SHAH GUMMAN MAL v.

THE STATE OF ANDHRA PRADESH

February 6, l 98U

[S. MuRTAZA FAZAL ALI AND A. D. KosH,\L, JJ.]

Custoins Act I 962, Section 135 ( 1) (b) & Erh'ence Act, 1872, Sections 106 and 114-Preniises searched-Gold 'biscuits with /oreign niarkings recovered- Accused not disclosing identity of person who gu ve the gold-Whether court can presume that the gold was smuggled and in1ported without permit.

An offence under section 135(1)(b) of the Customs Act, 1962 is punishable if the offender, acquires possession of or is in any way concerned in carrying removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner deaJ.ing \vith any goods which he kno\vs or has reason to believe are liable to confiscation under section 111.

Section 111 enumerates the categories. of goods which are imported into India and are liable to confiscation.

The Central Excise officials searched the house of the appellant and found in a secret chamber of an iron safe, \vhich was opened by him \'i'ith the keys in his possession, a. bundle containing 28 gold biscuits and a half biscuit, all of which bore foreign markings. In another secret chamber were found gold earnings in plnstic boxes and a bundle of currency notes.

When questioned in the presence of the witnesses he stated that he had been receiving gold biscuits from some unkno\vn person from Bombay and that the other artides belonged to him and his mother.

He admitted that be had no general or special permit from either the Reserve Bank of India or the Gold Control Administrator to import or keep foreign gold. The statement of the appellant was recorded.

Thereafter the appellant was prosecuted for offences under Section 135(1)(b)(ii) of the Customs Act. 1962 and Section 85(ii) read with Section 8(i) of the Gold Control Act, 1968.

The Magistrate convicted and sentenced the appellant to rigorous imprison~ ment for nine months under each count. On appeal, the Sessions Judge set aside the conviction and sentence under the Gold Control Act as the requisite sanction for prosecution was not accorded, but maintained the conviction and sentence nnder Section 135(i)(b){ii) of the Customs Act, which order was confirmed by the High Court in revision.

In appeal to this Court it was contended on behalf of the appellant :· G ( 1) that if the presumption under Section 123 of the Customs Act is not available to the prosecution, then there is no legal evidence to show that the appellant bad any knowledge or had any reason to believe that the goods were imported or were smuggled without a lawful permit and (2) as the case had been going on for eight years, a lenient view on the question of sentence may be taken; while on behalf of the respondent-State it was submitted that the fact that the gold bore foreign markings and was recovered H from the possession of the appellant who had admitted in his statement before the Customs Officers that some unknown person had given it to him,

1006 SUPR1i\1E C01JR r RLPOR r~ [i 980] 2 s.c.R.

A \Vould itself raise a suflicient presumption to attribute knov.ll:dge to the a.ppel11.nt that the gold i.vris snuggled wilhvut any permit.

_Dismissing the appeal,

HELD: (1) The prosecuti.Jn has clearly proved the charge under Section 135(1) (b)(ii) of the Customs Act. [1014Dl B

(2) The sentence being one only of rigorous imprisonment for nine

month~. there i~ no room for any reduction thereof.

[1014E-1

(3) The fact as to ho\v the appellant came into possession of the gold and whether it was import, d or not being v,, ithin the special knowledge of the appellant, if he frriled to disclose the identity of the person who gave him the gold, it Vias open to the Court to presume under sections 106 and 114 of the Evidence Act that the appellant kncv..· that the gold in his possession \vas srnnggled and in1po1te<l without a permit. [lOliJE-_F]

( 4) The broad e!Icct of the application of the basic principles underlying section 106 of the Evidence A.ct would be that the onus is disch:trged if the prosecution ndduces only so. much evidence, circumstantial or direct, as is sufficient to raise a. presumption in its f:ivour \0vith regard to the existence of facts sought to be proved. [1012F: 0 l.rsarda.r DauTat Rani &: Ors. v. Th~ [h1io11 of India & Or.r. [1962] Supp. 1 S.C.R. 358: Co1111r:i.uiuuer ,)f lncon1t' Tax. , i.Jadras v. lvle.urs Best & Co. [1966] 2 S.C.R. 480: Collector of Cnito1ns, 1'It1dras & Ors. v. D. Bhoormul [1974] 3 S.C.R. 833: Labchand Dl1a11p(lf Si11gh Jain v. -The State of Maharashtra [1975] 2 S.C.R. 907; Bnl:11n(d Ja11111ados Batra v. State o_f ,\faherashtra [1976] 1 S.C.R. 539 reftrrcd to; Bl'rluun Khurslied Pt'sikaka v. State of Bor11bay rt955] 1 S.C.R. 613; Stat(' of Punjeb v. Uian Ch,,.nd & 01hcrs Ct!. A.

E 195/62 dispocd of on April 2, 1968 di<1tinguishcd.

In the instant case 1_hough the seizure v.-as not n1adc nnl"kr Section 111 of the Cu'itoms Act and the prosecution could not press into service the presumption arising from cction 123 of the Customs Act.

It is proved that the appellant \V<1~ in th~ possession of gold bicuits with foreign nuukings which were kept in <l •.ccret chambr of the safe. a11d he admitted that the gold was brought from outside the country and given to him by son1ebody, whoe identity be was not prerared to disclose.

These circumstances are sufficient to raise a presumption under Section 106 of the Evidence Act so as to attribute knov1edge to the appellant that the gold was smuggled.

[1014B-D]

CRIMINAL -APPELLATE JURISDICTION : Criminal Appeal No. 47 of 1974.

G Appeal by Special Leave from the Judgment and Order dated 10-8-1973 of the Andhrn Pradesh High Court in Criminal Revision Case No. 648/72 and Criminal Revision Petition No. 992/72.

Dr. Y. S. Chitale and Vineet Kumar for the Appellant.

M. A. Khader and Venkatarao & G. N. Rao for the Respondent.

H The Judgment of the Court was delivered by

FAzAL Au, J.-This appeal by special leave is directed against a judgment dated August 18. 1973 of the Andhra Pradesh High Court.

The facts of the case have been detailed in the judgment of the High Court and it is not necessary to repeat them all over again.

The appellant was tried by the Magistrate for offences under s. 135 (1) (b )(ii) of the Customs Act, 1962 and s.85(ii) read withs. 8(i) of the Gold Control Act, and sentenced to rigorous imprisonment for nine months under each count. Both the sentences were directed to run concurrently .

Sentences of fine were also imposed. The Sessions Judge, on appeal, set aside the conviction and sentence under the Gold Control Act and acquitted the appellant of that charge for the reason that the requisite sanction for his prosecution was not accorded, but maintained the conviction and sentence of the appellant under s. 135 (1) ( b) (ii) of the Customs Act.

Thereafter, the appellant went up in revision to the High Court which confirmed the conviction and sentence upheld by the Sessions Judge.

Then the appellant moved this Court and this appeal is by special leave.

The allegations made against the appellant may be briefly stated.

On 16-4-1971 P.W. 4, Superintendent of Central Excise issued a warrant (Ext. P-3) authorising P.W. 3 and another Inspectono proceed to the house of the appellant at 6.30 a.m. P. W. 3 calied P.W. 1 and one Nihalchand as mediators and informed them that the accused had concealed gold biscuits of foreign origin in his house and hence it was decided to search his house.

When the search was conducted, the accused was directed to produce the gold biscuits of foreign origin

in his possession.

The accused denied that he possessed any but the E Excise ofticials searched the house and found in a secret chamber of an iiron safe, which was opened by the accused with the keys in his possession, a bundle containing 28 gold biscuits and a half biscuit marked as M. Os. 1-29.

All these biscuits bore foreign markings.

In another secret chamber were found gold earrings in plastic boxes and a bundle of currency notes.

The accused was then questioned in the presence of the witnesses and he stated that he had been recei>-

ving gold biscuits from some unknown person from Bombay and that the other articles belonged to him and his mother.

On being questioned further, the accused admitted that he had no general or special permit from the Reserve Bank of India or the Gold Control Administrator to import or keep foreign gold.

The statement of the accused was recorded and is marked Ext. P4.

Before launching a prosecution, the Collector of Central Excise issued a notice calling upon the appellant to show cause why M. Os. 1 to 51 be not confiscated and penalty levied.

The accused gave his explanation, Ext. P-7.

Thereafter, the Collector passed orders of adjudication confiscating the articles and imposed a penalty of Rs. 5,000/.

On appeal,

10-138 SCI/80

1008 SUPREME COlJRT REPORTS [1980] 2 s.c.R.

the confiscation of jewellery and cash was set aside.

Subsequently, PW 5, the Assistant Collector of Customs filed a complaint for the prosecution of the appellant under the Customs Act.

We have already mentioned that the prosecution and conviction under the Gold Control Act was set aside for lack of proper sanction. It is also admitted by the prosecution in the instant case that as no seizure was made in accordance with the provisions of the Customs Act, the presumption under s. 123 thereof was not available to the prosecution.

