VASUDEO KULKARNI

SURYAKANT BHATT & ANR.

March"'I, 1977

[P. K. GOSWAMI AND P. N. SHINGHAL, JJ.J

Practice and Procedure-Trial Court acquirted the accused-High Court- When could reverse the Trial Court's finding.

The complainant's (the first respondent) father entru&ted certain civil suits to the appellant, who was a lawyer. The complainant was a junior under the appellant. In a complaint lodged with a Magistrate it was alleged that by making a false representation to him that he had deposited in the Court certain sum towards costs in the suit, the appellant had collected from him (the com~ plainant) some money.

Later, in consequence of a como1omise between the parties the .appe11ant returned the sum to the complainant's father by a crossed cheque.

Even so the complainant filed the complaint. The trial court found that it was a case of accounting between the parties and that being a matter of civil nature, acquitted the appellant. The High .Court on the other hand reversed the acquittal and convicted and sentenced him under s. 420 J.P.C~.

Allowing the appeal to this Court,

HELD : The High Court had no reason whatsoever in an appear against acquittal to interfere with the conclusion reached by th~ trial court, which is justified on the evidence. The High Court was clearly \vrong in spelling out dishonest intention on the part of the appe11ant, taking a view different fro1n that of the trial court. [106 E]

(a) Although in an appeal against acquittal, the H.igh Court may reapprc. ciate fo1 itself the entire evidence and reach its own conclusion, it is well-settled that, when the conclusion is contrary to that of the trial court, the High Court has a further duty to satisfy itself that the grounds given by the trial court for acquittal are palpably wrong or manifestly erroneous. That, as an original court trying the case for the first time, the High Court would have entered a verdict of conviction, is not the test in an appeal against acquittal. This is not a case where it is even remotely possible to characterise the reasons for acquittal as palpably and unerringly shaky, in which case alone, there would be justification for interference by the High Court. The reasons given by the lligh Court should be demonstrably cogent and weighty.

[107 E; GJ

(b) The High Court has failed to take count of the relationship between a client and a lawyer which is a chain of .mutual adjustments of accounts. A lawyer's account should be clear and clean and above suspicion of manipulatlou-,

yet there may __ arise some omissions and commissions in the account which cannot give rise to a criminal charge.

[106 G]

In the instant case, the complainant lodged the complaint even without the kno\vledge of his father who had already received the amount in dispute. The appellant's relationship with the complainant's father \Vas that of lawyer and a client and anything outstanding from one or the other party was a matter of accounting between them. The complainant had no part to play on his own and the prosecution of the appellant even without examining his father as a witness \Vas unauthorised and uncalled for.

There was accounting between the parties and even the correspondence showed that there had been adjustments between them from time to time.

That bing the position dishonest intention which is the principal ingredient of an offence under s. 420 is lacking in this case.

[105 E&GJ

CRIMINAL APPELLATE foRISDICTION : Criminal Appeal No. 23 of 1972.

(Appeal by Special Leave from the Judgment and Order dated 22-10-1971 of the Madhya Pradesh High Court (Indore Bench) in Crl.

A. No. 291 of 1970).

R. L. Kohli, R. C. Kohli and A. G. Ratnaparkhi, for the appellant.

M. K. Khan and S. K. Dhingra, for respondent No. 1.

Ram Pa11jwa11i and H. S. Parihar, for respondent No. 2.

The Judgment of the Court was delivered by

GoswAMI, J. The appellant, an advocate of 25 years' standing, was charged under section 420, Indian Penal Code. He was acquitted by the trial court holding the matter to be of civil nature. The High Court of Madhya Pradesh on appeal at the instance of the complainant (the C first respondent herein) set aside the acquittal and convicted the appellant under section 420 IPC and sentenced him to rigorous imprisonment for two years and to a fine of Rs, 600/-, in dafault further rigorous imprisonment for six months.

The complainant is the son of one Dinubhai, a senior partner of D Dinubhai & Co., with its head office in Bombay and a branch office in Indore. There were two partners, namely, the complainant's father and one M. C. Mehta. Mehta ceased to be a partner in the firm with effect from July 5, 1960.

A civil suit was instituted by Dinubhai against Nai Duniya, Indore, a daily newspaper, impleading M. C.

Mehta also as a co-defendant. The suit was decreed against Nai Duniya but was dismissed against M. C. Mehta with costs amounting E to Rs. 612/- awarded to him. The complainant was acting as a junior to the appellant in this suit as well as in several other suits filed by the firm against others. It is alleged by the complainant that about February 8, 1965, the appellant made a demand from him, along with other amounts, of a sum of Rs. 612/- being the costs awarded to Mehta in the aforesaid suit by making a representation that he had already deposited the amount in court from his own funds.

Depending upon F this statement, the complaint proceeds, the complainant paid a sum of Rs. 1000/- which included the amount of Rs. 612/- towards the costs awarded.

The firm appealed against the decree and it appears a compromise was entered with Mehta whereby Mehta relinquished his claim for costs of Rs. 612/-. This happened on March 10, 1967. On that very date the appellant returned to Dinubhai the sum of Rs. 612/- by a crossed cheque stating that "this appeal is just now disposed of by the Hon'ble High Court, Indore. I am, therefore, expected to remit this sum to you''. Even so, the complainant, Dinubhai's son, lodged a complaint in the court of the Addition&! District Magistrate, Indore City, on September 21, 1967, bringing a charge of cheating against rhe appellant by citing the only witness in the complaint being the Record Keeper of the High Court. Dinubhai, his father, was not even mentioned as a witness in the complaint nor was he later examined in the case.

8-240SCT/77

In the trial the complainant examined himself and one Vijaykumar, . a clerk in the office of the High Court. The latter has proved flom the records of the first appeal in the High Court that the costs of Rs. 612/- awarded to the defendant, Mehta, in the suit had not been deposited on behalf of the complainant's father, Dinubhai.

The complainant reiterated his allegations in the complaint and further stated that after the compromise with Mehta which had taken place on March 10, 1967, he perused the record of the case and came to know that the appellant had not deposited any money of the costs to Mehta in the court. He, however, admitted that after the compromise the appellant had sent a cheque of Rs. 612/- to his father at Bombay.

In the course of cross-examination his attention was invited to his following statement given before the Magistrate under section 200, Criminal Procedure Code :

"Thereafter when Shri V. V. Kulkarni told me the aforesaid thing I knew and had knowledge of the fact that he had not deposited Rs. 612.00 in the court.

Still Shri Kulkarni deceitfully demanded Rs. 612.00 from me".

In the printed paper-book before this Court at page 3, paragraph 6 there is an error in adding the word "not" before the word "knowledge".

This is clear from the original High Court paper-book which we have examined.

The trial court found that it was a case of accounting between the parties and was a matter of civil nature. The trial court thus acquitted the appellant. The High Court on appeal, as mentioned earlier, reversed the acquittal and convicted and sentenced the appellant under section 420 IPC. Hence this appeal by special leave.

The complainant, who had earlier quarrelled with his father and later for some reason or other parted company with the appellant, who F was his senior, lodged the complaint even without the knowledge of his father who had already received the amount of Rs. 612/- for which the complainant was said to have been cheated. The statements of accounts filed in the case olearly show that at different times the firm was liable to pay certain expenses and fees to the appellant and at other J times the appellant was holding some money on client's account. The 1 letter of Dinubhai (Ex. D-8) dated October 27, 1966, to the appellant G is revealing in this respect. The letter states, inter alia, that-

"indeed you have worked and you must receive your fees.

There may be lot of recoveries now due and may I request you to recover your fees out of the recoveries.

You are aware that I have ventured to put Suryakant with your support at Indore and there can be no idea ever in exis- H tence to offend you. I think we are best friends and there should be no hitch in that at all.

x x x x

May I therefore request you to please carry out all the A recovery proceedings and take all your dues you think reasonable from the amounts so recovered''.

Similarly the letter from the complainant (Ex. D-39) to the appellant of March 29, 1967, written under instructions of Dinubhai was as follows :-

"(1) That you have submitted the last statement of account on 16-8-1966 showing the cash on hand of Rs. 488.60P remaining with you for future expenses.

(2) My client paid to you Rs. 300/- (Rupees three hundred) on 3-1-1967. Thus, you had Rs. 788.60P

(Rupees seven hundred eighty eight and Np. sixty) cash on hand with you.

( 3) It is, therefore, requested that kindly give the detailed statement of account to my client, as it is required for the purposes of Income tax".

On the top of that we find from the copy of the complaint (Ex. D-10) in Civil Suit No. 8 of 1968 B filed by Dinubhai against the app()][ant on D February 16, 1968, claiming a decree for the amount of Rs. 11492.85 after acknowledging the receipt of Rs. 612/-, the subject matter of the cheating case (para 3 of the plaint). It is, therefore, crystal clear that the appellant's relationship with the complainant's father was that of a lawyer and a client and anything outstanding from one or the other party was a matter of accounting between them. The complainant has no part to play on his own and his prosecution of the appellant even without examining his father as a witness is absolutely unauthorised and unca, lled for.

Even the receipt (Ex. P-1) upon which the High Court principally relied goes to show that a sum of Rs. 350.90 had already been spent

by the appellant and it is only on February 11, 1965, the date of the receipt, that this money was received by him from the complainant on F behalf of Dinnbhai. Even this receipt (Ex. P-1) shows that a round figure of Rs. 1000/- was paid to him leaving Rs. 37.10 as "cash for expenses". By no stretch of imagination it can be said that any deception was practised upon the complainant on February 11, 1965, when the latter parted with one thousand rupees inclnding the amount of Rs. 612/- towards the costs payable to Mehta.

