AMITABH SHRIVASTAVA

STATE OF MADHYA PRADESH & ORS.

February 4, 1982

(D.A: DESAI AND A. VARADARAJAN, JJ.J

Ru/ts relating to admission to medical colleges in Madhya Pradesh dated 17-4-1979-Reservation of seats to certain categories-Minimum marks reduced from 50 per cnt in the aggregate to 43 per cent, by an xecutive order dated 10th March, 1980-Stage at which the benefit ari'sing from the said executive order is to be applied, explained-Ru/es 2, 7, 9 and 20, scope of.

There are six medical colleges in Madhya Pradesh. Admission to the first year of M.B.B.S Course is on the basis of the qualifying examination. There D were 720 seats in tose six colleges in the year 1979-80,

Under Rule 7 reservations are made for certain categories. One such is for the sons and daughters of military personnel of Madhya Pradesh and 21 seats in all were reserved for that category.

Under Rule 20, the qualifying marks to be obtained by Candidates other than Scheduled Castes and Scheduled Tribes, shall be 50 per cent in the aggregate and 33 per cent in each of the subjects. In case the required number of candidates for admission are not available, according to the above percentage of qualifying marks, the Board conducting the pre-medical examinations under Rule 2 shall have power to lower the marks up to 5 per cent in the aggregate for all categories of candidates.

Under Rule 9, in case sufficient number of candidates do not qualify for admission under any reserved category and any seats remain vacant, such vacant seats shall be filled by preparing a combined merit list •of all the remaining categories of candidates on the waiting list and the candidates shall be admitted according to merit in the list so prepared.

The appellant who was a son of a military personnel got only 43.6 per cent of marks in the aggregate, and he could not get a seat under the reserved category even after the marks were lowered to 45 per cent under Note 1 to Rule 20 by the Board. Even after that was done, 7 seats remained vacant out of 21 seats reserved for the sons and daughters of military personnel. On 10-3-1980, the Governmeiit by an executive Order reduced the minimum aggregate to 43 per cent. The Board, prepared a combined list under Rule 9 and applying the minimum of 43 per cent granted admission, as per that list, and refused admission to the appellant. The question arose whether the selection should be based on the combined list prepared under Rule 9 or on taking 43 per cent as the qualifying marks in the aggregate. ·

AMITABH v. M. P. STATH (Varadarajan, J.) 187

Allowing the appeal by special leave, the Court,

HELD : Since the minimum qualifying marks were reduced to 43 per cent by an executive order without any provision therefor in the statutory rules, Rule 9 of the statutory rules could not be applied at that stage, and the appellant who bad secured 43.6 per cent of marks in the aggregate shou1d have been admitted in the category to which he belonged. The difference between 45 per cent in the aggregate, to -which the minimum qualifying marks were reduced uuder Note (1) to Rule 20 and 43.6 per cent of marks in the aggregate secured by the appellant is so little that it could not be a valid or sufficient reason for giving a go-bye, on the gro'und of merit, to the reservation provided for in Rule 7 of the Rules. [194 G-H, 195 A-Bl

CIVIL APPELLAlE JURISDICTION : Civil Appeal No. 853 of 1981.

Appeal by special leave from the judgment and order dated 4.11.1980 of the Madhya Pradesh High Court in Case Misc.

Petition No. 167 of 1980.

Shh- Dayal, P.S. Das Gupta and J.B. Dadachanji for the Appellant.

Gopal Subramaniam and S.A. Shroff for the Respondents.

The Judgment of the Court was delivered by

VARADARAJAN, J. This appeal by special leave is directed against the judgment of K.K. Due. J. of the Madhya Pradesh High Court in Writ Petition No. 167 of 1980, with whom the learned Chief Justice of that High Court had agreed on a difference of opinion between the learned Judge and A. R. Navkar, J. The petition filed .under Article 226 of the Constitution was for the issue of a writ, order or direction for the writ petitioner's admission into one of the medical colleges in Madhya Pradesh for the M .B.B.S. course, commencing in the academic year 1979-80. After hearing the learned counsel for the parties we allowed the appeal by a brief order on 14.1.1982 without any order as to costs, on account of the urgency of the matter, reserving our reasons to be given later, and directed the respondents to admit the appeHant to the M.B.B.S course for the academic year 1981-82 for which admissions are admittedly goipg on even now.

We are presently giving reasons.

The. Government of Madhya Pradesh,. Public Health and Family Welfare Department, have framed Rules on 17.4.1979 for

1 88 SUl>REME COU!tt .REPORTS ( J 982] :l S.C.R.

admission into the Medical, Dentistry and Ayurvedic Colleges in the State. In this appeal we are not concerned with the Dentistry and Ayurvedic Colleges. There are six Medical Colleges in the State of Madhya Pradesh affiliated to different universities. There are 720 seats for admission into the first year course in those six colleges.

Rule 5(l) of the aforesaid ules, hereinafter refer to as the Rules, lays down that no candidate shal.1 be admitted to the M.B.B.S. course unless he has passed the B.Sc. Part I (three years degree course Medical Grouj>) examination of the recognised universities of the State with Physics, Chemistry, Biology (Zoology and Botany) or any examination of any other university or board recognised as equivalent thereto with practical tests in each subject provided the candidate has passed in each of those subjects in theory and practi: .cal separately. Under rule 6 of the Rules no candidate shall be admitted to the medical college unless he completes the age of 17 years on the 31st December of the year of ailmission to the college. Rule 1(3) provides for the pre-medical examination being held every year for selection of candidates for admission to the medical colleges in the State and says tbat all admissions to those colleges have to be made only from the merit list prepared on the basis of the result of that examination except in the case of seats placed at the disposal of the Government of India or other States.

Under Rule 7 certain number of seats have to be reserved for specific categories of candidates passing the pre-medical examination as below:

Fifteen percent shall be reserved for women candidates;

Fifteen percent shall be reserved for each of the categories of Scheduled Caste and Scheduled Tribes candidates;

Seats not exceeding 3 percent may be reserved for children of military personnel who have to produce the necessary certificates. .,

Apart from those reservations, under Rule 8 seats not exceeding 3 per cent are reserved for nominees of the Government of India and three seats are reserved for candidates nominated by the Government of Jammu and Kashmir in consideration of three seats reserved in the medical colleges in that State for candidates of. the State of Madhya Pradesh.

Under Rule 20, selection of candidates from amongst those who had appeared and qualified in the written rexamination shall be made strictly on merit as disclosed by the total number of marks obtained by a candidate in the pre-medical examination. The qualifying marks for admission shall be 50 per cent in the aggregate and 33 percent in each of the subjects. For Scheduled Castes and Scheduled Tribes candidates the minimum qualifying marks shall be 45 per cent in aggregate and 30 per cent in each of the subject. In case the required number of candidate for admission are not available according to the above percentage of qualifying marks the Board conducting the pre-medical examination under Rule 2 shall have power to lower the marks up to 5 per cent in the aggregate for all categories of candidates. If even with the relaxation granted by the Board, as above, required number of candidates in the categories of Scheduled Castes and Scheduled Tribes are not available for admission the Government has power to grant special relaxation in the maximum qualifying marks to the extent considered necessary.

Under Rule 9, in case sufficient number of candidates do not qualify for admission under any reserved category and any seats remain vacant, such vacant seals shall be filled by preparing a combined merit list of all the remaining categories of candidates on the waiting list and the candidates shall be admitted according to merit in the list so prepared.

It is not necessary to refer to any of the other rules for the purpose of this appeal.

Indisputably, the appellant belongs to the third category of seats reserved under Rule 7 as he is a son of a military personnel settled in Madhya Pradesh. Sons and daughters of military personnel of Madhya Pradesh are entitled to 21 seats in all out of 720 seats available in the six medical colleges in the State. As per the minimum number of qualifying marks prescribed in Rule 20, namely, 50 per cent in the aggregate and 33 per cent in each of the subjects, children of military personnel secured only 8 seats, and 13 seats in that category remained vacant and all other categories secured only 361 seats and 338 seats of those categories remained vacant. The appellant did not qualify for admission on the basis of the marks specified in Rule 20 for the academic year I 979-80. Then the Board applied Note(!) to Rule 20 which provides for lowering the mini mum qualifying marks upto 5 per cent in the aggregate ', for all categodes of candidates. After that w&s done 6 more candidates

belonging to the category of sons and daughters of military personnel and 274 more candidates belonging to all other categories secured admission and 7 seats belonging to the category of children of military personnel and 64 seats of all other categories remained vacant.

Even then the appellant could not secure admission as he bad secured only 43.6 per cent of inarks in the aggregate and 33 per cent in each of the subjects in the pre-medical examination and in the merit list prepared according to rule 9 he ranked 74 and only 71 candidates in that 'list could be admitted on the basis of merit.

Then the Madhya Pradesh Government issued an executive notification dated IO March, 1980 regarding relaxation of qualifying marks for the purpose of admission to the medical colleges. That notification is to the effect that for the year 1979-80 candidates who have obtained at least 43 per cent of marks in the aggregate in the pre-medical examination shall be admitted to the medical colleges in the unfilled seats on the basis of merit according to the rules.

Ordinarily, the appellant who had secured 43.6 per cent of marks in the aggregate in the pre-medical examination and another candidate in the category of children of military personnel should have got admission after the lowering of the minimum qualifying marks to 43 per cent in the aggregate, leaving 5 seats in that category still vacant.

But Rule 9 was applied and a combined list of all the remaining categories on the waiting list was prepared and the candidates were admitted according to merit in the list so prepared and consequently the appellant who belongs to the category of children of military personnel and had secured 43.6 percent of marks in the aggregate in the pre-medical examination could not secure admission.

These facts are not in dispute.

The appellant filed a writ petition for the aforesaid relief contending that as minimum qualifying marks have been reduced by the Notification dated 10.3.1980 to 43 per cent in the aggregate and as he had secured 43.6 per cent marks he should have been given admission in the category to which he belongs. The writ petition was at first heard by K.K. Dube and A.R. Navkar, JJ.

