORTS

(1976] 3 S.C.R.

A This Court in State of Madras v. C. P. Sarathy(') and State vf Bombay v. K. P. Krishnan & Ors.(') held that the order of the Government acting under section 10(1) read with section 12(5) of the Act is an administrative order and not a judicial or a quasi-judicial one.

In Bombay Union of Journalists & Ors. v. The State of B Bombay and Anr.(') this Court said that in entertaining an application for a writ of mandamus against an order made by the appropria'.c Goverrunent under section 10(1) read with section 12(5) of the Act the Court does not sit in appeal over the order and is not entitled to consider the propriety or the satisfactory character of the reasons given by the Government. If it appears that the reasons given show that the appropriate Government took into account any C consideration irrelevant or foreign, then the Court may in a given case consider the case on a writ of mandamus.

In K. P. Krishnan's case (supra) the issues in dispute related to a claim of classification for specified employees and additional bonus and the sole ground on which the Government refused to refer the dispute for adjudication under section 12(5) of the Act was that the D employees had adopted go-slow tactics during the relevant year. The facts were that the company had nevertheless voluntarily paid three months' bonus for that year and the report of the Conciliation Officer

was in favour of the employees.

This Court held that the Government acted on irrelevant considerations and issued a writ of mandamus.

E In the present case, the fact is that the Government found that the appellant was not a workman within the definition of workman

in the Act, and, therefore, it was not a fit case for reference for " adjudication.

The High Court rightly rejected the application.

The appeal is" therefore, dismissed.

Parties will pay and bear their own costs.

S.R.

(1) [1953] S.C.R. 334.

(2) [1961] 1S.C.R.227. (3)

[19641 6 S.C.R. 22.

Appeal dimissed-

PREM KAKAR

STATE OF HARYANA AND ANR

April 5, 1976

A. N. RAY, C.J.

ASWANT SINGH, J.

Industrial Disputes Act

Art 226

Ss. 10(1) and 12(5)

section 12(5) read with 10(1)

s 12

Industrial Disputes Act

Art. 226

s 12(5)

s. 10(1)

section 12(5)

Industrial Disputes Act

section 10(1)

s. 12(5)

N. N. Goswami

Arvind Minocha

G. B. Pai

S. R.

Agarwal

Parveen Kumar

RAY

section 10(1)

Industrial Disputes Act

Hindustan Dowidat Tools Ltd.

4th September, 1972

section 12

section 12

7 June, J 973

Industrial Disputes Act

Article 226

Section 10

Section 12

section 10(1)

section 12(5)

section 10(1)

section 12(5)

K. P. Krishnan

section 12(5)


' ...

I. N. SUBBA REDDY v.

ANDHRA UNIVERSITY & ORS.

April 5, I ~76

[A. N. RAY, C.J., M. H. BEG AND ]ASWA:H SINGH, JJ.]

Civil Seriit.:e-Meaning of conditions of service-Tennination by punisl11nent and termination sin1pliciter-Administratio11 Manual of University-Sections 7, 8, 9, 10, 11 and 24.

way of A.ndhra

The appellant joined the Andhra University as a Senior Lecturer in 1960.

Jn 1967, he was promoted as Professor.

The appellant entered into an agreement with the University as required by the conditions of service. He \Vas confirmed as a Professor in October 1968. In October, 1973, the Syndicate passed a resolution determining the agreement of service with the appellant under s. 24 of Chanter V of Administration !v1anual of the Andhra Uni'lersity.

A cheque_ for the salary for the six months being the notice period \vas also sent along with the notice of termination of service.

Clause J 0 of the agreement provided for the termination of service simpliciter on giving 6 months notice or a salary in lieu of such notice.

Section 24 also authorised the Syndicate to terminate the service of a confirmed teacher by giving 6 months notice or salary in lieu of notice. Section 7 of the University Code provided for suspension or abolition of any professorship, readership. Section 8 provided for suspension or compulsory retirement for sufficient cause after due investigation. Section 9

<!1!..iliorised the Syndicate to remove a teacher for misconduct on his p;.irt or for breach by him of one or more of the terms of the contract.

Section J 0 authorised the Syndicate to terminate services of a teacher on the ground of illhealth. Section 11 prescribed the procedure for removal of a teacher. Section 12 bars a claim for damages or compensation by a teacher against whom a disciplinary action is taken.

The appellant filed a suit challenging the validity of termination of his service which he withdrew later on.

He thereafter filed a writ petition.

In the \lrrit petition, the appellant challenged the validity of the order terminating the service as well as vires of s. 24 of the Administration Manual.

It was also alleged that the action in terminating his service was , nala fide and that it was with the ulterior object of circumventing the procedure prescribed by sections 9 and 11 of the University Code. It was also contended that s. 24 of the agreement which provides for termination of service without assigning any reason was void being repugnant to ss. 8 to 12 of Chapter XXIX of the University Code.

The High Court dismissed the writ petition holding that the impugned action was neither taken as a measure of punishment for any misconduct on the part of the appellant nor did it involve the breach of mandatory statutory obligations or any principle of natural justice.

In appeal by special leave the appellant contended :

1. Section 24 is ultra vires the powers conferred on the Syndicate.

2. The said section 24 and clause 10 of the agreement being inconsistent with sections 7 to 12 of the University Code were void and ineffectual.

3. The services of the appellant could not be terminated except on the ground mentioned in sections 7 to 10 of the University Code.

HELD : 1. The expression 'conditions of service' means all those conditions H which regulate the holding of a post by a person right from the time of his apoointment till his retirement and even beyond it in matters like pension etc.

The Syndicate has power to define terms and conditions of service of teachers of

lhe. Uniyersity. Section 24 undoubtedly lays down a condition of service of tie Un1vers1ty teachers and, therefore, cannot be said to be ultra vires the power!I

of the Syndicate. [1018C-D, G-H]

2: Se_ction~ 7 .t~ 12 of the U:niversity Ccxie have nothing to do with the

termnation. sun_phclfr .of the services of a teacher without casting any aspersion on him, which 1s a distinct and separate matter and is provided for in section 24 and clause 10 of the agreement.

As such, neither section 24 nor section 10 can be held to be void on the ground of repuanancy to sections 7 to 12.

[1019D-EJ

3 .. The presnt case _is merely of termination of service simpticitcr without attaching any stigma which is governed by the conditions of service specified in the contract of employment. Case of Sirsi Municipality v. Cacelia Korn Francis Tellis [1973} 3 S.C.R. 348, relied on.

Relationship of master a11.d servant is governed purely by contract of employment.

Any breach of .contract in such a case is enforced by a suit for wrongful dismissal and damages.

