BRAHMAN AND v.

SMT. KAUSHALYA DEVI & ANR.

April 11, 1977

[V. R. KRISHNA IYER, R. S. SARKARIA AND JASWANT SINGH, JJ.J

Eviction on the ground of arrears of rent-Tenant due to strained relations B deposits r, ent in the Court-Whether such deposit shall be deemed that the rent

has been duly paid-United Provirices' (Temporary) Control of Rent and Evie~ tion Act 1947. S. 3(l)(a) rlw. s. 7-C(v) and (6) interpretation of.

Section 3(1)(a) of the United Provinces (Temporary) Control of Rent and Eviction Act, 1947, permits ejectment on the ground of arrears of rent when the tenant is in arrears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him: of a notice of demand. Section 7-C(l) enables deposits of rent to be made when a landlord C refuses to accept 'any rent lawfully paid to him by a tenant ands. 7C(6) enjoins that "in any case where a deposit has been made as aforesaid, it shall be deemed that the rent has been duly paid by the tenant to th.e landlord."

The appellanttenant had extremely strained relations with his landlady leading to criminal cases. He deposited the rent payable by him in the court regularly. The triaJ court as well as the High Court, taking the view that such prompt deposits of rent in the court did not satisfy the provisions of s. 3(1) (a) D of the United Provinces (Temporary) Control of Rent and Eviction Act, 1947, since it is not equivalent to payment of rent to the landlord, granted the ejection

application filed by the resvondentlandlady.

Allowing the appeal by special leave and remanding the case, the court,

HELD: (1) The construction put by the courts below on s. 7C is too narrow and a liberal construction of the.expression "paid to him by a tenant" ins. 7C (I) is necessary. [ 487 B-D) E

(2) A correct interpretation of s. 7 has to be conditioned by the circums tances prevailing between the parties. In a situation where not merely bitterness and friction but potentially violent terms mar the life of the parties, s. 7.c of the Act has to be read realistically, It is not necessary for the tenant to create a situation of tension and violence by physically giving the rent into the hands of the landlord. It is an idle ritual to insist on: a physical tender of payment of rent where the circumstances make it impracticable. But harassing the landlOrd by straightaway depositing the rent in court without fulfilment of the conditions F required by s. 7-0(1) is also unwarranted. [486 G-H, 487 A, DJ

(3) The expression "where the deposit has been made as aforesaid" ins. 7C

(6) means that the deposit is permissible only when the condition in s. 7C(l) is complied with. If the landlord refuses to accept rent paid to him a deposit jg permissible but payment need not be by physical tender person to person. It can be by money order or through messenger or by sending a notice to the landlord asking him to noniinate_ a bank into which the refits may be regularly paid to the credit of the lllI!dlord.· If the landlord refuses under these circutn- G stances then a court deposit will be the remedy. In the instant case the courts below have not considered whether the circumstances which drove the appellant into the depositing of rent in court were such as eliminated the other possibilities of direct payment. [487 E-F, AJ Observation

Jt wauld be a far more Satifctory s_olution of the situation between wo ne_ighQours who have fallen out, if the parties would come to terms at the gentle suggestion of :the conrt below as to w)lat it considers just aided b)'. !he activist H endeavoilrs of counsel, fhan -a niere adjudication of the pdints of fact and law riii.00 Which will leave the pat'ties as bitter neighbours. [The court dirocied the

al'POllate court to take the initiative in the matter With a caution to be 1otal!y non-aligned in the process.] [488 A-BJ

CIVIL APPELLATE JURISDCTION : Civil Appeal No. 711 of 1976.

(Appea'l by Special Leave from the Judgment and Order dated the 28-4-1976 of the Allahabad High Court in Second Appeal No. 1719 of 1972)

Yogeshwar Prasad, Miss Rani Arora and Meera Bali, for the B appellant.

S. L. Bhatia a1nd H. K. Puri, for respondent No. 1.

The Judgment of the Court was delivered by

KRISHNA IYER, J. The defendant-tenant is the appellant and the appeal is by special leave.

The landlord sued for eiectment on the ground of arrears of rent as provided in s. 3 of the United Provinces (Temporary) Control of Rent and Eviction Act, !947. Section 3(1)

(a) states, among one of the grounds of eviction,

"that the tenant is in arrears, of rent for more than three months and has failed to pay the same to the la, ndlord within one month of the service upon him of a notice of demand."

In the present case, the complaint of the plaintiff was that the rent was , not paid but was deposited into court regularly.

The trial court as well as the High Court took the view that such prompt deposits of rent into court did not satisfy the provisions of s. 3 ( 1 )(a) since it is not equivalent to payment of rent to the landlord. Counsel for the appellant c0ntends thats. 7-C(6) of the Act strikes a different note.

It reads :

"In any case where a deposit has been made, as aforesaid, it shall be deemed that the rent has been duly paid by the tenant to the landlord. (emphasis supplied)"

S. 7-C( 1) enables deposits of rent to be made when a landlord refuses to accept any rent lawfully paid to him by a tenant.

In the present case the facts are glaring.

The relations betweein the parties appears to be. extremely strained and they are living in adjacent premises.

There was a criminal case by the tenant against the landlord as early as 1969 for offences under ss. 323, 504, 506, 352, 354 and

452 I.P.C.

The case ended in an acquittal but the relations did not improve. Even now there is a pending prosecution by the tenant of the landlord for offences of a serious nature.

It. is common ground that not merely bitterness and friction but potentially violent terms mar the life of these parties.

In such a situation s. 7-C of the Act has to be read realistically. It is not necessary for the tenant to create a situation of tension and violence by physically offering the rent into the hands of the landlord..

We are satisfied that a correct interpretation of s. 7 has to be concjitioned by the circumstances prevailing between the parties. In the case we are concerned With, the relations between the parties being very estranged it, is an idle

BRAHMANAND v. KAUSHALYA DEVI (Krishna Iyer,!.) 487

ritual to insist on a physical tender of payment of the rent where the circumstances make it impractical aud, therefor, subject to what we have said later, prima facie, s. 7-C{l) is attracted and in such cases s. 7-C( 6) makes court deposit equivalent to payment by the tenant to the landlord.

Of course, in the absence of special and adequate grounds the tenant cannot drive the landlord to collect his re, nt every time through the court with all the attendant inconvenience and expense.

We consider the construction put by the courts below on s. 7-C too narrow. The High Court has proceeded on the footing that a deposit under s. 7-C can be made only if the landlord refuses to accept the rent tendered to him or, if there is any dispute as to the person who is actually entitled to receive the rent. "Nqne of the conditions existed in the instant case ... and the plaintiff had asked the defendant 11ot to deposit the rent in court but to pay her the same.

The defendant was accordingly required to pay the rent to her, not to deposit the same in court.

The deposit, accordingly, could , not constitute payment of rent to the plaintiff and the defendant, consequently, was in arrears of rent. .. ".

As we have earlier pointed out, a liberal construction of the expression 'paid to him by a tenant' in s. 7-C ( 1) is pecessary.

Physically offering payment when the relations between the parties are strained is to ask for trouble and be impractical.

But harassing the landlord by straightway depositing the rent in court without fulfilment of the conditions required by s. 7-C(l) is also 11nwarranted.

Section 7-C(6) by using the expression 'where the deposit has been made as aforesaid' takes us back to s. 7-C(l). That is to say, the deposit is permissible only when the condition in s. 7-C(l) is complied with.

If the landlord refuses to accept rent paid to him a deposit is permissible. But payment need not be by physical tender, person to persqn.

It can be by money order, or through messenger or by sending a notice to the landlord asking him to nominate a bank into which the rents may be regularly paid to the credit of the landlord. If the landlord refuses under these circumstances, then a court deposit will be the remedy.

In the present case, on account of the bad blood between the parties a physical tender of the rent is ruled out.

At the same time the courts below have not considered Whether the circumstances which drove the appellant into depositing the rent in court were such as eliminated the other possibilities of direct payment we have indicated.

It is therefore fair to set aside the finding of the courts below and remand the case to the lower appellate court (which is the final court of fact under ordinary circumstances) to ascertain whether any of the alternatives we have indicated, or may otherwise be made out by the tenant as equivalent to payment of rent, i~ present in the case. If no such circumstance is made out by the tenant justifying deposit of rent in court, the decree for eviction will stand.

Otherwise, the petition for eviction will be dismissed.

It may well be that having regard to the fact that the respondent, the landlady belonging to the weaker sex, has necessarily to live as adjacent occupant of the appellant, a fairly affluent doctor, and taking note of the fact that the relations between the parties are so embittered as to lead to criminal cases, it may be furtherance of justice if the appellate court tries to settle the dispute without taking sides.

If the parties are able to come to terms at the gentle suggestion of the court as to what it considers just, aided by the activist endeavours of counsel, it would be a far more satisfactory solution of the situation between two neighbours who have fa!le1n out than a bare adjudication of the points of fact and law raised which will leave the pa.rties as bitter neighbours.

We therefore think it proper to direct the appellate court to take the initiative in the matter but caution it to be totally non-aligned in the process. ·

With these observations we allow the appeal and remand the case to the lower appellate court. Parties will bear their own costs upto now incurred.

s.:a.

Appeal allowed.

BRAHMAN AND

KAUSHALYA DEVI & ANR

April 11, 1977

V. R. KRISHNA IYER

R. S. SARKARIA

JASWANT SINGH, JJ

S. 3(l)(a)

s. 7

Section 3(1)(a)

Control of Rent and Eviction Act, 1947

Section 7

s. 3(1)

Control of Rent and Eviction Act, 1947

s. 7C

s. 7

s. 7

s. 7

s. 7C(l)

CIVIL APPELLATE JURISDCTION

Allahabad High Court

Yogeshwar Prasad

Rani Arora

Meera Bali

S. L. Bhatia

KRISHNA IYER

s. 3

Control of Rent and Eviction Act

Section 3(1)

s. 3

S. 7

ss. 323, 504, 506, 352, 354 and

452

I.P.C

s. 7

s. 7

Krishna Iyer

s. 7

s. 7

s. 7

s. 7

s. 7

s. 7

Section 7

s. 7

s. 7


MADAN LAL LORIA A

ASSISTANT CONTROLLER & ORS.