A.R. Navkar, J, who decided in favour of the appellant, had observed in his judgment thus :

"The reduction of percentage of marks for admission by the Government on J0.3.1980 (Annexure II) clearly shows that the candidates who got 43 per cent of marks

:.-·

will be eligible for admission. There is no dispute that the petitioner got 43.6 per cent of marks in the pre-medical examination. Therefore, applying this order of reduction of qualifying marks (Annexure II), I am of the opinion that the right of the petitioner for admission in the medical college cannot be defeated by resorting to Rule 9 of the Rules.

As mentioned above, Rule 9 of the Rules, in my opinion, is a mandatory one. It says, 'if any seats remain vacant, such vacant seats shall be filled in by preparing a combined merit list of all the remaining categories of candidates on waiting list. This was not done when the percentage of marks for admission was reduced from 50 per cent to 45 per cent for all categories. Therefore, in my opinion, . it cannot be done to defeat the right of the petitioner .. .'I am of the opinion that the present petitioner cannot be denied his right of admission to the med1r.al college if he is otherwise eligible to get admission. Denial of admission to him by purporting to act on the strength of Rule 9 of the Rules, in my opinion, will not be justified and will amount to denial to him the protection given to him by Article 14 of the Constitution. The result, therefore, is that the petition deserves to be allowed ... "

But K.K. Dube, J. who took the opposite view has, after extracting E notification dated 10.3.1980, observed in his judgment thus:

"The reduced qualifying marks limit is only for filling up the vacant seats and the notification does not seek to amend Rule 20 or substitute 43 per cent for 50 per cent marks in the aggregate as minimum qualifying marks limit laid down under Rule 20.

Indeed, the notification does not state that the reduced qualifying mljrks limit is in substitution of the one provided in Rule 20. That being the position, Rule 9 would necessarily operate, and it is for selecting from amongst the candidates for the number of seats remaining vacant by operation of Rule 9.

The petitioner's contention would have some substance if Rule 9 was not there. The effect of Rule 9 is to wipe out the reservation for admission to any of the reserved categories.

The main idea is that the best candidates be given admission to the medical colleges. The reservation is for the purpose of securinlJ a co1wession and must operate in a like manner

as provided in the Rules. The reservation is riot absolute, and, therefore, when the minimum qualifying marks were reduced to 43 per cent it was only for filling up the vacant seats as obtained by operation of Rule 9 of the Rules, according to the merit in the combined merit list. We are unable to agree with the contention that the reduction in the eligibility to 43 per cent in the Government notification dated March 10, 1980 could be availed of by the petitioner and other similar candidates for filling up the 7 vacant seats in the reserved quota of the children of military personnel".

The learned Chief Justice before whom the matter came up on account of the difference of opinion between the two learned Judges who originally heard the writ petition, as mentioned above. while agreeing with K.K. Dube, J, has observed in his judgment thus:

"When even on reduction of qualifying marks under Note (i) the required number of candidates do not qualify for admission under any reserved category and seats remain vacant, Rule 9 begins to apply and as directed by that Rule "such vacant seats sliall be filled in by preparing a combined merit list of all the remaining categories of candidates in the waiting list and the candidates shall be admitted according to the merit in the list so prepared".

At this stage there is no further scope for reservation. In oiher words, the reservation comes to an end after the required number of candidates in a reserved category do not become available on reduction of qualifying marks in the aggregate by the Board in exercise of its power under Note (i) to Rule 20. It is generally expected that there would be a long waiting list of qualified candidates in the general category who would be available for filling in the seats transferred from a reserve category to general category. In 1979, however, it so happened that there were vacancies in the general category, that is, there were not sufficient number of qualified candidates who could have exhausted the general category under Rule 9. It is at this stage that the Government issued the order dated I 0th March, 1980. It is in the interpretation and application pf this order that difference of opinion has arisen. The

order.has not been issued under the Rules. It is an inde- A pendent order. The order does not expressly refer to any reservation. The order directs selection of candidates for vacant seats on the basis of merit from those who had secured aggregate marks up to 43 per cent. The order was passed at a stage when the reserved categories had come to an end under Rule 20 read with Rule 9 as sufficient number of candidates were not available. In my opinion, therefore, Dube, J. was right in holding that the order dated 10th March, 1980 did not bring back the reservation and selection had to be made on the basis of a combined merit list for all the vacant seats irrespective of whether

they originally belong to any reserved category.........

There is yet another important factor to be taken notice of. Not only the vacancies in the reserved category of children of military personnel but there were also vacancies in the category of women to be filled in on the basis of a combined merit list and no reservation was at all allowed in working out the order of 10th March, 1980.

The way in which this order was applied by the Board had apparently the approval of the Government and no other candidate excepting the petitioner has come forward to challenge its application.

As already pointed out, the order is not a statutory order. It is an order passed by the State Government in the exercise of its executive power.

The Government's approval of the manner in which the Board has applied the order goes to show that that was the intention of the Government in passing the order.

Although the approval of the Government of a particular mode of application of an order is not decisive of its meaning and it is for the Court to decide the correct meaning, still when the meaning of an order which is purely executive is in doubt the way in which it has been applied by all concerned is a relevant factor to be taken into account in deciding its true meaning .. The uniform application of the order by the Board with apparent approval of the Government for filling in all the vacant seats, goes a long way to show that the Government intended that the order should be applied y preparing a common merit list without continuing the reservations. In these circumstances, evefl if the interpretation P\lt forw!\l"~ by the learned counsel fof

the petitioner and accepted by Navkar, J. can he accepted as a possible interpretation of the order, it would not be right for me to hold that it conveys the true ipeaning".

We are inclined to agree with the conclusion reached by. A.R.

Navkar, J., though for different reasons.

The matter is simple. . Under Rule 20, the minimum number of marks prescribed for admission into the Medical Colleges in the State is 50 per cent in the aggregate and 33 per cent in each of the subjects. On that basis, out of the total of 720 seats available in all the six medical colleges in foe State only 8 out of 2 l of the category of soris and daughters of military personnel, and only 361 out of 699 available for all other categories could be and were admitted in the academic year 1979-80. Rule 9, which has been relied upon by the respondents as well as by K. K. Dube, J. and the Chief Justice says that in case sufficient number fof candidates do not qualify for admission under any reserved category, barring, of course, the category of Scheduled Castes and Scheduled Tribes candidates, and any seats remain vacant, such vacant seats shall be filled by preparing a combined merit list of all the remaining categories of candidates on the waiting list and the candidates shall be admitted according to merit in the list so prepared. But that Rule was not appllied by the respondents and could not be applied under the circumstances of the case when 338 seats in all other categories and 13 seats of the category of sons and daughters of military personnel could not be filled in 1979-80 on the basis of the said minimum number of qualifying marks, namely, 50 per cent in the aggregate and 33 per cent in each of the subjects. Then Note (1) to Rule 20 providing for lowering of the qualifying marks upto 5 per cent in the aggregate -

for all categories was' applied. Even then 64 seats of all other categories and 7 seats of the category of sons and daughters of military personnel could not be filled and remained vacant. Then the Government by an executive order issued the notification dated 10th March, 1980 reducing the minimum qualifying marks to 43 per cent in the aggregate, and it is only at this stage Rule 9 was applied with the result that in the category of sons and daughters of military personnel only 2 more candidates could secure admission and 7 seats of that category had to be filled by other categories. We are of the opinion that since the minimum qualifying marks were reduced to 43 per cent by an executive order without any provision therefor in the statutory rules, Rule 9 of the statutory rules could pot be applied at that stage, and that the appellant who had secured

43.6 per cent of mai:ks in the aggregate should have been admitted in the category to which he belongs. We think that the difference between 45 per cent in the aggregate, to which the mifiimum qualifying marks were reduced under Note {If to Rule 20 and 43.6 per cent of marks in the aggregate secured by the appellant is so little that it could not be a valid or sufficient reason for giving a go-bye, on the ground of merit, to the reservation provided for in Rule 7 of the Rules. The appellant deserves to be admitted even for this reason.

In these circumstances we are unable to agree with the view taken by K.K. Dube, J. and the Chief Justice, and we agree with the conclusion reached by A-.R. Navkar, J. The appeal is accordingly allowed without any order as to costs. As already directed the appellant shall be admitted to the M.B.B.S. course for the academic year 1981-82 in the ategory mentioned in Rule 7

(3) (c) of the Rules.

S.R.

Appeal allowed.

AMITABH SHRIVASTAVA

STATE OF MADHYA PRADESH & ORS

February 4, 1982

D.A: DESAI

A. VARADARAJAN, JJ

Madhya Pradesh

Shh- Dayal

P.S. Das Gupta

J.B. Dadachanji

Gopal Subramaniam

S.A. Shroff

VARADARAJAN

K.K. Due

A. R. Navkar

Article 226

Government of Madhya Pradesh

Government of India

Government of Jammu

State of Madhya Pradesh

Madhya Pradesh Government

K.K. Dube

A.R. Navkar

Article 14

March 10, 1980

I 0th March, 1980

Dube

10th March, 1980

Navkar

A.R.

Navkar

K. K. Dube

A-.R. Navkar


• 196

SAT PAL GUPTA & ANR.

STATE OF HARYANA & ANR.

February s; 1982

(Y.V. CHANDRACHUD, C.J. AND A.D.KOSHAL, J.]

Essential Commodities Act, 1955-"Foodstuff"-Meaning of-Rice bran used to feed poultry a11d cattle-Whelher essential commodity within the mea11ing of the Act.

Sub-clause (i) of section 2(a) of the Essential Commodities Act 1955 defines an ' 1essential commodity" to mean "cattle fodder including oilcakes and other coilcentrates" and by sub--clause (v) an "essential commodity" me:lns "food~ stuffs, including edible oih1eeds and oils." Clause 3 of the Haryana Rice Bran (Distribution and Price) Control Order 1967 provides that no dealer or owner of a ri!=C mill shall sen or offer to sell or supply rice bran save against a permit granted by certain officers of the State Government.