In the preseat case the services have been terminated sirnpliciter in accordance, with the terms of the contract. f1019E-G, H]

C!VIL APPELLATE JURISDICTION : Civil Appeal No. 1632 of .. 1974. ~

Appeal by special leave from the judgment and order 10th April, 1974 of the Andhra Pradesh High Court in tion No. 579 of 1974.

dated the Writ Peti-

R. K. Garg, S. C. Agarwal and V. J. Francis, for the appellant.

B. Sen, S. Venkata Reddy and G. N. Rao, for the respondents.

The Judgment of the, Court was delivered by

JASWANT SINGH, J.-This is an appeal by special leave from the judgment and order dated April 10, 1974, of the High Court of Andhra Pradesh at Hyderabad passed in Writ Petition No. 579 of 1974 upholding the resolution dated October 28, 1973, of the Syndicate of the Andhra University (conveniently referred to hereinafter as 'the Syndicate') terminating the services of the appellant by payment to him of salary and allowances for six months in lieu of notice for six calendar months under section 24 of Chapter V of the Administration Manual of the University and clause !O(b) of the written contract dated October 28, 1967.

Briefly stated, the facts leading to this appeal are : The appellant joined the Anthropology Department of the Andhra University as a Senior Lecturer in 1960.

Jn course of time, he was promoted as Professor of Anthropolagy with effect from October 1, 1967, pursuant to a resolution of the Syndicate dated September 26, 1967.

The cc"1ditions of service annexed to the communication , of the Registrar of the University informing the appellant that the Syndicate by its aforesaid resolution dated September 26, 1967, had ordered that the appellant be appointed Professor in the department of Anthropology with effect from Octoober I, 1967, inter alia stated:

"Every teacher, other than those appointed temporarily for one year or less, shall enter into a written contract with the University and get it executed within one month of the

). __ ...(

I. N. SUBB.A REDDY v. ANDERA UNIVERSITY (Jaswant Singh,!.) I 015

date of his joining duty and no salary can be drawn unless the contract is executed ..... .

When a teacher is pro111oted from one grade to another he shall be treated as a new entrant in that grade and the appointee in the new grade shall be placed on probation for a period not exceeding 1 year and shall be required to execute a fresh contract. .....

Teachers of the University shall ordinarily be appointed in the first instance on probation for a term not exceeding two years and shall be eligible for confirmation at the end of that period, provided their work is satisfactory. In the case of those who have been teachers before or have shown exceptional merit, the Syndicate may fix a shorter period.

Teachers so confirmed shall be eligible to hold their appointments until they are 60 years of age subject

to the provisions of sections 7, 8, 9 and 10 of Chapter XXX, lX of Vol. 1 of, the University Code .....

The appointments arc subject to the statutes, ordinances and regulations, etc. of the University auhorities that are current now or may be passed from time to time in respect of the University teachers''.

On October 28, 1967, the appellant entered into an agreement with the University as required by the aforementioned conditions of service and section 24 of Chapter V of the Administration Manual of the University.

Clause 10 of the agreement which contained a reciprocal covenant ran thus :-

"10. That the party of the first part will continue in the service of the University under the terms and conditions herein contained.

(a) Provided always that the party of the first part may determine this agreement on any day after CONFIRMA- TION by giving to the University a notice in writing of his intention to that effect at least six calendar months before such day and if such notice shall be given this agreement shall terminate on that day accordingly.

(b) Provided further that this agreement may be determined on any day after confirmation by the Synd:cate by giving the party of the first part a notice without assigning reasons in writing of its intention to that effect t least six calendar months before such a day or paying six month' salary in lieu of such notice; and if, such notice is given or payment made, this agreement shall terminate that day accordingly and the party of the first part shall not have the right of appeal to any other officer or authority against such termination. ( c) Provided further that this agreement may be deter- , mined on any day by the Syndicate if the Senate shall resolve to abolish the post held by the party of the first part."

I 016

SUPREME COUKT REPORTS

(1976) 3 S.C.R.

The appcUant was confirmed as Professor of Anthropology with effect from October 1, 1968.

On October 28, 1973, the Syndicate passed a resolution deterj-' mining the aforesaid agreement which the appellant had entered into with the University on his promotion and appointment as Professor

B of Anthropology.

Intimation of the determination of the agreement was communicated to the appeUant by registered post which was received by him on November 3, 1973.

The said communication was in these terms: -

"Under section 24 of Chapter V of the Administration Manual of the Andhra University and Cl. (10) of the Agreement entered into on 28-10-1967 bet, ween Dr. I. N.

C Subba Reddi on one part and the Andhra University on the other part, the said agreement is hereby determined.

A cheque bearing No. 460292 dated 28-10-1973 for Rs. 9,316/15 P. on the State Bank of India, Waltair, being the salary and dearness allowance for six months is hereby enclosed as provided for in the aforesaid S. 24 and CI.

lO(b)".

The appellant thereupon filed a suit. being suit No. 910 of 1973, in the Court of District Munsiff, Visakhapatnam questioning the validity of the .aforesaid resolution dated October 28, 1973 of the Syndicate.

In the said suit, an ex-parle temporary injunction was granted on November 5, 1973, restraining the respondents herein from implementing the resolution passed by the Syndicate.

Aggrieved by this injunction, the respondents filed an appeal (CMA No. 41 of

1973) which was dismissed by the Additional District Judge, Viskhapatnam by order dated November 28, 1973.

The respondents thereupon filed a revision petition to the High Court which by its order dated January 25, 1974, allowed the same and vacated the injunction holding inter alia that only a suit for damages and not for declaration and continuance in service lay.

After the acceptance of the revision petition by the High Court, the appeUant withdrew the aforesaid suit and filed a writ petition in the High Court under Article 226 of the Constitution on January 29, 1973 challenging the validity of the aforesaid resolution of the Syndicate and the vires of section 24 of Chapter V of the Administration Manual.

In that petition, it was inter alia averred by the appellant that the action of the Syndicate terminating his services was mala fide, and that it was with the ulterior object of circumventing the procedure prescribed by sections 9 and 11 of Chapter XXIX of the University Code and to camouflage the punishment of dismissal visited on him for the legal action that he had taken earlier against the University

that the Syndicate purported to act under section 24 of the Administration Manual and clause 10 (b) of the agreement.

It was further asserted by the appellant that section 24 of Chapter V of t!he Administration Manual was ultra vires the powers of the Syndicate and clause lO(b) of the agreement which provided for termination of his services without assigning any reason was void being repugnant to sections 8 to 12 of Chapter XXIX of the University Code.·

r. N. SUB BA REDDY v. ANDHRA TJNIVERSITY (Jaswant Singh, J.)

I 017

The petition was vigorously contested by the respondents.

While emphatically denying that the impugned action was maJa fide or that it had been taken as a measure of punishment, they averred that the relationship between the appellant and the University which was one of master and servant and was regulated by the contract of service entered into between the appellant and the University had been validly determined in accordance with the provisions of section 24 of Chapter V of the Administration Manual and clause lO(b) of the aforesaid contract of service which were perfectly legal and valid.