April 11, 1977

[P. N. BHAGWATI AND S. MURTAZA FAZAL ALI, JJ.j B Garnishee Proceedings-Estate Duty A.ct, 1953 (Act 34 of 1953 ), S .. 73(5) r/w. s. 46(5A) of the Income Tax Act, 1922-Scope of.

The appeUant, a tenant" in the building situate at No. 13 India Exchri.nge Place, Calcutta and belonging to one Rai Bhupathi Nath Deb Bahadur who died on September 23, 1959, was inducted in as a tenant through a registered lease deed dated 5th March 1960 for a period of thirty one years effective from 18th March 1960 and on a monthly rent of Rs. 1,400/· by nine persons who claimed to be the nephews and nieces of the said Bhupathi Nath Deb.

Respondents Nos. 3 and 4 claiming respectively to be the son and daughter of the deceased Bhupathi Nath, in their capacity as executors of the WiU dated

20th November 1957 said to have been made by the deceased prior to his death filed an account in form No. ED-1, of the properties including the building at 13 India Exchange Place, in respect of which, according to them estate duty was payable on the death of the deceased. The Assistant Controller of Estate Duty, after assessing the principal value of the estate under s. 58 of the Act determined a sum of Rs. 1,40,090/28 as the amount of duty payable by the accountable persons. Being unable to recover the amount, the Assistant Controller of Estate Duty, in view of the fact that the rent payable by the appeilant was a fortiorari an amount which in law belonged to the estate issued a notice to the appellant uls. 73 (5) of the Act r /w section 46(5A) of the Income Tax Act, 1922, pointing out that "a sum of Rs. lA0,090/20 is due from Tutsi Charan Deb and others on account of estate duty as accountable persons to the estate of late Rai Bhupathi Naith Deb" and requiring him to pay forthwith "any amount due from you to or, held by you, for, or on account of the said estate of Bhupathi Nath Deb Bahadur" upto the amount of Rs. 1,40,090/20.

The appellant on receipt of the notice paid a sum of Rs. 2800 /- being the rent for the months of December 1961 and January 1962. From February 1962 to May 1962, the appellant paid the rent to his lessors on the strength of a notice dated 24th February 1962 from the lessor's attorney to the effect that the Assistant Controller had no jurisdiction to demand from the appellant the rent, since the lessors were not the accountable persons as they were not assessed to estate duty.

No further payment of rent, therefore was made either to the 1essors or to Revenue; but instead the appeI!ant preferred a claim for refund of Rs. 2800 /- on the ground that this payment had been made by him under a bonafide 1nistake of law. By his order dated 25th March 1964, the Assistant Controller, holding that the appellant had acted in contravention of the notice dated 9th January 1962 issued against him, imposed a penalty of Rs. 3000/- under s. 73(5) of the Estate Duty Act, 1953 r/w. s. 46(1) and required the appellant to pay up the amounts of Rs. 35,000/- and Rs. 3,000/- on or before 6th April 1964.

The writ petition filed by the appellant challenging the said order was rejected by the Calcutta High Court.

Allowing the appeal by special leave in part, the Court,

HELD: (I) Two conditions must be fulfilled before penalty can be imposed u/s. 46(1) of the Income Tax Act, 1922 : one is that the person on whom penalty is so_ught to be imposed must be assessee and the other __ is tat_ tl!_e assessee must be in default within the tnean1ng of s. 45. Where a garn1shee IS required by notice issued under sub-section (SA) of section 46 to pay to the Income Tax Officer so much of the money due or which may become due frOm the garnishee to the assessee or held or which, may sboequently be held by the garnishee for or on account of the assess(; e, aS 1s uffic1ent to pay the amount due by the tax-payer in respect of the arrears of income tax, he does not become an assessee as defined in section 2, sub-section (2). The garnishee merely pa vs the amonnt which is due from him to the assessee. and such payment. is , in .discharge of the debt owed by hhn to th~ ass_, It LS not a paymnt tlie l1aq1!1ty for which is created under any proVISion of the Act. There LS 110 provmon

in. the Act which by. a legal fkti.on makes him an assessee. Unlike s. 226(3 )(x) of 1961 Act,, there ts ll? pov1s1on 1n the 1922 Act that the garnishee who fails to comply with_ the nottce issued under sub-s. (SA) of s. 46 shall be deemed to be an assessee in default. No pealty, .therefore, can be imposed on a garnishee ll1; lder sub-s. ( 1) of s. 46, even if he fails to comply with the notice issued to him under sub-s. SA of s. 46. [496 G-H, 497 Al

(2) Section 73, sub-sections (I). and (2) of the Estate Duty Act correspond to s. 4S(l) of. the 1922 Act deemmg the accountable person to be in default only on h.1s failure to pay in. accordance with the requisition contained in the notice.

Since s. 73, sub-section (5) by incorporating the provisions of sub sections (1), (lA), (Z), (3), (4), (S), (SA), (6) and (7) of s. 46 of the 1922 Act m?-kes them applicable for the purpose of collection and recovery of estate duty, It ust follow a fqrtiori that penalty cati be imposed on a garnishee, under sect10n 73, sub-sect10n (5) of the Estate Duty Act, 1953 read with section 46, sub-section (1) of the Act of 1922 only, if the garnishee can be said to be an accountable person in default.

The garnishee cannot be regarded as an accountable person, since section 2, sub-section

(12A) defines 'accountable person' to mean the person accountable for estate duty within the 1neaning of

he Ac~ and the garnishee does not come within the category of persons specified ln sections 53 and 54 (\S persons accountable for estate duty. There is also no provision in the Estate Duty Act, 1953, deeming a defaulting garnishee as an accountable person in default by a legal fiction.

In the instant case the order dated 25th March, 1964, imposing penalty of Rs. 3,000/- on the appellant is outside the power of the Assistant Controller under the Estate Duty Act, 1953. (497 B, D-Hl

(3) The plain effect of section 53, sub-s. (1) read with s. 73, sub-sec. (1) is that when an order of assessment is made not only the accountable person in respect of whom proceeding for assessment has been taken, but also every othe-r accountable person as defined in s. 2(2) and (12A) would be liable to pay the amount of estate duty, limited of course to the assets of the deceased which.he actually received or which, but for his own negligence or default, he might have received. [501 C.H, 502 Al ( 4) The words ''the property passing on the death", appearing in the ex.pression "the whole of the estate duty on the property passing on the death" in subsection (1) of s. 53, according to their plain grammatical construction, indicate that every accountable person would be accountable for the estate duty on the entire property passing or deemed to pass on the death of thi~ deceased. [502 C-Dl

(5) The argument that having regard to the words "where any property passes" appearing in the opening part of the sub-section, coupled with the words "such property so passes", and "the property so passing", appearing in the respective sub-clauses, the word "the" appearing before the words "property passing on the death" must again refer to the same property which is referred to in the respective sub-clauses (a), (b) or (c), as .the case may be is not "'ell founded, for it ignores one very important circumstance namely, that each of the persons. mentioned in sub clauses (a), (b) and (c) is rendered accountable for the whole of the estate duty not merely "on the property so passing", but on "the property passing on the death". [502 D-Fl

(6) Where the legislature wanted to refer to the specific property passing on the death of the deceased described in the opening part of the sub-section, the legislature used the words "such property so passes" and "the property so passing" in the sub-clauses (a), (b) and (c), but while imposing accountability for the estate duty the legislature made a deliberate departl\t"e and instead of the words "the proPerty so passing", which were familiar coinage, it used the words

~'the property passing on the death". This highly significant departure in phraseology clearly indicates that the legislative intent was that each of the persons mentioned in sub-clauses (a), (b) and (c) should be accoun, table for the estate duty on the entire property passing on the death. It was for this reason that the Hability of each of these persons had to be limited to "the assets of the decease.d which he actually received or which, but for his own neglect or default, he might have received". If the liability of each of these persons was only to the extent of the estate duty on the particular property falling within the respective sub- -clauses,_ thre .was need for limitipg' it. the MSets of the deceased which such person received or ought to have received. (502 F-H, S03 Al

J •

M. L. LOH!A V. ASSTT. CONTROLLER 491

( 7) The possibility that an anomaly may arise is only a factor to be taken A into account by the court where two interpretations are possible, but where the meaning of a statutory provision is plain, it cannot alter such meaning. Though the trustee of an insurance policy taken out by the deceac:; ed uiider the Married Women's Property Act, 1874 would fall within sub-clause (b) and hence become accountable for the estate Quty on the entire property passing on the death, he would not be liable to pay the estate duty out of the policy monies, since the estate of the deceased would have no interest in the policy monies and the policy monies would not form part of the estate of the deceased and his liability as an accountable persori would be limited only to the assets of the deceased which B he has actually received or which he ought to have received. [503 C-D]

(8) Sub-section (5) of s. 53 merely emphasises the principle of joint and several liability where two or more persons are a-ccountable for estate duty in respect of any property passing on the death of the deceased, reg&rdJess whether they are so accountable in the same capacity or in different capacities. It would be reading much more in sub-section (5) than what its language. warrants to say that this sub-section is consistent only with an accountable person mentioned in sub-clause (a), (b) or (c) of sub-section (I) being accountable only in respect c of estate duty on the particular property passing to him on the death of the deceased.