Section 135(1) (b), under which the appellant has been convicted, runs thus:-

"135 (1) Without prejudice to any action that may be taken under this Act, if any person-

(b) acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111."

Analysing the essential ingredients of clause (b), it is manifest that before a conviction can be recorded under it, the prosecution must prove that the accused has acquired possession of or is in any way concerned in depositing, keeping, etc., any goods which he knows or has reason to believe are liable to confiscation under s. 111. Thus in the instant case, as no presumption under s. 123 was available, it was for the prosecution to prove affirmatively that the appellant was in possession of smuggled gold knowing full well that it was imported from outside the country so as to fall within the ambit of s. 111.

Dr. Chitale, appearing for the , appellant, contended that if the presumption under s. 123 is not available to the prosecution, then there is no legal evidence to show that the appellant had any knowledge or had any reason to believe that the gocds were imported or were smuggled without a lawful permit.

The counsel appearing for the State, however, submitted that the fact that the gold bore fore; gn markings and was recovered from the possession of the appellant who had admitted in his statement before the Customs officers that some unknown person had given it to him, would itself raise a sufficient presumption to attribute knowledge to the appellant that the gold was smuggled without any permit.

Although the question raised by the counsel for the parties is not free from difficulty, an overall consideration of the special facts of the present case would show that there could no difficulty in holding that having regard to the admissions

~.

made by the appellant and his subsequent conduct, the onus would shift to the appellant to show that the gold found (ram him with foreign markings was imported without any permit to his knowledge.

This will be the combined effect of the provisions of ss. 106 and 114 of '!he Evidence Act. The matter was considered at great length in the case of Berham Khurshed Pesikaka v. The State of Bombay(!) where this Court holding that s. 106 could not be construed to place the 'Onus on the accused to prove the prosecution case, observed as follows:-- '

"Section I 06 of the Evidence Act cannot be construed to mean that the accused has by reason of the circumstance that the facts are especially within his own knowledge to prove that he has not committed the offence. (See Atiygalle v. The King-A.I.R. 1936 P.C. 169, also In re :

Kanakasabai Pillai-A. I. R. 1940 Madras 1). It is for the prosecution to prove that he has committed the offence and that burden is not in any manner whatsoever displaced by section 106 of the Evidence Act."

These observations were made wHh respect to the peculiar facts of that case.

It appears that what had happened in that case was tha~ the appellant was found to be guilty of an offence under the Prohibition Act and the only evidence to prove his guilt was that he was smelling of alcohol.

This Court held that it was for the prosecution to prove the. contravention of the provisions of the Prohibitpn Act and to prove further that a particular intoxicant which was a liquor under the Act, was consumed by the accused and merely because the accused knew what he had taken (which was a matter within his know- 1edge) could not relieve the prosecution of the burden of proving that the liquor consumed was an intoxicant as defined under the Act.

It is, therefore, clear that the observations made by this Court regarding the interpretation of s. 106 of the Evidence Act would not apply to the facts of the present case. In the case of lssardas Dau/at

Ram & Ors. v. The Union of.India & Ors.(') this Court, after discussing the admitted circumstances of the case, found that the rele- 'Vant pieces of evidence would prove the guilty knowledge of the ac- <CUsed.

That was a case which arose under s. 178(A) of the Sea -customs ;\cJ and this Court observed as follows :-

"If the gold now in question had been imported earlier it would be extremely improbable that the gold would remain in the same shape of bars and with the same fineness

(2) [1962) Supp. (l) S.C.R. 358.

F •

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1 010

SUPREME COU~T REPORTS [1980J 2 s.c.R.

as when imported after the passage of this length of time.

It was precisely for this reason that at the stage of the enquiry before the Collector the principal point which was urged on behalf of the appellants was to deny that the seized gold was of foreign origin and it is the nature of the defence that accounts for the order of the Collector dealing almost wholly with the consideration of that question. In order to reach his finding about the gold being smuggled, the Collector has referred to the conduct of the appellants . . . . . . These were undoubtedly relevant pieces of evidence which bore on the question regard:ng the character of the gold, whether it was licit or illicit.

Learned counsel is, therefore, not right in his submission regarding the absence of material before the Collector to justify the finding recorded in paragraph 6 we have set out earlier."

The facts of the present case appear to us to be almost on a!I fours with the facts of the case mentioned above.

Here, also, the facts are that gold with foreign marking in the shape of biscuits without indicating any change was recovered from the possession of the appellant.

Secondly, the appellant admitted that the gold was brought from outside the country.

The appellant further admitted that he did not hold any permit for importing the gold and the plea iaken by him was that some unknown person had delivered the gold to him. In view of these circumstances and the fact as to how the accused came into possession of the gold and whether it was imported or not being within the special knowledge of the accused, if he failed to disclose the identity of the person who gave him the gold, then it was open to the Court to presume under ss. 106 and 114 of the Evidence Act that the appel~ !ant knew that the gold in his possession was smuggled and imported without permit.

In The State of Punjab v. Gian Chand & Ors. (Criminal Appear No. 195 of 1962 disposed of on 2-4-1968), while examining thtl validity of conviction and sentence under s. 167 ( 81) of the Sea Customs Act, 1878, this Court held that as the accused did not claim any ownership over the gold and was a bullion merchant, the mere fact that the gold had foreign markings would not be sufficient to prove that the accused had knowledge that the gold was smuggled. In this connection, this Court observed as follows :- •

"In our view, the High Court was right in its conclusion because the fact that none of the respondents claimed ownership over the said gold could not necessarily mean either that the gold was smuggled gold or that the respondents were

... ;--

in possession thereof with the knowledge that it was so. The fact that the gold has foreign marks stamped on it can only mean that the gold was foreign.

But since such foreign gold used to be imported before the present restrictions were imposed on its importation, it could have been imported without any violation of law. Consequently, that fact alone would not establish either of the two ingredients of s. 167(81)."

The facts of this case are, however, clearly distinguishable from -those of the present case. In the first place, in the case mentioned above, the accused was a bullion merchant and it was in the very nature of circumstances and as a part of his profession, natural for him to be in possession of gold. Secondly, the Court clearly held that during those days foreign gold used to be freely imported in our country and therefore the mere presence of foreign markings would not be snfficient to raise a presumption under s. 106 of the Evidence Act so as to attribute 'knowledge to the accused that the gold was smuggled. In the instant case,

the facts are quite different and so is the nature of the admission made by the appellant.

In a later decision of this Court in the case of Commissioner of Income Tax, Madras v. Messrs Best & Co.(') this Court observed as •. t , follows :-

"When sufficient evidence, either direct .or circumstantial, in respect of its contention was disclosed by the Revenue, adverse inference could be drawn against the assessee if he failed to put before the Department material which was in his exclusive posession. The process is described in tl1e law of evidence as shifting of the onus in the course of a proceeding from one party to the other."

(It is true that case arose under the provisions of the income Tax Act 1mt the principles laid down by this Court would apply equally to the :facts of the present case. In the case of Collector of Customs, Madras &

-Ors. v. 'D. Bhoormull(') a case under the Customs Act, while dwelling on the nature and purport of the onus which lay on the prosecutfon, cthis Court observed as follows :-

"It cannot be disputed that in poceeding for imposing •penalties under clause (8) of s. 167 to which s. 178-A does not apply; the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental

' c

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1012 SUPREME COURf REPORTS

(1980) 2 S.C.R>.

rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrarary. But in appreciating its scope and the nature of the onus cost by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree ............ -All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue, Thus, legal proof is not necessarily perfect proof, often it is nothing more than a prudent man's estimate as to the probabilities of the case."

Similarly, while dealing with the merits of the case, this Court made the following observations :-

' "In the case before us, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector .......... The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish,_ on Bhoormull. He was simply giving him a fair opportunity of rebutting the first and the foremost presumption that arose out of the tell-tale circumstances in which the goods were found, regarding 'their being smuggled goods by disclosing facts within his special knowledge."

It was also pointed out that the broad effect of the application of the basic principles underlying s. 106 of the Evidence Act would be that onus is discharged if the prosecution adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved.

In the case of Labchand Dhanpat Singh Jain v. The State of Maharashtra, while this Court was again considering the extent and application of ss. 106 and 114 of the Evidence Act and in this connection, pbserved as follows :-

"Even if we were to apply the ratio deddendi of Gian

, H Chand's case (supra) in the case before us, we find that the

(2) [19751 2 S.C.R. 907.

• t

1.._.

result would only be that no presumption uruder section 123 of the Act could be used against t4e appellant. We do not think that the High Court or the Magistrate had used this presumption. We fin<rthat they had relied upcn circumstantial evidence in the case to infer the character of the gold re.. covered and the accused's guilty knowledge .......... A reference to lssardas Dau/at Ram & Ors. v. Union of India & Ors. ((1962) Supp. (1) S.C.R. 358] is enough to show that the GOnduct of the accused and the incredible version set up by him were enough to saddle the accused with the necessary knowledge of the character of the goods found in his possession. ........................................