In view of the importance of the question involved in the writ .petition viz. whether the University could take recourse to the aforesaid

contract entered into between it and the appellant for terminating the the services of the latter without regard to the provisions of sections 8 to 12 of Chapter XXIX of the University Code and whether section 24 of Chapter V of the' Administration Manuar was intra vires the powers of the Syndicate, a learned Single Judge of the High Court before whom the petition was placed for hearing referred the same for decision to a Division Bench. Following some decisions of this Court, the Division Bench of the High Court dismissed the writ petition holding that the impugned action had neither been taken as a measure of punishment for any misconduct on the part of the appellant nor did it involve a. breach of any mandatory statutory obligation or any principle of natural justice; that in view of the fact that the impugned resolution communicated to the appellant was cumulatively based upon section 24 of Chapter V of the Administration Manual which was intra vires and clause 10 of the agreement which was valid and binding, the appellant could no: have any legal grievance which could be redressed by a court of law and that no writ lay to quash the order termiirnting the contract of service.

Mr. Garg, counsel for the aPPellant, has assailed the aforesaid resolution of the Syndicate terminating the services of the appellant on three grounds, viz. (I) that section 24 of Chapter V of the Administration Manual is ultra vires the powers conferred on the Syndicate; (2) that the said section 24 and clause lO(b) of the aforesaid agreement between the appellant and the University being inconsistent with section 7 to 12 of Chapter XXIX of the University Code were void and ineffectual and (3) that the services of the appellant could not be terminated except on the grounds mentioned in sections 7 to 10 of the University Code.

We shall deal with these contentions seriatim.

For a proper consideration of the first contention, it is necessary to notice section 24 of Chapter V of the Administration Manual,, clauses (c) (iii) and

(d) of section 19, section 39 (f), section 34 and section 42 of the Andhra University Act (hereinafter referred to as 'the Act').

Section 24 of Chapter V of the Administration Manual runs as follows:-

"24.

The Syndicate may determine the services of a H

teaher after confirmation on any day by giving him a notice

WITHOUT assigning reasons in writing of its

A • intention to that effect at least six calendar months before such a day or paying him six months salary in lieu of such notice. It shall be sufficient service of a n.otice by the Syndicate, if the notice be signed by the Registrar or such other person as may be authorised in this behalf by the Syndicate and be delivered at or sent by registered post to the address of the teacher with ac, knowledgemen: due".

>..j

Clause (d) of section 19' of the Act confers power on the Syndicate to suspend or dismiss a teacher of the University (subject to such ordinances as may be made in this behalf) which obviously implies a power to take action for misconduct.

Clause (c) (ill) of section 19 of the Act empowers the Syndicate to fix the emoluments of the teachers of the University and to define their duties and conditions of service subject to such statutes as may be prescribed in this behalf under section 39 (f). As explained by this Court is State of Madhya Pradesh & Ors. v. Shardul Singh('), the expression 'conditions of service' means all those conditions which regulate the holding of, a post by a person right from the time of his appointment till his retirement and even beyond it, in matters like pension etc.

Section 29(f) of the Act lays down that subject to Uie provisions of the Act, the statutes (which can be framed by the Senate which is the supreme governing body of the University) may provide for the classification and the mode of appointment of the teachers of the University.

It does not say that statutes can be made laying down the terms and conditions of service of the teachers nor does it put any fetter on ihe power of the Syndicate to define the terms and conditions of service of the teachers focluding the condition relating to termination of their services otherwise than by way of dismissal or removal.

It follows, therefore, that the power conferred by clause (c) (iii) of section 19 of the Act is a power quite distinct and apart from the power to suspend or dismiss a teacher for misconduct and includes within its ambit power to lay down a condition relating to early termination of service of a teacher withont casting any aspersion on him by giving hlm a notice for a specified period or on payment to him of salary and allowances in lieu of the notice although he may be eligible to continue in service upto a specified age.

Section 34 of the Act lays down that every salaried officer and teacher of the University shall be appointed under a written contract.

Section 42 of the Act inter alia empowers the Syndicate to make Ordinances in consultation with the Academic Council with regard to all matters which by the Act or by the statutes may be provided for by the ordinances.

The analysis of the aforesaid porvisions of the Act makes it clear

.. -\

that the Syndicate is invested with untrammelled power to define the ') terms and conditions of service of the teachers of the University.

Now 1' section 24 of Chapter V of the Administration Manual being undoubtedly a condition of service of the University teachers, we are unable to understand how it is 1iltra vires the powers of the Syndicate.

H Tho first contention raised on behalf of the appellant is, therefore, repelled.

(1)

[19701 3 S.C.R. 302.

I ... /

Let us now see if the above quoted section 24 of Chapter V of the A Administrn'.ion Manual and clause 10 of the agreement are void being repugnant to and inconsistent with sections 7 to 12 of Chapter XXIX of the University Code.

Section 7 of Chapter XXIX of the Code provides for suspension or abolition of any Professorship, Readership, Lecturership or other teaching post.

Section 8 of Chapter XXIX of the Code empowers the Syndicate to suspend any teacher of the University for a maximum period of one year or to require him to B retire on sufficient cause shown and after due investigation.

Section 9 of Chapter XXIX of the Code confers power on the Syndicate to renrnve a teacher for misconduct on his part or of breach by him of one or more of the terms of the contract which he has entered into with the University, which, in the opinion of the Syndicate, makes him unfit to hold the post.

Section 10 of Chapter XXIX of the Code invests the Syndicate with power to terminate the services of a teacher C on the ground of ill health.

Section 11 of Chapter XXIX of the Code prescribes the procedure for removal of a teacher. It also confers the right of appeal on the teacher who is removed from service or is suspended.

Section 12 of Chapter XXIX of the Code bars a claim for damages or compensation by a teacher against whom disciplinary action is taken i.e. who is suspended or removed from service under sections 8 and 9 of Chapter XXIX of the Code.

The aforesaid sections of the Code have nothing to do with termination simpliciter of the services of a teacher without casting any aspersion on him, which is a distinct and separate matter and is provided for in section 24 of Chapter V of the Administration Manual and clause !O(b) of the aforesaid contract of service.

As such, neither section 24 of Chapter V of the Administration Manual nor clause IO(b) of the agreement can be held to be void on the ground of repugnancy to sections 7 to 12 of Chapter XXIX of the University Code.

This takes us to the third and last contention raised on behalf of the appellant which is also devoid of substance.

The instant case, it

will be seen, is neither a case of abolition nor suspension of a post as contemplated by section 7, nor of suspension as contemplated by section 8, nor of dismissal or removal for misconduct as contemplated F by section 8, nor of termination of services on the ground of ill-health.