Apart from this the costs of Rs. 612/- were indeed a liability of Dinubhai to Mehta and G not a fictitious claim. There was accounting between the parties and even the correspondence shows that there have been adjustments between the parties from time to time.

That being the position dishonest intention which is the principal ingredient of an offence under section 420 IPC is lacking in this case.

Even on merits it is olear that after receipt of the statement of H account from the appellant on February 10, 1965, the complainant knew quite well that there had been no deposit of Rs. 612/- as costs in

the court. There was, therefore, no occasion for making a statement to the complainant to represent that the appellant had already deposited Rs. 612/- in the court on account of the costs payable to Mehta ..

Apart from that since the amount was actually payable by the firm to Mehta, there was no need for making any representation to the complainant for obtaining this amount. It is even probable that this amount had beeu received towards payment of costs even without making any representation as alleged. The High Court has unnecessarily given exaggerated importance to the typed receipt (Ex.

P-1) of February 11, 1965, signed by the appe1lant wherein against the amount of Rs. 612/- it was recited that "the costs of Shri Mehta in the matter of Nai Duniya, deposited by me in the court from my person''. I\ is suggested by the appellant in the course of cross-examination of the complaiuant that this receipt was got typed by the complainant and the appellant only signed it in good faith in the usual course. The complainant, however, denied the suggestion.

There is also no evidence to show as to who typed the receipt or who even dictated the contents in the receipt. Whatever be the actual position, we are not prepared to hold that the complainant's allegation of wilful and dishonest representation by the appe11ant is at all corroborated by the recital in the receipt.

On the other haud, the history of the relationship between the parties. together with what has been set out above from the correspondences clearly lead to the conclusion that the trial court was perfectly justified in holdiug that it was a matter of civil nature and the offence under section 420 IPC was not at all established.

The High Court, therefore, had no reason whatsoever in appeal against acquittal to interfere with this conclusion which is clearly justified on the evidence. This is a case in which the High Court was clearly wrong in spelling out dishonest intention on the part of the appellant taking a view different from that of the trial court.

It is not likely at all that the amoUfit of Rs. 612/- was paid because of any representation by the appellant hut because the same was a known liability of the complainant's father as costs in favour of Mehta.

What was grievously missed by the High Court is that the transfer of money from the complainant to the appellant was not for a fake cause, nor did the passing of the money depend crucially on the representation, assuming it was made, that the amount had been already deposited by the appellant out of his personltl funds. The High Court has positively failed to take count of the relationship between the client and the lawyer which was a chain of mutual adjustment of accounts involving ascertaimnent of fees and all legitimate and sundry expenses. It is true that a lawyer's account should be Clear and clean and above suspicion of manipulation but that there may arise some omissions and commissions in the account cannot give rise to a criminal charge for which strong and unimpeachable proof wi11 be necessary.

Principally the trial court entered the verdict of acquittal on the ground that "the position was very clear to the complainant that no deposit towards the costs awarded to M. C. Mehta had been made by the accnsed" and "as such the possibility that the complainant was fully aware of the real position about the alleged deposit cannot be ruled

'out". The above conclusion of the trial court rests on the complainanfs position as a junior •lawyer assisting the appellant in the particular suit and in other cases; the complainant's own admission before the Magistrate in his statement recorded under section 200, Criminal Procedure Code that he (complainant) "knew and had knowledge of the fact that he (the appellant) had not deposited Rs. 612/- in the court"; and the

tatement of account of February 9, 1965, received by the complainant on February 10, 1965, showing that the deposit of Rs. 612/- had not heen mentioned.

It is, therefore, impossible for the High Court to hold, on the evidence on record, that "it is difficult to agree with the learned Magistrate that Suryakant must have known and did actually know that no deposit had been made". The High Court even did not refer to the statement of the complainant in bis initial deposition which was put to him in the course of cross-examination.

The Magistrate also gave importance to the fact that the complain- 11nt's father, on whose behalf alone the complainant was acting, should not have been examined as a witness. The Magistrate also considered the unusual delay in lodging the complaint as one of the grounds for "treating their real controversy to be of civil nature".

It is true that in an appeal against acquittal, the High Court may reappreciate for itself the entire evidence and reach its own conclusion, but it is equally well-settled that when the said conclusion is contrary to that of the trial court, the High Court has a further duty to satisfy "itself that the grounds given by the trial court for acquittal are palpably wrong or manifestly erroneous, shocking one's sense of justice. That, as an original court trying the case for the first time, the High Court would have entered a verdict of conviction, is not the test in an appeal against acquittal. The High Court spelt out dishonest intention from the appellant'nefund of the amount by cheque on March 10, 1967, on settlement between the parties in appeal.

This is an entirely wrong approach as the mens rea for the charge of cheating has to be considered on the date of the fraudulent or dishouest representation which was allegedly on February 8, 1965, two years earlier.

Having examined the reasons given by the trial court for the acquit- tal and having ourselves perused the entire evidence, we are clearly of opinion that this is not a case where it is even remotely possible to characterise the reasons for acquittal as palpably and unerringly shaky, in which case alone, there would be justification for interference by the High Court. We are also unable to say that the reasons given bv the High Court are demonstrably cogent and weighty to enable it to interfere with the acquittl.

At the conclusion of the argument by Mr. Khan on behalf of the .complainant pressing for conviction of the appellant, Mr. Panjwani,

A appearing on behalf of the State, fairly enough, did not think it proper to support the judgment of the High Court.

In the result the appeal is allowed. The judgment of the High Court is set aside. The appellant who has been on bail shall be discharged from his bail bond.

P.B.R.

Appeal allowed.

VASUDEO KULKARNI

SURYAKANT BHATT & ANR

P. K. GOSWAMI

s. 420

s. 420

R. L. Kohli

R. C. Kohli

A. G. Ratnaparkhi

M. K. Khan

S. K. Dhingra

Ram Pa11jwa11i

H. S. Parihar

GoswAMI

section 420

Indian Penal Code

High Court of Madhya Pradesh

section 420

IPC

Dinubhai

D Dinubhai & Co.

Bombay

Indore

M. C. Mehta

Mehta

July 5, 1960

Nai Duniya

M. C.

Mehta

Nai Duniya

February 8, 1965

March 10, 1967

Dinubhai

September 21, 1967

Dinubhai

Vijaykumar

section 200

Criminal Procedure Code

V. V. Kulkarni

Kulkarni

section 420

IPC

October 27, 1966

Suryakant

February 16, 1968

February 11, 1965

Dinnbhai

section 420

IPC

February 10, 1965

section 420

IPC

section 200

Criminal Procedure Code

February 9, 1965

Khan

Panjwani


I 09

VASUDEO KULKARNI

SURYAKANT BHATT & ANR.

March 2, 1977

[P. K. GOSWAMI AND P. N. SHINGHAL, JJ.]

Practice and Procedure-Trial Court acquitted the accused-High Court- When could reverse trial court's findings.

The appellant was a lawyer, under whom the Complainant (first respondent) was a junior. The ap-pellant was engaged as counsel in certain cases by the complainant's father. The appellant submitted staten1eat of accounts to the complainant's father in respect of the sums spent by him. in the suits. After a lapse of three years the complainant filed a complaint against the appeJlant making allegations under ss. 409, 468 and 474 I.P.C. The trial Court acquitted him holding that the prosecution had been launched after inordinate delay and that there was no clear and conclusive evidence of criminal intention and dishonest mental act on the appellant's part. The High Court, on appeal, set aside th~

acquittal holding that the appellant's explanation in regard to the discrepancies

\Va~ not true and could not be accepted.

Allowing the appeal to this Court,

HELD : There was no sufficient ground for the High Court to interfere with the acquittal in this case when the reasons given by the trial Court were weight)1 and cogent and there was no compelling justification to take a contrary view.

. (112 Fl

The mere fact that certain amounts were in the hand.s of the appellant and the accounts submitted were incorrect would not lead to the conclusion that the

appellant comm1tted criminal breach of trust. [111 F]

In the instant case, the complainant was a junior of the appellant and he could himself easily find out the discrepancy in the accounts and could have drawn the appellant's attention to it. The complainant's father did not authori!:>e him to file the complaint nor was he examined to corroborate the complainant. Secondly, in a notice issued to the appellant by the complainanfs father the latter did not attribute any dishonest intention or criminal intent on farmer's part. The High Court was wrong in holdin.2 the charge as proved and in reversing the order of the trial Court. [111 G; 112 CJ

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 24 of 1972.

(Appeal by Special Leave from the Judgment and Order dated 22-10-1971 of the Madhya Pradesh High Court (Indore Bench) in Crl.

A. No. 292/70).

R. L. Kohli, R. C. Kohli and A. G. Ratnaparkhi, for the appellant.

M. K. Khan and S. K. Dhingra, for respondent No. 1.

Ram Panjwani and H. S. Parihar, for respondent No. 2;

The Judgment of the Court was delivered by

GOSWAMI, J. This appeal by special leave is directed against the judgment of the High Court of Madhya Pradesh convicting the appellant under section 409, Indian Penal Code, and sentencing him to one

A year's rigorous imprisonment and to a fine of _Rs. 250/-, i1: default ur ther rigorous imprisonment for three months, m appea:l aamst acqmttal at the instance of the complainant (first respondent herem).

The appellant is a senior lawyer of 25 years' standing in Indore and the complainant was acting as his junior. The complainant's father, Dinubhai, was the senior partner of a firm of Chartered Accountant, B .M/s. Dinubhai & Co., with its registered office in Bombay and a branch office in Indore.