Atleast, the burden of proving an innocent receipt of gold lay upcn the appellant under section 106 Evidence Act. The totality of facts poved was enough, in our opinion, to raise a presumption under section 114 Evidence Act t!Jat the gold had been illegally imported into the country so as to (be) covered by section 111 ( d) of the Act. The appellant had not offered any other reasonable exp1anation of the manner in which it was being carried."

The facts in this case appar to be very similar to the facts in the present case. Furthermore, the case of Balumal Jamnadas Batra v. State of Maharashtra(') was also a case under the Customs Act and there also the presumption m1dcr section 123 was not applicable. It was held therein that having regard to the conduct of the accused and nature of the articles me11s rea was established.

In this connection, this Court observed as follows :--

"The very appearance of the goods and the manner in which they were packed indicated that they were newly manufactured and brought into this country very recently from another country.

The il\scriptions i:>n them and writing on the boxes were par\s of the state in which the goods in unopened boxes were found from which inferences about their origin and recent import qiuld arise.

The appellant's conduct, including his untruthful denial of their possession, indicated consciousness of their smuggled character or mens rea."

From the af0l'esaid case also it would apl"'ar that this Court was H prepared to draw a presumption against the accused from the fac~ that

(!) [ 1976] 1S.C.R.539.

SUPREME C0URT REPORTS

A the articles concerned were concealed and had particular markings and special features and from the nature of the unsatisfactory explanation given by the accused.

While it is, therefore, true that in the instant case the seizure was not made under s. 111 of the C\Jstoms Act and the prosecution could not press into service the presumption arising from s. 123 of the Customs Act, that does not clinch the issue. It is proved that the appellant was in possession of gold with foreign markings which was found to be in the shape of biscuits or bars kept in a secret chamber of the safe, and that the accused admitted that the gold was brought from outside the country and was given to him by somebody whose identity he was not prepared to disclose. Thus, the appellant knew as to who was the person who had given him the gold and if he also knew, as he says, that the gold was smuggled, he must have known whether the person who delivered the gold to him brought it under a permit or without any permit because at the time of the occurrence the import of gold was banned excepting nnder special circumstances.

Having regard to the totality of the situation, there is no reason why the prosecution would not be entitled to call into aid the combined effect of the presumptions under ss. 106 and 114 of the Evidence Act. We are, therefore, satisfied that the prosecution has clearly proved the charge under s. 135 ( 1)

(b) (ii) of the Customs Act.

E It was also contended by Dr. Chitale that as the case had been

going on for eight years, a lenient view on the question of sentence may be taken. The sentence being one only of rigorous imprisonment for nine months, we think there is no room for any reduction thereof.

For the reasons given above, the appeal fails and is accordingly dismissed.

N.V.K.

Appeal dismissed.

\~--.

• •

SHAH GUMMAN MAL

THE STATE OF ANDHRA PRADESH

February 6, l 98U

S. MuRTAZA FAZAL ALI

Section 135

Sections 106 and 114

section 135(1)(b)

Customs Act, 1962

section 111

Section 111

India

Bombay

Reserve Bank of India

Section 135(1)(b)(ii)

Customs Act

Section 85(ii)

Section 8(i)

Gold Control Act, 1968

Section 135(i)(b)

Customs Act

Section 123

Customs Act

Section 135(1)

Customs Act

sections 106 and 114

section 106

[1966] 2 S.C.R. 480

[1974] 3 S.C.R. 833

[1975] 2 S.C.R. 907

[1976] 1 S.C.R. 539

Section 111

Customs Act

Section 106

Y. S. Chitale

Vineet Kumar

M. A. Khader

Venkatarao

G. N. Rao

FAzAL Au

Andhra Pradesh High Court

s. 135

Customs Act, 1962

s. 135

Customs Act

Nihalchand

Customs Act

Customs Act

s. 123

Section 135(1)

section 111

s. 111

s. 123

s. 111

Chitale

s. 123

ss. 106 and 114

s. 106

section 106

s. 106

s. 178(A)

ss. 106 and 114

s. 167

Sea Customs Act, 1878

s. 167(81)

s. 106

Customs Act

s. 167

s. 178

Bhoormull

s. 106

ss. 106 and 114

H Chand

section 123

section 106

section 114

section 111

Customs Act

section 123

s. 111

s. 123

Customs Act

ss. 106 and 114

s. 135

Customs Act


DIRECTOR OF INDUSTRIES, U.P. AND ORS.

DEEP CHAND AGGARWAL February 6, 1980

[D. A. DESAI AND E. S. VENKATARAMIAH, JJ.]

Public Moneys (Recovery of Dues) Act, 1965 (U.P. Act No. XXV of B

1965) Section 3-Whether offends Article -14 of tl:e Constitution.

A sum of Rs. 15000 /- \Vas advanced to the Re~:pon<lent by the a.ppellant for the purpose of setting up a panel pins and wire nails industry in Hardoi .on the former hyPothecating under the mortgage deed his house by way of security for the loan.

The respondent committed default in repayment of the loan.

The State Government was compelled to take coercive measures to :oecover the ha.lance of the amount due and payable under the <leed as if it were an arrear of land revenue by resorting to section 3 of the Public Moneys (Recovery of Dues) Act, 1965 read with sections 279/281 of the

U.P.

Zamindari Abolition and Land Reforms Act, 1950.

The respondent, therefore, filed a petition under Article 226 of the Constitution on the file of the High Court of Allahabad (Lucknow Bench) questioning the competence of the revenue authorities to recover the balance of the amount due under the , deed as if it were an arrear of land revenue on the ground of violation of Article- 14 of the Constitution.

Following the decision of this Court in Northern India Calere.rs P. Ltd. and Anr. v. Stute of Punjab and Anr., [1967] 3 SCR 399 (which held the field at that time and since overruled) the High Court declared that Section 3 of the Act violated Article 14 of the Constitution and quashed the recovery proceedings initiated by the revenue authorities.

Allowing the appeal by certificate, the Court

HELD : Section 3 of the Public Moneys (Recove1y of Dues) Act 1965 which enables the State Government to recover the sums advanced under the circumstances mentioned therein, as if these were arrears of land revenue cannot be held to be discriminatory and viblative of Article 14 of the Consti- F tution. [10230-El

(a) Section 3 ( 1) ( c) of the Act provides that \vhere any person is a party to a.ny agreement providing that any money payable thereunder to the State Government shall be recoverable as arrear of land revenue and such person makes any default in repayn1ent of the Joan. or advance or any instalment thereof then the arrear due and payable by hin.1 may be recovered as if it G were an arrear of land revenue by issuing a certificate to the Collector. 1 The remedy of the State Government to recover the amount by instituting a <Uit also remains unaffected by the Act. [l019G-Hl

(b) There is reasonable basis for the classification made by the statute and that the classification does haVe a reasonable relation to the object of the statute. The Act is passed with the object of providing a speedier remedy to the State Government to realize the loans advanced by it ' or by the ff

~Jttar Pradesh Financial Corporation.

The State Government while advancing loans does not act as an ordinary banker with a view to earning interest.

SUPREME COURT REPORTS

(1980] 2 S.C.R

Ordinarily it advances Joans in order to assist the people financially in establishing an industry in the State or for the development of agriculture,. anima1 husbandry and for such oth;:r purposes which would, advance the economic well-being of the people.

The amounts so advanced are repayable in easy instalments with interest which would ordinarily be lower than the rate of interest payable on loans .advanced by banking institutions which are run on commercial lines.

The loans are advanced from out of the funds of the State in \Vhich all the people of the State are vitally interested.

Moneys advanced by the Statt: 'Government have got to be recovered expeditiously so that' fresh advances may be made to others who ha.ve not~ yet received finar.cial assistance from the State Government.

If the State Government should resort to a remedy by way of a suit on the mortgage deeds or

onds executed in its favour, the realization of the amounts due to the Government is bound to be dela.yed resulting in nonavailability of sufficient funds in the. hands of the State Government for advancing fresh loans. It is with the object of avoiding the usual delay involved in the disposal of suits in civil Courts and providing for an expeditious remedy, th€ Act has been enacted. In the instant case, the mortgage deed provided that the amount due thereunder could be realised as if it were an arrear of land revenue; and [1020B-G]

(c) The 1nere fact that there is no express provision in the Act containing guidelines to the authorities concerned regarding the (,,:ircumstances under which the amounts couhl be realized by resorting to the procedure piescribed for recovering arrears of land revenue, however, in the circumstance of the case is not sufficient to hold that section 3 of the impugned Act confers

rbitrary power on the Sta.te Government and makes a hostile discrimination.

The A.ct which is passed with the object of providing a speedier ren1edy itself provides sufficient guidance to the officer concerned as to when he should resort to the re1nedy provided for.

[1021A-C]

Shri Mannalal and Anr. v. Collector of Jhalwar and Ors, [1961] 2 SCR 962; Lachhn1an Das on behalf of Firn1 Tilak Ram Bux v. State of Punjab & Ors., [1963] 2 SCR 353 and Magan/a/ Chhagganlal (P) Ltd. v. Municipal Corporation of Greater Bo1nbay and Ors., [1975] 1 SCR 1 followed.