(9) The object of sub-setion (5) of s. 53 is to provide that every accountable person shall be liable not only jointly with other accountable persons, but also severally for estate duty in respect of any and every property passing on the death of the deceased. On a proper construction of sub-section (1) of s. 53,

re3.d in the context of the other provisions of the Act, each of the persons mentioned in sub-clauses (a), (b) and ( c) would be accountable for the estate D duty on the entire property passing on the eath and his accountability qua the Revenue would not be limited only to the estate:; duty on the particular property passing to him. [503 F, 503 C-DJ

(10) In the instant case, the lessors were clearly accountable persons since they admittedly took possession of and in.termeddled with the leased premises which formed part of the estat_e of the deceased. The order of assessment made by the Assistant Controller of Estate Duty was not challenged by the appellant in the writ petition, nor was it decared invalid by a superior authority at the E instance of the lessors.

Not even any steps appear to have been taken by the lessors for the purpose of challenging the order of assessment.

The lessors were in the circumstances, accountab1e for the whole of the estate duty on the entire prQperty. passing on the death of the deceased and hence they were liable to pay the estate duty of Rs. 1,40,0920 /20 limited of course to the extent of the leased premises which constituted the asset of the deceased received by them.

(504 H, 505 A-BJ

(11) Since the rent of the leased premises was payable by the appellant to the lessors under the lease deed and the lessors were liable ito pay the estate duty of Rs. 1,40,090/20 it was competent to the Assistant Controller to issue a notice under section 73. sub-section (5) read with section 46, sub-section (5A) of the Act of 1922 requiring the appeltant to pay the amount of rent due and to he

come due in respect of the leased premises. [505 C-D]

(12) The notice dated 9th January 1962 was a valid notice ancl the appellant was bound to comply with it and to pay to the Assistant Controller the amount of rent due or to become due in respect of the leased premises. Non-mentioning of the lessors in the notice as the persons to whom the amount of rent was due from the appellant in respect of the leased premises does not render the notice invalid or ineffective. What the notice dated 9th January 1962, in substance and effect required the appellant to do was to pay to the Assistant Contrl1Jler, the amount due or to become due from the appellant to the lessors in respect of the leased premises; that amount could rightly and legitimately be described as amount due to the estate of the deceased so as to be covered bY the terms of the notice. [505 H, 507 DJ

( 13) Questions of fact not raised in the writ petition nor argued before the High Court, oannot be allowed to be agitated for the first time before thi•

Court. [506 Bl

A _ C.14). In !Jrder that proceeding may be validly ta_ken against a garnishee under section 73, sub-section (5) read with section 46, sub-section (SA), it, is not necessary that the accountable person must be deemed to be in default and hence suCh garnishee proceeding need not be preceded by a notice of demand on the accountable person under sub-section (1)· of section 73~ [506 G-H}

Third Income- Tax Officer, Mangalore v. M. Damadar Bhat, 11 ITR 806, followed.

]Their Lordships expressed their opinion that the view taken ill this decision was not correct for three reasons given by them.]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 783 of 1972).

(Appeal by Special Leave from the Judgment and Order dated the 1st December 1969 of the Calcutta High Court in Civil Rule No. 1274 of 1974).

S. C. Majumdar and Mrs. Laxmi Arvind, for the appellant.

G. C. Sharma and P. L. Juneja, for the respondent.

The Judgment of the Court was delivered by

BHAGWATI, J.-This appeal by special leave raises a short question of law as to the scope of granishee proceeding under section 73, sub-section (5) of the Estate Duty Act, 1953 read with section 46(5A) of the Indian Income-Tax Act, 1922.

A brief narration of the facts giving rise to the appeal would be sufficient to .explain the background against which the question arises for determination in the appeal.

One Raj Bhupati Nath Dev Bahadur died on 23rd Se)'tember, 1959 leaving considerable movable and immovable properties which included inter alia a building situate at No. 13, India Exchange Place, Calcutta.

Respondents Nos. 3 and 4 claiming respectively to be the son and daughter of the deceased delivered to the Assistant Controller of Estate Duty an account in form ED-1 of the properties in respect of which, according to them, estate duty was payable on the death of the deceased.

The account was filed by respondents Nos. 3 and 4 in their capacity as executors of the Will dated 20th

becember, 1957 said to have been made by the deceased prior to his death.

The Assistant Controller issued notice under section 58, sub-section (2) to respondents Nos. 3 and 4 as accountable per>ons and after hearing them, made an order dated 23rd September, 1960 assessing the principal value of the estate of the deceased and deter- mining a sum qf Rs. 1,40,090.20 as the amount payable as estate duty.

It appears that the Assistant Controller was not able to recover the amount of estate duty from respondents Nos. 3 and 4, since most of the estate of the deceased consisted of immovable properties which were let out to different tenants and according to respondents Nos. 3 and 4, rent was not being paid to them by the tenants.

One of the immovable properties left by the deceased, namely, the building situate at No. 13, India Exchange Placei Calcutta was in the possession of the appellant.

According to the

~ .....

' ii . .,.

l t

l I

I •

appellant, it had been let out to him by nine persons who were the nephews and nieces of the deceased and who claimed to be the heirs of .the deceased on the basis that the deceased tlied wittlout

making any Will and did not leave any widow or son or daughter surviving him.

The lease given to the appellant by these nine persons, who may for the sake of convenience be hereinafter referred to as the lessors, was under a registered deed dated 5th March, 1960

nd it was a'lease for a period of thirty-one years with effect from 1st March, 1960 carrying rent at the rate of Rs. 1,400/- per month.

Sinoe the leased premises-that is how we propose to describe. the building leased to the appellant by the lessors-admittedly belonged to the estate of the deceased, the rent payable by the appellant was a fortiori an amount which in law belonged to the estate and hence the Assistant Controller issued a notice dated 9th January, 1962 to the appellant under section 73, sub-section (5) of the Estate Duty Act. 1953 read with section 46, sub-section (SA) of the Indian Income-Tax Act, 1922 (hereinafter referred to as the Act of 1922) pointing out that "a sum of Rs. 1,40,090.20 is due from Sim Tulsi Charan Deb and others on account of estate duty as account able persons to the estate of late Rai Bhupati Nath Deb" and re, quiring him to pay forthwith "any amount due from you to or, held by you, for, or on account of the said estate of Bhupati Nath Deb Bahadur" upto the amount of Rs. 1,40,090.20 as also "to pay money which may subsequently become due from you to them or which you may subsequently hold for or on account oi them upto the amount of arre-drs still remaining unpaid, forthwith on the money becoming due or being held by you as aforesaid, as such payment is required to meet the amount due by the accountable person in respect of arrears of estate duty''.

It was stated in the notice that

ny payment made by the appellant in compliance with the request contained in the notice would in law be "deemed ro have been made under the authority of the accountable person" and the receipt of the Assistant Controller "will constitute a good and sufficient discharge of his liability to the person to the extent of the amount referred to in the receipt".

The appellant, on receipt of the notice, paid the rent for the months of December, 1961 and January 1962 aggregating to Rs. 2,800/- to the Assistant Controller and informed the lessors about the same. The lessors, by their attorney's letter dated 24th February, l 962, however, contended that the notice issued by the Assistant Controller against the appellant was ineffectual, since the lessors had not been assessed to estate duty by the Assistant Controller as accountable persons and the Assistant Controller was, therefore, not competent to require the appellant to pay to him the amount of retlt which was due from the appellant to the lessors and moreover, the notice required the appellant to pay only such amount as was due from the appellant to respondents Nos. 3 and 4 as accountable persons and since the amount of rent was due from the appellatlt to the lessors and not to respondents Nos. 3 and 4, the appellant was not liable to pay the amount of rent in respect of the leased premises. to the Assistant Controller.

The 3ppellant, acting on this letter of the lessors' attorneys, did not l'W any further rent to the Assistant Controller btlt paid rent for the months frotn Fehroary to May 1962 to the lessors. No further payment of

5-502 SCJ /77 •

rent was thereafter made by the appellant either to the Assistant COntroller or to the lessors.

Since the appellant did not pay any rent to the Assistant Controller for the period subsequent 10 January 1962 in defiance of the notice dated 9th January, l 962, the Assistant Controller issued a notice dated 5th March, 1964 to the appellant requiring him to show cause why penalty in the sum of Rs. 10,000 /- should not be levied for the default committed by him.

The appellant addressed a letter dated 13th March, 1964 pointing out that the accountable persons mentioned in the notice dared 9th January, 1962 were "Shri Tulsi Chandra and Others'', that is, respondents Nos. 3 and 4 and the appellant had no concern or connection with these accountable persons nor was any amount due from him to them and hence the notice dated 9th January, 1962 was misconceived.

The appellant also called upon the Assistant Controller to refund the sum of Rs. 2,800/- paid by him in respect of rent for the months of December 1961 and January 1962 on the !!fOuhd that this payment had been made by him under a bona fide mistake of law. This explanation furnished by the appellant was found unacceptable and the Assistant Controller passed an order dated 25th March, 1964 holding that rent for the months commencing from .March 1962 and ending with March 196'1 aggregating to Rs. 35,000/- had been paid by the appellant to the lessbrs in contravention of the notice dated 9th January, 1962 issued against him and imposing a penalty or Rs. 3,000/- under section 73, ub section (5) of the Estate Duty Act, 1953 read with section 46(1) of the Act of 1922 and requiring the appellant to pay up the amounts of Rs. 35.000/- and Rs. 3,000/- on or before 6th April, 1964.

The appellant thereupon filed a writ petition in the High Court challenging the validity of the proceedings adopted by the Assistant Controller under section 73(5) of the Estate Duty Act, 1953 read with s. 46(5A) of the Act of 1922 for recovery of the amount of estate duty from the appellant as also the legality of the Order dated 25th March. 1964 imposing penalty of Rs. 3,000/- on the appe'llant.

