THE STATESMAN LTD. v.

THEIR WORKMEN

January 22, 1976

[V. R. KRISHNA IYER, A. C. GUPTA AND N. L. UNTWALIA. JJ.j

Industrial Di.pule-11/e; taf strike followed b_v lock-out-Lock-out not lifted despite the workers' conciliatory attitude-Payment of lu1/f wages during strikt~ period-If reasonable.

Constitution of India, 1950-Article 136-When the Court would interfere.

Even when a bonus dispute was pending adjudication before the Industrial Tribunal, the workn1en of the appellant resorted to rude tactics to press their earlier charter of demands, which took the turn of an illegal and disorderly strike.

The management declared a lockout.

On the day following the declaration of lockout, thei workmen requested the management to lift the lockout proferring peaceful resumption of work and asking for an interim relief on their economic demands. The management did not agree to lift the lockout.

Even tually, however, the lockout was lifted and the strike called off.

On the question of wages during the strike period, the Industrial Tribun<il, apportioning fault to hoth the p<1rties. directed that the mana_gcmcnt should pay half the wages to the employees during the strike period.

Dismissin.1?: the appeal,

HELD : ( 1) There is much to be said in favour of the view of the Tribunal that the blameworthiness may be equally apportioned bet\veen the parties. Where the strike is illegal and sequel of a lockout legal, the Court has to vie\v the whole course of developments and not stop with examining the initial legitimacy.

If one side or other behaves unrea&onably or the overall interests of good industrial relations warrant the Tribunal making such directions regarding strike period was as will meet with justice, fairplay and pragmatic v1isdom, there is no error

in doing so.

The power of the Tribunal is flexible.

[236 F; 233 DE]

India Marine Service, [19~3] 3 SCR 575, followed.

Jn the instant case there \vas a pending industrial dispute when the Unions sprang a strike notice.

The strike being illegal, the lockout that follo\ved, became a legal, defensive measure. But the management could not behave unreasonably merely because the lockout was born lawfully.

If, by subsequent conduct, the Unions had sho\vn readiness to resume work peacefully, the refusal to restart the industry was not right and the initial legitimacy of the lockout lost its virtue by this blemished sequel. f232 G-Hl

(2) In an appeal under Article 136 of the Constitution, this Court would interfere with the A\vard under challenge only if extraordinary flaws or grave injusti...-:e or othet recognised grounds are made out.

[231 EF]

Bcnf,!a[ Che111ical, [1959] Suppl. 2 SCR 136, 141; and Associated Cen1e11t Co111pa11ies Ltd., AIR 1972 SC 1552, 1554, followed.

In the instant case the direction of the Tribunal that the Company should pay tiffin allowance at the rate of 50 paise on working days to thoe. en1ployees in the staff canteen and that the members of the subordinate staff shoul.9be supplied with \Vnrm coats did not call for interference.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 232 of 1970.

Appeal by special leave. from the Award dated the 2-9-1969 of the 5th Industrial Tribunal, West Bengal, in Case No. 321 of 1967 published in the Calcutta Gazette dated the 16-10-1969.

/"•

STATESMAN LTD. v. WORKMEN (Krishna lyer, !.)

S. Chaudhury and D. N. Gupta for the Appellant.

Kapil Sibbal for the Respondents.

The Judgment of the Court was delivered by

KRISH~A IYER, J. There is a tragic touch in processual protraction as this little /is lasting a whole decade pathetically illustrates.

Such lingering legal machinery is by-passed by both sides in practice largely because, by sheer slow motion, it denies relief when needed and drives parties to seek remedies by direct action or political intervention.

What elegant alibi can there be for the routine charter of demands put forward in the middle of 1966, ripening into an industrial reference in Nov0mber 1966 after a flare-up of illegal strike and failure of conciliation, taking around 3 years for rendering a short award and a little over five years for reviewing it in this Court?

Law-makers whose vocal concern for industrial peace and constitutional promises for the working class is being put to the test by failure in the field will, we hope, alert themselves.

Labour liation can be a course or dread where one side is weak, as here, and has not been able to hire legal services but has been made good by amicus curiae, and the othr side, regardless of cost, is anxious to settle so1ne principle, as counsel for the appellant impressed on us.

We now move into the area of facts which wears a jural apparel.

The narrative of necessary facts starts naturally with a bonus dispute in the Statesman Ltd (a newspaper with editions published in Calcutta and Delhi) which was referred to adjudication in September 1966 and was, admiltedly, pending at a time when the Calcutta workers reportedly resorted to rude tactics to press an earlier charter of demands presented to the management. On September 20, !966, events reached a crescendo of illegal and disorderly strike at midday with a reprisal of lock-out at mid-night so soon as the administrative officer, with police assistance, gained his freedom.

Even in human affairs a storm is followed by a calm, may be. For, the two Unions, sobered, perhaps by this sudden action of the management wrote the very next day (21st September) to the employer requesting for lifting the lock-out, preferring peaceful resumption of work and requiring at least an interim relief on the 'economic' demands.

The letter speaks for itself and may be read presently. The employer was not ready to accept this assurance. The lock-out dragged on, despite the

scming offer of the olive branch by Labour. .

Mistrust on both sides .is inevitable when estrangement vitiates relations and language is suspect when bitterness is the rule of interpretation.

Right or wrong, the manag0ment took the view that the offer of good behaviour by the workers was conditional and not convincing, so that the lock-out was not lifted for several days.

The Deputy Commissioner of Labour, who had interceded to conciliate had unavailingly requested th~ Management to lift the lock-out and had found Labour insisting on some interim 'economic' relief as a ground for withdrawal of the strike.

At certain stages of conflict in th_is :vorld, fac.e-saving becomes more important than heart-searching.

Life 1s not logic and presl!ge amends propriety.

The cold-war correspondence continued for a little while more,. each blaming the other, till at last the State, on November 4, 1966. referred six points of dispute to the Fifth Industrial Tribunal Calcutta, before whom the bonus dispute was already pending.

Better sense on both sides resulted in the termination of the strike and the closure, and work was resumed from November 8, 1966.

The award that followed upon the dispute was rendered on September 2, 1969, nearly three years after the reference of the dispute.

One is led to wondor why there should have been so much delay,. but the blame, if any, has to be shared between the State Government and the Tribunal.

For, after the Fifth Tribunal started the enquiry and examined a few witnesses, the State Government ordered transfer of the industrial dispute to another Tribunal and, not surprisingly, omitted to communicate promptly the factum of such transfer to the affected Tribunal.

Thus, although the order of transfer was made on March 31, 1967 the enquiry continued upto April 22, 1967.

When actual notice of the transfer was received by the Fifth Tribunal on April 24, rep!tsentation was made by it about the enquiry having commenced and, naturally, Government re-transferred the dispute to the same Tribunal.

After this minor episodo, of transfer and retransfer, the enquiry was c.ontinued and the award made.

We are now concerned only with three disputes.

Of the three ismos, two deal with petty items like warm coats for the subordinate staff and canteen allowance for the employees' canteen staff-financially too negligible to engage the attention of this Court.

The other item, which is meaty enough to merit our verdict, relates to the wages during the period of work stoppage from September 20, 1966 to November 8, 1966. The Tribunal, considering, in its totality the facts and circumstances of the case, the share of blame on the part of each party the role of broad justice in producing industrial peace and advertence to the relevant materials on record, held 'that the coffir pany should pay half the wages to the employees during the period from September 20 to November 7, 1966.

F The Management, disappointed by this direction. as we]] as the orders regarding warm coats and canteen allowance, has come directly to this Court securing special kave under Art. 136. -4

Even though leave has been granted by this Court, the very width of its power under Art. 136 is a warning against its free-wheeling exercise save in grave situations. In Bengal Chemical ( 1) Subbarao, G J. (as he then was) pointed out that:

"The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of.

It would be illogical to apply two different standards at two different stages of the same case.

The same view was expressed by this Court in Pritam Singh v. State of Madras (1950 SCR 453), Hem Raj v. State of Ajmer (1954 SCR

1153) and Sadhu Singlz v. State of Pepsu (AIR 1954 SC A 271)".

From this it follows that when awards of Industrial Tribunals are challenged in this Court, we have to apply those several tests which have become part of the self-imposed restraints on its special jurisdiction.

What are these self-created trammels upon the exercise of this Court's power? The answer is furnished by this Court in the Associated Cement Companies Ltd.(l) Mathew J. followed Bengal Chemiwl (') (both these cases related to industrial awards challenged in appeal under Art. 136 of the Constitution), where this Court had observed :

"Though Art. 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards arc made in violation of the principles of natural justice causing substantial and grave injustice to parties or raising an important principle of industrial law requiring elucidation and final decision by this Court or disclosing such other exceptional or special circumstances which merit the consideration of this Court." The learned Judge endorsed the view in these words : 'The portion of the award with which we are concerned does not raise any important principle of law requiring elucidation and final decision by this Court.