By a writ petition under Article 226 of the Constitution, the appellants impugned the validity of clause 3 of the Control Order on the ground that rice bran is not an essential commodity and that for this reason power under section 3 could not be exercised for the purpose of regulating its sale or supply. The High Court rejected the appellants' writ petition.

Dismissing the appeal,

HELD : Rice bran being a "foodstuff" wilin the meaning of section 2(a) ~

(v) of the Act, it is an essential coinmodity and therefore, the-power conferred by section 3 can be used to regulate its production, sale or supply. [199 Fl

The term "foodstuffs" means food of any kind. The dictionar:Y meanings of "food" are not restricted to what is eaten by human beings for nourishment and sustenance. According to them, what one takes into the system to maintain life _and growth or what is taken into the body of an organism in order to sustain growth is food.

[199 C-E]

Rice bran, which is a bye-product of the husking and milling process of paddy, consists of the layer that lies between husk and the kernel. It is a food stuffWhicli is commonly used as poultry and cattle feed. Any stuff which is commonly used as food by the generality of living beings is foodstuff ; it is not legitimate to restrict its ineaning to things used as food by human heinfis. The animal kingdom is not any the Jess important in the cosmic scheme tban the human empire and it is a distortion to say that it is a matter of little or no concern to the State whether the cattle and the poultiy get their due ration of the means of their subsistence. Cattle feed and poultry feed are feed to the cattle and the poultry and therefore they are foodstuffs. (198 E-H]

/ ---

SA'tPAL v. HARYANA (Chandrachud, C.J.) 191

Cattle and poultry are living cOlnl)Onents of the natural environment and thero is no reason to exclude that which they eat or feed upon from the meaning of the word''foodstuffs". If what the human beings eat is food, so is what the other living beings eat. "Cattle fodder" is expressly brought within the cOmpass of essential c; ommodities by section 2(a) (i). It would be illogical ir', in that context, rice bran is excluded from the purview of essential commodities on the ground that it is eaten by the poultry and not by Homo Sapitns. (199 B-C]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1099(N) of 1972.

Appeal by special leave from the judgment and order dated the 12th October, 1971 of the Punjab aqd Haryana High Court in Civil Writ No. 3400 of 1971.

B.P .. Maheshwari arid Suresh Sethi for the Petitioner.

K.G. Bhagat and M.N. Shroff for the Respondents.

The Judgment of the Court was delivered by

CHANDRACHUD, C.J. The appellants, in this appeal by special leave, are dealers in rice, paddy and rice ~Jan. They also have an associate rice milling and husking plant which is run under the name and style of Jagdamba Rice Mills, Traori.

Section 3 of the Essential Commodities Act, 10 -of 1955, empowers the Central Government, under the circumstances stated in that section, to issue notified orders providing for the regulation of production, supply and distribution of any essential commodity,

Under Section 5, the Central Governmcint can delegate its powers to a State Govetnment or an officer or authority subordinate to it.

In exercise of that power, the Central Government issued a notification on July 24, 1967 delegating to the State Governments the power conferred upon it by Section 3 of the Act.

In exercise of such del'egated power, Respondent I, the State of Haryana, promulgated the Haryana Rice Bran (Distribution and Price) Control Order, 1967. Clause 3 of the said Order provides that no dealer or owner of a rice mill shall sell -or offer to sell or supply rice bran save against a permit granted by the Director, Food and Supplies, or the District )\1agistrate or any othe~ officer authorised by the Director in that behalf .• The appellants filed a. writ petition under Article 226 of the Constitution in the High Court of Punjab and Haryana, challen$ing clause 3 of the aforesaid Control Order, on the

198 SUPllBMB COUllT llBPOllTS (19821 3 s.c.A.

A ground that rice bran is not an essential commodity and therefore, the power conferred by section 3 of the Act cannot be exercised for the purpose of regulating its sale or supply. This contention has been negatived by the High Court.

It is true that the power conferred by section 3( I) of the Essential Commodities Act, 1955, can be exercised by the Central Government or its delegate, only if it is of the opinion that it is necessary or expedient to provide for the regulation of any 'essen tial commodity'. The only sub-clauses of section 2(a) which are relevant for the purpose of deciding whether rice bran is an essential commodity, are sub-clauses (i) and (v). Sub-clause (i) of section 2(a) defines an 'essential commodity' to mean "cattle fodder, including oilcakes and other .concentrates".

By subclause (v), an 'essential commodity' means "foodstuffs, including edible oilseeds and oi\s". If rice bran is either cattle fodder or foodstuff, it would be an essential commodity and the Central Government or its dele- . gate, the State Government, would have the power to regulate its production, supply and distribution, and trade and commerce therein.

' Coming first to the question argued by Shri Mabeshwari as to whether rice bran is a 'foodstuff', it is well known that rice bran is commonly used as poultry feed and not uncommonly as cattle feed.

This is undisputed. Rice bran is a bye-product of the husking and milling process of paddy and consists of the layer which lies between the husk and the kernel. The affidavit of Shri T.K. Banerji, Director, Food and Supplies, Haryaoa which was filed in the High Court shows that rice bran is used in place of wheat bran or wheat middlings in livestock feeding. To the same effect is the affidavit. filed in this Court by Shri H.D. Bansal, Director, Food and Supplies, Haryana. If this is the true position, we are unable to

preciate that rice bran cannot be considered to be a foodstuff. /Any stuff which is commonly used as food by the generality of living beings is foodstuff: it is not legitimate to restrict the meaning of that word to things which a.re used as food by human beings. The animal kingdom is not any the less important in the cosmic scheme

I r than the human empire and it is a distortion to say that it is a , matter of little or no concern to the State whether the cattle and the /; poultry get their due ration of the means of their subsistence. Cattle

) feed and poultry (eed are food to the catle and the poultry, and therefore they are foodstuffs.

-l--

----r--

SAtPAL \>. ltARYANA (Chandrachud, t.J.) 199

The word 'foodstuffs' which occurs in clause (v) of Section 2(a) is not defined in the Act and therefore it mu>t receive its ordinary and natural meaning, that is to say, a meaning which takes account of and accords with the day-to-day affairs of life. Cattle and poultry are living componenis of the natural environment and there is no reason to exclude that which they eat or feed upon, from the meaning of the word 'foodstuffs'. If, what the human beings eat is food, so is what the other living beings eat. 'Cattle fodder' is expressly brought within the compass of essential commodities by clause (i) of section 2(a). It would be illogical if, in that context, rice bran is excluded from the purview of essential commodities on the groimd that it is eaten by the poultty and not by Homo Sapiens.

By 'foodstuffs' is meant food of any kiud. The Shorter Oxford English Dictionary (Third Edition) says that 'food' is "what one takes into the system to maintain life and growth". According to Webster's Third New International Dictionary, 'food' means "material consisting of carbohydrates, fats, proteins alld supplementary substances, that is taken or absorbed into the body of an organism in order to sustain growth, repair, and all vital processes and to furnish energy for all activity of the organism; something that nourishes or develops or sustains". These dictionary meanings of the word "food" are not restricted to what is eaten by human beings for nourishment and sustenance. According to them, what one takes into the system to maintain life and growth or what is taken into the body of an organism in order to .sustain growth is food.

We are therefore of the op1mon that rice bran being a foodstuff within the meaning of section 2(a)(v) of the Act, it is an essential commodity and therefore, the power conferred by section 3 can be used to regulate its production, sale or supply.

The affidavits filed on behalf of the State of Haryana have attempted to make out a case that rice bran is also used for human consumption. A research bulletin brought out by the Department of Chemical Engineering and Technology, Punjab University, Chandigarh, is cited therein as showing that the oil extracted from rice bran can be used in a variety of ways in the edible field as, for example, for fat-frying, cooking and in the preparation of salads and sauces, and that in Japan, it has been used for edible purposes for many years. This claim may. or may not be true but we would like to have better evidence to uphold it. It may be possible, in

SUPRBMB COURT RBPORTS [1982! 3 s.c.il.

course of time, to process rice bran by the use of advanced food technology in order to make it a common article of food for human consumption.

Our attention is drawn by Shri Bhagat, who appears on behalf of the Haryana Government, to a decision of this Court in M/s Sachdeva & Sons & Ors v. State of Punjab & Ors (Civil Appeal No. 817 of 1980 decided on May 7, 1980) in which it was held that rice bran is "cattle fodder" within the meaning of section 2(a)(i) of the Act. We need not go into that question since we are of the view that rice bran, being a foodstuff, is an essential commodity.

C The decisions in The State of Bombay v. Virkumar Gulabchand Shah(') and Shriniwas Pannalal Chockani v. The Crown(') which were cited by Shri Maheshwari and Shri Bhagat respectively do not bear upon the question in issue before us and need not, therefore, be discussed.

D For these reasons we dismiss the appeal, but without costs.

P.B.R.

Appeal dismissed.

m [19521 2 s, c.R. 871

(2) A.I.R. (38) 1951 Nagpur 226

·-

196

SAT PAL GUPTA & ANR

STATE OF HARYANA & ANR

Y.V. CHANDRACHUD, C.J.

A.D.KOSHAL, J.

Essential Commodities Act, 1955

section 2(a)

Essential Commodities Act 1955

Clause 3

Article 226

clause 3

section 3

section 2(a)

section 3

section 2(a)

12th October, 1971

B.P .. Maheshwari arid Suresh Sethi

K.G. Bhagat

M.N. Shroff

CHANDRACHUD

Jagdamba Rice Mills

Section 3

Essential Commodities Act

Central Government

Section 5

Central Governmcint

July 24, 1967

Section 3

State of Haryana

Clause 3

Article 226

High Court of Punjab and Haryana

clause 3

section 3

section 3( I)

Essential Commodities Act, 1955

section 2(a)

section 2(a)

Mabeshwari

T.K. Banerji

Haryaoa

H.D. Bansal

Haryana

Chandrachud

Section 2(a)

section 2(a)

section 2(a)(v)

section 3

Japan

SUPRBMB COURT RBPORTS [1982! 3 s.c.il.