The Indore office was looked after by the second partner, M. C. Mehta. It appears that the firm was dissolved on July 5, 1960, when Mehta ceased to be a partner and Dinubhai appointed the appellant as counsel and attorney for filing suits and for recovering dues from various parties. Dinubhai filed a suit, being suit No. 13 of 1962, for recovery of Rs. 12,500/- in the court of the Third Additional C District Judge, Indore, impleading M. C. Mehta and one Chandulal Shah as defendants in that suit.

Although the suit was decreed, it appears there were two cross appeals against the decree in the High Court, one by Dinubhai and the other by Chandulal Shah. The appellant ·" was appearing for Dinubhai in both the appeals.

He received some amounts in advance from Dinubhai and submitted a statement of account of Shri Dinubhai (Ex. P-1) dated February 9, 1965, wherein D two items, namely, Rs. 210/- and Rs. 110/- were mentioned as being towards "paper book charges" respectively on 21-4-1964 and 22-9-1964.

The entry on 22-9-1964 shows that the amount of Rs. llO/- is one of several items mentioned therein as expenses incurred in the appeal filed by Chandulal Shah against Dinubhai.

So far as the items mentioned in Ex. P-1 on 21-4-1964 including the last item of Rs. 210/-, there is no mention whether the expenditure was actually E incurred on that date.

The complainant was not pulling on well with his father for some reason or other and also parted company with his senior, the appellant. _He filed a.complaint against the appellant on December 8, 1967, makmg allegations under sections 409, 468 and 4 7 4 IPC.

Ultimately the appellant was charged under section 409 IPC with regard to the amounts of Rs. 210/- and Rs. 110/- which were mentioned in the statement of account (Ex. pcl) received by the complainant on February 10, 1965. The complainant examined himself and a clerk of the High Court to prove that no paper book charges were deposited on the dates mentioned in the accounts. On the other hand a sum of Rs. 26.50 was deposited as paper book charges on March 18, 1965, in the particular appeal.

The appellant denied the charge and stated that there was a typing error in the accounts and the actual figures should have been Rs. 21 /- (and not .Rs. 210/-) and Rs. 10/- (and not Rs. 110/-). When the appellant's attention had been drawn to these amounts he admitted these to be typing errors and asked for adjustment of the amount of Rs. 300/- towards his fees in the case of Kothari Book Depot.

It is rather curious that a criminal complaint should have been lodged against the appellant nearly three years after the receipt of the accounts by the complainant.

VASUDEO KULKARNI v. SURYAKANT BHATT (Goswami, J.) 111

The trial court acquitted the accused (appellant herein) by observing as follows :-

"To sum up, the prosecution has been launched after inordinate unexplained delay, there is no. clear and conclusive evidence of the criminal intention and dishonest mental act of the accused, the real aggrieved person has not come with the complainant but has already sought the alternative remedy in Civil Court which is being already pursued. The question whether or not the adjustment made by the accused towards his fees was proper can more appropriately b_e decided by Civil Court.

Accused having reasonable claim against the complainant for any equiva.Jent sum of money, his user of the disputed sum for bis own purpose will not amount to criminal breach of trust".

The High Court, on the other hand, held that the charge was established against the accused and set aside the acquittal. The High Court held that the explanation of the accused did not appear to be true and, therefore, could not be accepted. It further held that it was clear that on the dates mentioµcd in the accounts no amounts were deposited as paper book charges in the High Court. The High Court concluded as follows:-

"Consequently it cannot be doubted that the respondent, who as an agent of the complainant's father was entrusted with the amounts, showed false expenses and thereby kept the amounts with himself.

In the face of these facts and also on the finding that the explanation given by the respondent cannot be accepted, the respondent cannot escape conviction 1)nder section 409 l.P.C. as that was "the only charge framed against him by the trying Magistrate".

The statement of account (Ex. P.l) as well as the correspondence between the appellant and the complainant's father, who was his client, clearly show that thue was mutual accounting and adjustment between them. The mere fact that certain amounts were in-the hands of the appellant and the accounts submitted were incorrect would not lead to the inevitable conclusion that the appellant committed criminal breach of trust in respect of these items.

The complainant, who was a junior attached to him and was looking after his cases could himself easily find out the discrepancies in tlie

accounts and in a normal course he wonld have drawn the attention of his senior on receipt of the statement of account in February 1965.

The accused in his statement under section 342, Criminal Procedure Code, stated, inter alia, as follows :-

"Typing error has occurred in the statement of account of Ex. P-1.

The difference of Rs. 300.00 which has occurred, bas been adjusted against my fees in Kothari Book Depot's case at the instance of Suryakant. I have given a receipt for it which is in possession of Suryakant. Surya kant used to maintain account of Court expenses of Dinubhai's cases in a register.

That register is with Suryakant.

Suryakant used to remain present in the court on each date along with me.

He knows everything.

Nothing is concealed from him.

There is Gadbad of money between Suryakant and his father. Hence on the instigation of other people this false case has been launched. Suryakant had got typed the statement of account Ex. P-1 from the register".

On one side we have the solitary statement of the complainant.

Even his father is not there to corroborate him or even to show that he authorised him to file the complaint. As against his statement, we have the explanation of the appellant.

The trial court who had an opportunity to see the complainant giving evidence did not choose to rely on his version of the case and preferred to accept the explanation of the appellant. In this state of the evidence we fail to see how the High Court, in an appeal against acquittal, thought it possible to hold the charge as proved. While the complaint was filed on December 8, 1967, a few months earlier on May 16, 1967, a lawyer's notice was addressed to the appellant on behalf of Dinubhai. We may extract the following passage from that letter :

"My client has instructed me to call upon you to remit to him the balance of Rs. 1700/- lying with you (after deducting your fees of Rs. 3300/- from the amount of Rs. 5,000/- paid to you) within 24 hours of the receipt Of this reply otherwise my client will not only place the matter before the Bar Council of M.P. but, if so advised, wm also file a suit for its recovery against you at your cost and consequences which please note".

This would clearly show that neither Dinubhai nor his lawyer ever thought of attributing any dishonest intention or criminal intent to the appellant. In view of this Jetter it is not possible to accept the sole testimony of the complainant imputing dishonest intention on the part of the appellant.

We are clearly of opinion that there was no sufficient ground for the High Court to interfere with the acquittal in iliis case when the reasons given by the trial court were weighty and cogent and there was no compelling justifkation to take a contrary view.

At the conclusion of the argument by Mr. Khan on behalf of the complainant pressing for convictioii of the appellan~, Mr.

Pa1_1jwani, appearing on behalf of the State, fairly enough, did not thmk it proper to support the judgment of the High Court.

In the result the appeal is allowed.

The j1.1dgment of the Higlt Court is set aside. The appellant shall be discharged from his bail bond.

P.B.R.

Appeal. allowed.

09

VASUDEO KULKARNI

SURYAKANT BHATT & ANR

March 2, 1977

P. K. GOSWAMI

ss. 409, 468 and 474

I.P.C

R. L. Kohli

R. C. Kohli

A. G. Ratnaparkhi

M. K. Khan

S. K. Dhingra

Ram Panjwani

H. S. Parihar

GOSWAMI

High Court of Madhya Pradesh

section 409

Indian Penal Code

Indore

Dinubhai

Bombay

M. C. Mehta

July 5, 1960

Mehta

Chandulal Shah

December 8, 1967

sections 409, 468 and 4

IPC

section 409

IPC

February 10, 1965

March 18, 1965

Kothari Book Depot

section 409

section 342

Criminal Procedure Code

Suryakant

Surya kant

May 16, 1967

Khan


STATE OF KARNATAKA

L. MUNISW AMY & ORS.

March 3. 1977

[Y. V. CHANDRACHUD, P. K. GOSWAMI AND P. N. SHINGHAL, JJ.]

Code of C1i111inal Procedure. 1973 (Act II of 1974)-S.482 (s. 561 A of 1899 Code)-lnllerent power of the High Court to quash proceiedings at the stage of fra1ning of charges-Explained.

The appellants are accused Nos. 10, 13, 14, 15 and 17 to 20 before the Sessions Court for trial under various offences, viz., ss. 324, 326, and 307 read with s.: 34 of the Penal Code. While discharging accused Nos. 11, 1~ and 16 u/s 227 of the Criminal Procedure Code, 1973, on 8.8.1975, the learned Se~ions Judge observed that there was "some material to hold that the remaining accused have had something to do with the incident which occurred on 6.12.1973 in I.T.I. Colony. Bangalore" and adjourned the case to September l, 1975, "for framing specific charges as made out from the material on record against the rest of the accused persons".

Two revision petitions were filed anainst this order. one by accused Nos. 10. 13, 14 and 15 and the other by accused Nos. 17 to 20.

These petitions were allowed by the High Court on the view that there was no sufficient ground for proceeding against the petitioners before it.

The High" Court accordingly quashed the proceedings in regard to them.

In appeal by Special Leave, the appellant State contended : ( 1) The High Court ought not to have exercised its power to quash the proceedings against the respondents without giving to the Sessions Court, which was seized of the case. an opportunity to consider whether there was sufficient material on the record on which to frame charges against the respondents. (ii) In any event the I-ligh Court could not take upon itself the task of assessing or nppreciating the weight of material on the record in order to find whether any charges could be legitimately framed against the respondents.

Dismissin2 the appeal, the Court

HELD : l 1) The High Court was justified in holding that for meeting the ends of justice the proceedings against the respondents ought to be quashed.

It would be a sheer waste of public time and money to permit the proceedings to continue against the respondents, when there is no material on the record on '''hich any tribunal could reasonably convict them for any offence connected V.'ith the assault on the complainant.