Nor does it disclose any exceptional or special circumstances which merit decision by this Court. On a question like this, where the Tribunal. on a consideration of all the materials placed before it and having regard to the overall picture came to a conclusion. we do not think this Court should interfere." Circumspection and circumscription must therefore induce us to interfere with the award under challenge only if extraordinary flaws or grave injustioe or other recognised grounds are made out. This perspective is sufficient in itself to dispose of the two tiny items of dispute bearing on warm coats and canteen allowance.

Even so, we will briefly refer to them.

The canteen staff claimed allowance of 50 paise per working day.

There are two canteens, one for officers and the other for the subordinate staff.

While the staff of the Officers' canteen are drawincr the dietary allowance of 50 paise, the employees of the staff canten arc denied this paltry sum. There is no reasonable basis for this invidious treatment and we find no ground to interfere. with the Tribunal's direction that 'the company should pay tiffin allowance at the rate of 50 paise on working days to the employees in the staff canteen'. Of course, if they take free food from the canteen they will be indigible for the allowance since they cannot have both.

Equally untenable is the grievance against warm coats supplied to the subordinate staff. It is common case that the management does supply warm coats to Jamadars, gate-darwans and inspectors but does not extend thi.s._r_Il1 facility to darwans and delivery peons Calcutta.

(1) Al.l.R. 1972 S. C. 1552, 1554.

16-LJ90 SCl/76

cold does not spare either category and therefore no climatic distiction can be made between the two. True it is that in the charter of demands warm coats were claimod only for those employees. who delivered newspapers.

Even so the dispute referred to the Tribunal is in wider terms and we arc satisfied that the award calls for no interference when it states 'that all the members of the subordinate staff should be supplied with warm coats'. Of course, it need hardly be said that these employees cannot claim warm jerseys over and above coats.

1 he bone of contention between the parties bears upon the wages during the strike period. We have already indicated that the award crystalliZ<'S a discretionary conclusion reached after a survey of all the facts and animated by a sense of broad justice.

The Tribunal had something to say against the workers and the management and felt impelled to state :

"J find that both the parties were at fault.

That being the position I am of opinion that both the parties should be held responsible for the delay in the matter of the withdrawing of the lock-out.

In these circumstances, I am of opinion that the company should pay half the wages to the employees during the period from 20th September 1966 to 7th November 1966."

Captious criticisms apart, the conspectus of relevant circumstances more or less bears out the propriety of this direction.

The crucial issue is as to whether we have any material to castigate this conclusion as unconscionable or unjuristic, involving gross injustice, violating a well-established rule of law or otherwise attracting out special responsibility to declare the law in a twilit area of public importance to industrial life.

We will examine the pertinent circwnstances from this angle and it will be evident that the more we ponder the subject the more we are satisfied about the legal soundness and practical wisdom of the award, having in mind industrial peace as the goal.

The smouldering dispute between the Management and the workers apparently burst into flame on September 20, 1966. Going by tl1e Tribunal's reading of the situation there was a strike that day.

The pendency of certain types of proceedings before a Tribunal stamps a strike or lock-out with illegality (s. 24). Whiles. 23 prohibits strikes and Jock-outs when proceedings mentioned there are under way, s. 24

(3) absolves a Jock-out of illegality if it is caused by an illegal strike.

There surely was a pending industrial dispute when the Unions sprang the strike.

Being therefore illegal, the lock-out that followed became a legal, defensive measure. So far is smooth sailing. But the management cannot behave unreasonably merely because the lock-out is born lawfully. If by subsequent conduct, imaginatively interpreted, tl1e Unions have shown readiness to resume work peacefully, the refusal to re-start the industry is not right and the initial legitimacy of the lockout loses its virtue by this blemished sequel. Nor can any management expect, as feelings run high, charge-sheets in criminal courts arc laid against workers and they are otherwise afl!ictcd by the pinch of

oTATESMAN LTD. v. WORKMEN (Krishna lyer, !.) 233

unemployment, to get proof of good behaviour beyond their written word. Nor can they realistically insist that they abandon their demands !or better benefits before the lock-out is lifted.

In this hungry "orid the weaker many cannot afford the luxury of finery in speech wnich the happier few can afford.

In the rough and tumble of industrial disputes conciliation is a necessary grace the stronger party, the soc1ally conscious management, must cultivate and huff a fia\v it must cschw.

In the realistic temper of bargaining between two wings of an ind1.1stryboth managements and workers belong equally to the industry, for if one owns the other produces-a feeling of partnership must prevail to persuade the two sides to trust each rather than such to point flaws in the language used.

Such is the spirit of give and take which must inform industrial negotiation if peace and production are the bona fide end and national development the great concern.

This broad philosophical approach amply vindicates the justice of the Tribunals impugned award.

To appreciate this view, a flash back into the ev-nts aro"nd and .after September 20, 1966 is helpful. The backdrop of law may be briefly recapitulated before going into factual details.

If the strike is illegal, wages during the period will ordinarily be negatived unless considerate circumstances constrain a different course.

Likewise if the lock-out is illegal full wages for the closure ixriod shall have to b~ 'forked out', if one may use that expression. But in between lies a grey area of twilit law. Strictly speaking, the whole field is left to the judicious discretion of the Tribunal. Where the strike is illegal and the sequel of a lock-out legal, we have to view the whole course of developments and not stop with examining the initial legitimately. If one side or other behaves unreasonably or the over-all interests of good industrial relations warrant the Tribunal making such -directions regarding strike period wages as will meet with justice, !airplay and pragmatic wisdom, there is no error in doing so.

His power is llexible.

We are heartened and strengthened irr our approach by the decision in India Marine Service('). There the Court noted that 'the attitude -0! the company was a reasonable one and that it even proposed to the

u!'ion and through it to its workmen that work should go on, that the -Oispute should be taken before the Conciliation Officer for conciliation and that in the meanwhile they were prepared to grant some interim xelief to the workmen. 'In our opinion', added the Court "while the strike was unjustifiable, the lock-out when it was ordered on November 13, 1958, was justified. It seems to us, however, that though the lock-out was justified at its commencement its continuance for 53 days was wholly unreasonable and therefore, unjustified. In a case wh2re a strike is unjustified and is followed by a lock-out which has because of its long duration. become uniustified it would not be a proper course for an industrial tribunal to direct th2 payment of the whole of the wages for the period of the lock-out. We would like to make it clear that in a case where the strike is unjustified and the lock-out is justified the

(!) (1963) 2 S.C.R. 575.

workmen would not be entitled to any wages at all. Similarly where the strike is justified and the lock-out is unjustified the workmen would be entilled to the entire wages for the period of strike and lock-out.

Where, however, a strike is unjustified and is followed by a lock-out which becomes unjustified, a caso for apportionment of blame arises.

In our opinion in the case before us the blame for the situation which resulted after the strike and the lock-out can be apportioned roughly half and hall between the company and its workers. In the circumstances we therefore direct that the workmen should get half their wages from November 14, 1958 to January 3, 1959 (both days inclusive)."

The factual milieu surrounding the strike-lock-out complex, as neatly presented by Shri Kapil Sibbal, shows how the flow ol events exonerated the Unions of serious impropriety and the employer was trying to be too clever.

When the workers struck, the Management put up a notice of closure wherein it was stated :

"The stay-in-strike resorted to by the workmen is unjustified and illegal in view of the pendency of the proceedings bdore the Fifth Industrial Tribunal and also violates the Code of Discipline.

The representatives of the Unions were made aware of this fact when the management met them to discuss their demands today.

In the circumstances, the 111anagen1ent has no option but to keep the establishment closed ulllil such time as the work- 1nen assure the n1anagen1ent of nor1na! and peaceful resun1ptioll of work."

(emphasis, added) The simple insistence of the Management in the closure notice was an assurance from the workmen 'of normal and peaceful resumption of work'.

No sooner was this notice put up than the Unions responded constructively, moderating the usual tantrums they arc given to in an atmosphere of conflict. The very next day after the closure, i.e., on September 21, the Secretary of the Union wrote back a letter wherein he stated inter alia :

"While we deny the various allegations contained in your said Notice and hold you wholly liable for the development on 20-9-66 in suddenly advising your supervisory staff to stop all processes of work from 12.30 p.111. and creating a confusion amongst t.he workmen who were working an the time till then, presumably to prepare a ground for the illegal Lockout since some days past as peaceful and constitutional movement of lhe Unions was there to your dislike, we should tell you here and now that no useful purpose will be served by such black-mailing Notice far less the cause of the industrial peace and progress of a reputable concern like 'The Statesman' . ... "

x x x x "You know more than anybody else that your are all peace loving people and have cooperated

x workmen with you

all along with respect and a\1eclion.

You had never any occasion to find fault with them for any indisciplined conduct.