F CIVIL APPELLATE JUR!SDJCTJON; Civil Appeal No. 576 of 1970.

From the Judgment and Order dated 18-8-1969 of the Allahabad High Court in Writ Petition No. 334 of 1963.

G. N. Dixit and 0. P. Rana for the Appellants.

H. K. Puri for the Respondent.

G The Judgment of the Court was delivered by

VENKATARAMJAH, J.-This appeal by certificate involves the question whether section 3 of the Public Moneys (Recovery of Dues) Act, 1965 (U.P. Act No. XXV of 1965) (hereinafter referred to as 'the Act') offends Article 14 of the Constitution and it arises in the H following circumstances.

The respondent is a resident of Railwayganj, Hardoi in the State of Ultar Pradesh.

He applied to the Government of Uttar Pradesh

_, I

for a loan of Rs. 15,000/ for the purpose of setting up a panel pins and wire nails industry in Hardoi.

The State Government which was interested in the industrial development of the State accordingly advanced the loan of Rs. 15,000 to t)1e respandent under a mortgage deed dated March 10, 1960.

The respondent was permitted to repay the loan in ten half-yearly instalments commencing from May 1, 1962 together with interest at the rate of 3 per cent per annum calculated from March 25, 1960.

Tc:: mortgage deed provided that the respondent should spend Rs. 7 ,000 out of the loan advanced on the purchase of machineries for manufacturing panel pins and wire nails and the balance of Rs. 8,000 on the construction of a building for the purpose of the said industry and for no other purpose.

The respondent also agreed to observe truly the Uttar Pradesh Rules for the Advance of Loan for Developing Cottage Industries in the Rural Area promulgated by the State Gove=ent and also to permit the Direc!or of Industries, U.P. or any official deputed by him to inspect his accounts for the purpose of verifying whether the amount borrowed had been utilised for the specified purpose.

The respondent hypothecated under the deed his house by way of security for the loan.

Clause ( 8) of the mortgage deed, however, inter alia provided that if any of the instalments payable by the respondent as mentioned in the deed was not paid .on the stipulated date then the entire amount due llllder the deed could be recovered by the State Government as arrears of la11d revenue. The 111ortgage deed was signed by the Director of Industries, U.P. on !Jehalf of and acting llllder t_he !!Uthority of the Governor of Uttar Pradesh and the respondent.

The respondent committed default in repayment of the loan.

The State Gove=ent was, therefore, compelled to take coercive measures to recover the balance of the amount due l!nd payable under the deed as if it were an arr?ar of land revenue, by resorting to section 3 of the Act read with sections 279 I 281 of the U.P. Zamindari Abolition and Land Reforms Act, 1950.

At the request of the Director of Industries, U.P., the Collector of Hardoi initiated steps to recover the balance of the amount due under the deed as an arrear of land revenue.

Pursuant to the order of the Collector, the Tahsi!dar of Hardoi issued an order of attachment dated March 12, 1968 of the house of the respondent and also issued a warrant of arrest of the respondent to recover the amount llllder the provisions governing the procedure prescribed for realising land revenue.

Immediately thereafter, the respandent filed a petition under Article 226 of the Constitution on the file of the High Court of Allahabad (Lucknow Bench) in writ petition No. 334 of 1968 questioning the competence of the revenue authorities to recover the

ff,

1018 SUPREME COlrRT iEPORTS

[1980] 2 S.C.R.

A the balance of the amount due under the deed as if h were an arrear of land revenue.

Jn that petition, the respondent contended that the Act was discriminatory and was, therefore, violative of Article 14 of the Constitution on the ground that the State Government had two remedies available to it in law-one by way of a suit for recovery of the mortgage money and another under the Act which authorised it to recover the amounts due as if they were arrears of land revenue, that the remedy under the Act was more onerous than a suit so far as the respondent was concerned and that there were no guidelines in law as to the circumstances in which the State Government could

C resort to the provisions of the Act.

The Director of Industries, U.P. ]!nd the revenue authorities who were impleaded as respoadents in the writ petition contended that the provisions of the Act did not offend Article 14 of the Constituti.on.

Following the decision of this Court in Northern India Caterers Private Ltd., & Anr. v. State of Punjab & Anr.(') the High ourt dec- 'f) Jared that section 3 of the Act violated Article 14 of the Constitution by providing an additional remedy to the State Government over and above the remedy by way of a suit, leaving it to the unguided discretion of the State Government to resort to one or the other and that the remedy available under the Act was more drastic or prejudicial to the party concerned thrin the suit.

Accordingly the High Court quashed the recovery proceedings initiated by the revenue authorities. Aggrieved by the decision of the High Court, the Director of Industries, U.P. and the revenue authorities have come up in appeal to this Court.

The impugned Act was passed in the year 1965 to provide for speedy recowry of certain classes of dues. payable to the State or to the Uttar Pradesh Financial Corporation.

The Act CQntains three sections.

The first section deals with the title of the Act and extent of its operation.

T11e second section is the definition clause Section 2 (b) of the Act defines the expression 'financial assistance' asi

any financial assistance (i) for establishing. expanding or running any industrial undertaking; or (ii) for purposes of vocational training; or (iii) for the development of animal husbandry; or (iv) for purposes of any other kind of planned development; or ( v) for relief against distress. Section 3 of the Act with which we are now concerned reads as follows :-

"3. Recovery of certain dues as arrears of land revenue-

DIRECTOR 'oF INDUSTRIES v. DEEP CHAND (Venkataramia/1, J.)

I 0 J 9

(1) Where any person is party- A

(a) to any agreement relating to a loan, advance or grant given to him by the State Government or the Corporation by way of financial assistance, or

(b) to any agreement r"lating to a guarantee given by the State Government or the Corporation in respe.ct of a loan raised by an industrial concern, or

(c) to any agreement providing that any 111_oney payable thereunder to the State Government shall be recoverable as arrears of land revenue, and such person-

(i) makes any default in repayment of the loan or advance or any instalmen~ thereof, or

(ii) having become liable under the conditions of the grant to refund the grant or any portion thereof, makes any default in repayment of such grant or portion or instalment thereof, or

(iii) otherwise fails to comply with the terms of the agreement,-

then, in the case of the State Government, such officer as may be authorised in this behalf by the State Government by notification in the Official Gazette and in the case of the Corporation, the Managing Director thereof, may, without prejudice 10 any other mode of recovery under any other law for !he time being in force, send a certificate to the Collector, mentioning the sum due from such person and requesting that such sum together with costs of the pro• ceedings be recovered as if it were an arrear of land revenue.

(2) The Collector on receiving the certificate shall proceed to recover the amount stated therein as an arrear of land revenue."

It may be seen that section 3 (1) ( c) of the Act provides that where any person is a party to any agreement providing that any money payable thereunder to the State Government shall be recoverable as arrears of land revenue and such person lllllkes any default in repayment of the loan or a<lvance or 'any instalment thereof then the arrears due and payable by him may be recovered as if it were an arrear of land reve11ue by issuing a certificate to the Collector.

The remedy of the State Government to recover the amount by instituting a suit also remains unaffectc{I by the Act.

1020 SUPREME COURT RfPORTS

[1980] 2 S.C .. R.

At the outset, it has to be stated that the decision of this 'Court in Northern India Caterers Private Ltd., & Anr. (supra) is overruled by this Court in Magan/al Chhaggan/al (P) Ltd. v. Municipal Corporation of Greater Bombay & Ors.(') The question for determinatiO!ll in this case is whether section 3 of the impugned Act violates Article 14 of the Constitution. In order to decide this question, it is necessary to determine the object of the Act and whether the classification made between the State on the one hand and others who have also advanced moneys under mortgage deeds bears any reasonable relation to the object of the statute.

T11e Act is passed with the object of providing a speedier remedy to che State Government to realize the loans advanced by it or by the Uttar Pradesh Financial Corporation.

The State Government while advancing loans does not act as an ordinary banker with a view to earning interest.

Ordinarily it advances l.oans in order to assist the people financially in establishing an industry in the State or for the development of agriculture, animal husbandry and for such other purposes which would advance the economic well-being of the people.

The amounts so advanced are repayable in easy instalments with interest which would ordinarily be lower than the rate of interest payable on loans advanced by banking institutions which are run on commercial lines. The loans are adYanced from out of the funds of the State in which :ill the people of the State are vitally interested.

Moneys advanced by the State Government have got to be recovered expeditiously so that fresh advanc.es may be made. to others who have not yet received financial assistance from the State Government. If the State Government should resort to a remedy by way of a suit on the mortgage deeds or bonds executed in its favour, the realization of the amounts due to the Government is bound to be delayed resulting in non-availability of sufficient funds in the hands of the State Government for advancing fresh loans. It is with the object of avoiding the

usual delay involved in the disposal of suits in civil courts and providing for an expeditious remedy, the Act has been enacted. In the instant case, the mortgage deed provided that the amount due there.- under could be realised as if it were an arrear of la,1d revenue. It cannot, therefore, be said that there is no reasonable basis for the classification made by the statute and that the classification does not have a reasonable relation to the object of the statute.