This is one of these cases in which a charge of conspiracy is hit upon for the mere reason that evidence of direct involvement of the accused is lacking. [118 A, D-E]

f2) The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a Salutary public purpose which is that a Court proceedings ought not to be permitted to degenerate into a weaoon G of harassment or persecution.

In a criminal case. the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. [117 F-G]

(3) Considerations justifying the exercise of inherent powers for securing the ends of justice vary from case to case and a jurisdiction as wholesome as the one ct1nferred by s. 482 ought not to be encased within the strait-jacket of a rigid formula. The three instances cited in the Judgment in R. P. Kapoor Vs.

H The State of Punjab, [1960] 3 SCR 3R8, as to when the High Court would be justified in exercising its inherent jurisdiction are only illustrative and can in the verynature of things not be regarded as exhaustive. [118 F-H, 119 Al

R. P. Kapur vs. State af P1111iab [1960] 3 SCR 338 explained.

(4) It is wrong to say that at the stage of framing charges the Court cannot apply its judicial mind to the consideration whether or not there is any ground for presuming the commission of the offence.

[119 B]

_(5) While considering whether there is sufficient ground for proceeding agai.nst an accused, the court possesses a comparatively wider discretion in the exercise of which it can determine the question whether the material on the record. if unrebutted. is such on the basis of which a conviction can be said reasonably to be possible.

[119 B-E]

Vadilal Panchal v. D. D. Ghadigao11kar AIR 1960 SC 1113; Century Spinning & Afanufact11ri11g Co. v. State of Maharashtra ATR 1972 SC 54·5

applied.

. (6) In he instant case the High Court is right in its vie\v that the matcnals on which the prosecution proposed to rely against the respondents is wholly inadequate to sustain the charge that they are in any manner connected with the assault on the complainant. [119 E-F]

(7) The grievance that the High Court interfered with the Sessions Court's order prematurely is not justified. The case was adjourned by the Sessions Judge not for deciding whether any charge at all could be framed against the remaining accused, but for the purpose of deciding as to which charge or charges could appropriately be framed on the basis of the material before him. [116 G-Hl

(8) The object of s. 227 of the Code of Criminal Procedure, Act 2 of 1974. is to er.able the superior Court to examine the correctness of the reasons for '.vhich the Sei.s1ons Judge has held that there is not sufficient ground for proceeding against the accused.

[117 C-D]

(9) The High Court is entitled to go into the reasons given by the Sessions Judge in support of his order and to determine for itself ¥.-hether the order is justified by the facts and circumstances of the case.

[117 D-E]

(10) In the exercise of the wholesome power u/s 482 of the Act 2 of 1974 (s. 561 of 1898 Code), th& High Court is entitled to quash a proceeding if it comes to the conclusion that allo"Vlring. the proceeding to continue \\ould be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. [117 E-F] Observations :

"fhe ends ot justice are higher than the ends of mere law though justice has got to be adn1inistered according to Jaws made by the legislature. Without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice between the State

and its subjects, it would be impossible to appreciate _the \Vidth and contours of that salient jurisdiction. [117 G-H]

CRJMINAL APPELLATE JURISDICTION : Criminal Appeal Nos. 345- 346 of 1976. (Appeals by Special Leave from the Judgment and Order dated 30-9-1975 of the Karnataka High Court in Cr!. Petitions Nos. 248 and 253 of 1975).

D. Mookherjee, and B. R. G. K. Achar, for !he Appellant, Frank Anthony, K. B. Rohtagi and M. N.

Kashyap, for the Respondents.

The Judgment of the Court was delivered by

CHANDRACHUD, J. These two apoeals bv soecial leave arise out of a judJµnent dated Septemr 30, 1975 rendered by the High Court

KARNATAKA v. L. MUNISWAMY (Cha11drachud, J:) 115

of Karnataka in Criminal Petitions Nos. 248 and 253 of 1975. By the aforesaid judgment the High Court in the exercise of its inherent powers has quashed proceedings initiated by the State of Karnataka, appellant herein, agamst the respondents.

The incident out of which these proceedings arise took place on December 6, 1973 in the Central Avenue of the Indian, Telephone Industries Colony, Bangalore. Thyagaraja Iyer, accused No. 1, who was an employee of the Indian Telephone Industries Ltd. was dismissed from service on September 20, 1973 on the allegation that he had assaulted a Canteen supervisor.

The complainant Ajit Dutt, Works Manager of the Crossbar Division, attempted to serve the dismissal order on him but he refused to accept it and threatened the complainant that he, the complainant, was primarily responsibfo for the dismissal and would have to answer the con, cquences: It is alleged that the LT.I. Employees' Union took up cudgels on his behalf and resolved to support his cause.

The case of the prosecution is that accused Nos. 1 andi 8 to 20 conspired to commit the murder of the complainant and; that in pursuance of that conspiracy accused Nos. I, 8 and 10 hired accused Nos. 2, a notorious criminal, to execute the object of the conspiracy. Accused No. 2 in turn engaged the services of accused Nos. 3 to 7 and eventually on the morning of December 6, 1973 accused Nos. 1 to 6 are allegett to have assaulted the complainant with knives, thereby committing offences under ss. 324, 326 and 307 read with s. 34 of the Penal Code.

Accused No. 2 was charged separately under s. 307 or in the alternative under s. 326, Penal Code.

By his order dated October 23, 1974 the learned Metropolitan Magistrate, V Court, Bangalore directed all the 20 accused to take their trial before the Sessions Court for offences under s. 324, 326 and 307 read with s. 34 of the Penal Code.

At the commencement, of the trial before the learned First Additional District and Sessions Judge, Bangalore, two preliminary questions were raised, one' by the prosecution and the other by the accused.

It was contended by the prosecution that the specification of particular sections in the committal order did not preclude the Sessions Court from framing a new charge under s. 120-B of the Penal Code.

On the other hand it was contended by the accused that there was no suflicient ground for proceeding with the prosecution and therefore they ought to be discharged. The learned Additional Sessions Judge accepted the contention of the prosecution that he had the power to frame a charge under s. 120-B. The correctness of that view was not challenged before us by Mr. Frank Anthony who appears on behalf of the accused. that is as it ought to be because the power of the Sessions Court to frame an appropriate charge is not trammelled by the specifications contained in the committal order. The Sessions Court, being seized of the case, has jurisdiction to frame appropriate charges as the facts may justtty or the circumstances may warraut.

The contention of the accused that they ought to he discharged was accepted by the learned Additional Sessions Judge partly.

He held that there was no case against accused Nos. 11, 12 and 16 and that

they were therefore entitled to be discharged.

By an order dated August 8, 1975 the learned Judge discharged those three accused in the. exercise o~ his, powers under' s. 227 of the Code of Criminal Procedure, 1973. We are informed that the correctness of that order is under challenge before the High Court in a proceeding taken by the State of Karnataka. We are not concerned with that order in thr, se appeals.

After discharging accused, Nos. 11, 12 and 16 the learned Judge, turning to the case against the remaining accused, observed that there was "some material to hold that they have had somethipg to do with the incident which occurred on 6-12-1973 in the LT.I.

Colony Bangalore".

The learned Judge adjourned the case to September 1, 1975 "for framing specific charges as made out from the material on record against the rest of the accused persons."

Two revision petitions were filed against this order, one by accused Nos. 10, 13, 14 and 15 and the other by accused Nos. 17 to 20. Those petitions were allowed by the High Court on the view that there was no sufficient ground for proceeding against the petitioners before it. The High Court accordingly quashed the proceedings in regard to them which has led to these appeals.

Mr. Mookerjee who appears on beha\.f of the State of Karnataka contends that the High Court ought not to havei exercised its powers to quash the proceedings against the respondents without giving to the Sessions Court, which was seized of the case, an opportunity to consider whether there was sufficient material on the record on which to frame charges against ihe respondents. It is argiiedl that the Sessions Court had adjourned the case for a consideration of that very question and it was not proper for the High Court to withdraw the case, as it were, and to exercise its extraordinary powers, thereby preventing the Trial Court from examining the sufficiency of the material which it is the primary duty and function of that Court to examine.

There is some apparent justification for this grievance because the language in which the Sessions Court couched its order would seem to suggest that it had adjourned the case to September 1, 1975 for consideration of the question as to whether there was sufficient ground for proceeding against the respondents.

But a careful reading of the Sessions Court's judgment would reveal that while discharging accused Nos. 11, 12 and 16 it came to the conclusion. that insofar as the other accused were concerned there was some material to hold that they were connected with the incident.

The case was, therefore, adjourned by the Court for framing specific charges against them. In other words, the learned Judge adjourned the case not for deciding whether any charge at all could be framed against the remaining accused but for the purpose of deciding as to which charge or charges could appropriately be framed on the basis of the material before him.

The grievance therefore that the High Court interfered with the Sessions Court's order prematurely iS not justified.

The second limb of Mr. Mookerjee's argument is that in any event the High Court could not take upon itself the task of assessing or appreciating the weight of material on the record in order to find whether any charges could be legitimately framed against the respondents. So

KARNATAKA v. L. MUNISWAMY (Chandrachud, J.) I Ii

long as there is some material on the record to connect the accused with the crime, says, the learned counsel, the case must go on and the High Court has no jurisdiction to put a precipitate or premature end to the proceedings on the belief that the prosecution is not likely to succeed. This, in our opinion, is too broad a proposition to accept.