Bhagat

Haryana Government

May 7, 1980

section 2(a)(i)

Maheshwari


COMMISSIONER OF INCOME TAX, DELHI

DELHI SAFE DEPOSIT CO. LTD.

January 12, 1982

[R.S. PATHAK AND E. S. VENKATARAMIAH, JJ]

Income Tax Act, 1961-Sec_tion 37-Scopt of-Assessee, partner of a manag~ ing agency firm-Managed companY advanced loan to another /ir"1 at tM instance ofapartnerof the'firm-Loan turned out to be a bad debt-Loss of managed

company partly made good by assessee~Reimbursed amount, if could be claimed C as deduction under section 37,

The assessee was a partner of a firm of managing agents. At the instance of one of the partners of the managing agency firm the managed company advanced to another firm a Jarge sum of money as loan. Eventually by reason of the failure of the borrower to repay the loao the managed company suffered Joss which was made good partly by the assessee and partly by one of its partners.

D Later, the managing agency firm had been reconstituted.

When the assessee in its returns claimed as a deduction the sum paid by it in that year in pai'tial discharge of its liability, the Income Tax Officer disaUowed it holding that the assessee was not legally bound to make the payment and

thcfore it was not a busiD.css expenditure which could be allowed as a deduction.

The Appellate Assistant Commissioner affirmed the order of the Income Tax Officer on the grounds that (a) the loss was actually the loss of a firm which was no more -in existence; (b) the loss had been borne by the asscsaee on personal considerations and (c) the loss was a loss of the managing agency and not of the partners concerned.

Accepting the assessee's appeal the Tribunal held that even if there was a change in the constitution of the managing agency firm the assessee's liability as a partner had not ceased, that tho payment could not be treated as one made on personal considerations and that th.o asseasee had made the payment in question purely on business considerations with the sole object of maintaining its busiD.ess connection which was yielding profit.

The High Court answered the reference in favour of the assessee.

Dismissing the appeal,

HELD : The true teot of. expenditure laid out wholly and exclusively for the purpoaes or trade or business is that it is incurred by the assessee as inci- H dental to its trade for the purpose of keeping tho trade going and of making it

r•Y and not in any other capacity than of a trader. (6 DE)

In the instant case the expenditure was rightly held to be deductible under s. 37 of the Act. Th~ assessee incurrCd the eXpenditure to avoid any adverse effect on its reputation, to protect the managing agency which was an income earning apparatus and for retaining it with the reconstituted firm in which the assessee's interest was the same as before. It was Jikely that but for-the expenditure, the fair name of the assessee would have been tarnished and the managing agency would have been terminated. The expenditure incurred on the preservation of a profit earning asset of a business has always been held to be a deductible expenditure. The expenditure incurred by the assessce was neither gratuitous nor one incurred outside the trading activities of the assessee. [7 CEl

Ushers's Wiltshire Brewery Ltd. v. Bruce, [1915] A. C. 433, British Insulated & Helsby Cables Ltd. v. Atherton, [1926] A. C. 205, Mitchell v. B. W. Noble Ltd. [1927] 1 K. B. 719; referred to.

Commissioner of lncomt! tax, Kera/a v. Malayalam Plantation Ltd .• [19641 7 S.C.R. 693, followed.

The fact that the firm has not claimed the expenditure as its own does not affect the right of the asmsee to claim deduction in respect of the amount in D question in its assessment proceedings. [7 H, 8 A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1235 of !974.

.Appeal by special leave from the judgment and order dated tbe 22nd March, 1973 of the Delhi High Court in Income Tax Reference No. 65 of 1968.

S.C. Manchanda, J. Ramamurthy and Miss A. Subhashini for the Appellant.

S. T. Desai and Bishambar Lal for the Respondent.

The Judgment of the Court was delivered by

VENKATARAMIAH, J. This appeal by special leave. is directed against the judgment and order dated March 22, 1973 of the Delhi High Court in Income-tax Reference No. 65 of 1968 made by the Income-tax Appellate Tribunal, Delhi pursuant to an order made by the High Court under section 256{2) of the Indian Income-tax.

Act, J 9(i I (hereinafter referred to as 'the Act').

H The facts of the case are these : The assessee (the respondent herein) is a public limited company. The assessee was a partner of a firm of managing agents known as M/s. Morari Lal Batra & Co.

• - ii

--·' }

I •

C.l.T. v. DELHI SAFE DEPOSIT co. (Venkataramiah, J.) 3

(hereinafter referred to as 'the managing agency firm') which was managing another public limited company called M/s. Bharat Carbon & Ribbon Manufacturing Co. Ltd. (hereinafter referred to as 'the managed company'). There were in all three partners in the managing agency firm, the two other partners being V .K. Batra and Lal Balwant Roy who held 50% share and 25% share respectively in that firm.

The assessee held the remaining 25% share. At the instance of V.K. Batra who held the major share in the managing agency firm, a l.arge sum was advanced by the managed company to a firm known as M/s. H.K. Sinha & Sons at Calcutta. When a demand for repayment was made, M/s. H.K. Sinha & Sons repudiat . ed the claim except to the extent of Rs. 11,409 and ultimately

the managed company suffered a loss to the extent of Rs. 1,90,092

on account of the said transaction. Consequently it became necessary for the managing agency firm to make good the said loss.

Thereupon the assessee and Lal Balwant Roy together undertook to pay to th_e managed company Rs. 95,092 out of which the share of the assessee was Rs. 47,500. The blance of the amount was undertaken to be paid by R.K. Batra, brother of V.K. Batra. The managing agency firm was also reconstituted with the assessee, Lal Balwant Roy and R.K. Batra as partners, R.K. Batra taking the place of V.K. Batra. During the previous year corresponding to the assessment year 1962 63, the &jfessee paid a sum of Rs. 9,500 to the managed company in partial discharge of its liability of Rs. 47,500 referred to above and claimed it by way of deduction in the assessment year in question in the assessment proceedings under the Act before the Income-tax Officer. The Income.tax

Officer disallowed the said claim on the ground that the assessee was not legally bound to make the payment and . hence it was not a business expense that could be allowed under the Act.

The Appellate Assistant Commissioner of Income-tax before whom the order of assessment was questioned by the assessee affirmed the order of assessment on the above question on three grounds : (a) the amount in question was actually the toss of a firm which was no more 'in existence; (b) th'e'' loss in question had been borne by the assessee on personal considerations, .and (c) the loss was the loss <i'f the managing agency firm and not of the partners concerned and since the managing agency firm had not claimed that loss in its return, none of its partners could claim it.

When the matter was taken up in appeal' before the Income-tax Appellate Tribunal, the claim of the asscssee was ai:cepted.

The

'.A

Tribunal held inter alia that even if there was a change in the constitution of the managing agency firm, the liability of the assessee as a partner had not ceased, the assessee being a company, the payment could not be treated as one made on personal considerations and that the assessee had made the payment in question purely on business considerations with the sole object of maintaining its business connection which was yielding profit.

The Tribunal was also of the view that there was no bar to the assessee claiming the loss in question in its own assessment even though it could have been first claimed by the firm and then in the hands of the partner.

An application under section 256(1) of the Act having been rejected by the Tribunal, the appellant moved the High Court under section 256(2) of the Act.

The High Court thereupon passed an order directing the Tribunal to refer the following question for its consideration :

D "Whether, on the facts and in the circumstances of

the case, the assessee was entitled to any allowance on account of the share of loss made good by it to the managed company ?"

After the reference was made to it, the High Court answered the question in the affirmative anti in favour of the assessee. Dissatisfied with the judgment of the High Court, the appellant has come up in appeal to this Court by special leave, as stated above.

The first question which needs to be examined is whether the amount in question can be treated as an expenditure laid out or e)tpended wholly and exclusively for the purposes of the business of the assessee which is admissible as a deduction under section 37 of the Act. It is no doubt true that the solution to a question of this nature sometimes is difficult to arrive at. But, however difficult the task \ may be, a decision on that question should be given having regard to the decisions bearing on tile question and ordinary principles of coriunercial trading and of commercial expediency. The facts found in the present case are that the assessee was carrying nbusiness as a partner of the managil!g agency firm and it also had othe.r businesses. The managing agency agreement with the managed company was a profitable source of income and that the assessee had continuously earned income from that source. But on account of the .; negligence on the part of one of its partners, there arose a serious ' dispute which could have ordinarily resulted in a long drawn out

-·

-+ J

II ..... }-

...

C.l.T. v. DELHI SAFE DEPOSIT co. (v:enkataramiah, J.) 5

litigation between the managing agency firm and the managed company affecting seriously the reputation of the assessee ib. ·

addition to any pecuniary loss which the assessee. as a partner was liable to bear on account of the joint and _several liability arising under the law of partnership. The settlement arrived at between the parties prevented effectively the hazards involved. in any litigation and also helped the assessee in continuing to enjoy the benefit of the managing agency which was a sound business proposition. It also assisted the assessee in retaining the business reputation unsullied. which it had built up over a numberof years. It is also material to notice here that it was not shown that t.he settlement was a gratuitous arrangeinent entered into by the assessee to benefit the defaulting partner exciusively even thoughihe might have been benefitted to some extent. It is no doubt true that it was voluntary in character but on the facts and in the circumstances of the case whether it would make any difference at all is the point for consideration.

Dealing with the question whether an expenditure incurred by a brewery in aid of their tenants of tied houses as a necessary incident of the profitable working of the brewery business was an admissible expenditure in the computation of the income-tax liability of the brewery, Lord Summer upholding the above claim observed

in Usher's Wiltshire Brewery Ltd. v. Bruce(') thus: E

"Where the whole and exclusive purpose of the expenditure is the purpose of the expender's trade, and the object which the expenditure serves is the same, the mere fact that to some extent the expenditure enures to a third party's benefit, say that of the publican, or that the brewer incidentally obtains some advantage, say in his character of landlord cannot in law defeat the effect of the finding as to the whole and exclusive purpose."