It is also argued that the impugned Act does not provide any H guidelines to the authorities concerned regarding the circumstances under which the amouJJ1'1. could be realized by resorting to the pro-

(l) [ 1975] 1 S.C.R.

' i

cedure prescribed for recovering arrears of land revenue. It is no doubt true that there is no express provision in the Act containing such guidelines.

That, however, in the circumstances of the case is not sufflcient to hold that section 3 of the impugned Act confers arbitrary power on the State Government and makes a hostile discrimination.

Under section 3 of the Act, the Collector can proceed to realize the amount due as arrears of land revenue only on the basis of a certificate issued by an officer as may be authorised in that behalf by the State Gove=ent mentioning the sum due from any person referred to therein.

Such officer is expected ordinarily to avail himself of the speedier remedy provided under the statute. We are of the view that the Act which is passed with the object of providiug a speedier remedy itself provides sufficient guidance to the officer concerned as to when he should resort to the remedy provided by it. As observed by this Court in Magan/al Chhgganlal (P) Ltd.'s case (supra), one expects the officer concerned to avail himself of the procedure prescribed by the Act and not to resort to the dilatory procedure of the ordinary civil court. In that case, the legality of the provisions of the Bombay Government Premises (Eviction) Act, 1955 and the provisions contained in Chapter VA of the Bombay Municipal Corporation Act, 1888 which provided a speedier remedy to recover possession of premises belonging to the State Government and the Bombay Municipal Corporation which were in unauthorised occupation of any person was questioned on the ground that the remedies under the said provisions were more onerous than the remedy by way of a suit which was also available to the State Government and the Corporation.

While upholding the above provisions, Alagiriswami, J. who spoke for the majority observed thus :

"The statute itself in the two classes of cases before us clearly lays down the purpose behind them, that is premises belonging to the Corporation and the Government should be subject to speedy procedure in the matter of eviicting un' authorized persons occupying them.

This is a sufficient guidance for the authorities on whom the power has been conferred.

With such an indication clearly given in the statutes one expects the officers concerned to avail themselves of the procedures prescribed by the Acts and not resort to the dilatory procedure of the ordinary Civil Court.

Even normally one cannot imagine an officer having the choice of two procedures, one which enables him to gtet possession of the property quickly and the other which would be a prolonged one, to resort to the latter. Administrative officers, no

1022 SUPREME CCuRl' REJ>OR15 [1980] 2 s.c.R.

less than the courts, do not function in a vacuum. It would be extremely unreal to hold that an administrative officer would in laking proceedings for eviction of unauthorised occupants of Government proporty or Municipal property resort to the procedure prescribed by the two Acts in one case and to tbc ordinary Civil Courts in the other. The provisions of these two Acts cannot be struck down on the fanciful theory that power would be exercised in such an unrealistic fashion.

In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal.

It is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account. This is not one orf those cases where discrimination i~ writ large on the face of the statute.

Discrimination may be possible but is very improbable. And if there is discrimination in actual practice this Court is not powerless.

Furthermore, the fact that the Legislature considered that the ordinary procedure is insufficient or ineffective in evicting unauthorised occupants of Government and Corporation property and provided a special speedy procedure therefor is a clear guidance for the authorities charged with the duty of evicting unauthorised occupants. We therefore, find ourselves unable to agree with the majority in the Northern India Caterers' case.

Certain provisions similar to the Act impugned in this case enabling a State Government to recover the amounts due to it by resorting to a speedier remedy have been upheld by this Court in two cases--Shri Manna Lal & Anr. v. Collector of Jhalawar & Ors.(') aT'd Lachhman Das 011 behalf of firm Tilak Ram Ram Bux v. State of Punjab & Ors.(2). Jn the case of Shri Ma11na Lal & Anr. (supra) the facts, were these : The Jhalawar State Bank was originally a Bauk belonging to the princely State o[ Jhalawar. Its assets, including moneys due to it, became vested in the United State of Rajasthan under the convenant executed by the Ruler -Of Jhalawar along wih other Rulers by which the United State of Rajasthan was formed.

On the promulgation of the Constitution of India, the United State of Rajasthan became the State of Rajasthan in the Indian Union and all its assets including the Jhalawar State Bank and its dues vested in the State of Rajas'.han.

In that case the question which arose for consideration was whether

(I) [1961] 2S.C.R.962.

' •-.:

moneys which had been advanced by the Jhalawar State Bank could be recovered by taking pr9ceedings under the Rajasthan Public Demands Recovery Act.

This Court held that the amounts could be recovered by the State of Rajasthan after the Bank had become vested in it as a public demand under the Rajasthan Public Demands Recovery Act and that the said Act did not offend Article 14 of the Constitution even though it provided a special facility to the Government as a banker for the recovery of the bank's dues for the Government could legitimately be put in a separate class for this purpose.

In the latter case i.e. the case of Lachhman Das on behalf of Firm

Tilnk Ram Ram Bux (supra), the right of Patiala State Bank to recover the amounts due to it under the provisions of the Patiala Recovery of State Dues Act was questioned.

This Court hdd that the Bank established by a State had distinctive features which differ entiated it from other Banks and formed a category in itself and the Act in setting up separate authorities for determination of disputes and in prescribing a special procedure to be followed by them for the recovery of the dues by summary process could not be considered to be discriminatory.

• We are, therefore, of the \'tiew that section 3 of the Act which

~.·

enables the State Government to recover the sums advanced under the circumstances mentioned therein as if they were arrears of land revenue cannot be held to be discriminatory and violative of Article 14 of the Constitution.

For the foregoing reasons, we allow the appeal, set aside the order passed by the High Court and dismiss the writ petition. Since the High Court disposed of the case on the basis of the decision of this Court in Northern India Caterers Private Ltd. & Anr. (supra) which has since been overruled, We make no order as to co,.sts.

V.D.K.

Appeal allowed.

11-138 SCI/80

A I

F I

DIRECTOR OF INDUSTRIES, U.P. AND ORS

DEEP CHAND AGGARWAL

February 6, 1980

D. A. DESAI

E. S. VENKATARAMIAH, JJ.

Section 3

section 3

sections 279

Article 226

[1967] 3 SCR 399

Section 3

Article 14

Section 3

Article 14

Section 3

~Jttar Pradesh Financial Corporation

section 3

[1961] 2 SCR 962

Lachhn1an Das

[1963] 2 SCR 353

[1975] 1 SCR 1

G. N. Dixit

0. P. Rana

H. K. Puri

VENKATARAMJAH

section 3

Article 14

Hardoi

Ultar Pradesh

Government of Uttar Pradesh

March 10, 1960

March 25, 1960

Uttar Pradesh

section 3

sections 279

Article 226

Article 14

Article 14

section 3

Article 14

U.P.

Uttar Pradesh Financial Corporation

Section 2

Section 3

section 3

section 3

Article 14

section 3

section 3

Magan/al Chhgganlal (P) Ltd.

Alagiriswami

Ma11na Lal

Jhalawar State Bank

United State of Rajasthan

Jhalawar

Constitution of India

State of Rajasthan

Article 14

Lachhman Das

section 3

Article 14

Northern India Caterers Private Ltd.


102.J

SUBHASH CHANDRA A."lD ORS.

STATE OF U.P. AND ORS.

February 12, 1980

[V. R KRISHNA !YER AND D. A. DESAI, JJ.J

Motor Vhicles Act, 1939, Section 51(2)-Wlzether Regional Transport Authority in1posing a condition that no permit shall be renelved in respect of vehicles wlticli are 7 years old is ultra-vires Article 19(1) (g) of the Constitution-Con1peterzcy of the R.T.A. to inzpose such a condition.

Dismissing the special leave petition, the Court

HELD : 1.

J\lere lexical legalism cannot sterilise the sensible humanism writ large on s. 51(2) (x). If Indian life is not ultra vires Indian law every condition to save life and limb is intra vires such salvationary provision.

[1025G]

2. Section 51(2) of the Motor Vehicles Act, 1939, is geared to public safety, not piivate profit and casts a solemn duty not to be deterred by any pressure except the pressure of social justice to Indian lives moving in D buses, \Valking on roads or even standing on margins. If the top killerroad nccident-is to be awarded death sentence, s. 51 and like provisions must receive severe enforcement. In this spirit-although backtracking from 4-year-old models to 7-year-old models-the state imposed condition. 18.

Section 51(2)(x) authorises the imp6st of "any condition" of course having a nexus with the statutory purpose.

Human safety is one such purpose.

(10250-F, H]

3. From the point of view of the human rights of road users, the condition regarding the model of the permitted bus is within jurisdic~ tion and not to prescribed such safety clauses is abdication of statutory duty.

There is no conflict between a vehicle being fit to ride and the condition as an additional requirement a.nd safety factor in the shape of the year and the model.