Section 227 of the Code of Criminal Procedure, 2 of 1974, provides that:

"If, upon consideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing." This section. is contained in Chapter XVIII called "Trial Before a Court o~ Sessions". It is cleat from the provision that the Sessions Court has the power to discharge an accused if after perusing the record and hearing the parties be comes to the conclusion, for reasons to be recorded, that there is not sufficient ground for proceeding against the accused. The object of the provision which requires the Sessions Judge to record bis reasons is to enable the superior court to examine thel correctness Qf the reasons for which the Sessions Judge has held that there is or is not sufficient ground for proceeding agamst the accused. The High Court therefore is ntitled to go into the reasons given by the Sessions Judge in support of his order and to determine for. itself whether the order is justified by the facts and circumstances of the case. Section 482 of the New Code, which corresponds to s. 561-A of the Code of 1898, provides that:

"Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may he necessary to give effect to any order under this Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice." In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse o~ the process of the Court or that the ends of justice require that the proceeding ought to be quashed.

The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to Jaws made by the legislature.

The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the Hi?h Court to dQ justice between the State and its subjects, it would be impossible to appreciate the width arid contours of that salient jurisdiction.

Let us thellj turn to the facts of the case to see; whether the High Court was justified in holding that the proceedings against the respondents ought to be quashed in order to prevent abuse of the process of the court and in order to..secure the ends of justice. We asked the State counsel time and again to point out any data or material on the basis of which a reasonable likelihood of the respondents being convicted of any offence in connection with the attempted murder of the complainant could be predicated. A few bits here and a few bits there on which the prosecution proposes to rely are woefully inadequate for connecting the respondents with the crime, howsoever, skilfully one may attempt to weave those bits into a presentable whole.

There is no material on the record on whlch any tribunal could reasonably convict; the respondents for any offence connected with the assault on the complainant. It is undisputed that the respondents

were nowhere near the scene of offence at the time of the assault.

What is alleged against them is. that they had conspired to c.ommit that assault.

Thls, we think, is one of those cases in which a charge of conspiracy is hit upon for the mere reason that evidence of direct involvement of the accused is lacking. we have been taken through the statements recorded b, Y the police during the course of investigation and the other materiaL The worst that can be said against the respondents on the basis thereof is that they used to meet one another frequently after the dismissal of accused No. 1 and prior to the commission of the assault on the complainant. Why they met, what they said, and whether they held any deliberations at all, are matters on which no witness has said a word. In the circmnstances, it woul.d be a sheer waste of public time and money to permit the proceedings to continue against thei respandents.

The High Court was therefore justified in holding that for meeting the ends of justice the proceedings against the respondents ought to be quashed.

Learned counsel for the State Govermnent relies upon a decision of this Court in R. P. Kapur v. The State of Punjab(') in whlch it was held that in the exercise of its inherent jurisdiction under s. 561A of the Code o[ 1898, the High Court cannot embark upon an enquiry as to whether the evidence in the case is reliable or not That may be so. But in the instant case the question is not whether any reliance can be placed on the veracity of this or that particular witness. The fact of the matter is that there is no material on the record on the basis of which any tribunal could reasonably come to the conclusion that the respondents are in any manner connected with the incident leading to the prosecution.

Gajendragadkar, J., who spoke for the Court in Kapur's(1) case observes in his judgment that it was not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of the Hieh Court's inherent jurisdiction.

The three instances cited in the judgment as to when tl1e High Court would be justified in exercising its inherent iurisdiction are only illustrative and can in the very nature of things not be regarded as exhaustive.

Considerations jnsti{ying the exercise of inherent powers for securing the ends of justice naturally vary from case to

(l) [1960] 3 S.C.R. 388

KARNATAKA v. L. MUN!SWAMY (Chandrachud, J.) 119

case and a jurisdiction as wholesome as the one conferred by s. 482 ought not to be encased within the strait-jacket of a rigid formula.

On the other hand, the decisions cited by learned counsel for the respondents in V adi/al Panchal v. D. D. Ghadigao11ki1r( ') and Centwy Spinning & Manufacturing Co. v. State of Maharashtra(') show that it is wrong to say that at the stage of framing charges the court <:annot apply its judicial mind to the consitleration whether or not there is any ground for presuming the commission of the offence by the accused.

As observed in the latter case, the order framing a charge affects a person's liberty sub&tantially r.ntl therefore it is the duty of the court to consider judicially whethe~ the material warrants !he framing of the charge. It cannot blindly accept the decision of the prosecution that the accused be asked Lo face a trial.

In Vadi/al Panchal's case (supra) section 203 of the old Code was under consideration, whichJ provided that the Magistrate could dismiss a complaint if after considering certain matters mentioned in the section there was in his judgment no sufficient ground for proceeding with the case. To an extent section 227 of the new Code contains an analogous power which is conferred on the Sessions Court. It was held by th.is Court, while considering the true scope of s. 203 of the old Code that the Magistrate was not bo.und to accept the result of :rn enquiry or investigation an_d that he must apply his judicial mind to the material on which he had to form his judgment. These decisions show that for the purpose of determining whether there is sufficient ground for proceeding against an accu>ed the court possesses a comparatively wider discretion in the exercise of which it can determine the question whether the material on the record, if unrebutted, is such on the basis of which a conviction can be said reasonably to lie possible.

We arc therefore in agreement with the view of the High. Court that the material on which the prosecution proposes to rely against the respondents is wholly inadequate to sustain the charge that they arc in any manner connected with the assault on the complainant. We would, however, like to observe that nothing in our judgment or in the judgment of the High Court should be taken as detracting from the case of the prosecution, to which we have not applied our mind, as against accused Nos. 1 to 9. The case against those accused must take its due and lawful course.

The appeals are accordingly dismissed.

S.R.

(!)A.LR. 1960 S.C. l 113.

(2) A.I.R. 1972 S.C. 545. 9-241lSCT 177

Appeals dismissed

STATE OF KARNATAKA

L. MUNISW AMY & ORS

March 3. 1977

Y. V. CHANDRACHUD

P. K. GOSWAMI

s. 561

ss. 324, 326

Penal Code

s 227

Criminal Procedure Code, 1973

Bangalore

s. 482

[1960] 3 SCR 3

[1960] 3 SCR 338

AIR 1960 SC 1113

s. 227

Code of Criminal Procedure

s 482

s. 561

D. Mookherjee

B. R. G. K. Achar

Frank Anthony

K. B. Rohtagi

M. N.

Kashyap

CHANDRACHUD

State of Karnataka

December 6, 1973

Thyagaraja Iyer

Indian Telephone Industries Ltd.

September 20, 1973

Ajit Dutt

LT.I. Employees' Union

ss. 324, 326 and 307

s. 34

Penal Code

s. 307

s. 326

Penal Code

October 23, 1974

s. 324, 326 and 307

s. 34

Penal Code

s. 120

Penal Code

s. 120

August 8, 1975

s. 227

Code of Criminal Procedure, 1973

September 1, 1975

Mookerjee

Karnataka

Section 227

Code of Criminal Procedure

Section 482

s. 561

s. 561A

Gajendragadkar

[1960] 3 S.C.R. 388

s. 482

Vadi/al Panchal

section 203

section 227

s. 203


STATE OF U.P. & OTHERS

M/S. INDIAN HUME PIPE CO. LTD.

March 3, 1977 [P. N. BHAGWATI AND S. MURTAZA FAZAL Au, JJ.] B lonsriturion of India-Article 136-Practice of Suprenu' Court-Interfec

rence with d1.scretio11ary orders of High Court-Article 226___..:..WJiether Hif;:/1 C'ourl should interfere-Alternative ren1edies.

I nterprt'/ation-A rticles used for business purposes-Whether in co1nn1ercial sense-U.P. Sales Tax Act-Meaning of sanitary fittings.

The respondent manufactures and sells hume pipes and high quality an<l high pressure pipes.

The pipes are reinforced concrete pipes.

The U.P. (Joycrnment issued a notification under the U.P. Sales Tax Act providing that

"sanitary fittings" were to be taxed -at 7 per cent instead of 2 per cent.

The Sales Tax Officer treated hume pipes supplies by the respondent as sanitary fittings and imposed sales tax @ 7 per cent. The respondent filed a writ petition in the High Court as.sailing the order of the Sales Tax Officer on the ground that the humc pipes manufactured by the asscssee could not by any stretch of imagination be construed to be sanitary fittings nor \Vere they ever used as such.

The High Court after perusing the materials on record and hearing counslaccepted the ple.'l of the respondent and held that the hume pi:ics could not be treated as sanitary ticting~.

The High Court accordingly quashed the assessment made by the Sale.s Tax Officer.

The respondent also filed certificates of Locn! Self Government Engineering Department, U.P. to show that the pipes supplied by the respondent were not used as sanitary fittings.

The aid certificate has been signed by the Executive Engineer on behalf of the chief Engineer of the deparl1nent.

In an appeal by certificate the appellant contended :

( 1) Jii.i;:h Court should not have entertained the writ petition and snould have allov.ed the assessee to avail of the remedies provided to him unJer the U.P. Sales Tax Act particularly when question of fact had to be determined.

(2) On merits the conclusion of the Hill:h

3re not sanitary fitdngs is erroneous. by cc1 tificatc.

Court that hume pipes Dismissing the appeal

Held : ( 1) The Court ne&ative.d the contention of the appellant that the High Court ought not to have entertained the writ petition <ind should have allowed the assessee to avail of the remedies provided to him under the U.P. Sales "fax Act.