The Hioh Court, by a judj!lllent dated 1st December, 1969. rejected the writ petition and hence the present appeal by special leave obtained from this Court.

There are two questions which arise for determination in this appeal : first. whether the notice dated 9th January, 1962 issued by the Assistant Controller to the appellant was a valid notice under which the appellant was bound to pay the amount or. rent in re"iect of the leased oremises to the Assistant <Controller, and &eCO!ldly, even if the notice da•ed 9th January, 1962 was a valid notice an<l it ohliated the aonellant to pay the arnount of rent to the Assistant Controller, whether any penalty could be levied on the aooellant for contravention of the terms of the notice. The ftrst question is not free from difficultv but the second is relatively simple and hence it would be convenient to be!!in first with a discussion of the second ouestion.

Now. at the date when the notice dated Qtl1 fanu"rv. 1962 was issued bv the Assistant Coritro11er. the Act of 19?2 w>< in force and hence the notice was i<sue<l un~P.t" on 73, sub-section (5) of the Estate Duty Act, 1953 read with section

M. L. LOHIA v. ASSTT. CONT!l.OLtER (Bhagwati, J.) 495

46(SA) of the Act of 1922.

Section 73, sub-section (S) of the A Estate Duty Act, 19S3 provides inter alia that the provisions of sub-sections (1), (lA), (2), (3), (4), (S), (SA), (6) and (7) of section 46 of the Act of 1922 shall apply as if the said provisions were provisions of Estate Duty Act, 19S3 and referred to estate duty and sums imposed by way of penalty or interest under the Estate Duty Act, 19S3 instead of to income-tax and sums imposed by way of penalty or interest under the Act of 1922 and to Controller B of Estate Duty instead of to Income Tax Officer.

Section 46 of the Act of 1922 lays down the mode and time of recovery of incometax and two sub-sections of this section are material, namely, subsections ( 1) and (SA) which read as follows :

" ( 1) When an assessee is in default in making a payment of income-tax, the Income-tax Officer may in his C discretion direct that, in addition to the amount of the arrears, a sum not exceeding that amount shall be recovered from the assessee by way of penalty." and

"(SA) The Income-tax Officer may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to D the Income-tax Officer) require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on acconnt of the assessee to pay to the Income-tax Officer, either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the E money as is sufficient to pay the amount due by the taxpayer in respect of arrears of income-tax and penalty or the whole of the money whv"Il it is equal to or less than that amount.

The Income-tax Officer may at any time or from time to time amend or revoke any such notice or extend F the time for making any payment in pursuance of the notice.

Any person making any payment in compliance with a notice under this sub-section shall be deemed to have made the payment under the authority of the assessee and the receipt of the Income-tax Officer shall constitute a good and G £ufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the receipt.

Any person discharging any liability to the assessee after receipt of the notice referred to in this sub-section shall be personally liable to the Income-tax Officer to the H extent of the liability discharged or to the extent of the liability of the assessee for tax and penalties, whichever is less.

lf the person to whom a notice Wider this snb-section is sent fails to make payment in pursuance tliereof to the Income-tax Officer, further proceeding may be taken by and before the Collector on the footing that the Income-tax Officer's notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to sub-section (2) of section 46.

Where a person to whom a notice under this subsection is sent objects to it on the ground that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then, nothing contained in this section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, to the Income-tax Officer." The penalty under sub-section ( 1) of section 46 can obvious! y be imposed on an assessee only when the assessee is in default in makmg payment of income tax and under section 4S, the assessee would be deemed to be in default when he fails to pay the amount of income tax specified as payable in a notice of demand served, inter aUa, wider section 29 within the time mentioned in the notice of demand or if no time is so mentioned, then on or before the first day of the second month following the date of service of the notice of demand.

Thus, two conditions must be fulfilled before penalty can be imposed under section 46, sub-section ( 1) : one is that the person on whom penalty is sought to be imposed must be an assessee

and ihe other is th.at the assessee must be in default within the meaning of section 45. Where a garnishee is required by notice issued uuder sub-section (SA) of section 46 to pay to the Income-tax Officer so much of tbe money due or which may become due from the garnishee to the assessee or held or which may subsequently be held by the garnishee for or on account of the assessee, as is sufficient to pay the amoWit due by the tax payer in respect of the arrears of income tax, he does not become an assessee as defined in section 2, sub-section (2 ). That sub-section defines an assessee to mean a person by whom income tax or any other sum of money is payable under the Act and the amount which the garnishee is required to pay to the Income Tax Officer in virtue of a notice under sub-section (SA) of section 46 is not "income tax or any other sum of money-payable under this Act".

The garnishee merely pays the amount which is due from him to the assessee and such payment is in dischanre of the debt owned by him to the assessee.

It is not a payment the iiability for which is created Wider any provision of the Act.

The garnishee l5 thus not an assessee within the meaning of the definition of that tenn in section 2, sub-section (2) nor is there any provision in the Act which by a legal fiction makes him an assessee.

Tile Act also does not contain any provision that the garnishee who fails to cotnoly with the notice issued under sub-section (SA) of section 46 shall be deemed to be an assessee in default. It is int.eresting to comoarc the orovisions of the Act of 1922 with the c0rresoonding orovisions of •he Incnme-tax Act, 1961 '(hereinafter referre<l to as the Act of 1961).

Clause (x) of sub-section

(3) of section

J • ..

226 of the Act of 1961 provides in clear and explicit terms that if the garnishee, to whom a notice under sub-section ( 3) is sent, fails to make payment in pursuance thereof to the Income Tax Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice.

But no such provision is to be found in the Act of 1922.

It is, therefore, obvious that no penalty can be imposed on a garnishee under sub-section (1) of section 46, even if he fails to comply with the notice issued to him under subsection (5A) of section 46. Now the scheme of collection and recovery of estate duty under the Estate Duty Act, 1953 is substantially the same as that under the income-tax law.

Section 73, sub-sections

(1) and (2) of the Estate Duty Act, 1953 correspond to section 45, su!H; ection (1) of the Act of 1922.

These two sub-sections provide that where any estate duty, penalty or interest is due in consequence of any order passed nuder the Act, the Controller shall serve upon the person accountable or other person liable to pay such estate duty, penalty on interest, a notice of demand in the prescribed form specifying the sum and the time within which it shall be payable and any amount specified as payable in the notice of demand shall be paid within the time, at the place and to the person ment'oned in the notice, or if no time is so mentioned, then on or before the first day of the second month following the date of service of the notice and any person accoun'able failing so to pay shall be deemed to be in default.

The Estate Duty Act, 1953 also, therefore, contemplates issue of a notice of demand to the accountable person after an order of assessment is made under the Act and it is only when the accountable person fails to pay in accordance with the requisifon con•ained in the notice of demand that he is to be deemed to be in default. Section 73, subsection (5) then incorporates the provisions of sub-sections (1), (lA) (2), (3), (4), (5), (5A), (6) and (7) of section 46 and makes them applicable for the purpose of collection and recovery of estate duty. It must follow a fortiori that penalty can be imoooed on a varnishee under section 73, sub-section (5) of the Estate Duty Act, 1953 read with section 46, sub-section (1) of the Act of 1922 onlv if the garnishee can be said to be an accountable person in default.

But, for like reason as those discussed while dealing with the provisions of the Act of 1922, the garnishee cannot be regarded as an accountable person, since section. 2, sub-section (12A) defines 'acconntable person' to mean the person accountable for esta•e dutv within the meaning of the Act and the garnishee does not come w'thin the category of persons specified in sections 53 and 54 as persons accountable for estate duty.

There is also no provision in the Es'ate Duty Act, 1953 deeming a defaulting garnishee as an acconntable person in default bv a legal fiction.

It is. therefore, difficult to see how an order imposing penalty could be passed against the appellant. even if the not'ce dated 9th January, 1962 was a valid notice under which the annellant was bound to pay the amount of rent in respect of the lea<ed premi<e< to the Assistant Controller and he failed to tin so.

The orrler <lated 25th March. 1964 imoosing penalty of Rs. 3.000/- on the aooelhnt mnst therefore. be held to be outside tlie power of •be Ass'stant Contrnlle; under the Estate Duty Act, 1953 and it must be quashed and set aside.

I c

That takes us to the consideration of the first question as to the validity of the notice dated 9th January, 1962. We have already refer· red to the relevant provisions of this _notice, but !t would~ desirable to recapitulate them here.

The notice starts with the recital of the fact that a sum of Rs. 1,40,090.20 is due from respondents Nos. 3 a!ild 4 on account of est11te duty "as accountable persons to the estate of late I!hupati Nath Deb Bahadur". This recital states very clearly that the amount of Rs. 1,40,090.20 is due on account of estate duty payable on the d.eath of the deceased. Then it goes on to rnqwre the appellant to pay to the Assistant .Controller the amount which is due or mav become due from him to the estate of the deceased or which is held or may subsequently be held by him for or on account ot the estate of the deceased upto the amount of Rs. 1,40,090.20. Here the amount which the appeUant is called upon to pay to the Assistant Controller is the amount due or to become due to the estate of the

deceased. The purpose for which such amount is required to be pam is to meet "the amount due by the a, c<:ountable person in respect of the a, rrears of estate duty" and the appella. nt is intimated that any

ayment made by him in compliance wih. the notice would in law be deemed to have been made under the authority of the accountable person" and the receipt of the Assistant Controller would constitute good and sufficient discharge of the liability of the appellant ''to \he accountable person." The argument of the appellant was that the words "accountable person" here in the context meant respondents Nos. 3 and 4 and since the amount of rent was payable by him to the

lsors and not to respondents Nos. 3 and 4, the notice was inoperative alld did not obligate him to pay the amou.nt of rent to the Assistant Controller.