Our Unions have also a long tradition of faithiul cooperation with the management in every hour of crisis and we are proud of our said lofty tradition.

There was no ob- struction in tbc movement of anybody at any stage on 20--9-66 as alleged or at all aqd the police ought not to have been invited in the offi_ce. Considering everything: Vle are o[ the opinion that no interest of the management or of the workmen will. be served by such acrimonious correspondence and any delay in the settlement of the outstanding disputes will make the situation more complex.

You are therefore requested to withdraw your aforesaid Notice, arrange an in1mcdiatc sitting with us and meet the genuine grievances of he e1nployces, if not in full at least as :an interim :Jrrangement and note in this context if any assurance is necessary that all along in the past the workmen will nzaintain peace and work 11or1nally and peacefully unless they are sllf/iciently provoked fnnn your end."

(emphasis, added)

lt is obvious that the tone of this reply is conciliatory and literally conforms to the demand for the assurance from the workmen of peaceful and normal resumption of work.

It is fair to infer that the receipt of this letter should have persuaded the Management in a spirit of goodwill, to lift the lock-out and give a trial to the workers' willingness. ls not a worker's word, until the contrary is proved, as good as his bond 9 Moreover, a strike is called oft when the strikers agree to come back to work. Curiously enough, the management struck a dis- cordant note in their letter two davs lat•cr.

Instead of a favourable wesponse, the appellant recited the 'old facts and concluded :

''We have no intention of keeping the oftice closed longer than is necessary, and as soon as the Managcn1ent is reasonably convinced that discipline and normal production will be maintained and that there will be no recurrence of the acts of indiscipline which led to the illegal strike and closure, we shall take steps to open the ot1icc."

The shift in stand is obvious. The first letter merely demanded of the workmeu an assurance of normal and peaceful resumption of work.

When this was given the Management quietly tilted its stance and demanded that it should k 'reasonably convinced that disciipline and G normal production will be maintained and that there will be no recurrence of the acts of indiscipline' ..... The further letter of October 31, 1966 by the Union highlights the anxiety of the workers for resumption of work.

Of course, the staying power of the workers is ltmited and wanes after a time. Naturally, they press the Management

to withdraw the closure. The language of the letter Exhibit E-7 is tellingly temperate : H

"Assuming though not conceding even by any stretch of imagination that there was an illegal strike as alleged by

you and the lock-out for 41 days till date after the Unions .. unequivocal assurance of peace and cooperation given to you on behalf of the workmen in their letter dated 21-9-66 111 reply to your notice dated 20-9-66 where you asked for such an assurance. So far as the Unions' demands arc concerned.- they are only of incidental nature because of the suffering thrust upon the workers on account of the unproved Jock out.

We want peace and a cli111ate where lock-out and strike will be a matter of the past. In that spirit we have selected the least controversial 11 items out of all the items of demands for immediate settlement. Hope you will appreciate the same by entering into a negotiated settlement and we assur.e you that if necessary we shall not even fight the Bonus case before the Tribunal if on that item also you agree to settle."

It was mentioned by Shri Sibbal that there were charge-sheets against the workers at the instance of the Management which embittered ·..l :relations. There is also the reference in the evidence of the Deputy Conunissioner of Labour that the Management was unwilling to lift the lock-out when requested and the workers were unwilling to withdraw the strike without settlement of disputes.

In an escalating situation of D conflict, developments lead to deterioration of industrial quiet and we have to look at the whole picture with realism.

There was a minor ripple of disputation as to whether the evidence recorded by the Fifth Industrial Tribunal between the date when the transfer order was passed by the government and the re-transfer order was made could be read as evidence.

The Tribunal has come to the E same conclusion both by excluding and by including such evidence in his verdict. Shri Kapil Sibbal has fairly taken us through these materials to convince us that the verdict cannot be deflected by eliminating or reading the disputed testimony. We feel satisfied that there is much to be said in favour of the ultimate view taken by the Tribunal that blameworthiness may be equally apportioned between the parties. Had the Management reacted with goodwill when the workers the very next F day offered to be peaceful and resume work, the prolonged situation of cessation of work could have been saved.

It is therefore a case which attracts Indian Marine Service (supra). In that ease also this Court found it fair to direct that the workmen should get half the wages during the strike period.

The Tribunal's view is certainly not unreasonnable. May be, it is a just solution. We hope that both sides. after these long years, will bury the hatchet and work for the better G efficiency and greater status of a leading newspaper of India.

Having regard to the circumstances of the case, it is proper to direct that the appeal be dismissed but the parties wiIJ bear their respective costs. Before parting with this case we deem it our duty to record our appreciation of the thoroughness of preparation of Shri Kapil Sibbal,

a young advocate of promise, who has assisted the Court as amicus H curiae with precedential industry and persuasive felicity.

P.B.R.

Appeal dismissea.

THE STATESMAN LTD

THEIR WORKMEN

January 22, 1976

V. R. KRISHNA IYER

A. C. GUPTA

N. L. UNTWALIA

Constitution of India

Article 136

India Marine Service

Article 136

AIR 1972 SC 1552

S. Chaudhury

D. N. Gupta

Kapil Sibbal

KRISH~A IYER

Statesman Ltd

Calcutta

Delhi

September 20, !

November 4, 1966

Fifth Industrial Tribunal Calcutta

November 8, 1966

September 2, 1969

March 31, 1967

April 22, 1967

September 20, 1966

September 20 to November 7, 1966

Art. 136

Art. 136

Bengal Chemical

Subbarao

Art. 136

Art. 136

20th September 1966

7th November 1966

s. 24

s. 24

November 13, 1958

(1963) 2 S.C.R. 575

January 3, 1959

Kapil Sibbal

October 31, 1966

Sibbal

India


...

I. N. SAKSENA

\-',

THE ST A TE OF MAD HY A PRADESH

lanuury 23, 1976

[A. N. RAY, CJ., M.H. BEG, R.S. SARKARIA AND P.N. SHINGHAL, JJ.]

Constitution of India-Articles 245 & 246-Schedule seven-List II entrv 41---lnlerpretation of legislative entries-subsidiary or ancillary to subjeCt covered by e11trie.1-J11dicial function and legislative function-Whet!ier legi:-J- }ature can overrule a judicial pro1101111cen1e11t by a bare declaration-Whetlicr can remove basis of judicial pronouncement.

The appellant v, ias a District & Sessions Judge.

By a Memorandum dated 28-2-1963, the State Government raised the age of compulsory retirement for Government servants to 58 years. The said Memorandum, however, empowered the Government to retire a Government servant after he attains tilel age of 5 5 years. Thereafter, rules under the proviso to Article 309 of the Constitution were framed whereby the age of uperannuation was raised to 58 years. However the clause empowering the Government to retire a Government servant after the age of 55 years, was not incorporated in the said rules.

The appellant was retired from service after he completed 55 years and before he completed 58 years, The challenge to the said order of compulsory retirement succeeded in this Court. This cOu1t held on 23-1-1967 as under:

"The appellant will be deemed to have continued in the service of the Government in spite of that order. As. however. the appellant attained the age of 58 years, in August, 1966, it is. not possible now to direct that he should be put in service.

But he will be entitled to such benefits as may accrue now to him by virtue of the success of the

Y.Tit petition. The appellant will get his costs from the State throughout."

'fhereafter, an Ordinance .was pron1ulgated Which later on became an Act of the fadhya Pradesh Legislature. The said Act validated the retirement of certain Government servants including the appellant, despite the judgment of this Court. The act was made effective from 1st March 1963 and it ernowered the Governn1ent to retire a Government servant on his attaining the age of 5? years.

The appellant again filed a Writ Petition in the High Court which was disn1issed.

In an appeal the appellant contended before this Court :

1. The Act hris heen passed to OVLrrulc a decision of this Court which the legislature has no power to do.

2. The 1natter having once been decided by the Supreme Court was barred by the principle of res judicata.

The Act gives naked PQ\Ver to the authorities to retire r..ny employee after he attains the age of 55 years and provides no guidelines for the exercise of the power.

A right of property being a judgment debt protected by Article 19(1)(f) of the Constitution, the impugned Act could not have expropriated without providing for any compensation. It is ultnt vi res Article 31 (2) of the Constitution.

5. 1'he impugned Act is ultra vires the Constitution since it 5e'eks to validate. the retrment .of the appelant and others l!ke him by changing their service conditions with retrospective effect.

In doing so, the Legislature has H over-stepped the limits of legislative power.

F.ve11 if the impugned Act is valid, on a proper construction it Jocs not vacate the decree of this Court. ...

Dismissing th~ appeal by certificate under Article 132(1) and 133(1)(a) to (c),

HELD : 1. The decree of this Court is not a money decree raising a iudgme?t debt. lt is a declaratory decree declaring that the order compulsorily retiring the appellant was invalid. The further declaration that he would be entitled to such benefits as might accrue to him by virtue of the succes'> of the Writ Petition, was only incidental or anciliary, to the main relief and will fall or stand with the same.