In British Insulated and Helsy Cables Ltd., v. Atherton(') Lord Cave ovserved . .

"It was made clear in the above cited cases of Usher's Wiltshire Brewery v. Bruce, [1915] A.C. ,433 and Smith v.

Incorporated Council of Law Reporting for England and

(1) (1915] A.C.433.

(2) [1926] A.C. 205.

,: .. ~·

6 SUPREME COURT REPOl\TS I I 982] 3 S.C.ll.

Wales, [1914] 3 K.B. 674 that a sum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expendiency, and in order indirectly to facilitate the carrying on the business, may yet be expended wholly and exclusively for the purposes of the trade."

Rowlatt, J. in Mitchell v. B. W. Noble Ltd.(1) held that the money spent on getting rid of a director and saving the company from scandal was deductible. Affirming the aboce view, the Court of Appeal (whose judgment appears at page 73 I) held that as the payment was not made to secure an actual. asset so as effectually to increase the. capital . of the company but was made in order

to enable the director( to carry on the business of the company as they had done in the past unfettered by the presence of the retiring director, which might have had a bad effect on the credit of the company, it must be treated as the income and not as capital expenditure and was deductible as such for incometax purposes.

The true test of an expenditure laid out wholly and exclusively for the purposes of trade or business is that. it is incurred by the assessee as incidental to his trade for the purpose of keeping the trade going and of making it pay and not in any other capacity than of a trader. In Commissioner of lncometax, Kera/av. Malayalam Plantation Ltd.(2) Subba Rao, J. (as he then was) summarised the legal position at page 705 thus :-

"The aforesaid discussion leads to the following result: The expression "for the purpose oft~ business" is wider in scope than the expression "for the purpose of earning profits". Its range is wide : it may take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery; it may include measure for the preservation of the business and for the protection of its assets and property from expropriation, coercive process.or assertion of hostile titles; it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business.

(l) [1927] l K.B. 719.

(2) [1964] 7 S.C.R. 693.

'

~,·

+ '

c.1tr:v. DELHI SAFE DEPOSIT co. (Venkataramlah, J.) 7

However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business that is to say, the expenditure incurred shall be for carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business."

In the instant case, the assessee incurred the expenditure in question to avoid any adverse effect on lits reputation, to protect the managing agency which was an income earning apparatus and . for retaining it with the reconstuted firm in : which the interest of the assessee was the same as before. It was likely that but for the expenditure, the fair name of the assessee would have been tranished or rendered suspicious and the managing agency would have been terminated. The expenditure incurred on the preservation of a profit earning asset of a business has always been held to be a deductible expenditure by courts. In the circumstances, it is c:lifficult

to hold that the expenditure incurred by the assessee was either gratuitous or one incurred outside the trading activities . of the assessee. . The expenditure was, therefore, rightly held to be deductible under section 37.

We, therefore, reject the contention of the Revenue that the amount in question could not be claimed as a deduction under section 37 of the Act.

The next contention of the Department is that the payment in question should have been first assessed as a loss in the assessment proceedings of the firm and in the absence of any claim oiade in the course of such proceedings by the firm, it was not possible to allow its deduction in the assessment of the assessee.

Reliance is placed on sections 187 and 67 of the Act in support of this submission. It is seen that th~ expenditure in question had not been incurred by the firm.

Even if the amount had been paid through the firm by the assessee, µ. would not be payment of the firm's funds.

In the accounts of the firm, there would be a credit and debit entry cancelling each other showing a receipt from the assessee and a payment to the managed company, not in any way affecting the capital structure of the firm.

Jf the amount had been paid by the assessee directly to the managed company which appears to be more probable then the expenditure is obviously one incurred by the assessee itself though on account of the firm, In any view of the matter, the fact that the firm has not claimed the

expenditure as its own does not affect the right of the assessee to claim deduction in respect of the amount in question in its -assess ment procemlings which it is legitimately entitled to do. It is not shown how in the peculiar circumstances of the case there is any statutory b1ir to the claim made by the assessee.

B We ure satisfied that in the circumstances of the case the decision of the High Court does not call for interference. -

For the foregoing reasons, the appeal is dismissed with costs.

P.B.R.

Appeal dismissed.

COMMISSIONER OF INCOME TAX, DELHI

DELHI SAFE DEPOSIT CO. LTD

January 12, 1982

R.S. PATHAK

E. S. VENKATARAMIAH, JJ

Income Tax Act, 1961

section 37

s. 37

CIVIL APPELLATE JURISDICTION

S.C. Manchanda

J. Ramamurthy

A. Subhashini

S. T. Desai

Bishambar Lal

VENKATARAMIAH

section 256

V .K. Batra

Lal Balwant Roy

V.K. Batra

H.K. Sinha & Sons

Calcutta

R.K. Batra

Income-tax Appellate Tribunal

section 256(1)

section 256(2)

section 37

enkataramiah

Rowlatt

Subba Rao

[1964] 7 S.C.R. 693

DELHI SAFE DEPOSIT co. (Venkataramlah,

section 37

section 37

sections 187 and 67


SMT. KALLOO & ORS.

DHAKADBVI & ORS .

February 9, 1982

[B.S. VENKATARAMIAH AND BAHARUL ISLAM, JJ.J

Code of Civil Procedure 1908 s. 47 and Or. XX!.

Landlord.and Tenant-Decree for p0Jse1sion obtained by landlord execution against tenant-Matter compromised-Tenant to continue in portion of property and pay damages for use and occupation without default-Breach by tenant-Execution petition by landlord-Whether maintainable._ Test-Whether the compromise extin~

guishes decrees and creates fresh /ecue or provides mere mode for discharge of decree.

The predecessor of the respondents filed a suit for eviction of the predecessor of the appellants from a shop and obtained a decree on March 21, 1960 for eviction. The decree-ho Ider filed an application for the execution of the decree on March 22, 1966 and. during the pendency of these proceedings, a compromise was entered into between the parties, and the Executing Court passed an order dated March 21, 1968 in terms of the compromise. The compromise provided for the judgment-debtor to give vacant possession of the remaining half of the shop to the decree-holder by December '31, 1972 and to pay damages for use and / occupation by the 5th of every month to the decree-holder at Rs. 110/- per month, and that on six months damages being due the decree-holder will be entitled to have the shop vacated.

The decree-holder filed an execution petition for. recovery of possession on Novell\ber 25, 1975 alleging that the judgment debtor had not paid damages at the rate of Rs. 110/- per month from July 1, 1975. The judgment-debtor contested the execution proceedings contending that the terms of compromise created a fresh lease in favour of the judgment-debtor in resp.:ct of the remaining half of the shop, and that the decree was therefore not executable. The Executing Court upheld the objection holding that the compromise dated March 21, 1968 amounted to a fresh lease.

On appeal, the District Judge, set side the order of the Executing Court, . but in Second Appeal, the High Court upheld the order of the District Judge, and dismissed the appeal.

In tho appeal to this Court it was contended on behalf of the appellant/ judgment-debtor, that the compromise dated March 21, 1968 created a fresh lease, in favour of the judgment-debtor in respect of the undelivered half of th_e shop and the. decree-holder's remedy was by way of .a suit for recOvery of possession.

202 SUPREME cotJllt R~PORTS (19821 3 s.t.ll.

Dismissing t.he appeal,

HELD : When a compromise takes place in the course of execution of a decrCe for eviction the compromise may extinguish the deCree and create a fresh iease, or the compromise may provide a mere mode for the discharge of the decree. What actually takes place depends upon the intention of the parties to the compromise, and the intention has to be gathered from the terms of the compromise and the surrounding circumstances including the order recorded by the Court on the basis of the compromise. [205 C-D]

In the instant case para l of the compromise petition and the order of the Executing Court recording the compromise disclose the intention of the parties.

The judgment-debtor had already vacated "half of the shop and given its possession" and time was granted till December 31, 1972 for vacating and delivering possession of the other half of the shop as the judgment-debtor wanted time till then Jest bis busiriess "will be ruined by vacating the shop in hurry.'' This shows that the intention of the parties was nOt to create a fresh lease in respect of the half of the shop in possession of the judgmeOt-debtor but to help him to find out alternative accommodation and time for vacating was given till December 31,

1972. Further, the term 'damages', and not 'rents' is used in the compromise petition as well as the order of tbe Executing Court. The intention of the parties clearly was not to extinguish the decree for eviction but to create a mode of its full discharge. [205 E-H)

Konchada Ramamurthy Subudhi & Anr. v. Gopinath Naik, [1968] 2 SCR 559, referred to.

E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2612 of

1981.

Appeal by special leave from the judgment and order dated the 6th January, 1981 of the Madhya Pradesh High court (Jabalpur Bench) in M.P. No. 87 of 1980.

Am/an Ghosh or the Appellants.

Sobhagmal Jain and S.K. Jain for the Respondents.

The Judgment of the Court was delivered by

BAHARUL ISLAM, J. This appeal by special leave is by the judgment-debtors. The material facts which are not in dispute may be stated thus :

2. The predecessor of the respondents (hereinafter referred • to as 'the decree-holder') filed a suit for eviction of the predecessor bf ihe appellants (hereinafter referred to as 'the judgment-debtor') and obtained a decree on 21.3.1960, inter alia, for eviction from a

' .

KALLOO v. DllAKADEVI (/Jaharal Islam, J.) 203

shop. The decree-holder filed a petition for execution of the decree for eviction in the executing court on 3.1.1961.

The petition was dismissed on 20.1.1961.

A fresh petition for execution was filed on 19.1.1965. It was also dismissed on 20.3.1965.

The decreeholder again filed an application for execution of the decree on 22.6.1966.

During the pendency of this execution proceeding, the parties filed a compromise petition on 31.3.1968.