It is, in our opinion,, a c.; ase ofl termination of srvice simpliciter without attaching any stigma which is governed by the conditions of service specified in the aforesaid contract of employment which the Syndicate was empowered to lay down under section 19(c) (iii) of the Act and is clearly covered by the decision of this Court in Sirsi Municipality by its President v. Cecelia Korn Francis Teel/is(') where one of us, G namely the learned Chief Justice after an exhaustive review of the case law bearing on '.he matter observed :

"Relationship of master and servant is governed purely by contract of employment.

Any breach of contract in such a case is enforced by a suit for wrongful dismissal and damages.

Just as a contract of emp!Oyment is not capable H of specific performance similarly breach of contract of employment is not capable of finding a declaratory judgment

(I) [1973] 3 S.C.R. 348.

of subsistence of employment.

A declaration of uolawful termination and restoration to service in such a case of contract of employment would be indirectly an instance of specific performance of contract for personal services.

Such a declaration is not permissible under the law of Specific Relief Act. .... Termination or dismissal of what is described as a pure contract of master and servant is not declared to be a nullity however wrongful or illegal it may be.

The reason is that dismissal in breach of contract is remedied by damages."

That the impugned action is not invalid would also be clear from a perusal of another decision of this Court in Delhi Transport Undertaking v. Balbir Saran Goel(').

There the respondent, who was an employee of the appellant undertaking, established under the Delhi Transport Authority Act, challenged his demotion by filing a petition under Article 226 of the Constitutions.

After the dismissal of the petition, the appellant-undertaking passed an order terminating the services of the respondent stating that they were no longer required and that one month's salary in lieu of notice would be paid.

The respondent thereupon filed a suit seeking a declaration that the ordar of his dismissal was illegal.

On the questions : ( 1) whether the respondent's services could be terminated under Regulation 9(b) by giving one month's notice or pay in lieu thereof without complying with the procedure of enquiry prescribed by Regulation 15(2) (c) and

(2) whether although the order was made in perfectly harmless and innocuous terms and purported to be within Regulation 9 (b) it was a mere camouflage or cloak for inflicting punishment for breach of standing order 1 7 in as much as the respondent had approached the High Court under Article 226 of the Constitution without exhausting the departmental remedies, it was held:

"(1) Even if it be assumed that the law is the same as would be applicable to a case governed by Article 311, it was difficult to say that the services of the respondent were not merely terminated in accordance with Regulation 9 (b) which governed the conditions of his employment.

It may be that the motive for termination of his services was the breach of Standing Order 17 i.e. of filing a writ petition in the High Court against the demotion without exhausting departmental remedies but the question of motive is immaterial.

No charge-sheet was preferred under Regulation 15 nor was any enquiry held in accordance therewith before the order under Regulation 9(b) was made.

(ii) As regards the punishment having been inflicted for misconduct the order being a mere camouflage, no such question could arise in the present case.

Regulation 9(b1 clearly empowered the authorities to terminate the services after giving one month's notice for pay in lieu of notice.

The order was unequivocaHy made in te1ms of that Regulation.

Even if the employers of the respondent thought that he was a cantankerous person and it was not desirable

(!) (1970] 3 S.C.R. 757.

' tt I ,.

' to retain him in service, it was open to them to terminate his services in terms of Regulation 9 (b) and it was not necessary to dismiss him by way of punishment for misconduct.

If the employer chooses to terminate the services

~. ,. in accordance with clause (b) of Regulation 9 after giving one month's notice or pay in lieu thereof it cannot amount to termination of service for misconduct within the . meaning of clause (a).

It is only when some punishment is inflicted on the nature specified in Regulation 15 for misconduct that the procedure laid down therein for an enquiry etc. becomes applicable."

The decision of the l:fouse of Lords in McCl£1land's(') case on which itrong reliance is placed by Mr. Garg is not at all helpful to the appellant. In the case, the dismissal of the plaintiff was on the ground of redundancy of the staff whidh was not one of the grounds specified in the terms and conditions of service.

In the present case, no such difficulty could arise as the terms and conditions of service specified in the contract of employment entered into between the appellant and 1 the University under section 34 of the Act contained an express provision for termination of his services by six month's notice on either side.

Thus all the contentions raised on behalf of the appellant having failed, the appeal cannot succeed and is hereby dismissed.

In the circumstances of the case, the parties are left to bear and pay their own costs of the appeal.

P.H.P.

(1) (1957) W.L.R. 594.

15-125 SCi{16

Appeal dismissed.

I. N. SUBBA REDDY

ANDHRA UNIVERSITY & ORS

A. N. RAY, C.J.

M. H. BEG

ASWA:H SINGH, JJ.

Sections 7, 8, 9, 10, 11 and 24

s. 24

Section 24

Section 7

Section 8

Section 9

Section 11

Section 12

s. 24

sections 9 and 11

s. 24

ss. 8 to 12

Chapter XXIX of the University Code

Section 24

section 24

clause 10

sections 7 to 12

sections 7 to 10

Section 24

section 24

clause 10

section 24

section 10

sections 7 to 12

S. C. Agarwal

V. J. Francis

B. Sen

S. Venkata Reddy

G. N. Rao

JASWANT SINGH

section 24

October 28, 1967

sections 7, 8, 9 and 10

section 24

Clause 10

section 24

Andhra University

I. N.

C Subba Reddi

State Bank of India, Waltair

S. 24

Additional District Judge, Viskhapatnam

November 28, 1973

Article 226

January 29, 1973

section 24

sections 9 and 11

Chapter XXIX of the University Code

section 24

clause 10

section 24

sections 8 to 12

Chapter XXIX of the University Code

Jaswant Singh

section 24

sections 8 to 12

Chapter XXIX of the University Code

section 24

section 24

clause 10

Garg

section 24

section 24

section 7 to 12

Chapter XXIX of the University Code

sections 7 to 10

section 24

section 19

section 39

section 34

section 42

Section 24

section 19

section 19

section 39

Section 29(f)

section 19

Section 34

Section 42

section 24

section 24

clause 10

sections 7 to 12

Chapter XXIX of the University Code

Section 7

Chapter XXIX of the Code

Section 8

Chapter XXIX of the Code

Section 9

Chapter XXIX of the Code

Section 10

Chapter XXIX of the Code

Section 11

Chapter XXIX of the Code

Section 12

Chapter XXIX of the Code

sections 8 and 9

Chapter XXIX of the Code

section 24

section 24

sections 7 to 12

Chapter XXIX of the University Code

section 7

section 8

section 8

section 19(c)

Sirsi Municipality

[1973] 3 S.C.R. 348

Specific Relief Act

Article 226

Article 226

Article 311

(1970] 3 S.C.R. 757

section 34


MOHATIA BROTHERS

BHARAT SURYODAYA MILLS CO. LTD., AHMEDABAD

April 5, 1976

[H. R. KHANNA AND P. K. GOSWAMI, JJ.]

Indian Partnership Act (9 of 1932), s. 69-Scope of-Partnership deed

shoing partners-Later deed showing change in partners-Proof, that it was 1101 acted upon.