This a.rgument may, at first blush, appear a little attractive, but a close look at the scheme and relevant provisions of the EsU!te Duty Act, 1953 would b.-; sufficient to repel it.

The Estate Duty Act, 1953 has been enacted in exercise of the legislative power conferred under Entry 87 of List 1 of Seventh Schedule to the Constitution and it provides for levy and co!lecfon of

es(ate duty in. respect of property. The charge of estate duty is imposed by section 5 which provides that in the case of every pers.on dying

after the c0ll1mencement of the Act, there shall be levied and paid 11pon the principal value of property, settled or not settled which passes on the death of such person, a duty called "estate duty" at lbe rate fixed in accordance with sect; on 3 5.

What property sh!IU be deemed to pass on the death of a person is laid down in sections 6 to 16 which occur nuder the heading "Property which is deemed to JY.ISS".

Sections 17 to 20A enacts special provisions relating to transfers to controlled companies and there are certain exceo'ions to the charge of esU!te duty enumerated in sections 21 to 33. The aggregation of property and rates of e.<tate ntv are nrnvidw in sections 34 and 35-. Th<; node of determination of the principal value of the property passing

on the death of a osrson is dealt with in sections 36 to 43 and certain deductions and allowances to be made in determining the princ; pal value of the estate are to be found in sections 44 to 50-B. Then follow a catena of sections oroviding fo_r co11ection of estate duty. Section 53 lays down as to who shall be accountable for estate duty and vdlat

shall be the duties and liabilities of such person and it reads as A follows:

"53 (1) Where any property passes on the death of the deceased-

(a) every legal representative to whom such property so passes for any beneficial interest in possession or in whom any interest in the property so passing is at any time vested,

(b) every trustee, quardian, committee or other person in whom any interest in the property so passing or the management thereof is at any time vested, and

(c) every person in whom any interest in the property 'so

p_assing is vested in possession by alienation or other derivative title,

shall be accountable for the whole of the estate duty on tbe property passing on the death but shall not be liable for any duty in excess of the assets of the deceased which he actually received or which, but for his own neglect or D default, he might have received :

x x x

( 3) Every person accountable for estate duty under this section shall, within six months of the death of the deceased, liver to the C.ontroller an account in the prescribed form and verified in tbe prescribed manner of all the properties in respect of whfch estate duty is payable :

Provided that the Controller may extend the period of 'six months aforesaid on such terms which may include payment of interest as may be prescribed.

( 4) Where the person accountable knows of any property which he has not included in his account because he does not know its amount or value,· he may state that such property exists, but he does not know the amount or value thereof a[ld that he undertakes, as soon aS the amount and value are ascertained to bring a supplementary account thereof and to pay both the duty for which he may be liable in respect of such property and any further duty payable by reason thereof for which he may be liable in respect of the property mentioned in the original account.

(5) Where two or more persons are accountable, whether in the same capacity or in different capacities, for estate duty in respect -0f anjl, property passing on the death of the deceased, they 'shall be liable jointly and severally for the whole of the estate duty on the property so passing."

The words 'legal representative' occurring in clanse (a) of sub-section (!) of section 53 are defined in section 2, sub-section (12) to mean:

"a person who in law represents the estate of a deceased person, and includes-

(i) an executor,

(ii) as regards any obligation under this Act, any person who takes possession of, or intermeddles with, the estate of a deceased person or any part thereof, and

(iii) where the deceased was a coparcener of a Hindu family, the manager for the time being of the family;"

C Another expression which occurs in section 53 and other provi:; ions of the Act is 'person accountable' or 'accountable person' and that is defined under section 2, sub-section (12A) to mean: ·

"the person accountable for e'state duty within the meaning of this Act, and includes every person in respect of whom any proceeding under this Act has been taken for the assess ..

D ment of the principal value of the estate of the deceased : "

The power to make provisional assessment in advance of regular assessment is conferred under section 57 which reads as follows :

"57 ( 1) Estate duty shall be due from the date of the death of the deceased, and the Controller may, at any time after the receipt of account delivered under section 53 or section 56, proceed to make in a snmmary manner a provisional assessment of the estate duty. payable by the person delivering the account on the basis of the account so delivered.

(2) Upon a provisional assessment being made under sub-section (!), the person so assessed shall pay to the Controller, or furni'sh security to the satisfaction of the Controller for the .payment of, the estate duty, if any, payable on the provisional assessment, and the Controller shall thereupon grant him a certificate that such duty has been or will be paid or that none is due, as the case may be, in respect of the property mentioned in the certificate.

( 3) After regular assessment has been made under 'section 58 any amount paid towards the provisional assessment made under sub-section (!) shall be deemed to have been paid towards the regular assessment.

x x x x"

Section 58 provides for the making of regular assessment and confers power on the Controller to assess the principal value of the estate of the deceased and to determine the amount payable as estate duty.

Then there are provisions relating to reopening of assessment, penalty for default or concealment and rectification of mistakes in the assessment.

Section 62 provides inter alia that any person objecting to any valuation made by the Controller, or to any order made by the Controller determining the estate duty payable under section 58 or section 59 or denying his liability to the amount of estate duty payable in respect of any property, may within thirty days of the date of receipt of the notice of demand under section 73, appeal to the Appellate Controller and the Appellate Controller is given the power to dispose of the appeal.

Then a further appeal is provided to the Appellate Tribunal under section 63 followed by a reference to the High Court under section 64 and an appeal to the Supreme Court under section

65. There are certain other provisions following on these sections which are not material for our purpose until we come to section 73 to which we have already referred.

The last section which is material is section 74 which provides that, subject to the provision of section 19, the estate duty payable in respect of property, movable or immovable, passing on the death of the deceased shall be a first charge on the immovable property so passing, in whomsoever it may vest on his death, after the debts and encumbrances allowable under Part VI of the Act.

This is broadly the scheme of the Estate Duty Act, 1953 and it is in the light of this scheme that we have to determine the question which arises for consideration in this appeal.

It is clear from the resume of the provisions of the Estate Duty Act, 1953 which we have given above that under sub-section (3) of section 53 every person accountable for e5tate duty under sub-section

(1) of that section is liable to deliver to the Controller within six months of the death of the deceased an account of all properties in respect of which estate duty is payable on the death of the deceased.

There may he and in many cases there would be more than one person accountable for estate duty under sub-section (1) of section 53 and the obligation to deliver an account of all the properties in respect of which estate duty is payable would be on each of t]Je persons so accountable.

But one out of several accountable persons may deliver an account to the Controller under sub-section (3) of section 53 and. that would be sufficient to empower the Controller to proceed under section 57, sub-section (1) to make a provisional assessment of the estate duty payable by such accountable person on the basis of the oaccount so delivered and when such provisional assessment is made, the accountable person "so asses'sed'' would be liable under sub- - section (2) of section 57 to pay to the Controller" the estate duty, if any, payable on such provisional assessment.

The amount of estate duty provisionally assessed would be payable only by the accountable person on whom the provisional assessment is made.

The Controller would thereafter be entitled under section 58 to make an order of regular assessment assessiM the orincioal value of the estaie of the deceased and determining the amount payable as estate duty. Wilen

an order of assessment is made, not only the accountable person in resoect of whom oroceeding for assessment has been taken, but also every other accountable person would be liable to pay the amount of estMe ilutv, limited of conrse tn "the assets <'f the deceaseil which lie actually received or which, but for bis own negligence or default, he

SUPREME COURT REPORTS [1977] 3 s.c.rr.

might have !eceived".

That is the plain effect of section 53, subsection (1) read with section 73, sub-section (1). It may be noticed that so far as the estate duty payable on provisional ; issessment is concerned, sub-section (2) of section 57 provides that "the person so assessed" shall pay the amount of such estate duty to the Controller, but when we turn to sub-section (1) of section 53 and section 73, sub-section ( 1), we find that the words "the person so assessed" are absent in both these provisions and the liability to .pay the amount of estate duty due in consequence of an order of assessment made under the Act is on every "person accountable", irrespective whether asses'sment is made on him or not.

But here a question of some difficulty arises, namely, whether each of the accountable persons in subclauses (a), (b) and (c) in section 53, sub-section (1) is accountable for estate duty on the entire property passing on the death of the dece!(Sed or only for the estate duty on the particular property falling within the respective sub-clauses which passes on the death.

The difficulty is created on account of the words "the property passing on the death"

appearing in . the expression "the whole" of the estate duty on the property passing on the death" in sub-section ( 1) of section 53 These words, according to their plain grammatical construction, would seem to indicate that every accountable person would be accountable for the estate duty on the entire property passing or deemed to pass on death of the deceased.

But it was argued on behalf of the appellant that having regard to the words "where any property passes" appearing in the opening part of the sub-section coupled with the words "such property so passes" and "the property so passing" appearing in the respective sub-clauses, the word 'the' appearing before the words "property passing on the death" must again refer to the same property which is referred to in the respective sub-clause (a), (b) or (c), as the case may be.

This argument, plausible though it may seem, is not well founded, for it ignores one very important circumstance, namely that each of the persons mentioned in sub-clauses (a), (b) and (c) is rendered accountable for the whole of the estate duty not merelv "on the property so passing" but on "the property passing on the death". Where the legislature wanted to refer to the specific property passing on the death of the deceased, described in the opening part of the sub-section, the legislature used the words "such property so passed" and "the property so passing" in sub-clauses (a), (b) and (c), but wMe irnnnsing accountability for the estate duty, the legislature made a deliberate d"fJ!ll'ture and instead of the words "the property so passing"; which were famiFar coinage, it used the words "the property passing on the death".

This departure in phraseology is highly significant and clearly indicates that the legislative intent was that each of the persons mentioned in sub-clauses (a), (b) and (c) should be accountable for the estate dutv on the entlre nronertv nas'sng on the death.