The terms of the compromise on the interpretation of which the result of this appeal depends were as follows :

(Material portions only) :

"In the above case, a compromise has taken place between the parties as follows :

(I) That for the present the judgmentdebtor is not getting a shop. His established business will be ruined by .vacating the shop in hurry.

Therefore, the judgmentdebtor wants time till '3L12.1972 from the decree n holder for vacating half the shop in his possession. So

the judgment-debtor will vacate the shop and give possession thereof to the decree holder by 31.12. 1972.

He has vacated half the shop and given its possession.

(2) That during this period the judgment-debtor shall pay damages to the decree-holder for use of the shop @ I IO/- per month.

(3) That the damages shall be paid upto the 5th of every month.

In the event of non-payment of damages for any six months, the decree-holder shall. be entitled to get the shop immediately vacated, by filing execution, from the possession of th~ judgment-debtor, without any objection as regards limitation.

• E

Ji'

(4) The decree-holder wants. to have new shutters put up after removing the present shutters in the front portion of the shop. The judgment-debtor will not be entitled G to object to this.

He will help in the putting of girders and he will vacate the portion.

If he will demur to it, the decree-bolder can have the shop vacated, without any objection as regards the above limitation.

204 SUPREME COUllT iIBMkTS [1982J j s.C.R.

So, the aforesaid compromise be accepted and kept on record."

3. It is also not in dispute that at the time of the compromise, half of the shop had _been vacated and its possession delivered to the decree-holder as stated in the compromise petition. In order to appreciate the intention of the parties to the compromise, it is also necessary to refer to the order dated 21.3 .1968 recorded. by the execution court on the basis of the compromise. The material para of the order is para 3 and it is in the following terms :

"The judgment-debtor 'to give vacant possession of the shop to the decree-holder by 31.12.72 according to the compromise and he will pay damages for use and occupation by the 5th of every month to the decree-holder according to the compromise @ Rs. 110/· per month. On six months' damages being due, the decree-holder will be entitled to have the shop vacated.

The decree-holder will provide shutters in the front portion.

The judgment debtor will not object to them.

The case is decided in terms of the com promise.

The compromise be recorded."

4. On 25.11.1975, the decree-holder filed an execution petition for recovery of possession of the portion of shop in possession of the judgment-debtor, alleging that the judgment-debtor had not paid damages at the rate of Rs. 110/- per month from 1.7.1975.

Notice of the execution petition was issued to the judgment-debtor who appeared and raised several objections to the execution proceedings.

But we are concerned in _this appeal only with one wl; lich was that in terms of the compromise, a fresh lease was created in favour of the judgment-debtor in respect of the remaining half of the shop.

It was therefore submitted that the decree was not executable. The Executing Court upheld the objection ho)ding that the compromise dated 21.3.1968 amounted to a fresh lease.

An appeal was taken to the Court of the District Judge who set aside the order of the Executing Court. In a second appeal, the High Court upheld the order of the District Judge, and dismissed the appeal. It is against this order of the High Court is. this appeal by special leave.

./ ~

' /_

-.. '

KALLOO v. DHAKADEVI (Baharul Islam, J.) 205

5. The only point urged before us by Shri Amlan Ghosh, learned counsel for the judgment-debtor was that the compromise dated 21.3.1968 created a fresh lease in favour of the judgmentdebtor in respect of the undelivered half of the shop, and the decreeholder's remedy was by a suit for recovery of its possession.

When a compromise petition is filed in an execution proceeding, and a contention is raised by the judgment-debtor on a subsequent execution being started by the decree-holder that the compromise bas given rise to a fresh contract between the parties and that the decree sought to be executed is not executable, what is

to be seen is whether the decree has been extinguished as a result C of the compromise and a fresh contract has emerged. When a compromise takes place in the course of execution of a decree-for eviction, the compromise may extinguish the decree and create a fresh lease, or the compromise may provide a mere mode for the discharge of the decree. What actually takes place depends on the intention of the parties to the compromise.

And the intention has

D , to be gathered from the terms of the compromise and the surrounding circumstances including the order recorded by the Court on the basis of the compromise.

7. In the instant case, paragraph I of the compromise petition E quoted above and the order of the . Executing Court recording the compromise are important and disclose the intention of the parties.

Paragraph I of the compromise petition shows that the judgmentdebtor had already "vacated half of the shop and given its possession" and time was granted till 31.12.1972 for vacating and delivering possession f the other half of the shop as the judgment-debtor F wanted time till then lest his business "will be ruined by vacating the shop in hurry".

This clearly shows that the intention of the parties was not to create a fresh lease in respect of the half of the shop in possession of the judgment-debtor, but to help the judgment: debtor find out, not in a hurry; alternative accommodation for his shop so that his established business waq not 'ruined' and time for G vacating the half of the room was given till 31.12.1972.

And this was also how the compromise petition waq understood by the Executing Court when it recorded in para 3 of its order : "The judgment-debtor to give vacant possesssion of the shop to the decreeholder by 31.12.1972 according to thPcompromise-............ ". The H intention of the parties clearly was not to extinguish the decree for .eviction but to create a mode of it~ f11ll dischar¥e

SUPREME COURT REPORTS (1982] 3 s.c.R.

The above interpretation gets support from the use of the term 'damages', and not 'rents', in the compromise petiiion as well as the order of the Executing Court. The view we have taken gets support also from a decision of this Court reported. in [1968] 2 SCR 559.(') In that case, the appellant filed a suit for eviction of the respon<)ent from the appellant's house.

The suit was dismissed by the trial court In appeal compromise was entered into between the parties and the decree was passed in terms of the compromise.

The compromise provided for the responden <'s continuation of possession of the house for five years, but it enabled the appellant to execute the decree by evicting the respondent, if the latter failed to pay rent for three consecutive months.

When the appellant sought to evict the respondent, the latter claimed protection from eviction on the ground that the compromise decree created a lease.

It was held by this Court that the facts that the appellant bad filed a suit for eviction of the respondent and the compromise decree enabled him to execute the decree by evicting the respondent, showed that the intention of the parties, which was the decisive test, was not to enter into a relationship of landlord and tenant.

9- This appeal

0has no merit and is dismissed with costs.

N.V.K.

Appeal dismissed.

(!) Kanchada Ramamurth1 Subudhl & Ors. v. Goplnath Naik.

I --- -1 _ _,. • )

KALLOO & ORS

DHAKADBVI & ORS

February 9, 1982

B.S. VENKATARAMIAH

BAHARUL ISLAM, JJ

Code of Civil Procedure 1908

s. 47

March 21, 1960

March 22, 1966

March 21, 1968

Novell\ber 25, 1975

July 1, 1975

December 31,

1972

[1968] 2 SCR 559

Ghosh

Sobhagmal Jain

S.K. Jain

SUPREME COUllT iIBMkTS [1982J j s.C.R.

Amlan Ghosh

[1968] 2 SCR 559

N.V.K.


-· \

RAM PY ARE CHAUDHARY & ANR.

STATE OF UTTAR PRADESH & ORS.

Pebruary II, 1982

[0.A. DBSAI, A.P. SEN AND BAHARUL !SLAM, JJ.J

U.P. Cooperative Societies Act, 1965-S. 29(2} read with r. 445(1)-Election of membtrs-Po/I held but declaration of result withheld by injunclion-Term of office fixed under statute-How reckoned-Power to remove elected representatives- Construction of.

The management of a cooperative society registered under the U.P.

Cooperative Societies Act vests in a committee constituted in accordance with the provisions of the Act and the Rules made thereunder. The term of elected members of a committee, accordiiig to s. 29(2) read with r. 445(1) is three 'Cooperative years' including the cooperative year in which they are elected. 'Cooperative year' means the year commencing on the 1st day of July and ending on the 30th day of June n.Xt following. Fresh members are to be elected before the expiry of the term of existing elected members failing which an administrator ca.n be appointed by the Deputy Registrar, Cooperative Societies to manage the affairs of the cooperative society till the reconstitution of the committee.

In this case the term of the cooperative society in question was drawing to a close and the poll to elect frosh members w.S held on September 11, 1978.

The result of the poll could not be declared immediately owing to an injunction issued by a court in a suit filed by a voter whose name bad not appeared in the electoral roil. The result was, however, declared ultimatelY on January 28, 1980, and appellant No. 1 was elected Chairman of the committee on January 29, 1980.

By an order dated July 1, 1981, made under s. 29(4) (b), the Deputy Registrar.

Cooperative Societies. appointed an administrator to manage the affairs of the society on the ground that the term of members of.the Committee had expired on June 30, 1981.

The appellants challenged the validity of the order under Art. 226.

The High Court upheld the impugned order and dismmissed the petition on the ground that once the poll was held and even though the result of the election was not announed, the term would commence from the date of the poll.

The ahppellant 1 ssuhb°:'ittedbeethatdeve 1 n thdogh hthefipotlltas heJJd on s 2 ep 8 tem 19 b 8 e 0 r

G .

II, 1978, t e resu t avi.g n ec are •Ort e rs 1me on anuary , , the term of three cooperative years of the elected members wou1d expire on June 30, 1982.

Allowing the appeal,

HELD : I. (a) Election means the process of being elected and the term of office is of elected members.

The term of office as member cannot .begin to run unless the statu1 9f bein' a tl!eoir i! acquired o~ being declared electe~.

SUPREME COURT REPOP.TS [1982) 3 s.c.ll.

A The result of the election having been declared on January 28, 1980, the term nf

 members commenced from the cooperative year beginning on July l, 1979 and ending with June 30, 1980 and since their term was three cooperative years including the year of election, it would expire on June 30, 1982. The order appointing the admin_istrator was, therefore illegal.

[213 H, 214 H, 215 A, 216 F-G)

(b) The provision of s. 29(4) (b) was not attracted as the process of election had begun with the holding of the poll before the expiry of the term and, once the poll was held as a part of the programme of election, it had to progress to the statutory end of declaration of result. [216 B-E)

2. The various stages of election were clearly demarcated in the Rules.

Mere holding of poll, which means recording of votes, without anything more would be inconsequential. . It is the counting of votes and the consequent declaration of result which. would determine who has become eligible fo{ office by the democratic process.