'The appellant, a registered partnership-firm, was the managing agent of the respondent.

After submitting its resignation to the board of directors of the respondent-company, the appellant filed a suit claiming a sum of money in accordance with an agreed scheme. The appellant-firm consisted of 5 partners with effect from April 1, 1949, and in addition, a minor was entitled to a 4-anna share in the profits of the partnership but was not liable for the losses.

The minor was represented by his mother as guardian.

On October 24, 1949, another partnership deed was executed wherein the mother was shown as a partner of the appellant-firm with a 4-anna share and the minor's name was \ omitted. The respondent contended that the suit was not maintainable, because, ·

the constitution of the old firm had been changed on October 24, 1949, and that the newly constituted firm consisting of 6 partners had not been registered.

The trial court held that the new partnPrshio deed was not acted upon and decreed the suit for a part of the amount claimed. There were appeals by both

sides.

The High Court disagreed with the finding of the trial court that the later partnership deed had not been acted upon and held that the mandatory condition of s. 69(2), Indian Partnership Act, was not fulfilled as the name of the mother. who was a partner in the reconstituted firm and in whose favour a cause of action had accrued, was not shown in the register of firms, and that this defect was fatal to the suit.

A1lowing the appellant's appeal to this Court and remanding the appeal to the High Court for disposal on merits, HELD : The trial court took the correct view of the matter in so far as it held that the later partnership deed was not acted upon and that the mother did not become a partner of the appellant-firm. [1028B]

(1) The question as to when it was decided not to act upon the later deed is not material.

The evidence of one of the partners of the appellant-firm that it was not acted upon and that the mother was not a partner is admissible :ind is fully corroborated by the documentary evidence. It is a statement inade by him against his own pecuniary interest. because, if the mother was a partner, the loss of the other partners would extend only to 12-anna share in the rnpee; whereas. if she was not a partner then they would have to bear losses to the full extent of 16 annas in the rupee.

[1029G-H; 1030H-1031D]

(2) In the register relating to the registration of firms kept under the Indian Partnership Act, an entry relating to the registration of the appeIIant-firm dated May 5. 1952. reveals that even in the year 1952, the stand of the partners of the appellant-firm was that the mother was not a partner and that it wa-; only her minor son who was entitled to a share in the profits of the partnership. [1028G-1029Al

(3) In the staiement of accouilts of the appellant-firm it is only the minor that is sho\vn to have a 4-anna share and not his mother. [1030B-C]

( 4) Applications in connection with the registration of that firm were prerented to the Income Tax Authorities under s. 26A, Indian Income Tax Act, 1922.

AU these applications were signed by the mother and they show that tho mother never claimed to be a partner of the appellant-firm and that, on the contrary, she acknowledged that it was her minor son who was entitled to the 4-anna share in the profits. [1029E-GJ

~ Jc

/'' I ~

(5) The directors of the respondent-company , bad passed a resolution in 1950 referring to the two partnership deeds.

But the entry which was made in the register of the respondent-company regarding the partners of its managing agents as required by s. 87, Indian Companies Act, 1913, shows that after April 1, 1949, there were only 5 partners, besides the minor under the guardianship -Of his mother of the appellant-firm. If the mother had become a partner since October 24, 1949, it is unlikely that an entry to that effect would not have been made in the reJdster of the defendant-company, because, under s. 87, a return has to be sent to the Registrar of Firms regarding any change in the particulars required to be contained in the register and non-compliance with the requirement would entail imposition of fine.

[1029A-E]

(6) The letter of resignation sent by the appellant-firm was signed by the mother also, but there was no indication whether she signed in her capacity as partner or as the_ guardian of her minor son.

[1028F-G]

(7) Soon after the presentation of the suit, on an application under Order

XXX, r.2, C.P .C., filed by the respondents, the appellant-firm declared the names C of its partners and the declaration did not show the mother as one of the partners. The question as to who should share the profits of the appellant-firm and should be other, wise entitled to its assets is essentially a matter for the partners of that firm.

Unlike the case of a defendant-firm from which money j is claimed here each partner may be personally liable, in the case of the plaintiff (appellant) firm claiming money, it would be a wholly untenable plea for the defendants, from whom money is claimed, to urge that even though the 1nother as well as other partners claimed that it was not she but her minor son that was D entitled to the 4-anna share in the partnership, the Court should hold that it was the mother who was entitled to that share.

[1030C-G]

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2075 & 2076 of 1968.

From the judgment and decree dated the 29th March & 1st April 1968 of the Gujarat High Court in First Apeals Nos. 769 and 1029 of

19W.

E A. K. Sen, L. M. Singhvi, S. K. Bagga and Mrs. Bagga, for the

~ appellant.

R. P. Bhatt, B. S. Trivedi H. S. Parihar and I. N. Shroff, fer the respondent.

The Judgment of the Court was delivered by F

KHANNA, J.

These two appeals on certificate by Mohatta Brothers plaintiff-firm are directed against the judgment of Gujarat High Court whereby that court reversed on appeal the judgment of the trial court awarding a decree for recovery of Rs. 77,286/0 Anna/2 Pies in favour of the plaintiff-appellant against the respondent-company and dismissed the suit.

The plaintiff is a partnership firm doing business under the name and style of Mohatta Brothers.

The plaintiff-firm carried on the business of managing agency of the defendant company up to September 4, 1950. Sometime before that date, it appears the plaintiff-firm expre5'ed an intention of giving up the post of managing agents.

On July 31, 1950 Chaturbhujdas on behalf of M/s.

Chaturbhujdas, Kharawala M0hatta & Co. submitted scheme Ex. 168 in consultation with the plaintiff.

Paras 5, 6 and 7 of the scheme were as under : " ( 5) Before our this Scheme is approved by the Company the present Directors shall submit before the Company

the Balance Sheets and the Profit and Loss Account upto the end of the year 1949 and get the same passed, and they shall get the Proforma Balance Sheet up to the date 31-7-5 0 prepared by the Auditors of the Company and shall hand over the same to us, and this Scheme has been given while understanding that at present everything is according to the list of machinery given to us by the present Agents.

And no one has any kind of charge or debt claimable from the Company till this day excep'.ing the approximate amount of Rs. 4,77,850/- due to the Agents and their kith and kin till this day and the list of which is given to us.

We give this Scheme believing the said fact true.

(6) The amounts of the Agents of the Company and their kith and kin which may have been deposited in the Company on the day the date 31-7-50 and which come to a)lout Rs. 4,77,850/- as told by the present Agents are to be kept credited in their accounts and interest thereon is not to be given from the date 1-8-50. And when our Scheme is approved they have not to take any interest on the said amounts from the Company for five years from the date we start the work of the Mills and they have not to withdraw the said amounts for a' period of ten years therealiter but the same are to be kept credited in the Company with interest at six per cent.

But the Company shall return the amounts earlier if it so desires.