[242 G-H] •

2. The distinction between a Legislative act and a Judicial act is well known though in some s-pecific instances the line which separates one category from the other !f13V not he easily discernible. Adjudication of the rights of the parties accC?rd1ng to Jaw enacted by the Legislature is a judicial function.

It is for the Legislature to lay down the law, prescribing norms of conduct which v.iU govern

partcs and transactions and to require the court to give effect to that law. The Legislature ca1?-not br a. are dc.laration, without more, directly overrule, reverse or overnde a Judicial dec1s1on. It may at any time in exercise of the plenary po, vers conferred on it by Articles 245 and 246 of the Constitution render. a j_udicial decision ineffective by enacting a. valid law on a topic within

1~ leg1slative e!d, fundamentally altering or changing with retrospective curative or neurahs1ng effect the conditions on which such decision is~ based.

Judgments rn Indira Nehru Gandhi v. Raj Narain [1976] 2 S.C.R. 347 and Harl Si111th v. Military Estate Officer, [1973] 1 S.C:R. 516 followed. [243 A-Dl

Jn enacting the impugned Act the State Legislature derives its competence not only from Article 309 but also from Entry 41 of List II of the Seventh

Schedule. It is \Vell settled that the entries in these legislative lists are to be construed in their widet possible amplitude and each general word used in tiuch entries must be held to comprehend anciliary or subsidiary niatters.

The Le, gis- Jature has legislative competence not only to change the service conditions of Civil Servants \vith retrospective effect but also to validate with retroactive force invalid executive orders retiring the servant~ because such validating legislation must be regarded as subsidiary or anciliary to the power of legislation on the subiect covered by Entry 41. 1245 A-Dl

The in1pugned Act by introducing a legal fiction on giving the said memorandum statutory status with effect from its inception, effectively cures the defects from which this Memorandum and the orders of retirement made thereunder were suffering.

Thus the said legislation removes or cures the dfcct which this Court found in the Memorandum which was the basis of the impugned orders of retirement. [246 A-Bl

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 131 of 1971 and 350 of 1971.

(From the Judgments and Orders dated 2-5-1970 of the Madhya Prade; h High Court in Misc. Petitions Nos. 504 and 92 of 1967 respectively).

G. L. Sanghi, Bishamber Lal and M. lyngar for the Appellant (In CA 131/71).

 M. N. Phadke, S. S. Khanduja for the Appellant (In CA 350/71).

l. N. Shroff for the Respondent (In both appeals).

The Judgment of the Court was delivered by

SARKARIA, J. This appeal on certificate is directed against a judgment of the Madhya Pradesh High Court dismissing the Appellant's writ petition under Art. 226 of the Constitution.

The appellant joined the service of the State Government as a A subordinate Judge in the year 1936.

On promotion, he was confirmed as District and Sessions Judge with effect from December 2, 1957.

The appellant attained the age of 55 years on August 22, 1965 which was the age of superannuation according to Fundamental Ruic 56 (Ch. IX) governing the Civil Services of the State. But prior to that on February 28, 1963, by a memorandum No. 433-259-1 (iii) /63, the State Government raised the age of compulsory retirement for govern- B ment servants to 5 8 years subject to certain exceptions.

The material part of the memorandum dated February 28, 1963, read as follows :

"5. Notwithstanding anything contained in the foregoing paragraphs, the appointing authority may require a Government servant to retire after he attains the age of 55 years on 3 months notice without assigning any reasons ....... .

A Government servant may also after attaining the age of 55 years voluntarily retire after giving 3 months notice to the appointing authority.

6. These orders will have effect from the !st March 1963.

7. Necessary amendments to the State Civil Service Regulations will be issued in due course."

Thereafter, by Government Notification dated November 29, 1963, F. R. 56 was amended on December 6, 1963 in exercise of the power under the Proviso to Article 309 of the Constitution, raising the age of compulsory retirement of the State Civil Servants to 58 years with effect from March !, 1963 but the clause in the aforesaid Memorandum, empowering the Go, vernment to retire servants above the age of 55 years by giving them three months' notice was not incorporated in the Rule.

In view of this memorandum, the appellant was allowed to continue in office after he had attained the age of 55 years.

On September 11, 1963, the respondent passed an order retiring the appellant from service with effect from December 31, 1963. To impugn this order, the appellant filed a Writ Petition in the High Court under Art. 226 of the Constitution on the ground that F. R. 56 as it stood a[ter the amendment of November 29, 1963, (published on 6-12-1963) did not contain any provision authorising the respondent to retire the appellant after the attainment of 55 years of age and that his retirement was contrary to Art. 311 (2) and Art. 14 of the Constitution.

The High Court dismissed the writ petition by its judgment dated April 30, 1964.

The appellant came up in appeal to this Court. During the pcndency of that appeal Saksena attained the age of 5 8 years.

By its judgment dated January 23, 1967, this Court quashed the impugned order of retirement holding that :

"The appellant will be deemed to have continued in the service of the Government in spite of that order. As, however, the appellant attained the age of 58 years, in August,

1966, it is not possible now to direct that he should be put back in service. But he will be entitled to such benefits as may accrue now to him by virtue of the success of the writ petition. The appellant will get his costs from the State throughout."

Before the decision of that appeal (Civil Appeal No. 670 of 1965) however, the Governor had promulgated the Madhya Pradesh (Age of Compulsory Retirement) Rules, 1965 under Art. 309 of the Constitution. These Rules were published in the Government Gazette of July 17, 1965. By a deeming clanse, these Rules were made effective from March 1, 1963. The age of retirement was thereby raised to 58 years and under r. 6 thereof, the appointing authority was empowered to retire a Government Servant on his attaining the age of SS year< on 3 months' notice without assigning any reason.

By r. 8, the aforesaid memorandum, dated February 28. l 963, was cancelled, and it was provided that notwithstanding the cancellation of that memorandum anything done or any action taken in pµrsuance of the directions contained in that memorandum shall be and shall always be deemed to have been done or to have been taken under the relevant provisions of these Rules.

At the hearing of the earlier appeal, these Rules were not brought to the notice of this Court.

On February 10, 1967, after the judgment by this Court, the State promulgated an Ordinance which was replaced on April 20, 1963 by the Madhya Pradesh Shaskiya Scvak Anivarya Sevanivitrika Vidhi- E manyatakaran Vidyayaktakaran Vidycyak Adhiniyam 1967 (Act 5 of

1967) validating the retirement of certain Government servants, including that of the appellant, despite the judgment of this Court.

Uy virtue of this Act, the State is vested with a right not to pay the

dues o[ the appellant from the date of his retirement (December 3, Ii.

1963) onwards.

Sections 2 and 5 of the Act, which arc material for our purpose, read as follows :

"2. ( 1) The Madhya Pradesh (Age of Compulsory Retirement) Rules, 1965 replacing the provisions of the Government of Madhya Pradesh General Administration Department Memorandum No. 1433-258-1 (iii) /63, dated the 28th February 1963 (hereinafter referred to as the Memorandum) shall be deemed to have come into force with effect from the 1st March 1963.

(2) Anything done or any action taken in pursuance of the directions contained in the memorandum shall be and shall always be deemed to have been done or taken under corresponding provisions of the aforesaid rules as if the aforesaid rules were in force on the date on which such thing was done or action was taken and shall now be called into

question in any court on the ground that the provisions of the memorandum were not issued in the form of rules made by the Governor of Madhya Pradesh under Art. 309' of the Constitution and coul~ not therefore regulate the conditions of service of Government servai:its serving in connection with the affairs of the State."

"5. Notwithstanding any judgment, decree or order of any Court, all Government servants serving in connection with the affairs of the State who were compulsorily retired or purported to have been compulsorily retired in accordance with the memorandum as replaced by the Madhya Pradesh (Age of Compulsory Retirement) Rules, 1965 referred lo in Section 2 during the period beginning with !st March, 1965 and ending on 15th July, 1965 shall be and shall aJways be deemed to have been validly retired in accordance with the condition of service applicable to them at the relevant time as if the provisions of Sections 2 and 3 had been in force at all material time when such retirement was ordered, as accordingly :

(a) all notices served on such Government servants after their completion of age of 55 years shall be deemed to be and to have been issued in accordance with the rules governing their conditions of service; ( b) no suit or other proceedings shall be maintained or continued in any Court for any amount whatsoever as a payment towards salary for the period beginning with the date on which a Government servant had been compulsorily retired and ending on the date of his attainment of age of 58 years. ( c) no court shall enforce any decree or order directing the payment of any such amount referred to in clause (b) above." In substance, and effect, this Act has made provisions of the Compulsorily Retirement Rules, 1965 applicable from March 1, 1963.

On November 10, 1967, the appellant again moved the High Court by a writ petition ont of which the present appeal has arisen, challenging the validity of this Act, particularly of sections 2 and 5 extracted a hove.