This i<; an extra measure, a further insurance against machine failure and cannot contradict the 'fitness' provision.

[11260, 1027A-B]

CIVIL APPELLATE JURISDICTION: Special Leave Petition No. 1262 of 1980.

From the Judgment and Order dated 19-2-1979 of the Allahabad High Court in C.M.W.P. No. 184 of 1975.

G S. N. Kaicker, Mrs. S. Markendeya and S.

Markendeya for the Petitioners.

The Order of the Court was delivered by

KRISHNA IYER, J.-An order draped in relative brevity is sufficient since we are refusing leave to appeal although the issue raised is the vires of a provision.

After due fulfilment of the obligation for oral hearing, we have considered the impact of two earlier decisions cited by Shri Kaicker sup-

-~ ~-

• .. ._._

I .

SUBHllSH CHANDER v. U.P. STATE (Krishna Iyer, J.) 1025

1Posedly striking a nate conlrary to the judgment un<ler attack but feel

I\. free-why, bound-to dismiss th' petition for special leave not merely ''1 because the High Court is right but because justice to the travelling public-a lost cause 011 our made roads-conscientises to that course.

Tersely put, the petitioner is the grantee of permits to ply minibuses as contract carriages and in the grant a condition has . been fastened that the vehicle shall not be more than seven years old.

Condition No. 18, relating to Mini-Buses Contract Carriage permits, .and the source of power, s. 51 (2 )(x) read thus : That the vehicle covered by the permit shall be not more than fO'ur years old counted from the date of registration at any time during \he validity of the permit. 51 (2) The Regional Transport Authority, if it decides to grant a contract carriage permit, may, subject to any rules that may be made under this Act, attach to the permit any one or more of the following conditions, namely :- •

(x) any other conditions which may be prnscribed.

Section 51 (2) (x) any other.

"Four years' have been relaxed to seven years since September 23, 1978, the beneficiaries being the bus owners and the potential victims being the unknown casualties who have no 'poor lobby' power.

The State must remember that it has responsibilities not merely to mini-bus owners, but also to avoid the daily tragedies on the Indian high ways under the lethal wheels of these whirling carriages. Section 51 (2)

of the Motor Vehicles Act, 1939, is geared to public safety, not private profit and casts a solemn duty not to be deterred by any pressure except the pressure of social justice to India'n lives moving in buses, walking on roads or even standing on margins. If the top killer-road .accident-is to be awarded death sentence, s. 51 and like provisions

mnst receive severe enforcement. In this spirit--although backtracking from 4-yearold models to 7-year-old models-the state imposed -condition 18.

This was challenged artfully but unsuccessfully before. the High Court and is attacked before us as ultra vires s. 51 (2) of the Act. We will examine briefly the submission to reach the conclusion that mere lexical legalism cannot sterilise the sensible humanism writ large on s. 51 (2) (x). If Indian life is not ultra vires Indian Jaw every condition to save life and limb is intra vires such salvationary provision.

This perspective of social justice simplifies the problem and upholds the High Court.

Section 51 (2)'(x) anthorises the impost of any condition, of course, H having a nexus with the statutory purpose. It is undeniable that human

safety is Olle sucli purpose. The State's neglect in this area of policing

1026 i<UPREME COURT REPORT; i [1980] 2 s.c.R;

public transport is deplorable but when it does act by prescribing a condition the court cannot be persuaded into little legalism and harmful' negativism. The short question is whether the prescription that the bus shall be at a seven-year old model one is relevant to the condition of the vehicle and i\s passengers' comparative safety and comfort on our chaotic highways. Obviously, it is. The older the model, the less the chances of the latest safety measures being built into the vehicle. Every new model incorporates new devices to reduce danger and promote comfort. Every new model assures its age to be young, fresh and strong, less likely to suffer sudden failures and breakages, less susceptible to wear and tear and moral fatigue leading to unexpected collapse.

When we buy a car or any other machine why do we look for the latest model ? Vintage vehicles are good for centenarian display of curios and cannot but be mobile menaces on our notoriously neglected highways. We have no hesitation to hold, from the point of view of the human rights of road users, that the condition regarding the model of the permitted bus is within jurisdiction, and not to prescribe s11ch safety clauses is abdication of statutory duty.

Two decisions-Masi Ullah v. State Tribunal Appellate(') and In re: Ramesh Chandra Tewari etc.(') were cited as striking a con-· trary note. The first deals withs. 48(3) of the Act and prescription of the model or year of the make was held ultra vires because, lexically read, it was held that the expression specified description in s. 48(3) did not cover, according to dictionaries, the year of manufacture of the vehicle.

We extract Black's Law Dictionary on 'description' to show how the model of a vehicle is obviously a facet of its description .. 'Description' means : (")

A delineation or account of a particular subject by the recital of its characteristic accidents and qualities.

So, dictionary versus dictionary leaves the matter at large, apart from the plain function of the court to gather the meaning, not nnder the dictatorship of dictionaries but guided by the statutory purpose with- . out being deflected by logamachic exercises, the mischief to be countered and the public interest to be advanced. We are clear that a later model is a better safeguard and, more relevantly to the point, the year of the make and the particulars of the model are part of the description. ------

(1) AIR 1967 All. 129.

(2) Civil Misc. Writ No. 7317 of 1975 of Allahabd High eourt (unreported).

(3) p, 532.

• -

SUBHASH CHANDER v. U.P. STATE (Krishna Iyer, J.) 1027

The unreported ruling in Civil Writ No. 7317 of 1975 interprets

'l!. 38 of the Act and the non-issuance of the fitness certificate because the model was not recent enough. May be the vehicle, regardless of the year of its make, may be fit and the refusal to certify fithess merely because it is old may not always be right. But we see no conflict between a vehicle being fit to ride and the condition, as an additional requirement and safety factor, in the shape of the year of the model. This is an extra measure, a further insurance against machine failure and cannot contradict the 'fitness' provision.

More reasons are, superogatory, less discussion will leave the Jaw -0bscure. We hold the ratio df the impugned ruling to be right and refuse leave to appeal.

:S.R.

Petition dismissed.

J

SUBHASH CHANDRA A."lD ORS

STATE OF U.P. AND ORS

February 12, 1980

D. A. DESAI, JJ

Motor Vhicles Act, 1939

Section 51(2)

Article 19(1)

s. 51(2)

Section 51(2)

Motor Vehicles Act, 1939

s. 51

Section 51(2)(x)

G S. N. Kaicker

S. Markendeya

S.

Markendeya

KRISHNA IYER

Kaicker

After due fulfilment of the obligation for oral hearing, we have considered the impact of two earlier decisions cited by Shri Kaicker sup-
~ ~-

• .. ..

I .

Krishna Iyer

s. 51

Section 51

September 23, 1978

Section 51

Motor Vehicles Act, 1939

s. 51

s. 51

s. 51

Section 51

Ramesh Chandra Tewari

s. 48(3)


RALLIS lNDIA LTD: v.

STATE OF ANDHRA PRADESH

February 12, 1980

[R. S. PATHAK AND A. D. KOSIIAL, JJ.]

Central Sales Tax Act 1956-Section 15(b )-Scope of.

On the ground that the dealers have not charged and collected Central' Sales Tax during the period !st April, 1969 to 9th June, 1969 tho Commercill<l Tax Officer, allowed exemption under section 10 of the Central Sales Tax Act in respect of certain turn-over of the appellant which included the price realised on account of inter-state sales. In respect of a second set of transactions which involved the purchase value of cotton sold during the: yer through inter-state sales the Commercial Tax Officer held that the appellant 'vas entitled to exemption under the proviso to section 6 of the A.P. General Sales Tax Act.

In 1972 section 15(h) of the Central Act \\'as amended with retrospective effect from 1st October, 1958 and in 1974 section 6 of the State Act was amended with retrospective effect from the same date.

The Deputy Commissioner of commercial Taxes revised the assessment order of the Commercial Tax Officer passed under the State Act on the ground that in view of the provisions of section 6 as amended in 1974 the appellant was not entitled to any exemption during the above period. The Sales Tax Appellate Tribunal dismissed the pellant'S appeal on the view that section 6 of the State Act did not talk of any exemption either before or after its amendment in 1974. The High Court dismissed the appellant's appeal holding that the exemption granted by the C.T.O. was p<itcntly \vrong.

Dismissing the Appeal,

HELD: 1. Section 10 of the Central Act Vlhich inakcs no reference to any tax leviable under a State Act can be of no assistance to the appellant.

Granting that the appellant did not collect any tax under the Central Act during the period in question on the ground" that no, such tax could have been levied or collected so that it becomes fully entitled to the benefit of the exemption enacted by the1 section, that \Vould only niean that central sales tax cannot be charged from it in respect of sales covered by the section. No demand had been made from it for any tax Jeviable under the Central Act in respect of such sales and the appellant couid not derive any benefit from section 10 of the Central Act in the matter of its assessment under the State Act.