No election process can be said to be complete uDless the votes are recorded and counted and the result of the election declared and publicised. [212 G-H, 213 E-G]

3. The election process is sacrosanct and members elected must be permitted to discharge their functions as chosen representatives of the.-'electorate for the statutori!Y prescribed terrri and therefore the plea that the administrator should not be disturbed as only four months would remain for the expiry of the term cannot be countenanced.

The drastic power of removing elected representatives before the eXpiry of their term must receive strict and narrow interpretation. (217 A-CJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 478 of 1982

Appeal by special leave from the Judgment and Order dated the 3rd August, 1981 of the Allahabad High Court in Civil Misc.

Writ No. 7869 of 1981.

S.N. Singh for the .Appellants.

G.N. Dikshit and Shoba Dikshit for the Respondents.

The Judgment of the Court was delivered by

DESAI, J. The District Co-operative Federation (Zila Sahakari Federation), Basti ('Federation' for short) is a co-operative society

G registered under the U.P. Co-operative Societies Act, 1965 ('Act' for short).

As provided by section 29 of the Act, the management of the Federation vests in a committee designated as Committee of Management.

The committee consists of I 0 elected members

H and I nominated member.

As the term of the Committee was drawing to a close, programme for election of the new committee of management was anaounced as required by Part VI of the U.P.

Co-operative Societies Rules, 1968 ('Rules' for short). Pursuant to

RAM PYARE v. u.P. STATE (Desai, J.) 209

this programme poll was held on September 11, 1978. It is not made clear to us when the counting of the votes commenced,. though rule 444(1) provides that counting of the votes will take place immediately after the close of the poll except when postponed in a given set of circumstances. Sub-rule (4) of rule 444 provides that Election Officer shall announce the result of election as soon as the counting is completed indicating the number of votes secured by each candidjlte. It appears that one Shri Kashi Nath whose name did not appear in the voter's listand who, on account of the omission, could not contest the election filed Civil Suit No. 29.1 of 1978 in the Court of Munsif, Basti on September 9, 1978 and asked for and obtained ad interim ex parte injunction restraining the. defendants in foe suit from conducting the election of Board of Directors (Committee of Management), President, Vice-President

and the del'egates of District Co-operative Federation, Basti and/or announcing the result of election.

Defendants Nos. 1 to 4 ii• the suit appeared and contested the application for interim injunction .

The learned Munsif after hearing both sides confirmed the injunction in the following terms :

"6-C. is allowed and the defendants No. 1 to 4 are directed not to conduct the election and not to declare the result, if any, of Board of Directors of District Co.operative

Federation, Basti, till disposal of the suit".

This order was made on September 21, 1978. It appears that by the time the suit was filed and ex parte ad interim injunction obtained, the poll was already held, but by the injunction, the defendants in the suit were prohibited from declaring the result and accordingly the result was not declared.

It now appears that the result was declared on January 28, 1980, and the election of the Chairman and the Vice-Chairman took place on January 29, 1980.

Appellant No. 1 was elected as Chairman. The term of the members of the Committee of Management as provided by rule 445 as amended on June 30, 1981, is three co-operative years including the year of election. The Ragistrar of Co-operative Societies pursuant to the amended rule 445 issued a teleprinter message to various authorities indicating that the term of the committee of management has expired and administrator sho1,1ld be appointed as provided by subsection (4) (b) of section 29 of the Act.

Pursuant to this teleprinter message, the Deputy Registrar; Co-operative Societies, Gorakhpur made an order on July !, 1981, that the term of the members of the committee of management of the Federation bs expired on June

30, 1981, and proceeded to appoint an administrator.

The appellants questioned the validity and legality of the order of the Deputy Registrar in Writ Petition No. 7869 of 1981 filed in the Hi&h Court of Judicature at Allahabad.

The High Court was of the opinion that even though under rule 445 the term of the office of the elected members of the committee of management of co-operative sociely is three co-operative years including the co-operative year of their election, once the poll is held and even though the result of the election is not announced, the term would commence from the date of the poll and therefore the decision of the Deputy Registrar that the term expired on June 30, 1981, is correct.

The High Court accordingly dismissed the writ petition.

Hence this appeal by special leave limited to one point only, namely, the commencement and completion of the term of office of the members of the committee of management of the sec., nd appellant.

Section 29(1) provides that the management of every cooperative society shall vest in a committee of management constituted in accordance with the Act, the rules and the bye-laws.

Sub-section

(2) provides that the term of the elected members of the committee of management shall be such as may be provided in the rules or the bye-laws of the society.

Rule 445(1) provides that exceot as otherwise provided in rules 406, 433, 434 and 435 the term of the office of the elected members of the committee of management of a cooperative society shall be three co-operative years including the co-operative year of their election.

Explanation appended to this Rule clarifies how the period of three co-operative years is to be computed. In substance the explanation clarifies that :

"For the purpose of determination on the term of a elected member the co-operative year during which the elections are held shall count as full year irrespective of the period left after such election in that co-operative year".

There is a proviso to this explanation which is immaterial.

The G expression 'co, operative year' is defined in seciion 2(i) of the Act to mean the year commencing on the l st day of July and ending on the 30th day of June next following.

Part VJ of the Rules sets out procedure for holding the election.

Election of members of committee of management of a co-operative society has to be held in accordance with the provisions of the Act and rules l!l!!l lh~ J?istrit M aistr11te of the district in which the

-./-

RAM PYARB v. U.P. STATE (Desai, J.) 211

headquarter of the society is situated, shall' take steps to organise the election under the 'superintendence, direction and control of the Registrar [see rule 439(1)]. Sub-rule (I) of rule 439 provides that the election In a co-operative society or societies or a class or classes of co-operative societies shall be held on such due date or dates as the Registrar may by order fix and the District Magistrate concerned shall on such dates being so fixed appoint by order one or more Election Officers or different Election Officers for different class or classes of society or for different areas for this purpose. Sub-rule (3) provides that the Election Officer shall perform all such functions as are enjoined upon him by the Rules or as may be incidental to or necessary for the discharge of his duties.

Rule 444 provides that the counting of votes will take place immediately after the closing of the poll and in case it is not possible to count votes immediately after the close of the poll, the ballot boxes shall be sealed by tlie Election Officer and kept in the safe custody in the nearest police station. Sub-rule (4) of rule 444 provides that the Election Officer shall announce the result of election as soon as the counting is completed indicating the number of votes secured by each candidate.

Sub-rule (6) proxides that the Election Officer shall display a list of elected candidates on the notice board of the society and also at such public places as he lllay deem fit.

Sub-rule (7) provides that a copy of the iist prepared under sub-rule (6) shall be sent to the Dirtrict Assistant Registrar concerned or the offic.er authorised under sub-rule (2) of rule 440 and also to .Secretary /Managing Director of the Society concerned.

Having noticed the conspectus of the provisions bearing on the topic 'election to a co-operative society', the principal point canvassed in this petition may be examined. According to the appellant even though the poll was held on September 11, 1978, the result, as required by rule 444(4), was declared for the first time on January 28, J980, the term of three co-operative years of the elected members of the co-operative society will expire on June 30, 1982.

On the other hand, according to the respondents, as the poll was held on September 11, 1978, the term of three co-operative years including the co-operative year of the election has expired on 30th June, 1981 and therefore the order appointing the administrator was legal and valid.

The question that emerges on riyal contentions is as to from what date the term of the elted memb~~~ f ti\~ C(ommitt~~ <if

management shall commence.

The period of three vears as ampli fied by the Explanation to rule 445(1) is to bereckoned not from the date of the election but the term shall be. three co-operative years including the co-operative year of .the election.

The co-operative year, as pointed out earlier, commences on July 1 and ends on June

30 of the next succeeding year. Therefore, if the term commences from the date of poll which happened to be September 11, 1978, the whole of co-operative year commencing from July 1, 1978 would have to be. taken into reckoning for computing the term of three years and, therefore, three years would expire on June 30, 1981.

The question, however, is whether mere holding of the poll cons titutes election of the members of committee of management or the result being declared after the counting has been completed and notified in the manner prescribed by sub-rules (6) and (7) of ruie 444 would provide the starting point for a terminus quo for the term of office to commence.

If the term was to commence on the declaration of the result of election, in this case admittedly the result was declared on January 28, 1980, that date would fall within D the co-operative year from July l, 1979 to June 30, 1980, and the term of three co-operative years would expire on June 30, 1982.

At one stage, Mr. Dixit, learned counsel for the respondents stated that there is no stage like declaration of result when the election of the members of the committee of management of a co-operative society is held .. Sub-rule (4) of rule 444 clearly indi- . cates to the contrary and it casts an obligation on the Election

Officer to announce the resuli of election as soon as the counting is complete and he is also under a duty to indicate the number of votes secured by each candidate. His duty does not end there.

He bas to display a list of elected candidates on the notice board of the society and also at such public places as he may dem fit.

He is also under an obligation to send a copy of the list prepared under

sub-n1le (6) to the District Assistant Registrar concerned.

It is, therefore, not possible to accept the submission that there is nothing like a stage of announcement of the result of election when election is held for electing members of the committee of management of a co-operative society.

In fact, the various stages of election are clearly demarcated in the rules.

If the poll has become necessary and is held the unavoidable and inescapable stage. of counting of votes and the next stage of announcement of result and subsequently publicising the result are part and parcel and necessary adjuncts of condm; ting poll. If the rules provide for all the three stages it is difficult to accept the submission that by merely

; .. .._ y-·

.... /--

..;../

---·~

RAM PYARE v. U.P. STA1E (Desai, J.) id

holding of the poll, the process of election can be said to have been completed and the term of members who had contested would commence from the time of holding the election. That is what the High Court holds. Says the High Court :

"that the elections since were held o_n 11 :9.78, mere act of not declaring the result on account of any order issued by \he Court or a stay order grauted by it which was subsequently vacated could not be taken as ifthe term of. the committee of the management has not commenced" .