Jt ws for this reason that the liability of each of these oersons had to be limited to "the a"ets of the deceased which he actually received or which, but for his own neglect or defualt, he might have received".

If the liability of each of these per;; on< was onlv to the extent of the e.•tate dutv on the particular nrnn<>rtv fa ll'ng within the resnective sub-clauses, there was no need for limiting it to the assets of the deceased which such per-

M. L. LORIA v. ASSTT. CONTROLLER (Bhagwati, !.) 5 03

son received or ougnt to have received.

The appellant, however, con- A tended that if this construction of sub-section (lJ ot section 53 were accepted, it would lead to consequences which could hardly have been intended by the legislature. He pointed out by way of an example that a trustee of an insurance policy taken out by the deceased under the Married Women's Property Act, 1874, which policy is exempt fro111 payment ol' estate duty by reason ol the total amount payable thereunder being Rs. 50,000/- or less, would become accountable and consequently B liable to pay, out of the policy monies, the estate duty payable in respect of the free estate of the deceased-to the extent of the whol.e of the policy monies in the hand of the trustee-even though the Married Women's Property Act expressly provides that the estate of the husband is not to have any interest in the policy monies.

It is not necessary for us to decide whether such an anomaly would arise or not, because the possibility that an anomaly may arise on a parti- C cular construction is only a factor to be taken into account by the court where two iilterpretations are possible, but where the meaning of a statutory provision is plain, it cannot alter such meanipg.

Moreover, i• appears to us prima fade that no such anomaly would arise on the interpretation which we are inclined to accept, because it seems that though the trustee of the insurance policy would fall within subclause (b) apd hence become accountable for the estate duty on the D entire property passsing on the death, he would not be liable to pay the estate duty out of the policy monies, since the estate of the deceased would have no in•erest in the policy monies and the policy mon'e' would not form nart of the estate of the deceased and his liability as an accountable person would be limited only to the assets of the deceased which he has actually received or which he ought to have received. The appellant then relied on the language of sub- E section (5) of section 53 and pointed out that even that sub-section refers to the p<iint and several liability of an accountable person "in

respect of any property passing on the death of the deceased", only to the extent of "whole of the estate duty on the property so passing" and urged that if under sub-section ( 1) of section 53 every a.ccountable person were to be accountable for the whole of the estate duty on the entire property passing or deemed to pass on the F death of the deceased, sub-section (5) would be rendered super fluous.

But we do not think this is a correct way of looking at sub-section (5) because what this section does is merely to emphsise the principle of joint and several liab'lity where two or more persons are accountable for estate duty in respect of any property passmg on the death of the deceased, regardless whether they are so accountable in the same capacity or in different capacities.

It would be G reading much more in sub-section (5) than what its language warrants to say that this sub-section is consistent only with an accountable person mentioned in sub-clause (a), (b) or (c) of sub-section ( 1) being accountable only in respect of estate duty on the particular J)(Qperty passing to him on the death of the deceased.

The object of sub-<ection (5) is to parvided that every accountable person shall be liable not only jointly with other accountable persons, but also H severally, for estate duty in respect of anv and everv property passing on the death of the deceased.

Sub-section ( 5) does not, therefore, in QUr opinion, militate against the constrilction which we are inclined

to place upon sub-section (1).

In fact section 76 clearly postulates that an accountable person may have to pay estate duty in respect of a property not passmg to hun and provides for his indemnificauon in such a contingency by saymg that if a person accountable under section 53 pays any part of the estate duty in respect of any property not passing to hun, it shall, where occasion requires, be repaid to him by the trustees or owners of that property. If an accountable person mentioned in sub-clauses (a), (b) or (c) of sub-section (1) were liable for estate duty only in respect of the particular property passing to him, there would be no need for such a provision as section 76, because in such an even there would be no question of payment by an accountable person of estate duty in respect of any property not passing to him.

The provision for indemnification enacted in section 76 clearly suggests that an accountable person being liable for estate duty on the entire property passing on the death may have to pay estate duty even in respect of a property not passing to him, but in such a case he would be entitled to be rennbursed by the trustees or owners of that property in respect of the amount of estate duty paid by him.

We are, therefore, of the view that on a proper construction of sub-section ( 1) of section 53, read in the context of the other provisions of the Act, each of the persons mentioned in sub-clauses (a), (b) and (c) would be accountable for the estate duty on the entire property passing on the death and his accountability qua the Revenue would not be limited only to the estate duty on the particular property passing to him.

Though we are taking his view as a matter of construction, we must point out that it would be very harsh indeed if the Revenue were to proceed only against one accountable person for recovery of the whole of the estate duty, leaving out others to whom some property or the other may have passed, because that would drive the accountable. person who is required to pay the estate duty in respect of the prope:rty not passing to him, to adopt proceedings against the owner of that property for recovery of the amount of estate duty so paid by him and that would unnecessarily foster litigation, apart from causing hardship to the accountable person and involving him in considerable waste of time and money.

We think it would be desirable if the Estate Duty Officer himself apportions the estate duty amongst different accountable persons in accordance with their respective interests in the property and seeks to recover from each accountable person only that part of the estate duty which is payable in respect of the property passing to him. We are told that this is the practice which is at present being followed by the Estate Duty Office and we hope and trust that the Estate Duty Officer will continue to follow the same practice even under the law as interpreted by us.

Now let us consider the position of the lessors in the light of the aforesaid discuss'on of the law.

The lessors are clearly-accountable persons since they admittedly took possession of and intermeddled with the leased premises which formed part of the estate of the deceased and if their contention is correct-and we must -assume it to be so s'nce that was the case of the appellant-the leased premises passed to tbem

__ ,,,.

for beneficial interest in possession and in any event interest in the leai>ed premises, became vested in them on the death of the deceased.

The order of assessment made by the Assistant Controller was not challenged by the appellant in the writ petition nor was it at any time declared invalid by a superior authority at the instance ol the lessors.

Not even any steps appear to have been taken by the lessors for the

purp06e of challenging the order of assessment.

The order of assessment must, therefore, be taken to be valid for the pnrpose of the pre-

; ent proceedings.

The lessors were in the circumstances accountable for the whole of the estate duty on the entire property passing on tll.e ·

death of the deceased and hence they were liable to pay the estate duty of Rs. 1,40,090.20 limited of course to the extent of the leased premises which constituted the asset of the deceased received by them.

Since the rent of the leased premises was payable by the appellant to the lessors under the lease deed and the lessors were liable to pay the estate duty of Rs. 1,40,090.20, it was competent to the Assistant Con

trailer to issue a notice under section 73, sub-section (S) read with section 46, sub-section (SA) of the Act of 1922 requiring the appellant to pay the amount of rent due and to become due in respect of the leased premises. Now it is trne tl1at in the notice dated 9th January,

1962, the lessors were not mentioned as t!1e persons to whom t!ie amount of rent was due from the appellant in respect of the leased oremises but that does not render the notice invalid or ineffective. What the notice dated 9th January, 1962 in substance and effect required the appellant to do was to pay to the Assistant Controller the amount due or to become due from the appellant to tlie lessors in respect of the leased premises; that amount could rightly and legitimately be described as amount due to the estate of the deceased so as to be covered by the terms of the notice and hence under the notice the appe1lant was liable to pay the arrears of rent and the amount of fume rent in respect of the lea•ed premises to the Assistant Controller to the extent of Rs. 1,40,090.20. The 11Poellant in fact rightly understood his obligation under the notice dated 9th January. 1962 and paid 2 months rent aggregating to Rs. 2,800/- to the Assistant Controller and it is only tliereafter that he refused to make further payment of rent, presumably with a view to obliPin~ the lessors.

This was clearly in brP"ch of the requisition contained in the notice dated 9th January, 1962.

Before we close, we must refer to one other contention urged on behalf of the appellant, namely, that no notice of demand having been

issued under sect'on 73, sub-section (1) to the lessors, the amount of estate duty, though due in consequence of the order of assessment made by the Assistant Controller, was not payable by the leasors and consequently no notice under section 7q, sub-section (S) read with section 46, sub-section (SA) of the Act of 1922 could be issued against the appellant requiring him to pay the amount of rent due from him to the lessors and the notice dated 9th January, I 962 was accordingly

iJ1vaHd.

The Revenue put forward a two-fold argument in reply !Cl this contention.

The first answer made bv the Revenue was that this contention wa• at no time raised in the writ petition nor was it urged

l:J<fore the High Court and since it rested on a question of fact as to

whether notice of demand under section 73, sub-section (1) was served on the lessors before issuing the notice dated 9th January, 1962, it could not be auowea to be raised for tbe lirst time at Ille nearing ot the appeal before us.

This answer, in our opinion, affords complete refutation to the contention of the appellant.

The question whether notice of demand was served on the lessors under section 73, subsection ( 1) before issue of the notice dated 9th January, 1962 is essentially a question of fact and if it has not been raised in the writ petiJion, nor argued before the High Court, it cannot be allowed to be agitated for the first time before tnis Court. Secondly it was urged that, m arty event, notice under section 73, sub-section (5) read with section 46, sub-section (5A) of the Act of 1922 could be validly issued against a garnishee without service of notice of demand on the accountable person under sub-section ( 1) of section 73 and hence the notice dated 9th January, 1962 could not be assailed as invalid of the ground that it was not preceded by a notice of demand on the lessors under section 73, sub-section (1).

Suppose for this contention was sought to be drawn from the decision of this Court in Third Income-Tax Officer, Mangalore v. M. Damodar Bhat.(1) Now, this was a decision given with reference to sub-section (3) of section 226 of the Act of 1961 which corresponds to section 46, sub-section (SA) of the Act of 1922 The question which arose for determination was whether action under section (3) could be taken only where the assessee was in default aild this Court held that in a proceeding under section 226, sub-section (3), it was not necessary that the asses see should be in default or should be deemed to qe in default.