In the present case, whether the hume pipes manufactured and sold by the respondent were sanit; iry fittings was a question of.Jaw and

since tbe entice material on the basis of , vhich this question could be determined was placed be.fore the Sales Tax Officer and had pointed in one and only one direction, nan1ely, that the hume pipes were not sanitary fittings and there wai;

nothing to show otherwise, the High Court was justified in entertairiing the , vrit petition.

There is no rule of law that the High Court should not entertain a writ petition where an alternative remedy is available to a party.

Jt is ahvays a matter of discretion and if the discretion has not been exercised by the HiJ;?; h Court unreasonably or perversely, it is the settled practice of this Court not to interfere y, ith the exercise of discretion by the High Court.

Jn these circumstances this Court would not be justified in the interest of justice to intedere under Article 136 of the Constitution to quash the order of the High Court merely on that ground after having found that the order was legaUy correct.

[124 BE]

(2) It is "ell-settled that in construcinathe articles used for bu:!!ines!. pur poses the terms must be interpreted in a prnely commercial sens1~. [123 BCl

U.P. v. INDIAN HUME PIPE (Fazal Ali, J.) 121

Ran1avatar Budhaiprasad etc. v. Assistant Sales Tax Officer. Ako/a (1962) A SCR 279. 282. followed.

The King v. Planters Nut and Chocolate Company Ltd., (1951) Canada L.R. Ex. Court 122. 126 approved.

So construed, by sanitary fittings one only understands such pipes or materials as are used in lavatories, urinals or bath rooms of private houses or public butld1t:il,!S.

In the present case there was absolutely no material before the Sales Tax Officer to show that any of the hume pipes manufactured and B sold by the rc5pondent were meant for use in lavatories, urinals or bath rooms and, in fact, the material was used entirely the other way, the Sales Tax Officer was not at all justified in holding that they were sanitary fittings.

[123 F-H]

(3) The Sales Tax Officer does not appear to have applied his mind at all to the reasons as to how and why hume pipes could be treated as sanitary fittings.

The respondent had filed an application before the Sales Tax Olf!ccr v.herein he had clearly alleged substantial facts showing that the hume C pipes could nt..vcr be used as sanitary fittings; that it is only the G.l.P. Pipes or other }\inds of pipes wJ.iich are used in lavatories, uninals and bath rooms v.hich could be termed as sanitary fittings.

The respondent had placed a large catena of materials in the shape of certificates from technical expert<;,

engineers and highly reputed dealers in sanitary fittings that hume pipes are never used as sanitary fittin1rs.

Even where a hume pipe is used for carrying the escrated material from the Commode to the Sceptio tank that may be treated as sanitary fittings.

The appellant in hiS counter affidavit before the High Court did not controvert any of the facts mentioned by the respondent.

D The State produced no material to controvert the facts. (122 D~G-123A]

( 4) "fhe Court observed that if at any time the material _produced before the Sales Tax Authorities establishes that in a given case hume pipes were meant to be used in the bath rooms, urinals and lavatories etc., then the notification of the Government would be attracted. [124 A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 784 of 1972. (From the Judgment and Order dated 29-9-1970 of the Allahabad High Court in Civil Misc. Writ No. 1111 /70).

S. C. Manchanda and 0. P. Rana, for the appellants.

S. V. Gupte, S. V. Vaidya, K. Rajendra Chaudhary and Mrs.

Veena Devi Khanna, for the respondent.

The Judgment of the Court was delivered by

FAZAL Au, J.

This appeal by certificate raises a short question of law as to whether or not hume pipes which are the subject-matter of the present case amount to "sanitary fittings" as contemplated by a notification issued by the Government under the U.P. Sales Tax Act.

The respondent is a dealer engaged in the manufacture and supply G of hume pipes. The pipes manufactured by the respondent are reinforced with cement concrete pipes and the respondent also manufactures high quality and high pressure pipes like prestressed concrete pipes for water supply, R.C.C. pressure pipes, penstock pipes used in hydro-electric projects etc. The respondent was a supplier of pipes to various Governmental Departments both Central and State, such as Irrigation, Public Works, Local Self Government Engineering, Railways H and Ministry of Petroleum etc. It appears that a dispute arose between the respondent and the Sales Tax Department with respect to the

rate of tax for sale of pipes manufactured by the respondent for tbe assessment years 1962-63, 1963-64 and 1964-65.

According to the notification issued by the Government in pun; uance oJl the U.P. Sales Tax Act, items classed as "sanitary fittings" were to be taxed a.t 7 % instead of 2 % . The Sales Tax Officer treated the hume pipes supplied by the respondent as "sanitary fittings" and imposed sales tax al the rate of 7 % . Instead ot going in appeal to the Assistant Conunissioner (Judicial) tbe respondent filed a writ petition in the High Omrt assailing the order of the Sales Tax Officer on the ground that the home pipes manufactured by the assessee could not, by any stretch of imagination, be construed to be "sanitary fittings", nor were they ever used as such. The High Court, after hearing counsel for the parties and after perusing the materials on the record, accepted the plea of the rc5pondent and held that the hume pipes could not be treated as "sanitary fittings" and the Sales Tax Officer was, therefore, not eutlt!W to levy tax at the rate of 7%. The High Court accordingly quashed the assessments made by the Sales Tax Officer and hence this appeal by the Department after obtaining a certificate from the High Court.

Jn our opinion, the tacts of this appeal lie within a very; 1mrrow compass. The only point which arises for considemtion is whether or not the home pipes manufactured by the respondent could he said to be "sanitary fittings".

The notification dated September 1, l 966 amended the existing entry as "sanitary goods and fittings" but in Viese assessment years we are concerned with the entry as it stood unamended. The Sales Tax Officer does not appear to have applied his mind at all to the reasons as to how and why home pipes could he treated as sanitary fittings.

Apart from his ipsi dixit that home pi1'es amounted to sanitary fittings, he based his order on no other matenal.

The respondent had filed an application before the Sales Ta.~ Ollicer wherein he had clearly alleged substantial facts showing tl1at the btunc pipes could nevet' be used as "sanitary fittings". It is only the O.I. pipes or other kinds of pipes which are used in lavatories., urinals and bath-rooms which can be termed as "sanitary fittings". Neither the contract nor the, tender by the respondent show the exact use for which the hume pipes were meant. On the other hand the respondent had produced a large catena of materials in the shape of certificates from fechn.ical experts, Engineers and highly reputed dealers in •anitary fittings to show that hume pipes are never nsed as sanitary fittings.

In spite of these materials, the State, when it filed it~ counter-affidavit before the High Court, did not controvert any of the facts mentioned by the respondent, vide paragraphs 4, 5 and 6 of the counter-affidavit filed before the High Court.

The materials consist of certificates by Local Self Government Engineering Department, U.P., to show that the pipes supplied by the respondent were not used as "sanitary fittings". This certificate appears at p. 34 of the Paper Book and shows that R.C.C. !Pipes purchased from the respondent had not been used as sanitary fittings by the L.S.G.E. Department. This certificate is signed by the Executive Engineer on behalf of the Chief Engineer of the Department. From pp. 36-39 and 41 of the Paper Book appear the certificates given by certain reputed dealers in sanitary r, oods and fittings, who have categorically certified that the hume pipes are nver

U.P. V. INDIAN HUME PIPE (Faza/ A/i, J.) 123

rcrognised as sanitary-wares or sanitary fittings.

As against this, the State produced no materials to controvert these facts, which could not be brushed aside. At p. 40 there is a certificate by the Ex. Special Engineer, Bombay Municipal Corporation and Ex. Director, Central PubliC Health Engineering Research Institute, Nagpur, in which he has clearly observed that sanitarywares and sanitary fittings are applicabk

to fittings used in the household for W .C.S., wash-basins, traps, sinks etc. and, therefore, hume and R.C.C. pi~ cannot be recognised a~ sanitary-wares or1 sanitary fittings.

As against this, the State produced no material to controvert these facts.

It is well settled that when we are dealing with the articles used for buslnes.s purposes, the terms must be interpreted in a purely commercial sense. In Ramavatar Budhaiprasad ttc. v. Assistant Sales Tax Of!ica, A kola ( ') this Court, while construing the import of the word "veget>tbles", observed M follows :

"But this word must be construed not in any technical sense nor from tho botanical point of view but as under>tood in common parlance. It has not been defined in the Act and

being a word of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it." It is to be construed as understood in common language;"

To the same effect is a docisi-On of the Exchequer Court of Canada in

ThL King .v. Planters Nut and Chocolate Company limited('), where the Court observed as follows :

"The words ''fruit" and "vegetable" are not defined in the Act and so far as 'I am aware they are not defined in any other Act in pari materia. They are ordinary words in every-day use and are therefore to be construed according to their popular sonse".

Tn these circumstances, therefore, we have to construe the expression "sarlitary fittings" in the popular sense of the tenn as it is used in our every-day life. Thus construing, it would be manifest that there could be no question of use of R.C.C. or humc pipes which are generally

laid underground and aro extremely heavy, for the purpore of use in lava!oOO, urinals or bath-rooms etc. By "sanitary fittings" we only

tmderstand such pipes or materiahl as are used in lavatories, urinals or bath-rooms of private houses or public buildings.

Even where a hnme pipe is used for carryinp; tho ascreted material from the commode to the 11eptic tank that mav be treated as sanitary fittings. In the instant care QS there was absolutely no matorial before the Sales Tax Officer tn show that any cl the hume pipes manufactured and sold by the respondent were meant for use in lavatories, urinals or bath-rooms and ill fact the material was used entirely the other way, the Sales Tax Officer was not at all justified in holding that they were sanitary fittings.

(1) [1962) I S.C.R. 279, 282.