Four contentions were raised by him before the High Court : ( 1) that the Act has been passed to over-rule the decision of the Supreme Court which the Icgislaturn has no power to do; (2) that the statement of Objects and Reasons attached to the Bill when it was introduced, indicates that its main object was to avoid financial burden which would fall on the State on account of its having to pay arrears of pension etc. to a large number of officers who had been retired under the said memorandum which was treated to be a rule and which the Supreme Court held was not an effective rule but merely an executive instruction : ( 3) that the matter having once been decided by the Supreme Court, was barred by the prh1ciple of res judicata and ( 4)

A that the Rules give naked power to the authorities fu relire any employee after he has attained the age of 55 years by giving him three \ months' notice, and provide no guidelines for the exercise of this power. '

Tbc High Court negatived these contentions, dismissed the writ petition but granted a certificate under Art. 132 (I) and 133(1)(a) to ( c) of the Constitution.

Hence this appeal.

The contentions advanced before the High Court have been repeated before us with amplification and addition.

It is argued on behalf of the appellant : (i) that a right of property, being a judgment-debt, protected by Article 19 ( 1) ( f) of the Constitution, had been created by this Court's decree dated January 30,

1967 in favour of the appellant and against the State. Since the impugned Act in effect, seeks to expropriate the appellant of that right without providing for any compensation, it is ultra vires Article 31 (2) of the Constitution, (ii) The impugned Act is ultra vires the Constitution inasmuch as it seeks to validate the retirement of the appcllaat, and others like him, by changing their service conditions with retrospective effect.

In so doing, the State legislature has overstepped the limits of legislative powers conferred on it by Article 309 of the Constitution.

Reliance has been placed on the decision of this Court in The Sta:e of Mysore v. Padamanabhacharya etc. (1) (iii) The impugned Act encroaches upon the judicial field inasmuch as it over-rules and makes unenforceable the decision, dated January 30, 1967 of this Court in Civil Appeal No. 670 of 1963 and in so doing. it vffcnds

Article 141. 142 and 144 of the Constitution, (iv) Even if the impugned Act is valid, els. (b) and ( c) of s. 5 of the Act, on a proper contruction, do not vacate the decree of this Court, requiring the respondent to pay to the appellant the pecuniary benefits resulting from the success of his earlier appeal (C. A. 670/65) in this Court.

Clause ( b) of s. 5 merely bars the maintenance or continuation of any proceeding for any amount as a payment towards salary.

The appellant is not seeking to maintain or continue any execution proceeding in court, for the reovcry of any amount towards salary, the decree being a declaratory one.

None of these contentions apcars to be tenable.

A perusal of this Court's decree, dated January 30, 1967, (extracted above) would show that it is not a money decree, raising a judgment-debt. It is a declaratory decree, declaring that the respondents' order, dated September 11, 1963, compulsorily retiring the appellant was invalid, and consequently the appellant would be deemed to have

continued in service till he attained the age of 58 years. The further declaration thac "he will be entitled to such benefits as may accrue to him y virluc of the success of the writ petition" was only incidental or ancilliary to the main relief and will fall or stand with the same.

This being the position, the decree did not create an indefeasible right

[1966] I S.CR. 494.

of property in favour of the appellant. We therefore do not find any A substance in the argument that the impugned Act seeks to acquire without payment of compensation property vesting in the appellant and is consequently unconstitutional.

The distinction be\ween a "legislative" act and a "judicial" act is I well known, though in some specific instances the line which separates

one category from the other may not be easily discernible.

Adjudi- B cation of the rights of the parties according to law enacted by the legislature is a judicial function. In the performance of this function, the court interprets and gives effect to the intent and mandate of the legisbturc as embodied in the statute.

On the other hand, it is for the kgislaturc to lay down the law, prescribing norms of conduct which - will .govern parties and transactions and to require the court to give effect to that law. c

While, in view of this distinction between legislative and judicial functions, the legislature cannot by a bare declaration, without more, directly over-rule, reverse or over-ride a judicial decision, it may, at any time ii; exercise of the plenary powers conferred on it by Article 245 and 246 of the Constitution render a judicial decision ineffective by enacting a valid law on a topic within its legislative field fundamentally altering or changing with retrospective, curative or neutralising effect the conditions on which such decision is based.

As pointed out by Ray CJ. in Indira Nehru Gandhi v. Raj Narain,( 1) the rendering inctfcctive o~ judgments or orders of competent courts and tribunals by changin.; their basis by legislative enactment is a well-known pattern of all validating Acts.

Such validating legislation which removes the causes for ineffectiveness or invalidity of actions or proceedings is not an t:ncroachment on judicial power.

In llari Singh v. Military Estate Officer,(') a Bench of seven learned Judges of this Court laid down that the validity of a validating law is to be judged by two tests. Firstly, whether the legislature possesses competence over the subject matter, and, secondly, whether by validation the legislature has removed the defect which the courts had found in the previous law. To these we may add a third : Whether it is consistent with the provisions of Part III of the Constitution.

We have noticed already, that the impugned provisions do not offencd Articles 19 and 31 or anything else in Part III of the Constitution.

We may now see whether the provisions in question satisfy the first

two tests.

G Mr. Sanghi's argument is that by virtue of the power conferred by Article 309, the State Legislature is not competent to pass a law validating retrospectively an invalid order of retirement of a State civi I

servant, made by the State Government, or render ineffective a decree of this Court declaring invalid such an order.

The point sought to be made out is that the legislative power conferred on the State legislature by Article 309, is confined to regulating the recruitment and con- H ditions of service of the persons appointed to public services of the -- ---·----

(1) [1976 2 S.C.R. 347.

A State, and that the impugned provisions not being such regulatory provisions, arc ultra vires Article 309.

Jn Pmbl!l/110bhacharya's case (supra), which is the sheet anchor of this contention, the Court was considering the scope of Article 309 in the context of Rule 294(a) Note 4, of the Mysore Service Regulations.

There, the respondent was a teacher in a Government School.

B He was ordered to be retired from service with effect from February 3, 1958 on attaining the age of 55 years. He challenged the validity of the order by a writ petition under Article 226 in the High Court and contended that rule 294 (a) having been amended in April 1955, the normal age of superannuation was fixed at 58 years, instead of 55 years.

On behalf of the State, it was canvassed that a notification of the Governor under Article 309 of the Constitution, issued on March C 25, 1959 had validated the action taken in retiring the respondent, and others upon their attaining the age of 5 5 years.

Wanchoo J. (as he then was), speaking for this Court held that such a rule cannot be made under the proviso to Article 309 of the ~

Constitution, but was cautious enough to add :

''We are expressing no opinion as to the power of the legislature to make a retrospective provision under Article 309 of the Constitution wherein the appropriate legislature has been given the power to regulate the recruitment and conditions of service of persons appointed to public service and posts in connection with the affairs of the Union or of any State by passing Acts under Art. 309 of the Constitution read with item 70 of List I of the Seventh Schedule or item 41 of List 1I of the Seventh Schedule.

The present rule has been made by the Governor under the proviso to Art. 309. That proviso lays down that it shall be competent for the Governor or such person as he may direct in the case of services nd posts in connection with the affairs of the State to make rules regulating the_ recruitment, and the conditions of service of per_sons appointed, to such services and posts until provision in that behalf is made by or under an Act by the appropriate legislature. Under the proviso the Governor has the power to make rules regulating the recruitment and conditions of service of persons appointed to such services and posts in connection with the affairs of the State.

The question is whether the notification of March 25, 1959 can be said to be $Uch a rule. We are of opinion that this notification cannot be said to be a rule regulating the recruitment and conditions of service of persons appointed to the services and posts in connection with the affairs of the State."

From what has been quoted above, it is clear that this Court advisedly did not express any opinion about the competency of the appropriate legislature to enact validating provisions of this type concerning the public servants serving in connection with the affairs of the State or the Central Government, as the case may be.

It is noteworthy that in enacting the impugned Act, the State legislature derives its competence not only from Article 309, but also from Entry 41 of List II of the Seventh Schedule. Indeed, within its allotted sphere, that is, with respect to any of the matters enumerated in List II of the Seventh Schedule the State legislature has, by virtue of Art. 246(3), exclusive, plenary powers of legislation.

Entry 41 , List II, reads as under :

"41. State public services; State Public Service Commission."

It is well settled that the entries in these legislative lists in Schedule VII are to be construed in their widest possible amplitude, and each general word used in such Entries must be held to comprehend ancillary or subsidiary matters. Thus considered, it is clear that the scope of Entry 41 is wider than the matter of regulating the recruitment and conditions of service of public servants under Article 309.

The area of legislative competence defined by Entry 41 is far more comprehensive than that covered by the proviso to Article 309.