This Court, speaking through Shah, :r., pointed out: "Section 226, however, provides other methods of recovery and there is no reference in sec'ion 226 (3) to any default on the part of the assessee.

Section 226(3) merely states that the Income-tax Officer may, at any time or from time to time', by notice in writing require any person who holds or may subsequently hold money for or on account of the assessee, to pay to the Income-tax Officer either forthwith so mnch of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount.

In a proceeding under section 226(3) of the new Act, therefore, it is not necessary that the assessee should be in default or should be deemed to be in default and no such condition or limitation is imposed by the language of that sub-section." If this decision lays down the correct law on the .subject.....,-and since this is a decision given by oa Bench of three judges of this Court, it must be regarded as binding noon us-it mn<t be hld, while interpreting the corresponding provisions Of sub-sections (1),

(2) and (5) of section 73 Of the Estate Dutv Act, 1953 reatl with section 46, sub-section (5A) of the Act of 1922 that, in order that proceeding mav be validlv taken aoainst a oornishee under sertion 73 sub-section (5) read with section 46, sub-section (5A), it is not necessary that the accountable person must be deemed to be in default and hence such garnishee ptnceeding need nnt be meceifed bv a nr>tice of demand on the accountable person under sub-section ( t) of sectlon 73.

We must, however, . point ont that we are taking this view because the decision in Third Income-Tax Of/icet, Mangalore v.

(I) 71 I.T.R. 806.

---'-!'

M. L. LOH!A v. ASSTT. CONTROLLER (Bhagwati, !.) 507

Damodar Bhat (supra) binds us, though we do feel that the view taken A in thib decision is not correct.

In the first place, the decision seems to have overlooked the fact that it is only when a notice of demand is served on the assessee under section 156 and the period for paymen~ of tax mentioned in it expires that the tax becomes payable by the assessee and it is only then the Income-tax Officer can proceed to recover it from the assessee.

The garnishee proceeding under section 226, subsection (3) is merely one of the modes of recovery prescribed by B law and it is difficult to see how it can be resorted to before the tax has become payable by the assessee.

Secondly, sub-section (3) of section 226 permits garnishee proceeding to be taken for recovery only of 'arrears' and no tax be said to be in arrears until the expiry of the period for payment of tax specified in the notice of demand, and thirdly, the concept of recovery by any mode whatever before the expiry of the time allowed for payment of tax is foreign to the whole c scheme of recovery both under the Act of 1961 and the Act of 1962 But, as we have pointed out, the decision in Third Income Tax Officer, Mangalore v. M. Damodar Bhat (supra) is binding upon us and it afiords a complete answer to the contention of the appellant.

We must, in the circumstances, hold that the notice dated 9th January, 1962 was a valid notice and the appellant was bound to comply with it and to pay to the Assistant Controller the amount of rent due or to become due in respect of the leased premises.

We accordingly allow the appeal in part and issue a writ quashing and setting aside the order dated 25th March, 1964 in so far as it imposes penalty of Rs. 3,000/- on the appellant, but so far as the notice dated 9th January, 1962 is concerned, we uphold its validity and reject the appeal. There will be no order as to costs throughout.

S.R.

Appeal partly allowed.

MADAN LAL LORIA

A

ASSISTANT CONTROLLER & ORS

April 11, 1977

P. N. BHAGWATI

S. MURTAZA FAZAL ALI, JJ

s. 46(5A)

Income Tax Act, 1922

s. 58

section 46(5A)

Income Tax Act, 1922

Tutsi Charan Deb

Rai Bhupathi Naith Deb

Bhupathi Nath Deb Bahadur

25th March 1964

9th January 1962

s. 73(5)

Estate Duty Act, 1953

s. 46(1)

6th April 1964

Calcutta High Court

s. 46(1)

Income Tax Act, 1922

s. 45

section 46

section 2

s. 226(3 )(x)

s. 46

s. 46

s. 46

Section 73

s. 4S(l)

s. 73

s. 46

Estate Duty Act, 1953

section 46

section 2

sections 53 and 54

25th March, 1964

section 53

s. 73

s. 2(2)

s. 53

Property Act, 1874

s. 53

s. 53

s. 53

section 73

section 46

section 73

section 46

section 73

S. C. Majumdar

Laxmi Arvind

G. C. Sharma

P. L. Juneja

BHAGWATI

section 73

Estate Duty Act, 1953

section 46(5A)

Indian Income-Tax Act, 1922

Raj Bhupati Nath Dev Bahadur

23rd Se)'tember, 1959

Calcutta

20th

becember, 1957

section 58

section 73

section 46

Indian Income-Tax Act, 1922

Sim Tulsi Charan Deb

Rai Bhupati Nath Deb

Bhupati Nath Deb Bahadur

24th February, l 962

5th March, 1964

9th January, 1962

Tulsi Chandra

section 73

Estate Duty Act, 1953

section 46(1)

section 73(5)

Estate Duty Act, 1953

s. 46(5A)

Estate Duty Act, 1953

Section 73

Estate Duty Act

section 46

Estate Duty Act

Section 46

section 46

section 46

section 4S

section 29

section 46

section 45

section 46

section 2

section 46

section 2

section 46

Incnme-tax Act, 1961

section 46

section 46

Section 73

Estate Duty Act, 1953

section 45

Estate Duty Act, 1953

Section 73

section 46

section 73

Estate Duty Act, 1953

section 46

sections 53 and 54

Duty Act, 1953

25th March. 1964

Estate Duty Act, 1953

I!hupati Nath Deb Bahadur

Duty Act, 1953

Estate Duty Act, 1953

Seventh Schedule

section 5

sections 6 to 16

Sections 17 to 20A

sections 21 to 33

sections 34 and 35

sections 36 to 43

sections 44 to 50

Section 53

section 53

section 2

section 53

section 2

section 57

section 53

section 56

section 58

Section 58

Section 62

section 58

section 59

section 73

section 63

section 64

Supreme Court

section

65

section 73

section 74

section 19

Part VI of the Act

section 53

section 53

section 53

section 57

section 57

section 58

section 53

section 73

section 57

section 53

section 73

section 53

section 53

section 53

Property Act, 1874

section 53

section 53

section 76

section 53

section 76

section 76

section 53

section 73

section 46

9th January,

1962

9th January. 1962

section 7

section 46

9th January, I 962

section 73

section 73

section 73

section 46

section 73

section 73

section 226

section 46

section 226

Shah

Section 226

Section 226(3)

section 226(3)

section 73

Estate Dutv Act, 1953

section 46

section 46

Damodar Bhat

section 156

section 226

section 226


KARNATAKA ELECTRICITY BOARD

GULAM MOHIUDDIN

April 12, 1977

[M. H. BEG, C.J., A. C. GUPTA AND P. S. KAILASAM, JJ.]

Electricity (Supply) Act, 1948-Sec. 79-Statutory Regulations-Whether can be overriden by ad1ninistrative resolutions-Mysore State Electricity Board Recruitment and Pro1notion of employees of the Board Regulation.t 1960-

Passing of SAS exa1nination if necessary for pron1otion.

The respondent was serving as an Accountant in the Electricity Departrnent of the former State of Hyderabad. On the reorganisation of the States in pursuance of the States Reorganisation Act, 1956, he was allotted to the new State of Mysore with effect from 1st November, 1956.

Option was given to the respondent to continue in the Government service or to opt to the Board.

On 1st October, 1957, the respondent opted to the service under the Board. and ceased to be an employee of the Government with effect from that date. In 1960, the Board framed Recruitment and Promotion Regulation in exercise .of its powers conferred under s. 79(c) of the Indian Electricity Supply Act, 1948.

The regulations were subsequently amended on 16.12.1966. The amended regulations prescribed that the posts of Accounts Superintendents were to be filled on the basis of seniority-cum-merit on their having passed SAS examinatioa. In December, 1966, some persons junior to the respondent vtere promoted on their having passed the SAS examination, while promotion- _was denied to the respondent as h~ had not passed the examination. After the respondent; s representations were rejected he filed a Writ Petition. The Single Judge dismissed the Petition. The Divis:on Bench refus""d to throw out the Writ Petition

on the ground of delay. It found on consideration of the two resolutions of the Board one dated 19.5.1969 and another dated 5.1.1970 that the respondent being an allottec was exempted from complying with the requiren1ents of passing the examination.

Allowing the appeal.

HELD : (1) The Division Bench rightly refused to deny relief to the respondent on the ground of delay and !aches. [510 Bl

<2) Section 79 of the Act empowers the Board to make regulations not iriconsistent .with the Act and rules made thereunder to provide for a11 or any of the matters referred to in els. (a) to (k) of the section. Sub-s. (c) en1powers the Board to make regulations regarding the duties of officers and servants of the Board and their salaries, allowances and other conditions of service.

By virtue of the said powers the Board framed Mysore State Electricity Board Recruitment and Promotion of Employees of the Board Regulations, 1960. The minimum qualification prescribed is passing of SAS examination. The resolu

tion of the Board dated 19.5.69 n1erely provides that the candidates appointed to the Government Board services for the first time after 1st November, 1956, must pass the department examinat:on for purnoses of earninJ? increments and promotion. The said resolution does not deal with cases of allottees. It is silent about allottees and, therefore, it is not pos:; dble to infer from that resolution that the allottees were exempted from passing the departmental examina tion. In any case, the passing of the resolution cannot have the effect of relaxing statutory regulations. Anart from that bv the subsequent resolution of 1970, the Board made it absolutely clear that the SAS examination had to be passed. [510 C-D, G-H, 511 E-F]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 144 of 1977.