(2) (1951) Canada L.R. Ex. Court 122 126

Of course, we must make it clear that if at any time the material produced before the Sales Tax authorities establishes that in a .given case the hume pipes were meant for use in a bathroom, lavatory, urinal etc .. then the notification of the Government would attracted and the assessee must be liable to be taxed at the rate of 7 % . ·

Lastly, it was feebly argued by Mr. Manchanda that the High Court ought not to have entertained the writ petition and should have allowed 'the assessee to avail of the remedies provided to him under the U .P. Sales Tax Act, particularly when questions of fact had to be determined. In the instant case, the question as to what is the true Connotation of the words "sanitary fittings" and whether the hume pipes manufactured and sold by the respondent were sanita!Cy fittings within the meaning of that expression was a question of law and sinco the entire material on the basis of which this question could be determined was placed before the Sales Tax Officer and it pointed in one and only one direction, namely, that the hume pipes were not sanitary fittings and there was nothing to show otherwise, the High Court was justified in entertaining the writ petition. Moreover, there is no rule of law that the High Court should not entertain a writ petition where an alternative remedy is available to a party. It is always a matter of discretion with the Court and if the discretion has been exercised by the High Court not unreasonably or perversely, it is the settkd practice .of this Court not to interfere with the exercise of discretion by the High Court. The High Court in the present case entertained the writ petition and decided the question of law arising in it and in our opinion rightly.

In these circumstances, therefore, we would not be justified in the interest of justice in interfering in our jurisdiction under Art. 136 of the Constitution to quash the order of the High Court merely on this ground after having found that the order is legally correct.

We are, therefore, unable to accept this contention.

For these reasons, therefore, we find ourselves in con1plete agreement with the view taken by the High Court and affinri the same. The result is that the appeal fails and is accordingly dismissed with costs.

P.H.P.

Appeal dismissed.

STATE OF U.P. & OTHERS

S. INDIAN HUME PIPE CO. LTD.

March 3, 1977

P. N. BHAGWATI

Article 136

Article 226

Sales Tax Act

Sales Tax Act

Sales Tax Act

Article 136

Fazal Ali

Allahabad High Court

S. C. Manchanda

. P. Rana

S. V. Gupte

S. V. Vaidya

K. Rajendra Chaudhary

Veena Devi Khanna

FAZAL Au

Sales Tax Act

Sales Tax Act

September 1, l 966

L.S.G.E. Department

U.P. V. INDIAN HUME PIPE

Bombay Municipal Corporation

Exchequer Court of Canada

Manchanda

Sales Tax Act

Art. 136


NATIONAL CO. LTD. CALCUTTA

DEPUTY DIRECTOR OF TAX CREDIT (EXPORTS)

CALCUTTA & ORS.

March 3, 1977

[P. N. BHAGWATI AND S. MURTAZA FAZAL ALI, JJ.J

Tax Credit Ce1tificate (Exports) Schenie 1965-Scheme providing for cer- .tain categories of goods or 1nerchandise specified in column 2 whiclz were f'X]>orted after 28-2-1965 to destinations specified in colun1n 4--Scherne a111c11ded by Notification dated 6-6-1966 disentitling an exporter to tdx credit certificate in respect of goods or n1erc/landise exported and the sale proceeds therefor were receiied after 5-6-1966-Second Notification amending the first one providing for grant of tax credit ci?rtificate in respect of goods exported on or before 5-6-1966 even if the sale proceeds WPre received thereafter-H,.het!1er the Notifications ultra vires the powers of the Central Government vested under

~. 280 ZE read with 280 ZC of the lnconze Tax Act.

The jute carpet 'backing cloth manufactured by the appellant in its , jute mills and exported was covered by Item 1 in column 2 which specified "goods made of jute not otherwise specified" of the Table appended to the Tax Credit Certificate (Exports) Scheme, 1965. The notification issued by the Central Government in exercise of the powers vested under s. 280ZE read with S. 280ZC, dated 6-6-1966 and 8-8-1966, provided that no tax credit certificnte shall be issued in respect of any goods exported after 5-6-1966. The appellant, who exported diverse quantities of jute carpet backing cloth .manufactured by it to various countries during the period 13-7-1966 and 30-11-1966, filed a writ petition in the Calcutta High Court for a writ of niandarnus for quashing and setting aside both the Notifications and directing the Central {]overnment to consider the application of the applicant for tax credit certificate in respect of the exports without taking into account the t\-vo Notifications.

The ground of challenge was that the twO Notificatioris \Vere outside. the powers conferred on the Central Government u/ s 280ZE read with S. 280 ZC, since the Central Government had no power under those sections to make

11 scheme providing that no tax credit certificate shall be granted in case of any goods or merchandise at all. The single Judge granted mandan1us. hot the Division Bench on appeal took a different view and negatived the challenge.

Dismissing the appeal by certificate the Court,

HELD : (i) The Division Bench of the High Court was right in holdlng that the Central Government was entitled to issue the two Notifications directing that no tax credit certificates sha11 be granted in respect of goods or merchandise exported on or after 5-6-1966. [131 AB]

(ii) No obligation can be spelt out from Ss. 280 ZC and 280 ZE re.:iuiring the Central Government to frame a scheme specifying the goods or merchandise in respect of which tax credit certificate shall be granted. The Central Govern~ ment was entitled to say that having regard to the factors set out in subsection (3) of S. 280 ZC, it does not think it desirable that , tax credit c.:rti ficate should be granted in respect of any goods or merchandISe for the tune being.

[130 FHJ

C!v1L APPELLATE JURISDICTION: Civil Appeal No. 950 r:i 1972.

(From the Judgment and Order dated the 5-7-1971 of the Calcutta High Court in Appeal No. 130/71) _

N. R. Khaitan, A. T. Patra and Pravee11 Kumar, for the appellant.

A Lal Narain Sinha, Sol. General, S. N. Prasad and Girish Clwndra

not present for respondents.

The Judgment of the Court was delivered by

BllAGWATI, J. The appellant.owns a jute mill situate at Rajgunj, Railway Station Andul, District Howrah in the State of West Bengal and among other jute .products, it manufactures jute . carpet backing cloth at its jute mill. 'fhc appellant exported diverse quantities m jut~ carpet backing cloth manufactured by it to various countrie:; during the period 13th July 1966 to 30th November 1966.

There was a Tax Credit certificate Scheme framed by the Central Government under Section 280 ZE read with Section 200 ZC of the Income Tux Act l 962.

The Scheme was called the Tax cr, dit Certificate (Exports) Scheme 1965. The Scheme provided for grant of Tax Credit Certificate in respect of certain categories of goods or merchandise specified in column 2 which wero exported to destinations specified in column 4 and the dates of export of which fell after 28th February 1965, for an amount calculated at the rates specified in column 3 of the Table attached to the Scheme.

Jute carpet backing cloth was covered by Item 1 in column 2 of the Table which specified "goods made of jute not otherwise specified". If the Scheme had remained unamended, the appellant would have been entitled to tax credit certificates io respect of the exports made by it of jute carpet backing material, but a notification was issued by the Central Government on 6th June, 1966 in exercise of the powers oonferred by Section 280 ZE read \\itlr Section 200 ZC, whereby paragraph 3 of the Scheme which provided for grant of tax credit certificates was amended by re-numbering that paragraph as sub-paragraph (l) and adding a sub-paragraph (2) to the following effect :

"No certificate shall be granted under sub-paragraph ( 1) in respect of any sale proceeds referred to in that sub-paragraph or part of such sale proceeds, received after the 5th day of June 1966 in India in according with the Foreign Exchange Regulation Act, 1947 (Vil of 1947) and the mies made thereunder''.

This amendment had the effect of disentitling an exporter to taxcrcdit certificate in respect of goods or merchandise exportc; d by him in nil cases where sale proceeds or part thereof were received in lndi" after 5th June, 1966.

The necessity for making this amedment in the Scheme arose on account of devaluation of the Indian rupee which was made by tho Central Government, as it was felt that in view of tho devaluation it was not nocessary to give any further incentive for export. But it was soon realised that this amendment of the Scheme might work hardship in those cases whero goods or merchandise were exported before 5th June 1966 on the faith of the Scheme but for some reason or the other, the sale proceeds were uot received until after that date and, therefore, a second notification dated 8th August, 1966 was issued by the Central Government further amending the scheme in exercise of the powers conferred under Section 280 ZE read with Section 280 ZC by deleting sub-paragraph ( 2) a.nd instead, adding a proviso which provided for grant of tax credit certificate in respect of goods or merchandise exported on or before 5th June 1966 even if the said proceeds were received a!ter that date and declared that in case of goods exported after. 5th June 1966 the rate specified in column 3 of the Table shall be deemed to he nil and no certificate shall be granted in respect of such goods or merchandise.

The exports of jute carpet backing cloth made by the appellant were admittedly after 5th June, 1966 and hence both the r.otifications adversely affected the appellant by disentitling it to tax crdit ce1tifkstes in respect of these exports.

The appellant, therefore, filed a Wri! Petition in the High Court of Calcutta for a writ of mandamus for quashing and setting aside both the Notifications and directing the Central Government to consider the application of the .appellant for tax credit certificates in respect of the exports without taking into account the two Notifications .. Though there were several grounds on which the validity of these two Notifications was challenged in the Writ Pc:tition before the High Court, only one ground was pressed before us on behalf of the appellant and we shall, therefore, refer only to that ground. That ground was that both the Notifications were outside the power conferred on the Central Government under Section 260 ZE read with Section 280 ZC, since the Central Government had no power under these Sections to make a scheme providing that no tax credit certificate shall be. gr-d.llted' in case of any goods or mer- .. chandise at all. This ground found favour with the single Judge of

the High Court but on appeal 'under clause 15 of the Letters Patent, a Division Bench of the High Court took a different view and negatived the challenge. Since !he writ petition was dismissed by the Divio; lon Bench, the appellant preferred the present appeal after obtaining a certificate of fitness from the High court.