By virtne of Articles 246, 309 and read with Entry 41, List II, therefore, the State legislature had legislative competence not only to change the service conditions of State Civil Servants with retrospective effect but also to validate with retrospective force invalid executive orders retiring the servants, because such validating legislation must be regarded as subsidiary or ancillary to the power of legislation on the snhject covered by Entry 41.

Thus the impugned provisions satisfy the first test.

This takes us to the second test, whether the impugned legislation removes or cures the defect which this Court had found in the Memorandum which was the basis of the impugned orders of retirement.

For reasons that follow, the answer to this question also must be in the affirmative.

The basis of this Court's decision dated January 30, 1967 in Civil Appeal 670 of 1965 was that the Government Memorandum dated Febrnary 28, 1963, in pursuance of which the impugned order of F retirement of I. N. Saksena had been passed on September 11, 1963, had not attained the status of a statutory rule framed under the proviso to Article 309 of the Constitution, but was merely an administrative instruction.

This provision in the Memorandum empowering the Government to retire a servant on his attaining the age of 55 years, after three months notice, was not incorporated in the statutory rules.

On the other hand the amendment made with effect from March J 963 G in Fundamental Rule 56, in exercise of its powers under Article 309 by the Government under notification dated December 6, 1963, had raised the age of retirement for State Government servants from 55 to 58 years. I. N. Saksena had therefore, by virtue of this amended statutory rule a right to remain in service upto the age of 58 years.

This right could not be taken away by mere executive instructions embodied in the Memorandum.

Madhya Pradesh Act 5 of 1963 gives the said Memorandum the statutory status with effect from its very inception.

By introducing

A a legal fiction the Act effectively cures tlie defect from which this Mcm1)randum and the orciers of retirement made thereunder were suffering.

Thus the second test was also satisfied. The conclusion is therefore inescapable that the impugned provisions were valid. Hence, the order, dated September 11, 1963, of Saksena's compulsory retirement became valid as the basis of this Court's judgment dated January 30, 1967 was removed.

There is no force in the fourth contention of Mr. Sanghi. Section 5, particularly Clauses (b) and (c), effectively vacate the p>cvious decree of this Court in favour of Saksena. For removing doubts, these clauses declare that this Court's decree will not be enforceable by initiating proceedings in any court thereon, in future.

In the light of the above discussion, it is abundantly clear that in enacting the impugned provisions, the legislature has not exceeded the limits of its legislative powers nor encroached on the judicial field.

We will close the discussion by noticing on.ly one decision out of the many that had been cited at the bar.

In Piare Dusada and Ors. v. The King Emperor,(1) the Governor- General by Ordinance repealed the Special Criminal Courts Ordinance II of 1942. There was a provision in the repealing Ordinance for confirmation and continuance of sentences of Special Courts and retrial of pending case. The appellant therein had been convicted and sentenced by Special Criminal Court which was held to have no jurisdiction to try the case by an order of a court. S.cction 3 (1) of the Special Criminal Courts (Repeal) Ordinance, 1943 conferred validity and full effectiveness on sentences passed by Special Criminal Conrts by conferring jurisdiction on them with retrospective effect. The Federal Court held that by promulgating the validating and repealing Ordinacc of 1943. the legislative authority had not attempted to do indirectly what it could not do directly or to exercise judicial power in the guise of legislation. It was further held that the Ordinance was not invalid on the ground that the legislative authority had validated by retrospective legislation proceedings held in courts which were void for want of jurisdiction as there was nothing in the Indian Constitution which precluded the legislature from doing so.

The ratio of the above decision applies with greater force to the present case.

For all the foregoing reasons, we negative all the contentions canvassed by Mr. Sanghi and dismiss this appeal leaving the parties to bear thc.ir own costs.

Civil Appeal No. 350 of 1971

SARKARIA, J.

For the reasons recorded in Civil Appeal No. 131 of 1971 entitled l. N. Saksena v. State of Madhya Pradesh, this appeal fails and is dismissed without any order as to costs.

P.H.P.

Appeals dismissed.

(I) [1944] F.C.R. 61.

I. N. SAKSENA

THE ST A TE OF MAD HY A PRADESH

A. N. RAY, CJ.

M.H. BEG

R.S. SARKARIA

Constitution of India

Articles 245 & 246

Article 309

1st March 1963

Supreme Court

Article 19(1)(f)

Article 31

Article 132(1) and 133(1)(a)

Articles 245 and 246

[1976] 2 S.C.R. 347

Jn enacting the impugned Act

Article 309

Seventh

Schedule

G. L. Sanghi

Bishamber Lal

M. lyngar

M. N. Phadke

S. S. Khanduja

N. Shroff

SARKARIA

Art. 226

August 22, 1965

February 28, 1963

Article 309

September 11, 1963

Art. 226

Art. 311

Art. 14

Saksena

January 23, 1967

Art. 309

July 17, 1965

March 1, 1963

February 28. l 963

February 10, 1967

Sections 2 and 5

Madhya Pradesh

Art. 309

Section 2

st March, 1965

15th July, 1965

Sections 2 and 3

November 10, 1967

sections 2 and 5

Tbc High Court

Art. 132

Article 19

January 30,

1967

Article 31

Article 309

January 30, 1967

Article 141

s. 5

s. 5

Article 245 and 246

Ray

Articles 19 and 31

Sanghi

Article 309

Article 309

[1976 2 S.C.R. 347

Article 309

Article 309

Article 226

Article 309

March C 25, 1959

Wanchoo

Article 309

Article 309

Art. 309

Seventh Schedule

Seventh Schedule

Art. 309

March 25, 1959

Central Government

Article 309

Seventh Schedule

Seventh Schedule

Art. 246(3)

Schedule VII

Article 309

Article 309

Articles 246, 309

I. N. Saksena

Article 309

Article 309

Madhya Pradesh Act

Saksena

Section 5

Piare Dusada

[1944] F.C.R. 61


GURBAKSH SINGH

UNION OF INDIA & OTHERS

January 27, l'i76

[V. R. KRISHNA IYER, A. C. GUPTA AND N. L. UNTWALIA, JJ.] 8

Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Dcliu-Sections 11, llA and 20-Scope of.

Section 11 of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi provides for assessment of tax. Section 1 lA provides for assessment or reassessment in case of escaped or under-assessment.

Section 20 provides for appeals and revision.

In 1959 the assessee was assessed by the Sales Tax Officer for the assessment year 1955-56. The appellate authority remanded the matter holding that the assessment for the first two quarters \Vas invalid having been made out of time.

The Sales Tax Officer passed a fresh assessment order in respect of the third and fourth quarter of the assessment year.

In July, 1960, the Commissioner under s. 20(3) revised the appellate order holding that no part of the assessment was barred by limitatjon and directed fresh assessment. Appellant's challenge; to the order of the CommiSioner and the assessment order by the a'isessing Ltuthority was unsuccessful in the High Court.

On appeal to this Court, it \Vas contended : (i) that the revisional authority n1ust exercise his powers within the pericxl of four years prescribed under s. 11(2) (a) \Vhether the order \Vas a final order of assessment by him or a remand order for fresh assessment by the assessing authority: (ii) while exercising the

rower of revision the Commissioner cannot ignore the period of limitation of three ycays._provieJ ins. llA; (iii) even when the Commissioner was exercising the revisional power under s. 20(3), his power is subject to the periods of limita- E tion p:ovidcd because, in ss. l l. 11 A and 20. the .authority mentionr.LI is the Co1nmissicner and (iv) the Revisional authority in the exercise of hi<> power suo 111oto mu:::t exercise it within a reasonable time and not after a long lapse of time.

Dismissing the appeals,

1-fbLD : The Legislature has not provided any period within which an order is to be rn.ade by an appellant or revisional. authority or a court. [250 E] F

. (l )(a) If the appeal.is filed in time for the exercise of the appellate power either to assess or to direct assessment under s. 20(2), there is no limitation of time. The limits of the revisional power in s. 20(3) are akin to the power of the "ppellatc "uthority in' 20(2). [250 FHl

(b) No limitation has been provided for the suo 1noto exerci'Se of the revisional power similar to the one provided in rule 66(2) of the Delhi Sales Tax

Rule<; for filing an application in revision.

[251 D] G

( c) It will be wholly unreasonable-almost impossible-to say that all orders in appeal, revision or reference must be passed within four years of the end of the period of assessment and that otherwise they would be barred The contention that there would be anomaly because of s. 11 (2a) in that fr the apMllate or revisional authority made a remand order, the assessing authority could pass <I fresh assessment order within four years of the remand order whereas if the appellate or revisional authority itself passed an order of assessment. H .shout? e done within four yer.s; and that such an anomaly \vould be avoided 1£ 1t was held that the rev1s1ng authority must exercise its powers within four years in all cases is not warranted by the language of the provision.

Further, it does not solve the anomaly because even if the order

A of remand is made just on the last day of the period of four years it would be competent to the assessing authority to make afresh asscssn1ent within the further period of four years.