- The High Court, at another stage, _observed that the postponement of declaration of the result did not justify the holding of the view that elections had not been held in September 1978.

Taken to the logical end, the judgment of the High Court would imply that elected and non-elected members both who participated in the poll would have their term as members commence since the poll is held.

Coul_d this be the intendment ·.of rule 445(1)?

This approach betrays lack of knowledge of the democratic process of election.

When the number of the members to be elected to the committee of management is fixed and candidates in excess of the fixed number are desirous of seeking office, the democratic process postulates holding of elections.

Mere holding of poll which means recording of votes without anything more would be inconsequential. It is the counting of votes and the.consequent declaration of.result showing who amongst the contesting candidates has secured highest number_ of votes or large number of votes which would determine who has become eligible for office by the democratic process. _ Therefore, recording of votes is a preliminary stage, te counting of votes and declaration of result are integral and inseparable part of process of holding and completing the process of election.

No election process can be said to be complete unless the votes are recorded, they are counted and_ those who have secured highest number of votes are declared elected and the result is publicised, as required by the relevant provision.

Rule_ 445(1) provides that the term of office of the elected members of a committee of management of a co-operative society shall be three co-operative years including the co-operative year of their election.

This provision indicates the terminus quo for commencement of the term, viz., that the term of office of the elected members would bi three co-operative years including the year of their election. Election means process of being electedand the term of office is of the elected member, not of contesting member. 1When candidates offer themselves for election, they are

called candidates and unless elected the term of such candidates would not commence. Their term ould commence when elected.

The expression 'year of their election' even on literal and gram matic:al construction would mean the year in which the member concerned whose term is in dispute, is declared elected meaning thereby he became eligible for office and entitled to e•ter office as a member.

Apart from literal construction, the completed process of election comprehends nomination, recording of votes, counting of votes and declaration of result and publicising and notifying the . result.

There ends the process of election.

Recording of votes is a mere stage in the process of election.

Even when votes are recorded, the candidates contesting the poll do not acquire the status of members of committee of management.

That status is acquired on being declared elected.

And unless that status is acquired the term of office as member cannot begin to run.

Therefore, the expression 'co-operative year of their election year', upon trlie construction can only mean the year in which the member is declared elected and not the year in which he contested the poll.

Turning to the facts of this case, undoubtedly the poll was held on September 11, 1978, but in view of the injunction granted by the learned Munsif the respondents were restrained from declaring

th~ result.

In the counter-affidavit filed on behalf of the respon dents in the High Court, the fact. that the result was declared on January 28, 1980, is admitted. The relevant portion teads as under;

"4. That the election of the committee of management of the Federation was held on 11.9. 78 and not on 28.1.80 as alleged in the writ petition. In fact, the election was actually' held on 11.9.78, but the declaration of the result of election stayed in pursuance of the order of learned Munsif, Basti, in Suit No. 29 J of 1978 (Kashi Nath Tripathi v. D.M., Basti).

Consequent upon the order of the learned Munsif, the election officer also passed similar order on 11.9.78 on which date the election was held. Th-e result was subsequently declared on 28.1.80".

It is thus an admitted position that even though the poll was held on September II, 1978, on account of the injunction granted by the Court, the result was declared on January 28, 1980.

On the very next day, i.e. January 29, 1980, first appellant was elected as Chairman of the Federation.

Once it is admitted that the result was declared on January 28, 1980, the term of the members of the committee of the management would commence fron1 the co-

~ ,·.~

!!.AM PYARll v. ti.P. STATE (Desai, J.)

~IS

operative year July 1, 1979, ending with June 30, 1980, and including this year the term would be of ihree years. Therefore, obviousiy the term would expire on June 30, 1982.

Mr. Dixit; however, urged that where for any reason whatsoever, election of the elected members of the committee of management has not taken place or could not take place before the expiry. of the term of elected members, the committee of management shall, notwithstanding anything to the contrary in the Act or the Rules or the bye-laws of the society, cease to exist on the expiry of the said term. In support of this submission he relied upon sub-section

(4) (a) and (b) of section 29. They may be extracted :

c 'y "29. Committee of management :

--. \

\ -·

x x x

(4) (a) . Where, for any reason whatsoever the election of the elected members of the committee of management has not taken place or could not take place before. expiry of the term of elected members, the committee of. management shall, notwithstanding anything to the contrary in this Act or the rules, or the bye-laws of the Society, cease to exist on the expiry of such term.

(b) On or as soon as may be after the expiry of such ·

term, the Registrar shall appoint an Administrator for the management of the affairs of the society until the reconstitution of the Committee of Management in accordance with the provisions of this Act, the rules and the bye-laws of the society, and the Registrar shall have power to change the Administrator from time to time :

• Provided that so long as no Administrator is appointed under this sub-section, the Secretary

or the Managing Director, as the case may be, of G the society shall be in chrge. only of the current duties of the committee of management.

Explanation-Where results of the election of members of the Committee of Management have not been or could not H be declared, for any reason whatsoever, before the expiry of the term of the elected members of the outgoing ommiloo

SUPREME COURT REPORTS [1982] 3 s.c.il..

A tee, it shall be deemed that the election of the elected members of the committee has not taken place within the meaning of this su_b-section".

Sub-section 4(a) would. not be attracted at all in the facts of this case because when the terrn of the members of the former committee of management expired, poll was held on September 11, 1978.

Once poll was held as a part of the programme of the election it must progress to the statutory end of declaration of result.

Unless the term begins to run it cannot come to an end.

Sub-section (4)

(a) caters to a situation where the term of the members of a committee of management bas begun and the election could not be held before the expiry of the term then, notwithstanding that no election has been held the term of the member~ of the former committee would come to an end and the committee of management would cease to exist on expiry of said term.

Sub-section (4) (b) would only by be attracted if the term:expires as contemplated by subsection (4) (a). If the term expires and the old managing committee whose term has expired ceases to exist and the election has not been held or could not be held to elect a new committee of management then in the interregnum the Registrar has the power to appoint an administrator for the management of the affairs of the society.

In the fact situation as we have in the present case, sub-section (4) (a) and (b) are not attracted and, therefore, the provision therein contained would ncit assist the respondent in any manner.

As the term of the committee of management would commence from the co-operative year fromJuly ; 1979 to June 1980, the same would expire on June 30, 1982. On this reckoning the Registrar could not have ismed teleprinter message declaring that the term bas come to an end on June 30, 1981.

If the term had not expired, the administrator could not he appointed as contemplated by subsection (4) (b) of section 29. Therefore, the order of the Deputy Registrar of the Co-operative Societies, Gorakhpur Division dated July l, 1981, appointing administrator is without jurisdictioi; i and is clearly illegal and invalid and must be quashed and set aside.

Mr. Dixit lastly urged that even on the view this Court would take, the term of the committee .of management would expire on June 30, J 982, and therefore, hardly a period of four months remains and the Court should not, therefore, disturb the administrator.

This submission does not commend to us because the Government by executive fiat cannot reduce the term of office statutorily fixed.

Further, the elections to panchayats, co-operative societies and

1 ' '

-· '

RAM PYAIUJ'V. u.P. STATE (Desai, J.) 217

smaller local bodies provide an apotheosis or a training ground for success of our larger experiment of parliamentary democracy.

Election process is sacrosanct, Members elected must be permitted te discharge their functions as chosen representatives of the electorate

for the statutory terms.

Such a drastic power of removing elected representatives before the expiry of term and substituting non-elected persons must receive strict and narrow interpretation at the hands of the courts.

If allowed to foster it would be the negation of the democratic process and would engulf the whole fabric of democratic institutions which we are trying to build up. Therefore, even though the term would expire roughly after four months, we would be perfectly justified in removing the administrator and re-instating the elected representatives. ·

Accordingly, this appeal is allowed and the judgment of the High Court is set aside. A writ in the nature of mandamus is issued quashing the impugned order dated July I, 1981, of the Deputy Registrar, Co-operative Societies, Gorakhpur Division, Gorakhpur.

It is declared that the term of the committee of management of District Co-operative Federation Limited, Basti, and the !st appel !ant-Chairman has not expired and the elected member§ continue to occupy the office.

The administrator is hereby directed to hand over the charge forthwith to the Chairman of the Committee of Management. There will be no order as to costs. ·

H.L.C.

Appeal allowed.

RAM PY ARE CHAUDHARY & ANR

STATE OF UTTAR PRADESH & ORS

A.P. SEN

Cooperative Societies Act, 1965

S. 29(2} read with r. 445(1)

s. 29(2)

30th day of June n.Xt following

September 11, 1978

January 28, 1980

29, 1980

July 1, 1981

s. 29(4)

June 30, 1981

Art. 226

s 2

SUPREME COURT REPOP.TS [1982) 3 s.c.ll.

June 30, 1982

s. 29(4)

Allahabad High Court

S.N. Singh

G.N. Dikshit

Shoba Dikshit

DESAI

Co-operative Societies Act, 1965

section 29

Co-operative Societies Rules, 1968

Kashi Nath

Court of Munsif, Basti

September 9, 1978

September 21, 1978

January 29, 1980

section 29

July !, 1981

June

30, 1981

Hi&h Court of Judicature at Allahabad

Section 29(1)

Part VJ of the Rules

January 28, J980

30th June, 1981

Dixit

11.9. 78

September II, 1978

section 29

section 4(a)

section 29

Gorakhpur Division

July l, 1981

June 30, J 982

RAM PYAIUJ'V.

Further, the elections to panchayats, co-operative societies and

1 ' '
· '

RAM PYAIUJ'V. u.P. STATE (Desai, J.) 217

smaller local bodies provide an apotheosis or a training ground for success of our larger experiment of parliamentary democracy.

July I, 1981

Gorakhpur