The Indian Income Tax Act 1922 as originally enacted, did not contain the fasciculus of Sections under Chapter XXII providing for gro.nt of tax credit certificates. This Chapter compri:; ing Sections -280 ZC and 280 .ZE was inserted by the Finance Act 1965 with effect from 1st April 1965 with a view to providing incentive for export . purpose of which Section 280 ZC and 280 ZE are material, reads as fellows:- · ·

"280 ZC. ( 1) Subject to the provisions of this Section, a person who exports any goods or merchandise out of India. after the 28th day of February.1965 and receives the . sale procttds thereon in India in according with the Foreign Exchange Regulation Act, 1947 (VII of 1947)

and tho rules made thereunder shall be granted a tn.x credit 'G cate for an amount calculated at a rate not exceeding fifteen pet' cent, on the amount of •uth sale proceeds.

(2) The goods or merchandise in respect of which a tax credit certificate shall be granted under sub-section (1) (including the destination of their export) and th~ rate at which the amount of such certificate shall be calc::rlated shall be such as may be specified in the Scheme:.

Provided thit different rates may be specified .in respect of different gocids or merchandise. · _

(3) In specifying the goods or merchandise (including the destination of their export) and the rates, the Central Government shall have regard to the following factors, namely:

(a) the cost of manufacture or production of such goods or merchandise and prices of similar goods in the foreign markets;

(b) the need to develop foreign markets for such goods or merchandise;

(c) the need to earn foreign exchange;

(d) any other relevant factor".

C Section 280 ZE conferred power on the Central Government to frame one or more scheme or schemes to be called tax ,:redit ccrtificaie scheme or schemes in the following words :

"(!) The Central Government shall, by notification in the Official Gazette, frame one or more scheme or schemes to be called tax credit certificate scheme or schemes in rela- D 'lion to tax credit certificates to be granted under this Chapter.

(2) A scheme framed under sub-section (I) may provide for:-

(a)

(b)

(c)

(d)

(e)

the form and manner in which, and the authoritv to which, applications for the grant of tax credit certificates shall be made;

the form in which, and the intervals at which. and the authority by which, such certificates shall be issued;

the verification of any information or particulars furnished, or contained in any application made, by or on behalf of any person entitled to tax credit certificates;

the determination of the rights and obligations of a person to whom such certificate has been granted and the circumstances in which any right in or title to the said certificate may be transferred to or devolve on any other person by succession or otherwise;

the detcnnination of the rights and obligation of

prsons who joinly subscribe to an eligible issue of capital;

(f) the determination of the rights and. obligation of

persons who subscribe to an eligible Tssuc of capital, on behalf, or for the benefit, of any other person;

NATIONAL co. v. DY. DIRECTOR TAX (Bhugwati, J.) 129

(g)

(h)

the appointment of any officer of Government or of the Reserve Bank of India to exercise any rights or perform any duties in connection with the grant of the said certificates;

the goods or merchandise and the rate or rates for the purposes of section 280 ZC and section 280 ZD and the destination of the export of such goods or merchandise for the purposes of section 280 ZC;

(!) any other matter which may be necessary or proper for the effective implementation of the provisions of this Chapter or the scheme.

(3) The Central Government may, by notification in the Official Gazette, and to, amend, vary or rescind any scheme made under this section".

It was in exercise of the power conferred on the Central Government under Section 280 ZE read with section 280 ZC that the Central Government made the Tax Credit Certificate (Exports) Scheme,

1965. The first Notification dated 6th June 1966 amended paragraph 3 of the Scheme by providing that no tax credit certificate shall be granted in respect of exports where the sale proceeds were received after 5th June, 1966. This provision was relaxed by the second Notification dated 8th August 1966 by providing that in case of e:"ports made on or before 5th June 1966 tax credit certificate shall be granted according to the provisions of the Scheme even if the sale pi'oceeds were received after that date, but in respect of exports inade after.5th June, 1966, the rate specified in column 3 of Table A shall be nil and. no tax credit certificate shall be granted in respect of such exports.

The argument urged on behalf of the appellant was that it was not competent to the Central Government to provide in the Scheme framed under Section 280 ZE read with Section 280 ZC that no tax -credit certificate shall be granted in respect of exports of any goods or merchandise. The only power, which; according to the appellant, the Central Government had under these two Section~, was to frame a Scheme specifying some goods or merchandise the export of which would entitle an exporter to tu credit certificate. The appellant conceded that the Central Government was not bound to specify any particular category of goods or merchandise in the Scheme framed by it but the limited corttention was that some goods or merchandise must be specified in the Scheme and since in the present case the Scheme as amended provided that tax credit certificates shall not be

~'l'llnted in respect of experts of any goods or merchandise, the two Notifications making this amendment in the Scheme wel'e ultra vites

the p0wel' of the Central Government under Sections 280 ZE and 28(1 'ZC. This contention, thoogh it found favour with the single Jndge of tlte Calcutta High Court who beard the Writ Petition in the first

instance, is in our opinion wholly without force and cannot he sustained.

A mere look at the scheme of the provisions of Section 280 ZC and 280 ZE is sufficient to expose the invalidity of this contention.

Sub-section ( l) of Section 280 ZC undoubtedly provide~ that a person who exports any goods or merchandise out of India after 28th Febn1ary 1965 and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 194 7 and the rules made thereunder, shall he granted a tax credit certificate for an amount calculated at a rate not exceeding 15 per cent of the amount of such sale proceeds.

But this right conferred on an exporter is subject to the other provisions of Section ZC, and these other provisions include sub-sections (2) & (3).

Suh-section (2) provides in so many terms that the goods or merchandise in respect of which a tax credit certificate shall be granted under sub-section (I) and the rate at which the amount ol such certificate shall be calculaterl, shall be such as may be specified in the Scheme.

It is, thus, left to the Scheme to be framed by the ntral Government to specify the goods or merchandise in respect of which an exporte~ shall be entitled to tax credit certificate as also tho rate at which the amount of such certificate shall be calculated. It is not in respect of every category of goods or merchandise that an exporter can claim to be entitled to tax credit certificate but it is only in respect of such goods or merchandise as are specified in the Scheme. The policy and the principle which would guide the Central Government in selecting the goods or merchandise for this purpose are set out in sub-section ( 3) which provides that in specifying the goods or merchandise as also the rates, the ntral Government shall have regard to the various factors set out in that sub-section.

These are the factors which woukl influence the choice of the Central Government in selecting the goods or merchandise for the purpose of grant of tax credit ce11ificate and also in determining the rates at which tax credit certificate should be given.

Section 280 ZE, sub-section (1) confers power on the Central Gm- emment to frame one or more Schen1es in relation to tax credit certificate to be granted under Se.ctiou 280 ZC, and under sub-se.:tion (2). such scheme or schemes may provide inter alia for the goods or merchandise and the rate or rates for the purposes of Section 280 ZC.

We fail to see how any obliization can be spelt out from these pnwisions requiring the Central Government to frame a scheme specifyi11.r the p:oods or merchandise in respect of which tax credit certificate shall be granted.

It would indeed be absurd to suggest that the Cel\{ral Government is under an obligation to make a scheme and the reqcirement of the statute would bo satisfied so long as tho Centm! Government specifies some oods or merchandise in the Sch=e. The.-e i• no reason why the Central Government should not be entitled to say that having rel!'lrd to the factors set out in sub-section (3) of .ectiu11 280 7£, it does not think it dirable that tax credit certificate should be granted in respect of any goods or merchandise for the time hcin~.

Sub-section (3) of Section 280 7£ confers pawer on the Central Government in so manv terms to rescind a Scheme made by it and that also supports the view that the Central Government mav keening in view the factors set out in sub-section (3) section 280 ZC,

l ,

decline to make a scheme or provide in the scheme that there shall be no goods or merchandise in respect of which tax credit certificate shall be granted. In the circumstances, we think that the Division Bench -of the Hi~ Court was right in holding that the Central ~Y cmment was enlltled to issue the two impugned Notifications directing that no tax credit certificates shall be granted in respect of goods or merchandise exported on or after 5th June, 1966.

We accordingly dismiss the appeal with costs.

S.R.

Appeal dismisicd.

NATIONAL CO. LTD. CALCUTTA

P. N. BHAGWATI

S. MURTAZA FAZAL ALI, JJ

Central Government

ZC of the lnconze Tax Act

s. 280Z

S. 280Z

Calcutta High Court

s 280Z

S. 280

Ss. 280

Central Govern~ ment

S. 280

N. R. Khaitan

A. T. Patra

Pravee11 Kumar

A Lal Narain Sinha

S. N. Prasad

Girish Clwndra

BllAGWATI

Section 280

Section 200

ZC of the Income Tux Act

6th June, 1966

Section 280

Section 200

5th day of June 1966

5th June, 1966

5th June 1966

8th August, 1966

Section 280

Section 280

High Court of Calcutta

Section 260

Section 280

clause 15

Indian Income Tax Act 1922

ZE was inserted by the Finance Act 1965

Section 280

28th day of February.1965

Section 280

section 280

section 280

section 280

Section 280

section 280

6th June 1966

8th August 1966

Section 280

Section 280

Sections 280

Section 280

Section 280

28th Febn1ary 1965

Section 280

Section 280

Section 280

section 280