[I033G-H]

2. In so far as the a-ssessment under the State Ac.:t is concerned all that the C, T.O. could have meant by granting exemption \Vas that the appellant H became liable to pay a tax under the opening para. of the section; but that since the appellant wa-s also entitled to a refund of sucll tax the same was taken to have been paid by and refundedto it. The assessment order made- I

RALLIS INDIA LTD. v. ANDHRA PRADESH (Kasha!, ], ) 1029

under the proviso to section 6 of the State Act and section 15 (b) of the A Central Act as they stood then was unexceptionable.

[1034E-F]

3. Under section 6 as amended the. liability to tax rcn1ained uncht.nged but thci entitlen1ent to refund v1as abolished and was substituted by a right to reimbur.sen1ent of the tax \\'hich arose only if the concerned goods \Vere later on sold in the course of inter-state trade under the Central Act and tax under that A.ct was paid in respect thereof.

Such reiniburs.ement would not be available merely because the goods in question had been sold in the course of inter-state ttade or commerce when they \Ve1e not subjected to tax under the Central Act. No such tax was paid. The proviso to section 6 as amended in 1974 can be of no assistance to the appellant. [1035A-B]

4. The language of claue (b) of section 15 of , the Central Act is the same as that of the amended proviso to secti6n 6 of the State Act.

It clearly means that the tax under the State Act wouJd be rei1nhursible only to at dealer who has paid tax under the Central Act in respect of the sale

of the goods in question in the course of inter-state trade or commerce.

[1035C-D]

5. The argun1ent that the Deputy Commissioner had no power to cancel the order of refund is fallacious.

He has done nothing rnore than to revise an order of the C.T.O. which has been varied only in so far as it was not in conformity with the law deemed to have been prevailing on the date of the assessment by virtue of the retrospective amendment of section 6 of the State Act. The Deputy Commissioner had not only the power but was duty bound to strike down the order of refund as being illegal. [1035F-Gl

6. Rule 27 A can be of little help to the appellant inasmuch as even if it can be constn1ed as laying down something in its favour, the rule ca-nnot

override the. provisions of the Act.

[1036A]

Daita Suryanarayana and Con1pany v. State of Andlzra Pradesli 39 S.T.C, 500 approved.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1897 of 1978.

From the Judgment and Order dated 19-9-1977 of the Andhra Pradesh High Court in Tax Revision Pe'.iti011 No. 66/76.

S. T. Desai, T. A. Ra111achandra11, Mrs. J.

Ramachandran and M. N. Tandon for the Appellant.

T. S. Krishnamoorthy Iyer, and B. Parthasarthi for the Respondent.

The Judgment of the Court was delivered by

KosHAL, J.

The question which falls for determination in the G appeal by certificate granted by the High Court of Andhra Pradesh against its judgment dated the 19th September, 1977 is whether the appellant which is a limited company is not liable to make good to the State Sales Tax authorities the amount of sales tax leviable under sectio'n 6 of the Andhra Pradesh General Sales Tax Act (hereinafter referred to as the A. P. Act) in respect of the turn-over cover- H ing the purchase by th3 petitioner of cotton during the period 1-4-1969 to 8c6-1969, which turn-over had been exempted from sales tax by

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the Commercial Tax Offic-cr, No. II, Guntur (C.T.O. for short) in his assessment order dated the 30th of April, 1971.

2. Two assessment orders were passed by the C.T.O. on the date last mentioned. One of them covered the turn-over of the appellant liable to tax under the Central Sales Tax Act (heminafter referred to as the Ce:Jtral Act). That turn-over included a sum of Rs. 2(J.61,166 which represented the price realised on account of inter-state sale during the period 1-4-1969 to 9-6-1969.

In respect of this amount the order made by the C.T.O. was :

"The dealers have not charged and collected Cen'ral saks Tax for the period from 1-4-69 to 9-6-69.

The twnover of Rs. 26,61,166.33 upto 9-6-')9 is allowed excmpc1on in view of section 10 of Central Sales Tax Amendment Act."

The second assessment order was passed under the A.P. Ac'. and therein the C.T.O., while considering a sum of Rs. 51,87,879/- being the purchase value of cotton sold during the year through inter-state sale, remarked that the appellant was entitled to 'exemption' nnder the proviso to section 6 of the A. P. Act in respect thereof. He linalisecl the assessment accordingly.

3. In the year 1972, clause (b) of section 15 of the Central Act was amended retrospectively so as to be effective from 1st October, 1958.

Two years later, section 6 of the A.P. Act was also amonded and made effective from the same date.

On the 21st of August, 1974, the Deputy Commissio'ner (Commercial Taxes) hereinafter called the D.C.C.T.) issued a notice to the appellant calling upon it to show cause why the 'exemption' granted to it by the C.T.O. should not bo cancelled.

After !€ceiving the appellanfs reply, the D.C.C.T. revised the assessment order dated 30th of April, 1971, passed under the A.P. Act and held that in view of the provisions of section 6 thereof as amended in 1974 the appella'nt was not entitled to any 'exemption' in respect of the purchase price (amounting to Rs. 23,00,057/-) of cotton sold by it in the course of interstate trade for Rs. 26,61,166/- during the period 1-4-1969 to 8-6-1969. The order of the D.C.C.T. was challenged by the appeallant in an appeal which was diSmissed by the Sales Tax Appellate Tribu'nal, Andhra Pradesh (hereinafter called the Tribunal) on the 30th of August, 1976, mainly on the ground that section 6 of the AP. Act did not talk of any 'exemption' either before or after its amendment in 1974.

The appellant sought a revision of the Tribunal's order by the High Court nnder section 22 (I) of the A.P. Act but remained unsuccessful as the High Court was of the opinion (for

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which it relied upon Vadivelu Chetty v. Commercial Tax Officer,

Tirupathi(') and Daita Suryanarayana and Company v.

State of Andhra Pradesh( 2 ) that the exempt>on granted by the C.T.O. was 'patently wrong'.

The High Court however granted a certificate declaring the case to be a fit one for appeal to the Supreme Court under article 133(1)(c) of the constitution of India read with section 109 of the Code of Civil Procedure.

4. In ord•"r to appreciate the contentions raised on behalf of the

~I" appellant it is necessary to examill'e the various relevant legislative i( : provisions which are set out below :

Section JO of the Central Sales Tax (Amendment) Act, 1969 (hereinafter referred to as the 1969 Act).

"10.

Exemption from liability to pay tax in certain . cases.

(1) Where any sale of goods in the course of interstate trade or commerce has been effected during the period between the 10th day of November, 1961, and the 9th day of June, 1969, and the dealer effecting such sale has not collected any tax under the principal Act on the ground that no such tax could have been levied or collected in respect of such sale or any portion of the turn-over pelating

to such sale ahd no such tax could have been J.cvied or collected if the amendments made in the principal Act by this Act had not bc•cn made, then, notwithstandi'ng anything contained in section 9 on the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as ame'nded by this Act, in f'spect of such sale or -such part of the turnover velating to such sale.

(2) For the purposes of sub-scction(l), the burden of proving that no tax was collected under the principal Act in respect of any sale referred to in sub-section (I) or in respect of any portion of tho turn-over relating to such sale shall be o'.n the dealer effecting such sale."

Section 6 of the A. P. Act as on 30-4-1971

"6. Tax in respect of declared goods-Notwithstanding anything contained in 5ection 5, the sale or purchase of declared goods by a dealer shall be liable to tax at the rate, and only at th~ point of sale or purchase, specified against

(I) 50 S.T.C. 176.

(2) 39 S.T.C. 500.

A each in the Third Scheduk, on his tur"n-over of such sales or purchases for each year irrespective of the quantum of his turn-over in such gocic:!s; !lnd the tax shall be assessed, levied and collected in such manner as may be prescribed :

Provided that where any such goods on which tax has been so levied are 5old in the course of inter-state trade or commerce, the tax so levied shall be refunded to such, person, in such manher and subject to such conditions as. may be prescribed."

The proviso to section 6 o/ the A. P. Act as amended in 1974 retrospectively with effect from 1-l0-1958.

"Provided that whene any such goods on which a tax has been so levied are sold in the course of inter-state trade or commerce and tax has been paid under the Central Sales Tax Act, 1956. in respect of the sale of such goos in the course of inter-stat•e trade or commerce the tax so levied shall be reimbursed to the person making such sale in the course of inter-state trade or commerce, in such manner and subject to such conditions as may be prescribed."

Sub-rule (I) of rule 27-A of the Rules framed under the A.P. Act as on 30-4-1971

"Where any tax has been levied and collected under section 6 in respect of the sale or purchase inside the State of any declared goods and such goods are subsequently sold in the course of int•er.,; tate trade or commerce, the tax so levied and collected shall be refunded to the person in the manner and subject to the conditions specified in sub-rules (2) to (4)."

Sub-rule (I) of the said rule 27 A after its amendment 1-8-1974

"Whef'e any lax has been levied ahd collected under G section 6 in respect of the sale or purchase inside the State of any declared goods and such goods are subsequently sold in the ccurse of inter-state trade or commerce,. the tax so levied and collected shall be reimbursed to the person in the manner and subject to the cohditions specified iu sub-rules (2) to ( 4) : H Provided that the refund shall not IJ.o made unless the tax payable under !hoc Central Sales Tax Act 1s paid."