(7) At present the amount of Rs. 3,46,466-11-8 is due to the Punjab National Bank Ltd. by the Company and the demand of giving bonus to the workers for the year 1949 is outstanding from the Company.

The present Agent states that in both of the said matters payments can be made from the amounts obtained by selling the goods of stores, etc. which is lying with the Company at present, the list of which is given to us by the present Agents, and from the amounts of E.P.T. deposit and advance payments of the income tax.

On making arrangement accordingly if the debt of the Bank is not fully paid or the liability of bonus is not fully fulfiIIed and if the Company is found responsible in any way, then the same is to be fuifilled by the present Agent.

But after fuifilling all liabilities accordingly if any amount remains in balance the same shall be treated as assets of the Company and half of the said amount shall be returned towards the above mentioned amount deposited in the Company and which belongs to the present Agent and their kith and kin.

But on fulfilling completely the liability of the Bank from the sale of goods of the Stores, etc. if there does not remain sufficient surplus or before getting the amount of E.P .T. deposit and income tax advance payment if the amount of bonus is required to be paid then the present Managing Agents has to give that amount first."

• I

"''

On the following day, i.e. August 1, 1950, the following Jetter was addressed by the plaintiff-firm to the Board of Directors of the defen- ""· dant-company :

"We Messrs Mohatta Brothers, the Secretaries, Treasurers & Agents of the company hereby beg to tender our resignation as Secretaries, Treasurers and Agents of the Company on condition of the scheme of Sheth Chaturbhujdas Chirnanlal dated 31-7-50 duly approved by the Board of Directors, being passed by the share-holders of the company in the Extraordinary General Meeting of the company to be held on 4th September, 1950.

FOR MOHATTA BROTHERS

Ahmedabad Shivaratan G. Mohatta Chandratan G. Moondhra D. R. Moondhra Brijratan S. Mohatta

S. R. Mohatta D Satyavati Mohatta" A notice was then issued for convening a general meeting of the defendant-company on September 4, 1950 for sanctioning the said scheme.

The said scheme was approved by the shareholders on September 4, 1950. Accordingly, as from that date Messrs Chaturbhujdas Kharawala Mohatta & Co. took over as the new managing

~ agents of the defendant-company instead of the plaintiff-firm.

The plaintiff's case was that the liability of the Punjab National Bank was fully discharged by sale of the stores.

No bonus was held to be payable by the Industrial Court to the employees of the company for the year 1949. It was stated that there was surplus left after discharging the liability of the Punjab National Bank from earmarked assets consisting of excess profit tax deposits, income tax advance amount and the amounts realised from the sale of the stores. The plaintiff-firm claimed half the surplus in terms of clause (7) of the scheme towards the deposit amounts of the plaintiff.

Prayer was made for accounts of the. surplus and decree for the amount due as per terms of the scheme with 9 per cent interest.

• It may be stated that the plaintiff-firm with effect from April 1, ". 1949 .consisted of five partne~. In addition to those five partners,

' Shash1 Kumar, who was a mmor and whose mother Satyavati was his guardian, was entitled to four Anna share in a rupee in the profits of 1 the partnership but was not liable for its losses.

Partnership deed

x. 115 was executed for this purpose on May 19, 1949 and was signed by the five partners and Satyavati.

On October 24 1949 another partnership deed Ex. 116 was executed wherein s'atyavati was shown as a partner of the plaintiff-firm instead of her minor son Shashi Kumar.

The suit was resisted by the defendant-company. Besides taking other pleas with which we are not concrned, the defendant contended that the plainllff firm could not maintam the suit as the constitution of the old firm which acted as managing agents of the defendant-company had been changed on October 24, 1949. From that date, it was stated, the plaintiff-firm consisted of six partners, including Satyavati.

The newly constituted firm, according to the defendant-company, had not been registered and as such the suit was not maintainable.

The trial court held that the new partnership deed Ex. 116 by which Satyavati became a partner was not acted upon. As the original partnership mentioned in the partnership deed dated May 19, 1949 had been registered, the plaintiffs suit was held to be not barred by section . 69 of the Indian Partnership Act. It is not necessary to refer to the other issues and the findings of the trial court on those issues. Suffice it to say that the defendant was held entitled to deduct certain amounts from the amount claimed by the plaintiff. The trial court accordingly passed the following order_ :

"The plaintiff has filed this suit for account as the account was to be• taken of the realisation and expenses of the stores. But by pursis Exhibit 424 t_he parties have agreed about the net realisation of the stores and have therefore urged that no Co=issioner be appointed and a final decree be passed. The real account was to be taken of the actual receipts and expenses of the sale of stores. But now nothing is required to be done and hence there is no necessity of passing any preliminary decree.

The plaintiffs as shown above are entitled to receive Rs. 77,286-0-2, from defendant towards their deposit amount being the net surplus which they are entitled. Hence defendants are liable to pay the said amount to plaintiff. The plaintiff should pay the remaining Court-fee stamp within a month.

I, therefore, pass the following order.

ORDER-··

Defendants do pay Rs. 77,286-0-2 and the cost of the snit to plaintiff with futnre interest at 6 per cent from 1st January. 1956. The plaintiff should pay the remaining Court fees within a month. Defendants to bear their own cost."

Two cross-appeals were filed against the judgment and decree of the trial Court. One appeal was by the defendant-company praying for the dismissal of the plaintiff's suit. The other appeal was by the plaintiff-firm claiming for enhancement of the amount decreed by the trial court.

One of the contentions advanced by the defendantcompany was as under :

"The plaintiff-firm was not entitled to file a suit as the plaintiff-firm was differently constituted from the firm of Mohatta Brothers as on 31st July 1950, and, in any event, as

the minor Shashikumar had become major in 1953 and had

• •

become a partner of the plaintiff-firm Mohatta Brothers, Ahmedabad, and as even the name of Satya vati Devi who was the partner suing did not apepar in the entry in the register of firms the present snit was barred under section 69(2) of the Act." ·

Dealing with the above contention, the High Court disagreed with the finding of the trial court that partnership deed Ex. 116 dated October 24, 1949 had not been acted upon.

The learned Judges of the High Conrt held so far as the first part of the above contention is concerned that when a firm is reconstituted by introduction of a new partner, it would remain the sgme registered firm, and there would be no necessity of fresh registration if the continuing firm was registered with the Registrar of the Firms under section 59 of the Indian Partnership Act.

Dealing with the contention that Shashi Kumar had become major,. C the High Court found that there was no evidence to show the age of Shashi Kumar and the whole argument in this respect was based on niere conjecture. On the latter part of the submission, the High Court held that the mandatory condition under section 69(2) of the Indian Partnership Act was not fulfilled in the present case as the name of Satyavati who was a partner of the reconstituted firm and in whose favour a cause of action had accrued was not shown in the register of the firms.