[252 D; B-C]

(d) The State of Orissa v. Debki Debi [15 STC, 153 (SC] is distinguishable because the period of limitation in that case applied to assessment made in exercise of the appellate or revisional power also; whereas in the present case there is no period of limitation for the exercise of appellate or revisional power. f252 Fl

(2) While correcting a mistake in exercise of his revisional power the Comniissioner \Vas merely setting right the illegality in the appellate order, nnd was not doing anything which the Sales Tax Officer was empowered to do under s. 1 J A au<l so was not bound by the period of limitation mentioned in that section. f253 Fl

The State of Kera/a v. K. M. Cheria Abdulla a11d Con1pany, 16 Sales Tax Cases, 87 5, referred to.

(3) The order of assessment was that of the Sales Tax Officer acting as an officer to assist the Commissioner for the purpose of assessment.

The term "'Comniissioner" is merely descriptive and includes the various officers appointed under s. 3 to assist the Commissioner. There is a hierarchy of officer's and all l cannrit be treated as "Commissioner" for the purpose of different powers exer- cised by them. [253 G-Hl

( 4) A:; sun1ing that the revisional power could not be exercised suo 1noto after a long and unreasonable delay, in the instant case there was no undue delay.

\Vhat is reasonable time will depend upon the facts of each case.

[254 A

8 B]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 66_7-668 of 1975.

From the Judgment and Order dated the 10-5-1973 of the Delhi High Court in Letter Patent Appeal Nos. 65 and 103 of 1969.

F. S. Nariman, Randhir Chawla, G. C. Sharma_, Mrs. A. K. Verma, Talat Ansari, Ravinder Narain, and 0. C. Mathur for the Appellant.

G. L. Sanghi, R. N. Sachthey and Girish Chandra for the Respondents.

The Judgment of the Court was delivered by

UNTWALIA, J. In these appeals by certificate the question for determination is whether the exercise of the power of revision under sub-section (3) of section 20 of the Bengal Finance (Sales Tax) Act,

1941 as extended to the Union Territory of Delhi-hereinafter called the Act-is subject to the period of limitation provided in sub-section

(2a) of section 11 or section llA of the said Act.

The requisite facts lie in a narrow compass and may usefully be stated at the outset.

The appellant who was carrying on the business of execution of building contracts was assesed to sales tax under the Act by the Sales Tax Officer for the year 1955-56 by an order of assessment made on November 23, 1959.

The appellant's appeal before the Assistant Commissioner of Sales Tax succeeded in part.

He held that the assessment for the first two quarters of the year 1955-56 was invalid having been made out of time.

The case was, ti)erefore, remanded to the Sales Tax Officer for a fresh assessment in respect of the 3rd and 4th

GURHAKSH SINGH v. UNION ( Untwalia, J.) 24 9

quarters of the year.

The Sales Tax Officer in pursuance of the appellate order of remand dated February 11, 1960 passed a fresh assessment order on March 21, 1960.

The Commissioner, however. after notice dated July 21, 1960 to the appellant, by his order dated July 29, 1960 revised the appellate order of the Assistant Commis- 'ioner in exercise of his power under section 20(3) of the Act.

He held that no part of the assessment for the year 1955-56 was barred an,;_ directed a fresh assessment to be made.

A fresh assessment for all the four quarters was accordingly made by the Sales Tax Officer on September 24, 1960.

The appellant filed two writ petitions in the Delhi High Court challenging the order made in revision by the Commissioner and the fresh assessment order passed by the Sales Tax Officer in pursuance thereof.

A learned single Judge of the High Court allowed the writ applications on April 2, 1969 and quashed the impugned orders. The respondents took up the matter in letters patent appeal and succeeded before a Bench of the High Court. Hence these appeals by the assessees

Mr. F. S. Nariman appearing for the appellant contended :

(1) That the appellate and the revisional authorities must

exercise their appellate or revisional power within the.

D period prescribed under sub-section (2a) of section 11 of the Act. If their orders are final orders of assessment then directly they are exercising their powers under sub-sections ( 1) or (2) of section 11.

In case their orders are of remand for fresh assessment to the assessing authority then also they must pass their orders within the periods aforesaid although E under the proviso added in 1959 the assessing authority may have a further period of 4 years or 6 years, as the case may be, for passing a fresh assessment.

(2) That the Commissioner while exercising the power in revision cannot overstep and ignore the period of limitation of 3 years provided in section I IA of the F Act.

( 3) That the authority mentioned in sections I I, 11 A and 20( 3) being the Commissioner, the Commisioner s subject to the period of limitation provided m sections 11 and llA even when exercising the revisional power under section 20(3).

( 4) That in any view of the matter the revisional authority must exercise the power in a reasonable manner and within a reasonable time.

It cannot exercise the power of revision, suo moto, after a long lapse of time at its sweet will and pleasure.

. Under section 3. of the At,. a hierarchy of officers has been cons!Jtuted by the Chief Comnuss10ner-namely, the Commissioner of Sales Tax, Sales Tax Officers and others to assist him. Section 11 of the Act deals with assessment of tax.

The Sales Tax Officer

exercising the powers as an officer to assist the Commissioner under section 11 (1) of the Act can proceed to assess the amount of the tax due from a registered dealer within 18 months of the expiry of a particular period.

A dealer who has been liable to pay tax under the Act but has failed to get himself registered can be assessed to tax under sub-section (2).

Then sub-section 2(a) says:

"No assessment under sub-section (1) shall be made after the expiry of four years and no assessment under subsection (2) shall be made after the expiry of six years from the end of the year in respect of which or part of which the assessment is made : "

A proviso was added to sub-section (2a) w.e.f. October 1, 1959

C by the Amending Act of 1959 and it reads as follows :

"Provided that where such assessment is made in consequence of or to give effect to any order of an appellate or -1 revisional authority or. of a court, the period of four years

""I or six years, as the casemay be, shall be reckoned from the date of such order."

It is to be noticed that a period of limitation has been provided in section 11 (2a) and no assessment either under sub-section (I) er sub-section (2) can be made after the expiry of the specified period . . But where such an assessment is made by the assessing authority i'1

consequence of or to give effect to any order of an appellate er revisional authority or any order of a court made in reference, wt; t or in any other proceeding then under the proviso the period of limitation is to be reckoned from the date of such order.

The Legislature has not provided any period witbin which an order is to be n1ade bv an appellate or revisional authority or a court.

Obviously it would have been unpractical and unworkable to do so.

Section 20 deals with an appeal, revision or review.

I.f the appeal is filed in time the appellate authority in disposing of any appeal filed under sub-section (l) may-

"(a) confirm, reduce, enhance or annul the assessment, or;

(b) set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed."

For exercise of the appellate power in any of the manners mentioned above, there is no limitation of time.

If a.ssessn1ent can be reduced in appeal at any time it can be enhanced also without the fetter of . time.

If the assessment is set aside and the case remanded to the assessing authority to make a fresh assessment then the authority, because of the proviso to section 11 (2a), is obliged to make the fresh assessment within four years of the appellate order.

Sub-section (3) of section 20 reads thus : "Subject to snch rules as may be prescribed and for reasons to be recorded in writing, the Commissioner upon

} ... _ •

I I

GURBAKSH SINGH v. UNION (Untwalia, !.) 251

application or of his own motion may revise any assessment made or order passed under this Act or the rules thereunder by a person appointed under section 3 to assist him, and sub_iect as aforesaid. the Chief Commissioner may, in like manner, revise any order passed by the Commissioner."

The Commissioner can revise any assessment made or order passed under the Act including the order of the appellate authority.

The B limits of the revisional power are not circumscribed in sub-section ( 3), but it goes without saying that they will be akin to the power of the appellate authority as mentioned in sub-section (2). The revisional authority obviously, as pointed out by this Court in the case of The State of Kerahi v. K. M. Cheria Abdulla and Company(') should not trench upon the power expressly reserved by the Act or the rules to othe1 authorities and cannot ignore the limits inherent in exercise of C those powers. Section 11 A is one such power which deals with assessment and re-assessment of tax in case of an escaped assessment or under-assessment.

Exercise of that power is subject to the limitations provided therein.

In Rule 66(2) of the Delhi Sales Tax Rules, 1951 a period of limitation of 60 days has been provided for the filing of an application in revision which can be extended under the proviso appended to that rule on sufficient cause being shown. But no such D limitation has been provided for the suo moto, exercise of the revisional power.

Mr. Nariman very strongly relied upon the majority decision of this Court in The State of Orissa v. Debaki Debi and others (') and submitted that the power of revision exercised by.the Commissioners in this case beyond the period of four years prescribed in sub-section (2a) E of section 11 was illegal and ultra vireo'.

A close scrutiny of the argument will result in its rejection.