,\:-meal by Soecial leave from the Jnd!!111ent and Order dated the 2nd Januory, 1976 of the Karnataka High Court in Writ Appeal No- 430 of 1974. ·

• .. t.

...

KARNATAKA ELF.CT. BOARD v. G. MOHIUDDIN (Kai/asam, J . .) 509

V. N. Satyqnarayana, K. Rajendra Chowdhary and Veena Devi A (Mrs.) Khanna for the Appellant.

S.S. Javali, B. P. Singh and A. K. Srivastava, for Respondent.

The Judgment of the Court was delivered by

KA!LASAM, J .-This appeal is by the Karnataka Electricity Board B by its Secretary by Special leave granted by this Court against the judgment of the Karnataka Higb Court allowing the writ petition filed by the respondent and issuing a writ of mandamus to the appellant to consider the case of the respondent for promotion as an Accounts Superintendent as on 30th December, 1966, and to promote him to that post with effect from that date. .

The respondent was serving as an Accountant, Grade II, in the Electricity Department of the former State of Hyderabad.

On the reorganisation of the States in pursuance of the States Reorganisation Act, 1956, he was allotted to the l\ew State of Mysore (now Karnataka) with effect from !st November, 1956. The post which he held came

to be equated with tha't ofl I Division Clerk in the former State of Mysore.

On !st October, 1957, the Mysore State Electricity Board now Karnataka State Electricity Board was constlfuted under the Indian Electricity (Supply) Act. An option was given to the respondent to continue in the. Government service or fo opt to the Board. On 1st October, 1957, the respondent opted to the service under the Boar<! and ceased to be an employee of the Government with effect from that dafo.

In the year 1960 the Board framed Recruitment and Promotions Regulations in the exercise of its powers conferred on it under section 79 ( c) of the Act.

The Regulations were subsequently amended on 16th December, 1966. The amended Rules prescribe\! that the posts of Accounts Superintendents were to be filled by promotion of I Division Clerks on the basis of seniority-cum-merit on their having passed Part I and II of the S.A.S. examination. ·

On 30th December, 1966, some persons junior to the respondent were promoted on their having passed the S.A.S. examination while promotion was denied to the respondent as be had not passed the examination.

The respondent made several representations one such representation being on 24th December, 1970 .. On 21st November, 1972, the respondent's representations were rejected. The respondent thereafter filed a writ petition before the High Court on 13th February, l973. The learned Single Judge who heard the petition dismissed it and the respondent preferred an appeal to a Bench of the Karnataka High Court. On behalf of the appellant, Karnataka Electricity Board, it was contended before the court that the writ petition ought to be dismissed on the ground of inordinate delay and !aches .. on the part of the respondent and also on the ground that in view of the later Resolution of the Board drrted 5th January, 1970, it was no longer open to the respondent to rely on the Resolution dated 19th May, 1969. The Bench of the Karnataka High Court held that the writ petition cannot

6-502SCI/77

A be thrown out on the ground of delay. On a consideration of the two Resolutions of the Board, namely thiit of 19th May, 1969 and 5th January, 1970, it found that the respondent as an allottee was exempted from complying with the requirements of passing the examination and therefore allowed the writ petition. 1--

We do not see any ground for not accepting the view of the lligh ·..- Court that in the circumstances of the case the relief to the respondent should not be denied on the ground of delay and !aches.

The only ground therefore on which the order of the High Court was challengd. by the appellant is that the court was in error in con~ truing the relevant provisions of the Regulations and the Resolutions and holding that the res.1JOndent is exempted from passing the S.A.S.

C examination before qualifying for the promotion.

Before referring to the two Resolutions the relevant provisions of the law and Regulations made thereunder may be referred to.

The Electricity (Supply) Act, 1948, by section 79 empowers the Board to make Regulations not inconsistent with the Act and the rules made thereunder to provide for all or any of the matters referred to in clauses (a) to (k) of the section.

Sub-clause ( c) empowers the Board to make Regulations regarding D the duties of officers and servants of the Board and their salaries, allowances and other conditions of service. By virtue of the powers conferred on the Board it framed Mysore State Electricity Board Recmitment and Promotion of Employees of the Board Regulation, 1960.

The method of recruitment prescribed for promotion to Accounts Superintendents is prescribed in Chapter V of Annexure-2.

The method of recruitment is by promotion from the cadre of I Grade Clerks on the E basis of seniority'cum-merit.

The minimum qulification prescribed is that the candidate ought to have passed S.A.S. examination Part I and Part IL This provision which was enacted in 1960 continued to be in force <luring the relevant time. If this Regulation is applicable, the respondent's plea has to be rejected as it is incumbent Ont him to pass the S.A.S. examination.

The Resolution of the Board relied on F by the respondent is 19th May, 1969 and the material paragraph runs as follows :-

"It is hereby directed that the candidates appointed to Government/Board Service for the first time after the date of States Re-organisation i.e., !st November 1956 (as they are not allottees) should pass the Departmental Examination's and Kannada Language Tests for purposes of earning increments and for promotion."

The Resolution requires the passing of the examination and Kannada language test for the purpose of earning increments and for promotion for candidates appointed after !st November, 1956. But as it is not made applicable to the allottces, it is contended that the allottees are bv implication exempted from passing the Departmental Examination and Kannada language test.

This contention cannot be accepted for the Resolution is silent regarding the allottees and is not made applicable fo them. It is not possible to infer from the Resolution that the

KARNATAKA ELECT. BOARD v. G. MOH!UDDIN (Kailasam, !.) 511

allottees are exempted from passing the Departmental Examination A and the Kannada language test. fhe Resolution was passed by the Board in pursuance of certain proceedings of the Government referred to in the Resolution itself.

Paragraph 2 of the Resolution reads thus:

"Approval is accorded for the adoption of the Government Order Nos. (1) GAD 123 SSH 66 dated 21-11-1966 (2) GAD 2 SSR 67 dated 3-8-1967 and (3) GAD 72 SSR 67 dated 20-7-1968."

The three Gove=ent orders referred to in the Resolution relate to the requirement of passing of the Departmental Examination and Kanuada language test as a consequence of the judgment of the High Couri

of Mysore and the Supreme Court. The orders specifically states that C unless in the Recruitment Rules relating to the service concerned Departmental Examination had been incorporated and pre_scribed and unless it is clearly specified for what purpose the tests are prescribed _ __......,. viz., whether for increments or promotions, the passing of Departmental tests cannot be legally insisted upon for grant of increments or for according promotion to higher posts.

The three Government orders make it clear that the relaxation of the rule relating to passing D of the Departmental Examinations and Kannada language test is only as regards services where the rules do not specifically require the passing of the examinations and the language test. These G.O.s do not apply in the present case as the Regulations framed by the Board under section 79(c) specifically prescribe the passing of the S.A.S. test.

We are unable to construe the Resolution dated 19th May, 1969 as exempting the alloftees from passing the test. In any event the plea of the E respondent will have to fail on the gronnd that the Regulations framed under section 79 ( c) of the Board requiring the passing of the examination was not relaxed by amending the Regulations. The passing of !he Resolution by the Board cannot have the effect of modifying a Regulation which was passed by the Board in the exercise of the powers conferred by the statute. Apart from this circumstance by a subsequent Resolution the Board itself considered the question in all its F aspects and resolved that passing of the S.A.S. examination for promotion to the cadre of Accounts Superintendents as before be insisted.

Whatever might have been the purport of the Resolution dated 19th May, 1969, the Board by a subsequent Resolution had resolved on insisting on the passing of the examination.

The High Court found that the later Resolution did not affect the earlier Resolution on the ground that the subsequent Resolution did not make any reference to the earlier Resolution and that there is no reference to the allottees G at all.

Relying on the words "the passing of the S.A.S. Examination for promotion to the cadre of Accounts Superintendents as before be insisted" the court found thaf it would mean that where the passin~

of the S.A.S. Examination was insisted prior to that Resolution the game 'shall continue to be insisted in future also, and if passing of the S.A.S. Examination was nai insisted prior to that Resolution in the case of allottees for promotion to the cadre of Accounts Superinten- H dents.

The Resolution dated 5th January, 1970, cannot be understood as altering the position existing "as before".

This reasoning is

A erroneous for, as pointed out by us the earlier Resolution was not intended to cover the case of allottees and merely because the allotte<:s were excluded from the operation of the Resolution the inference that the allottees were exempted from the passing of the examination is not justified.

Further before the Resolution there is nothing to indicate that the allottees were not required to pass the examinatio11. The conclusion of the High Court cannot be upheld as the binding nature of B the Regulations passed by the Board under section 79 ( c) has not

been taken due note of.

This is the view taken by the Single Judge of the High Court.

In the result we allow the appeal, set aside the judgment of the lower appellate court and restore that of the Single Judge. There will be no order as to costs.

P.H.P.

Appeal allowed.

KARNATAKA ELECTRICITY BOARD

GULAM MOHIUDDIN

April 12, 1977

M. H. BEG, C.J.

A. C. GUPTA

P. S. KAILASAM, JJ.

Sec. 79

1st October, 1957

s. 79(c)

Indian Electricity Supply Act, 1948

Section 79

1st November, 1956

V. N. Satyqnarayana

K. Rajendra Chowdhary

Veena Devi A (

Khanna for the Appellant.

S.S. Javali

B. P. Singh

A. K. Srivastava

KA!LASAM

Karnataka Higb Court

Mysore

Karnataka

st November, 1956

st October, 1957

Mysore State Electricity Board

section 79

16th December, 1966

24th December, 1970

21st November, 1972

13th February, l973

Karnataka High Court

Karnataka Electricity Board

5th January, 1970

19th May, 1969

section 79

High Couri

of Mysore

Supreme Court

section 79(c)

section 79

section 79