This defect was held to be fatal. The High Court in this context observed :

"In view of this legal position which we have discussed the second mandatory condition under section 69 (2) is not fulfilled in the present case as the name of Satyavati who was partner of the reconstituted firm and in whose favour the cause of action had accrued is not shown in the register of firms.

This defect would be fatal as the first defect of want of registration of the firm itself and in both the cases we would have no option but to dismiss the suit.

In that view of the matter it would be wholly unnecessary to go into any of the other contentions which have been raised in these two appeals and to record any finding on the issues relating to the merits of the case or as regards the other appeal of the plaintiff as well.

Howsoever much we may regret to dismiss the plaintiff's suit which apparently is well founded by upholding this technical objection of the defendant company. we are bound to dismiss this suit as in law a non-compliance of this second mandatory condition is also equally fatal as the non-compliance of first condition.

At the same time, however, in the circumstances of the cases while dismissing the plaintiff's suit we would order both the parties shall bear their own costs all throughout."

In appeal before us Mr. Sen on behalf of the appellants has assailed the judgment of the High Court in so far as it has disagreed with the finding of the trial court that Satyavati was not a partner of the plaintiff-firm and the deed of partnership dated October 24, 1949 had not been acted upon.

Mr.· Sen has also questioned the correctness oE the view taken by the High Court regarding the construction of section

A 69 (2) of the Indian Partnership Act.

As against that, Mr. Bhatt on

behalf of the respondents has canvassed for the correctness of the view >- -~ taken by the High Court, both on the question of fact as well as on the r question of law.

After hearing the iearned counsel for the parties and after having been taken through the relevant material on the record, we are of the opmivn that the trial court took a correct view of the matter in so far

as it has held that Satyavati did not become a partner of the plaintififirm and that the deed of partnership dated October 24, 1949 was not acted upon.

The main consideration which prevailed with the High Court in holding that Satyavati became a partner of the plaintiff-firm was the execution of deed of partnership dated October 24, 1949. According to this deed, Satyavati became a partner to the extent of 4 Annas share out of 16 Annas, which had been previously held by her minor son " Shashi Kumar. Shashi Kumar under the deed of partnership of May 19, 1949 was entitled to the share of profits to the extent of four Annas in a rupee and was not liable for the losses which were to be borne by the other five partners. Satyavati became entitled undec the deed of October 24, 1949 not only to the share of profit to the extent of 4 Annas in a rupee but also became liable to share losses to that extent.

The other circumstance relied upon by the High Court was resolution dated January 21, 1950 passed by the Board of Directon of the defendant-company.

That meeting was presided over by Shivratan G. Mohatta, partner of the plaintiff-firm.

In that resolution there was reference to partnership deeds dated May 19, 1949 and October 24, 1949 which had been received along with letter dated " December 1, 1949 from Mohatta Brothers. The Board of Directors took note of the changes mentioned in the above two partnership deeds and agreed to accept the partners therein mentioned.

The third circnmstance relied npon by the High Court is letter dated Augnst 1, 1950 Ex. 118 which was sent on behalf of the plaintiff-firm, Mohatta Brothers, for the purpose of tendering resignation as Secretaries, Treasnrers and Agents of the defendant-company. This letter was , signed, besides the other partners, by Satyavati.

There was, however, no indication in the letter as to whether Satyavati signed it in her capacity as a partner or as the gnardian of her minor son Shashi Kumar.

As against the circumstances relied upon by the High Court, we find that in the register relating to the registration of firms kept under the Indian Partnership Act, an entry was made on May 5, 1952 relating to the registration of the plaintiff-firm.

The above entry was plainly in pursuance of application filed on behalf of the plaintiff-firm shortly before the making of that entry.

The above entry shows that the position taken up on behalf of the plaintiff-firm even in the year 1952 was that there were only five partners of the plaintiff-firm and that in addition to that, Shashi Kumar minor was admitted to the benefit of partnership. The entrv thus reveals that even in the. year 1952 the stand of the partners of the plantiff-firm was that Satyavati was not a partner r>f the olaintiff-firm and that it was her minor son

Shashi Kumar who was entitled to share in the profits of the partnership.

This entry would be mexplicable if Satyavati had become a partner of the plaintiff firm with effect from October 24, 1949.

Another circumstance which goes to show that Satyavati did not become a partner of the plamtiff-firm is the entry in the registers of the defendent-company. According to section 87 of the Indian Companies Act 1913, which was the Act in fqrce at the relevant time, every company shall keep inter alia at its registered office a register of managmg agents containing with respect to each of them the following particulars, that is to say, in the case of a firm, the full name, address and nationality of each partner, and the date on which each became a partner.

The entry which was made in the register of the defendantcompany regarding the partners of its managing agents showed that after April 1, 1949 there were five partners besides Shashi Kumar minor under the guardianship of his mother Satyavati, of the firm of the managing agents Mohatta Brothers.

Although the above entry was made on October 6, 1949, no subsequent entry was made thereafter showing Satyavati as partner of the firm of Mohatta Brothers.

Had Satyavati in fact become a partner since October 24, 1949 of Mohatta Brothers, it seems unlikely that an entry to that effect would not be made in the register of the defendant-company. It may aloo be mentioned in the above context that return has to be sent to the Regis'.rar of Firms under section 87 regarding any change in the particulars required to be contained in the register.

Failure to comply with the above directions entailed imposition of fine.

The third significant circumstance which tends to show that Satyavati despite the execution of the deed of partnership dated October 24, 1949 did not become a partner of the plaintiff-firm is evidenced by applications in connection with the registration of that firm which were presented to the income-tax authorities under section 26A of the Indian Income-tax Act, 1922. Ex. 280 to 286 are the applications which were filed on behalf of the plaintiff-firm for the years 1949-50 to 1956-57. In all these applications, Shashi Kumar minor under the guardianship of Satyavati was shown entitled to 4 Anni!! share in a rupee in the plaintiff-firm.

Satyavati was not shown in any of these applications as partner of the plaintiff-firm. All. these applications which were signed by Satyavati clearly go to show that during these years she did not claim herself to be partner of the plaintiff firm.

On the contrary, she acknowledged that it was her minor son Shashi Kumar who was entitled to 4 Annas share in the profits of the partnership.

Documentary evidence which has been brought on the record in our opinion, clearly lends support to the statement of Shivratan (PW 1) that partnership deed dated October 24, 1949 was not acted upon and that Satyavati did not become a partner of the plaintiff-firm.

ivan. Das PW, who was an employee of the defendant-company, ha~ likewise deposed that Satyavati was never a partner of Mohatta Brothers.

During the hearing of the appeal, affidavit of Satyavati has been filed stating that she was never a partner of Mohatta Brothers and it

was her son Shashi Kumar who was at all material times admitted to the benefit of the partnership. Mr. Bhatt has objected to this Court taking notice of the contents of the affidavit of Satyavati including her disclanner of any interesnn the plaintiff-firm.