In the Orissa ease all the orders made by the Collector in exercise of his power of revision under section 23 of the Orissa Sales Tax Act were passed later than 36 months from the expiry of the period in respect of which the assessment was made.

The High Court's view that they were in contravention of section 12(7) which was a power of assessment or re-assessment in case of an escaped or under-assessment was not upheld.

But it was found that the proviso to section 12( 6) was. in general trms. It was not only a proviso providing for the penod of hm1tat10n for the first assessment but it governed the assessment made in exercise of the appellate or the revisional

powr. The min. ratio ecidendi of the case is that the proviso in

sect10n 12(6) _is m reality an independent legislative provision unrelated to section 12(6).

Therefore, its operation was not confined to assessment under section 12 but applied to any assessment made under the Act.. In the alterative it was also opined that assessment made m exercise of the rev1s1onal power was an assessment made

une! section 1~. It was so said because if the appellate or the rev1s10nal authonty would have directed the assessing authority to make a fresh assessment it could do so only under section 12 and then it

(1) 16 Sales Tax Cases, 875.

(2) 15 Sales Tax Cases, 153.

would be subject to the period of limitation of 36 months. ft was pointed out in the majority decision of this Court that there would be an anomalous situation. If the appellate authority set aside the assessment and remanded it for fresh orders, no fresh assessment could be made because of the period of limitation. But if instead of doing so the appellate authority affected the same assessment there would be no bar of limitation.

In the present case iu view o[ the proviso added to section 11 (2a) the anomaly flows in the reverse direction. If the appellate or the revisional authority made a re111and order the asessing authority could pass a fresh order of assessment within 4 years of such order.

But if the higher authority itself revised the assessment then it would be barred by the rule of limitation provided in section 11 (2a).

To avoid such an anomaly Mr. Nariman suggested a construction to be put which neither solves the anomaly nor is warranted by the language of the provisions of the Act.

Counsel submitted that in all cases the powers must be exercised within 4 years of the period in respect of which an assessment was being made on a registered dealer.

It will be wholly unreasonable-almost impossible--to say that all orders in appeal, revision or reference must be passed within four years of the end of the period of assessment. otherwise they will be barred. It does not solve the anomaly either.

Even if the order of remand is made, say, just on the last day of the period of four years,· it will oe competent to the assessing authority to make a fresh assessment within the further period of four years. The ratio of the case in Debaki Debi's (supra) must be confined within its four corners and cannot be extended to the facts of the instant case.

In The Swastik Oil Mills Ltd. v. H. B. Munshi, Deputy Cmmnissioner of sales Tax, Bombay ( 1) the decision of this Court in Debaki Debi's case was distinguished on the ground that the provision of limitation of 36 months in substance was not a real proviso to the section in which it was placed but was in fact a period of limitation for all orders of assessment made under any other provision of the

Orissa Act, while in the Bombay Acts there was no such general provision prescribing a period of limitation for making an assessment.

Reference to the period of limitation in section 1 !A of the Bombay Act \Vhich is a power of making _assessment or re-assessn1ent in case of an escaped or under-assessed assessments was also rejected.

Our attention was also drawn to the decision of a single Judge of the Punjab High Court, Delhi Bench, in Sir Sabha Singlz & Compwzy

v. Conunissioner of Sales Tax, Delhi (!.!) wherein foJlo\ving the decision of this Court in Debaki Debi's case it was held that an order oi review made by the Commissioner under section 20( 4) of the Act in effect is an order of assessment under section 11 (I) and cannot be made after tbe expiry of the period prescribed under section 11(2a).

The learned Judge in the course of his judgment made it clear that he was concerned with the construction of the Act as it stood before 1959 and was not obliged to consider the effect of the proviso added to section 11 (2a) in 1959. It is not necessary to decide in this case whether without the aid of the proviso aforesaid the decision of the

(I) 21 Sales fax Cases, 383.

(2) 18 S. T. C. 416.

GURBAKS!I SINGH v. UNION ( Untwa/ia, J.) 253

learned single Judge was correct or not but surely in face of the proviso it cannot hold good.

In Commissioner of Commercial Taxes, Biluir, Patna v. Sheodutta Prasad Chandeshwar Singh ( 1) the review proceedings initiated by the assessing authority was held to be barred under the proviso to section 13(6) of the Bihar Sales Tax Act, 1947.

But distinguishing the said decision another Bench of the Patna High Court held in Commissioner of Commercial Taxes, Bihar v. Ashoka Marketing Ltd. (') that the order of review passed by the Deputy Commissioner was not barred by time.

The decision of the Patna High Court in Commissioner of Cummercial Taxes, Bihar. Patna v. Sheodutta Prasad Chandeshwar Singh (supra) on identical facts was followed in Commissioner of Commercial Taxes, Bihar v. Shiva Pujan Prasad Bhagat ('). But the principle decided in those cases cannot help the appellant. It may well be that if the assessing authority itself exercises the power of review it cannot circumscribe the bar of limitation provided in section 11 (2a). But it will be unjust, unreasonable and impracticable to say that the said bar of limitation must also continue to run at all stages of the proceedings, namely, the appellate, rcvisional, reference, writ or any other stage.

It was pointed out by this Court in Swastik Oil Mills' case (supra) that the Deputy Commissioner when seeking to exercise his revisional powers was not encroaching upon the powers reserved to other authorities.

The powers were not exercised for the purpose of assessing or re-assessing an escaped turn over.

The revisional powers were sought to be exercised to correct what appeared to be an incorrect order passed by an Assistant Commissioner and for such a purpose proceedings could

hat possibly have been taken under section l lA. In the instant case also it could not be disputed that the view taken by the Assistant Commissioner in appeal was obviously wrong.

The Commissioner while correcting that mistake in exercise of his revisional power was not doing anything which the Sales Tax Officer was empowered to do under section 11 A.

He was merely setting right the illegality in the appellate order.

The third point urged by the appellant is too obviously wrong to merit any detailed discussion. It was not the Commissioner who had passed the assessment order under section 11.

That order was of the Sales. Tax Officer acting as an officer to assist the Commissioner for the purpose of assessment.

The assessment order was interfered with by the appellate authority, the Assistant Commissioner and the Commissioner was revising the order of the Assistant Commissioner.

All cannot be treated as Commissioners for the purpose of the different powers exercised by the three different authorities.

The use of the term "Commissioner" in the sections is merely for the purpose of describing and, at any rate, including the officer assisting the Commissioner as Commissioner.

(1) 25 S.T.C. 114.

(2) 33 S.T.C'. 24,

(3) 33 S.T.C. 466.

Apropos the fourth and the last submission of the appellant, suffice it to say that even assuming that the revisional power cannot be exercised suo mo to after 'an unduly long delay, 01,1 the facts of this case it is plain that it was not so done.

Within a few months of the passing of the appellate order by the Assistant Commissioner, the Commissioner proceeded to revise and revised the said order.

There was no undue or unreasonable delay made by the Commissioner.

It may be stated here that an appeal has to be filed by an assessee within the prescribed time and so also a time limit has been prescribed for the assessee to move in revision.

The appellate or the rcvisional powers in an appeal or revision filed by an asscssec can be exercised in due course. No time limit has been prescribed for it. It may well be that for an exercise of the suo moto power of revision also, the revisional authority has to initiate the proceeding within a reasonable time.

Any unreasonable delay in exercise may affect its validity.

What is a reasonable time, however, will depend upon the facts of each case.

For the reasons stated above the appeals fail and are dismissed with costs.

One set of hearing fee.

P.B.R.

Appeals dismissed.

GURBAKSH SINGH

UNION OF INDIA & OTHERS

January 27, l'i76

V. R. KRISHNA IYER

A. C. GUPTA

N. L. UNTWALIA, JJ.

Sections 11

Section 11

Section 1

Section 20

s. 20(3)

s. 11(2)

s. 20(3)

s. 20(2)

s. 20(3)

s. 11

s. 1

s. 3

F. S. Nariman

Randhir Chawla

G. C. Sharma

A. K. Verma

Talat Ansari

Ravinder Narain

0. C. Mathur

G. L. Sanghi

R. N. Sachthey

Girish Chandra

UNTWALIA

section 20

section 11

section 20(3)

September 24, 1960

Delhi High Court

April 2, 1969

F. S. Nariman

section 11

section 11

IA of the F Act

sections 11

section 20(3)

section 3

Section 11

section 11

section 2(a)

October 1, 1959

section 11

Section 20

section 11

section 20

section 3

Section 11

Delhi Sales Tax Rules, 1951

Nariman

section 11

section 23

section 12(7)

section 12( 6)

section 12(6)

section 12

section 1

section 12

section 11

section 11

Debaki Debi

section 1

Punjab High Court, Delhi Bench

section 20( 4)

section 11

section 11(2a)

section 11

section 13(6)

Bihar Sales Tax Act, 1947

Patna High Court

section 11

Swastik Oil Mills

section 11

section 11