Clauses (a) and (b) of section 15 of the Central Act av in force on 30-4-1971

"15. Restrictions and conditions in regard to tax 011 sale or purchase of declared goods within a State-Every sales tax law art' a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely :-

(a) the tax payable under that law in respect of any sale or purchase of such goods inside the Slate shall be levied only i"n respect of the last sa1c or purchase inside the State and shall not exceed two per cent of the sale or purchase price.

(b) where a tax has be•cn levied under that law in respect of the sal•c or purchase inside the State of any declared goods and such goods are sold in the course of inter-state trade or commerce, the tax so kvied

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shall be refunded to such person in such manner D• and subject to such conditions as may be provided in any law in force in that State." Clause (b) of section 15 of the Ce11tral Act as amended in 1972 retrospectively with effect from 1-10-1958

"(b) where a tax has been levied under that law in respect of the sale or purchas•c inside the State of any declared goods and such goods are sold in the course of inter-State trade or commorce, and tax has been paid under this Act in respect of tho sale of such goods in the course of inter-satc trade or con1metce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-state trade or commerce in such manner and subject to such conditions as may be provided

in any law in force i"n that State."

5. Section 10 of the 1969 Act makes no reference at all to any G, tax leviable under the State Act. It concerns itself only with the tax payable under the Central Act which it calls the 'Principal Act' and sayc, that a dealer shall not be liable to pay any such tax for the period between 10-11-1964 and 9-6-1969 if certaih conditions arc satisfied.

Much reliance has been placed by learned counsel for the appellant on this section which, in our opinion, however, is of no aSJSistance to H him. It may be taken for granted that the appellant did not collect any tax uhder the Central Act on the sale of goods effected by it in

the course of inter-state trade during the period 1-4-1969 to 9-6-1969 on the ground that no such tax could have been levied or collected in respect of such sale, so that it becomes fully entitled to the benefit of the exemption enacted by the section; but that would only mean that Central sales tax cannot be charged from it in respect of such sale.

As it is, no demand has been made from it for any tax leviable under the Central Act in respect of such sale and we do not see how the appel; ant could benefit from the said section 10 in the matter of its assessment for the period in question under the A.P. Act.

"' All tha:t we are concerned with is the liability of the appellant to pay tax on the purchase of cotton which it sold during that period in the course of into::r-state trade and that is a matter which has to be decided with reference to section 6 of the A.P. Act, rule 27-A extracted above and section 15 of the Central Act.

6. As on 30-4-1971 the provisions of section 6 of the A.P. Act laid down that if goods were sold in the course of inter-state trade or c01mnerce and tax had been levied on the sale or purchase thereof uuder that Act, the dealer concerned would be entitled to refund of such tax.

As on the date of assessment therefore the appellant was within its rights to claim refund of any tax that it was liable to pay on the purchase of cotton later sold by it in the course of i"nter-state trade; and although the section did not talk of any 'exemption', all that the C.T.O. could have meant by granting the appellant 'exemption from the tax was that it became liable to pay a tax under the opening para of the section but as it was also e"ntitled to a refund of such tax, the same was tak•cn to have been paid by and refunded to it.

As the section then stood therefore the assessment order was unexceptionable.

This was also the position Ul)Cfor clause (b) of ./ section 15 of the Central Act the language of which is practically the same as of the proviso to section 6 of the A.P. Act.

7. The matter however docs not end there as the amendment of section 15 of the Central Act in 1972 and that of section 6 of the' A.P.

Act in 1974 made a real difference which appears to ns to be an insur- G mountable hurdle in the way of the •appellant's stand being accepted. As already stated, both the amendments were retrospective so as ta be effective from the 1st of October, 1958. That means that the law to be applied to the assessment finalised through the two orders dated 30th of April, 1971, by the C.T.O. was that as modified by the two amendments. Of course we are here concerned only with the order of assess- :n ment made under the A.P. Act. That order would be good if it is in conformity with the provisions of the amended section 6 of the A.P.

Act but not otherwise. Under the amended section the liability tb tax

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remained unchanged but the entitlement to refund was abolished and A was substituted by a right to reimbursement of the tax which arose only if the concerned goods were later on sold in the course of inter-state trade or commerce under the Central Act and tax under that Act was paid in respect thereof. Such reimbursement would not be avaia!able merely because the goods in question had been sold in the course of inter-state trade or commerce when they were not subjected to tax under the Central Act. Admittedly no such tax was paid by the appellant in the course of inter-trade on goods regarding the purchase of which , reimbnrsement of the tax leviable under the A.P. Act is claimed. The '.'1" proviso to section 6 as amended in 1974 therefore is of no assistance _.ill.. to it.

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8. Nor does the amended clause (b) of section 15 of the Central

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Act come to the appellant's aid, as the language used therein, for all practical purposes, is the same as that of the amended proviso to section 6 of the A.P. Act and clearly means that the tax under the A.P.

Act would be reimbursibk only to a dealer who has paid tax under the Central Act in respect of the sale of the goods in question m the course of inter-state trade or commerce .

9. Faced with the above situation, Mr. Desai, Learned counsel for the appellant, pressed into service a novel contention to the effect that the appellant was not asking for any reimbursement or refund, that it was the D.C.C.T. who had cancelled the order 0! refund (inherent in the 'exemption' granted by the C.T.0.) and that there was no provision authorising the D.C.C.T. to force the appellant to return any amount paid to it as a refund. The argument is obviously fallack>us.

The D.C.C.T. has done nothing more than to revise an order of the C.T.O. which has been varied only in so far as it was not in conformity with the law deemed to have been prevailing on the date of the assessment by virtue of the retrospective amendment of section 6 of the A.P.

Act. It is conceded by Mr. Desai that the 'exemption' has to be regarded as a composite order of levy plus refund. That part of it which granted a refund was illegal under the amended proviso to section 6 of the A.P. Act inasmuch as no reimbursement was due in respect of goods on which tax under the Central Act had not been paid.

The D.C.C.T. therefore had not only the power but was duty-hound to strike down the order of refund as being illegal. The order of the C.T.0. as revised by the D.C.C.T. thus is reduced to an order merely of levy of the tax due under the opening paragraph of section 6 of the A.P. Act so that the appellant becomes liable to pay such tax.

10. The only other argument put forward by Mr. Desai in support •f the appeal rested on the provisions of rule 27-A above extracted in

\ its un-amended form.

The rule can obviously be of no help to him inasmuch as even if it can be construed as laying down something in kvour of the appellant it cannot override the provisions of the Act under which it is framed. No amount of argument would make a rule override or control the legislative enactment under the authority of which it comes into being and that is why the rule was amended in 1974 so as to conform to the parent statute.

11. It may be stated that at one stage of the argument Mr. Dai drew our attention to the fact that by reason of the amendments made in the statute law and the consequent demand by the D.C.C.T. for the refunded amount the appellant had been placed under a burden which did not fall on those who collected the Central sales tax from the purchasers and paid it to the Government because they were held entitled to refund of the tax under tke A.P. Act even though they had not paid anything out of their own pocket as tax under the Central Act. However, as he did not challenge the constitutional validity of any of the amended sections he did not pursue the matter further and we need take no further notice of it.

12. We mighl.. mention here that Daito Suryanarayana <1nd Company's case (supra) on which the High Court rclied i11 support of the impugned judgment takes a v.iew of the law which is in conformity with the opinion expressed above by us and we unreservedly approve of the same.

13. In the result the appeal fails and is dismissed but with no order as to costs.

Appeal dismissed.

RALLIS lNDIA LTD

STATE OF ANDHRA PRADESH

February 12, 1980

R. S. PATHAK

Central Sales Tax Act 1956

Section 15(b )

section 10

Central Sales Tax Act

section 6

General Sales Tax Act

section 15(h)

1st October, 1958

section 6

section 6

section 6

Section 10

section 10

section 6

section 15

section 6

section 6

section 15

section 6

T. Desai

T. A. Ra111achandra11

J.

Ramachandran

M. N. Tandon

T. S. Krishnamoorthy Iyer

B. Parthasarthi

KosHAL

30th of April, 1971

section 10

Central Sales Tax Amendment Act

section 6

section 15

section 6

21st of August, 1974

D.C.C.T.

section 6

30th of August, 1976

section 6

section 22

Supreme Court

article 133(1)(c)

section 109

the Code of Civil Procedure

Central Sales Tax (Amendment) Act

10th day of November, 1961

9th day of June, 1969

section 9

Section 6

section 6

Central Sales Tax Act, 1956

section 6

section 6

Central Sales Tax Act

section 15

section 15

Section 10

section 10

section 6

section 15

section 6

section 15

section 6

section 15

section 6

1st of October, 1958

section 6

section 6

section 15

section 6

Desai

section 6

section 6

D.C.C.T.

section 6

Dai

Daito Suryanarayana