In this respect we arc of the view tha: even without the above affidavit, the material on the record clearly goes to show that Satyavati was not a partner of the plaintiff-firm.

In addition to what has been pointed out, we find that in the statement of accounts of the plaintiff-firm it is Shashi Kumar and not Satyavati who is shown to have 4 Annas share in the plaintiff-firm.

Entries show that Shashi Kumar shared the profits as well as the losses in that proportion.

The significant thing which emerges from the account books is that Satyavati was not shown as the person entitled c to 4 Annas share in the partnership firm.

Soon after the present suit had been filed, on application filed on behalf of the defendants under Order XXX, Rule 2 of the Code of Civil Procedure, names of the partners of the plaintiff-firm were declared on behalf of the plaintiff-firm.

In the declaration the name of Satyavati was not mentioned as one of the partners of the plaintiff firm.

The question as to who should share the profits of the plaintifffirm and should be otherwise entitled to its assets is essentially a matter for the partners of the plaintiff-firm.

The facts of the case disclose that the partners of the plaintiff-firm have agreed between themselves that so far as the 4 Annas share in the profits and assets of the plaintiff-firm are concerned, it would be Shashi Kumar who would be entitled to the same.

That position is also accepted by Satyavati in the applications in connection with the registration of the firm to the income-tax authorities. It would, in our opinion, be a wholly untenable plea for the defendant from whom money is claimed, to urge that even though Satyavati as well as the other partners claim that it is not she but her son Shashi Kumar who is entitled to 4 Annas share in the partnership, the court should hold that it is Satyavati who is entitled to that share.

The distinction between a plaintiff-firm and a defendant-firm in the above context should not be lost sight of.

So far as a defendant-firm against whom a suit for recovery of money has been filed is concerned, it would be open to the plaintiff to prove that a person is a partner of the defendant firm despite the denial of that fact by that person as well as the other partners of the defendant-firm.

The reason for that is that a creditor of a defendant-firm can, except in some cases to which it is not necessary to refer, also proceed against the personal assets of each and every partner. Such a consideration does not hold good when the dispute relates to the question as to who are the partners of the plaintiff-firm.

It has been mentioned above that Shivratan stated in the course of his deposition that partnership deed dated October 24, 1949 had not been acted upon.

This statement is against the pecuniary interest of Shivratan. It is plain that if Satyavati were a partner of the plaintifffirm, Shivratan and other partners would have to bear looses to the extent of 12 Annas in a rupee.

As against that, if Shashi Kumar be entitled to share profits to the extent of 4 Annas in a rupee and be not

liable for the losses, in such an eveut Shivratan and other partners would have to bear the losses to the full extent of 16 Annas in a rupee.

If despite that fact, Sh1vratan has deposed that SatayvatJ did not become a partner of the plaintiff-firm and the deed of partnership dated October 24, 1949 was not acted upon, his statement in this respect should not, in our view, be rejected, especially when there is overwhelming documentary evidence which lends support to the above statement.

The entire course of dealings shows that despite the execution of the deed of partnership dated October 24, 1949, the said partnership deed was not acted upon and the relations between the partners of the plaintiff-firm continued to be governed by the deed of partnership dated May 19, 1949 according to which it was not Satyavati but her son Shashi Kumar who was entitled to four Annas share in the partnership. The question, to which a reference has been made in the course of arguments, as to when it was decided not to act upon t!tc deed of partnership dated October 24, 1949 is hardly of much importance, the material thing is that the said deed was not given effect to or acted upon by the parties concerned. The firm which came into existence as per deed of partnership dated May 19, 1949 was admittedly registered under the Indian Partnership Act and its partners were shown in the Register of Firms.

Looking to all the facts we are of the opinion that the trial court took a correct view of the matter in so far as it held that Satyavati had not become a partner of the plaintiff-firm and that the deed of partnership dated October 24, 1949 had not been acted upon.

The High Court, in our opinion, was in error in reversing that finding of the trial E court.

In view of this conclusion of ours, it is not necessary to go into the legal qu, estion as to what should be the proper construction of section 69(2) of the Indian Partnership Act.

Learned counsel for the parties are agreed that such question would arise only in case we had affirmed the finding of the High Court that Satyavati had become a prtner of the plaintiff-firm and that the deed of partnership dated October 24, 1949 had been acted upon.

The High Court did not deal with the merits of the cross-appeals filed by the parties in view of its finding on the point as to whether Satyavati had become partner of the plaintiff-firm and the construction it placed upon section 69(2) of the Indian Partnership Act.

In the light of the conclusion we have arrived at, it becomes essential to remand the matter to the High Court so that the cross-appeals filed G by the parties may be disposed of on merits.

We accordingly accept the appeals, set aside the judgment of the High Court and remand the case to it for disposal of the appeals filed by the parties on merits Looking to all the circumstances, we leave the parties to bear their own costs of these appeals.

As the matter has been pending for a long time, the High Court may dispose of the appeals at an early date.

V.P.S.

Appeals allowed.

MOHATIA BROTHERS

April 5, 1976

H. R. KHANNA

P. K. GOSWAMI, JJ.

Indian Partnership Act

s. 69

April 1, 1949

October 24, 1949

s. 69(2)

Indian Partnership Act

Indian Partnership Act

May 5. 1952

s. 26A

Indian Income Tax Act, 1922

s. 87

Indian Companies Act, 1913

s. 87

CIVIL APPELLATE JURISDICTION

E A. K. Sen

S. K. Bagga

Bagga

R. P. Bhatt

B. S. Trivedi H. S. Parihar

I. N. Shroff

F

KHANNA

Mohatta Brothers

September 4, 1950

July 31, 1950

Chaturbhujdas

31-7-5 0

Punjab National Bank Ltd.

August 1, 1950

Sheth Chaturbhujdas Chirnanlal

4th September, 1950

S. R. Mohatta D Satyavati Mohatta

Chaturbhujdas Kharawala Mohatta & Co.

Punjab National Bank

April 1, ". 1949

Satyavati

May 19, 1949

October 24 1949

s'atyavati

Shashi Kumar

Indian Partnership Act

1st January. 1956

31st July 1950

Mohatta Brothers

Ahmedabad

Satya vati Devi

section 69(2)

section 59

Indian Partnership Act

section 69(2)

Indian Partnership Act

section 69

Sen

Indian Partnership Act

Bhatt

January 21, 1950

Shivratan G. Mohatta

May 19, 1949 and

December 1, 1949

Augnst 1, 1950

Indian Partnership Act

May 5, 1952

section 87

Indian Companies Act 1913

October 6, 1949

section 87

section 26A

Indian Income-tax Act, 1922

Shashi Kumar

Shivratan

ivan. Das

Satyavati

the Code of Civil Procedure

Shivratan

SatayvatJ

Indian Partnership Act

section 69(2)

Indian Partnership Act

section 69(2)

Indian Partnership Act